Adjusted for inflation, housing prices are still 15 percent to 20 percent higher than they were in the mid-1990s, calculates housing economist Dean Baker, co-director of the nonpartisan Center for Economic and Policy Research.
“There’s no plausible fundamental explanation for that,” he says.
Baker believes economic fundamentals translate to a weak recovery at best. “People who say this is a temporary story, there’s no real reason to believe anything like that,” he says. “If anything, I expect housing to be weaker than normal rather than stronger over the next decade.”
Baker is opposed to the housing tax credit.
"As a matter of policy I can’t see that we want people to buy a house in 2009 that’s 10-20 percent higher than it would sell for in 2011,” he says. “In so far as the FHA was encouraging people to buy homes in bubble markets that were not deflated, that’s not good for the FHA and you didn’t help the home owner. We didn’t do those people a favor.”
Source: Bloomberg News, Nick Timiraos (01/26/2010)
Saturday, January 30, 2010
Freddie Mac CEO: Housing Is Near Bottom
The inventory of foreclosed houses still hampers the recovery of the housing sector, but overall, the U.S. housing market appears to be at or near bottom, Freddie Mac CEO Charles Haldeman told the Detroit Economic Club on Tuesday.
He predicted that the 30-year fixed mortgage rate would remain between 5 percent and 6 percent through 2010.
"The big downside risk to all this is a large wave of homes now in foreclosure potentially hitting the market at prices that are destructive," Haldeman said.
Source: Reuters News, Soyoung Kim (01/26/2010)
He predicted that the 30-year fixed mortgage rate would remain between 5 percent and 6 percent through 2010.
"The big downside risk to all this is a large wave of homes now in foreclosure potentially hitting the market at prices that are destructive," Haldeman said.
Source: Reuters News, Soyoung Kim (01/26/2010)
Treasury to Cut Foreclosure Relief Paperwork
The Treasury Department is announcing a plan Thursday to reduce the burdensome paperwork surrounding the foreclosure relief plan.
Two changes expected to make a big difference are:
Participating mortgage service companies will be required to acknowledge that they have received a borrower’s application within 10 days and approve or deny the application within 30 days. Borrowers will still be required to make three months of trial payments before the modification is made permanent.
Treasury officials are also reportedly devising a plan to give unemployed borrowers a break on payments – probably for six months – but because the details aren’t decided, the announcement won’t be made this week.
Source: Associated Press, Alan Zibel (01/27/2010)
Two changes expected to make a big difference are:
- Lenders will be required to collect two pay stubs at the start of the process.
- Borrowers will be required to give the Internal Revenue Service permission to provide their most recent tax returns.
Participating mortgage service companies will be required to acknowledge that they have received a borrower’s application within 10 days and approve or deny the application within 30 days. Borrowers will still be required to make three months of trial payments before the modification is made permanent.
Treasury officials are also reportedly devising a plan to give unemployed borrowers a break on payments – probably for six months – but because the details aren’t decided, the announcement won’t be made this week.
Source: Associated Press, Alan Zibel (01/27/2010)
New Home Sales Continue to Decline
New home sales fell 7.6 percent in December, the U.S. Commerce Department reported Wednesday.
This was the second-straight month that new home sales declined.
The Commerce Department also reported that new home sales in 2009 were down 22.9 percent compared with 2008, hitting a record low of 374,000 units.
The Federal Reserve responded on Wednesday by leaving short-term lending rates at near zero and pledged to keep them low.
"This report does not totally ruin the notion that housing is recovering, but it does underscore the fragility of that recovery. It's not good news for broader economic growth," said Dana Saporta, an economist at Stone & McCarthy Research in Princeton, N.J.
Source: Reuters News, Lucia Mutikani (01/27/2010)
This was the second-straight month that new home sales declined.
The Commerce Department also reported that new home sales in 2009 were down 22.9 percent compared with 2008, hitting a record low of 374,000 units.
The Federal Reserve responded on Wednesday by leaving short-term lending rates at near zero and pledged to keep them low.
"This report does not totally ruin the notion that housing is recovering, but it does underscore the fragility of that recovery. It's not good news for broader economic growth," said Dana Saporta, an economist at Stone & McCarthy Research in Princeton, N.J.
Source: Reuters News, Lucia Mutikani (01/27/2010)
Report: Record Year for Foreclosures Predicted
Las Vegas had the highest U.S. foreclosure rate in 2009, according to a foreclosure report released today by RealtyTrac.
Other cities with the nation’s highest rates are:
A record 3 million homes will be seized this year, the report forecasts.
“The dam will break and we’ll see a significant increase in foreclosures,” Michael Lea, a finance professor at San Diego State University, said in an interview. “The banks can’t continue to hope the economy starts growing.”
Source: Bloomberg, Dan Levy (01/28/2010)
Other cities with the nation’s highest rates are:
- Cape Coral-Fort Myers, Fla.
- Merced, Calif.
- Riverside-San Bernardino, Calif.
- Stockton, Calif.
- Modesto, Calif.
- Orlando-Kissimmee, Fla.
