Sparked by rising home prices across much of the nation, the housing recovery is now under way, but fiscal uncertainties and other challenges could result in a bumpy ride in the coming months, according to economists participating in a recent National Association of Home Builders (NAHB) webinar on the construction and economic outlook.
“We’re seeing a more robust housing sector than many other parts of the economy,” says NAHB Chief Economist David Crowe. “One of the reasons is we have finally begun to see on a national scale that house prices are picking up again.”
Crowe cited a number of other factors that are carrying the housing momentum forward. These include:
Updates from November, 2012
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By Steve Cook
Results from the survey show Americans’ optimism about the recovery of the housing market, and that homeownership continued its gradual climb, bolstered by a series of mortgage rate decreases experienced throughout the summer. Consumer attitudes about the economy also improved substantially last month, breaking the progression of waning confidence seen during much of this year.
Survey respondents expect home prices to increase an average of 1.5 percent in the next year. The share who says mortgage rates will increase in the next 12 months dropped (More …) Print This Post
WASHINGTON (September 17, 2012) – New survey findings, combined with an analysis of historic credit scores and loan performance, show home sales could be notably higher by returning to reasonably safe and sound lending standards, which also would create new jobs, according to the National Association of Realtors®.
Lawrence Yun, NAR chief economist, said there would be enormous benefits to the U.S. economy if mortgage lending conditions return to normal. “Sensible lending standards would permit 500,000 to 700,000 additional home sales in the coming year,” he said. “The economic activity created through these additional home sales would add 250,000 to 350,000 jobs in related trades and services almost immediately, and without a cost impact.” Print This Post
NEW YORK (CNNMoney) — Even though home prices are rebounding in some parts of the country, the overall housing market won’t start turning the corner until next spring, according to the latest forecast from Fiserv.
The forecast, which tracks 384 housing markets, predicts that nationwide home prices will dip another 1% between March 2012 and March 2013. Print This Post
With the economic recovery sluggish at best, many ask what impact this has on housing. Over the last several years, most economists believed that housing would not recover until the overall economy recovered. However, it now seems that the housing sector may be a driving influence in the recovery.
Here are four reports released in the last 30 days affirming this point:
“In terms of its contribution to real GDP, residential fixed investment has been a positive – albeit modest – force over the most recent four quarters, marking its longest span of back-to-back positive results since 2005.”
“The [overall] resumption in residential activity cannot be understated as the long awaited housing recovery should help buoy consumer confidence and provide a mild lift to second half economic output after what was likely a disappointing first half of the year.”
“The data from the past month collectively point to decelerating economic growth, but growth nonetheless…However, despite signs of deteriorating momentum for economic activity, housing continues to be a bright spot as news from the housing market has been relatively upbeat, presenting a rare upside boost to the economy.”
“As we look back at previous major housing recoveries, 1975 and 1991 began with negative jobs growth…In each case, the home sales recovery was fueled by home price improvement, driving new job growth and those jobs creating a fresh wave of demand that supported a multi-year recovery in housing.”
Is housing a victim to the current economic malaise? No. It may even be the cure. Print This Post
By DAVID WESSEL
The U.S. finally has moved beyond attention-grabbing predictions from housing “experts” that housing is bottoming. The numbers are now convincing.
Nearly seven years after the housing bubble burst, most indexes of house prices are bending up. “We finally saw some rising home prices,” S&P’s David Blitzer said a few weeks ago as he reported the first monthly increase in the slow-moving S&P/Case-Shiller house-price data after seven months of declines.
Nearly 10% more existing homes were sold in May than in the same month a year earlier, many purchased by investors who plan to rent them for now and sell them later, an important sign of an inflection point. In something of a surprise, the inventory of existing homes for sale has fallen close to the normal level of six months’ worth despite all the foreclosed homes that lenders own. The fraction of homes that are vacant is at its lowest level since 2006. Print This Post
by The KCM Crew on June 18, 2012
We often report on shadow inventory and its impact on home prices. We are pleased to announce that CoreLogic just reported that the amount of shadow inventory has fallen to levels not seen since 2008.
Mark Fleming, their chief economist, explains:
“Since peaking at 2.1 million units in January 2010, the shadow inventory has fallen by 28 percent. The decline in the shadow inventory is a positive development because it removes some of the downward pressure on house prices. This is one of the reasons why some markets that were formerly identified as deeply distressed, like Arizona, California and Nevada, are now experiencing price increases.”
For a copy of the full result, click here. Print This Post
By Pete Bakel
Despite economic growth of 3.0 percent annualized for the fourth quarter of 2011, incoming data suggest that economic growth slowed during the first quarter of 2012. In line with previous forecasts, Fannie Mae’s (FNMA/OTC) Economic & Strategic Research Group expects growth to slow to slightly more than 2 percent in the first quarter of the year.
