Signs of Letup in Home Price Slide
The decline in residential property prices appears to be slowing, according to preliminary data from First American CoreLogic.
A preview of its November report shows that home prices fell 9.6 percent last month, compared with 10.4 percent in October and 11.2 percent in September.
“The consistent deceleration over the past two months with November indicating the same trend in price declines is encouraging because it could portend the trough in price declines,” says Mark Fleming, chief economist for First American CoreLogic.
Still, layoffs and the swollen supply of unsold homes remain a concern, he notes.
Source: American Banker (12/29/08)
Want to Be Neighbors With Sarah Palin?
A December 2008 survey of more than 2,000 U.S. adults reveals which pop culture celebrities and politicians Americans think would make the most appealing neighbors … and who isn’t welcome anywhere near the backyard.
The survey, conducted by Harris Interactive for real estate Web site Zillow.com, found that U.S. adults would most like to be neighbors with Sarah Palin (14 percent), followed closely by Oprah Winfrey (13 percent).
Paparazzi magnets apparently don’t make the best neighbors, as only 2 percent of U.S. adults would like to be neighbors with David and Victoria “Posh” Beckham in the coming year.
It also seems age and gender play a prominent role in neighbor preferences:
- Among adult men, Sarah Palin is the most desired neighbor (17 percent), while 17 percent of adult women said that Oprah Winfrey was the most desired neighbor, ahead of Palin (12 percent).
- Among 18-34 year old men, Michael Phelps tops the list as the most desirable neighbor (17 percent). In comparison, only 9 percent of 18-34 year old women thought the gold medal Olympian would make a desirable neighbor.
- The gender gap reveals that among 45-54 year old women; 21 percent voted for Oprah, compared to only 6 percent of their male counterparts.
Worst Neighbors of 2008
Britney Spears, the trouble-prone pop star, was voted the worst celebrity neighbor in 2008, according to one in five (19 percent) U.S. adults. However, Spears’ reputation has improved over the past 12 months. In 2007, 21 percent voted Britney the worst neighbor.
Rosie O’Donnell was a close second in 2008, with 18 percent of the votes, compared with 14 percent in 2007. Rounding out the top 5 worst list is Joe the Plumber (8 percent) Lindsay Lohan (7 percent) and Adam “Pacman” Jones (6 percent).
Home Buyer Tax Credit: How It Works
First-time homebuyers in 2008 can take an income-tax credit on their purchase, thanks to passage in Congress earlier this year of the first-time home buyer tax credit.
The definition of first-time homebuyer is generous. To get the credit, the homebuyer cannot have owned a home in the previous three years. The home must be a principal residence and purchased between April 9, 2008 and July 1, 2009.
The credit is equal to 10 percent of the purchase price, up to $7,500. Single taxpayers with modified adjusted gross income up to $75,000 and couples with MAGI up to $150,000 will qualify for full credit. Singles with MAGI up to $95,000 and couples with MAGI up to $170,000 will get a reduced amount. Those with higher incomes don’t qualify.
If the amount of tax a homebuyer owes is less than the amount of the credit, they get to keep the difference in the form of an IRS refund.
The homebuyer must begin to repay the credit in two years in increments of about $500 a year over a 15-year period for those who received the full credit
Homebuyers who sell their home before the credit is repaid must pay off the loan with any profits. If they sell the home at a loss, the loan is forgiven.
[Editor's Note: The credit is set to expire in mid-2009, although industry groups, including the NATIONAL ASSOCIATION OF REALTORS®, are encouraging Congress to extend it. NAR is also encouraging Congress to make the credit available to all buyers and to eliminate the repayment requirement. More detail on how the credit works is available from NAR on REALTOR.org.]
Source: Chicago Tribune, Mary Umberger (12/28/2008)
Housing in 2009: Up as Well as Down
Overall housing news in 2009 could continue to be grim if – as predicted – a flood of Alt-A and option adjustable-rate mortgages reset and push homeowners with previously strong financial situations into foreclosure.
“We’re in the middle of the game here,” said Joseph Seneca, professor of economics at Rutgers University in New Jersey. “There’s significant further unwinding to come. We’re in a downward spiral with job losses that is reinforcing the weakness in the consumer markets, particularly in the largest investment the consumer makes, in his home.”
Seneca says the government’s aggressive efforts to stabilize housing are helping, but housing won’t really recover until prices fall so far that large numbers of buyers jump back into the game.
In the meantime, the price of housing is increasing in some areas that are immune to the economic slowdown. These areas include the energy-producing states of North Dakota, South Dakota, Okalahoma, Alaska and Montana. Washington, D.C. with its host of government and defense jobs is doing well. Boston, San Diego and Orange County, Calif., where prices have dropped enough to increase affordability significantly, are also seeing price increases.
Source: Business Week, Prashant Gopal (12/24/2008)
Amid Rate Drops, Mortgage Applications Soar
With interest rates approaching reaching historic lows, the application volume for mortgages jumped a seasonally adjusted 48 percent last week compared with the previous week, according to the Mortgage Bankers Association’s weekly survey.
Application activity for the week ending December 19th was 124.6 percent over the same period a year ago, the Washington, D.C-based MBA said. The spike in applications coincided with another drop in mortgage rates, as the government’s efforts to unfreeze the residential-mortgage market show further signs of having the desired effect.
