From Realtor Magazine Online, Daily Real Estate News June 26, 2009
Mortgage applications bounced back last week after nearly a month in the doldrums when the number of applications fell to a seven-month low.
The market index compiled by the Mortgage Bankers Association rose 6.6 percent on a seasonally adjusted basis to 548.2 points from 514.4 points the previous week.
On an unadjusted basis, the index increased 6 percent compared with the previous week and rose 17.2 percent compared with the same week a year ago.
Both purchases and refinances were up with the purchase share increasing 7.3 percent and refinances rising 5.9 percent.
Source: Mortgage Bankers Association (06/24/2009)
Friday, June 26, 2009
Real Estate Improves in California
From Realtor Magazine Online, Daily Real Estate News June 26, 2009
Median prices for single-family homes in California have risen for the third straight month, reaching $267,570, up 4 percent from April, according to a report from the California Association of REALTORS®.
The inventory of homes continues to drop, falling a 4.2-month supply in May, compared to 8.7 month supply in May 2008.
California’s real estate market always has been seen as a leading indicator for the rest of the country. What is happening in California bodes well for the rest of the nation, observers say.
Source: The Wall Street Journal, Stu Woo (06/26/2009)
Median prices for single-family homes in California have risen for the third straight month, reaching $267,570, up 4 percent from April, according to a report from the California Association of REALTORS®.
The inventory of homes continues to drop, falling a 4.2-month supply in May, compared to 8.7 month supply in May 2008.
California’s real estate market always has been seen as a leading indicator for the rest of the country. What is happening in California bodes well for the rest of the nation, observers say.
Source: The Wall Street Journal, Stu Woo (06/26/2009)
Thursday, June 25, 2009
California Housing Market Shows Pockets of Recovery
A surge in home sales that started in some of California’s more affordable inland areas has begun to spread to several more expensive coastal areas, another indicator that the state’s real estate market may be in recovery mode.
MAKING SENSE OF THE STORY FOR CONSUMERS
Many homes in the lower end of the market are receiving multiple offers, with some prospective buyers bidding well above asking prices. Inventory levels for homes priced under $500,000 stood at 3.2 months in May 2009, compared with 9.4 months in May 2008.
Some buyers, especially those in historically higher-priced markets such as the San Francisco Bay Area, are newly optimistic about buying homes and are realizing that the combination of low interest rates, favorable home prices, and first-time home buyer tax credits may not realign for many years.
Some housing economists caution against interpreting signs of increased sales activity as meaning the market has bottomed. Interest rates on 30-year, fixed-rate prime mortgages have risen above 5 percent in recent weeks and could continue to increase as fears of inflation impact interest rates. Additionally, the federal tax credit for first-time home buyers is scheduled to end Nov. 30, which may remove the incentive to purchase.
Although the median price in the state has risen for four consecutivemonths, prices in some higher-income neighborhoods still are declining. Some agents say that declining prices in these neighborhoods are a reflection of borrowers’ problems getting jumbo mortgages to make purchases.
Source: Wall Street Journal
MAKING SENSE OF THE STORY FOR CONSUMERS
Many homes in the lower end of the market are receiving multiple offers, with some prospective buyers bidding well above asking prices. Inventory levels for homes priced under $500,000 stood at 3.2 months in May 2009, compared with 9.4 months in May 2008.
Some buyers, especially those in historically higher-priced markets such as the San Francisco Bay Area, are newly optimistic about buying homes and are realizing that the combination of low interest rates, favorable home prices, and first-time home buyer tax credits may not realign for many years.
Some housing economists caution against interpreting signs of increased sales activity as meaning the market has bottomed. Interest rates on 30-year, fixed-rate prime mortgages have risen above 5 percent in recent weeks and could continue to increase as fears of inflation impact interest rates. Additionally, the federal tax credit for first-time home buyers is scheduled to end Nov. 30, which may remove the incentive to purchase.
Although the median price in the state has risen for four consecutivemonths, prices in some higher-income neighborhoods still are declining. Some agents say that declining prices in these neighborhoods are a reflection of borrowers’ problems getting jumbo mortgages to make purchases.
Source: Wall Street Journal
Wednesday, June 24, 2009
Will 'Echo Boomers' Save the Housing Market?
From Realtor Magazine Online, Daily Real Estate News June 24, 2009
Echo boomers, the children of baby boomers, will be the salvation of the housing market, Harvard University's Joint Center for Housing Studies predicts.
In its annual state of the nation’s housing study, the center says that the 75 million Americans born between 1979 and 1995 will mean plenty of demand for housing units.
"There will be 5 million more echo boomers than there were boomers when they first started swelling housing markets," says Eric Belsky, executive director of the Joint Center.
Belsky predicts that once the job market turns around, the housing market will recovery quickly because inventories are close in balance between supply and demand.
But the study warns that while echo boomers will increase demand significantly, they may not drive up prices much because their real incomes are lower than those earned by people a decade older when they entered the job market.
"While fundamentally we see what could be the foundation for long-term recovery, we still have to get through today's challenges," says Nicolas Retsinas, director of the Harvard center.
Sources: CNNMoney.com, Les Christie, and Reuters, Lynn Adler (06/22/2009)
Echo boomers, the children of baby boomers, will be the salvation of the housing market, Harvard University's Joint Center for Housing Studies predicts.
In its annual state of the nation’s housing study, the center says that the 75 million Americans born between 1979 and 1995 will mean plenty of demand for housing units.
"There will be 5 million more echo boomers than there were boomers when they first started swelling housing markets," says Eric Belsky, executive director of the Joint Center.
Belsky predicts that once the job market turns around, the housing market will recovery quickly because inventories are close in balance between supply and demand.
But the study warns that while echo boomers will increase demand significantly, they may not drive up prices much because their real incomes are lower than those earned by people a decade older when they entered the job market.
"While fundamentally we see what could be the foundation for long-term recovery, we still have to get through today's challenges," says Nicolas Retsinas, director of the Harvard center.
Sources: CNNMoney.com, Les Christie, and Reuters, Lynn Adler (06/22/2009)
Tuesday, June 23, 2009
Bank Gives Cities, States First Shot at REOs
From Realtor Magazine Online, Daily Real Estate News June 23, 2009
Bank of America is making it easier for states and cities to buy foreclosures before investors purchase them.
The program is a result of the U.S. Department of Housing and Urban Development’s Neighborhood Stabilization Program, which aims to encourage redevelopment of neighborhoods hit hardest by foreclosure and the resale of properties to home owners.
Bank of America will notify participating cities that properties are available before they are listed on multiple listing services. The company will set the prices with no haggling allowed.
"We're balancing our desire to work with communities that are struggling to stabilize with our fiduciary duty to the investors that hold the paper on all these properties," says Rob Grossman, senior vice president of community affairs for Bank of America. "We will offer them the best price."
Source: Chicago Tribune, Mary Ellen Podmolik (06/19/2009)
Bank of America is making it easier for states and cities to buy foreclosures before investors purchase them.
The program is a result of the U.S. Department of Housing and Urban Development’s Neighborhood Stabilization Program, which aims to encourage redevelopment of neighborhoods hit hardest by foreclosure and the resale of properties to home owners.
Bank of America will notify participating cities that properties are available before they are listed on multiple listing services. The company will set the prices with no haggling allowed.
"We're balancing our desire to work with communities that are struggling to stabilize with our fiduciary duty to the investors that hold the paper on all these properties," says Rob Grossman, senior vice president of community affairs for Bank of America. "We will offer them the best price."
Source: Chicago Tribune, Mary Ellen Podmolik (06/19/2009)
Obama's Mortgage-assistance Program Flops
From Realtor Magazine Online, Daily Real Estate News June 23, 2009
Getting help through the Obama administration’s mortgage-assistance program has been an impossible challenge for thousands of applicants.
Home owners who apply for mortgage modifications can expect to wait 45 to 60 days before hearing anything from their mortgage service company, according to a report from foreclosure-prevention counselor NeighborWorks America.
Here is some other basic information:
* The refinancing option is available only for certain loans owned or securitized by Fannie Mae and Freddie Mac. Home owners should contact their lender to see if they're eligible. Borrowers who are delinquent on their mortgage will not qualify.
* To be eligible for a modification, borrowers must live in their property and be able to pay the mortgage after the modification. The first mortgage may not exceed 105 percent of the current market value of the property. The unpaid principal balance must be equal to or less than $729,750 for one-unit properties. The loan must have originated before Jan. 1, 2009. A borrower must have a payment (including taxes, insurance and homeowners association dues) that is more than 31 percent of the borrower's gross monthly income.
* Consumers can find more information about these programs at FinancialStability.gov.
Source: USA Today (06/19/2009)
Getting help through the Obama administration’s mortgage-assistance program has been an impossible challenge for thousands of applicants.
Home owners who apply for mortgage modifications can expect to wait 45 to 60 days before hearing anything from their mortgage service company, according to a report from foreclosure-prevention counselor NeighborWorks America.
Here is some other basic information:
* The refinancing option is available only for certain loans owned or securitized by Fannie Mae and Freddie Mac. Home owners should contact their lender to see if they're eligible. Borrowers who are delinquent on their mortgage will not qualify.
* To be eligible for a modification, borrowers must live in their property and be able to pay the mortgage after the modification. The first mortgage may not exceed 105 percent of the current market value of the property. The unpaid principal balance must be equal to or less than $729,750 for one-unit properties. The loan must have originated before Jan. 1, 2009. A borrower must have a payment (including taxes, insurance and homeowners association dues) that is more than 31 percent of the borrower's gross monthly income.
* Consumers can find more information about these programs at FinancialStability.gov.
Source: USA Today (06/19/2009)
NAR: Existing-Home Sale Continue to Rise
From Realtor Magazine Online, Daily Real Estate News June 23, 2009
Sales of existing homes showed another gain in May, benefiting from favorable affordability conditions and a first-time buyer tax credit, according to the NATIONAL ASSOCIATION OF REALTORS ®. May’s increase was the first back-to-back monthly gain since September 2005.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 2.4 percent to a seasonally adjusted annual rate of 4.77 million units in May from a downwardly revised level of 4.66 million units in April. Sales remained 3.6 percent below the 4.95 million-unit pace in May 2008.
Lawrence Yun, NAR chief economist, expected an improvement in sales.
“Historically low mortgage interest rates clearly drew buyers into the market, and housing remains very affordable even with a recent uptick in rates,” Yun says. “First-time buyers also are being drawn off the sidelines by the $8,000 tax credit, which is helping to absorb inventory.
Poor Appraisals Stall Transactions
However, the increase in sales is less than expected because poor appraisals are stalling transactions. Pending home sales indicated much stronger activity, but some contracts are falling through from faulty valuations that keep buyers from getting a loan.
Total housing inventory at the end of May fell 3.5 percent to 3.80 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace, down from a 10.1-month supply in April.
Yun says the appraisal problem is serious.
“Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional homes with distressed and discounted sales,” he says. “In the past month, stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment. There is danger of a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected.”
NAR President Charles McMillan says appraisals and the tax credit are key issues.
“To maximize the potential for a housing recovery and subsequent economic recovery, we need realistic appraisals that are based on proper comparisons and done by a local specialist,” he said. “In addition, the first-time buyer tax credit should be expanded to all buyers of primary homes regardless of income. Extending the credit into 2010 would allow more time for the market to catch up with underlying demand, in part because many families with children, who normally time their purchase based on school year considerations, do not have enough time to move before the start of school in late August.
“Freeing a pent-up demand in housing will absorb inventory at a faster pace, strengthen communities and stabilize home prices earlier,” McMillan said.
A Closer Look at May Housing Data
An NAR practitioner survey in May showed first-time buyers accounted for 29 percent of transactions, and that the number of buyers looking at homes is nearly 10 percentage points higher than a year ago.
“This is the time of year when we see large increases in the number of repeat buyers, who are benefiting from sales to entry-level buyers,” Yun says. “Investors appear less active, but are more prevalent in areas with large price corrections.”
National median existing-home price: for all housing types was $173,000 in May, down 16.8 percent from a year earlier. Distressed properties, which declined to 33 percent of all sales in May from 45 percent in April, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes.
“The decline in the distressed sales share likely results from an increase of repeat buyers in May,” Yun says. “First-time buyers are concentrated in the lower price ranges, which include most of the distressed sales.”
Single-family home sales: rose 1.9 percent to a seasonally adjusted annual rate of 4.25 million in May from a pace of 4.17 million in April, but are 3 percent below the 4.38 million-unit level in May 2008. The median existing single-family home price was $172,900 in May, down 16.1 percent from a year ago.
Existing condominium and co-op sales: increased 6.1 percent to a seasonally adjusted annual rate of 520,000 units in May from 490,000 in April, but are 8.9 percent below the 571,000-unit level in May 2008. The median existing condo price was $173,800 in May, down 21.9 percent from a year earlier.
By the RegionHere’s how housing fared across the country for existing-home sales:
* Northeast: rose 3.9 percent to an annual level of 800,000 in May, but are 10.1 percent below a year ago. Median price: $243,600, which is 12.5 percent below May 2008.
* Midwest: jumped 9 percent in May to a pace of 1.09 million but are 4.4 percent below May 2008. Median price: $145,800, which is 10.4 percent lower than a year ago.
* South: unchanged at an annual pace of 1.74 million in May but are 8.9 percent below a year ago. Median price: $157,400, down 9.9 percent from May 2008.
* West: slipped 0.9 percent to an annual rate of 1.14 million in May, but are 11.8 percent higher than May 2008. Median price: $197,700, down 30.6 percent from a year ago.
