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2011-12-07T14:33:00.002-08:00

Twenty Metros Join List of Improving Housing Markets Index in December

2011-12-07T14:33:00.001-08:00

The number of improving housing markets continued to expand for a fourth consecutive month in December, rising from 30 to 41 on the latest National Association of Home Builders/First American Improving Markets Index (IMI), released today. The December list featured 20 new additions, including several major markets such as Washington, D.C.; San Jose, Calif.; and Toledo, Ohio. Meanwhile, nine smaller markets dropped off the list, primarily due to softer house prices.

The index identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months.

New entrants to the list in December include the following:

Ann Arbor, MI
Athens, GA
Boulder, CO
Burlington, VT
Canton, OH
Charleston, WV
Danville, VA
Fort Wayne, IN
Grand Forks, ND
Jackson, MS
Kingsport, TN
Laredo, TX
Lincoln, NE
Muncie, IN
Muskegon, MI
San Jose, CA
Scranton, PA
Toledo, OH
Washington, DC
Winchester, VA

"The increases we continue to see in the number and geographic diversity of improving metros are quite encouraging, and evidence of the fact that all housing markets are dependent on uniquely local factors," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. He noted that as of December, a total of 21 states and the District of Columbia are represented on the improving markets list -- up from14 states represented in November.

"The December IMI results are very much in keeping with the latest government housing data and our own builder surveys, which have shown modest signs of improvement in certain individual markets where employment is gaining and distressed properties are not as numerous," said NAHB Chief Economist David Crowe. "These gradual improvements are now becoming evident not just in small, energy-producing metros that have previously dominated the IMI, but also in several larger markets and areas with more diverse economies."

The nine markets that dropped off the IMI in December include Alexandria, La.; Fairbanks, Alaska; Hinesville, Ga.; Houma, La.; Jonesboro, Ark.; Lima, Ohio; Pine Bluff, Ark.; Sumter, S.C. and Waco, Tex. All but two of these metros fell from the list due to softening house prices. The exceptions to the rule were Jonesboro and Waco, where declines were registered in employment and single-family housing permits, respectively.

The total list of improving housing markets in December, as defined by the IMI, includes the following 41 entries (listed alphabetically by state):

Anchorage, AK
San Jose, CA
Boulder, CO
Fort Collins, CO
Washington, DC
Athens, GA
Davenport, IA
Waterloo, IA
Kankakee, IL
Fort Wayne, IN
Muncie, IN
Monroe, LA
New Orleans, LA
Ann Arbor, MI
Muskegon, MI
Jackson, MS
Fayetteville, NC
Winston-Salem, NC
Bismarck, ND
Grand Forks, ND
Lincoln, NE
Canton, OH
Toledo, OH
Pittsburgh, PA
Scranton, PA
Williamsport, PA
Kingsport, TN
Amarillo, TX
Corpus Christi, TX
Laredo, TX
McAllen, TX
Midland, TX
Odessa, TX
Sherman, TX
Tyler, TX
Danville, VA
Winchester, VA
Burlington, VT
Charleston, WV
Casper, WY
Cheyenne, WY

The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac, and single-family housing permit growth from the U.S. Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metro area must see improvement in all three areas for at least six months following their respective troughs before being included on the improving markets list.

Realtors® Applaud Congress for Reinstating FHA Loan Limits

2011-11-18T09:51:00.000-08:00

The National Association of Realtors® commends Congress for reinstating the loan limit formula and maximum cap for Federal Housing Administration-insured loans for two years.

“As the nation’s leading advocate for homeownership, we applaud members of Congress for restoring FHA’s previous loan limits, which will help reduce consumer cost burdens, stabilize local housing markets and allow qualified, creditworthy borrowers to access affordable mortgage financing,” said NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami. “The reinstated loan limits will help provide much needed liquidity and stability to communities nationwide as tight credit restrictions continue to prevent some qualified buyers from becoming home owners and the housing market recovery remains fragile.”

The provision reinstates the FHA loan limits through 2013 at 125 percent of local area median home prices, up to a maximum of $729,750 in the highest cost markets. The floor will remain at $271,050.The loan limits for Fannie Mae- and Freddie Mac-backed mortgages will remain at 115 percent of local area median home prices, up to $625,500.

NAR believes thereinstated loan limit formula and cap change will help make mortgages more affordable and accessible for hard-working, middle-class families throughout the country, not just wealthy individuals or those in costly markets. Nearly two-thirds of buyers who will be helped by the loan limits provision have incomes below $100,000.

“It’s a misconception that only wealthy borrowers benefit from the maximum cost loan limits; middle-class homebuyers living in all areas of the country deserve the same access to affordable mortgage financing and the same opportunity to achieve homeownership that homebuyers enjoy in the most affordable regions of the country,” said Veissi.The legislative action will have an impact even in communities with loan limits well below the maximum cap;the reset last month impacted 669 counties in 42 states and territories, with an average loan limit reduction of more than $68,000.

The bill also provides for a short-term extension of the National Flood Insurance Program through December 16, 2011. NAR strongly urges Congress to use the additional time to complete work on a five-year reauthorization of the program, which ensures access to affordable flood insurance for millions of home and business owners across the country.

A 3.8 Percent “Sales Tax” on Your Home?

2011-11-12T08:56:00.000-08:00

Q: Does the new health care law impose a 3.8 percent tax on profits from selling your home?

A: No, with very few exceptions. The first $250,000 in profit from the sale of a personal residence won’t be taxed, or the first $500,000 in the case of a married couple. The tax falls on relatively few — those with high incomes from other sources.

We’ve been flooded with queries about this one ever since the health care bill became law. At the last minute, Democratic lawmakers decided on a new 3.8 percent tax on the net investment income of high-income persons. But the claim that this would amount to a $15,200 tax on the sale of a typical $400,000 home is utterly false.

The truth is that only a tiny percentage of home sellers will pay the tax. First of all, only those with incomes over $200,000 a year ($250,000 for married couples filing jointly) will be subject to it. And even for those who have such high incomes, the tax still won’t apply to the first $250,000 on profits from the sale of a personal residence — or to the first $500,000 in the case of a married couple selling their home.

We can understand how this misconception got started. The law itself is couched in highly technical language that only a qualified tax expert can fully grasp. (This provision begins on page 33 of the reconciliation bill that was passed and signed into law.) And it does say the tax falls on "net gain … attributable to the disposition of property." That would include the sale of a home. But the bill also says the tax falls only on that portion of any gain that is "taken into account in computing taxable income" under the existing tax code. And the fact is, the first $250,000 in profit on the sale of a primary residence (or $500,000 in the case of a married couple) is excluded from taxable income already. (That exclusion doesn’t apply to vacation homes or rental properties.)

The Joint Committee on Taxation, the group of nonpartisan tax experts that Congress relies on to analyze tax proposals, underscores this in a footnote on page 135 of its report on the bill. The note states: "Gross income does not include … excluded gain from the sale of a principal residence."

And just to be sure, we checked with William Ahern, director of policy and communications for the nonprofit, pro-business Tax Foundation. "Some home sales would see a tax increase under this bill," Ahern told us, "but it would have to be a second home or a principal residence generating [a gain of] more than $250,000 ($500,000 for a couple)."

So there you have it. The sort of people who would have to pay the tax might include, for example:

A single executive making $210,000 a year who sells his $300,000 ski condo for a $50,000 profit. His tax on the sale of that vacation home would amount to $1,900, in addition to the capital gains tax he would have paid anyway.
An "empty nester" couple with combined income of over $250,000 a year who sell their $1 million primary residence to move to smaller quarters. If they cleared $600,000 on the sale, they would be taxed on $100,000 of the profit (the amount over the half-million-dollar exclusion). Their health care tax on the sale would amount to $3,800 over and above the usual capital gains levy. However, a typical home sale would not incur any tax. In March, for example, half of all existing homes sold for $170,700 or less, according to the National Association of Realtors. Obviously, none of those sales could possibly generate a $250,000 profit, and so none would be subject to the tax.

Thus, for the vast majority, the 3.8 percent tax won’t apply. The Tax Foundation, in a report released April 15, said the new tax on investment income (including real estate) "will hit approximately the top-earning two percent of families" when it takes effect in 2013.

Footnote: Some of the chain e-mails that claim ordinary home sales will be taxed include a copy of an article written by Paul Guppy, a policy analyst with the conservative Washington Policy Institute (that’s Washington state, not Washington, D.C.). The article appeared March 28 as an op-ed in the Spokane, Wash., Spokesman-Review, and Guppy claimed that "[m]iddle-income people must pay the full tax even if they are ‘rich’ for only one day." That brought a quick rebuttal from Sara Orrange, the government affairs director of the local Realtors association. She wrote a letter to the newspaper calling Guppy’s article "inaccurate" and saying, "Most people who sell their homes will not be impacted by these new regulations. This is not a new tax on every seller, and that correction needs to be made." In a news article the next day, business reporter Bert Caldwell confirmed that only "a very few" home sellers would pay the 3.8 percent tax.

The Internal Revenue Service says that to qualify for the $250,000/$500,000 exclusion, a seller must have owned the home and lived there as the seller’s "main home" for at least two years out of the five years prior to the sale.

Sources
Joint Committee on Taxation. "Technical Explanation of the Revenue Provisions of the ‘Reconciliation Act of 2010,’ As Amended, In Combination with the ‘Patient Protection and Affordable Care Act.’" 21 Mar 2010.

Ahern, William. E-mail to FactCheck.org, 22 Apr 2010.

National Association of Realtors. "Existing-Home Sales Rise on Home Buyer Tax Credit and Favorable Market Conditions." Press release. 22 Apr 2010.

Fleenor, Patrick and Gerald Prante. "Health Care Reform: How Much Does It Redistribute Income?" The Tax Foundation. 15 Apr 2010.

Guppy, Paul. "Health Law’s Heavy Impact." Spokesman-Review. 28 Mar 2010.

Orrange, Sara. "Home sales tax clarified." Letter. Spokesman-Review. 1 Apr 2010.

Caldwell, Bert. "Realtors take aim at health care tax claim." Spokesman-Review. 4 Apr 2010.

Veterans Day!

2011-11-11T08:17:00.000-08:00

It is with great pride that we in the Coldwell Banker family honor our veterans on this day. Not only is it a chance for us to reflect upon those who have served our great nation in the past, but also an opportunity to express our deepest gratitude to the men and women currently serving in our armed forces in locations around the world.

Our appreciation for the bravery and sacrifices of our service members is constant, yet we pay special tribute on this historic day each year. Veterans Day symbolizes the identity of our country – one founded on courage, determination and an enduring desire for personal freedom.

Whether the veteran you know is a family member, friend, neighbor or co-worker, we encourage you to show them your appreciation for all they have done and continue to do on our behalf.

New-Home Sales Rise 5.7 Percent in September

2011-10-26T12:28:00.001-07:00

Sales of newly built, single-family homes rose 5.7 percent to a seasonally adjusted annual rate of 313,000 units in September, according to newly released data from the U.S. Commerce Department. This marks the fastest pace of new-home sales in the past five months.

"Today's report highlights the gradual improvement in housing market conditions that is becoming evident in certain pockets of the country, as consumers who can surmount very restrictive lending standards to qualify for a favorable mortgage rate seize on this opportunity to buy," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "The latest numbers also reveal that first-time buyers are driving the new-homes market right now, as evidenced by the volume of lower-priced, entry-level homes under contract. It's worth noting that these consumers are very dependent upon federal policies and programs that support homeownership, such as the mortgage interest deduction and low-downpayment mortgage options that have been threatened by recent government proposals."

"The improved rate of new-home sales in September is on par with NAHB's forecast for the overall number of sales this year and in keeping with the spotty improvements that our latest builder surveys have highlighted in select markets," said NAHB Chief Economist David Crowe. "While 313,000 is still an exceptionally low rate of new-home sales by historic standards, it is an encouraging sign of an anticipated broader recovery over the course of next year, and builders have helped the situation by keeping their inventories of homes for sale very lean in areas where there is an oversupply of existing units."

Regionally, new-home sales were mixed in September, with gains of 11.2 percent and 9.7 percent registered in the South and West, respectively, and declines of 4.2 percent and 12.2 percent registered in the Northeast and Midwest, respectively.

The inventory of new homes for sale held at an all-time record low of 163,000 units in September. This represents a modest 6.2 -month supply at the current sales pace.

Number of Improving Housing Markets Nearly Doubles in October

2011-10-12T07:36:00.000-07:00

The second edition of the National Association of Home Builders/ First American Improving Markets Index (IMI), released today, shows 23 individual housing markets now qualifying as "improving" under the new gauge's parameters. This is nearly double the 12 housing markets that made the list last month.

The index reveals metropolitan areas that have shown improvement for at least six months in housing permits, employment and housing prices. The following metros were listed in October:

•Alexandria, LA
•Amarillo, TX
•Anchorage, AK
•Bismarck, ND
•Casper, WY
•Fairbanks, AK
•Fayetteville, NC
•Houma, LA
•Iowa City, IA
•Jonesboro, AR
•Kankakee, IL
•McAllen, TX
•Midland, TX
•New Orleans, LA
•Odessa, TX
•Pine Bluff, AR
•Pittsburgh, PA
•Sherman, TX
•Sumter, SC
•Waco, TX
•Waterloo, IA
•Wichita Falls, TX
•Winston-Salem, NC
"Both the number and geographic diversity of improving housing markets expanded this month, with Iowa, Illinois and South Carolina all newly represented by one entry or more on the list," said National Association of Home Builders (NAHB) Chairman Bob Nielsen, a home builder from Reno, Nev. "This is further evidence that, despite the tough conditions that persist in many cities, pockets of improvement are emerging in local housing markets across the country."

"While Pittsburgh and New Orleans remain the two largest improving markets, the October IMI is heavily weighted by smaller cities in which energy and agriculture are the primary economic drivers and where the effects of the recession have been less pronounced," said NAHB Chief Economist David Crowe. "In particular, Texas stands out for its seven entries on the improving markets list."

Bangor, Maine, was the only area to drop off of the improving markets list in October, due to a decline in local building permits.

The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac, and single-family housing permit growth from the U.S. Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metro area must see improvement in all three areas for at least six months following their respective troughs before being included on the improving markets list.

Please visit www.nahb.org/imi for additional data, tables and a list of 2011 future economic release dates.

Feelin' Hot.. Hot.. Hot!

2011-10-07T11:13:00.000-07:00

The summer may be over, but some parts of the economy are just starting to heat up. One economic indicator that has come in hotter lately is inflation. At the end of September, the final reading of GDP in the 2nd Quarter showed inflation at 2.5%, which was up from the previous reading of 2.4%.

That elevated inflation reading was released on the heels of a hot Core Consumer Price Index (CPI), which has risen steadily and jumped to the upper-end of the Fed’s comfort level in the latest release.

Although Fed Chair Ben Bernanke stated a couple weeks ago that inflation has "moderated" of late and should continue to do so, there are still some reasons for concern. For example, we are experiencing an unprecedented amount of stimulus and low rates, which is something never seen before in history.

So why is this significant?

The concept is simple: If inflation rises, investors in Bonds demand a higher yield to offset the lost buying power inflation imposes on a fixed payment. And as home loan rates are tied to Mortgage Bonds, this would mean home loan rates move higher.

Once inflation starts to emerge it can manifest rather quickly. Future inflation readings will be closely watched to see if a trend higher is emerging, and last month’s elevated number will certainly heat up the debate surrounding more stimulus, as more money into the system fuels inflation further.

If inflation heats up even more, the Fed will likely back off their "low rates until mid-2013" mandate. Inflation really does change everything, so the markets will continue to follow this story closely.

Home prices post fourth month of gains

2011-10-01T07:49:00.000-07:00

U.S. home prices inched up for the fourth month in a row, rising 0.9 percent from June to July, according to the latest Standard & Poor's/Case-Shiller Home Price Indices.

Only two of the 20 metro areas tracked by the Case-Shiller 20-City Composite saw month-to-month price declines: Las Vegas (-0.2 percent) and Phoenix (-0.1 percent). The index showed prices in Las Vegas down 59.3 percent from their August 2006 peak, hitting a new low.

Looking back a year, 18 out of 20 metro areas saw annual price declines, with the price index for Minneapolis falling 9.1 percent, Phoenix down 8.8 percent, and Portland, Ore., dropping 8.4 percent.

Detroit (up 1.2 percent) and Washington D.C. (up 0.3 percent) were the only cities to post annual gains in July, leaving the 20-City Composite down 4.1 percent.

But a dozen other cities -- Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Las Vegas, Miami, Minneapolis, Phoenix, Portland, and Tampa -- posted improvements in annual price declines compared to June.

Standard & Poor's said the report included some "unusually large revisions" across some metro areas. Detroit was the most affected, with additional sales in May and June showing "a much healthier market than previously thought."

Housing Starts Decline, Permits Rise in August

2011-09-23T11:05:00.000-07:00

Nationwide housing starts declined 5.0 percent to a seasonally adjusted annual rate of 571,000 units in August, according to figures released by the U.S. Commerce Department today. The decline was primarily on the more volatile multifamily side, with single-family housing production edging down just 1.4 percent. Meanwhile, permits for new construction posted modest gains in both sectors.

"At this point, most builders are only looking to replenish their depleted inventories of new homes for sale, but otherwise holding off on new projects," said National Association of Home Builders (NAHB) Chairman Bob Nielsen, a home builder from Reno, Nev. "While we would like to get more crews back on the job, we need to see solid improvement in consumer demand, greater access to credit for both builders and buyers, and a reduction in the number of foreclosed properties on the market before we can ramp up new production."

"Today's numbers are completely consistent with NAHB's forecast for the quarter, and are in keeping with the anemic economic and job growth we are seeing across most of the country," said NAHB Senior Economist Robert Denk. "That said, we continue to anticipate modest gains in new-home production through the end of this year with greater momentum building into 2013, and some pockets of improvement are already evident in about a dozen metros nationwide."

Single-family housing starts declined 1.4 percent to a seasonally adjusted annual rate of 417,000 units in August, while multifamily production – which tends to display greater volatility on a month to month basis – declined 13.5 percent to a 154,000-unit rate. Regionally, combined starts activity was mixed in August, with the Midwest and West posting gains of 2.6 percent and 2.2 percent, respectively, and the Northeast and South posting declines of 29.1 percent and 3.3 percent, respectively.

Building permits, which can be an indicator of future building activity, rose 3.2 percent to a seasonally adjusted annual rate of 620,000 units in August, their highest level since last December. Single-family permits gained 2.5 percent to 413,000 units, while multifamily permits gained 4.5 percent to 207,000 units.

New index tracks metros with growth in real estate prices, permits and jobs

2011-09-13T14:49:00.000-07:00

After enduring what has seemed like an endless string of dismal numbers reports, the housing industry is about to get some good news. Tuesday, the National Association of Home Builders (NAHB) launched the NAHB/First American Improving Markets Index (IMI), dedicated entirely to tracking metropolitan areas that have consistently shown signs of improvement.

To make the list, a metro area must have shown at least six months of improvement from its trough in three areas the NAHB sees as key to determining the pulse of the housing market: housing permits, employment, and home prices.

To be released monthly, the index will draw its data from the Bureau of Labor Statistics for employment growth numbers, house-price appreciation data from Freddie Mac, and single-family permit numbers from the U.S. Census Bureau.

"Housing conditions are local and do not always reflect the national picture," said Bob Nielsen, NAHB chairman, in a release. "We created this new index to shine a light on those housing markets across the country that have stabilized and have begun to show signs of recovery."

This month, 12 metro areas made the cut: Alexandria, La.; Anchorage, Alaska.; Bangor, Maine; Bismarck, N.D.; Casper, Wyo.; Fairbanks, Alaska.; Fayetteville, N.C.; Houma, La.; Midland, Texas; New Orleans; Pittsburgh; and Waco, Texas.

"It’s not surprising that many of the states represented are energy-rich areas," observed David Crowe, the NAHB’s chief economist. Still, he points out, "last year at this time, there was not a single market that showed improvement using these criteria."

Is Your Loan Modification Application Stuck?

2011-08-31T08:01:00.000-07:00

If you’re on the verge of losing your home, or you know someone who is, then you also know about the long, bureaucratic process involved in applying for a loan modification from a lender. The most common approach is to apply under the new Home Affordability Mortgage Program (HAMP), but lenders also accept modifications from mortgage holders because lenders really don’t want to take the house—they just want their money.
In many cases, however, the approval process takes longer than many homeowners can afford. But one expert believes it doesn’t have to be that way, and that there are solutions for homeowners whose applications seem stuck in the mud.

“Applying for a loan modification can be an extremely stressful process,” says Stephfan Nurse, CEO of Consumer Education—the makers of Mortgage Reduction software designed to help people through the modification process.

“Even if you send in your documents and your lender tells you everything is okay, you may still have a great amount of anxiety because you have no idea what the lender is doing with your file. You may not know what the next step is and how long it takes to move through each step in the process. Your lender may tell you what the next step is, but you may not understand why it will take so long. There are reasons, however, why the process can get stuck, and there are ways to move that process along, if you understand what goes on behind the scenes.”

Nurse’s tips for making the process smoother include:

• Account Numbers – It often happens that when you fax your paperwork to your lender, the lender either says they lost your paperwork or they just didn’t receive it all. This isn’t because they are incompetent. It’s because they receive thousands of faxes each day, and they use an image scanning technology to capture them all and place them in the appropriate file. In that system, a cover sheet that has your account number on it will get placed correctly, but the following sheets that lack your account number can be easily misplaced. The solution is to put your account number on every page of your paperwork, so they have a better chance of placing all your paperwork in your file.

• Complete the Paperwork – When your file gets assigned to a document manager, typically about 30 days after you first applied for the modification, the document manager’s job is to check to make sure all your required documents are ready to be submitted to the negotiator/specialist for review. If you have an incomplete file, even if you’re missing just one single required document, the document manager will note your account as having an incomplete file and move on to the next file to review. At this point, a generic letter is automatically mailed to your home requesting the additional information your file lacks. This letter can take up to two weeks to get to you, and then another two to four weeks before they look at your updated information. The key is to never send an incomplete package to your lender. It can lead to a delay or even a flat out denial.

• Follow Up – Finally, follow up every week with your lender to make sure all the documents they have are up to date. Don’t worry about being a pest. After all, it’s your house on the line if things get stuck in neutral. If you do this consistently, you will avoid getting caught in the delay cycle.

“The process is like any other, and it can be rife with mistakes and bureaucratic snafus,” Nurse adds. “But if you take the steps to reduce the opportunities for error, your application can move through the process much faster and you’ll have a much better chance at being approved.”

Pending Home Sales Slip in July but up Strongly from One Year Ago

2011-08-30T09:00:00.001-07:00

Pending home sales declined in July but remain well above year-ago levels, according to the National Association of REALTOES®. All regions show monthly declines except for the West, which continues to show the highest level of sales contract activity.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, slipped 1.3 percent to 89.7 in July from 90.9 in June but is 14.4 percent above the 78.4 index in July 2010. The data reflects contracts but not closings.

Lawrence Yun, NAR chief economist, says sales activity is underperforming. “The market can easily move into a healthy expansion if mortgage underwriting standards return to normalcy,” he says. “We also need to be mindful that not all sales contracts are leading to closed existing-home sales. Other market frictions need to be addressed, such as assuring that proper comparables are used in appraisal valuations, and streamlining the short sales process.”

The PHSI in the Northeast declined 2.0 percent to 67.5 in July but is 9.7 percent above July 2010. In the Midwest the index slipped 0.8 percent to 79.1 in July but is 18.8 percent above a year ago. Pending home sales in the South fell 4.8 percent to an index of 94.4 but are 9.5 percent higher than July 2010. In the West the index rose 3.6 percent to 110.8 in July and is 20.6 percent above a year ago.

“Looking at pending home sales over a longer span, contract activity over the past three months is fairly comparable to the first three months of the year, and well above the low seen in April,” Yun says. “The underlying factors for improving sales are developing, such as rising rents, record high affordability conditions and investors buying real estate as a future inflation hedge. It is now a question of lending standards and consumers having the necessary confidence to enter the market.”

IRS's top 10 tax tips for home sellers

2011-08-17T08:20:00.001-07:00

From time to time the IRS releases tips designed to help people with their taxes. Some of these are quite useful.

Last week the agency released "Ten Tax Tips for Individuals Selling Their Home," (IRS Summertime Tax Tip 2011-15).

Here are the IRS's top 10 tax tips for home sellers:

1. In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale. 

2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases). 

3. You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home. 

4. If you can exclude all of the gain, you do not need to report the sale on your tax return. 

5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses. 

6. You cannot deduct a loss from the sale of your main home. 

7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude. 

8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time. 

9. If you received the first-time homebuyer credit and within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence, using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year's tax return. 

10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.

These tips can be found on the IRS website at http://www.irs.gov/newsroom/content/0,,id=104608,00.html.

TransUnion: Mortgage Delinquencies Plummeted in Second Quarter

2011-08-15T08:11:00.000-07:00

The national mortgage delinquency rate (the rate of borrowers 60 or more days past due) decreased for the sixth consecutive quarter, dropping to 5.82 percent at the end of the second quarter in 2011 according to a quarterly analysis of credit-active U.S. consumers by TransUnion.

