Welcome to the "Z" Team!

Home ownership and rental demand may both get an uptick as a large number of immigrants are expected to enter the United States and call it home by 2020, according to Mortgage Bankers Association’s Research Institute for Housing America study.

The number of foreign-born home owners will continues to grow each decade, according to the report. For example, the number of foreign-born home owners rose 800,000 from 1980 to 1990; by 2.1 million from 1990 to 2000; then by 2.4 million from 2000 to 2010.

The home ownership rate has particularly grown among the Hispanic immigrant population. In 1990, Hispanic immigrants had a 15 percent home ownership rate, which grew to nearly 53 percent in 2010. By 2020, Hispanics’ home ownership rate is expected to rise above 61 percent, according to researchers. California will be a top demand state!

The study makes projections to the year 2020 on the growth of U.S. home owner households headed by immigrants. Please review and provide your comments.

More at source: “Housing demand to grow as new immigrants arrive,” HousingWire (March 5, 2013)

Moves across county and state lines are falling, with the 2007-2009 recession blamed for changing Americans’ moving patterns, according to an analysis of census data through 2010. The Great Recession caused more Americans to move because they could no longer afford to remain where they were. That’s a big change in what traditionally motivates Americans to move — a bigger home or higher paying job, USA Today reports about the analysis.

Nine percent of Americans stayed local with their moves during 2007-2009 period — the highest in a decade. 

“Typically, over the last couple of decades, when Americans moved, they moved to improve their lives,” says Michael Stoll, author of the research and chairman of UCLA’s public policy department. “This is the shock: For the first time, Americans are moving for downward economic mobility. Either they lost their house or can’t afford where they’re renting currently or needed to save money.”

More than 23 percent moved for more affordable housing during the recession. Prior to the recession, that percentage stood at 20.8 percent. 

Also, prior to the recession, 41.3 percent of Americans moved in order to own a home or settle into a better neighborhood. However, during the recession, that percentage dropped to 30.4 percent. 

Source: “Americans on the Move Start Moving Down, Not Up; Setback in Upward Mobility Hits Blacks, Sun Belt Spots Hardest,” USA Today (Feb. 20, 2013)

Good news to share! Fixed-rate mortgages stayed mostly flat this week, remaining near their record lows and continuing to support housing demand and “translating into a pick-up in home prices in most markets,” says Frank Nothaft, Freddie Mac’s chief economist. 

Freddie Mac reports the following national averages with mortgage rates for the week ending Feb. 14: 

• 30-year fixed-rate mortgages: averaged 3.53 percent, with an average 0.8 point, holding the same average as last week. A year ago, 30-year rates averaged 3.87 percent. 
• 15-year fixed-rate mortgages: averaged 2.77 percent, with an average 0.8 point, also holding the same as last week. Last year at this time, the 15-year fixed-rate mortgage averaged 3.16 percent.
• 5-year adjustable-rate mortgage: averaged 2.64 percent, with an average 0.6 point, rising slightly from last week’s 2.63 percent average. Last year at this time, 5-year ARMs averaged 2.82 percent. 

Source: Freddie Mac

California’s potential first-time homebuyers (aged 25-34) numbered 5,404,486 in 2011. At the same time, the state’s homeownership rate stood at 55.3%. California homeownership has dropped steadily during 2012. It will level off around 2016 as a wave of now-tenants enter (or re-enter) the market as buyers.

California’s homeownership rate continues its fall in the aftermath of the Great Recession. Will the next wave of first-time homebuyers bring a sea change?

Please view data and charts at:   http://firsttuesdayjournal.com/will-first-time-homebuyers-save-californias-homeownership-rate/

Although the average 30-year fixed-rate mortgage has been below 4% almost every week this year, experts say few home owners or buyers qualify for that rate.

Using data from CoreLogic, The Los Angeles Times calculated that about 69% of home owners who had mortgages as the second quarter of this year ended had rates of 5% or higher, and about a third of those owners had rates above 6%.

Fed’s taking steps to encourage lower mortgage rates? Economists say those actions may have limited results if these low rates continue to stay out of reach for many home owners. “The irony is the people who need the help the most have not been helped — the people who are underwater,” says Nobel Prize-winning economist Joseph Stiglitz.

Many industry observers agree that lower mortgage interest rates would free up income for underwater home owners and thus stimulate the economy. Along with the Fed’s recent action, some bills have been introduced into the U.S. Senate with the aim of assisting both home buyers and home owners interested in refinancing, but may linger as the November elections approach.

Source: “Two-thirds of Americans with mortgages pay 5% interest or higher,” The Los Angeles Times (9/18/2012)

Great news update to share! Interest rates for home mortgages continued to hover near all-time lows, keeping home buyer affordability high.

