Mortgage Rates Jump to 5.37%

Yes, mortgage rates are up. Rates have jumped from 4.93% at the beginning of the month to 5.37% today. The question is will they go up further, or stop and reverse like they did over the summer when rates approached 5.6%?

Looking at the chart below from bankrate.com, we see mortgage rates varying over the course of the past 12 months. We can see several periods of ups and downs. Have the underlying conditions in the mortgage markets changed?

2009 Mortgage Rates Chart

The Mortgage Rate Factor

The easiest way to understand mortgage rates is to understand that if it cost lenders more, it will cost you more. Mortgage lenders compete with US Treasury Bonds which are fully guaranteed by the US government. Mortgage lenders will pay more to borrow than the government to compensate for risk.

Look at the chart below that combines mortgage rates and 30 year bond prices. It’s not exact, but the darker line is mortgage rates and the lighter line the 30 year bond rates. It appears to correlate very closely. As bond rates go up and down, so do mortgage rates.

2009 30 Year Bond Rates Against Mortgage Rates

Look across at the horizontal lines and you will see that the lines correlate. Ignore the vertical scale because I didn’t match up the scales. The point is that recent mortgage rates correlate with US Treasury 30 year bonds.

We see continued pressure on Mortgage rates because of continued pressure on 30 year Treasury Bonds. The deficit is at $12 billion and growing. We believe that results in inflation at some point. Inflation means that bond buyers will expect higher rates to compensate; bringing mortgage rates up with them.

What to Do Now

If you are in the market to purchase Daytona Beach or Ormond Beach real estate, and you will be financing your purchase, it will be important for you to track mortgage rates. To fully understand the impact of changes in mortgage rates refer to our article Basic Math for Home Buyers Who Finance.

Make it a point to track 30 year US Treasury bond rates too. You can track these at CNN, Bloomberg, or Yahoo Finance.

If you qualify for the current home buyers tax credit you should take advantage of it before it expires with contracts written after April 30th. We don’t know if the credit will be extended, so why not take advantage of as much as $8,000.

We’ve seen prices stabilize in the past quarter, but that’s no guarantee that they won’t fall again, but whether they fall or not, it is to your advantage to secure the lowest possible mortgage rate and get the tax credit. We can help you find properties that are priced right, but we still advise that you don’t buy in this market unless you are going to hold the property for 5-7 years.

We are available to discuss your options. Give us a call at 386-566-7503 with your questions.

Ormond Beach Florida Canopy Walk

The canopy in Ormond Beach is one of the most beautiful features in our town. Drive up Beach Street and you can experience the beauty and serenity of the canopy.

This photo was taken close to my home in Ormond Beach. We walk along this path nearly every morning with the dogs.

The photo is of the walking path on Central Avenue in Ormond Beach. As you can see there is a lot of green along the path. The Trails is close by and there are similar areas, but those are a little more populated with houses.

This is just an example of many of the wonderful walking paths in the area. We also walk on the beach in cooler weather, but it’s too hot for me during the warmer months. Even in the early morning, when the sun comes up it gets hot fast.

Walking along the river is very nice too. South of Granada Blvd. on Beach Street, there are no homes on the river. You can walk or ride a bike close to the river bank. The water from the river will keep things a little cooler during the warm months.

The are many beautiful sights in our area that can be enjoyed. Ormond Beach is a little more expensive community in general than Daytona Beach, but generally offers more open spaces. You can check out my site for more about Ormond Beach real estate.

Is It A Great Time to Buy a Home?

As a real estate agent, people should be suspect if I say it’s a great time to buy a home. After all, I’m in the business of selling Daytona Beach and Ormond Beach real estate. The Atlantic magazine, weighed in this week when writer Daniel Indiviglio wrote an article on the subject.

Mr. Indiviglio writes about many of the things that we’ve been talking about:

• Foreclosures putting pressure on prices
• First Time Home Buyer Tax Credit
• Low low mortgage rates

He summarizes nicely, an approach that I would agree with for buyers:

“I think short-term real estate speculation is probably still
ill-advised. Even if home prices have hit the bottom, I don’t think
they’re likely to increase quickly over the next several years. So if
you’re hoping to get in and get out, you might be in for a rude
awakening.”

