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Saturday, May 19th, 2012
Housing Affordability Reaches Records
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Housing Affordability Reaches Records
Daily Real Estate News | Tuesday, May 15, 2012
Housing affordability conditions for all buyers reached a milestone in the first quarter, according to the National Association of REALTORS®.
NAR’s composite quarterly Housing Affordability Index rose to a record high of 205.9 in first quarter, based on the relationship between median home price, median family income and average mortgage interest rate. The higher the index, the greater the household purchasing power. This is the first time the quarterly index broke the 200 mark; recordkeeping began in 1970.
NAR President Moe Veissi said market conditions are optimal for home buyers. “For those with good credit, we’ve never seen better housing affordability conditions or market opportunities than we see at present,” he said. “Although home prices are stabilizing and sales are rising, some buyers still have to jump through a lot of hoops to convince a lender that they are creditworthy, even for a mortgage that would be well within their means. This is especially true for self-employed buyers.”
Veissi noted home sales would be much higher if lending standards would return to normal.
The index shows the median-income family, earning just under $61,000, could afford a home costing $325,500 in the first quarter, which is more than double the national median existing single-family home price of $158,100. The median monthly mortgage principal and interest payment for a median-priced home would take only 13.5 percent of gross income.
A companion index measuring the ability of first-time buyers to purchase a home also set a record, with the first-time buyer index reaching 135.8 in the first quarter.
Assumptions for the first-time buyer index include a lower income, at 65 percent of median family income, a starter home costing 85 percent of the median price, and a down payment of 10 percent. This index means the typical entry-level buyer could afford a home costing $182,500, which is well above the overall median price.
“It’s never been easy to buy a first home because of the cash required for downpayment and closing costs, but conditions for first-time buyers who are able to get a mortgage have never been better,” Veissi explained.
Most first-time buyers choose a loan with a lower down payment, often an FHA-insured loan with 3.5 percent down, and some use the VA program with no down payment.
Both home prices and mortgage interest rates are expected to edge up modestly as the year progresses, but housing affordability will remain very favorable with the median-income household well positioned to afford a median-priced home. For all of 2012 the index is projected to set an annual record, averaging 191 for the year.
Source: NAR
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Posted by: Ronald Smiley at 2:23am
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Monday, April 9th, 2012
Supreme Court Unanimously Decides in Favor of Property Rights in Sacke
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Supreme Court Unanimously Decides in Favor of Property Rights in Sackett vs. EPA
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The U.S. Supreme Court handed private property owners a victory with a unanimous decision on March 21 allowing a couple to appeal an EPA ruling that their property contains a wetland. The ruling is supported by the National Association of REALTORS® (NAR) which, along with other organizations, submitted a friend of the court brief in the case. NAR argued in its brief that the property owners in this case were being denied due process because the compliance process is time-consuming and the costs are significant--all before the main question of whether the property contains a wetlands is even considered. The Court ruled that property owners facing an EPA compliance order under the Clean Water Act (CWA) can seek judicial review before being forced to comply. The case, Sackett vs. EPA, involved the Sacketts, a couple in Priest Lake, Idaho, who bought a piece of property in an already developed subdivision, near Priest Lake in Idaho. After they started building their house, they were ordered by the EPA to stop construction out of a concern that the property contained a wetland, even though the property was adjacent to other developed properties. The Sacketts could have been subject to steep fines for not complying with the EPA’s request. This decision will change how the EPA enforces the Clean Water Act and will have implications for how EPA uses compliance orders under other environmental statutes. With this important unanimous decision, Mike and Chantell Sackett can finally get their day in court.
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Posted by: Ronald Smiley at 5:44am
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Saturday, January 7th, 2012
3 Predictions for Distressed Properties in 2012
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3 Predictions for Distressed Properties in 2012
Daily Real Estate News | Thursday, January 05, 2012
It’s hard to know exactly what will happen with foreclosures, REOs, and short sales in the coming year. Factors such as employment, home values, and consumer confidence will determine whether they go up or down. The one thing that’s certain is that they’ll still be around and affecting the housing market.
“Foreclosures aren’t going away right now,” says Andy Firoved, CEO of CounselorDirect, a technology company that specializes in automating processes for various government foreclosure-prevention programs. “We’re going to have a certain level. The question is, how many?”
Apart from quantity, there are certain things regarding distressed properties that can be predicted with some level of assurance, says Firoved, whose clients include housing departments in states with the highest unemployment and biggest declines in home values — the so-called “Hardest Hit.” Here are three of his prognostications for 2012:
Prediction #1: Government home owner assistance programs will get more effective.
Most of the government’s initial efforts at helping home owners who were threatened with foreclosure due to problems like job loss or medical expenses came up short. This was primarily due to a combination of poor promotion of the programs and arcane, overly bureaucratic processes.
Fivored says the underlying issue here was that federal and state governments were in too much of a rush to roll out these programs. “People came in with the best intentions, but had problems with the execution,” he adds.
