Wednesday, January 30, 2013
Home selling season isn't waiting until spring this year
There are indications of an unusually early start to the 2013 season as buyers rush to get off the sidelines before home prices and mortgage rates go higher.
WASHINGTON — Could we be looking at an early spring this year — not in meteorological terms but real estate? Could the chilly December-to-February months, which traditionally see fewer buyers out shopping for houses compared with the warmer months that follow, be more active than usual? And if so, what does this mean to you as a potential home seller or buyer?
There is growing evidence, anecdotal and statistical, that there are more shoppers on the prowl in many parts of the country than is customary for this time of year, more people requesting "preapproval" letters from mortgage companies, more people visiting websites offering homes for sale and more people telling pollsters that they expect home prices to continue rising and that the worst of the housing downturn is long past. There is even data showing that during holiday-distracted December, there was a jump in visits to homes listed for sale.
Coldwell Banker, one of the largest brokerages in the country, says traffic to its listings website was up 38% during the last month, compared with year-earlier levels. ZipRealty, an online brokerage based in Emeryville, Calif., reports that its website has seen an unusual 33% increase in home shoppers in the first half of January compared with December.
Redfin, a Seattle brokerage, found that during the week of Dec. 30, shoppers requesting home tours by agents jumped 26% over the four-week average, and 9% compared with the same week the year before.
Economists at the National Assn. of Realtors report that foot traffic at houses listed for sale in well over half of all markets around the country was higher in December than the year before. Given the strong December reading, says Paul C. Bishop, vice president for research at the association, sales in the coming weeks should be "robust."
Even in markets that typically hibernate until the snow melts, there are indications of an unusually early start to the 2013 season. Joe Petrowsky, president of Right Trac Financing Group, a mortgage company near Hartford, Conn., says he has received a much higher volume of requests for "preapproval" letters — which tell sellers that a purchaser is qualified for a mortgage loan — compared with what's typical at this time of year.
"I'm seeing twice as many buyers this January as last January," Petrowsky said. "People have finally figured out that prices are moving up, interest rates are really low, and they don't want to miss out on the opportunity."
In the Washington, D.C., area, Long & Foster Real Estate, the country's largest independent broker, reports strong "signs that we are going to have an early spring" in terms of home sales. In an unusual occurrence for January, according to Steve Wydler, a Long & Foster agent in Northern Virginia, "multiple offer situations are becoming increasingly common, with prices being escalated above asking price."
Gretchen Castorina, an agent with brokerage firm Allen Tate in Chapel Hill, N.C., says "spring started last month" in terms of new clients and multiple-bid competitions. Even in the dark final days of December, Castorina says she was busy. "I was showing houses on Dec. 31," she said, and had written a contract for buyers just before Christmas.
Jo Ann Poole, an agent with Simi Valley Real Estate, says that for a variety of reasons, "in the last 10 days people have figured it out" and are making real estate moves that might have normally been pushed back into the spring months.
Polling by Fannie Mae, the government-backed mortgage investor, may shed some light on what's motivating buyers. In a survey of 1,002 adults in December, Fannie found the highest share of consumers in the survey's 21/2-year history who expect home prices to rise during the coming 12 months. Forty-three percent expect mortgage rates to jump, and 49% believe that the cost of renting will increase.
Roll all this together, says Doug Duncan, Fannie's chief economist, and you can see why consumer sentiment "could incentivize those waiting on the sidelines … to buy a home sooner rather than later" — pushing spring behavior into midwinter.
What's missing from this equation? More owners listing their homes for sale. Inventories of available homes are down in most markets, mainly because many sellers are under the impression that it's still a buyer's market filled with low-ballers who won't pay them a fair price. In many parts of the country, that is last year's news. In 2013, it's simply no longer the case.
Written by,
Kenneth Harney
Thursday, January 24, 2013
Housing Set To Give Economy A Boost In '13
Home sales are set to keep marching upward this year after hitting their highest level in five years in 2012, economists say.
Existing-home sales for the full year rose 9.2 percent from 2011, according to preliminary data, the National Association of Realtors (NAR) reported Tuesday.
