Here is a link to some promising news from Lawrence Yun, Chief Economist at the National Association of Realtors. In addition to anticipating a better year in real estate sales, he says "The problem isn't with interest rates, but with the continuation of unnecessarily tight credit standards that are keeping many creditworthy buyers from getting a loan despite extraordinarily low default rates over the past two years."
Yes, it stands to reason that the extraordinarily low default rates probably stem from the unnecessarily tight credit standards. However, if we really want a true housing recovery we need to be more aggressive with eliminating the current inventory and shadow inventory of people waiting to sell when/if conditions approve. It is good to see more people calling out for more aggressive financing options for those that should be able to qualify a loan, but can't under today's often time unrealistic lending guidelines.
Source: http://www.marketwire.com/press-release/housing-and-economic-forecasts-point-to-rising-activity-1513897.htm
Friday, May 13, 2011
Tuesday, May 10, 2011
Four signs that your Housing Market is Recovering
Reposted from mint.com
The bad news just keeps piling up for homeowners. Home values, according to the most recent data from Zillow.com, dropped by 3% in the first quarter of 2011: the largest decline since the first quarter of 2008.
In fact, thanks to the decline in values in the first quarter this year, Zillow has pushed back its expectations for housing recovery. Previously, the company expected home values to bottom out by the end of this year. Now, it envisions that to happen in 2012, at the earliest.
But the news isn’t all bad: depending on where you live, you may be able to dig out of the hole sooner. You just need to follow several critical indicators that will give you an idea of where your real estate market is headed. (And you know that when it comes to real estate, it all depends on three things: location, location, location.) Here are four factors to watch.
Many parts of the country are still in the middle of a deep foreclosure crisis that floods the market with low-priced housing. But once the number of new foreclosures in a particular area starts slowing down and those homes get absorbed by deal-seeking buyers, homeowners can reasonably expect that the value of their properties will at the very least stop going down. Since the value of any given home derives in part from the sale price of similar homes nearby, after all, fewer or no foreclosed homes will help the values of all other properties in the area. Track foreclosure listings and trends through RealtyTrac.com.
With any cyclical trend, including housing prices, certain areas inevitably see the impact earlier than others. San Francisco and Miami were two of the first markets to see house prices crash back in 2006 and 2007. As a general rule, the areas hit the earliest also tend to be the first to recover. Miami and San Francisco are doing just that, experiencing an upturn in home prices during first quarter 2011, according to a report by Calculated Risk Finance & Economics. Some of the later-hit areas like Arizona, on the other hand, will likely continue to see stormy weather for a while.
New homes have always been a problem for people trying to sell their current houses. After all, why would a home buyer pick a used home when they can buy a new one in a better-groomed neighborhood? Real estate, like most markets, responds to supply and demand. As a result of the real estate crisis, the supply of new homes to the market since 2008 has slowed down considerably — though, of course, in foreclosure-flooded neighborhoods that doesn’t matter much. As soon as you see those foreclosed and new properties in your area start selling out, hope is near that your own home’s value will start recovering.
Many people in an upside-down mortgage fear that when their home values do finally rise, the interest rates will go up right along with them. If that happens, a new loan or an interest rate reset (if they have an ARM) might actually increase their mortgage payments — leaving them in the same tough situation they’ve lived with for years. Robert Ward of the Economic Intelligence Unit does not anticipate a significant rise in US interest rates during 2011 or 2012. This means advantageous interest rates are likely to still be available when home values reach a point that qualifies for refinancing — or putting your home on the market.
Gradually rising home values is good news for some, but for those caught with untenable mortgage payments it may be a case of too little, too late. Fortunately for those in that position, foreclosures are expensive for banks and bad for the economy at large. Credit and mortgage counselor Tony Saenz reports that private banks are continuing, and are expected to continue, to negotiate with home buyers and settle with lower interest rates and partial forgiveness of the principal on home loan
The bad news just keeps piling up for homeowners. Home values, according to the most recent data from Zillow.com, dropped by 3% in the first quarter of 2011: the largest decline since the first quarter of 2008.
In fact, thanks to the decline in values in the first quarter this year, Zillow has pushed back its expectations for housing recovery. Previously, the company expected home values to bottom out by the end of this year. Now, it envisions that to happen in 2012, at the earliest.
But the news isn’t all bad: depending on where you live, you may be able to dig out of the hole sooner. You just need to follow several critical indicators that will give you an idea of where your real estate market is headed. (And you know that when it comes to real estate, it all depends on three things: location, location, location.) Here are four factors to watch.
