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Jersey Shore Properties: Consider whether to trade up

Ellen James Martin, Press of Atlantic City

Americans have been on a home-improvement binge for years. But at some point, many homeowners realize their aspirations can’t be met through remodeling alone. That’s when they start thinking seriously about buying a better property.

What spurs move-up buyers to action? Often, it’s a job promotion, a growing family or the quest for better schools. Lately, it could also be the belief that if they don’t act soon, home values might rise to the point that they can no longer afford to move up.


“At some point, people just say, ‘Let’s go ahead and take the plunge,’” said Ashley Richardson, a longtime real estate agent affiliated with the Council of Residential Specialists (

She told the story of a couple of 33-year-old buyers who, until recently, were living comfortably with their 2-year-old son in a tiny Cape Cod with a dining room so small it could barely fit a table. Word that the wife was pregnant with twins sent them house-hunting.

After much discussion, they sold the house they bought in 2006, accepting the reality that it had gained little value since then, and found a colonial triple its size in a nearby neighborhood.

And it’s not just people with growing families who are moving up. Richardson also cited an older group she calls “house tweakers” who make a hobby of home improvement.

“As soon as they make one house absolutely perfect, they feel compelled to find another house they can remodel,” she said.

One common denominator to all trade-up buyers is the quest for upward mobility that Richardson believes is embedded in American culture.

Here are pointers for move-up buyers:

n Let go emotionally of your current property.

Surprisingly, many people who want to sell their property in favor of a better one have a tough time letting go of their current domain, said Sid Davis, the author of several real estate books.

“Subconsciously, many sellers think they’re entitled to a higher-than-market price because they love their house and think it’s better than any other place for miles around,” said Davis, a veteran real estate broker.

“Get greedy and you’ll hurt your plans for moving any time soon,” Davis said.

How can you loosen emotional ties to your current property so as to sell it properly?

Davis recommends that before setting your list price, you do a brief tour of the properties available in your price range in the area where you wish to live.

“Looking around at other options can flip the switch in your brain and cause you to get excited about buying that better house. This should help you on the selling end,” he says.

n Never ignore resale potential when buying a home.

If you’re trading up to a better property for the second or third time, you may assume your next buy will be your last — what real estate people call a “forever house.” But statistics show that many owners sell sooner than expected, said Dorcas Helfant, a former president of the National Association of Realtors (

Regardless of how long you stay, you’ll want a place that not only holds its value but appreciates. That’s why it’s wise to look for features that will gain in value over time, such as those that help keep utility bills to a minimum.

Helfant said one good bet is to look for energy savers, including extra attic insulation, double-paned windows and high-efficiency appliances. In addition, look for an open floor plan that should retain its popularity over time.

“Buyers don’t like chopped up floor plans with a lot of small, self-contained rooms. They like a kitchen that flows directly into a large ‘great room,’” she said.

n Don’t rule out a brand-new home.

As always, real estate markets vary in strength, fluctuating through the seasons and economic cycles. But Davis said one constant is that better deals, on a per-square-foot basis, are typically found in upper-range subdivisions.

“Some areas now have a shortage of new housing at all levels, while others have an excess of new properties at the top. Builders with big construction loans are always eager to sell so they can repay their debts,” he said.

n Consider the purchase of an “over-improved” property.

The recent surge in home-improvement activity prompted some homeowners to go to extremes, making their properties fancier than their neighbors’. For example, they might have added exotic wood kitchen cabinets in an area without upscale kitchens. Or perhaps they’ve built on a fifth or sixth bedroom in a community of three- or four-bedroom houses.

When they first set their list price, the owners of an over-improved home may ask too much, on the hope they’ll recoup every dime they spent on remodeling. But if they’ve outdone the local market, their home will typically sit unsold for a lengthy period, said Michael Crowley, a broker and former president of the National Association of Exclusive Buyer Agents (

Once a major price cut is taken, however, the over-improved home can become a genuine bargain, Crowley says.

“The key here is to be sure your agent is tracking the home and can tell you the minute a big price reduction occurs. At that point you might catch a wonderful buying opportunity,” he says

Ellen James Martin, a former real estate editor at The Baltimore Sun, gives advice for anyone buying, selling or financing a home.

