Vacation Home Sales Rebound

When the housing market started to head in the wrong direction, vacation homes led the way.  Since they were not the borrower’s primary residence, these properties were dumped on to the market first.  So, it is great news that we can now see a reversal in that trend.

The National Association of Realtors reported that vacation home sales jumped 7.9 percent from 2008 to 2009 in their 2010 Investment and Vacation Home Buyers Survey. The big news is that 90% of the vacation home purchasers were buying the property as a true vacation home and not for investment purchases.  Previously, wild speculative buying of vacation properties for the purpose of selling it again in the future was a large reason for the collaspe in that market segment.

Additionally, 70% of the purchases were for single-unit non-attached structures.  The median transaction price increased from $150,000 a year ago to $169,000.  For local Market Statistics visit Milestone’s website.

Positive Job Growth

Friday’s Unemployment Rate was unchanged at 9.7% for the third month in a row.  But we did have some very exciting news within that report: For the first time since the financial crisis began, we experienced Job Creation!

Yes, Non-Farm Payrolls increased for the first time as we added 164,000 new net jobs.  This shows that private sector job creation is underway which is what will continue to lead us into stronger demand for housing.  As people return to work, consumer confidence naturally rises and helps to stimulate demand for housing.

What Happened to Rates Last Week:

What Happened To Rates Last Week

Mortgage backed securities (MBS) lost -103 basis points last week which caused 30 year fixed rates to increase for both government and conventional loans.  Our worst mortgage rates were on Friday after the release of the Unemployment Report which showed positive job creation for the first time and pressured mortgage rates.  We also felt the sting of the Federal Reserve ending their $1.25 trillion mortgage backed securities purchase program.  This removed the single largest purchaser of MBS from the market place.

What to Watch Out For This Week:

What to Watch Out For This Week

The following are the major economic reports that will hit the market this week.  They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages.  We will be watching these reports closely for you and let you know if there are any big surprises.

We know you are busy and it is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to us, we monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.  If you have any questions, don’t hesitate to visit the Find A Loan Officer page on Milestone’s website.

Mike Dunn, Holleigh Sharp & Jeff Sharp