New home sales, which will be reported Friday, have also been improving.
Housing is finally contributing to the economy’s growth instead of pulling it down, Moody’s Analytics chief economist Mark Zandi says.
He expects housing to contribute a fifth of the economy’s growth this year. In 2009, it subtracted more than 1 percentage point from GDP growth, he says.
Housing has historically led the U.S. economy out of recessions.
Now that housing appears to be mending, with prices rising and more new construction, “the recovery will start to feel more normal,” says David Crowe, chief economist for the National Association of Home Builders.
New home sales are especially important to the economy because buyers spend money on other items, such as furnishings, appliances and landscaping.
Rising home values also increase household wealth.
December’s existing-home sales, down 1 percent from November to a seasonally adjusted annual rate of 4.94 million, were almost 13 percent higher than a year earlier, the NAR says.
Last month’s numbers were weaker than expected, but “the trend is still up,” says Liz Ann Sonders, Charles Schwab chief investment strategist.
Home sales – and prices – are being driven higher by:
• Low interest rates. Average interest rates for 30-year-fixed loans have been below 4 percent for the past 14 months, Freddie Mac data show.
• Job growth. The unemployment rate stood at 7.8 percent in December, down from its peak of 10 percent in fall 2010. A better job market is helping more people move out of friends’ and relatives’ homes into their own. Net household formations topped 1 million in each of the past two years, Sonders says. That’s more than twice the level of 2009 and 2010.
Not all economists see brighter days ahead for housing, given what market researcher CoreLogic says was a 7.4 percent jump in home prices in November from a year earlier.
Higher taxes and cuts in government spending, along with still-tepid job growth, will weigh on the market this year, says Steven Ricchiuto, chief economist for Mizuho Securities.
“You’ve probably already seen the best of the housing recovery,” he says.
Existing-home sales for the full year rose 9.2 percent from 2011, according to preliminary data, the National Association of Realtors (NAR) reported Tuesday.
New home sales, which will be reported Friday, have also been improving.
Housing is finally contributing to the economy’s growth instead of pulling it down, Moody’s Analytics chief economist Mark Zandi says.
He expects housing to contribute a fifth of the economy’s growth this year. In 2009, it subtracted more than 1 percentage point from GDP growth, he says.
Housing has historically led the U.S. economy out of recessions.
Now that housing appears to be mending, with prices rising and more new construction, “the recovery will start to feel more normal,” says David Crowe, chief economist for the National Association of Home Builders.
New home sales are especially important to the economy because buyers spend money on other items, such as furnishings, appliances and landscaping.
Rising home values also increase household wealth.
December’s existing-home sales, down 1 percent from November to a seasonally adjusted annual rate of 4.94 million, were almost 13 percent higher than a year earlier, the NAR says.
Last month’s numbers were weaker than expected, but “the trend is still up,” says Liz Ann Sonders, Charles Schwab chief investment strategist.
Home sales – and prices – are being driven higher by:
• Low interest rates. Average interest rates for 30-year-fixed loans have been below 4 percent for the past 14 months, Freddie Mac data show.
• Job growth. The unemployment rate stood at 7.8 percent in December, down from its peak of 10 percent in fall 2010. A better job market is helping more people move out of friends’ and relatives’ homes into their own. Net household formations topped 1 million in each of the past two years, Sonders says. That’s more than twice the level of 2009 and 2010.
Not all economists see brighter days ahead for housing, given what market researcher CoreLogic says was a 7.4 percent jump in home prices in November from a year earlier.
Higher taxes and cuts in government spending, along with still-tepid job growth, will weigh on the market this year, says Steven Ricchiuto, chief economist for Mizuho Securities.
“You’ve probably already seen the best of the housing recovery,” he says.
Written by,
Julie Schmit
USA Today
Tuesday, January 22, 2013
County Ranks 20th In U.S. For Paid-Off Homes
About one in five homeowners in San Diego County have paid off their mortgages or never had one, based on a recent report from popular real estate website Zillow.
