News

They say that no news is good news. And while that may be true, last week two economic reports were good news. Read on to learn what happened…and how home loan rates were impacted.
Last Thursday, Initial Jobless Claims come in at 381,000. Not only was this lower than expectations, the number was a nine-month low, signaling that the labor market is slowly improving. Then on Friday, Consumer Sentiment reached a six-month high, rising above expectations to 67.7. These aren't the only economic reports here in the US that have improved in recent weeks, which gives us reason for some optimism when it comes to our economy. But how the Eurodrama plays out may determine which way the fragile US economy goes next.
And it was a big week in Europe, with the European Central Bank (ECB) holding a policy meeting on Thursday and the two-day European Union Summit on Thursday and Friday. Before the Summit even began, rating firm Standard & Poor's put 15 of the 17-nation Euro currency bloc on a downgrade review, citing "continuing disagreements among European policy makers on how to tackle" the Euro debt crisis.
So what were the results of the EU Summit? Leaders agreed to a new, tighter "fiscal integration" across the Eurozone. This means that a new treaty will be drafted, setting guidelines such as annual budget deficits being limited to three percent, and failure to meet guidelines like these would automatically spark disciplinary procedures. As expected, Germany was the winner in this negotiation as they demanded a tighter fiscal union in lieu of firing up the printing press and buying troubled sovereign debt.
So what does all of this mean for home loan rates here in the US? It's important to remember that when our economy is struggling and economic reports are less favorable, our Bond Market usually benefits as investors seek a safe haven for their money. And since home loan rates are tied to Mortgage Bonds, our home loan rates are sometimes at their best when our economy is struggling. In a way it makes sense...in times of economic struggle, good home loan rates can help kick start our economy in other areas.
Though our economic reports have been improving of late, our Bond markets - and therefore home loan rates - have continued to benefit from the uncertainty in Europe, as investors have been staying put in the relative safe haven of US Bonds. That's why now remains a great time to purchase or refinance a home, with home loan rates still near historic lows. Let me know if I can answer any questions at all for you or your clients.

Weekly Info 12/9/2011

The newest European maneuvers have trigged a stock rally, but credit markets are not buying the deal. The small upward pressure on US yields today is preparatory to a big borrowing binge by the Treasury next week, not anything fundamental. Through the fog of Europe, dominating and concealing everything, one pattern is clear: the US economy is doing better than forecast 90 days ago, and the rest of the world is in some stage of sinking. The two surveyors of US consumer confidence have each reported November-December gains. New claims for unemployment insurance last month were the lowest since February, and the small-business org, NFIB, has also found the first up-turn in small-business hiring since 2008. The Fed's Z-1 reported a couple-trillion-dollar drop in US household net worth in the 3rd quarter; however, all of it was attributable to stock market losses then, all of which have been recovered.

Weekly Info 12/2/2011

Everybody struggles now to find guideposts in the thicket of new economic information. Two old ideas may help. First, the time-sense of humanity is more calibrated to getting the bear out of the cave than musing about why bears like caves. Second, a version of frog-in-hot-water: we tend not to notice the gradual onset of lunacy, grasping the insanity only in retrospect. US data are pretty good -- relative to fears of new recession. November payrolls gained 120,000 jobs, and inclusive of all revisions added that many to prior months. If markets had any idea in September that payrolls had jumped by 210,000, double the original announcement, we would not have had that mortgage refinance party. Reality break: the Treasury borrows and spends about $120 billion each month, and for that stimulus we get 120,000 jobs. Instead, why not just pay each of these people a million bucks and let them stay home? Europe is struggling with austerity, not us. Yet.

Rising Negative Equity Puts More Than One in Four Underwater

After declining between the first and second quarters of this year, Zillow says negative equity rose again in the third, reclaiming all of the previous quarter’s decline and then some.
Zillow’s latest market analysis indicates 28.6 percent of American homeowners with a mortgage owed more on the loan than their home was worth as of the end of September. That’s up from 26.8 percent in the second quarter and 28.4 percent in the first quarter.
Dr. Stan Humphries, Zillow’s chief economist, explains that negative equity fell in the second quarter on the basis of sharp improvements in depreciation rates and flat foreclosure liquidation rates.

Weekly Info 11/07/2011

A lot of really smart people are trying to figure out the European breaking point. Can't be done. Like watching an inevitable car accident with a closing speed of an inch per day. Markets via bank run may step on the accelerator at any time. Or these boobs may stay on the Merkel Plan and let austerity run its course, which means recession throughout Europe, collapsing credit and then bank collapse. Unlike the US, Europe has understood for more than a century that banks are public utilities, but they forget that there are limits to capacity at the sewer plant. Once you have a sewer plant in trouble, be veeerrry careful with the valves. Mercifully, since the world buys so little from us, we'll be less-impacted by global recession than anyone. No inflation, low or lower interest rates, Fed free to QE3, easy to sell Treasurys. Born lucky.

Greetings

As we near the end of the year we are again reminded of the benefits of living in Colorado. Beyond our incredible weather and vibrant communities, our local housing market has stayed relatively strong in the midst of a tough national economy.

The big news truly is today's low rate environment. Homeowners have been enjoying an unprecedented period of low mortgage rates, with an all-time low a few weeks ago. I never imagined locking 30 year fixed rate loans below 4.0%, but that has been a reality lately for well-qualified clients. It is not too late, however the best rates pass quickly, sometimes in a matter of hours. Those who are prepared to lock have saved a lot of money.

Many of my clients have recently been exploring investment property purchases to grow their wealth and diversify their portfolio. Thanks to the low rates and other factors, today is an ideal time to consider this investment option. Contact me if you'd like to discuss the opportunities available to your clients in this market in more depth.

Thank you again for your referrals and support of my business! It is always my goal to provide your clients with the highest level of service, coupled with great rates and a broad offering of loan products.

Make the Most of Your Flex Account in 2012

Will the maximum amount that I can contribute to my employer's medical flexible spending account shrink next year? I recall hearing that the contribution limits will change.

Actually, the rules won't change until 2013, when the maximum amount employees can stash in a medical FSA will be capped at $2,500 per year. Currently the maximum limit varies by plan, but many employers allow employees to set aside $4,000 or more in these pretax accounts for medical expenses. You can sign up for your 2012 contributions during open-enrollment season this fall.

In light of the impending change, however, you can make the most of your FSA in 2012. If you've been thinking of having an elective medical procedure done that's not fully covered by insurance – such as laser eye surgery for you or orthodontia for your kids – you might want to schedule it before the FSA limit changes, so you'll have access to more tax-free money.

And, if you plan carefully, you may have an even bigger stash of tax-free money to use for out-of-pocket medical expenses during the first 2½ months of 2012 or 2013. If your employer extends the deadline for using FSA funds to March 15 of the following year, rather than December 31, you can combine any funds remaining from the previous year with the entire amount you earmark for the current year – even though the full amount has not yet been deducted from your paycheck. If, for example, you have $1,000 left over from 2011 and you sign up to contribute $4,000 to your FSA for 2012, you may be able to use $5,000 in tax-free money to pay for out-of-pocket medical expenses from January 1 to March 15, 2012.

Weekly Info 10/22/2011

Mortgage interest rates improved slightly on the week on mixed economic data. Economic data better than expected included the October NAHB Housing Market Index, September Housing Starts, weekly jobless claims, and the October Philadelphia Fed Business Index. Economic data weaker than expected included the October New York Empire State Manufacturing Index, September Building Permits, and September Existing Home Sales. Inflation data was generally in line with expectations. However, the overall Producer Price Index (PPI), a measure of wholesale prices, was up 0.8% on expectations that it would be up 0.2%. Uncertainty persists surrounding the European sovereign debt crisis. German officials are saying that a deal will be resolved by next Wednesday. Yesterday the Greece Parliament voted to cut spending, appearing to meet the demands of the ECB, IMF, and EU for additional aid.

Weekly Info 07/22/2011

Mortgage interest rates increased slightly on the week on continued uncertainty surrounding European sovereign debt and US negotiations regarding the debt ceiling. Economic data of note included June Housing Starts and Building Permits, both of which were better than expected. June Existing Home Sales, though, fell 0.8% on expectations that they would increase by 2.5%. Weekly jobless claims increased by 10k, up more than expected. The July Philadelphia Fed Business index increased to a level of 3.2, indicating slight expansion after a couple of months of contraction within the sector. Bank of America reported its largest quarterly loss in its history, a loss of $8.83 billion in the second quarter. Also, China’s factory sector contracted for the first time in a year.

Latest Bill Calls for Fannie, Freddie Merger

A bill is expected to be introduced today in the House of Representatives that calls for a merger between government-sponsored enterprises Fannie Mae and Freddie Mac, The Wall Street Journal reports.

Rep. Gary Miller, R-Calif., who is introducing the bill and who is also a real estate developer and former home builder, proposes that the newly merged firm also be restructured in how it operates. It would purchase mortgages and sell them to investors as securities that are backed by the government.

Unlike other bills that have called for winding down of the GSEs and privatizing them, Miller’s bill would not seek private owners for the new entity. However, the new firm would be privately capitalized.

“Banks would pay a ‘guarantee’ fee on loans that would fund the firm's operations and maintain adequate capital. Investors would pay an additional fee to finance an insurance fund that would cover catastrophic losses,” The Wall Street Journal explains.

The new firm would be regulated by the Federal Housing Finance Agency. The FHFA would ensure the firm’s market share never exceeds 50 percent of the mortgage market.