However, newer initiatives, such as the “Hardest Hit” mortgage assistance programs and the revamped Home Affordable Refinance Program (HARP), will likely get more traction because they’re better publicized and administered.
“The word is getting out, and people are starting to get assistance,” Fivored says. “These programs are starting to find higher-level efficiencies as well.”
Prediction #2: The amount of evictions will stay the same or even go down.
While the number of evictions that have taken place over the past couple of years seems high compared with healthier economic times, they actually aren’t as high as they could be. “The majority of [delinquent and foreclosed-on borrowers] have not been evicted,” Fivored says.
Why? For one thing, banks are hesitant to pursue foreclosures because of the robo-signing issue, which still hasn’t been settled. Also, evictions are labor-intensive and involve some thorny legal procedures, Fivored explains. Many banks simply don’t have the will or the resources right now to evict all of those borrowers. “The problem is that there are a lot of people out there who haven’t paid their mortgage in a while, and they have gotten used to it,” he says.
Although “the party’s got to stop at some point,” Fivored is guessing it’ll keep going, for the most part, through 2012.
Prediction #3: Banks will get creative in dealing with REOs and delinquent home owners.
That’s not to say that lending institutions will remain passive this year. “In 2012, the theme is going to be managing the shadow inventory,” Fivored says. “That’s going to be two different things: REOs and delinquent home owners who they haven’t done anything with yet.”
According to him, banks will accomplish this by working out special deals, such as leasing foreclosed and bank-owned homes to their former owners. They may even allow foreclosed-on and delinquent borrowers to continue living in homes without making any payments — at least in the short term —because they want properties maintained for eventual resale, Fivored says.
By Brian Summerfield, REALTOR® Magazine
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Posted by: Ronald Smiley at 9:13am
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Saturday, December 31st, 2011
5 Events That Really Mattered For Housing in 2011 & Beyond
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Government, the mortgage industry and forces of nature all shook the housing market in 2011. They had both an immediate impact and slow-burning effects, setting the stage for a bumpy 2012 with more foreclosures, political battles and local market risks.
1) Robo-Signing Reverberations
The “robo-signing” scandal – where banks were accused of approving foreclosures with incomplete or incorrect documentation – exploded in October 2010, but where are we now? Banks want a settlement in order to avoid costly, drawn-out lawsuits. One is shaping up that could reduce loan balances or interest rates for current homeowners, give payments to people who lost their homes and establish new mortgage servicing standards for the future.
What Really Mattered: The threat of robo-signing lawsuits made banks gun-shy about pursuing foreclosures in 2011, which left many homes stuck in the foreclosure process. But once a settlement is reached, we’ll see a rush of foreclosures in 2012.
2) The Debt Ceiling and the Budget Deficit
In August, the government played a game of chicken over whether to raise the debt ceiling, but this should have been just a formality. It’s actually reducing the deficit that’s the hard part. Long before the debt ceiling debate, we all knew that the federal budget was in bad shape, and the federal credit rating downgrade itself didn’t change anyone’s view on this.
What Really Mattered: After the debt ceiling debate, the back and forth deliberations by the unsuccessful bipartisan deficit-reduction supercommittee teased us with some proposals that will surely rear their heads again. One idea that both Republicans and Democrats didn’t totally disagree about was reducing the mortgage interest and other tax deductions. If and when that happens, high-income homeowners with mortgages would pay a lot more in taxes.
3) The Expansion of HARP
In October, the Federal Housing Finance Agency (FHFA) said seriously underwater homeowners will be able to refinance through the Home Affordable Refinance Program (HARP). But there is a catch – borrowers must be current on their payments.
What Really Mattered: Borrowers who strategically fell behind on their payments in hopes of negotiating a loan-modification won’t be helped. What this plan will do is stimulate the economy without having to get Congress to agree on additional stimulus.
4) Natural Disasters Cause Insurance Disaster?
In 2011, several tornados, floodings and a hurricane temporarily halted what little construction there was to begin with, but this was just a short-term slowdown. The bigger long-term effect was the near-collapse of the federal government’s National Flood Insurance Program (NFIP). Still struggling financially under debt amassed after Hurricane Katrina, the NFIP’s insurance premiums don’t fully cover insurance claims when disaster strikes. Hurricane Irene and its flood damage returned this problem to center-stage.
What Really Mattered: In flood-prone areas, you can’t get a mortgage if you don’t have flood insurance. Without NFIP, housing markets in these areas would skid to a stop. As part of last week’s payroll tax agreement, the program got a last-minute extension until May 2012, but its future remains uncertain.
5) Lowering the Conforming Loan Limit
Starting in October, the government lowered the upper limit for loans backed by Fannie Mae or Freddie Mac or insured by the Federal Housing Administration (FHA) from $729,750 to $625,500. Why? Government agencies now back or insure most loans, but it’s time to make the housing market less dependent on the feds. Lowering loan limits is one step in that direction; however, the real estate industry has urged the government to push the loan limits back up. And you know what? They scored a half-win in November, raising the loan limit back up for FHA loans but not for Fannie and Freddie.
