Purchase mortgage apps defy surging rates

Mortgage applications increased 4.2% from the prior week, propelled by borrowers’ demand for purchase loans

Despite mortgage rates reaching the highest level in 14 years, mortgage applications increased 4.2% from the prior week, according to the latest Mortgage Bankers Association (MBA) survey for the week ending June 17.

“Mortgage rates continued to surge last week, with the 30-year fixed mortgage rate jumping 33 basis points to 5.98% – the highest since November 2008 and the largest single-week increase since 2009,” Joel Kan, associate vice president of economic and industry forecasting for the trade group, said in a statement. 

Rates for mortgage loans were strongly impacted by tightening monetary policy to combat rising inflation. On June 10, the U.S. Consumer Price Index showed an 8.6% increase year-over-year in May, the highest level in four decades. Consequently, the Federal Reserve raised the federal funds rate by 75 basis points last week, a rate hike not seen since 1994. Another 0.75% hike is expected from the Fed’s meeting in July.

With mortgage rates now at almost double what they were a year ago, refinancing applications decreased 3% from the prior week and were 77% lower than the same week in 2021. Refis were 29.7% of total applications last week, decreasing from 31.7% the previous week, the survey shows.

Meanwhile, the seasonally adjusted purchase index ticked up 8% from the prior week but was 9.4% down from the same week a year ago. According to Kan, purchase applications increased for the second straight week, driven mainly by conventional applications. 

Higher rates usually cool off prices, and Kan noted a potential trend in this week’s data. “The average loan size, at just over $420,000, is well below its $460,000 peak earlier this year and is potentially a sign that home price growth is moderating,” the economist said. 

The adjustable-rate mortgages (ARM) share of applications jumped to over 10.6%, demonstrating continued popularity among borrowers. The average interest rate for a 5/1 ARM rose to 4.78% from 4.57% a week prior, according to the MBA

The FHA share of total applications increased to 12% from 11.8% the week prior. Meanwhile, the VA share went from 11.7% to 10.7%. The USDA share of total applications declined to 0.5% from 0.6% the week prior. 

The trade group estimates the average contract 30-year fixed-rate mortgage for conforming loans ($647,200 or less) increased to 5.98%, from 5.65% the previous week. For jumbo mortgage loans (greater than $647,200), it went to 5.49% from 5.25%.

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13 Visual Tricks Home Stagers Are Playing on You

In today’s ultracompetitive real estate market, it’s said that potential buyers make up their minds within seconds of stepping inside a home.

Thats why an ever-growing number of sellers turn to professional home stagers—whose services, some say, can add instant appeal and even sell a house up to 40 days faster.

Their secret? An arsenal of optical illusions and psychological tricks that draw buyers’ eyes to all the right places. Yep, that’s right. Home stagers are fooling us! (And we love it). Here are some of the secrets of the dark art.

1. They never leave a room empty

Any home seller’s top goal is to make a small space look bigger. (Serious about selling? Here’s how to find a real estate agent in your area.) To get that look, you might be tempted to empty out the space and remove all your bulky furniture. But there’s a twist: Emptiness can actually make rooms look smaller.

Instead, professional stagers manipulate your visual perception of a room through the use of the right kind of furniture, says psychologist Kristie Barnett, author of “Psychological Staging: The Home Staging Secrets of the Decorologist.”

“An empty room gives buyers no point of reference for size,” Barnett says. “I have seen many buyers walk away from a vacant home because they falsely believe their own furniture will not fit in the master bedroom or that the living room will not provide enough seating for entertaining. Staging rooms with furniture helps establish the room’s size and helps a buyer visualize how they can arrange their own furniture.”

2. They really think about furniture placement

“We scan a room from left to right upon entry,” Barnett says. “If you place the tallest piece of furniture in the room in the far left corner, the room will appear larger.”

Placing a large or tall piece of furniture on either side of an entryway or door makes a room appear smaller, according to Barnett, while placing such pieces farther back in a room makes the space appear larger.

3. They use the ‘Rule of Three’

Interior designers swear by this golden rule of home staging, which involves grouping items—from chairs to lighting to artwork and accessories—in threes (or fives or sevens or nines).

