Home affordability took a slight hit this week after the Federal Reserve’s release of its August 10 meeting minutes.

The “Fed Minutes” is a lengthy, detailed recap of a Federal Open Market Committee meeting, not unlike the minutes published after a corporate conference, or condo association gathering. The Federal Reserve publishes its meeting minutes 3 weeks after a FOMC get-together.

The minutes are lengthy, too.

At 6,181 words, August’s Fed Minutes is thick with data about the economy, its current threats, and its deeper strengths. The minutes also recount the conversations that, ultimately, shape our nation’s monetary policy.

It’s for this reason that mortgage rates are rising. Wall Street didn’t see much from the Fed that warranted otherwise.

Among the Fed’s observations from its minutes:

• On the economy : The recession was deeper than previously believed
• On jobs : Private employment is expanding slowly
• On housing : The market was “quite soft” in June

Now, none of this was considered “news”, per se. If anything, investors were expecting for harsher words from the Fed; a bleaker outlook for the economy. And, because they didn’t get it, monies moved to stocks and mortgage bonds lost.

That caused mortgage rates to rise.

The Fed meets 8 times annually. Its next meeting is scheduled for September 21, 2010.  Until then, mortgage rates should remain low and home affordability should remain high. There will be ups-and-downs from day-to-day, but overall, the market is favorable.

According to the Standard & Poors Case-Shiller Index, home values rose 5 percent in June versus the month prior, and 4 percent from a year earlier.  It’s the 16th consecutive month in which Case-Shiller reported an increase in home values and the third straight month of outstanding results.

That said, homeowners and home buyers in Cincinnati would do well to temper Case-Shiller enthusiasm. The June figures are issued on 60-day delay and, over the last 60 days, housing data has been lackluster at best.

• Existing Home Sales are down 27 percent
• New Home Sales are down 12 percent
• Homebuilder confidence is down

Stories like these highlight a key weakness of the Case-Shiller Index — it’s out of date as soon as it’s published. Because of this, the Case-Shiller Index relevance to everyday Americans is muted. People don’t buy homes in the “60 days ago” real estate market, after all.

June is ancient real estate history to buyers and sellers in Mt Lookout.

However, the Case-Shiller Index does have its place. As the most widely-followed, private-sector housing tracker, the index is used to help make policy decisions and to shape Wall Street’s expectations of the economy. This means that a strong Case-Shiller reading can cause mortgage rates to rise, and a weak Case-Shiller reading can cause rates to fall.

Tuesday, mortgage rates fell.

Mortgage rates are low right now but pinning them down this week could be a challenge. As Labor Day Weekend nears and Wall Streeters take their head-start on the holiday, trading volume will fall, which will cause mortgage rates in Ohio to get jumpy.

As mortgage rates change, so does the long-term cost of owning a home. Every 1/8 percent adjustment changes a household budget.

Meanwhile, the relationship between “vacation days” and mortgage rate volatility is an interesting one; based more in scarcity than market fundamentals.

Rates tend to get volatile near holidays because of two inter-related facts:

1. Conforming mortgage rates are based on the price of mortgage-backed bonds
2. Mortgage-backed bonds can’t trade without a buyer and a seller at a specific price

So, as the week progresses and more traders leave for their respective “extended” 3-day weekends, there’s fewer buyers and sellers left on Wall Street to connect for a trade.  As a result, mortgage bond prices move across larger gaps than on a “normal” day which, in turn, translates into faster, larger changes in rates.

This phenomenon can be exaggerated during periods of economic uncertainty — like what we’re in now — and, furthermore, there’s a bevy of important data set for release this week including the FOMC Minutes, inflation data, and August jobs figures.

In other words, rates would have been volatile without the vacation week. The presence of Labor Day just piles on.

Mortgage rates may rise this week, or they may fall.  Either way, if you have a chance to lock something favorable and within your budget, consider doing it.  Rates are at all-time lows and likely won’t last.

With Labor Day looming, the autumn and winter months aren’t far behind. It’s a good time to reflect on your home’s heating and cooling costs, and take steps to lower your energy bills. Finding air leaks may be a perfect first project.

According to the U.S. Department of Energy, up to 30 percent can be cut from a home’s energy costs just by reducing drafts. For example, a 1/16-inch gap unsealed gap around a window is equivalent to leaving the window 3 inches open. 

That’s a lot of wasted Cincinnati air.

The good news is that air leaks are rather simple to identify, and simple to fix. The key is to know where to look. And, to make the job easier, the government offers a complete DIY Guide To Sealing and Insulating a home.

