The housing market may stabilize, but some economists believe that real estate will never again be the investment it once was.
Stan Humphries, chief economist for Zillow.com, predicts that in the future housing values will only keep up with inflation. “All those theories advanced during the boom about why housing is special — that more people are choosing to spend more on housing, that more people are moving to the coasts, that we were running out of usable land — didn’t hold up.”
Dean Baker, co-director of the Center for Economic and Policy Research, says it will take 20 years for the market to recover the $6 trillion lost since 2005 and values will never catch up.
Bob Walters, chief economist of the online mortgage firm Quicken, is more optimistic. “You have to live somewhere,” he says. “In three or four years, people will resume a normal course, and home values will continue to increase.”
Source: The New York Times, David Streitfeld (08/22/2010)
Thursday, September 2, 2010
Thursday, August 12, 2010
20-Year Mortgages Cut Interest Significantly
Buyers with the ability to stretch a little might consider a 20-year fixed-rate mortgage instead of the traditional 30-year, suggests CBS Money Matters’ financial adviser Ray Martin.
Martin points out that a $200,000 mortgage with a 30-year term and an interest rate of 4.75 would have a monthly payment of $1,043 and the total interest over the life of the loan would be $175,600.
The same mortgage with a 20-year term at 4.5 percent would have a monthly payment of $1,265 with total interest over the life of the mortgage of $103,670.
Young home buyers planning to have children will have their 20-year mortgage paid off by the time their kids enter college, a big financial advantage, Martin points out.
Source: CBS, Ray Martin (08/04/2010)
Martin points out that a $200,000 mortgage with a 30-year term and an interest rate of 4.75 would have a monthly payment of $1,043 and the total interest over the life of the loan would be $175,600.
The same mortgage with a 20-year term at 4.5 percent would have a monthly payment of $1,265 with total interest over the life of the mortgage of $103,670.
Young home buyers planning to have children will have their 20-year mortgage paid off by the time their kids enter college, a big financial advantage, Martin points out.
Source: CBS, Ray Martin (08/04/2010)
Wednesday, August 11, 2010
Senate Approves Increase in FHA Fees
The Senate on Wednesday gave the Federal Housing Administration the go-ahead to raise monthly fees that borrowers pay the agency.
The annual fee is expected to raise from the current rate of 0.55 percent to 0.9 percent of the total loan. The bill gives the FHA the authority to raise the annual fee as high as 1.55 percent.
Simultaneously, the agency plans to lower the loan initiation fee that was raised from 1.75 percent to 2.25 percent earlier this year. Officials would like to drop the up-front fee down to 1 percent of the total mortgage amount.
The net effect of lowering the up-front fee and raising the monthly fee would mean that someone who borrowed $170,000 at 5 percent would pay an extra $38 per month. Current mortgage holders won’t be affected.
The fee changes are projected to bring in an extra $3.6 billion per year to help stabilize the agency's finances.
Source: The Associated Press, Alan Zibel (08/05/2010)
The annual fee is expected to raise from the current rate of 0.55 percent to 0.9 percent of the total loan. The bill gives the FHA the authority to raise the annual fee as high as 1.55 percent.
Simultaneously, the agency plans to lower the loan initiation fee that was raised from 1.75 percent to 2.25 percent earlier this year. Officials would like to drop the up-front fee down to 1 percent of the total mortgage amount.
The net effect of lowering the up-front fee and raising the monthly fee would mean that someone who borrowed $170,000 at 5 percent would pay an extra $38 per month. Current mortgage holders won’t be affected.
The fee changes are projected to bring in an extra $3.6 billion per year to help stabilize the agency's finances.
Source: The Associated Press, Alan Zibel (08/05/2010)
Tuesday, August 10, 2010
Fewer Home Owners Are Under Water
Some 21.5 percent of borrowers owed more than their homes were worth in the second quarter of the year. That’s compared with 23.3 percent in the first quarter.
"It is the paramount challenge facing housing markets," said Stan Humphries, Zillow.com's chief economist.
Humphries said that much of the improvement came from homes falling into foreclosure, wiping away negative equity.
Rising home values also improved the situation in 45 of the metropolitan statistical areas.
Source: Reuters News, Julie Haviv (08/09/2010)
"It is the paramount challenge facing housing markets," said Stan Humphries, Zillow.com's chief economist.
Humphries said that much of the improvement came from homes falling into foreclosure, wiping away negative equity.
Rising home values also improved the situation in 45 of the metropolitan statistical areas.
Source: Reuters News, Julie Haviv (08/09/2010)
Monday, July 26, 2010
HUD and VA to Prevent Homeless Vets
To prevent homelessness among veterans, especially those returning from Iraq and Afghanistan, the Department of Housing and Urban Development and the Department of Veterans Affairs will jointly invest $15 million for housing assistance in five communities near military installations.
These installations will each receive $2 million: MacDill Air Force Base in Tampa; Camp Pendleton in San Diego; Fort Hood in Killeen, Texas; Fort Drum in Watertown, N.Y.; and Joint Base Lewis-McChord near Tacoma, Wash. In addition, VA medical centers in the following areas will each receive $1 million: Tampa, San Diego, Dallas, Syracuse, N.Y., and American Lake in Washington.
HUD will provide rental assistance, including security deposits, utility payments, and case management. The VA will offer healthcare.
