Home prices in urban areas have not fallen by as much the last few years as they have in the suburbs. And prices in urban areas are recovering much faster too, according to John McLain of the Urban Land Institute. Why? Some say it’s because of new moving patterns among the baby-boomer generation.
An increasing number of baby boomers are reportedly leaving their big homes in the suburbs and heading to urban areas for retirement, drawn by walkability, proximity to public transportation, diversity, and being closer to their children.
"[Boomers] want to buy something that's secure, and it's been pretty well demonstrated that suburban housing is not as secure an asset as anyone thought it was or that it used to be," McClain said.
Developers are taking note of the trend and beefing up construction in urban centers. Condos and apartments near downtown areas are popping up to accommodate more baby boomers.
The nation’s largest home builders are still investing in active-adult communities in the suburbs but confidence in the sector has been recovering at a much slower rate than the overall housing market, according to the National Association of Home Builders.
"The idea of living out in the suburbs, just with older people, has really disappeared," McClain says. Source: “Boomers to Blame for Rising Urban Home Prices,” CNBC (April 13, 2013)
Where Are Mortgage Rates Heading in 2014?
Mortgage rates will likely rise above 5 percent in 2014 and average 5.3 percent by the end of 2015, according to the Mortgage Bankers Association’s forecast.
That would mark a big jump over where mortgage rates stand now. The MBA reported this week that the 30-year fixed-rate mortgage averaged 4.33 percent, the lowest average since June.
The MBA expects that the Federal Reserve will decide to taper its $85-billion per month bond-purchasing program in early 2014 and end it altogether in September 2014. The Fed’s bond buying program has been keeping mortgage rates low. The Fed has hinted in recent months that it will soon be winding down the program.
“As a result, mortgage refinancing will continue to drop, and borrowers seeking to tap the equity in their homes will be more likely to rely on home equity seconds rather than cash-out refinances,” says Jay Brinkmann, the MBA’s chief economist.
The MBA said in its forecast that it expects home purchase applications for mortgages to rise 9 percent next year, following expected continued home sales and price increases.
However, the MBA projects that overall mortgage originations will drop 32 percent in 2014, as the number of refinancing applications post a large drop in the new year due to expected rising interest rates.
While refinancings make up the bulk of home applications today, that trend is expected to reverse next year. Purchase loans are expected to make up 60 percent of originations next year compared to about 38 percent this year.
“We are projecting home purchase originations will increase in 2014 due largely to gains in home sales and home prices,” says Brinkmann. “We expect to see a decline in the share of sales paid for with cash, and higher average LTVs on purchase mortgages, due to the rise in home prices.” Source: “U.S. Mortgage Applications Increase as Rates Edge Down,” Reuters (Oct. 30 2013) and “Purchase Loans Expected to Buck Rising Mortgage Rates Next Year,” Inman News (Oct. 29, 2013
That would mark a big jump over where mortgage rates stand now. The MBA reported this week that the 30-year fixed-rate mortgage averaged 4.33 percent, the lowest average since June.
The MBA expects that the Federal Reserve will decide to taper its $85-billion per month bond-purchasing program in early 2014 and end it altogether in September 2014. The Fed’s bond buying program has been keeping mortgage rates low. The Fed has hinted in recent months that it will soon be winding down the program.
“As a result, mortgage refinancing will continue to drop, and borrowers seeking to tap the equity in their homes will be more likely to rely on home equity seconds rather than cash-out refinances,” says Jay Brinkmann, the MBA’s chief economist.
The MBA said in its forecast that it expects home purchase applications for mortgages to rise 9 percent next year, following expected continued home sales and price increases.
However, the MBA projects that overall mortgage originations will drop 32 percent in 2014, as the number of refinancing applications post a large drop in the new year due to expected rising interest rates.
While refinancings make up the bulk of home applications today, that trend is expected to reverse next year. Purchase loans are expected to make up 60 percent of originations next year compared to about 38 percent this year.
“We are projecting home purchase originations will increase in 2014 due largely to gains in home sales and home prices,” says Brinkmann. “We expect to see a decline in the share of sales paid for with cash, and higher average LTVs on purchase mortgages, due to the rise in home prices.” Source: “U.S. Mortgage Applications Increase as Rates Edge Down,” Reuters (Oct. 30 2013) and “Purchase Loans Expected to Buck Rising Mortgage Rates Next Year,” Inman News (Oct. 29, 2013
What is the requirement in CA for smoke detectors & carbon monoxide detectors?
Smoke Detectors California law requires that every single-family dwelling and factory-built housing have operable smoke detectors that are approved and listed by the State Fire Marshal and installed in accordance with the State Fire Marshal's regulations. (Cal. Health & Safety Code § 13113.8.)
The smoke detectors must be centrally located outside each sleeping area. For example, a two-story home with bedrooms upstairs and downstairs would need two smoke detectors, one in the hallway outside the bedrooms(s) upstairs and one in the hallway outside the bedroom(s) downstairs.
Furthermore, for any new construction or any additions, alterations, repairs after August 14, 1992 that exceeds $1,000 in cost and for which a permit is required, a smoke detector must be installed in each bedroom in addition to being centrally located in the corridor or area outside the bedroom.
For new construction only, the smoke detector must be hardwired with a battery backup. For all other homes, the smoke detector may be battery operated. (Cal. Health & Safety Code § 13113.7.)
Sellers must check with the local department of building and safety in which the home is located to determine any additional local requirements.
Unless exempt, the transferor/seller must provide the buyer with a written statement indicating that the property is in compliance with the law governing smoke detectors. This requirement may be satisfied by using C.A.R. Form SDC.
The exemptions are as follows: *Transfers that require a copy of a public report be given to the buyer. * Transfers pursuant to court order. * Transfers during foreclosure or trustee’s sale or through deed in lieu of foreclosure (REO transfers are not exempted, however). * Transfers by a fiduciary of a trust, decedent’s estate, guardianship or conservatorship * Transfers between co-owners. * Transfers to a spouse or to a child, grandchild, parent, grandparent or other direct ancestor or descendant. Transfers between spouses in connection with a dissolution of marriage or similar proceeding. * Transfers by the State Controller pursuant to the Unclaimed Property Law. * Transfers as a result of failure to pay property taxes.
Carbon Monoxide Detector
Residential (CA Residential Code, 2010) All newly constructed detached one- and two-family dwellings and townhouses not more than three stories in height that contain fuel burning appliances or an attached garage. Also, when such an existing dwelling requires a permit for alterations, repairs or additions exceeding $1,000. Commercial (CA Building Code, 2010) Group homes, assisted living facilities housing more than 16 persons in a supervised environment who are capable of responding to an emergency. Also includes hotels, boarding houses, apartments, dorms, adult and child day care facilities (all I-1, R-1, R-2 and R-3 dwellings and facilities). EXISTING HOMES Single-Family Dwellings – Required beginning July 1, 2011 Multi-Family Dwellings – Required beginning January 1, 2013 Any single-family dwelling, duplex, lodging house, private dormitory, hotel, motel, condo, time-share or multiple unit dwelling that contains a fossil-fuel burning heater, appliance, fireplace or attached garage.
New Construction: Must be hardwired with battery backup and interconnected. Existing Homes: May be battery operated, plug-in with battery backup, or hardwired with battery backup. Installation : CO alarms must be installed outside each separate sleeping area in the immediate vicinity and on every level. NOTE: Most of us have improved our homes for more than $1,000.00 (without permits) Therefore, to be safe a smoke detector must be installed in each bedroom in addition to being centrally located in the corridor or area outside the bedroom. Its is ALWAYS better to be safe that sorry! No Excpetions.
The smoke detectors must be centrally located outside each sleeping area. For example, a two-story home with bedrooms upstairs and downstairs would need two smoke detectors, one in the hallway outside the bedrooms(s) upstairs and one in the hallway outside the bedroom(s) downstairs.
Furthermore, for any new construction or any additions, alterations, repairs after August 14, 1992 that exceeds $1,000 in cost and for which a permit is required, a smoke detector must be installed in each bedroom in addition to being centrally located in the corridor or area outside the bedroom.
For new construction only, the smoke detector must be hardwired with a battery backup. For all other homes, the smoke detector may be battery operated. (Cal. Health & Safety Code § 13113.7.)
Sellers must check with the local department of building and safety in which the home is located to determine any additional local requirements.
Unless exempt, the transferor/seller must provide the buyer with a written statement indicating that the property is in compliance with the law governing smoke detectors. This requirement may be satisfied by using C.A.R. Form SDC.
The exemptions are as follows: *Transfers that require a copy of a public report be given to the buyer. * Transfers pursuant to court order. * Transfers during foreclosure or trustee’s sale or through deed in lieu of foreclosure (REO transfers are not exempted, however). * Transfers by a fiduciary of a trust, decedent’s estate, guardianship or conservatorship * Transfers between co-owners. * Transfers to a spouse or to a child, grandchild, parent, grandparent or other direct ancestor or descendant. Transfers between spouses in connection with a dissolution of marriage or similar proceeding. * Transfers by the State Controller pursuant to the Unclaimed Property Law. * Transfers as a result of failure to pay property taxes.
Carbon Monoxide Detector
Residential (CA Residential Code, 2010) All newly constructed detached one- and two-family dwellings and townhouses not more than three stories in height that contain fuel burning appliances or an attached garage. Also, when such an existing dwelling requires a permit for alterations, repairs or additions exceeding $1,000. Commercial (CA Building Code, 2010) Group homes, assisted living facilities housing more than 16 persons in a supervised environment who are capable of responding to an emergency. Also includes hotels, boarding houses, apartments, dorms, adult and child day care facilities (all I-1, R-1, R-2 and R-3 dwellings and facilities). EXISTING HOMES Single-Family Dwellings – Required beginning July 1, 2011 Multi-Family Dwellings – Required beginning January 1, 2013 Any single-family dwelling, duplex, lodging house, private dormitory, hotel, motel, condo, time-share or multiple unit dwelling that contains a fossil-fuel burning heater, appliance, fireplace or attached garage.
New Construction: Must be hardwired with battery backup and interconnected. Existing Homes: May be battery operated, plug-in with battery backup, or hardwired with battery backup. Installation : CO alarms must be installed outside each separate sleeping area in the immediate vicinity and on every level. NOTE: Most of us have improved our homes for more than $1,000.00 (without permits) Therefore, to be safe a smoke detector must be installed in each bedroom in addition to being centrally located in the corridor or area outside the bedroom. Its is ALWAYS better to be safe that sorry! No Excpetions.
8 Cities Where Asking Prices Are Soaring:
Asking prices on homes for-sale are edging higher nationwide in the past year, with prices 6.40 percent higher than year ago levels, according to realtor.com®’s September National Housing Trend Report. Nationwide, the national median list price for homes was $199,500 last month.
Of the 146 markets that realtor.com® tracks in its report, more than 20 percent reported year-over-year over price gains of 12 percent or more.
In some areas, asking prices have jumped even more — by 26 percent or more — in the past year. In Detroit alone, asking prices have surged 44.57 percent year-over-year.
The following metros have seen some of the largest gains in median asking prices year-over-year:
1. Detroit: +44.57% Median list price: $133,000
2. Stockton-Lodi, Calif.: +41.12% Median list price: $239,900
3. Santa Barbara-Santa Maria-Lompoc, Calif.: +32.10% Median list price: $786,000
4. Las Vegas, Nev.-Ariz.: +30.69% Median list price: $169,900
5. Reno, Nev.: +29.63% Median list price: $259,250
6. Sacramento, Calif.: +28.94% Median list price: $303,000
7. Oakland, Calif.: +27.99% Median list price: $479,950
8. Melbourne-Titusville-Palm Bay, Fla.: +26.90% Median list price: $165,000
Source: Realtor.com National Housing Trend Report (September 2013)
Of the 146 markets that realtor.com® tracks in its report, more than 20 percent reported year-over-year over price gains of 12 percent or more.
In some areas, asking prices have jumped even more — by 26 percent or more — in the past year. In Detroit alone, asking prices have surged 44.57 percent year-over-year.
The following metros have seen some of the largest gains in median asking prices year-over-year:
1. Detroit: +44.57% Median list price: $133,000
2. Stockton-Lodi, Calif.: +41.12% Median list price: $239,900
3. Santa Barbara-Santa Maria-Lompoc, Calif.: +32.10% Median list price: $786,000
4. Las Vegas, Nev.-Ariz.: +30.69% Median list price: $169,900
5. Reno, Nev.: +29.63% Median list price: $259,250
6. Sacramento, Calif.: +28.94% Median list price: $303,000
7. Oakland, Calif.: +27.99% Median list price: $479,950
8. Melbourne-Titusville-Palm Bay, Fla.: +26.90% Median list price: $165,000
Source: Realtor.com National Housing Trend Report (September 2013)
Number of Underwater Homeowners Down 42%
Home prices are rising, more underwater home owners are regaining equity, and home sales are on the rise, according to the Obama Housing Scorecard, released each month by the U.S. Department of Housing and Urban Development.