Source: NAR
Sales of existing homes showed another gain in May, benefiting from favorable affordability conditions and a first-time buyer tax credit, according to the NATIONAL ASSOCIATION OF REALTORS ®. May’s increase was the first back-to-back monthly gain since September 2005.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 2.4 percent to a seasonally adjusted annual rate of 4.77 million units in May from a downwardly revised level of 4.66 million units in April. Sales remained 3.6 percent below the 4.95 million-unit pace in May 2008.
Lawrence Yun, NAR chief economist, expected an improvement in sales.
“Historically low mortgage interest rates clearly drew buyers into the market, and housing remains very affordable even with a recent uptick in rates,” Yun says. “First-time buyers also are being drawn off the sidelines by the $8,000 tax credit, which is helping to absorb inventory.
Poor Appraisals Stall Transactions
However, the increase in sales is less than expected because poor appraisals are stalling transactions. Pending home sales indicated much stronger activity, but some contracts are falling through from faulty valuations that keep buyers from getting a loan.
Total housing inventory at the end of May fell 3.5 percent to 3.80 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace, down from a 10.1-month supply in April.
Yun says the appraisal problem is serious.
“Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional homes with distressed and discounted sales,” he says. “In the past month, stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment. There is danger of a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected.”
NAR President Charles McMillan says appraisals and the tax credit are key issues.
“To maximize the potential for a housing recovery and subsequent economic recovery, we need realistic appraisals that are based on proper comparisons and done by a local specialist,” he said. “In addition, the first-time buyer tax credit should be expanded to all buyers of primary homes regardless of income. Extending the credit into 2010 would allow more time for the market to catch up with underlying demand, in part because many families with children, who normally time their purchase based on school year considerations, do not have enough time to move before the start of school in late August.
“Freeing a pent-up demand in housing will absorb inventory at a faster pace, strengthen communities and stabilize home prices earlier,” McMillan said.
A Closer Look at May Housing Data
An NAR practitioner survey in May showed first-time buyers accounted for 29 percent of transactions, and that the number of buyers looking at homes is nearly 10 percentage points higher than a year ago.
“This is the time of year when we see large increases in the number of repeat buyers, who are benefiting from sales to entry-level buyers,” Yun says. “Investors appear less active, but are more prevalent in areas with large price corrections.”
National median existing-home price: for all housing types was $173,000 in May, down 16.8 percent from a year earlier. Distressed properties, which declined to 33 percent of all sales in May from 45 percent in April, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes.
“The decline in the distressed sales share likely results from an increase of repeat buyers in May,” Yun says. “First-time buyers are concentrated in the lower price ranges, which include most of the distressed sales.”
Single-family home sales: rose 1.9 percent to a seasonally adjusted annual rate of 4.25 million in May from a pace of 4.17 million in April, but are 3 percent below the 4.38 million-unit level in May 2008. The median existing single-family home price was $172,900 in May, down 16.1 percent from a year ago.
Existing condominium and co-op sales: increased 6.1 percent to a seasonally adjusted annual rate of 520,000 units in May from 490,000 in April, but are 8.9 percent below the 571,000-unit level in May 2008. The median existing condo price was $173,800 in May, down 21.9 percent from a year earlier.
By the RegionHere’s how housing fared across the country for existing-home sales:
* Northeast: rose 3.9 percent to an annual level of 800,000 in May, but are 10.1 percent below a year ago. Median price: $243,600, which is 12.5 percent below May 2008.
* Midwest: jumped 9 percent in May to a pace of 1.09 million but are 4.4 percent below May 2008. Median price: $145,800, which is 10.4 percent lower than a year ago.
* South: unchanged at an annual pace of 1.74 million in May but are 8.9 percent below a year ago. Median price: $157,400, down 9.9 percent from May 2008.
* West: slipped 0.9 percent to an annual rate of 1.14 million in May, but are 11.8 percent higher than May 2008. Median price: $197,700, down 30.6 percent from a year ago.
Source: NAR
Monday, June 22, 2009
Property Tax Info Is a Few Clicks Away
From Realtor Magazine Online, Daily Real Estate News June 22, 2009
The Lincoln Institute of Land Policy has put its property tax database online. The database is a comprehensive source of information about finance in every state and many municipalities.
Users can manipulate the database to compare property tax laws, rates, and assessment rules, and to identify property tax relief programs.
The institute, which is associated with The George Washington University in Washington, D.C., plans to shortly add a database of property values across the United States.
Source: Lincoln Institute of Land Policy (06/08/2009)
The Lincoln Institute of Land Policy has put its property tax database online. The database is a comprehensive source of information about finance in every state and many municipalities.
Users can manipulate the database to compare property tax laws, rates, and assessment rules, and to identify property tax relief programs.
The institute, which is associated with The George Washington University in Washington, D.C., plans to shortly add a database of property values across the United States.
Source: Lincoln Institute of Land Policy (06/08/2009)
More Signs of a Real Estate Turnaround
From Realtor Magazine Online, Daily Real Estate News June 22, 2009
Housing confidence is up amid increasing evidence that the market is turning around.
The Adversity Index from MSNBC.com and Moody’s Economy.com reported signs of a turnaround in 33 of the nation’s metro areas.
While that’s less than 10 percent of all metro areas, it’s still significant, says economist Andrew Gledhill of Economy.com. "There are signs out there that builders are growing modestly more confident about their prospects,” he says.
Vallejo, Calif., where housing starts are up 440 percent compared to a year ago, leads the list of improving metros. In Longview, Tex., housing starts increased 263 percent. Others metros at the top of the list are Lawrence, Kan.; Ann Arbor, Mich.; Kokomo, Ind.; and Clarksville, Tenn.
Housing prices are also increasing in 140 metro areas compared to a year ago. The greatest increase was in Elmira, N.Y., where prices were up 10 percent compared to a year ago.
Source: MSNBC, Bill Dedman (06/19/2009)
Housing confidence is up amid increasing evidence that the market is turning around.
The Adversity Index from MSNBC.com and Moody’s Economy.com reported signs of a turnaround in 33 of the nation’s metro areas.
While that’s less than 10 percent of all metro areas, it’s still significant, says economist Andrew Gledhill of Economy.com. "There are signs out there that builders are growing modestly more confident about their prospects,” he says.
Vallejo, Calif., where housing starts are up 440 percent compared to a year ago, leads the list of improving metros. In Longview, Tex., housing starts increased 263 percent. Others metros at the top of the list are Lawrence, Kan.; Ann Arbor, Mich.; Kokomo, Ind.; and Clarksville, Tenn.
Housing prices are also increasing in 140 metro areas compared to a year ago. The greatest increase was in Elmira, N.Y., where prices were up 10 percent compared to a year ago.
Source: MSNBC, Bill Dedman (06/19/2009)
Thursday, June 18, 2009
California Running Out of $10,000 Tax Credits
From C.A.R., June 18, 2009
First-time home buyers wanting to take advantage of the state’s $10,000 tax credit may have less time than originally expected. California set aside $100 million to help home buyers purchase newly built homes, hoping to jump start the residential-construction market.
According to state officials, the tactic has worked well and is helping to entice home buyers into the market. However, there only is approximately 20 percent of the program’s funding remaining.
The program launched in March, and as of June 3 nearly $24 million in tax credit certificates already had been issued, according to the state’s Franchise Tax Board, leaving nearly $76 million in credit available. Many applications still are in the pipeline awaiting approval. If all of the submitted applications are approved, only $17.5 million would remain in the fund.
The California state legislature is considering adding another $200 million to the program. However, securing approval may be difficult due to the state’s estimated $24 billion budget deficit. A bill to extend the program already has won Assembly approval and now is awaiting activity in the state Senate.
To read the full story, please click here
First-time home buyers wanting to take advantage of the state’s $10,000 tax credit may have less time than originally expected. California set aside $100 million to help home buyers purchase newly built homes, hoping to jump start the residential-construction market.
According to state officials, the tactic has worked well and is helping to entice home buyers into the market. However, there only is approximately 20 percent of the program’s funding remaining.
The program launched in March, and as of June 3 nearly $24 million in tax credit certificates already had been issued, according to the state’s Franchise Tax Board, leaving nearly $76 million in credit available. Many applications still are in the pipeline awaiting approval. If all of the submitted applications are approved, only $17.5 million would remain in the fund.
The California state legislature is considering adding another $200 million to the program. However, securing approval may be difficult due to the state’s estimated $24 billion budget deficit. A bill to extend the program already has won Assembly approval and now is awaiting activity in the state Senate.
To read the full story, please click here
Strapped Condo Boards Initiating Foreclosures
From Realtor Magazine Online, Daily Real Estate News June 18, 2009
Strapped condo boards are foreclosing on units whose owners have failed to pay monthly assessments.
Because banks that hold defaulted mortgages don’t owe condo dues until they actually take title of the property, many condos are facing serious shortfalls and as a result face difficulty paying operating expenses.
Condos and the attorneys who represent them say banks are deliberately slowing foreclosure proceedings to avoid paying monthly assessments.
"It's become common practice to delay foreclosure," says Eric Glazer, a condo-association lawyer in Hallandale Beach, Fla., which is between Fort Lauderdale and Miami. "Banks are forcing the associations to take them the distance."
To combat this, condo boards, which can attach liens just like banks do, are stepping up and forcing foreclosure sales. After collecting back assessments, they pay out what’s remaining to the bank and rent out the unit until the bank gets around to deciding what to do next.
Lenders say they aren’t deliberately slowing foreclosure sales, but are facing political pressure to allow time for loans to be modified. "There's no generalized delay in foreclosure on either condominiums or anything else. Unfortunately, the courts are clogged with these things," says Thomas Cardwell, general counsel for the Florida Bankers Association.
Source: The Wall Street Journal, Nick Timiraos (06/18/2009)
Strapped condo boards are foreclosing on units whose owners have failed to pay monthly assessments.
Because banks that hold defaulted mortgages don’t owe condo dues until they actually take title of the property, many condos are facing serious shortfalls and as a result face difficulty paying operating expenses.
Condos and the attorneys who represent them say banks are deliberately slowing foreclosure proceedings to avoid paying monthly assessments.
"It's become common practice to delay foreclosure," says Eric Glazer, a condo-association lawyer in Hallandale Beach, Fla., which is between Fort Lauderdale and Miami. "Banks are forcing the associations to take them the distance."
To combat this, condo boards, which can attach liens just like banks do, are stepping up and forcing foreclosure sales. After collecting back assessments, they pay out what’s remaining to the bank and rent out the unit until the bank gets around to deciding what to do next.
Lenders say they aren’t deliberately slowing foreclosure sales, but are facing political pressure to allow time for loans to be modified. "There's no generalized delay in foreclosure on either condominiums or anything else. Unfortunately, the courts are clogged with these things," says Thomas Cardwell, general counsel for the Florida Bankers Association.
Source: The Wall Street Journal, Nick Timiraos (06/18/2009)
Foreign Investors Bullish on U.S. Real Estate
From Realtor Magazine Online, Daily Real Estate News June 18, 2009
Foreign real estate investors expect the U.S. real estate market to recover by the end of the second quarter of 2010, according to a survey released Wednesday by the Association of Foreign Investors in Real Estate (AFIRE).
Survey respondents were optimistic about the prospects for good returns, with more than two-thirds planning to invest in U.S. real estate before the end of the year.
About 31 percent said they were more hopeful now about the health of the U.S. real estate market than they were in January, 16 percent said they were more pessimistic, and 53 percent said their opinion had stayed the same.
The 200 members surveyed predicted that Washington, D.C., New York City, and San Francisco would be the first cities to recover, followed by Boston and Los Angeles.
Source: Association of Foreign Investors in Real Estate (06/17/2009)
Foreign real estate investors expect the U.S. real estate market to recover by the end of the second quarter of 2010, according to a survey released Wednesday by the Association of Foreign Investors in Real Estate (AFIRE).
Survey respondents were optimistic about the prospects for good returns, with more than two-thirds planning to invest in U.S. real estate before the end of the year.
About 31 percent said they were more hopeful now about the health of the U.S. real estate market than they were in January, 16 percent said they were more pessimistic, and 53 percent said their opinion had stayed the same.
The 200 members surveyed predicted that Washington, D.C., New York City, and San Francisco would be the first cities to recover, followed by Boston and Los Angeles.
Source: Association of Foreign Investors in Real Estate (06/17/2009)
Wednesday, June 17, 2009
Fast Facts June 17, 2009
Calif. median home price - April 09: $256,700 (Source: C.A.R.)
Calif. highest median home price by C.A.R. region April 09: Santa Barbara So. Coast $840,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region April 09: High Desert $106,530 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - First Quarter 2009: 69 percent (Source: C.A.R.)
Mortgage rates - week ending 6/11/09:
* 30-yr. fixed: 5.59% Fees/points: 0.7%
* 15-yr. fixed: 5.06% Fees/points: 0.7%
* 1-yr. adjustable: 5.04% Fees/points: 0.7%
(Source: Freddie Mac)
Calif. highest median home price by C.A.R. region April 09: Santa Barbara So. Coast $840,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region April 09: High Desert $106,530 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - First Quarter 2009: 69 percent (Source: C.A.R.)
Mortgage rates - week ending 6/11/09:
* 30-yr. fixed: 5.59% Fees/points: 0.7%
* 15-yr. fixed: 5.06% Fees/points: 0.7%
* 1-yr. adjustable: 5.04% Fees/points: 0.7%
(Source: Freddie Mac)
Can Buying Cheap Foreclosures Make You Rich?
