Real Estate News

Pending Home Sales Decline in December, Remain Above a Year Ago

After reaching a 19-month high, pending home sales eased in December but stayed above year-ago levels, according to the National Association of REALTORS®.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, declined 3.5 percent to 96.6 in December from 100.1 in November but is 5.6 percent above December 2010 when it was 91.5. The data reflects contracts but not closings.

Lawrence Yun, NAR chief economist, said the trend line remains positive. “Even with a modest decline, the preceding two months of contract activity are the highest in the past four years outside of the homebuyer tax credit period,” he said. “Contract failures remain an issue, reported by one-third of REALTORS® over the past few months, but home buyers are not giving up.”

Yun said some buyers successfully complete the sale after a contract delay, while others stay in the market after a contract failure and make another offer. “Housing affordability conditions are too good to pass up,” he said. “Our hope is lending conditions will gradually improve with sustained increases in closed existing-home sales.”

The PHSI in the Northeast declined 3.1 percent to 74.7 in December and is 0.8 percent below a year ago. In the Midwest the index rose 4.0 percent to 95.3 and is 13.3 percent higher than December 2010. Pending home sales in the South slipped 2.6 percent to an index of 101.1 in December but are 4.9 percent above a year ago. In the West the index fell 11.0 percent in December to 107.9 but is 3.7 percent higher than December 2010.

Source: National Association of REALTORS®

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Where the Biggest Foreclosure Discounts Are

Foreclosures in the third quarter sold, on average, for about a 34 percent discount compared to the average sales price of homes not in foreclosure, according to the latest report from RealtyTrac.

But in some metro areas discounts can be even larger between foreclosures and other home sales.

Here are the metro areas that offered some of the largest discounts in foreclosure sales in the third quarter of 2011:

Trenton-Ewing, N.J.: The average price of a foreclosure sale here was $108,302 — which is nearly 68 percent below the average sales price of a home not in foreclosure. In the third quarter, foreclosures accounted for 8 percent of all sales in the metro area.
St. Louis: Foreclosures sold for an average price of $80,545 — nearly 55 percent below the average sales price of a home not in foreclosure. Foreclosure accounted for nearly 13 percent of all home sales in the St. Louis metro area.
Milwaukee: The average foreclosure sold for $93,250, about 53 percent below the average sales price of a home not in foreclosure. Foreclosure sales accounted for 17 percent of all sales in the area.

Other metro areas posting large foreclosure discounts: Springfield, Mass. (52 percent); Saginaw, Mich. (52 percent); New Haven-Milford, Conn. (51 percent); Memphis (51 percent); San Francisco (51 percent); Toledo, Ohio (50 percent); Bridgeport-Stamford-Norwalk, Conn. (50 percent); and Atlanta (50 percent).

Source: “Foreclosures Account for 20% of Residential Sales in Q3,” RISMedia (Jan. 25, 2012)

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Mortgage Rates Rise After Posting Record Lows

Mortgage rates started to edge higher this week, after a series of recent positive reports showing the housing market on the mend, Freddie Mac reported in its weekly mortgage market survey.

The 30-year fixed-rate mortgage after posting all-time record lows for the past three weeks reversed course this week and ticked up to 3.98 percent. Still, this is the eighth consecutive week that 30-year fixed-rate mortgages have remained below 4 percent, Freddie Mac reported.

“Fixed mortgage rates ticked up this week as the housing market ended 2011 on a high note,” Frank Nothaft, Freddie Mac’s chief economist, said in a statement. Existing-home sales increased 5 percent in December, the largest amount since May 2010.

Here’s a closer look at mortgage rates for the week ending Jan. 26:

30-year fixed-rate mortgages: averaged 3.98 percent, with an average 0.7 point, up from last week’s low of 3.88 percent. A year ago at this time, 30-year rates averaged 4.80 percent.
15-year fixed-rate mortgages: averaged 3.24 percent, with an average 0.8 point, inching up after last week’s 3.17 percent average. Last year at this time, 15-year rates averaged 4.09 percent.
5-year adjustable-rate mortgages: averaged 2.85 percent, with an average 0.7 point, also up from last week’s 2.82 average. Last year at this time, 5-year ARMs averaged 3.70 percent.
1-year ARMs: averaged 2.74 percent this week, with an average 0.6 point–holding at last week’s 2.74 percent average. A year ago at this time, 1-year ARMs averaged 3.26 percent.

Source: Freddie Mac

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Builders Feel the Most Upbeat in More Than 4 Years

Builder confidence is at its highest level since June 2007, yet another sign that things are finally perking up in the new-home market, which has faced some of its darkest days on record this past year.

For the fourth consecutive month, builder sentiment for newly built, single-family homes was on the rise, according to the National Association of Home Builders and Wells Fargo Housing Market Index. The index measures builder sentiment on current and future sales conditions and buyer traffic.

The latest increase in the January index is “universally represented across every index component and region,” said Bob Nielsen, NAHB chairman.

“This good news comes on the heels of several months of gains in single-family housing starts and sales, and is yet another indication of the gradual but steady improvement that is beginning to take hold in an increasing number of housing markets nationwide,” Nielsen said.

Coming Off a Dismal 2011

The Commerce Department reported Thursday that for the third straight month, single-family home construction rose 4.5 percent in December. However, overall housing starts for the month dropped 4.1 percent, with gains in the single-family sector offset by a nearly 28 percent drop in apartment construction in December.

The latest news wraps up a dismal year for new-home building, with 2011 marking the fewest number of single-family homes built in half-century. In all, builders started about 606,900 homes in 2011 — that’s half the 1.2 million economists consider healthy for the sector.

Nevertheless, despite the mostly sluggish year for the sector, building did start to pick up in the last part of 2011 and housing analysts are upbeat that will continue. “We expect further sustained gains in starts and permits over the next few months; a real recovery is getting started,” Ian Shepherdson, chief U.S. economist at High Frequency Economics, told the Associated Press.
Threats to Recovery Remain

NAHB Chief Economist David Crowe warns that “caution remains the word of the day as many builders continue to voice concerns about potential clients being unable to qualify for an affordable mortgage, appraisals coming through below construction cost, and the continuing flow of foreclosed properties hitting the market.”

Source: National Association of Home Builders and “December Ends Worst Year for Single-Family Home Construction,” Associated Press (Jan. 19, 2012)

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10 Housing Markets Getting the Most Web Traffic

Chicago continues to garner the most Web traffic at Realtor.com, taking the No. 1 spot once again for the highest search ranking in December at Realtor.com.

Based on rankings of 146 metro markets, here are the cities that had the highest search rankings for December 2011 at Realtor.com:

1. Chicago
Median list price: $189,000

2. Detroit
Median list price: $80,000

3. Los Angeles-Long Beach, Calif.
Median list price: $324,900

4. Phoenix-Mesa, Ariz.
Median list price: $165,000

5. Atlanta
Median list price: $150,000

6. Tampa-St. Petersburg-Clearwater, Fla.
Median list price: $139,900

7. Philadelphia, Pa.-N.J.
Median list price: $224,950

8. Dallas
Median list price: $190,000

9. Las Vegas
Median list price: $120,000

10. Orlando, Fla.
Median list price: $155,000

By Melissa Dittmann Tracey for REALTOR® Magazine’s Daily News

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Banks, Gov’t Near Deal on Foreclosure Settlement

Up to 1 million at-risk, underwater borrowers may be eligible for a reduction on their mortgage principal, if a settlement between big banks and government officials gets the final approval.

The mortgage aid is reportedly on the table as big banks and federal and state government officials are nearing an end to months of settlement talks stemming from foreclosure abuses allegedly made by banks that caused many home owners to lose their home.

“We’re very close to a settlement that would both fix the servicing problems, but also help over a million families around the country stay in their homes and get help,” Shaun Donovan, U.S. Housing and Urban Development Secretary, said during a recent forum at the Winter Meeting of the U.S. Conference of Mayors in Washington.

Under the proposed settlement, major lenders J.P. Morgan Chase, Bank of America, Wells Fargo, Citigroup, and Ally Financial would pay between $20 billion to $25 billion to settle alleged foreclosure abuses.

Donovan also said banks also would reduce the mortgage principal of up to 1 million borrowers by about $20,000 each. Furthermore, he noted that some families who were wrongly foreclosed upon may get compensated as a result of the settlement.

Source: “Foreclosure Deal With Banks Is ‘Very Close,’ HUD’s Chief Says,” Reuters (Jan. 18, 2012)

Wanted: Skilled Appraisers

In markets where foreclosures and distressed properties are common, experienced appraisers should be used to conduct the complex appraisals, says Appraisal Institute President Sara Stephens.

