The 'Walmart Effect' on Home Prices?
http://goo.gl/lu7ev
When a Walmart comes to town, critics have long argued that the big-box discount retailer has the potential to lower nearby home values. Researchers decided to test that theory to see if there really is a “Walmart Effect” when it comes to home values.
What they found: Nearby Walmart stores can actually drive up home prices.
Economists Devin Pope at University of Chicago and Jaren Pope at Brigham Young University analyzed more than 600,000 real estate transactions near 159 newly opened Walmart stores between 2001 and 2006 in their study.
The researchers found that home owners located within a half mile of a new Walmart store saw their home prices increase anywhere from 2 percent to 3 percent, or an average of $7,000, in two-and-a-half years after a new Walmart store opened. Home owners located a half mile to one mile away also saw a boost, with home prices rising 1 percent to 2 percent or about $4,000.
"It was not until after the announcement and during the building process that we see homes close to the Walmart start to increase in value relative to homes that are slightly further away," the researchers say. "This suggests that it was the building of the Walmart itself that caused the change in housing values that we find, and that our results are not simply explained by Walmart building in areas that are experiencing housing price increases."
Critics, however, are quick to note that the study doesn’t take into account the effect on home prices with a new Walmart in rural areas. Also, some previous studies have shown that Walmart’s low prices can increase the number of nearby poverty-level households.
Source: “When Walmart Comes to Town, Home Prices Go ...” CNNMoney (May 30, 2012)
Thursday, May 31, 2012
Distressed Homes Make Up a Quarter of Home Sales
http://goo.gl/92irm
About one in four home sales during the first quarter of this year was in some form of foreclosure, according to RealtyTrac. A growing number of those distressed sales were also from short sales, the newly released report shows.
Distressed properties—either bank-owned, in default, or scheduled for auction—accounted for 26 percent of all residential sales during the first three months of this year, which is up 8 percent from the previous quarter, according to RealtyTrac.
Short sales made up a bigger bulk of that number—12 percent of all home sales—and reached a three-year high during the first quarter of this year. The percentage of short sales rose 25 percent compared to a year earlier.
Short sales in the first quarter sold for an average price of $175,461 (which is the lowest average ever recorded by RealtyTrac since 2005). Meanwhile, foreclosures in the first quarter sold for an average of $161,214, which is 27 percent below the average price of a non-foreclosure, according to RealtyTrac.
"Lenders are approving more aggressively priced short sales, which in turn is resulting in more successful short sale transactions," says Brandon Moore, chief executive of RealtyTrac.
Source: “Foreclosures Made up 26% of U.S. Home Sales in First Quarter,” CNNMoney (May 31, 2012)
http://goo.gl/92irm
About one in four home sales during the first quarter of this year was in some form of foreclosure, according to RealtyTrac. A growing number of those distressed sales were also from short sales, the newly released report shows.
Distressed properties—either bank-owned, in default, or scheduled for auction—accounted for 26 percent of all residential sales during the first three months of this year, which is up 8 percent from the previous quarter, according to RealtyTrac.
Short sales made up a bigger bulk of that number—12 percent of all home sales—and reached a three-year high during the first quarter of this year. The percentage of short sales rose 25 percent compared to a year earlier.
Short sales in the first quarter sold for an average price of $175,461 (which is the lowest average ever recorded by RealtyTrac since 2005). Meanwhile, foreclosures in the first quarter sold for an average of $161,214, which is 27 percent below the average price of a non-foreclosure, according to RealtyTrac.
"Lenders are approving more aggressively priced short sales, which in turn is resulting in more successful short sale transactions," says Brandon Moore, chief executive of RealtyTrac.
Source: “Foreclosures Made up 26% of U.S. Home Sales in First Quarter,” CNNMoney (May 31, 2012)
Consumer Confidence Reaches Highest Level in 4 Years
http://goo.gl/Hl3Yk
Americans are more positive about the direction of the economy, as consumer confidence reached its highest level since October 2007, according to a Thomson Reuters/University of Michigan index on consumer sentiment.
Americans are more positive about the job market and salary increases, and may be more willing to spend, the index showed. Half of the consumers in the index said the economy had improved in the last year. And more consumers reported plans to buy cars and household durables.
Higher-income Americans are more optimistic about salary increases than lower-income Americans, according to the index. Americans with incomes greater than $75,000 predicted more salary increases with an average 2 percent boost in income by next year. However, Americans who make less than $75,000 only anticipate a 0.3 percent increase in salaries.
“You’ve got a variety of forces working on consumer sentiment at this point. You’ve got obviously concerns about Europe, the economy in general, lower stock prices — all those are a negative,” Scott J. Brown, chief economist at Raymond James in St. Petersburg, Fla., told Reuters News. “But lower gasoline prices are a plus, so I think that’s probably part of the factor that you’ll see an increase in purchasing power if gasoline prices continue to move down.”
Source: “May Consumer Sentiment Highest in More Than 4 Years,” Reuters (May 25, 2012)
http://goo.gl/Hl3Yk
Americans are more positive about the direction of the economy, as consumer confidence reached its highest level since October 2007, according to a Thomson Reuters/University of Michigan index on consumer sentiment.
Americans are more positive about the job market and salary increases, and may be more willing to spend, the index showed. Half of the consumers in the index said the economy had improved in the last year. And more consumers reported plans to buy cars and household durables.
Higher-income Americans are more optimistic about salary increases than lower-income Americans, according to the index. Americans with incomes greater than $75,000 predicted more salary increases with an average 2 percent boost in income by next year. However, Americans who make less than $75,000 only anticipate a 0.3 percent increase in salaries.
“You’ve got a variety of forces working on consumer sentiment at this point. You’ve got obviously concerns about Europe, the economy in general, lower stock prices — all those are a negative,” Scott J. Brown, chief economist at Raymond James in St. Petersburg, Fla., told Reuters News. “But lower gasoline prices are a plus, so I think that’s probably part of the factor that you’ll see an increase in purchasing power if gasoline prices continue to move down.”
Source: “May Consumer Sentiment Highest in More Than 4 Years,” Reuters (May 25, 2012)
Is Home Ownership Still the American Dream?
http://goo.gl/FpUZp
In the aftermath of the housing crisis, some analysts are questioning whether the public still considers home ownership to be part of the American dream.
But the home ownership dream is still alive, according to several recent surveys. For example, a recently released survey by Woodrow Wilson Center found that the majority of Americans rated the importance of home ownership on a personal level at 10 out of 10.
“I think for many people, [housing] is a fundamental piece of the American dream, the ability to even think about owning one’s own home,” says Michael Martin, a host with NPR. “And for most people [it’s] not owning only one home [but] owning a better home.”
NPR has kicked off a series on home ownership and the American dream, and in its recently first segment that aired in the series experts talked about whether the dream of home ownership is still a dream.
The foreclosure crisis and plummeting home prices has shaken some people’s perceptions of the dream of home ownership, the hosts acknowledged. Many young professionals are now putting home ownership on hold and opting to rent as they get their finances in shape.
But “it's not giving up on home ownership as much as it's moving towards more of the way Germans think about home ownership, which is that a house is something you aspire to get eventually,” NPR's senior business editor, Marilyn Geewax, said on the NPR show. “It's sort of the reward you get after you've established yourself in your career. You don't start by buying a house and work your way up. You work your way up and then buy a house.”
Geewax went on to explain the shift in the perception of home ownership: “In 2001, if you bought a house, it didn't matter what phase [of] life you were in. If you held onto it until 2005, you could flip it and make a profit. Today, home ownership is really returning more to that idea that a house is someplace where you settle down. You're looking for a stable neighborhood. You look at a house as a way to shelter your loved ones, your possessions, and your money. It's a pretty good place to sink your money. Instead of paying rent every month, you put it into the house and you can build equity over time. So if you look at it as shelter and a slow growing, long term investment, financial planners will tell you that owning a house can still make a lot of sense.”
A recently released Coldwell Banker survey also revealed a shift in Americans’ perceptions of home ownership, from a financial perspective to a more emotional one.
“Instead of taking things for granted, people are protective of their jobs, homes, and futures,” says Robi Ludwig, a psychologist in New York who was involved in the study. “And now that we’re picking up the pieces [after the financial crisis], we’re seeing a psychological shift. Instead of looking at homes through the eyes of an economist, we’re realizing that a home doesn’t solely equate to financial return or measure only to a mortgage amount. Instead the home is the emotional center of our lives, and it remains a critical component of who we are.”
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
http://goo.gl/FpUZp
In the aftermath of the housing crisis, some analysts are questioning whether the public still considers home ownership to be part of the American dream.
But the home ownership dream is still alive, according to several recent surveys. For example, a recently released survey by Woodrow Wilson Center found that the majority of Americans rated the importance of home ownership on a personal level at 10 out of 10.
“I think for many people, [housing] is a fundamental piece of the American dream, the ability to even think about owning one’s own home,” says Michael Martin, a host with NPR. “And for most people [it’s] not owning only one home [but] owning a better home.”
NPR has kicked off a series on home ownership and the American dream, and in its recently first segment that aired in the series experts talked about whether the dream of home ownership is still a dream.
The foreclosure crisis and plummeting home prices has shaken some people’s perceptions of the dream of home ownership, the hosts acknowledged. Many young professionals are now putting home ownership on hold and opting to rent as they get their finances in shape.
But “it's not giving up on home ownership as much as it's moving towards more of the way Germans think about home ownership, which is that a house is something you aspire to get eventually,” NPR's senior business editor, Marilyn Geewax, said on the NPR show. “It's sort of the reward you get after you've established yourself in your career. You don't start by buying a house and work your way up. You work your way up and then buy a house.”
Geewax went on to explain the shift in the perception of home ownership: “In 2001, if you bought a house, it didn't matter what phase [of] life you were in. If you held onto it until 2005, you could flip it and make a profit. Today, home ownership is really returning more to that idea that a house is someplace where you settle down. You're looking for a stable neighborhood. You look at a house as a way to shelter your loved ones, your possessions, and your money. It's a pretty good place to sink your money. Instead of paying rent every month, you put it into the house and you can build equity over time. So if you look at it as shelter and a slow growing, long term investment, financial planners will tell you that owning a house can still make a lot of sense.”
A recently released Coldwell Banker survey also revealed a shift in Americans’ perceptions of home ownership, from a financial perspective to a more emotional one.
“Instead of taking things for granted, people are protective of their jobs, homes, and futures,” says Robi Ludwig, a psychologist in New York who was involved in the study. “And now that we’re picking up the pieces [after the financial crisis], we’re seeing a psychological shift. Instead of looking at homes through the eyes of an economist, we’re realizing that a home doesn’t solely equate to financial return or measure only to a mortgage amount. Instead the home is the emotional center of our lives, and it remains a critical component of who we are.”
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
Americans’ Perspective on Home Ownership Shifts
http://goo.gl/ZPlXy
Home ownership is getting more emotional than it used to be. A new survey by Coldwell Banker Real Estate finds that Americans are increasingly saying that the real value of home ownership is emotional, not financial. That marks a stark contrast from Americans’ perspectives on home ownership during the housing boom, in which they mostly viewed it as a financial venture.
“Instead of taking things for granted, people are protective of their jobs, homes, and futures,” says Robi Ludwig, a psychologist in New York who was involved in the study. “And now that we’re picking up the pieces [after the financial crisis], we’re seeing a psychological shift. Instead of looking at homes through the eyes of an economist, we’re realizing that a home doesn’t solely equate to financial return or measure only to a mortgage amount. Instead the home is the emotional center of our lives, and it remains a critical component of who we are.”
The more emotional ties to home ownership are causing Americans to get more practical in their home buying, the survey finds. Eighty-six percent of those surveyed say that people should no longer stretch themselves financially just to get a bigger house.
“Americans now recognize that they don’t need the biggest, most ornate home on the block,” Ludwig says. “Rather, they can and should live within their means.”
Buyers today are more swayed by a home that they can easily afford and that reflects their personalities. Seventy-one percent of Americans surveyed said that a home is an expression of their identity.
“Our homes help to define who we are, partly because we have to ask ourselves a lot of really honest questions, including what we want in life and why,” Ludwig says. She says that a home serves as an expression of peoples’ personalities, down to the wall colors they choose and the family photos they display.
“It’s only been in the last few years that the conversation has shifted almost entirely to the financial aspect of home ownership,” says Jim Gillespie, CEO of Coldwell Banker Real Estate. Gillespie adds that a more emotional perspective on home ownership will make owning a house a more central of the American Dream once again and will aid in the housing recovery.
The Coldwell Banker survey also found that 78 percent of owners say owning a home is one of their greatest life achievements. What’s more, 83 percent of renters say they plan to own a home one day.
Source: Coldwell Banker and “The American Dream Gets Another Facelift,” Time Magazine (May 15, 2012)
http://goo.gl/ZPlXy
Home ownership is getting more emotional than it used to be. A new survey by Coldwell Banker Real Estate finds that Americans are increasingly saying that the real value of home ownership is emotional, not financial. That marks a stark contrast from Americans’ perspectives on home ownership during the housing boom, in which they mostly viewed it as a financial venture.
“Instead of taking things for granted, people are protective of their jobs, homes, and futures,” says Robi Ludwig, a psychologist in New York who was involved in the study. “And now that we’re picking up the pieces [after the financial crisis], we’re seeing a psychological shift. Instead of looking at homes through the eyes of an economist, we’re realizing that a home doesn’t solely equate to financial return or measure only to a mortgage amount. Instead the home is the emotional center of our lives, and it remains a critical component of who we are.”
The more emotional ties to home ownership are causing Americans to get more practical in their home buying, the survey finds. Eighty-six percent of those surveyed say that people should no longer stretch themselves financially just to get a bigger house.
“Americans now recognize that they don’t need the biggest, most ornate home on the block,” Ludwig says. “Rather, they can and should live within their means.”
Buyers today are more swayed by a home that they can easily afford and that reflects their personalities. Seventy-one percent of Americans surveyed said that a home is an expression of their identity.
“Our homes help to define who we are, partly because we have to ask ourselves a lot of really honest questions, including what we want in life and why,” Ludwig says. She says that a home serves as an expression of peoples’ personalities, down to the wall colors they choose and the family photos they display.
“It’s only been in the last few years that the conversation has shifted almost entirely to the financial aspect of home ownership,” says Jim Gillespie, CEO of Coldwell Banker Real Estate. Gillespie adds that a more emotional perspective on home ownership will make owning a house a more central of the American Dream once again and will aid in the housing recovery.
The Coldwell Banker survey also found that 78 percent of owners say owning a home is one of their greatest life achievements. What’s more, 83 percent of renters say they plan to own a home one day.
Source: Coldwell Banker and “The American Dream Gets Another Facelift,” Time Magazine (May 15, 2012)
10 Metros Where List Prices Are Rising the Most
http://goo.gl/943Jk
Prices of for-sale homes are on the rise in several metro areas. According to Realtor.com, which tracks 146 metro markets, the following areas have seen their median list prices increase the most from March to April:
1. Minneapolis-St. Paul, Minn.-Wis.
Monthly median list price increase: 7.90 percent
Median list price: $199,500
2. Santa Barbara-Santa Maria-Lompoc, Calif.
Monthly median list price increase: 7.07 percent
Median list price: $545,000
3. Detroit
Monthly median list price increase: 4.66 percent
Median list price: $89,900
4. San Francisco
Monthly median list price increase: 4.62 percent
Median list price: $679,000
5. Seattle-Bellevue-Everett, Wash.
Monthly median list price increase: 4.46 percent
Median list price: $328,950
6. Boise City, Idaho
Monthly median list price increase: 4.40 percent
Median list price: $162,374
7. Trenton, N.J.
Monthly median list price increase: 4.26 percent
Median list price: $259,450
8. Boulder-Longmont, Colo.
Monthly median list price increase: 4.20 percent
Median list price: $375,000
9. Orange County, Calif.
Monthly median list price increase: 4.19 percent
Median list price: $448,000
10. Colorado Springs, Colo.
Monthly median list price increase: 4.09 percent
Median list price: $229,000
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
http://goo.gl/943Jk
Prices of for-sale homes are on the rise in several metro areas. According to Realtor.com, which tracks 146 metro markets, the following areas have seen their median list prices increase the most from March to April:
1. Minneapolis-St. Paul, Minn.-Wis.
Monthly median list price increase: 7.90 percent
Median list price: $199,500
2. Santa Barbara-Santa Maria-Lompoc, Calif.
Monthly median list price increase: 7.07 percent
Median list price: $545,000
3. Detroit
Monthly median list price increase: 4.66 percent
Median list price: $89,900
4. San Francisco
Monthly median list price increase: 4.62 percent
Median list price: $679,000
5. Seattle-Bellevue-Everett, Wash.
Monthly median list price increase: 4.46 percent
Median list price: $328,950
6. Boise City, Idaho
Monthly median list price increase: 4.40 percent
Median list price: $162,374
7. Trenton, N.J.
Monthly median list price increase: 4.26 percent
Median list price: $259,450
8. Boulder-Longmont, Colo.
Monthly median list price increase: 4.20 percent
Median list price: $375,000
9. Orange County, Calif.
Monthly median list price increase: 4.19 percent
Median list price: $448,000
10. Colorado Springs, Colo.
Monthly median list price increase: 4.09 percent
Median list price: $229,000
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
Short-Sale Process Expected to Speed Up in June
http://goo.gl/1iW1d
The short-sale process is expected to get shorter starting June 15. New guidelines issued under the Federal Housing Finance Agency will require Fannie Mae and Freddie Mac to give home buyers of short sales notice of their final decision within 60 days. The new guidelines also will require the mortgage giants to respond to initial short-sale requests within 30 days of receiving an offer from a potential buyer.
The speedier process is expected to be a boost to the housing market, Michael McHugh, president of the Empire State Mortgage Bankers Association, told the New York Times. Home buyers and sellers often have to wait months before they receive a decision from a lender on an offer for a short sale. Some deals fall apart just from the long wait alone.
Short sales have been increasing in recent months, as many lenders find them more appealing than foreclosures, which can be much more costly and take longer to remove from their books.
Short sales now outpace foreclosure sales in many parts of the country. Short sales represent more than 14 percent of existing-home sales, according to CoreLogic housing data from March, the most recent month available.
McHugh says that a faster short-sale process may be particularly helpful in speeding the recovery in judicial states, where foreclosures must go through the courts before they are approved. For example, in New York, judicial foreclosures can take a year or longer to be approved. Now short sales may be viewed by defaulting home owners as more of an option in avoiding foreclosure.
“There should be a significant improvement in the turnaround,” McHugh said regarding housing markets with judicial foreclosure processes.
