The housing industry has blamed banks’ tight mortgage standards as preventing many potential buyers from being able to purchase a home. But a new survey by the Office of the Comptroller of the Currency shows that more banks are finally easing up on their standards, which may open the doors for more buyers to qualify for a mortgage.
About a quarter of the banks reported tighter underwriting standards for home loans, which is down from 40 percent last year, according to the survey of 87 of the largest banks. Ten percent of the banks surveyed say they’ve eased their standards on mortgages, compared to only 8 percent who said that last year.
"This year's survey showed the continued normal progression toward stable or easing underwriting standards as the economic environment stabilizes," says John Lyons, chief national bank examiner at the OCC. "Examiners will be focusing on underwriting standards as banks ease standards to improve margins and compete for limited good loans."
Source: “Fewer Banks Tighten Mortgage Underwriting Standards,” HousingWire (June 28, 2012)
Friday, June 29, 2012
2012 Fla. laws effective July 1
Insurance, condo and economic incentive bills passed by the 2012 Florida Legislature become laws on Sunday. The following bills were approved with a July 1, 2012, effective date:
• Savings for private property insurers. Following a major storm that overtaxes the funds of Citizens Property Insurance – the Florida-owned property insurer – current law requires private insurers to pay Citizens up to 18 percent of their premiums within 30 days of being assessed. The bill effective Sunday, HB 1127, allows private insurers to focus on homeowners following a disaster and pay money to Citizens later. Florida Realtors backed the bill in hopes it would encourage more private insurance companies to start doing business in the state.
• Challenging Citizens’ replacement costs. Critics said the state-owned insurer over-valued property and, as a result, charged higher premiums. In January, following discussions with Florida Realtors and policyholders concerned about unreasonably high replacement cost estimates, Citizens Property Insurance Corp. agreed to consider valuation sources other than their current vendor, 360Value software. Starting Sunday, homeowners officially have three options for contesting replacement costs issued by Citizens under HB 1101, including valuations prepared by real estate appraisers licensed under Chapter 475, F.S.
• Boosting condo sales. In 2010, the Florida Legislature made it easier for investors to buy blocks of condos by amending laws to protect bulk buyers from some liabilities faced by condo developers. Those protections originally expired on July 1, 2012, but a push by the Department of Business and Professional Regulation (DBPR) has extended those protections for an additional three years under HB 517.
• Limiting AMC hold harmless agreements. A second bill backed by DBPR, HB 887, prohibits Appraisal Management Companies (AMCs) from requiring appraisers to sign hold harmless agreements as a condition of doing business.
• Developing economic incentives. A large tax bill, HB 7087, offers some relief to real estate businesses by increasing the corporate income tax exemption from $25,000 to $50,000.
Source: Florida Realtors®
• Savings for private property insurers. Following a major storm that overtaxes the funds of Citizens Property Insurance – the Florida-owned property insurer – current law requires private insurers to pay Citizens up to 18 percent of their premiums within 30 days of being assessed. The bill effective Sunday, HB 1127, allows private insurers to focus on homeowners following a disaster and pay money to Citizens later. Florida Realtors backed the bill in hopes it would encourage more private insurance companies to start doing business in the state.
• Challenging Citizens’ replacement costs. Critics said the state-owned insurer over-valued property and, as a result, charged higher premiums. In January, following discussions with Florida Realtors and policyholders concerned about unreasonably high replacement cost estimates, Citizens Property Insurance Corp. agreed to consider valuation sources other than their current vendor, 360Value software. Starting Sunday, homeowners officially have three options for contesting replacement costs issued by Citizens under HB 1101, including valuations prepared by real estate appraisers licensed under Chapter 475, F.S.
• Boosting condo sales. In 2010, the Florida Legislature made it easier for investors to buy blocks of condos by amending laws to protect bulk buyers from some liabilities faced by condo developers. Those protections originally expired on July 1, 2012, but a push by the Department of Business and Professional Regulation (DBPR) has extended those protections for an additional three years under HB 517.
• Limiting AMC hold harmless agreements. A second bill backed by DBPR, HB 887, prohibits Appraisal Management Companies (AMCs) from requiring appraisers to sign hold harmless agreements as a condition of doing business.
• Developing economic incentives. A large tax bill, HB 7087, offers some relief to real estate businesses by increasing the corporate income tax exemption from $25,000 to $50,000.
Source: Florida Realtors®
30-year mortgage rate still at record 3.66%
The average U.S. rate on the 30-year fixed mortgage stayed this week at the lowest level on record. Cheap mortgages have helped drive a modest housing recovery and could give the broader economy a jolt at a time when the job market is weak.
Mortgage buyer Freddie Mac says the average on the 30-year loan was 3.66 percent. That’s unchanged from last week and the lowest since long-term mortgages began in the 1950s.
The average rate on the 15-year mortgage, a popular refinancing option, slipped to 2.94 percent. That’s down from 2.95 percent last week and matches the record-low 2.94 percent reached three weeks ago.
The rate on the 30-year loan has been below 4 percent since December.
Cheap mortgages have provided a lift to the long-suffering housing market. Sales of new and previously occupied homes are up from the same time last year. Home prices are rising in most markets. And homebuilders are starting more projects.
The number of people who signed contracts to buy previously occupied homes rose in May, matching the fastest pace in two years, the National Association of Realtors reported Wednesday. That suggests Americans are growing more confident in the market.
Low rates could also provide some help to the economy if more people refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend. Many homeowners use the savings on renovations, furniture, appliances and other improvements, which help drive growth.
Still, the pace of home sales remains well below healthy levels. Many people are still having difficulty qualifying for home loans or can’t afford larger downpayments required by banks.
And the sluggish job market could deter some would-be buyers from making a purchase this year. The U.S. economy created only 69,000 jobs in May, the fewest in a year. The unemployment rate rose to 8.2 percent last month, up from 8.1 percent in April.
Mortgage rates have been dropping because they tend to track the yield on the 10-year Treasury note. Uncertainty about how Europe will resolve its debt crisis has led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield falls.
And the yield will likely fall even lower now that the Federal Reserve has said it will continue selling short-term Treasurys and using the proceeds to buy longer-term Treasurys. That goal of the program is to drive long-term interest rates lower to encourage more borrowing and spending.
To calculate average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.
The average 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.
The average fee for 30-year loans was 0.7 point, unchanged from last week. The fee for 15-year loans also was 0.7 point, up from 0.6.
The average rate on one-year adjustable rate mortgages was unchanged from last week at 2.74 percent. The fee for one-year adjustable rate loans slipped to 0.4 point from 0.5 point.
Source: The Associated Press, Marcy Gordon, AP business writer. All rights reserved.
Mortgage buyer Freddie Mac says the average on the 30-year loan was 3.66 percent. That’s unchanged from last week and the lowest since long-term mortgages began in the 1950s.
The average rate on the 15-year mortgage, a popular refinancing option, slipped to 2.94 percent. That’s down from 2.95 percent last week and matches the record-low 2.94 percent reached three weeks ago.
The rate on the 30-year loan has been below 4 percent since December.
Cheap mortgages have provided a lift to the long-suffering housing market. Sales of new and previously occupied homes are up from the same time last year. Home prices are rising in most markets. And homebuilders are starting more projects.
The number of people who signed contracts to buy previously occupied homes rose in May, matching the fastest pace in two years, the National Association of Realtors reported Wednesday. That suggests Americans are growing more confident in the market.
Low rates could also provide some help to the economy if more people refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend. Many homeowners use the savings on renovations, furniture, appliances and other improvements, which help drive growth.
Still, the pace of home sales remains well below healthy levels. Many people are still having difficulty qualifying for home loans or can’t afford larger downpayments required by banks.
And the sluggish job market could deter some would-be buyers from making a purchase this year. The U.S. economy created only 69,000 jobs in May, the fewest in a year. The unemployment rate rose to 8.2 percent last month, up from 8.1 percent in April.
Mortgage rates have been dropping because they tend to track the yield on the 10-year Treasury note. Uncertainty about how Europe will resolve its debt crisis has led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield falls.
And the yield will likely fall even lower now that the Federal Reserve has said it will continue selling short-term Treasurys and using the proceeds to buy longer-term Treasurys. That goal of the program is to drive long-term interest rates lower to encourage more borrowing and spending.
To calculate average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.
The average 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.
The average fee for 30-year loans was 0.7 point, unchanged from last week. The fee for 15-year loans also was 0.7 point, up from 0.6.
The average rate on one-year adjustable rate mortgages was unchanged from last week at 2.74 percent. The fee for one-year adjustable rate loans slipped to 0.4 point from 0.5 point.
Source: The Associated Press, Marcy Gordon, AP business writer. All rights reserved.
Thursday, June 28, 2012
Fewer Home Owners Late on Mortgage Payments
The number of home owners with severely delinquent mortgages — 90-plus days past due or in foreclosure — fell 37 percent in May compared to its peak in January 2010, according to a new report out by Equifax. Seventy percent of those delinquencies are loans opened between 2005 through 2007, Equifax notes in its May National Consumer Credit Trends Report.
"That severe mortgage delinquencies are trending downward is not surprising given generally improving economic conditions," says Amy Crew Cutts, Equifax chief economist. "What is surprising is that even with the foreclosure moratoriums and the slow resolution of foreclosure backlogs, the downward trend has been a steady, consistent drumbeat of recovery. If this pace continues, we expect the volume of severely delinquent mortgage balances to return to mid-2007 levels by the end of 2014."
According to the report, severely delinquent non-agency loans have seen the largest drops. Non-agency severely delinquent loans fell 45 percent in May to $320 million compared to its peak in January 2010 of $580 million. Meanwhile, agency-sourced mortgages — those that are backed by Fannie Mae, Freddie Mac, the Federal Housing Administration, and Veterans Administration — declined 9 percent in May to $130 billion compared to its peak in January 2010 of $142 billion.
The report also showed that mortgage write-offs have dropped 28 percent in May from their peak in 2010. Also, home mortgage balances have fallen 12.5 percent to $8.6 trillion compared to its record-setting $9.8 trillion reached in October 2008.
Source: Equifax
"That severe mortgage delinquencies are trending downward is not surprising given generally improving economic conditions," says Amy Crew Cutts, Equifax chief economist. "What is surprising is that even with the foreclosure moratoriums and the slow resolution of foreclosure backlogs, the downward trend has been a steady, consistent drumbeat of recovery. If this pace continues, we expect the volume of severely delinquent mortgage balances to return to mid-2007 levels by the end of 2014."
According to the report, severely delinquent non-agency loans have seen the largest drops. Non-agency severely delinquent loans fell 45 percent in May to $320 million compared to its peak in January 2010 of $580 million. Meanwhile, agency-sourced mortgages — those that are backed by Fannie Mae, Freddie Mac, the Federal Housing Administration, and Veterans Administration — declined 9 percent in May to $130 billion compared to its peak in January 2010 of $142 billion.
The report also showed that mortgage write-offs have dropped 28 percent in May from their peak in 2010. Also, home mortgage balances have fallen 12.5 percent to $8.6 trillion compared to its record-setting $9.8 trillion reached in October 2008.
Source: Equifax
5 Top Hot Spots for Buying Rental Properties
Rents are on the rise nationwide and investors are looking to cash in. Local Market Monitor recently reviewed 316 housing markets to find which ones offered some of the highest returns on investment potential for single-family rental properties.
The following are the top five markets that emerged from its list as best places to purchase a rental property in the U.S.
