From Realtor Magazine Online, Daily Real Estate News August 29, 2008
The Federal Housing Administration announced Tuesday that it is increasing the upfront premiums charged to most borrower to guarantee that a mortgage will be repaid.
Effective Oct. 1, most borrowers will pay 1.75 percent of the loan amount, up from 1.5 percent because the FHA is adopting a “risk-based” pricing system based on borrowers’ credit scores and the amount of their down payment or equity.
On a $300,000 loan, the new upfront premium works out to $5,250, up from $4,500. The annual premiums paid by borrowers would remain at 0.5 percent to 0.55 percent of the loan balance.
Source: The Wall Street Journal, James R. Hagerty (08/28/2008)
Friday, August 29, 2008
Thursday, August 28, 2008
What to Know About Inheriting Property
From Realtor Magazine Online, Daily Real Estate News August 28, 2008
Inheriting property can be exceedingly confusing for the heirs, particularly if they plan to sell the property. While getting expert legal advice is the best approach for the person who has inherited property, here is some basic information that can help a real estate professional better understand the situation.
* Every state has a legal process that allows the person who was willed property to transfer ownership of it from the previous owner’s name to the new owner’s name. The attorney assisting with the probate of the will can help fill out the forms. If there is no lawyer involved, sometimes someone in the clerk of courts office can guide the person inheriting property through the transfer process.
* Generally, there is little or no transfer tax or other cost involved because the person who is inheriting the property didn’t pay anything for it.
* When a person dies and title is transferred to a spouse or a child, the due-on-sale clause in a mortgage contract doesn’t apply. Otherwise, while a lender could call the loan, in the current economic climate it is unlikely if the person inheriting the property makes regular payments.
Source: Real Estate Matters Syndicate, Ilyce Glink (08/24/2008)
Inheriting property can be exceedingly confusing for the heirs, particularly if they plan to sell the property. While getting expert legal advice is the best approach for the person who has inherited property, here is some basic information that can help a real estate professional better understand the situation.
* Every state has a legal process that allows the person who was willed property to transfer ownership of it from the previous owner’s name to the new owner’s name. The attorney assisting with the probate of the will can help fill out the forms. If there is no lawyer involved, sometimes someone in the clerk of courts office can guide the person inheriting property through the transfer process.
* Generally, there is little or no transfer tax or other cost involved because the person who is inheriting the property didn’t pay anything for it.
* When a person dies and title is transferred to a spouse or a child, the due-on-sale clause in a mortgage contract doesn’t apply. Otherwise, while a lender could call the loan, in the current economic climate it is unlikely if the person inheriting the property makes regular payments.
Source: Real Estate Matters Syndicate, Ilyce Glink (08/24/2008)
Builders Worry About Impact of Housing Bill
From Realtor Magazine Online, Daily Real Estate News August 27, 2008
Home builders are concerned that two provisions of the recently passed housing law will further slow new home sales.
Beginning Oct. 1, the minimum down payment for loans insured by the Federal Housing Administration will go up from 3 percent to 3.5 percent. That adds an extra $1,153 down on a median-priced new home. Also, beginning Oct. 1, sellers will no longer be able to use a charity to channel money to a home buyer to cover a down payment.
Pulte Homes Inc. and Hovnanian Enterprises are both running sales promotions, urging buyers to take advantage of charitable down payment assistance programs before they expire.
Other builders are promoting the law’s $7,500 tax credit for first-time buyers. Beazer Homes USA Inc. recently staged an online consumer seminar about it. Lennar Corp. is offering to cover a down payment of up to 3 percent with no closing costs and throwing in a $7,500 discount for first-time buyers who buy before Oct. 1.
Source: The Associated Press, Alex Veiga (08/26/2008)
Home builders are concerned that two provisions of the recently passed housing law will further slow new home sales.
Beginning Oct. 1, the minimum down payment for loans insured by the Federal Housing Administration will go up from 3 percent to 3.5 percent. That adds an extra $1,153 down on a median-priced new home. Also, beginning Oct. 1, sellers will no longer be able to use a charity to channel money to a home buyer to cover a down payment.
Pulte Homes Inc. and Hovnanian Enterprises are both running sales promotions, urging buyers to take advantage of charitable down payment assistance programs before they expire.
Other builders are promoting the law’s $7,500 tax credit for first-time buyers. Beazer Homes USA Inc. recently staged an online consumer seminar about it. Lennar Corp. is offering to cover a down payment of up to 3 percent with no closing costs and throwing in a $7,500 discount for first-time buyers who buy before Oct. 1.
Source: The Associated Press, Alex Veiga (08/26/2008)
Mortgage Demand Up Slightly Last Week
From Realtor Magazine Online, Daily Real Estate News August 27, 2008
The volume of mortgage applications increased slightly last week, rising 0.5 percent on an adjusted basis to 421.6, compared with 419.3 a week earlier, according to the Mortgage Bankers Association weekly survey.
On an unadjusted basis, the index decreased 0.9 percent compared to the previous week and was down 31.2 percent compared with the same week a year ago.
Both refinances and purchases were up slightly. The refinance index increased 0.3 percent and the purchase index rose 0.6 percent.
Interest rates declined slightly:
* 30-year fixed-rate mortgages decreased to 6.44 percent from 6.47 percent;
* 15-year fixed-rate mortgages decreased to 5.94 percent from 5.99 percent;
* 1-year ARMs increased to 7.15 percent from 7.07 percent.
Source: Mortgage Bankers Association (08/27/2008)
The volume of mortgage applications increased slightly last week, rising 0.5 percent on an adjusted basis to 421.6, compared with 419.3 a week earlier, according to the Mortgage Bankers Association weekly survey.
On an unadjusted basis, the index decreased 0.9 percent compared to the previous week and was down 31.2 percent compared with the same week a year ago.
Both refinances and purchases were up slightly. The refinance index increased 0.3 percent and the purchase index rose 0.6 percent.
Interest rates declined slightly:
* 30-year fixed-rate mortgages decreased to 6.44 percent from 6.47 percent;
* 15-year fixed-rate mortgages decreased to 5.94 percent from 5.99 percent;
* 1-year ARMs increased to 7.15 percent from 7.07 percent.
Source: Mortgage Bankers Association (08/27/2008)
Key Rate May Rise, Fed Report Suggests
From Realtor Magazine Online, Daily Real Estate News August 27, 2008
Federal Reserve policymakers decided to hold a key interest rate steady at 2 percent for their August meeting, according to documents that also suggest the next action will be to raise rates.
Released on Aug. 26, the documents reveal that "members generally anticipated that the next policy move would likely be a tightening" and indicate that economic growth and inflation would determine the timetable for any hikes.
The Fed is unlikely to raise rates to reign in inflation until next year, according to most economists. Fed Chairman Ben Bernanke has suggested that the central bank will hold rates at 2 percent for the September meeting and for the rest of this year.
Source: Washington Post, Jeannine Aversa (08/27/08)
Federal Reserve policymakers decided to hold a key interest rate steady at 2 percent for their August meeting, according to documents that also suggest the next action will be to raise rates.
Released on Aug. 26, the documents reveal that "members generally anticipated that the next policy move would likely be a tightening" and indicate that economic growth and inflation would determine the timetable for any hikes.
The Fed is unlikely to raise rates to reign in inflation until next year, according to most economists. Fed Chairman Ben Bernanke has suggested that the central bank will hold rates at 2 percent for the September meeting and for the rest of this year.
Source: Washington Post, Jeannine Aversa (08/27/08)
Commerce Dept.: New Home Sales Rose in July
From Realtor Magazine Online, Daily Real Estate News August 27, 2008
New home sales in July rose 2.4 percent over the prior month to an annual pace of 515,000, the U.S. Commerce Department reported Tuesday.
At the same time, the number of unsold homes on the market fell 5.2 percent, marking the largest single-month decline since November 1963. Year over year, however, new-home sales were down 35.3 percent and the median new-home price slipped 6.3 percent to $230,700.
Nonetheless, some economists find the latest numbers reassuring.
“We're hopefully getting in the vicinity of a bottom,'' says David Resler, chief U.S. economist at Nomura Securities International Inc. in New York.
“The biggest declines, they’re all behind us now,” says Nigel Gault, chief domestic economist at Global Insight, a research firm.
Sales of new homes slipped in Midwestern and Southern states, according to the Commerce Department report, but rose in the Northeast and West. The median price of a new home in July was $230,700, down 6.3 percent from a year ago. Sales of new homes remained 35.3 percent below their level in July 2007.
Source: Bloomberg, Shobhana Chandra (08/26/2008)
New home sales in July rose 2.4 percent over the prior month to an annual pace of 515,000, the U.S. Commerce Department reported Tuesday.
At the same time, the number of unsold homes on the market fell 5.2 percent, marking the largest single-month decline since November 1963. Year over year, however, new-home sales were down 35.3 percent and the median new-home price slipped 6.3 percent to $230,700.
Nonetheless, some economists find the latest numbers reassuring.
“We're hopefully getting in the vicinity of a bottom,'' says David Resler, chief U.S. economist at Nomura Securities International Inc. in New York.
“The biggest declines, they’re all behind us now,” says Nigel Gault, chief domestic economist at Global Insight, a research firm.
Sales of new homes slipped in Midwestern and Southern states, according to the Commerce Department report, but rose in the Northeast and West. The median price of a new home in July was $230,700, down 6.3 percent from a year ago. Sales of new homes remained 35.3 percent below their level in July 2007.
Source: Bloomberg, Shobhana Chandra (08/26/2008)
Monday, August 25, 2008
Existing-Home Sales Hit 5-Month High
From Realtor Magazine Online, Daily Real Estate News August 25, 2008
Existing-home sales rose in July to the highest level in five months, although they continue to be well below the numbers from last year at this time, according to the NATIONAL ASSOCIATION OF REALTORS®.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – increased 3.1 percent in July to a seasonally adjusted annual rate of 5 million units from a downwardly revised level of 4.85 million in June. Sales were 13.2 percent lower than the 5.76 million-unit pace in July 2007.
NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said the up-and-down pattern may break soon.
“We hope the new tools in the hands of home buyers from the recently enacted housing stimulus package will spark a sustained sales uptrend in the months ahead,” he said. “Buyers who’ve been on the sidelines should take a closer look at what’s available to them now in terms of financing and incentives. Given some of the inventory on the market, we also strongly encourage buyers to get a professional home inspection.”
Median Price Down 7.1% from Year Ago
The national median existing-home price for all housing types was $212,400 in July, down 7.1 percent from a year ago when the median was $228,600.
Lawrence Yun, NAR chief economist, said home prices in some regions could soon increase.
