Job Growth and Lower Mortgage Rates Boosting Single-Family Housing

This year the housing industry has been on an uphill victory. According to NAHB Chief Economist Robert Dietz newsletter, Eye on the Economy, there are two main factors that are helping the single-family housing sector.

Job growth has been on a positive path in 2019. It is reported that there is a historically low unemployment rate at 3.7%. In June 2019 there were 224,000 jobs added to the country’s workforce.

The first six month of the year saw an average of 172,000 new jobs per month.

In the residential construction industry alone the increase was 21,000 jobs in June. The average for the first six month of the year in residential construction stands at 5,800 per month. Since the recession, there have been a total of 923,800 positions added in residential construction.

Also to aid in the booming housing industry is lower mortgage rates. Freddie Mac reports that the averaging 30-year fixed-rate is 3.8%. This is the fifth straight month that mortgage rates have fallen making this one of the best times to finance a home.

A recent industry survey shows that the mortgage loan applications for both purchase and refinance surged in the first week of June 2019.

In the most recent survey put out by the Freddie Mac’s research team it states that this “will help sustain the momentum in the housing market in 2019.”

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Old Lacombe Restaurant to Re-Open as Hotel and Events Venue

La Provence was one of north shore’s dining landmarks until it closed in 2018. What was once a French restaurant, will now open as a hotel and events venue. The spot is perfect for this as it has been compared in the past to a classic French country inn.

Cayman and Danny Sinclair, brothers and local entrepreneurs, purchased the property which they plan to turn into the small hotel and events venue naming it the Inn at La Provence.


“I feel like there’s so much value in that name, it’s so recognized; it means a lot to people. It would be a shame to lose that,” said Cayman Sinclair.

The single-story building currently has several dining rooms and a “lodge-like lounge” with a

fireplace. La Provence, which was built and opened by Chris Kerageorgiou in 1972, became one of the north shore’s most respected restaurants. Well known for Kerageorgiou’s quail gumbo and braised rabbit, his lamb a la Grecque and the little pots of chicken liver pâté set down with the bread, La Provence gave residents a great place to create fond memories.

“My family would stay for hours, sitting around that fire in the front room,” he said. “It was a classic place. We’re really excited to be able to revitalize it.”


The brothers plan will be to reconfigure the existing building for the events venue and build small bungalow-style structures on the two-acre property. The 28 room hotel and events venue would be a perfect place for weddings, corporate meetings and retreats.

“We can host the event, they can stay on the property, and from here they can go to other restaurants for rehearsal dinners or their night out,” he said.

Set to open in Fall of 2019, the Inn at La Provence will also open to the public for brunch on Sundays.


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House-Passed Bill Gives First-Time Home Buyers a Break

We all know that buying a home is a big step for anyone especially for someone who is doing it for the first time. A bipartisan House bill passed at the beginning of July 2019 that will help ease the first time buyer’s anxiety over the home buying process. The bill will allow first-time home buyers to pay less closing cost if they go through homeownership counseling.

“The idea behind the legislation is that counseling should improve loan performance and make people better borrowers,” said Pete Mills, senior vice president of residential policy for the Mortgage Bankers Association, which generally supports the bill.

The Housing Financial Literacy Act applies to mortgages backed by the Federal Housing Administration and is a tool that can be used for first-time home buyers. Those eligible, will go

through counseling which teaches them ways to be financially responsible homeowners. Once completed, they would receive a discount on the upfront mortgage insurance that is required on FHA loans.

First-time home buyers tend to go with FHA loans because of the less-stringent requirements. Although the requirements are more lax than a conventional loan it requires more money for insurance premiums because the FHA loan is riskier. Today the delinquency rate on FHA loans is around 9% where the delinquency rate on a conventional loan is only around 3%.

The risk for the lenders on an FHA tends to be higher because a good many of the first-time home buyers using an FHA have low or moderate incomes with lower credit scores. Lenders require those using the FHA to pay mortgage insurance along with an upfront mortgage insurance premium. Currently the upfront amount paid is 1.75% of the base loan amount. If a borrower does not have the money upfront to pay the premium, the cost can be rolled into the loan. The Housing Financial Literacy Act allows a discount of 25 basis points making the premium amount 1.5% of the base loan amount instead of the 1.75%. As an example, the upfront mortgage premium on a $200,000 loan would be $3,500 but with the discount the first-time buyer would only need to pay $3,000.


Hopefully if put into law, the bill will not only help reduce cost, but also give first-time home buyers the tools to become financially responsible homeowners.

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Too Little or Too Much….

When purchasing a home, the majority of homebuyers will purchase using a mortgage. Your credit and your down payment will affect your monthly payment and mortgage rate. The more you put down the lower your monthly payment will be making it easier to build more equity in a shorter amount of time. Although this is a plus, it can back-fire when a homeowner puts down most of their savings on a down payment leaving no funds for home maintenance or emergencies.

“There’s really no one-size-fits-all solution,” says Jason Speciner, a certified financial planner in Fort Collins, Colorado.

Find a happy balance. Figure out how much you can put down to lower payments without leaving the finances high and dry for those upgrades, maintenance issues, life emergencies or life in general. Here are a few pointers to follow when deciding the amount to put down on a home.

Do the benefits outweigh the negatives? Future homeowners are surprised at the differences in the monthly mortgage payments when calculating different down payment amounts. If a higher down

payment would mean a borrower could avoid mortgage insurance this would definitely be a plus. Mortgage insurance is a monthly expense added on top of the monthly mortgage payment making it a much slower process of building equity. There are times when a higher down payment does not reap any benefits. If it leaves a future homeowner strapped for cash it is just not worth it. If someone just needs to put down 3% for a conventional loan but tries to scrape together 5% to lower the monthly payment it just doesn’t make enough difference and cannot be justified if it leaves a future homeowner strapped.

