Market Matters

White House Representative Speaks on Housing Finance Reform
Source: DSNews.com

Gene Sperling, director of the National Economic Council for the White House, recently discussed the president’s four major principles for housing finance reform at an industry symposium. Sperling emphasized maintaining widespread access to the 30-year, fixed-rate mortgage, and enhancing the role of private capital in the market.
Read the full story

New home sales surge in October
Source: The LA Times

The Commerce Department is reporting that sales of newly built single-family houses rose 25.4 percent from September to a seasonally adjusted annual rate of 444,000. Sales are up 21.6 percent in comparison to October 2012.
Read the full story

Mortgage loan quality improved in 2013 

Source: HousingWire

 

Home loan eligibility jumped to 96.44 percent in the first half of the year from 93.66 percent in 2012, according to a new report from compliance technology firm Quality Mortgage Services.
Read the full story

FHFA: Conforming Loan Limits Remain Unchanged
Source: DSNews.com

The Federal Housing Finance Agency has announced that the 2014 maximum loan limit for mortgages acquired by Fannie Mae and Freddie Mac will remain at $417,000 for one-unit properties in most areas of the country. There is a cap of $625,500 in high-cost areas.
Read the full story

Senate opens door for immediate housing finance reform
Source: The Hill
Due to the Senate’s elimination of the filibuster for presidential nominations, many experts believe Rep. Mel Watt (D-N.C.) finally will be as the next director of the Federal Housing Finance Agency, and with that change in leadership, there could be immediate major housing finance reform that provides greater access to the conventional housing finance market for a variety of buyers.
Read the full story

Key U.S. housing markets challenged by lack of multifamily builds
Source: HousingWire

The latest building permit numbers indicate there were 387,000 authorizations for new multifamily units in October, which is an increase from the past two months. However, experts argue the number is too low and that equity financing for apartment projects is not growing.
Read the full story

Southland home buyers shifting to condos as house prices rise
Source: The LA Times

Since home prices jumped in price this year, southern California home buyers purchased fewer single-family homes in October due to affordability concerns. However, since condos are an affordable path to homeownership in many urban areas, demand increased this year.
Read the full story

Market Matters

Bidding Wars Wane in U.S. Housing Markets on Supply Rise Source: Bloomberg  Higher mortgage rates and an increase in values are reducing affordability, while also encouraging more sellers to list their properties. This could mean price growth will slow after the biggest increases since 2006. The government shutdown may have weakened confidence as well. Read the full story

Young American adults aren't moving as much as they once did Source: The LA Times The lingering effects of the recession are evident in statistics from the Census Bureau, as young adults are stuck in place due to an inability to obtain sufficient credit and income to move to a new home or apartment. The share of moves fell back to 11.7 percent this year. Read the full story

Down Payments Continue to Decline in Third Quarter Source: DSNews.com Lenders appear to have more confidence to lend with less cash down from qualified borrowers, as down payment percentages for 30-year, fixed rate purchase mortgages continue to decline. A new report reveals that the average down payment has dropped 2.74 percent since Q2 2013, according to a study released by LendingTree. As home values improve, the risk of borrowers defaulting on loans has decreased, so lenders have adjusted minimum requirements to attract borrowers. Making sense of the story The average down payment on a 30-year, fixed-rate mortgage loan in the third quarter of this year was 15.73 percent. According to LendingTree, the national average loan amount for a mortgage loan originated in the third quarter was about $218,344. New Jersey (18.8 percent), California (18.6 percent), New York (18.0 percent), D.C. (17.9 percent), and Massachusetts (17.5%) top the list with the highest average down payment percentages. The lowest average down payment percentage in the third quarter took place in Nebraska, where down payments averaged 12.5 percent of loan values. South Dakota (12.8 percent), Arkansas (12.9 percent), and Alabama (12.9 percent) followed Nebraska in the next lowest down payments. They all average under 13 percent for the quarter. Missouri filled the No. 5 spot with an average down payment of 13.1 percent. D.C. ranked highest in loan amount with an average of $309,768 in the third quarter. Read the full story

