Strong Rebound in Pending Home Sales

Pending home sales jumped in October, showing a positive uptrend since bottoming in June, NAR says.


The Pending Home Sales Index, a forward-looking indicator, rose 10.4 percent to 89.3 based on contracts signed in October from 80.9 in September. The index remains 20.5 percent below a surge to a cyclical peak of 112.4 in October 2009, which was the highest level since May 2006 when it hit 112.6.



Last October, first-time buyers were motivated to make offers before the initial contract deadline for the tax credit last November. The data reflects contracts and not closings, which normally occur with a lag time of one or two months. Lawrence Yun, NAR chief economist, said excellent housing affordability conditions are drawing home buyers. “It is welcoming to see a solid double-digit percentage gain, but activity needs to improve further to reach healthy, sustainable levels. The housing market clearly is in a recovery phase and will be uneven at times, but the improving job market and consequential boost to household formation will help the recovery process going into 2011,” he said.



“More importantly, a return to more normal loan underwriting standards and removal of unnecessary underwriting fees for very low risk borrowers is needed and could quickly help in the housing and economic recovery,” Yun said. Recent loan performance data from Fannie Mae and Freddie Mac clearly demonstrates very low default rates on recently originated mortgages, much lower that the vintages of 2002 and 2003 before the housing boom.



The PHSI in the Northeast jumped 19.6 percent to 71.3 in October but is 27.3 percent below the tax credit peak in October 2009. In the Midwest the index surged 27.3 percent in October to 81.7 but is 24.8 percent below a year ago. Pending home sales in the South rose 7.1 percent to an index of 93.8 but are 18.4 percent below October 2009. In the West the index slipped 0.4 percent to 104.3 and is 15.6 percent below a year ago.



Near term, Yun expects home sales will continue to climb from their cyclical low this past summer. “Even so, we now have some consumer concerns regarding the mortgage interest deduction, an important component in housing affordability,” he said. “Preliminary results of a new survey show nearly three out of four home owners and two out of three renters consider the mortgage interest deduction to be extremely or very important to them. Home owners already pay between 80 and 90 percent of all federal income taxes and additional tax burden would hurt them and the economic recovery, so we have a reasonable hope that it will not be changed.”



Source: NAR

Michigan is beginning to see the clearing past the woods

 MEDIAN SALES PRICE CONTINUES CLIMB WHILE ONMARKET

INVENTORY LEVELS DECREASE FURTHER

PRICES BUOYED BY HIGH NONFORECLOSURE

SALES

Analysis:

 On‐market inventories continue to decline in most areas (37,665 in September 2010 compared to 45,706 in September 2009)

 NON‐foreclosure sales outpaced foreclosure sales (3,127 non‐foreclosure sales vs. 2,095 foreclosure sales)

 Average days on market decreases include: ALL MLS decreased by 9 days to 94; Metro Detroit decreased by 11 days to 90.

 When comparing 2010 to 2009 sales, important to consider that September ’09 sales were at record levels (highest since 2005)
 
Thinking about buying or selling in this market requires a professional. 
 
I'm available in Helping You Make The Right Move
 
Karina Ball
586-212-5125

Foreclosure News

Editorial: Halting Foreclosures Harms Markets


Considering that banks handed out mortgages like jelly beans during the height of the real estate bubble, the latest housing news is quite predictable: Major lenders, including JPMorgan Chase and Bank of America, have suspended foreclosures in parts or all of the country because of sloppy paperwork and improper oversight of the avalanche of loans that went bad.



So, for now, some beleaguered home owners will be spared the misery of losing their homes. Further, banks will be forced to comply with the law and follow their own procedures, as they should be. People will get due process. But despite the revenge-of-the-downtrodden theme, the latest home loan fiasco seems destined only to make the nation's housing problems worse. That will be especially true if lawsuits, investigations and calls for a nationwide moratorium on foreclosures cause the entire process to grind to a halt.



There is still scant evidence that borrowers who are current in their payments are being mistakenly targeted for eviction. In the end, those who cannot afford their houses will probably still lose them — only the process will now be dragged out, preventing the real estate market from arriving at two things necessary for a recovery: a bottoming out of prices, and a sense of certainty that the market is functioning properly. Some previous buyers of foreclosed homes might even face title claims.



Even buyers and sellers that have never been in foreclosure have an interest in seeing the process start working again. Without a functioning foreclosure system, mortgage lending will continue to be sluggish, and so will the overall economy.

Home Buying Interest is Up

Even in Frugal Times, Home Buying Interest Up


A survey of U.S. adults in September finds that many people continue to be very conservative about how they spend money.



The findings conclude:



· About 17 percent say they expect to have more money to move to a different home. That percentage is virtually unchanged since May 2009.



