APSales of existing homes fall 1 percent in AprilFriday May 23, 10:05 am ET By Martin Crutsinger, AP Economics Writer
The National Association of Realtors said Friday that single-family home sales dropped by 1 percent to 4.89 million units, matching the all-time low set in January. These records go back to 1999.
The median price for an existing home dropped 8.5 percent, compared to a year ago, to $200,700. Analysts predicted further price declines given the huge backlog of unsold homes, which rose in June to 10.7 months supply at the current sales pace, the highest inventory level since June 1985.
Austin was named third on the Forbes.com list of the top 10 "Recession-Proof Cities" in the United States.
To create the list, the magazine looked at the 50 largest U.S. metros, examining key measures, such as unemployment data, non-farm related job growth, median home prices and data from a 2007 report, "U.S. Metro Economies: The Mortgage Crisis" by the U.S. Conference of Mayors.
At number three, Austin was right behind San Antonio, which grabbed the second spot thanks to solid employment figures and affordable home prices that continue to rise.
Oklahoma City took the No. 1 spot because of its strong housing market and solid growth in agriculture, energy and manufacturing.
For its part, Austin was lauded for being a hip town with one of the lowest unemployment rates in the country.
Forbes magazine's list of recession-proof cities also included: Houston, Dallas, Charlotte, N.C., Raleigh, N.C., Salt Lake City, San Jose, Calif. and Seattle.
Forbes says that Texas cities such as San Antonio, Austin, Houston and Dallas-Fort Worth have benefitted from historically lower home prices, land availability and 'little zoning'.
All four Texas cities boast falling unemployment rates, according to Forbes, with Austin dropping from 3.8 percent to 3.6 percent.
CNNMoney.comHome prices continue sharp descentTuesday May 13, 10:29 am ET By Les Christie, CNNMoney.com staff writer
Single-family home prices dropped 7.7% in the first quarter in the largest year-over-year decline since the National Association of Realtors began reporting prices in 1982.
The median sales price fell to $196,300, down 4.8% compared with the last three months of 2007.
Lawrence Yun, the chief economist of NAR, attributed much of the record decline to liquidity problems dragging down high-priced markets.
"These are highly unusual results because there were very few jumbo loan originations in the latest quarter," he said. "So sales are much slower in high-cost areas."
Sun-Belt cities were among the biggest losers. In California, Sacramento prices plummeted 29.2% to $258,500 compared with last year and Riverside prices fell 27.7% to $287,100. Prices in Las Vegas fell 20.2% to $247,600 and those in Phoenix dropped 15.4% to $222,200.
Midwestern cities, hard hit by factory closings, also suffered huge losses with Lansing, Mich., prices falling 26.9%.
The best performing market in the nation was Binghamtom, N.Y., where prices rose 11.8% to $109,700. Second was Peoria, Ill., up 10.4% to $119,000 and Spartanburg, S.C., where prices rose 10.2% to $130,300.
Hurting home prices were bigrises in foreclosure rates over the past 12 months, which threaten to get even worse. Delinquencies more than doubled over that time and more than 155,000 lost their homes in bank repossessions during the first three months of the year.
All that foreclosure activity added to the glut of homes on the market. The total inventory has risen to an average of 10 months worth of unsold homes. In addition, a record number - 2.9 million - of vacant homes are up for sale, according to the Census Bureau.
The big inventory has led to aggressive price slashing and increased incentives by builders looking to sell homes. They've also cut way back on housing starts, which are at a 17-year low.
The pace of existing home sales, at about 492,000 a month, is about a third less than its peak during the summer of 2005.
Are you having a difficult time deciding which type of home mortgage is the best for your needs? You're not alone. The world of home finance offers so many variables and options that it's often hard to keep them straight. The authors of these books help you do just that as they provide all the information you need to compare home mortgages and find a home loan that's right for you.
This text by Julie Garton-Good provides a thorough analysis of home finance and refinance. The queries included in the book's Q&A format offer comparisons and detailed information about specific types of home mortgages, and will answer your questions about home loans. Credit and credit repair are discussed, too. For anyone who wants to learn more about the home mortgage industry.
W. Frazier Bell takes the reader on a complete tour of the mortgage industry. His discussion of the secondary loan market helps you understand how lenders earn money and why loan underwriters must follow certain guidelines. An excellent book that even seasoned home buyers will find useful.
Here's an easy-to-understand home mortgage primer from Thomas C. Steinmetz. The author teaches you how to use simple number-crunching formulas to compare different types of loans. This thorough book will answer just about any question you might have about home mortgages.
Author Randy Johnson leads you through the maze of home loans, explaining the different types of loans available, which lenders specialize in each type, and how those lenders make money in the home mortgage market. He teaches you which questions you must ask to make sure you are getting the best possible deal. Includes information about credit scoring and other credit-related topics.
Shari and Clyde Steiner's book will help you decipher what a lender is actually offering you. Protect your interests by learning how to answer the lender's questions and know instinctively when a lender makes statements that could signal future problems. Learn home mortgage jargon and be more confident as you analyze and compare different types of home loans.
