We Just Got Settled Here in Hermitage

We were thinking about getting one of those three bedroom Nashville apartments at first, but that made no sense after we thought about it. The other people in the complex simply are not going to be happy with us rehearsing and we have a lot of work to do. So we had to have a place which was set off away from the neighbors and big enough for all of us. Of course John has been here for a couple of months and he had a place of his own, but when we found the house he sublet it to another musician that he knows. This place sits on about four acres of land pretty close to the Cumberland River and so we could pretty much make as much noise as we want without it bothering anyone. There is a highway close by, so the bigger issue is that we need to eliminate external noise if we want to really get a clean recording of the work.

Real estate leader to head sales team

unduhan-44HousingWire, the nation’s leading news source for the U.S. housing economy, announced Jennifer Watson Laws (pic, below) as its new national sales director.

Watson Laws brings over 18 years of experience in advertising and marketing to the company. Before coming to HousingWire, Watson Laws worked at The Wall Street Journalfor 11 years. She has extensive experience as a sales executive, her career spanning digital, print and out-of-home platforms.

“I am thrilled to be joining HousingWire at such an exciting time,” Watson Laws said. “As a digital first publication, HousingWire is well positioned in the marketplace to continue to be an industry leader for both our readers and advertising partners.”

“I look forward to leading the sales team and delivering superior results to our clients,” she said.

Watson Laws will now be responsible for managing the sales department and will lead all sales and business development efforts. She will also work closely with HousingWire’s executive team on the development and implementation of new products and solutions as the company continues to move markets forward.

“Jennifer is a highly experienced and knowledgeable media sales leader,” HousingWire CEO Clayton Collins said. “Her expertise and leadership will help HousingWire continue to innovate and ensure our clients achieve and surpass objectives.”

“We are thrilled to welcome Jennifer to the HousingWire team,” Collins said. “Jennifer has an incredible background and has a clear passion for helping clients and developing team members.”

How much that you take for house prices

unduhan-43Home prices are continuing to rise; now mere basis points below the all-time highs for prices, set in 2006.

According to the latest data released Tuesday by S&P Dow Jones Indices and CoreLogic, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, which covers all nine U.S. census divisions, reported a 5.3% annual gain in August, up from 5% in July.

Per the report, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index is currently at 184.42, which is within 0.1% of its record high of 184.62, set in July 2006.

The increase in August represents the 52nd consecutive month of positive gains.

According to the Case-Shiller report, the 10-City Composite posted a 4.3% annual increase, up from 4.1% in July, while the 20-City Composite posted a 5.1% annual increase, up from 5.0% in July.

The report states that Portland, Seattle and Denver turned in the highest year-over-year gains among the 20 cities for the seventh consecutive month, with year-over-year increases of 11.7%, 11.4% and 8.8%, respectively.

“Supported by continued moderate economic growth, home prices extended recent gains,” said David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices.

“All 20 cities saw prices higher than a year earlier with 10 enjoying larger annual gains than last month,” Blitzer continued. “The seasonally adjusted month-over-month data showed that home prices in 14 cities were higher in August than in July.”

Blitzer also noted that other housing data including sales of existing single-family homes, measures of housing affordability, and permits for new construction also point to a “reasonably healthy housing market.”

Additionally, the Case-Shiller report showed that before seasonal adjustment, the National Index posted a month-over-month gain of 0.5% in August.

The report also showed that both the 10-City Composite and the 20-City Composite posted a 0.4% increase in August.

After seasonal adjustment, the National Index recorded a 0.6% month-over-month increase, and both the 10-City Composite and the 20-City Composite reported 0.2% month-over-month increases.

After seasonal adjustment, 14 cities saw prices rise, two cities were unchanged, and four cities experienced negative monthly prices changes, the report showed.

Ralph McLaughlin, the chief economist at online real estate listing service Trulia, cautions that the increase to a near-record high isn’t quite as drastic as it may seem.

“The numbers suggest housing price trajectory is picking up again, as it was the second month where price growth was larger than the previous month,” McLaughlin notes.

“Earlier this year, price growth slid for five consecutive months and raised questions about where home prices were heading,” McLaughlin continues. “We’re now seeing a reversing of that trend. While the S&P/Case-Shiller National Home Price Index is an important metric to watch, it’s worth noting that the measure is more reflective of price movements in premium homes rather than middle or lower-tier homes.”

Reflecting on the latest Case-Shiller results, the chief economist for online real estate listing service, Zillow, said that the while the market seems relatively healthy right now, it can’t stay on the same track into perpetuity.

How to look out for housing

images-46Millennials haven’t taken over the housing market yet, but it’s only a matter of time before they do.

Many Millennials have not moved into homeownership due to a number of factors, including a preference for urban living and a high student debt burden.

However, now first First American created a chart that shows Millennials have a higher percentage of people with a college degree than any other generation.

