Where Home Ownership Rates Are Highest

The national home ownership rate has held mostly steady this year, standing at 65.5 percent for the second quarter, according to recent U.S. Census Bureau data. The rate is 0.4 percentage points lower than the second quarter of 2011, but 0.1 percentage point higher than the first quarter of this year.
The home ownership rate has steadily fallen over the last few years since last peaking in the first quarter of 2005 at 69.1 percent.
Home ownership rates are highest in the Midwest at 69.6 percent whereas home ownership rates are the lowest in the West, at 59.7 percent, according to the Census data.
Here’s a closer look at the home ownership rate among different demographics, according to the second quarter U.S. Census Bureau housing data:

• The home ownership rate is highest at 81.6 percent for those ages 65 years and over.
• The home ownership rate is lowest at 36.5 percent for those who are under 35 years of age.
• Non-Hispanic whites have the highest home ownership rates among the races at 73.5 percent, while the Hispanic home ownership rate was 46.5 percent and 43.8 percent for African Americans in the second quarter.

Source: U.S. Census Bureau

Are Home Owners Taking on Too Large of a Mortgage?

How much income should home owners devote to paying for their housing? The benchmark typically has been 30 percent. But in many places, home owners are devoting much more than that to pay for housing costs.
The problem is particularly evident in California, where millions of home owners are paying large shares of their income for housing. In fact, the number has doubled in the last 10 years, according to the Census Bureau. About 4.6 million California households—including home owners and renters—are paying 35 percent or more of their income housing. That number has increased by 1.7 million in the last 10 years. About 2.7 million California households are paying at least half their income for housing.
The "30 percent [benchmark] doesn't seem to click with reality in Orange County," Glenn Hayes, president of Neighborhood Housing Services of Orange County, told The Orange County Register. "Historically, we used to try to do 28 or 30 percent, but you couldn't buy in Orange County for that."
However, the trend of home owners devoting larger sums of their income to housing may pose troubles, analysts say, because home owners then aren’t able to save for retirement or savings.
"When you're paying 50 percent of your income for housing, you're primed and ready to fall," Ginna Green of the Center for Responsible Lending told The Orange County Register. "You are one illness, you are one car emergency, you are two overtime shifts away from a default."
Fannie Mae has been increasing its guidelines over the years on the income share it will allow home owners to devote to mortgages when it purchases loans. Now, they’ll permit home owners with good credit to take on as much as 45 percent—possibly even up to 50 percent—of their income on housing. Prior to 2008, Fannie Mae said borrowers should pay no more than 36 percent of their income for housing.
Source: “High Housing Payments the New ‘American Nightmare,’” The Orange County Register (July 26, 2012)

Home prices rose in all major U.S. cities in May

U.S. home prices rose in May from April in every city tracked by a leading index, a sign that increasing sales and tight inventories are supporting a modest housing recovery.

The Standard & Poor’s/Case-Shiller home price index released Tuesday showed increases in all of the 20 cities tracked. And a measure of national prices rose 2.2 percent from April to May, the second increase after seven months of flat or declining readings.

Chicago, Atlanta and San Francisco posted the biggest monthly increases. Detroit, San Diego and Charlotte posted the smallest gains.

Phoenix, one of the hardest-hit cities in the housing slump, posted the strongest year-over-year gain in home prices. Still, prices there remain more than 50 percent below their peak, reached in summer 2006.

The increases partly reflect the impact of seasonal buying. The month-to-month prices aren’t adjusted for seasonal factors.

In the past year, the 20-city price index has dropped 0.7 percent, the smallest decline since September 2010. That’s much lower than the 1.8 percent year-over-year decline in April.

Many economists were encouraged by the widespread nature of the increases.

“The fact that most regions ... have seen gains in recent months is a positive sign that the gradual improvement in housing conditions is becoming broader-based,” Peter Newland, an economist at Barclays Capital, said in a note to clients.

David Blitzer, chairman of the S&P s index committee, cautioned that the trend would need to continue into the summer and fall to ensure that it isn’t just a reflection of strong springtime and early summer sales.

“The housing market seems to be stabilizing, but we are definitely in wait-and-see mode for the next few months,” he said.

Economists also said that prices may be higher because foreclosures are making up a smaller share of home sales.

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 May figures are the latest available.

The housing market is recovering, but at a slow and uneven pace. Sales of new homes fell in June after reaching a two-year high in May. Sales of previously occupied homes also fell last month but were higher than a year ago.

Builders are getting more confident, partly because they’re seeing more interest from potential buyers. Builders broke ground in June on the most new homes and apartments in four years.

Even with the gains, the index is 33 percent below its peak reached in the summer of 2006, at the height of the housing boom. Based on the 20-city index, home prices are now at about the same level as in early 2003.

The supply of homes for sale remains very low, which has helped stabilize prices. At the current sales pace, it would take six and a half months to exhaust the supply of previously-occupied homes. That’s just above the six months economists consider healthy.

There were 144,000 new homes for sale in June, only slightly higher than the 143,000 in May, 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 75,000 jobs a month in the April-June quarter. That’s much lower than the average of 226,000 added in the first three months of this year.

Housing added to economic growth in the second quarter, but the sector isn’t large enough to make a big difference. The economy expanded at only a 1.5 percent annual rate in April-June, below the first quarter s 2 percent pace. Both readings are much lower than the fourth quarter’s 4.1 percent growth.
Source: The Associated Press. Christopher S. Rugaber, AP economics writer.

An 'Uneven' Housing Bottom?

While the housing market is showing signs of a turnaround, some analysts are referring to the recovery as “uneven.”
As The Wall Street Journal explains in a recent article, “things aren’t getting better rapidly, but we’re also not in the ‘hold-your-hat’ declines of 2010 or the ‘spring that never materialized’ of 2011.”
Several housing reports have shown home sales are up from last year's levels, but the most recent June housing numbers revealed a slowdown in several parts of the housing market. For example, the National Association of REALTORS® reported last week that pending home sales dropped in June by 1.4 percent compared to May. However, pending home sales are up nearly 10 percent year-over-year.
NAR also reported that sales of existing homes dropped 5.4 percent in June from May, yet sales are up 4.5 percent year-over-year. And last week, the Commerce Department reported that new-home sales dropped 8.4 percent in June from May, yet new-home sales are still up 15.1 percent over last year's levels.
Some blame a sagging economic recovery, along with stagnant job and wage growth, for holding back a stronger surge in the real estate market recovery.
While record low mortgage rates are giving a big boost to housing affordability, many home buyers reportedly continue to struggle to obtain financing due to banks’ tighter underwriting standards, some analysts say.
Also, NAR has said that the drop in sales volumes lately has been mostly due to low inventories of for-sale homes on the market. Inventories dropped 24 percent from a year ago, which marks the largest drop in some 30 years.
Despite a June drop in home sales, however, home prices are showing a consistent rebound, posting higher month-over-month and year-over-year increases nationwide.
Source: “Is This What a Housing Bottom Looks Like?” The Wall Street Journal (July 26, 2012)

As home values rise, property taxes increase

Many Florida property owners without a homestead exemption – and some with an exemption – have seen their property taxes go down along with property values. In some communities, the tax rate has been raised to offset potential losses; in some communities, the city learned how to get along with less money.