· Those who expect to buy a new house or condo are up from 7 percent in May to 10 percent in September.



· Those who expect to buy a boat or RV have doubled from 3 percent to 6 percent.



· About 10 percent expect to start a new business next year, compared to 6 percent who said they planned to do so this year.



· About 52 percent of all adults say they expect to save or invest more money, the same answer from the same percentage of respondents over the last two years.



Source: Harris Interactive (10/04/2010)

I have found this to be true in our area.  Working in the Macomb and Oakland County areas the interest in home buying is up from this time last year.  More families are seeing the opportunities in the market to get a great buy with history making interest rates.

If you are thinking of buying or selling or have other real estate needs, please feel free to give me a call.

Could this help you?

New Program Aimed to Keep Owners Paying


As strategic defaults rise, Loan Value Group, headed by Howard “Howie" Hubler, a mortgage trader who was deeply involved in Wall Street losses three years ago, is offering banks a way to resolve the problem.



The program involves the investors structuring a reward for borrowers, usually 10 percent of the loan balance, payable when the loan is paid off. While the reward won’t give the borrower positive equity, it could give him a reason to keep paying.



The plan is paid for by whomever owns the loan. So far, three hedge funds have signed up. Loan Value Group tells investors that the program isn’t affected by accounting rules that otherwise would require a modified mortgage to be written down.



Borrowers pay nothing to participate and participation doesn’t affect their credit scores.



Source: The Wall Street Journal, Nick Timiraos (09/13/2010)

Mortgage Rates Fall Yet Again

Mortgage rates have hit a new record low for the 10th time in 11 weeks as investors continue to turn to Treasury bonds as a safe haven; the shift in money is cutting yields, which mortgage rates tend to follow.
Freddie Mac reports that 30-year fixed loans averaged 4.32 percent, down from 4.36 percent a week ago; and the 15-year fixed rate fell to a new low of 3.83 percent, down from 3.86 percent.

This news is better than the first time buyer credit that expired earlier this year.  At these rates you will save more than the 8K on a home purchase.  Give me a call or check my recommended lender list for a trusted lender to help you. 

Have a great holiday weekend. I plan to join the group in Royal Oak.  Be safe!!!!!

Good News for people in a difficult position

Finally, Fannie has coherent rules for foreclosures, short sales, deed-in-lieu events...if a borrower avoids a full foreclosure, it's easier to get a mortgage the next time. October 1, it will get tougher if a borrower was full foreclosure - 7 years (vs. 5 yrs) or 3 years - extenuating circumstances (vs. 2 yrs). Call me for a cool reference chart! This updated provided by Brent Green of First Place Bank.  www.brentgreen.net

Words of Wisdom

"Planning is the active component of beginning with the end in mind. It is the first creation in your mind before physical creation. A goal is the end point and the plan explains how to get there. To be certain you can achieve your goals, break them down into manageable tasks with realistic deadlines. The goal inspires you, but the deadline motivates you."




- Stephen R. Covey, The 7 Habits of Highly Effective People

Homeownership is the American Dream

I promised you there would be no long winded articles but this really is a good one.  If you own your home remember the following contributions you make to our communities.

Enjoy.

NAR: Homeownership, Stable Communities Linked


Home owners are more active in their communities, benefit from improved education opportunities, and report higher levels of self-esteem and happiness when compared to renters, according to leading research. A new report from the NATIONAL ASSOCIATION OF REALTORS®, Social Benefits of Homeownership and Stable Housing, explores the impact of stable housing and the positive social outcomes resulting from homeownership.



“Homeownership is in investment in your future – home is where we make memories, build our lives and feel comfortable and secure,” said Vicki Cox Golder. “Owning a home has long-standing government support in this country because homeownership benefits individuals and families, strengthens our communities, and is integral to our nation’s economy.”



NAR’s study identifies research from government, industry, and academia that identified the relationship between homeownership and stable communities. Home owners move far less frequently than renters, and therefore are embedded into the same neighborhood and community for a longer amount of time. This allows for social cohesion, ultimately resulting in social benefits and stronger communities.



“REALTORS® care as much about keeping families in their homes as they do about helping them find the home of their dreams,” said Golder. “Social benefits do not arise solely from ownership, but also from greater housing stability and social ties associated with less frequent moves among home owners.”



Several research studies cited in the NAR report have found that homeownership has a significant impact on educational achievement. For instance, the decision by teenage students to stay in school is higher for those raised by parents who are homeowners compared to those whose parents are renters. Access to economic and educational opportunities are also more prevalent in neighborhoods with high rates of homeownership. Furthermore, studies have shown that changing schools frequently due to moving impacts negatively a child’s educational outcome.