Although mortgage delinquencies were expected to continue to drop, the Q2 2011 TransUnion data released recently shows mortgage delinquency rates improved on a quarterly basis by 5.98 percent, more than any time since the recession officially ended two years ago.
“While relatively low home prices and high unemployment continue to exert upward pressure on delinquency rates, they are more than offset by the impact of more conservative lending policies reflecting consumers with higher credit scores,” says Tim Martin, group vice president of the U.S. Housing Market in TransUnion’s financial services business unit. “Not only are these consumers less likely to default if house prices continue to edge downward throughout the year, but their willingness to repay their debt obligations in the face of high unemployment rates is greater. It is because of these dynamics that lenders today take a much closer look at the borrower’s income history and overall debt situation than before the recession began in 2007.”

Between the first and second quarters of 2011, 49 states and the District of Columbia experienced declines in their mortgage delinquency rates with Vermont being the only state to experience an increase. On a more granular level, 79 percent of metropolitan areas saw declines in their mortgage delinquency rates in Q2 2011. This is an improvement compared to Q1 2011 when 68 percent of metropolitan statistical areas (MSA) experienced a decline their mortgage delinquency rates. In Q4 2010, only 44 percent of MSAs experienced such a decline.

TransUnion forecasts that mortgage borrower delinquency rates will continue to drift downward for the remainder of 2011, as economic conditions begin to slowly recover and tighter lending standards offset the impact of falling home prices.

“Mortgage delinquencies have shown six straight quarters of improvement and the pace of the improvement seems to be picking up speed. This is encouraging news. However, at their current level, nearly three times the pre-recession ‘norm,’ and the current pace of improvement, we may not see ‘normal’ delinquency rates until the end of 2015,” says Martin.

Normal’ Home Prices Are Stabilizing

2011-07-29T11:06:00.001-07:00

Prices of “normal” homes—those that aren’t foreclosures or short sales—are stabilizing and the numbers of future foreclosures are falling. That “sliver of good news for consumer spending” was included in CoreLogic’s July report on housing and market trends.
In May 2011, the firm’s Home Price Index excluding distressed sales only dropped 0.4 percent from a year ago, compared to a decline of 7.4 percent for the all transactions measured by the HPI. Even while including distressed sales, the HPI increased between March and April —the first time in more than six months—and was up again between April and May.

“These increases represent the resumption of seasonality in home prices and are a positive sign for the market. When disaggregating median prices by type of sale for the first complete month of the spring home buying season, it is clear that despite the whipsaw impact of the federal homebuyer tax credit, state homebuyer tax credits and increases in FHA premiums, non-distressed median existing and new prices are back to 2009 levels,” the report said.

Although the distressed sales share remains high, the geographical sources of distress are shifting and becoming more dispersed. As of December 2008, four of the top five largest distressed sales markets were all located in California, and the top five markets averaged a distressed sale share of 68 percent. As of April 2011, only two of the top five markets are in California and, more importantly, the top five average distressed share was 56 percent — a 12 percentage point decline relative to top markets in late 2008.

NAHB Applauds EPA Rejection of Renovation Clearance Testing Requirements

2011-07-20T13:16:00.000-07:00

The National Association of Home Builders commends the U.S. Environmental Protection Agency for rejecting a proposal to add third-party clearance testing to the Lead: Renovation, Repair and Painting Rule (RRP).

“We’re pleased that the EPA listened to the concerns of remodelers about the extreme costs the proposed clearance testing would have imposed,” says Bob Peterson, NAHB Remodelers chair and a remodeler from Fort Collins, Colo. “Home owners are saved from spending a great deal of money on lead testing. If remodeling is more affordable, home owners will be able to hire an EPA-certified renovator to keep them safe from lead dust hazards during renovation.”
At NAHB’s request this regulation was selected for review by the EPA under the Presidential Executive Order for Regulatory Review (Improving Regulation and Regulatory Review, 76 FR 3821 issued on Jan. 21) concerning the impact of federal rules on small businesses and job creation.

The lead rule applies to homes built before 1978 and requires renovator training and certification, following lead-safe work practices, containing and cleaning dust, and record keeping.

Under the lead paint rule contractors have been required to wipe down the project area after completing remodeling or renovation work and match the result to an EPA-approved card to determine whether lead paint dust is still present—a process that EPA says is “effective at reducing dust lead levels below the dust-lead hazard standard.”

The proposal would have required contractors to hire EPA-accredited dust samplers to collect several samples after a renovation and send them to an EPA-accredited lab for lead testing. Because of the cost of this as well as the waiting period for test results and the limited number of accredited labs nationwide, professional remodelers were very concerned about home owners’ willingness to undergo the process.

“The EPA has maintained its common sense approach to keeping families safe during renovation,” says Peterson. “Hiring trained professional remodelers to contain dust, use lead-safe work practices, and clean up has been shown to successfully minimize lead hazards and protect individuals from lead exposure.”

Several problems with the rule still remain. The EPA has yet to recognize an efficient, low-cost lead test kit that meets the requirements of the regulation. And last year the agency removed a key consumer choice measure—the opt-out provision—which allowed homeowners with no children or pregnant women in residence to waive the rule’s requirement. In this down economy, consumers are still balking at the extra costs of the rule and often choose to reduce the amount of work done on their homes, hire uncertified contractors, or endanger themselves by attempting the work themselves.

For more information, visit www.nahb.org.

Coldwell Banker Real Estate Issues International Housing Report

2011-07-15T11:07:00.000-07:00

Coldwell Banker Real Estate LLC recently released a report on international housing markets, which compares similar four-bedroom, two-bathroom homes in 30 countries and more than 60 markets outside the United States and Canada.

Among the more affluent markets in the report is Neuilly-sur-Seine, France, located just four miles from the center of Paris and is the hometown of Nicolas Sarkozy, the current President of the French Republic. The city also serves as the headquarters for the global edition of The New York Times newspaper and The International Herald Tribune. A continent away in the opposite hemisphere, the tourist city of Salinas, Ecuador, is one of the many markets offering great affordability. It is also known for its proximity to the Pacific Ocean and year-round temperatures averaging 80 degrees Fahrenheit.

“As one of the world’s premier international real estate companies, Coldwell Banker has the pulse on what is happening in various global markets,” says Budge Huskey, president and chief operating officer, Coldwell Banker Real Estate LLC. “Increasingly we have seen that buyers are expanding their horizons when it comes to the number of countries under consideration for their investment.”

In addition to Salinas and Neuilly-sur-Seine, the Coldwell Banker report highlights some of the world’s most prominent cities, full of fun trivia and charming local facts:

• Paris, France, has been ranked as one of the top three European cities of the future by The Financial Times and produces more than one fourth of France’s total gross domestic product.

• Madrid, Spain, is the third largest city in the European Union and is considered the major financial center of Southern Europe.

• Rome is the capital and most populated city of Italy and has been ranked as one of the world’s 15 most important cities.

• Amsterdam is the financial and cultural capital of the Netherlands and home to seven Fortune 500 companies including ING Group and Royal Philips Electronics.

• Dublin houses more than one-quarter of the entire population of Ireland and is ranked 29th in the Global Financial Centres Index.

• Aruba is renowned for its white, sandy beaches, temperate waters and warm climate moderated by the trade winds of the Atlantic Ocean.

• Istanbul is the cultural, economic, and financial center of Turkey and at one time served as the capital of the Roman and Ottoman Empires.

• Mexico City, Mexico, is the country’s most important political, cultural, educational and financial center and boasts one of the world’s fastest growing economies with a gross domestic product expected to double by 2020.

The release of this international data follows the recent Coldwell Banker Home Listing Report, a comprehensive analysis of real estate markets throughout the U.S. and Canada. Additional information on the North American report can be found on the Coldwell Banker Home Listing Report website.

Mortgage Marvel Rate Trends Shows Jump in 30-Year Fixed Rates

2011-07-07T08:28:00.000-07:00

Mortgage Marvel Rate Trends™, a daily survey of over 950 lenders, shows 30-year, fixed rates bouncing up 0.15% to 4.78% after setting a new six-month low last week.
With the increase in rates over the past week, 30-year fixed rates are 0.44% lower than the 6-month high of 5.22% achieved on February 10, 2011 and 0.58% above the ever-to-date low of 4.20% reached October 12, 2010.

Fifteen-year fixed rates also jumped, but to a lesser degree than the 30-year fixed, ending the week at 3.93% as compared to last week’s 3.85%. The increase in 5/1 ARM rates matched that of the 30-year fixed rate, jumping 0.16% to end the week at 3.80%. The rates for 30-year, fixed rate jumbo loans (typically loans over $417,000) increased just 0.03% to 5.48% this week from 5.45% last week.

Pending Home Sales Turn Around in May

2011-06-30T06:20:00.000-07:00

Pending home sales rose strongly in May with all regions experiencing gains from a year ago, pointing to higher housing activity in the second half of the year, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, rose 8.2 percent to 88.8 in May from an upwardly revised 82.1 in April and is 13.4 percent higher than the 78.3 reading in May 2010. The data reflects contracts but not closings, which normally occur with a lag time of one or two months.

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

Lawrence Yun, NAR chief economist, said the improvement bodes well for home prices. “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,” he said. “Some markets have made a rapid turnaround, going from soft activity to contract signings rising by more than 30 percent from a year ago, including areas such as Hartford, Conn.; Indianapolis; Minneapolis; Houston; and Seattle.”

Pending home sales have trended up unevenly since bottoming last June, rising in seven of the past 11 months. “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.”

“In addition, a nonsensical situation has developed recently in some states with HUD unable to complete foreclosure deals because of insufficient funds to pay attorney fees at closing, even with buyers offering the full listing price,” Yun added.

Yun cautioned that healthy job creation is necessary to ensure a solid recovery in both housing and the overall economy. “The job market has sputtered recently, and because variations in local job creation impact housing demand, markets will recover unevenly around the country,” he said.

Housing Starts Gain 3.5 Percent in May

2011-06-22T08:21:00.001-07:00

Nationwide housing starts rose 3.5 percent to a seasonally adjusted annual pace of 560,000 units in May, according to newly released figures from the U.S. Commerce Department. The gain partially offsets a larger decline that was registered in April.

“While the upward movement registered in today’s report is somewhat good news, housing production continues to bounce along the bottom near historic lows, and is only running at a level necessary to replace dilapidated or destroyed units,” says Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. He also noted that “Amidst this fragile marketplace, the nation’s policymakers should be aware of a recent poll that confirms the strong value that most American voters continue to place on homeownership and housing choice.”

Conducted this May on behalf of NAHB by Public Opinion Strategies of Alexandria, Va., and Lake Research Partners of Washington, D.C., the poll asked 2,000 likely voters about their attitudes on homeownership and housing policy. It found that the vast majority of current home owners are happy with their decision to own a home and believe that owning their own home is important, while nearly three-quarters of those who do not now own a home consider it a goal of theirs to eventually buy one. Additionally, the poll determined that 73 percent of owners and renters believe the federal government should provide tax incentives to promote homeownership. Details on this poll are available at www.nahb.org/voterpoll.

“Like consumers, builders remain very concerned about the pace of economic growth and are awaiting signs of improvement before moving forward with new projects,” notes NAHB Chief Economist David Crowe. “The relative bright spot in new-home construction is on the multifamily side, where improving demand for rental apartments is spurring gains in that sector. However, access to construction credit remains a limiting factor for new building.”

Single-family housing starts rose 3.7 percent to a seasonally adjusted annual rate of 419,000 units in May—their strongest pace since this January. Multifamily starts rose 2.9 percent to a 141,000-unit rate in May.

Regionally, housing production rose 1.5 percent in the South and 18.1 percent in the West, but declined 3.3 percent in the Northeast and 4.1 percent in the Midwest in May.

Issuance of building permits, which can be an indicator of future building activity, rose 8.7 percent to a seasonally adjusted annual rate of 612,000 units in May. This was the strongest pace since December of 2010. Single-family permits were up 2.5 percent to a 405,000-unit rate, while multifamily permits rose 23.2 percent to 207,000-units—their best pace since October of 2008.

Permit issuance posted double-digit gains in the Northeast and West in May, rising 35.6 percent and 15.1 percent, respectively. The South also posted a gain, of 3.5 percent, while the Midwest registered a 1.1 percent decline.

For more information, please visit www.NARB.org.

Homeownership Dream Deserves Protection

2011-06-15T07:40:00.000-07:00

The homeownership rate dropped to 66.4 percent in April 2011, the lowest it’s been since 1998, according to the U.S. Census Bureau. Some would argue this means owning a home is not as important to Americans as it once was—but they’re wrong.

What it really means is that the artificially stimulated level of 69 percent in 2005 wasn’t sustainable. Today’s level is merely a return to a more normal rate.

The dream of homeownership is as strong as ever, and it deserves protection—not more regulatory roadblocks.
Understandably, government leaders are looking at ways to avoid another housing crisis, but prohibitive down payments and elimination of the Mortgage Interest Deduction (MID) are two highly detrimental steps in the wrong direction at the worst time.

Consumer confidence took a considerable hit during the past few years, and its gradual recovery is still very fragile.

An unprecedented number of recent and current homeowners has been rocked by the downturn—and prospective buyers are shaken on the sidelines. But there hasn’t been so much damage that people have abandoned their dream of owning a home.

According to a Pew Research Center study conducted in April, 81 percent of adults surveyed either somewhat agree or strongly agree that buying a home is the best long-term investment a person can make. Of homeowners whose homes have lost value during the downturn, 82 percent still favor owning a home. And 81 percent of renters aspire to own a home in the future.

These survey results are compelling enough, coming straight from consumers. But in case there’s any doubt about whether there’s still an interest in buying, recent home sales and pricing data show that buyer activity is picking up.

In all 54 metro areas tracked, home sales increased by no less than 9 percent from February to March 2011—the third-straight month of gains. And 35 of those markets also experienced price increases. Would we see these results without increased buyer demand? Of course not.

Investor activity has picked up considerably over the past six-plus months, with 22 percent of home sales linked to this influential buyer group. But investing alone can’t be expected to absorb the millions of foreclosed properties yet to be released to the market.

Right now, government leaders should focus on ways to keep qualified buyers motivated. Not everyone will purchase a home, but those who save and prepare should know, absolutely, that it’s attainable.

Don't Believe the Doom on US Housing

2011-06-03T08:36:00.000-07:00

Data from the US housing market has not made for nice reading in recent months but one analyst believes the worst could well be over and that if you take a closer look at the data prices are stabilizing.

“The decline is mainly because the mix of homes sold has changed in favor of distressed sales, which typically sell with a 'foreclosure discount.'

Non-distressed properties (sold by voluntary sellers) have already started to stabilize,” said Ajay Rajadhyaksha, the co-head of US fixed income strategy at Barclays Capital said in a research note on Friday.

“As voluntary sales pick up in the summer, the mix of homes should change again in the next few months, in favor of non-distressed sales. As a result, the aggregate index of home prices should stop declining and could even go up,” he added.

As a result Rajadhyaksha dismisses fears that recent drops in prices indicate a double dip for the housing market and predicts national valuations have reached a point where downside risks are limited.

“For investors who look to the home price indices for clues to the macro-economy, we recommend focusing on the index of voluntary sales, since non-distressed borrowers will increasingly determine the true health of the housing market,” he wrote.

“This index has held up reasonably well and suggests that prices are stabilizing. In sum, there are many reasons to worry about the US macroeconomic picture (the recent softening in the labor market, the US fiscal picture, etc.) but the recent drop in US home prices should not be one of them,” said Rajadhyaksha.

REALTORS® Continue to Push Congress for Comprehensive GSE Strategy

2011-06-01T07:43:00.001-07:00

The National Association of REALTORS® supports a secondary mortgage market model with some level of government participation that would protect taxpayers and ensure that creditworthy consumers have access to affordable mortgage capital in all markets at all times.
That is the message delivered recently by NAR President Ron Phipps during a Senate Banking, Housing and Urban Affairs Committee hearing.

“As the leading advocate for homeownership, REALTORS® agree that the existing housing finance system failed and that reforms are needed; however, those reforms must be done in a methodical, measured and comprehensive effort based on practical market experience,” says Phipps. “We applaud the committee’s caution as you continue to discuss this very important and complex issue.”

In his testimony, Phipps urges support for comprehensive reform of the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, which remain critical to ensuring mortgage liquidity, and expressed concern over recently proposed legislation that takes a piecemeal approach and could increase uncertainty in the housing market, which is still struggling to recover.

To ensure a viable secondary mortgage market going forward, Phipps says that private capital must return to the housing finance market and the government’s involvement needs to be reduced; however, full privatization is not a viable option.

“There are strong negative repercussions for relying solely on private capital to form the foundation of the housing finance system. After the housing downturn, private mortgage capital became nearly nonexistent, and without the GSEs, qualified borrowers would not have had access to the funds required to purchase a home. A government backstop is critical to ensure a continual flow of mortgage liquidity and the long-term viability of the housing market,” Phipps says.

He adds that in a fully private market, financial institutions with FDIC-backed deposits would focus more on optimizing their profits in a noncompetitive banking industry, and potentially fostering new, risky mortgage products that place taxpayers at risk, rather than products that would be in the best interests of consumers and the nation’s economy. That could lead to the end of long-term fixed rate loan products, like the 30-year fixed rate mortgage, and drastically raise the cost of mortgage capital for millions of American consumers.

Phipps also testified about another important issue that will dramatically impact the future of housing finance—the proposed risk retention regulation under the Dodd-Frank Act, which requires lenders that securitize mortgage loans to retain 5% of the credit risk unless the mortgage is a qualified residential mortgage (QRM).

“A poor QRM policy that focuses on high downpayment requirements rather than a variety of traditional safe, well underwritten products will exclude hundreds of thousands of buyers from homeownership, slowing economic recovery and hampering job creation,” says Phipps. “REALTORS® support a reasonable and affordable cash investment coupled with quality credit standards, strong documentation and sound underwriting; but higher downpayments do not have a meaningful impact on default rates.”

He also expressed strong support for making permanent the GSE and FHA mortgage loan limits that are currently in place and set to expire later this year. Phipps said that in today’s real estate market, lowering the loan limits will restrict liquidity and make mortgages more expensive for households nationwide. More than 612 counties in 40 states and the District of Columbia will see an average decline of $50,000 in loan limits in their area.

“REALTORS® look forward to working with Congress and our industry partners to design a secondary mortgage model that will best serve our nation today and into the future,” says Phipps.

The National Association of REALTORS®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

New Home Sales Rise to Four-Month High in April

2011-05-24T10:35:00.000-07:00

New U.S. single-family home sales rose unexpectedly in April to notch their second straight month of gains and prices increased, according to a government report on Tuesday that offered some hope for the stagnant housing market.

The Commerce Department said sales increased 7.3 percent to a seasonally adjusted 323,000 unit annual rate, the highest level since December, from a slightly upwardly revised 301,000-unit pace in March.

Economists polled by Reuters had forecast new home sales unchanged at a previously reported 300,000-unit rate. All four regions recorded gains in sales, with the West reporting a 15.1 percent rise.

However, compared to April last year sales were down 23.1 percent.

"It suggests maybe we're beginning to see some signs of stabilization in housing, but it's too early to say we've bottomed out," said Gary Thayer, chief macro strategist at Wells Fargo Advisors in St. Louis, Missouri.

While the report cast a positive light on the housing market, it did little to change perceptions the economy remained mired in a soft patch.

Data ranging so far ranging from retail sales to industrial production have painted a picture of an economy struggling to regain momentum as the second quarter started, with employment only the bright spot.

Manufacturing activity in the central Atlantic region paused in May, after expanding during the previous seven months, according to the Richmond Fed's latest survey, released on Tuesday.

The government is expected to report on Thursday that the economy grew at an annual 2.1 percent rate in the first quarter, according to a Reuters survey, rather than the 1.8 percent pace it estimated last month.

Lots of Homes for Sale

"There's still a tremendous overhang in the housing market, and while new home sales are starting to percolate, that doesn't change the fact that we still have such huge inventory," said Michael Yoshikami, chief investment strategist at YCMNET Advisors in Walnut Creek, California.

An oversupply of used houses and a relentless wave of foreclosed properties are curbing the market for new homes, even as builders are keeping lean inventories.

There were a record low 175,000 new homes available for sale last month, down 2.8 percent from the prior month.

Data last week showed a steep drop in new home construction in April and a dip in sales of previously owned homes.

The Commerce Department report the median sales price for a new home rose 1.6 percent last month to $217,900. Compared with April last year, the median price increased 4.6 percent.

At April's sales pace, the supply of new homes on the market dropped to 6.5 months' worth, the lowest since April last year, from 7.2 months' worth in March.

Spring Breathes Life into Prices

2011-05-12T07:40:00.000-07:00

A seasonal uptick in both median prices and inventory has appeared in most metropolitan areas across the country, contradicting earlier price reports, according to Altos Research’s 20-city Composite trends data in April. Price increases are apparent in 24 of the 26 tracked markets, and inventory increases are apparent in 23 of the 26 tracked markets.

The week-over-week median prices have been increasing for a few months now, and the 90-day rolling average is now reflecting the same trend.

“The historical view tells us a seasonal increase in activity is expected at this time of year. Regardless of what’s happening in the economy as a whole, we see a seasonal spike in both median prices and inventory when the country starts to thaw from the winter months,” says the Altos report.

Altos’ national index median price rose to $440,194 in April, up 1.82 percent from $432,307 in March. The leaders in the price increase category were in “Sunshine States”—San Francisco (4.87 percent), San Jose (4.32 percent), Phoenix (3.30 percent), Denver (3.23 percent), and DC (3.04 percent).

Austin, Boston, Philadelphia, San Francisco, and Washington D.C. all showed double-digit inventory increases and Boston posted the biggest inventory increase at 19.18 percent. The 7-day and 90-day averages are both trending upwards for median prices and inventory. The 7-day trends are always the first indication of a shifting market and should be watched closely.

Prices were flat in New York, Philadelphia, Portland, Salt Lake City, Seattle, and Tampa. Las Vegas and New York were the only markets showing a decrease in inventory, and the decreases were modest (-1.05 percent and -0.26 percent, respectively). Compared to the big price drops over the past six months, this is welcome news for sellers.

The Altos Research Real-Time Housing Report provides up-to-the-minute data relative to housing market conditions in major markets around the nation. The Altos report uses metrics associated with active residential property listings to deliver real-time information

During a Tornado, Run, Don’t Gawk!!

2011-05-10T09:35:00.000-07:00

One video circulating in cyberspace—shot by a 12-year-old boy with his cell phone in the back seat of his vehicle—shows a tornado closing in on a family driving in North Carolina last month —right up until the tornado hits them.
Another shows a tornado closing in on a Walgreens in Wilson, N.C., shot by a man in the parking lot who seems oblivious to the danger he is in until the last second.

“Hang on—I love you,” he tells his wife as the tornado bears down on him, as if finally realizing he may be moments from death.

The videos startled officials at the National Weather Service. In response, they’ve issued a fresh round of tornado safety tips to counter bad information—or simple ignorance—when it comes to tornado safety.

People seem to be “just clueless” about what to do if a tornado threatens, says Dick Elder, meteorologist-in-charge of the NWS’ Wichita branch.

In response to the tornado outbreaks in the South last month, Elder says “we are saddened and humbled by the number of people who have been killed and injured.”

More than 300 tornadoes recently touched down in six states, killing at least 344 people.

“I am saddened and frustrated at the growing number of lost lives from the recent tornado outbreaks,” says Charlene Miller, assistant director of emergency management for Butler County. “As public servants, we can only go so far. There is a level of personal responsibility that each and every one of us are accountable for.”

Eleven of the tornadoes that touched down were rated EF-4 or EF-5 on the Enhanced Fujita Tornado Scale.

Tornadoes in those categories can be killers even if people take all the proper steps to protect themselves, weather officials note. But far too often, they say, videos showed people doing absolutely the wrong thing as violent weather struck.

“You would look at that and go, ‘My goodness, they’re pretty stupid,’ ” Elder says.

More and more, he comments, the desire to capture a dramatic storm on video seems to be trumping common sense and safety.

Yet others may simply have forgotten what to do. That’s why weather officials are relaying the safety information.

“It’s always a good reminder to tell people where to go to save themselves,” Elder says, commenting that he is still troubled by the video of former Wichita television reporter Gregg Jarrett and his cameraman taking shelter from the weakened Andover tornado under a highway overpass on the Kansas Turnpike in 1991.

The clip recently surfaced on Fox News, where Jarrett works. In the piece, an “expert” on tornado safety says using an overpass for shelter is a good idea—even though weather officials have stated for years that an overpass can be a lethal place to be if a tornado approaches.

“I hate seeing that, because then people will start thinking, ‘Maybe that’s what we should do,’ ” Elder says. Three people were killed in May 1999 in Oklahoma when they took shelter under overpasses during a significant tornado outbreak. The overpasses become wind tunnels and debris collectors as a tornado nears, authorities have noted, making them particularly dangerous.

Tornado Safety

Here are ways you can protect yourself and your family if a tornado threatens:

• Before the storm:
- Develop a plan of action
- Have frequent drills
- Have a NOAA weather radio with a warning alarm tone
- Listen to weather information
- If planning a trip outdoors, listen to forecasts

• In homes or small buildings:
- Go to the basement or an interior room on the lowest floor (i.e., closet or bathroom). Upper floors are unsafe
- Wrap yourself in overcoats or blankets to protect yourself from flying debris

• In schools, hospitals, factories or shopping centers:
- Go to interior rooms and halls on the lowest floor. Stay away from glass-enclosed places or areas with wide-span roofs such as auditoriums and warehouses
- Crouch down and cover your head. Don’t take shelter in halls that open to the south or the west. Centrally located stairwells are another good shelter

• In mobile homes:
- Abandon them immediately and go to a designated shelter or ditch. Most fatalities occur in mobile homes or vehicles.

