Lower Than Expected Mortgage Rates

Homebuyers have better than expected lower rates this Spring. For the first of the year many potential homebuyers called it quits with rising house prices, low inventory and mortgage rates above 5%.

“It was somewhat of a surprise to see the degree and intensity of the pullback,” said Robert Dietz, National Association of Home Builders. “Five percent at those pricing levels was enough to take the wind out of sails of the housing market.”

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The current 4.5% rate is predicted to not rise much for the remainder of the year which means several positive outcomes for the homebuying market.


To begin, there will be more buying power. Lower mortgage rates along with rising wages gives homebuyers more leverage in the current residential real estate market. Current 4.5% rates make a $200,000 30 year-fixed mortgage $71 cheaper than at 5% which means total interest savings over the life on the loan would total $21,699.

“While folks might not have hit the bottom of the rate cycle – no one can perfectly time markets – on the historic side, these are still very attractive rates,” said John Pataky, executive vice president, chief consumer and banking executive at TIAA Bank.

Sellers will want to take the gains and run. According to evidence move-up buyers are purchasing more. The average mortgage balance for purchases has reached record levels. This is also good news for homebuyers in the lower priced home market. The move-up buyers will open up inventory in lower priced homes.

“It’s a musical chairs game,said Mike Fratantoni, chief economist of the Mortgage Bankers Association. “You need someone in the higher end to move, and it works its way down the ladder, eventually opening up an entry-level home.”

Potential homebuyers cannot control the Fed or rising home prices but there are several factors they can control when it comes to determining the interest rate they will get on a mortgage. Homebuyers can reduce their rate by the amount of money they put down. The larger a down payment the lower the rate giving the homebuyer more risk than the lender. The higher your credit rating the better the rates. For example a person with a high credit score (760 – 850) would get a 4% rate while a person with a credit score of 660 to 679 would receive a 4.5% rate on a $216,000 price with a 30-year fixed-rate mortgage.

“While folks might not have hit the bottom of the rate cycle – no one can perfectly time markets – on the historic side, these are still very attractive rates,” said John Pataky, executive vice president, chief consumer and banking executive at TIAA Bank.


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Is Madisonville A Town Or A Village?

This is the question many are pondering since Madisonville’s population is just over 800 residence. According to Louisiana Lawrason Act in order to be considered a town you must have 1,001 inhabitants.

In a report issued this week by the state legislative auditor it states, “Because Madisonville had only 748 residents as of the 2010 federal census, it appears that it should be classified as a ‘village’ under

its charter.”

This is a serious issue posed on the town as it even says in Madisonville’s own charter that the governor must be notified of a change in the town’s population. There will be several recommendations the town must follow from changes to the number of town board members to refining policies.

Many residents and leaders alike are not happy with the change in board members from the current five to three.


“I kind of like five people,” Brad Haddox, who serves on the Town Council said. “That’s five different considerations. … With more varied people, you have more varied viewpoints.”

How did this oversight occur? According to Haddox it was an innocent oversight. The Madisonville Charter list many governmental responsibilities that just don’t apply to today. Examples include regulating taxes on corn doctors, pet bear exhibitors, exhibitions for pay, fortune tellers, ten pin alleys etc.


Madisonville has only had a population of at least 1,001 residents in two U.S. Census reports. One in 1910 with 1,028 inhabitants and in 1920 there were 1,103 residents. Since then the town has seen a drop with the lowest population in 1990 at 659. Currently the population sits at an estimate of 831 residents.

“I don’t think we’ve been at 1,000 for 40 or 50 years,” said Mayor Jean Pelloat.

As of February 1, 2019, Governor John Bel Edwards has been notified via letter of the town’s current

population. Madisonville also sent a copy of the town’s charter and additional information the Governor requested to review.

The Mayor and town officials are waiting to hear back on his decision.

As for the name town or village, many residents believe a label does not define a community.
“We are such a small town,” said Stephen Marcus, president of the Madisonville Chamber of Commerce. “We’re in a pretty small area; we kind of call ourselves a tiny little village … there’s no stigma.”


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Covington City Council Candidates Agree On A New Community Center

Peter Lewis and Keitisha Young might be running against each other to become the next City Council member but they agree on one thing. If elected both candidates would make building a community center a priority in District A. District A is located in northern Covington which is mainly an African-American lower income neighborhood.

