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Contracts to Buy Homes Rose Sharply in May

Wednesday June 29, 2011

The number of people who signed contracts to buy homes rose sharply in May, pushed higher by an influx of spring buying.

The National Association of Realtors said Wednesday that its index of sales agreements for previously occupied homes rose 8.2 percent last month, to a reading of 88.8. That followed April's seven-month low of 82.1.

A reading of 100 is considered healthy by economists. The last time the index reached that level was in April 2010, the final month when buyers could qualify for a federal tax credit. Signings are now 17 percent above June's reading of 75.9, the lowest figure since the housing market went bust nearly four years ago.

Contract signings are typically a reliable indicator of where the housing market is headed. That's because there's usually a one- to two-month lag between a sales contract and a completed deal.

But the Realtors group says a growing number of buyers have cancelled contracts ahead of closings after appraisals showed the homes were worth less than they bid. A sale isn't final until a mortgage is closed.

Homes are now the most affordable they've been in years. But bargain prices and super-low mortgage rates have done little to boost sales. Economists say it could be several years before the nation's housing market recovers.

Sales of previously occupied homes sank in May to a seasonally adjusted annual rate of 4.81 million homes. That's far below the 6 million sales per year that economists say is typical in healthier times. And it's not much better than the 4.91 million homes sold last year, the worst showing in 13 years.

Contract signings in May increased in every region of the country: It rose 12.9 percent in the West, 10.5 percent in the Midwest, 7.3 percent in the Northeast and 4.1 percent in the South.

The trade group said Wednesday's report "implies that home values in many localities are or will soon be stabilizing."

Still, high unemployment, hard-to-get loans and a lingering fear that home prices will just keep falling are keeping many Americans from buying homes. And waves of foreclosures could soon hit the housing market soon as more Americans default on their mortgages.

Prices rose in 13 of the 20 cities tracked by the Standard & Poor's/Case-Shiller home-price index, according to the April report released Tuesday. The increase in April was the first rise since July.

But the positive data came with a notable caveat: The figures weren't adjusted for seasonal factors, such as the buying that normally picks up in spring. Once the numbers are adjusted, prices actually fell in April.

Source:  Associated Press

Home Prices Rise, Snapping 8-Month Drop treak

Tuesday, June 28, 2011

The downward cycle in home prices broke in April after eight consecutive months of decline, according to a survey released Tuesday.

According to the S&P/Case Shiller 20-city index, prices rose 0.7% compared with March, although they fell 0.1% when adjusted for the strong spring selling season. Prices were down 4% year-over-year.

"In a welcome shift from recent months, this month is better than last -- April's numbers beat March," said David Blitzer, S&P's spokesman, in a statement. "However, the seasonally adjusted numbers show that much of the improvement reflects the beginning of the spring-summer home buying season."

"It is much too early to tell if this is a turning point or simply due to some warmer weather," Blitzer added.

Any hint of good news in the troubled housing market will likely bring cheer to the industry, and there are some signs that market conditions are not quite as dire as some of the other statistics may indicate. Foreclosures, for example have been falling.

That has translated in a decline of 16% in the sales volume of distressed properties this year, while volume of non-distressed sales rose 11%, according to Joseph LaVorgna, chief economist for Global Markets Research.

That's good news because much of the price drop over the past year can be blamed on severe price slashing for homes in foreclosure, as Federal Reserve chairman Ben Bernanke pointed out in a press conference last Wednesday. Prices for homes sold by regular sellers have held up much better.

"That suggests," said Bernanke, "if we can reduce the current number . . . maybe 40% of home sales, which are on a distressed basis, that would do a lot for stabilizing the market and helping give people confidence that they can buy and not be buying into a falling market."

Still, the fact that prices perked up in April is not necessarily something to write home about, said Mike Larson, a housing market analyst for Weiss Research.

"It happens every spring," he said "It's very clear there's a seasonal component. Even non-statisticians can see that. The report was, however, better news than what people were expecting."

Metropolitan Washington continued to be the strongest of the 20 cities covered by the report. Prices rose 3% in April there and have been on the plus side year-over-year, up 4%.

The worst performing market for the month was Detroit, where prices fell 2.9%. The biggest year-over-year drop was recorded by Minneapolis, where prices have plunged 11.1% since last April.

The big picture is that a housing market recovery has yet to gain any steam, according to Larson.

"We're not falling off a cliff anymore, but we're only going sideways," he said.

The year-over-year price comparisons could start to become more favorable, according to LaVorgna. For many months, price changes have looked worse than they might actually have been because they were being compared to months when the home buyer tax credit was in effect, which boosted prices.

"[W]ith the homebuyer tax credit having expired in June 2010, we will soon be getting "clean" housing data unencumbered by artificial distortion," he said.  

Source: CNNMoney

Year Off to Dismal Start in Home Prices

Tuesday, June 28, 2011

Data released today by the S&P/Case-Shiller Home Price Indices showed further declines in U.S. home prices in January 2011. Of the 20 MSAs covered by the indices, 13 showed further deceleration in their annual growth rate. The same 11 cities that had posted recent index level lows in December 2010 posted new lows in January.

The 10-City Composite dropped 2%, and the 20-City Composite fell 3.1% from their January 2010 levels.

San Diego and Washington, D.C., were the only two markets to record positive year-over-year changes. These are the only two cities whose annual rates remained positive throughout 2010. 

“Keeping with the trends set in late 2010, January brings us weakening home prices with no real hope in sight for the near future,” said David Blitzer, chairman of the Index Committee at Standard & Poor's. “These data confirm what we have seen with recent housing starts and sales reports. The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery. At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing.

Blitzer also said that he was seeing “renewed weakness” in some cities that were among the last to reach their peaks, including Atlanta; Charlotte; Portland, Ore.; and Seattle, where new lows are being recorded. Dallas, which peaked late, has so far stayed above its low mark of home prices in February 2009. 

Source:  Home Channel News

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Housing Recovery Hampered by Lending

Monday, June 27, 2011

An analysis published by the Wall Street Journal showed that the nation’s 10 largest mortgage lenders denied 26.8% of loan applications in 2010, an increase from 23.5% in 2009. 

The mortgage data analyzed, which was obtained from banking regulators, included refinance requests as well as new-home loans. Among home purchase applicants, lenders denied 19.9%, up from 18.2% in 2009. The refi applications were denied 27.2% of the time, compared with 24.4% the previous year. 

The Wall State Journal was able to obtain the data as the result of the Home Mortgage Disclosure Act, which requires lenders to disclose these figures. The top 10 lenders accounted for 70% of loan originations last year, although many were obtained after smaller firms approved the loans. 

The analysis showed that denials increased in every state except Delaware. They were highest in Miami, Detroit and New Orleans and lowest in Raleigh, N.C.; Bethesda, Md.; and San Jose, Calif.

Source:  Home Channel New

New Recession Begins Next Year, Shilling Says

Friday, June 24, 2011

That's the debate going on these days from executive offices to the local malls. Business owners, workers and, yes, even economists are trying to decide whether the U.S. economy has hit a speed bump or is heading for a collision.

We all know growth is tepid, unemployment is a bear and housing, well, stinks. That's why major Wall Street firms, the International Monetary Fund and, on Wednesday, the Federal Reserve all slashed their estimates for U.S. GDP growth this year.

 Housing remains critical, so I looked up one of the few people who saw the housing bust and financial crisis coming years before they happened: Gary Shilling, economist and author of "The Age of Deleveraging." While his steadfast bearishness didn't surprise me, his blunt assessment did.

"I'm predicting another recession next year," he told me.

Not a double dip, he emphasized, because we're already two years from the end of the last recession and 3 ½ years from the business cycle's previous peak, in December 2007.

Historically, he said, economic expansions last about three years, especially in long down cycles of the kind he thinks we've been in since 2000.

So, he's looking for a brand new cyclical recession beginning in 2012.

Many Americans will be forgiven if they can't see the difference between that and the recovery we've been experiencing.

That's Shilling's point. Usually, deep recessions like the one we just lived through are followed by strong snapbacks, like a growth slingshot.

This time, however, the recovery has been "distinctly subpar," in his words. "As of the first quarter, ..real GDP is barely above its peak in the fourth quarter of 2007, whereas earlier recoveries were well above their previous tops 13 quarters later," he wrote in a recent edition of his newsletter, Insight.

Translation: More than three years after the peak, we're still not back to where we were.

Sputtering economy
There are good reasons for that, beyond the particularly tough toll financial crises take on growth.

The economy, he says, is like a four-cylinder engine, and a recovery usually requires all four to be firing. They are consumer spending, employment, housing and the reversal of the inventory cycle.

Shilling thinks only the last is really recovering — i.e., companies that brutally liquidated inventories during the recession have had to rebuild them through boosting production and some additional hiring as demand bounced off its lows.

But consumer spending has made only a partial comeback, concentrated among more-affluent buyers. Everyone else has been weighed down by weak job and income growth and the continued housing catastrophe.

We have seen some improvement in employment, albeit slow of late, and it's nowhere near what we've had in past recoveries. Mostly employers have just stopped laying people off, and when they hire, it's often on a part-time or temporary basis.

And then there's housing.

Year after year, many have predicted the bottom of the housing market (and for the record, I was one of them in 2011), and year after year housing prices have kept falling.

Shilling, of course, isn't one of the optimists. He's actually looking for another 20% drop in housing prices before we hit bottom in 2013.

Since housing prices nationally already have fallen by a third from their peak, that means that, if he's right, they'll end up a stomach-churning 45% off their early 2006 highs. Yale Prof. Robert Shiller, co-creator of the Standard & Poor's/Case-Shiller Home Price index, has a similar prediction.

Too many homes for sale
For Shilling, it's all about inventories: He estimates there are upwards of two million homes on the market that people want to sell but can't. That's deflated new-home sales, which now stand at about a third of their normal 1.5 million a year.

From a high 6.3% of GDP in the fourth quarter of 2005, residential construction now represents only 2.2% of GDP. Not only is that a half-a-trillion-dollar gap; housing's volatility makes it an important force in a cyclical recovery, said Shilling, and the paucity of home building has clearly taken a toll on this one.

A further 20% decline in home prices would raise the percentage of homes worth less than the value of their mortgages to a stunning 40%, from the mid-20% range now. Shilling estimated it would also cut homeowners' equity to a mere 8% of total home values, from 19% now and 50% in the early 1980s.

Lenders have foreclosed on 3.5 million American homes since 2007; Shilling expects millions of more foreclosures in the years ahead.

If this happens, "you know what that will do to consumer spending," said Shilling. "That's a recession — an easy forecast."

And once housing markets hit bottom, it can take a decade for them to recover, as in Texas after the oil bust or Southern California after the end of the Cold War. That could mean subpar growth — average annual GDP gains of 2% — for years to come, he predicted.

The government and the Federal Reserve have thrown everything at the economy, with minimal results. The Fed's quantitative easing programs did little except boost commodities prices and stimulate the stock market, he said, and he thinks the commodities mini-bubble already has burst.

The Obama administration's own attempt to "fix" the housing market — the Home Affordable Modification Program (HAMP) — was, in Shilling's words, "a miserable failure."

What's ahead
But slow growth will get politicians of both parties antsy to "do something" in an election year. "If the economy is still weak going into next year, we could have fiscal stimulus," he told me
.
Politicians do not "want to face voters with a weak economy," he said.

As for investing, Shilling has returned to an old favorite: the 30-year Treasury bond, which is currently yielding around 4.21%. "I think they're going to 3%," he said. "I think [the 10-year is] going to 2%." The 10-year Treasury note was yielding near 3% Wednesday. Take that, Bill Gross!

Naturally, Shilling's not looking for much from equities, and he recommends only blue-chip dividend-paying stocks.

Shilling's not infallible, of course. He has been predicting deflation since the late 1980s and in earnest since 1998. We've had two potentially deflationary episodes, in 2002 and after the financial crisis, but the Fed was able to dispatch them.

He also was very bearish on stocks, expecting new lows in early 2009 and pretty much missed the recent bull market. So, he's not the guy who's going to call bottoms or identify bullish inflection points.

And I think we'll probably get by with slower growth but without a new recession, based on strong overseas business and spending by affluent consumers here. Recent strong reports from companies like FedEx and CarMax show the economy may not be nearly as bad as Shilling thinks it is.

But I hesitate to second guess him on housing, where his track record has been stellar. That's why his predictions should be sobering indeed for homeowners, investors and policymakers alike.

Source: Yahoo Finance

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Economic Growth Still Weak

Friday, June 24, 2011

The U.S. economy was a little stronger than originally believed but still struggling in the first three months of the year, according to the government's final reading on the first quarter.
Gross domestic product, the broadest measure of the nation's economic activity, grew at an annual rate of 1.9% in the quarter, the Commerce Department reported Friday.

That's up from the previous estimate of 1.8%. Economists surveyed by Briefing.com had forecast no change from the prior reading.

But growth of 1.9% is still disappointingly weak, and there is widespread concern that the economy has slowed even more since the end of March. Hiring ground to a near halt in May and consumer spending and manufacturing slowed.

Economic growth of 3% or better is generally considered necessary to spur the level of hiring by employers needed to make a big dent in the unemployment rate. The U.S. economy typically grows at a 3.6% rate during an economic expansion.

On Wednesday, the Federal Reserve significantly cut its economic growth forecasts, and raised its unemployment and inflation estimates for the rest of this year as well as for 2012. Fed Chairman Ben Bernanke said he was frustrated by the fact that declines in unemployment will be slow and painful.

Another drag on growth in the first half of the year was a jump in the price of food and energy, which sapped consumers' ability to spend more on other goods.

Since the GDP reading is adjusted for inflation, higher prices means the economy has to grow faster just to keep pace with inflation.

Many economists have been cutting their forecasts for growth in the second quarter and the rest of 2011.

A CNNMoney survey earlier this month found that top economists are forecasting growth of just 2.3% in the second quarter, which is down from estimates of 3% only a month earlier.

Economists also see a greater risk of another recession, although they still believe that's a long-shot.

"Recent data suggests that the economy has slowed further since the first quarter, and some leading indicators are pointing to softness in the latter half of the year as well," said Jim Baird, chief investment strategist for Plante Moran Financial Advisors.

Bernanke said Wednesday he believed that some of the current weakness in the economy is due to temporary factors, such as the spike in oil prices following political turmoil in the Middle East and supply chain disruptions caused by the Japanese earthquake.

But he admitted he couldn't say how much of the weakness is due to those temporary factors and how much are more serious, longer-lasting issues such as consumers still struggling with too much debt and continued weakness in housing.

Economists said Friday's report leaves that key question still unanswered.

"We are not yet prepared to write-off a solid second half economic performance, particularly if the labor market regains momentum next quarter," wrote Carl Riccadonna, senior U.S. economist for Deutsche Bank.

"In the near term, it will be critical to determine if economic output in general and factory output in particular are stabilizing as the supply disruptions ease, and also if households and small businesses respond swiftly to lower gas prices."

John Silvia, chief economist with Wells Fargo Securities, also said he's still hopeful that the economy could rebound in the second half of the year.

But with growth so weak, he's worried that the economy would be vulnerable to any other shocks that might occur, such as a default of Greek sovereign debt, a new oil price spike due to more political turmoil in the Middle East or a U.S. government shutdown due to the debate over raising the debt ceiling.

"You can't get a shock to the system and walk away from that," he said.

A rebound is a best case scenario, Silvia added. But it's been a while since the economy enjoyed a best case scenario. 

Source:  CNNMoney

New Home Sales Slip 2%

Thursday, June 23, 2011

Sales of new homes fell 2.1% in May, after rising for two months in a row, as the housing market continues to struggle.

The Census Bureau reported an annual sales rate of 319,000 new homes last month. That was down from a revised rate of 326,000 in April. But compared to a year ago, sales are up 13.5%.

And the rate in May was better than expected. Economists had forecast a sales rate of 305,000 in May, according to consensus estimates from Briefing.com.

After falling to an all-time low of 278,000 in February, new home sales have been one of the weakest sectors of the economy.

Sales peaked in July 2005. But ever since the recession took hold in 2008, home builders have remained reluctant to boost production -- especially with unemployment still painfully high.

The glut of foreclosures on the market has also sliced demand for new homes, as financially strapped consumers look for better bargains.

A separate report from the National Association of Realtors on Tuesday showed that sales of existing homes dropped 3.8% in April, slightly more than expected.

The average price of new homes sold in May was $266,400, according to the report. That was up from $265,000 in April.

There were an estimated 166,000 new homes for sale. At the current sales rate, it would take 6.2 months to sell through that inventory, the report said.

New home sales in the Northeast declined the most last month, dropping 27%. The only region to see sales rise was the South, which reported a 2.4% increase.
 
Source:  CNN Money

Fed Acknowledges Economy is Growing More Slowly

Wednesday June 22, 2011

The Federal Reserve acknowledged Wednesday that the economy is growing more slowly than it expected. But it said it will complete its $600 billion Treasury bond buying program by June 30 and announced no further efforts to boost the economy.

Ending a two-day meeting, the Fed repeated a pledge to keep interest rates at record lows near zero for "an extended period," a promise it's made for more than two years.

Fed officials said in a statement summarizing their discussions that they think the main causes of the economy's slowdown, such as high gas prices and supply disruptions from Japan's natural disaster, are temporary. Once those problems subside, Fed officials said the economy should rebound.

As expected, the central bank said it would keep its holdings of Treasury bonds at current levels, a policy intended to keep consumer and business loan rates at low levels to stimulate spending.
The Fed noted that inflation has risen. But it said it expects those pressures to be temporary as well.

Bernanke and his colleagues are trying to keep a fragile economy on track two years after the Great Recession officially ended. A spike in gasoline prices earlier this year made consumers and businesses more cautious about spending. Employers scaled back hiring in May.

Economic growth slowed to 1.8 percent in the first three months of the year. It isn't expected to be much higher in the current quarter.

Beyond high gas prices and supply disruptions caused by the earthquake and tsunami in Japan, the Fed is now facing a new problem: renewed jitters that a debt crisis in Greece could spread to other heavily indebted European nations and send shockwaves through global financial markets.

The Fed has kept rates at ultra-low levels since December 2008. Once the Fed decides to abandon the "extended period" language, it would be viewed as a signal that it is getting ready to reverse course and start boosting interest rates. Many private economists think it will be another full year before the economy has recovered enough for the Fed to actually start raising interest rates.

The Fed is also winding down its Treasury bond-buying program, an effort to drive down long-term interest rates. Supporters say the bond purchases have worked, in part by keeping rates low and encouraging spending. Low long-term rates are vital for consumers buying homes and cars and for companies making investments.

They also argue that those lower rates fueled a stock rally. When Bernanke outlined plans for the bond-buying program in late August, the Standard & Poor's 500 index was down 6 percent for the year. Eight months later, the S&P 500 was up 28 percent. Lower rates made stocks more attractive to investors than bonds, whose yields were falling.

Falling bond yields have also helped keep mortgage rates near record lows. The average rate on a 30-year mortgage has stayed below 5 percent for all but two weeks this year and was 4.5 percent last week. Still, low rates have done little to boost home sales, which fell in May to the lowest level in since November.

Critics, including some Fed officials, saw things differently. They warned that by pumping so much money into the economy, the Fed increased the risks of high inflation later.

Source:  Associated Press

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California Redwood Co. Completes Purchase of Siskiyou Lumber

Wednesday, June 22, 2011

The California Redwood Co. completed the acquisition of the assets of Siskiyou Lumber Products, a California-based company specializing in remanufacturing and wholesale lumber distribution.

Siskiyou's Woodland, Calif., operations and its Ukiah, Calif., fence plant will now operate as part of The California Redwood Co., distributing redwood lumber products, Douglas fir lumber and treated lumber.

"A year ago, we announced a long-term marketing strategy of working with retailers to better understand and serve the needs of consumers," said Carl Schoenhofer, VP and general manager for The California Redwood Co., based in Eureka, Calif. "The acquisition of Siskiyou Lumber Products provides us the opportunity to get closer to consumers and allows us to offer a full range of premium redwood products directly to retail."

The products include decking, railing, fencing and garden accessories.

"We also plan to expand our product development efforts and value-added applications for redwood," Schoenhofer said.

Source:  Home Channel News

Housing Market's Silver Lining

Tuesday June 21, 2011

Amid the clouds of gloom hovering over the nation's housing market there is a silver lining. Steven Liberati sees it. The 28-year old heating, ventilation and air conditioning systems salesman and his fiancé are about to purchase their first home -- a co-op apartment in White Plains, New York -- for a fraction of what they thought it would cost just a couple of years ago.

"I'm always trying to take advantage of a situation. I feel like two years ago was a good time to rent," said Liberati. "Now it seems very affordable. We had to jump on the situation."

For much of the nation that silver lining remains invisible, as housing is stuck in its worst slump in decades. Each monthly data point -- sinking home prices, slow sales, sluggish housing starts -- has fallen like a hammer on the coffin nails of an industry that shows few signs of life.

But housing may soon rise from the dead, argue some economists. And, the severity of the slump may in fact accelerate the arrival of a recovery.

"The truth is the correction in house prices and the low level of home building is really the cure for the housing industry's problems," said Jim Glassman, senior economist at J.P. Morgan Chase & Co.

The lower prices fall the more affordable homes are becoming, even factoring in a decline in household income over the past few years due largely to the high level of unemployment.

In fact, home affordability has improved dramatically since the peak of the housing boom. A family earning the national median of $62,000 pays 13.5% of its monthly income for a mortgage payment on a median priced home ($163,000), according to the National Association of Realtors.

The current year will achieve the highest affordability condition in 40 years," said Lawrence Yun, chief economist of the National Association of Realtors.

Buying a home today looks even more affordable when compared to renting, which is becoming more expensive, as measured by the government's Consumer Price Index. So, in theory, more potential buyers should start thinking like Steven Liberati.

Problem is, there's a psychological "X" factor. Price declines convince many potential home buyers that they should keep waiting because they'll get an even better bargain a year from now.

"We're facing a lack of urgency on part of potential buyers," said Chris Herbert, research director of the Joint Center for Housing Studies at Harvard University.

To stabilize prices, supply and demand need to come into balance. That's where the lousy housing starts data can be helpful. While it's true that homebuilders are suffering mightily, the last thing the housing market needs right now is an explosion of new home construction. The slower the pace of new home building, the faster the imbalance between supply and demand should be corrected.

"All the bad news isn't bad news. Sometimes bad news is good news," said Drew Matus, senior economist at UBS Securities. "You want to limit the amount of new supply coming on the market."

In other words, today's lousy headlines should be building the foundation for a recovery in housing. Matus predicts home prices will stabilize by the end of the year.

Source:  CNN Money

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Existing Home Sales Drop 3.8%

Tuesday, June 21, 2011

Sales of existing homes fell in May, as severe weather and high gas prices weighed on the shaky housing market.

Home sales fell 3.8% to a seasonally adjusted annual rate of 4.81 million, down from a revised rate of 5 million in April, the National Association of Realtors said Tuesday.

Sales were more than 15% lower than in May 2010.

Economists had expected a May sales rate of 4.79 million existing homes, according to consensus estimates from Briefing.com. "Spiking gasoline prices along with widespread severe weather hurt house shopping in April, leading to soft figures for actual closings in May," said NAR chief economist Lawrence Yun.

Gas prices surged earlier this year, pinching household budgets and putting a damper on consumer spending. In addition, sales were hurt by tornados and flooding in May that devastated parts of the South and Midwest.

Sales fell more than 6% in the South and were down over 5% in the Midwest. By contrast, sales fell 2.5% in the Northeast and were flat in the West.

Yun called the drop in May sales "disappointing," but he expects the market to pick up in the second half of the year, given the recent decline in gas prices.

NAR also said that the national median price for existing homes of all types fell 4.6% in May to $166,500.

While sales had stabilized somewhat earlier this year, the market for existing homes has been working through aglut of foreclosed properties for years -- a trend that has weighed on prices.

In May, distressed homes accounted for 31% of all sales, which typically sell for about 20% less than homes that aren't in foreclosure, according to NAR.

Yun said the long and painful drop in home prices "could be diminishing" as some buyers look to take advantage of what he called the highest affordability conditions in 40 years.

He warned, however, that existing home sales are being held back by "restrictive loan underwriting standards."

"There's been a pendulum swing from very loose standards which led to the housing boom to unnecessarily restrictive practices as an overreaction to the housing correction -- this overreaction is clearly holding back the recovery," said Yun.  

Source: CNNMoney

Remodeling Activity Up for 18th Consecutive Month

Friday, June 17, 2011

Residential remodeling activity continued to rise across the United States, showing a 15% increase in April 2011 in year-over-year comparisons, according to an index compiled by BuildFax, which uses a national database of building permit data. 

The latest BuildFax Remodeling Index (BFRI) indicates that residential remodeling activity registered its eighteenth-straight month gain.

“April traditionally sets a baseline for the rest of the year in residential remodeling activity, and April 2011 is the best we’ve seen since the beginning of the index in April 2004,” said Joe Emison, VP research and development at BuildFax. “The BFRI is indexed to start at 100 in April 2004 and here we are seven years later, after significant drops in housing value, and the index is almost 110. That means there were almost 10% more residential remodels in April 2011 than in April 2004. Given the relatively pessimistic economic news that we heard about in April, including a slowing recovery, this is a nice surprise for the industry."

In April, all regions posted month-over-month gains, and only the Midwest posted a year-over-year loss. The West was up 18% year-over-year and up 5.3 points, or 5%, month-over-month. The Midwest was down 19% year-over-year and up 17% month-over-month, recovering slightly from a lower-than-average March. The Northeast was up 5% year-over-year and 14% month-over-month, and the South was up 11% year-over-year and 12% month-over-month.

Based in Austin, Texas, and Asheville, N.C., BuildFax bases its index on a proprietary property intelligence engine that contains building and permitting information from 4,000-plus cities and counties across the United States. 

Source: Home Channel News

Housing Starts Bounce Up 3.5% in May

Thursday, June 16, 2011

With seemingly nowhere to go but up, housing starts in May increased 3.5% from the upwardly revised April figure to a seasonally adjusted annual rate of 560,000. Single-family starts increased 3.7% to a rate of 419,000.

The figures had easy comparisons from a month ago, when the Commerce Department's New Residential Construction report posted depressing numbers. While the month-to-month gains are a welcome sign for the industry, year-over-year statistics are negative -- total starts were down 3.4%, and single-family starts were down 8.9%.

The May numbers were slightly higher than those of 2009, the slowest year of housing starts on record. 

On a regional basis, the West had the best numbers across the board, showing an 18.1% month-to-month gain and a 20.2% year-over-year gain. The West also showed a 15.6% improvement in single-family starts compared with April.

The Northeast struggled the most of the four regions. Year-over-year starts dropped 18.3%, and year-over-year single-family starts dropped 32.1%, according to the data released today.
Building permits, meanwhile, increased to a rate of 612,000 in May, up 8.7% from April, and up 5.2% compared with May 2010.

Source:  Home Channel News

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Foreclosures Fall For 8th Straight Month

Thursday, June 16, 2011

Foreclosure filings experienced their eighth straight month of declines, according to RealtyTrac.

In May, filings fell 33% from a year earlier and 2% month-over-month, according to the online marketplace of foreclosed properties. The number of homes that were repossessed (referred to as REOs or real estate-owned properties) in May also declined to 66,879, down 3.8% from April and 29% year-over-year, the firm said.

The huge year-over-year drop in foreclosures doesn't necessarily mean the housing market is staging a recovery, however.

James Saccacio, the CEO of RealtyTrac, says the declines are likely due to lingering effects of the "robo-signing" scandal, which broke last September, when it was discovered that banks were playing fast and loose with foreclosure documents.

In some cases, it was found that banks brought foreclosure proceedings upon homeowners when they had no standing to do so. Sloppy paperwork sometimes made it impossible to tell which entity was the rightful owner of the mortgage notes.

To help fix the mess, foreclosure proceedings were temporarily suspended. Even though the suspension has since been lifted, the pace of foreclosures remains significantly slower as banks more thoroughly review each case to ensure they are being handled legally and properly.

"Foreclosure processing delays continue to mask the true face of the foreclosure situation," said Saccacio. "Lenders are somewhat unevenly pushing batches of bad loans through foreclosure as they overhaul their paperwork and documentation procedures."

There's another factor at play, as well. The banks can't sell the homes they've already seized so they aren't as incentivized to repossess more homes.

"[There's] weak demand from buyers, making it tough for lenders to unload their REO inventory," said Saccacio. "Even at a significantly lower level than a year ago, the new supply of REOs exceeds the amount being sold each month."

The banks don't want to take on the expense of maintaining the homes -- property taxes, heating costs, repairs and insurance -- if they can't sell them quickly.

Selling off the inventory of repossessed homes is crucial to the housing market, said Jim Gillespie, CEO of Coldwell Banker. Sold at steep discounts, REOs compete with new homes for buyers and have severely depressed new home sales.

"That's a critical element for the economic recovery," said Gillespie. "If new homes were selling anywhere close to their levels of five years ago, it would add a full point to the GDP."

The steepest drops in filings have come from judicial states, ones in which the courts are involved in repossessions. In these states, where foreclosure proceedings are subject to the scrutiny of the courts, it appears banks are taking special care to make sure they've stamped out the last vestiges of the robo-signing issues.

Nevada, where most cases are handled outside of court, continued to be foreclosure central. One of every 103 households received a notice of some kind in May. However, that was an improvement of 23% compared with May 2010. Arizona, with one filing for every 210 households, and California, one for every 259, were second and third.

The judicial state of Florida, where the housing market is no better, has seen a much greater drop-off in filings over the past year, down 62%. It now has the eighth highest foreclosure rate, of one filing for every 461 households. A year ago, it was in the top four, along with the other "Sand States." 

Source:  CNN Money

Housing Market to Remain in the Doldrums: Reuters Poll

Thursday, June 16, 2011

The beaten-down housing market is expected to sink further this year and prices will virtually flatline in 2012, a Reuters poll predicted.

While theeconomy has slowly been recovering from the worst recession since the Great Depression, a housing market rebound has remained elusive despite multi-billion dollar federal programs and record low interest rates.

Home prices -- as measured by Standard & Poor's 20-City Composite Home Price Index -- will fall 5.0 percent in 2011 as a whole before finding a floor and rising just 0.5 percent in 2012, according to the median forecast of the 21 economists who provided price forecasts in the Reuters poll.

The findings were bleaker than those of the previous Reuters housing poll in March, which saw prices falling 2.3 percent this year and rising 1.2 percent in 2012.

A rise in "distressed" home sales at depressed prices has helped clear a backlog of homes for sale on the market, but a glut of homes for sale still remains. The rampant pace of foreclosures hitting the market has abated but is still grim with more than a quarter of homeowners owing more on their mortgage than what their homes are worth.

This negative equity not only prevents homeowners from selling but these borrowers tend to be more prone to defaults and foreclosures.

"It is hard to see the housing market doing better until the massive headwind of foreclosures is removed and that will likely take a couple of years," said Mark Vitner, senior economist at Well Fargo Securities in Charlotte, North Carolina.

By the third quarter of 2011, the pace of U.S. existing home sales will only edge up to a 5.10 million annualized rate compared with 5.05 million in April, according to the median forecast of 22 economists who gave an outlook for sales.

Forecasts for changes in the CaseShiller price index next year ranged widely, from a rise of 5 percent to a fall of 6 percent, highlighting the differences among economists on whether the housing slump has played out.

Home sales have mostly been falling since the expiration of popular home-buyer tax credits last year. Home sales in April, the most recent month available from the National Association of Realtors, was 12.9 percent below its year-ago level.

With home prices still falling, many potential buyers are sidelined and banks are more stringent with loan applications and credit scores, Wells Fargo's Vitner said.

"It is not that I am pessimistic about the housing market, it is just that I am not optimistic and a gradual recovery probably will not happen until 2013 or 2014, with a full normalization not until 2015," he said.

Another contributing factor to the dour outlook for the U.S. housing market is stubbornly high unemployment and underemployment.

Home prices will fall another 3 percent from their current levels, according to the median forecast in the poll.

The total price drop from the peak of the housing market in 2006 will be 35 percent, the poll showed.

One glimmer of hope for the hard-hit U.S. housing market is the high level of home affordability.

The average 30-year fixed U.S. mortgage rate will probably settle at 4.82 percent this year, the poll showed, up from a rate of 4.49 percent in the latest week.

The rate touched 4.19 percent in mid-October of 2010, the lowest since 1951, according to U.S. mortgage finance agency Freddie Mac, and economists say rates below 5 percent are historically low.

Source:  Reuters

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Glimmer of Optimism in Housing Report

Thursday June 16, 2011

Permits for housing construction climbed in May, signaling a glimmer of optimism among homebuilders about the future of the housing market.

The number of permits for future housing construction jumped to a seasonally adjusted annual rate of 612,000 last month, up 8.7% from the revised rate of 563,000 in April, the Commerce Department said.

It was the highest monthly rate since December and was much higher than expected, with economists surveyed by Briefing.com looking for a 548,000 permit rate.

Permits for single-family homes, viewed as a more stable indicator of new homebuilding activity than permits for multi-family home construction, ticked up 2.5% from April to a rate of 405,000.

While permits are typically viewed as an indication of builders' confidence in the housing market, the big jump in permits could have had a lot to do with seasonality, even allowing for the government's adjustment, said Doug Roberts, chief investment strategist for Channel Capital Research.

Roberts said that this is the prime time of year to begin construction, given the better weather. And given the flooding and bad weather in April, many builders may have gotten off to a late start -- leading to a jump in permits and housing starts last month.

"These are the months where the most construction occurs, so this increase could be more of a seasonal blip," he said. "We'll have to see if we gain some traction after the next few months -- but for now, it's not like we're at the beginning of a new housing boom."

But an increase in confidence also likely played a part in the positive report, said Roberts.

Though the housing market remains weak, it began stabilizing when the Federal Reserve introduced quantitative easing measures, aimed to help stimulate the economy. But Roberts said the combination of the Federal Reserve's stimulus program ending this month and the glut of homes still on the market may make it a rough second half of the year for homebuilders.

"The market is stabilizing," he said. "But it's like when you stabilize a patient after an auto accident -- it doesn't look like he's going to die, but in terms of doing marathons, he's got a long way to go."

Source: CNN Money

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Mortgage Applications See Biggest Gain in 3 Months: MBA

Wednesday, June 15, 2011

Applications for home mortgages saw their biggest jump in three months last week, fueled by demand for refinancing as interest rates continued to fall, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, surged 13.0 percent in the week ended June 10, the biggest percent gain since March.

The MBA's seasonally adjusted index of refinancing applications spiked up 16.5 percent, while the gauge of loan requests for home purchases gained 4.5 percent.

"Mortgage rates have declined for 8 of the past 9 weeks. Coming off of the Memorial Day holiday, refinance application volume increased significantly, as borrowers jumped to lock in the lowest mortgage rates since last November," Michael Fratantoni, MBA's vice president of research and economics, said in a statement.

Fixed 30-year mortgage rates averaged 4.51 percent in the week, off from 4.54 percent the previous week.

The refinance share of mortgage activity rose to 70.0 percent of total applications from 67.3 percent the week before.

Source: Reuters

Housing Could Fall Another 25% But Is Harder to Predict Than the Weather

Wednesday, June 15, 2011

The housing bubble of the early 2000s was "unprecedented" and the "biggest in U.S. history," according to Yale professor Robert Shiller.

As a result, he says "it's very hard to forecast" where housing goes from here, now that it has officially fallen into double-dip territory, based on the S&P Case-Shiller Index.

Housing "might fall [another] 10-25% in the next few years," but forecasting housing today is harder than predicting the weather, Shiller says. "I don't see how anyone can quantify a forecast because it's such an unusual event."

In his latest books, The Subprime Solution and Reforming U.S. Financial Markets, Shiller argues the path to recovery is paved with financial innovation; 11 million homeowners under water is proof "they weren't protected and need a way to hedge their housing risk."

But "the economy is sick right now [and] I don't have any miracle cure," he admits.

Best known for his earlier works, Animal Spirits and Irrational Exuberance, Shiller is arguably the world's foremost authority on financial bubbles. So if he can't predict with any certainty where housing is going, what hope is there for the rest of the punditry?