• In automobiles:
- If possible, get out and go to a sturdy structure or ditch
- If there isn’t time, buckle your seat belt and get below window level of your vehicle

For more information visit www.kansas.com.

Bin Laden's hiding place: a $1 million compound

2011-05-07T10:55:00.000-07:00

Unquestionably, the most interesting piece of real estate on the entire planet today is the "mansion" compound where Osama bin Laden was found.

As the New York Times reported, "It was hardly the spartan cave in the mountains that many had envisioned as bin Laden's hiding place. Rather, it was a mansion on the outskirts of the town's center, set on an imposing hilltop and ringed by 12-foot-high concrete walls topped with barbed wire.

"The property was valued at $1 million, but it had neither a telephone nor an Internet connection," the Times wrote. "American officials believed that the compound, built in 2005, was designed for the specific purpose of hiding bin Laden."

The Los Angeles Times has published a graphic showing property details, as well as satellite images from before and after the compound was built.

The Associated Press reported that a doctor, Qazi Mahfooz Ul Haq, sold the land in 2005 where the compound was built, and The Telegraph reports that the contractor who allegedly built the complex, named in reports as Gul Muhammad, has been arrested near Abbottabad, Pakistan.

The man listed as the buyer of the property may have been killed in the U.S. raid, AP also reported. There is a photo of the compound, and a Guardian article discusses bin Laden's family background in building and architecture.

http://www.telegraph.co.uk/news/picturegalleries/worldnews/8491858/Osama-bin-Laden-the-compound-in-Abbottabad-Pakistan-where-the-al-Qaeda-leader-lived.html

Pending Home Sales Rise Again

2011-04-29T09:24:00.001-07:00

March saw another increase in pending home sales, with contract activity rising unevenly in six of the past nine months, according to the National Association of Realtors®. The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 5.1 percent to 94.1 in March from a downwardly revised 89.5 in February. The index is 11.4 percent below 106.2 in March 2010; however, activity was at elevated levels in March and April of 2010 to meet the contract deadline for the home buyer tax credit.

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

Lawrence Yun, NAR chief economist, says home sales activity has shown an uneven but notable improvement. “Since reaching a cyclical bottom last June, pending home sales have posted an overall gain of 24 percent and demonstrate the market is recovering on its own,” he notes. “The index means modest near-term gains in existing-home sales are likely, which would be even stronger if tight mortgage lending criteria returned to normal, safe standards.”

The PHSI in the Northeast fell 3.2 percent to 63.4 in March and is 18.4 percent below March 2010. In the Midwest the index rose 3.0 percent in March to 83.5 but is 16.6 percent below where it was a year ago. Pending home sales in the South jumped 10.3 percent to an index of 110.2, but are 10.5 percent below March 2010. In the West, the index increased 3.1 percent to 103.7 but is 4.1 percent below a year ago.

“Based on the current uptrend with very favorable affordability conditions, rising apartment rents and ongoing job creation, existing-home sales should rise around 5 to 10 percent this year with sales growth of lower priced homes likely to outperform high-end homes. That means the price trend will reflect more homes sold in the lower price ranges,” Yun says.

“The good news is that recent home buyers are staying well within budget, leading to exceptionally low loan default rates among home buyers over the past two years,” Yun adds.

Slow Home Movement Focuses on Building Homes That Work for Occupants

2011-04-25T11:25:00.000-07:00

John Brown believes a home should ease the stress in life, not contribute to it.

Brown is the founder of the slow home movement, a philosophy of home design that emphasizes livability and sustainability. It’s about building a home that works for the occupants, not one that’s intended to impress.
The concept was inspired by the slow food movement, with its focus on healthful, sustainable ways of producing and preparing food, explained Brown, an architect, real estate broker and architecture professor in Calgary, Alberta. “You can think of the typical cookie-cutter house as being like fast food”—often supersized and designed to satisfy our craving for beauty, he said. It’s a house that’s designed to seduce us into buying by feeding our fantasies of a more glamorous life, he said, not one that’s necessarily easy to live in or easy on the environment.

A slow home, on the other hand, is reasonably sized and carefully designed to support its occupants. It might have an entry where family members can easily take off their boots, stash their keys and store their backpacks, for example. It might have a living space that encourages people to talk or read, not just watch television or surf the Internet. It’s energy efficient, filled with natural light and designed for easy flow among rooms and access to the outside. “It doesn’t have to be fancy. It doesn’t have to be expensive. It just has to be easy to live in,” Brown said.

Brown and his partners design these types of houses through their firm, Housebrand, and they encourage others to do the same through the educational outreach they call Slow Home Studio (http://www.slowhomestudio.com). Brown and his partner Matthew North have also written a book on the subject, What’s Wrong With This House? Fast Houses, Slow Homes and How to Tell the Difference.

Architect Hallie Bowie has long been guided by a similar philosophy in designing home additions and renovations through her Akron company, New Leaf Home Design. But before learning of the slow home movement recently, she never had a name for it, she said.

Bowie sees the movement as a marriage between green building and the “not-so-big-house” idea, a concept championed by architect Sarah Susanka in a series of popular home-design books.

At its heart, a slow home is really about good design, she said. “It seems to me the slow home has a real values kind of focus,” Bowie said. Its design grows from the occupants’ emphasis on the quality of time they spend with family and friends, not on the quantity of their possessions or their desire to impress people.

A slow home takes different forms for different people. A family who wants less emphasis on television, for example, might create a viewing area that’s separate from the great room, Bowie said. A family who wants to interact more with neighbors might have a front porch.

Brown said slow homes eliminate the little annoyances that tend to make our already harried lives more stressful—annoyances such as entries without closets, bathrooms that open directly to living areas or laundry rooms so close to the back door that people are constantly tripping over laundry baskets when they enter. He likens those kinds of poorly designed elements to an ill-fitting pair of shoes. They just make it harder to get through the day.

Author Shannon Honeybloom also sees a slow home as being a means of providing nurture. To her, the slow home movement involves determining how you want to live or raise children and then creating an environment that supports those goals, a concept she outlines in her book Making a Family Home. “I think the reality of life these days it that life is really fast-paced,” she said. She advocates creating a way of life and a home that put less emphasis on instant information and entertainment and more on encouraging interaction, imagination and learning.

Honeybloom’s concept of a slow home, then, might include elements such as a comfortable reading chair, a backyard garden where the family can spend time together, a computer located somewhere other than where the children usually play and a step stool in the bathroom that enables little ones to wash their own hands or brush their own teeth. Even something as simple as putting a TV in a cabinet, where it’s not always beckoning you to turn it on, can help slow the pace, she said.

Most average homes designed before 1950 are slow by design, Brown said. They’re often simple, “but they work.” But like the food industry, he said, the housing industry started turning out houses—or “products,” as he calls them—designed for short-term sale rather than long-term livability. Dazzling features and square footage sold houses, not abundant natural light, access to the outdoors or a location in a walkable neighborhood.

Ideally, Brown said, a slow home would be designed that way from the start by an architect who takes into consideration the occupants’ interests, needs and habits.

Nevertheless, he said it’s possible to “slow” an existing home. Something as simple as rearranging the furniture can make your home a better fit, he said. Bigger changes can be made over time.

The slow home movement isn’t “a touchy-feely new-age thing,” Brown said, but rather a way of helping consumers get homes that better serve their needs. “We as consumers can make a difference. It’s about an individual sense of empowerment.”

Existing-Home Sales Rise in March 2011

2011-04-21T07:51:00.000-07:00

Sales of existing-home sales rose in March 2011, continuing an uneven recovery that began after sales bottomed last July, according to the National Association of REALTORS®. Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 3.7% to a seasonally adjusted annual rate of 5.10 million in March from an upwardly revised 4.92 million in February, but are 6.3% below the 5.44 million pace in March 2010. Sales were at elevated levels from March through June of 2010 in response to the home buyer tax credit.

Lawrence Yun, NAR chief economist, expects the improving sales pattern to continue. “Existing-home sales have risen in six of the past eight months, so we’re clearly on a recovery path,” he said. “With rising jobs and excellent affordability conditions, we project moderate improvements into 2012, but not every month will show a gain—primarily because some buyers are finding it too difficult to obtain a mortgage. For those fortunate enough to qualify for financing, monthly mortgage payments as a percent of income have been at record lows.”

NAR’s housing affordability index shows the typical monthly mortgage principal and interest payment for the purchase of a median-priced existing home is only 13% of gross household income, the lowest since records began in 1970.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.84% in March, down from 4.95% in February; the rate was 4.97% in March 2010.

Data from Freddie Mac and Fannie Mae show requirements to obtain conventional mortgages have been tightened, with the average credit score rising to about 760 in the current market from nearly 720 in 2007; for FHA loans the average credit score is around 700, up from just over 630 in 2007.

“Although home sales are coming back without a federal stimulus, sales would be notably stronger if mortgage lending would return to the normal, safe standards that were in place a decade ago—before the loose lending practices that created the unprecedented boom and bust cycle,” Yun explained.

“Given that FHA and VA government-backed loan programs turned a modest profit over to the U.S. Treasury last year, and have never required a taxpayer bailout, we believe low-downpayment loans should continue to be available for those consumers who have demonstrated financial responsibility and are willing to stay well within their budget. Raising the downpayment requirement would unnecessarily deny credit to many worthy middle-class families and veterans,” Yun said.

A parallel NAR practitioner survey shows first-time buyers purchased 33% of homes in March, compared with 34% of homes in February; they were 44% in March 2010.

All-cash sales were at a record market share of 35% in March, up from 33% in February; they were 27% in March 2010. Investors accounted for 22% of sales activity in March, up from 19% in February; they were 19% in March 2010. The balance of sales were to repeat buyers.

The national median existing-home price for all housing types was $159,600 in March, down 5.9% from March 2010. Distressed homes—typically sold at discounts in the vicinity of 20%—accounted for a 40% marketshare in March, up from 39% in February and 35% in March 2010.

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said some renters are looking to homeownership as a hedge against inflation. “The typical buyer today plans to stay in a home for 10 years, while rents are projected to rise at faster rates over the next few years,” he said. “As buyers gain more financial security, the advantages of homeownership become more obvious. Rents will continue to trend up, especially in comparison with a fixed-rate loan which provides financial stability and gradual accumulation of equity over time.”

Total housing inventory at the end of March rose 1.5% to 3.55 million existing homes available for sale, which represents an 8.4-month supply at the current sales pace, compared with a 8.5-month supply in February.

Housing Starts Rise 7.2 Percent in March

2011-04-20T08:03:00.001-07:00

Nationwide housing starts rose 7.2 percent to a seasonally adjusted annual rate of 549,000 units in March from an upwardly revised number in the previous month, the U.S. Commerce Department reported today. Coming on the heels of disappointing declines in February, this gain was represented in both the single- and multifamily sectors, and was mirrored by substantial improvements in building permit issuance for the same period.

"While the overall rate of new-home production remains quite low and is still being weighed down by significant uncertainties among both home builders and buyers, this latest report is encouraging," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "It means that some builders are cautiously beginning to re-stock their extremely thin inventories of new homes in anticipation of gradual improvement in consumer demand as the economy slowly inches toward recovery."

"The modest improvement in new-home production and permitting in March is in line with our forecasts for incremental gains through the spring buying season," said NAHB Chief Economist David Crowe. "While our builder members continue to experience a great number of challenges with regard to competition from foreclosed and short-sale properties, low appraisal values and tight credit conditions, they have noted slight improvements in interest among qualified buyers, and they need to be ready to meet the demand as it materializes."

Gains in new-home production were seen across the board in March, with upward movement registered in both the single- and multifamily sectors as well as three out of four regions. On the single-family side, a 7.7 percent gain to a seasonally adjusted annual rate of 422,000 units partially offset a big decline in the previous month. Multifamily starts also gained back a portion of the ground they lost earlier, with a 5.8 percent increase to 127,000 units.

Regionally, housing starts posted double-digit gains of 32.3 percent in the Midwest and 27.6 percent in the West, as well as a 5.4 percent gain in the Northeast. The South was the only region to post a decline in housing starts in March, of 3.3 percent.

Meanwhile, issuance of building permits, which can be an indicator of future building activity, rose by an impressive 11.2 percent to a seasonally adjusted annual rate of 594,000 units, more than offsetting the previous month's decline. Single-family permits rose 5.7 percent to 405,000 units, while multifamily permits rose 25.2 percent to 189,000 units.

The Northeast was the only region to not post a gain in building permits this March, remaining unchanged from the previous month. Meanwhile, the Midwest posted a 6.9 percent gain, the South, a 6.3 percent gain, and the West, a 37.1 percent gain.

Buyer’s Market Spurs Confidence in Young Professionals and Affluent Homeowners

2011-04-04T09:15:00.001-07:00

As the cold temperatures become a distant memory, and the spring selling season gains momentum, consumers have come to agree on one thing—now’s a good time to get off the fence and into the real estate market. This is the overall theme in the latest American Express Spending and Saving Tracker survey, a monthly survey that tracks the spending and saving habits of consumers in order to get an indication of what’s happening in the market. “This month’s Spending and Saving Tracker provided an up-to-date look at various consumer trends and gave us the opportunity to assess how consumers are feeling about the current market in addition to gauging homeowner confidence,” says Leah Gerstner, vice president of public affairs at American Express.
“This month’s survey points to the fact that consumers overwhelmingly feel that we are in the midst of a buyer’s market,” she adds. The data also points to the fact that a seller’s market is at least a year away, which is certainly positive news. While homeowners aren’t necessarily willing to settle for less than the asking price when selling their home, two of the biggest areas of interest in the latest survey deal with homeowners including home improvement projects on their to-do list, as well as the willingness to include concessions to get their home sold.

Home Improvements
“In looking at the results of our latest Spending and Saving Tracker survey, our thinking was that if consumers overwhelmingly view today’s market as a buyer’s market—which they do—they are likely to have plans to put more money into their home,” adds Gerstner. In fact, the survey found that about 64 percent of homeowners currently have home improvement projects on their to-do list for 2011. While the plans are in place, the amount that homeowners are budgeting to spend has gone down quite a bit from last year. “Homeowners are looking for better ways to stretch their dollars, and many are looking toward energy-efficient home improvements that will pay off in the long run.” The survey shows that among homeowners who are looking to go green, the most common items homeowners would spend their money on include energy-efficient windows and doors, insulation, roofing, heating and cooling systems as well as alternative energy systems.

Concessions
Another finding that stood out in the latest survey had to do with whether or not sellers were willing to make concessions to get their homes sold, especially in today’s market. While 44 percent of sellers were willing to give away appliances during a sale—the biggest concession among young professionals and affluent homeowners—another 28 percent said they would take care of requested repairs in order to get their home sold. “While a large majority of sellers are willing to make concessions to get their home off the market, the willingness to make concessions is down among young professionals when compared with the 2010 survey,” says Gerstner. “This is an important finding as it shows that young professionals are more confident in their ability to sell their homes today.”

“Homeowner confidence in today’s market has increased compared to last year,” says Gerstner. “In fact, the survey shows that the confidence level is pretty evenly split—42 percent of homeowners are confident they will get their asking price in today’s market, while 47 percent of homeowners aren’t that confident.” Even though home values continue to be on the low side, young professionals and affluent homeowners are seemingly more confident in today’s market.

Update on First Time Homebuyer Credit and Tax Refunds

2011-03-28T09:03:00.001-07:00

The IRS recently released information on processing issues that are impacting a small percentage of tax returns involving repayment of the First Time Homebuyer Credit (FTHB), primarily involving 2008 home purchases. While most of these returns are processing normally, the IRS recognizes the hardship caused by delayed refunds, and it has assigned additional staff and resources to address the issues promptly.
It is important to note that taxpayer returns claiming a home purchase in 2010 are not affected, and those returns are being processed as are the vast majority of other homebuyer returns.

Here’s an update on the source of the processing issues:

1. Married Filing Joint taxpayers who received the FTHB credit on a 2008 purchase

There seems to be an identified processing issue primarily impacting refunds for married couples filing joint returns this year who received the First Time Homebuyer credit on their 2008 tax return. This credit was an interest-free loan, and must be paid back beginning this year under the provisions of the law.

This issue, related to Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, primarily impacts Married Filing Jointly taxpayers who filed their tax returns this year before Feb. 22. The IRS is working aggressively to manually process tax returns for this group of taxpayers. It expects most, if not all, of these refunds to be available by April 5, and others the following week. (The date assumes that there are no other issues with their return, and that their refunds are not subject to any offsets for unpaid federal taxes or other debts.)

2. Taxpayers who received the FTHB credit and are now reporting the sale or disposition of their home

3. Taxpayers who received the FTHB credit and are attempting to pay back more than the amount required (typically $500)

These two issues require changes to IRS’ core tax processing systems. The IRS is actively working on the development and testing of the required changes that will allow these impacted tax returns to be processed and appropriate refunds issued. The IRS does not currently have a definitive date for when these changes will be complete, although it will be in April.

What should taxpayers do?

The IRS understands that taxpayers affected by this issue are anxious to get the status of their refund. For those who have already filed, no action is necessary. They can check “Where’s My Refund” at www.IRS.gov for updates. Because the IRS is already aware of this issue and is taking corrective action, there is no need to call.

For those who have not yet filed and are making a repayment of a First Time Homebuyer Credit this year, there is a simple step taxpayers can take to help speed processing. Couples filing a joint return for tax year 2010 who received the credit on their jointly filed 2008 tax return should file two 5405 forms, one for each taxpayer. For couples filing a joint return for 2010 but who had a different filing status in 2008 and only one spouse received the credit, the IRS recommends filing one Form 5405 for the taxpayer who received the credit.

For more information visit www.IRS.gov.

New Statistics on Rent-Buy Ratio

2011-03-18T09:54:00.000-07:00

Deutsche Bank released a study showing that renting a home costs U.S. households more than paying a mortgage for the first time in at least two decades. The rent-buy ratio, or rent as a percentage of after-tax mortgage payments, is based on figures that Deutsche Bank compiled from NAR and the REIS information service. Rent amounted to 100.2% of home-loan costs in last year's fourth quarter, the highest level since calculations began in 1991.

Looks like it is a good time to buy!

New-Home Sales Rise Sharply in December

2011-01-26T11:10:00.000-08:00

Sales of newly built, single-family homes rose 17.5 percent to a seasonally adjusted annual rate of 329,000 units in December, according to newly released figures from the U.S. Commerce Department. The big gain, though largely tied to an unexpectedly strong showing in the West, was a welcome boost at the end of a year that had the lowest total number of new-home sales on record (321,000) since the government began keeping track in 1963.

"After six very tough months, the housing market ended the year on an upbeat, with signs of stabilization beginning to take hold in many markets," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "That said, the nationwide inventory of new homes for sale is now at its thinnest level in more than 40 years. This is a sign that many builders still cannot obtain the credit they need to meet anticipated improvements in buyer demand in 2011."

"I read today's report as a promising sign that the new-home sales market is re-starting its long journey to a more normal pace after the lull that began in May," said NAHB Chief Economist David Crowe. "However, the very low inventory of new homes available for sale is concerning, because it means that the critical lack of acquisition, development and construction financing continues to pose a tremendous obstacle to medium- and small-sized builders across the country, thereby slowing the arrival of a true recovery and the jobs that could generate."

The majority of the increase in new-home sales this December was recorded in the West, which posted a remarkable 71.9 percent gain that could end up being somewhat revised in subsequent months. But gains of 3.2 percent and 1.8 percent were also recorded in the Midwest and South, respectively. The Northeast posted a 5.0 percent decline in new-home sales this December.

Acknowledging that sales in the West may have gotten a boost from contracts being signed ahead of costly building code changes going into effect in some states this January, Crowe noted that issuance of building permits was also up substantially in that region at the end of the year.

The inventory of new homes for sale fell to 191,000 units in December, the lowest number since January of 1968. This amounts to a historically slim 6.9-month supply at the current sales rate.

Research Shows Changing Market, Evolving Buyer Preferences for the 55+ Housing Market

2011-01-19T07:42:00.000-08:00

A joint study by the 50+ Housing Council of the National Association of Home Builders (NAHB) and the MetLife Mature Market Institute shows the recession has made 55+ buyers more practical when selecting a new home. Design considerations have become less important, and financial concerns have become more prominent, according to the study.

Previous studies from these two organizations found that most 55+ buyers depended on home sale proceeds to finance a new purchase. The most recent data shows that option diminished during the economic downturn.
The study, “Housing Trends Update for the 55+ Market,” explores recently released housing data from the Census Bureau’s 2009 American Housing Survey (AHS) on the 55+ demographic. The report focuses especially on households living in active adult communities, either age-qualified active adult communities where at least one resident must be age 55+, other non-age-qualified 55+ owner-occupied communities (not explicitly restricted to 55+ households but nevertheless occupied primarily by people age 55+), or age-restricted rental communities.

“By the year 2020, as Baby Boomers move into this age bracket, almost 45 percent of all U.S. households will include someone at least 55 years old,” said David Crowe, NAHB’s chief economist. “The number of those households seeking housing better suited to their changing needs will therefore rise dramatically.”

Crowe noted that about 54,000 housing starts are projected in 55+ communities this year, a 30% rise from estimated 2010 levels, but still relatively modest production. Starts in 55+ communities are projected to increase another 46% to roughly 79,000 housing units in 2012.

In 2009, only 55% of new age-qualified active adult home buyers reported that their down payment came from a previous home sale, significantly down from 100% of respondents in 2005 and 92% in 2007. In 2005 and 2007, no active adult community buyers reported having to tap cash or savings for a down payment. In 2009, 45% of the average buyer’s down payment came from cash or savings.

Further analysis reveals other interesting developments. While median prices for new 55+ homes remain lower than 2005’s peak, a look at average home prices shows a big difference between buyers in age-qualified active adult communities and other 55+ community buyers. Average prices for 55+ homes dropped in 2007 and partially rebounded in 2009. But prices for age-qualified communities more than bounced back; they set a record with an average price of $319,000. Buyers in that group were more affluent, with average incomes of more than $80,000 a year. Twenty-seven percent reported earning $100,000 or more compared to fewer than 5% of such buyers in 2001.

“Most 55+ consumers—those who chose to move and those who stay in their homes—report that they are happy with their homes and communities,” said Sandra Timmermann, Ed.D., director of the MetLife Mature Market Institute. “But those who did move to an age-qualified community—about 3%—reported the greatest satisfaction, rating their homes and communities at nine on a one-to-ten scale.”

The desire to be near family and friends is the mature mover’s overwhelming motivation, the report noted. The design, amenities and appearance of the residence and the community remain important, but less so than before the recession. Buyers who fall into the 55+ age range that are moving into rental homes, both multi-family and single-family, cited a desire for less expensive housing as second in importance to living near friends and family.

Those who are able to buy are getting much more for less. In 2009, more than half of 55+ buyers said they were moving into better homes, but fewer than half reported that their new homes cost more than the old ones.

“Proximity to work” was more important than in the past for those relocating to age-qualified, active adult communities—12% in 2009 versus 2% in 2001—underscoring the trend toward delayed retirement in this age group. There was also a reported increase in the share of 55+ single-family homeowners who say they work at home—which may be a trend noteworthy to home designers.

A small, but growing share of older households is taking advantage of the ability to convert some of their home equity into a reverse mortgage or home equity conversion mortgage. They tend to be older, single-person households with lower household income and longer housing tenure. Those with reverse or home equity conversion mortgages represented more than 241,000 households in 2009, a 54% increase since 2007.

Housing Moving to Higher Ground in 2011

2011-01-17T08:14:00.001-08:00

Housing will see gradual improvements in activity this year as the nation’s economy and job market continue to move to higher ground, establishing momentum that will produce more considerable gains in 2012, according to economists who appeared at the NAHB International Builders’ Show in Orlando on Jan. 12.

"This year’s spring selling season will be better than last year’s," said NAHB Chief Economist David Crowe, with job growth providing a stronger stimulus in the housing market than last year’s tax credits for home buyers.

Crowe forecasted 575,000 single-family home starts in 2011, a 21 percent climb over an estimated 475,000 units started in 2010, which in turn showed a 7 percent gain from the 442,000 homes started in 2009.

Multifamily, which is poised to profit from a disproportionate number of Gen Y members moving into the housing market, has seen the bottom of the cycle, he said, and will see its starts rise 16 percent this year to 133,000 units, with a further 53 percent increase in 2012 to 203,000 units.

Builders’ access to the credit they need to start new homes remains the fragile component of the NAHB forecast, Crowe said. So far, small builders have experienced extreme difficulty in obtaining financing, and rectifying the situation as soon as possible is the top priority of the association.

More encouraging is a rebound in the confidence of consumers, who mid-2010 "froze in place, faced with a lot of uncertainty," he said. A recent pickup in durable purchases for such items as automobiles and furniture indicates that consumers are less afraid today of losing jobs and income.