Lawmakers continue to wrestle over the fate of the GSEs, which have cost taxpayers $138 billion since the government took them over in 2008. Earlier this year, the White House called for winding them down. A series of bills currently in Congress are attempting to shrink Fannie and Freddie’s role and privatize them.

Miller’s bill is expected to garner bipartisan support.

Source: “Bill Calls for Fannie, Freddie Merger,” The Wall Street Journal (July 5, 2011)

Pending Home Sales Turn Around in May

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 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,” Yun added.

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.

Regional Performance

▪ The PHSI in the Northeast rose 7.3 percent to 69.2 in May and is 4.4 percent above a year ago.
▪ In the Midwest, the index jumped 10.5 percent to 82.8 and is 17.2 percent higher than May 2010.
▪ Pending home sales in the South increased 4.1 percent to an index of 95.0 in May and are 14.6 percent higher than a year ago.
▪ In the West, the index surged 12.9 percent to 100.6 and is 13.5 percent above May 2010.

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.

Source: NAR

Freddie Mac: Better Days Ahead in Housing

Freddie Mac’s chief economist is optimistic that the housing market and economy will improve in the second half of 2011.

Freddie Mac Chief Economist Frank Nothaft said mortgage rates will likely remain historical lows of between 4.5 percent and 5 percent for the remainder of the year. Also, he expects more buyers to stop waiting on the sidelines as recent price drops in home prices have improved affordability.

Nothaft said consumers’ uncertainty about the economy has caused them to delay home purchases and other “big-ticket items.”

"Some potential buyers who have the means to buy are awaiting clearer signs that home values have firmed," Nothaft says.

But Nothaft says they should be getting their signs in the second half of the year, with projected job gains, and a growing, improved economy.

"Even though near-term concerns over income and sales growth are restraining consumer spending, business hiring, and new building, a number of positive signs in the economy indicate that growth will continue and is likely to accelerate in the second half of this year," Nothaft said. "Look for a gradual improvement in housing activity in the coming year.”

Source: “Freddie Mac Economist Sees Sunny Economy in Second Half,” HousingWire (June 27, 2011)

Green Buildings Net Higher Profits, Group Says

Green commercial buildings are more profitable, nabbing higher rates, boasting higher occupancies, and attracting more investors, according to Capital Markets Partnership, a nonprofit coalition of investment banks, investors, and governments.

As such, CMG plans to jump-start a secondary market to buy and sell green building securities for all types of buildings, Forbes reports. The group has created underwriting standards that have been tested by some of the biggest banks.

“Green buildings are complicated, and if you don’t define standards, you could devalue collateral” says Mike Italiano, CEO of Capital Markets Partnership and a founder the U.S. Green Building Council. “And coming off the largest devaluation of collateral in history, we need to avoid that."

Italiano maintains “there’s a 20-year business model here which has been calculated to create a trillion dollar economic stimulus, 8 million new jobs, and $400 billion in new wages.”

President Obama also is recently promoting the value of green building through the Better Buildings Initiative. The initiative, which offers tax incentives, aims to make existing commercial and multifamily buildings more energy efficient.

Source: “Green Building Financing Offers More Profits, Fewer Risks,” Forbes (June 14, 2011)

More Lawmakers Fight 20% Down Payment

A proposed 20 percent down payment rule for qualified residential mortgages is too high, argues a growing group of lawmakers in the House of Representatives.

Late last week, about 240 lawmakers in the House sent a second letter to federal regulators urging them to lower the down payment rule on QRMs. Last month, about 150 lawmakers had signed a letter urging the same.

"The resultant reduction in demand for housing, due to an overly burdensome government dictate, would only add to the challenges the housing market faces, and could threaten a full-fledged economic recovery from years to come," the most recent letter reads.

The 20 percent down payment rule arises from an effort of several federal agencies that have been trying to urge more responsible lending and borrowing. The agencies created a proposed risk-retention regulation under the Dodd-Frank Wall Street reform law, which requires lenders that securitize mortgage loans to retain 5 percent of the credit risk unless the mortgage is considered a safe mortgage or a “qualified residential mortgage.” (FHA and VA mortgages would be exempt.)

QRMs would be exempt from the 5 percent credit requirement but would have to meet certain guidelines, such as the proposed 20 percent down payment requirement. Borrowers with less than 20 percent down could then be forced to pay higher fees and interest rates.

A 20 percent down payment requirement would cause more first-time buyers to flee from the already fragile housing market, analysts at Capital Economics say.

The National Association of REALTORS® also has been an outspoken critic of the proposal, saying that a 20 percent down payment requirement would jeopardize a housing recovery.

Existing-Home Sales Drop with Market Constraints

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, fell 3.8 percent to a seasonally adjusted annual rate of 4.81 million in May from a downwardly revised 5 million in April, and are 15.3 percent below a 5.68 million pace in May 2010 when sales were surging to beat the deadline for the home buyer tax credit.

Lawrence Yun, NAR chief economist, said temporary factors held back the market in May, as implied from prior data on contract signings.

“Spiking gasoline prices along with widespread severe weather hurt house shopping in April, leading to soft figures for actual closings in May,” he said. “Current housing market activity indicates a very slow pace of broader economic activity, but recent reversals in oil prices are likely to mitigate the impact going forward. The pace of sales activity in the second half of the year is expected to be stronger than the first half, and will be much stronger than the second half of last year.”

Yun said the market also is being constrained by the lending community. “Even with recent economic softness, this is a disappointing performance with home sales being held back by overly restrictive loan underwriting standards,” he said. “There’s been a pendulum swing from very loose standards which led to the housing boom to unnecessarily restrictive practices as an overreaction to the housing correction – this overreaction is clearly holding back the recovery.”

There were notable regional differences in home sales. “A large decline in Midwestern existing-home sales can be attributed partly to the flooding and other severe weather patterns that occurred, but this also implies a temporary nature of soft market activity,” Yun explained.

The national median existing-home price for all housing types was $166,500 in May, down 4.6 percent from May 2010. Distressed homes – typically sold at a discount of about 20 percent – accounted for 31 percent of sales in May, down from 37 percent in April; they were 31 percent in May 2010.

“The price decline could be diminishing, as buyers recognize great bargain prices and the highest affordability conditions in 40 years; this will help mitigate further price drops,” Yun said.

“Home prices are rising or very stable in local markets with improved employment conditions, such as in North Dakota, Alaska, Washington, D.C., and many parts of Texas,” Yun noted.

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said a number of proposals being considered in Washington could further jeopardize the housing recovery. “We’re concerned about the flow of available capital, including a possible rule that would effectively raise minimum downpayment requirements to 20 percent,” he said. “We don’t need to throw the baby out with the bath water – increasing downpayment requirements would effective shut many qualified families out of the market. What we critically need is a return to the basics of providing safe mortgages to creditworthy buyers willing to stay well within their budget.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.64 percent in May, down from 4.84 percent in April; the rate was 4.89 percent in May 2010. “Although low mortgage interest rates are welcome, they are less meaningful compared to the tightness of loan underwriting standards,” Yun noted.

Total housing inventory at the end of May fell 1 percent to 3.72 million existing homes available for sale, which represents a 9.3-month supply at the current sales pace, up from a 9-month supply in April.

All-cash transactions stood at 30 percent in May, down from 31 percent in April; they were 25 percent in May 2010; investors account for the bulk of cash purchases.

First-time buyers purchased 35 percent of homes in May, down from 36 percent in April; they were 46 percent in May 2010 when the tax credit was in place. Investors accounted for 19 percent of purchase activity in May compared with 20 percent in April; they were 14 percent in May 2010.

Single-family home sales declined 3.2 percent to a seasonally adjusted annual rate of 4.24 million in May from 4.38 million in April, and are 15.4 percent below a surge to 5.01 million one year ago. The median existing single-family home price was $166,700 in May, down 4.5 percent from May 2010.

Existing condominium and co-op sales fell 8.1 percent to a seasonally adjusted annual rate of 570,000 in May from 620,000 in April, and are 14.7 percent below the 668,000-unit pace in May 2010. The median existing condo price was $165,400 in May, which is 5.8 percent below a year ago.

Existing-home sales by region:

Northeast - declined 2.5 percent to an annual level of 770,000 in May and are 13.5 percent below May 2010. The median price in the Northeast was $241,500, up 6.1 percent from a year ago.

Midwest - existing-home sales dropped 6.4 percent in May to a pace of 1.02 million and are 22.7 percent below a year ago. The median price in the Midwest was $136,400, which is 8.5 percent below May 2010.

South - existing-home sales fell 5.1 percent to an annual level of 1.85 million in May and are 14.4 percent below May 2010. The median price in the South was $149,200, down 3.1 percent from a year ago.

West - unchanged at an annual pace of 1.17 million in May but are 10 percent lower than a year ago. The median price in the West was $192,300, which is 12.6 percent below May 2010.

Source: NAR

Wells Fargo Stops Reverse Mortgage Loans

Wells Fargo Home Mortgage announced that it will stop taking applications for new reverse mortgage loans by the end of the month due to the unpredictable nature of home values.

Reverse mortgages generally are sold to those over age 62 who want to tap into their home equity to pay for personal expenses like medical bills. Reverse mortgages don’t have to be repaid until the home owner sells the property or passes away, which is how it differs from home equity loans.

The company will continue to service customers who already have existing reverse mortgages, but will no longer take new applications as of June 30.

Wells Fargo joins a growing number of banks that are getting out of the reverse mortgage origination business due to the sluggish real estate market, which has made it more difficult for banks to determine home values and how much they should lend in the reverse mortgages. Bank of America announced in February that it also would stop processing new reverse mortgage loans.

