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My Mortgage Team @ Waterman Bank

We deliver the absolute best lending experience through knowledge and true fiduciary service for your home mortgage needs.

Our Mission

Our team's mission is to help our clients and their families get the best residential mortgage banking options offered. We educate anyone we work with so understanding the decisions that are made puts everyone we work in the most financially strategic position they can be in.

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Mortgage News

New Home Sales Skyrocket, But It's Unsustainable and Here's Why

September 27 2022

The monthly New Home Sales data from the Census Bureau is usually just "there"--one of several monthly housing-related reports that makes no promises about being interesting or saying anything very different from the other housing reports.  Today's release of sales in August was different.  It showed a staggering 28.8% increase from the previous month, bringing the total annual pace to 685k from 532k previously.  Economists actually expected sales to fall to a pace of 500k. This large of a departure demands an explanation. But before that, let's get on the same page about exactly how large it was.  The following chart shows the percent change from the previous month.  Today's data was the 3rd biggest since records began in 1963. First off, here is what was happening with interest rates heading into August.  Keep in mind that June marked a brutal spike to the highest levels in 14 years and the subsequent recovery was a lot bigger than it looks on the chart (from over 6% to under 5% for many lenders): The reemergence of upward rate pressure in the the second half of August may have also coaxed would-be buyers off the sidelines.  Any contract signed in August counts in these numbers.  Anecdotal reports suggest borrowers were more eager to pick a house and lock the rate by the end of the month. The other x-factor is less obvious, but just as logical.  It was no mystery that builders had a growing number of homes in the pipeline due to a sales slowdown and the large pipeline of permitted/started homes waiting to be completed.  It's also no mystery that June's rate spike caused a fair amount of concern in the mortgage and housing markets--this on top of more general concern from what had already been a big rate spike in 2022. 

Home Prices Drop 0.6%, Raising Questions About Loan Limit Change

September 27 2022

Today brought the release of the two biggest home price indices (HPIs) for the month of July from S&P Case-Shiller and FHFA.  Both HPIs showed a marked deceleration in home price appreciation in June with Case Shiller up only 0.2% and FHFA up 0.1%.  Both moved into negative territory in July with Case Shiller down 0.4% and FHFA down 0.6%. The notion of falling home prices is potentially troubling to those who lived though the Great Financial Crisis (GFC) in 2008.  But while the present day price contraction has yet to fully play out, there are still significant differences from 2008.  In fact, even if the FHFA price index (the broader of the two) dropped by roughly 20% as it did by the end of 2008, it would merely take year-over-year numbers back to flat. While "flat" year-over-year home price appreciation doesn't sound so bad (and probably wouldn't be so bad in the big picture), getting there from here wouldn't be fun in terms of home equity dollars.  In 2008, a 20% decline was around 50k for the average home.  Now it would be 80k.  Someone who bought a 500k home near the peak could own a 400k home if a 20% correction plays out. But that is far from a certainty at this point--especially with persistent inventory issues becoming worse in the past 2 weeks as sellers balk at the idea of leaving their existing mortgage rate for something more than twice as high.  All this in addition to the fact that mortgage/housing markets have been operating in an infinitely more sustainable way than in the years leading up to the GFC.  The biggest issue/problem was an external one (pandemic and the associated fallout on the housing supply chain) and its worst offense was causing prices to appreciate too quickly.

Existing Home Sales Down Slightly, Price Appreciation Slows

September 21 2022

Seven straight months of slowing sales has reduced existing home transactions by nearly 20 percent from the same point in 2021. The National Association of Realtors® (NAR) said on Wednesday that August sales of preowned single-family houses, townhouses, condominiums, and cooperative apartments were at a seasonally adjusted annual rate of 4.80 million units. This is a decline of 0.4 percent from July and is 19.9 percent lower than the August 2021 pace. There is a bright spot; the size of the August decline, Over the previous three months, existing home sales had fallen an average of 4.7 percent. Sales were also slightly higher than anticipated. Analysts polled by both Econoday and Trading Economics had forecasted sales at 4.7 million Single-family home sales were down 0.9 percent to a seasonally adjusted annual rate of 4.28 million, 19.2 percent below the level a year earlier. Existing condominium and co-op sales were up 4.0 percent compared to July, but 24.6 percent lower year-over-year. [existinghomesdata] “The housing sector is the most sensitive to and experiences the most immediate impacts from the Federal Reserve’s interest rate policy changes,” said NAR Chief Economist Lawrence Yun. “The softness in home sales reflects this year’s escalating mortgage rates. Nonetheless, homeowners are doing well with near nonexistent distressed property sales and home prices still higher than a year ago.” August marked the 126th month of year-over-year price increases, the longest-running streak on record. Price gains, however, are clearly moderating from the record high median of $413,800 posted in June. The median price for existing units of all types rose 7.7 percent year-over-year in August, to $389,500. During the first few months of this year, rate gains exceeded 15 percent. The median existing single-family home price was $396,300, up an annual 7.6 percent. The median existing condo price was $333,700, a markup of 7.8 percent.

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