Across the great divide: Homeowners and appraisers rarely agree on a property’s value, and for the vast majority of the past decade, homeowners have been overvaluing their homes. As Credit.com reports, a 1.15% gap fell between what consumers thought their houses were worth and the worth determined by appraisers in May—marking the first time in 22 months that homeowners overvalued their properties by greater than 1%, according to Quicken Loans. Quicken Loans, a large, Detroit-based nonbank mortgage lender, publishes its Home Price Perception Index on a monthly basis, and May is the fourth consecutive month of a growing gap between homeowner and appraiser opinion. At the same time, the Home Value Index increased 0.24% nationally from April to May and 4.64% from last May, so values are going up, just not as much as homeowners may have believed, perhaps. Read the full story.
On the way up: With a Federal Reserve interest rate increase looming, consumers likely will face higher mortgage rates once central bank policymakers raise the federal funds rate for the first time since 2006, The Los Angeles Times reports. The rate has been near zero percent since late 2008. Mortgage and other long-term rates already have begun rising in anticipation of a Fed rate increase, which could come as early as Wednesday but is more likely later this year. Other factors also affect rates for mortgages, bonds, certificates of deposit and other financial products. But the federal funds rate is a key factor because it normally reflects broader economic trends. “When the Fed raises short-term interest rates, they’re raising the cost of money, and that impacts the cost of money to consumers, businesses and governments alike,” says Greg McBride, chief financial analyst at Bankrate.com. Read the full story.
On the way down: Housing starts slowed in May, coming off an 8-year high in April. But as USA Today reports, the recent rebound could resume soon. Home builders are still catching up after harsh weather hampered construction this past winter, economists say. Builders broke ground on almost 1.04 million privately owned homes in May, down 11.1% from April’s 1.35 million, according to the Commerce Department. That’s below consensus estimates of 1.1 million new homes. Despite the slowdown, the housing market showed some encouraging signs. Applications for new building permits surged 11.8%, ending just under 1.3 million in May, beating estimates of 1.1 million. That’s another high after topping 1.14 in April. And housing starts were still up 5.1% last month compared to a year ago. Read the full story.
