Home builders Grow More Confident About Housing Recovery.

Home builders Grow More Confident About Housing Recovery.

Home builders confidence inched slightly higher in October, bringing it to its strongest level since June of 2006, according to the National Association of Home Builders/Wells Fargo Housing Market Index. The October gain also marks the sixth consecutive month for increases in the index, which measures builder confidence about the direction of the new-home market.

“Many Home builders are reporting increases in the number of serious buyers visiting their sales offices, and the overall confidence measure is much higher than it was at this time last year,” says Barry Rutenberg, NAHB Chairman.

The monthly Housing Recovery index measures Home builders perceptions of current single-family home sales, sales expectations, and buyer traffic.

While builders’ confidence about the housing recovery continues to improve, housing experts say there are still several challenges ahead for the new-home sector.

“The slight gain in the Home builders confidence this month is an indication that, while still moving forward, the speed at which the housing recovery is proceeding is being moderated by the various constraints such as tight credit, difficult appraisals and more recently, the limited inventory of buildable lots in certain markets,” says David Crowe, NAHB chief economist.

Source: National Association of Home Builders

Housing Appraisals Remain Big Hurdle.

Housing Appraisals Remain Big Hurdle.

Housing Appraisals have been blamed on derailing a lot of sales in recent years. In fact, more than one-third of REALTORS® recently reported that deals were canceled, delayed, or renegotiated to a lower price due to a low appraisal.

The National Association of REALTORS® has spoken out against faulty Housing Appraisals, blaming it on holding back the housing recovery.

More real estate professionals are starting to include Housing Appraisals contingencies in their contracts. These contingencies specify how much a buyer would be willing to pay in cash in case the appraisal comes in lower than the agreed upon sales price.

Appraisers have been criticized for using foreclosures as comparable homes in their valuations and for failing to take into account market conditions like the low inventory and bidding wars in many areas, according to NAR’s report. NAR also has criticized many banks for increasing their requirements to six comparable sales instead of three, particularly at a time with low inventories.

“It’s holding sellers off the market,” Jed Smith, NAR’s managing director of quantitative research, told The New York Times. “Sales volume could probably be an additional 10 to 15 percent higher if we had normal lending practices and if we had normal appraisal practices.”

Appraisers say they’re not making valuations lower but they’re reflecting the current value of homes.

“Appraisers don’t set the market, they reflect what’s happening in the market,” Ken Chitester, a spokesman for the Housing Appraisals Institute, told The New York Times. “So don’t shoot the messenger. Blaming the appraiser for a bad housing market is like blaming the weatherman because you don’t like the weather.”

Appraisers don’t always make adjustments if they use bank-owned homes in comparables because not all REOs sell at a discount and not all are in bad condition, says Dan McKinnon, who operates an appraisal company in Phoenix. When neighborhoods are dominated by REOs, those homes need to be factored in to help determine the value of homes, he adds.

“If that property is in similar condition to your subject, it is direct competition,” McKinnon says.

Source: “Scrutiny for Home Appraisers as the Market Struggles,” The New York Times (Oct. 12, 2012)

House Flipping is Back!!

House Flipping is Back!!

Buying up homes, rehabbing them, and reselling them for a profit was big during the housing boom. But when the housing market started to slump, these buyer interested in House Flipping and in search of quick profits nearly vanished.

As the housing market recovers, house flipping may be showing signs of re-emerging, according to The Washington Post.

In the first half of 2012, House Flipping increased 25 percent compared to a year earlier, according to RealtyTrac. The average profit on each property is $29,342, according to the real estate research firm.

“There are House Flipping in many markets, but a market where home prices are appreciating is much more forgiving for flippers than a market where prices are depreciating,” Daren Blomquist, vice president of RealtyTrac, told The Washington Post. “We have turned that corner in a lot of places in the last six months, so that’s going to attract flippers.”

Areas that were the hardest hit in the housing crash are seeing some of the largest increases in flipping as investors buy up foreclosures and short sales at large discounts. Phoenix has had the highest number of reported flips, followed by Las Vegas, Los Angeles, Miami, and Atlanta.

Source: “Flipping Houses Is Once Again a Booming Business,” The Washington Post (Oct. 14, 2012)

A New Housing Boom by 2015?

A New Housing Boom by 2015?

The housing market has been showing several signs of recovery, including home prices and home sales on the rise, new construction up, foreclosures falling, and mortgage rates near record lows. Some economists are getting very bullish about a Housing Boom recovery and even predicting that the market will return to its “boom” level days in just three years.

