Rents nationwide continue to be on the rise, increasing 2.4 percent in January compared to a year earlier, according to new data released by the Labor Department. Demand for rentals remains strong. The apartment vacancy rate fell to 5.2 percent, marking its lowest level in more than a decade.
Rents have most been on the rise in tech-centered cities like San Francisco; Austin, Texas; and Boston. Rents also are rising in New York City; Washington, D.C.; Chicago; and Seattle.
Construction of new apartments has been slow to catch up to the increase in the demand. As such, the limited supply has caused prices to move up. In San Francisco alone, rents have risen nearly 5 percent in the last year, according to Reis Inc.
By the fourth quarter of 2011, about 2 million more households were renting compared to 2004, Kenneth Rosen, a professor of real estate at the Haas School of Business at University of California, Berkeley, told The New York Times.
A recent survey of more than 3,000 renters by Apartments.com found that 33.6 percent of those who were looking for an apartment this year say they are previous home owners (up from 20.5 percent in 2011).
“The fact that more renters are entering the market continues to create a series of challenges for the potential renter, including fewer apartments to choose from, which can drive higher rent rates,” says Chris Brown, vice president of product management, Apartments.com.
Source: “Rents Keep Rising, Even as Housing Prices Fall,” The New York Times (Feb. 25, 2012) and “More Previous Home Owners Are Looking to Rent in 2012,” RISMedia (Feb. 26, 2012)
Wednesday, February 29, 2012
Tuesday, February 28, 2012
A surge in national consumer confidence
The Conference Board’s Consumer Confidence Index, which had decreased in January, increased 9.3 points in February. The Index now stands at 70.8, up from 61.5 in January.
The Present Situation Index that gauges consumers’ outlooks about the current economy increased 6.2 points to 45.0 from 38.8. The Expectations Index, which gauges attitudes about the economy six months in the future, rose 11.3 points – to 88.0 from 76.7 in January.
“Consumer confidence, which had declined last month, posted a sizeable improvement in February,” says Lynn Franco, director of The Conference Board Consumer Research Center. “The Index is now close to levels last seen a year ago. Consumers are considerably less pessimistic about current business and labor market conditions than they were in January. And, despite further increases in gas prices, they are more optimistic about the short-term outlook for the economy, job prospects and their financial situation.”
Consumers’ assessment of current conditions
Those claiming business conditions are “good” increased slightly to 13.3 percent from 13.2 percent, while those claiming business conditions are “bad” decreased to 31.2 percent from 38.3 percent. Consumers’ appraisal of the labor market was also less pessimistic. Those stating jobs are “plentiful” increased to 6.6 percent from 6.2 percent, while those saying jobs are “hard to get” decreased to 38.7 percent from 43.3 percent.
Consumers’ assessment six months in the future
The proportion of consumers expecting business conditions to improve over the next six months increased to 18.7 percent from 16.7 percent, while those anticipating business conditions will worsen decreased to 11.8 percent from 14.6 percent. Consumers’ outlook for the labor market was also more upbeat. Those anticipating more jobs in the months ahead increased to 18.7 percent from 16.4 percent, while those anticipating fewer jobs declined to 16.9 percent from 19.1 percent. The proportion of consumers expecting an increase in their incomes improved to 15.4 percent from 13.8 percent.
Nielsen, a global provider of information and analytics, conducts the monthly Consumer Confidence Survey, based on a probability-design random sample, for The Conference Board. The cutoff date for the preliminary results was Feb. 15.
Source: Florida Realtors®
The Present Situation Index that gauges consumers’ outlooks about the current economy increased 6.2 points to 45.0 from 38.8. The Expectations Index, which gauges attitudes about the economy six months in the future, rose 11.3 points – to 88.0 from 76.7 in January.
“Consumer confidence, which had declined last month, posted a sizeable improvement in February,” says Lynn Franco, director of The Conference Board Consumer Research Center. “The Index is now close to levels last seen a year ago. Consumers are considerably less pessimistic about current business and labor market conditions than they were in January. And, despite further increases in gas prices, they are more optimistic about the short-term outlook for the economy, job prospects and their financial situation.”
Consumers’ assessment of current conditions
Those claiming business conditions are “good” increased slightly to 13.3 percent from 13.2 percent, while those claiming business conditions are “bad” decreased to 31.2 percent from 38.3 percent. Consumers’ appraisal of the labor market was also less pessimistic. Those stating jobs are “plentiful” increased to 6.6 percent from 6.2 percent, while those saying jobs are “hard to get” decreased to 38.7 percent from 43.3 percent.
Consumers’ assessment six months in the future
The proportion of consumers expecting business conditions to improve over the next six months increased to 18.7 percent from 16.7 percent, while those anticipating business conditions will worsen decreased to 11.8 percent from 14.6 percent. Consumers’ outlook for the labor market was also more upbeat. Those anticipating more jobs in the months ahead increased to 18.7 percent from 16.4 percent, while those anticipating fewer jobs declined to 16.9 percent from 19.1 percent. The proportion of consumers expecting an increase in their incomes improved to 15.4 percent from 13.8 percent.
Nielsen, a global provider of information and analytics, conducts the monthly Consumer Confidence Survey, based on a probability-design random sample, for The Conference Board. The cutoff date for the preliminary results was Feb. 15.
Source: Florida Realtors®
FHA increases buyers’ fees
Acting Federal Housing Administration (FHA) Commissioner Carol Galante announced a new premium structure for FHA-insured single-family mortgage loans: FHA will increase its annual mortgage insurance premium (MIP) by 0.10 percent for loans under $625,500 and by 0.35 percent for loans above that amount. Upfront premiums (UFMIP) will increase by 0.75 percent.
The premium changes will impact new loans insured by FHA beginning in April 2012. Details will soon be published in a Mortgagee Letter to FHA-approved lenders.
“After careful analysis of the market and the health of the Mutual Mortgage Insurance Fund (MMI) fund, we have determined that it is appropriate to increase mortgage insurance premiums in order to help protect our capital reserves and to continue encouraging the return of private capital to the housing market,” says Galante. “These modest increases are one of several measures we are taking towards meeting the Congressionally mandated two percent reserve threshold while allowing FHA to remain a valuable option for low- to moderate-income borrowers.”
The Temporary Payroll Tax Cut Continuation Act of 2011 requires FHA to increase the annual MIP it collects by 0.10 percent for case numbers assigned on or after April 1, 2012. FHA is also exercising its statutory authority to add an additional 0.25 percent to mortgages exceeding $625,500 assigned on or after June 1, 2012.
The UFMIP will increase from 1 percent to 1.75 percent of the base loan amount, which FHA says will apply regardless of the amortization term or LTV ratio. FHA will still allow buyers to finance this charge through the mortgage. It’s effective for case numbers assigned on or after April 1, 2012.
FHA estimates that the increase to the upfront premium will cost the average borrower about $5 more per month.
Borrowers already in an FHA-insured mortgage, Home Equity Conversion Mortgage (HECM), and special loan programs outlined in FHA’s forthcoming Mortgagee Letter will not be impacted by the pricing changes announced today.
The official announcement will be posted online in HUD’s mortgage letter web page.
Source: Florida Realtors®
The premium changes will impact new loans insured by FHA beginning in April 2012. Details will soon be published in a Mortgagee Letter to FHA-approved lenders.
“After careful analysis of the market and the health of the Mutual Mortgage Insurance Fund (MMI) fund, we have determined that it is appropriate to increase mortgage insurance premiums in order to help protect our capital reserves and to continue encouraging the return of private capital to the housing market,” says Galante. “These modest increases are one of several measures we are taking towards meeting the Congressionally mandated two percent reserve threshold while allowing FHA to remain a valuable option for low- to moderate-income borrowers.”
The Temporary Payroll Tax Cut Continuation Act of 2011 requires FHA to increase the annual MIP it collects by 0.10 percent for case numbers assigned on or after April 1, 2012. FHA is also exercising its statutory authority to add an additional 0.25 percent to mortgages exceeding $625,500 assigned on or after June 1, 2012.
The UFMIP will increase from 1 percent to 1.75 percent of the base loan amount, which FHA says will apply regardless of the amortization term or LTV ratio. FHA will still allow buyers to finance this charge through the mortgage. It’s effective for case numbers assigned on or after April 1, 2012.
FHA estimates that the increase to the upfront premium will cost the average borrower about $5 more per month.
Borrowers already in an FHA-insured mortgage, Home Equity Conversion Mortgage (HECM), and special loan programs outlined in FHA’s forthcoming Mortgagee Letter will not be impacted by the pricing changes announced today.
The official announcement will be posted online in HUD’s mortgage letter web page.
Source: Florida Realtors®
Officials: Fed Is Running Out of Options to Help Housing
The Federal Reserve is running out of options to help the housing market, and it’s time lawmakers step-up and do more, according to a paper by top economists, which was presented Friday at the U.S. Monetary Policy Forum.
Federal Reserve officials, members of foreign central banks, and economists discussed how the housing market continues to hamper overall economic recovery. The Fed has already lowered its key interest rate to near zero and mortgage rates are already at all-time lows, which are helping refinancers and home purchasers lock in big savings. However, the overhang in the housing market "may not be easily addressed by monetary policy," Michael Feroli, chief U.S. economist at JPMorgan Chase, said during the meetings.
Some economists said there’s still more the Fed can do: Lower the interest rates even more. However, some note that with more stringent lending standards those who can qualify for refinancing likely already have, so lowering the rate may not have that much impact.
Source: “Why the Federal Reserve Can’t Fix Housing,” CNNMoney (Feb. 24, 2012)
Federal Reserve officials, members of foreign central banks, and economists discussed how the housing market continues to hamper overall economic recovery. The Fed has already lowered its key interest rate to near zero and mortgage rates are already at all-time lows, which are helping refinancers and home purchasers lock in big savings. However, the overhang in the housing market "may not be easily addressed by monetary policy," Michael Feroli, chief U.S. economist at JPMorgan Chase, said during the meetings.
Some economists said there’s still more the Fed can do: Lower the interest rates even more. However, some note that with more stringent lending standards those who can qualify for refinancing likely already have, so lowering the rate may not have that much impact.
Source: “Why the Federal Reserve Can’t Fix Housing,” CNNMoney (Feb. 24, 2012)
Monday, February 27, 2012
In today’s topsy-turvy housing market, cash rules
When Chris and Diane Finney decided to buy a bank-owned condo in St. Paul, they knew there would be competition.
Their strategy? Offer less – but offer cash.
While others said they would pay more, they needed to finance the deal. The bank took less and took the cash.
“We were in the driver’s seat,” Chris Finney said.
In a normal housing market, multiple bids usually lead to higher home prices, and the highest bid wins. But when credit markets are tighter and appraisals are often lower, many sellers will take less to be sure that the deal will get done.
“If I get five offers on a property and the cash offer is darned close to being one of those top offers, I’d take the cash offer any day,” said Marshall Saunders, owner/broker at Re/Max Results.
In December, 33 percent of all U.S. home sales were cash deals – a record since the downturn started in 2006, according to Campbell Survey and Inside Mortgage Finance. As a result, home prices can’t gain much traction because many sellers won’t necessarily accept the highest offer.
For most homebuyers, it’s confounding to be rejected because they are financing the deal. For the housing market, it means more downward pressure on prices despite tight supplies and rising demand.
“It’s a real sign of what’s going on,” said Guy Cecala, publisher of Inside Mortgage Finance. “All things being equal, cash wins.”
The volume of cash deals is offsetting other positive trends in the market that should be leading to higher prices. The number of houses on the market has fallen to an eight-year low, and sales are up double digits. At the same time, home prices continue to fall.
At least a third of all homes sales last year involved an investor, Cecala said, and they often pay cash.
Multiple offers are becoming common on foreclosures and short sales, which represented half of all home sales last year. And there’s no sign that listings of financially distressed properties will abate anytime soon. The National Association of Realtors said this week that distressed homes accounted for 35 percent of existing-home sales in January
Those distressed sales not only put a drag on prices; they also make it very difficult for appraisers to find comparable sales to support higher prices on traditional listings. When a lender can’t get an appraisal that’s equal to the purchase price, the buyer and seller need to make up the difference, or the deal falls apart and the property goes back on the market.
“Banks tend to be much more motivated to sell quickly because they have holding and carrying costs,” Cecala said. “All that puts downward pressure on prices.”
John McWhite, a sales agent with Minnesota-based Coldwell Banker Burnet, said he recently worked with a client who made a full-price cash offer of $65,000 on a Minneapolis condo. It was one of three offers, but not the highest. But because it was cash and guaranteed to close, it was the winning bid. “That happens quite a bit,” he said.
In that case, McWhite’s client tried to buy the condo when it was a short sale, but the bank didn’t approve the deal in time to avoid foreclosure. His client ended up getting the property for significantly less.
Still, buyers need to remember that there’s a limit to how low a seller will go, Saunders said. Not every seller is going to favor cash deals the same way.
The cash strategy doesn’t work all the time. An outrageously low cash offer can easily offend a seller, especially one who has an emotional attachment to a house. And Ryan Kempenich, a sales agent for Coldwell Banker Burnet who specializes in foreclosure sales, said that Fannie Mae and Freddie Mac favor first-time buyers or buyers who plan to occupy the properties they’re trying to sell.
Those who can’t offer cash aren’t without options. Sellers always look favorably on those offers that don’t have a lot of contingencies. Jennifer Olstad, a sales agent for Keller Williams who is also an experienced investor, said that non-cash buyers should make sure that they are pre-qualified for the mortgage and can offer a quick close date. “Yes, a cash offer is better,” she said. “But if they’re qualified and have letter of qualification and can close in 30 days, I don’t see why a cash offer should always prevail.”
Experts agree that at a certain point prices will fall to a level where there will be enough buyers – and demand – that many sellers won’t have to take less than they’re asking, whether it’s cash or not.