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N.J. Realtor figures show stronger housing market, though South Jersey remains sluggish

By BRIAN IANIERI Atlantic City Press Staff Writer


New Jersey’s housing market has shown signs of strengthening in the past 12 months, with single-family homes selling 13 days faster and for $11,000 more than the prior year, according to new data from the New Jersey Association of Realtors.

“The market is starting to rebound,” said Jarrod Grasso, the association’s CEO. “We’re having a stronger market than we’ve seen in the last several years.”

But some South Jersey markets have been markedly slower.

In Cape May County, for example, the median home sale price dropped to $369,275 in the 12-month period ending in August, a 12 percent decline, the NJAR data show.

Atlantic County’s median sale price increased by $7,200 to $214,900, while the overall number of sales dropped about 2 percent during that time.

Cumberland County saw sale prices drop $13,000 — or nearly 9 percent — while single-family home sales rose 2 percent.

For the month of August, the average single-family home in Atlantic and Cape May counties was on the market for fewer days than in August 2012.

In Atlantic County, the average home was on the market for 103 days, 10 days fewer. In Cape May County, it was 109 days, nearly 44 days fewer.

Across New Jersey, the average was 82 days on the market.

“This is still high and it’s still a lot better than where we were,” Grasso said.

Last August, the average New Jersey home was on the market for 96 days.

The figures for Atlantic, Cape May and Cumberland counties reveal the ongoing trend of a sluggish housing market compared to the rest of the state and the nation.

However, in the month of August, there were some bright spots in single-family home sales — 108 homes were sold in Cumberland County that month, compared to 89 in August 2012.

And the number of new listings in Atlantic County shot up to 455 in August, compared to 376 a year ago.

The latest figures were released the past week by the New Jersey Association of Realtors as part of a new project to provide detailed housing data at state, county and local levels each month.

The NJAR says the reports will shed light on the intricacies of the housing markets throughout the state. The data comes from nine Multiple Listing Services in New Jersey and is analyzed by 10K Research & Marketing.

The figures were also released several days before the National Association of Realtors put out its highly followed monthly report on existing home sales in the U.S.

An unknown in real estate today is the future of interest rates, which the federal government drove to historic lows after the recession to stimulate borrowing and homebuying.

In August, a 30-year fixed-rate mortgage was 4.46 percent, according to mortgage giant Freddie Mac. This rate has increased throughout the year, and was 3.41 percent in January.

The difference in mortgages on a $300,000 home is $181 per month, according to

“If they’re creeping up, it will put a little more pressure on buyers getting into this market,” Grasso said. “If interest rates start creeping up, it will affect affordability. … It all goes back to the individual purchaser, what they’re comfortable with and what they can afford. When interest rates go up and you’re running a tight budget, that can impact whether you can buy that home.

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Home price appreciation expected to continue

I do not understand why, anyone would put much stock in a survey backed on what the public expect that prices will go up. They should be looking at supply and demand trends. Prices will fall back this fall as normal. In the spring they will go up, as is normal. There are micro cycles in a rising market. If you want a deal now til end of January is your time. If you want better selection wait til spring.

Read on …..

Home price appreciation expected to continue

Potential homebuyers show confidence in housing


More than half of Americans, 55% to be exact, are confident that home prices will go up over the next 12 months, according to a new report. Of those surveyed, 27% believe home prices will remain unchanged, while 9% anticipate a decline in home prices.


“It seems like Americans’ love affair with real estate has returned,” said Greg McBride,’s senior financial analyst. “But there are still some clear headwinds, including rising mortgage rates, stubbornly high unemployment and the relatively low U.S. household savings rate.”

But it appears these headwinds may have already passed. The latest local market index revealed monthly improvement in all 100 markets tracked in July — an increase from 87 markets the month before. According to the report, part of the weakness in recent months can be attributed to rising interest rates, which is likely having an impact on affordability.