Some of the key tips include:

• Focus on the attic and basement, where most air is lost
• Locate problem areas on a chimney
• Check recessed lights which allow air flow between conditioned and unconditioned air

The government’s website also provides a 13-page PDF with detailed images, instructions, and recommendation to help you with the work.

However, if the job is beyond your skill set, be sure to call a qualified contractor. Sealing your home from air leaks will reduce your monthly energy bill and the money spent to pay a professional will be just a fraction of what you’ll save over time.

(Image courtesy: US Department of Energy)

With home prices holding firm and mortgage rates still dropping, home affordability is reaching new heights.

According to the quarterly Home Opportunity Index as published by the National Association of Home Builders, more than 72 percent of all new and existing homes sold between April-June 2010 were affordable to families earning the national median income.

It’s a slightly higher reading as compared to last quarter, and the second highest reading in the survey’s history.

As with all aspects of real estate, however, home affordability varies by locale. 

For example, 97.2% of homes sold in Syracuse were affordable for families making the area’s median income, earning the New York city its first “Most Affordable Major City” designation.  Indianapolis was the first quarter winner.

On the opposite end of the spectrum, the “Least Affordable Major City” title went to the New York-White Plains, NY-Wayne, NJ area for the 9th consecutive quarter.  Just 19.9% of homes are affordable to families earning the local median income, down 1 percent from last quarter.

The rankings for all 225 metro areas are viewable on the NAHB website but regardless of where you live, buying a home is as affordable as it’s ever been in history. Furthermore, because home values are in recovery and mortgage rates may rise, the market is ripe for home buyers in Mt Lookout.

All things equal, buying a home may never be this inexpensive again. If you were planning to purchase later this year, you may want to move up your time frame.

One day after the National Association of Realtors released the softest Existing Home Sales report since 1995, the U.S. Census Bureau released a similarly-weak New Home Sales report.

Americans bought just 276,000 newly-built homes in July. That marks the fewest units sold since the government started keeping records in 1963.

In addition, although new home inventory actually dropped 2,000 units in July, the slowing sales pace still managed to push the national supply higher by 1.1 months.  At July’s rate of sales, the nation’s new home inventory would be exhausted in just about 9 months.

None of this news should surprise you, though. It’s all been foreshadowed for weeks.

First, Single-Family Housing Starts have dropped in every month since April.  A “housing start” is a when a home starts construction and, because fewer homes are under construction, we should expect fewer homes to be sold.

Second, Building Permits are down.  The number of new permits peaked in March and have fallen 23 percent since.

And, lastly, home builder confidence ranks at its lowest levels since early-2009. A contributing factor in that pessimism is dwindling buyer foot traffic.

Regardless, there’s two sides to the story. Although the New Home Sales data looks bad for builders, it can be terrific  for you. This is because new homes are more likely to be discounted when the sales cycle favors buyers.

Coupled with ultra-low mortgage rates, the cost of buying a newly-built home in Cincinnati may have just become cheaper.

Here are some of the numbers on Cincinnati Hyde Park real estate sales:

• Units sold increased by a whopping 35% year-over-year (!)
• Median sales price decreased by 4.9% year-over-year
• The most popular market segment for home sales continues to be between $200k and $300k

So what factors are driving these numbers? Be careful not to state the housing slump is over based on that first number… home sales in Cincinnati’s Hyde Park real estate market saw a massive surge in sales (18 more units than this time last year!) between 200k and 300k – a direct result of the first time buyer tax credit. Remember that the credit mandated buyers close by 6/30/10 … the last day of the second quarter of this year.

Seeing a 4.9% loss in value year over year may come across as depressing, until you see it from a higher perspective: Cincinnati real estate in general has lost ~10% of its value in the past 12 months. That fact that Cincinnati Hyde Park Real Estate only saw half that much depreciation is testament to its excellent location, lifestyle and long-term value proposition. Which is why we love helping people move into and out of it!

Interested in learning more about Cincinnati Hyde Park Real Estate or just checking out what homes are on the market right now? Search Cincinnati Hyde Park Real Estate for free on our website!

Love data? Check out the additional information on recent sales activity in the Cincinnati Hyde Park real estate market. Thanks! ~Team Chabris

The number of home resales plunged by 1.4 million units in July, according to the National Association of Realtors®’ Existing Home Sales report.

It’s a drop of 27 percent from June; single-family home resales are at the report’s lowest levels since May 1999.

