Home is Never Far Away

Market Matters

Bank of America to pay record $16.65 billion to settle mortgage claims Source: LA Times In what amounts to the largest settlement by a single company in U.S. history, the Justice Department has announced that Bank of America Corp. will pay $16.65 billion to end federal and state investigations into the sale of toxic mortgage securities during the subprime housing boom. California will receive $300 million from the settlement to reimburse the CalPERS and CalSTRS pension funds. Read the full story

3 facts crippling California's housing recovery Source: HousingWire   While California’s job growth and economy continue to improve, major hurdles remain for housing’s recovery. Firstly, affordability is a huge concern as rapid home price increases, mixed with a lack of affordable inventory is leaving little room for first-time borrowers to jump into the market. Tight credit and stagnant incomes are another concern if prices remain high. Read the full story

Housing construction surges in July Source: The Hill During July, housing construction hit its highest level in eight months as the sector shows signs of picking up pace in the second half of the year. After two months of drops, construction jumped 15.7 percent last month to a seasonally adjusted annual rate of 1.09 million homes, the fastest pace since the 1.11 million posted in November, according to the Commerce Department. Read the full story

Young Adults Are Living With Their Parents, But Not As Much As (Or Why) You Think

Source: Wall St. Journal

Young Americans are living with their parents in greater numbers, but don’t blame the economy or housing costs. Blame student loans. The proportion of young adults aged 18 to 31 living with parents has hit 36% from 31% in 2005, and indebtedness—especially rising student debt—explains roughly 30% of this increase, according to a new study by Lisa Dettling and Joanne Hsu at the Federal Reserve Board.
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Market Matters

Many Renters Could Afford Mortgages, But Can't Afford Homes
Source: The Atlantic

In many metro areas across the U.S., more than 50 percent of renters could afford to own a home, so why aren’t more young renters becoming first-time home-buyers right now? According to data analysis, the Atlantic notes that “Young renters don't appear to be transitioning into homeownership at the rate they could be. Either renters are opting out of the American dream, or it remains out of reach for reasons beyond affordability.” Possible explanations include tight credit, low inventory, and investor cash. 
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Closing costs: States ranked

Source: Bankrate

 

States have been ranked by average closing costs, from most expensive to least expensive. To determine the rankings, Bankrate requested good faith estimates for a $200,000 mortgage loan from up to 10 lenders in each state. The hypothetical loan was for a purchase of a single-family house in the state's largest city, using a 20 percent down payment, with excellent credit. California ranked as the 22nd most expensive state for closing costs.
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Homeownership at near 20-year low, but some bright spots
Source: HousingWire

Homeownership in the U.S. continues to fall, down to a low of 64.7 percent, a level not seen since 1995. Despite low interest rates and expanding credit availability, affordability has remained an issue. Also, first-time home purchasers are declining as a share of total home sales. Experts have expressed concerns that loosening of mortgage credit and a reduction in home price growth won’t be enough to reduce the trend of declining mortgage origination.
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No project left undone

Market Matters

House hunting in the Southern California summer real-estate doldrums
Source: LA Daily News

Home shoppers in Southern California this summer are confronted with a market trying to shake the lingering effects of the Great Recession. From the South Bay through the valleys and into the Inland Empire, there are fewer homes on the market, and appreciation of home prices has moderated —thereby prompting sellers to hold onto their homes longer — and as a result, homes sales are weak.
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Realtor.com®’s First Economist: I’m Anything But Typical

Source: N.A.R.

