Infographic: History of Mortgage Rates

Since 1971, when mortgage rates first started being tracked, they have ranged from a high of 18.63 percent in the early 80′s to a low of 3.20 percent in late 2013. Currently, rates are still relatively low and for many prospective home buyers, low rates can greatly affect the affordability of a home and the monthly mortgage payment. But, what will the future hold?

“After dropping to all-time lows at the end of 2012, rates have steadily rebounded throughout 2013. Now that the Federal Reserve has announced plans to begin winding down its stimulus program, which has helped keep rates low while the economy was still fragile, we expect rates will rise above 5 percent in 2014 as the economic recovery gains steam. Although those who missed out on mortgages in the 3 percent range may be disappointed that they missed that historic window, rates are still extraordinarily low by historic standards,” says Erin Lantz, director of Zillow Mortgage Marketplace.


January 6, 2014 – Author Erin Lantz for Zillow Blog



Buy a Home Before 2014

New rules, rising rates could mean fewer options

December 13, 2013 1:58PM via
real estate contract

The year 2014 will be a type of test market for the mortgage industry, with the Federal Reserve expected to eventually taper its mortgage securities purchases.

Not to mention the fact that 2014 is forecasted to bring a rise in rates and new lending rules that are likely to reshape the process of acquiring a mortgage.

With all of that in mind, is advising consumers to consider buying homes before the end of this year.

The site goes as far as naming the top five reasons for buying real estate before the dawn of 2014.

Among them the fact that rates are already up one to 2% over last year, and it’s still possible to grab a 30-year, FRM at 4.5%, according to lenders cited by HomeFinder.

New lending rules, including the qualified mortgage definition, will shift debt-to-income ratio requirements higher, potentially making it more difficult to buy a property, the report claims.

Lower sales during the holidays also could mean more inventory to comb through.

And finally, anyone who buys before the end of the year can begin deducting the interest right away, maximizing tax deductions.

Housing Market Confidence on the Rise

Originally posted by on August 13, 2013.

Home buyers, home builders, and the general public have renewed their confidence in the economy and in the housing market. This doesn’t necessarily mean everything is back to normal, but because consumers are more than two-thirds of the economy, a confident consumer is more likely to buy a home.

The evidence of an improved outlook is widespread. Two organizations survey consumers on a monthly basis, and their indexes are at levels last seen in early 2008 before the financial collapse and the beginning of the worst recession in more than 70 years. In addition, these national surveys also ask questions about attitudes toward home buying.  The University of Michigan survey asks if it is a good time to buy a home, and more than 80 percent of those surveyed responded “yes,” which is the highest percentage since 2003. The Conference Board asks if the respondent intends to buy a home in the next six months, and affirmative responses are at the highest in the history of the index.

Builder Confidence Up Builders also are demonstrating renewed confidence. The NAHB/Wells Fargo Housing Market Index (HMI) is a monthly measure of builders’ confidence and the overall index is at its highest level since 2005. The survey driving the index asks three questions about current home sales, expectations for future sales, and customer traffic. The expectation component also is at its highest level since 2005, and the current sales index is at the highest since January 2006.

Builders’ confidence has been rising faster than builders’ production. The HMI increased 75 percent in a year while single-family housing permits rose 25 percent. A similar advanced confidence move occurred after the 1990 recession when the HMI rose 120 percent as permits increased 52 percent. Eventually, permits caught up with builders’ attitudes in the 1991–92 recovery, and I expect the same in this recovery.

Confidence has returned because the things that worried consumers and builders are improving. Households have reduced their debt levels to what they were in 2003 at a bit over one year’s income. At the peak, households owed 130 percent of their annual income and reducing that meant less spending and more repaying and saving. The savings rate has settled back to near historic levels, which means more income spent.

Meanwhile, households feel wealthier because house prices have moved forward. House prices have seen positive moves for more than a year in part because of pent-up demand and investors competing for limited inventories. House prices are back to levels seen in 2008 as they were falling and in 2004 as they were rising. Higher, consistently growing house prices offer consumers the comfort that they will not see a decline in their equity if they buy and provides more equity if they sell.

