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
Sunday, May 20, 2012
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
Subscribe to:
Posts (Atom)