The August report showed that home prices continue to make strong gains while the number of underwater home owners has dropped by 42 percent since the beginning of 2012. The number of home owners who owe more on their mortgage than it is currently worth has dropped from 12.1 million to 7.1 million as of the second quarter of 2013. Home sales—for existing homes and new homes—continue to rebound as well.
However, the report also strikes a cautious note, underscoring the fact that housing market hasn’t returned to normal quite yet.
“As we regain stability in our housing markets, it is important to remember that we still have a long way to go in making sure that our housing finance system is strong for future generations,” says Kurt Usowski, HUD deputy assistant secretary for economic affairs.
The report notes that more than 1.7 million home owner assistance actions have taken place through the administration’s Making Home Affordable Program, including loan modifications and other foreclosure-mitigation efforts. But the administration continues to press mortgage servicers to improve their processes in helping struggling home owners, such as through better identification of home owners who could be helped through the program as well as improving upon the timeliness, accuracy, and detail of servicers communications with home owners.
“While there is significant progress, there is still more improvement needed in [mortgage] servicer behavior,” says Tim Massad, Treasury assistant secretary for financial stability. “And while the housing market has recovered substantially, there are still home owners struggling to avoid foreclosure and it is vital that we continue to try to help them.” Source: U.S. Department of Housing and Urban Development and “Obama Housing Scorecard: Housing faces long journey ahead,” HousingWire (Sept. 13, 2013)
The August report showed that home prices continue to make strong gains while the number of underwater home owners has dropped by 42 percent since the beginning of 2012. The number of home owners who owe more on their mortgage than it is currently worth has dropped from 12.1 million to 7.1 million as of the second quarter of 2013. Home sales—for existing homes and new homes—continue to rebound as well.
However, the report also strikes a cautious note, underscoring the fact that housing market hasn’t returned to normal quite yet.
“As we regain stability in our housing markets, it is important to remember that we still have a long way to go in making sure that our housing finance system is strong for future generations,” says Kurt Usowski, HUD deputy assistant secretary for economic affairs.
The report notes that more than 1.7 million home owner assistance actions have taken place through the administration’s Making Home Affordable Program, including loan modifications and other foreclosure-mitigation efforts. But the administration continues to press mortgage servicers to improve their processes in helping struggling home owners, such as through better identification of home owners who could be helped through the program as well as improving upon the timeliness, accuracy, and detail of servicers communications with home owners.
“While there is significant progress, there is still more improvement needed in [mortgage] servicer behavior,” says Tim Massad, Treasury assistant secretary for financial stability. “And while the housing market has recovered substantially, there are still home owners struggling to avoid foreclosure and it is vital that we continue to try to help them.” Source: U.S. Department of Housing and Urban Development and “Obama Housing Scorecard: Housing faces long journey ahead,” HousingWire (Sept. 13, 2013)
Where Home Sellers Fared the Best This Summer
As the summer home buying season wraps up, realtor.com® reports which markets fared the best.
For home sellers who listed their homes in April, they tended to have the best chance to receive multiple offers as well as the shortest time on the market, according to realtor.com®.
Over the season, inventory levels increased, adding greater competition to the field and slowing the appreciation of prices in the majority of housing markets, realtor.com® found.
Realtor.com® compiled a list of the “Top 10 Housing Markets Where Home Owners Wish They’d Listed in April,” which includes housing markets that saw the largest jumps in inventory from April to August. Most of the markets are still seeing prices rise, but the sellers who took advantage by listing their homes in April tended to fare the best.
1. Orange County, Calif.
Change in inventory from April 2013 to August 2013: 100.3%
2. Los Angeles-Long Beach, Calif.
Change in inventory: 82.3%
3. Ventura, Calif.
Change in inventory: 75.1%
4. Riverside-San Bernardino, Calif.
Change in inventory: 70.3%
5. Oakland, Calif.
Change in inventory: 62.2%
6. Anchorage, Alaska
Change in inventory: 53.3%
7. Dayton-Springfield, Ohio
Change in inventory: 51.9%
8. San Jose, Calif.
Change in inventory: 47.6%
9. Seattle-Bellevue-Everett, Wash.
Change in inventory: 44.3%
10. Bakersfield, Calif.
Change in inventory: 38.7%
Source: “Housing Markets Where Home Listings Spiked This Summer,” realtor.com (Sept. 12, 2013)
For home sellers who listed their homes in April, they tended to have the best chance to receive multiple offers as well as the shortest time on the market, according to realtor.com®.
Over the season, inventory levels increased, adding greater competition to the field and slowing the appreciation of prices in the majority of housing markets, realtor.com® found.
Realtor.com® compiled a list of the “Top 10 Housing Markets Where Home Owners Wish They’d Listed in April,” which includes housing markets that saw the largest jumps in inventory from April to August. Most of the markets are still seeing prices rise, but the sellers who took advantage by listing their homes in April tended to fare the best.
1. Orange County, Calif.
Change in inventory from April 2013 to August 2013: 100.3%
2. Los Angeles-Long Beach, Calif.
Change in inventory: 82.3%
3. Ventura, Calif.
Change in inventory: 75.1%
4. Riverside-San Bernardino, Calif.
Change in inventory: 70.3%
5. Oakland, Calif.
Change in inventory: 62.2%
6. Anchorage, Alaska
Change in inventory: 53.3%
7. Dayton-Springfield, Ohio
Change in inventory: 51.9%
8. San Jose, Calif.
Change in inventory: 47.6%
9. Seattle-Bellevue-Everett, Wash.
Change in inventory: 44.3%
10. Bakersfield, Calif.
Change in inventory: 38.7%
Source: “Housing Markets Where Home Listings Spiked This Summer,” realtor.com (Sept. 12, 2013)
What Ranks High with Luxury Homebuyers
Luxury home owners and buyers place a high value on real estate, according to a new survey conducted by Better Homes and Gardens of 500 luxury home buyers.
In fact, the survey finds that 75 percent of luxury home buyers believe home ownership is a sounder investment than the stock market. What’s more, 57 percent of luxury home owners say home ownership is a bigger indicator of success than their job or title.
“The luxury consumer is considered a trendsetter in most industries, and to see the strong connection this consumer has with ‘home’ is very significant as we look at the real estate market as a whole,” says Sherry Chris, president and CEO of Better Homes and Gardens Real Estate LLC. “The luxury home buyer has high standards and invests the money, the time, and the commitment to making their home fit their needs and reflect who they are. It’s remarkable that they do this so well that nearly all -- 93 percent -- believe their house is the best one on their block.”
The survey revealed some of the following insights into the luxury home buyer and owner:
In fact, the survey finds that 75 percent of luxury home buyers believe home ownership is a sounder investment than the stock market. What’s more, 57 percent of luxury home owners say home ownership is a bigger indicator of success than their job or title.
“The luxury consumer is considered a trendsetter in most industries, and to see the strong connection this consumer has with ‘home’ is very significant as we look at the real estate market as a whole,” says Sherry Chris, president and CEO of Better Homes and Gardens Real Estate LLC. “The luxury home buyer has high standards and invests the money, the time, and the commitment to making their home fit their needs and reflect who they are. It’s remarkable that they do this so well that nearly all -- 93 percent -- believe their house is the best one on their block.”
The survey revealed some of the following insights into the luxury home buyer and owner:
- They desire multiple homes: Fifty-three percent say they prefer owning multiple “lifestyle” homes to support their lifestyle activities, such as skiing or attending the theatre. Fifty-eight percent of the luxury home buyers surveyed say they already owned multiple homes to support their lifestyle activities.
- They’re willing to sacrifice square footage for luxurious amenities: Sixty-percent of luxury home buyers surveyed said they would rather have as many upgrades as they can afford in their home rather than greater square footage. Ninety-four percent of those surveyed would be willing to give up 1,000 square feet of living space in their next home in order to get the amenities they most desire, such as living in a better neighborhood, living in a house with “character,” more land, access to dining and entertainment, and a shorter commute.
- They want a high-tech home. Sixty-six percent expressed a stronger desire for having a “smart” home than a “green” home. Eighty-seven percent said they would not even consider purchasing a home that wasn’t tech-friendly.
- They also value their outdoor spaces. Luxury homebuyers also placed a high value on outdoor amenities as must-have essentials in a home. For example, they expressed a big interest in having a garden oasis, outdoor fireplace or firepit, and a separate guest house outside of the main home.
- They turn to their real estate agent for guidance and greater insights. The luxury home buyer is looking for their real estate agent to provide them insight into the neighborhood lifestyle (65%), advance new listing notices (64%), advice on housing trends (55%), and support at a personal level throughout the buying process (53%), the survey finds.
New FHA Program Seeks to Return Foreclosed Borrowers to Homeownership
'Back to Work' Program Cuts Waiting Period to Qualify for a New Mortgage
In the aftermath of more than 2.5 million foreclosures, the Federal Housing Administration (FHA) is now offering a homeownership program that will put previously troubled borrowers on a fast-tracked return to the home ownership market. The new program known as "Back to Work – Extenuating Circumstance" cuts the standard three-year waiting period to only 12 months.
"We understand that families occasionally experience financial difficulties that are simply beyond their control," said Charles Coulter, HUD's Deputy Assistant Secretary for Single Family Housing. "We already have a policy allowing for exceptions to this waiting period when there is an extraordinary life event. This Mortgagee Letter is a targeted expansion of that policy.
"As part of FHA's ongoing mission, we want to make sure that qualified borrowers are not being unnecessarily shut out of the market," he added. "We're looking forward to working with our industry partners to strengthen our housing market, to protect FHA's insurance fund, and to make certain access to credit remains available for future generations of homeowners."
That's good news for borrowers who lost their home due to specific financial hardships but can now demonstrate they have regained previously lost financial ground. The list of eligible financial hardships reads like a list of housing crisis woes:
• Chapter 7 or Chapter 13 bankruptcy • Deed-in-lieu • Forbearance • Foreclosure • Loan modification • Loss of income, employment or both that totaled at least 20 percent of previous earnings for at least six months – including copies of applicable termination notices or changes in employment status • Pre-foreclosure sales • Short sales Additionally, consumers must also meet other verifiable measures to participate in the program: • Proof of borrower's current income – usually W-2 forms or federal tax returns that show the desired mortgage would be affordable and sustainable; • Credit history before and after the eligible hardship event that is free from late payments or other major credit issues, including rental housing payments and accounts delinquent by 30 days or more; • Credit score of at least 500; • Housing counseling by a HUD-approved counselor at least 30 days but no more than six months before submitting an FHA application.
For consumers meeting all of these criteria as well as other standing FHA mortgage guidelines, the Back to Work program is now available nationwide through FHA-approved lenders. Once participating lenders determine that mortgage applicants meet all eligibility and policy criteria, the same 3.5 percent minimum FHA down payment requirement will apply. Mortgage insurance and closing costs will also apply.
Only one FHA program is ineligible for the Back to Work program: reverse mortgages.
Earlier research by the Center for Responsible Lending found that more than 2.5 million homes were lost to foreclosure during the housing crisis. According to CoreLogic, a firm providing data and analysis to financial services companies and real estate professionals, the number of homes in some state of foreclosure dropped below the million-mark as of July 2013, to 949,000. This figure also represents a drop of 32 percent since July 2012.
Underwater mortgages, properties that are now worth less than their purchase price, also continue to haunt housing recovery. As of May 2013, Core Logic, a firm specializing in residential property information and analytics, found that 11 states had more than 1-in-5 underwater homes. The states with the seven highest numbers of underwater properties were Arizona, Florida, Georgia, Michigan, Nevada, California and Illinois.
As CRL has stated before, the housing crisis is not yet over. But programs that enable former troubled borrowers to regain the pride of home ownership and the chance to build family wealth have to be good news.
In the aftermath of more than 2.5 million foreclosures, the Federal Housing Administration (FHA) is now offering a homeownership program that will put previously troubled borrowers on a fast-tracked return to the home ownership market. The new program known as "Back to Work – Extenuating Circumstance" cuts the standard three-year waiting period to only 12 months.
"We understand that families occasionally experience financial difficulties that are simply beyond their control," said Charles Coulter, HUD's Deputy Assistant Secretary for Single Family Housing. "We already have a policy allowing for exceptions to this waiting period when there is an extraordinary life event. This Mortgagee Letter is a targeted expansion of that policy.
"As part of FHA's ongoing mission, we want to make sure that qualified borrowers are not being unnecessarily shut out of the market," he added. "We're looking forward to working with our industry partners to strengthen our housing market, to protect FHA's insurance fund, and to make certain access to credit remains available for future generations of homeowners."
That's good news for borrowers who lost their home due to specific financial hardships but can now demonstrate they have regained previously lost financial ground. The list of eligible financial hardships reads like a list of housing crisis woes:
• Chapter 7 or Chapter 13 bankruptcy • Deed-in-lieu • Forbearance • Foreclosure • Loan modification • Loss of income, employment or both that totaled at least 20 percent of previous earnings for at least six months – including copies of applicable termination notices or changes in employment status • Pre-foreclosure sales • Short sales Additionally, consumers must also meet other verifiable measures to participate in the program: • Proof of borrower's current income – usually W-2 forms or federal tax returns that show the desired mortgage would be affordable and sustainable; • Credit history before and after the eligible hardship event that is free from late payments or other major credit issues, including rental housing payments and accounts delinquent by 30 days or more; • Credit score of at least 500; • Housing counseling by a HUD-approved counselor at least 30 days but no more than six months before submitting an FHA application.
