Many home buyers complain that one of the biggest hurdles they face is qualifying for financing. So what are some ways that home shoppers can ensure they qualify for a better mortgage deal — particularly one that takes advantage of the near record-breaking low mortgage rates?
A recent article at Money Magazine highlighted some of the following tips when shopping for a mortgage:
1. High credit scores count. The lowest mortgage rates go to home shoppers with credit scores of 760 or higher. Avoid opening new lines of credit or loans for at least three months prior to getting a loan. Also, on your open accounts, try to pay off those balances. “One large balance — even if it’s paid off at the end of the month — can ding your score by 20 points or more,” according to the article at Money Magazine.
2. Gather plenty of quotes. Most experts say shopping around can pay off. Gather at least six quotes from lenders on mortgage rates because they can vary quite a bit from lender to lender. Request quotes from local and regional lenders as well as national ones for comparison. Be sure to ask about estimated closing costs, too, which can be anywhere from 2 percent or more of the loan balance.
3. Ask about lock-ins. To make sure the rate doesn’t go up when you’re under contract, ask about a lock-in period on the loan, in which lenders agree to not raise the interest rate within a certain time period. Home shoppers should ask their lender and REALTOR® how long it takes to close loans similar to theirs and see how long they can lock a rate in for. Some lenders will charge several hundred dollars to extend a lock-in agreement, so experts recommend learning the lock-in terms beforehand when shopping for the best mortgage deal.
Source: “6 Ways to Get a Great Mortgage Deal,” Money Magazine (April 30, 2012)
Monday, April 30, 2012
Replacement value: Owners have new options
A bill signed into law last week by Gov. Rick Scott, H.B. 1101, creates rules that allow homeowners to submit home replacement cost valuations to the state-run insurer of last resort, Citizens Property Insurance.
HB 1101 creates new rules for other types of insurance, too, but the key issue for Florida’s real estate industry relates to the use of property valuations in calculating insurance costs. Until early 2012, Citizens relied on a single vendor, 360Value, to calculate the cost to replace a home if it was destroyed – the home’s replacement cost. The amount of an insurance premium is based, in part, on how much it would cost to rebuild the home, and critics claimed that 360Value overestimated replacement costs, which led to over-charging homeowners for insurance.
In January, following discussions with Florida Realtors and policyholders, Citizens agreed to expand the way it operates, however; and the passage of H.B. 1101 reflects the change in Florida law. Under the new law, a homeowner can submit a valuation from one of three sources, provided data was compiled within the previous 12 months and includes an itemized calculation. The sources can be:
• Any replacement cost software program, providing it’s designed specifically for that task.
• An evaluation prepared by a Florida certified or licensed real estate appraiser.
• An evaluation prepared by a licensed general, building or residential contractor, or one from a licensed professional engineer.
The complete text of the bill is available online. The relevant real estate portion is covered on lines 1904 – 1923.
Source: Florida Realtors®
HB 1101 creates new rules for other types of insurance, too, but the key issue for Florida’s real estate industry relates to the use of property valuations in calculating insurance costs. Until early 2012, Citizens relied on a single vendor, 360Value, to calculate the cost to replace a home if it was destroyed – the home’s replacement cost. The amount of an insurance premium is based, in part, on how much it would cost to rebuild the home, and critics claimed that 360Value overestimated replacement costs, which led to over-charging homeowners for insurance.
In January, following discussions with Florida Realtors and policyholders, Citizens agreed to expand the way it operates, however; and the passage of H.B. 1101 reflects the change in Florida law. Under the new law, a homeowner can submit a valuation from one of three sources, provided data was compiled within the previous 12 months and includes an itemized calculation. The sources can be:
• Any replacement cost software program, providing it’s designed specifically for that task.
• An evaluation prepared by a Florida certified or licensed real estate appraiser.
• An evaluation prepared by a licensed general, building or residential contractor, or one from a licensed professional engineer.
The complete text of the bill is available online. The relevant real estate portion is covered on lines 1904 – 1923.
Source: Florida Realtors®
Friday, April 27, 2012
Home Builders Report Big Gains in Sales Orders
Some of the country’s largest home builders are reporting increased sales and a rise in new orders, The Wall Street Journal reports. Builder stocks are also reflecting the increased optimism in the sector, rising 31 percent so far this year, according to the Dow Jones U.S. Home Construction index.
"Builders say April's sales remain brisk, leaving the the companies optimistic that they will report even stronger quarterly results later this year and giving them enough confidence to raise prices in some markets, including those hit hard by the housing crash," The Wall Street Journal reports.
Housing analysts say a big factor helping builders' recovery is the dropping inventory of existing homes. Also, many investors are buying up bargain-priced existing-homes in all-cash deals, which has made other home buyers start considering new home construction more.
Several home builders have reported gains in sales orders recently, including Ryland Group, which cited a 46 percent increase in orders; Meritage Homes Corp. reports a 36 percent rise in new orders; D.R. Horton Inc. reports a 19 percent increase; and PulteGroup Inc. reports a 15 percent increase.
"As buyers realize the market is tightening, we are seeing a greater sense of urgency than we have for quite some time," Steven J. Hilton, the chief executive of Meritage Homes Corp., said in a recent conference call. "The market has clearly turned in a more positive direction, and we are switching over to offense rather than defense.”
Source: “Home Builders’ Health Improves,” The Wall Street Journal (April 26, 2012)
"Builders say April's sales remain brisk, leaving the the companies optimistic that they will report even stronger quarterly results later this year and giving them enough confidence to raise prices in some markets, including those hit hard by the housing crash," The Wall Street Journal reports.
Housing analysts say a big factor helping builders' recovery is the dropping inventory of existing homes. Also, many investors are buying up bargain-priced existing-homes in all-cash deals, which has made other home buyers start considering new home construction more.
Several home builders have reported gains in sales orders recently, including Ryland Group, which cited a 46 percent increase in orders; Meritage Homes Corp. reports a 36 percent rise in new orders; D.R. Horton Inc. reports a 19 percent increase; and PulteGroup Inc. reports a 15 percent increase.
"As buyers realize the market is tightening, we are seeing a greater sense of urgency than we have for quite some time," Steven J. Hilton, the chief executive of Meritage Homes Corp., said in a recent conference call. "The market has clearly turned in a more positive direction, and we are switching over to offense rather than defense.”
Source: “Home Builders’ Health Improves,” The Wall Street Journal (April 26, 2012)
Gallup: Home Ownership Rate Reaches Decade Low
Sixty-two percent of Americans own a home, which is the lowest percentage in more than a decade, according to a new Gallup poll. Home ownership rates soared to 73 percent during the housing boom years in 2006 and 2007 but since that time have continued to drop.
A flood of foreclosures has wreaked havoc in many communities in recent years, forcing some former home owners to become renters while also pulling overall home prices down leading to more underwater home owners. The mix of fallen home values and record low interest rates, however, has pushed housing affordability at record levels, making the average house more affordable to the average family.
So while the home ownership rate has fallen in recent years, Americans haven’t lost their thirst for home ownership. Seventy-percent percent of Americans surveyed in the recent Gallup poll say that now is a "good time" to buy a house, which is up from 53 percent in 2008.
While more view home buying as attractive nowadays, some potential buyers are still being kept on the sidelines due to more stringent lending standards by banks in recent years.
"Potential home buyers can take advantage of today's low mortgage interest rates only if they can meet significantly more stringent down payment and underwriting standards than was the case prior to the financial crisis,” writes Dennis Jacobe, Gallup's chief economist, wrote about the survey results.
The U.S. Census, which also tracks the home ownership rate, has calculated that the home ownership rate reached its highest point in 2004 at 69.2 percent and dropped to 66.4 percent by the end of 2011.
Source: “Home Ownership Rate Falls to Decade Low, Poll Shows,” MSNBC.com (April 26, 2012)
A flood of foreclosures has wreaked havoc in many communities in recent years, forcing some former home owners to become renters while also pulling overall home prices down leading to more underwater home owners. The mix of fallen home values and record low interest rates, however, has pushed housing affordability at record levels, making the average house more affordable to the average family.
So while the home ownership rate has fallen in recent years, Americans haven’t lost their thirst for home ownership. Seventy-percent percent of Americans surveyed in the recent Gallup poll say that now is a "good time" to buy a house, which is up from 53 percent in 2008.
While more view home buying as attractive nowadays, some potential buyers are still being kept on the sidelines due to more stringent lending standards by banks in recent years.
"Potential home buyers can take advantage of today's low mortgage interest rates only if they can meet significantly more stringent down payment and underwriting standards than was the case prior to the financial crisis,” writes Dennis Jacobe, Gallup's chief economist, wrote about the survey results.
The U.S. Census, which also tracks the home ownership rate, has calculated that the home ownership rate reached its highest point in 2004 at 69.2 percent and dropped to 66.4 percent by the end of 2011.
Source: “Home Ownership Rate Falls to Decade Low, Poll Shows,” MSNBC.com (April 26, 2012)
3 Housing Trends Emerging This Spring
What can home buyers expect to face this selling season? An improving housing market has made it a different picture in many areas compared to recent years, housing experts say. A recent article at Bankrate.com notes some of the following trends taking shape in the housing market this spring:
1. Fierce competition.
Housing affordability is at record highs, due to falling home values and mortgage rates hovering near record lows. More buyers are taking notice and jumping off the sidelines. And mixed with sinking inventories of homes listed for sale, the competition is getting more fierce.
Investors are snapping up bargain prices, often in all-cash deals, which means greater competition for traditional home buyers too.
"Rents are going up, and as long as there are properties at the level where investors can get the positive cash flow, they will continue to invest," says Jed Smith, managing director of quantitative research for the National Association of REALTORS®. Smith adds that first-time home buyers, in particular, may find increased competition from investors in trying to snag some of the best deals on the market.
2. More renters show desire to become home owners.
Recent surveys have shown that buying a home nowadays is more affordable than renting. As such, more renters are finding home ownership more enticing.
The signs are already starting to show: About 59.5 percent of tenants recently surveyed say they intend to renew their leases this year, which is the lowest rate since early 2009, according to a study by Kingsley Associates.
3. Mortgages may be a little pricier.
Fannie Mae, Freddie Mac, and the Federal Housing Administration recently have raised their loan fees, which means home buyers can expect to pay a little more for their mortgage this spring.
"Those who don't have credit scores in the high 600s to low 700s may be forced to go the FHA route," says Ed Conarchy, a mortgage planner at Cherry Creek Mortgage in Gurnee, Ill. "And they will be stuck with the higher fees."
Buyers with smaller down payments can expect to pay more for FHA mortgage insurance premiums, which have risen to 1.75 percent of the loan total. Bankrate.com cites an example illustrating the higher fees: A borrower who takes out a $200,000 FHA loan will likely have to pay about $3,500 for mortgage insurance upfront. Prior to the increase taking effect, borrowers would pay about $2,000 for that same loan amount.
Borrowers with higher mortgages can expect higher fees too. The FHA announced that in June it’ll increase its annual insurance for mortgages more than $625,500. "A borrower who lives in a high-cost area and takes out the maximum $729,750 (which is the FHA limit for high-cost areas) will pay $912 each month in mortgage insurance alone," Bankrate.com reports.
Read about more trends expected for the spring selling-season.
Source: “5 Mortgage and Housing Trends in Spring 2012,” Bankrate.com (April 21, 2012)
1. Fierce competition.
Housing affordability is at record highs, due to falling home values and mortgage rates hovering near record lows. More buyers are taking notice and jumping off the sidelines. And mixed with sinking inventories of homes listed for sale, the competition is getting more fierce.
Investors are snapping up bargain prices, often in all-cash deals, which means greater competition for traditional home buyers too.
"Rents are going up, and as long as there are properties at the level where investors can get the positive cash flow, they will continue to invest," says Jed Smith, managing director of quantitative research for the National Association of REALTORS®. Smith adds that first-time home buyers, in particular, may find increased competition from investors in trying to snag some of the best deals on the market.
2. More renters show desire to become home owners.
Recent surveys have shown that buying a home nowadays is more affordable than renting. As such, more renters are finding home ownership more enticing.
The signs are already starting to show: About 59.5 percent of tenants recently surveyed say they intend to renew their leases this year, which is the lowest rate since early 2009, according to a study by Kingsley Associates.
3. Mortgages may be a little pricier.
Fannie Mae, Freddie Mac, and the Federal Housing Administration recently have raised their loan fees, which means home buyers can expect to pay a little more for their mortgage this spring.
"Those who don't have credit scores in the high 600s to low 700s may be forced to go the FHA route," says Ed Conarchy, a mortgage planner at Cherry Creek Mortgage in Gurnee, Ill. "And they will be stuck with the higher fees."
Buyers with smaller down payments can expect to pay more for FHA mortgage insurance premiums, which have risen to 1.75 percent of the loan total. Bankrate.com cites an example illustrating the higher fees: A borrower who takes out a $200,000 FHA loan will likely have to pay about $3,500 for mortgage insurance upfront. Prior to the increase taking effect, borrowers would pay about $2,000 for that same loan amount.
Borrowers with higher mortgages can expect higher fees too. The FHA announced that in June it’ll increase its annual insurance for mortgages more than $625,500. "A borrower who lives in a high-cost area and takes out the maximum $729,750 (which is the FHA limit for high-cost areas) will pay $912 each month in mortgage insurance alone," Bankrate.com reports.
Read about more trends expected for the spring selling-season.
Source: “5 Mortgage and Housing Trends in Spring 2012,” Bankrate.com (April 21, 2012)
U.S. rate on 30-year mortgage dips to 3.88%
The average rate on the 30-year fixed mortgage has dipped to near its record low, keeping home-buying and refinancing affordable.
Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan dropped to 3.88 percent this week, down from 3.9 percent. In February, the rate hit 3.87 percent, the lowest since long-term mortgages began in the 1950s.
The 30-year loan is the most common financing option for homebuyers.
The average on the 15-year fixed-rate mortgage, popular with homeowners who are refinancing, dipped to 3.12 percent, down from 3.13 percent last week. The national average hit an all-time low of 3.11 percent two weeks ago.
Cheaper mortgages have so far done little to boost home sales. Sales of both previously occupied homes and new homes fell in March. Analysts suspect some of that weakness reflected a warm winter, which pulled sales that would normally occur during the spring buying season into January or February.
In addition, some potential buyers are skeptical about purchasing a home with prices still falling. And many Americans are still struggling with damaged credit.
To calculate the average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.
