NAR: Obama's on the Right Track

Daily Real Estate News | Tuesday, September 17, 2013

The National Association of REALTORS® praised President Barack Obama's forceful speech on Monday reiterating that the economy remains his primary concern going forward.
Obama took the fifth anniversary of the collapse of Lehman Brothers as an opportunity to remind the country that his administration has taken bold steps to stabilize the economy. Chief among them are measures to help the housing market recover from disaster.
NAR’s 2013 President Gary Thomas, CEO Dale Stinton, and 2013 President-Elect Steve Brown were invited to be at the White House with other members of the NAR Leadership Team as Obama remarked on the housing market’s steady return to normalcy.
"Most Americans who’ve known economic hardship these past several years, they don’t think about the collapse of Lehman Brothers when they think about the recession," Obama said. "Instead, they recall the day they got the gut punch of a pink slip or the day that a bank took away their home." Obama then ticked down a list of actions he has taken to build the economy back up, naming the Home Affordable Modification Program as a top measure that has helped struggling home owners.
After Obama's speech, Thomas said REALTORS®' support was critical in helping the Obama administration's efforts to stabilize the housing market and extend an olive branch to home owners on the brink of losing their homes.
"With NAR’s support, the administration enacted key policies to stabilize the market, recover home values, ensure access to affordable credit, and most importantly, renew faith in the value of homeownership," Thomas said. "REALTORS® supported efforts to help more than 7 million underwater homeowners refinance their homes or modify their mortgages."
But the hard work isn't over, he cautioned.
"To protect future home buyers from unscrupulous lending practices, NAR continues our work with the administration and Congress to develop new lending standards that create opportunities for private capital to re-establish itself as part of a robust and competitive mortgage market," Thomas said.

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What Ranks High with Luxury Homebuyers

Daily Real Estate News | Wednesday, September 11, 2013

Luxury home owners and buyers place a high value on real estate, according to a new survey conducted by Better Homes and Gardens of 500 luxury home buyers.
In fact, the survey finds that 75 percent of luxury home buyers believe home ownership is a sounder investment than the stock market. What’s more, 57 percent of luxury home owners say home ownership is a bigger indicator of success than their job or title.
“The luxury consumer is considered a trendsetter in most industries, and to see the strong connection this consumer has with ‘home’ is very significant as we look at the real estate market as a whole,” says Sherry Chris, president and CEO of Better Homes and Gardens Real Estate LLC. “The luxury home buyer has high standards and invests the money, the time, and the commitment to making their home fit their needs and reflect who they are. It’s remarkable that they do this so well that nearly all -- 93 percent -- believe their house is the best one on their block.”
The survey revealed some of the following insights into the luxury home buyer and owner:

• They desire multiple homes: Fifty-three percent say they prefer owning multiple “lifestyle” homes to support their lifestyle activities, such as skiing or attending the theatre. Fifty-eight percent of the luxury home buyers surveyed say they already owned multiple homes to support their lifestyle activities. 
• They’re willing to sacrifice square footage for luxurious amenities: Sixty-percent of luxury home buyers surveyed said they would rather have as many upgrades as they can afford in their home rather than greater square footage. Ninety-four percent of those surveyed would be willing to give up 1,000 square feet of living space in their next home in order to get the amenities they most desire, such as living in a better neighborhood, living in a house with “character,” more land, access to dining and entertainment, and a shorter commute. 
• They want a high-tech home. Sixty-six percent expressed a stronger desire for having a “smart” home than a “green” home. Eighty-seven percent said they would not even consider purchasing a home that wasn’t tech-friendly. 
• They also value their outdoor spaces. Luxury homebuyers also placed a high value on outdoor amenities as must-have essentials in a home. For example, they expressed a big interest in having a garden oasis, outdoor fireplace or firepit, and a separate guest house outside of the main home. 
• They turn to their real estate agent for guidance and greater insights. The luxury home buyer is looking for their real estate agent to provide them insight into the neighborhood lifestyle (65%), advance new listing notices (64%), advice on housing trends (55%), and support at a personal level throughout the buying process (53%), the survey finds. 

Source: “Luxury Home Owners Believe Home Ownership is a More Sound Investment Than the Stock Market, Survey,” RISMedia (Sept. 10, 2013)

 

Report: Singles Make Up Quarter of All Buyers

Daily Real Estate News | Friday, August 30, 2013

More Americans are opting to live alone, with single buyers making up a quarter of all home purchases last year, according to the National Association of REALTORS®. In the U.S., there are 33 million one-person households, and living solo is becoming an international trend, MSN Real Estate reports.
Why are so many living alone? People are marrying later, divorcing more, and living longer, sociologists say.
Eric Klinenberg, a sociologist and author of "Going Solo: The Extraordinary Rise and Surprising Appeal of Living Alone," says that young adults ages 18 to 34 are the fastest-growing group of people living alone. Solo households are also mostly women: 18 million women live alone versus 14 million men. The majority of solo households are in cities and metro areas.
Purchasing a home can be a means of self-expression for singles, says Jennifer De Vivo, a real estate professional in Orlando, Fla.
"It's a way for singles to express their lifestyles and values,” she says. “They are able to focus on the exact communities, home styles, and features that cater to their individuality with much less compromise."
One-person households may be drawn to more low-maintenance homes, but for resale reasons, they still place a high value on being in a highly rated school district, agents say.
Being a single buyer can pose challenges, particularly in a post-recession market. Qualifying for a mortgage may be the biggest obstacle for single buyers, since they don’t have the advantages of dual incomes or shared responsibly that a two-person household does.
Source: “Alone, Not Lonely: The Growth of Solo Households,” MSN Real Estate (Aug. 26, 2013) and “Solo Homebuyer? You’re Not Alone,” MSN Real Estate (Aug. 29, 2013)

5 Inspection Problems Buyers Shouldn’t Ignore

Daily Real Estate News | Thursday, August 22, 2013

Home buyers need to be extra vigilant about inspections in the early stages of a purchase because if problems are discovered too late in the process, it can "dash home owners' dreams and budgets," writes Yahoo! Finance in a recent article.
One home buyer in Long Island, N.Y., explains in the story that she didn't discover the fixer-upper she bought needed $225,000 in repairs until after she purchased it.
Jonathan and Drew Scott, who educate viewers about transforming fixer-uppers on HGTV's "Property Brothers," offers up a checklist of five things buyers should look for to ensure they don’t buy a lemon.

• Mold: Buyers should note any musty smells in the home and be on the lookout for any mold. Mold can be caused by improper air circulation as well as water leaks. 
• Pests: Termite damage can be widespread and costly to repair.  
• Outdated fixtures and wiring: Electrical problems in a home can cause fire hazards. Buyers should take note of any indication of faulty wiring, such as cable coming out of drywall. 
• Poor DIY jobs: Buyers should make sure that the previous home owner's do-it-yourself projects were done correctly and are up to code. For example, poorly done flooring and painted-over wallpaper can be time-consuming and costly to fix. 
• Drainage problems: Sloping sod can cause flooding problems in a backyard, and a slow-draining sink could be an indication of a bigger problem. Buyers should test sinks and flush toilets to test for any potential problems. 

Source: “Property Brothers: Don’t Buy a House Without Checking These 5 Things,” Yahoo! Finance (Aug. 19, 2013)

Study: Price Home Higher, Get a Better Offer

Daily Real Estate News | Tuesday, August 20, 2013

The higher a home is priced at the outset, the more likely it is that it will get a higher offer from a buyer, according to a new study by researchers Grace Bucchianeri and Julia Minson. The study appeared in the May issue of the Journal of Economic Behavior & Organization. The researchers factored in geographical location and timing of sales in evaluating the pricing strategy of 14,000 real estate transactions.
"A home that is listed 10 to 20 percent higher than other homes in the neighborhood will command an additional increase of 0.05 percent to 0.07 percent in the sale price for each 10 percent increase in the expected price," the study notes.
A popular pricing strategy popular among some real estate professionals is to underprice a home in order to ignite a bidding war. However, the researchers say that this isn't effective because there are seldom enough buyers in a market to create a "herding effect" to increase prices. They found that under-pricing a home could actually lead to a lower sales price.
"Pricing a home 10 percent to 20 percent lower than comparable homes led to a 0.05 percent to 0.08 percent decrease in the expected price," the study notes.
The researchers suggest that first impressions on price have a strong influence on buyers. A buyer may consider a range of prices when house hunting, but they always refer back to the original list price when making a decision.
Critics point out that the study's findings aren’t completely conclusive in determining the best pricing strategy. The researchers evaluated transactions that had an average sales price of $234,000. Given the price variations found in the study, the amounts in final sales prices only ranged from $117 to $187, critics say.
Source: “What is the Correct Way to Price a Listing?” RealtyTimes (Aug. 20, 2013)