With property values starting to rise in many Florida communities, however, property taxes will follow. Local governments can then either collect more money, or they can lower the applicable tax rates in order to offset increases for homeowners.

In Lauderdale-by-the-Sea, for example, the town manager has suggested a lower tax rate. Commissioners are now considering it.

In theory, the 1.7-percent proposed reduction in the property tax rate would not lower the amount of money Lauderdale-by-the-Sea takes in since the base number – local home values – went up. A final decision will be made in September.

“Depending on the decisions the commission makes in reviewing this proposed budget, it may be possible to go a bit lower,” according to Town Manager Connie Hoffmann.

Source: Sun Sentinel, July 24, 2012, Larry Barszewski.

Citizens board approves 8.8% insurance rate hike

The governing board of Florida’s insurer of last resort approved an average rate increase of at least 8.8 percent Friday for most of its homeowner policyholders beginning next year.

The Citizens Property Insurance Corp. hike could go as high as 10.2 percent on average if state regulators accept an alternative version taking into account the risks of a major hurricane striking the state. Officials contend these risk factors wouldn’t count toward a 10 percent cap on annual increases mandated by state law.

The Citizens board could have opted for a lower 7.5 percent rate hike, but that would have been coupled with a new $15,000 limit on non-flood water damage. Several board members balked at that potential cost-savings measure, saying it would be far too low to cover damage from such things as burst pipes for many homeowners.

“I am opposed to any type of limit on water damage,” said board member Nancy Baily. “It’s a peril we need to continue to cover.”

One option would be to set a water damages cap but still allow policyholders to buy additional coverage if they wish. Several board members said they would return to the issue in the future. Water damage not caused by floods is one of Citizens’ major loss areas. The federal government sells flood insurance.

“I want to keep it on the table,” said board member John Wortman.

The 2013 rate increase will be higher in certain areas prone to sinkhole damage, mainly in the Tampa Bay area.

State-backed Citizens has grown to become Florida’s largest property insurer, with 1.4 million policyholders. Many private home insurers abandoned Florida as far too risky following the extremely active 2004 and 2005 hurricane seasons. Citizens now has a surplus of more than $6.1 billion, in large part because the state hasn’t been struck by a hurricane recently.

Citizens officials say its rates are far too low to remain competitive. It has been working over the past two years to shed policies by moving them into the private market, in part to prevent taxpayers from having to foot a big chunk of the bill if a major hurricane slams into Florida.

So far, getting rid of Citizens customers has been slow going.

Company Chief Financial Officer Sharon Binnun told the board Friday that about 100,000 policies have been shed over the past two years, including about 80,000 this year.

“That’s a really good thing for Citizens,” she said.

The proposed 2013 Citizens insurance rates proposals will be submitted to the state Office of Insurance Regulation, which has another 45 days to approve or disapprove them.
Source: The Associated Press, Curt Anderson.

U.S. rate on 30-year mortgage: 3.49%, new record

The average rate on the 30-year fixed mortgage fell again, this time dropping below 3.50 percent for the first time on records dating back 60 years.

Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan declined to 3.49 percent. That’s down from 3.53 percent last week and the lowest since long-term mortgages began in the 1950s.

The average rate on the 15-year fixed mortgage, a popular refinancing option, dipped to 2.80 percent. That’s below last week’s previous record of 2.83 percent.

The rate on the 30-year loan has fallen to or matched record-low levels in 13 of the past 14 weeks.

Cheaper mortgages have helped drive a modest but uneven housing recovery this year.

Sales of new and previously occupied homes fell in June but were higher than the same month last year. Home prices have started to stabilize in many large markets. And builders are more confident and are putting up more houses than they have in nearly four years.

Fewer Americans signed contracts to buy homes in June, the National Association of Realtors said in a separate report Thursday. The group’s index of sales agreements fell to 99.3, down from May’s reading of 100.7.

A reading of 100 is considered healthy. The index is 9.5 percent higher than it was a year ago. There’s generally a one- to two-month lag between a signed contract and a completed deal.

Low mortgage 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.

The sluggish job market could deter some from making a purchase this year.

U.S. employers added only 80,000 jobs in June, a third straight month of weak hiring. The unemployment rate was unchanged at 8.2 percent, the government reported last week. Slower job creation has caused consumers to pull back on spending.

Mortgage rates have been dropping because they tend to track the yield on the 10-year Treasury note. A weaker U.S. economy and uncertainty about how Europe will resolve its debt crisis have led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield falls.

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 rose to 0.7 point from 0.6 the previous week.

The average rate on one-year adjustable rate mortgages rose to 2.71 percent from 2.69 percent. The fee for one-year adjustable rate loans edged up to 0.5 point from 0.4 point.

The average rate on five-year adjustable rate mortgages jumped to 2.74 percent from 2.69 percent last week. The fee was unchanged at 0.6 point.
Source: The Associated Press, Marcy Gordon, AP business writer. All rights reserved.

A Setback in New Home Sales Recovery

New-home sales posted their biggest drop in more than a year, throwing a small hiccup into this housing sector's path to recovery. The Commerce Department reported that new-home sales fell 8.4 percent in June, it’s largest drop since February 2011.
Existing-home sales also posted a 5.4 percent drop in June, but most of the decline is attributed to fewer homes for sale, according to the National Association of REALTORS®.
New-home sales were pulled down in June mostly by a 60 percent drop in sales in the Northeast and an 8.6 percent decline in sales in the South. Meanwhile, new-home sales in the Midwest ticked up 14.6 percent in June and by 2.1 percent in the West, the Commerce Department reported.
Even though overall new-home sales were down nationally in June, sales are still faring better than last year, one of the worst years on record for the sector. New-home sales were up 15.1 percent in June year-over-year. And new-home construction in June reached its highest level since October 2008, as home builder confidence reached a five-year high.
Source: “New-Home Sales Take Biggest Drop in a Year,” Reuters News (July 25, 2012)

Home Prices Perk Up

For the last 12 months ending in May, U.S. home prices have increased 3.7 percent, according to the Federal Housing Finance Agency’s latest House Price Index. Home prices increased 0.8 percent from April to May on a seasonally adjusted basis, according to the index, which uses purchase prices of houses with mortgages that have been sold or guaranteed by Fannie Mae or Freddie Mac.
While prices are picking up, they still may have a long way to go in some markets. Home prices are about 17 percent below the peak reached in April 2007, according to the FHFA index. Prices are at about the same level they were at in May 2004, according to the index.
Still, other industry reports out recently are also showing an increasing in home prices.
The National Association of REALTORS® recently reported that median existing-home prices were up 7.9 percent in June from a year ago. In fact, existing-home prices in June posted their strongest gain since February 2006 and for the last four consecutive months have posted increases. NAR attributed most of the price gains to the fact that there were fewer distressed homes for sale in June.
Source: Federal Housing Finance Agency and “June Existing-Home Prices Rise Again,” REALTOR® Magazine Daily News (July 19, 2012)

Pending home sales down for month up for year

Pending home sales declined in June from May, but they marked 14 consecutive months of year-over-year gains, according to the National Association of Realtors® (NAR)

The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, slipped 1.4 percent to 99.3 in June from a downwardly revised 100.7 in May – but it’s 9.5 percent higher than June 2011 when it was 90.7. The data reflect contracts but not closings.