The average rate does not 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.
For the five-year adjustable loan, the average rate rose to 2.85 percent, up from 2.78 percent. The average on one-year adjustable loans dropped to 2.74 percent, down from 2.81 percent.
Source: The Associated Press, Martin Crutsinger (AP Economics Writer). All rights reserved.
Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan dropped to 3.88 percent this week, down from 3.9 percent. In February, the rate hit 3.87 percent, the lowest since long-term mortgages began in the 1950s.
The 30-year loan is the most common financing option for homebuyers.
The average on the 15-year fixed-rate mortgage, popular with homeowners who are refinancing, dipped to 3.12 percent, down from 3.13 percent last week. The national average hit an all-time low of 3.11 percent two weeks ago.
Cheaper mortgages have so far done little to boost home sales. Sales of both previously occupied homes and new homes fell in March. Analysts suspect some of that weakness reflected a warm winter, which pulled sales that would normally occur during the spring buying season into January or February.
In addition, some potential buyers are skeptical about purchasing a home with prices still falling. And many Americans are still struggling with damaged credit.
To calculate the average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.
The average rate does not 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.
For the five-year adjustable loan, the average rate rose to 2.85 percent, up from 2.78 percent. The average on one-year adjustable loans dropped to 2.74 percent, down from 2.81 percent.
Source: The Associated Press, Martin Crutsinger (AP Economics Writer). All rights reserved.
Keeping a home in ready-to-sell condition
When you own a home, it’s easy to stop seeing its flaws – the gate latch that never works, the faded shingles on the roof.
But potential buyers spot those problems in an instant.
To help Floridians look at their homes with a critical eye, a University of Florida (UF) housing specialist published a guide, based on the results of a national survey, that pinpoints areas that might need attention.
Randall Cantrell, a faculty member with the Institute of Food and Agricultural Sciences, says the average homeowner spends $2,000 to prepare a home to be sold. So keeping up with needed repairs can make life a lot easier when it comes time to put your house on the market.
Cantrell conducted a national survey in 2011 of more than 400 homeowners, asking them to rate 81 items that could improve their home’s overall performance in three areas: maintenance tasks, energy and water conservation measures, and family operations. Based on their responses, he created a document for each category, suggesting short-term and long-term changes.
Cantrell said he was inspired to write the publication about keeping one’s home ready to sell after living through a painful home sale in 2011, before the real estate market began to perk back up. Even though his home had been well cared for, he still found himself paying for changes to make the home appeal to buyers.
“I thought if I can help people not have to go through what I just went through, I should do it,” said Cantrell, a state extension specialist in housing and community development.
In the short-term category for keeping one’s home ready to sell, he lists such tasks as ensuring that the doorbell works, that fences are painted, intact and have working gate latches, keeping cars parked neatly and taking care that the mailbox is properly maintained and has reflective address numbers.
Cantrell even suggests keeping a fresh-looking welcome mat at the front door.
“If a buyer sees one thing that looks like it hasn’t been taken care of, they will wonder what else hasn’t been taken care of,” he said.
In the long-term category, he suggests changes such as taking care that deck boards are flipped nice side up and fastened with screws rather than nails, ensuring that a garage door is sturdy and clean, that tree branches hanging near the house are healthy, and the roof’s shingles aren’t loose, wavy or faded.
He also suggests taking time to check that ceiling-fan blades are balanced – and dusted.
Installing photocell sensors on exterior lights ensures that lights will come on when it’s dark and won’t accidentally be left on during the daytime, conserving energy.
Mark Cramer, who has been a home inspector in Indian Rocks Beach, Fla., for 23 years, said the way a home shows correlates strongly with higher sales prices.
“There are some homeowners who tend to fix everything, and then there are others who ignore virtually everything until the ceiling’s literally caving in on their heads,” he said. “The former tend to get much better prices for their homes.”
The three-part series is at http://edis.ifas.ufl.edu/. It includes:
• FY1320: Improving Savings and Health through Minor Conservation Measures in the Home
• FY1321: Improving Savings and Health by Maintaining Your Home at a Ready-to-Sell Level
• FY1322: Improving Savings, Health, and Happiness by Modifying How the Family Operates the Home
Source: Florida Realtors®
But potential buyers spot those problems in an instant.
To help Floridians look at their homes with a critical eye, a University of Florida (UF) housing specialist published a guide, based on the results of a national survey, that pinpoints areas that might need attention.
Randall Cantrell, a faculty member with the Institute of Food and Agricultural Sciences, says the average homeowner spends $2,000 to prepare a home to be sold. So keeping up with needed repairs can make life a lot easier when it comes time to put your house on the market.
Cantrell conducted a national survey in 2011 of more than 400 homeowners, asking them to rate 81 items that could improve their home’s overall performance in three areas: maintenance tasks, energy and water conservation measures, and family operations. Based on their responses, he created a document for each category, suggesting short-term and long-term changes.
Cantrell said he was inspired to write the publication about keeping one’s home ready to sell after living through a painful home sale in 2011, before the real estate market began to perk back up. Even though his home had been well cared for, he still found himself paying for changes to make the home appeal to buyers.
“I thought if I can help people not have to go through what I just went through, I should do it,” said Cantrell, a state extension specialist in housing and community development.
In the short-term category for keeping one’s home ready to sell, he lists such tasks as ensuring that the doorbell works, that fences are painted, intact and have working gate latches, keeping cars parked neatly and taking care that the mailbox is properly maintained and has reflective address numbers.
Cantrell even suggests keeping a fresh-looking welcome mat at the front door.
“If a buyer sees one thing that looks like it hasn’t been taken care of, they will wonder what else hasn’t been taken care of,” he said.
In the long-term category, he suggests changes such as taking care that deck boards are flipped nice side up and fastened with screws rather than nails, ensuring that a garage door is sturdy and clean, that tree branches hanging near the house are healthy, and the roof’s shingles aren’t loose, wavy or faded.
He also suggests taking time to check that ceiling-fan blades are balanced – and dusted.
Installing photocell sensors on exterior lights ensures that lights will come on when it’s dark and won’t accidentally be left on during the daytime, conserving energy.
Mark Cramer, who has been a home inspector in Indian Rocks Beach, Fla., for 23 years, said the way a home shows correlates strongly with higher sales prices.
“There are some homeowners who tend to fix everything, and then there are others who ignore virtually everything until the ceiling’s literally caving in on their heads,” he said. “The former tend to get much better prices for their homes.”
The three-part series is at http://edis.ifas.ufl.edu/. It includes:
• FY1320: Improving Savings and Health through Minor Conservation Measures in the Home
• FY1321: Improving Savings and Health by Maintaining Your Home at a Ready-to-Sell Level
• FY1322: Improving Savings, Health, and Happiness by Modifying How the Family Operates the Home
Source: Florida Realtors®
Thursday, April 26, 2012
Fed Renews Vow to Keep Interest Rates Low
The Fed voted this week to continue its near-zero interest rate policy for the next quarter and likely much longer. The move will keep mortgage rates low in the coming months, if not years.
In recent weeks, mortgage rates have hovered around record lows, which has helped increase home buyer purchasing power as well as helped refinancers trim their monthly mortgage payments.
Last summer, the Fed made a rare move in vowing to keep the key rate near zero through late 2014. The move has been criticized by some who say it will cause inflation and awards spenders, not savers. Critics have pushed the Fed to reverse its policy.
However, the Fed says the subdued outlook for inflation has not warranted a change in its policies.
Federal Reserve Chairman Ben Bernanke, following the Fed’s policy-making committee meeting this week, affirmed the Fed’s intention to continue keeping short-term interest rates down until late 2014—and possibly even longer.
The Fed has kept short-term interest rates near zero since late 2008. The Fed has also acted to reduce long-term rates by purchasing Treasury securities and mortgage bonds.
The Fed’s policy-making committee also released its economic forecast, projecting moderate economic growth in the coming months before a steady pick up, as well as a gradual drop in unemployment. The committee also projects for inflation to remain under control, despite the recent rise in oil prices.
“If there’s a substantial change in the economic outlook in either direction, then there would be a change in the outlook,” Bernanke said. “But for now, I think the committee is comfortable.”
Source: “Fed to Keep Interest Rate Near Zero for Extended Period,” HousingWire (April 25, 2012) and “Fed Cuts U.S. Growth Forecast for 2013 and 2014,” The New York Times (April 25, 2012)
In recent weeks, mortgage rates have hovered around record lows, which has helped increase home buyer purchasing power as well as helped refinancers trim their monthly mortgage payments.
Last summer, the Fed made a rare move in vowing to keep the key rate near zero through late 2014. The move has been criticized by some who say it will cause inflation and awards spenders, not savers. Critics have pushed the Fed to reverse its policy.
However, the Fed says the subdued outlook for inflation has not warranted a change in its policies.
Federal Reserve Chairman Ben Bernanke, following the Fed’s policy-making committee meeting this week, affirmed the Fed’s intention to continue keeping short-term interest rates down until late 2014—and possibly even longer.
The Fed has kept short-term interest rates near zero since late 2008. The Fed has also acted to reduce long-term rates by purchasing Treasury securities and mortgage bonds.
The Fed’s policy-making committee also released its economic forecast, projecting moderate economic growth in the coming months before a steady pick up, as well as a gradual drop in unemployment. The committee also projects for inflation to remain under control, despite the recent rise in oil prices.
“If there’s a substantial change in the economic outlook in either direction, then there would be a change in the outlook,” Bernanke said. “But for now, I think the committee is comfortable.”
Source: “Fed to Keep Interest Rate Near Zero for Extended Period,” HousingWire (April 25, 2012) and “Fed Cuts U.S. Growth Forecast for 2013 and 2014,” The New York Times (April 25, 2012)
Has the Housing Market Finally Reached Bottom?
If home buyers or home owners are waiting for the housing market to hit bottom before acting, they may have already missed it.
“The crash is over,” Mark Zandi, chief economist for Moody’s Analytics Inc., told Bloomberg about the real estate market. “Home sales—both new and existing—and housing starts are now off the bottom.”
Several economists are saying the bottom of the housing market has already been reached, and the market has been showing several signs of progress, including home prices stabilizing and demand increasing. The economists say they’re optimistic about a recovery in the housing market, despite threats of a foreclosure wave coming.
One of the biggest signs that a sustainable housing market recovery is taking shape: Consumer confidence is up.
"Today's consumer confidence shows labor markets recovering and that confidence is going to allow consumers to go out and buy homes," Chris Rupkey, chief financial economist for Bank of Tokyo-Mitsubishi in New York, told Bloomberg.
Indeed, real estate professionals have been reporting increased activity among home shoppers this spring, too.
"This year's selling season is shaping up to be the strongest we've seen in years," says Margaret Kelly, RE/MAX's chief executive officer. "Although we don't expect home prices to rise in every market at the same rate, the worst is definitely behind us, and a slow, steady recovery is taking hold."
Source: “Housing Declared Bottoming in U.S.,” Bloomberg News (April 25, 2012)
“The crash is over,” Mark Zandi, chief economist for Moody’s Analytics Inc., told Bloomberg about the real estate market. “Home sales—both new and existing—and housing starts are now off the bottom.”
Several economists are saying the bottom of the housing market has already been reached, and the market has been showing several signs of progress, including home prices stabilizing and demand increasing. The economists say they’re optimistic about a recovery in the housing market, despite threats of a foreclosure wave coming.
One of the biggest signs that a sustainable housing market recovery is taking shape: Consumer confidence is up.
"Today's consumer confidence shows labor markets recovering and that confidence is going to allow consumers to go out and buy homes," Chris Rupkey, chief financial economist for Bank of Tokyo-Mitsubishi in New York, told Bloomberg.
Indeed, real estate professionals have been reporting increased activity among home shoppers this spring, too.
"This year's selling season is shaping up to be the strongest we've seen in years," says Margaret Kelly, RE/MAX's chief executive officer. "Although we don't expect home prices to rise in every market at the same rate, the worst is definitely behind us, and a slow, steady recovery is taking hold."
Source: “Housing Declared Bottoming in U.S.,” Bloomberg News (April 25, 2012)
March pending home sales rise, market recovering
Pending home sales increased in March and are well above a year ago, another signal the housing market is recovering, according to the National Association of Realtors® (NAR).
The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, rose 4.1 percent to 101.4 in March from an upwardly revised 97.4 in February, and it’s 12.8 percent above March 2011 when it was 89.9. The data reflects contracts but not closings.
The index is now at the highest level since April 2010 when it reached 111.3.
“First quarter sales closings were the highest first quarter sales in five years,” says Lawrence Yun, NAR chief economist. “The latest contract signing activity suggests the second quarter will be equally good. The housing market has clearly turned the corner. Rising sales are bringing down inventory and creating much more balanced conditions around the county, which means home prices will be rising in more areas as the year progresses.”
The PHSI in the Northeast slipped 0.8 percent to 78.2 in March but is 21.1 percent above March 2011. In the Midwest, the index declined 0.9 percent to 93.3 but is 16.9 percent higher than a year ago.
Pending home sales in the South rose 5.9 percent to an index of 114.1 in March and are 10.6 percent above March 2011. In the West, the index increased 8.7 percent in March to 108.0 and is 9.0 percent above a year ago.
Source: Florida Realtors®
The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, rose 4.1 percent to 101.4 in March from an upwardly revised 97.4 in February, and it’s 12.8 percent above March 2011 when it was 89.9. The data reflects contracts but not closings.
The index is now at the highest level since April 2010 when it reached 111.3.
“First quarter sales closings were the highest first quarter sales in five years,” says Lawrence Yun, NAR chief economist. “The latest contract signing activity suggests the second quarter will be equally good. The housing market has clearly turned the corner. Rising sales are bringing down inventory and creating much more balanced conditions around the county, which means home prices will be rising in more areas as the year progresses.”
The PHSI in the Northeast slipped 0.8 percent to 78.2 in March but is 21.1 percent above March 2011. In the Midwest, the index declined 0.9 percent to 93.3 but is 16.9 percent higher than a year ago.
Pending home sales in the South rose 5.9 percent to an index of 114.1 in March and are 10.6 percent above March 2011. In the West, the index increased 8.7 percent in March to 108.0 and is 9.0 percent above a year ago.
Source: Florida Realtors®
Citizens ponders but ultimately declines to raise rates significantly for new buyers
Citizens Property Insurance Corp. considered a premium increase for new homeowners at a meeting in Tampa today, but ended up making no decision in order to give analysts time to consider the legality, to look at broader options involved in rate calculations, and to consider the ramifications of doing so.