Source: “Speeding Up Short Sales,” The New York Times (May 24, 2012)
http://goo.gl/1iW1d
The short-sale process is expected to get shorter starting June 15. New guidelines issued under the Federal Housing Finance Agency will require Fannie Mae and Freddie Mac to give home buyers of short sales notice of their final decision within 60 days. The new guidelines also will require the mortgage giants to respond to initial short-sale requests within 30 days of receiving an offer from a potential buyer.
The speedier process is expected to be a boost to the housing market, Michael McHugh, president of the Empire State Mortgage Bankers Association, told the New York Times. Home buyers and sellers often have to wait months before they receive a decision from a lender on an offer for a short sale. Some deals fall apart just from the long wait alone.
Short sales have been increasing in recent months, as many lenders find them more appealing than foreclosures, which can be much more costly and take longer to remove from their books.
Short sales now outpace foreclosure sales in many parts of the country. Short sales represent more than 14 percent of existing-home sales, according to CoreLogic housing data from March, the most recent month available.
McHugh says that a faster short-sale process may be particularly helpful in speeding the recovery in judicial states, where foreclosures must go through the courts before they are approved. For example, in New York, judicial foreclosures can take a year or longer to be approved. Now short sales may be viewed by defaulting home owners as more of an option in avoiding foreclosure.
“There should be a significant improvement in the turnaround,” McHugh said regarding housing markets with judicial foreclosure processes.
Source: “Speeding Up Short Sales,” The New York Times (May 24, 2012)
Sunday, May 27, 2012
Top 15 Hot-Spots for Recent College Grads
http://goo.gl/LYcHU
College grads say that relocating for more employment opportunities is their main motivation for moving this year, according to a recent Apartments.com survey.
So where are the best places for them to relocate to? Apartments.com and CareerBuilder for the fifth year in a row have compiled a list ranking the top 15 best cities for recent college graduates, identifying the places that offer some of the best opportunities for employment and quality of life for young professionals.
The top 15 cities for recent college graduates for 2012 are:
1. Washington, D.C.
One-bedroom average rent: $1,696
2. New York
One-bedroom average rent: $1,789
3. Boston
One-bedroom average rent: $1,814
4. Minneapolis
One-bedroom average rent: $974
5. Dallas
One-bedroom average rent: $912
6. Atlanta
One-bedroom average rent: $855
7. Chicago
One-bedroom average rent: $1,224
8. Houston
One-bedroom average rent: $910
9. Philadelphia
One-bedroom average rent: $1,070
10. Baltimore
One-bedroom average rent: $1,235
11. Denver
One-bedroom average rent: $1,089
12. Salt Lake City
One-bedroom average rent: $772
13. San Francisco
One-bedroom average rent: $1,653
14. Seattle
One-bedroom average rent: $1,199
15. Oklahoma City, Okla.
One-bedroom average rent: $676
Source: “Top 15 Best Cities for Recent College Graduates,” RISMedia (May 24, 2012)
http://goo.gl/LYcHU
College grads say that relocating for more employment opportunities is their main motivation for moving this year, according to a recent Apartments.com survey.
So where are the best places for them to relocate to? Apartments.com and CareerBuilder for the fifth year in a row have compiled a list ranking the top 15 best cities for recent college graduates, identifying the places that offer some of the best opportunities for employment and quality of life for young professionals.
The top 15 cities for recent college graduates for 2012 are:
1. Washington, D.C.
One-bedroom average rent: $1,696
2. New York
One-bedroom average rent: $1,789
3. Boston
One-bedroom average rent: $1,814
4. Minneapolis
One-bedroom average rent: $974
5. Dallas
One-bedroom average rent: $912
6. Atlanta
One-bedroom average rent: $855
7. Chicago
One-bedroom average rent: $1,224
8. Houston
One-bedroom average rent: $910
9. Philadelphia
One-bedroom average rent: $1,070
10. Baltimore
One-bedroom average rent: $1,235
11. Denver
One-bedroom average rent: $1,089
12. Salt Lake City
One-bedroom average rent: $772
13. San Francisco
One-bedroom average rent: $1,653
14. Seattle
One-bedroom average rent: $1,199
15. Oklahoma City, Okla.
One-bedroom average rent: $676
Source: “Top 15 Best Cities for Recent College Graduates,” RISMedia (May 24, 2012)
Bigger is No Longer Better in Housing, Study Says
http://goo.gl/5LLw9
Aspiring home owners are thinking small with their purchase, a trend that is expected to grow in the coming years, according to a new report — "The Shifting Nature of U.S. Housing Demand" — by the Demand Institute, a division of the U.S. Conference Board.
“Many [buyers] will scale back their housing aspirations,” according to the report. The report projects that the average size of a new home will go from 2,500 square feet during the housing boom to 2,150 square feet by 2015. That is about the same size of homes in the mid-1990s before the McMansion trend took hold.
The report suggests that other businesses may see a benefit from this expected decrease in square footage in homes, too.
For example, the report suggests that home owners likely will turn to commercial storage spaces more instead of having big basements or attics to store their treasures. Also, more home owners may opt for a gym membership over devoting square footage in their home to a workout room. Also, as kitchens get smaller and have fewer cupboards, home owners may have to make more frequent trips to the grocery store, which could be a perk for the retail industry.
Source: “Housing’s Future: Renting and Downsizing,” The Wall Street Journal (May 15, 2012)
http://goo.gl/5LLw9
Aspiring home owners are thinking small with their purchase, a trend that is expected to grow in the coming years, according to a new report — "The Shifting Nature of U.S. Housing Demand" — by the Demand Institute, a division of the U.S. Conference Board.
“Many [buyers] will scale back their housing aspirations,” according to the report. The report projects that the average size of a new home will go from 2,500 square feet during the housing boom to 2,150 square feet by 2015. That is about the same size of homes in the mid-1990s before the McMansion trend took hold.
The report suggests that other businesses may see a benefit from this expected decrease in square footage in homes, too.
For example, the report suggests that home owners likely will turn to commercial storage spaces more instead of having big basements or attics to store their treasures. Also, more home owners may opt for a gym membership over devoting square footage in their home to a workout room. Also, as kitchens get smaller and have fewer cupboards, home owners may have to make more frequent trips to the grocery store, which could be a perk for the retail industry.
Source: “Housing’s Future: Renting and Downsizing,” The Wall Street Journal (May 15, 2012)
Commercial Real Estate Improves, Multifamily Strong
http://goo.gl/2sf36
Shaking off a prolonged impact from the recession, fundamentals are gradually improving in all of the major commercial real estate sectors, according to the National Association of REALTORS® quarterly commercial real estate forecast. The apartment rental sector has fully recovered and is growing.
The findings also are confirmed in NAR’s recent quarterly Commercial Real Estate Market Survey, which collects data from members about market activity.
Lawrence Yun, NAR chief economist, said new jobs are the key. “Ongoing job creation, which is at a higher level this year, is fueling an underlying demand for commercial real estate space, assisted by a steady increase in consumer spending,” he said. “The pattern shows gradually declining commercial vacancy rates, with consequential but generally modest rent growth.”
Yun expects the economy to add 2 to 2.5 million jobs both this year and in 2013, on the heels of 1.7 million new jobs in 2011, assuming a new federal budget is passed before the end of the year. “Although we need even stronger job growth, by far the greatest impact of job creation is in multifamily housing, where newly formed households striking out on their own have increased demand for apartment rentals – this is the sector with the lowest vacancy rates and strongest rent growth, which is attracting many investors.”
Rising apartment rents also are having a positive impact on home sales because many long-time renters now view homeownership as a better long-term option, Yun noted.
A large problem remains for purchases of commercial property priced under $2.5 million. “Our recent commercial lending survey shows that there is very little capital available for small business, which is significantly impacting commercial real estate transactions, although funding is less restrictive for bigger properties.”
NAR’s latest Commercial Real Estate Outlook offers projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS, Inc., a source of commercial real estate performance information.
Office Markets
Vacancy rates in the office sector are projected to fall from 16.3 percent in the second quarter of this year to 16.0 percent in the second quarter of 2013.
The markets with the lowest office vacancy rates:
Washington, D.C.: 9.3% vacancy rate
New York City: 10%
New Orleans: 12.6%
Office rents should increase 2.0 percent this year and 2.5 percent in 2013. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is forecast at 24.7 million square feet in 2012 and 48.0 million next year.
Industrial Markets
Industrial vacancy rates are likely to decline from 11.0 percent in the current quarter to 10.7 percent in the second quarter of 2013.
The areas with the lowest industrial vacancy rates:
Orange County, Calif.: 4.7% vacancy rate
Los Angeles: 5%
Miami: 7.2%
Annual industrial rent is expected to rise 1.6 percent in 2012 and 2.4 percent next year. Net absorption of industrial space nationally is seen at 44.1 million square feet this year and 62.4 million in 2013.
Retail Markets
Retail vacancy rates are forecast to decline from 11.3 percent in the second quarter to 10.7 percent in the second quarter of 2013.
Presently, markets with the lowest retail vacancy rates:
San Francisco: 3.7% vacancy rate
Fairfield County, Conn.: 4%
Long Island, N.Y.: 5%
Average retail rent should rise 0.8 percent this year and 1.3 percent in 2013. Net absorption of retail space is projected at 8.0 million square feet this year and 21.9 million in 2013.
Multifamily Markets
The apartment rental market – multifamily housing – is likely to see vacancy rates drop from 4.5 percent in the second quarter to 4.3 percent in the second quarter of 2013; apartment vacancy rates below 5 percent generally are considered a landlord’s market with demand justifying higher rents.
Areas with the lowest multifamily vacancy rates:
New York City: 2.1%
Portland, Ore.: 2.3%
Minneapolis: 2.4%
After rising 2.2 percent last year, average apartment rent is expected to increase 4.0 percent in 2012 and another 4.1 percent next year. “Such a rent increase will raise the core consumer inflation rate. The Federal Reserve, in turn, may be forced to raise interest rates, possibly as early as late 2013.”
Multifamily net absorption is forecast at 215,900 units this year and 230,300 in 2013.
The Commercial Real Estate Outlookis published by the NAR Research Division for the commercial community. NAR’s Commercial Division, formed in 1990, provides targeted products and services to meet the needs of the commercial market and constituency within NAR. The NAR commercial components include commercial members; commercial committees, subcommittees and forums; commercial real estate boards and structures; and the NAR commercial affiliate organizations – CCIM Institute, Institute of Real Estate Management, REALTORS® Land Institute, Society of Industrial and Office REALTORS®, and Counselors of Real Estate. Approximately 78,000 NAR and institute affiliate members specialize in commercial brokerage and related services, and an additional 232,000 members offer commercial real estate services as a secondary business.
Source: NAR
http://goo.gl/2sf36
Shaking off a prolonged impact from the recession, fundamentals are gradually improving in all of the major commercial real estate sectors, according to the National Association of REALTORS® quarterly commercial real estate forecast. The apartment rental sector has fully recovered and is growing.
The findings also are confirmed in NAR’s recent quarterly Commercial Real Estate Market Survey, which collects data from members about market activity.
Lawrence Yun, NAR chief economist, said new jobs are the key. “Ongoing job creation, which is at a higher level this year, is fueling an underlying demand for commercial real estate space, assisted by a steady increase in consumer spending,” he said. “The pattern shows gradually declining commercial vacancy rates, with consequential but generally modest rent growth.”
Yun expects the economy to add 2 to 2.5 million jobs both this year and in 2013, on the heels of 1.7 million new jobs in 2011, assuming a new federal budget is passed before the end of the year. “Although we need even stronger job growth, by far the greatest impact of job creation is in multifamily housing, where newly formed households striking out on their own have increased demand for apartment rentals – this is the sector with the lowest vacancy rates and strongest rent growth, which is attracting many investors.”
Rising apartment rents also are having a positive impact on home sales because many long-time renters now view homeownership as a better long-term option, Yun noted.
A large problem remains for purchases of commercial property priced under $2.5 million. “Our recent commercial lending survey shows that there is very little capital available for small business, which is significantly impacting commercial real estate transactions, although funding is less restrictive for bigger properties.”
NAR’s latest Commercial Real Estate Outlook offers projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS, Inc., a source of commercial real estate performance information.
Office Markets
Vacancy rates in the office sector are projected to fall from 16.3 percent in the second quarter of this year to 16.0 percent in the second quarter of 2013.
The markets with the lowest office vacancy rates:
Washington, D.C.: 9.3% vacancy rate
New York City: 10%
New Orleans: 12.6%
Office rents should increase 2.0 percent this year and 2.5 percent in 2013. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is forecast at 24.7 million square feet in 2012 and 48.0 million next year.
Industrial Markets
Industrial vacancy rates are likely to decline from 11.0 percent in the current quarter to 10.7 percent in the second quarter of 2013.
The areas with the lowest industrial vacancy rates:
Orange County, Calif.: 4.7% vacancy rate
Los Angeles: 5%
Miami: 7.2%
Annual industrial rent is expected to rise 1.6 percent in 2012 and 2.4 percent next year. Net absorption of industrial space nationally is seen at 44.1 million square feet this year and 62.4 million in 2013.
Retail Markets
Retail vacancy rates are forecast to decline from 11.3 percent in the second quarter to 10.7 percent in the second quarter of 2013.
Presently, markets with the lowest retail vacancy rates:
San Francisco: 3.7% vacancy rate
Fairfield County, Conn.: 4%
Long Island, N.Y.: 5%
Average retail rent should rise 0.8 percent this year and 1.3 percent in 2013. Net absorption of retail space is projected at 8.0 million square feet this year and 21.9 million in 2013.
Multifamily Markets
The apartment rental market – multifamily housing – is likely to see vacancy rates drop from 4.5 percent in the second quarter to 4.3 percent in the second quarter of 2013; apartment vacancy rates below 5 percent generally are considered a landlord’s market with demand justifying higher rents.
Areas with the lowest multifamily vacancy rates:
New York City: 2.1%
Portland, Ore.: 2.3%
Minneapolis: 2.4%
After rising 2.2 percent last year, average apartment rent is expected to increase 4.0 percent in 2012 and another 4.1 percent next year. “Such a rent increase will raise the core consumer inflation rate. The Federal Reserve, in turn, may be forced to raise interest rates, possibly as early as late 2013.”
Multifamily net absorption is forecast at 215,900 units this year and 230,300 in 2013.
The Commercial Real Estate Outlookis published by the NAR Research Division for the commercial community. NAR’s Commercial Division, formed in 1990, provides targeted products and services to meet the needs of the commercial market and constituency within NAR. The NAR commercial components include commercial members; commercial committees, subcommittees and forums; commercial real estate boards and structures; and the NAR commercial affiliate organizations – CCIM Institute, Institute of Real Estate Management, REALTORS® Land Institute, Society of Industrial and Office REALTORS®, and Counselors of Real Estate. Approximately 78,000 NAR and institute affiliate members specialize in commercial brokerage and related services, and an additional 232,000 members offer commercial real estate services as a secondary business.
Source: NAR
Home Owners Try to Curb Rising Insurance Costs
http://goo.gl/nfZq7
Home owners' insurance premiums have been on the rise lately with many home owners seeing double-digit hikes and a rise in average annual premiums now over $1,000. Real estate professionals can help show their clients how they may be able to curb their home owners' insurance costs.
A recent article at Money Magazine offers some of the following tips:
Shop around. “If your rates rose 5 percent or more [in the last year], make sure to call the company for an explanation,” the Money Magazine article notes. “Knowing whether the increase resulted from changes in your risk profile or from broad-based increases in the marketplace will help you negotiate and comparison-shop -- which you should do at every renewal or at least every couple of years.”
Look for discounts. For example, bundling your home and auto insurance with the same insurance company could possibly save you up to 15 percent. Insurers often will also give you a discount if you install a security system to your home, storm shutters, or a new roof too.
Evaluate the deductible. Most experts will advise home owners to go for the highest deductible they can afford in order to lower their premiums. But be sure to note that “many insurers are retooling deductibles from set dollar amounts to percentages, which can often represent a substantial change,” Money Magazine notes.
Base your coverage on the right number. Base your coverage level on home owners' insurance on the recent per-square-foot replacement costs in your area, not on the home’s appraised value, notes Kevin McCarty, president of the National Association of Insurance Commissioners. To obtain that information, check out your local home builders association.
Source: “Save Big on Homeowners Insurance,” Money Magazine (May 24, 2012)
http://goo.gl/nfZq7
Home owners' insurance premiums have been on the rise lately with many home owners seeing double-digit hikes and a rise in average annual premiums now over $1,000. Real estate professionals can help show their clients how they may be able to curb their home owners' insurance costs.
A recent article at Money Magazine offers some of the following tips:
Shop around. “If your rates rose 5 percent or more [in the last year], make sure to call the company for an explanation,” the Money Magazine article notes. “Knowing whether the increase resulted from changes in your risk profile or from broad-based increases in the marketplace will help you negotiate and comparison-shop -- which you should do at every renewal or at least every couple of years.”
Look for discounts. For example, bundling your home and auto insurance with the same insurance company could possibly save you up to 15 percent. Insurers often will also give you a discount if you install a security system to your home, storm shutters, or a new roof too.
Evaluate the deductible. Most experts will advise home owners to go for the highest deductible they can afford in order to lower their premiums. But be sure to note that “many insurers are retooling deductibles from set dollar amounts to percentages, which can often represent a substantial change,” Money Magazine notes.
Base your coverage on the right number. Base your coverage level on home owners' insurance on the recent per-square-foot replacement costs in your area, not on the home’s appraised value, notes Kevin McCarty, president of the National Association of Insurance Commissioners. To obtain that information, check out your local home builders association.
Source: “Save Big on Homeowners Insurance,” Money Magazine (May 24, 2012)
Fourth Week in Row, 30-Year Rates Reach Records
http://goo.gl/ikV1A
Home buying got even more affordable this week as mortgage rates continue to ride low, breaking records, and increase home buyer affordability.
For the fourth consecutive week, 30-year fixed-rate mortgages, the most popular choice of borrowers, reached a new all-time low while 15-year fixed-rate mortgages held steady at its all-time low set last week, according to Freddie Mac’s weekly mortgage market survey.
"Mortgage rates were virtually unchanged this week with fixed-rate loans remaining at record lows and helping to drive home buyer affordability,” Frank Nothaft, Freddie Mac’s chief economist.
Indeed, housing affordability reached an all-time record high in the first quarter, according to the National Association of REALTORS®’ Housing Affordability Index.
Here’s a closer look at how mortgage rates fared for the week ending May 24, according to Freddie Mac:
30-year fixed-rate mortgages: averaged a new record of 3.78 percent, with an average 0.8 point, dropping from last week’s previous record low of 3.79 percent. A year ago at this time, 30-year rates averaged 4.60 percent.
15-year fixed-rate mortgages: averaged 3.04 percent, with an average 0.7 point, holding steady at the record low it set last week. Last year at this time, 15-year rates averaged 3.78 percent.
