| ||
|
Showing posts with label projections. Show all posts
Showing posts with label projections. Show all posts
Saturday, February 16, 2013
Confidence Index for February 2013
Friday, April 10, 2009
Housing Most Affordable
Realty Times of April 10, 2009
Housing Most Affordable: May be Time to Move from Renting to Owning
by Phoebe Chongchua
Falling housing prices, historically low interest rates, and tax credits are creating an enticing environment for renters to convert to homeowners.
"We are still going to have a tremendous amount of foreclosures, price declines, and best opportunities to buy properties at amazing prices," says Bruce Norris of The Norris Group.
If that sounds like a mixed bag of bad and good, indeed it is. Consumers have been inundated with news about a troubled real estate market. "If you look at the closings for California, 55 percent or more closings every month are lender-owned properties; that ratio has never existed before. So, the lenders are really dictating the prices at this point and there are so many lender-owned properties that the appraiser almost has no choice but to give that comp a lot of credence," says Norris. But the good news, especially for those who have been wanting to take the plunge into homeownership is that markets across the country are ripe for choosing the most suitable home.
"The affordability has never been this high. So, in relationship to income, California is the cheapest it's ever been. The fact that prices will still go down kind of means nothing to the person who is going to live in a house for quite a long time -- partly because the interest rates are also historically low," says Norris.
He points to his own daughter as an example. She is getting married this year and buying her own house for the first time.
"I think it's a very bright decision. Do I think her neighborhood might go down for another year-and-a-half, yeah—and to that I say, who cares! She's tying up an interest rate that's probably under 5 percent for 30 years and that may be the real bargain," says Norris.
Her fiancé owns a home but Norris and the couple agreed that her buying a home now is a good opportunity. So after the couple marries they will live in the home in order to receive maximum financial benefits. His daughter is using an FHA loan and putting $4,000 down on a $110,000 California home that was, at the height of the real estate boom worth, $330,000. She will then get a federal tax credit for $8,000 and she can receive that money (in as few as 10 days) now rather than waiting until she files her 2009 tax return. Best of all, the mortgage payment is less than it would cost to rent.
This is a trend that is playing out in many areas across the country. "Fortunately, the interest rates are national so you have that incredible interest rate that is forcing the mortgage payment below rent in many locations, including California. So the area that my daughter is buying in, her rent would be $1,100 and her mortgage payment is going to be about $825," says Norris.
Norris says that, coupled with the federal tax credit for first-time homebuyers, is making renters weigh their options, "It really is an inducement for people to go from being a renter to an owner."
"There are lots of areas that didn't go up as much as California. Let's pick an area, Texas, for instance, you have houses selling for $110,000 to $120,000 range and the rents there are also pretty high--$1,100 - $1,200 or so—so payments there are also a lot less if they own it," says Norris.
"It's most affordable right now, so you would think that everybody would want in, but real estate right now has a lot of fear attached to it and a lot of uncertainty about jobs," says Norris.
Some markets such as California are working to help alleviate barriers to home ownership. The California Association of Realtors in April introduced the Housing Affordability Fund's Mortgage Protection Program. There are specific eligibility requirements; talk to your Realtor for details.
"People who buy property in 2009 have a safety blanket now of six months of up to $1,500 payments per month that the California Association of Realtors, out of some fund that it has, will pay the people's payments," says Norris. He adds, "I've never heard anything like it."
Norris says while these programs to entice renters to become buyers are attractive, he says make sure you're ready to buy. He says there are specific habits that you should have in place before buying a home.
"You should already have developed a savings habit and you're ready to buy a home because you have a little bit of money left over in case something goes wrong," says Norris.
Another affirming reason to move from renting to buying comes from statistics from John Burns Real Estate Consulting in Irvine, California.
The company reports that 50 percent of the 76 metropolitan area markets across the U.S. that are tracked show that people can buy a house (after tax cost of homeownership considered) for less than they could rent one.
--------------------------------------------------------------------------------
Copyright © 2009 Realty Times. All Rights Reserved.
Housing Most Affordable: May be Time to Move from Renting to Owning
by Phoebe Chongchua
Falling housing prices, historically low interest rates, and tax credits are creating an enticing environment for renters to convert to homeowners.
"We are still going to have a tremendous amount of foreclosures, price declines, and best opportunities to buy properties at amazing prices," says Bruce Norris of The Norris Group.
If that sounds like a mixed bag of bad and good, indeed it is. Consumers have been inundated with news about a troubled real estate market. "If you look at the closings for California, 55 percent or more closings every month are lender-owned properties; that ratio has never existed before. So, the lenders are really dictating the prices at this point and there are so many lender-owned properties that the appraiser almost has no choice but to give that comp a lot of credence," says Norris. But the good news, especially for those who have been wanting to take the plunge into homeownership is that markets across the country are ripe for choosing the most suitable home.
"The affordability has never been this high. So, in relationship to income, California is the cheapest it's ever been. The fact that prices will still go down kind of means nothing to the person who is going to live in a house for quite a long time -- partly because the interest rates are also historically low," says Norris.
He points to his own daughter as an example. She is getting married this year and buying her own house for the first time.
"I think it's a very bright decision. Do I think her neighborhood might go down for another year-and-a-half, yeah—and to that I say, who cares! She's tying up an interest rate that's probably under 5 percent for 30 years and that may be the real bargain," says Norris.
Her fiancé owns a home but Norris and the couple agreed that her buying a home now is a good opportunity. So after the couple marries they will live in the home in order to receive maximum financial benefits. His daughter is using an FHA loan and putting $4,000 down on a $110,000 California home that was, at the height of the real estate boom worth, $330,000. She will then get a federal tax credit for $8,000 and she can receive that money (in as few as 10 days) now rather than waiting until she files her 2009 tax return. Best of all, the mortgage payment is less than it would cost to rent.
This is a trend that is playing out in many areas across the country. "Fortunately, the interest rates are national so you have that incredible interest rate that is forcing the mortgage payment below rent in many locations, including California. So the area that my daughter is buying in, her rent would be $1,100 and her mortgage payment is going to be about $825," says Norris.
Norris says that, coupled with the federal tax credit for first-time homebuyers, is making renters weigh their options, "It really is an inducement for people to go from being a renter to an owner."
"There are lots of areas that didn't go up as much as California. Let's pick an area, Texas, for instance, you have houses selling for $110,000 to $120,000 range and the rents there are also pretty high--$1,100 - $1,200 or so—so payments there are also a lot less if they own it," says Norris.
"It's most affordable right now, so you would think that everybody would want in, but real estate right now has a lot of fear attached to it and a lot of uncertainty about jobs," says Norris.
Some markets such as California are working to help alleviate barriers to home ownership. The California Association of Realtors in April introduced the Housing Affordability Fund's Mortgage Protection Program. There are specific eligibility requirements; talk to your Realtor for details.
"People who buy property in 2009 have a safety blanket now of six months of up to $1,500 payments per month that the California Association of Realtors, out of some fund that it has, will pay the people's payments," says Norris. He adds, "I've never heard anything like it."
Norris says while these programs to entice renters to become buyers are attractive, he says make sure you're ready to buy. He says there are specific habits that you should have in place before buying a home.
"You should already have developed a savings habit and you're ready to buy a home because you have a little bit of money left over in case something goes wrong," says Norris.
Another affirming reason to move from renting to buying comes from statistics from John Burns Real Estate Consulting in Irvine, California.
The company reports that 50 percent of the 76 metropolitan area markets across the U.S. that are tracked show that people can buy a house (after tax cost of homeownership considered) for less than they could rent one.
--------------------------------------------------------------------------------
Copyright © 2009 Realty Times. All Rights Reserved.
Tuesday, March 17, 2009
Where Housing is Headed
From Realty Times of March 17, 2009
Real Estate Outlook: Where Housing is Headed
by Kenneth R. Harney
We received an important indicator of where housing is headed last week, when new mortgage applications for home purchases and refinances suddenly surged as they hadn't in months.
Applications for FHA loans to buy houses were up by 10.4 percent. And overall home purchase applications jumped by 7.1 percent.
Meanwhile mortgage interest rates dropped to their second lowest level in nearly two decades, according to the Mortgage Bankers Association. Thirty year fixed rates averaged 4.96 percent and fifteen year rated dropped to just 4.5 percent.
Why's this important? New financing applications to buy homes obviously point to rising purchase contracts and closed sales in the months ahead. They also suggest that prices have hit a level in many markets that is attracting once-hesitant buyers off the sidelines.
There's still another factor that's likely at work here as well: Congress's recent improvements to the home purchase tax credit -- pushing it to $8,000 from $7,500 and making it non-repayable. George Ratiu, research economist for the National Association of Realtors, says the big jump in loan applications could be tied to the improved credit in the stimulus package signed into law last month.
"Consumers may be responding to the stimulation" effect of the better credit for 2009, he said.
But let's be clear here: A rise in home purchase applications does NOT suggest we've turned the corner in the cycle or have solved the multiple challenges facing markets around the country -- high foreclosure levels, continuing domination in some areas of REO and short sales, and continuing increases in the unemployment rate.
Even amid these problems, however, there are some hints of possible improvements ahead. For example, a new study by research firm Realty Trac and USA Today found that despite the constant headlines about record levels of foreclosures, the more closely you look, the more you find that those numbers are highly concentrated in a relatively small number of counties.
More than half of the nation's foreclosures in 2008, researchers found, were concentrated in just 35 counties in 12 states. You can guess where: California, Las Vegas, Phoenix and Florida.
But the really eye-opening finding: In more than 650 other counties, representing one fifth of all markets in the U.S., foreclosure numbers have actually declined since 2006.
Foreclosures are horrible no matter where they occur. But the fact is: Huge portions of the United States have NOT been seeing record foreclosures, short sales or even serious property value declines. They're doing better.
Copyright © 2009 Realty Times. All Rights Reserved.
Arisona always seems to get a mention - we are No. 2 nationally in Foreclosures in January 2009. I hope most of those are the California Investers that ran our prices up out of reach to most buyers in 2004 and 2005.
.
Real Estate Outlook: Where Housing is Headed
by Kenneth R. Harney
We received an important indicator of where housing is headed last week, when new mortgage applications for home purchases and refinances suddenly surged as they hadn't in months.