Citizens, the state-run insurer of last resort, has actuarially unsound rates, according to most analysts. The fund largely covers Florida homeowners in high-risk storm areas, but critics say it doesn’t charge enough to create reserves that would cover damage if a significant storm hit the state.
Critics of Citizens, which include Gov. Rick Scott, say Citizens’ low premiums cause two problems: They put all Florida policyholders at risk in the event of a major storm; and they undercut private insurance companies, which makes the Florida insurance market less competitive.
In 2009, the Florida Legislature passed a law limiting Citizens premium increases to a maximum of 10 percent per year, and it became effective in 2010. Since then, Citizens Property Insurance’s governing board has attempted to build reserves and charge more while still adhering to the letter of the law. The company has, for example, removed some homeowners from coverage and cancelled insurance for properties under construction.
Another idea for lowering risk and raising revenue came to light within the past few days – charge new homeowners more than neighbors with an existing Citizens policy. Proponents of the change said the 10 percent maximum increase established in law applies only to existing policyholders. Opponents disagreed.
At the Citizens board meeting today, Sen. Mike Fasano, R-New Port Richey, testified that raising rates on homebuyers would seriously undermine the market. “You can get all the rhetoric that you want, but the private companies are not coming back to some areas of this state – they’re just not,” he said. “Study or no study, if this is pushed or approved you will hurt our economy.”
The board settled on three major issues for further review. First, insurers break the state into “territories,” and owners in each territory pay a rate based on similar calculations. The board wants to look at how proposals affect not just the state, but also the individual territories.
Two, the board wants to consider a clear rate schedule that applies to new and existing coverage. Three, the board wants to get lawmakers and the Florida Office of Insurance Regulation involved in decisions, in part because lawmakers have statutory authority over Citizens and its rates.
Based on the areas of concern, Citizens board members decided the issue needed more study and may revisit it later.
Florida Realtors continues to monitor developments.
Source: Florida Realtors®
Citizens, the state-run insurer of last resort, has actuarially unsound rates, according to most analysts. The fund largely covers Florida homeowners in high-risk storm areas, but critics say it doesn’t charge enough to create reserves that would cover damage if a significant storm hit the state.
Critics of Citizens, which include Gov. Rick Scott, say Citizens’ low premiums cause two problems: They put all Florida policyholders at risk in the event of a major storm; and they undercut private insurance companies, which makes the Florida insurance market less competitive.
In 2009, the Florida Legislature passed a law limiting Citizens premium increases to a maximum of 10 percent per year, and it became effective in 2010. Since then, Citizens Property Insurance’s governing board has attempted to build reserves and charge more while still adhering to the letter of the law. The company has, for example, removed some homeowners from coverage and cancelled insurance for properties under construction.
Another idea for lowering risk and raising revenue came to light within the past few days – charge new homeowners more than neighbors with an existing Citizens policy. Proponents of the change said the 10 percent maximum increase established in law applies only to existing policyholders. Opponents disagreed.
At the Citizens board meeting today, Sen. Mike Fasano, R-New Port Richey, testified that raising rates on homebuyers would seriously undermine the market. “You can get all the rhetoric that you want, but the private companies are not coming back to some areas of this state – they’re just not,” he said. “Study or no study, if this is pushed or approved you will hurt our economy.”
The board settled on three major issues for further review. First, insurers break the state into “territories,” and owners in each territory pay a rate based on similar calculations. The board wants to look at how proposals affect not just the state, but also the individual territories.
Two, the board wants to consider a clear rate schedule that applies to new and existing coverage. Three, the board wants to get lawmakers and the Florida Office of Insurance Regulation involved in decisions, in part because lawmakers have statutory authority over Citizens and its rates.
Based on the areas of concern, Citizens board members decided the issue needed more study and may revisit it later.
Florida Realtors continues to monitor developments.
Source: Florida Realtors®
Southeast Florida Monthly Market Update, 2012
March, 2012 Market Update for the "BIG 5" Hialeah,
Miami Lakes, Miami Gardens, Miramar and Pembroke Pines in Florida
Market update for the cities of Hialeah, Miami Lakes, Miami
Gardens:
| Area 20 | |||
| Total Active Listings: | 58 | ||
| Total Value Dollar Volume: | $11,689,678.00 | ||
| Average List Price: | $201,546.00 | ||
| Median List Price: | $142,000.00 | ||
| Change from Previous Month (N. of Units) | 16% | ||
| Change from Previous Month (Dollar Vol.) | -5% | ||
| Total Sold Properties: | 134 | ||
| Total Dollar Volume Sold: | $19,117,109.00 | ||
| Average Sold Price: | $142,665.00 | ||
| Median Sold Price: | $99,450.00 | ||
| Change from Previous Month (N. of Units) | 9% | ||
| Change from Previous Month (Dollar Vol.) | 27% | ||
| Total Pending Sale: | 183 | ||
| Total Dollar Pending Volume: | $21,771,437.00 | ||
| Average Pending Price: | $118,970.00 | ||
| Median Pending Price: | $90,000.00 | ||
| Change from Previous Month (N. of Units) | -2% | ||
| Change from Previous Month (Dollar Vol.) | -8% | ||
Market update for the cities of Miramar and Pembroke Pines:
| Area 3990 | |||
| Total Active Listings: | 20 | ||
| Total Value Dollar Volume: | $7,253,938.00 | ||
| Average List Price: | $362,697.00 | ||
| Median List Price: | $324,500.00 | ||
| Change from Previous Month (N. of Units) | -9% | ||
| Change from Previous Month (Dollar Vol.) | -16% | ||
| Total Sold Properties: | 43 | ||
| Total Dollar Volume Sold: | $14,072,381.00 | ||
| Average Sold Price: | $327,265.00 | ||
| Median Sold Price: | $265,000.00 | ||
| Change from Previous Month (N. of Units) | 54% | ||
| Change from Previous Month (Dollar Vol.) | 53% | ||
| Total Pending Sale: | 30 | ||
| Total Dollar Pending Volume: | $9,736,750.00 | ||
| Average Pending Price: | $324,558.00 | ||
| Median Pending Price: | $306,500.00 | ||
| Change from Previous Month (N. of Units) | -33% | ||
| Change from Previous Month (Dollar Vol.) | -29% | ||
Total Sold for Dade and Broward Counties
| Dade County | |||
| Total Sales Count: | 2629 | ||
| Total Sales Dollar Volume: | $830,225,939.00 | ||
| Change from Previous Month (N. of Units) | 25% | ||
| Change from Previous Month (Dollar Vol.) | 35% | ||
| Broward County | |||
| Total Sales Count: | 2891 | ||
| Total Sales Dollar Volume: | $591,516,985.00 | ||
| Change from Previous Month (N. of Units) | 27% | ||
| Change from Previous Month (Dollar Vol.) | 40% | ||
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
3 Hidden Costs of the Foreclosure Crisis
Although U.S. foreclosure activity may be declining, the problem is far from over. There have been 5 million foreclosures since 2007, reports the Center for Responsible Lending, which estimates that between 3 million and 5 million more will occur over the next couple of years.
In 2003, one in 38 U.S. home owners were seriously delinquent on their mortgage payments or in foreclosure, but today those numbers are one in 10. Some of the consequences of foreclosures are obvious: family displacements, crime in vacant properties, ruined credit, and the loss of equity.
Other, less obvious consequences have emerged as well. About 8 million children could be affected, including kids of home owners and renters who were evicted due to a foreclosure. Julia Isaacs of the Brookings Institution calls these children the "invisible victims" of the foreclosure crisis, as foreclosures not only can cause emotional trauma, but also interfere with a child’s educational development.
Researchers also have found a connection between rising foreclosures and an increase in medical visits for mental health, such as anxiety, or preventable conditions such as high blood pressure.
And many communities are strapped because of a loss of property tax revenue caused by foreclosures, which can lead to cuts in services — including swimming pools, senior centers, and local law enforcement.
Source: "Three Hidden Costs of the Foreclosure Crisis," MarketWatch (April 24, 2012) & Information Inc.
In 2003, one in 38 U.S. home owners were seriously delinquent on their mortgage payments or in foreclosure, but today those numbers are one in 10. Some of the consequences of foreclosures are obvious: family displacements, crime in vacant properties, ruined credit, and the loss of equity.
Other, less obvious consequences have emerged as well. About 8 million children could be affected, including kids of home owners and renters who were evicted due to a foreclosure. Julia Isaacs of the Brookings Institution calls these children the "invisible victims" of the foreclosure crisis, as foreclosures not only can cause emotional trauma, but also interfere with a child’s educational development.
Researchers also have found a connection between rising foreclosures and an increase in medical visits for mental health, such as anxiety, or preventable conditions such as high blood pressure.
And many communities are strapped because of a loss of property tax revenue caused by foreclosures, which can lead to cuts in services — including swimming pools, senior centers, and local law enforcement.
Source: "Three Hidden Costs of the Foreclosure Crisis," MarketWatch (April 24, 2012) & Information Inc.
Good, Bad Reflected in New-Home Sales Data
Sales of new single-family homes dropped to their lowest level in March since November 2011, but analysts say there were glimmers of hope behind the Census Department’s data released Tuesday, which showed a much stronger winter selling-season than originally reported.
New-home sales were at a 328,000 seasonally adjusted annual rate in March, a drop of 7.1 percent compared to February. Still, new-home sales were up 7.5 percent in March compared to a year earlier.
The Census Department also on Tuesday announced that it had revised its figures for the three months prior, showing new-home sales were much better during that time than originally thought.
The government originally reported that new homes sold in February at an annual rate of 313,000. That figure was revised to 353,000, which marked new-home sales strongest pace since April 2010. New-home sales increased 7.3 percent in February from January. Originally, the government had reported new-home sales had fallen in that period 1.6 percent.
The Census Department also revised new-home sales in December and January to higher numbers.
Source: “New Home Sales Down 7.1% in March, but February Totals Revised,” The Los Angeles Times (April 24, 2012)
New-home sales were at a 328,000 seasonally adjusted annual rate in March, a drop of 7.1 percent compared to February. Still, new-home sales were up 7.5 percent in March compared to a year earlier.
The Census Department also on Tuesday announced that it had revised its figures for the three months prior, showing new-home sales were much better during that time than originally thought.
The government originally reported that new homes sold in February at an annual rate of 313,000. That figure was revised to 353,000, which marked new-home sales strongest pace since April 2010. New-home sales increased 7.3 percent in February from January. Originally, the government had reported new-home sales had fallen in that period 1.6 percent.
The Census Department also revised new-home sales in December and January to higher numbers.
Source: “New Home Sales Down 7.1% in March, but February Totals Revised,” The Los Angeles Times (April 24, 2012)
Housing market shows pockets of improvement
Home prices continue to fall but there are small signs of improvement.
Nationwide, prices fell 0.8 percent in February, the sixth-consecutive month of price declines, according to the Standard & Poor’s/Case Shiller index released Tuesday. When adjusted for seasonal factors, prices rose 0.2 percent.
The latest Federal Housing Finance Agency index shows home prices rising 0.4 percent for the 12 months ended in February, the first 12-month increase since July 2007.
“Home prices are slowly bottoming out,” says Steven Ricchiuto, chief economist of Mizuho Securities.
The Case-Shiller index shows February’s prices were 35 percent below their 2006 peak.
March numbers appear to be stronger, says Stan Humphries, chief economist of Zillow. A report it’s releasing today shows home prices rising 0.5 percent from February to March, the largest monthly increase in almost six years.
Nineteen of the 30 markets covered by the Zillow forecast will bottom in 2012, or already have, Zillow forecasts. Nationally, home prices will fall 0.4 percent in the next 12 months and may bottom in late 2012, Zillow adds.
Markets will hit bottom at different times, economists say.
The FHFA index, which includes fewer distressed homes than the Case-Shiller data, shows prices are holding up better in markets with fewer distressed homes, says Patrick Newport, IHS Global Insight economist.
Prices are picking up in some markets especially hard hit by the foreclosure crisis.
They have risen for five months in Phoenix, including a 1.2 percent gain in February, Case-Shiller data show. Miami posted a 0.6 percent monthly increase.
Zillow forecasts Phoenix will see a 6.5 percent gain in the next 12 months, the nation’s best home price appreciation rate.
Strong demand from investors and increasing demand from regular buyers – coupled with a low supply – is driving prices in Phoenix, says Michael Orr, real estate expert at Arizona State University.
Miami will follow Phoenix, with a 5.6 percent gain in the next year, Zillow says.
Phoenix and Miami both suffered huge price declines but are attractive to second-home buyers and investors, Humphries says.
Atlanta, whose market lacks those strengths and has been hurt by high foreclosures, posted a 17 percent drop in prices in February from a year ago.
That was far worse than the 3.5 percent decline in Case-Shiller’s index of 20 leading cities.
Source: USA TODAY, a division of Gannett Co. Inc., Julie Schmit
Nationwide, prices fell 0.8 percent in February, the sixth-consecutive month of price declines, according to the Standard & Poor’s/Case Shiller index released Tuesday. When adjusted for seasonal factors, prices rose 0.2 percent.
The latest Federal Housing Finance Agency index shows home prices rising 0.4 percent for the 12 months ended in February, the first 12-month increase since July 2007.
“Home prices are slowly bottoming out,” says Steven Ricchiuto, chief economist of Mizuho Securities.
The Case-Shiller index shows February’s prices were 35 percent below their 2006 peak.
March numbers appear to be stronger, says Stan Humphries, chief economist of Zillow. A report it’s releasing today shows home prices rising 0.5 percent from February to March, the largest monthly increase in almost six years.
Nineteen of the 30 markets covered by the Zillow forecast will bottom in 2012, or already have, Zillow forecasts. Nationally, home prices will fall 0.4 percent in the next 12 months and may bottom in late 2012, Zillow adds.
Markets will hit bottom at different times, economists say.
The FHFA index, which includes fewer distressed homes than the Case-Shiller data, shows prices are holding up better in markets with fewer distressed homes, says Patrick Newport, IHS Global Insight economist.
Prices are picking up in some markets especially hard hit by the foreclosure crisis.
They have risen for five months in Phoenix, including a 1.2 percent gain in February, Case-Shiller data show. Miami posted a 0.6 percent monthly increase.
Zillow forecasts Phoenix will see a 6.5 percent gain in the next 12 months, the nation’s best home price appreciation rate.