According to Whitney Parrott, lead designer at Everything Creative Designs in San Diego, arranging items in odd numbers forces the eye to move around a space and makes the overall experience more natural and visually rich (compared with the forced feeling you might get from even numbers).

4. They highlight focal points

Walk into any well-staged home, and you’ll notice great accent accessories positioned near a room’s best attributes. For example, a grouping of (three!) vases near a gorgeous fireplace or a large plant near a window with a view. Stagers also frequently position furniture at an angle to facilitate better movement in a square or skinny room, or to highlight existing focal points.

5. They create cozy conversation spaces

Prospective buyers want to socialize in a home’s common areas without moving chairs. Plus, placing furniture in conversational groups (think a love seat and two chairs) makes rooms feel larger.

In long rooms, consider creating two separate chat areas and delineating them with area rugs to create the illusion of more space. (Pro tip: Using just one rug that’s too large actually makes a room look smaller.) The back of a couch can also be a great divider between rooms in an open floor plan.

6. They don’t overdo it with rugs

“Unbroken floor space makes any room appear larger, which is why I recommend removing most rugs (except to anchor a conversation area), bed skirts, and items off the floor of closets,” Barnett says. She likes using furniture with long legs to further the effect.

7. They use consistent color to make rooms flow

Weaving the same pops of color throughout your home allows your space to flow cohesively from one room to the next, according to Parrott. Incorporate similar hues across rooms in pillows, artwork, and accessories. Generally, stagers recommend dedicating 60% of a room’s space to a single color, 30% to a secondary color, and 10% to an accent.

8. They let mirrors create the illusion of space

Hanging curtain rods just below the ceiling (as opposed to above the window) adds the illusion of height to an otherwise average-size room.

Read more on Realtor.com

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How Many Moving Boxes Do I Need?

The amount of moving boxes you’ll have factors heavily into any quote a moving company will give you.

So in order to save you from my procrastination-induced panic, here’s a guide to knowing what you’ll need, with advice from the professionals.

What types of boxes will you use?

The types of boxes you’re going to need really depends on what you already have to use and what kind of stuff you need to move. Before you do anything, declutter and get rid of everything that’s not moving with you. Then, “look around your home to see what you already have to pack in, like suitcases, canvas bags, and more,” says Jodi Farbish, Common’s Chief Move-In Officer. “This will help save the numbers of boxes you need.”

For breakables and things that could be water damaged, consumer trends expert at Opendoor Beatrice de Jong suggests using plastic bins instead of boxes. “I find that plastic bins get the most reuse, especially if you have kids that are constantly growing out of clothes, or bringing home keepsake crafts from school you want to save,” she says.

You can also get special boxes for your television, your clothes, and your picture frames, which will overall reduce the amount of boxes you need, because they have specialty uses. Try not to get any boxes from the moving company. They can bring them on moving day, but it’ll be more expensive and you’ll be left scrambling at the last minute to pack things that you really should already have boxed up.

Is there a secret formula movers use to determine the amount of boxes?

As you probably expected, there’s not.

“Unfortunately, there is no magic formula, and sometimes movers need to actually see your home to get a proper idea,” de Jong says. Most reputable moving companies will want to do a walkthrough of your property first, so they may be able to estimate based on their own experience. But overall, there’s no real way to know for sure.

So how do you know how many boxes to use?

See if you can make an estimate by looking around your house, and then get more than what you think you need. It’s always better to have too many and not use some than to have too little and be scrambling at the last minute. If you really need a guide, de Jong suggests budgeting for 10 boxes per room, at least to start. “Even if they aren’t all used in one room, they will get used eventually,” she says.

Read more.

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31 Little Ways to Save for a Down Payment This Month

There’s a meme going around that says something like, “I unsubscribed from Netflix and have been packing my own lunch; should be able to afford a house any day now!”

This is exactly the type of zinger that resonates with today’s generation of homebuyers. Home prices are at record highs, and factors like student loan debt, salaries not keeping pace with inflation, and high rent prices all make saving for a down payment really difficult.

To put it another way? It’s passé (and laughable, really) to tell anyone that skipping an iced coffee run here and there will magically translate to a down payment fund in this unprecedented market. But if you are looking to put some money aside for a down payment, here are 31 smart strategies that can help — one for each day of the month — and none of which are a cliché attack on avocado toast.

