When the Federal Reserve kicked off its rate-hiking campaign in March last year, the housing market responded predictably — mortgage rates climbed, leading to eventual declines in home prices.
But after 10 rate hikes, the housing market — traditionally one of the most interest-rate-sensitive areas of the economy — is anything but predictable.
“It’s creating a lot of confusion,” said Orphe Divounguy, a senior economist at Zillow.
Mortgage rates have likely peaked — but home prices keep increasing
The Fed has raised its benchmark interest rate by five percentage points since last March to help lower inflation, which was at a 40-year high.
When the Fed raises interest rates, that increases the rates that banks charge each other for overnight loans. Banks and other financial institutions pass on the higher cost of borrowing to consumers by charging them higher rates on mortgages, credit cards, auto loans and other loans. In theory, consumers respond to this by cutting back on spending, which means businesses can’t raise prices as much as they had.
Before the Fed announced its first rate hike on March 16, 2022, average 30-year fixed mortgage rates hadn’t gone above 4% since May 2019, according to data from Freddie Mac. Rates began to increase in anticipation of the Fed’s decision to raise rates and climbed even higher to 4.42% immediately after the first hike. Mortgage rates then continued to climb in tandem with the Fed’s hikes until November, when mortgage rates peaked at 7.08%, despite four subsequent rate hikes since then.
Mortgage rates have been moving higher recently, after weeks of declines. For the week ending July 6, mortgage rates hit 6.81%, the highest level for the year so far, Freddie Mac reported on Thursday.
But the median price of an existing home in May was $396,100, down from 3.1% compared to a year prior, according to data from the National Association of Realtors. However, median prices were up 2.6% for the month, marking the fourth-straight monthly increase. The median price of a new home was $416,300 in May. That’s a 7.6% decline from last May, but a 3.5% increase on a monthly basis, according to US Census Bureau data.
Why did mortgage rates stop responding to Fed hikes?
The Fed’s monetary policy is one of many factors that influences mortgage rates, said Charles Dougherty, senior economist at Wells Fargo.
Another big factor is yields on 10-year Treasury notes, which tend to serve as a bellwether for mortgage rates. But in recent months, the spread between the 10-year Treasury and 30-year fixed mortgage rates has widened.
That’s a product of the uncertain economic outlook, Dougherty said. Inflation remains above the Fed’s 2% target, which means the central bank is likely to implement more rate hikes. But without fully knowing the full effect that more hikes could have on the economy, the Fed may inadvertently invite a recession, he said.
“Long-term interest rates are anticipating not just the Fed’s next move, but the potential path for rates over the next decade,” said Len Kiefer, deputy chief economist at Freddie Mac. “Mortgage rates may respond to the next Fed rate move, but it could seem counterfactual.”
“For example, if the market comes to the conclusion that future rate hikes are less likely, that could put downward pressure on mortgage rates. In that case, mortgage rates could fall, even if the policy rate goes up,” Kiefer told CNN.
Higher mortgage rates have reduced home inventory
In theory, when mortgage rates go up, home prices should fall since it raises the cost of homeownership, thereby reducing demand. But that’s not happening.
That’s partly because the higher mortgage rates that came after the Fed hiked rates created a major lock-in effect, said Kiefer.
At the start of the pandemic, the Fed slashed rates to near-zero levels in hopes of stimulating the US economy as businesses closed and workers stayed home to avoid catching or spreading Covid. With such low rates, homeowners and homebuyers were then able to refinance or buy with rates as low as 2%.
With mortgages now approaching 7%, all that has changed. Selling could mean forfeiting a low mortgage rate for one that’s potentially double.
“Many existing homeowners find it difficult to give up a mortgage under 4% to trade for one over 6%,” Kiefer said. That has contributed to a decline in housing inventory.
And since many homes are still listed above where they were before the pandemic, homeowners have little incentive to sell.
“It seems to be that supply will be stuck for the foreseeable future,” said Dougherty.
Housing inventory, or the number of active home listings, is down by a third from before the pandemic. As of June, there were nearly 614,000 existinghomes listed compared to almost 928,000 in February 2020, according to data from Realtor.com.
In many ways, the housing market is still playing catch-up from the Great Recession, which induced nearly a decade of sluggish new home construction, Divounguy said. When mortgages fell below 3% in 2020, home builders started to pick up — but not fast enough to meet the pandemicsurge in demand.