 

Realtor.com® has hired Jonathan Smoke as its first economist in its 18-year history to compete with rivals Zillow and Trulia, both of which have long had their own economists to provide insights on the market. Smoke previously served as chief economist, senior vice president, and other executive roles at real estate marketing firm Hanley Wood. Smoke stated, “I’m just getting started surveying what we can produce, and I need to hear from consumers and REALTORS® first-hand about what is missing and needed that no company is producing today.”
Read the full story

Black Homeowners Are Worse Off Today Than They Were 40 Years Ago
Source: The Atlantic

A new study shows that changes in the market that led to the foreclosure crisis have essentially wiped out the gains in racial–residential equality made by black homeowners since the 1970s, and they have been dramatically more likely to transition back to renter status than whites following the recession. Overall, black homeowners in high-income neighborhoods were twice as likely to have subprime mortgages as white homeowners in low-income neighborhoods.
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The future of affordable housing is Lego houses?
Source: HousingWire

 

Is a real-life Lego house the answer to creating more affordable housing? A Danish company is showcasing a prototype for a 3D printed Lego-style home idea. The company stated, “If our Lego-constructed houses are good enough to be the home of tiny Lego figures, then why shouldn't they be good enough on a much bigger scale, to house real people?”
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Julián Castro sworn in, spends first day as HUD Secretary
Source: HousingWire

Julián Castro is now officially the head of the Department of Housing and Urban Development after being sworn into office earlier this week in Washington, D.C. In taking the reins, the 39-year-old is now the highest ranking Hispanic in the federal bureaucracy and the youngest member of the Obama cabinet. President Obama stated, “Julián has lived the American Dream in his own life, and I’m confident he will help Americans across our country seize their own piece of that dream for themselves and their children."
Read the full story

Some Home Builders Say First-Time Buyers Returning, Others Not Sure
Source: Wall Street Journal

Many major builders across the nation say they’re getting mixed signals about whether first-time buyers are truly returning to the housing market. PulteGroup Inc. stirred optimism after announcing that sales for its entry-level brand leapt by 26 percent in the second quarter, while D.R. Horton, the largest U.S. builder by closings, has seen a low percentage of mortgage originations going to first-timers. Conflicting signals were also seen when KB Homes stated it saw a revival in these buyers while Lennar Corp did not. Many analysts expect these buyers to return in full force in the second half of this year.
Read the full story

Gen Y is ready to buy!

New Home Loan Programs

We are starting to see more and more programs becoming available that are outside the guidelines of Fannie Mae and Freddie Mac.  In the past these programs came with really high rates and fees that made them difficult to sell.  Below are some examples of what is now available.  Most programs are available up to70% - 75% of the value or sales price of the property:

 

·        1 Year Seasoning out of Short Sale  (currently 4 years Fannie/Freddie & 3 years FHA)

·        1 Year Seasoning out of Foreclosure (currently 7 years Fannie/Freddie & 3 years FHA)

·        2 Year Seasoning Bankruptcy (currently 4 years Fannie/Freddie & 2 years FHA)

·        Loan amounts up to 1.2 million

 

Most programs are 3, 5, or 7 year ARM programs with rates under 4.0%.  10 and 15 year fixes programs are available.  These are excellent programs for those buyers that don’t qualify for the Fannie/Freddie or FHA guidelines.

Buyer Optimism

Selling my daughter on homeownership

Source: CNBC   David H. Stevens, president and CEO of the Mortgage Bankers Association, advocates professionally for aspiring homeowners all across the nation by promoting a healthy entry-level housing market. But he cannot convince his own daughter that the time is right for her to buy a home of her own. Stevens argues that one of the best decisions he ever made was buying his first home at the age of 27 in 1984. Pointing to his own daughter, Stevens writes, “We cannot underestimate the impact of this decline in first-time buyers; the health of the housing market relies heavily on them.” Read the full story

Hispanic Borrowers Diminishing in California Housing

Source: Bloomberg The Hispanic share of the market for home mortgages fell to 22 percent in 2013 from 24 percent the prior year and is now barely half of the 2006 peak, according to an analysis of federal lending data by the Urban Institute. While Hispanics account for 39 percent of the population, more Hispanics are dropping out of the market even as their numbers grow, surpassing whites this year as the largest ethnic group in California. Read the full story

Humans make a house for sale feel more like home

Source: Marketplace A nationwide home staging company is allowing people to apply to become “home managers” of a new home, which entails paying a small fee to live in a luxury home on the market. This “home manager” method is the company’s most effective service, as they argue a home feels more attractive to buyers if someone actually lives in it. Of course, this lifestyle involves a lot of moving since a home might sell after just a few weeks. Read the full story