The American Dream: Myth vs. Reality
One reason Shiller is so renowned is his extensive work on the long-term history of financial markets. Typically, markets fall below their long-term average after bubbles burst, one reason why the bears see much more pain ahead for housing even if prices are now back to 2003 levels. But stocks didn't 'revert to the mean' after the bursting of the 1990's bubble and Shiller says there's no "hard and fast rule."

Speaking of rules, many Americans were raised to believe that housing was always the best investment. But on an inflation-adjusted basis, U.S. home prices were flat from 1890 to 1990, according to Shiller, meaning the whole concept of housing wealth was "a bill of goods."

But the idea of the "American Dream" does have merit. "Home ownership pays a dividend in self respect," he says. Indeed, the idea of owning your own home has personal and societal benefits; the problem was the widespread misconception that housing was the path to wealth and financial freedom.

Source:  Yahoo Finance

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Multi-Family Housing Trend Gains Strength

Tuesday, June 14, 2011

Improvement in the multi-family housing market continues, according to the National Association of Home Builders (NAHB), which compiles a quarterly Multifamily Production Index (MPI). The index recorded its third consecutive increase in the first three months of 2011, according to the NAHB, moving from 40.8 in the fourth quarter of 2010 to 41.7 in the first quarter of 2011.

The MPI tracks multi-family housing industry sentiment on a scale of 0 to 100.

The index is based on three key elements: construction of low-rent units, construction of market-rate-rent units and construction of "for sale" units. The index and all of its components are scaled so that any number over 50 indicates that more respondents report conditions are improving than report conditions are getting worse.

"Multi-family continues to be one of the brighter spots in housing," said NAHB chief economist David Crowe. "Not only is the overall index on the rise, the market-rate rental component has improved dramatically. In the first quarter, the market-rate rental component was 60.5, the highest level in more than five years."

Although the increase is cause for optimism, the multi-family market still faces significant challenges, Crowe said. "There is considerable pent-up demand, but the ongoing crisis in funding for new construction means that developers are limited in their ability to meet that demand."

The Multifamily Vacancy Index (MVI), which measures the multi-family housing industry's perception of vacancies, increased slightly from 33.3 in the fourth quarter of last year to 35.0 in the first quarter of 2011. With the MVI, lower numbers indicate fewer vacancies.

Source:  Home Channel News

Congress Urged to Focus on Energy Efficiency Incentives for Existing Housing Stock

Thursday, June 9, 2011

As the Senate Energy and Natural Resources Committee hears testimony on a suite of energy efficiency bills, including legislation to make residential housing more energy-efficient, the National Association of Home Builders (NAHB) today urged lawmakers to take into account the differences in energy savings between the newest, highest-performing homes and older, less-efficient homes that comprise the vast majority of the nation's housing stock.

"With substantial amounts of energy lost in the nearly 130 million existing homes in the current stock, it is extremely important to develop an effective national energy policy that is not punitive to consumers who benefit from the most efficient new homes," Tony Crasi, a custom home builder from Akron, Ohio, told members of the Senate Energy and Natural Resources Committee. "Rather, the policy must promote an effective retrofit plan for older, less-efficient housing that allows builders and remodelers to create the benefits of energy efficiency for all housing."

Testifying on behalf of NAHB on The Energy Savings and Industrial Competitiveness Act of 2011 (S. 1000), legislation designed to increase the use of energy efficiency technologies in the residential, commercial and industrial sectors of the economy, Crasi said that over the past two decades NAHB has played a leading role in developing, promoting and encouraging the growth of residential green and energy-efficient construction.

"The introduction of modern energy codes in the early 1990s has significantly improved the efficiency of new construction," he said. "In fact, the Energy Information Administration reports that homes built between 1991 and 2001 consumed 2.5 percent of total energy output in the U.S. By contrast, the 94.5 million older, existing homes consumed 18.4 percent of U.S. energy consumption, meaning the most inefficient housing is the most plentiful."

NAHB fully supports efforts to incentivize retrofitting the oldest, least-efficient housing and believes a national energy policy priority must include provisions that seek to save the energy lost in older homes and buildings.

"NAHB has consistently championed incentives for consumers to upgrade older housing, including ongoing support for incentives under Sections 25C and 25D of the Internal Revenue Code that provide federal tax credits for energy efficiency home improvement efforts and renewable energy products," said Crasi.

"Without meaningful incentives to retrofit the millions of less-efficient existing homes, true energy savings in the residential sector will never materialize," he added.

NAHB led the effort to create a National Green Building Standard for all single-family homes, apartments and condos in 2009, the only residential green construction standard approved by the American National Standards Institute, and continues to be a leader in promoting energy efficiency in all facets of the industry - single-family, multifamily, light commercial and remodeling.

With access to credit a major concern, coupled with foreclosure, appraisal and inventory issues, Crasi said that builders face stiff challenges trying to construct new homes in today's market, leaving fewer, more-efficient homes available for consumers.

"NAHB is concerned with the changing dynamics of energy requirements for new housing because it has the potential to make the newest, highest-performing loans unaffordable for the average family," said Crasi. "Rather, NAHB encourages a national policy that directs limited federal resources to the biggest source of energy loss in the real estate sector: older homes and buildings."

Source: NAHB

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Household Wealth Rises More Slowly in Previous Quarter

Thursday, June 9, 2011

Household wealth rose by $943 billion in the first quarter, slowing sharply from the previous quarter, and household debt shrank at a 2 percent annual rate.

Gains from stocks and other investments boosted household net worth to $58.1 trillion, but the gains were tempered by a decline in the value of real estate, data released by the Federal Reserve showed on Thursday.

The first-quarter gain in net worth was less than half the revised $2.4 trillion surge in the fourth quarter.

Households have struggled to rebuild net worth after the collapse of the housing market and the financial crisis, and wealth is still well below its peak of $64.2 trillion at the end of 2007, the figures show. A sagging housing market is hampering those efforts, with the value of real estate sliding by $299 billion in the quarter.

Source: Reuters

Economy at Tipping Point and Housing Bad

Thursday, June 9, 2011

Recent housing and employment data suggests the economy is at a tipping point, while home prices could have much further to fall, veteran economist Robert Shiller said on Thursday.
"My gut feeling is we might see a continuation of the decline (in home prices)," Shiller said.

He added that a 10 to 25 percent slump in real home prices "wouldn't surprise me at all," though he cautioned that was not a forecast.

Speaking at the Standard & Poor's housing summit, Shiller said recent data showing U.S. home prices fell into a double dip in March could prove to be either a seasonal effect over the winter months or part of a downward trend.
Another uptick in the unemployment rate might also start to point to a double-dip recession, he said.

Shiller is the co-founder of the S&P/Case-Shiller home price index and is known for warning about bubbles in the stock market and housing market.

Source:  Reuters

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Home Equity Loans Blamed for Underwater Mortgages

Tuesday, June 7, 2011 |

A study released today by CoreLogic, a real estate data and analysis firm, indicates that 38% of homeowners who took out home equity loans on their houses were “underwater” at the end of the first quarter of 2011, compared with 18% of borrowers with no home equity loans. More than 40% (4.5 million) of all negative equity borrowers have home equity loans.

In total, 10.9 million, or 22.7%, of all residential properties with a mortgage were in negative equity at the end of the first quarter of 2011, down slightly from 11.1 million, or 23.1%, in the fourth quarter.

Las Vegas led the nation with a 66% negative equity share, followed by Stockton (56%), Phoenix (55%), Modesto (55%) and Reno (54%). Outside metropolitan areas in the top five negative equity states, the metropolitan markets with the highest negative equity shares include Greeley, Colo. (38%), Boise (36%) and Atlanta (35%).

While the average negative equity borrower was upside down by $65,000, there were wide disparities by state. New York borrowers were upside down by an average of $129,000, the highest average in the nation, followed by other high housing cost states: Massachusetts ($120,000), Connecticut ($111,000), Hawaii ($98,000) and California ($93,000). Ohio's negative equity borrowers were upside down by $31,000, the lowest average in the nation, followed by Indiana ($34,000) and Minnesota ($38,000).

"Many borrowers in negative equity are still able and willing to make their mortgage payments,” said Mark Fleming, chief economist with CoreLogic. “Those in negative equity and impacted by an income shock of some kind, such as a job loss, divorce or death, are much more likely to be at risk of foreclosure or a short sale. The current economic indicators point to slow yet positive economic growth, which will slowly reduce the risk of borrowers experiencing income shocks. Yet the existence of negative equity for the foreseeable future will weigh on the housing market recovery by holding back sale and refinance activity." 

Source:  Home Channel News

Owning a Home Essential to the American Dream, Survey Shows

Tuesday, June 7, 2011

Despite the ups and downs of the housing market, home owners and non-owners alike consider owning a home essential to the American Dream.

That's the key finding of a recent survey of people likely to vote in 2012 that was conducted on behalf of the National Association of Home Builders (NAHB) by Public Opinion Strategies of Alexandria, Va., and Lake Research Partners of Washington, D.C.

"The survey results show that Americans see beyond the immediate housing market to the enduring value of homeownership," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. "An overwhelming 75 percent of the people who were polled said that owning a home is worth the risk of the fluctuations in the market, and 95 percent of the home owners said they are happy with their decision to own a home," Nielsen said.

"Homeownership is worth the risk, pure and simple," said Neil Newhouse, a partner and co-founder of Public Opinion Strategies. "Even though the market is weak, people who don't own say they want to buy a house. Almost three-quarters of those who do not currently own a home, 73 percent, said owning a home is one of their goals. And among younger voters who are most likely to be in the market for a home in the next few years, the percentages are even higher," Newhouse said.

One of the more striking aspects of the survey results is the intensity of sentiment among potential voters, according to Celinda Lake, president of Lake Research Partners. "People believe overwhelmingly that owning a home is an anchor to the American Dream," she said. "It's an anchor to your retirement, and it's an anchor to your personal economic well-being."

Among the other survey results:             

·               Homeownership and a retirement savings program are considered by voters to be their best investments.

·               80% of home owners would advise a close friend or family member just starting out to buy a home.

·               Saving for a downpayment and closing costs is the biggest barrier to homeownership.

·               Americans believe that owning their own home is as important as being successful at their job or being able to pay for a family member's education.

"Owning a home isn't just a policy to people," said Lake. "It isn't just a commodity to people. It is a core value."

Source:  NAHB

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Communities Not Keeping Pace With Graying Home Owners

Monday, June 6, 2011

A report issued today on the nation’s housing market is full of all-too-familiar news on the state of America’s housing industry. But one statistic from The State of the Nation’s Housing stands out: home owners are going  gray.

The number of U.S. households headed by someone over age 65 will jump 35 percent in the coming decade as baby boomers age, according to the report from the Joint Center for Housing Studies at Harvard University (JCHS).

Aging home owners will add needed ballast and stability to the housing market. They tend to have less debt and more equity built up in their homes, and they move less frequently. But the graying trend also points to some big opportunities and challenges for the housing industry, and for communities serving an increasingly gray population.

Overall, this year’s JCHS study doesn’t offer much hopeful news: millions of owners remain underwater on their mortgages; existing home sales remain depressed and new home sales remain near record lows. High vacancy rates and foreclosures continue to place downward pressure on prices. Nothing is likely to change, JCHS reports, until demand turns upward with a broader economic and jobs recovery.

“While the sharp declines in both home prices and interest rates have left homes in many places more affordable than they have been in decades,” says Eric S. Belsky, the managing director of JCHS, “stubbornly high unemployment and tightened lending standards have limited the ability of many first-time buyers to capitalize on the situation.”

“The state of the nation’s housing,” he adds, “is sobering.”

Against that backdrop, the graying trend points toward some challenges and opportunities. Contrary to stereotypes of seniors moving to golf communities or other types of senior living communities, most older Americans aspire to age in place. That means staying in the homes they already own, or downsizing to housing near friends and family — and most will be doing so in the suburbs.

“Boomers are the most suburban generation in the nation’s history,” says Dan McCue, senior research analyst at JCHS. “Suburban communities will need to shift to providing more amenities for a senior population, rather than for a family population. It’s going to be a major transition for the suburbs — especially as more of those household heads turn 75 or 85.

Yet another report released last week finds most communities aren’t making much progress preparing for a graying population. The National Association of Area Agencies on Aging surveyed a representative sampling of all U.S. cities and towns with populations over 2,500; the report concludes that financial challenges stemming from the recession are preventing many from making progress in key areas such as public transportation and development of age-appropriate housing.

Most suburbs are designed around automobile transportation; as older adults stop driving, they’re at risk of being isolated from their communities. The report points to the need for more programs that provide transportation to healthcare services, grocery stores and cultural events. There’s also a need for more walking options – sidewalk systems linking residential areas and essential services.

The needed changes don’t always require big budgets, according to Sandy Markwood, CEO of the NAAAA. “We can make roads safer for older drivers with better line markings and signage. And, we need better correlation of land use policies with public transportation.” Markwood also points to innovative initiatives such as a volunteer driver program developed by the National Center on Senior Transportation.

Aging in place also will create significant opportunities for home remodelers, architects and contractors able to help home owners adapt their dwellings through universal design, which addresses issues such as countertop height and electrical sockets; usability of faucets, door levers, switches, and appliances; wide no-elevation entrances; comfortable height toilets; and improved lightin

Source: Reuters

Couple Gets Bank to Pay Up by Threatening to Foreclose

Monday, June 6, 2011

How do you get a big bank to pay for its error? Maybe you should foreclose.

Retired Ohio police officer Warren Nyerges and his wife, Maureen Collier, of Naples, Fla., had to call in the sheriff and threaten to seize the bank branch's furniture to get Bank of America to pay the $2,534 in attorney's fees the couple had been awarded months earlier -- after proving that the bank had erroneously tried to foreclose on their home.

This tale is just one more example of the shoddy way banks deals with homeowners in foreclosure cases.

The couple not only weren't delinquent on their mortgage; they didn't even have a mortgage. They bought the 2,700-square-foot house for $165,000 cash in 2009.

Several months later, Bank of America filed a foreclosure notice. You might think that this sort of error could be easily cleared up with a phone call, but that wasn't the case.

As Tamara Lush of The Associated Press writes:

That started 18 months of frustrating phone calls, paperwork and court hearings. Whenever Nyerges called the bank, representatives told him to "come up to date" with his payments. When he called 25 different law firms, no attorney would take the case. When he went to court, the lawyers for the bank filed incorrect motions and were woefully unprepared for the hearings.

Finally, the couple succeeded in getting the foreclosure case dismissed. The court awarded them $2,534 in attorney fees, a debt the bank ignored for months. Finally, they hired foreclosure attorney Todd Allen, who got a court order allowing the sheriff to seize the bank's assets to satisfy the unpaid debt.

After an hour of negotiation, Bank of America wrote the couple a check and issued an apology.

"We apologize to Mr. Nyerges that there was a delay in receiving the funds,” Bank of America spokeswoman Christina Beyer wrote in an email quoted by The Naples Daily News. "The original request went to an outside attorney who is no longer in business."

This isn't the first story we've heard about mistakes in foreclosure cases and banks' refusal to deal efficiently with homeowners.

We're lucky that banks don't handle our checking accounts with the same lack of attention to detail as they do foreclosure cases.

Tara-Nicholle Nelson of Time's Moneyland blog points out that banks don't have much trouble getting the details of other transactions right, down to the penny.  Why aren't they as careful in foreclosure cases? She writes:

… there are deeper implications to every one of these foreclosure foul-up horror stories we read about, and even those we don’t. The finger-pointing to outside attorneys seems reminiscent of the banks’ excuse for the robo-signing scandal that broke last fall, and just as flimsy: The fact that a bank has lots of foreclosures to process and hires an overworked, underqualified or otherwise not-up-to-the-job professional to do it does not justify the nonchalance with which documents and properties of such gravitas were treated.

Source:  MSN Real Estate

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Don't Count on Stimulus. It's Not Coming

Monday, June 6 2011

Economic indicators are pointing to slower growth. More Americans are looking for jobs, and the housing market is in a confirmed double dip.

In another time and place, lawmakers have might responded with economic stimulus measures to get the country back on track.

This time around, it's not in the cards.

Having spent the majority of the current legislative session operating at a truly glacial pace, Congress is sitting on the sidelines, waiting to see how the debate over the debt ceiling pans out.

"I am not sure you could even get the votes [for a stimulus package] if it was clear we were headed for a depression," said Norman Ornstein, a resident scholar at the conservative American Enterprise Institute.

To be fair, lawmakers have tried quite a few tactics to help the economy since 2008. Banks were bailed out, the auto industry was rescued and unemployment benefits were extended. Congress passed a gigantic stimulus package that included tax breaks and money for infrastructure projects.

But now that money has all dried up.

To complicate matters, Republicans now control the House, while Democrats hold the Senate and White House. And with the 2012 election year fast approaching, politicians are far less willing to compromise, or risk their jobs.

Eugene Steuerle, an economist and fellow at the Urban Institute, said Washington is mired in a particularly unproductive rut.

"It's as if neither party knows how to get anything done. Just the basic functioning of government has become more labored," he said.

Today, if lawmakers are likely to commit any one act of fiscal policy making, it'll be to cut spending. Republicans are now hoping to do exactly that as part of a deal to raise the debt ceiling by the Aug. 2 deadline.

"Any deal will have to include significant and immediate budget cuts, all at a time when we ought to be increasing spending," said Ornstein.

The debt talks themselves actually carry a risk to the economy, Ornstein said. If talks collapse, markets might get spooked when investors "realize what these idiots [lawmakers] could do."

Of course, the nation's debt is a major problem. Over time, Washington's budget deficits have piled up to more than $14 trillion in debt. That's so high that lawmakers find themselves with less room to act.

"We've boxed ourselves in with these long-run deficits to the point that it's weakened our ability to manage a short-term crisis," Steuerle said.

Just in the last decade, through two presidential administrations, lawmakers went on a spending spree. They spent trillions on tax cuts, wars in Iraq and Afghanistan and stimulus measures, all without paying for them.

If the economy continues to erode, there is one more stimulus option for policymakers to pursue: The Federal Reserve might be tempted to embark on another round of bond-buying in an attempt to pump cash into the economy.

The Fed's current $600 billion in monetary stimulus is scheduled to end later this month, and weakening economic conditions will almost certainly lead to calls for another round of "quantitative easing."

That might provide support to the economy if lawmakers are unable to muster the political will necessary to undertake economic tinkering -- never an easy task.

Just consider that in 2008, lawmakers failed to approve a $700 billion bank bailout that the Bush administration insisted was necessary to prevent an economic catastrophe. Most House Republicans voted against it.

"If you look at the House Republicans of today, they were raging moderates by comparison," said Ornstein. The bill was passed on a second try, but not before the Dow plunged 900 points in an afternoon.

Source:  CNN Money

Employment Growth Slows Sharply in May

Friday, June 3, 2011

The U.S. economy may be in for a prolonged period of soft growth as employers hired the fewest number of workers in eight months in May and the unemployment rate rose to 9.1 percent.

Nonfarm payrolls increased 54,000 last month, the Labor Department said, fewer than the most pessimistic forecast in the Reuters survey and just over a third of what economists had expected.

The employment report which showed broad weakness confirmed the loss of momentum in the economy already flagged by other data from consumer spending to manufacturing, and stoked fears the economy could be facing a more troubling stretch of weakness than had been thought.

"There are plenty of reasons to expect the third quarter will be better. But the question is now becoming how much better?," said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.

Economists had pinned the economy's sluggishness largely on high energy prices, supply chain disruptions stemming from Japan's earthquake and tornadoes and flooding in the U.S. Midwest and South. The department said it found "no clear impact" from weather on the jobs figures.

The private sector, which has shouldered the burden of job creation added just 83,000 jobs, the least since last June, while government payrolls dropped 29,000.

Adding to the gloomy labor market picture, about 39,000 fewer jobs were created in March and April than previously estimated.

"There was very little in the report that suggested the household sector has any reason to become more confident in the recovery and that in itself does not augur well for a future acceleration," said Patrick O'Keefe, head of economic research at J.H. Cohn in Roseland, New Jersey.

Payrolls had been expected to rise 150,000, with private employment gaining 175,000.

The employment report provides one of the best early reads on the health of the U.S. economy and it sets the tone for global financial markets.

U.S. stocks traded lower, while Treasury debt prices added to earlier gains and interest rate futures rose, signaling that traders believe mounting signs of economic weakness will lead the Federal Reserve to maintain an ultra-easy monetary policy.

The sharp slowdown in job creation is troubling news for President Barack Obama, whose chances of re-election next year could hinge on the health of the economy.

Source:  Reuters

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Fixed Mortgage Rates Drops For 7th Straight Week

Fixed mortgage rates slid for the seventh consecutive week, but the lowest rates of the year have done little to lift the struggling housing market.

Freddie Mac says the average rate on the 30-year loan fell to 4.55 percent from 4.60 percent. The average rate on the 15-year fixed mortgage, a popular refinance option, slipped to 3.74 percent from 3.78 percent. Both are lows for the year.

Rates tend to track the yield on the 10-year Treasury note, which has dropped over fears that higher energy prices could slow economic growth this year.

Most people are unable to take advantage of the lowest mortgage rates because they can't meet tougher lending requirements. And those who could afford to refinance likely did so last year, when rates fell to the lowest levels in decades.

Sales of new and previously occupied homes rose in April. But sales are well below healthy levels. Waves of foreclosures have pushed prices down. Many would-be buyers are holding off, worried that home prices have yet to hit bottom.

Home prices fell in the first three months of this year to the lowest levels since before the housing bust. Prices are expected to keep falling until the glut of foreclosures for sale is reduced, companies start hiring in greater force, banks ease lending rules and more people think it makes sense again to buy a house. In some markets, that could take years.

To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.

The average rate on a five-year adjustable-rate mortgage stayed flat at 3.41 percent. The five-year adjustable rate loan hit 3.25 percent in April, the lowest rate on records dating back to 2005.

The average rate on a one-year adjustable-rate loan rose slightly to 3.13 percent.

The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for the 30-year fixed loan in Freddie Mac's survey was 0.6 and it was 0.7 for the 15-year fixed loan. The average fee for the five-year ARM and the 1-year ARM was 0.6 point.

Source:  Associated Press

Home Price Bargains Coming This Summer

Wednesday June 1, 2011

Home prices are already a third off their highs, but this summer could bring the real discounts.

Buyers are still cautious, and anxious sellers will have to price aggressively to get them off the fence.

That could result in a "summer clearance sale," predicts Pete Flint, CEO of Trulia, the real estate web site.

"We don't imagine a stampede of buyers, like outside of Macy's on Black Friday," he said. "We see this more akin to January sales where retailers are trying to get rid of stock before it gets stale."

Several factors, he said, will lead to blow-out prices: Accelerating price drops: Home prices have already reached their lowest level since the housing bubble burst, and are now at 2002 levels. Sellers will feel the pressure to make deals before their homes lose even more value. Bloated inventory: There are boatloads of homes on the market, more than eight months’ worth at the current rate of sales. Many are distressed properties -- short sales and bank repossessions. Such homes are selling at discounts up to 50%. Tight credit: Some homebuyers still can't obtain mortgages, limiting demand.

Unemployment: While the job picture has brightened, unemployment is still around 9%. People without jobs don't buy homes, obviously, but high unemployment also rattles working people. Lacking the confidence that their jobs are secure, they may not look to buy.

These forces could all come to a head this summer, according to Flint, because of the cyclical nature of homebuying. Buying takes off in spring as many young families hope to make their moves before the new school year.
"By the end of the homebuying season, sellers will become increasingly desperate," said Flint.

Adding to already swollen inventories will be a flood of new distressed properties poised to hit the market.

"By the summer, most of the 'robo-signing' delays will be over and more distressed properties will be on the market," said Celia Chen of Moody's analytics.

Many banks had slowed foreclosure proceedings until they made sure that paperwork was in order. That put hundreds of thousands of homes into foreclosure limbo: Borrowers were no longer making payments in many cases, but were allowed to remain living in the homes.

There's little urgency for buyers to act in this stagnant market because no one expects prices to turnaround, according to Ken Johnson, a real estate professor at Florida International University and co-author of a new study on whether it's better to buy or rent. Realizing that home prices will likely get even better, buyers can wait for even better deals.

"If people think we're at the bottom of the market, they'll act," he said.

All the experts, however, are telling buyers that prices will continue to erode all through 2011. Even after that, no one is predicting outsized price gains.

"There will be a lousy housing market for another year or two," said Michael Larson, a housing analyst for Weiss Research.

Even if we're at or near the bottom, buyers are unlikely to see prices rise much if they wait.

"I myself continue to rent," said Johnson. "I know that even if I don't buy for a year, it's no big deal. Who cares if I miss the bottom if prices only go up a couple of points or so?"

Source:  CNN Money

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Housing Crash: Is It Time To Buy Low? 

Tuesday, May 31, 2011 

True confessions: I live in a bubble. Washington, D.C., the area I call home, appears to be one of the only two places in the country (the other being Seattle) where real estate is doing very well, thank you. So around me, I see home prices stable and rising, and houses getting sold within days of going on the market.

That’s not the case in most of the country, where home prices on average fell 0.8 percent in March, according to the S&P/Case Shiller survey released this morning. “Home prices continue on their downward spiral with no relief in sight,” David Blitzer of S&P, said in a statement. Home prices are at their lowest post-crash levels, with some areas retracing all the way back to 2002 levels.

And so, all morning analysts are saying things like “Maybe people just don’t want to own houses anymore.” David Streitfeld of The New York Times wrote: “The desire to own your own home, long a bedrock of the American Dream, is fast becoming a casualty of the worst housing downturn since the Great Depression.”

And now two more disclaimers: I believe in homeownership and own two homes myself. And I think the most dangerous words in investing are: “This time it’s different.” I don’t think the desire to live in a home you own has disappeared from the nation’s psyche — it’s more likely that home prices grew to levels that were unaffordable for more and more people. Until there are more better-paying jobs, higher incomes and more family formations, housing may not recover.

So, I’m not going to say it’s time to run out and buy a house right now. But I do believe that “This time it’s the same” and the most enduring, useful and hard-to-follow financial advice is ”Buy low and sell high.” And that the combination of home prices and interest rates are probably nearer their 21st century lows than their highs.

Most knowledgeable experts, and surveyed Americans, believe home prices could continue to decline or flatten and then bounce along the bottom for at least a couple of years, and possibly much longer. So if you’re thinking of flipping a condo for a quick profit, fuhgetaboudit. If you’re planning to relocate within five years, buying could be riskier than renting. But if you’re raising a family and renting, and have a solid job, you could look back on 2011-2012 as your greatest opportunity to buy your dream kitchen and fave family room.

Here are some things you can do with a home you own:
– Eventually actually own something. The great loss of home equity that started in 2006 and is still occurring is an anomaly. It is possible that houses will be worth less in 10, 20, and 30 years than they are now, but that’s highly, highly unlikely. In the meantime, you can pay off your mortgage and be done with monthly payments at some point in the future. When you buy a house, you buy a house. When you rent, you’re not buying anything.

– Paint it whatever color you’d like. And change the kitchen cabinets or put on a screened porch. That doesn’t just improve your quality of life, it adds to the value of your home. Renovations don’t get you all of your money back when you sell your home, but many of them get you most of your money back.

– Make some money. If you own your home, you can (1) rent out a room or a floor to pull in extra money; or (2) swap homes with people all over the world for rent-free vacations; or (3) go solar and sell power back to your energy company.

As for me and my personal disclosures, here is one more: If I had the cash, I’d be shopping for home number three right about now.

Source:  Reuters

Home Prices Drop Into Double-Dip Territory

Tuesday, May 31, 2011

U.S. single-family home prices dropped into double-dip territory in March as the housing market remained bogged down by inventory and weak demand, a closely watched survey released Tuesday showed.

The S&P/Case Shiller composite index of 20 metropolitan areas declined 0.2 percent in March from February on a seasonally adjusted basis, in line with economists' expectations. The latest data show home prices have reached their lowest points since the housing bubble burst in 2006.

this month’s report is marked by the confirmation of a double-dip in home prices across much of the nation,” David Blitzer, chairman of the index committee at S&P Indices, said in a statement. “Home prices continue on their downward spiral with no relief in sight.”

Prices fell from February to March in 18 of the metro areas tracked by the S&P/Case-Shiller 20-city index. And prices in a dozen markets have reached their lowest points since the housing crisis began. Prices in March rose only in the Seattle and Washington, D.C., metro areas.

The nationwide index fell for the eighth straight month.

A record number of foreclosures are forcing prices down, and they are expected to keep falling through this year.

The 12 cities now at their lowest levels in nearly four years are: Atlanta, Charlotte, Chicago, Cleveland, Detroit, Las Vegas, Miami, Minneapolis, New York, Phoenix, Portland, Ore., and Tampa.

The housing sector is struggling even as the overall economy is in the midst of a steady but slow recovery. Some of the worst declines in home prices are in cities hit hardest by unemployment and foreclosures, such as Phoenix, Tampa and Las Vegas.

The Case-Shiller index measures sales of select homes in those cities compared with January 2000. For each of the areas it reviews, the index provides a three-month moving average price. By measuring the sales prices of the same homes over time, the index seeks to gauge market values and conditions.

Source: MSNBC

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Foreclosures For Sale: Big Supply, Low Prices

Thursday, May 26, 2011

There's a three-year inventory of homes in foreclosure for sale, and that's devastating home prices.

Las Vegas has so many foreclosures that 53% of all the homes sold in Nevada are in some stage of foreclosure, according to a report from RealtyTrac, the online marketer of foreclosed properties.

Foreclosures represent 45% of sales in California and Arizona, and 28% of all existing home sales during the first three months of 2011.

"This is very bad for the economy," said Rick Sharga, a spokesman for RealtyTrac.

What's more, the homes are selling at steep discounts, especially so-called REOs, bank-owned homes that have been taken in foreclosure procedures.

The average REO cost on average about 35% less than comparable properties, according to RealtyTrac.

But in some areas, the discounts were ever greater: In New York State, the discount for REOs was 53% during the first quarter. And it was nearly 50% in Illinois, Ohio, and Wisconsin.

Also weighing on market prices are "short sales," homes where the selling price is less than what is owed by the borrowers. These sales sold at an average 9% discount.

Including both REOs and short sales, Ohio had the biggest discount of any state, at 41%.

There were 158,000 deals involving distressed properties nationwide during the first quarter, less than half the nearly 350,000 during the same period two years earlier.

With the slowed sales pace, it will take three years to burn through the inventory of 1.9 million distressed properties, according to Sharga.

"Even if you look at REOs alone, it will take 24 months to clear them and that's without any new foreclosures at all coming into the system," said Sharga.

Source: CNNMoney

Economic Growth Still Weak

Thursday, May 26, 2011

U.S. economic growth remained disappointingly weak the first three months of the year, the government reported Thursday.

Gross domestic product, the broadest measure of the nation's economic health, grew at an annual rate of 1.8% in the first quarter, according to the Commerce Department. That is unchanged from the original reading released a month ago, and well below the 3.1% pace of economic growth in the final three months of 2010.

Economists surveyed by Briefing.com had predicted that GDP would be revised up to 2% growth in Thursday's report.

The report showed consumer spending slowed even more than originally expected, as consumption grew at only a 2.2% rate, a significant slowdown from the original 2.7% estimate. But that was partly offset by businesses adding more to inventories than originally reported.

The Commerce Department calculates GDP as a measure of goods and services produced in the United States. The number is often revised multiple times. This is the second reading for the first quarter. 

Source: CNNMoney

April New Home Sales at 4-Month High

Tuesday May 24, 2011

New U.S. single-family home sales rose unexpectedly in April to notch their second straight month of gains and prices increased, according to a government report on Tuesday that offered some hope for the stagnant housing market.

The Commerce Department said sales increased 7.3 percent to a seasonally adjusted 323,000 unit annual rate, the highest level since December, from a slightly upwardly revised 301,000-unit pace in March.

Economists polled by Reuters had forecast new home sales unchanged at a previously reported 300,000-unit rate. All four regions recorded gains in sales, with the West reporting a 15.1 percent rise.

However, compared to April last year sales were down 23.1 percent.

An oversupply of used houses and a relentless wave of foreclosed properties are curbing the market for new homes, even as builders are keeping lean inventories. There were a record low 175,000 new homes available for sale last month, down 2.8 percent from the prior month.

Data last week showed a steep drop in new home construction in April and a dip in sales of previously owned homes.

The Commerce Department report the median sales price for a new home rose 1.6 percent last month to $217,900. Compared with April last year, the median price increased 4.6 percent.

At April's sales pace, the supply of new homes on the market dropped to 6.5 months' worth, the lowest since April last year, from 7.2 months' worth in March.

Source: Reuters

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Home Sales, Factory Data Show Recovery Weak

Thursday May 19, 2011

Weak data on U.S. home sales and factory activity showed an economy stuck in low gear although a drop in claims for jobless aid offered hope the labor market's recovery was on track.

Thursday's reports suggested growth was being hampered by a combination of bad weather at home and supply disruptions caused by the March earthquake in Japan, but analysts said the economy should regain momentum by the second half of the year.

"What you are looking at is second-quarter growth which may be a little softer than what people are expecting, but that's going to be temporary," said Rudy Narvas, an economist at Societe Generale in New York.

First-time claims for state unemployment benefits fell 29,000 to 409,000 last week, the Labor Department said.

The bigger-than-expected drop eased fears that a large increase last month reflected a fundamental deterioration in the jobs market, buttressing the view that the run-up was due to auto plant shutdowns and other one-time factors.

In a separate report, the Philadelphia Federal Reserve Bank said its business activity index -- a gauge of factory activity in the Mid-Atlantic region -- slumped to a seven-month low.

The flow of orders and shipments slowed significantly, while unfilled orders and inventories dropped. Employers, however, added workers.

While the Mid-Atlantic region does not have a high concentration of auto assembly plants, economists said part of the slowdown in factory activity last month reflected supply chain disruptions, which should prove to be temporary.

The report, together with data on Monday showing factory activity in New York state was the slowest in five months in May, implied manufacturing nationwide cooled further this month.

A Fed report on Tuesday showed U.S. motor vehicle output dropped 8.9 percent in April, causing manufacturing to contract for the first time in 10 months.

Source: Reuters

Existing Home Sales Unexpectedly Dip in April

Thursday, May 19, 2011

Sales of previously owned U.S. homes fell in April, a trade group said on Thursday, in a sign that the country's housing market is struggling to recover from the recent financial crisis.

Sales slipped 0.8 percent month over month to an annual rate of 5.05 million units from a downwardly revised 5.09 million in March, said the National Association of Realtors.

Economists polled by Reuters ahead of the report were expecting home resales to rise to 5.2 million from the previously reported 5.1 million.

"The recovery is very sluggish," said the group's senior economist, Lawrence Yun, adding that unnecessarily tight credit is continuing to restrain the market.

About 37 percent of the market consisted of distressed sales, which include both foreclosures and sales of homes where the bank agrees to take less than what is owed.

The median home price was $163,700 last month, down 5 percent from April year ago.

Source: Reuters

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Jobless Claims Fall, Regional Manufacturing Slows

Thursday, May 19, 2011

The number of Americans filing new claims for jobless benefits fell last week, but other data on home sales and regional factory activity suggested the economy remained on a moderate growth path.

Initial claims for state unemployment benefits fell 29,000 to a seasonally adjusted 409,000, the Labor Department said on Thursday, continuing to unwind the prior weeks' spike.

Though the drop exceeded economists' expectations for a fall to 420,000, claims stayed above the 400,000 level that is normally associated with stable job growth for a sixth straight week.

The data covered the survey period for the government's closely watched employment report for May, which will be released early next month.

"Jobless claims are still at levels consistent with moderate job growth and little progress in bringing unemployment down," said Avery Shenfeld, chief economist at CIBC World Markets in Toronto.

A second report showed factory activity in the nation's Mid-Atlantic region slowed sharply in May. The Philadelphia Federal Reserve Bank said its business activity index slumped to 3.9 from 18.5 in April.

Economists had expected a reading of 20. A reading above zero indicates expansion in the region's manufacturing.

"We're probably past the peak in regard to manufacturing activity, but we don't think manufacturing activity is stopping. We just think it is slowing a bit," said Tom Porcelli, a U.S. economist at RBC Capital Markets in New York.

