Rental rates have been on the rise and are projected to continue increasing. With very low interest rates, you should definitely do the math to see whether owning would save you money. If you need help doing the math, feel free to ask me--I do have an MBA so the math isn't beyond me.
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By Nin-Hai Tseng, writer-reporter May 25, 2011: 5:00 AM E
Members of the Rent is Too Damn High Party beware! Residential rental prices are on the rise. Here's who wins in the new non-ownership society.
FORTUNE -- There are still many factors discouraging even the most savvy homebuyers from purchasing a home, but a new class of renters is expected to bring a bright spot to the troubled U.S. real estate market. Prices for rental apartments are expected to rise nationally – by approximately 4.5% in 2011 and up to another 3% in 2012, according to Rent.com.
During the housing boom between 2001 and 2005, prices for rentals fell by nearly 10% as easy credit offered by banks lured many newcomers to homeownership. Since the bust of the housing market, rents have more than made up those declines as more people now question the financial merits of homeownership or simply can't get approved for a mortgage. From 2006 to 2009, rental prices on average increased by more than 15%, according to Moody's Analytics economist Andreas Carbacho-Burgos. Nationwide, the average rent today is $1,360 a month.
Experts predict rents will continue rising.
Christina Aragon, director of strategy and consumer insight of Rent.com, says this is being driven by demographic changes coupled with an improving economy and ongoing foreclosure problems hampering the market for single-family homes. Much of the demand for rentals will likely come from younger people who tend to rent rather than buy. The economic recession pushed many jobless twenty- and early thirty-somethings to crash with friends and parents, but Aragon expects that the improving job market will get them to find their own place. What's more, the number of people aged 25 to 34 is forecast to grow 1.4% per year through 2013, helping drive demand further.
Paying more to the landlord might be bad news for renters, but it could signal that better days are ahead for the overall housing market. Here are a few winners of our burgeoning rental economy.
Builders and developers
Since the bust of the housing market, residential construction has dropped to record lows. But that is poised to change as builders and developers have already begun trying to cash in on higher demand for rental apartments.
Charles Brindell, chairman of the National Association of Home Builders' Multifamily Leadership Board, says he expects apartment construction to pick up to at least 160,000 units this year, mostly in urban areas along the East Coast. This would be significantly higher, given that construction since 2009 has totaled less than 90,000 a year – the lowest in 50 years.
Brindell, also CEO of a Texas-based firm that invests and develops apartment communities, says he's bullish because of the improving job prospects for younger workers. More than 60% of jobs created in 2010 went to workers between 20 to 24-years old – the prime age group for renters. Brindell's Mill Creek Residential Trust is planning to build 3,000 apartment units this year, mostly in the Northeast including the Boston area, Long Island, New York, and Virginia.
However, while a burst of activity in multi-family homes is certainly good news for the construction sector, it is by no means enough to return the homebuilders to their previous level of activity. The NAHB index that tracks builder confidence remains low at 16 -- it was as high as 72 in 2005.
Real estate investment trusts (REITs)
It's not that homeownership is dead, but people are certainly renting more and investors have picked up on the higher demand.
REITs, which invest in commercial properties from office buildings to rental apartments – have outperformed the S&P500 since the financial crisis. In 2010, investments in apartment complexes led gains in the overall REITs market with total returns at 47%. Returns for the overall REITs market was 28%, markedly higher than the S&P500 that saw returns of 15%.
Last month, real estate investment trusts Equity Residential (EQR), headed by real estate mogul Sam Zell, and AvalonBay Communities (AVB) -- both among the nation's biggest apartment owners -- posted higher year-over-year revenue as the companies raised rents.
For Equity Residential, average rent rose 3.6% to $1,400 and occupancy rose to 95% from 94.6% the previous year on properties the company operated for a year or more. Revenue rose by 4%. And AvalonBay reported that revenues jumped 3.7% and average monthly rental rates ticked up slightly quarter over quarter from $1,873 to $1,879.
As of Monday, total returns for REITs were 8.73% (with about seven months to go), outperforming the Russell 2000, NASDAQ and S&P 500. Investments in apartment complexes continued contributing much of the gains.
Overall U.S. housing market
Given that many homeowners are still trying to clean up their messy finances, it might be hard to see how higher rents could benefit the overall U.S. housing market. In theory, at least, renting could become so expensive that it costs less to buy a house and make monthly mortgage payments.
In fact, that's happening already, even if it hasn't yet translated to a return to homeownership. In Moody Analytics' latest list of rent ratios for 54 U.S. metropolitan areas, 29 cities fell into the "better to buy" category. With many experts predicting that home prices have further to fall this year and with higher expectations for rentals, more cities could end up on the buy side of the buy-versus-rent calculator.
But much of that will likely depend on huge hurdles weighing on the housing market – namely, record foreclosure rates, high unemployment and tighter lending standards for new mortgages. Areas that continue to experience high foreclosure rates and widespread unemployment, such as Florida and Arizona, might find it more affordable to buy than rent. Yet renting will likely be king in more urban areas with more employment opportunities, such as New York and Seattle.