Peter Lewis, 41, was born in Covington and graduated from Covington High School. He holds bachelor’s degrees in general management and human resources/business management from

Southeastern Louisiana University and owns an insurance agency in Covington.

Lewis, who is endorsed by the St. Tammany Parish Democratic Committee, has been a mentor to local children and has worked with them for years. He wants to change the anger and violence he sees in the community. Just last month two shootings took place in District A by a 19-year-old resident. Bringing a new community center to the area will help with this situation. Youth in District A will have a place to go after school where they can be mentored.

Along with the new community center, Lewis wants to create more classroom space in the overcrowded schools, rennovate housing in the area, add sidewalks and street lamps and improve roadways.

“I see the other areas of Covington making changes, but District A doesn’t because no one is speaking up,” he said.


Keitisha Young was born in Covington and also graduated from Covington High. She studied business at Howard University in Washington, D.C.; working toward a degree at Southern New Hampshire University. She is endorsed by the West St. Tammany Chamber of Commerce’s Political Action Committee and the Alliance for Good Government.

Young agrees with Lewis and says District A needs a new community center for the kids. Right now

kids only have the Boys & Girls Club on Columbia Street which charges a fee. They need a free place to go that is a healthy environment.

“You need after-school recreation, studying, tutoring,” she said. “Kids emulate what they see, and the only thing they see is the courthouse and the jailhouse right down the street.”  Slum lords are also an issue Young wants to address.

“We have people paying $500, $600 for rent and they’re living in a house with holes in the floor and it’s infested by rodents. It’s a big problem, and it’s throughout the district. … We need homeownership education in our area. People have to know what their rights are and not be afraid to speak up about the housing they’re living in.”

Landlords need to be held accountable, Young believes there should be stronger home inspections. Residence who pay rent should have a home that is in livable condition.

“Things are getting cleaned up by the city, but it’s not getting done here in our district … The new mayor and council … have a responsibility to one another. We need to talk about all of it and see what we can do.”

The elections will be held on March 30, 2019 and early voting is currently daily through March 23, 2019.



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Spring Uptick For Housing Market

Spring always brings warm weather, sunshine and an upbeat attitude. The home market started off slow for the beginning of 2019, but analyst believe there will be a rise in home sales Spring 2019.

The beginning of the year wasn’t what the National Association of Realtors hoped for. Pending home sales did jump 4.6% this January, however sales were 2.3% lower than a year ago. January marked the 13th straight month of year-over-year declines.

The pending home-sales index (the NAR’s tracking system that records home contract signings) did go up in January to 103.2.  Analysts believe the reopening of the partial government shutdown caused

the boost from the nearly five-year low it saw in December of 2018. In the Northeast pending sales increased 1.6%, in the Midwest 2.8%, only 0.3% in the West and 8.9% in the South. The market should see the home sales from these pending contracts right around Springtime. Contracts usually stay pending on average for about 45 days until they close.

“February existing home sales should now rebound handily and with new home sales likely to head higher too, given the rising trend in mortgage demand, the gloomy housing narrative in markets and the media is set to change quite dramatically over the next few months. The market is not rolling over, and it is not a harbinger of recession in the broader economy,” said Ian Shepherdson, chief economist for Pantheon Macro.


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Homeownership is The Way To Go

Rent is rising fast and many are turning back to owning vs. renting. According to the Unites States Census Bureau, in 2016 the decline in homeownership suddenly changed and started to rise. The Housing Vacancies and Homeownership survey reflects that homeownership rates rose from 63% in 2016 to 64.6% in 2018. Here are some of the reasons why this reversal has come to fruition.

Millennials had enough with living with mom and dad. In 2017, 22% of adults between the ages of 25 to 34 were living with their parents compared to the 11.6 % of adults between the ages of 25 to 34 that were living with their parents in 2005. This increase was due to the housing crisis, slow earnings

growth, soft labor market and steep student loan debts. As of 2016, Millennials started to be in the position to financially own a home. The homeownership rate for those under 45 began to recover very quickly. This is an important statistic for the housing market because Millennials (those born after 1981) will outnumber baby boomers in the near future.

“Millennials have been on a buying spree the last few years,” Zillow Research economist Aaron Terrazas said.

The groundwork for the turning point hit in 2015 when rental rates rose nationally more than 6% from the previous year. This marked one of the rare times that rent rose faster than home prices.