Separately, sales of previously owned homes fell 0.8 percent last month to an annual rate of 5.05 million units, the National Association of Realtors said. Economists had expected sales to rise to a 5.2 million unit-rate.

The factory and housing reports were the latest to suggest the economy struggled to regain momentum as the second quarter started. Manufacturing has been leading the recovery and economists still expect the trend to continue.

U.S. stocks pared gains and were last trading flat, while prices for government debt trimmed losses. The dollar fell against the euro and cut gains against the yen.

The four-week moving average of unemployment claims, a better measure of underlying trends, rose 1,250 to 439,000 - the highest level since mid-November.

The recent jump in claims, blamed on auto layoffs because of supply chain disruptions from March's Japanese earthquake and problems with adjusting data for seasonal variations, had raised fears of a pull-back in the pace of job creation.

Employers added 244,000 jobs in April, the most in 11 months. However, the unemployment rate rose to 9 percent from 8.8 percent in March.

A Labor Department official said only one state or territory, the Virgin Islands, had been estimated, indicating the report was largely clear of distortions.

The number of people still receiving benefits under regular state programs after an initial week of aid fell 81,000 to 3.71 million in the week ended May 7.

Economists had expected so-called continuing claims to fall to 3.72 million from a previously reported 3.76 million.

The number of people on emergency unemployment benefits increased 53,398 to 3.47 million in the week ended April 30, the latest week for which data is available. A total of 7.94 million people were claiming unemployment benefits during that period under all programs.

Source: Reuters

Starts Figure Reflects Low Confidence in Housing

Wednesday, May 18, 2011
 
As housing starts fell 10.6% in April to a seasonally adjusted annual rate of 523,000 units, the National Association of Home Builders said the numbers point to a lack of confidence in the housing market.

 “While mortgage rates are low and house prices are as affordable as they’ve been in a generation, the decline in April’s housing starts is indicative of the low level of confidence that consumers have in the housing market,” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev.

Concerns regarding competition from foreclosures, a lack of consumer confidence in the housing market and the inability to secure production credit caused builders to slow production, the NAHB said.

“Consumers have not yet reached a level of confidence that is strong enough to begin lifting the housing market,” said NAHB Chief Economist David Crowe. “The fundamentals – such as economic growth and employment – are beginning to shape up and will eventually provide enough momentum to push housing forward at a healthy pace. But until then, builders are unwilling to move forward. The issuance of housing permits, an indication of future housing activity, has remained at about the same level as the first quarter of the year.”

Single-family starts declined 5.1% to a seasonally adjusted annual rate of 394,000 units in April, while multifamily starts – which tend to display greater volatility on a month-to-month basis – dropped 24.1% to a rate of 129,000 units after rising 30.8 percent the month before.

Source: Home Channel News

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Housing Starts Fall 10.6 percent in April as Uncertainly Continues

Tuesday, May 17, 2011

Washington, May 17-- Nationwide housing starts fell 10.6 percent in April to a seasonally adjusted annual rate of 523,000 units as concerns regarding competition from foreclosures, a lack of consumer confidence in the housing market and the inability to secure production credit caused builders to slow production, according to newly released figures from the U.S. Commerce Department.

"While mortgage rates are low and house prices are as affordable as they've been in a generation, the decline in April's housing starts is indicative of the low level of confidence that consumers have in the housing market," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev.

"Consumers have not yet reached a level of confidence that is strong enough to begin lifting the housing market," said NAHB Chief Economist David Crowe. "The fundamentals - such as economic growth and employment - are beginning to shape up and will eventually provide enough momentum to push housing forward at a healthy pace. But until then, builders are unwilling to move forward. The issuance of housing permits, an indication of future housing activity, has remained at about the same level as the first quarter of the year."

Single-family starts declined 5.1 percent to a seasonally adjusted annual rate of 394,000 units in April, while multifamily starts - which tend to display greater volatility on a month-to-month basis - dropped 24.1 percent to a rate of 129,000 units after rising 30.8 percent the month before.

Regionally, starts declined 4.8 percent in the Northeast and 23.0 percent in the South but increased 15.7 percent in the Midwest and 3.7 percent in the West.

Total permit issuance for new homes fell 4.0 percent to 551,000 units for the month. The single-family sector posted a 1.8 percent drop to 385,000 units while the multifamily sector posted an 8.8 percent drop to 166,000 units. Regionally, permit issuance was unchanged in the Northeast and declined 5.3 percent in the Midwest, 5.7 percent in the South and 0.8 percent in the West.

Source: NAHB

Why Declining Homeownership Rates Might Not Be a Bad Thing

Tuesday, May 17, 2011

In the first quarter of this year, homeownership rates fell to levels not seen since 1998. Despite that gloomy statistic, some experts say the decline might not be such a bad thing.

The share of Americans who owned their homes dipped to 66.4 percent, according to the U.S. Census Bureau, continuing the downward trend that began in mid-2009. Homeownership peaked at 69.2 percent in late 2004.

"Falling back to the 66-percent level is probably a good thing," says Ken Shuman, head of communications at real estate information website Trulia. "Homeownership isn't the American dream for everyone. A lot of people bought homes who shouldn't have been able to buy homes."

Historically, homeownership levels have hovered between 63 and 66 percent since the 1950s, only recently spiking to nearly 70 percent as a result of the credit bubble. "We had a credit bubble with housing as a symptom, and essentially homeownership edged outside that 'normal' range where it had been comfortable," says Jonathan Miller, president of New York City-based Miller Samuel Real Estate Appraisers.

After the implosion of the housing and banking sectors, homeownership rates have been on the decline, but remain perched near the top of the "comfortable" range, Miller says. "What's happening is that [we're] reverting to the mean," he says. "Remember why [the rate] went from 66 to 69 [percent]. It wasn't because homeownership became more in favor as much as it was the credit vehicle to make it essentially a no-brainer was the driver."

Lenders have reigned in credit standards, making it tougher to get financing for home purchases, but declining home prices and a chronically unstable job market may have a greater hand in keeping homeownership levels lower going forward.

"The single most significant driver in the housing market is consumer confidence," says Mitchell Hochberg, principal at New York City-based Madden Real Estate Ventures. "A lot of people are still afraid to make what is the biggest investment in their portfolio--a house--right now until they feel that both the economy and the housing market have stabilized. You have a lot of people who are sitting on the sidelines."

Nevertheless, experts say declining apartment vacancy rates and rising rental costs could give the housing market a much-needed boost. According to the Census Bureau, the rental vacancy rate was 9.7 percent in the first quarter, down from 10.6 percent in 2010. The uptick in renters has put pressure on rental rates in many areas, and buying is now more affordable than renting in nearly four out of five major U.S. cities, according to Trulia.

That might not sound like good news for tenants, but higher rents often boost home purchases and accelerate a housing market recovery. Historically low mortgage rates--the rate for a 30-year, fixed-rate mortgage was 4.63 percent as of May 12--are also a boon for would-be home buyers
.
"I've never in my life seen [interest] rates this low, where a family can go and borrow in the high fours and own a home," says Dorcas Helfant-Browning, managing partner at Coldwell Banker Professional Realtors. "I can't think of a landlord that's not upping rates with the market right now."

Along with an increase in the renting population, the glut of vacant homes serves as another reminder of the foreclosure crisis and housing market meltdown. "We're at a good level and we're starting to stabilize at two-third owners, one-third renters, and that's a comfortable level," Shuman says. "My bigger concern is the vacancies. We so overbuilt during the boom. What does that mean for home builders? What does it mean for the construction industry moving forward?"

According to Shuman, of the 130 million homes in America, about 10 percent remain vacant. "These aren't even the bank-owned homes," he says. "These are homes that have been vacant and are going to stay vacant." That figure, coupled with foreclosures still trickling through the system, threatens to further inflate the supply of homes and push prices down further.

"Real estate is local, and what it's going to come down to is what is happening in the different areas," Shuman says. "There will have to be local or state government decisions. You don't want values of neighborhoods being crippled.

Source: U. S. News

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Home Building, Manufacturing Slump in April

Tuesday, May 17, 2011

Housing starts and building permits fell in April and factory output slumped as an automobile parts shortage crimped production, showing the economy got off to a weak start in the second quarter.

Corporate results from Home Depot Inc added further evidence of a decline in housing after the No. 1 home improvement chain noted poor weather hurt the spring selling season and sapped its sales.

Groundbreaking for new housing dropped 10.6 percent to an annual rate of 523,000 units, the Commerce Department said on Tuesday, as a glut of homes on the market discouraged new projects. March's starts were revised up to a 585,000-unit pace from the previously reported rate of 549,000 units.

The report pointed to prolonged weakness for the sector. Economists had forecast housing starts rising to a 568,000-unit rate. Compared to April last year, residential construction was down 23.9 percent, the largest decline since October 2009.

Starts in the South slumped to a two-year low.

"We're still struggling to find the bottom here for the housing market. It does not bode well for construction in the near term, and there's a good deal of overhang in terms of inventory," said Michael Woolfolk a senior currency strategist at BNY Mellon in New York.

A separate report showed the Japanese earthquake had hit U.S. manufacturing output, which fell 0.4 percent in April after 9 consecutive monthly increases, the Federal Reserve said. Overall industrial production was flat, buoyed by gains in mining and utilities.

Excluding cars and parts, manufacturing output rose 0.2 percent.

Capacity utilization, a measure of how close to flat out factories are running, fell unexpectedly in April, suggesting scant inflationary pressures in the world's largest economy.

Wal-Mart Stores Inc's, the world's largest retailer, said its U.S. business continues to struggle even as international sales held strong.

U.S. stocks fell on concerns about the economic recovery, while Treasury debt prices rose and the dollar firmed against a basket of currencies.

TOO MANY HOUSES ON THE MARKET

Residential construction is being crowded out by an oversupply of used homes on the market, in particular, foreclosed properties, which sell well below their value.

In March, the spread between the prices of new and previously owned houses was about $54,200.

Home builders' sentiment was flat in May, the National Association of Home Builders said on Monday.

Though builders expected a modest improvement in sales during spring, they anticipated market conditions to weaken in the next six months.

Residential construction accounts for about 2.2 percent of gross domestic product. Investment in home building contracted in the first quarter after a modest increase in the last three months of 2010.

Groundbreaking last month was depressed by a 24.1 percent tumble in the volatile multi-family homes sector, where starts for buildings with five or more units dropped 28.3 percent. Single-family home construction fell 5.1 percent.

New building permits dropped 4.0 percent to a 551,000-unit pace last month. March's permits were revised down to a 574,000-unit pace and economists had expected overall building permits in April to remain unchanged at the previously reported 585,000-unit pace.

Permits were held down last month by an 8.8 percent drop in the multi-family segment. Permits to build single-family homes slipped 1.8 percent.

New home completions rose 4.1 percent to 554,000 units in April.

Source: Reuters

Residential Construction Falls in April

Monday, May 17, 2011

Data released by the Commerce Department this morning showed housing starts at a seasonally adjusted annual rate of 523,000 -- down 10.6% compared with the upwardly revised March figure of 574,000.

Single-family starts were at a rate of 394,000, down 5.1% from the revised March figure of 415,000.

Compared with the same month last year, total housing starts fell 23.9%, while single-family starts plunged 30%.

Building permits also showed declines in the Tuesday morning report on residential construction. Permits were at a rate of 551,000 in April, down 4.0% from March and down 12.8% from April 2010. 

Source: Home Channel News

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Builder Confidence Unchanged in May

Sunday May 16, 2011

Builder confidence in the market for newly built, single-family homes held unchanged at the low level of 16 in May, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. The index has now remained at this level for six out of the past seven months.

"Builder confidence has hardly budged over the past six months as persistent concerns regarding competition from distressed property sales, lack of production credit, inaccurate appraisals, and proposals to reduce government support of housing have continued to cloud the outlook," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. "In addition, many builders in this month's survey cited high gas prices as a further contributor to consumer anxiety and reluctance to go forward with a home purchase."

"The HMI component index measuring traffic of prospective buyers increased by one point for the second time this year as prospective buyers show growing interest but remain extremely hesitant due to a number of factors," said NAHB Chief Economist David Crowe. "Asked to identify reasons that potential customers are holding back at this time, 90 percent of builders surveyed said clients are concerned about being able to sell their existing home at a favorable price, while 73 percent said consumers think it will be difficult for them to get financing. Clearly, access to credit for both builders and buyers remains a considerable obstacle to the revival of the new-homes market."

Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.

Both the index gauging current sales conditions and the index gauging traffic of prospective buyers inched up one point in May, to 16 and 14, respectively. While still very low, the traffic gauge is now at its highest point since May of 2010. Meanwhile, the index gauging sales expectations in the next six months declined two points to 20 in May.

Regionally, the HMI results were mixed, with the Northeast posting a 5-point decline to 15, the Midwest posting no change at 14, the South posting a one-point gain to 16, and the West posting a two-point decline to 16.

Source: NAHB

Buy vs. Rent: These Days, Buying Wins

Friday, May 13, 2011

For the first time in years, buying a home may beat renting.

Two factors are at play, according to researchers who recently crunched the numbers, Ken Johnson of Florida International University and Eli Beracha of East Carolina University for a paper to be published in Real Estate Economics.

First, rents, though mostly stagnant the past few years, are expected to head higher as more people bitten by the housing bust turn to renting. Rents could rise 7% in each of the next two years, according to Peggy Alford, president of Rent.com.

Second, home prices have finally dropped enough to create a buying opportunity. Nationally, prices are down 32% from their peak, set in 2006.

The net result is that home price gains would need to average only 3.25% annually to beat renting, according to Beracha and Johnson. To make the math work, you have to stay in the home for at least eight years
Beracha and Johnson compared the cost of owning with the cost of renting.

Renting has usually come out ahead, they say. Buying typically leads to higher monthly and annual bills once all costs are factored in -- mortgage payments, property taxes, maintenance and transactional costs.

Those higher costs can be offset if the home gains in value. But renters -- the researchers assume -- can invest the savings. And that is a big part of why the professors say renting has typically been the better deal. "I was shocked at how often renters won," said Johnson.

Another reason had been the push to homeownership, which resulted in a premium on home values. "My dad always told me not to 'throw my money away on rent,'" said Johnson. "This mania toward homeownership tends to drive prices up."

But that's changing: Homeownership has dropped to 66.4% from a peak of 69.1% in 2005, according to the Census Bureau.

How much better buying will be depends on location. Of the 23 cities Beracha and Johnson looked at, Seattle is the best place to buy right now. When renters invest in portfolios that include stocks, the appreciation rate required over the next eight years there is 4.84% and the area's historical average is 6.06%.

For several cities, including New York, Boston and Dallas, renting is still preferable. In New York, for example, homeowners would need a 7% annual rise in home values to beat renters. (See "Fastest growing cities in the South")

Buyers should beware the assumption that home prices will rebound, even from these depressed levels, said Dean Baker, co-director of the Center for Economic and Policy Research.

Hiring has been slow and there are tons of potential foreclosures that could flood the market with distressed homes, depressing prices.

Even in cities where people are, theoretically, better off renting, they may not be in reality. Paying off a mortgage is a forced savings plan, said Baker. The mortgage bill comes in every month, the homeowner pays it and the mortgage balance goes down.

Renters, meanwhile, are just as likely to spend their savings. They'll wind up with less money than homeowners, which is kind of what your dad was saying all along.

Source: CNN Money

Foreclosures Down for 7th Straight Month

Thursday, May 12, 2011

The number of foreclosure filings issued in April plunged 34% from a year ago -- the seventh straight month of declines.

And there were just 69,532 homes repossessed last month, a 32% fall from the peak last September just before the eruption of the "robo-signing" scandal, in which banks were found to be mishandling the foreclosure process.

Will the seeming good news continue? No way, said Rick Sharga of RealtyTrac, which issued the latest monthly figures on Thursday.

Even with the drop, there were nearly 220,000 foreclosure filings during the month, including notices of default, scheduled auctions and bank repossessions.

And there are 3.7 million borrowers at least 90 days late on payments. Normally a large percentage of them would already be in foreclosure. They are not -- for two reasons.

One is that ongoing regulatory issues. Banks want to make sure their procedures are all in place.

Second, the banks have already saturated many markets with repossessions they've put back on the market.

"Banks can't move inventory fast enough, at prices high enough, that they're excited about foreclosing on any more homes," said Sharga.

On the other hand, there are a couple of reasons to believe the conditions may be improving. Hiring has picked up, enabling some borrowers to resume paying their bills.

Banks are also doing more to keep borrowers in their homes. In March, banks completed 77,000 mortgage modifications without government assistance, according to Hope Now, a coalition of mortgage servicers, investors and private counselors. That was 26% more than in February.

"What's important," said Faith Schwartz, the head of Hope Now, "is that these modifications are much more affordable. They should perform much better."

Home prices, however, continue to erode. That's a problem because it pushes more borrowers "underwater," with home loans worth more than the value of their homes.

That removes an important financial cushion should the borrower run into financial problems. And it given incentive to "strategically default," or walk away from their homes and mortgage payments.

The percentage of underwater owners of single-family homes has now reached 28.4%, according to real estate web site Zillow. That will worsen if home prices fall further.

"Home value declines are currently equal to those we experienced during the darkest days of the housing recession," said Zillow Chief Economist Stan Humphries. "That's going to put more homeowners in default."

Home prices have fallen so fast lately that Humphries changed his 2011 outlook, forecasting a 7% to 9% price drop for the year, up from 5% to 7%.

Just as falling home prices result in more foreclosures, rising foreclosures hurt home prices by swamping housing markets with repossessed homes.

Bottom line is that the crisis could last for years, according to Sharga. It could be 2014 before the housing market returns to a more normal condition. 

Source: CNNMoney

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Construction Spending Up Slightly in March

Tuesday, May 3, 2011

Numbers released on Monday from the U.S. Department of Commerce announced that construction spending during March 2011 was estimated at $768.9 billion, a 1.4% increase above February’s estimate of $758.6 billion. The March figure is 6.7% below the March 2010 estimate of $824.0 billion.

During the first three months of this year, construction spending amounted to $161.2 billion, 7.8% below the $174.8 billion from the same quarter in 2010. 

Spending on private construction was estimated at $476.1 billion, 2.2% above February’s estimate of $466.0 billion. Residential construction was at an annual rate of $229.1 billion in March, 2.6% above the February estimate of $223.2 billion. Nonresidential construction was at an annual rate of $247.0 billion in March, 1.8% above the February estimate of $242.7 billion.

Public construction was essentially flat: $292.8 billion, 0.1% above the February estimate of $292.6 billion. Educational construction was estimated at $68.5 billion, 0.5% above the February estimate of $68.1 billion. Highway construction was at an annual rate of $82.9 billion, 0.6% above the February estimate of $82.4 billion.

Source: Home Channel News

Trex Company Expands into Decking Substructures with Acquisition of Iron Deck(R)

Monday, May 2, 2011

Trex Company, Inc.the world's largest manufacturer of wood-alternative decking and railing products, today announced it has acquired substantially all of the assets of Iron Deck Corporation, a Denver-based manufacturer of steel deck framing systems.

Iron Deck framing systems are manufactured of dual-coated, galvanized steel, which offers superior durability, longevity and stability when compared to traditional wood substructures. The product is protected by a 25-year limited warranty - surpassing pressure-treated lumber, which is chemically treated to resist decay for a maximum of only 15 years. Iron Deck materials also are composed of 25 percent recycled material.

"The Trex name is already synonymous with high-performance outdoor living products, and this product extension will enable us to continue gaining market share in the rapidly growing ultra low-maintenance category, while positioning our brand for strategic expansion into the $1.9 billion deck substructure market," said Ron Kaplan, chairman, president and CEO of Trex. "Composite materials are increasingly taking share from wood decking and railing, and we see the same opportunity for significant market penetration against wooden deck substructures.

"The combination of Iron Deck's superior product technology and Trex's high-performance wood-alternative decking and railing creates a strong value proposition for both our consumers and professional partners," said Kaplan. "As the industry leader, we feel confident that Trex can drive overall product awareness and penetration of the wood-alternative deck substructure category."

Source: Business Wire

Brighter Outlook for Remodeling

Monday, May 2, 2011

Two different forecasts portend a recovery in the repair and remodeling market based on current jobs, calls for bids and proposals, and job commitments over the next three months. 

The National Association of Home Builders' (NAHB) Remodeling Market Index (RMI) reported an increase to 46.5 in the first quarter of 2011 from 41.5 in the fourth quarter of 2010. This marks the highest level for the RMI since the fourth quarter of 2006.

The overall RMI combines ratings of current remodeling activity with indicators of future activity. In quarter-over-quarter comparisons, current market conditions for the first quarter of 2011 rose to 46.1 from 43.3 in the previous quarter.

"Remodelers report a jump in activity so far this year and have been receiving more calls for work and appointments," said NAHB Remodelers chairman Bob Peterson, a remodeler from Ft. Collins, Colo. "However, many homeowners are still slow to commit to remodeling due to feeling uncertain about the economic recovery and difficulty obtaining loans."

Regional breakdowns for current remodeling market conditions showed growth in all but one area: the Midwest, which experienced a decline to 47.1 (from 54.3). The other three regions of the country showed increases: the Northeast was 46.1 (from 38.8 in the fourth quarter), the South was 46.1 (from 45.8), and the West was 46.1 (from 39.7).

All current remodeling market indicators increased: major additions to 50.3 (from 48.6 in the fourth quarter), minor additions to 48.0 (from 43.9), and maintenance and repair to 39.5 (from 37.0). Future market indicators also improved across the board: Calls for bids rose to 53.1 (from 47.2), appointments for proposals to 52.4 (from 43.1), backlog of remodeling jobs to 49.7 (from 42.6), and amount of work committed for the next three months to 32.1 (from 25.9).

BuildFax compiles its residential BuildFax Remodeling Index (BFRI) from building and permitting information from more than 4,000 cities and counties throughout the country. Its most recent data shows that every region of the United States had more remodeling activity in February 2011 than in February 2010. The BFRI rose 20% year-over-year -- and for the sixteenth straight month -- in February to 95.1, the highest February number in the index since 2006. Residential remodels in February were down month-over-month 3.9 points (4%) from the January value of 99.0, and up year-over-year 16.0 points from the February 2010 value of 79.1.

All regions posted year-over-year gains, although the West posted the highest at 21%, reaching well past index values in February 2010, 2009, 2008 and 2007. It was down 3% between January and February of 2011, however. The Midwest showed a larger-than-expected month-over-month decline of 22% between January and February, but rose slightly (1%) in year-over-year comparisons. The Northeast’s February 2011 BFRI numbers were up 7% year-over-year and down 11% month-over-month. The South was up 11% year-over-year and down 1% month-over-month.

“The cold weather and heavy snows in February could not put a damper on the sustained gains in the remodeling industry, as the month showed increased remodeling activity compared with a year earlier,” said Joe Emison, VP research and development at BuildFax. “February 2011 was a strong month for the industry, despite the fact that remodeling activity traditionally dips during the winter months. February 2011 was better than or equal to February 2010 in every region of the country.”

Source: Home Channel News

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5 Summer Home Improvements That Pay Off

Monday, May 2, 2011

Each spring when the temperatures rise and hibernation ends, a select segment of homeowners starts thinking this is the year to go down to Home Depot and start putting together that deck or digging out that long-desired pool.

For some of the most popular household improvements, it's never a good year to put them in.

This year will be especially rough, as 64% of Americans surveyed in American Express' Spending and Savings Tracker said they'll invest in home improvements — similar to last year's 62% — but plan to spend only an average $3,400 on them. That's nearly half the $6,200 they vowed to spend last year, and it cuts contractors out of the mix considerably; the 47% who planned to hire help last year shrunk to 20% this year.

Renovations are starting to stagnate. Harvard University's Joint Center for Housing Studies says spending will inch up only 0.2% this year from last year. After uprisings in Egypt and Tunisia, political unrest in Bahrain, Yemen and Syria, military action in Libya and a earthquake, tsunami and nuclear crisis in Japan, the argument for remodeling a home now sits on a pretty shaky foundation. The Consumer Confidence Index rose 1.6 points in April on job news, but still hasn't made up an 8.6-point drop in March — the first in five months. Meanwhile, average gas prices rose to nearly $3.91 per gallon, more than a dollar what it cost for the same gallon a year ago, and are expected to reach $4 by early May.

That said, homeowners should chose wisely before pouring out the concrete for a patio or cannonballing into a big investment such as a pool. TheStreet took a look at five of the biggest outdoor remodeling projects homeowners are considering before the summer and ranked the ones worth sweating over:

Pool
Worth doing? Push

At $25,000 to $50,000 or more, an in-ground pool requires a gut check before homeowners even dip a toe in the water. Sure, the National Association of Realtors' National Center for Real Estate Research boasts that an in-ground pool can add about 8% to a home's resale price, but that value swings dramatically, from 6% in the frosty Midwest to 11% in the most toasty Sun Belt.

It also doesn't cover the more than $2,000 it'll cost in maintenance and the hundreds it'll set owners back to keep heated models warm. Don't forget that many states require homeowners to fence in or cover their pools, which adds to the cost and insurance liability. In-ground pools don't exactly age well, either, with most requiring hundreds for filter and pump repairs within less than a decade and resurfacing costs running upward of $10,000 shortly after that first decade.

If you think an above-ground pool is the cheapest answer, it is — upfront. According to the Center for Real Estate Research, an above-ground pool not only adds no value to a house, though, but can actually subtract 1.9% of a house's value if the buyer decides the eyesore needs to come down. Basically, if the pool's not there for your personal enjoyment — your very costly personal enjoyment — it shouldn't be there at all.

A Deck
Worth doing? Yes
If your home doesn't have a deck and could, you're basically burning money and wasting space by not having one.

According to Remodeling Magazine's 2010-11 Cost. vs. Value Report, done in conjunction with the National Association of Realtors, a deck of any kind is one of the best investments a homeowner can make. The best part is that it's actually better to take the "cheap" way out.

A $16,000 composite deck that won't warp or fade in the rain, snow and sun will recoup 66% of its cost in resale value. For comparison's sake, that's better than the 59.5% of a $21,000 investment you'd get back for replacing a roof or the 53% of a $40,000 outlay that would come back at selling time for the poor sap who added another bathroom.

For a wood deck, which is more susceptible to the elements than its composite comrade but costs about $5,000 less, homeowners would get back 72.8% of what they put into it. That's outdone only by a steel entry door replacement (102.1% return) and garage door replacement (83.9%) and the same value as remodeling a kitchen.

Patio
Worth doing? Yes

On paper, patios are about as dated as three-martini lunches, calling a receptionist "doll face" and wearing floral shorts with boat shoes. Unlike each of these American postwar relics, however, the patio still serves a purpose when the situation requires it.

For homeowners with flat plots and flatter homes or deck-worthy homes so densely packed among their neighbors that the only views are of other people's decks, patios are a simple way to expand outdoor living space while maintaining some semblance of privacy in highly-populated urban areas.

Compared with decks, they're fairly cheap, too. Brick patios start at roughly $11 per square foot and can be installed by contractors for roughly $3,500 — or $700 if you're willing to do the work yourself, according to HGTV. Concrete is slightly more expensive, as the ConcreteNetwork says the price of preparing and pouring your summertime slab can run from $1,000 to $2,000 for a 10- by 20-foot space to between $5,000 and $10,000 a 100- by 100-foot patio. The financially fit, however, may want to splurge on their grandfather's surface of choice: flagstone, which runs $15 to $18 per square foot. A 10- by 20-foot patch starts at $3,000, while an 80- by 20-foot area fetches upward of $30,000, according to CostHelper.

Remodeling's Cost vs. Value Report doesn't cover patios, but the sizable return on decks and the comparably minimal investment required for a patio suggests homeowners are standing on solid ground when paving out a place to put the grill or fire pit.

Outdoor Kitchen
Worth doing? Depends on location

If you're in Syracuse, N.Y., and facing 170 inches of snow during the winter, putting a Viking stove, Lynx Grill and Kalamazoo Outdoor Gourmet dishwasher, bar and pizza oven in your outdoor space probably isn't going to pay off. If you're in Arizona or California, where a fenced-in outdoor area can actually count toward the home's square footage, an outdoor kitchen can be a brilliant investment.

If your outdoor kitchen is considered an actual kitchen, the return on a major kitchen remodel — in this case, 69% — would be roughly the same. Homeowners should in no way believe they'll be getting a break on the average $58,000 it costs to put in a kitchen, though. Despite having a pedestal grill in its clearance section for $2,000, the majority of Kalamazoo's grills run from $7,000 to upward of $15,000.

Throw in common kitchen fixtures such as refrigerators, sinks, cooktops, cabinets, dishwashers and even splurge items including beer taps and pizza ovens — not to mention the associated plumbing — and an outdoor kitchen can be every bit as formidable as a home's standard kitchen, if not more so. Features such as range hoods and portable heaters are also making outdoor kitchens year-round propositions in markets as seasonally chilly as Nantucket and Northern Michigan.

"We have reason to believe an outdoor kitchen installation has a return on investment that is at least comparable to that of an indoor kitchen," said Russ Faulk, vice president of product development for Kalamazoo Outdoor Gourmet. "In some markets, a fully functional outdoor kitchen means adding a second kitchen to the home's listing. So you list the home as five bedrooms, two kitchens."

Gazebos
Worth doing? If you have the space, absolutely
Gazebos tend to get lumped into the same aesthetic niche as lawn ornaments and water features, but that far oversimplifies what this $2,000 to $6,500 investment can do for a home or property. By basically giving the yard a roofed deck or a detached porch, a gazebo of the right size can make a lovely reading room, an extended gardening area or a nice shaded spot to take shelter with a drink during summer parties.

Vinyl versions from Home Depot or Lowe's tend to drive up the price a bit, but 12-foot gazebos made with treated wood are viable alternatives. If that hard ceiling isn't a necessity or you already have an outdoor space such as a patio, $800 to $5,000 vine-strung pergolas are a gazebo option for those seeking some shaded solitude. While gazebos and pergolas lean heavily on aesthetic appeal for their value — making their resale return a bit ambiguous — remodeling professionals suggest that the fluctuating values of almost any home improvement should make features such as gazebos and pergolas labors of love, not summer projects for those looking for a sunnier sale price.

"Builders are facing headwinds getting appraisals that give full value to the cost of materials and construction, and remodeled homes face similar challenges upon resale," says Stephen Melman, director of economic services for the National Association of Home Builders. "The best reason for remodeling is to improve the lifestyle of the owners, and that benefit is greatly undervalued."

Source: The Street

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82% of Landlords Would Accept Tenants After Foreclosure

Friday, April 29, 2011

If you lose your home to foreclosure, you're almost certainly going to need to find a place to rent.

Many rental communities and individual landlords do credit checks, and the drop in your credit score from foreclosure doesn't make you look like a good risk.

But a new survey, the National Association of Independent Landlords found that 82% of landlords would rent to someone who had undergone a foreclosure — if their credit otherwise was good.

"Landlords typically won't rent to applicants with poor credit — and a foreclosure will absolutely slam someone's scores," Tracey Benson, president of the association, said in a news release. "The exception is when they see people who have paid their bills their whole life, but lost their job, can't meet their mortgage and must hand their keys back to the bank."

Those tenants could turn out to be good risk because they are used to taking pride in where they live, Benson said.
  
If you're looking for a rental after losing your home to a foreclosure, selling it in a short sale or otherwise suffering a financial hardship that affected your credit score, it's good to explain you situation to the landlord upfront, making a case for why you're a good risk now.

Nearly all large rental complexes run credit checks, but not all individual landlords do -- though they should — and the association is one of the organizations that make background-check tools available to landlords.

The group polled 563 members in March.

In screening tenants, it's important to look at the entire credit report, not just the score. Have the prospective tenants routinely been late on their bills, for years? They may not make good tenants. Do their credit reports show problems beyond foreclosure? Do they have good jobs, and how long have they been in those jobs?

Tenant screening isn't easy, but it's important. I once rented to a tenant who said he had cleaned up his life after bankruptcy. Unfortunately, he couldn't keep a job, and he didn't think he should have to pay rent when he was unemployed. But I rented to another couple who had had some financial problems in the past and they paid on time for seven years. The moral of the story is don't skimp on screening and make sure you look beyond credit scores.

You want to separate the tenants who have recently suffered a patch of bad luck from those who have always been financially irresponsible.

Source: MSN Real Estate

Housing Bust Squeezes Renters

Thursday, April 28, 2011

The housing bust horror flick is now giving way to a very unwelcome sequel: a big squeeze on the cost of renting.

The number of renters paying more than half of their income towards rent has hit record levels, according to a new study by the Joint Center for Housing Studies (JCHS) of Harvard University.

Rental affordability is a critical issue for seniors, who live on fixed incomes and already are coping with low yields on their savings, fast-rising healthcare expenses and stagnant Social Security benefits. Yet the struggle with affordability is found most often among low-income Americans; JCHS found that 75 percent of renters in the lowest quartile of income are spending more than half of their income on housing. JCHS also found that lower-middle class renters also are having trouble finding affordable rental housing.

For example, 33 percent of renters with annual income of $14,500 to $30,000 are facing “severe burdens” in finding affordable rent. And the problem is growing most rapidly among demographic groups traditionally less likely to have affordability problems, including younger households, married couples with children and renters with some college education.

“These are astounding numbers,” says Eric Belsky, managing director of JCHS. “If you are spending half of your income on housing, you have very little to spend on everything else.”

The problem stems from a mismatch of supply and demand of affordable rental housing in the wake of the housing crash. The recession pushed up vacancy rates, and depressed rents, property values and new multi-family unit construction. Meanwhile, the foreclosure crisis has sparked a substantial increase in the number of former owners who now need to rent — just at a moment when development of new affordable housing units has stalled:

The supply gap for very low-income renters (with incomes up to 50 percent of area medians) also increased. In 2003, 16.3 million of these households competed for 12.0 million affordable, available, and adequate units. In 2009, these renters numbered 18.0 million while the supply of units dipped to 11.6 million, widening the gap from 4.3 million to 6.4 million units.

Meanwhile the recession has depressed income, further affecting affordability. Median monthly renter income, adjusted for inflation, has fallen during this decade from $2,950 in 2000 to $2,659 last year.

Rental rates fell through the economic downturn, but were rising at a 2.3 annualized rate last year, according to data quoted by JCHS from MPF Research. And that rate is expected to accelerate further as the recovery gains steam.

Households headed by adults over age 65 account for about 13 percent of renters, according to JCHS, with another 10 percent headed by adults age 55-64.

How are seniors coping? In part by sharing housing with family members, according to Richard Baron, chief executive officer of McCormack Baron Salazar, a St. Louis-based for-profit developer of affordable housing. “People are doubling up, because they don’t have other options.”

The AARP Public Policy Institute reported earlier this month that the recession has sparked a sizable increase in intergenerational households, from 6.2 million in 2008 to 7.1 million last year – a faster rate of growth than AARP found in the last eight years combined.

The country’s looming age wave also will be a factor driving rents upward in the years ahead, notes Christopher Herbert, director of research at JCHS. “The retirement of boomers will push up the total number of older renters,” Herbert says. “It’s not that more of them will convert from home ownership to renting, but simply that those who rent now will continue to do so – and they represent some very large numbers.”

Like all housing matters, federal programs and policy loom large in matters of affordable rentals. But federal housing policy hasn’t kept pace with the changing rental market. The most significant existing federal program is the Low Income Housing Tax Credit (LIHTC), which aims to stimulate availability of capital for the purpose of replenishing affordable housing stock. An array of vouchers and other subsidies also help some renters.

But the JCHS study notes that the federal programs are focused mainly on the lowest-income renters, so won’t address the growing need in higher income brackets.

Source: Reuters

GDP: Economic Recovery Stumbles

Thursday, April 28, 2011

Economic growth slowed to a crawl in the first three months of the year as a spike in gasoline, higher overall inflation and continued weakness in the housing market all took a toll on the recovery.

Gross domestic product, the broadest measure of the nation's economic health, rose at an annual rate of 1.8%, the Commerce Department reported Thursday. That's a significant slowdown from the 3.1% growth rate in the final quarter of 2010.