View original article: http://finance.fortune.cnn.com/2011/05/25/winners-of-the-rental-economy/?iid=HP_Highlight
Showing posts with label News. Show all posts
Showing posts with label News. Show all posts
Wednesday, May 25, 2011
Thursday, January 13, 2011
Savannah home sales jump in December
Some good news on the local front. Savannah has shown decreasing inventory for 9 straight months, which will help prices rebound. We’re also seeing out-of-state buyers, which has been an important part of our market in Historic Downtown Savannah.
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Realtors cautiously optimistic heading into New Year
Posted: January 12, 2011 - 3:18am | Updated: January 12, 2011 - 5:34pm
By Adam Van Brimmer
Finally, a glimmer of what a local housing recovery looks like.
December saw an unexpected uptick in home-buying activity, Savannah Multi-List Corporation statistics show. The 305 sales in the Savannah area, which includes Chatham, Bryan and Effingham counties, marked a six-month high.
Another 466 homes were under contract as of Tuesday, promising a rarity: A strong January.
The December sales numbers paralleled those of December 2009 when the extension and expansion of the federal homebuyer tax credit drove sales. That credit expired in April 2010.
"There are going to continue to be some problems, but you are starting to see the turn now," said Monica Spillane, president of the Savannah Area Board of Realtors. "I'm encouraged by that."
Even more encouraging than the sales and pending sales of single-family homes, townhouses and condos locally was the continued contraction of supply.
The inventory of homes for sale fell to pre-recession levels and is down 14 percent from mid-2010 levels. Pushing the inventory down was a drop in new listings, which fell for the ninth consecutive month.
Realtor optimism is tempered by concerns over what those in the industry call "shadow inventory." Shadow inventory includes homes owners who would like to sell but haven't listed, because of market conditions as well as those in foreclosure or that have been repossessed but not yet listed.
Market improvement could prompt would-be sellers to put a "for sale" sign in the yard. Foreclosures, meanwhile, have yet to abate in the Savannah area.
"Unfortunately, foreclosures are not over," Spillane said. "But in terms of shadow inventory, I don't think there are many of those out there, here, as in other parts of the country."
Active buyers
Credit the U.S. Army and real estate investors for driving December's sales volume.
More than 20 percent of the homes bought in the month were financed by Veteran's Administration loans. Another 23 percent were bought with cash, traditionally the purview of house-flippers and landlords.
The jump in military sales is not surprising considering the Army's Third Infantry Division, based out of Fort Stewart, returned from a year-long deployment to Afghanistan in late 2010.
Plus, those soldiers remain eligible for the federal homebuyer tax credit, worth $8,000 to first-time buyers and $6,500 to those who have owned another home within the last three years.
Given the military influence, December sales were predictably strong in West Chatham and Southside Savannah - areas in close proximity to Interstate 95 and the base. The Pooler/Berwick/U.S. 17 South neighborhoods saw their second best sales month of 2010.
Close to half - 42 percent - of the VA purchases were on new construction homes, good news for home builders.
As for investor activity, the end of the year typically sees an uptick in purchases because of tax reasons. Interestingly, investor activity in December was not as focused on distressed properties as in previous months.
Optimism on the islands
The coastal regions appeared to be building momentum going into the New Year.
The Islands/Beach area of multi-list statistics - Tybee, Wilmington, Whitemarsh, Talahi, Oatland and Dutch islands as well as Isle of Hope and Isle of Armstrong - saw the most sales since April at the highest average price since June.
Prices climbed despite close to 40 percent of those sales being on foreclosure and repossessed homes.
The activity on distressed properties bodes well for the spring, Realtors said, because it takes those homes out of the inventory and will firm up prices.
"The islands held their own, relatively, for most of (2010)," said Re/Max Savannah's Cheryl Klein. "Where sellers have been taking a beating is on price, and it's encouraging to them and for the market to see that pop up."
Skidaway Island real estate agents share that optimism. The island had 12 sales in December, the most since August.
But it's the renewed interest from out-of-town buyers, particularly retirees from the Northeast and New England, that has Realtors encouraged.
Bill Houghton, president of The Landings Company, credited a number of factors, such as impending bad weather in the Northeast, pent-up demand, the November election results, continued low interest rates and depressed values, for the uptick in activity.
"New England, New York, Washington, D.C., their prices and sales have increased," said Bob Diamond of Skidaway Island Properties. "Once they sell their house up there or even just get it under contract, they start to look down here. As activity increases up north, so will ours."
View original article: http://savannahnow.com/news/2011-01-12/local-home-sales-jump-december
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Realtors cautiously optimistic heading into New Year
Posted: January 12, 2011 - 3:18am | Updated: January 12, 2011 - 5:34pm
By Adam Van Brimmer
Finally, a glimmer of what a local housing recovery looks like.
December saw an unexpected uptick in home-buying activity, Savannah Multi-List Corporation statistics show. The 305 sales in the Savannah area, which includes Chatham, Bryan and Effingham counties, marked a six-month high.
