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