HOUSINGNEWS REPORT
PERSISTENT HOME PRICE APPRECIATION PRESSURES MARKET ORTHODOXIES
At the same time, the basic urge to own is likely to remain unchanged.
are higher and home prices are actually higher than in the U.S. as well.”
and also that they went down, so take your pick:
“Most of us are hardwired with the desire to own a home of one’s own,” explains Rob Chrane, the CEO of Down Payment Resource, a service which tracks more than 2,400 down payment assistance programs nationwide. “The triggers for homeownership have remained steady across generations: high rents, marriage, starting a family, community and other quality-of-life issues.” Chrane says the impact of tax reform may be less significant than many observers believe. “The loss of mortgage interest and local and state tax deductibility may affect those buying million-dollar homes, but there is lots of data on how many homeowners benefit significantly from the MID and it’s fewer than you would think. Homeownership rates in many countries without these tax benefits
Chrane also explained that “there are still many homebuyer programs that can help reduce the down payment and closing costs, as well as mortgage credit certificates that provide an annual tax credit of up to $2,000 for the life of the loan. In the wake of the tax reform changes, it will be important to increase the visibility of these options so borrowers know about the assistance they could be getting.” Will Mortgage Rates Rise? There is a substantial disconnect between the ability of the Fed to raise bank rates, something which is unquestioned, and the ability of the Fed to move the mortgage market, something which is not certain at all. The Fed raised bank rates three times in 2017 and the result in the mortgage marketplace has been mixed. It can be argued that as a result of Fed actions home financing costs went up in 2017
• Freddie Mac says the annual mortgage rate went from 3.65
percent in 2016 to 3.99 percent in 2017, a one-year increase of 34 basis points. • Freddie Mac also says weekly mortgage rates at year-end stood at 3.99 percent, that’s down from 4.32 percent at the end of 2016. For perspective, the long-term norm for mortgage rates is 8.60 percent. There’s no question that if rates today were in the 8-percent range, unit sales would be substantially reduced. Lawrence Yun, NAR’s Chief economist, estimates that for every 0.1 percent increase in mortgage rates 35,000 home sales are lost. Under new Chairman Jerome Powell, a Trump appointee, it’s widely predicted that the Fed will hike bank rates three
“Homeownership rates in many countries without these tax benefits are higher and home prices are actually higher than in the U.S. as well.”
ROB CHRANE CEO, DOWN PAYMENT RESOURCE
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FEBRUARY 2018 | ATTOM DATA SOLUTIONS
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