Sarasota Real Estate Market News

Rate on 30-year fixed mortgage falls to 4.11%

WASHINGTON – Oct. 21, 2011 – The average rate on the 30-year fixed mortgage was nearly unchanged this week after rising sharply last week.

Freddie Mac said Thursday that the rate on the 30-year loan edged down to 4.11 percent from 4.12 percent last week. The week before, it fell to 3.94 percent. That’s the lowest rate ever, according to the National Bureau of Economic Research.

The average rate on the 15-year fixed mortgage ticked up to 3.38 percent from 3.37 percent. It hit a record-low of 3.26 percent two weeks ago.

Low rates have done little to revive the lagging housing market, which has struggled with weak sales and declining prices. Many can’t qualify for loans because their credit is weak or they can’t afford a downpayment. Most of those who can afford to refinance already have.

The number of Americans who bought previously occupied homes fell in September and is on pace to match last year’s dismal figures – the worst in 13 years.

The National Association of Realtors said Thursday that home sales fell 3 percent last month to a seasonally adjusted annual rate of 4.91 million homes. That’s below the 6 million that economists say is consistent with a healthy housing market.

Sales of new homes are on pace to finish the year as the lowest on records dating back a half-century. Prices have been sliding because the market is flooded with houses being sold in foreclosure.

Many borrowers are unable to take advantage of the low rates because they can’t meet banks’ restrictive lending standards, or are unable to scrape together a downpayment.

The low rates have caused a modest boom in refinancing, but that benefit might be wearing off. Most people who can afford to refinance have already locked in rates below 5 percent.

There have been a few modest signs of life for housing. Homebuilders started projects in September at the fastest pace in 17 months, the government said Wednesday. Most of the gain was driven by a surge in volatile apartment construction.

Still, single-family home construction, which represents nearly 70 percent of the market, increased only slightly. And building permits, a gauge of future construction, fell.

The Federal Reserve has been trying to reduce long-term rates by buying longer-dated Treasurys. Mortgage rates tend to track the yield on the 10-year Treasury note. Buying by the Fed pulls the yield lower.

The average rate on a 30-year fixed mortgage fell below 4 percent for the first time in history this month, just as the 10-year yield hit its own record low. Rates have edged up since then.

Rates have been below 5 percent for all but two weeks in the past year. Just five years ago they were closer to 6.5 percent.

The low rates being offered don’t include extra fees, known as points, which many borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount. The average fees for the 30-year and 15-year loans were unchanged at 0.8 point.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.

The average rate on a five-year adjustable-rate mortgage fell to 3.01 percent from 3.06 percent. It hit a record-low of 2.96 percent two weeks ago.

The average rate for the one-year adjustable-rate mortgage rose to 2.94 percent from 2.90 percent. It fell last month to 2.81 percent, the lowest on records dating back to 1984.

The average fees on the one-year and five-year loan were unchanged at 0.6 point.
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October 27, 2011 Posted by | News related to Financing, News related to the Market | Leave a comment

Court: Owner never had legal ownership of foreclosure

BOSTON – Oct. 21, 2011 – A Massachusetts court ruling applies only to residents of that state, but the case focuses on another legal problem from the robo-signing foreclosure scandal.

In the case, the Massachusetts Supreme Court ruled that a homeowner who had purchased a home in foreclosure did not have legal ownership of the property and therefore could not resell it. The reason: The bank failed to properly process the title when foreclosing on it.

“The decision by the Supreme Judicial Court casts a cloud over the legal ownership of any properties in Massachusetts where banks didn’t properly convey title when foreclosing,” The Wall Street Journal says in its article about the case. “The problem has gained attention nationwide because of banks’ use of ‘robo-signing’ and other dubious practices that may have broken chains of title on foreclosures.”

The court’s ruling follows an earlier court decision that voided a foreclosure after banks couldn’t prove they owned the mortgage when it started the process.

The most recent “ruling took that decision one step further by finding that sales of bank-owned properties with clouded title were invalid, even after an unwitting third-party buyer later bought the bank-owned property,” The Wall Street Journal notes.

Any homeowner who bought a home with a “tainted foreclosure in their chain (of title) is going to have to do something to give clean title” whenever selling or refinancing the home, Jeffrey Loeb, the REO buyer’s attorney, told The Wall Street Journal. “That’s actually what’s scary. Most people don’t know they have this problem.”