Most predictions for growth have fallen precipitously over the past several weeks as rising prices spooked forecasters. Economists surveyed by CNNMoney were predicting growth of 2.0% in the first quarter. But some estimates were as high as 4.3% just two months earlier.

"Undoubtedly, consumers are cutting discretionary spending to compensate for rising food and energy prices," said Jim Baird, chief investment strategist for Plante Moran Financial Advisors. "The risk of recession in the near-term remains slim, but an extended period of slow growth isn't likely to encourage an enthusiastic mood any time soon."

The sharp rise in oil prices in recent months was a major drag on growth. Besides cutting into consumer spending, higher prices for imported oil caused a rise in the nation's imports, which slowed the economy. The increase in imported goods shaved 0.8 percentage points off of growth by itself.

Rising inflation on overall prices also took a bite out of growth in the quarter. Since GDP is adjusted for inflation, higher prices mean the economy must grow at a faster pace just to keep up. Consumer prices were up 3.8% from a year earlier, according to the report, compared to a rise of only 1.7% in the fourth quarter.

And the weak real estate market continued to weigh on the economy, as investment in homes and housing construction fell at a 4.1% pace in the quarter, while investment in non-residential real estate, such as offices, stores and factories, plunged by 29%.

Government spending fell across the federal, state and local levels, also hitting the economy. The push for greater fiscal austerity shaved 1.1 percentage points off of growth.

But economists surveyed by CNNMoney are expecting the slowdown to be temporary -- they still project full-year growth of 3.1% for 2011.

"It's a weak number, but behind the scenes, it's showing some strength," said John Canally, senior economist with LPL Financial. "The economy is just not that weak. The data shows this is a one-time thing and we'll get a rebound this quarter."

Canally said he believes weather factors also cut into growth in the first quarter.

Source: CNN Money

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Remodeling Market Index Reaches Highest Level in Four Years

Thursday, April 28, 2011

According to the National Association of Home Builders' (NAHB) Remodeling Market Index (RMI), the remodeling market is heading into recovery with an increase to 46.5 in the first quarter of 2011 from 41.5 in the fourth quarter of 2010. This marks the highest level for the RMI since the fourth quarter of 2006. An RMI below 50, however, indicates that still more remodelers report market activity is lower (compared to the prior quarter) than report it is higher.

The overall RMI combines ratings of current remodeling activity with indicators of future activity like calls for bids. Current market conditions for the first quarter of 2011 rose to 46.1 from 43.3 in the previous quarter. Future market indicators climbed to 46.8 from 39.7 in the previous quarter.

"Remodelers report a jump in activity so far this year and have been receiving more calls for work and appointments," said NAHB Remodelers Chairman Bob Peterson, CGR, CAPS, CGP, a remodeler from Ft. Collins, Colo. "However, many home owners are still slow to commit to remodeling due to feeling uncertain about the economic recovery and difficulty obtaining loans."

Regional break downs for current remodeling market conditions showed growth in all but one area: Northeast 46.1 (from 38.8 in the fourth quarter), South 46.1 (from 45.8), and West 46.1 (from 39.7). Only the Midwest experienced a decline to 47.1 (from 54.3).

All current remodeling market indicators increased: major additions to 50.3 (from 48.6 in the fourth quarter), minor additions to 48.0 (from 43.9), and maintenance and repair to 39.5 (from 37.0). Future market indicators also improved across the board: calls for bids rose to 53.1 (from 47.2), appointments for proposals to 52.4 (from 43.1), backlog of remodeling jobs to 49.7 (from 42.6), and amount of work committed for the next three months to 32.1 (from 25.9).

In an additional special question remodelers reported the top reasons prospective customers are holding back from remodeling their homes:
·               Customers think it is hard to get financing (90 percent of remodeler respondents)
·               Customers have lost equity in their homes (81 percent)
·               Customers are uncertain about their future economic situation (74 percent)
·               Reluctance to invest in home when not sure home will hold its value (67 percent)
·               Negative media stories making customers more cautious (62 percent)
·               Inaccurate appraisals are making financing more difficult (54 percent)

"Home remodeling continues to slowly increase and continued growth through the year is expected." said NAHB Chief Economist David Crowe. "The fact that some indicators are breaking 50 means remodelers are seeing improving activity in their markets. While credit scarcity and economic uncertainty continue to weigh down remodeling, signs of increasing consumer interest are promising."

Source: NAHB

Home Prices Near 'Double Dip'

Tuesday, April 26, 2011

Home prices in February sank 3.3% to just above the post-crisis lows reached in April 2009. It was the eighth straight month of declines.

Home values are down 32% from their peak set in May of 2006, according to the S&P/Case-Shiller index of home prices in 20 cities.

"There is very little, if any, good news about housing," said David Blitzer, spokesman for S&P. "Prices continue to weaken, trends in sales and construction are disappointing."

The drop has come in two stages. First, the index recorded 36 months of nearly uninterrupted declines after reaching the spring 2006 peak. Then came a 13-month upswing during which the index recorded a 5% gain. That rebound ended last June.

Since then, the index has recorded losses every month and it has now edged closer to a new bottom -- the dreaded double-dip. (8 best shrinking places to live)
The index now stands at 139.27, just a whisker above the first low, which came in April of 2009, when the index was at 139.26.

Of the 20 housing markets covered by the index, only Washington recorded a price increase from last year -- 2.7%.

In Phoenix, where prices are off a whopping 56% from their peak, prices fell 8.4% over the past 12 months, more than any other metro area. Minneapolis was close behind with a 8.3% drop and Chicago prices plunged 7.6%.

Price rebound a distant memory
Economists say the initial rebound after the financial crisis was artificially inflated by government initiatives.

Lawmakers implemented a tax credit for homebuyers. And the Federal Reserve helped keep mortgage rates low.

Also artificially supporting prices at the time was a decrease in the supply of foreclosed properties. That was the result of government loan modification programs, but many foreclosed properties have again come back to market.

Distressed properties -- bank repossessions and short sales -- now account for more than 30% of sales, and they've been selling at about a 34% discount to conventional sales. ('10 foreclosure hotspots')

Peter Morici, who teaches finances at the Smith School of Business at the University of Maryland, is one pessimist. He thinks homebuyers are hunkering down, unconvinced that conditions will improve.

"There is deep pessimism about the economy," Morici said, "and people are reluctant to make the commitment to buy homes."

On the other hand, according to Mark Fleming, chief economist for CoreLogic, housing markets may not really be as bad as the data indicate.

Fleming thinks you have to discount the impact of foreclosed properties. Exclude them, he said, and you see more stability.

When home prices decline, it can lead to more foreclosures. Price drops force mortgage borrowers underwater. They then owe more on their loan balances than their homes are worth. That, in itself, leads to more foreclosures.

Underwater borrowers have no home equity to tap should they run into financial hot water. Being underwater can also freeze them out potential mortgage refinancings because banks won't approve new loans for homes whose values have dropped below old loan balances.

"That puts more homeowners at risk of foreclosure," said Anthony Sanders, director of Real Estate Entrepreneurship at George Mason University. "Refinance credit has evaporated for many borrowers."

It's a vicious cycle of home price decreases, which cause more foreclosure, which depress prices and so on and on.

"Now you know why Mr. Bernanke has been trying to inflate home prices," said Sanders, referring to the Federal Reserve chairman.

Source: CNN Money

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AZEK Earns "Green Approved Product" Seal

Monday, April 25, 2011

The National Association of Home Builders (NAHB) Research Center’s “Green Approved Product” seal of approval was awarded to AZEK Building Products for its AZEK Trim, AZEK Mouldings, AZEK Deck and AZEK Porch product lines. This means the products are eligible to earn points toward certification of a given project under the National Green Building Standard.

“This program is an excellent way to guide architects and building products specifiers on which products can contribute to National Green Building Standard points,” said Jim Gross, VP Sales, AZEK Building Products, in a prepared statement.  “We are pleased that AZEK products have demonstrated the durability and sustainability to be designated as Green Approved Products.”

The NAHB Research Center program was created to help bridge the gap between manufacturers who make sustainable products and builders, architects and designers who want to use them. It is awarded to manufacturers who provide third-party evidence that their products meet the criteria for use in buildings certified to the National Green Building Standard.

Source: Home Channel News

Builder Rorecast: Chilly Start, Followed By Tough Conditions

Monday, April 25, 2011

A just-released report on the homebuilding industry from Standard & Poor’s has predicted “tough conditions” and no major improvement over the remainder of the year in the U.S. homebuilding market.

"U.S. home builders got off to a very slow start in 2011 as winter storms contributed to a record low level of new home sales in February," said credit analyst James Fielding, a senior director in Standard & Poor's U.S. real estate companies group. "Our baseline scenario for the rest of the year includes a slight warm-up as the spring selling season progresses, but we don't expect to see significant improvement over a very weak 2010."

Fielding also noted it will be difficult for builders to keep their liquidity intact if they opt to attain market share via aggressive land purchases. Standard & Poor’s, a credit rating agency, expects issue increasingly negative rating outlooks for the U.S. homebuilding sector.

"In essence, we do not yet believe that key economic drivers of housing demand, such as consumer confidence, employment growth, and household formation, are supportive of a strong recovery in the homebuilding sector,"  Fielding said. "In fact, we currently don't anticipate upgrading any homebuilder in 2011, barring company-specific events such as a successful recapitalization."

Of the 15 builders Standard & Poor's rates, three are rated in the 'BBB' category, three are in the 'BB' category, seven are in the 'B' category, and two are in the 'CCC' category.

Standard & Poor's hasn't changed any builder ratings this year, but it did downgrade KB Home, Lennar Corp., and PulteGroup Inc. during the second half of last year because new home sales dropped more than we had anticipated after the temporary tax credits for homebuyers expired.

Source: Home Channel News

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New Home Sales Crawl Back From All-Time Low

Monday, April 25, 2011

New home sales started to creep back up in March, according to government figures released Monday, but the housing market is still far from a recovery.

The Census Bureau reported an annual sales rate of 300,000 new homes in March. While that was an 11% increase from February's all-time low of 270,000, new home sales remained near the lowest levels recorded since the government started tracking the data in 1963.

Compared to March of last year, the annual rate was down a staggering 21.9%.

Still though, the monthly gain was a bit better than expected. Economists surveyed by Briefing.com had forecast a sales rate of 280,000 in March.

"It's a decent start to the spring selling season, but we're coming off all-time lows here, so we're not going to get too excited," said Brett Ryan, economist with Deutsche Bank Securities.

After enduring the burst of the housing bubble, homebuilders are still sitting on land and cautious to bulk up their inventory of new homes, Ryan said. Foreclosed homes continue to flood the market and compete with new homes on the market.

"The overhang of foreclosures drags on new home sales," Ryan said. "Builders are waiting for a clearing process to take place."

The report comes on the heels of slightly encouraging reports on existing home sales and new home construction and permits last week. Economists cautioned that one decent month of data doesn't mean the housing market has turned around.

Even though both home prices and mortgage rates are at attractive lows, demand for mortgages remains weak.

Investors Drove Home Sales Up 3.7 PCT. in March

Investors drove up U.S. home sales last month, plunking down cash to grab cheap homes at risk of foreclosure. But purchases made by first-time homebuyers, who are crucial to a housing recovery, fell.

Sales of previously occupied homes rose in March to a seasonally adjusted annual rate of 5.1 million, the National Association of Realtors said Wednesday. That's up 3.7 percent from 4.92 million in February. The pace is far below the 6 million homes a year that economists say represents a healthy market.

Foreclosures or short sales, when the lender agrees to accept less than is owed on the mortgage, rose to 40 percent of all purchases. And deals paid for entirely in cash accounted for 35 percent of all sales. The Realtors group says that's the biggest percentage since they have been tracking all-cash sales.

Many of those purchases are being made by investors, who are targeting cheap properties in areas hit hardest by foreclosures: Phoenix, Las Vegas and Tampa. The trade group's data only accounts for individual investors and does not include homes sold in bulk at auction or on courthouse steps. So many of the foreclosure sales are likely being picked up en masse by private equity firms.

Another sign of the investor activity is that sales of homes priced under $100,000 have risen 10 percent from a year ago. In that same period, sales of mid-priced homes, between $100,000 and $500,000, have fallen more than 14 percent.

Fewer first-time homebuyers, the types of people who set down roots and raise families, are entering the market. Sales among that group fell to 33 percent in March. A more healthy percentage of first-time buyers is 40 percent, according to the trade group.

The median sales price rose in March to $159,600, but it is still down 5.9 percent from a year ago.

Homes at risk of foreclosure usually sell at 20 percent discounts compared to their original listing prices. So when sales of distressed properties rise, prices fall. But Joshua Shapiro, chief U.S. economist with MFR Inc., said that "part of the market-clearing process is that distressed properties must be sold, so the fact that this is occurring is good."

Many would-be buyers are holding off, worried that home prices haven't hit their bottom. Other potential buyers are having trouble getting mortgages because banks have tightened lending requirements.

One major obstacle to a housing recovery is the glut of unsold homes on the market. There were 3.55 million unsold homes in March. It would take 8.4 months to clear them off the market at today's sales pace. Analysts say a six-month supply represents a healthy supply of homes.

Economists say the situation is much worse when the "shadow inventory" of homes is taken into account. These are homes that are in the early stages of the foreclosure process but have not been put on the market yet for resale.

"It is unlikely that home prices can recover on a sustained basis until the inventory-to-sales balance improves further and the number of distressed properties is significantly reduced," said Steven A. Wood, chief economist at Insight Economics.

Foreclosures are also playing a big role in weakening the housing industry. A record 1 million homes were lost to foreclosure last year and foreclosure tracker RealtyTrac Inc. said it expects 1.2 million more will be lost to foreclosures this year.

For March, sales rose 8.2 percent in the South, 3.9 percent in the Northeast and 1 percent in the Midwest. Sales fell 0.8 percent in the West.

Sales of single-family homes rose 4 percent to an annual rate of 4.45 million units. Sales of condominiums rose 1.6 percent to a rate of 650,000 units.

Source: Assocated Press

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March Sees Encrease in Existing-Home Sales

Wednesday April 20, 2011

Existing-home sales in March increased 3.7% to a seasonally adjusted annual rate of 5.10 million, the National Association of Realtors (NAR) reported this morning.

February's sales estimate was revised upwards from 4.88 million to 4.92 million. March's estimate is 6.3% below March 2010, when existing-home sales were at a pace of 5.44 million.

The month-to-month increase is a pattern the NAR expects to continue. “Existing-home sales have risen in six of the past eight months, so we’re clearly on a recovery path,” said Lawrence Yun, NAR chief economist. “With rising jobs and excellent affordability conditions, we project moderate improvements into 2012, but not every month will show a gain -- primarily because some buyers are finding it too difficult to obtain a mortgage. For those fortunate enough to qualify for financing, monthly mortgage payments as a percent of income have been at record lows.”

The national median existing-home price for all housing types was $159,600 in March, down 5.9% from March 2010. Distressed homes -- typically sold at discounts in the vicinity of 20% -- accounted for a 40% market share in March, up from 39% in February and 35% in March 2010.

“Although home sales are coming back without a federal stimulus, sales would be notably stronger if mortgage lending would return to the normal, safe standards that were in place a decade ago -- before the loose lending practices that created the unprecedented boom and bust cycle,” Yun said.

Source: Home Channel News

Builders Urge Congress to Open Up Credit

Tuesday, April 19, 2011

The National Association of Home Builders (NAHB) has asked members to contact Congress in support of legislation to open up lines of credit for new-housing production.

The association sent an alert to members, encouraging them to ask their representatives to co-sponsor the Home Construction Lending Regulatory Improvement Act.

"As we move into the spring home-buying season, builders and developers across the country continue to suffer from a severe lack of credit for viable home-building projects, which has major implications for the economy as a whole,” said NAHB chairman Bob Nielsen. “With scores of housing markets nationwide starting to show signs of improvement, this legislation recognizes that there is an urgent need to expand the flow of credit to builders in these communities to meet demand and keep the expansion moving ahead.”

According to the NAHB, the bill -- sponsored by by Rep. Gary Miller (R-Calif.) and Rep. Brad Miller (D-N.C.) -- targets specific regulatory obstacles to credit availability for the home-building industry. For instance, it seeks to cease implementing a 100% capital bank lending limit for Acquisition, Development and Construction (AD&C) loans as a “hard” limit, and utilize the 100% of capital guideline as it was intended.

Source: NAHB

Fed Unveils Proposal on Mortgage Standards

Tuesday April 19, 2011

Lenders would be required to make sure prospective borrowers have the ability to repay their mortgages before giving them a loan, under a proposal released by the Federal Reserve on Tuesday.

The rule, which is required by the Dodd-Frank financial reform law, is intended to tighten lending standards and combat home lending abuses that contributed to the 2007-2009 financial crisis.

The rule would establish minimum underwriting standards for most mortgages and lenders could be sued by the borrower if they do not take the proper steps to check a borrowers ability to repay the loan.

The law does provide protections from this type of liability if a loan meets the specific standards that are part of a "qualified mortgage."

In its proposal, the Fed is seeking comment on two possible ways of defining a qualified mortgage.

Under the first scenario the loan could not include interest-only payments, a balloon payment and regular payments could not result in the principle of the loan increasing.

Under the alternative, the loan would have to meet all the standards laid out under the first option and meet additional requirements such as having the lender verify a borrower's employment status and debt obligations.

The proposal lays out a general standard for complying with the rule, including verifying a borrowers income, their employment and the amount of debt they have.

Mortgage originators who serve rural and underserved areas would be allowed to give out loans with balloon payments.

"This option is meant to preserve access to credit for consumers located in rural or underserved areas where creditors may originate balloon loans to hedge against interest rate risk for loans held in portfolio," the Fed said in a statement.

The Fed is seeking comments on the proposal through July 22.

The final rule will be implemented by the Consumer Financial Protection Bureau, which opens its doors on July 21.

Source: Reuters

NAHB Encouraged by 7.2% March Starts Improvement

Tuesday, April 19, 2011

The National Association of Home Builders is somewhat encouraged by the 7.2% increase in housing starts for March.
 
Coming on the heels of disappointing declines in February, March results released by the Department of Commerce showed gains in both the single- and multi-family sectors, and was mirrored by substantial improvements in building permit issuance for the same period.

"While the overall rate of new-home production remains quite low and is still being weighed down by significant uncertainties among both home builders and buyers, this latest report is encouraging," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "It means that some builders are cautiously beginning to re-stock their extremely thin inventories of new homes in anticipation of gradual improvement in consumer demand as the economy slowly inches toward recovery."

"The modest improvement in new-home production and permitting in March is in line with our forecasts for incremental gains through the spring buying season," said NAHB chief economist David Crowe. "While our builder members continue to experience a great number of challenges with regard to competition from foreclosed and short-sale properties, low appraisal values and tight credit conditions, they have noted slight improvements in interest among qualified buyers, and they need to be ready to meet the demand as it materializes."

Gains in new-home production were seen across the board in March, with upward movement registered in both the single- and multi-family sectors, as well as three out of four regions. On the single-family side, a 7.7% gain to a seasonally adjusted annual rate of 422,000 units partially offset a big decline in the previous month. Multi-family starts also gained back a portion of the ground they lost earlier, with a 5.8% increase to 127,000 units.

Source: Home Channel News

Builder Confidence Slips Back a Notch in April

Monday, April 18, 2011

Builder confidence in the market for newly built, single-family homes slipped back one notch to 16 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for April, released today. The index has now held at 16 for five of the last six months.

"While builders in some areas are starting to see a pickup in traffic of prospective home buyers, many consumers remain skittish about the health of the housing market and overall economy, particularly in view of recent legislative and regulatory proposals that could make it much harder to get a mortgage," noted NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. "At the same time, builders are competing against a large number of foreclosed and distressed properties on the market, which are holding down prices and appraisals and making it tough for potential clients to sell their existing homes."

"The spring home buying season is getting off to a slow start due to persistent concerns about home values as more foreclosures seem to be hitting the market, increasingly restrictive lending requirements for home buyers and builders, and the slow pace of economic recovery," acknowledged NAHB Chief Economist David Crowe. "While pockets of improving activity are appearing in some markets, the best sales activity appears to be happening in the lower price ranges, where first-time buyers have greater flexibility than repeat buyers who must sell their current home. Consumers who can take advantage of today's low mortgage rates and very attractive pricing are finding bargains and are buying."

Source: NAHB

Economic Signals Still Mixed at HIRI Conference

Wednesday, April 13, 2011

The data was flying fast and furious here at the Home Improvement Research Institute's (HIRI's) Spring Conference. 

The series of seminars carried the theme "Understanding Today's Home Improvement Industry" and kicked off Wednesday morning with a detailed examination of some unpleasant and lingering macroeconomic trends. Other charts presented by the day's seven presenters picked up where last year's conference left off by establishing a worst-is-behind-us view of the home improvement industry.

"I think the main message we heard is the market is improving," said Fred Miller, managing director of HIRI. "And it's often the smaller projects or the spontaneous emergency projects that are helping to boost home improvement spending."

Michael Fratantoni, VP research and economics for the Mortgage Bankers Association, pointed to the slightly improving picture of employment -- predicting the unemployment rate would slip to 8.5% by the end of 2011, and dip under 8% by the end of 2012. Still, a return to employment normalcy will probably have to wait until 2015, he said.  

"We have seen an improvement in the job market above what I had expected six months ago," he added.

With starts slumping at 585,000 in 2010, the MBA's housing starts forecast calls for a slight improvement to 595,000 in 2011, and a more significant jump to 850,000 in 2012. 

Mary Myers, director of custom research in the home industry sector for The NPD Group, presented research from NPD's active panel of 750,000 consumers that showed the percentage of people planning projects in March 2011 is at 49.0% -- that's up from 48.3% last year and unchanged from the figure two years ago.

The NPD Group's Economic Perception Indicator showed mixed results in its recent March reading. "While we are in a better position than we were in March 2009, consumers are still concerned," she said.

Source: Home Channel News

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Mortgage Bankers See Slow-Going in 2011

Wednesday, April 13, 2011

Key housing metrics are in for a slow ride in 2011, and a quick upturn in 2012, according to the forecast from the Mortgage Bankers Association (MBA).

Delivering the MBA's forecast here at the Home Improvement Research Institute's (HIRI's) Spring Conference, Michael Fratantoni, the MBA's VP single-family research and policy development, said that along with pent-up demand for housing, "there's a lot of pent-up supply out there."

The MBA expects 2011 housing starts of 595,000, compared with 585,000 in 2010. In 2012, the forecast is for 850,000.

Existing-home sales, which were at 4.907 million in 2010, are forecast for 5.087 million in 2011 and 5.450 million in 2012.

Source: Home Channel News

Prices are Low! Mortgages Cheap! But You Can't Get One

Wednesday, April 6, 2011

Yep, mortgage interest rates are low, but there's a catch: It doesn't matter how cheap rates are if you can't get a loan.

And these days, only highly qualified borrowers can get financing -- let alone the best rates.

Nearly a quarter of people who apply for loans are turned down, according to the Federal Reserve.

"Good borrowers with one or two blemishes on their credit are being denied credit," said Lawrence Yun, chief economist for the National Association of Realtors.

The denial rates tell only half the story. Many potential buyers aren't even applying for loans because they assume they can't get one.

"A lot of people know it's very difficult to get a mortgage and they're not even trying," said Alan Rosenbaum, CEO of GuardHill Financial, a New York-based mortgage broker.

That shows up in credit scores for loans financed with backing from Fannie Mae and Freddie Mac. The average credit score has risen to 760 from 720 a few years ago. For FHA loans, the average score has gone to 700 from 660. Loans made to borrowers with sub-620 scores are almost nonexistent.

Another factor keeping people out of the mortgage market is that lenders now require much more up-front cash. The median down payment for purchase is about 15%. During the housing boom, it approached zero.

On most loans, banks want 20% down. On $200,000 purchases, that's $40,000, an insurmountable obstacle for many young house hunters. Or, in New York City, where the median home price is $800,000, buyers need $160,000 up front.

Industry insiders say all these factors have reduced the pool of buyers, lowering demand for homes and hurting prices.

"We feel it really reduces the demand for houses," said Mike D'Alonzo, president of the National Association of Mortgage Brokers. "It's an unbelievable buyer's market, but there hasn't been as much activity as you would expect because not as many people qualify for loans."

Jerry Howard, CEO of the National Association of Home Builders said, "You only have to look at the recent sales reports to see what the impact of the credit crunch has had. The statistics speak for themselves."

Sales of existing homes in February, despite very affordable prices, were 30% off their peak, and home prices fell for the sixth consecutive month in January.

Anthony Sanders, director of Real Estate Entrepreneurship at George Mason University, speculates the tougher credit standards may have stripped as much as 30% of the buyers off the market, compared with normal times.

And it's about to get harder for buyers. Federal regulators proposed rules last week that are designed to discourage risky lending but that will also likely further restrict lending.

Banks would be required to keep 5% of some loans, specifically those with less than 20% down payments, on their books rather than selling them all off as securities. As a result, banks make be unlikely to issue loans where less than 20% is put down. So much for first-time buyers.

We think the new rules are appalling," said the NAHB's Howard. "Only the wealthy will be able to buy homes at low interest cost."
It could also further erode consumer demand for homes.

"It's disturbing," said Lennox Scott, head of John LA. Scott Real estate in the Pacific Northwest. "We're just starting to feel healthier in inventory levels and prices and this is a potential headwind."

The immediate impact, should the new regulations get adopted, should be minor, according to Steve O'Connor, spokesman for the Mortgage Bankers Association. That's because Fannie, Freddie and FHA loans are all exempt from the requirements and they represent more than 90% of the market right now.

The government, however, wants to reduce the presence of all three agencies in favor of private lenders, and banking experts fears the long-term impact of abandoning the field to mostly private companies.

"For the first time in 100 years," said Howard, "the government is discouraging you. It's saying 'We intend to make it more difficult for you and your kids to buy homes.'"

Source: CNNMoney

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Home Builders Applaud Congressional Passage of 1099 Repeal

Tuesday, April 5, 2011

The Senate today approved legislation supported by the National Association of Home Builders (NAHB) to repeal a burdensome tax paperwork requirement that could cost small businesses thousands of dollars each year. The bill now goes to President Obama for his approval.

"During the past several months, NAHB has led the effort along with other industry groups to strike all new expanded IRS Form 1099 reporting requirements for small businesses and owners of rental real estate," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. "In testimony before Congress and in 'key vote' letters to House and Senate leaders, we have spelled out how failing to overturn these rules would kill jobs and place a major paperwork and cost burden on home builders. We applaud Congress for acting to rectify this situation and urge the President to quickly sign this measure into law."

Under the Patient Protection and Affordable Care Act approved last year, starting in 2012 businesses would have to file an IRS Form 1099 for each vendor from whom they purchase more than $600 in goods over the course of the year.

The annual $600 threshold applies to all vendors, so that businesses could find themselves sending out 1099 forms for such mundane purchases as coffee, fuel and office supplies. Rather than hiring additional workers to expand and grow, small businesses would be spending money on accountants and bookkeepers in order to keep up with these new requirements.

To prevent small businesses from drowning in these onerous paperwork requirements, the Senate by a vote of 87 to 12 passed the Small Business Paperwork Mandate Elimination Act of 2011 (H.R. 4), legislation previously approved by the House. In addition to repealing expanded 1099 requirements in the healthcare law, H.R. 4 also repeals an unfair provision in the Small Business Jobs Act of 2010 stipulating that independent landlords as of Jan. 1, 2011 must submit 1099s to firms to which they give more than $600 for services.

Going forward, businesses will still have to comply with long-standing reporting requirements for the purchase of services.

Source: NAHB

While the housing industry celebrates New Homes Month in April, home builders want Americans to know just how much of a positive, direct impact residential construction has on the U.S. economy throughout the entire year.

"Home building is a key driver of the American economy," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. "By generating economic activity including new income and jobs, purchases of goods and services, and revenue for local governments, housing--which has historically accounted for around 17 percent of the GDP--can put America back to work."

Economists at the National Association of Home Builders estimate that the one-year local impacts of building 100 single-family homes in a typical metro area include $21.1 million in local income, $2.2 million in taxes and other local government revenue, and 324 local jobs.

The employment effects extend beyond the home building industry. About half of the jobs are in construction, with the other 50 percent creating employment opportunities in industries ranging from production and sales of home furnishings to service providers such as real estate attorneys and landscapers.

Those 100 new homes also provide the community with additional, annually-recurring impacts of $3.1 million in local income, $743,000 in taxes and other revenue for local governments, and 53 local jobs.

The income earned from construction activity is spent and recycled in the local economy, and the new homes that are built become occupied by residents who pay taxes and buy locally produced goods and services. Those tax revenues help pay for a wide range of government services, including local school teachers, police departments and road repairs.

In order to accommodate population growth and necessary replacement of older homes, however, a long-run trend of approximately 1.7 million new homes a year is needed. Yet as of February 2011, the annual projection for housing starts stood at less than 500,000.

"The gap between actual home starts and what is required to fulfill America's future housing needs represents more than 3 million jobs," said Nielsen. "Restoring the health of the housing industry is a crucial first step in stabilizing our country's path to economic recovery."

During New Homes Month, home builders also bring attention to the advantages of newly-built homes, including safety, amenities, energy efficiency and floor plans to fit a wide variety of modern lifestyles. Combined with today's near record-low interest rates and competitive prices, the current market offers new home buyers unprecedented opportunities.

Source: NAHB

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Home Sales: Get Real

Monday, April 4, 2011

Two words of advice for the majority of U.S. home sellers: Get real. In most places, the market won’t come back for a long time, if ever. American housing in the worst markets is a damaged good that may remain so for a generation.

There are exceptions, of course. You can expect to see a sales and price bounceback in a handful of places that combine robust job growth with favorable supply-and-demand numbers.

According to the Local Market Monitor,which tracks real estate trends, there’s been strong job growth in Bethesda, Dallas, Raleigh, Washington, Milwaukee, San Jose and Houston. Most of these cities weren’t hit particularly hard by the bubble.

Job growth typically translates into stronger home prices. The publication forecasts a two percent to four percent housing-price increase in Bethesda, for example.

Places where the bubble burst most catastrophically are a different story. I was recently in Florida, where a land surveyor (now hiking cars for a rental agency), said the only sales he knew of were cash transactions from foreign buyers. One sale I tracked was a two-bedroom condo that sold for $89,000 that was valued around $200,000 five years ago in the Ft. Myers area.

In every market, supply and demand rules the day. Don’t expect glutted markets like Florida — where some 20 percent of homes are vacant — to see a quick recovery. The Market Monitor’s Ingo Winzer forecasts that home prices may drop another eight percent over the next two years in the Sunshine State.

With the exception of Washington, D.C., which seems to be benefiting from strong hiring (including the Bethesda, Maryland market), most major metropolitan areas are sagging.

According to the most recent S&P Case-Shiller housing index report, 19 of the largest 20 markets fell in January. The prospect of a double-dip housing decline seems likely. Prices in Atlanta, Cleveland, Detroit and Las Vegas have dipped below their January, 2000 levels.

If you’re trying to sell in a declining market, that means you will have to re-adjust your thinking and forget about bubble-based values. You may have to price your home along the lines of what it was worth in the last century.

Here are some tips to keep in mind that will help you get real:

What is the shape of your local market? Forget about national real-estate trends and low mortgage rates. You need to know how many homes are for sale in your area. What is the competition?

How many foreclosures are on the market? This is your competition as well. If you are selling against similar bank-owned properties, you have to adjust your pricing accordingly.

How long do homes remain on the market? If homes sit unsold for months (or years), that tells you something. The main factor moving homes now is price. If your price is too high, you won’t attract any buyers.

Get three different pricing estimates. Real-estate agents need to be realistic as well. Get three comparative marketing analyses and ask each agent to figure a “fire sale” price that will get buyers in the door.

Get your house in shape. Clean up your property, put on a coat of paint where needed and spruce up kitchens and bathrooms. Hire a “house stager” who can make your home’s interior look larger and more desirable. Check out Ilyce Glink’s new book “Buy, Close, Move In” for more tips.

Aside from the government reviving its successful tax credit for new home buyers, only favorable economic winds will revive the home market. In the interim, you’ll need to check your ego at the door if you need to sell now.

Source: Reuters

Wells Fargo's John Stumpf: How to Fix the Mortgage Mess

Monday, April 4, 2011

For most Americans, their home is the largest and most important investment they will ever make. Ensuring that they have the right kind of mortgage is critical to their financial well-being and -- as we've seen recently -- critical to our entire economy.

That means we have to solve the Fannie Mae and Freddie Mac problem and eventually figure out the proper role of the federal government in supporting a secondary market for home mortgages. Doing that right is one of the most important issues facing Congress and the Obama administration.

Some people ask, Why do we even need a secondary market for home mortgages? Why don't we just go back to the good old days before those markets existed and require banks to hang on to all the mortgages they create?

Let me tell you why. When I went to buy my first house in 1976, mortgage money was hard to find. In fact, it was rationed. Banks simply didn't have the deposits on hand to meet the demand. That was 35 years ago, and we don't want to go back to those "good old days." Mortgage rationing is not the future we want for our customers, their children, or their grandchildren.

Consider these facts: There are 76 million homes in the U.S., of which 51 million have mortgages. Taken together, those mortgages represent a debt of $11 trillion. That's a level of debt that banks can't afford to hold on their balance sheets alone. As a nation, if we want to make home ownership broadly available and affordable, we need a secondary mortgage market that operates fairly and efficiently for all parties.

Freddie Mac and Fannie Mae were created in part to help achieve those goals, but they've run into big trouble along the way. They now own or guarantee nearly 31 million home loans, worth more than $5 trillion. Their role is so critical in mortgage finance that the federal government bailed them out in 2008 to the tune of what might end up to be more than $250 billion.

So as Fannie and Freddie unwind, as they certainly will, what principles should shape the future of home financing? I believe the answer comes in three parts. First, all parties involved in making and investing in mortgage loans need to share a financial interest in the quality of those loans. That includes the customer taking out the loan, the financial institution or broker originating the loan, and the investor who ultimately owns the loan. All parties need to have skin in the game. If originators don't have a financial interest in the loan, they will have less concern for its quality, and poor lending decisions will happen and be passed along to investors. That creates a house of cards.

A healthy debate is already taking place about how much a homeowner should put down and how much a bank should keep on its balance sheet when it bundles and sells mortgage loans. There is no magic number out there, but I can tell you one thing: The more the risks and rewards of a mortgage loan are shared by all parties -- and the better those risks and rewards are understood -- the better the quality of the loan will be.

Will this mean higher down payments for homeowners and more financial skin in the game for banks? Probably so, but the long-term costs for homeowners, bankers, and the economy will be dramatically lower. Just look at what past mortgage lending practices have cost all of us.

Second, whatever role the federal government assumes in mortgage finance going forward, its role needs to be explicit, not implicit. Currently federal backing for Fannie and Freddie is implied because they are "government-sponsored enterprises." It needs to be crystal clear for investors around the world whether GSE loans are backed by the full faith and credit of the United States. If they are, consumers would benefit from worldwide liquidity for mortgage products. To protect taxpayers, adequate levels of private capital should be required to take the risk of loss. In this way, the federal government would only act as a "catastrophe risk" backstop much like the role the FDIC plays in protecting bank deposits up to a certain limit. Banks would pay a fee, just as they do for FDIC insurance, and the homeowner's mortgage would be guaranteed up to a certain amount by the federal agency providing the insurance.

And third, as we move forward in a post-GSE marketplace, we need to make sure we have uniform underwriting and servicing standards for mortgage loans, and more common products for what are called conforming mortgage loans. An efficient secondary market depends on relatively standard products and processes. Otherwise every batch of loans has to be examined in detail for its unique qualities, an examination that results in higher transaction costs and ultimately less attractive investments. The lack of standardization drains the lifeblood out of secondary market operations.

Mortgage financing is a big deal for millions of Americans and for our economy overall. All sides should be looking for solutions that will help all Americans. The path forward will not be easy, but I truly believe the solutions can be found. It will require hard work, courage, and cooperation across the board.
 