For consumers meeting all of these criteria as well as other standing FHA mortgage guidelines, the Back to Work program is now available nationwide through FHA-approved lenders. Once participating lenders determine that mortgage applicants meet all eligibility and policy criteria, the same 3.5 percent minimum FHA down payment requirement will apply. Mortgage insurance and closing costs will also apply.
Only one FHA program is ineligible for the Back to Work program: reverse mortgages.
Earlier research by the Center for Responsible Lending found that more than 2.5 million homes were lost to foreclosure during the housing crisis. According to CoreLogic, a firm providing data and analysis to financial services companies and real estate professionals, the number of homes in some state of foreclosure dropped below the million-mark as of July 2013, to 949,000. This figure also represents a drop of 32 percent since July 2012.
Underwater mortgages, properties that are now worth less than their purchase price, also continue to haunt housing recovery. As of May 2013, Core Logic, a firm specializing in residential property information and analytics, found that 11 states had more than 1-in-5 underwater homes. The states with the seven highest numbers of underwater properties were Arizona, Florida, Georgia, Michigan, Nevada, California and Illinois.
As CRL has stated before, the housing crisis is not yet over. But programs that enable former troubled borrowers to regain the pride of home ownership and the chance to build family wealth have to be good news.
Home Prices Edge Closer to Pre-Crash Levels
The housing market is inching closer to what it once was: Home prices are now within 15.2 percent nationally from their peak, according to a new report by Lender Processing Services.
The LPS price index rose in June to $229,000, up 6.9 percent from last year's levels. In June 2006, the peak was $270,000.
However, two states — California and New Jersey — are still playing catch up to their peak levels. California home prices are still down 26.3 percent and New Jersey is down 21.2 percent from its peak, according to LPS’ index.
Meanwhile, Massachusetts is only 10 percent from its peak housing price levels, and Pennsylvania and Tennessee are about 5 percent from their pre-crash highs, LPS says.
Texas and Colorado are two states that surpassed their pre-crash peaks. Source: “National Home Prices Nearing Pre-Crash Levels,” Mortgage News Daily (Aug. 26, 2013)
The LPS price index rose in June to $229,000, up 6.9 percent from last year's levels. In June 2006, the peak was $270,000.
However, two states — California and New Jersey — are still playing catch up to their peak levels. California home prices are still down 26.3 percent and New Jersey is down 21.2 percent from its peak, according to LPS’ index.
Meanwhile, Massachusetts is only 10 percent from its peak housing price levels, and Pennsylvania and Tennessee are about 5 percent from their pre-crash highs, LPS says.
Texas and Colorado are two states that surpassed their pre-crash peaks. Source: “National Home Prices Nearing Pre-Crash Levels,” Mortgage News Daily (Aug. 26, 2013)
Shadow Inventories Becoming Vanishing Problem
Shadow inventories posted the largest quarter-over-quarter decline since the housing crisis began, and dropped 23 percent year-over-year, according to Compass Point Research & Trading.
Shadow inventories — homes at risk of default that have yet to hit the market — once posed a big threat to the housing recovery. At its peak in March 2010, shadow inventory was at about 5.5 million loans, according to data compiled by the Mortgage Bankers Association and Bloomberg. For the second quarter of 2013, shadow inventory has fallen to 2.99 million.
In comparison, shadow inventory loans totaled about 800,000 in March 2000—considered a more normal average.
There has been a large decline in 90-day-plus past due loans, which has helped lead to the drop in shadow inventories. Also helping to lower shadow inventories is the rise in home prices, lower unemployment rates, the higher number of loan modifications, and tightening of underwriting standards that has led to an improvement in mortgage credit quality, economists note.
“The shadow inventory is quickly being worked off and is no longer a significant weight on the housing market in most parts of the country. The key exceptions would be pockets in Florida, parts of the Midwest, and the middle Atlantic,” says Mark Zandi, Moody’s Analytics chief economist.
The decline is expected to continue as more home owners stay current on their loans. Source: “Shadow Inventory Decline Begins to Accelerate,” HousingWire (Aug. 23, 2013)
Shadow inventories — homes at risk of default that have yet to hit the market — once posed a big threat to the housing recovery. At its peak in March 2010, shadow inventory was at about 5.5 million loans, according to data compiled by the Mortgage Bankers Association and Bloomberg. For the second quarter of 2013, shadow inventory has fallen to 2.99 million.
In comparison, shadow inventory loans totaled about 800,000 in March 2000—considered a more normal average.
There has been a large decline in 90-day-plus past due loans, which has helped lead to the drop in shadow inventories. Also helping to lower shadow inventories is the rise in home prices, lower unemployment rates, the higher number of loan modifications, and tightening of underwriting standards that has led to an improvement in mortgage credit quality, economists note.
“The shadow inventory is quickly being worked off and is no longer a significant weight on the housing market in most parts of the country. The key exceptions would be pockets in Florida, parts of the Midwest, and the middle Atlantic,” says Mark Zandi, Moody’s Analytics chief economist.
The decline is expected to continue as more home owners stay current on their loans. Source: “Shadow Inventory Decline Begins to Accelerate,” HousingWire (Aug. 23, 2013)
7 Cities Leading the Housing Recovery
The housing recovery rolls on, with some markets seeing more progress than others. RealtyTrac recently released its first Housing Market Recovery Index, which reveals the metros leading the housing recovery.
The index showed that upstate New York, southwest Florida, and Northern California's Bay Area are leaders in the housing recovery. On the other hand, markets in northern Maryland, southeast Pennsylvania, and downstate Illinois are still showing signs of lagging the furthest behind in the recovery, according to RealtyTrac.
“The U.S. housing market has clearly shifted to recovery mode over the past 18 months, with home prices consistently rising and foreclosures falling closer to pre-housing bubble levels,” says Daren Blomquist, vice president at RealtyTrac. “Still, symptoms of the distress that plagued the housing market over the past seven years continue to linger, particularly in the form of a high percentage of underwater borrowers and distressed sales. This lingering distress is creating an uneven pace of recovery across different local markets.”
For its Housing Market Recovery Index, RealtyTrac used seven different measures to evaluate the 100 largest metro’s recovery: the unemployment rate, underwater loan percentage, foreclosure activity percentage change from peak, distressed sales, investor share, cash purchases, and median home price change from the bottom. The following are the metros that ranked highest on its Housing Market Recovery Index:
1. Rochester, N.Y.
Median home price change from trough: 93%
Unemployment rate: 7%
Underwater home owners: 7%
2. Cape Coral-Fort Myers, Fla.
Median home price change from trough: 82%
Unemployment rate: 7.4%
Underwater home owners: 42%
3. Albany-Schenectady-Troy, N.Y.
Median home price change from trough: 44%
Unemployment rate: 6.4%
Underwater home owners: 9%
4. San Jose-Sunnyvale-Santa Clara, Calif.
Median home price change from trough: 70%
Unemployment rate: 6.9%
Underwater home owners: 9%
5. San Francisco-Oakland-Fremont, Calif.
Median home price change from trough: 96%
Unemployment rate: 6.5%
Underwater home owners: 17%
6. Birmingham-Hoover, Ala.
Median home price change from trough: 58%
Unemployment rate: 5.9%
Underwater home owners: 15%
7. Atlanta-Sandy Springs-Marietta, Ga.
Median home price change from trough: 57%
Unemployment rate: 8.9%
Underwater home owners: 36%
Source: RealtyTrac
The index showed that upstate New York, southwest Florida, and Northern California's Bay Area are leaders in the housing recovery. On the other hand, markets in northern Maryland, southeast Pennsylvania, and downstate Illinois are still showing signs of lagging the furthest behind in the recovery, according to RealtyTrac.
“The U.S. housing market has clearly shifted to recovery mode over the past 18 months, with home prices consistently rising and foreclosures falling closer to pre-housing bubble levels,” says Daren Blomquist, vice president at RealtyTrac. “Still, symptoms of the distress that plagued the housing market over the past seven years continue to linger, particularly in the form of a high percentage of underwater borrowers and distressed sales. This lingering distress is creating an uneven pace of recovery across different local markets.”
For its Housing Market Recovery Index, RealtyTrac used seven different measures to evaluate the 100 largest metro’s recovery: the unemployment rate, underwater loan percentage, foreclosure activity percentage change from peak, distressed sales, investor share, cash purchases, and median home price change from the bottom. The following are the metros that ranked highest on its Housing Market Recovery Index:
1. Rochester, N.Y.
Median home price change from trough: 93%
Unemployment rate: 7%
Underwater home owners: 7%
2. Cape Coral-Fort Myers, Fla.
Median home price change from trough: 82%
Unemployment rate: 7.4%
Underwater home owners: 42%
3. Albany-Schenectady-Troy, N.Y.
Median home price change from trough: 44%
Unemployment rate: 6.4%
Underwater home owners: 9%
4. San Jose-Sunnyvale-Santa Clara, Calif.
Median home price change from trough: 70%
Unemployment rate: 6.9%
Underwater home owners: 9%
5. San Francisco-Oakland-Fremont, Calif.
Median home price change from trough: 96%
Unemployment rate: 6.5%
Underwater home owners: 17%
6. Birmingham-Hoover, Ala.
Median home price change from trough: 58%
Unemployment rate: 5.9%
Underwater home owners: 15%
7. Atlanta-Sandy Springs-Marietta, Ga.
Median home price change from trough: 57%
Unemployment rate: 8.9%
Underwater home owners: 36%
Source: RealtyTrac
Mortgage Rates Calm—For Now
Average fixed-rate mortgages remained mostly unchanged this week, after seesawing the past few weeks, Freddie Mac reports in its weekly mortgage market survey.
Mortgage rates have fluctuated quite a bit the past few weeks as speculation grows that the Federal Reserve will taper its bond-buying program in September, which has been keeping rates at or near record lows in recent months.
Sixty-five percent of economists surveyed by Bloomberg expect the Fed to reduce its bond purchases at its Sept. 17-18 monetary policy committee meetings.
Thirty-year fixed-rate mortgages held flat this week but are 1.1 percentage points above their all-time lows set on Nov. 21, says Frank Nothaft, Freddie Mac’s chief economist. That rise alone equates to about $125 more per month in mortgage payments on a $200,000 loan, Nothaft says.
Freddie Mac reports the following national averages with mortgage rates for the week ending Aug. 15: •30-year fixed-rate mortgages: averaged 4.40 percent, with an average 0.7 point, holding the same average as last week. A year ago at this time, 30-year rates averaged 3.62 percent. •15-year fixed-rate mortgages: averaged 3.44 percent, with an average 0.6 point, rising slightly from last week’s 3.43 percent. Last year at this time, 15-year rates averaged 2.88 percent. •5-year adjustable-rate mortgages: averaged 3.23 percent, with an average 0.5 point, rising from last week’s 3.19 percent average. Last year at this time, 5-year ARMs averaged 2.76 percent. •1-year ARMs: averaged 2.67 percent, with an average 0.4 point, rising from last week’s 2.62 percent average. A year ago, 1-year ARMs averaged 2.69 percent. Source: Freddie Mac
Mortgage rates have fluctuated quite a bit the past few weeks as speculation grows that the Federal Reserve will taper its bond-buying program in September, which has been keeping rates at or near record lows in recent months.
Sixty-five percent of economists surveyed by Bloomberg expect the Fed to reduce its bond purchases at its Sept. 17-18 monetary policy committee meetings.
Thirty-year fixed-rate mortgages held flat this week but are 1.1 percentage points above their all-time lows set on Nov. 21, says Frank Nothaft, Freddie Mac’s chief economist. That rise alone equates to about $125 more per month in mortgage payments on a $200,000 loan, Nothaft says.
Freddie Mac reports the following national averages with mortgage rates for the week ending Aug. 15: •30-year fixed-rate mortgages: averaged 4.40 percent, with an average 0.7 point, holding the same average as last week. A year ago at this time, 30-year rates averaged 3.62 percent. •15-year fixed-rate mortgages: averaged 3.44 percent, with an average 0.6 point, rising slightly from last week’s 3.43 percent. Last year at this time, 15-year rates averaged 2.88 percent. •5-year adjustable-rate mortgages: averaged 3.23 percent, with an average 0.5 point, rising from last week’s 3.19 percent average. Last year at this time, 5-year ARMs averaged 2.76 percent. •1-year ARMs: averaged 2.67 percent, with an average 0.4 point, rising from last week’s 2.62 percent average. A year ago, 1-year ARMs averaged 2.69 percent. Source: Freddie Mac
Builders Gain Optimism in the Recovery
Builder confidence in newly built, single-family homes is on the rise again.
The National Association of Home Builders/Wells Fargo Housing Market Index posted its fourth consecutive monthly gain in August, bringing it to its highest level in nearly eight years. The index gauges builders’ perceptions of single-family home sales, sales expectations, and buyer traffic for the next six months.