30-Year Rates Inch Up Slightly for the Week

After eight weeks of declines, the average 30-year fixed-rate mortgage, a popular choice among home buyers, edged up this week but still remains low by historical standards. Meanwhile, the 15-year mortgage continued to reach new lows for the year, Freddie Mac reports in its weekly mortgage market survey.

Here’s a closer look at how rates fared for the week.

30-year fixed-rate mortgage averaged 4.50 percent, up just slightly from last week’s 4.49 percent. Last year at this time, the 30-year rate mortgage averaged 4.75 percent.
15-year fixed-rate mortgage averaged 3.67 percent for the week, which is down from last week’s 3.68 percent. That marks its lowest level since November 2010. Last year at this time, the 15-year rate mortgage averaged 4.20 percent.
5-year adjustable-rate mortgage averaged 3.27 percent, down from last week’s 3.28 percent average. A year ago at this time, the 5-year ARM averaged 3.89 percent.


Overall, "mortgage rates were little changed this week as financial market participants shrugged off the recent inflation reports,” says Frank Nothaft, chief economist of Freddie Mac.

Source: “Mortgage Rates Mixed; 30-Year Fixed Ticks Up to 4.50 Percent,” Freddie Mac (June 16, 2011)

Banks Giving Agents Short Sale Leads?

Banks are becoming more open to providing real estate professionals with “warm leads” of willing borrowers for short sales in order to boost the number of successful workouts, according to a panel at HousingWire’s REO Expo in Fort Worth, Texas.

This is a "completely new phenomenon," Marie Chung, director of REO and Short Sale Services at Modern Realty, told conference attendees of this “top down” approach to short sales.

What’s changing: Instead of real estate brokers having to cold call defaulting borrowers to offer their short sale services, more banks and mortgage servicers are becoming more open to giving brokers information of borrowers willing to participate in a short sale. The lenders contact the borrowers first and then pass on information of those willing to cooperate in a short sale to real estate professionals, the panel said.

"Our short sale closings increased about 20 percent," Jaysen Greenleaf, director of client relations and business development at Phoenix Asset Management, told conference attendees about the change to banks giving them leads.

7 Highest-Performing Major Housing Markets

Several real estate markets are starting to show signs of improvement with home prices in the last quarter as the industry demonstrates more signs of stabilizing, according to Clear Capital's latest monthly Home Data Index Market Report.

REO saturation rates have improved in the majority of the country’s largest markets. However, many areas are still battling year-over-year price declines. Clear Capital’s index reports that quarter-over-quarter home price declines were 2.3 percent in the latest quarter, which is less than half compared to the previous month.

“The latest market report results through May suggest that home prices are starting to ease back from the heavy declines seen over the winter,” says Alex Villacorta, director of research and analytics at Clear Capital. “We are still far away from the strong demand needed to fully turn things around for the housing market. However, it is clear from the initial spring sales data that prices are softening, suggesting stabilization in the market."

The High Performers
Seven of the top 15 markets posted quarter-over-quarter property price gains in this month's report, compared to none in last month’s, according to Clear Capital. Here are the seven highest-performing major real estate markets, according to the report.

1. Washington, D.C.-Arlington, Va.-Alexandria, Va.
Quarter-to-quarter home price change: 4.5%
Year-to-year price changes (May 2010-May 2011): 4.9%
REO saturation: 17.5%

2. St. Louis, Mo.
Quarter-to-quarter home price change: 2.2%
Year-to-year price changes: -11.4%
REO saturation: 35.3%

3. Pittsburgh, Pa.
Quarter-to-quarter home price change: 1.6%
Year-to-year price changes: 0.3%
REO saturation: 10.9%

4. New York, N.Y.-Long Island, N.Y.-No. New Jersey, N.J.
Quarter-to-quarter home price change: 1.5%
Year-to-year price changes: 1.4%
REO saturation: 9.6%

5. Virginia Beach, Va.-Norfolk, Va.-Newport News, Va.
Quarter-to-quarter home price change: 1.4%
Year-to-year price changes: -13.2%
REO saturation: 22.4%

6. Miami-Ft. Lauderdale-Miami Beach, Fla.
Quarter-to-quarter home price change: 0.6%
Year-to-year price changes: -5.2%
REO saturation: 39.6%

7. San Jose-Sunnyvale-Santa Clara, Calif.
Quarter-to-quarter home price change: 0.5%
Year-to-year price changes: -5%
REO saturation: 25%

Tthe lowest-performing market for the fifth straight month was Detroit-Warren-Livonia, Mich., with a 13.2 percent decrease in quarter-over-quarter home price change and a 58 percent REO saturation rate.

Source: “Clear Capital Reports Quarterly Home Price Decline Slows; Signs of Market Stability as Summer Approaches,” Clear Capital (June 9, 2011)

Which Social Network Is Rated Most Important?

Nearly 60 percent of survey respondents say that it is important to have a LinkedIn account--more than any other social network, according to “S-Net (The Impact of Social Media),” a report from ROI Research Inc. of nearly 3,000 active social networkers.

And those surveyed say they use LinkedIn a lot, too. With those who have an active LinkedIn account, half of those surveyed say they visit the site at least weekly, and 20 percent visit the site at least daily.

“Factors including LinkedIn’s recent IPO announcement, the May uptick in national unemployment, and signs of a slowed market certainly contribute to LinkedIn’s attractiveness among social networkers,” says Daina Middleton, CEO of Performics, which released the survey results.

The survey also found:

•Social networkers listen to what their peers have to say about brands and businesses they like--or don’t. Sixty percent say they are at least somewhat likely to take action when a friend posts something about a product/service, company, or brand. Slightly more than half agree that others can influence business decisions made by companies and brands by sharing their opinions on social networking sites.

•Fifty-three percent frequently or occasionally use social networking sites to give feedback about a brand or business.

•The public is divided on using social networks to give and get advice about other companies. Fifty percent of respondents say they use social networks to give advice and another 50 percent say they use it to get advice about services and companies.

Source: “New Social Media Study: Nearly 60 Percent Say LinkedIn Is Most Important Social Network Account,” RISMedia (June 9, 2011)

Housing Shortage Is Likely Coming, Report Says

Within the next decade, 16 million new housing units will be needed to meet population growth and shifting demands, according to Harvard University’s Joint Center for Housing Studies in its latest annual "State of the Nation's Housing" report.

That means household growth, which has dropped drastically in recent years, will need to greatly reverse its trend to meet the forecasted spike in demand. From 2007-2010, household growth averaged about 500,000 per year--less than half the 1.2 million annual pace averaged prior from 2000-2007.

To absorb the current rate of foreclosed and distressed homes plaguing most markets, a more normal rate of household formation is critical, according to the report. However, household growth partially has stalled as young adults have delayed home ownership and immigration has slowed.

As such, in recent years, builders have drastically cut production of new homes.

"With inventories of new homes at historic lows, a turnaround in demand could quickly result in tighter markets," the report notes. "Over the longer term, the number of younger households is set to rise sharply, supporting growth in the population that fuels growth in both new renters and first-time buyers. The path of the economy and evolution of the mortgage market will determine when and if this increased demand materializes."

The report predicts a need for greater housing units for several reasons. For example, the report projects demand for 1 million new homes a year is needed to meet population growth in the coming decade. The report also predicts a surge in smaller homes, estimating that 3.8 million baby boomers will be looking to downsize their homes within the next decade. Also in adding to the increase in housing units needed, Immigration growth, the need to replace existing homes, and demand for second homes will contribute to rising demand, the report notes. Therefore, researchers conclude at least 16 million new housing units will be needed over the next decade.

Source: “Harvard: Real Estate Recovery Hinges on Return of Demand,” Inman News (June 6, 2011)

Which Housing Values Have Suffered the Most?

Lower priced homes have been harder hit than higher priced homes in the sluggish housing market, according to a study by Harvard University’s Joint Center for Housing Studies.

High-priced homes have lost 38 percent of their value since values peaked in 2006. Lower priced homes, on the other hand, have dropped 63 percent since peaking in 2007.

Why such a difference? Daniel McCue, senior research analyst for the Joint Center, says it’s because lower priced homes appreciated much more before reaching its peak and therefore had further to drop than higher priced homes.

For example, in San Francisco, lower end homes nearly tripled in price before peaking. High-end homes, meanwhile, did not even double before reaching its peak. McCue attributes this partially to lenders making more loans available to lower income households during the housing peak days, which increased demand and prices.

Foreclosures have also plagued low-income areas, more so than higher income areas, according to the study. Foreclosures in low-income neighborhoods are more than double that of high-income neighborhoods, according to the Joint Center for Housing Studies.

Prices range drastically among major housing market so what’s considered “high-priced” and “low-priced” in the study varies greatly from market to market. For example, in Atlanta low-tier homes were considered under $122,533 and high-tier homes above $221,679; in San Francisco, low-tier homes were considered $312,546 and high-tier homes over $573,577.

Suburbs Being Reshaped by Lack of Kids

Children playing outside is a natural picture of the American suburban landscape. But in 2011, people are wondering — where did all the kids go?

William Frey, demographer at the Brookings Institution, calls children in the suburbs an “endangered species.”

The dropping children population is reshaping the look of suburbs, experts say. As more women delay having children and more families have fewer children, the childhood population under the age of 18 has dropped in 95 percent of U.S. counties since 2000, according to an analysis by USA Today of 2010 Census data. Despite a 9.7 percent growth in the overall population, the number of households with children under age 18 has remained at 38 million since 2000 — that’s fewer than the number of households with dogs (which stands at 43 million).

