Deann Gayles refused to let her marred credit history stop her from realizing her dream of buying a house.
The St. Paul, Minn., resident knew she wouldn’t qualify for a traditional mortgage in such a tight credit market, so she sought an alternative form of financing: a contract for deed.
Also known as a land contract and an installment sale agreement, a contract for deed is an arrangement where the seller provides the financing for the buyer.
Through a program offered through Bluff Neighborhood Housing Services in Dayton, Minn., Gayles was able to buy a tidy four-bedroom, multilevel house. She’s already busy painting and making improvements.
“They led me the right way,” she said of the St. Paul nonprofit.
Gayles and her husband, Steven, were able to finance the $149,900 St. Paul home at a rate of 7 percent for 30 years. She plans to refinance in three years.
While a popular last resort for house hunters who can’t get financed otherwise, contracts for deeds are largely unregulated and are ripe for abuse. Some housing advocates warn that these arrangements have now taken the place of the mortgage scams that contributed to the fall of the housing market six years ago.
“At this moment it’s the most prevalent form of predatory lending,” said Kristin Siegesmund, head of the consumer unit at Legal Aid Society of Minneapolis.
Seller financing isn’t new. Contracts for deeds were popular in the 1980s when interest rates were in the double digits. Many sellers would use contracts with a lower rate as a way to entice buyers. Siegesmund herself bought a house on a contract in the mid-’80s when the mortgage rate was 16 percent.
“The concept in and of itself is not bad,” she said. “The problem is that a lot of people on both sides of the equation don’t understand what they are.”
Complaints about contracts for deeds have swelled, said Luke Grundman, an attorney for the Legal Aid Society of Minneapolis.
The most common problems are associated with terms that favor sellers, including high interest rates and short repayment terms.
Typically, a contract for deed is offered by a seller who doesn’t have a mortgage on the property. The sales price is paid in installments. Often, the interest rate is a couple of percentage points higher than market rate and the term is usually five to seven years, which requires the buyer to refinance or make a large balloon payment when the contract expires. Once all the payments have been made, the owner gives the buyer the deed to the property.
Some sellers tout the low cost of executing a contract because an appraisal isn’t required, but that’s risky because a buyer could agree to pay more than the house is worth, making an eventual refinancing impossible.
One of the most troublesome forms of abuse, Grundman said, is when seller financing is used as a way to avoid complying with rental licensing laws. In Minneapolis, there have been property owners who have owned fixer-uppers that couldn’t pass a rental license inspection, so they “sold” the property using a contract for deed, which requires no property inspection.
And in many ways, buyers have less protection than they would with a signed rental agreement. If the buyer misses a payment, the property owner often has the right to cancel the contract and evict the buyer quickly.
Several housing groups recently published “The Contract For Deed Guidebook,” which gives pointers to help protect buyers and sellers alike.
“There is still room for a lot of mischief, and it’s important for the buyer to beware,” said Warren Hanson, president of the Greater Minnesota Housing Fund, one of the groups that helped produce the guide.
The Greater Metropolitan Housing Corp., a Minneapolis-based group, has also gotten involved by offering contracts for deeds through its SHOP Home Mortgage program on rehabbed houses that it sells to people who might not otherwise qualify for bank financing. It requires them to attend homeownership courses and credit counseling before they buy.
The program is partnering with Bluff Neighborhood Housing Services, the program Gayles used to buy her home. Already, 40 homeowners have successfully financed houses through the nonprofit. The program has been so successful, the group is trying to raise more money to expand the program. Gary Beatty, vice president of SHOP Home Mortgage, sees it a way to help stabilize neighborhoods that have been ravaged by the foreclosure crisis.
“This also benefits the community because it puts another family in the house,” Beatty said.
Sourcethe Star Tribune (Minneapolis), Jim Buchta. Distributed by McClatchy-Tribune News Service.
Friday, March 30, 2012
U.S. rate on 30-year mortgage back below 4%
The average U.S. rate on the 30-year fixed mortgage fell back below 4 percent this week, staying near historic lows.
Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan dropped to 3.99 percent from 4.08 percent last week. Last month, the rate touched 3.87 percent, the lowest since long-term mortgages began in the 1950s.
The average rate on the 15-year fixed mortgage also fell, to 3.23 percent. That’s down from 3.30 percent last week and above the record low of 3.13 percent hit earlier this month.
The low rates have made homebuying and refinancing more affordable at a time when the housing market is flashing small signs of improvement. Still, most economists say it will take years for the market to fully recover from the housing bust.
January and February made up the best winter for re-sales in five years, when the housing crisis began. And builders are more confident about the market. In February, they requested the most permits to build single-family homes and apartments since October 2008.
An improved job market may also be helping home sales. Employers have added an average 245,000 net jobs per month from December through February. That has helped reduce the unemployment rate to 8.3 percent, the lowest level in nearly three years.
Rates rose a bit earlier this month after positive economic news pushed up yields on U.S. Treasury bonds. Mortgage rates then to track the yield on the 10-year Treasury note.
An improving economic outlook can lead investors to shift money from Treasury bonds to stocks. That pushes up Treasury yields.
Even with signs of improvement in housing, home prices continue to fall. Millions of foreclosures and short sales - when a lender accepts less than what is owed on a mortgage - remain on the market. And the housing crisis and recession have also persuaded many Americans to rent instead of buy, which has led to a drop in homeownership.
To calculate the average rates, Freddie Mac surveys lenders across the country on 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 fixed loan was 0.7. For the 15-year fixed loan, the average was 0.8.
For the five-year adjustable loan, the average rate fell to 2.90 percent from 2.96 percent, and the average fee was unchanged at 0.8.
The average on the one-year adjustable loan dropped to 2.78 percent from 2.84 percent, and the average fee was unchanged at 0.6.
Source: The Associated Press, Christopher S. Rugaber, AP economics writer.
Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan dropped to 3.99 percent from 4.08 percent last week. Last month, the rate touched 3.87 percent, the lowest since long-term mortgages began in the 1950s.
The average rate on the 15-year fixed mortgage also fell, to 3.23 percent. That’s down from 3.30 percent last week and above the record low of 3.13 percent hit earlier this month.
The low rates have made homebuying and refinancing more affordable at a time when the housing market is flashing small signs of improvement. Still, most economists say it will take years for the market to fully recover from the housing bust.
January and February made up the best winter for re-sales in five years, when the housing crisis began. And builders are more confident about the market. In February, they requested the most permits to build single-family homes and apartments since October 2008.
An improved job market may also be helping home sales. Employers have added an average 245,000 net jobs per month from December through February. That has helped reduce the unemployment rate to 8.3 percent, the lowest level in nearly three years.
Rates rose a bit earlier this month after positive economic news pushed up yields on U.S. Treasury bonds. Mortgage rates then to track the yield on the 10-year Treasury note.
An improving economic outlook can lead investors to shift money from Treasury bonds to stocks. That pushes up Treasury yields.
Even with signs of improvement in housing, home prices continue to fall. Millions of foreclosures and short sales - when a lender accepts less than what is owed on a mortgage - remain on the market. And the housing crisis and recession have also persuaded many Americans to rent instead of buy, which has led to a drop in homeownership.
To calculate the average rates, Freddie Mac surveys lenders across the country on 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 fixed loan was 0.7. For the 15-year fixed loan, the average was 0.8.
For the five-year adjustable loan, the average rate fell to 2.90 percent from 2.96 percent, and the average fee was unchanged at 0.8.
The average on the one-year adjustable loan dropped to 2.78 percent from 2.84 percent, and the average fee was unchanged at 0.6.
Source: The Associated Press, Christopher S. Rugaber, AP economics writer.
Thursday, March 29, 2012
Housing Is ‘Awakening From Hibernation,’ Freddie Says
An improving economy is contributing to a gradual rebound in home prices across the country, according to mortgage giant Freddie Mac’s 2012 Economic Outlook report, released Wednesday. But there is still a way to go in the road to recovery for the housing market, the report noted.
“The housing market is showing some signs of shaking off the depression-like conditions that have plagued it for much of the past few years,” according to the report. “As if awakening from hibernation, housing starts and home sales moved to higher levels of activity.”
In fact, the signs have prompted Freddie Mac to revise its forecast upwards for home sales and originations. One economic contributor that’s helping to stabilize housing: The drop in the unemployment rate to 8.3 percent, its lowest level in three years, according to the report.
“A variety of encouraging indicators suggest that the housing market may be feeling a nascent recovery ... and more neighborhoods may see a stabilization in overall demand and housing values this spring,” says Frank Nothaft, Freddie Mac’s chief economist.
Median home sale prices are up, despite a slight drop in new and existing home sales, Freddie Mac reports. About a half of the increase in housing starts has been for construction of rental apartments in multi-unit buildings to meet the increasing demand, the report notes. New rental construction, at its current pace, is expected to reach its highest level since 2005.
“Housing starts continue to run below net household formations [and will allow for absorption of existing vacant homes],” according to the report.
Source: “Freddie Mac: Economic Growth Expected to Stabilize Housing Market,” Dow Jones Newswires (March 28, 2012)
“The housing market is showing some signs of shaking off the depression-like conditions that have plagued it for much of the past few years,” according to the report. “As if awakening from hibernation, housing starts and home sales moved to higher levels of activity.”
In fact, the signs have prompted Freddie Mac to revise its forecast upwards for home sales and originations. One economic contributor that’s helping to stabilize housing: The drop in the unemployment rate to 8.3 percent, its lowest level in three years, according to the report.
“A variety of encouraging indicators suggest that the housing market may be feeling a nascent recovery ... and more neighborhoods may see a stabilization in overall demand and housing values this spring,” says Frank Nothaft, Freddie Mac’s chief economist.
Median home sale prices are up, despite a slight drop in new and existing home sales, Freddie Mac reports. About a half of the increase in housing starts has been for construction of rental apartments in multi-unit buildings to meet the increasing demand, the report notes. New rental construction, at its current pace, is expected to reach its highest level since 2005.
“Housing starts continue to run below net household formations [and will allow for absorption of existing vacant homes],” according to the report.
Source: “Freddie Mac: Economic Growth Expected to Stabilize Housing Market,” Dow Jones Newswires (March 28, 2012)
Feb. completed foreclosures at year ago pace
In February 2012, there were about 65,000 completed foreclosures, compared to 66,000 in February 2011 and 71,000 in January 2012, according to CoreLogic’s National Foreclosure Report for February. The total number of completed foreclosures for the 12 months ending in February was 862,000, the report found. From the start of the financial crisis in September 2008, there have been approximately 3.4 million completed foreclosures.
About 1.4 million homes, or 3.4 percent of all homes with a mortgage, were in the foreclosure inventory as of February 2012 compared to 1.5 million, or 3.6 percent, in February 2011 and 1.4 million, or 3.4 percent, in January 2012. Nationally, the number of borrowers in the foreclosure inventory decreased by 115,000, a decline of 7.6 percent, in February 2012 compared to February 2011.
“The pace of completed foreclosures is down slightly compared to January, running at an annualized pace of 670,000, but compares favorably to the pace of completed foreclosures in February a year ago. Even though the pace of completed foreclosures has slowed, the overall foreclosure inventory is decreasing because REO sales were up in February,” said Mark Fleming, chief economist for CoreLogic. “With the spring buying season upon us, the inventory may decline further as the pace of distressed-asset sales rises along with the rest of the housing market.”
“In February, more than 60 major markets saw a decrease in their foreclosure rates compared to a year ago,” said Anand Nallathambi, president and CEO of CoreLogic. “This combined with faster REO-clearing rates, better employment news, and continued historically low interest rates are all positive signs of improvement in the housing economy.”
The share of borrowers nationally that were 90 or more days late on their mortgage payment fell to 7.3 percent in February 2012 from 7.8 percent in February 2011, but inched up from 7.2 percent in January 2012.
At the same time, the inventory of real estate owned (REO) assets held by servicers nationwide grew faster in February 2012 than the pace of REO sales, as measured by the distressed clearing ratio. The distressed clearing ratio is calculated by dividing the number of REO sales by the number of completed foreclosures; the higher the ratio, the faster the pace of REO sales relative to the pace of completed foreclosures. The distressed clearing ratio for February 2012 was 0.73, up from 0.66 in January 2012.
Highlights as of February 2012:
The five states with the largest number of completed foreclosures during the 12 months ending in February 2012 were: California (154,000), Florida (87,000), Michigan (64,000), Arizona (63,000) and Texas (58,000). These five states account for 49.4 percent of all completed foreclosures nationally.
The percent of homeowners nationally who were more than 90 days late on their mortgage payments, including homes in foreclosure and REO, was 7.3 percent for February 2012 compared to 7.8 percent for February 2011, and 7.2 percent in January 2012.
The five states with the highest foreclosure rates were: Florida (12.0 percent), New Jersey (6.6 percent), Illinois (5.4 percent), Nevada (5.0 percent) and New York (4.9 percent).
The five states with the lowest foreclosure rates were: Wyoming (0.7 percent), Alaska (0.8 percent), North Dakota (0.8 percent), Nebraska (1.0 percent) and Montana (1.4 percent).
Source: Associated Press.
About 1.4 million homes, or 3.4 percent of all homes with a mortgage, were in the foreclosure inventory as of February 2012 compared to 1.5 million, or 3.6 percent, in February 2011 and 1.4 million, or 3.4 percent, in January 2012. Nationally, the number of borrowers in the foreclosure inventory decreased by 115,000, a decline of 7.6 percent, in February 2012 compared to February 2011.