The index now stands at 59 — and any number above 50 indicates that more builders view market conditions as “good” rather than “poor.”
"Builders are seeing more motivated buyers walk through their doors than they have in quite some time," said NAHB Chairman Rick Judson. "What's more, firming home prices and thinning inventories of homes for sale are contributing to an increased sense of urgency among those who are in the market."
Buyers are showing increasing demand for the limited supply of new and existing homes in markets across the country, says David Crowe, NAHB’s chief economist.
"However, this positive momentum is being slowed by the ongoing headwinds of tight credit and low supplies of finished lots and labor,” Crowe notes. Source: National Association of Home Builders
The National Association of Home Builders/Wells Fargo Housing Market Index posted its fourth consecutive monthly gain in August, bringing it to its highest level in nearly eight years. The index gauges builders’ perceptions of single-family home sales, sales expectations, and buyer traffic for the next six months.
The index now stands at 59 — and any number above 50 indicates that more builders view market conditions as “good” rather than “poor.”
"Builders are seeing more motivated buyers walk through their doors than they have in quite some time," said NAHB Chairman Rick Judson. "What's more, firming home prices and thinning inventories of homes for sale are contributing to an increased sense of urgency among those who are in the market."
Buyers are showing increasing demand for the limited supply of new and existing homes in markets across the country, says David Crowe, NAHB’s chief economist.
"However, this positive momentum is being slowed by the ongoing headwinds of tight credit and low supplies of finished lots and labor,” Crowe notes. Source: National Association of Home Builders
Solarpanels
From the experts: all about solar leases Solar energy has a high profile, especially since the federal government created the 30% federal tax credit that applies to solar power systems in 2006. But is solar energy practical for the average California homeowner? SolarCity says, “Yes!”
California-based SolarCity offers two ways for homeowners to get into solar: -homeowners can purchase the system and installation from SolarCity; or -homeowners can install the system for free and pay SolarCity for the power the systems produce, through solar service agreements like solar leases or power purchase agreements (PPAs).
For either program, SolarCity includes: -repairs of the solar power system, if necessary; -insurance coverage for theft or damage to the panels; and-performance monitoring of each solar panel system.
But what happens when the homeowner sells their home? There are typically three options: -the buyer can choose to assume the solar lease; -the seller can purchase the solar panels and include the cost in the asking price; or -if the seller is moving within the same utility territory, they can pay to have their solar panel system transferred to their new home.
SolarCity also offers solar options for commercial buildings, new construction and government buildings.
Does it sound too good to be true? And is solar really for everyone? first tuesday called up Jonathan Bass, SolarCity’s Senior Director of Communications, to find out.
What are the requirements for entering SolarCity’s programs?
Solar can work for a wide range of homeowners. SolarCity provides potential clients with a free assessment, either in person or over the phone, to determine whether one of our solar programs will work for them.
Roof position is a major determinant of whether or not you should get solar. Generally you need a largely unshaded section of roof that faces south, east or west.
If the customer wants a monthly payment option, there is a credit score requirement of 680. The FICO score is the only requirement – there is no income or debt-to-income (DTI) requirement. If the homeowner doesn’t have at least a 680 FICO score, they can either pre-pay for the solar power or purchase the system.
We also have a team of transfer agents who work with people who are buying a home with our solar system already installed. If the homebuyer can’t meet the 680 FICO score (which is pretty rare), then we can look at other credit criteria to transfer the lease.
Why do most homeowners consider going solar? While there are environmental benefits to going solar, most homeowners go solar to control the price of their electricity. Our customers know exactly what they will pay for solar electricity for the length of their agreement, and their solar production is guaranteed. The agreements typically last 20 years, so the savings add up over the long-run.
A lot of homebuilders are actually adopting solar as well, pre-installing the system for the homebuyer. Our solar service to homebuilders has grown by more than 300 percent in the first six months of 2013 alone! This makes perfect sense, because installing solar panels increases the value of the home.
When is leasing solar panels more financially practical than purchasing solar panels? It depends on what is important to the customer. Customers that want to see immediate savings generally choose a no upfront cost option. Customers that want more long-term savings choose a prepaid service agreement or purchase option.
The cost of purchasing a solar system outright is pretty high. For a five kilowatt system in Los Angeles, the upfront cost is typically greater than $20,000, and even with incentives, it can still be $15,000 or more out of pocket.
Are there any issues with homeowners’ associations (HOAs) or permits that SolarCity has become aware of with the installation of solar panels? Many states, including California, have rules that prohibit HOAs from preventing customers from installing solar panels.* Solar panels have been demonstrated to increase home values in two separate studies conducted by Lawrence Berkeley National Laboratory and the National Bureau of Economic Research, so HOA concerns about solar panels are often unfounded.
Does leasing solar panels create a lien on the home? SolarCity’s panels files what is called a fixture filing on the solar panel system, not on the home. So, if the customer stops paying for the service, SolarCity is able to reclaim the system. However, we remove the fixture filing for customers when they sell or refinance their homes, and we have a dedicated team of employees in house that exclusively work on home sales and transfers to ensure the process goes smoothly.
Does it affect homeowner’s insurance? No, taking on a solar lease will not affect your homeowner’s insurance. SolarCity fully insures the system. However, some other providers may have you cover their panels in your own policy.
What happens if a homeowner stops making payments? Similar to anything else, if a homeowner cannot make payments then the service will stop.
Do you receive any incentives or subsidies from the government? Yes, there is a 30 percent federal tax credit that can be applied by the owner of the solar system. If the customer buys the system, they can write that credit off on the following year’s tax return if they have enough taxable income. If they choose a lease or PPA, then the incentives go to SolarCity, and are applied to reduce the cost of the system. Other incentives are generally treated the same way, and they vary by location and utility territory.
Will SolarCity be able to continue offering solar leases once the government stops subsidizing solar? We plan to be able to do so, yes. Energy is heavily subsidized. Oil and gas, nuclear power have received far more subsidies than solar to date. Solar incentives are designed to start at higher amounts and gradually decline to give providers the opportunity to increase efficiencies and reduce costs over time. Many local incentive programs have already ended or significantly declined. At the federal level, the 30% tax credit is scheduled to drop to 10% at the end of 2016. We need to reduce our costs between 5-6% annually to offset the change in incentives, and we plan to do so.
If there was one thing you wish every California real estate agent knew about solar panels, what would it be? Solar is not only a great way to reduce energy costs, it can be a powerful selling tool for real estate agents. Solar panel systems have been demonstrated to increase home resale value in two separate studies. SolarCity has a team of experts dedicated to help real estate agents and their clients sell solar-powered homes, and the interest in clean energy has never been greater than it is today.
California-based SolarCity offers two ways for homeowners to get into solar: -homeowners can purchase the system and installation from SolarCity; or -homeowners can install the system for free and pay SolarCity for the power the systems produce, through solar service agreements like solar leases or power purchase agreements (PPAs).
For either program, SolarCity includes: -repairs of the solar power system, if necessary; -insurance coverage for theft or damage to the panels; and-performance monitoring of each solar panel system.
But what happens when the homeowner sells their home? There are typically three options: -the buyer can choose to assume the solar lease; -the seller can purchase the solar panels and include the cost in the asking price; or -if the seller is moving within the same utility territory, they can pay to have their solar panel system transferred to their new home.
SolarCity also offers solar options for commercial buildings, new construction and government buildings.
Does it sound too good to be true? And is solar really for everyone? first tuesday called up Jonathan Bass, SolarCity’s Senior Director of Communications, to find out.
What are the requirements for entering SolarCity’s programs?
Solar can work for a wide range of homeowners. SolarCity provides potential clients with a free assessment, either in person or over the phone, to determine whether one of our solar programs will work for them.
Roof position is a major determinant of whether or not you should get solar. Generally you need a largely unshaded section of roof that faces south, east or west.
If the customer wants a monthly payment option, there is a credit score requirement of 680. The FICO score is the only requirement – there is no income or debt-to-income (DTI) requirement. If the homeowner doesn’t have at least a 680 FICO score, they can either pre-pay for the solar power or purchase the system.
We also have a team of transfer agents who work with people who are buying a home with our solar system already installed. If the homebuyer can’t meet the 680 FICO score (which is pretty rare), then we can look at other credit criteria to transfer the lease.
Why do most homeowners consider going solar? While there are environmental benefits to going solar, most homeowners go solar to control the price of their electricity. Our customers know exactly what they will pay for solar electricity for the length of their agreement, and their solar production is guaranteed. The agreements typically last 20 years, so the savings add up over the long-run.
A lot of homebuilders are actually adopting solar as well, pre-installing the system for the homebuyer. Our solar service to homebuilders has grown by more than 300 percent in the first six months of 2013 alone! This makes perfect sense, because installing solar panels increases the value of the home.
When is leasing solar panels more financially practical than purchasing solar panels? It depends on what is important to the customer. Customers that want to see immediate savings generally choose a no upfront cost option. Customers that want more long-term savings choose a prepaid service agreement or purchase option.
The cost of purchasing a solar system outright is pretty high. For a five kilowatt system in Los Angeles, the upfront cost is typically greater than $20,000, and even with incentives, it can still be $15,000 or more out of pocket.
Are there any issues with homeowners’ associations (HOAs) or permits that SolarCity has become aware of with the installation of solar panels? Many states, including California, have rules that prohibit HOAs from preventing customers from installing solar panels.* Solar panels have been demonstrated to increase home values in two separate studies conducted by Lawrence Berkeley National Laboratory and the National Bureau of Economic Research, so HOA concerns about solar panels are often unfounded.
Does leasing solar panels create a lien on the home? SolarCity’s panels files what is called a fixture filing on the solar panel system, not on the home. So, if the customer stops paying for the service, SolarCity is able to reclaim the system. However, we remove the fixture filing for customers when they sell or refinance their homes, and we have a dedicated team of employees in house that exclusively work on home sales and transfers to ensure the process goes smoothly.
Does it affect homeowner’s insurance? No, taking on a solar lease will not affect your homeowner’s insurance. SolarCity fully insures the system. However, some other providers may have you cover their panels in your own policy.
What happens if a homeowner stops making payments? Similar to anything else, if a homeowner cannot make payments then the service will stop.
Do you receive any incentives or subsidies from the government? Yes, there is a 30 percent federal tax credit that can be applied by the owner of the solar system. If the customer buys the system, they can write that credit off on the following year’s tax return if they have enough taxable income. If they choose a lease or PPA, then the incentives go to SolarCity, and are applied to reduce the cost of the system. Other incentives are generally treated the same way, and they vary by location and utility territory.
Will SolarCity be able to continue offering solar leases once the government stops subsidizing solar? We plan to be able to do so, yes. Energy is heavily subsidized. Oil and gas, nuclear power have received far more subsidies than solar to date. Solar incentives are designed to start at higher amounts and gradually decline to give providers the opportunity to increase efficiencies and reduce costs over time. Many local incentive programs have already ended or significantly declined. At the federal level, the 30% tax credit is scheduled to drop to 10% at the end of 2016. We need to reduce our costs between 5-6% annually to offset the change in incentives, and we plan to do so.
If there was one thing you wish every California real estate agent knew about solar panels, what would it be? Solar is not only a great way to reduce energy costs, it can be a powerful selling tool for real estate agents. Solar panel systems have been demonstrated to increase home resale value in two separate studies. SolarCity has a team of experts dedicated to help real estate agents and their clients sell solar-powered homes, and the interest in clean energy has never been greater than it is today.
Rapid Rise in Home Prices 'Remarkable'
In June, the latest data available, home prices were up 11.6 percent year over year, according to CoreLogic’s home price index, which reflects distressed sales as well. June marked the 16th consecutive month of increases.
The pace of home price appreciation is showing signs of slowing. In June, prices rose 1.9 percent compared to May -- a slower pace for increases than in recent months. From April to May, prices rose 2.6 percent, while they rose nearly 2.8 percent in April from March.
Some analysts point to a slowing due to rising mortgage rates, fewer investors making purchases, and a rise in inventory levels of homes for sale. The National Association of REALTORS® reported that inventories of existing homes for sale rose to 5.2 months in June from 5 months in May. A six- to seven-month supply is considered a balanced market.
Still, prices are not showing signs of stalling. CoreLogic analysts predict that home prices will be up 12.5 percent year over year in July.
The five states with the highest home price appreciation year-over-year, according to CoreLogic’s June stats:
The pace of home price appreciation is showing signs of slowing. In June, prices rose 1.9 percent compared to May -- a slower pace for increases than in recent months. From April to May, prices rose 2.6 percent, while they rose nearly 2.8 percent in April from March.
Some analysts point to a slowing due to rising mortgage rates, fewer investors making purchases, and a rise in inventory levels of homes for sale. The National Association of REALTORS® reported that inventories of existing homes for sale rose to 5.2 months in June from 5 months in May. A six- to seven-month supply is considered a balanced market.
Still, prices are not showing signs of stalling. CoreLogic analysts predict that home prices will be up 12.5 percent year over year in July.
