Tuesday, October 7, 2014

Luxury Buyers Are Spending Mega Bucks in These Markets

DAILY REAL ESTATE NEWS | FRIDAY, OCTOBER 03, 2014
The high-end residential real estate market remains strong point and plays a big role in the housing recovery. Nearly half – 48 percent – of all wealthy consumers recently reported that they plan to purchase a luxury home within the next 12 months, according to a survey of consumers with a net worth of at least $5 million conducted by Coldwell Banker Previews International program and the Luxury Institute. For affluent individuals under the age of 35, the percentage of those planning to buy a luxury home in the next year jumps to whopping 81 percent. This group of affluent Millennials also reported the highest average purchase price of all age groups at $7.8 million, according to the survey. 
Inside the Luxury Market
So where are luxury buyers’ targeting their home search? Coldwell Banker’s survey identified the following 10 U.S. cities as having the highest number of luxury home sales valued at $1 million or more during the last 12 months through June 2014:
  1. San Francisco: 2,485 (the number of home sales valued at $1 million-plus)
  2. Los Angeles: 2,170
  3. New York: 2,145
  4. San Jose, Calif.: 1,119
  5. Houston: 981
  6. Chicago: 972
  7. Naples, Fla.: 964
  8. Miami: 933
  9. San Diego: 927
  10. Washington, D.C.: 878
In the $10 million-plus sales category, New York, with 58 home sales valued at $10 million-plus and Beverly Hills, Calif., with 28 home sales of $10 million-plus led the pack.
What Are Luxury Buyers Looking For?
Location is no longer the top search criteria among luxury buyers, particularly the younger generations, according to the survey. With the ability to work remotely becoming an option for a growing number of people, only 25 percent of the under-35 age group indicate that location dominates their home search criteria. The under-35 group factors in lifestyle considerations instead, with 75 percent saying that dictates their choice of which home to buy, according to the survey.
The demand for eco-friendly homes is growing, too. Nearly one-third of all wealthy buyers under the age of 45 surveyed said a “green” or “LEED certified” home was more important to them than it was just three years ago. Twenty-one percent of all wealthy buyers say they want to purchase an eco-friendly home, a significant jump up from 7 percent in 2013.
Twenty-five percent of luxury home buyers also view a fully automated, high-tech home as a greater priority. For 37 percent of respondents under the age of 35 and 30 percent of those with a net worth of more than $10 million, safe rooms were also found to be a top priority.


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Monday, October 6, 2014

Could This Mortgage Product Change Lending?

DAILY REAL ESTATE NEWS | MONDAY, OCTOBER 06, 2014
Two mortgage executives are hoping to overhaul the 15-year mortgage, making it more readily available to low and moderate-income people. They say the changes will help borrowers build equity at a much faster pace than they would with a standard loan.
Edward Pinto, a resident fellow at the American Enterprise Institute, and Bruce Marks, who heads the Neighborhood Assistance Corp. of America, have created a new product called the Wealth Building Home Loan. The new product has generated buzz since being introduced at a mortgage conference in North Carolina in early September. The loan will initially be available through NACA’s 37 offices, with plans to pilot it at other institutions in the coming months. NACA acts as mortgage originator for Bank of America.
The Wealth Building Home Loan is a 15-year mortgage with a fixed interest rate that requires little or no down payment and has no additional fees. In originating the loans, underwriters pay more attention to a borrowers’ income than the borrowers’ credit score. They will also ensure that borrowers have enough money left over after they make their mortgage payment to cover other monthly expenses, reducing the risk of foreclosure in case a financial setback strikes.
Typically, the monthly payment on a 15-year loan is higher than a 30-year loan, since the loan amortizes faster. In order to make the monthly payments more affordable, however, the Wealth Building Home Loan will have an offering rate that is about three-quarters of a percentage point below the 30-year FHA rate. Borrowers can bring the rate down even further. For example, for every 1 percent of the loan amount the borrower has as a down payment, the interest rate will be lowered by half a percentage point, with the possibility of bringing it to zero.
The Los Angeles Times cites an example of a $6,000 down payment on a $100,000 mortgage at 3 percent, which would bring the rate to zero. That means all of the borrower’s monthly payment would go toward the principal, not interest.
Pinto and Marks say the aim was to create a product that would allow low and moderate-income borrowers to build wealth, and get them away from high-risk loans.
"This is an opportunity to spend a little more each month but build wealth much more rapidly," Pinto says. "But even better, there is only a small probability of going into foreclosure. If house prices should go down, you're covered because you have some equity to fall back on."
Source: “Loan Gives Low-Income Borrowers a Chance to Build Equity Fast,” The Los Angeles Times (Oct. 5, 2014)


