From Realtor Magazine Online, Daily Real Estate News May 30, 2008
Freddie Mac reports a jump in the 30-year fixed mortgage rate to 6.08 percent during the week ended May 29 from 5.98 percent the prior week, marking a two-month high triggered by investor concern over inflation.
The 15-year mortgage rate climbed to 5.66 percent from 5.55 percent over the same period, while the five-year adjustable rate rose slightly to 5.62 percent from 5.61 percent.
However, the one-year ARM slipped to 5.22 percent from 5.24 percent.
In the event of worsening inflationary pressures, Federal Reserve Bank of Dallas President Richard Fisher says, "I would expect a change of course in monetary policy to occur sooner rather than later, even in the face of an anemic [economy]."
Source: San Francisco Chronicle (05/30/08)
Friday, May 30, 2008
Priciest Homes on the Market
From Realtor Magazine Online, Daily Real Estate News May 30, 2008
After trying to sell his Palm Beach home, Maison de L’Amitie, for two years at $125 million in March, Donald Trump knocked $25 million off the price.
It was the largest discount ever for a single residence not involved in a bankruptcy proceedings.
As Trump’s experience proves, even the most expensive homes aren’t immune to the current economy, but overall, "Inventory is relatively tight for trophy-type properties," says Jonathan Miller, president of Miller Samuel, a Manhattan real estate appraisal firm.
Miller says the inventory of Manhattan homes priced at $8 million and up has declined by 35 percent over the last year. "If we were having this conversation six to nine months ago, we'd say it was Wall Street bonuses," he says, "but the weak dollar has certainly played a role," by attracting foreign buyers.
In addition, sellers like Trump are increasingly flexible. "The resistance has lessened,” says Nelson Gonzalez, a broker at Esslinger-Wooten-Maxwell in Miami Beach. “Smarter sellers are dropping their prices, and buyers are coming up a little bit more to make deals."
Here are the top-nine priciest homes on the market now:
* $125 million, Fleur de Lys Beverly Hills, Calif.
* $125 million, Dunnellen Hall, Greenwich, Conn.
* $100 million, Tranquility, Lake Tahoe, Nev.
* $100 million, Maison de L'Amitié, Palm Beach, Fla.
* $95 million, Hillandale, Stamford, Conn.
* $88 million, BootJack Ranch, Pagosa Springs, Colo.
* $85 million, Bel Air, Calif.
* $80 million, Southampton, N.Y.
* $75 million, The Portabello Estate, Corona del Mar, Calif.
Source: Forbes, Matt Woolsey (05/19/08)
After trying to sell his Palm Beach home, Maison de L’Amitie, for two years at $125 million in March, Donald Trump knocked $25 million off the price.
It was the largest discount ever for a single residence not involved in a bankruptcy proceedings.
As Trump’s experience proves, even the most expensive homes aren’t immune to the current economy, but overall, "Inventory is relatively tight for trophy-type properties," says Jonathan Miller, president of Miller Samuel, a Manhattan real estate appraisal firm.
Miller says the inventory of Manhattan homes priced at $8 million and up has declined by 35 percent over the last year. "If we were having this conversation six to nine months ago, we'd say it was Wall Street bonuses," he says, "but the weak dollar has certainly played a role," by attracting foreign buyers.
In addition, sellers like Trump are increasingly flexible. "The resistance has lessened,” says Nelson Gonzalez, a broker at Esslinger-Wooten-Maxwell in Miami Beach. “Smarter sellers are dropping their prices, and buyers are coming up a little bit more to make deals."
Here are the top-nine priciest homes on the market now:
* $125 million, Fleur de Lys Beverly Hills, Calif.
* $125 million, Dunnellen Hall, Greenwich, Conn.
* $100 million, Tranquility, Lake Tahoe, Nev.
* $100 million, Maison de L'Amitié, Palm Beach, Fla.
* $95 million, Hillandale, Stamford, Conn.
* $88 million, BootJack Ranch, Pagosa Springs, Colo.
* $85 million, Bel Air, Calif.
* $80 million, Southampton, N.Y.
* $75 million, The Portabello Estate, Corona del Mar, Calif.
Source: Forbes, Matt Woolsey (05/19/08)
Wednesday, May 28, 2008
Purchase Mortgage Applications Rise
From Realtor Magazine Online, Daily Real Estate News May 28, 2008
Mortgage applications fell 4.6 percent last week on a seasonally adjusted basis to 593.3 from 621.6 the previous week, the Mortgage Bankers Association says.
On an unadjusted basis, the index also declined 4.6 percent compared with the previous week and was down 7.5 percent compared with the same week last year.
The decline was driven by an 8.9 percent decline in refinance applications, whose share decreased to 46.1 percent from 48.2 percent the previous week. Purchases actually increased 9.1 percent.
Mortgage rates were up marginally:
* 30-year fixed-rate mortgages increased to 5.96 percent from 5.90 percent;
* 15-year fixed-rate mortgages increased to 5.49 percent from 5.42 percent;
* 1-year ARMs increased to 6.92 percent from 6.71 percent.
Source: Mortgage Bankers Association (05/28/2008)
Mortgage applications fell 4.6 percent last week on a seasonally adjusted basis to 593.3 from 621.6 the previous week, the Mortgage Bankers Association says.
On an unadjusted basis, the index also declined 4.6 percent compared with the previous week and was down 7.5 percent compared with the same week last year.
The decline was driven by an 8.9 percent decline in refinance applications, whose share decreased to 46.1 percent from 48.2 percent the previous week. Purchases actually increased 9.1 percent.
Mortgage rates were up marginally:
* 30-year fixed-rate mortgages increased to 5.96 percent from 5.90 percent;
* 15-year fixed-rate mortgages increased to 5.49 percent from 5.42 percent;
* 1-year ARMs increased to 6.92 percent from 6.71 percent.
Source: Mortgage Bankers Association (05/28/2008)
Plenty of Positive Market News Today
From Realtor Magazine Online, Daily Real Estate News May 28, 2008
Hungry for a little good real estate news? Leon d’Ancona, president of IMS Inc., has something to cheer you up.
D’Ancona, who provides real estate information to the industry, has set up a Web site that lists 2,319 markets in the United States where homes are selling well.
For instance, Loganville, Ga., homes sold 38.5 percent faster in April than they did in March, and sales of homes in Avondale, Ariz., increased by 64 percent in April compared with March"The problem with glass-is-half-empty stories is that they have an undue psychological impact on markets that is not borne out by all the facts," says d’Ancona. "We know, because it's our business to know, that there are hundreds of cities and thousands of neighborhoods in the United States right now where the market is very healthy, thank you.”
Source: IMS Inc. (05/27/2008)
Hungry for a little good real estate news? Leon d’Ancona, president of IMS Inc., has something to cheer you up.
D’Ancona, who provides real estate information to the industry, has set up a Web site that lists 2,319 markets in the United States where homes are selling well.
For instance, Loganville, Ga., homes sold 38.5 percent faster in April than they did in March, and sales of homes in Avondale, Ariz., increased by 64 percent in April compared with March"The problem with glass-is-half-empty stories is that they have an undue psychological impact on markets that is not borne out by all the facts," says d’Ancona. "We know, because it's our business to know, that there are hundreds of cities and thousands of neighborhoods in the United States right now where the market is very healthy, thank you.”
Source: IMS Inc. (05/27/2008)
New-Home Sales Surge in Northeast
From Realtor Magazine Online, Daily Real Estate News May 28, 2008
Sales of new homes were up 3.3 percent in April, the first increase in six months, according to the U.S. Commerce Department’s monthly report.
The rebound reflected a 41.7 percent surge in demand in the Northeast. Sales were up 8.3 percent in the West and 5.8 percent in the Midwest. They fell by 2.4 percent in the South.
The inventory of unsold new homes was down slightly to 10.6 months’ supply at the April sales pace, compared with 11.1 months in March.
The increase brought sales to a seasonally adjusted annual rate of 526,000.
The median price of new homes sold in April fell to $246,100, down 4.2 percent compared with April 2007.
Source: The Associated Press, Martin Crutsinger (05/27/2008)
Sales of new homes were up 3.3 percent in April, the first increase in six months, according to the U.S. Commerce Department’s monthly report.
The rebound reflected a 41.7 percent surge in demand in the Northeast. Sales were up 8.3 percent in the West and 5.8 percent in the Midwest. They fell by 2.4 percent in the South.
The inventory of unsold new homes was down slightly to 10.6 months’ supply at the April sales pace, compared with 11.1 months in March.
The increase brought sales to a seasonally adjusted annual rate of 526,000.
The median price of new homes sold in April fell to $246,100, down 4.2 percent compared with April 2007.
Source: The Associated Press, Martin Crutsinger (05/27/2008)
Friday, May 23, 2008
Better Terms Coming for Jumbo Loans
From Realtor Magazine Online, Daily Real Estate News May 23, 2008
Executives from Fannie Mae and Freddie Mac told Congress on Thursday that they are reducing interest rates on some jumbo mortgages.
They said their more aggressive purchases in recent weeks of loans between $417,000 and $729,750 have brought rates down.
Prices still remain relatively high compared to rates for lower amounts because investors believe borrowers will refinance as soon as rates decline.
HSH Associates, a financial publisher in Pompton Plains, N.J., said its surveys showed the average rate last week for a 30-year fixed-rate mortgage of $417,000 or less eligible for sale to Fannie or Freddie was 6.17 percent. The average for such loans of between $417,000 and $729,750 was 6.61 percent, or 0.44 of a percentage point higher.