The five states with the highest home price appreciation year-over-year, according to CoreLogic’s June stats:
- Nevada: +26.5%
- California: +21.4%
- Wyoming: +16.7%
- Arizona: +16.2%
- Georgia: +14.3%
Green-Home Buyers May Get Bigger Mortgages
A new bill in the Senate is proposing that borrowers who buy energy-efficient homes be able to qualify for larger mortgages. The bipartisan bill, called the SAVE Act, would allow mortgage lenders to factor energy savings into the value of a home.
"It's about energy efficiency, it's about savings, it's about increasing the borrowing power for the borrower. I think it's a win-win for the industry," said Sen. Johnny Isakson, R-Ga., a co-sponsor of the bill.
If the bill is approved, lenders with loans backed by Fannie Mae, Freddie Mac, and the Federal Housing Administration would account for expected energy cost savings. The bill would also require lenders to add the value of expected energy savings to the value of the home in the appraisal, CNBC reports. Source: “How a greener home could get you a bigger mortgage,” CNBC (July 19, 2013)
"It's about energy efficiency, it's about savings, it's about increasing the borrowing power for the borrower. I think it's a win-win for the industry," said Sen. Johnny Isakson, R-Ga., a co-sponsor of the bill.
If the bill is approved, lenders with loans backed by Fannie Mae, Freddie Mac, and the Federal Housing Administration would account for expected energy cost savings. The bill would also require lenders to add the value of expected energy savings to the value of the home in the appraisal, CNBC reports. Source: “How a greener home could get you a bigger mortgage,” CNBC (July 19, 2013)
Did Cash Buyers Save the Housing Market?
Cash real estate sales have risen the last few years to some of the highest levels on record, and a new report by CoreLogic suggests that these sales heavily helped to contribute to stabilizing the residential housing market and leading it into recovery.
In the early 2000s, cash sales averaged 25 percent of home sales. But in 2007 and 2008, cash sales began to rise as foreclosures started to increase. By 2012, cash sales were making up 40 percent of sales and have since inched down to 39 percent as of May 2013.
“Without cash sales overall, sales today would be much lower and the price declines would have been worse,” Mortgage News Daily reports about CoreLogic’s findings. “More recently, cash sales have helped fuel price increases dramatically in several boom and bust markets. Median prices for cash sales are up 24 percent from a year ago while prices of sales generally have increased 15 percent.”
The rise in home prices will lead to a lower presence of cash sales as investor activity returns to more traditional levels, CoreLogic notes. With cash sales receding in recent months, first-time and trade-up home buyers will need to step in to keep the recovery expanding, CoreLogic notes. Source: “Cash Sales Saved Housing Market -CoreLogic,” Mortgage News Daily (July 16, 2013)
In the early 2000s, cash sales averaged 25 percent of home sales. But in 2007 and 2008, cash sales began to rise as foreclosures started to increase. By 2012, cash sales were making up 40 percent of sales and have since inched down to 39 percent as of May 2013.
“Without cash sales overall, sales today would be much lower and the price declines would have been worse,” Mortgage News Daily reports about CoreLogic’s findings. “More recently, cash sales have helped fuel price increases dramatically in several boom and bust markets. Median prices for cash sales are up 24 percent from a year ago while prices of sales generally have increased 15 percent.”
The rise in home prices will lead to a lower presence of cash sales as investor activity returns to more traditional levels, CoreLogic notes. With cash sales receding in recent months, first-time and trade-up home buyers will need to step in to keep the recovery expanding, CoreLogic notes. Source: “Cash Sales Saved Housing Market -CoreLogic,” Mortgage News Daily (July 16, 2013)
Housing Inventories Rising Faster Than Usual
The number of homes for sale rose 4.3 percent in June to 1.9 million—the highest level in the past year. These gains are also higher than usual for this time of year, according to newly-released housing data from realtor.com®.
Following two years of declines, housing inventory is finally reversing course. More home owners are seeing rising prices and may be more apt to try to sell their homes.
The number of homes for sale has risen the most in the past year in areas that had seen the largest declines, such as Sacramento, Calif. (up 11 percent), Atlanta (up 10.9 percent), Phoenix (up 6.2 percent), and Miami (up 2.2 percent). From May to June, inventories soared by the highest month-over-month amounts in Southern California, with inventories up 51.5 percent in Orange County, 45.7 percent in Los Angeles, and 18.1 percent in San Diego, according to realtor.com®.
However, inventories of homes for sale remain far below last year’s level in markets such as Boston (down 35.1 percent), Denver (down 30.1 percent), Detroit (down 25.7 percent), Seattle (down 23.2 percent), and San Francisco (down 21.7 percent).
Realtor.com® also reports that median asking prices climbed 0.5 percent in June from May, reaching $199,900. Median asking prices are up by 5 percent over last year. Source: “Housing Listings Multiply in June,” The Wall Street Journal (July 15, 2013)
Following two years of declines, housing inventory is finally reversing course. More home owners are seeing rising prices and may be more apt to try to sell their homes.
The number of homes for sale has risen the most in the past year in areas that had seen the largest declines, such as Sacramento, Calif. (up 11 percent), Atlanta (up 10.9 percent), Phoenix (up 6.2 percent), and Miami (up 2.2 percent). From May to June, inventories soared by the highest month-over-month amounts in Southern California, with inventories up 51.5 percent in Orange County, 45.7 percent in Los Angeles, and 18.1 percent in San Diego, according to realtor.com®.
However, inventories of homes for sale remain far below last year’s level in markets such as Boston (down 35.1 percent), Denver (down 30.1 percent), Detroit (down 25.7 percent), Seattle (down 23.2 percent), and San Francisco (down 21.7 percent).
Realtor.com® also reports that median asking prices climbed 0.5 percent in June from May, reaching $199,900. Median asking prices are up by 5 percent over last year. Source: “Housing Listings Multiply in June,” The Wall Street Journal (July 15, 2013)
Foreclosures Down 29% From Year Ago
Foreclosures are continuing a steady fall, as home prices rise and the housing market picks up nationwide.
About 1 million homes were in some stage of foreclosure in May, down from 1.4 million in May 2012, a 29 percent decline, according to CoreLogic’s latest foreclosure report. As of May, the foreclosure inventory represented 2.6 percent of all homes with a mortgage -- down from 3.5 percent a year prior.
There were 52,000 foreclosures completed nationwide in May, down 27 percent year over year. However, the numbers are still elevated compared to what’s considered normal for the market. Prior to the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month between 2000 and 2006, according to CoreLogic.
Since September 2008 -- the start of the financial crisis -- about 4.4 million foreclosures have been completed, CoreLogic’s data shows.
Meanwhile, shadow inventory is down 34 percent from reaching its 2010 peak. It was under 2 million units in April, representing a 5.3 month supply.
“We continue to see a sharp drop in foreclosures around the country and, with it, a decrease in the size of the shadow inventory,” says Anand Nallathambi, president and CEO of CoreLogic. “Affordability, despite the rise in home prices over the past year, and consumer confidence are big contributors to these positive trends. We are particularly encouraged by the broad-based nature of the housing market recovery so far in 2013.”
The stock of seriously delinquent homes, which is the main driver of shadow inventory, is at the lowest level since December 2008, adds Mark Fleming, chief economist for CoreLogic. “Over the last year, it has decreased in 42 states by double-digit figures, resulting in rapid declines in shadow inventory for the first quarter of 2013,” Fleming says.
The following five states account for nearly half of all completed foreclosures nationally and had the highest number of completed foreclosures in the last 12 months ending in May:
About 1 million homes were in some stage of foreclosure in May, down from 1.4 million in May 2012, a 29 percent decline, according to CoreLogic’s latest foreclosure report. As of May, the foreclosure inventory represented 2.6 percent of all homes with a mortgage -- down from 3.5 percent a year prior.
There were 52,000 foreclosures completed nationwide in May, down 27 percent year over year. However, the numbers are still elevated compared to what’s considered normal for the market. Prior to the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month between 2000 and 2006, according to CoreLogic.
Since September 2008 -- the start of the financial crisis -- about 4.4 million foreclosures have been completed, CoreLogic’s data shows.
Meanwhile, shadow inventory is down 34 percent from reaching its 2010 peak. It was under 2 million units in April, representing a 5.3 month supply.
“We continue to see a sharp drop in foreclosures around the country and, with it, a decrease in the size of the shadow inventory,” says Anand Nallathambi, president and CEO of CoreLogic. “Affordability, despite the rise in home prices over the past year, and consumer confidence are big contributors to these positive trends. We are particularly encouraged by the broad-based nature of the housing market recovery so far in 2013.”
The stock of seriously delinquent homes, which is the main driver of shadow inventory, is at the lowest level since December 2008, adds Mark Fleming, chief economist for CoreLogic. “Over the last year, it has decreased in 42 states by double-digit figures, resulting in rapid declines in shadow inventory for the first quarter of 2013,” Fleming says.
The following five states account for nearly half of all completed foreclosures nationally and had the highest number of completed foreclosures in the last 12 months ending in May:
- Florida
- California
- Michigan
- Texas
- Georgia
10 Tips for Moving with Kids
Moving can be a regular hassle in the best of scenarios, but moving with children in tow is a whole other kettle of fish. Kids are often wary of change, so it's best to be well prepared. Follow these ten steps to make the moving process as stress-free as possible.
1. Breaking the news
Breaking the news of your move can be one of the most critical moments of the entire process. Use the first announcement to explain to your kids how you think the move will benefit the whole family. You’re going to want to bring the kids in on the moving process by having them help out, but don’t cross that bridge just yet — leave this for after the initial talk. If you have more than one kid, address each of them later in private once they've had some time to let it all sink in. Express to them personally what you’re expecting. Kids are aspirational, and if you make it clear to them that you need their help as part of the process, they’re more likely to step up and help out. Being as open and clear about what moving entails will always be better in the long run. With young children, don’t assume that they'll have a good grasp on what it all means right away. Patience is the key.
2. Keep the lines of communication open
Take the time to talk to your kids about the move. If applicable, ask them what room in the house they'd like, or how they want it to look. Use these conversations as an opportunity to explain the things you think they'll like about the neighbourhood you’re moving to. Take your children seriously and listen to their feelings and concerns even when you can’t address their desires directly. Sometimes, more than anything, children just wants to know that they've been heard, even if they can’t have their way.
3. Out with the old
This part of the process will depend a lot on the temperament of your kids, but it's time to pare down the household and make room for the new. Getting rid of old stuff can be a pain, or it can be a fun family activity (and as a bonus, you can have a garage sale at the end of it!). It can be tedious and time-consuming to try to go through your child’s things, having to ask them piece by piece what they want to keep or give away, but if you get the kids excited with the prospect of a garage sale, then the kids will do a better job sorting than you ever could. Margaret, mother of two, has another take:
4. Timing is everything
If you can, try to time the move around the more stable periods in your kids’ lives. Moving during the school year can be disruptive and make integration into the new community and school environment much more difficult.
5. Take advantage of relatives and friends
If you have small children, every minute they can be in another’s care will make the moving process that much easier. If your kids are a bit older, these can be opportune days for them to say their prolonged goodbyes to their friends in the neighbourhood. This will also allow you to space out the packing process a lot more.
6. Pack small boxes of the kids' things last
Go through the contents of these special, easy-access boxes with your kids item by item, and label them well! Don’t make the mistake of packing a favourite toy, book, or videogame too soon. When you arrive at the new place, you likely won’t have the luxury of friends and family that can entertain the kids while you sort through your new life, so you’ll want to have the kids entertain themselves for a time while you get to sorting through boxes. Jennifer, mother of two, also advises:
7. Saying Goodbye
You’re likely leaving a lot of people behind that you and your children had relationships with. A goodbye party can be a great way to bookend your time with the old place. If you can, though, have your neighbour or family member host the event. This can double as a goodbye present and will also save you the nightmare of planning a party in a half-packed house.
8. Familiarize your family with the new neighbourhood
Research the opportunities and activities that are close to your kids' hearts. Don’t just tell them about it; show them! It can be easy to be a bit of a hermit when you’ve just moved to a new place and don’t know anyone, so your kids might just need a push in the right direction. If they’re teenagers, mind that you don’t push too hard, but letting slip about the local youth culture and music scenes in the early days can pay later.
9. Keep the familiar that works
Routine can be very comforting in new environments and can help children deal with separation anxiety. Do your best to keep important family times and activities the same as soon as you can after arriving at the new house. Family meetings, dinners, weekly traditions — try to keep these consistent or go out and find a new local equivalent to meet your needs. Modifying old traditions in this way can also allow you to bridge the gap between the old and new and make the new place feel like home a lot quicker.
10. Remember your own needs
You’re doing a lot of work to make your kids comfortable with the move and you’re doing your best to make the process as painless as possible for them. You know it will be better for them in the long run, but sometimes that still won’t mean they understand right away. It’s okay. In all of this, remember to treat yourself with as much consideration and kindness as the rest of the family. You’re doing your best and a lot is counting on you. It's okay to make mistakes, and moving is stressful business. Relax. Breathe. It’s going to be great.