Another 466 homes were under contract as of Tuesday, promising a rarity: A strong January.
The December sales numbers paralleled those of December 2009 when the extension and expansion of the federal homebuyer tax credit drove sales. That credit expired in April 2010.
"There are going to continue to be some problems, but you are starting to see the turn now," said Monica Spillane, president of the Savannah Area Board of Realtors. "I'm encouraged by that."
Even more encouraging than the sales and pending sales of single-family homes, townhouses and condos locally was the continued contraction of supply.
The inventory of homes for sale fell to pre-recession levels and is down 14 percent from mid-2010 levels. Pushing the inventory down was a drop in new listings, which fell for the ninth consecutive month.
Realtor optimism is tempered by concerns over what those in the industry call "shadow inventory." Shadow inventory includes homes owners who would like to sell but haven't listed, because of market conditions as well as those in foreclosure or that have been repossessed but not yet listed.
Market improvement could prompt would-be sellers to put a "for sale" sign in the yard. Foreclosures, meanwhile, have yet to abate in the Savannah area.
"Unfortunately, foreclosures are not over," Spillane said. "But in terms of shadow inventory, I don't think there are many of those out there, here, as in other parts of the country."
Active buyers
Credit the U.S. Army and real estate investors for driving December's sales volume.
More than 20 percent of the homes bought in the month were financed by Veteran's Administration loans. Another 23 percent were bought with cash, traditionally the purview of house-flippers and landlords.
The jump in military sales is not surprising considering the Army's Third Infantry Division, based out of Fort Stewart, returned from a year-long deployment to Afghanistan in late 2010.
Plus, those soldiers remain eligible for the federal homebuyer tax credit, worth $8,000 to first-time buyers and $6,500 to those who have owned another home within the last three years.
Given the military influence, December sales were predictably strong in West Chatham and Southside Savannah - areas in close proximity to Interstate 95 and the base. The Pooler/Berwick/U.S. 17 South neighborhoods saw their second best sales month of 2010.
Close to half - 42 percent - of the VA purchases were on new construction homes, good news for home builders.
As for investor activity, the end of the year typically sees an uptick in purchases because of tax reasons. Interestingly, investor activity in December was not as focused on distressed properties as in previous months.
Optimism on the islands
The coastal regions appeared to be building momentum going into the New Year.
The Islands/Beach area of multi-list statistics - Tybee, Wilmington, Whitemarsh, Talahi, Oatland and Dutch islands as well as Isle of Hope and Isle of Armstrong - saw the most sales since April at the highest average price since June.
Prices climbed despite close to 40 percent of those sales being on foreclosure and repossessed homes.
The activity on distressed properties bodes well for the spring, Realtors said, because it takes those homes out of the inventory and will firm up prices.
"The islands held their own, relatively, for most of (2010)," said Re/Max Savannah's Cheryl Klein. "Where sellers have been taking a beating is on price, and it's encouraging to them and for the market to see that pop up."
Skidaway Island real estate agents share that optimism. The island had 12 sales in December, the most since August.
But it's the renewed interest from out-of-town buyers, particularly retirees from the Northeast and New England, that has Realtors encouraged.
Bill Houghton, president of The Landings Company, credited a number of factors, such as impending bad weather in the Northeast, pent-up demand, the November election results, continued low interest rates and depressed values, for the uptick in activity.
"New England, New York, Washington, D.C., their prices and sales have increased," said Bob Diamond of Skidaway Island Properties. "Once they sell their house up there or even just get it under contract, they start to look down here. As activity increases up north, so will ours."
View original article: http://savannahnow.com/news/2011-01-12/local-home-sales-jump-december
Friday, December 17, 2010
Average 30-Year Fixed Mortgage Rises to 4.83 Percent
Published: Thursday, 16 Dec 2010 | 10:46 AM ET
By: AP
Rates on fixed mortgages surged for the fifth straight week, reflecting higher yields on long-term Treasurys.
Freddie Mac said Thursday the average rate on a 30-year fixed mortgage rose to 4.83 percent from 4.61 percent in the previous week. Last month, the rate hit a 40-year low of 4.17 percent.
The average rate on the 15-year loan also increased to 4.17 percent from 3.96 percent. It reached 3.57 percent in November, the lowest level on records dating back to 1991.
Rates are on the rise after falling for seven months.
Investors are shifting money out of Treasurys and into stocks. That's largely on the expectation that the tax-cut plan that Congress is set to approve will spur growth and potentially higher inflation.
Yields tend to rise on fears of higher inflation. Mortgage rates track the yields on the 10-year Treasury note.
The sell-off in the 10-year Treasury note is complicating the Federal Reserve's efforts to lower interest rates by buying up $600 billion in Treasurys. Some traders had hoped the central bank would boost the scale of its purchases to keep interest rates down.
The increase in rates already is chilling the housing market. Refinance activity fell last week for the fifth straight week, while the number of people applying for a mortgage to purchase a home dropped 5 percent from the previous week, the Mortgage Bankers Association said.