Employment Gains Job additions have not been as stellar as home values, but the number of people employed has increased steadily and the number of people looking for a job has declined. From the peak, the U.S. lost 8.7 million jobs and has since gained back 6.7 million, or more than three-quarters of the loss. Of course, in that time, the population of employable people increased so unemployment remains at least 2 percentage points above a sustainable level, and some workers are so discouraged that they dropped out of the labor force and do not count as unemployed.

Those working and with good credit face some of the best housing affordability conditions in history. Since 2009, the NAHB/Wells Fargo Housing Opportunity Index has been above 70; that is, a family earning the median income could afford more than 70 percent of all homes sold in the previous quarter. The most recent quarter did dip to 69.3 as home prices and interest rates rose.

All signals point to positive movements in the underlying causes of improved confidence and hence in continued growth in new-home construction and sales.


Link to original article:

New Home is Dream Come True!

Originally posted by the Santa Maria Times January 18th, 2013

James and Gabriela MedleySanta Maria, CA  (January 2013) — For James and Gabriela Medley, the search for their next home took them back and forth, between new and old, foreclosure and short sale, just about every possible option.

The fact that they decided to move to the beautiful new home community of Lavigna in Santa Maria showcases the spectacular value the neighborhood offers.

“We looked for months and months, and basically shopped every foreclosure and short sale in the area because we thought the pricing would best fit our budget,” James stated.

“What we discovered, much to our delight, was that the new homes at Lavigna actually offered the best value of all.  And, as a first-time buyer, I was able to secure a no down payment VA loan, which was also a big plus for us.

“We have a brand new home, one in which nobody has ever lived. There’s nothing to fix, nothing to buy, and of course we also have new appliances and a 10-year structural warranty.  We fell in love with the lot size, square footage and a very comfortable floor plan.  The community’s swimming pool, clubhouse and nearby park areas are added luxuries.  And, our neighbors are great.

“Lavigna was definitely the best option for us, and believe me, we looked everywhere.  We’ve been living here about a year now, and couldn’t be happier”, he added.

Adding to the Medleys’ happiness is that they recently won a free 40” HDTV in a raffle at a Santa Maria Chamber of Commerce mixer hosted by Lavigna.

The Medleys purchased a Plan 13 home at Lavigna, with three bedrooms, two and one-half baths, a great room, living room and dining room.

Less than 30-miles south of San Luis Obispo, Lavigna is a dream come true for first-time home buyers… a beautiful new 3 or 4 bedroom home in a gated community for a price in the mid $200,000s!

Lavigna offers spacious one and two-story, three, four and five bedroom homes, with two to two and one-half baths, and up to 2,043 square feet of interior living area.

Lavigna homes are highlighted by two and three-car garages, as well as an excellent selection of interior and exterior appointments.  A community swimming pool and spa are available for the enjoyment of homeowners, as well as a spacious recreational area and playground.

Lavigna offers a serene, comfortable ocean close setting, with all the amenities which make for an ideal living environment.

Enjoy a swim party with your neighbors, the weekly BBQ get together, or a picnic in one of the many parks in the Santa Maria area. It’s all available at Lavigna, along with a sense of pride in your home and community that so many homeowners hope to achieve.

To make your purchase at Lavigna even smoother, the community offers a variety of financing options tailored to meet the changing needs of today’s home buyers, including zero down VA, as well as FHA financing. Many other loan programs are also available.  Please visit the sales office for additional information.

Lavigna has been created with healthy living in mind. You’ll notice the flexible design and creative floor plans, the quality construction, energy-efficient appliances, natural lighting and fixtures, a smart irrigation system, and green environmentally-friendly materials.

Located at the intersection of Battles Road and Westgate Road in Santa Maria, Lavigna is approximately two miles west of the 101 Freeway.