“The pace of completed foreclosures is down slightly compared to January, running at an annualized pace of 670,000, but compares favorably to the pace of completed foreclosures in February a year ago. Even though the pace of completed foreclosures has slowed, the overall foreclosure inventory is decreasing because REO sales were up in February,” said Mark Fleming, chief economist for CoreLogic. “With the spring buying season upon us, the inventory may decline further as the pace of distressed-asset sales rises along with the rest of the housing market.”
“In February, more than 60 major markets saw a decrease in their foreclosure rates compared to a year ago,” said Anand Nallathambi, president and CEO of CoreLogic. “This combined with faster REO-clearing rates, better employment news, and continued historically low interest rates are all positive signs of improvement in the housing economy.”
The share of borrowers nationally that were 90 or more days late on their mortgage payment fell to 7.3 percent in February 2012 from 7.8 percent in February 2011, but inched up from 7.2 percent in January 2012.
At the same time, the inventory of real estate owned (REO) assets held by servicers nationwide grew faster in February 2012 than the pace of REO sales, as measured by the distressed clearing ratio. The distressed clearing ratio is calculated by dividing the number of REO sales by the number of completed foreclosures; the higher the ratio, the faster the pace of REO sales relative to the pace of completed foreclosures. The distressed clearing ratio for February 2012 was 0.73, up from 0.66 in January 2012.
Highlights as of February 2012:
The five states with the largest number of completed foreclosures during the 12 months ending in February 2012 were: California (154,000), Florida (87,000), Michigan (64,000), Arizona (63,000) and Texas (58,000). These five states account for 49.4 percent of all completed foreclosures nationally.
The percent of homeowners nationally who were more than 90 days late on their mortgage payments, including homes in foreclosure and REO, was 7.3 percent for February 2012 compared to 7.8 percent for February 2011, and 7.2 percent in January 2012.
The five states with the highest foreclosure rates were: Florida (12.0 percent), New Jersey (6.6 percent), Illinois (5.4 percent), Nevada (5.0 percent) and New York (4.9 percent).
The five states with the lowest foreclosure rates were: Wyoming (0.7 percent), Alaska (0.8 percent), North Dakota (0.8 percent), Nebraska (1.0 percent) and Montana (1.4 percent).
Source: Associated Press.
NAR: Investment, vacation home sales up in 2011
Sales of investment and vacation homes jumped in 2011, with the combined market share rising to the highest level since 2005, according to the National Association of Realtors® (NAR).
NAR’s 2012 Investment and Vacation Home Buyers Survey, covering existing- and new-home transactions in 2011, shows investment-home sales surged 64.5 percent to 1.23 million last year from 749,000 in 2010. Vacation-home sales rose 7.0 percent to 502,000 in 2011 from 469,000 in 2010. Owner-occupied purchases fell 15.5 percent to 2.78 million.
Vacation-home sales accounted for 11 percent of all transactions last year, up from 10 percent in 2010, while the portion of investment sales jumped to 27 percent in 2011 from 17 percent in 2010.
NAR Chief Economist Lawrence Yun said investors with cash took advantage of market conditions in 2011. “During the past year investors have been swooping into the market to take advantage of bargain home prices,” he said. “Rising rental income easily beat cash sitting in banks as an added inducement. In addition, 41 percent of investment buyers purchased more than one property.”
Yun said the shift in investment buyer patterns in 2011 shows the market, for the large part, is able to absorb foreclosures hitting the market.
“Small-time investors are helping the market heal since REO (bank real estate owned) inventory is not lingering for an extended period,” he said. “Any government program to sell REO inventory in bulk to large institutional companies should be limited to small geographic areas. Even where alternatives are needed, it’s best to rely on the expertise of local businesses, nonprofit organizations and government.”
All-cash purchases have become fairly common in the investment- and vacation-home market during recent years: 49 percent of investment buyers paid cash in 2011, as did 42 percent of vacation-home buyers. Half of all investment home purchases in 2011 were distressed homes, as were 39 percent of vacation homes.
“Clearly we’re looking at investors with financial resources who see real estate as a good investment and who aren’t hesitant to use cash,” Yun said. Of buyers who financed their purchase with a mortgage, large downpayments were typical. The median downpayment for both investment- and vacation-home buyers in 2011 was 27 percent.
“Given the tight credit in recent years, many would-be normal home buyers for owner occupancy declined,” Yun said.
The median investment-home price was $100,000 in 2011, up 6.4 percent from $94,000 in 2010, while the median vacation-home price was $121,300, down 19.1 percent from $150,000 in 2010.
Investment-home buyers in 2011 had a median age of 50, earned $86,100 and bought a home that was relatively close to their primary residence – a median distance of 25 miles, although 30 percent were more than 100 miles away.
“The share of investment buyers who flipped property remained low in 2011, and many of those homes likely were renovated before reselling,” Yun said. Five percent of homes purchased by investment buyers last year have already been resold, up from 2 percent in 2010. The typical investment buyer plans to hold the property for a median of 5 years, down from 10 years for buyers in 2010.
The typical vacation-home buyer was 50 years old, had a median household income of $88,600 and purchased a property that was a median distance of 305 miles from the primary residence; 35 percent of vacation homes were within 100 miles and 37 percent were more than 500 miles. Buyers plan to own their recreational property for a median of 10 years.
Lifestyle factors have consistently been the primary motivation for vacation-home buyers, while the desire for rental income drives investment purchases. Vacation homes purchased last year were more likely to be in suburban or rural areas; investment homes were concentrated in suburban locations.
Eighty-two percent of vacation-home buyers said the primary reason for buying was to use the property themselves for vacations, or as a family retreat. Thirty percent plan to use the property as a primary residence in the future, and only 22 percent plan to rent to others.
Half of investment buyers said they purchased primarily to generate rental income, and 34 percent wanted to diversify their investments or saw a good investment opportunity.
Sixteen percent of vacation buyers and 14 percent of investment buyers purchased the property for a family member, friend or relative to use. In many cases the home is intended for a son or daughter to use while attending school.
Forty-two percent of vacation homes purchased last year were in the South, 30 percent in the West, 15 percent in the Northeast and 12 percent in the Midwest; 1 percent were located outside of the U.S.
Forty-four percent of investment properties were in the South, 23 percent in the West, 17 percent in the Midwest and 15 percent in the Northeast.
Eight out of 10 second-home buyers said it was a good time to buy. Nearly half of investment buyers said they were likely to purchase another property within two years, as did one-third of vacation-home buyers.
Currently, 42.1 million people in the U.S. are ages 50-59 – a group that has dominated second-home sales since the middle part of the past decade and established records. An additional 43.5 million people are 40-49 years old, while another 40.2 million are 30-39.
“Given that the number of people who are in their 40s is somewhat larger than the 50-somethings, the long-term demographic demand for purchasing vacation homes is favorable because these younger households are likely to enter the market as their desire for these kinds of properties grows, and individual circumstances allow,” Yun said.
NAR’s analysis of U.S. Census Bureau data shows there are 8.0 million vacation homes and 42.8 million investment units in the U.S., compared with 75.3 million owner-occupied homes.
NAR’s 2012 Investment and Vacation Home Buyers Survey, conducted in March 2012, includes answers from 2,241 usable responses about home purchases during 2011. The survey controlled for age and income, based on information from the larger 2011 NAR Profile of Home Buyers and Sellers, to limit any biases in the characteristics of respondents.
Source: Florida Realtors®
NAR’s 2012 Investment and Vacation Home Buyers Survey, covering existing- and new-home transactions in 2011, shows investment-home sales surged 64.5 percent to 1.23 million last year from 749,000 in 2010. Vacation-home sales rose 7.0 percent to 502,000 in 2011 from 469,000 in 2010. Owner-occupied purchases fell 15.5 percent to 2.78 million.
Vacation-home sales accounted for 11 percent of all transactions last year, up from 10 percent in 2010, while the portion of investment sales jumped to 27 percent in 2011 from 17 percent in 2010.
NAR Chief Economist Lawrence Yun said investors with cash took advantage of market conditions in 2011. “During the past year investors have been swooping into the market to take advantage of bargain home prices,” he said. “Rising rental income easily beat cash sitting in banks as an added inducement. In addition, 41 percent of investment buyers purchased more than one property.”
Yun said the shift in investment buyer patterns in 2011 shows the market, for the large part, is able to absorb foreclosures hitting the market.
“Small-time investors are helping the market heal since REO (bank real estate owned) inventory is not lingering for an extended period,” he said. “Any government program to sell REO inventory in bulk to large institutional companies should be limited to small geographic areas. Even where alternatives are needed, it’s best to rely on the expertise of local businesses, nonprofit organizations and government.”
All-cash purchases have become fairly common in the investment- and vacation-home market during recent years: 49 percent of investment buyers paid cash in 2011, as did 42 percent of vacation-home buyers. Half of all investment home purchases in 2011 were distressed homes, as were 39 percent of vacation homes.
“Clearly we’re looking at investors with financial resources who see real estate as a good investment and who aren’t hesitant to use cash,” Yun said. Of buyers who financed their purchase with a mortgage, large downpayments were typical. The median downpayment for both investment- and vacation-home buyers in 2011 was 27 percent.
“Given the tight credit in recent years, many would-be normal home buyers for owner occupancy declined,” Yun said.
The median investment-home price was $100,000 in 2011, up 6.4 percent from $94,000 in 2010, while the median vacation-home price was $121,300, down 19.1 percent from $150,000 in 2010.
Investment-home buyers in 2011 had a median age of 50, earned $86,100 and bought a home that was relatively close to their primary residence – a median distance of 25 miles, although 30 percent were more than 100 miles away.
“The share of investment buyers who flipped property remained low in 2011, and many of those homes likely were renovated before reselling,” Yun said. Five percent of homes purchased by investment buyers last year have already been resold, up from 2 percent in 2010. The typical investment buyer plans to hold the property for a median of 5 years, down from 10 years for buyers in 2010.
The typical vacation-home buyer was 50 years old, had a median household income of $88,600 and purchased a property that was a median distance of 305 miles from the primary residence; 35 percent of vacation homes were within 100 miles and 37 percent were more than 500 miles. Buyers plan to own their recreational property for a median of 10 years.
Lifestyle factors have consistently been the primary motivation for vacation-home buyers, while the desire for rental income drives investment purchases. Vacation homes purchased last year were more likely to be in suburban or rural areas; investment homes were concentrated in suburban locations.
Eighty-two percent of vacation-home buyers said the primary reason for buying was to use the property themselves for vacations, or as a family retreat. Thirty percent plan to use the property as a primary residence in the future, and only 22 percent plan to rent to others.
Half of investment buyers said they purchased primarily to generate rental income, and 34 percent wanted to diversify their investments or saw a good investment opportunity.
Sixteen percent of vacation buyers and 14 percent of investment buyers purchased the property for a family member, friend or relative to use. In many cases the home is intended for a son or daughter to use while attending school.
Forty-two percent of vacation homes purchased last year were in the South, 30 percent in the West, 15 percent in the Northeast and 12 percent in the Midwest; 1 percent were located outside of the U.S.
Forty-four percent of investment properties were in the South, 23 percent in the West, 17 percent in the Midwest and 15 percent in the Northeast.
Eight out of 10 second-home buyers said it was a good time to buy. Nearly half of investment buyers said they were likely to purchase another property within two years, as did one-third of vacation-home buyers.
Currently, 42.1 million people in the U.S. are ages 50-59 – a group that has dominated second-home sales since the middle part of the past decade and established records. An additional 43.5 million people are 40-49 years old, while another 40.2 million are 30-39.
“Given that the number of people who are in their 40s is somewhat larger than the 50-somethings, the long-term demographic demand for purchasing vacation homes is favorable because these younger households are likely to enter the market as their desire for these kinds of properties grows, and individual circumstances allow,” Yun said.
NAR’s analysis of U.S. Census Bureau data shows there are 8.0 million vacation homes and 42.8 million investment units in the U.S., compared with 75.3 million owner-occupied homes.
NAR’s 2012 Investment and Vacation Home Buyers Survey, conducted in March 2012, includes answers from 2,241 usable responses about home purchases during 2011. The survey controlled for age and income, based on information from the larger 2011 NAR Profile of Home Buyers and Sellers, to limit any biases in the characteristics of respondents.
Source: Florida Realtors®
Wednesday, March 28, 2012
FHA tightens lending rule on April 1
Effective April 1, 2012, the Federal Housing Administration (FHA) will change the way it considers ongoing credit disputes – such as collection agency claims in a buyer’s credit score – when approving FHA mortgage applications. The change does not impact any debt the homebuyer still owes – only debts in dispute.
Currently, credit disputes in a buyer’s record bump the application to an FHA underwriter. Under the new guidelines, however, no FHA loan will be approved for any dispute over $1,000. Amounts less than $1,000 shouldn’t impact loan approval unless it was ordered by a court, in which case any amount must be paid in full.
If a potential buyer has a $1,000-plus credit dispute on file, he or she must either pay the debt before FHA loan approval, or enter into a repayment agreement and make at least three months of on-time payments.
“We expect this revision will certainly kick some buyers out of the marketplace, and we’re in ongoing efforts to quantify how extreme the impact will be,” said Lisa Jackson, senior vice president of research at John Burns Real Estate Consulting, speaking to HousingWire.
FHA says the change will protect the program and bolster its emergency fund that has fallen below the amount mandated by Congress.
“We found that many borrowers with mortgage payment delinquencies had prior credit deficiencies, including unpaid collections and unresolved disputed accounts prior to the approval of their loan,” an FHA spokesperson said. “This change was made to eliminate this layer of risk to FHA-insured loans and help protect our insurance fund.”