"All of a sudden, there may technically be no children in the neighborhood," says James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy, Rutgers University.

So what’s this all mean for suburbia? In some areas of the country, schools have closed from declining enrollments, some child-oriented businesses are closing, and housing needs are shifting.

"Lots of singles, lots of elderly, fewer kids — what this does really is free people in their location decisions to a certain extent if they're not bound by school and safety aspects," says Armando Carbonell, chair of the department of planning and urban form at the Lincoln Institute of Land Policy. "It can mean growth in the central city where schools might have been a concern. More households will be able to locate to places without the attributes of the suburbs."

What's That '+1 Button' All Over the Internet?

Google recently launched the “+1 button” and you’ll spot it on a range of Web sites from YouTube and Blogger to the Washington Post and many others. Google added the +1 button to its search engine three months ago but is now making the “+1 button” available to other Web sites to add.

So what is it?

The button is similar to Facebook’s Like button. You click the +1 button when you think “this is pretty cool” or when you want to say “you should check this out” when viewing Web sites, according to Google.

The button gives you the ability to vote on Web sites and advertisements (the button can appear next to the headline of search ads), and the information is then used to tailor search results for you and your contacts.

For example, "with a single click you can recommend that raincoat, news article, or favorite sci-fi movie to friends, contacts, and the rest of the world,” writes Google software engineer Evan Gilbert in a blog post. “The next time your connections search, they could see your +1's directly in their search results, helping them find your recommendations when they're most useful."

You’ll need to be signed into your Google Account to see when friends and contacts have endorsed certain Web pages using the +1 button.

Google says it hopes the added button will help improve click-through rates for content and advertising and is encouraging Web site owners to add the button to their Web pages to get their search results to stand out more.

Agents Say Appraisals Continue to Hamper Deals

Low appraisals that come in below the purchase price are still delaying closings or killing some sales contracts, real estate professionals say in a survey from April.

One out of 10 real estate professionals--or 11 percent--say that low appraisals are causing home sales contracts to fall through. An additional 10 percent say low appraisals are delaying closings, according to an April survey by the National Association of REALTORS®. About the same number of real estate professionals reported the problems with low appraisals in a March survey.

About 14 percent of real estate professionals reported that appraisals below the purchase price are requiring extra negotiating in order to get the deal closed.

"Short sales and foreclosures are still priced too high by the lenders, who do not believe the agents information concerning actual market conditions," said one real estate professional in the survey comments.

Proposal to Raise FHA Loan Down Payment

Republicans on the House Financial Services Committee have drafted a bill to raise the minimum down payment for Federal Housing Administration-backed loans to 5 percent as well as cut FHA loan limits in many markets. FHA-backed loans are a main source of mortgages for first-time home buyers.

Currently, home owners who take out FHA-backed loans are required to have a minimum down payment of 3.5 percent; the GOP bill seeks to raise that to 5 percent. The GOP says it wants to protect home owners against default and improve FHA’s finances.

The bill has not yet been introduced but remains in draft form. However, the draft legislation is expected to be discussed on Wednesday by the subcommittee.

The draft legislation also calls for lowering FHA loan limits in several areas.

As of now, the maximum size of FHA-backed loans in expensive areas of the country is set to drop to $625,500 from $729,750 as of Oct. 1. In less expensive areas, the limit may drop to $271,050. The GOP draft bill wants to drop the limits even more to 125 percent of a county's median home price, Dow Jones reports.

"While we support reforms to strengthen the program, changes should not be made at consumers' expense by drastically impacting the affordability and availability of mortgage capital," Ron Phipps, the National Association of REALTORS®’ president, said in a statement.

Source: “House Republicans Aim to Raise Money Down for FHA Loans,” Dow Jones International News (May 23, 2011)

Finding the Right Sales Price Isn't Easy

In a volatile real estate market, knowing the right price for a home isn’t always clear, experts say.

Having to drop a home's sale price from its initial list price is common. On average, sellers reduce their list prices after about 2.5 months by 8 percent when a property hasn't sold yet, according to a report by Trulia.com. After making one price reduction, 35 percent of those sellers will make a second price cut too.

Even homes without any obvious faults are undergoing price cuts, agents say.

Real estate pros are finding that to find the right price for a home is much more than comparing it to a set of comps. But determining a price to fit a few of a home's unique limitations isn't easy. For example, a 1946 five-bedroom home in a sought-after neighborhood in Scarsdale, N.Y., has had five sales price adjustments. It was first listed at $1.699 million and now is on the market for $1.278 million.

While buyer offers are coming in, real estate pro Claire Civetta with Coldwell Banker Residential Brokerage in Scarsdale, N.Y., says they are far below asking price. The home is on a busy road and doesn’t have as large of buffer from street noise as other nearby homes.

So while comparable houses reveal this one to be well priced, Civetta says “the market has been telling us something else.”

Source: “In House Pricing, Own Up to Flaws,” The New York Times (May 19, 2011)

April Existing-Home Sales Ease

Existing-home sales slipped in April, although the market has managed six gains in the past nine months, according to the National Association of REALTORS®.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums, and co-ops, eased 0.8 percent to a seasonally adjusted annual rate of 5.05 million in April from a downwardly revised 5.09 million in March, and are 12.9 percent below a 5.80 million pace in April 2010; sales surged in April and May of 2010 in response to the home buyer tax credit.

Lawrence Yun, NAR chief economist, said the market is underperforming. “Given the great affordability conditions, job creation, and pent-up demand, home sales should be stronger,” he said. “Although existing-home sales are expected to trend up unevenly through next year, unnecessarily tight credit is continuing to restrain the market, along with a steady level of low appraisals that result in contract cancellations.”

Obstacles to Recovery
A parallel NAR practitioner survey shows 11 percent of REALTORS® report a contract was cancelled in April from an appraisal coming in below the price negotiated between a buyer and seller, 10 percent had a contract delayed, and 14 percent said a contract was renegotiated to a lower sales price as a result of a low appraisal.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.84 percent in April, unchanged from March; the rate was 5.10 percent in April 2010.

“Although sales are clearly up from the cyclical lows of last summer, home sales are being held back 15 to 20 percent due to the very restrictive loan underwriting standards,” Yun said.

All-cash transactions stood at 31 percent in April, down from a record level of 35 percent in March; they were 26 percent in March 2010. Investors account for the bulk of cash purchases.

NAR President Ron Phipps said the lending community needs to return to sensible standards. “We want to ensure that qualified buyers will be able to own their property on a sustained basis from a sound credit evaluation, but banks needn’t be so stingy as to only lend to those with the highest credit scores,” he said.

“Very high shares of cash purchases, and high credit score requirements, have led to historically low default rates among home buyers over the past two years. This trend implies a gulf is opening between those who can and cannot have access to the American dream of home ownership,” Phipps said. “At the same time, existing guidelines from Freddie Mac and Fannie Mae must be fully implemented so all appraisals are done by valuators with local expertise.”

Price Stability
The national median existing-home price for all housing types was $163,700 in April, which is 5.0 percent below April 2010. Distressed homes — typically sold at a discount of about 20 percent — accounted for 37 percent of sales in April, down from 40 percent in March. They were 33 percent in April 2010.

“Home values, despite month-to-month volatility, have been remarkably stable in the range of $160,000 to $170,000 for the past three years,” Yun said. “Stable home prices in turn will steadily lower loan default rates, including strategic defaults.”

Total housing inventory at the end of April increased 9.9 percent to 3.87 million existing homes available for sale, which represents a 9.2-month supply at the current sales pace, up from an 8.3-month supply in March.

First-time buyers purchased 36 percent of homes in April, up from 33 percent in March; they were 49 percent in April 2010 when the tax credit was in place. Investors slipped to 20 percent in April from 22 percent of purchase activity in March; they were 15 percent in April 2010. The balance of sales was to repeat buyers, which were 44 percent in April.

Single-family home sales slipped 0.5 percent to a seasonally adjusted annual rate of 4.42 million in April from 4.44 million in March, and are 12.6 percent below the 5.06 million pace in April 2010. The median existing single-family home price was $163,200 in April, which is 5.4 percent below a year ago.

Existing condominium and co-op sales fell 3.1 percent to a seasonally adjusted annual rate of 630,000 in April from 650,000 in March, and are 15.0 percent below the 741,000-unit level one year ago. The median existing condo price was $167,300 in April, down 2.3 percent from April 2010.

Regional Performance
Existing-home sales in the Northeast fell 7.5 percent to an annual pace of 740,000 in April and are 32.1 percent below a year-ago surge. The median price in the Northeast was $225,400, which is 7.3 percent below April 2010.

Existing-home sales in the Midwest rose 5.7 percent in April to a level of 1.12 million but are 16.4 percent below a cyclical peak in April 2010. The median price in the Midwest was $133,200, down 5.1 percent from a year ago.

In the South, existing-home sales declined 4.1 percent to an annual pace of 1.95 million in April and are 9.3 percent below a year ago. The median price in the South was $142,800, which is 4.1 percent lower than April 2010.

Existing-home sales in the West slipped 1.6 percent to an annual level of 1.24 million in April and are 0.8 percent below April 2010. The median price in the West was $203,400, down 6.1 percent from a year ago.

Source: NAR

U.S. Home Sales by Foreign Buyers Surge

The U.S. continues to remain a top destination for foreign buyers as international purchases surged by $16 billion this year, one of the highest increases in recent years. This is according to the National Association of REALTORS®’ 2011 Profile of International Home Buying Activity. According to the survey, total residential international sales in the U.S. for the past year ending March 2011 equaled $82 billion, up from $66 billion in 2010. Total international sales were split evenly between non-resident foreigners and recent immigrants, while combined total domestic and international existing-home sales in the U.S. reached $1.07 trillion.