For now, the proliferation of cash deals in today’s market is just another sign of how desperate lenders are to unload their listings. Kempenich said that he recently worked with a client who made a $35,000 cash offer on a condo that had originally sold for $200,000.
“Being a cash buyer is powerful,” he said. “Loan standards are so tight, the bank says, ‘Just get rid of it.’ “
Source: the Star Tribune (Minneapolis, Minn.) Distributed by MCT Information Services.
Their strategy? Offer less – but offer cash.
While others said they would pay more, they needed to finance the deal. The bank took less and took the cash.
“We were in the driver’s seat,” Chris Finney said.
In a normal housing market, multiple bids usually lead to higher home prices, and the highest bid wins. But when credit markets are tighter and appraisals are often lower, many sellers will take less to be sure that the deal will get done.
“If I get five offers on a property and the cash offer is darned close to being one of those top offers, I’d take the cash offer any day,” said Marshall Saunders, owner/broker at Re/Max Results.
In December, 33 percent of all U.S. home sales were cash deals – a record since the downturn started in 2006, according to Campbell Survey and Inside Mortgage Finance. As a result, home prices can’t gain much traction because many sellers won’t necessarily accept the highest offer.
For most homebuyers, it’s confounding to be rejected because they are financing the deal. For the housing market, it means more downward pressure on prices despite tight supplies and rising demand.
“It’s a real sign of what’s going on,” said Guy Cecala, publisher of Inside Mortgage Finance. “All things being equal, cash wins.”
The volume of cash deals is offsetting other positive trends in the market that should be leading to higher prices. The number of houses on the market has fallen to an eight-year low, and sales are up double digits. At the same time, home prices continue to fall.
At least a third of all homes sales last year involved an investor, Cecala said, and they often pay cash.
Multiple offers are becoming common on foreclosures and short sales, which represented half of all home sales last year. And there’s no sign that listings of financially distressed properties will abate anytime soon. The National Association of Realtors said this week that distressed homes accounted for 35 percent of existing-home sales in January
Those distressed sales not only put a drag on prices; they also make it very difficult for appraisers to find comparable sales to support higher prices on traditional listings. When a lender can’t get an appraisal that’s equal to the purchase price, the buyer and seller need to make up the difference, or the deal falls apart and the property goes back on the market.
“Banks tend to be much more motivated to sell quickly because they have holding and carrying costs,” Cecala said. “All that puts downward pressure on prices.”
John McWhite, a sales agent with Minnesota-based Coldwell Banker Burnet, said he recently worked with a client who made a full-price cash offer of $65,000 on a Minneapolis condo. It was one of three offers, but not the highest. But because it was cash and guaranteed to close, it was the winning bid. “That happens quite a bit,” he said.
In that case, McWhite’s client tried to buy the condo when it was a short sale, but the bank didn’t approve the deal in time to avoid foreclosure. His client ended up getting the property for significantly less.
Still, buyers need to remember that there’s a limit to how low a seller will go, Saunders said. Not every seller is going to favor cash deals the same way.
The cash strategy doesn’t work all the time. An outrageously low cash offer can easily offend a seller, especially one who has an emotional attachment to a house. And Ryan Kempenich, a sales agent for Coldwell Banker Burnet who specializes in foreclosure sales, said that Fannie Mae and Freddie Mac favor first-time buyers or buyers who plan to occupy the properties they’re trying to sell.
Those who can’t offer cash aren’t without options. Sellers always look favorably on those offers that don’t have a lot of contingencies. Jennifer Olstad, a sales agent for Keller Williams who is also an experienced investor, said that non-cash buyers should make sure that they are pre-qualified for the mortgage and can offer a quick close date. “Yes, a cash offer is better,” she said. “But if they’re qualified and have letter of qualification and can close in 30 days, I don’t see why a cash offer should always prevail.”
Experts agree that at a certain point prices will fall to a level where there will be enough buyers – and demand – that many sellers won’t have to take less than they’re asking, whether it’s cash or not.
For now, the proliferation of cash deals in today’s market is just another sign of how desperate lenders are to unload their listings. Kempenich said that he recently worked with a client who made a $35,000 cash offer on a condo that had originally sold for $200,000.
“Being a cash buyer is powerful,” he said. “Loan standards are so tight, the bank says, ‘Just get rid of it.’ “
Source: the Star Tribune (Minneapolis, Minn.) Distributed by MCT Information Services.
Jan. pending home sales rise, market on uptrend
Pending home sales are on an upward trend – an admittedly uneven but meaningful trend – since reaching a cyclical low last April, according to the National Association of Realtors®. Today’s national Pending Home Sales Index (PHSI) rose 2 percent compared to December 2011.
The PHSI, a forward-looking indicator based on contract signings, rose to 97.0 in January from a downwardly revised 95.1 in December, and it’s 8.0 percent higher than January 2011 when it was 89.8. The data reflects contracts but not closings.
The January index is the highest since April 2010 when it reached 111.3 as buyers were rushing to take advantage of the homebuyer tax credit.
“Given more favorable housing market conditions, the trend in contract activity implies we are on track for a more meaningful sales gain this year,” says Lawrence Yun, NAR chief economist. “With a sustained downtrend in unsold inventory, this would bring about a broad price stabilization or even modest national price growth, of course with local variations.”
The PHSI in the Northeast rose 7.6 percent to 78.2 in January and is 9.8 percent above a year ago. In the Midwest the index declined 3.8 percent to 88.1 but is 10.8 percent higher than January 2011. Pending home sales in the South increased 7.7 percent to an index of 109.1 in January and are 10.5 percent above a year ago. In the West, the index fell 4.4 percent in January to 101.9 but is 0.7 percent above January 2011.
“Movements in the index have been uneven, reflecting the headwinds of tight credit, but job gains, high affordability and rising rents are hopefully pushing the market into what appears to be a sustained housing recovery,” Yun says. “If and when credit availability conditions return to normal, home sales will likely get a 15 percent boost, speed up the home-price recovery, and thereby significantly reduce the number of homeowners who are underwater.”
Source: Florida Realtors®
The PHSI, a forward-looking indicator based on contract signings, rose to 97.0 in January from a downwardly revised 95.1 in December, and it’s 8.0 percent higher than January 2011 when it was 89.8. The data reflects contracts but not closings.
The January index is the highest since April 2010 when it reached 111.3 as buyers were rushing to take advantage of the homebuyer tax credit.
“Given more favorable housing market conditions, the trend in contract activity implies we are on track for a more meaningful sales gain this year,” says Lawrence Yun, NAR chief economist. “With a sustained downtrend in unsold inventory, this would bring about a broad price stabilization or even modest national price growth, of course with local variations.”
The PHSI in the Northeast rose 7.6 percent to 78.2 in January and is 9.8 percent above a year ago. In the Midwest the index declined 3.8 percent to 88.1 but is 10.8 percent higher than January 2011. Pending home sales in the South increased 7.7 percent to an index of 109.1 in January and are 10.5 percent above a year ago. In the West, the index fell 4.4 percent in January to 101.9 but is 0.7 percent above January 2011.
“Movements in the index have been uneven, reflecting the headwinds of tight credit, but job gains, high affordability and rising rents are hopefully pushing the market into what appears to be a sustained housing recovery,” Yun says. “If and when credit availability conditions return to normal, home sales will likely get a 15 percent boost, speed up the home-price recovery, and thereby significantly reduce the number of homeowners who are underwater.”
Source: Florida Realtors®
Sunday, February 26, 2012
Could Rising Rents Bump Up Home Sales?
Home sales may get a boost from the rising prices occurring in the rental market, which is making it cheaper to own rather than rent in a growing number of cities.
“We might see a spring season better than the numbers are predicting," Jay Brinkmann, the Mortgage Bankers Association's chief economist, said during the an MBA conference in Florida this week.
The number of renters in the country increased during the housing crisis, while home ownership dropped to a 14-year low. But with rental costs rising nationwide, more renters may be lured to buying a home, particularly with home prices falling and mortgage rates hovering at record lows.
Mike Fratantoni, MBA’s vice president of economics and research, is forecasting home sales to increase 10 percent in 2013. An improving employment picture also is expected to have a positive impact on housing, MBA economists noted.
Still, "everything is going to be based overall where the economy goes," Brinkmann said. "This is going to be a slow year. There are a number of headwinds we're facing in terms of economic growth."
Source: “MBA: Rising Rental Costs May Drive Home Sales Up,” HousingWire (Feb. 23, 2012)
“We might see a spring season better than the numbers are predicting," Jay Brinkmann, the Mortgage Bankers Association's chief economist, said during the an MBA conference in Florida this week.
The number of renters in the country increased during the housing crisis, while home ownership dropped to a 14-year low. But with rental costs rising nationwide, more renters may be lured to buying a home, particularly with home prices falling and mortgage rates hovering at record lows.
Mike Fratantoni, MBA’s vice president of economics and research, is forecasting home sales to increase 10 percent in 2013. An improving employment picture also is expected to have a positive impact on housing, MBA economists noted.
Still, "everything is going to be based overall where the economy goes," Brinkmann said. "This is going to be a slow year. There are a number of headwinds we're facing in terms of economic growth."
Source: “MBA: Rising Rental Costs May Drive Home Sales Up,” HousingWire (Feb. 23, 2012)
Citizens revamp bill passes Fla. House
Realtor-supported legislation that would change the way Citizens Property Insurance Corp. pays claims in the event of a major storm passed the Florida House yesterday on an 89-25 vote.
HB 1127 by Rep. Ben Albritton (R-Bartow) significantly reduces the amount of money private insurers must front Citizens if Citizens doesn’t have enough money to pay claims following a catastrophic storm. The state-run insurer has about $12.8 billion available to cover claims. Analysts estimate the cost of a 1-in-100 year storm at $23.2 billion.
Currently, private insurers could be required to pay up to 18 percent of the premiums they collect within 30 days if Citizens runs out of money. These companies would then recoup the money from its policyholders – essentially anyone not insured by Citizens except worker’s compensation and medical practice – over a two-year period.
HB 1127 would reduce this financial obligation to 2 percent of premiums and shift repayment of Citizens losses via emergency assessments on a wider pool of policyholders, while lengthening the repayment period.
“If private insurers don’t have to front these monies to Citizens, Florida will become a more attractive market to the private insurance companies already here – and to any outside companies that consider offering property insurance coverage in the future,” says Trey Goldman, legislative counsel for Florida Realtors. “This will lead to more competition, more choices for property owners, and lower assessments.”
The Senate companion bill, SB 1346 by Sen. Steve Oelrich (R-Gainesville), is awaiting action in the Senate Budget Committee, its last stop before heading to the floor.
Also this week, Sen. Jack Latvala (R-St. Petersburg) debuted legislation to speed up the foreclosure process and jumpstart the economy, amid concerns the measure could leave some homeowners unjustly out in the cold.
By a 5-0 vote, the Senate Judiciary Committee approved SB 1890, which combines the contents of two House proposals, HB 213 and HB 1149, that are traveling in that chamber and supported by banks, builders and other lenders. Florida Realtors has no official position.
Backers of the proposal say they are targeting the 30 percent of foreclosed properties that sit abandoned, reducing neighborhood property values and raising public safety concerns. By reducing the time it takes to get those properties unencumbered and available, supporters say, the state’s housing industry – and the economy – will rebound more quickly.
Critics, however, say the bills as written go much further than reducing the inventory of abandoned homes. They are concerned the proposals adversely affect homeowners trying to stay in homes purchased, in many cases, pre-recession – a white-hot period of easy credit, interest only mortgages and escalating home prices.
The Senate bill now travels to Senate Banking and Insurance Committee and is likely to see substantive changes before it reaches the floor.
In other news, the Senate Budget Subcommittee on Finance and Tax voted in favor of a proposed constitutional amendment that would increase the exemption from tangible personal property taxes – taxes levied on businesses’ inventory and equipment – from $25,000 to $50,000.
SJR 1064 would appear as a constitutional amendment on the November ballot if approved by the Legislature. About 156,000 businesses, or almost half of entities paying the tax, would be cleared from the tax roll.
The House version of the bill, HJR 1003, stalled Wednesday when a discussion of the measure on the floor was postponed. House sponsor Rep. Eric Eisnaugle (R-Orlando) said he will make technical changes to the constitutional amendment language before pressing ahead.
Source: Florida Realtors®
HB 1127 by Rep. Ben Albritton (R-Bartow) significantly reduces the amount of money private insurers must front Citizens if Citizens doesn’t have enough money to pay claims following a catastrophic storm. The state-run insurer has about $12.8 billion available to cover claims. Analysts estimate the cost of a 1-in-100 year storm at $23.2 billion.
Currently, private insurers could be required to pay up to 18 percent of the premiums they collect within 30 days if Citizens runs out of money. These companies would then recoup the money from its policyholders – essentially anyone not insured by Citizens except worker’s compensation and medical practice – over a two-year period.
HB 1127 would reduce this financial obligation to 2 percent of premiums and shift repayment of Citizens losses via emergency assessments on a wider pool of policyholders, while lengthening the repayment period.
“If private insurers don’t have to front these monies to Citizens, Florida will become a more attractive market to the private insurance companies already here – and to any outside companies that consider offering property insurance coverage in the future,” says Trey Goldman, legislative counsel for Florida Realtors. “This will lead to more competition, more choices for property owners, and lower assessments.”
The Senate companion bill, SB 1346 by Sen. Steve Oelrich (R-Gainesville), is awaiting action in the Senate Budget Committee, its last stop before heading to the floor.
Also this week, Sen. Jack Latvala (R-St. Petersburg) debuted legislation to speed up the foreclosure process and jumpstart the economy, amid concerns the measure could leave some homeowners unjustly out in the cold.
By a 5-0 vote, the Senate Judiciary Committee approved SB 1890, which combines the contents of two House proposals, HB 213 and HB 1149, that are traveling in that chamber and supported by banks, builders and other lenders. Florida Realtors has no official position.