“Buyer interest remains strong, but fewer home listings mean fewer contract signing opportunities,” says Lawrence Yun, NAR chief economist. “We’ve been seeing a steady decline in the level of housing inventory, which is most pronounced in the lower price ranges popular with first-time buyers and investors.”

According to the Realtors Confidence Index, the buyer traffic index stood at 60 in June while the seller index was 41, which shows a large imbalance between buyer and seller interest. A value of 50 implies neutral market conditions; the disparity between buyers and sellers began to grow in early spring and has been unbalanced for the past two months.

“Any bank-owned properties that have been held back in markets with inventory shortages should be released expeditiously to help meet market demand,” Yun says. “Housing starts will likely need to double over the next two years to satisfy the pent-up demand for both rentals and ownership.”

The PHSI in the Northeast fell 7.6 percent to 76.6 in June but is 12.2 percent higher than a year ago. In the Midwest, the index slipped 0.4 percent to 94.4 in June but is 17.3 percent above June 2011.

Pending home sales in the South declined 2.0 percent to an index of 106.2 in June but are 8.8 percent above a year earlier. In the West, the index rose 2.6 percent in June to 111.5 and is 3.0 percent higher than June 2011.

Yun says there also have been delays in the closing process. “With record low mortgage interest rates, there has been a surge of refinancing on top of a higher level of home purchases, which has been creating delays recently in the closing process,” he says. “In addition, there have been some delays with recent foreclosure sales as banks take steps to ensure there are no paperwork problems. This is causing an uneven performance in sales closings, which is likely to continue, but we also see notably higher levels of sales activity compared with a relatively flat performance in the preceding four years.”

Source: Florida Realtors®

Pending home sales down for month, up for year

Pending home sales declined in June from May, but they marked 14 consecutive months of year-over-year gains, according to the National Association of Realtors® (NAR)

The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, slipped 1.4 percent to 99.3 in June from a downwardly revised 100.7 in May – but it’s 9.5 percent higher than June 2011 when it was 90.7. The data reflect contracts but not closings.

“Buyer interest remains strong, but fewer home listings mean fewer contract signing opportunities,” says Lawrence Yun, NAR chief economist. “We’ve been seeing a steady decline in the level of housing inventory, which is most pronounced in the lower price ranges popular with first-time buyers and investors.”

According to the Realtors Confidence Index, the buyer traffic index stood at 60 in June while the seller index was 41, which shows a large imbalance between buyer and seller interest. A value of 50 implies neutral market conditions; the disparity between buyers and sellers began to grow in early spring and has been unbalanced for the past two months.

“Any bank-owned properties that have been held back in markets with inventory shortages should be released expeditiously to help meet market demand,” Yun says. “Housing starts will likely need to double over the next two years to satisfy the pent-up demand for both rentals and ownership.”

The PHSI in the Northeast fell 7.6 percent to 76.6 in June but is 12.2 percent higher than a year ago. In the Midwest, the index slipped 0.4 percent to 94.4 in June but is 17.3 percent above June 2011.

Pending home sales in the South declined 2.0 percent to an index of 106.2 in June but are 8.8 percent above a year earlier. In the West, the index rose 2.6 percent in June to 111.5 and is 3.0 percent higher than June 2011.

Yun says there also have been delays in the closing process. “With record low mortgage interest rates, there has been a surge of refinancing on top of a higher level of home purchases, which has been creating delays recently in the closing process,” he says. “In addition, there have been some delays with recent foreclosure sales as banks take steps to ensure there are no paperwork problems. This is causing an uneven performance in sales closings, which is likely to continue, but we also see notably higher levels of sales activity compared with a relatively flat performance in the preceding four years.”

Source: Florida Realtors®

6 in 10 U.S. cities see foreclosure spike

RealtyTrac released its Midyear 2012 Metropolitan Foreclosure Market Report. It shows that foreclosure activity in the first half of 2012 increased from the previous six months in 125 of the nation’s 212 metropolitan areas with a population of 200,000 or more.

However, in a year-to-year comparison, foreclosure activity declined in 129 of the metro areas.

California cities made up seven of the 10 highest metro foreclosure rates and 10 of the top 20 metro foreclosure rates during the first half of the year, while Florida accounted for four of the top 20 metro foreclosure rates. Illinois accounted for two of the top 20; and Georgia, Arizona, Nevada and Colorado each had one city in the top 20.

“Increasing foreclosure starts in many local markets helped push total foreclosure activity higher in the first half of this year compared to the second half of 2011,” said Brandon Moore, CEO of RealtyTrac. “Those foreclosure starts are welcome news for prospective buyers and real estate brokers in many local markets where a shortage of aggressively priced inventory has been holding up sales activity. Markets with increasing foreclosure starts will likely see more distressed inventory for sale in the form of short sales and bank-owned properties in the second half of the year.”

Top 10 metro foreclosure rates
Stockton, Calif., posted the nation’s highest metro foreclosure rate at 2.66 percent of housing units (one in every 38) in the first half of 2012, followed by four other California cities: Modesto (2.61 percent), Riverside-San Bernardino-Ontario (2.59 percent), Vallejo-Fairfield (2.56 percent) and Merced (2.15 percent).

Florida cities in the top 20 include Orlando (No.12), Miami (No. 13), Cape Coral (No. 17) and Lakeland (No. 18).

In gauging change between the last half of 2011 and the first half of 2012, the Tampa-St. Petersburg-Clearwater area had the highest foreclosure increase at 47 percent.

Source: Florida Realtors®

Foreign Buyers Losing Interest in U.S. Real Estate?

The number of international buyers conducting home searches for U.S. properties has fallen nearly 10 percent in the last year, Trulia reports in its International House Hunter Report, which covers the period of April 1 to June 30.
The report suggests that rising U.S. asking prices are cooling international interest. The metro areas where prices have risen the fastest are where foreign-based housing searches have dropped the most too, according to Trulia’s report.
”Foreigners attracted to real estate bargains get turned off when prices increase,” says Jed Kolko, Trulia’s chief economist. “Investors want to buy when prices are at their bottom, but they’ll start to lose interest when prices rise 15 percent, as they have in Miami and Phoenix. Demand by people looking to scoop up bargains can dry up quickly when prices rise.”
Top Searched Metros by International Home Shoppers
Still, international house hunters who are continuing their search for U.S. property are showing the strongest preferences for areas in the United States that offer warm winters and show the largest price declines from the housing crisis.
The following are the top U.S. markets with the highest share of searches by international house hunters during the second quarter of 2012, according to Trulia.

1. Miami: 15.7%
2. Los Angeles: 13.7%
3. Fort Lauderdale, Fla.: 12.9%
4. Lakeland-Winter Haven, Fla.: 10.9%
5. Orlando, Fla.: 10.8%

Source: Trulia

10 Big Bargain Housing Markets

Home prices are inching up in many areas, but in several metros housing bargains can still be found. The median asking price in June nationwide was $195,000, according to Realtor.com housing data. But of the 146 housing markets that Realtor.com tracks, the following 10 areas had the lowest median asking prices in June.

