Today's most important report was the initial reading of the 4th Quarter Gross Domestic Product (GDP). It revealed a 5.7% annual rate of growth during the last quarter of 2009. This was much better than expected and the fastest pace in six years, indicating that the economy is likely growing at a faster pace than many had thought. That creates a negative for bonds because once the economy begins to gain momentum, inflation concerns will rise in the markets. Since inflation is the number one nemesis of the bond market, bonds tend to suffer when inflation is strengthening, leading to higher mortgage rates.
Preventing a sizable sell-off in bonds was a much lower than expected inflation reading within the data. That inflation reading came in half of forecasts, meaning that inflation isn't a concern yet. However, many experienced traders and analysts firmly believe that it will follow shortly if economic activity continues to grow at a pace similar to what today's GDP reading showed. Therefore, we have seen some selling in bonds, but considering the headline GDP reading, we should be content with this morning's trading.
To cap off today's relevant economic data, the University of Michigan's Index of Consumer Sentiment for January was a higher than expected revision. This index measures consumer confidence, which is thought to indicate consumer willingness to spend. The 74.4 reading (Highest in 2 years) indicates that consumers were more optimistic about their own financial situation this month than many had thought. Strengthening confidence usually translates into more consumer spending, fueling economic growth. However, this report doesn't carry enough power to heavily influence the markets, especially following the initial GDP reading for the quarter.
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Q4 GDP Deflator + 0.6%
Q4 PCE Price Index + 2.7%
Q4 Business Investment + 2.9%
Q4 Housing Investment + 5.7%
Q4 Employment Cost Index + 0.5%
Q4 Software and Capital Expenditures + 13.3% (WOW)
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Tags:
Economy improved more than expected in Q4, 4th Quarter Gross Domestic Product(GDP), 4th Quarter Employment Cost Index (ECI), Consumer Sentiment, Inflation Risk, home buyer, home seller, University of Michigan, ATLShortSales.com
The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner.
Some conditions apply. The ones most relevant to investors are:
- All transactions must be arms length.
- The Seller holds title to the property.
- The waiver does not apply to Home Equity Conversion Mortgage (HECM) for Purchase program.
- No pattern exists of flipping the subject property within 12 months.
- The property was marketed openly and fairly via Multiple Listing Service, Auction, or For Sale By Owner.
IMPORTANT NOTE: The waiver states that any sales contracts that refer to an “assignment of contract for sale” may be a red flag, since this represents a special arrangement between seller and buyer)
- If the sale is 20% or more above the acquisition cost, additional lender requirements will apply as follows:
o Justify the increase with documentation of significant renovation to justify the increase OR a second appraisal, AND
o The lender orders an FHA approved inspection report and provides it to the Buyer
For a full description of the waiver and its specific language, click on:
http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf
The Red Flag language regarding “assignment of contract for sale” is an important consideration for investors flipping properties. Transactions involving an assignment are likely to receive extra scrutiny by the End-Buyer mortgage underwriters. However, use of Transactional Funding is a low-cost alternative by providing two stand-alone transactions allowing for the flip in less than ninety days. Additionally, the requirements to justify any sale price above 20% of acquisition cost are likely to receive scrutiny. However, at least the waiver allows for it with documented improvements and/or a second appraisal and an inspection.
The waiver is not directly intended to assist investors. Rather, it shows that FHA realizes that not restricting free market activities will help move REO (bank owned properties) property more quickly and will maximize the return to FHA. Abandoned homes and "dead" loans are bad for banks and FHA. First time buyers will naturally benefit since real estate investors may provide more low-cost homes to buyers. This may also help stabilize real estate prices by allowing the market to absorb more of the "shadow inventory" (estimated at 13 million in 2010) of foreclosed homes in bank inventories. Let's hope that Fannie Mae (FNMA) and Freddie Mac will also see the light and reduce their restrictions.
Tags: FHA, Federal Housing Administration, first time buyers, Fannie Mae, transactional funding, FHA, REO, real estate owned, FNMA, Freddie Mac, flipping, single family homes, Multiple Listing Service, MLS, property auction, HUD, assignment of contract for sale, red flag, HomeEquity Conversion Mortgage (HECM), FHA Waives 90 Day Flip Restriction, ATLShortSales.com
Fed makes record windfall off economic revival program, sends $46.1B to Treasury.
The Federal Reserve generated record profits last year, reflecting money made off its extraordinary efforts to rescue the country from the worst economic and financial crisis since the 1930s.
P.S., Don't start congratulating yourself yet on this windfall. The Fed's efforts to end the crisis are separate from the $700 billion taxpayer-funded financial bailout program authorized by Congress in 2008 and overseen by theTreasury Department.
For the full story, click here: http://bit.ly/5OK01C
Tags: Federal Reserve, Record Profits for 2009, The Fed, Treasury Department, economic recovery, Bear Stearns, American International Group, $700 billion taxpayer-funded financial bailout, Fannie Mae, Freddie Mac, General Motors, Chrysler, GMAC, government debt, ATLShortSales.com.
New Consumer Financial Protection Agency
Congress voted to terminate the controversial Home Valuation Code of Conduct (HVCC) once a new Consumer Financial Protection Agency begins operations.
The Home Valuation Code of Conduct has been highly unpopular with consumers, appraisers, and Realtors since its inception in May, 2009. HVCC rules were blamed for many "low-ball" appraisals which led to the cancellation of many home sales contracts.
