Increasing Fed Funds Rates Could Have a Positive Impact

Two weeks ago, the Federal Reserve announced a decision to raise the Fed funds rate by 25 basis points. Many housing analysts have expressed fear that this decision will increase mortgage rates, have a negative impact on home affordability, and possibly take the United States housing market recovery off its track. Rick Sharga, Executive Vice President of Ten-X and former Senior Vice President at RealtyTrac, disagrees. He thinks the rise in mortgage rates could in fact prove to be a good thing for the housing market.

Sharga and other industry analysts argue that this decision will cause buyers to move faster and get into the housing market sooner – before rates go any higher. Sharga says he expects this decision will help increase home sales in 2017 or, at the very minimum, encourage buyers who would have normally waited until later in the year to buy a home in the spring and summer months instead.

Sharga also expressed his belief that higher rates will encourage lenders to loosen some of the tight underwriting standards that have plagued the housing market the last few years and prevented many would-be borrowers from moving forward with a purchase.
"This will happen partly just due to higher mortgage interest rates, which will provide a bit of a cushion for lenders to take on a little more risk," Sharga writes in a recent column for housingwire.com. "And higher rates will also drastically reduce the number of refinance loans being issued, which lenders will try to offset by doing more purchase loans."

Sharga thinks the Fed's recent 25-basis-point hike may not actually have a big an impact on mortgage rates.

"The 25-basis-point hike was well within the range that most industry analysts had expected, which means it's possible that this hike won't cause mortgage rates to rise significantly from current levels, which are already the highest they've been in years," Sharga notes.

If Sharga expectations come to fruition, this could equal a scenario with motivated buyers, more relaxed lending standards, minimal mortgage rate increases, and strong wage and job growth, which could result in the strongest spring selling season in several years.

New Scam Targeted at Real Estate Industry

Wire fraud schemes targeted toward those involved in real estate transactions have been a commonly discussed topic for some time, but there is now a new type of scam that is surfacing that is almost impossible to prevent, and at least 4,000 agents from all 50 states and Canada have already been impacted.

A real estate professional from Dubuque, Iowa says scammers are using her identity to create fake email addresses in her name and send fraudulent emails offering referrals to other real estate agents. The emails also contain fake contact information. Recipients who responded have been sent a Google Drive link that they are told contains listings the referred client wants to see. However, the link, once opened, installs computer viruses that allow scammers to scrape passwords and other personal information from the targets computer.

The initial fraudulent email typically reads as the below example:

"Hi,

My name is (Realtor’s Name) a realtor with (Real Estate Company Name) in Dubuque IA, I have a client who is interested in buying a property in your area of expert, Please let me know if you're available to help them out and I will send their contact details and the listings they are interested in.

Best

Realtor’s Name"

People who receive the email are encouraged to report it as spam or a phishing attempt. The hope is that if enough people take such action, the IP address of the sender will be blocked.

Since February 2016, when the scam apparently started, nearly 4,000 practitioners have contacted Dietz to either confirm the referral or warn her of the scam.

"I've gotten calls at the office, on my cell phone, texts and emails at all hours of the day and night," the real estate professional whose name is being used for the scam says. "There was one day I had over 100 pieces of correspondence just about these emails."

"Unfortunately, it is nearly impossible on the front end to prevent a fraudster from using your name in a scam," says Jessica Edgerton, associate counsel for the National Association of Realtors. "If you are the victim of any kind of identity theft, the best course of action is to immediately contact the Federal Trade Commission (FTC), the FBI and your local authorities."

Edgerton says that recipients of suspicious emails that appear to come from another real estate professional should search that practitioner's name on Google to compare their business email address and contact information to that of the sender.

If you want to keep your email more secure, Edgerton offers the following tips:

• Check sent mail, junk mail and email account settings regularly for anomalies. Hackers often break into an email account and modify the "email forwarding" settings to forward emails to their own account.
• Regularly purge email of unneeded or outdated information. Save important emails securely.
• Avoid email as a method for sending sensitive or confidential information. Instead, consider using a secure document sharing or transaction management platform.
• Use strong passwords that incorporate a combination of letters, numbers and symbols.
• Use two-factor (or multi-factor) authentication.
• Avoid using unsecured or public Wi-Fi.