Kids by Suzette Pauwels
1. Breaking the news 
Breaking the news of your move can be one of the most critical moments of the entire process. Use the first announcement to explain to your kids how you think the move will benefit the whole family. You’re going to want to bring the kids in on the moving process by having them help out, but don’t cross that bridge just yet — leave this for after the initial talk. If you have more than one kid, address each of them later in private once they've had some time to let it all sink in. Express to them personally what you’re expecting. Kids are aspirational, and if you make it clear to them that you need their help as part of the process, they’re more likely to step up and help out. Being as open and clear about what moving entails will always be better in the long run. With young children, don’t assume that they'll have a good grasp on what it all means right away. Patience is the key.
2. Keep the lines of communication open
Take the time to talk to your kids about the move. If applicable, ask them what room in the house they'd like, or how they want it to look. Use these conversations as an opportunity to explain the things you think they'll like about the neighbourhood you’re moving to. Take your children seriously and listen to their feelings and concerns even when you can’t address their desires directly. Sometimes, more than anything, children just wants to know that they've been heard, even if they can’t have their way.
Moving by Marco Varisco
3. Out with the old
This part of the process will depend a lot on the temperament of your kids, but it's time to pare down the household and make room for the new. Getting rid of old stuff can be a pain, or it can be a fun family activity (and as a bonus, you can have a garage sale at the end of it!). It can be tedious and time-consuming to try to go through your child’s things, having to ask them piece by piece what they want to keep or give away, but if you get the kids excited with the prospect of a garage sale, then the kids will do a better job sorting than you ever could. Margaret, mother of two, has another take:
We have moved back when I was still expecting. The only thing that we learned from the experience is to unpack things only as they are needed: emotional mementos and actual necessities. This way, whatever is still in boxes after 60 days can be easily disposed of.Paring down can be some of the hardest work of moving, so make it easy on yourself.
4. Timing is everything
If you can, try to time the move around the more stable periods in your kids’ lives. Moving during the school year can be disruptive and make integration into the new community and school environment much more difficult.
5. Take advantage of relatives and friends
If you have small children, every minute they can be in another’s care will make the moving process that much easier. If your kids are a bit older, these can be opportune days for them to say their prolonged goodbyes to their friends in the neighbourhood. This will also allow you to space out the packing process a lot more.
6. Pack small boxes of the kids' things last
Go through the contents of these special, easy-access boxes with your kids item by item, and label them well! Don’t make the mistake of packing a favourite toy, book, or videogame too soon. When you arrive at the new place, you likely won’t have the luxury of friends and family that can entertain the kids while you sort through your new life, so you’ll want to have the kids entertain themselves for a time while you get to sorting through boxes. Jennifer, mother of two, also advises:
Make sure vaccination cards, medicine, any prescription they may have and medical insurance papers are readily available and not stuck in some anonymous package.These are not the sorts of items you don't want to have to hunt around for should the need arise in a new place.
Empy Apartment by Matt Biddulph
7. Saying Goodbye
You’re likely leaving a lot of people behind that you and your children had relationships with. A goodbye party can be a great way to bookend your time with the old place. If you can, though, have your neighbour or family member host the event. This can double as a goodbye present and will also save you the nightmare of planning a party in a half-packed house.
8. Familiarize your family with the new neighbourhood
Research the opportunities and activities that are close to your kids' hearts. Don’t just tell them about it; show them! It can be easy to be a bit of a hermit when you’ve just moved to a new place and don’t know anyone, so your kids might just need a push in the right direction. If they’re teenagers, mind that you don’t push too hard, but letting slip about the local youth culture and music scenes in the early days can pay later.
9. Keep the familiar that works
Routine can be very comforting in new environments and can help children deal with separation anxiety. Do your best to keep important family times and activities the same as soon as you can after arriving at the new house. Family meetings, dinners, weekly traditions — try to keep these consistent or go out and find a new local equivalent to meet your needs. Modifying old traditions in this way can also allow you to bridge the gap between the old and new and make the new place feel like home a lot quicker.
Moving by Pawel Loj
10. Remember your own needs
You’re doing a lot of work to make your kids comfortable with the move and you’re doing your best to make the process as painless as possible for them. You know it will be better for them in the long run, but sometimes that still won’t mean they understand right away. It’s okay. In all of this, remember to treat yourself with as much consideration and kindness as the rest of the family. You’re doing your best and a lot is counting on you. It's okay to make mistakes, and moving is stressful business. Relax. Breathe. It’s going to be great.
Don't Let Credit Checks Derail Buyers
Buyers may want to purchase furniture to outfit their new home prior to closing. But if they’re not careful, they could cause delays in closing or even lose their home loan.
Since 2010, mortgage giant Fannie Mae has mandated that lenders recheck a borrower’s credit prior to closing on a mortgage. If anything new arises in the credit re-check, lenders may want to delay the closing to verify the borrower can still afford the mortgage. In some cases, the lenders may even cancel the mortgage prior to closing, which could mean a higher interest rate on a new loan.
“We tell our clients about this upfront, and keep reminding them through the entire process not to go buy a new bed or a refrigerator,” says Michael Daversa, president and founder of Atlantic Residential Mortgage. “What you’re supposed to do is keep everything status quo.”
During the credit re-check prior to closing, lenders will scan for any new credit card accounts that have been opened as well as any new credit inquiries. For example, a credit inquiry from a car company may indicate to a lender that the buyer is in the market for a new car, which could send up a red flag if the buyer is going to take on more debt.
Fannie Mae’s maximum debt-to-income ratio is 45 percent—a maximum of 45 percent of a gross monthly income can be allocated for mortgage and housing expenses and other debt.
“It’s more of an issue for people on the cusp of approval where they just get in under the wire,” David Stein, the chief operating officer and a partner of Residential Home Funding, told The New York Times. “If someone was a 44 percent at the approval, if they incurred more debt at the credit refresh, and the debt goes over 45, we can’t close that loan.”
To avoid delays, lenders recommend that borrowers check with their lender before taking on any new debt. Borrowers should also notify any lenders about any changes in employment or job loss. Lenders will reverify borrowers’ employment status prior to closing, and even a change in the company’s name by the borrower’s employer has the potential to delay closing. Source: “Pre-Closing Credit Checks,” The New York Times (July 5, 2013)
Since 2010, mortgage giant Fannie Mae has mandated that lenders recheck a borrower’s credit prior to closing on a mortgage. If anything new arises in the credit re-check, lenders may want to delay the closing to verify the borrower can still afford the mortgage. In some cases, the lenders may even cancel the mortgage prior to closing, which could mean a higher interest rate on a new loan.
“We tell our clients about this upfront, and keep reminding them through the entire process not to go buy a new bed or a refrigerator,” says Michael Daversa, president and founder of Atlantic Residential Mortgage. “What you’re supposed to do is keep everything status quo.”
During the credit re-check prior to closing, lenders will scan for any new credit card accounts that have been opened as well as any new credit inquiries. For example, a credit inquiry from a car company may indicate to a lender that the buyer is in the market for a new car, which could send up a red flag if the buyer is going to take on more debt.
Fannie Mae’s maximum debt-to-income ratio is 45 percent—a maximum of 45 percent of a gross monthly income can be allocated for mortgage and housing expenses and other debt.
“It’s more of an issue for people on the cusp of approval where they just get in under the wire,” David Stein, the chief operating officer and a partner of Residential Home Funding, told The New York Times. “If someone was a 44 percent at the approval, if they incurred more debt at the credit refresh, and the debt goes over 45, we can’t close that loan.”
To avoid delays, lenders recommend that borrowers check with their lender before taking on any new debt. Borrowers should also notify any lenders about any changes in employment or job loss. Lenders will reverify borrowers’ employment status prior to closing, and even a change in the company’s name by the borrower’s employer has the potential to delay closing. Source: “Pre-Closing Credit Checks,” The New York Times (July 5, 2013)
New-Home Sales Rise to Fastest Pace Since 2008
For the third consecutive month, sales of new single-family homes posted gains, rising 2.1 percent in May, according to housing data released Tuesday by HUD and the U.S. Census Bureau.
"Builders are reporting increased demand for new homes as buyers seek to take advantage of historically low mortgage rates while they remain so favorable," says Rick Judson, National Association of Home Builders chairman. "Consumers in markets nationwide are definitely becoming more confident about making a home purchase as firming prices and tighter inventories provide further evidence of the ongoing housing recovery."
New-homes sales moved to the fastest sales pace in May since July of 2008. Inventories also rose in May, reaching a 4.1-month supply at the current sales pace.
Regionally, sales posted double-digit increases in May by 40.7 percent in the Midwest and a 20.7 percent increase in the Northeast. In the West, new-home sales rose 3.6 percent while posting a 9 percent decrease in the South. Source: National Association of Home Builders
Home Prices Rising at ‘Unsustainable’ Rate
Home prices have been soaring by double digits compared to last year’s numbers and the National Association of REALTORS® are calling the rises “unsustainable.”
The price for existing home sales surged 15.4 percent higher in May compared to last year.
"Some of the increases can be explained by the fact that it is recovering from an over-corrected situation," says Lawrence Yun, NAR chief economist. "But with people's income rising at only 1 or 2 percent and prices rising in double digits, it cannot continue.”
The price discounts for bank-owned homes are vanishing rapidly, says Rick Sharga of Carrington Mortgage Holdings. Prices of distressed homes — particularly in markets like California, Arizona, and Florida — are rising faster than traditional home prices.
"You can at least make an argument that part of the dramatic increase in median home prices can be attributed to the foreclosure discount evaporating,” Sharga says. “That suggests that overall home price increases may be slightly overstated.”
However, according to NAR’s latest report, more expensive homes are seeing higher price rises. For example, homes priced at more than $500,000 have had prices soar 33 percent in the last year while homes priced below $100,000 have had prices down 9 percent year-over-year. Source: “Home Price Rise ‘Unsustainable,’ Realtors Report Says,” CNBC (June 20, 2013)
The price for existing home sales surged 15.4 percent higher in May compared to last year.
"Some of the increases can be explained by the fact that it is recovering from an over-corrected situation," says Lawrence Yun, NAR chief economist. "But with people's income rising at only 1 or 2 percent and prices rising in double digits, it cannot continue.”
The price discounts for bank-owned homes are vanishing rapidly, says Rick Sharga of Carrington Mortgage Holdings. Prices of distressed homes — particularly in markets like California, Arizona, and Florida — are rising faster than traditional home prices.
"You can at least make an argument that part of the dramatic increase in median home prices can be attributed to the foreclosure discount evaporating,” Sharga says. “That suggests that overall home price increases may be slightly overstated.”
However, according to NAR’s latest report, more expensive homes are seeing higher price rises. For example, homes priced at more than $500,000 have had prices soar 33 percent in the last year while homes priced below $100,000 have had prices down 9 percent year-over-year. Source: “Home Price Rise ‘Unsustainable,’ Realtors Report Says,” CNBC (June 20, 2013)
Home Ownership Makes Happier, Healthier Families, Survey Shows
Owning a home can make families healthier, happier, and more financially secure, according to new research by Canada Mortgage and Housing Corp. on the benefits of home ownership. Researchers worked with Habitat for Humanity families to evaluate how their lives changed after moving into their homes.
Eighty-nine percent of the Canadian families surveyed said their lives improved since they moved into their homes. Eighty-six percent said they’re happier since owning a home.
The survey also found home ownership led to an improvement in children’s school performance. The families reported that the children had increased confidence, improved behavior, higher grades, and enjoyed school more after becoming home owners.
What’s more, more than 75 percent of families surveyed say their health had improved since becoming home owners. They reported fewer illnesses caused by colds, flu, allergies, and stress, according to the study.
Canada’s home ownership rate -- at about 70 percent -- is one of the highest in the world.
The study’s release coincided with the National Association of REALTORS(R) recent release of a new publication, “Social Benefits of Homeownership and Stable Housing."
"There is evidence from numerous studies that attest to the benefits [of home ownership] accruing to many segments of society,” according to Canadian researchers. “Home ownership boosts the educational performance of children, induces higher participation in civic and volunteering activity, improves health care outcomes, lowers crime rates and lessens welfare dependency."
Source: “Owning a Home Makes Families Happier, Healthier,” Realty Times (June 18, 2013)
Where Asking Prices Are Rising the Most
Median list prices in May edged up 2.10 percent month-over-month, as housing inventories also were on the rise, creating a greater balance between supply and demand, according to realtor.com’s latest Real Estate Health Report.
The nationwide median list price was $199,000 for May, and up 4.79 percent year-over-year.
"We are seeing large regional markets across the country leading the way to national recovery. These regions are acting as a microcosm for what's slowly happening in the larger real estate market," says Steve Berkowitz, chief executive officer of Move. "Overall, we're seeing seller confidence beginning to respond to consumer demand. Nationally, there are more homes going on the market for a shorter amount of time. And this is happening in our hot markets on a much larger scale."
