Pending Home Sales Rise Again

Daily Real Estate News | Thursday, December 29, 2011

Pending home sales continued to gain in November and reached the highest level in 19 months, according to the National Association of REALTORS®.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 7.3 percent to 100.1 in November from an upwardly revised 93.3 in October and is 5.9 percent above November 2010 when it stood at 94.5. The October upward revision resulted in a 10.4 percent monthly gain.

The last time the index was higher was in April 2010 when it reached 111.5 as buyers rushed to beat the deadline for the home buyer tax credit. The data reflects contracts but not closings.

Lawrence Yun, NAR chief economist, said the gains may result partially from delayed transactions. “Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high,” he said. “Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage.

“November is doing reasonably well in comparison with the past year. The sustained rise in contract activity suggests that closed existing-home sales, which are the important final economic impact figures, should continue to improve in the months ahead,” Yun added.

Pending home sales are not affected by the recently published rebenchmarking of existing-home sales because the index uses a different methodology based directly on contract signings, and is adjusted for seasonality.

The PHSI in the Northeast rose 8.1 percent to 77.1 in November but is 0.3 percent below November 2010. In the Midwest the index increased 3.3 percent to 91.6 in November and is 9.5 percent above a year ago. Pending home sales in the South rose 4.3 percent in November to an index of 103.8 and remain 8.7 percent above November 2010. In the West the index surged 14.9 percent to 121.2 in November and is 2.9 percent higher than a year ago.

Source: NAR

Americans Eager to Buy, Sellers Aren’t Happy?

Daily Real Estate News | Wednesday, December 21, 2011

Nearly 80 percent of home buyers say now is a great time to buy a home, but sellers say it’s not a great time to sell, according to a new study, “The Great Recession and Attitudes Toward Homebuying,” released this week by the Mortgage Bankers Association. In fact, homeselling sentiment has fallen to record lows.

As for home buyers, they certainly have plenty to be happy about — housing prices have fallen and interest rates are at record lows, pushing affordability to record levels and allowing buyers to snag great deals on housing. 

But sellers, on the other hand, are getting discouraged that they can’t find buyers for their homes at a desirable sales price as well as the large overhang of mortgages past due or in foreclosure, according to the report. 

“In economic terms, as market values have fallen, potential sellers have not adjusted their price expectations downward fast enough to bring buyer and seller sentiment in line with one another,” Gary Engelhardt, a professor at Syracuse University who authored the study, said in a statement.

Sellers still can’t accept that their home values have fallen and they are no longer able to get the prices from the past, according to the study. 

Meanwhile, “despite high unemployment and slow economic growth, the bulk of American households believe that now is a good time to buy a home,” Engelhardt said. The strongest positive sentiments toward buying was found among young, educated, white, and Hispanic households, according to the study. 

“The pattern of home-buying sentiment during the current recession looks very similar to that of past recessions,” Engelhardt notes. “Home buyer sentiment falls as the unemployment rate increases, and improves as job growth returns and housing becomes more affordable. What distinguishes the current recession, though, is the dramatic decline in home-selling sentiment. From 1992 through 2005, positive home-selling sentiment fluctuated between 40 and 60 percent. Since 2005, sentiment has dropped precipitously, to around 7 percent currently, even while home-buying sentiment remains high.”

Source: “The Great Recession and Attitudes Toward Homebuying,” Mortgage Bankers Association (December 2011)

Flawed Appraisals Killing More Deals, NAHB Says

Daily Real Estate News | Friday, December 09, 2011

In many recent cases, new homes are being appraised for less than the cost of construction, according to the National Association of Home Builders. Builders are blaming flawed appraisals for holding back the housing market’s recovery.

Builders say that new homes should not be compared to foreclosed homes that have sat vacant and are in disrepair. 

“The inappropriate use of distressed and foreclosed sales as comparables in determining new home values is needlessly driving down home prices, killing home sales, causing more workers to lose their jobs and delaying a housing and economic recovery,” said NAHB Chairman Bob Nielsen.

Sixty percent of builders say they were experiencing problems with appraisals coming in below their contract sales price, according to a recent survey by NAHB. One out of three new-home builders say they’ve had signed sales contracts canceled in the last six months because appraisals on their homes are less than the contract sales price. In a separate study by the National Association of REALTORS® from June, 16 percent of real estate professionals also reported an increase in deals being canceled mostly due to low appraisals, too.  

“This is not only unfair and unreasonable, but it perpetuates the cycle of declining home values, drives more home owners underwater, harms local economic activity and acts as an obstacle to the recovery of the housing market,” Nielsen said in a statement.

NAHB is calling on regulators to make major reforms to appraisal practices and oversight to prevent flawed appraisals from continuing to hamper a housing market recovery. 

Source: National Association of Home Builders

Winter-Selling Tips for Overcoming the Gloom

Daily Real Estate News | Friday, December 02, 2011

Selling a home in the cold, dreary winter months may not be ideal but there’s still plenty you can do to get a home to standout. 

