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Showing posts with label Bayside. Show all posts
Showing posts with label Bayside. Show all posts
Monday, July 16, 2012
The Next Big Threat to Home Owners Looms
While the housing market is showing signs of picking up across the country, housing experts warn of a new concern for home owners: resetting home equity lines of credit.
Home equity lines of credit often require low payments in the initial years as home owners only pay the interest on these loans at the onset. But later on, these loans reset with higher payments when home owners have to start paying down the principal.
About 44 percent of home owners with home equity lines of credit through Wells Fargo have paid only the minimum amount due on these loans, reports The New York Times.
Many borrowers may soon see their home equity lines of credit reset with higher payments and those higher payments may be too much for some borrowers.
The Office of the Comptroller of the Currency recently warned of the danger these resetting payments could pose for many home owners across the country. The OCC warned that nearly 60 percent of all home equity line balances would require payments of both principal and interest between 2014 and 2017.
The report highlights three main threats home equity borrowers face: Rising payments as they begin to pay back the principal and not just the interest on these loans; the risk of rising interest rates (many of these loans have adjustable rates); and refinancing challenges “because collateral values have declined significantly since these loans originated.”
Many of the home owners have seen their property values decrease since they first took out the home equity loans.
“These are among the riskiest loans in any bank’s portfolio,” The New York Times reports. “As borrowers are pressed to pay principal and interest, write-offs are almost certain to rise.”
Source: “Here Comes the Catch in Home Equity Loans,” The New York Times (July 14, 2012)
Friday, February 24, 2012
New NAR Partnership Aims to Assist You With Short Sales
The National Association of REALTORS® is teaming up with the U.S. Department of Treasury for a series of workshops to help real estate professionals better assist home owners who are struggling to sell their homes in a short sale.
At upcoming Making Home Affordable “Help for Homeowners” outreach events, real estate professionals will be able to gain greater insight into navigating short sales and also have the chance to meet directly with loan officers on their clients’ behalf for any assistance with challenging transactions.
Those who attend the events will hear directly from lender and loan servicers about the short sale process as well as learn tips to effectively negotiate short sale offers and how to speed up these transactions. Treasury officials will also be present to speak about foreclosure prevention programs, such as the Home Affordable Foreclosure Alternatives (HAFA) short sales program.
By REALTORS® and the Treasury Department working together, “we can improve the success rate for short sale transactions, which will reduce the overall number of foreclosures and benefit sellers, lenders, buyers, and the entire community,” said NAR President Moe Veissi.
The outreach events will be held throughout this year. The next session is slated for Feb. 24 in Tampa, Fla. Additional events are planned for Chicago, Indianapolis, Los Angeles, and Sacramento, Calif. Live webinars will also be available for those who can’t attend in person.
For more information about the “Help for Homeowners” events, visit www.makinghomeaffordable.gov/get-assistance/homeowner-events/Pages/default.aspx or register to attend at www.hmpadmin.com/portal/resources/eventinfo.jsp.
Source: National Association of REALTORS®
At upcoming Making Home Affordable “Help for Homeowners” outreach events, real estate professionals will be able to gain greater insight into navigating short sales and also have the chance to meet directly with loan officers on their clients’ behalf for any assistance with challenging transactions.
Those who attend the events will hear directly from lender and loan servicers about the short sale process as well as learn tips to effectively negotiate short sale offers and how to speed up these transactions. Treasury officials will also be present to speak about foreclosure prevention programs, such as the Home Affordable Foreclosure Alternatives (HAFA) short sales program.
By REALTORS® and the Treasury Department working together, “we can improve the success rate for short sale transactions, which will reduce the overall number of foreclosures and benefit sellers, lenders, buyers, and the entire community,” said NAR President Moe Veissi.
The outreach events will be held throughout this year. The next session is slated for Feb. 24 in Tampa, Fla. Additional events are planned for Chicago, Indianapolis, Los Angeles, and Sacramento, Calif. Live webinars will also be available for those who can’t attend in person.
For more information about the “Help for Homeowners” events, visit www.makinghomeaffordable.gov/get-assistance/homeowner-events/Pages/default.aspx or register to attend at www.hmpadmin.com/portal/resources/eventinfo.jsp.
Source: National Association of REALTORS®
Deadline Extended for Foreclosure Reviews
Home owners who’ve undergone a foreclosure and want a review of their case now have a longer time to submit their request. The Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve announced the deadline has been extended to July 31, which provides an extra three more months to spread the word about the review program.
Home owners who faced foreclosure in 2009 and 2010 may be eligible to request a review from their lender of their case through the Independent Foreclosure Review to see if any errors were made in their paperwork and if they were wrongly foreclosed upon. If errors are found, the home owner may receive compensation or another agreed upon settlement.
Announced in April 2011, government agencies mandated that the country’s 14 largest mortgage servicers hire independent consultants to conduct reviews of foreclosure activity in 2009 and 2010 and to ensure that no errors were made in the processing of the foreclosure.
You can view a list here of the lenders involved in the Independent Foreclosure Reviews.
Source: “Deadline to Request Mortgage Review Extended to July 31,” RISMedia (Feb. 22, 2012)
Home owners who faced foreclosure in 2009 and 2010 may be eligible to request a review from their lender of their case through the Independent Foreclosure Review to see if any errors were made in their paperwork and if they were wrongly foreclosed upon. If errors are found, the home owner may receive compensation or another agreed upon settlement.
Announced in April 2011, government agencies mandated that the country’s 14 largest mortgage servicers hire independent consultants to conduct reviews of foreclosure activity in 2009 and 2010 and to ensure that no errors were made in the processing of the foreclosure.
You can view a list here of the lenders involved in the Independent Foreclosure Reviews.
Source: “Deadline to Request Mortgage Review Extended to July 31,” RISMedia (Feb. 22, 2012)
Critics Push the Fed for More Public Rulemaking Meetings
Since July 2010, when the Dodd-Frank Act became law, the U.S. Federal Reserve has held 47 votes on financial regulations. Of the 47 votes, the Fed only held two public meetings. The other votes were submitted electronically, and the votes were just recently disclosed.
Bipartisan critics say that the closed off rulemaking has made it harder for Congress to hold the Fed accountable and has broken with a long-held tradition of providing the public with insight into how rules are being written and implemented.
"People have a right to know and hear the discussion and hear the presentations and the reasoning for these rules," Former Federal Deposit Insurance Corp. Chair Sheila Bair says. " All of the other agencies which are governed by boards or commissions propose and approve these rules in public meetings. I think it would be in the Fed's interest to do so as well."
There are more votes on the way as the central bank works to reshape the regulatory environment and direct how much capital banks must hold, what kind of trading they can do, and what fees they can charge retailers on debit-card transactions.
The Fed indicates that open meetings are held more often and that growing demands on the governors' time makes it difficult to coordinate schedules. But the recent dissension of Fed Governor Sarah Bloom Raskin to the draft Volcker Rule was not disclosed until Feb. 14, though she has recently said that she was concerned the rule was too unwieldy for banks to comply with and for regulators to enforce.