Home inventory is likely to drop even lower due to the “low flow of listings paired with the demand for homebuying in the spring,” Zillow’s Divounguy told CNN. On top of that, housing demands remain high because the labor market is still so strong and workers continue to earn more than they had before the pandemic, he added.
“That tells the crux of the story for why the housing market seems a bit odd right now,” Divounguy said.
The steep increase in interest rates over the past year has lifted housing mortgage finance rates as well. For most people who bought their homes when interest rates were at historically low levels over the last 15 years, refinancing their mortgages at today’s higher rates is a losing proposition. Those homeowners are caught in a so-called “mortgage lock-in,” according to a new paper titled “Mortgage Lock-In, Mobility, and Labor Reallocation” co-authored by Wharton finance professor Lu Liu.
Typically in the U.S., a homeowner with a mortgage can move to a different home only after paying off the existing mortgage and refinancing their home with a new mortgage. But homeowners who find themselves in a mortgage lock-in cannot move to a different location unless they buy a cheaper home or earn more, in addition to covering the costs of moving and refinancing. In such conditions, Liu says “the housing market is gridlocked,” where homeowners have a “strong incentive to stay put” in their current homes.
The paper’s authors build their case around the metric of the mortgage rate differential (or “mortgage rate delta”) which is the difference between the mortgage rate locked in at purchase and the current market rate. Their study covered the period between 2010 and 2018, with about four million observations (or households) of data on consumer credit records. The average mortgage loan balance was $205,480, the average remaining loan term was 21 years, and the average mortgage rate was 5.1%. The moving rate was measured as a change in a homeowner’s primary residence that has been reported to a credit bureau or bank.
According to Liu, their paper offers some takeaways for policymakers. She points out that when homeowners in the U.S. want to move, they have to settle their existing mortgage and take out a fresh mortgage for their new home. In that, they have less flexibility in moving home than those in the U.K. or Canada, which allow portability (taking your mortgage to a new house) or assumability of mortgages (taking over the mortgage on an existing house), respectively.
“When policymakers raise interest rates, we need to think about mortgage market policies that alleviate lock-in, otherwise there will be knock-on effects on mobility and labor reallocation,” Liu says. It would be helpful if homeowners can keep their existing mortgages and take it to their new houses; policymakers should evaluate these policies with mortgage lenders, she adds.
As the pandemic shut down office life in Los Angeles’ downtown financial district, Claude Cognian tried to keep his gastropub Public School 213 open. But the evacuation of white-collar workers made way for an influx of homeless people and drug users — and more than a few troublemakers striding in the front door.
“It was hard to keep hostesses at the door, because they got scared,” said Cognian, chief executive of the restaurant’s parent company, Grill Concepts Inc.
Three break-ins cost as much as $12,000 each time just to repair the windows, all while the bottom line was cratering in the absence of the office employees who used to gather for lunch and after-work drinks. With sales down 75% from pre-pandemic days, his company closed the downtown gastropub in August and is not planning to return.
“Our bet was that downtown was going to come back, and it hasn’t,” Cognian said.
For decades the Los Angeles financial district was the beating heart of downtown, the corporate muscle that gave the city of sprawl a soaring glass skyline. But the pandemic and the wave of remote work hollowed out its skyscrapers and helped shut many restaurants and businesses that relied on crowds of workers. Though the neighborhood shows signs of recovery, few expect it to return to being the bustling hive of suits and ties that it was.
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To many insiders — the urban planners, real estate developers and business owners with interests in it — the area will recover only if its identity grows more textured than a zone of white-collar office space.
Desirable office addresses were already spreading beyond the financial district before the pandemic, as downtown experienced a renaissance in housing, art and entertainment on blocks previously shunned by investors and residents.
To the south, billions of dollars were spent improving the blocks around Crypto.com Arena with hotels, housing and entertainment venues. Obsolete century-old commercial and industrial buildings to the east were renovated into desirable housing and fashionably unconventional offices. Billions more were spent north on Bunker Hill where the Music Center including Walt Disney Concert Hall and office skyscrapers have been joined by museums, apartments and a high-rise hotel.
The housing boom drew residents to the financial district as well, and that has kept it from turning into a ghost town.
But for the area to truly come back to life, many say it will need to follow the path of Lower Manhattan. The financial capital of New York faced an exodus after 9/11, but city officials and investors staved it off by making it a place of more diverse uses. It is still an office district but is far more lively than it used to be since it also became a residential neighborhood with more shops, restaurants, parks and hotels than it had before the attacks. A performing arts center will open in September.
