Thousands of single-family homes are being built to rent rather than sell, The New York Times reports. More home builders and investors see it as an income-generating investment at a time when the pool of first-time home buyers is shrinking.
The percentage of homes built specifically as rentals was 6.2 percent in 2012 — a record high, according to Census Bureau figures.
“New homes still command a premium with renters,” the Times reports.
For investors, a new home can offer “fewer repairs, lower maintenance, and it looks great to the tenants,” says Bruce McNeilage, the managing partner of Kinloch Partners, a Nashville-based real estate investment company that has been acquiring model homes in the Atlanta area to turn into rentals. “You can get maximum rents, and people are going to stay in them for a while because they’re brand-new.”
However, some home owners say they’re concerned about investors turning their new subdivisions into neighborhoods of renters. They fear it will worsen property values.
Some firms say they try to avoid buying up blocks of rentals in one subdivision.
Source: “Home Buyers Are Scarce, So Renters Take Their Place,” The New York Times 12/4/13
One of the fastest-growing crimes in the U.S. is cell phone theft, and the nation’s four largest U.S. carriers, along with the Federal Communications Commission, have banded together to curtail it with a national registry of lost and stolen phones. They’re hoping it can be used to deny activation of reported stolen phones as well as reduce the value of stolen smartphones that thieves try to sell.
The database lists stolen 4G/LTE smartphones, and the plan is to integrate it with international databases. The database will be maintained by each carrier and will track all phones reported stolen via the phone’s serial number.
“The matter of stolen devices is extremely important to wireless providers,” says Steve Largent, president and CEO of CTIA-The Wireless Association. “As more countries and more carriers around the world participate in the 3G and 4G/LTE databases, criminals will have fewer outlets since these stolen phones would be blacklisted and could not be reactivated.”
CTIA still encourages consumers to use apps or programs to protect their phones from theft as well. Several services exist to help find lost phones or remotely wipe them clean to secure data, such as Android Device Manager or Find my iPhone. Apple recently debuted the Activation Lock feature on the iOS 7, which makes it impossible to reactivate a lost or stolen device without an Apple ID and password.
Source: CTIA-The Wireless Association and “CTIA hopes to deter smartphone theft with global, multi-carrier common database for lost and stolen devices,” TechSpot (Nov. 28, 2013)
Mortgage delinquencies are on the rise for home equity lines of credit that were taken out during the housing bubble and others reaching the 10-year mark, Equifax data shows.
In most cases, after these loans hit the 10-year mark, borrowers must start paying not only the interest but also the principal on these loans. For many, that could mean their monthly payments could more than triple. For example, a consumer with a $30,000 home equity line of credit with a 3.25 percent initial interest rate could see their monthly payments go from $81.25 to $293.16, according to Fitch Ratings analysts.
The number of home owners missing their payments is growing, Equifax reports. Amy Crews Cutts, the chief economist of Equifax, has called the pending increase in payments on home equity lines as a “wave of disaster.”
“More than $221 billion of these loans at the largest banks will hit this mark over the next four years, about 40 percent of the home equity lines of credit now outstanding,” Reuters reports. The delinquencies will mean banks stand to lose 90 cents on the dollar?
Analysts say that home owners who are facing a big jump in their payments may be able to refinance their main mortgage and home equity lines of credit into a new, single fixed-rate loan. Or some borrowers may find that selling their home and taking advantage of rising home prices is another way to repay their loan, analysts note.
Source: “Insight: A new wave of U.S. mortgage trouble threatens,” Reuters (Nov. 26, 2013)
The Senate is considering legislation that would require Fannie Mae, Freddie Mac, the FHA, and other federal mortgage entities to revamp their rules to reward energy savings.
Supporters of energy efficiency want lenders to take the net savings from energy improvements into consideration when they underwrite and impose mortgage fees, and they also want appraisers to take into account the value of these retrofits.
More than 125 multiple listing services nationwide provide “green fields” in online listing information displays so that energy improvements and certifications for Energy Star–qualified appliances, solar power, and other features can be described. Moreover, the Appraisal Institute is offering green valuation training for appraisers and has established a comprehensive “green addendum” that could result in higher property valuations.
On top of all this, Genworth Mortgage Insurance plans to offer green rewards to U.S. borrowers like it already does in Canada — where borrowers receive a 10 percent refund on mortgage insurance premiums, online discounts for common household items, and even a break on their debt-to-income ratio for underwriting purposes if the home meets national or provincial energy efficiency guidelines.
Source: “The Nation’s Housing: Seeing Green Over Mortgages,” New London Day (CT) (11/22/13)
As home prices rise, lenders are showing less willingness to grant short sales, RealtyTrac reports.
The number of short sales has been gradually dropping the last few months. Short sales represented 5.3 percent of all sales in October, down from 6.3 percent the previous month and down from 11.2 percent last October, according to RealtyTrac data.
The National Association of REALTORS® recently reported in its October existing-home sales report that short sales tend to sell at an average discount of 14 percent below market value.