“Sales have picked up significantly in several Florida and California markets. Home prices generally follow sales trends after a few months of lag time,” he said. “Still, inventory remains high in many parts of the country and will require time to fully absorb. We expect more balanced conditions in 2009 and will eventually return to normal long-term appreciation patterns.”
Analysis of NAR price data since 1968 shows home prices normally rise 1 to 2 percentage points above the overall rate of inflation, building wealth over the typical period of homeownership.
11-Month Supply of Homes for Sale
Total housing inventory at the end of July rose 3.9 percent to 4.67 million existing homes available for sale, which represents an 11.2.-month supply at the current sales pace, up from a 11.1-month supply in June. The rise in supply results from a sharp increase in condo inventory; the single family supply declined.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 6.43 percent in July from 6.32 percent in June; the rate was 6.70 percent in July 2007.
Single-family home sales rose 3.1 percent to a seasonally adjusted annual rate of 4.39 million in July from 4.26 million in June, but are 12.4 percent below the 5.01 million-unit level a year ago. The median existing single-family home price was $210,900 in July, down 7.7 percent from July 2007.
Existing condominium and co-op sales increased 3.4 percent to a seasonally adjusted annual rate of 610,000 units in July from 590,000 in June, but are 18.6 percent below the 749,000-unit pace in July 2007. The median existing condo price4 was $223,400 in July, which is 2.7 percent below a year ago.
In Detail: Regional Sales, Prices
West.
Regionally, existing-home sales in the West jumped 9.7 percent in July to a level of 1.13 million and are 0.9 percent higher than July 2007. The median price in the West was $273,200, down 22.2 percent from a year ago.
Northeast.
In the Northeast, existing-home sales rose 5.9 percent to an annual pace of 900,000 in July, but are 11.8 percent below a year ago. The median price in the Northeast was $278,700, which is 4.9 percent lower than July 2007.
Midwest.
Existing-home sales in the Midwest increased 0.9 percent to an annual rate of 1.12 million in July, but are 17.0 percent lower than July 2007. The median price in the Midwest was $175,400, up 1.0 percent from a year ago.
South.
In the South, existing-home sales slipped 0.5 percent to an annual pace of 1.85 million in July, and are 18.1 percent below a year ago. The median price in the South was $179,300, down 3.5 percent from June 2007.
— NAR
Existing-home sales rose in July to the highest level in five months, although they continue to be well below the numbers from last year at this time, according to the NATIONAL ASSOCIATION OF REALTORS®.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – increased 3.1 percent in July to a seasonally adjusted annual rate of 5 million units from a downwardly revised level of 4.85 million in June. Sales were 13.2 percent lower than the 5.76 million-unit pace in July 2007.
NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said the up-and-down pattern may break soon.
“We hope the new tools in the hands of home buyers from the recently enacted housing stimulus package will spark a sustained sales uptrend in the months ahead,” he said. “Buyers who’ve been on the sidelines should take a closer look at what’s available to them now in terms of financing and incentives. Given some of the inventory on the market, we also strongly encourage buyers to get a professional home inspection.”
Median Price Down 7.1% from Year Ago
The national median existing-home price for all housing types was $212,400 in July, down 7.1 percent from a year ago when the median was $228,600.
Lawrence Yun, NAR chief economist, said home prices in some regions could soon increase.
“Sales have picked up significantly in several Florida and California markets. Home prices generally follow sales trends after a few months of lag time,” he said. “Still, inventory remains high in many parts of the country and will require time to fully absorb. We expect more balanced conditions in 2009 and will eventually return to normal long-term appreciation patterns.”
Analysis of NAR price data since 1968 shows home prices normally rise 1 to 2 percentage points above the overall rate of inflation, building wealth over the typical period of homeownership.
11-Month Supply of Homes for Sale
Total housing inventory at the end of July rose 3.9 percent to 4.67 million existing homes available for sale, which represents an 11.2.-month supply at the current sales pace, up from a 11.1-month supply in June. The rise in supply results from a sharp increase in condo inventory; the single family supply declined.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 6.43 percent in July from 6.32 percent in June; the rate was 6.70 percent in July 2007.
Single-family home sales rose 3.1 percent to a seasonally adjusted annual rate of 4.39 million in July from 4.26 million in June, but are 12.4 percent below the 5.01 million-unit level a year ago. The median existing single-family home price was $210,900 in July, down 7.7 percent from July 2007.
Existing condominium and co-op sales increased 3.4 percent to a seasonally adjusted annual rate of 610,000 units in July from 590,000 in June, but are 18.6 percent below the 749,000-unit pace in July 2007. The median existing condo price4 was $223,400 in July, which is 2.7 percent below a year ago.
In Detail: Regional Sales, Prices
West.
Regionally, existing-home sales in the West jumped 9.7 percent in July to a level of 1.13 million and are 0.9 percent higher than July 2007. The median price in the West was $273,200, down 22.2 percent from a year ago.
Northeast.
In the Northeast, existing-home sales rose 5.9 percent to an annual pace of 900,000 in July, but are 11.8 percent below a year ago. The median price in the Northeast was $278,700, which is 4.9 percent lower than July 2007.
Midwest.
Existing-home sales in the Midwest increased 0.9 percent to an annual rate of 1.12 million in July, but are 17.0 percent lower than July 2007. The median price in the Midwest was $175,400, up 1.0 percent from a year ago.
South.
In the South, existing-home sales slipped 0.5 percent to an annual pace of 1.85 million in July, and are 18.1 percent below a year ago. The median price in the South was $179,300, down 3.5 percent from June 2007.
— NAR
Friday, August 22, 2008
30-Year Rates Fall Lower This Week
From Realtor Magazine Online, Daily Real Estate News August 22, 2008
The 30-year fixed-rate mortgage declined in the week ending Aug. 21, falling to an average of 6.47 percent from last week's 6.52 percent, according to Freddie Mac.
Last year at this time, the 30-year rate averaged 6.52 percent.
"Even with the current historically affordable mortgage rates, news continues to show signs of weakening in the housing sector," said Frank Nothaft, Freddie Mac vice president and chief economist. "For example, housing starts fell to 0.965 million units (annualized) in July, the slowest pace since March 1991. As a result, homebuilder confidence remained at an all-time record low in August since the series began in January 1985.
The 15-year fixed-rate mortgage this week averaged 6.00 percent, down from last week when it averaged 6.07 percent, and last year when it averaged 6.18 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.99 percent this week, down from last week when it averaged 6.02 percent.
A year ago, the 5-year ARM averaged 6.34 percent.
One-year Treasury-indexed ARMs averaged 5.29 percent this week with an average 0.5 point, up from last week when it averaged 5.18 percent. At this time last year, the 1-year ARM averaged 5.60 percent.
"Next week, market watchers will be looking to the release of house price indices from S&P/Case-Shiller, OFHEO, and Freddie Mac for signs of whether home prices may be slowing their descent as recent monthly indices have shown, or whether the observed deceleration was temporary," Nothaft says. Read more coverage of this week's Primary Mortgage Market Survey by Freddie Mac.
Source: Freddie Mac
The 30-year fixed-rate mortgage declined in the week ending Aug. 21, falling to an average of 6.47 percent from last week's 6.52 percent, according to Freddie Mac.
Last year at this time, the 30-year rate averaged 6.52 percent.
"Even with the current historically affordable mortgage rates, news continues to show signs of weakening in the housing sector," said Frank Nothaft, Freddie Mac vice president and chief economist. "For example, housing starts fell to 0.965 million units (annualized) in July, the slowest pace since March 1991. As a result, homebuilder confidence remained at an all-time record low in August since the series began in January 1985.
The 15-year fixed-rate mortgage this week averaged 6.00 percent, down from last week when it averaged 6.07 percent, and last year when it averaged 6.18 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.99 percent this week, down from last week when it averaged 6.02 percent.
A year ago, the 5-year ARM averaged 6.34 percent.
One-year Treasury-indexed ARMs averaged 5.29 percent this week with an average 0.5 point, up from last week when it averaged 5.18 percent. At this time last year, the 1-year ARM averaged 5.60 percent.
"Next week, market watchers will be looking to the release of house price indices from S&P/Case-Shiller, OFHEO, and Freddie Mac for signs of whether home prices may be slowing their descent as recent monthly indices have shown, or whether the observed deceleration was temporary," Nothaft says. Read more coverage of this week's Primary Mortgage Market Survey by Freddie Mac.
Source: Freddie Mac
VA Raises Loan Cap to $729,000
From Realtor Magazine Online, Daily Real Estate News August 22, 2008
The Department of Veterans Affairs (VA) is raising ceilings on its no-downpayment home loans from the current $417,000 to as much as $729,000.
The increases are effective immediately under legislation recently enacted with President Bush signing the Housing and Economic Recovery Act of 2008.
That law also improved VA's Specially Adapted Housing Program. It raises primary grants from $50,000 to $60,000 toward constructing a new home or modifying an existing home to meet adaptive needs of veterans or active duty servicemembers with certain service-connected disabilities.
One new feature is a provision in the law that will assist burn victims. It will allow veterans with certain service-connected disabilities resulting from severe burns to receive the adaptive housing grants. The new law also makes future increases in ceilings on the Specially Adapted Housing Program automatic.
The increased limits in the general home loan program for all veterans' home purchases or construction will be based on local housing costs, tied to the similar locality adjustments of the Federal Home Loan Mortgage Corp., Freddie Mac.
VA home loans are available for veterans to purchase or construct single-family homes, and to purchase condominiums or cooperative apartments. There are about 2.3 million existing VA home loans, more than 90 percent made with no down payment.
Source: Department of Veterans Affairs (08/21/2008)
The Department of Veterans Affairs (VA) is raising ceilings on its no-downpayment home loans from the current $417,000 to as much as $729,000.
The increases are effective immediately under legislation recently enacted with President Bush signing the Housing and Economic Recovery Act of 2008.
That law also improved VA's Specially Adapted Housing Program. It raises primary grants from $50,000 to $60,000 toward constructing a new home or modifying an existing home to meet adaptive needs of veterans or active duty servicemembers with certain service-connected disabilities.
One new feature is a provision in the law that will assist burn victims. It will allow veterans with certain service-connected disabilities resulting from severe burns to receive the adaptive housing grants. The new law also makes future increases in ceilings on the Specially Adapted Housing Program automatic.
The increased limits in the general home loan program for all veterans' home purchases or construction will be based on local housing costs, tied to the similar locality adjustments of the Federal Home Loan Mortgage Corp., Freddie Mac.