5-year adjustable-rate mortgages: averaged 2.83 percent, with an average 0.6 point, also unchanged from last week’s average. Last year at this time, 5-year ARMs averaged 3.41 percent.
1-year ARMs: averaged 2.75 percent, with an average 0.4 point, dropping from last week’s 2.78 percent average. A year ago, 1-year ARMs averaged 3.11 percent.
Source: Freddie Mac
http://goo.gl/ikV1A
Home buying got even more affordable this week as mortgage rates continue to ride low, breaking records, and increase home buyer affordability.
For the fourth consecutive week, 30-year fixed-rate mortgages, the most popular choice of borrowers, reached a new all-time low while 15-year fixed-rate mortgages held steady at its all-time low set last week, according to Freddie Mac’s weekly mortgage market survey.
"Mortgage rates were virtually unchanged this week with fixed-rate loans remaining at record lows and helping to drive home buyer affordability,” Frank Nothaft, Freddie Mac’s chief economist.
Indeed, housing affordability reached an all-time record high in the first quarter, according to the National Association of REALTORS®’ Housing Affordability Index.
Here’s a closer look at how mortgage rates fared for the week ending May 24, according to Freddie Mac:
30-year fixed-rate mortgages: averaged a new record of 3.78 percent, with an average 0.8 point, dropping from last week’s previous record low of 3.79 percent. A year ago at this time, 30-year rates averaged 4.60 percent.
15-year fixed-rate mortgages: averaged 3.04 percent, with an average 0.7 point, holding steady at the record low it set last week. Last year at this time, 15-year rates averaged 3.78 percent.
5-year adjustable-rate mortgages: averaged 2.83 percent, with an average 0.6 point, also unchanged from last week’s average. Last year at this time, 5-year ARMs averaged 3.41 percent.
1-year ARMs: averaged 2.75 percent, with an average 0.4 point, dropping from last week’s 2.78 percent average. A year ago, 1-year ARMs averaged 3.11 percent.
Source: Freddie Mac
Saturday, May 26, 2012
5 Worst Mobile Behavior Offenses
http://goo.gl/EoA9c
Mobile manners are getting worse, according to 81 percent of 2,000 Americans recently surveyed by Intel. Ninety-two percent of those surveyed said they wish the public would get more respectful with their mobile etiquette.
Could you be one of the offenders?
Forbes.com recently profiled some of the worst mobile manner offenses. Some of the offenses include:
1. Spending too much facetime with your phone, instead of with people. “Social network in the room — not on your device,” Anna Post, an etiquette expert, noted in the article.
2. Having your smartphone on the table. You don’t want to just clear your elbows from the table but etiquette experts also say it’s rude to have your phone on a dinner table or desk when with a client. It can be distracting to others, the article notes.
3. Keep it down. Loud talking on a mobile device is a commonly cited pet peeve when it comes to mobile behavior. “It doesn’t matter if you don’t care who overhears your conversations with the doctor, it’s that no one else wants to hear your personal calls,” Post says. Try to keep the personal calls more personal and out of earshot from others.
4. No good vibrations from phones. A lot of people try to silence their phones by putting it on vibration mode, but etiquette experts say that can sometimes be more distracting than a ring if a phone is constantly vibrating on a table. Instead, always keep your device on silent mode when with clients or at meetings.
5. Watch when you sneak in social networking. One common complaint is those who sneak in social networking time during meetings or in encounters with others. Save it for later. Human Resource managers refer to it as “social notworking” when doing it in meetings.
Find out more mobile manner mistakes at Forbes.com.
Source: "Digital Over-Sharing, Constant Complaining And Other Top Mobile Etiquette Mistakes,” Forbes.com (May 23, 2012)
http://goo.gl/EoA9c
Mobile manners are getting worse, according to 81 percent of 2,000 Americans recently surveyed by Intel. Ninety-two percent of those surveyed said they wish the public would get more respectful with their mobile etiquette.
Could you be one of the offenders?
Forbes.com recently profiled some of the worst mobile manner offenses. Some of the offenses include:
1. Spending too much facetime with your phone, instead of with people. “Social network in the room — not on your device,” Anna Post, an etiquette expert, noted in the article.
2. Having your smartphone on the table. You don’t want to just clear your elbows from the table but etiquette experts also say it’s rude to have your phone on a dinner table or desk when with a client. It can be distracting to others, the article notes.
3. Keep it down. Loud talking on a mobile device is a commonly cited pet peeve when it comes to mobile behavior. “It doesn’t matter if you don’t care who overhears your conversations with the doctor, it’s that no one else wants to hear your personal calls,” Post says. Try to keep the personal calls more personal and out of earshot from others.
4. No good vibrations from phones. A lot of people try to silence their phones by putting it on vibration mode, but etiquette experts say that can sometimes be more distracting than a ring if a phone is constantly vibrating on a table. Instead, always keep your device on silent mode when with clients or at meetings.
5. Watch when you sneak in social networking. One common complaint is those who sneak in social networking time during meetings or in encounters with others. Save it for later. Human Resource managers refer to it as “social notworking” when doing it in meetings.
Find out more mobile manner mistakes at Forbes.com.
Source: "Digital Over-Sharing, Constant Complaining And Other Top Mobile Etiquette Mistakes,” Forbes.com (May 23, 2012)
Mortgage Applications Rise Again on Low Rates
http://goo.gl/rh3ev
Record low interest rates continue to pump up mortgage volume, as more borrowers try to take advantage.
Mortgage applications increased 3.8 percent for the week ending May 18, the Mortgage Bankers Association reports. A boost in more home owners refinancing their mortgages was attributed to the rise last week.
Refinance application activity increased 5.6 percent, reaching a nearly four-month high. Meanwhile, applications for home purchases dropped 3 percent in the week, the Mortgage Bankers Association reports.
"Mortgage rates again dipped to new record lows in the survey, which spurred more borrowers back into the refinance market,” says Michael Fratantoni, MBA's vice president of research and economics. “As a result, applications for refinance loans have increased for the third straight week and are at the highest level since February of this year."
Source: “Record low rates spur mortgage application filings,” HousingWire (May 23, 2012)
http://goo.gl/rh3ev
Record low interest rates continue to pump up mortgage volume, as more borrowers try to take advantage.
Mortgage applications increased 3.8 percent for the week ending May 18, the Mortgage Bankers Association reports. A boost in more home owners refinancing their mortgages was attributed to the rise last week.
Refinance application activity increased 5.6 percent, reaching a nearly four-month high. Meanwhile, applications for home purchases dropped 3 percent in the week, the Mortgage Bankers Association reports.
"Mortgage rates again dipped to new record lows in the survey, which spurred more borrowers back into the refinance market,” says Michael Fratantoni, MBA's vice president of research and economics. “As a result, applications for refinance loans have increased for the third straight week and are at the highest level since February of this year."
Source: “Record low rates spur mortgage application filings,” HousingWire (May 23, 2012)
New-Home Sales Inch Up, Optimism Builds
http://goo.gl/TfuU4
Sales of new single-family homes in April continued to inch up, increasing optimism in the building industry that a recovery is finally taking hold.
New-home sales rose 3.3 percent in April and were up 9.9 percent year-over-year, according to new Commerce Department housing data released Wednesday.
The increase in April sales activity is in line with other important housing measures that have shown continued, gradual improvement from the first quarter as more consumers look to take advantage of today's low interest rates and affordable home prices," says Barry Rutenberg, chairman of the National Association of Home Builders. "In markets where demand is rising, we could be seeing a faster pace of recovery if not for persistently tight lending conditions that are slowing both the building and buying of new homes."
New-home sales rose the most in the Midwest, by 28.2 percent in April, and by 27.5 percent in the West. The Northeast saw new-home sales rise by 7.7 percent in April, while the South posted a 10.6 percent decline last month.
The inventory of new-homes remains historically low at a 5.1-month supply at the current sales pace. But housing experts say the record low inventories may prove an eventual boost for future housing prices.
Home prices for new-homes are up nearly 5 percent compared to a year earlier, with the median price at $235,700 from April, the Commerce Department reported.
In another optimistic sign at recovery for the housing market: The National Association of REALTORS® reported Tuesday that sales of existing homes also increased in April, rising 3.4 percent in April compared to March and increasing 10 percent year-over-year.
Source: National Association of Home Builders and “New-Home Sales Amplify Optimism About Housing,” The Wall Street Journal (May 23, 2012)
http://goo.gl/TfuU4
Sales of new single-family homes in April continued to inch up, increasing optimism in the building industry that a recovery is finally taking hold.
New-home sales rose 3.3 percent in April and were up 9.9 percent year-over-year, according to new Commerce Department housing data released Wednesday.
The increase in April sales activity is in line with other important housing measures that have shown continued, gradual improvement from the first quarter as more consumers look to take advantage of today's low interest rates and affordable home prices," says Barry Rutenberg, chairman of the National Association of Home Builders. "In markets where demand is rising, we could be seeing a faster pace of recovery if not for persistently tight lending conditions that are slowing both the building and buying of new homes."
New-home sales rose the most in the Midwest, by 28.2 percent in April, and by 27.5 percent in the West. The Northeast saw new-home sales rise by 7.7 percent in April, while the South posted a 10.6 percent decline last month.
The inventory of new-homes remains historically low at a 5.1-month supply at the current sales pace. But housing experts say the record low inventories may prove an eventual boost for future housing prices.
Home prices for new-homes are up nearly 5 percent compared to a year earlier, with the median price at $235,700 from April, the Commerce Department reported.
In another optimistic sign at recovery for the housing market: The National Association of REALTORS® reported Tuesday that sales of existing homes also increased in April, rising 3.4 percent in April compared to March and increasing 10 percent year-over-year.
Source: National Association of Home Builders and “New-Home Sales Amplify Optimism About Housing,” The Wall Street Journal (May 23, 2012)
Home Prices Begin to Bounce Back
http://goo.gl/sePUy
The Federal Housing Finance Agency reported that nationwide home prices posted their first gain in the first quarter since 2007. While the gain was modest at 0.6 percent, housing experts note it’s still another sign that the housing market is gaining momentum.
FHFA’s housing price index is calculated using home sales price information based off Freddie Mac and Fannie Mae-backed mortgages.
FHFA’s seasonally adjusted monthly index rose 1.8 percent in March over February, which is the largest monthly increase in at least 20 years. Year-over-year, home prices increased 2.7 percent, FHFA reports.
"Increased affordability and a somewhat smaller inventory of homes for sale are positively impacting house prices," says Andrew Leventis, FHFA’s principal economist.
Price increases were the highest in Hawaii with a 10.3 percent increase, and in Washington, D.C., which saw a 9.8 percent gain, according to FHFA.
Still, Number of Underwater Home Owners Remain High
Despite recent improvements in home prices, the percentage of underwater borrowers has shown little improvement in the last year. More than 30 percent of home owners in the first quarter remained underwater on their mortgage, owing more on their home than it’s currently worth, according to a new Zillow housing report.
A year ago, 32.4 percent of all borrowers had negative equity on their loan compared to 31.4 percent during the most recent quarter, Zillow reports.
Yet, Zillow notes that nine out of 10 underwater borrowers are current on their mortgage payments.
"[It's] important to note that negative equity remains only a paper loss for the vast majority of underwater home owners," says Stan Humphries, Zillow's chief economist. "As home values slowly increase and these home owners continue to pay down their principal, they will surface again."
The highest share of underwater home owners continues to be in Las Vegas, where 71 percent of home owners are underwater, followed by Phoenix (at 55.5 percent) and Atlanta (at 55.2 percent), according to the Zillow housing report.
Source: “U.S. Housing Prices Rise,” UPI (May 23, 2012); “Home Prices Rose Most in Two Decades in March, FHFA Says,” Bloomberg News (May 23, 2012) and “More than 30% of Mortgage Borrowers Still Underwater,” CNNMoney (May 24, 2012)
http://goo.gl/sePUy
The Federal Housing Finance Agency reported that nationwide home prices posted their first gain in the first quarter since 2007. While the gain was modest at 0.6 percent, housing experts note it’s still another sign that the housing market is gaining momentum.
FHFA’s housing price index is calculated using home sales price information based off Freddie Mac and Fannie Mae-backed mortgages.
FHFA’s seasonally adjusted monthly index rose 1.8 percent in March over February, which is the largest monthly increase in at least 20 years. Year-over-year, home prices increased 2.7 percent, FHFA reports.
"Increased affordability and a somewhat smaller inventory of homes for sale are positively impacting house prices," says Andrew Leventis, FHFA’s principal economist.
Price increases were the highest in Hawaii with a 10.3 percent increase, and in Washington, D.C., which saw a 9.8 percent gain, according to FHFA.
Still, Number of Underwater Home Owners Remain High
Despite recent improvements in home prices, the percentage of underwater borrowers has shown little improvement in the last year. More than 30 percent of home owners in the first quarter remained underwater on their mortgage, owing more on their home than it’s currently worth, according to a new Zillow housing report.
A year ago, 32.4 percent of all borrowers had negative equity on their loan compared to 31.4 percent during the most recent quarter, Zillow reports.
Yet, Zillow notes that nine out of 10 underwater borrowers are current on their mortgage payments.
"[It's] important to note that negative equity remains only a paper loss for the vast majority of underwater home owners," says Stan Humphries, Zillow's chief economist. "As home values slowly increase and these home owners continue to pay down their principal, they will surface again."
The highest share of underwater home owners continues to be in Las Vegas, where 71 percent of home owners are underwater, followed by Phoenix (at 55.5 percent) and Atlanta (at 55.2 percent), according to the Zillow housing report.
Source: “U.S. Housing Prices Rise,” UPI (May 23, 2012); “Home Prices Rose Most in Two Decades in March, FHFA Says,” Bloomberg News (May 23, 2012) and “More than 30% of Mortgage Borrowers Still Underwater,” CNNMoney (May 24, 2012)
Market Stabilizing? Home Inventories Fall by Nearly 20%
http://goo.gl/3vLQg
Home inventories of for-sale listings continue to fall, which may help raise overall housing prices as demand picks up.
Inventory of for-sale single-family homes, condos, townhouses, and co-ops dropped by 18.85 percent in April compared to a year ago, according to housing data of 146 metro markets tracked by REALTOR.com.
“These key indicators continue to suggest the housing market may be at a turning point and headed towards a broad-based recovery,” REALTOR.com notes in a release on its April housing data. “Lower inventories, combined with faster moving markets and relatively stable median listing prices are indicative of the kind of balanced housing market that has not been seen in many years.”
On a national basis, the median age of inventory dropped nearly 12 percent year-over-year. The median age of inventory dropped by the highest percentages in the following metro areas:
1. Oakland, Calif.
Median age of inventory: 20
Year-over-year drop: 54.54%
2. Miami
Median age of inventory: 41.08%
Year-over-year drop: 76
3. Fort Lauderdale, Fla.
Median age of inventory: 36.19%
Year-over-year drop: 67
4. Seattle-Bellevue-Everett, Wash.
Median age of inventory: 34.28%
Year-over-year drop: 46
5. Pensacola, Fla.
Median age of inventory: 33.33%
Year-over-year drop: 106
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
http://goo.gl/3vLQg
Home inventories of for-sale listings continue to fall, which may help raise overall housing prices as demand picks up.
Inventory of for-sale single-family homes, condos, townhouses, and co-ops dropped by 18.85 percent in April compared to a year ago, according to housing data of 146 metro markets tracked by REALTOR.com.
“These key indicators continue to suggest the housing market may be at a turning point and headed towards a broad-based recovery,” REALTOR.com notes in a release on its April housing data. “Lower inventories, combined with faster moving markets and relatively stable median listing prices are indicative of the kind of balanced housing market that has not been seen in many years.”
On a national basis, the median age of inventory dropped nearly 12 percent year-over-year. The median age of inventory dropped by the highest percentages in the following metro areas:
1. Oakland, Calif.
Median age of inventory: 20
Year-over-year drop: 54.54%
2. Miami
Median age of inventory: 41.08%
Year-over-year drop: 76
3. Fort Lauderdale, Fla.
Median age of inventory: 36.19%
Year-over-year drop: 67
4. Seattle-Bellevue-Everett, Wash.
Median age of inventory: 34.28%
Year-over-year drop: 46
5. Pensacola, Fla.
Median age of inventory: 33.33%
Year-over-year drop: 106
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
Friday, May 25, 2012
Foreclosed Home Owners Find a Way to Buy Again
http://ow.ly/b8kCI
Once-foreclosed home owners are slowly making a comeback in the housing market as some lenders give them a second chance at home ownership.
After defaulting on their home loans or doing a short sale on their previous homes in recent years, some home owners have found a way to buy again, Reuters News reports.
The Federal Housing Agency is the main way paving a comeback for these former home owners to buy again, according to Reuters’ interviews with lenders and real estate professionals. FHA loans can be an option for some who defaulted on their mortgage or did a short sale. FHA borrowers usually need a credit score of at least 620 and a 3.5 percent down payment, which are lower requirements than most conventional mortgages.
"These are not mainstream programs geared for mainstream borrowers," Greg McBride, senior financial analyst at Bankrate.com, told Reuters about former home owners using FHA-backed loans to get back into home ownership.
Still, home owners with mortgage defaults on their records often find its a long way to crawl back into the housing market. They must make big strides in boosting their credit scores after a foreclosure, short sale, or bankruptcy.
"Most of the loans that are getting done are for people who have really rebuilt their credit," rank Donnelly, president of the Mortgage Bankers Association of Metropolitan Washington, D.C., told Reuters. "They have to prove (to the lender that) it was something like a job loss that caused this and not chronic delinquency."
Lenders will take into consideration why the person lost their home previously, and they’re much more likely to try again on a borrower who lost their home due to a job loss than a borrower who walked away on their prior home even though they could still afford the mortgage payments.
Source: “Back from Foreclosure to Homeownership,” Reuters News (May 16, 2012)
http://ow.ly/b8kCI
Once-foreclosed home owners are slowly making a comeback in the housing market as some lenders give them a second chance at home ownership.
After defaulting on their home loans or doing a short sale on their previous homes in recent years, some home owners have found a way to buy again, Reuters News reports.
The Federal Housing Agency is the main way paving a comeback for these former home owners to buy again, according to Reuters’ interviews with lenders and real estate professionals. FHA loans can be an option for some who defaulted on their mortgage or did a short sale. FHA borrowers usually need a credit score of at least 620 and a 3.5 percent down payment, which are lower requirements than most conventional mortgages.
"These are not mainstream programs geared for mainstream borrowers," Greg McBride, senior financial analyst at Bankrate.com, told Reuters about former home owners using FHA-backed loans to get back into home ownership.
Still, home owners with mortgage defaults on their records often find its a long way to crawl back into the housing market. They must make big strides in boosting their credit scores after a foreclosure, short sale, or bankruptcy.