Backers of the proposal say they are targeting the 30 percent of foreclosed properties that sit abandoned, reducing neighborhood property values and raising public safety concerns. By reducing the time it takes to get those properties unencumbered and available, supporters say, the state’s housing industry – and the economy – will rebound more quickly.
Critics, however, say the bills as written go much further than reducing the inventory of abandoned homes. They are concerned the proposals adversely affect homeowners trying to stay in homes purchased, in many cases, pre-recession – a white-hot period of easy credit, interest only mortgages and escalating home prices.
The Senate bill now travels to Senate Banking and Insurance Committee and is likely to see substantive changes before it reaches the floor.
In other news, the Senate Budget Subcommittee on Finance and Tax voted in favor of a proposed constitutional amendment that would increase the exemption from tangible personal property taxes – taxes levied on businesses’ inventory and equipment – from $25,000 to $50,000.
SJR 1064 would appear as a constitutional amendment on the November ballot if approved by the Legislature. About 156,000 businesses, or almost half of entities paying the tax, would be cleared from the tax roll.
The House version of the bill, HJR 1003, stalled Wednesday when a discussion of the measure on the floor was postponed. House sponsor Rep. Eric Eisnaugle (R-Orlando) said he will make technical changes to the constitutional amendment language before pressing ahead.
Source: Florida Realtors®
New-home sales dip after 4 straight monthly gains
Sales of new U.S. homes dipped in January, but the final quarter of 2011 was stronger than first estimated.
The Commerce Department said Friday that new-home sales fell 0.9 percent last month to a seasonally adjusted annual rate of 321,000 homes. That followed four straight months of gains in which home sales rose 10 percent.
The gains came after the government upwardly revised October, November and December’s figures. December’s annual sales pace of 324,000 was the highest in a year.
Even with more sales, only 304,000 new homes were sold in 2011 – the fewest on record dating back to 1963. And new homes are selling well below the 700,000-per-year rate that economists equate with healthy markets.
Still, the pickup in sales at the end of last year should bolster the view that the housing market is starting to revive.
Builders are growing more optimistic after seeing more people express interest in buying this year. They’ve also sought more permits to build single-family homes – one of several encouraging signs across the housing industry.
In January, sales of previously occupied homes reached their highest level in nearly two years. And they have risen more than 13 percent in the past six months. Mortgage rates have never been lower.
Most importantly, hiring has improved, which is critical to a housing rebound. The economy added more than 200,000 net jobs in both December and January. And economists anticipate another big month of hiring in February after seeing unemployment benefit applications fall to the lowest level in nearly four years. The unemployment rate was 8.3 percent in January, its lowest level in nearly three years.
Economists caution that housing is a long way from fully recovering. Builders have stopped working on many projects because it’s been hard for them to get financing or to compete with cheaper resale homes. For many Americans, buying a home remains too big a risk more than four years after the housing bubble burst.
Though new-home sales represent less than 10 percent of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to the National Association of Home Builders.
A key reason for the dismal 2011 sales is that builders must compete with foreclosures and short sales – when lenders accept less for a house than what is owed on the mortgage
Builders ended 2011 with a third straight year of dismal home construction and the worst on record for single-family home building. But in a hopeful sign, single-family home construction, which makes up 70 percent of the market, increased in each of the last three months.
Source: The Associated Press, Derek Kravitz, AP real estate writer.
The Commerce Department said Friday that new-home sales fell 0.9 percent last month to a seasonally adjusted annual rate of 321,000 homes. That followed four straight months of gains in which home sales rose 10 percent.
The gains came after the government upwardly revised October, November and December’s figures. December’s annual sales pace of 324,000 was the highest in a year.
Even with more sales, only 304,000 new homes were sold in 2011 – the fewest on record dating back to 1963. And new homes are selling well below the 700,000-per-year rate that economists equate with healthy markets.
Still, the pickup in sales at the end of last year should bolster the view that the housing market is starting to revive.
Builders are growing more optimistic after seeing more people express interest in buying this year. They’ve also sought more permits to build single-family homes – one of several encouraging signs across the housing industry.
In January, sales of previously occupied homes reached their highest level in nearly two years. And they have risen more than 13 percent in the past six months. Mortgage rates have never been lower.
Most importantly, hiring has improved, which is critical to a housing rebound. The economy added more than 200,000 net jobs in both December and January. And economists anticipate another big month of hiring in February after seeing unemployment benefit applications fall to the lowest level in nearly four years. The unemployment rate was 8.3 percent in January, its lowest level in nearly three years.
Economists caution that housing is a long way from fully recovering. Builders have stopped working on many projects because it’s been hard for them to get financing or to compete with cheaper resale homes. For many Americans, buying a home remains too big a risk more than four years after the housing bubble burst.
Though new-home sales represent less than 10 percent of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to the National Association of Home Builders.
A key reason for the dismal 2011 sales is that builders must compete with foreclosures and short sales – when lenders accept less for a house than what is owed on the mortgage
Builders ended 2011 with a third straight year of dismal home construction and the worst on record for single-family home building. But in a hopeful sign, single-family home construction, which makes up 70 percent of the market, increased in each of the last three months.
Source: The Associated Press, Derek Kravitz, AP real estate writer.
Rate on 30-year mortgage rises to 3.95%
The average rate on the 30-year fixed mortgage jumped after standing pat for three straight weeks at record lows. But the rate stayed below 4 percent for the 12th straight week, keeping homebuying and refinancing attractive for those who can qualify.
Mortgage buyer Freddie Mac said Thursday the rate on the 30-year loan rose to 3.95 percent. That’s up from last week’s rate of 3.87 percent, the lowest since long-term mortgages began in the 1950s.
The average on the 15-year fixed mortgage rose to 3.19 percent from 3.16 percent. It hit a record low of 3.14 percent three weeks ago.
So far, low rates have done little to help the housing market, which is slowly improving. Few people can qualify for the rates and many who can have already done so.
The four-week average of home purchase applications dropped in late January and February while refinancing is mostly flat, according to the Mortgage Bankers Association. Refinancing now makes more than 81 percent of mortgage activity.
But the housing market is flashing signs of health ahead of the spring-buying season. Sales of previously occupied homes are at their highest level since May 2010. More first-time buyers are making purchases. And the supply of homes fell last month to its lowest point in nearly seven years, which could push home prices higher.
The job market is also improving, which is critical to a housing rebound. In January, employers added 243,000 net jobs – the most in nine months – and the unemployment rate fell to 8.3 percent, the lowest level in nearly three years.
Frank Nothaft, Freddie Mac’s chief economist, said the housing market is gradually starting to pick up. Still, home sales remain weak and it could take years for the market to fully return to health.
To calculate the average rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.
The average rates don’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fees for the 30-year and 15-year loans were unchanged at 0.8.
For the five-year adjustable loan, the average rate fell to 2.80 percent from 2.82 percent, and the average fee fell to 0.7 from 0.8.
The average on the one-year adjustable loan fell to 2.73 percent from 2.84 percent, and the average fee was unchanged at 0.6.
Source: The Associated Press, Derek Kravitz, AP real estate writer.
Mortgage buyer Freddie Mac said Thursday the rate on the 30-year loan rose to 3.95 percent. That’s up from last week’s rate of 3.87 percent, the lowest since long-term mortgages began in the 1950s.
The average on the 15-year fixed mortgage rose to 3.19 percent from 3.16 percent. It hit a record low of 3.14 percent three weeks ago.
So far, low rates have done little to help the housing market, which is slowly improving. Few people can qualify for the rates and many who can have already done so.
The four-week average of home purchase applications dropped in late January and February while refinancing is mostly flat, according to the Mortgage Bankers Association. Refinancing now makes more than 81 percent of mortgage activity.
But the housing market is flashing signs of health ahead of the spring-buying season. Sales of previously occupied homes are at their highest level since May 2010. More first-time buyers are making purchases. And the supply of homes fell last month to its lowest point in nearly seven years, which could push home prices higher.
The job market is also improving, which is critical to a housing rebound. In January, employers added 243,000 net jobs – the most in nine months – and the unemployment rate fell to 8.3 percent, the lowest level in nearly three years.
Frank Nothaft, Freddie Mac’s chief economist, said the housing market is gradually starting to pick up. Still, home sales remain weak and it could take years for the market to fully return to health.
To calculate the average rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.
The average rates don’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fees for the 30-year and 15-year loans were unchanged at 0.8.
For the five-year adjustable loan, the average rate fell to 2.80 percent from 2.82 percent, and the average fee fell to 0.7 from 0.8.
The average on the one-year adjustable loan fell to 2.73 percent from 2.84 percent, and the average fee was unchanged at 0.6.
Source: The Associated Press, Derek Kravitz, AP real estate writer.
Thursday, February 23, 2012
8 Markets Where List Prices Have Fallen the Most
Median list prices nationwide are up 3.69 percent year over year, according to Realtor.com data, which tracks 146 metro areas. More housing markets are showing signs of stabilizing, as inventories of for-sale homes are dropping.
But a few metro areas continue to see falling list prices. Many of these areas are plagued by foreclosures that are chipping away at home prices.
The following eight metro areas have seen the largest year-over-year drops in median list prices.
1. Chicago
Median list price: $186,000
Year-over-year: -11%
2. Detroit
Median list price: $81,700
Year-over-year: -8.20%
3. Las Vegas, Nev.-Ariz.
Median list price: $121,500
Year-over-year: -6.18%
4. Atlanta
Median list price: $150,000
Year-over-year: -5.60%
5. Knoxville
Median list price: $175,000
Year-over-year: -5.35%
6. Sacramento, Calif.
Median list price: $199,000
Year-over-year: -5.24%
7. Los Angeles-Long Beach, Calif.
Median list price: $320,444
Year-over-year: -5.14%
8. South Bend, Ind.
Median list price: $95,500
Year-over-year: -4.40%
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
But a few metro areas continue to see falling list prices. Many of these areas are plagued by foreclosures that are chipping away at home prices.
The following eight metro areas have seen the largest year-over-year drops in median list prices.
1. Chicago
Median list price: $186,000
Year-over-year: -11%
2. Detroit
Median list price: $81,700
Year-over-year: -8.20%
3. Las Vegas, Nev.-Ariz.
Median list price: $121,500
Year-over-year: -6.18%
4. Atlanta
Median list price: $150,000
Year-over-year: -5.60%
5. Knoxville
Median list price: $175,000
Year-over-year: -5.35%
6. Sacramento, Calif.
Median list price: $199,000
Year-over-year: -5.24%
7. Los Angeles-Long Beach, Calif.
Median list price: $320,444
Year-over-year: -5.14%
8. South Bend, Ind.
Median list price: $95,500
Year-over-year: -4.40%
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
Mortgage Bills May Soon Be Simpler to Grasp
The Consumer Financial Protection Bureau has proposed a standardized mortgage statement that sets out to make it easier to understand the information about your loan on one page.
The proposed mortgage statement, released last week, includes a breakdown of such items as the amount paid from the monthly payment toward the principal, interest, escrow, the outstanding principal, maturity date, and any prepayment penalties. For adjustable-rate mortgages, the prototype also shows when the interest rate on the loan will begin to reset.
“This information will help consumers stay on top of their mortgage costs and hold their mortgage servicers accountable for fixing errors that crop up,” Richard Corday, the director of the Consumer Financial Protection Bureau, said in a statement. “Given the widespread mortgage servicing problems we’ve seen over the past few years, consumers need clear disclosures they can count on.”
Currently, the industry does not have an industrywide standard for monthly mortgage statements.
You can view the proposed form at ConsumerFinance.gov. The agency currently is soliciting public and industry comment. The form is to be formally proposed this summer.
Source: Consumer Financial Protection Bureau
The proposed mortgage statement, released last week, includes a breakdown of such items as the amount paid from the monthly payment toward the principal, interest, escrow, the outstanding principal, maturity date, and any prepayment penalties. For adjustable-rate mortgages, the prototype also shows when the interest rate on the loan will begin to reset.
“This information will help consumers stay on top of their mortgage costs and hold their mortgage servicers accountable for fixing errors that crop up,” Richard Corday, the director of the Consumer Financial Protection Bureau, said in a statement. “Given the widespread mortgage servicing problems we’ve seen over the past few years, consumers need clear disclosures they can count on.”
Currently, the industry does not have an industrywide standard for monthly mortgage statements.
You can view the proposed form at ConsumerFinance.gov. The agency currently is soliciting public and industry comment. The form is to be formally proposed this summer.
Source: Consumer Financial Protection Bureau
Defaults of the Rich: Walking Away From the McMansions
Wealthy home owners with huge loans worth more than the value of their mansions are walking away from luxury homes in some of California's toniest neighborhoods, even if they still can afford the monthly payments.
Foreclosures on loans over $1 million are up nearly 600 percent nationwide since 2008 and, according to a Reuters report, at least 180 houses in Beverly Hills alone have been foreclosed, scheduled for auction, or served with a notice of default in recent months.
The problem is acute in California, one of a few "non-recourse" states where a lender can only recover the house and not the owner's other assets after a default.
Source: Information, Inc.
Foreclosures on loans over $1 million are up nearly 600 percent nationwide since 2008 and, according to a Reuters report, at least 180 houses in Beverly Hills alone have been foreclosed, scheduled for auction, or served with a notice of default in recent months.
The problem is acute in California, one of a few "non-recourse" states where a lender can only recover the house and not the owner's other assets after a default.
Source: Information, Inc.
Wednesday, February 22, 2012
Fla. housing market upbeat in Jan. 2012
Florida’s housing market reported gains in median sales prices and a reduced inventory of homes for sale in January, according to the latest housing data released by Florida Realtors®.
“We’re seeing positive signs of a strengthening recovery in Florida’s housing market,” says 2012 Florida Realtors President Summer Greene, regional manager of Better Homes and Gardens Real Estate Florida 1st in Fort Lauderdale. “In both the statewide single-family and condo-townhome markets, pending sales are higher and the statewide median sales price rose – up 5.3 percent to $129,000 for single-family homes and up 18.8 percent to $95,000 for condo-townhomes. Improving the availability of affordable financing to qualified buyers and investors would continue to stabilize Florida’s housing market and economy.”