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30-Year Mortgage Sinks to 4.19% This Week

DAILY REAL ESTATE NEWS | FRIDAY, OCTOBER 03, 2014
Mortgage rates are falling, despite the cuts to the Federal Reserve's monthly bond purchases that were expected to send long-term rates higher.  The 30-year fixed-rate mortgage, the most popular choice among home buyers, averaged 4.19 percent this week, down from a 4.53 percent average at the start of the year, Freddie Mac reports in its weekly mortgage market survey.
Freddie Mac reports the following national averages with mortgage rates for the week ending Oct. 2:
  • 30-year fixed-rate mortgages: averaged 4.19 percent, with an average 0.4 point, dropping from last week’s 4.20 percent average. Last year at this time, 30-year rates averaged 4.22 percent.
  • 15-year fixed-rate mortgages: averaged 3.36 percent, with an average 0.5 point, holding the same average as last week. A year ago, 15-year rates averaged 3.29 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.06 percent, with an average 0.5 point, dropping from last week’s 3.08 percent average. Last year at this time, 5-year ARMs averaged 3.05 percent.
  • 1-year ARMs: averaged 2.42 percent, with an average 0.4 point, dropping from last week’s 2.43 percent average. A year ago, 1-year ARMs averaged 2.64 percent.

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Buyers Grow Resistant to Higher Home Prices

DAILY REAL ESTATE NEWS | MONDAY, OCTOBER 06, 2014
Buyers are pushing back against higher home prices, according to the latest Credit Suisse monthly survey of real estate professionals. Overall, agents in 37 of the 40 markets surveyed in September reported lower-than-expected buyer traffic, up from 31 markets in August.
Too Much, Too Fast?
Some housing analysts are concerned that the sudden rise in home prices could make homes more unaffordableagain if the price increases outpace income growth.
“Many buyers have shifted from a negotiation mindset toward a willingness to sit on the sidelines and wait for lower prices,” according to the survey.  “The resistance of buyers to higher home prices was broad-based with comments from agents suggesting that affordability and the future trajectory of home prices was a particularly large part of conversations with buyers.”
The median price of existing-homes has risen by 25 percent in the past five years to $219,800 in August. The median price of new homes has increased even more, up 33 percent, to $275,600 during that time period.
Real estate professionals in several of the largest housing markets are complaining about lackluster growth heading into the fall. For example, the Credit Suisse report showed that in Phoenix, Ariz., many real estate professionals report that housing demand is being challenged by sluggish job growth. They say many sellers have over-priced their homes and are unwilling to negotiate. In Atlanta, real estate professionals blamed dropping buyer traffic on the lack of quality inventory.
“To purchase a house you have to have confidence in the future and the buyers are very uncertain about the future,” the Atlanta agents surveyed said in the report.
Even in Dallas, where the housing market is strong and more buyer traffic has been reported since the spring, real estate professionals say low inventories are hampering growth. Dallas real estate professionals are “relying on new builds much of the time but even that inventory remains low,” according to the survey.
In Houston, another strong market, agents reported that relocation activity has slowed in September, but the market there is returning to normal levels after more than three years of price increases and high home sales.
Source: “Here’s how the top 5 Housing Markets Look for Fall Homebuying,” HousingWire (Oct. 3, 2014) and “Home Prices Sapped Home-Buyer Traffic in September,” iMarketReports.com (Oct. 3, 2014)


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Friday, September 19, 2014

The 12 Best Cities to Live Are ...

