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Home Values May Prove Political Football in Battleground States

Posted on February 3, 2012 in housing news with no comments

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home pricesHome values dropped an average of 16% in 15 of 16 key presidential battleground states since the financial crisis.  Despite this key fact most of the Republican presidential candidates have chosen to be largely silent on what they would do to end the housing crisis. They have preferred to concentrate on jobs and unemployment issues.

The Progressive Policy Institute points out that 2/3 of the voters in the key battleground states own homes, a number that is much greater than that of the unemployed in any of these states.  Potentially, many more voters have been negatively affected by tumbling home values than by joblessness.  As many as 12 million homeowners now have underwater mortgages.  The states that have lost the greatest value between November 2010 and November 2011 include: Nevada (91%); Minnesota (74%); Arizona (72%); Missouri (69%); Florida (64%); North Carolina (62%); Wisconsin (61%); New Hampshire (59%); Ohio (57%); Colorado (57%); Pennsylvania (56%); Indiana (53%); Michigan (53%); Iowa (51%); Virginia (48%); New Mexico (43%).  Many of these are battleground states that must be won to sew up the election for any presidential candidate.

The PPI report asserts that housing must be part of any candidate’s economy policy in order to win the election in 2012.

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Survey Shows Real Estate Cash Buyers Place Downward Pressure on Home Values

Posted on February 3, 2012 in housing news with no comments

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real estate cash buyersA report associated with the Campbell Housing Pulse Tracking Survey concludes that real estate investors buying with all cash are putting downward pressure on home values.

In December 2011 cash buyers represented 33.2% of the market, according to the Campbell study.  Most of these real estate cash buyers are real estate investors buying investment properties since 74% of all real estate investors used all cash to buy homes last month.  The HousingPulse survey reports that 22.8% of all December buyers were investors.

Real estate cash buyers are able to successfully bid lower prices and win contracts because of the lower risk and shorter closing timeframe involved in all cash deals.  Often these deals are not the first ones attempted, but are accepted as back-up offers when non-cash deals fall through.

The report says real estate investors generally offer 10-20% under list price while retail buyers settle for list price.  Real estate investors require 2-4 weeks to close while retail buyers are now taking 6-8 weeks to close because of financing.

This is a sign that savvy real estate investors are getting back into the game, because they know now is the time to buy.

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Housing Inventory Declines

Posted on February 3, 2012 in housing news with no comments

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housing inventoryThe NAR also released statistics on the inventory of homes for sale and shows a decline of 22.29% from a year ago.  The 146 MSAs monitored by the NAR survey found that at the end of 2011 there were 1.89 million single family homes on the market in the U.S., a drop of 6% from November 2011. The median days on market in December: 122 days, down 4% from a year ago.

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Existing Home Sales Up 5% in December: NAR

Posted on February 3, 2012 in housing news with no comments

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existing home salesAccording to the National Association of Realtors existing home sales surged 5% from 4.39 million units in November to 4.61 million units in December.

Investors represented 21% of the market, up from 19% in November. All cash sales were 31% of all closed deals compared to 28% in November.  The median home price was $164,500 or 2.5% lower than the same time last year.  Contract failures held steady at 33%.

NAR representatives said that there is a large pent-up demand for housing that will be gradually met as the economic picture improves.

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How is BOA Short Sale Incentive Test Going in Florida?

Posted on February 3, 2012 in florida, housing news, short sales with no comments

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short sale incentiveOne would think that desperate homeowners would be jumping for joy in Florida with the opportunity of making up to $20,000 as an incentive for selling an under water house through a Short Sale or deeding it back to the bank with a Deed-In-Lieu for foreclosure.  The results of Bank of America’s test program have not been as spectacular as anticipated to date.

Since the program was announced in August only 60 homeowners have collected the incentive payment.  Bank spokesman, Richard Simon, said it was too early to tell the results of the program.  The bank expects thousands in the end to take advantage of the program which will pay qualified homeowners 5% of the unpaid balance with a minimum of $5000 and a maximum of $20,000 to settle the default short of a foreclosure. Many Agents in Florida have indicated that they do have incentive deals in the pipeline but as yet uncompleted.

Bank of America has targeted about 20,000 of its 1.1 million mortgage holders in Florida for this incentive program.  It selected Florida as the pilot state for the program based on the large number of homes in pre-foreclosure there.

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Is There Consumer Demand to Refinance?

Posted on January 20, 2012 in housing news with no comments

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refinanceA recent Harris Interactive poll asked a group of 2,237 adults who were online in December about their planned financial behaviors in 2012.  One of the questions asked whether respondents planned on refinancing a mortgage in the new year.  Only 5% responded positively, the same percentage as those who answered the same question in 2009 and one point lower than that of 2010 respondents.

The survey received a larger positive response on the refinance question from respondents in the Gen X group (age 35 to 46).  For that group the response was 9%. The survey does not reveal how many of those surveyed are current mortgage holders.