"Most of the loans that are getting done are for people who have really rebuilt their credit," rank Donnelly, president of the Mortgage Bankers Association of Metropolitan Washington, D.C., told Reuters. "They have to prove (to the lender that) it was something like a job loss that caused this and not chronic delinquency."
Lenders will take into consideration why the person lost their home previously, and they’re much more likely to try again on a borrower who lost their home due to a job loss than a borrower who walked away on their prior home even though they could still afford the mortgage payments.
Source: “Back from Foreclosure to Homeownership,” Reuters News (May 16, 2012)
Sellers More Willing to Work on Buyer Appeal
http://ow.ly/b8kxx
Home sellers are more willing to make changes to their home to make it more competitive in the market and more attractive to potential buyers, according to a new survey by Coldwell Banker Real Estate of 700 of its agents nationwide.
So what are sellers willing to do to better their home’s presentation? The survey found:
94 percent of the agents surveyed said their sellers are removing clutter and making cosmetic updates, including minor repairs and fresh paint.
76 percent of U.S. sellers are willing to “depersonalize” their home. (60 percent of Canadian agents say their sellers are willing to depersonalize)
59 percent of say sellers are even bringing in new home decorations or furniture to help make the home more appealing.
“When marketing your home, it’s important to help buyers imagine themselves living in the property. De-cluttering and de-personalizing is crucial to this process,” says Susanita de Diego, Coldwell Banker Canadian Consumer Specialist. Homes are competing for buyers so homes “presented with a minimum of clutter and distracting personal items ... will appeal to buyers and improve their chances of a successful sale.”
The survey also found that American sellers are more willing to get competitive on price too. Fifty-one percent of the agents surveyed said they’ve found their home sellers more willing to price their homes competitively than compared to last year.
What Buyers Want
The survey also revealed what is guiding home buyers in their home search. Thirty-three percent of the real estate agents surveyed say that new or updated kitchens are the most important home feature for home buyers. Meanwhile, 14 percent say an open floor plan and 12 percent say a new or updated bathroom are the most important home buyer features today.
The survey found that only 1 percent of the real estate agents say that their buyers rate entertainment rooms or finished basements as the most important home feature.
The most common motivation getting buyers moving: A new baby or growing family, according to the survey. Other lifestyle factors like getting married, a divorce, or retiring also are big motivators for wanting to find a new home.
Source: Coldwell Banker Real Estate
http://ow.ly/b8kxx
Home sellers are more willing to make changes to their home to make it more competitive in the market and more attractive to potential buyers, according to a new survey by Coldwell Banker Real Estate of 700 of its agents nationwide.
So what are sellers willing to do to better their home’s presentation? The survey found:
94 percent of the agents surveyed said their sellers are removing clutter and making cosmetic updates, including minor repairs and fresh paint.
76 percent of U.S. sellers are willing to “depersonalize” their home. (60 percent of Canadian agents say their sellers are willing to depersonalize)
59 percent of say sellers are even bringing in new home decorations or furniture to help make the home more appealing.
“When marketing your home, it’s important to help buyers imagine themselves living in the property. De-cluttering and de-personalizing is crucial to this process,” says Susanita de Diego, Coldwell Banker Canadian Consumer Specialist. Homes are competing for buyers so homes “presented with a minimum of clutter and distracting personal items ... will appeal to buyers and improve their chances of a successful sale.”
The survey also found that American sellers are more willing to get competitive on price too. Fifty-one percent of the agents surveyed said they’ve found their home sellers more willing to price their homes competitively than compared to last year.
What Buyers Want
The survey also revealed what is guiding home buyers in their home search. Thirty-three percent of the real estate agents surveyed say that new or updated kitchens are the most important home feature for home buyers. Meanwhile, 14 percent say an open floor plan and 12 percent say a new or updated bathroom are the most important home buyer features today.
The survey found that only 1 percent of the real estate agents say that their buyers rate entertainment rooms or finished basements as the most important home feature.
The most common motivation getting buyers moving: A new baby or growing family, according to the survey. Other lifestyle factors like getting married, a divorce, or retiring also are big motivators for wanting to find a new home.
Source: Coldwell Banker Real Estate
What May Delay Some Housing Markets' Recovery
http://ow.ly/b8kdd
he difference in how states handle foreclosures may determine how quickly their housing markets make a full recovery, according to a new report by Capital Economics.
States with nonjudicial foreclosure markets — where foreclosures can be approved outside the court system — are seeing housing prices stabilize faster than states that require foreclosures to go through the court system, according to Capital Economics. The report notes that judicial foreclosure states tend to see houses linger on the market longer, which ultimately can cause prices to drop.
"We think that differences in foreclosure procedures will continue to affect state-level house price trends, with nonjudicial states outperforming," Paul Diggle, property economist with Capital Economics. "After all, as foreclosure pipelines are brought down to healthier levels in nonjudicial, high burn-through states, supply conditions can more rapidly tighten to the point that they support price growth."
The Federal Housing Finance Agency index recently showed that housing prices were down 2.3 percent year-over-year in the fourth quarter of 2011 and dropped 0.3 percent in the fourth quarter compared to the previous quarter in states with judicial procedures for foreclosures. In states with nonjudicial foreclosure procedures, however, home prices increased 0.3 percent quarter-over-quarter and dropped only 1.6 percent year-over-year.
Economists have predicted a surge in foreclosures is coming in the next few months from the $25 billion robo-signing mortgage settlement. The foreclosure wave will pose a “much greater threat to the house price outlook in judicial states, where the foreclosure backlog is that much larger,” Diggle told HousingWire.
Source: “Housing Markets Recover Faster in Nonjudicial Foreclosure States, Report Says,” HousingWire (May 18, 2012)
http://ow.ly/b8kdd
he difference in how states handle foreclosures may determine how quickly their housing markets make a full recovery, according to a new report by Capital Economics.
States with nonjudicial foreclosure markets — where foreclosures can be approved outside the court system — are seeing housing prices stabilize faster than states that require foreclosures to go through the court system, according to Capital Economics. The report notes that judicial foreclosure states tend to see houses linger on the market longer, which ultimately can cause prices to drop.
"We think that differences in foreclosure procedures will continue to affect state-level house price trends, with nonjudicial states outperforming," Paul Diggle, property economist with Capital Economics. "After all, as foreclosure pipelines are brought down to healthier levels in nonjudicial, high burn-through states, supply conditions can more rapidly tighten to the point that they support price growth."
The Federal Housing Finance Agency index recently showed that housing prices were down 2.3 percent year-over-year in the fourth quarter of 2011 and dropped 0.3 percent in the fourth quarter compared to the previous quarter in states with judicial procedures for foreclosures. In states with nonjudicial foreclosure procedures, however, home prices increased 0.3 percent quarter-over-quarter and dropped only 1.6 percent year-over-year.
Economists have predicted a surge in foreclosures is coming in the next few months from the $25 billion robo-signing mortgage settlement. The foreclosure wave will pose a “much greater threat to the house price outlook in judicial states, where the foreclosure backlog is that much larger,” Diggle told HousingWire.
Source: “Housing Markets Recover Faster in Nonjudicial Foreclosure States, Report Says,” HousingWire (May 18, 2012)
5 Places Where Prices Are Expected to Rise Most
http://ow.ly/b8k2y
Housing markets that have seen some of the biggest drop in home prices since the housing peak are now poised for recovery in the next two years, according to a new report by Fiserv. The bargains in these cities are attracting buyer attention and expected to drive up home prices in the coming year.
Fiserv forecasts that the following five cities will see some of the biggest growths in home prices by the end of 2013:
1. Madera, Calif.
Median home price: $125,000
2013 forecast for home prices: 21.5% increase
2. Medford, Ore.
Median home price: $144,000
2013 forecast for home prices: 20.1% increase
3. Yuma, Ariz.
Median home price: $105,000
2013 forecast for home prices: 16.7% increase
4. Corvallis, Ore.
Median home price: $224,000
2013 forecast for home prices: 13.2% increase
5. Eugene, Ore.
Median home price: $166,000
2013 forecast for home prices: 12.4% increase
Find out what other cities made Fiserv’s rebounding home price list.
Source: “Where Home Prices Are Rising Fastest,” CNNMoney (May 2012)
http://ow.ly/b8k2y
Housing markets that have seen some of the biggest drop in home prices since the housing peak are now poised for recovery in the next two years, according to a new report by Fiserv. The bargains in these cities are attracting buyer attention and expected to drive up home prices in the coming year.
Fiserv forecasts that the following five cities will see some of the biggest growths in home prices by the end of 2013:
1. Madera, Calif.
Median home price: $125,000
2013 forecast for home prices: 21.5% increase
2. Medford, Ore.
Median home price: $144,000
2013 forecast for home prices: 20.1% increase
3. Yuma, Ariz.
Median home price: $105,000
2013 forecast for home prices: 16.7% increase
4. Corvallis, Ore.
Median home price: $224,000
2013 forecast for home prices: 13.2% increase
5. Eugene, Ore.
Median home price: $166,000
2013 forecast for home prices: 12.4% increase
Find out what other cities made Fiserv’s rebounding home price list.
Source: “Where Home Prices Are Rising Fastest,” CNNMoney (May 2012)
Sunday, May 20, 2012
Commercial Real Estate Follows Economy Into Recovery
http://ow.ly/b1Lom
In his remarks yesterday at the Commercial Business Trends Forum during the Midyear Legislative Meetings & Trade Expo in Washington, D.C., NAR Chief Economist Lawrence Yun sounded a cautiously optimistic note regarding the state of the commercial real estate market.
That’s because the commercial sector is so closely tied to the overall economy, which has been looking up over the past year in many respects. Specifically, the stock market has regained nearly all the losses it took in late 2008 and early 2009, Yun said. Also, corporations are sitting on large cash reserves, and are now looking for ways to invest that productively.
"The commercial market follows the broader economy with a lag time of 12 to 24 months," he explained. "Statistically, we're out of the recession. The economy's been improving since late 2009, almost three years of uninterrupted growth. Now, consumers are opening up their wallets and beginning to spend more."
Commercial real estate should pick up even more as businesses continue to grow and hire, Yun said. However, a few significant challenges remain. The possibility of a default by Greece, as well as the states of Illinois and California, looms over the financial markets. Additionally, while the jobs picture has improved somewhat, the unemployment rate will remain high for the foreseeable future.
Within commercial real estate, financing also remains a problem. Last year was a tough one to obtain commercial mortgages, and so far 2012 has been too, particularly for smaller-scale companies, Yun said. "Bigger players have gotten bigger, smaller players have gotten shut out," he explained.
In his rundown of commercial subsectors, Yun said multifamily and office are bright spots, with rising leasing costs and falling vacancies, and New York and Washington, D.C. are the strongest markets, respectively, for those categories. Industrial and retail are improving as well, but the turnaround in those areas has been slower.
— Brian Summerfield, REALTOR® Magazine
http://ow.ly/b1Lom
In his remarks yesterday at the Commercial Business Trends Forum during the Midyear Legislative Meetings & Trade Expo in Washington, D.C., NAR Chief Economist Lawrence Yun sounded a cautiously optimistic note regarding the state of the commercial real estate market.
That’s because the commercial sector is so closely tied to the overall economy, which has been looking up over the past year in many respects. Specifically, the stock market has regained nearly all the losses it took in late 2008 and early 2009, Yun said. Also, corporations are sitting on large cash reserves, and are now looking for ways to invest that productively.
"The commercial market follows the broader economy with a lag time of 12 to 24 months," he explained. "Statistically, we're out of the recession. The economy's been improving since late 2009, almost three years of uninterrupted growth. Now, consumers are opening up their wallets and beginning to spend more."
Commercial real estate should pick up even more as businesses continue to grow and hire, Yun said. However, a few significant challenges remain. The possibility of a default by Greece, as well as the states of Illinois and California, looms over the financial markets. Additionally, while the jobs picture has improved somewhat, the unemployment rate will remain high for the foreseeable future.
Within commercial real estate, financing also remains a problem. Last year was a tough one to obtain commercial mortgages, and so far 2012 has been too, particularly for smaller-scale companies, Yun said. "Bigger players have gotten bigger, smaller players have gotten shut out," he explained.
In his rundown of commercial subsectors, Yun said multifamily and office are bright spots, with rising leasing costs and falling vacancies, and New York and Washington, D.C. are the strongest markets, respectively, for those categories. Industrial and retail are improving as well, but the turnaround in those areas has been slower.
— Brian Summerfield, REALTOR® Magazine
REALTORS® Dubbed ‘Conscience of the Industry’
http://ow.ly/b1LgT
Steps to nowhere are scattered throughout the Lower Ninth Ward of New Orleans — steps that once led to homes. But since the catastrophe of Hurricane Katrina, little rebuilding has been accomplished, says James Perry, director of the Greater New Orleans Fair Housing Center, which he greatly attributes to both systemic and individual cases of housing discrimination.
In his Equal Opportunity-Cultural Diversity Forum presentation Tuesday at the NAR Midyear Legislative Meetings & Trade Expo in Washington, D.C., Perry discussed examples of actions and policies that disenfranchised African-American citizens who lived in the most devastated areas of New Orleans.
In one such case, private individuals in nearby communities and states posted online housing ads inviting “white only” displaced residents of New Orleans to share private homes or rent rooms — blatantly disregarding the Fair Housing Act.
And an ordinance established by the neighboring St. Bernard Parish prohibited property owners in the predominantly white community from renting single-family homes to anyone other than blood relatives. The parish later required property owners to obtain a permit to rent, the granting of which was at the discretion of the parish, as well as placed zoning limits on multifamily housing and, most recently, a moratorium on the construction of new apartments.
Litigation accusing St. Bernard Parish of Fair Housing violations has been ongoing for more than six years.
John Trasvina, HUD’s assistant secretary for Fair Housing and Equal Opportunity and another presenter at the forum, has intimate involvement in the case, having filed a housing discrimination complaint against the parish as well.
In 2005, Hurricane Katrina changed everything for the residents of New Orleans. But if there is a beacon of hope, it’s that housing inequalities, accessibility obstacles, and systemic flaws are starting to be recognized, Perry says.
Last year, HUD charged more Fair Housing cases than ever before. But Trasvina says the agency is working to tackle discrimination issues by addressing systemic problems rather than always taking them on a case-by-case basis.
HUD is working more closely with counties and municipalities to provide data and analysis in order to isolate housing obstacles and outline ways jurisdictions can use HUD funds to break down barriers.
Trasvina called on REALTORS® to increase community participation, and serve as a housing advocate and resource. “NAR has become the conscience of the industry and a true partner,” he said.
“REALTORS® are the most important asset, friend, and partner in the fair housing movement,” Perry added
— Erica Christoffer, REALTOR® Magazine
http://ow.ly/b1LgT
Steps to nowhere are scattered throughout the Lower Ninth Ward of New Orleans — steps that once led to homes. But since the catastrophe of Hurricane Katrina, little rebuilding has been accomplished, says James Perry, director of the Greater New Orleans Fair Housing Center, which he greatly attributes to both systemic and individual cases of housing discrimination.
In his Equal Opportunity-Cultural Diversity Forum presentation Tuesday at the NAR Midyear Legislative Meetings & Trade Expo in Washington, D.C., Perry discussed examples of actions and policies that disenfranchised African-American citizens who lived in the most devastated areas of New Orleans.
In one such case, private individuals in nearby communities and states posted online housing ads inviting “white only” displaced residents of New Orleans to share private homes or rent rooms — blatantly disregarding the Fair Housing Act.
And an ordinance established by the neighboring St. Bernard Parish prohibited property owners in the predominantly white community from renting single-family homes to anyone other than blood relatives. The parish later required property owners to obtain a permit to rent, the granting of which was at the discretion of the parish, as well as placed zoning limits on multifamily housing and, most recently, a moratorium on the construction of new apartments.
Litigation accusing St. Bernard Parish of Fair Housing violations has been ongoing for more than six years.
John Trasvina, HUD’s assistant secretary for Fair Housing and Equal Opportunity and another presenter at the forum, has intimate involvement in the case, having filed a housing discrimination complaint against the parish as well.
In 2005, Hurricane Katrina changed everything for the residents of New Orleans. But if there is a beacon of hope, it’s that housing inequalities, accessibility obstacles, and systemic flaws are starting to be recognized, Perry says.
Last year, HUD charged more Fair Housing cases than ever before. But Trasvina says the agency is working to tackle discrimination issues by addressing systemic problems rather than always taking them on a case-by-case basis.
HUD is working more closely with counties and municipalities to provide data and analysis in order to isolate housing obstacles and outline ways jurisdictions can use HUD funds to break down barriers.
Trasvina called on REALTORS® to increase community participation, and serve as a housing advocate and resource. “NAR has become the conscience of the industry and a true partner,” he said.
“REALTORS® are the most important asset, friend, and partner in the fair housing movement,” Perry added
— Erica Christoffer, REALTOR® Magazine
Mortgage Rates Sink to New Records Once Again
http://ow.ly/b1LwO
For the third-straight week, fixed-rate mortgages reached new record lows, pushing home affordability even higher for those who can qualify.
"The European debt crisis overshadowed improving economic indicators for the U.S. and allowed Treasury bond yields and fixed mortgage rates to ease for another week,” Frank Nothaft, Freddie Mac’s chief economist, said in explaining why mortgage rates continue to inch down.
Here’s a closer look at how rates fared for the week ending May 17, according to Freddie Mac’s weekly mortgage market survey:
30-year fixed-rate mortgages: averaged a new record low of 3.79 percent this week, with an average 0.7 point, down from last week’s previous record of 3.83 percent. Thirty-year mortgage rates have been below 4 percent since December. A year ago at this time, 30-year fixed-rate mortgages averaged 4.61 percent.
15-year fixed-rate mortgages: also dipped to new record lows this week, averaging 3.04 percent, with an average 0.7 point, dropping from last week’s previous record of 3.05 percent. Last year at this time, 15-year fixed-rate mortgages averaged 3.80 percent.
5-year adjustable-rate mortgages: averaged 2.83 percent, with an average 0.6 point, rising slightly from last week’s 2.81 percent average. Last year at this time, 5-year ARMs averaged 3.48 percent.
1-year ARMs: averaged 2.78 percent, with an average 0.5 point, also up slightly from last week’s 2.73 percent average. A year ago at this time, 1-year ARMs averaged 3.15 percent.
Source: Freddie Mac
http://ow.ly/b1LwO
For the third-straight week, fixed-rate mortgages reached new record lows, pushing home affordability even higher for those who can qualify.
"The European debt crisis overshadowed improving economic indicators for the U.S. and allowed Treasury bond yields and fixed mortgage rates to ease for another week,” Frank Nothaft, Freddie Mac’s chief economist, said in explaining why mortgage rates continue to inch down.
