I don't wait for moods. You accomplish nothing if you do that. Your mind must know it has got to get down to work. This is a practiced behavior. I'm a great believer in luck and I find the harder I work, the more I have of it. The dctionary is the only place that success comes before work. Hard work is the price we must pay for success. I thank you can accomplish anything if you're willing to pay the price.
Have a great and safe New Years Eve and New Year.....
Rick Funk
Pending Home Sales Continue Recovery
Pending home sales rose again in November, with the broad trend over the past five months indicating a gradual recovery into 2011, according to the NATIONAL ASSOCIATION OF REALTORS ® .
The Pending Home Sales Index, a forward-looking indicator, rose 3.5 percent to 92.2 based on contracts signed in November from a downwardly revised 89.1 in October. The index is 5.0 percent below a reading of 97.0 in November 2009. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, said historically high housing affordability is boosting sales activity. “In addition to exceptional affordability conditions, steady improvements in the economy are helping bring buyers into the market,” he said. “But further gains are needed to reach normal levels of sales activity.”
The PHSI in the Northeast increased 1.8 percent to 72.6 in November but is 6.2 percent below November 2009. In the Midwest the index declined 4.2 percent in November to 78.3 and is 7.7 percent below a year ago. Pending home sales in the South slipped 1.8 percent to an index of 91.4 and are 7.2 percent below November 2009. In the West the index jumped 18.2 percent to 123.3 and is 0.4 percent above a year ago.
“If we add 2 million jobs as expected in 2011, and mortgage rates rise only moderately, we should see existing-home sales rise to a higher, sustainable volume,” Yun said. “Credit remains tight, but if lenders return to more normal, safe underwriting standards for creditworthy buyers, there would be a bigger boost to the housing market and spillover benefits for the broader economy.”
The 30-year fixed-rate mortgage is forecast to rise gradually to 5.3 percent around the end of 2011; at the same time, unemployment should drop to 9.2 percent.
For perspective, Yun said that the U.S. has added 27 million people over the past 10 years. “However, the number of jobs is roughly the same as it was in 2000 when existing-home sales totaled 5.2 million, which appears to be a sustainable figure given the current level of employment,” he explained. “All the indicator trends are pointing to a gradual housing recovery,” Yun said. “Home price prospects will vary depending largely upon local job market conditions. The national median home price, however, is expected to remain stable even with a continuing flow of distressed properties coming onto the market, as long as there is a steady demand of financially healthy home buyers.”
Existing-home sales are projected to rise about 8 percent to 5.2 million in 2011 from 4.8 million in 2010, with an additional gain of 4 percent in 2012. The median existing-home price could rise 0.6 percent to $173,700 in 2011 from $172,700 in 2010, which was essentially unchanged from 2009.
“As we gradually work off the excess housing inventory, supply levels will eventually come more in-line with historic averages, and could allow home prices to rise modestly in the range of 2 to 3 percent in 2012,” Yun said.
New-home sales are estimated to rise 24 percent to 392,000 in 2011, but would remain well below historic averages, while housing starts are forecast to rise 21 percent to 716,000.
Yun sees Gross Domestic Product growing 2.5 percent in 2011, and the Consumer Price Index rising 2.3 percent.
Source: NAR
The Pending Home Sales Index, a forward-looking indicator, rose 3.5 percent to 92.2 based on contracts signed in November from a downwardly revised 89.1 in October. The index is 5.0 percent below a reading of 97.0 in November 2009. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, said historically high housing affordability is boosting sales activity. “In addition to exceptional affordability conditions, steady improvements in the economy are helping bring buyers into the market,” he said. “But further gains are needed to reach normal levels of sales activity.”
The PHSI in the Northeast increased 1.8 percent to 72.6 in November but is 6.2 percent below November 2009. In the Midwest the index declined 4.2 percent in November to 78.3 and is 7.7 percent below a year ago. Pending home sales in the South slipped 1.8 percent to an index of 91.4 and are 7.2 percent below November 2009. In the West the index jumped 18.2 percent to 123.3 and is 0.4 percent above a year ago.
“If we add 2 million jobs as expected in 2011, and mortgage rates rise only moderately, we should see existing-home sales rise to a higher, sustainable volume,” Yun said. “Credit remains tight, but if lenders return to more normal, safe underwriting standards for creditworthy buyers, there would be a bigger boost to the housing market and spillover benefits for the broader economy.”
The 30-year fixed-rate mortgage is forecast to rise gradually to 5.3 percent around the end of 2011; at the same time, unemployment should drop to 9.2 percent.
