Month: February 2014

Fannie Mae offering cash incentives to some home buyers

To reduce its inventory of foreclosed homes, Fannie offers qualified owner-occupant purchasers cash incentives toward closing costs of 3.5% of the purchase price.

WASHINGTON — If you’re planning to shop for a home in the next few weeks, here’s an early spring buying season come-on that just might save you some money if you qualify.

Fannie Mae, the largest mortgage investor in the country, has a bulging portfolio of houses acquired through foreclosures nationwide. About 31,000 of these properties are listed on its HomePath (www.homepath.com) resale marketing site. To move them quickly out of inventory, Fannie temporarily is offering qualified owner-occupant purchasers — but not investors — cash incentives toward closing costs of 3.5% of the purchase price. But you have to submit your initial offer no later than March 31 and close by May 31.

What sort of houses are we talking about? Visit the site and you’ll see. They run the gamut — from a one-bedroom condo in San Diego to a four-bedroom, four-bath single-family home in suburban Montgomery Village, Md. Some states have thousands of HomePath listings online: Florida has nearly 12,000; Illinois, 4,360; Ohio, 2,800; California, more than 2,300; Washington state, nearly 1,800; and Nevada, about 1,400. Asking prices range from $30,000 to $600,000 or more. On a $400,000 house, the 3.5% closing cost incentive would amount to $14,000.

To ensure that buyers who intend to occupy its homes get an opportunity to fully check them out and bid without competition from investment groups offering all-cash deals, Fannie has instituted what it calls a First Look program. It essentially prohibits bids from investors on properties during the first 20 days after listing (30 days in Nevada). After that, investors are free to jump in. Each First Look listing has a countdown clock attached to it that indicates the number of days remaining before bidding is opened to all comers.

The new 3.5% closing cost offer is available only during active First Look periods from mid-February through March, so there’s not a lot of time to get involved. Bidders will need to indicate upfront that they want to be considered for a closing-cost discount.

Who is eligible? First, you’ve got to be a bona fide owner-occupant purchaser and commit to live in the house as a primary residence for at least a year. You’ll need to fill out a certification to that effect that can be found on the HomePath site. Properties are not available in all states.

You don’t have to be a first-time buyer, though the Fannie program is likely to attract substantial numbers of them. The 3.5% closing cost discount helps with one of the biggest problems faced by first-timers — upfront cash.

As with most home purchases, you’ll need to be able to qualify for mortgage financing. Though Fannie may end up owning or securitizing the loan you obtain, it won’t be financing you directly. On HomePath purchases, you shop for a mortgage just as you would on any other house. Ideally, you nail down a financing source and get prequalified for mortgage money up to a specific dollar limit at current interest rates. If you’ve already located a First Look property and qualify, the lender is likely to take the 3.5% closing cost incentive into consideration in evaluating your application.

While you shop on HomePath, however, keep this important factor in mind: These are foreclosed, previously occupied homes. Though some of them are repaired, painted and spiffed up before they are listed, many could use some additional work. They are sold “as is” and that’s built into the pricing. Fannie identifies what it calls “improved” properties on the HomePath site — those that have undergone significant repairs — with either the “Home Depot” logo (when repairs have been made by contractors from that company) or a hammer and roof symbol (when repairs have been completed by independent contractors hired by Fannie).

If you can’t find the First Look house you want, don’t give up. Freddie Mac, the other giant federal mortgage investor, also has thousands of foreclosed homes that it’s trying to dispose of — and its own First Look program — at its HomeSteps (www.homesteps.com) marketing site. Though Freddie currently has no closing cost incentive offer, it does provide a $500 allowance toward the purchase of a home warranty policy, and it promotes special mortgage financing options on houses in some areas. If you qualify, that could mean a loan with no mortgage insurance, no appraisal and a 5% maximum down payment.

Definitely worth checking out.