Supreme Court to Weigh Tactic Used to Combat Housing Bias

Source: The Associated Press   Justices on the Supreme Court have agreed to take up a Texas case that challenges the theory that certain housing or lending practices can illegally harm minority groups, even when there is no proof of intent to discriminate. Banks and mortgage companies have argued that federal housing laws should punish only intentional acts of discrimination, while civil rights groups argue that statistics should be allowed to prove that race-neutral policies disproportionately harm racial minorities. Read the full story

The Housing Market Is Improving, But There Still Aren't Enough Affordable Homes to Go Around

Source: The Atlantic   Homeownership may be slipping out of reach not just for lower income Americans, but working and middle class people as well, as there is not enough affordable housing inventory to go around in most of the country's large metro areas, according to Zillow. This tightness of supply will continue to have an impact on first-time home buyers, as well as anyone trying to buy a low-end home. Read the full story

Chinese investors remain an X Factor for the US housing market

Source: HousingWire Richard K. Green, director of the University of Southern California Lusk Center for Real Estate, writes that for the first time, the Chinese surpassed Canadians as the top investors in American residential real estate. Investors from China invested $22 billion in the U.S. housing market during the 12-month period that ended in March. He notes that Chinese investors consider the U.S. market and even the coastal cities of California to be relatively inexpensive.  Read the full story

Interest Rate Update

Interest Rate Update

WOW!!! Stock Market is down today over 400 points at 11am. Stocks have been losing ground every day this week and some think this is the big correction. Great for rates

How Will Lower Rates Impact Real Estate Sales?

As interest rates ease it is fairly obvious that more people can qualify for more homes. The affordability index measures the what percentage of people making the average wage can afford the average priced home. As rates ease that number goes up. It will become widely publicized that rates are falling as the government strives to keep the housing market in high gear.

How Does This Affect You ?

This is obviously GREAT news. Nobody can predict how long interest rates will stay under 4.0% but it could be into next year. The housing market has slowed due to recent increase in prices and a slight rise in interest rates above 4.0%. With home prices stabilizing and rates fall-ing below 4.0%, this could be a great opportunity for people to buy again. Get the word out to all your buyers, sellers, and anybody else you can find.

30 Year Fixed up to $417,000	3.625% to 4.0%
30 Year Fixed "Agency" up to $625,500	3.75% to 4.125%
30 Year Fixed FHA up to $417,000	3.25% to 3.75%
30 Year Fixed FHA "Jumbo" up to $729,500	3.375% to 3.875%

Debt-to-income ratio can sink mortgage application

Debt-to-income ratios (DTIs) proved to be the top answer that credit-risk managers at financial institutions across the country cited when declining to fund a loan request, according to a new survey by credit-score giant FICO. Nearly 60 percent of risk managers in the FICO study rated excessive DTIs as their No. 1 concern factor — five times the percentage who picked the next biggest turnoff. So if you’re in the market for a mortgage, work on your debt-to-come ratio to boost your chances of qualifying. Read the full story

Where Can Renters Afford to Own? Interactive Map

Source: Harvard Joint Center for Housing Studies   Harvard’s Joint Center for Housing Studies found that in looking at renters in the age group of 25-34, most would find the monthly costs of homeownership affordable in many metros across the country. Indeed, in 42 of the 85 metros studied, more than half of renters can afford the monthly costs of homeownership. So where are these buyers? Low inventory in many areas, combined with unemployment, income stagnation, and student loan debt have hampered sales. Read the full story

FHA Premium Issue Sure to Challenge New HUD Chief

Source: National Mortgage News Industry calls to lower Federal Housing Administration premiums will be a key issue that Julian Castro, the new head of the Department of Housing and Urban Development, will have to address when he takes the reins. Banking and housing groups have stressed that lowering FHA premiums is crucial to improving loan affordability. Castro’s predecessor, Shaun Donovan, resisted calls to lower premiums.

Read the full story

School or Pool?