Fed officials say that many open meetings are formulary and will provide little insight into the rulemaking process, and with 250 separate rule writing projects under way, coordinating schedules for meetings would be difficult. Moreover, each rule is open to public comment for between 60 and 90 days, and Fed officials are called before Congress and grilled on the status of controversial regulations.
Source: "Fed Writes Sweeping Rules From Behind Closed Doors," Wall Street Journal (02/21/12)
Bipartisan critics say that the closed off rulemaking has made it harder for Congress to hold the Fed accountable and has broken with a long-held tradition of providing the public with insight into how rules are being written and implemented.
"People have a right to know and hear the discussion and hear the presentations and the reasoning for these rules," Former Federal Deposit Insurance Corp. Chair Sheila Bair says. " All of the other agencies which are governed by boards or commissions propose and approve these rules in public meetings. I think it would be in the Fed's interest to do so as well."
There are more votes on the way as the central bank works to reshape the regulatory environment and direct how much capital banks must hold, what kind of trading they can do, and what fees they can charge retailers on debit-card transactions.
The Fed indicates that open meetings are held more often and that growing demands on the governors' time makes it difficult to coordinate schedules. But the recent dissension of Fed Governor Sarah Bloom Raskin to the draft Volcker Rule was not disclosed until Feb. 14, though she has recently said that she was concerned the rule was too unwieldy for banks to comply with and for regulators to enforce.
Fed officials say that many open meetings are formulary and will provide little insight into the rulemaking process, and with 250 separate rule writing projects under way, coordinating schedules for meetings would be difficult. Moreover, each rule is open to public comment for between 60 and 90 days, and Fed officials are called before Congress and grilled on the status of controversial regulations.
Source: "Fed Writes Sweeping Rules From Behind Closed Doors," Wall Street Journal (02/21/12)
Former Home Owners Wait for Second Chance
More than 4 million homes have been lost to foreclosure in the last six years, and many of those former home owners are now starting to ask: When can we buy again?
Many banks have guidelines that prevent them from issuing loans to people with a foreclosure or short sale in their credit history in some cases for as much as seven years. That also doesn’t factor in the damage foreclosures and short sales can do to a person’s credit score, and the work former home owners' will need to do to repair it so they’ll have a better chance at qualifying for financing again in the future.
Still, some former home owners, particularly those who foreclosed or did a short sale due to extenuating circumstances like a job loss or illness, are finding the wait may not be as long as they were once told.
"They're probably going to pay a little higher interest rate, but with rates so low, a higher interest rate of 4 percent is not a big deal," Rosa Herwick, a broker and owner of Century 21 JR Realty in Henderson, Nev., told the Associated Press.
The wait-time varies among lenders and government entities. For example, the Federal Housing Administration says former home owners with a foreclosure must wait three years before they can qualify, while Fannie Mae and Freddie Mac require a seven-year wait following a foreclosure.
As for short sales, sometimes these waits can be waived or drastically cut, depending on the borrower’s situation. FHA requires a three-year wait following a short sale, but it may waive that wait if the short sale was due to a job loss.
Also, for borrowers who can come up with a higher down payment on their next home purchase, they may also not have as long to wait. For example, Fannie Mae will reduce the wait from seven years to two years for borrowers who come with a down payment of 20 percent or more.
Source: “Lost Home to Foreclosure but Ready to Buy Again? Prepare to Wait in Lender ‘Penalty Box,’” Associated Press (Feb. 22, 2012)
Many banks have guidelines that prevent them from issuing loans to people with a foreclosure or short sale in their credit history in some cases for as much as seven years. That also doesn’t factor in the damage foreclosures and short sales can do to a person’s credit score, and the work former home owners' will need to do to repair it so they’ll have a better chance at qualifying for financing again in the future.
Still, some former home owners, particularly those who foreclosed or did a short sale due to extenuating circumstances like a job loss or illness, are finding the wait may not be as long as they were once told.
"They're probably going to pay a little higher interest rate, but with rates so low, a higher interest rate of 4 percent is not a big deal," Rosa Herwick, a broker and owner of Century 21 JR Realty in Henderson, Nev., told the Associated Press.
The wait-time varies among lenders and government entities. For example, the Federal Housing Administration says former home owners with a foreclosure must wait three years before they can qualify, while Fannie Mae and Freddie Mac require a seven-year wait following a foreclosure.
As for short sales, sometimes these waits can be waived or drastically cut, depending on the borrower’s situation. FHA requires a three-year wait following a short sale, but it may waive that wait if the short sale was due to a job loss.
Also, for borrowers who can come up with a higher down payment on their next home purchase, they may also not have as long to wait. For example, Fannie Mae will reduce the wait from seven years to two years for borrowers who come with a down payment of 20 percent or more.
Source: “Lost Home to Foreclosure but Ready to Buy Again? Prepare to Wait in Lender ‘Penalty Box,’” Associated Press (Feb. 22, 2012)
Home Sales on the Rise: Ready for Spring Buying Season?
Existing-home sales rose 4.3 percent in January to a seasonally adjusted annual rate of 4.57 million, marking the third gain for home sales in the last four months, the National Association of REALTORS® reports.
“The uptrend in home sales is in line with all of the underlying fundamentals – pent-up household formation, record-low mortgage interest rates, bargain home prices, sustained job creation and rising rents,” NAR’s Chief Economist Lawrence Yun says.
While sales ticked up, inventories of for-sale homes also continued to show improvement, NAR reported. At the end of January, total housing inventory fell 0.4 percent to 2.31 million existing homes for sale, which represents a 6.1-month supply at the current sales pace.
“The broad inventory condition can be described as moving into a rough balance, not favoring buyers or sellers,” Yun says. “Foreclosure sales are moving swiftly with ready home buyers and investors competing in nearly all markets. A government proposal to turn bank-owned properties into rentals on a large scale does not appear to be needed at this time.”
Unsold listed inventory has steadily dropped since reaching a peak of 4.04 million in July 2007. It now is 20.6 percent below where it was a year ago, NAR reports.
Housing Affordability Improves
As home prices have fallen and mortgage rates at all-time record lows, housing affordability is at some of its highest levels on record.
“Word has been spreading about the record high housing affordability conditions and our members are reporting an increase in foot traffic compared with a year ago,” says NAR President Moe Veissi. “With other favorable market factors, these are hopeful indicators leading into the spring home-buying season. We’re cautiously optimistic that an uptrend will continue this year.”
The national median existing-home price for all housing types in January was $154,700, which is down 2 percent year-over-year.
Distressed sales, which tend to sell at steep discounts, continue to hamper home prices nationwide. Foreclosures and short sales accounted for 35 percent of all January home sales, which is up slightly from 32 percent in December.
Still, “home buyers over the past three years have had some of the lowest default rates in history,” Yun said. “Entering the market at a low point and buying at discounted prices have greatly helped in that success.”
Breakdown by Housing Type
Here’s a closer look at how home sales fared by housing type in January:
Single-family home sales: increased 3.8 percent to a seasonally adjusted annual rate of 4.05 million in January from 3.90 million in December. They are 2.3 percent above the 3.96 million-unit pace a year ago. Median price: $154,400 in January, down 2.6 percent from January 2011.