Fannie Mae Survey Results Indicate Encouraging Outlook for Incomes and Housing

The number of participants who took part in the survey regarding Fannie Mae’s recent Home Purchase Sentiment Index® (HPSI) that reported “significantly higher household income” for 2016, rose by five points to 15 percent in January, while the portion of participants who reported it is “a good time to sell” a home increased by 2 points, from 13 to 15 percent.  The number of survey participants who reported home prices will increase, increased by seven points from 35 percent to 42 percent.  Overall, the index rose two points to 82.7, which represents a record high.

“Three months after the presidential election, measures of consumer optimism regarding personal financial prospects and the economy are at or near the highest levels we’ve seen in the nearly seven-year history of the National Housing Survey,” says Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae.

Though there are still a number of things to remain watchful of, including rising housing prices, low inventory levels, and policy changes that could affect the housing market, the results of this survey are encouraging overall.  

According to ATTOM Data Solutions, since 2012, the average median home price has grown 60 percent, while average weekly wages have grown 1 percent.  The ATTOM Q4 2016 Home Affordability Index dropped to its lowest level since the onset of the recession, with the average homebuyer needing 36.9 percent of their income to afford a median-priced home.  A higher number of participants expect incomes to increase, which would bring ease to this issue. 

“Any significant acceleration in housing activity will depend on whether consumers’ favorable expectations are realized in the form of income gains sufficient to offset constrained housing affordability,” Duncan says. 

With regard to mortgage rates, the portion of those surveyed by Fannie Mae who reported rates “will go down” in the next year was 55 percent, while the portion of those surveyed who reported it is “a good time to buy a house” was 29 percent.

Prime Time to Put a Home on the Market

Many factors can have an effect on the sale of a home, including the timing of when the home is listed.  According to a recent evaluation by Zillow, the best time of the year to list a home for sale in the United States is between May 1 and May 15.  The analysis results show that homes listed during this period of time typcially sell for a higher price and at a faster pace (9 days faster than the average for the nation overall). 

The May 1 through May 15 timeframe is the best overall time frame to list a home for sale in the United States, though this window of time varies for some metro areas.  For example, the ideal time frame for homes to be listed for sale in San Francisco, California is May 16 – 31; the ideal time for Miami-Fort Lauderdale and Tampa, Florida is March 1 – 15; and the ideal time for homes to be listed for sale in Baltimore, Maryland is April 1 – 15, during which homes for sale tend to sell approximately 21.5 days faster than average.

Zillow’s analysis also indicates that there are ideal days of the week for the initial listing of a home for sale.  Homes new to Zillow on Saturdays are generally viewed 20 percent more during their first week on the market than homes that are listed on Zillow earlier in the week. 

“With 3 percent fewer homes on the market than last year, 2017 is shaping up to be another competitive buying season,” says Dr. Svenja Gudell, Chief Economist at Zillow.  “Many homebuyers who started looking for homes in the early spring will still be searching for their dream home months later. By May, some buyers may be anxious to get settled into a new home – and will be more willing to pay a premium to close the deal,” Gudell adds.

These are some important factors to take into consideration for homeowners looking to list their home for sale, but also for buyers and residential real estate industry professionals across the nation. 

Reasons Why Families Choose Naples, Florida

Naples, Florida is widely known for its beautiful white sand beaches and its warm climate, yet there are a plethora of additional benefits to living in the area and families who already live in Naples or are looking to move there are more than aware. Some of the key benefits to living in Southwest Florida’s Naples include safety, dining, cleanliness, outdoor activities, architecture, year-round events, good schools, and employment opportunities.

The crime rate in Naples, Florida sits far below the national average. Reports indicate the crime rate in Naples is also approximately 86 percent lower than the Florida state average. The police officer to resident ratio is high as well, which helps to keep the crime rate low.

Some of the best dining options in the nation are located in Naples. Favorites include Osteria Tulia, The Grill at Ritz Carlton, Truluck’s and the Turtle Club.

When it comes to the cleanliness of Naples, the word pristine comes to mind. Litter-free roads, smaller signs, clean beaches, and meticulously landscaping all contribute to the overall beauty in this slice of paradise.

There is an abundance of outdoor adventure possibilities in Naples, including golfing, boating, fishing, snorkeling, parasailing, paddle boarding, and more. The warm and sunny weather draws people to enjoy the outdoors. And for those who want to enjoy a little bit of relaxation in the sun, the beaches are stunning from sunrise to sunset, with Naples offering some of the most vibrant, awe-inspiring and colorful sunsets.

Year-round events are also hosted in Naples, drawing residents to go out and about and drawing visitors to the area. Music and art festivals, a yearly seafood festival, craft beer festival and musical performances catering to those who follow all genres fill the area throughout all months of the year.