VA home loans are available for veterans to purchase or construct single-family homes, and to purchase condominiums or cooperative apartments. There are about 2.3 million existing VA home loans, more than 90 percent made with no down payment.
Source: Department of Veterans Affairs (08/21/2008)
Monday, August 18, 2008
Foreigners Take Advantage of U.S. Bargains
From Realtor Magazine Online, Daily Real Estate News August 18, 2008
Foreign buyers are snapping up U.S. real estate at bargain prices.
Dubai investors bought the General Motors Building in New York City for $2.8 billion. The Abu Dhabi Investment Council's sovereign wealth fund bought a 90 percent stake in the landmark Chrysler Building.
In all, foreigners spent $52.2 billion on U.S. commercial real estate in 2007, double the previous year's total, according to Real Capital Analytics, a research group based in New York City that tracks property investment.
Anne Marie Moriarty, a vice president at Corcoran Real Estate Group, says that since March 2007 her sales to foreigners have doubled. Foreigners see such purchases “as a long-term investment. Part of [real estate] for them is owning a piece of New York," she says.
Source: Time (08/25/08)
Foreign buyers are snapping up U.S. real estate at bargain prices.
Dubai investors bought the General Motors Building in New York City for $2.8 billion. The Abu Dhabi Investment Council's sovereign wealth fund bought a 90 percent stake in the landmark Chrysler Building.
In all, foreigners spent $52.2 billion on U.S. commercial real estate in 2007, double the previous year's total, according to Real Capital Analytics, a research group based in New York City that tracks property investment.
Anne Marie Moriarty, a vice president at Corcoran Real Estate Group, says that since March 2007 her sales to foreigners have doubled. Foreigners see such purchases “as a long-term investment. Part of [real estate] for them is owning a piece of New York," she says.
Source: Time (08/25/08)
New Mortgage Law Has Buyers Scrambling
From Realtor Magazine Online, Daily Real Estate News August 18, 2008
Housing industry observers expect that prospective buyers will scramble to take advantage of seller-funded down-payment assistance before a federal ban on such programs takes effect on Oct. 1.
The federal housing bill signed into law in July sews up a loophole that allows nonprofit organizations to gift mortgage down payments, and industry experts believe markets that have relied heavily on the programs could see new-home sales cut by as much as half.
Seller-funded downpayment assistance has served as a surrogate for subprime loans in some ways and has helped builders put first-time and low-income buyers into new homes.
"We will eventually go back to the mind-set of a society where you have to have 3 percent up-front to buy a home," says Phoenix real estate analyst Jim Belfiore.
Source: Poughkeepsie Journal (N.Y.) (08/18/08)
Housing industry observers expect that prospective buyers will scramble to take advantage of seller-funded down-payment assistance before a federal ban on such programs takes effect on Oct. 1.
The federal housing bill signed into law in July sews up a loophole that allows nonprofit organizations to gift mortgage down payments, and industry experts believe markets that have relied heavily on the programs could see new-home sales cut by as much as half.
Seller-funded downpayment assistance has served as a surrogate for subprime loans in some ways and has helped builders put first-time and low-income buyers into new homes.
"We will eventually go back to the mind-set of a society where you have to have 3 percent up-front to buy a home," says Phoenix real estate analyst Jim Belfiore.
Source: Poughkeepsie Journal (N.Y.) (08/18/08)
Friday, August 15, 2008
30-Year Mortgage Rates Hold Steady
From Realtor Magazine Online, Daily Real Estate News August 15, 2008
Freddie Mac reports that the 30-year fixed mortgage rate held steady at 6.52 percent during the week ended Aug. 14. However, interest on 15-year fixed loans fell slightly to 6.07 percent from the prior week.
Meanwhile, the five-year adjustable mortgage rate dipped to 6.05 percent, and the one-year ARM dropped to 5.18 percent.
Source: Chicago Sun-Times, Francine Knowles (08/15/08)
Freddie Mac reports that the 30-year fixed mortgage rate held steady at 6.52 percent during the week ended Aug. 14. However, interest on 15-year fixed loans fell slightly to 6.07 percent from the prior week.
Meanwhile, the five-year adjustable mortgage rate dipped to 6.05 percent, and the one-year ARM dropped to 5.18 percent.
Source: Chicago Sun-Times, Francine Knowles (08/15/08)
Thursday, August 14, 2008
Inventories Are Declining
From Realtor Magazine Online, Daily Real Estate News August 14, 2008
ZipRealty Inc. says housing inventories in the 29 cities in which it does business have dropped 0.5 percent in July compared with June.
Zip attributes the decline to sellers pulling homes off the market.
In another report issued last week, Barclays Capital predicted the housing market will bottom out by year end in part because housing construction has fallen below the pace of population growth and price declines have made housing more affordable.
Here’s a partial list of the metro areas served by Zip and the percentage of inventory declines in those cities:
Boston: – 4.2
Chicago: +0.3
Dallas: -0.8
Houston: -1.3
Las Vegas: +0.6
Los Angeles: -2.4
Miami-Fort Lauderdale: -0.8
Minneapolis: -1.8
Orange County, Calif.: -1.6
Orlando: unchanged
Phoenix: +6.1
San Francisco Bay: -1.1
Sacramento, Calif.: +6.9
Seattle: +1.4
San Diego: -0.6
Tampa, Fla.: -0.5
Washington, D.C.: -2.6
All metro areas: -0.5
Source: The Wall Street Journal, James R. Hagerty (08/13/2008)
ZipRealty Inc. says housing inventories in the 29 cities in which it does business have dropped 0.5 percent in July compared with June.
Zip attributes the decline to sellers pulling homes off the market.
In another report issued last week, Barclays Capital predicted the housing market will bottom out by year end in part because housing construction has fallen below the pace of population growth and price declines have made housing more affordable.
Here’s a partial list of the metro areas served by Zip and the percentage of inventory declines in those cities:
Boston: – 4.2
Chicago: +0.3
Dallas: -0.8
Houston: -1.3
Las Vegas: +0.6
Los Angeles: -2.4
Miami-Fort Lauderdale: -0.8
Minneapolis: -1.8
Orange County, Calif.: -1.6
Orlando: unchanged
Phoenix: +6.1
San Francisco Bay: -1.1
Sacramento, Calif.: +6.9
Seattle: +1.4
San Diego: -0.6
Tampa, Fla.: -0.5
Washington, D.C.: -2.6
All metro areas: -0.5
Source: The Wall Street Journal, James R. Hagerty (08/13/2008)
Toll Bros. Says Demand Picking Up
From Realtor Magazine Online, Daily Real Estate News August 14, 2008
Robert Toll, the outspoken CEO of Toll Brothers Inc. luxury home builder, says sales were weak in the latest quarter, but there’s “growing pent-up demand” from people who have delayed buying for the past three years."
Although the rate of cancellations as a percentage of our backlog remained quite elevated compared to our historical standards, total cancellations during the third quarter of 195 were the lowest quarterly total in over two years," Toll said. "We believe this reduction in cancellations is a positive sign."
Toll Brothers estimates it will have $100 million to $200 million in pretax write downs for the quarter. Mostly, the company is writing off land and land options bought before the housing market declined. Toll owns 48,500 lots, down 47 percent from a high reached two years ago.
Source: The Wall Street Journal, David Benoit (08/14/2008)
Robert Toll, the outspoken CEO of Toll Brothers Inc. luxury home builder, says sales were weak in the latest quarter, but there’s “growing pent-up demand” from people who have delayed buying for the past three years."
Although the rate of cancellations as a percentage of our backlog remained quite elevated compared to our historical standards, total cancellations during the third quarter of 195 were the lowest quarterly total in over two years," Toll said. "We believe this reduction in cancellations is a positive sign."
Toll Brothers estimates it will have $100 million to $200 million in pretax write downs for the quarter. Mostly, the company is writing off land and land options bought before the housing market declined. Toll owns 48,500 lots, down 47 percent from a high reached two years ago.
Source: The Wall Street Journal, David Benoit (08/14/2008)
Greenspan: Housing Stabilizing Soon
From Realtor Magazine Online, Daily Real Estate News August 14, 2008
Former Federal Reserve Chair Alan Greenspan in an interview with the Wall Street Journal this week says he expects U.S. home prices to stabilize in the first half of 2009.
"Stable home prices will clarify the level of equity in homes, the ultimate collateral support for much of the financial world's mortgage-backed securities. We won't really know the market value of the asset side of the banking system's balance sheet – and hence banks' capital – until then," he said.
Greenspan had a one-word description for the government’s response to Fannie Mae and Freddie Mac’s problems – “Bad.”
“[Congress] should have wiped out the shareholders, nationalized the institutions with legislation that they are to be reconstituted – with necessary taxpayer support to make them financially viable – as five or 10 individual privately held units," which the government would eventually auction off to private investors, he said.
Source: The Wall Street Journal, David Wessel (08/13/2008)
Former Federal Reserve Chair Alan Greenspan in an interview with the Wall Street Journal this week says he expects U.S. home prices to stabilize in the first half of 2009.
"Stable home prices will clarify the level of equity in homes, the ultimate collateral support for much of the financial world's mortgage-backed securities. We won't really know the market value of the asset side of the banking system's balance sheet – and hence banks' capital – until then," he said.
Greenspan had a one-word description for the government’s response to Fannie Mae and Freddie Mac’s problems – “Bad.”
“[Congress] should have wiped out the shareholders, nationalized the institutions with legislation that they are to be reconstituted – with necessary taxpayer support to make them financially viable – as five or 10 individual privately held units," which the government would eventually auction off to private investors, he said.
Source: The Wall Street Journal, David Wessel (08/13/2008)
Home Buyers Acting On Lower Prices
From Realtor Magazine Online, Daily Real Estate News August 14, 2008
Existing-home sales rose from the first quarter in 13 states, largely from buyers responding to discounted home prices, according to the latest quarterly survey by the NATIONAL ASSOCIATION OF REALTORS®.
Nearly one-quarter of metropolitan areas showed rising home prices in the second quarter from a year ago, with greatly mixed conditions continuing around the country.
In the second quarter, 35 out of 150 metropolitan statistical areas 1 showed gains in median existing single-family home prices from the second quarter of last year, while 115 had price declines. NAR’s track of metro area home prices dates back to 1979.
NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said foreclosures are distorting the price data. “In many areas with large concentrations of foreclosure sales, homes are being purchased below replacement cost values,” Gaylord said. “Many buyers with long-term expectations are getting exceptional value in the current market. Once the inventory is drawn down, price pressure will return because the costs of construction are rising – today’s buyers are very well positioned to build wealth over time.”