Existing condominium and co-op sales: rose 8.3 percent to a seasonally adjusted annual rate of 520,000 in January from 480,000 in December. They are 10.3 percent lower than the 580,000-unit level in January 2011. Median price: $156,600 in January, up 2 percent from a year ago.
Home Sales by Region
The following is a breakdown of existing-home sales in January by region:
Northeast: increased3.4 percent to an annual pace of 600,000 in January and are 7.1 percent above a year ago. Median price: $225,700, which is 4.2 percent below January 2011.
Midwest: increased 1 percent in December to a level of 980,000 and are 3.2 percent higher than January 2011. Median price: $122,000, down 3.9 percent from a year ago.
South: rose 3.5 percent to an annual level of 1.76 million in January but are unchanged from a year ago. Median price: $134,800, which is 0.3 percent below January 2011.
West: increased 8.8 percent to an annual pace of 1.23 million in January but are 3.1 percent below a spike in January 2011. Median price: $187,100, down 1.8 percent from a year ago.
Contract Delays, Cancellations Remain High
Twenty-one percent of NAR members in January reported delays in contracts, and 33 percent said contracts fell through, according to NAR. The number of contract cancellations remains mostly unchanged from December.
The increase in the past year of contract cancellations or delays has been blamed on more lenders declining mortgage applications from stricter underwriting standards and low appraisals coming in under the agreed upon contract price.
Source: National Association of REALTORS®
“The uptrend in home sales is in line with all of the underlying fundamentals – pent-up household formation, record-low mortgage interest rates, bargain home prices, sustained job creation and rising rents,” NAR’s Chief Economist Lawrence Yun says.
While sales ticked up, inventories of for-sale homes also continued to show improvement, NAR reported. At the end of January, total housing inventory fell 0.4 percent to 2.31 million existing homes for sale, which represents a 6.1-month supply at the current sales pace.
“The broad inventory condition can be described as moving into a rough balance, not favoring buyers or sellers,” Yun says. “Foreclosure sales are moving swiftly with ready home buyers and investors competing in nearly all markets. A government proposal to turn bank-owned properties into rentals on a large scale does not appear to be needed at this time.”
Unsold listed inventory has steadily dropped since reaching a peak of 4.04 million in July 2007. It now is 20.6 percent below where it was a year ago, NAR reports.
Housing Affordability Improves
As home prices have fallen and mortgage rates at all-time record lows, housing affordability is at some of its highest levels on record.
“Word has been spreading about the record high housing affordability conditions and our members are reporting an increase in foot traffic compared with a year ago,” says NAR President Moe Veissi. “With other favorable market factors, these are hopeful indicators leading into the spring home-buying season. We’re cautiously optimistic that an uptrend will continue this year.”
The national median existing-home price for all housing types in January was $154,700, which is down 2 percent year-over-year.
Distressed sales, which tend to sell at steep discounts, continue to hamper home prices nationwide. Foreclosures and short sales accounted for 35 percent of all January home sales, which is up slightly from 32 percent in December.
Still, “home buyers over the past three years have had some of the lowest default rates in history,” Yun said. “Entering the market at a low point and buying at discounted prices have greatly helped in that success.”
Breakdown by Housing Type
Here’s a closer look at how home sales fared by housing type in January:
Single-family home sales: increased 3.8 percent to a seasonally adjusted annual rate of 4.05 million in January from 3.90 million in December. They are 2.3 percent above the 3.96 million-unit pace a year ago. Median price: $154,400 in January, down 2.6 percent from January 2011.
Existing condominium and co-op sales: rose 8.3 percent to a seasonally adjusted annual rate of 520,000 in January from 480,000 in December. They are 10.3 percent lower than the 580,000-unit level in January 2011. Median price: $156,600 in January, up 2 percent from a year ago.
Home Sales by Region
The following is a breakdown of existing-home sales in January by region:
Northeast: increased3.4 percent to an annual pace of 600,000 in January and are 7.1 percent above a year ago. Median price: $225,700, which is 4.2 percent below January 2011.
Midwest: increased 1 percent in December to a level of 980,000 and are 3.2 percent higher than January 2011. Median price: $122,000, down 3.9 percent from a year ago.
South: rose 3.5 percent to an annual level of 1.76 million in January but are unchanged from a year ago. Median price: $134,800, which is 0.3 percent below January 2011.
West: increased 8.8 percent to an annual pace of 1.23 million in January but are 3.1 percent below a spike in January 2011. Median price: $187,100, down 1.8 percent from a year ago.
Contract Delays, Cancellations Remain High
Twenty-one percent of NAR members in January reported delays in contracts, and 33 percent said contracts fell through, according to NAR. The number of contract cancellations remains mostly unchanged from December.
The increase in the past year of contract cancellations or delays has been blamed on more lenders declining mortgage applications from stricter underwriting standards and low appraisals coming in under the agreed upon contract price.
Source: National Association of REALTORS®
Mortgage Rates Inch Up After Record Lows
For the first time in three weeks, fixed mortgages rate moved up from their all-time lows, Freddie Mac reports in its weekly mortgage market survey.
One of the factors leading to higher fixed mortgage rates this week was signs of a gradually improving housing market, Freddie Mac Chief Economist Frank Nothaft says. For example, the Mortgage Bankers Association reported this week that seriously delinquent loans — those 90 days or more past due — and the inventory of foreclosures dropped 5.3 percent by the end of 2011, marking the lowest quarterly share since the beginning of 2009. Also, the National Association of REALTORS® reported this week that existing-home sales in January were at their strongest pace since May 2010.
Here’s a closer look at how rates fared for the week ending Feb. 23:
30-year fixed-rate mortgages: averaged 3.95 percent, with an average 0.8 point, up slightly from last week’s all-time low of 3.87 percent. A year ago, 30-year rates averaged 4.95 percent.
15-year fixed-rate mortgages: averaged 3.19 percent, with an average 0.8 point, inching up from last week’s 3.16 percent average. Last year, 15-year rates averaged 4.22 percent at this time.
5-year adjustable-rate mortgages: averaged 2.80 percent this week, with an average 0.7 point, dropping from last week’s 2.82 percent average. Last year, 5-year ARMs averaged 3.80 percent at this time.
1-year ARMs: averaged 2.73 percent, with an average 0.6 point, also dropping from last week’s 2.84 percent average. A year ago at this time, 1-year ARMs averaged 3.40 percent.
Source: Freddie Mac
One of the factors leading to higher fixed mortgage rates this week was signs of a gradually improving housing market, Freddie Mac Chief Economist Frank Nothaft says. For example, the Mortgage Bankers Association reported this week that seriously delinquent loans — those 90 days or more past due — and the inventory of foreclosures dropped 5.3 percent by the end of 2011, marking the lowest quarterly share since the beginning of 2009. Also, the National Association of REALTORS® reported this week that existing-home sales in January were at their strongest pace since May 2010.
Here’s a closer look at how rates fared for the week ending Feb. 23:
30-year fixed-rate mortgages: averaged 3.95 percent, with an average 0.8 point, up slightly from last week’s all-time low of 3.87 percent. A year ago, 30-year rates averaged 4.95 percent.