From Realtor Magazine Online, Daily Real Estate News June 17, 2009
Speculators are buying up an uncounted, but certainly significant percentage of homes for sale in cities where the meltdown has hit hardest.
Homes.com reports a 30- to 50-percent year-over-year increase in searches for homes in foreclosure-heavy states, including California, Michigan, and Florida. In these states, helping long-distance investors find and close on properties and close has become a burgeoning real estate specialty.
The investors run the gamut from international speculators seeking a house or two to venture capital firms that buy bundles of homes for 25 cents on the dollar — most in need of renovation and some with substantial tax liens.
Will these investments lead to riches? Possibly, if housing prices go back up and if investors are able to fix up and rent the properties out while they wait to sell, experts say.
Source: Smart Money, Anne Kadet (06/01/2009)
Speculators are buying up an uncounted, but certainly significant percentage of homes for sale in cities where the meltdown has hit hardest.
Homes.com reports a 30- to 50-percent year-over-year increase in searches for homes in foreclosure-heavy states, including California, Michigan, and Florida. In these states, helping long-distance investors find and close on properties and close has become a burgeoning real estate specialty.
The investors run the gamut from international speculators seeking a house or two to venture capital firms that buy bundles of homes for 25 cents on the dollar — most in need of renovation and some with substantial tax liens.
Will these investments lead to riches? Possibly, if housing prices go back up and if investors are able to fix up and rent the properties out while they wait to sell, experts say.
Source: Smart Money, Anne Kadet (06/01/2009)
Survey Shows Optimism on Home Values
From Realtor Magazine Online, Daily Real Estate News June 17, 2009
A recent poll by Housing Predictor asked consumers if they believed home prices would one day hit the record highs last seen during the residential property boom. Of those surveyed, 62 percent anticipate a recovery and expect record high prices to be achieved down the road.
Consumers appear to have faith in housing, despite troubling media reports triggered by the foreclosure crisis.
Source: PR.com (06/16/09)
A recent poll by Housing Predictor asked consumers if they believed home prices would one day hit the record highs last seen during the residential property boom. Of those surveyed, 62 percent anticipate a recovery and expect record high prices to be achieved down the road.
Consumers appear to have faith in housing, despite troubling media reports triggered by the foreclosure crisis.
Source: PR.com (06/16/09)
Mortgage Applications Fall Again
From Realtor Magazine Online, Daily Real Estate News June 17, 2009
The weekly mortgage application index compiled by the Mortgage Bankers Association declined 15.8 percent to 514.4 on a seasonally adjusted basis last week compared to 611 the previous week.
On an unadjusted basis, the index fell 15.8 percent. Compared to the same week last year, applications were off 0.3 percent. The refinance index was down 23.3 percent, while the purchase index fell 3.5 percent.
There were fewer applications last week than in any week since November 2008.
Mortgage rates actually declined slightly after having risen steadily for almost a month.
* 30-year fixed-rate mortgages decreased to 5.50 percent from 5.57 percent;
* 15-year fixed-rate mortgages decreased to 4.99 percent from 5.10 percent;
* 1-year ARMs decreased to 6.54 percent from 6.75 percent.
Source: Mortgage Bankers Association (06/17/2009)
The weekly mortgage application index compiled by the Mortgage Bankers Association declined 15.8 percent to 514.4 on a seasonally adjusted basis last week compared to 611 the previous week.
On an unadjusted basis, the index fell 15.8 percent. Compared to the same week last year, applications were off 0.3 percent. The refinance index was down 23.3 percent, while the purchase index fell 3.5 percent.
There were fewer applications last week than in any week since November 2008.
Mortgage rates actually declined slightly after having risen steadily for almost a month.
* 30-year fixed-rate mortgages decreased to 5.50 percent from 5.57 percent;
* 15-year fixed-rate mortgages decreased to 4.99 percent from 5.10 percent;
* 1-year ARMs decreased to 6.54 percent from 6.75 percent.
Source: Mortgage Bankers Association (06/17/2009)
Monday, June 15, 2009
Pending Home Sales Up for Three Months in a Row
From N.A.R.
WASHINGTON, June 02, 2009
Record low mortgage interest rates boosted pending home sales for the third consecutive month, with some benefit now from the first-time buyer tax credit, according to the National Association of Realtors®.
The Pending Home Sales Index,1 a forward-looking indicator based on contracts signed in April, rose 6.7 percent to 90.3 from a reading of 84.6 in March, and is 3.2 percent above April 2008 when it was 87.5.
Lawrence Yun, NAR chief economist, said buyers are responding to very favorable market conditions. “Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market,” he said. “Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers.”
The Pending Home Sales Index in the Northeast shot up 32.6 percent to 78.9 in April and is 0.8 percent above a year ago. In the Midwest the index rose 9.8 percent to 90.4 and is 11.1 percent above April 2008. The index in the South slipped 0.2 percent to 93.0 in April but is 3.5 percent higher than a year ago. In the West the index rose 1.8 percent to 94.8 but is 2.9 percent below April 2008.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are numerous buyer assistance programs around the country. “Some states are offering bridge loans that allow first-time buyers to use the tax credit for downpayment and closing costs, but there are many other local government and nonprofit programs available to buyers, depending on location,” he said.
“Just last week, HUD announced that qualifying buyers can use the tax credit for closing costs on FHA loans, to buy down the interest rate or make a larger downpayment. Buyers who are wondering about their options should contact a Realtor®, who can advise consumers on the housing assistance programs and resources available in a given area.”
NAR’s Housing Affordability Index2 is in record territory. The affordability index rose to 174.8 in April from an upwardly revised 171.9 in March, and was the second highest monthly reading on record after peaking at 176.9 in January of this year. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income; tracking began in 1970.
A median-income family, earning $60,900, could afford a home costing $296,800 in April with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of that amount. The affordable price was well above the median existing single-family home price in April, which was $169,800.
Yun cautions that the reporting sample for pending home sales is smaller than that of existing-home sales, so it is subject to greater variability. “In addition, the relationship between contracts on pending home sales and closings on existing-home sales is taking longer than in the past for several reasons,” he said. “Mortgage processing time has increased, it is taking many months to close on those homes requiring short sales with lender approval, and some sales are falling through at the last moment.”
The total number of existing-home sales is expected to improve but with dramatic local market variation in the timing of recovery. “The market has already bottomed in some areas, but this is an unusual housing cycle with some areas improving rapidly while others languish or decline,” Yun said.
WASHINGTON, June 02, 2009
Record low mortgage interest rates boosted pending home sales for the third consecutive month, with some benefit now from the first-time buyer tax credit, according to the National Association of Realtors®.
The Pending Home Sales Index,1 a forward-looking indicator based on contracts signed in April, rose 6.7 percent to 90.3 from a reading of 84.6 in March, and is 3.2 percent above April 2008 when it was 87.5.
Lawrence Yun, NAR chief economist, said buyers are responding to very favorable market conditions. “Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market,” he said. “Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers.”
The Pending Home Sales Index in the Northeast shot up 32.6 percent to 78.9 in April and is 0.8 percent above a year ago. In the Midwest the index rose 9.8 percent to 90.4 and is 11.1 percent above April 2008. The index in the South slipped 0.2 percent to 93.0 in April but is 3.5 percent higher than a year ago. In the West the index rose 1.8 percent to 94.8 but is 2.9 percent below April 2008.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are numerous buyer assistance programs around the country. “Some states are offering bridge loans that allow first-time buyers to use the tax credit for downpayment and closing costs, but there are many other local government and nonprofit programs available to buyers, depending on location,” he said.
“Just last week, HUD announced that qualifying buyers can use the tax credit for closing costs on FHA loans, to buy down the interest rate or make a larger downpayment. Buyers who are wondering about their options should contact a Realtor®, who can advise consumers on the housing assistance programs and resources available in a given area.”
NAR’s Housing Affordability Index2 is in record territory. The affordability index rose to 174.8 in April from an upwardly revised 171.9 in March, and was the second highest monthly reading on record after peaking at 176.9 in January of this year. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income; tracking began in 1970.
A median-income family, earning $60,900, could afford a home costing $296,800 in April with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of that amount. The affordable price was well above the median existing single-family home price in April, which was $169,800.
Yun cautions that the reporting sample for pending home sales is smaller than that of existing-home sales, so it is subject to greater variability. “In addition, the relationship between contracts on pending home sales and closings on existing-home sales is taking longer than in the past for several reasons,” he said. “Mortgage processing time has increased, it is taking many months to close on those homes requiring short sales with lender approval, and some sales are falling through at the last moment.”
The total number of existing-home sales is expected to improve but with dramatic local market variation in the timing of recovery. “The market has already bottomed in some areas, but this is an unusual housing cycle with some areas improving rapidly while others languish or decline,” Yun said.
Friday, June 12, 2009
Mortgage Rates Reach 7-Month High
From Realtor Magazine Online, Daily Real Estate News June 12, 2009
Higher interest rates put the brakes on mortgage refinancing this week, according to Freddie Mac.
The firm's weekly survey pegged interest on 30-year fixed mortgages at an average of 5.59 percent -- up from 5.29 percent last week and the highest rate since November 2008.
Other rates also climbed: Interest climbed to
* 5.06 percent from 4.79 percent for 15-year fixed loans;
* 5.17 percent from 4.85 percent for five-year, adjustable-rate mortgages;
* 5.04 percent from 4.81 percent for one-year ARMs.
Freddie Mac chief economist Frank Nothaft says the gains are not affecting home purchase loans.
Source: Boston Globe (06/12/09)
Higher interest rates put the brakes on mortgage refinancing this week, according to Freddie Mac.
The firm's weekly survey pegged interest on 30-year fixed mortgages at an average of 5.59 percent -- up from 5.29 percent last week and the highest rate since November 2008.
Other rates also climbed: Interest climbed to
* 5.06 percent from 4.79 percent for 15-year fixed loans;
* 5.17 percent from 4.85 percent for five-year, adjustable-rate mortgages;
* 5.04 percent from 4.81 percent for one-year ARMs.
Freddie Mac chief economist Frank Nothaft says the gains are not affecting home purchase loans.
Source: Boston Globe (06/12/09)
First-time Home Buyers Grabbing Houses and Tax Credit
From Real Estate Buyers Agent Council of N.A.R.
RISMEDIA, June 4, 2009-(MCT)-Generation Y is getting jazzed about a new $8,000 federal tax credit for first-time home buyers-jumping at the opportunity to move up and out of their rentals.
"The last 90 days I've seen it go crazy," Kevin Foster, a real estate agent with Reece & Nichols in Lee's Summit, said Tuesday. "Every conference room has been full with agents working on offers, and many are people in their 20s."
Peter Abbey, 26, and his girlfriend, Abigail Barnett, 27, were among them.
Abbey, bar manager at Avenue Bistro in Kansas City, and Barnett, a hospital administrative assistant, had been saving to buy a house the past couple of years but weren't quite there yet. Until Congress approved the expanded tax credit in February.
Now they're leaving their rented home in the city for their own place in Roeland Park.
"We were saving money and waiting for the right time, and that definitely helped give us a push," Abbey said. "We were able to buy a little bit earlier because of the government tax credit."
The Kansas City Regional Association of Realtors® said April sales of new and existing homes were up 10% from March, with almost 2,500 homes sold. "We're seeing a lot of first-time buyers back in the market again," said Chris Collins of Keller-Williams and president of the association. "The tax credit along with historically low mortgage rates is affecting the market."
The tax credit was part of President Barack Obama's $787 billion American Recovery and Reinvestment Act. It's available to people buying their first home in 2009 as long as the purchase is completed by Dec. 1.
Because of the one- to two-month lag between a contract and a done deal, many home buyers are making offers on homes now.
As opposed to a $7,500 tax credit available in 2008, the latest incentive doesn't have to be repaid if the taxpayer remains in the home for at least three years.
At the national level, a report Tuesday said pending home sales in April were up 6.7% from March, the biggest monthly increase since October 2001, according to a seasonally adjusted index of sales contracts kept by the National Association of Realtors®.
(Continue reading on RISMedia.com.)
More Tax Credit Resources
Tax Credit Information and Home Buyer Resources FROM REBAC
The Basics: 2009 First-Time Home Buyer Tax Credit
HUD: Tax Credit Can Be Used on Closing Costs
- By Kevin Collison
RISMEDIA, June 4, 2009-(MCT)-Generation Y is getting jazzed about a new $8,000 federal tax credit for first-time home buyers-jumping at the opportunity to move up and out of their rentals.
"The last 90 days I've seen it go crazy," Kevin Foster, a real estate agent with Reece & Nichols in Lee's Summit, said Tuesday. "Every conference room has been full with agents working on offers, and many are people in their 20s."
Peter Abbey, 26, and his girlfriend, Abigail Barnett, 27, were among them.
Abbey, bar manager at Avenue Bistro in Kansas City, and Barnett, a hospital administrative assistant, had been saving to buy a house the past couple of years but weren't quite there yet. Until Congress approved the expanded tax credit in February.
Now they're leaving their rented home in the city for their own place in Roeland Park.
"We were saving money and waiting for the right time, and that definitely helped give us a push," Abbey said. "We were able to buy a little bit earlier because of the government tax credit."
The Kansas City Regional Association of Realtors® said April sales of new and existing homes were up 10% from March, with almost 2,500 homes sold. "We're seeing a lot of first-time buyers back in the market again," said Chris Collins of Keller-Williams and president of the association. "The tax credit along with historically low mortgage rates is affecting the market."
The tax credit was part of President Barack Obama's $787 billion American Recovery and Reinvestment Act. It's available to people buying their first home in 2009 as long as the purchase is completed by Dec. 1.