The Sales Center is open daily 11 a.m. to 5 p.m., closed Wednesdays and Thursdays. For additional information, please call 805-922-9100 or visit

Lavigna is another fine community from The Towbes Group, one of the Central Coast’s most prominent home builders.  Based in Santa Barbara, The Towbes Group has more than 50 years of professional experience in all aspects of real estate development, including construction, development and property management.

Home Construction Shows a Pulse

Originally posted by the Santa Maria Times on April 26th, 2012

Santa Marians will soon hear those familiar sounds of spring — pounding hammers and buzzing saws — as construction begins on a number of new houses in town.

Most home builders have been on extended leave — or found other professions — since the housing market collapsed four years ago. But a few are strapping on their tool belts again this summer as at least one local builder begins building again.

The Towbes Group, developers of the gated community of Lavigna on the west side of Santa Maria, is beginning two new phases this year which will include 20 homes. A dozen will be started next month, according to Courtney Seeple, project manager for Towbes Group.

It’s a sign that’s promising for the Santa Maria housing market, and one that’s bucking the trend for new home construction throughout the country.

According to the National Association of Home Builders, sales of newly built, single-family homes dropped 7.1 percent in March to a seasonally adjusted rate of 328,000 units. That drop followed strong February sales which many experts attributed to mild winter weather across the country.

“Construction is continuing in the commercial and industrial sectors, but we are now seeing renewed interest in housing construction,” noted Santa Maria Community Development Director Larry Appel. “We have met with a number of local builders who are ready to resume construction in town.”

The Towbes Group has adjusted its new offerings at Lavigna to fit the still recovering housing market.

“Because of the times and our perception of the market, we have downsized these homes,” Seeple said. “We’re finding now that our smaller houses are some of our better houses.”

In its early phase, the development’s most popular designs were 1,800-square-feet and larger. The current phase is matching customer demand with models beginning around 1,200 square feet.

Three-car garages are among the most sought-after amenities, too.

Lavigna sales manager Teresa Shoneff said nine homes have been sold since the beginning of the year, and she believes the development’s new models and lower prices — smaller models start around $250,000 — are driving those sales.

“We’re seeing an end of some of the credit problems people had over the past few years,” Shoneff said. “We already have a waiting list for our next phase.”

Seeple said they aren’t seeing many people from outside the Santa Maria Valley among their buyers. He also said historically low interest rates on home loans are also driving the buyers.

“Our buyers are working Santa Maria people. Two jobs, working people,” he said.

While any residential construction is a good sign for the city and the industry, the Towbes Group might have the market cornered in Santa Maria. It was responsible for 22 of the 28 residential building permits issued by the city Community Development Department since Jan. 1, 2011.

In Santa Barbara County, 58 building permits have been issued for single-family homes so far in 2012 compared to 60 last year. The majority of those — 33 — have been in the unincorporated areas, with 10 in Lompoc.

In San Luis Obispo County 55 permits have been issued for single-family homes this year compared to 50 through the same time period in 2011.

“We’re seeing minor signs of an up-tick in activity. Certainly nothing to jump up and down about,” said Jerry Bunin, governmental affairs director for the Home Builders Association of the Central Coast. “It’s a minor step in the right direction.”

New Houses Selling in Santa Maria

Courtesy of Central Coast News. Originally published on April 11th, 2012.

SANTA MARIA – It’s a promising sign for Santa Maria’s stagnant housing market.

Sales of new homes are finally showing signs of life.

It’s a landmark to a Santa Maria housing market that came screeching to a halt when the bubble burst back in 2008.

Only now its 2012 and brand new homes in the Lavigna residential development on Santa Maria’s west side are starting to sell again.

With prices starting in the low $200,000′s, coupled with historically low mortgage interest rates, first-time home buyers are finding a rare, affordable opportunity to live in a brand new house in a gated community near the center of town.

“It’s a private community, and its real child friendly and the neighbors are really nice”, says Lavigna homeowner Mary Martinez, “its just very well kept, very clean, seems like everybody is friendly here, I have no problems with the neighbors.”

