Homeowners’ monthly mortgage down about 40%
WASHINGTON – Nov. 14, 2011 – Improving housing affordability mixed with low mortgage rates means that homeowners are paying a lot less for their monthly mortgage payment than they did just a few years ago. In fact, they’re paying nearly 40 percent less on their monthly mortgage payment than homeowners paid in 2006.
According to Fiserv, the monthly mortgage payment for a median-priced single-family home today is $700 – a drop of close to 40 percent from 2006, when it was $1,140.
“Housing affordability has improved dramatically because of declines in both prices and mortgage interest rates,” David Stiff, chief economist at Fiserv, said in a statement. “Nationally, purchase mortgage payments now account for only 13 percent of monthly median family income, the lowest percentage on record (since 1971), and compared to 23 percent in the first quarter of 2006.”
Source: “Monthly Mortgage Payment Almost 40% Cheaper Than 2006,” HousingWire (Nov. 9, 2011) and Fiserv
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Renters spend 5% more than homeowners
Check the facts!!!
NEW YORK – Oct. 27, 2011 –
Rising rents are forcing renters to outspend homeowners on housing costs, according to a new study.
Since 2005, homeowners’ housing expenses have climbed from 31.9 percent of their household budget to 33.2 percent. In that same time period, renters’ expenses have jumped from 35.6 percent to 38.4 percent, according to the October CoreLogic U.S. Housing and Mortgage Trends.
In the last 26 years, homeowners have increased the amount they spend on household expenses by 12 percent while renters have increased it by 22 percent, according to the study.
Earlier this month, Capital Economics economists noted that for the first time in 30 years the median monthly mortgage payment is about the same – or less – than the median rental payment.
Yet, with the bleak job market, homeownership rates continue to fall in many parts of the country, particularly among younger generations. CoreLogic found in its report that the homeownership rate for the 25-to-34 age group dropped from 51.6 percent in 1980 to 42 percent in 2010. For the 35-to-44 age group, homeownership rates fell from 71.2 percent to 62.3 percent over that period.
Source: “Renters Outspend Owners on Housing,” RISMedia (Oct. 25, 2011) and Capital Economics
© Copyright 2011 INFORMATION, INC. Bethesda, MD
Growth picture enjoys uptick
Positive Article
WASHINGTON – Oct. 25, 2011 – Economists have significantly raised their estimates of third-quarter economic growth ahead of the government’s official report Thursday, easing near-term fears of another recession.
A consensus of economists surveyed by Bloomberg News estimates the economy grew at a still-modest 2.5 percent annual pace last quarter, up from their 1.8 percent projection less than two weeks ago. The brighter picture follows better-than-expected data on retail sales, manufacturing, jobs and business investment.
“We should take some comfort that the economy isn’t hurtling into recession,” says Capital Economics’ Paul Ashworth. Ashworth estimates third-quarter growth was 3.2 percent.
That’s not robust, but it beats the anemic expansion of less than 1 percent the first half of 2011. Amid last summer’s debt battle in Congress, the downgrade of the U.S. credit rating and financial turmoil in Europe, many analysts thought the U.S. was on the verge of another downturn.
Since Oct. 3, 10-year Treasury yields have risen nearly half a percentage point, indicating growth prospects are prompting a shift of money to higher-risk assets, says market strategist Anthony Valeri of LPL Financial.
Many experts say the third-quarter upturn was due to temporary factors, particularly the end of supply disruptions after the Japanese earthquake, and the decline in oil prices. The Commerce Department said last week that retail sales jumped 1.1 percent in September, partly because of a 3.6 percent rise in auto sales as Japanese bottlenecks eased.
Meanwhile, manufacturing grew at a 4.3 percent annualized rate in the third quarter. And business investment in equipment and software has rebounded. Both measures were buoyed by the unclogging of Japanese supply channels and lower oil prices.
Many economists say growth will slow to a sluggish 2 percent rate over the next year. Unemployment, at 9.1 percent, is high and consumer confidence is shaken.
Yet a recession appears less likely. New jobless claims have been falling since summer. “You would be seeing claims shooting up” if a downturn were imminent, says chief economist James O’Sullivan of MF Global.
Some say growth could beat estimates. Excluding autos, retail sales rose 0.6 percent last month. Consumer stock prices, often a leading job indicator, are at a record premium relative to stocks overall, says economist James Paulsen of Wells Capital Management.
But Bernard Baumohl of the Economic Outlook Group notes consumers have been borrowing more and saving less to finance their increased spending – which he says can’t continue.
© Copyright 2011 USA TODAY, a division of Gannett Co. Inc., Paul Davidson
What’s it going to take to move the housing market forward?