In addition to all of the above, Third Street South and Fifth Avenue South districts offer boutiques, various specialty shops and outdoor cafes, offering a multitude of shopping and dining options as well as dancing and other nightlife.

Naples was reported to be the happiest and healthiest city in the United States, according to Gallup-Healthways Well-Being Index in 2016, and it is easy to see why.

New Home Sales Increase Again for January

Reports indicate Americans purchased more new homes in January after a decreased number of new homes sales were reported during the prior month, indicating that the housing market is healthy despite higher mortgage rates.

New home sales increased by 3.7 percent to a seasonally-adjusted 555,000, the Commerce Department reported last Friday. That is 5.5 percent higher than one year ago.

Solid job gains and some signs of an increase in wages have helped to drive consumer confidence. More confident consumers are more likely to purchase homes. Sales of existing homes jumped to their highest level in a decade, according to data released early last week.

The solid sales have occurred despite an increase in mortgage rates since the fall.  In fact, the rising rates may be prompting some to purchase homes now, as many buyers could be accelerating purchases to get ahead of any further rate increases.

Financial markets are anticipating more rapid growth and higher inflation as a result of President Donald Trump's tax cuts and deregulation initiatives. This has pushed interest rates up on both the 10-year Treasury note and mortgages.

The average 30-year fixed mortgage rate was 4.16 percent last week, virtually unchanged from the prior week, but up from the 2016 average of 3.65 percent.

Low mortgage rates and a strong and steady job market have helped the housing market recover from the recession. Reports indicate, home prices on average nationwide have returned to their pre-recession peaks to some degree, yet homeowners are carrying less debt and have more equity ownership of their homes now than during the bubble, which helps to alleviate any fears of a repeat.

A limited inventory of homes available has helped increase prices, but there are signs that builders focused on the new home market will be addressing the inventory issue.

Though further increases in inventory are needed, there were 265,000 new homes for sale at the end of January, up nearly 11 percent from a year earlier and the most in nearly eight years.

February 2017 Southwest Florida Regional Economic Indicators Report

According to the Southwest Florida Regional Economic Indicators report for February 2017, prepared by Florida Gulf Coast University, Southwest Florida’s regional economy was generally strong in January. Positive trends included a three percent increase in seasonally-adjusted regional taxable sales from the prior year and a three percent increase in total airline passenger activity.

The seasonally-adjusted regional unemployment rate for the five county region held at 5.0 percent in December 2016. Seasonally-adjusted employment for the region increased by 2,807 from November 2016, while the number of unemployed decreased by 147. Compared to December 2015, employment increased by 11,957 and unemployment by 551.

Other highlights from this report include:

·        A 6-percent decrease in single-family home sales by Realtors® in December 2016 compared to December 2015, and a 7-percent decrease for the full year.

·        December-to-December increases in Consumer Price Indices exceeded 2 percent for the first time since 2011.

·        Single-family building permits were down 27 percent in the coastal counties from December 2015 to December 2016, however Hendry County issued 54 permits in 2016, which is three times the total recorded for all of 2015.

·        A month-to-month increase of 0.5 points in the Florida Consumer Sentiment Index for January 2017, to 97.8, while the national Index of Consumer Sentiment reached its highest level since February 2004.

The national Index of Consumer Sentiment rose 0.3 points to 98.5 from December 2016 to January 2017, maintaining a significant upward movement starting in October.  The January number was also 6.5 points higher than the number recorded in January 2016.  The January 27, 2017 issue of Survey of Consumers noted that, “Consumers expressed a higher level of confidence January than any other time in the last dozen years.  The post-election surge in confidence was driven by a more optimistic outlook for the economy and job growth during the year ahead as well as more favorable economic prospects over the next five years.”

The Florida Consumer Sentiment Index continued its upward trend, increasing 0.5 points to 97.8 in January 2017 compared to the prior month.  The January 2017 number was also 5.4 points higher than the 92.4 recorded for January 2016, marking the highest recording of the index for the state since March 2002.  “Perceptions of current conditions improved among Floridians in the last month as a result of the positive economic picture that prevailed in the state during the last year,” Hector H. Sandoval, Director of the Economic Analysis Program at University of Florida BEBR said in the January 31, 2017 issue of Florida Consumer Sentiment Index.  “Floridians are optimistic about their own finances.  The recent surge in the level of confidence comes from perceptions and expectations about Floridians’ individual financial situations.”