Federal Reserve Governor Elizabeth A. Duke, while speaking at the Federal Reserve Board Policy Forum last week, discussed the effect on the housing market that properties acquired by banks and lenders through foreclosure (REO’s) and suggested that if some of this inventory was converted to rental property by the lenders, this may have a positive effect on the housing market.
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In my opinion, the capital gains tax exclusion that was granted to homeowners under the Taxpayer Relief Act of 1997, is the single best, wealth-building opportunity, that’s ever been made available to the average American. That’s because, under Section 121, of the Internal Revenue Code, a single homeowner can exclude, up to $250,000, from the sale of their principal residence, from capital gains tax, and a married couple, filing a joint tax return, can exempt up to $500,000. The only requirement is that a homeowner must have owned and occupied their home, for a total of twenty-four out of Continue Reading → HUD released its U.S. Housing Market Conditions report for the 2nd quarter of 2011 which stated “housing data for the second quarter of 2011 indicate that the recovery in the housing market continues to remain fragile.” This did not come as a surprise, but what I did find a little surprising was the report showed that the market for new homes performed better than that for existing homes. The number of new homes sold rose in the second quarter and the year-over-year median sales price of new homes was up slightly. In contrast, the number of existing homes sold in Continue Reading → Dennis Norman The National Association of REALTORS Pending Home Sales Index for July shows, after two consecutive months of increases, a decrease of 1.3 percent in the index from the month before (seasonally adjusted), and a 14.4 percent increase from a year ago (last month’s index was up 19.8 percent from the year before). This morning, RealtyTrac released it’s Foreclosure Sales Report for the St. Louis metro area for the 2nd quarter of 2011 which showed there were 2,138 REO’s (banked owned) and Pre-Foreclosure (short sales and other sales of property with loans in default) during the quarter which is a 4.86 percent increase from the prior quarter and a decrease of 6.64 percent from a year ago. Today, the U.S. Department of Housing and Urban Development and U.S. Census Bureau released new home sales data for July 2011 showing a decrease of 0.7 percent from the month before, and an increase of 6.8 percent from a year ago. The seasonally-adjusted new home sales rate for July was 298,000 homes, down from an adjusted rate of 300,000 the month before and is a rate that if we finish 2011 at will make 2011 new home sales the lowest since the Commerce Department began keeping track of sales in 1963. Today’s existing home sales report from the National Association of REALTORS® shows existing home sales in July were at at a seasonally adjusted-annual rate of 4.67 million units which is a decrease of 3.5 percent from the month before, an increase of 21.0 percent from a year ago and is the lowest rate of home sales since November 2010 when it was 4.64 million. Having been in the mortgage industry for a number of years, I have found a lot of my “issues” when it comes to underwriting was a result of missing something at time of application. The following is a quick rundown of items that should be collected at application: In 1959 the census bureau first started keeping track of new home construction activity and reported that there were 1.5 million new homes started that year. In 2005 a record high 1.7 million new homes were started and in 2009 a record low 445,100 new homes. In 2010 there was a little improvement as there were 471,200 new homes started and things were looking up a bit, however, unless something changes dramatically, 2011 will hit a new record low of new home starts. The U.S. Census Bureau and US Department of Housing and Urban Development (HUD) issued their report Continue Reading → Last week, The Washington Post published an article by Kenneth Harney which said “if you take mortgage interest tax deductions, the next 100 days could have significant financial implications for you, thanks to Congress’s new federal debt ceiling plan……the compromise legislation created an unusual mechanism — an evenly split, 12-member bipartisan supercommittee — that could call for major cutbacks on real estate write-offs by Thanksgiving.” The question is, would doing away with the mortgage interest deduction put the final nail in the coffin for the housing industry? Read on to hear two opposing opinions on the topic. A report released by CoreLogic shows U.S. home prices increased in June 2011 by 0.7 percent from the month before, marking the third consecutive month-over-month increase. However, U.S. home prices in June 2011 decreased 6.8 percent from the year before. If we take the distressed sales (foreclosures, REO’s and short-sales) then year-over-year home prices declined by 1.1 percent in June 2011 from June 2010. Dennis Norman The National Association of REALTORS Pending Home Sales Index for June shows an increase of 2.4 percent in the index from the month before (seasonally adjusted), and a whopping 19.8 percent increase from a year ago. This is the second month in a row that the index increased on a year-over-year basis. Today, the U.S. Department of Housing and Urban Development and U.S. Census Bureau released new home sales data for June 2011 showing a decrease of 1.0 percent from the month before, and an increase of 1.6 percent from a year ago. The seasonally-adjusted new home sales rate for June was 312,000 homes, down from 315,000 the month before and is a rate that if we finish 2011 at will make 2011 new home sales the lowest since the Commerce Department began keeping track of sales in 1963. Radarlogic, real estate data and analytics company that frequently disagrees with the National Association of REALTORS® view of the housing market, released their RPX Monthly Housing Market Report for May 2011 yesterday and in it had a scorecard showing how their rather bleak predictions they made at the end of 2010 for the 2011 housing market were holding up. Unfortunately, as you will see below, it seems many of their predictions have been accurate and the housing market is performing as poorly as they expected in many areas. Today’s existing home sales report from the National Association of REALTORS® shows existing home sales in June were at at a seasonally adjusted-annual rate of 4.77 million units which is a decrease of 0.8 percent from the month before, a decrease of 8.8 percent from a year ago and is the lowest rate of home sales since November 2010 when