However, the Appraisal Institute has acknowledged that new rules blocking lenders from hiring their own appraisers mean that appraisers are often hired by appraisal management companies, which generally absorb some of the fee that appraisers earn.

The National Association of REALTORS® has long asserted that appraisals conducted by less experienced appraisers can derail transactions and impede the market’s recovery. A recent REALTOR® Magazine webinar addresses these issues and offers advice on how to work with appraisers. Download the presentation slides or playback the event recording.

Source: “Unskilled Appraisers Seen as Problem,” NASDAQ (01/17/12)

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Don’t Lag on Winter Home Maintenance

Homes may require some extra attention when it comes to maintenance to protect itself against the cold, harsh weather.

A recent article at Realty Times offers up some maintenance tips for the winter months:

Keep out drafts. Twice a year check your windows and doors for any air leaks, and add caulking, if needed. If extra caulking won’t suffice and you don’t have the money for a replacement, consider adding a storm door to keep out drafts or at least purchasing a draft blocker, which lies at the bottom of your door to block out the cold air.

Check the heating system. “Central heat and air units need to be checked over,” the Realty Times article notes. “When a unit is well-serviced it will save you fuel and thus money.”

Assess the ductwork. Make a trip to the attic to ensure that any parts haven’t become disconnected as well as a critter hasn’t chewed through any duct work.

Clean the gutters. Gutters can become clogged of leaves or other debris. When that happens, they can hold water, which can eventually rot away the siding or roof of your home. Make sure to keep the gutters clean.

Prevent freezing pipes. “When the weather drops below freezing you need to keep your pipes from freezing,” the Realty Times article notes. “Let faucets drip and unhook all outdoor hoses.”

Read more winter maintenance tips at Realty Times. NAR’s consumer site HouseLogic.com also has thorough tips and information for seasonal maintenance that you can provide to your customers and clients.

Source: “Winter Home Maintenance,” Realty Times (Jan. 19, 2012)

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Mortgage Applications Surge 23%

Record-low mortgage rates sparked a wave in mortgage applications for home purchase and refinancings last week, increasing more than 20 percent in a week, the Mortgage Bankers Association reports.

For the week ending Jan. 13, mortgage applications for refinancing applications jumped 26.4 percent while home purchase applications, a future gauge for home buying, increased 10.3 percent.

“With mortgage rates reaching new lows, refinance volume jumped,” Michael Fratantoni, MBA’s vice president of research and economics, said in a statement. “Purchase activity also increased as buyers returned to the market after the holiday season.”

Freddie Mac reported that 30-year fixed-rate mortgage averaged a record low of 3.89 percent for the week ending Jan. 12. For six consecutive weeks, 30-year fixed-rate mortgages — the most popular choice among home buyers — has averaged below 4 percent.

Source: “Mortgage Applications Surge on Refinancing Demand,” Reuters (Jan. 18, 2012)

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Home Inspector Sues Agent for Calling Him ‘Total Idiot’

A Lincoln, Neb., area housing inspector says he resents being described as a “total idiot” in an e-mail that was reportedly sent to more than 400 real estate agents, and he’s suing a real estate agent and her company for the name-calling.

According to the lawsuit, home inspector Matthew Steinhausen alleges that real estate agent Shelly Nitz was asked for feedback from agents at her company, Wood Bros. Realty and HomeServices of Nebraska, about Steinhausen.

In response, Steinhausen says in court documents that Nitz responded in an e-mail to the 400 or so agents: “He did an inspection in Seward for the agent that sold one of my listings. I will never let him near one of my listings ever again. Total idiot.”

In the defamation lawsuit, Steinhausen says the comment has greatly hurt his business and has resulted in more than $50,000 in damages.

“When I lose work because of a falsehood e-mailed en masse accusing me of being an idiot, it’s infuriating,” Steinhausen told the Lincoln Journal Star. Steinhausen told the Lincoln Journal Star that he felt Nitz was upset over an August 2008 inspection he did of one of her listings that she may have felt was overly critical.

Nitz and HomeServices have declined to comment publicly on the lawsuit.

Source: “Nebraskan Sues over ‘Total Idiot’ Description,” Associated Press (Jan. 17, 2012) and “Idiot Comment Spurs Lawsuit,” The Lincoln Journal Star (Jan. 17, 2012)

Obama’s State of the Union: More Aid Coming to Housing

President Obama, in his State of the Union address Tuesday, vowed to keep the “American dream” alive, which included several efforts aimed at lifting the economy and the ailing housing market.

Obama said that he intends to submit a plan to Congress that will help more underwater home owners — those who owe more than their home’s current value — to refinance.

“No more red tape,” Obama said during the speech. “No more runaround from the banks.”

Obama said he will propose expanding the Home Affordable Refinance Program so more home owners can take advantage of low mortgage rates, which could save home owners about $3,000 a year on their mortgage.

Obama also said he will start a new fraud task force aimed at cracking down on mortgage fraud. He called for more investigations into mortgage fraud and other abusive practices that led to the housing crisis.

“This new unit will hold accountable those who broke the law, speed assistance to home owners, and help turn the page on an era of recklessness that hurt so many Americans,” Obama said in his speech.

NAR: Housing Needs to Be Top Priority

Meanwhile, the National Association of REALTORS® in a statement commended Obama for his remarks during the State of the Union in support of home owners and those who are struggling in the housing market.

NAR’s 2012 President Moe Veissi urged the White House to host a national housing summit to further discussions about how to advance policies that could move the housing market toward recovery.

“We must make housing a national public policy priority,” Veissi said in a statement. “REALTORS® believe that more must be done to stem the rising inventory of foreclosed homes and address the lack of available and affordable mortgage financing, which is inhibiting a meaningful housing market recovery.”

Veissi said more needs to be done to help struggling home owners who are at risk of losing their homes, such as by modifying loans and helping home owners significantly reduce their monthly mortgage payments. Veissi also called for changes to the short sale process, which is often “time-consuming” and “inefficient” when it comes to lenders approving “reasonable offers when families can no longer keep their homes.”

“Keeping people in their homes and reducing foreclosures will help minimize the negative impact of distressed properties on home values and neighborhoods,” Veissi said in the statement. “Expanding financing opportunities could also help reduce excess inventories of distressed properties. Increased fees and higher down payments are making it harder for many creditworthy home buyers and investors to obtain financing, thwarting the sale of distressed properties and prolonging the impact those homes have on local markets.”

Source: “Obama Proposes New Mortgage Refinance Program, Fraud Task Force,” HousingWire (Jan. 24, 2012) and the National Association of REALTORS®

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Home Affordability Offering Up 40-Year Deals

Home affordability is at 1971 levels, due to falling home prices and record low mortgage rates, pushing home ownership in reach to more families, according to the U.S. Department of Housing and Urban Development (HUD).

Home owners are bringing in nearly double the median income they need to cover the cost of an average home, HousingPredictor reports.

“With interest rates at historically low levels and markets across the country beginning to improve, home ownership is within reach of more households,” Bob Nielsen, chairman of the National Association of Home Builders, said in a statement.

Home sales have been ticking up, according to recent reports by the National Association of REALTORS®, the National Association of Home Builders, as well as the Obama administration’s December Housing Scorecard.

However, some consumers are finding more stringent lending standards for getting a mortgage a roadblock to home ownership, and some housing experts have blamed tighter underwriting standards in recent years for continuing to hold back the housing market.

Source: “Home Affordability Reaches 1971 Level,” HousingPredictor (Jan. 11, 2012)

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Banks Face Scrutiny Over Home Insurance Steering

The New York State’s Department of Financial Services is investigating several big banks to determine if they illegally steered distressed home owners toward overpriced insurance policies, The New York Times reports.

The agency has found cases where large banks have steered distressed home owners into insurance policies “up to 10 times as costly as the home owners’ original plans,” The New York Times reports. For example, in one case, the agency found that a home owner was paying $2,000 a year to State Farm but then saw an increase to $6,000 a year when switching to a new insurer.

The agency is also investigating whether the banks showed conflicts of interest in offering customers home insurance policies that may have been affiliated with the banks rather than shopping for the best rate in the open market.

“In general, mortgage servicers are allowed to take out insurance policies on homes after a home owner allows existing coverage to lapse,” The New York Times’ article explains. “Though home owners have little choice and sometimes little notice about the new plans, they often end up shouldering the costs of the insurance through their mortgage payments.”

JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo are among the major banks named in the investigation.