What Really Mattered: Mortgage lenders are willing to charge lower rates for loans that are backed by Fannie or Freddie; with a lower conforming loan limit, a small number of loans that used to qualify for federal backing no longer do.
Jed Kolko is the Chief Economist at Trulia, a real estate resource for homebuyers, sellers and renters, where he leads housing research. He translates economic trends and public policy on Trulia Insights, helping people understand what really matters in housing. Find him on Twitter at @jedkolko.
Read more: http://moneyland.time.com/2011/12/29/5-events-that-really-mattered-for-housing-in-2011-and-beyond/#ixzz1i7ZcX2MD
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Posted by: Ronald Smiley at 5:04am
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Thursday, December 22nd, 2011
What Is A Short Sale?
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If You Are No Longer Able To Pay Your Mortgage & Are Facing Foreclosure, Watch This Video on Short Sale Then Call Me @ 317-966-6004 For A FREE Private Evaluation Of Your Situation.
<iframe width="560" height="315" src="http://www.youtube.com/embed/49sS88Cbsc8" frameborder="0" allowfullscreen></iframe>
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Posted by: Ronald Smiley at 5:59am
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Wednesday, December 21st, 2011
House Prices: Where They Will Be in the Spring
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House Prices: Where They Will Be in the Spring
by The KCM Crew on October 18, 2011
Disclaimer: This blog covers the national housing market as a whole. Please check with a local real estate professional to discover how the following information will impact your region. – The KCM Crew
 Many sellers want to wait until the spring before putting their home on the market. This might be for any of several reasons:
- They don’t want to be inconvenienced during the holiday season.
- They believe that they will see more potential buyers and as a result will get a higher price.
- In the northern part of the country, they might not want people walking through the snow and then into their house.
- All of the above
In a normal real estate market, this may make sense. However, this market has been anything but normal. This spring will also see some abnormalities. The biggest difference will be the direction prices will take.
In years past, the spring market would favor the seller because increased demand would outpace any increase in supply: the number of houses coming onto the market would not be as great as the number of buyers newly entering the market. In most situations, when demand is greater than supply, prices increase.
The reason this spring will be different is that the supply of homes coming to the market will be dramatically impacted by foreclosure properties being released by the banks. Many believe this increase in inventory will far outweigh buyer demand. In situations where supply is greater than demand, prices decrease.
Will This Actually Happen?
RealtyTrac, in their latest foreclosure report, explained:
“U.S. foreclosure activity has been mired down since October of last year, when the robo-signing controversy sparked a flurry of investigations into lender foreclosure procedures and paperwork. While foreclosure activity in September and the third quarter continued to register well below levels from a year ago, there is evidence that this temporary downward trend is about to change direction, with foreclosure activity slowly beginning to ramp back up.
This will impact prices.
What Do Experts Believe the Impact Will Be?
Here are the pricing projections by several major entities:
- Zillow believes we will not see a bottom in prices until the first quarter of 2012.
- Standard & Poors thinks prices will drop %5 in the next few months.
- JP Morgan Chase believes prices will depreciate 6 to 7% over the next six months.
- Barclays says prices will fall 7% by the end of the first quarter of 2012.
Bottom Line
You may pay a hefty price for the convenience of not having your property on the market right now.
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Posted by: Ronald Smiley at 9:26am
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Sunday, December 11th, 2011
Common Sense Isn’t Common Practice
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It used to be that there was logic applied in the world of mortgage lending. An appraiser determined the value of a home by the axiom, “what a reasonable buyer would pay a reasonable seller”. An underwriter weighed the plusses and minuses of a file (after analyzing the income, the assets, the credit profile and the appraisal) and made a judgment call based on their experience.
Loans with sizable down payments used to be more flexible with how income was documented or what quality of credit was required. Even the decision of what made up “good credit” has been reduced to a FICO score. Determining the risk of a loan affected its approval or denial. Further, loans deemed riskier were given less favorable terms (higher rates and/or costs or larger down payments).
But today, everyone has tried to quantify everything and put everything into a matrix. Credit scores are numerical, and the number determines eligibility and cost. Gone is the concept of explaining why you have defects in your credit. We don’t care why, we just look at your score. Appraisers now are being scored and their data being scrutinized to a level most would find mind-boggling. Amenities that make a home worth more for a particular buyer (like a pool or upgraded basement) are virtually ignored. Underwriters have primarily become fact-checkers and quality control as a computer software program underwrites the vast majority of mortgages today.
Gone is common sense. It has been replaced by numerical formulas and a cover-my-behind, justify-everything-with-data mentality. Basically, the pendulum has swung too far. It used to be that lending was too easy (see the subprime debacle), but now we have eliminated too much of the human element. We need common sense back.
People who have saved 30% for a down payment know what they can afford monthly. Don’t they?
People who had a medical challenge two years ago that is not likely to reappear should not have a twenty year credit history destroyed. Should they?
People aren’t likely to overpay for a home with so much inventory and all the media exposure about falling prices. Are they?
Bring back some common sense when we need it most!
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Posted by: Ronald Smiley at 2:31am
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