After consecutive years of little or no activity at all the Lavigna development here maybe the first indication that new housing construction in Santa Maria may finally be on the rebound.

Sources say all of the homes in the first phase of the Lavigna project site have now been sold.

Construction on Phase Two is expected to begin soon.

The number of new building permits issued in Santa Maria remains very low.

But this recent surge in new home sales is expected to help jump-start the overall local home-building industry.

To read the original article, visit

It’s Time to Buy That House

U.S. house prices have plunged by nearly a third since 2006, and homeownership rates are falling at the fastest pace since the Great Depression.

The good news? Two key measures now suggest it’s an excellent time to buy a house, either to live in for the long term or for investment income (but not for a quick flip). First, the nation’s ratio of house prices to yearly rents is nearly restored to its prebubble average. Second, when mortgage rates are taken into consideration, houses are the most affordable they have been in decades.

Two of the silliest mantras during the real-estate bubble were that a house is the best investment you will ever make and that a renter “throws money down the drain.” Whether buying is a better deal than renting isn’t a stagnant fact but a changing condition that depends on the relationship between prices and rents, the cost of financing and other factors.

But the math is turning in buyers’ favor. Stock-oriented folks can think of a house’s price/rent ratio as akin to a stock’s price/earnings ratio, in that it compares the cost of an asset with the money the asset is capable of generating. For investors, a lower ratio suggests more income for the price. For prospective homeowners, a lower ratio makes owning more attractive than renting, all else equal.

Nationwide, the ratio of home prices to yearly rents is 11.3, down from 18.5 at the peak of the bubble, according to Moody’s Analytics. The average from 1989 to 2003 was about 10, so valuations aren’t quite back to normal.

But for most home buyers, mortgage rates are a key determinant of their total costs. Rates are so low now that houses in many markets look like bargains, even if price/rent ratios aren’t hitting new lows. The 30-year mortgage rate rose to 4.12% this week from a record low of 3.94% last week, Freddie Mac said Thursday. (The rates assume 0.8% in prepaid interest, or “points.”) The latest rate is still less than half the average since 1971.

As a result, house payments are more affordable than they have been in decades. The National Association of Realtors Housing Affordability Index hit 183.7 in August, near its record high in data going back to 1970. The index’s historic average is roughly 120. A reading of 100 would mean that a median-income family with a 20% down payment can afford a mortgage on a median-price home. So today’s buyers can afford handsome houses—but prudent ones might opt for moderate houses with skimpy payments.

For example, the median home in the greater Phoenix market, including houses, condos and co-ops, costs $121,700, according to With a 20% down payment and a 4.12% mortgage rate, a buyer’s monthly payment would be about $470. Rent for a comparable house would be more than $1,100 a month, according to data provided by

Of course, all of this assumes mortgages are available—no given now that lending standards have tightened. But long-term data on down payments and credit scores suggest conditions are more normal than many buyers think, according to Stan Humphries, chief economist at Zillow. “If you have good credit, a job and a down payment, you can get a mortgage,” Mr. Humphries says. “There’s more paperwork and scrutiny than five years ago, but things are pretty much like they were in the ’80s and ’90s.”

Not all housing markets are bargains. Mr. Humphries says Zillow has developed a new price/rent ratio that uses estimates for each individual property rather than city medians, to better reflect the choices facing typical buyers. A fresh look at the numbers suggests Detroit and Miami are plenty cheap for buyers, with price/rent ratios of 5.6 and 7.7, respectively. New York and San Francisco are more expensive, with ratios of 17.6 and 17.2, respectively. The median ratio for 169 markets is 10.7.

For investors seeking income, one back-of-the-envelope way of seeing how these numbers stack up against yields for other assets is to divide 1 by the price/rent ratio, resulting in a rent “yield.” The median market’s rent yield is 9.3% and Detroit’s is 17.9%.