For perspective, Yun said that the U.S. has added 27 million people over the past 10 years. “However, the number of jobs is roughly the same as it was in 2000 when existing-home sales totaled 5.2 million, which appears to be a sustainable figure given the current level of employment,” he explained. “All the indicator trends are pointing to a gradual housing recovery,” Yun said. “Home price prospects will vary depending largely upon local job market conditions. The national median home price, however, is expected to remain stable even with a continuing flow of distressed properties coming onto the market, as long as there is a steady demand of financially healthy home buyers.”
Existing-home sales are projected to rise about 8 percent to 5.2 million in 2011 from 4.8 million in 2010, with an additional gain of 4 percent in 2012. The median existing-home price could rise 0.6 percent to $173,700 in 2011 from $172,700 in 2010, which was essentially unchanged from 2009.
“As we gradually work off the excess housing inventory, supply levels will eventually come more in-line with historic averages, and could allow home prices to rise modestly in the range of 2 to 3 percent in 2012,” Yun said.
New-home sales are estimated to rise 24 percent to 392,000 in 2011, but would remain well below historic averages, while housing starts are forecast to rise 21 percent to 716,000.
Yun sees Gross Domestic Product growing 2.5 percent in 2011, and the Consumer Price Index rising 2.3 percent.
Source: NAR
"God Bless Us, Everyone!"
May you Christmas be full of love, peace, happiness, friends and family. From mine to yours, The Very Best Holidays ever!
Rick Funk and family
Rick Funk and family
Economic Growth Exceeds Forecast
A rash of favorable economic reports, including a jump in consumer spending and a drop in layoffs, are offering hope for a pickup.
Moreover, new Commerce Department data show U.S. gross domestic product grew 2.6 percent in the third quarter — not 2.5 percent as initially reported. The encouraging signs are prompting some economists to revise fourth-quarter and 2011 growth estimates upward.
Source: The Wall Street Journal, Conor Dougherty (12/23/10)
© Copyright 2010 Information Inc.
Moreover, new Commerce Department data show U.S. gross domestic product grew 2.6 percent in the third quarter — not 2.5 percent as initially reported. The encouraging signs are prompting some economists to revise fourth-quarter and 2011 growth estimates upward.
Source: The Wall Street Journal, Conor Dougherty (12/23/10)
© Copyright 2010 Information Inc.
There’s a Reason for Differences in Price
Housing prices vary from city to city, but even within your neighborhood or community, there may be distressed and non-distressed sub-markets with significant price differences. To illustrate, the overall median sale price of a detached existing home has been just over $300,000 throughout 2010. By comparison, the median price of a conventional non-distressed sale was about a third higher at roughly $400,000. At the other extreme, REO properties sold by banks were about a third lower than the overall median at roughly $200,000. Short sales, however, were not so steeply discounted. With a median price of roughly $270,000 over the past year, short sales were priced about 10 percent below the overall median and about 25 percent higher than REOs. What explains these differences in prices?
REO properties are sold substantially below market price because they are typically smaller in size, generally not well-maintained, and may have title clearance issues that are not desirable to home buyers. Also, since banks and lenders are not in the business of property management, they try to get rid of the inventory faster by reducing prices to below market level.
Short sales are usually priced somewhere between REO sales and market sales. These are properties owned by “underwater borrowers” who cannot pay off the mortgage balance. To avoid incurring hefty costs from a foreclosure proceeding, lenders agree to discount the loan balance. With lenders willing to concede, short sale properties are priced below market value but above what they would have sold in foreclosure status, so lenders could minimize the financial loss that would have incurred otherwise.
REO properties are sold substantially below market price because they are typically smaller in size, generally not well-maintained, and may have title clearance issues that are not desirable to home buyers. Also, since banks and lenders are not in the business of property management, they try to get rid of the inventory faster by reducing prices to below market level.
Short sales are usually priced somewhere between REO sales and market sales. These are properties owned by “underwater borrowers” who cannot pay off the mortgage balance. To avoid incurring hefty costs from a foreclosure proceeding, lenders agree to discount the loan balance. With lenders willing to concede, short sale properties are priced below market value but above what they would have sold in foreclosure status, so lenders could minimize the financial loss that would have incurred otherwise.
Fewer homeowners underwater in the third quarter
However, Nevada, Arizona, California and Florida also posted the biggest decline in negative equity, mostly because a high percentage of severely underwater borrowers in those states fell into foreclosure.
