Home buyers Survey Contains Valuable Information For Agents and Seller.

Home buyer Survey Contains Valuable Information For Agents and Sellers

One of the most useful research projects of the National Association of Realtors® (NAR) is the annual survey of home buyers and sellers. The 2011 version (Profile of Home Buyers and Sellers 2011) became available in May of this year. The information is based on answers to a questionnaire mailed to a random sample of 80,099 consumers who purchased a home between July 2010 and June 2011. (Names and addresses were provided by Experian, a company that maintains an extensive database of recent home buyers that is derived from county records.) There was a 7.3 percent response rate.

In 2011, first-time home buyers constituted 37 percent of the market. That is the lowest in five years, and a big drop from 50% in 2010 and 47% in 2009. The drop in first-time home buyers was accompanied, not surprisingly, by an increase in the median age of home buyers: from 39 years of age in 2010 to 45 in 2011. This statistical evidence gives support to the wide-spread Realtor® concern, reported here just last week, that overly-tight lending standards along with severe property restrictions by FHA are having the effect of keeping younger and entry-level buyers out of the market.

Certainly the most useful information for sellers and their agents is to be found in the section on the home search process. While the survey results are not significantly different from those of recent years, the trends continue. For example, this year 75 percent of buyers said that they used the internet frequently during the search process, about the same as 74% last year. In 2003 that number was 42%.

Thirty-five percent of buyers went to the internet as the first step in the home search process. 21% contacted a real estate agent first, and 8% began by driving through neighborhoods looking for homes for sale.

Buyers use multiple sources of information in the process of looking for a home. Far and away the most used sources are the internet (88%) and real estate agents (87%). What is the third most used information source? Yard signs (55%).

Multiple Listing Service (MLS) websites were the primary source of information for buyers who used the internet in their search process. 56 percent of those buyers went to MLS sites. Of course, many went to a variety of different sites. 45 percent used Realtor®.com, 40% went to real estate company websites, and 46% went to sites hosted by individual agents. Aggregators such as Zillow, Homegain, and Yahoo were visited by 38% of buyers.

Despite all the hoopla about using social networking sites such as Facebook and Twitter, only 2% of buyers used them as a source of information about available properties; and only 1% used video hosting sites such as YouTube.

While there are a lot of intriguing data about the sources of information used by prospective home buyers, certainly the most relevant has to do with where they actually found the home that they ultimately purchased. This year, for the first time, the information source that was highest in that category (40%) was the internet. In previous years it had been a real estate agent.

Agents are a very close second at 35%. The differences in a decade are fascinating. In 2001, 48 percent of buyers learned about their home through a real estate agent, and only 8 percent found their home on the internet. The times they have changed.

Some things, though, remain persistently the same – or close to it. In 2001, a yard sign was the third most likely source of information leading to the home that was purchased (15%). And this year? It is still the third leading source at 11%, the same as last year. Print media may not be dead, but it has shrunk to insignificance in this arena. In 2001, 7% of home buyers found the home they ultimately purchased through a newspaper ad; in 2011, as in 2010, it was less than 2%. Fewer than 1% found their home through a home book or magazine.

The 2011Profile of Home Buyers and Sellers shows what works. It is a valuable resource.

Increased Lending, Short Sales Necessary to Reduce High REO Inventories, Say REALTORS®.

Increased Lending, Short Sales Necessary to Reduce High REO Inventories, Say REALTORS®

Improving access to affordable mortgage financing for qualified home buyers and investors and committing additional resources to loan modifications and short sales will help reduce current and future inventories of real estate owned (REO) properties held by government agencies, according to the National Association of Realtors®.

In a letter sent today to the U.S. Department of Housing and Urban Development, the Federal Housing Finance Agency, and the U.S. Department of the Treasury, NAR responded to the agencies’ recent request for input and offered its recommendations for selling REO properties held by Fannie Mae, Freddie Mac and the Federal Housing Administration.