• Detroit

Median list price: $99,000
Year-over-year change: +10%

• Fort Wayne, Ind.

Median list price: $109,000
Year-over-year change: -0.81%

• Toledo, Ohio

Median list price: $109,900
Year-over-year change: -4.35%

• South Bend, Ind.

Median list price: $109,900
Year-over-year change: -2.65%

• Dayton-Springfield, Ohio

Median list price: $112,500
Year-over-year change: +2.36%

• Las Vegas, Nev.-Ariz.

Median list price: $129,000
Year-over-year change: +7.76%

• Ocala, Fla.

Median list price: $129,500
Year-over-year change: +3.68%

• Springfield, Ill.

Median list price: $129,000
Year-over-year change: +1.17%

• Lakeland-Winter Haven, Fla.

Median list price: $130,000
Year-over-year change: +1.64%

• Akron, Ohio

Median list price: $134,000
Year-over-year change: +3.15%

By Melissa Dittmann Tracey, REALTOR® Magazine Daily News

State Farm questioned on rate hike request

State insurance officials and consumer advocates pressed State Farm Florida Insurance Co. today over a proposed 57.3 percent increase in rental property premiums when the company still isn’t writing new business.

Florida’s insurance consumer advocate also questioned the rationale behind State Farm’s request to have policyholders foot the bill for a $750 million loan made to the Florida subsidiary by its parent company, State Farm Mutual. That repayment will add an additional 8.5 percent to the parent company’s bottom line in addition to a 16-percent profit margin.

State Farm representatives requested the rate hike before the Florida Office of Insurance Regulation (OIR). It would impact roughly 33,000 policies held by owners of rental property, including apartment buildings and single homes that landlords rent out.

The company has about 470,000 total policies in the state, the bulk of which are residential homeowners’ policies. With few exceptions, State Farm has not written new policies in several years and has seen its exposure shrink. At one time, it had more than 1 million policies and was the state’s largest property insurer.

“In addition to the general concerns of a nearly 58 percent rate increase, is the concern that State Farm has not given any indication that this rate increase will result in them writing any new policies,” said Brian Deffenbaugh, senior counsel for the Office of Insurance Consumer Advocate.

Despite the proposed increase, State Farm actuary Sara Frankowiak said she “was not aware of any plans” for the company to resume writing policies in the state, but is instead shoring up its financial position.

“We certainly have concerns for the impact that this kind of rate change has on our customers,” Frankowiak said. “But at the same time, we owe an obligation to all of our customers to make sure we are financially strong and able to pay when the storms come.”

In 2010, State Farm announced it would not renew 125,000 policies. The action came after Florida insurance officials denied a request for a 47 percent increase in homeowners’ premiums and the company threatened to exit the state altogether.

State Farm is also requesting a 14.9 percent increase in homeowner rates and nearly 28 percent increase in condominium insurance. Those rates are subject to separate rate filings.

Given the company’s presence in Florida, Florida Justice Association representative Reggie Garcia questioned why multiple rate hearings weren’t being conducted around the state, noting the lack of public participation.

In response, OIR General Counsel Belinda Miller said the agency used to travel around the state seeking comment but policyholders often didn’t show up. In addition, most of the legal issues between Florida and State Farm have been settled in court, so both parties are pretty sure where they stand on the issue.

The statewide 57.3 percent rate hike for rental property owners varies greatly depending on the territory. Rates in Duval County would increase from $695 to $1,065, an increase of 53.3 percent. Orange County rates would jump 60.7 percent, or $720.

Miami-Dade County policies would increase 110 percent to $6,008. In Monroe County, where State Farm insures just four properties, the rates would rise from $4,857 to $14,411.

Source: News Service of Florida, Michael Peltier

U.S. new-home sales fall to 350K, 5-month low

Americans bought fewer new homes in June after sales jumped to a two-year high in May. The steep decline suggests a weaker job market and slower growth could make the housing recovery uneven.

The Commerce Department said Wednesday that sales of new homes fell 8.4 percent last month from May to a seasonally adjusted annual rate of 350,000. That’s the biggest drop since February 2011.

Sales in the Northeast plunged 60 percent in June to the lowest level since November.

Nationwide, sales in May and April were revised much higher. June’s sales pace is 15.1 percent higher than the same month last year. But sales remain well below the 700,000 annual rate that economists equate with healthy markets.

The housing market has started to show signs of recovery this year.

Builders are more confident and breaking ground on more homes. Mortgage rates are at record lows. And home prices nationwide have stabilized after losing a third of their value in the past six years. Sales of new and previously occupied homes have risen, although the increases have been choppy.

Sales of previously occupied homes fell in June to their lowest level since October. But sales were up 4.5 percent from a year ago, evidence that a modest recovery is still under way.

One trend that is holding back sales has been low inventories. There were 144,000 new homes for sale in June, just above May’s 143,000 – the lowest on records dating back to 1963. At the current sales pace, it would take 4.9 months to exhaust the June supply. Economists generally consider a six-month supply healthy.

The reduced inventory is pushing up overall home prices, which have turned up in recent months. The median price of a new home, however, fell 1.9 percent in June from May to $232,600.

Low inventories are also spurring more building. Builders broke ground last month on the most new homes and apartments in nearly four years. And permits to build single-family homes rose to the highest level since March 2010. Surveys also show that builders are more confident in the market, partly because they are seeing more interest from potential buyers.

However, many people are still having difficulty qualifying for home loans or can’t afford the larger downpayments that are being required by banks. That’s likely holding back sales.

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 statistics compiled by the National Association of Home Builders.

Economists expect housing will add to economic growth this year for the first time since 2005. But home construction and remodeling have become such a small part of the economy that the increase will likely have only a modest impact.

Other than housing, the economy has been weakening. Americans have cut their spending at retail stores for three straight months, the longest stretch of cutbacks since the recession. A survey earlier this month found that manufacturing activity contracted in June for the first time in nearly three years.

And hiring is slowing. Employers added an average of only 75,000 jobs a month from April through June. That’s much lower than the average of 226,000 a month added in the first three months of this year.

On Friday, the government will issue its first estimate for economic growth in the April-June quarter. Economists have cut back on their forecasts in recent weeks, and now expect growth at an annual rate of only 1.5 percent. That’s below the 1.9 percent pace in the first three months of the year.

Source: The Associated Press, Christopher S. Rugaber, AP economics writer.

Money-Making Strategy: Buy Up Homes, Rent Them Out?