Oklahoma had the smallest percentage of underwater homeowners in the third quarter at 6 percent. Only nine states recorded percentages less than 10 percent.
The total amount of negative equity decreased to $744 billion nationwide, down from $766 billion in the previous quarter.
Oklahoma had the smallest percentage of underwater homeowners in the third quarter at 6 percent. Only nine states recorded percentages less than 10 percent.
The total amount of negative equity decreased to $744 billion nationwide, down from $766 billion in the previous quarter.
Thomas Jefferson
LISTED BELOW IS THE HISTORY OF ONE OF THE GREAT LEADERS OF AMERICA, PLEASE NOTE THAT IN HIS LIST OF ACCOMPLISHMENTS, HE WAS NEVER NOTED AS A COMMUNITY ORGANIZER.
Thomas Jefferson was a very remarkable man who started learning very early in life and never stopped.
� At 5, began studying under his cousins� tutor.
� At 9, studied Latin, Greek and French.
� At 14, studied classical literature and additional languages.
� At 16, entered the College of William and Mary.
� At 19, studied Law for 5 years starting under George Wythe.
� At 23, started his own law practice.
� At 25, was elected to the Virginia House of Burgesses.
� At 31, wrote the widely circulated "Summary View of the Rights of British America" and retired from his law practice.
� At 32, was a Delegate to the Second Continental Congress.
� At 33, wrote the Declaration of Independence.
� At 33, took three years to revise Virginia’s legal code and wrote a Public Education bill and a statute for Religious Freedom.
� At 36, was elected the second Governor of Virginia succeeding Patrick Henry.
� At 40, served in Congress for two years.
� At 41, was the American minister to France and negotiated commercial treaties with European nations along with Ben Franklin and John Adams.
� At 46, served as the first Secretary of State under George Washington.
� At 53, served as Vice President and was elected president of the American Philosophical Society.
� At 55, drafted the Kentucky Resolutions and became the active head of Republican Party.
� At 57, was elected the third president of the United States.
� At 60, obtained the Louisiana Purchase doubling the nation’s size.
� At 61, was elected to a second term as President.
� At 65, retired to Monticello.
� At 80, helped President Monroe shape the Monroe Doctrine.
� At 81, almost single-handedly created the University of Virginia and served as its first president.
� At 83, died on the 50th anniversary of the Signing of the Declaration of Independence along with John Adams
Thomas Jefferson knew because he himself studied the previous failed attempts at government. He understood actual history, the nature of God, his laws and the nature of man. That happens to be way more than what most understand today. Jefferson really knew his stuff. A voice from the past to lead us in the future: John F. Kennedy held a dinner in the white House for a group of the brightest minds in the nation at that time. He made this statement: "This is perhaps the assembly of the most intelligence ever to gather at one time in the White House with the exception of when Thomas Jefferson dined alone." When we get piled upon one another in large cities, as in Europe, we shall become as corrupt as Europe. Thomas Jefferson The democracy will cease to exist when you take away from those who are willing to work and give to those who would not. Thomas Jefferson It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world. Thomas Jefferson I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them. Thomas Jefferson My reading of history convinces me that most bad government results from too much government. Thomas Jefferson No free man shall ever be debarred the use of arms. Thomas Jefferson The strongest reason for the people to retain the right to keep and bear arms is, as a last resort, to protect themselves against tyranny in government. Thomas Jefferson The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. Thomas Jefferson To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical. Thomas Jefferson Thomas Jefferson said in 1802: I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property - until their children wake-up homeless on the continent their fathers conquered. I wish we could get this out to everyone!!!
I'm doing my part. Please do yours......
Thomas Jefferson was a very remarkable man who started learning very early in life and never stopped.
� At 5, began studying under his cousins� tutor.
� At 9, studied Latin, Greek and French.
� At 14, studied classical literature and additional languages.
� At 16, entered the College of William and Mary.
� At 19, studied Law for 5 years starting under George Wythe.
� At 23, started his own law practice.
� At 25, was elected to the Virginia House of Burgesses.
� At 31, wrote the widely circulated "Summary View of the Rights of British America" and retired from his law practice.
� At 32, was a Delegate to the Second Continental Congress.
� At 33, wrote the Declaration of Independence.
� At 33, took three years to revise Virginia’s legal code and wrote a Public Education bill and a statute for Religious Freedom.
� At 36, was elected the second Governor of Virginia succeeding Patrick Henry.
� At 40, served in Congress for two years.