- Phoenix
- Port St. Lucie, Fla.
- Miami-Fort Lauderdale-Pompano Beach, Fla.
A record 3 million homes will be seized this year, the report forecasts.
“The dam will break and we’ll see a significant increase in foreclosures,” Michael Lea, a finance professor at San Diego State University, said in an interview. “The banks can’t continue to hope the economy starts growing.”
Source: Bloomberg, Dan Levy (01/28/2010)
Better Selection Of Lights For Outdoor Lighting
Creative outdoor lighting can transform a boring backyard or patio into a private, nighttime oasis. Wall sconces, deck lights and deck step lights provide the perfect illumination for quiet evening conversations or midnight stargazing.
The soft glow and stylish designs can make your deck a favorite place to relax and enjoy warm summer breezes. However, you have to be strategic about placing the lights to avoid annoying your neighbors.
When purchasing outdoor chandeliers, you should have a plan in mind. Decide which areas you want to illuminate, choose attractive and durable fixtures, accessories and bulbs, and choose the power supply.
The best way to decide where the lights should go is to go into the yard at night with a good flashlight and try lighting different areas from different angles. If you want outdoor lights for a small patio or balcony, then try hanging simple outdoor hanging lamps over a patio table or grouping of chairs.
You can also use wall mounted lanterns for a soft glow. Make sure you use low wattage bulbs to avoid harsh glares. You can also use wrought iron chandeliers or glass chandeliers on a covered patio.
Correct positioning is essential for an effective lighting out-of-doors. When planning, be sure to consider the impact the lights may have on the neighbors. If you’re a stargazer, then select light fixtures designed to direct light and minimize light pollution.
When arranging your outdoor lights, it’s best to avoid installing them in the undergrowth of low shrubs or tall grasses unless you want to create a silhouetted effect. Usually, the beam of light should be unobstructed from the fixture to the focal point so there are no distracting spots of reflected light.
For maximum effect, keep your lawn mowed, trim shrubs and bushes, and remove dead tree limbs. Light the walkway to your front door with wrought iron chandeliers and add up lighting aimed at trees to make the front of your home more interesting. Down lighting is the same idea only the fixture is up high and shines down.
This highlights flower beds, paths or steps. Spotlighting creates a focal point by illuminating an object, like a fountain. One of the most dramatic techniques you can use is back lighting.
By placing the light behind a subject it will appear in silhouette. This can be an extremely effective technique with dramatically shaped trees, shrubs or garden ornaments.
Installing outdoor lights can be dangerous, so if you don’t have the knowledge to work with electricity safely, then get an electrician to do the work. Solar lights are a popular choice because they are easy to install, require no wiring and won’t increase your use of electricity since sunlight charges a solar panel that powers the lights at night.
Shop around since solar lights can often be found on sale and at discount stores. If your landscape lighting is complicated or expansive, then consider hiring a landscaper or professional designer to help.
The downside to outdoor lights is that they often attract bugs. To maintain the attractiveness of your fixtures, clean away ugly cobwebs and dead insects. That’s a small price to pay for the beauty of good outdoor lighting including pendant lights.
What is comes down to is choosing practical, stylish fixtures, bulbs that glow softly but still emit enough light, and the correct placement of the lights to maximize their effectiveness.
Since outdoor chandeliers should be an extension of your style and taste, use decorative pieces like outdoor chandeliers, iron chandeliers and even contemporary chandeliers made out of sturdy materials that are weather resistant.
The results will be a home with tremendous curb appeal.
Friday, January 29, 2010
Fannie to Offer Closing Cost Aid on Foreclosures
Fannie Mae, the largest provider of residential home funding in the United States, announced Friday that it would pay the closing costs on purchases of foreclosed homes in its inventory.
The government-controlled company said buyers of qualified properties will get up to 3.5 percent in closing costs, or an equivalent amount for the purchase of new appliances.
The goal of Fannie is to clear out the nearly 50,000 properties it has in inventory— listed on HomePath.com, the Web site created by Fannie Mae last year to sell the growing number of foreclosed homes.
"Attracting qualified buyers to the market and reducing inventory of vacant homes is critical to stabilizing neighborhoods and helping the market recover," said Terry Edwards, executive vice president for credit portfolio management, in a statement.
Source: Reuters News, Al Yoon (01/28//2010)
The government-controlled company said buyers of qualified properties will get up to 3.5 percent in closing costs, or an equivalent amount for the purchase of new appliances.
The goal of Fannie is to clear out the nearly 50,000 properties it has in inventory— listed on HomePath.com, the Web site created by Fannie Mae last year to sell the growing number of foreclosed homes.
"Attracting qualified buyers to the market and reducing inventory of vacant homes is critical to stabilizing neighborhoods and helping the market recover," said Terry Edwards, executive vice president for credit portfolio management, in a statement.
Source: Reuters News, Al Yoon (01/28//2010)
Mortgage Rates Hold Steady This Week
Mortgage interest for the week held fairly close to the previous week's rates, reports Freddie Mac.