The new rule can be found in HUD Mortgagee Letter 2012-3.
Source: Florida Realtors®
Currently, credit disputes in a buyer’s record bump the application to an FHA underwriter. Under the new guidelines, however, no FHA loan will be approved for any dispute over $1,000. Amounts less than $1,000 shouldn’t impact loan approval unless it was ordered by a court, in which case any amount must be paid in full.
If a potential buyer has a $1,000-plus credit dispute on file, he or she must either pay the debt before FHA loan approval, or enter into a repayment agreement and make at least three months of on-time payments.
“We expect this revision will certainly kick some buyers out of the marketplace, and we’re in ongoing efforts to quantify how extreme the impact will be,” said Lisa Jackson, senior vice president of research at John Burns Real Estate Consulting, speaking to HousingWire.
FHA says the change will protect the program and bolster its emergency fund that has fallen below the amount mandated by Congress.
“We found that many borrowers with mortgage payment delinquencies had prior credit deficiencies, including unpaid collections and unresolved disputed accounts prior to the approval of their loan,” an FHA spokesperson said. “This change was made to eliminate this layer of risk to FHA-insured loans and help protect our insurance fund.”
The new rule can be found in HUD Mortgagee Letter 2012-3.
Source: Florida Realtors®
Tuesday, March 27, 2012
New FHA Rule to 'Kick Some Buyers Out'?
The Federal Housing Administration announced that starting April 1 it will not insure mortgages to borrowers who have an ongoing credit dispute of $1,000 or more on their file.
To be considered for an FHA-backed loan, borrowers will either have to pay the remaining balance on the credit dispute or enter into a payment plan, making at least three payments on it. Any payment plans will need to be documented and submitted to FHA, which will then figure it into the debt-to-income ratio for the new mortgage.
FHA’s new rule does not include disputed credit accounts from more than two years ago or any related to reported identity theft.
Still, the new rule has some in the housing industry worried that it’s going to keep more potential home buyers from securing a mortgage.
"We expect this revision will certainly kick some buyers out of the marketplace, and we’re in ongoing efforts to quantify how extreme the impact will be," Lisa Jackson, senior vice president of research at John Burns Real Estate Consulting, told HousingWire.
Jeremy Radack, a real estate attorney in Houston who assists with financing, estimated FHA originations may be reduced by 33 percent to 50 percent this year due to the new rule.
FHA says the rule is aimed at protecting the FHA’s emergency fund, which has fallen below the mandated amount Congress requires.
"We found that many borrowers with mortgage payment delinquencies had prior credit deficiencies including unpaid collections and unresolved disputed accounts prior to the approval of their loan," the spokesman said. "This change was made to eliminate this layer of risk to FHA-insured loans and help protect our insurance fund."
Also in reimbursing the emergency fund*, FHA announced it would raise its insurance premiums starting April 1 too.
Source: “FHA to Deny Mortgage Backing for Credit Disputes Above $1,000,” HousingWire (March 26, 2012) and “Tougher Requirements Start Monday for FHA Mortgages,” Tampa Bay Times (March 27, 2012)
To be considered for an FHA-backed loan, borrowers will either have to pay the remaining balance on the credit dispute or enter into a payment plan, making at least three payments on it. Any payment plans will need to be documented and submitted to FHA, which will then figure it into the debt-to-income ratio for the new mortgage.
FHA’s new rule does not include disputed credit accounts from more than two years ago or any related to reported identity theft.
Still, the new rule has some in the housing industry worried that it’s going to keep more potential home buyers from securing a mortgage.
"We expect this revision will certainly kick some buyers out of the marketplace, and we’re in ongoing efforts to quantify how extreme the impact will be," Lisa Jackson, senior vice president of research at John Burns Real Estate Consulting, told HousingWire.
Jeremy Radack, a real estate attorney in Houston who assists with financing, estimated FHA originations may be reduced by 33 percent to 50 percent this year due to the new rule.
FHA says the rule is aimed at protecting the FHA’s emergency fund, which has fallen below the mandated amount Congress requires.
"We found that many borrowers with mortgage payment delinquencies had prior credit deficiencies including unpaid collections and unresolved disputed accounts prior to the approval of their loan," the spokesman said. "This change was made to eliminate this layer of risk to FHA-insured loans and help protect our insurance fund."
Also in reimbursing the emergency fund*, FHA announced it would raise its insurance premiums starting April 1 too.
Source: “FHA to Deny Mortgage Backing for Credit Disputes Above $1,000,” HousingWire (March 26, 2012) and “Tougher Requirements Start Monday for FHA Mortgages,” Tampa Bay Times (March 27, 2012)
Home prices fell in Jan. in most U.S. cities
Home prices fell in January for a fifth straight month in most major U.S. cities, as modest sales increases have yet to boost prices.
The Standard & Poor’s/Case-Shiller home-price index released Tuesday showed that prices dropped in January from December in 16 of 19 cities tracked.
The steepest declines were in San Francisco, Atlanta and Portland. Prices increased in Miami, Phoenix and Washington. Price information for Charlotte was delayed and therefore not included in the report.
The declines partly reflect typical offseason sales. The month-over-month data are not adjusted for seasonal factors.
Still, prices fell in 17 of the 20 cities in January compared to the same month in 2011. The group’s nationwide index of prices has fallen 34 percent since the housing bust and is now at 2002 levels.
The continued drop in prices suggests the housing market remains weak, even after the best winter for home sales in five years and steady improvement in the job market.
“Despite some positive economic signs, home prices continued to drop,” said David M. Blitzer, chairman of S&P’s index committee.
Eight cities – Atlanta, Chicago, Cleveland, Las Vegas, New York, Portland, Seattle and Tampa, Fla. – are now back at 2000 levels or earlier. Only Denver, Detroit and Phoenix posted year-over-year increases.
Analysts were quick to note that prices are expected to rise modestly throughout much of 2012.
“It’s going to be tempting to look at home price declines and see a still-faltering housing recovery, but that’s just not the case,” said Stan Humphries, chief economist for housing website Zillow.com. “The reality is that home prices and home sales will be moving” higher.
The Case-Shiller monthly index covers half of all U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The January data are the latest available.
Some economists say sales increases could stop prices from falling further by early spring. Home prices tend to follow sales by about six months. When sales rise, prices rise, too, and an increase in prices would likely create a positive cycle.
Homes are the most affordable they’ve been in decades. And mortgage rates are just above record lows.
The job market is also getting stronger. The economy has added an average of 245,000 jobs per month from December through February. The unemployment rate has fallen to 8.3 percent, the lowest in three years.
Conditions are improving for those in position to buy a home. Still, many people can’t afford to buy or are unable to qualify for mortgage. Some people in position to buy are holding off, worried that prices could fall even further.
The biggest reason why prices are still falling is foreclosures, which are still high across the country. Foreclosures and short sales – when a lender accepts less for a home than what is owed on a mortgage – are selling at an average discount of 20 percent.
Foreclosure activity surged in February across half of U.S. states. The pace of foreclosures is increasing after all 50 U.S. states reached a $25 billion settlement last month with the nation’s five biggest mortgage lenders over foreclosure abuses. Many foreclosures had been stuck in limbo as the 16-month government investigation into foreclosure paperwork problems dragged on.
Source: The Associated Press, Derek Kravitz, AP real estate writer.
The Standard & Poor’s/Case-Shiller home-price index released Tuesday showed that prices dropped in January from December in 16 of 19 cities tracked.
The steepest declines were in San Francisco, Atlanta and Portland. Prices increased in Miami, Phoenix and Washington. Price information for Charlotte was delayed and therefore not included in the report.
The declines partly reflect typical offseason sales. The month-over-month data are not adjusted for seasonal factors.
Still, prices fell in 17 of the 20 cities in January compared to the same month in 2011. The group’s nationwide index of prices has fallen 34 percent since the housing bust and is now at 2002 levels.
The continued drop in prices suggests the housing market remains weak, even after the best winter for home sales in five years and steady improvement in the job market.
“Despite some positive economic signs, home prices continued to drop,” said David M. Blitzer, chairman of S&P’s index committee.
Eight cities – Atlanta, Chicago, Cleveland, Las Vegas, New York, Portland, Seattle and Tampa, Fla. – are now back at 2000 levels or earlier. Only Denver, Detroit and Phoenix posted year-over-year increases.
Analysts were quick to note that prices are expected to rise modestly throughout much of 2012.
“It’s going to be tempting to look at home price declines and see a still-faltering housing recovery, but that’s just not the case,” said Stan Humphries, chief economist for housing website Zillow.com. “The reality is that home prices and home sales will be moving” higher.
The Case-Shiller monthly index covers half of all U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The January data are the latest available.
Some economists say sales increases could stop prices from falling further by early spring. Home prices tend to follow sales by about six months. When sales rise, prices rise, too, and an increase in prices would likely create a positive cycle.
Homes are the most affordable they’ve been in decades. And mortgage rates are just above record lows.
The job market is also getting stronger. The economy has added an average of 245,000 jobs per month from December through February. The unemployment rate has fallen to 8.3 percent, the lowest in three years.
Conditions are improving for those in position to buy a home. Still, many people can’t afford to buy or are unable to qualify for mortgage. Some people in position to buy are holding off, worried that prices could fall even further.
The biggest reason why prices are still falling is foreclosures, which are still high across the country. Foreclosures and short sales – when a lender accepts less for a home than what is owed on a mortgage – are selling at an average discount of 20 percent.
Foreclosure activity surged in February across half of U.S. states. The pace of foreclosures is increasing after all 50 U.S. states reached a $25 billion settlement last month with the nation’s five biggest mortgage lenders over foreclosure abuses. Many foreclosures had been stuck in limbo as the 16-month government investigation into foreclosure paperwork problems dragged on.
Source: The Associated Press, Derek Kravitz, AP real estate writer.
70% of renters think owning makes more sense
Fannie Mae’s latest quarterly National Housing Survey focuses on the homeownership aspirations of Americans. Despite the recent housing crisis, most Americans continue to believe that homeownership is better than renting.
And while Fannie Mae’s data finds that financial constraints and employment concerns may be keeping potential homebuyers on the sidelines, that could change. As employment picks up and the economy grows stronger, stabilizing home prices may entice Americans to buy a home in coming years.
Findings
• Across all education levels, Americans say owning makes more sense than renting. This belief is held consistently across all demographic groups.
• Nearly two-thirds of current renters say that they will buy a house at some point in the future.
• Non-financial factors, such as safety and quality of local schools, continue to be the top reasons for buying a home across all income groups.
• African-Americans and Hispanics are more likely to cite various benefits to homeownership, such as buying a home as a way to build wealth, as a symbol of success and civic benefits.
“In spite of the impact of the housing crisis on home values and homeownership rates across the country, Americans by and large still hope to become homeowners,” says Doug Duncan, vice president and chief economist of Fannie Mae. “A point of concern for the industry is that some consumers find the mortgage shopping process difficult to navigate. If potential homeowners avoid the process because they believe it to be too complex, we will likely see a continued impact on homeownership rates.”
Overall, certain groups (renters, those with lower levels of education, people with lower incomes, African-Americans and Hispanics) cite potential difficulties in getting a mortgage. Renters today are most likely to cite poor credit, complexity of the loan process and bad economic times as major reasons not to buy a home.
Financing problems
• Renters are consistently more likely than mortgage borrowers to think it would be difficult for them to get a home, and say financial reasons are the major reason they have not bought a home.
• African-Americans and Hispanics are more likely to indicate that getting a mortgage is difficult, regardless of income level. They’re also more likely to cite bad economic times and the complexity of the mortgage process as major reasons not to buy a home.
• Groups with lower levels of education are more likely to say it would be difficult for them to get a mortgage than groups with higher levels of education.
• Hispanics are less confident than other groups about receiving information they need to choose the right mortgage.
Moreover, attitudes about homeownership as an investment, financial constraints and mortgage accessibility may mean that more Americans choose not to act on their aspiration for homeownership, thus potentially leading to lower homeownership rates.
Homeownership as an investment
• The margin of Americans believing homeownership has the highest investment potential has declined over the past several years.
• At the same time, the perceived safety of owning a home as an investment has trended downward, reaching a low of 63 percent in the fourth quarter of 2011.
• In turn, groups with higher levels of education and higher incomes are more likely to think buying a home is a safe investment.
Source: Florida Realtors®
And while Fannie Mae’s data finds that financial constraints and employment concerns may be keeping potential homebuyers on the sidelines, that could change. As employment picks up and the economy grows stronger, stabilizing home prices may entice Americans to buy a home in coming years.
Findings
• Across all education levels, Americans say owning makes more sense than renting. This belief is held consistently across all demographic groups.
• Nearly two-thirds of current renters say that they will buy a house at some point in the future.
• Non-financial factors, such as safety and quality of local schools, continue to be the top reasons for buying a home across all income groups.
• African-Americans and Hispanics are more likely to cite various benefits to homeownership, such as buying a home as a way to build wealth, as a symbol of success and civic benefits.
“In spite of the impact of the housing crisis on home values and homeownership rates across the country, Americans by and large still hope to become homeowners,” says Doug Duncan, vice president and chief economist of Fannie Mae. “A point of concern for the industry is that some consumers find the mortgage shopping process difficult to navigate. If potential homeowners avoid the process because they believe it to be too complex, we will likely see a continued impact on homeownership rates.”
Overall, certain groups (renters, those with lower levels of education, people with lower incomes, African-Americans and Hispanics) cite potential difficulties in getting a mortgage. Renters today are most likely to cite poor credit, complexity of the loan process and bad economic times as major reasons not to buy a home.