� At 41, was the American minister to France and negotiated commercial treaties with European nations along with Ben Franklin and John Adams.
� At 46, served as the first Secretary of State under George Washington.
� At 53, served as Vice President and was elected president of the American Philosophical Society.
� At 55, drafted the Kentucky Resolutions and became the active head of Republican Party.
� At 57, was elected the third president of the United States.
� At 60, obtained the Louisiana Purchase doubling the nation’s size.
� At 61, was elected to a second term as President.
� At 65, retired to Monticello.
� At 80, helped President Monroe shape the Monroe Doctrine.
� At 81, almost single-handedly created the University of Virginia and served as its first president.
� At 83, died on the 50th anniversary of the Signing of the Declaration of Independence along with John Adams
Thomas Jefferson knew because he himself studied the previous failed attempts at government. He understood actual history, the nature of God, his laws and the nature of man. That happens to be way more than what most understand today. Jefferson really knew his stuff. A voice from the past to lead us in the future: John F. Kennedy held a dinner in the white House for a group of the brightest minds in the nation at that time. He made this statement: "This is perhaps the assembly of the most intelligence ever to gather at one time in the White House with the exception of when Thomas Jefferson dined alone." When we get piled upon one another in large cities, as in Europe, we shall become as corrupt as Europe. Thomas Jefferson The democracy will cease to exist when you take away from those who are willing to work and give to those who would not. Thomas Jefferson It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world. Thomas Jefferson I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them. Thomas Jefferson My reading of history convinces me that most bad government results from too much government. Thomas Jefferson No free man shall ever be debarred the use of arms. Thomas Jefferson The strongest reason for the people to retain the right to keep and bear arms is, as a last resort, to protect themselves against tyranny in government. Thomas Jefferson The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. Thomas Jefferson To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical. Thomas Jefferson Thomas Jefferson said in 1802: I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property - until their children wake-up homeless on the continent their fathers conquered. I wish we could get this out to everyone!!!
I'm doing my part. Please do yours......
10 Reasons Why....Now is a good time to buy
Owning a home has been a part of the American Dream for decades. If you are still unsure, however, whether or not homeownership is the move for you, be sure to read these ten reasons to buy.
1. Low Interest Rates. It's true! Interest rates are currently at historical lows. This means over the course of your loan, you'll pay less interest. And it also means monthly payments will be a smaller, more manageable amount.
2. Mortgage Interest Deduction: While this deduction may not be available for much longer, for now you can still use this great tax advantage!
3. Stability: Studies have shown that homeownership not only increases community involvement, it also leads to safer neighborhoods, and higher graduation rates.
4. Affordability: Coupled with the low interest rates, affordability is the highest it's been in years. Prices fell in many areas and median incomes rose -- meaning you can get more bang for your buck.
5. Paying Towards Ownership. Instead of paying a landlord, you are making an investment in your future. Every month your payment goes towards something you'll eventually own and that will have worth and value. Renting only makes the landlord richer!
6. Appreciation: Average appreciation rates vary widely depending on the condition of the local market and demand, but anywhere from 4 to 6 percent annually is considered average. This means the longer you stay in your home, the more your home will be worth.
7. Home equity: This building of worth over time (see number 6) means that if you need to make improvements to your home, you will be able to tap into its equity to finance repairs and additions.
8. Gardening: Many households are embracing the organic movement, and families have begun again to raise their own food. Even the White House has its own victory garden. Owning your own home (in most cases) means you will have your own land to cultivate.
9. Roots: Young and old alike seek out places where they belong. Owning a property, and taking your first steps towards putting down roots, can mean the difference between a house and a home.
10. Monthly Payments: Once your home is paid off -- you won't have monthly payments anymore. Apart from insurance, property taxes, and repairs, monthly expenses are minimal. In today's market, many buyers are finding, as well, that their monthly house payments are less than what they'd pay in rent!
1. Low Interest Rates. It's true! Interest rates are currently at historical lows. This means over the course of your loan, you'll pay less interest. And it also means monthly payments will be a smaller, more manageable amount.
2. Mortgage Interest Deduction: While this deduction may not be available for much longer, for now you can still use this great tax advantage!
3. Stability: Studies have shown that homeownership not only increases community involvement, it also leads to safer neighborhoods, and higher graduation rates.
4. Affordability: Coupled with the low interest rates, affordability is the highest it's been in years. Prices fell in many areas and median incomes rose -- meaning you can get more bang for your buck.
