Tuesday, September 19, 2017

The Latest on Greenwich Mortgage Rates

A couple of weeks back, the ultimate authority on Greenwich mortgage rates hadn’t minced words. That was Freddie Mac, whose opinion about mortgage rates constitutes the final say in the matter. Freddie isn’t modest about its preeminence (Freddie’s trademarked corporate slogan is “We make home possible”). Together with sibling Fannie Mae, the quasi-governmental entities stand behind 60% of U.S. mortgages.

Each week their PMMS survey collects data snapshots from thrifts, credit unions, banks, and mortgage lenders to gauge of the direction of the home loan market. Future Greenwich home hunters and the homeowners whose properties are found in the current listings are constantly affected by those ups and downs.  Naturally, the rate averages vary from lender to lender and state to state—but it’s the direction in which mortgage rates are headed that can be a spur for buyers. Either direction can cause activity. When rates rise quickly, buyers can be incentivized to lock in rates before they get out of hand. When they fall, that inducement disappears—although a shrinking monthly payment number does create an increasingly affordable scenario. Low rates create an encouraging “price is up, but cost is down” situation.

The week before last, Freddie’s headline had been an unequivocal piece of favorable news for Greenwich buyers and sellers:

“30-Year Mortgage Rate Hits Another 2017 Low.”

But last week’s follow-up failed to live up to the expected slight rebound . Freddie’s headline on Thursday was neither fish nor fowl, up nor down. It was the third possibility, where mortgage rates don’t go anywhere: they just sit there, deadpan as a professional poker player, revealing nothing.

The U.S. weekly average was still 3.78%, tying the low for the year. For Greenwich  buyers who may have missed out on locking in the previous week’s home loan bargain rates, the reprieve was welcome news. Whether the expected rebound is on the way remains to be seen.  With rates holding at historic lows, it creates an undeniably auspicious market opportunity in Greenwich.

Monday, September 11, 2017

The 1-2-3-4's of Home Buying

What a simpler world it would be if Greenwich home buying could be reduced to a simple 4-Step process. Even better if those were four easy steps. Actually, without coming out and saying so, that’s the tantalizing prospect hinted at on radio financial guru Dave Ramsey’s website’s “Home Buying Process Made Easy.”   Ramsey is the likable media expert in household budgeting and financial planning. A good deal of his guidance could be summed up in just 2 steps:

1) Get out of debt (except for mortgage debt) as soon as humanly possible; then, 
2) Stay out.

203 Clapboard Ridge Farmhouse with Modern Addition
Since that’s not bad advice, the promise of home buying in 4 steps seems almost reasonable. After all, his millions of listeners have undoubtedly benefitted greatly through the years (once they’ve figured out a way to act on the advice).  And in fact, his 4 home buying steps are actually not far off-target—although I think they’re out of order:

1. Put your finances in order before home buying-- which should lead you to know what you can afford.
2. Do the cash flow math. Ramsey thinks your Greenwich home’s monthly mortgage payments should be no more than a quarter of your net income.
3. Get a home loan. Make this a 15-year fixed rate mortgage to minimize total interest paid.
4. Use a good real estate agent-  To make sure you are paying at or below fair market value and deal with any “unexpected home buying hurdles.”

Realistically, Greenwich home buying has a bit more involvement than these 4 steps and Step 4 should actually come after Step 2, and Step 3 (getting a mortgage) should come after you have zeroed in on your target Greenwich  home.

On a practical note: the 15-year mortgage structure automatically results in a higher monthly payment that, when combined with a 25% of net income budget cap, could yield an unrealistically limited budget target. Being financially conservative also means being realistic. A growing family, for instance, might find that they have wasted money if they have to move to a larger home after only a few years. 

Tuesday, September 5, 2017

Five Ways The Real Estate Marketplace Changes In September

New To The Market: 203 Clapboard Ridge, Renovated and Expanded Farmhouse $3.195 Million

A while back, Forbes noted what they called “The Four Ways the Real Estate Market Changes” after Labor Day. Between Labor Day and Thanksgiving, Fall's change of season alters the house hunting landscape.

In Greenwich, Forbe's  broad brush proposition that a great number of house hunters throw in the towel after Labor Day is simply not true, in fact, it is our second strongest selling season-- right behind the Spring market. I suggest that there are five market changes  supporting a healthy Fall selling season-- and reason to list your property now. 

1. More of a buyer’s market. Buyers who have held off through the prime Spring selling season are more apt to find sellers who are more open to negotiation. 
2. Action increases for second homes. This is prime time for out-of-towners to consider a home that puts them near New York City and the beach.  Greenwich has 28 miles of coastline and a spectacular beach, Tod's Point.  What's more, it's just 48 minutes by train or car to Manhattan.  Those who have battled the drive to the Hamptons all summer are discovering that Greenwich is a viable option for beach, luxury amenities, and quick access to the Big Apple.   
3. Price dips. House hunters find that asking prices, like the autumn leaves, fall.  Sellers who have been thinking of a price reduction and have held off during Summer, come back at Fall market time with a price reduction, hoping to make a sale before the holidays.  
4. Open-ended house hunting. Time pressures (like having to be moved in by the first day of school) will have vanished by Labor Day, so many Greenwich house hunters tend to adopt a more leisurely house hunting attitude. There may also be something about crisp autumn days (and they’ll be here soon enough) that helps contribute to a more relaxed atmosphere—at least until the holidays loom! 
5.     New Inventory.  Many savvy realtors hold back new inventory after Memorial Day, knowing the summer is the quietest season, and introduce properties right after Labor Day.  My team has 6 terrific new properties coming to the market in the next few weeks.  This means more choices and fresh selection for buyers.

Every Greenwich buyer has specific and individual goals and expectations—and of course, the same is true for sellers. But it does seem to be true that post-Labor Day, Greenwich listings tend to include an uptick in price reductions—as well as some withdrawals that, as Forbes might have it, “will sprout anew” come springtime.

If your busy summer included activities and travel that kept you fully occupied, now may be an opportune time to inaugurate or resume your Greenwich focus. And contact me if you would like to a pre-market glimpse of what our team has coming.