on April 7th, 2012
The Federal Housing Administration is giving borrowers a chance to provide an explanation on any disputed collection accounts in their history in order to qualify for an FHA-backed mortgage. The new FHA rule took effect April 1 and had some in the real estate community concerned that it would shut more buyers out of qualifying for mortgages.
According to the FHA’s new rule, borrowers with any credit disputes of more than $1,000 on their file will not be able to get a government-backed loan. Borrowers will either have to pay the remaining balance of the credit amount or show proof of entering into a payment plan for it.
The FHA is easing those restrictions somewhat, according to new instructions it provided to lenders, HousingWire reports. Borrowers will be exempt from the new rule if the credit amount is from a “life event.” This might include a medical bill, death, divorce, or unemployment, HousingWire reports.
“The borrower may provide a written explanation and documentation as it applies to all types of disputed and collections accounts if it makes sense, and is consistent with other credit information in the file,” according to instructions provided to lenders.
Also starting on April 1, the FHA raised its insurance premiums, citing it as another effort to try to rebuild its emergency fund, which has fallen below the mandated amount Congress requires.
Source: “FHA Eases New Rule on Collections Accounts,” HousingWire (April 3, 2012)
on April 5th, 2012
Real estate economists and analysts are increasingly optimistic that the housing market will have a dramatic recovery in the next two years, according to results of a new semi-annual survey of 38 real estate economists and analysts conducted by the Urban Land Institute’s Center for Capital Markets and Real Estate.
The economists predict that the national average for home prices will stop falling by this year and a subsequent turnaround will occur. By next year, they project that home prices will begin to rise by 2 percent, and then get a larger boost of 3.5 percent by 2014. The economists also predict that housing starts will nearly double by next year.
They also foresee rental prices continuing to increase for all property types, ranging from 0.8 percent to 5 percent.
The economists’ predictions were made on assumptions that the economy would continue to strengthen, including a larger drop in unemployment.
“While geopolitical and global economic events could change the forecast going forward, what we see in this survey is confidence that the U.S. real estate economy has weathered the brunt of the recent financial storm and is poised for significant improvement over the next three years,” says Patrick L. Phillips, ULI chief executive officer. “These results hold much promise for the real estate industry.”
Source: “Real Estate Will Rock in 2014,” RISMedia (March 31, 2012)
on April 3rd, 2012
Some real estate markets are reporting that home buyers are having to pay more than asking price to get the home they desire, as the supply of for-sale homes has shrunk, Bloomberg News reports.
Bidding wars were a common part of real estate in 2006. But when the market turned from a “seller’s market” to “buyer’s market,” more sellers started seeing lowball bids than high bids. Now times are slowly changing, and bidding wars are being reported in several markets, such as in Seattle, Boston, Silicon Valley, Miami, and Washington, D.C., Bloomberg reports.
The inventory of homes for-sale is near a six-year low. Mixed with the low inventory, the job market has been improving and buyers are being lured to the record level of affordability in the housing market. Existing-home sales and pending home sales are up more than 8 percent compared to a year earlier, the National Association of REALTORS® recently reported. Trulia Inc. also reported that falling home values and low mortgage rates have made home buying a better deal than renting in 98 of the 100 largest metro areas.
“The housing crash is finally giving way to recovery in an increasing number of markets across the country,” Mark Zandi, chief economist for Moody’s Analytics, told Blommberg. “The decline in unsold listings and vacant homes and the increase in rents presage better times ahead for single-family housing.”
Source: “Bidding Wars Erupt as Supply of Available Homes Shrink,” Bloomberg News (March 31, 2012)
on March 31st, 2012
An improving economy is contributing to a gradual rebound in home prices across the country, according to mortgage giant Freddie Mac’s 2012 Economic Outlook report, released Wednesday. But there is still a way to go in the road to recovery for the housing market, the report noted.
“The housing market is showing some signs of shaking off the depression-like conditions that have plagued it for much of the past few years,” according to the report. “As if awakening from hibernation, housing starts and home sales moved to higher levels of activity.”
In fact, the signs have prompted Freddie Mac to revise its forecast upwards for home sales and originations. One economic contributor that’s helping to stabilize housing: The drop in the unemployment rate to 8.3 percent, its lowest level in three years, according to the report.
“A variety of encouraging indicators suggest that the housing market may be feeling a nascent recovery … and more neighborhoods may see a stabilization in overall demand and housing values this spring,” says Frank Nothaft, Freddie Mac’s chief economist.