In a recent report, Barclays Capital predicts that the Housing Boom could be back to peak levels by 2015. Barclays is predicting home prices to rise 5 percent to 7.5 percent a year.

“In our view, the housing market had undergone a dramatic over-correction during the prior five years, resulting in pent-up demand for housing purchases that would spark a Housing Boom,” says Stephen Kim, an analyst with Barclays.

Home construction is also expected to soar, rising 20 percent or more a year for the next year, according to some economists’ forecasts. The new-home market could return to its pre-bubble average of about 1.5 million new homes a year by 2016, CNNMoney reports. That would double the construction level expected this year.

“That turn in the [housing] market is occurring now and it should become a Housing Boom by 2015,” Roger Altman, chairman of Evercore Partners and former deputy Treasury secretary, told CNNMoney.

Source: “A New Housing Boom,” CNNMoney (Oct. 12, 2012)

Foreclosures Drop to 5 Year Lows.

Foreclosures Drop to 5 Year Lows

Foreclosures continue to do the opposite of what most analysts had predicted: They keep falling rather than rising.

Foreclosure filings in September fell 7 percent from August and are down 16 percent from last September, RealtyTrac reported Thursday. Foreclosure filings include default notices, scheduled auctions, and bank repossessions.

The number of foreclosure filings in September reached their lowest level since July 2007. What’s more, foreclosure filings have decreased 13 percent in the third quarter compared to the third quarter of 2011, marking the ninth consecutive quarter with an annual decrease in foreclosures activity, RealtyTrac reports.

“We’ve been waiting for the other foreclosure shoe to drop since late 2010, when questionable foreclosure practices slowed activity to a crawl in many areas, but that other shoe is instead being carefully lowered to the floor and therefore making little noise in the housing market — at least at a national level,” says Daren Blomquist, vice president at RealtyTrac. “Make no mistake, however, the other shoe is dropping quite loudly in certain states, primarily those where foreclosure activity was held back the most last year.”

A backlog of delayed foreclosures in certain states may be problematic in some areas soon, Blomquist says, particularly in judicial states, where foreclosures must be approved by a court. Florida, Illinois, Ohio, New Jersey, and New York have posted the largest year-over-year increases in foreclosure activity.

Meanwhile, other states are seeing large drops in foreclosure activity, mostly centered in “non-judicial” states, where foreclosures do not have to be court-approved. For example, states like California, Georgia, Texas, Arizona, and Michigan have posted large drops in foreclosure activity.

Source: RealtyTrac

Wells Fargo Accused of ‘Reckless’ Lending.

Wells Fargo Accused of ‘Reckless’ Lending

The government has filed a lawsuit in federal court against Wells Fargo, alleging the nation’s largest mortgage lender has engaged in a decade of regular “reckless origination and underwriting” of government-backed loans.

The government’s lawsuit against Wells Fargo is the latest in its broad sweep against banks that cites the Federal False Claims Act, which targets lenders accused of misusing Federal Housing Administration loans. (The FHA does not make loans but insures loans that lenders make.)

Wells Fargo denies any wrongdoing and said it would “vigorously” defend itself against the government’s accusations. Company officials said they acted in “good faith and in compliance” with federal guidelines in their lending.

In February, Bank of America, which never admitted any wrongdoing, reached a $1 billion settlement involving False Claims Act fraud allegations with FHA-backed loans. Three other banks, in similar recent cases, also have agreed to pay $490 million.

Source: “U.S. Sues Wells Fargo for Faulty Mortgages,” The Wall Street Journal (Oct. 9, 2012)

Upbeat About Housing.

Upbeat About Housing

Americans continue to get more optimistic and Upbeat About Housing, according to Fannie Mae’s September National Housing Survey of 1,000 Americans. In fact, Americans’ views on the direction of housing prices has remained positive for 11 consecutive months in the survey, and the number of people expecting home prices to fall now rests at 11 percent, an all-time low since the survey began in 2010.

Overall, survey respondents are so Upbeat About Housing, they expect home prices to increase 1.5 percent, on average, in the next year.

“Consumers are showing increasing faith in the nascent housing recovery,” says Doug Duncan, Fannie Mae’s chief economist.

Nearly 20 percent say now is a good time to sell, the highest percentage since the survey began in 2010. Also, 69 percent say now would be a great time to buy if they were planning to move.

Survey respondents also showed more optimism for the direction of the economy as well as the Upbeat About Housing sector. Forty-one percent say the economy is on the right track, which is up from 33 percent last month. Still, 53 percent of survey respondents say the economy is on the wrong track.

Source: Fannie Mae