Because of the one- to two-month lag between a contract and a done deal, many home buyers are making offers on homes now.
As opposed to a $7,500 tax credit available in 2008, the latest incentive doesn't have to be repaid if the taxpayer remains in the home for at least three years.
At the national level, a report Tuesday said pending home sales in April were up 6.7% from March, the biggest monthly increase since October 2001, according to a seasonally adjusted index of sales contracts kept by the National Association of Realtors®.
(Continue reading on RISMedia.com.)
More Tax Credit Resources
Tax Credit Information and Home Buyer Resources FROM REBAC
The Basics: 2009 First-Time Home Buyer Tax Credit
HUD: Tax Credit Can Be Used on Closing Costs
- By Kevin Collison
Buyers, Beware of New Appraisal Law
From The Union.com, June 4, 2009
At the start of what seems to be a great season for house-hunters, a new law has created difficulties for home buyers, their Realtors and other real estate professionals in an already beleaguered market.
The Home Valuation Code of Conduct, or HVCC, became law May 1. In the details of the law, Fannie Mae and Freddie Mac, quasi-government institutions and purchasers of most mortgages, won’t provide funds for mortgage loans unless the appraisal follows a few new guidelines.
One of the main rules prohibits mortgage brokers from ordering appraisals directly from, or having any contact with, a licensed real estate appraiser. This includes approaching them with relevant information. Instead, lenders are required to use third-party “appraisal management” companies that oversee the appraisal and any communication.
One of the largest problems this has created is when a loan officer improperly qualifies the buyer or runs into a new underwriting rule that declines their loan. Previously, the loan could be repackaged and sent to a new source without delay or ordering a new appraisal. Under the new law, appraisals are captive to the lending source, cannot be transferred, therefore a second appraisal fee must be paid by the buyer, or a third, if the loan is especially difficult to place.
Other problems this law has created in the current real estate market are:
• The value of a house is a mystery until the appraisal is received; checking with another appraiser ahead of time has proven to be no guarantee value will be met.
• Valuation may come in low due to out-of-area appraisers being unfamiliar with local market activity. They may not have the expertise or understand how to properly evaluate in Nevada County, creating delay for escrows.
• In some cases, appraisal assignments are given on a “first come, first served” basis, replacing professional expertise with the ability to be first to reply to an appraisal request. This sets the bar of professionalism very low.
• The rebuttal process is cumbersome and inefficient, creating more delay to escrows and frustration for everyone involved.
Pre-Approval for Loan
If you are looking for a home, the best insurance you have today is making sure you are properly qualified by your loan officer before you go look for a home. How do you know? Just ask to see your approval. Make sure to discuss this law with them.
If you are a loan officer or lender, the best assurance you can provide to your clients and their Realtor is to make sure they are accurately approved for their purchase well before they start to look for a home. Your insistence that they are properly approved won’t burst their bubble — it will enhance their overall experience.
Source: By Jeff Kuns, owner of Mortgage Advisors Group - a mortgage lender in Nevada City, and co-author of the book, “Borrow Smart, Retire Rich.”
At the start of what seems to be a great season for house-hunters, a new law has created difficulties for home buyers, their Realtors and other real estate professionals in an already beleaguered market.
The Home Valuation Code of Conduct, or HVCC, became law May 1. In the details of the law, Fannie Mae and Freddie Mac, quasi-government institutions and purchasers of most mortgages, won’t provide funds for mortgage loans unless the appraisal follows a few new guidelines.
One of the main rules prohibits mortgage brokers from ordering appraisals directly from, or having any contact with, a licensed real estate appraiser. This includes approaching them with relevant information. Instead, lenders are required to use third-party “appraisal management” companies that oversee the appraisal and any communication.
One of the largest problems this has created is when a loan officer improperly qualifies the buyer or runs into a new underwriting rule that declines their loan. Previously, the loan could be repackaged and sent to a new source without delay or ordering a new appraisal. Under the new law, appraisals are captive to the lending source, cannot be transferred, therefore a second appraisal fee must be paid by the buyer, or a third, if the loan is especially difficult to place.
Other problems this law has created in the current real estate market are:
• The value of a house is a mystery until the appraisal is received; checking with another appraiser ahead of time has proven to be no guarantee value will be met.
• Valuation may come in low due to out-of-area appraisers being unfamiliar with local market activity. They may not have the expertise or understand how to properly evaluate in Nevada County, creating delay for escrows.
• In some cases, appraisal assignments are given on a “first come, first served” basis, replacing professional expertise with the ability to be first to reply to an appraisal request. This sets the bar of professionalism very low.
• The rebuttal process is cumbersome and inefficient, creating more delay to escrows and frustration for everyone involved.
Pre-Approval for Loan
If you are looking for a home, the best insurance you have today is making sure you are properly qualified by your loan officer before you go look for a home. How do you know? Just ask to see your approval. Make sure to discuss this law with them.
If you are a loan officer or lender, the best assurance you can provide to your clients and their Realtor is to make sure they are accurately approved for their purchase well before they start to look for a home. Your insistence that they are properly approved won’t burst their bubble — it will enhance their overall experience.
Source: By Jeff Kuns, owner of Mortgage Advisors Group - a mortgage lender in Nevada City, and co-author of the book, “Borrow Smart, Retire Rich.”
Thursday, June 11, 2009
New Loan Helps Seniors Buy Homes
From C.A.R. Market Matters, June 11, 2009
Shrinking nest eggs have retirees searching for ways to stretch their money. Some are discovering a new mortgage tool that can make buying a house cheaper than renting.
"It is unbelievable. I call it a miracle myself," said Betty Swayngim, 69, of Asheville, N.C.
Swayngim said after her husband died two years ago she sold their house and rented a condominium. But, she said, the $800 a month rent was more than half her income and to make ends meet she continued to dip into her savings.
Fearful for her future, Swayngim talked to a Wells Fargo mortgage consultant in February who told her about a way for her to buy a townhouse next door to the one she was renting. She could stop paying rent and also would not have to make a monthly mortgage payment on the new place.
She used a Home Equity Conversion Mortgage for Purchase that became available in January through the Department of Housing and Community Development.
The new tool is a variation of reverse mortgages, which for years have allowed homeowners 62 and older to refinance their homes with no need to repay the principal and interest until they move, sell or die.
While reverse mortgages originally were intended to help people afford to stay in their homes, the new variation makes it easier for seniors who do not own a house to qualify to buy one.
"They are going from renting to owning a house," said Gus Acevedo, a counselor at Springboard Nonprofit Consumer Credit Management in Riverside.
Acevedo said while some seniors have enough money in savings or a retirement account for a down payment on a house, they don't have enough income to qualify for a conventional mortgage. But they can get a reverse mortgage, for which income is not a qualification, he said. Not having to make another rent or mortgage payment provides them with a sense of security and extra money for other living expenses.
So far Springboard has counseled about five clients who obtained reverse mortgages for purchase, Acevedo said, and he expects demand to grow.
Swayngim said that although she had $60,000 for a down payment, she would not qualify for a traditional mortgage to buy a home because she does not have the necessary income or credit.
But in April she was able to buy a two-bedroom townhouse by putting $60,000 down toward the $132,000 purchase price and financing the rest with a reverse mortgage.
"I pay nothing but homeowner association fees, taxes and insurance. That is a far cry from $800 a month," she said. She added that now she has no trouble paying her bills with her Social Security check.
The reverse mortgage for purchase, which is insured by the Federal Housing Authority, also can assist those who want to sell the house they own and buy another with the aim of downsizing, moving closer to family or relocating to a retirement community.
"We all feel this is a tremendous opportunity for certain seniors who may be moving out of state to be closer to children and grandchildren or out of a house they can't afford or into a single-story home," said Dean Jones, senior loan officer with Plaza Home Mortgage in San Diego and a member of the board of directors of the National Reverse Mortgage Lenders Association.
The Department of Housing and Community Development recently said it had received 2,408 applications for the purchase loan product, and 124 loans had been completed.
Some lenders say they are just beginning to take applications.
Not FOR EVERYONE
The mortgage does not work for everyone. It requires a large down payment. The amount that can be borrowed is determined by the home's appraised value or sales price, whichever is lower, the borrower's age and the interest rate. The older the borrower, the more he or she can borrow.
Under the loan, a home loses equity each year to an expanding debt. When the homeowner sells the home or dies, the mortgage is paid off from the proceeds of the sale. The borrower or borrower's heirs will never owe more than the home's worth.
Reverse mortgages for purchase are an attractive new source of business for lenders, said Gordon Jaus, MetLife Bank's regional manager for reverse mortgages in the western United States.
Lenders do not have to wait for the mortgages to mature to get paid, Jaus said, because government-sponsored Fannie Mae, the sole investor in such mortgages, buys them after they are written.
Since closing costs for a reverse mortgage purchase are considerably higher than for a conventional home purchase, the expense makes sense only for a senior who is planning to stay a long time in the house he or she is buying.
Under government guidelines, every reverse mortgage borrower first must receive counseling from a HUD-approved agency.
A reverse mortgage can expand a senior's home purchasing power. In downsizing, for instance, sellers could retain more of the money from the sales of their original homes in retirement savings and dispose of their mortgage without having to pay all cash for another home.
A 62-year-old using a reverse mortgage could buy a house priced at roughly twice the amount of the required down payment.
The maximum price of a house that can be financed through a reverse mortgage this year was raised from $417,000 to $625,000.
NO MORTGAGE
Ronald Barnard, founder and chief executive of Norco-based Home Center Realty, said the new reverse mortgage for purchase could be valuable for seniors who want to sell houses near LA and move to Riverside or San Bernardino counties to be near their children.
Bernard said in moving from the higher-priced Los Angeles area, home sellers in their 70s could pocket a big chunk of money for retirement, put 25 to 30 percent down on a new place "and still get a house as nice or nicer and bigger and with no mortgage payments."
Pat Conway, 67, a real estate agent who lives in San Jose, salvaged the remaining equity from her 1,300-square-foot house, which had been losing value in California's busted housing market, and bought a condominium in the same city. By using a reverse mortgage, she was able to finance more than half the $225,000 price of the condo and discard her monthly mortgage payment.
Conway said if she hadn't used the reverse mortgage, she would have had to move out of the area, far from her children and grandchildren, to find a condominium she could afford to buy for cash.
Although Conway knows the reverse mortgage could erode the equity in her new condo, she said she is confident that real estate will appreciate again and build back some of the lost equity.
Besides, she said, she feels safe realizing, "Even if they use up your equity, they can never kick you out of your home."
By Leslie Berkman, The Press-Enterprise, Riverside, CA, June 6, 2009
Shrinking nest eggs have retirees searching for ways to stretch their money. Some are discovering a new mortgage tool that can make buying a house cheaper than renting.
"It is unbelievable. I call it a miracle myself," said Betty Swayngim, 69, of Asheville, N.C.
Swayngim said after her husband died two years ago she sold their house and rented a condominium. But, she said, the $800 a month rent was more than half her income and to make ends meet she continued to dip into her savings.
Fearful for her future, Swayngim talked to a Wells Fargo mortgage consultant in February who told her about a way for her to buy a townhouse next door to the one she was renting. She could stop paying rent and also would not have to make a monthly mortgage payment on the new place.
She used a Home Equity Conversion Mortgage for Purchase that became available in January through the Department of Housing and Community Development.
The new tool is a variation of reverse mortgages, which for years have allowed homeowners 62 and older to refinance their homes with no need to repay the principal and interest until they move, sell or die.
While reverse mortgages originally were intended to help people afford to stay in their homes, the new variation makes it easier for seniors who do not own a house to qualify to buy one.
"They are going from renting to owning a house," said Gus Acevedo, a counselor at Springboard Nonprofit Consumer Credit Management in Riverside.
Acevedo said while some seniors have enough money in savings or a retirement account for a down payment on a house, they don't have enough income to qualify for a conventional mortgage. But they can get a reverse mortgage, for which income is not a qualification, he said. Not having to make another rent or mortgage payment provides them with a sense of security and extra money for other living expenses.
So far Springboard has counseled about five clients who obtained reverse mortgages for purchase, Acevedo said, and he expects demand to grow.
Swayngim said that although she had $60,000 for a down payment, she would not qualify for a traditional mortgage to buy a home because she does not have the necessary income or credit.
But in April she was able to buy a two-bedroom townhouse by putting $60,000 down toward the $132,000 purchase price and financing the rest with a reverse mortgage.
"I pay nothing but homeowner association fees, taxes and insurance. That is a far cry from $800 a month," she said. She added that now she has no trouble paying her bills with her Social Security check.
The reverse mortgage for purchase, which is insured by the Federal Housing Authority, also can assist those who want to sell the house they own and buy another with the aim of downsizing, moving closer to family or relocating to a retirement community.
"We all feel this is a tremendous opportunity for certain seniors who may be moving out of state to be closer to children and grandchildren or out of a house they can't afford or into a single-story home," said Dean Jones, senior loan officer with Plaza Home Mortgage in San Diego and a member of the board of directors of the National Reverse Mortgage Lenders Association.
The Department of Housing and Community Development recently said it had received 2,408 applications for the purchase loan product, and 124 loans had been completed.
Some lenders say they are just beginning to take applications.
Not FOR EVERYONE
The mortgage does not work for everyone. It requires a large down payment. The amount that can be borrowed is determined by the home's appraised value or sales price, whichever is lower, the borrower's age and the interest rate. The older the borrower, the more he or she can borrow.
Under the loan, a home loses equity each year to an expanding debt. When the homeowner sells the home or dies, the mortgage is paid off from the proceeds of the sale. The borrower or borrower's heirs will never owe more than the home's worth.
