This week Freddie Mac’s survey showed interest rates at 4.49% on the 30-year fixed, dropping below 4.5% for the first time. Further, the 15-year fixed dropped to 3.9%, falling below the key 4% mark.
I’m starting to see lenders quoting 30-year investment property loans below 5%. I think this marks a special time for investors to consider locking in long-term rates on investment properties like this.
This weeks rate drop is primarily due to downwardly revised GDP numbers that came out this week.
Lease2Buy.com, the top-ranked rent-to-own marketplace on the web, published a feature story today on the “Top Real Estate Investing Markets”. In the article, our senior housing analyst, Ryan Hinricher discussed the opportunity in the Memphis, Tennessee market.
Also covered (in no particular order) were Detroit, Orlando, St. Louis, and California.
Enjoy! Full Article | Podcast
Automatic Data Processing (known as ADP) reported today that private-sector employers added 42,000 jobs to their payrolls, marking 6 months of consecutive job gains. This follows an upwardly revised figure of 19,000 increase in June. The consensus was 25,000 jobs, with ADP reporting 17,000 more jobs than expected.
Although the growth is certainly slow, the ADP number excludes census or government jobs and focuses only on the private sector. Many see this as only a minor impact on the macro economy because of an estimated 300,000 that state governments are expected to terminate over the next 12 months to trim deficits.
Any job growth is better than no job growth.
This morning, the Mortgage Bankers Association released its latest numbers related to purchase and refinance applications. Purchase applications were up 1.5% over the prior week, marking 3 straight weeks of increases. This was largely driven by government purchases while conventional applications stayed relatively flat. The Purchase Index is now up 7.1% over 4 weeks ago but still nearly 34% lower than a year ago when the crisis was really setting in. Refinances were also slightly up, 1.3% from the prior week, leaving many wonder how many refinances are left in the market.
Looking forward, I doubt we’ll see much change here, though slight increases are dictating consumer confidence. Confidence breeds more confidence, which is why the economy is 60-70% consumption.
The National Association of Realtors reported that pending home sales declined 2.6% to 75.7 in June from an upwardly revised level of 77.7 in May. This is over 18% lower than June 2009 when it was 93. This of course is a future indicator of closings 30-60 days out. This decline was expected as we’ve seen sales drop considerably with the expiration of the home buyer tax credit.
“There could be a couple of additional months of slow home-sales activity before picking up later in the year, provided the job market continues to improve,” said Lawrence Yu, NAR chief economist. Further, Yun expects interest rates to remain low as do most economists. The Northeast and Midwest were the biggest drags on pending home sales showing drops of 12.2% and 9.5%, while the West showed only a slight decline of .2%, and the South showed a 3.7% gain.
Because of the home buyer tax credit, many home sales were pulled from future months to beat the deadline thus causing a peak followed by a large drop. Once the September closing extension passes, we should start to see an accurate picture of health of the housing market for the first time since the crisis.
- Ryan Hinricher, Founder, Senior Housing Analyst