Here’s a closer look at how rates fared for the week ending May 17, according to Freddie Mac’s weekly mortgage market survey:
30-year fixed-rate mortgages: averaged a new record low of 3.79 percent this week, with an average 0.7 point, down from last week’s previous record of 3.83 percent. Thirty-year mortgage rates have been below 4 percent since December. A year ago at this time, 30-year fixed-rate mortgages averaged 4.61 percent.
15-year fixed-rate mortgages: also dipped to new record lows this week, averaging 3.04 percent, with an average 0.7 point, dropping from last week’s previous record of 3.05 percent. Last year at this time, 15-year fixed-rate mortgages averaged 3.80 percent.
5-year adjustable-rate mortgages: averaged 2.83 percent, with an average 0.6 point, rising slightly from last week’s 2.81 percent average. Last year at this time, 5-year ARMs averaged 3.48 percent.
1-year ARMs: averaged 2.78 percent, with an average 0.5 point, also up slightly from last week’s 2.73 percent average. A year ago at this time, 1-year ARMs averaged 3.15 percent.
Source: Freddie Mac
Thursday, May 17, 2012
Needy States Use Housing Aid Cash to Plug Budgets
http://ow.ly/aZd41
As the funds from a $25 billion nationwide settlement over foreclosure abuses are distributed to individual states, money set aside specifically to help distressed home owners is instead being rerouted into depleted state coffers.
Only 27 states have directed 100 percent of their funding into housing programs, reports Enterprise Community Partners. About 15, with California being the latest, have announced that the settlement money will be used in part or completely for other purposes, ranging from economic development to debt reduction.
U.S. Housing and Urban Development Secretary Shaun Donovan has been privately nudging state officials to use the money -- $2.5 billion total -- as it was intended. "Other uses fail to capitalize on the opportunities presented by the settlement to bring real, concerted relief to homeowners and the communities in which they live," he said.
Alan Jenkins of the Opportunity Agenda, which supports home ownership, goes so far as to suggest that redirecting the settlement funds could even have a racially discriminatory effect in some states. "If you dump all of these funds into the general coffers," he explains, "the African-American home owners are not going to benefit in any real way because they represent such a small percentage of the larger state."
Source: "Needy States Use Housing Aid Cash to Plug Budgets," The New York Times (05/16/12)
http://ow.ly/aZd41
As the funds from a $25 billion nationwide settlement over foreclosure abuses are distributed to individual states, money set aside specifically to help distressed home owners is instead being rerouted into depleted state coffers.
Only 27 states have directed 100 percent of their funding into housing programs, reports Enterprise Community Partners. About 15, with California being the latest, have announced that the settlement money will be used in part or completely for other purposes, ranging from economic development to debt reduction.
U.S. Housing and Urban Development Secretary Shaun Donovan has been privately nudging state officials to use the money -- $2.5 billion total -- as it was intended. "Other uses fail to capitalize on the opportunities presented by the settlement to bring real, concerted relief to homeowners and the communities in which they live," he said.
Alan Jenkins of the Opportunity Agenda, which supports home ownership, goes so far as to suggest that redirecting the settlement funds could even have a racially discriminatory effect in some states. "If you dump all of these funds into the general coffers," he explains, "the African-American home owners are not going to benefit in any real way because they represent such a small percentage of the larger state."
Source: "Needy States Use Housing Aid Cash to Plug Budgets," The New York Times (05/16/12)
Foreclosures Plummet to 5-Year Lows
http://ow.ly/aZcQy
For the third consecutive month, foreclosure filings dropped, sinking to their lowest level since July 2007, according to RealtyTrac’s April report on nationwide foreclosure activity.
Foreclosure activity, which includes default notices, scheduled auctions, and bank repossessions, fell 5 percent from March to April and were down 14 percent year-over-year.
"More distressed loans are being diverted into short sales rather than becoming completed foreclosures," says Brandon Moore, CEO of RealtyTrac.
The drop in foreclosure activity was mixed, however.
"Rising foreclosure activity in many state and local markets in April was masked at the national level by sizable decreases in hard-hit foreclosure states like California, Arizona, and Nevada," Moore said in a statement.
For example, in Nevada and Arizona, bank repossessions dropped about 70 percent and by more than 50 percent in California.
Meanwhile, in states like Florida, New Jersey, and Illinois, which require judicial review, foreclosure activity increased. New Jersey had the largest annual increase in foreclosure starts in April seeing a 180 percent jump.
In the 26 states that have a judicial foreclosure process, foreclosure activity was up 15 percent compared to April 2011.
Source: RealtyTrac and “Foreclosures Fall to Lowest Level Since 2007,” CNNMoney (May 17, 2012)
http://ow.ly/aZcQy
For the third consecutive month, foreclosure filings dropped, sinking to their lowest level since July 2007, according to RealtyTrac’s April report on nationwide foreclosure activity.
Foreclosure activity, which includes default notices, scheduled auctions, and bank repossessions, fell 5 percent from March to April and were down 14 percent year-over-year.
"More distressed loans are being diverted into short sales rather than becoming completed foreclosures," says Brandon Moore, CEO of RealtyTrac.
The drop in foreclosure activity was mixed, however.
"Rising foreclosure activity in many state and local markets in April was masked at the national level by sizable decreases in hard-hit foreclosure states like California, Arizona, and Nevada," Moore said in a statement.
For example, in Nevada and Arizona, bank repossessions dropped about 70 percent and by more than 50 percent in California.
Meanwhile, in states like Florida, New Jersey, and Illinois, which require judicial review, foreclosure activity increased. New Jersey had the largest annual increase in foreclosure starts in April seeing a 180 percent jump.
In the 26 states that have a judicial foreclosure process, foreclosure activity was up 15 percent compared to April 2011.
Source: RealtyTrac and “Foreclosures Fall to Lowest Level Since 2007,” CNNMoney (May 17, 2012)
Positive Signs Abound for Housing
http://ow.ly/aZcIn
The first quarter of 2012 was the best first quarter for real estate in five years, and pending contracts suggest that the second quarter of 2012 will be the best second quarter in five years, NAR Chief Economist Lawrence Yun said this morning at the Residential Economic Update during the NAR Midyear Legislative Meetings & Trade Expo.
Moreover, he said the second half of this year could be even better than the first, in part because of continued increases in rental costs and record affordability of homes. "Renters are getting squeezed, and they don't want to rent anymore," Yun explained. "This could be the year we see the release of pent-up demand."
Home prices have been skipping along the bottom for about a year now, Yun said, a trend that has drawn investors into the market. These investors have helped housing through a couple of difficult years and partly mitigated the dysfunctional mortgage market.
"Right now is the time to buy low," he said. "Investors are coming in to take advantage. Second homes started to recover nicely last year because of investors."
However, home values are poised for a rebound as more traditional buyers move back into the market, Yun said. In fact, this has already started to happen in areas such as Phoenix and Miami, which have seen year-over-year (March 2011 to March 2012) double-digit percentage increases in home prices.
As real estate improves, consumer psychology around home ownership will change, he added. Coupled with the recent — if relatively modest — job growth and stock market gains, conditions are right for a sustained housing recovery.
Future Challenges
Nonetheless, there are issues that could restrain a turnaround in housing. Mortgages are still too hard to come by, the shadow inventory — while declining — remains historically high, and price inflation is rising "above the Fed's comfort level," Yun said.
To address that last problem, the Federal Reserve will likely raise rates in 2013 and 2014. Yet Yun contends a modest rise in interest rates wouldn't necessarily be a bad thing for the housing market. That's because an increase in rates would cause financial institutions to focus their mortgage servicing departments on purchase loans instead of refis.
The biggest challenge, though, remains the murky political and regulatory environment, particularly the repeated threats from legislators and policymakers to alter or eliminate the mortgage interest deduction. Additionally, the country is racing toward a "fiscal cliff" on Jan. 1, 2013, the date by which a compromise federal budget must be approved. If this is delayed, there will be automatic government spending cuts, which would probably create a fallout effect in the financial markets.
U.S. Migration Patterns
In a presentation preceding Yun's, Fed Economist Raven Molloy went over data that showed migration within the United States had fallen across practically all demographic categories since the 1980s. This has significant implications for real estate, as a decline in the number of people moving around within the country can translate into a decline in home-purchase activity.
There were no sharp moves downward in internal migration during the recession, which suggests the trend is not connected to the housing market or macro-economic cycles, Molloy said. If this was the case, migration would likely increase in the next few years as the job market improves and household formation picks up. Instead, it could remain flat or fall as the economy recovers.
In his presentation, Yun said this trend, which doesn't have a clear source, is a problematic development.
"It’s troubling," he said. "We want to have a very dynamic society where people can move up and trade up."
— Brian Summerfield, REALTOR® Magazine
http://ow.ly/aZcIn
The first quarter of 2012 was the best first quarter for real estate in five years, and pending contracts suggest that the second quarter of 2012 will be the best second quarter in five years, NAR Chief Economist Lawrence Yun said this morning at the Residential Economic Update during the NAR Midyear Legislative Meetings & Trade Expo.
Moreover, he said the second half of this year could be even better than the first, in part because of continued increases in rental costs and record affordability of homes. "Renters are getting squeezed, and they don't want to rent anymore," Yun explained. "This could be the year we see the release of pent-up demand."
Home prices have been skipping along the bottom for about a year now, Yun said, a trend that has drawn investors into the market. These investors have helped housing through a couple of difficult years and partly mitigated the dysfunctional mortgage market.
"Right now is the time to buy low," he said. "Investors are coming in to take advantage. Second homes started to recover nicely last year because of investors."
However, home values are poised for a rebound as more traditional buyers move back into the market, Yun said. In fact, this has already started to happen in areas such as Phoenix and Miami, which have seen year-over-year (March 2011 to March 2012) double-digit percentage increases in home prices.
As real estate improves, consumer psychology around home ownership will change, he added. Coupled with the recent — if relatively modest — job growth and stock market gains, conditions are right for a sustained housing recovery.
Future Challenges
Nonetheless, there are issues that could restrain a turnaround in housing. Mortgages are still too hard to come by, the shadow inventory — while declining — remains historically high, and price inflation is rising "above the Fed's comfort level," Yun said.
To address that last problem, the Federal Reserve will likely raise rates in 2013 and 2014. Yet Yun contends a modest rise in interest rates wouldn't necessarily be a bad thing for the housing market. That's because an increase in rates would cause financial institutions to focus their mortgage servicing departments on purchase loans instead of refis.
The biggest challenge, though, remains the murky political and regulatory environment, particularly the repeated threats from legislators and policymakers to alter or eliminate the mortgage interest deduction. Additionally, the country is racing toward a "fiscal cliff" on Jan. 1, 2013, the date by which a compromise federal budget must be approved. If this is delayed, there will be automatic government spending cuts, which would probably create a fallout effect in the financial markets.
U.S. Migration Patterns
In a presentation preceding Yun's, Fed Economist Raven Molloy went over data that showed migration within the United States had fallen across practically all demographic categories since the 1980s. This has significant implications for real estate, as a decline in the number of people moving around within the country can translate into a decline in home-purchase activity.
There were no sharp moves downward in internal migration during the recession, which suggests the trend is not connected to the housing market or macro-economic cycles, Molloy said. If this was the case, migration would likely increase in the next few years as the job market improves and household formation picks up. Instead, it could remain flat or fall as the economy recovers.
In his presentation, Yun said this trend, which doesn't have a clear source, is a problematic development.
"It’s troubling," he said. "We want to have a very dynamic society where people can move up and trade up."
— Brian Summerfield, REALTOR® Magazine
Wednesday, May 16, 2012
Builders Get More Confident About Improving Market
http://ow.ly/aXnzs
"Firming home values, improving employment, and low mortgage rates" are driving greater optimism over a recovery taking shape in the new-home market, says David Crowe, chief economist for the National Association of Home Builders.
Builder confidence for the market of newly built single-family homes rose five points this month, posting its best reading since May of 2007, according to a measure of builder sentiment by NAHB/Wells Fargo. The index measures builder sentiment on sales conditions and expectations as well as buyer traffic.
"Builders in many markets are reporting that buyer traffic and sales have picked back up after a pause this April," says Barry Rutenberg, NAHB chairman. "It seems we have resumed the gradual upward trend in confidence that started at the beginning of this year, as stabilizing prices and excellent affordability encourage more people to pursue a new-home purchase."
Still, housing experts warn the new-home market still has a long way to go toward normalizing, based on historical trends. Builders say consumer access to credit, inaccurate appraisals, and the rise in materials costs for new construction continue to pose major challenges to the industry.
According to May's index, the largest gains in builder confidence occurred in the Northeast, followed by Midwest and South. The West posted a two-point decline in builder sentiment for May, according to the index.
Source: National Association of Home Builders
http://ow.ly/aXnzs
"Firming home values, improving employment, and low mortgage rates" are driving greater optimism over a recovery taking shape in the new-home market, says David Crowe, chief economist for the National Association of Home Builders.
Builder confidence for the market of newly built single-family homes rose five points this month, posting its best reading since May of 2007, according to a measure of builder sentiment by NAHB/Wells Fargo. The index measures builder sentiment on sales conditions and expectations as well as buyer traffic.
"Builders in many markets are reporting that buyer traffic and sales have picked back up after a pause this April," says Barry Rutenberg, NAHB chairman. "It seems we have resumed the gradual upward trend in confidence that started at the beginning of this year, as stabilizing prices and excellent affordability encourage more people to pursue a new-home purchase."
Still, housing experts warn the new-home market still has a long way to go toward normalizing, based on historical trends. Builders say consumer access to credit, inaccurate appraisals, and the rise in materials costs for new construction continue to pose major challenges to the industry.
According to May's index, the largest gains in builder confidence occurred in the Northeast, followed by Midwest and South. The West posted a two-point decline in builder sentiment for May, according to the index.
Source: National Association of Home Builders
BofA Offers Up to $30K to Owners for Short Sales
http://ow.ly/aXnsV
In an effort to curb foreclosures, Bank of America is offering some of its defaulting home owners relocation assistance of anywhere from $2,500 to as much as $30,000 if they agree to complete a short sale.
Bank of America and other banks increasingly are becoming more willing to complete short sales than in the past, seeing it as a much less expensive alternative than if a home owner falls into foreclosure. With a short sale, banks are able to get ownership of the property more quickly, which tends to allow banks to keep the homes in better condition for resale and avoid costly other fees. Also, studies have shown that short sale properties tend to sell for more than properties in foreclosure.
As such, more banks have tried out special offers to struggling home owners to get them to pursue a short sale over foreclosure. Bank of America first began piloting its short sale relocation program in Florida last year, offering up to $20,000 to home owners who agreed to complete a short sale. JPMorgan Chase piloted a program that offered some home owners up to $35,000 to complete a short sale.
Bank of America has now rolled out the program nationally. To participate, home owners must get preapproval on the sales price of the home. The sale also must close by Sept. 26, 2013.
"This program can help customers make a planned transition from ownership when home retention options have been exhausted or they have made a decision not to keep the home," says Bob Hora, a Bank of America executive.
Source: “Bank of America Offering up to $30,000 for Short Sales,” CNNMoney (May 15, 2012) and Bank of America
http://ow.ly/aXnsV
In an effort to curb foreclosures, Bank of America is offering some of its defaulting home owners relocation assistance of anywhere from $2,500 to as much as $30,000 if they agree to complete a short sale.
Bank of America and other banks increasingly are becoming more willing to complete short sales than in the past, seeing it as a much less expensive alternative than if a home owner falls into foreclosure. With a short sale, banks are able to get ownership of the property more quickly, which tends to allow banks to keep the homes in better condition for resale and avoid costly other fees. Also, studies have shown that short sale properties tend to sell for more than properties in foreclosure.
As such, more banks have tried out special offers to struggling home owners to get them to pursue a short sale over foreclosure. Bank of America first began piloting its short sale relocation program in Florida last year, offering up to $20,000 to home owners who agreed to complete a short sale. JPMorgan Chase piloted a program that offered some home owners up to $35,000 to complete a short sale.
Bank of America has now rolled out the program nationally. To participate, home owners must get preapproval on the sales price of the home. The sale also must close by Sept. 26, 2013.
"This program can help customers make a planned transition from ownership when home retention options have been exhausted or they have made a decision not to keep the home," says Bob Hora, a Bank of America executive.
Source: “Bank of America Offering up to $30,000 for Short Sales,” CNNMoney (May 15, 2012) and Bank of America
Conservation Easements Are Often Poorly Understood
http://ow.ly/aXnaN
Long-standing common-law policies against placing undue restrictions on land owners' ability to use and transfer property can lead to confusion about the proper implementation of conservation easements, explained Brian Blaesser, an attorney with Robinson and Cole in Boston, who specializes in land use issues. Blaesser discussed the pros and cons of conservation easements Tuesday at the Land Use, Property Rights, and Environmental Forum during the 2012 NAR Midyear Legislative Meetings in Washington, D.C.
Under these easements, land owners voluntarily give an environmental organization or government entity a nonpossessive interest in property for conservation purposes such as the protection of a natural habitat or preservation of a forest or farmland.
"Conservation easements don't usually involve granting physical access to a property as do other easements," Blaesser said, but rather exist for some sort of public benefit. Statutes are in place in every state recognizing conservation easements. "But they don't confer [to] the public any rights to come onto your property," which is a common misconception, he added. Nor do they take precedence over any preexisting rights.
Conservation easements typically reduce the value of a property, but they entitle the holder to federal and state tax deductions. "But the conservation easements must be perpetual, meaning they have to exist forever, for the owner to get those tax benefits," Blaesser said.
The perpetuity concept inherently raises concerns for real estate owners. "It suggests a distrust of property owners' ability to make wise decisions for the future based on current needs, values, and benefits," he said. "If a property contains a perpetual easement, it can be hard to make land available for other needs like affordable housing."
On the positive side, conservation easements generally raise the property values of land around the protected area. They also keep properties in private hands and on the tax rolls.
— Wendy Cole, REALTOR® Magazine
http://ow.ly/aXnaN
Long-standing common-law policies against placing undue restrictions on land owners' ability to use and transfer property can lead to confusion about the proper implementation of conservation easements, explained Brian Blaesser, an attorney with Robinson and Cole in Boston, who specializes in land use issues. Blaesser discussed the pros and cons of conservation easements Tuesday at the Land Use, Property Rights, and Environmental Forum during the 2012 NAR Midyear Legislative Meetings in Washington, D.C.
Under these easements, land owners voluntarily give an environmental organization or government entity a nonpossessive interest in property for conservation purposes such as the protection of a natural habitat or preservation of a forest or farmland.
"Conservation easements don't usually involve granting physical access to a property as do other easements," Blaesser said, but rather exist for some sort of public benefit. Statutes are in place in every state recognizing conservation easements. "But they don't confer [to] the public any rights to come onto your property," which is a common misconception, he added. Nor do they take precedence over any preexisting rights.