A separate recent study by the National Bureau of Economic Research, “Housing Supply and Housing Bubbles,” shows construction costs in 2007 were higher than home prices in 33 out of 79 metro areas studied.
Because foreclosures and short sales are accounting for about one-third of transactions, there is a downward pull to the national median price. In the second quarter, the median existing single-family home price was $206,500, down 7.6 percent from the second quarter of 2007 when it was $223,500. The median price is where half of the homes sold for more and half sold for less.
Total state existing-home sales, including single-family and condo, were at a seasonally adjusted annual rate2 of 4.91 million units in the second quarter, down 0.8 percent from 4.95 million units in the first quarter, and were 16.3 percent below a 5.87 million-unit pace in the second quarter of 2007.
According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage rose to 6.09 percent in the second quarter from 5.88 percent in the first quarter; the rate was 6.37 percent in the second quarter of 2007.
Lawrence Yun, NAR chief economist, said a clear cause-and-effect response has developed in the housing market. “The biggest home-sales gains over the previous quarter have been in some of the markets with the steepest and fastest price drops,” Yun said. Compared with the first quarter, existing-home sales increased 25.8 percent in California, 25.0 percent in Nevada, 20.5 percent in Arizona and 10.1 percent in Florida. “Buyers in these areas are responding to deeply discounted home prices.”
The largest sales gain during the second quarter was in Idaho, up 51.7 percent; Virginia sales rose 10.5 percent.
The steepest declines in single-family home prices in the second quarter were in the Sacramento-Arden-Arcade-Roseville area of California, where the median price of $229,500 dropped 35.6 percent from a year ago, followed by Cape Coral-Fort Myers, Fla., at $178,100, down 33.1 percent from the second quarter of 2007, and Riverside-San Bernardino-Ontario, Calif., where it dropped 32.7 percent to $265,200. “Each of these areas has seen a strong buyer response in recent months to the big cuts in home prices,” Yun said.
Sharp price declines, in excess of 20 percent, also were reported in the Los Angeles-Long Beach-Santa Ana area; the Anaheim-Santa Ana-Irvine, Calif., area; Las Vegas-Paradise; and Phoenix-Mesa-Scottsdale.
“Areas with affordable housing and healthy local economies continue to see price growth,” Yun said. In the second quarter, the largest single-family home price increase was in the Yakima, Wash., area, where the median price of $162,300 rose 8.9 percent from a year ago. Next was the Binghamton, N.Y., area, at $120,900, up 8.7 percent from the second quarter of 2007, followed by the Amarillo, Texas, area, where the second-quarter median price increased 7.2 percent to $124,600.
Yun said home price conditions reflect comparisons from 12 months ago. “Prices having fallen sharply and quickly in very distressed markets, but most or all of the price declines may have already occurred in these areas since buyers have now returned to those markets,” he said. “Furthermore, the momentum of buying is likely to continue in light of the housing stimulus package that was recently enacted. About 2.5 million first-time buyers are expected to take advantage of the $7,500 tax credit between now and the middle of next year.”
Median second-quarter metro area single-family home prices ranged from a very affordable $71,700 in the Youngstown-Warren-Boardman area of Ohio and Pennsylvania, to nearly 11 times that amount in the San Jose-Sunnyvale-Santa Clara area of California, where the median price was $755,000. The second most expensive area was San Francisco-Oakland-Fremont, at $684,900, followed by Honolulu at $636,000.
Other affordable markets include Elmira, N.Y., at $76,400, and the Saginaw-Saginaw Township North area of Michigan with a second-quarter median price of $80,300.
In the condo sector, metro area condominium and cooperative prices – covering changes in 54 metro areas – showed the national median existing-condo price was $220,000 in the second quarter, down 3.0 percent from $226,900 in the second quarter of 2007. Seventeen metros showed annual increases in the median condo price and 37 areas had price declines.
The strongest condo price increases were in the Syracuse, N.Y., area, where the second quarter price of $144,900 rose 17.8 percent from a year earlier, followed by the New Orleans-Metairie-Kenner area of Louisiana, at $192,100, up 15.9 percent, and the Houston-Baytown-Sugar Land area of Texas, where the median condo price of $141,100 rose 9.9 percent from the second quarter of 2007. Areas where condo prices declined mirrored the pattern seen with single-family homes.
Metro area median existing-condo prices in the second quarter ranged from $107,500 in the Wichita, Kan., area to $523,500 in the San Francisco-Oakland-Fremont area. The second most expensive condo market reported was Honolulu at $330,000, followed by Los Angeles-Long Beach-Santa Ana at $327,800.
Other affordable condo markets include Greensboro-High Point, N.C., at $109,600 in the second quarter, and the Indianapolis area at $113,500.
Regionally, the median existing single-family home price in the Northeast fell 9.6 percent to $269,000 in the second quarter from the same period in 2007. After Binghamton, the strongest price increase in the Northeast was in Elmira, N.Y., up 6.6 percent from the second quarter of 2007, followed by Buffalo-Niagara Falls, N.Y., with a median price of $108,200, up 4.7 percent.
The median existing single-family home price in the Midwest declined 0.9 percent to $161,500 in the second quarter from the same period in 2007. The strongest metro price increases in the Midwest were in the Decatur, Ill., area, where the median price of $94,200 was 6.0 percent higher than a year ago, and Des Moines, Iowa, at $156,600, also up 6.0 percent, followed by Peoria, Ill., at $124,800, up 3.7 percent from the second quarter of 2007.
In the South, the median existing single-family home price was $177,000 in the second quarter, down 4.1 percent from a year earlier. After Amarillo, the strongest price increase in the South was in the Charleston, W.V., area, at $136,600, up 7.1 percent from a year ago, followed by Corpus Christi, Texas, with a 6.2 percent gain to $144,400, and Greenville, S.C., at $160,300, up 5.1 percent.
In the West, the median existing single-family home price was $290,600 in the second quarter, which is 17.4 percent below a year ago. After Yakima, the strongest metro price increase in the West was in the Salt Lake City area, at $234,200, up 0.5 percent from a year ago; all other metro areas reported for the West were down from the second quarter of 2007.
Source: NAR
Existing-home sales rose from the first quarter in 13 states, largely from buyers responding to discounted home prices, according to the latest quarterly survey by the NATIONAL ASSOCIATION OF REALTORS®.
Nearly one-quarter of metropolitan areas showed rising home prices in the second quarter from a year ago, with greatly mixed conditions continuing around the country.
In the second quarter, 35 out of 150 metropolitan statistical areas 1 showed gains in median existing single-family home prices from the second quarter of last year, while 115 had price declines. NAR’s track of metro area home prices dates back to 1979.
NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said foreclosures are distorting the price data. “In many areas with large concentrations of foreclosure sales, homes are being purchased below replacement cost values,” Gaylord said. “Many buyers with long-term expectations are getting exceptional value in the current market. Once the inventory is drawn down, price pressure will return because the costs of construction are rising – today’s buyers are very well positioned to build wealth over time.”
A separate recent study by the National Bureau of Economic Research, “Housing Supply and Housing Bubbles,” shows construction costs in 2007 were higher than home prices in 33 out of 79 metro areas studied.
Because foreclosures and short sales are accounting for about one-third of transactions, there is a downward pull to the national median price. In the second quarter, the median existing single-family home price was $206,500, down 7.6 percent from the second quarter of 2007 when it was $223,500. The median price is where half of the homes sold for more and half sold for less.
Total state existing-home sales, including single-family and condo, were at a seasonally adjusted annual rate2 of 4.91 million units in the second quarter, down 0.8 percent from 4.95 million units in the first quarter, and were 16.3 percent below a 5.87 million-unit pace in the second quarter of 2007.
According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage rose to 6.09 percent in the second quarter from 5.88 percent in the first quarter; the rate was 6.37 percent in the second quarter of 2007.
Lawrence Yun, NAR chief economist, said a clear cause-and-effect response has developed in the housing market. “The biggest home-sales gains over the previous quarter have been in some of the markets with the steepest and fastest price drops,” Yun said. Compared with the first quarter, existing-home sales increased 25.8 percent in California, 25.0 percent in Nevada, 20.5 percent in Arizona and 10.1 percent in Florida. “Buyers in these areas are responding to deeply discounted home prices.”
The largest sales gain during the second quarter was in Idaho, up 51.7 percent; Virginia sales rose 10.5 percent.
The steepest declines in single-family home prices in the second quarter were in the Sacramento-Arden-Arcade-Roseville area of California, where the median price of $229,500 dropped 35.6 percent from a year ago, followed by Cape Coral-Fort Myers, Fla., at $178,100, down 33.1 percent from the second quarter of 2007, and Riverside-San Bernardino-Ontario, Calif., where it dropped 32.7 percent to $265,200. “Each of these areas has seen a strong buyer response in recent months to the big cuts in home prices,” Yun said.
Sharp price declines, in excess of 20 percent, also were reported in the Los Angeles-Long Beach-Santa Ana area; the Anaheim-Santa Ana-Irvine, Calif., area; Las Vegas-Paradise; and Phoenix-Mesa-Scottsdale.
“Areas with affordable housing and healthy local economies continue to see price growth,” Yun said. In the second quarter, the largest single-family home price increase was in the Yakima, Wash., area, where the median price of $162,300 rose 8.9 percent from a year ago. Next was the Binghamton, N.Y., area, at $120,900, up 8.7 percent from the second quarter of 2007, followed by the Amarillo, Texas, area, where the second-quarter median price increased 7.2 percent to $124,600.
Yun said home price conditions reflect comparisons from 12 months ago. “Prices having fallen sharply and quickly in very distressed markets, but most or all of the price declines may have already occurred in these areas since buyers have now returned to those markets,” he said. “Furthermore, the momentum of buying is likely to continue in light of the housing stimulus package that was recently enacted. About 2.5 million first-time buyers are expected to take advantage of the $7,500 tax credit between now and the middle of next year.”
Median second-quarter metro area single-family home prices ranged from a very affordable $71,700 in the Youngstown-Warren-Boardman area of Ohio and Pennsylvania, to nearly 11 times that amount in the San Jose-Sunnyvale-Santa Clara area of California, where the median price was $755,000. The second most expensive area was San Francisco-Oakland-Fremont, at $684,900, followed by Honolulu at $636,000.
Other affordable markets include Elmira, N.Y., at $76,400, and the Saginaw-Saginaw Township North area of Michigan with a second-quarter median price of $80,300.
In the condo sector, metro area condominium and cooperative prices – covering changes in 54 metro areas – showed the national median existing-condo price was $220,000 in the second quarter, down 3.0 percent from $226,900 in the second quarter of 2007. Seventeen metros showed annual increases in the median condo price and 37 areas had price declines.