“After a surge in short sales in late 2011 and early 2012, the favored disposition method for distressed properties is shifting back toward the more traditional foreclosure auction sales and bank-owned sales,” says Daren Blomquist,vice president at RealtyTrac. “The combination of rapidly rising home prices — along with strong demand from institutional investors and other cash buyers able to buy at the public foreclosure auction or an as-is REO home — means short sales are becoming less favorable for lenders.”
Source: RealtyTrac and “Short sales falling out of favor with lenders as prices surge,” Inman News (Nov. 25, 2013)
National foreclosure pre-sale inventory is at its lowest point since 2008, Lender Processing Services reports.
The inventory—which reflects the number of loans that are in some stage of foreclosure—represents 2.54 percent of all mortgaged homes in LPS’ October data. That marks a 3.23 percent drop month-over-month, and a nearly 30 percent year-over-year drop. LPS’ data reflects about 70 percent of the mortgage market.
The National Association of REALTORS® reported last week that distressed homes are making up fewer of the total existing-home sales recorded in the past year. Sales of distressed homes—which include foreclosures and short sales—made up 14 percent of October sales, down 25 percent year-over-year.
Distressed sales tend to sell at a discount. NAR reported that foreclosures sold for an average discount of 17 percent below market value in October. Short sales were discounted 14 percent below market value.
Source: “Foreclosure Inventory Falls to 5 year Low,” Mortgage News Daily (Nov. 22, 2013) andNational Association of REALTORS®
Fixed-rate mortgages dropped this week due to weaker economic data, particularly a decline in manufacturing growth and overall inflation rates, says Frank Nothaft, Freddie Mac’s chief economist.
Freddie Mac reports the following national averages for the week ending Nov. 21:
- 30-year fixed-rate mortgages: averaged 4.22 percent, with an average 0.7 point, dropping from last week’s 4.35 percent average. Last year at this time, 30-year rates averaged 3.31 percent.
- 15-year fixed-rate mortgages: averaged 3.27 percent, with an average 0.7 point, dropping from last week’s 3.35 percent average. A year ago, 15-year rates averaged 2.63 percent.
- 5-year hybrid adjustable-rate mortgages: averaged 2.95 percent, with an average 0.5 point, dropping from last week’s 3.01 percent average. Last year at this time, 5-year ARMs averaged 2.74 percent.
- 1-year ARMs: averaged 2.61 percent, with an average 0.4 point, holding steady from last week. A year ago, 1-year ARMs averaged 2.56 percent.
Source: Freddie Mac
A low number of homes for sale is pushing home prices up to double-digit gains year-over-year, the National Association of REALTORS® reports in its latest existing-homes report.
“Low inventory is holding back sales while at the same time pushing up home prices in most of the country,” says Lawrence Yun, NAR’s chief economist. “More new-home construction is needed to help relieve the inventory pressure and moderate price gains.”
In October, the national median existing-home price was $199,500 — a 12.8 percent surge above what it was a year ago. It also marks the 11th consecutive month of double-digit year-over-year increases, NAR reports.
Meanwhile, housing inventories are falling, dropping 1.8 percent in October to 2.13 million existing homes for sale. That represents a 5-month supply at the current sales pace.
The median time on the market for all home types was 54 days in October, up from 50 days in September. In October 2012, the median time on the market was 71 days.
“In the near term, homeowner spending on improvements is expected to see its strongest growth since the height of the housing boom,” says Kermit Baker, director of the Remodeling Futures Program at the Harvard Joint Center for Housing Studies.
Home remodeling is posting a strong recovery as more home owners regain equity and look to spruce up their homes. Projects surged 14 percent in September over year-ago levels, according to BuildFax, which tracks building permits.
However, smaller remodeling projects — those under $10,000 — are dropping.
One reason behind the trend is that regular home owners may be starting to renovate more and spend more as they regain equity. In recent years, remodeling activity was mostly dominated by smaller projects from investors who had purchased single-family homes to turn into rentals. Investors are lessening their share in remodeling as regular home owners show more interest in home remodeling. Your comments?
Source: “Remodeling? Now you can snoop inside your neighbors’ kitchen,” CNBC (Nov. 19, 2013)
Though it has been one of the most rapid displacements in recent history, the Great Recession did not cause most Americans to move very far from home.
At the height of the recession, only about 10.5 million people moved outside their counties, according to the Census Bureau. That’s the lowest proportion since the bureau started tracking the number in 1947. Those displaced by foreclosures tended to move within home towns and cities. In 2010, the number of local moves increased to the highest level in a decade—24.2 million, according to a study by Michael Stoll, professor of public policy at UCLA.
Part of the reason this shift affected the population differently is because the economic downturn was so widespread. While the mass migrations caused by the Dustbowl of the 1930s offered migrants respite from their economic woes in the form of better environmental conditions, the recession followed people wherever they went.
“Paying the costs to move [across regions] without a guarantee of employment just doesn’t make sense,” says Stoll. “There was no good place to move to, and some reason to stay.” Stoll’s study also found that nearly a quarter of those who moved locally did so in order to find cheaper housing.
Source: Lose it and move it: Displaced Americans move locally, Nov. 12, 2013, OZY.com.