“The U.S. has always been a desirable place to own property and a profitable investment,” said NAR President Ron Phipps. “In recent years we have seen more and more foreign buyers coming here to take advantage of low prices and plentiful inventory. In addition to the advantageous market conditions, REALTORS® in this country have a global perspective and experience in working with clients from different cultures and real estate practices, helping them bring value to their international clients.”

Historically, foreign buyers have been attracted to property ownership in the U.S. for a number of reasons. U.S. homes are generally less expensive than comparable foreign properties, homes in this country are viewed as a secure investment, and the U.S. market offers rental opportunities and long-term appreciation potential.

More recently, REALTORS® have noticed new factors motivating foreign buyers. Many U.S. colleges and universities have a significant number of international students, and some foreign families are purchasing U.S. properties in college areas so their child has a place to live. Another source of international demand is foreign executives temporarily working in the U.S., some of whom prefer to purchase a residence instead of renting.

“Besides the strength of the dollar and the general economic trends in the U.S., international buyers are also recognizing the benefits of home ownership in this country, especially in the case of recent immigrants,” said Phipps. “Many foreigners perceive owning a home here as an important accomplishment in their efforts to become established in this country.”

Recent international buyers came from 70 different countries, up from 53 countries in 2010. For the fourth consecutive year, Canada was the top country of origin, with 23 percent of sales to foreigners. China was the second most popular country of origin, with nine percent of international sales this year. Tied for third were Mexico, the U.K., and India. Argentina and Brazil combined reported an increase in foreign sales with five percent, up from two percent in 2010. The top five countries of origin accounted for 53 percent of international transactions in 2011.

The average price paid by an international buyer was $315,000 compared to the overall U.S. average of $218,000. However, 45 percent of international purchases were under $200,000. This price segment has grown significantly over the years, most likely due to overall price declines in the U.S. as well as the strengthening of some foreign currencies.

Almost every state had at least one international transaction in the past year. The four states with the heaviest concentration of international buyer activity have remained the same over the past five years. Florida had 31 percent of total international transactions this year, the most of any state. California had 12 percent, Texas had nine percent, and Arizona rounded out the top four with six percent of international transactions.

Foreign buyers are primarily interested in three factors when deciding where to buy in the U.S.: proximity to their home country; convenience of air transportation; and climate and location. Generally, the East Coast attracts European buyers. The West Coast remains popular for Asian purchasers. Mexican buyers are traditionally attracted to the Southwestern markets. Florida is most popular among South Americans, Europeans, and Canadians.

Similar to last year, 28 percent of REALTORS® in 2011 reported working with an international client. Fifty-five percent served at least one foreign client, while the bulk of international transactions were handled by a small percentage of REALTORS®. Only eight percent of members obtained 50 percent or more of their transactions from international clients.

Sixty-one percent of foreign buyers purchased a single-family home while 36 percent bought a condo/apartment or townhouse. In addition, 62 percent of international purchases were reported as being all cash. This percentage is significantly higher than all-cash purchases for domestic buyers, mostly due to the differences in international credit reporting standards. Financing challenges continue to be a major hurdle for international buyers, with 32 percent reporting these as their reason for not buying a home. Many REALTORS® reported that their foreign clients faced mortgage financing issues, as well as problems with legal, tax and immigration laws.


— NAR

It's Getting Costlier to Insure a Home

Some of the nation’s largest insurers are raising home insurance premium rates, or plan to soon, reports The Wall Street Journal.

For example, State Farm Mutual Automobile Insurance Co. says it increased home owner rates, on average, 7.3 percent, and in some states it raised rates even more. Other insurance companies also report higher rates--a company in Florida reports an 11 percent increase this year in premium rates and in Pennsylvania some areas have faced a 33 percent hike in rates.

So why are rates rising when many home owners are seeing their housing values dropping?

Experts say premiums are partially based on rebuilding costs, not a home’s appraised market value, The Wall Street Journal reports.

While rates have most stayed stable the last five years, they’re now on the upswing. In 2000, the average premium for home owners insurance was $508. In 2010, that grew to $807, according to National Association of Insurance Commissioners and Insurance Information Institute.

More premium rate increases are expected in the near future too, insurers say, due to the increased costs from natural disasters, such as the recent tornadoes that struck the South and even the earthquake and tsunami in Japan.

Source: “While Home Prices May Be Falling, Insurance Premiums Are on the Rise,” The Wall Street Journal (May 17, 2011)

New Homes Competing Against Foreclosures

Builders broke ground on fewer homes in April as the new-home sector continues to face competition from a glut of foreclosures that in many markets has brought home values down.

Construction on homes and apartments dropped 10.6 percent to a seasonally adjusted annual rate of 523,000 units, the Commerce Department reported on Tuesday. In March, housing starts reached a 585,000-unit pace (an upward revised figure). Residential construction is down 23.9 percent compared to April of last year--its largest drop since October 2009.

Considered the “volatile part” of the new-home market at the moment, construction of multifamily homes (buildings with five or more units) particularly hampered housing starts last month, decreasing 28.3 percent. Single-family home construction--which generally makes up 75 percent of all housing starts--dropped 5.1 percent from a month earlier.

Regionally, the results were mixed. In the South, housing starts dropped 23 percent and 4.8 percent in the Northeast. However, the Midwest posted a 15.7 percent gain in housing starts, as well as the West with 3.7 percent.

Permits for future home construction dropped last month, falling 4 percent to a 551,000-unit pace last month, the Commerce Department reports.

The Distressed Sales Impact

New-home construction is being weighed down by an oversupply of existing homes on the market, particularly foreclosures, experts say. Buyers are increasingly choosing bargain-priced foreclosures and previously owned homes over--in general--pricier new homes.

“Builder confidence has hardly budged over the past six months as persistent concerns regarding competition from distressed property sales, lack of production credit, inaccurate appraisals, and proposals to reduce government support of housing," NAHB Chairman Bob Nielsen said Monday in statement about the National Association of Home Builder/Wells Fargo Housing Market Index, which shows builders’ confidence about the new-home market remains low.

Foreclosures Fall Again, Reaching 3-Year Lows

Fewer home owners are losing their homes as the number of foreclosure filings sank to more than a three-year low in April, RealtyTrac reports.

The number of foreclosure filings in April dropped 34 percent from a year ago, also marking the seventh straight month of declines, and reaching its lowest level since December 2007. Foreclosure filings include notices of default, scheduled auctions, and bank repossessions. Also, 69,532 homes were repossessed in April — an 8.6 percent drop from March and a 32 percent drop from last September’s peak.

Banks being blamed for faulty paperwork continued to slow the pace of foreclosure activity last month, but many foreclosures still loom, experts warn. About 3.7 million borrowers are at least 90 days late on payments.

However, there are hopeful signs of a turnaround: The employment picture is improving, which will allow more home owners to make payments and banks are completing more loan modifications to keep borrowers in their home. Banks completed 77,000 mortgage modifications in March, which is a 26 percent increase from February.

States With the Highest Foreclosure Rates
Nevada, Arizona, and California continue to post the highest foreclosure rates in the nation.

Ten states account for more than 70 percent of all foreclosure activity in the country: California, Florida, Arizona, Michigan, Nevada, Illinois, Texas, Georgia, Ohio, and Colorado.

Economy, Affordability to Drive Home Sales Growth

Home sales are on track to outperform last year, even though the market doesn’t have the benefit of the home buyer tax credit. This is thanks to sustained economic growth, the slowly recovering jobs picture, and historically high affordability conditions, NAR Chief Economist Lawrence Yun told a packed room on Thursday during the Residential Economic Update at the 2011 REALTORS® Midyear Legislative Meetings.

Although unemployment remains high at about 9 percent, the country is seeing steady job growth. More than 100,000 jobs are being created a month, and the U.S. could see 1.5 million net new jobs this year, Yun said.

Frank Nothaft, chief economist for secondary mortgage market company Freddie Mac, who spoke later at the same session, said he expects a bit more robust job growth, closer to 2 million, but both economists said the unemployment rate will remain high despite the new jobs because of the size of the hole that needs to be filled. More than 8 million jobs were lost during the 2008-09 recession, and new entrants to the labor force, such as recent college graduates, add another 2 million to the hole.

Both Yun and Nothaft are predicting home sales a little higher than 5 million, which would improve upon last year even though 2010 had the artificial stimulus of the tax credit, they said.

Historically high affordability is one of the key drivers of the improved sales performance. NAR’s affordability index is at its highest level ever, at nearly 170, which means households earning the national median income have 170 percent of the income needed to buy a home at the national median price.

Behind the affordable conditions are low interest rates, which today are below 5 percent, and home prices that, while rising in some areas (like booming North Dakota), remain quite a bit below their peak during the housing boom. The high number of distressed homes (those in which the value is below the amount of equity the owners have in them) is one of the main reasons values are struggling to get off the bottom.

Yun said that overly strict lending standards are holding back more robust sales: 2010-vintage mortgage originations have a lower serious delinquency rate than in 2002, when serious delinquencies were barely above 1 percent, and 2011 is shaping up to be another stellar year in delinquency rates, but lenders are still requiring extraordinarily high credit scores and putting up other hurdles to obtaining financing. “If lenders would just go back to the normal standards that were in place prior to the boom years, sales might be 20 percent higher,” Yun said.

