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Home Builders Are Cautiously Optimistic About Spring Home Buying
By Michael Kling on March 16, 2011

Home builders are cautiously hopeful that an improving economy will boost construction and home buying this spring.

Builder confidence in the newly built, single-family home market improved by just one point in March, rising to 17 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). That’s the best the index has been since May 2010 just before the federal home-buyer tax credit program expired.

“Builders are cautiously looking forward to the spring home buying season in hopes that improving economic conditions will help bring more buyers to the table,” said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev.

The bad news that that home buyers still face the same problems as before: competition from short sales and foreclosures, difficulties selling existing homes, appraisals that are below construction cost due to the inappropriate use of distressed properties as comps, and restrictive mortgage lending conditions for both buyers and builders.

Housing starts in February were down 20.8 percent from January and 20.8 percent from February 2010, the U.S. Census Bureau and Department of Housing and Urban Development announced today. Housing completions were down 13.9 percent from January and 13 percent from February 2010

Continue Reading…

Category: Housing Market
More Americans Are Optimistic About A Housing Market Recovery
1 By Michael Kling on March 10, 2011

More Americans are confident that home values will recover in the next year or two, indicates a survey by Prudential Real Estate and Relocation Services Inc.

The survey reports that 68 percent of potential home buyers think home prices will recover in a year or two. Last year, 47 percent predicted home values would increase. Also, 86 percent believe real estate is a good investment despite recent housing market troubles. Potential home buyers, the survey points out, realize that this a good time to buy a home, but if they are current homeowner they are worried about selling their existing home for a decent price.

Given home price trends and current mortgage rates, first-time home buyers are in a better position, provided they can qualify for a mortgage and have enough for a down payment.

A recent Fannie Mae survey fewer people believe a home is a safe investment, 64 percent compared to 70 percent last year. The difference could be due to potential home buyers feeling more optimistic and sellers feeling disillusioned. Continue Reading…

Category: Housing Market, Purchase
Buying A Home Is A Great Investment, Buffett Says
By Michael Kling on March 9, 2011

Warren Buffett, renown as the smartest investor around, says buying his home was one of the best investments he ever made.

Specifically, it was the third best investment after wedding rings. “For the $31,500 I paid for our house, my family and I gained 52 years of terrific memories with more to come,” writes Buffet, chairman of Berkshire Hathaway, in his 2010 letter to shareholders.

Buffett concedes that he could have made more money if he had rented instead and used the extra money to purchase stocks, but most of us are not Buffett and don’t do a job picking stocks.

“Homeownership makes sense for most Americans, particularly at today’s lower prices and bargain interest rates,” he writes in the shareholder letter. “But a house can be a nightmare if the buyer’s eyes are bigger than his wallet and if a lender – often protected by a government guarantee – facilitates his fantasy. Our country’s social goal should not be to put families into the house of their dreams, but rather to put them into a house they can afford.”

Buffett remarked about homeownership while commenting on financial performance of Clayton Homes, a producer and financier of manufactured homes, that Berkshire Hathaway owns. Continue Reading…

Category: First Time Home Buyer, Purchase
Jumbo Mortgage Rates, Stock Values Boost Sales Of Luxury Homes
By Michael Kling on March 7, 2011

At least one housing market saw a huge jump in home sales last year: high-end homes.

For instances, sales of California homes over $1 million increased from 18,621 in 2009 to 22,529 in 2010, a 21 percent, reported DataQuick Information Systems, a San Diego-based data provider. In fact, sales of homes and condominiums for over $1 million increased in all 20 major metro areas last year, reported DataQuick. Those metro areas saw an 18.6 percent increase in high-end home sales on average.

Low mortgage rates helped boost the increase in luxury home sales, but a rebounding stock market and lower home prices were major factors. Buying a million dollar home calls for a jumbo mortgage, which entails a higher mortgage rate and stricter lending guidelines like a higher down payment. Although many luxury home buyers use cash, lower mortgage rates helped motivate them to purchase homes. The difference, or spread, between jumbo mortgage rates and rates for smaller conforming mortgages has narrowed considerable since the height of the financial crises.

But the wealthy worry less about mortgage rates than other home buyers, said DataQuick President John Walsh. Continue Reading…

Category: Jumbo Mortgage
Mortgage Lending Standards Still Tight And Housing Remains Weak, Says Fed Report
By Michael Kling on March 3, 2011

While hints of inflation are emerging and the job market improved in January and February, mortgage lending standards remain tight and the housing industry is still anemic, according to the Federal Reserve Beige Book report released yesterday.

“Recent activity in residential real estate varied, but overall sales and construction remained at low levels across all districts,” the survey stated.

Lending requirements remained tight in all districts. Atlanta actually reported tighter home loan standards. Although an improving job market is definitely good for the economy, stringent mortgage lending requirements are not good news for homeowners or home buyers hoping to take advantage of current mortgage rates.

New York saw a stable housing market with some improving markets. Other Fed districts reported mixed or sluggish real estate activity. For instance, home prices continued to fall in the Philadelphia area, but mainly at the high end of house prices. The New England district said home sales continued to decline significantly in Rhode Island, Connecticut, and Maine, but increased modestly in Massachusetts and New Hampshire. Continue Reading…

Category: Housing Market
Disputes Over NAR’s Data Raise Questions Over Realtors’ Role In The Housing Market Bubble
By Michael Kling on February 23, 2011

Recent allegations that the National Association of Realtors has been inflating home sales data raise questions over the group’s role in the real estate bubble and the still struggling housing market.

