Round up of real estate, housing and economic news for 3-29-2016…
Another Day Another Mortgage Settlement
Act surprised as you read the news from Reuters:
Credit Suisse has agreed to pay more than $29 million to resolve a U.S. regulator’s claims that it sold toxic mortgage-backed securities to credit unions that later failed, according to court papers filed on Thursday.
Construction Employment Rises
Good news from the Associated General Contractors of America’s analysis of Labor Department data is that 43 states and the District of Columbia added construction jobs between February 2015 and February 2016.
Ken Simonson, chief economist at the AGC said:
In most of the country, construction continues to outpace other industries in adding jobs. Contractors remain upbeat about demand for many types of projects, but they are having difficulty finding enough qualified workers.
Simonson noted that job openings spiked in January, according to the latest survey from the Bureau of Labor Statistics. According to the AGC data:
- 91,200 employed in construction in February 2016 in South Carolina
- 85,500 employed in construction in February 2015 in South Carolina
- This is a 6.7% gain!
Read more at Construction Employment Rises in 43 States and DC
Chokehold Loosens on Mortgage Lending in Some Areas?
The Consumer Financial Protection Bureau (CFPB) recently issued an interim final rule that broadens the availability of certain special provisions for small creditors that operate in rural or underserved areas. The new rule, which takes effect in 2 days, implements Congress’s recent legislation, the Helping Expand Lending Practices in Rural Communities (HELP) Act, that allowed more small creditors operating in rural or underserved areas to take advantage of these provisions.
CFPB Director Richard Cordray said:
The Consumer Bureau today has acted to implement the recent law that extends to more small creditors the specific provisions for operating in rural or underserved areas. This rule provides broader eligibility for lenders serving those areas to originate balloon-payment qualified and high-cost mortgages.
It is too soon to say whether or not this will help buyers in the Anderson area. Still this is good news as it will help small lenders instead of big banks AND more importantly, it should help some consumers purchase a home.
Good News for Home Owners in the Military
As it should be:
On March 21, 2016, the U.S. House of Representatives passed S. 2393, the “Foreclosure Relief and Extension for Servicemembers Act of 2015,” which extends the one-year protection from foreclosure in the Servicemembers Civil Relief Act (SCRA) through 2017. The Senate passed S. 2393 in 2015 and the legislation is expected to be signed by the President.
The Servicemembers Civil Relief Act (SCRA) is intended to help those men and women who have answered their nation’s call by providing certain financial protections, including foreclosure protection, to members of the military that have incurred debt prior to their active service.
Read more at Military Foreclosure Protection Bill Passes
There Are Jobs and Then There Are GOOD JOBS
Read more at The “We’ve Created Millions of Jobs” Myth
It Is Called an Estimate For a Reason
First, let me say I am NOT disagreeing:
The new TILA-RESPA (Truth in Lending Act/Real Estate Settlement Procedures Act) rule, referred to as TRID (TILA-RESPA Integrated Disclosure), focuses on increased quality and accuracy of information for settlement services. While these issues are important, transparency, speed and accuracy of escrow estimations remain key areas of opportunity to improve homeowners’ experience as demonstrated by homeowner feedback and servicing issues.
Escrow amount-related issues are one of the major sources of homeowner dissatisfaction with the origination, closing and servicing processes, according to data from the Consumer Financial Protection Bureau (CFPB). Analysis of customer complaint data shows that a number of borrowers are dissatisfied with the inaccuracies associated with annual tax estimates as well as with settlement funds required at closing.
In the most recent survey, 2015 Annual Consumer Mortgage Experience, published by the CFPB in January 2015, almost 50 percent of all borrowers say they are only “somewhat familiar” with the amounts required at closing. And that percentage is even higher for first-time homebuyers. This reinforces the need for homebuyers to have clear disclosure of closing costs in the loan estimate.
How can this be accomplished? Will the local tax assessor give an estimate based on the contract price? And more importantly, who will the tax assessor give this estimate to? Also would it be written?
Read more at: New Mortgage Origination Rule Shines Spotlight on Need for More Accurate Tax Estimates
Always Optimistic and Always a Good Time to Buy a Home
In the most recent REALTORS Confidence Index Survey, NAR asked members “What are your expectations for the housing market over the next six months compared to the current state of the market in the neighborhood(s) or area(s) where you make most of your sales?”