1. Las Vegas
Median home price (2012): $122,000
Estimated median home price by 2015: $121,087
Projected annual rent in 2015: $12,829
2. Detroit
Median home price (2012): $78,000
Estimated median home price by 2015: $93,982
Projected annual rent in 2015: $9,016
3. Daytona Beach, Fla.
Median home price (2012): $114,000
Estimated median home price by 2015: $123,282
Projected annual rent in 2015: $11,048
4. Orlando, Fla.
Median home price (2012): $115,000
Estimated median home price by 2015: $150,491
Projected annual rent in 2015: $13,105
5. Warren, Mich.
Median home price (2012): $114,000
Estimated median home price by 2015: $116,706
Projected annual rent in 2015: $9,308
View CNNMoney’s full list of the Top 10 best places to buy rental properties.
Source: “Best Cities to Buy Rental Properties,” CNNMoney (June 2012)
The following are the top five markets that emerged from its list as best places to purchase a rental property in the U.S.
1. Las Vegas
Median home price (2012): $122,000
Estimated median home price by 2015: $121,087
Projected annual rent in 2015: $12,829
2. Detroit
Median home price (2012): $78,000
Estimated median home price by 2015: $93,982
Projected annual rent in 2015: $9,016
3. Daytona Beach, Fla.
Median home price (2012): $114,000
Estimated median home price by 2015: $123,282
Projected annual rent in 2015: $11,048
4. Orlando, Fla.
Median home price (2012): $115,000
Estimated median home price by 2015: $150,491
Projected annual rent in 2015: $13,105
5. Warren, Mich.
Median home price (2012): $114,000
Estimated median home price by 2015: $116,706
Projected annual rent in 2015: $9,308
View CNNMoney’s full list of the Top 10 best places to buy rental properties.
Source: “Best Cities to Buy Rental Properties,” CNNMoney (June 2012)
Lennar’s 2nd-quarter earnings top estimates as builder sees signs of recovery
Miami-based Lennar Corp., a homebuilding giant, reported second-quarter earnings well above Wall Street’s expectations, saying the nation’s battered housing market has “commenced a slow and steady recovery process.”
“I’m increasingly optimistic we’re seeing a real bottom in housing,” Stuart Miller, chief executive officer of Lennar, told analysts in a conference call Wednesday.
“While the downturn was national, the recovery is decidedly very local,” with pockets in the most desirable locations stabilizing and recovering first, while other areas languish, Miller added.
Lennar posted net income of $452.7 million, or $2.06 a diluted share, including a large tax-related gain, for the period ended May 31. That compared with year-ago earnings of $13.8 million, or 7 cents a diluted share. Excluding the tax-related gain, Lennar reported net income of 21 cents a share, beating analysts’ consensus estimate of 17 cents a share.
It was Lennar’s ninth consecutive quarter of profitability.
Second-quarter revenue rose 22 percent to $930.2 million from $764.5 million a year earlier.
Lennar said deliveries of new homes increased 20 percent in the latest quarter, while new orders increased 40 percent. Its operating margin widened to 9.2 percent, the best since the second-quarter of 2006.
Source: The Miami Herald Distributed by McClatchy-Tribune News Service.
“I’m increasingly optimistic we’re seeing a real bottom in housing,” Stuart Miller, chief executive officer of Lennar, told analysts in a conference call Wednesday.
“While the downturn was national, the recovery is decidedly very local,” with pockets in the most desirable locations stabilizing and recovering first, while other areas languish, Miller added.
Lennar posted net income of $452.7 million, or $2.06 a diluted share, including a large tax-related gain, for the period ended May 31. That compared with year-ago earnings of $13.8 million, or 7 cents a diluted share. Excluding the tax-related gain, Lennar reported net income of 21 cents a share, beating analysts’ consensus estimate of 17 cents a share.
It was Lennar’s ninth consecutive quarter of profitability.
Second-quarter revenue rose 22 percent to $930.2 million from $764.5 million a year earlier.
Lennar said deliveries of new homes increased 20 percent in the latest quarter, while new orders increased 40 percent. Its operating margin widened to 9.2 percent, the best since the second-quarter of 2006.
Source: The Miami Herald Distributed by McClatchy-Tribune News Service.
State Farm requests insurance increase
State Farm has requested an average increase of 15 percent on its homeowners policies in Florida, its sixth rate hike request in less than three years.
According to an analysis of the request by the Sun Sentinel, the increase, if approved by the Florida Office of Insurance Regulation, would average 14 percent for single-family owners, 49 percent for renters and 27 percent for condo owners.
State Farm says the actual premium cost for a homeowner will vary, however, because it’s also bringing back a handful of discounts. The biggest one – a 10 percent cut in cost – would be granted owners who also use State Farm for their car insurance, for example. The company also says that a homeowner facing a 14 percent price hike could cut it down to 3 percent by opting for a higher deductible.
According to State Farm, it needs permission to raise prices because its “financial position has deteriorated significantly over the past several years.”
The Office of Insurance Regulation has final say over the increase, however. It has a meeting scheduled for July 25 to consider the request.
Source: Sun-Sentinel, June 28, 2012, Julie Patel & Florida Realtors®
According to an analysis of the request by the Sun Sentinel, the increase, if approved by the Florida Office of Insurance Regulation, would average 14 percent for single-family owners, 49 percent for renters and 27 percent for condo owners.
State Farm says the actual premium cost for a homeowner will vary, however, because it’s also bringing back a handful of discounts. The biggest one – a 10 percent cut in cost – would be granted owners who also use State Farm for their car insurance, for example. The company also says that a homeowner facing a 14 percent price hike could cut it down to 3 percent by opting for a higher deductible.
According to State Farm, it needs permission to raise prices because its “financial position has deteriorated significantly over the past several years.”
The Office of Insurance Regulation has final say over the increase, however. It has a meeting scheduled for July 25 to consider the request.
Source: Sun-Sentinel, June 28, 2012, Julie Patel & Florida Realtors®
Despite Low Rates, Mortgage Apps Fall
Despite continued record low mortgage rates, mortgage applications for refinancings and home purchases dropped 7.1 percent for the week ending June 22, the Mortgage Bankers Association reports.
Separated out, refinancing applications dropped by 8.3 percent alone for the week while home purchase applications--which are a gauge for future home purchases--fell 1.4 percent for the week, MBA reports.
Michael Fratantoni, MBA’s vice president of research and economics, said the drop in mortgage applications this week mostly stemmed from a drop in refinance applications for government-backed loans. Last week, applications for government mortgage refinancing more than doubled, surging 121.3 percent and reaching an all-time high.
"The large swings in activity [this week] were due to the implementation of [the Federal Housing Authority’s] new premiums on streamline refinances, and borrowers timing their application to lower their premiums," Fratantoni said in a statement.
Source: “Mortgage Applications Fell Last Week: MBA,” Reuters (June 27, 2012)
Separated out, refinancing applications dropped by 8.3 percent alone for the week while home purchase applications--which are a gauge for future home purchases--fell 1.4 percent for the week, MBA reports.
Michael Fratantoni, MBA’s vice president of research and economics, said the drop in mortgage applications this week mostly stemmed from a drop in refinance applications for government-backed loans. Last week, applications for government mortgage refinancing more than doubled, surging 121.3 percent and reaching an all-time high.
"The large swings in activity [this week] were due to the implementation of [the Federal Housing Authority’s] new premiums on streamline refinances, and borrowers timing their application to lower their premiums," Fratantoni said in a statement.
Source: “Mortgage Applications Fell Last Week: MBA,” Reuters (June 27, 2012)
UF: Fla. consumer confidence down four points in June
Consumer confidence among Floridians dropped four points this month after jumping four points to 78 in May, according to a University of Florida survey.
“In June, Floridians reversed their optimism about their future finances,” says Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. “The decline was across age and income groups and did not reflect a specific policy change.”
In fact, Florida’s housing and job market has seen positive trends lately, McCarty says.
For the first time since February, all five components of the confidence index declined. For example, survey takers’ perception that they are better off financially now than a year ago fell one point to 61. Meanwhile, overall expectations that personal finances will improve a year from now fell 10 points to 86.
Respondents were also glum in their assessment of broader issues. Their confidence in the national economy over the coming year dropped three points to 73, while their trust in the national economy’s prospects for the next five years fell four points to 84. Floridians’ confidence in whether now is a good time to buy big-ticket consumer items, such as televisions and automobiles, also fell, dropping four points to 78.
In May, consumer confidence was largely buoyed by perceptions that personal finances would improve. Such thinking “was likely due to the dramatic drop in gas prices between April and May, a decline of more than 50 cents a gallon,” McCarty says.
Although gas prices have continued to fall since then, the associated optimism may have slowed in June because of increased news coverage about expiring tax cuts and automatic budget cuts in January that could disrupt the economy.
Also dampening confidence was a Federal Reserve analysis this month that found household wealth had eroded to 1990s levels. This discouraging news may have erased the short-term positive effects of lower gas prices, McCarty says.
Despite the gloom expressed in the report, Florida experienced positive economic indicators in May and June. Florida’s unemployment rate declined 0.1 percent to 8.6 percent in May, the lowest level since the recession ended in June 2009, while the U.S. rate edged up 0.1 percent to 8.2 percent in May.
There were also big employment gains in Florida’s professional and business services sectors, which increased by 2.4 percent or 24,900 jobs. The only sectors to lose jobs were construction and government.
Another promising trend is that Florida’s improving unemployment numbers are not the result of a decreased state labor force, which was the case earlier in the year.
There is still more good news: Stock market values are up, and so are housing prices, which have been slowly recovering since January. The median price for a Florida house is now $147,000, the highest since August 2009. Short sales now account for more sales than foreclosures.
“Fortunately, gas prices are expected to continue to decline, although at a slower pace, in the next few months,” McCarty says. “This should help to maintain confidence somewhere near its current level.”
Conducted June 12-21, the UF study reflects the responses of 409 individuals who represent a demographic cross-section of Florida. The index used by UF researchers is benchmarked to 1966, which means a value of 100 represents the same level of confidence for that year. The lowest index possible is a 2; the highest is 150.
Source: Florida Realtors®
“In June, Floridians reversed their optimism about their future finances,” says Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. “The decline was across age and income groups and did not reflect a specific policy change.”
In fact, Florida’s housing and job market has seen positive trends lately, McCarty says.
For the first time since February, all five components of the confidence index declined. For example, survey takers’ perception that they are better off financially now than a year ago fell one point to 61. Meanwhile, overall expectations that personal finances will improve a year from now fell 10 points to 86.
Respondents were also glum in their assessment of broader issues. Their confidence in the national economy over the coming year dropped three points to 73, while their trust in the national economy’s prospects for the next five years fell four points to 84. Floridians’ confidence in whether now is a good time to buy big-ticket consumer items, such as televisions and automobiles, also fell, dropping four points to 78.
In May, consumer confidence was largely buoyed by perceptions that personal finances would improve. Such thinking “was likely due to the dramatic drop in gas prices between April and May, a decline of more than 50 cents a gallon,” McCarty says.
Although gas prices have continued to fall since then, the associated optimism may have slowed in June because of increased news coverage about expiring tax cuts and automatic budget cuts in January that could disrupt the economy.
Also dampening confidence was a Federal Reserve analysis this month that found household wealth had eroded to 1990s levels. This discouraging news may have erased the short-term positive effects of lower gas prices, McCarty says.
Despite the gloom expressed in the report, Florida experienced positive economic indicators in May and June. Florida’s unemployment rate declined 0.1 percent to 8.6 percent in May, the lowest level since the recession ended in June 2009, while the U.S. rate edged up 0.1 percent to 8.2 percent in May.
