Bulls & Blogs

Get a tax credit when you buy a home

Special Programs Comments Off

Sep 152022

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

The recent spike in interest rates may have made it harder for you to afford the home you want. For a $300k home, a 1% increase in the interest rate means a roughly $200 increase in the monthly mortgage payment, and that means you need a $400 raise to qualify for the same home before rates went up.

If you can’t convince your boss to boost your paycheck, I have another option: a Mortgage Credit Certificate. The certificate provides a tax credit equal to 20% of the interest you pay each month as part of your mortgage payment. And here’s the important part: we can treat that tax credit as additional income to help you qualify for more home.

A $300k 30-year mortgage with a 6% interest rate could generate a tax credit of almost $3600 in the first year. That boosts your qualifying income by almost $300 per month.

See how large a tax credit you can get. Click this link to take a short four-question quiz. Or just give us a call. We’d love to help you buy a home.

Reasons it’s a good time to buy despite virus

Real Estate Market Comments Off

Jun 122020

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

Spring typically is the peak season for home buying, but this year’s Coronavirus scare has given us a particularly unpredictable market. As lockdown orders hit the economy, sellers took their homes off the market – either out of concern over people entering their homes or concern they wouldn’t be able to sell for their desired price. Buyers had their share of concerns, too, as millions lost jobs, were furloughed, or took pay cuts.

Despite all that, many economists still suggest this summer will be a good time to buy a home. Granted, some of these economists work in the real estate industry, and saying that is self-serving. But their reasoning contains some logic, so if you’re in the market for a new home, you may want to consider these points.

First, this virus-induced recession is entirely different than the last one. The real estate industry drove the Great Recession a decade ago, and home prices declined dramatically in many markets. In this recession, it looks like real estate will remain relatively unscathed, which is what has happened in recent recessions other than the Great Recession.

Second, as lockdown orders are lifted, it’s likely real estate markets will see a flurry of activity due to pent up demand, and we are starting to hear this from local realtors. It sounds likely you’re going to face the same competitive market we had last year. Homes that are priced correctly will sell quickly.

Third, interest rates are at record lows, and I don’t expect they can get much lower. If you wait and rates rise, you may not be able to afford as much home.

If you need to buy a new home, keep in mind that sellers are just starting to come back into the market. Home choice may remain a little lean for a couple more weeks, but analysts are predicting a surge of listings this summer. Get a good real estate agent to help you identify homes as soon as they’re available and to help you keep from paying too much.

Spring homebuying season starts in January

Real Estate Market Comments Off

Jan 142020

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

It used to be that the spring homebuying season was in, well, the springtime. According to Realtor.com, the seasons are a-changing. Homebuyers have started shopping earlier and earlier the last few years. In larger cities this year, the homebuying season may have already started.

This phenomenon is likely the result of the lower number of homes for sale over the last few years. That low inventory combined with rising home prices is leading home shoppers to get an early start. With housing inventory expected to reach record lows this year, Realtor.com says the trend towards early shopping should continue.

The company based its prediction on views of its Web site listings. Jan 2019 was only 1% behind Feb for the highest number of views per listing. That’s a huge change from 2015 when Apr was the top month, and Jan views lagged Apr by 16%.

So, if you plan to buy a home this spring, it’s time to start shopping.

Housing survey shows strength and caution

Real Estate Market Comments Off

Jul 252019

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Homebuyers remain cautious about the housing market according to the most recent Fannie Mae National Housing Survey. The overall index dipped slightly last month after peaking at a near survey high in May.

The index was buoyed by a rise in one component: the net percentage of respondents who thinks mortgage rates will fall. The remaining components were flat or fell slightly. Interestingly, even though more folks said they think rates will fall, they’re still outnumbered by those who think they’ll rise 4 to 1.

The good-time-to-buy component fell four points last month. However, positive sentiment outweighs negative more than 2 to 1, and a majority still thinks it’s a good time to buy a home.

The good-time-to-sell component was flat, and it remains strongly positive, most likely reflecting the strong price appreciation in most markets over the past few years.

Two measures that aren’t part of the overall index concern rental prices. Respondents still think rents will rise almost twice as fast as home prices, and a majority still believes rents will rise in the coming year. Only 2% think they’ll fall. So, renters still have a strong incentive to become homebuyers.

Click here for the full report.

3 reasons the next recession won’t lead to a housing collapse

Real Estate Market Comments Off

May 132019

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Some pundits have suggested we’re staring at the beginnings of a new recession fueled by the housing market. Not so, says Ralph DeFranco, Global Chief Economist for Arch Capital Services. He says current housing trends bare no resemblance to conditions that existed prior to the Great Recession.

A recession is inevitable at some point in the future, but DeFranco says it should be less severe for the housing market than the 2008 recession due to three factors:

He estimates the current market is underbuilt by 1 million homes;
Homebuyers are more cautious; and
The quality of loans originated since the Great Recession is much higher.

Conditions were exactly opposite before the Great Recession.

DeFranco also noted that big price drops during recessions are the exception rather than the norm. In the five recessions since 1975, home values have declined only once. Moreover, the current housing inventory shortage likely would soften the effects of a recession on the housing market.

Renters twice as cost burdened as homeowners

Residential Mortgage Comments Off

May 082019

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

With all the ink spent on affordability in the last year, I found a recent study by Corelogic provided some novel insights. It found that housing costs in Austin for renters rose almost twice as fast as those for homeowners.