Source: The Wall Street Journal, James R. Hagerty (05/23/2007)
Executives from Fannie Mae and Freddie Mac told Congress on Thursday that they are reducing interest rates on some jumbo mortgages.
They said their more aggressive purchases in recent weeks of loans between $417,000 and $729,750 have brought rates down.
Prices still remain relatively high compared to rates for lower amounts because investors believe borrowers will refinance as soon as rates decline.
HSH Associates, a financial publisher in Pompton Plains, N.J., said its surveys showed the average rate last week for a 30-year fixed-rate mortgage of $417,000 or less eligible for sale to Fannie or Freddie was 6.17 percent. The average for such loans of between $417,000 and $729,750 was 6.61 percent, or 0.44 of a percentage point higher.
Source: The Wall Street Journal, James R. Hagerty (05/23/2007)
How Housing Is Faring Around the Globe
From Realtor Magazine Online, Daily Real Estate News May 23, 2008
The United States isn’t the only country that is worrying about its housing market. There’s a glut of housing in Spain and Ireland, where home building grew by 187 percent and 177 percent respectively between 1996 and 2006. Home prices in Ireland are falling, while Spanish numbers still show a small annual increase.
Meanwhile, there's positive news in other parts of the world. New Zealand house prices are 82 percent higher than they were in the last quarter of 1999, and have risen by 70 percent relative to household income. However, rising food and fuel prices are expected to cause a price correction.
Housing news is mostly good in Singapore and Hong Kong, which have benefited from the booming Asian economy. An analysis by DTZ Debenham Tie Leung, an estate agency, found that the number of homes bought by foreigners in Singapore jumped by 71 percent last year.
Source: The Economist (05/24/2008)
The United States isn’t the only country that is worrying about its housing market. There’s a glut of housing in Spain and Ireland, where home building grew by 187 percent and 177 percent respectively between 1996 and 2006. Home prices in Ireland are falling, while Spanish numbers still show a small annual increase.
Meanwhile, there's positive news in other parts of the world. New Zealand house prices are 82 percent higher than they were in the last quarter of 1999, and have risen by 70 percent relative to household income. However, rising food and fuel prices are expected to cause a price correction.
Housing news is mostly good in Singapore and Hong Kong, which have benefited from the booming Asian economy. An analysis by DTZ Debenham Tie Leung, an estate agency, found that the number of homes bought by foreigners in Singapore jumped by 71 percent last year.
Source: The Economist (05/24/2008)
30-Year Mortgage Rates Drop
From Realtor Magazine Online, Daily Real Estate News May 23, 2008
After four weeks in an upward trajectory, Freddie Mac reports that long-term mortgage rates are falling again.
The average interest on a 30-year fixed loan settled at 5.98 percent this week, down 0.03 percent from the prior week. Rates on 15-year fixed mortgages, meanwhile, slipped 0.5 percent for the week to an average of 5.55 percent.
Borrowing costs drifted slightly higher, however, on adjustable-rate products.
Five-year ARMs bumped up 0.04 percent to 5.61 percent, while one-year ARMs moved up 0.06 percent to 5.24 percent.
Source: Chicago Sun-Times (05/23/08)
After four weeks in an upward trajectory, Freddie Mac reports that long-term mortgage rates are falling again.
The average interest on a 30-year fixed loan settled at 5.98 percent this week, down 0.03 percent from the prior week. Rates on 15-year fixed mortgages, meanwhile, slipped 0.5 percent for the week to an average of 5.55 percent.
Borrowing costs drifted slightly higher, however, on adjustable-rate products.
Five-year ARMs bumped up 0.04 percent to 5.61 percent, while one-year ARMs moved up 0.06 percent to 5.24 percent.
Source: Chicago Sun-Times (05/23/08)
Existing-Home Sales Dip 1% in April
From Realtor Magazine Online, Daily Real Estate News May 23, 2008
Existing-home sales slowed in April, partly because tight lending guidelines hampered home buyers.
But there are some things to be happy about: A greater number of market areas are showing sales gains from a year ago, and a recent reversal in mortgage policy means the market is better positioned for a turnaround, according to the NATIONAL ASSOCIATION OF REALTORS®.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – declined 1.0 percent to a seasonally adjusted annual rate of 4.89 million units in April from an upwardly revised pace of 4.94 million in March, and are 17.5 percent below the 5.93 million-unit level in April 2007.
More Favorable Mortgage Options Will Help
With less-restrictive mortgage options opening up for buyers, “we could see an upturn in home sales this summer,” says NAR President Richard F. Gaylord.
Last week, Freddie Mac and Fannie Mae announced that they were eliminating their “declining market” policies, effective June 1. NAR and others believed the policy was bad for the housing market because it discouraged consumers from buying homes in areas hardest-hit by foreclosures.
“This means consumers across the country will have access to safe, affordable financing with down payments of only 5 percent on most mortgages, with 100 percent financing available on some loan products.”
Lawrence Yun, NAR chief economist, said eliminating restrictive policies should be a big help to home buyers. “I would encourage buyers who were disappointed by poor mortgage options to take another look at the market because the lending changes are significant,” he said. “Also, a recent notable drop in interest rates on conforming jumbo loans will help consumers in high-cost markets like California and New York.”
National Prices, Inventory Levels
Nationally, the median existing-home price for all housing types was $202,300 in April, which is 8.0 percent below a year ago when the median was $219,900. Because the slowdown in sales from a year ago is greatest in high-cost areas, there is a downward distortion to the national median with relatively more sales in low- and moderate-priced markets.
* Total housing inventory at the end of April rose 10.5 percent to 4.55 million existing homes available for sale, which represents an 11.2-month supply at the current sales pace, up from a 10.0-month supply in March.
* Mortgage rates declined, according to Freddie Mac. The national average commitment rate for a 30-year, conventional, fixed-rate mortgage slipped to 5.92 percent in April from 5.97 percent in March; the rate was 6.18 percent in April 2007.
* Single-family home sales slipped 0.5 percent to a seasonally adjusted annual rate of 4.34 million in April from 4.36 million in March, and are 16.1 percent below the 5.17 million-unit level recorded one year ago. The median existing single-family home price was $200,700 in April, down 8.5 percent from April 2007.
* Existing condominium and co-op sales fell 5.2 percent to a seasonally adjusted annual rate of 550,000 units in April from 580,000 in March, and are 27.9 percent below the 763,000-unit pace in April 2007. The median existing condo price was $214,900 in April, which is 3.7 percent below a year ago.
Regional Sales Volume, Prices
The unusual mix of market conditions around the country continues, but areas showing healthy price gains include Greenville, S.C., and Springfield, Mo., both with solid local economies. “On the other hand, some markets like San Diego, Calif., and Fort Myers, Fla., are experiencing rising sales after sudden double-digit drops in local home prices, so lower prices and low interest rates are starting to generate results,” Yun said.
* In the West, existing-home sales rose 6.4 percent in April to a level of 1.00 million but are 15.3 percent below a year ago. The median price in the West was $285,700, which is 16.7 percent lower than April 2007.
* In the South, existing-home sales were unchanged from March at an annual rate of 1.92 million in April, but are 18.6 percent below April 2007. The median price in the South was $170,800, down 5.1 percent from a year ago.
* In the Northeast, existing-home sales fell 4.4 percent to an annual pace of 870,000 in April, and are 14.7 percent below a year ago. The median price in the Northeast was $262,000, which is 7.7 percent below April 2007.
* In the Midwest, existing-home sales were at an annual rate of 1.10 million in April, which is 6.0 below March and 19.7 percent lower than April 2007. The median price in the Midwest was $159,100, down 2.9 percent from April 2007.
Existing-home sales slowed in April, partly because tight lending guidelines hampered home buyers.
But there are some things to be happy about: A greater number of market areas are showing sales gains from a year ago, and a recent reversal in mortgage policy means the market is better positioned for a turnaround, according to the NATIONAL ASSOCIATION OF REALTORS®.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – declined 1.0 percent to a seasonally adjusted annual rate of 4.89 million units in April from an upwardly revised pace of 4.94 million in March, and are 17.5 percent below the 5.93 million-unit level in April 2007.
More Favorable Mortgage Options Will Help
With less-restrictive mortgage options opening up for buyers, “we could see an upturn in home sales this summer,” says NAR President Richard F. Gaylord.
Last week, Freddie Mac and Fannie Mae announced that they were eliminating their “declining market” policies, effective June 1. NAR and others believed the policy was bad for the housing market because it discouraged consumers from buying homes in areas hardest-hit by foreclosures.
“This means consumers across the country will have access to safe, affordable financing with down payments of only 5 percent on most mortgages, with 100 percent financing available on some loan products.”
Lawrence Yun, NAR chief economist, said eliminating restrictive policies should be a big help to home buyers. “I would encourage buyers who were disappointed by poor mortgage options to take another look at the market because the lending changes are significant,” he said. “Also, a recent notable drop in interest rates on conforming jumbo loans will help consumers in high-cost markets like California and New York.”
National Prices, Inventory Levels
Nationally, the median existing-home price for all housing types was $202,300 in April, which is 8.0 percent below a year ago when the median was $219,900. Because the slowdown in sales from a year ago is greatest in high-cost areas, there is a downward distortion to the national median with relatively more sales in low- and moderate-priced markets.