There were also big employment gains in Florida’s professional and business services sectors, which increased by 2.4 percent or 24,900 jobs. The only sectors to lose jobs were construction and government.
Another promising trend is that Florida’s improving unemployment numbers are not the result of a decreased state labor force, which was the case earlier in the year.
There is still more good news: Stock market values are up, and so are housing prices, which have been slowly recovering since January. The median price for a Florida house is now $147,000, the highest since August 2009. Short sales now account for more sales than foreclosures.
“Fortunately, gas prices are expected to continue to decline, although at a slower pace, in the next few months,” McCarty says. “This should help to maintain confidence somewhere near its current level.”
Conducted June 12-21, the UF study reflects the responses of 409 individuals who represent a demographic cross-section of Florida. The index used by UF researchers is benchmarked to 1966, which means a value of 100 represents the same level of confidence for that year. The lowest index possible is a 2; the highest is 150.
Source: Florida Realtors®
New Citizens CEO says higher rates needed
The new head of Citizens Property Insurance Corp. made his debut before the governor and Cabinet on Tuesday, saying the state-backed insurer needs to raise rates – but he conceded that the issue is a political hornet’s nest.
After telling the governor and Cabinet that inadequate premiums were the “1,000 pound alligator in the room,” Citizens President and CEO Barry Gilway met with reporters and said the state’s 10 percent cap on Citizens’ premium increases would not result in more private company participation in theFlorida property insurance market.
Citizens’ is providing “$50 worth of insurance for $30,” thanks in large part to legislation that has capped premium increases to 10 percent a year, Gilway said after the meeting, the first since he was chosen by the Citizens Board of Governors last week to run the agency. Citizens currently covers about one in four state policyholders.
Despite the need for higher rates, Gilway said he is becoming quickly attuned to the political considerations that made it difficult for predecessors to raise rates to actuarially sound levels.
A majority of Florida residents live within miles of the coast, a fact that led in part to lawmakers freezing and then capping rates on Citizens policies following the 2004 and 2005 hurricane seasons. Recent attempts to raise rates met stiff resistance, with critics saying the state’s economic recovery would suffer if rates rise too rapidly.
Over the past few days, Gilway has met with Gov. Rick Scott, Florida Agriculture Commissioner Adam Putnam and others who have briefed him on the level of emotions surrounding rates. He also attended a town hall meeting in Miami, where he heard policyholders’ frustrations with Citizens and private companies.
“It’s going to have to be a very fine balancing act, in my opinion, related to how we address them; but ultimately, my position is that we have to address them,” Gilway said.
The former private insurance-industry executive has been the CEO for only one week, but he maintains that the number of Citizens policies can be dramatically reduced from the nearly 1.5 million now under its umbrella, but it will take time to work up detailed proposals. He said it’s clear that Florida must tap into the global market to draw private companies willing to insure some of the state’s most hurricane-prone homes and businesses. To do that, however, they have to be able to make money.
“The only way you are going to attract private insurers is if they believe they have a reasonable chance of generating a return on capital,” Gilway said. “It’s not rocket science.”
Speaking after the Cabinet meeting Tuesday, Scott and Chief Financial Officer Jeff Atwater offered their support for Gilway, but expressed concerns that cash-strapped consumers can’t afford too much of a hit.
“You can’t make the big, bold moves that some people in the private markets may wish to make,” Atwater said. “You need to let time take you there on an appropriate glide path.”
The governor told reporters that Citizens customers would be socked by huge assessments in the event of a major storm, a message he believes is not being sent.
“The first thing we ought to be doing is that we need to let people know what they are buying,” Scott said. “It’s just a downpayment in case there is a hurricane. They need to know that.”
Source: News Service of Florida, Michael Peltier
After telling the governor and Cabinet that inadequate premiums were the “1,000 pound alligator in the room,” Citizens President and CEO Barry Gilway met with reporters and said the state’s 10 percent cap on Citizens’ premium increases would not result in more private company participation in theFlorida property insurance market.
Citizens’ is providing “$50 worth of insurance for $30,” thanks in large part to legislation that has capped premium increases to 10 percent a year, Gilway said after the meeting, the first since he was chosen by the Citizens Board of Governors last week to run the agency. Citizens currently covers about one in four state policyholders.
Despite the need for higher rates, Gilway said he is becoming quickly attuned to the political considerations that made it difficult for predecessors to raise rates to actuarially sound levels.
A majority of Florida residents live within miles of the coast, a fact that led in part to lawmakers freezing and then capping rates on Citizens policies following the 2004 and 2005 hurricane seasons. Recent attempts to raise rates met stiff resistance, with critics saying the state’s economic recovery would suffer if rates rise too rapidly.
Over the past few days, Gilway has met with Gov. Rick Scott, Florida Agriculture Commissioner Adam Putnam and others who have briefed him on the level of emotions surrounding rates. He also attended a town hall meeting in Miami, where he heard policyholders’ frustrations with Citizens and private companies.
“It’s going to have to be a very fine balancing act, in my opinion, related to how we address them; but ultimately, my position is that we have to address them,” Gilway said.
The former private insurance-industry executive has been the CEO for only one week, but he maintains that the number of Citizens policies can be dramatically reduced from the nearly 1.5 million now under its umbrella, but it will take time to work up detailed proposals. He said it’s clear that Florida must tap into the global market to draw private companies willing to insure some of the state’s most hurricane-prone homes and businesses. To do that, however, they have to be able to make money.
“The only way you are going to attract private insurers is if they believe they have a reasonable chance of generating a return on capital,” Gilway said. “It’s not rocket science.”
Speaking after the Cabinet meeting Tuesday, Scott and Chief Financial Officer Jeff Atwater offered their support for Gilway, but expressed concerns that cash-strapped consumers can’t afford too much of a hit.
“You can’t make the big, bold moves that some people in the private markets may wish to make,” Atwater said. “You need to let time take you there on an appropriate glide path.”
The governor told reporters that Citizens customers would be socked by huge assessments in the event of a major storm, a message he believes is not being sent.
“The first thing we ought to be doing is that we need to let people know what they are buying,” Scott said. “It’s just a downpayment in case there is a hurricane. They need to know that.”
Source: News Service of Florida, Michael Peltier
NAR: Pending sales at two-year high
Pending home sales bounced back in May, matching the highest level in the past two years and well above year-ago levels, according to the National Association of Realtors® (NAR). Every region saw monthly and annual gains.
NAR’s Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, rose 5.9 percent to 101.1 in May from 95.5 in April; and it’s 13.3 percent above May 2011 when it was 89.2. The data reflect contracts but not closings.
The index also reached 101.1 in March, which is the highest level since April 2010, though at that time, buyers were rushing to beat the deadline for the homebuyer tax credit.
“The housing market is clearly superior this year compared with the past four years,” said Lawrence Yun, NAR chief economist. “The latest increase in home contract signings marks 13 consecutive months of year-over-year gains. Actual closings for existing-home sales have been notably higher since the beginning of the year, and we’re on track to see a 9 to 10 percent improvement in total sales for 2012.”
The national median existing-home price is expected to rise 3.0 percent this year and another 5.7 percent in 2013.
The PHSI in the Northeast increased 4.8 percent to 82.9 in May and is 19.8 percent above May 2011. In the Midwest, the index rose 6.3 percent to 98.9 in May and is 22.1 percent higher than a year ago. Pending home sales in the South increased 1.1 percent to an index of 106.9 in May and are 11.9 percent above May 2011. In the West the index jumped 14.5 percent in May to 108.7 and is 4.8 percent stronger than a year ago.
Pending home sales could be even higher, but low inventory could be holding back sales in some areas – a relatively new challenge.
“If credit conditions returned to normal, and if we had more inventory, especially in the lower price ranges, more people would become successful buyers,” Yun said. “In an environment of historically favorable housing affordability conditions, it’s frustrating to see some consumers thwarted in the process.”
Low inventory results partly from underwater homeowners who are unwilling to list their homes, which would require a lengthy short sale process or additional cash to complete the transaction. NAR estimates 85 percent of homeowners have positive equity, with 15 percent underwater.
“Low inventory can be cured by increasing new home construction,” Yun says. He projects housing starts to rise by 26 percent this year and another 50 percent in 2013.
“If housing starts do not rise in a meaningful way over the next two years due to the difficulty in getting construction loans, and barring an unexpected shift in the economy, the steady shedding of inventory could lead to shortages where home prices could get bid up close to 10 percent in 2013,” Yun said.
Source: Florida Realtors®
NAR’s Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, rose 5.9 percent to 101.1 in May from 95.5 in April; and it’s 13.3 percent above May 2011 when it was 89.2. The data reflect contracts but not closings.
The index also reached 101.1 in March, which is the highest level since April 2010, though at that time, buyers were rushing to beat the deadline for the homebuyer tax credit.
“The housing market is clearly superior this year compared with the past four years,” said Lawrence Yun, NAR chief economist. “The latest increase in home contract signings marks 13 consecutive months of year-over-year gains. Actual closings for existing-home sales have been notably higher since the beginning of the year, and we’re on track to see a 9 to 10 percent improvement in total sales for 2012.”
The national median existing-home price is expected to rise 3.0 percent this year and another 5.7 percent in 2013.
The PHSI in the Northeast increased 4.8 percent to 82.9 in May and is 19.8 percent above May 2011. In the Midwest, the index rose 6.3 percent to 98.9 in May and is 22.1 percent higher than a year ago. Pending home sales in the South increased 1.1 percent to an index of 106.9 in May and are 11.9 percent above May 2011. In the West the index jumped 14.5 percent in May to 108.7 and is 4.8 percent stronger than a year ago.
Pending home sales could be even higher, but low inventory could be holding back sales in some areas – a relatively new challenge.
“If credit conditions returned to normal, and if we had more inventory, especially in the lower price ranges, more people would become successful buyers,” Yun said. “In an environment of historically favorable housing affordability conditions, it’s frustrating to see some consumers thwarted in the process.”
Low inventory results partly from underwater homeowners who are unwilling to list their homes, which would require a lengthy short sale process or additional cash to complete the transaction. NAR estimates 85 percent of homeowners have positive equity, with 15 percent underwater.
“Low inventory can be cured by increasing new home construction,” Yun says. He projects housing starts to rise by 26 percent this year and another 50 percent in 2013.
“If housing starts do not rise in a meaningful way over the next two years due to the difficulty in getting construction loans, and barring an unexpected shift in the economy, the steady shedding of inventory could lead to shortages where home prices could get bid up close to 10 percent in 2013,” Yun said.
Source: Florida Realtors®
Tuesday, June 26, 2012
Bill Could Increase Flood Insurance Premiums
A bill winding its way through Congress has the potential to more than double flood insurance premiums over the next four years for owners of vacation homes and commercial properties in flood-prone areas, The Wall Street Journal reports.
The proposed jump in premiums is to help ramp up finances for the National Flood Insurance Program, which is a government-run program that makes flood insurance mandatory for certain property owners in flood-prone areas. The program currently owes the Treasury Department nearly $18 billion. The increase in premiums is expected to save NFIP $4.7 billion by 2021.
More than 20 percent of the home owners currently in the program receive subsidized rates. The bill would set out to gradually remove subsidies for second homes, commercial properties, and properties with a history of multiple flood damage, The Wall Street Journal reports. Some residential property owners will continue to receive the subsidies.