The U.S. economy will receive a boost from the massive tax package enacted at the end of last year, he said, including more income going into the pockets of wage earners thanks to a one-year 2 percent reduction in Social Security taxes. This will contribute to the gross domestic product strengthening from the 2.5 percent range to 3.5 percent to 3.8 percent by year’s end.

New-home sales, Crowe projected, "will struggle" but begin following employment gains, reaching 405,000 for the year, up from an estimate of about 320,000 for 2010.

The housing recovery will start up slowly this year, he said, because it will be driven by the relatively low housing production Plains states, with Texas the most powerful of the bunch. Traditional bulwarks of housing activity such as California and Florida, on the other hand, will not be among the states whose housing markets recover the fastest.

In addition to stimulative fiscal and monetary policy, Freddie Mac Chief Economist Frank Nothaft said that housing affordability and demographic trends will help support growing housing demand.

Citing research from the Harvard Joint Center for Housing Studies, Nothaft said that households should be growing at an average annual rate of 1.2 million to 1.5 million over the next five to 10 years, suggesting the need for a sharp increase in housing production; half of the 500,000 to 600,000 starts of the past two years were needed just to replace the number of homes being removed from the housing stock.

While there will continue to be supply overhangs in some important large markets, by and large the housing price slump should bottom out by the middle of this year, he said, and price increases are already occurring in some local areas. That should attract prospective buyers who have been procrastinating until they see prices hit bottom.

"Potential buyers who have resources to buy but want to buy at the bottom are likely to start coming into the market in the springtime," he said, which for fence sitters will be "the time to come into the market."

Fixed-rate mortgages will move up from their current 4.75 percent to the 5.75 percent range by the end of this year, he forecasted. This will push total single-family mortgage originations down about 30 percent below the 2010 level as refinancings fall sharply in the face of rising mortgage rates.

While a 20 percent increase in housing production in 2011 is good news for housing, to put things in perspective, Nothaft said that this gain is from an extremely low level, with single-family production declining about 80 percent from peak to trough.

Do-It-Yourself Interior Painting Is Like Money in the Bank

2011-01-06T08:46:00.000-08:00

Trying to decide whether to do some home remodeling this year or leave your money in the bank? You can do both if you remodel with paint. “The cost of do-it-yourself interior painting is so low, it’s almost like remodeling without touching your bank account,” says Debbie Zimmer, spokesperson for the Paint Quality Institute.

The key, of course, is investing some sweat equity.

“While a professional painter might charge up to $500 or more to paint a room, if you’re willing to provide the labor, you can complete the job for a small fraction of that amount,” says Zimmer.

Looked at another way, do-it-yourself interior painting is a great way to “earn” money. Since painting a room is usually a two-day proposition, if a contractor-applied paint job costs $500 in your area, you’re essentially paying yourself $250 a day to paint.

Absent the labor cost, do-it-yourself interior painting is downright thrifty. Your only outlay is for paint, application equipment like brushes and rollers, and some miscellaneous expenses for things like tape and a drop-cloth. Total cost? “Less than $100 a room,” says Zimmer. That’s little more than pocket-change in today’s remodeling world.

Whether you’ve decided to do your own interior painting to save money or simply to have a hand in beautifying your home, Zimmer offers the following tips:

“Take the time to properly prepare the walls and other surfaces before starting to paint,” she says. “That means cleaning them with a solution of detergent and water, after which they should be rinsed and allowed to dry. If there are any cracks or holes in the walls, this is the time to repair them with spackling compound or a good-quality acrylic caulk.”

Zimmer also recommends using only high quality brushes and rollers. “These will help you apply the paint more evenly to get professional-looking results, even if this is your first time painting,” she says.

When applying latex paints, be sure to use brushes and rollers with synthetic bristles and covers. According to Zimmer, the brushes will maintain the proper stiffness and the rollers will maintain their shape even when exposed to a lot of water.

Lastly, Zimmer recommends that do-it-yourselfers buy only top quality 100% acrylic latex interior paints, which she describes as “the do-it-yourselfer’s best friend.”

“If you’re going to spend time and effort doing your own interior painting, you want the job to last, and that’s where these paints really pay off,” she says. “Top quality 100% acrylic latex paints are extremely durable, plus they resist fading, so your paint job will look great for years to come.”

So if you think you’re up to the job, put yourself to work doing your own interior painting. You’ll be rewarded not just with the money you save, but also with the satisfaction of a job well done.

For more information, visit www.paintquality.com.

Helping Buyers become Homeowners – Lowe’s Offers Customers a One-Stop Destination for Repairs, Renovation Products and Service Needs

2011-01-05T08:07:00.000-08:00

There are times in life when we all need a little bit of help. Whether you’re a first-time home buyer or someone looking for a fresh start, today’s market can be challenging; however, it is also ripe with opportunity and possibilities. That’s where Lowe’s comes in to lend a helping hand.

Already a leader in the home improvement space, the retailer made a bold decision recently to take its real estate efforts a step further, unveiling a new, nationwide, in-store program, in connection with REbuildUSA, geared toward offering customers a one-stop destination for repairs, renovation products and service needs through the FHA Streamlined 203(k) program, which adds money into a mortgage for repairs and renovations.

“Homes needing renovation are typically the very best buys available; however, most prospective buyers have no idea how to finance both the purchase of the home and the renovation work required,” says Dennis Walsh, CEO of REbuildUSA. “The FHA Streamlined 203(k) offers a competitive solution. At the same time, millions of current homeowners could also benefit from this program that offers excellent rates and the ability to make improvements to their homes.”

Always looking to make the process easier for consumers, REbuildUSA and Lowe’s recently added lending partner Bank of America. The Charlotte-based company joins Wells Fargo as an approved lender in this program.

“Lowe’s is working with REbuildUSA to be the home improvement solution for products and services required by a Streamlined 203(k) loan,” says Mark Malone, vice president of consumer marketing for Lowe’s. “We can help facilitate the needs of home buyers acquiring distressed properties and facilitate the process of getting their projects done.”

Another plus for faster facilitation: Lowe’s is an approved contractor, which significantly cuts down the contractor validation process, from three weeks for independent contractors to about three days.

Specially trained Lowe’s associates in stores across the country, except in Texas, can help the customer plan the project and select products, and Lowe’s independent subcontracted installers can handle the installation. The program allows Streamlined 203(k)-qualified customers to have a huge selection of products and services under one roof, and it gives customers the ability to immediately improve their homes by adding equity with the repairs and renovations.

In good markets and bad, Lowe’s has shown that it’s a staunch supporter of the real estate industry and is in it for the long haul, and it’s now going a step further in helping buyers bring their renovation dreams to reality.

For more information on the Lowe’s/REbuildUSA program, please visit www.rebuildusa.com.

Pending Home Sales Continue Recovery

2011-01-03T07:36:00.000-08:00

Pending home sales rose again in November 2010, with the broad trend over the past five months indicating a gradual recovery into 2011, according to the National Association of REALTORS®. The Pending Home Sales Index, a forward-looking indicator, rose 3.5% to 92.2 based on contracts signed in November from a downwardly revised 89.1 in October. The index is 5.0% below a reading of 97.0 in November 2009. 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 historically high housing affordability is boosting sales activity. “In addition to exceptional affordability conditions, steady improvements in the economy are helping bring buyers into the market,” he said. “But further gains are needed to reach normal levels of sales activity.”

The PHSI in the Northeast increased 1.8% to 72.6 in November but is 6.2% below November 2009. In the Midwest, the index declined 4.2% in November to 78.3 and is 7.7% below a year ago. Pending home sales in the South slipped 1.8% to an index of 91.4 and are 7.2% below November 2009. In the West, the index jumped 18.2% to 123.3 and is 0.4% above a year ago.

“If we add 2 million jobs as expected in 2011, and mortgage rates rise only moderately, we should see existing-home sales rise to a higher, sustainable volume,” Yun said. “Credit remains tight, but if lenders return to more normal, safe underwriting standards for creditworthy buyers, there would be a bigger boost to the housing market and spillover benefits for the broader economy.”

The 30-year fixed-rate mortgage is forecast to rise gradually to 5.3% around the end of 2011; at the same time, unemployment should drop to 9.2%.

For perspective, Yun said that the U.S. has added 27 million people over the past 10 years. “However, the number of jobs is roughly the same as it was in 2000 when existing-home sales totaled 5.2 million, which appears to be a sustainable figure given the current level of employment,” he explained.

“All the indicator trends are pointing to a gradual housing recovery,” Yun said. “Home price prospects will vary depending largely upon local job market conditions. The national median home price, however, is expected to remain stable even with a continuing flow of distressed properties coming onto the market, as long as there is a steady demand of financially healthy home buyers.”

Existing-home sales are projected to rise about 8% to 5.2 million in 2011 from 4.8 million in 2010, with an additional gain of 4% in 2012. The median existing-home price could rise 0.6% to $173,700 in 2011 from $172,700 in 2010, which was essentially unchanged from 2009.

“As we gradually work off the excess housing inventory, supply levels will eventually come more in-line with historic averages, and could allow home prices to rise modestly in the range of 2-3% in 2012,” Yun said.

New-home sales are estimated to rise 24% to 392,000 in 2011, but would remain well below historic averages, while housing starts are forecast to rise 21% to 716,000.

Yun sees Gross Domestic Product growing 2.% in 2011, and the Consumer Price Index rising 2.3%.

Housing Starts Rise 3.9 Percent in November

2010-12-17T09:40:00.001-08:00

Nationwide housing starts rose 3.9 percent in November to a seasonally adjusted annual rate of 555,000 units from an upwardly revised number in the previous month, according to newly released data from the U.S. Commerce Department. This marked the first upward movement in new-home production since August, and was entirely attributable to a nearly 7 percent gain in single-family home building.

"Builders are very cautiously adding to their diminished inventories in preparation for the spring buying season and an anticipated modest revival in buyer demand when the economy shows more signs of improvement," said Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich. "That said, we are still looking at a very low level of housing production, due largely to builders' inability to obtain construction financing."

"The modest increase in single-family starts and permits in November is consistent with a very low inventory of unsold new homes and our member surveys that have shown a degree of optimism among builders with regard to sales expectations in the next six months," said NAHB Chief Economist David Crowe. "However, builders continue to find it extremely difficult to obtain credit for acquisition, development and construction activities, and this is weighing on their ability to initiate viable new projects that could generate much-needed job growth."

The 3.9 percent gain in overall housing starts this November was due entirely to a 6.9 percent increase to a 465,000 unit seasonally adjusted annual rate of new-home production on the single-family side. Meanwhile, multifamily housing starts declined 9.1 percent to a 90,000-unit rate.

Regionally, starts activity showed gains in all but one part of the country in November. The Midwest, South and West each posted gains, of 15.8 percent, 2.3 percent and 2.1 percent, respectively, while the Northeast posted a 2.5 percent decline.

Permit issuance, which can be an indicator of future building activity, declined 4 percent to a seasonally adjusted annual rate of 530,000 units in November, its lowest level since April of 2009. However, this decline was entirely due to a 23 percent drop-off in the more volatile multifamily sector, where permits hit a seasonally adjusted annual rate of just 114,000 units. In contrast, single-family permits rose 3 percent to a rate of 416,000 units – their highest level since this June.

Regionally, permit activity was mixed in November, with the Northeast and Midwest registering declines of 8.3 percent and 22.2 percent, respectively, and the South and West posting gains of 1.9 percent and 2.7 percent, respectively.

Obama’s Pick to Lead Fannie Mae, Freddie Mac Promises Leadership

2010-12-13T08:40:00.000-08:00

President Barack Obama’s nominee to lead Fannie Mae and Freddie Mac recently pledged to Congress to offer not just management, but leadership, if he becomes the new chief of the troubled housing agencies.
Joseph A. Smith Jr., the North Carolina banking commissioner, was in Washington most of last week, meeting with senators, congressional staff and other officials.

He recently testified before the Senate Banking Committee, the panel that will consider his nomination to be director of the Federal Housing Finance Agency. The FHFA oversees not only the two mortgage giants, but also a dozen federal home loan banks that lend to community banks across the country.

Smith’s nomination comes as Fannie and Freddie remain in federal conservatorship, receiving $151 million from the Treasury Department to maintain their work in the housing market. Obama must offer Congress a plan in January for reorganizing the agencies.

Both play a critical role in the housing market by buying bundled mortgages from lenders and keeping cash in the system.

If confirmed by the full Senate, Smith would hold much of the responsibility for carrying out Obama’s plan. “The activities of Fannie Mae and Freddie Mac are national in scope but local in impact, directly affecting communities across the country,” Smith said. “Leadership in this context means determining how to address critical local needs in conjunction with the agency’s duties of conservatorship.”

The Senate Banking Committee, and then the full Senate, must vote on Smith’s nomination this month before Congress adjourns. Otherwise, the nomination expires and Obama must put forward the name of a potential candidate again in the next Congress.

Smith faced tough questions—but no time for answers—from Sen. Richard Shelby of Alabama, the committee’s top Republican. In a hearing cut short by Senate floor votes, Shelby used his time to pepper Smith with questions, but he said he’d wait until later for written answers.

Banking Committee Chairman Christopher Dodd, D-Conn. endorsed Smith and praised his qualifications, saying in a statement that he would work with top Senate leaders to get Smith confirmed before Congress adjourns.

Smith would bring to the housing agencies his reputation as a champion for states’ abilities to protect consumers against abusive mortgage practices. He oversaw implementation of North Carolina’s laws against predatory lending, considered some of the toughest in the nation, and he testified that he worked to get “undesirable characters” out of the mortgage licensing system.

He also has supported Fannie Mae’s and Freddie Mac’s ability to support homeownership.

November Housing Scorecard Shows Continued Signs of Stabilization in House Prices and High Home Affordability

2010-11-24T11:11:00.000-08:00

The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury released the November 2010 edition of the Obama Administration’s Housing Scorecard (www.hud.gov/scorecard). The latest housing figures show continued signs of stabilization in house prices and high home affordability due in part to record low mortgage interest rates. The housing scorecard is a comprehensive report on the nation’s housing market.
“The Obama Administration has made significant strides in promoting stability for the housing market and the nation’s homeowners. Through a range of swift actions since we took office, we’ve seen millions more families able to stay in their homes and a steady rise in responsible borrowers refinancing their loans or becoming homeowners,” said HUD Assistant Secretary Raphael Bostic. “But, while we cannot stop every foreclosure, we know that more has to be done to reach homeowners in distress and to help unemployed borrowers. That’s why we’re continuing to focus on successfully implementing the programs we’ve put in place—such as neighborhood stabilization funding, additional assistance on refinancing and emergency loans to help unemployed homeowners—and ensuring that help is available to homeowners as early as possible.”

“The recent reports of problems in the foreclosure process underscore the importance of helping responsible homeowners avoid the pain of foreclosure,” said acting Assistant Secretary for Financial Stability Timothy Massad. “As we implement additional program enhancements to reach more homeowners, we continue to stress to mortgage servicers the importance of making every effort to enroll eligible homeowners in HAMP and provide meaningful alternatives to avoidable foreclosures.”

The November Housing Scorecard features key data on the health of the housing market including:

-An additional one million families refinanced their mortgages in the last quarter, taking advantage of the lowest rates in history on 30-year fixed mortgages. Since April 2009, record low interest rates have helped more than 8.3 million homeowners to refinance, resulting in more stable home prices and $15.2 billion in annual borrower savings.

-As expected with the expiration of the Home Buyer Tax Credit, new and existing home sales have remained below levels seen in the first half of 2010. At the same time, home prices remained level in the past year after 33 straight months of decline and homeowners added $95 billion in home equity in the second quarter.

-More than 3.73 million modification arrangements were started between April 2009 and the end of August 2010—more than double the number of foreclosure completions during that time. These modification arrangements included nearly 1.4 million trial Home Affordable Modification Program (HAMP) modification starts, more than 600,000 Federal Housing Administration (FHA) loss mitigation and early delinquency interventions, and nearly 1.8 million proprietary modifications under HOPE Now. While some homeowners may have received help from more than one program, the number of agreements offered were more than double the number of foreclosure completions for the same period (1.6 million).

Data in the scorecard also show that the recovery in the housing market continues to remain fragile. While the recovery will take place over time, the Administration remains committed to its efforts to prevent avoidable foreclosures and stabilize the housing market.

Well-Kept Yards Signal Neighborhood Safety, Suggests New Relocation Survey

2010-11-17T11:01:00.000-08:00

A new survey conducted by Relocation.com finds that 75% of Americans believe the most important factor in determining a neighborhood’s safety is the up-keep of surrounding homes, especially the conditions of the front lawns, which trumps even Googling neighborhood statistics to get a feel for a community.

The latest Relocation.com survey finds that 74% of respondents indicated they would select a neighborhood based on “word-of-mouth” or its local reputation over any other reason, while 67% of the respondents say they pay attention to local crime reports and statistics as reported in the local media. Less compelling, according to the Relocation survey are “a gated community with security patrols” and “proximity to a police or fire station” when determining the safety of a neighborhood.

“It’s interesting to see how home buyers determine neighborhood safety based on the neighborhood’s appearance and not as much based on police statistics or crime reports,” said Relocation.com Chairman and Founder Sharon Asher. “Our findings suggest that some home sellers who are struggling to generate interest may want to go the extra mile and help their neighbors with landscaping needs in order to create buyer interest.”

The Relocation.com survey was conducted in mid-October, 2010, in a continuing effort to provide information on lifestyle factors that drive moving and relocation decisions in the U.S.

Builder Confidence Improves in October

2010-10-18T11:14:00.000-07:00

Builder confidence in the market for newly built, single-family homes rose three points to 16 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for October, released today. This was the first improvement registered by the HMI in five months, and returns the index to a level last seen in June of this year.

"Builders are starting to see some flickers of interest among potential buyers, and are hopeful that this interest will translate to more sales in the coming months," said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. "However, because most builders still have no access to credit for building homes, there is a real concern that we will not be able to meet the pent-up demand when consumers are ready to get back in the market. This problem threatens to severely slow the housing and economic recovery."

"The new-homes market is finally moving past the lull that occurred when the home buyer tax credits expired and economic growth stalled this summer," noted NAHB Chief Economist David Crowe. "While challenges such as competition from foreclosures, inaccurate appraisal values, and general consumer uncertainty about the economy and job market continue to be major factors, builders have seen a slight increase in consumers who are considering a home purchase. The toughest obstacles really come down to financing – the scarcity of construction credit for builders along with tougher mortgage requirements for consumers."

Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three of the HMI's component indexes registered gains in October. The index gauging current sales conditions rose three points to16, while the index gauging sales expectations in the next six months rose five points to 23 and the index gauging traffic of prospective buyers rose two points to 11.

Builder confidence also improved across every region in October. The South and West each posted four-point gains, to 18 and 12, respectively, while the Northeast and Midwest each posted single-point gains, to 17 and 13, respectively.

Housing Tax Incentives Benefit Younger Households Most

2010-10-18T11:12:00.000-07:00

New research from the National Association of Home Builders (NAHB) reveals that the benefits of housing-related tax deductions, such as the mortgage interest deduction, generally decline in value as individuals age. Using Internal Revenue Service Statistics of Income (SOI) data, NAHB was able to report for the first time how various tax deductions are used by different age groups. The analysis demonstrates that the biggest beneficiaries are younger households, who typically have large mortgages, small amounts of equity in their homes and growing families.
“Opponents falsely argue that the deduction is only for the wealthy, but it is clear that the mortgage interest deduction is also of great value to younger homeowners,” said Robert Dietz, assistant vice president for Tax and Policy Issues for NAHB. “Any tampering with this deduction would have a disproportionate impact, as a share of household income, on younger homeowners who have relatively higher mortgage interest payments. These are households who have growing demand for homeownership due to marriages and children.”

The average mortgage interest deduction peaks for taxpayers in the 35 to under-45 age group, followed by the 18-to 34-aged taxpayers, and declines as the taxpayer gets older. According to the research, this occurs because the mortgage interest deduction peaks soon after the taxpayer moves from renting to homeownership, and declines over time as homeowners pay down existing mortgage debt and increase homeowner equity.

When examining the age distribution of those claiming the deduction for mortgage insurance, which is associated with homeowners making a downpayment of less than 20%, the analysis found that the largest share—59%—goes to those aged 18 to under-45.

The age-related pattern for the smaller tax deduction for local and state real estate taxes, however, differs slightly. Unlike the mortgage interest deduction, which declines in value as taxpayers age, the value of the real estate tax deduction increases as taxpayers age, primarily due to increases in home values as household income and wealth increases.

The report also shows that both housing deductions—for mortgage interest and real estate taxes—fall as a share of household income for older taxpayers. In contrast, the share of other non-housing deductions, such as the medical expense, charitable contribution, and investment interest expense deductions, rises for taxpayers who are 65 and older.

NAR Says Families Will Suffer if Foreclosure Freeze Continues

2010-10-14T07:52:00.000-07:00

Thousands of first-time and move-up buyers who hoped to make a foreclosed property their new home now face uncertainty, anxiety and possibly remorse as they worry that closing on their desired property could be in jeopardy.

For many, the dream of homeownership could turn into agony if their home purchase is indefinitely delayed by a moratorium on foreclosures declared by some banks, the National Association of Realtors® said today. The moratoriums are needed, banks say, to review all of the foreclosures in their portfolios to make sure they’re in compliance with the law and that titles are clear.

NAR warned that a prolonged review process would have a damaging impact on many communities and hinder the nation’s economic recovery.

“As the leading advocate for homeownership issues, we understand that many lenders need a time-out to review their actions to ensure that homeowners are not improperly foreclosed on and that the lenders are following regulations and state laws. After that, the foreclosure process must resume quickly to return stability to families, the housing market and the economy,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates, Tucson, Ariz.

Over the past few months NAR has met with officials of top banks to discuss market issues. NAR urged banking leaders to seek resolution quickly through loan modifications and the short-sale process rather than through foreclosure. “We stand ready to help lenders develop better short-sale procedures,” Golder said.

“There are valid foreclosures that should move ahead quickly, and we shouldn’t lump them in with mortgages that are suspect. That would cause deep problems in an already fragile market and throw many families into uncertainty,” Golder said.

Golder said that she is receiving reports from Realtors® that the moratorium is already creating some anxiety among purchasers as transactions are being delayed and that some foreclosure listings are being removed from the market.

Compounding the problem is that the requirements for foreclosure vary by state, and practices to meet these requirements vary by firm. NAR is working with regulators, such as the Federal Housing Finance Agency; and encouraging them to identify and quickly address process problems.

In a letter today to the U.S Treasury Department, the U.S Department of Housing and Urban Development, and the Federal Housing Finance Agency, NAR stated the hope that banks would complete their foreclosure review expeditiously to assure that the rights of borrowers are protected and remove doubt that buyers will receive clear title to their purchase.

“NAR has long urged the lending industry to take every feasible action to keep families in their homes with a loan modification and, if that is not possible, to give them a ‘graceful exit’ through a short sale. These options are far better than a foreclosure, and nothing has driven this point home more clearly than the questions being raised about foreclosures. Lenders should place additional resources into processing loan modifications and short sales,” NAR wrote.

Will Foreclosure Freezes Fix the Housing Market?

2010-10-06T07:52:00.001-07:00

MoneyWatch)—On Friday, Bank of America announced that it would suspend foreclosures in 23 states while it amended filed paperwork. That makes B of A the third major bank in two weeks to put its foreclosure process in limbo. Two days earlier J.P. Morgan Chase announced it would freeze foreclosures on more than 50,000 homes currently in receipt of a foreclosure filing. Last week, Ally Financial Inc. (the former GMAC Mortgage) also froze foreclosures.
All three banks have admitted to problems in the processing of foreclosures, including the use of so-called “robo-signatures,” employees who job it is tp solely sign foreclosure docs without reviewing the paperwork.

Today, Ohio’s Secretary of State Jennifer Brunner asked federal prosecutors to investigate foreclosure irregularities in her state. Ohio has been pushing lenders to do better. On September 17, Ohio Attorney General Richard Cordray announced that the state court had affirmed its case and legal strategy of holding loan servicers accountable in the foreclosure crisis.

So will Chase’s and Ally’s foreclosure freeze ultimately fix the housing market? That’s one theory put forth in today’s New York Times. But, I’m not so sure. What will happen in the short run is that all of the banks will put a moratorium on the foreclosures. Law firms that have become foreclosures processing machines in places like Florida, will have a lot of extra time on their hands.

I suppose, in the best of all worlds, slowing down or freezing foreclosures might actually force lenders to take a harder look at ways they might keep folks in their homes, like doing more loan modifications. That would reduce the so-called “shadow inventory” and keep housing values from crashing again.

Again, that’s the best possible scenario. I think it’s too soon to tell. And, there’s a lot that’s going wrong with the economy right now (jobs, anyone?) which could complicate the view in any rose-colored glasses.

Right now, those who have Chase and GMAC on the top of their loans are getting a reprieve.

Obama Administration September Housing Scorecard Shows Continued Advances in Housing Market; Challenges Remain

2010-09-24T10:37:00.000-07:00

The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury recently released the September edition of the Obama Administration’s Housing Scorecard (www.hud.gov/scorecard), a comprehensive report on the nation’s housing market. The latest housing figures show continued signs of stabilization in house prices. Although existing and new home sales declined in July, recent data shows housing starts rebounded in August.