The median is the midpoint; half the homes sold for more, half for less. Sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes, according to housing industry analysts.
The national median sales price for existing single-family homes in December 2011 was $165,100, which is 2.5 percent below the previous year, according to the National Association of Realtors® (NAR). In California, the statewide median sales price for single-family existing homes in December was $285,920; in Maryland, it was $222,934.
Florida statewide sales of existing single-family homes totaled 12,044 in January 2012, down 5.5 percent compared to the year-ago figure, according to data from Florida Realtors Industry Data and Analysis department and vendor partner 10K Research and Marketing.
Looking at Florida’s year-to-year comparison for sales of condos/townhomes, a total of 5,963 units sold statewide last month, down 22.6 percent from those sold in January 2011. According to NAR, the national median existing condo price in December 2011 was $160,000.
“Even though closed sales are down from a year ago, there are two really bright spots in Florida’s housing market,” said Florida Realtors Chief Economist Dr. John Tuccillo. “One is a significant increase in pending sales. In fact, pending sales have been up every month since May. The barrier that stands between pending sales and closings is the difficulty consumers are experiencing in obtaining financing.
“The second positive is inventories, which are now at a point close to a balanced market,” Tuccillo said. The months supply of inventory stands at 6.4 for both the single-family homes market and the condos/townhomes market.
The interest rate for a 30-year fixed-rate mortgage averaged 3.92 percent in January 2012, down from the 4.76 percent average during the same month a year earlier, according to Freddie Mac.
To see the full statewide housing activity report, go to Florida Realtors Media Center at http://media.floridarealtors.org/ and look under Latest Releases, or download the report under Market Data at: http://media.floridarealtors.org/market-data.
The January 2012 Florida Realtors home sales release marks a new statewide housing market reporting partnership between Florida Realtors Industry Data and Analysis department and a new vendor partner, 10K Research and Marketing. Housing sales data from the state’s 63 local Realtor organizations is collected and organized with the goal of providing unique, localized market reports to the local Realtor boards and associations within Florida Realtors, enabling the groups and their Realtor members to serve as the definitive voice of real estate in their respective local markets.
At the same time, Florida Realtors is providing comprehensive statewide housing market statistics – but this new data series only includes statewide numbers. Beginning with this January 2012 housing data report, Florida Realtors is no longer reporting any market data for Realtor members’ sales in the state’s metropolitan statistical areas, as had previously been reported in partnership with the University of Florida’s Bergstrom Center for Real Estate Studies.
Source: Florida Realtors®
“We’re seeing positive signs of a strengthening recovery in Florida’s housing market,” says 2012 Florida Realtors President Summer Greene, regional manager of Better Homes and Gardens Real Estate Florida 1st in Fort Lauderdale. “In both the statewide single-family and condo-townhome markets, pending sales are higher and the statewide median sales price rose – up 5.3 percent to $129,000 for single-family homes and up 18.8 percent to $95,000 for condo-townhomes. Improving the availability of affordable financing to qualified buyers and investors would continue to stabilize Florida’s housing market and economy.”
The median is the midpoint; half the homes sold for more, half for less. Sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes, according to housing industry analysts.
The national median sales price for existing single-family homes in December 2011 was $165,100, which is 2.5 percent below the previous year, according to the National Association of Realtors® (NAR). In California, the statewide median sales price for single-family existing homes in December was $285,920; in Maryland, it was $222,934.
Florida statewide sales of existing single-family homes totaled 12,044 in January 2012, down 5.5 percent compared to the year-ago figure, according to data from Florida Realtors Industry Data and Analysis department and vendor partner 10K Research and Marketing.
Looking at Florida’s year-to-year comparison for sales of condos/townhomes, a total of 5,963 units sold statewide last month, down 22.6 percent from those sold in January 2011. According to NAR, the national median existing condo price in December 2011 was $160,000.
“Even though closed sales are down from a year ago, there are two really bright spots in Florida’s housing market,” said Florida Realtors Chief Economist Dr. John Tuccillo. “One is a significant increase in pending sales. In fact, pending sales have been up every month since May. The barrier that stands between pending sales and closings is the difficulty consumers are experiencing in obtaining financing.
“The second positive is inventories, which are now at a point close to a balanced market,” Tuccillo said. The months supply of inventory stands at 6.4 for both the single-family homes market and the condos/townhomes market.
The interest rate for a 30-year fixed-rate mortgage averaged 3.92 percent in January 2012, down from the 4.76 percent average during the same month a year earlier, according to Freddie Mac.
To see the full statewide housing activity report, go to Florida Realtors Media Center at http://media.floridarealtors.org/ and look under Latest Releases, or download the report under Market Data at: http://media.floridarealtors.org/market-data.
The January 2012 Florida Realtors home sales release marks a new statewide housing market reporting partnership between Florida Realtors Industry Data and Analysis department and a new vendor partner, 10K Research and Marketing. Housing sales data from the state’s 63 local Realtor organizations is collected and organized with the goal of providing unique, localized market reports to the local Realtor boards and associations within Florida Realtors, enabling the groups and their Realtor members to serve as the definitive voice of real estate in their respective local markets.
At the same time, Florida Realtors is providing comprehensive statewide housing market statistics – but this new data series only includes statewide numbers. Beginning with this January 2012 housing data report, Florida Realtors is no longer reporting any market data for Realtor members’ sales in the state’s metropolitan statistical areas, as had previously been reported in partnership with the University of Florida’s Bergstrom Center for Real Estate Studies.
Source: Florida Realtors®
Tuesday, February 21, 2012
The 10 Most Popular Housing Markets
Chicago continues to hold on to the top-spot in January as the most widely searched housing market at Realtor.com. The following are the top searched housing markets from last month, according to Realtor.com data of 146 metro areas.
1. Chicago
Median list price: $186,000
2. Detroit
Median list price: $81,700
3. Los Angeles-Long Beach, Calif.
Median list price: $320,444
4. Philadelphia, Pa.-N.J.
Median list price: $221,995
5. Phoenix-Mesa, Ariz.
Median list price: $169,500
6. Atlanta
Median list price: $150,000
7. Tampa-St. Petersburg-Clearwater, Fla.
Median list price: $142,500
8. Dallas
Median list price: $189,900
9. Orlando, Fla.
Median list price: $155,000
10. Las Vegas, Nev.-Ariz.
Median list price: $121,500
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
1. Chicago
Median list price: $186,000
2. Detroit
Median list price: $81,700
3. Los Angeles-Long Beach, Calif.
Median list price: $320,444
4. Philadelphia, Pa.-N.J.
Median list price: $221,995
5. Phoenix-Mesa, Ariz.
Median list price: $169,500
6. Atlanta
Median list price: $150,000
7. Tampa-St. Petersburg-Clearwater, Fla.
Median list price: $142,500
8. Dallas
Median list price: $189,900
9. Orlando, Fla.
Median list price: $155,000
10. Las Vegas, Nev.-Ariz.
Median list price: $121,500
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
Housing Inventories Drop, List Prices Rise
In a growing number of housing markets, sellers are facing less competition now compared to a year ago.
Inventory of for-sale homes has dropped by about 23 percent compared to this time last year, and fell by 6 percent alone from December 2011 to January 2012, according to Realtor.com data.
The age of the inventory is also declining, and is nearly 5 percent below levels last January.
The median age of for-sale housing inventory is lowest — 69 days or less — in Oakland, Calif.; Bakersfield, Calif.; Denver; Fresno, Calif.; Stockton-Lodi, Calif. and Phoexnis-Mesa, Ariz., according to January data from Realtor.com.
Meanwhile, as inventory is falling, the median list price has been on the rise: up nationally more than 3 percent year-over-year.
“Over the past year, an increasing number of markets have registered year-over-year increases in median list prices while fewer markets have experienced year-over-year list price declines,” a statement by Realtor.com notes.
The metro areas with the highest increases to median list prices year-over-year, from January 2011 to January 2012 are:
1. Miami, Fla.: 32.75%
Median list price (in January 2012): $265,500
2. Fort Myers-Cape Coral, Fla.: 21%
Median list price: $229,900
3. Punta Gorda, Fla.: 19%
Median list price: $179,000
4. West Palm Beach-Boca Raton, Fla: 18.6%
Median list price: $224,150
5. Boise City, Idaho: 18.15%
Median list price: $151,228
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
Inventory of for-sale homes has dropped by about 23 percent compared to this time last year, and fell by 6 percent alone from December 2011 to January 2012, according to Realtor.com data.
The age of the inventory is also declining, and is nearly 5 percent below levels last January.
The median age of for-sale housing inventory is lowest — 69 days or less — in Oakland, Calif.; Bakersfield, Calif.; Denver; Fresno, Calif.; Stockton-Lodi, Calif. and Phoexnis-Mesa, Ariz., according to January data from Realtor.com.
Meanwhile, as inventory is falling, the median list price has been on the rise: up nationally more than 3 percent year-over-year.
“Over the past year, an increasing number of markets have registered year-over-year increases in median list prices while fewer markets have experienced year-over-year list price declines,” a statement by Realtor.com notes.
The metro areas with the highest increases to median list prices year-over-year, from January 2011 to January 2012 are:
1. Miami, Fla.: 32.75%
Median list price (in January 2012): $265,500
2. Fort Myers-Cape Coral, Fla.: 21%
Median list price: $229,900
3. Punta Gorda, Fla.: 19%
Median list price: $179,000
4. West Palm Beach-Boca Raton, Fla: 18.6%
Median list price: $224,150
5. Boise City, Idaho: 18.15%
Median list price: $151,228
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
Biggest U.S. mortgage lenders
Residential originations fell in 2011, and some lenders saw a bigger decline than others, according to MortgageDaily.com’s 2011 Mortgage Lender Ranking. The government’s role in residential finance was reduced last year.
Fourth-quarter originations by all lenders were an estimated $381 billion, up from approximately $317 billion closed three months earlier.
The biggest fourth-quarter lender was Wells Fargo, which reported that volume climbed to $120 billion from the third quarter’s $89 billion. No. 3 Bank of America saw production fall more than any other top-10 lender as it quit correspondent lending. U.S. Bancorp gave the best performance, where production climbed 51 percent.
Top 4Q originators
1. Wells Fargo
2. Chase
3. Bank of America
4. Citi
5. U.S. Bancorp
Industry-wide production during all of 2011 was around $1.3 trillion, falling from approximately $1.6 trillion the previous year.
There were $206 billion in loans insured by FHA last year, giving FHA a market share around 16 percent, down from 19 percent in 2010. Loans purchased or guaranteed by Fannie Mae or Freddie Mac accounted for approximately 74 percent of 2011 business – lower than the 78 percent share a year earlier.
The government owns FHA and controls Fannie and Freddie, putting the country on the hook for around 90 percent of mortgages originated last year. But that was lower than the approximately 97 percent government market share in 2010.
Wells Fargo dominated annual rankings despite an 8 percent decline. Bank of America, Chase and Wells Fargo were responsible for about half of all production during 2011.
PHH saw annual production rise 6 percent, the best annual performance of any top-ranking lender.
Top 2011 lenders
1. Wells Fargo
2. Bank of America
3. Chase
4. Citigroup
5. Ally
6. PHH
7. U.S. Bancorp
8. Quicken
9. Flagstar
10. BB&T
Based on mortgage servicing portfolios, including third-party servicing, mortgages owned and home-equity assets, Wells Fargo’s $1.822 trillion portfolio was the biggest.
Top 2011 servicers
1. Wells Fargo
2. Bank of America
3. Chase
4. Citigroup
5. Ally
6. U.S. Bancorp
7. PNC
8. PHH
9. SunTrust
10. OneWest
Source: Florida Realtors®
Fourth-quarter originations by all lenders were an estimated $381 billion, up from approximately $317 billion closed three months earlier.
The biggest fourth-quarter lender was Wells Fargo, which reported that volume climbed to $120 billion from the third quarter’s $89 billion. No. 3 Bank of America saw production fall more than any other top-10 lender as it quit correspondent lending. U.S. Bancorp gave the best performance, where production climbed 51 percent.
Top 4Q originators
1. Wells Fargo
2. Chase
3. Bank of America
4. Citi
5. U.S. Bancorp
Industry-wide production during all of 2011 was around $1.3 trillion, falling from approximately $1.6 trillion the previous year.
There were $206 billion in loans insured by FHA last year, giving FHA a market share around 16 percent, down from 19 percent in 2010. Loans purchased or guaranteed by Fannie Mae or Freddie Mac accounted for approximately 74 percent of 2011 business – lower than the 78 percent share a year earlier.
The government owns FHA and controls Fannie and Freddie, putting the country on the hook for around 90 percent of mortgages originated last year. But that was lower than the approximately 97 percent government market share in 2010.
Wells Fargo dominated annual rankings despite an 8 percent decline. Bank of America, Chase and Wells Fargo were responsible for about half of all production during 2011.
PHH saw annual production rise 6 percent, the best annual performance of any top-ranking lender.
Top 2011 lenders
1. Wells Fargo
2. Bank of America
3. Chase
4. Citigroup
5. Ally
6. PHH
7. U.S. Bancorp
8. Quicken
9. Flagstar
10. BB&T
Based on mortgage servicing portfolios, including third-party servicing, mortgages owned and home-equity assets, Wells Fargo’s $1.822 trillion portfolio was the biggest.
Top 2011 servicers
1. Wells Fargo
2. Bank of America
3. Chase
4. Citigroup
5. Ally
6. U.S. Bancorp
7. PNC
8. PHH
9. SunTrust
10. OneWest
Source: Florida Realtors®
Six questions to ask when shopping for homeowners insurance
Homeowners should work with experts to determine the type of homeowners insurance they need and the amount of coverage.