In its letter, NAR urged the agencies to create an advisory board as they explore new options for selling foreclosed properties to ensure that efficiently disposing of agency REO properties will minimize taxpayer losses and reduce the negative effects that distressed properties have on local real estate markets.

“As the leading advocate for housing issues, Realtors® know that foreclosures affect families, communities, the housing market and our nation’s economy,” said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “We believe the government has an opportunity to minimize the impact of distressed properties on local markets by expanding financing opportunities, bolstering loan modifications and short sales efforts, and enhancing the efficient disposition of REO properties. This will help stabilize home prices and neighborhoods and help support the broader economic recovery.”

Phipps said that the lack of available and affordable mortgage financing is hurting REO sales and the entire housing market, and urged increased consumer and investor lending. While NAR supports strong underwriting standards, the lack of private capital in the mortgage market, unduly tight underwriting standards, and increasing fees have discouraged many potential home buyers from applying for mortgages. NAR believes ensuring mortgage availability for qualified home buyers and investors will help absorb the excess REO inventory.

To prevent further REO inventory increases, NAR also recommended that the agencies take more aggressive steps to modify loans and, when a family is absolutely unable keep their home, to quickly approve reasonable short sale offers that allow families to avoid foreclosure. Phipps said that while federal programs have been put into place to help keep families in their homes, many of these have fallen short of expectations, and advocated that those resources be applied toward modifying loans and expediting short sales, which are typically less costly than foreclosure.

“Loan modifications keep families in their home and reduce defaults, while short sales keep homes occupied, helping stabilize neighborhoods and home values,” Phipps said. “Expanding resources and ensuring the use of already allocated funds for pre-foreclosure efforts is the best opportunity to reduce taxpayer costs and creates more positive outcomes for homeowners and their communities.”

NAR’s letter also outlined concerns about proposals to pool large volumes of REO properties for bulk sales. While these types of transactions may help quickly alleviate high REO inventories, taxpayers would be required to accept larger losses than are necessary. Phipps said that efforts should be made to incentivize individual versus bulk sales, except in small geographic areas that meet certain criteria, since selling in bulk to large national investors puts a large section of the housing market into the hands of fewer market participants and puts individual home buyers and sellers at a disadvantage.

He also said the success of any bulk sale programs should be determined by the stabilizing effect the program has on a locale and whether it maximizes value to taxpayers. Maximizing the recovery on the agencies’ assets will depend on how property valuations are determined and that those valuations are accurate, appropriate, and reflective of market conditions, such as the valuations available through the REALTOR® Property Resource, an NAR subsidiary.

NAR is also concerned about proposals that include lease-to-own elements. Phipps said that agency policies should first be focused on keeping families in their homes through loan modifications or short sales if that’s a better option, and that the agencies should not expedite foreclosures so that those properties could be included in a lease-to-own program. He added that any lease-to-own programs should not be administered by the government, but instead should include the participation of local investors or nonprofits that can manage the specialized needs and challenges of the local market.

“Realtors® welcome the agencies’ desire to receive input and ideas to help address their REO inventory. We look forward to serving on any advisory board and working together with agency staff, real estate professionals, property managers, and others with extensive real estate industry experience to develop sound strategies and solutions to ongoing REO issues,” said 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.

Mortgage Applications Rise Again on Low Rates.

Mortgage Applications Rise Again on Low Rates

Record low interest rates continue to pump up Mortgage Applications volume, as more borrowers try to take advantage.

Mortgage applications increased 3.8 percent for the week ending May 18, the Mortgage Bankers Association reports. A boost in more home owners refinancing their mortgages was attributed to the rise last week.

Refinance application activity increased 5.6 percent, reaching a nearly four-month high. Meanwhile, Mortgage Applications for home purchases dropped 3 percent in the week, the Mortgage Bankers Association reports.

“Mortgage rates again dipped to new record lows in the survey, which spurred more borrowers back into the refinance market,” says Michael Fratantoni, MBA’s vice president of research and economics.  “As a result, Mortgage Applications for refinance loans have increased for the third straight week and are at the highest level since February of this year.”