NO FEDERAL DEBT RELIEF INCOME TAX FOR SHORT SALES

A short sale in California is generally not subject to federal income tax for mortgage debt forgiveness, according to a recent letter from the Internal Revenue Service (IRS). C.A.R. worked closely with Senator Barbara Boxer to obtain this IRS guidance. We are also hopeful that we can promptly obtain similar guidance regarding state income tax for mortgage debt relief income from the California Franchise Tax Board (FTB), which has been awaiting this IRS letter. Given that a homeowner in California generally cannot be held personally liable for a short sale deficiency (see below), the IRS stated in its letter that it would consider the mortgage loan as a nonrecourse obligation that is not subject to federal debt relief income tax.  The amount of indebtedness, however, must be reported as the amount realized for capital gains purposes. Of course, a principal residence is generally excluded from capital gains tax up to $250,000 for single taxpayers and $500,000 for married couples filing joint returns (under 26 U.S.C. § 121). As background, California law generally protects a borrower from owing a deficiency after a short sale of a residential property with one-to-four units, including both first and junior trust deeds (Cal. Code of Civ. Proc. section 580e). Exceptions include fraud, waste, cross-collateralized loan, and a borrower that is a corporation, LLC, or limited partnership. For more information, see C.A.R.’s legal article on Short Sale Deficiencies. Although short sale sellers of a qualified principal residence are currently protected against federal debt relief income tax under the Mortgage Forgiveness Debt Relief Act of 2007, that federal law is set to expire on December 31, 2013, whereas the tax exemption set forth in the IRS letter has no expiration date. Similar protection to the federal Mortgage Forgiveness Debt Relief Act for state income tax under California law has already expired on December 31, 2012. However, other exemptions from federal and state taxation of debt relief income are available, such as for bankruptcies and insolvencies. REALTORS® should encourage their clients to seek the advice of a tax professional regarding the tax consequences of a short sale.

What Buyers want in a new home

Market Matters

Refi Activity Runs Out of Steam Source: The Wall Street Journal  In comparison to last year, applications to refinance a mortgage have decreased by 57 percent. Since mortgage rates started rising last spring, refinance activity fell sharply, particularly in the second half of 2013. Read the full story

One Of Fed's First Quantitative Easers: 'I'm Sorry, America' Source: NPR Andrew Huszar, who oversaw the purchase of $1.25 trillion worth of mortgage bonds in a year, argues in an op-ed for the Wall Street Journal that the first round of quantitative easing did little to make credit any more accessible for the average American. Huszar calls the program the "greatest backdoor Wall Street bailout of all time.” Read the full story

Investors pitch to take over much of Fannie and Freddie  Source: Financial Times   An investor group comprised of hedge funds and private equity companies will put forth a proposal to take over large parts of Fannie Mae and Freddie Mac. The investors want to restructure and reform these agencies using private capital, and they hold more than half the $34.6 billion of preferred shares in Fannie and Freddie. Read the full story

What buyers and sellers need to know about the end-of-year housing market Source: The Washington Post Dynamics of the real estate market are always changing, so understanding your housing and financial position, and where you stand in the buying/selling cycle, will allow you to make the best decisions. Read the full story

Why the Nation’s Housing Market Needs Mel Watt Source: Center for American Progress Rep. Mel Watt (D-NC) is President Barack Obama’s nominee to lead the Federal Housing Finance Agency (FHFA), but Senate Republicans recently blocked a vote to confirm Watt for the position. Two policy analysts argue what’s at stake if the Senate stalls on the vote and housing challenges linger. Read the full story