Source: CNN Money

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February Construction Activity Drops 1.4 Percent

Friday April 1, 2011

Builders started work on fewer homes, apartments and government projects in February, pushing construction activity down to the lowest level in more than a decade.

Construction spending tumbled for a third straight month, dropping 1.4 percent in February, the Commerce Department said Friday. The weakness pushed total activity down to a seasonally adjusted annual rate of $760.6 billion, the smallest total since October 1999. That was below the previous recession low set back in August.

Activity at the February level is about half the $1.5 trillion pace that economists believe would signal a healthy construction sector. They think it could take up to four years for construction to fully recover from the bursting of a housing bubble that pushed the country into a deep recession.

The recession depressed demand for office buildings, hotels and shopping centers, further deepening the problems in construction. In addition, banks tightened lending standards, making it harder for builders to get financing for projects.

For February, private construction activity dropped 1.4 percent to an annual rate of $468 billion, the slowest pace for non-government building since April 1997.

Private residential construction fell 3.7 percent to an annual rate of $228.5 billion in February. Single-family and multi-family construction both declined as housing continues to struggle with a glut of unsold homes and record levels of foreclosures.

Non-residential construction was the only major sector showing an increase, rising 0.9 percent to an annual rate of $239.6 billion, still far below activity before the recession hit. For February, there were gains in transportation, communication, power and manufacturing projects. That offset declines in office building, hotels and shopping centers.

Government construction dropped 1.3 percent to an annual rate of $292.5 billion in February. That reflected a 0.7 percent rise in spending on federal projects and a 1.5 percent drop in activity at the state and local level. State and local budgets have come under pressure as officials struggle to get control of large budget deficits.

Source: Associated Press

“Green” Claims Confuse Consumers

Thursday, March 31, 2011

A survey conducted by Cone, a brand strategy and marketing firm, indicates that most consumers continue to misunderstand phrases commonly used in environmental marketing and advertising, giving products more credit than they deserve. At the same time, most Americans are willing to punish a company if they think they were deliberately misled by “greenwashing” claims.

The annual Cone Green Gap Trend Tracker found that 97% of Americans believe they know what common environmental marketing claims such as "green" or "environmentally friendly" mean. Yet their interpretations are often inaccurate, according to the researchers. More than two-in-five Americans (41%) erroneously believe these terms mean a product has a positive (i.e., beneficial) impact on the environment. Only 29% understand that these terms more accurately describe products with less environmental impact than previous versions or competing products.

But consumers also expressed a desire to learn more. Almost 60% said it is only acceptable for marketers to use general environmental claims when they are backed up with additional detail and explanation. Another 23% said vague environmental claims should never be used. And 79% want detailed information readily accessible on product packaging.

Of those surveyed, 71% said they will stop buying the product if they feel misled by an environmental claim, and more than a third (37%) will go so far as to boycott the company's products entirely.

Source: Home Channel News

Rate on 30-Year Fixed Mortgage Rises to 4.86 PCT.

Thursday March 31, 2011

Fixed mortgage rates rose slightly this week, but the average rate on the 30-year loan remained below 5 percent.

Freddie Mac says the average rate on the 30-year fixed mortgage rose to 4.86 percent from 4.81 percent the previous week. It hit a 40-year low of 4.17 percent in November.

The average rate on the 15-year fixed mortgage increased to 4.09 percent from 4.04 percent. It reached 3.57 percent in November, the lowest level on records dating back to 1991.

Mortgage rates tend to track the yield on the 10-year Treasury note, which rose this week. Investors sold off Treasurys on fears the Federal Reserve might end its bond-buying program sooner than expected.

Low rates have done little to jumpstart the weak housing market. Home sales remain sluggish and prices are falling in most major markets. Most analysts expect prices to decline through midyear.

More Americans did sign contracts to buy homes last month, the National Association of Realtors said Monday. But there was "a measurable level of contract cancellations" in February, meaning many pending sales might not translate into closed sales.

In another dismal sign, Lennar Corp. said Tuesday that new orders dropped 12 percent from December through February, while home deliveries slipped 3 percent.

High unemployment and strict lending requirements have kept many people from buying homes. And a record number of foreclosures are forcing down home prices, leaving many would-be buyers worried that the market has yet to bottom out.

To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.

The average rate on a five-year adjustable-rate mortgage rose to 3.70 percent from 3.62 percent. The five-year hit 3.25 percent last month, the lowest rate on records dating back to January 2005.

The average rate on one-year adjustable-rate home loans increased to 3.26 percent from 3.21 percent. Two weeks ago, the rate hit 3.17 percent, the lowest level in records dating starting in 1984.

The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for the 30-year fixed loan, 15-year fixed loan and the five-year ARM in Freddie Mac's survey was 0.7 point. The average fee for the 1-year ARM was 0.6 point.

Source: Associated Press

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Home Builders: Effective Housing Finance System Critical to Sound Economy

Thursday, March 31, 2011

As Congress and the Administration debate potential reforms of the housing finance companies Fannie Mae and Freddie Mac, the National Association of Home Builders (NAHB) today called on Congress to develop a workable housing finance system before it moves forward with policies that would further destabilize the struggling housing market.

"A finance system that provides liquidity for the housing sector in all geographic markets throughout the economic cycle is a prerequisite to achieving housing policy objectives," NAHB Chairman Bob Nielsen, a home builder from Reno, Nev., told members of the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises.

Also of great concern to NAHB are the credit risk retention rules required by Section 941 of the Dodd-Frank Act, which were unveiled this week by the six agencies charged with implementing that section of the law. NAHB believes the proposed rules contain an unduly narrow definition of the important term "Qualified Residential Mortgage" (QRM), featuring a minimum down payment of 20 percent, which would seriously disrupt the housing market by making mortgages unavailable or unnecessarily expensive for many creditworthy borrowers.

By stipulating such a large down payment for a loan to be considered a QRM, the Administration and federal agencies are preempting congressional efforts to reform the housing finance system by imposing a narrow and rigid gateway to the secondary mortgage market.

"This extreme proposal could not have been put forward at a less opportune time," Nielsen said. "The housing market is still weak, with a significant overhang of unsold homes, and an equally large shadow inventory of distressed loans. A move to a larger down payment standard at this juncture would cause renewed stress and uncertainty for borrowers who are seeking or are on the threshold of seeking affordable, sustainable homeownership. We believe a more balanced QRM exemption is imperative in light of the enormous potential impact it would have on the cost and availability of mortgage credit at this precarious point in the housing cycle."

Addressing the GSE reform issue, Nielsen noted that the housing finance system is struggling under a cloud of uncertainty. The federal government, through Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA), currently accounts for nearly all mortgage credit flowing to home buyers and rental properties.

"Even with the current high level of federal support, fewer mortgage products are available, and these loans are being underwritten on much more stringent terms," Nielsen said. "This arrangement cannot continue indefinitely, and there is no clear picture of the future shape of the conforming conventional mortgage market. But one thing is clear - the status quo cannot continue."

Policy discussions are underway on what should become of Fannie Mae and Freddie Mac following the current indefinite conservatorship period, and what should change in the structure and operation of the Federal Home Loan Banks. A key consideration is how to make the transition from the current structure to a future arrangement without undermining ongoing financial rescue efforts and further disrupting the operation of the housing finance system.

"NAHB strongly supports efforts to modernize the nation's housing finance system, including reforms to the government sponsored enterprises Fannie Mae and Freddie Mac," Nielsen said. "We cannot go back to the system that existed before the Great Recession, but it is critical that any reforms be well-conceived, orderly and phased in over time. Short-term proposals to reduce the support Fannie Mae and Freddie Mac provide for the housing finance system represent a piecemeal approach to reform that would disrupt the housing market and could push the nation back into a deep recession.

"The National Association of Home Builders urges Congress and the Administration to consider the potential consequences of their proposals," Nielsen said. "Housing can be the engine of job growth this country needs, but it can't fill that vital role if Congress and the Administration make damaging, ill-advised changes to the housing finance system at such a critical time."

NAHB strongly believes that an efficient secondary mortgage market that facilitates the flow of capital to housing is essential to the economy and to the nation's long-term well-being. NAHB joined a broad coalition of housing and financing groups to develop "Principles for Restoring Stability to the Nation's Housing Finance System," released on March 28. The principles, outlined below, should guide efforts to restore and repair the nation's housing finance system:

·               A stable housing sector is essential for a robust economic recovery and long-term prosperity. Housing, whether through homeownership or rental, promotes social and economic benefits that warrant it being a national policy priority.

·               Private capital must be the dominant source of mortgage credit, and it must also bear the primary risk in any future housing finance system.

·               A continuing and predictable government role is necessary to promote investor confidence and ensure liquidity and stability for homeownership and rental housing.

·               Changes to the mortgage finance system must be done carefully and over a reasonable transition period to ensure that a reliable mortgage finance system is in place to function effectively in the years ahead.

"NAHB looks forward to working with all stakeholders to develop an effective as well as safe and sound means to provide a reliable flow of housing credit under all economic and financial market conditions," Nielsen said.

Source: NAHB

Diverse Groups Respond to Proposed Rule for Qualified Residential Mortgages

Wednesday March 30, 2011

The National Association of Home Builders (NAHB) hosted a media teleconference today along with other industry and consumer groups and finance experts to discuss the negative impact that overly restrictive lending rules proposed yesterday by the Federal Deposit Insurance Corp. would have on the housing market and larger economic recovery.

The plan unveiled by the FDIC would require a minimum 20 percent down payment for "qualified residential mortgages," or QRMs, that would exempt lenders from forthcoming risk retention rules under the Dodd-Frank financial reform law passed last year.

Below are statements from the panelists outlining their position on the proposed rule:

"Requiring a high down payment would disproportionately harm first-time home buyers, who have limited wealth and on average account for 40 percent of home-buying activity. It would take an average family 12 years to scrape together a 20 percent down payment. Borrowers who can't afford to put 20 percent down on a home and who are unable to obtain FHA financing will be expected to pay a premium of two percentage points for a loan in the private market to offset the increased risk to lenders, according to NAHB economists. This would disqualify about 5 million potential home buyers, resulting in 250,000 fewer home sales and 50,000 fewer new homes being built per year.

"Basically the government is telling Mr. and Mrs. America thanks for paying your mortgage during these tough times, and thanks for building your wealth around housing, as we have encouraged you to do, but we are now changing the rules. We are going to reduce the value of your retirement nest egg even more than the recession already has.  And as an extra thank you, your kids are going to find homeownership that much more difficult to obtain."

--- Barry Rutenberg, First Vice Chairman, National Association of Home Builders

"The proposed very narrow QRM definition will allow very few potential homeowners to qualify.  As a result, it will complicate the withdrawal of the Government's guarantee of the mortgage market.  I fear it will also delay the establishment of broad investor confidence necessary for the re-establishment of the RMBS market."

--- Lew Ranieri

"The proposed rule establishes a standard for 'safe and sound' mortgages that would take the industry back to the 1980's, when low wealth and moderate income borrowers, and particularly communities of color, were routinely barred from conventional, affordable credit.  The proposed standard seems to ignore all the positive lessons lenders learned over many years of experimentation in how to offer sustainable mortgage credit.  We are very concerned that when combined with other recommendations from the Administration's White Paper on housing finance, including 10 percent down payment minimums for Fannie Mae and Freddie Mac mortgages, and possibly higher down payments for FHA borrowers, this proposal will move the lending industry's goalposts unacceptably far from the reach of low, moderate and middle income homebuyers.

"We are pleased that the proposals include at least a minimal set of servicing guidelines that would apply to all mortgage securitizations.  We look forward to working with the regulators to improve and strengthen them.  But there can be no doubt after the foreclosure debacle consumers have endured that clear standards are necessary."

--- Barry Zigas, Director of Housing Policy, Consumer Federation of America

"Securitization provides financing for most of our credit- mortgages, car loans, credit cards, even financing for the buildings we work in.  The collapse of this market led to the broad economic recession, and CRL supports reform of the securitization markets.  The goal is to make the system safer, while still making credit available and affordable.  The recent risk retention rules are an important part of this reform process.  However, the proposed Qualified Residential Mortgage standards would unnecessarily over restrict credit and shut off homeownership to most working families. In particular, the down payment requirements of 20% would create an insurmountable barrier for most families, even though low down payment loans that are fully underwritten have performed well, even through the recent crisis."

--- Mike Calhoun, President, Center for Responsible Lending

Source: NAHB

What It Will Take to Fix the Housing Market

Wednesday March 30, 2011

If you're a squeamish homeowner, you probably can't bear to follow the housing news anymore. Home prices have fallen by more than 30 percent over the last five years, yet the pain still isn't over: After a respite when it looked like the bust was ending, price declines have been accelerating once again. Sales are abysmal, despite the lowest interest rates in a generation. The inventory of foreclosures and other fire-sale homes is going up, not down, which will put further downward pressure on prices for much of 2011. Housing usually rebounds after a recession, giving the recovery legs. But the housing market is so bad that some analysts worry it could drag the whole economy back down into a dreaded double-dip recession.

Economists have continually misread the housing market over the last five years, as it metastasized from a modest correction into a once-a-century debacle. Part of the problem now is the uncertainty caused by rising gas prices, which tend to unnerve consumers far more than the added cost warrants, and the nationwide slowdown in foreclosures due to legal questions over fishy bank practices. There's also a lot of disquiet over unrest in the Middle East, ongoing sovereign debt problems in Europe, and Washington's own mushrooming debt problems. It doesn't help that there's talk of ending some housing subsidies, making it harder to qualify for a 30-year mortgage and even slashing the mortgage-interest deduction that makes homeownership cheaper for millions of middle-class families.

Still, the recovery has absorbed a couple of global shocks, and apparently continues apace. The job market is improving, shoppers are more willing to spend, and corporate profits remain strong. Those are all preconditions for a housing rebound, which is inevitable as long as the nation's population continues to expand and the economy keeps growing. The only question--and it's a big one--is when. Here are six missing pieces that still need to fall into place for a housing rebound to take root:

More job gains. The employment picture has been improving for over a year, with the economy adding nearly 1.3 million jobs since the low point in February 2010. That's a start, but the pace of job growth needs to be about twice that to generate a self-sustaining recovery in which consumers spend more because they're confident about their jobs, and companies hire more because they need the extra workers to meet growing demand. And we're not quite at that point yet. While private-sector firms have been hiring, state and local governments have been slashing jobs, slowing overall job gains. That's likely to continue. And the twin shocks of Middle East unrest and the damage from the Japanese earthquake have added fresh doubts about the sustainability of a global recovery. So it will still take a major ramp-up in private hiring to make the recovery look lasting.

The unemployment rate has been a key indicator of the economy's health, but even that has become a bit suspect. Since last November, the unemployment rate has dropped sharply, from 9.8 percent to 8.9 percent. That seemingly reflects a dramatic improvement in the job market. But that has happened as the number of people looking for jobs has fallen, too. So in effect, America's labor force is shrinking at a time when it ought to be growing. Meanwhile, the economy is still down about 7 million jobs from peak levels before the recession, which has hollowed out the pool of potential home buyers. Some of those people need to get back to work before the demand for housing improves.

Outlook: Moody's Analytics predicts that the pace of job creation by the end of 2011 will be at least 2.5 million new jobs per year, more than twice the current rate. If that holds, it will boost confidence and bring many needed home buyers back into the market.

Fewer foreclosures. It's impossible to hold the line on retail prices when distressed merchandise keeps hitting the market, and that's been the problem with an endless stream of foreclosures in hard-hit states like California, Nevada, Arizona, Utah, Michigan, Georgia, Mississippi, and Florida. As foreclosed homes get repossessed and resold, they drag down the prices of most other homes, which perpetuates the vicious cycle of holdout sellers who can't afford to take a loss and reluctant buyers who don't want to commit to purchase until they're sure prices are nearly done falling.

Outlook: The number of delinquent mortgages has been declining, which means foreclosure rates should slow, as long as the job market continues to improve and the economy doesn't slide back into recession. But there's an enormous inventory of foreclosed or soon-to-be-foreclosed homes that will depress prices in many markets for months or years. The good news is that 15 to 20 states, mostly in the Northeast and Midwest, have modest foreclosure rates and are better-poised for a housing recovery. It will also help once the state regulators who are dickering with banks over "robosigners" and other fishy foreclosure practices reach some kind of global settlement that will allow normal foreclosures to proceed. News reports suggest a settlement could come within weeks, which would ease delays that have dragged out the whole foreclosure fiasco.

A stable homeownership rate. Until the last decade, the homeownership rate was mostly steady at around 64 percent. Then it rose to a peak of 69 percent in 2004, which was obviously too high. As people who can't afford homes sell or default, the homeownership rate has been drifting back down, and it's now around 67 percent. It probably needs to fall back to the historical average of 64 percent or so for the housing market to return to normal.

Outlook: At the current pace, homeownership rates could hit 64 percent again in 2012 or 2013, but there's a risk they'll overshoot and go lower than that--which would stretch the huge gap that already exists between the supply of homes and demand. The good news is that housing affordability is the best it's been in more than 40 years, and banks are starting to ease up on loans, which could lure buyers back sooner.

Clarity from Washington. Buying a home is a complicated ordeal to start with, and now, home buyers also need to worry about battles in Washington over tax policy, housing subsidies, and the entire future of housing finance. Some budget hawks want to reduce the mortgage-interest deduction, to help cut Washington's huge deficits, which would probably affect purchases of more expensive homes the most. Other proposed changes could effectively require higher down payments and shorter-term mortgages, which would shrink the pool of eligible buyers. And something needs to be done about Fannie Mae and Freddie Mac, the wrecked housing agencies that are now completely run by Washington, at a huge loss to taxpayers. But if changes are too abrupt, it could cause another ruinous pullback in housing.

Outlook: For all the intense talk in Washington, the biggest issues, such as what to do about Fannie and Freddie, probably won't be addressed until after the 2012 presidential election. And if there ever is a cut in the mortgage-interest deduction, it will probably be phased in slowly, to minimize voter revolt. The biggest risk for buyers today isn't an abrupt change in housing policy. It's not leaving enough margin for error in case there's an unexpected pullback in the future. That's one more reason to make conservative decisions and leave a lot of cushion in case something goes wrong.

Rising rents. Fewer homeowners means there are more renters, which drive the demand for apartments up, along with rents. That's a hardship for renters, since it cuts into their disposable income. But it also gives them a good reason to consider buying. With the affordability of homes at record levels, that should eventually turn some renters into buyers, raising demand for homes and helping stabilize prices.

Outlook: Rents have already started going up, and research firm REIS predicts a healthy 3.4 percent rise in rents, on average, in 2011. In a few cities, rents could rise by nearly 10 percent. And in most cities, rents will outpace inflation and wage growth. That won't turn renters into buyers overnight, since loans are still hard to get and a lot of people can't come up with money for a down payment. But it will help restore the normal equilibrium between the rental and purchase markets, and increasingly motivate renters to look into buying.

Some courageous buyers. The conventional wisdom at the moment is that the housing bust still has a ways to go, which means it would be foolish to buy until it's clear that prices have stopped falling. But smart money rarely follows conventional wisdom, and there are good reasons to buy, even now. Getting a good deal on a home is a function of two things: price and interest rates. Prices may fall a bit further, but it's very likely that interest rates will go up over the next several months, as the global recovery picks up steam and investors begin to anticipate the end of the Federal Reserve's super-stimulative policies. So in terms of mortgage rates at least, the bottom may be now.

Outlook. "Housing markets across the country are increasingly a good buy," economist Mark Zandi of Moody's Analytics said in a recent conference call. "They're undervalued." In fact, he predicts that the best buys may be in the most distressed areas, where prices have fallen the most. It might take guts to act on that, and muster a down payment while other buyers are still on the sidelines. But sooner or later, predictions of a housing recovery will turn out to be right.

Source: U.S News

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Twenty Percent Downpayment Rule Would Disrupt First-Time Buyer Market

Tuesday March 29, 2011

A plan unveiled today by the Federal Deposit Insurance Corp. that would require a minimum 20 percent down payment for "qualified residential mortgages" would disrupt the housing market and jeopardize the economic recovery, according to the National Association of Home Builders (NAHB).

"By mandating a 20 percent down payment on qualified residential mortgages, the Administration and federal regulators are excluding those without huge cash reserves - which constitutes most first-time home buyers and many middle-class households - from a chance to buy a home," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. "Just do the math. First-time home buyers historically average 40 percent of home-buying activity. It would take an average family 12 years to scrape together a 20 percent down payment. This plan is nothing short of an assault on homeownership that could have a long-lasting negative impact on housing for generations to come."

Under the Dodd-Frank financial reform law passed last year, lenders are required to have "skin in the game" by retaining 5 percent of the credit risk of each loan that they sell into the secondary market. The law also called for federal banking regulators to establish rules for a qualified residential mortgage, or QRM, that would exempt lenders from these risk retention rules.  The Dodd-Frank law exempts FHA and VA loans from the risk retention requirement and the proposed risk retention rules will not apply to Fannie Mae and Freddie Mac while they remain in conservatorship.

The exclusion of FHA and VA and, at least temporarily, Fannie and Freddie from the risk retention requirement provides some short-term cushion to the impact of the proposal but that relief will be short-lived and is eroded by the tighter underwriting and higher costs already imposed by those agencies.  Further exacerbating the situation, the Obama Administration has announced its intention to shrink FHA's share of the marketplace, lower FHA and conventional conforming loan limits and further increase fees on FHA, Fannie Mae and Freddie Mac home loans.  These changes, combined with the effects of an overly restrictive QRM, would make it even more difficult for buyers to access affordable housing credit.

By stipulating a 20 percent borrower down payment for a loan to be considered a qualifying residential mortgage, the Administration and federal regulators are preempting congressional efforts to reform the housing finance system by imposing a narrow and rigid gateway to the secondary mortgage market.

Borrowers who can't afford to put 20 percent down on a home and who are unable to obtain FHA financing will be expected to pay a premium of two percentage points for a loan in the private market to offset the increased risk to lenders, according to NAHB economists.  "This would disqualify about 5 million potential home buyers, resulting in 250,000 fewer home sales and 50,000 fewer new homes being built per year," said Nielsen. "Such a drastic cutback would have a disproportionate impact on minorities and low-income families who are struggling to achieve the dream of homeownership.

"By significantly and unnecessarily raising the cost of purchasing or financing homes, this sledgehammer approach to restore the health of the mortgage markets makes no sense," he added. "If buyers are denied access to affordable housing credit, the shadow inventory of foreclosed homes will not be drawn down, a housing recovery will not take hold and economic growth will stall."

And with credit already extremely tight for home buyers and home builders, this overly restrictive QRM definition would drive countless lenders from the residential mortgage market, including thousands of community banks, and enable only a few of the largest lenders to originate and securitize loans, said Nielsen.

"This sharp dilution of mortgage market competition would further diminish mortgage credit availability and drive costs higher."

Five other federal agencies are expected to sign off this week on the risk retention/QRM proposal, which will be published soon after in the Federal Register. The public will be granted a 60-day comment period before the agencies make a final decision.

"Millions of low down payment loans have been originated safely for decades," said Nielsen. "Low-down payments are not what drove this lending crisis. It was lax underwriting standards. Unfortunately, regulators chose to focus on excessive down payment requirements as some type of silver bullet to solve the lending crisis when they should have looked at other underwriting failures and unsound mortgage products that produced the lending disaster."

Nielsen urged the Administration and federal regulators to reassess their position and offer a new plan that ensures a safe and healthy mortgage market, lowers the risk of default and keeps homeownership affordable for working American families.

Source: NAHB

Foreclosure Aid Fell Short, and Is Fading Away

Tuesday March 29, 2011

Last summer, as President Obama’s premier plan to save millions of Americans from foreclosure foundered, the administration tossed a new life preserver to homeowners.

Officials unveiled a $1 billion program to offer loans to help the jobless pay their mortgages until they could find work again. It was supposed to take effect before the end of the year, but as of today, the program has yet to accept any applications.

“We wait and wait, and they keep saying it’s coming,” said James Tyson, 50, a Philadelphia homeowner who lost his job a year ago.

That could be an epitaph for the administration’s broader foreclosure prevention effort, as tens of billions of dollars remain unspent and hundreds of thousands of homeowners have been rejected. Now the existence of the main program, the Home Assistance Modification Program, is in doubt.

Saying it is a waste of money, the Republican-controlled House voted on Tuesday night to kill the foreclosure relief program. The Senate, which the Democrats control, will pursue a rescue. But Democrats, too, consider the program badly flawed.

The effort has failed to stanch a wave of foreclosures and a decline in home prices, which have fallen for six consecutive months and are now just barely above their recession low, according to a key index updated on Tuesday. All of this threatens the fragile economy, which is also being buffeted by foreign crises.

“The banking industry fought us tooth and nail, and we ended up with a program that is failing homeowners,” said Representative Zoe Lofgren, a Democrat from California. “The administration doesn’t give us real enforcement or answers; we just get the old yokey-doke.”

Yet the need remains great. There were 225,000 foreclosure filings in February, according to RealtyTrac. About 145,000 homeowners are in trial modifications under the Obama program. An examination of federal documents and lawsuits, and interviews with legislators, state attorneys general, housing counselors, homeowners and regulators, reveal a federal mortgage modification program crippled by weak oversight, conflicts of interest, mind-numbing complexity and poor performance by many participating banks.

Source: Yahoo Finance

Year Off to Dismal Start in Home Prices

Tuesday, March 29, 2011

Data released by the S&P/Case-Shiller Home Price Indices showed further declines in U.S. home prices in January 2011. Of the 20 MSAs covered by the indices, 13 showed further deceleration in their annual growth rate. The same 11 cities that had posted recent index level lows in December 2010, posted new lows in January.

The 10-City Composite dropped 2.0%, and the 20-City Composite fell 3.1% from their January 2010 levels.

San Diego and Washington, D.C., were the only two markets to record positive year-over-year changes. These are the only two cities whose annual rates remained positive throughout 2010.  

“Keeping with the trends set in late 2010, January brings us weakening home prices with no real hope in sight for the near future,” said David Blitzer, chairman of the Index Committee at Standard & Poor's. “These data confirm what we have seen with recent housing starts and sales reports. The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery. At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing.”

Blitzer also said that he was seeing “renewed weakness” in some cities that were among the last to reach their peaks, including Atlanta; Charlotte; Portland, Ore.; and Seattle, where new lows are being recorded. Dallas, which peaked late, has so far stayed above its low mark of home prices in February 2009. 

Source: Home Channel News

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Home Prices Fall Near 2009 Lows

Tuesday, March 29, 2011

January home prices fell for the sixth month in a row, nearing the housing market's 2009 lows.

The S&P/Case-Shiller home price index covering 20 major markets fell 3.1% year-over-year, and was down 1% compared with December 2010.

After rebounding nearly 7% off their post-bubble lows, prices have fallen more than 5% since July and are only 1.1% higher than the bottom set in April, 2009.

"January brings us weakening home prices with no real hope in sight for the near future," says David M. Blitzer, a spokesman for S&P.

The dismal report followed other negative housing market indicators recently. Sales of existing homes were off nearly 10% in February and new homes sales were at a record low.

"The housing market recession is not yet over," said Blitzer, "and none of the statistics are indicating any form of sustained recovery. At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing."

Pat Newport, a housing market analyst for IHS Global Insight sees little prospect of a turnaround soon.

"There's just a lot of inventory glut out there," he said, "and that's why housing prices are dropping. The low prices help clear out the glut."

Anthony Sanders, director of Real Estate Entrepreneurship at George Mason University, pointed out that home prices have fallen despite extremely low interest rates, which have dramatically reduced the monthly mortgage costs for buyers.

"If interest rates climb, that could be the tipping point into the double dip," he said.

Only two of the 20 markets covered by the survey recorded year-over-year gains and prices in one of those, San Diego, were up only 0.1%. Washington reported the only substantial increase, up 3.6%.

Prices fell 9.1% in Phoenix, compared with January, 2010, more than any of the other markets covered. Detroit dropped 8.1% and Minneapolis fell 7.6%. The biggest month-over-month drops were in Minneapolis, down 3.4%; Seattle, which dipped 2.4%, and Chicago, which fell 1.8%. Only Washington reported a gain for the month, up 0.1%.

Newport expects the price drops to continue most of the year, and says that it's only a matter of time before the market enters a double dip.

"I think prices will drop another 5% to 10%," he said. "The double dip will hit in the next couple of months."  

Source:CNNMoney

World Events Affect Your Mortgage Rate

Tuesday, March 29, 2011

As world events dominated the news in recent weeks, mortgage rates enjoyed a reprieve from a climb that began late last year, keeping the 30-year fixed-rate mortgage down below 5% at the start of what is traditionally the home buying and selling season.

While multiple factors move mortgage rates and it's impossible to pinpoint the exact reason why they're up or down, we do know this: The tsunami and subsequent nuclear disaster in Japan likely caused a flight to quality by worried investors, moving more money from riskier investments into safer U.S. Treasury bonds and mortgage-backed securities, said Robert Rauf, a mortgage banker with Real Estate Mortgage Network in Manasquan, N.J. Ditto for conflicts in the Middle East, including the current situation in Libya.

That flight to quality by investors, in turn, caused mortgage rates to drop.

The average rate on 30-year fixed-rate mortgages was 5.05% for the week ending Feb 10, according to Freddie Mac's weekly survey of conforming mortgage rates. The Libyan revolt began in mid-February, on the heels of the uprising in Egypt. The tsunami in Japan occurred March 11.

And by the week ending March 17, rates on the mortgage had fallen to an average 4.76%, Freddie Mac reported.

Rates are up a bit since, averaging 4.81% for the week ending March 24; that rise may be due to inflationary pressures, Freddie Mac's chief economist Frank Nothaft said on Thursday.

Or, the leveling off could also signal something else: Investors are getting past the "initial shock/panic/concern which accompanies such events," Keith Gumbinger, vice president of HSH Associates, a publisher of consumer loan information, wrote in an email.

"Fear of thousands dead has turned into reality; fear of a nuclear disaster has turned into a reality, fear that civil unrest in any number of countries would turn deadly has become a reality. We're passing the fear and adapting to the reality," he wrote, "and after a period of assessment, this often tends to level off interest rates and see them return to pre-event path (if perhaps with lesser velocity, in some cases)."

That said, mortgage rates still seem to be suppressed somewhat by the effects of recent world events. And if conditions continue to worsen in Japan or the situation deteriorates further in Libya, rates could face more downward pressure, said Dan Green, loan officer with Waterstone Mortgage, in Cincinnati.

But this effect typically doesn't stick around too long.

For mortgage rates, investors' flight to quality is a good thing — temporarily, Rauf said. Eventually, fear wears off, and people want back the money they socked away in safe havens to invest elsewhere.

In the future, some think the costs of cleanup of the Japan disaster could end up boosting mortgage rates more, Rauf said. Japan is a major holder of U.S. securities, and the country — as well as insurance companies settling claims — will likely need to sell off a chunk of U.S. investments to pay for the crisis, he said. "The extra supply [of U.S. securities] will end up driving the price down and the yield up," Rauf said. That could cause mortgage rates to rise.

But Bob Walters, chief economist for Quicken Loans, said while Japanese expenses will be large, unwinding of positions won't happen at once and shouldn't impact mortgages severely.

And of course, while rates have been influenced heavily by international news lately, domestic issues could cause rates to rise, too. For example, the Treasury Department recently said it would begin selling back mortgage-backed securities that it bought to support the mortgage markets, and that could also boost rates higher, Rauf said.

In the long run, what happens with rates depends on when the economies of the world start improving appreciably and "how the central banks of the world will unwind all the stimulus, the medicine it has pumped into the patient," Walters said.

In Walters's opinion, rates won't move too much — remaining in the ballpark of 4.5% and 5.5% — throughout the year. That basically mirrors the most recent Freddie Mac forecast, which has rates on the 30-year fixed-rate mortgage slowly rising to 5.5% in the fourth quarter of this year.

Even at 5.5%, rates are low, historically speaking. But at under 5%, they're near record lows. "Realistically, rates right now are flirting around the 40-year low mark," Rauf said. "The problem is, everyone is spoiled."

The recent dip in rates helps those in the market for a mortgage to lock in lower rates, but they should move soon, Green said. "I've been recommending to clients: The current market is a gift — they should be locking right now," he said.

Source: Yahoo Finance

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Home Prices Falling in Most Major US Cities

Tuesday, March 29, 2011

Home prices are falling in most major U.S. cities, and the average prices in four of them are at their lowest point in 11 years. Analysts expect further prices declines in most cities in the coming months.

The Standard & Poor's/Case-Shiller 20-city index released Tuesday shows price declines in 19 cities from December to January. Eleven of them are at their lowest level since the housing bust, in 2006 and 2007. The index fell for the sixth straight month.

Home values in Atlanta, Las Vegas, Detroit and Cleveland are now below January 2000 levels.

The only market where prices rose was Washington, where homes prices gained 0.1 percent month over month.

"The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery," said David M. Blitzer, chairman of the Index Committee at Standard & Poor's.

The pain is not uniform, however. It is worse in cities where foreclosures and short sales are dominating the market and pushing home prices down. That includes Detroit and Cleveland, which are struggling with weak local economies. Miami, Phoenix, Las Vegas and Atlanta are reeling from overbuilding during the housing boom.

California cities are faring better. San Diego was the only city besides Washington where home prices have risen year over year.

Home prices in the nation's capital are up 3.6 percent year over year and have risen nearly 11 percent since they bottomed out in March 2009. And among the 20 cities, prices there have held up the best since 2000, appreciating almost 84 percent.

The Case-Shiller report measures home price increases and decreases relative to prices in January 2000 and gives an updated three-month average for the metropolitan areas it looks at.

Source: Associated Press

Pending Home Sales Unexpectedly Rise in February

Monday, March 28, 2011

Pending sales of previously owned U.S. homes unexpectedly rose in February, a trade group said on Monday, pointing to a modest pick-up in home sales.

The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in February, increased 2.1 percent to 90.8.

Economists had expected the index, which leads existing home sales by a month or two, to fall 1.0 percent after a previously reported 2.8 percent decline.

"We may not see notable gains in existing-home sales in the near term, but they're expected to rise 5 to 10 percent this year with the economic recovery, job creation and excellent affordability conditions providing confidence to buyers who have been on the sidelines," said NAR chief economist Lawrence Yun.

Compared to February last year, the index was down 8.2 percent.

Source: Reuters

13% of All U.S. Homes Are Vacant

Monday, March 28, 2011

High residential vacancies are killing many housing markets, as foreclosed homes sit on the market and depress sale prices and property values.

And it's only getting worse: The national vacancy rate crept up to just over 13% according to last week's decennial census report. That's up from 12.1% in 2007.

"More vacant homes equal more downward pressure on home prices," said Brad Hunter, chief economist for Metrostudy, a real estate information provider.

Maine had the highest proportion of empty housing stock, at 22.8%. Other states with gluts of empty houses included Vermont (20.5%), Florida (17.5%), Arizona (16.3%) and Alaska (15.9%).

The way the census calculates the vacancy rates, however, is problematic. It includes properties such as ski lodges, beach houses and pied-à-terres that many real estate statisticians would not.

These are often summer homes or second homes, but census lumps them together with homes that have been sold but not occupied, empty homes for sale or rent, and homes used by migrant workers. Basically, anything other than a primary residence is considered vacant.

"You can only live in one home," said William Chapin of the Census Bureau's Housing Statistics Branch. "If you own five homes that you occasionally live in, four of them will be counted as vacant."

But Paul Bishop, the vice president for research for the National Association of Realtors, countered that these properties aren't vacant in the usual sense of the term. "A vacation home is hardly the same situation as a foreclosed home that has been taken back by the bank," he said.

In Maine, more than two-thirds of the 160,000 vacancies were vacation homes in 2009; Vermont had a similarly high concentration.

Compare them with Connecticut, which has a vacancy rate of just 7.9%, the lowest of all the states. If you back out the vacation properties from the statistics, the states have very similar vacancy rates: 6.1% for Connecticut and 7% for Maine.

Some states have high vacancy rates even after backing out the second homes: Florida's is about 10%; Arizona's is 10.7%; and Nevada's 11.4%.

Source: CNNMoney

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New Home Sales Slowest in at Least a Half-Century

Wednesday March 23, 2011

Home construction in the United States is all but coming to a halt.