Reverse mortgages for purchase are an attractive new source of business for lenders, said Gordon Jaus, MetLife Bank's regional manager for reverse mortgages in the western United States.
Lenders do not have to wait for the mortgages to mature to get paid, Jaus said, because government-sponsored Fannie Mae, the sole investor in such mortgages, buys them after they are written.
Since closing costs for a reverse mortgage purchase are considerably higher than for a conventional home purchase, the expense makes sense only for a senior who is planning to stay a long time in the house he or she is buying.
Under government guidelines, every reverse mortgage borrower first must receive counseling from a HUD-approved agency.
A reverse mortgage can expand a senior's home purchasing power. In downsizing, for instance, sellers could retain more of the money from the sales of their original homes in retirement savings and dispose of their mortgage without having to pay all cash for another home.
A 62-year-old using a reverse mortgage could buy a house priced at roughly twice the amount of the required down payment.
The maximum price of a house that can be financed through a reverse mortgage this year was raised from $417,000 to $625,000.
NO MORTGAGE
Ronald Barnard, founder and chief executive of Norco-based Home Center Realty, said the new reverse mortgage for purchase could be valuable for seniors who want to sell houses near LA and move to Riverside or San Bernardino counties to be near their children.
Bernard said in moving from the higher-priced Los Angeles area, home sellers in their 70s could pocket a big chunk of money for retirement, put 25 to 30 percent down on a new place "and still get a house as nice or nicer and bigger and with no mortgage payments."
Pat Conway, 67, a real estate agent who lives in San Jose, salvaged the remaining equity from her 1,300-square-foot house, which had been losing value in California's busted housing market, and bought a condominium in the same city. By using a reverse mortgage, she was able to finance more than half the $225,000 price of the condo and discard her monthly mortgage payment.
Conway said if she hadn't used the reverse mortgage, she would have had to move out of the area, far from her children and grandchildren, to find a condominium she could afford to buy for cash.
Although Conway knows the reverse mortgage could erode the equity in her new condo, she said she is confident that real estate will appreciate again and build back some of the lost equity.
Besides, she said, she feels safe realizing, "Even if they use up your equity, they can never kick you out of your home."
By Leslie Berkman, The Press-Enterprise, Riverside, CA, June 6, 2009
Foreclosure Crisis Spreads to Prime Mortgages
From C.A.R. Market Matters, June 11, 2009
The pace of prime borrowers going into foreclosure is accelerating, especially in states with mounting unemployment or property values that saw a big run-up during the housing boom.
It's a marked shift from earlier this year, when foreclosures were driven by defaults on subprime loans. And it has major implications — ravaging the credit scores of borrowers who once had unblemished records and dragging down property values in more affluent neighborhoods.
It also threatens to undermine the housing recovery.
"It's definitely a concern," says Brian Bethune at IHS Global Insight. "(Unemployment) is a major driver of foreclosures, and it will frustrate the housing recovery process."
In the first quarter, almost half of the overall increase in the start of foreclosures was due to the increase in prime, fixed-rate loans, according to the Mortgage Bankers Association (MBA). At the end of the fourth quarter, 2.4% of prime mortgages were seriously delinquent, more than double the 1.1% at the end of March 2008, according to a report by the Office of the Comptroller of the Currency and the Office of Thrift Supervision.
"In the beginning, the higher-end (homes) were a bit isolated," says Kevin Marshall, president of Clear Capital, a provider of real estate asset valuation. "But in the last several months, we're seeing a significant erosion in the higher-end homes. It's reached into the prime loans."
California, Florida, Arizona and Nevada represent 56% of the increase in foreclosure starts, including half of the increase in prime fixed-rate foreclosure starts, according to the MBA.
That coincides with states reporting some of the highest unemployment rates. In California, the unemployment rate in April was 11%, according to the Department of Labor. In Nevada, it was 10.6%.
Economists fear that further increases in unemployment could lead to more defaults on prime, fixed-rate loans.
That's what happened to Marvin Clayton, 47, of Waco, Texas. He lost income after his wife had a stroke and was unable to work. Then he lost his job a year ago. He's now behind on his 30-year, 5.78% prime loan and is facing foreclosure in July. He is currently trying to get another job in retailing.
"I was trying to make it off one income but was struggling to make payments," Clayton says. "I'm still hoping for a modification from my bank."
By Stephanie Armour, USA TODAY
The pace of prime borrowers going into foreclosure is accelerating, especially in states with mounting unemployment or property values that saw a big run-up during the housing boom.
It's a marked shift from earlier this year, when foreclosures were driven by defaults on subprime loans. And it has major implications — ravaging the credit scores of borrowers who once had unblemished records and dragging down property values in more affluent neighborhoods.
It also threatens to undermine the housing recovery.
"It's definitely a concern," says Brian Bethune at IHS Global Insight. "(Unemployment) is a major driver of foreclosures, and it will frustrate the housing recovery process."
In the first quarter, almost half of the overall increase in the start of foreclosures was due to the increase in prime, fixed-rate loans, according to the Mortgage Bankers Association (MBA). At the end of the fourth quarter, 2.4% of prime mortgages were seriously delinquent, more than double the 1.1% at the end of March 2008, according to a report by the Office of the Comptroller of the Currency and the Office of Thrift Supervision.
"In the beginning, the higher-end (homes) were a bit isolated," says Kevin Marshall, president of Clear Capital, a provider of real estate asset valuation. "But in the last several months, we're seeing a significant erosion in the higher-end homes. It's reached into the prime loans."
California, Florida, Arizona and Nevada represent 56% of the increase in foreclosure starts, including half of the increase in prime fixed-rate foreclosure starts, according to the MBA.
That coincides with states reporting some of the highest unemployment rates. In California, the unemployment rate in April was 11%, according to the Department of Labor. In Nevada, it was 10.6%.
Economists fear that further increases in unemployment could lead to more defaults on prime, fixed-rate loans.
That's what happened to Marvin Clayton, 47, of Waco, Texas. He lost income after his wife had a stroke and was unable to work. Then he lost his job a year ago. He's now behind on his 30-year, 5.78% prime loan and is facing foreclosure in July. He is currently trying to get another job in retailing.
"I was trying to make it off one income but was struggling to make payments," Clayton says. "I'm still hoping for a modification from my bank."
By Stephanie Armour, USA TODAY
U.S. Regulator: Be Wary of Reverse Mortgages
From C.A.R. Market Matters, June 11, 2009
Some industry analysts, including U.S. bank regulator, John Dugan, believe that reverse mortgages could be the next subprime mortgage product to gain traction. Dugan says that while reverse mortgages can be beneficial, they also share some of the characteristics of the riskiest types of subprime mortgages.
Although the majority of reverse mortgages is insured by the Federal Housing Administration and poses limited credit risk, a different class of reverse mortgages is becoming popular--“proprietary” products--which offer less consumer protection.
To protect consumers, regulators are crafting guidelines and Dugan is recommending that regulators be more vigilant about misleading marketing and cracking down on lenders who try to bundle a reverse mortgage with other financial products, such as an annuity or life insurance product.
To read the full story, please click here
Some industry analysts, including U.S. bank regulator, John Dugan, believe that reverse mortgages could be the next subprime mortgage product to gain traction. Dugan says that while reverse mortgages can be beneficial, they also share some of the characteristics of the riskiest types of subprime mortgages.
Although the majority of reverse mortgages is insured by the Federal Housing Administration and poses limited credit risk, a different class of reverse mortgages is becoming popular--“proprietary” products--which offer less consumer protection.
To protect consumers, regulators are crafting guidelines and Dugan is recommending that regulators be more vigilant about misleading marketing and cracking down on lenders who try to bundle a reverse mortgage with other financial products, such as an annuity or life insurance product.
To read the full story, please click here
Congress Weighs Buyer Tax Credit Expansion
From Realtor Magazine Online, Daily Real Estate News June 11, 2009
Legislation introduced in Congress Wednesday would expand the tax credit now limited to first-time homebuyers to any purchaser of a home and increase the maximum available to $15,000.
The tax credit passed earlier this year is limited to $8,000 and has income caps.
U.S. Sen. Johnny Isakson, a Georgia Republican, introduced the legislation, and Senate Banking Committee Chair Christopher Dodd, a Connecticut Democrat, quickly stepped up to co-sponsor.
The National Association of REALTORS® and the National Association of Home Builders have said they would like to see the tax credit improved.
Source: The Wall Street Journal, Jessica Holzer (06/10/2009)
Legislation introduced in Congress Wednesday would expand the tax credit now limited to first-time homebuyers to any purchaser of a home and increase the maximum available to $15,000.
The tax credit passed earlier this year is limited to $8,000 and has income caps.
U.S. Sen. Johnny Isakson, a Georgia Republican, introduced the legislation, and Senate Banking Committee Chair Christopher Dodd, a Connecticut Democrat, quickly stepped up to co-sponsor.
The National Association of REALTORS® and the National Association of Home Builders have said they would like to see the tax credit improved.
Source: The Wall Street Journal, Jessica Holzer (06/10/2009)
Key Metric: Housing Foreclosures Fall in May
From Realtor Magazine Online, Daily Real Estate News June 11, 2009
Foreclosures declined 6 percent in May compared to April, but the number is still an increase of 18 percent compared to May 2008, reports RealtyTrac.
"May foreclosure activity was the third-highest month on record, and marked the third straight month where the total number of properties with foreclosure filings exceeded 300,000 – a first in the history of our report," says James J. Saccacio, CEO of RealtyTrac.
While defaults and foreclosure auction were down in May, bank repossessions were up 2 percent, RealtyTrac says, due in large part to increases in Michigan, Arizona, Washington, Nevada, Oregon and New York.
Nevada continued to have the highest foreclosure rate with one in every 64 housing units receiving a foreclosure filing in May, six times the national average.
These 10 states account for nearly 77 percent of total U.S. foreclosure activity: Nevada, California, Florida, Arizona, Utah, Michigan, Georgia, Colorado, Idaho, and Ohio.
Source: RealtyTrac (06/11/2009)
Foreclosures declined 6 percent in May compared to April, but the number is still an increase of 18 percent compared to May 2008, reports RealtyTrac.
"May foreclosure activity was the third-highest month on record, and marked the third straight month where the total number of properties with foreclosure filings exceeded 300,000 – a first in the history of our report," says James J. Saccacio, CEO of RealtyTrac.
While defaults and foreclosure auction were down in May, bank repossessions were up 2 percent, RealtyTrac says, due in large part to increases in Michigan, Arizona, Washington, Nevada, Oregon and New York.
Nevada continued to have the highest foreclosure rate with one in every 64 housing units receiving a foreclosure filing in May, six times the national average.
These 10 states account for nearly 77 percent of total U.S. foreclosure activity: Nevada, California, Florida, Arizona, Utah, Michigan, Georgia, Colorado, Idaho, and Ohio.
Source: RealtyTrac (06/11/2009)
With Economy Improving, Rates Become Focus
From Realtor Magazine Online, Daily Real Estate News June 11, 2009
The Federal Reserve’s Beige Book report released Wednesday found five of the Fed’s 12 regions reporting improved business activity. Most reported an increase in home sales and some stabilization in new-home construction, albeit at low levels.
The survey, which is based on phone interviews with businesses in all parts of the country, concluded that the recession is receding. The sense of improvement leaves observers wondering what the Fed will do about interest rates when it meets in two weeks.
The Fed has left interest rates near zero for months, but fears that this approach will lead to inflation has increased the premium investors are willing to pay on long-term Treasury bonds. That has resulted in rising mortgage rates, making it possible that the Fed will take some action to push rates back down.
Source: The Washington Post, Annys Shin and The Associated Press (06/10/2009)
The Federal Reserve’s Beige Book report released Wednesday found five of the Fed’s 12 regions reporting improved business activity. Most reported an increase in home sales and some stabilization in new-home construction, albeit at low levels.
The survey, which is based on phone interviews with businesses in all parts of the country, concluded that the recession is receding. The sense of improvement leaves observers wondering what the Fed will do about interest rates when it meets in two weeks.
The Fed has left interest rates near zero for months, but fears that this approach will lead to inflation has increased the premium investors are willing to pay on long-term Treasury bonds. That has resulted in rising mortgage rates, making it possible that the Fed will take some action to push rates back down.
Source: The Washington Post, Annys Shin and The Associated Press (06/10/2009)
Wednesday, June 10, 2009
Industry Lobbies to Extend Buyer Tax Credit
From Realtor Magazine Online, Daily Real Estate News June 10, 2009
Key organizations in the housing industry are urging Congress to increase the $8,000 home buyer credit to $15,000 and make it available to all home buyers instead of just those buying a first home.
"What is being billed as a recovery is not showing up in the cash register yet," says Richard A. Smith, CEO of Realogy Corp. and a member of the Business Roundtable, which is orchestrating the lobbying effort.
The Roundtable’s campaign is also pushing Congress to make permanent expanded limits for loans eligible for government purchase or backing. The limit is now $729,750 in high-cost housing markets.
Source: The Wall Street Journal, Nick Timiraos (06/10/2009)
Key organizations in the housing industry are urging Congress to increase the $8,000 home buyer credit to $15,000 and make it available to all home buyers instead of just those buying a first home.
"What is being billed as a recovery is not showing up in the cash register yet," says Richard A. Smith, CEO of Realogy Corp. and a member of the Business Roundtable, which is orchestrating the lobbying effort.
The Roundtable’s campaign is also pushing Congress to make permanent expanded limits for loans eligible for government purchase or backing. The limit is now $729,750 in high-cost housing markets.