California housing markets are seeing some of the highest median price gains. The following 10 markets have seen the highest year-over-year list price gains:
1. Sacramento, Calif.: up 42.45%
Median list price: $284,900
2. Oakland, Calif.: up 38.27%
Median list price: $495,000
3. Detroit, Mich.: up 31.73%
Median list price: $125,000
4. San Jose, Calif.: up 30.58%
Median list price: $679,000
5. Los Angeles-Long Beach, Calif.: up 27.80%
Median list price: $428,000
6. Fresno, Calif.: up 27.48%
Median list price: $219,900
7. Phoenix-Mesa, Ariz.: up 27.03%
Median list price: $235,000
8. Stockton-Lodi, Calif.: up 25.63%
Median list price: $199,750
9. Reno, Nev.: up 24.23%
Median list price: $235,900
10. Santa Barbara-Santa Maria-Lompoc, Calif.: up 24%
Median list price: $775,000
Source: realtor.com®
30-Year Mortgage Rates Climb Near 4% Range
For the sixth consecutive week, mortgage rates inched higher, continuing to climb from all-time lows, Freddie Mac reports in its weekly mortgage market survey. The 30-year fixed-rate mortgage—the most popular among home buyers—has now climbed a half percentage point since last month.
A strengthening economy and positive employment report this month prompted fixed-rate mortgages to climb higher this week, says Frank Nothaft, Freddie Mac’s chief economist.
Freddie Mac reports the following national averages with mortgage rates for the week ending June 13:
- 30-year fixed-rate mortgages averaged 3.98 percent, with an average 0.7 point, rising from last week’s 3.91 percent average. A year ago at this time, 30-year rates averaged 3.71percent.
- 15-year fixed-rate mortgages averaged 3.10 percent this week, with an average 0.7 point, increasing from last week’s 3.03 percent average. Last year at this time, 15-year rates averaged 2.98 percent.
- 5-year adjustable-rate mortgages averaged 2.79 percent, with an average 0.6 point, rising from last week’s 2.74 percent average. Last year at this time, 5-year ARMs averaged 2.80 percent.
- 1-year ARMs averaged 2.58 percent, with an average 0.4 point, holding the same as last week. A year ago, 1-year ARMs averaged 2.78 percent.
"With the ongoing run-up in fixed mortgage rates, adjustable-rate mortgages (ARMs) are becoming more popular among home owners looking to refinance and for home purchasers,” says Nothaft.
Source: Freddie Mac
Mortgage Applications Fall as Rates Surge
Mortgage applications for home purchases and refinancing continued to fall, dropping 11.5 percent last week, amid rising mortgage rates. Interest rates rose above 4 percent for the first time in a year, according to the Mortgage Bankers Association.
Applications for refinancings saw the largest declines, with applications falling 15 percent last week, the MBA reports. Meanwhile, applications for home purchases, an indicator for future home sales, fell 1.6 percent last week.
Many analysts blame the decreasing applications on rising mortgage rates. The fixed 30-year mortgage rate averaged 4.07 percent for the week ending May 31, its highest level since April 2012, the MBA reports. Fed chairman Ben Bernanke recently indicated that the Fed may soon scale back its bond purchase program, which has helped to keep mortgage rates near all-time record lows.
Source: “Mortgage applications drop as rates surge: MBA,” Reuters (June 5, 2013)
Rising Housing Market Likely to Lift Job Mobility
Home owners are starting to feel freer to move where the jobs are, Reuters reports, as worries about homes that won't sell or will sell at a loss begin to fade.
Since early 2012, home prices in the major metro areas have been rising. Homes are also selling faster: It took 62 days, on average, to sell a home, compared with 91 days one year prior, according to March data from the National Association of REALTORS®.
The increase in mobility from the recovering housing market is expected to have a hand in lowering the jobless rate.
"Until the real estate market picked up, people wouldn't even consider a move without the certainty that they could sell their homes," Jerry Funaro, vice president of global marketing for TRC Global Solutions, a Milwaukee-based relocation service, told Reuters. "Companies are now more inclined to make offers since we're seeing real estate markets across the country coming back."
The number of people who moved last year increased to 35.6 million, with the mover rate climbing to 12 percent, according to the U.S. Census Bureau. That marked an increase over the 11.6 percent low set in 2011.
"It's not a huge gain, but when you consider that for two years, we've had the lowest migration rates since World War II, any move up is good news," William Frey, a demographer at the Brookings Institution in Washington, told Reuters.
Meanwhile, in April, the jobless rate dropped to its lowest point in more than four years, reaching 7.5 percent, due to an increase in hiring among employers. Source: " Insight: Housing improvement may herald return of U.S. workforce mobility," Reuters (May 13, 2013)
Affordability Remains High, Despite Price Gains
Low mortgage rates and stabilizing incomes are keeping home affordability high and giving home buyers "ample buying power," according to the National Association of REALTORS®.
The Wall Street Journal highlights the following example on just how affordable housing has become: "Assuming a 5 percent down payment, a 3.5 percent mortgage rate, and 25 percent of a gross income devoted to mortgage payments, a buyer would only need an income of $36,500 to buy a house at the median price. With a 10 percent down payment, the required salary falls to $34,600, and with a 20 percent down payment, it falls to $30,700."
In the first quarter, the median family income nationwide was $62,200.
Housing affordability remains high despite recent reports that show home prices in 150 U.S. cities saw their biggest year-over-year gains in more than seven years, according to NAR’s most recent report, reflecting data from the first quarter of 2013. The median price of a single-family, existing home was $176,600 in the first quarter of this year, an increase of 11.3 percent from year ago levels, NAR notes.
Areas with strong job growth are posting some of the largest home price gains, including:
Akron, Ohio: +32.7%
San Francisco By area: +32.6%
Reno-Sparks, Nev.: +32.1%
Silicon Valley area surrounding San Jose, Calif.: +31.7%
Atlanta: +31.1%
Phoenix: +30.1%
Source: " Home Prices Jump but Affordability Remains in Buyers’ Favor," The Wall Street Journal (May 9, 2013)
Big Job Boom Expected in Homebuilding
Between 2006 and 2011, residential construction jobs saw a 41 percent drop, as the new-home market faced steep losses.
However, a big rebound is expected to be on the horizon in homebuilding. Housing starts are expected to return to normal levels by 2016, and with that prediction residential construction employment will likely rise to nearly 2.5 million jobs, according to Fannie Mae’s Housing Insights report, which looks at the historical relationship between housing starts and construction jobs.
According to Fannie’s forecast, residential construction employment will surge by 412,000 jobs between 2012 and 2016.
“This 20 percent rise in homebuilding employment will nearly triple the forecasted pace of total job growth during this time period,” HousingWire reports.
Despite the expected surge in homebuilding jobs, Fannie says that the increase still will not reflect all the homebuilding jobs that had been lost during the housing crisis. By 2016, the number of residential construction jobs is forecasted to be nearly 1 million below the peaks reached during the housing boom.
More home owners are seeing equity once again in their homes, as prices rise. The number of mortgages with negative equity dropped to 18 percent of homes with a mortgage in January, down from 41 percent one year earlier.
Source: “Housing Crash Fades as Defaults Decline to 2007 Levels,” Bloomberg (May 6, 2013)
6 Ways to 'Green' a Home
More home owners and buyers are ranking energy-efficient and environmentally friendly home features high in surveys.
AOL Real Estate recently highlighted a few easy steps home owners can take to make their homes more “green”:
•Swap out the light bulbs: LED light bulbs are known as being 80 percent more energy efficient and lasting as much as 25 times longer than incandescent bulbs.
•Have a programmable thermostat: These devices that allow you more easily to adjust the temperature can save a home owner about $180 a year in energy costs, according to Energy Star.
•Trade in the old water heater: A heat pump hot water heater is known to be more than twice as efficient as standard electric resistance tanks, according to the AOL Real Estate article.
•Add aerators to faucets and showerheads: These devices can limit the amount of water that is used.
•Add ceiling fans: “Energy Star-qualified fans are 50 percent more efficient than conventional units and can save up to $15 per year on utility bills,” according to AOL Real Estate.
•Use Energy Star appliances: For example, replacing a dishwasher that was made before 1994 with an Energy Star-certified one can save $40 on utility bills by using less water. Energy Star-rated refrigerators can save home owners from $200 to $1,100 over the life of the appliance.
Source: “10 Eco-Friendly Things to Do for Your Home,” AOL Real Estate (April 22, 2013)
•Have a programmable thermostat: These devices that allow you more easily to adjust the temperature can save a home owner about $180 a year in energy costs, according to Energy Star.
•Trade in the old water heater: A heat pump hot water heater is known to be more than twice as efficient as standard electric resistance tanks, according to the AOL Real Estate article.
•Add aerators to faucets and showerheads: These devices can limit the amount of water that is used.
•Add ceiling fans: “Energy Star-qualified fans are 50 percent more efficient than conventional units and can save up to $15 per year on utility bills,” according to AOL Real Estate.
•Use Energy Star appliances: For example, replacing a dishwasher that was made before 1994 with an Energy Star-certified one can save $40 on utility bills by using less water. Energy Star-rated refrigerators can save home owners from $200 to $1,100 over the life of the appliance.
Source: “10 Eco-Friendly Things to Do for Your Home,” AOL Real Estate (April 22, 2013)
Home Remodeling Business Posts Big Turnaround
“Home owners are tired of waiting to make improvements,” according to a remodeling trade association, which released its latest data showing the home remodeling business is reaching “new heights.”
Current business conditions in remodeling have seen steady rises since March 2012 and now stand at a 5.97 rating -- compared to 5.59 one year prior, according to the National Association of the Remodeling Industry’s first-quarter index. NARI also notes that sharp increases in the number of inquiries and requests for bids reflects an increase in consumer confidence in the housing market.
“Remodelers nationwide are not only experiencing increased activity right now, but many have a backlog of projects well into the fall,” says Tom O’Grady, chairman of NARI’s Strategic Planning & Research Committee. “This current condition is worlds away from March of last year and suggests that the recovery is beginning to gain speed.”
The main drivers of remodeling activity cited in its index among respondents was the need for improvements due to postponement of projects and due to improving home prices.
“We knew that several things had to turn around in order for business to get better, and NARI members are finally feeling a holistic economic recovery outside and inside the housing market,” O’Grady says. Source: National Association of the Remodeling Industry
Are Home Prices Rising Too Fast?
Some housing analysts are concerned that the sudden rise in home prices could make homes more unaffordable again if the price increases outpace income growth, The Wall Street Journal reports.
Average housing costs for home buyers who took out a mortgage were around 22.5 percent of average incomes, according to John Burns Real Estate Consulting. That is down from 38.5 percent in 2006, the peak of the housing bubble. The historical average is about 33 percent.
But with home prices rising in many markets and, in some, rising at a faster pace than income levels, will more people soon be priced out of the market?
Housing analysts say that, for now at least, lower mortgage rates are offsetting the higher prices of homes.
Borrowers have seen their purchasing power rise by around 33 percent over the past four years due to the low interest rates, The Wall Street Journal reports. For example, a borrower can make a $1,000 monthly mortgage payment and qualify for a $222,000 mortgage at today’s low interest rates, compared to 2008 when they’d likely qualify for $165,000 when mortgage rates were around 6.1 percent -- nearly double what they are today.
Borrowers are able to withstand home-price increases because of the low rates, n
ot because household incomes are growing, The Wall Street Journal reports. If mortgage rates tick back up to the 6 percent or 8 percent range, homes may look overpriced relative to incomes, according to housing analysts. Source: “Why Rising Interest Rates Could Eventually Curb Price Gains,” The Wall Street Journal (April 10, 2013)
More Home Owners Look to Remodel
More home owners are planning to renovate their houses this year, according to Houzz, a remodeling Web site. The company recently surveyed approximately 100,000 home owners, and 53 percent of them reported that now is a good time to remodel.
More home owners getting motivated to increasing the values of their houses by improving the “look, flow, and layout” of these residences.
The most popular renovation projects were centered around bathrooms and kitchens. Twenty-eight percent said they were planning a bathroom remodel or addition, while 23 percent of those surveyed said they were planning a kitchen remodel or addition in the next two years. Over the last five years, home owners have spent $28,030 on average to remodel their kitchens, according to the Houzz survey. Source: “Interest in building, remodeling homes picks up,” Inman News (March 28, 2013)
Big Predictions for Housing for Next 2 Years
Home sales are projected to post some big gains in the next two years, according to Fannie Mae’s latest monthly economic outlook.
Fannie Mae economists predict that existing-home sales will rise by 10.5 percent this year, and by 6.2 percent in 2014. The economists made even bolder projections for new single-family home sales -- growing 15.1 percent this year and 44.1 percent in 2014.
"We expect home prices to firm further amid a durable housing recovery, continuing to boost household net worth, gradually diminishing the population of underwater borrowers, and reducing incentive for strategic defaults," according to Fannie Mae’s report.
Fannie Mae projects that mortgage rates will stay low by historical averages this year, but the 30-year fixed-rate mortgage will rise from an average of 3.5 percent during the first quarter to an average of 4 percent during the final three months of 2013. During the fourth quarter of 2014, mortgage rates are projected to tick up to a 4.5 percent average.
Mortgage applications for purchases are projected to increase by 16.8 percent this year and by 17.1 percent in 2014. However, a decline in applications for refinancings will likely cause mortgage originations to be down 14.5 percent this year and by 31.4 percent in 2014, Fannie economists predict.