Housing market another battlefield for U.S. Vets Source: The San Francisco Chronicle New data reveals that our nation’s veterans face unique challenges when it comes to achieving homeownership. When members of our military leave active duty and return to the United States, in most cases they do not return to a home they own. In fact, only 18 percent of veterans return to a home they already own at the end of their service, and only one-third of military families report actually looking for a home within a year of return from active duty, according to the CENTURY 21 Harris poll. Making sense of the story As military service members return from duty and transition to civilian life, 93 percent of veterans indicate that homeownership is important to them. The top road blocks for veterans are the price of homes (36 percent); an inability to come up with a down payment (31 percent); and personal savings (28 percent). Physical or mental health problems create further disadvantages for veterans when it comes to finding employment and a home. It is projected that one in every four homeless persons in this country is a veteran. According to January 2012 figures, there were over 62,000 homeless veterans. The unemployment rate among veterans is 16 percent, which is more than double the nation’s average unemployment rate. Seventy-five percent say that owning a home is one of the most important things for a soldier returning home. Among the reasons that becoming a homeowner is so significant to veterans are a desire to have their own residence (73 percent), to establish a household (43 percent), and to achieve financial security (36 percent). In addition, the majority of veterans (88 percent) indicated that owning a home makes them feel safer. Read the full story

Home Prices Climb in 88 Percent of U.S. Cities

Source: Bloomberg

The NATIONAL ASSOCIATION OF REALTORS® is reporting that prices for single-family homes climbed in 88 percent of U.S. cities in the third quarter. There were double-digit increases in 33 percent of areas. The median transaction price rose from a year earlier in 144 of 163 metropolitan areas measured.
Read the full story

Banks offering mortgages with only 5 percent down payments

Source: CNNMoney 

Banks like TD Bank, Bank of America, and Wells Fargo are now offering loans with down payments that are as low as 5 percent, which will help buyers who had trouble coming up with enough cash to make a 20 percent down payment. Rising home prices have led private lenders to loosen the purse strings. 
Read the full story

What Buyers Don't Want

Credit unions say new rules will hurt lending

New federal mortgage rules are set to go into effect early next year, but the Credit Union National Association has warned that credit unions will be forced to discontinue, delay or reduce their mortgage loan product offerings because of the changes. Read the full story

Buyer Optimism is up

Interest Rate Update

Interest Rate Update

November 25, 2013

Interest rates have eased down a tiny bit over the last few weeks. Some "experts" say rates

could dip down again for a short period of time to keep the housing market moving.



Back From The Brink

30 Year Fixed up to $417,000 3.99% to 4.25%

30 Year Fixed "Agency" up to $625,500 4.125% to 4.625%

30 Year Fixed FHA up to $417,000 3.75% to 4.0%

30 Year Fixed FHA "Jumbo" up to $729,500 3.75% to 4.125%





Pending Home Sales Slow


A report just out shows the pending home sales slowed a bit last month which is a good thing.

First of all the report deals with data nationwide. Our area is still experiencing strong sales.

Secondly a little slower pace would actually be good for the market. We have seen record sales

and record appreciation rates over the last 6 to 8 months and that is a pace that is not sustainable

over the long run. We are also seeing many first time or limited down payment buyers having

trouble getting offers accepted due to properties selling over sales price. Sellers are opting for

larger down payment buyers in anticipation of possible appraisal problems.



How Does This Affect You ?
Hopefully the inventory of homes for sale will increase a bit and move the market back to a

more normal pace. Experts believe that the next 5 to 10 years will be very good for the real estate

market. As the economy improves and unemployment stabilizes, more and more people

will feel confident in buying real estate again. Interest rates will move upward at some point

which will also help the market get back to a more normal situation.

Small Home Improvements with Big Returns for Sellers

Experts say a few key home improvement projects can help seller increase their listing price and decrease the time their homes sit on the market, but not all projects will result in the same return. Curb appeal is a big factor, and new paint in neutral colors can show an owner's commitment to maintenance. Read the full story

Homeowners with more equity want to improve their homes

As the housing market has improved, homeowners have seen their home equity levels rise. However, in the difficult lending environment that consumers are currently experiencing, it can be difficult to tap into this home equity to finance remodeling projects. Institutions reportedly remain hesitant about providing home equity lines of credit at a time when more homeowners are interested in restoring their properties, according to a new report from Fitch Ratings. The home improvement sector still faces challenges, such as elevated unemployment levels and weakened consumer confidence. Making sense of the story According to Compass Point Research & Trading, homeowners have watched their equity increase $571 billion in the second quarter of 2013 and $2.2 trillion over the past year. If institutions change course, rising equity could support the issuance of home equity loans by banks and potentially increase the pool of borrowers eligible for refinancing. While lending standards remain tight, another hurdle is banks, thrifts, and credit unions have not explored various products to tap into a new market of profitability, according to Business Loan Connection. For example, one loan product specifically focuses on home improvement loans, which goes up to roughly $30,000. The Fitch Ratings report notes that remodeling spending is expected to pick up for the remainder of the year and into 2014 since more homeowners are revisiting restoration projects they previously deferred.  Homeowners are now more willing to undertake discretionary projects and purchases, whereas most investments in home improvements over the past few years were focused on necessities.