This educational advantage bodes well for future homeownership rates among this generation. A study from Fannie Mae showed that the long-term benefit of a college degree outweighs the short-term burden of student loan debt when it comes to the likelihood of eventual homeownership.

The study showed that those who earned a degree without taking on student debt are the most likely to become homeowners, followed by those who graduated with debt, those who never went to college and lastly, those who took on student debt but never graduated.

So Millennials’ status as not only the largest demographic but also the most educatedgeneration ever could soon lead to abnormally high homeownership rates. That could come with a downside, however.

“The risk will be that prices will adjust to all of the demand and reduce affordability, making it more difficult,” First American Financial Corp. Chief Economist Mark Fleming told HousingWire.

“That’s why the issue of lack of inventory, whether in the form of less existing home sales than expected or a lack of right-priced new homes, is so important to the future success of the market to serve the possible tsunami of demand,” Fleming said.

How to find housing is still really affordable

The last full day of the Mortgage Bankers Association annual conference is underway, and the latest revelation is increasing home prices may not be as threatening as many think.

Many studies, including today’s S&P CoreLogic Case-Shiller Home Price Index, show that home prices gains are up more than 5% nationally. While that’s true, the story changes when economists bring in other factors.

In fact, when adjusting for inflation and the amount of purchase power provided by low interest rates, home prices actually dropped in the past 16 years, First American Chief Economist Mark Fleming said in an interview with HousingWire.

“Contrary to popular opinion, housing isn’t getting more expensive,” Fleming said. “In fact, on a purchasing-power adjusted basis, housing is becoming more affordable.”

“Interest rate declines, combined with meaningful gains in incomes, have provided the consumer with greater buying power, which increases housing affordability,” he said. “The growth in consumer house-buying power is actually outpacing the increases in nominal prices driven by remarkably tight inventories.”

The amount of purchasing power is determined by many economic factors including interest rates, inflation and household income.

Since July 2006, real home prices decreased 41% as of August. They did, however, increase 0.8% from July, but decreased 2.6% from August 2015. Real home prices decreased 20.7% from January 2000.

This chart shows that while home prices are near housing boom peaks, affordability is actually much better off:

“At the moment, affordability is actually increasing in more markets than it is decreasing, including San Francisco, San Jose, New York, Washington and Boston,” Fleming said. “The conventional wisdom that these markets are over-valued does not account for the meaningful growth in consumer house-buying power across the majority of major metropolitan markets.”

However, an increase in interest rates could decrease the demand for housing and put the brakes on rising home prices, Fleming told HousingWire. It would decrease the buying power of consumers.

And yet, MBA Chief Economist Mike Fratantoni still predicts double-digit increases in purchase mortgage originations in 2017, despite the possibility of a rate hike.

While a decrease in interest rates could also mean a decrease in purchasing power, according to Fleming it’s “not necessarily a bad thing.”

The economy can’t sustain a prolonged period of low interest rates, he said.

Several members of the Federal Open Market Committee agree with this view, and continue to argue for a rate hike. Many experts expect the Fed to raise interest rates in December.

Requirements for condos

When President Obama signed the “Housing Opportunity Through Modernization Act of 2016” into law a few months ago, many celebrated because it changed the Federal Housing Administration’s rules for condominium financing, among other changes.

At the time, the National Association of Realtors said that law would “dramatically improve long-fought restrictions on FHA financing for condominiums.”

And Wednesday, the FHA announced that it is indeed changing some of its rules around condo financing, lowering its owner-occupancy requirements on certain condo developments.

Under the FHA’s current rules, approved condominium developments must have a minimum of 50% of the units occupied by owners.

The new rules, which go into effect immediately, would lower this requirement to 35% for existing condo developments provided the project meets “certain conditions,” the FHA said.

“While having too few owner-occupants can detract from the viability of a project, requiring too many can harm its marketability,” the FHA said in a statement. “It is FHA’s position that owner-occupants serve to stabilize the financial viability of the projects and are less likely to default on their obligations to homeowner associations than non-owner occupants.”

According to the FHA, for some condominium projects, the existing owner-occupancy requirement is “necessary” to maintain the stability of FHA’s Mutual Mortgage Insurance Fund.

But the FHA said that it in certain instances, it now believes that it would be possible to protect the MMIF while allowing a lower percentage of owner-occupants.

“(The Department of Housing and Urban Development’s) experience shows that higher reserves, a low percentage of association dues in arrears, and evidence of long-term financial stability allow for a lower owner-occupancy percentage without undue risk to the MMIF,” the FHA said.

