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