“Besides knowing the basics of what a standard homeowners insurance policy covers, consumers should ask a series of questions – and receive satisfactory answers to each of them – before buying a new policy or renewing an existing one,” says Michael Barry, vice president, media relations, Insurance Information Institute (I.I.I.). I.I.I. is a nonprofit, communications organization supported by the insurance industry.
According to I.I.I., there are six basic questions everyone should ask before buying or renewing a homeowners insurance policy:
1. How much would it cost to rebuild my home in its current location in the event of a total loss? Ideally, a homeowners insurance policy should cover the cost of building a new home from scratch. In general, homeowners policies cover partial or total damages caused by fire, hurricane, hail, lightning or any other disaster if it’s listed in the policy. Flood and earthquake-related losses must be insured separately because both perils are excluded in standard homeowners insurance policies.
2. How much is my personal property worth in the event of a total loss? A homeowners insurance policy should cover the cost of replacing all personal property (furniture, appliances, clothing) should it be stolen or destroyed by fire, hurricane or another insured disaster. Most companies provide personal property coverage equal to about 50 to 70 percent of the amount of insurance on the home’s structure. (A $100,000 policy for the structure would have perhaps $50,000 to $70,000 worth of personal property coverage.)
However, the best way to determine personal property coverage in a specific situation is to conduct a home inventory. I.I.I. provides online software to help homeowners catalog and value possessions (link underlined to: https://www.knowyourstuff.org/iii/login.html) as well as an iPhone app.
3. How much liability protection do I need? Liability covers homeowners against lawsuits for bodily injury or property damage caused to other people, including damage caused by pets. The liability portion of a policy pays legal defense costs and any court awards – but only up to the limit set in the policy. It’s effective not just inside the home but also anywhere in the world. Liability limits generally start at about $100,000, and many insurance agents will recommend at least $300,000. Homeowners with significant assets may want more; others may want less.
4. What level of additional living expense coverage do I need? The Additional Living Expenses (ALE) provision is found in standard homeowners insurance policies. It pays for the costs of living away from home if damage from an insured disaster makes the house uninhabitable. ALE covers hotel bills, meals and other expenses above customary living expenses.
ALE coverage differs from company to company. Many policies provide coverage equal to about 20 percent of dwelling protection. For example, if the structure of your home is insured for $100,000, you would have $20,000 of ALE coverage. Some companies impose a time limitation, such as 12 to 24 months.
5. Should I buy a separate flood and/or earthquake insurance policy? Flood coverage is available from the federal government’s National Flood Insurance Program (NFIP) and from a few private insurers. Earthquake coverage is usually available in the form of a supplemental policy.
6. Do I qualify for any discounts? Homes with smoke detectors, burglar alarms or dead-bolt locks often get a premium rate discount. Sophisticated sprinkler systems and alarms that ring at monitoring stations often reduce homeowners insurance premiums too. Ask an agent. If you are at least 55 years old and retired, for instance, you may qualify for a discount of up to 10 percent at some companies. If you have completely modernized your plumbing or electrical system recently, a few companies may provide a price break.
Source: Florida Realtors®
“Besides knowing the basics of what a standard homeowners insurance policy covers, consumers should ask a series of questions – and receive satisfactory answers to each of them – before buying a new policy or renewing an existing one,” says Michael Barry, vice president, media relations, Insurance Information Institute (I.I.I.). I.I.I. is a nonprofit, communications organization supported by the insurance industry.
According to I.I.I., there are six basic questions everyone should ask before buying or renewing a homeowners insurance policy:
1. How much would it cost to rebuild my home in its current location in the event of a total loss? Ideally, a homeowners insurance policy should cover the cost of building a new home from scratch. In general, homeowners policies cover partial or total damages caused by fire, hurricane, hail, lightning or any other disaster if it’s listed in the policy. Flood and earthquake-related losses must be insured separately because both perils are excluded in standard homeowners insurance policies.
2. How much is my personal property worth in the event of a total loss? A homeowners insurance policy should cover the cost of replacing all personal property (furniture, appliances, clothing) should it be stolen or destroyed by fire, hurricane or another insured disaster. Most companies provide personal property coverage equal to about 50 to 70 percent of the amount of insurance on the home’s structure. (A $100,000 policy for the structure would have perhaps $50,000 to $70,000 worth of personal property coverage.)
However, the best way to determine personal property coverage in a specific situation is to conduct a home inventory. I.I.I. provides online software to help homeowners catalog and value possessions (link underlined to: https://www.knowyourstuff.org/iii/login.html) as well as an iPhone app.
3. How much liability protection do I need? Liability covers homeowners against lawsuits for bodily injury or property damage caused to other people, including damage caused by pets. The liability portion of a policy pays legal defense costs and any court awards – but only up to the limit set in the policy. It’s effective not just inside the home but also anywhere in the world. Liability limits generally start at about $100,000, and many insurance agents will recommend at least $300,000. Homeowners with significant assets may want more; others may want less.
4. What level of additional living expense coverage do I need? The Additional Living Expenses (ALE) provision is found in standard homeowners insurance policies. It pays for the costs of living away from home if damage from an insured disaster makes the house uninhabitable. ALE covers hotel bills, meals and other expenses above customary living expenses.
ALE coverage differs from company to company. Many policies provide coverage equal to about 20 percent of dwelling protection. For example, if the structure of your home is insured for $100,000, you would have $20,000 of ALE coverage. Some companies impose a time limitation, such as 12 to 24 months.
5. Should I buy a separate flood and/or earthquake insurance policy? Flood coverage is available from the federal government’s National Flood Insurance Program (NFIP) and from a few private insurers. Earthquake coverage is usually available in the form of a supplemental policy.
6. Do I qualify for any discounts? Homes with smoke detectors, burglar alarms or dead-bolt locks often get a premium rate discount. Sophisticated sprinkler systems and alarms that ring at monitoring stations often reduce homeowners insurance premiums too. Ask an agent. If you are at least 55 years old and retired, for instance, you may qualify for a discount of up to 10 percent at some companies. If you have completely modernized your plumbing or electrical system recently, a few companies may provide a price break.
Source: Florida Realtors®
Monday, February 20, 2012
More lawmakers push for flood insurance
Insurers, environmentalists and others have joined U.S. Sens. Jon Tester (D-Mont.) and David Vitter (R-La.) in pressuring Senate leaders to consider a five-year extension of the National Flood Insurance Program (NFIP), which is slated to expire on May 31.
Given the wide support for the NFIP’s extension, Tester says, “There’s no reason for a lot of brinksmanship.”
The legislation not only would extend the program but also reform it, calling for higher flood insurance premiums, a premium rate increase of 15 percent per year on nonresidential homes and businesses, and a new requirement to mandate coverage for people near levees and dams if their mortgages are federally regulated.
The measure also would create a natural catastrophe commission to study how the United States can reduce its risk from disasters, just as new research warns that climate change could increase damages from a storm surge.
“Unfortunately, flooding is becoming more frequent and more severe,” says American Rivers President Bob Irvin. “People need reliable information about where floods are likely to occur in order to protect themselves and their property from flood damage.”
Experts also say that premium rate hikes could send a message to developers and homeowners and convince them to reduce development along coastlines at the expense of wetlands that can absorb and reduce flood damage.
A recent Massachusetts Institute of Technology study found that sea surges near New York City could be higher and more frequent over the next 100 years, and the Federal Emergency Management Agency continues to study climate change and its effect on flood insurance.
Although it is unclear when the Senate will consider the measure, Vitter and Tester say that it will attract the 60 votes necessary for passage.
Source: INFORMATION, INC.
Given the wide support for the NFIP’s extension, Tester says, “There’s no reason for a lot of brinksmanship.”
The legislation not only would extend the program but also reform it, calling for higher flood insurance premiums, a premium rate increase of 15 percent per year on nonresidential homes and businesses, and a new requirement to mandate coverage for people near levees and dams if their mortgages are federally regulated.
The measure also would create a natural catastrophe commission to study how the United States can reduce its risk from disasters, just as new research warns that climate change could increase damages from a storm surge.
“Unfortunately, flooding is becoming more frequent and more severe,” says American Rivers President Bob Irvin. “People need reliable information about where floods are likely to occur in order to protect themselves and their property from flood damage.”
Experts also say that premium rate hikes could send a message to developers and homeowners and convince them to reduce development along coastlines at the expense of wetlands that can absorb and reduce flood damage.
A recent Massachusetts Institute of Technology study found that sea surges near New York City could be higher and more frequent over the next 100 years, and the Federal Emergency Management Agency continues to study climate change and its effect on flood insurance.
Although it is unclear when the Senate will consider the measure, Vitter and Tester say that it will attract the 60 votes necessary for passage.
Source: INFORMATION, INC.
More new homes conserve energy
In downtown Frederick, Md., blocks from a Starbucks and Barnes & Noble, four new duplexes nearing completion were sold with complimentary iPads to monitor energy use.
For nearly the same price as other new homes, they have solar panels, geothermal wells and ultra-efficient, factory-made exterior walls. They’re designed to generate as much power as they use, along with thousands of dollars in renewable energy tax credits.
“We think of ourselves as early adopters,” says Mike Muren, of Nexus EnergyHomes, which is building 55 zero-energy homes in the historic town. “Our homes go way beyond energy codes.”
His company may be ahead of today’s curve, but that curve is changing so fast that net-zero homes may soon become archetypical. Despite the concerns of builders, an increasing number of states are adopting codes that require new homes and commercial buildings to use considerably less energy.
Maryland is leading the charge. It became the first state nationwide, beginning last month, to require new residences to meet the 2012 International Energy Conservation Code (IECC), which requires an estimated 30 percent more efficiency than those built five years ago. Durham, N.H., also adopted it last month, and Houston did so with a three-year phase-in.
More are coming. Next month is the official release of the first International Green Construction Code, a voluntary guide for commercial and public buildings to improve indoor air quality, as well as cut energy and water use. Maryland plans to adopt it, along with – in varying degrees – Florida, North Carolina, Oregon and Arizona’s Scottsdale and Phoenix, says the International Code Council, an association that develops the widely used codes for the construction industry.
“There’s definitely been a lot of movement by states to adopt more energy-efficient codes,” says Max Neubauer of the American Council for an Energy-Efficient Economy, which advocates them.
He says states see them as a cost-effective way to reduce pollution and were given Recovery Act funds to adopt them. He adds: “The movement is going to continue.”
Energy building codes are generally updated every three years, but the last two cycles have required the biggest leaps in efficiency. The 2009 IECC required 15 percent greater efficiency than the 2006 code, and the 2012 version adds about another 15 percent.
The number of states adopting the 2009 code for homes jumped from six in January 2010 to 23 as of Feb. 1, 2012. In that two-year period, the number of states enacting a similar code for commercial projects jumped from seven to 30, according to Paul Karrer of the Online Code Environment and Advocacy Network, a project of groups seeking energy efficiency.
Karrer estimates that moving from the 2006 code to the 2009 version adds an average of $840.77 to the cost of a new home but saves $243.37 in lower utility bills each year. When amortized over a 30-year loan, “you basically break even at month 10,” he says.
Many homebuilders balk at the tougher codes, citing higher costs and design constraints at a time the housing industry is still struggling. As a result, Pennsylvania moved away from adopting the 2012 residential code and Albuquerque, which had adopted it, voted in December to revert to the 2009 version.
“Design options have been taken away,” and that’s costly, says Donald Surrena of the National Association of Home Builders (NAHB). He says the codes only give builders flexibility to meet the efficiency targets if they provide detailed calculations.
“This (2012 code) is a train wreck,” says Tom Marston of Energy Services Group, a Massachusetts-based consulting firm. Although the state is allowing a six-month transition, he says many homebuilders, as well as building officials, are not ready for its requirements.
“The industry in Maryland will be in a pickle,” Marston says. He says it’s already building many homes to meet the U.S. government’s voluntary Energy Star program, which has efficiency criteria, so the mandatory code is unnecessary and costly. He adds: “I don’t think the consumer today is that interested in energy efficiency.”
Muren disagrees. “Everybody wants to talk about energy” when they tour Nexus’ homes. He says the homes are selling quickly and prove that it’s possible, though not easy, to meet and even exceed code with little or no price increases.
He says his company, one of 17 builders nationwide to win an “energy value” award last Wednesday from the NAHB Research Center, is tapping federal and state incentives for renewable energy and using smart, low-cost building practices such as insulating under the house and sealing air leaks.
Its duplexes in Frederick, about 50 miles north of the nation’s capital, have 1,600 to 1,700 square feet and sell at prices starting at $275,000. Muren says they may cost 5 percent to 8 percent more than similar-size new homes, but the buyer gets tax credits that offset the difference. He adds: “We’re competing head-to-head with average-built homes.”
Source: USA TODAY, a division of Gannett Co. Inc., Wendy Koch
For nearly the same price as other new homes, they have solar panels, geothermal wells and ultra-efficient, factory-made exterior walls. They’re designed to generate as much power as they use, along with thousands of dollars in renewable energy tax credits.
“We think of ourselves as early adopters,” says Mike Muren, of Nexus EnergyHomes, which is building 55 zero-energy homes in the historic town. “Our homes go way beyond energy codes.”
His company may be ahead of today’s curve, but that curve is changing so fast that net-zero homes may soon become archetypical. Despite the concerns of builders, an increasing number of states are adopting codes that require new homes and commercial buildings to use considerably less energy.
Maryland is leading the charge. It became the first state nationwide, beginning last month, to require new residences to meet the 2012 International Energy Conservation Code (IECC), which requires an estimated 30 percent more efficiency than those built five years ago. Durham, N.H., also adopted it last month, and Houston did so with a three-year phase-in.
More are coming. Next month is the official release of the first International Green Construction Code, a voluntary guide for commercial and public buildings to improve indoor air quality, as well as cut energy and water use. Maryland plans to adopt it, along with – in varying degrees – Florida, North Carolina, Oregon and Arizona’s Scottsdale and Phoenix, says the International Code Council, an association that develops the widely used codes for the construction industry.