1. Save your tax return (and other windfalls).

If you’re getting a tax return back, stash it away in savings or use it to pay down any high-interest debt (which can be the archnemesis of savings!), recommends Nathan Grant, a senior credit industry analyst with Money Tips, a personal finance site. You can also plan to put away any other money that comes your way, like one-time performance bonuses at work.

2. Spend your credit card rewards.

If you have cash-back rewards, sign-up bonuses, or any other credit rewards sitting on your card, consider cashing them in as statement credits to pay off your balance and free up money for savings, Grant says. Or, cash them out and transfer them to savings directly, he recommends.

3. Round up your purchases.

“There are more apps than ever before that can give you more control over your finances,” Grant says. Set up automatic deposits, he suggests, or use a banking app that allows you to round up your purchase to the nearest dollar. Bank of America has a “Keep the Change” savings program that rounds up to the nearest dollar when you make a purchase, transferring the change to your savings account. Or, an app like Acorns will invest your spare change.

4. Crowdfund.

When your birthday or the holidays roll around, family and friends can contribute to your down payment fund on sites like HomeFundIt. Some couples are asking for down payment contributions instead of gifts at their weddings.

5. Consider savings bonds.

For example, the Series 1 Savings Bond is currently offering 7 percent interest, which is much higher than any other savings account on the market, says Danetha Doe, Clever Real Estate’s economist and spokesperson, as well as the creator of personal finance site Money & Mimosas. 

6. Limit your spending to one day a week.

Choose one day per week that you will do your grocery shopping, and any other shopping, Doe suggests. “This will help you practice money mindfulness and eliminate impulse spending,” she says.

7. Name your savings account.

Some banks will let you name certain accounts, which can be motivating to see money piling up in your “first home fund.” 

8. Find a money buddy.

Find a friend who is also working on a savings goal, and hold one another accountable, Doe suggests. “Financial goals, like fitness goals, are easier to achieve if you have someone in your corner rooting for you.”

9. Flip furniture.

If you own a van or truck, there is a good chance you can make some extra money to save by finding used furniture, cleaning it up, and reselling it, says Adam Sanders, director and business coach at The Relaunch Pad, an organization that helps hard-to-employ individuals find financial success. There is a constant stream of used furniture being sold on Facebook Marketplace, Craigslist, and other local classified services. 

“Spending a little time every day going through the listings can be a great way to find great deals that you can clean up,” he says. “With a little elbow grease and knowledge, you can take scruffy furniture and resell it for hundreds more than you bought it for.”

10. Continue “paying off” your debt.

Say you recently paid off your credit card, car loan, student loans, or other type of debt. Figure out what you were paying toward that debt each month, and automatically transfer it to your savings, suggests Rick Albert, a real estate agent with LAMERICA Real Estate in Los Angeles. It’s a trick he’s used in the past, explaining “if I lived without that money before, I can continue to live without it.”

11. Consider changing up your cell phone plan.

A recent study found that 90 percent of mobile users waste money on unnecessary unlimited data plans and use much less than what their plans allow for, points out personal finance and money-saving expert Andrea Woroch. You could consider switching to a lower-tiered data plan or go with an online carrier like Mint Mobile, which offers plans for as little as $15 a month, she points out. 

12. Hack your insurance bill.

When was the last time you checked the price of your auto insurance policy? Chances are, you shopped around for the best price when you first purchased your car, Woroch points out. You can use sites like The Zebra to find cheaper insurance options and potentially lower your bills, freeing up money for savings, Woroch suggests.

For the full list, go to Apartment Therapy.

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Are home prices about to fall?

Here's how to make sense of this crazy housing market

We are at the point of the economic cycle where I really just get two questions: Are we going into recession and are home prices about to fall? I am going to do my best to try to make sense of what is happening with the housing market right now, since the years 2020-2024 have been a talking point of mine for years and my biggest concern since the fall of 2020 has been prices overheating — not having a deflationary collapse. 

For over a decade, a lot of people didn’t believe in housing inflation but in the deflationary housing story, which hasn’t ended well for them since 2012. Talking about this from a historical standpoint will help us understand better what is happening today.

I have separated my work into two different time frames: 2008-2019 and 2020-2024.