Furthermore, because of the sharp drop in sales volume, home inventories are spiking.

Homes for sale nationwide fell just short of 4 million units in July and, at the current sales paces, it would take 12.5 months for the existing inventory to be absorbed.

Home supply was just 8.9 months in June.

For home sellers in Cincinnati , the Existing Home Sales report is a bit of bad news.  Fewer sales and larger inventories put negotiation leverage in the hands of the buyers which, in turn, creates downward pressure on home prices.  It may also increase time-on-market.

For home buyers, however, the data is decidedly welcome. After a stimulus-driven spring buying season that favored sellers, the summer and early-fall market seem to favor buyers. More choices and more leverage is a positive.

It helps that home affordability is up, too. 

Although there’s reports that home values are rising, their modest gains are more than countered by the ongoing rally in mortgage rates. Freddie Mac says that 30-year fixed rate mortgage rates are at their lowest levels in history and, at today’s rates, every one-eighth drop in mortgage rates roughly offsets a 1.5% increase to home price.

Mortgage rates are down 0.75 percent since mid-April.

The tightening in mortgage-lending policies that characterized the last 3 years appears to be slowing.

According to the Federal Reserve’s quarterly survey of senior bank loan officers, roughly 1 in 10 lenders added mortgage qualification hurdles between April and June. It’s a huge departure from just 2 years ago when the mortgage industry was facing its first wave of challenges. 

During that period, eight in 10 lenders added hurdles.

For mortgage applicants in Cincinnati , this quarter’s Fed survey results signals that mortgage lending may have reached its limits of restriction.

Since 2007, mortgage guidelines have become increasingly restrictive. There’s extra scrutiny on assets and tax returns; employment history is given more weight; loan purpose matters.  There’s a bevy of traits that can stand between you and an approval that didn’t exist a few years ago.

That said, lots of homeowners are still getting loans.

Verifiable income, good credit scores and equity are the “magic formula” and banks want to lend to good credit risks. And the best news for those that qualify is that mortgage rates are fantastic right now.

According to Freddie Mac, mortgage rates are as low as they’ve been in history.

So, if you’re among the many wondering if now is the right time to buy a home — or refinance one — remember that, although mortgage guidelines likely won’t get worse, mortgage rates probably will.

Over time, the grout in a shower can become dirty and discolored, and start to separate from its grout lines. This is a potentially dangerous condition for a home because broken grout lines allow water to seep into the walls, which can then lead to the growth of mold spores.

Fortunately, keeping your grout in tip-top shape is simple.

In this 2-minute video, you’ll learn how to clean the existing grout in your shower and to prepare for a new coating. You’ll also learn how to replace its caulk.

The video’s tips include:

• Why you should remove excess grout diagonally with a sponge
• How to protect your tub from damage while the re-grout is in process
• Choosing the right caulk for the job

The North American Tile Cleaning Association also offers helpful grout-cleaning advice. Visit their website at http://www.tilecleaning.org.

Another week, another new low for conforming mortgage rates.  In fact, this week marks the 9th time in a row it’s happened.

Mortgage rates are (again) at their lowest levels in history.

The data comes from the Freddie Mac, a government group and major loan securitizer for the U.S. mortgage market. Freddie Mac’s weekly survey is among the most widely-cited reports on mortgage rates and is the data used in home affordability models, among other statistics.

The 30-year fixed rate is averaging 4.42% nationally with an accompanying cost of 0.7 points. 1 point is equal to 1 percent of the loan size.  This week’s reported rate is lower by 0.02 percent from last week, and lower by 0.70 percent from one year ago.

On a region-by-region basis, though, “average” 30-year fixed mortgage rates are different.

• Northeast : 4.44 with 0.6 points
• Southeast : 4.44 with 0.8 points
• N. Central : 4.42 with 0.4 points
• Southeast : 4.46 with 0.5 points
• West : 4.35 with 0.8 points

But this isn’t to say that mortgage pricing is better in, say, California as compared to Florida. Note that the West Region — with the lowest average rate — has the highest required points.  This is because mortgage rates and mortgage fees move in opposite directions.  The type of low-rate/high fee structure common in the West may be right for some home buyers and would-be refinancers, but may not be right for others.

What’s important to remember is that, as a rate-shopper in Ohio , it’s always your choice on how your loan is structured. Banks offer multiple set-ups — with or without points — to meet every applicant’s budget.

As mortgage rates continue to slide and touch new lows, it’s an excellent opportunity to see what your lender can do for you. Low rates won’t last forever.

