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California Assoc. Of Realtors – Leslie Appleton-Young’s Real Estate Market Update & 2012 Forecast (This is a MUST SEE)
Detailed Statistical reports on our local Market.
Real Estate Market Update & 2012 Forecast
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CAR Vice President and Chief Economist Leslie Appleton-Young gave a Real Estate Market Update and 2012 Forecast at our March 14 Breakfast Forum.
Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.
The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.
Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.
However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.
Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.
Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”
In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.
While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.
Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generate actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.
Americans More Optimistic About Housing, Economy – Daily Real Estate News | Thursday, March 08, 2012
Americans’ concerns over housing and the economy are subsiding, according to Fannie Mae’s National Housing Survey from February.
An improving job market is a big part of what’s behind Americans feeling more confident about the housing market and the direction of the economy, according to the survey.
“The pickup in the pace of hiring over the past few months has helped soothe consumer concerns, lifting their moods regarding their personal finances, the direction of the economy, and their views on the housing market,” says Doug Duncan, chief economist of Fannie Mae. “As a result, we’ve seen more potential for economic upside, creating a more balanced near-term outlook.”
The survey found that 28 percent of Americans expect home prices to increase over the next 12 months while 53 percent say prices will likely stay the same. Fifteen percent say they expect home prices to decline.
Meanwhile, the majority of those surveyed see rental prices continuing to increase over the next year.
Sixty-five percent of those surveyed say that if they were going to move they’d buy their next home; 29 percent say they would rent.
With low mortgage rates and falling home prices, 70 percent of those surveyed say now is a good time to purchase a home. Also, more Americans surveyed say now is a good time to sell, rising to 13 percent in February, which is the highest level in more than a year but still low by historic standards.
Overall, Americans expressed more confidence about their personal financial situation, with only 12 percent saying they expected their personal financial situation to worsen in the next 12 months — which is the lowest number in more than a year.
If a home isn’t enough for your buyer, how about an entire town?
A small village known as Pray, Mont., is for sale, which means one buyer could own his or her very own town for $1.4 million. The small village, founded in 1907, is about 30 miles north of Yellowstone National Park and boasts a population of 197, according to Census data.
The five-acre scenic countryside town includes a four-unit trailer park, a now-closed general store, a post office, and other small buildings. The town falls along Highway 540 — once a heavily traveled route for tourists who were heading to Yellowstone National Park.
“It’s a town,” Barbara Walker, the owner of the property, maintains. “There’s status in being able to own a town.” Plus, as the owner you get to wear multiple hats: Besides being the owner of the property, Walker says she’s also the unofficial mayor, sheriff, garbage control, and animal control officer for the town too.
Pending home sales rose to their highest level in 21 months in January, according to the National Association of Realtors, as agents signed more contracts for existing homes.
The seasonally adjusted index increased 2% month-over-month to 97 from a downwardly revised 95.1 in December. Signed contracts also jumped 8% over the year-earlier reading of 89.8.
The trade group's index marked its highest point since a 111.3 reading in April 2010, also the last time it topped 100.
Analysts polled by Econoday predicted 1.5% monthly growth, with a consensus range between a 1.1% drop and a 3% increase.
Lawrence Yun, NAR chief economist, said job growth and rising rental rates "are hopefully pushing the market into what appears to be a sustained housing recovery," despite wavering in the pending home sales. The index dipped in December from 96.9 in November.
"If and when credit availability conditions return to normal, home sales will likely get a 15% boost, speed up the home-price recovery, and thereby significantly reduce the number of homeowners who are underwater," Yun said in a release.
Pending sales grew 7.7% and 7.6% in January month-over-month in the South and Northeast, respectively, while West and Midwest sales fell 4.4% and 3.8%. All four regions, however, saw signed contracts increase from a year earlier, from 10.8% in the Midwest to 0.7% in the West. (Click chart to expand.)
Some crafty criminals are aiming to steal one of the most valuable pieces of your personal property: your banking information.
In a new warning, the Federal Bureau of Investigation warns account holders of a new spam email scheme that involves a type of malware called "Gameover." The scheme involves fake emails from the National Automated Clearing House Association, the Federal Reserve or the FDIC. These messages attempt to trick recipients into clicking on a link to resolve some type of issue with their accounts or a recent ACH transaction. Once you click on the link, Gameover takes over your computer, and thieves can steal usernames, passwords and your money.
The FBI also warns the thieves' hacking capabilities can navigate around common user authentication methods banks use to verify your identity, which is certainly a cause for concern. Those additional authentication steps — often personal questions, birth dates or other pieces of private information — are meant to provide some extra security padding.
While phishing scams are nothing new to the world of online banking, this type of warning serves as a reminder of just how susceptible account holders can be to malicious attacks. As more account holders begin to jump on the mobile banking bandwagon, it's important to remember that a smartphone essentially acts as another computer. While this additional connection to the Internet is convenient, it also serves as another outlet where your information can be compromised.
Here are a few crucial steps to take to avoid falling victim to this type of Internet crime.