Existing home sales hit lowest level in year and a half

Weather? Also blame flood insurance for falling sales

http://www.housingwire.com/articles/29052-existing-home-sales-hit-lowest-level-in-year-and-a-half

February 21, 2014

Existing-home sales tumbled in January to the lowest level in a year and a half as inventory shortages push home prices higher, the latest data from the National Association of Realtors announced.

Last month, home sales left the industry hanging on the potential of improvement if the job market reported enough growth to offset a rise in rates.

But January’s figures ended up falling and cancelling out any improvement seen in December.

Total existing-home sales — completed transactions that include single-family homes, townhomes, condominiums and co-ops — decreased 5.1% to a seasonally adjusted annual rate of 4.62 million in January from 4.87 million in December. Additionally, it came in 5.1% below the 4.87 million-unit pace in January 2013 and posted the slowest level of activity since July 2012, when it stood at 4.59 million.

While unusual weather is playing a role in the market, Lawrence Yun, NAR chief economist, said, “We can’t ignore the ongoing headwinds of tight credit, limited inventory, higher prices and higher mortgage interest rates. These issues will hinder home sales activity until the positive factors of job growth and new supply from higher housing starts begin to make an impact.”

Meanwhile, median existing-home price for all housing types in January reached $188,900, up 10.7% from January 2013.

Distressed homes, which are foreclosures and short sales, accounted for 15% of January sales, compared with 14% in December and 24% in January 2013.

Furthermore, total housing inventory at the end of January increased 2.2% to 1.90 million existing homes available for sale, representing a 4.9-month supply, up from 4.6 months in December.

Unsold inventory is 7.3% above a year ago, when there was a 4.4-month supply. As a standard, a supply of 6.0 to 6.5 months represents a rough balance between buyers and sellers.

However, January threw a new twist into the system.

In addition to disruptive weather, higher flood insurance rates are impacting the market in areas designated as flood zones, which account for roughly 8% to 9% of sales, NAR President Steve Brown, explained.

“Thirty percent of transactions in flood zones were cancelled or delayed in January as a result of sharply higher flood insurance rates,” Brown said. “Since going into effect on October 1, 2013, about 40,000 home sales were either delayed or cancelled because of increases and confusion.”

In light of this, Congress is considering legislation to halt new flood insurance rates so theFederal Emergency Management Agency can complete an affordability study and determine the full impact of the law.

Despite these additional factors, the median time on market for all homes was 67 days in January, down from 72 days in December and 71 days on market in December 2013.

Short sales stayed on market for a median of 150 days in January, while foreclosures typically sold in 58 days and non-distressed homes took 66 days.

Bay Area home sales slowest for a January since 2008

February 13, 2014 dqnews.com

La Jolla, CA.—-Bay Area home sales remained at a six-year low in January, largely because too few properties are being put up for sale. Prices went through their normal mid-winter dip, but are still well ahead of year-ago levels, a real estate information service reported.

A total of 4,696 new and resale houses and condos sold in the nine-county Bay Area last month. That was the lowest sales tally for any January since 2008, when 3,586 homes sold. Last month’s sales fell 30.1 percent from 6,714 in December, and declined 14.6 percent from 5,501 in January 2013, according to San Diego-based DataQuick.

Home sales always decline from December to January, usually around 30 percent. Last month’s sales were 22.3 percent below the January average of 6,043 since 1988, when DataQuick’s statistics begin. Bay Area sales haven’t been above average for any month in more than seven years. The most active January was in 2005, when 8,298 homes sold, while the least active was in 2008, with 3,586 sales.

“Mid-winter numbers don’t really tell us much about upcoming activity. March is much more predictive. That said, what we’re seeing now is a continuation of what we’ve been seeing for the past half year. Not much is changing beyond the normal seasonal ebb and flow. This spring should be interesting. We may find out how much pent-up supply and demand is still on hold from the great recession, and how it will play itself out,” said John Walsh, DataQuick president.