“Cities evolve. That’s what they do,” said downtown L.A. business representative Nick Griffin. “From natural disasters, wars and pandemics. They evolve with market changes, customer preferences and cultural shifts. Downtown has evolved pretty dramatically over the last 20 years and the next five or so are going to be very interesting.”
Many companies have returned to their offices, but on a limited basis as their employees work some days from home. “For Lease” signs clutter building fronts, tacked over restaurants and bars that once served lively hordes of office workers. Graffiti marks windows.
At Public School 213, the chairs are stacked neatly on tables as if it just closed for the night. Other former restaurants have been gutted by their landlords. Sidewalks are quiet, sometimes eerily so.
Downtown’s centers of gravity have shifted numerous times since its days as a remote Spanish pueblo.
The plaza by Olvera Street near the Los Angeles River was el centro until the late 19th century. When the railroads arrived in the American era, the business elite shifted the commercial district south from the plaza toward 1st Street in the Anglo section of the racially divided city, said Greg Fischer, an expert on the history of downtown who worked on planning matters for former City Councilwoman Jan Perry. Main, Spring, Broadway and Hill streets became the business hub.
In the early 20th century, elite social clubs such as the Jonathan Club, the California Club and the Los Angeles Athletic Club erected new buildings on the west side of downtown where property was relatively cheap. Soon the rooming houses, small apartment buildings and ramshackle Victorian homes there gave way. Richfield and other oil companies headquartered there, the seeds of today’s financial district.
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In “the Jetsons era,” as Fischer described the 1960s, corporate leaders viewed the Spring Street-centered office district as increasingly obsolete and passé and moved to newer buildings in the financial district. Downtown lost a lot of itslifeblood during that time, he said.
“In the years after World War II, downtown was a shopping, office and entertainment area,” Fischer said. “By the 1960s the office component had shifted west, most entertainment went to suburbs and housing just evaporated.”
Among the big businesses with offices in the west were the Richfield, Union, Signal, National and Superior oil companies. Pacific Mutual Life Insurance Co. was headquartered there and Bank of America had a big presence.
The boundaries of the financial district are not officially outlined, but property brokerage CBRE defines it as the office center south of Bunker Hill and 4th Street, flanked on the west by the 110 Freeway and on the east by Hill Street and extending south to 8th Street.
By the 1980s, much of downtown was moribund; buildings that once thrummed with commerce were dilapidated and vacant or underused. There were pockets of vibrancy, notably the Jewelry District and a Latino-centric shopping zone that emerged among aging buildings along Broadway in the Historic Core. The Civic Center around City Hallremained one of the largest concentrations of public administrative buildings in the country, employing thousands of workers.
But the financial district was the shinythriving part of the city, a high-rise office park for lawyers, bankers and accountants who piled into their cars for a mass exodus at the end of each workday.
To many, the neighborhood felt like a corporate fortress, invisibly walled off from the rest of downtown. Business leaders were painfully aware that downtown L.A. lacked the vibrancy of other big cities because it had so few residents, but was stuck in a chicken-and-egg dilemma: People didn’t want to live there because it lacked restaurants, grocery stores and other typical city-life amenities, but merchants didn’t want to set up shop because few lived there.
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The stalemate began to break around 2000 with an ordinance that made it easier to redevelop obsolete office buildings into housing. The relocation of the Lakers, Clippers and Kings pro sports teams to the new downtown arena then known as Staples Center brought thousands of sports and music fans and led a wave of development south of the financial district.
Decades of efforts to add rail service and thousands of apartments and condominiums helped create a more vibrant downtown that was taking on the flavor of other big cities before the pandemic.
“All of a sudden people were walking dogs and pushing baby carriages,” architect Martha Welborne said. “New restaurants came in, even destination restaurants that weren’t just for the people who worked downtown or lived there.”
Fortunately for downtown’s future prospects, its apartment towers remain nearly fully occupied. More than 35,000 units were built after 1999, when so few people lived there that downtown didn’t even have a big-chain grocery store.
Three new hotels have recently opened and a 42-story apartment tower will start leasing later this year. Bottega Louie, one of the region’s top-grossing restaurants before it shut down during the pandemic, reopened in 2021. A few blocks away, legendary Beverly Hills steakhouse Mastro’s also opened a seafood restaurant last year near Crypto.com Arena.
