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In my opinion….as long as interest rates stay above 5% the housing market cannot rebound. Tim Geithner should be pushing banks, especially banks that accepted TARP funds to lend money below 5%. Read article below released by the Mortgage Bankers Association.
WASHINGTON, D.C. (January 28, 2009) — The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending January 23, 2009. The Market Composite Index, a measure of mortgage loan application volume, was 732.1, a decrease of 38.8 percent on a seasonally adjusted basis from 1195.3 one week earlier. This week’s results included an adjustment to account for the shortened week due to the Martin Luther King Jr. holiday. On an unadjusted basis, the Index decreased 46.5 percent compared with the previous week and 40.4 percent compared with the same week one year earlier.
The Refinance Index decreased 48 percent to 3373.9 from 6491.8 the previous week and the seasonally adjusted Purchase Index decreased 2.9 percent to 294.3 from 303.1 one week earlier. The Conventional Purchase Index decreased 7.8 percent while the Government Purchase Index (largely FHA) increased 8.8 percent.
The four week moving average for the seasonally adjusted Market Index is down 10.5 percent. The four week moving average is down 2.1 percent for the Purchase Index, while this average is down 12.7 percent for the Refinance Index.
The refinance share of mortgage activity decreased to 72.8 percent of total applications from 83.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 2.4 from 1.5 percent of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.22 percent from 5.24 percent, with points decreasing to 1.05 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.98 percent from 4.99 percent, with points decreasing to 1.13 from 1.20 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for one-year ARMs increased to 5.96 percent from 5.89 percent, with points decreasing to 0.06 from 0.07 (including the origination fee) for 80 percent LTV loans.
Today’s Boston Globe had an article about the performance of real estate by zip code. I posted this article on December 18th breaking down Newton by zip code. http://www.boston.com/realestate/news/articles/2009/01/28/its_all_a_matter_of_zip_code/?p1=Well_MostPop_Emailed7
In view of the fact that Newton is so large and the villages quite diverse, I was curious to see if Newton housing performed as a whole or did certain villages operate on their own. The results are somewhat surprising…all information was obtained from MLS on December 18, 2008. The numbers will change very little at the end of the year, since there are few homes pending.
Zip code Village 2007 vs.2008 % Change
02458 Newton Corner $1,046K $1,106K + 6%
02459 Newton Centre $902K $924K + 2.5%
02460 Newtonville $779K $813K + 5%
02461 Newton Highlands $714K $720K +1
02462 Newton Lower Falls $685K $518K -24%
02464 Newton Upper Falls $522K $461K -11.5%
02465 West Newton $542K $523K -3.5%
02465 West Newton Hill $1,451K $1,641K +13%
02466 Auburndale $761K $706K -7%
02467 Chestnut Hill $1,528K $1,230K 19.5%
02468 Waban $1,118K $977K -12.5%
So what information can we garner from these stats? Since West Newton Hill and Chestnut Hill have the highest priced homes, one would think that they would have similar numbers, yet they do not; West Newton Hill is up 13% and Chestnut Hill is down 19.5%. It is worth noting that West Newton Hill had a 40% decrease in homes sold in 2008, 51 in 2007 vs. 30 in 2008. Chestnut Hill stayed about even, 31 vs.27. It could mean we may see an increase in new listings on West Newton Hill in 2009. One measure worth mentioning is that a few of these zip codes encompass a very large geographical area of Newton; Newton Centre and Newton Corner specifically. Newton Corner consists of Nonantum, Hunnewell Hill, Farlow Hill, the area surrounding the YMCA and the Park Street neighborhood. The Newton Centre zip code runs all the way from Cabot Street on the north side to south of Route 9 to Dedham Street. These two zips are probably the most economically diverse of all the zip codes, so they might offer the clearest picture of Newton as a whole. Newton Upper and Lower Falls are the smallest zip codes, and the had the least amount of homes sold; a change of a few houses could alter these numbers considerably.
Overall, Newton has weathered the housing crisis plaguing the rest of the US quite well. I expect to see lower interest rates and less restrictive lending, however, less restrictive does not mean loose. Lower interest rates combined with job security will hopefully translate into buyer confidence. Stay tuned.
It looks like the spring market is starting…the phones in the Coldwell Banker, Newton Centre office are ringing again. Cynthia and I are working on a few deals right now as both buyer and seller agents’, we are currently representing a buyer in a bidding war! Since the beginning of the year Newton has had 26 sales. 15 single family homes, 7 condos and 4 multi family homes have gone under agreeement. Stay tuned.