Conservation easements typically reduce the value of a property, but they entitle the holder to federal and state tax deductions. "But the conservation easements must be perpetual, meaning they have to exist forever, for the owner to get those tax benefits," Blaesser said.
The perpetuity concept inherently raises concerns for real estate owners. "It suggests a distrust of property owners' ability to make wise decisions for the future based on current needs, values, and benefits," he said. "If a property contains a perpetual easement, it can be hard to make land available for other needs like affordable housing."
On the positive side, conservation easements generally raise the property values of land around the protected area. They also keep properties in private hands and on the tax rolls.
— Wendy Cole, REALTOR® Magazine
Lender Uncertainty Restraining Housing Recovery
http://ow.ly/aXmdV
There are many positive signs in the housing market right now that suggest 2012 may be the best year for real estate since the subprime meltdown in 2007. However, the recovery has been inhibited so far due to lenders' reluctance to originate enough new mortgages to meet buyer demand, experts said yesterday at the 2012 REALTORS® Midyear Legislative Meetings & Trade Expo.
That hesitation stems from a number of factors, ranging from continued elevated levels of unemployment to deep staff cuts in financial institutions' mortgage servicing departments, said Federal Reserve Governor Elizabeth Duke, who spoke at a joint Real Estate Services/Regulatory Issues Forum yesterday morning. And she added that lenders needed to tighten up credit immediately following the financial collapse.
However, she argued that present lending levels are far too constrained and that the biggest challenge to lender confidence today is the lack of clarity around the current regulatory and political environment. Specifically, Duke cited ambiguous standards for qualified residential mortgages and servicer compensation, as well as delayed reforms of government-sponsored enterprises Fannie Mae and Freddie Mac, as contributing to this problem.
"Perhaps the most important solution I'm suggesting today is that policymakers move forward with the difficult decisions that will affect the future of the mortgage market," she said. "It will not be easy to decide what to do about the GSEs, or how best to promote a robust secondary market, or what form crucial regulations should ultimately take. And it is unlikely that anyone, including REALTORS®, will fully agree with the final decisions that are made. Nevertheless, until these tough decisions are made, uncertainties will continue to hinder access to credit, the evolution of the mortgage finance system, and the ultimate recovery in the housing market."
In a panel discussion that immediately followed Duke's presentation, Michael Stegman, counsel to the secretary of the treasury for housing finance policy, acknowledged the need for GSE reform. He said this issue would further be addressed by the Treasury Department "sometime in the spring," and wryly noted that spring goes through the first three weeks of June.
Copanelist J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, said the GSEs didn't need wholly new reforms so much as a return to pre–housing boom policies and standards. "The basic core GSE programs are solid, time has shown that they're solid, and we need to make sure that we don't foul it up," he said.
Scott added that the continued, drawn-out discussions around regulatory and policy issues were not helping the housing market. "End the conversation about changing the mortgage interest deduction," he said. "End the conversation about 20 percent down payments for QRM."
That theme of ambiguity in the political sphere continued into the afternoon. The panelists at the Real Estate Summit general session maintained that new rules and institutions weren't necessarily needed at this point. Instead, they argued that the housing recovery wouldn't get into full swing until the existing laws, policies, and regulatory authorities settled into a predictable, stable overall system.
"You don't know what's coming out of the chute next,” said Cutler Dawson, president and CEO of the Navy Federal Credit Union. "You don't know if you'll get a new appraisal system or something else. I almost wish we could have a moratorium on new ideas."
"One thing the regulatory system should do is define the rules," Moody's Chief Economist Mark Zandi said. "Once we know what the rules are, we'll get the market going again."
— Brian Summerfield, REALTOR® Magazine
http://ow.ly/aXmdV
There are many positive signs in the housing market right now that suggest 2012 may be the best year for real estate since the subprime meltdown in 2007. However, the recovery has been inhibited so far due to lenders' reluctance to originate enough new mortgages to meet buyer demand, experts said yesterday at the 2012 REALTORS® Midyear Legislative Meetings & Trade Expo.
That hesitation stems from a number of factors, ranging from continued elevated levels of unemployment to deep staff cuts in financial institutions' mortgage servicing departments, said Federal Reserve Governor Elizabeth Duke, who spoke at a joint Real Estate Services/Regulatory Issues Forum yesterday morning. And she added that lenders needed to tighten up credit immediately following the financial collapse.
However, she argued that present lending levels are far too constrained and that the biggest challenge to lender confidence today is the lack of clarity around the current regulatory and political environment. Specifically, Duke cited ambiguous standards for qualified residential mortgages and servicer compensation, as well as delayed reforms of government-sponsored enterprises Fannie Mae and Freddie Mac, as contributing to this problem.
"Perhaps the most important solution I'm suggesting today is that policymakers move forward with the difficult decisions that will affect the future of the mortgage market," she said. "It will not be easy to decide what to do about the GSEs, or how best to promote a robust secondary market, or what form crucial regulations should ultimately take. And it is unlikely that anyone, including REALTORS®, will fully agree with the final decisions that are made. Nevertheless, until these tough decisions are made, uncertainties will continue to hinder access to credit, the evolution of the mortgage finance system, and the ultimate recovery in the housing market."
In a panel discussion that immediately followed Duke's presentation, Michael Stegman, counsel to the secretary of the treasury for housing finance policy, acknowledged the need for GSE reform. He said this issue would further be addressed by the Treasury Department "sometime in the spring," and wryly noted that spring goes through the first three weeks of June.
Copanelist J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, said the GSEs didn't need wholly new reforms so much as a return to pre–housing boom policies and standards. "The basic core GSE programs are solid, time has shown that they're solid, and we need to make sure that we don't foul it up," he said.
Scott added that the continued, drawn-out discussions around regulatory and policy issues were not helping the housing market. "End the conversation about changing the mortgage interest deduction," he said. "End the conversation about 20 percent down payments for QRM."
That theme of ambiguity in the political sphere continued into the afternoon. The panelists at the Real Estate Summit general session maintained that new rules and institutions weren't necessarily needed at this point. Instead, they argued that the housing recovery wouldn't get into full swing until the existing laws, policies, and regulatory authorities settled into a predictable, stable overall system.
"You don't know what's coming out of the chute next,” said Cutler Dawson, president and CEO of the Navy Federal Credit Union. "You don't know if you'll get a new appraisal system or something else. I almost wish we could have a moratorium on new ideas."
"One thing the regulatory system should do is define the rules," Moody's Chief Economist Mark Zandi said. "Once we know what the rules are, we'll get the market going again."
— Brian Summerfield, REALTOR® Magazine
Tuesday, May 15, 2012
Ally Bank Mortgage Unit Files for Bankruptcy
http://ow.ly/aW2aN
Residential Capital, a mortgage subsidiary of Ally Financial Inc. filed for Chapter 11 bankruptcy on Monday.
“By severing itself from ResCap, Ally hopes to focus its efforts on its core auto-lending and online-banking businesses,” The Wall Street Journal reports. Ally is the former in-house financing arm for General Motors Co.
ResCap has been a drain on Ally's finances for several years as the number of mortgage defaults soared during the housing crisis. Ally has faced billions of dollars in lawsuits over mortgage securities that have turned sour and the bank has been trying to break ties from ResCap. But some analysts say the companies are too intertwined and it will be difficult to separate the two, despite the bankruptcy filing by ResCap.
The Associated Press reports that ResCap’s mortgage unit remains very reliant on Ally for funding "and there can be no assurance that Ally or its affiliates will continue such actions," according to the bankruptcy filing.
Ally officials say they will cover about $1.3 billion related to ResCap’s bankruptcy. ResCap is expected to emerge from bankruptcy quickly and by the end of the year, already reaching agreements with creditors, company officials note.
Ally is 74 percent owned by the U.S. government and still owes the government nearly $12 billion. Through the ResCap bankruptcy filing and Ally’s possible sale of some of its international operations, the government says it hopes it will get the remainder of the bailout money Ally owes repaid faster.
Source: “ResCap Files for Protection Under Chapter 11,” The Wall Street Journal (May 14, 2012) and “Ally Financial's ResCap Mortgage Unit Files for Bankruptcy,” Associated Press (May 14, 2012)
Disqus
http://ow.ly/aW2aN
Residential Capital, a mortgage subsidiary of Ally Financial Inc. filed for Chapter 11 bankruptcy on Monday.
“By severing itself from ResCap, Ally hopes to focus its efforts on its core auto-lending and online-banking businesses,” The Wall Street Journal reports. Ally is the former in-house financing arm for General Motors Co.
ResCap has been a drain on Ally's finances for several years as the number of mortgage defaults soared during the housing crisis. Ally has faced billions of dollars in lawsuits over mortgage securities that have turned sour and the bank has been trying to break ties from ResCap. But some analysts say the companies are too intertwined and it will be difficult to separate the two, despite the bankruptcy filing by ResCap.
The Associated Press reports that ResCap’s mortgage unit remains very reliant on Ally for funding "and there can be no assurance that Ally or its affiliates will continue such actions," according to the bankruptcy filing.
Ally officials say they will cover about $1.3 billion related to ResCap’s bankruptcy. ResCap is expected to emerge from bankruptcy quickly and by the end of the year, already reaching agreements with creditors, company officials note.
Ally is 74 percent owned by the U.S. government and still owes the government nearly $12 billion. Through the ResCap bankruptcy filing and Ally’s possible sale of some of its international operations, the government says it hopes it will get the remainder of the bailout money Ally owes repaid faster.
Source: “ResCap Files for Protection Under Chapter 11,” The Wall Street Journal (May 14, 2012) and “Ally Financial's ResCap Mortgage Unit Files for Bankruptcy,” Associated Press (May 14, 2012)
Disqus
Lenders Put Borrowers Through More Scrutiny
http://ow.ly/aW1UI
Home buyers and refinancers applying for a mortgage are being caught off guard in what all lenders are asking for when approving a loan.
The Wall Street Journal reports an incident where a borrower was even asked for a copy of her divorce decree — from two years ago — and asked to explain a deposit of about $200 into her bank account when applying for a mortgage.
Lenders are being more careful in who they issue a loan to nowadays, tightening underwriting standards and carefully documenting applicants’ finances and ability to repay the loan.
Practically nothing is off the table these days when it comes to what a lender may ask for. Lenders may question any deposits to bank accounts, increases in a borrower’s income, and any disputed balance over a late payment, even if it was from years ago. Some lenders are even requesting college transcripts and diplomas in verifying employment history.
Any credit inquiries on a person’s credit invites red flags and more questions from lenders, Rhonda Porter, a loan officer in Seattle, told The Wall Street Journal.
"I have customers who know they're a strong [borrower], and they're still asked for documentation," Porter says. "Some of them get their feathers ruffled."
Some borrowers — particularly refinancers — are getting so frustrated by the extra paperwork and questions that they are increasingly just stopping the process, according to news reports.
Stella Adams, a fair housing advocate in North Carolina, says banks need to lighten up. Banks should return to "solid, old-fashioned underwriting" standards that were used prior to the housing boom and stop making it so difficult for people to get financing.
Source: "Lenders Want to Know Everything," The Wall Street Journal (May 12, 2012)
http://ow.ly/aW1UI
Home buyers and refinancers applying for a mortgage are being caught off guard in what all lenders are asking for when approving a loan.
The Wall Street Journal reports an incident where a borrower was even asked for a copy of her divorce decree — from two years ago — and asked to explain a deposit of about $200 into her bank account when applying for a mortgage.
Lenders are being more careful in who they issue a loan to nowadays, tightening underwriting standards and carefully documenting applicants’ finances and ability to repay the loan.
Practically nothing is off the table these days when it comes to what a lender may ask for. Lenders may question any deposits to bank accounts, increases in a borrower’s income, and any disputed balance over a late payment, even if it was from years ago. Some lenders are even requesting college transcripts and diplomas in verifying employment history.
Any credit inquiries on a person’s credit invites red flags and more questions from lenders, Rhonda Porter, a loan officer in Seattle, told The Wall Street Journal.
"I have customers who know they're a strong [borrower], and they're still asked for documentation," Porter says. "Some of them get their feathers ruffled."
Some borrowers — particularly refinancers — are getting so frustrated by the extra paperwork and questions that they are increasingly just stopping the process, according to news reports.
Stella Adams, a fair housing advocate in North Carolina, says banks need to lighten up. Banks should return to "solid, old-fashioned underwriting" standards that were used prior to the housing boom and stop making it so difficult for people to get financing.
Source: "Lenders Want to Know Everything," The Wall Street Journal (May 12, 2012)
Housing Affordability Reaches Records
http://ow.ly/aW1QP
Housing affordability conditions for all buyers reached a milestone in the first quarter, according to the National Association of REALTORS®.
NAR’s composite quarterly Housing Affordability Index rose to a record high of 205.9 in first quarter, based on the relationship between median home price, median family income and average mortgage interest rate. The higher the index, the greater the household purchasing power. This is the first time the quarterly index broke the 200 mark; recordkeeping began in 1970.
NAR President Moe Veissi said market conditions are optimal for home buyers. “For those with good credit, we’ve never seen better housing affordability conditions or market opportunities than we see at present,” he said. “Although home prices are stabilizing and sales are rising, some buyers still have to jump through a lot of hoops to convince a lender that they are creditworthy, even for a mortgage that would be well within their means. This is especially true for self-employed buyers.”
Veissi noted home sales would be much higher if lending standards would return to normal.
The index shows the median-income family, earning just under $61,000, could afford a home costing $325,500 in the first quarter, which is more than double the national median existing single-family home price of $158,100. The median monthly mortgage principal and interest payment for a median-priced home would take only 13.5 percent of gross income.
A companion index measuring the ability of first-time buyers to purchase a home also set a record, with the first-time buyer index reaching 135.8 in the first quarter.
Assumptions for the first-time buyer index include a lower income, at 65 percent of median family income, a starter home costing 85 percent of the median price, and a down payment of 10 percent. This index means the typical entry-level buyer could afford a home costing $182,500, which is well above the overall median price.
“It’s never been easy to buy a first home because of the cash required for downpayment and closing costs, but conditions for first-time buyers who are able to get a mortgage have never been better,” Veissi explained.
Most first-time buyers choose a loan with a lower down payment, often an FHA-insured loan with 3.5 percent down, and some use the VA program with no down payment.
Both home prices and mortgage interest rates are expected to edge up modestly as the year progresses, but housing affordability will remain very favorable with the median-income household well positioned to afford a median-priced home. For all of 2012 the index is projected to set an annual record, averaging 191 for the year.
Source: NAR
http://ow.ly/aW1QP
Housing affordability conditions for all buyers reached a milestone in the first quarter, according to the National Association of REALTORS®.
NAR’s composite quarterly Housing Affordability Index rose to a record high of 205.9 in first quarter, based on the relationship between median home price, median family income and average mortgage interest rate. The higher the index, the greater the household purchasing power. This is the first time the quarterly index broke the 200 mark; recordkeeping began in 1970.
NAR President Moe Veissi said market conditions are optimal for home buyers. “For those with good credit, we’ve never seen better housing affordability conditions or market opportunities than we see at present,” he said. “Although home prices are stabilizing and sales are rising, some buyers still have to jump through a lot of hoops to convince a lender that they are creditworthy, even for a mortgage that would be well within their means. This is especially true for self-employed buyers.”
Veissi noted home sales would be much higher if lending standards would return to normal.
The index shows the median-income family, earning just under $61,000, could afford a home costing $325,500 in the first quarter, which is more than double the national median existing single-family home price of $158,100. The median monthly mortgage principal and interest payment for a median-priced home would take only 13.5 percent of gross income.
A companion index measuring the ability of first-time buyers to purchase a home also set a record, with the first-time buyer index reaching 135.8 in the first quarter.
Assumptions for the first-time buyer index include a lower income, at 65 percent of median family income, a starter home costing 85 percent of the median price, and a down payment of 10 percent. This index means the typical entry-level buyer could afford a home costing $182,500, which is well above the overall median price.
“It’s never been easy to buy a first home because of the cash required for downpayment and closing costs, but conditions for first-time buyers who are able to get a mortgage have never been better,” Veissi explained.
Most first-time buyers choose a loan with a lower down payment, often an FHA-insured loan with 3.5 percent down, and some use the VA program with no down payment.
Both home prices and mortgage interest rates are expected to edge up modestly as the year progresses, but housing affordability will remain very favorable with the median-income household well positioned to afford a median-priced home. For all of 2012 the index is projected to set an annual record, averaging 191 for the year.
Source: NAR
Gaps Persist in Americans’ Credit Knowledge
http://ow.ly/aW249
The majority of Americans don’t fully understand how credit scores are formulated, according to a survey released by the Consumer Federation of America. That gap in knowledge can cost them when applying for a mortgage too.
While the survey showed a big improvement in the last year in the number of Americans knowledgeable about credit and how companies collect credit information on them, Americans overall still don’t fully understand how credit scores are calculated or used.
For example, the survey found that respondents were not fully aware of just how a low credit score could hamper them. “Only 29 percent are aware that, on a $20,000, 60-month auto loan, a borrower with a low credit score is likely to pay at least $5,000 more than a borrower with a high credit score,” according to the Consumer Federation of America survey.
The survey found that 56 percent of respondents mistakenly believe a person’s age and 54 percent say a person’s marital status are used to calculate a credit score. Twenty-one percent surveyed also mistakenly said that a person’s ethnic origin was a factor in calculating credit scores too.
The survey also found that less than half of respondents — 44 percent — understood that a credit score is for measuring the risk of repaying loans. Twenty-two percent mistakenly thought credit scores measured a person’s amount of debt and 21 percent said credit scores were “financial resources.”
Still, the survey found that more people are becoming aware of what can hurt or help your credit score in comparing this year's results to last year’s. The survey found that more people in the most recent survey knew that a missed payment, bankruptcy, or carrying high credit card balances could lower their credit score. Most respondents also knew that making payments on time can raise their credit score, while missing a payment can lower it.
Source: Consumer Federation of America and “Consumer Knowledge of Credit Leaves a lot to be Desired,” HousingWire (May 14, 2012)
http://ow.ly/aW249
The majority of Americans don’t fully understand how credit scores are formulated, according to a survey released by the Consumer Federation of America. That gap in knowledge can cost them when applying for a mortgage too.
While the survey showed a big improvement in the last year in the number of Americans knowledgeable about credit and how companies collect credit information on them, Americans overall still don’t fully understand how credit scores are calculated or used.
For example, the survey found that respondents were not fully aware of just how a low credit score could hamper them. “Only 29 percent are aware that, on a $20,000, 60-month auto loan, a borrower with a low credit score is likely to pay at least $5,000 more than a borrower with a high credit score,” according to the Consumer Federation of America survey.
The survey found that 56 percent of respondents mistakenly believe a person’s age and 54 percent say a person’s marital status are used to calculate a credit score. Twenty-one percent surveyed also mistakenly said that a person’s ethnic origin was a factor in calculating credit scores too.