The proposed increases under the bill would likely more than double premiums for about 44,000 policy holders, according to estimates. Those policy holders currently pay on average about $1,174 per year.
The Senate is expected to consider the bill this week.
Source: “Senate Bill Would Drive Up Flood-Insurance Premiums,” The Wall Street Journal (June 25, 2012)
The proposed jump in premiums is to help ramp up finances for the National Flood Insurance Program, which is a government-run program that makes flood insurance mandatory for certain property owners in flood-prone areas. The program currently owes the Treasury Department nearly $18 billion. The increase in premiums is expected to save NFIP $4.7 billion by 2021.
More than 20 percent of the home owners currently in the program receive subsidized rates. The bill would set out to gradually remove subsidies for second homes, commercial properties, and properties with a history of multiple flood damage, The Wall Street Journal reports. Some residential property owners will continue to receive the subsidies.
The proposed increases under the bill would likely more than double premiums for about 44,000 policy holders, according to estimates. Those policy holders currently pay on average about $1,174 per year.
The Senate is expected to consider the bill this week.
Source: “Senate Bill Would Drive Up Flood-Insurance Premiums,” The Wall Street Journal (June 25, 2012)
New-Home Sales Quicken Pace, Soaring 7.6%
New-home sales got a big lift last month, selling at the fastest pace in two years, the Commerce Department reported Monday.
Single-family home sales rose 7.6 percent, reaching the highest level since April 2010. Year-over-year, total new-home sales were up nearly 20 percent. Prices are rising too, with new homes seeing a 5.6 percent increase over year ago levels -- now at a median price of $234,500.
"May's sales report is a welcome sign that the market has returned to a more solid growth path following lackluster reports in March and April, and is in keeping with our expectations for continued, steady improvement through the end of this year," says David Crowe, National Association of Home Builders’ chief economist.
However, analysts note that the new-home market still has a ways to go, after facing its lowest sales on record last year. Crowe says a full recovery is still being held back by the lack of credit available and low appraisals.
New-home sales in May jumped the most in the Northeast, rising 36.7 percent, and increasing 12.7 percent in the South. Meanwhile, new-home sales dropped 3.5 percent in the West and fell 10.6 percent in the Midwest.
Source: “New-home Sales Surge to Fastest Pace in Two Years,” MSNBC.com (June 25, 2012) and National Association of Home Builders
Single-family home sales rose 7.6 percent, reaching the highest level since April 2010. Year-over-year, total new-home sales were up nearly 20 percent. Prices are rising too, with new homes seeing a 5.6 percent increase over year ago levels -- now at a median price of $234,500.
"May's sales report is a welcome sign that the market has returned to a more solid growth path following lackluster reports in March and April, and is in keeping with our expectations for continued, steady improvement through the end of this year," says David Crowe, National Association of Home Builders’ chief economist.
However, analysts note that the new-home market still has a ways to go, after facing its lowest sales on record last year. Crowe says a full recovery is still being held back by the lack of credit available and low appraisals.
New-home sales in May jumped the most in the Northeast, rising 36.7 percent, and increasing 12.7 percent in the South. Meanwhile, new-home sales dropped 3.5 percent in the West and fell 10.6 percent in the Midwest.
Source: “New-home Sales Surge to Fastest Pace in Two Years,” MSNBC.com (June 25, 2012) and National Association of Home Builders
Home prices rise in nearly all major U.S. cities
Home prices rose in nearly all major U.S. cities in April from March, further evidence that the housing market is slowly improving even while the job market slumps.
The Standard & Poor’s/Case-Shiller home price index shows increases in 19 of the 20 cities tracked. That’s the second straight month that prices have risen in a majority of U.S. cities.
And a measure of national prices rose 1.3 percent in April from March, the first increase in seven months.
San Francisco, Washington and Phoenix posted the biggest increases. Prices fell 3.6 percent in Detroit, the only city to record a drop.
The month-to-month prices aren’t adjusted for seasonal factors. Still, prices in half of the cities are up over the past 12 months.
Prices are increasing as other parts of the housing market are strengthening. Sales of new and previously occupied homes are up over the past year, in part because mortgage rates have plunged to the lowest levels on record. Builders are more confident and are starting to build more homes.
The S&P/Case-Shiller monthly index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The April figures are the latest available.
Its measure of home prices for all 20 cities fell 1.9 percent over the 12 months ending in April. That suggests weaker markets continue to weigh on national prices.
But other measures show home prices have risen nationally over the past year. CoreLogic, a private firm, calculates that prices rose 1.1 percent nationally in the 12 months ending in May. Federal Housing Finance Agency, which oversees mortgage giants Fannie Mae and Freddie Mac, says prices have increased 3 percent in the 12 months ending in April.
Recent data indicate that the housing market has started to recovery more than five years after the bubble burst.
Greater interest from buyers is boosting builders’ confidence. In May, builders requested the highest number of permits to build homes and apartments in three and a half years.
The supply of homes for sale remains extremely low, which has helped stabilized prices. The inventory of previously occupied homes is back down to levels last seen in 2006. And there were 145,000 new homes for sale in May. That’s only slightly higher than in April, which was the lowest supply on records dating back to 1963.
Despite the modest gains in housing, the broader economy has weakened in recent months. Employers have added an average of only 73,000 jobs a month in April and May. That’s much lower than the average of 226,000 added in the first three months of this year. Some economists worry that the sluggish job market could weigh on home sales just as the housing market is flashing signs of recovery.
Source: The Associated Press, Christopher S. Rugaber, AP economics writer. All rights reserved.
The Standard & Poor’s/Case-Shiller home price index shows increases in 19 of the 20 cities tracked. That’s the second straight month that prices have risen in a majority of U.S. cities.
And a measure of national prices rose 1.3 percent in April from March, the first increase in seven months.
San Francisco, Washington and Phoenix posted the biggest increases. Prices fell 3.6 percent in Detroit, the only city to record a drop.
The month-to-month prices aren’t adjusted for seasonal factors. Still, prices in half of the cities are up over the past 12 months.
Prices are increasing as other parts of the housing market are strengthening. Sales of new and previously occupied homes are up over the past year, in part because mortgage rates have plunged to the lowest levels on record. Builders are more confident and are starting to build more homes.
The S&P/Case-Shiller monthly index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The April figures are the latest available.
Its measure of home prices for all 20 cities fell 1.9 percent over the 12 months ending in April. That suggests weaker markets continue to weigh on national prices.
But other measures show home prices have risen nationally over the past year. CoreLogic, a private firm, calculates that prices rose 1.1 percent nationally in the 12 months ending in May. Federal Housing Finance Agency, which oversees mortgage giants Fannie Mae and Freddie Mac, says prices have increased 3 percent in the 12 months ending in April.
Recent data indicate that the housing market has started to recovery more than five years after the bubble burst.
Greater interest from buyers is boosting builders’ confidence. In May, builders requested the highest number of permits to build homes and apartments in three and a half years.
The supply of homes for sale remains extremely low, which has helped stabilized prices. The inventory of previously occupied homes is back down to levels last seen in 2006. And there were 145,000 new homes for sale in May. That’s only slightly higher than in April, which was the lowest supply on records dating back to 1963.
Despite the modest gains in housing, the broader economy has weakened in recent months. Employers have added an average of only 73,000 jobs a month in April and May. That’s much lower than the average of 226,000 added in the first three months of this year. Some economists worry that the sluggish job market could weigh on home sales just as the housing market is flashing signs of recovery.
Source: The Associated Press, Christopher S. Rugaber, AP economics writer. All rights reserved.
Monday, June 25, 2012
FHFA Tries to Halt Real Estate Transfer Taxes
Joining other states considering similar moves across the country, the Illinois Department of Revenue plans to bring taxes on real estate transferred to and from mortgage giants Fannie Mae and Freddie Mac, including charges for foreclosed properties.
But the Federal Housing Finance Agency (FHFA) is trying to stop such taxes. It has filed a lawsuit against Illinois to prevent the state from charging real estate transfer taxes to Fannie Mae and Freddie Mac. FHFA argues in the lawsuit that the government-sponsored enterprises should be exempt because they are under conservatorship from the government.
Several other counties across the nation are considering a similar move to impose real estate transfer taxes on the GSEs.
"The Federal Housing Finance Agency recognizes the difficulties faced by local officials that are struggling with shrinking tax bases,” according to a recent statement released by FHFA. “However, FHFA must resist when local governments impose unlawful tax-raising programs on Fannie Mae and Freddie Mac that, in turn, create a cost for taxpayers across the country."
Source: “FHFA Sues Illinois to End Real Estate Transfer Taxes,” HousingWire (June 22, 2012)
But the Federal Housing Finance Agency (FHFA) is trying to stop such taxes. It has filed a lawsuit against Illinois to prevent the state from charging real estate transfer taxes to Fannie Mae and Freddie Mac. FHFA argues in the lawsuit that the government-sponsored enterprises should be exempt because they are under conservatorship from the government.
Several other counties across the nation are considering a similar move to impose real estate transfer taxes on the GSEs.
"The Federal Housing Finance Agency recognizes the difficulties faced by local officials that are struggling with shrinking tax bases,” according to a recent statement released by FHFA. “However, FHFA must resist when local governments impose unlawful tax-raising programs on Fannie Mae and Freddie Mac that, in turn, create a cost for taxpayers across the country."
Source: “FHFA Sues Illinois to End Real Estate Transfer Taxes,” HousingWire (June 22, 2012)
5 Projections of Where the Housing Market's Headed
Real estate markets across the country are inching their way to a slow recovery after bottoming out, according to several real estate economists who spoke at a forum hosted by the National Association of Real Estate Editors.
National Association of REALTORS®’ Chief Economist Lawrence Yun, Zillow Chief Economist Stan Humphries, and National Association of Home Builders Chief Economist David Crowe shared their views on the direction of the housing market during the forum.
"Last year was the worst year on record for [new] house sales, for 60 years of housing-sale info," Crowe said.
But things are picking up, the economists note, despite several challenges still threatening that recovery. Yun says that appraisal issues are holding back up to 20 percent of home sales and that lenders’ tightened mortgage underwriting standards are likely holding back another 15 to 20 percent of potential home deals.
Here are some of the economists’ forecasts:
1. New-home market: The NAHB predicts a 19 percent increase in single-family housing starts this year over last (from 434,000 last year to a projected 516,000 this year).
2. Single-family rental market: This could be the next housing market bubble, Humphries warns. He expects this sector to cool as rental rates continue to increase and as home ownership looks more attractive to the public again.
3. Distressed home sales: The percentage of distressed homes sales is projected to drop by 25 percent in 2012 and 15 percent in 2013, Yun says.
4. Home price appreciation: Yun says it’s possible some markets may see a 10 percent rise in home-price appreciation next year due to an increase in demand, or a 60 to 70 percent increase in housing starts. Yun argues it won’t be both, however, but rather one or the other. He notes it greatly depends on whether lawmakers reach an agreement once again on the looming debt-ceiling deadline.
5. Home owners’ negative equity: About a third of home owners are underwater, owing more on their mortgage than their home is currently worth. As such, the housing recovery will likely be “stair stepped,” Humphries says. He says home owners with negative equity will gradually begin to list their homes as they see prices inch up, but when they do, that may temporarily swell the housing supply and cause a brief pause to the recovery.
Source: “Economists: 2012 Marks the End of a Long Bottom,” Inman News (June 22, 2012)
National Association of REALTORS®’ Chief Economist Lawrence Yun, Zillow Chief Economist Stan Humphries, and National Association of Home Builders Chief Economist David Crowe shared their views on the direction of the housing market during the forum.