Applications for FHA loans to buy houses were up by 10.4 percent. And overall home purchase applications jumped by 7.1 percent.
Meanwhile mortgage interest rates dropped to their second lowest level in nearly two decades, according to the Mortgage Bankers Association. Thirty year fixed rates averaged 4.96 percent and fifteen year rated dropped to just 4.5 percent.
Why's this important? New financing applications to buy homes obviously point to rising purchase contracts and closed sales in the months ahead. They also suggest that prices have hit a level in many markets that is attracting once-hesitant buyers off the sidelines.
There's still another factor that's likely at work here as well: Congress's recent improvements to the home purchase tax credit -- pushing it to $8,000 from $7,500 and making it non-repayable. George Ratiu, research economist for the National Association of Realtors, says the big jump in loan applications could be tied to the improved credit in the stimulus package signed into law last month.
"Consumers may be responding to the stimulation" effect of the better credit for 2009, he said.
But let's be clear here: A rise in home purchase applications does NOT suggest we've turned the corner in the cycle or have solved the multiple challenges facing markets around the country -- high foreclosure levels, continuing domination in some areas of REO and short sales, and continuing increases in the unemployment rate.
Even amid these problems, however, there are some hints of possible improvements ahead. For example, a new study by research firm Realty Trac and USA Today found that despite the constant headlines about record levels of foreclosures, the more closely you look, the more you find that those numbers are highly concentrated in a relatively small number of counties.
More than half of the nation's foreclosures in 2008, researchers found, were concentrated in just 35 counties in 12 states. You can guess where: California, Las Vegas, Phoenix and Florida.
But the really eye-opening finding: In more than 650 other counties, representing one fifth of all markets in the U.S., foreclosure numbers have actually declined since 2006.
Foreclosures are horrible no matter where they occur. But the fact is: Huge portions of the United States have NOT been seeing record foreclosures, short sales or even serious property value declines. They're doing better.
Copyright © 2009 Realty Times. All Rights Reserved.
Arisona always seems to get a mention - we are No. 2 nationally in Foreclosures in January 2009. I hope most of those are the California Investers that ran our prices up out of reach to most buyers in 2004 and 2005.
.
Tuesday, January 13, 2009
Real Estate Outlook: Follow the Money
From Realty Times of January 13, 2009
Real Estate Outlook: Follow the Money by Kenneth R. Harney
Is the economic glass half empty or half full?
Talk to different groups of forecasters and you get different answers, but basically a similar consensus: The national recession is likely to drag on for another four to six months, but by mid-year we should be moving into a slow-growth rebound mode, digging out of recession.
A new poll of 50 top business economists conducted by Blue Chip Economic Indicators, a research organization, found a mildly upbeat general outlook -- especially if the economic stimulus package being prepared by the incoming Obama administration and the new Congress cuts taxes, stimulates housing sales, lowers mortgage rates, and reverses job losses as the year moves on.
Randell Moore, the head of Blue Chip Indicators, which conducts monthly economic surveys, said "the consensus (is that) we are in the deepest part of the recession (right) now. But the stimulus package and lower gasoline prices are expected to … restore consumer confidence and personal spending -- and that will put us on the road back."
The Federal Reserve released its own forecast, based on discussions at its December board meeting: Expect negative growth through the late Spring, a slow recovery thereafter.
What about housing and real estate?
The latest pending home sales survey by the National Association of Realtors, covering the month of November, was down. But think back to the prevailing mindset back in October and November - some of the biggest jitters and panic on Wall Street in recent history, plus worries about the financial safety of the banking system.
Who would expect people to rush out and sign home purchase contracts with the entire economy in earthquake mode and consumer confidence plummeting?
Today, by contrast, the outlook is VERY different. We're on the verge of getting an economic shot in the arm from a giant stimulus package -- some of which will likely directly target home sales, possibly with tax credits.
Mortgage interest rates are at almost unprecedented lows -- five percent and even below if you've got a downpayment and decent credit. Applications for new mortgages to buy houses were up by more than 7 percent last week, according to the Mortgage Bankers Association's national survey -- up 2.3 percent for those seeking conventional loans and up an amazing 19.2 percent for buyers planning to use FHA financing.
As the saying goes: Follow the money. There's something important stirring out there. Home prices are at 2004 levels in many markets. Buyers who can qualify are seeing real, tangible opportunities….and that dynamic, along with help from the stimulus package, should begin turning around housing even before the economy as a whole.
--------------------------------------------------------------------------------
Copyright © 2009 Realty Times. All Rights Reserved.
.
Real Estate Outlook: Follow the Money by Kenneth R. Harney
Is the economic glass half empty or half full?
Talk to different groups of forecasters and you get different answers, but basically a similar consensus: The national recession is likely to drag on for another four to six months, but by mid-year we should be moving into a slow-growth rebound mode, digging out of recession.
A new poll of 50 top business economists conducted by Blue Chip Economic Indicators, a research organization, found a mildly upbeat general outlook -- especially if the economic stimulus package being prepared by the incoming Obama administration and the new Congress cuts taxes, stimulates housing sales, lowers mortgage rates, and reverses job losses as the year moves on.
Randell Moore, the head of Blue Chip Indicators, which conducts monthly economic surveys, said "the consensus (is that) we are in the deepest part of the recession (right) now. But the stimulus package and lower gasoline prices are expected to … restore consumer confidence and personal spending -- and that will put us on the road back."
The Federal Reserve released its own forecast, based on discussions at its December board meeting: Expect negative growth through the late Spring, a slow recovery thereafter.
What about housing and real estate?
The latest pending home sales survey by the National Association of Realtors, covering the month of November, was down. But think back to the prevailing mindset back in October and November - some of the biggest jitters and panic on Wall Street in recent history, plus worries about the financial safety of the banking system.
Who would expect people to rush out and sign home purchase contracts with the entire economy in earthquake mode and consumer confidence plummeting?
Today, by contrast, the outlook is VERY different. We're on the verge of getting an economic shot in the arm from a giant stimulus package -- some of which will likely directly target home sales, possibly with tax credits.
Mortgage interest rates are at almost unprecedented lows -- five percent and even below if you've got a downpayment and decent credit. Applications for new mortgages to buy houses were up by more than 7 percent last week, according to the Mortgage Bankers Association's national survey -- up 2.3 percent for those seeking conventional loans and up an amazing 19.2 percent for buyers planning to use FHA financing.
As the saying goes: Follow the money. There's something important stirring out there. Home prices are at 2004 levels in many markets. Buyers who can qualify are seeing real, tangible opportunities….and that dynamic, along with help from the stimulus package, should begin turning around housing even before the economy as a whole.
--------------------------------------------------------------------------------
Copyright © 2009 Realty Times. All Rights Reserved.
.
Tuesday, January 6, 2009
POSITIVE THOUGHTS
Ken Harney has provided many good articles through the Realty Times. Here is his view on the 2009 Outlook.
----------------------------------------------
Real Estate Outlook: What's in Store for 2009?
January 6, 2009 by Kenneth R. Harney
What will the new year bring for housing and real estate? It's easy to look at all the negative economic news in the headlines and say - there's no sign that 2009 is going to be any better than 2008.
But here's a different perspective to consider from one of the country's veteran financial analysts -- Richard Bove of Ladenburg Thalmann, the investment banking company.
In a research report issued late in December, Bove said he sees a positive dynamic taking shape in the current cycle. The government has intervened aggressively in the markets to push interest rates down -- most notably in the home mortgage sector.
Though it takes awhile for low-cost money to begin having its effect, Bove said he expects “housing prices to stabilize and/or rise (in 2009) after a likely boom in mortgage refinancings as rates fall and loan applications increase.”
Add in the expected massive economic stimulus package being put together on Capitol Hill with the incoming Obama administration -- and there's a good chance we're going to see a gradual transformation of the downward cycle into a slow rebound over the coming several quarters.
Already there are positive signs of the turnaround Bove predicts:
Mortgage applications are off the charts, mainly for refis but also to buy houses at affordable prices.
Rates continue to hover at 50-year lows - five percent and even four and three quarters percent for 30-year mortgages, and still lower for 15 and 20 year mortgage terms.
Plus we're all paying a lot less at the gas pump, and sharply discounted prices for retail goods and autos.
And guess what? Americans are actually SAVING again, the national savings rate took a nearly three percent jump last month. That might sound small, but it's hugely important if it is the start of a trend.
There are also some signs that housing prices are stabilizing in some parts of the country. The latest monthly Federal Housing Finance Agency index found home prices UP by six-tenths of a percent in the Mountain states and UP by two tenths of a percent in New England.
You can ridicule small regional gains as statistically irrelevant, but here's Realty Times's economic proposal to you for the New Year: Keep your eyes open for the small positive signs that are accumulating out there … because all downcycles tail off and come to an end.
We think the smartest players in real estate -- consumers and the industry - will make the most of the positives -- low-cost money, low prices, stabilizing local markets -- and thrive in the new year.
--------------------------------------------------------------------------------
Copyright © 2009 Realty Times. All Rights Reserved.
We hope that 2009 will indeed be the turnaround - a little optimism helps!
.
----------------------------------------------
Real Estate Outlook: What's in Store for 2009?
January 6, 2009 by Kenneth R. Harney
What will the new year bring for housing and real estate? It's easy to look at all the negative economic news in the headlines and say - there's no sign that 2009 is going to be any better than 2008.
But here's a different perspective to consider from one of the country's veteran financial analysts -- Richard Bove of Ladenburg Thalmann, the investment banking company.
In a research report issued late in December, Bove said he sees a positive dynamic taking shape in the current cycle. The government has intervened aggressively in the markets to push interest rates down -- most notably in the home mortgage sector.
Though it takes awhile for low-cost money to begin having its effect, Bove said he expects “housing prices to stabilize and/or rise (in 2009) after a likely boom in mortgage refinancings as rates fall and loan applications increase.”
Add in the expected massive economic stimulus package being put together on Capitol Hill with the incoming Obama administration -- and there's a good chance we're going to see a gradual transformation of the downward cycle into a slow rebound over the coming several quarters.