The strongest condo price increases were in the Syracuse, N.Y., area, where the second quarter price of $144,900 rose 17.8 percent from a year earlier, followed by the New Orleans-Metairie-Kenner area of Louisiana, at $192,100, up 15.9 percent, and the Houston-Baytown-Sugar Land area of Texas, where the median condo price of $141,100 rose 9.9 percent from the second quarter of 2007. Areas where condo prices declined mirrored the pattern seen with single-family homes.
Metro area median existing-condo prices in the second quarter ranged from $107,500 in the Wichita, Kan., area to $523,500 in the San Francisco-Oakland-Fremont area. The second most expensive condo market reported was Honolulu at $330,000, followed by Los Angeles-Long Beach-Santa Ana at $327,800.
Other affordable condo markets include Greensboro-High Point, N.C., at $109,600 in the second quarter, and the Indianapolis area at $113,500.
Regionally, the median existing single-family home price in the Northeast fell 9.6 percent to $269,000 in the second quarter from the same period in 2007. After Binghamton, the strongest price increase in the Northeast was in Elmira, N.Y., up 6.6 percent from the second quarter of 2007, followed by Buffalo-Niagara Falls, N.Y., with a median price of $108,200, up 4.7 percent.
The median existing single-family home price in the Midwest declined 0.9 percent to $161,500 in the second quarter from the same period in 2007. The strongest metro price increases in the Midwest were in the Decatur, Ill., area, where the median price of $94,200 was 6.0 percent higher than a year ago, and Des Moines, Iowa, at $156,600, also up 6.0 percent, followed by Peoria, Ill., at $124,800, up 3.7 percent from the second quarter of 2007.
In the South, the median existing single-family home price was $177,000 in the second quarter, down 4.1 percent from a year earlier. After Amarillo, the strongest price increase in the South was in the Charleston, W.V., area, at $136,600, up 7.1 percent from a year ago, followed by Corpus Christi, Texas, with a 6.2 percent gain to $144,400, and Greenville, S.C., at $160,300, up 5.1 percent.
In the West, the median existing single-family home price was $290,600 in the second quarter, which is 17.4 percent below a year ago. After Yakima, the strongest metro price increase in the West was in the Salt Lake City area, at $234,200, up 0.5 percent from a year ago; all other metro areas reported for the West were down from the second quarter of 2007.
Source: NAR
Current Mortgage Rages
From Bankcorp
Current Mortgage Rates
BankRateLinkMtg('30yrFixedMtg');
30 yr fixed mtg
6.43%
BankRateLinkMtg('15yrFixedMtg');
15 yr fixed mtg
5.94%
BankRateLinkMtg('30yrFixedJumboMtg');
30 yr fixed jumbo mtg
7.50%
BankRateLinkMtg('51Arm');
5/1 ARM
5.85%
BankRateLinkMtg('51JumboArm');
5/1 jumbo ARM
6.39%
Current Mortgage Rates
BankRateLinkMtg('30yrFixedMtg');
30 yr fixed mtg
6.43%
BankRateLinkMtg('15yrFixedMtg');
15 yr fixed mtg
5.94%
BankRateLinkMtg('30yrFixedJumboMtg');
30 yr fixed jumbo mtg
7.50%
BankRateLinkMtg('51Arm');
5/1 ARM
5.85%
BankRateLinkMtg('51JumboArm');
5/1 jumbo ARM
6.39%
Inflation surges by 5.6%
From CNNMoney.com, By Aaron Smith, CNNMoney.com staff writer
Last Updated: August 14, 2008
Consumers feel the sting as prices jump again to highest point since 1991 - monthly increase twice what was expected.
NEW YORK (CNNMoney.com) -- The annual inflation rate surged to 5.6% in July - the highest point in 17 years.
The previous month's reading on annual inflation was 5%.
The July increase matched the 5.6% level in January 1991, when the Persian Gulf War was raging.
"It's obviously disturbing - it's a bad number," said David Wyss, chief economist for Standard & Poor's.
On a monthly basis, the Consumer Price Index jumped by 0.8% in July. That is twice the increase that economists had expected.
The biggest culprit in driving up inflation was the cost of energy, which increased by 4% on a monthly basis and 29.3% annually.
The big hits on energy include a 61.1% annual surge in household fuel oil and a 37.9% jump in the price of gasoline.
Monthly food prices increased 0.9% and 8.4% annually. This is one of the largest monthly increases of the year, matching the 0.9% increase in April.
Among the annual food price increases were a 12% jump in the price of cereal and bakery products and a 10.1% increase in fruits and vegetables.
The so-called core CPI, which excludes the volatile food and energy prices, increased to 2.5% annually and 0.3% on a monthly basis in July. Analysts had expected a monthly increase of 0.2%.
Wyss said that while energy prices have dropped dramatically in recent weeks, "this is a number that is going to make the Fed very concerned."
He also said that the weak U.S. dollar was "part of the problem" in driving up the CPI.
Wyss said he does not expect the Federal Open Market Committee, which next meets on Sept. 16, to change the federal funds rate from its current target of 2%.
The price of crude oil slipped 56 cents on Thursday morning to $115.44 a barrel, down from the July 11 record of $147.27.
Last Updated: August 14, 2008
Consumers feel the sting as prices jump again to highest point since 1991 - monthly increase twice what was expected.
NEW YORK (CNNMoney.com) -- The annual inflation rate surged to 5.6% in July - the highest point in 17 years.
The previous month's reading on annual inflation was 5%.
The July increase matched the 5.6% level in January 1991, when the Persian Gulf War was raging.
"It's obviously disturbing - it's a bad number," said David Wyss, chief economist for Standard & Poor's.
On a monthly basis, the Consumer Price Index jumped by 0.8% in July. That is twice the increase that economists had expected.
The biggest culprit in driving up inflation was the cost of energy, which increased by 4% on a monthly basis and 29.3% annually.
The big hits on energy include a 61.1% annual surge in household fuel oil and a 37.9% jump in the price of gasoline.
Monthly food prices increased 0.9% and 8.4% annually. This is one of the largest monthly increases of the year, matching the 0.9% increase in April.
Among the annual food price increases were a 12% jump in the price of cereal and bakery products and a 10.1% increase in fruits and vegetables.
The so-called core CPI, which excludes the volatile food and energy prices, increased to 2.5% annually and 0.3% on a monthly basis in July. Analysts had expected a monthly increase of 0.2%.
Wyss said that while energy prices have dropped dramatically in recent weeks, "this is a number that is going to make the Fed very concerned."
He also said that the weak U.S. dollar was "part of the problem" in driving up the CPI.
Wyss said he does not expect the Federal Open Market Committee, which next meets on Sept. 16, to change the federal funds rate from its current target of 2%.
The price of crude oil slipped 56 cents on Thursday morning to $115.44 a barrel, down from the July 11 record of $147.27.
Wednesday, August 13, 2008
H.R. 3221, "American Housing Rescue & Foreclosure Prevention Act of 2008"
The Housing Act was signed into law by the President on July 30, 2008. This sweeping measure is designed to shore up the ailing housing market as well as tighten lending practices and reform financial institutions associated with that market. It also contains a number of tax changes, including tax breaks for homebuyers and homeowners, relaxed requirements for bonds, eased AMT rules, tax changes for businesses, as well as highly specialized changes affecting low-income housing and special investment vehicles called Real Estate Trusts (REITs).
A tax credit-with a twist for first-time home buyers.
The new law gives first-time homebuyers a $7,500 tax credit (or, in the unlikely event the home costs less than $75,000, a credit equal to 10% of the home's purchase price). The top credit amount is $3,750 for married persons filing separate returns. The new credit, like other tax credits, reduces a person's tax liability on a dollar-for-dollar basis (and if the credit is more that owe, the difference is paid to you as a tax refund). However, unlike other Federal tax credits (for example, the child credit), the new credit must be paid back to the Government ratably over a period of 15 years. So, as a practical matter, the new credit for first-time homebuyers is the equivalent of an interest-free loan from the Government.
A number of terms and conditions must be met for the credit to apply. The two key rules are that:
(1) You (and if married, your spouse) didn't own a principal residence during the 3-year period before you make the credit-eligible home purchase; AND
(2) You must buy a new principal residence after April 8, 2008, and before July 1, 2009.
The credit for new homebuyers is available in full only if AGI (adjusted gross income, with some modifications for highly specialized income) doesn't exceed $150,000 if you file a joint return ($75,000 for all other filers). The credit phases out over the $150,000 to $170,000 AGI range for joint filers ($75,000 to $95,000 for all other filers).
In general, you claim the credit on the tax return you file for the year you buy the principal residence. However, if you buy the home after Dec. 31, 2008, and before July 1, 2009, you have the option of claiming the credit on your 2008 tax return instead of your 2009 tax return.
You'll have to start paying back the credit over 15 years as an extra tax amount on your Federal returns beginning with the tax return for the second year after the year in which you buy the new home. First-time homebuyers who buy principal residences in 2008, and claim a $7,500 credit, will pay it back (1) starting with the 2010 tax return they file in 2011, and (2) ending with the 2024 tax return they file in 2025, at the rate of $500 per year.
In general, the payback of the credit is accelerated if you sell the principal residence (or stop using the home as your principal residence) before the end of the pay-back period.
Property tax deduction for non-itemizers.
For 2008 only, those who take the standard deduction instead of itemizing deductions may claim an additional standard deduction for State and local property taxes paid (but taxes written off as business deductions don't count). The deduction is $1,000 for joint return and $500 for all other filers (or actual property tax paid, if that's less).
Reduced homesale exclusion.for some sellers.
After 2008, some homesellers who don't use their properties as principal residences for their entire ownership period may wind up paying more of a tax bill than they would under current rules (or pay tax when none would be owed currently). The tax break affected is the homesale exclusion, which generally allows up to $250,000 of homesale profit to be tax-free if a home was owned and used by the seller as a principal residence (i.e., main home) for at least 2 of the 5 years before the sale. In general, the tax-free break can only be used once every 2 years. The tax-free profit amount is up to $500,000 for married taxpayers filing jointly for the year of sale if several conditions are met. A reduced maximum exclusion may apply to taxpayers who must sell their principal residence because of health or employment changes (or certain unforeseen circumstances) and as a result (1) fail the 2-out-of-5-year ownership and use rule, or (2) previously used the homesale exclusion within two years.
For sales after 2008, the homesale exclusion will be reduced proportionately for the period of time a home wasn't used as a principal residence.