- Keep your computer and mobile device updated with the newest versions of anti-virus software.
- If you have any doubts about an email sender's authenticity, do not click on any embedded links.
- Remember, banks never request any personal information via email.
- Be vigilant about checking your account balances. The sooner you notice and report any type of fraudulent activity, the more likely you'll be able to be reimbursed for any missing funds.
CoreLogic’s chief economist Mark Fleming says housing statistics and the duration of the downturn to date indicate 2012 may be the year the housing market begins to turn the corner.
In the first release of CoreLogic’s new MarketPulse newsletter Wednesday, Fleming explained his rationale for such an assessment.
He notes that housing is an industry with long business cycles. Regional housing recessions have typically taken anywhere from three to five years to find their bottom, and Fleming says the national housing recession has behaved similarly in that it has bounced along a bottom for the past two years.
Fleming points out that housing affordability is rising dramatically due to a combination of home price deflation and rock-bottom mortgage rates. In fact, he says, after adjusting for inflation, this has been a “lost decade” for housing as prices are the same as at the beginning of the millennium.
“The time is right in 2012 for prices to begin growing again,” Fleming said, “and housing affordability will put a floor under any further significant declines.”
Fleming says he will be watching the spring and summer buying season closely for positive signs of demand.
He points out that households are paying off their debts and at the same time accessing credit more easily, with some even adding Home Equity Lines of Credit in the third quarter of last year – the first such movement for these second-lien mortgage products since the financial crisis began.
Fleming cites a quarterly survey by the New York Federal Reserve Bank, which shows total household debt continues to decline. At the same time, consumer sentiment rebounded strongly in the latter part of 2011, posting a six-month high in December – an indication that consumers’ confidence in the strength of the economy is growing, according to Fleming.
Most housing statistics basically moved sideways in the latter part of 2011, but Fleming finds several positives in the numbers. Although market indicators are coming off of very low levels, he notes that both existing-home sales and single-family housing starts have begun to increase, homebuilder confidence is improving, and affordability is at an all-time high.
Putting all of these statistics together suggests that while there is a very long way to go, the housing market is likely to sustain these upward movements in 2012, according to Fleming.
“While we cannot say with a high degree of certainty what 2012 has in store for us, indications based on the latter part of 2011 are that both the broad economy and the housing market are moving toward positive growth in 2012,” Fleming said.
He concedes that some impediments do exist, including slower global economic growth, a recession in Europe, and fiscal and political uncertainty in the United States.
But Fleming says when you look at the big picture, “we are bullish on the prospect of improving economic performance in 2012 from 2011.”
By: Carrie Bay
When you compare the cost of owning a home to renting, you’ll find that buying may soon make more sense, Paul Diggle, a housing economist at Capital Economics, told MSNBC.com.
Diggle’s analysis of the housing market showed a 33 percent drop in home prices, record-low mortgage rates (with 30-year fixed-rate mortgages available under 4 percent now), and a 15 percent rise in rents since the housing market turned sour are making more consumers take a closer look at buying.
“The median monthly mortgage payment of about $700 has fallen to about the level of a median monthly rent check,” an article at MSNBC.com notes about Diggle’s analysis. “If mortgage rates keep falling and rents keep rising, the equation will tip even further toward owning.”
Case in point: Diggle says that a buyer who purchases a median-priced home and stays there for at least seven years would likely come out ahead by about $9,000 than if they chose to rent for those seven years. Diggle’s calculations factor in rents continuing to rise 3 percent a year, and housing prices staying flat for the next two years before rising in 2014.
But while more Americans may be motivated to buy, many still can’t, Diggle notes. Home owners who lost their home to foreclosure may be forced to wait on the sidelines before owning again, other Americans may not have a 20 percent down payment that more lenders are wanting, lack a high credit score to qualify for the best financing, or have steady employment.
Source: “Home Buying Could Soon Beat Renting,” MSNBC.com (Jan. 23, 2012)
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.
For the fifth consecutive year, Nevada continues to have the highest foreclosure rate in the country, despite a 31 percent drop in the state’s foreclosure activity from 2010 to 2011, RealtyTrac reports.
Several states continue to see a large amount of foreclosures, which are putting downward pressure on overall home prices.
The states with the highest foreclosure rates for 2011 are:
1. Nevada: 6 percent (1 in 16 housing units received at least one foreclosure filing in 2011)
2. Arizona: 4.14 percent (or 1 in 24)
3. California: 3.19 percent (or 1 in 31)
4. Georgia: 2.71 percent (or 1 in 37)
5. Utah: 2.32 percent (or 1 in 43)
6. Michigan: 2.21 percent
7. Florida: 2.06 percent
8. Illinois: 1.95 percent
9. Colorado: 1.78 percent
10. Idaho: 1.77 percent
Nationwide, 1 in 69 housing units or 1.45 percent of home owners received at least one foreclosure filing during 2011, which is down from 2.23 percent in 2010, RealtyTrac reports.