5. Paying Towards Ownership. Instead of paying a landlord, you are making an investment in your future. Every month your payment goes towards something you'll eventually own and that will have worth and value. Renting only makes the landlord richer!
6. Appreciation: Average appreciation rates vary widely depending on the condition of the local market and demand, but anywhere from 4 to 6 percent annually is considered average. This means the longer you stay in your home, the more your home will be worth.
7. Home equity: This building of worth over time (see number 6) means that if you need to make improvements to your home, you will be able to tap into its equity to finance repairs and additions.
8. Gardening: Many households are embracing the organic movement, and families have begun again to raise their own food. Even the White House has its own victory garden. Owning your own home (in most cases) means you will have your own land to cultivate.
9. Roots: Young and old alike seek out places where they belong. Owning a property, and taking your first steps towards putting down roots, can mean the difference between a house and a home.
10. Monthly Payments: Once your home is paid off -- you won't have monthly payments anymore. Apart from insurance, property taxes, and repairs, monthly expenses are minimal. In today's market, many buyers are finding, as well, that their monthly house payments are less than what they'd pay in rent!
Real Estate Outlook: Bernanke Discusses Job Growth
Is the slow pace of the economy limiting job growth? That's the sentiment from Federal Reserve Chairman, Ben Bernanke. Last Tuesday Bernanke had a chance to discuss issues other than the recent Bond purchase, and during this time he brought up concerns over job growth. Bernanke noted, "At the pace of growth that we’re seeing now, we’re not growing fast enough to materially reduce the unemployment rate." He says "the economy needs to grow at an annualized rate of 2 to 2.5 percent just to accommodate new workers coming into the labor force."
And while the recession officially ended over a year ago, unemployment has remained nearly constant at 9.6 percent from June of 2009.
According to The Conference Board Consumer Research Center, however, consumers are increasingly upbeat about future job prospects, with those polled expecting more jobs, income increases, and fewer job declines.
The Conference Board Consumer Confidence Index® has improved for 2 straight months now. This index is based on a monthly representative sample of 5,000 U.S. households. Lynn Franco, Director of The Conference Board Consumer Research Center reports, "Consumer confidence is now at its highest level in five months, a welcome sign as we enter the holiday season. Consumers' assessment of the current state of the economy and job market, while only slightly better than last month, suggests the economy is still expanding, albeit slowly. Expectations, the main driver of this month's increase in confidence, are now at the highest level since May. Hopefully, the improvement in consumers' mood will continue in the months ahead."
Commercial real estate markets are reportedly stabilizing, as well. Lawrence Yun, the chief economist for the National Association of REALTORS® reports that the slowly improving economy has led to a rise in commercial leasing demand. He says this "means overall vacancy rates have already peaked or will soon top out."
Yun anticipates a rise in household formation from an improving economy, which will increase demand for housing, both ownership and rental. "Multifamily housing is the one commercial sector that has held on relatively well in the past year, and can expect the best performance in 2011," he added.
"Apartment rents could rise by 1 to 2 percent in 2011, after having fallen in 2009 and no growth in 2010," Yun said. "This rent rise therefore could start to force up broader consumer prices as well."
And while the recession officially ended over a year ago, unemployment has remained nearly constant at 9.6 percent from June of 2009.
According to The Conference Board Consumer Research Center, however, consumers are increasingly upbeat about future job prospects, with those polled expecting more jobs, income increases, and fewer job declines.
The Conference Board Consumer Confidence Index® has improved for 2 straight months now. This index is based on a monthly representative sample of 5,000 U.S. households. Lynn Franco, Director of The Conference Board Consumer Research Center reports, "Consumer confidence is now at its highest level in five months, a welcome sign as we enter the holiday season. Consumers' assessment of the current state of the economy and job market, while only slightly better than last month, suggests the economy is still expanding, albeit slowly. Expectations, the main driver of this month's increase in confidence, are now at the highest level since May. Hopefully, the improvement in consumers' mood will continue in the months ahead."
Commercial real estate markets are reportedly stabilizing, as well. Lawrence Yun, the chief economist for the National Association of REALTORS® reports that the slowly improving economy has led to a rise in commercial leasing demand. He says this "means overall vacancy rates have already peaked or will soon top out."
Yun anticipates a rise in household formation from an improving economy, which will increase demand for housing, both ownership and rental. "Multifamily housing is the one commercial sector that has held on relatively well in the past year, and can expect the best performance in 2011," he added.