Already there are positive signs of the turnaround Bove predicts:
Mortgage applications are off the charts, mainly for refis but also to buy houses at affordable prices.
Rates continue to hover at 50-year lows - five percent and even four and three quarters percent for 30-year mortgages, and still lower for 15 and 20 year mortgage terms.
Plus we're all paying a lot less at the gas pump, and sharply discounted prices for retail goods and autos.
And guess what? Americans are actually SAVING again, the national savings rate took a nearly three percent jump last month. That might sound small, but it's hugely important if it is the start of a trend.
There are also some signs that housing prices are stabilizing in some parts of the country. The latest monthly Federal Housing Finance Agency index found home prices UP by six-tenths of a percent in the Mountain states and UP by two tenths of a percent in New England.
You can ridicule small regional gains as statistically irrelevant, but here's Realty Times's economic proposal to you for the New Year: Keep your eyes open for the small positive signs that are accumulating out there … because all downcycles tail off and come to an end.
We think the smartest players in real estate -- consumers and the industry - will make the most of the positives -- low-cost money, low prices, stabilizing local markets -- and thrive in the new year.
--------------------------------------------------------------------------------
Copyright © 2009 Realty Times. All Rights Reserved.
We hope that 2009 will indeed be the turnaround - a little optimism helps!
.
Thursday, October 30, 2008
States Step Up Foreclosure Relief
From Realty Times of October 30, 2008
States Step Up Foreclosure Relief by Broderick Perkins
"Defaulting on the Dream: States Respond to America's Foreclosure Crisis" is a must read for home owners struggling with their mortgage.
Produced by the Pew Charitable Trusts as the first detailed dissertation to chronicle the impact of the foreclosure crisis at the state level, the report is chock full of "where-to-go-for-help" advice.
"The stakes are incredibly high. Home ownership is the primary vehicle through which American families build financial security. It also is an essential building block of state and local economies," according to Pew managing directors Susan Urahn and Shelley Hearne.
Their timing is impeccable. One in 33 current U.S. homeowners may be headed toward foreclosure in the coming years because of subprime loans, and in some states the crisis is more acute. In Arizona, one in every 18 homeowners could lose their home. In Nevada, the ratio is one in 11, according to the report.
The report charts some assertive, even experimental state efforts to mitigate financial harm to homeowners, lenders, local communities and state budgets.
To help borrowers avoid foreclosure and keep their homes, 20 states (including California, Colorado, New York and Nevada) have launched formal foreclosure intervention or prevention initiatives.
Sixteen states (along with those above, including, Indiana, Maryland, Massachusetts, Michigan, New Jersey, Ohio and Pennsylvania) have enacted both high-cost lending and foreclosure intervention laws.
Thirteen states (among them Arizona, Illinois, Indiana, Iowa and Minnesota) have created counseling hotlines to help the foreclosure-at-risk, and several states are encouraging (too often reluctant) lenders to work with borrowers to find alternatives to foreclosure.
Nine states (including Delaware, Maryland, Michigan and Ohio) have established loan funds that can be used to refinance borrowers who have loans they cannot afford or to provide short-term loans to help borrowers overcome financial difficulties.
To protect vulnerable borrowers from unscrupulous real estate investors, nine states have created laws regulating firms that claim to "rescue" borrowers from default. Since the downturn, rescue operations have preyed upon vulnerable home owners.
And in an effort to prevent problematic loans from being made in the first place, 31 states (among them, Arkansas, Georgia, Kentucky, Oklahoma, Texas and Utah ) have implemented laws that address predatory lending.
The report also explains the foreclosure process and lists home owners options when they default (become more than 30 days late on a payment) on their mortgage.
Bring the account current by paying the past due balance on their loan, including late charges and other fees assessed by the lender.
Renegotiate the terms of their loan with the lender.
Pay off their loan by refinancing the loan with another lender.
Sell the property to pay off the current loan, if the home is worth more than the mortgage. Or if the property is not worth the mortgage balance, engage a "short sale" where the lender forgives a portion of the debt provided a seller is available to buy the home.
Voluntarily convey the property back to the lender through a deed–in-lieu of foreclosure.
The report also lists a host of relief efforts, some on the state level, some not, some well known, some not so well known, including:
Homeownership Preservation Foundation creates partnerships to help families overcome obstacles that could cause foreclosure.
National Consumer Law Center uses consumer law to promote marketplace justice for vulnerable home owners and families.
Pennsylvania's Homeowners' Emergency Mortgage Assistance Program (HEMAP) is a loan fund that provides eligible state residents with foreclosure assistance.
Minnesota's Foreclosure Prevention Assistance Program provides eligible state home owners with counseling and financial assistance.
Ohio's Opportunity Loan Refinance Program helps borrowers refinance high-cost loans with a 30-year fixed-rate and a 20-year, fixed rate second.
Check with your state housing, consumer, social or community agencies to determine what home owner and mortgage programs and assistance is available to help see you through hard times.
--------------------------------------------------------------------------------
Copyright © 2008 Realty Times. All Rights Reserved.
Visit Mr. Broderick's blog at
DEADLINENEWSROOM
To review the detailed article referenced by Mr. Broderick, visit:
Defaulting on the Dream
.
States Step Up Foreclosure Relief by Broderick Perkins
"Defaulting on the Dream: States Respond to America's Foreclosure Crisis" is a must read for home owners struggling with their mortgage.
Produced by the Pew Charitable Trusts as the first detailed dissertation to chronicle the impact of the foreclosure crisis at the state level, the report is chock full of "where-to-go-for-help" advice.
"The stakes are incredibly high. Home ownership is the primary vehicle through which American families build financial security. It also is an essential building block of state and local economies," according to Pew managing directors Susan Urahn and Shelley Hearne.
Their timing is impeccable. One in 33 current U.S. homeowners may be headed toward foreclosure in the coming years because of subprime loans, and in some states the crisis is more acute. In Arizona, one in every 18 homeowners could lose their home. In Nevada, the ratio is one in 11, according to the report.
The report charts some assertive, even experimental state efforts to mitigate financial harm to homeowners, lenders, local communities and state budgets.
To help borrowers avoid foreclosure and keep their homes, 20 states (including California, Colorado, New York and Nevada) have launched formal foreclosure intervention or prevention initiatives.
Sixteen states (along with those above, including, Indiana, Maryland, Massachusetts, Michigan, New Jersey, Ohio and Pennsylvania) have enacted both high-cost lending and foreclosure intervention laws.
Thirteen states (among them Arizona, Illinois, Indiana, Iowa and Minnesota) have created counseling hotlines to help the foreclosure-at-risk, and several states are encouraging (too often reluctant) lenders to work with borrowers to find alternatives to foreclosure.
Nine states (including Delaware, Maryland, Michigan and Ohio) have established loan funds that can be used to refinance borrowers who have loans they cannot afford or to provide short-term loans to help borrowers overcome financial difficulties.
To protect vulnerable borrowers from unscrupulous real estate investors, nine states have created laws regulating firms that claim to "rescue" borrowers from default. Since the downturn, rescue operations have preyed upon vulnerable home owners.
And in an effort to prevent problematic loans from being made in the first place, 31 states (among them, Arkansas, Georgia, Kentucky, Oklahoma, Texas and Utah ) have implemented laws that address predatory lending.
The report also explains the foreclosure process and lists home owners options when they default (become more than 30 days late on a payment) on their mortgage.
Bring the account current by paying the past due balance on their loan, including late charges and other fees assessed by the lender.
Renegotiate the terms of their loan with the lender.
Pay off their loan by refinancing the loan with another lender.
Sell the property to pay off the current loan, if the home is worth more than the mortgage. Or if the property is not worth the mortgage balance, engage a "short sale" where the lender forgives a portion of the debt provided a seller is available to buy the home.
Voluntarily convey the property back to the lender through a deed–in-lieu of foreclosure.
The report also lists a host of relief efforts, some on the state level, some not, some well known, some not so well known, including:
Homeownership Preservation Foundation creates partnerships to help families overcome obstacles that could cause foreclosure.
National Consumer Law Center uses consumer law to promote marketplace justice for vulnerable home owners and families.
Pennsylvania's Homeowners' Emergency Mortgage Assistance Program (HEMAP) is a loan fund that provides eligible state residents with foreclosure assistance.
Minnesota's Foreclosure Prevention Assistance Program provides eligible state home owners with counseling and financial assistance.
Ohio's Opportunity Loan Refinance Program helps borrowers refinance high-cost loans with a 30-year fixed-rate and a 20-year, fixed rate second.
Check with your state housing, consumer, social or community agencies to determine what home owner and mortgage programs and assistance is available to help see you through hard times.
--------------------------------------------------------------------------------
Copyright © 2008 Realty Times. All Rights Reserved.
Visit Mr. Broderick's blog at
To review the detailed article referenced by Mr. Broderick, visit:
.
Thursday, October 16, 2008
Smaller Homeowner Bailout Already In Place
--------------------------------------------------------------------------------
From Realty Times of October 16, 2008
Smaller Homeowner Bailout Already In Place, by an old freind, Broderick Perkins
Don't wait for home owner bailout provisions to trickle down from the $700 billion "Emergency Economic Stabilization Act of 2008," (H.R. 1424) recently rushed through Congress.
When it comes to help from new federal legislation for distressed home owners, the $300 billion "Housing and Economic Recovery Act of 2008" (H.R. 3221), signed earlier this year, can provide more immediate relief.
The $300 billion recovery act has both a mandated mortgage modifying provision and a voluntary "Hope For Homeowners" (H4H) refinance program, for home owners who qualify.
President Bush signed the larger $700 billion stabilization act on Oct. 3, 2008, but it is, in-part, "stay tuned" legislation. Exactly how it will be implemented to help home owners -- or the economy at large, for that matter -- isn't fully clear.
In part, the stabilization act calls for federal agencies holding mortgage and mortgage securities to identify loans that can be modified and work toward modifications. The stabilization act also allows the U.S. Secretary of the Treasury to use loan guarantees and credit enhancements to help home owners avoid foreclosures. And the stabilization deal calls for shoring up the H4H program. How any of those provisions will be implemented, however, is still under consideration.