Source: “Record low rates spur mortgage application filings,” HousingWire (May 23, 2012) & realtormag.realtor.org

What Does It Take to Get a Loan Today? A Lot!

What Does It Take to Get a Loan Today? A Lot!

One of the biggest obstacles home buyers are facing is qualifying for financing, and a new report by the Federal Reserve shows exactly how big of struggle potential borrowers face.

According to a new Federal Reserve report surveying banks, the report found that most banks say they are a lot less likely to issue a mortgage to borrowers with a FICO credit of 620 and a 10 percent down payment than they were in 2006 during the housing boom.

“A moderate net fraction of banks were less likely to originate loans to borrowers with a FICO score of 680, regardless of down payment size,” the report also said. “A modest net fraction of banks were less likely to originate loans to borrowers with a FICO score of 720 and a 10 percent down payment, although survey respondents indicated that they were about as likely to originate loans now as they were in 2006 if such borrowers had a down payment of 20 percent.”

So while mortgage rates continue to sink to new record lows, many home buyers are finding they can’t always qualify for the low rates.

As a recent New York Times article about the Federal Reserve’s report illustrates: “A borrower with a credit score of 720 can expect a rate of 3.70 percent on a 30-year, $300,000 fixed-rate mortgage … while someone with a score of 620 to 639 can expect a 5.07 percent rate — or an extra $242 per monthly payment.”

Source: “How to Pump Up Your Credit Score,” The New York Times (May 17, 2012) & realtormag.realtor.org

Housing Affordability Reaches Record Highs.

Housing Affordability Reaches Record Highs

For the median-income family, buying a home has never been more affordable, new surveys by the National Association of REALTORS® and National Association of Home Builders show.

Housing affordability reached a record high for the second-straight quarter in the first three months of this year, the National Association of Home Builders/Wells Fargo Housing Opportunity index shows. Nearly 78 percent of all new and existing homes sold in the first quarter this year were affordable to families earning the national median income of $65,000, according to the index.

NAR’s quarterly Housing Affordability Index also showed a record high in affordability in the first quarter. NAR first began keeping records on affordability in 1970.

According to NAR’s index, the median-income family earning under $61,000 could afford a home costing $325,000 — more than double the national median existing single-family home price of $158,100.

“The median monthly mortgage principal and interest payment for a median-priced home would take only 13.5 percent of gross income,” according to NAR’s affordability index.

Buyers Struggle to Take Advantage

However, while affordability remains high, many home buyers are still being shut out of the market and are unable to take advantage of the deals due to tight lending conditions, housing experts say.

“For those with good credit, we’ve never seen better housing affordability conditions or market opportunities than we see at present,” says Moe Veissi, NAR’s president. “Although home prices are stabilizing and sales are rising, some buyers still have to jump through a lot of hoops to convince a lender that they are creditworthy, even for a mortgage that would be well within their means. This is especially true for self-employed buyers.”

Indeed, Barry Rutenberg, NAHB’s chairman, echoes those comments, adding that “without this significant hurdle, the housing and economic recovery could be proceeding at a much stronger pace.”

Where Affordability Is the Highest

Some of the most affordable housing markets in the first quarter, according to the NAHB/Wells Fargo Index are:

1. Indianapolis-Carmel, Ind. (where 95.8 percent of the homes sold during the first quarter were affordable to households earning the area’s median family income of $66,900)

2. Dayton, Ohio

3. Lakeland-Winter Haven, Fla.

4. Modesto, Calif.

5. Grand Rapids-Wyoming, Mich. (tied for fifth place)

5. Buffalo-Niagara Falls, N.Y. (tied for fifth place)

Meanwhile, the least affordable housing market continued to be New York-White Plains-Wayne, N.Y.-N.J., a title which it has held for 16-straight quarters, according to the NAHB/Wells Fargo index. Only 31.5 percent of the homes sold in the first three months were affordable to those earning the median income in the area of $68,200.

Source: REALTOR® Magazine Daily News & realtormag.realtor.org