Sellers lose grip on the market

Are sellers losing their dominant position in the housing market? A new poll from Redfin found that 72 percent of surveyed agents describe now as a good time to sell compared to 86 percent in the second quarter. Read the full story

7 reasons rentals are rocking the housing market

The Week spells out seven key reasons why homeownership is facing some challenges, such as the lingering impact from the foreclosure crisis, tight lending conditions, the impact of investors on reshaping the market, and Millennials renting before buying. That being said, buying a home is 35 percent cheaper than renting in the long term. Read the full story

‘Vampire’ foreclosures could damage housing market

RealtyTrac has coined the new term “vampire foreclosures” to describe the growing number of homes around the country that have been seized by a bank, but are still lived in by the original owners. In some major cities, up to 65 percent of bank-owned homes are considered vampire foreclosures. Read the full story

Improving Housing Market May Boost U.S. Credit, IMF Reports

According to the International Monetary Fund, small- and medium-sized businesses stand to benefit from improvements in the U.S. housing market, as they can use housing as collateral to obtain more loans. Large corporations are more likely to benefit from relaxed financial conditions and expanding corporate markets than smaller enterprises. Read the full story

Mortgage Updates

Interest Rate Update


Interest rates have eased down a tiny bit over the last few weeks. Some "experts" say rates

could dip down again for a short period of time as Congress and the Senate continue to fight

and bicker over the budget and debt ceiling.

30 Year Fixed up to $417,000 3.99% to 4.25%

30 Year Fixed "Agency" up to $625,500 4.125% to 4.625%

30 Year Fixed FHA up to $417,000 3.75% to 4.0%

30 Year Fixed FHA "Jumbo" up to $729,500 3.75% to 4.125%





　

How Does This Affect You ?
It appears that the inventory of homes for sale has picked up a little bit which is a good thing.

We need the market to cool a bit so the first time buyers can get back in the game. Seems most

of the listings are being bought by all cash offers or buyers with large down payments. I have

several FHA or 5% down payment buyers who have been unable to get any offers accepted. I

still believe the next several years will be excellent for all people in our industry.

What features do buyers value in a home?

What does one TRILLION dollars look like?

All this talk about "stimulus packages" and "bailouts"...

A billion dollars...

A hundred billion dollars...

Eight hundred billion dollars...

One TRILLION dollars...

What does that look like? I mean, these various numbers are tossed around like so many doggie treats, so I thought I'd take Google Sketchup out for a test drive and try to get a sense of what exactly a trillion dollars looks like.

We'll start with a $100 dollar bill. Currently the largest U.S. denomination in general circulation. Most everyone has seen them, slighty fewer have owned them. Guaranteed to make friends wherever they go.

A packet of one hundred $100 bills is less than 1/2" thick and contains $10,000. Fits in your pocket easily and is more than enough for week or two of shamefully decadent fun.

Believe it or not, this next little pile is $1 million dollars (100 packets of $10,000). You could stuff that into a grocery bag and walk around with it.

While a measly $1 million looked a little unimpressive, $100 million is a little more respectable. It fits neatly on a standard pallet...

And $1 BILLION dollars... now we're really getting somewhere...

Next we'll look at ONE TRILLION dollars. This is that number we've been hearing so much about. What is a trillion dollars? Well, it's a million million. It's a thousand billion. It's a one followed by 12 zeros.

You ready for this?

It's pretty surprising.

Go ahead...

Scroll down...

Ladies and gentlemen... I give you $1 trillion dollars...

Notice those pallets are double stacked.
...and remember those are $100 bills.

