Home Owners are Tapping Into Equity, Again

DAILY REAL ESTATE NEWS | THURSDAY, OCTOBER 09, 2014

Home equity lines of credit surged nearly 20 percent compared to a year ago and are now at the highest level since the 12 months ending in June 2009, according to RealtyTrac’s Home Equity Line of Credit (HELOC) Trends Report. HELOC originations comprised 15.4 percent of all loan originations nationwide during the first eight months of the year, the highest percentage since 2008.

Here's why HELOCs are back on the rise: Nearly 1 Million Homes Regain Equity

“This recent rise in HELOC originations indicates that an increasing number of home owners are gaining confidence in the strength of the housing recovery and, more importantly, have regained much of their home equity lost during the housing crisis,” says Daren Blomquist, vice president at RealtyTrac.

Nearly 10 million home owners nationwide, representing 19 percent of all home owners with a mortgage, have regained at least 50 percent equity in their homes, RealtyTrac data shows. Meanwhile the percentage of home owners with severe negative equity has fallen from 29 percent in the second quarter of 2012 to 17 percent in the second quarter of this year, Blomquist notes.

Despite home equity lines of credit rising significantly in the past year, they still remain 76 percent below the 2006 peak reached during the housing boom, RealtyTrac notes.

Among the nation’s largest metro areas tracked, 49 out of 50 posted year-over-year increases in HELOC originations for the year ending June 2014 (the lone exception was Rochester, N.Y.).

The following metro areas had the largest year-over-year increases in HELOC originations:

• Riverside-San Bernardino, Calif.: +87.7%
• Las Vegas: 85.1%
• Cincinnati: 81%
• Sacramento, Calif.: 65.1%
• Phoenix: 60.1%

Source: RealtyTrac

http://realtormag.realtor.org/daily-news/2014/10/09/home-owners-are-tapping-equity-again

www.RebeccaSellsAZ.com

Latest Rate Drops Lift Loan Demand

DAILY REAL ESTATE NEWS | WEDNESDAY, OCTOBER 08, 2014

Mortgage applications picked up last week, as a drop in interest rates gave a boost to both refinances and home purchases, the Mortgage Bankers Association reports in its weekly mortgage market survey, reflecting the week ending Oct. 3. Total mortgage application volume rose 3.8 percent on a seasonally adjusted basis compared to the previous week.

Broken out, applications for refinancings rose 5 percent compared to the previous week, while purchase applications, viewed as a gauge for future home sales, ticked up 2 percent.

"The purchase index reached its highest level since July," says Michael Fratantoni, the MBA’s chief economist. "The increase was led by a 3.7 percent increase in government purchase volume for the week."

Nevertheless, purchase applications remain down nearly 8 percent on an annual basis.

The MBA reported that the nationwide average on the 30-year fixed-rate mortgage fell from 4.33 percent the prior week to 4.30 percent. What’s more, as the stock market weakened on Tuesday, rates continued to post more drops, even in some cases nearing their lowest level of the year of 4 percent averages, CNBC reports.

Source: “Falling Rates Offer Home Buyers a Push,” CNBC (Oct. 8, 2014)

http://realtormag.realtor.org/daily-news/2014/10/08/latest-rate-drops-lift-loan-demand

www.RebeccaSellsAZ.com

Americans' Attitudes Improve on Housing

DAILY REAL ESTATE NEWS | WEDNESDAY, OCTOBER 08, 2014

Consumers’ optimism toward the housing market showed a slight rebound last month, with more people now saying it’s a good time to buy or sell a home, according to Fannie Mae’s September 2014 National Housing Survey, based on about 1,000 Americans’ attitudes on the housing market.

A Hopeful Trend

Consumers Aren't Losing Confidence in Home Prices

Homebuilders Pick Up Pace to Meet Shortages, Demand

Fannie: More Americans Say Buy, Sell Now

The share of consumers who say now is a good time to purchase a home rose to 68 percent in September, a four percentage point increase from August. Also, the share of Americans who said they’d prefer to buy a home on their next move rose to 66 percent, following a three-point drop the previous month. The percentage of those who reported now is a good time to sell grew to 39 percent. Those surveyed also were more upbeat about home prices rising in the next 12 months, with expectations of price gains of 2.2 percent, on average.

Consumers also showed greater optimism toward the overall economy, with 40 percent now saying the economy is on the right track, posting a five percentage point gain from last month.

"The September National Housing Survey shows a slight recovery in consumer housing sentiment after a two-month setback, bringing us back to the modestly positive trend we've seen over the last year," says Doug Duncan, senior vice president and chief economist at Fannie Mae. "It might be too late to save this year's home sales from posting the first decline in five years. However, the return to an upward trend in housing sentiment, combined with this month's positive news on the jobs front, suggests that a broad-based, albeit measured, housing recovery is on track to resume in 2015. The results of the past few months show that consumer optimism remains cautious and somewhat volatile, and we'll likely continue to see bumps on the housing recovery path reflected in our survey results."

Source: Fannie Mae

http://realtormag.realtor.org/daily-news/2014/10/08/americans-attitudes-improve-housing

www.RebeccaSellsAZ.com

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

Priced to Sell at $30M? Apparently, Yes!

Luxury Market Takes Larger Chunk of Sales

Speculative Building Returns to 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.

Source: Coldwell Banker Previews International/Coldwell Banker (Oct. 1, 2014)

http://realtormag.realtor.org/daily-news/2014/10/03/luxury-buyers-are-spending-mega-bucks-in-these-markets

www.RebeccaSellsAZ.com

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.

Curious what else is new on the mortgage front?

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)

http://realtormag.realtor.org/daily-news/2014/10/06/could-mortgage-product-change-lending

www.RebeccaSellsAZ.com

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.

Source: Freddie Mac (Oct. 2, 2014)

http://realtormag.realtor.org/daily-news/2014/10/03/30-year-mortgage-sinks-419-week

www.RebeccaSellsAZ.com

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)

http://realtormag.realtor.org/daily-news/2014/10/06/buyers-grow-resistant-higher-home-prices

www.RebeccaSellsAZ.com