Median home sale prices are up, despite a slight drop in new and existing home sales, Freddie Mac reports. About a half of the increase in housing starts has been for construction of rental apartments in multi-unit buildings to meet the increasing demand, the report notes. New rental construction, at its current pace, is expected to reach its highest level since 2005.
“Housing starts continue to run below net household formations [and will allow for absorption of existing vacant homes],” according to the report.
Source: “Freddie Mac: Economic Growth Expected to Stabilize Housing Market,” Dow Jones Newswires (March 28, 2012)
on March 27th, 2012
Foreign buyers are being lured by the bargain prices in American real estate. So which markets are the most attractive to these international buyers?
Florida continues to be the most popular destination among foreign home buyers, but other states are attracting more foreign interest as well. More than half–58 percent–of international sales in 2011 came from these four states alone: Florida (31 percent), California (12 percent), Texas (9 percent), and Arizona (6 percent), according to National Association of REALTORS® data.
Inman News recently identified the individual markets where foreign buyers make up the biggest share of home buyers. Among the top markets to make the list:
Lakeland-Winter Haven, Fla.
Cape Coral-Fort Myers, Fla.
Orlando-Kissimmee-Sanford, Fla.
North Point-Bradenton-Sarasota, Fla.
Miami-Fort Lauderdale-Pompano Beach, Fla.
Phoenix-Mesa-Glendale, Ariz.
New York County, N.Y. (Manhattan)
Honolulu
Source: “10 Hot Spots for Global Homebuyers,” Inman News (March 2012)
on March 24th, 2012
Economists say the housing market is starting to heal, but too many people aren’t aware of it because they’re judging a housing recovery on the wrong sign: What’s happening with home prices.
Paul Dales at Capital Economics says higher prices won’t be the sign that the housing market is on the mend — that can be a lagging indicator — but rather an increase in overall home sales. And that’s showing signs of improvement: Existing home sales in 2011 rose to 4.26 million compared to 4.19 million in 2010. In the last six months alone, home sales have increased 13 percent.
As a recent article at Fortune points out, “The evidence reminds us that perhaps we should change our expectations of what a housing recovery might look like, particularly following a crisis marked by record foreclosures and a financial crisis that sent the economy into one of the deepest recessions. The recovery we have been anticipating is defined more on the rate at which the glut of vacant properties comes off the market as opposed to any steady rise in prices, which some think won’t happen for another few years.”
Source: “The One Number to Watch for a Housing Recovery,” Fortune (March 20, 2012)
on March 22nd, 2012
Median list prices nationwide increased 6.82 percent in February compared to February 2011, according to the latest data from Realtor.com, tracking 146 markets.
“The nation’s housing market as a whole are in better shape today than at any time since the 2009-2010 tax credits,” according to Realtor.com’s monthly housing summary. “While higher list prices do not always translate into higher sales prices, they may signal a growing optimism on the part of sellers that the market has begun to turn around.”
Florida continues to be the market seeing some of the biggest increases to median list prices in the last year. The following 10 markets posted the biggest rise in median list prices year-over-year, according to February housing data from Realtor.com.
1. Miami, Fla.
Year-over-year increase: 26.19%
Median list price: $265,000
2. Phoenix-Mesa, Ariz.
Year-over-year increase: 20.62%
Median list price: $174,900
3. Punta Gorda, Fla.
Year-over-year increase: 19.35%
Median list price: $185,000
4. West Palm Beach-Boca Raton, Fla.
Year-over-year increase: 18.48%
Median list price: $225,000
5. Washington, D.C.-Md.-Va.-W.Va.
Year-over-year increase: 18.45%
Median list price: $384,950
6. Boise City, Idaho
Year-over-year increase: 16.28%
Median list price: $150,000
7. Naples, Fla.
Year-over-year increase: 15.67%
Median list price: $369,000
8. Fort Myers-Cape Coral, Fla.
Year-over-year increase: 15.59%
Median list price: $229,900
9. Daytona Beach, Fla.
Year-over-year increase: 15.56%
Median list price: $179,000
10. Sarasota-Bradenton, Fla.
Year-over-year increase: 14.47%
Median list price: $246,000
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
on March 19th, 2012
The government vows to closely monitor that the nation’s five largest banks fulfill the aid to home owners outlined in a $25 billion mortgage settlement over foreclosure allegations.