The report from pointed toward strong success in the West, who saw an index percentage change of 4.98% from June to July. Following closely was the South, which saw a monthly change of 3.29%. The Midwest and Northeast had index percentage improvements of 1.93% and 1.45%, respectively.

The latest Lender Processing Services price index released Monday also pointed toward continued improvement in home prices. The home price index was up 0.6% on a monthly basis in July, with the average price of a home hitting $231,000.

The July numbers are up 8.7% year-over-year, compared to the home price average of $212,000 last July. However, the index is 14.7% below the June 2006 peak of $270,000.

On a monthly basis, Florida saw the biggest increase in home prices, up 1.0% from June. New York came in second with a 0.8% increase, while Texas followed with an increase of 0.6%. California and New Jersey rounded off the top-5 list, both with 0.5% improvement.

Both the Federal Housing Administration House Price Index and the S&P Case-ShillerHPI will be released on Tuesday. These reports will give further insight into the direction of home prices in the country.

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Few think it’s a good time to sell a house

From the WSJ:

Consumer confidence in the housing recovery has leveled off, likely connected to concerns that the Federal Reserve will cut back on asset purchases, according to new data from mortgage-finance company Fannie Mae (FNMA).

Americans, already pessimistic regarding their personal finances and the economy, demonstrated declining optimism in August across key housing-market measures. Those saying it would be a good time to sell a house declined four percentage points to 36% from July, and those saying it’s a good time to buy a house decreased three percentage points to 71%.

According to the survey, the share of consumers who believe home prices will go up in the next year rose two percentage points to 55%.

“The spike in mortgage rates associated with the possibility that the Fed will begin to wind down its asset purchase program later this month has dampened the improving trend in consumer sentiment regarding housing witnessed in our survey since the start of this year,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.

The average 12-month home price change expectation decreased slightly to 3.5%, Fannie Mae said. The percentage of respondents who think mortgage rates will go up decreased two percentage points to 60% from last month’s survey high.

The average 12-month rental price expectation fell slightly to 4.1%.

The share of respondents who said they would buy if they were going to move increased slightly to 65%, while the share who said the economy is on the right track fell three percentage points from July to 37%.

The percentage of respondents who expect their personal financial situation to get better over the next year edged up one percentage point to 44%. The number of respondents who said their household income is significantly higher than it was a year ago fell three percentage points to 23%.

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Shaking off the sand, New flood maps a relief to shore housing market

By KEVIN POST, Press of Atlantic City Business Editor 

The island housing market in Atlantic County has gotten a boost from last month’s release of more favorable flood insurance maps.

New preliminary flood zone maps from FEMA reduced the land in high-risk velocity zones – where homes are required to be on piling as a condition of flood insurance – by 80 percent in Atlantic County.

Before the mid-June map release, property owners and potential buyers feared the potential cost of raising properties and insuring them against flooding.

“It was very frightening,” said Paula Hartman, of Prudential Fox & Roach Realtors in Margate. “Now the market is fabulous,” especially in ocean- and bay-front blocks and for new construction.

Hartman, who focuses on high-end properties, said she is having her best year ever – even a bit better than the housing bubble years, with 125 homes sold or committed in the first half of this year compared to 241 in all of 2006.

“When the storm happened, prices dropped 20 percent across the board, and more than that on the ocean and bay. Now interest rates are starting to go up and people are running to get these dream homes while prices and rates are low,” she said.

Hartman said homebuilders didn’t know what they had to build or what the costs would be before the new maps, but now they are buying ground and are very active.

Maria Schrenk, an agent with Coldwell Banker At The Shore in Brigantine, said last week she was preparing to show several properties to buyers interested in building new or rebuilding an existing structure.

There are good buys in the current market for builders and buyers “with a vision for the future,” she said.

“We’re busy. I think there’s some renewed hope,” Schrenk said. “Maybe the fear has dissipated a little bit.”

Paul Dzialo, of Weichert Realtors, Brigantine Realty, said he’s seeing a lot of new construction, particularly in areas spared by flooding from Hurricane Sandy.

He said the agency’s owner, Gary Woerner, is building 15 to 20 homes per year at the affiliated Woerner Custom Builders, including one that just sold for about $2 million.