And last week, Metro opened its new Regional Connector, a 1.9-mile underground downtown track adding three stations and linking different lines to make travel more seamless.
Though some business owners have abandoned the financial district, others see an opportunity to get in at an affordable price during what they hope is a temporary economic dip.
Restaurateur Prince Riley recently leased a spot on Grand Avenue that was last home to the Red Herring restaurant. He grabbed it because he liked the location and it was already built-out for upscale dining.
“You can see all the love and care that went into this space,” he said. “They were a casualty of COVID.”
Riley and his wife plan to open their restaurant, named Joyce, in July, featuring a raw bar and Southern-style seafood such as crudo and ceviche. They moved into the apartment building upstairs to be close to it.
The couple like being near Bottega Louie, a popular Whole Foods grocery store and the recently opened Hotel Per La, which took over a lavishly refurbished 1920s building last occupied by another hotel that closed early in the pandemic.
“I can see business picking up,” Riley said. “This is an opportunity from a terrible tragedy like COVID. We wouldn’t have had this otherwise.”
A key factor keeping downtown teetering between recovery and a further downward slide appears to be discomfort with the streets and the sense that they are not as safe as they were before the pandemic.
The blocks close to Metro’s underground 7th Street/Metro Center station, where multiple light and heavy rail train lines meet, are among those that have changed the most since the pandemic as the Metro system struggles to combat rampant drug use and serious crimes such as robbery, rape and aggravated assault on its lines.
Thegrowing number of homeless people on the streets has been an issue in other cities too, said Cognian of Public School 213. His company also closed restaurants in Seattle and San Francisco because customers at their urban locations trickled away as unhoused people commandeered the sidewalks.
“Hopefully, we as a city, as a state, find a solution for the homeless,” he said. “If the homeless situation doesn’t get solved in some fashion that allows tourists, office workers and businesses to operate, it’s just going to bring down the area.”
Real estate broker Derrick Moore of CBRE, who specializes in matching restaurant and shop operators with landlords, said leasing of retail space downtown has improved in recent months, especially compared to the dark days of the 2020pandemic shutdown when downtown fell silent.
“It seems like ancient history,” Moore said, “but it was very devastating to one’s psyche.” And to downtown businesses.
In the wake of the COVID shutdown, downtown overall lost more than 100 food and beverage establishments with a combined footprint of more than 1 million square feet, Moore said.
“That’s restaurants, bars and lounges, juice bars, boutique coffee operators and even national brands,” Moore said. “A good portion of those remain vacant.”
Replacement tenants like Joyce restaurant are starting to come in, he said, with leasing and property showings picking up in the first quarter at a “resoundingly” busier pace than early 2022. Moore has taken potential tenants to the empty Public School space, where across the street the failed Standard Hotel just reopened under new management as the Delphi.
Faced with a challenging market, retail landlords have cut their asking rents as much as 50% from pre-COVID prices, Moore said, and more than doubled the amount they are willing to spend on tenant upgrades such as installing restaurant kitchens and restrooms, and providing periods of free rent.
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The financial district also faces a struggle of changing tastes, with many firms bypassing the gleaming skyscrapers that were the height of prestige in the late 20th century in favor of campus-style offices anda more laid-back vibe.
Even legal firms, long a stalwart in the financial district, are turning elsewhere in some cases. One firm established in February recently opted out of putting its office there.
“When we started to look at space it became very clear to us that locating in the financial district was a very different proposition than it used to be,” said Matt Umhofer, a partner at Umhofer, Mitchell & King. “Downtown has changed dramatically, and we wanted to rethink what it means to be a law firm in Los Angeles and let go of preconceived notions of needing to be in the financial district in order to be relevant.”
The fledgling firm opted instead for an office in Row DTLA, a campus of shops, restaurants and offices created out of century-old warehouses near the Arts District, east of the financial center, even though office rents in the Arts District are often higher than they are in the glitzy skyscrapers.
“The short version is, being in the financial district isn’t as cool as maybe it was in the past,” Umhofer said.
The spotty attendance of office workers has changed the character of business centers across the country, said Mark Grinis, leader of consulting firm EY‘s real estate, hospitality and construction practice.
An analysis by EY found that offices are being used at only 25% to 50% of the level they were before the pandemic.
“In some locations, three-quarters of the people that normally would have gone in, didn’t,” Grinis said. “People are not on the subway, ordering sandwiches at lunch or having a drink after work.”