15-year fixed-rate mortgages: averaged 3.19 percent, with an average 0.8 point, inching up from last week’s 3.16 percent average. Last year, 15-year rates averaged 4.22 percent at this time.
5-year adjustable-rate mortgages: averaged 2.80 percent this week, with an average 0.7 point, dropping from last week’s 2.82 percent average. Last year, 5-year ARMs averaged 3.80 percent at this time.
1-year ARMs: averaged 2.73 percent, with an average 0.6 point, also dropping from last week’s 2.84 percent average. A year ago at this time, 1-year ARMs averaged 3.40 percent.
Source: Freddie Mac
Commercial Real Estate Vacancy Rates Improve
According to the National Association of REALTORS®’ quarterly commercial real estate forecast, all of the major commercial real estate sectors are seeing improved fundamentals, but multifamily housing is becoming a landlord’s market, commanding bigger rent increases. These trends also are confirmed in NAR’s recent quarterly Commercial Real Estate Market Survey.
Lawrence Yun, NAR chief economist, said vacancy rates are improving in all of the major commercial real estate sectors. “Sustained job creation is benefiting commercial real estate sectors by increasing demand for space,” he said. “Vacancy rates are steadily falling. Leasing is on the rise and rents are showing signs of strengthening, especially in the apartment market where rents are rising the fastest.”
NAR forecasts commercial vacancy rates over the next year to decline 0.4 percentage point in the office sector, 0.8 point in industrial real estate, 0.9 point in the retail sector and 0.2 percentage point in the multifamily rental market.
“Household formation appears to be rising from pent-up demand,” Yun said. “The tight apartment market should encourage more apartment construction. Otherwise, rent increases could further accelerate in the near-to-intermediate term.”
The Society of Industrial and Office REALTORS® shows a notable gain in its SIOR Commercial Real Estate Index, an attitudinal survey of 297 local market experts.
The SIOR index, measuring the impact of 10 variables, jumped 8.3 percentage points to 63.8 in the fourth quarter, following a gain of 0.6 percentage point in the third quarter. The index remains well below the level of 100 that represents a balanced marketplace, which was last seen in the third quarter of 2007.
Most market indicators posted advances in the fourth quarter, but 71 percent of respondents said leasing activity is below historic levels in their market — an improvement from 83 percent in the third quarter. Only 29 percent report there is ample sublease space available.
Office and industrial space remains a tenant’s market — 87 percent of participants feel that tenants are getting a range of benefits ranging from moderate concessions to deep rent discounts.
Construction activity is still low, with 95 percent of experts reporting it is below normal, and 83 percent said it is a buyers’ market for development acquisitions; prices are below construction costs in 78 percent of markets.
Participants are broadly expecting stronger conditions for the current quarter, with two out of three expecting market improvement.
NAR’s latest Commercial Real Estate Outlookoffers projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS Inc., a source of commercial real estate performance information.
Office Markets
Vacancy rates in the office sector are projected to fall from 16.4 percent in the current quarter to 16.0 percent in the first quarter of 2013.
The markets with the lowest office vacancy rates presently are Washington, D.C., with a vacancy rate of 9.5 percent; New York City, at 10.0 percent; and New Orleans, 12.4 percent.
After rising 1.6 percent in 2011, office rents should increase another 1.9 percent this year and 2.4 percent in 2013. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is forecast at 20.1 million square feet in 2012 and 28.1 million next year.
Industrial Markets
Industrial vacancy rates are likely to decline from 11.7 percent in the first quarter of this year to 10.9 percent in the first quarter of 2013.
The areas with the lowest industrial vacancy rates currently are Orange County, Calif., with a vacancy rate of 4.8 percent; Los Angeles, 4.9 percent; and Miami at 7.6 percent.
Annual industrial rent is expected to rise 1.8 percent in 2012 and 2.3 percent next year. Net absorption of industrial space nationally is seen at 40.6 million square feet this year and 57.7 million in 2013.
Retail Markets
Retail vacancy rates are forecast to decline from 11.9 percent in the current quarter to 11.0 percent in the first quarter of 2013.
Presently, markets with the lowest retail vacancy rates include San Francisco, 3.6 percent; Fairfield County, Conn., at 5.1 percent; and Long Island, N.Y., at 5.4 percent.
Average retail rent should rise 0.7 percent this year and 1.2 percent in 2013. Net absorption of retail space is projected at 9.9 million square feet this year and 23.9 million in 2013.
Lawrence Yun, NAR chief economist, said vacancy rates are improving in all of the major commercial real estate sectors. “Sustained job creation is benefiting commercial real estate sectors by increasing demand for space,” he said. “Vacancy rates are steadily falling. Leasing is on the rise and rents are showing signs of strengthening, especially in the apartment market where rents are rising the fastest.”
NAR forecasts commercial vacancy rates over the next year to decline 0.4 percentage point in the office sector, 0.8 point in industrial real estate, 0.9 point in the retail sector and 0.2 percentage point in the multifamily rental market.
“Household formation appears to be rising from pent-up demand,” Yun said. “The tight apartment market should encourage more apartment construction. Otherwise, rent increases could further accelerate in the near-to-intermediate term.”
The Society of Industrial and Office REALTORS® shows a notable gain in its SIOR Commercial Real Estate Index, an attitudinal survey of 297 local market experts.
The SIOR index, measuring the impact of 10 variables, jumped 8.3 percentage points to 63.8 in the fourth quarter, following a gain of 0.6 percentage point in the third quarter. The index remains well below the level of 100 that represents a balanced marketplace, which was last seen in the third quarter of 2007.
Most market indicators posted advances in the fourth quarter, but 71 percent of respondents said leasing activity is below historic levels in their market — an improvement from 83 percent in the third quarter. Only 29 percent report there is ample sublease space available.
Office and industrial space remains a tenant’s market — 87 percent of participants feel that tenants are getting a range of benefits ranging from moderate concessions to deep rent discounts.
Construction activity is still low, with 95 percent of experts reporting it is below normal, and 83 percent said it is a buyers’ market for development acquisitions; prices are below construction costs in 78 percent of markets.
Participants are broadly expecting stronger conditions for the current quarter, with two out of three expecting market improvement.
NAR’s latest Commercial Real Estate Outlookoffers projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS Inc., a source of commercial real estate performance information.
Office Markets
Vacancy rates in the office sector are projected to fall from 16.4 percent in the current quarter to 16.0 percent in the first quarter of 2013.
The markets with the lowest office vacancy rates presently are Washington, D.C., with a vacancy rate of 9.5 percent; New York City, at 10.0 percent; and New Orleans, 12.4 percent.
After rising 1.6 percent in 2011, office rents should increase another 1.9 percent this year and 2.4 percent in 2013. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is forecast at 20.1 million square feet in 2012 and 28.1 million next year.
Industrial Markets
Industrial vacancy rates are likely to decline from 11.7 percent in the first quarter of this year to 10.9 percent in the first quarter of 2013.