To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.
The average rate on a five-year adjustable-rate mortgage rose to 3.77 percent from 3.60 percent. The five-year hit 3.25 percent last month, the lowest rate on records dating back to January 2005.
The average rate on one-year adjustable-rate home loans edged up to 3.35 percent from 3.27 percent.
The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for all mortgages in Freddie Mac's survey was 0.7 point.
View original article: http://www.cnbc.com/id/40699814
Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.
By: AP
Rates on fixed mortgages surged for the fifth straight week, reflecting higher yields on long-term Treasurys.
Freddie Mac said Thursday the average rate on a 30-year fixed mortgage rose to 4.83 percent from 4.61 percent in the previous week. Last month, the rate hit a 40-year low of 4.17 percent.
The average rate on the 15-year loan also increased to 4.17 percent from 3.96 percent. It reached 3.57 percent in November, the lowest level on records dating back to 1991.
Rates are on the rise after falling for seven months.
Investors are shifting money out of Treasurys and into stocks. That's largely on the expectation that the tax-cut plan that Congress is set to approve will spur growth and potentially higher inflation.
Yields tend to rise on fears of higher inflation. Mortgage rates track the yields on the 10-year Treasury note.
The sell-off in the 10-year Treasury note is complicating the Federal Reserve's efforts to lower interest rates by buying up $600 billion in Treasurys. Some traders had hoped the central bank would boost the scale of its purchases to keep interest rates down.
The increase in rates already is chilling the housing market. Refinance activity fell last week for the fifth straight week, while the number of people applying for a mortgage to purchase a home dropped 5 percent from the previous week, the Mortgage Bankers Association said.
To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.
The average rate on a five-year adjustable-rate mortgage rose to 3.77 percent from 3.60 percent. The five-year hit 3.25 percent last month, the lowest rate on records dating back to January 2005.
The average rate on one-year adjustable-rate home loans edged up to 3.35 percent from 3.27 percent.
The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for all mortgages in Freddie Mac's survey was 0.7 point.
View original article: http://www.cnbc.com/id/40699814
Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.
Housing Starts Rise in November, But Permits Drop
Published: Thursday, 16 Dec 2010 | 8:36 AM ET
By: Reuters
U.S. housing starts rose slightly more than expected in November, but a surprise drop in permits for future home construction to a 1-1/2 year low indicated continued weakness in the housing market even as the economic recovery gains traction.
The Commerce Department said on Thursday housing starts rose 3.9 percent to a seasonally adjusted annual rate of 555,000 units. October's starts were revised up to a 534,000-unit pace from the previously reported 1-1/2 year low rate of 519,000 units.
Analysts polled by Reuters had expected housing starts to rise to a 550,000-unit rate.
Despite last month's pick-up in residential construction, housing remains weak as a 9.8 percent unemployment rate weighs on demand and homeowners' ability to hang on to their properties, lagging an acceleration in broader economic activity.
A survey on Wednesday showed sentiment among home builders was mired at record low levels this month, suggesting residential construction will again be a drag on gross domestic product growth in the fourth quarter.
New building permits fell 4.0 percent to a 530,000-unit pace last month, the lowest since April 2009, after a 0.9 percent increase in October. Permits were dragged down by a 23 percent plunge in the volatile multi-family segment. Permits for single-family homes rose 3 percent last month.
Analysts had expected overall building permits to rise to a 560,000-unit pace in November.
Groundbreaking last month was lifted by a 6.9 percent rise in single-family home construction. Starts for the multi-family segment, however, fell 9.1 percent. New home completions tumbled 14.1 percent to a record low 513,000 units in November.
View original article: http://www.cnbc.com/id/40696959
Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.
By: Reuters
U.S. housing starts rose slightly more than expected in November, but a surprise drop in permits for future home construction to a 1-1/2 year low indicated continued weakness in the housing market even as the economic recovery gains traction.
The Commerce Department said on Thursday housing starts rose 3.9 percent to a seasonally adjusted annual rate of 555,000 units. October's starts were revised up to a 534,000-unit pace from the previously reported 1-1/2 year low rate of 519,000 units.
Analysts polled by Reuters had expected housing starts to rise to a 550,000-unit rate.
Despite last month's pick-up in residential construction, housing remains weak as a 9.8 percent unemployment rate weighs on demand and homeowners' ability to hang on to their properties, lagging an acceleration in broader economic activity.
A survey on Wednesday showed sentiment among home builders was mired at record low levels this month, suggesting residential construction will again be a drag on gross domestic product growth in the fourth quarter.
New building permits fell 4.0 percent to a 530,000-unit pace last month, the lowest since April 2009, after a 0.9 percent increase in October. Permits were dragged down by a 23 percent plunge in the volatile multi-family segment. Permits for single-family homes rose 3 percent last month.
Analysts had expected overall building permits to rise to a 560,000-unit pace in November.
Groundbreaking last month was lifted by a 6.9 percent rise in single-family home construction. Starts for the multi-family segment, however, fell 9.1 percent. New home completions tumbled 14.1 percent to a record low 513,000 units in November.