The slowdown in economic growth is not indicative of a significant deterioration in the underlying strength of economic activity, but a fading inventory boost to GDP growth. For all of 2012, the Group expects growth to be modest at 2.3 percent as a number of factors combine to constrain activity, including slow real disposable income growth, which should restrain household spending activity; a very small contribution from net exports; and continued fiscal contraction by the federal government, as well as ongoing cutbacks by state and local governments acting as a drag on growth during the year.
“Consumer spending continued its upward trajectory with strong spending on autos and other durable goods, and spending on services showing the largest gain in nearly two years,” says Fannie Mae Chief Economist Doug Duncan. “However, the pickup in consumer spending has outpaced income growth, which means that consumers are increasing their spending by borrowing from their savings. Real disposable income has been flat and that needs to change for a higher pace of economic activity to occur.”
Through the fourth quarter of 2011, residential investment contributed to overall economic growth for the third consecutive quarter, the first time that has occurred since 2005. Recent housing data also indicate some loss of momentum in the first quarter, underscoring the uneven nature of the current housing recovery. However, confidence among consumers improved in March. The Fannie Mae March National Housing Survey shows that 33 percent of Americans expect home prices to increase over the next 12 months, up from 28 percent in February. On the downside, the Group notes a long-term risk to housing concerning federal student loan debt, which has increased dramatically over recent years and may cause a delay in students’ entering the first-time homebuyer market in the future.
On the employment front, the March employment report showed weakening momentum, as the economy created just 120,000 jobs – less than half of the average monthly gain over the prior three months and the smallest gain in five months. However, the setback in the employment report should not necessarily be interpreted too negatively. Other job-related data continue to show signs of improvement with initial jobless claims hovering near a new low of the recovery at the end of March. Despite the unemployment rate dropping to 8.2 percent, the lowest rate in more than three years, it is not indicative of improving labor market conditions, as the rate was driven by a substantial decline in the labor force. The Group expects the unemployment rate to trend down to about 7.5 percent by the end of 2013, with a monthly average gain of approximately 190,000 jobs during 2012 and slightly stronger gains during 2013.
For more information, visit http://www.fanniemae.com Print This Post
New data from the National Association of REALTORS®’ Local Market reports shows that the national foreclosure rate eased from 2.8 percent in June of 2011 to 2.7 percent by December, with 113 of the 163 markets surveyed experiencing a decline in their foreclosure rate over this period.
While the improvement was widespread, the largest aggregate declines occurred in markets where the rate had ballooned in 2009 and 2010. Markets in Florida and Nevada dominated the top 10 in declines, but Seattle and Spokane, Wash., also made the top 10 despite having a small overall foreclosure rate, (More …) Print This Post
by Dean Hartman on March 8, 2012
There have been a few developing (and some already existing) programs that are worth mentioning, as the newspaper headlines applaud the opportunity. With interest rates remaining at near historic lows for quite some time, many people have been unable to take advantage of these rates because of problems in securing a high enough appraised value.
To that end, here are a few thoughts to consider:
New FHA Streamline Announcement
HUD announced that they will be rolling back the insurance premiums on this program for loans closed prior to June 2009. The Upfront Premium (the one that is added into the loan amount) will be .01% and the annual premium (the one that is paid in the monthly payment) will be slashed to .55%. These cuts could reduce borrowers’ expenses drastically. This program can be done where the lender pays the closing costs – without an appraisal, income verification, or even a credit check. Most lenders will look for a good mortgage payment history.
The VA IRRL – (Interest Rate Reduction Loan)
For people with existing VA mortgages, this program allows reasonable closing costs to be added into the loan. There is no new appraisal required, nor is there an income calculation. Basically, as long as the veteran is getting a payment at least $50 lower, it is good to go. In some cases, veterans may choose to reduce the term of their loan (instead of a monthly savings). This can be done with some documents delivered to the lender.
This is a program for loans currently owned by Fannie Mae and Freddie Mac wherein the house is underwater. Under this program, lenders may be able to reduce your interest rate despite your loan-to-value. Each mortgage investor is developing their own underwriting and risk criteria, but the good news is that people with good payment histories can take advantage of the great rates – even though their home has declined in value.
I gave you a very general overview of some loan products here today. There are many considerations (ex. closing costs and time you intend to stay in the home) and qualification items that will pertain to your individual circumstance. My intent was to heighten awareness and get you to reach out to your favorite mortgage professional and see if there is an opportunity for you.