To be eligible for the lower owner-occupancy rules, the condo development must be more than 12 months old. Additionally, the requirements for the lower owner-occupancy rules are:

  • Applications must be submitted for processing and review under the HUD Review and Approval Process (HRAP) option
  • Financial documents must provide for funding of replacement reserves for capital expenditures and deferred maintenance in an account representing at least 20% of the condo development’s budget
  • No more than 10% of the total units can be in arrears (more than 60 days past due) on their condominium association fee payments
  • Three years of acceptable financial documents must be provided

Replacement program of industry experts

The Home Affordable Modification Program will expire at the end of this year, and experts from the industry talked about its replacement: One Mod: Principles for Post-HAMP Loan Modification at the Mortgage Bankers Association annual conference this week.

The MBA revealed its new program proposal at the end of September. While the Federal Housing Finance Agency already created a new program to replace the Home Affordable Refinance Program, nothing is in place to take over for HAMP.

“One Mod is a universal framework designed to provide the customer meaningful payment relief early in delinquency,” JPMorgan Chase Product Executive Erik Schmitt told HousingWire. “This is achieved through the creation of a simplified customer experience and a product designed to provide meaningful payment relief, which is the key driver of re-performance.”

“Additionally, the product is durable, in that it is designed to provide customers with assistance across a broad range of economic environments,” Schmitt said.

One Mod will be an improvement from HAMP as experts analyze what worked and what didn’t.

“We’re taking the lessons that we learned from HAMP and finding ways to only require the specific documentation used to drive payment reduction,” Alex McGillis of Quicken Loanstold HousingWire. “The data from HAMP shows that payment reduction is the biggest driver in reducing re-defaults.”

There will be several changes to the new program as the industry shifts towards what Yvette Gilmore, Freddie Mac vice president of servicing performance management, calls a non-crisis program.

One of the major shifts includes an increase in the program’s availability.

“The focus of One Mod is to maximize the number of homes saved, which is achieved through increasing program accessibility and providing more sustainable solutions to prevent default,” Schmitt said.

Also, the proposed program will differ when it comes to the regulation that controls it. At the session, the MBA asked Laurie Maggiano, the Consumer Financial Protection Bureauprogram manager, what the industry can expect when it comes to new regulation for loan modification.

“We just published a 900-page rule, what else do you want?” Maggiano joked. Then, on a more serious note, she added, “Because the rule doesn’t say what a modification should look like, and I don’t expect to go there, I don’t expect any more regulation.”

McGillis summed up the goals for the new program:

“Everyone should have the ability or chance to save their home no matter what they’re going through,” he said at the session.

Continues to hover near 50

Homeownership rates changed very little in the third quarter, and remain near lows not seen since 1965.

The homeownership rate decreased slightly from last year’s 63.7% to 63.5% in the third quarter, according to the latest report from the U.S. Census Bureau. This is up just 0.4 percentage points from last quarter.

National vacancy rates for rental housing decreased to 6.8%, down 0.5 percentage points from last year and the same as the second quarter this year. The homeowner vacancy rate remained unchanged from last quarter and last year at 1.8% in the third quarter.

“Given other evidence from the release, my views swing more with the optimists than the pessimists,” Trulia Chief Economist Ralph McLaughlin said. “Household formation surpassed 1.1 million, climbing from 944,000 last quarter. About 560,000 – or nearly half – of these households were owners, up from a loss of 22,000 last quarter.”

“I think this is good news in light of the fact that millennials now make up the largest pool of potential new households,” McLaughlin said. “Though many are still living with their parents, they eventually will move out.”

“First, they will rent, and as they settle down, and then they will buy,” he said. “While we can’t know for sure they will own at rates of older generations, our survey work at Trulia shows 80% of Millennials want to own a home – the highest share of any cohort and the highest in the seven years we’ve run the survey.”

A chart from First American shows Millennials have a higher percentage of people with a college degree than any other generation. Historically speaking, homeownership rates are much higher among those with college degrees.

Big insights from the new HMDA

What is HMDA?

The Federal Financial Institutions Examination Council released the Home Mortgage Disclosure Act (HMDA) data for 2015 at the end of September.  HMDA data is considered the most comprehensive report on mortgage originations.  For 2015, 6,900 institutions reported 14.3 million loan records.  This makes HMDA an important data source even though it is released with a nine-month lag.

The state of the mortgage and housing market for 2015

The most important story is that the mortgage origination market continued to benefit from an improved housing market in 2015.  Higher home sales, rising home prices and more homeowners in the housing market contributed to a stronger purchase origination market.  But growth has been unevenly distributed across different parts of the country, with faster growth centered in the West and Southeastern parts of the country, reflecting faster demand growth in these regions.

The strong momentum behind the multi-family housing market also continued in 2015, as growth in multi-family purchase originations eclipsed growth in the single-family segment.  With the collapse in oil prices in late 2014, housing markets in oil-producing states saw slower growth, and that also slowed the mortgage origination markets in those states.  On the refinance side, the unexpected drop in mortgage rates in early 2015 helped to revive refinance activity.