"Last year was the worst year on record for [new] house sales, for 60 years of housing-sale info," Crowe said.
But things are picking up, the economists note, despite several challenges still threatening that recovery. Yun says that appraisal issues are holding back up to 20 percent of home sales and that lenders’ tightened mortgage underwriting standards are likely holding back another 15 to 20 percent of potential home deals.
Here are some of the economists’ forecasts:
1. New-home market: The NAHB predicts a 19 percent increase in single-family housing starts this year over last (from 434,000 last year to a projected 516,000 this year).
2. Single-family rental market: This could be the next housing market bubble, Humphries warns. He expects this sector to cool as rental rates continue to increase and as home ownership looks more attractive to the public again.
3. Distressed home sales: The percentage of distressed homes sales is projected to drop by 25 percent in 2012 and 15 percent in 2013, Yun says.
4. Home price appreciation: Yun says it’s possible some markets may see a 10 percent rise in home-price appreciation next year due to an increase in demand, or a 60 to 70 percent increase in housing starts. Yun argues it won’t be both, however, but rather one or the other. He notes it greatly depends on whether lawmakers reach an agreement once again on the looming debt-ceiling deadline.
5. Home owners’ negative equity: About a third of home owners are underwater, owing more on their mortgage than their home is currently worth. As such, the housing recovery will likely be “stair stepped,” Humphries says. He says home owners with negative equity will gradually begin to list their homes as they see prices inch up, but when they do, that may temporarily swell the housing supply and cause a brief pause to the recovery.
Source: “Economists: 2012 Marks the End of a Long Bottom,” Inman News (June 22, 2012)
New home sales up, fastest pace in two years
Americans bought new homes in May at the fastest pace in more than two years. The increase suggests a modest recovery in the housing market continues, despite weaker job growth.
The Commerce Department said Monday that sales of new homes increased 7.6 percent in May from April to a seasonally adjusted annual rate of 369,000 homes. That’s the best pace since April 2010, the last month that buyers could qualify for a federal homebuying tax credit.
Even with the gains, the pace is less than half the 700,000 that economists consider to be healthy.
Still, the increase follows other signs that suggest the housing market is rebounding nearly five years after the bubble burst.
Builders are slowing gaining confidence in the market and starting to build more homes. Mortgage rates have plunged to the lowest levels on record, making home buying more affordable. And sales of previously occupied homes are much higher than the same time last year.
Though new homes represent less than 20 percent of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to the National Association of Home Builders.
The gains in new homes sold were concentrated in two regions of the country last month. Sales surged 36.7 percent in the Northeast and 12.7 percent in the South. Sales fell 10.6 percent in the Midwest and were down 3.5 percent in the West.
The median price of a new home sold in May edged down 0.6 percent from April to $234,500. But the price was 5.6 percent higher than the same month one year ago.
Sales of new homes are increasing despite a sluggish job market, which has slowed retail spending and business investment in computers and machinery. Some economists warned that the weaker job market has also started to affect some home sales.
Sales of previously occupied homes fell in May to a seasonally adjusted sales rate of 4.55 million after nearly touching a two-year high in April.
Still, sales have risen 9.6 percent from the same month last year.
Hiring slowed sharply in April and May, raising concerns about the strength of the recovery. Employers have added an average of only 73,000 jobs a month in April and May. That’s much lower than the average of 226,000 added in the first three months of this year.
Source: The Associated Press, Martin Crutsinger, AP economics writer.
The Commerce Department said Monday that sales of new homes increased 7.6 percent in May from April to a seasonally adjusted annual rate of 369,000 homes. That’s the best pace since April 2010, the last month that buyers could qualify for a federal homebuying tax credit.
Even with the gains, the pace is less than half the 700,000 that economists consider to be healthy.
Still, the increase follows other signs that suggest the housing market is rebounding nearly five years after the bubble burst.
Builders are slowing gaining confidence in the market and starting to build more homes. Mortgage rates have plunged to the lowest levels on record, making home buying more affordable. And sales of previously occupied homes are much higher than the same time last year.
Though new homes represent less than 20 percent of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to the National Association of Home Builders.
The gains in new homes sold were concentrated in two regions of the country last month. Sales surged 36.7 percent in the Northeast and 12.7 percent in the South. Sales fell 10.6 percent in the Midwest and were down 3.5 percent in the West.
The median price of a new home sold in May edged down 0.6 percent from April to $234,500. But the price was 5.6 percent higher than the same month one year ago.
Sales of new homes are increasing despite a sluggish job market, which has slowed retail spending and business investment in computers and machinery. Some economists warned that the weaker job market has also started to affect some home sales.
Sales of previously occupied homes fell in May to a seasonally adjusted sales rate of 4.55 million after nearly touching a two-year high in April.
Still, sales have risen 9.6 percent from the same month last year.
Hiring slowed sharply in April and May, raising concerns about the strength of the recovery. Employers have added an average of only 73,000 jobs a month in April and May. That’s much lower than the average of 226,000 added in the first three months of this year.
Source: The Associated Press, Martin Crutsinger, AP economics writer.
Friday, June 22, 2012
736K self-insured Floridians to get rebate
Health insurers will pay $124 million to about 1.3 million Floridians, with self-insured residents getting part of the total, according to the Florida Department of Health and Human Services. While the amounts vary, it should average about $168 per household.
The rebate is part of President Obama’s healthcare reform, in which an 80/20 rule requires health insurers to spend 80 percent of premiums directly on patients with 20 percent allocated to the cost of doing business, such as marketing and salaries. Companies must rebate money above and beyond its limit. Most insurance companies met the 80/20 rule, but about a third of the companies must send refunds to consumers.
Nationally, health care insurers will rebate about $1.1 billion to 12.8 million people.
“Some insurance companies spent as little as 60 percent of premium dollars on consumers at a time when insurance companies saw record profits while consumers saw record premiums,” says Health and Human Services Secretary Kathleen Sebelius. “This is about holding insurance companies accountable.”
Realtors who deserve a rebate don’t have to apply. If someone maintains a personal health insurance policy and deserves a refund, they will either receive a check in the mail or see a credit on their next insurance bill.
If a business receives a rebate for a group policy, it can apply it in several ways.
The U.S. Supreme Court is expected to issue a ruling shortly on the legality of the healthcare law. That ruling could impact the 80/20 rebate rule in the future.
The Orlando Sentinel looked at federal data and issued the following list of companies that will be issuing rebates in Florida:
Individual market
•American General Life and Accident Insurance Company
•American Medical Security Life Insurance Company
•American Republic Insurance Company
•Connecticut General Life Insurance Company
•Coventry Health Plan of Florida
•Golden Rule Insurance Company
•Humana Health Insurance Company of Florida
•Mid-West National Life Insurance Company of Tennessee
•Preferred Medical Plan
•The United States Life Ins. Co. in the City of New York
•Time Insurance Company
•World Insurance Company
Small group market (50 or fewer employees)
•Blue Cross and Blue Shield of Florida
•Humana Health Insurance Company of Florida
•UnitedHealthcare Insurance Company
Large group market (51 or more employees)
•Cigna HealthCare of Florida
•Health Options
•Humana Medical Plan
•Neighborhood Health Partnership
•UnitedHealthcare Insurance Company
Source: Marni Jameson, Orlando Sentinel, June 21, 2012 & Florida Realtors®
The rebate is part of President Obama’s healthcare reform, in which an 80/20 rule requires health insurers to spend 80 percent of premiums directly on patients with 20 percent allocated to the cost of doing business, such as marketing and salaries. Companies must rebate money above and beyond its limit. Most insurance companies met the 80/20 rule, but about a third of the companies must send refunds to consumers.
Nationally, health care insurers will rebate about $1.1 billion to 12.8 million people.
“Some insurance companies spent as little as 60 percent of premium dollars on consumers at a time when insurance companies saw record profits while consumers saw record premiums,” says Health and Human Services Secretary Kathleen Sebelius. “This is about holding insurance companies accountable.”
Realtors who deserve a rebate don’t have to apply. If someone maintains a personal health insurance policy and deserves a refund, they will either receive a check in the mail or see a credit on their next insurance bill.
If a business receives a rebate for a group policy, it can apply it in several ways.
The U.S. Supreme Court is expected to issue a ruling shortly on the legality of the healthcare law. That ruling could impact the 80/20 rebate rule in the future.
The Orlando Sentinel looked at federal data and issued the following list of companies that will be issuing rebates in Florida:
Individual market
•American General Life and Accident Insurance Company
•American Medical Security Life Insurance Company
•American Republic Insurance Company
•Connecticut General Life Insurance Company
•Coventry Health Plan of Florida
•Golden Rule Insurance Company
•Humana Health Insurance Company of Florida
•Mid-West National Life Insurance Company of Tennessee
•Preferred Medical Plan
•The United States Life Ins. Co. in the City of New York
•Time Insurance Company
•World Insurance Company
Small group market (50 or fewer employees)
•Blue Cross and Blue Shield of Florida
•Humana Health Insurance Company of Florida
•UnitedHealthcare Insurance Company
Large group market (51 or more employees)
•Cigna HealthCare of Florida
•Health Options
•Humana Medical Plan
•Neighborhood Health Partnership
•UnitedHealthcare Insurance Company
Source: Marni Jameson, Orlando Sentinel, June 21, 2012 & Florida Realtors®
Rate on 30-year FRM falls to record 3.66%
The average U.S. rate on a 30-year fixed mortgage fell this week to a record low for the seventh time in eight weeks. Cheap mortgages have helped drive a modest recovery in the weak housing market this year.
Mortgage buyer Freddie Mac said Thursday that the average on the 30-year loan dropped to 3.66 percent. That’s down from 3.71 percent last week and the lowest since long-term mortgages began in the 1950s.
The average rate on the 15-year mortgage, a popular refinancing option, declined to 2.95 percent. That’s down from 2.98 percent last week and just above the record 2.94 percent reached two weeks ago.
The rate on the 30-year loan has been below 4 percent since December.
Low rates could provide some help to the economy if more people refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend.
Still, the pace of home sales remains well below healthy levels. Sales of previously occupied homes dipped in May to a seasonally adjusted annual rate of 4.55 million, although they are up from the same month last year.
Many people still have difficulty qualifying for home loans or can’t afford larger downpayments required by banks. Some would-be homebuyers are holding off because they fear that home prices could keep falling.
The U.S. economy is growing only modestly and job creation slowed sharply in April and May. U.S. employers created only 69,000 jobs in May, the fewest in a year.
Mortgage rates have been dropping because they tend to track the yield on the 10-year Treasury note. Uncertainty about how Europe will resolve its debt crisis has led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield falls.
And the yield will likely fall even lower now that the Federal Reserve has said it will continue selling short-term Treasurys and using the proceeds to buy longer-term Treasurys. That goal of the program is to drive long-term interest rates lower to encourage more borrowing and spending.
To calculate average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.
The average 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.
The average fee for 30-year loans was 0.7 point, unchanged from last week. The fee for 15-year loans was 0.6 point, down from 0.7.
The average rate on one-year adjustable rate mortgages fell to 2.74 percent from 2.78 percent last week. The fee for one-year adjustable rate loans was unchanged at 0.5 point.
Source: The Associated Press, Martin Crutsinger, AP economics writer. All rights reserved.
Mortgage buyer Freddie Mac said Thursday that the average on the 30-year loan dropped to 3.66 percent. That’s down from 3.71 percent last week and the lowest since long-term mortgages began in the 1950s.