Investment firms, hedge funds, private equity partnerships and others are turning to a new investment strategy that involves real estate and that they believe is a money-making one: Buy up single-family homes in bulk and rent them out for profits.
Their main focus has been buying up foreclosures, snagging them at big discounts, fixing them up, and then taking advantage of the hot rental market.
For example, the private equity firm Blackstone Group in the past year has bought up 2,000 single-family homes at about $300 million. Fortune Magazine calls it “one of the biggest piles of homes ever intentionally put together by an institutional investor.” But, Fortune says, it’s likely not even the largest one nowadays.
The number of homes that these firms are buying all at once differs from most smaller landlord operations in previous years. For example, Kenneth Rosen, a UC Berkeley professor, told Fortune that he’s aware of about two dozen investment funds who are buying up single-family homes and hoping to own up to 10,000 homes across the country.
These investors aren’t buying up in bulk and waiting for home prices to rise either, but they’re wealth-building plan relies on renting these homes out for a profit. They plan to sell only when the economy fully recovers.
According to a report from Goldman Sachs, investors may stand to generate 8 percent investment returns by purchasing and fixing up and then renting out homes.
However, Matthew Desmond, a Harvard professor, says he’s concerned these investment firms will drive up rental prices on homes. Others are also concerned that the investment firms won’t be able to adequately maintain all the properties they own.
Source: “Wall Street’s Hottest Investment Idea: Your House,” Fortune (July 24, 2012)

Foreign home searches drop as prices rise

Trulia – a home search website – looked at the buyers who accessed its website to check home listings. The company says that in recovering markets, the number of foreign buyers conducting a search appears to drop off as real estate prices rebound.

However, foreign buyers are still interested in U.S. real estate generally and Florida real estate specifically. Trulia listed the top 10 cities searched by foreign buyers through its website, and six are in Florida:

1. Miami
2. Los Angeles
3. Fort Lauderdale
4. Lakeland-Winter Haven
5. Orlando
6. West Palm Beach
7. Cape Coral-Fort Myers
8. Honolulu
9. San Francisco
10. Las Vegas

Trulia says that 15.7 percent of the Miami searches done through its website were by foreign buyers.

“Foreigners attracted to real estate bargains get turned off when prices increase,” says Jed Kolko, Trulia’s chief economist. “Investors want to buy when prices are at their bottom, but they’ll start to lose interest when prices rise 15 percent, as they have in Miami and Phoenix.”

Falling home prices across the U.S. real estate market have attracted foreign home searchers, most notably from Canada, the United Kingdom, Germany and Australia. However, U.S. asking prices rose nationally 0.3 percent year over year in June.

Source: Florida Realtors®

FHFA: Home prices rose 0.8% in May

The federal agency that tracks same-home sales over time under Fannie Mae and Freddie Mac says prices rose 0.8 percent in May compared to April. And prices were up 3.7% year-to-year, since May 2011.

The Federal Housing Finance Agency’s (FHFA) monthly House Price Index previously reported a 0.8 percent increase in April, though it revised the index downward slightly to a 0.7 percent increase. The index is 17.0 percent below its April 2007 peak and roughly the same as its May 2004 level.

Since the FHFA’s index looks at repeat sales of the same homes over time, it’s considered a fairly conservative yet accurate reflection of U.S. home price changes. The index includes only single-family home transactions with conforming, conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. It doesn’t include FHA, VA or other federal government mortgages, nor does it include homes with jumbo loans.

Source: Florida Realtors®

Home Owners Press for Zoning Changes to Add Spaces

With more family members—adult children and aging parents included—moving in under the same roof in recent years, more home owners are pressing for zoning law changes so they can better accommodate their growing households. Other home owners are looking to cash in on a hot rental market by adding units to their single-family homes.
“Many suburban communities have long made it difficult, or impossible, for home owners to convert underused space—barns, garages and basements—into rental apartments,” The Wall Street Journal reports. “But across the U.S., home owners are pressing for changes in zoning laws to allow rentals while home builders report a rise in demand for houses with in-law suites or quarters with separate entry.”
Some communities are concerned that adding rental apartments to suburban, single-family homes could strain public utilities, overcrowd schools, and cause traffic and parking problems. Others allow home owners to have multiple units in their single-family homes, but they may require that the home owner still occupy at least one portion of the home and that there is adequate parking and utility capacity. Still others ban homes from being rented out and even the construction of kitchens or full bathrooms in areas that could potentially be rented out. The ban has brought about a growing number of illegal rental conversions in single-family homes, The Wall Street Journal reports.
Prompted by the Great Recession, more households have been “doubling up” to curb housing costs. For example, one in five college graduates age 25 to 34 are living with their parents, according to the Pew Research Center. The number of shared households—not counting a spouse—has increased 11.4 percent from 2007 to 2010, according to the U.S. Census data. The booming rental market has prompted others to add accessory apartments in their home so they can bring in tenants for extra income potential.
"In some markets, like Washington, New York, San Francisco, [people] can't rent something in the areas they want to rent and they don't want to commute two hours away,” Mark Obrinsky, chief economist for the National Multi Housing Council, told The Wall Street Journal. "This may be making some communities more open to rentals and to think about housing more broadly than they have."
Source: “Multiple Families, One Roof,” The Wall Street Journal (July 18, 2012)

Underwhelming growth continues

Fannie Mae’s latest economic report suggests that U.S. growth and a rebound will continue, but the rate of that growth has slowed and will probably stay on a subdued pace for at least the rest of 2012.

“The data from the past month collectively point to decelerating economic growth, but growth nonetheless,” says Fannie Mae Chief Economist Doug Duncan. “However, despite signs of deteriorating momentum for economic activity, housing continues to be a bright spot as news from the housing market has been relatively upbeat, presenting a rare upside boost to the economy.”

Breaking pace with a strong first quarter, consumer spending weakened recently, according to Fannie Mae’s report. Contributing to the downturn is an uncertain job market. The June employment report showed significantly fewer hires compared to the first quarter monthly average, and ongoing concern regarding the European debt crisis and domestic financial markets may suppress a meaningful increase in private payrolls before the end of the year.

In light of these trends, the Fannie Mae’s research group revised its 2012 gross domestic product (GDP) growth projection from 2.2 percent to 2.0 percent.

The housing market continues to show positive signs, the report notes. Compared to the same time last year, home sales increased by 9 percent and single-family housing starts are approximately 20 percent higher, though the levels are still considered below healthy norms.

Residential investment is expected to increase this year from a very low base and expected to contribute to economic growth for the first time since 2005. Homeowners are showing greater confidence in one-year-ahead home price expectations, and their broad attitudes regarding the housing market continue to improve. The share of polled consumers who say they would buy a home if they were going to move increased by 6 percentage points to the highest level seen in the survey’s two-year history likely due, in part, to low interest rates and the assumption that home prices have hit bottom.

Source: Florida Realtors®

Asking Prices Post Big Jumps in These 8 Cities

Median list prices nationwide have risen 2.68 percent in the last year to $195,000, according to June housing data from Realtor.com of 146 metro markets. But in some markets across the country, asking prices have soared even more, in some cases jumping even more than 30 percent in the past year.
The following are the eight metro areas that posted the largest jumps in median list prices in June of this year compared to June 2011:
1. Santa Barbara-Santa Maria-Lompoc, Calif.
Year-over-year increase to median list prices: 33.14 percent
Median list price: $699,000
2. Phoenix-Mesa, Ariz.
Year-over-year increase: 32.19 percent
Median list price: $185,000
3. San Francisco
Year-over-year increase: 15.44 percent
Median list price: $725,000
4. Boise City, Idaho
Year-over-year increase: 14.94 percent
Median list price: $170,000
5. Oakland, Calif.
Year-over-year increase: 14.84 percent
Median list price: $379,000
6. Miami
Year-over-year increase: 14.34 percent
Median list price: $275,000
7. Fort Myers-Cape Coral, Fla.
Year-over-year increase: 14.30 percent
Median list price: $239,925
8. Washington, D.C.-Md.-Va.-W. Va.
Year-over-year increase: 14 percent
Median list price: $284,990
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News

30-year mortgage hits 3.53%, a new record

Average rates on fixed mortgages fell again this week to record lows, creating more incentive for buyers to enter the recovering housing market.

Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year loan fell to 3.53 percent. That’s down from 3.56 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 2.83 percent, below last week’s previous record of 2.86 percent.

The rate on the 30-year loan has fallen to or matched record-low levels in 12 of the past 13 weeks.

Cheaper mortgages have contributed to a modest housing recovery. Home sales fell in June but were up from the same month last year. Home prices are rising in most markets.

Builders are putting up more houses than they have in nearly four years, a long-awaited recovery that could help energize the U.S. economy.

Low mortgage 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 from making a purchase this year.

U.S. employers added only 80,000 jobs in June, a third straight month of weak hiring. The unemployment rate was unchanged at 8.2 percent, the government reported last week.

Slower job creation has caused consumers to pull back on spending.

Mortgage rates have been dropping because they tend to track the yield on the 10-year Treasury note. A weaker U.S. economy and uncertainty about how Europe will resolve its debt crisis have led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield falls.

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 slipped to 0.6 point, down from 0.7 the previous week.

The average rate on one-year adjustable rate mortgages was unchanged at 2.69 percent. The fee for one-year adjustable rate loans also stayed the same, at 0.4 point.

The average rate on five-year adjustable rate mortgages dropped to 2.69 percent from 2.74 percent last week. The fee was unchanged at 0.6 point.
Source: The Associated Press, Marcy Gordon, AP business writer. All rights reserved.

New-Home Building at Highest Level in 3 Years

The home-building industry continues to dig out of its slump as the pace of construction posts big jumps for single-family and multifamily houses. Builders had a level of starts in June not seen since October 2008, the Commerce Department reported Wednesday.
Housing starts in June soared 6.9 percent, reaching a seasonally adjusted annual rate of 760,000 units. Broken down, single-family home construction, which makes up the largest segment of those new housing starts, increased 4.7 percent in June. Multifamily housing starts, considered a volatile segment of the market, jumped 12.8 percent last month.
Housing starts were nearly 24 percent higher in June compared to last year at that time.
“Housing continues to be the one sector of the U.S. economy that is outperforming expectations,” Michael Gapen, an economist at Barclays, told Reuters.
Still, while housing starts posted a big leap in June, new housing permits — a gauge of future building — dropped 3.7 percent in June.
Source: “Housing Starts Are Up, but Building Permits Decline,” Reuters (July 18, 2012)

June Existing-Home Prices Rise Again

Existing-home prices continued to show gains but sales fell in June with tight supplies of affordable homes limiting first-time buyers, according to the National Association of REALTORS®.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums, and co-ops, declined 5.4 percent to a seasonally adjusted annual rate of 4.37 million in June from an upwardly revised 4.62 million in May, but are 4.5 percent higher than the 4.18 million-unit level in June 2011.
Lawrence Yun, NAR chief economist, said the bigger story is lower inventory and the recovery in home prices. “Despite the frictions related to obtaining mortgages, buyer interest remains solid. But inventory continues to shrink and that is limiting buying opportunities. This, in turn, is pushing up home prices in many markets,” he said. “The price improvement also results from fewer distressed homes in the sales mix.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 3.68 percent in June from 3.80 percent in May. The rate was 4.51 percent in June 2011; recordkeeping began in 1971.
The national median existing-home price for all housing types was $189,400 in June, up 7.9 percent from a year ago. This marks four back-to-back monthly price increases from a year earlier, which last occurred in February to May of 2006. June’s gain was the strongest since February 2006 when the median price rose 8.7 percent from a year prior.
Distressed homes — foreclosures and short sales sold at deep discounts — accounted for 25 percent of June sales (13 percent were foreclosures and 12 percent were short sales), unchanged from May but down from 30 percent in June 2011. Foreclosures sold for an average discount of 18 percent below market value in June, while short sales were discounted 15 percent. “The distressed portion of the market will further diminish because the number of seriously delinquent mortgages has been falling,” said Yun.
NAR President Moe Veissi said there’s been a steady growth in buyer interest. “Buyer traffic has virtually doubled from last fall, while seller traffic has risen only modestly,” he said. “The very favorable market conditions are helping to unleash a pent-up demand, which is why housing supplies have tightened and are supporting growth in home prices. Nonetheless, incorrectly priced homes will not attract buyers.”
Total housing inventory at the end June fell another 3.2 percent to 2.39 million existing homes available for sale, which represents a 6.6-month supply at the current sales pace, up from a 6.4-month supply in May. Listed inventory is 24.4 percent below a year ago when there was a 9.1-month supply.
First-time buyers accounted for 32 percent of purchasers in June, compared with 34 percent in May and 31 percent in June 2011. “A healthy market share of first-time buyers would be about 40 percent, so these figures show that tight inventory in the lower price ranges, along with unnecessarily tight credit standards, are holding back entry level activity,” Yun said.
All-cash sales edged up to 29 percent of transactions in June from 28 percent in May; they were 29 percent in June 2011. Investors, who account for the bulk of cash sales, purchased 19 percent of homes in June, up from 17 percent in May; they were 19 percent in June 2011.
Single-family home sales declined 5.1 percent to a seasonally adjusted annual rate of 3.90 million in June from 4.11 million in May, but are 4.8 percent above the 3.72 million-unit pace in June 2011. The median existing single-family home price was $190,100 in June, up 8.0 percent from a year ago.
Existing condominium and co-op sales fell 7.8 percent to a seasonally adjusted annual rate of 470,000 in June from 510,000 in May, but are 2.2 percent higher than the 460,000-unit level a year ago. The median existing condo price was $183,200 inJune, which is 6.9 percent above June 2011.
Regionally, existing-home sales in the Northeast dropped 11.5 percent to an annual pace of 540,000 in June but are 1.9 percent above June 2011. The median price in the Northeast was $253,700, down 1.8 percent from a year ago.
Existing-home sales in the Midwest slipped 1.9 percent in June to a level of 1.02 million but are 14.6 percent higher than a year ago. The median price in the Midwest was $157,600, up 8.4 percent from June 2011.
In the South, existing-home sales declined 4.4 percent to an annual pace of 1.73 million in June but are 5.5 percent above June 2011. The median price in the South was $165,000, up 6.6 percent from a year ago.
Existing-home sales in the West fell 6.9 percent to an annual level of 1.08 million in June and are 3.6 percent below a year ago. The median price in the West was $233,300, up 13.3 percent from May 2011. Given tight supply in in both the low and middle price ranges in this region, sales in the West are stronger in the higher price ranges.
Source: NAR

Fla.’s housing market continues positive trends in June

Florida’s housing market had increased pending sales, more closed sales, higher median prices and a reduced inventory of homes for sale in June, according to the latest housing data released by Florida Realtors®.