But because many eligible borrowers had already refinanced at similar rates during the 2012-2013 refinance boom, the impact of lower mortgage rates was much smaller in 2015.  Finally, rising home equity and lower interest rates created favorable conditions for home improvement lending in 2015, allowing homeowners to start overdue home improvement projects.

With this backdrop, here are my top five takeaways from the new HMDA data set:

1.  Mortgage originations benefited from a stronger housing market in 2015.

The housing market experienced strong overall growth in 2015—boosted by a strong job market and lower mortgage rates.  Home sales, including both new and existing homes, grew by approximately 7% to 5.76 million.  Housing supply tightened in many markets across the country, driving home prices higher.  Nationally, home prices grew by around 6% in 2015, according to the Federal Housing Finance Administration’s Purchase Home Price Index.

Higher home sales and rising home prices lifted both the number of purchase loans and the average loan balance.  Purchase originations increased by 18% to $872 billion in 2015, the highest volume since 2007.  The number of single-family home purchase loans increased by 13%, while the average size of purchase loans increased by 4%.  The number of home purchase loans grew almost twice as fast as home sales (13% vs. 7%), suggesting that the percentage of mortgage-financed home sales has been on the rise, while the percentage of cash sales has been falling.  This is an important aspect of the housing recovery, suggesting that there were more “normal” home sales in 2015.  We believe this trend will continue.

Another indicator that the housing market is improving is the increased proportion of homeowners in contrast to investors.  The percentage of owner-occupiers in purchase originations grew from 89% to 89.4%, reaching its highest level since 2009 and 2010, when the first-time homebuyers’ tax credit temporarily boosted the percentage of homeowners in the purchase market.

2.  Purchase origination growth was uneven at the state level.

Single-family purchase originations grew in all states during 2015, but growth was centered in the Western and Southeastern parts of the country, where purchase origination volume grew well over 20%.  A notable exception here is California, which saw purchase origination growth slightly below the national average of 18% on weaker home sales growth.  With the collapse in energy prices in late 2014, energy-producing states saw a general slowdown in purchase origination growth, with smaller states such as North Dakota and West Virginia reporting some of the weakest growth rates in the country.

How to save your credit score for real estate

There’s not much time left before the malls are flooded with busy holiday shoppers. And for the yearlong planners, the shopping probably started a long time ago. A recent blogfrom VantageScore emphasizes the importance of making sure shoppers don’t destroy their credit score right before the busiest home-buying season.

The holidays may still seem far off, but when the possibility of securing a home in the spring is on the line, the time to plan is now.

So what is the main area where consumers hurt their credit during the holidays? Credit cards.

Here’s what VantageScore suggests to consumers:

First and foremost, if you apply for a new credit card or higher spending limits on existing cards for the holiday season, the card issuers will probably request your credit score from one or more of the national credit reporting companies (CRCs), Equifax, Experian and TransUnion. The same is true if a new car is on your shopping list or if you choose to open a store credit card account. Just as they would at any other time of year, those score inquiries from lenders can cause a dip in your credit score.

The shopping-season strategy here is twofold: You want to maximize your score before applying for this holiday-related credit, and you want to avoid having these holiday loans lower your score in advance of any major borrowing you may be planning in the early months of the new year.

Are you increase in unsteady pending home sales

Pending home sales increased in September, hitting the fifth highest level over the past year, according to the National Association of Realtors most recent report.

Increases in the South and West outgained the declines in the Northeast and Midwest, according to the report, underpinning the unsteady nature of the current housing recovery. However, there remain several bright spots, according to the trade group’s leading economist.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 1.5% to 110 in September, up from August’s downwardly-revised 108.4. The index is 2.4% above last year’s 107.4, and marks the 25th consecutive month of year-over-year increase.

An index of 100 is equal to the average level of contract activity during 2001, the first year to be analyzed. Coincidentally, 2001 was the first of four consecutive record years for existing-home sales.

“Buyer demand is holding up impressively well this fall with Realtors reporting much stronger foot traffic compared to a year ago,” NAR Chief Economist Lawrence Yun said. “Although depressed inventory levels are keeping home prices elevated in most of the country, steady job gains and growing evidence that wages are finally starting to tick up are encouraging more households to consider buying a home.”

At 5.47 million, sales are matching their third-highest pace since February 2007’s 5.79 million. Distressed sales fell to the lowest level since NAR first began tracking in October 2008, and first time homebuyers reached 34%, the highest level since July 2012.

In the Northeast, the PHSI fell 1.6% to 96.5, but is still 7.7% above last year. In the Midwest the index declined only slightly at 0.2% to 104.6 in September. This is a decline of 1% from last year.

On the other hand, pending home sales in the South increased 1.9% to 122.1 in September, an increase of 1.7% from last year. The west saw the largest increase at 4.7% from August to 107.3. This is 4% above last year.