Loan modifications
On the other hand, the older recovery act, signed in July came with one provision ready to go. It mandated that mortgage servicers modify loans for certain home owners to help them avoid foreclosure as long as three requirements are met:
A default on the mortgage either has already happened or is "reasonably foreseeable."
The home owner lives in the property as his or her primary residence.
The lender is likely to recover more through the loan modification or workout than by forcing the home owner into foreclosure.
It's up to the home owner to prove, in writing, his or her case to the lender. That could mean some back and forth negotiating, even legal wrangling. To that end, an accredited mortgage, banker and broker certifier, CMPS Institute, offers a sample letter containing more assistance, and tips to help home owners negotiate a loan modification.
The institute further advises:
1. Your hardship letter should demonstrate job loss, a serious health condition, an ensuing balloon payment, a coming adjustable rate reset or some other financial calamity that will preclude you from making your mortgage payments as scheduled.
2. Send the letter along with documented evidence -- your financial statements, employment records, tax returns and bank statements and other evidence that demonstrates how you can afford a modified loan under your present financial circumstances. Also send the lender a current appraisal of your home or otherwise document the current value of your home.
3. Deal directly with a representative of the lender's "loss mitigation" or workout department-- not a broker, loan originator or other mortgage staffer.
FHA refinancing
Newly effective Oct. 1, 2008 a second provision of the recovery act allows troubled mortgage holders to avoid foreclosure by refinancing into smaller, more affordable, Federal Housing Administration (FHA)-backed mortgages, provided Uncle Sam gets a piece of the equity-growth action and provided the lender voluntarily agrees to the deal, which includes writing down or reducing loan balances.
U.S. Department of Housing and Urban Affairs' (HUD) "Hope For Homeowners"fact sheets spell out the details.
The refinanced, 30-year, fixed rated FHA mortgages in the H4H program are for home owner-occupants having difficulty making their payments.
The existing mortgage must have been originated on or before January 1, 2008, and the owner must have made at least six payments.
Banks can volunteer to write down an existing mortgage to 90 percent of the new appraised value of the home. To get the deal to fly, any holders of existing mortgage liens must release the liens and waive all prepayment penalties and late payment fees. The existing first mortgage holder has to accept the H4H loan as full settlement of all outstanding indebtedness.
As of March 2008, the home owner's total monthly mortgage payments due must be more than 31 percent of the household's gross monthly income.
The loan amount on the new H4H mortgage cannot exceed $550,440. The amount can include a financed 3 percent "Upfront Mortgage Insurance Premium" and other loan costs. The home owner must also pay a 1.5 percent annual mortgage insurance premium.
The home owner cannot take out a second mortgage for the first five years of the new loan, except under certain emergency conditions.
The borrower must agree to share equity with the FHA, both the equity created at the beginning of the new mortgage and future appreciation in the value of the home. If the home is sold or refinanced, the homeowner will share the equity with FHA on a sliding scale ranging from a 100 percent FHA share after the first year to a minimum of 50 percent after five years. The FHA will share a portion of its equity earnings, when available, with past lien holders until any available appreciation is exhausted. Any left over appreciation goes to the FHA on the sliding scale.
More help for home owners: "Foreclosure Prevention Efforts Grow.
Copyright © 2008 Realty Times. All Rights Reserved.
Broderick has done a great job sorting through the Govt lawyer language to explain an important program available NOW. Visit his website at
DEADLINENEWSROOM
.
From Realty Times of October 16, 2008
Smaller Homeowner Bailout Already In Place, by an old freind, Broderick Perkins
Don't wait for home owner bailout provisions to trickle down from the $700 billion "Emergency Economic Stabilization Act of 2008," (H.R. 1424) recently rushed through Congress.
When it comes to help from new federal legislation for distressed home owners, the $300 billion "Housing and Economic Recovery Act of 2008" (H.R. 3221), signed earlier this year, can provide more immediate relief.
The $300 billion recovery act has both a mandated mortgage modifying provision and a voluntary "Hope For Homeowners" (H4H) refinance program, for home owners who qualify.
President Bush signed the larger $700 billion stabilization act on Oct. 3, 2008, but it is, in-part, "stay tuned" legislation. Exactly how it will be implemented to help home owners -- or the economy at large, for that matter -- isn't fully clear.
In part, the stabilization act calls for federal agencies holding mortgage and mortgage securities to identify loans that can be modified and work toward modifications. The stabilization act also allows the U.S. Secretary of the Treasury to use loan guarantees and credit enhancements to help home owners avoid foreclosures. And the stabilization deal calls for shoring up the H4H program. How any of those provisions will be implemented, however, is still under consideration.
Loan modifications
On the other hand, the older recovery act, signed in July came with one provision ready to go. It mandated that mortgage servicers modify loans for certain home owners to help them avoid foreclosure as long as three requirements are met:
A default on the mortgage either has already happened or is "reasonably foreseeable."
The home owner lives in the property as his or her primary residence.
The lender is likely to recover more through the loan modification or workout than by forcing the home owner into foreclosure.
It's up to the home owner to prove, in writing, his or her case to the lender. That could mean some back and forth negotiating, even legal wrangling. To that end, an accredited mortgage, banker and broker certifier, CMPS Institute, offers a sample letter containing more assistance, and tips to help home owners negotiate a loan modification.
The institute further advises:
1. Your hardship letter should demonstrate job loss, a serious health condition, an ensuing balloon payment, a coming adjustable rate reset or some other financial calamity that will preclude you from making your mortgage payments as scheduled.
2. Send the letter along with documented evidence -- your financial statements, employment records, tax returns and bank statements and other evidence that demonstrates how you can afford a modified loan under your present financial circumstances. Also send the lender a current appraisal of your home or otherwise document the current value of your home.
3. Deal directly with a representative of the lender's "loss mitigation" or workout department-- not a broker, loan originator or other mortgage staffer.
FHA refinancing
Newly effective Oct. 1, 2008 a second provision of the recovery act allows troubled mortgage holders to avoid foreclosure by refinancing into smaller, more affordable, Federal Housing Administration (FHA)-backed mortgages, provided Uncle Sam gets a piece of the equity-growth action and provided the lender voluntarily agrees to the deal, which includes writing down or reducing loan balances.
U.S. Department of Housing and Urban Affairs' (HUD) "Hope For Homeowners"fact sheets spell out the details.
The refinanced, 30-year, fixed rated FHA mortgages in the H4H program are for home owner-occupants having difficulty making their payments.
The existing mortgage must have been originated on or before January 1, 2008, and the owner must have made at least six payments.
Banks can volunteer to write down an existing mortgage to 90 percent of the new appraised value of the home. To get the deal to fly, any holders of existing mortgage liens must release the liens and waive all prepayment penalties and late payment fees. The existing first mortgage holder has to accept the H4H loan as full settlement of all outstanding indebtedness.
As of March 2008, the home owner's total monthly mortgage payments due must be more than 31 percent of the household's gross monthly income.
The loan amount on the new H4H mortgage cannot exceed $550,440. The amount can include a financed 3 percent "Upfront Mortgage Insurance Premium" and other loan costs. The home owner must also pay a 1.5 percent annual mortgage insurance premium.
The home owner cannot take out a second mortgage for the first five years of the new loan, except under certain emergency conditions.
The borrower must agree to share equity with the FHA, both the equity created at the beginning of the new mortgage and future appreciation in the value of the home. If the home is sold or refinanced, the homeowner will share the equity with FHA on a sliding scale ranging from a 100 percent FHA share after the first year to a minimum of 50 percent after five years. The FHA will share a portion of its equity earnings, when available, with past lien holders until any available appreciation is exhausted. Any left over appreciation goes to the FHA on the sliding scale.
More help for home owners: "Foreclosure Prevention Efforts Grow.
Copyright © 2008 Realty Times. All Rights Reserved.
Broderick has done a great job sorting through the Govt lawyer language to explain an important program available NOW. Visit his website at
.
Monday, October 13, 2008
Troubled Asset Relief Program
From Realty Times -
Washington Report: Paulson and Neel Kaskari by Kenneth R. Harney .. 10-13-08
Most people call it the $700 billion bailout, but in Washington it goes by the unglamorous name: TARP.
That stands for Troubled Asset Relief Program, and it's the centerpiece of the federal government's effort to take bad mortgages and other toxic financial products off the books of banks.
The idea is that by buying those assets at a fair market price, the banks will have the capital and confidence to begin making loans again to small businesses, home builders and individual consumers - thereby helping to ease the current credit freeze.
TARP is barely a week into official operation, but there are important developments underway that anyone interested in real estate ought to know about.
Treasury Secretary Paulson picked a 35-year-old whiz kid from his former Wall Street firm, Goldman Sachs, to run the entire program. His name is Neel Kaskari and he's an aeronautical engineer by training who used to work on satellite designs for NASA.
High on Paulson's and Kaskari's priority list will be to quickly start buying up defaulted "acquisition, development and construction" (ADC) loans made by local and regional banks to home builders. That's potentially huge for real estate because it could eventually set the stage for a slow revival of new home building.
Another target: Defaulted equity lines of credit and second mortgages made to home buyers during the boom years. You probably remember the wildly popular "piggyback" plans that allowed people to purchase homes with no downpayment.
Many of those second liens are gushing red ink in bank portfolios right now. By getting them off the books, the program should eventually allow local and regional banks to begin offering credit lines and seconds to homeowners who need them and qualify for them.
Though TARP will also be buying up billions of dollars of complex mortgage securities from giant banks -- and that's extremely important -- its help to small and medium-sized lending institutions on ADC loans and home equity lines may well have more immediate, tangible impacts on local real estate markets around the country.
Still another key priority: Reworking the repayment terms of tens of thousands of "underwater" and delinquent mortgages to allow home owners to remain in their houses and avoid foreclosure.
That, in turn, should gradually begin to have positive impacts on local real estate market conditions.
But don't expect miracles overnight. This is going to take months and years to fully work its way through the system.
In the meantime, Realty Times will keep a close eye on TARP -- and keep you posted on important developments.
--------------------------------------------------------------------------------
Copyright © 2008 Realty Times. All Rights Reserved.
.
