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Weekly News (March 31, 2021)

This week’s Interest Rate (13th Week)

(By Fairway Home Loan/ Time Mortgage)

   30 yr fx(%)  15 yr fx(%) FHA(%) 10 yr Tr Y (%)
A year ago      3.625       3/125     3.375          0.687
A month ago      2.875       2.375     2.500          1.359
Last week      3.250       2.375     2.875          1.652
This week      3.125       2.375     2.750          1.751

 

 Prime Rate:3.0% / Ref IR: 0.00- 0.25% 

  • Interest rates is upward trend as of now. Investment property and the 2nd home product’s interest rate went up more than a primary residence.  Fannie and Freddie are making a big adjustment for the program.
  • 2021 Conventional loan limit: Conforming: $548,250/ Conforming high balance: $882,375
  • annualcreditreport.com (Free Credit Report 제공) – Time Mortgage

 

Gateway project might be resumed with more energy

(Korea Daily   3/29)

  • According to Bloomberg, Secretary of Transportation said Biden Admin is reviewing the approval of the Gateway project which incudes new tunnel tubes underneath Hudson River and replacement of the Portal North Bridge.  The project cost is max. $30B.
  • The department of Transportation said they will finish the environmental impact study by the end of June this year, which was postponed for a while.
  • Due to aging of the existing tunnels, NJ Transit and Amtrack are being delayed often.
  • Trump Admin was objecting the project, especially on the Federal supports of the budget, and they were against NJ and NY states.

 

Office-Space subleases flood market

(WSJ  3/31 )

  • Companies cut rental needs in expectation that working from home will continue.  Large companies typically sign office spaces for a decade or longer, giving them few options for reducing their footprint beyond trying to sublease floors to other tenants.  These companies include JPMorgan Chase, Yelp, Uber Technologies, and Wells Fargo, etc.
  • CBRE reported that 137M sf of office spaces was available for sublease across the US at the end of 2020.  That is up 40% from a year earlier and highest figure since 2003.
  • This time many of the companies ditching real estate are doing well financially; they say they need less space because they plan for more employees to work at least part time from home even after the pandemic is over.  That raises the prospect that demand for office space could be permanently lower at some companies, much like the rise of e-commerce has been driving down demand and rents for street-level retail.
  • Sublease space usually comes with an additional 25% discount, said David Falk at Newmark.

 

Mortgage loan application increased while interest rates are up

(Korea Times 3/29)

  • With increased interest rates, mortgage applications are increased for 4 consecutive weeks, according to MBA.  This week the mortgage application is increased 3% from the last week and it went up 26% compared to a year ago.
  • ReFi application is decreased 5% from the last week.  The portion of RiFi among the total mortgage was 60.9% from a week ago 62.9%.
  • For the confirming loan under $548,250, interest rates for 30 year fixed with 20% down is 3.36% which was up 0.08% from the last week 3.28%.
  • Mortgage application increase with increasing interest rates shows that there is still demand for first home buyers.

 

Massive residential foreclosure crisis is not likely happening

(Korea Times/Steve Kim at Pioneer Realty  3/26 )

  • While the financial crisis hit the market without warning or preparation, the current mortgage situation under the pandemic is protected with CARES Act and forbearance programs, etc.  The households under forbearance program are about 2.7M as of at the end of 2020, which is about 5.5% of the total mortgage cases.
  • At the peak, it was 8% right after the pandemic announced in March 2020 and the current rate is 5.5% which is down 2.5%.
  • 87% of those who came out of forbearance program has arranged with re-payment schedule with banks and only 13% has not arranged with further arrangement with banks which are 325,000 households and they are exposed to possible foreclosures.
  • Compared to 10M households under exposure of short sales or foreclosure at the financial crisis, only 3% of households are exposed to the possible short sales or foreclosures.
  • It is hard to imagine for massive foreclosures because many home owners also experienced increase on home equity due to the home price hike.
  • According to Realty Trac, as of Jan 2021, 70% of home owners has min. 20% of equity and 90% of home owners has more than 10% of equity.

 

Warehouse demand is soaring due to COVID-19  

( Korea Times 3/31)

  • According to CNBC, severe competition is in place for the lots for warehouses due to fast growing e-commerce and speedy delivery demand. CBRE reported that 349.3M sf has been contracted in 22 major commercial zones in U.S, which shows 25% increase compared to 2019.
  • Amazon has purchased a 18 hole golf course and converted to $350M worth of warehouse in Clay in NY. And they are continuing to buy vacant shopping malls to convert. Amazon has invested $3.1B to distribution centers in 2019.  Their revenue is increased average 26.3% annually between 2003 – 2018 and their warehouse spaces has increased 27.5%.
  • Other companies such as TJ Max, Lows store, Burlington, Home depot also are joining converting commercial building to warehouses.  Consequently, rent for commercial space is increased : Commercial Edge reported that commercial average rent is $6.47 nation wide which is up by 5.1% from a year ago.

 

Home-price surge hits 15-year high

(WSJ 3/31)

  • Across the country, housing prices are climbing at the fastest pace in 15 years because of a tight supply of homes.  From small cities like Bridgeport, CT to large ones like Seattle, prices have been steadily moving higher.
  • The number of reasons: Mortgage rates dropped below 3% in July for the first time ever.  New-homes construction has lagged behind demand and home owners are holding their houses longer. Many Americans sought homes with more space to work remotely during COVID-19.  The pandemic worsened the already severe shortage of homes for sale.
  • There were 1.03M homes for sale at the end of Feb, which was lowest in data going back to 1982, NAR announced.
  • The Case-Shiller 20 big city index rose 11.1% from a year earlier: Phoenix has the fastest home price growth in the country for the 20th straight month, at 15.8%, followed by Seattle at 14.3%.
  • Economists say the shortage of homes for sale is likely to continue to buoy house prices.  But mortgage rates are also ticking higher, which could slow some of buying demand.

 

Consumer confidence surges in March to highest point in year

   (Record  3/31)

  • S consumer confidence surged in March to the highest point reading in a year, helped by increased vaccinations and more government economic support.  The Conference Board said Tuesday its consumer confidence index rose to 109.7 in March, the best showing since it stood at 118.8 in March of last year as the pandemic was beginning to hit the US.  The index stood at 90.4 in Feb.

 

Others/Tech News :  Tesla car accident in New Jersey

– In South Brunswick, Tesla car with cruise control mode hit the tractor  trailer behind.
– NHTSA is investigating 27 cases of Tesla car accident currently.
– Tesla is bragging their superior level of self-driving mode.

 


 

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Stephen Lee

He has been in Real Estate industry in about 20 years and has been Broker of Record for 9 years. His experience includes residential, commercial, and property management. Prior to involving with Real Estate business, he has been involved in the digital communication equipment industry utilizing his engineering background and education, including running own company. He has established C Land Realty in 2011 which has grown to staffing over 100 Real Estate agents and the annual transaction amount of over $110,000,000 today.

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