1. Foreclosures in your area
Many parts of the country are still in the middle of a deep foreclosure crisis that floods the market with low-priced housing. But once the number of new foreclosures in a particular area starts slowing down and those homes get absorbed by deal-seeking buyers, homeowners can reasonably expect that the value of their properties will at the very least stop going down. Since the value of any given home derives in part from the sale price of similar homes nearby, after all, fewer or no foreclosed homes will help the values of all other properties in the area. Track foreclosure listings and trends through RealtyTrac.com.
2. Indicator cities
With any cyclical trend, including housing prices, certain areas inevitably see the impact earlier than others. San Francisco and Miami were two of the first markets to see house prices crash back in 2006 and 2007. As a general rule, the areas hit the earliest also tend to be the first to recover. Miami and San Francisco are doing just that, experiencing an upturn in home prices during first quarter 2011, according to a report by Calculated Risk Finance & Economics. Some of the later-hit areas like Arizona, on the other hand, will likely continue to see stormy weather for a while.
3. New home sales
New homes have always been a problem for people trying to sell their current houses. After all, why would a home buyer pick a used home when they can buy a new one in a better-groomed neighborhood? Real estate, like most markets, responds to supply and demand. As a result of the real estate crisis, the supply of new homes to the market since 2008 has slowed down considerably — though, of course, in foreclosure-flooded neighborhoods that doesn’t matter much. As soon as you see those foreclosed and new properties in your area start selling out, hope is near that your own home’s value will start recovering.
4. Interest rates
Many people in an upside-down mortgage fear that when their home values do finally rise, the interest rates will go up right along with them. If that happens, a new loan or an interest rate reset (if they have an ARM) might actually increase their mortgage payments — leaving them in the same tough situation they’ve lived with for years. Robert Ward of the Economic Intelligence Unit does not anticipate a significant rise in US interest rates during 2011 or 2012. This means advantageous interest rates are likely to still be available when home values reach a point that qualifies for refinancing — or putting your home on the market.
The relief boat hasn’t sailed yet
Gradually rising home values is good news for some, but for those caught with untenable mortgage payments it may be a case of too little, too late. Fortunately for those in that position, foreclosures are expensive for banks and bad for the economy at large. Credit and mortgage counselor Tony Saenz reports that private banks are continuing, and are expected to continue, to negotiate with home buyers and settle with lower interest rates and partial forgiveness of the principal on home loan
Tuesday, May 3, 2011
Market Forecast 05/02-05/06
Not as much movement today as would be expected with the big OBL news, but at least rates held steady. Here are the big market movers for this week. Feel free to call me with any questions!
Market Comment
Mortgage bond prices rose slightly last week pushing mortgage interest rates lower. The Fed meeting resulted in no interest rate adjustments at this time despite continued talk of inflation fears. The data was mixed. Durable goods orders came in higher than expected pushing rates higher Wednesday morning. Weekly jobless claims came in at 429k, higher than the expected 390k and helped rates recover and rally Thursday. Mortgage bonds ended the week better by about 1/2 of a discount point.
The employment report will be the most important release this week. The weekly jobless claims and ADP data will also shed light on the state of employment.
LOOKING AHEAD
ADP Employment
The ADP employment report is a measure of employment derived from data of roughly 500,000 US businesses. The survey focuses on the private sector of the economy. In contrast, the Bureau of Labor Statistics releases the regular employment report which includes both private and government employment statistics.
The ADP employment report has gained more prominence lately in that it is delivered prior to the Friday employment report. This gives analysts an improved forecast heading into the payrolls component of the employment report later in the week.
The Fed is usually focused on keeping inflation in check. Tightening employment conditions can result in wage inflation. The ADP report provides solid data on these conditions. Despite this, the data still can diverge from the regular employment report. The employment report is derived from a household survey and an establishment survey. These surveys often differ from one another and from the ADP employment report in that they are based on different data sets. There are no guarantees that the most important employment report the first Friday of each month will mirror the ADP report released 2 days prior. With this in mind floating into the data is always very risky. Now is a great time to take advantage of mortgage interest rates at these historically favorable levels to avoid future market volatility.
Market Comment
Mortgage bond prices rose slightly last week pushing mortgage interest rates lower. The Fed meeting resulted in no interest rate adjustments at this time despite continued talk of inflation fears. The data was mixed. Durable goods orders came in higher than expected pushing rates higher Wednesday morning. Weekly jobless claims came in at 429k, higher than the expected 390k and helped rates recover and rally Thursday. Mortgage bonds ended the week better by about 1/2 of a discount point.
The employment report will be the most important release this week. The weekly jobless claims and ADP data will also shed light on the state of employment.