“Over the last 17 months, the Obama Administration has taken comprehensive action to keep interest rates at record lows, provide incentives to responsible home buyers, and help millions of families stay in their homes,” said HUD Assistant Secretary Raphael Bostic. “But we’re certainly not going to stop fighting to turn things around. That’s why we are focusing on successfully implementing the programs we have put in place, such as additional assistance on refinancing and helping unemployed homeowners stay in their homes, and will continue to monitor the market closely in case more is needed.”

“We’ve been steadily enhancing our programs to help struggling homeowners avoid foreclosure,” said Treasury Assistant Secretary for Financial Stability Herb Allison. “We understand that the foreclosure crisis can be highly localized and some regions have seen severe home price declines and faced severe unemployment. As a result, we have announced more than $4 billion for states hit hardest by this crisis. Our goal is to help build a sustainable, long-term housing recovery. As part of that effort, we have delivered critical support to struggling homeowners while the market continues to heal.”

The September Housing Scorecard features key data on the health of the housing market including:

-Families continued to benefit from the lowest rates in history on 30-year fixed mortgages. Since April 2009, record low rates have helped more than 7.1 million homeowners to refinance, resulting in more stable home prices and $12.7 billion in total borrower savings.

-Existing and new home sales shifted downward in July, though stabilizing housing prices drove improving expectations in some regions. As expected with the expiration of the Home Buyer Tax Credit, new and existing home sales showed a dip in July. At the same time, home prices have leveled off in the past year after 30 straight months of decline and homeowners added $95 billion in home equity in the second quarter.

-More than twice as many modification arrangements have begun compared to foreclosure completions. More than 3.35 million modification arrangements were started between April 2009 and the end of July 2010. These included more than 1.3 million trial Home Affordable Modification Program (HAMP) modification starts, more than 510,000 Federal Housing Administration (FHA) loss mitigation and early delinquency interventions, and nearly 1.6 million proprietary modifications under HOPE Now. The number of agreements offered continued to more than double foreclosure completions for the same period (1.24 million).

-More than 468,000 permanent modifications granted to homeowners; more than 33,000 homeowners received a HAMP permanent modification in August. In addition, servicers continue to work aggressively through their backlog of pending modifications, which is expected to decline in coming months. Homeowners in permanent HAMP modifications have a median monthly payment reduction of 36%, or more than $500 per month. Homeowners in permanent modifications saw their median first-lien housing expenses fall from nearly 45% of their monthly household income to 31%.

For more information, visit www.hud.gov.

Springfield, MO Makes Forbe's Top Ten Best Housing Markets for Investors

2010-09-17T07:50:00.000-07:00

It has been a tough few years in the housing market, and the Greater Springfield area hasn't been immune. A frequent question on the minds of many is: "When will recovery begin?" The truly astute are wondering: "Where will the housing recovery take hold first?"

A clue to the answer to that question may have come this week, when Forbes.com released its list of the top ten housing markets in America for investors. The Springfield, MO MSA made the list at number nine.

From the story: “To select the best markets for investing, Local Market Monitor (a North Carolina - based real estate research firm) analyzed the 145 Metropolitan Statistical Areas with populations over 400,000 on a variety of factors, including historic population growth, job growth, housing price changes and the mix of jobs in an area, using data through Sept. 1. The investing sweet spot is a market where strong job growth is predicted over the next three years, the population was expanding rapidly before the recession began and home prices are at or near their bottom.”

The story could foretell good news for home builders, buyers and sellers. But it also represents a strong vote of confidence for the near-term strength of the region from an economic development perspective. Consider these excerpts from the story:

“LMM wasn't looking for markets that had come back--this list identified where they think the housing market will come back, with the greatest chance for price appreciation.”

"These are markets that in the past year have had sharp turndowns but we think they have longer-term potential," says Wizner. "Markets with longer-term prospects in general have had above-average population growth between 2000 and 2005."
As encouraging as it is for many that Springfield is a market expected to come back stronger and sooner than most, not every real estate investment here is necessarily a good one. Experts agree that the future holds a very different and dicier investment picture from what became the norm before the downturn. Investors will have to pay more attention than ever to studying precisely where those market opportunities exist here. They will have to be much more sophisticated about investment decisions in the future than most were in the past. That’s why the Home Builders Association of Greater Springfield made the decision last year to invest in bringing and making available locally an unprecedented level of construction market research and forecasting data. As the local market supplier of MarketGraphics research, the HBA brings invaluable insight to its members, lenders, and the broader real estate industry as an important tool for making careful, wise choices, even in the early stages of recovery.

Still, for many, it will be comfort enough to simply know that there ARE wise choices for real estate investment here. Many in local real estate have become accustomed to the view that, as difficult as it has been in the local housing market, they'd rather do what they do here than anywhere else in the country. Now, it appears, Forbes agrees.

Article by: The Home Builders Association of Greater Springfield

FHA Short Refinance Option Now Available

2010-09-10T08:41:00.001-07:00

In an effort to help responsible homeowners who owe more on their mortgage than the value of their property, the U.S. Department of Housing and Urban Development today will begin providing an additional refinancing option for underwater borrowers. Originally announced in March, this enhancement of Federal Housing Administration (FHA) refinance program will offer certain ‘underwater’ non-FHA borrowers who are current on their existing mortgage and whose lien holders agree to write off at least 10% of the unpaid principal balance of the first mortgage, the opportunity to qualify for a new FHA-insured mortgage.

The FHA Short Refinance option is targeted to help people who owe more on their mortgage than their home is worth—also known as being ‘underwater’—because their local markets saw large declines in home values. As announced earlier this year, this change as well as other programs that have been put in place will help the Obama Administration meet its goal of stabilizing housing markets by offering a second chance to up to 3-4 million struggling homeowners through the end of 2012.

Participation in FHA’s short refinance program is voluntary and requires the consent of all lien holders. To be eligible for a new loan, the homeowner must owe more on their mortgage than their home is worth and be current on their existing mortgage. The homeowner must qualify for the new loan under standard FHA underwriting requirements. The property must be the homeowner’s primary residence and the borrower’s existing first lien holder must agree to write off at least 10% of their unpaid principal balance. In addition, the existing loan to be refinanced must not be an FHA-insured loan, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75% and a combined loan-to-value ratio no greater than 115%.

To facilitate the refinancing of new FHA-insured loans under this program, the U.S. Department of Treasury will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens. To be eligible, servicers must execute a Servicer Participation Agreement (SPA) with Fannie Mae, in its capacity as financial agent for the United States, on or before October 3, 2010.

Smart Design Creates Energy-Efficient Home

2010-09-04T15:19:00.000-07:00

The Lake County, Fla., home Paul Fallman shares with his wife and two daughters has 4,000 square feet of living space. Yet his electric bills have averaged just $180 a month so far this year, despite record-low winter temperatures and close-to-record summer highs.

His natural-gas bill for two tankless water heaters and a fireplace averages $25 a month.
“My focus with this house was energy-efficiency,” says Fallman, owner of Fallman Design & Construction in Clermont, Fla. “It’s so easy to do. It’s a great marketing angle. And it’s the right thing to do.”

The key to the energy-efficiency of the lakefront home, which is certified by the Florida Green Building Coalition, is its south-facing orientation, said Fallman, who has made green-building his specialty.

Before starting construction, he commissioned a solar-path study to track the angle of the sun in winter and summer. He used the information to design a home that would be flooded with sunlight during the cooler months, but shaded by porches, balconies and extra-wide roof overhangs when temperatures soar.

“It’s the single thing a builder can do to make a home more efficient without much more expense,” he says.

The three-garage home on the site of the historic Clermont Yacht Club, which was torn down in the early 1950s, is also angled to maximize views across two-mile-wide Lake Minnehaha. Facing the lake on the first floor are the kitchen, dining room, living room and master suite, which either open onto screened porches or are shaded by wide roof overhangs and high-performance windows—tinted, Low-E4 and argon-filled. Upstairs, covered balconies or roof overhangs shade the windows and walls of the three bedrooms and loft area. An apartment above a second garage has similar features.

To receive certification from the green building coalition, a home must be inspected by a green certifier and an energy rater, Fallman says. The green certifier makes as many as 10 checks of the site and home before and during construction, checking for items such as site drainage and properly sealed plumbing pipes, doors and windows. The energy rater conducts a duct-blast test, blower-door test and thermal-envelope test to determine how airtight the home is.

The Fallman home has a Home Energy Rating System (HERS) score of 62 out of 100. The lower the score, the more energy-efficient the home. For a home to be Energy Star-rated, it must score 85 or lower.

At present, about 70% of the payback for building green is improved energy-efficiency, Fallman says. Spending $3,000-$5,000 on equipment upgrades and an additional $2,000-$3,000 on green construction will pay for itself in 5-10 years, he figures.

Certainly, better air-handling equipment cuts down on dust and indoor humidity; better insulation creates a quieter home; drip irrigation in the yard saves water.

The Fallman home, which is on the market for $1.1 million, also features these energy-efficient elements:

-Fifty-year shingle roof with Icynene spray-foam insulation, which keeps cool air in, heat and dampness out; protects against dust and insects; and improves structural strength.
-Concrete-block walls with rigid insulation on the first floor, and 2×6 frame with R-19 batt insulation on the second floor.
-Semi-air conditioned, 200-square-foot attic, which keeps ducts about 30 degrees cooler in the summer so the air-conditioner doesn’t have to work as hard.
-Low-E4 windows with tinted, high-performance glass and wood frames which don’t conduct heat.
-Non-conductive fiberglass doors with insulated glass.
-Dual-compressor 20 SEER (seasonal energy efficiency ratio) air-conditioner and timeable bathroom fans for humidity control.
-Two tankless gas water heaters.
-Gas fireplace with electric ignition.
-Windows at the top of the stairs to vent rising hot air and ceiling fans in many rooms.
-Energy-Star appliances, which use less energy.
-Compact fluorescent lighting.

(c) 2010, The Orlando Sentinel (Fla.).

Distributed by McClatchy-Tribune Information Services.

Pending Home Sales Post Surprise Jump in July

2010-09-02T13:00:00.000-07:00

Pending sales of previously owned U.S. homes rose unexpectedly in July, an industry group said on Thursday, suggesting a tax credit-related housing market decline was close to bottoming.

The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in July, increased 5.2 percent to 79.4 from June.

June contracts were revised to show a slightly bigger 2.8 percent decline instead of the previously reported 2.6 percent fall.

Compared to the July last year, pending home sales fell 19.1 percent. Economists polled by Reuters forecast the index, which leads existing home sales by a month or two, falling 1.0 percent in July.

Home sales and building activity have dropped sharply following the end in April of a popular tax credit for home buyers.

"Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery," said Lawrence Yun, NAR chief economist.

Housing Starts Rise 1.7 Percent in July

2010-08-17T12:22:00.000-07:00

Nationwide housing starts inched up 1.7 percent to a seasonally adjusted annual rate of 546,000 units in July from a downwardly revised figure in the previous month, according to U.S. Commerce Department figures released today. The gain occurred entirely on the multifamily side, with single-family housing production falling 4.2 percent to 432,000 units.

“Builders are very reluctant to build more homes in view of the current state of the economy and weak buyer demand,” noted Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich.

“Right now the housing market is essentially in a holding pattern,” acknowledged NAHB Chief Economist David Crowe. “As our latest member surveys have indicated, builders are seeing greater hesitancy among potential home buyers who are uncertain about what’s in store for the economy and jobs going forward. That said, favorable home buying conditions including historically low mortgage rates and low house prices should help spur additional demand as the job market gradually improves later this year.”

The entire 1.7 percent gain in housing production this July was due to a 32.6 percent jump on the more volatile multifamily side, which brought that sector back closer to trend at a 114,000-unit rate following a major dip in the previous month. Meanwhile, single-family housing production declined 4.2 percent to a seasonally adjusted annual rate of 432,000 units, its lowest mark since May of 2009.

Two regions registered improved starts activity in July, with the Northeast and Midwest each posting double-digit gains, of 30.5 percent and 10.7 percent, respectively. The South, which is the country’s largest housing market, posted a 6.3 percent decline in starts this July, while the West posted no change in starts activity.

Permit issuance, which can be an indicator of future building activity, declined 3.1 percent to a seasonally adjusted annual rate of 565,000 units in July. Single-family permits fell 1.2 percent to 416,000 units, while multifamily permits fell 8 percent to 149,000 units. Regionally, permits fell nearly 26 percent in the Northeast, 1.1 percent in the Midwest, and 4.9 percent in the West, but gained 3.9 percent in the South in July.

Broad Stabilization in Second Quarter Metro Area Home Prices with Strong Sales

2010-08-13T09:59:00.000-07:00

The real estate trend in firming home prices solidified in the second quarter with more metropolitan areas showing increases from a year ago, aided by a surge in home sales driven by the home buyer tax credit, according to the latest survey by the National Association of Realtors. In the second quarter, 100 out of 155 metropolitan statistical areas (MSAs) had higher median existing single-family home prices in comparison with the second quarter of 2009, including 14 with double-digit increases; two were unchanged and 53 metros showed price declines. In the first quarter of this year, 91 areas had higher prices, while only 26 MSAs experienced annual price gains in the second quarter of 2009.

The national median existing single-family price was $176,900 in the second quarter, up 1.5% from $174,200 in the same period of 2009. The median is where half sold for more and half sold for less. Distressed homes accounted for 32% of second quarter sales, down from 36% a year ago.

Lawrence Yun, NAR chief economist, said the correction in home prices appears to have ended in 2009. “All year we’ve been seeing relatively flat national home prices, which appear to be supported by market fundamentals,” he said. “Prices in some areas remain below replacement construction costs, so even with an elevated supply of existing homes on the market, we don’t expect any consequential movement in home prices for the foreseeable future. Very low inventory of newly built homes will also help to support home values.”

Yun urged caution on interpreting price data. “The median price is influenced by the mix of homes that were sold and do not reflect pure appreciation or depreciation,” he said. “The recorded home prices in many markets were significantly depressed last year because of a large percentage of distressed homes sold at discount. Now as more normal, non-distressed home sales are occurring, the median price in many areas is showing higher values.”

Total state existing-home sales, including single-family and condo, rose 9.1% to a seasonally adjusted annual rate of 5.61 million in the second quarter from 5.14 million in the first quarter, and were 17.3% above the 4.78 million-unit pace in the second quarter of 2009.

Sales increased from the first quarter in 44 states and the District of Columbia; 47 states and D.C. had increases over year-ago sales levels.

Regionally, the median existing single-family home price in the Northeast declined 3.2% to $238,000 in the second quarter from a year earlier. Existing-home sales in the Northeast jumped 14.9% in the second quarter to a level of 980,000 and are 23.6% above the second quarter of 2009.

In the Midwest, the median existing single-family home price increased 1.4% to $148,500 in the second quarter from the second quarter of last year. Existing-home sales in the Midwest rose 14.5% in the second quarter to a pace of 1.30 million and are 20.9% above the same period in 2009.

In the South, the median existing single-family home price slipped 2.0% to $155,500 in the second quarter from the second quarter of 2009. Existing-home sales in the South increased 10.9% in the second quarter to an annual rate of 2.10 million and are 18.8% above a year ago.

The median existing single-family home price in the West rose 2.6% to $219,700 in the second quarter from a year ago. Existing-home sales in the West fell 2.6% in the second quarter to an annual rate of 1.23 million but are 7.6% higher than the second quarter of 2009.

Remodeling Dips but Shows Signs of Stabilization

2010-07-30T09:17:00.001-07:00

The remodeling market slid backward during the second quarter, according to the latest National Association of Home Builders' (NAHB) Remodeling Market Index (RMI). The RMI (combining current and future market indicators) sunk to 40.7 from 43.8 in the first quarter. Current market conditions slid back to 42.6 from 44.5 in the previous quarter. Future indicators of remodeling business declined to 38.9 from 43.1 in the last quarter.

The RMI measures market demand for current and future residential remodeling projects based on remodelers' perceptions and indicators of future activity like calls for bids. Any number below 50 indicates that more remodelers say market conditions are getting worse than report improving conditions. The RMI has been running below 50 since the final quarter of 2005 and during the last quarter approached break even again.

"Remodelers are suffering from weak consumer confidence and constricted credit lines," said NAHB Remodelers Chairman Donna Shirey, CGR, CAPS, CGP, a remodeler from Issaquah, Wash. "Homeowners are delaying remodeling projects because of economic uncertainty."

The current conditions indices for the remodeling market worsened in two regions: Northeast 41.4 (from 46.6 in the first quarter); and South 42.4 (from 44.1). However, current remodeling indices improved in the Midwest 44.7 (from 43.8) and the West 42.0 (from 34.8). Major additions fell to 44.2 (from 48.0), as did minor additions to 45.8 (from 47.3). Maintenance and repair indicators showed a milder decline, from 37.3 to 36.6.

All the indices for future remodeling business declined. Calls for bids dropped to 46.2 (from 49.4). Work committed for the next three months slumped to 27.9 (from 29.9). The backlog of remodeling jobs dipped to 37.7 (from 44.8), and appointments for proposals slid to 43.7 (from 48.1).

Responding to additional special questions in the survey, remodelers also reported on the changing composition of remodeling projects. Sixty-one percent said bathroom remodeling was one of their most common projects during the first half of 2010. Kitchen remodeling came next with 52 percent. In previous years, kitchen remodeling was reported as the most common activity by more than 70 percent of remodeler respondents.

In general, comparisons to historical data show that larger remodeling projects (such as room additions, whole house remodeling, bathroom additions, and second story additions) have been on the decline for several years. Smaller remodeling jobs (such as window and door replacements) have remained relatively steady, or, in the case of handyman services, actually increased. For example, only 29 percent of remodelers reported that room additions were a common activity in 2010, compared to 70 percent in 2004. Conversely, none of the professional remodelers responding to the survey reported that it was common for their companies to perform handyman services in 2004, while 33 percent of remodelers were regularly providing handyman work in the first half of 2010.

"While remodelers are continuing to struggle, we expect the rest of 2010 to be a period of stabilization for remodeling, with the first stages of recovery emerging by the end of the year, followed by a more robust recovery beginning early next year," said NAHB Chief Economist David Crowe. "For now, professional remodelers are taking on smaller projects and working to find consumers willing to spend money despite the economic uncertainty."

For more information about remodeling, visit www.nahb.org/remodel.

New-Home Sales Bounce Back from Record Low in June

2010-07-28T09:50:00.000-07:00

Coming off an historic low in May, sales of newly built, single-family homes rose 23.6 percent to a seasonally adjusted annual rate of 330,000 units in June, according to U.S. Commerce Department data released today.

“Today’s numbers are an encouraging sign that new-home sales are coming back from an expected slow period that followed the expiration of the home buyer tax credit program,” said Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich. “While we still have quite a way to go on the path to recovery, it’s good to see that we are headed in the right direction.”

“It’s worth noting that some of the new-home sales in June were due to move-up buyers who were able to sell their previous home to a tax-credit-eligible buyer while that program was active,” said NAHB Chief Economist David Crowe. “Also, while sales activity is still far from robust, it has picked up some momentum as positive factors such as historic low mortgage rates, great selection and attractive prices help draw potential home buyers back to the market. We anticipate that this momentum will continue along with a gradually improving economy, although other factors such as a critical lack of production financing remain a drag on housing’s recovery.”

Sales of new homes rose strongly in three out of four regions in June. The largest percentage increase was the Northeast’s 46.4 percent gain, followed by a 33.1 percent gain in the South and a 20.5 percent gain in the Midwest. The West was the only region where new-home sales did not improve in June, instead falling 6.6 percent to a new record low.

Meanwhile, the nationwide inventory of new homes for sale declined to 210,000 in June, the thinnest it has been since September of 1968. This amounts to a 7.6 months’ supply at the current sales pace.

Restoring AD&C Lending Key to Promoting Job and Economic Growth

2010-07-16T08:11:00.000-07:00

With the Obama Administration and Federal Reserve this week sponsoring events that focus on how to ease regulatory burdens on the small business community that are constricting job growth, the National Association of Home Builders (NAHB) today urged policymakers to address the lack of financing for housing production that is impeding the housing and economic recovery.

"In normal times, housing accounts for about 17 percent of GDP," said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. "However, in the current economic climate, lenders have basically stopped making acquisition, development and construction (AD&C) loans and are calling in existing loans, even when the borrower's payments are current. Policymakers must act now to restore credit availability for viable home building projects; otherwise countless construction jobs will be lost, further jeopardizing the fragile economic recovery."

Federal Reserve Chairman Ben Bernanke said that the objective of a conference today at the Federal Reserve is to develop policies that will support the flow of loans to creditworthy small businesses. Meanwhile, the White House has asked business leaders and lawmakers to attend a jobs summit at the U.S. Chamber of Commerce on Wednesday to help identify regulatory obstacles that are hampering job and economic growth.

NAHB is reaching out to regulators, banks, Administration officials and members of Congress to seek action to reduce regulatory restrictions on AD&C credit and rein in overzealous bank examiners.

The vast majority of NAHB builder members are small businesses situated in communities across the nation who employ workers that contribute to the local economic base. NAHB estimates the one-year local impacts of building 100 single-family homes in a typical metro area result in the creation of 324 local jobs and an additional $21.1 million in local income and $2.2 million in taxes and other revenue for local governments.

Beyond its negative effect on home builders, the lack of AD&C lending has major implications for the economy and the nation, said Jones.

"Over the next decade, population growth will trigger demand for an average of at least 1.7 million additional homes per year," he said. "This translates into five million jobs and significant economic activity, including tax revenue. But without increased AD&C lending, this demand will not be met, jobs will be lost and job creation will suffer."

House Extends Deadline to Sept. for Homebuyer Tax Credit

2010-06-30T12:56:00.000-07:00

The U.S. House of Representatives voted to give homebuyers who qualified for a federal tax credit more time to settle on their pending purchases.

The House voted 409-5 to extend the deadline for closing home purchases to Sept. 30. The program initially required borrowers who signed contracts before April 30 to complete paperwork by July 1 to get a tax credit of as much as $8,000.

The House measure accommodates borrowers at risk of being disqualified for the tax credit because lenders and loan servicers aren’t processing mortgages quickly enough. The Senate is considering similar legislation.

“We owe this to the people who have essentially followed the rule who are caught by a closing date,” House Ways and Means Committee Chairman Sander Levin, a Michigan Democrat, said before the vote.

As many as 180,000 homebuyers would lose their tax credit if Congress fails to push back the date, according to the National Association of Realtors, which sought the extension. Transactions at risk include as many as 75,000 short sales, or homes being purchased for less than the existing debt on them.

Top 10 Things You Should Know about Financial Reform

2010-06-26T09:28:00.000-07:00

As the United States continues to put plans into action in order to help remedy the country’s financial situation, Americans are waiting optimistically to see the end result of the regulation bill that is moving through both the Senate and House. While the Senate recently approved their version of the big financial regulation bill by a 59-39 vote, the bill has now moved to a conference committee where it will be reconciled with the already passed House bill.
Here are the top 10 things you should know about the financial regulations bill.

1. End of too-big-to fail: If a big financial firm is failing, it will have only one fate: liquidation. There will be no taxpayer funded bailout. Instead, regulators will have the ability to shut down and break apart failing financial firms in a safe, orderly way – without putting the rest of the financial system at risk, and without asking taxpayers to pay a dime.

2. Close loopholes in regulation of major financial firms: Loopholes that allowed firms like Lehman Brothers, Bear Stearns and AIG to operate without tough standards or oversight were major contributors to the financial crisis. Regulatory reform will close these loopholes, and create accountable regulation for all firms that pose the most risk to the financial system. It will end the ability of financial firms to avoid tough standards by manipulating their legal structure.

3. Bring transparency to hedge funds: Financial reform will require advisers to hedge funds to register with the SEC for the first time, bringing transparency and oversight to these unregulated financial firms.

4. Constrain the size of the largest firms: Financial reform will prevent any financial firm from growing by acquisition to more than 10% of the liabilities in the financial system. This will reduce the adverse effects of the failure of any single firm and prevent the further concentration of our financial system.

5. Reform executive pay and strengthen shareholder protections: Financial reform will give shareholders a say in the compensation of senior executives at the companies they own, and require that the compensation committees of corporate boards are independent.

6. Separate banking and speculative trading – the Volcker Rule: Financial reform will protect taxpayers and depositors by separating risky, speculative “proprietary trading” from the business of banking.

7. Strongest consumer protections ever: Instead of seven federal agencies with only partial responsibilities for consumer protection, there will be one agency with the sole responsibility of establishing clear rules of the road for banks, mortgage companies, payday lenders, credit card lenders and other financial service firms and for enforcing these rules. From now on, every consumer will be empowered with the clear and concise information they need to make financial decisions that are best for them.

8. Crack down on the abuses in the mortgage markets at the center of the crisis: Financial reform will ban abusive practices in the mortgage markets, like those where brokers got paid more to put families into higher priced loans than those they qualified for, and require mortgage brokers and banks to consider a family’s ability to repay when making a loan. The reforms will also require lenders and Wall Street loan packagers to keep skin in the game when selling off loans to investors and make full disclosure so investors know what’s in those packages. Reforms of credit rating agencies will help make sure investors do not rely unwisely on their ratings on these packages.

9. Safer, more transparent derivatives market to help Main Street businesses: By bringing the derivatives markets out of the shadows, reform will benefit those businesses that use derivatives to manage their commercial risks. Reform will benefit Main Street companies at the expense of Wall Street’s hidden fees. That’s good for every farmer and every manufacturer that uses derivatives the way they were meant to be used. Derivatives reform also means the taxpayer won’t be on the hook for reckless risks of an AIG.

