Overall Housing Confidence Boosted by Record New Home Sales

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It’s no secret that the housing market has been on a gradual but steady, never faltering upswing all throughout 2014.  When home prices started to rebound in 2013, and the market seemed to be heading up with no limits, alarms were sent out across the real estate industry to beware of the unsustainable housing bubble.  However, those fears were not realized, and housing prices began leveling off as supply and demand started to be more balanced.  To culminate such an incredible growth year for the new home industry, December, 2014’s new home sales numbers were something to celebrate for new home builders and new home buyers alike.  The pace of sales of newly built, single-family homes increased 11.6% in December to a seasonally adjusted annual rate of 481,000 homes, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, which is the highest it has been since June, 2008.

This 6-year increase has been a long time coming, but most builders have had a rise in confidence throughout the entire year according to the National Association of Home Builders’ HMI score which is taken each month in 305-seminole-court-exterior-ucpartnership with Wells Fargo.  The HMI is short for the Housing Market Index, and it measures builder confidence throughout the United States by taking a survey each month to ask builders questions about the following three topics: current home sales conditions, future new home sales projections, and consumer participation or confidence.  These three scores are averaged out over 4 regions of the U.S. and any number above 50 indicates strong builder confidence.  As of December, 2014, builder confidence had been above 50 for 5 consecutive months straight, and in January, the average score nationwide was 57.

Builders are not the only people who are interested, excited, and confident about real estate and / or the economy in general.  Consumer confidence has been on the rise with the reduction of unemployment numbers, growing employment opportunities, long-term unemployed citizens coming back into the job market, overall economic growth each quarter according to GDP numbers, and the rise in retail sales.  Because of steady full-time employment instead of just part time employment, households are now not only paying their bills, but they are also able to save money once again. Another factor that helps with household wealth is the reduction of gas prices for now which have eased costs not only at the pump but also at grocery stores and other industries that have to increase prices due to the cost of gas.

With all of this good news and confidence “floating around” for both builders and consumers, the National Association of Home Builders is projecting a 26% increase in new home construction starts in the year 2015 which would be 804,000 new homes built this year.  For home buyers, there is an incredible investment opportunity to buy a new home for two reasons.  First interest rates are still at historic lows, and just last week, they once again dipped down to 3.75% for a 30-year mortgage and 3.25% for a 15-year mortgage.  As long as interest rates are so low, the cost to buy a home is minimal when it comes to interest.  The second reason is that the credit restrictions and application hoops and hurdles have eased slightly for all home buyers, making it easier to obtain a loan.  Also, the FHA, Fannie Mae and Freddie Mac have just reduced loan down payments to 3% – 3.5%.  Two days ago the FHA lowered the cost of their loans from 1.35% of the loan value to just .85% of the loan value.  If you are looking for a new home investment in St. Tammany Parish, you will want to contact Bedico Creek Preserve in Madisonville, Louisiana t 985-845-4200 or E-mail Info@LiveBedico.com.  We have 9 different Neighborhoods from which to choose with Homes for Sale and Lots for Sale.  You can also build a custom home on one of our lots.  Contact Us Today to get started on building your dream home!

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FHA Reducing Loan Costs for Credit Challenged Buyers

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There is no question that the Recession affected both the mortgage industry as well as the home buying process when it comes to obtaining a loan to buy a new home.  Mortgage companies, lenders, and banks had their feet “held to the fire” and were required to jump through multiple hoops in all categories and steps to the loan procurement process. HUD-logo Even now, on average, it takes 6 weeks to 3 months just to refinance your existing home even if you have (and have had) a steady job, money in the bank, equity in your home, and excellent credit.  The strict requirements that lenders are applying to loan applicants are also being applied to their own corporations with stiff penalties and sanctions in store for any bank or mortgage company that even comes close to “bending the rules.”

With that being said, Fannie Mae and Freddie Mac who were able to restructure and survive the housing market falter have now found a way, along with the FHA (Federal Housing Administration) to finally bring some relief to first-time home buyers by offering loans with either a 3.5% or 3% down payment of the loan.  Now, the FHA has reduced the cost of its loan for first-time home buyers, dropping from 1.35% of the loan value to just .85% of the loan value.  The FHA provides an affordable loan to all home buyers and does not, for the most part, discriminate against home buyers who are “credit challenged,” those who may have a less than stellar credit score.  Therefore, as long as you are above the threshold of the credit score required by the FHA, your loan cost will be the same whether you are 5 points above the threshold or Freddie-Mac200 points above the threshold.

FHA loans are the most beneficial for custom home buyers who cannot afford a 10% down payment on their loan, who may have had struggles with credit in the past, and first-time home buyers.  Fannie Mae and Freddie Mac were established just after the Great Depression as lenders backed by government bonds in order to allow low-income Americans to be able to buy a house.  They have since privatized and restructured, but they are still focused on helping low-income or struggling families afford and pay for their new house.  With the latest reductions in down payments and loan costs, it could now be affordable and plausible for younger professionals to graduate from college, start their careers, and form their own households by buying a new home for the first time.