More details emerged in court filings on Monday of the landmark settlement among the nation’s five largest banks and state and federal government officials. The settlement, first announced last month, stems from allegations over banks’ foreclosure practices, although as part of the settlement the banks do not have to admit to any wrongdoing.
Among some of the aid outlined in the $25 billion settlement for home owners:
Banks have agreed to pay about $20 billion to help home owners avoid foreclosure. The majority of that money will be allocated to reducing the mortgage principal and modifying loans for about 1 million underwater home owners.
Banks have agreed to pay $5 billion to federal and state government officials, with a portion of that money going to compensate about 750,000 Americans who have been found to be wrongfully foreclosed upon from 2008 through 2011. Affected home owners will receive $2,000 checks.
Banks will be required to adopt new processing standards for foreclosure. For example, banks will be unable to pursue a foreclosure when home owners are being considered for a loan modification.
Banks must comply with the terms of the settlement or face stiff penalties. Banks are required to complete all loan relief requirements as part of the settlement within three years; 75 percent of it is to be fulfilled within two years. Any bank that violates the agreement will be fined $1 million for each violation, capped at $5 million for repeat violations.
The settlement does not free banks from criminal action. Federal and state officials can still pursue criminal action action against banks for any wrongdoing over foreclosures.
The mortgage settlement only applies to mortgages held privately. It does not apply to mortgages held by Fannie Mae and Freddie Mac.
The banks part of the settlement are Bank of America, Citigroup, JPMorgan, Chase, Wells Fargo, and Ally Financial.
Some banks have negotiated separate requirements so they won’t have to pay as much in penalties to federal and state officials. For example, in return to a reduction in penalties, Ally Financial has agreed to cut the mortgage principal for struggling home owners by 105 percent of the home’s value. Bank of America says it will trim the mortgage principal of more than 200,000 struggling borrowers.
The settlement still must be approved by a judge to be final.
Source: “Feds Promise Tough Oversight in Mortgage Deal,” Reuters (March 12, 2012) and “Gov’t Files $25B Mortgage Settlement; Banks to Provide Relief Without Admitting Wrongdoing,” Associated Press (March 12, 2012)
on March 15th, 2012
The government was able to chip away at its foreclosure inventory in 2011, reducing it by nearly half, HousingWire reports in analyzing financial statements from three government enterprises.
From the end of 2010 to 2011, Freddie Mac, Fannie Mae, and the Department of Housing and Urban Development saw a 49 percent reduction in the number of REO properties it owns. The three government enterprises held about 150,700 properties as of Dec. 31, 2011, compared to 296,000 at the end of 2010.
“The GSEs sold REOs at a record pace in 2011,” HousingWire reports. “Combined, both sold more than 353,000 previously foreclosed property for the year.”
Here’s a closer look by how much the government enterprises trimmed their foreclosure inventories:
HUD: Reduced its foreclosure inventory to about 32,000, a 47 percent drop from more than 62,000 it held at the end of 2010.
Fannie: Reduced its foreclosure inventory to more than 118,000, which is down 27 percent from about 162,000 at the end of 2010.
Freddie: Reduced its REO inventory to 60,500, down 16 percent from more than 72,000 in 2010.
Source: “Government-held REO Halved During Robo-Signing Freeze,” HousingWire (March 9, 2012)
on March 13th, 2012
Low mortgage rates and falling home values have brought housing within reach to more families than ever before, according to the latest National Association of REALTORS® housing affordability index.
Housing affordability in January reached its highest level since NAR began tracking it in 1970. The index — which tracks median home price, median family income, and the average mortgage rate — reached 206.1 in January.
“This is the first time the housing affordability index has broken the 200 mark, meaning the typical family has roughly double the income needed to purchase a median-priced home,” says Moe Veissi, 2012 NAR president. “For buyers who can qualify for a mortgage, now is a very good time to become a home owner.”
An index of 100 means that median-income household has exactly enough income to qualify for the purchase of a median-priced existing single-family home, also accounting for a 20 percent down payment and 25 percent of gross income devoted to the mortgage principle and interest payments.
NAR projects that affordability will remain high for the remainder of the year.
“Housing inventory levels have declined to a point where conditions are becoming much more balanced in much of the country,” Veissi said. “If access to credit improves, we could see a much more meaningful increase in home sales and broader stabilization in home prices with modest gains in areas with stronger job growth.”
Source: National Association of REALTORS®
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