Financing problems
• Renters are consistently more likely than mortgage borrowers to think it would be difficult for them to get a home, and say financial reasons are the major reason they have not bought a home.
• African-Americans and Hispanics are more likely to indicate that getting a mortgage is difficult, regardless of income level. They’re also more likely to cite bad economic times and the complexity of the mortgage process as major reasons not to buy a home.
• Groups with lower levels of education are more likely to say it would be difficult for them to get a mortgage than groups with higher levels of education.
• Hispanics are less confident than other groups about receiving information they need to choose the right mortgage.
Moreover, attitudes about homeownership as an investment, financial constraints and mortgage accessibility may mean that more Americans choose not to act on their aspiration for homeownership, thus potentially leading to lower homeownership rates.
Homeownership as an investment
• The margin of Americans believing homeownership has the highest investment potential has declined over the past several years.
• At the same time, the perceived safety of owning a home as an investment has trended downward, reaching a low of 63 percent in the fourth quarter of 2011.
• In turn, groups with higher levels of education and higher incomes are more likely to think buying a home is a safe investment.
Source: Florida Realtors®
February, 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:
Market update for the cities of Miramar and Pembroke Pines:
Total Sold for Dade and Broward Counties
| Area 20 | |||
| Total Active Listings: | 50 | ||
| Total Value Dollar Volume: | $12,270,839.00 | ||
| Average List Price: | $245,417.00 | ||
| Median List Price: | $177,400.00 | ||
| Change from Previous Month (N. of Units) | -25% | ||
| Change from Previous Month (Dollar Vol.) | -35% | ||
| Total Sold Properties: | 123 | ||
| Total Dollar Volume Sold: | $15,078,925.00 | ||
| Average Sold Price: | $122,593.00 | ||
| Median Sold Price: | $87,900.00 | ||
| Change from Previous Month (N. of Units) | 21% | ||
| Change from Previous Month (Dollar Vol.) | 9% | ||
| Total Pending Sale: | 187 | ||
| Total Dollar Pending Volume: | $23,578,916.00 | ||
| Average Pending Price: | $126,090.00 | ||
| Median Pending Price: | $100,000.00 | ||
| Change from Previous Month (N. of Units) | -8% | ||
| Change from Previous Month (Dollar Vol.) | -7% | ||
Market update for the cities of Miramar and Pembroke Pines:
| Area 3990 | |||
| Total Active Listings: | 22 | ||
| Total Value Dollar Volume: | $8,601,800.00 | ||
| Average List Price: | $390,991.00 | ||
| Median List Price: | $367,000.00 | ||
| Change from Previous Month (N. of Units) | -42% | ||
| Change from Previous Month (Dollar Vol.) | -37% | ||
| Total Sold Properties: | 28 | ||
| Total Dollar Volume Sold: | $9,206,500.00 | ||
| Average Sold Price: | $328,804.00 | ||
| Median Sold Price: | $317,500.00 | ||
| Change from Previous Month (N. of Units) | 4% | ||
| Change from Previous Month (Dollar Vol.) | 25% | ||
| Total Pending Sale: | 45 | ||
| Total Dollar Pending Volume: | $13,678,411.00 | ||
| Average Pending Price: | $303,965.00 | ||
| Median Pending Price: | $309,900.00 | ||
| Change from Previous Month (N. of Units) | 5% | ||
| Change from Previous Month (Dollar Vol.) | 3% | ||
Total Sold for Dade and Broward Counties
| Dade County | |||
| Total Sales Count: | 2106 | ||
| Total Sales Dollar Volume: | $616,521,735.00 | ||
| Change from Previous Month (N. of Units) | 12% | ||
| Change from Previous Month (Dollar Vol.) | 11% | ||
| Broward County | |||
| Total Sales Count: | 2274 | ||
| Total Sales Dollar Volume: | $423,654,674.00 | ||
| Change from Previous Month (N. of Units) | 10% | ||
| Change from Previous Month (Dollar Vol.) | 11% | ||
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/N2G3s
Monday, March 26, 2012
How Involved Should Sellers be in a Sale?
With competition high, sellers may be intervening more when it comes to selling their home, and it can cause personalities to clash.
Because it might take a little longer to find a buyer nowadays, some sellers are getting very “hands on,” proofreading every line carefully on the MLS and brochures, and questioning your every step, according to a recent article at The Philadelphia Inquirer.
“Sellers get particularly ‘brainy’ in terms of the value of their home, but the reality is that they may not be aware of all recent comparable sales, or been inside those comparables, to really pinpoint value,” Mark Wade, a Philadelphia real estate sales associate, told The Philadelphia Inquirer.
Real estate professionals say it’s important for agents to keep their seller-clients informed every step along the way and educate them about the market.
“Our job as their agents is to advise and to educate them as to the present climate and conditions,” says Marilou Buffum, a Philadelphia agent. “We cannot make decisions for our clients. We only advise and represent.”
The Internet has provided abundant housing information to sellers so they may have access to a lot, but it require some explanation.
“We are dealing with more informed involvement on the part of both the buyers and sellers, it still requires the REALTORS® to analyze all the data and summarize it in a way that provides useful information that can be utilized,” Paul Leiser, a real estate professional from the New Jersey shore, told The Philadelphia Inquirer.
Source: “The Seller’s Role: How Big Is Their Part?” RISMedia (March 24, 2012)
Because it might take a little longer to find a buyer nowadays, some sellers are getting very “hands on,” proofreading every line carefully on the MLS and brochures, and questioning your every step, according to a recent article at The Philadelphia Inquirer.
“Sellers get particularly ‘brainy’ in terms of the value of their home, but the reality is that they may not be aware of all recent comparable sales, or been inside those comparables, to really pinpoint value,” Mark Wade, a Philadelphia real estate sales associate, told The Philadelphia Inquirer.
Real estate professionals say it’s important for agents to keep their seller-clients informed every step along the way and educate them about the market.
“Our job as their agents is to advise and to educate them as to the present climate and conditions,” says Marilou Buffum, a Philadelphia agent. “We cannot make decisions for our clients. We only advise and represent.”
The Internet has provided abundant housing information to sellers so they may have access to a lot, but it require some explanation.
“We are dealing with more informed involvement on the part of both the buyers and sellers, it still requires the REALTORS® to analyze all the data and summarize it in a way that provides useful information that can be utilized,” Paul Leiser, a real estate professional from the New Jersey shore, told The Philadelphia Inquirer.
Source: “The Seller’s Role: How Big Is Their Part?” RISMedia (March 24, 2012)
New-Home Sales Dip in February
New-home sales fell in February, declining 1.6 percent compared to the previous month, the Census Bureau reported Friday.
Still, new-home sales were 11.4 percent above February 2011 numbers, reaching an annualized pace of 313,000 in February 2012 compared to 2011’s 281,000.
But at a time when the new-home market was just starting to gain momentum, the decrease in sales may have some in the industry wondering if the sector is really heading toward recovery mode. The Census report closely followed another report released by the Commerce Department last week, which shows that housing starts also dropped in February by 1.1 percent.
Home builder sentiment, however, remains high as builders look at several key indicators that may be signaling a gradual turnaround. For one, the median price of new homes increased in February to $233,700 from $217,000 in January.
Also, inventory has been dropping, reaching 150,000 — a 5.8-month supply, the Census Bureau reports. And permits for future construction rose 5.1 percent, its highest level in more than three years, the Commerce Department reported last week.
The industry faces hurdles, particularly with home buyers continuing to face problems with qualifying for financing, builders say.
"Many people come in pre-approved for mortgages, but, ultimately, can't pass the underwriting process," said David Crowe, chief economist at the National Association of Home Builders. "They're qualified but they can't get a high-enough appraisal on a house."
Source: “New Home Sales Dropped in February,” CNNMoney (March 23, 2012)
Still, new-home sales were 11.4 percent above February 2011 numbers, reaching an annualized pace of 313,000 in February 2012 compared to 2011’s 281,000.
But at a time when the new-home market was just starting to gain momentum, the decrease in sales may have some in the industry wondering if the sector is really heading toward recovery mode. The Census report closely followed another report released by the Commerce Department last week, which shows that housing starts also dropped in February by 1.1 percent.
Home builder sentiment, however, remains high as builders look at several key indicators that may be signaling a gradual turnaround. For one, the median price of new homes increased in February to $233,700 from $217,000 in January.
Also, inventory has been dropping, reaching 150,000 — a 5.8-month supply, the Census Bureau reports. And permits for future construction rose 5.1 percent, its highest level in more than three years, the Commerce Department reported last week.
The industry faces hurdles, particularly with home buyers continuing to face problems with qualifying for financing, builders say.
"Many people come in pre-approved for mortgages, but, ultimately, can't pass the underwriting process," said David Crowe, chief economist at the National Association of Home Builders. "They're qualified but they can't get a high-enough appraisal on a house."
Source: “New Home Sales Dropped in February,” CNNMoney (March 23, 2012)
Clash over floating home reaches U.S. Supreme Court
Court documents refer to it as “that certain unnamed gray, two-story vessel approximately 57 feet in length.” To Fane Lozman, it was a floating Florida home never intended to sail the seas. Now, a long-running dispute over exactly what the structure was has landed before the U.S. Supreme Court.
Lozman, a 50-year-old former Chicago financial trader, seemingly lost his nearly six-year battle with the seaside city of Riviera Beach when his home was hauled away in 2009 and later destroyed by court order. But Lozman refused to give up, claiming officials vindictively and illegally targeted him for eviction from the city’s marina because of his vocal opposition to a major redevelopment plan.
“Whatever they had to do to get me out of there, they were going to do it,” Lozman said. “All I want to do is live a quiet life. I didn’t look for this drama, it came to me because I wanted to stay at the marina.”
The only-in-Florida backstory matters less to the Supreme Court than a more fundamental question: When is something a vessel, and when is it not? The court agreed to take the case earlier this year and is expected to hear arguments in October.
The vessel definition is crucially important to not only people who live on the water but also to major commercial businesses such as floating casinos, hotels and restaurants, said Stanford University law professor Jeffrey Fisher. The outcome will determine whether federal maritime or state laws apply to structures that are moored, more or less permanently, in one place.
“Federal maritime law is very different often than state law because it’s crafted for the specific dangers and concerns of maritime commerce and navigation at sea,” said Fisher, an experienced Supreme Court litigator who is handling Lozman’s appeal. “Here you have a question of federal law that has divided courts across the country. It’s very significant.”
For example, owners of floating homes usually must pay property taxes, while those owning vessels under maritime law do not. Coast Guard regulations require certain levels of crew for vessels. The standards differ on what kinds and amounts of damages can be awarded in personal injury lawsuits. There are different rules aboard vessels for employment disputes and compensation for workers injured on the job.
Owners of vessels and floating structures across the U.S. are closely watching the case so they know which set of laws to follow.
“The most overarching concern in maritime law on the planet is uniformity,” said David Weill, a maritime attorney in Long Beach, Calif., who isn’t involved in Lozman’s case. “It’s extremely important that shipping interests have uniform treatment as they go from port to port.”
Two federal appeals courts have ruled the owner’s intent is key to determining whether a structure is a vessel. In Lozman’s case, however, the 11th U.S. Circuit Court of Appeals held that what mattered most was if a structure was “practically capable of transportation over water,” which closely tracks the language in federal law that dates to the 1870s.
Riviera Beach officials declined comment because of the pending legal case. But in documents urging the Supreme Court not to take the case, they insisted the structure was not similar to a land-based home that would be afforded important state law protections against seizure.
Yet Lozman’s home had no engines, no bilge pumps, no steering mechanism, no lights or navigation aids. It had to be towed wherever it went. It had no Florida vessel registration number. All it did was float.
“It was a very unseaworthy craft,” Lozman said, adding the appeal of living there was the immediate access to his speedboats and other pleasure watercraft.
Yet a Florida federal judge and the 11th Circuit judges determined the structure was, in fact, a vessel, in part because it had been towed several times to different marinas across hundreds of miles.
Lozman’s story began when he picked the marina in Riviera Beach, one of South Florida’s poorest coastal cities, as the place for his floating home. Not only did it give him easy access to his speedboats and pleasure craft, but it was governed by the same state laws as homes on land.
Then Lozman learned Riviera Beach was planning a $2.4 billion private redevelopment project for the marina. The plan included the use of its eminent domain powers to take many local businesses and homes for a project geared toward wealthy yacht owners. On May 10, 2006, the city council held a hastily called private meeting to designate the project’s master developer – one day before then-Gov. Jeb Bush signed a law prohibiting use of eminent domain authority for such non-public projects.
Lozman decided to challenge that decision in state court, arguing the meeting violated state open-government laws. That’s when the trouble began.
Lozman claims he was followed and harassed, his truck tampered with and damaged. He started showing up at city council meetings, where he got thrown out regularly and was even arrested a couple of times. He became a fixture on local TV newscasts. The local politicians considered him a nuisance; other people saw him as a crusader.
Then the city served an eviction notice, contending that Lozman’s 10-pound dachshund, Lady, was a dangerous dog and that he used unlicensed repair workers at his home. The city argued at the time that he was on a month-to-month lease that could be terminated under state landlord-tenant law.
No mention of the structure as a vessel – yet.
Lozman fought the eviction in court and won, with a jury finding in March 2007 that the eviction amounted to retaliation. Meanwhile, the marina redevelopment plan was shelved, only to be replaced by a scaled-down version that didn’t include use of eminent domain powers. Lozman fought that plan, too.