The survey also found that less than half of respondents — 44 percent — understood that a credit score is for measuring the risk of repaying loans. Twenty-two percent mistakenly thought credit scores measured a person’s amount of debt and 21 percent said credit scores were “financial resources.”
Still, the survey found that more people are becoming aware of what can hurt or help your credit score in comparing this year's results to last year’s. The survey found that more people in the most recent survey knew that a missed payment, bankruptcy, or carrying high credit card balances could lower their credit score. Most respondents also knew that making payments on time can raise their credit score, while missing a payment can lower it.
Source: Consumer Federation of America and “Consumer Knowledge of Credit Leaves a lot to be Desired,” HousingWire (May 14, 2012)
Home Ownership Key to Elections, National Strategists Say
http://ow.ly/aW1Mu
Protecting home ownership will be front and center in this year’s national elections, said top political strategists speaking with hundreds of REALTORS® Tuesday morning at the 2012 NAR Midyear Legislative Meetings & Trade Expo in Washington, D.C.
Celinda Lake, a Democratic political strategist, said middle-aged women without a college education are the key swing demographic in this year’s elections. For this group, home ownership is of vital importance because of the impact of owning a home on family stability. Lake is president of national polling firm Lake Research Partners.
Given the political centrality of home ownership this year, the National Association of REALTORS®’ Home Ownership Matters campaign and the Rally to Protect the American Dream on Thursday at the Washington Monument couldn’t be more timely and important.
The Rally, says Lake, is a “very, very smart” move on the part of REALTORS®. “Your average politician doesn’t want to get on the other side of home ownership,” she said.
Lake’s national polling finds that, despite the downturn in housing, three-quarters of voters see home ownership as central to the American Dream and believe it’s the most important financial investment they’ll ever make and worth taking a risk for. The high regard for ownership is shared by both renters and owners who are underwater on their mortgage, she said. Almost 70 percent of underwater borrowers continue to believe home ownership is worth the financial investment.
Lake told the hundreds of REALTORS® to keep their eye on how the economy is doing in June, because that month is the “most predictive of the vote” in November. So, whether voters think the economy is improving or getting worse next month will be all-important.
Lake said most voters personally approve of President Barack Obama and most voters don’t hold him responsible for the country’s economic problems, but their views are mixed on how well he’s been dealing with the downturn. There’s a concern that what he’s done so far hasn’t worked well and that more needs to be done.
Gene Sperling, President Obama’s chief economic advisor, said later at the same session that the administration has done as much as it could to restore housing, and now it needs Congress to act on mortgage relief measures that are pending on Capitol Hill.
On its own, the administration has crafted mortgage modification standards and incentives resulting in some 5 million modifications, encouraged refinancings, persuaded lenders to extend mortgage forbearance to 12 months from the usual practice of three months, and allowed FHA and the two secondary mortgage market institutions Fannie Mae and Freddie Mac to sell their REO properties in bulk to investors — including for conversion to rentals in some cases. Sperling stressed that the REO bulk sales are only for selected markets in which such sales would be helpful to the market.
On the to-do list for Congress is a measure to allow all home owners, not just those with federally backed mortgages, to refinance their loan to take advantage of historically low interest rates.
Michael Steele, former head of the Republican National Committee, who spoke at the forum with Lake, said members of Congress take very seriously what REALTORS® tell them when they make their visits to Capitol Hill later this week. It’s key that REALTORS® tell their lawmakers about the impact of federal policies — such as Wall Street reform enacted two years ago — on the local market. If lenders aren’t making loans to creditworthy borrowers because of that law, he said, then REALTORS® must tell them that in their Hill visits. “You’ll get a response from them when you explain the impact,” he said.
- Robert Freedman, REALTOR® Magazine
http://ow.ly/aW1Mu
Protecting home ownership will be front and center in this year’s national elections, said top political strategists speaking with hundreds of REALTORS® Tuesday morning at the 2012 NAR Midyear Legislative Meetings & Trade Expo in Washington, D.C.
Celinda Lake, a Democratic political strategist, said middle-aged women without a college education are the key swing demographic in this year’s elections. For this group, home ownership is of vital importance because of the impact of owning a home on family stability. Lake is president of national polling firm Lake Research Partners.
Given the political centrality of home ownership this year, the National Association of REALTORS®’ Home Ownership Matters campaign and the Rally to Protect the American Dream on Thursday at the Washington Monument couldn’t be more timely and important.
The Rally, says Lake, is a “very, very smart” move on the part of REALTORS®. “Your average politician doesn’t want to get on the other side of home ownership,” she said.
Lake’s national polling finds that, despite the downturn in housing, three-quarters of voters see home ownership as central to the American Dream and believe it’s the most important financial investment they’ll ever make and worth taking a risk for. The high regard for ownership is shared by both renters and owners who are underwater on their mortgage, she said. Almost 70 percent of underwater borrowers continue to believe home ownership is worth the financial investment.
Lake told the hundreds of REALTORS® to keep their eye on how the economy is doing in June, because that month is the “most predictive of the vote” in November. So, whether voters think the economy is improving or getting worse next month will be all-important.
Lake said most voters personally approve of President Barack Obama and most voters don’t hold him responsible for the country’s economic problems, but their views are mixed on how well he’s been dealing with the downturn. There’s a concern that what he’s done so far hasn’t worked well and that more needs to be done.
Gene Sperling, President Obama’s chief economic advisor, said later at the same session that the administration has done as much as it could to restore housing, and now it needs Congress to act on mortgage relief measures that are pending on Capitol Hill.
On its own, the administration has crafted mortgage modification standards and incentives resulting in some 5 million modifications, encouraged refinancings, persuaded lenders to extend mortgage forbearance to 12 months from the usual practice of three months, and allowed FHA and the two secondary mortgage market institutions Fannie Mae and Freddie Mac to sell their REO properties in bulk to investors — including for conversion to rentals in some cases. Sperling stressed that the REO bulk sales are only for selected markets in which such sales would be helpful to the market.
On the to-do list for Congress is a measure to allow all home owners, not just those with federally backed mortgages, to refinance their loan to take advantage of historically low interest rates.
Michael Steele, former head of the Republican National Committee, who spoke at the forum with Lake, said members of Congress take very seriously what REALTORS® tell them when they make their visits to Capitol Hill later this week. It’s key that REALTORS® tell their lawmakers about the impact of federal policies — such as Wall Street reform enacted two years ago — on the local market. If lenders aren’t making loans to creditworthy borrowers because of that law, he said, then REALTORS® must tell them that in their Hill visits. “You’ll get a response from them when you explain the impact,” he said.
- Robert Freedman, REALTOR® Magazine
Monday, May 14, 2012
Home Owners Trying to Save Face Refinancing Delays
http://ow.ly/aU4V9
With record-low interest rates, more home owners have been looking at refinancing their mortgages to trim their monthly payments. But they’re finding that they may have a lot longer to wait to refinance than in the past.
“Clogged mortgage pipelines have created headaches for hundreds of thousands of Americans trying to take advantage of low mortgage rates,” The Wall Street Journal reports.
The nation’s largest lenders reportedly are taking an average of more than 70 days to complete refinancing applications — that’s up from 45 days a year prior, according to Accenture Credit Services.
The clog in refinancing is mostly due to a surge in requests, particularly coming from the revamped Home Affordable Refinance Program, which has removed some common roadblocks for underwater home owners who want to refinance. HAMP applications account for one-third of refinance applications, according to the Mortgage Bankers Association.
Also causing refinance delays, lenders are being much more cautious about who they make new loans to. What’s more, the number of mortgage brokers has decreased significantly in the last few years. Mortgage brokers now account for less than 10 percent of originations compared to 31 percent in 2005.
"You have more loans going through a pipeline that is too small," Terry Moore, global managing director of Accenture Credit Services, told The Wall Street Journal.
Coupled with that, “amid reduced competition, some large lenders have boosted their rates in a bid to hold down volumes while bolstering profits,” The Wall Street Journal reports. “That limits the savings for many applicants.”
Source: "Borrowers Face Big Delays in Refinancing Mortgages," The Wall Street Journal (May 9, 2012)
http://ow.ly/aU4V9
With record-low interest rates, more home owners have been looking at refinancing their mortgages to trim their monthly payments. But they’re finding that they may have a lot longer to wait to refinance than in the past.
“Clogged mortgage pipelines have created headaches for hundreds of thousands of Americans trying to take advantage of low mortgage rates,” The Wall Street Journal reports.
The nation’s largest lenders reportedly are taking an average of more than 70 days to complete refinancing applications — that’s up from 45 days a year prior, according to Accenture Credit Services.
The clog in refinancing is mostly due to a surge in requests, particularly coming from the revamped Home Affordable Refinance Program, which has removed some common roadblocks for underwater home owners who want to refinance. HAMP applications account for one-third of refinance applications, according to the Mortgage Bankers Association.
Also causing refinance delays, lenders are being much more cautious about who they make new loans to. What’s more, the number of mortgage brokers has decreased significantly in the last few years. Mortgage brokers now account for less than 10 percent of originations compared to 31 percent in 2005.
"You have more loans going through a pipeline that is too small," Terry Moore, global managing director of Accenture Credit Services, told The Wall Street Journal.
Coupled with that, “amid reduced competition, some large lenders have boosted their rates in a bid to hold down volumes while bolstering profits,” The Wall Street Journal reports. “That limits the savings for many applicants.”
Source: "Borrowers Face Big Delays in Refinancing Mortgages," The Wall Street Journal (May 9, 2012)
The Cost of Getting a Loan is on the Rise
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Closing costs for a mortgage averaged $4,143 last year, which is 12.4 percent higher than in 2010, Bankrate.com reports.
Despite record low mortgage rates, borrowers are finding the cost of getting a loan is on the rise.
Origination fees have posted some of the biggest increases, rising 12 percent in 2011 to $1,045, according to Bankrate.com data. Attorney costs and other settlement fees now average $544, a 9.6 percent increase. Appraisal fees have risen 7.8 percent, averaging $406.
Closing costs vary quite a bit among lenders so it can pay for borrowers to shop around, housing experts say. For example, origination fees can range anywhere from $123 to more than $2,000.
Analysts say part of the reason behind the increase in fees is the increased cost to lenders of processing loans with more paperwork required nowadays.
Last week, the Consumer Financial Protection Bureau proposed new rules to limit certain fees lenders require borrowers to pay at closing. One of the fees the agency said it hopes to ban is a fee referred to as “origination points” that buyers sometimes must pay at closing.
“Mortgages today often come with so many different types of fees and points that it can be hard to compare offers,” Richard Cordray, the director of the Consumer Financial Protection Bureau, told The New York Times. “We want to bring greater transparency to the market so consumers can clearly see their options and choose the loan that is right for them.”
Source: "Rising Costs Hit Homeowners Chasing Lower Rates," The Wall Street Journal (May 9, 2012) and “Consumer Bureau Proposes Mortgage Fee Limits,” REALTOR® Magazine Daily News (May 10, 2012)
http://ow.ly/aU4GH
Closing costs for a mortgage averaged $4,143 last year, which is 12.4 percent higher than in 2010, Bankrate.com reports.
Despite record low mortgage rates, borrowers are finding the cost of getting a loan is on the rise.
Origination fees have posted some of the biggest increases, rising 12 percent in 2011 to $1,045, according to Bankrate.com data. Attorney costs and other settlement fees now average $544, a 9.6 percent increase. Appraisal fees have risen 7.8 percent, averaging $406.
Closing costs vary quite a bit among lenders so it can pay for borrowers to shop around, housing experts say. For example, origination fees can range anywhere from $123 to more than $2,000.
Analysts say part of the reason behind the increase in fees is the increased cost to lenders of processing loans with more paperwork required nowadays.
Last week, the Consumer Financial Protection Bureau proposed new rules to limit certain fees lenders require borrowers to pay at closing. One of the fees the agency said it hopes to ban is a fee referred to as “origination points” that buyers sometimes must pay at closing.
“Mortgages today often come with so many different types of fees and points that it can be hard to compare offers,” Richard Cordray, the director of the Consumer Financial Protection Bureau, told The New York Times. “We want to bring greater transparency to the market so consumers can clearly see their options and choose the loan that is right for them.”
Source: "Rising Costs Hit Homeowners Chasing Lower Rates," The Wall Street Journal (May 9, 2012) and “Consumer Bureau Proposes Mortgage Fee Limits,” REALTOR® Magazine Daily News (May 10, 2012)
More Renters Are Finding It's Cheaper to Buy
http://ow.ly/aU3WS
With rising rents, more renters are being swayed into home ownership, even in pricey housing markets like New York.
For example, one New York renter said he started looking into owning a home when his landlord tried to increase his rent by 13 percent when his lease was up for renewal. He found that he could buy a home and get the same amount of space for cheaper than continuing to rent, plus he’d be building equity.
Other renters are starting to see that buying may be a better option for them, too.
Rents are increasing at about the same pace that home values are dropping, says Stan Humphries, Zillow’s chief economist, who says, according to their surveys, home prices have dropped 3.1 percent year-over-year whereas rents have increased 2.5 percent.
"Herein lie the seeds to eventually more interest in buying on the part of consumers, which will help put a floor under home prices," Humphries told Investors Business Daily. Recent housing surveys, including Zillow’s, are showing home prices are starting to rise in recent months.
Affordability in housing has been at record highs from the combination of falling home values and record-low mortgages. Humphries says that housing prices have rolled back to 2003 levels.
"That increased affordability in the face of rising rental prices will begin to get buyers off the fence this year,” Humphries says. "What's been keeping buyers on the fence is a crisis of confidence. People who don't have a job, or who are worried about losing their job, don't buy homes. They also don't want to buy an asset they think is rapidly depreciating.”
National Association of REALTORS®’ Chief Economist Lawrence Yun says the tighter restrictions from lenders are also preventing many potential buyers from securing financing in order to buy. But for those who are able to qualify, Yun says “it’s better to get in now” than wait.
Source: “Rising Rents Prompt Buys, May Help Housing Recover,” Investors Business Daily (May 10, 2012)
http://ow.ly/aU3WS
With rising rents, more renters are being swayed into home ownership, even in pricey housing markets like New York.
For example, one New York renter said he started looking into owning a home when his landlord tried to increase his rent by 13 percent when his lease was up for renewal. He found that he could buy a home and get the same amount of space for cheaper than continuing to rent, plus he’d be building equity.
Other renters are starting to see that buying may be a better option for them, too.
Rents are increasing at about the same pace that home values are dropping, says Stan Humphries, Zillow’s chief economist, who says, according to their surveys, home prices have dropped 3.1 percent year-over-year whereas rents have increased 2.5 percent.
"Herein lie the seeds to eventually more interest in buying on the part of consumers, which will help put a floor under home prices," Humphries told Investors Business Daily. Recent housing surveys, including Zillow’s, are showing home prices are starting to rise in recent months.
Affordability in housing has been at record highs from the combination of falling home values and record-low mortgages. Humphries says that housing prices have rolled back to 2003 levels.
"That increased affordability in the face of rising rental prices will begin to get buyers off the fence this year,” Humphries says. "What's been keeping buyers on the fence is a crisis of confidence. People who don't have a job, or who are worried about losing their job, don't buy homes. They also don't want to buy an asset they think is rapidly depreciating.”
National Association of REALTORS®’ Chief Economist Lawrence Yun says the tighter restrictions from lenders are also preventing many potential buyers from securing financing in order to buy. But for those who are able to qualify, Yun says “it’s better to get in now” than wait.
Source: “Rising Rents Prompt Buys, May Help Housing Recover,” Investors Business Daily (May 10, 2012)
Obama Calls for Changes to Make Refinancing Easier
http://ow.ly/aU490
Late last week, President Obama said more home owners are taking advantage of government programs to refinance into ultra-low mortgage rates, but there's still more Congress can do to make refinancing easier for home owners.
Refinancing applications have soared 50 percent since October as more home owners seek to take advantage of refinancing programs.
President Obama, speaking in Las Vegas on Friday, said that legislation introduced by Democrats in the Senate seeks to remove additional barriers that would allow even more underwater home owners to refinance into new mortgages. The legislation includes waiving a requirement for home appraisals when refinancing, which can add to the costs of refinancing. Additionally, the proposals include expanding the refinancing program for home owners current on their mortgages who don’t have government-backed mortgages by Fannie Mae or Freddie Mac.
Obama also has called on a proposal that would waive closing costs for refinancing home owners who apply their mortgage savings to their principal.
“I’m calling on Congress to give every responsible home owner a chance to save an average of $3,000 a year by refinancing their mortgage,” President Obama said. Obama made his comments on Friday in Nevada, an election battleground state where six out of 10 home owners are underwater on their mortgages.
Source: “Obama Returns to Topic of Economic Recovery,” The New York Times (May 11, 2012); “HUD: 3 Bills Will Complete Obama Refinancing Initiative,” HousingWire (May 11, 2012); and “Obama Touts Mortgage Relief in Swing State Nevada,” Reuters News (May 11, 2012)
http://ow.ly/aU490
Late last week, President Obama said more home owners are taking advantage of government programs to refinance into ultra-low mortgage rates, but there's still more Congress can do to make refinancing easier for home owners.
Refinancing applications have soared 50 percent since October as more home owners seek to take advantage of refinancing programs.
President Obama, speaking in Las Vegas on Friday, said that legislation introduced by Democrats in the Senate seeks to remove additional barriers that would allow even more underwater home owners to refinance into new mortgages. The legislation includes waiving a requirement for home appraisals when refinancing, which can add to the costs of refinancing. Additionally, the proposals include expanding the refinancing program for home owners current on their mortgages who don’t have government-backed mortgages by Fannie Mae or Freddie Mac.
Obama also has called on a proposal that would waive closing costs for refinancing home owners who apply their mortgage savings to their principal.
“I’m calling on Congress to give every responsible home owner a chance to save an average of $3,000 a year by refinancing their mortgage,” President Obama said. Obama made his comments on Friday in Nevada, an election battleground state where six out of 10 home owners are underwater on their mortgages.
Source: “Obama Returns to Topic of Economic Recovery,” The New York Times (May 11, 2012); “HUD: 3 Bills Will Complete Obama Refinancing Initiative,” HousingWire (May 11, 2012); and “Obama Touts Mortgage Relief in Swing State Nevada,” Reuters News (May 11, 2012)
Friday, May 11, 2012
Obama to Tout Success of Refi Programs
http://ow.ly/aRtQD
he White House is set to announce today figures reflecting a big jump in the number of Americans participating in federal initiatives meant to aid financially strapped home owners and bolster the sluggish housing market.
Officials say the new data underscore the efficacy of programs President Obama has implemented to let more home owners refinance into historically low interest rates.
Obama will use the figures to demonstrate the need for lawmakers to take even more action to give still more Americans the same opportunity.