Source: The Wall Street Journal, Nick Timiraos (06/10/2009)
ZipRealty Says Housing Inventories Are Down
From Realtor Magazine Online, Daily Real Estate News June 10, 2009
The inventory of homes for sale in 28 major metropolitan areas served by ZipRealty Inc., was down 3.9 percent at the end of May.
The ZipRealty data is compiled from local multiple-listing services where the firm operates and doesn’t include New York City. It also doesn’t include many of the foreclosed homes owned by banks.
Compared with a year ago, the May inventory was down 24 percent. Historically, inventories have been flat between April and May, according to Zelman & Associates research firm.
Housing economist Thomas Lawler said the decline in inventory combined with slow housing starts "indicates that home prices in many parts of the country could be nearing a bottom."
Source: The Wall Street Journal, James R. Hagerty (06/10/2009)
The inventory of homes for sale in 28 major metropolitan areas served by ZipRealty Inc., was down 3.9 percent at the end of May.
The ZipRealty data is compiled from local multiple-listing services where the firm operates and doesn’t include New York City. It also doesn’t include many of the foreclosed homes owned by banks.
Compared with a year ago, the May inventory was down 24 percent. Historically, inventories have been flat between April and May, according to Zelman & Associates research firm.
Housing economist Thomas Lawler said the decline in inventory combined with slow housing starts "indicates that home prices in many parts of the country could be nearing a bottom."
Source: The Wall Street Journal, James R. Hagerty (06/10/2009)
EU Economy Matters (Interactive Map)
From International Real Estate Report, Wednesday, June 10, 2009
How is the economic crisis affecting the European Union? This interactive map from the Dutch news site NRC shows the figures for all the member states by year and quarter and lets you compare budget deficit, unemployment rate, national debt and economic contraction. Click on the map to select an EU country and figures will be updated by country, or click on 'Show EU Figures' for entire region. Not doing business in the EU? Doesn't matter. Europe's troubles are the world's troubles. The EU accounts for almost a quarter of the world's economic activity, and its sluggish emergence from the crisis is likely to slow any rebound in world trade and foreign investment. Read more.
How is the economic crisis affecting the European Union? This interactive map from the Dutch news site NRC shows the figures for all the member states by year and quarter and lets you compare budget deficit, unemployment rate, national debt and economic contraction. Click on the map to select an EU country and figures will be updated by country, or click on 'Show EU Figures' for entire region. Not doing business in the EU? Doesn't matter. Europe's troubles are the world's troubles. The EU accounts for almost a quarter of the world's economic activity, and its sluggish emergence from the crisis is likely to slow any rebound in world trade and foreign investment. Read more.
Monday, June 8, 2009
How to Use the Tax Credit for Downpayments
From Realtor Magazine Online, June 2009
Potential first-time buyers have yet another reason to consider purchasing a home: the monetization of the tax credit. Here are four ways your clients can get access to those funds for upfront costs.
Short-term bridge loans are now available from a variety of lenders so that buyers can tap the benefits of the $8,000 Federal Housing Tax Credit for First-Time Home Buyers upfront. If your clients are eligible for the tax credit, these bridge loans will enable them to use the money for their down payment and closing costs with the credit as collateral. Consumers will have to pay the money back after they’ve filed their tax return and received a refund.
There are essentially four sources for this type of financing, and their terms can vary considerably.
1. State HFA Bridge Loans
As of early June 2009, 10 state Housing Finance Agencies offered tax-credit bridge loans, and more were planning to do so. The easiest way to learn whether one is offered in your state is to get your HFA’s phone number through a Housing Finance Agency list maintained by the National Council of State Housing Agencies (NCSHA). NCSHA also maintains a list of HFAs that already offer the bridge loans. The HFAs with loan programs already in place are Colorado, Delaware, Idaho, Kentucky, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, and Tennessee.
If your state HFA offers the loans, you should be able to get more information about them on the agency’s Web site. Look for “tax credit advance loan” or some variant of that, or else look for information on the HFA’s regular mortgage program, which should include info on the tax-credit advance loan somewhere. Although each state HFA loan differs, here are some typical characteristics:
* You’ll need to make a minimum downpayment from your own funds, probably around $1,000.
* You’ll have to go through local lenders approved by the HFA to actually originate the loan, since HFAs are not originators.
* In some cases, the loans are interest-free; check with the state HFA to find out.
* The HFAs have set aside a limited amount of funds for the loans, so they tend to be made on a first-come, first-served basis.
* You’ll be expected to use HFA-backed financing for the mortgage on your home purchase. This financing typically comes with a below-market interest rate and usually requires borrowers to meet eligibility criteria. These criteria will vary greatly, but they often require borrowers to be first-timer buyers and meet income-eligibility requirements. For the bridge loans, there’s a good chance the criteria will be similar to what’s required for the tax credit.
Since the bridge loans are made in tandem with your HFA’s financing products, you apply for the loans when you apply with the HFA-approved lender for your mortgage financing. You should be able to find a list of approved lenders on the HFA’s Web site.
2. Local Government or Nonprofit Loans
If your state HFA doesn’t offer the loans, you can ask an HFA staff person to direct you to local nonprofits or state or local government agencies that do. If that person can’t help you, a good place to start a search is with a national nonprofit group called NeighborWorks, which maintains a list of more than 200 local affiliates that provide housing assistance. The loan programs for each of these affiliates differ, so you or your client will need to check with them on their underwriting standards and loan terms—and even on whether they make bridge loans repayable with the tax credit.
3. Local HFAs
Another source, if your state HFA can’t help you, might be the National Association of Local Housing Finance Agencies. Local HFAs are much like state HFAs but with jurisdictions limited to their locality. To learn whether there’s a local HFA in your area, call NALHFA at 202/367-1197.
4. FHA-approved Lenders
If you’re unable to identify a state or local HFA or other governmental agency or nonprofit to assist you, you can tap bridge-loan assistance if you work with a lender approved by the U.S. Department of Housing and Urban Development to originate FHA-backed loans. HUD maintains a database of FHA lenders on its Web site that’s searchable by a number of criteria including city, state, county, and service area.
In a difference with the assistance provided by state and local agencies or nonprofits, the bridge loans provided by private, for-profit FHA-approved lenders must be structured in the form of a personal loan or line of credit collateralized by the tax credit. The bridge loan can’t be structured as a second mortgage.
Also, although FHA allows you to use the bridge loan to cover your closing costs or to buy down your interest rate, you can use it for the down payment only after you’ve covered the 3.5 percent minimum that’s required on any FHA loan. Thus, you’ll have to come up with the 3.5 percent minimum down payment yourself or else tap another source of assistance for it. That can include gifts from family. Seller-funded down-payment programs are not permitted. HUD provides complete details in a May 29 Mortgagee Letter on “Using First-Time Homebuyer Tax Credits” (2009-15) that went to its approved lenders.
Since it’s the HUD-approved lender and not FHA itself that’s making the bridge loan, actual loan terms will vary. At a minimum, though, the bridge loan must meet certain restrictions, most of them imposed to weed out fraud or ensure borrowers aren’t getting in over their heads. These include:
* Loans can’t result in cash back to the borrower.
* The amount can’t exceed what’s needed for the downpayment, closing costs, and prepaid expenses.
* If there’s a monthly repayment, it must be included within the qualifying ratios and, when combined with the first mortgage, can’t exceed the borrower’s reasonable ability to pay.
* Payments must be deferred for at least 36 months to not be included in the qualifying ratios.
* There can be no balloon payment required before 10 years.
Start with the Deepest Assistance First
Since state HFA bridge loans are typically allowed for as much of the downpayment as possible (up to the credit limit of $8,000), your client’s best bet is to start with the state HFA. If it doesn’t have a program in place, learn what you can from it about other state or local programs, including nonprofits. If these sources don’t pan out, your buyer can work with an FHA-approved lender. However, since HUD requires borrowers to put down a minimum of 3.5 percent, they can access bridge-loan assistance only for other upfront expenses such as closing costs, an interest-rate buy-down, or a portion of the downpayment above 3.5 percent.
Potential first-time buyers have yet another reason to consider purchasing a home: the monetization of the tax credit. Here are four ways your clients can get access to those funds for upfront costs.
Short-term bridge loans are now available from a variety of lenders so that buyers can tap the benefits of the $8,000 Federal Housing Tax Credit for First-Time Home Buyers upfront. If your clients are eligible for the tax credit, these bridge loans will enable them to use the money for their down payment and closing costs with the credit as collateral. Consumers will have to pay the money back after they’ve filed their tax return and received a refund.
There are essentially four sources for this type of financing, and their terms can vary considerably.
1. State HFA Bridge Loans
As of early June 2009, 10 state Housing Finance Agencies offered tax-credit bridge loans, and more were planning to do so. The easiest way to learn whether one is offered in your state is to get your HFA’s phone number through a Housing Finance Agency list maintained by the National Council of State Housing Agencies (NCSHA). NCSHA also maintains a list of HFAs that already offer the bridge loans. The HFAs with loan programs already in place are Colorado, Delaware, Idaho, Kentucky, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, and Tennessee.
If your state HFA offers the loans, you should be able to get more information about them on the agency’s Web site. Look for “tax credit advance loan” or some variant of that, or else look for information on the HFA’s regular mortgage program, which should include info on the tax-credit advance loan somewhere. Although each state HFA loan differs, here are some typical characteristics:
* You’ll need to make a minimum downpayment from your own funds, probably around $1,000.
* You’ll have to go through local lenders approved by the HFA to actually originate the loan, since HFAs are not originators.
* In some cases, the loans are interest-free; check with the state HFA to find out.
* The HFAs have set aside a limited amount of funds for the loans, so they tend to be made on a first-come, first-served basis.
* You’ll be expected to use HFA-backed financing for the mortgage on your home purchase. This financing typically comes with a below-market interest rate and usually requires borrowers to meet eligibility criteria. These criteria will vary greatly, but they often require borrowers to be first-timer buyers and meet income-eligibility requirements. For the bridge loans, there’s a good chance the criteria will be similar to what’s required for the tax credit.
Since the bridge loans are made in tandem with your HFA’s financing products, you apply for the loans when you apply with the HFA-approved lender for your mortgage financing. You should be able to find a list of approved lenders on the HFA’s Web site.
2. Local Government or Nonprofit Loans
If your state HFA doesn’t offer the loans, you can ask an HFA staff person to direct you to local nonprofits or state or local government agencies that do. If that person can’t help you, a good place to start a search is with a national nonprofit group called NeighborWorks, which maintains a list of more than 200 local affiliates that provide housing assistance. The loan programs for each of these affiliates differ, so you or your client will need to check with them on their underwriting standards and loan terms—and even on whether they make bridge loans repayable with the tax credit.
3. Local HFAs
Another source, if your state HFA can’t help you, might be the National Association of Local Housing Finance Agencies. Local HFAs are much like state HFAs but with jurisdictions limited to their locality. To learn whether there’s a local HFA in your area, call NALHFA at 202/367-1197.
4. FHA-approved Lenders
If you’re unable to identify a state or local HFA or other governmental agency or nonprofit to assist you, you can tap bridge-loan assistance if you work with a lender approved by the U.S. Department of Housing and Urban Development to originate FHA-backed loans. HUD maintains a database of FHA lenders on its Web site that’s searchable by a number of criteria including city, state, county, and service area.
In a difference with the assistance provided by state and local agencies or nonprofits, the bridge loans provided by private, for-profit FHA-approved lenders must be structured in the form of a personal loan or line of credit collateralized by the tax credit. The bridge loan can’t be structured as a second mortgage.
Also, although FHA allows you to use the bridge loan to cover your closing costs or to buy down your interest rate, you can use it for the down payment only after you’ve covered the 3.5 percent minimum that’s required on any FHA loan. Thus, you’ll have to come up with the 3.5 percent minimum down payment yourself or else tap another source of assistance for it. That can include gifts from family. Seller-funded down-payment programs are not permitted. HUD provides complete details in a May 29 Mortgagee Letter on “Using First-Time Homebuyer Tax Credits” (2009-15) that went to its approved lenders.
Since it’s the HUD-approved lender and not FHA itself that’s making the bridge loan, actual loan terms will vary. At a minimum, though, the bridge loan must meet certain restrictions, most of them imposed to weed out fraud or ensure borrowers aren’t getting in over their heads. These include:
* Loans can’t result in cash back to the borrower.
* The amount can’t exceed what’s needed for the downpayment, closing costs, and prepaid expenses.
* If there’s a monthly repayment, it must be included within the qualifying ratios and, when combined with the first mortgage, can’t exceed the borrower’s reasonable ability to pay.
* Payments must be deferred for at least 36 months to not be included in the qualifying ratios.
* There can be no balloon payment required before 10 years.
Start with the Deepest Assistance First
Since state HFA bridge loans are typically allowed for as much of the downpayment as possible (up to the credit limit of $8,000), your client’s best bet is to start with the state HFA. If it doesn’t have a program in place, learn what you can from it about other state or local programs, including nonprofits. If these sources don’t pan out, your buyer can work with an FHA-approved lender. However, since HUD requires borrowers to put down a minimum of 3.5 percent, they can access bridge-loan assistance only for other upfront expenses such as closing costs, an interest-rate buy-down, or a portion of the downpayment above 3.5 percent.
Foreclosure Counseling Can Be Daunting
From Realtor Magazine Online, Daily Real Estate News June 8, 2009
Being a foreclosure counselor can be one of the most gut-wrenching jobs around.