Americans are on track to buy fewer new homes than in any year since the government began keeping data almost a half-century ago. Sales are now just half the pace of 1963 -- even though there are 120 million more people in the United States now.

The sliding sales show just how far the housing market has fallen since the bubble burst four years ago. And they're a blow to the economic recovery as it draws strength from other places.

Diminished sales have driven the median price of a new home down to about $202,000, the lowest since 2003. If the sluggish sales continue, analysts say, small homebuilders will fold, meaning less competition as the market improves and higher prices later.

"The longer it goes on, the more builders will drift away from the industry altogether," said Paul Ashworth, chief U.S. economist of Capital Economics.

Ashworth noted that a surge in foreclosures is forcing down prices for previously occupied homes even faster than they're falling for new homes. As a result, new homes are less attractive to buyers.

"That's not going to change for at least another year or two," Ashworth said. "Under these conditions, you can't really see homebuilders willing to ramp up, and that's bad for buyers."

Sales of new homes plunged in February to an annual rate of 250,000, the Commerce Department said Wednesday. It was the third straight monthly drop. The pace is far below the pace economists say is healthy, about 700,000 a year.

Last year, 323,000 new homes were sold -- the worst year on record and the fifth straight year of declines. Economists don't expect this year to be any better and say it could take two years or more before sales return to a healthy pace.

In 1963, when the U.S. population was about 190 million -- compared with today's nearly 310 million -- far more new homes were sold: 560,000.

New homes have accounted for just 5 percent of all sales so far this year. They typically represent closer to 15 percent. There were just 183,000 new homes available for sale in February, the smallest supply in four decades.

The median price of a new home is now 30 percent higher than that of a resold home, twice the typical markup in a healthy economy.

Builders have responded by scaling back. In February, they broke ground on only about 40 percent of the number of homes they typically do in normal markets.

That decline in activity is weighing down the construction industry, which in the past has fueled economic recoveries. It's also slowing the broader economy. Each new home creates an average of three jobs for a year and $90,000 in taxes, according to the National Association of Home Builders.

People are still looking at new homes, builders say. But many would-be buyers say they can't justify the cost.

For starters, it's cheaper to buy used -- especially if you can get a foreclosed home or a short sale, when lenders let homeowners sell for less than they owe on their mortgage.

Banks are imposing tougher standards for loans and requiring bigger down payments. And many people are nervous about entering the market, fearful that home prices have yet to reach the bottom.

Gregory F. Ugalde has been encouraged by increased foot traffic at his model homes in recent months. But Ugalde, president of Connecticut homebuilder T&M Building Co., is building only about a third of the homes he did before the housing boom began in 2003.

"Over the past year, we thought the recovery in our industry would be right around the corner," Ugalde said. "It's like they're teasing us."

Buyers say the same could be said for builders.

Source: Associated Press

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New Home Sales Tumble to Record Low

Japan Earthquake Unlikely To Affect N. American Timber Prices for Months, Experts Say

Tuesday, March 22, 2011

Aside from a run up in timber companies' stock prices, the earthquake and tsunami that devastated northern Japan are more likely to have a long-term than a short-term influence on the price and availability of North American lumber, a number of experts tell ProSales.

One of the unknowns is when a devastated Japan will be able to get back into a position to rebuild, they say. Another is whether Japan will revise its building codes in ways that will favor North American lumber. And a third involves how timber companies will weigh potential opportunites in Japan against already hot sales in China.

Japan imported $10.4 billion worth of wood products last year, putting it No. 3 on world rankings, Bob Flynn, director, international timber, for the RISI research firm noted earlier this month at a conference in Amsterdam. "Because Japan was already such a large import market for wood products, any jump in demand due to reconstruction efforts will have significant global impacts on the markets," RISI reported. "Although the news media reports today that investors are already flocking to timber stocks because of this anticipated reconstruction effort in Japan, we caution that the timing of market impacts may not be so immediate. Given the scale of the damage to infrastructure in northeast Japan, it will likely take months before any meaningful reconstruction effort can be organized and implemented."

Even when it does recover enough to be able to start rebuilding, Japan's purchase patterns are likely to be slow and limited, the experts said. John Bavester of Progressive Affiliated Lumbermen, a Grand Rapids, Mich.-based co-op, noted that it took several years for rebuilding to take place in areas like south Florida and New Orleans after hurricanes Andrew and Katrina roared through. Some experts figured it will be a year before Japanese buying affects the market, just as it did after the Kobe earthquake in 1995.

Others noted that mills and dealers that handle southern yellow pine and eastern white pine are unlikely to see any impact at all, as virtually all of Japan's North American imports involve West Coast timber in general and wood from British Columbia in particular.

"But, when the reconstruction effort does kick in, which suppliers are most likely to benefit?" RISI asked in its commentary. "Sawmills in Japan (outside of the region of damage) will no doubt try to accelerate production, and this will require increased imports of softwood logs. The United States and Canada accounted for over 70% of Japan's softwood log imports in 2010, and it is logical to assume that suppliers in North America will see the greatest increase in demand from Japanese customers For New Zealand log exporters, Japan was only the fourth largest market in 2010 (trailing China, Korea and India) and Chinese buyers this year are again sucking up most of the available sawlogs in New Zealand. Japanese buyers had already turned away from Russian log suppliers, given the uncertainty and greater cost resulting from the Russian log export tax. While it is possible, given the magnitude of the situation in Japan, that buyers might decide to return to importing more Russian logs, it is most likely that the long-term, reliable log suppliers in North America will see the largest uptick in demand."

RISI also asked rhetorically whether Canada's sawmills will be able to accommodate a surge in demand from Japan given how much wood the Canadians are selling to China. It even asked whether Canadians will want to meet short-term demand from Japan at the expense of long-term sales to China.

Another long-term question concerns whether Japanese building codes and practices will change as a result of the earthquake. Typically, the experts said, every disaster such as an earthquake, tsunami, or hurricane teaches contributes to building science and ultimately leads to adjustments in codes. Some experts speculated that the latest earthquake would make Japanese more amenable to wood construction rather than building with concrete. If that happens, West Coast timber companies definitely would benefit.

Source: PROSALES Information Service

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Existing Home Sales Dive, Prices Near 9-Year Low

Monday, March 21, 2011

Sales of previously owned U.S. homes fell unexpectedly sharply in February and prices fell to their lowest in nearly nine years, an industry group said on Monday.

The National Association of Realtors said sales fell 9.6 percent month over month to an annual rate of 4.88 million units, snapping three straight months of gains. The percentage decline was the largest since July.

Economists polled by Reuters had expected February sales to fall 4.0 percent to a 5.15 million-unit pace from the previously reported 5.36 million unit rate in January, which was revised slightly up to 5.40 million.

Compared with February last year, sales were down 2.8 percent.

The median home price dropped 5.2 percent in February from a year earlier to $156,100, the lowest since April 2002.

Source:  Reuters

Fannie and Freddie Earning Respect

Friday, March 18, 2011

The debate on Fannie Mae and Freddie Mac is slowly beginning to change -- it just may be a while before anyone in government has anything nice to say about the mortgage giants. Last month, the Treasury Department released a white paper announcing its intention to wind down both institutions. However, as a panel of housing experts convened by the trade group SIFMA discussed Wednesday, that will take five years at the very least, and likely far longer.

"The Treasury and the administration did a very politically astute job with respect to that statement," said Kent Colton, senior fellow at Harvard University's joint center for Housing Studies, addressing Jeff Foster, a senior Treasury official who had just finished speaking. "One way I've said it is you've called the House Republicans' bluff."

Colton explained that though he is a Republican, he believes the U.S. housing market is too fragile to recover without Fannie and Freddie standing behind it for at least the next few years.

He is not sure all Republicans in Congress understand enough about housing finance to understand why Fannie and Freddie are so important. However, if the Democratic administration is not insisting Fannie and Freddie stick around, it makes it harder for Republicans who would like to use the institutions as symbols of the evils of big government Democrats.

"This way they let some of the political steam boil off so we can have a good debate," Colton says of the administration.

The administration is safe in saying it wants to do away with Fannie and Freddie because -- as Colton and other experts agreed -- they aren't going anywhere for a good long while.

That doesn't necessarily mean they will still be two entities, or that they will still be called Fannie and Freddie, argues Laurie Goodman, senior managing director at Amherst Securities.

Goodman believes Fannie and Freddie will be profitable by 2013 or 2014, and she sees a 25% chance the Government-sponsored enterprises "will survive, but in a slightly different form: that is you do a very, very substantial cosmetic change. You merge the entities, you recapitalize them, you rename them and they have a catastrophic government guarantee, rather than a bunch of securitizing entities. That is, these choices may morph over time and in particular to the extent they morph, they're going to morph in the direction of saving more and more of the current system," she says.

The cost of that government-heavy system, insofar as it is symbolized by Fannie and Freddie, is beginning to look a bit more palatable, however.

Goodman is far from the only housing expert to argue that Fannie and Freddie could soon be profitable. Graham Fisher & Co. managing director Josh Rosner recently argued at an event hosted by Bloomberg that the GSEs.

This will be music to the ears of hedare likely to achieve that feat this yearge fund contrarians who have been buying Fannie and Freddie preferred shares at pennies of the dollar. One of those contrarians even thinks a General Motors-style IPO may be in the cards for the GSEs.

Even the White House is quietly optimistic. Quietly may be the operative word, but Fortune.com's Colin Barr recently pointed out that the White House budget projects Fannie and Freddie will start generating cash for taxpayers in 2013.

Anything that makes Fannie and Freddie more palatable to Americans is probably a good thing, since Tom Vartanian, partner at Dechert, contends that even the minimum of five to seven years that Goodman and Colton think it would take to wind Fannie and Freddie is too short a timetable.

Vartanian, a former banking regulator, told the SIFMA attendees he had participated in closing "about 500 institutions," and said the average wind down of a bank in receivership is about five to seven years.

He thought it would be "too complicated" to put Fannie and Freddie in receivership. "There's too many interests involved and it would be too cataclysmic."

The "only other way," Vartanian said, is winding down the GSEs while they remain in conservatorship.

"It's going to be a long, long wind down. I don't think it's going to be five to seven years. It doesn't look anything like your normal commercial bank," he said.

Source: Yahoo Finance

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Young Buyers Will Lead Housing Market Recovery, Says NAHB

Thursday, March 17, 2011

Generation X -young families and adults ages 31 to 45 - are likely to lead the home buying recovery as it gets underway, according to real estate experts who spoke at an educational webinar produced by the National Association of Home Builders (NAHB). 

These potential home buyers are most likely to think it's a good time to get off the fence - and have strong opinions about the design features their new homes will include.

At 32 percent of the population of home-buying age - generally defined as those who are at least 30 years old, the Gen X population cohort isn't the largest, but it's the most mobile, said presenter Mollie Carmichael, principal of John Burns Real Estate Consulting in Irvine, Calif. "They are in full force with their careers and they need to accommodate growing families," she said.

In sharp contrast, even though they constitute 41 percent of prospective home buyers, Baby Boomers continue to wait for the market to improve, and their decisions to delay retirement also delay their decisions to downsize into a smaller home, Carmichael said. 

Most of the 10,000 buyers and potential buyers in 27 metro areas that the consulting company surveyed were optimistic about a new home purchase, with between 85 percent and 89 percent saying that it was a good time to buy a home.  Only 13 percent said they thought home prices would continue to fall, further evidence that it's "not all about price," she said. "They want something compelling, from a design or personalization standpoint," said Carmichael. 

In addition, though the average home size is shrinking, a majority of prospective buyers said they would like a bigger home than the one they have.  "These are first-time buyers or younger families looking for more room to grow," she said.

Seventy percent said that they were willing to pay $5,000 more for a green home, but those responding to the survey said that they expected new homes to already have many green technology features. They also said they would pay a premium for dark wood cabinets, a separate tub and shower and a fireplace in the living room, and more preferred a great room over formal spaces.

And while community amenities are important to Gen X buyers, 46 percent said they prefer a home in a large-lot, suburban development, versus the 21 percent looking for a traditional or "walkable" neighborhood.

Webinar panelist Heather McCune, director of marketing at Bassenian/Lagoni Architects in Newport Beach, Calif., also emphasized that design will be important in generating sales in the emerging marketplace. "The notion of 'build it and they will come' no longer works. Design matters," she said.

McCune said buyers are looking for homes with a connection between indoor and outdoor spaces, even in colder climates, to create the perception of greater home size, even if the space is only usable for part of the year. They also want more storage, an open floor plan and flexibility in the garage.

"While Gen X numbers are smaller than the birth cohorts before and after them, their numbers have been enlarged by steady immigration," said NAHB Chief Economist David Crowe. "Gen X may wait longer than their predecessors to establish their own household or buy a home because of the recent recession impacts, but the trends are still likely to occur as they have for past generations."

Source: NAHB

Average Rate on 15-Year Mortgage Dips Below 4 PCT.

Thursday, March 17, 2011

Fixed mortgage rates tumbled this week and the 15-year loan dipped below 4 percent for the first time in three months.

Freddie Mac says the average rate on the 15-year fixed mortgage dropped to 3.97 percent from 4.15 percent. The last time the rate was below 4 percent was in mid-December. It reached 3.57 percent in November, the lowest level on records dating back to 1991.

The average rate on the 30-year fixed mortgage fell to 4.76 percent from 4.88 percent the previous week. It hit a 40-year low of 4.17 percent in November.

Mortgage rates tend to track the yield on the 10-year Treasury note. Those yields have tumbled as investors sought safer investments on fears that Japan's earthquake and ensuing nuclear crisis could slow economic growth.

Source: Associated Press

Builders Urge Congress to Restore Flow of Credit to Housing

Wednesday March 16, 2011

New-Home Construction Plunges in February

Wednesday March 16, 2011

Builders broke ground last month on the fewest homes in nearly two years and cut their requests for permits to start new projects to a five-decade low. The decline in construction activity is the latest evidence that the housing industry is years away from a recovery.

Home construction plunged 22.5 percent in February from January to a seasonally adjusted 479,000 homes, the Commerce Department said Wednesday. It was the lowest level since April 2009 and the second-lowest on records dating back more than a half-century.

The decline followed a surge in highly volatile apartment construction in January, which pushed the overall construction rate up to more than 600,000 units -- the fastest rate in 20 months. Still, the building pace has been far below the 1.2 million units a year that economists consider healthy.

Economists say falling prices, sluggish sales and the weak construction rate all point to a housing market that is years away from a recovery.

"There are really large structural problems with the housing market," said Dan Greenhaus, chief economic strategist with Miller Tabak + Co. "This is not a run-up in oil prices. This is a multiyear build up in the housing market that is going to take more than several months or several quarters to get through."

Single-family homes, which make up roughly 80 percent of home construction, fell 11.8 percent in February. Apartment and condominium construction dropped 47 percent, reversing much of January's gains.

Building permits, an indicator of future construction, fell 8.1 percent last month to the lowest level on records dating back to 1960. Permit requests for single-family homes saw the biggest decline. Apartments and condos remained flat.

Analysts said year-end building code changes in California, Pennsylvania and New York caused an artificial spike for permit requests in December and housing starts in January. Builders in those states rushed to file new permits before those changes went into effect.

Even with those gains, the housing market has struggled. Millions of foreclosures have forced home prices down and more are expected this year. Tight credit has made mortgage loans tough to come by. And some potential buyers who could qualify for loans are hesitant to enter the market, worried that prices will fall further.

The drop in home construction activity was felt coast to coast. It fell 48.6 percent in the Midwest, 37.5 percent in the Northeast, 28 percent in the West and 6.3 percent in the South.

The volatile housing market is weighing on the overall economic recovery. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.

The trade group said Tuesday that its index of industry sentiment for March improved slightly to 17. That was the first gain in five months after four straight readings of 16. Still, any reading below 50 indicates negative sentiment about the housing market's future. The index hasn't been above that level since April 2006.

Source: Associated Press

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Tuesday, March 15, 2011

As the April 18 federal income tax filing deadline approaches, many American homeowners are realizing the financial benefits of homeownership--savings that can add up to tens of thousands of dollars over several years.

"The mortgage interest deduction is one homeownership tax incentive that has been part of the tax code for nearly 100 years," said Bob Nielsen, chairman of the National Association of Home Builders and a home builder from Reno, Nev. "Incentives such as this have helped millions of American families be able to afford a home of their own."  

A study from NAHB economists, "The Tax Benefits of Homeownership," details sample savings for a variety of income levels and homeownership situations. In one example, a household with an $80,000 annual income that buys a home with a $200,000 mortgage will save on average $1,765 in the first year--and realize a total benefit of $41,138 over the expected period of homeownership.

The three most important sources of tax savings for homeowners are: deductions for mortgage interest; deductions for real estate taxes; and the capital gains exclusion for the sale of a principal residence. 

Homeowners who itemize their federal income tax deductions can deduct 100 percent of their mortgage interest payments on a first or second home for up to $1 million of mortgage debt, as well as interest paid on up to $100,000 of home equity loans.

State and local real estate taxes paid each year on an owner-occupied home are also deductible.

Mortgage insurance premiums--generally required when a home is purchased with a down payment that is less than 20 percent of the mortgage loan amount--can be deducted from taxable income as well.

When it is time to sell their home, most taxpayers don't have to pay capital gains tax on the profit from the sale. Under present law, married couples who have owned and occupied their principal residence for at least two of the past five years do not have to pay any taxes on the first $500,000 in profits from the sale of their home. Single filers earn up to $250,000 tax free.

Homeowners rely on the mortgage interest deduction each year to help offset the costs of homeownership, but the deduction is in danger as a national deficit commission has proposed reducing or eliminating it as part of a restructuring of the tax code.

The NAHB website SaveMyMortgageInterestDeduction.com provides the study "The Tax Benefits of Homeownership" and additional information about the threat to the mortgage interest deduction.

Source: NAHB

Builder Confidence Up One Point

Thursday, March 15, 2011

Builder confidence in the market for newly built, single-family homes improved by one point in March to 17 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This is the highest level since May 2010, when the survey period corresponded with the final days of the federal home buyer tax credit program. 

"While many home buyers are still holding off on making a purchase, builders did indicate slightly increased optimism about the future with a two-point gain in the HMI component gauging sales expectations for the next six months," said NAHB chief economist David Crowe. "In fact, prevailing indicators portend some improvement in the overall economy, which should generate modest housing market gains later this year. 

“Unfortunately, most small builders report that they are no more able to obtain credit for new construction today than they have been in the past year, and this is a major impediment that is keeping them from putting their crews back to work,” he added.

The NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores from each component are used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor. 

Two out of three of the HMI's component indexes were unchanged in March, including the component gauging current sales conditions, which held at 17, and the component gauging traffic of prospective buyers, which held at 12. The component gauging sales expectations in the next six months rose two points to 27, its highest level since May 2010.

Regionally, HMI results were mixed. The Northeast posted a one-point decline to 20, the Midwest was flat at 12, the South gained two points to 20, and the West gained four points to 17. 

Source: Home Channel News

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Builders Support Five-Year Extension of National Flood Insurance Program

Friday, March 11, 2011

The National Association of Home Builders (NAHB) today voiced strong support for congressional efforts to extend the National Flood Insurance Program (NFIP) for an additional five years to provide ongoing flood insurance protection for property owners and ensure the nation's real estate markets operate smoothly and without delay.

Testifying before the House Financial Services Subcommittee on Housing and Community Opportunity, NAHB First Vice Chairman Barry Rutenberg, a home builder from Gainesville, Fla., said that the home building industry depends upon the NFIP to remain available, affordable and financially sound.

"A strong, viable national flood insurance program helps ensure the members of the housing industry can continue to provide safe, decent and affordable housing to consumers," said Rutenberg. "We are pleased to see the subcommittee propose a five-year extension of this important program."

The federally-backed flood insurance program suffered unprecedented losses stemming from the devastating 2004 and 2005 hurricane seasons, with combined claims from these two years exceeding the total amount paid during the previous 37-year existence of the NFIP program.

As Congress moves to reform the NFIP to ensure its financial stability, Rutenberg urged lawmakers to proceed with care, noting that it is not simply about flood insurance premiums and payouts, but also a comprehensive program that guides future development and mitigates against future loss.

"While a financially-stable NFIP is in all of our interests, the steps that Congress takes to ensure financial stability have the potential to greatly impact housing affordability and the ability of local communities to exercise control over their growth and development options," he said.

During the past several years, the NFIP experienced several short-term lapses in authorization, forcing many home buyers to delay or cancel closings due to the inability to obtain flood insurance for a mortgage. In other instances, builders were forced to stop or delay construction on new homes due to the lack of flood insurance approval, adding unneeded delays and job losses.

To improve the solvency of the program and its attractiveness to potential policyholders, NAHB supports a number of reforms designed to allow the Federal Emergency Management Agency (FEMA) and the NFIP to better adapt to changes in risk, inflation and the marketplace:

·               Increasing coverage limits to better reflect replacement costs would provide more assurances that the legitimate losses will be covered and benefit program solvency by generating increased premiums.

·               Creating a more expansive "deluxe" flood insurance option, or a menu of insurance options from which policyholders could pick and choose, could provide additional home owner benefits while aiding program solvency.

·               Raising the minimum deductible for paid claims would provide a strong incentive for home owners to mitigate and protect their homes, thereby reducing potential future losses to the NFIP.

Established in 1968, the NFIP offers affordable flood insurance to home owners and businesses in flood plains and other low-lying areas that otherwise might not be able to obtain coverage.
More than 20,000 communities nationwide participate in the insurance program, which currently covers about 5.5 million policyholders.

Source: NAHB

9 Items Homebuyers Desire in 2011

Friday, March 11, 2011

Today's homebuyers want it all.

Some items on the shopping list: a home in great condition with rooms that can do double duty. Areas that mingle indoor and outdoor living -- patios, porches, decks and outdoor rooms -- are always a plus. And so are those features that offer a little luxury, like garden tubs, first-rate appliances and high-dollar countertops.

They're also going back to basics: searching for solid, well-maintained properties that will give them their money's worth.

"I think this year they're buying properties that are in good mechanical condition that have inherent value," says Ron Phipps, president of the National Association of Realtors.
But more than anything, buyers want to drive a hard bargain.

They want "great deals," says Patricia Szot, president of the MetroTex Association of Realtors. "And no matter where a seller prices their property, they're looking to negotiate."
Here are nine items popular with buyers this year:

Homes in Good Condition
Buyers demand homes that are well maintained, Phipps says. "There's not a lot of flexibility in that." The attitude is: "I'd rather spend the money getting into the house" and not have to spend more money later, he says. Buyers don't want an unknown expense hanging over their heads.

Pat Vredevoogd Combs agrees. "I'm not working with too many people who want a fixer-upper," says Combs, past president of the National Association of Realtors and vice president of Coldwell Banker AJS Schmidt in Grand Rapids, Mich.

One big reason: With most transactions, "buyers have limited amounts of cash," Phipps says. "Even if they want to do a fixer-upper, they don't have the money to do it."

"Buyers have enough money to buy," he says. "They don't have enough money to buy and improve. And the lenders make it really difficult."

Rock-Bottom Bargains
Buyers "are more focused on negotiating, drawing limits in their mind and focusing on the strategy," says Justin Knoll, president of the Denver Board of Realtors.

Some of it is a point of pride, he says. "They want to tell their friends and family that they really got a smokin' deal."

They "want value," says Alice Walker, president of the Greater Nashville Association of Realtors. "They are very picky. They're just a lot more critical. They are not going to settle because they know they don't have to."

Her advice to sellers: Repair, update, clean and stage. "You have got to remove every obstacle possible for the buyers," Walker says.

The more-for-less approach even holds when buyers consider bank-owned properties, says Joan Pratt, real estate broker, Re/Max Professionals in Castle Pines, Colo. "They want the short sales and the foreclosures and they want them to look like they're owner-occupied," she says. "They don't want to paint. They don't want to put carpet in. They don't want to clean."

And they're surprised when they don't find it, Pratt says.

Outdoor Living Areas
"The thing that we've seen over the past couple of years is more outdoor living areas," says Laurie Knudsen, president of the Charlotte Regional Realtor Association. Some popular features: Screen porches, outdoor kitchens, two-way fireplaces.

"It's a selling point if a house already has it," she says. And "it's going to make it more competitive on the market."

Incentives
Call it "Rock-bottom deals, part two."

Along with pricing, "it's all about incentives," says Mabel Guzman, president of the Chicago Association of Realtors. To pique buyer interest, sellers offer everything from gift cards for new furniture and paint to financial assistance at closing.

Szot agrees, and laments that it's made the road more difficult for sellers.

"Not only are (buyers) asking them to lower the price, but they are asking for a lot more," Szot says. "So negotiations are a lot more difficult now."

Practical Green Features
Call it "Yankee frugality," says Phipps. But what he sees on buyer shopping lists is a home that is easy on the planet because it's easy on the wallet.

Buyers are looking for things like triple-glazed windows, high-efficiency boilers and energy-efficient appliances. "The buyer of today wants to make sure that the ongoing operating costs of the house are as controlled and economical as possible," he says.

Another popular item: nontech green features. Buyers are looking at the sun exposure in relation to energy efficiency, he says. And that's something that will vary with the area and region, he says. "In some areas, you want larger overhangs to minimize the sun," Phipps says. "In my area (New England), lots of windows on the southern side to maximize the sun would be smart."

Open Kitchens
"The wall between the kitchen and the family room is evaporating," Phipps says.

"The kitchen is becoming part of the gathering space," he says. "And it's ironic -- it's the way it was 300 years ago. We've come full circle."

Repurposed Materials
Buyers like a material that looks or feels natural, even if it's not the genuine article, Phipps says. For example, "granite (for counters) is still popular, but it doesn't have to be granite," he says. "It can be stone, another natural material or something that looks like stone."

"We're seeing lots of different materials and lots of reusable materials, which is interesting," he says. "Also a lot of unusual uses of hardwood -- like pine flooring (reclaimed and) reused for counters," or terra cotta slabs -- beautifully glazed -- used for countertops, he says.

Smaller, Less-Formal Homes
Buyers are buying smaller homes, but they want to be able to use and reuse every inch of space, Phipps says. "They are being much more strategic and efficient with how they use it."

Formal spaces that might only be used three or four times per year are disappearing. "The slipcover rooms are gone," says Phipps.

That's "led to a repurposing of space," he says. Formal living rooms have been added to great rooms or converted into home offices or entertainment rooms.

"Three to five years ago, if they could get a loan that would get them into a McMansion with stone and tile and brick and more rooms than they needed, they would do it," says Jeff Wiren, president of the Portland Metropolitan Association of Realtors. "Now they're saying 'I don't know if I want to heat that place and clean it.' They're being much more realistic."

Touches of Luxury
Buyers like luxury. And sometimes the amenities that convey that feeling of living large are relatively simple or inexpensive.

One example: coffee bars in the master bedroom. "It's like a butler's pantry in your bedroom," Pratt says. "An area for your coffee pot and accoutrements and a little fridge."

The feature has been popular, especially in high-end homes, for about five years, she says.

Another luxury touch: high-dollar finishes in less-expensive homes, Knoll says. Granite counters and stainless steel appliances, marble tiles in the bathrooms and vessel or undermount sinks continue to impress, he says.

Buyers also like "a living space where you can have barstools and do some entertaining," he says.

Says Knoll, "There is a sex appeal about housing, and they do get excited about those kinds of things."

Source: Yahoo Finance

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New Rules for First-Time Home Buyers

Thursday, March 10, 2011

Without a house to sell, first-time home buyers have had a field day in the depressed housing market. Until recently, anyway. A series of new rules, regulations and policies have changed the landscape, making buying that new home harder and more expensive.

Not long ago, first-time buyers accounted for 40% of home sales. Now they're down to 29% and falling, experts say, as first-time buyers confront a steady accumulation of rising fees, costs, and rates. This month, fees on most new mortgages will rise by up to 0.50%. In April, fees on small-down-payment mortgages, a first-time buyer favorite, will spike. Meanwhile, more lenders are requiring larger down payments, and new proposals from the Obama administration call for mortgages to become more expensive and limited in size.

The new fees and higher barriers to entry are all a response to the sweeping mortgage losses of the last several years. Banks and other lenders lost billions of dollars on subprime and other risky mortgages, and some must now buy back bad loans they sold to Fannie Mae and Freddie Mac. To cover those losses, banks and the agencies are raising fees on new mortgages, says Keith Gumbinger, a vice president at HSH Associates, which tracks the mortgage market. Also, from the perspective of lenders and the government, making it harder and more expensive to get a mortgage will deter or cull the riskiest borrowers and minimize defaults.

But taken in total, all this reform means the window of opportunity for first-time buyers may be closing. Home prices still seem to be near the bottom, mortgages are still cheap and, though they have increased over the past five months, interest rates are still low. Of course, there are still reasons to wait to buy: The changes to the mortgage market could depress home sales and prices further. But for those who don't want to wait, here are the new rules for first-time home buyers.

New rule: Put more money down.
Not because you'll have to — it's still possible to make a down payment of less than 5% — but because you want to. Insurance fees on the government-insured mortgages that require just 3.5% down have doubled in seven months, to up to 1.15% (as of April). On a 30-year, $300,000 mortgage, a buyer would pay $30,000 more in fees than if he had signed up for the mortgage in September. Also, between new lender requirements and cash-flush buyers, down payments have been rising since the last half of 2010 and now average 34% of the purchase price, according to the latest data by mortgage-data firm CoreLogic.

It's unlikely that a first-time home buyer can save so much money for a down payment, especially in high-priced markets like New York and San Francisco, says Cameron Findlay, chief economist at LendingTree.com, which tracks mortgage rates. Instead, first timers might need to consider alternative options to get cash, like grants offered by individual states. And most lenders still permit buyers to use cash gifts from family with a notarized letter from the donor stating that the money doesn't need to be paid back, says Gumbinger. Or, a buyer who's open to co-owning a home can sign up for a mortgage with a co-applicant who has extra cash to put down but wants a stake in the property.

New rule: Stay for a decade.
Not only are the days of flip-and-move long gone, but buying a house has become truly a long-term investment. In many cases, 10 years long, says Paul Bishop, vice president of research at the National Association of Realtors — if buyers are hoping to make a profit or just break even. As mortgage fees rise, buyers have to recoup larger costs, which takes a longer time. Also, experts predict very slow growth in home prices over the next 10 years, which means it will take a long time before sellers can make a profit, says Findlay. Of course, buying a home may still make financial sense, but buyers' focus should shift from rising prices to building equity.

For first-time buyers, this means avoiding homes that require renovations, if it's possible — it will only take longer to recoup the costs of a new kitchen or deck, says Findlay. Instead, stick to a home that requires few major projects, which builds equity with the passing of time. Also, a bigger down payment can cushion the blow for buyers who end up having to sell in a hurry, because it lessens the chances of owing more money on the home than it's worth should values drop.

New rule: Brace for competition.
Following the housing downturn, desperate sellers were often eager to accept an offer — any offer. But now, first-time buyers looking for discounted prices may be disappointed. Over the past few months, investors, international buyers, and downsizing retirees have made a noticeable impact on the market, because they're paying with cash. In January, about 32% of purchases were made with all cash, up from 26% a year ago, according to the NAR. Sellers are often more inclined to accept these offers since they don't need to wait for a lender to approve financing, says Karen Trainor, managing broker at Weichert Realtors in Ashburn, Va.

To stand out, first-time buyers can present an offer with few contingencies, she says. At this point, given growing competition among buyers, there's little reason for a seller to work with someone who requests repairs or asks them to cover the closing costs. But offers from buyers who ask strictly for a home inspection and appraisal — two requirements they shouldn't give up — are more likely to get accepted than all-cash bids with a long list of requirements.

Source: Yahoo Finance

Foreclosures Plunge 27% - Biggest Drop on Record

Thursday, March 10, 2011

Is our long national foreclosure nightmare ending?

The number of foreclosure notices filed in February dropped 14% compared with a month earlier and 27% compared with a year earlier, according to RealtyTrac.

That was the biggest year-over-year decline the company has ever recorded. But the improvement may be exaggerated, according to RealtyTrac CEO James Saccacio, who traced some of the decline to the fallout over robo-signing issues.

"Allegations of improper foreclosure processing continued to dog the mortgage servicing industry and disrupt court dockets," he said. "The industry is in the midst of a major overhaul that has severely restricted its capacity to process foreclosures."

Another contributing factor was the harsh winter weather that covered much of the country during the month. That delayed some of the paperwork processing and the serving of notices of default, notices of auction sales and other filings.

There were still more than 225,000 filings during the month, or one for every 577 homes. The banks repossessed 64,643 homes from delinquent borrowers, down significantly from the peak of about 102,000 last September.

The foreclosure fall flew in the face of other housing market reports that made it clear that housing is far from being out of the woods. S&P/Case-Shiller reported that prices are going down, and Zillow, the real estate website, said nearly 30% of borrowers with mortgages owe more than their homes are worth.

Looking to the future, the 50 state attorney generals seem to be making progress in their pursuit of a financial settlement with the banks over the robo-signing mess.

"We believe some of the servicers have slowed foreclosures as they wait to see how the settlement talks play out," said RealtyTrack spokesman Rick Sharga.

Worst-hit states
Three of the four "Sand States," Nevada (one filing for every 119 housing units), Arizona (one in 222) and California (one in 239) held their places at the top of the list of hardest hit states. Utah is the new number four, followed by Idaho, Georgia and Michigan.

Florida (one in 472), however, has slipped down the list to number eight. Filings dropped more than 65% year-over-year.

Part of the reason for Florida's improvement may have been the fall-out from the robo-signing issue. Foreclosures involve court hearings in the Sunshine State and many cases have been delayed by judges.

"Judicial foreclosure states recorded the most severe drops in foreclosures," said Sharga.

 Source: CNNMoney

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Health of Housing Market Hinges on Acces to Credit, Builders Tell Congress Washington

Wednesday, March 9, 2011

An improving job market should help boost home sales and housing production later this year, but the ongoing problems that builders are facing in acquiring construction credit threatens to significantly slow the fragile housing recovery, the National Association of Home Builders (NAHB) told Congress today. Testifying before the Senate Banking Committee on the state of the nation's housing market, NAHB Chief Economist David Crowe said that, "Without access to credit, the residential construction industry will lose more small businesses and experience more job losses, with these impacts being widely spread across the nation." Congress, regulators and financial institutions must work to restore acquisition, development and construction (AD&C) lending to permit home builders to contribute to the economy where and when housing demand emerges as the economy improves, he added. Given housing's ongoing weakness in the economy, Crowe urged Congress to proceed cautiously when debating housing finance and budget issues that will impact job creation and future growth. "When you consider the enormity of the total number of jobs attached to housing, a sector that accounts for 15 percent of our nation's GDP, now is hardly the time to step back from our nation's long-standing commitment to homeownership," said Crowe. Noting that more than 1.4 million residential construction jobs have been lost since April 2006, Crowe said that as the housing market slowly mends, it stands poised to contribute to job growth and boost economic output. "NAHB estimates that the construction of each single-family home creates three jobs; $90,000 in federal, state and local tax revenue; $145,000 in wage income; and $86,000 in net business income," he said. In addition to calling for congressional action to help open the flow of credit to home builders, Crowe urged lawmakers to take the following steps to restore the health of the housing industry and to help put America back to work: ·              

Agree to definite solutions regarding the future of government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac that ensure a stable, reliable and affordable supply of credit to home buyers and a liquid secondary mortgage market. ·              

Preserve the mortgage interest deduction and other housing tax rules, such as the capital gain exclusion, the real estate tax deduction and the Low Income Housing Tax Credit (LIHTC). If eliminated or weakened, these well-established housing policies would result in wealth losses for home owners, lower home values, rising foreclosures, a diminished local tax base for many communities, and in the case of the LIHTC, an abandonment of a successful policy that facilitates the production affordable housing. ·              

Call on federal regulators to enact a broad-based definition of a Qualified Residential Mortgage (QRM) that would be exempt from the risk retention rules under last year's Dodd-Frank financial reform law. An overly restrictive QRM definition would drive numerous lenders from the current residential mortgage market and could result in excessive downpayment requirements of 20 percent or more, which Crowe said would squeeze first-time home buyers out of the market for years to come, preventing household formations and producing economic damage to the overall economy. A Gradual Upturn Crowe pointed to several factors that conditions in the housing market should show modest improvement in the coming months: An improving economy and continued job growth, low mortgage rates that are keeping housing affordable, stabilizing home values and three years of sub-normal household formation rates that has created pent-up demand to help reduce some of the excess housing inventory.

