The Accunet Mortgage Show (01/10/2021) Episode
This week’s Highlights:
- How do current events affect the housing market?
- Is renovating your home worth the cost?
- More housing market data for 2020
Download a transcript of this week’s episode here.
Last week had an odd effect on the stock market… here’s why.
As a general rule, when the news is bad, so is the stock market… but historically good news for mortgage interest rates. A reminder of last week’s events:
- There was a deadly insurrection at the Capitol
- Reported COVID deaths were at a record high
- The number of US jobs shrank by 140,000
- There was a stressful state senate election
- Vaccine rollout isn’t going super smoothly in some places
Man oh man! That’s a lot… so why did the bellwether 10 year US treasury note indicate a 22% increase in just five days? Our theory as expert mortgage pundits is the fact that Wall Street doesn’t just look at one week’s worth of data. They’re taking possible future events into effect.
Now that Washington is looking a bit different politically, experts are anticipating a healthier economic forecast. Increased government spending and potentially more stimulus money in people’s pockets will blunt this very small, temporary dip. That means despite the increase now, we anticipate a greater decrease in costs ahead.
Learn how to get the best rate for you with Accunet Mortgage and our team of refinance experts—click here to get started.
Think twice before renovating your home for increased value
Real Client Experience
A client came to us asking a very common (and very good) question: If you take cash out to remodel your unfinished basement, can you include that remodel in your home’s square footage?
Consensus: Yes, HOWEVER, it is extremely unlikely that you’ll make that value back in an appraisal. Here’s why.
Even though you will have added finished square footage to your home, appraisers only value finished square feet below grade at around $25-30 per square foot. With those numbers, there’s no way the value of your home will get as high as the money you put into the remodel.
What are the benefits of refinancing your home for a remodel?
Our client’s current loan is 2.75% on a 15-year fixed mortgage. So what happens if he considers a refi? There are two options we can look at:
- An incredibly sexy looking 1.875% rate on the 15-year fixed… BUT that comes with $6,180 in loan costs (…those are Rocket Mortgage sized costs).
- A 2.25% interest rate and only $634 in TOTAL loan costs.
If you’re wondering what he’d save monthly, the answer is only $22.64. The kicker is it will take him a total of 244 months (that’s over 20 years) to make any money back. Remember we’re talking about a 15-year mortgage. Not worth it, in our expert opinion.
Learn more about the rules of refinance with Accunet’s refi rules of thumb.
Housing and mortgage data roundup
CNBC Mortgage Data
CNBC published an article with a relatively startling headline that indicates mortgage applications fell sharply over the first couple of weeks in 2021. Let’s take a look at the facts:
- Applications fell 0.8% in the first two weeks of January
- Purchase volume was 3% higher than the same period the previous year
- The seasonally adjusted index took the holidays into account
So, we’re not saying this article is wrong because there’s a lot of good stuff in there. But the last bullet is key. While there seems to be a sudden decrease, you need to understand that no one is moving over the holidays! With that considered, this is not necessarily indicative of anything to come. It’s also important to note that this is national data, and real estate varies greatly from city to city and state to state.
Greater Milwaukee Association of Realtors MLS Data
2020 gave us an all-time record for the 5 county greater Milwaukee area. Here are the stats:
- 23,197 single-family detached and condos changed hands
- 14086 more than last year
- Almost a billion more value
- Increase in dollars by 17%
- Median sales for single-family was 260k
- Median sales for a condo was 195k
Condo listings were 8.5% higher in 2020 than in 2019. Single-family detached homes are often different from condo sales, but we theorize that this particular difference is because of supply and demand. People upsized a lot last year, which means moving to a single-family home. However, due to so many people moving, there were simply fewer single-family homes to choose from. Developers are building more condos than single-family detached homes, so condo movers simply got their pick of the litter compared to single-family homebuyers.
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