Federal Reserve will reduce amount spent monthly on Mortgage Backed Securities.
For just over 5 years, the Federal Reserve has purchased Mortgage Backed Securities (MBS) to the tune of $85 billion as part of the stimulus program enacted in November 2008. Known as Quantitative Easing (QE), this purchase of bonds helped to shore up the real estate market by helping to keep interest rates low. QE gave confidence for investors because of the security the ongoing stimulus provided to the market.
Late last spring, the Federal Reserve hinted that they may eventually end Quantitative Easing due to marked improvements in the nation’s economy. Investors, nervous that they may no longer rely on the stimulus guarantee, initiated a selloff of MBS that caused mortgage interest rates to jump nearly a full percent. The Fed changed their course late in the summer, and QE continued without any changes.
Changes ahead, but how will they affect the real estate market?
On December 18th, the Federal Reserve announced they would reduce Quantitative Easing by $10 billion per month. Good news from an economic standpoint in that taxpayers will be saved $120 billion during the course of the year. So far, the stock market has reacted positively, with markets closing up since the news was announced. Interest rates have not been affected either…yet…but so far the outlook appears positive.
All of this seems to be good news to start the new year. November saw home prices in Santa Clarita the highest in five years, when values peaked just before the recession took hold. Overall we’ve seen significant gains in the housing market in 2012, and with the improvement of economic conditions, we should see continued gains into 2014. Continue reading Fed Eases Mortgage Stimulus, Rates Hold Steady
Housing prices in the Southland rise to a new year-over-year record.
RealtyTrac, the company that collects and reports nationwide statistics and trends for the real estate industry, recently reported that housing prices in Southern California jumped 28.3% in June 2013 over June of last year. According to RealtyTrac, this is the largest jump in housing prices since they began generating data in 1989. This includes double digit jumps for the Santa Clarita housing market as well.
Los Angeles County had the largest price jump at 30.8 percent year-over-year, with Riverside County a close second at 30.4 percent. Locally, Santa Clarita housing prices have seen an 18% rise.
The real estate market has returned, but will it last?
We’ve seen a tremendous turnaround in the real estate market in the past few years, dramatically so from the dark days following the economic issues that sparked the so-called “Great Recession” back in 2008. Interest rates remained steady, and even dropped to historic lows thanks in part to the Federal Reserve guaranteeing mortgage backed securities to the tune of $85 billion per month. With the economic rebound came more qualified home buyers who were ready to take advantage of the low mortgage rates. This, coupled with “boomerang buyers” (Home buyers who may have left the market a few years earlier due to short sale or other methods of avoiding foreclosure), have led to a buying surge. Of course, lower than normal housing inventory for sale sparked what turned into a seller’s market, which has helped spur the dramatic rise in home prices. Continue reading Southern California Home Prices Jump Over 28% In June
While mortgage rates are back on the rise, they are still phenomenally low for home buyers.
After years of continually dropping to historic lows, mortgage interest rates are slowly on the rise. That being said, as of this posting they are still hovering below 4 percent.
While rates are rising, it’s important to note that home sales, as well as prices, are also still on the rise.
Santa Clarita has experienced an 11 percent jump in home prices for both single family residences and condominiums in the past year, and overall the market has improved into the double digits across the country as well. Most people know and understand a lot about trends in real estate sales, such as supply and demand, economic conditions that drive prices down and/or up, and indicators for growth and expansion, but how is it that interest rates have remained so low during the so-called “Great Recession,” and what are some of the factors driving them upward again?
Mortgage Backed Securities and the Federal Government
We saw many bad things happen in 2007 and 2008 with the fall of banks and lending institutions deemed “too large to fail.” So much so, that by the Fall of 2008, the Federal Government stepped in to buy up Mortgage Backed Securities to the tune of $85 billion per month. Mortgage Backed Securities (Also known as MBS) are loans bundled into packages and sold as stock options whereby money is based on the principal and interest payments on the packaged loans. That’s the definition in its simplest form, however MBS can be much more complicated than that based on the offerings and desires of the investor. Since November of 2008, government backed MBS have helped keep interest rates low since the Fed will guarantee a return on the investment. Continue reading Rising Mortgage Rates Affect Re-fi’s, But Not Home Sales
Santa Clarita unemployment rate drops .4% in April while housing prices continue to rise.
According to the State of California’s Employment Development Department, Santa Clarita’s unemployment rate dropped to 5.7% during the month of April 2013, down .4% from the previous month. Santa Clarita’s unemployment rate is 3.6% less than the rate for Los Angeles County, which has a 9.3% overall unemployment rate. The statewide unemployment rate dropped to 9% in April 2013, down .4% from the previous month.
Santa Clarita remains on firm economic ground.
According to city sources, Santa Clarita fared much better than surrounding communities in the wake of the so-called Great Recession, which hit businesses and homeowners alike beginning in late 2007, with much of its impact felt for several years thereafter. While many of Santa Clarita residents did feels the recession’s effects, the city remained on solid economic footing throughout.
Fortunately, the Santa Clarita Valley housing market has bounced back along with the employment numbers. Many homeowners are seeing growth in equity in their properties, and home sellers are experiencing multiple offers and selling their homes at or above listing price in many cases. Continue reading How Santa Clarita’s Unemployment Rate Drop Affects The SCV Real Estate Market
February Real Estate Sales Figures For The Santa Clarita Valley Show An Increase In Property Value For Single Family Homes
According to figures from the Santa Clarita Valley Economic Development Corporation and the Southland Regional Association of Realtors, the Santa Clarita Valley showed an average increase of 5% in single family home values during the month of February.
Median prices for single family homes rose to $379,000 in February from an average of $360,000 in January of this year. Condominium prices also rose slightly in February to an average of $220,000 from January 2013’s high of $206,700.
March Figures Show Agua Dulce At Top Of Pricing Index For Housing
The Southland Regional Association of Realtors reported housing sales figures for the month of March 2013. Valencia had the highest number of new listings at 90 and a median list price of $489,000; followed by Canyon Country with 82 new listings with $400,000 as its price median which is the lowest in the Santa Clarita Valley. Total figures for all of the Santa Clarita Valley for the month of March are as follows: Continue reading Santa Clarita Valley Home Prices Rise While Unemployment Drops
Homes are Selling in the Santa Clarita Valley
It’s true what they’re saying about the real estate market: A recovery is at hand. Higher consumer spending , receding unemployment figures, record stock closings as well as double digit jumps in real estate values in many parts of the country are all great signs of a brighter economic future.
After years of sagging sales and a bottoming out of property values due in large part to what’s now being referred to as the “Great Recession”, we’ve seen a big jump in the Santa Clarita housing numbers.
According to Trulia.com, the average price per square foot for Santa Clarita properties has increased slightly over 15% from the same time last year. Loan applications, which were soft at the beginning of this year, are gaining in volume as buyers come out in force to take advantage of the market with historically low interest rates. With this overall gain in property value, many homeowners once upside-down on their mortgage are once again seeing a return of equity. Continue reading Santa Clarita Real Estate Market Rebound in Full Swing