Freddie Mac reports the following averages in this week’s mortgage market survey:

•30-year fixed-rate mortgages: averaged 3.55 percent, with an average 0.7 point, dropping from last week’s 3.59 percent average. A year ago at this time, 30-year rates averaged 4.12 percent.

•15-year fixed-rate mortgages: averaged 2.86 percent, with an average 0.6 point, holding steady from last week’s average. A year ago, 15-year rates averaged 3.33 percent.

•5-year adjustable-rate mortgages: averaged 2.75 percent, with an average 0.7 point, dropping from last week’s 2.78 percent average. Last year at this time, 5-year ARMs averaged 2.96 percent.

Source: Freddie Mac

Wanted to share two recent reports highlight the strength of the commercial market.

Morningstar reports that commercial real estate is much stronger than housing as evidenced by real estate funds, which have recorded an average annualized return of 33 percent over the past three years. Through June, real estate funds have attracted $2.9 billion in new cash while investors have pulled out of nearly every other stock fund group. The decline in commercial real estate was not nearly as severe as the residential market crash due to the fact that office buildings, industrial facilities, hotels, and apartments were not overbuilt to the same extent as homes.

Meanwhile, Fitch Ratings reports that delinquencies on commercial real estate collateralized debt obligations (CDO) declined in June for the second month in a row. The rate fell to 12.3 percent last month from 13 percent in May. Just five new delinquencies were added to the Fitch index in June, while 15 assets were removed. Eight of those 15 interests were disposed of at full to partial losses, which contributed to the $115 million in realized losses reported by asset managers in June—the highest monthly total so far in 2012.

Sources: “Real Estate Funds Lead the Pack, Can It Last?” USA Today (June 21 2012) and “Fitch: Commercial Real Estate CDO Delinquencies Fall for Second Month in a Row,”" Wall Street Journal (June 20 2012)

Forty-seven percent of Generation Yers say they plan to purchase a home within five years or less, according to a new study by Western Union. That tops the general population, 29 percent of which say they plan to buy a home in the next five years or less.

Ten percent of Generation Y members surveyed are even more eager to jump into the housing market, saying they plan to buy a home in the next 12 months, according to Western Union’s Payment Money Mindset Index survey.

But unlike other generations, Gen Y may have some debt to work through first. The surveyed showed that the generation has higher student-loan debt and more bills compared to any other age group. About one in four graduating students who have student loan debt say they will move home after graduation to curb costs.

The survey also found that Gen Y tends to be bigger spenders when compared to other age groups. The survey found that they outspend other age groups in leisure activities, such as on hobbies, video games, electronics, sporting events, and recreation.

Source: “Western Union: Gen Y Gives Home Sellers Some Hope,” HousingWire (5/23/12)

Here’s some interesting news to share with you! California’s attorney general has requested that the Federal Housing Finance Agency suspend foreclosure sales in the state for home owners with government-backed mortgages. 

Attorney General Kamala D. Harris has requested that home owners with loans backed by Fannie Mae and Freddie Mac get a temporary reprieve from foreclosures while housing regulators conduct reviews of whether at-risk home owners are eligible to have the amount they owe on their mortgage reduced. 

Fannie Mae and Freddie Mac have stated in the past that they’re opposed to mortgage principal reductions. The FHFA, which regulates Fannie and Freddie, has said that any such program would cost taxpayers $100 billion. 

More than half a million Californians have lost their home to foreclosure since 2008. What’s more, another half a million are in foreclosure or at “imminent” risk this year. Fannie and Freddie guarantee or own more than 60 percent of mortgages in California. 

Source: “California Seeks Suspension of Foreclosures,” Associated Press (Feb. 27, 2012) and “California AG Seeks Foreclosure Suspension,” MarketWatch (Feb. 27, 2012)

“Good News” to share with you! The number of home owners behind on their mortgage payments dropped to the lowest level in three years, according to a report of data from the fourth quarter of 2011 released by the Mortgage Bankers Association. 

“Mortgage performance is also improving faster than the overall economy,” says Jay Brinkmann, MBA’s chief economist. (We’re finding this is not true with some lenders.)

According to MBA, 7.6 percent of residential mortgages were at least 30 days past due on their payments in the fourth quarter of 2011. Last year, the percentage was 8.3, and the peak of 10 percent was reached in early 2010. Mortgage delinquencies usually hover around 5 percent in more stable markets. Let’s hope this trend continues.

Still, while the lower delinquencies serve as an important sign needed for a healing housing market, MBA still cautions that the number of loans in foreclosure remains high. About 4.4 percent of all loans were in foreclosure in the fourth quarter. The peak reached one year earlier was 4.6 percent.

Source: “Mortgage Delinquencies Hit Three-Year Low,” The Wall Street Journal (2/16/12)