The areas with the lowest industrial vacancy rates currently are Orange County, Calif., with a vacancy rate of 4.8 percent; Los Angeles, 4.9 percent; and Miami at 7.6 percent.
Annual industrial rent is expected to rise 1.8 percent in 2012 and 2.3 percent next year. Net absorption of industrial space nationally is seen at 40.6 million square feet this year and 57.7 million in 2013.
Retail Markets
Retail vacancy rates are forecast to decline from 11.9 percent in the current quarter to 11.0 percent in the first quarter of 2013.
Presently, markets with the lowest retail vacancy rates include San Francisco, 3.6 percent; Fairfield County, Conn., at 5.1 percent; and Long Island, N.Y., at 5.4 percent.
Average retail rent should rise 0.7 percent this year and 1.2 percent in 2013. Net absorption of retail space is projected at 9.9 million square feet this year and 23.9 million in 2013.
Could Rising Rents Bump Up Home Sales?
Home sales may get a boost from the rising prices occurring in the rental market, which is making it cheaper to own rather than rent in a growing number of cities.
“We might see a spring season better than the numbers are predicting," Jay Brinkmann, the Mortgage Bankers Association's chief economist, said during the an MBA conference in Florida this week.
The number of renters in the country increased during the housing crisis, while home ownership dropped to a 14-year low. But with rental costs rising nationwide, more renters may be lured to buying a home, particularly with home prices falling and mortgage rates hovering at record lows.
Mike Fratantoni, MBA’s vice president of economics and research, is forecasting home sales to increase 10 percent in 2013. An improving employment picture also is expected to have a positive impact on housing, MBA economists noted.
Still, "everything is going to be based overall where the economy goes," Brinkmann said. "This is going to be a slow year. There are a number of headwinds we're facing in terms of economic growth."
Source: “MBA: Rising Rental Costs May Drive Home Sales Up,” HousingWire (Feb. 23, 2012)
“We might see a spring season better than the numbers are predicting," Jay Brinkmann, the Mortgage Bankers Association's chief economist, said during the an MBA conference in Florida this week.
The number of renters in the country increased during the housing crisis, while home ownership dropped to a 14-year low. But with rental costs rising nationwide, more renters may be lured to buying a home, particularly with home prices falling and mortgage rates hovering at record lows.
Mike Fratantoni, MBA’s vice president of economics and research, is forecasting home sales to increase 10 percent in 2013. An improving employment picture also is expected to have a positive impact on housing, MBA economists noted.
Still, "everything is going to be based overall where the economy goes," Brinkmann said. "This is going to be a slow year. There are a number of headwinds we're facing in terms of economic growth."
Source: “MBA: Rising Rental Costs May Drive Home Sales Up,” HousingWire (Feb. 23, 2012)
Thursday, February 23, 2012
Study Calls Today’s Market Good Time to Buy
Researchers from several universities have just completed a paper that looks at what they call the hurdle rate. This is the point at which it’s equally smart to rent or buy if your only criterion is to build wealth. Based on today’s hurdle rate, it’s a better time to buy than to rent, because you can build more wealth owning than renting.
The study looks at what they call an indifferent renter. This is someone who is just as happy renting as buying depending on which choice is better at building wealth over a holding period, in this case eight years. The study assumes the renter puts the savings from renting into an investment to earn a return.
The hurdle rate is the point of equilibrium between renting and buying where it’s a wash in terms of wealth building. If today’s hurdle rate rate is lower than the average past property appreciation rate for a particular market, then it makes sense to buy, because future property appreciation should be such that an individual will, on average, create more wealth through owning rather than renting. On the other hand, if today’s hurdle rate is higher than the average past property appreciation for a particular market, then this is a sign that ownership can be a drag on wealth creation.
“It’s not a perfect reason to buy, it’s just a test,” says Ken. H. Johnson of Florida International University in Miami, one of the authors of the study, called “The Rent vs. Buy Decision,” released about two weeks ago. “But it’s a good sign that the market’s turning.”
The paper is part of a series Johnson and some other researchers have been doing on the rent vs. buy decision. This paper just looks at the narrow topic of the hurdle rate; other papers look more broadly at whether it makes sense to rent or buy based on financial considerations. In one earlier paper, renting can make more sense in some instances, at least in the short run, if renters invest all of their savings over a period of time in an instrument that generates a yield comparable to what they would earn in appreciation on a house in their market. But since few renters could realistically invest all of their savings from renting, it’s more appropriate to assume renters don’t invest all of their savings. And in these cases, owning is the overwhelmingly better investment over the holding period.
You can learn more about the paper that looks at the hurdle rate in the two-minute video above. The paper was sponsored by the REALTOR® University Research Center, which is part of REALTOR® University.
Source: speakingofrealestate.blogs.realtor.org
The study looks at what they call an indifferent renter. This is someone who is just as happy renting as buying depending on which choice is better at building wealth over a holding period, in this case eight years. The study assumes the renter puts the savings from renting into an investment to earn a return.
The hurdle rate is the point of equilibrium between renting and buying where it’s a wash in terms of wealth building. If today’s hurdle rate rate is lower than the average past property appreciation rate for a particular market, then it makes sense to buy, because future property appreciation should be such that an individual will, on average, create more wealth through owning rather than renting. On the other hand, if today’s hurdle rate is higher than the average past property appreciation for a particular market, then this is a sign that ownership can be a drag on wealth creation.
“It’s not a perfect reason to buy, it’s just a test,” says Ken. H. Johnson of Florida International University in Miami, one of the authors of the study, called “The Rent vs. Buy Decision,” released about two weeks ago. “But it’s a good sign that the market’s turning.”
The paper is part of a series Johnson and some other researchers have been doing on the rent vs. buy decision. This paper just looks at the narrow topic of the hurdle rate; other papers look more broadly at whether it makes sense to rent or buy based on financial considerations. In one earlier paper, renting can make more sense in some instances, at least in the short run, if renters invest all of their savings over a period of time in an instrument that generates a yield comparable to what they would earn in appreciation on a house in their market. But since few renters could realistically invest all of their savings from renting, it’s more appropriate to assume renters don’t invest all of their savings. And in these cases, owning is the overwhelmingly better investment over the holding period.
You can learn more about the paper that looks at the hurdle rate in the two-minute video above. The paper was sponsored by the REALTOR® University Research Center, which is part of REALTOR® University.
Source: speakingofrealestate.blogs.realtor.org
Wednesday, February 22, 2012
Bank and Non-Profit Unite to Provide Homes to Service Members
Operation Homefront, a non-profit which assists families of service members, partnered with Chase to place at least 100 Wounded Warriors, military, and veteran families into permanent residences this year through the Homes on the Homefront program.
Chase is providing the homes, and Operation Homefront will provide ongoing transitional services to the families until properties are deeded to the recipients.
“These individuals have made tremendous sacrifices for our nation, and as they move back into civilian life in a tough economic environment, we hope that a mortgage-free home will make that transition a little easier,” said JPMorgan Chase CEO of mortgage banking Frank Bisignano in a release.