Pittsburgh, and Tampa, Fla., had the highest rates of mortgage-free property owners among U.S. metropolitan areas — 38.6 percent and 33.2 percent, respectively. San Diego ranked 20th in the nation at 21.5 percent.
Zillow, which typically analyzes negative home equity, switched gears this time to look at the share of homeowners with no mortgage. This is an important indicator because it points out a group of homeowners who may be more flexible than people with mortgages in putting their homes on the market, said Stan Humphries, chief economist at Zillow.
“By determining where these homeowners are located, we can also gain insight into potential inventory and demand in those areas,” Humphries said.
San Diego County has a lower-than-normal level of homes for sale: About 4,140 listings are currently on the market, the lowest level in more than 3½ years. Another perspective: The present tally is approximately half of what it was a year ago.
Inventory has fallen for 18 straight months, an effect of dwindling foreclosures and the fact that a significant number of homeowners can’t or won’t sell their properties because they are underwater on their mortgages.
Several factors help explain an area’s mortgage-free rate. Obvious ones include the median age of homeowners: People 65 to 74 are the most likely to have no home-loan debt because they’ve had enough time to pay off their mortgages.
However, the Zillow analysis also showed that nearly 35 percent of homeowners nationwide in the 20 to 24 age category had no mortgage. The share in San Diego County is 42 percent.
Housing analysts said parents with enough means are likely helping these young adults take advantage of relatively low housing prices. They may be giving money or extending private loans to their children.
Regardless of age group, there has been a clear rise in cash-only home purchases in recent years. For example, nearly one in three home resales in the county in October were cash transactions, based on numbers from real estate tracker DataQuick.
Other factors that account for an area’s mortgage-debt rate include:
Median home price. Homeowners in an area with a lower median price are more likely to pay off their mortgages faster.
High credit scores. Nationally, 44 percent of homeowners with free and clear mortgages have VantageScores that range from 800 to 900. VantageScore is one of several ways to measure a person’s creditworthiness.
Pittsburgh, and Tampa, Fla., had the highest rates of mortgage-free property owners among U.S. metropolitan areas — 38.6 percent and 33.2 percent, respectively. San Diego ranked 20th in the nation at 21.5 percent.
Zillow, which typically analyzes negative home equity, switched gears this time to look at the share of homeowners with no mortgage. This is an important indicator because it points out a group of homeowners who may be more flexible than people with mortgages in putting their homes on the market, said Stan Humphries, chief economist at Zillow.
“By determining where these homeowners are located, we can also gain insight into potential inventory and demand in those areas,” Humphries said.
San Diego County has a lower-than-normal level of homes for sale: About 4,140 listings are currently on the market, the lowest level in more than 3½ years. Another perspective: The present tally is approximately half of what it was a year ago.
Inventory has fallen for 18 straight months, an effect of dwindling foreclosures and the fact that a significant number of homeowners can’t or won’t sell their properties because they are underwater on their mortgages.
Several factors help explain an area’s mortgage-free rate. Obvious ones include the median age of homeowners: People 65 to 74 are the most likely to have no home-loan debt because they’ve had enough time to pay off their mortgages.
However, the Zillow analysis also showed that nearly 35 percent of homeowners nationwide in the 20 to 24 age category had no mortgage. The share in San Diego County is 42 percent.
Housing analysts said parents with enough means are likely helping these young adults take advantage of relatively low housing prices. They may be giving money or extending private loans to their children.
Regardless of age group, there has been a clear rise in cash-only home purchases in recent years. For example, nearly one in three home resales in the county in October were cash transactions, based on numbers from real estate tracker DataQuick.
Other factors that account for an area’s mortgage-debt rate include:
Median home price. Homeowners in an area with a lower median price are more likely to pay off their mortgages faster.
High credit scores. Nationally, 44 percent of homeowners with free and clear mortgages have VantageScores that range from 800 to 900. VantageScore is one of several ways to measure a person’s creditworthiness.