Source: “State Rules on Foreclosure,” The Wall Street Journal (Oct. 19, 2011)

October 27, 2011 Posted by | News related to Buyers, News related to Investors, News related to Short Sales and Foreclosures, News related to the Market | Leave a comment

Foreigners’ sweetener: Buy house, get a visa

WASHINGTON – Oct. 21, 2011 – Sens. Charles Schumer (D-N.Y.) and Mike Lee (R-Utah) have proposed a new type of resident visa for foreigners who spend at least $500,000 to purchase real estate in the United States. The proposal calls for at least $250,000 to be spent on a residence, while the other $250,000 could be invested in other real estate. However, the entire amount must be a cash investment.

The provision, part of a larger package of immigration measures, would complement existing visa programs that permit foreigners to enter the country if they invest in new businesses that create jobs.

Supporters believe the initiative would help absorb a glut of housing supply – especially in markets like Arizona and South Florida, where foreign buyers have represented a rising share of home buying activity. According to National Association of Realtors® (NAR) research, 5.5 percent of Miami homes sell to international buyers.

International buyers snapped up $82 billion in U.S. residential property in the year ended in March, surging from $66 billion during the prior 12 months, reports NAR.

Source: Wall Street Journal (10/20/11) P. A7; Timiraos, Nick

October 27, 2011 Posted by | News related to Sellers, News related to the Market | Leave a comment

Are banks getting better on short sales?

CHICAGO – Oct. 21, 2011 – Are short sales getting easier? Some homeowners are reporting that banks are now not only more willing to consider a short sale, but are even offering incentives to complete a short sale. For example, a homeowner in Chicago says his lender approved his short sale and then gave him a $20,000 check after the deal was finalized for selling the home as a short sale instead of letting it sink into foreclosure.

Lenders accepting a lower mortgage payoff from an underwater seller traditionally isn’t thought of an easy transaction to complete. Lenders weren’t so willing a few years ago. But as the number of Americans underwater on their mortgages grow, more lenders are reconsidering as they try to avoid the extra costs incurred to their bottom-lines that a foreclosure can cause.

For 2011, short sales accounted for about 8 percent of total home sales, and rose 7 percent over 2010 totals, according to CoreLogic data. Short sales are up by 59 percent year-over-year in Illinois, 32 percent in Michigan, and 19 percent in Arizona alone, according to CoreLogic.

“We’re starting to see that servicers and lenders are viewing short sales as a better alternative than they had in the past,” says Daren Blomquist, spokesman for RealtyTrac. “Some of that relates to the fact that it’s getting harder to foreclose. There are additional requirements in terms of paperwork and requirements that states and judges are imposing.”

Short sales can still be complex and lengthy – they can take up to nine months to close and even after that, there’s no guarantee it’ll end successfully. “In general, it is a totally different type of transaction,” says Mike Cuevas, a real estate professional at Exit Realty in Chicago. “You’re not only selling a house, you’re negotiating debt.”

Source: “Why it can Pay to try a Short Sale; Lenders may be Viewing Short Sales as a Better Alternative,” MarketWatch (Oct. 20, 2011)

October 27, 2011 Posted by | News related to Short Sales and Foreclosures | Leave a comment

Best day to list real estate for sale: Friday

SEATTLE – Oct. 20, 2011 – After analyzing 1.2 million listings in 16 markets across the country for 21 months, Redfin found that sellers have a better chance of moving their homes off the market if they list them on a Friday.

The brokerage says the study indicates that Friday listings are 12 percent more likely to change hands within 90 days. Additionally, 94.4 percent of properties listed on a Thursday or Friday sold close to the list price; in contrast, only 93.3 percent of those listed on a Sunday or Monday sold close to the list price.

Friday listings were 18.8 percent more likely than Sunday or Monday listings to be toured, with Redfin noting that “homes listed on Fridays are the freshest in buyers’ minds when they’re making their weekend plans.” Buyers also prefer to visit the newest listings first to beat the competition.

The study’s conclusion: “More tours leads to more offers, and more offers leads to a better price and a better chance of selling.”

Source: Inman News (10/18/11)

October 27, 2011 Posted by | News related to Sellers | Leave a comment

Florida’s existing home and condo sales up in September

ORLANDO, Fla. – Oct. 20, 2011 – Florida’s existing home and existing condo sales continued their upswing in September, according to the latest housing data released by Florida Realtors®. Existing home sales increased 10 percent last month with a total of 15,036 homes sold statewide compared to 13,723 homes sold in September 2010, according to Florida Realtors.