View original article: http://www.cnbc.com/id/40696959
Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.
Friday, November 19, 2010
October Housing Starts Down
Housing starts are down. What does this actually mean? The seasonably adjusted number of new construction homes based on permit applications has decreased. Clearly the two new home construction permits my investors and I are applying for next week were not taken into consideration. So a recovery might be on its way. Seriously, though, all the numbers are extremely difficult to use for personal purposes. We're talking about national numbers, and we know that all markets are different, and if there's one thing anyone following this blog should have learned in the past six months, it's that no one really seems to know what's happening. You can sit on the sideline, read your data, wonder where prices are going, wonder where interest rates are going, wonder how many permits were pulled, or you can find a house that makes sense for you now, lock in a historically low interest rate, and stop hiding under the covers. And remember, a rise in interest rates from 4.25% to 5.25% will more than negate any monthly savings you might have in your mortgage payment if you wait for prices to drop 10%. If prices don't drop and interest rates go up, which most observers think they must, you'll be kicking yourself for not locking in at a ridiculously low rate now. And now on to those inscrutable statistics.
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RISMEDIA, November 18, 2010—Nationwide housing starts declined 11.7 percent to a seasonally adjusted annual rate of 519,000 units in October, according to figures released by the U.S. Commerce Department. The decline was primarily registered in the more volatile multifamily sector, where starts retreated 43.5 percent to an 83,000-unit rate, while single-family starts posted a more modest 1.1 percent decline to 436,000 units.
"Home builders continue to be very cautious about starting new projects at this time," said Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich. "That said, in markets where consumer demand for new homes is reviving, builders are finding it almost impossible to obtain construction financing, and this frustrating situation is producing an unnecessary drag on both new home production and economic growth."
"October single-family starts and permitting activity remained essentially in line with the third quarter's trend," noted NAHB Chief Economist David Crowe. "What this tells us is that the market is running at a steady, but slow, rate following the downturn that took place upon expiration of the home buyer tax credit program and the economic slowdown this summer. Today, builders are just starting to report some improvement in buyer demand, which should gradually translate into more sales activity, and more starts, as the economy strengthens. The great concern is that this positive momentum will be stifled due to builders' inability to obtain financing for new construction at a time when inventories of completed new homes are very thin."
A report to be released by NAHB later today will highlight the extent to which much of the U.S. single-family housing market is underbuilt following the severe decline in production that has taken place since 2006. This finding underscores the concern that demand for new homes could quickly overwhelm supplies as economic conditions improve.
Starts activity was mixed across the nation in October, with gains of 12.9 percent and 1 percent reported in the Northeast and Midwest, respectively, and declines of 13.4 percent and 30.5 percent reported in the South and West, respectively.
Permit issuance, which can be an indicator of future building activity, showed virtually no change in October, with a 0.5 percent gain to a seasonally adjusted annual rate of 550,000 units. This lack of movement was reflected in both the single-family and multifamily sectors, with a 1.0 percent gain recorded in the former and a 0.7 percent decline registered in the latter.
Regionally, permit activity showed no change in the Northeast, a 14.3 percent gain in the Midwest, a 3.4 percent decline in the South, and a 0.9 percent decline in the West.
View original article: http://rismedia.com/lowes/8355/11190
Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.
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RISMEDIA, November 18, 2010—Nationwide housing starts declined 11.7 percent to a seasonally adjusted annual rate of 519,000 units in October, according to figures released by the U.S. Commerce Department. The decline was primarily registered in the more volatile multifamily sector, where starts retreated 43.5 percent to an 83,000-unit rate, while single-family starts posted a more modest 1.1 percent decline to 436,000 units.
"Home builders continue to be very cautious about starting new projects at this time," said Bob Jones, chairman of the National Association of Home Builders (NAHB) and a home builder from Bloomfield Hills, Mich. "That said, in markets where consumer demand for new homes is reviving, builders are finding it almost impossible to obtain construction financing, and this frustrating situation is producing an unnecessary drag on both new home production and economic growth."
"October single-family starts and permitting activity remained essentially in line with the third quarter's trend," noted NAHB Chief Economist David Crowe. "What this tells us is that the market is running at a steady, but slow, rate following the downturn that took place upon expiration of the home buyer tax credit program and the economic slowdown this summer. Today, builders are just starting to report some improvement in buyer demand, which should gradually translate into more sales activity, and more starts, as the economy strengthens. The great concern is that this positive momentum will be stifled due to builders' inability to obtain financing for new construction at a time when inventories of completed new homes are very thin."
A report to be released by NAHB later today will highlight the extent to which much of the U.S. single-family housing market is underbuilt following the severe decline in production that has taken place since 2006. This finding underscores the concern that demand for new homes could quickly overwhelm supplies as economic conditions improve.
Starts activity was mixed across the nation in October, with gains of 12.9 percent and 1 percent reported in the Northeast and Midwest, respectively, and declines of 13.4 percent and 30.5 percent reported in the South and West, respectively.