Written by,
Lily Leung
Monday, January 21, 2013
'Cliff' Deal Revives Some Expired Tax Benefits
Although it wasn’t a total win for homeowners and sellers, the patchwork legislation that emerged from the “fiscal cliff” fracas on Capitol Hill came pretty close. In fact, it even reached back and resuscitated two key tax benefits for housing that had expired more than a year ago. Now homeowners will be able to take deductions on their upcoming 2012 tax returns that they assumed were no longer available.
Here’s a quick tally sheet on what the new legislation could mean for you as a buyer, seller or owner.
• Do you, like millions of Americans, pay mortgage insurance premiums or guarantee fees on an FHA, VA, Fannie Mae, Freddie Mac or Rural Housing loan? The American Taxpayer Relief Act — the fiscal cliff compromise bill — allows you to write off the insurance premiums you paid during 2012 along with your mortgage interest, provided your household income does not exceed $110,000. Legal authorization for this deduction expired at the end of 2011. But the new bill retroactively permits write-offs for all of 2012 and 2013 for qualified borrowers.
• Did you do some energy-efficient renovations in your home during 2012 — installing insulation, energy-saving windows, doors, roofing material, nonsolar water heaters and the like? Maybe you’re thinking about doing a little green rehab in 2013? For either year, you may be able to claim up to a $500 tax credit thanks to the revival of a home energy improvement incentive that lapsed in 2011. Five hundred bucks may not sound huge, but remember: It’s a credit, not a deduction, so it means $500 off the bottom line of your federal tax return.
• Are you planning a short sale of your underwater home this year or hoping to receive a principal reduction on your loan as a result of a mortgage modification by your lender? The new legislation reauthorized the Mortgage Forgiveness Debt Relief Act that had been scheduled to terminate Dec. 31, and spares you potentially punitive federal taxes on the amount forgiven. Had the debt relief exception in the tax code not been renewed, large numbers of underwater owners participating in short sales — where banks agree to accept less than the full amounts owed on a loan as part of a sale to a new buyer or investor — would have faced taxation on the full amount forgiven, as if it were regular income.
Lenders and real estate brokers say thousands of financially distressed homeowners would have been devastated by the expiration. Alexis Eldorrado, a Chicago-area real estate specialist in short sales, says she has five clients who are underwater on their mortgages by an average of $100,000, and awaiting short sale closings in the coming weeks. They probably would have had to file for bankruptcy — or go to foreclosure — had Congress not renewed the debt forgiveness law, she said, because none of them could afford to pay taxes on $100,000 they never actually received.
What’s in the legislation that some buyers or sellers might not like? Start with steeper capital gains taxes for high-income sellers with big gains that exceed current federal exclusion limits of $250,000 (single tax filers) and $500,000 (married joint filers). Say you are a single earner and earn more than $400,000, or you’re married, file jointly and earn more than $450,000. Under the new legislation, you can expect to pay 20 percent on capital gains. So if you sell your principal residence this year and your gain on the sale is $750,000, the capital gains tax on the $250,000 excess above the $500,000 exclusion limit will be at 20 percent, rather than 15 percent. Sellers with income below the $400,000 threshold will still pay capital gains taxes at 15 percent, and earners at the two lowest tax brackets will pay zero on capital gains.
Another negative: The fiscal cliff deal limits deductions for mortgage interest, property taxes, charitable donations and other write-offs for single-filing taxpayers with adjusted gross incomes above $250,000 and married joint-filers above $300,000. The formula it uses is complex, but it could amount to about $1,000 in additional tax liability for a couple with an income around $400,000, according to housing industry estimates.
Written by,
Kenneth Harney
Columnist for The Washington Post Writers Group
Here’s a quick tally sheet on what the new legislation could mean for you as a buyer, seller or owner.
• Do you, like millions of Americans, pay mortgage insurance premiums or guarantee fees on an FHA, VA, Fannie Mae, Freddie Mac or Rural Housing loan? The American Taxpayer Relief Act — the fiscal cliff compromise bill — allows you to write off the insurance premiums you paid during 2012 along with your mortgage interest, provided your household income does not exceed $110,000. Legal authorization for this deduction expired at the end of 2011. But the new bill retroactively permits write-offs for all of 2012 and 2013 for qualified borrowers.