GREAT ARTICLE ON ABOUT.COM
Home Buying Myth Number 1
I'll get the best deal on the house if I call the agent listed on the For Sale sign.
Maybe, maybe not. That agent represents the seller and is contractually bound to get the best deal for the seller. That doesn't mean the agent can't work with you in a fair and professional manner as a dual agent, but it does mean you should not disclose confidential details to the agent until you are assured that the agent will keep your information confidential.
Bottom LineIf you tell a seller's agent the top dollar you will pay for a house, the agent must pass that on to the seller.
Home Buying Myth Number 2
The agent told me I had to sign a Buyer Agency agreement before he would work with me, so I did, and now I'm unhappy with the relationship.
You might know you are a good match with an agent on the very first day you meet, but what if you aren't sure? If an agent asks you to sign an agency agreement before you feel comfortable about it, try one of these alternatives:
· Ask the agent to work under a verbal buyer agency agreement for a short time. Some states allow this, giving you time to become familiar with the agent before you sign a formal agreement.
· Ask the agent to write a buyer agency agreement that covers a very short period, a day or a week.
· Find out if the agent can offer a non-exclusive buyer agency agreement. The agent would be your buyer's agent, but you would not be tied exclusively to her.
· Let the agent continue to be a seller's agent--just don't disclose confidential information.
Bottom LineIf the agent will only work with you if you immediately sign a lengthy buyer agency agreement, you might be better off seeking another agent.
Home Buying Myth Number 3
I can find more homes for sale by calling lots of agents.
Maybe--but maybe not. If you are home shopping in a specific area, and the agencies belong to Multiple Listing Services, it means they all have access to the same properties.
Ask agents what areas they cover. Small-town agents might work a multi-county area. Agents in a city might restrict themselves to certain neighborhoods or subdivisions.
If you sign agreements with more than one buyer's agent, make sure the contracts are worded so that areas and duties do not overlap. For instance, Agent X works for you only in County A. Agent Y works for you only in County B.
Bottom LineResearching and showing properties is time-consuming, so you'll get better service if you find an agent you like (within a given area) and stick with that agent.
Home Buying Myth Number 4
The agent with the most listings in town is the best agent to call.
Think about that. If an agent has that many listings to deal with, how much time do they have for buyers, especially buyers who might want to look at properties other than theirs?
Many top agents are turning to team systems, so time might not be an issue, but it's something to ask about when you interview an agent.
Bottom LineA brand new (competent) agent can be every bit as effective as a seasoned pro. Someone working with fewer clients will have your needs in mind constantly. Hire the person, not a lineup of listings.
Over the past year, home sales have dropped by 22 percent, single family housing starts have plummeted by almost 35 percent, and nationwide, home values have slipped by about 4.5 percent. Clearly it has been far from a normal year in the housing market, and 2006 was weak as well. On the other hand, the several years before these were just as unusual from housing, but the opposite perspective. So, just what is a normal year for housing, and will we ever see one again?
Historically, the housing sector has been one of the most volatile in the U.S. economy. The reason for this is that to a large extent home sales are driven from year to year by housing affordable, which in turn usually is affected most strongly by movements in interest rates.
Whether it is because of changes in monetary policy at the Federal Reserve, adjustments in inflations expectations, movements in foreign capital flows, or just increases and decreases in economic growth, interest rates tend to be volatile - thus moving housing demand up or down, often sharply. In recent years this more normal interest rate volatility has been heightened by movements in house prices, resulting in sharp swings in affordability.
Are we nearing the end of the current housing downturn? We dont think so, given the magnitude of the run up in housing (with no significant housing downturn since the recession of 1991-92). That doesn't mean that the level of housing activity has to fall to 1992 levels - after all there are almost 22 million more households today then there were back then, with higher income levels and lower unemployment rates. But the unsustainable surge of 2002-05 has to be worked off, and thats whats going on in the housing market today.
The famous economist Herb Stein once noted, "If something cannot go on forever, it will stop." That is probably the best way to view the housing market today. We know that given the cobmination of demographics, job and income growth, and the level of interest rates, housing demand cant fall without bounds.
Despite the media hype, the sky isn’t falling. People are still buying and selling homes; however, times have changed, and your clients need your professional guidance more than ever. At Land Mortgage, we have been fortunate to navigate the rough waters of the past few weeks well. We reacted quickly to the market when the landscape changed, and we’re asking you to help yourselves and us by creating proper expectations with your clients.
Documentation & Money down – With current market conditions everyone involved in a real estate transaction must understand that borrowers will most likely have to provide more documentation than has been the norm for the past few years. Also, prepare your borrowers; they most likely will have to bring money to the deal which hasn’t necessarily been the norm either.
Jumbo Loans (Non-conforming) – A Jumbo is defined as a loan where the loan value is greater than $417,000, not the property but the loan. If you have a house valued at $520,000 and the borrower requires financing in order to purchase, it could work. If your property values exceed $520,000, financing options may become more expensive.