“Rent appreciation was so high during that period that it essentially put fire under people’s feet to get up and buy,” Terrazas said. “People who may have been sitting on the fence would be incentivized to jump into homeownership,” according to Terrazas.

Rising house prices also led to a quick reaction as Milleanials feared they would be priced out of the market. Terrazas commented that, “driven to homeownership by fears that with homes appreciating so quickly that they would be locked out of buying a home in their desired area.”
Another fear was that interest rates could go up so those who wanted to own a home needed to lock in immediately.

“Maybe people thought ‘interest rates could go up, I should lock in now,’ ” Urban institute housing expert Laurie Goodman said.

Those that were affected by foreclosures during the 2008 recession are ready to buy again. Those that went into foreclosure are now able to obtain a mortgage( it takes seven years for your credit to be cleared of a foreclosure). Buyers who were burned during the housing bubble are no longer gun shy, they are beginning to reenter the housing market.

Overall the unemployment rate is in better shape than it was a decade ago and there are more people out there ready to invest their money.

“When there’s very low unemployment, when there’s been slow but steady wage growth, that tends to make households confident in their ability to make what will probably be their largest investment of their life,” said Ralph McLaughlin an economist at CoreLogic.


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Local Mandeville Artist Exhibits Artwork at Diboll Gallery

Diboll Gallery, located at Loyola University in New Orleans, is currently housing an exhibit that features a local Mandeville Artist. Luba Zygarewicz, a Mandeville resident, is part of the HIVE MIND exhibit which continues until March 17, 2019.

Luba was born in Chile, and came to the United States, San Francisco, when she was 15 years old. She began her formal study of art at Loyola University and earned a Bachelor of Art in Sculpture.San Francisco Art Institute.

She then went on to obtain a Master of Fine Art from

Motherhood took over for awhile, but she still was able to create and discover her talent while rearing and schooling 4 children. Many of her pieces reflect her stages in life and the story of her family. Her mediums include used tea bags from her cups of tea, discarded twigs, lint from her dryer and even clusters of hair.

“Finding myself doing piles of laundry,” she said in the show’s statement. “I often thought of fellow artists I knew…they were probably in their studios making ‘art,’ while I was doing yet another load of laundry. This is where my time is going! ‘Petrified Time: 13 years of my life folded and neatly stacked’ grew out of this inner struggle between domestic obligations and my creative practice.”

“For a while motherhood defined a lot of my work and the process. I think that’s why I worked in little things because they would accumulate into big things,” she said, adding that her long-running

project – collecting her fallen hair for over 25 years– was important because “it was a reminder that I am an artist.”

“My work investigates implied presence in light of absence. I collect moments that together create an experience as a way of holding memories. Memories often drift into the present and are woven into my practice.” she said in a proposal for The Wild: Artist in Residence on Italy’s Amalfi Coast. She was one of five international artists awarded a spot in the November 2018 residency, entitled “Wonder Up a World.”


“The whole point was being more aware of how I move through the world, in a sense of just being present,” Zygarewicz said of LED-lit shoes she created as a representation of a mindful walking practice for an interactive performance during the seven-day residency abroad.

Her installations and sculptures have been exhibited locally, nationally and internationally including Agora Gallery in New York City, Acadiana Center for the Arts in Lafayette, Sonoma Valley Museum of Art in Sonoma, California, Ogden Museum Of Southern Art and the Contemporary Arts Center in New Orleans, Woman Made Gallery in Chicago, among others.

Luba Zygarewicz’s work can be viewed at HIVE MIND continues until March 17 at Loyola University’s Collins C. Diboll Art Gallery, 4th Floor of the Monroe Library, 6363 St. Charles Avenue, New Orleans at the HIVE MIND from now until March 17, 2019.

Follow Luba’s process on Instagram at @lubazygarewicz



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Ways to Watch This Year’s House Market Trends

The prediction this year is a challenging one for the housing market. Mortgage rates will increase as well as home prices making it harder to afford a new home. Along with the decrease in affordability, there will also continue to be a short supply of homes to purchase.

On the flip side, 2019 sees more entry-level homes being built and mortgage lenders are making it easier to qualify for a home loan. First time home buyers should have a better chance at purchasing their first home this upcoming year.

A great way to look for a good opportunity is to follow the market trends. Here are several housing and mortgage trends to watch for this year.