* Total housing inventory at the end of April rose 10.5 percent to 4.55 million existing homes available for sale, which represents an 11.2-month supply at the current sales pace, up from a 10.0-month supply in March.
* Mortgage rates declined, according to Freddie Mac. The national average commitment rate for a 30-year, conventional, fixed-rate mortgage slipped to 5.92 percent in April from 5.97 percent in March; the rate was 6.18 percent in April 2007.
* Single-family home sales slipped 0.5 percent to a seasonally adjusted annual rate of 4.34 million in April from 4.36 million in March, and are 16.1 percent below the 5.17 million-unit level recorded one year ago. The median existing single-family home price was $200,700 in April, down 8.5 percent from April 2007.
* Existing condominium and co-op sales fell 5.2 percent to a seasonally adjusted annual rate of 550,000 units in April from 580,000 in March, and are 27.9 percent below the 763,000-unit pace in April 2007. The median existing condo price was $214,900 in April, which is 3.7 percent below a year ago.
Regional Sales Volume, Prices
The unusual mix of market conditions around the country continues, but areas showing healthy price gains include Greenville, S.C., and Springfield, Mo., both with solid local economies. “On the other hand, some markets like San Diego, Calif., and Fort Myers, Fla., are experiencing rising sales after sudden double-digit drops in local home prices, so lower prices and low interest rates are starting to generate results,” Yun said.
* In the West, existing-home sales rose 6.4 percent in April to a level of 1.00 million but are 15.3 percent below a year ago. The median price in the West was $285,700, which is 16.7 percent lower than April 2007.
* In the South, existing-home sales were unchanged from March at an annual rate of 1.92 million in April, but are 18.6 percent below April 2007. The median price in the South was $170,800, down 5.1 percent from a year ago.
* In the Northeast, existing-home sales fell 4.4 percent to an annual pace of 870,000 in April, and are 14.7 percent below a year ago. The median price in the Northeast was $262,000, which is 7.7 percent below April 2007.
* In the Midwest, existing-home sales were at an annual rate of 1.10 million in April, which is 6.0 below March and 19.7 percent lower than April 2007. The median price in the Midwest was $159,100, down 2.9 percent from April 2007.
Thursday, May 22, 2008
Housing Deal Would Reduce Jumbo Cap
From Realtor Magazine Online, Daily Real Estate News May 22, 2008
The bi-partisan housing deal that passed the U.S. Senate Banking Committee on Tuesday would limit Fannie Mae and Freddie Mac to buying loans that are less than $550,000.
The current limit is $729,750 in high-cost areas of the country. It was raised earlier this year from $417,000. That higher limit expires at the end of 2008.
Mortgage bankers are watching the negotiations closely. Steve Habetz, president of Threshold Mortgage in Westport, Conn., says higher limits are needed for expensive parts of the country, such as the New York suburbs. While a permanent extension to more than $700,000 would be preferable, he says, "I'll take what they'll give me."
The current higher limits appear to be stabilizing the market. As of last week, rates on Fannie and Freddie-backed jumbo loans were averaging 6.5 percent, a premium of 0.4 percentage points over the rate for conforming loans, according to HSH Associates. That premium had been about 0.7 percentage points a month earlier.
Source: The Associated Press, Alan Zibel (05/21/2008)
The bi-partisan housing deal that passed the U.S. Senate Banking Committee on Tuesday would limit Fannie Mae and Freddie Mac to buying loans that are less than $550,000.
The current limit is $729,750 in high-cost areas of the country. It was raised earlier this year from $417,000. That higher limit expires at the end of 2008.
Mortgage bankers are watching the negotiations closely. Steve Habetz, president of Threshold Mortgage in Westport, Conn., says higher limits are needed for expensive parts of the country, such as the New York suburbs. While a permanent extension to more than $700,000 would be preferable, he says, "I'll take what they'll give me."
The current higher limits appear to be stabilizing the market. As of last week, rates on Fannie and Freddie-backed jumbo loans were averaging 6.5 percent, a premium of 0.4 percentage points over the rate for conforming loans, according to HSH Associates. That premium had been about 0.7 percentage points a month earlier.
Source: The Associated Press, Alan Zibel (05/21/2008)
Borrowers Finding Mortgage Loans Tight
From Realtor Magazine Online, Daily Real Estate News May 22, 2008
Mortgage lenders have turned back the clock on lending policy, making it much harder for borrowers to get a home loan if they have less than 20 percent to put down.
Just as it was decades ago, lenders are balking at anything other than plain vanilla loans to would-be buyers with stellar credit histories, significant down payments, and income that can be verified with government tax forms.
"The market is so skittish right now," says Guy Cecala, publisher of Inside Mortgage Finance. Lenders have "been so burned by their inability to understand the risk of subprime loans that they're translating that to the rest of the market. The days of putting no money down are gone."
Source: Reuters News, Lisa Baertlein (05/21/2008)
Mortgage lenders have turned back the clock on lending policy, making it much harder for borrowers to get a home loan if they have less than 20 percent to put down.
Just as it was decades ago, lenders are balking at anything other than plain vanilla loans to would-be buyers with stellar credit histories, significant down payments, and income that can be verified with government tax forms.
"The market is so skittish right now," says Guy Cecala, publisher of Inside Mortgage Finance. Lenders have "been so burned by their inability to understand the risk of subprime loans that they're translating that to the rest of the market. The days of putting no money down are gone."
Source: Reuters News, Lisa Baertlein (05/21/2008)
Wednesday, May 21, 2008
Big-City Home Prices Are Faring Well
From Realtor Magazine Online, Daily Real Estate News May 21, 2008
America's largest downtowns have become some of the best places to hide during the housing downturn. Here’s a rundown of home-pricing trends in the central core of a sampling of the country’s largest cities:
* Chicago. The city’s prized Gold Coast neighborhood had record sales prices in the last year, but bargains abound in the city’s periphery. In Bronzeville, a gentrifying community, prices have dropped to as low as $85,000. Chicago’s desirable North Shore suburbs are continuing to do well: Prices are up, though sales volume has declined.
* New York. Manhattan neighborhoods like SoHo, the Lower East Side, Greenwich Village and the Upper West Side are all up in the last year. Brooklyn is also holding up well. Meanwhile, sales in New Jersey and Connecticut commuter suburbs are down 8 percent from the peak in mid-2006.
* Boston. Prices in the core part of the city are flat or slightly higher over the past year, though sales are taking longer. However, Condo prices in suburban Brookline, one of the most desirable neighborhoods, are down about 7 percent. City neighborhoods like Jamaica Plain and West Roxbury are up about the same amount.
* San Francisco. Prices are up strongly in the city’s favorite neighborhoods, including the Financial District, Telegraph Hill and Russian Hill. Distant suburbs have weakened. Sales in Alameda and Contra Costa, across San Francisco Bay, are down 18 percent and 27 percent respectively.
* Los Angeles. Without an active downtown residential core, L.A. is an anomaly, Riverside and San Bernardino counties are down sharply. Lower-priced homes in Palm Springs have lost about 24 percent of their value. Less-affluent cities like Ontario and Chino are down between 15 per cent and 31 percent. But prices are up in posh areas like Brentwood, Westwood, and the Hollywood Hills.
Source: The Wall Street Journal, Jeff D. Opdyke (05/20/2008)
America's largest downtowns have become some of the best places to hide during the housing downturn. Here’s a rundown of home-pricing trends in the central core of a sampling of the country’s largest cities:
* Chicago. The city’s prized Gold Coast neighborhood had record sales prices in the last year, but bargains abound in the city’s periphery. In Bronzeville, a gentrifying community, prices have dropped to as low as $85,000. Chicago’s desirable North Shore suburbs are continuing to do well: Prices are up, though sales volume has declined.
* New York. Manhattan neighborhoods like SoHo, the Lower East Side, Greenwich Village and the Upper West Side are all up in the last year. Brooklyn is also holding up well. Meanwhile, sales in New Jersey and Connecticut commuter suburbs are down 8 percent from the peak in mid-2006.
* Boston. Prices in the core part of the city are flat or slightly higher over the past year, though sales are taking longer. However, Condo prices in suburban Brookline, one of the most desirable neighborhoods, are down about 7 percent. City neighborhoods like Jamaica Plain and West Roxbury are up about the same amount.
* San Francisco. Prices are up strongly in the city’s favorite neighborhoods, including the Financial District, Telegraph Hill and Russian Hill. Distant suburbs have weakened. Sales in Alameda and Contra Costa, across San Francisco Bay, are down 18 percent and 27 percent respectively.
* Los Angeles. Without an active downtown residential core, L.A. is an anomaly, Riverside and San Bernardino counties are down sharply. Lower-priced homes in Palm Springs have lost about 24 percent of their value. Less-affluent cities like Ontario and Chino are down between 15 per cent and 31 percent. But prices are up in posh areas like Brentwood, Westwood, and the Hollywood Hills.
Source: The Wall Street Journal, Jeff D. Opdyke (05/20/2008)
Mortgage Applications Fell Last Week
From Realtor Magazine Online, Daily Real Estate News May 21, 2008
After rising for two weeks, mortgage applications fell 7.8% last week on a seasonally adjusted basis to 621.6 from 674.4 the previous week, according to the Mortgage Bankers Association weekly survey.
This week's unadjusted market index decreased 10.08% from last year's level and 7.8% from last week's.
This is the second lowest level of applications this year. The slowest pace was the week of April 25 when the index hit 567.