Sellers Who Delay May Miss Out
Some would-be move-up home sellers are eyeing home prices carefully. They’re waiting to see how much home prices appreciate more before they consider selling their home. But they may be missing their perfect opportunity, some housing experts say.
The best time to move may depend on when the home owner purchased their current residence, says Daren Blomquist, vice president of RealtyTrac. Blomquist says that home owners who purchased their home during the sluggish market the last two to three years may find moving up in 2013 may be their prime opportunity.
"Because they bought near the bottom, these home owners should have built up some good equity that can go toward the purchase of a new home, and waiting longer to build more equity likely won’t provide much advantage given that other homes that they might want to move up to will also be appreciating at roughly the same pace," Blomquist told HousingWire.
Home owners who wait much longer to sell their home may miss out.
"If you're selling one house just to move up to another, it does you no good to wait for prices to rise — the price of the move-up home will increase faster than the price of the place you're leaving behind," says Redfin CEO Glenn Kelman.
Plus, mortgage rates are expected to come off the 3.5 percent range and reach 4.4 percent in the next year, according to the Mortgage Bankers Association. That will increase the costs of financing your next home.
Source: “The Time to Sell Is a Waiting Game for Some,” HousingWire (March 21, 2013)
Source: “The Time to Sell Is a Waiting Game for Some,” HousingWire (March 21, 2013)
How House Hunters View Your Listing Researcher Michael Seiler tracked the eye movements of 45 people viewing 10 online real estate listings with six photos in August 2011, determining that 95 percent of participants viewed the first photo—an exterior property shot—for just 20 seconds. The study is relevant because knowing how house-hunters view a listing online can help agents fine-tune their marketing approach.
Founder and director of Old Dominion University's Institute for Behavioral and Experimental Real Estate, Seiler says participants moved their eyes in a "Z" pattern from the upper left corner and after reaching the bottom right corner, they scanned up the right column of the screen.
After viewing the home's exterior photo, 76 percent looked at the property description; but 41.5 percent did not bother to ever read the agent's remarks. Researchers also cautioned practitioners against using all capital letters, overhyped adjectives, and brand names in property descriptions.
Seiler determined that overall, participants devoted 60 percent of their time to photos, 20 percent to property descriptions, and 20 percent to the agent's comments; and he found that their interest diminished after clicking through numerous properties.
"You have to grab people's attention within two seconds," Seiler remarked. "Do it the way a billboard does." Some agents ensure the photos, property descriptions, and remarks can be seen without scrolling; while others limit their remarks to only a few paragraphs and focus more on the lifestyle and neighborhood than appliances and other features.
Source: "20 Seconds for Love at First Sight," Wall Street Journal (March 22, 2013)
Source: "20 Seconds for Love at First Sight," Wall Street Journal (March 22, 2013)
Freddie Has High Expectations for Spring Market
Daily Real Estate News | Thursday, March 21, 2013
Get ready for the healthiest spring home-buying season since 2007, according to Freddie Mac’s U.S. Economic and Housing Market Outlook for March.
Get ready for the healthiest spring home-buying season since 2007, according to Freddie Mac’s U.S. Economic and Housing Market Outlook for March.
The mortgage giant is forecasting low mortgage rates and increasing housing prices to continue, as well as gradually improving consumer confidence that will likely boost home sales this spring.
Sales are expected to rise 8 to 10 percent in 2013 compared to 2012 numbers, Freddie economists report. Freddie Mac also expects housing starts to rise to 950,000 units this year compared to 780,000 in 2012.
"History shows us not all economic recoveries are created equal, and consumer confidence mirrors this fact,” says Frank Nothaft, Freddie Mac’s chief economist. “With the spring home-buying season upon us, the recent highs in the stock market are a welcome signal of better times ahead. But it will be the gradually declining unemployment rate and steadily improving housing market that will deliver broad-based economic benefits for Americans and, in turn, support the overall recovery."
Source: Freddie Mac
1.7 Million Home Owners Regain Equity in 2012
Rising home prices have helped more home owners make their way above water again, with 1.7 million residential properties regaining equity in 2012, according to the latest figures from CoreLogic. The number of mortgaged home owners with equity now stands at 38.1 million.
More home owners are expected to soon join them: About 1.8 million homes will regain equity if home prices rise by another 5 percent—which most economists have forecast for this year.
“In the fourth quarter we again saw an improvement in the equity position of households,” says Mark Fleming, chief economist for CoreLogic. “Housing market improvements, particularly in the hardest hit states, are the catalyst for households to regain equity and become participants in 2013’s housing market.”
While the numbers are improving, many home owners are still underwater: About 21.5 percent—or 10.4 million—of all residential properties with a mortgage still retained negative equity at the end of the fourth quarter of 2012. That number is down 22 percent, year-over-year.
Nevada has the highest percentage of homes with negative equity (at 52.4%), followed by Florida (40.2%), Arizona (34.9%), Georgia (33.8%), and Michigan (31.9%). These five states alone account for 32.7 percent of the total amount of negative home equity in the U.S., according to CoreLogic.
Some additional findings from CoreLogic’s latest report:
•The majority of homes that have equity tend to be on the higher end of the real estate market. Eighty-six percent of homes valued at more than $200,000 have equity, compared to 72 percent of home less than $200,000.
•About 3.9 million home owners with negative equity have both first and second liens. Their average mortgage balance is $296,000 and their average underwater amount is $80,000.
•About 3.9 million home owners with negative equity have both first and second liens. Their average mortgage balance is $296,000 and their average underwater amount is $80,000.
Mortgage Rates Remain Near 65-Year Record Lows
Fixed-rate mortgages mostly held at the same low averages this week, providing more support for the housing recovery, Freddie Mac reports in its weekly mortgage market survey.
“Low mortgage rates are helping to revive the housing market,” says Frank Nothaft, Freddie Mac’s chief economist. Mortgage rates have been staying near their 65-year record lows for the last several weeks.
Freddie Mac reports the following national averages for the week ending March 7:
•30-year fixed-rate mortgages: averaged 3.52 percent, with an average 0.7 point, rising slightly from last week’s 3.51 percent average. A year ago at this time, 30-year rates averaged 3.88 percent.
•15-year fixed-rate mortgages: averaged 2.76 percent, with an average 0.7 point, holding the same as last week’s average. Last year at this time, 15-year rates averaged 3.13 percent.
•5-year adjustable-rate mortgages: averaged 2.63 percent, with an average 0.5 point, rising slightly from last week’s 2.61 percent average. Last year at this time, 5-year ARMs averaged 2.81 percent.
•1-year ARMs: averaged 2.63 percent, with an average 0.3 point, dropping from last week’s 2.64 percent average. A year ago, 1-year ARMs averaged 2.73 percent.
•15-year fixed-rate mortgages: averaged 2.76 percent, with an average 0.7 point, holding the same as last week’s average. Last year at this time, 15-year rates averaged 3.13 percent.
•5-year adjustable-rate mortgages: averaged 2.63 percent, with an average 0.5 point, rising slightly from last week’s 2.61 percent average. Last year at this time, 5-year ARMs averaged 2.81 percent.
•1-year ARMs: averaged 2.63 percent, with an average 0.3 point, dropping from last week’s 2.64 percent average. A year ago, 1-year ARMs averaged 2.73 percent.
Where Are Home Prices Heading Through 2017?
Home prices are expected to continue their trajectory upward, projected to rise 3.7 percent between the third quarters of 2013 and 2014, according to Fiserv, which used data from the Federal Housing Finance Agency for its projection.
Following the third quarter of 2014, Fiserv predicts home prices to rise an average 3.3 percent annually over the next three years.
“Although some recent real estate activity has been speculative, it seems as if buyers have more realistic expectations about housing market returns after having lived through the largest housing market crash in U.S. history,” says David Stiff, Fiserv’s chief economist. “2012 was the first year since 1997 that the housing market has resembled something recognizable as normal. For the past 15 years, home-price changes and sales volumes have either been boosted by a bubble mentality or crushed by crash psychology.”
In 1997, home prices grew at a 3 percent rate, Stiff says, but from 1998 to 2006, prices started soaring above 5 percent and even saw double-digit increases in some of those years.
By the end of 2013, Fiserv expects that home prices will increase in nearly every U.S. metro area, while some markets may see short-term double-digit price increases.
Source: “Home Prices Expected to Rise at Least 3.3 Percent Annually Through 2017,” RISMedia (March 6, 2013)
Kiplinger: Housing Recovery Firmly Underway
Prices are rising and inventories are falling in markets throughout the United States, which has led financial reporting and forecasting firm Kiplinger to declare the housing recovery “firmly” in motion. Moreover, the company says housing will help carry the overall economy at a time when U.S. exports are decreasing, says Karen Mracek, a Kiplinger editor and real estate analyst.
“The biggest reason we think we’re on firm ground is that we’re seeing every indicator on the way up,” Mracek says. “As with the overall economy, it’s kind of hard to call the bottom or the pivot point. But we’re seeing a range of indicators that suggest pretty solid growth going forward.”
In addition to home values and supply, positive indicators include the number of multiple-bid situations, new-home construction, and credit availability, she says. Solid improvements in these fundamentals will lead to formation of more new households and will also help more borrowers come out from underwater — and trade up to a new home. They’ll also create new jobs in real estate and construction, Mracek explains.
The recent gains made in housing have some concerned that real estate could be entering another bubble market, but Mracek disagrees with that assessment. “There might be [a bubble] in some concentrated markets,” she says. “But I don’t think it will be a bubble that’s as widespread and disastrous as the one that happened in the last decade.”
Improvements have been — and will continue to be — uneven. The turnaround will probably be slower in metro areas in Florida and the Midwest.
Nationally, Mracek says the current housing recovery is real and sustainable, but she also acknowledges that the rise in home values and decline in inventories won’t maintain their current pace.
“We see prices leveling out a bit more [in the future] from the late jumps in 2012,” she says. “There are still foreclosures for the banks to work through. As prices improve, you’re going to see banks get rid of REOs.”
— Brian Summerfield, REALTOR® Magazine
January Pending Home Sales Up in All Regions
Pending home sales rose in January, and have been above year-ago levels for the past 21 months, according to the National Association of REALTORS®. There were healthy monthly gains in all regions but the West, which, despite being constrained by limited inventory, still improved slightly.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 4.5 percent to 105.9 in January from a downwardly revised 101.3 in December and is 9.5 percent above January 2012, when it was 96.7. The data reflect contracts but not closings.
The January index is the highest reading since April 2010, when it hit 110.9, just before the deadline for the home buyer tax credit. Aside from spikes induced by the tax credits, the last time there was a higher reading was in February 2007 when it reached 107.9.
Lawrence Yun, NAR chief economist, said inventory is the key to this year’s housing market. “Favorable affordability conditions and job growth have unleashed a pent-up demand. Most areas are drawing down housing inventory, which has shifted the supply-demand balance to sellers in much of the country. It’s also why we’re experiencing the strongest price growth in more than seven years,” he said.
“Over the near term, rising contract activity means higher home sales, but total sales for the year are expected to rise less than in 2012, while home prices are projected to rise more strongly because of inventory shortages,” Yun said.
The PHSI in the Northeast rose 8.2 percent to 84.8 in January and is 10.5 percent higher than January 2012. In the Midwest, the index increased 4.5 percent to 105.0 in January and is 17.7 percent above a year ago. Pending home sales in the South rose 5.9 percent to an index of 119.3 in January and are 11.3 percent higher January 2012. In the West, the index edged up 0.1 percent in January to 102.1 but is 1.5 percent below a year ago.
Yun expects approximately 5.0 million existing-home sales this year. However, price growth could exceed a 7 percent gain projected for 2013 if inventory supplies remain low. Previously, NAR had expected 5.1 million existing-home sales in 2013, while prices were forecast to rise 5.5 to 6.0 percent.
The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.
Also released today are annual data revisions. Each February, NAR Research incorporates a review of seasonal activity factors and fine-tunes historic data for the past three years based on the most recent findings. There are no changes to unadjusted or annual data.
60% of Single-Family Renters Plan to Buy Within 5 Years
Renters of single-family homes are twenty-five percent more likely than apartment tenants to stay in their current homes fives years or longer, according to a new survey by Opinion Research Corporation. The finding suggests that “demand for single-family homes, the fastest growing rental category, will be more stable than multi-family demand,” according to the survey findings.
Renters also say they plan to become home owners one day, particularly among single-family tenants. Sixty percent of single-family renters and 44 percent of apartment renters say they plan to become home owners within the next five years.
“The near term interest in becoming home owners among single-family tenants reflects the new roles single-family rentals are fulfilling as a stepping stone to home ownership for first-time buyers and as a sanctuary for large numbers of families displaced by foreclosures but who plan to buy again when they can afford to do so,” according to the survey results.
The survey also found that single-family renters make more money and are twice as likely to have children as apartment renters, according to the survey. The survey found that the median income of a single-family renter is $75,000 to $100,000 compared to $50,000-$75,000 for apartment dwellers. Single-family renters also tend to be older, with the majority aged 35 to 44, compared to 14 to 34 among apartment dwellers.
Source: Opinion Research Corporation
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