Source: “Big Banks Face Inquiry over Home Insurance,” The New York Times (Jan. 10, 2012)

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Mortgage Applications Soar 4.5%

Mortgage applications for purchase — a gauge of future home buying — increased 8.1 percent last week, the Mortgage Bankers Association reports. The purchase index on an unadjusted basis now stands at 41.9 percent higher than last year, signaling more people taking out loans to buy homes.

More home owners are also taking advantage of low interest rates. Refinance activity last week also increased, inching up 3.3 percent from a week earlier. Overall, mortgage applications were up 4.5 percent last week.

For the fifth consecutive week, 30-year fixed-rate mortgages have averaged at historical lows below 4 percent, Freddie Mac reported last week. For the week ending Jan. 5, 30-year fixed-rate mortgages averaged 3.91 percent, with an average 0.8 point, matching the previous record low set a few weeks ago.

Source: “Mortgage Applications Rise 4.5%,” HousingWire (Jan. 11, 2012)

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MetLife Closes Mortgage-Origination Business

MetLife Inc., the nation’s largest insurer, announced Tuesday it is getting out of the mortgage-origination business and that it will no longer be accepting new mortgage applications as it prepares to shutter its residential mortgage unit. However, the company says MetLife Home Loans will continue to offer reverse mortgages as well as service its current mortgage customers.

For any loan applications already in the pipeline, the company said it will continue to process those loans and expects most of the loans to close within 90 days.

In October, MetLife had said that excessive regulations in the banking industry was prompting the company to get out of the mortgage business. Last month, General Electric agreed to buy MetLife Bank for about $7.5 billion. However, MetLife was unable to find a buyer for its mortgage business.

The closing of the company’s home mortgage origination business is expected to cost MetLife at least $90 million, and 4,300 employees are expected to lose their jobs.

In 2010, MetLife was the 13 largest mortgage originator in the nation, issuing more than $22 billion in home loans.

Source: MetLife and “MetLife Exits Forward Mortgage Business,” HousingWire (Jan. 10, 2012)

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Fannie Mae CEO to Resign

Michael Williams, the CEO of Fannie Mae, announced on Tuesday that he plans to step down as CEO, but he will continue on in his role until a successor is named.

“The time is right to turn over the reins to a new leader,” Williams said in a statement, not providing a specific reason for his departure. Williams became CEO in 2009 of the financially struggling mortgage giant, which reported a $5.1 billion third-quarter loss in November.

Williams’ announcement follows a few months after Charles E. Haldeman, the CEO of sister company Freddie Mac, announced plans to step down as CEO sometime this year too.

Williams, Haldeman, and other executives at the GSEs have faced increased scrutiny on Capitol Hill in recent months over their hefty paychecks and bonuses, which have come at a time when the mortgage giants have continued to ask for more bailout money from taxpayers, CNNMoney reports. Williams and Haldeman’s paychecks in 2011 were expected to total about $6 million a piece.

The mortgage giants continue to face steep losses due to the foreclosure crisis. To date, Fannie Mae and Freddie Mac have received about $150 billion in bailout money, but that number could grow to $259 billion, according to the Federal Housing Finance Administration, the mortgage giants’ government regulator.

Source: “Fannie Mae CEO to Resign,” CNNMoney (Jan. 10, 2012) and “Top Executive Announces Plan to Leave Fannie Mae,” The New York Times (Jan. 10, 2012)

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A House That’s for the Dogs

Most homes are not designed with the family pet in mind, but Fauna Plus Design of Kobe, Japan, designs dog-friendly homes that are both attractive, practical, and attentive to animal behavior. To maximize space, the company has designed a home with an indoor kennel for a Labrador retriever located under a children’s playroom and another home with a waterproof indoor kennel, located under a study, for two dachshunds.

Pet-friendly design also might involve kennels made from cabinets featuring odor-absorbing materials, ventilation systems that remove hair, outdoor dog showers, and special backyard-accessible spaces for dogs. These concepts have not been embraced in the United States, apart from doggy doors and pet-resistant fabrics, despite the fact that Americans shelled out over $50 billion on their pets last year, according to the American Pet Products Association.

The Pet Realty Network, however, enables U.S. real estate agents to meet the needs of clients with pets, helping them to locate homes with elevators, mudrooms with dog washes, and other useful features. Still, experts say that it remains to be seen whether home design will evolve to fully embrace the family pet.

Source: “A House That’s for the Dogs,” Inman News (01/06/12)

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Chicago Finds New Purpose for Foreclosed Condos

More cities are faced with the question: What should happen to the vacant homes left behind from the foreclosure crisis?

On a national level, the Treasury Department, the Federal Housing Finance Agency, and the U.S. Department of Housing and Urban Development are working on a program to transform single-family foreclosed homes into rental properties. The federal agencies are not releasing details yet of how the program will work, but an REO rental program for Fannie Mae, Freddie Mac, and the Federal Housing Administration properties is expected to take shape sometime this year.

Until then, some cities are taking matters into their own hands. In Chicago, city officials have launched a program to rent out foreclosed condos and turn them into affordable apartments. City officials are selling entire buildings to investors and developers of vacant, foreclosed condo units, as the investors vow to rehab the condo units and then rent them out, the Chicago Tribune reports.

In exchange, the lenders, who typically own the units when they are in foreclosure, receive a share of the proceeds from a sale after any liens have been removed.

So far, about 150 condo buildings in the city are in the process of being converted into apartment buildings. What’s more, Community Investment Corp., a nonprofit mortgage lender in the city, estimates more than 250 buildings also could be salvageable in the city through the program.

“We’re trying to make use of these buildings instead of losing them,” John “Jack” Markowski, president of Community Investment Corp., told the Tribune. “All we want to do is put the property back together and restore it back to the rental housing stock of the city.”

Source: “Chicago Program Turns Vacant Condo Buildings into Affordable Rentals,” Chicago Tribune (Jan. 6, 2012)

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More Cities Join ‘Improving’ Housing Market List The National

Association of Home Builders’ list of improving housing markets nearly doubled this month, as more cities showed signs of a rebound with their real estate markets.

The list now contains 76 improving markets, up from 41 in December, according to NAHB’s and First American’s Improving Markets Index, a monthly gauge that measures a city’s improvements in housing permits, employment, and housing prices for at least six months.

“The fact that the list of improving housing markets nearly doubled this month shows that a significant, positive trend is developing, and is even more relevant when you consider the expanding geographic distribution of the list — which now includes 31 states and the District of Columbia,” NAHB Chairman Bob Nielsen said in a statement.

These cities were added to the list in January:

Florence, Ala.
Tuscaloosa, Ala.
Fayetteville, Ark.
Denver, Col.
Greeley, Col.
Bridgeport, Conn.
New Haven, Conn.
Cape Coral, Fla.
Jacksonville, Fla.
Punta Gorda, Fla.
Honolulu, Hawaii
Ames, Iowa
Des Moines, Iowa
Dubuque, Iowa
Elkhart, Ind.
Indianapolis, Ind.
Lafayette, Ind.
Lake Charles, La.
Worcester, Mass.
Grand Rapids, Mich.
Lansing, Mich.
Monroe, Mich.
Minneapolis, Minn.
Columbia, Mo.
Joplin, Mo.
Fargo, N.D.
Manchester, N.H.
Cincinnati, Ohio
Oklahoma City, Okla.
Tulsa, Okla.
Corvallis, Ore.
Erie, Pa.
Philadelphia, Pa.
Chattanooga, Tenn.
Clarksville, Tenn.
Nashville, Tenn.
College Station, Texas
Dallas, Texas
Victoria, Texas
Madison, Wisc.

View a complete list of all 76 metro areas on the Improving Markets Index list at www.nahb.org/imi.

Source: National Association of Home Builders

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Rental History: More Important in Getting a Mortgage?

Borrowers who have a history of paying rent on time may see a boost to their credit score.

Experian, a leading credit report company, added a section to its credit reports last year that reflected on-time rent payments, which helped give a boost in the credit scores to some on-time rent payers. Now the two other major credit reporting companies are following suit.

CoreLogic and FICO recently announced they are also adding a score that reflects payment histories from landlords, The New York Times reports.

“Evidence of positive rental payments could be a plus for consumers,” Joanne Gaskin, FICO’s director of product management global scoring, told The New York Times.

Nearly half of high-risk consumers saw an increase of 100 points or more after their rental history was added to their credit report, says Brannan Johnston, the managing director of Experian’s rent bureau. Consumers with average or higher credit scores, on the other hand, did not see any major difference to their scores.

For former home owners who lost their homes to foreclosure, they may be able to rebuild their credit histories more quickly now by showing they are “very responsible renters,” Tim Grace, senior vice president of CoreLogic, told The New York Times.