With mortgage rates headed upward, the refinance share of mortgage activity decreased to 48.2 % from 48.7% the previous week.
- 30-year fixed-rate mortgages increased to 5.9%t from 5.82%.
- 15-year fixed-rate mortgages increased to 5.42 percent from 5.38%.
- 1-year ARMs increased to 6.71 percent from 6.60%.
Source: Mortgage Bankers Association (05/21/2008)
After rising for two weeks, mortgage applications fell 7.8% last week on a seasonally adjusted basis to 621.6 from 674.4 the previous week, according to the Mortgage Bankers Association weekly survey.
This week's unadjusted market index decreased 10.08% from last year's level and 7.8% from last week's.
This is the second lowest level of applications this year. The slowest pace was the week of April 25 when the index hit 567.
With mortgage rates headed upward, the refinance share of mortgage activity decreased to 48.2 % from 48.7% the previous week.
- 30-year fixed-rate mortgages increased to 5.9%t from 5.82%.
- 15-year fixed-rate mortgages increased to 5.42 percent from 5.38%.
- 1-year ARMs increased to 6.71 percent from 6.60%.
Source: Mortgage Bankers Association (05/21/2008)
Tuesday, May 20, 2008
Multifamily Construction Rose in April
From Realtor Magazine Online, Daily Real Estate News May 20, 2008
U.S. housing starts rose 8.2 percent, to a 1.032 million-unit annual pace in April, from a 0.954 million rate in March. Housing starts are still down 30.6 percent from a year ago.
The April increase was entirely due to a jump in multifamily starts – up 40.5 percent. Single-family starts dropped 1.7 percent, to 692,000. The increase was concentrated in the Midwest – up 24.4 percent – and the West – up 18.5 percent. Starts were down 12.7 percent in the East and up 3.6 percent in the South.
Nevertheless, housing starts were doing better than analysts expected. That’s good news for U.S. economic growth, notes S&P Economics. "We do not think the [housing] problem is over, however, and still expect declines through the summer," wrote S&P economist Beth Ann Bovino in a May 16 note.
John Ryding, chief U.S. economist at Bear Stearns, advised against reading too much into the rise in construction permits and said in an e-mail note that the decline in housing starts over the last three months shows housing will continue to be a significant drag on growth in the second quarter.
Source: BusinessWeek.com (05/19/2008)
U.S. housing starts rose 8.2 percent, to a 1.032 million-unit annual pace in April, from a 0.954 million rate in March. Housing starts are still down 30.6 percent from a year ago.
The April increase was entirely due to a jump in multifamily starts – up 40.5 percent. Single-family starts dropped 1.7 percent, to 692,000. The increase was concentrated in the Midwest – up 24.4 percent – and the West – up 18.5 percent. Starts were down 12.7 percent in the East and up 3.6 percent in the South.
Nevertheless, housing starts were doing better than analysts expected. That’s good news for U.S. economic growth, notes S&P Economics. "We do not think the [housing] problem is over, however, and still expect declines through the summer," wrote S&P economist Beth Ann Bovino in a May 16 note.
John Ryding, chief U.S. economist at Bear Stearns, advised against reading too much into the rise in construction permits and said in an e-mail note that the decline in housing starts over the last three months shows housing will continue to be a significant drag on growth in the second quarter.
Source: BusinessWeek.com (05/19/2008)
U.S. Senate Strikes Housing Rescue Deal
From Realtor Magazine Online, Daily Real Estate News May 20, 2008
Democrats and Republicans in the Senate have ended weeks of negotiations with a plan that would allow the federal government to insure up to $300 billion in refinanced loans for struggling home owners.
The bipartisan accord, which represents the clearest sign yet that Congress is ready to pass sweeping legislation on housing, also seeks to tighten up oversight of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, which provide funding for mortgages.
Republicans had been concerned that taxpayers would be responsible for what amounts to a bailout, but a provision calls for initial losses on defaulted loans to be covered by fees charged to the two GSEs.
Even President Bush has recognized the Senate's efforts in recent days, easing off earlier veto threats.
Source: Wall Street Journal (05/20/08) Damian Paletta; James R. Hagerty
Democrats and Republicans in the Senate have ended weeks of negotiations with a plan that would allow the federal government to insure up to $300 billion in refinanced loans for struggling home owners.
The bipartisan accord, which represents the clearest sign yet that Congress is ready to pass sweeping legislation on housing, also seeks to tighten up oversight of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, which provide funding for mortgages.
Republicans had been concerned that taxpayers would be responsible for what amounts to a bailout, but a provision calls for initial losses on defaulted loans to be covered by fees charged to the two GSEs.
Even President Bush has recognized the Senate's efforts in recent days, easing off earlier veto threats.
Source: Wall Street Journal (05/20/08) Damian Paletta; James R. Hagerty
Thursday, May 15, 2008
Jumbo Mortgage Rates Becoming Affordable
In the past week, jumbo conforming loans have become almost as affordable as standard conforming loans thanks to higher loan limits and a drop in bank interest rates. That’s good news for high-cost markets and homeowners with equity in their homes who may be able to refinance to a lower-cost standard conforming rate. However, borrowers still face tightened lending requirements.
MAKING SENSE OF THE STORY FOR CONSUMERS
- Last week, a 30-year fixed-rate jumbo conforming loan with no points averaged 6.125 percent, compared with 5.875 percent for a standard conforming and 6.75 percent for a regular jumbo loan. Jumbo conforming loans are used for home purchases between $417,000 and $729,750, while standard conforming loans apply to homes with a purchase price below $417,000. Conforming loans are those that meet certain underwriting criteria and can be guaranteed by Fannie Mae and Freddie Mac. A lower rate could save borrowers several hundred dollars a month in mortgage costs.
- Both Fannie Mae and Freddie Mac require jumbo loan borrowers to make a higher downpayment (in the 10 percent to 15 percent range); require higher credit scores; provide income documentation; and typically have lower debt-to-income ratios than standard conforming loans.
- Congress recently increased the maximum loan amount to 125 percent of an area’s median home price up to $729,750. The new higher rates were intended to more accurately reflect home prices in high-cost markets and to stimulate housing market activity by allowing lenders to package more loans for sale to Fannie Mae and Freddie Mac.
To read the full story, please click here:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/05/13/BUBV10L0PG.DTL
MAKING SENSE OF THE STORY FOR CONSUMERS
- Last week, a 30-year fixed-rate jumbo conforming loan with no points averaged 6.125 percent, compared with 5.875 percent for a standard conforming and 6.75 percent for a regular jumbo loan. Jumbo conforming loans are used for home purchases between $417,000 and $729,750, while standard conforming loans apply to homes with a purchase price below $417,000. Conforming loans are those that meet certain underwriting criteria and can be guaranteed by Fannie Mae and Freddie Mac. A lower rate could save borrowers several hundred dollars a month in mortgage costs.
- Both Fannie Mae and Freddie Mac require jumbo loan borrowers to make a higher downpayment (in the 10 percent to 15 percent range); require higher credit scores; provide income documentation; and typically have lower debt-to-income ratios than standard conforming loans.
- Congress recently increased the maximum loan amount to 125 percent of an area’s median home price up to $729,750. The new higher rates were intended to more accurately reflect home prices in high-cost markets and to stimulate housing market activity by allowing lenders to package more loans for sale to Fannie Mae and Freddie Mac.
To read the full story, please click here:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/05/13/BUBV10L0PG.DTL
Smooth Short Sales: Tips from a Lender
From Realtor Magazine Online, Daily Real Estate News May 15, 2008
WASHINGTON — Real estate practitioners who've worked with clients on a short sale often complain about constant transaction delays, particularly in getting the deal approved from lenders.
On Wednesday at NAR's Midyear Legislative Meetings in Washington, D.C., a representative from lender JPMorgan Chase & Co. shared some advice on how you can help move a short sale along as smoothly as possible.
"We’ve found a brave lender to stand in front of a room full of agents,” short-sales expert Robert Kutschbach, broker-owner of Carleton Realty in Westerville, Ohio, said in his introduction of Jim Satterwhite, vice president of prime default management at Chase.
A short sale occurs when the net proceeds from the sale of a home are not enough to cover the sellers’ mortgage obligations and closing costs, and the seller is unable or unwilling to bring sufficient liquid assets to closing to cover the deficiencies.
Patience Is a Virtue
Satterwhite said that just as practitioners are being hit with a wave of short sales, they must recognize that lenders are too.
“Be patient. The decision process may take several weeks,” Satterwhite said, adding that a big lender may be dealing with a quarter-million delinquent loans at any given time. It can be a challenge to obtain approvals from everyone involved in the short sale, including investors and insurers, he said. He encouraged practitioners to stay in contact with the servicer of the mortgage to keep everything moving.
Another common problem he sees: When short sale offers are submitted days from an impending foreclosure sale, which is not an adequate amount of time for a lender to reach a decision.
Research, Follow-Up Can Avoid Delays
Satterwhite shared these recommendations for practitioners:
- Find out if there are any liens on the property, which can become big problems for lenders and real estate professionals. Secondary lien holders may require money to minimize their losses and can balk at approving the short sale. Frequent objectors include tax lien holders and mechanic’s lien holders.
- Engage both primary and secondary lien holders at the same time because all parties will need to approve the contract.
- When working with the seller, ensure that all paperwork is completed and submitted on time. Also, make clients aware that they may be asked to reduce the lender’s loss by making a payment or by signing a promissory note.