7 Cities Leading the Housing Recovery

Daily Real Estate News | Wednesday, August 21, 2013

The housing recovery rolls on, with some markets seeing more progress than others. RealtyTrac recently released its first Housing Market Recovery Index, which reveals the metros leading the housing recovery.
The index showed that upstate New York, southwest Florida, and Northern California's Bay Area are leaders in the housing recovery. On the other hand, markets in northern Maryland, southeast Pennsylvania, and downstate Illinois are still showing signs of lagging the furthest behind in the recovery, according to RealtyTrac.
“The U.S. housing market has clearly shifted to recovery mode over the past 18 months, with home prices consistently rising and foreclosures falling closer to pre-housing bubble levels,” says Daren Blomquist, vice president at RealtyTrac. “Still, symptoms of the distress that plagued the housing market over the past seven years continue to linger, particularly in the form of a high percentage of underwater borrowers and distressed sales. This lingering distress is creating an uneven pace of recovery across different local markets.”
For its Housing Market Recovery Index, RealtyTrac used seven different measures to evaluate the 100 largest metro’s recovery: the unemployment rate, underwater loan percentage, foreclosure activity percentage change from peak, distressed sales, investor share, cash purchases, and median home price change from the bottom. The following are the metros that ranked highest on its Housing Market Recovery Index:
1. Rochester, N.Y.
Median home price change from trough: 93%
Unemployment rate: 7%
Underwater home owners: 7%
2. Cape Coral-Fort Myers, Fla.
Median home price change from trough: 82%
Unemployment rate: 7.4%
Underwater home owners: 42%
3. Albany-Schenectady-Troy, N.Y.
Median home price change from trough: 44%
Unemployment rate: 6.4%
Underwater home owners: 9%
4. San Jose-Sunnyvale-Santa Clara, Calif.
Median home price change from trough: 70%
Unemployment rate: 6.9%
Underwater home owners: 9%
5. San Francisco-Oakland-Fremont, Calif.
Median home price change from trough: 96%
Unemployment rate: 6.5%
Underwater home owners: 17%
6. Birmingham-Hoover, Ala.
Median home price change from trough: 58%
Unemployment rate: 5.9%
Underwater home owners: 15%
7. Atlanta-Sandy Springs-Marietta, Ga.
Median home price change from trough: 57%
Unemployment rate: 8.9%
Underwater home owners: 36%
Source: RealtyTrac

Second Chance for Foreclosed Home Owners

Daily Real Estate News | Monday, August 19, 2013

The Federal Housing Administration is giving some former home owners another shot at home ownership. The FHA sent a letter to mortgage lenders stating that it would offer mortgage insurance to borrowers who once filed for bankruptcy, or who lost their homes through foreclosure or short sale during the recession.
Still, potential borrowers must show they can meet all other FHA requirements and that they are no longer financially constrained. Borrowers also will have to undergo housing counseling and FHA is requiring lenders to verify that at least a year has passed since the foreclosure or “economic event" that caused the foreclosure or bankruptcy.
"FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage," according to the letter FHA sent to lenders.
Source: “FHA offers mortgage backing to the once bankrupt,” HousingWire (Aug. 16, 2013)

Housing's Top 10 Turnaround Towns

Daily Real Estate News | Friday, August 16, 2013

Which U.S. cities are leading the nation's housing recovery? Realtor.com® has released its second quarter rankings based on indicators such as inventory, median list price, days on the market, and search and listing activity on its site.
Despite its recent filing for bankruptcy, Detroit emerged as No. 7 on the list. The median list prices in Detroit were nearly 38 percent higher for the second quarter than last year at this time, and the market’s median age of inventory was 45 days — the second lowest in the nation.
“Detroit has made remarkable progress in the last year, shrinking its inventory of unsold homes by more than 26 percent and becoming one of the most balanced markets in the nation,” says Steve Berkowitz, CEO of Move.  “We’ll be watching the inventory levels in the months ahead, but if this past quarter is any indication, Detroit won’t be giving up without a fight.”
The following are realtor.com®’s top 10 turnaround towns:
1. Oakland, Calif.
Quarterly year-over-year median list price:  up 41.3%
Quarterly year-over-year median age of inventory: down 53.1%
2. Orange County, Calif.
Quarterly year-over-year median list price: +29.4%
Quarterly year-over-year median age of inventory: -43.3%
3. Santa Barbara-Santa Maria-Lompoc, Calif.
Quarterly year-over-year median list price: +34.3%
Quarterly year-over-year median age of inventory: -30.9%
4. San Jose, Calif.
Quarterly year-over-year median list price: +25%
Quarterly year-over-year median age of inventory: -64%
5. Seattle-Bellevue-Everett, Wash.
Quarterly year-over-year median list price: +17.2%
Quarterly year-over-year median age of inventory: -55.8%
6. Los Angeles-Long Beach, Calif.
Quarterly year-over-year median list price: +30.3%
Quarterly year-over-year median age of inventory: -27.2%
7. Detroit
Quarterly year-over-year median list price: +37.8%
Quarterly year-over-year median age of inventory: -25%
8. Portland, Ore.-Vancouver, Wash.
Quarterly year-over-year median list price: +12%
Quarterly year-over-year median age of inventory: -45.8%
9. San Diego
Quarterly year-over-year median list price: +21.1%
Quarterly year-over-year median age of inventory:-26.4%
10. Reno, Nev.
Quarterly year-over-year median list price: +26%
Quarterly year-over-year median age of inventory: -32.3%
Source: realtor.com®

More Buyers Becoming Wary of Short Sales

Daily Real Estate News | Thursday, August 15, 2013

Home buyers once saw short sales as big bargains, but their appeal has fizzled in some parts of the country — so much so that some real estate professionals are advertising listings as "not a short sale" to attract more buyers.
"'Short sale' does have a stigma now," says Summer Greene, regional manager of Better Homes and Gardens Florida First Real Estate in Fort Lauderdale, Fla. Greene says getting bank approval for a short sale can be difficult, and the process of buying a short sale can take four to six months in her area.
A recent study found that short sales in Boca Raton tended to stay on the market much longer than other homes. And when homes were advertised as "not a short sale," they tended to sell for 2 percent to 5 percent more than comparable non-distressed homes that were not advertised the same way, according to the study. Homes advertised as "not a short sale" also sold faster, according to the study.
"What really caught our eye was there were a lot of people specifically stating, 'We are not a short sale,'" says Ken H. Johnson, the study's co-author and a professor with Florida International University's real estate department. "Not only were [the homes] not a short sale, but they got the extra mile to state that to clearly delineate themselves from the rest. That shouldn’t be happening."
In housing markets where short sales are less prevalent, agents say they aren’t noticing the stigma. Buyers aren't as aware of the lengthy process so they don’t dread it as  much. Therefore, singling out a property as “not a short sale” would be pointless, says Diane Saatchi, an associate broker with Saunders and Associates in the Hamptons.
Source: “Is There a Stigma with Home ‘Short Sales?’” CBSNews.com (Aug. 14, 2013)

Inventory Crunch Over? More Homes Are For Sale

Daily Real Estate News | Wednesday, August 14, 2013

Inventory levels are on the rise nationwide, which could soon mean the severe inventory shortages plaguing many markets the last few months may soon be nearing an end, according to the latest report from realtor.com®. As home prices rise, more sellers may be testing the market, helping to increase the options for home buyers.
Realtor.com® reported that 1.96 million homes were listed for sale in June -- the highest number since last September.
The markets that posted the largest rises in the number of homes for sale compared to one year earlier were:

• Atlanta: inventories rose 17.9% year-over-year
• Sacramento, Calif.: +16.7%
• Los Angeles: +6.8%
• Orlando: +2.8%

All four markets have also posted strong gains in home prices the past year, realtor.com® reports.
“At the current pace of sales, the supply of homes for sale is still very low, suggesting price gains are likely to continue,” The Wall Street Journal reports. “But the months supply is up slightly in a growing number of markets. This could actually boost sales — a major complaint of home shoppers and their real estate agents is that there’s a shortage of attractive homes being offered for sale.”
Meanwhile, inventories of homes for-sale has fallen year-over-year levels in 26 of the markets realtor.com® monitors. Inventory levels fell the most in Detroit (by –30.2%); Boston (–28.9%), Denver (–25.1%), and San Francisco (–19.4%).
Source: “Housing Inventory Rose in July,” The Wall Street Journal (Aug. 13, 2013)