Washington Report: Paulson and Neel Kaskari by Kenneth R. Harney .. 10-13-08
Most people call it the $700 billion bailout, but in Washington it goes by the unglamorous name: TARP.
That stands for Troubled Asset Relief Program, and it's the centerpiece of the federal government's effort to take bad mortgages and other toxic financial products off the books of banks.
The idea is that by buying those assets at a fair market price, the banks will have the capital and confidence to begin making loans again to small businesses, home builders and individual consumers - thereby helping to ease the current credit freeze.
TARP is barely a week into official operation, but there are important developments underway that anyone interested in real estate ought to know about.
Treasury Secretary Paulson picked a 35-year-old whiz kid from his former Wall Street firm, Goldman Sachs, to run the entire program. His name is Neel Kaskari and he's an aeronautical engineer by training who used to work on satellite designs for NASA.
High on Paulson's and Kaskari's priority list will be to quickly start buying up defaulted "acquisition, development and construction" (ADC) loans made by local and regional banks to home builders. That's potentially huge for real estate because it could eventually set the stage for a slow revival of new home building.
Another target: Defaulted equity lines of credit and second mortgages made to home buyers during the boom years. You probably remember the wildly popular "piggyback" plans that allowed people to purchase homes with no downpayment.
Many of those second liens are gushing red ink in bank portfolios right now. By getting them off the books, the program should eventually allow local and regional banks to begin offering credit lines and seconds to homeowners who need them and qualify for them.
Though TARP will also be buying up billions of dollars of complex mortgage securities from giant banks -- and that's extremely important -- its help to small and medium-sized lending institutions on ADC loans and home equity lines may well have more immediate, tangible impacts on local real estate markets around the country.
Still another key priority: Reworking the repayment terms of tens of thousands of "underwater" and delinquent mortgages to allow home owners to remain in their houses and avoid foreclosure.
That, in turn, should gradually begin to have positive impacts on local real estate market conditions.
But don't expect miracles overnight. This is going to take months and years to fully work its way through the system.
In the meantime, Realty Times will keep a close eye on TARP -- and keep you posted on important developments.
--------------------------------------------------------------------------------
Copyright © 2008 Realty Times. All Rights Reserved.
.
Friday, October 10, 2008
Market Conditions
Market Conditions by Realty Times Staff October 10, 2008
The latest report from the National Association of Realtors indicates that pending home sales surged in August -- jumping 7.4 percent. This level is even higher than the August 2007 stats.
Lawrence Yun, NAR chief economist, said home buyers were responding to improved affordability. "What we're seeing is the momentum of people taking advantage of low home prices, with pending home sales up strongly in California, Nevada, Arizona, Florida, Rhode Island and the Washington, D.C., region," he said. "It's unclear how much contract activity may be impacted by the credit disruptions on Wall Street, but we're hopeful most of the increase will translate into closed existing-home sales."
Regionally, the West saw the biggest jump for the month of August -- surging 18.4 percent.
The only region that was still below August 2007 levels is the South.
Expert predict that home prices will finally begin to rise again -- by about 2 to 3 percent next year. This comes with prediction about 30 year fixed rate mortgages staying in the 6 percent range throughout 2009.
Copyright © 2008 Realty Times. All Rights Reserved.
==============
I would add that data on my website shows that September was strong as well.
.
The latest report from the National Association of Realtors indicates that pending home sales surged in August -- jumping 7.4 percent. This level is even higher than the August 2007 stats.
Lawrence Yun, NAR chief economist, said home buyers were responding to improved affordability. "What we're seeing is the momentum of people taking advantage of low home prices, with pending home sales up strongly in California, Nevada, Arizona, Florida, Rhode Island and the Washington, D.C., region," he said. "It's unclear how much contract activity may be impacted by the credit disruptions on Wall Street, but we're hopeful most of the increase will translate into closed existing-home sales."
Regionally, the West saw the biggest jump for the month of August -- surging 18.4 percent.
The only region that was still below August 2007 levels is the South.
Expert predict that home prices will finally begin to rise again -- by about 2 to 3 percent next year. This comes with prediction about 30 year fixed rate mortgages staying in the 6 percent range throughout 2009.
Copyright © 2008 Realty Times. All Rights Reserved.
==============
I would add that data on my website shows that September was strong as well.
.
Tuesday, October 7, 2008
Market Conditions & Total Mortgages in U.S.
Market Conditions by Realty Times Staff October 7, 2008
It appears that with the recent final woes in the nation and on Wall Street, the Dow fell below 10,000 for the first time since 2004 in the first hour on Monday, many consumers are holding back on their spending.
Even before the latest ailing markets, reports indicated that August had been the weakest for consumer spending in six months. The Commerce Department reported that consumer spending was unchanged in August -- not a positive sign in an economy that needs jumpstarted.
The New York times reports that cutbacks seem to be across the board, from the automobile industry to fashion to restaurants. "Less than a month ago, Nigel Gault, chief domestic economist at Global Insight, a forecasting service, predicted that domestic economic output would rise 1.2 percent in the third quarter." This number is currently closer to zero percent.
Copyright © 2008 Realty Times. All Rights Reserved.
Some numbers heard on the radio. 95% of all mortgages are current and being paid every month. There are $14 Trillion total mortgages in the U.S. Thus 5% or $700 Billion are of concern. Interesting number, $700 Billion. Hmmmmm.
.
It appears that with the recent final woes in the nation and on Wall Street, the Dow fell below 10,000 for the first time since 2004 in the first hour on Monday, many consumers are holding back on their spending.
Even before the latest ailing markets, reports indicated that August had been the weakest for consumer spending in six months. The Commerce Department reported that consumer spending was unchanged in August -- not a positive sign in an economy that needs jumpstarted.
The New York times reports that cutbacks seem to be across the board, from the automobile industry to fashion to restaurants. "Less than a month ago, Nigel Gault, chief domestic economist at Global Insight, a forecasting service, predicted that domestic economic output would rise 1.2 percent in the third quarter." This number is currently closer to zero percent.
Copyright © 2008 Realty Times. All Rights Reserved.
Some numbers heard on the radio. 95% of all mortgages are current and being paid every month. There are $14 Trillion total mortgages in the U.S. Thus 5% or $700 Billion are of concern. Interesting number, $700 Billion. Hmmmmm.
.
Monday, September 29, 2008
THE BAILOUT - SURPRISE, SURPRISE!!
The bailout bill has failed in the U.S. House !!!!
What next, nobody knows at this stage. Probably Thursday before they can restart negotiations.
What next, nobody knows at this stage. Probably Thursday before they can restart negotiations.
Brief Overview of Bailout Plan
From Realty Times on September 29, 2008
Washington Report: Overview of Bailout Plan by Kenneth R. Harney
There's no question what's been dominating debate in Washington -- the Treasury's and Congress's plans to buy hundreds of billions of dollars of distressed mortgages from lenders and investors.
The fine print rules and regulations for the bailout plan won't be known for weeks, but here's a quick overview from a real estate perspective on how it's supposed to work:
At its core, the plan is all about taking home loans off lenders' and investors' books that are currently illiquid -- they can't be sold, or are extremely difficult to sell -- because no one is sure what they're really worth.
Consider this hypothetical example: Say you own a mortgage-backed bond that has 100 subprime home mortgages in it. At the moment, 24 of those loans are delinquent; but 76 are paying on time. That proportion is pretty close to reality, according to the latest delinquency numbers from the Mortgage Bankers Association.
Now, because there are serious defaults in the pool, there's a stigma attached to your subprime bond. The best offer you've heard is maybe 20 cents on the dollar - which is ridiculous because over three quarters of your loans are paying on time, and the monthly cash flows should be worth a lot more.
You need an organization or program to intervene, buy your mortgage pool for a fairer price. That, in turn, will allow you to take in some cash and make some new mortgages.
The buyer of your loans can now work to see whether the interest rates, monthly payments, and other features of the 24 “bad” mortgages can be modified to be more affordable for the home owners involved.
Let's say that over a period of three years, those modifications end up saving 15 of the 24 delinquent mortgages from going into foreclosure. The new owner of the pool now has 90 loans paying on time, making it a lot more valuable than it paid.
Although the example is simplified, it's pretty much what the bailout plan is all about: Taking undervalued assets, holding them for awhile and turning them into better assets -- lemons into lemonade -- and reselling them, maybe even at a profit.
It's not clear at the moment how successful this will be long-term. But by buying up incorrectly valued mortgages at a “fair” price, the government has a chance to pump new money into the market -- money for new home mortgages -- and even lower interest rates in the process.
Exactly how to do that -- with what rules and guidelines -- has been what all the noise in Washington has been about.
--------------------------------------------------------------------------------
Copyright © 2008 Realty Times. All Rights Reserved.
Washington Report: Overview of Bailout Plan by Kenneth R. Harney
There's no question what's been dominating debate in Washington -- the Treasury's and Congress's plans to buy hundreds of billions of dollars of distressed mortgages from lenders and investors.
The fine print rules and regulations for the bailout plan won't be known for weeks, but here's a quick overview from a real estate perspective on how it's supposed to work:
At its core, the plan is all about taking home loans off lenders' and investors' books that are currently illiquid -- they can't be sold, or are extremely difficult to sell -- because no one is sure what they're really worth.
Consider this hypothetical example: Say you own a mortgage-backed bond that has 100 subprime home mortgages in it. At the moment, 24 of those loans are delinquent; but 76 are paying on time. That proportion is pretty close to reality, according to the latest delinquency numbers from the Mortgage Bankers Association.
Now, because there are serious defaults in the pool, there's a stigma attached to your subprime bond. The best offer you've heard is maybe 20 cents on the dollar - which is ridiculous because over three quarters of your loans are paying on time, and the monthly cash flows should be worth a lot more.
You need an organization or program to intervene, buy your mortgage pool for a fairer price. That, in turn, will allow you to take in some cash and make some new mortgages.
The buyer of your loans can now work to see whether the interest rates, monthly payments, and other features of the 24 “bad” mortgages can be modified to be more affordable for the home owners involved.
Let's say that over a period of three years, those modifications end up saving 15 of the 24 delinquent mortgages from going into foreclosure. The new owner of the pool now has 90 loans paying on time, making it a lot more valuable than it paid.