Strong demand from investors and increasing demand from regular buyers – coupled with a low supply – is driving prices in Phoenix, says Michael Orr, real estate expert at Arizona State University.
Miami will follow Phoenix, with a 5.6 percent gain in the next year, Zillow says.
Phoenix and Miami both suffered huge price declines but are attractive to second-home buyers and investors, Humphries says.
Atlanta, whose market lacks those strengths and has been hurt by high foreclosures, posted a 17 percent drop in prices in February from a year ago.
That was far worse than the 3.5 percent decline in Case-Shiller’s index of 20 leading cities.
Source: USA TODAY, a division of Gannett Co. Inc., Julie Schmit
Tuesday, April 24, 2012
Top 5 Most Affordable Housing Markets
Where is it cheapest to buy a home? Look in the Midwest for the bargains, according to a recent 24/7 Wall St. article, which used Realtor.com data to track the most affordable housing markets based on the lowest price per square footage.
“In general, the cities with the lowest real estate prices per square foot were cities that have suffered from poor economic conditions for some time,” 24/7 Wall St. notes in the article. “Many of these cities have begun to see interest from potential home owners and investors.”
The following cities have the lowest cost per square foot in the nation:
1. Detroit
Price per square foot: $62.45
Median list price: $84,900
2. Fort Wayne, Ind.
Price per square foot: $66.03
Median list price: $104,900
3. Toledo, Ohio
Price per square foot: $67.02
Median list price: $100,000
4. Indianapolis
Price per square foot: $68.56
Median list price: $133,000
5. Wichita, Kan.
Price per square foot: $69.04
Median list price: $129,900
The metro with the highest price per square footage? San Francisco, where the price per square foot averages $420.99, and the median list price is $611,700.
Source: “America’s Most and Least Affordable Cities to Buy a Home,” 24/7 Wall St. (April 23, 2012)
“In general, the cities with the lowest real estate prices per square foot were cities that have suffered from poor economic conditions for some time,” 24/7 Wall St. notes in the article. “Many of these cities have begun to see interest from potential home owners and investors.”
The following cities have the lowest cost per square foot in the nation:
1. Detroit
Price per square foot: $62.45
Median list price: $84,900
2. Fort Wayne, Ind.
Price per square foot: $66.03
Median list price: $104,900
3. Toledo, Ohio
Price per square foot: $67.02
Median list price: $100,000
4. Indianapolis
Price per square foot: $68.56
Median list price: $133,000
5. Wichita, Kan.
Price per square foot: $69.04
Median list price: $129,900
The metro with the highest price per square footage? San Francisco, where the price per square foot averages $420.99, and the median list price is $611,700.
Source: “America’s Most and Least Affordable Cities to Buy a Home,” 24/7 Wall St. (April 23, 2012)
U.S. new-home sales off 7.1% in March
Sales of new homes fell in March by the largest amount in more than a year, indicating that the U.S. housing market remains under strain despite some modest signs of improvement.
The Commerce Department says sales dropped 7.1 percent in March to a seasonally adjusted annual rate of 328,000 units. That followed a 7.3 percent increase in sales in February. This figure was revised up from an initial estimate that February sales had fallen 1.6 percent.
The weakness in March could reflect that a warmer-than-normal winter caused sales that normally occur at the start of the spring sales season in March to occur in February.
The median home price was $234,500 in March, down 1 percent from the February sales price.
Source: The Associated Press, Martin Crutsinger, AP economics writer. All rights reserved.
The Commerce Department says sales dropped 7.1 percent in March to a seasonally adjusted annual rate of 328,000 units. That followed a 7.3 percent increase in sales in February. This figure was revised up from an initial estimate that February sales had fallen 1.6 percent.
The weakness in March could reflect that a warmer-than-normal winter caused sales that normally occur at the start of the spring sales season in March to occur in February.
The median home price was $234,500 in March, down 1 percent from the February sales price.
Source: The Associated Press, Martin Crutsinger, AP economics writer. All rights reserved.
FHA delays loan rule on borrower credit disputes
After being told that a new rule could shut too many borrowers out of the market, the Federal Housing Administration (FHA) said it would postpone implementation. The now-delayed rule raised the bar on qualifying for an FHA mortgage if borrowers had a credit dispute in their file.
The rule took effect April 1, and FHA announced a few days later that it would ease the restrictions a bit. But after the first week, FHA announced that it would postpone the rule altogether until July 1.
Any mortgages written while the rule was in effect during that first week in April will not see the new rule applied.
The new guidelines required borrowers qualifying for an FHA-insured mortgage to pay off any credit dispute of more than $1,000 in their history or set up a documented payment plan on any unpaid collection accounts.
The FHA received several complaints from lenders that said the new rule would shut out too many buyers. For example, JPMorgan Chase analysts had estimated the rule could curtail demand by up to 20 percent for FHA loans.
The new rule is expected to have the greatest impact on young, first-time borrowers, according to Jeremy Radack, a real estate attorney who assists Texas builders in a Builder Magazine interview. When the FHA rule temporarily took effect in the first week of April, Radack says they saw a decrease in sales up to 35 percent.
The delay in the new rule taking effect, according to FHA, will give lenders more time to adjust to the new requirements as well as the opportunity to solicit “additional input on this section and work to clarify guidance, as appropriate.”
Source: “FHA Postpones Rule Change for Borrowers in Debt Disputes,” Inman News (April 20, 2012) and “FHA Delays New Rule on Debt Accounts,” San Francisco Chronicle (April 12, 2012)
Source: INFORMATION, INC.
The rule took effect April 1, and FHA announced a few days later that it would ease the restrictions a bit. But after the first week, FHA announced that it would postpone the rule altogether until July 1.
Any mortgages written while the rule was in effect during that first week in April will not see the new rule applied.
The new guidelines required borrowers qualifying for an FHA-insured mortgage to pay off any credit dispute of more than $1,000 in their history or set up a documented payment plan on any unpaid collection accounts.
The FHA received several complaints from lenders that said the new rule would shut out too many buyers. For example, JPMorgan Chase analysts had estimated the rule could curtail demand by up to 20 percent for FHA loans.
The new rule is expected to have the greatest impact on young, first-time borrowers, according to Jeremy Radack, a real estate attorney who assists Texas builders in a Builder Magazine interview. When the FHA rule temporarily took effect in the first week of April, Radack says they saw a decrease in sales up to 35 percent.
The delay in the new rule taking effect, according to FHA, will give lenders more time to adjust to the new requirements as well as the opportunity to solicit “additional input on this section and work to clarify guidance, as appropriate.”
Source: “FHA Postpones Rule Change for Borrowers in Debt Disputes,” Inman News (April 20, 2012) and “FHA Delays New Rule on Debt Accounts,” San Francisco Chronicle (April 12, 2012)
Source: INFORMATION, INC.
Optimism shows in survey on economy
The U.S. economy will grow faster than expected this year, despite the headwinds of higher gas prices and Europe’s financial crisis, according to USA TODAY’s quarterly survey of economists.
Their median estimates are higher than in January for everything from this year’s business investment to hiring.
Economists think job growth for the rest of the year will be about 20 percent stronger than they did after Christmas.
The economy is strengthening enough that two-thirds expect the Federal Reserve to raise interest rates sooner than its late-2014 target, although none expects it to happen at this week’s Fed meeting Tuesday and Wednesday.
The biggest reason: Consumers have bought more vehicles and gone out to eat more often, even though gas prices had been expected to make them spend less, says Jeff Rosen, an economist at Briefing Research in Chicago.
“Things are getting better,” Rosen says. “The economy is picking up and hiring is going to be on the rise.”
Median estimates – the point where half are below and half above – of the 50 economists surveyed forecast:
• The economy will grow 2.5 percent this year vs. their 2.3 percent forecast three months ago.
• Employment gains averaging 185,000 new jobs a month through December, 29,000 more than economists forecast in January.
• Unemployment averaging 8 percent in the fourth quarter vs. 8.2 percent now.
• Regular gasoline at an average of $4 a gallon on July 4 and $3.80 on Election Day. Sunday’s average was $3.86, according to AAA.
How much the economy improves in coming months could influence whether President Obama gets re-elected.
The question now is whether the recent lull in job markets means the warm winter simply delayed the growth hiccup economists expected during the first quarter, says Diane Swonk, chief economist at Mesirow Financial.
The March hiring slowdown implies that strong job gains early in the year were exaggerated, Swonk says.
“The reality is somewhere between the employment numbers of March and the relatively rosy numbers from January and February,” Swonk says.
Economists’ optimism also colors a new survey by the National Association for Business Economists. It shows three times as many economists think the economy will grow 3 percent or more this year, compared with January.
One of the biggest economic threats is uncertainty about what Congress may do after the election, when tax cuts are set to expire and spending cuts are supposed to take effect. Without action, the “fiscal cliff” could shrink next year’s economy by 3.5 percent, or about $575 billion, says Mark Zandi, chief economist at Moody’s Analytics.
“If policymakers do nothing, early 2013 will be recession-like,” Zandi says.
Source: USA TODAY, a division of Gannett Co. Inc.
Their median estimates are higher than in January for everything from this year’s business investment to hiring.
Economists think job growth for the rest of the year will be about 20 percent stronger than they did after Christmas.
The economy is strengthening enough that two-thirds expect the Federal Reserve to raise interest rates sooner than its late-2014 target, although none expects it to happen at this week’s Fed meeting Tuesday and Wednesday.
The biggest reason: Consumers have bought more vehicles and gone out to eat more often, even though gas prices had been expected to make them spend less, says Jeff Rosen, an economist at Briefing Research in Chicago.
“Things are getting better,” Rosen says. “The economy is picking up and hiring is going to be on the rise.”
Median estimates – the point where half are below and half above – of the 50 economists surveyed forecast:
• The economy will grow 2.5 percent this year vs. their 2.3 percent forecast three months ago.
• Employment gains averaging 185,000 new jobs a month through December, 29,000 more than economists forecast in January.
• Unemployment averaging 8 percent in the fourth quarter vs. 8.2 percent now.
• Regular gasoline at an average of $4 a gallon on July 4 and $3.80 on Election Day. Sunday’s average was $3.86, according to AAA.
How much the economy improves in coming months could influence whether President Obama gets re-elected.
The question now is whether the recent lull in job markets means the warm winter simply delayed the growth hiccup economists expected during the first quarter, says Diane Swonk, chief economist at Mesirow Financial.
The March hiring slowdown implies that strong job gains early in the year were exaggerated, Swonk says.
“The reality is somewhere between the employment numbers of March and the relatively rosy numbers from January and February,” Swonk says.
Economists’ optimism also colors a new survey by the National Association for Business Economists. It shows three times as many economists think the economy will grow 3 percent or more this year, compared with January.
One of the biggest economic threats is uncertainty about what Congress may do after the election, when tax cuts are set to expire and spending cuts are supposed to take effect. Without action, the “fiscal cliff” could shrink next year’s economy by 3.5 percent, or about $575 billion, says Mark Zandi, chief economist at Moody’s Analytics.
“If policymakers do nothing, early 2013 will be recession-like,” Zandi says.
Source: USA TODAY, a division of Gannett Co. Inc.
Low-ball offers don’t work anymore
When the number of home sellers grossly outpaces the number of buyers, no offer can be ignored, even if it’s 25 percent or more off the asking price. But in today’s rebounding market, those low-ball offers don’t often work. Many times, the potential buyer finds that they don’t get a counter-offer. And, in many cases, another more realistic buyer gets the home.
A low-ball offer – generally 25 or more off the asking price – allows buyers to see if they can land a great deal, even if they’re willing to pay more. In a survey last year conducted by the National Association of Realtors® (NAR), one in 10 respondents cited low-ball offers as a concern. According to real estate columnist Kenneth Harney, a NAR survey conducted in March and not yet released found that almost no one complained about low offers.
When the number of listings outpaced the number of buyers, many potential homeowners submitted a shockingly low offer on the theory that they had nothing to lose. If the seller balked, most would still counter with something below their asking price. Today, however, offers close to the asking price – or even beating it – will probably come in fairly quickly from someone else if a home is priced correctly in the first place.
Even buyers who still want to low-ball an offer on a home many times switch tactics after they lose a property or two to a more aggressive buyer.
Florida Realtor Marnie Matarese works with J Wood Realty in Sarasota. She told Harney that fewer buyers want to low-ball an offer in her area, but they still come in – mainly from out-of-state or out-of-the-country people who have read about the state’s foreclosures and short sales. That news, however, is old – it has not kept up with reality in many areas.
Matarese says some people still insist on making a low-ball offer, but that she doesn’t mind. “You can’t blame a buyer for trying to get a good deal,” she says.
In some cases, a seller isn’t offended by a low-ball offer, but their counter-offer shaves only a little bit off their original asking price. An Olympia, Wash., real estate agent had a $150,000 offer for a $250,000 listing, according to Harney. But after the dust settled and the seller shook off his irritation, he and the buyer agreed to $230,000.
Harney closed his column with this advice: “Rolling low-balls at sellers may have been an effective approach between 2008 and early 2011. But in 2012’s environment – at least in rebounding markets – it could be counterproductive if you truly want to buy.”
Source: Florida Realtors®
A low-ball offer – generally 25 or more off the asking price – allows buyers to see if they can land a great deal, even if they’re willing to pay more. In a survey last year conducted by the National Association of Realtors® (NAR), one in 10 respondents cited low-ball offers as a concern. According to real estate columnist Kenneth Harney, a NAR survey conducted in March and not yet released found that almost no one complained about low offers.
When the number of listings outpaced the number of buyers, many potential homeowners submitted a shockingly low offer on the theory that they had nothing to lose. If the seller balked, most would still counter with something below their asking price. Today, however, offers close to the asking price – or even beating it – will probably come in fairly quickly from someone else if a home is priced correctly in the first place.
Even buyers who still want to low-ball an offer on a home many times switch tactics after they lose a property or two to a more aggressive buyer.
Florida Realtor Marnie Matarese works with J Wood Realty in Sarasota. She told Harney that fewer buyers want to low-ball an offer in her area, but they still come in – mainly from out-of-state or out-of-the-country people who have read about the state’s foreclosures and short sales. That news, however, is old – it has not kept up with reality in many areas.
Matarese says some people still insist on making a low-ball offer, but that she doesn’t mind. “You can’t blame a buyer for trying to get a good deal,” she says.