Repeat Buyers: Backbone of Housing Recovery

Daily Real Estate News | Tuesday, August 13, 2013

The growing ranks of repeat home buyers are helping to drive the housing recovery, making up for the dwindling numbers of first-time buyers.
Repeat home buyers accounted for 54 percent of existing-home sales in June, up from 49 percent just one year prior, according to the National Association of REALTORS®. Meanwhile, first-time buyers — who usually account for 40 percent of the market share — shrank to 29 percent in June. A lack of lower-priced homes and strict lending requirements are edging more first-time buyers out of the market.
“What we’re seeing are these buyers who’ve waited around and who have finally realized this is a good time to move,” says David Crowe, chief economist for the National Association of Home Builders. “They will feed the demand until our economy gets a little more solid.”
Rising home prices are increasing household wealth and pushing more home owners to sell, either to trade up for bigger properties or to use the greater equity in their homes to put down a larger down payment for a comparable home, Bloomberg reports.
“The economy looks to be on a sounder footing, home prices are rising, and expectations are that they’ll continue to increase,” Michelle Meyer, a senior economist at Bank of America in New York, told Bloomberg. “Not only would they be able to sell their current property, but also in terms of purchasing their larger home, they’ll feel that their homes will appreciate with time.”
Source: “Home Sales Buoyed by Repeat Buyers,” Bloomberg (Aug. 11, 2013)

Moody's: Privatizing Mortgage Finance Will Cost Borrowers

Daily Real Estate News | Monday, August 12, 2013

If Congress shuts down Fannie Mae and Freddie Mac, borrowers likely will end up paying slightly higher mortgage rates.  Proposed House and Senate bills would wind down the two firms over five years and scale back the government intervention in guaranteeing mortgage securities.
The House GOP bill would virtually privatize the mortgage market, while the Senate's bipartisan plan would limit Washington's role in insuring mortgage securities and retain the federal government as an insurer of last resort.  Both plans are meant to shift more mortgage financing risk from the government to the private sector in order to prevent future taxpayer-funded bailouts.
Mark Zandi, chief economist at Moody's Analytics, suggests that, as a result, typical borrowers could pay about $75 per month in extra interest payments—or about half a percentage point more—under the Senate proposal, and about $135 more under the House plan.  That could be the average on a conforming loan of about $200,000 with a 20 percent down payment.
"Closing Fannie, Freddie Could Up Mortgage Rates," Associated Press (Aug. 8, 2013)

Moody's: Privatizing Mortgage Finance Will Cost Borrowers

Daily Real Estate News | Monday, August 12, 2013

If Congress shuts down Fannie Mae and Freddie Mac, borrowers likely will end up paying slightly higher mortgage rates.  Proposed House and Senate bills would wind down the two firms over five years and scale back the government intervention in guaranteeing mortgage securities.
The House GOP bill would virtually privatize the mortgage market, while the Senate's bipartisan plan would limit Washington's role in insuring mortgage securities and retain the federal government as an insurer of last resort.  Both plans are meant to shift more mortgage financing risk from the government to the private sector in order to prevent future taxpayer-funded bailouts.
Mark Zandi, chief economist at Moody's Analytics, suggests that, as a result, typical borrowers could pay about $75 per month in extra interest payments—or about half a percentage point more—under the Senate proposal, and about $135 more under the House plan.  That could be the average on a conforming loan of about $200,000 with a 20 percent down payment.
"Closing Fannie, Freddie Could Up Mortgage Rates," Associated Press (Aug. 8, 2013)

Foreclosure Fears Less Haunting to Housing Recovery

Daily Real Estate News | Friday, August 09, 2013

Fears over a large overhang of potential foreclosures that could threaten the housing recovery have failed to materialize — and aren’t likely to do so — according to the Mortgage Bankers Association.
More housing data is supporting that statement: The number of home owners behind on their mortgage payments or facing foreclosure dropped to a five-year low in the second quarter, according to a report released Thursday by the Mortgage Bankers Association.
At the end of June, nearly 6 percent of home mortgages were 90 days or longer past due or in the foreclosure process. That’s down from a 9.7 percent high set in late 2009, and down from 7.3 percent last year at this time.
“At a national level, all of the indicators are good. The numbers are down where they should be down,” says Jay Brinkmann, the chief economist for the Mortgage Bankers Association.
While the drop is welcome news to the housing industry, the share of home owners delinquent on their mortgages still remains well above historical levels. Prior to the housing boom, seriously delinquent rates averaged about 2.5 percent.
Some states — particularly those that don’t require foreclosures to go through the courts for approval — are seeing some of the biggest improvements and have returned to near pre-crisis levels. California had a foreclosure rate of 1.6 percent and Arizona’s was 1.5 percent in the second quarter. These mark a drastic improvement for these states, which once were in the top five as worst foreclosure rates in the nation during the housing downturn and now are No. 37 and 38, respectively, MBA reports.
On the other hand, judicial foreclosure states — such as Florida, New York, and New Jersey — continue to battle higher shares of foreclosures.
“If you look at where the problems are centering now, the northeast is more of a center of attention,” Brinkmann says.
Source: “Mortgage Delinquencies Hit Five-Year Low,” The Wall Street Journal (Aug. 8, 2013)

How to Identify a Healthy Housing Market

Daily Real Estate News | Monday, August 05, 2013

Houston-based real estate consulting firm Metrostudy uses "drive-bys" to help it gauge the health of the residential market in different U.S. metro areas.  Employees drive through newly built—or still under construction—housing developments from Texas to Florida and begin observing.
If there are toys on a house's front lawn, for example, that is a good sign that a family has moved in.  Another positive sign is if a garden hose is attached to the side of the house.  Not only is the home occupied, it also has an owner who cares about his or her property.
Among the bad signs are the absence of curtains in the windows, a high number of empty lots, and newly completed but clearly vacant houses.  Metrostudy researchers say these are indicators that a developer may have badly overestimated demand and could soon be saddled with inventory.
Brad Hunter, chief economist of Metrostudy, is projecting double-digit increases in new-home prices for the remainder of 2013.  He sees the speculative excess mostly gone from the market.  In 2014, though, Hunter forecasts that new-home prices will increase only 6 percent as interest rates continue their upward climb.  He concludes, "Mortgage rates could pose a challenge to affordability."
Source: "To Figure Out Where Real Estate Is Headed, Start Driving," Business Week (Aug. 5, 2013)

Obama to Support 30-Year Mortgage in Speech

Daily Real Estate News | Tuesday, August 06, 2013

President Barack Obama is making it clear in his housing-focused economic speech today in Phoenix that he envisions the 30-year fixed-rate mortgage to be the centerpiece of any reformed mortgage system.
“Homeownership remains the primary way that most middle-income working families build long-term wealth and provides a foundation for widely shared economic growth,” the Obama Administration said in a fact sheet released prior to the president’s speech. Any reforms to the secondary mortgage market, the fact sheet said, must ensure “the continuation of the 30-year mortgage in goods times and bad.”
Obama’s plan envisions a continuing presence of the federal government in the secondary mortgage market to provide “catastrophic” insurance when needed after private insurers have met their responsibilities. “Private capital should bear the substantial majority of losses,” said the fact sheet, which provides an outline of what the president’s remarks cover.
The leadership and executive staff of the Phoenix and Arizona associations of REALTORS® are attending the speech today at Desert Vista High School in Phoenix at 4:05 p.m. EST. “REALTORS® are looking forward to supporting the continuation of safe 30-year fixed-rate mortgage financing in any way we can,” said Diane Scherer, CEO of the Phoenix Association of REALTORS®.
Scherer and other attendees, using the handles “phxrealtors” and “dscherer,” plan to provide updates from the speech via Twitter using the hash tag #obamaphx.
Among other housing matters Obama is covering in his speech are the administration’s plans for continuing the phase-out of Fannie Mae and Freddie Mac — the two secondary mortgage market companies that are in conservatorship — and the development of a common securitization platform to encourage investment in mortgage-backed securities.
He also will reinforce the federal government’s commitment to maintaining direct support for safe, affordable mortgage financing under FHA (though he favors allowing FHA loan limits to decrease), the Rural Housing Service, and the Department of Veterans Affairs.
Obama will also once again seek expansion of the administration’s refinance program to include troubled borrowers with mortgage loans not backed by the federal government. 
NAR supports maintaining the 30-year fixed-rate mortgage and keeping an explicit federal role in the secondary mortgage market. NAR also backs continued strong support of FHA, RHS, and VA guaranteed-loan programs.
More on the speech is at the White House’s website at http://www.whitehouse.gov/a-better-bargain#housing.
— By Robert Freedman, REALTOR® Magazine