Always be mindful of the effects a higher down payment will have on your financial plan. According to the Bank of the West’s 2018 Millennial Study, 29% of homeowners between the ages of 21 to 34 borrowed from their retirement accounts to make a large down payment on a home. Taking from Peter to pay Paul is not always the greatest solution. Taking money from your 401(k) is definitely risky. If you loose your job, the money must be put back into the 401(k) before the next yearly tax filing or it will be treated as ordinary income with a 10% penalty. An Roth IRA is not as risky, but when taking out money from your IRA you are losing tax-free growth.

Always expect the unexpected. You always want a cushion to fall back on. Leave some cash in the bank for emergencies. Sadly NerdWallet’s 2019 Home Buyer Report, says that 34% of recent first-time home buyers feel they are no longer financially secure after purchasing their home. Homownership includes many expenses that first time homebuyers might not have planned for. Do not drain your savings on a down payment and closing costs.

Speciner says it best, “Emergency reserves are for ‘Oh, shoot’ moments.”


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A Mandeville Favorite Dining Spot Is Not Gone Forever

Liz’s Where Y’ at Diner in Mandeville was tragically burned in a fire June 11, 2019. The closing of this landmark at 2500 Florida Street was sad for everyone. Liz is not letting the fire detour her business. She plans to reopen.

Tuesday morning, June 11, 2019, a fire broke out during a busy morning rush. The fire began in the dry goods storage area and spread from there causing major damage to the building. The restaurant’s 10 year anniversary is today and will be celebrated when the restoration is complete.

Liz praised the community for their love and support, “The love we’re getting … the wonderful things people are saying and doing for us. The free meals (from neighboring restaurants). It’s amazing. It’s truly amazing.

“I’ll tell you: It’s overwhelming.”

Liz Munson opened “the laid-back diner” ten years ago in Mandeville on Florida Street. This had been her dream after waitressing for fifteen years. The New Orleans native wanted to celebrate the New Orleans’ classic Creole food in the tranquil setting of the Northshore. 
     
The fire hasn’t stopped her from working nor her employees. She will keep paying her employees even though the restaurant is closed. Liz has created a make shift office out of a picnic table next door. She and her 33 employees are working on getting the restaurant restored and reopened.
Luckily the damage was mostly in the kitchen area, however everything will have to be replaced.

Munson explains that, “The smoke (damage) is everywhere. Little things like the pencils and the pens. Every sheet of paper. Everything smells like smoke.”

Patrons will still enjoy the same food, and same atmosphere as before. Liz shoots for a Labor Day reopening. There is a GoFundMe page that has been set up to help cover cost.
Click here to contribute to the GoFundMe account for Liz’s Where Y’ at Diner.

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2019 New Home Sales Up 3.8% Year-Over-Year

Even with the sales numbers for new homes for sale during May, 2019, not all in, an annualized report of new home sales shows a 3.8% increase, year-over-year of new home sales. Because many different firms only look at sales numbers through the lens of how they compare to the previous month’s sales, the reports of new home sales growth slowing have been inaccurate when taken into account of adjusting for seasonal fluctuations and year-over-year numbers.

In 2018, two things affected new home sales – the increases in interest rates throughout the year and a slight stock market “bear market” which slowed down the economy overall. The beginning of 2019 shows a boost after the slowdown, and it also doesn’t show any signs of wavering throughout the rest of the year according to Forbes.com economic contributor John S. Tobey (click here to read the article).

The seasonal adjustments account for the slowdown of new home sales throughout the winter – this is a consistent annual occurrance. It is Tobey’s opinion that home buyers “postponed” the purchase of their new home to wait for better housing market conditions. He also anticipates double-digit growth rates towards the end of 2019’s home buying season.

Locally, in St. Tammany Parish, Louisiana, local home builders enjoyed enormous turnout for the 2019 Parade of Homes. Also, local builders have also seen tremendous and growing interest in home buyer contacts to build new homes and fully custom homes in Mandeville, Covington, and Madisonville. Ron Lee Homes has been inundated with interested home buyers, partially as a result of the Parade of Homes. We welcome you to Contact Us for your home building needs to sit down for a consultation to discuss your options. Call 985-626-7619 or Email Info@RonLeeHomes.com.
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Home Sales Increase Nationally During May

For the first time in two months, the year-over-year increases in existing home sales increased during the month of May, according to the National Association of Realtors (NAR). The exact number of home sales was 5.34 million, increasing existing home sales by 2.5%. Part of this increase is due to supply. For many months, it’s been a seller’s market because the number of homes for sale has not been able to meet the demand of home buyers on a national level.

The number of homes for sale increased from April, 2019, to May, 2019, from 1.83 million units to 1.92 million units in May. The types of homes included were single-family homes, townhomes, condominiums, and co-ops. There was also a year-over-year increase in the number of homes available for sale from 2018, which saw 1.87 million units available to May, 2019, which had 1.92 million units, which is a 4.3-month supply for potential home buyers.

Home buyers are eager to pick up homes as soon as they come on the market, which has been great for sellers and Realtors alike. The average amount of time that an existing home stayed on the market before going under contract was 26 days, and that actually accounted for 53% of homes under contract. This statistic is kind of unusual because average home prices are up in 2019 – by 4.8%, averaging $277,700 for resales.

All statistics were made on a national level, but specifically in the Southern region, resale sales were up 1.8%, and home sales also increased by 1.3% in the Southern region. Locally, homes for sale have been “flying” off the market, so if you are in the market for a home for sale or are considering buying a new home for sale, Contact Ron Lee Homes for your next new home purchase! Call 985-626-7619 or Email Info@RonLeeHomes.com.

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