Sales data for June from the regional Multiple Listing Service seemed to already show the increase in activity in the Margate market.

Margate home sales rebounded to the year-ago level of 16 properties, but now at an average price of $892,000, up from $591,000 in June 2012. In May of this year, the last month before the new maps, 12 homes sold in Margate at an average price of $624,000.

Hartman said reactions to storm damage have been varied, with some homeowners remodeling, some waiting, and some taking their insurance settlement and putting the property on the market as is. Investors and market watchers have been snapping up bargains.

“Before the new maps we didn’t have this many calls from buyers. Now we’re having bidding wars again,” she said.

She said people mostly have come to terms with having to pay more for flood insurance, which was going to happen with or without Sandy. Many others who weren’t carrying flood insurance because they had paid off their mortgage and weren’t required to have it, now are purchasing policies.

“They’re moving forward. People want to be here. If they have to pay a little more for flood insurance, that’s OK because there’s a magic to being here at the shore,” Hartman said.

Even the storm damage and the renovations it required have had a silver lining, she said,

“I know personally what it means to be forced to remodel. The storm forced me to remodel my house and the real estate office,” she said. “But the island looks beautiful now, with many of the houses and stores remodeled.”

A spokesman for the Federal Emergency Management Agency said the updated preliminary maps for Cape May County will be released in August.

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Rebuilding Jersey Shore’s Real Estate Post Sandy

By Kate Rogers

FOX Business


Last fall, Peter Van Sciver watched Hurricane Sandy’s waves destroy both his home and business. The south-Jersey bred realtor lost it all.

“We are the oldest real estate office at the Jersey Shore,” says Van Sciver of his family-owned agency. “I felt sorry for myself for awhile, but not anymore. I feel energetic and positive after coming out of the gauntlet.”

Van Sciver’s attitude reflects the perseverance and renewal taking place throughout the New Jersey Shore region. A week before Memorial Day weekend, which is when tourists and residents start flocking to the beaches, energy is running high on the rebuilding efforts.

Prince Harry of Wales and Gov. Chris Christie toured the damage Tuesday, costing an estimated $37 billion, and while significant reconstruction is underway, there is still a great amount of work to be done.

“Business has been damaged severely, but everyone wants to own a place at the Jersey Shore,” he says. “It’s like the stock market crash in 2008– if you stay in the market, you will lose some money, but the prices are coming back up. I am extremely positive about what our business will do.”


Rebuildng and Repairing

Many of the homes damaged in Ocean County, including Bayhead and Mantoloking, were relatively high-end, says realtor George D’Amico of D’Amico and McConnell Realtors. While some were year-round residences, many properties were second homes, he says, suggesting the owners can afford to fix the damage in many cases.

“In Belmar and Manasquan, a lot of the homes are being refurbished and renovated rather than demolished and built new,” he says. “Some had to be demolished though because it wasn’t worth rebuilding them.”

In terms of units being sold and under contract, D’Amico says his agency is on-par with last year’s numbers, and in some cases even ahead of schedule. The average home prices in Sea Girt and Spring Lake, which saw less damage, are around $1.6 and $1.7 million.

Northern parts of the shore community in Spring Lake and Sea Girt have seen prices go up for  two reasons, according to Van Sciver says. Both areas sustained minimal damage from Sandy, making the location seem ‘safer’ for buyers and renters, and the demand for rentals is higher due to unavailability of properties in shore hotpots like Manasquan and Point Pleasant.

Homes that are selling at the shore have likely been renovated and rehabilitated, says Eric Pearl, realtor at Diane Turton Realty. Pearl covers Rumson, the Atlantic Highlands and the Bay Shore areas in the Garden State, with both high-end and moderately-priced homes. On the high end, his home sell for around $1.5 million and more moderately around $450,000.

“The houses that are selling post- Sandy have all kinds of questions and pieces to them,” he says. “Some of them weren’t damaged, while others have been raised and lifted. Some sellers are selling in an as-is condition, while other owners don’t have the inclination to do any renovation.”

