An improving economy is contributing to a gradual rebound in home prices across
the country, according to mortgage giant Freddie Mac’s 2012 Economic Outlook
report, released Wednesday. But there is still a way to go in the road to
recovery for the housing market, the report noted.
“The housing market is showing some signs of shaking off the depression-like
conditions that have plagued it for much of the past few years,” according to
the report. “As if awakening from hibernation, housing starts and home sales
moved to higher levels of activity.”
In fact, the signs have prompted Freddie Mac to revise its forecast upwards for
home sales and originations. One economic contributor that’s helping to
stabilize housing: The drop in the unemployment rate to 8.3 percent, its lowest
level in three years, according to the report.
“A variety of encouraging indicators suggest that the housing market may be feeling
a nascent recovery ... and more neighborhoods may see a stabilization in overall
demand and housing values this spring,” says Frank Nothaft, Freddie Mac’s chief
economist.
Median home sale prices are up, despite a slight drop in new and existing home sales,
Freddie Mac reports. About a half of the increase in housing starts has been for
construction of rental apartments in multi-unit buildings to meet the increasing
demand, the report notes. New rental construction, at its current pace, is
expected to reach its highest level since 2005.
“Housing starts continue to run below net household formations [and will allow for
absorption of existing vacant homes],” according to the report.
Source: “Freddie Mac: Economic Growth Expected to Stabilize Housing Market,” Dow Jones
Newswires (March 28, 2012)
Poll: Renters Want to Buy
Americans
still believe in home ownership, but they’re spooked about the mortgage process,
a survey finds. Two-thirds of renters -- across educational and demographic levels -- say they want to purchase a home in the future, according to a quarterly national housing survey
of 3,000 Americans conducted by Fannie Mae. "In spite of the impact of the housing crisis on home values and home ownership rates across the country, Americans by and large still hope to become home owners," says Doug Duncan, Fannie Mae’s chief economist. "Some may not be
financially positioned to own a home in the near future, but Americans may begin
to revisit that aspiration as employment and household balance sheets improve
over the coming years." However, Duncan says many renters are expressing caution about the homebuying process when it comes to qualifying for a mortgage and navigating the mortgage
process. "If potential home owners avoid the process because they believe it to be too
complex, we will likely see a continued impact on home ownership rates," Duncan
says. Source: “Fannie Mae Finds Americans Remain Committed to Homeownership,” HousingWire (March 27, 2012)
still believe in home ownership, but they’re spooked about the mortgage process,
a survey finds. Two-thirds of renters -- across educational and demographic levels -- say they want to purchase a home in the future, according to a quarterly national housing survey
of 3,000 Americans conducted by Fannie Mae. "In spite of the impact of the housing crisis on home values and home ownership rates across the country, Americans by and large still hope to become home owners," says Doug Duncan, Fannie Mae’s chief economist. "Some may not be
financially positioned to own a home in the near future, but Americans may begin
to revisit that aspiration as employment and household balance sheets improve
over the coming years." However, Duncan says many renters are expressing caution about the homebuying process when it comes to qualifying for a mortgage and navigating the mortgage
process. "If potential home owners avoid the process because they believe it to be too
complex, we will likely see a continued impact on home ownership rates," Duncan
says. Source: “Fannie Mae Finds Americans Remain Committed to Homeownership,” HousingWire (March 27, 2012)
Bernanke Stands Firm on Interest Rates
The economy still has a long way to go, Federal Reserve Chairman Ben Bernanke
said Monday.Bernanke continue to assert that the Fed intends to hold short-term interest rates near zero through 2014, which will help keep mortgage rates low. He also said the Fed has
been investing in government debt that will possibly reduce long-term interest
rates even more.
With the economy showing some signs of improvement — including a drop in the jobless
rate to 8.3 percent in February (compared to 9.1 percent last summer) — many
investors had assumed the Fed would reverse course and announce a raise in
interest rates starting in July 2013.
But Bernanke stood firm Monday on the Fed’s vow to keep key rates low until 2014.
Bernanke cited continued concerns over long-term unemployment.
“Recent improvements are encouraging,” Bernanke said. However, “millions of families
continue to suffer the day-to-day hardships associated with not being able to
find suitable employment.”
Unemployment particularly remains high for those who have been unable to find a job for six
months or more. Research has shown those who are out of work for an extended
period of time are more likely to see permanent declines in wealth, health, and
earnings potential.