How to Help Buyers Beat Out the Competition

Daily Real Estate News | Tuesday, July 30, 2013

With home buyers finding themselves in bidding wars all over the country, how can you help make sure they aren’t outbid every time?
In 18 states, 69 percent of homes on the market fielded multiple offers in June, according to real estate brokerage Redfin. Bidding wars are reportedly most common for bargain-priced homes where home buyers are competing with investors.
The Wall Street Journal recently highlighted some of the following tips for buyers who want to win a bidding war without overpaying.
Don’t lowball an offer: “Make sure your initial bid isn’t insulting,” The Wall Street Journal reports. Syd Leibovitch, president of Rodeo Realty in Los Angeles, advises his clients to submit their maximum bid first rather than try to base their offer on what they think other buyers will do. He says clients too often lose a home to a higher bidder when they were willing to pay a higher price from the beginning.
Set a “walkaway number”: At the beginning of their real estate search, have your buyers pick the number that is their absolute maximum. This will help them avoid getting caught up in the competition if they face a bidding war. This maximum limit should include the amount they can get from a lender, plus some extra cushion. That will ensure they are taking into account insurance, taxes, and other costs of home ownership.
Be flexible: Being flexible — such as negotiating closing dates or offering a “rent back” to sellers — can help set your buyers apart.
Get prequalified: If your buyers need financing for their home purchase, they need to know how much a lender is willing to give them. Getting prequalified shows that a buyer has the ability to close.
Be the backup: If your buyer loses out in a bidding war, you can still communicate to the seller that the buyer is still interested in purchasing the house — even if another bid has been accepted. A transaction can fall through in the final hours, which would allow your buyer to step in.
Source: “How to Win a Bidding War,” The Wall Street Journal (July 27, 2013) [Log in required]

10 Markets Where More Buyers Bring Cash

Daily Real Estate News | Friday, July 26, 2013

Home buyers who require financing for their home purchase can struggle to compete against buyers who have offers of all-cash.
Where are all-cash deals are the most prevalent? Cash deals represented 80 percent of home sales in June in Vermont; 58 percent in Nevada; 57 percent in Florida, and 51 percent in New York, according to RealtyTrac. Cash deals represent a very small percentage in Texas, Utah, and New Mexico.
The markets with the most all-cash transactions tend to have a high number of foreclosures and depressed home prices, which attracts investors and private equity firms, according to RealtyTrac.
The following 10 metros had 40 percent or more all-cash deals out of the total home sales in June, according to RealtyTrac:

1. Miami/Ft. Lauderdale: 64%
2. Las Vegas: 62%
3. Tampa, Fla.: 58%
4. Detroit: 56%
5. Orlando: 53%
6. New York: 49%
7. New Orleans: 43%
8. Memphis: 43%
9. Jacksonville, Fla.: 42%
10. Atlanta: 42%

Source: “Housing markets where cash is king,” CNNMoney (July 25, 2013)

Fannie: Fast Rise in Mortgage Rates Could Hurt

Daily Real Estate News | Tuesday, July 23, 2013

The rise in mortgage rates over the last couple of months has been “significant” and could hamper the housing recovery, economists note in Fannie Mae’s Economic Strategic Report for July. However, home sales so far have been little affected by the spikes, they say.
The 30-year fixed-rate mortgage has risen more than 110 basis points from the first week of May to the end of June. In early July, it started to ease somewhat. Still, the report says that despite the increases, rates are still near historical lows. It’s the sudden rise in such a short time that has been alarming, the economists note.
Mortgage applications for home purchases have fallen about 9 percent since early May, when the rise in rates began. However, pending home sales during that same period rose to the highest level in more than six years. Many of those sales, though, are in cash, which means they may be less tied to the rise in mortgage rates.
Fannie Mae economists predict that mortgage rates will continue a gradual rise and average 4.7 percent in the fourth quarter. That is about 40 basis points higher than economists had predicted a month ago.
Economists predict home sales will rise about 8 percent in 2013, and the median home price will be $189,000 for existing homes and $276,000 for new homes in the fourth quarter.
Source: “Fannie Mae Expects Rates to Continue Higher,” Mortgage News Daily (July 22, 2013)

Are Young Home Buyers Being Left Behind?

Daily Real Estate News | Friday, July 19, 2013

Young, first-time buyers are struggling to purchase a home. With low inventories of homes for sale, young first-timers are finding themselves competing against other bidders who are willing to pay cash. Meanwhile, many young buyers are having trouble qualifying for a loan, often due to high student loan debt.
Overall, young buyers have been left out of the housing recovery more than any other age group, according to a new USA Today analysis. The home ownership rate for 25 to 34 year olds has gone from 46.7 percent in 2006 to 29.7 percent in 2011 — a decline of 7 percentage points. As comparison, the 45-54 age group has seen home ownership rates fall 3.8 percent.
National home ownership rates during the same timeframe has fallen 2.7 percentage points — from 67.3 percent to 64.6 percent, USA Today reports.
"There's been no situation as devastating as this, and it's probably taken a greater toll on the younger generation," says Budge Huskey, CEO of residential brokerage Coldwell Banker. "They've seen other friends or acquaintances that may have even gone through a foreclosure. There's a psychological aspect of the impact of the recession that goes beyond the mere finances."
The median age of first-time home buyers was 31 in 2012, according to National Association of REALTORS® data. First-time home buyers are viewed as critical to a healthy housing market, allowing older Americans to purchase their next home and helping to stimulate new-home construction.
But the number of first-time home buyers has been steadily falling in recent years. In May, first-time buyers accounted for 28 percent of existing-home purchases — a drop from 34 percent a year ago, according to NAR.
"Giving people the opportunity to buy a home is a way to provide them a vehicle of accumulating wealth," says Chris Hebert, research director for the Joint Center for Housing Studies of Harvard University. "Making sure this next generation has this opportunity will be important for their well-being."
Source: “Housing recovery leaves Millennials behind,” USA Today (July 17, 2013)

Housing Inventories Rising Faster Than Usual

Daily Real Estate News | Monday, July 15, 2013

The number of homes for sale rose 4.3 percent in June to 1.9 million—the highest level in the past year. These gains are also higher than usual for this time of year, according to newly-released housing data from realtor.com®.
Following two years of declines, housing inventory is finally reversing course. More home owners are seeing rising prices and may be more apt to try to sell their homes.
The number of homes for sale has risen the most in the past year in areas that had seen the largest declines, such as Sacramento, Calif. (up 11 percent), Atlanta (up 10.9 percent), Phoenix (up 6.2 percent), and Miami (up 2.2 percent). From May to June, inventories soared by the highest month-over-month amounts in Southern California, with inventories up 51.5 percent in Orange County, 45.7 percent in Los Angeles, and 18.1 percent in San Diego, according to realtor.com®.
However, inventories of homes for sale remain far below last year’s level in markets such as Boston (down 35.1 percent), Denver (down 30.1 percent), Detroit (down 25.7 percent), Seattle (down 23.2 percent), and San Francisco (down 21.7 percent).
Realtor.com® also reports that median asking prices climbed 0.5 percent in June from May, reaching $199,900. Median asking prices are up by 5 percent over last year.
Source: “Housing Listings Multiply in June,” The Wall Street Journal (July 15, 2013)

Did Cash Buyers Save the Housing Market?