LOOKING AHEAD
Economic | Release | Consensus |
|
ISM Index | Monday, May 2, | 61.1 | Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates. |
Factory Orders | Tuesday, May 3, | Up 0.1% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
ADP Employment | Wednesday, May 4, | 125k | Important. An indication of employment. Weakness may bring lower rates. |
Weekly Jobless Claims | Thursday, May 5, | 420k | Important. An indication of employment. Higher claims may result in lower rates. |
Preliminary Q1 Productivity | Thursday, May 5, | Up 2.2% | Important. A measure of output per hour. Improvement may lead to lower mortgage rates. |
Employment | Friday, May 6, | 8.7%, | Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates. |
Consumer Credit | Friday, May 6, | $7.5b | Low importance. A significantly large increase may lead to lower mortgage interest rates. |
ADP Employment
The ADP employment report is a measure of employment derived from data of roughly 500,000 US businesses. The survey focuses on the private sector of the economy. In contrast, the Bureau of Labor Statistics releases the regular employment report which includes both private and government employment statistics.
The ADP employment report has gained more prominence lately in that it is delivered prior to the Friday employment report. This gives analysts an improved forecast heading into the payrolls component of the employment report later in the week.
The Fed is usually focused on keeping inflation in check. Tightening employment conditions can result in wage inflation. The ADP report provides solid data on these conditions. Despite this, the data still can diverge from the regular employment report. The employment report is derived from a household survey and an establishment survey. These surveys often differ from one another and from the ADP employment report in that they are based on different data sets. There are no guarantees that the most important employment report the first Friday of each month will mirror the ADP report released 2 days prior. With this in mind floating into the data is always very risky. Now is a great time to take advantage of mortgage interest rates at these historically favorable levels to avoid future market volatility.
Market Foreca
Not as much movement today as would be expected with the big OBL news, but at least rates held steady. Here are the big market movers for this week. Feel free to call me with any questions!
Market Comment
Mortgage bond prices rose slightly last week pushing mortgage interest rates lower. The Fed meeting resulted in no interest rate adjustments at this time despite continued talk of inflation fears. The data was mixed. Durable goods orders came in higher than expected pushing rates higher Wednesday morning. Weekly jobless claims came in at 429k, higher than the expected 390k and helped rates recover and rally Thursday. Mortgage bonds ended the week better by about 1/2 of a discount point.
The employment report will be the most important release this week. The weekly jobless claims and ADP data will also shed light on the state of employment.
LOOKING AHEAD
ADP Employment
The ADP employment report is a measure of employment derived from data of roughly 500,000 US businesses. The survey focuses on the private sector of the economy. In contrast, the Bureau of Labor Statistics releases the regular employment report which includes both private and government employment statistics.
The ADP employment report has gained more prominence lately in that it is delivered prior to the Friday employment report. This gives analysts an improved forecast heading into the payrolls component of the employment report later in the week.
The Fed is usually focused on keeping inflation in check. Tightening employment conditions can result in wage inflation. The ADP report provides solid data on these conditions. Despite this, the data still can diverge from the regular employment report. The employment report is derived from a household survey and an establishment survey. These surveys often differ from one another and from the ADP employment report in that they are based on different data sets. There are no guarantees that the most important employment report the first Friday of each month will mirror the ADP report released 2 days prior. With this in mind floating into the data is always very risky. Now is a great time to take advantage of mortgage interest rates at these historically favorable levels to avoid future market volatility.
Market Comment
Mortgage bond prices rose slightly last week pushing mortgage interest rates lower. The Fed meeting resulted in no interest rate adjustments at this time despite continued talk of inflation fears. The data was mixed. Durable goods orders came in higher than expected pushing rates higher Wednesday morning. Weekly jobless claims came in at 429k, higher than the expected 390k and helped rates recover and rally Thursday. Mortgage bonds ended the week better by about 1/2 of a discount point.
The employment report will be the most important release this week. The weekly jobless claims and ADP data will also shed light on the state of employment.
LOOKING AHEAD
Economic | Release | Consensus |
|
ISM Index | Monday, May 2, | 61.1 | Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates. |
Factory Orders | Tuesday, May 3, | Up 0.1% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
ADP Employment | Wednesday, May 4, | 125k | Important. An indication of employment. Weakness may bring lower rates. |
Weekly Jobless Claims | Thursday, May 5, | 420k | Important. An indication of employment. Higher claims may result in lower rates. |
Preliminary Q1 Productivity | Thursday, May 5, | Up 2.2% | Important. A measure of output per hour. Improvement may lead to lower mortgage rates. |
Employment | Friday, May 6, | 8.7%, | Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates. |
Consumer Credit | Friday, May 6, | $7.5b | Low importance. A significantly large increase may lead to lower mortgage interest rates. |
ADP Employment
The ADP employment report is a measure of employment derived from data of roughly 500,000 US businesses. The survey focuses on the private sector of the economy. In contrast, the Bureau of Labor Statistics releases the regular employment report which includes both private and government employment statistics.