The city then decided to change the rules at the marina, telling Lozman in 2009 his right to stay there would be revoked unless he got the structure registered as a vessel and proved it could be moved when a hurricane or tropical storm threatened. The city also demanded payment of more than $3,000 in dockage fees. When Lozman refused to pay or leave the marina, the city went to federal court and for the first time sought to use U.S. maritime law to impose a lien on the structure as a vessel, not a house.
Fisher said this maneuver was a game-changer and set the dispute on its course to the Supreme Court. The floating home would have been protected from seizure under state law. But a judge sided with the city, so the structure was seized then bought by Riviera Beach for $1,400 and ultimately destroyed.
So, Lozman can never get his floating home back. He’s now living in Miami Beach and is no longer battling the latest marina redevelopment plan. But he won’t give up the legal dispute over his home, and he made enough money in the financial markets to take the case to the highest court in the land.
“When someone punches you in the face, you either fight back or you run and hide,” he said. “I’m going to fight back.”
The case is Fane Lozman v. The City of Riviera Beach, Florida. No. 11-626.
Source: The Associated Press, Curt Anderson, AP legal affairs writer.
Lozman, a 50-year-old former Chicago financial trader, seemingly lost his nearly six-year battle with the seaside city of Riviera Beach when his home was hauled away in 2009 and later destroyed by court order. But Lozman refused to give up, claiming officials vindictively and illegally targeted him for eviction from the city’s marina because of his vocal opposition to a major redevelopment plan.
“Whatever they had to do to get me out of there, they were going to do it,” Lozman said. “All I want to do is live a quiet life. I didn’t look for this drama, it came to me because I wanted to stay at the marina.”
The only-in-Florida backstory matters less to the Supreme Court than a more fundamental question: When is something a vessel, and when is it not? The court agreed to take the case earlier this year and is expected to hear arguments in October.
The vessel definition is crucially important to not only people who live on the water but also to major commercial businesses such as floating casinos, hotels and restaurants, said Stanford University law professor Jeffrey Fisher. The outcome will determine whether federal maritime or state laws apply to structures that are moored, more or less permanently, in one place.
“Federal maritime law is very different often than state law because it’s crafted for the specific dangers and concerns of maritime commerce and navigation at sea,” said Fisher, an experienced Supreme Court litigator who is handling Lozman’s appeal. “Here you have a question of federal law that has divided courts across the country. It’s very significant.”
For example, owners of floating homes usually must pay property taxes, while those owning vessels under maritime law do not. Coast Guard regulations require certain levels of crew for vessels. The standards differ on what kinds and amounts of damages can be awarded in personal injury lawsuits. There are different rules aboard vessels for employment disputes and compensation for workers injured on the job.
Owners of vessels and floating structures across the U.S. are closely watching the case so they know which set of laws to follow.
“The most overarching concern in maritime law on the planet is uniformity,” said David Weill, a maritime attorney in Long Beach, Calif., who isn’t involved in Lozman’s case. “It’s extremely important that shipping interests have uniform treatment as they go from port to port.”
Two federal appeals courts have ruled the owner’s intent is key to determining whether a structure is a vessel. In Lozman’s case, however, the 11th U.S. Circuit Court of Appeals held that what mattered most was if a structure was “practically capable of transportation over water,” which closely tracks the language in federal law that dates to the 1870s.
Riviera Beach officials declined comment because of the pending legal case. But in documents urging the Supreme Court not to take the case, they insisted the structure was not similar to a land-based home that would be afforded important state law protections against seizure.
Yet Lozman’s home had no engines, no bilge pumps, no steering mechanism, no lights or navigation aids. It had to be towed wherever it went. It had no Florida vessel registration number. All it did was float.
“It was a very unseaworthy craft,” Lozman said, adding the appeal of living there was the immediate access to his speedboats and other pleasure watercraft.
Yet a Florida federal judge and the 11th Circuit judges determined the structure was, in fact, a vessel, in part because it had been towed several times to different marinas across hundreds of miles.
Lozman’s story began when he picked the marina in Riviera Beach, one of South Florida’s poorest coastal cities, as the place for his floating home. Not only did it give him easy access to his speedboats and pleasure craft, but it was governed by the same state laws as homes on land.
Then Lozman learned Riviera Beach was planning a $2.4 billion private redevelopment project for the marina. The plan included the use of its eminent domain powers to take many local businesses and homes for a project geared toward wealthy yacht owners. On May 10, 2006, the city council held a hastily called private meeting to designate the project’s master developer – one day before then-Gov. Jeb Bush signed a law prohibiting use of eminent domain authority for such non-public projects.
Lozman decided to challenge that decision in state court, arguing the meeting violated state open-government laws. That’s when the trouble began.
Lozman claims he was followed and harassed, his truck tampered with and damaged. He started showing up at city council meetings, where he got thrown out regularly and was even arrested a couple of times. He became a fixture on local TV newscasts. The local politicians considered him a nuisance; other people saw him as a crusader.
Then the city served an eviction notice, contending that Lozman’s 10-pound dachshund, Lady, was a dangerous dog and that he used unlicensed repair workers at his home. The city argued at the time that he was on a month-to-month lease that could be terminated under state landlord-tenant law.
No mention of the structure as a vessel – yet.
Lozman fought the eviction in court and won, with a jury finding in March 2007 that the eviction amounted to retaliation. Meanwhile, the marina redevelopment plan was shelved, only to be replaced by a scaled-down version that didn’t include use of eminent domain powers. Lozman fought that plan, too.
The city then decided to change the rules at the marina, telling Lozman in 2009 his right to stay there would be revoked unless he got the structure registered as a vessel and proved it could be moved when a hurricane or tropical storm threatened. The city also demanded payment of more than $3,000 in dockage fees. When Lozman refused to pay or leave the marina, the city went to federal court and for the first time sought to use U.S. maritime law to impose a lien on the structure as a vessel, not a house.
Fisher said this maneuver was a game-changer and set the dispute on its course to the Supreme Court. The floating home would have been protected from seizure under state law. But a judge sided with the city, so the structure was seized then bought by Riviera Beach for $1,400 and ultimately destroyed.
So, Lozman can never get his floating home back. He’s now living in Miami Beach and is no longer battling the latest marina redevelopment plan. But he won’t give up the legal dispute over his home, and he made enough money in the financial markets to take the case to the highest court in the land.
“When someone punches you in the face, you either fight back or you run and hide,” he said. “I’m going to fight back.”
The case is Fane Lozman v. The City of Riviera Beach, Florida. No. 11-626.
Source: The Associated Press, Curt Anderson, AP legal affairs writer.
Pending home sales ease in Feb. but higher than last year
Pending home sales were down slightly in February but remain notably above the pattern in the first half of last year, according to the National Association of Realtors® (NAR).
The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, eased 0.5 percent to 96.5 in February from 97.0 in January but is 9.2 percent above February 2011 when it was 88.4. The data reflects contracts but not closings.
Lawrence Yun, NAR chief economist, says we’re seeing the continuation of an uneven – but higher – sales pattern. “The spring homebuying season looks bright because of an elevated level of contract offers so far this year,” he says. “If activity is sustained near present levels, existing-home sales will see their best performance in five years. Based on all of the factors in the current market, that’s what we’re expecting with sales rising 7 to 10 percent in 2012.”
The PHSI in the Northeast slipped 0.6 percent to 77.7 in February but is 18.4 percent above a year ago. In the Midwest the index jumped 6.5 percent to 93.8 and is 19.0 percent higher than February 2011. Pending home sales in the South fell 3.0 percent to an index of 105.8 in February but are 7.8 percent above a year ago. In the West, the index declined 2.6 percent in February to 99.3 and is 1.8 percent below February 2011.
Source: Florida Realtors®
The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, eased 0.5 percent to 96.5 in February from 97.0 in January but is 9.2 percent above February 2011 when it was 88.4. The data reflects contracts but not closings.
Lawrence Yun, NAR chief economist, says we’re seeing the continuation of an uneven – but higher – sales pattern. “The spring homebuying season looks bright because of an elevated level of contract offers so far this year,” he says. “If activity is sustained near present levels, existing-home sales will see their best performance in five years. Based on all of the factors in the current market, that’s what we’re expecting with sales rising 7 to 10 percent in 2012.”
The PHSI in the Northeast slipped 0.6 percent to 77.7 in February but is 18.4 percent above a year ago. In the Midwest the index jumped 6.5 percent to 93.8 and is 19.0 percent higher than February 2011. Pending home sales in the South fell 3.0 percent to an index of 105.8 in February but are 7.8 percent above a year ago. In the West, the index declined 2.6 percent in February to 99.3 and is 1.8 percent below February 2011.
Source: Florida Realtors®
Friday, March 23, 2012
Have Home Prices Finally Reached Bottom?
“Prices are bottoming now,” according to a Bank of America Merrill Lynch forecast, released this week.
In the fall, the analysts had predicted home prices would drop by 8 percent from the second quarter of 2011 through the first quarter of 2013 — but now they’re revising that forecast, realizing the housing market is stabilizing faster than they originally thought.
The analysts now predict that prices will remain flat for the next two years, as the excess foreclosure inventory is absorbed. They then expect to see a pickup in home prices by 2014.
And in the long-term, they see a big rise in housing prices. From 2012 through 2020, analysts forecast a cumulative growth of 42 percent in home prices (at 4 percent on an annualized basis).
Source: “Home Prices ‘Bottoming Now,’ BofA Merrill Lynch Analysts Say,” HousingWire (March 22, 2012)
In the fall, the analysts had predicted home prices would drop by 8 percent from the second quarter of 2011 through the first quarter of 2013 — but now they’re revising that forecast, realizing the housing market is stabilizing faster than they originally thought.
The analysts now predict that prices will remain flat for the next two years, as the excess foreclosure inventory is absorbed. They then expect to see a pickup in home prices by 2014.
And in the long-term, they see a big rise in housing prices. From 2012 through 2020, analysts forecast a cumulative growth of 42 percent in home prices (at 4 percent on an annualized basis).
Source: “Home Prices ‘Bottoming Now,’ BofA Merrill Lynch Analysts Say,” HousingWire (March 22, 2012)
U.S. new-home sales fell in Feb. for 2nd month
Sales of new U.S. homes fell in February for the second straight month, a reminder that the depressed housing market remains weak despite some improvement.
The Commerce Department said Friday that new-home sales dropped 1.6 percent last month to a seasonally adjusted annual rate of 313,000 homes. Sales have fallen nearly 7 percent since December.
While a mild winter and three months of strong job growth have lifted re-sales, those conditions haven’t benefited the new-home market. The current pace is less than half the 700,000 that economists consider to be healthy.
There were some positive signs in the report. The government revised December’s sales figures up to show an annual rate of 336,000, the best sales pace in a year.
And the median sales price for new homes surged in February more than 8 percent, to $233,700. That's the highest median price since June and could suggest builders are anticipating more sales in the months to come.
Still, economists caution that the housing market is a long way from fully recovering.
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.
Builders are growing more confident after seeing a growing number of people express interest in buying this year. They’ve responded by requesting the most permits to build single-family homes and apartments since October 2008.
Sales of previously occupied homes have risen more than 13 percent since July. And January and February made up the best winter for re-sales in five years, when the housing crisis began.
A key reason for the dismal sales in the new-home market is that builders must compete with foreclosures and short sales – when lenders accept less for a house than what is owed on the mortgage.
Foreclosure activity surged in February across half of U.S. states. The pace of foreclosures is increasing now that states have reached a settlement with the nation’s five biggest mortgage lenders over foreclosure abuses.
Builders have also 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.
Source: The Associated Press, Derek Kravitz, AP real estate writer.
The Commerce Department said Friday that new-home sales dropped 1.6 percent last month to a seasonally adjusted annual rate of 313,000 homes. Sales have fallen nearly 7 percent since December.
While a mild winter and three months of strong job growth have lifted re-sales, those conditions haven’t benefited the new-home market. The current pace is less than half the 700,000 that economists consider to be healthy.
There were some positive signs in the report. The government revised December’s sales figures up to show an annual rate of 336,000, the best sales pace in a year.
And the median sales price for new homes surged in February more than 8 percent, to $233,700. That's the highest median price since June and could suggest builders are anticipating more sales in the months to come.
Still, economists caution that the housing market is a long way from fully recovering.
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.
Builders are growing more confident after seeing a growing number of people express interest in buying this year. They’ve responded by requesting the most permits to build single-family homes and apartments since October 2008.
Sales of previously occupied homes have risen more than 13 percent since July. And January and February made up the best winter for re-sales in five years, when the housing crisis began.
A key reason for the dismal sales in the new-home market is that builders must compete with foreclosures and short sales – when lenders accept less for a house than what is owed on the mortgage.
Foreclosure activity surged in February across half of U.S. states. The pace of foreclosures is increasing now that states have reached a settlement with the nation’s five biggest mortgage lenders over foreclosure abuses.
Builders have also 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.
Source: The Associated Press, Derek Kravitz, AP real estate writer.
U.S. rate on 30-year mortgages jumps above 4.0%
The average U.S. rate on a 30-year fixed mortgage rose above 4 percent for the first time in five months. The sharp increase suggests the window to buy or refinance a home at historically low rates is closing.
Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan jumped to 4.08 percent, up from 3.92 percent the previous week. A month ago, it touched 3.87 percent, the lowest since long-term mortgages began in the 1950s.
The average on the 15-year fixed mortgage rose to 3.30 percent, up from 3.16 percent last week and a record low of 3.13 percent two weeks ago.