"Apartment rents could rise by 1 to 2 percent in 2011, after having fallen in 2009 and no growth in 2010," Yun said. "This rent rise therefore could start to force up broader consumer prices as well."
Strong Rebound in Pending Home Sales
Pending home sales jumped in October, showing a positive uptrend since bottoming in June, NAR says.
The Pending Home Sales Index, a forward-looking indicator, rose 10.4 percent to 89.3 based on contracts signed in October from 80.9 in September. The index remains 20.5 percent below a surge to a cyclical peak of 112.4 in October 2009, which was the highest level since May 2006 when it hit 112.6.
Last October, first-time buyers were motivated to make offers before the initial contract deadline for the tax credit last November. The data reflects contracts and not closings, which normally occur with a lag time of one or two months. Lawrence Yun, NAR chief economist, said excellent housing affordability conditions are drawing home buyers. “It is welcoming to see a solid double-digit percentage gain, but activity needs to improve further to reach healthy, sustainable levels. The housing market clearly is in a recovery phase and will be uneven at times, but the improving job market and consequential boost to household formation will help the recovery process going into 2011,” he said.
“More importantly, a return to more normal loan underwriting standards and removal of unnecessary underwriting fees for very low risk borrowers is needed and could quickly help in the housing and economic recovery,” Yun said. Recent loan performance data from Fannie Mae and Freddie Mac clearly demonstrates very low default rates on recently originated mortgages, much lower that the vintages of 2002 and 2003 before the housing boom.
The PHSI in the Northeast jumped 19.6 percent to 71.3 in October but is 27.3 percent below the tax credit peak in October 2009. In the Midwest the index surged 27.3 percent in October to 81.7 but is 24.8 percent below a year ago. Pending home sales in the South rose 7.1 percent to an index of 93.8 but are 18.4 percent below October 2009. In the West the index slipped 0.4 percent to 104.3 and is 15.6 percent below a year ago.
Near term, Yun expects home sales will continue to climb from their cyclical low this past summer. “Even so, we now have some consumer concerns regarding the mortgage interest deduction, an important component in housing affordability,” he said. “Preliminary results of a new survey show nearly three out of four home owners and two out of three renters consider the mortgage interest deduction to be extremely or very important to them. Home owners already pay between 80 and 90 percent of all federal income taxes and additional tax burden would hurt them and the economic recovery, so we have a reasonable hope that it will not be changed.”
Source: NAR
The Pending Home Sales Index, a forward-looking indicator, rose 10.4 percent to 89.3 based on contracts signed in October from 80.9 in September. The index remains 20.5 percent below a surge to a cyclical peak of 112.4 in October 2009, which was the highest level since May 2006 when it hit 112.6.
Last October, first-time buyers were motivated to make offers before the initial contract deadline for the tax credit last November. The data reflects contracts and not closings, which normally occur with a lag time of one or two months. Lawrence Yun, NAR chief economist, said excellent housing affordability conditions are drawing home buyers. “It is welcoming to see a solid double-digit percentage gain, but activity needs to improve further to reach healthy, sustainable levels. The housing market clearly is in a recovery phase and will be uneven at times, but the improving job market and consequential boost to household formation will help the recovery process going into 2011,” he said.
“More importantly, a return to more normal loan underwriting standards and removal of unnecessary underwriting fees for very low risk borrowers is needed and could quickly help in the housing and economic recovery,” Yun said. Recent loan performance data from Fannie Mae and Freddie Mac clearly demonstrates very low default rates on recently originated mortgages, much lower that the vintages of 2002 and 2003 before the housing boom.
The PHSI in the Northeast jumped 19.6 percent to 71.3 in October but is 27.3 percent below the tax credit peak in October 2009. In the Midwest the index surged 27.3 percent in October to 81.7 but is 24.8 percent below a year ago. Pending home sales in the South rose 7.1 percent to an index of 93.8 but are 18.4 percent below October 2009. In the West the index slipped 0.4 percent to 104.3 and is 15.6 percent below a year ago.
Near term, Yun expects home sales will continue to climb from their cyclical low this past summer. “Even so, we now have some consumer concerns regarding the mortgage interest deduction, an important component in housing affordability,” he said. “Preliminary results of a new survey show nearly three out of four home owners and two out of three renters consider the mortgage interest deduction to be extremely or very important to them. Home owners already pay between 80 and 90 percent of all federal income taxes and additional tax burden would hurt them and the economic recovery, so we have a reasonable hope that it will not be changed.”
Source: NAR
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