Permit issuance, which can be an indicator of future building activity, showed virtually no change in October, with a 0.5 percent gain to a seasonally adjusted annual rate of 550,000 units. This lack of movement was reflected in both the single-family and multifamily sectors, with a 1.0 percent gain recorded in the former and a 0.7 percent decline registered in the latter.
Regionally, permit activity showed no change in the Northeast, a 14.3 percent gain in the Midwest, a 3.4 percent decline in the South, and a 0.9 percent decline in the West.
View original article: http://rismedia.com/lowes/8355/11190
Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.
Wednesday, November 17, 2010
Foreclosure mess prompts call for stress tests
As everyone knows, I’ve given up making predictions on the near-term future of real estate, and am continuing to make purchases that make sense for my own purposes, as well as advising clients to do the same. My investors and I have three projects in the works—the next two skinny lot Victorian District new construction projects I’ve been discussing, and a small cottage in the Landmark Historic District that we just put under contract and plan to renovate. More on that later. Anyway, we’ve been successful, but maybe news like the following will ultimately make us look like idiots. Or, maybe we’ll continuing being successful while others sit on the sidelines.
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By Ben Rooney, staff reporter
November 16, 2010: 8:20 AM ET
NEW YORK (CNNMoney.com) -- A Congressional watchdog group said Tuesday that U.S. banks should undergo stress tests to determine whether or not they have enough money to absorb losses that could stem from investigations into their foreclosure processes.
The Congressional Oversight Panel, created by Congress in 2008 to review the Treasury Department's response to the financial crisis, issued a 125-page report detailing recent allegations that banks and loan servicers filed thousands of inaccurate documents in foreclosure cases across the country.
While the report acknowledged that the scope and the consequences of controversy remain unknown, the panel warned that the financial system could be at risk if the allegations of "robo-signing" are proven to be true.
"If documentation problems prove to be pervasive and, more importantly, throw into doubt the ownership of not only foreclosed properties but also pooled mortgages, the consequences could be severe," the report said.
The worry is that banks will be forced to buy back mortgages that had been bundled and sold in the $7.6 trillion market for Residential Mortgage Backed Securities, or RMBS. That could result in severe losses for the banks and destabilize the still-fragile financial system, according to the report.
Bank of America has already come under fire from some big institutional investors, including the Pacific Investment Management Company and the Federal Reserve Bank of New York, which have accused the bank of mishandling $47 billion in home loans.
In addition, attorneys general from all 50 states have launched investigations into banks' foreclosure practices.
Still, the report noted that concerns about robo-signing could be overblown, and the panel's chairman told reporters Monday that he doesn't yet know the full impact of the problem.
"It could turn out to be nothing, or it could turn out to be a big deal," said Senator Ted Kaufman, D-Del. "We're not at the stage yet were we have all the info we need to determine how bad it's going to be," he added.
To assess banks' vulnerability, the panel called on regulators to subject banks to stress tests to gauge whether their financial health is sound enough to withstand losses that could result from the controversy under a worst-case scenario.
The Federal Reserve and the Treasury Department conducted stress tests on banks in 2009 amid the financial crisis. But those tests offer "limited reassurance that major banks could survive further shocks in the months and years to come," the report said.
The panel also took issue with statements from the Treasury Department suggesting that the robo-signing problem does not currently pose a threat to the financial system, saying such assertions "appear premature."
In response, a Treasury official said in a statement that the agency is working closely with 11 other federal regulators to investigate the issue, but "they have not found evidence to date of a systemic threat to the broader financial system."
"We strongly believe that the reported behavior within the mortgage servicer industry is simply unacceptable, and servicers who have failed to follow the law must be held accountable," said Treasury spokesman Mark Paustenbach.
The report also raised concerns that the controversy could undermine the Treasury's main foreclosure prevention program, the Home Affordable Modification Program, or HAMP. Panel members are concerned that some servicers dealing with Treasury may have no legal right to initiate foreclosures, which may call into question their ability to grant modifications or to demand payments from homeowners.
However, the Treasury noted that HAMP is intended to help eligible homeowners before they enter the foreclosure process.
View original article: http://money.cnn.com/2010/11/16/real_estate/congressional_oversight_panel_bank_foreclosures/index.htm
Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.
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By Ben Rooney, staff reporter
November 16, 2010: 8:20 AM ET
NEW YORK (CNNMoney.com) -- A Congressional watchdog group said Tuesday that U.S. banks should undergo stress tests to determine whether or not they have enough money to absorb losses that could stem from investigations into their foreclosure processes.
The Congressional Oversight Panel, created by Congress in 2008 to review the Treasury Department's response to the financial crisis, issued a 125-page report detailing recent allegations that banks and loan servicers filed thousands of inaccurate documents in foreclosure cases across the country.
While the report acknowledged that the scope and the consequences of controversy remain unknown, the panel warned that the financial system could be at risk if the allegations of "robo-signing" are proven to be true.
"If documentation problems prove to be pervasive and, more importantly, throw into doubt the ownership of not only foreclosed properties but also pooled mortgages, the consequences could be severe," the report said.