Applications to refinance existing mortgages increased 62.6 percent on a week-to-week basis, while applications filed for mortgages to buy homes increased a seasonally adjusted 10.6 percent. Refinancings made up 83.2 percent of all applications filed last week, up from 76.9 percent the previous week.
According to the MBA survey, interest rates fell across the board:
- Rates on 30-year fixed-rate mortgages averaged 5.04 percent last week, their lowest level in more than five years.
This was down from 5.18 percent the previous week.
- Fifteen-year fixed-rate mortgages averaged 4.91 percent, down from 4.93 percent the week before.
- One-year ARMs averaged 6.36 percent, down from 6.63 percent.
Source: Mortgage Bankers Association and MarketWatch (12/24/08)
Forbes Calls These Cities a Bore
There are some big cities in the United States that nobody ever talks about. Forbes magazine says it’s because they are boring.
We won’t make that judgment. But Forbes says that these are cities that many had never heard of until now.
Many of these cities grew quickly because of the housing boom and lie just beyond more established locales. Now that the boom is over, these cities are getting noticed because of high foreclosure rates.
Here’s Forbes’ list of the most boring—or ignored—cities and their populations.
- Chula Vista, Calif. Population: 217,478
- Hialeah, Fla.: 212,217
- Mesa, Ariz.: 452,933
- North Las Vegas, Nev.: 212,114
- Chandler, Ariz.: 246,399
- Santa Ana, Calif.: 339,555
- Bakersfield, Calif.: 315,837
- Aurora, Colo.: 311,794
- Gilbert, Ariz.: 207,550
- Henderson, Nev.: 249,386
Source: Forbes, Joshua Zumbrun (12/10/08)
Mortgage Applications Surge on Falling Rates
Mortgage lenders are seeing a deluge of applications for refinancings as borrowing costs decline due to a recent cut in the federal funds rate by the Federal Reserve, and many are hiring temporary workers or reassigning employees to handle the swelling volume.
Some experts believe the jump in refis could signal a turning point in the market and reduce pressure on banks by the U.S. government to bolster lending following the distribution of millions of dollars in assistance.
However, it remains uncertain how many borrowers will qualify for loans, how long it will take to process loans under new documentation and credit standards, and whether borrowers will back down in hopes that mortgage rates will fall further.
Source: Wall Street Journal, Dan Fitzpatrick (12/22/08)
Is Now a Good Time to Refinance?
Refinancing now sounds appealing, but for lots of people, it isn’t all that easy.
Applications for refinances tripled earlier this month after the Federal Reserve promised to buy up $600 billion of mortgage debt. And rates for 30-year fixed mortgages are falling below 5 percent – the lowest in 50 years – but many home owners will have trouble doing the deal.
Having at least 20 percent equity in a home is important. A credit score of at least 720 and a debt ratio that is less than 43 percent are both essential.
Jumbo mortgages are still expensive. A 5/1 adjustable-rate with an initial interest rate for five years and an annual reset is averaging 6.6 percent. Traditional 30-year fixed are at 7.49 percent. Home owners in this situation may have to just ride it out.
Source: Business Week, Lauren Young (12/22/08)
Mortgage Rates Plunge to Record Lows
In response to the Federal Reserve’s cut in the federal funds rate to near zero, Freddie Mac reports that the 30-year fixed mortgage rate fell to 5.17 percent during the week ended Dec. 18–down from 5.47 percent last week and the lowest since the survey’s inception in 1971.
Interest on 15-year fixed loans slipped to 4.92 percent from 5.20 percent.
Meanwhile, the five-year hybrid adjustable mortgage rate dropped to 5.6 percent from 5.82 percent; and the one-year ARM dipped to 4.94 percent from 5.09 percent.
A year ago, the 30-year fixed rate stood at 6.14 percent, the 15-year fixed rate at 5.79 percent, the five-year hybrid ARM at 5.9 percent, and the one-year ARM at 5.51 percent.
Source: The Wall Street Journal, Steve Kerch (12/19/08)
Where Prices Have Increased the Most in 2008
U.S. Home values declined an average of 8.4 percent in the first three periods of 2008, down $2 trillion in total value, according to Zillow.com Real Estate Market Report, released this week.
Thirty of the 163 metropolitan statistical areas covered by Zillow, either showed gains in the median value of homes in the area or values stabilized.
Here are the 10 areas where values increased and declined the most.
Places Where Values Increased the Most
- Ithaca, N.Y., 5.6%
- State College, Pa., 4%
- Jacksonville, N.C., 3.9%
- Winston-Salem, N.C., 3.4%
- Bay City, Mi., 3.2%
- Rochester, N.Y. 3.1%
- Greenville, S. C., 2.8%
- Anderson, S.C. 2.7%
- Burlington, N.C., 2.6%
- Spartanburg, S.C., 2.0%
Places Where Values Decreased the Most
- Las Vegas-Paradise, Nev., -24.6%
- Bakersfield, Calif., -24.9%
- Madera, Calif., -26.2%
- Gainesville, Ga., -26.4%
- Riverside-San Bernardino-Ontario, Calif., -30.4%
- Modesto, Calif., -31%
- Salinas, Calif., -32.4%
- Merced, Calif., -32.5%
- Vallejo-Fairfield, Calif., -33.2%
- Stockton, Calif., -35.5%
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