Supply and demand is always for the buyer or for the seller. The best time to buy is when the market exceeds the demand. The real estate market has been on the seller’s side now for almost a decade.

There is just more buyers out there then there are homes for sale. Although this is not an ideal situation for those looking to purchase a home, the forecast does show there might be some fortune coming their way. Reports have shown that there will be a rise in the number of homes for sale in 2019.

Secondly, look at the home price trends. Are the home prices on the rise or holding steady? It is predicted that the prices of homes will rise this year but at a slower pace than in the previous years. The National Association of Realtors estimates the prices to rise 2.5% in 2019 to a median of $265,200 making the spike 2.2% less than in 2018 where the rise was 4.7% to a median of $258,700.

“Home price appreciation will slow down — the days of easy price gains are coming to an end — but prices will continue to rise,” says Lawrence Yun, chief economist for the National Association of Realtors.

Another trend to watch is the rise in Mortgage rates. Again, it is predicted that the mortgage rates will rise at a slower pace in 2019. A 30-year fixed mortgage should rise half a percentage point this year according to Freddie Mac compared to the 2018 30-year fixed mortgage rate which went up just under three-quarters of a percentage point.

A shy buyer’s market can be concerning. Potential home buyer’s should gauge home ownership affordability. When the prices and rates go up, it is harder to find affordable homes.

“We do worry about affordability, particularly in some areas that have lower inventory” of homes for sale, says Randy Hopper, senior vice president of home lending for Navy Federal Credit Union.

According to Hopper this will not deter prospective home buyers from purchasing a home. He explains that a quarter or half percentage point rise will only impact a mortgage payment by $75 to $100 per month on a $300,000 home for example.

Hopper states this, “isn’t insignificant, but it’s not necessarily something that impacts the buying decision.”

As far as home prices, Danielle Hale, chief economist for Realtor.com predicts the home prices to rise at a slow pace which will cause them to fall back in line with incomes.

Look for ways the builder’s accommodate the price increases in the housing market to make a more affordable home for potential buyers. Builder’s are building new homes smaller and more affordable.

“Continuing a multiyear trend, new single-family home size decreased during the third quarter of 2018,” wrote Robert Dietz, chief economist for the National Association of Home Builders, in a November blog post. “New home size has been falling over the last three years due to an incremental move to additional entry-level home construction.”

Homes built in 2018 averaged out to be about 2,320 square feet which is 4.9% smaller than the median size of new homes built in 2016.

Hopper comments, “I think for many years, the builders were focused on that $500,000-and-up market because the margins were healthier,” he says. “But they’re starting to find now that there’s so much pent-up demand in the lower-end-priced market that they can sustainably offer communities and new construction, and we’ve seen a lot of growth in that space.”

Another trend to be aware of is first-time home buyers. “First-timers have dominated the mortgage market for the past 10 years, and their share today is still high,” according to an Urban Institute report published this summer, which adds: “We don’t see this changing anytime soon.”

Currently first-time home buyers take out approximately 60% of purchase mortgages. Prior to the housing crisis, first-time home buyers only made up 40%. In fact, 80% of the growth in home sales for the past three years are from first-time home buyers.

Tian Liu, chief economist for Genworth Mortgage Insurance reports, “Between 2007 and 2015, our estimate is that roughly 3 million first-time home buyers delayed buying a home, and they’re reaching that age when they can no longer delay.” Liu says. “Their housing needs are really catching up with them. It doesn’t feel right to be raising a family in a rental apartment. They want to own their place. So I think those drivers will be very significant for the next few years.”

Look at the mortgage lending standards. Mortgage lenders want to make sure a borrower can repay their loans. During the financial crisis of 2008, lenders became strict on their lending standards.

Today, mortgage lenders are tending to relax the standards. There are less documents, lower credit scores and smaller down payments that are required.

This leads into what type of mortgages are being chosen by home buyers. When rates on fixed-rate mortgages go up, home buyers tend to choose ARMs (adjustable-rate mortgages).

Arms accept more risk from the borrower. In October of 2018 ARM’s consisted of 8.2% of compared to the 5.5% in 2017.

Last, watch for bidding wars. Even though 2019 is predicted to be a seller’s market doesn’t mean a seller can expect a bidding war. If a home is priced above the median for that area, sellers tend to not see a bidding war.

As a seller, Hale says, “if you’re in that above-median price point, you’re going to have to price competitively and offer incentives for buyers.”


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