Welcome to the "Z" Team!

More good news to share! Mortgage applications soared 9.2 percent last week, as more Americans sought to take advantage of record low mortgage rates, according to the Mortgage Bankers Association’s weekly report. 

The surge in mortgage applications last week was attributed to a jump in refinance applications, which rose 13 percent for the week. Refinance applications make up nearly 75 percent of all mortgage applications.

Surprisingly, mortgage applications for home purchases dropped 2.4 percent last week.

“Low rates have convinced many home owners to refinance their mortgages, though tougher lending requirements still keep many prospective home buyers from taking out new debt,” The Wall Street Journal reports. We agree, your thoughts?  

Source: “Mortgage Application Volume Rose 9.2% Last Week: MBA,” The Wall Street Journal (5/16/12)

With rising rents, more renters are being swayed into home ownership. Many are finding they buy a home and get the same amount of space cheaper than renting in our region. Affordability in housing is at record highs from the combination of falling home values and record-low mortgages.

Rents are increasing at about the same pace that home values are dropping, says Stan Humphries, Zillow’s chief economist, who says, according to their surveys, home prices have dropped 3.1 percent year-over-year whereas rents have increased 2.5 percent. “Herein lie the seeds to eventually more interest in buying on the part of consumers, which will help put a floor under home prices,” Humphries told Investors Business Daily.

Recent housing surveys, including Zillow’s, are showing home prices are starting to rise in recent months. Since this varies by local areas, how’s your market doing?

Source: “Rising Rents Prompt Buys, May Help Housing Recover,” Investors Business Daily (May 10, 2012)

Todays Fed’s update to share with you! The Consumer Financial Protection Bureau plans to issue new rules that would limit certain fees that lenders require consumers to pay when they purchase a home. Among these fees the agency hopes to ban would be a fee sometimes referred to as “origination points” that buyers pay at closing.

The agency is proposing a ban on mortgage companies from charging origination fees, which can fluctuate with a loans amount, The New York Times reports. The fees can often get confused with upfront discount points that borrowers often pay.

The agency is also looking at implementing a new rule that would require lenders to offer a reduced interest rate when a borrower chooses to pay discount points on a loan upfront. Lenders would be required to offer a loan option to not include any points.

“Mortgages today often come with so many different types of fees and points that it can be hard to compare offers,” Richard Cordray, the director of the consumer bureau, told The New York Times. “We want to bring greater transparency to the market so consumers can clearly see their options and choose the loan that is right for them.” What are your thoughts for this being transparency for the housing recovery in your local market?

Source: “New Rules May Curtail Some Fees in Mortgage, ” The New York Times 5/9/12)

We enjoy sharing good news like this report! Fannie Mae, which backs the most loans in the country, announced that it would not need taxpayer aid to cover losses for the first time since the federal government took control over the mortgage giant in 2008.

Fannie posted a profit in the first quarter of the year, reporting a net income of $2.7 billion compared to a $6.5 billion loss they reported in the first quarter of 2011.

“We expect our financial results for 2012 to be significantly better than 2011,” says Susan McFarland, Fannie Mae’s chief financial officer. “As our serious delinquency rate declines and home prices stabilize, we expect to reduce our reserves, which combined with revenue from our high-quality new book of business, will drive our future results.”

Freddie Mac, also a government-sponsored enterprise and mortgage giant, recently reported a profit as well — a $577 million quarterly net income for the first quarter.

Our region is showing other signs of the housing market stabilizing: The decline in home prices is slowing, more are buying homes than a year ago, and housing starts have climbed in the last year. Comments about your local market conditions improving? 

Source: “Fannie Mae Profit Signals a Stabilizing Housing Market,” The New York Times (May 9, 2012)

Many housing experts have been warning a foreclosure wave would soon flood several markets. But was it all a false alarm? We think it was and want to share this with you!

Recent surveys have shown that foreclosure sales have dropped to their lowest point in more than two years. And while according to March data, 8 percent more homes did enter the foreclosure process from the previous month, that number is down more than 30 percent from a year ago, according to Lender Processing Services.

CNBC real estate reporter Diana Olick notes that it could be another delay in the foreclosure system “as banks try to modify more loans to meet some of the terms of the [$25 billion] servicing settlement . The foreclosure sales decline also appears to be exclusively in private and portfolio loans, which again points to the settlement.”

Meanwhile, banks are increasing their number of short-sale transactions, and some surveys have shown that short sales are actually now outpacing foreclosure sales— the first time that’s ever occurred.

“Lenders are increasingly recognizing that short sales may be a better alternative for them than foreclosure,” RealtyTrac’s Daren Blomquist told CNBC. “This trend began in markets with stronger demand and where the distressed inventory tends to be newer homes (Phoenix, Los Angeles, Las Vegas), but the trend appears to be spreading to other markets like Atlanta and Detroit.” Please provide thoughts about your local market.