10. Support long term job growth by helping prevent future crises: By making the financial system safer and stronger, reform will reduce the chances that a financial crisis deprives businesses of the credit they need to grow and to create jobs. Financial reform will ensure businesses a more stable and predictable source of credit through the business cycle and reduce the risk of a sharp and sudden cut-off because of financial panic.

The Home Buyer Tax Credit Is Over, Now What?

2010-06-25T09:45:00.000-07:00

The Home Buyer Tax Credit Is Over, Now What? In the aftermath of the deadline for the home-buyer-tax-credit, which advanced a significant amount of housing demand into April, monthly housing indicators turned negative.

Single-family starts fell 17% in May to a seasonally-adjusted annual rate of 468,000, which was a return to the level of May 2009. Single-family permits also dropped to similar year-earlier levels. The June NAHB/Wells Fargo Home builder sentiment index fell back five points to 17. May new home sales plunged 33% to their lowest level on record.

The deadline for signing a purchase contract has passed, but the deadline for closing is June 30 and could be extended to September if legislation already passed in the House passes in the Senate and is signed into law.

Since existing home sales are reported at closing, they are not expected to fall off until July. Nevertheless, they were down 2% to 5.66 million in May, although this could be due in part to a crush of closings causing delays and backlogs.

Putting the May sales decline into perspective, it was preceded by a 15% increase in sales in April. The average sales pace for the two months combined was 373,000, which was a 3% increase over the average for this year’s first quarter. A similar, although smaller, decline occurred in December, when the 2009 home buyer credit was scheduled to expire but was extended.

Beyond the influence of the tax credit, the more volatile multifamily starts jumped 33% to 125,000 in May from April’s 94,000 and multifamily permits were up 10%, suggesting that the apartment market may finally have reached bottom.

While vacancy rates remain high, they are down from their recent peak. Expected improvement in labor markets has also encouraged multifamily developers to begin planning new projects that can easily take one to two years to complete after they receive permits.

The real question now is whether what occurred in May is a harbinger of a housing market still unable to work up enough momentum on its own to sustain a recovery or simply a temporary side-effect of the tax credit doing its job.

Although housing activity in May was generally weaker than anticipated, several factors continue to support NAHB’s forecast for improvements in 2010. Mortgage interest rates are expected to remain at historically low levels for the remainder of 2010, with only a modest increase in 2011. House prices are back to where they were in 2003.

Although prices have been bouncing around, with small positive and negative changes from month to month, some markets have been inching upwards. The economy continues to show improvement in total output and employment growth, a vital element to housing demand. New home inventories are at their lowest level in almost 40 years, and any uptick in demand for new homes will almost certainly require increased residential construction.

From a longer perspective, the U.S. population continues to grow. Household formations have lagged behind trend as a result of the recession, and those unformed households represent the prospect of moves out of the overcrowded homes of friends and relatives.

And the economy in general has been advancing. Industrial production rose 1.2% in May and was up 7.6% from a year earlier. May capacity utilization rose to 74.7% from73.7% in April and 68.5% a year earlier. Retail sales stumbled in May, falling 1.2% from April, but were still up 6.3% from a year earlier. Despite May’s pullback in retail sales, both the University of Michigan’s consumer sentiment index and the Conference Board’s Consumer Confidence Index showed solid improvement for the month.

Meanwhile, according to government estimates, only a little over half of the funds from the American Recovery and Reinvestment Act — $409 billion of the $787 billion — has been distributed, leaving well over $300 billion in economic stimulus yet to come.

These economic and demographic forces are expected to provide sufficient stimulus to slowly push the housing market forward in the second half of this year. Financial Market Turmoil Turmoil in the Euro currency union stemming from fiscal problems in Greece and Spain and some other member countries has spilled over to the U.S. financial markets.

For now, the United States is benefiting from foreign investors seeking safety in Treasury securities and other U.S. fixed-income assets, pushing long-term interest rates lower. Below the 5% threshold for seven consecutive weeks, 30-year, fixed-rate mortgage rates are now among the lowest on record.

Although lower long-term interest rates are a positive for housing and the economy, the rising value of the U.S. dollar against the euro will increase the prices of U.S. exports and dampen demand for them in Europe.

Demand in Europe is likely to weaken further as governments on the continent impose stricter fiscal measures out of concern over their sovereign debt. On balance, lower interest rates but fewer exports will likely impose a minor drag on U.S. economic growth.
Federal Reserve Policy In statements from its June 22-23 meeting, the Federal Open Market Committee (FOMC) has indicated it will be continuing its monetary policy of “exceptionally low” interest rates for an “extended” period.

The FOMC’s assessment of the economy is in alignment with NAHB’s outlook. “The labor market is improving gradually,” and “household spending is …constrained by high unemployment, modest income growth, lower housing wealth, and tight credit,” the Fed said. It acknowledged that “housing starts remain at a depressed level.”

NAHB expects the federal funds rate to remain in the 0.0% to .25% range through the middle of 2011 as a relatively slow and prolonged recovery puts little stress on capacity and resources, keeping inflation in check. Low inflationary expectations, along with the situation in Europe, should help keep mortgage rates low.

NAHB projects that mortgage rates will remain below 6% through 2010 and most of 2011. Inflation Remains Tame The seasonally adjusted monthly Consumer Price Index was down in May for the second month in a row, falling 0.2% following a decline of 0.1% in April, but up 2.0% from a year earlier. Meanwhile, core inflation — excluding food and energy prices — rose a modest 0.9% from a year earlier, a rate consistent with the April data.

For the past year, the rental component of the CPI has been essentially flat, and as of May, it was down 0.1% from a year earlier. Homeownership “prices” are measured by using an owner’s equivalent rent that is largely driven by the rent index without utilities. That measure has also been drifting down — 0.3% over the past year.

The rent and owner components of the CPI make up 31% of the CPI. The soft rental market and excess vacancies have kept rents from rising, which has been a challenge to apartment owners who have seen other costs rising. It also has made it more difficult for multifamily projects to obtain financing.

Once the rental sector begins recovery and rents return to a more normal path, the CPI will also reflect the major influence housing costs have on overall inflation.

The Producer Price Index (PPI) for finished goods also fell for the second month in a row, down 0.3% in May after falling 0.1% in April. The May reading was up 5.3% from a year earlier, though that is down from March’s year-over-year increase of 6.0%.

Despite year-over-year declines in cement and gypsum prices, overall building materials prices in May rose 0.7% for both single-family and multifamily construction, their seventh consecutive monthly increase, and 4.6% and 4.7%, respectively, from a year earlier.

Some near-term price relief is likely at hand, with lumber prices in recent weeks retreating rapidly from their earlier increases.

House Passage of FHA Reform Bill

2010-06-11T10:59:00.001-07:00

The National Association of Realtors® applauded the House for overwhelming passage of FHA reform legislation that would allow the Federal Housing Administration to adjust monthly premiums on mortgage insurance.

This bill, H.R. 5072, FHA Reform Act of 2010, would strengthen the FHA loan insurance program while keeping it available and affordable to responsible home buyers. Allowing FHA to raise the monthly insurance premium would let FHA lower the up-front premium that places a burden on cash-strapped borrowers at closing.

“As the leading advocate for homeownership and housing issues, NAR is very pleased that FHA will be allowed to play its intended countercyclical role to provide qualified borrowers with access to prime credit. FHA is a critical part of our nation’s economic recovery,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz.

En route to passage, the House defeated an amendment that would have increased the FHA down payment from 3.5 percent to 5 percent, which would have disenfranchised more than 300,000 potential homeowners and would not have contributed significantly to FHA cash reserves.

“The current 3.5 percent down payment represents a significant financial commitment and sufficient investment to insure a borrower’s seriousness about homeownership,” said Golder. The proposed change could have an especially harsh impact on African American and Hispanic borrowers, who traditionally have much lower accumulated wealth and have benefited from the opportunities offered by fully documented, standard FHA loans with low down payments.

She also praised FHA’s aggressive efforts to protect taxpayers and manage credit risk.

Is Buying a Home in Today's Economy a Good Idea?

2010-06-02T14:53:00.000-07:00

As a long-term investment, homeownership is still one of the best investments for individual households.

“Why” you may ask? After all, the headlines say the housing market is down and out, with defaults rising at an alarming rate, and mortgage markets so frozen that buyers can’t get a home loan at any price.

What buyers need to realize is that housing markets, like all markets, inevitably have their ups and downs. And homeownership has a track record that is virtually unmatched by any other purchase in terms of its real benefits.

Despite the turmoil in mortgage lending, if you have good credit, a job and steady income, you will find there is still plenty of mortgage credit to be had at good rates. For well-qualified buyers, rates are running at near historical lows.

Homeownership’s Real Value

Here are a few examples of why, dollar for dollar, homeownership is a solid stepping stone to a future of financial security and the single largest creator of wealth for many Americans.

Over the long-term real estate has consistently appreciated, even through periodic adjustments in local markets in response to economic conditions. On a national level, home appreciation has historically increased 5-6 percent annually, report economists at the National Association of Home Builders.

Five percent may not seem much at first, but here’s an example that will put it into perspective: Say you put 10 percent down on a $200,000 house, for an investment of $20,000. At a 5 percent annual appreciation rate, that $200,000 home would increase in value $10,000 during the first year. Earning $10,000 on an investment of $20,000 is an extraordinary 50 percent annual return.

In contrast, putting that $20,000 down payment into the stock market and getting a 5 percent gain would only yield a $1,000 profit.

Compared to Stocks

Looking at it another way, over a longer period of time, if someone put $10,000 into the stock market in 1997, the average annual S&P return would make that investment worth $21,500 today—an increase of $11,500. The median home price in 1997 was $140,000.

Today, that same home would have gained nearly $100,000 in value.

Don’t miss out on the benefits of homeownership.

Pending Home Sales Surge Continuing

2010-06-02T09:27:00.000-07:00

Pending home sales have risen for three consecutive months, reflecting the broad impact of the home buyer tax credit and favorable housing affordability conditions, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator, rose 6.0 percent to 110.9 based on contracts signed in April, from an upwardly revised 104.6 in March, and is 22.4 percent higher than April 2009 when it was 90.6. That follows gains of 7.1 percent in March and 8.3 percent in February.

Pending home sales are at the highest level since last October when the index reached 112.4 and first-time buyers were rushing to beat the initial deadline for the tax credit. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, said this second round of surging sales from the tax credit extension looks as strong as the original tax credit. “There were concerns that only a small pool of buyers were left to take advantage of the tax credit extension. But evidently the tax stimulus, combined with improved consumer confidence and low mortgage interest rates, are contributing to surging sales,” he said. “The housing market has to get back on its own feet and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs.” NAR expects a net of 1 million additional jobs in the second half of this year and about 2 million in 2011.

“The home buyer tax credit brought close to 1 million additional buyers into the market, which is now helping the trade-up market and has significantly improved the inventory situation. This stabilized home prices more quickly and has preserved about $900 billion in home equity; in turn, that is keeping additional households from going underwater and risking foreclosure,” Yun said.

30 Year Mortgage Rate Falling to Record Lows

2010-05-27T11:12:00.000-07:00

U.S. mortgage rates continued their downward trek in the past week, edging closer to a record low set in early December, according to a survey released on Thursday by Freddie Mac, the second-largest U.S. mortgage finance company.

Lower interest rates on mortgages should buoy home loan refinancing activity, putting more cash into consumers' hands to funnel into the U.S. economy. It also makes homes more affordable during the most important period, the spring selling season.

Interest rates on U.S. 30-year fixed-rate mortgages, the most widely used loan, averaged 4.78 percent for the week ended May 27, down from the previous week's 4.84 percent, according to the survey.

That is below the year-ago level of 4.91 percent and also the lowest the rate has been since the week ended Dec. 3, 2009 when it hit a record low of 4.71 percent. Freddie Mac started the survey in 1971.

"These low rates will help to elevate home-buyer affordability and soften the effects of the sunset of the home-buyer tax credit," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.

Mortgage rates are linked to yields on Treasuries and yields on mortgage-backed securities.

Tax Credits Boost New-Home Sales in April

2010-05-26T12:43:00.001-07:00

Sales of newly built, single-family homes surged 14.8 percent to a seasonally adjusted annual rate of 504,000 units in April as consumers rushed to beat the deadline for expiring home buyer tax credits, according to data released by the U.S. Commerce Department today. This was the strongest level of new-home buying activity since May of 2008.

“Clearly the home buyer tax credit program, which concluded at the end of April, was successful in getting the housing market moving again by helping many families achieve the dream of homeownership,” said Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich. “Now that the program is over, other great buying incentives continue – including exceptionally favorable mortgage rates, very attractive home prices and the steadily improving economy – so there is good reason to expect the positive momentum to continue.”

“The surge of buying activity we have seen in the final two months of the tax credit program has been very encouraging, and has helped builders work down their standing inventories to near historic lows,” said NAHB Chief Economist David Crowe. “It stands to reason that this activity will level off over the next few months, as sales that would have occurred during that time were likely pulled forward to meet the April deadline. That said, today’s favorable home buying conditions, the recovering job market and reviving consumer confidence should help take the place of tax incentives to generate buyer demand.”

Three out of four regions posted substantial gains in new-home sales in April; the Midwest registered a 31.6 percent gain, the South, a 10.8 percent gain, and the West, a 21.7 percent gain. The Northeast posted no change in sales activity from the previous month.

The nationwide inventory of new homes on the market fell 5.8 percent to 212,000 units in April, its slimmest measure since October of 1968. Meanwhile, the month’s supply at the current sales pace declined from 6.2 in March to a modest 5.0 in April, the lowest since November of 2005.

Mortgage Rates at New Lows

2010-05-24T11:23:00.000-07:00

Here's some good news for the US housing market: Thanks to the European debt crisis, mortgage rates are at historic lows.

The current average rate for a 30 year fixed loan is 4.87 percent, according to Bankrate.com. That's the lowest rate for the 30 years since Bankrate started keeping track 25 years ago.

Even jumbo loan rates—loans for more than $417,000—have fallen. The 30-year fixed jumbo loan is at an average rate of 4.5 percent, down from nearly 6 percent at this time last year.

"It's the best time in our generation to buy," says Mark Zandi, chief economist at Moody's. "It may be the best time in any generation. Mortgage rates are so low and with homes prices down and lots of inventory, you couldn't pick a better time to buy or re-finance."

Europe's debt crisis is behind the drop. Nervous investors are flocking to the security of US Treasurys, which pushes down their yield and influences a host of consumer interest rates—including those on mortgages.

The decline is also good news for homeowners looking to refinance, particularly those who owe more on their mortgage than their house is worth.

"There's a tremendous window on re-financing," says Greg McBride, chief economist at Bankrate.com. "That's particularly true for people who can take advantage of the government's Home Affordability Refinance Program (HARP)—which allows home owners to refinance into low mortgage interest rates even if they're property value has gone down."

HARP, which was due to end at the end of this June, now runs through June of 2011.

"Think of the benefits if you buy or refinance now," says McBride. "Locking in now at the lower rates means more more bang for the buck and more breathing room for homeowners when it comes to payments."

But the decline in rates probably won't last long, analysts say. So homeowners need to move fast.

"I think they won't last much longer than a month or two at the best," says Lawrence Yun, chief economist at the National Association of Realtors. "I can see them going up to 5.5 percent by the end of June if not sooner."

The reasons? Yun says the worries over Europe will be fading soon and investors will be looking at other assets besides US Treasurys. And there's the US deficit, which will push up Treasury yields.

"The US is fortunate now that there's no pressure on interest rates," Yun goes on to say. "But going forward, higher rates will be needed for financing the debt."

Zandi agrees. "Yes, I can't see these rates being this low in three to four weeks," Zandi says. "Investors will settle down and this current crisis (Europe) will pass and the focus will be back on US debt. It's really a now or never type of proposition, when it comes to getting these types of historic rates."

Plenty of Reasons to Buy a Home Even After the Tax Credit

2010-05-24T11:17:00.000-07:00

Even though the home buyer tax credit expired on April 30 and won’t be renewed, there may never be a better time to buy a home than today, according to the National Association of Home Builders (NAHB). Many outstanding opportunities still exist for home buyers, but they may not be around forever.

“The home buyer tax credit was just one of many factors motivating Americans to buy homes,” said NAHB Chairman Bob Jones, a builder and developer in Bloomfield Hills, Mich. “But buyers can still take advantage of today’s low interest rates and competitive prices to get a home they may not have been able to purchase just a few years ago.”

Besides mortgage interest rates that have been hovering at near-record lows, homes in many markets have become more affordable. Prices have moderated from the highs of the housing boom that occurred in most of the country, especially in major markets where they had increased significantly.

Today’s new homes are also built to be much more energy efficient than homes constructed a generation ago, making them more affordable to operate. New homes are designed to support modern lifestyles with open floorplans, flexible spaces, improved safety features, and low-maintenance materials.

Consumers who are thinking about buying a home should not count on interest rates or prices staying at current levels, however. Mortgage rates are sensitive to market conditions, and even a slight increase can push monthly payments beyond a family’s budget. As the country recovers from the recession and people stabilize their financial situations, NAHB economists expect that home prices will begin to increase by 2011.

NAHB’s home buyer brochure “Opportunity Knocks for Home Buyers” describes many of the opportunities in today’s market, as well as the long-term financial benefits of homeownership. It provides examples of how interest rates affect monthly mortgage payments and the typical federal tax savings over the first five years of homeownership. The brochure can be downloaded from NAHB’s web site at: www.nahb.org/homebuyerbrochure.

The home buyer tax credit is still available for eligible home buyers who had a signed sales contract by the April 30 deadline and who close by June 30, 2010, as well as for qualified members of the military, foreign service and intelligence communities, who have until April 30, 2011, to sign a contract. For more information, go to www.federalhousingtaxcredit.com.

Optimistic Outlook for Housing, But Challenges Remain

2010-05-19T14:14:00.000-07:00

10 States to See Normalized Housing Production Numbers Within 18 Months

May 19, 2010 - Economists participating in yesterday’s NAHB Construction Forecast Conference Webinar agreed that the housing market is on the road to recovery, but cautioned that several factors could contribute to a bumpy ride in the coming months.

“Home buyer tax credits clearly did their job and got people back into the marketplace,” said NAHB Chief Economist David Crowe, who also served as moderator of the two-hour webinar.

With the expiration of the tax credits in April, Crowe said the housing momentum is being carried forward by low interest rates, pent up household formations, stabilizing prices and budding employment growth.

However, many factors continue to drag on housing at this time – including the critical shortage of credit for new and existing projects, competition from short sales and foreclosures and regional economic disparities.

The availability of acquisition, development and construction (AD&C) financing remains a major concern as the industry moves forward, Crowe said. “Builders still tell us that credit is extremely tight. Banks are saying not so much. That gap is an indication that something is broken, at least when it comes to residential construction.”

NAHB is forecasting 552,000 single-family starts in 2010, up 25 percent from last year’s 445,000 level, which was the lowest annual output since 1959 when the government began collecting this data.

Suffering from an acute shortage of available financing and a significant shadow inventory of homes lost to foreclosure that are competing against normal inventory, Crowe said that multifamily housing starts are expected to lose further ground this year, falling 18 percent to 93,000 units, before rebounding to 150,000 units in 2011.

Crowe anticipates that nationwide home prices will remain flat this year and post a modest increase in 2011 and that mortgage interest rates will continue to stay low, barely breaking 6 percent by the end of this year, and not rising much above that level through 2011.

The road back to normal levels of residential construction will be longer for some states than others. By the end of 2011, the top 20 percent of the states will see their production levels back to normal. Those states include Texas, Oklahoma, Montana, Wyoming, Tennessee, Louisiana, Mississippi, Alabama and Arkansas and Kansas. The previous boom markets in California, Arizona, Florida and Nevada, along with the Great Lake states of Michigan, Indiana, Ohio, Illinois and Wisconsin that were hit by deep cuts in auto production and manufacturing, will be the last ones to recover.

Housing Demand Reflects Job Growth

Like his co-panelists, Mark Zandi, chief economist of Moody’s Analytics, said that housing will improve as the job market does. He forecast that the economy will average monthly job gains of 125,000 this year, 250,000 in 2011 and 300,000 in 2012.

Mirroring anticipated employment growth, Zandi expects GDP to rise 3 percent this year, approximately 4 percent in 2011 and closer to 5 percent in 2012.

The key factor driving housing demand is jobs, said Zandi. “We’re not going to get home sales unless we have jobs. Here the prospect is good. Business balance sheets are in good shape and improving rapidly. These are pre-conditions for better job growth and we should see the job market steadily gain traction.”

Zandi forecast that overall housing starts will total 700,000 units this year, close to 1 million in 2011 and about 1.7 million by 2012, which he describes as close to trend and consistent with demographics in a normal functioning economy.

Driven largely by the high foreclosure rate, Zandi expects that home prices will continue to fall modestly in 2010, down about 5 percent on a national average. He calculates that the difference between supply and demand is approximately 750,000 units annually, and it will require until the end of 2011 to work off this extra inventory.

“The good news,” he said, is “as the job market improves, so will household formations and demand. So I anticipate we will work off the excess inventory more quickly than the two-year period.”

He added that most of the housing surplus is regionally concentrated in Florida, around Atlanta, along the South Carolina coast, in Las Vegas, Phoenix, and Tucson and in the central valley of California.

Consumers Fuel Recovery

Taking the most bullish approach to the ongoing recovery, Chris Varvares, president of Macroeconomic Advisers, LLC, forecast that GDP will rise 3.7 percent this year and that housing starts will total 750,000, well above the Blue Chip Economic Indicators consensus of 690,000.

“Personal consumption expenditures are making a very solid recovery,” said Varvares. “Residential investment is going from a drag to a contributor. The difference between our forecast and the consensus is the strength in personal consumption and housing.”

Although the huge number of foreclosures on the market are accounting for about 300,000 to 400,000 fewer starts than there otherwise would be, Varvares said the fundamentals still point to a solid trajectory for housing.

“With prices stabilizing, demand is picking up and we expect builders to respond. By the end of 2011, we expect about 1.2 million housing starts. This suggests we can have recovery in starts this strong while simultaneously working down excess housing inventory.”

The panelists were in unanimous agreement on a number of areas – the Federal Reserve will likely continue to keep interest rates near rock bottom levels at least through the end of the year; the chance of a double dip recession is extremely slim; and policymakers will need to take action within the next two years to increase revenues and cut spending to rein in the burgeoning structural deficit.

Survey Suggests Affordable Prices and Mortgage Rates Could Help Propel Housing Market Past Tax Expiration

2010-05-12T07:39:00.000-07:00

The majority of people looking for, or considering buying, a home had no plans to take advantage of the first-time or move-up/repeat home buyer tax credits, according to a survey recently released from Better Homes and Gardens Real Estate.

The survey, conducted earlier this year, was designed to identify factors affecting today’s home-buying decisions. It drew responses from among those across the country who are searching or saving for a new home, or who recently purchased a new home.
Of those respondents who are looking for, or considering buying, a home, nearly two-thirds (63%) believe it is a “buyer’s market,” more than half (54%) feel that mortgage rates are affordable, and 70 percent indicate that there are affordable homes on the market. Just about half (49%) feel that the economy gives them the ability to negotiate more than usual. However, only 39 percent surveyed said they had planned to take advantage of the tax credit before it expired on April 30, 2010.

“There has been a lot of speculation about the housing market after the tax credit extension expired,” said Sherry Chris, president and CEO of Better Homes and Gardens Real Estate. “The tax credit was truly a great motivating factor, with many home buyers taking advantage. However, we found that the tax credit was only one motivation. People buy homes for lifestyle reasons as well and I suspect that the normal seasonality patterns of home buying will still play out now that the tax credit has expired.”

The Better Homes and Gardens Real Estate survey was conducted online during the fourth week of February 2010 by Amplitude Research, Inc. The survey results referred to above were based on 422 out of 600 respondents with a maximum sampling error of +/- 4.8% at the 95% confidence level. More information about Amplitude Research may be found at http://www.amplituderesearch.com.

Pending Home Sales on an Upswing

2010-05-05T15:23:00.000-07:00

Pending home sales increased again in March 2010, affirming that a surge of home sales is unfolding for the spring home buying season, according to the National Association of Realtors®. The Pending Home Sales Index (PHSI) forward-looking indicator based on contracts signed in March, rose 5.3% to 102.9 from 97.7 in February, and is 21.1% above March 2009 when it was 85.0; this follows an 8.3% increase in February. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, said favorable affordability conditions have been working with the tax credit. “Clearly the home buyer tax credit has helped stabilize the market. In the months immediately following the expiration of the tax credit, we expect measurably lower sales,” he said. “Later in the second half of the year, and into 2011, home sales will likely become self-sustaining if the economy can add jobs at a respectable pace, and from a return of buyer demand as they see home values stabilizing.”

The PHSI in the Northeast declined 3.3% to 75.1 in March but remains 27.2% higher than March 2009. In the Midwest the index increased 1.2% to 98.9 and is 18.5% above a year ago. Pending home sales in the South jumped 12.7% to an index of 121.2, which is 28.3% higher than March 2009. In the West the index rose 1.9% to 99.9 and is 8.8% above a year ago.