- When working with a buyer, make a reasonable offer on the property. A ridiculously low offer is a waste of everyone's time, he said. “The servicer’s primary goal is to minimize the investor’s loss on a property with a distressed borrower,” Satterwhite said. Therefore, the lender will try to obtain fair market value for the property, so offers way below fair market value just cloud the process, he said.
What Price Should I Offer?
One audience member asked Satterwhite why lenders can’t provide some type of guidance on what price they'll accept so practitioners can avoid having multiple offers rejected. But Satterwhite said that would be too good to be true: Just as you wouldn’t try to sell your car by advertising the lowest price you’ll accept, lenders won’t do that in a short sale.
“We want to do what is reasonable, but we also want to do our best to recover our indebtedness,” he said.
— By Melissa Dittmann Tracey
WASHINGTON — Real estate practitioners who've worked with clients on a short sale often complain about constant transaction delays, particularly in getting the deal approved from lenders.
On Wednesday at NAR's Midyear Legislative Meetings in Washington, D.C., a representative from lender JPMorgan Chase & Co. shared some advice on how you can help move a short sale along as smoothly as possible.
"We’ve found a brave lender to stand in front of a room full of agents,” short-sales expert Robert Kutschbach, broker-owner of Carleton Realty in Westerville, Ohio, said in his introduction of Jim Satterwhite, vice president of prime default management at Chase.
A short sale occurs when the net proceeds from the sale of a home are not enough to cover the sellers’ mortgage obligations and closing costs, and the seller is unable or unwilling to bring sufficient liquid assets to closing to cover the deficiencies.
Patience Is a Virtue
Satterwhite said that just as practitioners are being hit with a wave of short sales, they must recognize that lenders are too.
“Be patient. The decision process may take several weeks,” Satterwhite said, adding that a big lender may be dealing with a quarter-million delinquent loans at any given time. It can be a challenge to obtain approvals from everyone involved in the short sale, including investors and insurers, he said. He encouraged practitioners to stay in contact with the servicer of the mortgage to keep everything moving.
Another common problem he sees: When short sale offers are submitted days from an impending foreclosure sale, which is not an adequate amount of time for a lender to reach a decision.
Research, Follow-Up Can Avoid Delays
Satterwhite shared these recommendations for practitioners:
- Find out if there are any liens on the property, which can become big problems for lenders and real estate professionals. Secondary lien holders may require money to minimize their losses and can balk at approving the short sale. Frequent objectors include tax lien holders and mechanic’s lien holders.
- Engage both primary and secondary lien holders at the same time because all parties will need to approve the contract.
- When working with the seller, ensure that all paperwork is completed and submitted on time. Also, make clients aware that they may be asked to reduce the lender’s loss by making a payment or by signing a promissory note.
- When working with a buyer, make a reasonable offer on the property. A ridiculously low offer is a waste of everyone's time, he said. “The servicer’s primary goal is to minimize the investor’s loss on a property with a distressed borrower,” Satterwhite said. Therefore, the lender will try to obtain fair market value for the property, so offers way below fair market value just cloud the process, he said.
What Price Should I Offer?
One audience member asked Satterwhite why lenders can’t provide some type of guidance on what price they'll accept so practitioners can avoid having multiple offers rejected. But Satterwhite said that would be too good to be true: Just as you wouldn’t try to sell your car by advertising the lowest price you’ll accept, lenders won’t do that in a short sale.
“We want to do what is reasonable, but we also want to do our best to recover our indebtedness,” he said.
— By Melissa Dittmann Tracey
Monday, May 12, 2008
Senate to Wrestle With Home-Loan Package
From Realtor Magazine Online, Daily Real Estate News May 12, 2008
It is now the U.S. Senate's turn to craft its own version of homeowner rescue legislation, following the U.S. House of Representatives' approval last week of a home-loan package aimed at easing the foreclosure crisis.
The White House has released a statement threatening to veto any bill that "would force the FHA and taxpayers to take on excessive risk, and jeopardize FHA's solvency."
The Bush administration says it's worried that lenders would seek to use the new law to transfer their highest-risk loans to the federal government.
Meanwhile, Pew Center on the States research shows that American homeowners are falling into foreclosure at a rate of 7,000 to 8,000 per day.
Source: Christian Science Monitor (05/12/08)
It is now the U.S. Senate's turn to craft its own version of homeowner rescue legislation, following the U.S. House of Representatives' approval last week of a home-loan package aimed at easing the foreclosure crisis.
The White House has released a statement threatening to veto any bill that "would force the FHA and taxpayers to take on excessive risk, and jeopardize FHA's solvency."
The Bush administration says it's worried that lenders would seek to use the new law to transfer their highest-risk loans to the federal government.
Meanwhile, Pew Center on the States research shows that American homeowners are falling into foreclosure at a rate of 7,000 to 8,000 per day.
Source: Christian Science Monitor (05/12/08)
Friday, May 9, 2008
Banks Revisit Mortgage-Backed Securities
From Realtor Magazine Online, Daily Real Estate News May 9, 2008
Investors are starting to buy up billions of dollars in mortgages that have been stuck on the books of banks, but that hasn’t yet freed up money for new mortgages.
In the past four weeks, banks have gone to market with four issues of commercial mortgage backed securities with a total balance of $4.9 billion, according to data provider Commercial Real Estate Direct. That’s a big improvement from weeks earlier this year when there were no deals, but down from the same period last year, when the issuance totaled $78.7 billion.
Banks are offering the securities at discounts ranging from 5 percent to 20 percent, but those discounts are modest compared to what vulture investors got in the wake of the last major real-estate collapse in the early 1990s.
That’s because default rates on commercial real estate remain low by historical standards. And there’s a lot of cash available. Banks don’t have to take the low-ball offers.
Source: The Wall Street Journal, Lingling Wei and Jennifer S. Forsyth (05/09/2008)
Investors are starting to buy up billions of dollars in mortgages that have been stuck on the books of banks, but that hasn’t yet freed up money for new mortgages.
In the past four weeks, banks have gone to market with four issues of commercial mortgage backed securities with a total balance of $4.9 billion, according to data provider Commercial Real Estate Direct. That’s a big improvement from weeks earlier this year when there were no deals, but down from the same period last year, when the issuance totaled $78.7 billion.
Banks are offering the securities at discounts ranging from 5 percent to 20 percent, but those discounts are modest compared to what vulture investors got in the wake of the last major real-estate collapse in the early 1990s.
That’s because default rates on commercial real estate remain low by historical standards. And there’s a lot of cash available. Banks don’t have to take the low-ball offers.
Source: The Wall Street Journal, Lingling Wei and Jennifer S. Forsyth (05/09/2008)
Treasury's Paulson: Credit Crisis Ending
From Realtor Magazine Online, Daily Real Estate News May 9, 2008
Treasury Secretary Henry Paulson said Wednesday that the worst of the nation’s credit crisis has probably passed.
"There's progress," he said. "I think we're closer to the end of this" than to the beginning.
But Paulson doesn’t see much immediate change in the housing market. He said depressed home sales and prices remained "the biggest risk to the economy,” and he expects further pressure on housing in the months ahead."
Even the optimists here believe that you're going to continue to see in the next several months" newspaper headlines that will say prices have declined even further and foreclosures have increased, he said. "That's what happens during a correction."
Source: The Associated Press, Jeannine Aversa and Martin Crutsinger (05/07/08)
Treasury Secretary Henry Paulson said Wednesday that the worst of the nation’s credit crisis has probably passed.
"There's progress," he said. "I think we're closer to the end of this" than to the beginning.
But Paulson doesn’t see much immediate change in the housing market. He said depressed home sales and prices remained "the biggest risk to the economy,” and he expects further pressure on housing in the months ahead."
Even the optimists here believe that you're going to continue to see in the next several months" newspaper headlines that will say prices have declined even further and foreclosures have increased, he said. "That's what happens during a correction."
Source: The Associated Press, Jeannine Aversa and Martin Crutsinger (05/07/08)
30-Year Mortgages Edge Down Slightly
From Realtor Magazine Online, Daily Real Estate News May 9, 2008
Freddie Mac Chief Economist Frank Nothaft says the housing slump, along with rising mortgage delinquencies and foreclosures, has taken a toll on homeownership rates and prevented significant movement in mortgage rates during the week ended May 8.
The 30-year fixed rate slipped to 6.05 percent from 6.06 percent a week ago, while the 15-year fixed rate bumped up to 5.60 percent from 5.59 percent. Over the same period, the five-year adjustable mortgage rate fell to 5.67 percent from 5.73 percent; and the one-year ARM held steady at 5.29 percent.
Nothaft cites a report from the U.S. Census Bureau that indicates a decline in the national homeownership rate to 67.8 percent in the 2008 first quarter from 69 percent in the 2006 third quarter.
Source: Northwest Indiana Times (05/09/08), Martin Crutsinger
Freddie Mac Chief Economist Frank Nothaft says the housing slump, along with rising mortgage delinquencies and foreclosures, has taken a toll on homeownership rates and prevented significant movement in mortgage rates during the week ended May 8.
The 30-year fixed rate slipped to 6.05 percent from 6.06 percent a week ago, while the 15-year fixed rate bumped up to 5.60 percent from 5.59 percent. Over the same period, the five-year adjustable mortgage rate fell to 5.67 percent from 5.73 percent; and the one-year ARM held steady at 5.29 percent.