The new agency would assume primary federal responsibility for equal opportunity in credit, real estate settlement procedures, financial disclosures to borrowers, plus unfair and deceptive marketing in mortgages and other financial products.
For the full story from Realty Times : http://bit.ly/51xkdz
Tags: Consumer Financial Protection Agency, CFPA, Home Valuation Code of Conduct, HVCC, home appraisals, low-ball appraisals, homebuyers, home sellers, ATLShortSales.com.
The Housing Market In Review
Existing Home Sales - Up 24% from last year
Existing home sales recorded another strong gain in October with many buyers rushing to beat the deadline for the first-time buyer tax credit scheduled to expire at the end of November. Sales surged 10.1 percent to 6.1 million units over September sales of 5.54 million and are 23.5 percent above the 4.94 million-unit level seen last year. Sales activity is at the highest level since February 2007 when it reached 6.55 million.
Median Home Price - Very favorable
Low home prices are contributing to extremely favorable affordability conditions. Existing-home price was $173,100 in October, 5 percent higher from its low in January but still 7.1 percent below October 2008. Distressed properties, which accounted for 30 percent of all transactions in October, continue to hold down the median home price, as they typically sell for 15 to 20 percent less than traditional homes.
Inventory - Lowest level in more than 2.5 years
“We are getting closer to a general balance between buyers and sellers,” according to Lawrence Yun, NAR chief economist. The supply of homes is now at the lowest level in more than two and a half years. Total housing inventory at the end of October fell 3.7 percent to 3.57 million existing homes available for sale, representing a seven-month supply at the current sales pace, down from September’s eight-month supply. Compared to a year ago, there are now 15 percent fewer homes on the market.
Mortgage Rates – Back at 4.78%
Remaining at attractive levels for people looking to buy a home or refinance, historically low interest rates are boosting the market. Rates for 30-year fixed loans fell to 4.95 percent in October from 5.06 percent the month before. During the week ended November 25, rates again dropped to the low 4.78 percent reached in the spring. As the economy enters its recovery phase and concerns over inflation come back, mortgage rates are expected to go up.
Affordability – Best since 1970s
Unprecedented interest rates, low home prices, as well as the first-time buyer tax credit are lifting the housing market. All these factors combined are “adding to the buying power of the typical family, with affordability conditions this year at the highest on record dating back to 1970,” according to Lawrence Yun, NAR chief economist. So far this year, the home price-to-income ratio has fallen well below the historical average of 25 percent. The ratio now stands at 15 percent.
Sources: National Association of Realtors, Freddie Mac
Tags: Existing Home Sales, Median home price, housing inventory, mortgage rates, housing affordability, National Association of Realtors, Freddie Mac, NAR, inflation, rising mortgage rates, home price-to-income ratio, ATLShortSales.com
Producer Prices are UP .http://bit.ly/5SMRhm
Consumer Prices are UP - due to surging energy costs - oil, natural gas, etc.http://bit.ly/6XcJoe
The Fed claims that their focus is on JOBS - NOT INFLATION ? http://bit.ly/5XaZJ0
I thought the main mission of the Federal Reserve Board was to be vigilant in curbing INFLATION ?Now the Fed can certainly affect interest rates, discount rates, and capital reserve requirements for banks - no problem there.So, I'm just wondering: Where is this magic lever that Ben Bernanke can pull to directly affect JOB GROWTH ?
Consumer Price Index, Producer Price Index, Inflation, job growth, CPI, PPI, Federal Reserve Board, Ben Bernanke, interest rates, discount rates, bank reserve requirements, ATLShortSales.com.
FHA Starring as The Grinch:
FHA, facing increasing losses on loans in its portfolio, is asking Congress to let it RAISE INSURANCE PREMIUMS, RAISE CREDIT SCORES, and LIMIT CLOSING COSTS.
Buyers => Buy Now!
Click here for the Wall Street Journal article on 12/2/09 by Nick Timiraos http://bit.ly/6T79fU
Tags: FHA plans to raise insurance premiums, raise credit scores, and limit closing costs, homebuyers, home sellers, ATLShortSales.com.
RISMEDIA, December 2, 2009 - Pending home sales have risen for nine months in a row, a first for the series of the index since its inception in 2001, according to the National Association of Realtors®.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in October, increased 3.7% to 114.1 from 110.0 in September, and is 31.8% above October 2008 when it was 86.6. The rise from a year ago is the biggest annual increase ever recorded for the index, which is at the highest level since March 2006 when it was 115.2.
Lawrence Yun, NAR chief economist, said home sales are experiencing a pendulum swing. “Keep in mind that housing had been underperforming over most of the past year. Based on the demographics of our growing population, existing-home sales should be in the range of 5.5 million to 6.0 million annually, but we were well below the 5-million mark before the home buyer tax credit stimulus,” he said. “This means the tax credit is helping unleash a pent-up demand from a large pool of financially qualified renters, much more than borrowing sales from the future.
The PHSI in the Northeast surged 19.9% to 100.2 in October and is 44.2% above a year ago. In the Midwest the index rose 11.6% to 109.6 and is 36.6% higher than October 2008. Pending home sales in the South increased 5.4% to an index of 115.4, which is 31.6% above a year ago. In the West the index fell 11.2% to 127.7 but is 21.9% above October 2008.
