I think condo financing is the most critical component to help with the health of our housing market so I will continue to educate you on what is available for our clients. Attached is the FHA condo approved list. This means you can take your FHA buyer to these communities and not have to stress about the likelihood of securing financing. I will push out Supreme’s ever growing list of approved condos eligible for conventional financing next week.
The Dow Jones snapped a six day win streak, closing at ahead of the 3 day weekend, but still up around 1% for the week. The most meaningful economic data released was the 2nd reading of the 1st quarter GDP, which indicated that the US economy grew around 1.2%, which was slightly higher than the “first look” of GDP. We talk a lot about the Dow Jones, which hosts household blue chip companies, but the NASDAQ has performed even better the past 6 months, up over 20%. The NASDAQ hosts primarily technology companies.
The last month trading has been kind to the US Bond market, and in particular the Fannie Mae 3.5 instrument, which is what best translates to a home buyer’s mortgage rate. In the past 30 days the instrument as improved by about 50 basis points. This translates into about a .125% lower interest rate to the home loan borrower.
Local Real Estate Market
The most recent reports indicate that there is less than a 2 month supply of homes on the market and as we can all relate to, it is certainly putting pressure on the price of homes. Worse yet, prices for median priced homes have less than a 1 month supply. It is considered a balanced market, or equilibrium occurs, when there is a 6 month supply of homes on the market. This target can move quickly because it factors in not only how many homes are listed for sale but how many transactions took place the month before. Example, let’s say there were 12,000 homes listed for sale and there were 3,000 sales that took place, 12,000 divided by 3,000 = 4. This means we have a 4 month supply of homes…Let’s say the following month 13,000 homes get listed for sale and only 2,000 transactions take place…Voila! We have a 6.5 month supply of homes. We have a long way to go to get to equilibrium though and we are rapidly approaching dead center of the home buying season.
I hear all the time…“The housing market is hot right now you must be killing it”!! Values no doubt are hot. With April median priced homes reaching nearly $250,000, up nearly 3% from March and 13% from March of 2016…but the number of transactions year to date is not hot at all. In fact, there were over 10% less homes sold in April than in March. Enter stage left….the home builders. Home builders will be looking to take advantage of the housing shortage and help alleviate pressure on the supply side of the housing market.