Daily Real Estate News | Wednesday, July 17, 2013

Cash real estate sales have risen the last few years to some of the highest levels on record, and a new report by CoreLogic suggests that these sales heavily helped to contribute to stabilizing the residential housing market and leading it into recovery.
In the early 2000s, cash sales averaged 25 percent of home sales. But in 2007 and 2008, cash sales began to rise as foreclosures started to increase. By 2012, cash sales were making up 40 percent of sales and have since inched down to 39 percent as of May 2013.
“Without cash sales overall, sales today would be much lower and the price declines would have been worse,” Mortgage News Daily reports about CoreLogic’s findings. “More recently, cash sales have helped fuel price increases dramatically in several boom and bust markets. Median prices for cash sales are up 24 percent from a year ago while prices of sales generally have increased 15 percent.”
The rise in home prices will lead to a lower presence of cash sales as investor activity returns to more traditional levels, CoreLogic notes. With cash sales receding in recent months, first-time and trade-up home buyers will need to step in to keep the recovery expanding, CoreLogic notes.
Source: “Cash Sales Saved Housing Market -CoreLogic,” Mortgage News Daily (July 16, 2013)

'Boomerang Buyers' Are Staging a Comeback

Daily Real Estate News | Tuesday, July 16, 2013

“Boomerang buyers”—former home owners who have gone through a short sale, foreclosure, or bankruptcy in the past few years and are saving up for a down payment to purchase a home again—are coming back. They're expected to flood markets in some of the hardest hit areas for short sales and foreclosures in the coming years. For example, boomerang buyers are predicted to account for nearly one in every five home sales in the metro Phoenix area this year—double the projected U.S. rate.
Rising rents and the desire to own again now that the economy is more stable are driving many boomerang buyers to re-enter the market. They also want to jump in before interest rates and home prices climb too much higher.
But how soon they can jump back in will depend on the type of loan they had as a previous home owner. For example, boomerang buyers who had FHA loans may need to wait only three years if they can prove that a hardship, such as job loss or death of a wage earner, led to their foreclosure or short sale.
Borrowers have typically been required to wait five to seven years to qualify for another loan, but mortgage giants have begun to change their rules to allow home owners who underwent a foreclosure or short sale to qualify sooner. Those who underwent a short sale will likely qualify the soonest. However, not all lenders are participating, so borrowers will need to shop around.
Freddie Mac’s wait time is usually four years following a short sale or deed-in-lieu, and seven years after a foreclosure. Fannie Mae may require a seven-year wait for a foreclosure, but only a two-year wait following a short sale as long as the borrower can provide a 20 percent down payment.
The following markets have the highest share of boomerang buyers, according to John Burns Real Estate Consulting:

• Riverside-San Bernardino, Calif.: 4.1% (percentage of all U.S. boomerang buyers in 2013)
• Los Angeles: 3.7%
• Phoenix: 3.6%
• Chicago: 2.5%
• Atlanta: 2.4%
• Las Vegas: 2.12%
• Washington, D.C.: 2.1%

Source: “New Wave of Buyers Ready to Hit the Real Estate Market,” The Examiner (July 15, 2013) and“Phoenix housing market sees 'boomerang buyers' sooner than expected,” The Arizona Republic (July 14, 2013)

Report Suggests Intentional Underbuilding

Daily Real Estate News | Thursday, July 11, 2013

With housing inventories so low, why aren’t homebuilders jumping in by ramping up production to meet demand?
A new housing report by Arizona State University suggests that homebuilders are methodically holding back their inventories and keeping the rate of new-home building low, despite population growth projections.
“New-home builders don’t appear too anxious to help meet the demand,” says Michael Orr, a real estate expert at ASU’s W.P. Carey School of Business.
A few years ago, during the housing bubble, homebuilding outpaced population growth. But builders are taking the opposite approach this time around. In an environment with tight underwriting for loans, builders are exercising some caution and restraint.
“They are trying to make sure they don’t overbuild like they did before the housing crisis, and they want to keep prices moving up,” Orr says. For example, Orr notes that in the Phoenix area, new-home sales rates are less than one-third of what is needed to keep pace with the projected population growth. He added that, with limited supply, builders are able to increase prices for new homes.
Those in the building industry have cited labor shortages, tight underwriting standards, and the rise in lot prices as a reason building hasn’t kept pace.
Source: “Why home builders aren't rushing to meet demand,” Phoenix Business Journal (July 9, 2013)

NAR on Blank Slate Tax Reform: 'Do No Harm'

 

Daily Real Estate News | Wednesday, July 10, 2013

The National Association of REALTORS® today is asking its members to let their senators know that real estate tax provisions are critical to the economy and should remain high on lawmakers’ priority list as they take a blank slate approach to tax reform.
NAR is issuing a Call for Action to its members that emphasizes the need for any tax legislation to do no harm to the economy by retaining the deductions for mortgage interest and property taxes, the capital gains exclusion on proceeds from the sale of a principal residence, and extension of mortgage cancellation relief. Also emphasized are deprecation rules and the continued tax-deferred treatment of 1031 exchanges.
Under the blank-slate approach to tax reform announced by the leadership of the Senate Finance Committee recently, senators are asked to start from scratch and identify the provisions they want to keep in the Tax Code. Sen. Max Baucus (D-Mont.), the Finance Committee chair, says he'd like to start developing a bill this fall.
NAR staff professionals explain the blank-slate approach to tax reform in this short video interview with REALTOR^® Magazine.

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Home Prices Post Biggest Jump in 7 Years

Daily Real Estate News | Wednesday, July 03, 2013

Home prices are moving up at a quicker pace, rising in May by their largest annual amount in more than seven years with more to come, according to the latest report released by CoreLogic.
Home prices increased 2.6 percent in May over April and have shot up 12.2 percent compared to last year’s prices. CoreLogic economists are predicting that home prices will rise by another 2.9 percent in June, making the yearly price gain 13.2 percent year-over-year.
Tight inventories of homes for sale across the nation have pushed home prices higher, according to CoreLogic.
“Home price appreciation, particularly in much of the western half of the U.S., is increasing at a torrid pace,” says Anand Nallathambi, president and CEO of CoreLogic. “Across the country, pent-up demand and continued low interest rates are fueling strong demand for a limited inventory of properties. We expect that trend to continue to drive up prices throughout the balance of the summer months.”
When including distressed sales, the following five states have seen the highest home appreciation in the past year, according to CoreLogic:

• Nevada: +26%
• California: +20.2%
• Arizona: +16.9%
• Hawaii: +16.1%
• Oregon: +15.5%

Source: CoreLogic and “Home prices rise by most in seven years in May: CoreLogic,” Reuters (July 2, 2013)

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Pending Sales at Strongest Pace Since 2006

Daily Real Estate News | Thursday, June 27, 2013

Pending home sales rose in May to the highest level since late 2006, implying a possible spark as mortgage interest rates began to rise, according to the National Association of REALTORS®.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 6.7 percent to 112.3 in May from a downwardly revised 105.2 in April, and is 12.1 percent above May 2012 when it was 100.2. Contract activity is at its strongest pace since December 2006, when it reached 112.8. Also, pending sales have been above year-ago levels for the past 25 months.
Lawrence Yun, NAR chief economist, said there may be a fence-jumping effect.  “Even with limited choices, it appears some of the rise in contract signings could be from buyers wanting to take advantage of current affordability conditions before mortgage interest rates move higher,” he said.  “This implies a continuation of double-digit price increases from a year earlier, with a strong push from pent-up demand.”
Regionally, the index went unchaged in the Northeast, but is 14.3 percent above a year ago.  In the Midwest, it jumped 10.2 percent to 115.5 in May and is 22.2 percent higher than May 2012.  Pending home sales in the South rose 2.8 percent and 16 percent in the West.

Source: NAR

First Bipartisan Housing Finance Bill Introduced in Senate

Daily Real Estate News | Wednesday, June 26, 2013

A bipartisan group of Senators introduced Tuesday a bill to remake the role of the federal government in mortgage finance. The bill proposes replacing Fannie Mae and Freddie Mac with a new guarantor, the Federal Mortgage Insurance Corp. The FMIC would offer reinsurance of mortgage securities if private creditors ever reached another crisis in the future.
The legislation would “require private entities to buy mortgages from lenders and issue them to investors as securities,” Reuters reports. “Private equity would be required to absorb a 10 percent loss of the principal underlying those new mortgage-backed securities if the loans went bad.”
The government took control over Fannie Mae and Freddie Mac in 2008 and has spent $187.5 billion in keeping the government sponsored enterprises afloat. Recently, the GSEs have emerged from needing taxpayer bailout funding and have been posting record profits since the housing market has picked up. Fannie Mae and Freddie Mac back nearly half of all new U.S. home loans.
"It lessens the footprint of the federal government in housing and winds down Fannie and Freddie," says Sen. Bob Corker, R-Tenn., one of the lawmakers who introduced the bill. “But at the same time it keeps the housing finance industry in a liquid state."
The bill is only the first step and it will likely take years before Fannie Mae and Freddie Mac are fully wound down, analysts say. Analysts say that  even if the proposed legislation won the support of the Democrat-led Senate it would still need to gain approval in the Republican-controlled House of Representatives. Many lawmakers in the House have said they favor a fully private system.
The legislation “represents a milestone in the government's response to the housing crisis as it is the first comprehensive, bipartisan measure to deal with Fannie, Freddie and mortgage finance," writes Jaret Seiberg, a senior policy analyst at Guggenheim Securities, in a research note. However, Seiberg was doubtful the legislation would be approved as is.

Source: “Senators push bill to scrap mortgage firms Fannie, Freddie,” Reuters (June 25, 2013)

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Are Appraisals Finally Playing Catch-Up?