The study period was Dec 2005 to Dec 2018, so it roughly covers one full economic cycle. Corelogic compared its rental index, which analyzes the same rental properties over time, to a “typical mortgage payment,” which it calculates assuming a 30-year fixed mortgage with a 20% down payment.

In Austin, the rental index rose more than 60% over the study period while the typical mortgage payment rose about 35%. The difference between the two in Dallas and Houston wasn’t as large, but the rental index still rose faster. A part of this difference is attributable to the fact that mortgage rates in 2005 were a point and a half higher than they were last Dec.

And this reinforces another interesting point highlighted by Corelogic. Renters are almost twice as likely to be “cost burdened,” meaning 30% or more of their income goes towards housing expenses. Forty-six percent of renters were cost-burdened in 2017 as opposed to about 27% of homeowners. Moreover, the share is down 10 points for homeowners in the last 10 years whereas it’s held steady for renters. This highlights the fact that homeowners can leverage the market through refinancing to lower their housing costs whereas renters’ only recourse is to move to a less expensive (and probably lower quality) rental.

Here is a link to the study results.

Big rebound in housing sentiment

Real Estate Market, Residential Mortgage Comments Off

Feb 252019

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Fannie Mae’s housing index rebounded in Jan after Dec’s big drop in sentiment. Most of the gain was the result of consumers’ confidence about their personal finances. Thirty-four percent of respondents reported their income is higher this year while only seven percent said their income has fallen. This is an 11 point improvement from the index a year ago.

The overall index, which measures how consumers feel about the housing market, rose 1.2 points in Jan. However, the index is down almost 5 points from the same time last year, a negative trend that started last summer.

Three other components of the index stood out. The net share of respondents who thinks home prices will rise fell one percent, declining for the fourth consecutive month. This component is down 22 points from the same time last year.

The net share of respondents saying mortgage rates will fall increased three points. However, this component hasn’t changed much in the last year, and the overwhelming majority of consumers still think rates will rise.

Finally, the net share who thinks now is a good time to buy a home rose four points last month to 15%. It was this component that caused the Dec index to sink.

Taken together, the positive improvements in the index may signal that consumers are sensing improving home affordability, and that could portend an active spring homebuying season.

The best day to buy a home

Real Estate Market, Residential Mortgage Comments Off

Feb 192019

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Do know which day is the best day to buy a home? Well, according to ATTOM Data Solutions, a national property data warehouse, it’s the day after Christmas. ATTOM studied closings for the last 5 years and determined that buyers who closed on Dec 26th realized the greatest discount from market value.

The purchase price for buyers on that day averaged 1.3% below what ATTOM considered the market value. To determine market value, it used a computer-based valuation model, which can have laughably inaccurate results. However, ATTOM analyzed more than 18 million transactions, so you’d expect the laughable outliers would average out.

But why that day? It might be because in order to close on Dec 26, a buyer would be submitting an offer around Thanksgiving. Those sellers who wanted to sell before the end of the year probably were getting a little more motivated to cut a deal.

Interestingly, ATTOM’s analysis showed only 10 days during the year when buyers had the upper hand getting a below market price. That’s probably a testament to the strength of the recent seller’s market. Seven of those days occurred in Dec with one day in each of Feb, Oct, and Nov.

Fannie housing index says it’s a good time to buy

Real Estate Market Comments Off

Oct 312018

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Fannie Mae’s housing index fell slightly last month, but it remains on trend, suggesting the housing market continues to strengthen slowly. The good-time-to-buy component of the index rebounded strongly last month, gaining 5 points. Apparently, the strong economy has buoyed homebuyer sentiment enough to overcome rising interest rates. However, the component still is significantly lower than earlier in the year and is down year-over-year.

The good-time-to-sell component remained flat last month; however, it’s still trending higher and is well within reach of its recent all-time high.

Surprisingly, the components that measure personal finances both fell last month. The net share of respondents who said their income is significantly higher than last year fell by 4 points, and the net share who feel confident about job security fell 1 point. However, this last component is strongly positive (+79%), so the decrease probably isn’t meaningful. The right track/wrong track component widened to 21 points in favor of the economy being on the right track, and that could explain the strength of the good-time-to-buy component.

Neither the home price nor mortgage rate component of the index showed any surprises. Respondents still overwhelming expect home prices and mortgage rates to rise in the next year, and the net share expecting a rise increased for both components last month.

Fannie housing index shows market still strong

Real Estate Market, Residential Mortgage Comments Off

Jun 302018

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Fannie Mae’s housing index rose to another record high last month despite the continued divergence of attitudes about buying and selling a home. The good-time-to-sell indicator rose 1 point last month and now stands at +46 while the good-time-to-buy indicator fell by 1 point and stands at +28. A positive reading means more consumers think it’s a good time to buy or sell than not, so both indicators still suggest strength in the housing market.

The good-time-to-sell indicator has been rising steadily over the past year and is 14 points higher year-over-year. The good-time-to-buy indicator has been relatively flat over the past year, which is good news given the increase in mortgage rates and home prices over the same period.

One possible contributor to the still positive good-time-to-buy indicator is consumers’ attitudes about renting. An overwhelming majority still say they would buy rather buy than rent if they were going to move. In addition, consumers expect rents to rise faster than home prices over the coming year, meaning waiting to buy a home could be an expensive choice.

Respondents continue to report strong personal financial conditions. Again this month they expressed an increased sense of job security, and more reported that their incomes had increased significantly in the last year. Both indicators also are higher year-over-year.

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