Operation Homefront and Chase will match families served by the non-profit with homes in the bank’s inventory. In order to be an eligible applicant, one must be on active duty, the Guard or Reserve, or have been honorably discharged; one must not own a home; and one must be financially capable of sustaining a home.
Special priority will also be given to families who already live at an Operation Homefront Village, Wounded Warriors, surviving single spouses of those killed in action, and post 9/11 disabled veterans.
“Chase’s imaginative, nation-wide approach to providing quality homes to deserving service members and their families will make a huge difference in how these heroes can make that difficult transition and adjustment into productive civilian lives,” said CEO of Operation Homefront Jim Knotts.
Military families can apply for the program online. A veteran of any era can apply.
Chase is providing the homes, and Operation Homefront will provide ongoing transitional services to the families until properties are deeded to the recipients.
“These individuals have made tremendous sacrifices for our nation, and as they move back into civilian life in a tough economic environment, we hope that a mortgage-free home will make that transition a little easier,” said JPMorgan Chase CEO of mortgage banking Frank Bisignano in a release.
Operation Homefront and Chase will match families served by the non-profit with homes in the bank’s inventory. In order to be an eligible applicant, one must be on active duty, the Guard or Reserve, or have been honorably discharged; one must not own a home; and one must be financially capable of sustaining a home.
Special priority will also be given to families who already live at an Operation Homefront Village, Wounded Warriors, surviving single spouses of those killed in action, and post 9/11 disabled veterans.
“Chase’s imaginative, nation-wide approach to providing quality homes to deserving service members and their families will make a huge difference in how these heroes can make that difficult transition and adjustment into productive civilian lives,” said CEO of Operation Homefront Jim Knotts.
Military families can apply for the program online. A veteran of any era can apply.
Moderate Growth Projected for 2012
Overall, growth is expected to continue for the year, but at a modest rate, according to the Fannie Mae February 2012 Economic Outlook report.
Economic growth is projected to be at 2.3 percent for 2012, an increase compared to 1.6 percent last year, according to the report.
For the first time in seven years, the housing market is projected to contribute to gross domestic product (GDP), the report also stated, but by a very modest amount.
“Risks to the forecast are more balanced between the upside and downside since our January forecast,” said Fannie Mae chief economist Doug Duncan. “The economy appears to be more resilient than in previous months, and should be less vulnerable to shocks, including any spillover from the European sovereign debt crisis.”
Duncan added that economic growth will remain constrained by various headwinds, including a potential spike in oil prices; an expected decline in net exports; and an expected increase in fiscal drag, including the fading of federal spending from the stimulus and a decline in defense spending for operations in Iraq and Afghanistan.
For 2011, the unemployment rate ended at 8.9 percent, and is projected to average at 8.4 percent in 2012, according to an economic forecast report released by the Mortgage Bankers Association (MBA).
The unemployment rate dropped to 8.3 percent in January, down 0.2 points from the previous month.
Mike Fratantoni, VP of research and economics for the MBA, said the organization has increased its estimate of economic growth, and nudged down expectations for the unemployment rate in 2012 considering the stronger job reports from the last two months.
The MBA report projects the 30-year fixed rate mortgage to average at about 4.3 percent for 2012. According to the February 16 Primary Mortgage Market Survey from Freddic Mac, the 30-year rate stayed at an all-time low of 3.87 percent since the first week of February.
Fratantoni also said purchase applications have come in weaker than anticipated, while refinance applications have come in considerably stronger.
According to an MBA report released February 15, the Market Composite Index, a measure of mortgage loan application volume, decreased 1 percent compared to the previous week. The Refinance Index increased 0.8 percent from the previous week, reaching its highest level since August 8, 2011. The refinance share of mortgage activity inched up to 81.1 percent of total applications, a slight increase from 80.5 percent for the previous week.
Foreclosures activity in 2012 is predicted to increase due to artificially low numbers in 2011 from foreclosure processing delays, according to the 2012 foreclosure market outlook report released by RealtyTrac. Foreclosure activity is not expected to return to the 2009 peak and is projected to decrease in 2013, according to the report.
Economic growth is projected to be at 2.3 percent for 2012, an increase compared to 1.6 percent last year, according to the report.
For the first time in seven years, the housing market is projected to contribute to gross domestic product (GDP), the report also stated, but by a very modest amount.
“Risks to the forecast are more balanced between the upside and downside since our January forecast,” said Fannie Mae chief economist Doug Duncan. “The economy appears to be more resilient than in previous months, and should be less vulnerable to shocks, including any spillover from the European sovereign debt crisis.”
Duncan added that economic growth will remain constrained by various headwinds, including a potential spike in oil prices; an expected decline in net exports; and an expected increase in fiscal drag, including the fading of federal spending from the stimulus and a decline in defense spending for operations in Iraq and Afghanistan.
For 2011, the unemployment rate ended at 8.9 percent, and is projected to average at 8.4 percent in 2012, according to an economic forecast report released by the Mortgage Bankers Association (MBA).
The unemployment rate dropped to 8.3 percent in January, down 0.2 points from the previous month.
Mike Fratantoni, VP of research and economics for the MBA, said the organization has increased its estimate of economic growth, and nudged down expectations for the unemployment rate in 2012 considering the stronger job reports from the last two months.
The MBA report projects the 30-year fixed rate mortgage to average at about 4.3 percent for 2012. According to the February 16 Primary Mortgage Market Survey from Freddic Mac, the 30-year rate stayed at an all-time low of 3.87 percent since the first week of February.
Fratantoni also said purchase applications have come in weaker than anticipated, while refinance applications have come in considerably stronger.
According to an MBA report released February 15, the Market Composite Index, a measure of mortgage loan application volume, decreased 1 percent compared to the previous week. The Refinance Index increased 0.8 percent from the previous week, reaching its highest level since August 8, 2011. The refinance share of mortgage activity inched up to 81.1 percent of total applications, a slight increase from 80.5 percent for the previous week.
Foreclosures activity in 2012 is predicted to increase due to artificially low numbers in 2011 from foreclosure processing delays, according to the 2012 foreclosure market outlook report released by RealtyTrac. Foreclosure activity is not expected to return to the 2009 peak and is projected to decrease in 2013, according to the report.
Overdue Mortgages Number 6,082,000
New data from Lender Processing Services (LPS) shows that as of the end of January, there were 6,082,000 mortgages in the U.S. going unpaid. That tally includes loans that are 30 or more days delinquent and loans in foreclosure.
LPS’ mortgage performance statistics are derived from its loan-level database of nearly 40 million mortgage loans.
The national mortgage delinquency rate as of January month-end was 7.97 percent. LPS determines the delinquency rate as a measurement of all loans behind by at least one payment, excluding those already in the process of foreclosure.
The delinquency rate registered a decline, both for the month and the year, with January’s rate down 2.2 percent from December 2011 and down 10.5 percent from January 2011.
The total foreclosure inventory rate hit 4.15 percent last month – up 1.1 percent compared to December 2011, but down a slight 0.1 percent when comparing year-over-year numbers.
According to LPS’ report, there were 2,084,000 properties that were counted as part of the foreclosure inventory last month.
