Morning Briefing: Apartments, condos market steady say builders

by Steve Randall20 Nov 2015
Apartments, condos market steady say builders
Builder sentiment in the apartment and condominium sector remained strong in the third quarter of 2015. The Multifamily Protection Index from the National Association of Home Builders advanced 1 point to 56, the 15th consecutive quarter that it was above 50 indicating improving conditions.

The separate vacancy index was also higher but expectation is high for that to change: “Multifamily builders and developers continue to report that the market is doing quite well,” said W. Dean Henry, CEO of Legacy Partners in Foster City, Calif., and chairman of NAHB’s Multifamily Leadership Board. “We did see a slight rise in the MVI [vacancy index], primarily due to large supply coming online in the previous quarter, but with demand remaining strong we expect those vacancies will be absorbed.”
Mortgage rates hold steady following Fed
Mortgage rates were largely unchanged this week following the Fed’s minutes which showed that a December rise in interest rates may be likely but that increases will be small and steady rather than a hike. The Primary Mortgage Survey from Freddie Mac revealed that 30-year FRM’s averaged 3.97 per cent in the week ending Nov. 19 from 3.98 a week earlier. 15-year FRM’s averaged 3.18 per cent, down from 3.20 per cent; 5-year ARMs averaged 2.98 per cent, down from 3.03; 1-year ARMs averaged 2.64 per cent, down from 2.65 per cent.
Higher mortgage rates could be a good thing for first-time buyers
If the Fed increases interest rates next month that could be a good thing overall for the housing market. That’s the conclusion of Mark Fleming, chief economist of title insurance firm First American. He says that pushing up mortgage rates will eventually help housing affordability: “Continued low mortgage rates are a contributing factor to the pace of price appreciation that we have seen in the housing market over the past three years. The longer rates remain low, the longer leverage-assisted housing asset inflation outpaces income growth and reduces affordability for the first-time homebuyer.”

On home sales, Fleming predicts that October’s existing-sales figures will slip to a seasonally-adjusted annualized rate of 5.44 million, down from September’s 5.55 million. He expects 2016 to remain strong though: “I expect existing-home sales to reach 5.5 million by the end of the year. Housing demand is expected to be increasingly dominated by the first-time homebuyer as existing homeowners will have a reduced incentive to sell in a higher rate environment.”


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