• Did you do some energy-efficient renovations in your home during 2012 — installing insulation, energy-saving windows, doors, roofing material, nonsolar water heaters and the like? Maybe you’re thinking about doing a little green rehab in 2013? For either year, you may be able to claim up to a $500 tax credit thanks to the revival of a home energy improvement incentive that lapsed in 2011. Five hundred bucks may not sound huge, but remember: It’s a credit, not a deduction, so it means $500 off the bottom line of your federal tax return.
• Are you planning a short sale of your underwater home this year or hoping to receive a principal reduction on your loan as a result of a mortgage modification by your lender? The new legislation reauthorized the Mortgage Forgiveness Debt Relief Act that had been scheduled to terminate Dec. 31, and spares you potentially punitive federal taxes on the amount forgiven. Had the debt relief exception in the tax code not been renewed, large numbers of underwater owners participating in short sales — where banks agree to accept less than the full amounts owed on a loan as part of a sale to a new buyer or investor — would have faced taxation on the full amount forgiven, as if it were regular income.
Lenders and real estate brokers say thousands of financially distressed homeowners would have been devastated by the expiration. Alexis Eldorrado, a Chicago-area real estate specialist in short sales, says she has five clients who are underwater on their mortgages by an average of $100,000, and awaiting short sale closings in the coming weeks. They probably would have had to file for bankruptcy — or go to foreclosure — had Congress not renewed the debt forgiveness law, she said, because none of them could afford to pay taxes on $100,000 they never actually received.
What’s in the legislation that some buyers or sellers might not like? Start with steeper capital gains taxes for high-income sellers with big gains that exceed current federal exclusion limits of $250,000 (single tax filers) and $500,000 (married joint filers). Say you are a single earner and earn more than $400,000, or you’re married, file jointly and earn more than $450,000. Under the new legislation, you can expect to pay 20 percent on capital gains. So if you sell your principal residence this year and your gain on the sale is $750,000, the capital gains tax on the $250,000 excess above the $500,000 exclusion limit will be at 20 percent, rather than 15 percent. Sellers with income below the $400,000 threshold will still pay capital gains taxes at 15 percent, and earners at the two lowest tax brackets will pay zero on capital gains.
Another negative: The fiscal cliff deal limits deductions for mortgage interest, property taxes, charitable donations and other write-offs for single-filing taxpayers with adjusted gross incomes above $250,000 and married joint-filers above $300,000. The formula it uses is complex, but it could amount to about $1,000 in additional tax liability for a couple with an income around $400,000, according to housing industry estimates.
Written by,
Kenneth Harney
Columnist for The Washington Post Writers Group
Wednesday, January 16, 2013
Real Estate Rebound Seen In Rising Equity, Falling Inventory
With all the depressing reports about the “fiscal cliff” and potential rollbacks in tax benefits for homeowners, you might have missed some of the positive trends under way for real estate.
Start with homeowners’ equity. It’s growing again significantly, following five years of declines and stagnation. This is a huge piece of good news that hasn’t received the attention it deserves. After hitting a low of $6.45 trillion in the final three months of 2011, Americans’ combined home equity jumped nearly $1.3 trillion during the next nine months to $7.71 trillion — a 20 percent gain — according to the “flow of funds” quarterly estimate released in December by the Federal Reserve.
A homeowner’s equity is the difference between the market value of his or her house and the amount of mortgage debt it is carrying. Equity is a key measure of wealth — often the largest single item on a family’s financial balance sheet — and the Federal Reserve tracks the estimated equity holdings of millions of owners to come up with its quarterly numbers. As recently as 2007, homeowners’ collective equity exceeded $10.2 trillion. Between that year and late 2011, owners lost nearly $4 trillion in real estate wealth.
So the $1.3 trillion turnaround during the first nine months of 2012 was a big deal. It reflected the first sustained rebound in home prices in a long time in many local real estate markets. In a study released just before Christmas, researchers at Zillow.com found that of 177 major metropolitan markets, 135 had experienced net increases in cumulative home values during 2012.