Source: “A Good Rental History Can Help Borrowers,” The New York Times (Jan. 5, 2012)

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Several Housing Markets Head for Appreciation in 2012

A boom in farm prices has caused many Midwest cities to emerge as leaders for some of the strongest predictions for housing appreciation in 2012. Kansas City, Kan., came in the top spot in HousingPredictor’s annual survey, forecasting an appreciation of 5.8 percent for this year.

“The recovery is starting in housing with these cities and will eventually spread to other communities throughout the nation as the U.S. recovers from the worst collapse in real estate since the Great Depression,” according to HousingPredictor.

Here are the top cities expected to have housing appreciation in 2012 and by how much, according to HousingPredictor’s latest report:

1. Kansas City, Kan.: 5.8%

2. Topeka, Kan.: 4.7%

3. Charleston, W.V.: 4.5%

4. Oklahoma City, Okla.: 4.3%

5. Minot, N.D.: 4.2%

6. Overland Park, Kan.: 4.2%

7. Wichita, Kan.: 4.1%

8. Huntington, W.V.: 4%

9. Wheeling, W.V.: 3.9%

10. Bismarck, N.D.: 3.6%

11. Casper, Wyo.: 3.5%

12. Lake Charles, La.: 3.4%

13. Rapid City, S.D.: 3.2%

14. El Paso, Texas: 3.2%

15. Cheyenne, Wyo.: 3.2%

Source: “Best Housing Markets 2012,” HousingPredictor (January 2012)

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How Long Will Low Mortgage Rates Last?

For nine consecutive weeks, the 30-year fixed-rate mortgage has been hovering at or below record lows of 4 percent, pushing housing affordability for home buyers even higher.

But will these low rates stick around much longer?

The Federal Reserve has vowed to keep rates low through 2013 so rates likely will hang around for a few more months, at least, but whether mortgage rates will stay at the current record-lows, many experts say it’s unlikely.

The 30-year fixed-rate mortgage is expected to inch up to an average 4.5 percent for 2012 and increase to 5.4 percent in 2013, according to Freddie Mac economists’ forecasts.

While that forecast means rates are expected to move higher in the coming months, the rates will still be low by historical standards, economists told the Los Angeles Times. For comparison, 30-year rates averaged more than 16 percent in 1981 and 1982. What’s more, until 2000, rates typically were above 8 percent, Freddie Mac notes.

Despite the drop in rates, however, many home buyers have been unable to take advantage of the low rates. Lenders’ tightening of their underwriting standards for loans in the recent years following the housing crisis has shut some buyers who have poor credit, low down payments, or unsteady employment from securing a loan at today’s low rates. Freddie Mac had predicted home-purchase applications to comprise two-thirds of all mortgage applications by the end of 2011. But the Mortgage Bankers Associations says that instead about 80 percent of the mortgage applications came from home owners who wanted to refinance.

Source: “Low Mortgage Rates Likely to Continue Through 2012, Experts Say,” Los Angeles Times (Jan. 3, 2012)

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Investors Eye ‘Farmland Boom’ in Midwest

Farmland values continue to soar in the Midwest, climbing 25 percent higher than a year ago, according to the Federal Reserve of Chicago. Rising prices in corn and other agriculture has sent land prices soaring.

In Iowa alone, prices per acre have increased more than 30 percent in the past year, MSN reports.

At auctions, farmland is selling at $20,000 per acre — prices that are “once in a lifetime deal,” says auctioneer Jeffrey Obrecht.

The sudden rise in prices has caused investors to take notice.

“There isn’t a kind of person that I haven’t heard from somewhere, whether it’s the farmers from North Dakota, whether it’s a police officer from New York, bankers in Chicago and attorneys from the south,” Jason Smith, a real estate pro with Dreamdirt, told MSN about the farmland buying rush. “People, and especially business owners that have cash to park, are bringing it up here to Iowa, bringing it up to the Midwest.”

Many of the land purchases are being made with cash or investors are putting 40 to 50 percent down on the loan, housing experts say.

“Farmland doesn’t come on the market that often. It’s not like urban real estate where you see signs in the neighborhoods all the time,” Dan Piller, an agricultural reporter for The Des Moines Register, told MSN. “A good piece of farmland may only become available once every 50 years.”

Source: “On Eve of Caucus, a Different Boom in Iowa: Real Estate Prices Soar for Farmland,” MSN (Jan. 2, 2011)

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What Does the Average Home Owner Pay on a Mortgage?

Hawaii home owners tend to take on the most debt in their home purchases with an average home loan amount of $677,299, according to a recent study by LendingTree.com, which revealed the average loan amounts on residential real estate purchases in 2011. That means the average home owner in Hawaii would have a monthly payment of about $3,234 for a 30-year mortgage, before taxes and insurance, according to LendingTree data.

Meanwhile, in Mississippi, home owners take on the lowest loan amounts at $137,182or $655 monthly mortgage payments, on average.

The national average for a home loan is $222,261 with a $1,061 average monthly payment for a 30-year mortgage at 4 percent, according to LendingTree.

The following are the top states with the highest loan amounts, including the average closed home loan for 2011, according to LendingTree:

Hawaii: $667,299.33
Washington, D.C.: $393,453
New Jersey: $344,240.85
New York: $340,124.50
Maryland: $328,650.89
Connecticut: $326,416.85
Virginia: $312,930.83
California: $310,676.35
Utah: $276,211.67

See all 50 states and their ranking.

Source: LendingTree LLC

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Cities With the Largest Average Home Sizes

Where can you snag some of the largest homes in the country? AOL Real Estate used data from PropertyShark and Realtor.com to compile a list of cities that have some of the country’s largest average home sizes. Some of the cities with the largest average home size are:

1. Beverly Hills, Calif.
Average home size (square feet): 3,884
Median house price: $1.99 million

2. Malibu, Calif.
Average home size (square feet): 2,998
Median house price: $2.195 million

3. Washington, D.C.
Average home size (square feet): 2,237
Median house price: $379,000

4. Atlanta, Ga.
Average home size (square feet): 2,074
Median house price: $149,900

Where can you find some of the smallest homes? According to AOL Real Estate, New York City offers some of the smallest homes at 1,124 square feet average size (yet the median home price is $1.139 million).

See what other cities made the list for largest and smallest homes in the country at AOL Real Estate.

Source: “How Large We Live: Average Home Sizes Across the U.S.,” AOL Real Estate (Dec. 31, 2011)

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Donated Homes Increased in 2011

As the foreclosure crisis continues, experts predict that nonprofit organizations will receive even more donated homes. Bank of America plans to increase its home donations to more than 1,200 in 2012 from 150 in 2011, and Wells Fargo donated over 1,120 homes last year.

Meanwhile, the number of homes rehabilitated by Habitat for Humanity that were donated or bought at bargain prices nearly doubled to 1,210 during the year-over-year period ended in June 2011.

Many of the donated dwellings are in bad shape, but turning them over to a nonprofit gives home owners a charitable tax deduction and eliminates maintenance costs. Meanwhile, Gus Frangos, president of the Cleveland-based Cuyahoga Land Bank, says eliminating blighted properties “almost immediately stabilizes property values.”

Source: “Charities Get More Donated Homes,” USA Today (12/30/11)

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What’s in Store for Housing in 2012?

The worst for the housing market may finally be over, according to housing experts in a recent article in Kiplinger. After median home price have dropped nearly 40 percent nationwide, a rebound is taking shape — although, housing experts say, the market may stay flat for awhile before gradually ticking up.

According to housing experts in a recent Kiplinger article, here are some predictions for the real estate market in the coming year:

Home prices stabilize: Mark Zandi, chief economist at Moody’s Analytics, predicts that home prices nationwide may still drop another 3 to 5 percent in 2012, but the new year will most likely finally bring a leveling off of home prices before gains start to take shape in 2013. When markets do begin to stabilize in the new year, “price appreciation tends to spread unevenly, creating a lot of confusion about where the recovery is occurring and when,” David Stiff, chief economist at Fiserv Case-Shiller, told Kiplinger. “Even within a single city, more desirable neighborhoods will stabilize first, while prices in other neighborhoods may fall at a rapid pace.”

Housing affordability high: Housing affordability — the ratio of median home prices to median family income — will likely remain at record levels in 2012. Homes in many cities are “substantially undervalued,” the Kiplinger article notes. That may even lead to a mini bubble with double-digit spikes in prices, such as an increase of 10 to 15 percent in a given year in some markets, housing experts say.