Although he’s seeing no signs of lenders opening up on lending yet, Yun said conditions are in place for lenders to start easing up. They’re sitting on plenty of money, and they could be reaching the point at which they can earn more revenues at reasonable risk levels by making home loans than by doing other things with their money. “I’m not seeing that yet, but that is a potential upside,” he said

In some ways, the heroes of housing today are the all-cash buyers. They’re 40 percent of the market now, so they’re helping to drive sales despite the tight availability of financing. Yun thinks all-cash buyers are investors who either can’t get financing or think they can get a better return on their cash by putting it into real estate than they can in savings instruments or stocks, particularly given the rock-bottom process of so many houses. He also thinks some empty-nest baby boomers might be acting as the lender for their children, buying a home for them on an all-cash basis and taking back a note. “I’m seeing this anecdotally. I don’t know if it’s a trend,” he said.

Yun’s forecast: The U.S. economy will grow about 2.5 percent this year, with between 1.5 and 2 million new jobs added to the economy. Home sales will reach about 5.1 million, up 7-10 percent from last year, with home values staying virtually unchanged. Nothaft had a largely similar forecast.

Affordable, Reliable Home Financing Is Priority

Reforms to America’s housing finance market must ensure a reliable source of affordable mortgage lending for creditworthy consumers. That’s according to REALTORS® and other industry insiders who examined the federal government’s future role in the secondary mortgage market at a session called “Fannie Mae & Freddie Mac: Obama Options and Beyond” at the NATIONAL ASSOCIATION OF REALTORS® 2011 Midyear Legislative Meetings & Trade Expo in Washington, D.C.

Steve Brown, 2011 NAR first vice-president nominee, opened the session by outlining NAR’s position for reforming the government-sponsored enterprises (GSEs), saying that reform is required, taxpayers must be protected from losses, and the federal government must continue to play a role in the secondary mortgage market to ensure a steady flow of mortgage liquidity in all markets under all economic conditions.

Reform Must Be Thoughtful

“As the leading advocate for home owners, NAR is concerned that eliminating the GSEs without a viable replacement is not a reasonable option and will severely restrict mortgage capital and result in higher fees and costs for qualified borrowers,” said Brown. “Reform of the secondary mortgage market needs to be comprehensive and undertaken methodically.”

James Parrot, senior advisor for housing at the National Economic Council in Washington, D.C., overviewed the Obama administration’s recommendations for reforming the GSEs in the wake of the financial crisis, which included varying levels of government backing. He noted the primary objective of the proposals was twofold: first, to lay out an immediate near-term path for reform, with steps that could be taken the next few years to reduce taxpayer risk and move the housing market to more stable footing, and second, to frame the discussion regarding the government’s long-term role in housing finance.

“The government’s large presence in the housing finance is unhealthy and needs to be scaled back; however, the steps we take over next few years to reduce the government’s role and increase private capital will have a tremendous impact on the housing market and economy as well as the availability and affordability of mortgages,” said Parrot. “The objective isn’t to turn away from housing, but to make the housing finance market stronger so that families and their most important asset are better protected,” said Parrot.

More Transparency Needed

Panelist Susan Wachter, a professor at The Wharton School, University of Pennsylvania, agreed that private capital needs to return to the housing finance market, but that most likely won’t happen until the market has stabilized.

“There needs to be more accountability and transparency in the secondary mortgage market so that private investors can best assess their risk and safely get back into the market,” she said.

Mark Calabria, director of Financial Regulation Studies at the Cato Institute, argued for a very limited government role in the secondary mortgage market; saying that the private capital market has the funds and capacity to absorb Fannie Mae and Freddie Mac’s market share. He said that increased government support in the past few decades has only slightly increased America’s home ownership rate and that rates in other countries are higher despite their government’s limited involvement.

Despite his opposing viewpoint to the level of involvement, Calabria did acknowledge that some government backstop was essential in the future, since the housing and finance markets are sensitive to booms and busts.

David Katkov, executive vice president and chief business officer at The PMI Group, countered that it would be naïve to move to a purely private market because it’s been successful in other countries, adding that the U.S.’s housing finance system dwarfs that of other countries and is far more complex.

Ann Grochala, vice president at the Independent Community Bankers of America also shared concerns for small lenders and community bankers in a purely private market, where competition from large lenders would be great.

Source: NAR

Existing-Home Sales Rise in Most States

Existing-home sales continued to recover in the first quarter with gains in 49 states and the District of Columbia, while 22 percent of metropolitan areas saw prices rise from a year ago, according to the latest survey by the NATIONAL ASSOCIATION OF REALTORS®.

Total state existing-home sales, including single-family homes and condos, rose 8.3 percent to a seasonally adjusted annual rate of 5.14 million in the first quarter from 4.75 million in the fourth quarter, and are only 0.8 percent below a 5.18 million pace during the same period in 2010.

Also in the first quarter, the median existing single-family home price rose in 34 out of 153 metropolitan statistical areas from the first quarter of 2010, including four with double-digit increases; one was unchanged and 118 areas showed price declines.

Lawrence Yun, NAR chief economist, said home prices are all over the map. “The reading of quarterly price data can be volatile because they are based on the types of homes that are sold during the quarter. When buyers principally purchase distressed properties in a given market, the recorded prices will be very low, which is what we’re seeing now in much of the country,” he said. “Annual price data provides a better guide about the direction of the market in those areas.”

Distressed Sales Put Pressure on Prices

The national median existing single-family home price was $158,700 in the first quarter, down 4.6 percent from $166,400 in the first quarter of 2010. The median is where half sold for more and half sold for less. Distressed homes typically sold at a discount of about 20 percent, accounted for 39 percent of first quarter sales, up from 36 percent a year earlier.

Yun said lower priced homes have seen the best sales performance. “The biggest sales increase has been in the lower price ranges, which are popular with investors and cash buyers,” he said. “The preponderance of sales activity at the lower end is bringing down the median price, so what we’re seeing is the result of a change in the composition of home sales.”

Although sales are slightly below a year ago, the volume of homes sold for $100,000 or less in the first quarter was 8.9 percent higher than the first quarter of 2010, creating a downward skew on the overall median price.

The share of all-cash home purchases rose to 33 percent in the first quarter from 27 percent in the first quarter of 2010.


More Investors in the Market

Investors accounted for 21 percent of first quarter transactions, up from 18 percent a year ago, while first-time buyers purchased 32 percent of homes, down from 42 percent in the first quarter of 2010 when a tax credit was in place. Repeat buyers accounted for a 47 percent market share in the first quarter, up from 40 percent a year earlier.

“The rising sales trend in nearly all states is a part of the healing process to clear off inventory. Sales need to rise before prices can firm up,” Yun added.

NAR President Ron Phipps said strong sales of distressed homes are exactly what the market needs. “The good news is foreclosures, which account for two-thirds of all distressed homes sold, are selling very quickly,” he said. “Short sales still take far too long to get lender approval, but it appears the inventory of distressed property is peaking and will be gradually declining next year. This means the market should slowly return to balance. We are encouraged that recent home buyers are having exceptionally low default rates.”

According to Freddie Mac, the national commitment rate on a 30-year conventional fixed-rate mortgage averaged 4.85 percent in the first quarter, up from a record low 4.41 percent in the fourth quarter, but below the 5.00 percent average in the first quarter of 2010.


A Closer Look at Price Trends

In the condo sector, metro area condominium and cooperative prices – covering changes in 53 metro areas – showed the national median existing-condo price was $152,900 in the first quarter, down 10.4 percent from the first quarter of 2010. Eleven metros showed increases in the median condo price from a year ago, one was unchanged and 41 areas had declines.

Regionally, existing-home sales in the Northeast increased 0.8 percent in the first quarter to a level of 800,000 but are 7.3 percent below the first quarter of 2010. The median existing single-family home price in the Northeast declined 5.0 percent to $234,100 in the first quarter from a year ago.

Existing-home sales in the Midwest rose 7.9 percent in the first quarter to a pace of 1.09 million but are 5.0 percent below a year ago. The median existing single-family home price in the Midwest fell 5.3 percent to $124,400 in the first quarter from the same period in 2010.

In the South, existing-home sales increased 8.5 percent in the first quarter to an annual rate of 1.96 million and are 2.8 percent higher than the first quarter of 2010. The median existing single-family home price in the South slipped 0.6 percent to $141,800 in the first quarter from a year earlier.

Existing-home sales in the West jumped 13.5 percent in the first quarter to a level of 1.29 million and are 2.1 percent above a year ago. The median existing single-family home price in the West fell 4.7 percent to $197,400 in the first quarter from the first quarter of 2010.

Slow Economic Recovery Blamed on Housing

While the employment picture continues to gradually improve, the economy is not recovering at the pace some experts had hoped for, and some are pointing fingers at the housing market for the slow recovery.

Federal Reserve Chairman Ben Bernanke says the economy is recovering at a “moderate pace” and that a high number of foreclosures and home owners who are “underwater” on their mortgages continues to drag down housing prices and the economy.

"Declines in the values of homes and stocks sharply reduced the wealth of many Americans during the crisis,” Bernanke says. “Three-fifths or more of families across all income groups reported a decline in wealth between 2007 and 2009, and the typical household lost nearly one-fifth of its wealth, regardless of income group.

"Moreover, one in eight of the households ... started the crisis with zero or negative net worth and thus had scant resources to fall back on to maintain their standard of living during bouts of unemployment."