Nothaft cites a report from the U.S. Census Bureau that indicates a decline in the national homeownership rate to 67.8 percent in the 2008 first quarter from 69 percent in the 2006 third quarter.
Source: Northwest Indiana Times (05/09/08), Martin Crutsinger
Analysts Say Inventories May Shrink Soon
From Realtor Magazine Online, Daily Real Estate News May 9, 2008
The supple inventory of homes available for sale in major metropolitan areas rose in April, according to figures compiled by ZipRealty Inc. But analysts believe the supply of houses may plateau.
The inventory was up about 6 percent from April 2007 in the 18 metro areas for which Zip, a California-based real-estate brokerage, has comparable year-earlier data.
Compared with March of this year, inventories expanded 3.5 percent in the 29 markets the company tracks. However, the number of homes on the market normally increases during this month-to-month timeframe.
Michael Larson, a real estate analyst with Weiss Research, says, “Inventories in some cities may be topping out” because there are fewer new homes being built and builders and banks have been very aggressive in selling off foreclosures and previously built homes.
Source: The Wall Street Journal, James R. Hagerty, and CNNMoney.com, Les Christie (05/08/2008)
The supple inventory of homes available for sale in major metropolitan areas rose in April, according to figures compiled by ZipRealty Inc. But analysts believe the supply of houses may plateau.
The inventory was up about 6 percent from April 2007 in the 18 metro areas for which Zip, a California-based real-estate brokerage, has comparable year-earlier data.
Compared with March of this year, inventories expanded 3.5 percent in the 29 markets the company tracks. However, the number of homes on the market normally increases during this month-to-month timeframe.
Michael Larson, a real estate analyst with Weiss Research, says, “Inventories in some cities may be topping out” because there are fewer new homes being built and builders and banks have been very aggressive in selling off foreclosures and previously built homes.
Source: The Wall Street Journal, James R. Hagerty, and CNNMoney.com, Les Christie (05/08/2008)
Wednesday, May 7, 2008
The Housing Crisis is Over -- Wall Street Journal
[How will a buyer know when the market has hit bottom? By the time the media starts publishing positive articles, it will be too late!]
Wall Street Journal, By Cyril Moulle-Berteaux May 6, 2008
The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.
How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won't happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.
Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005.
New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50%, and, adjusted for population growth, are back to the trough levels of 1982.
Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what's going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.
The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.
Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.
Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.
The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.
In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.
The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in "months of supply" terms. That's the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high -- but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months.
Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000-100,000 annually.
Inventories will drop even faster to 400,000 -- or seven months of supply -- by the end of 2008.
This shift in inventories will have a significant impact on prices, although house prices won't stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market.
Many pundits claim that house prices need to fall another 30% to bring them back in line with where they've been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons.
Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages.
And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one's income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today's house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading.
This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity.
When the rate of house-price declines halves, there will be a wholesale shift in markets' perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face.
More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure.
A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year.
Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets' perception of risk related to housing, the financial system, and the economy.
We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to sub-trend growth for a couple of years.
Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now.
Mr. Moulle-Berteaux is managing partner of Traxis Partners LP, a hedge fund firm based in New York.
Wall Street Journal, By Cyril Moulle-Berteaux May 6, 2008
The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.
How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won't happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.
Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005.
New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50%, and, adjusted for population growth, are back to the trough levels of 1982.
Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what's going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.
The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.
Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.
Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.
The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.
In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.
The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in "months of supply" terms. That's the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high -- but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months.
Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000-100,000 annually.
Inventories will drop even faster to 400,000 -- or seven months of supply -- by the end of 2008.
This shift in inventories will have a significant impact on prices, although house prices won't stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market.
Many pundits claim that house prices need to fall another 30% to bring them back in line with where they've been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons.
Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages.
And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one's income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today's house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading.
This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity.
When the rate of house-price declines halves, there will be a wholesale shift in markets' perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face.
More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure.
A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year.
Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets' perception of risk related to housing, the financial system, and the economy.
We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to sub-trend growth for a couple of years.
Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now.
Mr. Moulle-Berteaux is managing partner of Traxis Partners LP, a hedge fund firm based in New York.
Owners Still Upbeat About Home Values
From Realtor Magazine Online, Daily Real Estate News May 7, 2008
Home owners are still optimistic about their home’s value, despite falling home prices all around them, according to a survey of homeowner confidence conducted by Harris Interactive for Zillow.com.
According to the survey, 72 percent of home owners believe their home's value has increased or stayed the same in the past year. The reality is 75 percent of U.S. homes actually decreased in value from the same period a year ago, according to Zillow. In fact, in the first quarter home values dropped 7.7 percent year-over-year, which was the largest year-over-year decline in more than a decade, Zillow points out.
But home owners could be growing more realistic. Since the confidence survey was first conducted last December, home owners show signs they are moving closer to reality as 5 percent more respondents in the first quarter said they think their home value has decreased in the past year compared to those surveyed in the fourth quarter of 2007.
Source: Zillow.com (05/07/2008)
Home owners are still optimistic about their home’s value, despite falling home prices all around them, according to a survey of homeowner confidence conducted by Harris Interactive for Zillow.com.
According to the survey, 72 percent of home owners believe their home's value has increased or stayed the same in the past year. The reality is 75 percent of U.S. homes actually decreased in value from the same period a year ago, according to Zillow. In fact, in the first quarter home values dropped 7.7 percent year-over-year, which was the largest year-over-year decline in more than a decade, Zillow points out.
But home owners could be growing more realistic. Since the confidence survey was first conducted last December, home owners show signs they are moving closer to reality as 5 percent more respondents in the first quarter said they think their home value has decreased in the past year compared to those surveyed in the fourth quarter of 2007.
Source: Zillow.com (05/07/2008)
Mortgage Applications Rebound
From Realtor Magazine Online, Daily Real Estate News May 7, 2008
After a couple of down weeks, the spring buying season kicked in and mortgage application volume rose last week 15.6 percent on a seasonally adjusted basis to 655.4 from 567.0 the previous week, according to the Mortgage Bankers Association weekly survey.
On an unadjusted basis, the index increased 15.9 percent compared to the previous week, but was down 4.4 percent from the same week a year ago.
Last week’s increase reflected a rise of 19.3 percent in refinances with the refinance share of mortgage activity rising to 47.1 percent from 45.7 the previous week. Purchase applications rose 12.1 percent.
Interest rates declined slightly:
- 30-year fixed-rate mortgages decreased to 5.91 percent from 6.01 percent;
- 15-year fixed-rate mortgages decreased to 5.49 percent from 5.53 percent;
- 1-year ARMs decreased to 6.77 percent from 6.86 percent.
Source: Mortgage Bankers Association (05/07/2008)
After a couple of down weeks, the spring buying season kicked in and mortgage application volume rose last week 15.6 percent on a seasonally adjusted basis to 655.4 from 567.0 the previous week, according to the Mortgage Bankers Association weekly survey.
On an unadjusted basis, the index increased 15.9 percent compared to the previous week, but was down 4.4 percent from the same week a year ago.
Last week’s increase reflected a rise of 19.3 percent in refinances with the refinance share of mortgage activity rising to 47.1 percent from 45.7 the previous week. Purchase applications rose 12.1 percent.
Interest rates declined slightly:
- 30-year fixed-rate mortgages decreased to 5.91 percent from 6.01 percent;
- 15-year fixed-rate mortgages decreased to 5.49 percent from 5.53 percent;
- 1-year ARMs decreased to 6.77 percent from 6.86 percent.
Source: Mortgage Bankers Association (05/07/2008)
Expect a Summer Rise in Home Sales
From Realtor Magazine Online, Daily Real Estate News May 7, 2008
A flat pattern in home sales activity should continue for the next couple of months before improving over the summer, according to the latest forecast by the NATIONAL ASSOCIATION OF REALTORS®.
Lawrence Yun, NAR chief economist, said the extent of an expected recovery hinges on better access to affordable loans. “Things are beginning to improve, but the availability of affordable mortgages is uneven around the country and sometimes within metropolitan areas,” he says. “As anticipated, we continue to look for a soft first half of the year, for both housing and the economy, before notable improvements in the second half. Some time is needed for FHA and new conforming jumbo loans to become widely available.”
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in March, edged down 1.0 percent to 83.0 from a downwardly revised level of 83.8 in February, and was 20.1 percent lower than the March 2007 index of 103.9.
NAR President Richard F. Gaylord says additional costs in many markets are hindering a recovery. “Our members are telling us that more buyers are looking at homes but are slow in signing contracts, and that’s contributing to the weakness in pending home sales,” he says. “In many cases buyers are waiting for greater access to affordable credit, especially in higher cost areas, but some are disappointed with what appears to be unnecessarily restrictive lending requirements. The good news this week is there is some discussion toward relaxing some of the burdensome lending practices.”
The PHSI in the Northeast jumped 12.5 percent in March to 80.8 but remains 15.4 percent below a year ago. In the South, the index slipped 0.1 percent to 84.9 and is 26.7 percent lower than March 2007. The index in the West declined 1.4 percent in March to 91.2 and is 9.5 percent below a year ago. In the Midwest, the index fell 10.4 percent in March to 74.1 and is 22.3 percent below March 2007.
Existing-home sales are projected to rise from an annual pace of 4.95 million in the first quarter to 5.82 million in the fourth quarter. For all of 2008, existing-home sales are likely to total 5.39 million, and then rise 6.1 percent to 5.72 million next year. “Although more than half of local markets are expected to see price growth this year, the aggregate existing-home price will decline 2.4 percent in 2008, driven by a relatively few markets that are very oversupplied,” Yun says. The median price is forecast at $213,700 this year before rising 4.1 percent to $222,600 in 2009.