So the next time you hear someone toss around the phrase "trillion dollars"... that's what they're talking about.

Americans in Poll Doubt Economy Rebound in Defiance of Forecasts

Source: Bloomberg
Despite the fact forecasters expect growth to accelerate, a new Bloomberg National Poll reveals that
Americans have their doubts about the strength of the nation’s economic recovery over the next year.
Close to half of poll respondents said they expect the economy to remain about the same and nearly 30 percent said it would weaken.

Read the full story
http://www.bloomberg.com/news/2013-09-25/americans-in-poll-doubt-economy-rebound-in-defiance-offorecasts.html

FHFA encouraging use of federal refinancing program

Source: The Hill
The Federal Housing Finance Agency (FHFA) is trying to spread the word about a federal refinancing program, the Home Affordable Refinance Program (HARP), as a way to encourage homeowners who are up to date on their payments but who owe more than their home is worth to contact a lender. At least 2.8 million homeowners have refinanced already through HARP.
Read the full story
http://thehill.com/blogs/on-the-money/1091-housing/323951-fhfa-encouraging-use-of-federalrefinancing-program

What would you pay first: your mortgage or credit card bill?

Source: The LA Times
A new study on consumer behavior found that financially-strapped Americans are now about as likely to fall behind on their credit cards as they are on their mortgage. During the recession, troubled borrowers were more likely to pay just credit card bills, but as a sign of an improving housing market, rising home prices create more equity in a home, which creates an incentive to keep making house payments.

Read the full story
http://www.latimes.com/business/money/la-fi-mo-credit-card-mortgages-20130918,0,479553.story

Want to Know Where Home Prices Are Headed? Read the Papers

Source: The Wall Street Journal
Research from a professor at the University of Michigan found that local housing-related newspaper
articles could be used to create indexes that accurately measured sentiment in 20 local housing markets.
Cindy Soo, assistant professor of finance, argues sentiment indexes can be used to track current housing trends not just nationally but also across regional markets.

Read the full story
http://blogs.wsj.com/economics/2013/09/24/want-to-know-where-home-prices-are-headed-read-thepapers/

Debt limit deadline is Oct. 17, Treasury secretary says

Financial markets will be disrupted, and the U.S. economy will suffer if Congress fails to raise the debt limit in order to avert a federal government shutdown. Treasury Secretary Jacob J. Lew has warned that the debt limit must be raised by October 17 because that is when the Treasury will run out of borrowing authority, and the country will face its first-ever federal government default. If that were to occur, business and consumer confidence is expected to take a hit.

Read the full story
http://www.latimes.com/business/money/la-fi-mo-debt-limit-lew-treasury-economy-20130925,0,1350942.story

Interest Rate Update
Interest rates have eased down a tiny bit over the last few weeks. Some “experts” say rates
could dip down again for a short period of time as Congress starts to deliberate about the debt
ceiling.
The Shutdown Continues
Really? I don’t care which party you follow or are affiliated with and it really doesn’t matter.
We elect these people to do a job and avoid things like this. So no more finger pointing or
grandstanding. I think the message we all need to send to Washington is enough bickering and
get the job done. Anyway, also in the negotiations is the looming debt ceiling which needs to
be raised again. The debt ceiling currently is at 16.7 Trillion. That is the total amount the U.S.
Government is authorized to borrow to meet its existing legal obligations. This amount needs
to go up to cover expected increases in needed borrowing. How much more has not been decided.
How Does This Affect You ?
These crazy numbers get thrown around all the time now. 88 Billion the Federal Reserve
spends monthly to help stimulate the economy. 16.7 Trillion for the debt ceiling. What the
heck does that look like. I found a quick illustration online (see attached) to help provide a visual of how much money we are really talking about.  It is scary how much money that really is.
30 Year Fixed up to $417,000  3.99% to 4.50%
30 Year Fixed “Agency” up to $625,500  4.125% to 4.625%
30 Year Fixed FHA up to $417,000  3.75% to 4.0%
30 Year Fixed FHA “Jumbo” up to $729,500  3.75% to 4.125%