 

Daily Real Estate News | Monday, June 24, 2013

Many real estate professionals have been blaming low appraisals for derailing transactions over the last few years. But now home prices are heating up across the country. Are appraisals still coming in lower than the agreed-upon sales price?
Even with prices rising and the number of foreclosures falling, some appraisers say assigning a value to a property isn’t getting any easier. One of the big reasons, they say, is because of low inventories in many markets. “An undersupply of available homes has prompted bidding wars above list price, a price that isn’t necessarily justified by an appraisal,” The Chicago Tribune reports.
"That's been happening a lot this winter and spring — the appraisal isn't coming in," Alvin "Chip" Wagner, of A.L. Wagner Appraisal Group Inc. told The Chicago Tribune. "It's an appreciating market, and the closed data that appraisers use is behind what the homes are actually selling for right now. We're just now on the cusp of good data."
Appraisers say they are using sound data to base their valuations, including motivations of buyers and sellers.
Consumers "don't always value us in a friendly light because we are the person coming in and saying yea or nay, and we've been the bearer of bad news for too many years," says Sharon Bagby, an appraiser at Crystal Lake Appraisal Service Inc. "Home owners don't really know where the values are. They're hearing some really rosy values in some markets, but we have to work with the value that's there."

Source: “As housing warms up, appraisers feel the heat,” The Chicago Tribune (June 21, 2013)

Should Boomers Worry About Millennials' Housing Shift?

Daily Real Estate News | Monday, June 17, 2013

The Millennial generation is showing different housing preferences than previous generations, and some analysts say that Baby Boomers may be growing concerned that they will have a tough time selling their suburban, larger homes due to the Millennials’ differing tastes.
The Millennial generation has been called a key to the housing recovery, and housing experts are taking careful note of how the younger group's housing preferences differ from previous generations.
A new survey by the Urban Land Institute’s Terwilliger Center for Housing shows that about 60 percent of the millennial genreation say they prefer a mix of housing choices and prefer to be near shops, restaurants, offices, and transit. Seventy-five percent of Millennials say they value walkability. Of the 63 percent of Millennials who say they plan to move within the next five years, about 40 percent say they expect to move to multifamily housing.
“I do think their preferences are going to result in sustained change,” says Lynn Ross, the executive director of the ULI Terwilliger Center for Housing. “This group is so different from previous generations.”
One of the biggest obstacles facing this generation is student loan debt. Fifty-four percent of those aged 22 to 32 said that debt is their biggest financial concern. Forty-two percent referred to their debt as “overwhelming.”
“This generation has been through an incredibly difficult time, and I think it is ultimately going to operate very similarly to the generation that went through the Great Depression,” Ross says.

Source: “Home Loans for Millennials,” The New York Times (June 13, 2013)

Why Some Buyers Are Feeling Like They Missed Out

Daily Real Estate News | Tuesday, June 11, 2013

Mortgage rates and home prices are on the rise, and some home buyers who were waiting around for the housing market to reach bottom are realizing now they may have missed the boat.
Mortgage rates are inching up, with the 30-year fixed-rate mortgage averaging 3.91 percent last week -- up from 3.3 percent in early May, according to mortgage giant Freddie Mac.
"It's unlikely that rates will ever be that low again," says Doug Duncan, Fannie Mae's chief economist.
The Fed has been keeping interest rates at record lows by buying up to $85 billion a month in Treasury bonds and mortgage-backed securities, which has helped bolster the housing market.
"Up until recently, expectations were that the Fed would begin to taper purchases of mortgage-backed securities and Treasury bonds late in 2013, but that time frame appears to have moved to September, possibly sooner," says Keith Gumbinger, vice president of HSH.com, a mortgage information company.
As the economy continues to gain traction, interest rates are expected to continue to increase, Gumbinger says, since low rates often are associated with a distressed economy.
But even if mortgage rates move up a percentage point or two, housing experts note that mortgage rates will still be low by historical standards.
"The 30-year [mortgage rate] hit a 37-year low in 2003 at 5.23 percent," Gumbinger says. "That was the previous low-watermark prior to this financial crisis, and it's likely we will move closer to that mark as we grind forward."
Source: “Why You Missed the Boat On Record-Low Mortgage Rates,” CNNMoney (June 6, 2013)

Most Renters Plan to Buy, But Fear Lending Standards

Daily Real Estate News | Friday, June 07, 2013

Ninety percent of renters say they expect to buy a home in the future, but the majority are fearful of their ability to qualify for a mortgage at today’s stringent underwriting standards, according to a new survey conducted by Fannie Mae. In fact, 42 percent of those who intend to buy a home one day say they don’t think they’ll be able to do so for at least five years.
"Younger renters who prefer to own are much more likely than their older counterparts to say that they are renting mainly to make themselves financially ready to own," according to the survey.
The majority of renters surveyed said that if they had trouble qualifying for a mortgage, they would take steps to improve their credit score or financial situation, or consider buying a less expensive home. Only a quarter of renters said that if they were denied a mortgage, they would stop pursuing a mortgage altogether.
The survey showed that renters believe home ownership is better than renting in terms of privacy, security, and for raising a family. Fifty-one percent of renters say that owning makes more sense than renting when comparing both the financial and lifestyle benefits, according to the survey.
"The strength of the economy, particularly job creation and real income growth, as well as the favorability of credit conditions should play significant roles in determining if and when many of these renters will see the fruit of their efforts to become home owners," says Sarah Shahdad, analyst of Economic & Strategic Research at Fannie Mae.

Source: “Renters pursue the American Dream of homeownership,” HousingWire (June 6, 2013)

Home Prices Soar to Largest Gain in 7 Years

Daily Real Estate News | Wednesday, June 05, 2013

The housing recovery has picked up speed, as home prices posted their highest year-over-year gain since February 2006, according to the latest housing data from CoreLogic.
CoreLogic's home price index climbed 12.1 percent in April over year-ago levels. Home prices have been on the rise for more than a year.
"The pace of the housing market recovery quickened in April as home prices rose across the U.S.," says Anand Nallathambi, CoreLogic's chief executive officer. "We expect this trend to continue, bolstered by tight supplies and pent-up buyer demand."
CoreLogic economists predict home prices will rise another 2.7 percent in May.
The following five states had the largest price gains over the past year:

• Nevada: +24.6%
• California: +19.4%
• Arizona: +17.3%
• Hawaii: +17%
• Oregon: +15.5%

Source: “April home prices see biggest yearly gain in seven years: CoreLogic,” Reuters (June 4, 2013) and “U.S. Home Prices In April Jumped Most in 7 Years,” The Associated Press (June 4, 2013)

Downsizing Trend Reverses, Americans Want Big Homes Again

Daily Real Estate News | Tuesday, June 04, 2013

For the past three years, the average size of new homes has been on the rise. The median new-home size in 2012 reached a record high at 2,306 square feet, according to newly released data from the Census Bureau. That is an 8 percent increase from 2009.
During the Great Recession, Americans showed a preference for smaller homes, and many housing experts were saying it meant the end of the McMansion.
But Jeffry Roos, a regional president for homebuilder Lennar, told CNNMoney that it wasn’t that Americans wanted less space, they just couldn’t afford more space at the time.
Now, they’re upsizing again. A spokeswoman for GL Homes says that the builder has been selling homes that average 7 percent larger than during the first five months of 2012.
Some consumers are choosing to buy larger because they have more people under their roof. Lennar offers homes known as Next Gen, which feature separate suites for a mother-in-law or college grad who has moved back home.
Home shoppers tend to buy bigger than what they originally plan, Fred Cooper, a spokesman for Toll Brothers, told CNNMoney.
"In the downturns, in upturns, whenever, our customers typically added another 18 to 20 percent of floor space onto what already was a very nice house to begin with," Cooper says.
Source: “McMansions are making a comeback,” CNNMoney (June 4, 2013)

It's Not Over: Report Warns Shadow Inventory Threat Remains

Daily Real Estate News | Monday, June 03, 2013

Foreclosures have been falling in recent months, but two government watchdogs warn that the foreclosure crisis isn’t over yet. About 1.7 million borrowers have missed more than one payment on their government-backed mortgages, according to a newly released report by the inspectors general of the Federal Housing Finance Agency and Department of Housing and Urban Development.
The shadow inventory is made up of loans that have been delinquent for at least 90 days. If these delinquent loans become foreclosures, they could pose significant financial challenges to mortgage giants Fannie Mae, Freddie Mac, or other federal housing agencies, the report notes.
"Not only are current REO inventory levels elevated ... they may rise over the next several years depending on the number of shadow inventory properties that are ultimately foreclosed on," the report stated.
According to the report, the shadow inventory is more than seven times the inventory of REOs that Fannie Mae, Freddie Mac, and HUD currently own.
"Even a fraction of the shadow inventory falling into foreclosure could considerably swell ... inventories of REO properties," the report notes.

