mycentralcoastlandman.com

With the recent landmark National Mortgage Settlement between the nation’s five largest real estate loan servicers and state attorneys general over faulty foreclosure practices, troubled homeowners are at risk of falling victim to scam artists offering mortgage modification and other foreclosure prevention services.

C.A.R. wants to help consumers from being defrauded and has launched a special section on car.org with information about forclosure-prevention, short sale, and other types of mortgage-related fraud, along with information on where to get help and where to report suspected cases of fraud.

Mirroring the uneven economic recovery, the housing market is expected to move in a slow, gradual upward path in 2012, while encountering its share of speed bumps along the road, according to a forecast presented by the National Association of Home Builders (NAHB) on the housing and economic outlook.

While the latest monthly housing data have shown signs of a slight softening, NAHB Chief Economist David Crowe said this is more reflective of typical month-to-month volatility in the numbers and unusual seasonal factors than they are an indication of any significant downward trend in the broader housing market.

Crowe noted that numerous other fundamentals remain positive for housing at this time, including demographic factors (with pent-up household demand expected to ramp up and echo-boomers heading into their prime household formation ages), historically favorable mortgage rates that are not expected to move higher than 5 percent by the end of next year, more than 100 local markets currently listed on the NAHB/First American Improving Markets Index, and the fact that house price-to-income ratio has now returned to its historical average of about three-to-one versus the nearly five-to-one to which it had previously risen during the height of the housing boom.

However, he cautioned that housing still continues to face formidable challenges of its own — such as rising foreclosures, persistently tight lending standards for home buyers and builders and difficulties in obtaining accurate appraisals. Moreover, disappointing job growth numbers in March and uncertainty in the European economy are undermining prospects for a vigorous recovery.

California home sales declined in March from February’s pace, while the median home price snapped a 16-month annual price decline and posted its first year-over-year gain, C.A.R. reported Monday.

The statewide median price of an existing, single-family detached home jumped 9.2 percent to $291,080 in March from February’s $266,660 median price and was up 1.6 percent from a revised $286,550 recorded in March 2011.  The month-to-month increase was the largest since March 2004.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 505,360 units in March, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide.  Sales in March were down 4.5 percent month-over-month and 2.3 percent year-to-year. 

“Housing inventory remains extremely tight throughout the state and at levels severely under normal market conditions,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  “In areas, such as Los Angeles and Riverside counties, where the Federal Housing Finance Agency (FHFA) wants to implement the REO bulk sale pilot program, inventory is running at levels well below the long-run average.  These low inventory levels demonstrate that the pilot program is not necessary in California.”

The pilot program calls for the sale of more than 600 Fannie Mae-owned foreclosed homes in Los Angeles and Riverside counties to institutional investors. 

More consumers may be looking to purchase homes with a shift in several key housing market indicators, according to Fannie Mae’s March 2012 consumer attitudinal National Housing Survey.  More Americans now expect both home rental and home purchase prices to increase over the next year.  Nearly half of consumers expect higher rental prices, the highest number recorded since monthly tracking began in June 2010.  These trends may be providing Americans with an increased sense of urgency to buy a home as 73 percent of Americans now believe it is a good time to buy a home, up from 70 percent in February.

Highlights of the survey include:

Thirty-three percent of respondents expect home prices to increase over the next 12 months, a five percentage point increase from last month, the highest level over the past 12 months.

On average, Americans expect home prices to increase by 0.9 percent over the next 12 months (up slightly since last month).

Thirty-nine percent of Americans say that mortgage rates will go up in the next 12 months, a five percentage point increase from last month.

On average, respondents expect home rental prices to increase by 4.1 percent over the next 12 months, a significant increase since February, and the highest number recorded to date.

Forty-eight percent of respondents think that home rental prices will go up, a three percentage point increase from last month and the highest number recorded to date.

Sixty-six percent of respondents say they would buy their next home if they were going to move, up one point since last month, while 30 percent say they would rent, up one point versus last month.

 Rising rents, coupled with slumping home prices and interest rates near record-lows, are boosting demand for homes at entry-level prices.

Making sense of the story:

Increased buying activity from investors and second-home purchases may be factors behind the recent pickup in home sales, but real estate agents say they are fielding more calls from anxious tenants complaining about rising rents.

Average apartment rents rose by 2.7 percent last year, while the national vacancy rate dropped below 5 percent for the first time since 2001, according to a quarterly survey released Wednesday by REIS Inc., a real estate research firm.
The largest rent increases came in San Francisco and San Jose, Calif., which saw increases of 5.9 percent and 4.9 percent, respectively. 

Such increases are one reason why industry analysts believe 2012 will be the first year since 2005 when the share of apartment renters that moves out to buy a house increases from the previous year.

Historically, the cost to rent an apartment has been about 10 percent lower than the after-tax cost of owning a home.  That rental discount began to fall in 2010 and disappeared entirely last year, according to analysts at Deutsche Bank who track housing costs. By the end of 2011, the bank’s research found that the cost to rent an apartment was about 15 percent higher than the cost to own a home.

It isn’t always easy for home buyers to make it to the closing table though. Lending and appraisal standards remain tight, keeping many would-be buyers out of the market.  And aspiring buyers are competing with savvy investors who have turned buying and reselling foreclosed homes into a business.

A survey of bank risk professionals found fewer lenders expect a rise in delinquencies on home loans, car loans, and small business loans, according to FICO’s quarterly survey.

In the latest survey, the number of respondents expecting mortgage delinquencies to rise during the next six months was 12 percentage points lower than last quarter – dropping from 47 to 35 percent.  The survey found 28 percent of respondents expected delinquencies on small business loans to increase, which is 11 percentage points lower than last quarter.  And 20 percent of respondents expected delinquencies on car loans to increase, 13 percentage points lower than last quarter.

