Monday, April 6 – Austin Metro Area Real Estate Update
Current Austin Metro Area Inventory
345 new homes emerged on the market in the past 7 days. A 13.5% decrease from last week which is improved from the previous week.
271 homes went under contract in the past 7 days. A 2.9% decrease from last week.
238 homes sold and closed in the past 7 days. A 8.1% increase from last week.
103 homes withdrawn or temporarily taken off the market. This is a 51% decrease in homes withdrawn from the market since last week which tells me that folks are finding ways to remain active in this market.
Essential Real Estate Services During Shelter-In-Place
Home showings restrictions have loosened with extreme caution while open houses are still prohibited.
Governor Abbott’s executive order last Tuesday the 31st further defined real estate activities in Texas. Using guidance from the Cybersecurity and Infrastructure Security Agency, Texas identifies essential critical infrastructure workers including real estate professionals. The statewide order is very clear in that it does not loosen local restrictions already in place. It simply creates an exception for religious gatherings and puts some restriction in place for Texas communities that had none before.
ABOR, The Austin Board of Realtors has issued a guideline that allows for home showings but with specific language that says, “exercise great caution in doing so.” The ABOR guideline also says, “While we understand there will be circumstances that require showing activity, you should continue to take extreme caution in any in-person interaction to protect yourself and discourage the spread of COVID-19.”
During this unprecedented pandemic – The Agent Jill Team will continue to look out for our clients safety, our safety, and the safety of your community. We will continue to exercise the same abundance of caution, limit person to person interaction, and conduct the majority of business online or remotely to slow the spread of COVID-19. If the situation requires physical presence, we will ask that clients maintain physical distancing for their own safety and we’ll work out the specifics of each case as it presents itself.
To learn more about our COVID 19 Procedures and systems click here
https://www.agentjill.com/covid-19/
Interest Rates & Loan Qualification Changes
For two weeks in a row, the national average 30-year fixed mortgage rate fell in Freddie Mac’s Primary Mortgage Market Survey. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.
As of 1pm on Monday rates were resting at 3.25% for a 30 year Conventional loan and 2.75% for a 15 year conventional Loan. Refinance rates are between 3 & 3.5%.
In speaking with our preferred lenders today they are communicating that rates are slowly heading down. The market is still very volatile but headed in the right direction. Mark Abernathy of Capstar Lending says he expects 30 year conventional loans to be around 2.75 in 3 months if things progress as they should. As always, reach out to them with questions about refinancing but be patient with them during this busy time.
FHA and VA are now easing standards on home appraisals and employment verification on some loans while conventional loans with buyers placing 20% down have seen appraisals removed all together. Jumbo loans are still only being serviced by the big banks with caution during the underwriting process.
Mortgage & Money Tips of the Week
FORBEARANCE DOES NOT EQUAL FORGIVENESS
Overview of mortgage forbearance options from local Austin lender Josh Penland of Legacy Mutual Mortgage
Forbearance is confusing and often misinterpreted. Many people are mistakenly thinking that forbearance = loan forgiveness. It does NOT. Forbearance is intended as temporarily relief for those who need it most and have no other options. Any payments “skipped” will need to be paid when the forbearance period is over. There is absolutely no financial gain by exercising forbearance, as you will either have to pay a lump sum, modify your loan, or owe the balance before you can refinance or when you sell your home. If your forbearance has not been caught up, it could hinder you from purchasing a home or refinancing.
Let’s look at an example of ‘mortgage forbearance math’.
——————————————
Mom and Dad have a mortgage.
It’s currently $1,500 per month.
Dad gets laid off, calls the servicer, and asks for forbearance.
In one phone call, he gets 6 months “off” from paying.
Seven months later, Dad is finally back to work, and hasn’t been able to save any money during the forbearance.
Forbearance is lifted and servicer says,
“That will be $9,000 + $1,500, which is now due”. ($10,500)
Dad almost passes out and says, “WHY??”
Servicer: “That’s the 6 months of forbearance plus the current month.”
Dad: “I can’t do that, can we work something out?”
Servicer: “Sure, we will spread out the $9,000 over 12 months.”
Dad: “Phew….ok, good. What will that look like?”
Servicer: That will be $2250 a month for the next 12 months.”
Dad: ” I can’t afford that.”
Servicer: “Sorry…..”
Dad: “Can I refinance?”
Servicer: “No because the loan went into forbearance.”
Dad: “What can I do?”
——————————————A few other points I would like to also make:
- There is not guidance yet from Fannie Mae and Freddie Mac on what happens after the forbearance period with the principal/interest (tacked on to the end of the loan, broken up over 12 months or paid as a lump sum.)
- Escrows – Taxes & insurance still have to get paid when due and the lender will need to get that money faster (meaning not tacked on to the end of the note). That could increase consumer payments next year where they cannot afford the payment.
- Credit – While the credit report should not show a 30-60-90 day lates, it does show what payment or non-payment someone makes each month. We do not know what that means for the consumer if they want to buy or refinance showing no payments for 6 months. They may not be able to refi until the missed payments are made.
- Servicing lender (where you make your payment) does not own the actual note/loan. They get a fee to collect the payments monthly and send to the investor. Yes even the big banks like Wells Fargo, Chase and Ban of America may not own the note. The servicer will want their money after the forbearance to pay the investors who own the note/mortgage backed security. Otherwise, they will have cash/liquidity issues.
Forbearance should be the absolute last resort and only chosen if you have no other options. If you really need to exercise forbearance, you cannot simply stop making payments. You must notify your Mortgage Servicer and agree to the forbearance terms. It is best to email and not call the services because wait times are 2-4 hours.
CARE ACT LOAN OPTIONS
I’ve seen a lot of questions this past week about the loan options available through the Care Act for small businesses and independent contractors.
I’m not an expert in this nor would I attempt to give you a thorough overview but I have found these two sites to be tremendously helpful. I hear that funds are limited so I would encourage you to research and consider submitting an application sooner than later.
https://covid19relief.sba.gov/#/
https://www.sba.gov/funding-programs/loans
Austin Metro Market Overview
This past week has brought home the reality of shelter as a fundamental need and the definition of essential services during a time of crisis. As I have shared in recent market updates real estate is still continuing in Austin despite the challenges. The stats above show the reality of the story. We are working right now with clients who are experiencing job changes, relocations, lease deadlines, and other life altering events that force them to step into this market. It is not easy and it requires agility and adaptation but it is absolutely something we can and are navigating. It takes thoughtful planning, creativity, cooperation, and careful communication all things that are already core ingredients of our Agent Jill processes.
Long Term Market Forecast – The National Association of Realtors chief economist says the spring buying peak will be delayed, not canceled: “people who are staying home right now, once the all-clear signal is given, will be going back into the market.” Freddie Mac’s chief economist noted, “homebuyer demand has declined in response to current economic conditions,” but “stimulus is on the way and will provide support for both consumers and businesses.”