The median price paid for a home in the Bay Area last month was $525,000. That’s down 4.3 percent from $548,500 in December, and up 26.5 percent from $415,000 in January 2013. For seasonal reasons the median almost always declines from December to January. The median has increased on a year-over-year basis for the last 22 months.

The Bay Area median peaked at $665,000 in June and July 2007, then dropped to a post-boom low of $290,000 in March 2009.

Last month the number of homes that sold for less than $500,000 dropped 22.7 percent year-over-year, while the number that sold for more increased 17.1 percent, DataQuick reported.

Distressed property sales – the combination of foreclosure resales and “short sales” – made up about 16 percent of the resale market last month. That’s up from about 15 percent in December and down from about 37 percent a year earlier.

Foreclosure resales – homes that had been foreclosed on in the prior 12 months – accounted for 5.4 percent of resales in January, up from a revised 4.6 percent the month before, and down from 14.1 percent a year ago. Foreclosure resales peaked at 52.0 percent in February 2009. The monthly average for foreclosure resales over the past 17 years is 9.9 percent.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 10.5 percent of resales last month. That was the same as December’s estimate and down from 22.6 percent a year earlier.

Last month absentee buyers – mostly investors – purchased 24.2 percent of all Bay Area homes. That was up from December’s revised 22.5 percent and down from 28.3 percent for January a year ago. Absentee buyers paid a median $420,000 last month, up 40.0 percent from a year earlier.

Buyers who appear to have paid all cash – meaning no sign of a corresponding purchase loan was found in the public record – accounted for 24.8 percent of sales in January, up from a revised 23.5 percent in December and down from 28.4 percent a year earlier. The monthly average going back to 1988 is about 13 percent. Cash buyers paid a median $410,000 in January, up 36.4 percent from a year earlier.

Bay Area home buyers put $1.24 billion of their own money on the table last month in the form of a down payment or as an outright cash purchase. That number hit an all-time high of $2.64 billion last May.

Meantime, credit conditions appear to be improving gradually.

Adjustable-rate mortgages (ARMs), an important indicator of mortgage availability, accounted for 23.5 percent of the Bay Area’s home purchase loans in January. That was up from a revised 22.2 percent in December, and up from 10.9 percent in January last year. It was the highest since 25.4 percent in July 2008. ARMs hit a low of 3.0 percent of loans in January 2009. Since 2000, ARMs have accounted for 47.1 percent of all Bay Area purchase loans.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 46.9 percent of last month’s purchase lending, down a tad from a revised 48.2 percent in December, and up from 35.8 percent a year ago. Jumbo usage dropped as low as 17.1 percent in January 2009.

Bay Area home buyers borrowed a total of $1.76 billion in mortgage money from lenders last month. The most active lenders to those January buyers were Wells Fargo with 12.7 percent of the purchase loan market, Bank of America with 4.0 percent, and Stearns Lending with 3.7 percent.

Government-insured FHA home purchase loans, a popular choice among first-time buyers, accounted for 11.6 percent of all Bay Area purchase mortgages in January, up slightly from 10.9 percent in December and down from 15.0 percent a year earlier.

San Diego-based DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Because of late data availability, sales were estimated in Alameda, San Francisco and San Mateo counties.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying last month was $2,111. Adjusted for inflation, last month’s payment was 25.9 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 45.3 percent below the current cycle’s peak in July 2007. It was 67.7 percent above the February 2012 bottom of the current cycle.

Indicators of market distress continue to decline. Foreclosure activity remains well below year-ago and far below peak levels. Financing with multiple mortgages is very low, and down payment sizes are stable, DataQuick reported.

To view the county-by-county Bay Area chart, visit DQNews.com.

California January Home Sales

February 13, 2014  DQNews.com

An estimated 25,832 new and resale houses and condos sold statewide last month. That was down 26.1 percent from 34,949 in December, and down 10.5 percent from 28,871 sales in January 2013, according to San Diego-based DataQuick.