Some areas already are seeing sales increases, underscoring that all real estate is local. In March, unpublished snapshot data shows sales in Bakersfield, Calif., and Jackson, Miss., were higher than a year ago. At the same time, price gains were noted in markets such as Buffalo-Niagara Falls, and Cedar Rapids, Iowa.
On May 13, NAR will report first-quarter data on metropolitan area home prices, covering about 150 metro areas, and state home sales. “Although some market adjustments are necessary, a downward overshooting of the housing market would cause unnecessary loss in economic output, income, and jobs,” Yun says. “It is critical to stimulate housing demand by inducing fence sitters back into the market. A home buyer tax credit on any home purchase would accomplish that.”
Here are some highlights from NAR's report:
New-homes.
Sales of new homes are expected to fall 30.9 percent to 536,000 this year before rising 10.1 percent to 590,000 in 2009. Housing starts, including multifamily units, will probably drop 29.5 percent to 955,000 in 2008, and then rise 1.3 percent to 967,000 next year. The median new-home price is estimated to fall 3.7 percent to $238,000 this year, and then rise 5.4 percent in 2009 to $250,900.
Rates.
The 30-year fixed-rate mortgage is likely to rise gradually to 6.2 percent by the end of the year, and then average 6.3 percent in 2009.
Affordability. NAR’s housing affordability index is expected to rise 10 percentage points to 127.0 for all of 2008.
GDP.
Growth in the U.S. gross domestic product (GDP) should be 1.5 percent this year and 2.3 percent in 2009. The unemployment rate is projected to average 5.3 percent in 2008 and 5.5 percent next year.
Inflation.
Inflation, as measured by the Consumer Price Index, is seen at 3.4 percent this year and 2.2 percent in 2009. Inflation-adjusted disposable personal income is forecast to grow 1.2 percent in 2008 and 3.0 percent next year.
A flat pattern in home sales activity should continue for the next couple of months before improving over the summer, according to the latest forecast by the NATIONAL ASSOCIATION OF REALTORS®.
Lawrence Yun, NAR chief economist, said the extent of an expected recovery hinges on better access to affordable loans. “Things are beginning to improve, but the availability of affordable mortgages is uneven around the country and sometimes within metropolitan areas,” he says. “As anticipated, we continue to look for a soft first half of the year, for both housing and the economy, before notable improvements in the second half. Some time is needed for FHA and new conforming jumbo loans to become widely available.”
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in March, edged down 1.0 percent to 83.0 from a downwardly revised level of 83.8 in February, and was 20.1 percent lower than the March 2007 index of 103.9.
NAR President Richard F. Gaylord says additional costs in many markets are hindering a recovery. “Our members are telling us that more buyers are looking at homes but are slow in signing contracts, and that’s contributing to the weakness in pending home sales,” he says. “In many cases buyers are waiting for greater access to affordable credit, especially in higher cost areas, but some are disappointed with what appears to be unnecessarily restrictive lending requirements. The good news this week is there is some discussion toward relaxing some of the burdensome lending practices.”
The PHSI in the Northeast jumped 12.5 percent in March to 80.8 but remains 15.4 percent below a year ago. In the South, the index slipped 0.1 percent to 84.9 and is 26.7 percent lower than March 2007. The index in the West declined 1.4 percent in March to 91.2 and is 9.5 percent below a year ago. In the Midwest, the index fell 10.4 percent in March to 74.1 and is 22.3 percent below March 2007.
Existing-home sales are projected to rise from an annual pace of 4.95 million in the first quarter to 5.82 million in the fourth quarter. For all of 2008, existing-home sales are likely to total 5.39 million, and then rise 6.1 percent to 5.72 million next year. “Although more than half of local markets are expected to see price growth this year, the aggregate existing-home price will decline 2.4 percent in 2008, driven by a relatively few markets that are very oversupplied,” Yun says. The median price is forecast at $213,700 this year before rising 4.1 percent to $222,600 in 2009.
Some areas already are seeing sales increases, underscoring that all real estate is local. In March, unpublished snapshot data shows sales in Bakersfield, Calif., and Jackson, Miss., were higher than a year ago. At the same time, price gains were noted in markets such as Buffalo-Niagara Falls, and Cedar Rapids, Iowa.
On May 13, NAR will report first-quarter data on metropolitan area home prices, covering about 150 metro areas, and state home sales. “Although some market adjustments are necessary, a downward overshooting of the housing market would cause unnecessary loss in economic output, income, and jobs,” Yun says. “It is critical to stimulate housing demand by inducing fence sitters back into the market. A home buyer tax credit on any home purchase would accomplish that.”
Here are some highlights from NAR's report:
New-homes.
Sales of new homes are expected to fall 30.9 percent to 536,000 this year before rising 10.1 percent to 590,000 in 2009. Housing starts, including multifamily units, will probably drop 29.5 percent to 955,000 in 2008, and then rise 1.3 percent to 967,000 next year. The median new-home price is estimated to fall 3.7 percent to $238,000 this year, and then rise 5.4 percent in 2009 to $250,900.
Rates.
The 30-year fixed-rate mortgage is likely to rise gradually to 6.2 percent by the end of the year, and then average 6.3 percent in 2009.
Affordability. NAR’s housing affordability index is expected to rise 10 percentage points to 127.0 for all of 2008.
GDP.
Growth in the U.S. gross domestic product (GDP) should be 1.5 percent this year and 2.3 percent in 2009. The unemployment rate is projected to average 5.3 percent in 2008 and 5.5 percent next year.
Inflation.
Inflation, as measured by the Consumer Price Index, is seen at 3.4 percent this year and 2.2 percent in 2009. Inflation-adjusted disposable personal income is forecast to grow 1.2 percent in 2008 and 3.0 percent next year.
Monday, May 5, 2008
First Quarter Mortgage Volume Higher
From Realtor Magazine Online, Daily Real Estate News May 5, 2008
First-quarter mortgage volume was down 22 percent from the first quarter 2007, but it rose 3 percent from the fourth quarter, according to publisher MortgageDaily.com.
There were $370.6 billion mortgage originations in first quarter 2008. Compared with the first quarter of 2007, U.S. Bancorp mortgage activity jumped 86 percent. Flagstar Bancorp Inc. was up 44 percent and First Horizon National Corp. rose 19 percent.
The five largest mortgage lenders and their first quarter totals were:
1. Countrywide Financial Corp., $73 billion
2. Wells Fargo & Co., $66 billion
3. JPMorgan Chase & Co., $53.8 billion
4. Bank of America Corp., $38.6 billion
5. Citigroup, $34.3 billion
Source: MortgageDaily.com (05/05/2008)
First-quarter mortgage volume was down 22 percent from the first quarter 2007, but it rose 3 percent from the fourth quarter, according to publisher MortgageDaily.com.
There were $370.6 billion mortgage originations in first quarter 2008. Compared with the first quarter of 2007, U.S. Bancorp mortgage activity jumped 86 percent. Flagstar Bancorp Inc. was up 44 percent and First Horizon National Corp. rose 19 percent.
The five largest mortgage lenders and their first quarter totals were:
1. Countrywide Financial Corp., $73 billion
2. Wells Fargo & Co., $66 billion
3. JPMorgan Chase & Co., $53.8 billion
4. Bank of America Corp., $38.6 billion
5. Citigroup, $34.3 billion
Source: MortgageDaily.com (05/05/2008)
Buffett Does His Part to Keep Rates Stable
From Realtor Magazine Online, Daily Real Estate News May 5, 2008
Berkshire Hathaway, the insurance and investment company chaired by Warren Buffett, the world’s wealthiest man, has bought portfolios of subprime mortgages and frozen their rates.
Buffett, who spoke at Berkshire Hathaway’s annual meeting Sunday, said Clayton Homes, a unit of Berkshire that makes and provides financing on manufactured homes, purchased the subprime mortgages. Clayton sent letters to all the borrowers involved telling them the interest rates wouldn’t reset higher.
"We're not in the business of resetting mortgages higher," Buffett said.
Source: Dow Jones Business News, Alistair Barr (05/04/2008)
Berkshire Hathaway, the insurance and investment company chaired by Warren Buffett, the world’s wealthiest man, has bought portfolios of subprime mortgages and frozen their rates.
Buffett, who spoke at Berkshire Hathaway’s annual meeting Sunday, said Clayton Homes, a unit of Berkshire that makes and provides financing on manufactured homes, purchased the subprime mortgages. Clayton sent letters to all the borrowers involved telling them the interest rates wouldn’t reset higher.
"We're not in the business of resetting mortgages higher," Buffett said.
Source: Dow Jones Business News, Alistair Barr (05/04/2008)
Condo Owners Face Rental Dilemma
From Realtor Magazine Online, Daily Real Estate News May 5, 2008
Condo owners who can’t sell their units often consider leasing the space to tenants until the market improves. Yet, increasingly, such owners are discovering that their condo association has rules preventing them from doing so.
Rental policies vary by condo association, but generally associations limit the percentage of units that can be occupied by tenants. Some communities require owners to submit the lease they plan to use to the condo board for approval.
The rental restrictions are meant to guard against the condo being viewed as a risky investment by lenders who believe that buildings with a high concentration of rentals are harder to market to homebuyers. Fannie Mae will not guarantee a loan for a condo in which renters make up more than 49 percent of the occupants.