U.S. Housing Recovery Seems Still on Track

Analysts are worried that the housing market may slow in the months ahead, but for now it continues to gain strength despite the drag of rising mortgage rates. The New York Times notes that “Higher home prices help the economy not just by strengthening the construction and real estate industries, but by making homeowners feel wealthier and more likely to spend,” thereby a key driver of the economic recovery.
Read the full story
http://www.nytimes.com/2013/09/25/business/economy/home-prices-still-rising-but-at-slowerpace.html?pagewanted=all&_r=0

The Effect of Fed Tapering on the Economy, the Housing Market, and

Amid raging speculation, last week the Federal Reserve ultimately decided against tapering due to
concerns about the impact on the country’s recovery, which means it will not reduce its stimulus for the U.S. economy (i.e. its $85 billion per month asset purchase program). By postponing the pullback, the housing market is expected to experience lower interest rates—much to the benefit of prospective buyers.
Rising mortgage rates and government spending cuts are two key factors the Fed cited in its decision.
Making sense of the story 

When tapering does occur, there are two potentially detrimental effects, namely higher mortgage
rates and increased costs to the federal budget. A strong economy is dependent on the housing
recovery, so if its progress is weakened, the impact will be felt in the economy as a whole.

Forbes expects tapering – when it takes place – to remain “highly accommodative” in that it will
not raise short-term interest rates right away.
Some estimates suggest tapering will begin in December since the economy will be performing
well during the peak of the holiday season.
Any hint at tapering thus far has led to a sharp response in the stock market, with shares rapidly
being sold. Investors are advised to plan for (and protect against) a sharp decline.
Forbes asks a few key questions about tapering: “The time will come when the Fed will begin to
reduce its asset purchases. How will this impact the financial markets? Perhaps more important,
have the financial markets become so accustomed to the Feds easy money policy that the
addiction is deeply ingrained? In other words, has the stock market consumed so much punch
that the withdrawals will be severe?
The Fed announced that it plans to keep its key short-term interest rate near zero at least until
unemployment falls to 6.5 percent, down from 7.3 percent last month.
Read the full story
http://www.forbes.com/sites/mikepatton/2013/09/19/the-effect-of-fed-tapering-on-the-economy-thehousing-market-and-stocks/

Short update on the effect the government shutdown will have on getting a home loan

Interest Rate Update
Interest rates have eased down a tiny bit over the last few weeks. Some “experts” say rates
could dip down again for a short period of time as Congress starts to deliberate about the debt
ceiling.
Government Shutdown
So here we go again with our wonderful elected officials bickering to the point that they have
now shutdown the government. Amazing how this could happen. Anyway, so how does this
situation affect getting a home loan? Not much is changing. The IRS will not be processing the
4506 Forms but most lenders can deal with that. The Social Security Administration will not be
processing the SS89 Form that verifies a person’s Social Security number but again lenders can
deal with that.
How Does This Affect You ?
Hopefully this shutdown will not last long. In the meantime lending should be pretty much the
same. We may see some temporary issues but there should be nothing serious. That being said
if this shutdown lasts longer then a few days we may all see some serious changes in everything. I would advise all of us to get on the phone and fire up your e-mails and get the message
to our elected officials that this is not acceptable. They were elected to do their job which is to
run the government and they are obviously failing.

Beyond the Headlines: Home Prices Rising at Fastest Pace Since Start of Bubble

Source: The Wall Street Journal During the first seven months of 2013, home prices rose faster than any year since 2004, which is the year that marked the beginning of the home-price bubble. When examining the results of the S&P/Case-Shiller home price index for 20 major metro areas, the index had its largest June-to-July increase in the 14-year history of the 20-city index, as prices rose by 1.8% from June. Read the full story