Wednesday, March 9, 2011

At $9.4 billion, Los Angeles County, Calif. leads the country for counties spending the most money on remodeling, according to the National Association of Home Builders (NAHB). Rounding out the top 5 list is Cook County in Illinois, Orange and San Diego counties in California, and Maricopa County in Arizona. The NAHB model uses data from the American Housing Survey - which is funded by the U.S. Department of Housing and Urban Development and conducted by the U.S. Census Bureau - to estimate local remodeling based on home and home owner characteristics. It is then applied to the information on every county's homes and home owners that the Census Bureau released late last year from its American Community Survey. The new NAHB estimates include remodeling spending per owner-occupied home. "Total remodeling spending in a particular county is most strongly related to the number of home owners in the county," according to NAHB Chief Economist David Crowe. "On the other hand, we found that remodeling per home depends upon factors such as the share built before 1980, the share owned by married couples, and, most significantly, the average value of the homes." Nantucket County Massachusetts leads the nation on remodeling spending per home at $9,369. Other counties in the top five include New York County (Manhattan) and three counties in the San Francisco Metropolitan area. In each of these counties, remodeling is over $8,000 per owner-occupied home. In comparison, the average across all counties nationwide is $2,085. "Many remodelers are seeing increased interest from home owners on upgrading their home," said NAHB Remodelers Chairman Bob Peterson, CGR, CAPS, CGP, and president of Associates in Building & Design, Ltd. in Ft. Collins, Colo. "Investing in home remodeling brings the immediate satisfaction of enjoying a more comfortable dwelling, but can also support long-term home values." The counties with the highest total estimated spending on home remodeling:

1.            Los Angeles County, Calif. - $9.4 billion
2.            Cook County, Ill. - $4.6 billion
3.            Orange County, Calif. - $4 billion
4.            San Diego County, Calif. - $3.4 billion
5.            Maricopa County, Ariz. - $3 billion The counties with the highest estimated spending per owner-occupied home:
1.            Nantucket County, Mass. - $9,369
2.            Marin County, Calif. - $8,755
3.            New York County, N.Y. - $8,716
4.            San Francisco County, Calif. - $8,443
5.            San Mateo County, Calif. - $8,053

Source: NAHB

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Mortgage Applications Surge to Highest in Three Months

Wednesday, March 9, 2011

Applications for home mortgages jumped to the highest level in three months last week, buoyed by improvements in the job market, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 15.5 percent in the week ended March 4.

It was the highest level since the week ended December 10 and was the biggest increase since June 11.

The MBA's seasonally adjusted index of refinancing applications climbed 17.2 percent, while the gauge of loan requests for home purchases gained 12.5 percent.

"An improving job market is beginning to pave the way for an improving housing market," Michael Fratantoni, MBA's vice president of research and economics, said in a statement.

"Additionally, mortgage interest rates remained below 5 percent for a second week, maintaining affordability for buyers and leading to an increase in refinance applications."

Fixed 30-year mortgage rates averaged 4.93 percent in the week, up from 4.84 percent the week before.

Source: Reuters

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NAHB Study: Homes in 2015 Will be Smaller, Greener and More Casual

Monday, March 7, 2011

A recent study by the National Association of Home Builders (NAHB) shows that while consumer hesitations on home buying is waning, the recent housing downturn has changed what Americans are looking for in their next home.The survey research on consumer preferences, which is presented annually at the NAHB International Builders' Show, suggests that the severity of the recession has left an indelible mark on prospective home buyers, who have shifted their perspective on the housing they want and need.Builders surveyed expect homes to average 2,152 square feet in 2015, 10 percent smaller than the average size of single-family homes started in the first three quarters of 2010.To save on square footage, the living room is high on the endangered list - 52 percent of builders expect it to be merged with other spaces in the home by 2015 and 30 percent said it will vanish entirely."As an overall share of total floor space, 54 percent of builders said the family room is likely to increase," said Rose Quint, NAHB's assistant vice president for survey research. "That makes it the only area of the home likely to get bigger."In addition, the relative size of the entry foyer and dining room are likely to be diminished by 2015. However, opinions were fairly evenly divided on the fate of the kitchen, master bedroom and bath and mudroom, she said.The average new home of 2015 is likely to feature a great room comprised of the kitchen, foyer and living room; a walk-in closet in the master bedroom; a laundry room; ceiling fans; a master bedroom on the first floor in homes with two stories; and a two-car garage.In addition to floor plan changes, 68 percent of builders surveyed say that homes in 2015 will also include more green features and technology, including low-E windows; engineered wood beams, joists or tresses; water-efficient features such as dual-flush toilets or low-flow faucets; and an Energy Star rating for the whole house.

Source: NAHB

Saving Up For a Big Down Payment? Sucker!

Tuesday, March 7, 2011

Remember the Red Queen’s warning to Alice? “It takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast.”

That must be what it feels like to be saving up for a down payment on a home these days. Washington policymakers are entertaining several proposals that would raise the minimum down payment required for loans backed by Fannie Mae and Freddie Mac. Lenders are raising their own minimum cash requirements — the average down payment on new loans for home purchases is now around 27 percent, according to the Mortgage Bankers Association of America. Meanwhile, the Federal Housing Administration, the chief source of low down payment loans, is raising the fees it charges folks who only have minimal amounts of cash to the table.

Trying to save just the standard 20 percent? That could take you 14 years if you’re an average middle-class family looking for an average middle-class house, tCenter for Responsible Lending he reported recently. If you save $250 a month, it would take nine years to save a 10 percent down payment and six years to save a five percent down payment.

And that doesn’t seem to pay. If you think about the cost of paying rent for five or more years, you may be better off jumping into a home with a low down payment now. That’s true even if you have to spend more money on fees and mortgage insurance to get one of those low down payment loans. While nobody can predict interest rates with certainty, it seems unlikely that the mortgage terms you’d face down the road would be as favorable as they are now, with the Federal Reserve holding short term rates close to zero, and the government still backing loans via Fannie Mae and Freddie Mac.

Even if you have the money for a bigger down payment, there can be good reasons to save your cash. Mortgage rates continue to skirt all-time lows: Why not put your money to work for yourself and borrow as much as you can reasonably afford, on a monthly basis, at today’s rates? You can put the money you’re not paying into a down payment to work elsewhere. If home values rise, you will have done your best to leverage a small down payment into bigger equity. If they fall, you’ll have less skin in the game, and that could put more pressure on your banker to improve your loan terms lest you walk away.

The most popular source of low-down payment loans is the , which backs loans that cover as much as 96.5 percent of a home’s value. To get one of those 3.5 percent down payment loans, though, borrowers have to pay one percent up front and annual mortgage insurance premiums. Beginning on April 18, those premiums will rise 0.25 percentage points, to 1.1 percent for borrowers who put at least five percent down, and to 1.15 percent for borrowers who only put 3.5 percent down.

That may seem like a big price to pay, but the FHA plan Federal Housing Authoritybuys you a couple of advantages. An FHA loan may get you into the house years earlier, while rates and housing prices are low. And the actual mortgage rates for FHA loans are lower than traditional loans. Consider these figures calculated by Keith Gumbinger of HSH.com, a mortgage research firm, on the purchase of a $250,000 home:

* With a 3.5 percent down payment, you’ll need $8,750 in cash for the down payment plus $2,412 for the initial buy-in fee. At 4.87 percent interest, your monthly payment would be $1277 $1,507.
* With a five percent down payment, you’ll need $12,500 for the down payment and $2,375 for the buy-in fee. At 4.87 percent, your monthly payment would be $1,474. You’d need $3,713 more up front than with the 3.5 percent loan, and you’d pay just $33 a month less. It would take more than nine years of lower payments to make up for that $3,713.

* With a 20 percent down payment, you’ll need $50,000 for the down payment. There would be no upfront fee and no monthly insurance premium. But your rate would be higher, at 5.01 percent, based on today’s averages. Your monthly payment would be $1,075 — $399 less than the five percent loan and $432 less than the 3.5 percent loan. You’d have to save an additional $37,500 (how long would that take?), and it would take more than seven years of those lower mortgage payments to catch up.

It looks like the less you put down, the better off you are.  And if that extra monthly payment really starts to annoy you after seven or nine years, you can always refinance. With all of your payments and a little good luck in your market, you’ll have enough equity to avoid the mortgage insurance by then
.
Source:  Reuters

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Home Prices: The Double-Dip is Near

Thursday, March 3, 2011

That big sucking sound you heard last week? That was the air being taken out of the housing market by a slew of bad reports followed by some dire predictions by an industry bubble-spotter.

On Tuesday, we found out that home prices were near their post-bust lows. Two days later the government reported that January saw a double-digit dip in the number of new homes sold.

Then Robert Shiller, the Yale economist and co-founder of the S&P/Case-Shiller home price indexes, dropped this bomb: "There's a substantial risk of home prices falling another 15%, 20% or 25%," he said.

That's a stunning enough pronouncement to make house hunters consider putting purchases on hold. And that may not be a dumb move: If prices are near a double dip -- meaning they fell after the bust, rose a bit during recovery and are now heading back down -- there may be better deals ahead.

"There will be differences by market, but generally, you may get a big discount by waiting a year [to buy]," said Dean Baker, co-director of the Center for Economic and Policy Research, who thinks the price drop will be closer to 10% or 15%.

Baker looks at the ratio between local home prices and annual rents to judge whether markets are overvalued. If the median-priced home sells for more than 15 times the median annual rent, there's a good chance prices may come down.

On a national level, Shiller and other economists compare home price changes with income growth over the years. Before the bust, home prices had been outpacing earnings since the late 1990s.

Just to get that back to a normal ratio -- which we last saw in 1998 -- home prices would have to drop another 15%, according to Anthony Sanders, a director of Real Estate Entrepreneurship at George Mason University.

"Even after the bubble burst, the ratio of income to home prices is still way too high," he said.

Naturally, many disagree with these assessments. Karl Case, who co-founded the home price index with doom-sayer Shiller, believes that the market will "bounce along the bottom all year." If that's the case, buyers who take the plunge now shouldn't expect big profits if they sell in the next few years, but they shouldn't have to take a major hit either.

Besides, a home purchase is more than a potential investment, especially for families planning to stay put for a while. The big plus for them is the pleasure of living in their own homes.

"People should base their decision on affordability, lifestyle choices and home preferences, not on investment," said Lawrence Yun, the National Association of Realtors' chief economist.

Some stable areas, such as Texas and the Midwest, will probably not experience price plunges at all, but other markets, such as Seattle, Portland and inland California, could still fall substantially, according to Baker.

Even for the markets most likely to rebound, projected returns are minimal. Fiserv, which provides financial information and analysis, projects that the best performing market over the next two years will be Tacoma, Wash. -- and it will only record a price increase of 12%. That means those in average markets can only hope for single-digit returns.

With home-price gains so modest, it doesn't pay to buy unless you're pretty sure you'll stay for five years or more. "With high transaction costs, buying and selling, it probably will not work out financially," Baker said.

Nicolas Retsinas, of the Harvard Joint Center for Housing Studies, recently advised his own daughter about buying a home. She was returning to Providence, R.I., but it might only be for a few years.
He told her to rent -- not that it mattered. "Whose kids listen to them anyway?" he asked.

Even those with longer time horizons should not take it for granted that their purchases will pay off. Home prices could stagnate well into mid-decade.

Despite the gloom, many Americans remain confident about home buying. A survey released Monday by Fannie Mae revealed that 65% of people believe it's a good time to purchase, with 78% expecting prices will rise or remain the same over the next 12 months.

And buyers may take heart from some positive recent indicators, such as an up tick in the sales of existing homes in January; a drop in vacant rental homes; and more investors snapping up properties.

There's also been an upswing in the number of high-end homes -- those costing more than $750,000 -- being sold, according to Yun. The wealthy buyers of these properties have lots of choices of where to place their money and many are investing in real estate.

"The smart money is making their move," said Yun. 

Source:  CNNMoney

Source: NAHB

• Miami-Fort Lauderdale, Fla., 42%
• Los Angeles-Long Beach, Calif., 37%
• Orlando, Fla., 35%
• Riverside-San Bernardino-Ontario, Calif., 35%
• San Diego, 34%
• New York-Northern New Jersey, 32%
• San Francisco, 29%
• Las Vegas, 29%
• Tampa, Fla., 29%
• San Jose, Calif., 28%
• Sacramento, Calif., 28%

• Pittsburgh, 15%
• Louisville, Ky., and its Indiana suburbs, 15%
• Kansas City, 6%
• Cincinnati, 16%
• Raleigh, N.C. 17%

Source: MSN Real Estate

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Pending Home Sales Decline in January

Tuesday, March 1, 2011

Pending home sales are down in January for the second straight month, and are down 1.5% compared with the January 2010 figure, according to the National Association of Realtors (NAR).

The Pending Home Sales Index, a forward-looking indicator, declined 2.8% to 88.9 based on contracts signed in January from a downwardly revised 91.5 in December. The index is 1.5% below the 90.3 level in January 2010 when a tax credit stimulus was in place. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

The NAR pointed out that the current Pending Home Sales Index is 20.6% ahead of the cyclical low last June.

Lawrence Yun, NAR chief economist, points to the broader trend. “The housing market is healing with sales fluctuating at times, depending on the flow of distressed properties coming on the market,” he said

Source: Home Channel News

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Geithner to Congress: Revamp housing in 2 years

Tuesday, March 1, 2011

The Obama administration wants Congress to approve legislation within two years that gradually dissolves Fannie Mae and Freddie Mac, the nation's huge but financially feeble housing market giants, Treasury Secretary Timothy Geithner is telling lawmakers.

In remarks prepared for delivery Tuesday to the House Financial Services Committee, Geithner says failure to act by then would worsen market jitters and leave serious problems unaddressed. But in an apparent warning to some Republicans who want to quickly pull the government out of its role in supporting the mortgage system, he's also warning that acting too fast would hurt too.

"While we are confident that the steps we have laid out follow the right path, haste would be counterproductive -- possibly destabilizing the housing finance market or even disrupting the broader recovery," Geithner says.

The Treasury chief's testimony comes less than three weeks after the administration released a report proposing the dismantling of Fannie and Freddie and scaling back much of the rest of the federal role in housing, a process the administration has said should occur gradually over several years.
Geithner's setting of a time frame for the overhaul legislation underscores President Barack Obama's desire to start the clock on many of those changes.

"Reforming our country's housing finance market is an essential part of our broader efforts to help ensure Americans will never again suffer the consequences of a preventable economic crisis," Geithner says.

It's unclear whether major legislation such as this could be approved during next year's presidential election campaign, when partisan divisions heighten.

Fannie and Freddie guarantee or own about half of all U.S. mortgages. Along with other federal agencies, they played a role in nearly 9 of 10 new mortgages over the past year, as private lenders have remained nervous about making new loans. The two companies nearly collapsed in 2008 as the housing market crumbled, but have been kept alive with $150 billion -- so far -- in taxpayer dollars.

Congress is trying to decide how to reshape the federal role in the housing market, which remains weak, with low prices and huge numbers of foreclosures in Florida, parts of the Southwest and other regions. While both political parties concede that changes are needed to protect taxpayers and revive private lending, Republicans tend to want to move more strongly while Democrats express more concerns about maintaining the government's role in helping lower-income families.

To wind down Fannie's and Freddie's roles in the market, the administration also wants to take steps for which it does not need congressional action, such as decreasing the size of loans the two companies may buy. Geithner also reiterated administration plans to constrict the Federal Housing Administration's role in making loans. Some Democrats and consumer advocacy groups have complained that such actions will make it harder for many families to purchase homes.

The administration's report offered three options for overhauling Fannie and Freddie. One would limit the government to helping poor and middle-class borrowers through agencies like the FHA. The second would have the government back private mortgages, but mostly during times of economic crisis. The third would have the government "reinsure" some mortgage investments that are already guaranteed by private insurers.

The two companies buy mortgages from banks and other primary lenders, package them together and sell them with a guarantee that investors would be repaid in case of default. That system helps keep interest rates lower and provides lenders with fresh cash to make additional loans.

Source: Associated Press

Fewer in U.S. Deem Homeownership a Safe Investment

Monday, February 28, 2011

Homeownership as an investment is no longer the rock-solid foundation for the American Dream it once was, according to a survey released on Monday by the firm the government created in the 1930s to promote homeownership.

Fewer than two in three Americans now think owning their own home is a safe investment, down sharply from more than four out of five who thought it was a good investment less than a decade ago.

That attitude shift is likely to cause rents to rise as more Americans opt for renting over buying, according to the latest quarterly survey of attitudes toward homeownership from Fannie Mae, the largest provider of U.S. home mortgage funds.

The National Housing Quarterly Survey found just 64 percent of Americans think owning their own home is a safe investment, down from 70 percent at the beginning of last year and sharply lower than the 83 percent who thought it was a safe investment in 2003.

Last week, data released by the National Association of Realtors showed that home sales rose for third straight month in January, while the median home price fell to its lowest since April 2002.

An overhang of foreclose properties is weighing down the property market even as the broader economy appears to have entered a sustainable growth path.

"The public is aware that the demand side increase is going to be in the rental market, not the housing (purchase) market," Doug Duncan, chief economist at Fannie Mae, said in a telephone interview.

Growing demand for rental properties as the economy strengthens is set to lift underlying U.S. inflation gauges, though the Federal Reserve is not expected to raise interest rates anytime soon.

High rental vacancies have weighed on the core consumer price index, which excludes volatile food and energy prices, and economists now see this anchor slipping loose.

In the fourth quarter of 2010, the rental vacancy rate fell to 9.4 percent -- the lowest since the second quarter of 2007 -- from 10.3 percent in the July-September period, according to government statistics.

Rental costs constitute about 40 percent of the core CPI, which rose 0.8 percent in the 12 months to December, staying close to a record low. Core CPI is a gauge of underlying inflation.

Duncan noted that borrowers are swinging back toward making home purchase decisions based on where they want to raise children and what kind of lifestyle they want, rather than on the investment potential.

"Focusing on the whole economy, not just housing, there are some long-term benefits of that because it is likely to be a more stable environment than people acting on the temporary benefits and tax strategies. So, it's likely to lead to more stability for the economy," Duncan said, adding that stability is also positive for housing in the long-term.

Nearly three out of four respondents to the survey said they think it will be harder to get a mortgage in the future, up from about two-thirds who thought so at the beginning of last year.

Still, 78 percent of respondents believe housing prices will hold steady or rise in the next year, up from 73 percent in January 2010. Pollsters conducted telephone interviews between October and December of last year with a random sample of about 3,400 American adults. The government, through Fannie Mae, sister firm Freddie Mac, and the Federal Housing Administration, is now backing almost nine in 10 new mortgages.

The Obama administration earlier this month announced several short-term steps to make those government-backed mortgages more expensive going forward in a bid to lure private capital back to the mortgage market.

The administration also announced plans to phase-out Fannie Mae and Freddie Mac over time and presented Congress with three options for replacing them long-term. Treasury Secretary Timothy Geithner is scheduled to appear before lawmakers on Tuesday to discuss those options, all of which would make it harder for prospective buyers to obtain a mortgage.

Source: Reuters

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Police Break Up Building Materials Theft Ring

Thursday, February 24, 2011

After an eight-month investigation, police from several Oregon and Washington counties served search warrants on seven Portland-area houses and recovered approximately $1 million of stolen building materials, according to an article in The Oregonian.  

Much of the recovered material -- roofing shingles, siding, rebar and power tools -- had been stolen from local businesses and was being offered up for sale on Craigslist and eBay, police said.

Authorities arrested Steven Terrill, 38, whom they accuse of being the ringleader of a network of suspects stealing vehicles and other items, creating fake credit cards and selling stolen property. Terrill was taken into custody just before dawn on Feb. 17, as he returned to a small white house in the Northeast section of Portland. The homes was elevated 12 ft. in the air and supported by a crisscross of steel beams, large house jacks and thick wooden blocks, all of which had been stolen from local businesses and construction sites, police said.

Ted Nisley, a branch manager at Allied Building Products Corp., arrived later to help identify materials. His crew recovered nearly $6,000 in allegedly stolen materials.

Allied workers carried out 90-lb. bags of roofing shingles and dropped them onto a large truck, as others hauled out long pieces of rebar or power tools.

At least five other individuals were arrested as part of the bust. KATU News reported that among the recovered building materials were windows destined to be installed in Terrill’s elevated house, which he was renovating.

Source:  Home Channel News

Sales of New Homes Fall a Shocking 11.2%

Thursday, February 24, 2011

The new year has brought little cheer to new-home builders: Their sales fell a shocking 11.2% between December and January and 18.6% from 12 months earlier.

The total number of new homes sold in January was a seasonally adjusted 284,000, down from 325,000 in December, the government said Thursday.

In total, the market is down 80% from its peak, which was set in July 2005, when the annualized rate of sales hit nearly 1.4 million.

The big problem facing developers is that they face significant competition from foreclosed homes, which sell at bargain-basement prices. In fact, 26% of all homes sold last year were foreclosures.

"Housing is a price-driven market," said real estate analyst Michael Larson of Weiss Research Investors. "Ordinary home buyers can and will buy houses, but only if the price is right. That makes life tough for new home builders, who have to compete with distressed properties and 'nearly new' foreclosures."

The release followed Wednesday's more positive industry report showing that sales of previously owned homes had inched up slightly during January. A bulk of those sales came from bank repossessions and other distressed properties.

But there is always a market a for new homes because many people prefer a a house that nobody else has used, according to Jeff Mezger, CEO of KB Homes. Plus, foreclosures are often sold "as is" and are in poor condition.

"One of our biggest market segments is single moms, who don't want to have to fix up things," he said. "They look at used homes first. "They look at foreclosures and don't like what they see."

Some progress has been made by home builders in reducing their inventories of unsold homes, according to Brad Hunter, chief economist with Metrostudy, a real estate information provider.

In Atlanta, builders reduced the glut by 35% during 2010. In Tampa, inventory fell more than 17%; in Phoenix, it's down more than 10%.

That absorption may be slow by historical standards, but it does indicate a trending in the right direction.

By the end of January, there were an estimated 188,000 new homes still on the market, the lowest inventory level since December 1967. It's a 7.9 month supply at the current rate of sales, down 1.2 months since last January.

The median price of home sold during the month was $230,600, a 13.3% increase compared to a year earlier."If you're looking for signs of a robust recovery in housing," said Larson, "you're just not going to find it anytime soon. Instead, sales, pricing, and construction activity are likely to bounce along the bottom for several quarters."

Source: CNNMoney

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Home Sales Inching Up

Wednesday, February 23, 2011

Sales of existing homes recorded modest gains in January, the third straight month of month-over-month increases.

According to the National Association of Realtors, homes sold at an annual rate of 5.36 million in January, up 2.7% from December and 5.3% higher than January 2010 sales. At the same time, the median home price fell 3% to $158,000, compared to a year earlier.

"The up trend in home sales is consistent with improvements in the economy and jobs," said Lawrence Yun, NAR's chief economist.

The report was slightly stronger than expected. A consensus of experts surveyed by Briefing.com had expected sales to hit 5.23 million.

Yun pointed out that home sales have benefited from unusually favorable conditions: Mortgage rates are still very low; there's a large supply of homes to choose from; and home prices have fallen to near post-housing bust lows.

One factor holding buyers back is the still tight mortgage lending.

"Buyers have been constrained by unnecessarily tight credit," said Yun. "As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity."

NAR reported that all-cash sales went up to 32% of the total, up from 26% a year earlier. It estimated the percentage of investor purchases hit 23%, up from 17% a year ago.

"Unprecedented levels of all-cash purchases -- primarily of distressed homes sold at deep discounts -- undoubtedly pulls the median price downward," said NAR president, Ron Phipps.

Whatever the source of the sales, they do have a welcome impact on supply. Inventory dropped 5.1% to 3.38 million units, a 7.6-month supply at the current rates of sales. That was the lowest inventory level in more than a year.

Normally, a five- or six-month supply is considered a good balance between supply and demand. That's when sellers will start to regain some of the "pricing power" they've lost in the bust. Right now, said Hoffman, "Sellers are desperate to sell and buyers bidding low." 

Source: CNNMoney

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Grab a Second-Home Bargain

Saturday, February 18, 2011

People selling second homes in sunny locations couldn't have asked for a better marketing pitch than the winter of 2011. With snow turning Northern roads into ice rinks and closing airports and schools, the Sunbelt would seem to be more desirable than ever. The only glitch is the real estate hangover from the Great Recession.

But new data from Florida suggest that this may be the year when buyers and sellers come together. "We've outperformed January 2010 by 85%," says Judy Green, chief executive officer of Premier Sotheby's International Realty in Naples. "It's almost as if someone just turned on a faucet and the people are out there. They're making deals."

Before leaping in, though, you need to ask yourself two questions: Why is this happening now? And how can I take advantage of it?

The "why" is a function of both the market and of sentiment about Florida. Interest rates remain historically low -- the average 30-year fixed-rate mortgage in Florida was recently 4.9%, according to Bankrate.com -- and banks are lending again, if cautiously. Now that rental prices in the coastal areas are rising, people who have dreamed about owning a second home in (or relocating to) the state see this as their moment to act -- while sale prices remain off their highs.

Indeed, the uptick in sales hasn't yet translated directly into pricing power for sellers. According to Florida Realtors, sales were up statewide in 2010 by 29% for condominiums and by 5% for homes, but prices were down 15% and 4%, respectively. (This is better than last year, when prices were down 24% for homes and 34% for condos.) A January report from Moody's Analytics said home prices in Naples will not return to their pre-recession peak until 2038.

Those numbers mean that there are plenty of bargains to be found, and even an occasional steal. Allison Turk, an associate at EWM Realtors, just sold a house on the exclusive North Bay Road in Miami Beach for the second time in five years. In 2005 the home fetched $1.3 million; this time it went for $690,000.

There are caveats when it comes to how one should take advantage of the opportunities in Florida. Cash buyers are going to have an easier time negotiating a deal, particularly if they are using the place as a second home. Banks want to see a down payment of 20% to 25% or sterling credit for those financing. Rates are also incrementally higher for people who will use the property as a second home or a rental.

Single-family homes are where prices are firming up the quickest. "They're easier to finance," says Michael Timmerman, senior associate at Fishkind & Associates, an Orlando real estate consulting company. "Many condominium associations did the same thing individuals did [during the boom] -- they said, 'We don't need to fund these reserves.' Now buyers are worried about special assessments."

The real estate recovery in Florida isn't complete by any means. But in a decade smart shoppers will be boasting about the deals they got in 2011 -- preferably by the pool.  

Source:  Fortune

Multifamily Construction Boosts Housing Starts in January

Home Construction Rises in January

Wednesday, February 16, 2011

Permits for future home building fell, but initial construction of homes rose in January, the government reported Wednesday.

The number of permits for future housing construction fell to an annual rate of 562,000 last month, down 10.4% from 627,000 in December, the Commerce Department said. The reading fell short of forecasts, with economists surveyed by Briefing.com looking for 575,000 permits.

Housing starts, the number of new homes being built, rose 14.6% to an annual rate of 596,000 in January from 520,000 in December.

That was better than the 540,000 housing starts economists had expected for the month. 

Source:  CNNMoney

Single-Family Starts Challenged by Weather, Financing

Wednesday, February 16, 2011

Bad weather deserves part of the blame for the decline in January single-family housing starts, according to the National Association of Home Builders (NAHB).

Government data releasted Wednesday morning showed single-family starts for January at a seasonally adjusted annual rate of 413,000, down 1.0% from December. Total starts increased 14.6%. 

"Considering the abnormally poor weather conditions that prevailed across most of the country last month, along with the continuing difficulty that builders are having in obtaining financing for new construction, the fact that single-family starts held virtually unchanged while multifamily starts posted solid gains is encouraging," said Bob Nielsen, chairman of the NAHB and a home builder from Reno, Nev. "Any gain in housing production means more people are being put back to work, and is a sign that builders are preparing for improving demand for new homes in the spring."

NAHB Chief Economist David Crowe said the report echoes the sentiment found in builder surveys. "Builders see spotty buyer interest but remain very cautious as credit remains tight and buyer confidence uncertain," he said.

Source:  Home Channel News

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Builder Confidence Unchanged for Fourth Consecutive Month in February

Tuesday, February 15, 2011

Builder confidence in the market for newly built, single-family homes remained unchanged at 16 for a fourth consecutive month in February, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. "While builders are starting to see more interest among potential home buyers, we are also dealing with a multitude of challenges, including competition from foreclosure properties and inaccurate appraisals of new homes, which are limiting our ability to sell," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev.  "On top of that, an extremely tight lending environment continues to make it almost impossible to obtain credit for viable new and existing projects, and most do not see that situation improving anytime soon." "Builders are telling us that some pockets of optimism have begun to emerge, but many prospective purchasers are concerned about selling their existing home in the current market, or face difficulty securing credit for a home purchase -- even when they are well-qualified," said NAHB Chief Economist David Crowe. "Adding these concerns to the severe difficulty that builders continue to confront in obtaining acquisition, development and construction financing, you can understand why builder sentiment has not improved over the past four months." Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor. On a positive note, two out three of the HMI's component indexes edged slightly upward in February. The component gauging current sales conditions improved by two points to 17, while the component gauging sales expectations in the next six months rose a single point, to 25. Meanwhile, the component gauging traffic of prospective buyers held unchanged, at 12. On a regional basis, HMI scores were mixed in February, with gains reported in two parts of the country and declines in two others. The Northeast registered a two-point gain to 22, the South posted a one-point gain to 18, the Midwest posted a one-point decline to 12 and the West posted a two-point decline to 13.

Source: NAHB

After Two Years of Declines, Hardware Sales Are Up

Tuesday, February 15, 2011

Hardware store sales increased slightly in 2010, according to government data released Tuesday.  

The Census Bureau's Monthly & Annual Trade Report showed December sales for hardware stores -- NAICS code 44413 -- reached $1.684 billion in December, the most recent month of available data in this business classification. That unadjusted figure is up 4.5% from the unadjusted figure from December 2009.

For the full year, hardware stores sales were $18.756 billion, up 0.7% from 2009.

It was the first increase in NAICS code 44413 sales since 2007 showed an increase over 2006. 

Source:  Home Channel News

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Obama Launches Housing Overhaul Plan, Long Road Ahead

Friday, February 11, 2011

The Obama administration nailed a 'condemned' sign on the wrecked U.S. housing finance system on Friday but did not offer a clear blueprint for a rebuilding project that promises to take years.

In a long-awaited move, the White House offered three big-picture options for overhauling a $10.6-trillion market that cratered in 2008, triggering a wave of home foreclosures and the worst banking crisis since the Great Depression.

All the alternatives sketched out in a 31-page "white paper" would unwind the troubled mortgage titans Fannie Mae and Freddie Mac and shrink the government's market footprint to allow private capital to step in.

That options strategy was designed to force newly empowered Republicans in the House of Representatives to make the next move on long-term changes to the housing system now almost entirely backed by the government.

Short-term steps were also proposed to level the playing field between the publicly backed mortgage sector and the private market, flat on its back for years, as well as reduce the huge loan portfolios of Fannie and Freddie.

With property markets still fragile and the 2012 elections looming, political consensus on an overhaul could be elusive, leaving Fannie and Freddie to limp along for now.

Analysts said the changes would raise borrowing costs for consumers who are still wary of getting back into housing, potentially weakening property prices again.

"Realistically this is going to take five to seven years," Treasury Secretary Timothy Geithner told reporters on a conference call. He urged Capitol Hill to get moving and set a transition into law, suggesting a two-year deadline.

"Ultimately, we are going to have to explain to the market what the end-game is going to be and we can't wait too long to lay that out," Geithner said, adding that a mix of the three proposals he unveiled could be the final outcome.

Despite their key role in the crisis, Fannie and Freddie -- known as government-sponsored enterprises, or GSEs -- still dominate the market, backing nearly nine of 10 new mortgages, along with the Federal Housing Administration.

The most drastic of the administration's three options would privatize housing finance almost entirely, with government insurance and guarantees limited to FHA and other programs for low- and middle-income borrowers.

Texas Representative Jeb Hensarling welcomed that proposal, similar to one he offered last year that failed to make traction when Democrats controlled the House of Representatives.

"I hope that the administration chooses to pursue that particular path," Hensarling said. The fourth highest House Republican vowed to re-introduce his legislation before the end of next year.

A second option would add a government backstop mechanism to be activated during a crisis, while the third would include government reinsurance for some types of mortgages.

In the short-term, the administration called for phasing in higher prices for GSE guarantees, reducing the size of mortgages the GSEs can back and shrinking their portfolios at a rate of at least 10 percent a year.

Source:  Reuters

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White House's Unwritten Mortgage Memo: Act Now

Friday, February 11, 2011

The Obama Administration's newly unveiled housing finance plan may have clouded the picture for policymakers, lenders and bond buyers, but it made the future for borrowers starkly clear: It's going to cost more to get a home loan.

Mortgages have already become more expensive in recent weeks, as Fannie Mae and Freddie Mac began adding risk fees to almost all of the loans they sponsor. Average rates on 30-year fixed rate-loans have already moved from 4.4 percent in November to 5.2 percent now, according to Mortgage Marvel, a loan comparison web site.

In a much-awaited report released Friday, the administration proposed winding down the role of the two government-sponsored mortgage repackagers and left open for prolonged Washington debate what would remain in their place.

It also called for higher down payments, a lower cap on the amount of mortgage that could be guaranteed and another increase in the fees Freddie and Fannie charge in the short term. All of those measures are likely to steepen the cost of securing a home mortgage.

"Rates are probably on the rise, due to the increases in fees," said Keith Gumbinger of HSH Associates, a mortgage research firm. "But will the borrowing process get better, faster or easier as a result of reforms? No."If you can effect a transaction now, it's probably not a bad idea," Gumbinger said.
Rates are also likely to rise as the economy improves and the rock-bottom interest rates that have been protected by the Federal Reserve Board edge up.

The rising credit market rates will have a bigger effect on mortgages than the winding down of Freddie and Fannie, said Scott Happ, president of Mortgagebot, a company that builds and runs mortgage web sites.

The cost of loans that are not handled by the guaranteed mortgages and those that aren't guaranteed is roughly 0.6 percentage points now, he said.

Source: Source:  Reuters

55+ Housing Ends 2010 in Slump

Thursday, February 10, 2011

Washington, Feb. 10 - Home builder sentiment for the mature-market sector retreated in the last quarter of 2010 when compared to the same period a year earlier.   The National Association of Home Builders' 55+ Housing Market Index for single-family homes dropped three points to 14 from a year ago following annual declines in the second and third quarters of 2010. 

"The normal course of purchasing a new home in anticipation of or upon entering retirement has been interrupted by the fall in Baby Boomers' house values and reduction in their home equity," said NAHB Chief Economist David Crowe. "Boomers are finding that the market for their current home remains soft and potential buyers cannot qualify for affordable mortgages. Even those with the ability to buy a new home are finding a limited selection, as builders cannot get loans to build homes."
 
The 55+ single-family HMI measures builder sentiment based on current sales, prospective buyer traffic and anticipated six-month sales for the 55+ single-family market.  A number greater than 50 indicates that more builders view conditions as good than poor. Among the index components, present sales dropped four points, to 13. Expected sales (six months into the future) dropped five points, to 24. And traffic of prospective buyers fell two points, to 10.

The 55+ multifamily condo HMI also showed continued weakness, with an index level of 8, down from 11 at the end of 2009. All three index components - current sales, expected sales and buyer traffic - declined during this period.

While the present production index for multifamily rental units rose only one point, to 17, the index of expected production for those units in the next six months jumped five points, up to 23, indicating respondents see some strengthening in the months ahead for the construction of apartments.  Current and expected demand for multifamily rental units each rose by 2 points, reaching 28 and 32, respectively.