How much does a mortgage cost? The answer depends on where you live. But no matter which your locale, chances are strong that you’ll pay more for a mortgage in 2010 as compared to 2009.

According to Bankrate.com and its annual Closing Cost Survey, a typical $200,000, purchase mortgage now carries an average $3,741 in closing costs — up nearly 37 percent from last year.

As defined by Bankrate.com, “closing costs” is defined as the sum of two numbers.  The first group is labeled “origination charges”, a category that includes such items as underwriting fees, application fees and processing fees.  These fees are paid directly to the loan originator’s company at the time of closing.

The second grouping of costs is labeled “third-party fees”.  Third-party fees include appraisals, credit reports, settlement fees and title searches — items paid in connection with the loan, but not paid to the lending bank or broker.

It’s unclear why closing costs appear to have escalated into 2010, but Bankrate.com suggest that recently-enacted federal lending laws are a culprit:

1. The new law requires loan officers to be accountable to a Good Faith Estimate’s accuracy. Bankrate.com’s prior-year surveys may have been “understated”, therefore, because of a lack of accountability.
2. The cost of federal compliance is high, and banks may be passing on compliance costs to consumers

To see the complete list of closing costs by state, including where Ohio ranks, visit the Bankrate.com website.

Sometimes, you need to look deeper than the headlines to get the news that matters. This basic truth’s latest example comes from the July Housing Starts data, as published by the U.S. Census Bureau.

According to the newspapers, Housing Starts improved last month:

• US Housing Starts Make Modest Rebound (FT)
• Housing Starts Rise Slightly (MoneyWatch)
• Housing Starts Tick Higher In July (MarketWatch)

However, these stories are speaking in terms of all housing starts — not just the single-family ones. This is a major point of difference for home buyers in Cincinnati because the most people don’t buy the multi-unit homes and apartment buildings that’s also a part of the Housing Starts data. 

The overwhelming majority of buyers buy single-family homes and in July, as in the previous 3 months, the number of single-family housing starts fell.

In fact, single-family housing starts are down by nearly 25 percent since April and are now at their lowest levels since May 2009.

This is a much different message from the headlines above.

It’s not surprising that single-family housing starts are down; builder confidence is down as well and the two metrics tend to trend in the same direction.

Furthermore, building permits for single-family homes fell in July, too.

As a home buyer, the drop in Housing Starts should help reduce housing inventory in the months ahead.  This may lead home prices to rise because home values are based on supply and demand.  For home sellers, falling starts should help reduce competition for buyers.

Each real estate market is unique and supply levels will vary from ZIP code to ZIP code. For up-to-the-minute inventory levels, make sure to talk with your real estate agent.

Home builder confidence in the newly-built, single-family housing market is down for the third straight month this month.

After reaching a 3-year high just 90 days ago, the National Association of Homebuilders’ Housing Market Index is now at a multi-year low. It’s since dropped by almost half.

As an economic indicator, the HMI’s goal is to “take the pulse of the single-family housing market”. It surveys home builders across the country and asks them to report on 3 facets of their business:

1. How are market conditions today?
2. How do market conditions look 6 months from now?
3. How is the prospective traffic of new buyers for new homes?

Responses are then collated, weighted, and presented as the Housing Market Index.

The August HMI reading of 13 is the lowest since March 2009.

Not surprisingly, the main reasons why HMI is down echo the main reasons why consumer confidence is down. Jobs growth continues to be weak; credit guidelines remain restrictive; and, home values are recovering slowly, pressured by distressed properties.

Builders report watching foot traffic stagnate and most likely won’t want to be stuck with excess inventory into the fall and winter months.  For home buyers in Cincinnati , drops in builder confidence like this can be an excellent negotiation tool.

Builders may be more likely to offer incentives and/or price reductions into an uncertain economy, as compared to a strong one. Furthermore, weakness in home building indirectly drags mortgage rates lower. 

This one-two combination can make for cheaper homes with cheaper monthly payments.

Sometimes, a backed-up sink is too big of a job for a bottle of Drano. To clear the clog, you have to get your hands dirty. But what do you do?  This quick, 2-minute video from Lowe’s is an excellent tutorial.

The video starts with basic safety preparation, then shows you how to:

1. How to identify the J-trap beneath your sink
2. Position a plastic bucket to catch water run-off
3. Use your finger to clear out debris
4. Replace the J-trap beneath the sink

Unclogging a sink can be simple homeowner project, but if you’re uncomfortable working with plumbing or just want to outsource, be sure to call a professional.