Economists use its home sales figures to gauge the health of both housing markets and the overall economy. But those numbers are being called into question. Saying NAR’s home sales are inflated by 15 to 20 percent, a housing analytics firm, CoreLogic, found that the trade group’s figures contradict its data as well as information from other researchers. Perhaps a non-biased government agency like the U.S. Census Bureau should take over reporting the all-important home sales data.

Mortgage lenders are often blamed for causing the home price bubble, while NAR’s role in the crisis has been largely ignored. Lenders can choose to approve mortgage applications or not, but they do not set home prices. Lenders consider the appraised home value, but that value is based on other nearby home values. If the entire market if overpriced, then individual overpriced homes are perceived as valued appropriately. How much subprime mortgages contributed to the home price bubble is unclear. Perhaps making mortgages available to more people helped increase demand for homes, but subprime mortgages were meant to make homeownership possible for more people, such as minorities and low- and moderate-income first-time homebuyers.

Buyers and sellers working with their real estate agents establish home values. Real estate agents were indeed a factor in driving up home values. Just remember the television programs showing how to get rich quickly by flipping homes. Continue Reading…

Category: Housing Market, Mortgage Rates
Realtor Group Accused Of Over-Counting Homes Sales
By Michael Kling on February 22, 2011

The National Association of Realtors might be over-estimating home sales figures. If it has, the real estate bust was even worse than it seemed and current housing markets may be even worse than believed.

The problem is that NAR’s much-followed home sales numbers just don’t jive with figures from other housing market researchers.

CoreLogic, a real estate research firm in Santa Ana., Calif., stated in its U.S. Housing and Mortgage Trends report for this February: “Although it’s been widely reported that the National Association of Realtors’s (NAR) existing home sales data fell only 5% to 4.9 million in 2010, down from 5.2 million in 2009 and flat relative to 2008, the CoreLogic data indicates otherwise.”

CoreLogic estimated 3.6 million home sales in 2010, a 12 percent decrease from 4.1 million in 2009.

The report goes on: “Historically, the CoreLogic existing sales data have covered about 85% to 90% of all NAR’s existing home sales data. However, in 2006 NAR’s sales data became elevated relative to the CoreLogic, MBA, HMDA and Census sales related data, and that trend has continued and become more pronounced through 2010.” Continue Reading…

Category: Housing Market
Increasing Home Prices Reported In Some New England Areas, Multifamily Properties
By Michael Kling on January 14, 2011

Some New England states are bucking the national housing of falling home prices, says RE/MAX of New England.

For instance, Rhode Island saw average home price increase of 11.2 percent, from $243,968 in 2009 to $271,244 in 2010, the real estate agency reported in its “2011 Housing Market Outlook and Forecast.” That’s in spite of have the highest unemployment rate (11.6 percent) in New England and the fifth highest in the nation.

The average Rhode Island condominium price rose 10.1 percent from $214,116 to $235,735. The average multifamily home prices jumped from $114,131 to $137,451. The 20.4 percent increase shows that investors believe multifamily homes are priced favorably and are jumping in the housing market.

Massachusetts, with an 8.2 percent unemployment rate, saw single-family home prices rise 7.2 percent from an average of $351,788 in 2009 to $376,970 in 2010. Condominium prices increased 9.3 percent from $305,937 in 2009 to $334,343 in 2010. Multifamily home prices showed gains of 14 percent over 2009, with average prices increasing from $226,535 to $258,322.

“With rates continuing on a steady trajectory, it’s really an investor’s market,” said Jay Hummer, executive vice president and regional director of RE/MAX of New England. “There is no other industry right now in which you can expect 80 percent return on your investment. Consumers who are able to put 20 percent down, rent a property and in 20 to 30 years time own it, will realize that return.” Continue Reading…

Category: Housing Market
2011 Forecasts: Higher Mortgage Rates, Improving Housing Market
By Michael Kling on January 13, 2011

Mortgage rates will increase in 2011 while housing markets will improve, predicted experts at the International Builders’ Show in Orlando, FL, this week.

Freddie Mac Chief Economist Frank Nothaft, a speaker at the conference, predicted that mortgage rates will reach 5.5 percent by the end of 2011, the AP reported. In making that call, he raised his prediction from December when he said rates will stay below 5 percent this year. Check current mortgage rates.

Nothaft also thinks home prices will bottom out this year. “House prices will bottom out in 2011, and, by 2012, the house-price metric shows a gradual increase,” he said.

National Association of Home Builders Chief Economist David Crowe, another speaker at the conference predicted that home sales will rise about 26 percent this year. Home construction will increase 21 percent from last year, home prices will stay pretty much the same, and unemployment will fall below 9.4 percent. Continue Reading…

Category: Housing Market, Mortgage Interest Rates, Mortgage Rate Trends and Analysis, Mortgage Rates
Vacation Home Market Bouncing Back Robustly
By Michael Kling on January 13, 2011

While housing markets continue to struggle in many areas, the vacation home market is rebounding strongly.

Vacation home sales in some resort areas are off and running, according to an article in The Wall Street Journal.

“The proverbial train has left the station. We haven’t felt energy like this in a long time,” a Florida real estate agent told the Journal. “Buyers sense that they’ve been on the sidelines long enough.”

Signs of an improving economy, a rebounding stock market, and reasonable prices are prompting more sales.

Buyers can make cash offers by drawing on savings or taking out a second mortgage or cash-out refinance on their primary residence. A mortgage on a primary residence will have a lower mortgage rate than a rate for a second home. Home equity lines of credit (HELOCs) are revolving lines of credit, while home equity loans have fixed amounts and rates.

Some owners rent out their vacation home for part of the year for extra income. A stronger economy, they hope, will prompt more traveling and more vacation home renters. Continue Reading…

Category: Housing Market, Mortgage Rates