Ron's Blog

  • Americans More Optimistic About Housing, Economy

    Americans’ concerns over housing and the economy are subsiding, according to Fannie Mae’s National Housing Survey from February. An improving job market is a big part of what’s behind Americans feeling more confident about the housing market and the direction of the economy, according to the survey. “The pickup in the pace of hiring over the past few months has helped soothe consumer concerns, lifting their moods regarding their personal finances, the direction of the economy, and their views on the housing market,” says Doug Duncan, chief economist of Fannie Mae. “As a result, we’ve seen more potential for economic upside, creating a more balanced near-term outlook.”The survey found that 28 percent of Americans expect home prices to increase over the next 12 months while 53 percent say prices will likely stay the same. Fifteen percent say they expect home prices to decline. Meanwhile, the majority of those surveyed see rental prices continuing to increase over the next year. Sixty-five percent of those surveyed say that if they were going to move they’d buy their next home; 29 percent say they would rent. With low mortgage rates and falling home prices, 70 percent of those surveyed say now is a good time to purchase a home. Also, more Americans surveyed say now is a good time to sell, rising to 13 percent in February, which is the highest level in more than a year but still low by historic standards. Overall, Americans expressed more confidence about their personal financial situation, with only 12 percent saying they expected their personal financial situation to worsen in the next 12 months — which is the lowest number in more than a year. Source: Fannie Mae

  • Housing Affordability Index Hits Record High

    According to the National Association of Realtors, the housingaffordability conditions have reached the highest level sincerecordkeeping began in 1970. NAR’s Housing Affordability Indexrose to a record high 206.1 in January, based on the relationshipbetween median home price, median family income and averagemortgage interest rate. An index of 100 is defined as the pointwhere a median-income household has exactly enough income toqualify for the purchase of a median-priced existingsingle-family home, assuming a 20 percent down payment and 25percent of gross income devoted to mortgage principal andinterest payments. “This is the first time the housingaffordability index has broken the two hundred mark, meaning thetypical family has roughly double the income needed to purchase amedian-priced home,” he said. “For buyers who can qualify fora mortgage, now is a very good time to become a homeowner,”said NAR President Moe Veissi.  

  • Warren Buffett on Housing

    Warren Buffett, CEO of Berkshire Hathaway, said yesterday on CNBC’s “Squawk Box” that buying single-family homes is such a great investment right now, if it were practical, he’d buy a couple hundred thousand of them. Given how low rates are for a 30-year fixed-rate mortgages (3.95 percent, according to the Freddie Mac Mortgage Index), Buffett told CNBC’s Becky Quick that homes, held over the long term, provide a better investment than stocks. If you factor in that prices in some areas are at a 10-year low and inventory levels are high, the conditions are  ideal for buying.While the “Omaha Oracle” has been right about a lot of investments, his opinion on housing hasn’t always been on the mark. At last year’s annual Berkshire Hathaway meeting, he said 2011 was going to be the year that housing prices were going to rebound. In a letter to his shareholders sent last weekend, he apologized for being “dead wrong.” He explained his belief that housing is a sound investment at least in part the inventory of new homes isn’t growing at a rate that will satisfy future demand. People living with their in-laws to save money, he quipped, will find that attractive for only so long.You have to give Buffett credit for putting his money where is mouth is. Home Services of America Inc., a Berkshire Hathaway Affiliate, is one of the largest independent residential real estate and settlement servicing companies in the U.S. 

  • FHA Mortgages Fees Hikes

    Home buyers with mortgages backed by the Federal Housing Administration will soon see a rise in fees, the agency announced Monday, Feb 27, 2012. The agency is raising its fees in an effort to try to recoup some of its depleted reserves, which suffered from the rising number of home owners who defaulted on their mortgages. The agency also says it’s raising fees to try to encourage the return of more private capital to the market. FHA loans allow for smaller down payments, as low as 3.5 percent compared to traditional loans, and they often have less stringent credit requirements, which have made them soar in popularity in recent years. (The agency insures loans but doesn’t issue them.) About 40 percent of all new mortgages for home purchases in 2010 were FHA-backed mortgages. In particular, FHA will increase two fees that borrowers pay. Starting April 1, it will increase its annual mortgage insurance premium for loans under $625,500, bringing the total cost from 1.15 percent of the loan amount to 1.25 percent. Starting June 1, larger loan premiums will see an increase of 0.35 percent of a percentage point, bringing the total premium costs up to 1.5 percent of the loan amount, The New York Times reports. FHA also announced it will raise a fee for the upfront mortgage premium by 0.75 of a percentage point, which will now total 1.75 percent of the loan amount. The New York Times illustrates the impact of the increase in a recent article: For example, a borrower with a 3.5 percent down payment with a mortgage of $193,000 can expect to pay an upfront mortgage premium alone of $3,377, compared to the prior $1,930. That can be rolled into the mortgage.The new fees will also apply to homeowners who want to refinance their mortgages, the agency announced. The raise in fees is expected to bring in $1.25 billion in additional revenue to the agency through September 2013.

  • New bill to speed up short sales

    Senators Lisa Murkowski, Scott Brown, and Sherrod Brown are proposing a bill requiring mortgage lenders to make a prompt decision on whether to allow a short sale at the request of a home buyer. The bill, “Prompt Notification of Short Sales Act,” will require a written response from the lender no later than 75 days after the receipt of the written request from the buyer.  This bill will require that the lender’s written response to the buyer must specify whether the request was approved, if more time is required the servicer must estimate a date a decision will be reached. The loan servicer is limited to one extension no longer than 21 days. This will give the distressed homeowner a more definite timeline for when the short sale will be completed so they can plan their move better.   In April 2011, Representatives Thomas Rooney of Florida and Robert Andrews of New Jersey introduced a similar version of the bill but it never came up for debate before a House committee before the legislative session ended.  The previous version said that that if a borrower submitted a written request for a short sale of a home and if they didn’t receive a written response within 45 days, the request would be considered approved. This new version extends the response time for lenders but includes a penalty if they fail to comply.  If the loan servicer doesn’t respond to a buyer’s request within the 75 day period, the buyer may be awarded $1000, plus reasonable attorney fees, per violation of the Act. The new bill would hold banks accountable to specific standards that they must follow, streamlining the process for everyone involved in the short sale transaction. It would make short sales more attractive to buyers and eliminate the uncertainty related to buying a short sale, resulting in more sales of distressed properties. This reduction of housing inventory will assist the stabilization of home prices and the real estate market.

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