Yun cautioned that home sales could dip in the months ahead. “The expanded tax credit has only been available for the past three weeks, but the time between when buyers start looking at homes until they close on a sale can take anywhere from three to five months. Given the lag time, we could see a temporary decline in closed existing-home sales from December 2009 until early spring when we get another surge, but the weak job market remains a major concern and could slow the recovery process.
“Still, as inventories continue to decline and balance is gradually restored between buyers and sellers, we should reach self-sustaining housing conditions and firming home prices in most areas around the middle of 2010. That would mean broad wealth stabilization for the vast number of middle-class families,” Yun said.
Pending home sales rise 9 consecutive months, Pending Home Sales Index,effect of Tax Credit, National Association of Realtors, NAR, weak job market,economic recovery, large pool of financially qualified renters, firming homeprices, ATLShortSales.com
Fannie Mae plans to raise minimum credit score requirements next month and limit the amount of overall debt that borrowers can carry relative to their incomes, TheWashington Post reported on Thursday.
Starting Dec.12, the automated system that the government-controlled mortgage finance company uses to approve loans will reject borrowers who have at least a 20 percent down payment but whose credit scores fall below 620 out of 850, the newspaper reported. Previously, the cut-off was 580.
Also, for borrowers with a 20 percent down payment, no more than 45 percent of their gross monthly income can go toward paying debts, the newspaper said.
Loans to people with credit scores below 620 fell seriously behind at a rate approximately nine times higher than other loans purchased in the same period, Fannie Mae spokesman Brian Faith said.
Loans taken out by borrowers with lots of debt also suffer higher levels of serious delinquency, he said.
“It’s not enough to help borrowers buy a home — we must also ensure that they can stay in the home over the long term,” Faith said in a statement to The Washington Post.
Tags: Fannie Mae, raising minimum credit score, debt limit, home buyers, home sellers, credit squeeze on home buyers, delinquency, government sponsored enterprises, GSEs, ATLShortSales.com
Mortgage bond prices rose last week pushing mortgage interest rates lower. The economic data continues to be mixed. Personal income, outlays, and PCE inflation data were stronger than expected. Trading was thin and erratic. Thin trading conditions, news of the looming debt crisis in Dubai and a continued influx of Fed money into the mortgage bond market helped rates improve.Interest rates finished the week improved by about 1/2 of a discount point.The employment report will be the most important release this week. This week there are many economic releases classified as very important or important. Market volatility increases when these types of reports are released. Be alert throughout the entire week.
Low importance. An indication of economic strength. Significant weakness may lead to lower rates.
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
Important. A measure of employment. Payroll weakness may bring lower rates. Often revised.
Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates.
Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Very important. A measure of wage inflation. Weakness may lead to lower rates.
Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates.
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Fed "Beige Book"
The Fed "Beige Book" is a summary of economic conditions from each of the 12 Federal Reserve regional districts. The release takes place eight times a year approximately two weeks ahead of each of the Federal Open Market Committee meetings. The report is used at the FOMC meetings, which tends to be one of the most influential events in the market.Market participants are continually attempting to determine what FOMC interest rate policy will be ahead of the next meeting. Any deviation from expectations usually results in extreme short-term market volatility. The timing of the "Beige Book" provides analysts a valuable look at one of the many factors the FOMC considers in setting interest rate policy. If the "Beige Book" shows signs of inflationary pressures, the Fed's ability to keep rates lower may be somewhat restricted. However, if the report shows signs of difficulties, the Fed may keep rates low to stimulate the economy.The "Beige Book" release on Wednesday should provide market participants with valuable insight into what the Fed will do and how mortgage interest rates will respond in the short-term. Be cautious heading into this and the other important releases this week.
How Buyers Benefit From Market News
Any signs of economic weakness tend to result in good news for mortgage bond prices. When mortgage bond prices rise, their mortgage yields fall. When mortgage yields fall, mortgage increase rates are lower. This means that a buyer can:
qualify more easily for a larger loan
enjoy a lower mortgage interest rate for the money borrowed
buy a more expensive home while having a lower monthly payment.
How Sellers Benefit From Market News
Any signs of economic weakness tend to result in good news for mortgage bond prices. When mortgage bond prices rise, their mortgage yields fall. When mortgage yields fall, mortgage increase rates are lowers. This means your buyer can:
qualify more easily for a larger loan => so you can raise your home's price.
enjoy a lower mortgage interest rate for the money borrowed => so more buyers can afford to buy your home.
buy a more expensive home while having a lower monthly payment => your home may sell faster because more buyers can afford it.
Tags: Mortgage bond prices rose last week pushing mortgage interest rates lower, interest rates fell by half a point, employment news, mortgage bond prices, mortgage interest rates, Federal Open Market Committee, FOMC, Beige Book, low rates stimulate the economy, home buyers, home sellers, ATLShortSales.com.
Record Jump - Existing Homes Sales.
Existing Home Sales were UP 10.1% in October and were also UP 23.5% versus 2008.
BOTH are RECORDS!
Prices fell nationwide by 7.1%, but inventories are at their lowest level in 2 and a half years.
Tags: Existing Home Sales Up, Record sales, Home prices down, inventories, ATLShortSales.com
Mortgage Delinquencies Soar - Is a Double-Dip In Housing Likely
The Mortgage Bankers Association said in its Quarterly Delinquency Survey today: "Job losses continue to increase and drive up delinquencies and foreclosures, because mortgages are paid with paychecks, not percentage point increases in GDP."Hint: Just because the economy may be improving, it doesn't mean that the foreclosure crisis is ending.Remember the Home Affordable Modification Program (HAMP)? Its purpose was to help hundreds of thousands of borrowers avoid foreclosure. HAMP seems unable to keep pace with the problem. For instance,
MBA reports that the Q3 seasonally adjusted delinquency rate
Seasonally adjusted delinquency rate rose : 9.64 percent of all loans outstanding, up 40 basis points from Q2.