High-end owners in particular are taking a ‘wait-and-see’ attitude, according to Pearl for the government’s final delineation numbers for flood zones and where homes need to be raised off the ground. Pearl says these should be released in August, however there is a period of public comment afterwards before any final decisions are made.

“If the government says they have to raise their home 14 feet off the ground, or their flood insurance is going to be $28,000 a year, they may just sell,” he says. “But the problem is that people who are trying to sell now don’t have those answers for the new buyers, who are skeptical and wary.”

The Rental Market’s Shift

The traditionally rock-solid summer rental market has also changed significantly after the storm, realtors say, not necessarily in terms of property demand, but in location for tourists.

Due to major damage to many of the rentals in Manasquan, Point Pleasant and Bayhead, vacationers will be heading more north to the Spring Lake area this season, which has seen a bump, D’Amico says.

“This has given rise to greater rentals in Monmouth County,” he says. “In Mantoloking, a lot of those rentals just won’t be happening.”

Overall though, the storm damage hasn’t stopped shore mainstays from booking their summer seasons this year, he says. The numbers are solid and on par with last  year’s.

Open for Business

D’Amico is president of the Greater Spring Lake Chamber of Commerce and says the chamber is making a public relations outreach push to let tourists know that despite the damage and devastation, this summer it is widely business as usual.

“In a lot of cases, we are as good as new,” he says. “It’s the great shore that everyone knows and loves– we’re still here.”

The communities are all so intertwined, so even if some areas are still rebuilding, others will pick up the slack when it comes to tourism, he adds.

“No town stands on its own, If you vacation in Spring Lake for the summer, you will probably go to Asbury Park for dinner during the week. The Belmar boardwalks were gone after Sandy, but will be ready for Memorial Day Weekend. The towns have done tremendous work.”

Pearl echoes D’Amico’s optimism, and says the real estate market will also return in time.

“It’s just too valuable, and too beautiful a place to live,” he says. “It will be available who are willing to take a chance on a future storm event, or who are affluent enough not to worry about that risk.”

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Housing market continues to improve, but risks linger

By Brena Swanson

  • July 12, 2013 • 2:07pm

The latest data from the Obama Administration’s June Housing Scorecard reveals a strengthening housing market.

Yet, administration officials remain cautious, saying the recovery varies by region and is still fragile overall.

“The Obama Administration’s efforts to speed the housing recovery are showing continued progress as the June scorecard indicators highlight ongoing improvements throughout the housing market,” said the U.S. Department of Housing and Urban Development Deputy Assistant Secretary for Economic Affairs Kurt Usowski.

He expanded saying, “Foreclosure starts and completions are down significantly from one year ago and since January 2012, rising home values have lifted 2.4 million homeowners back above water. That said, we remain cautious because although mortgage delinquencies are trending down, they still remain quite high compared to historic norms.”


Home prices continued to escalate after hitting their post-crisis level last month. The S&P Case-Shiller home price index rose from an index score of 148.7 in April to 152.4 in May. A year earlier, the same index score hovered at 136.

Existing-homes sales climbed higher to 431,700 units in May, up from 414,200 in April, according to data gathered from the National Association of Realtors.

Also on the rise, new home sales soared to 39,700 units in May compared to 38,800 in April and 30,800 a year prior, data from the U.S. Census Bureau and HUD noted.

Housing supply experienced a slight dip, falling to a 5.1-month supply from a 5.2-month supply, NAR added. Meanwhile, the inventory of new homes ticked up to a 4.1-month supply.


The number of foreclosure starts plummeted from 72,700 starts in May to 57,300 in June, RealtyTrac reported.

Mortgage rates also continue to fluctuate, with the 30-year, fixed-rate mortgage inching down to 4.29%, compared to 4.46% in June, Freddie Mac said.

In addition, mortgage delinquency rates continued to fall for prime borrowers from 3.3% to 3.1%, based on Lender Processing Services statistics.