"It's pretty daunting," says Ed Moncrief, executive director of Neighborhood Housing Services in San Jose, Calif., "knowing that in most cases you're not going to be able to do anything, and then going home at night and thinking about it all."
Moncrief says his organization gets about 100 calls a day and is able to save the homes of about one in four cases that it takes on.
Marlene Santiago, a former real estate practitioner who now works for Neighborhood Housing, advises her clients to prepare for foreclosure. She tells them, "Save all your money for the time you're going to have to transition. And keep the faith. Family is more important than material things."
Source: San Jose Mercury News, Mike Cassidy (06/05/2009)
Being a foreclosure counselor can be one of the most gut-wrenching jobs around.
"It's pretty daunting," says Ed Moncrief, executive director of Neighborhood Housing Services in San Jose, Calif., "knowing that in most cases you're not going to be able to do anything, and then going home at night and thinking about it all."
Moncrief says his organization gets about 100 calls a day and is able to save the homes of about one in four cases that it takes on.
Marlene Santiago, a former real estate practitioner who now works for Neighborhood Housing, advises her clients to prepare for foreclosure. She tells them, "Save all your money for the time you're going to have to transition. And keep the faith. Family is more important than material things."
Source: San Jose Mercury News, Mike Cassidy (06/05/2009)
Average Home Undervalued by 12%
From Realtor Magazine Online, Daily Real Estate News June 8, 2009
Housing research organization IHS Global Insight estimates that the average U.S. home is undervalued by 12.2 percent, and many previously pricey communities are undervalued by considerably more.
A recent study released by IHS used home prices, interest rates, area incomes, population density, and historic premiums and discounts to analyze housing values. It examined 330 markets and found homes are underpriced in 248 of them.
Despite the high percentage of undervalued areas, IHS says "it is too early to call a bottoming," as "job losses continue, housing inventories remain elevated, and consumers remain wary in light of economic uncertainty."
Here are the 10 most undervalued areas:
1. Vero Beach, Fla., -42.5 percent
2. Houma, La., -41.4 percent
3. Las Vegas, -40.9 percent
4. Merced, Calif., -40.1 percent
5. Cape Coral, Fla., -39.1 percent
6. Houston, -36.9 percent
7. Midland, Tex., -34.8 percent
8. Lafayette, La., -34.4 percent
9. Vallejo, Calif., -34.3 percent
10. Stockton, Calif., -34.3 percent
Source: CNNMoney.com, Les Christie (06/04/2009)
Housing research organization IHS Global Insight estimates that the average U.S. home is undervalued by 12.2 percent, and many previously pricey communities are undervalued by considerably more.
A recent study released by IHS used home prices, interest rates, area incomes, population density, and historic premiums and discounts to analyze housing values. It examined 330 markets and found homes are underpriced in 248 of them.
Despite the high percentage of undervalued areas, IHS says "it is too early to call a bottoming," as "job losses continue, housing inventories remain elevated, and consumers remain wary in light of economic uncertainty."
Here are the 10 most undervalued areas:
1. Vero Beach, Fla., -42.5 percent
2. Houma, La., -41.4 percent
3. Las Vegas, -40.9 percent
4. Merced, Calif., -40.1 percent
5. Cape Coral, Fla., -39.1 percent
6. Houston, -36.9 percent
7. Midland, Tex., -34.8 percent
8. Lafayette, La., -34.4 percent
9. Vallejo, Calif., -34.3 percent
10. Stockton, Calif., -34.3 percent
Source: CNNMoney.com, Les Christie (06/04/2009)
Friday, June 5, 2009
Mortgage Rates Hit 25-Week High
From Realtor Magazine Online, Daily Real Estate News June 5, 2009
Mortgage rates across the board jumped this week, with conventional mortgages reaching their highest point so far this year.
Freddie Mac reports a jump in the 30-year fixed mortgage rate to a 25-week high of 5.29 percent during the week ended June 4, up from 4.91 percent the prior week. As recently as two months ago, rates had been 4.78 percent.
The 15-year fixed rate also increased, rising to 4.79 percent from 4.53 percent, with Freddie Mac chief economist Frank Nothaft indicating that the gains follow a surge in long-term bond yields.
Meanwhile, the five-year adjustable mortgage rate climbed to 4.85 percent from 4.82 percent, and the one-year ARM surged to 4.81 percent from 4.69 percent.
Source: Chicago Sun-Times, Francine Knowles (06/05/09)
Mortgage rates across the board jumped this week, with conventional mortgages reaching their highest point so far this year.
Freddie Mac reports a jump in the 30-year fixed mortgage rate to a 25-week high of 5.29 percent during the week ended June 4, up from 4.91 percent the prior week. As recently as two months ago, rates had been 4.78 percent.
The 15-year fixed rate also increased, rising to 4.79 percent from 4.53 percent, with Freddie Mac chief economist Frank Nothaft indicating that the gains follow a surge in long-term bond yields.
Meanwhile, the five-year adjustable mortgage rate climbed to 4.85 percent from 4.82 percent, and the one-year ARM surged to 4.81 percent from 4.69 percent.
Source: Chicago Sun-Times, Francine Knowles (06/05/09)
Thursday, June 4, 2009
Housing Picture Brightens in California
From The Wallstreet Journal
With the state’s median price rising for the second consecutive month in April, and sales of existing, single-family homes remaining above the 500,000 level for the eighth month in a row, California is being closely watched as a barometer of the economy. Some economists believe these two factors indicate the state’s median price could be at or near the bottom.
MAKING SENSE OF THE STORY FOR CONSUMERS
· Sales of existing, single-family homes increased 49.2 percent in April in California compared with the same period a year ago, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) April sales and price report.
· As the level of unsold inventory declines, the state’s median price will likely stabilize. Inventory levels for homes in the under $500,000 segment shrank to nearly three months in April, compared with almost 10 months a year ago, while unsold inventory in the more than $1 million segment rose to approximately 17 months, compared with roughly 10 months in April 2008.
· The median price of an existing, single-family detached home in California during April 2009 was $256,700, an increase of 1.4 percent compared with the prior month, but a 36.5 percent decrease from the revised $404,470 median of a year ago.
· Favorable home prices in many parts of the state have led to an increase in affordability for first-time buyers. In the first quarter of 2009, affordability rose to 69 percent, enabling many to take advantage of first-time buyer programs and near record-low interest rates.
With the state’s median price rising for the second consecutive month in April, and sales of existing, single-family homes remaining above the 500,000 level for the eighth month in a row, California is being closely watched as a barometer of the economy. Some economists believe these two factors indicate the state’s median price could be at or near the bottom.
MAKING SENSE OF THE STORY FOR CONSUMERS
· Sales of existing, single-family homes increased 49.2 percent in April in California compared with the same period a year ago, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) April sales and price report.
· As the level of unsold inventory declines, the state’s median price will likely stabilize. Inventory levels for homes in the under $500,000 segment shrank to nearly three months in April, compared with almost 10 months a year ago, while unsold inventory in the more than $1 million segment rose to approximately 17 months, compared with roughly 10 months in April 2008.
· The median price of an existing, single-family detached home in California during April 2009 was $256,700, an increase of 1.4 percent compared with the prior month, but a 36.5 percent decrease from the revised $404,470 median of a year ago.
· Favorable home prices in many parts of the state have led to an increase in affordability for first-time buyers. In the first quarter of 2009, affordability rose to 69 percent, enabling many to take advantage of first-time buyer programs and near record-low interest rates.
Low Mortgage Rates Are Going, Going…
From The Wallstreet Journal, June 1, 2009
Looking to refinance? If you haven't locked in, you may already be too late.
If you're looking for a new 30-year mortgage, last week's events from the financial markets carry a very simple message: Get 'em cheap while you still can.
Rates on conforming 30-year loans jumped dramatically in just a few days, ending the week at an average of 5.27% according to Bankrate.com. That's still OK by historic standards, but it's a jump from the levels seen just a few weeks ago, when you could get loans at 4.75% or below.
The underlying cause isn't hard to find. Rising government debts, and burgeoning hopes of an economic recovery, are pushing up long-term interest rates on government debt. The yield on the 10-Year Treasury, which was barely 2% near the end of last year, surged to 3.67% late last week before settling back slightly. And that, in turn, pushes up rates on other long-term loans.
What does this mean for you?
This surge in mortgage rates, if it continues, is ominous news all around. It's bad for those trying to refinance an existing mortgage, those looking to buy a new home, and those looking to sell their home. It may also be bad for the stock market, and maybe even for the dollar, too. More on that later.
For those trying to refinance: If you hadn't locked in the rate already, you are probably out of luck. You may be stuck with higher rates.
Ironically, if you were stuck crawling through the refi process when the rates jumped, you may be a victim of new mortgage rules. These were introduced in the last year to prevent another subprime scandal. They have slowed down the loan approval process and have discouraged most lenders from offering rate locks until other steps have been completed. "Lenders are not locking in borrowers' rates until the (home) appraisals are in," says Paul Sapienza, broker at Drew Mortgage in Boston. Until last year you could lock in a rate while you refinanced, or even looked for a new home. "That's over," Mr Sapienza says.
For those looking to buy a new home: Be aware this rate hike -- to 5.25%, from 4.75% recently -- can add quite a bit to your expenses. It will cost an extra $50 a month for someone buying a typical $200,000 residence with an 80% loan.
Rates still look pretty reasonable, but now there's an extra level of uncertainty in the process. Who knows where they will end up by the time you come to sign?
Some borrowers are now looking instead at adjustable rate mortgages, or ARMs. In some cases the initial rates are lower. Alas, we've seen this movie before. ARMs are high-risk and in most cases a terrible idea. They mean the lenders are transferring inflation and interest rate risk to you. In this environment both risks are substantial.
And if you were looking to sell a new home, bad news too: This rate jump adds about 10% to your potential customer's financing costs. Cheap mortgage rates were one of the things tempting buyers into the market. That is now in peril.
Why is this dangerous for the stock market? The rally in recent months depends on the economy stabilizing, and then recovering. There have been some hopeful signs in recent months. But of course the consumer has benefited from at least two big doses of financial adrenaline this winter: Refinancing gains and cheaper fuel. Both put extra money in their pockets. Both now appear to be over.
It is two months since Federal Reserve chairman Ben Bernanke unveiled plans to print money to buy up Treasury bonds. The aim was to keep long-term rates down. He will have to step up the process. The federal government may also wade back into the market for mortgage backed securities with a similar strategy. The U.S. Mint will have to move to a triple shift to print all the money.
Alas, there is only so far this can succeed. Treasury bonds are IOUs of the federal government. But so are dollar bills. Ultimately the bond market may notice that Uncle Sam is only paying off his IOUs with more IOUs. Gamblers who do this tend to find their markers start trading at a discount. When it does, neither is likely to command a premium.
By BRETT ARENDS
Looking to refinance? If you haven't locked in, you may already be too late.
If you're looking for a new 30-year mortgage, last week's events from the financial markets carry a very simple message: Get 'em cheap while you still can.
Rates on conforming 30-year loans jumped dramatically in just a few days, ending the week at an average of 5.27% according to Bankrate.com. That's still OK by historic standards, but it's a jump from the levels seen just a few weeks ago, when you could get loans at 4.75% or below.
The underlying cause isn't hard to find. Rising government debts, and burgeoning hopes of an economic recovery, are pushing up long-term interest rates on government debt. The yield on the 10-Year Treasury, which was barely 2% near the end of last year, surged to 3.67% late last week before settling back slightly. And that, in turn, pushes up rates on other long-term loans.
What does this mean for you?
This surge in mortgage rates, if it continues, is ominous news all around. It's bad for those trying to refinance an existing mortgage, those looking to buy a new home, and those looking to sell their home. It may also be bad for the stock market, and maybe even for the dollar, too. More on that later.
For those trying to refinance: If you hadn't locked in the rate already, you are probably out of luck. You may be stuck with higher rates.
Ironically, if you were stuck crawling through the refi process when the rates jumped, you may be a victim of new mortgage rules. These were introduced in the last year to prevent another subprime scandal. They have slowed down the loan approval process and have discouraged most lenders from offering rate locks until other steps have been completed. "Lenders are not locking in borrowers' rates until the (home) appraisals are in," says Paul Sapienza, broker at Drew Mortgage in Boston. Until last year you could lock in a rate while you refinanced, or even looked for a new home. "That's over," Mr Sapienza says.
For those looking to buy a new home: Be aware this rate hike -- to 5.25%, from 4.75% recently -- can add quite a bit to your expenses. It will cost an extra $50 a month for someone buying a typical $200,000 residence with an 80% loan.
Rates still look pretty reasonable, but now there's an extra level of uncertainty in the process. Who knows where they will end up by the time you come to sign?
Some borrowers are now looking instead at adjustable rate mortgages, or ARMs. In some cases the initial rates are lower. Alas, we've seen this movie before. ARMs are high-risk and in most cases a terrible idea. They mean the lenders are transferring inflation and interest rate risk to you. In this environment both risks are substantial.
And if you were looking to sell a new home, bad news too: This rate jump adds about 10% to your potential customer's financing costs. Cheap mortgage rates were one of the things tempting buyers into the market. That is now in peril.
Why is this dangerous for the stock market? The rally in recent months depends on the economy stabilizing, and then recovering. There have been some hopeful signs in recent months. But of course the consumer has benefited from at least two big doses of financial adrenaline this winter: Refinancing gains and cheaper fuel. Both put extra money in their pockets. Both now appear to be over.
It is two months since Federal Reserve chairman Ben Bernanke unveiled plans to print money to buy up Treasury bonds. The aim was to keep long-term rates down. He will have to step up the process. The federal government may also wade back into the market for mortgage backed securities with a similar strategy. The U.S. Mint will have to move to a triple shift to print all the money.