Source: NAHB

Housing Back to Pre-Bubble Prices

Wednesday, February 9, 2011

Here's where falling home prices have bought us: back to where we were in 2003, before the real estate bubble began. New data indicate that housing is more affordable now than it has been since the boom, at least in some markets, with the housing affordability index hitting a 35-year low in some areas in the third quarter of 2010.

"Based on incomes, this is as affordable as it gets," Mark Zandi, the chief economist at Moody's Analytics, which analyzed the data, told The Wall Street Journal. "If you can get a loan, these are pretty good times to buy." The falling prices don't look as good to people who already own homes, particularly those who want to sell. New data from Zillow's Home Value Index found that 27% of Americans with mortgages owed more than their homes were worth in the last quarter of 2010, up from 23.2% the previous quarter.

Zillow reported an average price drop of 2.6% nationwide, the largest single-quarter decline since the first quarter of 2009.

Of course, data varies widely by region. Moody's measured affordability in 74 markets, and the affordability index is back down to the average of the years 1989 to 2003 in 47 of those markets. Prices in Cleveland are back to 1991 levels. In contrast, homes are still overvalued in the Pacific Northwest, as well as along the Atlantic corridor from Baltimore to Boston.

Detroit showed the largest drop in property value in the last quarter, 7.5%, followed by Chicago and St. Louis. Year to year, the greatest declines were in Detroit (17.4%), followed by Miami-Fort Lauderdale (15.4%) and Atlanta (15.3%). Miami-Fort Lauderdale showed the greatest decline in home values since the peak (54.8%), followed by Orlando (54.4%) and Phoenix (53.6%). The areas with the largest percentage of underwater mortgages were Phoenix (69.9%), followed by Orlando (61.7%) and Atlanta (54%).

Source:  MSN Money

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Elimating Mortgage Interest Deduction Would Raise Taxes for Middle-Class Families

Friday, January 28, 2011

Eliminating the deductions for mortgage interest and real estate taxes would raise taxes disproportionately for middle-class households and make the tax system less progressive, according to a new study from the National Association of Home Builders (NAHB). The study also concludes that the benefits of these deductions are collected primarily by middle-class taxpayers, with incomes between $50,000 and $200,000, and that greater benefits are earned by larger households and families, such as those with children. "Proposals to reduce or eliminate the mortgage interest deduction are short-sighted and would harm the economy and job creation at a time when housing is poised for recovery," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. "The deduction is the mainstay of our housing policies and tampering with it would break faith with the millions of families who rely upon it  to meet their household expenses and with millions more who one day would like to be able to afford to own a home of their own."

"Contrary to the claims of some economists, the benefits of the mortgage interest and real estate tax deductions are collected primarily by the middle class," according to the study. "Of the total, 68 percent of the benefits of the mortgage interest deduction, and 77 percent of the real estate tax benefits, are claimed by those earning less than $200,000. These same taxpayers pay only 43 percent of all income taxes." The research estimates the tax benefit (or tax expenditure) collected by home owners from these deductions, while accounting for factors that would "claw back" the net benefits, such as the Alternative Minimum Tax and the standard deduction. Using data from the nonpartisan Joint Committee on Taxation (JCT), the report shows the tax liability and mortgage interest deduction and real estate tax deduction benefits for five income groups. The report finds that the shares of the total benefits of the two housing deductions exceeded the shares of taxes paid for every income class except the last one, those earning $200,000 or more. These data "demonstrate that the mortgage interest and real estate tax deductions make the U.S. tax system more progressive, not less, as is often claimed," the report says. The report adds that "for taxpayers with less than $200,000 in adjusted gross income (AGI), the average tax benefit of the mortgage interest deduction is equal to 1.76 percent of AGI. For taxpayers with more than $200,000 in AGI, it is equal to 1.5 percent. This is clearly indicative of a progressive tax benefit."

The study also examines the relationship between housing tax benefits and household size and addresses the criticism that the mortgage interest deduction provides people with an incentive to purchase a larger, more expensive home. "It is more likely the case that larger families demand larger homes, and the tax incentives help these families more to finance these homes with debt, particularly for first-time home buyers who may have less equity in housing," the study says. Using the IRS data from 2004, the study found that the average benefit of the mortgage interest deduction rose fairly steadily with the size of the household. "These results are consistent with intuition," the study says. "Larger households and families require larger homes. And larger homes require additional mortgage debt to finance, particularly for younger home buyers, who are or may be in the process of having children. These greater home finance costs imply larger deductions for mortgage interest and real estate taxes."

Source: NAHB

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New-Home Sales Rise Sharply in December

Wednesday, January 26, 2011

Sales of newly built, single-family homes rose 17.5 percent to a seasonally adjusted annual rate of 329,000 units in December, according to newly released figures from the U.S. Commerce Department. The big gain, though largely tied to an unexpectedly strong showing in the West, was a welcome boost at the end of a year that had the lowest total number of new-home sales on record (321,000) since the government began keeping track in 1963.

"After six very tough months, the housing market ended the year on an upbeat, with signs of stabilization beginning to take hold in many markets," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "That said, the nationwide inventory of new homes for sale is now at its thinnest level in more than 40 years. This is a sign that many builders still cannot obtain the credit they need to meet anticipated improvements in buyer demand in 2011."

"I read today's report as a promising sign that the new-home sales market is re-starting its long journey to a more normal pace after the lull that began in May," said NAHB Chief Economist David Crowe. "However, the very low inventory of new homes available for sale is concerning, because it means that the critical lack of acquisition, development and construction financing continues to pose a tremendous obstacle to medium- and small-sized builders across the country, thereby slowing the arrival of a true recovery and the jobs that could generate."

The majority of the increase in new-home sales this December was recorded in the West, which posted a remarkable 71.9 percent gain that could end up being somewhat revised in subsequent months. But gains of 3.2 percent and 1.8 percent were also recorded in the Midwest and South, respectively. The Northeast posted a 5.0 percent decline in new-home sales this December.

Acknowledging that sales in the West may have gotten a boost from contracts being signed ahead of costly building code changes going into effect in some states this January, Crowe noted that issuance of building permits was also up substantially in that region at the end of the year.

The inventory of new homes for sale fell to 191,000 units in December, the lowest number since January of 1968. This amounts to a historically slim 6.9-month supply at the current sales rate.

Source: NAHB

Mixed Data Points to Growth Momentum

Thursday, January 21, 2011

U.S. housing and factory data on Thursday showed the economy still gaining strength in December but at a pace unlikely to cause the Federal Reserve to rethink its stimulus program.

Economists said they expected Friday's reading of gross domestic product to show the world's biggest economy picking up speed albeit short of the pace needed to bring down unemployment significantly.

The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in December, rose 2 percent to 93.7. The increase, which was above economists' expectations for a 1.0 percent gain, pointed to another rise in sales of previously owned homes this month.

A separate report from the Commerce Department showed orders for a range of domestically manufactured goods gained 0.5 percent last month. But a nearly 100 percent drop in civilian aircraft pulled overall orders down 2.5 percent.

Economists shrugged off a surprise jump in new claims for unemployment benefit as a result of bad weather rather than a sudden setback for the labor market.

"The underlying data tells me the economy is expanding but it's not expanding at any kind of pace that going to cause the Fed to sit up and say 'gee, maybe we have gone too far'," said Steve Blitz, senior economist at ITG Investment Research in New York.

Fed officials on Wednesday acknowledged the improving economic outlook but said the pace of the recovery remained "insufficient to bring about a significant improvement in labor market conditions."

The U.S. central bank reiterated its commitment to buy an extra $600 billion of government debt through the middle of 2011 to keep interest rates low and help the economy.

U.S. stock indexes held near 29-month highs as companies such as Caterpillar reported strong earnings. Prices for U.S. government debt fell slightly and the dollar was little changed against a basket of currencies.

Source: Reuters

Remodelers Expect Market Gains Durring 2011

Thursday, January 21, 2011

The latest National Association of Home Builders' (NAHB) Remodeling Market Index (RMI) edged up to 41.5 in the fourth quarter of 2010, compared to 40.8 in the third quarter. An RMI below 50 indicates that more remodelers say market activity is lower compared to the prior quarter than report it is higher. The RMI has been running below 50 since the final quarter of 2005.

The overall RMI combines ratings of current remodeling activity with indicators of future activity like calls for bids. In the fourth quarter, the RMI component measuring current market conditions stayed flat at 43.3 from 43.4 in the previous quarter. The RMI component measuring future indicators of remodeling business increased, to 39.7 from 38.1 in the previous quarter.

"Remodelers are starting to see an uptick in interest from consumers who are considering future remodeling projects," said NAHB Remodelers Chairman Bob Peterson, CGR, CAPS, CGP, a remodeler from Ft. Collins, Colo. "Home owners are also showing more willingness to undertake larger remodeling projects."

All but one index for future market conditions improved during the fourth quarter. Calls for bids jumped to 47.2 (from 42.9), along with backlog of remodeling jobs at 42.6 (from 37.2), and appointments for proposals at 43.1 (from 41.9). The amount of work committed for the next three months shrank to 25.9 (from 30.3).

"Remodeling activity has been rising slowly since the first quarter of 2010. Expected improvements in the job market and the overall economy are beginning to increase homeowners' confidence and remodelers are seeing indications that business will pick up," said NAHB Chief Economist David Crowe. "More remodeling jobs will unfold as consumers in more secure financial positions enter the remodeling market. A more robust recovery in residential remodeling will depend upon future improvements in labor and credit markets."

Current conditions indices for remodeling improved in two regions: Midwest 54.3 (from 44.9 in the third quarter) and South 45.8 (from 42.3). However, the current indices declined in the Northeast 38.8 (from 41.6) and West 39.7 (from 49.3). Future market indicators grew significantly in nearly all regions: Northeast 49.5 (from 34.0); Midwest 56.1 (from 39.4); and South 47.0 (from 37.9). Only the West region reported some decline at 39.7 (from 41.0). Major additions also expanded to 48.6 (from 45.8), but minor additions dipped slightly to 43.9 (from 46.4), while maintenance and repair stayed flat at 37.0 (from 37.1).

Source: NAHB

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Home Price Slump Deepens

Tuesday, January 25, 2011

November home prices continued their latest slump, falling 1% compared with October, according to the latest S&P/Case-Shiller Home Price Index of 20 metro markets.

San Diego was the only market that didn't slip, posting a slight gain of 0.1%. The overall index fell for the fifth straight month and prices are at about the same level they were in mid-2003.

"With these numbers, more analysts will be calling for a double-dip in home prices," said David Blitzer, spokesman for Standard & Poor's.

The worst-hit market during the month was Detroit, where prices fell another 2.7%. That was especially troubling considering how low that city's prices already were. In Washington D.C. prices inched down only 0.1%, making it the second-best performing city behind San Diego.

Source: CNNMoney

Housing Starts Lowest Since Late 2009

Wednesday, January 19, 2011

Groundbreaking on new U.S. home construction fell more than expected in December to its lowest in over a year, suggesting the battered housing sector remains a major roadblock to economic recovery.

U.S. housing starts dropped to an annual rate of 529,000 units, the Commerce Department said on Wednesday, down from November's 553,000 and well below forecasts around 550,000 in a Reuters poll. At current levels, starts account for less than a quarter of their boom-time peaks.

At the same time, building permits soared, a hint of optimism about future demand. Permits jumped 16.7 percent to 635,000, far above a median forecast of 560,000 and the biggest jump since June 2008.

However, changes to state building codes set to take effect in January may have boosted permits in California, Pennsylvania and New York in December, the report said. For example, permits surged 80.6 percent in the Northeast last month.

Financial markets had a muted reaction to the figures, though gold prices did hit a session high following their release.

Jennifer Lee, senior economist at BMO Capital Markets in Toronto, called the housing report "very disappointing."

"Some builders went ahead in December with projects to beat the change (in building codes), so that is reflected in the headline," she said. "Look for a big retracement in January permits, which in turn, is not good news for starts."

Housing was at the epicenter of the worst financial crisis in generations, which began when banks started to take a hit from rising defaults in the mortgage sector in the summer of 2007. Real estate continues to be plagued by foreclosures, which topped 1 million for the first time ever during 2010.

Nevada, Arizona and Florida are among the hardest hit states.

"You still have this nagging worry that if housing remains in this kind of uncomfortable equilibrium, it could drag down the consumer and the economy, " said Cary Leahey, economist at Decision Economics in New York.

What little rebound has occurred in housing thus far has been erratic. Applications for U.S. home mortgages increased last week as interest rates dipped to their lowest in a month, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity rose 5 percent in the week ended January 14.

The MBA's seasonally adjusted index of refinancing applications gained 7.7 percent last week, and the gauge of loan requests for home purchases fell 1.9 percent.

Fixed 30-year mortgage rates averaged 4.77 percent in the week, down 1 basis point from 4.78 percent the prior week. The rate is down from 4.93 percent at the end of December.

Source:  Reuters

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2010 Ends as 2nd Worst Year for Home Construction

Wednesday, January 19, 2011
 
Builders began work last year on the second fewest number of homes in more than half a century, as the weak economy kept people from buying houses.

Builders broke ground on a total of 587,600 homes in 2010, just barely better than the 554,000 started in 2009. Those are the two worst years on records dating back to 1959.

And the pace is getting worse. The Commerce Department reported Wednesday that builders started work at a seasonally adjusted annual rate of 529,000 new homes and apartments last month. That's a drop of 4.3 percent from November and the slowest pace since October 2009.

In a healthy economy, builders start about one million units a year. They built twice as many in 2005, at the height of the housing boom. Since then the market has been in decline.

One positive sign is that builders appear to be planning more projects in 2011. Building permits, considered a good barometer for future activity, rose 16.7 percent in December to a seasonally adjusted annaul rate of 635,000, the best pace since March. But builders likely pulled more permits in California, New York and Pennsylvania ahead of code changes in 2011 -- a factor that likely influenced the spike.

People are buying fewer single-family homes, which represent nearly 80 percent of the market. Demand fell 9 percent to an annual rate of 417,000 units. Apartment building increased 17.9 percent to an annual rate of 112,000 units.

Housing construction fell in all parts of the country in December except the West where activity surged 45.8 percent. Construction dropped 38.4 percent in the Midwest and was down 24.7 percent in the Northeast and 2.2 percent in the South. Severe winter weather likely affected activity in the Northeast and Midwest.

The collapse of the housing market helped push the country into a deep recession and more than a year after the recession, housing is still struggling.

Unemployment remains high. Record numbers of foreclosures have forced home prices down and tight credit has made mortgages tough to come by.

Source:  Associated Press

Home Builders Are Cautiously Optimistic at NAHV International Builders' Show

Tuesday, January 18, 2011

More than 47,000 builders, remodelers, product manufacturers and other home building industry professionals were in Orlando, Fla., last week to attend the National Association of Home Builders (NAHB) International Builders' Show.

And as the industry slowly, cautiously climbs out of the worst downturn in memory, vendors on the exhibit floor say the mood among home builders is noticeably brighter than last year's."There's optimism," said Tom Ktsanes, district sales manager for Velux, manufacturers of tubular daylighting devices. 

"The green movement is still going strong, there's more interest in solar hot water heater and daylighting products."Harsh weather in the rest of the country delayed or even cancelled a number of Orlando-bound flights, leading to lighter attendance on Wednesday, Jan. 12, when the show opened, but the next day's numbers were noticeably stronger, said David Perozzi, marketing manager for Schalge. "We were busy all day on Thursday. It was a really good show," he said.

On Saturday, Stan and Bertha Gillies of S & B Home Builders in  Dadeville, Ala., were touring the four modular homes constructed in the parking lot of the Orange County Convention Center just outside the exhibit hall. They said they enjoyed seeing the new products on display, especially a new granite veneer for countertops and stair tread replacements. 

"We've enjoyed meeting all the vendors. It's very beneficial," Stan Gillies said.

In addition to commemorating sustainable construction by holding the fourth annual Green Day, his year's International Builders' Show celebrated universal design, offered plan review workshops, partnered builders with lenders and included 224 educational sessions. More than 1,100 exhibitors displayed their products and services at this year's show, and many of them are already ma king plans to be back when the show returns to Orlando in February 2012. Toby Texer, southeast representative for Empire Comfort Systems, said his visitors were particularly interested in the display of high-efficiency direct-vent gas fireplaces - and the company is already thinking about next year's exhibits.Texer was encouraged by the NAHB economic outlook that forecast a 21 percent increase in new home construction by 2011.

Chief Economist David Crowe said he expects 575,000 single-family home starts in 2011, a 21 percent climb over an estimated 475,000 units started in 2010.

Source: NAHB

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Builder Confidence Remains Unchanged in January

Tuesday, January 18, 2011

Builder confidence in the market for newly built, single-family homes held unchanged at a relatively low level of 16 for a third consecutive month in January, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today.

"As we emerge from the traditionally slow holiday season, builders continue to look for signs of improvement in the economy, home buyer demand and builder and consumer credit conditions," said 2011 NAHB Chairman Bob Nielsen, a home builder from Reno, Nev.  "Unfortunately, a severe lack of construction financing, and widespread difficulties in obtaining accurate appraisal values, continue to limit builders' ability to prepare for anticipated improvements in buyer demand in 2011."

"The HMI and its subcomponent indexes are holding steady following a below-expectations finish in 2010," noted NAHB Chief Economist David Crowe. "At this point, housing remains on the sidelines of a weak economic recovery as consumers and builders wait for clear and consistent indications that jobs and economic output are reviving. Meanwhile, the problems that builders continue to confront in obtaining production financing, and in maintaining performing lines of credit, threaten to significantly slow the onset of a housing recovery."

Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

While the HMI components gauging current sales conditions and sales expectations for the next six months both held steady from the previous month, at 16 and 25, respectively, the component gauging traffic of prospective buyers edged up a single point to 12 in January.

HMI scores rose by one point in the Midwest and four points in the West in January, to 14 and 15, respectively. Meanwhile, HMI scores fell two points in the Northeast and one point in the South, to 20 and 17, respectively.

Source: NAHB

Housing Moving to Higher Ground in 2011

Friday, January 14, 2011

Housing will see gradual improvements in activity this year as the nation's economy and job market continue to move to higher ground, establishing momentum that will produce more considerable gains in 2012, according to economists who appeared at the NAHB International Builders' Show in Orlando on Jan. 12.

"This year's spring selling season will be better than last year's," said NAHB Chief Economist David Crowe, with job growth providing a stronger stimulus in the housing market than last year's tax credits for home buyers.

Crowe forecasted 575,000 single-family home starts in 2011, a 21 percent climb over an estimated 475,000 units started in 2010, which in turn showed a 7 percent gain from the 442,000 homes started in 2009.

Multifamily, which is poised to profit from a disproportionate number of Gen Y members moving into the housing market, has seen the bottom of the cycle, he said, and will see its starts rise 16 percent this year to 133,000 units, with a further 53 percent increase in 2012 to 203,000 units.

Builders' access to the credit they need to start new homes remains the fragile component of the NAHB forecast, Crowe said. So far, small builders have experienced extreme difficulty in obtaining financing, and rectifying the situation as soon as possible is the top priority of the association.

More encouraging is a rebound in the confidence of consumers, who mid-2010 "froze in place, faced with a lot of uncertainty," he said. A recent pickup in durable purchases for such items as automobiles and furniture indicates that consumers are less afraid today of losing jobs and income.

The recession delayed as many as two million household formations over the past few years, he added, as individuals doubled up with family and friends to weather a dismal job market. These households will begin to form as jobs improve, and they "are the next to move into a new home or apartment." The economy should be adding a "solid" 200,000 jobs monthly in 2012, he said.

The U.S. economy will receive a boost from the massive tax package enacted at the end of last year, he said, including more income going into the pockets of wage earners thanks to a one-year 2 percent reduction in Social Security taxes. This will contribute to the gross domestic product strengthening from the 2.5 percent range to 3.5 percent to 3.8 percent by year's end.

New-home sales, Crowe projected, "will struggle" but begin following employment gains, reaching 405,000 for the year, up from an estimate of about 320,000 for 2010.

The housing recovery will start up slowly this year, he said, because it will be driven by the relatively low housing production Plains states, with Texas the most powerful of the bunch. Traditional bulwarks of housing activity such as California and Florida, on the other hand, will not be among the states whose housing markets recover the fastest.

In addition to stimulative fiscal and monetary policy, Freddie Mac Chief Economist Frank Nothaft said that housing affordability and demographic trends will help support growing housing demand.

Thirty-year fixed-rate mortgages dipped to 4.25 percent in the final quarter of 2010, he said, the lowest level since the early 1950s. While that has since moved up closer to 5 percent, home financing is still available at "a phenomenal rate," according to Nothaft.

Citing research from the Harvard Joint Center for Housing Studies, Nothaft also said that households should be growing at an average annual rate of 1.2 million to 1.5 million over the next five to 10 years, suggesting the need for a sharp increase in housing production; half of the 500,000 to 600,000 starts of the past two years were needed just to replace the number of homes being removed from the housing stock.

While there will continue to be supply overhangs in some important large markets, by and large the housing price slump should bottom out by the middle of this year, he said, and price increases are already occurring in some local areas. That should attract prospective buyers who have been procrastinating until they see prices hit bottom.

"Potential buyers who have resources to buy but want to buy at the bottom are likely to start coming into the market in the springtime," he said, which for fence sitters will be "the time to come into the market."

Fixed-rate mortgages will move up from their current 4.75 percent to the 5.75 percent range by the end of this year, he forecasted. This will push total single-family mortgage originations down about 30 percent below the 2010 level as refinancings fall sharply in the face of rising mortgage rates.

While a 20 percent increase in housing production in 2011 is good news for housing, to put things in perspective, Nothaft said that this gain is from an extremely low level, with single-family production declining about 80 percent from peak to trough.

Source: NAHB

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Retail Sales Get Online Boost

Friday, January 14, 2011

Retail sales climbed in December, propelled by strength from online merchants, the government said Friday.

Overall sales rose 0.6% last month to $380.9 billion, the Commerce Department said. Sales were expected to have gained 0.7%, after rising 0.8% in November, according to a consensus of economists surveyed by Briefing.com.

Month-to-month sales, excluding autos, rose 0.5% in December, falling short of the forecast for an increase of 0.6%.

Retail sales rose 7.9% in December, compared to the year-ago month, according to the government. Retail sales rose 6.6% for the full-year 2010, compared to 2009.

Non-store sales, which are primarily online sales, rose 2.6% month over month in December, the biggest percentage gain for any sector in the report. Other strength was reported among building supply merchants, health care retailers and gasoline stations.

Dragging on the report were sales at local merchants, down 1.3%. Also lower were sales at general merchandise stores, as well as electronics stores and food stores.

The report is closely watched by economists, with holiday sales serving as a barometer for the progress of economic recovery.

Source: CNNMoney

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Thursday, January 13, 2011

The year's most outstanding work in residential real estate sales, marketing and design was honored by the National Association of Home Builders (NAHB)  yesterday at The National Sales and Marketing Awards gala  one of the building industry's most prestigious events.

Hosted by the NAHB National Sales and Marketing Council, the event attracted more than 500 building industry professionals to The Peabody Orlando during the 2011 International Builders' Show for an detailed look at the year's most innovative and successful ideas.

"The Nationals Awards has always celebrated the amazing talent in the home building industry, and this year is no different," said Gaye Orr, this year's chair. "New home sales and marketing professionals will continue to produce good work, no matter what the circumstances. This year's winners truly deserve recognition for excelling in a time when the economy suggested they could not succeed."

A diverse panel of industry professionals from across the country selected Gold award winners from more than 700 entries.

For a complete list of Gold and Silver winners, along with additional details and history of The Nationals, please visit www.thenationals.com.

Source: NAHB

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Source: Reuters

Wednesday, January 12, 2011

A joint study by the 50+ Housing Council of the National Association of Home Builders (NAHB) and the MetLife Mature Market Institute shows the recession has made 55+ buyers more practical when selecting a new home.  Design considerations have become less important, and financial concerns have become more prominent.

Previous studies from these two organizations found that most 55+ buyers depended on home sale proceeds to finance a new purchase.  The most recent data shows that option diminished during the economic downturn. 

The study, "Housing Trends Update for the 55+ Market," explores recently released housing data from the Census Bureau's 2009 American Housing Survey (AHS) on the 55+ demographic.  The report focuses especially on households living in active adult communities, either age-qualified active adult communities where at least one resident must be age 55+, other non-age-qualified 55+ owner-occupied communities (not explicitly restricted to 55+ households but nevertheless occupied primarily by people age 55+), or age-restricted rental communities.

"By the year 2020, as baby boomers move into this age bracket, almost 45 percent of all U.S. households will include someone at least 55 years old," said David Crowe, NAHB's chief economist.  "The number of those households seeking housing better suited to their changing needs will therefore rise dramatically."

Crowe noted that about 54,000 housing starts are projected in 55+ communities this year, a 30 percent rise from estimated 2010 levels, but still relatively modest production.  Starts in 55+ communities are projected to increase another 46 percent to roughly 79,000 housing units in 2012.

In 2009, only 55 percent of new age-qualified active adult home buyers reported that their down payment came from a previous home sale, significantly down from 100 percent of respondents in 2005 and 92 percent in 2007.  In 2005 and 2007, no active adult community buyers reported having to tap cash or savings for a down payment.  In 2009, 45 percent of the average buyer's down payment came from cash or savings.

Further analysis reveals other interesting developments.  While median prices for new 55+ homes remain lower than 2005's peak, a look at average home prices shows a big difference between buyers in age-qualified active adult communities and other 55+ community buyers.  Average prices for 55+ homes dropped in 2007 and partially rebounded in 2009.  But prices for age-qualified communities more than bounced back; they set a record with an average price of $319,000.  Buyers in that group were more affluent, with average incomes of more than $80,000 a year.  Twenty-seven percent reported earning $100,000 or more compared to fewer than five percent of such buyers in 2001.  

"Most 55+ consumers - those who chose to move and those who stay in their homes - report that they are happy with their homes and communities," said Sandra Timmermann, Ed.D., director of the MetLife Mature Market Institute.  "But those who did move to an age-qualified community - about 3 percent - reported the greatest satisfaction, rating their homes and communities at nine on a one-to-ten scale."

The desire to be near family and friends is the mature mover's overwhelming motivation, the report noted.  The design, amenities and appearance of the residence and the community remain important, but less so than before the recession.  55+ buyers moving into rental homes, both multi-family and single-family, cited a desire for less expensive housing as second in importance to living near friends and family.

Those who are able to buy are getting much more for less.  In 2009, more than half of 55+ buyers said they were moving into better homes, but fewer than half reported that their new homes cost more than the old ones.

"Proximity to work" was more important than in the past for those relocating to age-qualified, active adult communities - 12 percent in 2009 versus 2 percent in 2001 - underscoring the trend toward delayed retirement in this age group.  There was also a reported increase in the share of 55+ single-family homeowners who say they work at home - which may be a trend noteworthy to home designers.

A small, but growing share of older households is taking advantage of the ability to convert some of their home equity into a reverse mortgage or home equity conversion mortgage.  They tend to be older, single-person households with lower household income and longer housing tenure.  Those with reverse or home equity conversion mortgages represented more than 241,000 households in 2009, a 54 percent increase since 2007.

Source: NAHB

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NAHB Study: Small Builders Rule the Housing Market

Sunday, December 26, 2010

Small home builders are the mainstay of the nation’s housing industry, including a sizable number of self-employed mom-and-pop operations, according to a new study by economists at the National Association of Home Builders.

The report concludes that housing remains the domain of small businesses and looks at the Census Bureau’s Economic Census, which provides information on the size of businesses in various industries. Conducted every five years, the most recent census is based on business activity that occurred in 2007.

Among the data that provides a profile of the housing industry as of 2007:

• Slightly more than 65 percent of all home building establishments had annual receipts below $1 million. Almost 31 percent generated between $1 million and $10 million; and 4.1 percent had more than $10 million.
• In 2007, 41,483 new single-family general contractors (who build on the owner’s land) did less than $1 million in business, about a 70 percent share of the 59,679 businesses in this group. Although multifamily general contractors tend to be somewhat larger, 42 percent of them also recorded less than $1 million in yearly sales or receipts. About 60 percent of the 35,378 “operative builders” (who own the land upon which they build) did less than $1 million in business. Eighty-four percent of 73,888 residential remodelers and 61 percent of 6,462 land developers saw less than $1 million.
• Some 25 percent of $89.3 billion in total construction value delivered by single-family general contractors in 2007 was subcontracted out. Subcontracting amounted to half of $34.6 billion worth of construction among multifamily general contractors, 22 percent of $180.1 billion for operative builders and 23 percent of the $52.1 billion for residential remodelers.
• These results are consistent with findings from NAHB’s monthly Builder Economic Council survey. Among the single-family builders responding, 40 percent said they subcontracted 100 percent of their work and another 39 percent subcontracted 76 percent to 99 percent of the work. The same builders used 24 specialty trade contractors in the process of building the average single-family home.
• Seventy-four percent of a total of 477,950 specialty trade contractors rang up less than $1 million in business in 2007.
• Under U.S. Small Business Administration standards, at least 96 percent of residential builders and remodelers were small (defined as doing no more than $33.5 million in annual business). Also considered small were 94 percent of land developer (less than $7.0 million) and 98 percent of specialty trade contractor (less than $14 million) establishments. Most of the home building and trade contractor establishments were far below the SBA ceilings.

Source:  NAHB

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SEC Sends More Subpoenas in Mortgage Probe: Sources

Friday December 17, 2010

Regulators have opened a new line of inquiry in their mortgage foreclosure probe and are asking big Wall Street banks about the beginning stages of mortgage securitization, two sources familiar with the probe said.

The Securities and Exchange Commission launched the new phase of its investigation by sending out a fresh round of subpoenas last week to big banks like Bank of America Corp, Citigroup Inc, JPMorgan Chase & Co, Goldman Sachs Group Inc and Wells Fargo & Co, the sources said.

The subpoenas focus on the earliest stage of the mortgage securitization process, said the sources, who requested anonymity because the probe is not public.

The sources said the SEC is asking for information about the role of so-called "master servicers" -- specialized firms that oversee the selection and maintenance of the large pool of home loans that go into every mortgage-backed bond.

In many cases, Wall Street banks that underwrite mortgage-backed securities either own their own master servicing firms or are closely aligned with one.

In the fall, the SEC began looking into the banks' foreclosure practices following allegations that mortgage servicers like Bank of America were using shoddy paperwork to evict delinquent borrowers from their homes.

The Justice Department, banking regulators and the attorneys general in all 50 U.S. states are also probing potential wrongdoing.

One of the sources said the SEC is seeking information about the role banks had in mortgage securitization. The regulator is also looking at the role trustees for the trusts that issued the mortgage-backed securities had in monitoring the performance of the underlying loans.

The SEC is looking at whether loans were properly transferred to the trusts that issued the securities, the source said.

The renewed look at the securitization process is an extension of the SEC's preliminary probe into the mortgage mess. The SEC's regional offices are all looking at some aspect of the foreclosure crisis.

The SEC had no comment.

Separately, the SEC is still investigating banks, credit rating agencies and individuals in connection with the 2007-09 subprime crisis. Those investigations center around potential misrepresentations to investors about the value of the mortgage-backed securities that helped fuel the crisis.

The agency has filed some high-profile cases, including one against former Countrywide Financial chief Angelo Mozilo and another against Goldman Sachs.

Banking regulators, including the Federal Reserve, are feverishly reviewing lenders' foreclosure practices and are expected to reveal their findings in January.

In particular, the Fed is concerned about investors accusing lenders of misrepresenting the loans that underpin mortgage securities, and demanding repayment.

That has already happened with Bank of America, which has started negotiating with a group of angry mortgage investors, including BlackRock Inc.

Bank of America, Citigroup, JPMorgan and Goldman had no comment. Wells Fargo said it is "always working with regulators and others who are interested in its servicing business" but declined to comment on whether the bank had received a subpoena.

Source: Reuters

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Housing Bust? So What? We Still Want to Own

Thursday, December 16, 2010

The American Dream is still alive and kicking, including within immigrant and minority communities, according to a survey from mortgage giant Fannie Mae.

The housing crisis hasn't quenched the homeownership thirst, the company found. More than 51% of people said the bust did not change their willingness to buy a home and an additional 27% said it actually made them more likely to do so.

"The crisis has not put a dent in the desire to own," said Doug Duncan, Fannie's chief economist, "although it may have changed the reasons that people want to own."

The report, the first close analysis Fannie has taken of consumer attitudes about the rent-or-own decision, found that qualitative reasons -- like having the ability to remodel or to send the kids to a better school -- have overtaken financial considerations as the primary motivators for homeownership.

Some misperceptions about financial benefits may help to keep it high.

"People's attitudes don't always line up with empirical facts," said Duncan.

For example, although trillions of dollars of equity were wiped out by the housing bust and millions of people will lose homes to foreclosure, nearly two-thirds of people surveyed still believe purchasing a house is a safe investment. That could be viewed as a major disconnect.

Also, more than half the public thought buying a home was a good idea financially even if they plan to move out in less than three years. That's actually rarely true because transactional costs like real estate commissions, title insurance costs and mortgage fees take a big cut off the top of selling and purchase prices.

Furthermore, a huge majority, 86% of those surveyed, cite income-tax benefits -- mostly the mortgage interest deduction -- as a big reason to buy. That benefit, however, is very small for most homeowners or even nonexistent.

"Lower-income homeowners, for example, don't itemize," said Duncan, "so there is no tax benefit for them at all."

Fannie found that no matter what their ethnicity or immigration status, Americans generally share similar positive attitudes toward homeownership, even though there are substantial differences among these groups in homeownership rates.

It seems that economic opportunities, not attitudes, account for much of the variation.

Only 44% of African Americans own homes, for instance, compared with 71% of whites, but that disparity starts to vanish among families in stronger financial circumstances. African Americans' homeownership rises to 60% for those earning between $50,000 and $99,000, for example.

The survey findings have implications for Fannie's business model. Non-Hispanic whites are projected to account for just 46% of the population by 2050. Immigration will account for most of the population growth between now and then.

And since, as the report stated, "strong homeownership aspirations exist across races, ethnicities and immigrant groups," Fannie can count on future demand for owner-occupied homes remaining strong, as long as the economy cooperates. 

Source: CNNMoney.com

Record Plunge in Foreclosures, Thanks to Robosigners

Thursday, December 16, 2010

The number of foreclosure notices filed in November plunged 21%, the biggest month-over-month drop ever recorded by RealtyTrac, the online foreclosure marketer. Filings fell 14% compared with November 2009.

The number of Americans who actually lost their homes to bank repossessions plummeted even more steeply -- to 67,428. That was off a whopping 28% from 93,236 in October. Repossessions are down a third since September.

The drop in total filings, which include notices of default, scheduled auctions and repossessions, followed a 4% decline a month earlier. RealtyTrac CEO James Saccacio attributed the downtrend to fallout from the recent robo-signing controversy.

"[That] forced lenders and servicers to hit the pause button on many foreclosures while they scrambled to revamp their internal procedures and revise or resubmit questionable paperwork," he said.

Robo-signing exposed sloppy industry practices that critics charged violated state laws and regulations. Some lenders froze the foreclosure process for all their loans until they could check whether their procedures were flawed and make any needed corrections.

The robo-signing moratoriums were responsible for the lion's share of the decrease in November filings, said Rick Sharga, spokesman for RealtyTrac.

"I wish the report was actually good news," he said. "But it's just an artificial drop. For most borrowers in foreclosure, it will be a temporary reprieve."

As evidence, Sharga pointed out that in judicial foreclosure states, ones where courts are involved and where banks are most vulnerable to scrutiny over their foreclosure practices, filings dropped substantially more than in states where courts do not usually participate in foreclosure actions.

There were 34% fewer auctions scheduled in judicial states, month-over-month, compared with a 7% decline in non-judicial states. Even that small drop was probably driven by an excess of caution among the banks, Sharga said.

Already, the banks have begun to restart the foreclosure process. Bank of America announced last week that it was phasing out its moratorium.

Sharga discounted economic factors as a major contributor to the foreclosure notice drop. Unemployment remains stubbornly high, home prices have taken another dip and significant improvement in consumer confidence has been elusive.

The temporary freezes likely won't benefit many homeowners, he added: Most will still lose their homes.

"There w