Source: “'Shadow' homes could burden U.S. housing agencies: report,” Reuters (May 31, 2013)
 

Mortgage Rates Climb to Highest Level in Year

Daily Real Estate News | Friday, May 31, 2013

Fixed-rate mortgages soared higher this week, reaching their highest averages in a year, Freddie Mac reports in its weekly mortgage market survey.
The 30-year fixed-rate mortgage -- the most popular choice among home buyers -- has climbed nearly half a percentage point since the beginning of this month -- from 3.35 percent to 3.81 percent this week.
"Fixed mortgage rates followed long-term government bond yields higher, following a growing market sentiment that the Federal Reserve may lessen its accommodative policy stance,” says Frank Nothaft, Freddie Mac’s chief economist. “Improving economic data may have encouraged those views.”
Despite the uptick, mortgage rates remain low by historical standards, Freddie Mac reports.
The mortgage giant reports the following national averages with mortgage rates for the week ending May 30:

• 30-year fixed-rate mortgages: averaged 3.81 percent, with an average 0.8 point, rising from last week’s 3.59 percent average. A year ago at this time, 30-year rates averaged 3.75 percent. 
• 15-year fixed-rate mortgages: averaged 2.98 percent, with an average 0.7 point, rising from last week’s 2.77 percent average. Last year at this time, 15-year rates averaged 2.97 percent. 
• 5-year adjustable-rate mortgages: averaged 2.66 percent, with an average 0.5 point, also up from last week’s average of 2.63 percent. Last year at this time, 5-year ARMs averaged 2.84 percent. 
• 1-year ARMs: averaged 2.54 percent, with an average 0.5 point, dropping from last week’s 2.55 percent average. A year ago, 1-year ARMs averaged 2.75 percent. 

Source: Freddie Mac

Investors Place Big Bets on Widespread Housing Recovery

Daily Real Estate News | Wednesday, May 29, 2013

Investors are picking up shares of appliances, building materials, and even pickup trucks in betting on a widening housing recovery, The Wall Street Journal reports. Investors say that the increase in residential construction and home renovation represents a big opportunity on Wall Street.
The recovery is in "the very early innings," Russell Croft, a portfolio manager at Croft Leominster Inc., told The Wall Street Journal. "[I’m trying] to find the secondary or tertiary stocks that might be influenced by housing."
Following a run-up in shares of homebuilder stocks -- like Lennar, KB Home, and Toll Brothers -- investors are now diversifying, looking at such companies like appliance maker Whirlpool (which has surged more than 170 percent since the end of 2011) and Ford Motor Co. for pickup trucks. Investors are looking for anything housing-related, including companies that manufacture related items from roofing and floorboards to drywall and faucets.
Home improvement retailers Lowe’s and Home Depot have each soared by about 60 percent over the last 12 months.
With home prices still below about 28 percent from their 2006 peak, investors are seeing plenty of opportunity ahead for the housing market.
"The housing market is one of the best investible themes out there for 2013 and for 2014 as well," says analyst Kevin O'Keefe with Brown Advisory, which oversees $33 billion in assets.

Source: “Investors Spread Their Housing Bets,” The Wall Street Journal (May 27, 2013)

Short Sales Losing Favor with Lenders?

Daily Real Estate News | Thursday, May 30, 2013

Lenders may be less inclined to approve short sales due to rising home prices, according to a new report by RealtyTrac.
During the first quarter, short sales posted a 35 percent drop compared to year-ago levels.
"The decrease in short sales was a bit of surprise given that 11 million home owners nationwide still owe more on their homes than they're worth," says Daren Blomquist, spokesman for RealtyTrac. "Rising home prices are taking away the incentive for short sales on the part of both home owners and lenders."
Foreclosure prices are on the rise, increasing 28 percent in the first quarter. The banks may be realizing they won’t necessarily lose a lot more money by letting a home go into foreclosure instead, Blomquist says.
However, foreclosure sales have been plummeting too, reaching their lowest levels since early 2008. Foreclosure sales made up 21 percent of the total market during the first quarter, which is down from 25 percent one year ago, according to RealtyTrac.
Foreclosure sales peaked in early 2009, when they made up 45 percent of all homes sold nationally.
Still, foreclosures are making up the biggest bulk of sales in certain states, such as Georgia (where 35 percent of sales were foreclosures in the first quarter), Illinois (32 percent), and California (30 percent), according to RealtyTrac.

Source: “Foreclosure sales fall to lowest level since 2008,” CNNMoney (May 30, 2013)

8 Fast-Growing Cities

Daily Real Estate News | Tuesday, May 28, 2013

Americans are continuing to flock to Texas. The state boasts the most cities that added the highest percentage of residents in the past year.
However, New York continues to hold the crown as the largest city in the U.S., and added 67,000 new residents between July 2011 and July 2012—which is the largest gain of any city in the nation.
The following cities saw the biggest increases in new residents between July 2011 and July 2012, according to the U.S. Census Bureau:

1. New York
   • New residents: 67,000
   • Population: 8.3 million
2. Houston
   • New residents: 34,625
   • Population: 2.2 million
3. Los Angeles
   • New residents: 34,500
   • Population: 3.9 million
4. San Antonio, Texas
   • New residents: 25,400
   • Population: 1.4 million
5. Austin, Texas
   • New residents: 25,400
   • Population: 840,000
6. Phoenix
   • New residents: 24,500
   • Population: 1.5 million
7. Dallas
   • New residents: 23,300
   • Population: 1.2 million
8. Charlotte, N.C.
   • New residents: 19,000
   • Population: 775,000

Source: “10 Big, Booming Cities,” CNNMoney (May 2013)

NAR Allows Public-Facing MLS Sites; Leaders to Look at realtor.com Content

Daily Real Estate News | Monday, May 20, 2013

The debate over public access to real estate information long-controlled by REALTORS® took center stage Saturday at the Board of Directors meeting of the National Association of REALTORS®.  At issue on the concluding day of the NAR Midyear Legislative Meetings & Trade Expo was whether MLSs should be able to charge members for establishing, maintaining, and promoting public-facing Web sites by including such sites in the “basic” services they provide to members.
Directors rejected the idea of “kicking the can down the road” to further consider technicalities of the proposal, as had been recommended by the NAR Executive Committee.
The move in favor of public-facing Web sites followed a separate discussion about the need for realtor.com to enhance and broaden its content and user experience in response to evolving consumer needs and expectations. Explaining that  “these are not ordinary times” for the industry, realtor.com president Errol Samuelson offered a presentation to the Board that described the accuracy of the site as second to none because of its leading-edge technology. He noted that “90 percent of the site is updated every 15 minutes.” The rest of the site is updated in the same day.
But the site’s lack of comprehensive content—such as the absence of FSBO properties from the site and a less than systematic approach to including new-construction homes and rental properties—puts realtor.com at a disadvantage, Samuelson said. He noted that the site is no longer No. 1 in terms of total visits or total audience.
The directors approved a motion for NAR leaders to convene meetings with Move Inc., which operates realtor.com, to discuss ways to enhance the site’s content and to present recommendations to NAR directors on how to achieve this goal at a special meeting to be held this summer.
Also at the meeting, the Board elected a new slate of officers for 2014 including: President-Elect Chris Polychron of Hot Springs, Ark; First Vice President Tom Salomone of Coral Springs, Fla.; and Treasurer Mike McGrew of Lawrence, Kansas. The slate joins Steve Brown of Dayton, Ohio, who will be 2014 President.  Appointed as vice presidents were Beth Peerce of Century City, Calif. and JoAnne Poole of Baltimore, Md.
Other highlights included:

• Membership— NAR membership dues remain unchanged at $120 (with $40 of that amount continue to be dedicated for REALTOR® Party programs), and dues for student membership were set at $25.
• Code of Ethics—The enforcement power of the Code of Ethics was strengthened significantly with the maximum penalty for violations tripling from $5,000 to $15,000.
• No Tax on Services —NAR adopted the following statement of policy opposing the application of state or local sales tax to rents and real estate services and other professional services, including real estate broker commissions, title searches, appraisals, home inspections, property management services, and any other services related to the real estate transaction.
• National Advertising Campaign —­­The Public Advocacy campaign was approved for funding for the next three years at the current level of $35 per member each year along with a name change to the Consumer Advertising Campaign. The new name is seen as better describing the campaign’s purpose, distinct from the association’s political advocacy efforts The national advertising campaign is central to the association’s consumer outreach efforts and is one of NAR most popular membership programs with 95 percent of REALTORS® favoring it.
• GRI Hours ­—The minimum hours of instruction for the GRI designation program were reduced from 90 to 60 hours in recognition of the time commitment and cost that has contributed to the substantial decrease in designees over the past five years, from 8000 in 2007 to 1455 last year.