The prime example is a vacation home that is turned into a principal residence by its owners, but the new rule also can hit individuals who use a property as a main home for a while, rent it out for a period of time, and then move back in. There are, however, a number of exceptions. For starters, pre-2009 periods of non-principal-residence use don't count, and neither do periods of temporary absence totaling no more than 2 years due to health or employment changes (or certain unforeseen circumstances), or up to 10 years of absence for qualifying members of the military or certain government employees. Finally, non-principal-residence use doesn't count if it occurs (1) in the five years preceding the sale, but (2) after you permanently stop using the home as a main home.
As you can see, the new rule is quite complex and down the road will cause big headaches for some homesellers unless they're careful and get an expert's advice. Please keep in mind that only the highlights of the tax changes in the new Housing Act are mentioned in this letter. We hope you find the information useful.
A tax credit-with a twist for first-time home buyers.
The new law gives first-time homebuyers a $7,500 tax credit (or, in the unlikely event the home costs less than $75,000, a credit equal to 10% of the home's purchase price). The top credit amount is $3,750 for married persons filing separate returns. The new credit, like other tax credits, reduces a person's tax liability on a dollar-for-dollar basis (and if the credit is more that owe, the difference is paid to you as a tax refund). However, unlike other Federal tax credits (for example, the child credit), the new credit must be paid back to the Government ratably over a period of 15 years. So, as a practical matter, the new credit for first-time homebuyers is the equivalent of an interest-free loan from the Government.
A number of terms and conditions must be met for the credit to apply. The two key rules are that:
(1) You (and if married, your spouse) didn't own a principal residence during the 3-year period before you make the credit-eligible home purchase; AND
(2) You must buy a new principal residence after April 8, 2008, and before July 1, 2009.
The credit for new homebuyers is available in full only if AGI (adjusted gross income, with some modifications for highly specialized income) doesn't exceed $150,000 if you file a joint return ($75,000 for all other filers). The credit phases out over the $150,000 to $170,000 AGI range for joint filers ($75,000 to $95,000 for all other filers).
In general, you claim the credit on the tax return you file for the year you buy the principal residence. However, if you buy the home after Dec. 31, 2008, and before July 1, 2009, you have the option of claiming the credit on your 2008 tax return instead of your 2009 tax return.
You'll have to start paying back the credit over 15 years as an extra tax amount on your Federal returns beginning with the tax return for the second year after the year in which you buy the new home. First-time homebuyers who buy principal residences in 2008, and claim a $7,500 credit, will pay it back (1) starting with the 2010 tax return they file in 2011, and (2) ending with the 2024 tax return they file in 2025, at the rate of $500 per year.
In general, the payback of the credit is accelerated if you sell the principal residence (or stop using the home as your principal residence) before the end of the pay-back period.
Property tax deduction for non-itemizers.
For 2008 only, those who take the standard deduction instead of itemizing deductions may claim an additional standard deduction for State and local property taxes paid (but taxes written off as business deductions don't count). The deduction is $1,000 for joint return and $500 for all other filers (or actual property tax paid, if that's less).
Reduced homesale exclusion.for some sellers.
After 2008, some homesellers who don't use their properties as principal residences for their entire ownership period may wind up paying more of a tax bill than they would under current rules (or pay tax when none would be owed currently). The tax break affected is the homesale exclusion, which generally allows up to $250,000 of homesale profit to be tax-free if a home was owned and used by the seller as a principal residence (i.e., main home) for at least 2 of the 5 years before the sale. In general, the tax-free break can only be used once every 2 years. The tax-free profit amount is up to $500,000 for married taxpayers filing jointly for the year of sale if several conditions are met. A reduced maximum exclusion may apply to taxpayers who must sell their principal residence because of health or employment changes (or certain unforeseen circumstances) and as a result (1) fail the 2-out-of-5-year ownership and use rule, or (2) previously used the homesale exclusion within two years.
For sales after 2008, the homesale exclusion will be reduced proportionately for the period of time a home wasn't used as a principal residence.
The prime example is a vacation home that is turned into a principal residence by its owners, but the new rule also can hit individuals who use a property as a main home for a while, rent it out for a period of time, and then move back in. There are, however, a number of exceptions. For starters, pre-2009 periods of non-principal-residence use don't count, and neither do periods of temporary absence totaling no more than 2 years due to health or employment changes (or certain unforeseen circumstances), or up to 10 years of absence for qualifying members of the military or certain government employees. Finally, non-principal-residence use doesn't count if it occurs (1) in the five years preceding the sale, but (2) after you permanently stop using the home as a main home.
As you can see, the new rule is quite complex and down the road will cause big headaches for some homesellers unless they're careful and get an expert's advice. Please keep in mind that only the highlights of the tax changes in the new Housing Act are mentioned in this letter. We hope you find the information useful.
Mortgage Applications Show Slight Dip
From Realtor Magazine Online, Daily Real Estate News August 13, 2008
Mortgage applications edged downward last week as interest rates rose, according to the Mortgage Bankers Association.
The index fell to 425.9, a decrease of 1.5 percent on a seasonally adjusted basis from 432.6 a week earlier. On an unadjusted basis, the index decreased 2.2 percent compared to the previous week, and was down 36.9 percent compared to the same week a year ago.
The refinance index decreased 4.2 percent and the purchase index remained unchanged.
Mortgage rates were mixed:
* 30-year fixed-rate mortgages increased to 6.57 percent from 6.41 percent;
* 15-year fixed-rate mortgages increased to 6.17 percent from 6.02 percent;
* 1-year ARMs decreased to 7.15 percent from 7.17 percent.
Source: Mortgage Bankers Association (08/13/2008)
Mortgage applications edged downward last week as interest rates rose, according to the Mortgage Bankers Association.
The index fell to 425.9, a decrease of 1.5 percent on a seasonally adjusted basis from 432.6 a week earlier. On an unadjusted basis, the index decreased 2.2 percent compared to the previous week, and was down 36.9 percent compared to the same week a year ago.
The refinance index decreased 4.2 percent and the purchase index remained unchanged.
Mortgage rates were mixed:
* 30-year fixed-rate mortgages increased to 6.57 percent from 6.41 percent;
* 15-year fixed-rate mortgages increased to 6.17 percent from 6.02 percent;
* 1-year ARMs decreased to 7.15 percent from 7.17 percent.
Source: Mortgage Bankers Association (08/13/2008)
Walkability Becomes Plus for Buyers
From Realtor Magazine Online, Daily Real Estate News August 13, 2008
Walk Score identifies San Francisco as the most walkable city in the United States, mainly due to the close proximity of amenities in its Chinatown, Financial District, and Downtown neighborhoods.
New York's Tribeca, Little Italy, and Soho neighborhoods helped it land a No. 2 ranking on the Web site's list of the most walkable cities, with Boston, Chicago, Philadelphia, Seattle, the District of Columbia, Long Beach, Los Angeles, and Portland rounding out the top 10, in that order.
Experts say more people are moving to urban areas as a way to spend less money on gas, though convenience and exercise also play a role.
The Center for Neighborhood Technology--which insists a shift in transportation spending is necessary to make mass transit more efficient--says individuals reduce their annual gas expenses by as much as $2,100 when they live in urban areas versus outer-ring suburbs.
Source: Seattle Times, Amy Hoak (08/10/08)
Walk Score identifies San Francisco as the most walkable city in the United States, mainly due to the close proximity of amenities in its Chinatown, Financial District, and Downtown neighborhoods.
New York's Tribeca, Little Italy, and Soho neighborhoods helped it land a No. 2 ranking on the Web site's list of the most walkable cities, with Boston, Chicago, Philadelphia, Seattle, the District of Columbia, Long Beach, Los Angeles, and Portland rounding out the top 10, in that order.
Experts say more people are moving to urban areas as a way to spend less money on gas, though convenience and exercise also play a role.
The Center for Neighborhood Technology--which insists a shift in transportation spending is necessary to make mass transit more efficient--says individuals reduce their annual gas expenses by as much as $2,100 when they live in urban areas versus outer-ring suburbs.
Source: Seattle Times, Amy Hoak (08/10/08)
New Index Says Home Prices Rising
From Realtor Magazine Online, Daily Real Estate News August 13, 2008
A new home price index published for the first time this summer by Integrated Asset Services showed that home prices rose 1.1 percent on a national level in June compared to May, although prices dropped 11.5 percent over the previous year.
The IAS360 House Price Index indicates that Midwest prices increased 4.7 percent in June, resulting in a 0.2 percent decline compared with the previous year. Prices in the West fell 0.5 percent in June and were down 16.9 percent compared to a year ago.
The index is not adjusted for seasonal forces, such as the typically stronger spring and summer selling season and appears more volatile than other indexes, observers say.
Denver-based IAS specializes in residential real estate valuations and the disposition of bank-owned properties.
Source: Reuters News (08/12/2008)
A new home price index published for the first time this summer by Integrated Asset Services showed that home prices rose 1.1 percent on a national level in June compared to May, although prices dropped 11.5 percent over the previous year.
The IAS360 House Price Index indicates that Midwest prices increased 4.7 percent in June, resulting in a 0.2 percent decline compared with the previous year. Prices in the West fell 0.5 percent in June and were down 16.9 percent compared to a year ago.
The index is not adjusted for seasonal forces, such as the typically stronger spring and summer selling season and appears more volatile than other indexes, observers say.
Denver-based IAS specializes in residential real estate valuations and the disposition of bank-owned properties.
Source: Reuters News (08/12/2008)
Tuesday, August 12, 2008
Apartment Builders See Big Opportunities
From Realtor Magazine Online, Daily Real Estate News August 12, 2008
Builders of apartments say the time is right for new construction.
Condo developers are no longer competing for land or construction services, fewer people can qualify for mortgages, and in many areas there is a shortage of apartments for rent, pushing up rents.
Jay Jacobson, the development partner in charge of Wood Partners' South Florida division, says his company, based in Marietta, Ga., sat out the condo craze. Now with people needing a place to live, he says it’s time to jump in.
But Jacobson says the challenge is finding financing. Banks are reluctant to lend, interest rates are higher, and lenders want borrowers to put down more money.
Wood Partners has 996 units under construction in Miami-Dade and Broward counties, and has plans to start an additional 1,500 within the next 18 months.
Evan Kristol, a vice president of investments at Marcus & Millichap's Fort Lauderdale office, says Wood Partners probably has the right idea. ''With location, location, location and quality construction, I think they've got a recipe for making money,'' Kristol said.
Source: The Miami Herald (08/11/08)
Builders of apartments say the time is right for new construction.
Condo developers are no longer competing for land or construction services, fewer people can qualify for mortgages, and in many areas there is a shortage of apartments for rent, pushing up rents.