Questions to ask when buying a home

Beyond the Headlines

Four Factors to Watch in Housing’s Rebound
Source: The Wall Street Journal
Buyers and sellers have been forced to adjust quickly to changing dynamics in the recovering U.S.
housing markets, such as bidding wars when prices were low, short inventory, rising mortgage rates, and financing issues. A research firm notes that in a typical recovery sales pick up and then prices follow, but the current recovery has experienced the opposite. The Wall Street Journal notes there are four key factors to observe related to affordability, inventory, bubbles, and investors as the market rebounds.
Making sense of the story
Housing affordability was impacted in a relatively short span. Builders capitalized on rising
demand and low interest rates while adding little in the way of new construction, which some
experts say has led consumers to experience sticker shock.
Depressed inventory is a key factor because demand is only part of the equation. The supply of
homes for sale is below the already-depressed levels of one year ago, despite the number of
listings in August being up by 20 percent from the beginning of the year.
Demand exceeds supply in the vast majority of the nation’s 20 top markets, according to data
tracked by John Burns Real Estate Consulting.
Home prices have risen around 12 percent nationally, which far surpasses the one percent growth
in incomes. Bubble talk has been fueled by a growth rate seen as too high and unsustainable.
The Journal notes, “As rising prices ease investors out of more markets, there will be less
competition for some homes, slowing the pace at which prices are going up.”

With interest rates rising, it will be important to watch whether owner-occupant, mortgagedependent buyers will pick up the slack from investors who ease out of markets. Employment
figures will also be key to revealing how quickly housing heals.
Read the full story
http://blogs.wsj.com/economics/2013/09/16/four-factors-to-watch-in-housings-rebound/

Federal Reserve Announcement

Good Development Today

 

One of the main reasons interest rates have remained low for so long has been the Federal Reserve’s policy of stimulating the economy by purchasing mortgage backed securities each month in the amount of 85 billion dollars.  Rates have popped up a bit recently on evidence that the economy has been slowly improving.  The  Federal Reserve was supposed to announce today a cutback or “tapering” of this mortgage securities buying program.  In a surprise move today the Federal Reserve announced no cutback or tapering of the program due to recent economic reports that still show weakness in the economic recovery.  This surprise announcement could cause interest rates to ease down for a period of time.  

13687 Pine View, Yucaipa

Top 5 Reasons Why You Need A Realtor

In Remembrance

Beyond the headlines

Eased Mortgage-Risk Rule to Be Proposed by U.S. Agencies

Source: Bloomberg

As a way to simplify the mortgage market, six federal agencies have proposed revised regulations that oversee how banks finance mortgages. By easing requirements on lenders under the softened qualified residential mortgage rule, banks won’t have to retain a stake in mortgages with down payments of less than 20 percent when they bundle mortgages into securities. The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, the Federal Housing Finance Agency and the Department of Housing and Urban Development are the regulators behind the proposal.

Making sense of the story

The first draft of the qualified residential mortgage rule faced opposition from housing industry

participants and consumer groups. The rule was intended to prevent the type of risky loans that

contributed to the subprime credit crisis, but opponents said it would impede home lending.



Under the new draft, the qualified residential mortgage rule would be aligned with the qualified

mortgage, or QM, rule. The QM stems from the Consumer Financial Protection Bureau and

contains no down payment requirement. Such alignment provides a clearer roadmap to banks.



Before regulators vote to finalize the rule, they are requesting public feedback on the full proposal

by Oct. 30. Feedback is also encouraged for an alternative arrangement that would require lenders

to keep a stake in any loan with a down payment of less than 30 percent.



Commenting on the revision, NATIONAL ASSOCIATION OF REALTORS® President Gary

Thomas stated the following: “The new standards, which align with those applied to Qualified

Mortgages, are stringent enough to protect consumers from unscrupulous lending practices while

also creating new opportunities for private capital to reestablish itself as part of a robust and

competitive mortgage market.”



Under the revisions, borrowers who spend less than 43 percent of their income on debts will have

an easier time getting a loan.

Read the full story

http://www.bloomberg.com/news/2013-08-28/eased-mortgage-risk-rule-to-be-proposed-by-u-s-agenciestoday.

html

In other news …

What should home buyers ask themselves before entering the market?

Source: Marketplace

Existing home sales topped an almost four-year high in July, and mortgage rates remain historically low,

so plenty of interested buyers are thinking about jumping into the market. When considering the costs,

one expert advises first-time buyers to ask the current homeowner for his or her utility bills, his or her

property tax bills, and also to factor in the price of one major repair a year.