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FEMA releases new N.J. flood maps

Emily Babay, staff

The Federal Emergency Management Agency has released long-awaited revisions to its flood risk maps. FEMA released the updated flood work maps for Atlantic, Hudson, Monmouth and Ocean counties Sunday evening. Homeowners can check their addresses on a FEMA website to see how the agency classifies their flood risk. FEMA says the new maps decrease the number of homes in high-risk “velocity” zones from advisory maps that the agency released in December, which showed the risk of flooding was worse than believed. Those maps overestimated the amount of land in the V zones, officials said today. Properties in the high-risk zone would have to be raised or risk higher flood-insurance premiums, and some residents and legislators worried that it would be too costly for some homeowners to comply. MORE COVERAGE Here’s what new Shore flood maps mean In Atlantic County, there was an 80-percent decrease in the number of acres labeled as V zones, Bill McDonnell, the mitigation branch director for the FEMA region that includes New Jersey, said at a briefing this morning about the new maps. The county has a significant amount of marshland that could absorb a wave’s impact, he said. There was a 76-percent decline in V zone acres in Hudson County. Ocean County had a 45-percent decrease in V zone acreage and Monmouth had a 46-percent drop in V zone acres, McDonnell said. “We did not take into consideration all of the impediments or obstructions that would impede a wave” in the earlier maps, McDonnell said. In Hudson county, a number of urban structures would obstruct waves, officials said. Authorities said they didn’t have the precise number of homes affected by the changes. The maps will give Superstorm Sandy victims deciding whether to rebuild more information about what to do. State and federal officials have said that residents won’t get grants to repair homes damaged by Sandy unless the homeowners comply with the new maps. Officials also stressed that the revised maps still reflect an increased risk for flooding. “The overall risk has increased from the current effective map,” McDonnell said. “We anticipate that the risk may increase in the future.” New Jersey Sen. Robert Menendez praised the map revisions in a statement last week, saying the earlier versions were “fundamentally flawed.” Maps for Salem and Cumberland counties are expected to be released shortly, followed by Middlesex, Essex, Union and Cape May. Any changes to insurance rates wouldn’t go into effect until 2014, after flood insurance rate maps are released and the public and local officials have the chance to provide feedback.

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Average 30-year mortgage rate up to 4.46%

U.S. mortgage rates surged this week, reaching their highest level in two years and threatening to slow the housing industry’s steady recovery.

Mortgage Rates

30 yr fixed 4.38%
15 yr fixed 3.46%
5/1 ARM 3.53%
30 yr refi 4.40%
15 yr refi 3.45%

Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year fixed loan jumped to 4.46% this week, the highest level since June 2011. That’s up from 3.93% from the previous week.

It was the largest weekly increase in the 30-year rate since April 1987, Freddie Mac said.

The average rate on the 15-year mortgage jumped to 3.50% from 3.04%. That’s the highest since August 2011. A year ago, the rate on the 15-year mortgage was at 2.94%.

The increases follow rising yields on the 10-year Treasury bond in the wake of Federal Reserve Chairman Ben Bernanke’s comments last week that the Fed could start trimming its stimulus policies later this year if the economy continues to improve. Mortgage rates track the 10-year Treasury rate, which is at a two-year high.

Higher rates caused mortgage applications to fall 3% from last week, according to the Mortgage Bankers Association. Refinancing applications also fell to their lowest level since late 2011. But the purchasing index increased 2% and is up 16% from a year ago, according to the MBA.

HOUSING: Mortgage applications fall 3% as rates jump

“Higher mortgage rates may dampen some housing market activity but the effect will be muted by the high level of buyer affordability, and home sales should remain strong,” said Freddie Mac chief economist Frank Nothaft.

Mortgage rates remain low by historical standards. But their sudden jump could make home buying more expensive with each passing week.

A buyer taking out a $200,000 mortgage at a 3.35% rate would pay $881 a month, according to The monthly mortgage payment jumps to $1,008 a month at a rate of 4.46%. That’s an increase of $127 a month, which over 30 years adds $45,720 to the cost of the loan. The figures don’t include taxes and insurance.

Patrick Newport, an economist at IHS Global Insight, doesn’t see the rise in mortgage rates dampening the housing market over the long term.