Zillow broke it down into specific dollar amounts added to owners’ net worth, city by city: Owners in Los Angeles gained a cumulative $122.1 billion during the year, Washington, D.C., owners $40.4 billion, San Diego $31.2 billion, Seattle $20.1 billion, Boston just under $16 billion, Tampa, Fla., $8 billion, Sarasota, Fla., $5 billion, Tucson, Ariz., $3.8 billion, Oklahoma City $3.3 billion and Columbus, Ohio, $3.5 billion.
These are big numbers and hard to grasp, but think of it this way: The odds are good that even if you own in a market that experienced severe price declines during the housing bust, the value of your house rose last year, at least modestly. Even if you have negative equity, it’s likely that, thanks to appreciation in your area and your continuing payment of principal on your mortgage, your equity position improved.
Some of the most impressive gains in values were in areas that suffered the deepest price plunges — and the most painful losses in owners’ equity — between 2007 and 2011. According to a study byRealtor.com, list prices of houses in Phoenix were 21.4 percent higher in November than they were 12 months earlier. In Riverside-San Bernardino, prices were up 13.3 percent. In Las Vegas 10.6 percent; Miami 10 percent.
What’s causing price surges like these in cities that cratered just a few years back? Part of it is a recognition by buyers, including investors, that prices hit bottom and won’t drop any further. The intrinsic economic values of houses and land simply exceeded the near giveaway, foreclosure-sale prices prevalent in the post-recession years. Now prices are correcting upward as buyers come back into the market.
But virtually all major real estate markets across the country have seen declines in the homes for sale, in part because some sellers still fear they won’t get a good price, and because in some areas large numbers of potential sellers are still underwater on their mortgages.
Fewer listings mean more competition for what’s available for sale on the market, sometimes multiple offers, higher prices, and even the return of escalation clauses in contracts, where buyers’ offers contain automatic increases in multiple bid situations.
Ultimately, higher prices should begin to persuade more sellers to list their homes, pushing inventory higher and creating a healthier, more balanced real estate environment for 2013.
Written by,
Kenneth Harney, Columnist for The Washington Post Writers Group.
Start with homeowners’ equity. It’s growing again significantly, following five years of declines and stagnation. This is a huge piece of good news that hasn’t received the attention it deserves. After hitting a low of $6.45 trillion in the final three months of 2011, Americans’ combined home equity jumped nearly $1.3 trillion during the next nine months to $7.71 trillion — a 20 percent gain — according to the “flow of funds” quarterly estimate released in December by the Federal Reserve.
A homeowner’s equity is the difference between the market value of his or her house and the amount of mortgage debt it is carrying. Equity is a key measure of wealth — often the largest single item on a family’s financial balance sheet — and the Federal Reserve tracks the estimated equity holdings of millions of owners to come up with its quarterly numbers. As recently as 2007, homeowners’ collective equity exceeded $10.2 trillion. Between that year and late 2011, owners lost nearly $4 trillion in real estate wealth.
So the $1.3 trillion turnaround during the first nine months of 2012 was a big deal. It reflected the first sustained rebound in home prices in a long time in many local real estate markets. In a study released just before Christmas, researchers at Zillow.com found that of 177 major metropolitan markets, 135 had experienced net increases in cumulative home values during 2012.
Zillow broke it down into specific dollar amounts added to owners’ net worth, city by city: Owners in Los Angeles gained a cumulative $122.1 billion during the year, Washington, D.C., owners $40.4 billion, San Diego $31.2 billion, Seattle $20.1 billion, Boston just under $16 billion, Tampa, Fla., $8 billion, Sarasota, Fla., $5 billion, Tucson, Ariz., $3.8 billion, Oklahoma City $3.3 billion and Columbus, Ohio, $3.5 billion.
These are big numbers and hard to grasp, but think of it this way: The odds are good that even if you own in a market that experienced severe price declines during the housing bust, the value of your house rose last year, at least modestly. Even if you have negative equity, it’s likely that, thanks to appreciation in your area and your continuing payment of principal on your mortgage, your equity position improved.