October 13th, 2011 in CDPE by Alex CharfenRecently, I was asked by Logan Mohtashami, a columnist for Benzinga, which is an online news and financial analysis service, to respond to the question: “What do you think the main problems in the housing market are, and what ideas do you have to help the housing market out of its current malaise?”
Here’s an excerpt from the column in which my response appeared on Oct. 12:
The biggest problem in housing right now is that we are still dealing with the issues from the boom and too many people want to somehow find a magic bullet or program to fix everything. There is no such program, and while in many cases, the programs that have been launched are working, we need to allow this financial process to run its course.
The continued call for government stimulus or a jumpstart is troublesome, since many interventions have caused market anomalies or confusion. Also, the continued pressure to “provide a solution for the housing market” is tantamount to providing a single solution to the health care crisis—there isn’t one. What’s needed is a series of rational financial decisions that will eventually return us to a rational housing market.
The perception that a healthy market is a return to 2004-2007 is a dangerous one. We have seen first-hand just how unhealthy and unstable that market was.
Little by little, housing is coming back, and housing is more affordable than it has been in many consumers’ lifetimes. If we can cure the perception that housing is somehow damaged, we will see a return to primary home purchases. We are already seeing the return of both domestic and international investors. In some markets, this is actually driving an inventory shortage.
In summary, we are in a saw-tooth recovery and we will see housing indices go up and down at monthly or quarterly intervals for the forseeable future. This is predictable. As inventories swell, prices go down and sales increase. As inventories constrict, the opposite happens.
The challenge is that each fluctuation is seen by the media as either a recovery or a (double, triple, or quadruple) dip. The housing market traditionally runs in 7- to 12-year cycles, yet the media runs in 7- to 12-minute cycles.
The perception that housing is erratic is driving buyers away and providing investors with a major opportunity. An educated consumer today is one who is purchasing if they can.
Luxury home foreclosures a deal for well-heeled
Interesting article
“There are $4 million estates in Lutz and the Riverview area that are now less than $1 million,” said Keller Williams real estate agent Rande Friedman. “There’s a condo in Channelside that was $1.5 million, and now it’s $700,000.”
Most homeowners have seen values drop, but these prices are so low because the homes are owned by a bank. And the bank wants to get rid of them.
There are so many foreclosed luxury homes that Friedman created a website to list them. In three weeks, PoshForeclosures.com already has about 400 local listings.
The Tampa Bay area and Florida are among the hardest-hit by foreclosures in the country. Friedman has a theory on why the foreclosure crisis finally caught up to the rich.
“A lot of the people who got into the luxury market in 2005, 2006 were making their money from real estate,” he said. When the market crashed, so did their incomes.
Plus, just like the rest of the population, many luxury buyers took out adjustable-rate mortgages. Many of them have come due recently. That, combined with job loss and sinking home prices, led to an uptick in foreclosures of luxury homes.
That means hundreds of high-end homes sit abandoned. But that could be good news for those ready to buy. Homes and condos along the beaches and downtown condos are among the most popular luxury foreclosures, Friedman said.
Potential buyers of luxury foreclosures also don’t have to worry about trashed homes as much as buyers of lower-end houses. That’s because banks usually take better care of them, Friedman said.
“People are still living in them, maintaining them, so they’re not the deserted, desolate foreclosure feeling,” Friedman said. “They really are truly nice properties.”
That’s true, said Daren Blomquist, spokesman for RealtyTrac, which tracks foreclosure activity nationwide.
“It’s in the bank’s best interest to fix up the home and get in the best shape possible before trying to sell it,” Blomquist said. “That way, they may get a better price.”
Getting the best price matters even more, he said, when the homes are expensive. That’s why lenders often give owners of luxury homes more time to work something out.
“We find that with mortgages of more than $1 million, lenders wait longer to file for foreclosure,” he said. “By the time they foreclose, the mortgages are much deeper in default.”
That said, Blomquist said he’s noticed lenders of these million-dollar homes acting to foreclosure much more quickly this year.
“While this category of mortgages still has a low foreclosure rate, this category is also seeing the largest increase in initial foreclosure filings, compared to less expensive mortgages,” Blomquist said.
PoshForeclosure.com currently lists foreclosed homes that are for sale in Hillsborough, Pasco and Pinellas counties.
On the website there are estates that were listed at $1.5 million in 2006 and are now being sold for $500,000.
“All buyers are expecting great deals these days, and upper-end buyers are especially savvy,” Friedman said.
Copyright © 2011 the Tampa Tribune, Tampa, Fla., Shannon Behnken. Distributed by MCT Information Services.
