The Real Estate News Brief: Growing Demand for ARMs, The 7-Year Foreclosure, Top Complaints about Neighbors

The Real Estate News Brief - Week Ending April 30, 2022; Growing Demand for ARMs, The 7-Year Foreclosure, Top Complaints about Neighbors In this Real Estate News Brief for the week ending April 30th, 2022... you’ll hear about the surging demand for adjustable-rate mortgages, the years it takes to foreclose in some states, and the top reasons people dislike their neighbors. Hi, I'm Kathy Fettke and this is Real Estate News for Investors. Before we start, I want to let you know that we are hosting our first live event in over 2 1/2 years on May 21st in St Petersburg Florida. I'll be there giving my 2022 Housing Update, and we'll also have property teams from 10 different markets to update us on what's going on in their markets and share available income properties. We'll also have a tour of rental properties in St Pete on Sunday and then Jacksonville on Monday. Check it out at newsforinvestors.com Economic News We begin with economic news from this past week, and more concerns about inflation. The Federal Reserve’s preferred inflation index rose again in March to an annual rate of 6.6%. That’s up from an annual rate of 6.4% in February. But there are signs that inflation may be hitting a peak because the core rate of inflation went down for the first time in a year. The core rate excludes food and energy and decreased from 5.3% to 5.2% in March. The Fed believes the PCE is more accurate than the consumer price index or CPI because it’s more comprehensive. (1) Despite all the worries about inflation, the job market is going strong. Initial claims were down 5,000 to just 180,000 last week. Continuing claims were also down to their lowest level since 1970, at approximately 1.41 million. (2) Rising mortgage rates are putting a damper on new home sales. The Census Bureau says that sales dropped 8.6% in March to an annual rate of 763,000. High prices are also discouraging buyers. The median price for a new home was $436,700 in March. That’s about $77,000 more than it was in March of last year. (3) Pending home sales for existing homes were also down in March. The National Association of Realtors says they dipped 1.2%. It is predicting that sales will be down a total of 9% for the year. NAR’s chief economist Lawrence Yun expects multiple offers to disappear, and calmer, more normal conditions to replace the homebuying frenzy we’ve been witnessing. (4) Because demand remains high for housing, home prices continue to rise. The S&P; CoreLogic Case-Shiller 20-city index was up 2.4% in February. That brought the annual rate up to 20.2%. At a national level, annual home price growth rose to 19.8%. The Federal Housing Finance Agency reported similar results. It shows that home prices rose 19.4% year-over-year in February which was a 2.1% increase from January. (5) There are mixed reports on consumer sentiment. A survey on consumer confidence shows it dipped slightly in April because of inflation. But it also shows that consumers are still spending money on big-ticket items, despite the high prices. (6) Meantime, the University of Michigan’s consumer sentiment index jumped higher by several points. Consumers are reportedly happy that gas prices have gone back down a bit, and are feeling more optimistic about the future. (7) Mortgage Rates Mortgage rates didn’t move much, but the average 30-year fixed-rate mortgage remains above the 5% level. Freddie Mac says it was down just one basis point to 5.1%. The 15-year was up 2 points to 4.4%. (8) In other news making headlines… ARMs In High Demand as Fixed Rates Rise More home buyers are choosing adjustable-rate loans to keep mortgage payments lower at the beginning of their loan term. The Mortgage Bankers Association says demand for ARMs has “doubled” compared to three months ago The interest rate for an ARM was 3.78% last week, according to Freddie Mac. The Mortgage Bankers Association says the average rate for a 5-year ARM was 4.28%. Both are lower than the 30-year fixed rate, and that’s driving up demand. (9) The Lengthy Process of Foreclosure Buying a foreclosure might get you a great price on a home, but in some places, the length of time it takes to foreclose could eclipse any monetary value. ATTOM Data Solutions published a report on the states with the longest average times to foreclose, and the winner was Hawaii, at 2,578 days. That’s a little longer than 7 years. Louisiana, is second on the list with an average of about 2,000 days or 5.5 years. Other states on the top ten list include Kentucky, Nevada, Connecticut, New York, Florida, New Jersey, Pennsylvania, and New Mexico. New Mexico was last on the list but foreclosures there still take more than 3.5 years. (10) At the other end of the spectrum are states with the fastest foreclosure process. Montana came out at the top of that list, at 133 days. Mississippi was second at 146 days, and West Virginia was third at 197 days. What’s Up with the Neighbors? The last story I’d like to share with you is a report on the top reasons Americans don’t like their neighbors. According to a Lending Tree survey, 28% of the participants said their neighbors “give off a weird vibe.” Other reasons include noise levels, rudeness, disruptive pets, being nosy, and unruly kids. Some people also said they don’t like it when their neighbors have guests that park in front of their house, or their parking space. Smoking was listed by 11% of the people. 4% said they had issues with their neighbors’ political views, and 3% said they were not happy that their neighbors were using their homes as short-term rentals. (11) It’s interesting that so few people listed short-term rentals as a problem, given all the controversy about how much disruption they cause, or don’t cause. Of course, it’s often the case that people who are disgruntled about an issue will speak out more loudly than the ones who don’t mind. That’s it for today. Check the show notes for links. And please remember to hit the subscribe button, and leave a review! You can also join RealWealth for free at newsforinvestors.com. As a member, you have access to the Investor Portal where you can view sample property pro-formas and connect with our network of resources, including experienced investment counselors, property teams, lenders, 1031 exchange facilitators, attorneys, CPAs and more. Thanks for listening. I'm Kathy Fettke... Show Notes link: https://www.newsforinvestors.com Join link: https://join.realwealth.com/?utm_content=Real%20Estate%20News%20Podcast&utm;_campaign=Join%20for%20Free&utm;_term=Description%20Text%20Link Subscribe link: https://podcasts.apple.com/us/podcast/real-estate-news-real-estate-investing-podcast/id1079952715 Links: 1 - https://www.marketwatch.com/story/coming-up-pce-inflation-index-and-consumer-spending-11651234498?mod=economy-politics 2 - https://www.marketwatch.com/story/u-s-jobless-claims-fall-5-000-to-180-000-showing-momentum-continues-in-labor-market-11651149515?mod=home-page 3 - https://www.marketwatch.com/story/new-homes-are-likely-a-viable-choice-for-fewer-first-time-home-buyers-new-home-sales-dip-as-affordability-worsens-11650982695?mod=economic-report 4 - https://www.marketwatch.com/story/the-spring-housing-market-is-off-to-an-unpredictable-start-pending-home-sales-fall-amid-rising-mortgage-rates-11651068612?mod=search_headline 5 - https://www.marketwatch.com/story/it-will-take-time-for-surging-mortgage-rates-to-rebalance-the-market-home-prices-are-still-skyrocketing-but-buyers-could-see-relief-soon-11650979422?mod=economic-report 6 - https://www.marketwatch.com/story/consumer-confidence-slips-in-april-but-americans-arent-cutting-back-on-spending-11650982322?mod=economic-report 7 - https://www.marketwatch.com/story/consumer-sentiment-jumps-in-april-on-lower-gas-prices-and-more-optimism-about-the-economy-11651241527?mod=economy-politics 8 - https://www.freddiemac.com/pmms 9 - https://magazine.realtor/daily-news/2022/04/28/demand-doubles-for-arms 10 - https://magazine.realtor/daily-news/2022/04/26/where-foreclosures-could-take-years-to-process 11 - https://magazine.realtor/daily-news/2022/04/27/why-75-of-americans-say-they-don-t-like-their-neighbor