Because we are entering the hot selling season, REALTORS remained by and large confident about the outlook over the next six months.
Are we being overly optimistic? While things are MUCH better than a few years ago, the lack of inventory in some price ranges/areas does cause me concern. Also, stagnant incomes for many Americans also concerns me.
I just mentioned stagnant incomes. Consider this:
In the wake of the 2008 financial crisis, conventional wisdom among economists, business leaders, and policy makers was fairly straightforward: Once the banks were bailed out, the stimulus spent, and businesses had a few years to recover, the U.S. economy would return to its usual healthy growth. Time, in other words, would heal the wounds of the subprime collapse and subsequent turbulence.
But if any recovery has turned conventional wisdom on its head, it’s this one. Over the last eight years, America’s economic prospects have lagged even the most pessimistic early predictions. These confounding circumstances have led many economists to rally behind the concept of so-called “secular stagnation.”
If these people can’t wrap their heads around the fact that things are weaker than they expected, why are we even listening to them?
Read more at: Why the U.S. Economy Might Never Get Better
Why Housing is Facing a New Crisis
Jeff Mezger, CEO of KB Homes, recently said:
Over the last three years, it’s kind of interesting, our first-time buyer mix has ranged right around 50% for the last three years, and if you put that in the context of how much our average selling price has lifted, I think it’s over $100,000 in that period. It shows you how we’ve been able to flex and find a first-time buyer in these higher income more desirable sub-markets where they have an easier time getting the mortgage and underwriting is getting easier, but it’s not easy yet.
Combine the lack of inventory, rising prices and stagnant incomes for the typical first time buyer and you can see the ingredients for a perfect storm.
Black Knight on Home Prices
- US Home Prices Up 0.1% for the Month
- US Home Prices Up 5.3% Year-Over-Year
- Black Knight’s US Home Price Index is 5.5% lower than the June 2006 Peak
- Black Knight’s US Home Price Index is Up 26.7% From the Market’s Low Point
Please remember this is talking about the entire US and will not tell you what has happened with a specific home in your area. You can find out more about real estate market conditions in Upstate SC by reading the Weekly Snapshots or Monthly Reports
NAR Pending Home Sales Index Increases
NAR just reported that Pending home sales increased in February to the highest level in 7 months. The Pending Home Sales Index is a forward-looking indicator based on contract signings which does mean it is counting your chickens before they hatch.
Don’t get me wrong as this increase is great news. Just because a home is under contract does not mean it will close with 100% certainty. It takes hard work on the part of the agents, buyer, seller, loan officer and many other people to keep things moving towards a successful transaction!
The Pending Home Sales Index has increased year-over-year for 18 consecutive months!
Pending home sales in February rose 3.5% from the January level. Pending home sales in February 2016 are now 0.7% above the February 2015 level.
Read more at: Pending Home Sales Move Forward in February
S&P/Case-Shiller on Home Prices
The latest home price report from S&P/Case-Shiller shows that US home prices continued to increase over the last 12 months.
Looking at Year Over Year Home Price Changes
The S&P/Case-Shiller US National Home Price Index (all 9 U.S. census divisions) recorded a slightly higher year-over-year gain with a 5.4% annual increase in January 2016. The 10-City Composite is up slightly at 5.1% for the year. The 20-City Composite’s year-over-year gain is 5.7%. After seasonal adjustment, the National, 10-City Composite, and 20-City Composite rose 0.5%, 0.8%, and 0.7%, respectively, from the prior month.
Looking at Month Over Month Home Price Changes
Before seasonal adjustment, the National Index, the 10-City Composite, and the 20-City Composite all remained unchanged in January. After seasonal adjustment, all three composites reported strong advances. Eleven of 20 cities reported increases in January before seasonal adjustment; after seasonal adjustment, all 20 cities increased for the month.
David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices said:
Home prices continue to climb at more than twice the rate of inflation. The low inventory of homes for sale — currently about a five month supply – means that would-be sellers seeking to trade-up are having a hard time finding a new, larger home. The recovery of the sale and construction of new homes has lagged the gains seen in existing home sales. This may be starting to change: starts of single family homes in February were the highest since November 2007.
While Blitzer points out some of the current problems, over all this is great news for the US housing market. And just like the report from Black Knight, this is NOT the local information that buyers and sellers need to make informed decisions.
Read more at: S&P/Case-Shiller Home Price Indices
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