Housing recovery… A good week for it!

Housing recovery… A good week for it!

The housing recovery showed signs of strengthening this week, as two new reports showed home sales and prices on the upswing.

Existing-home sales have soared nearly 8 percent from a year ago, the National Association of REALTORS® reported this week proving the Housing recovery is on the upswing. Meanwhile, the new-home market also is showing signs of recovery, with starts rising 29.1 percent over year-ago levels, according to the Census Bureau.

What’s more, home builders are getting more confident about the Housing recovery market with recent sales, future sales, and buyer traffic. Home builder confidence reached its highest level since the housing-boom time of June 2006, according to this month’s index of home builder sentiment.

Also this week, fixed-rate mortgages this week were at all-time record lows or near it, helping to keep home buyer affordability high, Freddie Mac reported in its weekly mortgage market survey.

With a drop in inventory of for-sale homes nationwide, many markets are also seeing an increase in home prices. The median home price is $187,400, a 9.5 percent increase over year-ago levels. Also, “that marked the sixth consecutive month of price increases, the first time that has happened since May 2006, near the very peak of the housing price boom,” CNNMoney reports.

“We have a real housing recovery taking root, and that has positive implications for the broader economy,” Sal Guatieri, senior economist at BMO Capital Markets, told the Associated Press. “If home prices continue to rise, so, too, will household wealth and consumer confidence.”

Source: “Housing Recovery Blossoms,” CNNMoney (Sept. 19, 2012) and “Housing Recovery Stirs in August,” Associated Press (Sept. 19, 2012)

Home Buyers Canceling Contracts?

Home Buyers Canceling Contracts?

With a high number of Home Buyers Canceling Contracts, even as the housing market picks up and sales are on a rise, new data from Capital Economics shows. Nearly 18 percent of signed contracts on existing home sales were canceled from May through July.

What’s more, 36 percent of real estate professionals say they’ve experienced a problem with Home Buyers Canceling Contracts, whether that be a delay, negotiations on the sales term, or a cancellation of the contract, according to the National Association of REALTORS®.

What’s leading to the high number of Home Buyers Canceling Contracts?

For one, some are blaming tight lending requirements for causing more contract cancellations. More buyers find that as they inch toward closing that they’re unable to get the financing approved for their home purchase or are facing major delays from obtaining a mortgage.

Some analysts blame the high number of Home Buyers Canceling Contracts on the limited inventory of homes for-sale on the market. The limited inventory is prompting some buyers to aggressively bid on a property in order to get a seller’s attention. However, after getting the “winning” offer, these buyers reevaluate how much they truly wanted the home in the first place, Bryan Sweeley with ZipRealty in Santa Clara, Calif., told MarketWatch. In those cases, if a home inspection or appraisal reveal any any potential snafu, the buyer may be prompted to walk away from the deal.

Still, Capital Economics notes: Just because a buyer cancels a contract to buy a house doesn’t mean they’re walking away from the housing market altogether. They may then go on to make an offer on another home, or it may be just renegotiating in a new contract on the same property.

Source: “Canceled Contracts Dog Real Estate Recovery,” MarketWatch (Sept. 19, 2012)

Home building Bounces Back in August.

Home building Bounces Back in August.

Home building Bounces Back for single-family homes was at its fastest pace in more than two years during August, as the new-home market continues on in recovery mode.

The Commerce Department reported Wednesday that single-family housing starts soared 5.5 percent, marking the best pace since April 2010. Construction of homes and apartments increased 2.3 percent in August from July.

Overall, Home building Bounces Back to nearly 60 percent since April 2009, when it hit a recessionary low, the Commerce Department reports. Still, the sector is only at half the pace that most economists consider healthy.

Apartment construction has been a volatile part of the market in recent years and construction dropped nearly 5 percent in August.

Home building Bounces Back — for both homes and apartments — rose the most in the Midwest, which saw a 20.7 percent monthly increase in construction. Home construction also increased 3.7 percent in the South, but dropped 12.6 percent in the Northeast and 4.3 percent in the West.

Building permits, a gauge of future construction, dropped to an annual rate of 803,000, down from a four-year high of 811,000 in July.

Source: “U.S. Housing Starts Rose 2.3 Percent in August, Buoyed by Single-Family Construction,” Associated Press (Sept. 19, 2012)

REO Sales – Fannie Takes Bigger Grip Over them.

REO Sales – Fannie Takes Bigger Grip Over them.

Fannie Mae announced that it will no longer be using third-party management vendors and sales teams to help manage its REO properties. The mortgage giant will now be handling the management of its REO inventories through its in-house staff.