Source: “Bernanke Says Faster Growth Is Needed to Bolster Job Market,” The New York Times (March 26, 2012) and “Bernanke: U.S. Needs Faster Growth to Lower Unemployment,” Reuters News (March 26, 2012)
said Monday.Bernanke continue to assert that the Fed intends to hold short-term interest rates near zero through 2014, which will help keep mortgage rates low. He also said the Fed has
been investing in government debt that will possibly reduce long-term interest
rates even more.
With the economy showing some signs of improvement — including a drop in the jobless
rate to 8.3 percent in February (compared to 9.1 percent last summer) — many
investors had assumed the Fed would reverse course and announce a raise in
interest rates starting in July 2013.
But Bernanke stood firm Monday on the Fed’s vow to keep key rates low until 2014.
Bernanke cited continued concerns over long-term unemployment.
“Recent improvements are encouraging,” Bernanke said. However, “millions of families
continue to suffer the day-to-day hardships associated with not being able to
find suitable employment.”
Unemployment particularly remains high for those who have been unable to find a job for six
months or more. Research has shown those who are out of work for an extended
period of time are more likely to see permanent declines in wealth, health, and
earnings potential.
Source: “Bernanke Says Faster Growth Is Needed to Bolster Job Market,” The New York Times (March 26, 2012) and “Bernanke: U.S. Needs Faster Growth to Lower Unemployment,” Reuters News (March 26, 2012)
8 Metros Where List Prices Are on the Rise
A number of housing markets nationwide have been seeing modest increases in
median list prices. In the last year alone, median national list prices ticked
up 6.82 percent year over year in February, according to Realtor.com data of 146
metro markets. And a number of markets have seen increases in just one month by
3 or 4 percent.
The
following are the eight metro areas that saw the highest median list price
increases from January to February: 1. San Jose,
Calif.Month-over-month increase: 4.20 percentMedian list price:
$468,888
2.
Washington, D.C.-Md.-Va.-W.Va.Month-over-month increase: 4.17
percentMedian list price: $384,950
3.
DetroitMonth-over-month increase: 3.92 percentMedian list price:
$84,900
4.
Corpus Christi, TexasMonth-over-month increase: 3.89 percentMedian list
price: $165,700
5.
San FranciscoMonth-over-month increase: 3.77 percentMedian list price:
$611,700
6.
Punta Gorda, Fla.
Month-over-month
increase: 3.35 percent
Median
list price: $185,000
7.
Atlanta
Month-over-month
increase: 3.27 percent
Median
list price: $154,900
8.
Oakland, Calif.
Month-over-month
increase: 3.23 percent
Median
list price: $320,000
And
where have median list prices fallen the most in the last month? Iowa City,
Iowa, where median list prices have declined 4.95 percent, and Toledo, Ohio,
where list prices dropped 4.31 percent from January to February, according to
Realtor.com data.
By Melissa Dittmann Tracey, REALTOR® Magazine Daily
News
Nationwide
List Prices Rise Nearly 7%
median list prices. In the last year alone, median national list prices ticked
up 6.82 percent year over year in February, according to Realtor.com data of 146
metro markets. And a number of markets have seen increases in just one month by
3 or 4 percent.
The
following are the eight metro areas that saw the highest median list price
increases from January to February: 1. San Jose,
Calif.Month-over-month increase: 4.20 percentMedian list price:
$468,888
2.
Washington, D.C.-Md.-Va.-W.Va.Month-over-month increase: 4.17
percentMedian list price: $384,950
3.
DetroitMonth-over-month increase: 3.92 percentMedian list price:
$84,900
4.
Corpus Christi, TexasMonth-over-month increase: 3.89 percentMedian list
price: $165,700
5.
San FranciscoMonth-over-month increase: 3.77 percentMedian list price:
$611,700
6.
Punta Gorda, Fla.
Month-over-month
increase: 3.35 percent
Median
list price: $185,000
7.
Atlanta
Month-over-month
increase: 3.27 percent
Median
list price: $154,900
8.
Oakland, Calif.
Month-over-month
increase: 3.23 percent
Median
list price: $320,000
And
where have median list prices fallen the most in the last month? Iowa City,
Iowa, where median list prices have declined 4.95 percent, and Toledo, Ohio,
where list prices dropped 4.31 percent from January to February, according to
Realtor.com data.