However, there are signs the outlook is starting to improve. The construction industry in April increased employment by 9,000, which is its first monthly increase in years and may be a sign that the sector is finally in recovery mode. Overall, unemployment continues to decline, which will help more households start to feel more financially secure. However, long-term unemployment remains historically high, particularly among the young, minorities, and those with less education.

Source: “Real Estate Outlook: Bernanke on Housing,” Realty Times (May 9, 2011)

Gallup Poll: Americans Say Buy Now

With dropping home values in many markets mixed with interest rates at historical lows, homes are more affordable now than they’ve been in the last 35 years, reports Zillow.com.

The average buyer nowadays can expect to spend about 17 percent of her monthly gross income on a mortgage, which compares to a 25 percent average since 1975, Zillow reports.

With affordability high, Americans seem to be getting the message about the value of home ownership. Nearly 70 percent of Americans say now is a good time to buy a home, according to a recent Gallup poll.

Men are about 16 percent more likely to say now is a good time to buy a home than women. And Americans living in the West are most favorable toward buying (75 percent), which compares to 64 percent of Americans who live in the South who say now is a good time to buy.

Americans with higher incomes also expressed more of an interest in home ownership, according to the Gallup poll. Americans who make $75,000 or more a year are 18 percent more likely to say that 2011 is a good time to buy a home than those making $30,000-$75,000.

Big Jump Expected in New U.S. Households

Millions of young adults are beginning to move out of their parents’ homes and create new households at the fastest rate since 2007. Some housing experts are predicting these young adults may provide a major jump to U.S. housing starts--possibly by more than 50 percent, even by next year--and increase housing consumption at a rate nearly double that of the past two years, Bloomberg News reports.

In 2011, between 750,000 and 1 million new households are expected to be created, says UBS Securities LLC’s Maury Harris and IHS Global Insight’s Patrick Newport. In the year ended March 2010, new households stood at 357,000--the lowest on record, according to U.S. Census data. The “depressed rate” in new household formation has continued to jeopardize the housing market’s recovery, experts say.

But as the employment picture continues to improve, more young adults are leaving Mom and Dad’s house and making a new home for themselves. The “moving-back-in-with-Mom-and-Dad phenomenon” had caused a backlog of pent-up households, Charles Lieberman, chief investment officer with Advisors Capital Management LLC in Hasbrouck Heights, N.J., told Bloomberg News. “Improved economic conditions” will “enable these households to split up and resume living in their own residences.”

Housing starts are expected to get a boost to about 648,000 this year and near 900,000 in 2012 (it stood at 586,800 last year), says Brad Hunter, chief economist and national director of consulting for Metrostudy. The increase in housing starts, he says, reflects a “shadow demand” for new homes among family members who have moved in together because of economic conditions.

“The demographic component of housing demand is strong," he says. "It’s just the economic and psychological components that are holding things back.”

Construction Spending On The Rise

The U.S. construction industry saw an increase in spending for the first time in four months -- the biggest improvement since April 2010.

In March, construction spending grew 1.4 percent to $768.9 billion.

With an increase in home remodeling activity outpacing declines in apartments and single-family homes, residential construction expenditures rose 2.6 percent. Outlays for nonresidential projects, meanwhile, climbed 1.6 percent due to robust spending for hotel, office, and industrial construction.

Source: "U.S. Construction Spending Up," Investor's Business Daily (05/03/11)

Home Owners to Congress: Leave MID Alone

More than half — 53 percent — of home owners recently surveyed say they want Congress to leave the federal tax credit for home owners alone, according to a recent opinion poll at HousingPredictor.com. Those surveyed also say they want Congress to instead focus its efforts on instituting other tax advantages to stimulate the real estate market.

Some congressional leaders have raised the issue of trimming the mortgage interest deduction as a way to increase federal taxes and alleviate the ongoing budget crisis.

The mortgage interest deduction allows home owners to write off the mortgage interest and state taxes paid as itemized deductions on their personal federal income taxes.

The National Association of REALTORS® has strongly opposed any cut to the mortgage interest deduction and has lobbied Congress to protect it.

Banks Rush to Revamp Foreclosure Rules

The rush is on for banks to meet a mid-June deadline in offering up plans on how they plan to meet a set of guidelines by U.S. regulators to clean up their foreclosure procedures. The banks will have another 60 days after that deadline to implement the changes.

As part of the rules set by U.S. regulators, 14 financial institutions will be required to provide a single point of contact to borrowers trying to modify a loan or in the foreclosure process as well as set “appropriate deadlines” for deciding whether borrowers can get a loan workout. Regulators are also requiring banks to ensure their staffing levels are on par to handle the flood of foreclosures and loan modifications.

Several banks have already taken steps to implement the changes.

For example, J.P. Morgan says it’s developing a software program to make it easier for employees and borrowers to track loan modification requests. It also has started providing borrowers with a “relationship manager” to help navigate the loan modification or foreclosure process.

Citigroup, which already provides a single point of contact, says in the next few months it'll debut a “concierge" system that will provide a small team of employees to guide delinquent borrowers and home owners at risk of default.

Banks are also making efforts to speed up their loan modifications, after customers have complained of long delays from banks in responding to requests. For example, Los Angeles Neighborhood Housing Services says it takes an average of 141 days for its borrowers to get an answer on an initial loan modification request. Wells Fargo was found to have the fastest turnaround: Initial reviews averaged 79 days. But the bank says now 60 percent of its borrowers receive a decision five days after the company receives the request.

Banks are also increasing their staffing. J.P. Morgan has announced it’ll add up to 3,000 new home-lending jobs, and Bank of America plans to hire about 3,000 employees to focus on its troubled mortgages.

New Incentives From Fannie, Freddie

Banks and mortgage servicers also must meet new guidelines from Fannie Mae and Freddie Mac, announced this week, that aim for more loan modifications and prevent foreclosures from taking too long.

Mortgage servicers will be required to approach borrowers earlier, making contact frequently after just one missed payment.

The GSEs are also offering incentives: They’ll pay $1,600 in incentives depending on how quickly servicers complete a loan workout. They also will impose a $500 compensatory fee on servicers who do not complete loan modification applications within six months after the loan goes delinquent. The changes will go into effect in the second quarter.

Source: “Banks Rush to Improve Foreclosure Practices,” The Wall Street Journal (April 29, 2011)

For Second Straight Week, Mortgage Rates Drop

For the second straight week, mortgage rates continued to inch downward, according to Freddie Mac’s weekly Primary Mortgage Market Survey.

The 15-year fixed-rate mortgage averaged 3.97 percent, the lowest since Dec. 9, 2010. Last week, it averaged 4.02 percent, and a year ago at this time it averaged 4.39 percent.

Meanwhile, the 30-year fixed-rate mortgage, the most popular choice among buyers, averaged 4.78 percent this week, down from last week’s 4.80 percent. Last year at this time, the 30-year fixed-rate mortgage stood at 5.06 percent.

The 5-year adjustable-rate mortgage averaged 3.51 percent this week, down from last week’s 3.61 percent average. A year ago, it stood at 4 percent.

10 Cities With the Highest-Priced Listings

Last month, the national median list price was $199,500, down 0.25 percent for the year, according to Realtor.com housing data of 146 markets. But in San Francisco, the median list price is more than three times that amount.

The following is a list of the cities that had the highest median list prices in March, based on Realtor.com housing data.

1. San Francisco
Median list price: $639,000
Down 8.45 percent for the year
Median days on the market: 63

2. Santa Barbara-Santa Maria-Lompoc, Calif.
Median list price: $559,000
Down 19.57 percent year-over-year
Median days on the market: 117

3. San Jose, Calif.
Median list price: $470,000
Down 5.05 percent year-over-year
Median days on the market: 71

4. Orange County, Calif.
Median list price: $450,000
Down 5.05 percent year-over-year
Median days on the market: 100

5. Honolulu
Median list price: $444,000
Down 1.11 percent year-over-year
Median days on the market: 112

6. Santa Fe, New Mexico
Median list price: $435,000
Up 4.82 percent year-over-year
Median days on the market: 288

7. Ventura, Calif.
Median list price: $420,000
Down 6.67 percent year-over-year
Median days on the market: 93

8. New York
Median list price: $389,000
Down 2.51 percent year-over-year
Median days on the market: 146

9. Naples, Fla.
Median list price: $389,000
Up 2.40 percent year-over-year
Median days on the market: 225

10. Boulder-Longmont, Colo.
Median list price: $380,000
Up 2.73 percent year-over-year
Median days on the market: 114

Source: REALTOR® Magazine online (April 28, 2011)

11 Cities Where Homes Sell the Fastest

California boasted the highest number of cities where homes tended to spend the shortest amount of time on the market last month, based on March housing data from Realtor.com.

In Oakland, Calif., the average days on the market for listings was 50 in March--the least amount of days for median days on the market for the 146 markets reviewed.

Nationally, the median for homes for days on the market was 160 in March, which is an increase of 40 percent in a year.

Here is a list of the cities with the fewest median days on the market from March:

Oakland, Calif.
Median days on the market: 50
Median list price: $319,000

San Francisco
Median days on the market: 63
Median list price: $639,000

Denver
Median days on the market: 66
Median list price: $259,900

Iowa City, Iowa
Median days on the market: 66
Median list price: $187,500

Los Angeles-Long Beach, Calif.
Median days on the market: 70
Median list price: $345,000

Stockton-Lodi, Calif.
Median days on the market: 70
Median list price: $175,000

Bakersfield, Calif.
Median days on the market: 70
Median list price: $141,500

San Jose, Calif.
Median days on the market: 71
Median list price: $470,000

Anchorage, Alaska
Median days on the market: 71
Median list price: $279,975

Fresno, Calif.
Median days on the market: 71
Median list price: $170,000

Tulsa, Okla.
Median days on the market: 71
Median list price: $147,900

Is This Really a Buyer's Market?