The average rate on the 15-year mortgage, a popular refinancing option, declined to 2.95 percent. That’s down from 2.98 percent last week and just above the record 2.94 percent reached two weeks ago.
The rate on the 30-year loan has been below 4 percent since December.
Low rates could provide some help to the economy if more people refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend.
Still, the pace of home sales remains well below healthy levels. Sales of previously occupied homes dipped in May to a seasonally adjusted annual rate of 4.55 million, although they are up from the same month last year.
Many people still have difficulty qualifying for home loans or can’t afford larger downpayments required by banks. Some would-be homebuyers are holding off because they fear that home prices could keep falling.
The U.S. economy is growing only modestly and job creation slowed sharply in April and May. U.S. employers created only 69,000 jobs in May, the fewest in a year.
Mortgage rates have been dropping because they tend to track the yield on the 10-year Treasury note. Uncertainty about how Europe will resolve its debt crisis has led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield falls.
And the yield will likely fall even lower now that the Federal Reserve has said it will continue selling short-term Treasurys and using the proceeds to buy longer-term Treasurys. That goal of the program is to drive long-term interest rates lower to encourage more borrowing and spending.
To calculate average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.
The average 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.
The average fee for 30-year loans was 0.7 point, unchanged from last week. The fee for 15-year loans was 0.6 point, down from 0.7.
The average rate on one-year adjustable rate mortgages fell to 2.74 percent from 2.78 percent last week. The fee for one-year adjustable rate loans was unchanged at 0.5 point.
Source: The Associated Press, Martin Crutsinger, AP economics writer. All rights reserved.
Thursday, June 21, 2012
Home Value Analysis Finds Unbalanced Recovery
A Zillow Inc. analysis of home values in different zip codes for the three months ended in April—taking into account home sales and appraisals, among other factors—shows an unbalanced housing recovery and emphasizes the influence of location on residential values.
As home sales grow and available supply narrows, home values have held up or are beginning to rise in neighborhoods with good public school systems, low crime rates, and nearby transportation corridors. However, other neighborhoods—especially in the exurbs—are not yet in recovery mode.
The report shows that home values during the three-month period rose in nearly 94 percent of Phoenix zip codes, 90 percent of Denver zip codes, and 33 percent of Seattle zip codes, while they fell in 40 percent of Washington, D.C., zip codes. Although buyers were willing to commute longer distances to achieve homeownership during the boom years, they are unwilling to do so now.
Redfin CEO Glenn Kelman says, "The marginal neighborhoods won't do well until the so-called desirable neighborhoods are completely fished out." He adds that these communities could see rising foreclosures due to a large "shadow inventory."
Source: "Housing Prices Rise, But Not for Everyone," Wall Street Journal (June 20, 2012). & Information, Inc.
As home sales grow and available supply narrows, home values have held up or are beginning to rise in neighborhoods with good public school systems, low crime rates, and nearby transportation corridors. However, other neighborhoods—especially in the exurbs—are not yet in recovery mode.
The report shows that home values during the three-month period rose in nearly 94 percent of Phoenix zip codes, 90 percent of Denver zip codes, and 33 percent of Seattle zip codes, while they fell in 40 percent of Washington, D.C., zip codes. Although buyers were willing to commute longer distances to achieve homeownership during the boom years, they are unwilling to do so now.
Redfin CEO Glenn Kelman says, "The marginal neighborhoods won't do well until the so-called desirable neighborhoods are completely fished out." He adds that these communities could see rising foreclosures due to a large "shadow inventory."
Source: "Housing Prices Rise, But Not for Everyone," Wall Street Journal (June 20, 2012). & Information, Inc.
Fannie Mae Expresses ‘Cautious Optimism’ for Housing Market
Despite slowing economic growth, Fannie Mae says the housing market has “performed relatively well” as record affordability and low interest rates continue to bump up home sales.
“Cautious optimism remains in place for continued gradual healing of the housing market, albeit in the face of various headwinds, including weak employment growth, rising student loans, and a continuing stream of foreclosed households,” according to Fannie Mae’s June Economic Outlook report, released by its Economic & Strategic Research Group.
The report notes that home prices have “firmed in recent months” while the shares of “distressed sales have declined in a strong seasonal period.”
Fannie predicts distressed sales will finally bottom out in 2013. The group expects home prices to decline slightly by 1.2 percent this year, before bottoming in the beginning of next year and regaining that 1.2 percent in 2013.
Sources: Fannie Mae and “Fannie Mae Forecasts 'Continued Gradual Healing' for Housing,” Inman News (June 20, 2012)
“Cautious optimism remains in place for continued gradual healing of the housing market, albeit in the face of various headwinds, including weak employment growth, rising student loans, and a continuing stream of foreclosed households,” according to Fannie Mae’s June Economic Outlook report, released by its Economic & Strategic Research Group.
The report notes that home prices have “firmed in recent months” while the shares of “distressed sales have declined in a strong seasonal period.”
Fannie predicts distressed sales will finally bottom out in 2013. The group expects home prices to decline slightly by 1.2 percent this year, before bottoming in the beginning of next year and regaining that 1.2 percent in 2013.
Sources: Fannie Mae and “Fannie Mae Forecasts 'Continued Gradual Healing' for Housing,” Inman News (June 20, 2012)
Fla. housing market continues positive track in May
Pending sales, closed sales and median prices rose, while the inventory of homes and condos for sale dropped in Florida’s housing market in May, according to the latest housing data released by Florida Realtors®.
“The recovery in Florida’s housing market and economy continues to grow stronger and stronger,” said 2012 Florida Realtors President Summer Greene, regional manager of Better Homes and Gardens Real Estate Florida 1st in Fort Lauderdale. “Realtors across the state are reporting increased activity – in May, statewide pending sales were up 43.1 percent for existing single-family homes and up 33.4 percent for townhome-condo properties. In some areas, a shortage of for-sale inventory is resulting in multiple bids from buyers and rising price conditions.
“Now, more than ever, successful buyers and sellers are realizing the value of working with a Realtor who knows their local markets.”
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 May was $147,000, up 8.9 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 $112,000, up 14.3 percent over May 2011.
The national median sales price for existing single-family homes in May 2012 was $182,900, up 7.7 percent from the previous year, according to the National Association of Realtors® (NAR). In California, the statewide median sales price for single-family existing homes in May was $312,110; in Maryland, it was $259,207; and in New York, it was $208,000.
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 18,723 in May, up 7.2 percent, compared to the year-ago figure. Looking at Florida’s year-to-year comparison for sales of townhomes/condos, a total of 9,995 units sold statewide last month, up 5.4 percent from those sold in May 2011. NAR reported the national median existing condo price in May 2012 was $180,000.
Last month, the inventory for both single-family homes and for townhome-condo properties stood at a 5.5-month supply, according to Florida Realtors.
“Some very positive trends have been developing in the Florida market, and the May numbers indicate those trends are continuing,” said Florida Realtors Chief Economist Dr. John Tuccillo. “Closed sales, pending sales and prices – both average and median – are strongly above where they were a year ago. In fact, average prices have increased in 11 of the past 12 months.
“In addition, home sellers are receiving a higher percentage of their asking price, a trend we’ve seen for nine months. Perhaps the most striking characteristic of this market has been the dramatic drop in inventories. Now, Florida is in what is generally considered a balanced market – that is, one that favors neither buyers nor sellers.”
The interest rate for a 30-year fixed-rate mortgage averaged 3.80 percent in May 2012, down from the 4.64 percent average during the same month a year earlier, according to Freddie Mac.
To see the full statewide housing activity report, go to Florida Realtors website at www.floridarealtors.org, and click on the Research page; then look under Latest Housing Data, Statewide Residential Activity and get the May report. Or go to Florida Realtors Media Center at http://media.floridarealtors.org/ and download the May 2012 data report PDF under Market Data at: http://media.floridarealtors.org/market-data.
Source: Florida Realtors®
“The recovery in Florida’s housing market and economy continues to grow stronger and stronger,” said 2012 Florida Realtors President Summer Greene, regional manager of Better Homes and Gardens Real Estate Florida 1st in Fort Lauderdale. “Realtors across the state are reporting increased activity – in May, statewide pending sales were up 43.1 percent for existing single-family homes and up 33.4 percent for townhome-condo properties. In some areas, a shortage of for-sale inventory is resulting in multiple bids from buyers and rising price conditions.
“Now, more than ever, successful buyers and sellers are realizing the value of working with a Realtor who knows their local markets.”
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 May was $147,000, up 8.9 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 $112,000, up 14.3 percent over May 2011.
The national median sales price for existing single-family homes in May 2012 was $182,900, up 7.7 percent from the previous year, according to the National Association of Realtors® (NAR). In California, the statewide median sales price for single-family existing homes in May was $312,110; in Maryland, it was $259,207; and in New York, it was $208,000.
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 18,723 in May, up 7.2 percent, compared to the year-ago figure. Looking at Florida’s year-to-year comparison for sales of townhomes/condos, a total of 9,995 units sold statewide last month, up 5.4 percent from those sold in May 2011. NAR reported the national median existing condo price in May 2012 was $180,000.
Last month, the inventory for both single-family homes and for townhome-condo properties stood at a 5.5-month supply, according to Florida Realtors.
“Some very positive trends have been developing in the Florida market, and the May numbers indicate those trends are continuing,” said Florida Realtors Chief Economist Dr. John Tuccillo. “Closed sales, pending sales and prices – both average and median – are strongly above where they were a year ago. In fact, average prices have increased in 11 of the past 12 months.
“In addition, home sellers are receiving a higher percentage of their asking price, a trend we’ve seen for nine months. Perhaps the most striking characteristic of this market has been the dramatic drop in inventories. Now, Florida is in what is generally considered a balanced market – that is, one that favors neither buyers nor sellers.”
The interest rate for a 30-year fixed-rate mortgage averaged 3.80 percent in May 2012, down from the 4.64 percent average during the same month a year earlier, according to Freddie Mac.
To see the full statewide housing activity report, go to Florida Realtors website at www.floridarealtors.org, and click on the Research page; then look under Latest Housing Data, Statewide Residential Activity and get the May report. Or go to Florida Realtors Media Center at http://media.floridarealtors.org/ and download the May 2012 data report PDF under Market Data at: http://media.floridarealtors.org/market-data.
Source: Florida Realtors®
Wednesday, June 20, 2012
First-Time Buyers Find Housing Market Tough
First-time home buyers are increasingly saying they are getting shut out of the market, losing out on bids on for-sale homes to investors who are willing to pay all cash or home buyers willing to pay larger down payments.
"I thought it was a buyer's market ripe for the picking," says Washington, D.C., home buyer Jason Leggett, 25. Leggett says he lost out on six previous bidding wars for a home before finally snagging a home after beating out four other bidders.
More than 53 percent of first-time home buyers use Federal Housing Administration loans, which have a minimum down payment of 3.5 percent. But FHA loans can sometimes require home sellers to do home repairs, so sellers may be more tempted to consider other offers they receive than FHA offers, real estate professionals report. FHA loans also can take buyers longer to close than buyers coming with all-cash or conventional loans.
"FHA buyers are getting pushed to the bottom of the pile," Brian Cross with Keller Williams Realty in the Phoenix area, told USA Today. "It's much different than a year ago."
First-time home buyers generally account for a big bulk of the market, about 40 to 45 percent, according to the National Association of REALTORS®. More recently, they’ve made up about 35 percent of home buyers. The tightening of credit by many banks continues to keep many out, says Lawrence Yun, NAR’s chief economist.