But if you’re in the market for a home as a long-term investment,
say at least 10-15 years, it’s pretty hard to make an argument against
buying now. Even if we aren’t at the precise bottom, it’s hard to
believe that home prices could plummet much further in most areas. And
even if they did continue to decline a little, the tax credit might
make up for most or all of that decline anyway. For anyone who can find
an especially good deal on a foreclosure or short-sale property, I find
it even more difficult to argue against buying.”

Daytona Beach foreclosures continue at a high rate, but the inventory is relatively low because it’s taking so long for lenders to process foreclosures to conclusion. There are many more short sales available and we believe this is where the best bargains are. The downside is that short sales are much more difficult to bring to conclusion. First it can take a long time for banks to respond to an offer. Then it can take a long time to complete the process.

Foreclosures are much less complicated because the bank is the owner and really wants to sell the property. However, the banks have already gone through the cost of foreclosure, so there is less of a chance on getting a great deal before market price.

Check out the article at The Atlantic here –> A Great Time To Buy A Home?

Here are Mr. Indiviglio’s final thoughts on buying a home now:

“So while it’s never possible to say with full confidence that any time
is the best time to buy a home, it’s hard to see right now as anything
other than a pretty good time to buy. It appears to be a buyer’s market
in every imaginable way.”

Well put!

Daytona Beach Homes Market Analysis in One Sentence

Drum roll please – If a home or condo is priced aggressively in the Daytona Beach real estate market, it will sell.

Yeah, so simple, but it wasn’t that way six months ago. Now, bargain hunters are hunting the wilds of the Daytona Beach real estate market.

Proof

Sales of Daytona Beach and Ormond Beach real estate have improved considerably in the first quarter over 2008. Home and condo sales are up 24.3% for the 1st quarter of a year ago.

Many more buyers are actively bidding on aggressively priced properties. Over 65% of Florida real estate sales are distressed properties, either foreclosures or short sales. There are bargain priced and below bargain priced Daytona Beach foreclosures. We submitted an offer for a client yesterday where we were told there are 8 other offers.

More Proof – Housing Predictor Service

The first sign appears. Out of the muck of bad news comes one bold group making the statement that Florida real estate will recover first. First? Yes, before California, Arizona and the other battered states.

Housing Predictor (www.housingpredictor.com/florida.html) is stating that the Florida market has begun recovery. Here’s their reasoning in a nutshell:

• 2 Consecutive Quarters of rising home and condo sales
• Florida’s Increasing population
• It’s a bargain hunters paradise

Cautiously Optimistic

A few random thoughts that point to being optimistic:

1. Booms don’t last forever and either do busts
2. Sales are better than last year
3. People (buyers) believe there are bargains to be found and they’re right
4. People are beginning to talk about the bottom of the market (both real people like you and me and so-called experts and pundits)
5. Florida as a larger market is improving

The caution part is don’t take your eye off the target. The only surprise will be if there are no surprises.

Ormond Lakes Community Video

Ormond Beach real estate offers many options and beautiful communities. I am partial to Ormond Lakes. I started my real estate career there. This is a special place if you love nature, lakes, bike and walking trails and a friendly community. The community features tennis, a beautiful club house for events and a wonderful pool with a large deck.

Most the homes in the community are custom built homes, and there are many homes to choose from the 200’s up into the millions of dollars in the estate section. Most of these homes are newer. There are many lakes in the community, so many homes open to water in the backyard. Lots are still available for customer built homes.

It would be my pleasure to show you homes available in Ormond Lakes. Give me a call when you’re ready.

Daytona Beach Real Estate Video Listings are Here

We have created our first video listing. The home is located at 562 Oceanshore Blvd. in Ormond Beach. This home is what the Florida lifestyle is all about. It’s right across from the beach and has a marvelous pool and deck area in the back.

Check out the Video here or go to Ormond Beach Home – 562 Oceanshore.

It took awhile to get all the technical requirements, video hosting and production requirements nailed, but we were able to do it in a few weeks. It helps when I have a film maker and an IT Director available. I could not have done it without them. Thanks Michael and David.

We would appreciate comments about this video. Many more are coming now that we have the production and technical requirements complete.