Civic participation is another social benefit resulting from homeownership and stable housing. Home owners are proven to be more politically active and are more likely to vote in local elections compared to renters. In addition, homeowners have a higher membership in voluntary organizations.



Studies have shown that home owners are more likely to believe that they can do things as well as anyone else, and they self-report higher ratings on their physical health. “The research shows that home owners report higher self-esteem and happiness than renters, resulting in better overall health, both physically and psychologically,” said Golder.



When it comes to property, home owners have more invested both financially and emotionally. Property crimes affect home owners directly, but nonviolent property crimes can impact the property values of the entire neighborhood. Therefore, home owners are more motivated to deter crime by forming and implementing voluntary crime-prevention programs. In addition, it is easier for home owners to recognize perpetrators in stable neighborhoods because of extensive social ties. Unstable neighborhoods often display social disorganization which can lead to higher levels of crime.



Along with protecting their home and neighborhood from crime, home owners spend more time and money maintaining their home than renters. Neighbors also influence other home owners to improve their property, resulting in a better overall quality of the community.



“Homeownership certainly contributes to positive social outcomes, but those outcomes are truly a result of stable housing communities,” said Golder. “With strong social ties and a cohesive community, home owners can enjoy not only the long-term financial benefit of owning a home, but also a more satisfying life – which is what’s really at the heart of the American Dream.”



Source: NAR

What is HAFA?

On April 5, 2010 the HAFA program took effect. At this juncture, many of the country’s major mortgage servicer’s have agreed to participate. The buzz has been very optimistic in the real estate community. The National Association of Realtor’s has been hopeful that this program would lend expediency and transparency to what has thus far been a complicated, difficult, and often time consuming process.



I have several clients that have been solicited by their servicer’s to participate in HAFA. It is becoming ever more clear to me that just as the world of short sales has become much murkier, this program is not the “saving grace” many of us were hoping it would be. The underlying investor guidelines are still being utilized to assess the bank’s willingness to approve a borrower through HAFA. Although on the surface, HAFA appears to offer clear guidelines, if you read the guidelines carefully, there is still a fair amount of discretion for banks to evaluate a borrower’s financial circumstances per the underlying investor’s own independent guidelines.



In cases that I have seen where there are two mortgages this is an issue.  The first mortgage holder approved the borrower through HAFA. However, the same borrower, utilizing the same documentation, was denied by the second mortgage holder. Logically you might ask how can one lender evaluate and approve the borrower and another deny them. Well, it was because the determinations are still being made “per the investor’s guidelines”. This transaction will still be approved. However, the borrower is not going to be eligible to participate in the HAFA program, at least on the second mortgage. In most of the cases I have been involved in, the approval’s on the first mortgage are not an issue. The issues are typically with the second mortgage holder and the borrower’s need for relief from deficiency.

I don’t see there being an extreme difference in how these decisions are being made by the lenders. Of course, this is quite unfortunate. There will be some borrower’s that will easily qualify for HAFA, and this will be a wonderful relief going forward with their lives. However, there will still be quite a few that may be left with the looming prospect of being pursued by their lender’s for a lingering deficiency balance.



Just as the Making Home Affordable Program (HAMP) was not the success that many believed it might be when it was introduced, I am fearful that HAFA may also be a similar disappointment.

Check out the link below for the guidelines of HAFA.
http://www.realtor.org/wps/wcm/connect/8ed80b00412373d29bb6bb08069f8e0c/HAFA+Brochure+Text+1.25.10.pdf?MOD=AJPERES&CACHEID=8ed80b00412373d29bb6bb08069f8e0c
 
 
Keeping you informed.

Let the blogging begin

So here I am finally getting a site together to blog with my clients, customers and interested people.  I will be posting interesting articles, rate updates, value updates for local areas and so much more.  I encourage you to email me your questions or comments so I can blog about that too.  I want to know what you want to read about.  I wont make my posts long and boring. Just quick points for you to read thru so you too can have a bit of knowledge in the industry.
So here I go with my first blog.  Let me know what you think.  Have a great week.

Mortgage Rate Falls Under 4.5 %


Freddie Mac reports that long-term mortgage rates moved south again this week.



Interest on 30-year fixed loans hit a new low of 4.49 percent, compared to 4.54 percent last week and 5.22 percent a year ago; and the 15-year mortgage landed at 3.95 percent, down from 4 percent last week and 4.63 percent a year ago.



Five-year adjustable-rate mortgages reached a new low of 3.63 percent, down from 3.76 percent last week and 4.73 percent a year ago; while one-year ARMs fell to 3.55 percent from 3.64 percent last week and 4.78 percent a year ago.