Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Shmuel has over two decades of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. Shmuel provides a uniquely holistic approach to comprehensive real estate and financial matters that goes well beyond any single transaction. Shmuel is an award-winning financier recognized for maximizing the short-term and long-term objectives of his client. As a contributing writer to many local and regional newspapers and publications, his insights have been featured in the media for many topics, including mortgages, personal finance, appraisals, and real estate trends.
We are indeed living in unprecedented times. Summer vacations and camp experiences typically the highlight for so many during the year, have been compromised or canceled altogether. Many makeshift alternatives have been created, with many scrambling to find out what other children are doing in place of their customary camp plans. I sincerely hope that our children get to enjoy their summer, regardless of what camp they end up in.
This week I thought a lot about the different perspectives that I see in the marketplace regarding homeownership considerations and deliberations. In all my years, I don’t remember seeing a more staggered disparity when it comes to managing home financing. With rates at historical lows, the calls that I am fielding are ranging anywhere from those looking to shorten the years on their loan to be “debt-free” sooner, to those looking to extend their mortgage, thereby giving them the lowest monthly financial outlay. Some are in the camp of pulling out as much money as they can, given these low rates – to those looking to pay down their loan so that they aren’t plagued with a massive liability longer than needed.
It is also so fascinating to see how COVID-19 has changed the way we think differently now about home ownership and tenancy. It wasn’t that long ago that “McMansions” were in vogue, where we were seeing these “over-sized, insipidly designed, expensive homes” being built in so many suburban areas. Now, however, we see a new trend in homeownership. Recently there has been a massive spike in the popularity of “Tiny Homes.” Tiny homes are homes that are less than 600 square feet, and they have seen a considerable 63% spike in interest by millennials who are now considering them in leu of their urban apartment living. Tiny homes (and carriage houses) have also become popular as secondary structures on existing lots that can accommodate college-age children or elderly parents.
Also related to this topic is the new report by CorLogic forecasting real estate values for the remainder of the year. CorLogic believes that prices will fall 6.6% going forward for the rest of the year. CoreLogic noted that a lot of the demand that we have recently seen was “pent up” from spring to summer with elevated unemployment and sheltering requirements.
Dr. Frank Nothaft, Chief Economist for CorLogice said, “Pending sales and home purchase loan applications are higher than in June of last year, and reflect the buying activity of millennials. By the end of the summer, buying will slacken, and we expect home prices will show declines in most metro areas that have been especially hard hit by the recession.” Although I do believe that there was a substantial spike in home buyer activity because of pent-up demand, I think nevertheless that home prices will not drop as much as being forecasted by CorLogic. I look forward to sharing my research more in the future.
When it comes to sentiments on interest rate prophecies and conjectures, I hear much feedback from clients about how they expect rates to drop further, with an equally vocal vote from those that anticipate a spike higher from these record lows. I have great news – whether you are in the camp that believes rates will rise, or expect that rates will further decline, you are right. The answer is that no one knows for sure what the future will bring. I have lost many clients because I told them to wait patiently while rates dipped lower, but they were convinced by someone else to lock immediately. Regardless of what camp you are in, you should enjoy the summer and do yourself a favor by calling your competent local mortgage professional.
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