The worry is that banks will be forced to buy back mortgages that had been bundled and sold in the $7.6 trillion market for Residential Mortgage Backed Securities, or RMBS. That could result in severe losses for the banks and destabilize the still-fragile financial system, according to the report.
Bank of America has already come under fire from some big institutional investors, including the Pacific Investment Management Company and the Federal Reserve Bank of New York, which have accused the bank of mishandling $47 billion in home loans.
In addition, attorneys general from all 50 states have launched investigations into banks' foreclosure practices.
Still, the report noted that concerns about robo-signing could be overblown, and the panel's chairman told reporters Monday that he doesn't yet know the full impact of the problem.
"It could turn out to be nothing, or it could turn out to be a big deal," said Senator Ted Kaufman, D-Del. "We're not at the stage yet were we have all the info we need to determine how bad it's going to be," he added.
To assess banks' vulnerability, the panel called on regulators to subject banks to stress tests to gauge whether their financial health is sound enough to withstand losses that could result from the controversy under a worst-case scenario.
The Federal Reserve and the Treasury Department conducted stress tests on banks in 2009 amid the financial crisis. But those tests offer "limited reassurance that major banks could survive further shocks in the months and years to come," the report said.
The panel also took issue with statements from the Treasury Department suggesting that the robo-signing problem does not currently pose a threat to the financial system, saying such assertions "appear premature."
In response, a Treasury official said in a statement that the agency is working closely with 11 other federal regulators to investigate the issue, but "they have not found evidence to date of a systemic threat to the broader financial system."
"We strongly believe that the reported behavior within the mortgage servicer industry is simply unacceptable, and servicers who have failed to follow the law must be held accountable," said Treasury spokesman Mark Paustenbach.
The report also raised concerns that the controversy could undermine the Treasury's main foreclosure prevention program, the Home Affordable Modification Program, or HAMP. Panel members are concerned that some servicers dealing with Treasury may have no legal right to initiate foreclosures, which may call into question their ability to grant modifications or to demand payments from homeowners.
However, the Treasury noted that HAMP is intended to help eligible homeowners before they enter the foreclosure process.
View original article: http://money.cnn.com/2010/11/16/real_estate/congressional_oversight_panel_bank_foreclosures/index.htm
Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.
Wednesday, June 30, 2010
Nothing like waiting for the last minute
Think about this for a moment, and then think how idiotic it is. Everyone--buyers, sellers, agents, attorneys and especially lenders--to get deals closed before June 30th, so buyers can take advantage of the first-time buyer $8000 tax credit. Because of the overload, Congress has been considering extending the closing date deadline. So when do they finally vote and approve the extension? Yesterday, a day before everyone needs to close. Your elected representatives, ladies and gentlemen.
The House of Representatives voted on Tuesday to extend by three months the closing deadline for the home buyer tax credit, setting the stage for a possible last-minute reprieve with Wednesday’s deadline looming.
The extension of the tax credit worth up to $8,000 isn’t a “sure thing” yet. The Senate still needs to pass the House measure, and President Obama would have to sign it into law.
The Senate had approved a similar provision earlier this month, but it was included in a larger tax package that failed to secure enough votes when it was considered last week. On Tuesday, Senate Majority Leader Harry Reid (D., Nev.) said he would again try to bring the extension up for a vote, along with other measures, including retroactively reinstating federal unemployment insurance benefits.
In recent weeks, lenders and real-estate companies have warned of bottlenecks that could lead thousands of potential buyers to miss out on the credit that they thought they were getting.
Congress first created a tax credit for homeowners in 2008. It was extended and expanded twice during 2009. The most recent extension said that house purchase contracts would have to be signed by April 30, and home buyers would have until June 30 to close on those sales. The House proposal would give buyers who met April’s contract deadline until Sept. 30 to finalize those purchases. The credit wouldn’t be available to buyers who weren’t under contract before April 30, though the change has raised concerns that some tax-cheats might submit bogus claims.
View original article here: http://blogs.wsj.com/developments/2010/06/29/will-congress-extend-the-tax-credit-closing-deadline/
Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.
Wednesday, May 26, 2010
US New Home Sales at 2-Year High in April
Good news for sellers--there is decreasing inventory on the market, so that should slow price decreases. Buyers--you have historically low interest rates and the lowest prices since December 2003. If prices are stabilizing, there are opportunities to lock into low prices and low rates. I'll repeat my mantra for buyers--if you like the house, and the payment makes sense, this is a good time to get back into the market.
Sales of newly built U.S. single-family homes rose faster than expected in April to their highest level in nearly two years, government data showed on Wednesday, as buyers signed contracts to benefit from a popular government tax credit.
The Commerce Department said sales jumped 14.8 percent to a 504,000 unit annual rate, the highest since May 2008, from an upwardly revised 439,000 units in March. It was the second straight month that new home sales rose.
Sales of newly built U.S. single-family homes rose faster than expected in April to their highest level in nearly two years, government data showed on Wednesday, as buyers signed contracts to benefit from a popular government tax credit.