January sales have varied from a low of 19,145 in 2008 to a high of 47,138 in 2004. Last month’s sales were 17.7 percent below the average of 31,393 sales for all the months of January since 1988, when DataQuick’s statistics begin. California sales haven’t been above average for any particular month in more than seven years.

The median price paid for a home in California last month was $353,000, down 3.3 percent from $365,000 in December and up 21.7 percent from $290,000 in January 2013. Last month was the 23nd consecutive month in which the state’s median sale price rose year-over-year, and the 14th straight month with a gain exceeding 20 percent.

In March/April/May 2007 the median peaked at $484,000. The post-peak trough was $221,000 in April 2009.

Of the existing homes sold last month, 7.7 percent were properties that had been foreclosed on during the past year. That was up from a revised 6.9 percent in December and down from 19.0 percent a year earlier. Foreclosure resales peaked at 58.8 percent in February 2009.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 11.5 percent of the homes that resold last month. That was down from an estimated 13.1 percent the month before and down from 23.9 percent a year earlier.

The typical monthly mortgage payment that California buyers committed themselves to paying last month was $1,419, down from $1,473 the month before and up from $1,030 a year earlier. Adjusted for inflation, last month’s payment was 38.6 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 50.2 percent below the current cycle’s peak in June 2006. It was 54.0 percent above the February 2012 bottom of the current cycle.

DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

Indicators of market distress continue to decline. Foreclosure activity remains well below year-ago and peak levels reached in the last five years. Financing with multiple mortgages is low, while down payment sizes are stable, DataQuick reported.

Source: DataQuick; DQNews.com

Southland Home Sales Drop in January; Price Picture Mixed

February 12, 2014 DQNews.com

La Jolla, CA—Southern California logged its lowest January home sales in three years as buyers continued to wrestle with a tight inventory of homes for sale, a fussy mortgage market and the highest prices in years. The median price paid for a home dipped from December – a normal seasonal decline – but remained 18 percent higher than January last year, a real estate information service reported.

A total of 14,471 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 21.4 percent from 18,415 in December, and down 9.9 percent from 16,058 sales in January 2013, according to San Diego-based DataQuick.

A significant drop in sales between December and January is to be expected because many buyers drop out of the market during the holidays and mid-winter. That means fewer transactions close during January and February. On average, sales have declined 27.6 percent between December and January since 1988, when DataQuick’s statistics begin.

Last month’s Southland sales were 17.3 percent below the average number of sales – 17,493 – in the month of January since 1988. Sales haven’t been above average for any particular month in more than seven years. January sales have ranged from a low of 9,983 in January 2008 to a high of 26,083 in January 2004.

“The economy is growing, but Southland home sales have fallen on a year-over-year basis for four consecutive months now and remain well below average. Why? We’re still putting a lot of the blame on the low inventory. But mortgage availability, the rise in interest rates and higher home prices matter, too,” said John Walsh, DataQuick president.

“Two of the bigger questions hanging over the housing market right now are,‘How much pent-up demand is left out there?’ and, ‘Will inventory skyrocket this year as more owners take advantage of the price run-up?’” Walsh continued. “Unfortunately, we’ll probably have to wait until spring for the answers. When it comes to statistical trends, January and February are atypical months that haven’t proven to be predictive over the years.”

The median price paid for all new and resale houses and condos sold in the six-county region last month was $380,000, down 3.8 percent from $395,000 in December and up 18.4 percent from $321,000 in January 2013. Because of seasonal changes it is typical for the median to decline between December and January, with that drop averaging 2.9 percent since 1988. Last month’s median was the lowest since it was $368,000 in May last year.

The Southland’s median price held at or near $385,000 between last June and November, then rose to $395,000 in December, which was the peak for 2013 and the highest for any month since February 2008, when it was $408,000.