Jay Jacobson, the development partner in charge of Wood Partners' South Florida division, says his company, based in Marietta, Ga., sat out the condo craze. Now with people needing a place to live, he says it’s time to jump in.
But Jacobson says the challenge is finding financing. Banks are reluctant to lend, interest rates are higher, and lenders want borrowers to put down more money.
Wood Partners has 996 units under construction in Miami-Dade and Broward counties, and has plans to start an additional 1,500 within the next 18 months.
Evan Kristol, a vice president of investments at Marcus & Millichap's Fort Lauderdale office, says Wood Partners probably has the right idea. ''With location, location, location and quality construction, I think they've got a recipe for making money,'' Kristol said.
Source: The Miami Herald (08/11/08)
Tight Lending Standards Keep Good Buyers Out
From Realtor Magazine Online, Daily Real Estate News August 12, 2008
The California Association of Mortgage Brokers has called on lenders and investors to relax their underwriting rules because many prospective home buyers with good credit are unable to qualify for financing.
During its annual convention, the mortgage brokers said lenders also could create payment modification plans and streamlined refinancing programs to help borrowers who are not delinquent on their loans but who now owe more than their homes are worth.
"More remains to be done to help home owners struggling to meet their mortgage payments as well as to help those who want to purchase a home," said the group's president, Fred Arnold.
The organization added that housing will become less affordable in California next year unless Congress designates the state as a high-cost market.
Nationwide, the Federal Reserve released a survey Monday that said about 75 percent of banks had tightened their lending standards for prime mortgages. The Fed’s survey covered 50 banks that hold about 80 percent of the residential mortgages.
Source: San Francisco Chronicle, Lew Sichelman (08/08/08) and The Associated Press, Martin Crutsinger (08/11/08)
The California Association of Mortgage Brokers has called on lenders and investors to relax their underwriting rules because many prospective home buyers with good credit are unable to qualify for financing.
During its annual convention, the mortgage brokers said lenders also could create payment modification plans and streamlined refinancing programs to help borrowers who are not delinquent on their loans but who now owe more than their homes are worth.
"More remains to be done to help home owners struggling to meet their mortgage payments as well as to help those who want to purchase a home," said the group's president, Fred Arnold.
The organization added that housing will become less affordable in California next year unless Congress designates the state as a high-cost market.
Nationwide, the Federal Reserve released a survey Monday that said about 75 percent of banks had tightened their lending standards for prime mortgages. The Fed’s survey covered 50 banks that hold about 80 percent of the residential mortgages.
Source: San Francisco Chronicle, Lew Sichelman (08/08/08) and The Associated Press, Martin Crutsinger (08/11/08)
Home Builders' Stocks Surge
From Realtor Magazine Online, Daily Real Estate News August 12, 2008
Monday was the best day for homebuilders’ stocks in a long time.
Several builders’ stocks were up by at least 5 percent, with Beazer Homes USA Inc. rising 23.7 percent.
Shares of Hovnanian Enterprises Inc. rose about 8.6 percent.
Lennar Corp. rose about 7.2 percent and KB Home’s shares rose 8.5 percent. Centex Corp. was up 6.2 percent, Toll Brother rose 5.9 percent, D.R. Horton Inc. climbed 5.6 percent, and Pulte Homes increased 5.6 percent.
Source: The Associated Press (08/11/08)
Monday was the best day for homebuilders’ stocks in a long time.
Several builders’ stocks were up by at least 5 percent, with Beazer Homes USA Inc. rising 23.7 percent.
Shares of Hovnanian Enterprises Inc. rose about 8.6 percent.
Lennar Corp. rose about 7.2 percent and KB Home’s shares rose 8.5 percent. Centex Corp. was up 6.2 percent, Toll Brother rose 5.9 percent, D.R. Horton Inc. climbed 5.6 percent, and Pulte Homes increased 5.6 percent.
Source: The Associated Press (08/11/08)
Monday, August 11, 2008
Fannie, Freddie Avoid Mortgage Securities
From Realtor Magazine Online, Daily Real Estate News August 11, 2008
Fannie Mae announced Friday that it is cutting back on its purchase of mortgage securities, focusing instead on buying jumbo loans.
Freddie Mac announced a similar decision last Wednesday.
The moves are expected to trigger a sell off of mortgage securities that will drive down their values. This will likely further tighten an already hobbled market.
Observers say that this kind of decision begs the question of whether Fannie and Freddie should really be public companies.
As the biggest buyers of these securities, the decision by Fannie and Freddie "raises the question of who is going to buy these mortgages," said Ajay Rajadhyaksha, U.S. head of fixed-income research at Barclays Capital.
Source: The Wall Street Journal, Aparajita Saha-Bubna and Prabha Natarajan (08/09/08)
Fannie Mae announced Friday that it is cutting back on its purchase of mortgage securities, focusing instead on buying jumbo loans.
Freddie Mac announced a similar decision last Wednesday.
The moves are expected to trigger a sell off of mortgage securities that will drive down their values. This will likely further tighten an already hobbled market.
Observers say that this kind of decision begs the question of whether Fannie and Freddie should really be public companies.
As the biggest buyers of these securities, the decision by Fannie and Freddie "raises the question of who is going to buy these mortgages," said Ajay Rajadhyaksha, U.S. head of fixed-income research at Barclays Capital.
Source: The Wall Street Journal, Aparajita Saha-Bubna and Prabha Natarajan (08/09/08)
Friday, August 8, 2008
Gas Prices Force Buyers to Rethink 'Burbs
From Realtor Magazine Online, Daily Real Estate News August 8, 2008
High gas prices are affecting American workers' attitudes toward commuting and are prodding many to trade in their large homes in the exurbs for smaller, more urban properties.
Buying a 6,000-square-foot home with a large yard and a sport-utility vehicle to boot made sense when gas and property prices were low, economists say, but gasoline is now cost-prohibitive for many.
If the federal government lifts the heavy gas subsidies that encourage suburban growth, many Europeans pay $8 a gallon for gas, suburban residents will abandon their properties en masse and move in closer to urban transit stations.
"What were pluses of that lifestyle are now liabilities: a big SUV, a big home to heat, the energy needed to mow the lawn," says CEO Tom Darden of the Raleigh-based real estate conversion group Cherokee Investment Partners.
The firm takes properties close to transit centers in urban areas and develops them into housing.
Properties in the Washington, D.C.-metro area, Montreal, and Denver are thriving, says Darden, while property values in far-removed exurbs like Loudoun County, Va., and California's Central Valley are plummeting.
Source: The Washington Post, Eric M. Weiss (08/05/08)
High gas prices are affecting American workers' attitudes toward commuting and are prodding many to trade in their large homes in the exurbs for smaller, more urban properties.
Buying a 6,000-square-foot home with a large yard and a sport-utility vehicle to boot made sense when gas and property prices were low, economists say, but gasoline is now cost-prohibitive for many.
If the federal government lifts the heavy gas subsidies that encourage suburban growth, many Europeans pay $8 a gallon for gas, suburban residents will abandon their properties en masse and move in closer to urban transit stations.
"What were pluses of that lifestyle are now liabilities: a big SUV, a big home to heat, the energy needed to mow the lawn," says CEO Tom Darden of the Raleigh-based real estate conversion group Cherokee Investment Partners.
The firm takes properties close to transit centers in urban areas and develops them into housing.
Properties in the Washington, D.C.-metro area, Montreal, and Denver are thriving, says Darden, while property values in far-removed exurbs like Loudoun County, Va., and California's Central Valley are plummeting.
Source: The Washington Post, Eric M. Weiss (08/05/08)
30-Year Fixed Rates Rise Slightly
From Realtor Magazine Online, Daily Real Estate News August 8, 2008
Mortgage rates rose slightly in the latest week, with the average conforming 30-year fixed mortgage rate increasing to 6.74 percent.
According to Bankrate.com's weekly national survey of large lenders, the average 30-year fixed mortgage has an average of 0.38 discount and origination points.
The average 15-year fixed rate mortgage popular for refinancing rose to 6.27 percent, while the average jumbo 30-year fixed rate is now 7.68 percent. Adjustable mortgage rates were lower, with the average 1-year ARM dipping to 6.24 percent and the average 5/1 ARM down to 6.32 percent. Here’s another look at the latest figures:
* 30-year fixed: 6.74%, up from 6.70% last week (avg. points: 0.38)
* 15-year fixed: 6.27%, up from 6.22% last week (avg. points: 0.47)
* 5/1 ARM: 6.32%, down from 6.35% last week (avg. points: 0.45)
Since posting a mighty advance two weeks ago, mortgage rates have settled into a range but have been bobbing up and down, with no clear direction. That was true this week, with mortgage rates pulling back due to disappointing economic growth and more job losses before moving up as the Fed indicated interest rates could be on hold for some period of time.
Another factor in higher mortgage rates has been the noticeably wider spread between benchmark Treasury yields and fixed mortgage rates. Spreads have expanded in recent weeks as investors fret about the quality of outstanding mortgage loans, commanding higher returns to compensate for the risk.
Mortgage rates have been on a wild ride since the beginning of the year. The average 30-year fixed mortgage rate was as low as 5.57 percent in January, meaning that a $200,000 loan would have carried a monthly payment of $1,144.38. But at today's rate of 6.74 percent, a $200,000 loan would mean a monthly payment of $1,295.87.
Bankrate's national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.
The survey is complemented by Bankrate's weekly forward-looking Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next 30 to 45 days. This week, a majority of panelists, 71 percent, expect mortgage rates to continue climbing. Chances of a decline look slim, with only 21 percent voting that way. Just 8 percent forecast that rates will remain more or less unchanged in the next 30 to 45 days.
Source: Bankrate.com
Mortgage rates rose slightly in the latest week, with the average conforming 30-year fixed mortgage rate increasing to 6.74 percent.
According to Bankrate.com's weekly national survey of large lenders, the average 30-year fixed mortgage has an average of 0.38 discount and origination points.
The average 15-year fixed rate mortgage popular for refinancing rose to 6.27 percent, while the average jumbo 30-year fixed rate is now 7.68 percent. Adjustable mortgage rates were lower, with the average 1-year ARM dipping to 6.24 percent and the average 5/1 ARM down to 6.32 percent. Here’s another look at the latest figures:
* 30-year fixed: 6.74%, up from 6.70% last week (avg. points: 0.38)
* 15-year fixed: 6.27%, up from 6.22% last week (avg. points: 0.47)
* 5/1 ARM: 6.32%, down from 6.35% last week (avg. points: 0.45)
Since posting a mighty advance two weeks ago, mortgage rates have settled into a range but have been bobbing up and down, with no clear direction. That was true this week, with mortgage rates pulling back due to disappointing economic growth and more job losses before moving up as the Fed indicated interest rates could be on hold for some period of time.