“Another encouraging sign is the improvement in the availability for jumbo and second-home mortgages,” Yun said. “As bank balance sheets strengthen, it is just a matter of time before lending of non-government-backed mortgages steadily opens up.”

Armed Service Members Have Extra Year for Home Buyer Tax Credit

2010-04-26T11:24:00.000-07:00

The National Association of Home Builders (NAHB) wants members of the military, foreign service and intelligence communities to know that they may have an additional year to buy a home and claim the home buyer tax credit, which expires for most Americans on April 30.

The law provides qualified service members who served on official extended duty outside of the United States for 90 days or more at any time between Jan. 1, 2009, to April 30, 2010, another year to buy a home and claim the credit. They have until April 30, 2011, to sign a sales contract, and until June 30, 2011, to settle and close on the home. Both the $8,000 first-time and $6,500 repeat home buyer tax credits are included in the rule.

“Congress recognized that many service members may have missed out on the home buyer tax credit due to being posted overseas,” said NAHB Chairman Bob Jones, a builder and developer in Bloomfield Hills, Mich. “It is only fitting that they be given another year to take advantage of this opportunity in appreciation of the sacrifices they have made serving our country.”

“Qualified service members” are defined as a member of the uniformed services of the United States military, a member of the Foreign Service of the United States, or an employee of the intelligence community.

The rule that requires buyers to repay the credit if they move out of their home within three years has also been waived for qualified service members if they have to sell their home due to receiving government orders for extended duty service.

NAHB provides information on the home buyer tax credit, including eligibility requirements and links to home buying resources, on its consumer website www.FederalHousingTaxCredit.com.

New Home Sales Surge 27%, Blowing Past Estimates

2010-04-23T07:18:00.000-07:00

Sales of new homes surged 27 percent last month, bouncing off the previous month's record low and blowing past expectations as better weather and government incentives boosted sales.

The Commerce Department said new home sales rose in March to a seasonally adjusted annual sales pace of 411,000.

It was the strongest month since last July and the biggest monthly increase in 47 years.

Economists surveyed by Thomson Reuters had expected a sales pace of 330,000.

February's results were revised upward to 324,000, but remained an all-time low. Sales had been especially weak over the winter, partly due to bad weather in much of the country.

Housing Starts And Permits Rise in March

2010-04-17T09:26:00.000-07:00

Nationwide housing starts rose for a third consecutive month in March to a seasonally adjusted annual rate of 626,000 units from an upwardly revised February number, according to figures released today by the U.S. Commerce Department. The rate of permit issuance for new housing construction also rose by a solid 7.5 percent in the month, to a seasonally adjusted annual rate of 685,000 units.

“After an uncertain couple of months, home builders are gradually getting back to what they do best as the spring home buying season commences and consumers return to the market,” said Bob Jones, Chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich. “While we still have a long way to go, today’s numbers are an indication that builders are looking down the road with a bit more optimism.”

“Today’s report is very encouraging, because it signifies that home builders are confident enough to begin work on homes that will very likely be completed after the expiration of the home buyer tax credits,” noted NAHB Chief Economist David Crowe. “The solid gain in permit issuance last month is particularly welcome news, since those numbers are generally a reliable indicator of future building activity. That said, considerable headwinds continue to impede housing’s recovery, including the critical shortage of credit for housing production that is stifling new development in reviving markets.”

While single-family starts slipped 0.9 percent in March, this small decline – from an upwardly revised number the previous month – was due entirely to a drop-off in the Midwest from an abnormally high February level; all other regions reported single-family gains in March. Nationwide multifamily starts gained 18.8 percent to a 95,000-unit rate for the month.

The 7.5 percent gain in nationwide building permits reflected a 5.6 percent uptick to 543,000 units on the single-family side and a 15.4 percent gain to a 142,000-unit rate on the multifamily side.

Regionally, combined single- and multifamily starts activity rose 18.2 percent in the South, which is the largest regional housing market, but fell 28.4 percent in the Midwest, 8.3 percent in the Northeast and 2.1 percent in the West.

Combined permit activity rose 17.6 percent in the Midwest and 18.4 percent in the South, but fell 19.5 percent in the Northeast and 6.7 percent in the West in March

Builder Confidence Improves in April

2010-04-16T08:06:00.000-07:00

Builder confidence in the market for newly built, single-family homes improved significantly in April as consumers rushed to take advantage of home buyer tax credits set to expire at the end of the month, according to results of the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. The HMI surged four points to 19 in April, its highest level since September of 2009.

"Home builders reported some real improvement in current sales activity and traffic of prospective buyers through their model homes over the past month," said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. "While we remain cautious about what future months will bring, it's great to have this positive momentum at the start of the spring home buying season."

"An expected surge in buyer activity leading up to the expiration of the home buyer tax credits and a gradually improving economy helped to brighten builders' view of the marketplace in April," confirmed NAHB Chief Economist David Crowe. "Meanwhile, builders have a more neutral view of what may come in the next six months, and are very aware of the many factors that continue to drag on housing at this time - including the critical shortage of credit for new and existing projects, problems with inaccurate appraisals, and the ongoing flow of foreclosed properties on the market. Greater economic growth, particularly in the job market, and the abatement of these housing issues are needed to help move home building to a more sustained recovery."

Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

The HMI's four-point gain to 19 this month returned it to where it was in September of 2009, just prior to the expiration of the last home buyer tax credit. The component gauging current sales conditions rose by five points to 20 - the strongest gain in that index since 2003 - while the component gauging traffic of prospective buyers rose a solid four points, to 14. However, the index gauging sales expectations in the next six months registered only a marginal one-point increase to 25, an indication of builders' continued cautious outlook.

The Midwest and South each registered substantial HMI gains in April, rising five points to 15 and four points to 21, respectively. Meanwhile, the Northeast posted no change at 22 and the West dipped two points to 13.

Editor's Note: The NAHB/Wells Fargo Housing Market Index is strictly the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public. HMI tables can be accessed online at: www.nahb.org/hmi. More information on housing statistics is also available at: www.housingeconomics.com.

Federal Government Needs Central Role in New Housing Finance System

2010-04-14T12:50:00.000-07:00

April 14, 2010 - As Congress begins to debate how to reform government-sponsored enterprises (GSEs) Fannie Mae, Freddie Mac and the Federal Home Loan Bank System, the National Association of Home Builders (NAHB) today called on lawmakers to ensure that the federal government continues to provide a backstop for the housing finance system to ensure a reliable and adequate flow of affordable housing credit.

Testifying before the House Financial Services Committee, NAHB Third Vice Chairman Rick Judson, a builder and developer from Charlotte, N.C., said the need for such support is underscored by the current state of affairs, with the GSEs, Federal Housing Administration and Ginnie Mae acting as the primary conduits for residential mortgage credit.

“NAHB feels the federal backstop must be a permanent fixture in order to ensure a consistent supply of mortgage liquidity as well as to allow rapid and effective responses to market dislocations and crises,” said Judson.

Regarding the future of Fannie Mae and Freddie Mac, NAHB recommended the following policy changes in terms of structure and operations to restore and improve the secondary mortgage market and housing finance system:

•Degree and structure of government support. While government support is needed to ensure that mortgage credit is available and affordable in all areas of the country under all economic circumstances, for the conforming conventional portion of the mortgage market, that support should not be provided directly to private companies. Rather, the federal government should provide an explicit guarantee of the timely payment of principal and interest on securities backed by conforming conventional mortgages, in the same manner that Ginnie Mae now provides guarantees for investors in securities representing interests in government-backed mortgages.
•Operation of the conforming conventional mortgage market. NAHB envisions that private companies, called conforming mortgage conduits (CMCs), would be chartered to purchase conforming conventional loans that are originated by approved mortgage lending institutions such as banks, savings and loan associations, mortgage banking companies and credit unions. CMCs would issue securities backed by those mortgages, which would carry a federal government guarantee of the timely payment of principal and interest for the securities investors.
CMCs would guarantee the timely payment on the mortgages that are pooled in the government-guaranteed securities and would be required to be well-capitalized and to maintain reserves at levels appropriate for their risk exposure. However, CMCs and the mortgages backing their securities would not have implicit or explicit support from the federal government. A fund would be established by the government to provide a guarantee of timely payment of principal and interest to investors in the securities. CMCs benefitting from the federal securities guarantees would pay a fee to capitalize the fund, which would be designed to mitigate the federal government’s risk so that it would only be exposed in the case of a “catastrophic” occurrence.

•Conforming conventional mortgages. Mortgages eligible for inclusion in securities receiving an explicit federal guarantee should be products with well-understood risk characteristics -- such as fixed-rate mortgages, standard adjustable-rate mortgages and selected multifamily mortgage loans.
NAHB is in the process of updating its policy on the future of the Federal Home Loan Bank System and believes that policymakers must account for their significant structural and operational differences from Fannie Mae and Freddie Mac when considering the future make-up of the housing finance system.

With Fannie Mae and Freddie Mac now operating under conservatorship and experiencing severe financial pressures, NAHB urged Congress to proceed with caution as lawmakers take steps to transition to a new housing finance system.

“Any changes should be undertaken with extreme care and with sufficient time to ensure that U.S. home buyers and renters are not placed in harm’s way and that the mortgage funding and delivery system operates efficiently and effectively as the old system is abandoned and a new system is put in place,” said Judson.

Federal Housing Administration to Accept DocuSign for Real Estate Contracts Nationwide

2010-04-12T15:15:00.000-07:00

DocuSign, a leader in on-demand electronic signature solutions, announced e-signed third-party documents, including real estate contracts, are now being accepted by the Federal Housing Administration (FHA). DocuSign spearheaded an industry-wide effort to move the FHA to formally recognize e-signed third-party documents. The April 8, 2010 dated FHA mortgagee letter is the first in what is expected to be a series of responses to this initiative. With this policy statement from one of the nation’s largest mortgage insurers, real estate professionals can use DocuSign to get real estate contracts, addenda and other documents signed electronically, and their buyers can apply for FHA insurance with confidence.
“We commend FHA’s action. By clarifying its position on electronic signatures, the process of buying, selling and financing of homes across the country will be greatly improved,” said Ken Moyle, chief legal officer at DocuSign. “Buyers, sellers and agents can use DocuSign’s online process to eliminate the time, expense and environmental impact of printing, delivering and signing large stacks of paper documents, and mortgage lenders can take comfort in knowing that DocuSign’s e-signature process is designed for legal compliance in all 50 states and is fully evidenced by a comprehensive audit trail.”
Real estate agents can quickly access the DocuSign e-signing service from any laptop with Internet access, drag and drop familiar yellow StickEtabs onto the contract and send the envelope. The recipient immediately receives an e-mail notification that can be accessed through a computer or any Web-enabled mobile device, including Apple iPhone, RIM BlackBerry, Google Android or Windows Mobile, then adopts an e-signature and signs the document. Once completed, an e-mail notification is sent to all parties with a link to the final executed document. The result is a legally binding, fully ESIGN-compliant document supported by a comprehensive audit trail.
As on-demand software-as-a-service (SaaS), DocuSign requires no additional software or hardware purchases and no downtime for training. DocuSign eSignature service offers users one of the easiest, most simple to use and safest electronic signature experiences available today.

Pending Home Sales Show Healthy Gain, Hint at Spring Surge

2010-04-05T07:26:00.001-07:00

Pending home sales rose in February, potentially signaling a second surge of home sales in response to the home buyer tax credit, according to the National Association of Realtors®.
The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in February, rose 8.2 percent to 97.6 from a downwardly revised 90.2 in January, and remains 17.3 percent above February 2009 when it was 83.2. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, said the improvement is another hopeful sign. “The rise in buyer contact activity may signal the early stages of a second surge of home sales this spring. The healthy gain hints home prices are continuing to flatten,” he said. “We need a second surge to meaningfully draw down inventory and definitively stabilize home values.”
The PHSI in the Northeast rose 9.0 percent to 77.7 in February and is 18.9 percent higher than February 2009. In the Midwest the index jumped 21.8 percent to 97.9 and is 18.7 percent above a year ago. Pending home sales in the South increased 9.2 percent to an index of 107.0, and the index is 17.5 percent higher than February 2009. In the West the index fell 4.8 percent to 98.0 but is 14.6 percent above a year ago.
“Anecdotally, we’re hearing about a rise of activity in recent weeks with ongoing reports of multiple offers in more markets, so the March data could demonstrate additional improvement from buyers responding to the tax credit,” Yun said.

New-Home Sales Decline in February

2010-03-24T13:53:00.000-07:00

March 24, 2010 - Sales of newly built, single-family homes fell 2.2 percent in February to a seasonally adjusted annual rate of 308,000 units, the Commerce Department reported today. While this figure marked a new record low for overall sales activity, only one region (the South) hit its own record low.
“The very slow pace of new-home sales in February was partly due to unusually poor weather conditions, but was also tied to consumers’ ongoing concerns about the poor job market and sluggish economy,” said Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich.
“Unusually bad weather certainly played a role in the large regional declines depicted in today’s new-home sales report,” agreed NAHB Chief Economist David Crowe. “In addition, many potential buyers remained nervous about their job security and their ability to qualify for a mortgage in light of tight underwriting standards. That said, we are still expecting to see some improvement in consumer demand as the deadline for taking advantage of home buyer tax credits nears. Going forward, other factors such as pent-up demand, new household formations among echo-boomers and excellent affordability conditions will support a 20 percent gain in new-home sales this year compared to 2009.”
While nationwide home sales fell to a record low in February, two out of four regions actually posted gains and all but the South remained above their record lows. Sales inched up 2 percent in the Midwest and 20.8 percent in the West, but declined by a respective 20 percent and 4.6 percent in the storm-battered Northeast and South.
The nationwide inventory of new homes on the market rose by a marginal 1.3 percent in February, to 236,000 units. Due to the slower sales pace, the month’s supply of new homes for sale rose from 8.9 in January to 9.2 in February.

New Fannie Mae, Freddie Mac Structures Should Ensure Availability of Mortgage Capital and Protect Taxpayer Dollars, Says NAR

2010-03-23T13:26:00.000-07:00

Government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac should be restructured as government-chartered, non-shareholder owned authorities, the National Association of Realtors® said in congressional testimony today.
“We want to ensure a flow of capital into the mortgage market regardless of the state of the market or economy,” Vince Malta, NAR vice president and liaison to government affairs, testified to the House Financial Services Committee. “The new Fannie and Freddie must ensure there is always mortgage capital available for creditworthy buyers and that taxpayer dollars are protected.”
In outlining NAR’s proposal, Malta cautioned Congress and the administration about moving too quickly in restructuring the GSEs. “The housing recovery is still too fragile for the government to completely step away, and any disruption in the marketplace now by doing something too radical would be harmful,” he said. “Our goal is to help Congress and our industry design a secondary mortgage model that will serve America’s best interest today, and in the future.”
Neither a fully privatized entity nor a fully nationalized structure for the secondary mortgage market giants effectively addresses the critical issues of loan availability and taxpayer protection, he said. A fully private entity would foster mortgage products more aligned with business goals rather than the nation’s housing policy for consumers. “In difficult markets, like today’s, private lenders have not been willing to make loans without government backing,” said Malta.
A fully federal structure would put taxpayers at risk. “We want to eliminate any scenario that would place taxpayers on the hook to protect these entities. And to combine the two, or merge them with Ginnie Mae, would remove competition in the secondary market, and the new entity could lose focus on it missions to serve low- and moderate-income families and maintain liquidity in the mortgage markets,” he said.
The new authorities should be subject to tighter regulations on products, profitability and minimal, retained portfolio practices in a way to ensure protection of taxpayer monies. The new entities would also concentrate on standard mortgage products that are the foundation of the housing finance market.
“While that might curtail some private participation and alternative products in this market, we believe privates will offer innovations that meet consumer needs. The new entities would focus on safe mortgage products, including 15- and 30-year fixed rate mortgages and traditional adjustable rate mortgages.”

Single-Family Starts Hold Firm In February

2010-03-22T09:24:00.000-07:00

The pace of single-family home production remained virtually unchanged in February, with a 0.6 percent decline to a seasonally adjusted annual rate of 499,000 units, according to figures released today by the U.S. Commerce Department. Meanwhile, a large decline on the more volatile multifamily side brought the overall number of housing starts down 5.9 percent to a seasonally adjusted annual rate of 575,000 units.
“Today’s single-family numbers are fairly encouraging, in that the level of building activity held firm even as large portions of the country experienced abnormal weather conditions,” noted Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich.
“This latest data indicates that the single-family sector is gradually finding more stable ground, particularly in light of the poor weather conditions that hampered new building activity in two out of four regions last month and the continued difficulties that builders faced in accessing financing for new projects,” said NAHB Chief Economist David Crowe. “With the deadline for purchasers to take advantage of home buyer tax credits fast approaching at the end of April, improvement in single-family building activity was expected and may have continued into early March. Moreover, the very thin inventory of new homes now on the market, the pent-up demand from three-plus years of low household formations and good affordability conditions will provide the platform for a 25 percent gain in new-home construction in 2010 over 2009.”
While the combined pace of single- and multifamily housing starts fell 5.9 percent to 575,000 units in February, that decline was mostly due to a 30.3 percent dip in multifamily starts to a 76,000-unit pace following a double-digit increase on that side in the previous month. Meanwhile, single-family starts held virtually even, with a 0.6 percent decline to a 499,000-unit pace.
On a regional basis, combined starts activity declined 9.6 percent in the Northeast and 15.5 percent in the South, where unusually poor weather conditions were a factor in February. Meanwhile, starts activity posted gains of 14.3 percent in the Midwest and 7.9 percent in the West.
Permit issuance, which can be an indicator of future building activity, declined 1.6 percent overall to a seasonally adjusted annual rate of 612,000 units in February. This reflected a statistically insignificant 0.2 percent decline to 503,000 units on the single-family side and a 7.6 percent decline to 109,000 units on the multifamily side.
Regionally, permit issuance was mixed in February, with the Northeast posting no change, the Midwest posting an 11.7 percent gain, the South registering a 5.8 percent decline and the West recording a 2.1 percent decline.

Pending Home Sales Down; Severe Weather Impacting Market

2010-03-17T08:29:00.000-07:00

Pending home sales are down and additional declines are expected from abnormal weather conditions, according to the National Association of Realtors®.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in January, fell 7.6 percent to 90.4 from an upwardly revised 97.8 in December, but remains 12.3 percent higher than January 2009 when it was 80.5.
Lawrence Yun, NAR chief economist, said weather is likely to impact housing data. “January pending sales, though still higher than one year ago, remain much lower than expected given that a large number of potential buyers are eligible for the expanded home buyer tax credit. Moreover, the abnormally severe and prolonged winter weather, which affected large regions of the U.S., hampered shopping activity in February,” he said.
As such, abnormal swings are expected in housing data. “We will see weak near-term sales followed by a likely surge of existing-home sales in April, May and June,” Yun said. “The real question is what happens in the second half of the year. If there is sufficient job creation, housing can become self-sustaining with stable to modestly rising home prices because inventory has been trending downward.”
The PHSI in the Northeast fell 8.7 percent to 71.3 in January but is 20.5 percent higher than January 2009. In the Midwest the index dropped 8.9 percent to 81.2 but is 11.8 percent above a year ago. Pending home sales in the South slipped 2.1 percent to an index of 98.1, but the index is 18.0 percent higher than January 2009. In the West the index dropped 13.2 percent to 102.9 but is 1.4 percent above a year ago.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

Existing-Home Sales Down in January 2010 but Higher Than Year Ago

2010-03-04T11:18:00.000-08:00

Existing-home sales fell in January 2010 but are above year-ago levels, according to the National Association of Realtors. Existing-home sales- including single-family, townhomes, condominiums and co-ops- dropped 7.2% to a seasonally adjusted annual rate of 5.05 million units in January from a revised 5.44 million in December, but remain 11.5% above the 4.53 million-unit level in January 2009.
Lawrence Yun, NAR chief economist, said there is still some delay between shopping and closing that affected current sales. “Most of the completed deals in January were based on contracts in November and December. People who got into the market after the home buyer tax credit was extended in November have only recently started to offer contracts, so it will take a couple months to close those sales,” he said. “Still, the latest monthly sales decline is not encouraging, and raises concern about the strength of a recovery.”
Total housing inventory at the end of January fell 0.5% to 3.27 million existing homes available for sale, which represents a 7.8-month supply at the current sales pace, up from a 7.2-month supply in December. Raw unsold inventory is 9.6% below a year ago, and is at the lowest level since March 2006.
“Activity should be picking up strongly in late spring as buyers take advantage of the tax credit, which is critical to absorb distressed properties reaching the market and to continually chip away at inventory,” Yun said. “With a downtrend in the number of homes on the market, especially in the lower price ranges, values are beginning to firm but with great variance around the country.”
The national median existing-home price for all housing types was $164,700 in January, unchanged from a year earlier. Distressed homes, which accounted for 38% of sales last month, continue to downwardly distort the median price because they typically are discounted in comparison with traditional homes in the same area.
A parallel NAR practitioner survey shows first-time buyers purchased 40% of homes in January, down from 43% in December. Investors accounted for 17% of transactions in January, up from 15% in December; the remaining sales were to repeat buyers. The survey also shows that buyer traffic increased 9.4% in January.
NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said buying a home in the current environment has become more challenging. “First-time buyers and others who need a mortgage are increasingly losing out to all-cash investors for the best bargains in many areas, particularly for foreclosed homes where cash is king,” she said. “Inventory conditions vary by price range, and of course there are major differences depending on location. Realtors are the best buyer resource for strategies on winning bids in increasingly competitive markets,” Golder said. “The bidding for more desirable homes will only accelerate between now and the April 30 contract deadline to qualify for a tax credit of up to $8,000.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage edged up to 5.03% in January from 4.93% in December; the rate was 5.05% in January 2009.
Single-family home sales fell 6.9% to a seasonally adjusted annual rate of 4.43 million in January from a level of 4.76 million in December, but are 8.6% above the 4.08 million pace in January 2009. The median existing single-family home price was $163,600 in January, down 0.4% from a year ago.
Existing condominium and co-op sales dropped 8.1% to a seasonally adjusted annual rate of 620,000 in January from 675,000 in December, but are 38.1% above the 449,000-unit level a year ago. The median existing condo price was $172,400 in January, which is 1.4 % higher than January 2009.

How Soon Until U.S. Withdraws Mortgage Market Support?

2010-02-20T09:54:00.000-08:00

Uncle Sam is trying to get out of the business of running the U.S. mortgage market. The trick will be withdrawing support without toppling the nation’s fragile housing recovery in the process.
The government rescued the sector last year with a series of unprecedented measures that staved off a catastrophic collapse, including pumping more than $1 trillion into home loans. But Washington now has effective control of the housing market, either owning or guaranteeing an estimated 9 out of 10 new mortgages.
That has critics worried that the government has asserted too much control over a critical segment of the economy while inflating the federal deficit at what some consider an alarming pace. Pressure is building on the Obama administration to scale back a variety of stimulus efforts.
Federal Reserve Chairman Ben S. Bernanke recently outlined a broad strategy for eventually tightening credit. He talked only vaguely about when the central bank might act, sprinkling his remarks with phrases such as ‘in due course’ and ‘at some point.’ “We have spent considerable effort in developing the tools we will need to remove policy accommodation, and we are fully confident that at the appropriate time we will be able to do so effectively,” he said.
For the housing market, the plan to scale back support carries an inherent risk: that it could stall the very housing recovery that the government has worked so feverishly to jump-start. “We understand that stimulus can’t continue forever, but at the same time, trying to get the housing market back on track is key to a broader economic recovery,” said Lawrence Yun, chief economist for the National Association of Realtors. “This policy is having that intended impact. Policymakers should be cautious about how soon to end it.”
The Fed plans to end a $1.25-trillion mortgage-bond-purchase program that has helped keep mortgage interest rates near a record-low 5% next month. The Fed has been buying virtually all the mortgage bonds churned out by mortgage giants Fannie Mae and Freddie Mac, replacing private investors such as pension funds and mutual funds that have shied away since the subprime mortgage crisis. That exit is expected to push up rates, which could weigh on buyers at a time of high unemployment and anemic consumer spending.
The Mortgage Bankers Association, an industry trade group, predicts the end of the Fed mortgage-bond program could push rates up by roughly 0.5 %. For a $500,000 fixed-rate mortgage, that would increase the monthly payment by $155.
Even a moderate rise could push potential buyers out of the market.
Higher rates could force many others to recalculate where to live or what to purchase. “If those rates jump up to 5.5% or 6%, then buyers can’t qualify for what they thought they could qualify for, and they’re not going to be able to buy as much house as they thought they could,” said Frank Drury, a loan originator at Cobalt Financial Corp. in Huntington Beach, Calif.
A popular home buyer’s tax credit is scheduled to lapse at the end of April. It provides tax breaks of up to $8,000 to first-time buyers and up to $6,500 for some homeowners who move up to middle-market homes costing up to $800,000. The credits were originally scheduled to lapse in November 2009, but were extended over concerns that home sales would slow without the incentive.
There is already evidence that could occur. In December 2009, home resales skidded almost 17% after buyers sped up their purchases the month before to make sure they qualified for the subsidy before the expiration of the original deadline.
Even with the elimination of the programs, the government would remain deeply involved in housing and would maintain several key pillars that have propped up the market. Those include expanded Federal Housing Administration programs, as well as enhanced support of Fannie Mae and Freddie Mac.
Still, “it is one of what will ultimately be many steps by the government to start to take back its unprecedented support for the housing and mortgage markets,” said Thomas A. Lawler, founder of research firm Lawler Economic & Housing Consulting. “There will be more.”
Ending the Fed’s near-total control of the market could help spur investors to reenter the market. “My sense is government officials desperately want to get out of this program,” said Keith Gumbinger, vice president at mortgage research firm HSH Associates. “The longer this goes on, the less likely that the private marketplace will jump back in anytime soon.”
Falling rates have lured buyers. In Southern California, for example, sales rose 16.4% in December from the previous month and 12.1% from December 2008, according to MDA DataQuick, a San Diego real estate research firm. The Fed’s purchase of “mortgage-backed securities has helped a great deal, and I hope they keep doing it,” said Laura Zajdman, an agent at ZipRealty in Culver City, Calif.
The combination of many factors, including a slowly improving economy, will probably push rates slowly higher, some experts say. “I really think the odds-on bet is that rates are near their lows and they’re more likely to slowly go up from here,” said Walt Schmidt, a mortgage-bond strategist at investment firm FTN Financial in Chicago.