If you are in the market for a new home to buy in St. Tammany Parish on the Northshore of Lake Pontchartrain in New Orleans, Louisiana, come Visit Bedico Creek Preserve in Madisonville, Louisiana to view 9 new Neighborhoods of Homes for Sale within our masterplanned community just outside of Covington, LA.  We have 18 builders building new and custom homes in our subdivision.  Many builders can and will build any size or type of home that meet our architectural standards.  Call 985-845-4200 or E-mail Info@LiveBedico.com today to find out more about our new home community!

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The Housing Market Strongly Affects Overall Economy in 2014

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As the National Association of Home Builders has strongly emphasized every time they are given a chance to speak before Congress, real estate and the housing market strong affects the overall economy, and the housing market is well on its way to proving that point during 2014.  3rd quarter numbers in 2014 showed that the housing market contributed 15.24% of the 5% growth of the GDP (Gross Domestic Product) during that period.  A 5% growth was an unexpected surprise for most economists because the expected growth was just over 3%.  However, with the housing market steadily recovering, and employment numbers on the rise, including the long-term unemployed once again entering the job market, the economy is experiencing better than expected growth numbers.

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The housing market affects the overall economy’s GDP in 2 different ways.  The “real” numbers are called RFI – Residential Fixed Investment.  These numbers is the actual monetary gross profit or national income that results from home building and remodeling.  The “boots on the ground” – builders, contractors, vendors, suppliers, and technicians such as electricians, plumbers, HVAC, carpenters, as well as remodelers and their contractors and vendors – produce actual income which in turn stimulates the economy in capitalistic spending.  Employment will always drive an economy to recovery, and the construction industry provides a more than significant amount of employment and money flow.  The total percentage of home building and remodeling that contributed to the 15.24% of the GDP was 3.08%.  In a normal economy, this number is normally around 5%.  Also, The RFI component reached a $500 billion annualized pace during the second quarter. This is the second highest quarterly total for RFI since the middle of 2008.

The second part of the housing market that makes up the rest of the percentage of the contribution to the GDP is called housing services.  This includes the actual rent paid by renters, owners’ imputed rent (an estimate of how much it would cost to rent owner-occupied units) , and utilities.  The percentage for housing services was 12.16% which is actually in the normal range for this percentage.  The housing market’s two components normally makes up 17% – 18% of the GDP when the economy is stable.  The 3rd quarter, 2014’s housing market numbers are strong indication of recovery with hopeful predictions from economists on the horizon for 2015.

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10-Year Steady Growth in St. Tammany Parish Housing Market

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A gradual, steady, and continual increase in residents, new households, and home prices is what the St. Tammany Parish Economic Development Foundation (EDF) encountered in a study done of the housing market’s recovery in the parish.  From 2003 – 2013, St. Tammany Parish’s population grew from 205,883 – 242,333.  Home prices, which2-246-w-longview-court-exterior-2 rose after Hurricane Katrina to later plummet during the Recession have now seen an increase for the first time since 2007.  The average price of a home in St. Tammany Parish in 2013 was $225,540, up from when the housing market hit bottom in 2009.

The St. Tammany Parish EDF also found that the amount of building permits issued for builders in St. Tammany Parish rose 78% since the market bottomed out in 2009.  Building permits and existing home sales have increased every year since 2010, they found.  Existing homes sold at a 44% higher rate since 2009, according to the report.

Steve Dixon, president of the North Shore Area Board of Realtors, agrees that the market has stabilized, but he thinks the recovery will take a little longer. New housing starts were so scant in the depth of the recession that even modest growth appears significant when looking at percentages, he said.

green-spaces-madisonville-subdivisionAt Bedico Creek Preserve, a master planned subdivision in St. Tammany Parish, we have seen a phenomenal demand for lots, homes, and building custom homes.  Our clients are eager to invest in our community with one of our neighborhoods selling out in just over 1 year.  Bedico Creek has since developed lots ready to build in 4 new Neighborhoods, one of which is a builder-exclusive neighborhoods of homes for sale called Cypress Crossing.

At Bedico Creek Preserve, we not only sell new custom homes, but we also sell a unique lifestyle just minutes from shopping, dining, and entertainment in the mall district of Highway 21 and easy access to downtown Covington, Louisiana.  Our Conservation Community is developed so that homes that are built and amenities are nestled among and around the green spaces, waterways, and trees.  We have designed and built hiking and biking trails that wind throughout a natural wildlife habitat so that when you move to our subdivision, you get to enjoy all that nature has to offer while being able to easily get to your place of work or even downtown New Orleans. If you have not had the chance already, come Visit Our Community or Contact Us at 985-845-4200 or E-mail Info@LiveBedico.com.

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