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Vacant offices and storefronts can hinder recovery, he said, because people shy away from empty spaces.
“Three blocks of vacant houses in a residential neighborhood ultimately becomes a negative,” he said. “An office center is not that different.”
The physical appearance of vacancy becomes more alarming when graffiti, litter and grime follow and create a bad “multiplier effect,” Grinis said.
Stopping the spiral starts with making the streets safe and getting homeless residents into better housing, but there are also public policy decisions that could help landlords convert office buildings to housing if they are no longer competitive on the office leasing market.
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And the market has been brutal. Owners of some of downtown’s office high-rises have faced defaults, foreclosures and rushed sales in the face of falling demand, real estate data provider CoStar said.
The owner of two of the financial district’s premier office towers, 777 Tower and Gas Company Tower, said in February that it defaulted on loans tied to the buildings. Other high-rise owners are in similar straits.
In the face of rising vacancy rates, “those defaults could signal pain to come for the 69-million-square-foot downtown L.A. office market,” CoStar said.
Owners of buildings facing foreclosure sometimes don’t have enough money to build out new tenants’ offices, as is customary, which hinders strapped landlords from recovering financially.
Commercial landlords are getting hit on multiple fronts, said Jessica Lall, managing director of the downtown office of CBRE.
“What we’re seeing is a perfect storm when it comes to the office distress in downtown L.A.,” she said.
Loans on large-scale properties are maturing at a time when interest rates are high, making refinancing a challenge, Lall said. There is widespread uncertainty among tenants about how much space they will need to rent in the future if employees work remotely at least some of the time.
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Those issues are compounded by “the general perception around downtown being unsafe,” she said. “All urban centers are grappling with that issue right now.”
The downtown office vacancy rate — the share of total space that is unleased — climbed to 24% in the first quarter, up from 21.1% a year ago, according to CBRE. More empty space is coming, the brokerage said, pushing estimated availability to a daunting 30% as some companies shrink their offices or move away from downtown.
Law firm Skadden, for example, a large longtime tenant in downtown’s Bunker Hill district, has decided to move its offices to Century City .
The landlord of the U.S. Bank Tower, downtown’s tallest office tower at 72 stories, remains bullish on the market in spite of its troubles and recently spent $60 million to make the building more attractive to tenants by adding hotel-like amenities.
“People need offices,” said Marty Burger, chief executive of Silverstein Properties, which owns the tower. “Not every company in every industry needs an office, but the majority of them do.”
Among the reasons for offices are collaboration and education, he said. “How do you mentor the young folks who are coming up in your industry if the older people aren’t in the office for younger people to learn from? There is a whole ecosystem where you need people in an office now.”
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Companies may end up using their offices fewer days of the week than they used to as remote work and shortened schedules grow in popularity, he acknowledged: “Fridays may never be Fridays again.”
Burger says his optimism about downtown L.A.’s potential for improvement has a foundation in New York, where Silverstein built One World Trade Center on the site of the Twin Towers.
“After 9/11, everyone said that no one would ever live there or work there again,” Burger said.
In 2001, the neighborhood had about 20,000 residents and saw little activity after office hours. Now rebuilt, the neighborhood has about 75,000 residents and a greater mix of office tenants including businesses in tech and advertising in what was mostly a banking center before, Burger said.
“It’s a vibrant 24/7 community,” he said.
Many see this as the best future for L.A.’s financial district.
The city’s tight housing market combined with the downturn in office rentals opens the possibility to convert some office buildings into housing or hotels.
More residents and visitors would make the neighborhood more dynamic and better able to support restaurants, shops and nightlife, said Griffin, executive director of the privately funded Downtown Center Business Improvement District, a nonprofit coalition of more than 2,000 property owners.
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“If we trade some office for residential, that’s a good thing.”
The pandemic’s blow to the office market “is an opportunity that none of us ever imagined happening,” Welborne said, “transforming office buildings into residential buildings and reimagining our entire downtown.”
Zillow announced today that it will now offer rental listings to go along side the millions of homes for sale in its massive database.
Homeowners can now list their properties for rent or for sale, while prospective home buyers can search both rental homes and homes for sale.
Additionally, the company will offer the industry’s first “search by monthly payment” option, allowing home shoppers to specify a certain amount they wish to pay in rent or mortgage.
“In today’s volatile housing market, many would-be sellers are opting to rent for a few years and ride out the market, while many home shoppers are just trying to decide whether to buy or rent,” said Spencer Rascoff, Zillow Chief Operating Officer, in a press release.