Housing expected to improve over last year
WASHINGTON – July 19, 2011 –
The U.S. housing market, aided by a recovering rental sector, is unlikely to experience a “double-dip” setback, Freddie Mac said Monday.In its U.S. Economic and Housing Market Outlook for July, the Federal Home Loan Mortgage Corp. said housing likely will follow the performance of the overall economy for the rest of 2011. Additionally, home sales are projected to be above last year’s numbers by 3- to 5 percent.
The report also indicated that despite record levels of homebuyer affordability and historically low mortgage rates, households were concerned about their financial futures and were holding off making major purchases, notably homes.
The rental housing market showed the clearest signs of a turnaround with the apartment property price index showing a 15.2 percent gain over the year through the first quarter of 2011.
“Following June’s labor market report, households are naturally concerned about their financial futures, which is being reflected in the housing market,” said Frank Nothaft, Freddie Mac’s vice president and chief economist. “Yet, the single-family market will likely improve over the balance of 2011, in keeping with positive [gross domestic product] forecasts for the United States.”
Copyright © 2011 United Press International Inc.
How long is the wait to buy after foreclosure?
NEW YORK – June 28, 2011 –
A sluggish housing market has caused millions of homeowners to lose their home to foreclosure, short sale, or deed in lieu of foreclosure. But once these former homeowners get a better handle on their credit, how long do they have to sit on the sidelines until they can secure future financing to buy a home again?
As an article in The New York Times notes, “there are plenty of asterisks and conditions” when it comes to how long a borrower must wait after a “significant derogatory event,” like a foreclosure or short sale.
In general, however, The New York Times reports that the longest wait to buy again will come if there is a foreclosure in the former homeowner’s past.
Fannie Mae and Freddie Mac have a three-year waiting period following a foreclosure, and a two-year wait following a short sale, deed in lieu, or discharge or dismissal of bankruptcy. However, if borrowers can justify that the circumstance for the foreclosure or bankruptcy occurred because of an illness or job loss — or other “extenuating circumstance” — that may help reduce their wait. But with no such extenuating circumstances, these former homeowners may have to wait longer, even up to seven years following a foreclosure or four years after bankruptcy, the article notes.
For loans insured by the Federal Housing Administration, borrowers with perfect credit afterwards also will, in general, have to wait three years after a foreclosure and two years after a bankruptcy is discharged, The New York Times notes.
Following a short sale, borrowers will have to wait three years to secure another FHA loan — however, there are plenty of exceptions. Borrowers will have to wait three years if they were in default at the time of the short sale and had no extenuating circumstances. However, if the borrowers were on time with all their payments a year prior to the short sale, they may have no wait at all and might even qualify for an FHA loan immediately.
“The key is to avoid the foreclosure,” Andrew Wilson, a spokesman for Fannie Mae, told The New York Times. “That is what will help you be eligible for the shorter period.”
Source: “The Post-Foreclosure Wait,” The New York Times, (June 23, 2011)
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~Interest Rates vs House Prices~
I received this chart from Rich Givens at Wells Fargo.
Housing shortage likely coming, report says
(not many would have thought this)
CAMBRIDGE, Mass. – June 13, 2011 – Within the next decade, 16 million new housing units will be needed to meet population growth and shifting demands, according to Harvard University’s Joint Center for Housing Studies in its latest annual “State of the Nation’s Housing” report.
That means household growth, which has dropped drastically in recent years, will need to greatly reverse its trend to meet the forecasted spike in demand. From 2007-2010, household growth averaged about 500,000 per year – less than half the 1.2 million annual pace averaged prior from 2000-2007.
To absorb the current rate of foreclosed and distressed homes plaguing most markets, a more normal rate of household formation is critical, according to the report. However, household growth partially has stalled as young adults have delayed homeownership and immigration has slowed.
As such, in recent years, builders have drastically cut production of new homes.
“With inventories of new homes at historic lows, a turnaround in demand could quickly result in tighter markets,” the report notes. “Over the longer term, the number of younger households is set to rise sharply, supporting growth in the population that fuels growth in both new renters and first-time buyers. The path of the economy and evolution of the mortgage market will determine when and if this increased demand materializes.”
The report predicts a need for greater housing units for several reasons. For example, the report projects demand for 1 million new homes a year is needed to meet population growth in the coming decade. The report also predicts a surge in smaller homes, estimating that 3.8 million baby boomers will be looking to downsize their homes within the next decade. Also immigration growth, the need to replace existing homes, and demand for second homes will contribute to rising demand for housing units, the report notes. Therefore, researchers conclude at least 16 million new housing units will be needed over the next decade.
To download the report, visit Harvard University’s Joint Center for Housing Studies website.
Source: “Harvard: Real Estate Recovery Hinges on Return of Demand,” Inman News (June 6, 2011)
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