The rules generally stem from a feeling that renters don’t take good care of a unit and can reduce the value of the unit.
Source: The Washington Post, Renae Merle (05/03/2008)
Condo owners who can’t sell their units often consider leasing the space to tenants until the market improves. Yet, increasingly, such owners are discovering that their condo association has rules preventing them from doing so.
Rental policies vary by condo association, but generally associations limit the percentage of units that can be occupied by tenants. Some communities require owners to submit the lease they plan to use to the condo board for approval.
The rental restrictions are meant to guard against the condo being viewed as a risky investment by lenders who believe that buildings with a high concentration of rentals are harder to market to homebuyers. Fannie Mae will not guarantee a loan for a condo in which renters make up more than 49 percent of the occupants.
The rules generally stem from a feeling that renters don’t take good care of a unit and can reduce the value of the unit.
Source: The Washington Post, Renae Merle (05/03/2008)
Friday, May 2, 2008
FHA Mortgage Refinance Bill Moves Ahead
From Realtor Magazine Online, Daily Real Estate News May 2, 2008
The U.S. House Financial Services Committee on Thursday passed a bill that paves the way for the Federal Housing Administration to refinance $300 billion in troubled mortgages.
Lenders would have to erase a portion of the original loan in order to secure a government guarantee on future payments.
The plan would "put liquidity back in the market and not interfere with the market, I think, but help restore (it)," Committee Chairman Barney Frank says.
Democrats, who hold the majority in the House, are expected to pass the measure once it is presented for a vote next week. A Senate panel is to begin drafting a companion measure on Tuesday. The bill will probably have a harder time in the Republican-dominated Senate.
Source: Reuters News, Patrick Rucker (05/02/2008)
The U.S. House Financial Services Committee on Thursday passed a bill that paves the way for the Federal Housing Administration to refinance $300 billion in troubled mortgages.
Lenders would have to erase a portion of the original loan in order to secure a government guarantee on future payments.
The plan would "put liquidity back in the market and not interfere with the market, I think, but help restore (it)," Committee Chairman Barney Frank says.
Democrats, who hold the majority in the House, are expected to pass the measure once it is presented for a vote next week. A Senate panel is to begin drafting a companion measure on Tuesday. The bill will probably have a harder time in the Republican-dominated Senate.
Source: Reuters News, Patrick Rucker (05/02/2008)
Little Change in Mortgage Rates
From Realtor Magazine Online, Daily Real Estate News May 2, 2008
Long-term mortgage rates saw little change over the past week, according to Freddie Mac. Interest on 30-year fixed loans came in at 6.06 percent, compared with 6.03 percent for the previous week.
Other rates registered some movement, but not much, with the 15-year fixed mortgage averaging 5.59 percent, down slightly from 5.62 percent a week earlier. The five-year hybrid adjustable rate floated up to 5.73 percent from 5.68 percent over the same period.The one-year ARM, meanwhile, held steady at 5.29 percent.
Source: Wall Street Journal (05/02/08)
Long-term mortgage rates saw little change over the past week, according to Freddie Mac. Interest on 30-year fixed loans came in at 6.06 percent, compared with 6.03 percent for the previous week.
Other rates registered some movement, but not much, with the 15-year fixed mortgage averaging 5.59 percent, down slightly from 5.62 percent a week earlier. The five-year hybrid adjustable rate floated up to 5.73 percent from 5.68 percent over the same period.The one-year ARM, meanwhile, held steady at 5.29 percent.
Source: Wall Street Journal (05/02/08)
Thursday, May 1, 2008
Mortgage Insurers: Defaults Drop
From Realtor Magazine Online, Daily Real Estate News May 1, 2008
The Mortgage Insurance Co. of America (MICA) says there are signs more homeowners are recovering from their financial issues and paying their mortgages on time.
"In the past month, cures – or borrowers once headed for foreclosure but now back on track – have risen slightly," says Suzanne Hutchinson, an executive vice president at the trade group.
In March, there were 50,585 cures reported, a 5.5 percent increase from February and 42.6 percent over the number of cures in January, when defaults rose to a record high.
Defaults on privately insured U.S. mortgages still remain high with 58,131 insured borrowers at least 60 days late on payments. That’s up from 42,362 – 37.2 percent – from a year ago, but down from February figures. The March figures marked the first time in four straight months that there had been fewer than 60,000 defaults, according to MICA.
Source: MICA
The Mortgage Insurance Co. of America (MICA) says there are signs more homeowners are recovering from their financial issues and paying their mortgages on time.
"In the past month, cures – or borrowers once headed for foreclosure but now back on track – have risen slightly," says Suzanne Hutchinson, an executive vice president at the trade group.
In March, there were 50,585 cures reported, a 5.5 percent increase from February and 42.6 percent over the number of cures in January, when defaults rose to a record high.
Defaults on privately insured U.S. mortgages still remain high with 58,131 insured borrowers at least 60 days late on payments. That’s up from 42,362 – 37.2 percent – from a year ago, but down from February figures. The March figures marked the first time in four straight months that there had been fewer than 60,000 defaults, according to MICA.
Source: MICA
Fed Cuts Rates One-Quarter Point
From Realtor Magazine Online, Daily Real Estate News May 1, 2008
The Federal Reserve cut interest rates Wednesday 25 basis points to 2 percent.
It’s the lowest point in four years. The Fed was divided 8-2 on the cut. A statement from the majority of Fed members said: "The substantial easing of monetary policy to date ... should help to promote moderate growth over time and to mitigate risks to economic activity."
Observers believes this means that the Fed is unlikely to make any more cuts – at least through the end of this year.
"The Fed didn't completely shut the door on rate cuts, but they closed it part way," said Mark Zandi, chief economist at Moody's Economy.com. "I think the overall message was they've done a lot already to help the economy and think this will be enough. But they stand ready to do more if that is needed."
Source: The Associated Press, Jeannine Aversa (04/30/2008)
The Federal Reserve cut interest rates Wednesday 25 basis points to 2 percent.
It’s the lowest point in four years. The Fed was divided 8-2 on the cut. A statement from the majority of Fed members said: "The substantial easing of monetary policy to date ... should help to promote moderate growth over time and to mitigate risks to economic activity."
Observers believes this means that the Fed is unlikely to make any more cuts – at least through the end of this year.
"The Fed didn't completely shut the door on rate cuts, but they closed it part way," said Mark Zandi, chief economist at Moody's Economy.com. "I think the overall message was they've done a lot already to help the economy and think this will be enough. But they stand ready to do more if that is needed."
Source: The Associated Press, Jeannine Aversa (04/30/2008)
Rates Rise on 30-year Mortgages
Thursday, May 1, 2008
Long-term mortgage rates ended the week mixed, with the 30-year fixed-rate average rising, as markets reacted to news of higher inflation.
The average rate on 30-year fixed-rate loans edged up to 6.06 percent from last week's 6.03 percent, while the average rate on 15-year fixed loans dipped from 5.62 percent to 5.59 percent. A year ago the 30-year averaged 6.16 percent and the 15-year averaged 5.87 percent.
To qualify for these rates, borrowers must pay points, or fees that lenders charge for loan processing expressed as a percent of the loan, which this week averaged 0.5 on the 30- and 15-year loans.
"This week saw little change in mortgage rates on mixed news of higher inflation and a weaker housing market," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.
"Additionally, in its most recent policy committee statement on April 30, the Federal Reserve (Fed) indicated it expects inflation to moderate in coming quarters, but uncertainty about the outlook for inflation remains high. However, the Fed did note that financial markets remain under considerable stress and tight credit conditions, along with the deepening housing contraction, are likely to weigh on economic growth."
Inflation jitters pushed the five-year Treasury-indexed adjustable-rate mortgage (ARM) up to an average 5.73 percent this week from 5.68 percent a week ago. The average rate on one-year Treasury-indexed ARMs, however, held steady at 5.29 percent. Points paid on the five- and one-year loans averaged 0.5 and 0.6, respectively.
Long-term mortgage rates ended the week mixed, with the 30-year fixed-rate average rising, as markets reacted to news of higher inflation.
The average rate on 30-year fixed-rate loans edged up to 6.06 percent from last week's 6.03 percent, while the average rate on 15-year fixed loans dipped from 5.62 percent to 5.59 percent. A year ago the 30-year averaged 6.16 percent and the 15-year averaged 5.87 percent.
To qualify for these rates, borrowers must pay points, or fees that lenders charge for loan processing expressed as a percent of the loan, which this week averaged 0.5 on the 30- and 15-year loans.
"This week saw little change in mortgage rates on mixed news of higher inflation and a weaker housing market," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.
"Additionally, in its most recent policy committee statement on April 30, the Federal Reserve (Fed) indicated it expects inflation to moderate in coming quarters, but uncertainty about the outlook for inflation remains high. However, the Fed did note that financial markets remain under considerable stress and tight credit conditions, along with the deepening housing contraction, are likely to weigh on economic growth."
Inflation jitters pushed the five-year Treasury-indexed adjustable-rate mortgage (ARM) up to an average 5.73 percent this week from 5.68 percent a week ago. The average rate on one-year Treasury-indexed ARMs, however, held steady at 5.29 percent. Points paid on the five- and one-year loans averaged 0.5 and 0.6, respectively.
Subscribe to:
Posts (Atom)
.jpg)