Investors would then subtract for taxes, insurance, upkeep and other expenses—costs that vary widely. But suppose total costs were 4% of the purchase price. That would still leave a 5.3% rent yield in the typical market. With the 10-year Treasury yield at 2.2% and the Standard & Poor’s 500-stock index carrying a dividend yield of 2.1%, rents for residential housing in many markets look attractive.

A few caveats are in order. First, not all transactions are average ones. Even in low-priced markets, buyers should shop carefully. Second, prices could fall further. Celia Chen, a senior director at Moody’s Analytics, expects prices to drop 3% before bottoming early next year and rising slowly thereafter. “If the economy slips back into recession, however, we could easily see a 10% drop,” Ms. Chen says.

And property “flipping” can be dangerous even when prices are rising. That is because, absent a real-estate boom, house price gains simply aren’t that exciting. Research by Yale economist Robert Shiller suggests houses more or less track the rate of inflation over long time periods.

Houses aren’t the magic wealth creators they were made out to be during the bubble. But when prices are low, loans are cheap and plump investment yields are scarce, buyers should jump.

—Jack Hough is a columnist at Email:

Is It Better to Buy or Rent?

Whether renting is better than buying depends on many factors, particularly how fast prices and rents rise and how long you stay in your home. The New York Times has put together this great mortgage calculator that allows you to gauge whether or not it’s better to buy or rent. Click here to read the article and use the New York Times online rent vs. buy calculators.

Why It’s Time To Buy

The Clouds Haven’t Quite Parted, But the Long-Term Case for Home Ownership Is Looking Stronger


Back in June 2006, when the housing market peaked, the prospect of a five-year national housing bust seemed unimaginable to most people. And yet here we are, with the latest Standard & Poor’s Case-Shiller index showing that prices hit new bear-market lows, falling back to 2002 levels nationally and to 1990s levels in some battered regions.

Despite all the gloom, however, there are growing indications that it is a good time to buy. Mortgage rates, which fell to 4.55% for the week ending June 2, according to Freddie Mac, are near 50-year lows. Homes have become more affordable than they have been in years: According to Moody’s Analytics, the ratio of home prices to income is now 20.9% lower than the 15-year average through 2010, and 12.5% lower than the 1989-2004 average. A historic glut of homes, meanwhile, has created a buyer’s market: There were about 15 million vacant homes in the U.S. last year, according to John Burns Real Estate ConsultingInc.—some 3.1 million more than normal.

Such conditions might not last long. Moody’s Analytics predicts that the number of distressed sales will begin to fall in 2013, and that prices will begin to edge upward then. Home building is at a virtual standstill, so the supply overhang isn’t likely to get much worse. Meanwhile, demographic indicators such as “household formation”—the number of new households each year—are on the rise, and promise to take a bite out of the glut in coming years.

Click Here to read the entire article


It’s About Payment, Not Price!

For those consumers who are waiting to buy a home, are you aware that you could be “priced out” of the market by rising mortgage rates and tighter underwriting, even if home prices fall? Do you still want to wait?

Potential home buyers are focused on the wrong metric. They are overly focused on home price because of the tremendous correction that has occurred and the focus on home prices in the media. The media is also overly focused on price because they tend to live in the expensive markets like New York and Washington D.C. What consumers and the media are ignoring is the monthly payment, which is absolutely fantastic right now and highly unlikely to get much better. Everyone is just assuming that mortgages rates will stay low forever.

Did you know that if prices fall another 10%, but mortgage rates rise 1 percentage point, fewer people will be able to qualify to buy a house? Add to the equation the discussion in D.C. about reducing the allowable Debt/Income ratios on mortgages, and even more people will be unlikely to qualify.

If prices stayed flat and mortgage rates inched up 1 percentage point from 4.5% to 5.5%, the same house would cost you 12% more per month to buy. A movement from 4.5% to 6.5% would increase your mortgage payment by 25%. Needless to say, the impact of mortgage rates is tremendous.

Nobody knows where mortgage rates will be several years from now, but let me share with you a 40 year history of mortgage rates. Perhaps this will help you realize just how favorable mortgage rates are right now.