Wednesday, December 7, 2011

Spring buying boosts U.S. home prices for 4th month

WASHINGTON – Sept. 27, 2011 – Home prices rose for a fourth straight month in most major U.S. cities in July on the strength of the peak buying season. But the housing market remains depressed, and prices are expected to decline in the coming months.

The Standard & Poor’s/Case-Shiller index shows home prices increased in July from June in 17 of the 20 cities tracked.

Over the past 12 months, prices fell in all but two cities – Detroit and Washington. Prices rose sharply in Minneapolis and Chicago. Prices in Las Vegas and Phoenix declined.

Housing is a key reason the economy has struggled more than two years after the recession officially ended. Home sales are on pace this year to be the worst since 1997.

Source: Copyright © 2011 The Associated Press, Derek Kravitz, AP real estate writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Wednesday, October 5, 2011

Rentals market back on track

ORLANDO, Fla. – Sept. 28, 2011 – An investor paid cash last month for a four-bedroom, three-bathroom house with a three-car garage in the Lee Vista area and immediately had a pool of potential renters competing to move in.

“I stuck a sign in the yard, put it on the MLS and had two dozen showings within three days,” said real estate agent B.J. Edens of Re/Max Town Centre, who handled the property. “Things are crazy out there … I’m expecting it to continue for a little while until we start to see the loan market loosen up.”

Today’s rental market has the hallmarks of the frenzied housing market circa 2006, when buyers were willing to ask, “Where do a I sign?” before they even walked through a property.

But this is no bubble.

This is the beginning of the correction of the market’s radical over-correction.

Ever since foreclosures started rising, so did the demand for rental properties.

Thousands of former homeowners who either ended up in foreclosure or shed their house in a short sale are frozen out of the buyers’ market until they rebuild their credit. Perfectly creditworthy people are choosing to rent because they don’t want to gamble on values taking another nosedive.

We’re raising a generation of renters who are scared to buy after watching their parents struggle through the housing bust. At the same time, housing prices and interest rates are at historic lows.

All of that adds up to one very important fact that points – finally – to a healthier housing market: Investors can get good enough deals on houses and command high enough rents that being a landlord is no longer a losing proposition.

People are starting to make money in the real estate business again. And that’s a step toward normal in an otherwise depressed market.

Scott Hampton owns a company that manages about 500 rental properties and launched a new division that charges would-be tenants a $350 flat fee just to help them find a home.

“The houses go so fast. We’re finding 70 percent of the people sign up for it,” said Hampton of Hampton & Hampton Leasing & Management Inc.

Hampton, who owns the property management company with his wife, said they have hired seven leasing agents who charge a fee to help tenants secure a property. People are willing to pay because they often have trouble even getting a returned phone call from landlords who are overwhelmed with multiple inquiries from potential tenants.

Another good sign for housing: as rental rates increase, more people who have good credit and can qualify for loans at today’s low interest rates will find it just makes more sense to buy. With rents hovering between 75 cents and $1.50 per square foot, a monthly mortgage payment could be cheaper than rent.

“That will definitely be a factor again,” said Maria Rampy Blanchard, general manager of Olde Town Brokers.

She said the number of rental referrals she receives has shot up and that the good properties get snapped up quickly, which allows some landlords to charge a premium.

“The inventory is low,” she said. “They rent out almost immediately, definitely within a 30-day period.”

And then there’s the newest buzzword in the business, and perhaps the biggest sign that good rental properties are in demand – “foreclosure disclosure.”

Some renters are so desperate for a good property at a reasonable rate that they are willing to sign a waiver acknowledging the house is in foreclosure, and they could be forced out before the end of their lease.

“We actually have forms for that now,” Hampton said.

Source: Copyright © 2011 The Orlando Sentinel, Orlando, Fla., Beth Kassab. Distributed by MCT Information Services

Tuesday, October 4, 2011

UF: Rise in Florida’s consumer confidence

GAINESVILLE, Fla. – Sept. 28, 2011 – Florida’s consumer confidence index rose this month to 64, up three points from a revised mark of 61 in August. However, confidence still remains low, according to the University of Florida (UF) survey.