Low mortgage rates: Helping to keep affordability high, low mortgage rates are expected to continue on in 2012 — at least the first part of the year, economists predict. The 30-year fixed-rate mortgage, the most popular among home buyers, has been hovering under a 4-percent average the past few weeks, staying in record low territory. Rates are expected to stay between 4 to 5 percent in 2012, predicts Guy Cecala, publisher of Inside Mortgage Finance, an industry publication.

Sales increases: The National Association of REALTORS® has already been showing a tick up in sales taking shape with increases in existing-home sales during the summer and early fall of 2011. High inventories of homes continue to flood the market but a drastic slowdown in new-home building the past three years is “gradually easing the surplus,” the Kiplinger article notes.

Foreclosures: Foreclosures remain the problem and still plague many markets. After a slowdown with lenders processing the paperwork, foreclosures have began to pick up once again. About 1.84 million home loans are 90 days or more delinquent and 2.17 million have finished the foreclosure process but aren’t up for sale yet, according to RealtyTrac data. Alex Villacorta, director of research and analytics at Clear Capital, told Kiplinger that he predicts regardless of the downward price pressure caused from foreclosures, overall home prices won’t fall as long as lenders bring additional foreclosures to the housing market at a steady pace.

Source: “What’s Ahead for Home Prices in 2012,” Kiplinger (January 2012)

Home Owners Try Delay Tactics to Stall Foreclosures

The average time it takes for banks to process a foreclosure — from missed mortgage payment to the final part of the process — has increased to 674 days, more than double the time frame foreclosures took just four years ago, according to LPS Applied Analytics. Four years ago, the average time nationally was 253 days.

Delinquent home owners are learning how to stay longer in their homes with some home owners taking advantage of delay tactics, according to a recent article at CNNMoney. Some stall tactics housing experts report more home owners are using to delay evictions are home owners’ challenging the bank’s foreclosure against them, requesting that lenders dig up original paperwork such as by asking for banks to produce paperwork that shows it is the legal holder of the mortgage note, or even, in some cases, home owners will declare bankruptcy, CNNMoney reports.

Housing experts say the delays are continuing to throw a thorn in the real estate market’s recovery. “People who stay in homes undergoing foreclosure for years often don’t maintain the properties, causing blight and lowering property values in the surrounding neighborhoods,” David Dunn, a partner at law firm Hogan Lovells in New York, who represents banks in foreclosure cases, told CNNMoney.

The following are the states with the longest delays in foreclosures:

Washington, D.C.: Foreclosures take on average 1,053 days
Florida: The average process time for foreclosures takes 1,027 days (or three years).
New York: 906 days

Source: “Foreclosure Free Ride: 3 Years, No Payments,” CNNMoney (Dec. 28, 2011)

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7 Cities Where List Prices Are Falling the Most

Nationally, median list prices have mostly been flat since June, but some markets are still seeing some decreases in home prices, according to the latest data from Realtor.com of 146 metro markets.

The following are the cities where list prices have fallen the most from October to November:

1. Detroit

Month-over-month decrease: -4.61%

Year-over-year decrease: -12.47%

Median list price: $84,900

2. Monmouth-Ocean, N.J.

Month-over-month decrease: -4.32%

Year-over-year decrease: -3.05%

Median list price: $300,444

3. Santa Barbara-Santa Maria-Lompoc, Calif.

Month-over-month decrease: -3.52%

Year-over-year decrease: -1.95%

Median list price: $539,250

4. Pueblo, Colo.

Month-over-month decrease: -3.45%

Year-over-year increase: 0.29%

Median list price: $139,900

5. Tulsa, Okla.

Month-over-month decrease: -3.38%

Year-over-year decrease: -5.34%

Median list price: $140,000

6. Peoria-Pekin, Ill.

Month-over-month decrease: -3.18%

Year-over-year increase: 3.71%

Median list price: $139,900

7. Charleston, W. Va.

Month-over-month decrease: -3.09%

Year-over-year increase: 6.67%

Median list price: $159,900

By Melissa Dittmann Tracey for REALTOR® Magazine’s Daily News

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Rental Boom Takes Shape

The multifamily market continues to post gains.

“Rents are rising, vacancies are falling, household formations are growing and rental supply is limited,” according to a recent report, “2012: The Year of the Landlord,” issued by Morgan Stanley. “We believe the demand for rental properties will continue to grow.”

Vacancies of rental properties dropped to 9.8 percent in the third quarter of this year compared to 10.3 percent earlier this year.

Led by strong gains in multifamily housing, groundbreaking for new-housing market soared 9.3 percent in November. Construction of multifamily homes of at least two units increased 25.3 percent in November, the Commerce Department reported last week. Starts for structures with five or more units has increased more than 30 percent from October and is nearly double year-over-year levels, Reuters reports.

Rental costs are also on their way up, increasing 2.4 percent over last year compared with an increase of 0.6 percent in 2010, Reuters reports.

Source: “America Becoming a Nation of Renters,” Reuters (Dec. 27, 2011)

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Safest Places to Live

Where are the most “secure places” — large or mid-size metro areas — in the nation to live? The annual Farmers Insurance Group of Companies ranked nearly 400 communities based on safety and security in its eighth annual study on the “most secure places to live for 2011.”

The rankings take into account such factors as crime statistics, natural disasters, housing depreciation, foreclosures, air quality, environmental hazards, life expectancy, and car accidents.

According to the Farmers Insurance Group of Companies, here are the most secure places to live among large metro areas with populations of 500,000 or more:
1. Pittsburgh, Pa.
2. Rochester, N.Y.
3. El Paso, Texas
4. Syracuse, N.Y.
5. Bethesda-Gaithersburg–Frederick, Md.
6. Buffalo-Niagara Falls, N.Y.
7. Wichita, Kan.
8. Omaha, Neb.-Council Bluffs, Iowa
9. Denver-Aurora, Colo.
10. Austin-Round Rock, Texas

The most secure places to live among mid-size cities with populations between 150,000 and 500,000 are:

Kennewick–Richland–Pasco, Wash.
2. Boulder, Colo.
3. Fargo, N.D.–Moorhead, Minn.
4. Olympia, Wash.
5. Binghamton, N.Y.
6. Sioux Falls, S.D.
7. Bellingham, Wash.
8. Lincoln, Neb.
9. Fort Collins–Loveland, Colo.
10. Rochester, Minn.

Source: Farmers Insurance Group of Companies

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Falling Home Values Mean Budget Crunches for Cities

The country has been mired in a housing crisis for the past five years; and the worst may still lie ahead for local governments, because of the time it takes for property assessments to reflect home depreciation.

The bust that began in 2007 has just started to ravage tax revenues in communities across the country — a problem that is expected to linger for years. Many local governments weathered the early years of the financial crisis partly because the property tax revenues they so heavily depend on held steady or actually rose due to assessments that still reflected inflated residential values. In their latest assessments, though, a growing number of municipalities are being forced to recognize the collapse in home prices and the shrinking tax base that comes with it.

Andrew Reschovsky, a professor of public affairs and applied economics at the University of Wisconsin at Madison, has studied the effects of the recession on city finances. He observes, “We’ll see, over the next few years, the real impact of the recession and housing crisis on local governments. I think the case can be made that we have not yet seen the worst of the impact on local governments.” This fall in Chicago, for instance, Mayor Rahm Emanuel proposed closing police stations, hiking water and sewer fees, and reducing library hours to help close a budget gap.

Thomas Fitzpatrick, an economist at the Federal Reserve Bank of Cleveland, wrote in a recent report: “If creative ways to make up for this lack of revenue are not found, local governments may face the undesirable choice of either raising property taxes or reducing funding for essential services.”

Source: “Falling Home Values Mean Budget Crunches for Cities,” Washington Post (12/26/11)

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Beware of Down Payment Gift-Giving Rules

Last year, 27 percent of first-time home buyers received a financial gift from relatives or friends that they applied toward a down payment on a new home — up from 22 percent in 2009, according to data from the National Association of REALTORS®.

While gift-giving a down payment has increased, those who receive such gifts need to make sure they follow IRS and banks’ gift-giving rules.

1. Home owners still need to come up with at least some of the down payment on their own. A spokesperson with Freddie Mac told Newsday that loans backed by Freddie Mac require that when the loan-to-value is greater than 80 percent, the buyer will need to come up with at least 5 percent of the purchase price from his or her own funds. For Fannie Mae loans, Fannie allows all down payment funds to come as a gift on one-unit principal residences. “The thing that is tricky about this is that few people know whether the loan will get sold to Fannie or Freddie,” the Newsday article notes.

2. You may need to document where the down payment money came from. “A gift letter should be signed and dated and include the giver’s name, address, and telephone number, along with his or her relationship to the borrower,” according to Total Mortgage Services in the Newsday article.