“One of the most overlooked statistical trends in all of real estate is the growth in home sales, both single-family and condo, in the state of Florida,” said Florida Realtors Chief Economist Dr. John Tuccillo. “We’ve seen an upward trend in sales since January 2011, and September’s sales were a full 10 percent above September 2010. Even prices, which have been static over the past few months, are well above where they were in January 2011.

“One of the reasons for this is stabilization in the distressed property market. This is not a problem that’s going away, but there’s a degree of certainty that is helping the market.”

Fifteen of Florida’s metropolitan statistical areas (MSAs) reported higher existing home sales in September; 11 MSAs had higher existing condo sales.

The statewide median sales price for existing homes last month was $133,900; a year ago, it was $135,000 for only a 1 percent decrease. According to analysts with the National Association of Realtors® (NAR), sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.

The national median sales price for existing single-family homes in August 2011 was $168,400, down 5.4 percent from a year ago, according to NAR. In California, the August statewide median resales price was $297,060; in Maryland, it was $241,564; and in New York, it was $220,000.

In Florida’s year-to-year comparison for condos, 6,666 units sold statewide in September, a 10 percent gain over the 6,035 units sold in September 2010. The statewide existing condo median sales price last month was $87,200; a year earlier, it was $81,800 for a 7 percent increase.

“Historically low mortgage rates and stabilizing home prices all across Florida’s local housing markets continue to attract potential buyers – housing affordability conditions are very favorable right now,” said 2011 Florida Realtors President Patricia Fitzgerald, manager/broker-associate with Illustrated Properties in Hobe Sound and Mariner Sands Country Club in Stuart. “However, financially qualified buyers are still being denied home loans because of overly restrictive lending requirements, and that’s a significant obstacle to the housing recovery.”

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 4.11 percent in September, down from the 4.35 percent average during the same month a year earlier. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

© 2011 Florida Realtors®

October 27, 2011 Posted by | News related to Buyers, News related to Investors, News related to Sellers, News related to the Market | Leave a comment

When will REO sales finally reach the peak?

NEW YORK – Oct. 19, 2011 – Properties repossessed through foreclosure may not peak until 2013, HousingWire reports, quoting several analysts and recent reports.

Foreclosure sales are expected to reach 1.48 million properties in 2013, according to analysts from Bank of America Merrill Lynch.

However, with the surge, “we do not expect to see anywhere near the downward pressure on home prices that we had back in 2008, since the expected percent changes in liquidation volumes are so much smaller,” the analysts said.

The increase in foreclosures is expected to mostly change from private banks’ portfolios – which nearly half are from now – to the government’s backlog of properties, with an increase in foreclosures forecasted from Fannie Mae, Freddie Mac, and the Department of Housing and Urban Development’s portfolios. Overall, they are expected to liquidate about 595,000 properties in 2013.

To handle the expected surge, the government continues to consider ideas, including proposals of turning some of the foreclosures into rentals, and a plan from the Federal Housing Finance Agency to refinance more underwater borrowers so they’ll be less likely to walk away from their property.

But some analysts are skeptical that a surge in foreclosures will come without an intervention from the government.

“Do they really think that the government under any administration would let 500,000 homes hit the mark and crash prices all over again, six years after the first crash?” Scott Sambucci, chief analyst at Altos Research, told HousingWire.

Source: “REO Sales May Not Peak Until 2013,” HousingWire (Oct. 17, 2011)

© Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688

October 27, 2011 Posted by | News related to Buyers, News related to Investors, News related to Short Sales and Foreclosures, News related to the Market | Leave a comment

Freddie Mac: Demand surges for rental housing

MCLEAN, Va. – Oct. 18, 2011 – Freddie Mac released its U.S. Economic and Housing Market Outlook for October. It shows rental demand rising and calls the multifamily sector “a strong positive signal for the U.S. housing industry.”

Outlook highlights

• Over the year ending mid-2011, the Census Bureau reported a net increase of 1.4 million households that moved into rental housing – a 4 percent rise in the number of tenant households in just one year.

• The U.S. homeownership rate fell about 1.5 percent over the past year (from 66.9 percent to 65.9 percent); homeownership rates fell about 4.4 percent for those under 25 years of age, and by 7 percent for those aged 25 to 29 years.

• Apartment rents, which had been flat to falling in many projects during the 2008-2009 recession, have started to rise, albeit slowly.