Loans in the foreclosure process rose: 4.47 percent, up 17 basis points from Q2.
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A RECORD! 14.41% of all loans in the U.S. are either delinquent or in foreclosure
It's all about EMPLOYMENT!
Here's where the tracking becomes complicated. HAMP has a modification trial period of three months. Many of these loans are listed in the 90-day+ late category. Some of these loans may not go into foreclosure. Nevertheless, MBA reports that it was delinquent prime, fixed-rate loans that increased the overall delinquency rate. These loans are far harder to modify since they are delinquent because the borrower has lost his/her job and has no income.
They are not delinquent because of a reset of the interest rate/payment on an adjustable rate mortgage, a questionable loan product, or bad underwriting. It's unlikely that even if the banks hold off on foreclosing, that the employment picture may improve. It's far more likely that the new modified loan would also fail.
MBA says that FHA loans are the culprit: (FHA loans require less down payment (3.5%) and are made to borrowers with credit scores as low as 620 - riskier credit, less resources).
The foreclosure rate on FHA loans also increased, despite having a large increase in the number of FHA-insured loans outstanding. The number of FHA loans outstanding has increased by about 1.1 million over the last year. This increase in the denominator depresses the delinquency and foreclosure percentages. If we assume these newly-originated loans are not the ones defaulting and remove the big denominator increase from the calculation results, the foreclosure rate would be 1.76 percent rather than 1.31 percent reported.
So, FHA loans are becoming delinquent faster than programs like the Home Affordable Modification Program (HAMP) can save other loans.
Bob Toll, the CEO of Toll Brothers , a luxury homebuilder quipped at the UBS home builder conference in New York, "Yesterday’s subprime is today’s FHA,” “It’s a definite train wreck and the flag will go up in the next couple of months: Bail us out. Give us more money.”
One more thing from the MBA:
The number of loans 90 days or more past due or in foreclosure is now a little over 4 million as compared with 3.9 million new and previously occupied homes currently for sale, although there is likely some overlap between the two numbers. The ultimate resolution of these seriously delinquent loans will put added pressure on the hardest hit sections of the country.
(This means that there are now more homes in foreclosure than there are new and existing homes for sale combined, and it's spreading ! )
Four states (CA, NV, AZ, FL) are the worst offenders with 43 percent of total U.S. foreclosures. Twenty-five percent of all loans in Florida are in trouble. Now the problem is spreading to other states - the Carolinas, Georgia, and Utah.
Meanwhile, there is no news on how well or whether the HAMP program is working, i..e., how many people qualify for a loan modification, and of those who qualify, how many result in permanent modification and do not slip back into foreclosure later (BACKSLIDING).
It appears that between the government red tape, excessive paperwork, and foot-dragging from the lenders, plus rising unemployment, a double-dip in housing may occur in the near future.
Tags: Mortgage Bankers Association, MBA, Quarterly Delinquency Survey, FHA, Federal Housing Administration, HAMP, Home Affordable Modification Program, mortgage delinquencies soar to a record, foreclosures now outnumber all new and existing homes for sale, loan modification, Toll Brothers, foreclosure crisis, unemployment, government red tape, excessive paperwork, foot-dragging by lenders, foreclosures spread to more states, double-dip in housing, ATLShortSales.com.
Federal Housing Finance Agency (FHFA) Extends Conforming Loan Limits Through 2010
Conforming loan limits were temporarily increased last year and were originally set to expire at the end of 2009.
FHFA announced that it has set the limit for conforming loans eligible for purchase by government-sponsored enterprises (GSEs - Fannie Mae, Freddie Mac, etc) at $417,000 for single family homes by the Economic Stimulus Act of 2008 (ESA) and the Housing and Economic Recovery Act of 2008 (HERA). This limit will remain in effect for all of 2010.
Tags: Federal Housing Finance Agency, FHFA, Conforming Loan Limits, $417,000, Fannie Mae, Freddie Mac, Government-Sponsored Enterprises, GSEs, Conforming limits now in effect through 2010, ATLShortSales.com
Mortgage bond prices ended the week nearly unchanged despite considerable market volatility. Trading was up and down all week. Rates improved the first portion of the week as stocks fell below key psychological levels. Unfortunately, a reversal the middle portion of the week eroded the earlier improvements. Data was mixed, with tame inflation readings, but generally stronger than expected economic activity. For the week, interest rates were nearly unchanged.The Treasury auctions will take center stage again this week. If there is strong foreign demand, it will likely spill over to the mortgage bond market. Weak auctions will likely result in mortgage interest rate increases. Employment cost index data will also be carefully watched.
Important. $44 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
Important. $41 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
Important. $31 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Important. A measure of consumers' ability to spend. Weakness may lead to lower mortgage rates.
Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates
Existing HomeSales
Last week's existing home sales data shocked the market with a stronger than expected increase. Sales rose 9.4%, considerably stronger than the expected 5.5% increase. Some analysts attribute the surge in sales to the $8000 tax credit that was set to expire at the end of November. (The good news going forward is that the tax credit has been extended and expanded until April 30, 2010). Lower home prices and historically low mortgage interest rates also factored into the increase. From a national perspective this is a positive report. However, the fact that some major metropolitan areas of the country failed to see improvements is an example of the axiom that real estate is local.There is still uncertainty regarding the future state of the economy. Mortgage rates are great. Take advantage of them while that remains the case.