“With the launch of rental listings and search, we are arming our more than 8 million monthly users with information, tools and options to make the right housing decisions for them today.”
Zillow compares the monthly cost of owning versus renting side-by-side so prospective buyers can determine more easily what’s best for their unique situation.
The monthly mortgage payment is calculated using that day’s local mortgage rate for a 30-year fixed rate mortgage, assuming a 20 percent down payment.
The company cited a recent survey, which found that 25 percent of respondents who plan to move in the next three years intend to search for both homes for rent and homes for sale.
When shopping for an apartment, you may not know if you can you see your apartment before signing a lease. Maybe your specific unit is still occupied or undergoing renovations. Or, perhaps you’re searching for an apartment in another city or state and can’t see it before you move. Regardless, you may not see your actual apartment before you sign the rental contract. But, there are steps you can take to ensure you get the apartment you want.
Can you see your apartment before signing a lease?
You may wonder if a landlord is legally required to show you the specific apartment you will rent before you sign the lease. The short answer is no. You can request the landlord show you a similar apartment, such as the model apartment, so you know what your unit would look like. However, because you voluntarily sign the renter’s contract, you’re agreeing to the lease terms, whether you see the actual unit or not.
How to proceed with an apartment sight unseen
If you intend to sign a lease without seeing an apartment beforehand, there are steps you should take to ensure you, hopefully, have an apartment you can live with — and in.
1. Check out the apartment community
Even if you can’t see your actual apartment, you can still check out the apartment community. Take a walk through the building or community to see the amenities, talk with other tenants to find out the good and bad of living there, and see how quiet or loud the area is. This also provides a look at how well-kept the grounds and buildings are.
For a gated complex, the landlord should provide access so you can look around. If he or she is unwilling to let you scout the property, that could be a red flag, one you should take into consideration before signing a lease.
If you can’t get to the apartment complex, review information online, such as photos and, if possible, reviews. Use Google StreetView on Google Earth to see the community.
2. Check out the surrounding neighborhood
Review online maps or take a drive down the streets surrounding the apartment complex. What type of neighbors would you have? Restaurants, business services, industrial warehouses or residential subdivisions? Is there a lot of traffic, making it difficult to get in and out of the apartment complex? If there are restaurants or industrial businesses nearby, are there smells in the air? Spend some time in the area to evaluate what it’s like to live there.
3. Outline specifics in the apartment lease
If your actual apartment is significantly different in reality than what the landlord agreed to provide in the tenant contract, the rental agreement could be rendered void. Therefore, be as specific in the lease as possible when including apartment details.
For instance, make sure it states you’re renting a two-bedroom unit. If your landlord says you will have an apartment with a balcony, at the end of the hall or on the first floor, make sure the renter’s contract includes those details. If the landlord says the rental unit will be freshly painted, include granite countertops and have new carpet, spell that out in the lease agreement.
Including the most specific details provides protection for you given you haven’t seen the apartment before you sign the lease agreement.
4. Ask to delay signing the lease agreement until after the walk-through
Although a landlord is not legally required to show you the specific apartment you will live in before you sign a tenant contract, he or she must do a walk-through of the unit with you on move-in day. During this walk-through, examine every corner of the apartment. Do you see signs of water damage? Are there any broken locks on doors or windows? Do you actually have granite countertops, fresh paint and a new carpet?
If you find issues with the apartment, make a list and take photos and/or videos to document what the landlord needs to repair. Have the landlord sign the list, acknowledging the issues. This protects you from being responsible for any damages and provides possible evidence if you have to sue the property management company for failure to repair or address these problems.
5. Don’t hesitate to walk away
If you don’t feel comfortable enough to sign the tenancy agreement without seeing your specific apartment first, don’t. It’s that simple. Signing is voluntary, so don’t feel pressured to sign a legally binding agreement if you don’t think it’s the right path for you to take.
Once you do sign, you’re legally obligated to adhere to the terms of the legally binding contract, including paying a security deposit, the first month’s rent and any fees to terminate the lease early.
Feel confident before signing your lease
The bottom line is this: Don’t sign on the bottom line of a lease agreement for an apartment you haven’t seen yet until you’re confident this will be a good home for your foreseeable future.