“Buyers out looking at homes in December or January are, as a group, quite serious about buying,” Laura Ortoleva, a spokesperson for the RE/MAX Northern Illinois, told RISMedia. “Therefore, sellers tend to benefit because each showing is more productive, and fewer showings are needed to sell the property.” 

RE/MAX agents offer some of the following tips when selling a home in winter in a recent article at RISMedia. 

Turn on the lights: Counter winter’s cloudy and short days by turning on all of the lights in a home for each showing. “Also, it’s a great idea to keep the lights on in the front of the house even if no showings are scheduled,” says Marlene Granacki of RE/MAX Exclusive Properties in Chicago. “People are always driving past the house, and keeping it lighted makes it look happy and welcoming.”

Have a place for shoes: Prospective buyers may arrive at the front door with shoes coated in snow or salt. “Make it easy for buyers to deal with their shoes when they arrive,” says Barbara Hibnick of RE/MAX Showcase, Long Grove, Ill. “Put a festive area rug at the front door for a great first impression and so visitors can wipe their feet. Have slippers or disposable booties available, along with a bench or chair, if there is room for one, where a visitor can sit and easily remove or put on their boots.”

Watch for odors: Homes can get stuffy in the winter. “Pet odors can be especially worrisome in winter,” says Mike Mondello of RE/MAX Synergy in Orland Park, Ill. “Use a room fragrance if needed, but nothing too strong, and I recommend that in winter sellers clean more often.”

Don’t make it too toasty: “Don’t blast buyers with hot air,” the RISMedia article notes. Keep the temperature at a comfortable 65 degrees during your showings (although keep in mind that a comfortable temperature for your thermostat can vary form house to house.) Potential buyers will most likely be wearing their winter coats when they tour the house so no reason to make them sweat.

Read more winter-selling tips. 

Source: “10 Ways to Get the Best of Winter When Selling Your Home,” RISMedia (Dec. 1, 2011)

Mortgage Scams Rise on Search Engines

 

Daily Real Estate News | Wednesday, November 23, 2011

Federal investigators are investigating the Google, Bing, and Yahoo! search engines in a hunt to find con artists who are using the sites to dupe troubled home owners.

The online ads posted by scammers promise to help save home owners from foreclosure. The ads claim they’ll help home owners through a government-backed program by modifying their mortgage payments so they can keep their home. The deceptive ads often target victims when searches for phrases like “stop foreclosure” are made. 

As part of the scam, con artists will ask for upfront fees or ask that mortgage payments be sent to them.

Investigators have already uncovered 125 mortgage scams through the search engines as of Monday, according to the Office of the Special Inspector General for the Troubled Asset Relief Program. 

Meanwhile, the three search engines say they will no longer accept ads from Internet agencies linked to such scams. 

Source: “Feds Widen Inquiry of Online Mortgage Scams,” The Associated Press (Nov. 22, 2011)

30-Year Mortgage Rates Drop Under 4% Again

Daily Real Estate News | Friday, November 11, 2011

For the second time this year, the 30-year fixed-rate mortgage dropped below 4 percent and continues to hover around record lows, Freddie Mac reported in its weekly mortgage market survey.

Yet overall, “fixed mortgage rates were little changed this week amid a mix of economic data reports,” Frank Nothaft, Freddie Mac’s chief economist, said in a statement.

Here’s a closer look at mortgage rates for the week ending Nov. 10:

• 30-year fixed-rate mortgages: averaged 3.99 percent with an average 07 point, down from last week’s 4 percent average. The last time the 30-year fixed-rate mortgage dropped below 4 percent was Oct. 6 when it averaged 3.94 percent. Last year at this time, 30-year rates averaged 4.17 percent.
• 15-year fixed-rate mortgages: averaged 3.30 percent with an average 0.8 point, dropping slightly from last week’s 3.31 percent average. Last year at this time, 15-year rates averaged 3.57 percent.
• 5-year adjustable-rate mortgages: averaged 2.98 percent, with an average 0.6 point, rising from last week’s 2.96 percent average. A year ago at this time, the 5-year ARM averaged 3.25 percent.
• 1-year ARMs: averaged 2.95 percent with an average 0.6 point, up from last week’s 2.88 percent average. A year ago at this time, the 1-year ARM averaged 3.26 percent.

Mortgage Rates Drop Sharply This Week

Daily Real Estate News | Friday, November 04, 2011

The 30-year fixed-rate mortgage, the most popular choice among home buyers, dropped to its second lowest reading on record this week, Freddie Mac reports in its weekly mortgage market survey.

“Market concerns over the European debt market drew investors to U.S. Treasury securities, lowering bond yields and mortgage rates,” says Frank Nothaft, chief economist at Freddie Mac.

Here are how rates fared for the week:

30-year fixed-rate mortgages: averaged 4 percent, with an average 0.7 point, down from last week’s 4.10 percent average. The 30-year fixed-rate mortgage is the second lowest on record, just behind the 3.94 percent record reached on Oct. 6. A year ago at this time, 30-year rates averaged 4.24 percent.