Some of the most impressive gains in values were in areas that suffered the deepest price plunges — and the most painful losses in owners’ equity — between 2007 and 2011. According to a study byRealtor.com, list prices of houses in Phoenix were 21.4 percent higher in November than they were 12 months earlier. In Riverside-San Bernardino, prices were up 13.3 percent. In Las Vegas 10.6 percent; Miami 10 percent.
What’s causing price surges like these in cities that cratered just a few years back? Part of it is a recognition by buyers, including investors, that prices hit bottom and won’t drop any further. The intrinsic economic values of houses and land simply exceeded the near giveaway, foreclosure-sale prices prevalent in the post-recession years. Now prices are correcting upward as buyers come back into the market.
But virtually all major real estate markets across the country have seen declines in the homes for sale, in part because some sellers still fear they won’t get a good price, and because in some areas large numbers of potential sellers are still underwater on their mortgages.
Fewer listings mean more competition for what’s available for sale on the market, sometimes multiple offers, higher prices, and even the return of escalation clauses in contracts, where buyers’ offers contain automatic increases in multiple bid situations.
Ultimately, higher prices should begin to persuade more sellers to list their homes, pushing inventory higher and creating a healthier, more balanced real estate environment for 2013.
Written by,
Kenneth Harney, Columnist for The Washington Post Writers Group.
Monday, January 14, 2013
Jobs: A Slow, Steady Climb
December marked another lukewarm month of hiring, the government said Friday in an employment report that suggested the economy probably will muddle along for some time with subpar growth.
The unemployment rate held steady at 7.8 percent in December as employers added 155,000 jobs.
The jobs gain fell in the range of the monthly average for all for 2012, which happened also to be the monthly average for 2011: 153,000. It means that hiring is on a steady trajectory, but it has a long way to go to make up for the jobs lost from 2008 to 2010.
By U-T San Diego
Monday, January 7, 2013
Tight Inventory, Low Rates Helped Give A Boost To Housing Market
The housing market has steadily improved this year, helped by stable job gains and record-low mortgage rates. Here are five key things that happened in real estate in 2012:
1. Mortgage rates plummeted to record lows. Thirty years ago, the rate for a 30-year fixed home loan was in the double digits, between 13 percent to almost 18 percent. Now, it’s fallen below 4 percent, based on numbers from mortgage giant Freddie Mac. In fact, both the 30-year and 15-year rates in November dropped to their lowest levels in 41 years. Since then, neither have strayed too far from their all-time lows of 3.31 percent for the 30-year and 2.63 percent for the 15-year. Rates have consistently fallen throughout the year but received an extra downward push after the Federal Reserve said in September it would buy mortgage-backed securities to give the U.S. economy a lift. The plan is meant to keep long-term interest rates and mortgage rates down so more folks can buy homes and refinance their mortgages.
2. A $25 billion mortgage settlement pushes banks to help consumers. California Attorney General Kamala Harris and housing advocates called the deal between 49 states and five major lenders a historic deal that finally holds accountable the companies accused of wrongfully foreclosing on homes and failing to help property owners. Opponents of the deal say the effort was too little, too late, and a raw deal for consumers because the relief amount, when broken down by harmed homeowner, was minor. Critics of the mortgage settlement also point out that many states, including California, used part of their money to fix their budgets. Not quite the intended use. Still, banks have provided help to homeowners through the settlement. On the flip side, about two-thirds of that aid has been in the form of short sales, which some housing advocates argue is less desirable than a loan modification or other means of keeping the borrower in the home.
3. Short sales make up a larger share of the housing market than foreclosure resales. This happened because fewer homeowners have been defaulting on their mortgages because of a slightly improving economy and other alternatives such as loan modifications and short sales, deals where homeowners can sell their homes for less than what they owe as long as the lender says OK. In November, mortgage defaults sank to a six-year low and foreclosures decreased 35 percent from the same time a year ago. Also, the mortgage settlement appears to have contributed to somewhat of a short sale frenzy. Almost 40,000 of them were completed in the state through the settlement, from February to November. Short sales not only can benefit consumers, they also benefit lenders because they tend to be less costly to complete compared to foreclosures, which are lengthier to process.