Of the five components used by UF researchers to measure overall confidence, four edged upward. Expectations that personal finances would rise in the coming year went up five points to 78, and consumer anticipation that the U.S. economy will improve in the coming year rose by one point to 52. There was also a four-point increase to 66 in the overall expectation that the country will see economic gains during the next five years. Confidence that now is a good time to purchase retail big-ticket items, such as laptops and cars, rose six points to 74.

“It is not surprising that confidence rose this month as we get further from the debt-ceiling debate,” says Chris McCarty, director of UF’s Bureau of Economic and Business Research and Survey Research Center, which conducted the survey. “Confidence actually rose this month among both younger and older respondents.”

The only component to show a decline in September was the perception that personal finances today are lower than a year ago. It fell by three points to 50.

According to the survey, Florida’s seniors, whose perceptions accounted for much of the decline in August, remain pessimistic about the economy in both the short and long run. Confidence levels of those over 60 are at “record lows,” McCarty says.

The ongoing national debate over spending cuts and entitlements is only partly responsible for sluggish confidence levels. Florida’s unemployment rate also remained stuck at 10.7 percent for the past three months. In addition, a loss of government jobs along with those in other sectors offset employment gains in a rebounding tourist industry. Moreover, tourism itself could face temporary setbacks if economic troubles worsen in Europe.

Other indicators also affect the perceptions of Florida consumers. The median price of an existing single-family home in Florida went up slightly in August to $137,500. A drop in gas prices since August was a typical market adjustment following Labor Day, McCarty says. Finally, a volatile stock market that sharply declined in July and took dramatic swings in August and September could also be taking a toll on confidence.

McCarty expects consumer confidence to remain lackluster until next year, given the looming deadline of Nov. 23 for the deficit reduction plan by the U.S. Congress’ super-commission. He thinks it will reignite debates over federal spending and again shake consumer confidence.

The UF survey measures the mood of consumers 18 or older, living in households, who were randomly telephoned Sept. 11-22. The preliminary index for September was collected from 410 respondents.

The index is benchmarked to 1966, so a value of 100 represents the same level of confidence for that year. The lowest index possible is a 2; the highest is 150.

Source: © 2011 Florida Realtors®

Thursday, September 29, 2011

Foreclosure reviews may take another year

WASHINGTON – Sept. 27, 2011 – A review of about 4.5 million foreclosures from 2009 and 2010 from the nation’s banks could take “another year and more,” said a top fed official.

John Walsh, acting head of the federal Office of the Comptroller of the Currency, said 14 major banks will be reaching out to borrowers who may have been wrongly foreclosed upon and are fixing their foreclosure protocols over the next year.

Last spring, regulators ordered banks to overhaul their foreclosure practices after several problems were uncovered in processing and filing errors. Since then, banks have been working with independent consultants to identify borrowers who may have been wrongly foreclosed upon.

Banks are setting up a single process for consumers who would like to request a review of their case from 2009 and 2010. An outreach campaign, expected to launch in the coming weeks, will include a toll-free number, a joint Web site, and an advertising campaign in an attempt to reach out to affected homeowners.

“We have pursued this matter aggressively because correcting improper practices in foreclosure processing and mortgage servicing is of the utmost importance for the safely and soundness of the banks, for the financial health of home owners, and for recovery in the U.S. housing sector,” Walsh said. “The reputation of the entire industry has suffered.”

Source: “Fixing Foreclosure Woes Could Take a Year,” Dow Jones Newswires (Sept. 23, 2011)

Wednesday, September 28, 2011

Rate on 30-year mortgage stays at record 4.09%

Mortgage Rate Trend Index

A solid majority (62%) of mortgage experts polled this week by expect even lower fixed mortgage rates over the short term. Only 13% foresee an increase, and the remaining 25% predict no change.

WASHINGTON – Sept. 23, 2011 – Fixed mortgage rates hovered at record lows for a third straight week. They are likely to fall even further now that the Federal Reserve said it would shuffle its holdings to drive down long-term interest rates.

The average rate on the 30-year fixed mortgage was unchanged at 4.09 percent this week, Freddie Mac said Thursday. That’s the lowest rate seen since 1951.