Sellers: What To Do Now
Get your home on the market now while homes are more affordable, interest rates are low, and buyers are plentiful and looking for bargains. Take advantage of the Holidays to put your home's best foot forward. For tips on which fix-ups and clean-ups have the most impact, please call me at 404-384-2274.
Buyers: What To Do Now
Beat the other buyers to the best listings now. There are fewer competitors during the Fall and Winter - increasing your chances of finding a good deal at an attractive price. Be sure to pre-qualify with a lender before you start looking at homes. If you need help finding a lender, please call me at 404-384-2274.
Treasury auction, Q3 Advance GDP, Consumer Sentiment, existing home sales, strong increase, credit demand, mortgage interest rate increases, homebuyers, home sellers, home buyers, interest rates were nearly unchanged, mortgage rates near historic lows, home fix-ups, home clean-ups, getting pre-qualified with a lender, ATLShortSales.com
On November 6, 2009, President Obama signed a bill to extend the tax credit for first-time homebuyers (FTHBs) through April 30, 2010. The bill also opens up opportunities for others who are not buying a home for the first time.
This new program extends the time for the current Federal Tax Credit until April 30, 2010
plus
It also provides up to $6,500 in tax credit to existing homeowners who buy a new home.
For all the details on the new program, click here
Tags: homebuyers, home sellers, First time home buyers, Federal tax credit, making homes affordable, ATLShortSales.com.
RISMEDIA, October 22, 2009— Nationwide housing production remained virtually unchanged in September 2009, edging up half of a percent to a seasonally adjusted annual rate of 590,000 units, according to U.S. Commerce Department figures recently released. Meanwhile, issuance of new building permits, an indicator of future construction activity, fell by 1.2% to a seasonally adjusted 573,000 units.
“Builders are being extremely cautious right now in their efforts to maintain a modest inventory of new homes for sale,” said Joe Robson, a home builder from Tulsa, Okla. and chairman of the National Association of Home Builders (NAHB). “On top of the fact that it is nearly impossible to obtain construction financing for new units, there are widespread concerns about what will happen to demand with the expiration of the $8,000 first-time home buyer tax credit at the end of November.
“At a time when the national economy and housing market are just embarking on a fragile recovery period, Congress has the ability to keep things moving forward and create much-needed jobs across the country by moving now to expand eligibility for the tax credit to all home buyers and extend the credit’s effective date for one year,” Robson noted. “Doing so would generate nearly 350,000 jobs, $28.2 billion in wages, salaries and business income and $11.6 billion in additional tax revenues.”
“As our latest member surveys have indicated, new-home production is continuing at a very low level with few signs of improvement as builders confront the multiple challenges of a severe credit crunch for builder loans, inappropriate appraisals and the impending expiration of the home buyer tax credit,” said NAHB Chief Economist David Crowe. “In particular, the fact that builders are pulling fewer permits right now is an indication of the increasing uncertainty about where this market is headed. Clearly the positive momentum we have seen in the housing market has begun to stall and congressional action to expand and extend the tax credit may be the only way to keep us from moving back down the hill.”
Overall housing starts posted a 0.5% gain to a seasonally adjusted annual rate of 590,000 units in September, returning to a production rate last seen in June. Starts of new single-family homes made up some of the ground lost in previous months with a nearly 4% gain, to a 501,000-unit rate, while multifamily starts fell 15.2% to a meager 89,000 units.
Housing starts were down across three out of four regions in September, with the Northeast, Midwest and West posting declines of 11.5%, 6.1%, and 10.2%, respectively. The South was the only region to register an increase in starts during September, with a 7.5% gain for the month.
Permit issuance, which can be an indicator of future building activity, fell by 1.2% overall to a seasonally adjusted annual rate of 573,000 units in September. Single-family permits were down 3% to 450,000 units while multifamily permits gained 5.1% to 123,000 units.
Regionally, permits were mixed in September. The Northeast and South posted declines of 3.1% and 1.7%, respectively, while the Midwest posted a 1% gain and the West posted no change for the month.
For more information, visit www.nahb.org.
Sellers: You'll have less downward price pressure from new construction since there will be a smaller supply of competing new homes. Sell now while you have less competition and while mortgage interest rates are at 50 year lows.
Buyers: You'll have less to choose from in the coming months since less new construction will be available. Closely evaluate currently available homes to find one that meets your needs. Buy now while mortgage interest rates are low. You'll be able to afford more home today than you are likely to in the future.
Tags: U.S. Commerce Department, National Association of Home Builders, NAHB, Housing Starts, Housing Permits, Housing starts rise in the South, construction financing, new building permits, $8,000 first-time homebuyer tax credit, construction activity, new home inventory, modest inventory of new homes for sale, severe credit crunch for builder loans, inappropriate appraisals, Housing Starts remain flat in September, what it means to buyers, what it means to sellers, ATLShortSales.com.
Halloween is just around the corner, and this year it will fall on the best of days: Saturday! What a great year to go all out with your Halloween decorations and host a Halloween party!
Here are some tips from the El Paso Fire Department to keep you, your guests, and all your little goblins safe as you create your own “Monster Ball” or get ready for a night of trick-or-treating:
The El Paso Fire Department would like to offer these safety tips for their Halloween decorations and Costumes.