“There’s definitely been a lot of movement by states to adopt more energy-efficient codes,” says Max Neubauer of the American Council for an Energy-Efficient Economy, which advocates them.
He says states see them as a cost-effective way to reduce pollution and were given Recovery Act funds to adopt them. He adds: “The movement is going to continue.”
Energy building codes are generally updated every three years, but the last two cycles have required the biggest leaps in efficiency. The 2009 IECC required 15 percent greater efficiency than the 2006 code, and the 2012 version adds about another 15 percent.
The number of states adopting the 2009 code for homes jumped from six in January 2010 to 23 as of Feb. 1, 2012. In that two-year period, the number of states enacting a similar code for commercial projects jumped from seven to 30, according to Paul Karrer of the Online Code Environment and Advocacy Network, a project of groups seeking energy efficiency.
Karrer estimates that moving from the 2006 code to the 2009 version adds an average of $840.77 to the cost of a new home but saves $243.37 in lower utility bills each year. When amortized over a 30-year loan, “you basically break even at month 10,” he says.
Many homebuilders balk at the tougher codes, citing higher costs and design constraints at a time the housing industry is still struggling. As a result, Pennsylvania moved away from adopting the 2012 residential code and Albuquerque, which had adopted it, voted in December to revert to the 2009 version.
“Design options have been taken away,” and that’s costly, says Donald Surrena of the National Association of Home Builders (NAHB). He says the codes only give builders flexibility to meet the efficiency targets if they provide detailed calculations.
“This (2012 code) is a train wreck,” says Tom Marston of Energy Services Group, a Massachusetts-based consulting firm. Although the state is allowing a six-month transition, he says many homebuilders, as well as building officials, are not ready for its requirements.
“The industry in Maryland will be in a pickle,” Marston says. He says it’s already building many homes to meet the U.S. government’s voluntary Energy Star program, which has efficiency criteria, so the mandatory code is unnecessary and costly. He adds: “I don’t think the consumer today is that interested in energy efficiency.”
Muren disagrees. “Everybody wants to talk about energy” when they tour Nexus’ homes. He says the homes are selling quickly and prove that it’s possible, though not easy, to meet and even exceed code with little or no price increases.
He says his company, one of 17 builders nationwide to win an “energy value” award last Wednesday from the NAHB Research Center, is tapping federal and state incentives for renewable energy and using smart, low-cost building practices such as insulating under the house and sealing air leaks.
Its duplexes in Frederick, about 50 miles north of the nation’s capital, have 1,600 to 1,700 square feet and sell at prices starting at $275,000. Muren says they may cost 5 percent to 8 percent more than similar-size new homes, but the buyer gets tax credits that offset the difference. He adds: “We’re competing head-to-head with average-built homes.”
Source: USA TODAY, a division of Gannett Co. Inc., Wendy Koch
Friday, February 17, 2012
Housing Affordability Reaches New Records
Housing affordability rose to a record high during the fourth quarter of 2011, which means a home buyer’s purchasing power is greater than it ever has been before, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index.
The index showed that 75.9 percent of all new and existing homes sold in the fourth quarter were affordable to families earning the national median income of $64,200, according to the index. That marks the highest percentage recorded in the index’s 20-year history.
"While today's report indicates that home ownership is within reach of more households than it has been for more than two decades, overly restrictive lending conditions confronting home buyers and builders remain significant obstacles to many potential homes sales, even with interest rates at historically low levels," says Barry Rutenberg, chairman of the National Association of Home Builders.
Other top affordable housing markets include: Lakeland-Winter Haven, Fla.; Modesto, Calif.; Harrisburg-Carlisle, Pa.; and Toledo, Ohio.
Other high-priced metro areas at the bottom of the affordability index include: Honolulu; San Francisco-San Mateo-Redwood City, Calif.; Santa Ana-Anaheim-Irvine, Calif.; and Los Angeles-Long Beach-Glendale, Calif.
Source: National Association of Home Builders
The index showed that 75.9 percent of all new and existing homes sold in the fourth quarter were affordable to families earning the national median income of $64,200, according to the index. That marks the highest percentage recorded in the index’s 20-year history.
"While today's report indicates that home ownership is within reach of more households than it has been for more than two decades, overly restrictive lending conditions confronting home buyers and builders remain significant obstacles to many potential homes sales, even with interest rates at historically low levels," says Barry Rutenberg, chairman of the National Association of Home Builders.
Most Affordable Cities
According to the index, the most affordable major housing market was Youngstown-Warren-Boardman, Ohio, in which 95 percent of all homes sold during the fourth quarter were affordable to households earning the median family income of $54,900, according to the index.Other top affordable housing markets include: Lakeland-Winter Haven, Fla.; Modesto, Calif.; Harrisburg-Carlisle, Pa.; and Toledo, Ohio.
Least Affordable Cities
However, some metro areas still remain too pricey for buyers. The least affordable major housing market during the fourth quarter was New York-White Plains-Wayne, N.Y.-N.J., in which 29 percent of all homes sold were affordable to those earning the area's media income of $67,400.Other high-priced metro areas at the bottom of the affordability index include: Honolulu; San Francisco-San Mateo-Redwood City, Calif.; Santa Ana-Anaheim-Irvine, Calif.; and Los Angeles-Long Beach-Glendale, Calif.
Source: National Association of Home Builders
Job market continues its improvement
The healthier job market that’s lifted the U.S. economy in recent months shows no signs of slowing.
Applications for unemployment benefits are near a four-year low, raising expectations of further hiring gains. The news Thursday helped lift the Dow Jones industrial average to its highest close since May 2008.
More jobs and tame inflation are giving consumers more buying power. Their higher spending could further boost growth and lower the unemployment rate for February for a sixth-consecutive month.
Even the troubled housing market is benefiting. Builders expect improved sales in the near future. In response, they’re planning to break ground on more homes.
“The housing starts and unemployment claims numbers add to the belief that the economy is shifting gears,” said Joel Naroff, president of Naroff Economic Advisers. “The decline in the unemployment rate is real, and it should continue.”
A series of positive economic reports Thursday reinforced that message:
Weekly applications for unemployment benefits fell to a seasonally adjusted 348,000, the Labor Department said. That’s the lowest since March 2008. Unemployment applications have dropped 11 percent in four months.
Builders broke ground in January at a seasonally adjusted annual rate of 699,000 homes, the Commerce Department said. That nearly matches November’s three-year high. Single-family home construction cooled off slightly after a big jump in December.
Factory activity in the Philadelphia region grew in February at the fastest pace in five months, a survey by the Philadelphia Federal Reserve Bank found. That followed a report that showed a third-consecutive month of factory growth in the New York region.
Wholesale prices were largely unchanged in January, Commerce said. While gasoline prices are rising, they’ve been offset by falling costs for electricity, home heating oil and natural gas. Most economists see inflation as little threat.
Many analysts expect more good news in next month’s jobs report for February. Some say the net job gains could match or top January’s 243,000. For the past three months, the economy has gained an average of about 200,000 jobs.
Source: USA TODAY, a division of Gannett Co. Inc., The Associated Press.
Applications for unemployment benefits are near a four-year low, raising expectations of further hiring gains. The news Thursday helped lift the Dow Jones industrial average to its highest close since May 2008.
More jobs and tame inflation are giving consumers more buying power. Their higher spending could further boost growth and lower the unemployment rate for February for a sixth-consecutive month.
Even the troubled housing market is benefiting. Builders expect improved sales in the near future. In response, they’re planning to break ground on more homes.
“The housing starts and unemployment claims numbers add to the belief that the economy is shifting gears,” said Joel Naroff, president of Naroff Economic Advisers. “The decline in the unemployment rate is real, and it should continue.”
A series of positive economic reports Thursday reinforced that message:
Weekly applications for unemployment benefits fell to a seasonally adjusted 348,000, the Labor Department said. That’s the lowest since March 2008. Unemployment applications have dropped 11 percent in four months.
Builders broke ground in January at a seasonally adjusted annual rate of 699,000 homes, the Commerce Department said. That nearly matches November’s three-year high. Single-family home construction cooled off slightly after a big jump in December.
Factory activity in the Philadelphia region grew in February at the fastest pace in five months, a survey by the Philadelphia Federal Reserve Bank found. That followed a report that showed a third-consecutive month of factory growth in the New York region.
Wholesale prices were largely unchanged in January, Commerce said. While gasoline prices are rising, they’ve been offset by falling costs for electricity, home heating oil and natural gas. Most economists see inflation as little threat.
Many analysts expect more good news in next month’s jobs report for February. Some say the net job gains could match or top January’s 243,000. For the past three months, the economy has gained an average of about 200,000 jobs.
Source: USA TODAY, a division of Gannett Co. Inc., The Associated Press.
Rate on 30-year mortgage still at record 3.87%
The average rate on the 30-year fixed mortgage held steady at a record low for a third straight week, offering more incentive to those looking to buy a home or refinance.
Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year home loan was unchanged at 3.87 percent. That’s the lowest level since long-term mortgages began in the 1950s.
The average on the 15-year fixed mortgage was also unchanged at 3.16 percent. That’s up from a record low of 3.14 percent reached two weeks ago.
The low rates have done little to boost the struggling housing market. Rates have been below 5 percent for all but two weeks in the past year. Yet few people can qualify for the rates and many of those who can have already done so.
And prospective buyers don’t want to put money into a home that they fear could fall in price over the next few years.
Sales of previously occupied homes were dismal last year. New-home sales in 2011 were the worst on records going back half a century.
Builders are hopeful that the low rates could boost sales this year. But so far, they have had a minimal impact.
Frank Nothaft, Freddie Mac’s chief economist, said mixed readings on consumer confidence underscore the fragile condition of the housing market.
Surveys of small business owner and homebuilder confidence rose in January and February, respectively. But the University of Michigan’s consumer sentiment fell in February, breaking a five-month upward trend.
To calculate the average rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.
The average rates don’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for the 30-year loan was unchanged at 0.8; the average on the 15-year fixed mortgage rose to 0.8 from 0.7.
For the five-year adjustable loan, the average rate fell to 2.82 percent from 2.83 percent, and the average fee rose to 0.8 from 0.7.
The average on the one-year adjustable loan rose to 2.84 percent from 2.78 percent, and the average fee was unchanged at 0.6.
Source: The Associated Press, Derek Kravitz, AP real estate writer.
Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year home loan was unchanged at 3.87 percent. That’s the lowest level since long-term mortgages began in the 1950s.
The average on the 15-year fixed mortgage was also unchanged at 3.16 percent. That’s up from a record low of 3.14 percent reached two weeks ago.
The low rates have done little to boost the struggling housing market. Rates have been below 5 percent for all but two weeks in the past year. Yet few people can qualify for the rates and many of those who can have already done so.
And prospective buyers don’t want to put money into a home that they fear could fall in price over the next few years.
Sales of previously occupied homes were dismal last year. New-home sales in 2011 were the worst on records going back half a century.
Builders are hopeful that the low rates could boost sales this year. But so far, they have had a minimal impact.
Frank Nothaft, Freddie Mac’s chief economist, said mixed readings on consumer confidence underscore the fragile condition of the housing market.
Surveys of small business owner and homebuilder confidence rose in January and February, respectively. But the University of Michigan’s consumer sentiment fell in February, breaking a five-month upward trend.
To calculate the average rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.
The average rates don’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for the 30-year loan was unchanged at 0.8; the average on the 15-year fixed mortgage rose to 0.8 from 0.7.
For the five-year adjustable loan, the average rate fell to 2.82 percent from 2.83 percent, and the average fee rose to 0.8 from 0.7.
The average on the one-year adjustable loan rose to 2.84 percent from 2.78 percent, and the average fee was unchanged at 0.6.
Source: The Associated Press, Derek Kravitz, AP real estate writer.
Thursday, February 16, 2012
U.S. housing starts rise modestly
Construction of single-family homes in the U.S. cooled off slightly in January after surging in the final month last year. But a rise in permits suggests builders are growing more confident that more buyers are ready to come off the sidelines.
The Commerce Department said Thursday that builders broke ground on a seasonally adjusted annual rate of 699,000 homes in January. That’s up 1.5 percent from December and nearly matches November’s three-year high for starts.
Construction began work on 508,000 single-family homes last month. That’s a 1 percent drop from December and the first decline in four months. A big rise in volatile apartment construction helped offset the decline in single-family homes.
Still, December single-family homes were revised up strongly to show builders started 513,000 homes – a 12 percent gain from November.
And building permits, a gauge of future construction, rose 0.7 percent. The majority of those permits were for single-family homes. It can take 12 months for a builder to obtain a permit and construct a single-family home.
Single-family home construction rose in each of the final three months of last year, bringing the pace of those starts to the highest level since April 2010. The modest but steady gains helped boost confidence among builders after the worst year for single-family home construction on record.
“The upturn in permits and starts in recent months has been consistent with the surge in the … survey of homebuilders, which has surprised the markets to the upside for five straight months,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics. “The new home sales numbers have not yet responded but builders seem confident that if they build, buyers will come.”
The critical gauge of the housing market’s health has a long way to go before most declare a full recovery is under way. The current pace is less than half the rate in which those homes went up during the 1990s. And it’s only one-quarter of the 1.82 million single-family homes that builders started in January 2006, at the peak of the housing boom.
Most analysts say it could be years before the industry is fully recovered from the damage caused by the housing bust.
Builders are starting to see some signs of progress.
A measure of builder sentiment has risen for five straight months and is now at its highest level in nearly five years. Many builders are seeing more people express interest in buying a home, leading them to believe 2012 could be a turn-around year for the market. Mortgage rates have never been cheaper. And home sales started to rise at the end of last year.
Yet for all their optimism, builders began just 430,900 single-family homes last year. It was the fewest on records dating back a half-century. And home prices are still falling.
Though new homes represent just 20 percent of the overall home market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.
Builders are struggling to compete with deeply discounted foreclosures and short sales – when lenders allow homes to be sold for less than what’s owed on the mortgage.