The median sale price has risen on a year-over-year basis for 22 consecutive months. Those gains have been double-digit – between 10.8 percent and 28.3 percent – over the past 18 months. The January median stood 24.8 percent below the peak $505,000 median in spring/summer 2007.

Prices have been rising at different rates depending on price segment. In January, the lowest-cost third of the region’s housing stock saw a 23.3 percent year-over-year increase in the median price paid per square foot for resale houses. The annual gain was 20.3 percent for the middle third of the market and 19.7 percent for the top, most-expensive third.

The number of homes sold in many middle and up-market areas continued to rise on a year-over-year basis last month, while more affordable markets generally saw less activity than a year earlier.

Last month sales from $300,000 through $799,999 – a range that includes many move-up buyers – rose 4.7 percent year-over-year. The number that sold for $500,000 or more increased 26.3 percent from one year earlier, while $800,000-plus sales rose 36.7 percent.

In January, 32.0 percent of all Southland home sales were for $500,000 or more, down from a revised 35.0 percent the month before and up from 22.2 percent a year earlier.

The number of Southland homes that sold below $200,000 last month dropped 46.8 percent year-over-year, while sales below $300,000 fell 37.1 percent. One of the main reasons for the big decline in lower-end sales is the relatively low supply of homes on the market. Many owners still can’t afford to sell their homes because they owe more than they are worth, and lenders aren’t foreclosing on as many properties, further limiting supply.

Foreclosure resales – homes foreclosed on in the prior 12 months – accounted for 6.6 percent of the Southland resale market in January. That was up slightly from 5.8 percent the prior month and was down from 17.2 percent a year earlier. In recent months the foreclosure resale rate has been the lowest since early 2007. In the current cycle, foreclosure resales hit a high of 56.7 percent in February 2009.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 12.2 percent of Southland resales last month. That was down from 13.1 percent the prior month and down from 24.2 percent a year earlier.

Absentee buyers – mostly investors and some second-home purchasers – bought 27.5 percent of the Southland homes sold last month, up slightly from 27.2 percent in December and down from a record 32.4 percent a year earlier. The monthly average since 2000, when the absentee data begin, is 18.6 percent. Last month’s absentee buyers paid a median $325,000, down 1.5 percent from the month before and up 31.6 percent year-over-year.

In January 6.3 percent of all Southland homes sold on the open market were flipped, meaning they had previously sold in the prior six months. That’s up from a flipping rate of 5.8 percent the month before and down from 6.6 percent a year earlier. Flipping peaked at 7.0 percent in February 2013. (The figures exclude homes resold after being purchased at public foreclosure auctions on the courthouse steps).

Buyers paying cash last month accounted for 29.1 percent of home sales, up from 28.7 percent the month before and down from 33.7 percent a year earlier. The cash share of purchases hit an all-time peak of 36.9 percent in February 2013. Since 1988 the monthly average for cash buyers is 16.4 percent of all sales. Cash buyers paid a median $344,000 last month, down 4.4 percent month-to-month and up 37.6 percent from a year earlier.

In January, Southern California home buyers forked over a total of $3.22 billion of their own money in the form of down payments or cash purchases. That was down from a revised $4.34 billion in December and up from $2.89 billion a year ago. The out-of-pocket total peaked last May at $5.41 billion.

Credit conditions haven’t changed a lot in recent months but the change from a year earlier is significant.

Last month 13.5 percent of Southland home purchase loans were adjustable-rate mortgages (ARMs) – more than double the ARM rate of a year earlier and the highest since April 2008, when it was 16.4 percent. In December 13.0 percent of purchase loans were ARMs, while in January 2013 ARMs accounted for only 5.6 percent of the purchase loan market. Since 2000, a monthly average of about 31 percent of Southland purchase loans have been ARMs.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 26.7 percent of last month’s Southland purchase lending. That was down from 28.5 percent the prior month and up from 19.4 percent a year earlier. In the months leading up to the credit crunch that struck in August 2007, jumbos accounted for around 40 percent of the home loan market.