3. If you’ve had the gift for a long time, you likely won’t need to document it. If the gift has been in your bank account for three months or longer, it’s considered “seasoned” and doesn’t require a gift letter, lenders say.

Source: “Rules for ‘Gifts’ to Home Buyers,” Newsday (December 2011)

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New-Home Construction Bounces Back, Soars 9.3%

New-home construction and building permits — a future gauge of construction — surged last month, slowly helping to pull the new-home market out of one of its worst years for home building.

Builders broke ground on more homes in November, a 9.3 percent increase over October, reaching the highest level since April 2010, the Commerce Department reported Tuesday. Year-over-year, new-home starts were up 24.3 percent in November.

Home construction increased to a seasonally adjusted annual rate of 685,000 homes in November. However, while it’s an improvement, the rate is still below the 1.2 million home pace that economists consider healthy for the new-home sector.

November’s increase was mostly driven by construction of multi-family homes with at least two units, which soared 25.3 percent in November. Construction of single-family homes increased 2.3 percent for the month.

Building permits jumped 5.7 percent in November, the highest increase since March 2010, with the increase mostly driven by apartment construction permits.
Builders Feeling More Confident

Meanwhile, for the third consecutive month, builder confidence in the new-home market continued to edge up, according to the National Association of Home Builders/Wells Fargo Housing Market Index for December. The index is at its highest point since May 2010.

While the index reached 21 in December, it is still far below 50, a reading which indicates more builders view conditions as good rather than poor. The index hasn’t reached that point since the housing boom in April 2006.

“While builder confidence remains low, the consistent gains registered over the past several months are an indication that pockets of recovery are slowly starting to emerge in scattered housing markets,” Bob Nielsen, chairman of the National Association of Home Builders, said in a statement. “However, the difficulties that both builders and buyers continue to experience in accessing credit for new homes are holding back potential sales even in areas where economic conditions are improving.”

Source: “Apartment Construction Spurs 9.3% Jump in Housing Starts, But Level Remains Low,” Associated Press (Dec. 20, 2011); “U.S. Nov. Housing Starts +9.3% to 685K; Consensus +0.3%,” Dow Jones International News (Dec. 20, 2011); and National Association of Home Builders

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Which Seller Incentives Tempt Buyers?

Sellers trying to get buyers attention are offering up plenty of incentives, everything from closing-cost assistance to remodeling credits — even hot tubs, home theatre systems, flat-screen TVs, and cars, reports The Washington Times.

But these incentives “don’t actually make the deal,” says Michael Labout, regional vice president for the National Association of REALTORS®, who recalls one seller who offered up his 1970s Cadillac El Dorado in a real estate deal. “They’re as much to get buyers and agents to look at a house as anything.”

But sellers may be convinced that the extra buyers these incentives may bring in to view their home may be worth it. Some popular seller incentives catching on:

Offering a gift card to a home improvement store or a local flooring company if the property you’re trying to sell is in need of some remodeling work;
Covering some or all of the closing costs;
Offering home warranties, which will cover HVAC systems and other major appliances., usually for a year — although more home sellers are offering warranties that last longer, possibly even up to 4 or 5 years;
Paying the homeowners association dues for a year or more or covering the first year’s property taxes or condo fees;
Offering a selling agent bonus, such as $2,000 or $3,000 bonus to the buyer’s agent may help get the property shown to more potential buyers.

Source: “Incentives Upgraded in Down Market,” The Washington Times (Dec. 15, 2011)

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Does Foreclosure Counseling Work?

Borrowers who underwent foreclosure counseling are more likely — nearly twice as likely — to receive a loan modification and stay current on their mortgage, according to a new study by the Urban Institute, which analyzed about 800,000 borrowers who participated in the National Foreclosure Mitigation Counseling program from January 2008 to December 2009.

Through the program, foreclosure counselors assist home owners on budgets and guide them in how they can avoid foreclosure.

Home owners who participated in the program were at least 67 percent more likely to stay current on their mortgage within nine months after receiving a loan modification, according to the study. Also, home owners who participated in the program had their mortgage payments, on average, reduced by $176 per month, the study found.

However, the counseling program has been on the chopping block in recent months, HousingWire reports. Earlier this year, Congress cut the funding for HUD’s housing counseling programs, but in November voted to restore $40 million to counselors.

Source: “Foreclosure Counseling Doubles the Chance of Mortgage Modification,” HousingWire (Dec. 19, 2011)

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The Growing Business of Green

Pike Research estimates the market for bringing energy efficient to commercial buildings will increase to $100 billion by 2017.

Companies doing retrofits — as well as property managers — are promoting the cost savings and other benefits of energy efficient buildings. President Obama is making a renewed pitch for his green buildings initiative, with an additional $4 billion pledged for energy retrofits.

The government has been a leader in making its buildings green, using its long-time horizon to make the energy investments pay for themselves. However, the private sector will need to see a return on investment in the two-year time frame, not the six to 20 years the government will wait.

Even though increased energy efficiency can pay dividends in lower energy costs, it has yet to prove its value in rents and resale, according to Eric Bloom of Pike Research. He adds that while there is plenty of anecdotal evidence about the energy efficiency and desirability of green building, “there still isn’t enough data to factor the added value of green into appraisal and lending processes.”

There is a push to establish the value of green building. The Department of Energy and the Appraisal Foundation want energy performance to be considered and is training appraisers how to do it.

Source: “Going Green Could Be a $100 Billion Business by 2017,” CNBC News (12/14/11)

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First-time Home Buyers Scared Off?

Home prices have fallen to 2002 levels and mortgage rates are at record lows — so why are the number of first-time home buyers decreasing instead of increasing?

First-time home buyers used to account for about half of all housing sales, but over the past year, they’ve made up only about a third of buyers, according to a recent New York Times article.

“The obstacles facing first-time buyers are big, and it’s changing the way they look at home ownership,” Dan McCue, research manager at Harvard University’s Joint Center for Housing Studies, told The New York Times.

Higher downpayment requirements, job insecurity, and tougher credit standards may all be holding back first-time home buyers — which tend to be dominated by young professionals. The median down payment for a single-family home in 2002 was 4 percent in nine major metro areas, but now stands at 22 percent, according to Zillow.com.

What’s more, while mortgage rates are hovering at record lows, fewer buyers are able to qualify. About one-third of households have credit scores that aren’t good enough to qualify for a mortgage. The median required credit score from FICO Inc. has increased from 720 in 2007 to 760 currently, according to The New York Times article.

Source: “Home Market Being Held Back by Wary First-Timers,” The New York Times (Nov. 30, 2011)

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Study: Women Get Worse Mortgage Rates Than Men

Women aren’t getting the best mortgage rate when getting a loan compared to men, but it’s not because of gender discrimination. It’s because women aren’t doing enough shopping when it comes to mortgage rates, a new study published in the Journal of Real Estate Finance and Economics finds.

Women tend to rely on recommendations from their friends when it comes to mortgage rates, while men are more likely to shop around and talk to several lenders in finding the best rate, the researchers note.

Researchers aimed to shed light on why a 2006 study found that women are 32 percent more likely to get a subprime mortgage than men.

Researchers suggest that “gender disparity in mortgage rates may be addressed by policies aimed at improving women’s financial literacy and search skills.”

Source: “When it Comes to Mortgages, Women Don’t Shop Enough,” AOL Real Estate (Nov. 18, 2011)

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Are the Holidays a Good Time to Sell?

Sixty percent of real estate professionals advise their sellers to list a home during the holidays because it’s a good time to sell, according to a new survey conducted by Realtor.com.

Why are the holidays such a good time to sell? Seventy-nine percent of the agents surveyed said that more serious buyers come out during the holidays, and 61 percent say less competition from other properties make it a great time to sell. Plus, 17 percent of agents say the cold weather is actually a benefit, making homes feel more cozy.

But online listing photos become even more crucial during the holiday season, according to the survey. Slightly more than half of agents say that the photos are more important because sellers tend to offer less open houses around the holidays, and so the online photos help buyers decide the properties to see and which ones to possibly bypass.

The biggest hurdles sellers face during the holidays, however, are keeping a home ready to show (clean and staged) as well as winter weather conditions and buyers’ vacation schedules, the Realtor.com survey found.

Source: “Survey Data Reveals Majority of Real Estate Professionals Recommend Clients List Their Homes During the Holidays,” Realtor.com (Dec. 2, 2011)

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Despite Improvements, Foreclosure Concerns Remain

Foreclosures continued to fall in November, dropping 3 percent from October and 14 percent year-over-year, according to the latest data from RealtyTrac.