4. Housing inventory is super tight. If you’re a buyer, especially someone who’s not an investor, you may be facing slim pickings out there. It’s not just in your head. There are about 5,300 active listings in San Diego County, half of what we saw just a year ago and the lowest level in at least three years, according to the local Realtors’ group. Inventory has consistently fallen for the last 15 months and may keep dropping if consumer demand remains strong and would-be sellers stay on the sidelines. Why aren’t folks listing their homes? Many are underwater on their mortgages and are waiting for prices to rise more.
5. Home prices and sales have stayed hot through the fall and winter. The median price for a home sold in November was $358,000, almost 14 percent higher than a year ago and the number of transactions reached a seven-year high for a November. Keep in mind, that happened during a fall month, when homebuying typically cools down. Homebuying demand remains strong especially among the investor crowd. That, coupled with limited inventory, has pushed prices up. This is not-so-great news for potential buyers. And possibly good news for potential sellers.
1. Mortgage rates plummeted to record lows. Thirty years ago, the rate for a 30-year fixed home loan was in the double digits, between 13 percent to almost 18 percent. Now, it’s fallen below 4 percent, based on numbers from mortgage giant Freddie Mac. In fact, both the 30-year and 15-year rates in November dropped to their lowest levels in 41 years. Since then, neither have strayed too far from their all-time lows of 3.31 percent for the 30-year and 2.63 percent for the 15-year. Rates have consistently fallen throughout the year but received an extra downward push after the Federal Reserve said in September it would buy mortgage-backed securities to give the U.S. economy a lift. The plan is meant to keep long-term interest rates and mortgage rates down so more folks can buy homes and refinance their mortgages.
2. A $25 billion mortgage settlement pushes banks to help consumers. California Attorney General Kamala Harris and housing advocates called the deal between 49 states and five major lenders a historic deal that finally holds accountable the companies accused of wrongfully foreclosing on homes and failing to help property owners. Opponents of the deal say the effort was too little, too late, and a raw deal for consumers because the relief amount, when broken down by harmed homeowner, was minor. Critics of the mortgage settlement also point out that many states, including California, used part of their money to fix their budgets. Not quite the intended use. Still, banks have provided help to homeowners through the settlement. On the flip side, about two-thirds of that aid has been in the form of short sales, which some housing advocates argue is less desirable than a loan modification or other means of keeping the borrower in the home.
3. Short sales make up a larger share of the housing market than foreclosure resales. This happened because fewer homeowners have been defaulting on their mortgages because of a slightly improving economy and other alternatives such as loan modifications and short sales, deals where homeowners can sell their homes for less than what they owe as long as the lender says OK. In November, mortgage defaults sank to a six-year low and foreclosures decreased 35 percent from the same time a year ago. Also, the mortgage settlement appears to have contributed to somewhat of a short sale frenzy. Almost 40,000 of them were completed in the state through the settlement, from February to November. Short sales not only can benefit consumers, they also benefit lenders because they tend to be less costly to complete compared to foreclosures, which are lengthier to process.
4. Housing inventory is super tight. If you’re a buyer, especially someone who’s not an investor, you may be facing slim pickings out there. It’s not just in your head. There are about 5,300 active listings in San Diego County, half of what we saw just a year ago and the lowest level in at least three years, according to the local Realtors’ group. Inventory has consistently fallen for the last 15 months and may keep dropping if consumer demand remains strong and would-be sellers stay on the sidelines. Why aren’t folks listing their homes? Many are underwater on their mortgages and are waiting for prices to rise more.
5. Home prices and sales have stayed hot through the fall and winter. The median price for a home sold in November was $358,000, almost 14 percent higher than a year ago and the number of transactions reached a seven-year high for a November. Keep in mind, that happened during a fall month, when homebuying typically cools down. Homebuying demand remains strong especially among the investor crowd. That, coupled with limited inventory, has pushed prices up. This is not-so-great news for potential buyers. And possibly good news for potential sellers.
Written by
Lily Leung
Lily Leung
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