“We have reduced our REO inventory from 162,489 properties at the start of 2011 to 109,266 as of June 30, 2012,” Fannie Mae officials told HousingWire in an e-mail. “With a reduced inventory of properties, Fannie Mae’s in-house teams now have sufficient capacity to manage our REO properties without the assistance of third party asset management providers.”

However, Fannie announced it will continue to use real estate professionals to market the properties.

“Fannie Mae’s goal is to help neighborhoods recover by selling as many properties as possible to owner occupants at competitive prices,” Fannie told HousingWire.

Source: “Fannie Mae Moving REO Management In-House,” HousingWire (Sept. 17, 2012)

Foreclosures Continue to Fall From Last Year’s Levels

Foreclosures Continue to Fall From Last Year’s Levels

Foreclosures are down 13 percent from a year ago when they had reached a 17-month high, RealtyTrac reports. Foreclosures include default notices or scheduled foreclosure auctions.

Many experts had been predicting a foreclosure wave to occur this summer with foreclosures reaching elevated levels. But the “wave” has yet to materialize. Foreclosures increased 1 percent in August from July but remain well-below year ago levels.

Several states saw large decreases in foreclosures in August:

Oregon – 89% decrease

Nevada – 64% decrease

Utah– 57% decrease

Massachusetts – 47% decrease

California – 42% decrease

Arizona – 41% decrease

Georgia – 31% decrease

Foreclosure filings—which includes default notices, scheduled auctions, and bank repossessions—increased 1 percent in August compared to July, but were still down 15 percent from last year’s levels. Also, bank repossessions decreased in August by 2 percent compared to the previous month, marking the 22nd month for declines, RealtyTrac reported.

Strategic Defaulters targeted by ‘Mortgage Cops’.

Strategic Defaulters targeted by ‘Mortgage Cops’

The Office of the Inspector General at the Federal Housing Finance Agency is trying to find strategic defaulters and collect on what they still owe. Strategic defaulters are often underwater home owners who walk away from their mortgages even though they still have the means to pay.

Experian has estimated that 20 percent of all foreclosures are from Strategic Defaulters. The OIG estimates that strategic defaulters owe more than $1 billion to Fannie Mae and Freddie Mac, and they’re ready to start collecting.

The OIG is reportedly working with Fannie Mae and Freddie Mac to develop a mechanism for identifying strategic defaulters.

“Debts that haven’t been repaid don’t just go away,” an unnamed Treasury Department official told The Chicago Tribune. “It doesn’t matter whether it’s on your credit report or not.”

The OIG has an even harsher warning for  strategic defaulters who have failed to disclose that they walked away from a previous loan on any new loan applications. The OIG says such walkaways have constituted mortgage fraud, and the OIG plans to refer them for criminal prosecution.

“We’re not just going to demand repayment,” says Heather Wolfe, OIG assistant inspector general for audits. “We’re going to lock [people] up.”

Source: “Mortgage Cops Taking Tough Stance,” The Chicago Tribune (Sept. 16, 2012)

Fed Moves to Keep Rates Low.

Fed Moves to Keep Rates Low

The Federal Reserve announced Thursday that, in an effort to re-ignite economic recovery, it was taking aim at mortgage rates — a move that will likely take rates even lower from their current record lows.

The Federal Reserve announced it will purchase $40 billion of mortgage-backed securities that will help boost the recovery in the housing market. What’s more, the central bank said that it will continue with the purchase program until the economy shows greater improvement, particularly with unemployment.

“These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodating,” according to the Fed in a public statement.

The Fed says the economy still has a long way to go toward recovery. The Fed predicts the jobless rate will stay above 7 percent well into 2014 and that economic growth will remain slow in the coming months.

At its Thursday meeting, the Fed left its funds rate unchanged at near-zero, but announced the rate — which has a bearing on Mortgage Rates — would remain at “exceptionally low levels” until at least mid-2015.

As mortgage rates sink lower, home shoppers have been taking advantage. The Mortgage Bankers Association announced this week that mortgage applications for home purchases were up 8.1 percent for the week ending Sept. 7. Mortgage applications for purchases also were up 7 percent from year-ago levels, MBA said.

“While low interest rates impose some costs, Americans will ultimately benefit most from the healthy and growing economy that low interest rates promote,” Fed Chairman Ben Bernanke said Thursday following the Fed committee’s meeting.

Source: “Fed Pulls Trigger, to Buy Mortgages in Effort to Lower Rates,” CNBC (Sept. 13, 2012)