The Commerce Department said sales jumped 14.8 percent to a 504,000 unit annual rate, the highest since May 2008, from an upwardly revised 439,000 units in March. It was the second straight month that new home sales rose.
Analysts polled by Reuters had expected new home sales to increase to a 430,000 unit annual pace from March's previously reported 411,000 units.
Buyers had to sign contracts by April 30 and close on the home by the end of June to qualify for the federal tax credit.
New home sales are measured at contract signing and analysts believe buying activity will temporarily ebb in May.
However, they expect sales to pick up toward year-end as the economic and labor market recovery gain more vigor.
Data on Monday also showed the tax credit spurred sales of previously owned homes, which are recorded at contract closing, to a five-month high in April. Existing home sales are expected to rise through June when the tax credit ends.
Despite the jump in sales, the median sale price for a new home dropped a record 9.7 percent from March to $198,400, the lowest since December 2003, the Commerce Department said. In the 12 months to April, the median sale price declined 9.5 percent.
The number of new homes on the market fell a record 7 percent to 211,000 units in April, the lowest since October 1968. Last month's sales pace left the supply of homes available for sale at 5.0 months' worth, the lowest since December 2005, from 6.2 months 'worth in March.
Published by: Reuters. Original article here: http://www.cnbc.com/id/37354168
Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.
Friday, May 21, 2010
Mortgage Rates at All Time Lows
It's interesting that you don't really hear this, but mortgage interest rates are at all time lows right now. Let me repeat that--all time lows. You would think that would be a big story. Right now, my mortgage partner, Michael Caputo from Bank of America, is quoting 4.75% 30-year fixed mortgages and 4.5% 30-year fixed mortgages for FHA loans. FHA requires on 3.5% down, so think about that for a moment: 3.5% down, 30-year fixed loan, all time low interest rate. That should be attractive to most people. And by the way, you can do a 5-year loan at 3.5%. Rates are just absurdly low.
The full article is at Bankrate.com. Click here.
Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.
The full article is at Bankrate.com. Click here.
Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.
Thursday, May 20, 2010
What's It All Mean?
From Reuters News Service this morning--the headline would suggest things are good, right? But look at all the contradictions. My advice--if you can afford the house, you're not planning on moving in a year or two, and it's a viable rental alternative, then it makes sense to buy. Keep it simple.
Report-U.S. homeowner confidence rose in 1st qtr -Zillow
(Reuters) - U.S. homeowners grew more confident about the value of their homes in the first quarter, but the optimism was at odds with actual declines in values, real estate website Zillow.com said on Thursday. The overconfidence could portend an onslaught of new supply of homes for sale that would threaten prices. Nationally, 50 percent of homeowners believe their home's value declined in the past year, according to the Zillow Q1 Homeowner Confidence Survey. But in reality, 65 percent of U.S. homes declined in value, according to Zillow's Q1 Real Estate Market Reports. The numbers put Zillow's Home Value Misperception Index at a reading of 5, up from negative 2 in the fourth quarter. A reading of zero would indicate that homeowner perception is in line with reality, while a negative reading means homeowners are overly cynical. "The specter of shadow inventory continues to loom over the housing market, and will certainly impede an earnest recovery," Stan Humphries, Zillow's chief economist, said in an interview. "Pent-up supply makes up part of this inventory." Zillow said 7 percent of homeowners, which translates to 5.3 million homes, said they would be "very likely" to put their home on the market in the next 12 months if they see signs of an improving housing market. In all of 2009, sales of existing homes totaled 5.2 million. An additional 8 percent said they would be "likely" to put their home on the market, and another 14 percent said they would be "somewhat likely." These homeowners represent "sidelined sellers," a component of "shadow inventory" that if materialized, could significantly delay timing of a market recovery. On a regional basis, homeowners in the South and the Midwest were overly optimistic about the value of their homes, with a Misperception Index of 14 for the South and 4 for the Midwest. Homeowners in the West and Northeast, on the other hand, were overly pessimistic about the value of their homes. The Western region's Misperception Index came in at negative 12, while the Northeast was at negative 2. "It is clear that with 7 percent of homeowners saying they are 'very likely' to put their homes on the market with signs of a turnaround, we are in for a saw-toothed bottom, where inventory will begin to decrease, causing values to stabilize and some of these 5.3 million sidelined sellers to put their homes on the market, causing inventory to grow," Humphries said. This pattern should repeat itself several times during the next three to five years before a real recovery in housing takes hold, he said. (Editing by Leslie Adler) Keywords: USA ECONOMY/HOUSING (Reuters Messaging:julie.haviv.reuters.com@reuters.net; email: julie.haviv@thomsonreuters.com; +1-646 223-6153) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.
To view the original story click here.
Blogger Matthew Allan is a specialist in Savannah Real Estate, focusing on Savannah's downtown historic districts, including the Landmark Historic District, Victorian Historic District, Thomas Square Historic District, Starland Historic District, Baldwin Park, and Ardsley Park Historic District.
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