Round up of the latest real estate, housing and economic news for 3-23-2016…
Years Later and STILL No GSE Reform
From Washington Monthly:
It’s been almost a decade since the slow-rolling financial crisis, which reached its grand finale in the fall of 2008, got started. The way we finance housing, which makes up some 20 percent of the U.S. GDP, affects anyone who has a stake in our economy.
The idea that these little-understood but critically important companies caused the crisis is just the icing on top of the controversy about Fannie and Freddie, which were created by Congress to serve the dream of the United States as a society of individual homeowners.
Conservatives blame the mortgage giants (wrongly) for the financial crisis, and both parties want them dead. But to finish the job of financial reform without destroying the housing market and costing taxpayers billions, we need to let them live.
I don’t expect any changes any time soon. This situation has dragged on for years and not much progress has been made so why should now be any different?
Is This a Substitute For FHA Mortgages?
Interesting read on the latest mortgage offering from the bank I love to hate:
Bank of America recently announced a new Affordable Loan Solution (ALS) mortgage, a 3 percent down payment mortgage that does not require private mortgage insurance (PMI). Targeted at low- and moderate-income (LMI) borrowers and offered in partnership with Self-Help Ventures Fund and Freddie Mac, the ALS mortgage is seen by some as an attempt to create a channel for lending to LMI borrowers that bypasses FHA and its heavy enforcement hammer. Though such efforts are an alternative to FHA lending, they are not a substitute, as the underlying economics of this deal make it difficult to scale up lending in a manner that would replace FHA.
Old Scam Growing
The Federal Trade Commission and the National Association of Realtors® are warning home buyers about an email and money wiring scam. Hackers have been breaking into some consumers’ and real estate professionals’ email accounts to get information about upcoming real estate transactions. After figuring out the closing dates, the hacker sends an email to the buyer, posing as the real estate professional or title company.
Read more at Scammers Phish for Mortgage Closing Costs
Lack of Inventory Hurting First Timer Home Buyers the Most
Puh-leeze remember this is NOT talking about real estate market conditions in your neighborhood/area:
Nationally, Starter and Trade-Up Home Inventory Down More Than 40% Since 2012. Heading into the spring house-hunting season, inventory remains tight and affordability continues to worsen.
The number of starter and trade-up homes on the market nationwide has dropped by 43.6% and 41.0%, respectively. Meanwhile, buyers will need to spend between 2-6% more of their income towards a home purchase than in 2012.
It is possible to find starter homes in our area IF buyers work with an experienced Buyer’s Agent. Read the rest at Trulia
February 2016 Existing Home Sales
I have read lots of scary headlines regarding NAR’s Existing Home Sales for February 2016.
Should we be concerned?
First let’s look at the facts:
- February 2016 total existing home sales decreased 7.1% from the January 2016
- February 2016 existing home sales were 2.2% higher than February 2015
- The median existing home price for all housing types in February 2016 was up 4.4% from February 2015
- This is the 48th consecutive month with year-over-year increases in home prices
- Total US housing inventory at the end of February 2016 was 1.1% lower than February 2015
- 25% of home sales in February 2016 were ALL CASH sales
- The share of first-time buyers was 30% in February 2016
Lawrence Yun, NAR chief economist, said:
Sales took a considerable step back in most of the country last month, and especially in the Northeast and Midwest. The lull in contract signings in January from the large East Coast blizzard, along with the slump in the stock market, may have played a role in February’s lack of closings.
However, the main issue continues to be a supply and affordability problem. Finding the right property at an affordable price is burdening many potential buyers. The overall demand for buying is still solid entering the busy spring season, but home prices and rents outpacing wages and anxiety about the health of the economy are holding back a segment of would-be buyers.
I would caution everyone to NOT freak out if home sales or prices change from the previous month. We should start to become concerned if we see decreasing home sales/prices (Year over Year) for at least 3 months in a row.
There is NO doubt that demand is bigger than the number of homes for sale. The limited inventory is driving up house prices in many areas of the US.
Limited inventory and increasing home prices are making it harder for buyers. These facts are why serious buyers need to work with a REALTOR.
FHFA on Home Prices
FHFA just released their latest data on US home prices:
US house prices rose in January, up 0.5% on a seasonally adjusted basis from the previous month
From January 2015 to January 2016, US house prices were up 6.0%
Check out the chart from FHFA:
I Feel the Need… the Need for Speed
Nearly six months after the implementation of TRID and the market finally turned a corner as the time to close all loans decreased to 46 days, which is the shortest time to close since May 2015
Read more at Initial discomfort of TRID now over
Can a Bank Feel Shame About Foreclosures?
Interesting article about how a home owner being foreclosed on was given the run around by various banks/mortgage servicers.
Not for several months… Or a year… But for 7 years!!
After starting a publicity campaign to draw attention to the inept or unprofessional behavior, this situation was resolved in 3 months.
Some banks or mortgage servicers do not care about doing what is right, legal or ethical. Can a nameless faceless corporate machine feel shame?
Of course not! But they can and will react to negative press. Something to consider…
Read more at Got Foreclosure Trouble? Try ‘Shaming’ Your Bank
Inflation and Increasing Home Prices
The U.S. Federal Reserve has had a tough time getting inflation back up to desired levels. There’s one area, though, where it may be having a bigger effect than some of its major foreign counterparts: house prices. Comparing house prices across borders can be a fraught enterprise, given the idiosyncratic nature of housing markets and statistics.
That said, after the U.S. housing bust tanked the global economy, the Bank for International Settlements started collecting and publishing data for a large number of countries. Though still imperfect, the data allow for some rough comparisons.
It appears that home prices in the US have been increasing at a faster pace than many other places. Is this a good thing?
Well it is good that underwater home owners are regaining the values of their homes. But the negative is that US home prices are increasing MUCH faster than incomes.
Read the rest at Home Is Where the Inflation Is
Uncomfortable Housing Questions Need Answering
From the St Louis Fed:
According to many metrics, housing market conditions continued to improve in 2015.
For example, nationwide statistics show that:
- House prices increased faster than inflation for the fourth consecutive year
- Home sales increased 7 percent in 2015, reaching the highest level since 2007
- New-home construction rose 11 percent in 2015, likewise the best since 2007
- Mortgage balances increased for the first time since 2008
- Mortgage delinquency declined for the sixth straight year, returning to the 2007 level
Yet one important gauge of housing conditions continued to fall in 2015—the homeownership rate. After peaking in 2004 at 69 percent, the national homeownership rate declined in 2015 to 63.7 percent
Now check out the chart that shows home ownership and the author’s projections:
While it has been proven that higher home ownership levels are good in many ways, what is a sustainable or healthy level?
And how can a healthy sustainable level of home ownership be achieved?
Have any of the people running for President presented a plan to address ANY of the issues in the housing market?
Chemical Activity Barometer Expands in March
Good news from the American Chemistry Council that their Chemical Activity Barometer increased in March following a revised 0.2% decline in February and 0.1% downward revision in January.
The Chemical Activity Barometer remains is up 1.5% over this time last year. On an unadjusted basis the Chemical Activity Barometer jumped 0.9%, thus ending three consecutive monthly declines. While not as well known as some other economic indicators, this is in my opinion a very important one to watch.
Well that is it for today! Be sure to subscribe!