Committing to a lease agreement is no easy decision. Review all your options and check out the apartment complex and surrounding neighborhood. If possible, have an attorney review the lease before signing it. These precautions can go a long way in making sure you’re happy with the apartment you will call home.
The information contained in this article is for educational purposes only and does not, and is not intended to, constitute legal or financial advice. Readers are encouraged to seek professional legal or financial advice as they may deem it necessary.
An experienced freelance writer, Karon Warren has covered home and real estate topics for more than 20 years for such outlets as Curbed Atlanta, Apartment Therapy, RealTrends and HotPads.com. She is a member of the American Society of Journalists & Authors.
Mortgage rates are easing today. We did see in the Freddie Mac PMMS today that mortgage rates moved higher for the ninth straight week.
Rates have been expected to climb higher throughout 2018, which is why we’ve been recommending that borrowers lock in a rate sooner rather than later. Read on for more details.
Where are mortgage rates going?
Mortgage rates slide today
News from across the pond that the European Central Bank is no longer saying that they will increase the pace of its bond-buying program if the economic environment deteriorated is affecting U.S. market this morning.
Financial market participants have moved more into bonds as a result, pushing down Treasury yields. The yield on the 10-year Treasury note (the best market indicator of where mortgage rates are going) is down about three basis points to 2.85%. Mortgage rates typically move in the same direction as the 10-year yield.
Mortgage Rates Rise in the Freddie Mac Primary Mortgage Market Survey
The Freddie Mac PMMS got released today at 10am sharp and it showed that mortgage rates rose for the ninth consecutive week. Here are the numbers:
The average rate on a 30-year fixed rate mortgage moved up three basis points to 4.46% (0.5 points)
The average rate on a 15-year fixed rate mortgage went up four basis points to 3.94% (0.5 points)
The average rate on a 5-year adjustable-rate mortgage moved up one basis point to 3.63% (0.4 points)
Here is what the Freddie Mac’s Economic & Housing Research Group had to say about rates this week:
“The 10-year Treasury yield has been bouncing around in a narrow 15 basis point range for the last month. While the yield on the 10-year Treasury is currently below the high of 2.95 percent reached two weeks ago, mortgage rates are up for the ninth consecutive week. The U.S. weekly average 30-year fixed mortgage rate rose 3 basis points to 4.46 percent in this week’s survey, its highest level since January 2014.”
It’s important to note that the data for the PMMS is collected early on in the week and therefore doesn’t necessarily reflect current market conditions. This is true today, as mortgage rates have moved a little lower.
Rate/Float Recommendation
Take action soon
Mortgage rates keep on climbing higher. The average rate on a 30-year fixed rate in the Freddie Mac PMMS has now risen fifty-one basis points since the start of the year.
Learn what you can do to get the best interest rate possible.
Many analysts are calling for another fifty basis point increase by the time 2019 rolls around. If you want to minimize the risk of getting a higher rate and paying more, then you should consider locking in a rate as soon as possible.
Today’s economic data:
Jobless Claims
Applications filed for U.S. unemployment benefits came in at 231,000. That’s up 11,000 from the prior reading (which was a 49-year low).
Notable events this week:
Monday:
PMI Services Index
ISM Non-Mfg Index
Fedspeak
Tuesday:
Fedspeak
Factory Orders
Wednesday:
Fedspeak
ADP Employment Report
International Trade
Productivity and Costs
EIA Petroleum Status Report
Beige Book
Thursday:
Jobless Claims
Friday:
Employment Situation for February
Fedspeak
*Terms and conditions apply.
Carter Wessman
Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.
A sign advertising home mortgage services at a Bank of America branch in Manhattan Beach, Calif.
Patrick T. Fallon | Bloomberg | Getty Images
The average rate on the popular 30-year fixed mortgage hit 7.22% on Thursday, according to Mortgage News Daily. That’s the highest point since early November.
Mortgage rates follow loosely the yield on the 10-year Treasury, which leapt higher following a much stronger-than-expected employment report from ADP.
Rates had already begun rising last week, following signals from Federal Reserve Chairman Jerome Powell that the central bank may continue raising interest rates following a pause in June.
In remarks to Congress just after the June Fed meeting, Powell said the central bank has “a long way to go” to bring inflation back to the 2% goal. The next interest rate decision is on July 26.
The 30-year fixed mortgage rate has now risen 31 basis points in just the past week. For a homebuyer taking out a $400,000 mortgage, the monthly payment of principal and interest rose to $2,720 from $2,637 in just one week.