The average rate on the 15-year mortgage ticked down to 3.29 percent. Economists say that’s the lowest rate ever for the loan.

Mortgage rates tend to track the yield on the 10-year Treasury note. One day after the Fed’s announcement, the yield on the 10-year note touched 1.74 percent Thursday. That’s the lowest level since Federal Reserve Bank of St. Louis started keeping daily records in 1962.

In July, the yield on the 10-year note was above 3 percent.

Low mortgage rates have done little to boost home sales. This year is shaping up to be the worst for sales of previously occupied homes since 1997. Few are buying, even though the average rate on the 30-year fixed mortgage has been below 5 percent for all but two weeks this year.

Many Americans are in no position to buy or refinance. High unemployment, scant wage gains and large debt loads have kept them away.

Others can’t qualify. Banks are insisting on higher credit scores and 20 percent down payments for first-time buyers. Some homeowners have too little equity invested in their homes to meet loan requirements.

Most people must also pay extra fees to get the low mortgage rates. Those fees are known as points, with one point equaling 1 percent of the total loan amount.

The average fees for the 30-year FRM held steady at 0.7 point. Fees paid on 15-year fixed loans and both 5-year and one-year adjustable-rate loans were all at 0.6 point.

Once fees are factored in, the average rate on the 30-year loan rises to 4.25 percent, Freddie Mac said.

A drop in mortgage rates could provide some help to the economy if more people could refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend.

But many homeowners with good jobs and stable finances have already refinanced in the past year. The average rate on the 30-year fixed loan fell to 4.17 percent last November, and to 4.15 percent last month. Both were previous lows.

Homeowners typically pay a few thousand dollars in closing costs when they refinance. To refinance again, most experts say rates would need to fall an additional 1-percentage point to make it worthwhile.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.

The average rate on a five-year adjustable-rate mortgage rose to 3.02 percent. That’s higher than last week’s 2.99 percent.

The average rate for the one-year adjustable-rate mortgage increased slightly to 2.82 percent from 2.81 percent, the lowest rate on records going back to 1984.

Source: Copyright 2011 The Associated Press, Derek Kravitz (AP Real Estate Writer). All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Tuesday, September 27, 2011

Consumer confidence rises a bit in Sept.

NEW YORK – Sept. 26, 2011 – The Conference Board Consumer Confidence Index, which had declined in August, remained essentially unchanged in September. The Index now stands at 45.4, up slightly from 45.2 in August.

The Present Situation Index decreased to 32.5 from 34.3. The Expectations Index, which gauges expectations for the future, edged up to 54.0 from 52.4 last month.

“The pessimism that shrouded consumers last month has spilled over into September,” says Lynn Franco, director of The Conference Board Consumer Research Center. “Consumer expectations, which had plummeted in August, posted a marginal gain. However, consumers expressed greater concern about their expected earnings, a sign that does not bode well for spending. In addition, consumers’ assessment of current conditions declined for the fifth consecutive month, a sign that the economic environment remains weak.”

Consumers’ assessment of current conditions weakened in September. Those claiming business conditions are “good” decreased to 11.7 percent from 14.1 percent, while those claiming business conditions are “bad” remained virtually unchanged at 40.4 percent. Consumers’ appraisal of employment conditions, however, was mixed. Those claiming jobs are “hard to get” increased to 50.0 percent from 48.5 percent, while those stating jobs are “plentiful” increased to 5.5 percent from 4.8 percent.

Consumers’ short-term outlook, which had deteriorated sharply last month, improved slightly in September. Those expecting business conditions to improve over the next six months decreased to 11.3 percent from 11.8 percent, while those expecting business conditions to worsen declined to 22.6 percent from 24.6 percent.

Consumers were also slightly less pessimistic about the outlook for the job market. Those anticipating more jobs in the months ahead edged up to 12.0 percent from 11.8 percent, while those expecting fewer jobs declined to 28.6 percent from 31.2 percent. The proportion of consumers anticipating an increase in their incomes, however, declined to 13.3 percent from 14.3 percent.

Nielsen conducts the monthly Consumer Confidence Survey for The Conference Board. The cutoff date for the preliminary results was September 15th.