Read the full story

http://www.marketplace.org/topics/economy/what-should-homebuyers-ask-themselves-entering-market

Developers Tailor New Housing Stock toWell-Heeled Buyers

Source: The Wall Street Journal

With larger, more expensive homes on the rise again, trade-up buyers appear to have more weight in the

new-home market as credit rules squeeze first-time buyers. Older, more affluent buyers are being catered

to with the average size of a new home reaching a record 2,642 square feet in the second quarter. This

surpasses the record of 2,561 square feet set in the first quarter of 2009.

Read the full story

http://online.wsj.com/article/SB10001424127887323980604579031350928407682.html

Home construction adds 500,000 jobs a year

Source: HousingWire

Construction of new homes is a major driver of economic growth, as for every new house constructed,

between four and five jobs are created. Single-family home construction contributed approximately

500,000 jobs to the economy year-over-year, and approximately 2 million jobs were added to the

economy from July 2012 to July 2013.

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http://www.housingwire.com/articles/26387-home-construction-adds-500000-jobs-a-year

Home prices continue climb, but boost shows signs of slowing

Source: The Hill

The latest report from the S&P/Case-Shiller home price index indicates that prices for homes in the

nation's 20 largest cities in June rose 12.1% over the last year. From May to June, home prices were up

0.9 percent. However, gains in several cities came at a slower pace, perhaps due to an increase in home

mortgage rates.

Read the full story

http://thehill.com/blogs/on-the-money/1091-housing/318905-home-prices-continue-climb-but-boostshows-

signs-of-slowing

The Suburbs Are Dead, Long Live the Suburbs

Source: The Atlantic

The thesis of a new book on America’s housing says the future will be characterized by "urban burbs,"

which are urban-style suburban developments that will have a walkable downtown and proximity to

everyday needs. Based on an analysis of trends, the author says the American Dream is moving away

from the great American suburban experiment in a way that won’t bring the end of the suburbs but just

suburbs as we know them.

Read the full story

http://www.theatlanticcities.com/housing/2013/08/suburbs-are-dead-long-live-suburbs/6680/

Delinquency Rate Back on Downward Course After Seasonal Increase

Source: DSNews.com

Continuing its downward trend, the national mortgage delinquency rate fell to 6.41 percent in July,

according to Lender Processing Services, Inc. (LPS). The rate did experience a seasonal uptick in June,

when it increased to 6.7 percent, but there has been a yearly decline of 8.76 percent.

Read the full story

http://www.dsnews.com/articles/delinquency-rate-back-on-downward-course-after-seasonal-increase-

2013-08-26

States Ranked for ‘Healthiest’ Borrowers

Source: Mortgage Servicing News

Washington, D.C., New Jersey, Hawaii, Massachusetts and California are ranked as the top five states

with the most financially healthy would-be mortgage borrowers. A new LendingTree report considered

average of credit score, loan-to-value ratio “and overall lendability of mortgage-seekers” for the rankings.

Read the full story

http://www.nationalmortgagenews.com/dailybriefing/LendingTree-Ranks-States-Healthiest-Borrowers-

1038326-1.html?site=default_msn

What you should know …



The share of equity sales – or non-distressed property sales – has risen on a month-to-month basis

for 17 of the last 18 months and now makes up more than four in five sales, the highest share

since December 2007, according to the CALIFORNIA ASSOCIATION OF REALTORS®

(C.A.R.). In addition, distressed sales plunged by half compared to a year ago.



C.A.R. reported that the available supply of homes was essentially flat from June but remained

tight. The July Unsold Inventory Index for equity sales edged down from 3.1 months in June to 3

months in July. The supply of REOs inched up from 1.8 months in June to 2.1 months in July,

and the supply of short sales ticked upward from 2.4 months in June to 2.5 months in July.



Of the distressed properties, the share of short sales fell to the lowest point since April 2009 at

11.6 percent. July’s figure was down from 12.9 percent in June and was about half of what it was

a year ago, when short sales made up 22.7 percent of all sales. The continuing decline in short

sales indicates more previously underwater homes are moving into positive equity as home prices

remain on an upward trend.