Mortgage rates are rising because they tend to track the yield on the 10-year Treasury note. The economic outlook has improved in recent weeks, leading investors to shift money out of long-term U.S. Treasury bonds and into stocks. That has driven Treasury yields higher.
“With the economy getting stronger, the markets are beginning to recognize that rates are too low,” said Joel Naroff, president of Naroff Economic Advisors. “That means mortgage rates should rise.”
The average rate on the 30-year mortgage had been at or below 4 percent since last October.
Higher mortgage rates could spur more sales, especially if home prices begin to rise. Potential buyers will likely move quickly to avoid paying higher rates down the line.
“As we move through the year, buyer reaction could be very strong,” Naroff said.
The lowest mortgage rates on record have helped lift the housing market in recent months.
January and February made up the best winter for sales of previously occupied homes in five years, when the housing crisis began.
Builders have grown more confident over the past six months after seeing more people express interest in buying a home. They have responded by requesting the most permits to build single-family homes and apartments since October 2008.
Optimism is also rising because the job market has strengthened. Employers have added an average 244,600 jobs per month from December through February. That has helped lower the unemployment rate to 8.3 percent, the lowest level in nearly three years.
Even with the improvement, the housing market is still weak. Millions of foreclosures and short sales – when a lender accepts less than what is owed on a mortgage – remain on the market. And the housing crisis and recession have also persuaded many Americans to rent instead of buy, which has led to a drop in homeownership.
Economists say housing is years away from returning to full health.
To calculate the average rates, Freddie Mac surveys lenders across the country on 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 fixed loans were 0.8, unchanged from 0.8 last week.
For the five-year adjustable loan, the average rate rose to 2.96 percent from 2.83 percent, and the average fee edged down to 0.7 from 0.8.
The average on the one-year adjustable loan rose to 2.84 percent from 2.79 percent, and the average fee was unchanged at 0.6.
Source: The Associated Press, Derek Kravitz, AP business writer. All rights reserved.
Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan jumped to 4.08 percent, up from 3.92 percent the previous week. A month ago, it touched 3.87 percent, the lowest since long-term mortgages began in the 1950s.
The average on the 15-year fixed mortgage rose to 3.30 percent, up from 3.16 percent last week and a record low of 3.13 percent two weeks ago.
Mortgage rates are rising because they tend to track the yield on the 10-year Treasury note. The economic outlook has improved in recent weeks, leading investors to shift money out of long-term U.S. Treasury bonds and into stocks. That has driven Treasury yields higher.
“With the economy getting stronger, the markets are beginning to recognize that rates are too low,” said Joel Naroff, president of Naroff Economic Advisors. “That means mortgage rates should rise.”
The average rate on the 30-year mortgage had been at or below 4 percent since last October.
Higher mortgage rates could spur more sales, especially if home prices begin to rise. Potential buyers will likely move quickly to avoid paying higher rates down the line.
“As we move through the year, buyer reaction could be very strong,” Naroff said.
The lowest mortgage rates on record have helped lift the housing market in recent months.
January and February made up the best winter for sales of previously occupied homes in five years, when the housing crisis began.
Builders have grown more confident over the past six months after seeing more people express interest in buying a home. They have responded by requesting the most permits to build single-family homes and apartments since October 2008.
Optimism is also rising because the job market has strengthened. Employers have added an average 244,600 jobs per month from December through February. That has helped lower the unemployment rate to 8.3 percent, the lowest level in nearly three years.
Even with the improvement, the housing market is still weak. Millions of foreclosures and short sales – when a lender accepts less than what is owed on a mortgage – remain on the market. And the housing crisis and recession have also persuaded many Americans to rent instead of buy, which has led to a drop in homeownership.
Economists say housing is years away from returning to full health.
To calculate the average rates, Freddie Mac surveys lenders across the country on 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 fixed loans were 0.8, unchanged from 0.8 last week.
For the five-year adjustable loan, the average rate rose to 2.96 percent from 2.83 percent, and the average fee edged down to 0.7 from 0.8.
The average on the one-year adjustable loan rose to 2.84 percent from 2.79 percent, and the average fee was unchanged at 0.6.
Source: The Associated Press, Derek Kravitz, AP business writer. All rights reserved.
Thursday, March 22, 2012
Shadow Inventory Falls 10%, Threat Remains
Shadow inventory--distressed properties not yet listed for sale--has decreased about 10 percent compared to a year earlier, according to CoreLogic.
While the decrease has been viewed as a welcome sign to housing experts, shadow inventory still remains a threat to a housing recovery, even at a time when the housing market has shown other signs of improvement in recent weeks.
For every two homes available for sale in the country, one home awaits in the “shadows,” HousingWire reports about the data.
In January, shadow inventory accounted for 1.6 million units, which is a six-month supply. In January 2011, that number stood at 1.8 million units, an eight-month supply.
“Almost half of the shadow inventory is not yet in the foreclosure process,” says Mark Fleming, CoreLogic’s chief economist. “Shadow inventory also remains concentrated in states impacted by sharp price declines and states with long foreclosure timelines.”
The top six states that account for most of the nation’s shadow inventory:
While the decrease has been viewed as a welcome sign to housing experts, shadow inventory still remains a threat to a housing recovery, even at a time when the housing market has shown other signs of improvement in recent weeks.
For every two homes available for sale in the country, one home awaits in the “shadows,” HousingWire reports about the data.
In January, shadow inventory accounted for 1.6 million units, which is a six-month supply. In January 2011, that number stood at 1.8 million units, an eight-month supply.
“Almost half of the shadow inventory is not yet in the foreclosure process,” says Mark Fleming, CoreLogic’s chief economist. “Shadow inventory also remains concentrated in states impacted by sharp price declines and states with long foreclosure timelines.”
The top six states that account for most of the nation’s shadow inventory:
- Florida
- California
- Illinois
- New York
- Texas
- New Jersey
Buying is Cheaper Than Renting in Nearly All Major Cities
Home buying is the smarter choice than renting, according to Trulia’s Winter 2012 Rent vs. Buy Index.
Buying a home is more affordable than renting in 98 of the nation’s 100 largest metro areas, according to the index, which tracks asking prices for rental units compared to for-sale homes in major metro areas.
The only two metros out of the 100 tracked where renting was found to be the better deal: Honolulu and San Francisco. Still, the index notes that if you plan to stay in those markets more than five years, you might still be better off owning than renting in those markets too.
Falling home values and low mortgage rates have made home ownership more affordable. Meanwhile, rents have been on the rise.
“As rents rise and prices stagnate, home ownership is becoming even more affordable, but rising rents create a dilemma for people who can’t afford to buy yet,” says Jed Kolko, Trulia’s chief economist. “Rising rents make it harder for people to save for a down payment, which is the biggest barrier to buying a home that aspiring home owners face.”
Top 10 Metros to Buy vs. Rent
1. Detroit
2. Oklahoma City, Okla.
3. Dayton, Ohio
4. Warren-Troy-Farmington Hills, Mich.
5. Toledo, Ohio
6. Grand Rapids, Mich.
7. Cleveland, Ohio
8. Atlanta
9. Gary, Ind.
10. Memphis, Tenn.
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
Buying a home is more affordable than renting in 98 of the nation’s 100 largest metro areas, according to the index, which tracks asking prices for rental units compared to for-sale homes in major metro areas.
The only two metros out of the 100 tracked where renting was found to be the better deal: Honolulu and San Francisco. Still, the index notes that if you plan to stay in those markets more than five years, you might still be better off owning than renting in those markets too.
Falling home values and low mortgage rates have made home ownership more affordable. Meanwhile, rents have been on the rise.
“As rents rise and prices stagnate, home ownership is becoming even more affordable, but rising rents create a dilemma for people who can’t afford to buy yet,” says Jed Kolko, Trulia’s chief economist. “Rising rents make it harder for people to save for a down payment, which is the biggest barrier to buying a home that aspiring home owners face.”
Top 10 Metros to Buy vs. Rent
1. Detroit
2. Oklahoma City, Okla.
3. Dayton, Ohio
4. Warren-Troy-Farmington Hills, Mich.
5. Toledo, Ohio
6. Grand Rapids, Mich.
7. Cleveland, Ohio
8. Atlanta
9. Gary, Ind.
10. Memphis, Tenn.
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
FHFA House Price Index unchanged in January
U.S. house prices were unchanged on a seasonally adjusted basis from December to January, according to the Federal Housing Finance Agency’s monthly House Price Index. The previously reported 0.7 percent increase in December was revised downward to reflect a 0.1 percent increase.
For the 12 months ending in January, U.S. prices fell 0.8 percent. The U.S. index is 19.2 percent below its April 2007 peak and roughly the same as the February 2004 index level.
The FHFA monthly index looks at the selling price of the same properties over time. It considers those with mortgages owned or guaranteed by Fannie Mae or Freddie Mac. Mortgages financed by government-insured loans, such as FHA or VA, are excluded from the HPI.
For the nine census divisions, seasonally adjusted U.S. monthly price changes from December to January ranged from -1.7 percent in the West South Central division to +4.7 percent in the West North Central division.
The Federal Housing Finance Agency (FHFA) publishes the HPI. The Office of Federal Housing Enterprise Oversight (OFHEO), one of FHFA’s predecessor agencies, began publishing the HPI in 1995.
Source: Florida Realtors®
For the 12 months ending in January, U.S. prices fell 0.8 percent. The U.S. index is 19.2 percent below its April 2007 peak and roughly the same as the February 2004 index level.
The FHFA monthly index looks at the selling price of the same properties over time. It considers those with mortgages owned or guaranteed by Fannie Mae or Freddie Mac. Mortgages financed by government-insured loans, such as FHA or VA, are excluded from the HPI.
For the nine census divisions, seasonally adjusted U.S. monthly price changes from December to January ranged from -1.7 percent in the West South Central division to +4.7 percent in the West North Central division.
The Federal Housing Finance Agency (FHFA) publishes the HPI. The Office of Federal Housing Enterprise Oversight (OFHEO), one of FHFA’s predecessor agencies, began publishing the HPI in 1995.
Source: Florida Realtors®
U.S. home re-sales complete best winter in 5 years
U.S. home sales are gradually coming back. A mild winter and a stronger job market have helped boost sales ahead of the crucial spring buying season.
The past two months made up the best winter for sales of previously occupied homes in five years, when the housing crisis began. And the sales pace in January was the highest since May 2010, the last month that buyers could qualify for a federal home-buying tax credit.
February sales dipped only slightly to a seasonally adjusted 4.59 million, the National Association of Realtors said Wednesday. That’s 13 percent higher than the sales pace last July and just below the revised 4.63 million in January.
Ian Shepherdson, chief U.S. economist at High Frequency Economics, said the lower February’s numbers “should not detract from the key point, which is that sales are trending upward.”
The sales pace remains far below the 6 million that economists equate with healthy markets. And the number of first-time buyers, who are critical to a housing recovery, continues to lag normal levels, while foreclosures remain high.
Still, Florida Realtors President Summer Greene, a Realtor in Fort Lauderdale, said she’s getting multiple offers for listings. That’s been rare since the housing market went bust in South Florida.
“People don’t want to wait on the sidelines anymore and the change is very noticeable,” Greene said. “There’s definitely been a mood shift.”
The median sales prices of homes rose for the first time in four months in February, to $156,600. And the supply of homes on the market increased more than 4 percent in February to 2.43 million, which could signal that more homeowners became confident in the housing market.
There have been other signs of improvement in the depressed housing market.
Homebuilders have grown more confident in the past six months after seeing more people express interest in buying a home. In February, they requested the most permits to build homes since October 2008.
Mortgage rates are near record lows. And the supply of homes fell in January to its lowest level in seven years.
A lower supply helps push up prices, which lures more sellers onto the market and generally improves the quality of homes for sale. Rising prices also boost sales because buyers want to invest in homes that are appreciating in value.
A key reason for the brighter housing outlook is the job market has strengthened. From December through February, employers added an average of 245,000 jobs a month. The unemployment rate has fallen to 8.3 percent, the lowest in three years.
Still, economists caution that the damage from the housing bust is deep and the industry is years away from fully recovering.
Sales among first-time buyers, who are critical to a housing recovery, fell slightly last month to 32 percent of all purchases. That’s down from 33 percent in January. In healthy markets, first-time buyers make up at least 40 percent.
And homes at risk of foreclosure made up 34 percent of sales, down only slightly from 35 percent in January. In more stable markets, foreclosures make up less than 10 percent of sales.
For the past few years, the market has been saturated for years with foreclosures. That has put downward pressure on prices and driven away buyers. Many can’t qualify for loans or meet higher down-payment requirements. Even those with excellent credit and stable jobs are holding off because they fear that home prices will keep falling.
Sales are measured when buyers close on homes. Some deals have been scuttled before the closing after banks declined mortgage applications, home inspectors found problems, appraisals showed a home was worth less than the bid, or a buyer lost a job.
One-third of Realtors say they’ve had at least one contract scuttled in each of the past five months. That’s up from just 18 percent in September.
Sales were mixed across the country. They rose on a seasonal basis 1 percent in the Midwest and 0.6 percent in the South. They dropped 3.2 percent in the West and 3.3 percent in the Northeast.
The Associated Press, Derek Kravitz, AP real estate writer. All rights reserved.
The past two months made up the best winter for sales of previously occupied homes in five years, when the housing crisis began. And the sales pace in January was the highest since May 2010, the last month that buyers could qualify for a federal home-buying tax credit.