“We will probably see some impact. … Any time the price of something goes up, people buy it,” Newport said. “But demand for housing is so strong right now. Higher mortgage rates won’t do much to slow down the housing market.”

Rates remain historically low, he noted, and there’s still pent-up demand for houses after several years of depressed construction and a limited number of homes for sale.

A more pressing problem than higher rates is the availability of credit for home borrowers, Newport said. The biggest barrier for many homebuyers has been difficulty obtaining a mortgage. Banks have tightened lending standards since the financial crisis erupted in 2008.

According to Freddie Mac’s survey, the average fee for 30-year mortgages held steady this week at 0.8 percentage point. The fee for 15-year loans rose to 0.8 point from 0.7 percentage point.

The average rate on a one-year adjustable-rate mortgage increased to 2.66% from 2.57%. The fee for one-year adjustable-rate loans rose to 0.5 point from 0.4 point.

The average rate on a five-year adjustable-rate mortgage rose to 3.08% from 2.79% The fee rose to 0.7 point from 0.5 point.

Contributing: Associated Press

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Say goodbye to ultra-low mortgage rates.


Say goodbye to ultra-low mortgage rates.

In the past month, rates have been on the rise and they are expected to continue to climb.



This week, the average rate on a 30-year fixed-rate mortgage jumped another 10 percentage points to 3.91% and are up from 3.3% in early May, according to mortgage giant Freddie Mac. Meanwhile, those seeking a 15-year loan received an average rate of 3.03%, up from 2.56% — a record low.

“It’s unlikely that rates will ever be that low again,” said Doug Duncan, Fannie Mae’s chief economist.

Those who didn’t take advantage of record-low rates have missed the boat — at least for now. Here are three reasons why.

Related: Best deals on real estate

The Fed is going to stop bolstering the housing market. The Fed has kept rates at rock-bottom levels by buying up to $85 billion a month of Treasury bonds and mortgage-backed securities. That has enabled lenders to sell mortgage loans at low interest rates and recoup their money immediately — plus profits.

“Up until recently, expectations were that the Fed would begin to taper purchases of mortgage-backed securities (MBS) and Treasury bonds late in 2013, but that timeframe appears to have moved to September, possibly sooner,” said Keith Gumbinger, vice president of, a mortgage information company.

Related: McMansions are making a comeback

If the Fed stops purchasing the securities, private investors will have to pick up the slack. For investors to do that, the loans will have offer a better payoff. And that would mean raising rates for borrowers, said Duncan.

The economy is no longer reeling. During the recession, the Fed lowered its short-term interest rate to near zero in order to stimulate the economy. But now conditions have improved considerably since the economy emerged from recession four years ago. As the economic revival gains traction, it is creating a tailwind for interest rate increases, according to Gumbinger.

Low rates happen when the economy is in distress. But now, the market believes the economy is getting stronger, said Wendy Cutrefelli, a vice president in the Mortgage Banking Division of Bank of the West.



Housing recovery ripples through economy


Job gains have picked up lately, averaging about 202,000 a month over the past six months.

That hiring is advancing rather than retreating is good news for the economy and any positive future reports are expected to push rates higher, according to Gumbinger. Even mediocre news might not cause any meaningful decline in rates.

3.3% rates are unprecedented. “The 30-year [mortgage rate] hit a 37-year low in 2003 at 5.23%,” said Gumbinger. “That was the previous low-watermark prior to this financial crisis and it’s likely we will move closer to that mark as we grind forward.”

Any return to normal conditions, therefore, will likely be accompanied by higher mortgage rates.

Even if they go up a percentage point or two, however, mortgages will still be relatively low. Historically, 30-year loans are usually 5.5% or higher.

For clues to the direction of mortgage rates, look at the daily movements in 10-year Treasury bond yields. Mortgage rates track Treasury yields with the difference between them holding fairly constant.

These days, Treasury bonds have been on a jumpy uphill climb, with the 10-year hitting 2.21% on May 31, its highest closing since April 2012. On Thursday, the yield was about 2.10%. Since the interest rate on a 30-year is usually 1.7 to 2 percentage points higher, it indicates that mortgages should be at between 3.82% and 4.12% this week