• New construction starts of apartments in buildings with at least 20 dwellings has picked up this year; in the second quarter, it reached its highest point since the end of 2008.

• Low Treasury yields suggest that mortgage rates fell to new lows for multifamily lending in recent weeks.

© 2011 Florida Realtors®

October 25, 2011 Posted by | News related to Buyers, News related to Investors | Leave a comment

What’s lurking in the shadows?

ORLANDO, Fla. – Oct. 18, 2011 – When you drive down the street, you can see a “for sale” sign on nearly every road. The supply of homes may seem overwhelming at times, and we are definitely in a buyers’ market. But in August, the National Association of Realtors (NAR) reported an 8.5-month inventory level, close to the six-month level that historically signals a balanced market. Even so, there’s a general feeling of uneasiness about the market.

The reason for this anxiety, notes Erica Cross, research analyst with the Florida Realtors, is likely due to “shadow inventory” – homes placed in foreclosure or owned by lenders, and loans overdue by at least one payment. We feel their looming presence, even though a “for sale” sign hasn’t appeared in the front yard.

But how much shadow inventory is out there? The amount depends on its definition. How delinquent must a property be to include it in shadow inventory – 1 day, 90 days? Is it assumed that any of the delinquencies will improve? Are foreclosure properties included?

With all of these different questions, estimates of shadow inventory in March 2010 ranged from 1.7 million to 7 million, according to NAR. The number of homes in shadow inventory is uncertain; more importantly, so is the timing of their exact release to the market.

Shadow inventory going to market

Let’s imagine two scenarios. First, think of a situation where banks slowly release shadow inventory to the market. Foreclosures are currently weighing down home prices, so this trend would continue. But if a balance between those foreclosures coming on the market and those being sold is maintained, market stability will continue. The supply of homes would be restricted.

Now picture a more drastic case. What if banks dumped all of the homes they own on the market all at once? The increase of supply would cause a decline in price, a drop most likely affecting home prices negatively across the board. Since demand cannot respond quickly, the price drop would have a tremendous impact on the market.

In turn, a drop in home prices would have a harmful impact on home equity and consumer confidence, leading to less consumer spending and more of the economic issues we are currently trying to resolve.

Can it be managed?

Banks aren’t the only players in the “disposing of homes” game. Homeowners also control the number of homes in shadow inventory. A homeowner in trouble can decide whether to pay the mortgage, seek mitigation or walk away. Think of it like a bathtub. Currently, the amount of bank-owned homes fills part of the tub. The disposing of homes into the market is like letting the drain open. Homeowners going into foreclosure can add more homes to the shadow inventory – like opening a faucet into the tub. If there is more water (homes) being added by the faucet than there is water (homes) being drained (or sold), the bathtub will fill and overflow. The flooding of the bathtub means that banks can only hold so many homes or they will need to dump homes on the market.

The government affects the supply of shadow inventory through the Home Affordable Modification Program (HAMP). HAMP allows homeowners to modify their mortgage payments to 31 percent of their pre-tax income to make them more affordable. If homeowners meet the HAMP criteria and can reduce the amount of their mortgage payments, they are less likely to default. Stricter eligibility or removal of HAMP would cause more delinquencies and foreclosures. Easier eligibility could prevent delinquencies and foreclosures and lower the shadow inventory count.

What to do

Banks, homeowners and the government can modify their actions to speed up or slow down the amount of inventory added to the current supply. With each player making different moves, the moral of the story is that the timing and number of distressed properties in the market can’t be predicted. We do know it will affect your business, so monitor your local market closely. Communicate with lenders so you know the business decisions they are making, and work with distressed homeowners to help mitigate their debt burdens.

Source: Erica Cross, research analyst, Florida Realtors

© 2011 Florida Realtors®

October 25, 2011 Posted by | News related to Short Sales and Foreclosures, News related to the Market | Leave a comment

Credit scores poised to get more personal

CHICAGO – Oct. 17, 2011 – Many consumers applying for a mortgage are going to start sharing more personal information with lenders next year, like it or not.

FICO scores, the industry standard for determining credit risk in mortgages backed by Fannie Mae, Freddie Mac and the Federal Housing Administration, largely have been based on a person’s credit history. But in an attempt to develop a more well-rounded picture of a person’s finances beyond credit, tools are being developed to help the lending industry dig deeper.

