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WOODARD: Survey: Housing recovery on ‘solid path’

More than 60 percent of the top housing markets in the U.S. are now on a solid path of improvement, according to a national survey.

Freddie Mac recently released its updated Multi-Indicator Market Index (MiMi). It showed the U.S. housing market continuing to stabilize and getting back on track heading into the spring home-buying season after a slight stumble last month.

The latest release of MiMi now tracks the top 100 metro housing markets across the country. Of the top 100 metro areas, 60 percent are showing an improving three-month trend.

Fourteen of the 50 states plus the District of Columbia have MiMi values in a stable range, with North Dakota, the District of Columbia, Hawaii, Montana and Wyoming ranking in the top five. Eighteen of the 100 metro areas have MiMi values in a stable range, with Honolulu, Fresno, Calif., Austin, McAllen, Texas, and Los Angeles ranking in the top five.

The most improving metro areas month-over-month were Detroit, Fresno, Portland, New Orleans and Milwaukee.

Here is a quote from Freddie Mac Deputy Chief Economist Len Kiefer:

“By adding an additional 50 metro markets to the monthly MiMi we are able to capture greater insights into what’s moving local housing markets heading into the spring home-buying season. The good news is after a slight stumble last month, nearly 60 percent of all markets are improving.

“Also, of the top 100 metro areas, over 60 are showing purchase applications up from the same time last year, with over 20 of those metro areas showing double-digit percentage increases.”

Q: Are mortgage rates finally rising?

                A: On May 7, Freddie Mac announced a rise in rates. The average fixed mortgage rates are following the 10-year Treasury yields.

Those rates are now up to 3.8 percent for a 30-year fixed-rate mortgage – 3.02 percent for a 15-year fixed mortgage.

Q: What is a cash-out refinance mortgage?

                A: This is a refinance mortgage for more than you currently owe, and then you take the difference in cash. The objective of this refinance mortgage is to generate cash in addition to obtaining a lower interest rate – a loan that is now reviving in popularity with rising home values.

Cash-out refinancing differs from a home equity loan in several ways: A home equity loan is a separate loan on top of your first mortgage. A cash-out refinance is a replacement of your first mortgage.

The interest rates on cash-out refinancing are usually, but not always, lower than the interest rate on a home equity loan. You pay closing costs when you refinance your mortgage. Generally, you don’t pay closing costs for a home equity loan

Q: Is there an increasing number of retirement communities offering independent living apartments in today’s market?

                A: Definitely. Independent living apartment communities are increasingly becoming a desirable option for a growing segment of seniors, and for a very good reason. Renters of those apartments – those over age 75 – are rapidly increasing, as noted in an article by Adam Anunian:

“The U.S. Census Bureau projects the 75-plus age cohort will reach 23.4 million by 2020, up from 19.8 million currently. The most significant period of growth for the 75-plus population is expected to occur between 2021 and 2035, when the baby boomer generation enters this demographic group.

“The U.S. Census Bureau expects the 75-plus population to reach 28.8 million by 2025 and over 41 million by 2035. Homeownership peaks around 71 years old, according to analysis of Census data. Beyond that age, households begin to show a greater tendency toward renting, and apartments can meet that need.”

Q: Why is it taking so long for the housing market to fully recover?

                A: One rationale was revealed in a recent study. A statistical analysis of data from 20 industrial countries covering the period 1970 to 2012 suggests housing market pricing cycles – normal, boom and bust phases – have become longer over the past four decades.

The study also found that longer down phases can have dire consequences on national and international economies. While relatively short-lived housing booms tend to deflate, more prolonged booms are likely to spiral out of control.

Similarly, compared to short housing busts, longer housing busts are more likely to turn into chronic slumps and ultimately lead to severe recessions. Results of the analysis recently were included in an article in the Journal of Business and Economic Statistics, a journal published by the American Statistical Association.

WOODARD has been writing about real estate news and trends since 1971 and is the resident storyteller at the Ronald Reagan Presidential Library in Simi Valley, Calif.

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