Tag: real estate market

5 Real Estate Headlines You’ll see in the Next Six Months

This is great insight from our friends at KCMBlog.com:

Making predictions can be the ‘kiss-of-death’ for a blog. Even if we get four out of five correct (80%), there are those in the industry who will kill us on the one we got wrong. We believe strongly that when making a real estate decision for you and your family you must look forward and take into consideration how the housing market may change.

For this reason, we are willing to take on the possible wrath of our counterparts by sticking out our necks and predicting these will be the major real estate news stories from now until the end of the year.

Interest Rates Rise

Many, including us, have been surprised that rates have not risen already. However, the next several months are going to see three distinct changes that will propel rates upward.

As the government starts to leave the mortgage market, private industry will step in. Private industry demands a higher rate of return on their investments. Mortgages will be no different. Studies have shown that 30 year mortgage rates could increase by 1 to 3% over the current rate.
In many higher priced markets, rolling back Conforming Loan Limits means that rates for the mortgages on these properties will resort back to the rates on private jumbo loans. The FHFA informed us that last year, the difference between mortgage rates for jumbo loans and jumbo-conforming mortgages has varied between about ½ and ¾ of a percentage point.
As the economy gets better (and we believe it will), the pressure to keep rates low to stimulate growth will abate.

Some Loan Requirements Tighten but More Can Now Get a Loan

Lending institutions have already started to introduce stricter mortgage guidelines. Whether the Quality Residential Mortgage (QRM) requirements are instituted as originally proposed or eased somewhat, there is no doubt that guidelines will continue to tighten as we work through the year. However, we believe the private sector will again start introducing alternative mortgage financing but at a greater expense to the consumer. You WILL be able to get a mortgage. It will just cost you more.

Housing Sales Increase

Contracted sales have shown consistent improvement over the last six months and we feel this will continue and actually begin gaining even greater momentum. We believe there is a ‘pent-up’ buying demand caused by the volatility of the market over the last several years. When interest rates start to move upward and alternative financing becomes more available, these buyers will start to jump off the fence. We believe there will be a major upswing in sales over the next six months.

Distressed Properties Increase Markedly

More people are paying their mortgage on time and that is great news for housing in the long term. However, the numbers of distressed properties currently in the foreclosure process is still very swollen. These properties will begin coming to the market in the second half of the year as short sales and foreclosures. The numbers will be staggering in some areas.

Prices Continue to Soften in Most Markets

The current housing inventory for sale and the distressed properties about to come on the market will vastly outnumber the increased supply of purchasers we will see over the next six months. There will be more houses for sale then there will be buyers purchasing them. That oversupply will continue to put downward pressure on prices through the rest of this year and into 2012.

You now know what we believe will take place in real estate between now and the end of the year.

Pending Home Sales Rebound, Mortgage Rates Remain Low

by bmadmin

Pending home sales rose sharply in May with all regions experiencing gains from a year ago, a signal that the housing market could improve through the second half of the year, the National Association of Realtors said Wednesday.

Pending sales, a forward-looking indicator based on contract signings, jumped 8.2 percent to 88.8 in May from an upwardly revised 82.1 in April, according to NAR. That is 13.4 percent higher than the 78.3 reading in May 2010.

“Absorption of inventory is the key to price improvement, and this solid gain in contract signings implies that home values in many localities are or will soon be stabilizing as inventories get absorbed at a faster pace,” said Lawrence Yun, NAR chief economist.

“Some markets have made a rapid turnaround, going from soft activity to contract signings rising by more than 30 percent from a year ago,” he said.

Those markets include Hartford, Conn.; Indianapolis; Minneapolis; Houston and Seattle.

Pending sales in the Northeast were up 7.3 percent, 4.4 percent above a year ago. The Midwest the index jumped 10.5 percent, 17.2 percent higher than May of last year.

In the South, pending home sales increased 4.1 percent, 14.6 percent higher than a year ago. In the West the index surged 12.9 percent, 13.5 percent above May 2010.

The data reflects contracts but not closings, which normally occur with a time lag of one to two months.

This is the first time since April 2010 that contract activity was above prior year levels, and the monthly gain was the strongest increase since last November, when the index rose 10.6 percent.