Another factor in higher mortgage rates has been the noticeably wider spread between benchmark Treasury yields and fixed mortgage rates. Spreads have expanded in recent weeks as investors fret about the quality of outstanding mortgage loans, commanding higher returns to compensate for the risk.
Mortgage rates have been on a wild ride since the beginning of the year. The average 30-year fixed mortgage rate was as low as 5.57 percent in January, meaning that a $200,000 loan would have carried a monthly payment of $1,144.38. But at today's rate of 6.74 percent, a $200,000 loan would mean a monthly payment of $1,295.87.
Bankrate's national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.
The survey is complemented by Bankrate's weekly forward-looking Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next 30 to 45 days. This week, a majority of panelists, 71 percent, expect mortgage rates to continue climbing. Chances of a decline look slim, with only 21 percent voting that way. Just 8 percent forecast that rates will remain more or less unchanged in the next 30 to 45 days.
Source: Bankrate.com
Wednesday, August 6, 2008
Housing Market Looking Better in the Midwest
From Realtor Magazine Online, Daily Real Estate News August 6, 2008
There was some good news this month for Midwestern cities hardest hit by the housing downturn.
In 10 of the 26 markets analyzed by Altos Research and Real IQ, asking prices increased in July, with the largest monthly gain in hard-bitten Detroit, up 4.8 percent. Denver and Cleveland also showed solid improvement, up 2.3 percent and 2.7 percent respectively.
Asking prices fell in July by more than 1 percent in Phoenix, Miami, Tampa, Fla., New York, Salt Lake City, Washington, DC, San Jose, Calif. and Los Angeles. The largest monthly decline occurred in Las Vegas with a fall of 4 percent.
Inventory levels declined in 20 of the 26 markets followed by Altos with Detroit and Cleveland contracting the most at 6.1 percent and 4.0 percent respectively.
Inventories rose by the largest amount in Portland and Seattle, up 8.2 percent and 2.8 percent respectively. Other markets with inventory increases were San Jose, Salt Lake City, Las Vegas, and Philadelphia.
Days on the market declined in just three of 26 markets in July with Detroit down 3.8 percent.
Cleveland declined 7.4 percent and Las Vegas was down 7 percent.
Inventory turnover increased the most in Atlanta, rising 29.4 percent, followed by New York City with an 18.6 percent increase and Austin up 15.4 percent.
Altos Research/Real IQ provides housing market analysis to mortgage and real estate companies, including Bank of America, Realogy, Weichert, Long & Foster and Lending Tree.
Source: Altos Research/Real IQ, (08/05/2008)
There was some good news this month for Midwestern cities hardest hit by the housing downturn.
In 10 of the 26 markets analyzed by Altos Research and Real IQ, asking prices increased in July, with the largest monthly gain in hard-bitten Detroit, up 4.8 percent. Denver and Cleveland also showed solid improvement, up 2.3 percent and 2.7 percent respectively.
Asking prices fell in July by more than 1 percent in Phoenix, Miami, Tampa, Fla., New York, Salt Lake City, Washington, DC, San Jose, Calif. and Los Angeles. The largest monthly decline occurred in Las Vegas with a fall of 4 percent.
Inventory levels declined in 20 of the 26 markets followed by Altos with Detroit and Cleveland contracting the most at 6.1 percent and 4.0 percent respectively.
Inventories rose by the largest amount in Portland and Seattle, up 8.2 percent and 2.8 percent respectively. Other markets with inventory increases were San Jose, Salt Lake City, Las Vegas, and Philadelphia.
Days on the market declined in just three of 26 markets in July with Detroit down 3.8 percent.
Cleveland declined 7.4 percent and Las Vegas was down 7 percent.
Inventory turnover increased the most in Atlanta, rising 29.4 percent, followed by New York City with an 18.6 percent increase and Austin up 15.4 percent.
Altos Research/Real IQ provides housing market analysis to mortgage and real estate companies, including Bank of America, Realogy, Weichert, Long & Foster and Lending Tree.
Source: Altos Research/Real IQ, (08/05/2008)
After Hitting a Low, Mortgage Applications Climb
From Realtor Magazine Online, Daily Real Estate News August 6, 2008
Mortgage applications rose slightly on an adjusted basis last week, up 2.8 percent to 432.6 from 420.8 the previous week, according to the Mortgage Bankers Association weekly survey.
Total mortgage applications had slumped a week ago to their lowest level since December 2000.
On an unadjusted basis, the index increased 2.4 percent compared with the previous week and was down 33.7 percent compared with the same week a year ago.
Refinances increased 4.4 percent, while purchases rose 1.8 percent.
Mortgage rates were down slightly:
* 30-year fixed-rate mortgages decreased to 6.41 percent from 6.46 percent;
* 15-year fixed-rate mortgages increased to 6.02 percent from 5.98 percent;
* 1-year ARMs decreased to 7.17 percent from 7.25 percent.
Source: Mortgage Bankers Association (08/06/08)
Mortgage applications rose slightly on an adjusted basis last week, up 2.8 percent to 432.6 from 420.8 the previous week, according to the Mortgage Bankers Association weekly survey.
Total mortgage applications had slumped a week ago to their lowest level since December 2000.
On an unadjusted basis, the index increased 2.4 percent compared with the previous week and was down 33.7 percent compared with the same week a year ago.
Refinances increased 4.4 percent, while purchases rose 1.8 percent.
Mortgage rates were down slightly:
* 30-year fixed-rate mortgages decreased to 6.41 percent from 6.46 percent;
* 15-year fixed-rate mortgages increased to 6.02 percent from 5.98 percent;
* 1-year ARMs decreased to 7.17 percent from 7.25 percent.
Source: Mortgage Bankers Association (08/06/08)
Monday, August 4, 2008
How the New First-Time Buyer Tax Credit Works
From Realtor Magazine Online, Daily Real Estate News August 4, 2008
Under the new housing bill, home buyers who have not owned a home in the last three years will be eligible for a tax credit equal to 10 percent of the property up to a maximum of $7,500.
Here’s how it works:
* The credit is $3,750 for married couples filing separately. Unmarried people who jointly purchase a home will be able to divide the $7,500 credit.
* This program is actually a loan, which home buyers must repay over 15 years at zero percent interest beginning in the second year after they purchase the home. A home buyer who qualified for the whole credit would pay $500 for 15 years or about $41.67 per month.
* The credit applies only to homes purchased on or after April 9, 2008, and before July 1, 2009.
* High-income home buyers don’t qualify: Eligibility begins phasing out for single filers with adjusted income of more than $75,000 and $150,000 for joint filers. It completely phases out at $95,000 for singles and $170,000 for married couples filing jointly.
Source: The Washington Post, Michelle Singletary (07/03/08)
Under the new housing bill, home buyers who have not owned a home in the last three years will be eligible for a tax credit equal to 10 percent of the property up to a maximum of $7,500.
Here’s how it works:
* The credit is $3,750 for married couples filing separately. Unmarried people who jointly purchase a home will be able to divide the $7,500 credit.
* This program is actually a loan, which home buyers must repay over 15 years at zero percent interest beginning in the second year after they purchase the home. A home buyer who qualified for the whole credit would pay $500 for 15 years or about $41.67 per month.
* The credit applies only to homes purchased on or after April 9, 2008, and before July 1, 2009.
* High-income home buyers don’t qualify: Eligibility begins phasing out for single filers with adjusted income of more than $75,000 and $150,000 for joint filers. It completely phases out at $95,000 for singles and $170,000 for married couples filing jointly.
Source: The Washington Post, Michelle Singletary (07/03/08)
Economists: Housing Declines to Remain Small
From Realtor Magazine Online, Daily Real Estate News August 4, 2008
A team of economists who created a variety of forecasting models concludes that predictions of further large housing price declines are greatly overblown.
They point to the house price index of the Office of Federal Housing Enterprise as most reflective of reality. Its data reveals that only four states — Arizona, California, Florida, and Nevada — have had declines of more than 4 percent in home prices over the past year.
These economists, including professors from Columbia University and from the Center for Real Estate at Wichita State University in Kansas, discount more drastic figures from the Standard & Poor's/Case-Shiller housing price index. They say this index is faulty because it doesn’t include data from 13 states and offers only partial coverage of 29 others, making its results an inaccurate reflection of middle-market homeownership.
Using a model constructed from the OFHEO price index, foreclosures, home sales, permits and employment, the economic team concluded that declines in house prices are highly likely to remain small.
“Our analysis reveals, unsurprisingly, that foreclosures and home prices have negative effects on each other over time, but this does not imply a vicious cycle of collapsing prices. Our models predict that as foreclosures continue to climb in many states, house prices will remain flat or decline in those states — but will not collapse.
“One reason for this is that the effect of foreclosure shocks on house prices is small. Furthermore, other fundamental factors (such as employment growth and a slowing of the growth of the housing supply over the past year and a half) will cushion the impact of foreclosures,” the economic team said.
Source: The Washington Post, Charles W. Calomiris, Stanley D. Longhofer and William Miles (08/04/08)
A team of economists who created a variety of forecasting models concludes that predictions of further large housing price declines are greatly overblown.
They point to the house price index of the Office of Federal Housing Enterprise as most reflective of reality. Its data reveals that only four states — Arizona, California, Florida, and Nevada — have had declines of more than 4 percent in home prices over the past year.
These economists, including professors from Columbia University and from the Center for Real Estate at Wichita State University in Kansas, discount more drastic figures from the Standard & Poor's/Case-Shiller housing price index. They say this index is faulty because it doesn’t include data from 13 states and offers only partial coverage of 29 others, making its results an inaccurate reflection of middle-market homeownership.
Using a model constructed from the OFHEO price index, foreclosures, home sales, permits and employment, the economic team concluded that declines in house prices are highly likely to remain small.
“Our analysis reveals, unsurprisingly, that foreclosures and home prices have negative effects on each other over time, but this does not imply a vicious cycle of collapsing prices. Our models predict that as foreclosures continue to climb in many states, house prices will remain flat or decline in those states — but will not collapse.
“One reason for this is that the effect of foreclosure shocks on house prices is small. Furthermore, other fundamental factors (such as employment growth and a slowing of the growth of the housing supply over the past year and a half) will cushion the impact of foreclosures,” the economic team said.
Source: The Washington Post, Charles W. Calomiris, Stanley D. Longhofer and William Miles (08/04/08)
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