The ADP employment report has gained more prominence lately in that it is delivered prior to the Friday employment report. This gives analysts an improved forecast heading into the payrolls component of the employment report later in the week.
The Fed is usually focused on keeping inflation in check. Tightening employment conditions can result in wage inflation. The ADP report provides solid data on these conditions. Despite this, the data still can diverge from the regular employment report. The employment report is derived from a household survey and an establishment survey. These surveys often differ from one another and from the ADP employment report in that they are based on different data sets. There are no guarantees that the most important employment report the first Friday of each month will mirror the ADP report released 2 days prior. With this in mind floating into the data is always very risky. Now is a great time to take advantage of mortgage interest rates at these historically favorable levels to avoid future market volatility.
Tuesday, April 19, 2011
Portland Real Estate Market is (FINALLY) Heating Up!
Portland Real Estate Market Update – April 2011
The real estate market in Portland finished March with 699 closed sales, which is considerably higher than the 468 and 450 closed sales recorded during February and January respectively. Of the 699 closed sales in March, 175 were distressed properties (foreclosures/short sales) representing 25% of the closed sales for the month. As of the end of March, distressed properties accounted for 28% of the active listings. There were 77 closed sales of homes valued over $500K during March and a total of 147 sales over the three month period of January – March.
The inventory level is lowest in the $251-500K price bracket at 5.4 months and overall it is at 5.7 months worth across all price brackets based solely on the March closed sales rate. Looking back over the last three months average closed sales rate, the inventory picture increases to 7.5 months worth across all price brackets.
The average sold price in March was $288K which is an increase of $20K, compared to $268K in February. The median sold price was $240K in March, up $9K from the prior month. The average price of the active listings ($349K) increased $46K from the last reading in February while the median price for the active listings ($250K) decreased $5K from the prior month.
The real estate market in Portland finished March with 699 closed sales, which is considerably higher than the 468 and 450 closed sales recorded during February and January respectively. Of the 699 closed sales in March, 175 were distressed properties (foreclosures/short sales) representing 25% of the closed sales for the month. As of the end of March, distressed properties accounted for 28% of the active listings. There were 77 closed sales of homes valued over $500K during March and a total of 147 sales over the three month period of January – March.
The inventory level is lowest in the $251-500K price bracket at 5.4 months and overall it is at 5.7 months worth across all price brackets based solely on the March closed sales rate. Looking back over the last three months average closed sales rate, the inventory picture increases to 7.5 months worth across all price brackets.
The average sold price in March was $288K which is an increase of $20K, compared to $268K in February. The median sold price was $240K in March, up $9K from the prior month. The average price of the active listings ($349K) increased $46K from the last reading in February while the median price for the active listings ($250K) decreased $5K from the prior month.
Monday, April 18, 2011
Market Forecast 04/18-04/22
Below is this week’s market forecast. After a rate friendly last week, we are hoping to see more of the same. Unfortunately, often times a good day in rates means a bad day in stocks. Looks like the biggest news this week is the potential for rate volatility on Thursday as bond traders adjust pricing (read: inflate to cover themselves) leading into the long Holiday Weekend.
In other lending news, I am still operating with VERY quick turn times! Of late I am averaging around 22 days to close, so if you have any clients who’s transaction seems to be “going sideways”, feel free to have them call me on my cell below.
Market Comment
Mortgage bond prices rose last week pushing mortgage interest rates lower. The data was mixed. The headline retail sales figure was slightly weaker than expected while the ex-autos figure was higher than expected. Producer prices rose 0.7%, weaker than the expected 1% increase however the core, which excludes volatile food and energy prices, rose a higher than expected 0.3%. Tame core consumer inflation data Friday morning helped end the week on a positive note despite higher than expected consumer sentiment, industrial production, and capacity use data. Mortgage bonds ended the week better by about 1/2 of a discount point.
The bond market will close early Thursday and will be closed all of Friday. Rates could be volatile Thursday as traders position themselves ahead of the extended holiday weekend.
LOOKING AHEAD
Globalization
Economic globalization is the increasing interdependence of national economies through trade, finances, and technology. While economists debate the pros and cons of globalization, the fact remains that globalization is not new and continues to expand.