The number of properties with mortgages 30 or more days past due but not yet referred to a foreclosure attorney tallied 3,998,000. Of these, 1,772,000 had been delinquent for 90 days or longer.
LPS says Florida had the highest percentage of non-current mortgages last month, followed by Mississippi, Nevada, New Jersey, and Illinois.
Non-current totals combine foreclosures and delinquencies as a percent of all active loans in that state.
States with the lowest percentage of non-current loans in January included Montana, Alaska, Wyoming, South Dakota, and North Dakota.
LPS’ mortgage performance statistics are derived from its loan-level database of nearly 40 million mortgage loans.
The national mortgage delinquency rate as of January month-end was 7.97 percent. LPS determines the delinquency rate as a measurement of all loans behind by at least one payment, excluding those already in the process of foreclosure.
The delinquency rate registered a decline, both for the month and the year, with January’s rate down 2.2 percent from December 2011 and down 10.5 percent from January 2011.
The total foreclosure inventory rate hit 4.15 percent last month – up 1.1 percent compared to December 2011, but down a slight 0.1 percent when comparing year-over-year numbers.
According to LPS’ report, there were 2,084,000 properties that were counted as part of the foreclosure inventory last month.
The number of properties with mortgages 30 or more days past due but not yet referred to a foreclosure attorney tallied 3,998,000. Of these, 1,772,000 had been delinquent for 90 days or longer.
LPS says Florida had the highest percentage of non-current mortgages last month, followed by Mississippi, Nevada, New Jersey, and Illinois.
Non-current totals combine foreclosures and delinquencies as a percent of all active loans in that state.
States with the lowest percentage of non-current loans in January included Montana, Alaska, Wyoming, South Dakota, and North Dakota.
Overdue Mortgages Number 6,082,000
New data from Lender Processing Services (LPS) shows that as of the end of January, there were 6,082,000 mortgages in the U.S. going unpaid. That tally includes loans that are 30 or more days delinquent and loans in foreclosure.
LPS’ mortgage performance statistics are derived from its loan-level database of nearly 40 million mortgage loans.
The national mortgage delinquency rate as of January month-end was 7.97 percent. LPS determines the delinquency rate as a measurement of all loans behind by at least one payment, excluding those already in the process of foreclosure.
The delinquency rate registered a decline, both for the month and the year, with January’s rate down 2.2 percent from December 2011 and down 10.5 percent from January 2011.
The total foreclosure inventory rate hit 4.15 percent last month – up 1.1 percent compared to December 2011, but down a slight 0.1 percent when comparing year-over-year numbers.
According to LPS’ report, there were 2,084,000 properties that were counted as part of the foreclosure inventory last month.
The number of properties with mortgages 30 or more days past due but not yet referred to a foreclosure attorney tallied 3,998,000. Of these, 1,772,000 had been delinquent for 90 days or longer.
LPS says Florida had the highest percentage of non-current mortgages last month, followed by Mississippi, Nevada, New Jersey, and Illinois.
Non-current totals combine foreclosures and delinquencies as a percent of all active loans in that state.
States with the lowest percentage of non-current loans in January included Montana, Alaska, Wyoming, South Dakota, and North Dakota.
LPS’ mortgage performance statistics are derived from its loan-level database of nearly 40 million mortgage loans.
The national mortgage delinquency rate as of January month-end was 7.97 percent. LPS determines the delinquency rate as a measurement of all loans behind by at least one payment, excluding those already in the process of foreclosure.
The delinquency rate registered a decline, both for the month and the year, with January’s rate down 2.2 percent from December 2011 and down 10.5 percent from January 2011.
The total foreclosure inventory rate hit 4.15 percent last month – up 1.1 percent compared to December 2011, but down a slight 0.1 percent when comparing year-over-year numbers.
According to LPS’ report, there were 2,084,000 properties that were counted as part of the foreclosure inventory last month.
The number of properties with mortgages 30 or more days past due but not yet referred to a foreclosure attorney tallied 3,998,000. Of these, 1,772,000 had been delinquent for 90 days or longer.
LPS says Florida had the highest percentage of non-current mortgages last month, followed by Mississippi, Nevada, New Jersey, and Illinois.
Non-current totals combine foreclosures and delinquencies as a percent of all active loans in that state.
States with the lowest percentage of non-current loans in January included Montana, Alaska, Wyoming, South Dakota, and North Dakota.
Plans to Involve Private Investors Lessen Role of Fannie and Freddie
The Federal Housing Finance Agency (FHFA) released a three-part goal Tuesday to phase out the dominant role of Fannie Mae and Freddie Mac and allow for more private investors into the mortgage industry.
The first part of the goal involves building a new infrastructure to allow the private sector to participate in the secondary market. The goal includes national standards for the mortgage securitization process that Congress and participants can use to develop the mortgage market, according to a letter from the FHFA explaining the strategic plan. The letter also states that the GSEs securitize $100 billion per month in new mortgages, and today, no private sector infrastructure exists that is capable of doing this.
The second goal would be to contract the GSEs’ operations to the private sector, gradually moving mortgage credit risk from the GSEs to private investors, according to the letter.
The last goal is to continue with programs and initiatives to prevent foreclosures and ensure mortgage credit is available.
In September of 2008, the GSEs were placed into a conservatorship by the U.S Treasury amidst the housing market crises to keep the two mortgage giants in operation. The conservatorship for the GSEs meant the government would oversee their operations temporarily.
Since that time, the GSEs have received more than $180 billion in taxpayer support, according to the letter.
“With the conservatorships operating for more than three years and no near-term resolution in sight, it is time to update and extend the goals and directions of the conservatorships,” said Edward J. DeMarco, acting director of the FHFA.
Since entering the conservatorship, the GSEs have bought or guaranteed about three out of every four mortgages originated in the U.S., according to the letter.
In order to shift mortgage credit risk from the GSEs to private investors, several plans are being considered or are already implemented, according to the letter.
One includes a gradual increase in guarantee fee pricing so that the price may become closer to the level expected if mortgage credit risk was based on private capital. In September 2011, the FHFA announced plans to continue towards gradual price increases based on risk and the cost of capital, and in December of that year, Congress required the FHFA to increase guarantee fees by at least an average of 10 basis points, according to the letter.
Currently, most GSE mortgage securities are fully guaranteed, but one idea proposes to establish loss-sharing arrangements and have private investors bear some or all of the credit risk.
Another plan under consideration is to expand mortgage insurance coverage on loans.
The first part of the goal involves building a new infrastructure to allow the private sector to participate in the secondary market. The goal includes national standards for the mortgage securitization process that Congress and participants can use to develop the mortgage market, according to a letter from the FHFA explaining the strategic plan. The letter also states that the GSEs securitize $100 billion per month in new mortgages, and today, no private sector infrastructure exists that is capable of doing this.
The second goal would be to contract the GSEs’ operations to the private sector, gradually moving mortgage credit risk from the GSEs to private investors, according to the letter.
The last goal is to continue with programs and initiatives to prevent foreclosures and ensure mortgage credit is available.