Source: “Housing Isn't a Buyer's Market for Many First-Timers,” USA Today (June 19, 2012)
"I thought it was a buyer's market ripe for the picking," says Washington, D.C., home buyer Jason Leggett, 25. Leggett says he lost out on six previous bidding wars for a home before finally snagging a home after beating out four other bidders.
More than 53 percent of first-time home buyers use Federal Housing Administration loans, which have a minimum down payment of 3.5 percent. But FHA loans can sometimes require home sellers to do home repairs, so sellers may be more tempted to consider other offers they receive than FHA offers, real estate professionals report. FHA loans also can take buyers longer to close than buyers coming with all-cash or conventional loans.
"FHA buyers are getting pushed to the bottom of the pile," Brian Cross with Keller Williams Realty in the Phoenix area, told USA Today. "It's much different than a year ago."
First-time home buyers generally account for a big bulk of the market, about 40 to 45 percent, according to the National Association of REALTORS®. More recently, they’ve made up about 35 percent of home buyers. The tightening of credit by many banks continues to keep many out, says Lawrence Yun, NAR’s chief economist.
Source: “Housing Isn't a Buyer's Market for Many First-Timers,” USA Today (June 19, 2012)
5 Biggest Mistakes Home Buyers Make
Some home buyers fall for common pitfalls when purchasing a home. How can you help make sure your clients don’t fall for one?
Credit.com recently featured some of the biggest mistakes home buyers often make. Their list included:
1. Trying to fix credit scores before buying a home.
Home buyers may do more harm than good if they don’t consult a financial expert first. “Even paying down credit card balances, which is a good thing as far as your credit scores and debt ratios are concerned, could be a problem if it leaves you short the cash you need to qualify to get the loan,” says Gerri Detweiler, Credit.com’s personal finance expert.
2. Not considering the future enough in their purchase.
Buyers should consider what they want out of a house not just for today but also five or 10 years down the road. Do they plan to expand their family? If so, they may need a bigger home and want a different location. Also, how long do they plan on staying at the home? That can help determine the type of mortgage that makes the most sense for them too.
3. Failing to research financing enough.
First comes the home and then the financing? Not in today’s market. Home shoppers should get prequalified for a mortgage before they start shopping for a home so they know what they can afford. “The time to make decisions about your mortgage needs is not during this 10-day window [after you sign a contract]; at most, this is time to shop for rates and fees and such,” says Keith Gumbinger, vice president of HSH.com. “Evaluating your credit, deciding on a product you prefer, how much down payment you feel comfortable making, whether you want to pay fees or points [and, if so, how much] and even shopping for a lender [getting preapproved] should happen well in advance of even wandering through the market looking at houses.”
4. Making the assumption that the Good Faith Estimate is always what you pay at closing.
The form lenders provide that estimates closing costs is not set in stone. Closing costs may actually be more, so buyers need to be prepared. Closing costs generally are about 3 percent to 5 percent of the loan amount. “Shop around and compare the Good Faith Estimate provided by the lender with that of two or three other lenders,” suggests Ryan Himmel, a CPA and founder of BIDaWIZ, a tax advice resource. “If there is a significant disparity in estimates, then request an explanation from the lender to determine if you would like to move forward.”
5. Failing to budget for home expenses.
Budgeting to purchase the home isn’t all new home owners should be squeezing in their budget. They’d be wise to not forget to budget for maintaining the home too. New home owners should budget for an increase in utility bills as well as for future maintenance and repair costs, such as repairing a furnace or roof.
Read more mistakes that home buyers often make.
Source: “10 Mistakes New Homebuyers Make,” Credit.com (2012)
Credit.com recently featured some of the biggest mistakes home buyers often make. Their list included:
1. Trying to fix credit scores before buying a home.
Home buyers may do more harm than good if they don’t consult a financial expert first. “Even paying down credit card balances, which is a good thing as far as your credit scores and debt ratios are concerned, could be a problem if it leaves you short the cash you need to qualify to get the loan,” says Gerri Detweiler, Credit.com’s personal finance expert.
2. Not considering the future enough in their purchase.
Buyers should consider what they want out of a house not just for today but also five or 10 years down the road. Do they plan to expand their family? If so, they may need a bigger home and want a different location. Also, how long do they plan on staying at the home? That can help determine the type of mortgage that makes the most sense for them too.
3. Failing to research financing enough.
First comes the home and then the financing? Not in today’s market. Home shoppers should get prequalified for a mortgage before they start shopping for a home so they know what they can afford. “The time to make decisions about your mortgage needs is not during this 10-day window [after you sign a contract]; at most, this is time to shop for rates and fees and such,” says Keith Gumbinger, vice president of HSH.com. “Evaluating your credit, deciding on a product you prefer, how much down payment you feel comfortable making, whether you want to pay fees or points [and, if so, how much] and even shopping for a lender [getting preapproved] should happen well in advance of even wandering through the market looking at houses.”
4. Making the assumption that the Good Faith Estimate is always what you pay at closing.
The form lenders provide that estimates closing costs is not set in stone. Closing costs may actually be more, so buyers need to be prepared. Closing costs generally are about 3 percent to 5 percent of the loan amount. “Shop around and compare the Good Faith Estimate provided by the lender with that of two or three other lenders,” suggests Ryan Himmel, a CPA and founder of BIDaWIZ, a tax advice resource. “If there is a significant disparity in estimates, then request an explanation from the lender to determine if you would like to move forward.”
5. Failing to budget for home expenses.
Budgeting to purchase the home isn’t all new home owners should be squeezing in their budget. They’d be wise to not forget to budget for maintaining the home too. New home owners should budget for an increase in utility bills as well as for future maintenance and repair costs, such as repairing a furnace or roof.
Read more mistakes that home buyers often make.
Source: “10 Mistakes New Homebuyers Make,” Credit.com (2012)
Five questions to ask a lender
First-time homebuyers must leave their comfort zone when applying for that first mortgage, and even move-up buyers can feel uncomfortable. But basing a final decision on a specific lender or even type of mortgage doesn’t make sense without all the facts.
Prospective homebuyers should interview more than one lender, ask the right questions, and compare the answers. There is no best mortgage. The conditions and rates that work best for one household may not be ideal for another.
LendingTree asked over 300 lenders on the LendingTree Network this question: “In your professional opinion, what is the best questions all borrowers should ask their potential lender?” The top five answers are:
1. What are the total costs involved with the loan?
2. What is the best program for me, based on my financial goals and situation?
3. What documents will be required ahead of time to avoid delays?
4. What are the service ratings for your company, and where can I find them?
5. How long have you (the loan officer and the company) been in the mortgage business?
“Consumers have very little confidence that they will be able to qualify for a mortgage, let alone find a great deal when it comes to a home loan,” says Doug Lebda, chairman and CEO of LendingTree. “But with rates as low as they are, borrowers have the opportunity to tap into substantial savings. If you have the right information, know what to do and what to avoid, there’s no need to be intimidated or shy away from the process.”
Source: Florida Realtors®
Prospective homebuyers should interview more than one lender, ask the right questions, and compare the answers. There is no best mortgage. The conditions and rates that work best for one household may not be ideal for another.
LendingTree asked over 300 lenders on the LendingTree Network this question: “In your professional opinion, what is the best questions all borrowers should ask their potential lender?” The top five answers are:
1. What are the total costs involved with the loan?
2. What is the best program for me, based on my financial goals and situation?
3. What documents will be required ahead of time to avoid delays?
4. What are the service ratings for your company, and where can I find them?
5. How long have you (the loan officer and the company) been in the mortgage business?
“Consumers have very little confidence that they will be able to qualify for a mortgage, let alone find a great deal when it comes to a home loan,” says Doug Lebda, chairman and CEO of LendingTree. “But with rates as low as they are, borrowers have the opportunity to tap into substantial savings. If you have the right information, know what to do and what to avoid, there’s no need to be intimidated or shy away from the process.”
Source: Florida Realtors®
Fla. lawmakers push insurance change in 2013
Frustrated but not surprised by a lack of progress on Florida property insurance issues during an election year, a pair of key legislators on Tuesday began preparing for another push after the dust settles in November.
Rep. Bryan Nelson, R-Apopka, and Sen. Garrett Richter, R-Naples – chairmen of their respective chambers’ insurance committees – released a three-part position paper they say highlights the hidden risks all insurance policyholders face in the event of a devastating storm. While the Florida Hurricane Catastrophe Fund (CAT) and Citizens Property Insurance Corp. are in their best financial shape in years, the pair contends that the programs’ relative health masks their vulnerability and the risks to policyholders.
Despite general agreement that Citizens rates are artificially low and the CAT fund remains vulnerable, solutions remain elusive. Political leaders must grapple with a cold and hard reality: Nearly 1.5 million policyholders rely on the state-backed insurer while millions more rely on the CAT fund.
“When you have 60 percent of the state’s population living within 10 miles of the coast, it is political suicide to do the right thing, which is to force people to pay whatever the premium should be,” Nelson said.
Nelson and Richter are expected to again spearhead industry-backed efforts to return more of the market to private companies and away from state-backed insurance now being offered at below market rates.
Critics, however, maintain that the sky is not falling and lawmakers should be wary of such claims. The odds of a major storm or series of storms breaking the bank are very low.
“These are more ridiculous scare tactics coming straight from the insurance rate hike dream team,” said Sean Shaw, a former Florida insurance consumer advocate whose law firm now represents homeowners.
Nelson and Richter released a series of opinion pieces Tuesday outlining their case, explaining that hidden behind artificially low premiums is the possibility that policyholders of all stripes will be hit with assessments if Citizens and the CAT fund fall short.
While attempts can be made to raise premiums for existing Citizens customers, Nelson said it would be difficult to wean policyholders from the plan. Lawmakers are more likely to modify assessments and consider ways to make it more difficult to become a Citizens policyholder in the first place.
“If we keep people from getting into (Citizens), it won’t seem like such a great deal,” Nelson said.
Both sides throw out numbers to justify their positions. In their opinion piece, Nelson and Richter state that a storm costing Citizens more than $13 billion could lead to assessments that nearly double premiums for Citizens policyholders the year after a storm.
But critics, including Shaw, say the odds of that happening are about 1 in 100, while raising rates too high will have its own consequences as the state tries to rebound economically.
“If we listen to the rate hike dream team, we have a 100 percent chance of ruining our delicate housing recovery,” Shaw said in a statement.
Source: News Service of Florida, Michael Peltier
Rep. Bryan Nelson, R-Apopka, and Sen. Garrett Richter, R-Naples – chairmen of their respective chambers’ insurance committees – released a three-part position paper they say highlights the hidden risks all insurance policyholders face in the event of a devastating storm. While the Florida Hurricane Catastrophe Fund (CAT) and Citizens Property Insurance Corp. are in their best financial shape in years, the pair contends that the programs’ relative health masks their vulnerability and the risks to policyholders.
Despite general agreement that Citizens rates are artificially low and the CAT fund remains vulnerable, solutions remain elusive. Political leaders must grapple with a cold and hard reality: Nearly 1.5 million policyholders rely on the state-backed insurer while millions more rely on the CAT fund.
“When you have 60 percent of the state’s population living within 10 miles of the coast, it is political suicide to do the right thing, which is to force people to pay whatever the premium should be,” Nelson said.
Nelson and Richter are expected to again spearhead industry-backed efforts to return more of the market to private companies and away from state-backed insurance now being offered at below market rates.