Housing Starts Rise in January

2010-02-17T10:35:00.000-08:00

Nationwide housing production hit its strongest pace in the last six months this January, posting a 2.8 percent gain to a seasonally adjusted annual rate of 591,000 units, according to figures released today by the U.S. Commerce Department.

“Builders are starting to see the positive impacts of home buyer tax credits and other favorable buying conditions in terms of consumer demand, and are cautiously increasing production to meet that demand,” said National Association of Home Builders (NAHB) Chairman Bob Jones, a home builder from Bloomfield Hills, Mich.

“As our latest home builder surveys have indicated, today’s excellent home buying conditions – including the availability of tax credits for first-time and repeat buyers, very favorable mortgage rates and stabilizing home values – are helping drive potential buyers back to the market,” said NAHB Chief Economist David Crowe. However, he said, “A continuing shortfall in available credit for building projects is still producing a drag on new construction and slowing the progress of recovery in housing and the overall economy.”

The overall gain in housing starts was reflected on both the single- and multi-family side this January. While single-family starts posted a 1.5 percent gain to a seasonally adjusted, annual rate of 484,000 units, multifamily starts posted a 9.2 percent gain to 107,000 units.

Meanwhile, overall permit issuance, which can be an indicator of future building activity, fell 4.9 percent to a rate of 621,000 units in January. This was due entirely to a 23 percent decline to 114,000 units on the multifamily side, which offset a big gain in that sector the previous month. Single-family permits held virtually even, with a 0.4 percent gain to 507,000 units.

Combined single- and multifamily housing starts rose in three out of four regions this January. The South and West each registered a third consecutive month of improvement, with 1 percent and 8.9 percent gains, respectively, and the Northeast also posted a 10 percent gain. The Midwest saw a 3.2 percent decline in overall housing starts.

Conversely, permit issuance declined in three out of four regions this January. The West was the only region to post a gain, of 8.5 percent, while declines of 17.8 percent, 20.2 percent and 1.3 percent were registered in the Northeast, Midwest and South, respectively.

Cost-Effective Green a Trend to Watch, NAHB Says

2010-01-26T08:45:00.000-08:00

The key to the mainstreaming of green is to make sure that consumers understand the value of green upgrades – and exactly how cost-effective that sustainable construction can be in the long run, according to four green home building professionals who spoke at a press conference on Wednesday at the National Association of Home Builders’ International Builders’ Show.
Builders, remodelers and product manufacturers are beginning to green their processes and incorporate more energy-, water- and resource-efficient features. They are learning how to reduce waste on the job site to save enough money to pay for these upgrades – and help ensure that the builder makes a profit, said consultant Steve Bertasso, who helps builders achieve these measures.
Green building has truly reached the tipping point because it’s moving out of the custom home market into the realm of high-production homes, he added. "This year is going to be a big change in the production [building] environment," Bertasso predicted. "Consumers are asking questions they didn’t ask two and a half years ago and contractors are making better decisions."
The key to reducing the nation’s energy use is to green existing homes, said Philip Beere, who is remodeling distressed properties near Phoenix’s new rapid transit line. Adding insulation, improving the ventilation and air conditioning systems and replacing turf grass with landscaping more appropriate to the Southwest’s desert climate doesn’t cost much more than a traditional remodel, but "retrofitting these homes to be green is a good solution," he said.
Connecticut home builder Jim Pepitone called himself a "late adopter," but one who has finally seen the green light – and believes the rest of the industry can’t be far behind. Builders need to educate consumers on air sealing, the importance of right-sized heating systems and good insulation, and the advantages of rooms that can serve more than one purpose so the home can be smaller and less expensive. "We need to make sustainable attainable," he said.

Crowds More Optimistic at the 2010 International Builders’ Show, Says NAHB

2010-01-26T08:43:00.000-08:00

January 22, 2010 - Approximately 55,000 builders, remodelers and other members of the home building industry crowded the aisles of the National Association of Home Builders’ International Builders’ Show, which ended its four-day run Friday at the Las Vegas Convention Center.
The mood? "I’d call it cautious optimism," said Ron Cook of Tamko Building Products in Joplin, Mo., one of more than 1,100 exhibitors at this year’s event. "It’s certainly different than it was last year because we didn’t quite know what we were in for," as the country was still in the midst of the biggest recession since the 1930s.
Members lined up at the Partnership Pavilion, a new NAHB initiative on the show floor designed to match builders with financing sources. The program was launched to help serve an industry still stymied by a lack of available credit for new housing developments – as well as tighter restrictions on home buyer mortgages.
Builders and remodelers also attended educational presentations on design trends, energy retrofitting, marketing, low-income housing tax credits and more than 175 other topics.

"We came here to network," said Clint Wilson of Hybrid Core Homes in Santa Rosa, Calif. The show seemed livelier than last year’s event, he said, although he and his colleagues were disappointed that The New American Home, the much-anticipated demonstration home that usually draws huge crowds, was unavailable for touring this year because of financing issues – a problem plaguing other builders throughout the industry.
A company manufacturing geothermal heating systems saw steady traffic at its booth, according to Steve Smith, managing partner at Enertech Manufacturing, LLC of Greenville, Ill., who said builders are particularly interested in learning more about the tax credits available for installing geothermal and other renewable energy heating and cooling systems.
"It’s been a good, upbeat crowd," Smith said. "I think we all have a more positive attitude for 2010. I’ve already talked to our marketing folks about getting a bigger booth at next year’s show."

The next International Builders’ Show takes place Jan. 12-15 at the Orange County Convention Center in Orlando, Fla.

December Existing-Home Sales Down but Prices Rise; 2009 Sales Up

2010-01-25T10:58:00.000-08:00

After a rising surge from September through November, existing-home sales fell as expected in December after first-time buyers rushed to complete sales before the original November deadline for the tax credit. However, prices rose from December 2008 and annual sales improved in 2009, according to the National Association of Realtors®.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – fell 16.7 percent to a seasonally adjusted annual rate1 of 5.45 million units in December from 6.54 million in November, but remain 15.0 percent above the 4.74 million-unit level in December 2008.
For all of 2009 there were 5,156,000 existing-home sales, which was 4.9 percent higher than the 4,913,000 transactions recorded in 2008; it was the first annual sales gain since 2005.
Lawrence Yun, NAR chief economist, said there were no surprises in the data. “It’s significant that home sales remain above year-ago levels, but the market is going through a period of swings driven by the tax credit,” he said. “We’ll likely have another surge in the spring as home buyers take advantage of the extended and expanded tax credit. By early summer the overall market should benefit from more balanced inventory, and sales are on track to rise again in 2010. However, the job market remains a concern and could dampen the housing recovery – job creation is key to a continued recovery in the second half of the year.”
An NAR practitioner survey shows first-time buyers purchased 43 percent of homes in December, down from 51 percent in November. Repeat buyers rose to 42 percent of transactions in December from 37 percent in November; the remaining sales were to investors.
The national median existing-home price for all housing types was $178,300 in December, which is 1.5 percent higher than December 2008. “The median price rose because of an increased number of mid- to upper-priced homes in the sales mix,” Yun said. It was the first year-over-year gain in median price since August 2007.

Repeat Buyers Need to Act Fast to Capitalize on Expanded Tax Credit

2010-01-23T09:56:00.000-08:00

By now it is well documented that today’s affordable housing prices, historically low interest rates and federal home buyer tax credit have combined to create one of the most attractive first-time buyer markets in recent memory. What many Americans might not realize is that a recent expansion of the buyer tax credit has created an equally desirable opportunity for existing homeowners.
This past November, Congress elected to expand the home buyer tax credit to repeat buyers after seeing the success the temporary financial incentive had on the housing market and overall economy. As a result, current homeowners who will have lived in their home for 5 consecutive years out of the last 8 may now be eligible to receive a $6,500 tax credit.
The expanded tax credit offers a great financial opportunity for existing homeowners, particularly those looking to trade up. Not only can you receive a large sum of money from the government, you’ll also likely purchase your next home for less money and at a lower interest rate than you could have in years past or years to come.
To qualify for the tax credit, the repeat buyer must have signed a binding contract by April 30, 2010 and close on the home by June 30, 2010. Tax credit eligibility is subject to income limits, $125,000 for single buyers and $225,000 for couples. In addition, the sale price of the home being purchased can not exceed $800,000.
There is no requirement that existing homeowners must have sold their home to be eligible for the $6,500 tax credit. However, we encourage existing homeowners who want to benefit from this incentive to move quickly, particularly those who prefer to first sell their current home before purchasing a new one.
Typically, it takes three months or longer to sell a home. That’s why it is critical repeat buyers put their home on the market right away. Otherwise they might not leave themselves enough time to both secure a buyer for their current home and find a new home by the April 30 deadline.

Appraisals an Impediment to More Green Homes, NAHB Says

2010-01-21T08:48:00.001-08:00

January 20, 2010 - Kohler, Marvin Windows and Doors and Whirlpool are three manufacturers ready with new lines of green and sustainable products for today’s new homes, company representatives said today at the National Association of Home Builders’ International Builders’ Show in Las Vegas.

But until lenders and appraisers learn to recognize the value of green innovation and the money it can save new home buyers, there is not enough incentive in the marketplace for large-scale implementation, said Bill Nolan, the Florida home building consultant who moderated the first of three press conferences in commemoration of Green Day at the Builders’ Show.

Kohler’s water-saving toilets use an average of 39,000 fewer gallons of water per year for a family of four – a lifetime of drinking water for three people, said Shane Judd, senior marketing manager of water conservation for the company. New products will incorporate rainwater reuse and gray water – using the water draining from the shower stall to fill the washing machine, for example.

Marvin emphasizes long-term sustainability rather than first-time costs and also pays close attention to green practices during the production process, said Brett Boyum, director of marketing. Each year, 8,500 tons of shavings and other wood waste are used to heat the company’s manufacturing plant.

Ed Linder, division director, Whirlpool Corporation, said his company is manufacturing ranges that use 40 percent less energy and appliances that are "smart-grid" ready and is exploring shared-power technologies: for example, using the energy generated from a refrigerator condenser coil to heat the water in the dishwasher.

For innovation to leap forward, it must be cost-effective, and that can’t happen until the additional first-time costs and long-term savings of most green technologies are appreciated by appraisers and bankers in the underwriting process, Nolan said.

"We can’t get lenders to appreciate the value of the net costs, and if we can’t get the values recognized, [manufacturers] can’t justify moving these products forward," he said, noting that NAHB is working to educate appraisers and lenders. "The goal should be long-term energy efficiency."

New Survey Data Looks at Both Older and Younger 55+ Buyers

2010-01-19T12:13:00.000-08:00

January 19, 2010 - A survey of consumers and builders, conducted in 2009 by the National Association of Home Builders (NAHB) and the MetLife Mature Market Institute, has yielded a new round of data revealing the housing preferences of the 55+ consumer. This analysis of data – the third in a series – compared the preferences of the 55-to-64 year old age group to those of the 65+ group.

The data uncovered a strong similarity in housing preferences between the two groups, with a few exceptions. The younger age group showed more interest in technology-heavy features, while the older group expressed a stronger preference for a single-story floor plan or one with a first-floor master bedroom, and a variety of universal design features.

One striking difference, according to John Migliaccio, director of research at MetLife’s Mature Market Institute, related to the desire for home services and community services.

"Very telling, said Migliaccio, "is that the younger group of mature consumers reported enthusiastically that they want services like home maintenance and repair as part of their next home purchase, along with services typically connected to older homeowners, such as housekeeping, onsite health care and transportation," noted Migliaccio.

According to Migliaccio, all of the aforementioned were ranked higher than the desire for organized social activities – a surprise, inasmuch as social activities and amenities have been thought to be valued quite highly by this group. This finding, he said, supports an emerging trend among builders to look for ways to partner with providers of such services to the residents of their active adult/lifestyle communities.

According to Mike McGowan, a 50+ builder from Binghamton, N.Y. and chair of NAHB’s 50+ Housing Council, "Most buyers in this market are looking for an easy-living lifestyle. They would like access to services that will free up their time from maintenance both inside and outside their homes. This data tells builders that the homes we build for older active adults will remain attractive to the consumers who will be entering that market for the foreseeable future."

Paul Emrath, NAHB’s vice president for survey and housing policy research, pointed out that the share of households that will want lower-maintenance housing is large, and growing larger as Baby Boomers age into that segment of the market. He cautioned that the current financial situation has led to sharply decreased construction of communities that serve the mature market. Without a change in the availability of capital for development and construction, there could well be a shortage of such housing when it is most needed.

Home Improvement Trends for 2010

2009-12-31T09:59:00.000-08:00

If you do plan to update your home or garden, here are some trends to keep in mind.

Home decor.
The sleek, sophisticated but comfortable style known as “soft contemporary” will be a key look for the New Year, said Kris Kolar, vice president of interior design at Robb & Stucky Interiors. Instead of the eclectic clutter that has been popular for a while, there will be a move toward using just one or two eye-catching accents. These “punctuation-mark pieces,” featuring hand-worked techniques that give a custom look, may include special materials such as mother-of-pearl, flame mahogany and stainless steel.

Furniture.
The environmental movement is getting stronger, said Jackie Hirschhaut, spokeswoman for the American Home Furnishings Alliance. Increasingly, furniture is being built using natural-fiber fabrics, recycled metals and sustainable woods. Red will be the trendiest accent color for furniture, she predicted. And home offices will continue to boom as growing numbers of Americans work from their residences.

Color.
Classic neutrals and pops of exotic brights are the key shades at Pittsburgh Paints, which recently announced four color palettes for 2010.
The “Canvas” palette includes deep gray-browns and gray-blues, muted beige and chalky white. “Pink City” offers vibrant pinks, spicy oranges, grays and chocolate-brown. “Grace” includes elegant hues such as pale butter, bronze-gold and sea foam. And “Zest” reinvents the style of Palm Springs circa 1950, mixing high-energy yellows with gray, white and black.

Landscaping.
Organic vegetable gardens, like the one installed at the White House are likely to be a huge trend in 2010, said Orlando, Fla., horticulture expert Tom MacCubbin. Community gardens are a growing trend, especially those that involve children. Of all vegetables, he predicts tomatoes will be especially popular. In the landscape, perennial plants that last longer than annuals and need less care are a strong trend, he added. Trendy plants include gold mound duranta, a shrub with acid-green foliage, and perennial bulbine, which sports spikes of yellow blooms.

New-home construction.
The era of the extravagant McMansion is over, said Nathan Cross of NWC Construction in Orlando. When building new homes, people are increasingly budget-conscious. “It’s back to basics. Even the pool is a no-frills deal,” he said. About the only area where homeowners may be prepared to splurge a little is the master suite. Energy-efficiency will be important. So will going green: “So long as it’s a green trend that doesn’t cost too much.” Outdoors, some homeowners will be installing fireplaces, fire pits and summer kitchens.

Remodeling.
The trend toward making minor improvements to home exteriors is likely to extend into next year—for good reason. It gives homeowners the biggest bang for their bucks when it comes to selling their homes. In terms of costs recouped, eight out of the top 10 home-improvement projects this year were exterior upgrades that cost less than $14,000, according to Realtors Report’s annual Remodeling Cost vs. Value Report. A steel entry-door replacement topped the list, recouping 128.9% of costs, followed by upscale fiber-cement siding replacements (83.6%), wood deck additions (80.6%), and several types of window replacements (more than 70%). The two interior projects that landed on the top-10 list were attic-bedroom additions (83.1% recouped) and minor kitchen remodels (78.3%). The least profitable remodeling projects in terms of resale, and therefore not likely to be popular in 2010, were home-office remodels and sunroom additions.

Senate Health Care Bill Threatens Home Building Industry

2009-12-22T08:35:00.000-08:00

December 21, 2009 - In a rush to pass a massive health care overhaul before Christmas, Senate Democrats have included a last-minute provision targeting the construction industry that is certain to derail the fragile housing recovery and threaten the solvency of countless small home building firms.
In order to find the 60 votes needed to pass health care reform, a provision was slipped into the health care bill that unfairly targets small construction industry firms by mandating that they provide health insurance if they employ more than five workers. That is the same mandate required for big businesses. Meanwhile, all other small businesses – with the exception of the construction industry -- would be exempt from providing mandatory health coverage if they employ 50 workers or less.
“This narrow provision is an unprecedented assault on the construction industry and unjustly targets an industry trying to keep its doors open during the worst housing downturn since the Great Depression,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. “If this provision were to be enacted into law, it would prove to be catastrophic for the home building industry. In short, this is a true jobs killer. Thousands of small builder firms struggling to stay afloat could go under. We strongly urge the Senate to reconsider and pull this onerous provision that threatens the viability of small home builders across the nation.”

Existing Home Sales Jump To Highest Level in Three Years

2009-12-22T07:19:00.000-08:00

Sales of previously owned homes in the United States surged last month as prices continued to fall and buyers rushed to take advantage of a popular tax credit, the National Association of Realtors (NAR) said on Tuesday.
The National Association of Realtors said that sales rose 7.4 percent to an annual rate of 6.54 million units, the fastest pace since February 2007, and higher than the 6.25 million unit pace expected.
October sales were revised lower to a 6.09 million pace from 6.10 million units.
Compared to November last year, sales of existing homes were up 44.1 percent, the largest yearly gain on records dating to 1999.
The median sales price was $172,600, down 4.3 percent from a year earlier, and up 0.2 percent from October.

New Home Energy-Efficiency Incentives Could Boost Recovery

2009-12-21T07:51:00.000-08:00

The National Association of Home Builders (NAHB) recently commended President Barack Obama as he proposed a new initiative to create jobs and make today’s homes more energy efficient.
In a recent speech that took place at a Home Depot in the suburban Washington, D.C. area, the president called on Congress to extend energy-efficiency tax credits for home owners as part of an $8 billion effort to reduce energy use.
“This is the kind of thinking that is going to get America back to work–and make a big difference in many home owners’ monthly utility bills,” said NAHB Chairman Joe Robson, a builder and developer in Tulsa, Okla.
NAHB estimates that 11,000 jobs, $527 million in wages and salaries, and $300 million in business income are generated by every $1 billion in new remodeling and home improvement activity. “That’s a huge impact just in the short run. And in the long run, the energy savings for participating home owners can be quite significant,” Robson said. “This also bolsters a very important message and something we have been saying for years: If we really want to make an impact on the nation’s energy use, we need to take significant steps to make the existing housing stock more efficient,” Robson said.
He pointed out that state and local home builder associations affiliated with NAHB can be instrumental in the effort to weatherize older homes and make them more energy efficient.
For example, the Builders Association of Minnesota served as the conduit for federal stimulus program funds provided to the state for its energy-efficiency programs. The association trained nearly 1,000 remodelers and other residential contractors and funneled the money to 1,300 Minnesota home owners to help them make needed improvements. Minnesota home owners got extra incentives for choosing projects like attic insulation, which some consumers don’t do because it’s something that’s not immediately visible, but when combined with incentives can bring a payback on utility bills within a year or two, depending on the climate.
“President Obama is right that saving money is very attractive, and so is providing jobs,” Robson said. “These are efforts that the Administration should consider on a much larger scale,” he continued. “They provide employment, stimulate the economy and help us reduce our dependence on fossil fuels–that’s three great outcomes. NAHB can help make this happen all over the country.”
Last month, the White House Council on Environmental Quality invited NAHB to explain how home builders, product manufacturers and remodelers can be part of the Administration’s “Recovery Through Retrofit” solution with programs like Minnesota’s. “We’re anxious to help with these efforts,” Robson said. “It’s what our members do, and do well–and they all want to get back to work

Housing Starts Rise Less Than Expected

2009-12-16T09:26:00.000-08:00

New U.S. housing starts rose but were lower than expected in November as construction activity for single family dwellings increased only marginally, a government report showed on Wednesday.
AP
The Commerce Department said housing starts increased 8.9 percent to a seasonally adjusted annual rate of 574,000 units.
Analysts polled by Reuters had expected housing starts to rise to 580,000 units. However, the percentage increase last month was the largest since May, indicating housing remained on a steady recovery path
October's housing starts were revised downwards to 527,000
units from the previously reported 529,000 units. Compared to the same period a year-ago, housing starts were down 12.4 percent, but way off the 54.9 percent decline seen in January.
Groundbreaking for single-family homes rose 2.1 percent last month to an annual rate of 482,000 units, after falling sharply in October. Starts for the volatile multifamily segment surged 67.3 percent to a 92,000 annual pace, reversing the previous month's plunge.
The housing sector, the main catalyst of the most painful U.S. recession since the 1930s, has been slowly improving after three straight years of decline. New home construction contributed to economic growth in the third quarter for the first time since 2005.
New building permits, which give a sense of future home construction, rose 6 percent to 584,000 units last month, the highest since November 2008. That compared to analysts' forecasts for 570,000 units. Compared to the same period a year-ago, building permits fell 7.3 percent.

30-Year Mortgage Rate Climbs From Record Lows

2009-12-10T11:16:00.000-08:00

U.S. fixed home loan rates edged above record lows in the past week, tracking bond yields higher following surprise improvement in November employment, home funding company Freddie Mac said on Thursday.
Thirty-year mortgages averaged 4.81 percent, up 0.10 percentage point from the the previous week, when it hit the lowest level since Freddie Mac started tracking it in 1971.
Historically low mortgage rates, largely a response to government interventions such as the purchase of more than $1.4 trillion in mortgage-related debt, are helping restore stability in hard-hit U.S. housing after a three-year dive.
High unemployment and fear of job loss has curbed homebuyer appetite despite enticing borrowing costs and discounted house prices, The Labor Department reported last Friday that the unemployment rate dropped to 10 percent in November from a 26-1/2-year high of 10.2 percent in October.
"Following an upbeat employment report, long-term bond yields rose slightly and fixed mortgage rates followed" in the week ended Dec. 10, Freddie Mac chief economist Frank Nothaft said in a statement.
Despite the rise, "rates on 30-year fixed mortgages are almost 0.7 percentage points below those at the same time last year, (which) translates into an $81 lower monthly payment on a $200,000 conventional mortgage," Nothaft said.
The average 15-year mortgage rate climbed to 4.32 percent in the past week from 4.27 percent, which was a record low dating back to when Freddie started tracking this rate weekly in 1991.
A year ago, 15-year home loans averaged 5.20 percent.
Lenders charged an average of 0.7 points in fees on the 30-year loan and 0.6 points on the 15-year mortgage, unchanged in the week.

Nine Consecutive Gains for Pending Home Sales

2009-12-01T08:30:00.000-08:00

Pending home sales have risen for nine months in a row, a first for the series of the index since its inception in 2001, according to the National Association of Realtors®.
The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in October, increased 3.7 percent to 114.1 from 110.0 in September, and is 31.8 percent above October 2008 when it was 86.6. The rise from a year ago is the biggest annual increase ever recorded for the index, which is at the highest level since March 2006 when it was 115.2.
Lawrence Yun, NAR chief economist, said home sales are experiencing a pendulum swing. “Keep in mind that housing had been underperforming over most of the past year. Based on the demographics of our growing population, existing-home sales should be in the range of 5.5 million to 6.0 million annually, but we were well below the 5-million mark before the home buyer tax credit stimulus,” he said. “This means the tax credit is helping unleash a pent-up demand from a large pool of financially qualified renters, much more than borrowing sales from the future.
The PHSI in the Northeast surged 19.9 percent to 100.2 in October and is 44.2 percent above a year ago. In the Midwest the index rose 11.6 percent to 109.6 and is 36.6 percent higher than October 2008. Pending home sales in the South increased 5.4 percent to an index of 115.4, which is 31.6 percent above a year ago. In the West the index fell 11.2 percent to 127.7 but is 21.9 percent above October 2008.
Yun cautioned that home sales could dip in the months ahead. “The expanded tax credit has only been available for the past three weeks, but the time between when buyers start looking at homes until they close on a sale can take anywhere from three to five months. Given the lag time, we could see a temporary decline in closed existing-home sales from December until early spring when we get another surge, but the weak job market remains a major concern and could slow the recovery process.
“Still, as inventories continue to decline and balance is gradually restored between buyers and sellers, we should reach self-sustaining housing conditions and firming home prices in most areas around the middle of 2010. That would mean broad wealth stabilization for the vast number of middle-class families,” Yun said.