In September of 2008, the GSEs were placed into a conservatorship by the U.S Treasury amidst the housing market crises to keep the two mortgage giants in operation. The conservatorship for the GSEs meant the government would oversee their operations temporarily.
Since that time, the GSEs have received more than $180 billion in taxpayer support, according to the letter.
“With the conservatorships operating for more than three years and no near-term resolution in sight, it is time to update and extend the goals and directions of the conservatorships,” said Edward J. DeMarco, acting director of the FHFA.
Since entering the conservatorship, the GSEs have bought or guaranteed about three out of every four mortgages originated in the U.S., according to the letter.
In order to shift mortgage credit risk from the GSEs to private investors, several plans are being considered or are already implemented, according to the letter.
One includes a gradual increase in guarantee fee pricing so that the price may become closer to the level expected if mortgage credit risk was based on private capital. In September 2011, the FHFA announced plans to continue towards gradual price increases based on risk and the cost of capital, and in December of that year, Congress required the FHFA to increase guarantee fees by at least an average of 10 basis points, according to the letter.
Currently, most GSE mortgage securities are fully guaranteed, but one idea proposes to establish loss-sharing arrangements and have private investors bear some or all of the credit risk.
Another plan under consideration is to expand mortgage insurance coverage on loans.
Proposal Gives Lenders Short Sale Response Deadline
A Senate proposal would expedite short sales by giving mortgage lenders or servicers 75 days to respond after receiving a home owner's written request.
Borrowers must submit a copy of a contract with a prospective buyer to the lender/servicer — which can accept it, reject it, or seek an additional three weeks to consider it.
For each instance where the lender/servicer fails to respond, borrowers would receive $1,000, along with other "appropriate relief," according to the bill sponsored by Sens. Lisa Murkowski (R-Alaska), Sherrod Brown (D-Ohio), and Scott Brown (R-Mass).
National Association of REALTORS®' 2012 President Moe Veissi said NAR supports "any effort to improve the process for approving short sales."
Source: "Senate Bill Requires Response to Short Sale Requests Within 75 Days," Housing Wire (02/20/12)
Borrowers must submit a copy of a contract with a prospective buyer to the lender/servicer — which can accept it, reject it, or seek an additional three weeks to consider it.
For each instance where the lender/servicer fails to respond, borrowers would receive $1,000, along with other "appropriate relief," according to the bill sponsored by Sens. Lisa Murkowski (R-Alaska), Sherrod Brown (D-Ohio), and Scott Brown (R-Mass).
National Association of REALTORS®' 2012 President Moe Veissi said NAR supports "any effort to improve the process for approving short sales."
Source: "Senate Bill Requires Response to Short Sale Requests Within 75 Days," Housing Wire (02/20/12)
Is the Downsizing Trend Fading?
Homes are getting bigger again. Census Bureau data shows that 2011 home starts were bigger with more features and amenities than those built in 2010.
According to the data, the average new-home size grew from 2,381 square feet in 2010 to 2,522 square feet in 2011. Forty-two percent of the new homes had four or more bedrooms, and 28 percent of the new homes had three or more full bathrooms.
However, housing experts are quick to point out that home construction last year saw its worst year on record, so the characteristics of new homes from last year is being pulled from a much smaller pool of homes than previous years.
Also, the average sales price for a new home also increased last year, going from $264,900 in 2010 to $274,400 in 2011.
Source: “Size Matters: Newly Constructed Home Trends in 2011,” RISMedia (Feb. 16, 2012)
According to the data, the average new-home size grew from 2,381 square feet in 2010 to 2,522 square feet in 2011. Forty-two percent of the new homes had four or more bedrooms, and 28 percent of the new homes had three or more full bathrooms.
However, housing experts are quick to point out that home construction last year saw its worst year on record, so the characteristics of new homes from last year is being pulled from a much smaller pool of homes than previous years.
Also, the average sales price for a new home also increased last year, going from $264,900 in 2010 to $274,400 in 2011.
Source: “Size Matters: Newly Constructed Home Trends in 2011,” RISMedia (Feb. 16, 2012)
Fewer Home Owners Behind on Payments
The number of home owners behind on their mortgage payments dropped to the lowest level in three years, according to a report of data from the fourth quarter of 2011 released by the Mortgage Bankers Association.
"Mortgage performance is also improving faster than the overall economy," says Jay Brinkmann, MBA's chief economist.
According to MBA, 7.6 percent of residential mortgages were at least 30 days past due on their payments in the fourth quarter of 2011. Last year, the percentage was 8.3, and the peak of 10 percent was reached in early 2010. Mortgage delinquencies usually hover around 5 percent in more stable markets.
Still, while the lower delinquencies serve as an important sign needed for a healing housing market, MBA still caution that the number of loans in foreclosure remains high. About 4.4 percent of all loans were in foreclosure in the fourth quarter. The peak reached one year earlier was 4.6 percent.
Source: “Mortgage Delinquencies Hit Three-Year Low,” The Wall Street Journal (Feb. 16, 2012)
"Mortgage performance is also improving faster than the overall economy," says Jay Brinkmann, MBA's chief economist.
According to MBA, 7.6 percent of residential mortgages were at least 30 days past due on their payments in the fourth quarter of 2011. Last year, the percentage was 8.3, and the peak of 10 percent was reached in early 2010. Mortgage delinquencies usually hover around 5 percent in more stable markets.
Still, while the lower delinquencies serve as an important sign needed for a healing housing market, MBA still caution that the number of loans in foreclosure remains high. About 4.4 percent of all loans were in foreclosure in the fourth quarter. The peak reached one year earlier was 4.6 percent.
Source: “Mortgage Delinquencies Hit Three-Year Low,” The Wall Street Journal (Feb. 16, 2012)
The 10 Most Popular Housing Markets
Chicago continues to hold on to the top-spot in January as the most widely searched housing market at Realtor.com. The following are the top searched housing markets from last month, according to Realtor.com data of 146 metro areas.
1. Chicago
Median list price: $186,000
2. Detroit
Median list price: $81,700
3. Los Angeles-Long Beach, Calif.
Median list price: $320,444
4. Philadelphia, Pa.-N.J.
Median list price: $221,995
5. Phoenix-Mesa, Ariz.
Median list price: $169,500
6. Atlanta
Median list price: $150,000
7. Tampa-St. Petersburg-Clearwater, Fla.
Median list price: $142,500
8. Dallas
Median list price: $189,900
9. Orlando, Fla.
Median list price: $155,000
10. Las Vegas, Nev.-Ariz.
Median list price: $121,500
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
1. Chicago
Median list price: $186,000
2. Detroit
Median list price: $81,700
3. Los Angeles-Long Beach, Calif.
Median list price: $320,444
4. Philadelphia, Pa.-N.J.
Median list price: $221,995
5. Phoenix-Mesa, Ariz.
Median list price: $169,500
6. Atlanta
Median list price: $150,000
7. Tampa-St. Petersburg-Clearwater, Fla.
Median list price: $142,500
8. Dallas
Median list price: $189,900
9. Orlando, Fla.
Median list price: $155,000
10. Las Vegas, Nev.-Ariz.
Median list price: $121,500
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
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