Mean Residential Mortgage Loan Rates as of 4PM 6/18/18
30-Year Fixed-Rate VA 4.875% 5.19%
20-Year Fixed Rate 4.625% 4.721%
15-Year Fixed Rate 4.375% 4.496%
3-month trend 30-year fixed rate 15-year fixed rate
3/28/2018 ------- 4.54%-------------------3.98%
3/21/2018 ------- 4.58%-------------------4.00%
3/14/2018 ------- 4.54%-------------------3.95%
3/7/2018--------- 4.59%-------------------4.00%
Seasonal mortgage loan rate increases of 30-70 basis points is not considered a surge. Most real property assessors define seasonal surges as increases of 200-300 basis points over the previous seasonal structures. When compared to other seasonal mortgage loan increases, we can clearly see seasonal rates have increased about 50% less than in past years. Meanwhile, commercial mortgage rates are approximately 40-50 basis point lower than last spring. While listings for both residential A & B properties are showing as much as a 20% drop in asking prices, as much as a 30% drop in closing prices over last year for the same period in most regions of the country. C & D listing are showing stability and slight drops this year, longer time periods for finding qualified buyers. Translating to higher lending standards. Nominally and historically, spring and summer mortgage rates and property prices increase as much as 50% compared to fall and winter. Note increases are not measure by total pricing but by measurement of actual increases or decrease percentages.
Per example, an A class residential property listed in February at $30 mil, delisted after 3 months, then re-listed come May at a Price of $27 mil, subsequent to a 10 year old purchase at $20 mil, is experiencing a 30% drop in pricing, reflecting on the gross gain, not the total price. Right now this is common for A class residential properties. Read the real estate news, almost daily we are hearing A listing celebrity homes being repriced by as much as 50% downward, or better. Listers, for the most part, are still making money, not as much as they expected. This is a very small fraction of the overall marketplace. Not many of us need 10 car garages and 18 bathrooms. I only need one bathroom myself, tho a second for the grandkids with poor aim, doesn't hurt.
The small development company I founded 28 years ago with partners, specializing in re-hab and new construction of high end middle-class housing spec housing development, currently selling between $8-900k, and higher end spec development of residences greater than $5 mil (from which I am retired, but maintain a quiet investment position) currently has 4 high end properties in contract for summer closings, and 3 higher end properties in contract for summer closings. Our only inventory is 11 parcels for high end development and 2 parcels for higher end development, all waiting for permit approvals before breaking ground. We have a buying subscription list of more than 600 qualified qualified buyers ready to place bids. The market, if judging from our position, is extremely healthy, even tho inventories are extremely low. We are actively pursuing buildable locations. We recently closed on a $40 mil 12 story office building we built in Manhattan, considered a low end project by current Manhattan standards tho it is an A address, the lots limited by zoning and pre-conveyances of air rights. A niche development not worthy of the big boys, but perfect for us. That conveyance reflected an approximate $8 mil gross profit, a post tax net of $4.6 mil. A very healthy project subject to participatory lending. The lending institution, in addition to points up front, term interest, and placement of the permanent mortgage, walked away with $2 mil of the gross, a very nice return on their money in less than two years. They are not a bank. Participation gained us a full point lower interest rate on the construction mortgage (translating as lower carrying costs during construction), and a .6 point return on the placement of the permanent financing.