Although the example is simplified, it's pretty much what the bailout plan is all about: Taking undervalued assets, holding them for awhile and turning them into better assets -- lemons into lemonade -- and reselling them, maybe even at a profit.
It's not clear at the moment how successful this will be long-term. But by buying up incorrectly valued mortgages at a “fair” price, the government has a chance to pump new money into the market -- money for new home mortgages -- and even lower interest rates in the process.
Exactly how to do that -- with what rules and guidelines -- has been what all the noise in Washington has been about.
--------------------------------------------------------------------------------
Copyright © 2008 Realty Times. All Rights Reserved.
Friday, September 19, 2008
AN INTERESTING PIECE OF DATA
The following is an article in the Realty Times of 9-19-08 entitled "Investor Report: Small-scale Investors Beware by Kenneth R. Harney"
Small-scale rental home investors need to be aware of a new campaign by the nation's largest apartment owners that could have the effect of scaring away potential tenants.
The National Multi Housing Council is mounting the campaign to warn consumers about what it considers the imminent dangers of renting with landlords who don't own many properties and don't offer "professional management."
According to the council, "nearly 40 percent of today's foreclosures involve a single family house, condominium or other housing rented out" by private, small-scale owners, including investors.
"People who choose to rent these properties put themselves at risk for losing their lease, losing their security deposits, and having to move on short notice" if the owner cannot pay the mortgage and taxes and the unit goes to foreclosure, said the council in announcing its nationwide "rent from the pros" publicity campaign.
Douglas Bibby, president of the council, said the problem is serious, but heads-up tenants can get "peace of mind in a volatile housing market" by "renting at a professionally managed property," such as a large apartment complex.
The council, whose members own and manage hundreds of thousands of apartment units across the country, is the principal lobby group for the industry on Capitol Hill.
In a brochure prepared for the "rent from a pro" campaign, the group warns that "even renters aren't necessarily safe" from the foreclosure epidemic. "(I)f you choose to rent from a private individual, the risk of losing your rental home is very real," it says.
Asked by Realty Times for documentation of the "nearly 40 percent" figure used centrally in the campaign, a spokesman for the council said it came from a report "based on data from Realty Trac" that was cited on the CBS Evening News last March.
But the actual 38 percent foreclosure figure released by Realty Trac related to all non-owner occupied housing units, including second homes - many of which are never rented out or only rented seasonally.
Meanwhile, the largest private company in the U.S. involved in rental home investing, Dallas-based Home Vestors, whose 230 franchisees have bought over 36,000 houses in the past 12 years -- many of them rented out -- called the Multi Housing Council's campaign "a scare tactic" with no statistical basis.
John Hayes, president and CEO of Home Vestors, told RealtyTimes, "in our experience, we have not to my knowledge had a complaint or even heard of a franchisee ending up in foreclosure with a rental (home) property."
Copyright © 2008 Realty Times. All Rights Reserved.
-----------------------------------------------------------------
My own observations:
The key element of the article, which addresses the National Multi Housing Council's effort to drive renters back to Apartments, is the data which suggests "nearly 40 percent" of the National foreclosure problem is private investor rentals. That data, if true, certainly sheds a different light to our National problem of foreclosures.
Our local TV stations have highlighted cases of renters in single family homes being forced to move and losing deposits due to "investor foreclosures". But each has been a single report format - not suggesting a wide spread problem.
Back to the adage, liars figure, figures lie. Who to beleive?
.
Small-scale rental home investors need to be aware of a new campaign by the nation's largest apartment owners that could have the effect of scaring away potential tenants.
The National Multi Housing Council is mounting the campaign to warn consumers about what it considers the imminent dangers of renting with landlords who don't own many properties and don't offer "professional management."
According to the council, "nearly 40 percent of today's foreclosures involve a single family house, condominium or other housing rented out" by private, small-scale owners, including investors.
"People who choose to rent these properties put themselves at risk for losing their lease, losing their security deposits, and having to move on short notice" if the owner cannot pay the mortgage and taxes and the unit goes to foreclosure, said the council in announcing its nationwide "rent from the pros" publicity campaign.
Douglas Bibby, president of the council, said the problem is serious, but heads-up tenants can get "peace of mind in a volatile housing market" by "renting at a professionally managed property," such as a large apartment complex.
The council, whose members own and manage hundreds of thousands of apartment units across the country, is the principal lobby group for the industry on Capitol Hill.
In a brochure prepared for the "rent from a pro" campaign, the group warns that "even renters aren't necessarily safe" from the foreclosure epidemic. "(I)f you choose to rent from a private individual, the risk of losing your rental home is very real," it says.
Asked by Realty Times for documentation of the "nearly 40 percent" figure used centrally in the campaign, a spokesman for the council said it came from a report "based on data from Realty Trac" that was cited on the CBS Evening News last March.
But the actual 38 percent foreclosure figure released by Realty Trac related to all non-owner occupied housing units, including second homes - many of which are never rented out or only rented seasonally.
Meanwhile, the largest private company in the U.S. involved in rental home investing, Dallas-based Home Vestors, whose 230 franchisees have bought over 36,000 houses in the past 12 years -- many of them rented out -- called the Multi Housing Council's campaign "a scare tactic" with no statistical basis.
John Hayes, president and CEO of Home Vestors, told RealtyTimes, "in our experience, we have not to my knowledge had a complaint or even heard of a franchisee ending up in foreclosure with a rental (home) property."
Copyright © 2008 Realty Times. All Rights Reserved.
-----------------------------------------------------------------
My own observations:
The key element of the article, which addresses the National Multi Housing Council's effort to drive renters back to Apartments, is the data which suggests "nearly 40 percent" of the National foreclosure problem is private investor rentals. That data, if true, certainly sheds a different light to our National problem of foreclosures.
Our local TV stations have highlighted cases of renters in single family homes being forced to move and losing deposits due to "investor foreclosures". But each has been a single report format - not suggesting a wide spread problem.
Back to the adage, liars figure, figures lie. Who to beleive?
.
Saturday, September 13, 2008
THE STATE OF US FINANCES AND FORECLOSURES
The following statement recently appeared in a News Article:
"Lenders have repossessed a record 656,545 properties nationwide – or 8.6 of every 1,000 households in the US" - the data was attributed to ForeclosureS.com.
It concerns me that it is stated in terms of 1,000 households - in reality it is 0.86% of households, less than 1%, but sounds more ominous when they say it as they do. I do agree it is a very painful experience for those affected, and do not mean to minimize the impact to those folks, but let's at least keep it in a reasonable perspective.
In a similar fashion, August Foreclosures were a new record! However, have any of you heard that the percentage of foreclosures in August reflected a reduced rate of foreclosures over July? Stated differently, the rate of foreclosures dropped! Hmmm, don't guess you heard that.
How about the Bank Foreclosure Crisis. Some large banks have fallen, and no doubt others will follow. I can't prove the numbers I heard but this is what I heard. "The Feds are still looking at 117 banks that are potential Lehman Brothers or Bear Stearns". The speaker then went on to say that there are 8500 banks in the U.S.
Hmmmm, if that's accurate, then the 0.0138% largest of the 8500 banks may be in trouble.
What is the old expression, liars figure, figures lie? Well, it does sell papers. Maybe this makes me guilty of being a liar?
Again, not trying to minimize the concerns we face but let's at least try to offer the whole story after we sell the paper.
.
"Lenders have repossessed a record 656,545 properties nationwide – or 8.6 of every 1,000 households in the US" - the data was attributed to ForeclosureS.com.
It concerns me that it is stated in terms of 1,000 households - in reality it is 0.86% of households, less than 1%, but sounds more ominous when they say it as they do. I do agree it is a very painful experience for those affected, and do not mean to minimize the impact to those folks, but let's at least keep it in a reasonable perspective.
In a similar fashion, August Foreclosures were a new record! However, have any of you heard that the percentage of foreclosures in August reflected a reduced rate of foreclosures over July? Stated differently, the rate of foreclosures dropped! Hmmm, don't guess you heard that.
How about the Bank Foreclosure Crisis. Some large banks have fallen, and no doubt others will follow. I can't prove the numbers I heard but this is what I heard. "The Feds are still looking at 117 banks that are potential Lehman Brothers or Bear Stearns". The speaker then went on to say that there are 8500 banks in the U.S.
Hmmmm, if that's accurate, then the 0.0138% largest of the 8500 banks may be in trouble.
What is the old expression, liars figure, figures lie? Well, it does sell papers. Maybe this makes me guilty of being a liar?
Again, not trying to minimize the concerns we face but let's at least try to offer the whole story after we sell the paper.
.
Wednesday, September 10, 2008
MARKET CONDITIONS
From Realty Times:
Market Conditions
by Realty Times Staff
When the government decided to place Fannie Mae and Freddie Mac into its conservatorship, it opened up many different possible avenues the heal the ailing giants.
The New York Times reports that there haven't been any specific proposals made by lawmakers to date on what to do -- but in one option, some lawmaker "favors restoring the companies to health and then returning them to the way they were before they went into conservatorship, but with safeguards to prevent another crisis."
This seems a much milder approach than free-market theorists who favor a liquidation of the companies.
National Association of Realtors President, Richard Gaylord, issued the statement: "I commend Treasury Secretary Paulson and Federal Housing Finance Agency Director Lockhart for their bold actions to bring stability and continued liquidity to the nation’s mortgage market. Fannie Mae and Freddie Mac have always played a vital role in the U.S. economy by making fair and affordable mortgage loans available for home buyers and owners. Their critical mission must not be interrupted, and Sunday’s announcement goes a long way in making sure that does not happen."
Many experts hope that with this takeover will come restored confidence and more movement in the mortgage markets -- and maybe more affordable housing.
--------------------------------------------------------------------------------
Copyright © 2008 Realty Times. All Rights Reserved.
Market Conditions
by Realty Times Staff
When the government decided to place Fannie Mae and Freddie Mac into its conservatorship, it opened up many different possible avenues the heal the ailing giants.
The New York Times reports that there haven't been any specific proposals made by lawmakers to date on what to do -- but in one option, some lawmaker "favors restoring the companies to health and then returning them to the way they were before they went into conservatorship, but with safeguards to prevent another crisis."