For sellers, higher mortgage rates have created a so-called golden handcuff effect. The vast majority of homeowners today have mortgages with interest rates below 4% or even below 3%, as rates hit record lows in the first year of the Covid pandemic. They now don’t want to move and have to give up that low rate to buy at a higher rate.
“Recent data indicated that nearly 82% of home shoppers reported feeling locked-in by their existing low-rate mortgage, while around 1 in 7 homeowners without a selling plan cited their current low rate as their reason for remaining on the sidelines,” Jiayi Xu, an economist at Realtor.com, said in a release.
Because of that, there is a currently a critical shortage of homes for sale, with year-to-date new listings now 20% behind last year’s pace.
As metropolitan areas across the nation continue to grapple with challenges related to housing their homeless populations, the White House announced on Thursday the launch of a new initiative designed to address unsheltered homelessness.
“ALL INside” is part of a larger plan introduced by the Biden administration in December 2022 called “All In: The Federal Strategic Plan to Prevent and End Homelessness,” which has a goal of reducing homelessness in America by 25% by the year 2025. The ALL INside initiative focuses on addressing homelessness issues in both key metropolitan areas and the nation’s most populous state.
“Through the ALL INside initiative, the U.S. Interagency Council on Homelessness (USICH) and its 19 federal member agencies will partner with state and local governments to strengthen and accelerate local efforts to get unsheltered people into homes in six places: Chicago, Dallas, Los Angeles, Phoenix Metro, Seattle, and the State of California,” the White House said in its announcement.
The White House plans to support the initiative by assigning a dedicated federal official in each community to assist in the implementation of locally-designed homelessness strategies. It will also dedicate staff across the federal government to identify areas where regulatory relief would help to spur actions for reducing unsheltered homelessness.
Such staff will also “navigate federal funding streams, and facilitate a peer learning network across the communities,” the White House said.
The White House will also work to connect a network of philanthropists and the private sector to facilitate additional support for the measures.
A number of federal agencies will also play a part in supporting the initiative. The U.S. Department of Housing and Urban Development (HUD) will, for example, work in concert with the U.S. Department of Veterans Affairs (VA), the Social Security Administration (SSA) and the U.S. Department of Health and Human Services (HHS) to address barriers that the unhoused population may encounter when trying to obtain government-issued identification.
HUD will also “help communities troubleshoot barriers to connecting people to rental assistance or housing programs, as well as assist communities to use regulatory flexibilities to speed up the processes enabling residents to move into properties and transition into permanent housing,” the White House said.
Other agencies committed to supporting the new initiative include AmeriCorps, the U.S. Department of Agriculture, the U.S. Department of Justice, as well as the Departments of Energy, Treasury and Transportation. The General Services Administration is also involved, but the specific details regarding how these agencies will contribute were not specified.
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ABOUT NEW STORY We’re a team working to end homelessness. It’s a big goal, but we’ve seen it attract bold people — like you! Sure, building the world’s first community of 3D printed homes is cool. So is building our own data-collection tool to track impact. But they’re just means to fulfill our big dream.Our favorite part of it all? The 11,000+ lives impacted. Thanks to our donors, we’ve helped build over 2,300 homes across 25 communities. And we’re just getting started.
Mortgages rates, which hit an all-time low about a month ago, are slated to rise to six percent by the end of 2010, according to the deputy chief economist at mortgage financier Freddie Mac.
Amy Crew Cutts told the Washington Post mortgage rates could climb about a percentage point over the next year as the Fed winds down its mortgage securities purchase program.
She said private buyers of mortgage securities will demand a higher rate of return on the investments than that of the Federal Reserve, prompting banks and mortgage lenders to raise interest rates for consumer loans.
Last week, the always-hot 30-year fixed averaged 5.05 percent, up slightly from 4.94 percent a week earlier; but rates have increased for three consecutive weeks since hitting rock bottom.
And rates hadn’t been above five percent since the last week of October, so there’s fear the best may have come and gone.
It’s been largely expected that mortgage rates will rise in 2010, given the current unprecedented levels and the amount of government involvement necessary to artificially deflate them.
Cutts added that anything below five percent on a mortgage is a “gift at this point,” echoing similar sentiment from interim Freddie Mac CEO John A. Koskinen back in late March, who said mortgage rates were “about as attractive as they’re ever going to be.”
In other words, buy a house TODAY, before it’s too late. But seriously, rates will probably move higher in 2010.