With regard to credit cards, 32 percent of respondents expected delinquencies to increase.  That is an improvement of seven percentage points over last quarter and is the lowest figure since the second quarter of 2011.

When asked about the availability of credit for specific loan types over the next six months, the majority of respondents expected supply to meet or exceed demand for all loan types except mortgages.  With lenders unsure about the real estate sector, 56 percent of respondents believed credit supply would not meet demand for residential mortgages.

Fannie Mae’s latest quarterly National Housing Survey focuses on the state of homeownership aspirations among Americans across all demographic groups. The survey finds that despite the recent housing crisis, most Americans continue to believe that owning their home is preferable to renting it. The data also indicate that while financial constraints and employment concerns may be keeping potential home buyers on the sidelines in the near term, future improvements in employment and personal finances, a pickup in interest rates in response to stronger economic growth, and stabilizing home prices may move Americans to act on their aspirations in coming years.

Across all education levels, Americans say owning makes more sense than renting.  This belief is held consistently across all demographic groups.

Nearly two-thirds of current renters say that they will buy a house at some point in the future.

Non-financial factors such as safety and quality of local schools continue to be the top reasons for buying a home across all income groups.

African-Americans and Hispanics are more likely to cite various benefits, such as buying a home as a way to build wealth, homeownership as a symbol of success, and civic benefits.

Attitudes about homeownership as an investment, financial constraints, and mortgage accessibility may mean that more Americans choose not to act on their aspiration for homeownership, thus potentially leading to lower homeownership rates.

The margin of Americans believing homeownership has the highest investment potential has declined over the past several years.
At the same time, the perceived safety of owning a home as an investment has trended downward, reaching a low of 63 percent in the fourth quarter of 2011.

In turn, groups with higher levels of education and higher incomes are more likely to think buying a home is a safe investment.

 Next to filing for bankruptcy protection, nothing wrecks a borrower’s chances of qualifying for a home loan like a foreclosure.  And, some lenders may not look favorably upon borrowers who were able to successfully complete a short sale either.

Making sense of the story:

Although more than 4 million homes have been lost to foreclosure in the six years since the housing market began its descent, it’s a reality that the former owners will have to contend with the repercussions of foreclosures and/or short sales.  However, the passage of time makes all the difference.

The mortgage-lending guidelines followed by the majority of banks prohibit lenders from making loans to people with foreclosure or short sale in their credit history, often for years. 

Still, some homeowners who were foreclosed upon when the market first started to skid are now looking to buy another home and are getting approved for new loans.

The likelihood of a borrower with a real-estate related blemish on their credit history being approved for a new loan depends on several factors, but largely on whether the borrower had a foreclosure or a short sale.

Generally, borrowers who have a foreclosure in their credit history can expect to wait between two to seven years before a lender will even accept their loan application.  The waiting periods stem from guidelines most banks must follow in order to sell their loans to purchasers such as Fannie Mae and Freddie Mac.

If a buyer with a past foreclosure is seeking a government-backed mortgage, the waiting period can vary before they can qualify.  The Federal Housing Administration, which insures roughly 30 percent of new loans, requires former homeowners to wait three years from the date of their foreclosure before they can qualify for a loan guaranteed by the agency.

Americans’ concerns about key economic and housing issues are beginning to subside, according to results from Fannie Mae’s February 2012 National Housing Survey. Consumers’ attitudes have stabilized across most indicators – including personal finances, housing, and employment – demonstrating their sense that downside risks have abated somewhat compared with late summer and fall of 2011.

Highlights of the survey include:

The rise in confidence in the economy’s direction continued in February, with 35 percent responding that they think the economy is on the right track, a 5 percentage point increase from January. The percentage of respondents who say the economy is on the wrong track dropped to 57 percent, a decline of 6 percentage points.

On average, Americans expect home prices to increase by 0.8 percent over the next 12 months (down slightly since last month).

Twenty-eight percent of respondents expect home prices to increase over the next 12 months (consistent with last month), while 15 percent say they expect home prices to decline (down 1 percentage point since last month). Fifty-three percent say prices will stay the same.

The percentage of respondents who say it is a good time to sell rose by 3 percentage points to 13 percent, the highest level in more than a year, while the percentage of respondents who say it is a good time to buy dropped 1 percentage point to 70 percent this month.

Sixty-five percent of respondents say they would buy their next home if they were going to move, up 1 percentage point since last month, while 29 percent say they would rent, down 1 percentage point versus last month.

The Conference Board Consumer Confidence Index increased in February. The Index now stands at 70.8 (1985=100), up from 61.5 in January. The Present Situation Index increased to 45 from 38.8. The Expectations Index rose to 88 from 76.7 in January.

Consumers’ assessment of current conditions was more favorable in February. Those claiming business conditions are “good” increased slightly to 13.3 percent from 13.2 percent, while those claiming business conditions are “bad” decreased to 31.2 percent from 38.3 percent. Consumers’ appraisal of the labor market was also less pessimistic. Those stating jobs are “plentiful” increased to 6.6 percent from 6.2 percent, while those saying jobs are “hard to get” decreased to 38.7 percent from 43.3 percent.

Consumers were more optimistic about the short-term outlook than they were last month.  The proportion of consumers expecting business conditions to improve over the next six months increased to 18.7 percent from 16.7 percent, while those anticipating business conditions will worsen decreased to 11.8 percent from 14.6 percent. Consumers’ outlook for the labor market was also more upbeat.  Those anticipating more jobs in the months ahead increased to 18.7 percent from 16.4 percent, while those anticipating fewer jobs declined to 16.9 percent from 19.1 percent. The proportion of consumers expecting an increase in their incomes improved to 15.4 percent from 13.8 percent.