“Florida’s housing recovery continues its positive momentum,” said 2012 Florida Realtors President Summer Greene, regional manager of Better Homes and Gardens Real Estate Florida 1st in Fort Lauderdale. “All of the signs point to solid gains, which is good news for the state’s economy. In June, pending sales were up 31 percent for existing single-family homes and nearly 23 percent for townhouse-condo units compared to a year ago. The trend shows that many buyers are ready to purchase their Florida dream home, but a lack of financing options and overly restrictive credit standards remain obstacles.”

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.

Statewide closed sales of existing single-family homes totaled 18,800 in June, up 5.3 percent compared to the year-ago figure, according to data from Florida Realtors Industry Data and Analysis department and vendor partner 10K Research and Marketing. The statewide median sales price for single-family existing homes last month was $151,000, up 8.2 percent from June 2011.

According to the National Association of Realtors (NAR), the national median sales price for existing single-family homes in May 2012 was $182,900, up 7.7 percent from the previous year. 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.

Looking at Florida’s year-to-year comparison for sales of townhomes/condos, a total of 9,202 units sold statewide last month, up 1.5 percent from those sold in June 2011. The statewide median for townhome-condo properties was $110,000, up 15.8 percent over the previous year. NAR reported the national median existing condo price in May 2012 was $180,000.

Last month, the inventory for single-family homes stood at a six-months’ supply; inventory for townhome-condo properties was at a 5.9-months’ supply, according to Florida Realtors.

“The trend we’ve seen established over the past year is continuing,” said Florida Realtors Chief Economist Dr. John Tuccillo. “In June, every housing market indicator moved in the right direction. Closed sales are up, but so are pending sales, median prices, average prices and the ratio of sales price to list price. Conversely, listings are down, days on market are down and – most important – inventories are down. We have now reached a six months’ supply of inventory for existing single-family homes and 5.9-months’ supply for townhouse-condos.”

Tuccillo added, “With an improving employment environment in Florida, we expect that the housing market recovery will continue in the future.”

The interest rate for a 30-year fixed-rate mortgage averaged 3.68 percent in June 2012, significantly lower than the 4.51 percent average during the same month a year earlier, according to Freddie Mac.

To see the full statewide housing activity report, go to Florida Realtors Media Center at http://media.floridarealtors.org/ and look under Latest Releases, or download the June 2012 data report PDF under Market Data at: http://media.floridarealtors.org/market-data

Source: Florida Realtors®

Southeast Florida Monthly Market Update, June 2012

June, 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:			64
Total Value Dollar Volume:			$12,847,298.00
Average List Price:			$200,739.00
Median List Price:			$179,950.00
Change from Previous Month (N. of Units)			-2%
Change from Previous Month (Dollar Vol.)			-18%
Total Sold Properties:			117
Total Dollar Volume Sold:			$14,162,749.00
Average Sold Price:			$121,049.00
Median Sold Price:			$89,000.00
Change from Previous Month (N. of Units)			-25%
Change from Previous Month (Dollar Vol.)			-52%
Total Pending Sale:			163
Total Dollar Pending Volume:			$22,171,783.00
Average Pending Price:			$136,023.00
Median Pending Price:			$100,000.00
Change from Previous Month (N. of Units)			-15%
Change from Previous Month (Dollar Vol.)			-17%

Market update for the cities of Miramar and Pembroke Pines:

Area 3990
Total Active Listings:			21
Total Value Dollar Volume:			$7,091,000.00
Average List Price:			$337,667.00
Median List Price:			$369,900.00
Change from Previous Month (N. of Units)			40%
Change from Previous Month (Dollar Vol.)			42%
Total Sold Properties:			43
Total Dollar Volume Sold:			$14,390,100.00
Average Sold Price:			$334,653.00
Median Sold Price:			$339,000.00
Change from Previous Month (N. of Units)			39%
Change from Previous Month (Dollar Vol.)			54%
Total Pending Sale:			52
Total Dollar Pending Volume:			$15,253,426.00
Average Pending Price:			$293,335.00
Median Pending Price:			$267,500.00
Change from Previous Month (N. of Units)			-9%
Change from Previous Month (Dollar Vol.)			-2%

Total Sold for Dade and Broward Counties

Dade County
Total Sales Count:			2490
Total Sales Dollar Volume:			$949,149,435.00
Change from Previous Month (N. of Units)			-10%
Change from Previous Month (Dollar Vol.)			-5%

Broward County
Total Sales Count:			2927
Total Sales Dollar Volume:			$643,280,291.00
Change from Previous Month (N. of Units)			2%
Change from Previous Month (Dollar Vol.)			4%

The above data is for Residential Real Estate Only, Market Data from SEF MLS

For an update on your market area please contact us

Take hold of your previous Monthly Market Update here goo.gl/N2G3s

Miramar-Pembroke Pines, FL Area-June, 2012 Market Update

Miami Lakes, FL-June, 2012 Market Update

Mortgage Applications Surge Nearly 17% Last Week

Record-low mortgage rates helped spur more mortgage applications last week, led by a jump in applications for refinancings, according to the Mortgage Bankers Association in its weekly report.
The MBA’s index for mortgage applications -- which includes applications for both refinancing and home purchase -- rose 16.9 percent for the week ending July 13.
Refinance activity posted its largest jump in seven months, increasing 21.6 percent last week.
On the other hand, loans for home purchases -- which serves as a gauge of home sales -- decreased slightly by 0.1 percent last week.
Source: “Mortgage Applications Surge on Refinancing,” Reuters (July 18, 2012)

Bernanke Warns of Another Recession

Federal Reserve Chairman Ben Bernanke warned on Tuesday of threats to the economic recovery and the nation being at risk of slipping back into a recession.
Bernanke did offer a positive outlook for the housing market, however: He acknowledged the housing market is showing signs of improving, but he said that it it is contributing less to economic growth than it has in past recoveries.
Bernanke announced no new action by the central bank to try to stimulate the sluggish economy, although some analysts predict that before the end of the year the Fed will act to buy up more Treasury bonds, which could lower long-term interest rates even further from record lows.
In testimony to the Senate Banking Committee on Tuesday, Bernanke pushed lawmakers to reach a compromise on tax increases and spending cuts that are to take effect by the end of the year. He said that if lawmakers don’t approve the tax increases and spending cuts by then, it’s likely a “shallow recession would occur early next year.”
"The most effective way that the Congress could help to support the economy right now would be to work to address the nation's fiscal challenges in a way that takes into account both the need for long-run stability and the fragility of the recovery," Bernanke told the Senate Banking Committee. "Doing so earlier rather than later would help reduce uncertainty and boost household and business confidence."
Source: “Bernanke Offers Downbeat View of Economy, but no Action,” USA Today (July 17, 2012)

HUD simplifies info for Fla. cities

The U.S. Department of Housing and Urban Development (HUD) redesigned its consumer-facing website to make it easier for Florida customers to find information on HUD and FHA programs.

In addition to Florida, the redesign impacts the nine other states plus Puerto Rico that are part of HUD Southeast Region IV.