15-year fixed-rate mortgages: averaged 3.31 percent, with an average 0.7 point, falling from last week’s 3.38 percent average. Last year at this time, 15-year mortgages averaged 3.63 percent.

5-year adjustable-rate mortgages: averaged 2.96 percent this week, with an average 0.6 point, dropping from last week’s 3.08 percent. At this time last year, 5-year ARMs averaged 3.39 percent.

1-year ARMs: averaged 2.88 percent this week, with an average 0.6 point, dropping from last week’s 2.90 percent average. A year ago at this time, the 1-year ARM averaged 3.26 percent.

Source: Freddie Mac

Survey Reveals 5 Home Buying Myths

Daily Real Estate News | Friday, October 28, 2011

Overall, today’s home buyers tend to be fairly knowledgeable about the real estate market, but there are still a few points of confusion in the process, a new survey by Zillow of 1,000 potential home buyers finds.

Here are the five main areas of confusion the survey revealed:

Appreciation: About 42 percent of home buyers believe home values will appreciate by 7 percent a year.

Reality: Historically, home values in a normal market appreciate by 2 to 5 percent in a year.

Mortgage insurance: 41 percent of buyers think they will have to purchase private mortgage insurance, regardless of the amount of their downpayment.

Reality: Buyers only need to purchase PMI if their downpayment is less than 20 percent of the home’s purchase price.

Appraisals: 56 percent of the buyers said the purpose of the appraisal was to determine if a home was in good condition.

Reality: That’s the purpose of a home inspection; an appraisal estimates fair market value.

Home owner’s insurance: 37 percent of home buyers said that buying home owner’s insurance is optional.

Reality: Lenders require homebuyers to purchase homeowner’s insurance.

Ownership: 47 percent of home buyers said a prospective buyer owns a home after the purchase contract is signed.

Reality: The purchase and sales agreement is the beginning of the closing phase, but it can be a long process until they finally take ownership.

Source: Zillow Inc.

Improved Job Report Sends Mortgage Rates Higher

Daily Real Estate News | Friday, October 14, 2011

After posting record lows the last few weeks, mortgage rates inched higher this week, Freddie Mac reports in its weekly mortgage market survey. Yet, rates still remain near 60-year lows.

“An employment report that was better than market expectations helped to lift long-term Treasury bond yields and mortgage rates as well,” Frank Nothaft, Freddie Mac’s chief economist, notes. In September, the economy added 103,000 workers; however, the unemployment rate still remained high at 9.1 percent.

Here’s a closer look at rates for the week ending Oct. 13.

• 30-year fixed-rate mortgages: averaged 4.12 percent, with an average 0.8 point, moving up from last week’s record-hitting 3.94 percent average. A year ago at this time, 30-year rates averaged 4.19 percent.
• 15-year fixed-rate mortgages: averaged 3.37 percent with an average 0.8 point–that’s up slightly from last week’s low of 3.26 percent average. Last year at this time, 15-year rates averaged 3.62 percent.
• 5-year adjustable-rate mortgages: averaged 3.06 percent, with an average 0.6 point, and inching up from last week’s 2.96 percent. Last year at this time, the 5-year ARM averaged 3.47 percent.
• 1-year ARMs: averaged 2.90 percent with an average 0.6 point, a drop from last week’s 2.95 average. A year ago, 1-year ARMs averaged 3.43 percent.

Source: Freddie Mac

30-Year Mortgage Rates Drop Below 4%

Daily Real Estate News | Friday, October 07, 2011

For the first time ever, 30-year fixed-rate mortgages fell below 4 percent, Freddie Mac reported in its weekly mortgage market survey.

In the last months mortgage rates have continued to set new weekly record lows, but the 30-year mortgages’ latest drop below 4 percent may be an important threshold for potential buyers. The 30-year mortgage is the most popular financing option of buyers.

Mortgage rates are expected to stay well-below 5 percent through 2013, Fannie Mae economists are projecting. Home buyers taking out loans for purchase is expected to more than double in the next two years too, Inman News reports.

Rates have continued to free-fall as concerns over a global recession grows, Frank Nothaft, Freddie Mac’s chief economist, said in a statement.

Here’s a closer look at rates for the week ending Oct. 6.

• 30-year fixed-rate mortgages: averaged 3.94 percent this week, down from last week’s previous record low of 4.01 percent. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.27 percent.
• 15-year fixed-rate mortgages: averaged 3.26 percent, another all-time low. This is the sixth-consecutive week the 15-year mortgage has posted new average record lows. Last week, 15-year rates averaged 3.28 percent. Last year at this time, 15-year rates averaged 3.72 percent.
• 5-year adjustable-rate mortgages: averaged 2.96 percent this week, dropping from last week’s 3.02 percent. A year ago, the 5-year ARM averaged 3.47 percent.
• 1-year ARMs: averaged 2.95 percent, the only mortgage rate to move up last week. Last week, the 1-year ARM averaged 2.83 percent. A year ago, the 1-year ARM averaged 3.40 percent.

By Melissa Dittmann Tracey, REALTOR® Magazine Daily News