—Wendy Cole, REALTOR® Magazine

Strong Fundamentals Shore Up Home Sales

Daily Real Estate News | Friday, May 17, 2013

Uncertainty over federal actions remains a big hurdle
Home sales are on a sustained upswing, with solid gains in volume and price predicted for the next few years thanks to improved market fundamentals. But whether the federal government will derail further improvement remains a question, REALTORS® heard Thursday.
Existing-home sales are expected to hit 5 million at the end of this year and then grow to 5.3 million in 2014, up from 4.3 million in 2011, National Association of REALTORS® Chief Economist Lawrence Yun told a packed audience at his residential economic forum at the 2013 Midyear Legislative Meetings & Trade Expo in Washington.

View slides from Yun's presentation.

Price appreciation will be strong, too. Yun said he expects gains of 8 percent this year and 5 percent next year.
The strong price growth reflects the overly tight inventory conditions in many markets, Yun said. And that’s not a healthy condition. What’s needed is a return to the market by small builders, but they can’t get financing because community banks, leery of banking regulations coming out of Washington, aren’t lending.
Until that regulatory uncertainty clears up, only the country’s largest builders, which have access to Wall Street bond financing, will be building. As a result, although building has picked up in the last year after years of flat-lining, the number of new units is barely at replacement level. To meet the pent-up demand that’s in the market right now, builders need to get some 1.5 million units on the market. They’re only getting about 1 million right now.
The good news is that the housing recovery is based on deep-seated improvements in market fundamentals. So as long as the economy stays on track, which economists generally say will be the case, the housing market should continue to improve well into the future.
To the extent that there are market risks, they largely stem from the federal government, which continues to look at ways to reduce its budget deficit. Washington is also writing rules to protect against future mortgage market problems.
Will the government pare back the availability of Federal Housing Authority financing through tightened lending rules? Will it require banks to meet stringent capital standards and underwriting requirements under Dodd-Frank Wall Street reform rules?
Another unknown is whether the government will it impose strict limits on the points and fees lenders charge for loan originations–what Yun called a kind of price control that could end up dampening loan availability.
Until these and other uncertainties are cleared up, the improving market will face headwinds, Yun said. As a result, although the market should continue improving, its gains are unlikely to be as robust as they otherwise would be.

—Robert Freedman, REALTOR® Magazine

Tax Reform Effort to Be Open and Serious

Daily Real Estate News | Thursday, May 16, 2013

Amid all the partisan squabbling in Washington, D.C., that makes national news headlines is a bipartisan effort by the House and Senate chairs of the tax-writing committees to roll out major tax-reform legislation this summer and have it considered by Congress before the end of the year.
Warren Payne, policy director on the tax-writing House Ways & Means Committee, met with the National Association of REALTORS®’ Taxation Committee Wednesday morning at the 2013 Midyear Legislative Meetings and Trade Expo. He told attendees that Rep. Dave Camp (R-Mich.), the committee chair, and his counterpart in the Senate, Max Baucus (D-Mont.), have been meeting weekly and are determined to make a good-faith effort to rewrite the country’s tax laws before the end of the year. Rep. Camp will be stepping down as Ways & Means chair at the end of this session, and Sen. Baucus has announced his retirement at the end of his term.
“They’re starting with a blank page,” said Payne.
The two lawmakers’ goal is to be transparent and open throughout the process by keeping stakeholders — including REALTORS®—informed at every step along the way.
Already some 20 hearings have been held in the House, and a Web site called taxreform.gov has been launched to help explain the effort and get input from people inside and outside the formal policymaking process. At the NAR meeting, Payne encouraged REALTORS® to go to the Web site and submit their views and to tell others to do so as well.
The determined effort to craft a bill from scratch means the mortgage-interest deduction and other vital homeownership and commercial real estate incentives are on the table, although Payne noted that Rep. Camp has said he doesn’t consider MID “a loophole,” but rather a fundamental part of the Tax Code.
To start the overhaul, Rep. Camp is working with four goals in mind:

1. The individual tax rate should be split into two levels: 10 percent and 25 percent
2. The corporate rate should be set at 25 percent
3. The U.S. tax system should put the country in a competitive posture compared to other nations
4. The alternative minimum tax should be repealed

Camp also is working on the assumption that the tax overhaul will be “tax revenue neutral” over 10 years, which means it will be targeted to bring in $42.2 trillion over that period, no more, no less.
Payne said the 1986 tax overhaul is being looked at as a model for both what to do and what not to do. On the positive side, the 1986 effort shows how lawmakers can craft complicated tax legislation by finding areas of consensus, while on the negative side it shows what happens when lawmakers aren’t open and transparent throughout the process. He was referring to the changes to passive losses that many experts have said shattered the commercial real estate market.
Those passive-loss changes weren't thoroughly vetted by the industry and other experts before they were approved. The result, many say, was massive, unexpected dislocation in commercial real estate that is still being felt today.
To avoid another debacle like that, Rep. Camp is keeping an open line of communication with all stakeholders, and in fact he and his staff are in regular communication with NAR and other groups to get input and minimize surprises. “We value our open communication with you,” Payne told the

REALTORS®. “We want to have your input at every point along the way.”
–Robert Freedman, REALTOR® Magazine

Don't Get Caught Flat-Footed on MID, REALTORS® Warned

Daily Real Estate News | Wednesday, May 15, 2013

Though partisanship in Washington, D.C., is at a historic high, that doesn't mean lawmakers won't take on tax reform later this year, possibly putting the mortgage interest deduction and other tax incentives important to real estate into play, said Jeffrey Birnbaum, a long-time Washington journalist who captured the 1986 tax reform battle in an award-winning book, Showdown at Gucci Gulch.
“Don’t count out the chances of tax reform,” Birnbaum told hundreds of REALTORS^® in Washington this week for the 2013 Midyear Legislative Meetings & Trade Expo. “It could start out slow and could gain momentum,” which is how the massive 1986 reforms unfolded.
Birnbaum noted that both Democrats — including President Obama — and Republicans have said they would like to overhaul the tax code, and although partisan differences have become a stumbling block to members’ ability to reach consensus on many issues, there’s an unusual dynamic at work in the two tax-writing committees that could end up being a game-changer. That dynamic is the retirements of Rep. Dave Camp (R-Mich.), chair of the House Ways and Means Committee, and Sen. Max Baucus (D-Mont.), his counterpart on the Senate Finance Committee.
Both have said they want to move forward with tax reform before they go, and the fight over raising the federal debt ceiling, which is expected to be reached this fall, provides a possible trigger event for them and other lawmakers to come to agreement on big tax changes, said Birnbaum.
What’s more, the federal budget deficit is coming down more quickly than lawmakers expected, thanks to the improving economy and the across-the-board spending cuts under the “sequester” that took effect at the beginning of this year. It’s possible the government could go from a $1.1 trillion deficit this fiscal year to a surplus by fiscal year 2015, which would ease the give-and-take on tax and other issues as lawmakers come to agreement on reform.
Birnbaum said the the risk to real estate is that lawmakers will be looking to the MID as one of the biggest places to find money to offset any tax cuts they agree to. That puts at particular risk the amount of MID benefit available to higher-income households and those with second homes. “No one should take [the] MID for granted,” he said.
The capital gains tax rate applied to the carried interest of general partners in investment partnerships will also be on the table, as will deductions for charitable contributions and employer-sponsored health plans.
Birnbaum said it’s important for REALTORS^® to stay engaged, because “you don’t want to be caught flat-footed if Congress overreacts,” which it often does when it legislates, Birnbaum said. He added that the visits that real estate professionals are making to Capitol Hill this week are just the kind of engagement that’s needed now. “Lawmakers will be able to hear from you directly,” he said.
Rep. Randy Nuegebauer (R-Texas), chair of the House Financial Services Committee's Subcommittee on Housing and Insurance, who followed Birnbaum on the speaker’s podium, complimented REALTORS^® for their strong presence on Capitol Hill. “You’re well represented here,” he said. “You’re at the table with us, and we’re delighted to work with you. We want to make sure these fixes we want to do are right.”


—Robert Freedman, REALTOR® Magazine