DAILY REAL ESTATE NEWS | FRIDAY, SEPTEMBER 19, 2014
Newton, Mass., has been crowned as this year’s best U.S. city to live in, according to rankings from 24/7 Wall St. The publication narrowed its list to 550 cities (all of which have more than 65,000 residents) and ranked the cities based on seven major categories: crime, economy, education, housing, environment, leisure, and infrastructure.
The labor market was one of the key measures used to identify the best cities, with top cities having to show positive employment growth between 2011 and 2013.
More Best Cities:
24/7 Wall St. noted that “surprisingly, none of America’s largest cities are on this list,” citing that the largest cities tend to have higher crime rates that automatically excluded them from consideration, as well higher poverty rates.
Below are the 12 cities that topped 24/7 Wall St.’s list. Visit 24/7 Wall St. to view the full methodology used in the rankings for each of the top cities. 
  1. Newton, Mass.
  2. Bellevue, Wash.
  3. Mountain View, Calif.
  4. Pleasanton, Calif.
  5. Evanston, Ill.
  6. Irvine, Calif.
  7. Troy, Mich.
  8. Cary, N.C.
  9. Flower Mound, Texas
  10. Johns Creeks, Ga.
  11.  Boca Raton, Fla.
  12. Carmel, Ind.
Source: “America’s 50 Best Cities to Live,” 24/7 Wall St. (Sept. 17, 2014)


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Where Did Americans Move This Summer?

DAILY REAL ESTATE NEWS | THURSDAY, SEPTEMBER 18, 2014
Chicago, Washington, D.C., and Atlanta were the most popular moving destinations of this summer, according to United Van Lines' Summer Long-Distance Moving Trends Study. The moving company giant found that more Americans this summer left cities in the Sun Belt and West Coast to move to Midwestern and Northeastern cities.
On the Move
"Bucking recent trends, more people are moving to cities in the Northeast and Midwest," says Michael A. Stoll, economist, professor, and chair of the Department of Public Policy at the University of California, Los Angeles. "Popular metropolitan destinations driving city-to-city migration are those with a highly educated labor force and that have growing or mature business, financial, and insurance services. In addition, strong technology and health care industries are driving migration, sectors where recent job growth has been relatively robust in the broader economy."
The most popular metro areas for U.S. family moves during the peak moving season (based on United Van Lines' summer moving volume data) are:
  1. Chicago
  2. Washington, D.C.
  3. Atlanta
  4. Boston
  5. Los Angeles
  6. Dallas
  7. Phoenix
  8. New York City
  9. Minneapolis
  10. San Diego
What had people moving this summer? Seventy-one percent moved for a new job or corporate transfer; 13 percent moved because of retirement; and nearly 10 percent moved for health or other personal reasons, according to the United Van Lines survey. Dallas/Fort Worth, Atlanta, and Los Angeles were the most popular destinations for new jobs and corporate transfers, according to the survey.


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Thursday, September 18, 2014

Get a Discount on Your Mortgage

DAILY REAL ESTATE NEWS | THURSDAY, SEPTEMBER 18, 2014
Lending giants Bank of America Corp. and Citigroup reportedly will offer mortgages at discounted rates to stir more lending among low-income borrowers and those with subprime credit histories. The loans will be originated through a program by the Neighborhood Assistance Corp. of America, a national nonprofit group that primarily assists low- to moderate-income borrowers.
Credit Standards Easing
Under the new program, the discounts, which will be offered on fixed-rate mortgages, will be greater than what banks usually reserve for borrowers with high credit scores, significant assets, and large down payments. To get the discount in the new loan program, the borrowers will have to pay mortgage points, which are upfront fees that lower the interest rate on a mortgage.
For example, if borrowers pay a mortgage point — which is equal to 1 percent of the total loan amount taken — they typically receive a discount of 0.25 percent on the mortgage interest rate. However, under the new loan assistance program, the banks will offer a 0.5 percent discount for a single mortgage point.
NACA, the originator of loans under the program, doesn't require borrowers to have down payments or to pay closing costs. It also approves borrowers for mortgages as soon as 12 months after a default on a loan. NACA conducts in-depth reviews of applicants' payment histories and requires income and asset documentation, according to CEO Bruce Marks.
The banks' move to work with NACA follows on the heels of a $16.65 billion settlement reached by Bank of America with government regulators in August, as well as a $7 billion settlement Citigroup reached in July. The settlements were reached following accusations that the banks sold risky mortgage securities during the run-up to the housing crisis. Neither bank admits to wrongdoing. But the settlements do require that the banks assist struggling home owners, such as lending to low-income borrowers.
The banks, however, say that their decision to issue NACA loans isn't related to the settlements.
Source: “Citigroup and Bank of America Offer Mortgages with Discounted Rates,” The Wall Street Journal (Sept. 16, 2014)


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