This seems a much milder approach than free-market theorists who favor a liquidation of the companies.
National Association of Realtors President, Richard Gaylord, issued the statement: "I commend Treasury Secretary Paulson and Federal Housing Finance Agency Director Lockhart for their bold actions to bring stability and continued liquidity to the nation’s mortgage market. Fannie Mae and Freddie Mac have always played a vital role in the U.S. economy by making fair and affordable mortgage loans available for home buyers and owners. Their critical mission must not be interrupted, and Sunday’s announcement goes a long way in making sure that does not happen."
Many experts hope that with this takeover will come restored confidence and more movement in the mortgage markets -- and maybe more affordable housing.
--------------------------------------------------------------------------------
Copyright © 2008 Realty Times. All Rights Reserved.
Tuesday, September 9, 2008
Real Estate Outlook: Recession Fears Put to Rest
From the September 9, 2008 REALTY TIMES:
Real Estate Outlook: Recession Fears Put to Rest
by Kenneth R. Harney
The latest national economic growth numbers should finally put to rest fears of a recession that could choke the real estate recovery now getting underway.
Second quarter Gross Domestic Product (or GDP) came in at an upwardly-revised 3.3 percent -- far above the 1.9 percent the federal government had previously estimated.
Key reasons for the robust economic performance: Exports, which have been riding the weak dollar to record levels, and lower imports because the prices of foreign-made goods have been priced higher.
Why should anyone interested in real estate care about GDP? Well, number one, when the economic growth rate accelerates, consumer confidence in the economy rises. That, in turn, pulls potential buyers off the sidelines and opens the door to higher housing sales.
And sure enough, the consumer confidence numbers for August, released last week by the Conference Board, are up by 5 points.
We're already seeing some impressive jumps in home sales in places that haven't seen positive news in two to three years -- central Florida and even some of the hardest-hit parts of California. According to a new report from the real estate tracking firm, DataQuick, sales in southern California jumped 16.7 percent in July over June, and were 14 percent above the pace of July the year before.
Another encouraging sign: Last week's mortgage rates dropped to 6.39 percent for 30-year fixed rate loans, according to the Mortgage Bankers Association of America. Fifteen year rates are still just under 6 percent. Applications for loans to buy homes jumped by 6 percent for conventional loans and an impressive 19.9 percent for FHA mortgages.
The federal government's latest quarterly survey on home prices reveals that the best price appreciation performances are now coming from areas that barely got noticed during the hottest years of the housing boom -- markets like Charleston, West Virginia ( up 6 percent for the year), Greenville, South Carolina (up 5.8 percent), Tulsa, Oklahoma (up by nearly 5 percent) and Scranton, Pennsylvania, where values were up by 4.7 percent..
All these markets -- and there are dozens more spread through Texas, the Midwest and the South -- never experienced the wild days of double digit appreciation.
They offer affordable housing prices and moderate - but steady and slow - price growth. They're not flashy -- never have been, probably never will be -- but that's why they're still producing positive appreciation numbers, while the boom to bust markets are not.
--------------------------------------------------------------------------------
Copyright © 2008 Realty Times. All Rights Reserved.
There are some who feel that the numbers on which this article is based are not really correct - that the Feds are leaving out some things that would negatively effect the GDP. October may give us a better indicator and hopefully still support the premise that the Recession is no longer a concern.
Real Estate Outlook: Recession Fears Put to Rest
by Kenneth R. Harney
The latest national economic growth numbers should finally put to rest fears of a recession that could choke the real estate recovery now getting underway.
Second quarter Gross Domestic Product (or GDP) came in at an upwardly-revised 3.3 percent -- far above the 1.9 percent the federal government had previously estimated.
Key reasons for the robust economic performance: Exports, which have been riding the weak dollar to record levels, and lower imports because the prices of foreign-made goods have been priced higher.
Why should anyone interested in real estate care about GDP? Well, number one, when the economic growth rate accelerates, consumer confidence in the economy rises. That, in turn, pulls potential buyers off the sidelines and opens the door to higher housing sales.
And sure enough, the consumer confidence numbers for August, released last week by the Conference Board, are up by 5 points.
We're already seeing some impressive jumps in home sales in places that haven't seen positive news in two to three years -- central Florida and even some of the hardest-hit parts of California. According to a new report from the real estate tracking firm, DataQuick, sales in southern California jumped 16.7 percent in July over June, and were 14 percent above the pace of July the year before.
Another encouraging sign: Last week's mortgage rates dropped to 6.39 percent for 30-year fixed rate loans, according to the Mortgage Bankers Association of America. Fifteen year rates are still just under 6 percent. Applications for loans to buy homes jumped by 6 percent for conventional loans and an impressive 19.9 percent for FHA mortgages.
The federal government's latest quarterly survey on home prices reveals that the best price appreciation performances are now coming from areas that barely got noticed during the hottest years of the housing boom -- markets like Charleston, West Virginia ( up 6 percent for the year), Greenville, South Carolina (up 5.8 percent), Tulsa, Oklahoma (up by nearly 5 percent) and Scranton, Pennsylvania, where values were up by 4.7 percent..
All these markets -- and there are dozens more spread through Texas, the Midwest and the South -- never experienced the wild days of double digit appreciation.
They offer affordable housing prices and moderate - but steady and slow - price growth. They're not flashy -- never have been, probably never will be -- but that's why they're still producing positive appreciation numbers, while the boom to bust markets are not.
--------------------------------------------------------------------------------
Copyright © 2008 Realty Times. All Rights Reserved.
There are some who feel that the numbers on which this article is based are not really correct - that the Feds are leaving out some things that would negatively effect the GDP. October may give us a better indicator and hopefully still support the premise that the Recession is no longer a concern.
Thursday, August 7, 2008
Prices Up In Certain Markets
August 7, 2008
--------------------------------------------------------------------------------
Real Estate Outlook: Prices Up In Certain Markets
by Kenneth R. Harney
When you're in a long, slow recovery period in real estate, even the slightest hint of good news can be significant.
We saw that last week, when the controversial Standard & Poor's Case-Shiller home price index came out.
You may have seen the headlines or watched the gloomy news reports on TV: Prices were down again -- this time by nearly 16 percent year to year -- in 20 of the largest U.S. markets.
Now even if you accept the validity of that index as a measure of what's really going on in prices nationwide -- and we have always had serious doubts about it -- when you scratch below the surface of the latest monthly report, you find some surprisingly positive developments that got little or no media attention.
Number one: Prices in seven of Case-Shiller's top markets actually were UP for the month. They include Denver, Atlanta, Boston, Minneapolis, Charlotte, Portland and Dallas.
Number two: The month to month change for the entire index was a minus nine tenths of one percent. We all know the index is disproportionately weighted toward the most volatile, high-cost markets of the boom years, so when the monthly change is less than one percent, it begins to look like the curve is finally flattening out.
That's definitely positive news, especially coming from the most bearish source in the real estate marketplace.
In other economic developments affecting housing this week, recession fears were put off for still another quarter, as the U.S. economy continued to expand and defy the doomsayers. The Gross Domestic Product (or GDP) rose at a 1.9 percent rate in the second quarter, up from nine tenths of one percent in the first quarter.
Mortgage rates dropped to 6.46 percent for 30 year fixed rate loans, according to the Mortgage Bankers Association of America. Fifteen years rates slid below the 6 percent mark again, down from 6.1 percent last week. Both are lower than year ago levels.
The main negative at work at the moment is the unemployment rate, which jumped again last month and now stands at 5.7 percent. However, the Labor Department just revised its employment numbers upward by 26,000 for the prior two months. As a result, according to forecast economist Dr. Orawin Velz of the Mortgage Bankers Association, "the decline in employment in the past two months is less severe than originally reported."
--------------------------------------------------------------------------------
Copyright © 2008 Realty Times. All Rights Reserved.
.
--------------------------------------------------------------------------------
Real Estate Outlook: Prices Up In Certain Markets
by Kenneth R. Harney
When you're in a long, slow recovery period in real estate, even the slightest hint of good news can be significant.
We saw that last week, when the controversial Standard & Poor's Case-Shiller home price index came out.
You may have seen the headlines or watched the gloomy news reports on TV: Prices were down again -- this time by nearly 16 percent year to year -- in 20 of the largest U.S. markets.
Now even if you accept the validity of that index as a measure of what's really going on in prices nationwide -- and we have always had serious doubts about it -- when you scratch below the surface of the latest monthly report, you find some surprisingly positive developments that got little or no media attention.
Number one: Prices in seven of Case-Shiller's top markets actually were UP for the month. They include Denver, Atlanta, Boston, Minneapolis, Charlotte, Portland and Dallas.
Number two: The month to month change for the entire index was a minus nine tenths of one percent. We all know the index is disproportionately weighted toward the most volatile, high-cost markets of the boom years, so when the monthly change is less than one percent, it begins to look like the curve is finally flattening out.
That's definitely positive news, especially coming from the most bearish source in the real estate marketplace.
In other economic developments affecting housing this week, recession fears were put off for still another quarter, as the U.S. economy continued to expand and defy the doomsayers. The Gross Domestic Product (or GDP) rose at a 1.9 percent rate in the second quarter, up from nine tenths of one percent in the first quarter.
Mortgage rates dropped to 6.46 percent for 30 year fixed rate loans, according to the Mortgage Bankers Association of America. Fifteen years rates slid below the 6 percent mark again, down from 6.1 percent last week. Both are lower than year ago levels.
The main negative at work at the moment is the unemployment rate, which jumped again last month and now stands at 5.7 percent. However, the Labor Department just revised its employment numbers upward by 26,000 for the prior two months. As a result, according to forecast economist Dr. Orawin Velz of the Mortgage Bankers Association, "the decline in employment in the past two months is less severe than originally reported."
--------------------------------------------------------------------------------
Copyright © 2008 Realty Times. All Rights Reserved.
.
Monday, July 7, 2008
Many Metros to See No Job Growth
An article from Realty Times:
No Job Growth as Mortgage Crisis Worsens
And if you don't read the article, you will miss this nugget:
"Peak-to-peak employment gains (the difference between the current job level peak and the employment peak prior to the 2001 recession) were led by Phoenix at 307,100 jobs; Houston at 298,300; Washington at 289,400; Riverside at 233,800; and Miami at 220,600."