Fair Isaac Corp., or FICO, the company behind the widely used scoring formula, and data provider CoreLogic last week announced a collaboration that will result in a separate score that will be available to mortgage lenders and incorporates information that will include payday loans, evictions and child support payments. In the future, information on the status of utility, rent and cellphone payments may also be included.

Separately, last month, the big three credit reporting agencies, Experian, Equifax and TransUnion, began providing estimates of consumer income as a credit report option. And earlier this year, Experian began including data on on-time rental payments in its reports.

The new information could prove to be a double-edged sword for consumers: It may open the door to homeownership to some consumers who have, according to industry-speak, a “thin file” or worse, a “no-file,” meaning they lack sufficient credit histories.

On the other hand, the extra information may make a borderline borrower look even worse on paper. And it’s unlikely to quiet critics who complain that too much emphasis is put on a single number.

Still, there is thought among researchers that consumer transparency, if it demonstrates both good and bad behavior, has its place.

“You’re trying to convince someone to loan you an awful lot of money at a low interest rate,” said Michael Turner, president of the Policy and Economic Research Council. “Only you know whether you’re going to pay it back. There is a harmony in this data exchange.”

The FICO-CoreLogic partnership won’t result in a credit score that will rule out a borrower for a mortgage backed by Fannie Mae, Freddie Mac or the FHA, which together own or guarantee at least 90 percent of the mortgages being written. That’s because the “tri-merge” report required for such a loan does not rely on CoreLogic data. But it could mean either more or fewer mortgage fees or a higher or lower interest rate charged by lenders that in today’s cautionary lending environment have heartily adopted risk-based pricing.

“We’re fascinated to see, as we get into the data, whether that may expand the universe of people who can get a mortgage,” said Joanne Gaskin, director of product management global scoring for FICO. “Banks are saying, ‘How do I find ways to safely increase loan volume, to find the gems out there?’ “

As a result, there’s a rush by credit reporting agencies to provide financial companies, whether it’s a mortgage bank or a credit card provider, with a wealth of information on individual customers.

“Before the (housing) bubble burst, there was a huge amount of interest in targeting the unbanked,” said Brannan Johnston, an Experian vice president. “It was a desperate dash to try and grow and go after more and more consumers. When the bubble burst, that certainly dialed back some. They want to grow their business responsibly by taking good credit risks.”

FICO scores have been around since the 1950s, but they didn’t become a major factor in mortgage lending until 1995, when Fannie Mae and Freddie Mac began recommending their use to help determine a mortgage borrower’s creditworthiness. The score, which ranges from 300 to 850, factors in how long borrowers have had credit, how they’re using it and repaying it, and if they have any judgments or delinquencies logged against them.

The change comes at a time when the average FICO scores of homebuyers who qualify for loans continue to rise, as mortgage lenders reward the most creditworthy borrowers with low rates and tack extra fees onto loans for those with lower credit scores.

In a report last year, the Woodstock Institute, a Chicago-based research and advocacy group, found that residents in Illinois’ “communities of color” were far more likely to have lower, “non-prime” credit scores compared with people in predominantly white communities. Statewide, 20 percent of people had a credit score of less than 620, which meant they had a hard time qualifying for a mortgage as well as other forms of credit.

Among other ideas, Woodstock recommended that businesses report on-time and delinquent payment histories for items such as rent, health care, utility and cellphone bills, to truly determine a person’s default history.

“Any time you can get a fuller picture of a customer’s risk profile, it makes it more likely that they can get the product they are most suited to,” said Tom Feltner, Woodstock vice president. “The concern, of course, is what is that information, and does it reflect the rate of default?”

There also are concerns about whether inquiries and charge-offs from payday and online lenders should be included. “Payday loans are extremely onerous,” said Chi Chi Wu, a staff attorney at the National Consumer Law Center. “They trap people in a cycle of debt. To report on them is to cite that person as financially distressed. We certainly don’t think that’s going to help people with a credit score.”

The extra information may also help more affluent homeowners who aren’t on the credit grid.

Two years ago, David Pendley, president of Avenue Mortgage Corp., worked with a client, a college professor, who didn’t believe in using credit. “He was putting down 40 percent and he had the hardest time getting a loan, even though he had $120,000 in the bank and he was 22 years on the job.”

Eventually, Pendley secured a loan for the customer through a private bank, but he paid for it. “He didn’t get the lowest rate possible,” Pendley recalled.

© 2011 the Chicago Tribune Distributed by MCT Information Services

October 25, 2011 Posted by | News related to Buyers, News related to Financing | Leave a comment