Home Owners Near Foreclosures Feel Big Loss Too

Home Owners Near Foreclosures Feel Big Loss Too

Home owners living near a foreclosed property have faced about $2 trillion in losses to property values, according to a new report by the Center for Responsible Lending, which analyzed the impact of foreclosures on properties within one-eighth mile of a home in foreclosure.

“Communities with high concentrations of foreclosures lose tax revenue and incur the financial and  non-financial costs of abandoned properties and neighborhood blight, while home owners living in close proximity to foreclosures suffer loss of wealth through depreciated home values,” according to the report.

Home owners who live near a foreclosed property have lost, or stand to lose, about 7.2 percent — or $21,077, on average — of their home’s value, according to the report. In minority neighborhoods, the loss was found to be even greater: Home owners living near foreclosures lost 13.1 percent of their home value, or $37,084 on average.

Source: “Foreclosure Fallout Cost Nearby Home Owners $2 Trillion,” NBC News (Oct. 24, 2012)

Remodeling Activity Bounces Back to 2005 Levels

Remodeling Activity Bounces Back to 2005 Levels

More home owners are tackling remodeling jobs once again, as the Remodeling Market Index heats up and climbs to its highest point since the third quarter of 2005, the National Association of Home Builders reports. The greater momentum in remodeling is yet another positive trend recently trickling through the housing sector, NAHB reports.

“The strength of the [Remodeling Market Index], especially in owner-occupied properties, shows that home owners are investing in remodels as home prices stabilize,” says George “Geep” Moore Jr., NAHB Remodelers chairman. “As owners become more confident that investments in housing will hold their value, they are beginning to undertake projects to improve their comfort that they had been putting off.”

The index showed an increase in all three of the indicators measured: maintenance and repairs, minor additions and alterations, and major additions and alterations.

“The improvement in the RMI provides more evidence that the remodeling industry is making the orderly recovery from its low point in 2009 as we’ve been expecting,” says NAHB Chief Economist David Crowe. “Although remodeling projects over $25,000 are now showing some signs of strength, they are still lagging behind smaller property alterations and maintenance and repair jobs. The recovery of the remodeling market in general, and large projects in particular, continues to be constrained by factors such as tight credit and problematic appraisals.”

Source: National Association of Home Builders

Federal Reserve vows to keep Rates Low.

Federal Reserve vows to keep Rates Low

The Federal Reserve acknowledged Wednesday that segments of the economy are looking up, particularly housing and household spending. However, the Fed said it will continue to press forward with its stimulus campaign — which includes a move that is lowering mortgage rates — until the economy shows more growth.

At its latest meeting, the Federal Reserve renewed its vow to keep rates near zero until mid-2015. It will also continue to buy $40 billion in mortgage-backed debt each month, a program known as “QE3,” which has helped to push mortgage rates into record-low territory in recent weeks.

“The committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions,” the Fed said in a statement.

The Federal Reserve said that unemployment still remains high at 7.8 percent, the “fiscal cliff” looms at the end of the year, the global economy is struggling, and the U.S. gross domestic product grew at an annual rate of only 1.3 percent in the second quarter.

Source: “Fed Pledges to Maintain Stimulus,” The New York Times (Oct. 24, 2012)

New-Home Sales Surge 5.7% in September

New-Home Sales Surge 5.7% in September

New-home sales posted their largest gain in more than two years in September, the Census Bureau reported Wednesday. New-home sales rose 5.7 percent in September over August and are 27.1 percent higher year-over-year.

The median price of a new home in September was $242,400, up 11.7 percent from a year earlier. Analysts contribute the increase to the tight supply of inventories of new-homes on the market. Inventories of new-homes are at their tightest supplies since August 2005.

“Combined with consistent, positive reports on housing starts, permits, prices and builder confidence in recent months, today’s data on New-home sales provides further confirmation that a gradual but steady housing recovery is underway across much of the nation,” says Barry Rutenberg, chairman of the National Association of Home Builders. “Consumers who have been on the sidelines during the past few years are deciding now is the time to go forward with a new-home purchase, assuming they can qualify for a good mortgage under today’s exceedingly stringent guidelines.”

Regionally, the largest gains in new-home sales in September occurred in the Northeast, where sales rose 16.7 percent; followed by the South with a 16.8 percent increase; and the West posted a 3.9 percent increase. The Midwest saw new-home sales fall 37.3 percent.

Source: “New-Home Sales Hit 2-Year Hight,” CNNMoney (Oct. 24, 2012) and the National Association of Home Builders

Housing Shortages Plague Market

Housing Shortages Plague Market

Buyer demand is up, but there aren’t enough homes available to buy, according to the National Association of REALTORS®, which blamed a recent drop in home sales on Housing Shortages of for-sale homes.

“Recent price increases are not deterring buyer interest,” notes Lawrence Yun, NAR’s chief economist. “Rather, Housing Shortages are limiting sales, notably in parts of the West.” For example, sales of homes priced under $100,000 in the West have dropped 47 percent from a year ago.

Home owners are not putting their homes on the market at a high enough rate to offset the drop in distressed volumes, CNBC reports. Distressed sales have made up more than one-third of home sales in the past two years, but more recently has only made up about 24 percent of total home sales.

Besides the drop in distressed homes for-sale, many home owners are still continuing to wait out the market to recover more equity in their homes before they try to sell.

Yun says that home builders need to increase construction in order for home sales to recover more and to meet the demand for houses. Housing starts have risen 43 percent compared to a year ago, but levels still are only about half of what is considered normal for the sector.

Source: “Is There a Housing Shortage?” CNBC (Oct. 19, 2012)

Fannie Mae on Housing: The Worst is Behind Us

Fannie Mae on Housing

Fannie Mae economists say they believe home prices “hit bottom” earlier this year and that prices and sales will continue to move up as more consumers enter the housing market.

Economists with the mortgage giant are forecasting about a 9 percent rise in home sales this year, topping out at 4.98 million. They expect home sales to reach 5.19 million next year—a number that hasn’t been reached in years. Fannie Mae is also predicting housing starts to rise: 746,000 this year and 888,000 by 2013.

Still, challenges persist in the housing market’s recovery, Fannie Mae economists note.

“The U.S. fiscal cliff and debt ceiling debate as well as the weakened global economic environment are likely to create the strongest headwinds facing any real improvement this year,” says Doug Duncan, Fannie Mae’s chief economist. “With these issues hanging in the balance, we believe risks remain tilted to the downside. News from the housing sector is more positive, with various indicators showing continued momentum toward a sustainable, long-term recovery.”

Source: “Fannie: Sales Up 9 Percent in 2012,” RISMedia (Oct. 22, 2012)