For safety, parents should ALWAYS examine the treats their children collect to be sure the treats are safe to eat.
Excerpted from the El Paso Texas Fire Department:
http://www.elpasotexas.gov/fire/tips17.asp
Tags: Halloween safety, Trick-or-Treaters, goblins, Happy Halloween, Happy and SAFE Halloween, fire safety in the home, costume safety, ATLShortSales.com
Mortgage bond prices fell last week pushing mortgage interest rates higher. The Treasury auctions were mixed with the 3 and 10-year auctions showing decent foreign demand. Unfortunately the 30-year auction was a huge disappointment and caused mortgage interest rates to worsen Thursday. The fear of future rate hikes sent mortgage bonds lower Friday pushing mortgage interest rates higher. For the week, interest rates rose by about 1/2 of a discount point. (That means your monthly payment would rise by about $0.33 per $1,000 borrowed. For a $100,000 loan, your payment would increase by $33.00 per month).The consumer price index will be the most important release this week. Any signs of inflation will generally not bode well for mortgage bonds. Retail sales and the Fed minutes are also likely to factor into trading this week. Any surprises may lead to mortgage interest rate volatility.
Important. A measure of consumer demand. Weakness may lead to lower mortgage rates.
Low importance. An indication of stored-up capacity. A significantly larger increase may lead to lower rates.
Important. Details of the last Fed meeting will be thoroughly analyzed.
Important. A measure of inflation at the consumer level. Lower figures may lead to lower rates.
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates.
Important. An indication of consumers' willingness to spend. Weakness may lead to lower mortgage rates.
Tax Credit
The housing sector made eager pleas to Congress last week to extend the $8,000 first time homebuyer tax credit. The benefit was part of the stimulus plan and expires the end of November. The White House indicated the program "helped the economy" and led to "quite a bit of success" and noted consideration of extending the program. There are additional proposals in the Senate to not only extend the program but also to increase the tax credit and remove the first time homebuyer qualification (The Senate passed a similar resolution last year, but the House of Representatives did not). Unfortunately the cost to extend the credit is around $1 billion per month ($14.8 billion in unbudgeted expense for the fiscal year). This has politicians from both sides of the aisle concerned (How are they going to pay for it?"). The House voted Thursdayto extend the credit for American service members another 12 months. Both parties have members pushing for the extension to apply to all purchasers (not just people who have not owned a home in the past three years; Will it be retroactive?). Analysts indicate some sort of extension is very likely.Last week was a great example of the danger of thinking rates would always improve. The good news is that despite last week's bounce higher, rates still remain historically favorable.Tags: Mortgage interest rates rise, future rate increases, Congress, Homebuyer Tax Credit extension, 30-year auction disappoints, consumer price index, inflation, decent foreign demand, homebuyers, homesellers, White House, ATLShortSales.com
Working With a Certified Short Sale Specialist is more important NOW than ever …..
As we reported over 2 years ago, the number of homeowners choosing to de-leverage their own ‘toxic asset’ would only increase. In the past there were significant moral and social stigmas associated with ‘walking away’ or choosing a strategic default. Now, that has all changed.
It has become clear that there will be no ‘V’ shaped recovery … and certainly no fast recovery for housing. In some parts of the country, it will take over 10 years for homes to return to peak bubble prices. With that in mind, millions of homeowners are considering a strategic default.
Disclaimer: We are not here to be the ‘moral’s police’ and judge others. This is a very important personal financial and social decision. As Realtors, we don’t think it's ethical to advise sellers to choose a strategic default as the solution.
Clearly, homeowners are coming to the decision to ‘walk-away’ on their own.
Simple, a Short Sale is by far a better alternative to a foreclosure or a deed in lieu of foreclosure. The initial credit impact is roughly the same. But, the lasting effects of a Short Sale versus a Foreclosure are dramatically different. For example, according the FHA guidelines you can qualify for a new FHA backed mortgage 24 months after a Short Sale. If you choose to accept foreclosure or deed in lieu of foreclosure, the same FHA guidelines may prohibit you from getting an FHA backed mortgage for 5 or more years. Since a foreclosure remains on your credit report for seven years, it can affect your ability not only to get a mortgage, but also to qualify for a job. It even causes your credit card rates to climb and your insurance costs to increase.
Since in some markets 75% of all homeowners are upside down … if they want to sell and avoid foreclosure, they will need the services of a Short Sale Specialist.
Here are excerpts of the article from SeattleTimes.com Scott Conroy pays the mortgage every month on his one-bedroom condominium in San Diego, even though it’s worth 33 percent less than what he owes and it may take more than a decade to break even. Homeowners like Conroy who can afford their payments are weighing whether to sell and pay the difference, stick it out until housing prices recover or walk away. In the U.S., 26 percent of borrowers owe more than their home is worth, said Karen Weaver, global head of securitization research for Deutsche Bank Securities. In parts of California, Florida and Nevada, it’s as high as 75 percent.
Here are excerpts of the article from SeattleTimes.com
Scott Conroy pays the mortgage every month on his one-bedroom condominium in San Diego, even though it’s worth 33 percent less than what he owes and it may take more than a decade to break even.
Homeowners like Conroy who can afford their payments are weighing whether to sell and pay the difference, stick it out until housing prices recover or walk away.
