Archive for the ‘Housing Article’ Category

Minutes show Federal Reserve still concerned with housing

Wednesday, January 6th, 2010

ABC News reported Wednesday that some Federal Reserve officials worry the housing recovery could be interrupted when the government’s purchase of $1.25 trillion in mortgage-backed securities winds down by the end of March.

“Some participants … noted the risk that improvements in the housing sector might be undercut next year as the Federal Reserve’s purchases of (mortgage-backed securities) wind down, the homebuyer tax credits expire, and foreclosures and distress sales continue,” minutes of the Fed’s Dec. 15-16 policy-setting meeting said.

DHW asks: Do you think the government should increase its purchase of mortgage-backed securities?

Stevens: FHA sublime, not subprime

Monday, November 16th, 2009

During a speech to the National Association of Realtors in San Diego, FHA Commissioner David Stevens said his agency is not headed for the same fate as Fannie Mae, Freddie Mac or the subprime sector. Concerns about the FHA’s financial well being were raised last week when it was revealed in an independent audit that the agency’s funds were below legal guidelines.

The Commissioner sought to minimize these concerns, reporting the agency had $31 billion in capital – an increase of $3.5 billion from a year ago.

Stevens went on to say that the FHA is  “the only participant in home financing services in the U.S. economy that hasn’t needed a bailout, hasn’t needed (funds from the government’s Troubled Asset Relief Program), hasn’t needed special assistance and is still completely self-sustaining.”

The AP reports the FHA has insured almost 25 percent of all new loans made in 2009. Eighty-percent of these loans represent first time home buyers.

Stevens rejected comparisons between the FHA and the subprime market.  “Nothing could be further from the truth,” he said, stressing the FHA has far more stringent underwriting guidelines for the loans it insures.

As the unemployment rate has risen, so have FHA’s losses. According to the Mortgage Bankers Association, approximately 17 percent of FHA borrowers are at least one payment behind or in foreclosure. This compares with 13 percent for all loans.

The FHA does not make loans. It insures against default, taking much of the risk away from lenders. FHA loans have grown in popularity in recent years as credit markets have tightened up. The agency’s 203K rehab loan is also growing in popularity as more first-time home buyers purchase foreclosures.

DHW asks: Do you think the FHA is at risk of needing a government bailout?

Cities leading the country in price reductions

Monday, November 16th, 2009

As any good Realtor will tell you, price moves a home. But sometimes Realtors (as well as sellers) are afraid to take their own advice. As housing evaluations have dropped around the country, listing prices have been slow to follow. To get the job done, and your home sold, a price reduction might be in order.  However, nothing beats pricing a home correctly from the start. Even with price reductions, you may never fully catch up the the market. No groundhog has popped its head up to officially declare the housing decline over.

Here is a slide show of cities leading the country in price reductions.

DHW asks: Do you see your city on this list?

The South will rise again, but in a good way.

Monday, November 16th, 2009

A survey released last week by Move.com, a real estate website, shows 1 in 5 Americans plan on purchasing a home within the next year. The survey also revealed these buyers are most likely to be 34 years of age or younger and live in the South or West.

It should be noted this survey was taken before the housing tax credit extensions were announced.

DHW asks: Do you intend to buy a home within the next year?

Will expanding the housing tax credits beyond first time homebuyers contribute to housing inventory woes?

Sunday, November 15th, 2009

The Capital published an intriguing article addressing the potential side-effects of expanding the housing tax credits beyond first time homebuyers. The article raises some fair questions with regard to existing homes needing to be liquidated so that current homeowners can take advantage of the housing tax credits now afforded to them. The Capital article focuses on housing inventory in D.C. and its surrounding area. However, this potential side-effect could present itself in other parts of the country.

DHW asks: Do you think expanding the housing tax credits beyond first time homebuyers will increase housing inventories?

Realtors forecast uptick in home prices 2010

Saturday, November 14th, 2009

Lawrence Yun, chief economist for the National Association of Realtors, predicted on Friday that home prices will rise in 2010. If his prediction holds true, home prices will see their first increase in four years.

Yun pointed to the current price-income ratio of 2.4 as evidence of pent-up demand in the market. The price-income ratio accelerated from a norm of 2.6 in 1984-2001 to 3.3 in 2005. This means the price-income ratio has dipped below its pre-bubble rate. 

The housing tax credit extension is also seen as a contributing factor to rising homes prices next year.   

DHW asks: Do you think home prices will rise in 2010?

Consumer sentiment takes unexpected plunge

Friday, November 13th, 2009

Despite a drop in jobless claims and and a bullish stock market, the Reuters/University of Michigan Surveys of Consumers reports its consumer sentiment index for November plunged to 66 from 70.6 in October. Some had expected the November preliminary sentiment index to rise.

DHW asks: Do you agree with the sentiment index?

Audit: FHA’s reserve funds way below what law requires

Thursday, November 12th, 2009

From The Washington Post : ‘FHA’s cash reserves have dropped well below amount required by law, audit shows’

DHW asks: Do you think the FHA’s reserves will hit zero?

FHA loan limits in your area

Foreclosures down but not out

Thursday, November 12th, 2009

U.S. foreclosures sank for a third consecutive month in October, down 3% from the previous month. However, many feel this trend will not continue. Foreclosure notices were curtailed in many states due to temporary, legislative intervention. CNBC reported Nevada foreclosures “dropped 26 percent from the previous month because of new legislation requiring mediation before initiating foreclosure proceedings.” Illinois had similar legislation, but foreclosure notices skyrocketed there 56% in October from the previous month.   

States leading in foreclosure:

  1. Nevada
  2. California
  3. Florida
  4. Arizona
  5. Idaho

DHW asks: Are foreclosures down in your area?

Realogy CEO just doesn’t get it.

Wednesday, November 11th, 2009

In a CNBC interview this morning, Realogy CEO, Richard Smith, called on FHA to increase its minimum required down payment of 3.5%. Mr Smith suggested the ‘risk profile’ will have to change to stave off foreclosures. This argument only perpetuates the myth that those who put less money down are somehow less attached to their home than those who put down a significant amount. Mr Smith should have taken the opportunity to call on the administration and Congress to cure the real problems that cause mortgage delinquencies.

The Urban Institute, a Washington D.C. based think tank, issued a study recently that revealed some interesting, though not surprising, data. Those who put little or no money down tend to be more poor than those who put, say, 20% down. They are also less likely to have health insurance. Someone who has health insurance is more likely to miss less work due to an illness than someone who has no insurance. This is only one example cited in the Institute’s report. 

Although many pundits, including Mr Smith, suggest the nation’s recovery is tied to housing, it is not. It is tied to job creation. You cannot have a 10% unemployment rate and expect to have a stabilizing housing market.

Reology is the world’s largest brokerage operator. They own Coldwell Banker, Century 21, Better Homes and Gardens Real Estate and ERA. 

DHW asks: Do you think the FHA should increase its minimum required down payment?