How to Freak Out About Millennials in a Statistically Responsible Manner

Source: The Atlantic   Is the meme about Millennials living in their parents' basements overblown? The Atlantic argues that it’s money and not basements that should worry the housing market because young people simply aren’t making enough money. There's just one economy, and it's slashed median incomes to historic lows. “More years of school + more student debt + lower starting salaries + a nervous housing market + stricter rules for new home-buyers = no new home buyers.” Read the full story

Tiny Houses Big With U.S. Owners Seeking Economic Freedom

Source: Bloomberg

Micro buildings and tiny homes are growing in popularity for many Americans who want to minimize expenses while achieving the dream of homeownership. Dramatic downsizing appears to be gaining interest among Americans based on increased sales of plans and ready-made homes and growing audiences for websites related to the niche. These tiny houses are typically 500 or fewer square feet. Read the full story

Consumers Increasingly Expect Higher Rents and Lower Home Prices

Source: Mortgage News Daily   According to Fannie Mae's National Housing Survey, there is slowly increasing confidence in the housing market and in the economy in general; however, the greatest change was in consumer expectations about interest rates. The number of respondents who think this is a good time to buy a house increased 2 percentage points from May to 70 percent, but those who think it is a good time to sell reversed a four-month climb to drop from 43 percent to 40 percent. Fifty-four percent of respondents expect rental prices to rise over the next 12 months compared to 51 percent in May. Read the full story

Investment plan to spur first-time home buyers

Source: HousingWire   The state of Virginia has enacted a new law that will allow first-time home buyers to invest up to $50,000 in financial institutions and declare them first-time home buyer savings plan. Proponents hope the policy will stimulate the housing market by allowing potential homeowners to put their tax-free earnings toward a down payment or closing costs. The law was championed by the Virginia Association of REALTORS®.  Read the full story

Market Matters

A city's 'walkability' drives real estate values Source: CNBC A new report from Smart Growth America ranks the walkability of the nation's 30 largest metropolitan areas, and there is a distinct correlation between walkability and real estate values. The author of the report, Chris Leinberger, commented, “Walkable, urban for-sale housing is by far the most expensive housing in the country. The range, depends on the market, between 40 percent and 200 percent greater than drivable, suburban housing. Twenty-five years ago that relationship didn't exist because walkable (cities back then) was not valued.” Read the full story

UCLA Anderson Forecast predicts 'normal' California housing market Source: LA Times   Construction jobs should continue to help drive job growth in Southern California over the next few years, according to the quarterly UCLA Anderson Forecast. The forecast predicts that the market will move toward more “normal territory” as foreclosures and other so-called distressed properties no longer flood the market, which will encourage builders to launch new construction. Read the full story

Obama’s housing nominee open to ending Fannie and Freddie Source: The Hill San Antonio Mayor Julián Castro, who President Obama nominated to be secretary for Housing and Urban Development (HUD), appeared before the Senate Banking Committee this week and expressed willingness to end the federal backstop established through Fannie Mae and Freddie Mac. Castro commented, “I absolutely believe that there are better alternatives than what we have in place with this duopoly and with the conservatorship.” Read the full story

An Update from Aracely!

Change is in the air!

 

I am also excited to announce that I am moving offices to TNG Real Estate in La Habra.  You will experience the same great service and professionalism in a great new location.  I look forward to serving all your real estate needs.

 

 

 

10 Reasons Why Homeownership Never Goes Out Of Style

Source: BuzzFeed Shaun Donovan, the outgoing secretary of the Department of Housing & Urban Development, decided to go out in style with a humorous list of reasons “homeownership is great” on the popular website BuzzFeed. Donovan introduced the list by writing, “For those ready to own, homeownership has historically served as a vehicle for Americans to build equity, start businesses, put kids through college, and retire with comfort and dignity.” Read the full story

Five Star Professional Award Winner - Aracely Gordon!