it was 4.64 million. The U.S. Census Bureau and US Department of Housing and Urban Development (HUD) issued their report on New Residential Construction for June 2011 showing a very slight increase in single-family home building permits from the month before (0.2 percent), and a 9.4 percent increase in new home starts compared to the month before. KANSAS CITY, MO—Beth Phillips, United States Attorney for the Western District of Missouri, announced that a former real estate agent and a former loan officer are among five co-defendants who have pleaded guilty in federal court to their roles in an $11 million mortgage fraud scheme that involved upscale homes in Lee’s Summit, Blue Springs, Liberty, Parkville, and elsewhere. Typically from early spring until late summer is a busy season for the real estate market with increased home sales as people try to make their move without fighting winter and in time to have their kids in place before the new school year. Now, thanks to a report by Intersections, Inc., a company that provides address monitoring and credit monitoring services, I realize that it is also a season of increased identify theft. They say the risk of identity theft during a move is a result of personally identifiable information being shuffled around from one home to the next Continue Reading → Following last week’s somewhat encouraging Pending Home Sales report from the National Association of REALTORS which showed increased home sales activity, Radar Logic issued a much less encouraging report. Their report, titled “Don’t be Misled by Gains in Home Price Indices and Pending Homes Sales; Housing Recovery is Still a Long Way Off” pretty much says it all in the title. A report issued by Lender Processing Services, one of the countries largest loan servicers and aggregators of loan performance data, shows that while mortgage delinquencies continue to decline, lenders are taking longer to foreclose resulting in a drop in foreclosure sales. In fact, there are still significantly fewer foreclosure sales than there were before foreclosure moratoriums were put into place, and foreclosure sales are declining. Dennis Norman The National Association of REALTORS Pending Home Sales Index for May shows an increase of 8.2 percent in the index from the month before (seasonally adjusted), and a 13.4 percent increase from a year ago. This is the first time since April 2010 that the index increased on a year-over-year basis, and had the largest monthly gain since last November when the index rose 10.6 percent. In Britain… I am not a “misery loves company” guy, nor a “grass on the other side is always greener” guy, but in this case, it’s good to know the grass is greener in the U.S., at least as it relates to the housing market. Granted, I may be getting a little desperate for some good news, but a study I saw on the housing market in Britain by Zoopla.co.uk got my attention when I saw that 80 percent of the 4.32 million homes bought in Britain since 2006 are now worth less than the buyer paid. My first Continue Reading → Last week I got to hear a presentation by Brendan Lowney of Economic Advisors, aptly titled “Groping Toward a Housing Recovery“, which I think is a perfect way of describing our current housing market, so perfect, I borrowed it for the title of this article. Mr. Lowney began his presentation with a very sobering statement, saying “it’s really hard to overestimate the severity of the downturn that we’re in. This is much worse than anything we saw in the ’70s or the early ’80s, if people remember, and it’s really akin in many ways to the Great Depression, and within Continue Reading → Today, the U.S. Department of Housing and Urban Development and U.S. Census Bureau released new home sales data for May 2011 showing a decrease of 2.1 percent from the month before, and an increase of 13.5 percent from a year ago. The seasonally-adjusted new home sales rate for May was 319,000 homes, down from 326,000 the month before. The supply of new homes on the market decreased from an adjusted 6.3 month supply the month before to a 6.2 month supply in May. The median new home price increased for the month to $222,600, a 2.6 percent increase from a Continue Reading → Today’s existing home sales report from the National Association of REALTORS® shows existing home sales in May were at at a seasonally adjusted-annual rate of 4.81 million units which is a decrease of 3.8 percent from the month before and is a decrease of 15.3 percent from a year ago and is the lowest rate of home sales since November 2010 when it was 4.64 million. The U.S. Census Bureau and US Department of Housing and Urban Development (HUD) issued their report on New Residential Construction for May 2011 showing a 2.5 percent increase in single-family home building permits from the month before, and a 3.7 percent increase in new home starts compared to the month before. The Neighborhood Stabilization Program (NSP) was established as a result of the Housing and Economic Recovery Act (HERA) of 2008. It’s purpose is to allow state and local governments to purchase and redevelop abandoned or foreclosed properties in areas in the greatest need of help. The NSP program is designed to help low, moderate, and middle income families purchase REHABBED foreclosed homes and stimulate the economy. This is a middle income housing program that has an income limit for buyers at 120% of the Area Median Income. It is important to note that NSP is not just for first-time-home Continue Reading → The “State of the Nation’s Housing“ Report for 2011 by the Joint Center for Housing Studies of Harvard University does not paint a very pretty picture of the housing market, nor does it give us a whole lot to look forward to with regard to the near-term future of the U.S. housing market. There is a lot of talk in the media today about the poor housing market and how an increase in employment would help bring the housing market back. However, the question is, will a recovery in the job market bring the housing market back, or will a recovery in the housing market bring the job market back? Thinking of purchasing a home or refinancing a mortgage? Here are some tips to help make the process smooth: Know your current situation. Be aware of your credit history; your credit report may contain out of date, or inaccurate items. Carefully review your credit report and make a note of items that should be fixed. It takes time, but you can correct mistakes successfully with a written request to the individual credit bureaus. It is also a good idea to examine your monthly housing expenses to determine how comfortable you are with your budget without sacrificing important necessities. |
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