After previous recessions, housing accounted for at least 15 percent of U.S. economic growth. Since the recession officially ended in June 2009, it has contributed just 4 percent.
Another reason sales have fallen is that previously occupied homes have become a better deal than new homes. The median price of a new home is about 30 percent higher than the median price for a re-sale. That’s nearly twice the markup typical in a healthy housing market.
Source: The Associated Press, Derek Kravitz, AP real estate writer.
The Commerce Department said Thursday that builders broke ground on a seasonally adjusted annual rate of 699,000 homes in January. That’s up 1.5 percent from December and nearly matches November’s three-year high for starts.
Construction began work on 508,000 single-family homes last month. That’s a 1 percent drop from December and the first decline in four months. A big rise in volatile apartment construction helped offset the decline in single-family homes.
Still, December single-family homes were revised up strongly to show builders started 513,000 homes – a 12 percent gain from November.
And building permits, a gauge of future construction, rose 0.7 percent. The majority of those permits were for single-family homes. It can take 12 months for a builder to obtain a permit and construct a single-family home.
Single-family home construction rose in each of the final three months of last year, bringing the pace of those starts to the highest level since April 2010. The modest but steady gains helped boost confidence among builders after the worst year for single-family home construction on record.
“The upturn in permits and starts in recent months has been consistent with the surge in the … survey of homebuilders, which has surprised the markets to the upside for five straight months,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics. “The new home sales numbers have not yet responded but builders seem confident that if they build, buyers will come.”
The critical gauge of the housing market’s health has a long way to go before most declare a full recovery is under way. The current pace is less than half the rate in which those homes went up during the 1990s. And it’s only one-quarter of the 1.82 million single-family homes that builders started in January 2006, at the peak of the housing boom.
Most analysts say it could be years before the industry is fully recovered from the damage caused by the housing bust.
Builders are starting to see some signs of progress.
A measure of builder sentiment has risen for five straight months and is now at its highest level in nearly five years. Many builders are seeing more people express interest in buying a home, leading them to believe 2012 could be a turn-around year for the market. Mortgage rates have never been cheaper. And home sales started to rise at the end of last year.
Yet for all their optimism, builders began just 430,900 single-family homes last year. It was the fewest on records dating back a half-century. And home prices are still falling.
Though new homes represent just 20 percent of the overall home market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.
Builders are struggling to compete with deeply discounted foreclosures and short sales – when lenders allow homes to be sold for less than what’s owed on the mortgage.
After previous recessions, housing accounted for at least 15 percent of U.S. economic growth. Since the recession officially ended in June 2009, it has contributed just 4 percent.
Another reason sales have fallen is that previously occupied homes have become a better deal than new homes. The median price of a new home is about 30 percent higher than the median price for a re-sale. That’s nearly twice the markup typical in a healthy housing market.
Source: The Associated Press, Derek Kravitz, AP real estate writer.
Wednesday, February 15, 2012
Mild winter may help boost economy
Some economists give credit for the improving economy to Washington, others to the stock market and still more to the long-awaited bottoming of the housing market.
Others say the key is the weather.
The nation’s mild winter has added thousands of jobs this year, boosting crucial businesses such as construction and auto sales.
The question is whether this is a coincidence, as good weather and an improving economy arrive at the same time, or whether the weather effect is the main factor behind the better-than-expected run of recent economic news.
Some things aren’t in doubt.
The January unemployment report said that about 206,000 people were out of work because of bad weather, compared with 424,000 workers who normally face weather-related layoffs in January.
And construction, the most weather-sensitive major industry, added 52,000 jobs in the last two months, after adding 32,000 in the prior 12 months.
The question is what that all means.
“It’s not a trivial part of the improvement in the last couple of months, but not big compared to the total number of people, even in construction,” said Mike Montgomery, an economist at IHS Global Insight, a consulting firm in Lexington, Mass.
“Things that normally would be postponed, weren’t. Someone on a business trip this year can get where he wants to go,” Montgomery said. “Bartenders and waitresses get more hours of work than normal. The improvement in the economy is real.”
On the bearish side is Steven Ricchiuto, chief U.S. economist for Mizuho Securities. He says weather accounts for nearly all the hiring acceleration in the last few months.
With underlying demand not growing fast, he says, recent gains will show up as car sales, housing starts and related hiring that won’t happen this spring.
“You’re jumping to conclusions based on a few thousand jobs,” he said. “When we don’t have the sales, housing starts or the employment, everyone will run in the other direction.”
Tuesday’s report from the Census Bureau on January retail sales, which said overall sales rose 0.4 percent, while car sales to consumers dropped 1.1 percent, only added to the confusion.
Economists had relied on earlier reports that automakers in January sold cars at an annual rate of 14.2 million in forecasting that retail sales would rise 0.8 percent on average.
The drop in auto sales may mean that carmakers sold more vehicles to corporate fleets in January, and fewer to consumers than had been thought, Bank of America Merrill Lynch economist Michelle Meyer said.
“The data is so noisy, you just can’t tell,” said Patrick Newport, U.S. economist at IHS. “You won’t be able to get a good read on the effect of weather until at least May.”
Source: USA TODAY, a division of Gannett Co. Inc.
Others say the key is the weather.
The nation’s mild winter has added thousands of jobs this year, boosting crucial businesses such as construction and auto sales.
The question is whether this is a coincidence, as good weather and an improving economy arrive at the same time, or whether the weather effect is the main factor behind the better-than-expected run of recent economic news.
Some things aren’t in doubt.
The January unemployment report said that about 206,000 people were out of work because of bad weather, compared with 424,000 workers who normally face weather-related layoffs in January.
And construction, the most weather-sensitive major industry, added 52,000 jobs in the last two months, after adding 32,000 in the prior 12 months.
The question is what that all means.
“It’s not a trivial part of the improvement in the last couple of months, but not big compared to the total number of people, even in construction,” said Mike Montgomery, an economist at IHS Global Insight, a consulting firm in Lexington, Mass.
“Things that normally would be postponed, weren’t. Someone on a business trip this year can get where he wants to go,” Montgomery said. “Bartenders and waitresses get more hours of work than normal. The improvement in the economy is real.”
On the bearish side is Steven Ricchiuto, chief U.S. economist for Mizuho Securities. He says weather accounts for nearly all the hiring acceleration in the last few months.
With underlying demand not growing fast, he says, recent gains will show up as car sales, housing starts and related hiring that won’t happen this spring.
“You’re jumping to conclusions based on a few thousand jobs,” he said. “When we don’t have the sales, housing starts or the employment, everyone will run in the other direction.”
Tuesday’s report from the Census Bureau on January retail sales, which said overall sales rose 0.4 percent, while car sales to consumers dropped 1.1 percent, only added to the confusion.
Economists had relied on earlier reports that automakers in January sold cars at an annual rate of 14.2 million in forecasting that retail sales would rise 0.8 percent on average.
The drop in auto sales may mean that carmakers sold more vehicles to corporate fleets in January, and fewer to consumers than had been thought, Bank of America Merrill Lynch economist Michelle Meyer said.
“The data is so noisy, you just can’t tell,” said Patrick Newport, U.S. economist at IHS. “You won’t be able to get a good read on the effect of weather until at least May.”
Source: USA TODAY, a division of Gannett Co. Inc.
Southeast Florida Monthly Market Update, January 2012
January, 2012 Market Update for the "BIG 5" Hialeah,
Miami Lakes, Miami Gardens, Miramar and Pembroke Pines in Florida
Market
update for the cities of Hialeah, Miami Lakes, Miami Gardens:| Area 20 | |||
| Total Active Listings: | 67 | ||
| Total Value Dollar Volume: | $18,753,699.00 | ||
| Average List Price: | $279,906.00 | ||
| Median List Price: | $217,000.00 | ||
| Change from Previous Month (N. of Units) | -23% | ||
| Change from Previous Month (Dollar Vol.) | 23% | ||
| Total Sold Properties: | 102 | ||
| Total Dollar Volume Sold: | $13,772,297.00 | ||
| Average Sold Price: | $135,023.00 | ||
| Median Sold Price: | $109,450.00 | ||
| Change from Previous Month (N. of Units) | -17% | ||
| Change from Previous Month (Dollar Vol.) | -13% | ||
| Total Pending Sale: | 203 | ||
| Total Dollar Pending Volume: | $25,220,168.00 | ||
| Average Pending Price: | $124,237.00 | ||
| Median Pending Price: | $87,500.00 | ||
| Change from Previous Month (N. of Units) | 65% | ||
| Change from Previous Month (Dollar Vol.) | 85% | ||
Market update for the cities of Miramar and Pembroke Pines:
| Area 3990 | |||
| Total Active Listings: | 38 | ||
| Total Value Dollar Volume: | $13,563,350.00 | ||
| Average List Price: | $356,930.00 | ||
| Median List Price: | $328,950.00 | ||
| Change from Previous Month (N. of Units) | 138% | ||
| Change from Previous Month (Dollar Vol.) | 126% | ||
| Total Sold Properties: | 27 | ||
| Total Dollar Volume Sold: | $7,378,368.00 | ||
| Average Sold Price: | $273,273.00 | ||
| Median Sold Price: | $279,999.00 | ||
| Change from Previous Month (N. of Units) | -41% | ||
| Change from Previous Month (Dollar Vol.) | -48% | ||
| Total Pending Sale: | 43 | ||
| Total Dollar Pending Volume: | $13,218,999.00 | ||
| Average Pending Price: | $307,419.00 | ||
| Median Pending Price: | $280,000.00 | ||
| Change from Previous Month (N. of Units) | 65% | ||
| Change from Previous Month (Dollar Vol.) | 88% | ||
Total Sold for Dade and Broward Counties
| Dade County | |||
| Total Sales Count: | 1878 | ||
| Total Sales Dollar Volume: | $557,328,635.00 | ||
| Change from Previous Month (N. of Units) | -17% | ||
| Change from Previous Month (Dollar Vol.) | -23% | ||
| Broward County | |||
| Total Sales Count: | 2058 | ||
| Total Sales Dollar Volume: | $381,438,967.00 | ||
| Change from Previous Month (N. of Units) | -17% | ||
| Change from Previous Month (Dollar Vol.) | -25% | ||
The above data is for Residential Real Estate Only, Market Data from SEF MLS
For an update on your market area please contact us
Take hold of your previous Monthly Market
Update here goo.gl/N2G3sTuesday, February 14, 2012
Save a Home by Turning It Into a Billboard?
Home owners in a Los Angeles suburb are getting their nearly $2,000 monthly mortgage paid for by allowing their home to be turned into a massive billboard, painted in orange and green.
The marketing company Braniacs From Mars launched the initiative: They’ll pay struggling home owners mortgage for up to a year, if home owners agree to rent out billboard space on their home to advertise the firm and its social media icons.
The company made its bold offer to home owners in April 2011, collecting nearly 40,000 applications. The majority of the applications came from hard-hit housing markets like California, Florida, and Nevada.
Romeo Mendoza, Braniacs From Mars founder and CEO, told Reuters that his goal is to choose 1,000 homes across the country and have them all advertising his firm.
"If we roll it out to scale and impact the foreclosure crisis, that would be amazing," Mendoza said.
But zoning laws and other city code laws regarding a home’s appearance may derail Mendoza’s plans. Many areas won’t allow homes to be turned into massive billboards.
Source: “Mortgage Relief: Houses Turned into Billboards,” Reuters (Feb. 13, 2012)
The marketing company Braniacs From Mars launched the initiative: They’ll pay struggling home owners mortgage for up to a year, if home owners agree to rent out billboard space on their home to advertise the firm and its social media icons.
The company made its bold offer to home owners in April 2011, collecting nearly 40,000 applications. The majority of the applications came from hard-hit housing markets like California, Florida, and Nevada.
Romeo Mendoza, Braniacs From Mars founder and CEO, told Reuters that his goal is to choose 1,000 homes across the country and have them all advertising his firm.
"If we roll it out to scale and impact the foreclosure crisis, that would be amazing," Mendoza said.
But zoning laws and other city code laws regarding a home’s appearance may derail Mendoza’s plans. Many areas won’t allow homes to be turned into massive billboards.
Source: “Mortgage Relief: Houses Turned into Billboards,” Reuters (Feb. 13, 2012)
FHA is a $1 billion beneficiary in settlement with banks over foreclosure fraud
The landmark $25 billion settlement with banks last week over fraudulent foreclosure practices might aid more than struggling homeowners. Part of the proceeds also will help plug a projected shortfall in the reserves of the Federal Housing Administration.
Shaun Donovan, secretary of Housing and Urban Development, said in a conference call with reporters Monday that the financial firms involved in the settlement agreed to provide up to $1 billion to shore up the capital reserve fund of the FHA, which provides mortgage insurance on loans made by approved lenders across the country.
The Office of Management and Budget estimated that the FHA’s capital reserves could be depleted this year, leaving a nearly $700 million shortfall and potentially forcing the self-funded agency to seek aid from the Treasury for the first time since its creation in 1934.
But Donovan said Monday that the deal with banks would make such talk a moot point. In addition to the settlement payments from banks, Donovan said the agency would increase its mortgage insurance premiums again this year, a move that also could help the FHA bolster its finances.
While the government is legally required to ensure that the balance in the FHA’s emergency reserve fund does not drop below 2 percent of outstanding FHA loans, the agency’s reserves have sunk below that threshold in recent years because of the housing crisis.
Under law, if the FHA’s reserves were depleted entirely, the agency would automatically receive payments from the Treasury to make up for the deficit, a form of aid that the agency has never needed.
Officials have maintained that taxpayer funding will not be necessary to back the agency, in part because the FHA has the ability to raise cash through higher premiums and because any improvements in the housing market would ease the pressure on FHA’s bottom line. In fact, projections show that while the agency could further exhaust its reserves in the coming months, it should return to more solid financial footing by 2013.