Repossessions — the last stage of the foreclosure process — are down 45 percent from the peak reached in September 2010, in which 102,000 homes were repossessed in foreclosure compared to 56,124 in November 2011.

Following last fall’s robo-signing scandal, banks have been slowing the foreclosure process as they spend more time reviewing paperwork before taking action and doing more loan workouts, which has caused foreclosures to slow the last few months.

But a new wave of foreclosures may be looming in the new year, experts warn.

“Despite a seasonal slowdown similar to what we’ve seen in each of the past four years, November’s numbers suggest a new set of incoming foreclosure waves, many of which may roll into the market as REOs or short sales sometimes early next year,” James Saccacio, CEO of RealtyTrac, told CNNMoney.

Signaling possible trouble ahead in the November data, according to RealtyTrac, is the uptick in bank auctions. Scheduled auction sales soared 13 percent in November compared to October. “Many of the new defaults that started the foreclosure process over the past few months are now being scheduled for public foreclosure auction,” Saccacio said.

Yet, one positive signal: Initial default notices — the first notice banks send out to borrowers when they’ve missed a payment — dropped 8 percent in November from October, and is down 9 percent year-over-year.

Source: “Foreclosures Fall, But Outlook Isn’t Bright,” CNNMoney (Dec. 15, 2011)

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Fannie Mae Halts Foreclosures for the Holidays

Fannie Mae says it will suspend evictions for single-family foreclosures and two- to four-unit properties during the holiday season, from Dec. 19 through Jan. 2, 2012.

“The holidays are meant for families to spend time together, especially if they’ve gone through the stress of financial challenges and foreclosure,” Terry Edwards, executive vice president of Credit Portfolio Management for Fannie Mae, said in a statement. “No family should have to give up their home during this holiday season.”

While the holiday moratorium is in place, legal and administrative proceedings for evictions may continue, but “families living in foreclosed properties will be permitted to remain in the home,” Fannie Mae announced in a statement.

Source: Fannie Mae

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10 States Hit Hardest by Foreclosures

For the 59th month in a row, Nevada continues to have the highest foreclosure rate in the country — despite a new law that took effect in October that changed the state’s foreclosure process and was expected to curtail foreclosures there.

Although foreclosures were down 43 percent year-over-year in Nevada, its foreclosure rate still remained higher than any other state.

The following are the top 10 states with the highest foreclosure rates in the country in November, according to RealtyTrac data.

Nevada: 1 in every 175 home received a foreclosure filing in November
California: 1 in every 211 homes
Arizona: 1 in every 256 homes
Utah: 1 in every 290 (This state saw a 74 percent increase in November from October in foreclosure activity.)
Georgia: 1 in every 330 homes
Michigan: 1 in every 330 homes
Florida: 1 in every 358 homes
Illinois: 1 in every 427 homes
Ohio: 1 in every 500 homes
South Carolina: 1 in every 517 (This is the first time South Carolina has made it into the top 10 for foreclosure activity since RealtyTrac began tracking in 2005.)

Source: RealtyTrac

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Home Owners to Lawmakers: Do More to Help Housing

The government isn’t doing enough to help home owners at risk of default, foreclosure, and underwater on their homes, a majority of Americans say in the Home Horizons 2012 study, a survey conducted by Yahoo! Real Estate of 1,500 current and aspiring home owners.

Fifty-one percent of home owners say the government needs to pass more legislation to help home owners who are at risk of losing their house. About two-thirds of Americans surveyed say the government needs to offer more assistance like low-cost loans to help home owners more.

Four out of five adults polled say the 2012 presidential election will have a small or large influence on the housing market, with 43 percent predicting it will have a large impact. However, one-third of those surveyed doubt either party — Republican or Democrat — will have either a positive or negative impact on the real estate market.

“A large-scale government policy that’s going to fix all of this — no one has seen such a thing,” Stan Humphries, chief economist at Zillow, told Yahoo! Real Estate. “Stabilization in home prices and then a slow upward movement in prices to work down negative equity — that’s a multiyear affair.”

Source: “Yahoo! Study: Home Owners Want Political Action,” Yahoo! Real Estate (Dec. 12, 2011)

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Banks Post Higher Profits off Each Loan

Banks are making more profits on each loan they originate — a 377 percent increase in just a six-month period, according to the Mortgage Bankers Association.

On average, mortgage banks made a profit of $1,263 for each loan they originated during the third quarter — that’s up from $575 per loan in the second quarter of 2011. In the first quarter, they made $346 per loan.

“Higher volume helped profitability as production costs were spread over a greater number of loans,” said Marina Walsh, MBA’s associate vice president of industry analysis. “Third quarter production expenses dropped on a per-loan basis as volume rose, although expenses remained high by historical standards when compared to other quarters with similar volume.”

Refinancings made up the biggest bulk of originations — by dollar volume it was 45 percent in the third quarter compared to 36 percent in the second quarter.

Source: “Mortgage Banks’ Profits on Originations Soar 377 Percent,” RISMedia (Dec. 14, 2011)

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Freddie Mac’s 2012 Outlook: Housing to Slowly Gain Ground

Freddie Mac released its U.S. Economic and Housing Market Outlook with five projections for 2012.

Frank Nothaft, Freddie Mac’s vice president and chief economist, said there are indications that the economy and housing market are slowly gaining ground. “Sustained and increased job growth beyond the average monthly payroll gains of 130,000 so far this year ending in November are essential,” he said in a statement.

Nothaft also expects mortgage rates to remain low through the middle of 2012, and for rentals to continuing leading housing market improvements.

“All told, next year will be another bumpy ride,” he said.

Five outlook highlights:

Economic growth will likely strengthen to about 2.5 percent in 2012.
The U.S. unemployment rate will decline but likely remain above 8 percent.
Mortgage rates will likely remain very low, at least through mid-2012.
Housing activity will be better in 2012, but not robust.
Expect less single-family originations but more multifamily lending in 2012.

Source: Freddie Mac

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Strong Temptations for Home Buying

The monthly cost of owning a home is more affordable now than in the past 15 years, and is less expensive than renting in numerous cities, according to The Wall Street Journal’s third-quarter survey.

Low home prices mixed with low mortgage rates—hovering at 4 percent or even lower—are creating an appealing buyer’s market, analysts say. For example, buyers today have a 77 percent increase in their borrowing power compared to 1991, Dan Green, a loan officer with Waterstone Mortgage in Cincinnati, told The Wall Street Journal. To illustrate: He says that in 1991 a $1,700 mortgage payment allowed a borrower to take out a $200,000 mortgage, whereas today the home owner taking advantage of current low rates can get a $350,000 loan for that mortgage payment amount.

In the 28 cities that The Wall Street Journal tracked, it found monthly mortgage payments on the median-priced home—including taxes and insurance—to be lower than the average rent levels in 12 of the metro areas.

Atlanta was found to be the city where owning was more favorable to renting by the most. For example, the monthly rent on the median-priced home there was $539 during the third quarter (with a 20 percent down payment) compared to the average asking rent which averaged $840, according to data provided by Marcus & Millichap.

Nationwide, apartment rents are expected to rise by about 4 percent this year, which may make the owning vs. renting picture tilt even higher, according to some analysts.

Despite the appealing housing picture for home buyers, some buyers continue to stay on the sidelines, unable to sell their current home, qualify for mortgages due to the tightening of credit, or keep a steady job, housing expert say.

Source: “Stronger Lure for Prospective Home Buyers,” The Wall Street Journal (Nov. 26, 2011)

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New-Home Sales Post Biggest Gains in Months

New-home sales for single-family homes rose 1.3 percent in October, marking the best pace for new-home sales activity since this May, the U.S. Commerce Department reports.

Following the sector’s worst year for new-home activity on record last year, several recent reports are suggesting a pick-up in new construction.

“Builders have been seeing some marginal improvement in sales activity over the past few months, particularly in select markets where consumer confidence is higher due to improved economic conditions,” Bob Nielsen, chairman of the National Association of Home Builders, said in a statement. “While this trend is encouraging, overall sales activity is still well below normal due to the effects of overly tight credit conditions for builders and buyers, the continued flow of distressed properties on the market, and inaccurate appraisal values on new homes.”

Despite the October gain in sales, new-home sales for the month were at an annual rate of 307,000–still less than half the 700,000 in sales that most economists consider healthy for the housing market.
A Regional Look

A break down of sales by region in October:

Midwest: Rose 22.2 percent
West: Rose 14.9 percent
Northeast: Stayed flat
South: Declined 9.5 percent

Inventory Drops Drastically

Nationwide, the inventory of new homes for sale stayed at an all-time record low of 162,000 units in October.