In the U.S., 26 percent of borrowers owe more than their home is worth, said Karen Weaver, global head of securitization research for Deutsche Bank Securities. In parts of California, Florida and Nevada, it’s as high as 75 percent.
In some markets, 75% of all homeowners are upside down! Staggering.
So-called strategic defaults, in which homeowners stop paying their mortgages while remaining current on other debts, rose 128 percent to 588,000 last year, according to Experian, a credit-checking company, and Oliver Wyman, a New York consulting firm. Two-thirds of those who walked away defaulted on their primary residences. “You’re looking at an extremely long horizon in order to see a return of home values to where they were at their peak,” said Stan Humphries, chief economist for Zillow.com, the Seattle real-estate data service. “It could be 15 to 20 years in some markets.” Trickle for now Strategic defaulters represent about 4 percent of all homeowners underwater. That trickle could become a flood as the likelihood recedes that home prices will soon return to their peak values, said Rick Sharga, senior vice president of Irvine, Calif.-based RealtyTrac, an online seller of real-estate data.
So-called strategic defaults, in which homeowners stop paying their mortgages while remaining current on other debts, rose 128 percent to 588,000 last year, according to Experian, a credit-checking company, and Oliver Wyman, a New York consulting firm. Two-thirds of those who walked away defaulted on their primary residences.
“You’re looking at an extremely long horizon in order to see a return of home values to where they were at their peak,” said Stan Humphries, chief economist for Zillow.com, the Seattle real-estate data service. “It could be 15 to 20 years in some markets.”
Trickle for now
Strategic defaulters represent about 4 percent of all homeowners underwater. That trickle could become a flood as the likelihood recedes that home prices will soon return to their peak values, said Rick Sharga, senior vice president of Irvine, Calif.-based RealtyTrac, an online seller of real-estate data.
In San Diego, home values are down about 40 percent since March 2006, according to the S&P/Case-Shiller monthly index. Prices have rebounded for three consecutive months, returning to the October 2002 level, before the start of the housing boom. Nationwide, home values are what they were in September 2003, according to the Case-Shiller index as of July. “You have to ask yourself: ‘Are you just renting the home from the bank?’ ” said Michael Joe, a foreclosure expert at the Legal Aid Center of Southern Nevada. “Would it be cheaper to walk away and rent across the street?” Conroy, 32, and his wife purchased their home for $385,000 in March 2006, a month before marrying. The property was reassessed this summer for $250,000. Conroy said he and his wife are trying to save, knowing they may have to move to a bigger place within 18 months to start a family. “We’ve given up on this dream of having equity in our home. We don’t expect to walk away with cash in hand; we expect to pay.” More homeowners may opt to take a hit to their credit score rather than come up with cash to cover the loss, especially in California and the nine other U.S. states where the legal repercussions of foreclosures are less than in other parts of the country, said Sharga. Ten states are so-called non-recourse, prohibiting deficiency judgments after most home foreclosures: Alaska, Arizona, California, Hawaii, Minnesota, Montana, North Dakota, Oklahoma, Oregon and Washington, according to the Boston-based National Consumer Law Center. The bank can repossess your home in those states, not other assets, to settle the debt. In California, a second-mortgage holder may try to pursue a delinquent borrower to repay through litigation, said Rick Brooks, a financial adviser with the San Diego-based wealth-advisory firm Blankinship & Foster. Banks generally prefer not to sue because it can easily cost $60,000 or more, said Debra Guzov, co-founder of the New York law firm Guzov Ofsink. In a short sale, the realtor finds a buyer for the home at an acceptable price and then negotiates with the homeowner's bank to persuade the bank to accept the offer and to agree to forgive the difference. In a deed-in-lieu of foreclosure, the bank sells the home after a similar debt negotiation. Tax break A 2007 law exempts from tax up to $2 million of debt forgiven in a foreclosure or similar proceeding for a primary residence, according to Internal Revenue Service spokesman Eric Smith. The tax break extends to 2012. The lender’s willingness to negotiate varies and depends on the loan balance, condition of the property, location and resale opportunities, said Alberta Hultman, CEO of USFN, an association of mortgage-banking attorneys based in Tustin, Calif. Short sales or deeds-in-lieu of foreclosures are considered the same as a foreclosure on your credit score, said Craig Watts, spokesman for FICO Corp., owner of the credit-scoring formula most widely used by U.S. lenders. A foreclosure remains on a credit report for seven years. Credit scores can begin to rebound in as little as two years if bills are paid on time, according to FICO. Tags: 2010 Real Estate Market Forecast, Certified Short Sale Specialist, affordability improves, walking away’ from your mortgage, strategic default, foreclosure, short sale, deed in lieu of foreclosure, deficiency judgments, S&P/Case-Shiller index, federal tax exemption, FICO Corp, Bankrate.com, credit score, RealtyTrac, Experian, Zillow.com, SeattleTimes.com, FHA guidelines, ATLShortSales.com
In San Diego, home values are down about 40 percent since March 2006, according to the S&P/Case-Shiller monthly index. Prices have rebounded for three consecutive months, returning to the October 2002 level, before the start of the housing boom.
Nationwide, home values are what they were in September 2003, according to the Case-Shiller index as of July.
“You have to ask yourself: ‘Are you just renting the home from the bank?’ ” said Michael Joe, a foreclosure expert at the Legal Aid Center of Southern Nevada. “Would it be cheaper to walk away and rent across the street?”
Conroy, 32, and his wife purchased their home for $385,000 in March 2006, a month before marrying. The property was reassessed this summer for $250,000.