Source: washingtonpost.com, Brady Dennis
Shaun Donovan, secretary of Housing and Urban Development, said in a conference call with reporters Monday that the financial firms involved in the settlement agreed to provide up to $1 billion to shore up the capital reserve fund of the FHA, which provides mortgage insurance on loans made by approved lenders across the country.
The Office of Management and Budget estimated that the FHA’s capital reserves could be depleted this year, leaving a nearly $700 million shortfall and potentially forcing the self-funded agency to seek aid from the Treasury for the first time since its creation in 1934.
But Donovan said Monday that the deal with banks would make such talk a moot point. In addition to the settlement payments from banks, Donovan said the agency would increase its mortgage insurance premiums again this year, a move that also could help the FHA bolster its finances.
While the government is legally required to ensure that the balance in the FHA’s emergency reserve fund does not drop below 2 percent of outstanding FHA loans, the agency’s reserves have sunk below that threshold in recent years because of the housing crisis.
Under law, if the FHA’s reserves were depleted entirely, the agency would automatically receive payments from the Treasury to make up for the deficit, a form of aid that the agency has never needed.
Officials have maintained that taxpayer funding will not be necessary to back the agency, in part because the FHA has the ability to raise cash through higher premiums and because any improvements in the housing market would ease the pressure on FHA’s bottom line. In fact, projections show that while the agency could further exhaust its reserves in the coming months, it should return to more solid financial footing by 2013.
Source: washingtonpost.com, Brady Dennis
How to invest in the coming housing market rebound
The housing market recovery hasn’t taken off yet, but a rally in its stocks sure has. The Standard & Poor’s homebuilders index is up 60 percent since October.
Given that stock prices tend to anticipate business trends, does that mean a housing market rebound is imminent during the spring home-selling season?
Not necessarily.
The biggest sustained rally in homebuilding stocks in years and recent upbeat home sales data, however, have injected some long-absent optimism into the outlook for housing.
Sales of previously occupied homes rose for three straight months at the end of last year. The glut of houses on the market is diminishing, down to 2.4 million previously owned homes on the market in December from 3.8 million in June. And buyers are slowly regaining a little bit of confidence.
“The housing market enters the spring selling season in absolutely the best shape it’s been since 2005,” says analyst Eric Landry, who follows homebuilding stocks for Morningstar. “Sales will still likely be below normal, but inventories are in the best shape they’ve been in years.”
The government’s landmark $25 billion settlement of foreclosure abuses is the latest dose of good news. Financial analysts see it as helping to clear the way for builders to gear up construction activity.
The CEOs of some of the biggest homebuilders said during earnings conference calls this month that the housing market has stabilized. But they were cautious about making any bullish forecasts.
Major improvement in the industry won’t take place until next year, according to a forecast by the chief economist of the National Association of Home Builders, David Crowe.
More important for investors, the big run-up in stock prices in the last four months makes a correction likely soon. Homebuilding stocks have a history of declining after rising in the months ahead of spring selling season.
The current rally is seen by some as the opening act in a multi-year recovery for the stocks. Low interest rates, more affordable home prices and pent-up demand should help them rise further.
But the stocks are no longer cheap. Most are currently trading at roughly 1.5 times book value – considered the best way to value this group. Book value is the value of a company’s assets if it were to be liquidated. Their current value strongly suggests they are overpriced.
Investors would be wise to keep an eye on housing-related stocks. With prices having shot up, though, they should exercise caution. Waiting for a pullback and buying after spring home-selling season, if the industry still has momentum, makes more sense. That should put investors in much better position to profit from the coming rebound.
Here are four stocks to watch, along with an exchange-traded fund that invests in homebuilders:
D.R. Horton Inc. (DHI)
Shares of D.R. Horton are up 74 percent since an industry low-water mark on Oct. 3. That’s well above the 23 percent climb of the Standard & Poor’s 500, but shares are still about where they were two years ago. The company caters mostly to low-end buyers and builds homes in 26 states. Financial analysts believe that its broad customer base can help the company grow annual revenue by double digits for years.
Lennar Corp. (LEN)
With lean construction practices, a healthy balance sheet and other strengths, Morningstar says Lennar sits poised to reap major economic gains from an eventual rebound in housing. Its revenue was up 12.5 percent and orders were up 21 percent in the fourth quarter, its highest growth in several years. The company recently created a distressed real estate unit, Rialto, that allows it to obtain land more cheaply than competitors. It also provides financial services including mortgage financing, title and closing services. Its backlog of orders is 36 percent higher than a year ago, leaving it in good shape to wait for a future surge in sales. The stock is up 88 percent since early October.
Toll Brothers Inc. (TOL)
Toll Brothers builds higher-priced homes in urban markets with job growth, particularly in the Northeast. That focus on the high-end consumer should enable the company to profit from a recovery in housing. Like Lennar, it has a distressed investment arm, Gibraltar, that helps it lock in land at bargain prices in marquee locations, an advantage that will show on the bottom line when home selling picks up. It also has modest net debt of just $400 million. Along with Lennar, it may be the best positioned of the homebuilders to profit from the recovery, according to analyst Jack Micenko of Susquehanna Financial Group. Toll Brothers shares are up 74 percent since early October.
SPDR S&P Homebuilders (XHB)
This exchange-traded fund includes seven of the largest homebuilders. It also owns shares of companies that sell building materials or furniture and other items for the home. Many of the homebuilders are sitting on large piles of cash. That will allow them to expand in the coming years. The fund is cheaper than the other homebuilder ETF, with an expense ratio of 0.35 percent versus 0.47 percent for iShares Dow Jones U.S. Home Construction.
Source: The Associated Press, Dave Carpenter, AP personal finance writer.
Given that stock prices tend to anticipate business trends, does that mean a housing market rebound is imminent during the spring home-selling season?
Not necessarily.
The biggest sustained rally in homebuilding stocks in years and recent upbeat home sales data, however, have injected some long-absent optimism into the outlook for housing.
Sales of previously occupied homes rose for three straight months at the end of last year. The glut of houses on the market is diminishing, down to 2.4 million previously owned homes on the market in December from 3.8 million in June. And buyers are slowly regaining a little bit of confidence.
“The housing market enters the spring selling season in absolutely the best shape it’s been since 2005,” says analyst Eric Landry, who follows homebuilding stocks for Morningstar. “Sales will still likely be below normal, but inventories are in the best shape they’ve been in years.”
The government’s landmark $25 billion settlement of foreclosure abuses is the latest dose of good news. Financial analysts see it as helping to clear the way for builders to gear up construction activity.
The CEOs of some of the biggest homebuilders said during earnings conference calls this month that the housing market has stabilized. But they were cautious about making any bullish forecasts.
Major improvement in the industry won’t take place until next year, according to a forecast by the chief economist of the National Association of Home Builders, David Crowe.
More important for investors, the big run-up in stock prices in the last four months makes a correction likely soon. Homebuilding stocks have a history of declining after rising in the months ahead of spring selling season.
The current rally is seen by some as the opening act in a multi-year recovery for the stocks. Low interest rates, more affordable home prices and pent-up demand should help them rise further.
But the stocks are no longer cheap. Most are currently trading at roughly 1.5 times book value – considered the best way to value this group. Book value is the value of a company’s assets if it were to be liquidated. Their current value strongly suggests they are overpriced.
Investors would be wise to keep an eye on housing-related stocks. With prices having shot up, though, they should exercise caution. Waiting for a pullback and buying after spring home-selling season, if the industry still has momentum, makes more sense. That should put investors in much better position to profit from the coming rebound.
Here are four stocks to watch, along with an exchange-traded fund that invests in homebuilders:
D.R. Horton Inc. (DHI)
Shares of D.R. Horton are up 74 percent since an industry low-water mark on Oct. 3. That’s well above the 23 percent climb of the Standard & Poor’s 500, but shares are still about where they were two years ago. The company caters mostly to low-end buyers and builds homes in 26 states. Financial analysts believe that its broad customer base can help the company grow annual revenue by double digits for years.
Lennar Corp. (LEN)
With lean construction practices, a healthy balance sheet and other strengths, Morningstar says Lennar sits poised to reap major economic gains from an eventual rebound in housing. Its revenue was up 12.5 percent and orders were up 21 percent in the fourth quarter, its highest growth in several years. The company recently created a distressed real estate unit, Rialto, that allows it to obtain land more cheaply than competitors. It also provides financial services including mortgage financing, title and closing services. Its backlog of orders is 36 percent higher than a year ago, leaving it in good shape to wait for a future surge in sales. The stock is up 88 percent since early October.
Toll Brothers Inc. (TOL)
Toll Brothers builds higher-priced homes in urban markets with job growth, particularly in the Northeast. That focus on the high-end consumer should enable the company to profit from a recovery in housing. Like Lennar, it has a distressed investment arm, Gibraltar, that helps it lock in land at bargain prices in marquee locations, an advantage that will show on the bottom line when home selling picks up. It also has modest net debt of just $400 million. Along with Lennar, it may be the best positioned of the homebuilders to profit from the recovery, according to analyst Jack Micenko of Susquehanna Financial Group. Toll Brothers shares are up 74 percent since early October.
SPDR S&P Homebuilders (XHB)
This exchange-traded fund includes seven of the largest homebuilders. It also owns shares of companies that sell building materials or furniture and other items for the home. Many of the homebuilders are sitting on large piles of cash. That will allow them to expand in the coming years. The fund is cheaper than the other homebuilder ETF, with an expense ratio of 0.35 percent versus 0.47 percent for iShares Dow Jones U.S. Home Construction.
Source: The Associated Press, Dave Carpenter, AP personal finance writer.
Monday, February 13, 2012
6 ‘Turnaround Towns’ in Real Estate
Florida cities are expected to see some of the biggest recoveries in housing prices in the coming months, according to a new report by Realtor.com that reveals the top turnaround towns. In fact, the signs are already there with drops in inventories and distressed homes, as well as higher listing prices and increases in sales.
The following are the top six housing markets expected to see the biggest turnaround, according to Realtor.com.
1. Miami, Fla.
Median home price: $185,000
Growth: Sales volume of existing single-family homes has jumped 51 percent in the third quarter compared to 12 months prior.
A factor in the recovery: International clients are snagging up Miami homes: In May, they purchased 60 percent of existing houses and condos and 90 percent of newly built homes.
2. Phoenix
Median home price: $129,000
Growth: Homes sold 27 percent faster in the fourth quarter compared tot he same period in 2010.
A factor in the recovery: An improving job market: Unemployment dropped to 7.7 percent in November, which beats the national average and is a 1.1 percentage point improvement over 2010‘s rate in the city.
3. Orlando
Median home price: $145,000
Growth: Inventory of for-sale homes dropped 44 percent in the fourth quarter and homes that were on the market sold 37 percent faster than they did a year earlier.
A factor in the recovery: A strong tourist destination, Orlando is attracting international buyers, such as from South America, Canada, and Europe. Also, the job market is improving there, particularly aided by the development of a major medical complex.
4. Fort Myers, Fla.
Median home price: $115,000
Growth: Median listing prices here had the biggest increase in the nation last year, soaring 31 percent year-over-year.
A factor in the recovery: This retirement hot-spot is getting more attention from Canadians, who are taking advantage of a strong Canadian dollar and the fallen home values here.
5. Sarasota, Fla.
Median home price: $181,000
Growth: Sales volume here increased 17 percent during the three months ended Dec. 31 compared to year-over-year. Plus, home prices rose 2 percent in that time period.
A factor in the recovery: A drop in bank-owned homes and distressed sales is helping the housing market to recover, as well as an improving job market.
6. Boise, Idaho
Median home price: $120,000
Growth: A big drop in inventory: The number of homes for sale during the fourth quarter dropped by 40 percent compared to a year earlier.
A factor in the recovery: The metro area is seeing a growth in the diversity of its employers and the number of jobs its attracting, particularly in the tech industry and a growth in agricultural-based companies.
Source: “Top 10 Turnaround Towns,” CNNMoney (February 2012)
The following are the top six housing markets expected to see the biggest turnaround, according to Realtor.com.
1. Miami, Fla.
Median home price: $185,000
Growth: Sales volume of existing single-family homes has jumped 51 percent in the third quarter compared to 12 months prior.
A factor in the recovery: International clients are snagging up Miami homes: In May, they purchased 60 percent of existing houses and condos and 90 percent of newly built homes.
2. Phoenix
Median home price: $129,000
Growth: Homes sold 27 percent faster in the fourth quarter compared tot he same period in 2010.
A factor in the recovery: An improving job market: Unemployment dropped to 7.7 percent in November, which beats the national average and is a 1.1 percentage point improvement over 2010‘s rate in the city.
3. Orlando
Median home price: $145,000
Growth: Inventory of for-sale homes dropped 44 percent in the fourth quarter and homes that were on the market sold 37 percent faster than they did a year earlier.
A factor in the recovery: A strong tourist destination, Orlando is attracting international buyers, such as from South America, Canada, and Europe. Also, the job market is improving there, particularly aided by the development of a major medical complex.
4. Fort Myers, Fla.
Median home price: $115,000
Growth: Median listing prices here had the biggest increase in the nation last year, soaring 31 percent year-over-year.
A factor in the recovery: This retirement hot-spot is getting more attention from Canadians, who are taking advantage of a strong Canadian dollar and the fallen home values here.
5. Sarasota, Fla.
Median home price: $181,000
Growth: Sales volume here increased 17 percent during the three months ended Dec. 31 compared to year-over-year. Plus, home prices rose 2 percent in that time period.
A factor in the recovery: A drop in bank-owned homes and distressed sales is helping the housing market to recover, as well as an improving job market.
6. Boise, Idaho
Median home price: $120,000
Growth: A big drop in inventory: The number of homes for sale during the fourth quarter dropped by 40 percent compared to a year earlier.
A factor in the recovery: The metro area is seeing a growth in the diversity of its employers and the number of jobs its attracting, particularly in the tech industry and a growth in agricultural-based companies.
Source: “Top 10 Turnaround Towns,” CNNMoney (February 2012)
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