In the years 2008-2019 we saw the weakest housing recovery ever. I predicted that purchase application data wouldn’t reach 300 until years 2020-2024 and housing starts wouldn’t start a year at 1.5 million until then as well. In contrast, I knew 2020-2024 would have the best housing demographic patch ever as the country’s biggest demographic group hits the median age for first-time homebuyers.

Let’s look back at how some people have interpreted housing market data.

A short history of the housing crash narrative

2012: What they said: Shadow inventory will cause prices to fall. The reality: Inventory broke down in 2012, and the monthly supply data got below 6.0 months. The “shadow inventory” was not an issue as it took years to get rid of the distressed supply from the housing bubble years.

2013: What they said: Because mortgage rates were rising and the Fed was tapering, housing would crash. The reality: The 10-year yield shot up from 1.60% to 3% (sound familiar?), making housing cool down noticeably. Nominal home price growth cooled down, but we had no negative year-over-year price declines as inventory didn’t even get over five months back then.

2014: What they said: Housing would crash because purchase application data was down 20% year over year; adjusting to the population, it was the lowest ever. (Total inventory grew this year, and sales were negative. This was the last time total inventory did grow in America.) The reality: Even though sales fell and inventory grew, nominal home prices didn’t decline since the monthly supply of homes never came close to breaking over six months.

2015: What they said: This was the start of the Silver Tsunami. The first baby boomer turned 62 in 2008, and thus 2015 was the start of what they said would be a mass downsizing that would collapse prices because nobody could buy a home from the Boomers, and they needed to discount their net wealth by 70% to have a smaller home to live in. The reality: The Silver Tsunami didn’t happen; this was supposed to be a decade-long process up to 2025, and still hasn’t happened.

2016: What they said: Because manufacturing was in a recession, and stocks pulled back 15%, people were pushing a general recession premise. The reality: Home prices grew because inventory fell once again. (Here’s me on a treadmill challenging those calling for a recession.)

2017: What they said: Because home prices were back to the housing bubble peak, prices had to crash. The reality: Inventory fell again and home prices rose.

2018: What they said: With mortgage rates rising to 5% and the new home sales sector getting hit hard, housing would crash. The reality: The existing home sales marketplace was in much better shape. Sales fell, but the total inventory still didn’t grow. The monthly supply data increased as it took longer to buy homes: there was no inventory growth and purchase application data were only negative for three weeks out of this year.

2019: What they said: Housing would crash because Inventory was up year over year on the monthly supply data for a few months, and the sales trend was still falling. The reality: As rates fell, housing rebounded in the second half of 2019. I enjoyed the 2019 housing market because real home prices went negative briefly, and people had choices. Not many people liked this market, but it was as good as it gets because the days on the market climbed to over 30 days and we had no drama.

2020: COVID-19 hit us and thus the housing crash premise went into overdrive. Even though I tried my best in 2019 to warn my housing bubble friends not to go there with a bubble crash, they did. I was willing to forgive them early on since it was our first global pandemic in recent history and the economy paused, leading to a drastic downturn in economic activity. What they said: COVID would lead to a housing crash. The reality: I wrote on April 7, 2020, we would have an economic recovery in 2020 if you follow these data lines and dates. Regarding housing, I said please wait until July 15 to see June’s data before you go all housing crash on us. They didn’t wait and missed the greatest recovery ever. I retired that economic recovery model on Dec. 9 2020, and now we were dealing with the Forbearance Crash Bros.

2021: What they said: After failing with another housing crash call, what do all crash call boys and girls do? They move the goal post to next year and the theme was forbearance —all the people coming off of forbearance would crash the housing market. The reality: Data was stable and most people making over $60,000 a year got their jobs back by October of 2020.

Now that we have that 10 years of history on the books, it’s time to talk about the future because the housing market has had a material change based on my own economic work.  One thing is for sure, demographics are economics, and mother demographics flexed her muscle during COVID-19. Ages 28-34 are the biggest age group ever and when you add them with move-up, move-down, cash, and investor buyers together, you have solid replacement demand.

This also means we might have problems with inventory as well. As you can see here with the NAR total inventory data, total inventory has been falling since 2014, but with a bump in demand, we had the potential to break under 1.52 million. Historically, 2 million to 2.5 million of inventory is normal. Post-2014, a slow but potential dangerous downtrend formed right when our demographic patch was about to kick in.

Read the full article here.

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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