As a driving force in the global economy, the US often benefits when foreign economies struggle. A prime example is the continued Euro concerns tied to struggling economies in Spain, Portugal, and Greece. Unlike a corporation, a country cannot file for bankruptcy when they can’t make debt payments. One remedy in situations like this has been restructuring the debt, which is mired in uncertainty for investors. A big global concern is the fear that a default by one member of the European Union could ripple throughout all the other eurozone countries. In times like this, investors often move funds to safe havens in what is called a "flight to quality." This is exactly what we saw recently as US debt instruments saw an influx of foreign investment following the tsunami in Japan. Bond prices rose, which caused mortgage interest rates to fall. From a short-term perspective it was great for homebuyers and those refinancing if they take advantage of the short-term drop in rates. Unfortunately those improvements in rates were often very short-lived. The fear of inflation continues to permeate the US and abroad. Oil prices are skyrocketing with political instability throughout the Middle East and Northern Africa. Rising energy costs are only part of the problem as US monetary policy also plays a key role. Inflation, real or perceived, erodes the value of fixed income securities generally causing prices to fall and rates to rise. While there have been a few dips here and there in rates over the course of the last few months we have also seen rates test recent highs. It is wise to take advantage of rate dips when they occur with the continued global economic uncertainty.
In other lending news, I am still operating with VERY quick turn times! Of late I am averaging around 22 days to close, so if you have any clients who’s transaction seems to be “going sideways”, feel free to have them call me on my cell below.
Market Comment
Mortgage bond prices rose last week pushing mortgage interest rates lower. The data was mixed. The headline retail sales figure was slightly weaker than expected while the ex-autos figure was higher than expected. Producer prices rose 0.7%, weaker than the expected 1% increase however the core, which excludes volatile food and energy prices, rose a higher than expected 0.3%. Tame core consumer inflation data Friday morning helped end the week on a positive note despite higher than expected consumer sentiment, industrial production, and capacity use data. Mortgage bonds ended the week better by about 1/2 of a discount point.
The bond market will close early Thursday and will be closed all of Friday. Rates could be volatile Thursday as traders position themselves ahead of the extended holiday weekend.
LOOKING AHEAD
Economic | Release | Consensus |
|
Housing Starts | Tuesday, April 19, | 468k | Important. A measure of housing sector strength. Weakness may lead to lower rates. |
Existing Home Sales | Wednesday, April 20, | 4.8m | Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates. |
Weekly Jobless Claims | Thursday, April 21, | 405k | Important. An indication of employment. Higher claims may result in lower rates. |
Philadelphia Fed Survey | Thursday, April 21, | 44.4 | Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates. |
Leading Economic Indicators | Thursday, April 21, | Up 0.6% | Important. An indication of future economic activity. A smaller increase may lead to lower rates. |
Good Friday Holiday | Friday, April 22 | Important. Bond market closes early Thursday and entire day Friday. Shortened week could lead to rate volatility. |
Globalization
Economic globalization is the increasing interdependence of national economies through trade, finances, and technology. While economists debate the pros and cons of globalization, the fact remains that globalization is not new and continues to expand.
As a driving force in the global economy, the US often benefits when foreign economies struggle. A prime example is the continued Euro concerns tied to struggling economies in Spain, Portugal, and Greece. Unlike a corporation, a country cannot file for bankruptcy when they can’t make debt payments. One remedy in situations like this has been restructuring the debt, which is mired in uncertainty for investors. A big global concern is the fear that a default by one member of the European Union could ripple throughout all the other eurozone countries. In times like this, investors often move funds to safe havens in what is called a "flight to quality." This is exactly what we saw recently as US debt instruments saw an influx of foreign investment following the tsunami in Japan. Bond prices rose, which caused mortgage interest rates to fall. From a short-term perspective it was great for homebuyers and those refinancing if they take advantage of the short-term drop in rates. Unfortunately those improvements in rates were often very short-lived. The fear of inflation continues to permeate the US and abroad. Oil prices are skyrocketing with political instability throughout the Middle East and Northern Africa. Rising energy costs are only part of the problem as US monetary policy also plays a key role. Inflation, real or perceived, erodes the value of fixed income securities generally causing prices to fall and rates to rise. While there have been a few dips here and there in rates over the course of the last few months we have also seen rates test recent highs. It is wise to take advantage of rate dips when they occur with the continued global economic uncertainty.
Tuesday, April 12, 2011
HUD (thankfully) Changes Position on Reverse Mortgage Widows/ers
The Department of Housing and Urban Development Office recently changed its position on how it handles widows or widowers in the event their spouse passes and they were not previously listed as mortgagees on the original loan. I did not do a lot of these, but this is still great news for those that recently lost a loved one and were facing losing their property on account of HUD's short-sightedness. Read more here (via NYT)
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