In some cases, a seller isn’t offended by a low-ball offer, but their counter-offer shaves only a little bit off their original asking price. An Olympia, Wash., real estate agent had a $150,000 offer for a $250,000 listing, according to Harney. But after the dust settled and the seller shook off his irritation, he and the buyer agreed to $230,000.
Harney closed his column with this advice: “Rolling low-balls at sellers may have been an effective approach between 2008 and early 2011. But in 2012’s environment – at least in rebounding markets – it could be counterproductive if you truly want to buy.”
Source: Florida Realtors®
Sunday, April 22, 2012
Having Good Schools Nearby Improves Home Values
Living near a high-scoring public school district can raise home values $205,000 higher compared to homes located in neighborhoods with low-scoring school districts, according to a new study by Brookings Institution. Brookings analyzed the nation’s 100 largest metro areas to find the differences between living near a high-scoring public school and a low-performing school.
“We think of public education as being free, and we think of the main divide in education between public and private schools,” Jonathan Rothwell, a senior research analyst at Brookings, told The New York Times. “But it turns out that it’s actually very expensive to enroll your children in a high-scoring public school.” The cost of living in a high-scoring public neighborhood can be higher than paying a private tuition at a school, researchers note.
Housing costs near high-scoring schools — those in the top one-fifth of schools in the area — were 2.4 times higher on average, or $11,000 more per year, than homes located in school districts in the bottom fifth, the study found.
“Some of the areas with the largest differences in housing costs also have the widest gaps in school test scores,” reports CNNMoney about the study’s findings.
Students from low-income families — classified as those who are eligible for free or reduced-price school lunches — were found to be more likely to attend schools that score in the 42nd percentile on state tests, according to Brookings. On the other hand, students from middle- to high-income households, on average, tend to attend schools that score in the 61st percentile.
Source: “Test Scores and Housing Costs,” The New York Times (April 19, 2012) and “Living Near Good Schools will Cost an Extra $200k,” CNNMoney (April 19, 2012)
“We think of public education as being free, and we think of the main divide in education between public and private schools,” Jonathan Rothwell, a senior research analyst at Brookings, told The New York Times. “But it turns out that it’s actually very expensive to enroll your children in a high-scoring public school.” The cost of living in a high-scoring public neighborhood can be higher than paying a private tuition at a school, researchers note.
Housing costs near high-scoring schools — those in the top one-fifth of schools in the area — were 2.4 times higher on average, or $11,000 more per year, than homes located in school districts in the bottom fifth, the study found.
“Some of the areas with the largest differences in housing costs also have the widest gaps in school test scores,” reports CNNMoney about the study’s findings.
Students from low-income families — classified as those who are eligible for free or reduced-price school lunches — were found to be more likely to attend schools that score in the 42nd percentile on state tests, according to Brookings. On the other hand, students from middle- to high-income households, on average, tend to attend schools that score in the 61st percentile.
Source: “Test Scores and Housing Costs,” The New York Times (April 19, 2012) and “Living Near Good Schools will Cost an Extra $200k,” CNNMoney (April 19, 2012)
U.S. rate on 30-year mortgage rises to 3.90%
The average rate on the 30-year fixed mortgage stayed near its lowest level on record, keeping home-buying and refinancing affordable.
Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan rose to 3.90 percent from 3.88 percent. The rate touched 3.87 percent in February, which was the lowest since long-term mortgages began in the 1950s.
The 30-year loan is the most common financing option for homebuyers.
The 15-year mortgage, which is popular with those refinancing, rose to 3.13 percent from 3.11 percent, an all-time low.
Cheaper mortgages have done little to boost home sales. Americans bought 2.6 percent fewer homes in March, according to a separate report released by the National Association of Realtors.
Some would-be buyers are skeptical about purchasing a home with prices still falling. Home appraisals that are higher or lower than the sales price have scuttled some home contracts. And many Americans are struggling with damaged credit and unstable finances.
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 loan rose to 0.8 from 0.7. The fee for the 15-year loan was unchanged at 0.7.
For the five-year adjustable loan, the average rate fell to 2.78 percent from 2.85 percent. The average fee for the loan was unchanged at 0.7.
The average fee on the one-year adjustable loan ticked up to 2.81 percent from 2.80 percent. 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 rose to 3.90 percent from 3.88 percent. The rate touched 3.87 percent in February, which was the lowest since long-term mortgages began in the 1950s.
The 30-year loan is the most common financing option for homebuyers.
The 15-year mortgage, which is popular with those refinancing, rose to 3.13 percent from 3.11 percent, an all-time low.
Cheaper mortgages have done little to boost home sales. Americans bought 2.6 percent fewer homes in March, according to a separate report released by the National Association of Realtors.
Some would-be buyers are skeptical about purchasing a home with prices still falling. Home appraisals that are higher or lower than the sales price have scuttled some home contracts. And many Americans are struggling with damaged credit and unstable finances.
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 loan rose to 0.8 from 0.7. The fee for the 15-year loan was unchanged at 0.7.
For the five-year adjustable loan, the average rate fell to 2.78 percent from 2.85 percent. The average fee for the loan was unchanged at 0.7.
The average fee on the one-year adjustable loan ticked up to 2.81 percent from 2.80 percent. The average fee was unchanged at 0.6.
Source: The Associated Press, Derek Kravitz, AP business writer. All rights reserved.
Buyers: It’s time to commit
It’s an old investment adage that remains true: “Buy low, sell high.”
National Association of Realtors® (NAR) President Moe Veissi, who served as Florida Realtors president in 2002, explains why conditions have never been better to buy a home in an online radio interview.
The Real Estate Today interview can also be forwarded through Facebook and Twitter to friends, family and clients.
Veissi, broker-owner of Veissi & Associates Inc. in Miami, says today’s real estate market has “less folks looking, less inventory and more contracts working. … We’re just now seeing appreciation in real estate prices in some areas of the country. … This is a wonderful time to take advantage of interest rates that are lower than they’ve ever been.”
Veissi quotes investor Warren Buffet’s outlook on the current real estate market: “Warren Buffet appeared on CNBC about two weeks ago, and the young lady that was interviewing him asked where you should invest your money. Warren said, ‘If I had the capabilities, I’d buy 200,000 homes across this county … I think that housing in America today will outstrip the investment capabilities of the Wall Street blue chips over the longer term.”
To hear the five-minute radio interview and forward to friends and clients, visit the Real Estate Today website at: http://retradio.com/?p=4916.
Source: Florida Realtors®
National Association of Realtors® (NAR) President Moe Veissi, who served as Florida Realtors president in 2002, explains why conditions have never been better to buy a home in an online radio interview.
The Real Estate Today interview can also be forwarded through Facebook and Twitter to friends, family and clients.
Veissi, broker-owner of Veissi & Associates Inc. in Miami, says today’s real estate market has “less folks looking, less inventory and more contracts working. … We’re just now seeing appreciation in real estate prices in some areas of the country. … This is a wonderful time to take advantage of interest rates that are lower than they’ve ever been.”
Veissi quotes investor Warren Buffet’s outlook on the current real estate market: “Warren Buffet appeared on CNBC about two weeks ago, and the young lady that was interviewing him asked where you should invest your money. Warren said, ‘If I had the capabilities, I’d buy 200,000 homes across this county … I think that housing in America today will outstrip the investment capabilities of the Wall Street blue chips over the longer term.”
To hear the five-minute radio interview and forward to friends and clients, visit the Real Estate Today website at: http://retradio.com/?p=4916.
Source: Florida Realtors®
Thursday, April 19, 2012
Short Sales Start to Outpace Foreclosures
Banks are agreeing to more short sales, and for the first time, short sale transactions are exceeding foreclosure deals, according to the most recent housing data from Lender Processing Services (LPS) Inc.
In January, short sales made up 23.9 percent of home purchases, according to LPS. Meanwhile, foreclosures made up 19.7 percent of sales.
Just one year prior, foreclosures made up the bulk at 24.9 percent of transactions while short sales made up 16.3 percent.
“It’s a fairly recent phenomenon that short sales have been increasing,” Jonathon Weiner, a vice president with LPS, told Bloomberg News.
So why are banks getting more agreeable to short sales? Banks are realizing that short sale transactions usually sell for higher prices than foreclosures. In fact, foreclosed homes tend to sell for 29 percent less, on average, than comparable non-distressed properties. Short sales tend to sell at a 23 percent discount, according to Lending Processing Services data from January.
Banks and government agencies in recent weeks have taken steps to speed up the short sale process, setting new timelines for how long mortgage servicers have to respond to short sales offers. Also, some banks, such as Wells Fargo and JPMorgan Chase, are even offering some home owners cash incentives — up to $35,000 — if they agree to do a short sale instead of let the home fall into foreclosure.
Source: “Short Sales Surpass Foreclosures as Banks Agree to Deals,” Bloomberg News (April 17, 2012)
In January, short sales made up 23.9 percent of home purchases, according to LPS. Meanwhile, foreclosures made up 19.7 percent of sales.
Just one year prior, foreclosures made up the bulk at 24.9 percent of transactions while short sales made up 16.3 percent.
“It’s a fairly recent phenomenon that short sales have been increasing,” Jonathon Weiner, a vice president with LPS, told Bloomberg News.
So why are banks getting more agreeable to short sales? Banks are realizing that short sale transactions usually sell for higher prices than foreclosures. In fact, foreclosed homes tend to sell for 29 percent less, on average, than comparable non-distressed properties. Short sales tend to sell at a 23 percent discount, according to Lending Processing Services data from January.
Banks and government agencies in recent weeks have taken steps to speed up the short sale process, setting new timelines for how long mortgage servicers have to respond to short sales offers. Also, some banks, such as Wells Fargo and JPMorgan Chase, are even offering some home owners cash incentives — up to $35,000 — if they agree to do a short sale instead of let the home fall into foreclosure.
Source: “Short Sales Surpass Foreclosures as Banks Agree to Deals,” Bloomberg News (April 17, 2012)
March Existing-Home Sales Saw Decline, Lower Inventory, Stabilizing Prices
Existing-home sales dipped in March, but continued to outpace last year's levels. At the same time, inventory tightened and home prices showed further signs of stabilizing, according to the National Association of REALTORS®.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, declined 2.6 percent to a seasonally adjusted annual rate of 4.48 million in March from an upwardly revised 4.60 million in February, but are 5.2 percent above the 4.26 million-unit pace in March 2011.
Lawrence Yun, NAR chief economist, said the recovery is in the process of settling into a higher level of home sales. “The recovery is happening though not at a breakout pace, but we have seen nine consecutive months of year-over-year sales increases,” he said. “Existing-home sales are moving up and down in a fairly narrow range that is well above the level of activity during the first half of last year. With job growth, low interest rates, bargain home prices and an improving economy, the pent-up demand is coming to market and we expect housing to be notably better this year.”
Total housing inventory at the end of March declined 1.3 percent to 2.37 million existing homes available for sale, which represents a 6.3-month supply at the current sales pace, the same as in February. Listed inventory is 21.8 percent below a year ago and well below the record of 4.04 million in July 2007.
“We were expecting a seasonal increase in home listings, but a lack of inventory has suddenly become an issue in several markets with not enough homes for sale in relation to buyer interest,” Yun said. “Home sales could be held back because of supply factors and not by demand – we’re already seeing this in the Western states and in South Florida.”
The national median existing-home price for all housing types was $163,800 in March, up 2.5 percent from March 2011. Distressed homes – foreclosures and short sales sold at deep discounts – accounted for 29 percent of March sales (18 percent were foreclosures and 11 percent were short sales), compared with 34 percent in February and 40 percent in March 2011.
Foreclosures typically sold for an average 19 percent below market price in March, while short sales were discounted 16 percent.
NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami, said buyer traffic is up. “Our members are reporting an increase in foot traffic from a year ago, but more importantly, home shoppers this year are much more serious about finding the right home and making an offer,” he said. “Stabilizing home prices and historically favorable affordability conditions are giving buyers more confidence, and REALTORS® have become more optimistic since the beginning of the year from the positive shift in buyer patterns.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 3.95 percent in March, up from a record low 3.89 percent in February; the rate was 4.84 percent in March 2011; recordkeeping began in 1971.
All-cash sales slipped to 32 percent of transactions in March from 33 percent in February; they were 35 percent in March 2011. Investors account for the bulk of cash transactions.
Investors purchased 21 percent of homes in March, down from 23 percent in February and 22 percent in March 2011. First-time buyers accounted for 33 percent of transactions in March; they were 32 percent in February and 33 percent in March 2011.
Single-family home sales declined 2.5 percent to a seasonally adjusted annual rate of 3.97 million in March from 4.07 million in February, but are 5.9 percent above the 3.75 million-unit pace a year ago. The median existing single-family home price was $163,600 in March, up 1.9 percent from March 2011.
Existing condominium and co-op sales fell 3.8 percent to a seasonally adjusted annual rate of 510,000 in March from 530,000 in February, and are unchanged from March 2011. The median existing condo price was $165,200 inMarch, which is 7.1 percent above a year ago.
Midwest: Unchanged in March at a pace of 1.02 million but are 15.9 percent above March 2011. The median price in the Midwest was $132,800, up 5.2 percent from a year ago.
South: Declined 1.1 percent to an annual level of 1.75 million in Marchbut are 3.6 percent higher than a year ago. The median price in the South was $146,500, up 6.2 percent from March 2011.
West: Declined 7.4 percent to an annual pace of 1.13 million in March and are 0.9 percent below March 2011. The median price in the West was $198,300, up 1.6 percent from a year ago.
Source: NAR
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, declined 2.6 percent to a seasonally adjusted annual rate of 4.48 million in March from an upwardly revised 4.60 million in February, but are 5.2 percent above the 4.26 million-unit pace in March 2011.
Lawrence Yun, NAR chief economist, said the recovery is in the process of settling into a higher level of home sales. “The recovery is happening though not at a breakout pace, but we have seen nine consecutive months of year-over-year sales increases,” he said. “Existing-home sales are moving up and down in a fairly narrow range that is well above the level of activity during the first half of last year. With job growth, low interest rates, bargain home prices and an improving economy, the pent-up demand is coming to market and we expect housing to be notably better this year.”
Total housing inventory at the end of March declined 1.3 percent to 2.37 million existing homes available for sale, which represents a 6.3-month supply at the current sales pace, the same as in February. Listed inventory is 21.8 percent below a year ago and well below the record of 4.04 million in July 2007.