Source: HUD and VA Offices of Public Affairs (07/22/2010)
These installations will each receive $2 million: MacDill Air Force Base in Tampa; Camp Pendleton in San Diego; Fort Hood in Killeen, Texas; Fort Drum in Watertown, N.Y.; and Joint Base Lewis-McChord near Tacoma, Wash. In addition, VA medical centers in the following areas will each receive $1 million: Tampa, San Diego, Dallas, Syracuse, N.Y., and American Lake in Washington.
HUD will provide rental assistance, including security deposits, utility payments, and case management. The VA will offer healthcare.
Source: HUD and VA Offices of Public Affairs (07/22/2010)
Wednesday, July 7, 2010
Mortgage Applications Decline for 8th Week
Applications for mortgages to purchase property declined again last week, falling eight out of the last nine weeks, according to the Mortgage Bankers Association.
The purchase index decreased 2 percent last week compared with the previous week on an adjusted basis. The unadjusted purchase index declined 2.3 percent and was down 34.7 percent compared to the same week a year ago.
“For the month of June, purchase applications declined almost 15 percent relative to the prior month, and were down more than 30 percent compared to April, the last month in which buyers were eligible for the tax credit,” said Michael Fratantoni, MBA’s vice president of research and economics.
With mortgage rates at record lows, applications to refinance existing mortgages increased 9.2 percent from the previous week.
Mortgage rates were at near-record lows:
· 30-year fixed-rate mortgages increased to 4.68 percent from 4.67 percent;
· 15-year fixed-rate mortgages increased to 4.11 percent from 4.06 percent;
· 1-year ARMs increased to 7.20 percent from 7.05 percent.
Source: Mortgage Bankers Association (07/07/2010)
The purchase index decreased 2 percent last week compared with the previous week on an adjusted basis. The unadjusted purchase index declined 2.3 percent and was down 34.7 percent compared to the same week a year ago.
“For the month of June, purchase applications declined almost 15 percent relative to the prior month, and were down more than 30 percent compared to April, the last month in which buyers were eligible for the tax credit,” said Michael Fratantoni, MBA’s vice president of research and economics.
With mortgage rates at record lows, applications to refinance existing mortgages increased 9.2 percent from the previous week.
Mortgage rates were at near-record lows:
· 30-year fixed-rate mortgages increased to 4.68 percent from 4.67 percent;
· 15-year fixed-rate mortgages increased to 4.11 percent from 4.06 percent;
· 1-year ARMs increased to 7.20 percent from 7.05 percent.
Source: Mortgage Bankers Association (07/07/2010)
Friday, July 2, 2010
Tax Credit Extension Passes; Senate OKs Flood Bill
After a close brush with a deadline that could have impacted tens of thousands of home buyers, the U.S. Congress last night passed an extension of the Home buyer Tax Credit closing deadline.
The extension is included in the Home Buyer Assistance and Improvement Act (H.R. 5623) and will prevent as many as 180,000 home buyers from losing their eligibility for the tax credit through no fault of their own. These households had home purchase contracts pending as of April 30 and had until June 30 to close on their purchases to claim the federal tax credit. Under the legislation that passed last night, these households now have until September 30 to close.
The NATIONAL ASSOCIATION OF REALTORS® supported extension of that closing deadline because buyers are experiencing delays in getting their financing closed. The delays are the result of the large number of transactions that are short sales, which can take a long time to close, and the rush of transactions lenders are processing from buyers submitting contracts before the April 30 contract deadline.
The legislation, which now goes to President Obama for signature, is designed to create a seamless extension of the closing deadline; there will be no gap between June 30 and the date the President signs the bill into law.
NAR worked closely with congressional leaders on both sides of the aisle in supporting lawmakers' passage of the legislation, which the association says will help provide additional stability to real estate markets across the nation.
Separately, the U.S. Senate also last night passed the National Flood Insurance Program Extension Act of 2010 (H.R. 5569), which extends the National Flood Insurance Program until September 30. This will allow home purchases in the 100-year floodplain to move forward. The House passed the bill last week.
When signed into law by the President, the bill, which will apply retroactively, will cover the lapse period from June 1 to the date of enactment of the extension. Without flood insurance, households buying homes in the 100-year floodplain cannot obtain mortgage financing.
Source: NAR
The extension is included in the Home Buyer Assistance and Improvement Act (H.R. 5623) and will prevent as many as 180,000 home buyers from losing their eligibility for the tax credit through no fault of their own. These households had home purchase contracts pending as of April 30 and had until June 30 to close on their purchases to claim the federal tax credit. Under the legislation that passed last night, these households now have until September 30 to close.
The NATIONAL ASSOCIATION OF REALTORS® supported extension of that closing deadline because buyers are experiencing delays in getting their financing closed. The delays are the result of the large number of transactions that are short sales, which can take a long time to close, and the rush of transactions lenders are processing from buyers submitting contracts before the April 30 contract deadline.
The legislation, which now goes to President Obama for signature, is designed to create a seamless extension of the closing deadline; there will be no gap between June 30 and the date the President signs the bill into law.
NAR worked closely with congressional leaders on both sides of the aisle in supporting lawmakers' passage of the legislation, which the association says will help provide additional stability to real estate markets across the nation.
Separately, the U.S. Senate also last night passed the National Flood Insurance Program Extension Act of 2010 (H.R. 5569), which extends the National Flood Insurance Program until September 30. This will allow home purchases in the 100-year floodplain to move forward. The House passed the bill last week.
When signed into law by the President, the bill, which will apply retroactively, will cover the lapse period from June 1 to the date of enactment of the extension. Without flood insurance, households buying homes in the 100-year floodplain cannot obtain mortgage financing.
Source: NAR
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