Critics, however, maintain that the sky is not falling and lawmakers should be wary of such claims. The odds of a major storm or series of storms breaking the bank are very low.
“These are more ridiculous scare tactics coming straight from the insurance rate hike dream team,” said Sean Shaw, a former Florida insurance consumer advocate whose law firm now represents homeowners.
Nelson and Richter released a series of opinion pieces Tuesday outlining their case, explaining that hidden behind artificially low premiums is the possibility that policyholders of all stripes will be hit with assessments if Citizens and the CAT fund fall short.
While attempts can be made to raise premiums for existing Citizens customers, Nelson said it would be difficult to wean policyholders from the plan. Lawmakers are more likely to modify assessments and consider ways to make it more difficult to become a Citizens policyholder in the first place.
“If we keep people from getting into (Citizens), it won’t seem like such a great deal,” Nelson said.
Both sides throw out numbers to justify their positions. In their opinion piece, Nelson and Richter state that a storm costing Citizens more than $13 billion could lead to assessments that nearly double premiums for Citizens policyholders the year after a storm.
But critics, including Shaw, say the odds of that happening are about 1 in 100, while raising rates too high will have its own consequences as the state tries to rebound economically.
“If we listen to the rate hike dream team, we have a 100 percent chance of ruining our delicate housing recovery,” Shaw said in a statement.
Source: News Service of Florida, Michael Peltier
Housing outlook: More opt for renting
Freddie Mac released its latest U.S. economic and housing outlook, which shows that rental market activity has been a bright spot for the housing market.
“Further increases in rental demand are likely in the coming year as newly formed households postpone homeownership decisions until the economy strengthens, and they have accumulated sufficient savings,” says Frank Nothaft, Freddie Mac, vice president and chief economist. “Overall apartment market trends may show further vacancy declines and rent gains, with property values improving as well.”
Outlook highlights
• Over the year ending March 2012, an additional 1.5 million households moved into rental housing – a 4 percent increase in a single year.
• Rental vacancy rates dropped roughly 2 percentage points over the past two years.
• While nominal rents rose (2 to 4 percent) during the year ending March 2012, average rent on an inflation-adjusted basis remained below where it had been for much of the decade prior to the Great Recession.
• Multifamily property values are up, on average, about 25 percent over the past two years from their trough during the first quarter of 2010, according to the National Council of Real Estate Investment Fiduciaries index. But they’re still about 14 percent below their peak prior to the Great Recession.
• Starts of buildings with at least five apartments have jumped 48 percent in the first five months of this year when compared to the same period a year ago.
Source: Florida Realtors®
“Further increases in rental demand are likely in the coming year as newly formed households postpone homeownership decisions until the economy strengthens, and they have accumulated sufficient savings,” says Frank Nothaft, Freddie Mac, vice president and chief economist. “Overall apartment market trends may show further vacancy declines and rent gains, with property values improving as well.”
Outlook highlights
• Over the year ending March 2012, an additional 1.5 million households moved into rental housing – a 4 percent increase in a single year.
• Rental vacancy rates dropped roughly 2 percentage points over the past two years.
• While nominal rents rose (2 to 4 percent) during the year ending March 2012, average rent on an inflation-adjusted basis remained below where it had been for much of the decade prior to the Great Recession.
• Multifamily property values are up, on average, about 25 percent over the past two years from their trough during the first quarter of 2010, according to the National Council of Real Estate Investment Fiduciaries index. But they’re still about 14 percent below their peak prior to the Great Recession.
• Starts of buildings with at least five apartments have jumped 48 percent in the first five months of this year when compared to the same period a year ago.
Source: Florida Realtors®
Southeast Florida Monthly Market Update, May 2012
May, 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: | 65 | ||
| Total Value Dollar Volume: | $15,630,000.00 | ||
| Average List Price: | $240,462.00 | ||
| Median List Price: | $184,900.00 | ||
| Change from Previous Month (N. of Units) | 20% | ||
| Change from Previous Month (Dollar Vol.) | 15% | ||
| Total Sold Properties: | 156 | ||
| Total Dollar Volume Sold: | $29,754,357.00 | ||
| Average Sold Price: | $190,733.00 | ||
| Median Sold Price: | $100,000.00 | ||
| Change from Previous Month (N. of Units) | 30% | ||
| Change from Previous Month (Dollar Vol.) | 68% | ||
| Total Pending Sale: | 191 | ||
| Total Dollar Pending Volume: | $26,618,740.00 | ||
| Average Pending Price: | $139,365.00 | ||
| Median Pending Price: | $99,000.00 | ||
| Change from Previous Month (N. of Units) | 10% | ||
| Change from Previous Month (Dollar Vol.) | 18% | ||
Market update for the cities of Miramar and
Pembroke Pines:
| Area 3990 | |||
| Total Active Listings: | 15 | ||
| Total Value Dollar Volume: | $4,987,101.00 | ||
| Average List Price: | $332,473.00 | ||
| Median List Price: | $295,000.00 | ||
| Change from Previous Month (N. of Units) | -21% | ||
| Change from Previous Month (Dollar Vol.) | -31% | ||
| Total Sold Properties: | 31 | ||
| Total Dollar Volume Sold: | $9,364,700.00 | ||
| Average Sold Price: | $302,087.00 | ||
| Median Sold Price: | $285,000.00 | ||
| Change from Previous Month (N. of Units) | -26% | ||
| Change from Previous Month (Dollar Vol.) | -30% | ||
| Total Pending Sale: | 57 | ||
| Total Dollar Pending Volume: | $15,595,130.00 | ||
| Average Pending Price: | $273,599.00 | ||
| Median Pending Price: | $275,000.00 | ||
| Change from Previous Month (N. of Units) | 36% | ||
| Change from Previous Month (Dollar Vol.) | 28% | ||
Total Sold for Dade and Broward Counties
| Dade County | |||
| Total Sales Count: | 2778 | ||
| Total Sales Dollar Volume: | $1,001,183,947.00 | ||
| Change from Previous Month (N. of Units) | 11% | ||
| Change from Previous Month (Dollar Vol.) | 10% | ||
| Broward County | |||
| Total Sales Count: | 2875 | ||
| Total Sales Dollar Volume: | $618,525,376.00 | ||
| Change from Previous Month (N. of Units) | -2% | ||
| Change from Previous Month (Dollar Vol.) | -1% | ||
The above data is for Residential Real Estate Only, Market
Data from SEF MLS
For an update on your market area please contact us
Tuesday, June 19, 2012
Home Building Picks Up in May
Groundbreaking for single-family homes edged up 3.2 percent in May, reaching its highest level since December, the Commerce Department reported Tuesday. Single-family construction is now up 26 percent from year ago levels, as the new-home market continues to inch toward recovery.
However, the volatile multifamily market bit into the pick-up in single-family construction. Overall housing construction in May dropped 4.8 percent compared to April, pulled down by a 21.3 percent decrease in May in multifamily construction.
Still, there’s reason behind home builders’ increasing optimism about the sector: New housing permits--a future gauge of construction--soared nearly 8 percent in May, reaching the highest monthly level since September 2008.
Builders’ Feeling More Confident About Recovery
Builders’ confidence is gradually building about the market for newly built, single-family homes. Builder confidence rose one point in June and continuing the trend of several months of steady increases, according to the National Association of Home Builders/Wells Fargo Housing Market Index. The index is now at its highest level since May 2007.
Builders in the Midwest and West seem to be the most optimistic that the new-home market is improving.
The increase in builders’ sentiment is “reflective of the continued, gradual improvement we are seeing in many individual housing markets as more buyers decide to take advantage of today's low prices and interest rates," says Barry Rutenberg, NAHB chairman.
However, builders continue to cite overly tight lending conditions and low appraisals as major obstacles in completing sales.
Source: “Housing Starts in U.S. Fall 4.8% in May on Apartments,” Bloomberg (June 19, 2012) and National Association of Home Builders
However, the volatile multifamily market bit into the pick-up in single-family construction. Overall housing construction in May dropped 4.8 percent compared to April, pulled down by a 21.3 percent decrease in May in multifamily construction.
Still, there’s reason behind home builders’ increasing optimism about the sector: New housing permits--a future gauge of construction--soared nearly 8 percent in May, reaching the highest monthly level since September 2008.
Builders’ Feeling More Confident About Recovery
Builders’ confidence is gradually building about the market for newly built, single-family homes. Builder confidence rose one point in June and continuing the trend of several months of steady increases, according to the National Association of Home Builders/Wells Fargo Housing Market Index. The index is now at its highest level since May 2007.
Builders in the Midwest and West seem to be the most optimistic that the new-home market is improving.
The increase in builders’ sentiment is “reflective of the continued, gradual improvement we are seeing in many individual housing markets as more buyers decide to take advantage of today's low prices and interest rates," says Barry Rutenberg, NAHB chairman.
However, builders continue to cite overly tight lending conditions and low appraisals as major obstacles in completing sales.
Source: “Housing Starts in U.S. Fall 4.8% in May on Apartments,” Bloomberg (June 19, 2012) and National Association of Home Builders
FHA Revokes Controversial Credit Dispute Rule
The Federal Housing Administration has decided to rescind a rule that would have made it tougher for borrowers with credit disputes on their records to qualify for an FHA-backed mortgage. The rule had been widely criticized by the lending and real estate industry as shutting out too many potential borrowers from qualifying for a mortgage.
The new rule originally took effect April 1 but then was postponed a week later until July 1 as the FHA further reviewed the policy change.
The guideline would have required borrowers who wanted to qualify for an FHA-insured mortgage to pay off any credit dispute in their history of more than $1,000 or set up a documented payment plan on any unpaid collection accounts.
"FHA killing off the rule is not a surprise when you take into account the resounding objection from the housing finance community and their concern that this would overly constrain credit," Edward Mills, senior vice president at FBR Capital Markets, told HousingWire. "This action shows how it can be incredibly difficult to make choices that move towards protecting the insurance fund over keeping mortgage credit available."
The FHA rule was expected to have the greatest impact on young, first-time borrowers. John Burns Real Estate Consulting found in a recent survey that about a quarter of builders said that the rule had the potential of delaying or losing up to 60 percent of their sales.
"The ripple effects of the FHA credit dispute rule would have had a notable impact on the housing market," Lisa Marquis Jackson, vice president of John Burns Real Estate Consulting, told HousingWire.
Source: “FHA Rescinds $1,000 Credit Dispute Rule,” HousingWire (June 16, 2012)
The new rule originally took effect April 1 but then was postponed a week later until July 1 as the FHA further reviewed the policy change.
The guideline would have required borrowers who wanted to qualify for an FHA-insured mortgage to pay off any credit dispute in their history of more than $1,000 or set up a documented payment plan on any unpaid collection accounts.
"FHA killing off the rule is not a surprise when you take into account the resounding objection from the housing finance community and their concern that this would overly constrain credit," Edward Mills, senior vice president at FBR Capital Markets, told HousingWire. "This action shows how it can be incredibly difficult to make choices that move towards protecting the insurance fund over keeping mortgage credit available."
The FHA rule was expected to have the greatest impact on young, first-time borrowers. John Burns Real Estate Consulting found in a recent survey that about a quarter of builders said that the rule had the potential of delaying or losing up to 60 percent of their sales.
"The ripple effects of the FHA credit dispute rule would have had a notable impact on the housing market," Lisa Marquis Jackson, vice president of John Burns Real Estate Consulting, told HousingWire.
Source: “FHA Rescinds $1,000 Credit Dispute Rule,” HousingWire (June 16, 2012)
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