Source: © 2011 Florida Realtors®

Tuesday, September 13, 2011

Fewer homeowners underwater in Q2

SEATTLE – Sept. 13, 2011 – CoreLogic released Q2 negative equity data showing that 10.9 million, or 22.5 percent, of all residential properties with a mortgage had negative home equity at the end of second quarter 2011. However, that’s down slightly from 22.7 percent in the first quarter.

An additional 2.4 million borrowers had less than five percent equity in the second quarter. The new report also shows that nearly three-quarters of homeowners in negative equity situations are also paying higher, above-market interest on their mortgages.

Negative equity, often referred to as “underwater” or “upside down,” means that borrowers owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both.

Data highlights

• Nevada had the highest negative equity percentage with 60 percent of all of its mortgaged properties underwater, followed by Arizona (49 percent), Florida (45 percent), Michigan (36 percent) and California (30 percent).

• The negative equity share in the hardest hit states improved. Over the past year, the average negative equity share for the top five states has declined from 41 percent to 38 percent. Nevada had the largest decline over the last year, with the negative equity share dropping from 68 percent to 60 percent, due largely to the high number of foreclosures that removed those underwater mortgages from the equation.

• Nearly 28 million outstanding mortgages that are above-market rates and could refinance to save money.

• Twenty million borrowers with positive equity – 53 percent of all above-water borrowers – have mortgage rates higher than those currently offered.

• Eight million borrowers with negative equity – nearly 75 percent of all underwater borrowers – have above market rates.

• The disparity is greater for homeowners with severe negative equity. More than 40 percent of borrowers with 125 percent or higher loan-to-value (LTV) ratios have mortgages with rates at 6 percent or above compared to only 17 percent for borrowers with positive equity.

• Since the 2005 sales peak, non-distressed sales in zip codes with low negative equity have fallen 61 percent, compared to an 83 percent sales decline in high negative equity zip codes.

“High negative equity is holding back refinancing and sales activity, and is a major impediment to the housing market recovery,” said Mark Fleming, chief economist with CoreLogic. “The hardest hit markets have improved over the last year, primarily as a result of foreclosures. But nationally, the level of mortgage debt remains high relative to home prices.”

Source: © 2011 Florida Realtors®

Thursday, July 28, 2011

Credit unions get busy with commercial lending

WASHINGTON – July 12, 2011 – Credit unions are expanding to fill a void in business lending left by banks since the financial crisis. As banks have been slow to start lending again, credit unions have gotten a head start.

Banks still carry about 12 times as much in loans as credit unions in America, according to Federal Deposit Insurance Corp. statistics. But over the past two years, those numbers have trended in opposite directions, and officials at major credit unions say they are more interested than ever in commercial lending, not traditionally the core function of a credit union.

From March 2009 to March 2011, total loans by banks declined by more than $500 billion, according to FDIC data. Over the past year, credit union business lending is up 5 percent, while bank business lending is down 3 percent a decline of about $95 billion, according to the Credit Union National Association. Pat Keefe, a spokesman for the association, said credit unions are pushing into business lending in part because of slow demand for consumer credit auto and home loans, for instance.

“Businesses are looking for new sources of credit; credit unions are looking for new sources of borrowers,” he said. “They’re improvising strategies to do business lending.”

Copyright © 2011 USA TODAY, a division of Gannett Co. Inc., Adam Belz, USA TODAY. Belz also reports for the Des Moines Register.

Friday, July 22, 2011

Feds: House prices rose for second month

WASHINGTON – July 21, 2011 – U.S. house prices rose 0.4 percent on a seasonally adjusted basis from April to May, according to the Federal Housing Finance Agency’s monthly House Price Index. The previously reported 0.8 percent increase in April was revised to a 0.2 percent increase.

For the 12 months ending in May, U.S. prices fell 6.3 percent. The U.S. index is 19.6 percent below its April 2007 peak and roughly the same as the January 2004 index level.

The FHFA monthly index is calculated using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac. For the nine Census Divisions, seasonally adjusted monthly price changes from April to May ranged from -1.0 percent in the West South Central Division to +2.0 percent in the Mountain Division.

Source: © 2011 Florida Realtors®