Source: "Obama to Tout Success of Mortgage Refinancing," Washington Post (May 11, 2012)
http://ow.ly/aRtQD
he White House is set to announce today figures reflecting a big jump in the number of Americans participating in federal initiatives meant to aid financially strapped home owners and bolster the sluggish housing market.
Officials say the new data underscore the efficacy of programs President Obama has implemented to let more home owners refinance into historically low interest rates.
Obama will use the figures to demonstrate the need for lawmakers to take even more action to give still more Americans the same opportunity.
Source: "Obama to Tout Success of Mortgage Refinancing," Washington Post (May 11, 2012)
Florida Case May Have Widespread Effect
http://ow.ly/aRtLl
A lawsuit currently in the Florida Supreme Court has the potential to undo “hundreds of thousands of foreclosures and open up U.S. banks to severe financial liabilities in the state,” Reuters News reports.
This week the court heard oral arguments over whether banks filing foreclosure lawsuits using documents that were discovered to be fraudulent can dismiss the cases and then refile the cases with different paperwork.
Analysts say that the judges’ ruling on the case — which could still take eight more months to decide — has the potential to influence judgments in 26 other states that require lawsuits in foreclosures.
"If the Florida court takes a strong stand, it sends a strong signal to the mortgage servicing industry in the rest of the country," says Tom Cox about the case, Roman Pino vs. Bank of New York Mellon. Cox is a foreclosure attorney who in the past is known for bringing about one of the first foreclosure lawsuits in the country.
This current case, he says, has the potential to cause other judges to start overturning more foreclosure lawsuits.
"A broad universe of mortgages could be rendered unenforceable," former U.S. Attorney Kendall Coffey told Reuters News. “The cost to the financial industry is difficult to estimate, but it could be substantial."
The case has its roots in the robo-signing scandal, which rattled throughout the country in 2010 when banks were found to be approving foreclosure documents in mass numbers without conducting proper reviews.
Source: “Florida Foreclosure Case Could Slam Banks,” Reuters News (May 9, 2012)
http://ow.ly/aRtLl
A lawsuit currently in the Florida Supreme Court has the potential to undo “hundreds of thousands of foreclosures and open up U.S. banks to severe financial liabilities in the state,” Reuters News reports.
This week the court heard oral arguments over whether banks filing foreclosure lawsuits using documents that were discovered to be fraudulent can dismiss the cases and then refile the cases with different paperwork.
Analysts say that the judges’ ruling on the case — which could still take eight more months to decide — has the potential to influence judgments in 26 other states that require lawsuits in foreclosures.
"If the Florida court takes a strong stand, it sends a strong signal to the mortgage servicing industry in the rest of the country," says Tom Cox about the case, Roman Pino vs. Bank of New York Mellon. Cox is a foreclosure attorney who in the past is known for bringing about one of the first foreclosure lawsuits in the country.
This current case, he says, has the potential to cause other judges to start overturning more foreclosure lawsuits.
"A broad universe of mortgages could be rendered unenforceable," former U.S. Attorney Kendall Coffey told Reuters News. “The cost to the financial industry is difficult to estimate, but it could be substantial."
The case has its roots in the robo-signing scandal, which rattled throughout the country in 2010 when banks were found to be approving foreclosure documents in mass numbers without conducting proper reviews.
Source: “Florida Foreclosure Case Could Slam Banks,” Reuters News (May 9, 2012)
Bernanke: Mortgages Still too Difficult to Get
http://ow.ly/aRtHF
Even creditworthy borrowers are finding it difficult to get a mortgage nowadays and it’s unlikely banks will ease their standards anytime soon, Federal Reserve Chairman Ben Bernanke told a banking conference in Chicago Thursday.
While banks have made huge strides in improving their balance sheets and overall lending (such as for credit cards and auto loans), banks continue to be extra cautious when it comes to issuing new mortgages, he said. Even borrowers coming with a 20 percent down payment on a home purchase may face hurdles unless they have stellar credit, he said.
"A return to pre-crisis lending standards wouldn't be appropriate," Bernanke said in referencing how banks prior to the housing crisis were issuing mortgages with little or no documentation for jobs or incomes. "However, current standards may be limiting or preventing lending to many creditworthy borrowers."
The challenges of getting a mortgage have been cited by real estate professionals and economists as one of the biggest obstacles standing in the way of a full housing recovery.
An estimated 10 to 20 percent of creditworthy home buyers are being locked out of the housing market because of tightened credit conditions, U.S. Housing Secretary Shaun Donovan told Reuters.
Source: “Credit Easing in U.S., Fed Chairman Says,” The New York Times (May 10, 2012) an
http://ow.ly/aRtHF
Even creditworthy borrowers are finding it difficult to get a mortgage nowadays and it’s unlikely banks will ease their standards anytime soon, Federal Reserve Chairman Ben Bernanke told a banking conference in Chicago Thursday.
While banks have made huge strides in improving their balance sheets and overall lending (such as for credit cards and auto loans), banks continue to be extra cautious when it comes to issuing new mortgages, he said. Even borrowers coming with a 20 percent down payment on a home purchase may face hurdles unless they have stellar credit, he said.
"A return to pre-crisis lending standards wouldn't be appropriate," Bernanke said in referencing how banks prior to the housing crisis were issuing mortgages with little or no documentation for jobs or incomes. "However, current standards may be limiting or preventing lending to many creditworthy borrowers."
The challenges of getting a mortgage have been cited by real estate professionals and economists as one of the biggest obstacles standing in the way of a full housing recovery.
An estimated 10 to 20 percent of creditworthy home buyers are being locked out of the housing market because of tightened credit conditions, U.S. Housing Secretary Shaun Donovan told Reuters.
Source: “Credit Easing in U.S., Fed Chairman Says,” The New York Times (May 10, 2012) an
Double-Digit Price Increases Coming Soon?
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ome buyers and sellers need to get ready to pounce. Hard-hit housing markets are on the road to recovery and expected to see major price gains soon.
Some of the hardest-hit markets during the housing crisis — plagued by soaring foreclosures and plummeting home prices — are expected to post some of the biggest gains through 2013, according to a report released this week by Fiserv.
"Some markets may have overshot to the downside, and people are jumping in to try to catch the bottom," says David Stiff, Fiserv’s chief economist. Fiserv recently projected that nationwide housing prices will gain 4 percent a year over the next five years.
The areas projected to have the largest price gains, according to Fiserv:
1. Madera, Calif
Projected price increase by the end of 2013: 21.5 percent
2. Medford, Ore.
Projected price increase: 20.1 percent
3. Yuma, Ariz.
Projected price increase: 16.7 percent
4. Corvallis, Ore.
Projected price increase: 11.4 percent
Source: “10 Housing Markets Set for Double-Digit Price Gains,” CNNMoney (May 9, 2012)
http://ow.ly/aRtsC
ome buyers and sellers need to get ready to pounce. Hard-hit housing markets are on the road to recovery and expected to see major price gains soon.
Some of the hardest-hit markets during the housing crisis — plagued by soaring foreclosures and plummeting home prices — are expected to post some of the biggest gains through 2013, according to a report released this week by Fiserv.
"Some markets may have overshot to the downside, and people are jumping in to try to catch the bottom," says David Stiff, Fiserv’s chief economist. Fiserv recently projected that nationwide housing prices will gain 4 percent a year over the next five years.
The areas projected to have the largest price gains, according to Fiserv:
1. Madera, Calif
Projected price increase by the end of 2013: 21.5 percent
2. Medford, Ore.
Projected price increase: 20.1 percent
3. Yuma, Ariz.
Projected price increase: 16.7 percent
4. Corvallis, Ore.
Projected price increase: 11.4 percent
Source: “10 Housing Markets Set for Double-Digit Price Gains,” CNNMoney (May 9, 2012)
Thousands of REALTORS® Ready for Housing Rally
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t’s an election year, and real estate professionals from across the country want to make sure their voices are heard. More than 10,000 REALTORS® from coast to coast are expected to come together next week to show their support for home ownership in the nation’s capital.
The Rally to Protect the American Dream will be held May 17 in front of the Washington Monument in Washington, D.C. The rally will take place during the National Association of REALTORS®' Midyear Legislative Meetings & Trade Expo, May 14-19.
Several members of Congress are also expected to attend the rally and listen to real estate professionals speak out about the critical issues facing home ownership today and how important housing is to an overall economic recovery. Among the housing issues to be addressed are the threats mortgage interest deduction, foreclosures and short sales, affordable financing, and ensuring that credit is available for those who want — and are able to — purchase a home.
To learn more about the REALTOR® rally or to register to attend, visit www.realtorrally.org.
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
http://ow.ly/aRtqM
t’s an election year, and real estate professionals from across the country want to make sure their voices are heard. More than 10,000 REALTORS® from coast to coast are expected to come together next week to show their support for home ownership in the nation’s capital.
The Rally to Protect the American Dream will be held May 17 in front of the Washington Monument in Washington, D.C. The rally will take place during the National Association of REALTORS®' Midyear Legislative Meetings & Trade Expo, May 14-19.
Several members of Congress are also expected to attend the rally and listen to real estate professionals speak out about the critical issues facing home ownership today and how important housing is to an overall economic recovery. Among the housing issues to be addressed are the threats mortgage interest deduction, foreclosures and short sales, affordable financing, and ensuring that credit is available for those who want — and are able to — purchase a home.
To learn more about the REALTOR® rally or to register to attend, visit www.realtorrally.org.
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
How Low Will Mortgage Rates Go?
http://ow.ly/aR9BG
For the second consecutive week, fixed-rate mortgages reached new all-time records lows, offering another big boost to home buyer affordability.
The 30-year fixed-rate mortgage averaged 3.83 percent for the week ending May 10, posting a new record low from last week’s 3.84 percent average. The 15-year fixed-rate mortgage also posted a new record, averaging 3.05 percent this week.
Here’s a closer look at mortgage rates for this week:
30-year fixed-rate mortgages: averaged 3.83 percent, with an average 0.7 point, down from last week’s previous record of 3.84 percent. A year ago at this time, 30-year mortgages averaged 4.63 percent. The 30-year fixed-rate mortgage, the most popular choice among home buyers, has averaged below 4 percent for nearly every week — except for one — since Dec. 8, 2011, according to Freddie Mac.
15-year fixed-rate mortgages: averaged 3.05 percent, with an average 0.7 point, dropping from last week’s previous record low of 3.07 percent. Last year at this time, the 15-year fixed-rate mortgage averaged 3.82 percent.
5-year adjustable-rate mortgages: averaged 2.81 percent, with an average 0.5 point, dropping from last week’s 2.85 percent average. Last year, 5-year ARMs averaged 3.41 percent.
1-year ARMs: averaged 2.73 percent, with an average 0.5 point, rising from last week’s 2.70 average. A year ago, 1-year ARMs averaged 3.11 percent.
Source: Freddie Mac
http://ow.ly/aR9BG
For the second consecutive week, fixed-rate mortgages reached new all-time records lows, offering another big boost to home buyer affordability.
The 30-year fixed-rate mortgage averaged 3.83 percent for the week ending May 10, posting a new record low from last week’s 3.84 percent average. The 15-year fixed-rate mortgage also posted a new record, averaging 3.05 percent this week.
Here’s a closer look at mortgage rates for this week:
30-year fixed-rate mortgages: averaged 3.83 percent, with an average 0.7 point, down from last week’s previous record of 3.84 percent. A year ago at this time, 30-year mortgages averaged 4.63 percent. The 30-year fixed-rate mortgage, the most popular choice among home buyers, has averaged below 4 percent for nearly every week — except for one — since Dec. 8, 2011, according to Freddie Mac.
15-year fixed-rate mortgages: averaged 3.05 percent, with an average 0.7 point, dropping from last week’s previous record low of 3.07 percent. Last year at this time, the 15-year fixed-rate mortgage averaged 3.82 percent.
5-year adjustable-rate mortgages: averaged 2.81 percent, with an average 0.5 point, dropping from last week’s 2.85 percent average. Last year, 5-year ARMs averaged 3.41 percent.
1-year ARMs: averaged 2.73 percent, with an average 0.5 point, rising from last week’s 2.70 average. A year ago, 1-year ARMs averaged 3.11 percent.
Source: Freddie Mac
Thursday, May 10, 2012
Builder Buys Distressed Homes, Rents Them Out
http://ow.ly/aPFfK
Builders have struggled to compete with distressed homes that sell at big discounts, so one major home builder has found a way it also can cash in on the discounts. For the past year, Beazer Homes USA has been buying up distressed homes and turning them into rentals, hoping that one day these renters will become home buyers.
The home builder has been purchasing distressed properties in Phoenix and Las Vegas and renovating the homes before they rent them out.
The company recently announced that it has created a new real estate investment trust, called Beazer Pre-Owned Rental Homes Inc. (BPRH), in order to grow its single-family rental home business.
“We believe our investment in BPRH allows us to unlock the value in our rental homes business and grow it more rapidly than we otherwise could within Beazer,” says Allan P. Merrill, Beazer’s CEO. “BPRH’s ability to focus specifically on the rental homes market and attract external capital to scale the business represents a compelling—and differentiated—value for our shareholders.”
Source: “Beazer Forms Partnership to Buy Rental Homes,” Builder Magazine (May 3, 2012)
http://ow.ly/aPFfK
Builders have struggled to compete with distressed homes that sell at big discounts, so one major home builder has found a way it also can cash in on the discounts. For the past year, Beazer Homes USA has been buying up distressed homes and turning them into rentals, hoping that one day these renters will become home buyers.
The home builder has been purchasing distressed properties in Phoenix and Las Vegas and renovating the homes before they rent them out.
The company recently announced that it has created a new real estate investment trust, called Beazer Pre-Owned Rental Homes Inc. (BPRH), in order to grow its single-family rental home business.
“We believe our investment in BPRH allows us to unlock the value in our rental homes business and grow it more rapidly than we otherwise could within Beazer,” says Allan P. Merrill, Beazer’s CEO. “BPRH’s ability to focus specifically on the rental homes market and attract external capital to scale the business represents a compelling—and differentiated—value for our shareholders.”
Source: “Beazer Forms Partnership to Buy Rental Homes,” Builder Magazine (May 3, 2012)
Mortgage Applications for Home Purchases Tick Up 3.4%
http://ow.ly/aPF4o
Home buyers and refinancers are looking at cashing in on record-low interest rates, sending mortgage applications higher for the week.
Mortgage applications for purchasing a home increased again last week, rising 3.4 percent for the week ending May 4, the Mortgage Bankers Association reports in its weekly survey.
Overall, mortgage applications rose 1.7 percent this week compared to the prior week. Applications for refinancing, which make up the biggest bulk of mortgage applications, increased 1.3 percent.
Home owners refinancing at today's lower rates are seeing savings, according to a refinance analysis of the first quarter by Freddie Mac. Home owners who refinanced are, on average, seeing a reduction in an interest rate for a 30-year fixed-rate mortgage of about 1.5 percentage points, or a savings of about 27 percent in the interest rate. It’s the largest percentage reduction in interest rate recorded for refinancing in the 27 years that Freddie Mac has been compiling data.
Source: “Mortgage Application Volume Rose 1.7% Last Week - MBA,” Dow Jones Newswires (May 9, 2012) and “79% of Refinancing Home Owners Maintain or Reduce Mortgage Debt in First Quarter,” RISMedia (May 9, 2012)
http://ow.ly/aPF4o
Home buyers and refinancers are looking at cashing in on record-low interest rates, sending mortgage applications higher for the week.
Mortgage applications for purchasing a home increased again last week, rising 3.4 percent for the week ending May 4, the Mortgage Bankers Association reports in its weekly survey.
Overall, mortgage applications rose 1.7 percent this week compared to the prior week. Applications for refinancing, which make up the biggest bulk of mortgage applications, increased 1.3 percent.
Home owners refinancing at today's lower rates are seeing savings, according to a refinance analysis of the first quarter by Freddie Mac. Home owners who refinanced are, on average, seeing a reduction in an interest rate for a 30-year fixed-rate mortgage of about 1.5 percentage points, or a savings of about 27 percent in the interest rate. It’s the largest percentage reduction in interest rate recorded for refinancing in the 27 years that Freddie Mac has been compiling data.
Source: “Mortgage Application Volume Rose 1.7% Last Week - MBA,” Dow Jones Newswires (May 9, 2012) and “79% of Refinancing Home Owners Maintain or Reduce Mortgage Debt in First Quarter,” RISMedia (May 9, 2012)
Consumer Bureau Proposes Mortgage Fee Limits
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The Consumer Financial Protection Bureau plans to issue new rules that would limit certain fees that lenders require consumers to pay when they purchase a home. Among these fees the agency hopes to ban would be a fee sometimes referred to as “origination points” that buyers pay at closing.
The agency is proposing a ban on mortgage companies from charging origination fees, which can fluctuate with a loans amount, The New York Times reports. The fees can often get confused with upfront discount points that borrowers often pay in order to obtain a lower interest rate on a loan.
The agency is also looking at implementing a new rule that would require lenders to offer a reduced interest rate when a borrower chooses to pay discount points on a loan upfront. Lenders would then be required to offer a loan option that does not include any points.
“Mortgages today often come with so many different types of fees and points that it can be hard to compare offers,” Richard Cordray, the director of the consumer bureau, told The New York Times. “We want to bring greater transparency to the market so consumers can clearly see their options and choose the loan that is right for them.”
The proposed rules will need to go up for public review and a special panel before being formally proposed this summer. The agency says that if the new rules win approval they hope the rules will take effect by January.
Source: “New Rules May Curtail Some Fees in Mortgage,” The New York Times (May 9, 2012)
http://ow.ly/aPEWp
The Consumer Financial Protection Bureau plans to issue new rules that would limit certain fees that lenders require consumers to pay when they purchase a home. Among these fees the agency hopes to ban would be a fee sometimes referred to as “origination points” that buyers pay at closing.
The agency is proposing a ban on mortgage companies from charging origination fees, which can fluctuate with a loans amount, The New York Times reports. The fees can often get confused with upfront discount points that borrowers often pay in order to obtain a lower interest rate on a loan.
The agency is also looking at implementing a new rule that would require lenders to offer a reduced interest rate when a borrower chooses to pay discount points on a loan upfront. Lenders would then be required to offer a loan option that does not include any points.
“Mortgages today often come with so many different types of fees and points that it can be hard to compare offers,” Richard Cordray, the director of the consumer bureau, told The New York Times. “We want to bring greater transparency to the market so consumers can clearly see their options and choose the loan that is right for them.”
The proposed rules will need to go up for public review and a special panel before being formally proposed this summer. The agency says that if the new rules win approval they hope the rules will take effect by January.
Source: “New Rules May Curtail Some Fees in Mortgage,” The New York Times (May 9, 2012)
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