“We were expecting a seasonal increase in home listings, but a lack of inventory has suddenly become an issue in several markets with not enough homes for sale in relation to buyer interest,” Yun said. “Home sales could be held back because of supply factors and not by demand – we’re already seeing this in the Western states and in South Florida.”
The national median existing-home price for all housing types was $163,800 in March, up 2.5 percent from March 2011. Distressed homes – foreclosures and short sales sold at deep discounts – accounted for 29 percent of March sales (18 percent were foreclosures and 11 percent were short sales), compared with 34 percent in February and 40 percent in March 2011.
Foreclosures typically sold for an average 19 percent below market price in March, while short sales were discounted 16 percent.
NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami, said buyer traffic is up. “Our members are reporting an increase in foot traffic from a year ago, but more importantly, home shoppers this year are much more serious about finding the right home and making an offer,” he said. “Stabilizing home prices and historically favorable affordability conditions are giving buyers more confidence, and REALTORS® have become more optimistic since the beginning of the year from the positive shift in buyer patterns.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 3.95 percent in March, up from a record low 3.89 percent in February; the rate was 4.84 percent in March 2011; recordkeeping began in 1971.
All-cash sales slipped to 32 percent of transactions in March from 33 percent in February; they were 35 percent in March 2011. Investors account for the bulk of cash transactions.
Investors purchased 21 percent of homes in March, down from 23 percent in February and 22 percent in March 2011. First-time buyers accounted for 33 percent of transactions in March; they were 32 percent in February and 33 percent in March 2011.
Single-family home sales declined 2.5 percent to a seasonally adjusted annual rate of 3.97 million in March from 4.07 million in February, but are 5.9 percent above the 3.75 million-unit pace a year ago. The median existing single-family home price was $163,600 in March, up 1.9 percent from March 2011.
Existing condominium and co-op sales fell 3.8 percent to a seasonally adjusted annual rate of 510,000 in March from 530,000 in February, and are unchanged from March 2011. The median existing condo price was $165,200 inMarch, which is 7.1 percent above a year ago.
Existing-Home Sales by Region:
Northeast: Declined 1.7 percent to an annual level of 580,000 in March but are 5.5 percent higher than a year ago. The median price in the Northeast was $228,300, down 1.9 percent from March 2011.Midwest: Unchanged in March at a pace of 1.02 million but are 15.9 percent above March 2011. The median price in the Midwest was $132,800, up 5.2 percent from a year ago.
South: Declined 1.1 percent to an annual level of 1.75 million in Marchbut are 3.6 percent higher than a year ago. The median price in the South was $146,500, up 6.2 percent from March 2011.
West: Declined 7.4 percent to an annual pace of 1.13 million in March and are 0.9 percent below March 2011. The median price in the West was $198,300, up 1.6 percent from a year ago.
Source: NAR
Fla.’s housing market shows positive trends in March
Florida’s housing market had increased pending sales, higher median prices and a reduced inventory of homes for sale in March, according to Florida Realtors® latest housing data.
“With the continued steep decline of inventory, historically low interest rates and buyers no longer willing to wait on the sidelines, Florida’s real estate market continues on its road to recovery,” says 2012 Florida Realtors President Summer Greene, regional manager of Better Homes and Gardens Real Estate Florida 1st in Fort Lauderdale. “The latest numbers show that pending sales are up almost 30 percent for single-family homes and almost 20 percent for townhomes and condos.”
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 March was $139,000, up 10.3 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 $105,000, up 20.8 percent over March 2011.
The national median sales price for existing single-family homes in February 2012 was $157,100, which is slightly higher than the previous year, according to the National Association of Realtors® (NAR). In California, the statewide median sales price for single-family existing homes in February was $266,660; in Massachusetts, it was $255,000; in New York, it was $220,000; and in Maryland, it was $212,301.
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 18,370 in March, down 5.7 percent compared to the year-ago figure. Looking at Florida’s year-to-year comparison for sales of townhomes/condos, a total of 10,012 units sold statewide last month, down 12.4 percent from those sold in March 2011. NAR reported the national median existing condo price in February 2012 was $153,000.
In March, there was a 5.9-month supply of single-family homes in inventory and a 6.0-month supply for townhomes/condos, according to Florida Realtors.
“The encouraging trends we’ve seen in the Florida housing market are continuing, with very strong pending sales and decreasing inventory,” said Florida Realtors Chief Economist Dr. John Tuccillo. “The large jump in median sales prices for both single-family homes and condos is a sign that buyers are now looking at higher priced properties, while it’s becoming tougher to find properties at the lower end of the market.”
The interest rate for a 30-year fixed-rate mortgage averaged 3.95 percent in March 2012, down from the 4.84 percent average during the same month a year earlier, according to Freddie Mac.
To download the full statewide housing activity report, go to the Research page of floridarealtors.org at http://www.floridarealtors.org/Research/index.cfm and look under the header “New statewide housing reports.”
Source: Florida Realtors®
“With the continued steep decline of inventory, historically low interest rates and buyers no longer willing to wait on the sidelines, Florida’s real estate market continues on its road to recovery,” says 2012 Florida Realtors President Summer Greene, regional manager of Better Homes and Gardens Real Estate Florida 1st in Fort Lauderdale. “The latest numbers show that pending sales are up almost 30 percent for single-family homes and almost 20 percent for townhomes and condos.”
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 March was $139,000, up 10.3 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 $105,000, up 20.8 percent over March 2011.
The national median sales price for existing single-family homes in February 2012 was $157,100, which is slightly higher than the previous year, according to the National Association of Realtors® (NAR). In California, the statewide median sales price for single-family existing homes in February was $266,660; in Massachusetts, it was $255,000; in New York, it was $220,000; and in Maryland, it was $212,301.
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 18,370 in March, down 5.7 percent compared to the year-ago figure. Looking at Florida’s year-to-year comparison for sales of townhomes/condos, a total of 10,012 units sold statewide last month, down 12.4 percent from those sold in March 2011. NAR reported the national median existing condo price in February 2012 was $153,000.
In March, there was a 5.9-month supply of single-family homes in inventory and a 6.0-month supply for townhomes/condos, according to Florida Realtors.
“The encouraging trends we’ve seen in the Florida housing market are continuing, with very strong pending sales and decreasing inventory,” said Florida Realtors Chief Economist Dr. John Tuccillo. “The large jump in median sales prices for both single-family homes and condos is a sign that buyers are now looking at higher priced properties, while it’s becoming tougher to find properties at the lower end of the market.”
The interest rate for a 30-year fixed-rate mortgage averaged 3.95 percent in March 2012, down from the 4.84 percent average during the same month a year earlier, according to Freddie Mac.
To download the full statewide housing activity report, go to the Research page of floridarealtors.org at http://www.floridarealtors.org/Research/index.cfm and look under the header “New statewide housing reports.”
Source: Florida Realtors®
Wednesday, April 18, 2012
7 Metros Where List Prices Soared Last Month
Nationwide median list prices rose more than 5 percent in March compared to February, according to Realtor.com housing data of 146 markets. The median list price nationally is now $189,900.
In fact, nearly all of the 146 metro areas saw median list prices rise or hold steady month-over-month except for five metros (Columbia, Mo.; Melbourne-Titusville-Palm Bay, Fla.; Minneapolis-St. Paul, Minn.; Fort Collins-Loveland, Colo.; and Reading, Pa.).
The areas seeing some of the largest month-over-month increases in median list prices are:
1. San Francisco
Month-over-month increase: 6.10%
Median list price: $649,000
2. Washington, D.C.-Md.-Va.-W.Va.
Month-over-month increase: 5.92%
Median list price: $270,000
3. San Jose, Calif.
Month-over-month increase: 5.57%
Median list price: $495,000
4. Oakland, Calif.
Month-over-month increase: 5.04%
Median list price: $336,120
5. Seattle-Bellevue-Everett, Wash.
Month-over-month increase: 4.97%
Median list price: $314,900
6. Toledo, Ohio
Month-over-month increase: 4.90%
Median list price: $104,900
7. New Haven-Bridgeport-Stamford-Danbury-Waterbury, Conn.
Month-over-month increase: 4.29%
Median list price: $365,000
The metro areas that have seen the largest jumps in median list prices over the year include Phoenix-Mesa, Ariz. (a 23.45% increase in list prices compared to March this year to March 2011); Miami (a 22.27% increase), and Boise City, Idaho (a 19.73 percent increase), the Realtor.com data shows.
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
In fact, nearly all of the 146 metro areas saw median list prices rise or hold steady month-over-month except for five metros (Columbia, Mo.; Melbourne-Titusville-Palm Bay, Fla.; Minneapolis-St. Paul, Minn.; Fort Collins-Loveland, Colo.; and Reading, Pa.).
The areas seeing some of the largest month-over-month increases in median list prices are:
1. San Francisco
Month-over-month increase: 6.10%
Median list price: $649,000
2. Washington, D.C.-Md.-Va.-W.Va.
Month-over-month increase: 5.92%
Median list price: $270,000
3. San Jose, Calif.
Month-over-month increase: 5.57%
Median list price: $495,000
4. Oakland, Calif.
Month-over-month increase: 5.04%
Median list price: $336,120
5. Seattle-Bellevue-Everett, Wash.
Month-over-month increase: 4.97%
Median list price: $314,900
6. Toledo, Ohio
Month-over-month increase: 4.90%
Median list price: $104,900
7. New Haven-Bridgeport-Stamford-Danbury-Waterbury, Conn.
Month-over-month increase: 4.29%
Median list price: $365,000
The metro areas that have seen the largest jumps in median list prices over the year include Phoenix-Mesa, Ariz. (a 23.45% increase in list prices compared to March this year to March 2011); Miami (a 22.27% increase), and Boise City, Idaho (a 19.73 percent increase), the Realtor.com data shows.
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
Speed Up Short Sales, FHFA Directs Servicers
The Federal Housing Finance Agency announced a new policy to speed up the process that mortgage servicers use to handle short sales, deeds-in-lieu, and deeds-for-lease for mortgages that are backed by Fannie Mae and Freddie Mac.
The FHFA, the regulator of Fannie and Freddie, says the new policy includes a revised timeline that will require mortgage servicers to respond to a request for a short sale offer within 30 days. Servicers also will be required to make a final decision on the short sale offer within 60 days.
For any short sale offer still under review after 30 days, banks will be required to provide weekly status updates to borrowers regarding the pending short sale offer.
The new policy, which will roll out in stages starting in June, aims to “prevent foreclosures, keep homes occupied, and help maintain stable communities,” says Edward DeMarco, the FHFA’s acting director. “These timeline and borrower communication announcements set minimum standards and provide clear expectations regarding these important foreclosure alternatives.”
The FHFA also says that by the end of the year there will be additional announcements from Fannie and Freddie that are aimed at addressing borrower eligibility and evaluation, simplifying documents, property valuation, fraud mitigation, payments to subordinate lien holders, and mortgage insurance.
Source: Federal Housing Finance Agency
The FHFA, the regulator of Fannie and Freddie, says the new policy includes a revised timeline that will require mortgage servicers to respond to a request for a short sale offer within 30 days. Servicers also will be required to make a final decision on the short sale offer within 60 days.
For any short sale offer still under review after 30 days, banks will be required to provide weekly status updates to borrowers regarding the pending short sale offer.
The new policy, which will roll out in stages starting in June, aims to “prevent foreclosures, keep homes occupied, and help maintain stable communities,” says Edward DeMarco, the FHFA’s acting director. “These timeline and borrower communication announcements set minimum standards and provide clear expectations regarding these important foreclosure alternatives.”
The FHFA also says that by the end of the year there will be additional announcements from Fannie and Freddie that are aimed at addressing borrower eligibility and evaluation, simplifying documents, property valuation, fraud mitigation, payments to subordinate lien holders, and mortgage insurance.
Source: Federal Housing Finance Agency
Housing recovery also location, location, location
The Bipartisan Policy Center (BPC) Housing Commission held a public forum in Winter Park yesterday to discuss Florida’s response to recent problems in its housing market. The group focused on U.S. policies, state policies and local conditions that led to the recent crisis, as well as those that helped or hindered a recovery.
The forum, held at Rollins College, featured former U.S. Senator and Department of Housing and Urban Development Secretary (HUD) Mel Martinez, co-chair of the BPC Housing Commission and vice chairman of JPMorgan Chase & Co.
It also included regional housing experts from Central Florida. According to CoreLogic’s February foreclosure report, the Orlando and Tampa metros tied for the state’s highest foreclosure rate – 12.3 percent (1 in 8) of homes with a mortgage in some stage of the foreclosure process.
The forum’s goal was to look at the way national and state policies impact a single region. Some of the discussion was based on new research from the University of California, Berkeley, comparing the U.S. housing finance system to other countries.
“By studying both the real-world effects of this nation’s financial crisis on regional housing markets and how other countries handled similar crises, we can examine ways to spur our own economic recovery and learn effective strategies to better handle the temptations of another hot housing market in the future,” said Mel Martinez.
Speakers pointed out that many factors influence regional housing markets, including demographics, income levels, local economic growth and job creation. According to the U.S. Bureau of Labor statistics, Florida’s 9.4 percent unemployment rate in February, for example, was significantly higher than the 8.2 percent rate for the nation as a whole. Clearly, they said, unemployment helped fuel foreclosures in Florida.
“We cannot begin to talk recovery in Central Florida’s housing market without first addressing the region’s economic development as a whole,” said Dr. Sean Snaith, director of the University of Central Florida’s Institute for Economic Competitiveness. “Housing and the labor market are the Siamese twins of Florida’s economy. When unemployment rates rise, so do foreclosures. When people have paychecks, they have money to buy houses. Until the labor market stabilizes, economic recovery in Florida will continue to be slow.”
The Housing Commission also released a study by the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley, entitled, “A Comparative Context for U.S. Housing Policy: Housing Markets and the Financial Crisis in Europe, Asia and Beyond.” The study examines how local economic, national and global financial forces shape housing markets in the United States and around the world. It looks at popular mortgage products in other countries, such as adjustable rate mortgages and non-recourse loans, to see whether U.S. homebuyers should consider shifting homebuyer financing in some way to avoid a future market collapse.
According to the worldwide study, some countries had early interventions that helped keep the housing problem from reaching a crisis level – ones that required less government intervention down the road. Successful responses in other countries generally involved more conservative lending practices and stronger regulations.
However, the report found that no country is completely immune from irrational behavior. Still, recent events such as the current housing crisis tend to dampen similar irrational behavior in the near future.