Source: “Flood of Foreclosures Still Fails to Materialize,” CNBC (May 2, 2012)

Although we see the foreclosure activity may be declining, the problem is far from over! There have been 5 million foreclosures since 2007, reports the Center for Responsible Lending, which estimates that between 3 million and 5 million more will occur over the next couple of years nationwide.  

Some of the consequences of foreclosures are obvious: family displacements, crime in vacant properties, ruined credit, and the loss of equity. Other, less obvious consequences have emerged as well. About 8 million children could be affected, including kids of home owners and renters who were evicted due to a foreclosure. Julia Isaacs of the Brookings Institution calls these children the “invisible victims” of the foreclosure crisis, as foreclosures not only can cause emotional trauma, but also interfere with a child’s educational development.

Researchers also have found a connection between rising foreclosures and an increase in medical visits for mental health, such as anxiety, or preventable conditions such as high blood pressure. Plus, let’s don’t forget possible job related problems. 

Our region is strapped because of a loss of property tax revenue caused by foreclosures, which can lead to cuts in services — including fire protection, senior centers, and local law enforcement. Please provide comments about your local market contitions. 

Source: “Three Hidden Costs of the Foreclosure Crisis,” MarketWatch (4/ 24/12)

Last year, some of us complained about receiving really low offers on listed homes. Offers usually submitted by the buyer for 25 percent or more below the list price, according to a recent  National Association of REALTORS® survey of its members. That number has dropped by about the same percentage in our local market area.

According to a survey this March of 4,500 agents and brokers, no REALTORS® complained about low-ball offers. The main problem nowadays: The sudden drop in inventory of for-sale homes has led to fewer homes available to sell.

For home buyers who still think they have a chance of hitting it lucky with a low-ball offer, they’re finding in many markets that their offers are more often being rejected or countered closer to the original asking price, the Los Angeles Times reports. Please comment, is your local market reflecting similar changes?

Source: “Low-ball Offers Decline in Some Housing Markets,” Los Angeles Times (4/22/12)

 The Federal Housing Finance Agency Federal Housing Finance Agency announced a new policy to speed up the process that mortgage servicers use to handle short sales, deeds-in-lieu, and deeds-for-lease for mortgages that are backed by Fannie Mae and Freddie Mac.

The FHFA, the regulator of Fannie and Freddie, says the new policy includes a revised timeline that will require mortgage servicers to respond to a request for a short sale offer within 30 days. Servicers also will be required to make a final decision on the short sale offer within 60 days.

For any short sale offer still under review after 30 days, banks will be required to provide weekly status updates to borrowers regarding the pending short sale offer.

The new policy, which will roll out in stages starting in June, aims to “prevent foreclosures, keep homes occupied, and help maintain stable communities,” says Edward DeMarco, the FHFA’s acting director. “These timeline and borrower communication announcements set minimum standards and provide clear expectations regarding these important foreclosure alternatives.”

The FHFA also says that by the end of the year there will be additional announcements from Fannie and Freddie that are aimed at addressing borrower eligibility and evaluation, simplifying documents, property valuation, fraud mitigation, payments to subordinate lien holders, and mortgage insurance. Please provide your thoughts about this policy?

Source: Federal Housing Finance Agency 

The nationwide inventory of residential homes for-sale dropped 21 percent in March compared to a year ago, according to newly released housing data from Realtor.com, tracking 146 metro markets. Nearly all 146 markets posted a drop in their inventory!

Other good news, the nationwide median list price in March also saw improvement, increasing more than 5 percent last month compared to last year at this time.

Our area housing picture is much different than last year at this time, when inventory was up around 25 percent and list prices were down about 5 percent.

“If the market continues to hold its own, 2012 could well mark the beginning of a broad-based housing recovery,” according to Realtor.com. Let’s hope this becomes reality.

The California regions posting the biggest drops in the top 12, last year were:

1. Oakland, Calif.: -51.91 percent year-over-year drop in total listings

2. Bakersfield, Calif.: -50.35 percent

4. Fresno, Calif.: -45.56 percent

12. Stockton-Lodi, Calif.: -36.18 percent

Source of data: Melissa Dittmann Tracey, REALTOR® Magazine Daily News

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How the real estate market will fare in the spring home-selling season will prove a test for housing demand and show which markets will lead a housing recovery, economists say in a recent article at USA Today. Our spring selling season is March through June and the regional Placerville market is showing an increase for housing demand.

Existing home sales and pending sales are up about 9 percent compared to the same time year ago, according to recent data by the National Association of REALTORS®.

Paul Dales of Capital Economics told USA Today that he expects the spring selling season to “be the best in four or five years” for the real estate industry.

Our housing supply of for-sale homes has dropped the most and is more balanced which should be the potential of prices gaining this year. So, we’re optimistic!

Source: “Spring Home Sales Could be Omen,” USA Today (April 2, 2012)