Alas, there is only so far this can succeed. Treasury bonds are IOUs of the federal government. But so are dollar bills. Ultimately the bond market may notice that Uncle Sam is only paying off his IOUs with more IOUs. Gamblers who do this tend to find their markers start trading at a discount. When it does, neither is likely to command a premium.
By BRETT ARENDS
Get Your $8,000 HUD Tax Credit Now
Qualified, first-time home buyers using a Federal Housing Administration (FHA)-insured mortgage now can apply the $8,000 federal tax credit toward their down payments, the U.S. Dept. of Housing and Urban Development (HUD) recently announced.
Currently, borrowers applying for an FHA-insured mortgage are required to issue minimum down payments of 3.5 percent. Buyers still must issue the mandatory 3.5 percent down payment, but the tax credit now can be used as an additional down payment, or for other closing costs, which can help lower principal balances and monthly payments.
Call or email us if you would like to schedule a mortgage financing consultation.
Currently, borrowers applying for an FHA-insured mortgage are required to issue minimum down payments of 3.5 percent. Buyers still must issue the mandatory 3.5 percent down payment, but the tax credit now can be used as an additional down payment, or for other closing costs, which can help lower principal balances and monthly payments.
Call or email us if you would like to schedule a mortgage financing consultation.
Sales Are Up but Jam Persists for Jumbo Loans
From Realtor Magazine Online, Daily Real Estate News June 4, 2009
While sales to first-time home buyers are up, experts say the jumbo loan market is weak because trade-up buyers cannot secure affordable financing.
"If you've ever wondered what the mortgage market would look like without government support, that's what we have today in the jumbo market," says mortgage industry consultant Howard Glaser.
NATIONAL ASSOCIATION OF REALTORS® Chief Economist Lawrence Yun notes that the spread between conforming and jumbo loan rates rose to 3.9 percentage points in March from 1.4 percentage points in 2005. He says buyers able to make a purchase are holding off because they do not want to pay jumbo loan rates.
Source: American Banker, Lew Sichelman (06/04/09)
While sales to first-time home buyers are up, experts say the jumbo loan market is weak because trade-up buyers cannot secure affordable financing.
"If you've ever wondered what the mortgage market would look like without government support, that's what we have today in the jumbo market," says mortgage industry consultant Howard Glaser.
NATIONAL ASSOCIATION OF REALTORS® Chief Economist Lawrence Yun notes that the spread between conforming and jumbo loan rates rose to 3.9 percentage points in March from 1.4 percentage points in 2005. He says buyers able to make a purchase are holding off because they do not want to pay jumbo loan rates.
Source: American Banker, Lew Sichelman (06/04/09)
Home Builders Dip a Toe in the Spec Market
From Realtor Magazine Online, Daily Real Estate News June 4, 2009
Some brave home builders are back building spec homes, something they had all but stopped doing as the market slowed.
D.R. Horton Inc. had about 5,500 speculative homes at the end of the second quarter. Pulte Homes Inc., had about 2,400 spec homes at the end of the first quarter. Both are well above the industry average of 1,388 spec homes, according to a May report from J. P. Morgan.
"We went from having way too much inventory, to liquidating all that, to now being back in a situation where you've got to build some inventory or risk losing sales," says Brent Anderson, vice president of investor relations for Meritage Homes Corp.
Source: The Wall Street Journal, Dawn Wotapka (06/03/2009)
Some brave home builders are back building spec homes, something they had all but stopped doing as the market slowed.
D.R. Horton Inc. had about 5,500 speculative homes at the end of the second quarter. Pulte Homes Inc., had about 2,400 spec homes at the end of the first quarter. Both are well above the industry average of 1,388 spec homes, according to a May report from J. P. Morgan.
"We went from having way too much inventory, to liquidating all that, to now being back in a situation where you've got to build some inventory or risk losing sales," says Brent Anderson, vice president of investor relations for Meritage Homes Corp.
Source: The Wall Street Journal, Dawn Wotapka (06/03/2009)
The Two Latest Signs Housing Is Recovering
From Realtor Magazine Online, Daily Real Estate News June 4, 2009
Here’s more evidence that the housing market is recovering.
Two major home builders, Toll Brothers Inc. and Hovnanian Enterprises Inc., said their losses were shrinking compared to last year because buyers are coming back to the market.
Other encouraging news came from HIS Global Insight, a research firm, which said home prices fell on average at an annual rate of 2.2 percent in the first quarter in 199 of 330 metropolitan areas. That compares with a 12.5 percent decline in the fourth quarter of 2008 in 312 metropolitan areas.
"While it's too early to see a bottom of this housing downturn," the report said, the latest data "may signal that the market is beginning to stabilize."
Source: The Wall Street Journal, James R. Hagerty and John Spence (06/04/2009)
Here’s more evidence that the housing market is recovering.
Two major home builders, Toll Brothers Inc. and Hovnanian Enterprises Inc., said their losses were shrinking compared to last year because buyers are coming back to the market.
Other encouraging news came from HIS Global Insight, a research firm, which said home prices fell on average at an annual rate of 2.2 percent in the first quarter in 199 of 330 metropolitan areas. That compares with a 12.5 percent decline in the fourth quarter of 2008 in 312 metropolitan areas.
"While it's too early to see a bottom of this housing downturn," the report said, the latest data "may signal that the market is beginning to stabilize."
Source: The Wall Street Journal, James R. Hagerty and John Spence (06/04/2009)
Tuesday, June 2, 2009
Construction Spending Rises
From Realtor Magazine Online, Daily Real Estate News June 2, 2009
Construction spending rose 0.8 percent in April, the most since last August and a reversal of the drop analysts predicted.
The U.S. Commerce Department said yesterday that residential construction was up 0.6 percent.
Non-residential construction, including public projects, increased 0.8 percent. Compared with a year earlier, it was up 2.5 percent.
Public construction decreased 0.6 percent, but these are expected to increase in the coming months as federal dollars filter through.
“Residential construction may be bottoming,” says Steven Wood, president of Insight Economics LLC in Danville, Calif.. “Over the next several quarters, federal stimulus dollars may support public construction activity despite weak state and local government funding.”
Source: Bloomberg, Bob Willis and Courtney Schlisserman (06/01/2009)
Construction spending rose 0.8 percent in April, the most since last August and a reversal of the drop analysts predicted.
The U.S. Commerce Department said yesterday that residential construction was up 0.6 percent.
Non-residential construction, including public projects, increased 0.8 percent. Compared with a year earlier, it was up 2.5 percent.
Public construction decreased 0.6 percent, but these are expected to increase in the coming months as federal dollars filter through.
“Residential construction may be bottoming,” says Steven Wood, president of Insight Economics LLC in Danville, Calif.. “Over the next several quarters, federal stimulus dollars may support public construction activity despite weak state and local government funding.”
Source: Bloomberg, Bob Willis and Courtney Schlisserman (06/01/2009)
Should Home Buyers Lock in Rates?
From Realtor Magazine Online, Daily Real Estate News June 2, 2009
Should home buyers apply for loan lock-in rates that are at their highest level since February? Or should they bet that the federal government will find a way to lower rates?
Money magazine staffers say the wildcard is Federal Reserve Chair Ben Bernanke. The Fed has been buying up long-term Treasuries and mortgage-backed securities to keep rates low. But when rates started to climb in the last week, the Fed seemed to signal that it wasn’t too concerned.
But now that rates have climbed to a six-month high, some observers believe that the Fed will refocus its efforts and push them down.
“It’s one thing to have a Treasury yield backup when mortgage rates are still declining, but that is no longer the case. The yield on the 30-year fixed-rate is already up 20 basis points from the lows; 1-year ARMs have jumped 17 basis points. This is not what the Fed wants to see,” says David Rosenberg, a former Merrill Lynch economist now at Gluskin Sheff.
Source: CNNMoney.com, Carla Fried (05/29/2009)
Should home buyers apply for loan lock-in rates that are at their highest level since February? Or should they bet that the federal government will find a way to lower rates?
Money magazine staffers say the wildcard is Federal Reserve Chair Ben Bernanke. The Fed has been buying up long-term Treasuries and mortgage-backed securities to keep rates low. But when rates started to climb in the last week, the Fed seemed to signal that it wasn’t too concerned.
But now that rates have climbed to a six-month high, some observers believe that the Fed will refocus its efforts and push them down.
“It’s one thing to have a Treasury yield backup when mortgage rates are still declining, but that is no longer the case. The yield on the 30-year fixed-rate is already up 20 basis points from the lows; 1-year ARMs have jumped 17 basis points. This is not what the Fed wants to see,” says David Rosenberg, a former Merrill Lynch economist now at Gluskin Sheff.
Source: CNNMoney.com, Carla Fried (05/29/2009)
Pending Home Sales Increase
From Realtor Magazine Online, Daily Real Estate News June 2, 2009
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in April, rose 6.7 percent to 90.3 from a reading of 84.6 in March, and is 3.2 percent above April 2008 when it was 87.5.
Lawrence Yun, NAR chief economist, said buyers are responding to very favorable market conditions. “Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market,” he said. “Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers.”
Geographical Breakdown
* Northeast: The Pending Home Sales Index shot up 32.6 percent to 78.9 in April and is 0.8 percent above a year ago.
* Midwest: The index rose 9.8 percent to 90.4 and is 11.1 percent above April 2008.
* South: The index slipped 0.2 percent to 93.0 in April but is 3.5 percent higher than a year ago.
* West: The index rose 1.8 percent to 94.8 but is 2.9 percent below April 2008.
NAR President Charles McMillan said there are numerous buyer assistance programs around the country. “Some states are offering bridge loans that allow first-time buyers to use the tax credit for downpayment and closing costs, but there are many other local government and nonprofit programs available to buyers, depending on location,” he said.
“Just last week, HUD announced that qualifying buyers can use the tax credit for closing costs on FHA loans, to buy down the interest rate or make a larger down payment. Buyers who are wondering about their options should contact a REALTOR, who can advise consumers on the housing assistance programs and resources available in a given area.”
Affordable Housing
NAR’s Housing Affordability Index is in record territory. The affordability index rose to 174.8 in April from an upwardly revised 171.9 in March, which makes it the second-highest monthly reading on record after peaking at 176.9 in January of this year. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income.
A median-income family, earning $60,900, could afford a home costing $296,800 in April with a 20 percent down payment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small down payments are roughly 80 percent of that amount. The affordable price was well above the median existing single-family home price in April, which was $169,800.
Pending Vs. Existing Sales
Yun cautions that the reporting sample for pending home sales is smaller than that of existing-home sales, so it is subject to greater variability. “In addition, the relationship between contracts on pending home sales and closings on existing-home sales is taking longer than in the past for several reasons,” he said. “Mortgage processing time has increased, it is taking many months to close on those homes requiring short sales with lender approval, and some sales are falling through at the last moment.”
The total number of existing-home sales is expected to improve but with dramatic local market variation in the timing of recovery. “The market has already bottomed in some areas, but this is an unusual housing cycle with some areas improving rapidly while others languish or decline,” Yun said.
Existing-home sales for May will be released June 23. The next Pending Home Sales Index will be on July 1.
Source: NAR (06/02/09)
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in April, rose 6.7 percent to 90.3 from a reading of 84.6 in March, and is 3.2 percent above April 2008 when it was 87.5.
Lawrence Yun, NAR chief economist, said buyers are responding to very favorable market conditions. “Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market,” he said. “Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers.”
Geographical Breakdown
* Northeast: The Pending Home Sales Index shot up 32.6 percent to 78.9 in April and is 0.8 percent above a year ago.
* Midwest: The index rose 9.8 percent to 90.4 and is 11.1 percent above April 2008.
* South: The index slipped 0.2 percent to 93.0 in April but is 3.5 percent higher than a year ago.
* West: The index rose 1.8 percent to 94.8 but is 2.9 percent below April 2008.
NAR President Charles McMillan said there are numerous buyer assistance programs around the country. “Some states are offering bridge loans that allow first-time buyers to use the tax credit for downpayment and closing costs, but there are many other local government and nonprofit programs available to buyers, depending on location,” he said.
“Just last week, HUD announced that qualifying buyers can use the tax credit for closing costs on FHA loans, to buy down the interest rate or make a larger down payment. Buyers who are wondering about their options should contact a REALTOR, who can advise consumers on the housing assistance programs and resources available in a given area.”
Affordable Housing
NAR’s Housing Affordability Index is in record territory. The affordability index rose to 174.8 in April from an upwardly revised 171.9 in March, which makes it the second-highest monthly reading on record after peaking at 176.9 in January of this year. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income.
A median-income family, earning $60,900, could afford a home costing $296,800 in April with a 20 percent down payment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small down payments are roughly 80 percent of that amount. The affordable price was well above the median existing single-family home price in April, which was $169,800.
Pending Vs. Existing Sales
Yun cautions that the reporting sample for pending home sales is smaller than that of existing-home sales, so it is subject to greater variability. “In addition, the relationship between contracts on pending home sales and closings on existing-home sales is taking longer than in the past for several reasons,” he said. “Mortgage processing time has increased, it is taking many months to close on those homes requiring short sales with lender approval, and some sales are falling through at the last moment.”
The total number of existing-home sales is expected to improve but with dramatic local market variation in the timing of recovery. “The market has already bottomed in some areas, but this is an unusual housing cycle with some areas improving rapidly while others languish or decline,” Yun said.
Existing-home sales for May will be released June 23. The next Pending Home Sales Index will be on July 1.
Source: NAR (06/02/09)
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