January Roundup

January Roundup

by Realty Times Staff

Mortgage rates were up only slightly at the end of January, the increase reflecting largely what's going to happen as opposed to what's already happened. That's the way the capital markets work these days. Rates change in anticipation of some future event -- in this case, the Federal Reserve would once again raise short-term rates -- rather than reacting to an unforeseen development. And so, with short rates poised to raise by another quarter-point, long rates, i.e., the rate on 30-year fixed loans, rose to 6.12 percent at January's end from 6.10 percent the week before, according to Freddie Mac's latest Primary Mortgage Market Survey. Last year at this time, the 30-year FRM averaged 5.66 percent. Five-year Treasury indexed hybrid ARMs -- loans which carry fixed rates for the first five years and then become one-year adjustables -- averaged 5.75 percent, unchanged from the week before but up almost three quarters of a percent from 5.02 percent a year ago. But at 5.20 percent, one-year ARMs were up even higher. The typical one-year adjustable was 4.18 percent a year ago and 5.18 the previous week. Calling the end-of-the-month changes "minuscule," Freddie Mac Chief Economist pointed out that favorable loan rates continue to fuel the housing market. Last Word on Rates -- For '05 And one more thing about mortgage rates: They started the New Year just as they ended the old, according to HSH Associates, a publisher of mortgage data. So what's with all that hand-wringing about loan costs shooting out of sight? Over the 12-month 2005 period, mortgage rates may have bobbed and weaved a bit. But when all was said and done, the average 30-year fixed rate mortgage held steady at 6.34 percent, and the 5/1 hybrid adjustable rate mortgage -- fixed for the first five years and then adjusting once a year every year thereafter -- also was unchanged at 5.90 percent. "For all of the noise made this year about rising mortgage interest rates, when economists look back to review the trends of the time years from now, they'll wonder at the hue and cry," HSH says. "Truly, we have enjoyed a remarkable run for interest rates, and there are no current signs that the end of low rates is near." Development Resistance Deep Seated Many people say they are opposed to real estate development, especially in their own neighborhoods. But just how strongly they are against it may surprise you. It did Patrick Fox, who heads a company which specializes in the politics of contested projects. In his company's first-ever nationwide poll on land-use issues, Fox found that Americans are twice as likely to oppose new development as they are to support it. And they say they will use the political process to stop it. "If 'all politics is local'," says the president of the Hingham, Mass.-based Saint Consulting Group, the survey of 1,000 people in the fall "confirms that all land use has become political." Says Fox: "Our survey shows that the American public is far more sophisticated about planning and zoning than we thought. The most staggering number to me is that one if five families has actively opposed a project." The study confirmed that people are most worried about traffic and quality-of-life issues, and found they are most likely to fight quarries, casinos, land-fills and big-box retail. But housing mostly got a green light. Supporters of single-family housing -- not apartments -- outnumber opponents three-to-one. And grocery stores were favored by 63 percent of the respondents. Fast, Faster, Fastest For the 19th consecutive "year," Nevada topped the nation as the fastest growing state. But this time, the race was closer than it has been in ages. The Silver State's population increased by 3.5 percent between July 1, 2004 and July 1, 2005, according to the latest Census Bureau figures. But Arizona was right behind, with a growth rate of just under 3.5 percent for the same period. Overall, the country's population rose by 2.8 million people -- 0.9 percent -- to 296.4 million. And as usual, the South and West monopolized the list of fastest growing states. After Nevada and Arizona, the fastest growers were: Idaho, 2.4 percent; Florida, 2.3 percent; Utah, 2 percent; Georgia, 1.7 percent; Texas, 1.7 percent; North Carolina, 1.7 percent; Delaware, 1.6 percent, and Oregon, 1.4 percent. This was Oregon's first time on the top ten list, edging out New Mexico, which recorded a 1.3 percent population gain. Early Warning on Taxes The New Year always turns thoughts to the new tax season and when it comes to taxes there's no place like home to find shelter. Your home offers a score of tax deductions and credits designed to help offset the cost of housing and to keep the housing market fueled with new buyers. Here's a list of the Top Ten "One the House" tax breaks: Interest on a primary mortgage, home improvement loan interest, points, property taxes, capital gains exclusion, home-based business deductions, selling costs and capital improvements, moving costs, mortgage tax credit and energy tax credits. For a detailed explanation on any of these write-offs, visit the Internal Revenue Service's website.