HUD has four physical locations in Florida, and each one – Jacksonville, Miami, Orlando and Tampa – has its own webpage. Each webpage has an extensive storehouse of information that covers most visitor inquiries, including:

• Office business hours
• Frequently requested information and programs
• Frequently requested telephone numbers within HUD
• Opportunity to provide customer service feedback
• Overview of HUD programs
• Foreclosure help: HOPE Now, Making Home Affordable, more
• Link to FHA loan information
• Link to HUD homes for sale

Customers may click on their respective state of Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee and Puerto Rico and the U.S. Virgin Islands to connect with the new customer service page or access the page at www.hud.gov/(type in their state) then go to the I Want to section and click on Get Help for Me/Customer Service in order to connect to the customer service page as well.

For more information, visit the Florida cities page.

Source: Florida Realtors®

US builders start most new homes since Oct. 2008

U.S. builders broke ground on the most new homes and apartments in nearly four years last month, the latest evidence that the housing market is recovering.

The Commerce Department said Wednesday that housing starts rose 6.9 percent in June from May to a seasonally adjusted annual rate of 760,000. That’s the highest since October 2008.

Single-family housing starts, which account for more than 70 percent of new residential construction, rose for the fourth straight month to a two-year high. Apartment starts, which can be volatile, increased after falling in May.

The number of permits to build homes, a sign of future construction, fell 3.7 percent to 755,000. But that’s down from May’s level, which was the highest since Sept. 2008.

And permits to build single-family homes edged up to the highest level since March 2010. Permits to build apartments declined.

“This was a good report overall,” said Martin Schwerdtfeger, an economist at TD Bank. He noted that permits remain high, which “suggests that the momentum in building activity observed in recent months should carry forward.”

Single-family housing starts rose in every region of the country last month. Total starts, which include apartments, jumped 37 percent in the West and 22 percent in the Northeast, while falling in the Midwest and South.

Despite the gains, the level of housing starts and permits are roughly half what economists consider healthy.

Still, the beleaguered housing market is showing modest gains while the rest of the economy has weakened. Federal Reserve Chairman Ben Bernanke highlighted the improvement in an otherwise gloomy report to Congress on the economy Tuesday.

Builder confidence has jumped since last fall in part because more people are expressing interest in buying a home. A measure of home builder confidence rose to a five-year high, the National Association of Home Builders said Tuesday.

Cheaper mortgages and lower home prices in many markets have made homebuying more attractive. Many economists believe that housing construction could contribute to overall economic growth this year for the first time since 2005.

New home sales rose in May to the fastest pace in more than two years. And while sales of previously occupied homes dipped in May, they were nearly 10 percent higher than a year earlier.

More home building also pushed up construction spending in May by the largest amount in five months.

Many people still have difficulty qualifying for home loans or can’t afford larger downpayments required by banks. That’s holding back home sales.

The economy is growing only modestly and job creation has slowed sharply in the past three months. U.S. employers added an average of 75,000 jobs in that time, down from a pace of 226,000 in the first three months of the year.

Though new homes represent just 20 percent of the overall home market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to data from the home builders association.
Source: The Associated Press, Christopher S. Rugaber, AP economics writer.

Zuckerberg Lands Dream Mortgage Rate

Mortgage rates have been at record lows in recent weeks, but for Mark Zuckerberg, the founder and CEO of Facebook, mortgage rates have been even sweeter.
Zuckerberg recently refinanced a $5.95 million loan for his Palo Alto, Calif., home and landed a 1.05 percent mortgage rate, Bloomberg reports. Zuckerberg refinanced his loan into an adjustable-rate mortgage.
ARMs usually offer low teaser rates for a period of time before they rise. These loans were blamed on being a big culprit of a soaring number of home owners who defaulted on their mortgages when their payments reset to higher amounts following the housing boom. Often times, when home owners opt to refinance they refinance out of ARMs and into a fixed-rate mortgage, which offers some security of never-fluctuating monthly payments.
But Zuckerberg, one of the wealthiest people in the country, likely can afford to take on the risk of an ARM.
ARMs currently carry about a 2.7 percent one-year lock-in rate, on average. Zuckerberg was able to get his rate even lower by agreeing to accept monthly resets of his interest rate, with no lock-in period, from the beginning of his loan. So his payments could fluctuate right away.
But “unlike most home owners, [Zuckerberg] can simply sell assets and pay off his mortgage loan if the interest rate on his loan suddenly skyrockets,” notes AOL Real Estate. “Despite Zuckerberg's cheap rate, trying to follow in his footsteps isn't a smart idea for most home owners. Refinancing to a fixed-rate mortgage will help you lock in affordable, predictable payments no matter what happens to interest rates in the future.”
Source: “Facebook CEO Mark Zuckerberg Refinances Mortgage Loan Down to 1%,” AOL Real Estate (July 16, 2012)

A False Housing Recovery or for Real This Time?

Deutsche Bank says that there have been seven false recoveries with the housing market in the last six years. But housing analysts and economists are more optimistic that this time around a residential housing recovery will finally stick.
The signs analysts point to:

• Stocks of homebuilding companies are rising and even doubling in the last nine months.
• Falling inventories of for-sale homes—both new and existing homes—have caused a shortage in the market and sparked higher demand.
• Home prices have appeared to bottom out in many areas and are gradually starting to reverse course and rise.
• And the increased costs of renting has made more Americans see housing as a better deal.

Housing experts also turn to a case in Delray Beach, Fla., as another recent example of a turnaround. Home buyers started lining up at 6 a.m. to buy one of the 44 homes that were for-sale that weekend.
Still, economists and housing analysts say they have concerns, such as that elevated numbers of foreclosures will soon hit the market and cause prices to fall again. But, they say, as long as the foreclosures come on the market gradually and not all at once, they believe the housing market—and home prices—can sustain the recovery.
Source: “Buying into a Housing Comeback,” Fortune (July 2012)

Inventory of For-Sale Homes Continues to Plummet

Inventory of for-sale single-family homes, condos, townhouses, and co-ops dropped more than 19 percent in June compared to a year ago, REALTOR.com reports in its analysis of 146 markets nationwide.
Of the 146 markets across the U.S. that REALTOR.com analyzed, only three markets did not see inventory levels fall year-over-year, including Denver, Philadelphia, and Shreveport-Bossier City, La.
Meanwhile, the median national list price rose 2.68 percent in June compared to June 2011, REALTOR.com reports.
“Low inventories, combined with steadily rising list prices are positive signs that the overall market is gaining traction and is entering a recovery mode,” REALTOR.com noted in a statement on the housing data.
California cities are seeing the largest drops in inventory levels, and the tightened supply of homes for-sale is sparking higher demand among home buyers. The following markets posted the largest inventory drops in June compared to June 2011, according to the REALTOR.com housing data:

1. Oakland, Calif.: -57.92%
2. Fresno, Calif.: -49.10%
3. Bakersfield, Calif.: -47.37%
4. Seattle-Bellevue-Everett, Wash.: -42.85%
5. San Jose, Calif.: -41.98%
6. San Francisco, Calif.: -39.68%
7. Phoenix-Mesa, Ariz.: -39.50%
8. Stockton-Lodi, Calif.: -38.92%
9. Riverside-San Bernardino, Calif.: -38.08%
10. Atlanta, Ga.: -37.92%
11. Sacramento, Calif.: -35.95%
12. Pueblo, Colo.: -34.59%

By Melissa Dittmann Tracey, REALTOR® Magazine Daily News