In Time for Buying Season, Rates Reach Yearly Lows

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Daily Real Estate News
May 6, 2011
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In Time for Buying Season, Rates Reach Yearly Lows

The 30-year fixed-rate mortgage, a popular choice among buyers, sank even lower this week, matching its yearly low of 4.71 percent from January, reports Freddie Mac in its weekly mortgage market survey. Last year at this time, the 30-year fixed-rate mortgage averaged 5 percent.

Meanwhile, the 15-year fixed-rate hit a new yearly low of 3.89 percent this week. Last week, the 15-year fixed-rate mortgage averaged 3.97 percent. The 15-year rate averaged 4.36 percent last year at this time. It reached its lowest level on record in November when it averaged 3.57 percent.

The one-year adjustable-rate mortgage averaged 3.14 percent, down from last week’s 3.15 percent. Last year at this time, it averaged 4.07 percent.

"Weaker economic data reports reduced Treasury bond yields and allowed mortgage rates to drift lower for the third consecutive week,” says Frank Nothaft, Freddie Mac’s chief economist.

Source: “30-Year Fixed-Rate Mortgage Matches Yearly Low of 4.71 Percent,” Freddie Mac (May 5, 2011)

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Apartment Vacancies Decline, Rents Expected to Rise

By DAWN WOTAPKA
Vacancy in apartment buildings fell to the lowest rate in more than two years in the first quarter, setting the stage for fewer choices and higher rent for tenants.

With the economy adding jobs, and with more people choosing to rent instead of buy homes, the nation's vacancy rate came in at 6.2%, down from 6.6% in the fourth quarter and 8% in the first quarter a year ago, according to data released Wednesday by Reis Inc.

This increasing demand has allowed many landlords to scale back on freebies and increase rent. The average effective rent, or the amount paid after discounting, rose to $991 in the first quarter from 2.5% a year earlier, according to Reis, which collected data from 82 major markets.

."You don't often see occupancy and rents increasing at the same time," says Rich Anderson, a REIT analyst covering the multifamily sector for BMO Capital Markets. "It's a great fundamental picture today."

Thanks to the bullish outlook, apartment buildings are being bid up close to boom levels in some of the hottest markets. Last month, UDR Inc., a Denver-based REIT, said it would pay $260.8 million for its first Manhattan building.

Also, many of the nation's apartment owners have ramped up construction. Home Properties Inc. said Tuesday it started a 314-unit community in Fredericksburg, Va., that should be finished by 2012.

It also aims to break ground on a Maryland development later this year.

"Now is the time to start development," said David Gardner, Home's chief financial officer. "We're expecting to see some great returns."

The CoStar Group expects about 22,500 units to be added this year, followed by 94,600 in 2012 and more than 109,000 in 2013. Of course, that might put downward pressure on rents and occupancy levels.

"Supply will come in and rain on the parade as it always does," Mr. Anderson says. "It's just a matter of when it will happen."



The market improvement also could stall or reverse if employers don't keep adding jobs. But, for now, few industry watchers are worried.

"Expect vacancies to continue declining, and rents rising through the rest of 2011 at an even faster pace," Reis wrote in the report.

Rental activity during the winter season is typically slow because consumers prefer to avoid apartment hunting and moving in chilly weather.

But landlords filled 44,000 more units than were vacant in the first quarter, the strongest first quarter in a decade.

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Possible signs Recession may be coming to end in Columbia S.C.

Published: July 29, 2009

COLUMBIA — After years of bad news, it looks like the recession may be over in South Carolina and nationally.

“We do believe the recession actually has bottomed-out now,” said Dr. Doug Woodward, an economist at the Darla Moore School of Business at the University of South Carolina.

“We see a lot of indications that the economy is not expanding vigorously, but it’s not deteriorating, either,” he said. “Maybe that’s not the best news to hear, but it is in the context of what we’ve been through.”

Woodward said the school keeps track of the economy through a set of indicators, which are combined into a composite index of leading indicators that anticipate where the economy will be in six to eight months. Those indicators include things like home sales, construction permits, unemployment, hours worked and national indicators, like the stock market.

Nationally, the stock market is back above 9,000 and has been rising since March. Home prices went up in May for the first time in three years, based on a 20-city index. Nationally, home sales also went up in June for the third straight month.

In South Carolina, home sales were up 16.5 percent in May from April.

But it’s not a vigorous recovery and there are mixed signals. While home sales were up from April to May, when you compare May 2009 with May 2008, sales were down 21.4 percent.

S.C. Comptroller General Richard Eckstrom said he hopes the recession is over, but he’s not convinced yet that it is. Companies across the state are still cutting back.

DuPont Teijin Films announced Tuesday it will cease polyester film manufacturing operations in Florence by September 2010. All 213 employees will lose their jobs at some point in the shutdown process, which will occur in phases.

Mohawk Industries just announced that its cutting 45 positions from its commercial carpet plant in Landrum.

“Sales taxes, usually, pretty much reflect what’s going on out in the economy and our sales tax collections are terrible,” Eckstrom said. “We saw sales tax collections dip 6, 7 percent last month. It’s not as bad as they had been, but it’s still very bad.”

Eckstrom said income taxes and corporate taxes also are down, but they typically recover later in the process.

Woodward also said those are “lagging indicators,” so it’s no surprise they would still be down if the recovery is just beginning.

And, unfortunately for the thousands of South Carolinians who are out of work or facing layoffs, the unemployment rate is also one of the last things to improve during any recovery.

“Businesses aren’t going to be hiring and bringing on new employees until they see a sure sign of recovery,” Woodward said. “So their business might be expanding, but they’re not going to be hiring. They might add more hours to the existing labor force, so that’s one thing we do look at as an anticipation of where the economy’s headed — hours worked. But actual new jobs being created and the lower unemployment rate, that’s just the last thing to pick up.

“We just think — we hope — the worst is over.”

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