“The way different countries handled the global financial crisis … illustrates the tradeoffs between tightly regulating markets, which offers more stability but narrower choices, and more dynamic systems that are riskier for borrowers and lenders,” said Dr. Cynthia Kroll, one of the report’s authors.
“Moving forward, policymakers will have to weigh these pros and cons and determine whether it is possible to strike an optimal balance in housing policy that would retain its dynamic features and encourage mobility, while still protecting homeowners and borrowers … and lenders,” said Dr. Ashok Bardhan, another of the report’s authors.
Source: Florida Realtors®
The forum, held at Rollins College, featured former U.S. Senator and Department of Housing and Urban Development Secretary (HUD) Mel Martinez, co-chair of the BPC Housing Commission and vice chairman of JPMorgan Chase & Co.
It also included regional housing experts from Central Florida. According to CoreLogic’s February foreclosure report, the Orlando and Tampa metros tied for the state’s highest foreclosure rate – 12.3 percent (1 in 8) of homes with a mortgage in some stage of the foreclosure process.
The forum’s goal was to look at the way national and state policies impact a single region. Some of the discussion was based on new research from the University of California, Berkeley, comparing the U.S. housing finance system to other countries.
“By studying both the real-world effects of this nation’s financial crisis on regional housing markets and how other countries handled similar crises, we can examine ways to spur our own economic recovery and learn effective strategies to better handle the temptations of another hot housing market in the future,” said Mel Martinez.
Speakers pointed out that many factors influence regional housing markets, including demographics, income levels, local economic growth and job creation. According to the U.S. Bureau of Labor statistics, Florida’s 9.4 percent unemployment rate in February, for example, was significantly higher than the 8.2 percent rate for the nation as a whole. Clearly, they said, unemployment helped fuel foreclosures in Florida.
“We cannot begin to talk recovery in Central Florida’s housing market without first addressing the region’s economic development as a whole,” said Dr. Sean Snaith, director of the University of Central Florida’s Institute for Economic Competitiveness. “Housing and the labor market are the Siamese twins of Florida’s economy. When unemployment rates rise, so do foreclosures. When people have paychecks, they have money to buy houses. Until the labor market stabilizes, economic recovery in Florida will continue to be slow.”
The Housing Commission also released a study by the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley, entitled, “A Comparative Context for U.S. Housing Policy: Housing Markets and the Financial Crisis in Europe, Asia and Beyond.” The study examines how local economic, national and global financial forces shape housing markets in the United States and around the world. It looks at popular mortgage products in other countries, such as adjustable rate mortgages and non-recourse loans, to see whether U.S. homebuyers should consider shifting homebuyer financing in some way to avoid a future market collapse.
According to the worldwide study, some countries had early interventions that helped keep the housing problem from reaching a crisis level – ones that required less government intervention down the road. Successful responses in other countries generally involved more conservative lending practices and stronger regulations.
However, the report found that no country is completely immune from irrational behavior. Still, recent events such as the current housing crisis tend to dampen similar irrational behavior in the near future.
“The way different countries handled the global financial crisis … illustrates the tradeoffs between tightly regulating markets, which offers more stability but narrower choices, and more dynamic systems that are riskier for borrowers and lenders,” said Dr. Cynthia Kroll, one of the report’s authors.
“Moving forward, policymakers will have to weigh these pros and cons and determine whether it is possible to strike an optimal balance in housing policy that would retain its dynamic features and encourage mobility, while still protecting homeowners and borrowers … and lenders,” said Dr. Ashok Bardhan, another of the report’s authors.
Source: Florida Realtors®
FEMA: Fla. flood insurance in jeopardy
An attempt by Florida lawmakers to jumpstart the construction industry by making it easier to get building permits may inadvertently override rules set up by the National Flood Insurance Program (NFIP) and force homeowners and commercial developers out of the program. Without flood insurance, many owners cannot get or even retain a mortgage, though Florida officials have two possible solutions for the problem.
The problem stems from a previously non-controversial bill passed this year by the Florida Legislature, HB 503. The bill, which Gov. Rick Scott has not yet signed into law, would speed up the permit process by streamlining it. Currently, some permits cannot be issued unless other permits – local, state and federal – are issued first. If the bill becomes law, local or state permits could be issued without a requirement that other permits be secured first.
However, FEMA says it won’t give flood insurance policies to communities that don’t follow its rules, some of which exclude new development in flood-prone zones, mandate certain elevations and outline rules for foundations. The bill, if enacted, could allow developers to begin construction even if they’re not following FEMA’s rules.
“Florida is a low-lying peninsula with a lot of land at or below sea level,” said Eli Lehrer, who analyzes flood insurance for The Heartland Institute, a think tank with offices in Washington and Tallahassee. “And right now, the National Flood Insurance Program is the only game in town.”
A number of groups are now calling on Scott to veto HB 503, and the governor says he’ll review the bill before deciding what to do, according to a spokesperson.
“There are 459 communities participating in the NFIP in Florida and there are 2,059,371 flood insurance policies in the state with just over $471 billion in flood coverage.” FEMA Regional Administrator Major P. May said in an earlier letter. The new legislation “may jeopardize the state’s voluntary participation in the NFIP.”
Even if the Scott signs the bill, state officials have offered FEMA a possible solution. While local and state permits might still be fast-tracked, a new rule could mandate that construction not begin until a developer has met all federal and state requirements. The officials say this would allow fast-track permitting to go forward without breaking FEMA’s rules for coverage.
FEMA has said that compromise might be okay – providing the state and local governments enforce it effectively.
“We are confident that any potential issues with this bill in regard to the flood insurance program will be worked out between FEMA and the state, and we would not see any disruption,” said William Booher, external affairs director of the Florida Division of Emergency Management.
Source: Florida Realtors®
The problem stems from a previously non-controversial bill passed this year by the Florida Legislature, HB 503. The bill, which Gov. Rick Scott has not yet signed into law, would speed up the permit process by streamlining it. Currently, some permits cannot be issued unless other permits – local, state and federal – are issued first. If the bill becomes law, local or state permits could be issued without a requirement that other permits be secured first.
However, FEMA says it won’t give flood insurance policies to communities that don’t follow its rules, some of which exclude new development in flood-prone zones, mandate certain elevations and outline rules for foundations. The bill, if enacted, could allow developers to begin construction even if they’re not following FEMA’s rules.
“Florida is a low-lying peninsula with a lot of land at or below sea level,” said Eli Lehrer, who analyzes flood insurance for The Heartland Institute, a think tank with offices in Washington and Tallahassee. “And right now, the National Flood Insurance Program is the only game in town.”
A number of groups are now calling on Scott to veto HB 503, and the governor says he’ll review the bill before deciding what to do, according to a spokesperson.
“There are 459 communities participating in the NFIP in Florida and there are 2,059,371 flood insurance policies in the state with just over $471 billion in flood coverage.” FEMA Regional Administrator Major P. May said in an earlier letter. The new legislation “may jeopardize the state’s voluntary participation in the NFIP.”
Even if the Scott signs the bill, state officials have offered FEMA a possible solution. While local and state permits might still be fast-tracked, a new rule could mandate that construction not begin until a developer has met all federal and state requirements. The officials say this would allow fast-track permitting to go forward without breaking FEMA’s rules for coverage.
FEMA has said that compromise might be okay – providing the state and local governments enforce it effectively.
“We are confident that any potential issues with this bill in regard to the flood insurance program will be worked out between FEMA and the state, and we would not see any disruption,” said William Booher, external affairs director of the Florida Division of Emergency Management.
Source: Florida Realtors®
Is housing bubble possible again? Experts disagree
There is little to prevent another housing run-up and subsequent bust as long as there are people who want to get rich quick, said the chief economist of AIG during a business conference Tuesday at the Palm Beach County Convention Center.
Ardavan Mobasheri, who spoke to about 100 people gathered for a real estate discussion at the International Economic Forum of the Americas, said the financial crisis that began in 2008 can “easily trace its roots to the excesses of the housing market” but can’t as easily be stopped from happening again.
“So long as individuals have the liberty and freedom to be greedy, the speculative bubbles will be inevitable, and we’ll have to deal with the outcome of the bursting of that bubble,” Mobasheri said. “There is no measure we can take to prevent investors who want in a short period of time to become rich.”
AIG, a multinational insurance company, was a major contributor to the economic crisis when it imploded in September 2008. A credit rating downgrade required it to put up billions of dollars in cash collateral, which triggered a lack of liquidity. Its federal bailout package of $182.3 billion was the single largest of any company in U.S. history. AIG has paid back billions of dollars. Its remaining debt to the Troubled Asset Relief Program is about $35.7 billion.
Although there is no cure for greed, changes in mortgage application requirements and underwriting guidelines will help thwart a repeat of the multitude of bad loans granted during the housing boom, said Lawrence Yun, chief economist for the National Association of Realtors, who spoke during the same session as Mobasheri.
“Back in 2005 investors came in with exotic mortgages and liar loans, but that’s not the case today,” Yun said. “These investors are coming in solidly with cash deals.”
Yun was optimistic about a housing recovery, predicting Florida existing-home prices will jump 10 percent by the end of 2012.
Several Realtors in the session said bidding wars are again commonplace and that they are having trouble finding homes for traditional buyers, especially those getting a loan instead of using cash. One Realtor told the panelists she worries that another mini-bubble is forming.
“The home is on the market for $115,000 and people are bidding $150,000,” she said. “It’s not a fair game for people trying to purchase with financing.”
In February, there was a six-month supply of homes for sale in Palm Beach County, down from nearly 14 months during the same month last year, according to the Realtors Association of the Palm Beaches.
Yun’s pricing prediction was buoyed Tuesday by a Realtor.com report that found Palm Beach County listing prices were up 15 percent to $225,000 in March compared to the same time in 2011. Nationally, the list price was up 5.5 percent.
A backlog of homes in foreclosure will eventually expand the housing supply, a development welcomed by Florida Realtors President Summer Greene.
“When you put a foreclosure on the market you have, two, three, four offers coming in,” she said.
While real estate may be bouncing back, other speakers Tuesday were more reluctant to forecast a rapid overall fiscal recovery.
“Risks remain high and the path forward is shrouded in uncertainty,” said Lisa Shalett, chief investment officer of Merrill Lynch Global Wealth Management, during her keynote speech. “The global economy is far from out of the woods.”
Source: The Palm Beach Post (West Palm Beach, Fla.), Kimberly Miller. Distributed by MCT Information Services.
Ardavan Mobasheri, who spoke to about 100 people gathered for a real estate discussion at the International Economic Forum of the Americas, said the financial crisis that began in 2008 can “easily trace its roots to the excesses of the housing market” but can’t as easily be stopped from happening again.
“So long as individuals have the liberty and freedom to be greedy, the speculative bubbles will be inevitable, and we’ll have to deal with the outcome of the bursting of that bubble,” Mobasheri said. “There is no measure we can take to prevent investors who want in a short period of time to become rich.”
AIG, a multinational insurance company, was a major contributor to the economic crisis when it imploded in September 2008. A credit rating downgrade required it to put up billions of dollars in cash collateral, which triggered a lack of liquidity. Its federal bailout package of $182.3 billion was the single largest of any company in U.S. history. AIG has paid back billions of dollars. Its remaining debt to the Troubled Asset Relief Program is about $35.7 billion.
Although there is no cure for greed, changes in mortgage application requirements and underwriting guidelines will help thwart a repeat of the multitude of bad loans granted during the housing boom, said Lawrence Yun, chief economist for the National Association of Realtors, who spoke during the same session as Mobasheri.
“Back in 2005 investors came in with exotic mortgages and liar loans, but that’s not the case today,” Yun said. “These investors are coming in solidly with cash deals.”
Yun was optimistic about a housing recovery, predicting Florida existing-home prices will jump 10 percent by the end of 2012.
Several Realtors in the session said bidding wars are again commonplace and that they are having trouble finding homes for traditional buyers, especially those getting a loan instead of using cash. One Realtor told the panelists she worries that another mini-bubble is forming.
“The home is on the market for $115,000 and people are bidding $150,000,” she said. “It’s not a fair game for people trying to purchase with financing.”
In February, there was a six-month supply of homes for sale in Palm Beach County, down from nearly 14 months during the same month last year, according to the Realtors Association of the Palm Beaches.
Yun’s pricing prediction was buoyed Tuesday by a Realtor.com report that found Palm Beach County listing prices were up 15 percent to $225,000 in March compared to the same time in 2011. Nationally, the list price was up 5.5 percent.
A backlog of homes in foreclosure will eventually expand the housing supply, a development welcomed by Florida Realtors President Summer Greene.
“When you put a foreclosure on the market you have, two, three, four offers coming in,” she said.
While real estate may be bouncing back, other speakers Tuesday were more reluctant to forecast a rapid overall fiscal recovery.
“Risks remain high and the path forward is shrouded in uncertainty,” said Lisa Shalett, chief investment officer of Merrill Lynch Global Wealth Management, during her keynote speech. “The global economy is far from out of the woods.”
Source: The Palm Beach Post (West Palm Beach, Fla.), Kimberly Miller. Distributed by MCT Information Services.
US home prices by city, at a glance
After steady declines, U.S. home prices rose slightly in February and March in some major metro areas, according to CoreLogic and Trulia, two real estate data firms. Price gains have occurred in many hard-hit areas, such as Miami and Phoenix, while losses have been reported in cities ranging from Las Vegas to Seattle to Wilmington, Del.