All lenders combined provided a total of $3.95 billion in mortgage money to Southern California home buyers in January, down from a revised $5.34 billion in December and up from $3.61 billion in January last year.

The most active lenders to Southern California home buyers last month were Wells Fargo with 7.0 percent of the total home purchase loan market, Bank of America with 2.8 percent and JP Morgan Chase with 2.5 percent.

Government-insured FHA loans, a popular low-down-payment choice among first-time buyers, accounted for 20.9 percent of all purchase mortgages last month. That was up from 19.6 percent the month before and down from 25.1 percent a year earlier. In recent months the FHA share has been the lowest since early 2008, mainly because of tighter FHA qualifying standards and the difficulties first-time buyers have competing with investors and cash buyers.

DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

The typical monthly mortgage payment Southland buyers committed themselves to paying last month was $1,528, down from $1,594 the month before and up from $1,140 a year earlier. Adjusted for inflation, last month’s typical payment was 36.1 percent below the typical payment in the spring of 1989, the peak of the prior real estate cycle. It was 47.6 percent below the current cycle’s peak in July 2007.

Indicators of market distress continue to decline. Foreclosure activity remains well below year-ago and far below peak levels. Financing with multiple mortgages is very low, and down payment sizes are stable, DataQuick reported.

To view the county-by-county chart, please visit DQNews.com.

Hurdles shrink for jumbo loan shoppers

By Donna Rosato  @Money February 7, 2014

http://money.cnn.com/2014/01/01/real_estate/jumbo-mortgages.moneymag/index.html?section=money_realestate

 
jumbo mortgageThinking about buying a big home? Lenders are making deals on jumbo mortgages.

(Money Magazine)

You’ll pay more for a big home nowadays, but a big mortgage should be less of a reach.

For the first time in over 20 years, rates on jumbo mortgages — loans of more than $417,000, or $625,500 in pricier areas — are at or below rates on conventional mortgages. Jumbo rates usually run one-quarter to one-half of a percentage point higher, but lenders eager for wealthier customers are making deals.

In 2013, Wells Fargo and Bank of America cut minimum down payments to 15% from 20%; some competitors did too.

“It’s a good time to be a jumbo borrower,” says Guy Cecala, CEO of Inside Mortgage Finance.

Want a large loan?

Big banks have the best rates; you’ll need a 740 credit score or higher to snag them, says Keith Gumbinger of mortgage data provider HSH.

Currently, rates for a 30-year fixed jumbo are averaging 4.25%, compared to 4.35% for a conventional 30-year fixed-rate mortgage. For ultralow rates, check out adjustable-rate jumbos: Wells Fargo recently offered a five-year adjustable for 2.375%. Get an ARM, though, only if you expect to move on during the fixed period.

What’s the good news for homebuyers?

Mortgage rates push down

Freddie Mac says that weaker housing data is putting downward pressure on average fixed mortgage rates.

“Mortgage rates fell further this week following the release of weaker housing data. The pending home sales index fell 8.7% in December to its lowest level since October 2011,” said Frank Nothaft, vice president and chief economist, Freddie Mac. “Fixed residential investment negatively contributed to GDP in the fourth quarter for the first time since the third quarter of 2010.”

The 30-year fixed-rate mortgage averaged 4.23% with an average 0.7 point for the week ending Feb. 6, down from last week when it averaged 4.32%. A year ago at this time, the 30-year FRM averaged 3.53%.

The 15-year FRM this week averaged 3.33% with an average 0.7 point, down from last week when it averaged 3.4%. A year ago at this time, the 15-year FRM averaged 2.77%.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.08% this week with an average 0.5 point, down from last week when it averaged 3.12%. A year ago, the 5-year ARM averaged 2.63%.

The 1-year Treasury-indexed ARM averaged 2.51% this week with an average 0.5 point, down from last week when it averaged 2.55%. At this time last year, the 1-year ARM averaged 2.53 percent.