February sales dipped only slightly to a seasonally adjusted 4.59 million, the National Association of Realtors said Wednesday. That’s 13 percent higher than the sales pace last July and just below the revised 4.63 million in January.
Ian Shepherdson, chief U.S. economist at High Frequency Economics, said the lower February’s numbers “should not detract from the key point, which is that sales are trending upward.”
The sales pace remains far below the 6 million that economists equate with healthy markets. And the number of first-time buyers, who are critical to a housing recovery, continues to lag normal levels, while foreclosures remain high.
Still, Florida Realtors President Summer Greene, a Realtor in Fort Lauderdale, said she’s getting multiple offers for listings. That’s been rare since the housing market went bust in South Florida.
“People don’t want to wait on the sidelines anymore and the change is very noticeable,” Greene said. “There’s definitely been a mood shift.”
The median sales prices of homes rose for the first time in four months in February, to $156,600. And the supply of homes on the market increased more than 4 percent in February to 2.43 million, which could signal that more homeowners became confident in the housing market.
There have been other signs of improvement in the depressed housing market.
Homebuilders have grown more confident in the past six months after seeing more people express interest in buying a home. In February, they requested the most permits to build homes since October 2008.
Mortgage rates are near record lows. And the supply of homes fell in January to its lowest level in seven years.
A lower supply helps push up prices, which lures more sellers onto the market and generally improves the quality of homes for sale. Rising prices also boost sales because buyers want to invest in homes that are appreciating in value.
A key reason for the brighter housing outlook is the job market has strengthened. From December through February, employers added an average of 245,000 jobs a month. The unemployment rate has fallen to 8.3 percent, the lowest in three years.
Still, economists caution that the damage from the housing bust is deep and the industry is years away from fully recovering.
Sales among first-time buyers, who are critical to a housing recovery, fell slightly last month to 32 percent of all purchases. That’s down from 33 percent in January. In healthy markets, first-time buyers make up at least 40 percent.
And homes at risk of foreclosure made up 34 percent of sales, down only slightly from 35 percent in January. In more stable markets, foreclosures make up less than 10 percent of sales.
For the past few years, the market has been saturated for years with foreclosures. That has put downward pressure on prices and driven away buyers. Many can’t qualify for loans or meet higher down-payment requirements. Even those with excellent credit and stable jobs are holding off because they fear that home prices will keep falling.
Sales are measured when buyers close on homes. Some deals have been scuttled before the closing after banks declined mortgage applications, home inspectors found problems, appraisals showed a home was worth less than the bid, or a buyer lost a job.
One-third of Realtors say they’ve had at least one contract scuttled in each of the past five months. That’s up from just 18 percent in September.
Sales were mixed across the country. They rose on a seasonal basis 1 percent in the Midwest and 0.6 percent in the South. They dropped 3.2 percent in the West and 3.3 percent in the Northeast.
The Associated Press, Derek Kravitz, AP real estate writer. All rights reserved.
Wednesday, March 21, 2012
Oprah Sells Penthouse in Less Than a Week
Oprah Winfrey sold her New York City penthouse for $7.9 million in less than a week, with buyers starting to line up as soon as the property hit the market on Feb. 22, according to media reports.
A British financier, whose name has not been disclosed, made an offer right away and will close on the penthouse next month.
Winfrey purchased the penthouse in 2008 for $7.1 million in the name of her late cocker spaniel.
The 26th floor unit is 2,530 square feet and has three bedrooms and includes a 768 square foot balcony, a master suite with three walk-in closets, and views that extend from New York's Central Park to the Hudson River. Oprah reportedly never lived in the penthouse, but her friend Gayle King had occupied it.
Source: “Oprah Sells NYC Penthouse for $7.9M,” UPI (March 19, 2012)
A British financier, whose name has not been disclosed, made an offer right away and will close on the penthouse next month.
Winfrey purchased the penthouse in 2008 for $7.1 million in the name of her late cocker spaniel.
The 26th floor unit is 2,530 square feet and has three bedrooms and includes a 768 square foot balcony, a master suite with three walk-in closets, and views that extend from New York's Central Park to the Hudson River. Oprah reportedly never lived in the penthouse, but her friend Gayle King had occupied it.
Source: “Oprah Sells NYC Penthouse for $7.9M,” UPI (March 19, 2012)
Good news/bad news: Shadow inventory stable
CoreLogic reported today that the current residential shadow inventory in January 2012 was 1.6 million units, or a six-month supply. The level matches the number in October 2011. However, the shadow inventory decreased year-to-year. In January 2011, it stood at 1.8 million units, or an eight-month supply.
Currently, the flow of new seriously delinquent (90 days or more) loans moving into the shadow inventory has been offset by the roughly equal flow of distressed sales (short and real estate owned).
“Almost half of the shadow inventory is not yet in the foreclosure process,” says Mark Fleming, chief economist for CoreLogic. “Shadow inventory also remains concentrated in states impacted by sharp price declines and states with long foreclosure timelines.”
“The shadow inventory remains persistent even though many other metrics of the housing market show signs of improvements,” says Anand Nallathambi, president and CEO of CoreLogic. “In some hard-hit markets, the demand for REO and distressed property is now outstripping supply. As we move into what is traditionally the peak selling season for real estate, servicers will certainly be watching closely to see if now is the time to move more inventory out of the shadows.”
Data highlights
• As of January 2012, shadow inventory remained at 1.6 million units, or 6-months’ supply and represented half of the 3 million properties currently seriously delinquent, in foreclosure or REO.
• Of the 1.6 million properties currently in the shadow inventory, 800,000 units are seriously delinquent (3.1-months’ supply), 410,000 are in some stage of foreclosure (1.6-months’ supply) and 400,000 are already in REO (1.6-months’ supply).
• Florida, California and Illinois account for more than a third of the shadow inventory. The top six states, which would also include New York, Texas and New Jersey, account for half of the shadow inventory.
• The shadow inventory is approximately four times higher than its low point (380,000 properties) at the peak of the housing bubble in mid-2006.
• Despite 3 million distressed sales since January 2009, the period when home prices were declining at their fastest rate, the shadow inventory in January 2012 is at the same level as January 2009.
• The shadow inventory is approximately half of the size of all visible inventory listings. For every two homes available for sale, there is one home in the “shadows.”
• The segment of borrowers 60-plus days delinquent in the past but “cured” – now current on their payments – is increasing. This figure was 7.2 percent in January 2012, up from 5.7 percent a year ago.
• The total percent of borrowers over 60-plus days delinquent (irrespective of delinquency status today) increased to 15.5 percent in January 2012, up from 14.3 percent a year ago.
• The highest concentration of shadow inventory is for loans with loan balances between $100,000 and $125,000. While the overall supply of homes in the shadow inventory is declining versus a year ago, the declines are being driven by higher balance loans. For loans with balances of $75,000 or less, however, the shadow is still growing and up 3 percent from a year ago.
Source: Florida Realtors®
Currently, the flow of new seriously delinquent (90 days or more) loans moving into the shadow inventory has been offset by the roughly equal flow of distressed sales (short and real estate owned).
“Almost half of the shadow inventory is not yet in the foreclosure process,” says Mark Fleming, chief economist for CoreLogic. “Shadow inventory also remains concentrated in states impacted by sharp price declines and states with long foreclosure timelines.”
“The shadow inventory remains persistent even though many other metrics of the housing market show signs of improvements,” says Anand Nallathambi, president and CEO of CoreLogic. “In some hard-hit markets, the demand for REO and distressed property is now outstripping supply. As we move into what is traditionally the peak selling season for real estate, servicers will certainly be watching closely to see if now is the time to move more inventory out of the shadows.”
Data highlights
• As of January 2012, shadow inventory remained at 1.6 million units, or 6-months’ supply and represented half of the 3 million properties currently seriously delinquent, in foreclosure or REO.
• Of the 1.6 million properties currently in the shadow inventory, 800,000 units are seriously delinquent (3.1-months’ supply), 410,000 are in some stage of foreclosure (1.6-months’ supply) and 400,000 are already in REO (1.6-months’ supply).
• Florida, California and Illinois account for more than a third of the shadow inventory. The top six states, which would also include New York, Texas and New Jersey, account for half of the shadow inventory.
• The shadow inventory is approximately four times higher than its low point (380,000 properties) at the peak of the housing bubble in mid-2006.
• Despite 3 million distressed sales since January 2009, the period when home prices were declining at their fastest rate, the shadow inventory in January 2012 is at the same level as January 2009.
• The shadow inventory is approximately half of the size of all visible inventory listings. For every two homes available for sale, there is one home in the “shadows.”
• The segment of borrowers 60-plus days delinquent in the past but “cured” – now current on their payments – is increasing. This figure was 7.2 percent in January 2012, up from 5.7 percent a year ago.
• The total percent of borrowers over 60-plus days delinquent (irrespective of delinquency status today) increased to 15.5 percent in January 2012, up from 14.3 percent a year ago.
• The highest concentration of shadow inventory is for loans with loan balances between $100,000 and $125,000. While the overall supply of homes in the shadow inventory is declining versus a year ago, the declines are being driven by higher balance loans. For loans with balances of $75,000 or less, however, the shadow is still growing and up 3 percent from a year ago.
Source: Florida Realtors®
Fla.’s housing market continues on positive track in Feb.
Pending sales and median prices rose, while the inventory of homes for sale dropped in Florida’s housing market in February, according to the latest housing data released by Florida Realtors®.
“Growing optimism about the economy, gains in the state’s jobs market and continued low mortgage rates are generating interest in Florida real estate,” says 2012 Florida Realtors President Summer Greene, regional manager of Better Homes and Gardens Real Estate Florida 1st in Fort Lauderdale. “Increased statewide pending sales for both single family existing homes, up 36.1 percent, and for townhouse-condo properties, up 19.8 percent, show that buyers are encouraged by these positive signs.”
Pending sales refer to contracts that are signed but not yet completed or closed; closed sales typically occur 30 to 90 days after sales contracts are written.
The statewide median sales price for single-family existing homes in February was $134,000, up 7.2 percent from the year-ago figure, according to data from Florida Realtors Industry Data and Analysis department and vendor partner 10K Research and Marketing. The statewide median for townhome-condo properties was $95,000, up 15.9 percent over Feb. 2011.
The national median sales price for existing single-family homes in January 2012 was $154,400, which is 2.6 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 January was $268,280; in Massachusetts, it was $265,000; and in Maryland, it was $219,500.
The median is the midpoint; half the homes sold for more, half for less. Housing industry analysts note that 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.
Statewide sales of existing single-family homes totaled 14,270 in February 2012, down 4.8 percent compared to the year-ago figure. Looking at Florida’s year-to-year comparison for sales of townhomes/condos, a total of 7,545 units sold statewide last month, down 16 percent from those sold in February 2011. NAR reported the national median existing condo price in January 2012 was $156,600.
In February, the months supply of inventory stood at 6.2 for single-family homes and at 6.3 for the condos/townhomes, according to Florida Realtors.
“The overall picture that these statistics show is of a stabilizing housing market,” said Florida Realtors Chief Economist Dr. John Tuccillo. “While closed sales are down, so are listings and so is inventory. These are signs of a market that’s moving from being a buyer’s market to a balanced market.
“For the past year, median sales prices have been slowly rising; and over a longer period of time, prices have really flattened out – again, signs of an improving housing market.”
The interest rate for a 30-year fixed-rate mortgage averaged 3.89 percent in February 2012, down from the 4.95 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 and look under Latest Releases, or download the February data report PDF under Market Data.
Source: Florida Realtors®
“Growing optimism about the economy, gains in the state’s jobs market and continued low mortgage rates are generating interest in Florida real estate,” says 2012 Florida Realtors President Summer Greene, regional manager of Better Homes and Gardens Real Estate Florida 1st in Fort Lauderdale. “Increased statewide pending sales for both single family existing homes, up 36.1 percent, and for townhouse-condo properties, up 19.8 percent, show that buyers are encouraged by these positive signs.”
Pending sales refer to contracts that are signed but not yet completed or closed; closed sales typically occur 30 to 90 days after sales contracts are written.
The statewide median sales price for single-family existing homes in February was $134,000, up 7.2 percent from the year-ago figure, according to data from Florida Realtors Industry Data and Analysis department and vendor partner 10K Research and Marketing. The statewide median for townhome-condo properties was $95,000, up 15.9 percent over Feb. 2011.
The national median sales price for existing single-family homes in January 2012 was $154,400, which is 2.6 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 January was $268,280; in Massachusetts, it was $265,000; and in Maryland, it was $219,500.
The median is the midpoint; half the homes sold for more, half for less. Housing industry analysts note that 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.
Statewide sales of existing single-family homes totaled 14,270 in February 2012, down 4.8 percent compared to the year-ago figure. Looking at Florida’s year-to-year comparison for sales of townhomes/condos, a total of 7,545 units sold statewide last month, down 16 percent from those sold in February 2011. NAR reported the national median existing condo price in January 2012 was $156,600.
In February, the months supply of inventory stood at 6.2 for single-family homes and at 6.3 for the condos/townhomes, according to Florida Realtors.
“The overall picture that these statistics show is of a stabilizing housing market,” said Florida Realtors Chief Economist Dr. John Tuccillo. “While closed sales are down, so are listings and so is inventory. These are signs of a market that’s moving from being a buyer’s market to a balanced market.
“For the past year, median sales prices have been slowly rising; and over a longer period of time, prices have really flattened out – again, signs of an improving housing market.”
The interest rate for a 30-year fixed-rate mortgage averaged 3.89 percent in February 2012, down from the 4.95 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 and look under Latest Releases, or download the February data report PDF under Market Data.