“Home sales still could be 15 to 20 percent higher,” Yun said. “If banks would simply return to normal sound underwriting standards and begin lending to more creditworthy borrowers, we’d get a much faster recovery in the housing sector.”

Mortgage rates are in line to spur buying.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.46 percent from 4.57 percent, the lowest 30-year rate recorded in the survey since the middle of November, the Mortgage Bankers Association said in its weekly Wednesday report.

A 15-year fixed-rate mortgage decreased to 3.64 percent from 3.70 percent, the lowest 15-year rate recorded in the survey since the beginning of November.

Meanwhile, mortgage applications decreased 2.7 percent from a week earlier, even as home loan rates dropped to their lowest levels in nearly eight months.

The Refinance Index decreased 2.6 percent while the seasonally adjusted Purchase Index decreased 3.0 percent in the week that ended June 24, according to data from the Mortgage Bankers Association.

Overall, the four-week moving average is up 0.7 percent, with refinancings showing a 1.5 percent increase, while purchases are down 1.5 percent.

The refinance share of mortgage activity increased to 69.5 percent of total applications from 69.2 percent the previous week.

Originally posted on thehill.com

Home Prices Up, First Time in 8 Months

by bmadmin

Data through April 2011, released yesterday by S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, show a monthly increase in prices for the 10- and 20-City Composites for the first time in eight months. The 10- and 20-City Composites were up 0.8% and 0.7%, respectively, in April versus March.

In April 2011, the 10-City and 20-City Composites recorded annual returns of -3.1% and -4.0%, respectively. On a month-over-month basis, the 10- and 20-City Composites were up 0.8% and 0.7% in April versus March.

“In a welcome shift from recent months, this month is better than last – April’s numbers beat March,” saysDavid M. Blitzer, Chairman of the Index Committee at S&P Indices. “However, the seasonally adjusted numbers show that much of the improvement reflects the beginning of the Spring-Summer home buying season. It is much too early to tell if this is a turning point or simply due to some warmer weather.

As of April 2011, average home prices across the United States are back to the levels where they were in the summer of 2003. Measured from their peaks in June/July 2006 through April 2011, the peak-to-current declines for the 10-City Composite and 20-City Composite are -32.6% and -32.8%, respectively. From their April 2009 troughs, the 10-City Composite has risen 1.4% and the 20-City Composite is up a scant 0.7%.

The table below summarizes the results for April 2011. The S&P/Case-Shiller Home Price Indices are revised for the 24 prior months, based on the receipt of additional source data. More than 24 years of history for these data series is available, and can be accessed in full by going to www.homeprice.standardandpoors.com

	April 2011	April/March	March/ February
Metropolitan Area	Level	Change (%)	Change (%)	1-Year Change (%)
Atlanta	101.95	1.6%	-0.3%	-3.5%
Boston	147.07	-0.2%	-1.7%	-4.2%
Charlotte	108.42	-0.3%	-1.2%	-6.6%
Chicago	110.12	-0.4%	-2.4%	-8.6%
Cleveland	97.69	1.2%	-1.8%	-6.8%
Dallas	113.38	0.5%	-0.8%	-4.0%
Denver	122.32	1.5%	-0.6%	-4.1%
Detroit	62.74	-2.9%	-4.4%	-7.5%
Las Vegas	96.47	-0.7%	-1.1%	-6.2%
Los Angeles	168.20	0.3%	-0.3%	-2.1%
Miami	136.99	-0.2%	-0.8%	-5.6%
Minneapolis	106.07	0.4%	-3.7%	-11.1%
New York	164.17	0.8%	-1.0%	-2.8%
Phoenix	100.36	0.1%	-0.5%	-8.8%
Portland	132.84	0.1%	-0.7%	-9.2%
San Diego	154.50	0.4%	-0.8%	-4.3%
San Francisco	132.03	1.7%	-0.1%	-5.5%
Seattle	135.14	1.6%	0.1%	-6.9%
Tampa	126.47	-0.4%	-0.5%	-7.7%
Washington	186.76	3.0%	0.2%	4.0%
Composite-10	152.51	0.8%	-0.8%	-3.1%
Composite-20	138.84	0.7%	-0.9%	-4.0%
Source: Standard & Poor’s and Fiserv
Data through April 2011

Read the full report at HousingViews.com.