“Particularly encouraging is the fact that builders continue to hold down their inventories to match the current sales rate, with the number of new homes for sale now down to a sustainable, 6.3-month supply,” NAHB Chief Economist David Crowe said in a statement.

By Melissa Dittmann Tracey, REALTOR® Magazine Daily News

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Don’t Let Foreclosure Buyers be Tempted by Price Alone

Buyers may be swayed by the big bargain prices that foreclosures often offer. But before they jump in, some housing experts say they need to be warned that it may not be as big of bargain as they believe.

“Brokers who specialize in the foreclosure market say there are good deals to be had, but they advise buyers to look beyond an alluring list price and do the research to avoid getting into trouble,” an article in the Buffalo News notes.

For example, often times, foreclosed homes are sold “as-is,” but if the homes have been left vacant for awhile it may have lots of maintenance and damage issues that might not make it such a great bargain after all. Housing experts recommend getting a home inspector to look at the property before submitting an offer—regardless of it being sold in “as-is” condition—so that buyers can know what they’re getting into and the potential price tag for any needed repairs. Vacant and improperly maintained homes may have problems like frozen pipes and water damage.

Real estate professionals also advise buyers of foreclosures to take into account any liens or judgments on the property, which they may inherit if they purchase the home. Ensure the property title is clean by working with a foreclosure attorney, Pat Flowers of RealtyUSA suggests.

Also, buyers need to be aware that closing costs may be more expensive when buying a foreclosed property since banks will not absorb some of the costs, Todd Vanderlip of Realty Edge told the Buffalo News.

Source: “Focusing on Foreclosures; Buyers Are Warned to do their Homework Before Closing a Deal,” Buffalo News (Nov. 27, 2011)

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Insurance Against Faulty Appraisal Valuations

Low appraisals have been blamed for continuing to hamper the real estate market. So Kirchmeyer & Associates is debuting an appraisal warranty insurance program to its appraisal management services to protect lenders and investors against faulty appraisals.

The insurance will protect lenders and investors against default losses, including repurchase expenses, as well as “provides assurance to the investment community that the valuation will not ultimately impair the performance of the loan,” according to a release by the company.

Here’s how it’ll work: In cases where a “loan defaults, forecloses, or a loan repurchase demand occurs and a valuation inaccuracy is found, the insurer will pay the claim subject to the terms and conditions of the insurance policy,” according to the company.

The program will be operated in partnership with Group9 Insurance Solutions.

“Rebuilding the mortgage industry’s confidence is paramount in today’s market, and having a plan in place enables the industry to thrive,” James Kirchmeyer, Kirchmeyer president, said in a statement.

While mortgage insurance traditionally covers losses on default or foreclosure, it does not tend to cover appraisals. Lenders have increasingly cited flawed appraisals as hampering the recovery.

Source: “Kirchmeyer Adds Appraisal Insurance Against Faulty Valuations,” HousingWire (Nov. 28, 2011) and Kirchmeyer & Associates

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6 Cities Where Foreclosures Are Soaring

Some housing markets are still battling high numbers of foreclosures that are continuing to put downward pressure on overall housing prices. Many of the cities facing the highest spikes in foreclosure are facing high unemployment rates, underwater borrowers, and low median family income.

24/7 Wall St., using data from RealtyTrac, found that the following cities saw the biggest increases in foreclosures by 30 percent or more between the second and third quarters of 2011:

1. Albuquerque, N.M.

Quarterly increase in foreclosures: +151%
Number of foreclosures in third quarter of 2011: 1,358
Percentage that home values have dropped from peak: -14.9%

2. Boston-Cambridge-Quincy, Mass.

Quarterly increase in foreclosures: +67%
Number of foreclosures in third quarter of 2011: 2,003
Percentage that home values have dropped from peak: -15.8%

3. Sarasota-Bradenton-Venice, Fla.

Quarterly increase in foreclosures: +57%
Number of foreclosures in third quarter of 2011: 1,673
Percentage that home values have dropped from peak: -51.4%

4. Cincinnati-Middleton, Ohio-Ky.-Ind.

Quarterly increase in foreclosures: +55%
Number of foreclosures in third quarter of 2011: 1,956
Percentage that home values have dropped from peak: -15.9%

5. Jacksonville, Fla.

Quarterly increase in foreclosures: +49%
Number of foreclosures in third quarter of 2011: 2,559
Percentage that home values have dropped from peak: -39.3%

6. Palm Bay-Melbourne-Titusville, Fla.

Quarterly increase in foreclosures: +44%
Number of foreclosures in third quarter of 2011: 1,039
Percentage that home values have dropped from peak: -53.4%

Find out what other cities are facing high foreclosure increases.

Source: “10 Cities Getting Slammed by Foreclosures,” 24/7 Wall St. (Nov. 11, 2011)

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Freddie Expands REO Winter Sale to More States

Six more states — now bringing the total to 33 — will participate in a winter sales promotion as Freddie Mac’s HomeSteps looks to unload its high REO inventory.

The six states added are Alaska, Kansas, Kentucky, Missouri, Oregon, and Washington. To view a complete list of all states participating in the winter promo as well as eligibility requirements, visit www.HomeSteps.com/smartbuy.

“We’re expanding our winter promotion to focus additional incentives to encourage strong sales activity in our ‘cold weather’ states over the next several months.” HomeSteps executive Chris Bowden said in a statement.

HomeSteps’ Winter Sales Promotion for buyers includes paying up to 3 percent of the final sales price toward a buyer’s closing costs for offers received between Nov. 15 and Jan. 31, 2012. (To qualify, escrow must be closed on or before March 15, 2012.) Selling agents may also be eligible for a $1,000 selling bonus through the program.

Source: “Freddie Mac Adds Six More States to REO Winter Promo,” HousingWire (Nov. 22, 2011)

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Lawmakers Urge Mortgage Principal Write-downs

More than 20 lawmakers in the House of Representatives this week called on Fannie Mae and Freddie Mac to reduce the mortgage principal of borrowers who owe more on their home than it is currently worth.

The Federal Housing Finance Agency, which regulates Fannie and Freddie, has been refusing to take such a drastic move, citing concerns that writing down principal balances may create a “moral hazard” and prompt other borrowers to stop making loan payments on time.

But the Democrat lawmakers argue that such action would reduce the risk of defaults for about 20 percent of Fannie and Freddie’s mortgages.

“We strongly urge that you reconsider your refusal to allow principal reductions to achieve better-performing [loan] modifications and avoid the extreme losses of unnecessary foreclosures,” the Democrat lawmakers wrote in a letter to the FHFA.

Source: “U.S. House Democrats Press for Mortgage Write-Downs,” Reuters News (Nov. 22, 2011)

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Mortgage Scams Rise on Search Engines

Federal investigators are investigating the Google, Bing, and Yahoo! search engines in a hunt to find con artists who are using the sites to dupe troubled home owners.

The online ads posted by scammers promise to help save home owners from foreclosure. The ads claim they’ll help home owners through a government-backed program by modifying their mortgage payments so they can keep their home. The deceptive ads often target victims when searches for phrases like “stop foreclosure” are made.

As part of the scam, con artists will ask for upfront fees or ask that mortgage payments be sent to them.

Investigators have already uncovered 125 mortgage scams through the search engines as of Monday, according to the Office of the Special Inspector General for the Troubled Asset Relief Program.

Meanwhile, the three search engines say they will no longer accept ads from Internet agencies linked to such scams.

Source: “Feds Widen Inquiry of Online Mortgage Scams,” The Associated Press (Nov. 22, 2011)

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Minorities Received Worse Loan Terms, Study Finds

A new study by the Center for Responsible Lending found that blacks and Hispanics were offered risky loan terms three times more than whites. More specifically, researchers found that blacks and Hispanics with credit scores of 660 or higher were offered subprime and option adjustable-rate mortgages dramatically more than similar white borrowers between 2004 and 2008.

Furthermore, about 25 percent of all black and Hispanic borrowers who were issued a loan in that time period ended up losing their home due to foreclosure, according to the study. That is compared to 12 percent of white borrowers.

“The disparity exists even in the higher-income brackets,” HousingWire reported from the study’s findings.

“The findings presented in this report suggest that we are not even halfway through the foreclosure crisis, as millions of additional families are still at risk of losing their home,” researchers noted in the report. “Meanwhile, Americans of every demographic group — all incomes, races, and ethnicities — have been affected.”

Source: “CRL: Good-Credit Minorities Received 3 Times More Subprime Loans than Whites,” HousingWire (Nov. 17, 2011)

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