Source: Florida Realtors®
Tuesday, March 20, 2012
New-Home Market Shows Steady Improvement
After a surge last month, housing starts dropped in February by 1.1 percent, the Commerce Department reported Tuesday. However, the slip was offset by a hopeful sign for builders that a recovery is still on track: Permits for future construction soared 5.1 percent, reaching its highest level in more than three years.
Permits for single-family homes increased 4.9 percent alone, the highest since April 2010, while permits for multi-family homes rose 5.6 percent, the Commerce Department reported.
The future gauge of building is a welcome sign for the building industry, which last year suffered one of its worst years on record for construction.
In comparing residential construction from this February to February 2011, construction is up 34.7 percent.
February’s modest decrease in housing starts was mostly due to a drop in single-family home construction, which makes up the biggest bulk of new construction. Single-family home construction dropped 9.9 percent in February. Meanwhile, multi-family housing continues to be a bright spot in the sector, soaring 21.1 percent in February due to an increase in demand for rental apartments.
Builder confidence has picked up in recent months and held steady, holding at near a five-year high in March, according to an index by the National Association of Home Builders/Wells Fargo.
"While builders are still very cautious at this time, there is a sense that many local housing markets have started to move in the right direction and that prospects for future sales are improving," says Barry Rutenberg, chairman of the National Association of Home Builders. However, builders still cite hurdles that persist in the recovery, particularly the tightening of credit for builders and buyers and the inventory of distressed properties pulling down overall home prices.
Source: “U.S. Housing Starts Dip; Permits Near 3-1/2 Year High,” Reuters News (March 20, 2012) and the National Association of Home Builders
Permits for single-family homes increased 4.9 percent alone, the highest since April 2010, while permits for multi-family homes rose 5.6 percent, the Commerce Department reported.
The future gauge of building is a welcome sign for the building industry, which last year suffered one of its worst years on record for construction.
In comparing residential construction from this February to February 2011, construction is up 34.7 percent.
February’s modest decrease in housing starts was mostly due to a drop in single-family home construction, which makes up the biggest bulk of new construction. Single-family home construction dropped 9.9 percent in February. Meanwhile, multi-family housing continues to be a bright spot in the sector, soaring 21.1 percent in February due to an increase in demand for rental apartments.
Builder confidence has picked up in recent months and held steady, holding at near a five-year high in March, according to an index by the National Association of Home Builders/Wells Fargo.
"While builders are still very cautious at this time, there is a sense that many local housing markets have started to move in the right direction and that prospects for future sales are improving," says Barry Rutenberg, chairman of the National Association of Home Builders. However, builders still cite hurdles that persist in the recovery, particularly the tightening of credit for builders and buyers and the inventory of distressed properties pulling down overall home prices.
Source: “U.S. Housing Starts Dip; Permits Near 3-1/2 Year High,” Reuters News (March 20, 2012) and the National Association of Home Builders
U.S. makes $25 billion profit on mortgage securities
The Obama administration announced Monday that taxpayers made $25 billion in profit on a program to keep mortgage interest rates down in the wake of the 2008 meltdown in financial markets.
Building on efforts that began under President George W. Bush, the Obama administration took a number of steps to keep the mortgage market operating after the real estate market crashed, including providing unlimited financial support to mortgage-finance giants Fannie Mae and Freddie Mac and buying $225 billion in securities backed by mortgage loans.
The $25 billion profit came from the sale of these mortgage-backed securities and underscores the administration’s success in winding down some of the emergency programs undertaken during the financial crisis. The vast majority of banks that received aid from taxpayers, for instance, have paid back the investments with interest, and the auto industry is continuing to show strength after it was bailed out.
Although government efforts helped make sure borrowers could continue to get affordable financing to buy homes during the recession, other elements of the administration’s response to the housing crisis have proved less favorable for taxpayers and existing homeowners.
Fannie and Freddie, for example, are expected to cost taxpayers more than $100 billion in the end, with little hope of that money being paid back. And the administration’s efforts to help homeowners have fallen far short of its expectations. Only $3.44 billion of the $50 billion the administration pledged to spend to help homeowners has been disbursed over the past three years.
In supporting the housing market, the Treasury Department bought $225 billion of mortgage-backed securities in 2008 and 2009. The purchases channeled money into the mortgage markets, helping to reduce the interest rates of home loans.
The program came after interest rates on home loans spiked in the wake of the 2008 crisis and doubts arose over whether investors around the world would continue to invest in U.S. mortgages.
The Federal Reserve launched a much larger and significant program, and now owns about $846 billion in mortgage-backed securities.
Treasury began to wind down its portfolio in March 2011 after concluding its mortgage purchase program was no long necessary.
“The successful sale of these securities marks another important milestone in the wind down of the government’s emergency financial crisis response efforts,” said Mary Miller, assistant Treasury secretary for financial markets. “This program helped support the housing market during a critical moment for our nation’s economy and delivered a substantial profit for taxpayers,” she said.
Source: 2012 washingtonpost.com, Zachary A. Goldfarb
Building on efforts that began under President George W. Bush, the Obama administration took a number of steps to keep the mortgage market operating after the real estate market crashed, including providing unlimited financial support to mortgage-finance giants Fannie Mae and Freddie Mac and buying $225 billion in securities backed by mortgage loans.
The $25 billion profit came from the sale of these mortgage-backed securities and underscores the administration’s success in winding down some of the emergency programs undertaken during the financial crisis. The vast majority of banks that received aid from taxpayers, for instance, have paid back the investments with interest, and the auto industry is continuing to show strength after it was bailed out.
Although government efforts helped make sure borrowers could continue to get affordable financing to buy homes during the recession, other elements of the administration’s response to the housing crisis have proved less favorable for taxpayers and existing homeowners.
Fannie and Freddie, for example, are expected to cost taxpayers more than $100 billion in the end, with little hope of that money being paid back. And the administration’s efforts to help homeowners have fallen far short of its expectations. Only $3.44 billion of the $50 billion the administration pledged to spend to help homeowners has been disbursed over the past three years.
In supporting the housing market, the Treasury Department bought $225 billion of mortgage-backed securities in 2008 and 2009. The purchases channeled money into the mortgage markets, helping to reduce the interest rates of home loans.
The program came after interest rates on home loans spiked in the wake of the 2008 crisis and doubts arose over whether investors around the world would continue to invest in U.S. mortgages.
The Federal Reserve launched a much larger and significant program, and now owns about $846 billion in mortgage-backed securities.
Treasury began to wind down its portfolio in March 2011 after concluding its mortgage purchase program was no long necessary.
“The successful sale of these securities marks another important milestone in the wind down of the government’s emergency financial crisis response efforts,” said Mary Miller, assistant Treasury secretary for financial markets. “This program helped support the housing market during a critical moment for our nation’s economy and delivered a substantial profit for taxpayers,” she said.
Source: 2012 washingtonpost.com, Zachary A. Goldfarb
Realtors in Fla., across U.S. prepare for Nationwide Open House
To showcase the importance of homeownership, Realtors in Florida and across the U.S. plan to host thousands of open houses as part of Nationwide Open House Weekend, April 28-29, sponsored by the National Association of Realtors® (NAR).
“With a range of housing opportunities at affordable prices and continued low mortgage rates, now is a great time to become a Florida homeowner,” says 2012 Florida Realtors President Summer Greene, regional manager of Better Homes and Gardens Real Estate Florida 1st in Fort Lauderdale. “On April 28 and 29, people will have a chance to conveniently see many homes for sale in communities across Florida and the entire nation. The event is a fun way to bring buyers and sellers together, with Realtors on hand to answer questions and help them navigate the homebuying process.”
The housing market shows positive signs of improvement as the economy grows stronger, according to industry analysts. For many, homeownership remains an important part of the American Dream. Research from NAR indicates that more renters aspire to become homeowners, and an overwhelming majority of Americans believe buying a home is a solid financial decision.
NAR is providing resources, tips and ideas to make the Realtor Nationwide Open House Weekend a success locally and nationally. For more information about the event, go to NAR’s website (login required) at http://www.realtor.org/topics_secured/nationwideopenhouse/ae_resources.
Need balloons for your open house? Blue balloons with the Realtor “R” logo in white can be purchased through NAR’s Realtor Team Store (login required) under the miscellaneous category. You may also purchase balloons directly from Burton & Burton, a wholesale distributor that Florida Realtors used during last year’s statewide open house event. Burton and Burton still has available the customized imprint of the white Realtor “R” logo to place on 11-inch dark blue balloons. To find out more about prices, quantities, shipping schedules and shipping costs, call Burton & Burton directly at (800) 701-7013 and ask for the custom imprint department.
To search for open houses during the Nationwide Open House Weekend, consumers should check with Realtor associations and boards in their area – many local Realtor organizations will have information about participating open houses on their association websites. Consumers should also check local newspaper and online real estate listings for open houses during April 28 and April 29.
Source: Florida Realtors®
“With a range of housing opportunities at affordable prices and continued low mortgage rates, now is a great time to become a Florida homeowner,” says 2012 Florida Realtors President Summer Greene, regional manager of Better Homes and Gardens Real Estate Florida 1st in Fort Lauderdale. “On April 28 and 29, people will have a chance to conveniently see many homes for sale in communities across Florida and the entire nation. The event is a fun way to bring buyers and sellers together, with Realtors on hand to answer questions and help them navigate the homebuying process.”
The housing market shows positive signs of improvement as the economy grows stronger, according to industry analysts. For many, homeownership remains an important part of the American Dream. Research from NAR indicates that more renters aspire to become homeowners, and an overwhelming majority of Americans believe buying a home is a solid financial decision.
NAR is providing resources, tips and ideas to make the Realtor Nationwide Open House Weekend a success locally and nationally. For more information about the event, go to NAR’s website (login required) at http://www.realtor.org/topics_secured/nationwideopenhouse/ae_resources.
Need balloons for your open house? Blue balloons with the Realtor “R” logo in white can be purchased through NAR’s Realtor Team Store (login required) under the miscellaneous category. You may also purchase balloons directly from Burton & Burton, a wholesale distributor that Florida Realtors used during last year’s statewide open house event. Burton and Burton still has available the customized imprint of the white Realtor “R” logo to place on 11-inch dark blue balloons. To find out more about prices, quantities, shipping schedules and shipping costs, call Burton & Burton directly at (800) 701-7013 and ask for the custom imprint department.
To search for open houses during the Nationwide Open House Weekend, consumers should check with Realtor associations and boards in their area – many local Realtor organizations will have information about participating open houses on their association websites. Consumers should also check local newspaper and online real estate listings for open houses during April 28 and April 29.
Source: Florida Realtors®
U.S. builders start fewer homes but permits jump
U.S. builders started work on slightly fewer homes in February. But they began laying the groundwork for a turnaround later this year by requesting the most building permits in any month since October 2008.
The Commerce Department said Tuesday that builders broke ground on a seasonally adjusted annual rate of 698,000 homes last month. That’s down 1.1 percent from January’s revised level of 706,000, the highest since October 2008.
Building permits, a gauge of future construction, jumped 5.1 percent last month to 717,000. Two-thirds are for single-family homes, which are critical to a housing recovery.
It can take up to 12 months for a builder to obtain a permit and construct a single-family home.
Ian Shepherdson, chief U.S. economist at High Frequency Economics, said he expects further gains over the next few months, based on a measure of builder confidence that has increased in five of the past six months.
“Housing will add to growth all year, and beyond,” Shepherdson said.
The housing market still has a long way to go before a full recovery is under way. The current pace of construction is barely half the rate considered healthy, as are the number of permits being requested. Most analysts say it could be years before the industry returns to full health.
Construction of single-family homes, which makes up roughly 70 percent of housing starts, dipped in February to 457,000 after rising for four straight months to an 18-month high. A jump in volatile apartment construction offset the decline.
A mild winter allowed builders to keep working in most parts of the country. And an improving job market has many slightly more optimistic about home sales this year.
Builders are starting to see some signs of progress. They are more confident after seeing more people express interest in buying a home. Mortgage rates are hovering near record lows below 4 percent. And home sales started to rise at the end of last year.
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.
There are some hurdles to a smooth recovery: 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. All rights reserved.
The Commerce Department said Tuesday that builders broke ground on a seasonally adjusted annual rate of 698,000 homes last month. That’s down 1.1 percent from January’s revised level of 706,000, the highest since October 2008.
Building permits, a gauge of future construction, jumped 5.1 percent last month to 717,000. Two-thirds are for single-family homes, which are critical to a housing recovery.
It can take up to 12 months for a builder to obtain a permit and construct a single-family home.
Ian Shepherdson, chief U.S. economist at High Frequency Economics, said he expects further gains over the next few months, based on a measure of builder confidence that has increased in five of the past six months.
“Housing will add to growth all year, and beyond,” Shepherdson said.
The housing market still has a long way to go before a full recovery is under way. The current pace of construction is barely half the rate considered healthy, as are the number of permits being requested. Most analysts say it could be years before the industry returns to full health.
Construction of single-family homes, which makes up roughly 70 percent of housing starts, dipped in February to 457,000 after rising for four straight months to an 18-month high. A jump in volatile apartment construction offset the decline.
A mild winter allowed builders to keep working in most parts of the country. And an improving job market has many slightly more optimistic about home sales this year.
Builders are starting to see some signs of progress. They are more confident after seeing more people express interest in buying a home. Mortgage rates are hovering near record lows below 4 percent. And home sales started to rise at the end of last year.
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.
There are some hurdles to a smooth recovery: 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. All rights reserved.
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