By Melissa Dittmann Tracey, REALTOR® Magazine Daily
News
Nationwide
List Prices Rise Nearly 7%
Housing Crisis to End in 2012 as Banks Loosen Credit Standards
Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit. The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago. Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters. However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability. Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings. Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV. While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan. Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generate actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.
What Do Americans Want Most Once Finances Improve?
Fifty-one percent of Americans in a recent poll say that if their financial situation were to improve, they’d buy a home. Coming in second on the list of wishes, they’d make repairs or improvements to the home they already have, according to the poll of more than 1,400 Americans conducted by the National Foundation for Credit Counseling Web site, www.DebtAdvice.org.
Meanwhile, 17 percent of Americans polled said they’d upgrade their car and 9 percent said they’d take a vacation.
"Home ownership has traditionally been a part of sound financial planning," says Gail Cunningham, spokesperson for the NFCC, a nonprofit credit counseling organization. "With a combined total of 74 percent of respondents selecting a home-oriented option, the poll results strongly suggests that people continue to place value in owning a home, and are anxious to buy a house or improve their existing one."
Meanwhile, 17 percent of Americans polled said they’d upgrade their car and 9 percent said they’d take a vacation.
"Home ownership has traditionally been a part of sound financial planning," says Gail Cunningham, spokesperson for the NFCC, a nonprofit credit counseling organization. "With a combined total of 74 percent of respondents selecting a home-oriented option, the poll results strongly suggests that people continue to place value in owning a home, and are anxious to buy a house or improve their existing one."
Economy Adds 227K Jobs in February
Nonfarm payroll employment rose 227,000 in February, and the unemployment rate was unchanged at 8.3 percent, the U.S. Bureau of Labor Statistics reported this morning. Payroll jobs increased in professional and business services, health care and social assistance, leisure and hospitality, manufacturing, and mining. The number of unemployed persons, at 12.8 million, was essentially unchanged in February. At 8.3 percent, the unemployment rate remains 0.8 percentage point below the August 2011 rate.
Home Prices Stabilize Despite Increase in REOs
Daily Real Estate News Tuesday, March 06, 2012 An increase in distressed properties on the market is no longer chipping away at overall home prices, an “unusual and encouraging” sign, a new report suggests.
In fact, the report found that in the top 15 metro areas REOs dramatically increased in February, but those areas still showed average gains or mostly stable home prices compared to the previous month, a new report by Clear Capital shows. Distressed properties typically are known to put downward pressure on nearby home prices.
Alex Villacorta, director of research and analytics at Clear Capital, says improvements in the job market, an uptick in consumer confidence, and an increase in activity among investors making cash purchases may be helping to pull home prices up and “could be in play with the resiliency we’re seeing in prices against increasing REO this month.”
Overall, national home prices dropped 1.9 percent year-over-year, which is the smallest margin drop in 10 months, according to Clear Capital’s March housing report.
“Home prices across the nation saw light levels of depreciation in February, consistent with the trend we have seen over the last several months,” Villacorta noted. “However, the Northeast, Midwest, and West improved performance against last month’s quarterly declines in light of increases in REO saturation, which is unusual and encouraging.”
With the uptick in REO activity, however, “we’ll be keeping a very close eye on the effects of the attorneys general settlement with servicers, as it could dramatically change the flow of REO properties moving through the foreclosure process and significantly impact values in the near future," Villacorta said.
In fact, the report found that in the top 15 metro areas REOs dramatically increased in February, but those areas still showed average gains or mostly stable home prices compared to the previous month, a new report by Clear Capital shows. Distressed properties typically are known to put downward pressure on nearby home prices.
Alex Villacorta, director of research and analytics at Clear Capital, says improvements in the job market, an uptick in consumer confidence, and an increase in activity among investors making cash purchases may be helping to pull home prices up and “could be in play with the resiliency we’re seeing in prices against increasing REO this month.”
Overall, national home prices dropped 1.9 percent year-over-year, which is the smallest margin drop in 10 months, according to Clear Capital’s March housing report.
“Home prices across the nation saw light levels of depreciation in February, consistent with the trend we have seen over the last several months,” Villacorta noted. “However, the Northeast, Midwest, and West improved performance against last month’s quarterly declines in light of increases in REO saturation, which is unusual and encouraging.”
With the uptick in REO activity, however, “we’ll be keeping a very close eye on the effects of the attorneys general settlement with servicers, as it could dramatically change the flow of REO properties moving through the foreclosure process and significantly impact values in the near future," Villacorta said.
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