Here’s a look at some of the cities with the sharpest home price gains and losses over the past year, according to Trulia:
Best metro areas year-over-year change
Cape Coral-Fort Myers, Fla.: 14.8%
Miami: 14.1%
Phoenix: 13.2%
Pittsburgh: 9.2%
Little Rock, Ark.: 6.7%
Orlando: 6.3%
North Port-Bradenton-Sarasota, Fla.: 6.2%
Palm Bay-Melbourne-Titusville, Fla.: 6.1%
West Palm Beach, Fla.: 5.8%
Warren-Troy-Farmington Hills, Mich.: 5.6%
Worst metro areas year-over-year change
Tacoma, Wash.: -11.9%
Seattle: -9.1%
Sacramento, Calif.: -8.3%
Las Vegas: -7.7%
Wilmington, Del.: -7.7%
Columbia, S.C.: -7.3%
Cleveland: -6.9%
Fresno, Calif.: -6.8%
Milwaukee: -6.7%
Allentown, Pa.: -6.7%
Source: The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Here’s a look at some of the cities with the sharpest home price gains and losses over the past year, according to Trulia:
Best metro areas year-over-year change
Cape Coral-Fort Myers, Fla.: 14.8%
Miami: 14.1%
Phoenix: 13.2%
Pittsburgh: 9.2%
Little Rock, Ark.: 6.7%
Orlando: 6.3%
North Port-Bradenton-Sarasota, Fla.: 6.2%
Palm Bay-Melbourne-Titusville, Fla.: 6.1%
West Palm Beach, Fla.: 5.8%
Warren-Troy-Farmington Hills, Mich.: 5.6%
Worst metro areas year-over-year change
Tacoma, Wash.: -11.9%
Seattle: -9.1%
Sacramento, Calif.: -8.3%
Las Vegas: -7.7%
Wilmington, Del.: -7.7%
Columbia, S.C.: -7.3%
Cleveland: -6.9%
Fresno, Calif.: -6.8%
Milwaukee: -6.7%
Allentown, Pa.: -6.7%
Source: The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
U.S. home-buying season finally signaling a recovery
Five years after the U.S. housing bust sent sales and prices plunging, the spring home-buying season is pointing to a long-awaited recovery.
Reduced prices, record-low mortgage rates, higher rents and an improving job market appear to be emboldening many would-be buyers. Open houses are drawing crowds. A wave of foreclosures is leading investors to grab bargain-priced homes.
And many people seem to have concluded that prices won’t drop much further. In some areas, prices have begun to tick up.
Interviews with more than two dozen potential buyers, sellers, brokers, Realtors and economists suggest that confidence is up and that sales will move slowly but steadily higher.
“The biggest challenge that we’ve had over the past four years is fear – fear that the economy is collapsing, that property values are collapsing, that the world is coming to an end,” says Mark Prather, a broker at ERA Buy America Real Estate in La Palma, Calif. “The fear factor is all but gone.”
Prather says the number of prospective buyers who contacted his company last month was about 35 percent more than a year ago.
The spring buying season got an early lift-off from an uncommonly warm January and February – a winter that was the best for sales of previously occupied homes in five years. Permits to build houses and apartments rose in February to their highest level since 2008.
“People feel much more confident,” said Steve Brown, co-owner of real estate company Irongate Inc. of Dayton, Ohio, who says sales jumped more than 16 percent for the first two months of 2012 over the same period last year. “There’s no question there’s a good feeling in the marketplace.”
Some analysts detected a slight uptick in prices for February and March. CoreLogic, a real estate data firm, says prices for homes not at risk of foreclosure – about two thirds of the market – rose 0.7 percent in February. It was the first increase in four years. Price gains occurred both in some hard-hit areas, such as Phoenix, and some still-thriving areas like New York and Washington.
In Miami, the average sales price has surged 14 percent in the past year, according to Trulia, a real estate data firm. In Phoenix, the average is up 13 percent, in Pittsburgh 9 percent.
Earnings reports Friday from two big banks suggested that more people are taking out mortgages. JPMorgan Chase issued 6 percent more mortgages from January through March than it did a year ago and got 33 percent more applications. Wells Fargo issued 54 percent more mortgages and received 84 percent more applications.
Still, few think the housing industry is nearing a return to full health. For that to happen, a robust job market would be needed. More hiring would give more people the money and job security to buy. That would help boost sales and prices.
Such areas as Atlanta, suburban Las Vegas and central California show few signs of recovery. And in some others – from Seattle to Cleveland – home prices have continued to slip. The average has dropped 9 percent in Seattle over the past 12 months and 7 percent in Cleveland.
But in many parts of the country, including thriving areas of Boston, Dallas and Seattle, confidence is rising along with prices. Among the reasons:
• Hiring has strengthened. Each month from January through March generated a solid average of 212,000 jobs. Unemployment has sunk from 9.1 percent in August to 8.2 percent. More job security tends to embolden more people to invest in a home. In Dayton, for example, the University of Dayton is hiring for a new engineering research center, General Electric is hiring hundreds of contractors and the nearby Wright-Patterson Air Force Base is expanding.
• Loans remain cheap. The average rate on a 30-year fixed-rate mortgage is 3.88 percent. That’s just above the 3.87 percent reached in February – the lowest since long-term mortgages were first offered in the 1950s.
• Homes are more affordable. Nationwide, home prices are down 34 percent since 2006.
• Americans are more confident. The Thomson Reuters/University of Michigan’s survey of consumer confidence rose in March for a seventh straight month to its highest level in 13 months.
Also fueling interest are signs that home values are finally stabilizing. One factor that had slowed purchases after the housing boom ended in late 2006 was fear that a home would lose value soon after its purchase.
But the price declines slowed toward the end of 2011, according to the Wells Fargo/Case-Shiller home price index. And CoreLogic says the average price nationally rose slightly in January and February.
“Unless prices went down, I don’t think we would have ever been able to afford a home,” said John Henschel, 37, an information technology consultant who will move with his family into a five-bedroom house in Wheaton, Ill., in May. “But we feel like prices aren’t going to go back down. We’re confident. So why not?”
When the landlord on their Chicago apartment told them he was selling it, Henschel and his wife decided it was time to buy. The home they bought for nearly $450,000 could have fetched more than $570,000 six years ago, according to housing website Zillow.com.
On a rainy Saturday this month in long-struggling Riverside, Calif., 12 families visited a three-bedroom house priced at $199,999. Ten others stopped by in the first hour of the next day’s open house. By the end of the weekend, two buyers had made offers.
“We’re seeing more buyer activity this spring than we’ve seen in probably four years,” said Liane Thomas, the broker who was showing the house.
Prices in the area could rise in coming months because the supply of homes for sale in Riverside is down – from nearly 19,000 last year to 13,000 in February.
Many potential buyers are hunting for deals in places that were especially hurt by the housing bust. In Sarasota, Fla., which boasts wide sugar-sand beaches, condos are selling for an average of $325,000, compared with more than $550,000 at the height of the boom, said Marc Rasmussen, a broker.
Homes nearing foreclosure account for nearly half of all properties on the market, according to the Campbell/Inside Mortgage Finance HousingPulse survey. That compares with 10 percent in healthy economies. Many are receiving multiple offers because their prices have plunged.
In Phoenix, a foreclosed home offered for $77,000 that had been vandalized received 21 offers last month at or near the asking price – roughly the price it sold for. The average time a home sits on the market in Phoenix has dropped from 114 days last year to 90 days, according to the Cromford Report, a data research group.
In suburban Washington, D.C., Rory Obletz and his wife have been saving to buy after renting for six years. Obletz, 27, failed in two previous bids for single-family homes. He’s hoping a third bid – about $10,000 above the asking price of $399,000 for a home in Silver Spring, Md. – will succeed this month.
“One home we went to, it was under contract by the time we walked out of the house,” Obletz said. “If you really want to get something, you don’t have a lot of time to think about it.”
It isn’t just bargain-hunting families seeking homes. Investors are increasingly buying single-family houses, fixing them up and re-selling them or converting them into rentals.
Investors are out-bidding many first-time buyers on cheaper homes in particular. Sales of homes between $100,000 and $250,000 have jumped nearly 19 percent over the past year. For homes between $250,000 and $500,000, sales are up 13 percent.
More expensive homes, from $500,000 to $750,000, whose sales tend to contribute the most to the U.S. economy, are up a smaller 6.7 percent.
For buyers seeking to move up to a bigger home or to relocate, the toughest challenge is often selling the home they’re in. According to CoreLogic, about 11 million homeowners are “underwater” – they owe more on their mortgage than their home is worth.
Yet for first-timers like Obletz, who have been saving and watching as homes have become more affordable, the time feels right.
“Rent is a little more expensive, and we have the money, so we might as well jump on it,” he says.
Source: The Associated Press, Derek Kravitz and Alex Veiga (AP Real Estate Writers). All rights reserved.
Reduced prices, record-low mortgage rates, higher rents and an improving job market appear to be emboldening many would-be buyers. Open houses are drawing crowds. A wave of foreclosures is leading investors to grab bargain-priced homes.
And many people seem to have concluded that prices won’t drop much further. In some areas, prices have begun to tick up.
Interviews with more than two dozen potential buyers, sellers, brokers, Realtors and economists suggest that confidence is up and that sales will move slowly but steadily higher.
“The biggest challenge that we’ve had over the past four years is fear – fear that the economy is collapsing, that property values are collapsing, that the world is coming to an end,” says Mark Prather, a broker at ERA Buy America Real Estate in La Palma, Calif. “The fear factor is all but gone.”
Prather says the number of prospective buyers who contacted his company last month was about 35 percent more than a year ago.
The spring buying season got an early lift-off from an uncommonly warm January and February – a winter that was the best for sales of previously occupied homes in five years. Permits to build houses and apartments rose in February to their highest level since 2008.
“People feel much more confident,” said Steve Brown, co-owner of real estate company Irongate Inc. of Dayton, Ohio, who says sales jumped more than 16 percent for the first two months of 2012 over the same period last year. “There’s no question there’s a good feeling in the marketplace.”
Some analysts detected a slight uptick in prices for February and March. CoreLogic, a real estate data firm, says prices for homes not at risk of foreclosure – about two thirds of the market – rose 0.7 percent in February. It was the first increase in four years. Price gains occurred both in some hard-hit areas, such as Phoenix, and some still-thriving areas like New York and Washington.
In Miami, the average sales price has surged 14 percent in the past year, according to Trulia, a real estate data firm. In Phoenix, the average is up 13 percent, in Pittsburgh 9 percent.
Earnings reports Friday from two big banks suggested that more people are taking out mortgages. JPMorgan Chase issued 6 percent more mortgages from January through March than it did a year ago and got 33 percent more applications. Wells Fargo issued 54 percent more mortgages and received 84 percent more applications.
Still, few think the housing industry is nearing a return to full health. For that to happen, a robust job market would be needed. More hiring would give more people the money and job security to buy. That would help boost sales and prices.
Such areas as Atlanta, suburban Las Vegas and central California show few signs of recovery. And in some others – from Seattle to Cleveland – home prices have continued to slip. The average has dropped 9 percent in Seattle over the past 12 months and 7 percent in Cleveland.
But in many parts of the country, including thriving areas of Boston, Dallas and Seattle, confidence is rising along with prices. Among the reasons:
• Hiring has strengthened. Each month from January through March generated a solid average of 212,000 jobs. Unemployment has sunk from 9.1 percent in August to 8.2 percent. More job security tends to embolden more people to invest in a home. In Dayton, for example, the University of Dayton is hiring for a new engineering research center, General Electric is hiring hundreds of contractors and the nearby Wright-Patterson Air Force Base is expanding.
• Loans remain cheap. The average rate on a 30-year fixed-rate mortgage is 3.88 percent. That’s just above the 3.87 percent reached in February – the lowest since long-term mortgages were first offered in the 1950s.
• Homes are more affordable. Nationwide, home prices are down 34 percent since 2006.
• Americans are more confident. The Thomson Reuters/University of Michigan’s survey of consumer confidence rose in March for a seventh straight month to its highest level in 13 months.
Also fueling interest are signs that home values are finally stabilizing. One factor that had slowed purchases after the housing boom ended in late 2006 was fear that a home would lose value soon after its purchase.
But the price declines slowed toward the end of 2011, according to the Wells Fargo/Case-Shiller home price index. And CoreLogic says the average price nationally rose slightly in January and February.
“Unless prices went down, I don’t think we would have ever been able to afford a home,” said John Henschel, 37, an information technology consultant who will move with his family into a five-bedroom house in Wheaton, Ill., in May. “But we feel like prices aren’t going to go back down. We’re confident. So why not?”
When the landlord on their Chicago apartment told them he was selling it, Henschel and his wife decided it was time to buy. The home they bought for nearly $450,000 could have fetched more than $570,000 six years ago, according to housing website Zillow.com.
On a rainy Saturday this month in long-struggling Riverside, Calif., 12 families visited a three-bedroom house priced at $199,999. Ten others stopped by in the first hour of the next day’s open house. By the end of the weekend, two buyers had made offers.
“We’re seeing more buyer activity this spring than we’ve seen in probably four years,” said Liane Thomas, the broker who was showing the house.
Prices in the area could rise in coming months because the supply of homes for sale in Riverside is down – from nearly 19,000 last year to 13,000 in February.
Many potential buyers are hunting for deals in places that were especially hurt by the housing bust. In Sarasota, Fla., which boasts wide sugar-sand beaches, condos are selling for an average of $325,000, compared with more than $550,000 at the height of the boom, said Marc Rasmussen, a broker.
Homes nearing foreclosure account for nearly half of all properties on the market, according to the Campbell/Inside Mortgage Finance HousingPulse survey. That compares with 10 percent in healthy economies. Many are receiving multiple offers because their prices have plunged.
In Phoenix, a foreclosed home offered for $77,000 that had been vandalized received 21 offers last month at or near the asking price – roughly the price it sold for. The average time a home sits on the market in Phoenix has dropped from 114 days last year to 90 days, according to the Cromford Report, a data research group.
In suburban Washington, D.C., Rory Obletz and his wife have been saving to buy after renting for six years. Obletz, 27, failed in two previous bids for single-family homes. He’s hoping a third bid – about $10,000 above the asking price of $399,000 for a home in Silver Spring, Md. – will succeed this month.
“One home we went to, it was under contract by the time we walked out of the house,” Obletz said. “If you really want to get something, you don’t have a lot of time to think about it.”
It isn’t just bargain-hunting families seeking homes. Investors are increasingly buying single-family houses, fixing them up and re-selling them or converting them into rentals.
Investors are out-bidding many first-time buyers on cheaper homes in particular. Sales of homes between $100,000 and $250,000 have jumped nearly 19 percent over the past year. For homes between $250,000 and $500,000, sales are up 13 percent.
More expensive homes, from $500,000 to $750,000, whose sales tend to contribute the most to the U.S. economy, are up a smaller 6.7 percent.
For buyers seeking to move up to a bigger home or to relocate, the toughest challenge is often selling the home they’re in. According to CoreLogic, about 11 million homeowners are “underwater” – they owe more on their mortgage than their home is worth.
Yet for first-timers like Obletz, who have been saving and watching as homes have become more affordable, the time feels right.
“Rent is a little more expensive, and we have the money, so we might as well jump on it,” he says.
Source: The Associated Press, Derek Kravitz and Alex Veiga (AP Real Estate Writers). All rights reserved.
Subscribe to:
Posts (Atom)