Conventional/Conforming Loans – Large agency lenders (Countrywide, Wells Fargo, Citi, etc…) do not currently have an appetite for lending “out of the box,” which means they are averse to lending out of the conventional market, anything above a loan value of $417,000. We are witnessing a return to the tried and true: Fannie Mae, Freddie Mac, FHA. Why is conventional not suffering? Because the only groups buying loans in the bond market are the aforementioned government-chartered entities.
Yup, New York reigns supreme as the largest city in the United States, with a population of 8.2 million. The next largest city is Los Angeles, which has just 3.8 million residents. Chicago is third with 2.8 million inhabitants and Houston is fourth with 2.1 million. Phoenix, the aforementioned desert city, moved into fifth place, according to the latest count, moving ahead of Philadelphia. The head count in Phoenix in 2006 was 1.5 million. In Philadelphia, it was 1.45 million. The switch is further evidence of a shift in the U.S. population that began decades ago.
In 1910 -- nearly a century ago -- all of the ten most populous cities were within approximately 500 miles of the Canadian border. Now, seven of the top ten and three of the top five are in states that border Mexico.
Three of the 10 fastest-growing cities are in the Dallas metro area: McKinney (second), Grand Prairie (sixth) and Denton (ninth). In the same general vicinity, Ft. Worth just missed the list, ranking 11th.
Phoenix had the largest population increase of any city between 2005 and 2006, adding more than 43,000 residents. But Texas dominated the list of the 10 highest numerical gainers, with San Antonio, Ft. Worth, Houston, Austin and Dallas each making the top 10. Three other Texas cities made the list of 25 biggest numerical gainers.
New York -- 8,214,426 Los Angeles -- 3,849,378 Chicago -- 2,833,321 Houston -- 2,144,491 Phoenix -- 1,512,986 Philadelphia -- 1,448,394 San Antonio -- 1,296,682 San Diego -- 1,256,951 Dallas -- 1,232,940 San Jose -- 929,936
Long and Short Term Mortgage Rates Reach 10 Month Highs
McLEAN, VA -- Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 6.53 percent with an average 0.4 point for the week ending June 7, 2007, up from last week when it averaged 6.42 percent. Last year at this time, the 30-year FRM averaged 6.62 percent. The 30-year FRM has not been higher since the week ending August 10, 2006, when it averaged 6.55 percent.
The 15-year FRM this week averaged 6.22 percent with an average 0.4 point, up from last week when it averaged 6.12 percent. A year ago, the 15-year FRM averaged 6.23 percent. The 15-year FRM has not been higher since the week ending August 3, 2006, when it averaged 6.27 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.24 percent this week, with an average 0.6 point, up from last week when it averaged 6.19 percent. A year ago, the 5-year ARM averaged 6.20 percent. The 5-year ARM has not been higher since the week ending August 3, 2006, when it averaged 6.27 percent.
One-year Treasury-indexed ARMs averaged 5.65 percent this week with an average 0.7 point, up from last week when it averaged 5.57 percent. At this time last year, the 1-year ARM averaged 5.63 percent. The 1-year ARM has not been higher since the week ending August 10, 2006, when it averaged 5.69 percent.
"Mortgage rates climbed this week owing to market concerns of a tight labor force and wage growth. May's unemployment rate remained at the second lowest level since May 2001 while average hourly earnings rose," said Frank Nothaft, Freddie Mac vice president and chief economist. "Additionally, unit labor costs increased 1.8 percent over the first three months of the year, tripling the original estimate, and fueling inflation fears."
"Meanwhile, Freddie Mac released a new purchase-transaction only version of its Conventional Mortgage Home Price Index this week which showed a sharp deceleration in house-price appreciation in the first quarter of 2007. As house prices grow less quickly and household incomes rise, the housing market will likely recover from its current slump, but perhaps not before the end of this year."
Reverse Mortgages Boom While the Rest of the Industry Swoons
The conventional home mortgage market may be down 25 to 30 percent-and subprime home loans may be disappearing - but one segment of the industry is not only growing fast, it’s poised for a sustained boom: Reverse mortgages.
Volume in Home Equity Conversion Mortgages (HECMs), the dominant form of reverse loans currently, jumped by 77 percent to more than 76,000 new loans last year, according to HUD.
Roughly 78 million equity-rich baby boomers are heading towards their retirement years, and a new breed of flexible reverse mortgages is expected to provide important financial tools for them. Reverse mortgages, which currently are restricted to seniors 62 years and older, permit homeowners to convert their inert equity into cash for the balance of their lifetimes as long as they reside in the house. The money, plus interest, need not be repaid to the lender until the borrower sells the property, dies or moves out. Some programs allow seniors not only to refinance into a reverse mortgage from their current loan, but also to buy a new primary dwelling and a second home.
According to trade news reports, Wall Street giants Goldman Sachs, Credit Suisse, Bear Stearns and UBS are all exploring possible forays into the reverse mortgage field. These Wall Street investment bankers would likely securitize their reverse mortgages-pool them and sell them as bonds around the world. Among the likely investors: Domestic and international pension funds, who would essentially help finance American boomers' retirements while simultaneously growing the retirement funds of the new generation.
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