Conroy said he and his wife are trying to save, knowing they may have to move to a bigger place within 18 months to start a family.
“We’ve given up on this dream of having equity in our home. We don’t expect to walk away with cash in hand; we expect to pay.”
More homeowners may opt to take a hit to their credit score rather than come up with cash to cover the loss, especially in California and the nine other U.S. states where the legal repercussions of foreclosures are less than in other parts of the country, said Sharga.
Ten states are so-called non-recourse, prohibiting deficiency judgments after most home foreclosures: Alaska, Arizona, California, Hawaii, Minnesota, Montana, North Dakota, Oklahoma, Oregon and Washington, according to the Boston-based National Consumer Law Center. The bank can repossess your home in those states, not other assets, to settle the debt.
In California, a second-mortgage holder may try to pursue a delinquent borrower to repay through litigation, said Rick Brooks, a financial adviser with the San Diego-based wealth-advisory firm Blankinship & Foster. Banks generally prefer not to sue because it can easily cost $60,000 or more, said Debra Guzov, co-founder of the New York law firm Guzov Ofsink.
In a short sale, the realtor finds a buyer for the home at an acceptable price and then negotiates with the homeowner's bank to persuade the bank to accept the offer and to agree to forgive the difference.
In a deed-in-lieu of foreclosure, the bank sells the home after a similar debt negotiation.
Tax break
A 2007 law exempts from tax up to $2 million of debt forgiven in a foreclosure or similar proceeding for a primary residence, according to Internal Revenue Service spokesman Eric Smith. The tax break extends to 2012.
The lender’s willingness to negotiate varies and depends on the loan balance, condition of the property, location and resale opportunities, said Alberta Hultman, CEO of USFN, an association of mortgage-banking attorneys based in Tustin, Calif.
Short sales or deeds-in-lieu of foreclosures are considered the same as a foreclosure on your credit score, said Craig Watts, spokesman for FICO Corp., owner of the credit-scoring formula most widely used by U.S. lenders.
A foreclosure remains on a credit report for seven years. Credit scores can begin to rebound in as little as two years if bills are paid on time, according to FICO.
Tags: 2010 Real Estate Market Forecast, Certified Short Sale Specialist, affordability improves, walking away’ from your mortgage, strategic default, foreclosure, short sale, deed in lieu of foreclosure, deficiency judgments, S&P/Case-Shiller index, federal tax exemption, FICO Corp, Bankrate.com, credit score, RealtyTrac, Experian, Zillow.com, SeattleTimes.com, FHA guidelines, ATLShortSales.com
Alarming new information is (finally) being released about how SERIOUS … make that HUGE …the foreclosure problem really is.
Here are some key facts for you:
Fact: Every 13 Seconds Another Home Goes Into Foreclosure.
Fact: There Are Nearly 7,000 Foreclosure Filings PER DAY.
Fact: There are Roughly 7,000,000 lender ‘Shadow Inventory’ homes …. homes destined to become Real Estate Owned (REO) ... homes for sale that are already owned by lenders. 'Shadow Inventory' homes are homes that the lender has foreclosed, but does not want to sell now since home prices are depressed. Compare this with the forecasted sales from the National Association of Realtors for 2009 ( 5.1 million homes for 2009)
Fact: It's Simply Unrealistic To Assume That There Will Be Any Sort Of ‘Market Correction’ For Years ( and that home prices will miraculously snap back to previous inflated levels). Recent sales show that 70% of the homes that are selling are distressed property sales - foreclosures, short sales, etc.). The glut of foreclosed properties will continue to depress market prices.
Fact: The FHA Will Have To Raise Standards For Loans, Raise Mortgage Rates, and Require Higher Credit Scores for Buyers. The intention is to restrict home buying only to those who are creditworthy.
Fact: Over the next 3 years more than 6,000,000 more homes may be lost to foreclosure (that's in addition to the 7,000,000 above!). This is because luxury home owners are now defaulting on their loans too.
Investor , Buyer, or Seller
Trigger
What Do Do Now
There are home bargains galore and you must be selective and do the numbers to know which properties are winners.
2) Offer properties as Rent-To-Own to encourage better quality tenants and help them rebuild their credit.
3) Offer properties as Lease-Option or Lease-Purchase, encouraging the tenant to take better care of the property.
4) Selectively Acquire Rental Properties near Areas That Have Been Hardest Hit By Foreclosure.
2) Search for homes that are fairly valued, in your price range, and do not need burdensome, extensive repairs.
3) By acting quickly, you may also qualify for up to $9,800 in Homebuyer Tax Credits.
3) Check with a Realtor to determine what your present home is worth so you can determine whether this is the right time for you to make a move.
If you want the best price, you simply cannot afford to wait for the "market to improve".
This may be an ideal time for you to be a "move up" buyer.
1) Check with a lender and see whether you can qualify to buy a home now.
Similar Posts:
1) Flood of Foreclosures Coming Now
2) Luxury Homes Lose Value
2) Breaking News: Existing Homes Sales Slide - Continued Price Declines.
Tags: foreclosures, short sales, distressed properties, "shadow inventory", National Association of Realtors, NAR, Federal Housing Administration, rising mortgage rates, tighter credit criteria, higher credit scores, luxury home foreclosures, real estate owned, bank owned homes, REO, tighter lending standards, sellers, buyers, first time home buyer, "move up" buyers, real estate investors, home sellers, homebuyers, ATLShortSales.com
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