I am thrilled to report that, once again, I have become a FIVE STAR professional award winner for Orange County and will be featured in Orange Coast Magazine in December 2014.  Be sure to look for me!
I'm currently a two year LA County Five Star award winner

 

 

Young Optimism

Market Matters

Housing Isn’t Overvalued, Except in These 10 Spots Source: Wall St. Journal With winter over and housing data showing a market that is bouncing back, bubble markets are few and far between—that is with California being the exception. Eight of the 10 most overvalued U.S. housing markets are in the Golden State; specifically, Orange Country, Los Angeles, and Riverside-San Bernardino are in the top four. Potential bubbles are determined by using price-to-income and price-to-rent ratios, as well as comparing home prices to historical trends. Read the full story

5 Surprising Missteps That Sabotage Mortgage-Seekers Source: AOL Real Estate   Common credit mistakes could complicate the mortgage process for potential home buyers. Consequently, knowing ahead of time what one shouldn’t do can make all the difference in ensuring that a buyer does not jeopardize the loan approval process. For example, applying for credit during the loan process is a red flag. Read the full story

International buyers are looking for more than just vacation homes Source: HousingWire Dense, urban areas are now attracting the attention of international buyers rather than holiday properties in markets like Miami, Aspen, and Palm Springs. Prospective buyers in Brazil, Australia, France, Italy and Russia are searching for urban areas with greater frequency, primarily in Los Angeles, New York City, and Miami. Read the full story Housing prices cooling slightly Source: San Francisco Chronicle   While home prices aren’t exactly falling, they are rising at a slower pace. According to the S&P/Case-Shiller 20-city home price index, prices rose "only" 10.8 percent in April, compared with April of last year, which was a smaller increase than the 11.6 percentage increase that experts were expecting, and substantially lower than in previous months. Read the full story

Market Matters

Loosened Mortgage Rule Advances After SEC Drops Objection Source: Wall Street Journal Concerns about a down-payment requirement that could crimp access to credit and impede the fragile housing recovery led to a revised approach to mortgage rules that won’t hold borrowers to a 20 percent down-payment to get a loan (or lenders having to retain five percent of a loan's risk once it was packaged and sold to investors). Under the revision, regulators wouldn't require a down payment and would include a broad exemption for banks and other issuers of mortgage-backed securities from having to retain a portion of the credit risk on their books. Read the full story

Home Price Gains of 20% Vanish as Hottest Markets Cool Source: Bloomberg   For the first time in almost two years, none of the 100 largest U.S. metropolitan areas had increases of more than 20 percent in residential asking prices last month. In light of softened demand from buyers, asking prices gained 8 percent last month from a year earlier, the slowest pace in 13 months. Read the full story

Why Renters Are Ending Up in the Suburbs Source: The Atlantic In fast-growing suburbs and exurbs, rentals are the major force driving growth—just not multifamily rentals. Due to an abundance of stock left over from the single-family housing boom (and the subsequent Great Recession), this housing stock is being opened to a new generation of suburban renters by investors who bought up inventory only to rent it out. Read the full story

Real Estate Crushes

Market Matters

Americans Shut Out of Housing as FHA Fees Jump Source: Bloomberg For many buyers seeking a mortgage backed by the Federal Housing Administration, homeownership may no longer be attainable with increases in mortgage insurance fees, especially at a time when housing affordability remains a challenge for many Americans. The new FHA fees can tack on a couple hundred extra dollars every month, which experts argue has contributed to the decline in first-time buyers. Read the full story

Are Student Loans Really Killing the Housing Market? Source: The Atlantic   Derek Thompson of the Atlantic points out that student debt is destroying demand among first-time buyers, but it's not affecting their share of the market. Examining the statistics, he argues, “First-time home buyers make up a historically normal share of new homeowner families, but a historically small share of new home buyers, because a big slice of the housing market is owned by big institutional investors who aren't living in the homes they buy.” He concludes that student loans are indeed depressing demand for homes, but only slightly more than the overall market for homes is already depressed. Read the full story

One in Three SoCal homes paid for with cash: Who's buying? Source: KPCC Around 33 percent of all home purchases in California were paid in cash in the first quarter, the highest level since 2011, according to RealtyTrac. Beverly Hills, Arcadia, and San Marino were areas with a high percentage of home sales paid in cash, with many all cash buyers coming from overseas. Read the full story