Average interest on 30-year fixed loans slipped a notch to 4.98 percent from 4.99 percent and was down from 5.10 percent a year ago.
Here's how other rates fared for the week:
15-year fixed loans dropped down to 4.39 percent from 4.40 percent.
Five-year adjustable-rate mortgages dipped to 4.25 percent from 4.27 percent.
One-year ARMs came down to 4.29 percent from 4.32 percent.
While still higher than the historic lower of 4.71 percent established in early December, long-term mortgage rates have hovered around a very favorable 5 percent thanks to the Federal Reserve's mortgage-backed securities program meant to keep rates low and make home buying more affordable.
The central bank's policymaking committee confirmed on Jan. 27 that it will keep rates near those record lows in order to prop up the economy; but it still plans to terminate the program at the end of March.
Low rates also trigger more refinancing activity, according to Freddie Mac. In the 2009 fourth quarter, it said, about a third of borrowers who refinanced a home loan -- the highest share since at least 1985 -- opted to slash their principal balance rather than tap into their equity.
As a result, only around $11 billion in home equity -- the smallest quarterly volume in about nine years -- was tapped by consumers who refinanced a conventional, prime mortgage.
Source: Memphis Daily News (01/29/10)
Average interest on 30-year fixed loans slipped a notch to 4.98 percent from 4.99 percent and was down from 5.10 percent a year ago.
Here's how other rates fared for the week:
15-year fixed loans dropped down to 4.39 percent from 4.40 percent.
Five-year adjustable-rate mortgages dipped to 4.25 percent from 4.27 percent.
One-year ARMs came down to 4.29 percent from 4.32 percent.
While still higher than the historic lower of 4.71 percent established in early December, long-term mortgage rates have hovered around a very favorable 5 percent thanks to the Federal Reserve's mortgage-backed securities program meant to keep rates low and make home buying more affordable.
The central bank's policymaking committee confirmed on Jan. 27 that it will keep rates near those record lows in order to prop up the economy; but it still plans to terminate the program at the end of March.
Low rates also trigger more refinancing activity, according to Freddie Mac. In the 2009 fourth quarter, it said, about a third of borrowers who refinanced a home loan -- the highest share since at least 1985 -- opted to slash their principal balance rather than tap into their equity.
As a result, only around $11 billion in home equity -- the smallest quarterly volume in about nine years -- was tapped by consumers who refinanced a conventional, prime mortgage.
Source: Memphis Daily News (01/29/10)
4 Demographic Trends That Will Affect Housing
A new report from the Urban Land Institute predicts two major changes in the U.S. housing market as we began a new decade.
Home appreciation will slow considerably to about 1 percent to 2 percent annually.
The current U.S. homeownership rate, now at 67 percent (which is down from a record high of 69 percent), will fall further to about 62 percent.
4 Major Demographic Trends
The report also cites four major U.S. demographic trends that will have a major impact on housing.
1. Aging baby boomers (ages 55 to 64 years old): They will keep working, and many will be forced to stay in their suburban homes until values recover. Those who are able to move will choose mixed-age living environments that cater to active lifestyles. Walkable suburban town centers also will appeal to this group.
2. Younger baby boomers (46 to 54 years old): They are now entering their prime earning years but they will lack home equity and unlike the older members of their generation, they won’t be able to purchase second homes. This will likely curb the prospects for the second-home market.
3. Generation Y: They are larger than the baby boom generation (with a population of about 86 million). As they enter the housing market, they are less interested in homeownership than their parents were when they were young adults. “They will be renters by necessity or choice for years ahead,” says John K. McIlwain, author of the report.
4. Immigrants – both legal and illegal: They are nearly 40 million strong. They often prefer multi-generational households and if they can afford them, larger homes in neighborhoods with a strong sense of community.
Source: The Urban Land Institute (01/27/2010)
Home appreciation will slow considerably to about 1 percent to 2 percent annually.
The current U.S. homeownership rate, now at 67 percent (which is down from a record high of 69 percent), will fall further to about 62 percent.
4 Major Demographic Trends
The report also cites four major U.S. demographic trends that will have a major impact on housing.
1. Aging baby boomers (ages 55 to 64 years old): They will keep working, and many will be forced to stay in their suburban homes until values recover. Those who are able to move will choose mixed-age living environments that cater to active lifestyles. Walkable suburban town centers also will appeal to this group.
2. Younger baby boomers (46 to 54 years old): They are now entering their prime earning years but they will lack home equity and unlike the older members of their generation, they won’t be able to purchase second homes. This will likely curb the prospects for the second-home market.
3. Generation Y: They are larger than the baby boom generation (with a population of about 86 million). As they enter the housing market, they are less interested in homeownership than their parents were when they were young adults. “They will be renters by necessity or choice for years ahead,” says John K. McIlwain, author of the report.
4. Immigrants – both legal and illegal: They are nearly 40 million strong. They often prefer multi-generational households and if they can afford them, larger homes in neighborhoods with a strong sense of community.
Source: The Urban Land Institute (01/27/2010)
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