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Freddie Mac Cuts Refi Credit Score Requirements for Some

Posted on January 20, 2012 in freddie mac, housing news, mortgage news with no comments

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refi credit score requirementsIn an effort to make refinancing available to more homeowners Freddie Mac announced that it would no longer require homeowners to have credit scores of 620 or higher as long as the loan is current, the LTV at 80% or higher, and the refinance is being completed with their existing lender.

The new rule became effective for loans settled as of January 5, 2012.

In December Fannie Mae eliminated the need for servicers to determine the borrower’s ability to repay a refinance.  Both servicers have eliminated up front refinancing fees, lifted the limits to refinancing underwater loans, and taken steps to mitigate the representation and warranty risks incurred by the lender on the old loan in an effort to make low interest refinancing accessible to more homeowners.

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Fed Makes Recommendations to Improve Health of Housing Market

Posted on January 20, 2012 in Fannie Mae, foreclosures, freddie mac, housing news with no comments

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housing marketThis past week two Federal Reserve officials made suggestions to improve the housing market in addition to Fed chairman, Ben Bernanke, who came out with a game-changing white paper with numerous suggestions on how to reduce foreclosures and their negative impact on home values.

Federal Reserve Bank of New York president, William Dudley, espouses the use of principal reductions to take the heat out of the foreclosure problem and he urged Fannie Mae and Freddie Mac to begin to accept principal reductions.  Meanwhile, Freddie Mac’s outgoing CEO, Ed Haldeman, has indicated that principal reductions are not a good idea because they may lead to higher default rates. Currently principal reductions are against GSE policy.

Dudley believes a system of “earned principal reductions” could keep the temptation for strategic defaults in check.  Under the plan, homeowners would have the option of paying off a loan below mortgage value at certain intervals given a period of timely payments.

Fed Board of Governors member, Elizabeth Duke, commented last week that tight lending standards are stifling new mortgages and hurting the economy as a whole. While standards are important, lending requirements should be loosened for creditworthy individuals who are currently being denied, according to Duke. Prime loan credit scores now average around 760 while in 2000 they were 720; FHA scores average 700 now and 650 a decade ago. Fewer than half of all lenders offer loan packages to those in the lower end of the credit spectrum.  Duke believes that in the short term credit standards must be eased and the GSEs will need to play a continuing role in guaranteeing loans in order to assure that lenders will willingly underwrite loans based on lower standards.

The paper Ben Bernanke sent to the Senate Committee on Banking and House Financial Services Committee last week is much too detailed to cover at length here, but it does contain concrete analysis of the continuing housing industry weaknesses and a wide variety of potential solutions for Congress to consider.  A short list includes:

–Develop an REO-to-rental program on a bulk scale;

–Moderate inflow of properties to foreclosure status by continuing to improve efficiencies and incentives for short sales and deed-in-lieu programs;

–Remove barriers to the creditworthy to obtaining loans and refinancing.

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Voters’ Biggest Concerns: Jobs and Housing

Posted on January 19, 2012 in economy, housing news with no comments

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A Houselogic survey demonstrates that voters are most concerned about jobs and housing policy as election year issues for 2012.  Respondents were asked: “What issue area will have the greatest impact on your vote in 2012?”

Jobs were mentioned as the top issue by 54% of respondents.  The next most critical issue was housing, which ranked first for 27% of those surveyed.  National security was mentioned by only 8% of those surveyed, health care by 4% and energy/environment by 2%. Another 4% gave other answers.

It is apparent that issues related to the economy are upper-most in the minds of voters.  Both jobs and housing are key to economic recovery.  Housing accounts for 15% of the GDP; one job is created for every two homes that are sold.  The American voters clearly understand that the future of the economy is tied to what happens in the housing market.

What are your top concerns for this young year?

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Federal Reserve Findings: Real Estate Investors to Blame for Housing Bubble

Posted on January 19, 2012 in REWealthCoach.com Announcements, arizona, california, florida, nevada with no comments

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real estate investorsA research report by the Federal Reserve Bank of New York finds that amateur real estate investors were more to blame for the housing bubble in markets in California, Nevada, Arizona and Florida than was previously thought.

More than one-third of the mortgages granted in 2006 went to people who owned more than one house.  Frequently these neophyte investors turned to shady no-documentation sub-prime mortgage schemes. In Arizona, California, Florida and Nevada investors made up almost half of the mortgage-backed home purchases during the housing bubble and in these states home prices more than doubled between 2000 and 2006. The bubble caused millions of homeowners to have to pay more for their mortgages.

When home values plummeted in 2006 25% of those who defaulted were investors, and in the key bubble states investors made up more than one-third of the defaults between 2007 and 2009.

The report recommends that there be higher interest rates and larger down payment requirements placed on speculative borrowing to avoid any future speculation-driven bubbles.

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