Hey, we must be doing something right!
And if you don't read the article, you will miss this nugget:
"Peak-to-peak employment gains (the difference between the current job level peak and the employment peak prior to the 2001 recession) were led by Phoenix at 307,100 jobs; Houston at 298,300; Washington at 289,400; Riverside at 233,800; and Miami at 220,600."
Hey, we must be doing something right!
Sunday, June 15, 2008
PENDING SALES UP NATIONALLY FOR APRIL
An article from CNNMoney.com:
Pending home sales up 6.3%; prices seen falling:
The number of homes under contract to be sold rose unexpectedly..
"The Pending Home Sales Index from the National Association of Realtors (NAR) rose to 88.2 in April, up 6.3% from March's reading of 83 and the highest level since October. The increase defied the consensus estimate of economists polled by Briefing.com, which forecast pending sales to fall by 1%.
Despite the increase, April's reading remains down 13.1% from the same period last year, and off 29% from the index's peak in April 2005."
We will all remember what 2005 looked like, won't we?
Pending home sales up 6.3%; prices seen falling:
"The Pending Home Sales Index from the National Association of Realtors (NAR) rose to 88.2 in April, up 6.3% from March's reading of 83 and the highest level since October. The increase defied the consensus estimate of economists polled by Briefing.com, which forecast pending sales to fall by 1%.
Despite the increase, April's reading remains down 13.1% from the same period last year, and off 29% from the index's peak in April 2005."
We will all remember what 2005 looked like, won't we?
Wednesday, May 14, 2008
Soft Existing-Home Sales Expected Near-Term But to Rise Midsummer
The latest projection from the NATIONAL ASSOCIATION of REALTORS®, WASHINGTON, May 07, 2008
"A flat pattern in home sales activity should continue for the next couple months before improving over the summer, according to the latest forecast by the National Association of Realtors®.
Lawrence Yun, NAR chief economist, said the extent of an expected recovery hinges on better access to affordable loans. "Things are beginning to improve, but the availability of affordable mortgages is uneven around the country and sometimes within metropolitan areas," he said. "As anticipated, we continue to look for a soft first half of the year, for both housing and the economy, before notable improvements in the second half. Some time is needed for FHA and new conforming jumbo loans to become widely available."
The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in March, edged down 1.0 percent to 83.0 from a downwardly revised level of 83.8 in February, and was 20.1 percent lower than the March 2007 index of 103.9.
NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said additional costs in many markets are hindering a recovery. “Our members are telling us that more buyers are looking at homes but are slow in signing contracts, and that’s contributing to the weakness in pending home sales,” he said. “In many cases buyers are waiting for greater access to affordable credit, especially in higher cost areas, but some are disappointed with what appears to be unnecessarily restrictive lending requirements. The good news this week is there is some discussion toward relaxing some of the burdensome lending practices.”
The PHSI in the Northeast jumped 12.5 percent in March to 80.8 but remains 15.4 percent below a year ago. In the South, the index slipped 0.1 percent to 84.9 and is 26.7 percent lower than March 2007. The index in the West declined 1.4 percent in March to 91.2 and is 9.5 percent below a year ago. In the Midwest, the index fell 10.4 percent in March to 74.1 and is 22.3 percent below March 2007.
Existing-home sales are projected to rise from an annual pace of 4.95 million in the first quarter to 5.82 million in the fourth quarter. For all of 2008, existing-home sales are likely to total 5.39 million, and then rise 6.1 percent to 5.72 million next year. “Although more than half of local markets are expected to see price growth this year, the aggregate existing-home price will decline 2.4 percent in 2008, driven by a relatively few markets that are very oversupplied,” Yun said. The median price is forecast at $213,700 this year before rising 4.1 percent to $222,600 in 2009.
Some areas already are seeing sales increases, underscoring that all real estate is local. In March, unpublished snapshot data shows sales in Bakersfield, Calif., and Jackson, Miss., were higher than a year ago. At the same time, price gains were noted in markets such as Buffalo-Niagara Falls, and Cedar Rapids, Iowa. On May 13, NAR will report first-quarter data on metropolitan area home prices, covering about 150 metro areas, and state home sales.
"Although some market adjustments are necessary, a downward overshooting of the housing market would cause unnecessary loss in economic output, income and jobs," Yun said. "It is critical to stimulate housing demand by inducing fence sitters back into the market. A home buyer tax credit on any home purchase would accomplish that."
New-home sales are expected to fall 30.9 percent to 536,000 this year before rising 10.1 percent to 590,000 in 2009. Housing starts, including multifamily units, will probably drop 29.5 percent to 955,000 in 2008, and then rise 1.3 percent to 967,000 next year. The median new-home price is estimated to fall 3.7 percent to $238,000 this year, and then rise 5.4 percent in 2009 to $250,900.
The 30-year fixed-rate mortgage is likely to rise gradually to 6.2 percent by the end of the year, and then average 6.3 percent in 2009. NAR’s housing affordability index is expected to rise 10 percentage points to 127.0 for all of 2008.
Growth in the U.S. gross domestic product (GDP) should be 1.5 percent this year and 2.3 percent in 2009. The unemployment rate is projected to average 5.3 percent in 2008 and 5.5 percent next year.
Inflation, as measured by the Consumer Price Index, is seen at 3.4 percent this year and 2.2 percent in 2009. Inflation-adjusted disposable personal income is forecast to grow 1.2 percent in 2008 and 3.0 percent next year.
# # #
*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 from 2001 through 2004 parallels the level of closed existing-home sales in the following two months. There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.
Existing-home sales for April will be released May 23; the next Forecast / Pending Home Sales Index will be released June 9."
© Copyright NATIONAL ASSOCIATION of REALTORS® | Headquarters: 430 North Michigan Avenue, Chicago, IL 60611
DC Office: 500 New Jersey Avenue, NW, Washington, DC 20001-2020 I 1-800-874-6500
"A flat pattern in home sales activity should continue for the next couple months before improving over the summer, according to the latest forecast by the National Association of Realtors®.
Lawrence Yun, NAR chief economist, said the extent of an expected recovery hinges on better access to affordable loans. "Things are beginning to improve, but the availability of affordable mortgages is uneven around the country and sometimes within metropolitan areas," he said. "As anticipated, we continue to look for a soft first half of the year, for both housing and the economy, before notable improvements in the second half. Some time is needed for FHA and new conforming jumbo loans to become widely available."
The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in March, edged down 1.0 percent to 83.0 from a downwardly revised level of 83.8 in February, and was 20.1 percent lower than the March 2007 index of 103.9.
NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said additional costs in many markets are hindering a recovery. “Our members are telling us that more buyers are looking at homes but are slow in signing contracts, and that’s contributing to the weakness in pending home sales,” he said. “In many cases buyers are waiting for greater access to affordable credit, especially in higher cost areas, but some are disappointed with what appears to be unnecessarily restrictive lending requirements. The good news this week is there is some discussion toward relaxing some of the burdensome lending practices.”
The PHSI in the Northeast jumped 12.5 percent in March to 80.8 but remains 15.4 percent below a year ago. In the South, the index slipped 0.1 percent to 84.9 and is 26.7 percent lower than March 2007. The index in the West declined 1.4 percent in March to 91.2 and is 9.5 percent below a year ago. In the Midwest, the index fell 10.4 percent in March to 74.1 and is 22.3 percent below March 2007.
Existing-home sales are projected to rise from an annual pace of 4.95 million in the first quarter to 5.82 million in the fourth quarter. For all of 2008, existing-home sales are likely to total 5.39 million, and then rise 6.1 percent to 5.72 million next year. “Although more than half of local markets are expected to see price growth this year, the aggregate existing-home price will decline 2.4 percent in 2008, driven by a relatively few markets that are very oversupplied,” Yun said. The median price is forecast at $213,700 this year before rising 4.1 percent to $222,600 in 2009.
Some areas already are seeing sales increases, underscoring that all real estate is local. In March, unpublished snapshot data shows sales in Bakersfield, Calif., and Jackson, Miss., were higher than a year ago. At the same time, price gains were noted in markets such as Buffalo-Niagara Falls, and Cedar Rapids, Iowa. On May 13, NAR will report first-quarter data on metropolitan area home prices, covering about 150 metro areas, and state home sales.
"Although some market adjustments are necessary, a downward overshooting of the housing market would cause unnecessary loss in economic output, income and jobs," Yun said. "It is critical to stimulate housing demand by inducing fence sitters back into the market. A home buyer tax credit on any home purchase would accomplish that."
New-home sales are expected to fall 30.9 percent to 536,000 this year before rising 10.1 percent to 590,000 in 2009. Housing starts, including multifamily units, will probably drop 29.5 percent to 955,000 in 2008, and then rise 1.3 percent to 967,000 next year. The median new-home price is estimated to fall 3.7 percent to $238,000 this year, and then rise 5.4 percent in 2009 to $250,900.
The 30-year fixed-rate mortgage is likely to rise gradually to 6.2 percent by the end of the year, and then average 6.3 percent in 2009. NAR’s housing affordability index is expected to rise 10 percentage points to 127.0 for all of 2008.
Growth in the U.S. gross domestic product (GDP) should be 1.5 percent this year and 2.3 percent in 2009. The unemployment rate is projected to average 5.3 percent in 2008 and 5.5 percent next year.
Inflation, as measured by the Consumer Price Index, is seen at 3.4 percent this year and 2.2 percent in 2009. Inflation-adjusted disposable personal income is forecast to grow 1.2 percent in 2008 and 3.0 percent next year.
# # #
*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 from 2001 through 2004 parallels the level of closed existing-home sales in the following two months. There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.
Existing-home sales for April will be released May 23; the next Forecast / Pending Home Sales Index will be released June 9."
© Copyright NATIONAL ASSOCIATION of REALTORS® | Headquarters: 430 North Michigan Avenue, Chicago, IL 60611
DC Office: 500 New Jersey Avenue, NW, Washington, DC 20001-2020 I 1-800-874-6500
Subscribe to:
Posts (Atom)