With falling home prices and higher inventories, most of the public views real estate as a “buyer’s market,” in which buyers hold more of the control and sellers will more eagerly accept lower offers just to sell.

Not so fast, say buyers and sellers. More buyers are finding the sellers in the driver’s seat.

Buyer Young Hammack gave up looking for homes for a while after being outbid on three properties in California. "It's a false buyer's market," Hammack says. "If you think prices are cheap, wait until you start putting offers in."

Many sellers may be unable or unwilling to lower their home prices — mostly because they may be underwater on their mortgage — so buyers are increasingly finding lower offers than list price denied. Buyers, on the other hand, may be reluctant to agree to a deal if they don’t feel like they are getting it at a deep discount, industry insiders say.

Traditional buyers also are finding even buying a foreclosure can be difficult as they’re increasingly outbid by investors who are willing to pay cash.

"There's a shortage of attractive inventory," says Glenn Kelman, chief executive of Redfin Corp. "Customers just keep getting outbid on the houses that they want."

Real estate professional Steve Capen with Keller Williams Realty in St. Petersburg, Fla., says that the homes most in demand among buyers often don’t require much repair work and are located in good school districts and choice neighborhoods near transit hubs.

"What's selling is the cream of the crop, and they sell fast," Capen says. "If it's not cream of the crop, it's getting hammered."

Source: “Buyers' Market? Stressed Sellers Say Not So Fast,” The Wall Street Journal online (April 25, 2011)

New-Home Sales Gain Momentum

After three straight months of declines, sales of new homes got a boost last month, jumping 11 percent, according to the Commerce Department’s latest new-home sales report released Monday.

New-home sales rose in March to a seasonally adjusted rate of 300,000 homes, up from February’s 250,000. However, the number is still far from what economists view as a healthy 700,000-a-year pace for the sector.

The median price of a new home increased 3 percent from February to $213,800. New-home prices are about 34 percent higher than the median price of existing homes, according to economists.

Regionally, new-home sales saw the biggest boost in the Northeast, jumping nearly 67 percent in March. The West saw an increase in new-home sales last month by nearly 26 percent; the Midwest posted a 13 percent increase; and in the South, new-home sales dipped 0.6 percent.

The new-home market continues to be battered by a high number of foreclosures that continue to dampen home prices across the country. With 1.2 million foreclosures forecast this year, the new-home sales market may not see a major turnaround for years, according to RealtyTrac Inc.

However, while residential construction has decreased considerably in recent years, reports have recently shown building permits have increased 28 percent for apartment and condo buildings.

Mortgage Rates Drop This Week

fter four straight weeks of rising, mortgage rates dropped this week, according to Freddie Mac’s weekly market survey.

Here are how rates fared for the week:
30-year fixed-rate mortgages: averaged 4.80 percent, down from last week’s 4.91 percent average. Last year at this time, the 30-year fixed-rate mortgage averaged 5.07 percent.
15-year fixed-rate mortgage: averaged 4.02 percent, down from last week’s 4.13 percent. A year ago at this time, the 15-year mortgage averaged 4.39 percent.
5-year adjustable-rate mortgage: averaged 3.61 percent this week, down from last week when it averaged 3.78 percent. Last year at this time, the 5-year ARM stood at 4.03 percent.

"Low inflation is keeping mortgage rates at bay,” says Frank Nothaft, chief economist at Freddie Mac.

NAR: March Existing-Home Sales Rise 3.7%

Sales of existing-home sales rose in March, 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 percent 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 percent 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 percent 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 percent in March, down from 4.95 percent in February; the rate was 4.97 percent 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 percent of homes in March, compared with 34 percent of homes in February; they were 44 percent in March 2010.

Record Share of All-Cash Sales
All-cash sales were at a record market share of 35 percent in March, up from 33 percent in February; they were 27 percent in March 2010. Investors accounted for 22 percent of sales activity in March, up from 19 percent in February; they were 19 percent 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 percent from March 2010. Distressed homes – typically sold at discounts in the vicinity of 20 percent – accounted for a 40 percent market share in March, up from 39 percent in February and 35 percent in March 2010.
NAR President Ron Phipps said some renters are looking to home ownership 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 home ownership 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 percent 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.

Single-family home sales rose 4.0 percent to a seasonally adjusted annual rate of 4.45 million in March from 4.28 million in February, but are 6.5 percent below the 4.76 million level in March 2010. The median existing single-family home price was $160,500 in March, down 5.3 percent from a year ago.
Existing condominium and co-op sales increased 1.6 percent to a seasonally adjusted annual rate of 650,000 in March from 640,000 in February, but are 4.1 percent below the 678,000-unit pace one year ago. The median existing condo price was $153,100 in March, which is 10.1 percent below March 2010.

Regions: Northeast
Regionally, existing-home sales in the Northeast rose 3.9 percent to an annual level of 800,000 in March but are 12.1 percent below March 2010. The median price in the Northeast was $232,900, down 3.0 percent from a year ago.
Midwest
Existing-home sales in the Midwest increased 1.0 percent in March to a pace of 1.06 million but are 13.1 percent lower than a year ago. The median price in the Midwest was $126,100, which is 7.1 percent below March 2010.
South
In the South, existing-home sales rose 8.2 percent to an annual level of 1.99 million in March but are 1.0 percent below March 2010. The median price in the South was $138,200, down 6.6 percent from a year ago.
West
Existing-home sales in the West slipped 0.8 percent to an annual pace of 1.25 million in March and are 3.1 percent below a year ago. The median price in the West was $192,100, which is 11.2 percent lower than March 2010.

—NAR

New-Home Building On the Rise

New home construction is picking up just in time for the spring buying season, according to the latest new-home report released on Tuesday from the Commerce Department. Builders broke ground on more new homes in March than in the last six months.

Another bright spot: Building permits, an indicator of future construction, increased 11.2 percent for the month.

After a dismal winter performance, new-home building bounced back 7.2 percent in March from February to a seasonally adjusted 549,000 units. Yet, the sector is still far below the 1.2 million units a year that economists consider a healthy building pace.

The new-home sector has faced hard times in recent years, competing against a flood of foreclosures and short sales on the market that have pushed housing prices down. In February, construction fell to its lowest level in nearly two years, and requests for building permits to start new projects had dropped to a five-decade low in February.

Builder sentiment also remains low, according to Monday’s release of the National Association of Home Builders’ monthly index of industry sentiment for April.

Builders' views on the market had risen slightly in March to 17 in the index but in April fell back to 16, a level that it had remained at for four straight months prior to March. Any reading below 50 indicates negative sentiment about the market, a level the index hasn’t been above since April 2006.

Source: “U.S. Housing Starts, Permits Rebounded in March,” Associated Press (April 19, 2011) and “Builder Outlook for Home Buying Falls Slightly

More Americans Flock to the South, West

More Americans are heading to the South and West, according to the 2010 U.S. Census. The latest census data shows the largest population growth in the last decade occurred in areas of the South and West, as Northeast and Midwest residents continued to head toward warmer and less expensive Sun Belt hot-spots.

Populations in the South and West grew 14.3 percent and 13.8 percent, respectively, from 2000 to 2010, while Northeast and Midwest areas grew by only 3.2 percent and 3.9 percent, according to the Census Bureau.

As such, the decade’s hottest housing markets also had the most rapid population growth, including Nevada (35.1 percent growth), Arizona (24.6 percent), and Florida (17.6 percent).

However, demographic factors likely will have less of an impact as it once did in the short-term in driving the housing market and prices, experts say.

Paul Bishop, vice president for research at the National Association of REALTORS®, says he expects much of the short-term housing activity to be mostly centered on low and high ends of the market, rather than driven by merely migration patterns. He says investors likely will continue to target highly discounted homes in growing Sun Belt cities as well as in shrinking Rust Belt areas. He also anticipates an increase in sales of expensive homes.

"The stock market has been doing pretty well, which benefits the wealthy," Bishop told Investor’s Business Daily. "And the wealthy can withstand bad economic times better than others."

5 'Most Innovative' Mobile Apps

PC World recently released its top picks for most innovative apps for 2011 — mobile apps for tablets and smartphones that have the potential of making your life easier. Here are five free apps that made the list for iPhone or Android:

1. Fring: An upcoming version of this app will offer free video group calls with up to four people at once. (A beta is currently available.)
Platform: Apple’s iOS, Android
Price: Free

2. UpSoundDown: You can put your phone on speakerphone mode automatically by just laying your phone down on a table or turning the phone upside down like you’re using it as a microphone. When you pick the phone back up, you’ll be able to use the handset again.
Platform: Android
Price: Free

3. Zite: This app learns what you like to read and then scans your Facebook and Twitter feeds for news based on your reading habits. It then populates a virtual magazine with content that is tailored to your reading habits.
Platform: Apple iOS
Price: Free

4. Adobe Photoshop Express: You can manipulate photos using this app’s simple features on your iPhone or iPad and then store your photos on the Internet to access from anywhere. Coming soon: Photoshop for iPad, which works like a desktop version of the Photoshop software, which includes layers and effect features (price to be determined for iPad version).
Platform: Apple iOS
Price: Free

5. iSwifter: iPad lovers will appreciate this app, which allows you to watch Flash videos and view Web site animations.
Platform: Apple iOS
Price: Free

Source: “The Top 15 Innovative Mobile Apps in 2011,” InfoWorld (April 2011)