Bellevue Real Estate, Mortgage, and Economy 4/4/12
Posted on 4 April 2012 | No responses
Here is the Bellevue Real Estate Reportfor April 4, 2012:
Mortgage Rates Make Small Improvements: Interest rates had some success in overcoming technical levels of resistance which made for some optimism for more improvements. More troubling news is coming out of Europe but finance officials say they have identified a ceiling of the amount needed to cure any further sovereign debt issues at $1 trillion Euros. We will see if that plays out to be true…I am skeptical. Supposedly the existing Euro bank facilities have most of those funds available when needed. Mortgage bond markets have been helped by comments from Fed Chairman Bernanke that the US economy, while improving, is still questionable therefore he will continue to keep short term rates low for a considerably long period. As long as he remains concerned about the underlying strength of the recovery, it somewhat removes the bond market fear that rates will increase as the Fed would otherwise consider tightening to end off the inflation fears that will not go away.
Industry News
State of the Economy:
Last Week in Review
To “QE” or not to “QE” – that is the question. And that pun on Shakespeare’s famous quote is likely one that the Fed is weighing carefully these days, as they work to determine the best decisions for our economy. Read on to learn why…and what the impact could be on home loan rates.
Last week, Personal Income and Spending came in close to expectations. While that is good news, one negative within this report that is something to consider is the inflation-adjusted income. As you can see in the chart, Personal Income rose by 0.2%. But after factoring in the 0.3% rise in headline Personal Consumption Expenditures (which includes energy and food), income actually declined by 0.1%. We have seen incomes actually decline on an inflation adjusted basis three of the past four months. The rise in fuel prices is a big culprit for this negative trend and it highlights how high oil prices can be a detriment to the economy.
In addition, the final reading of 4th Quarter Gross Domestic Product (GDP) for 2011 remained at 3.0%, a decent number. However, for 2011 overall, GDP was an anemic 1.625%, well below the number needed for a normal functioning economy.
These factors — combined with recent weak data from the housing sector and a discouraging bounce higher in last week’s Initial Jobless Claims Report — are all reasons that could make the Fed consider doing another round of Bond buying (Quantitative Easing or QE3).
Remember: Home loan rates are tied to Mortgage Bonds…so as Bonds improve, home loan rates improve…and helping the housing market by keeping home loan rates low would be a big reason that the Fed would do another round of QE. Another key factor to keep in mind when it comes to whether Bonds and home loan rates will improve is the safe haven trade. The Eurodrama resurfaced front and center last week with the news from credit rating agency Standard and Poor’s that Greece may have to restructure their debt again. Plus, there was news that Spain’s GDP is already contracting, and the country is grappling with a 23% unemployment rate.
The bottom line is that even though Bonds and home loan rates worsened last week, rates still remain near historic lows and now continues to be a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.
European leaders seeing rising confidence that their region’s crisis is near an end. The euro area’s woes are “almost over” after a slow initial response by policy makers, Italian Prime Minister Mario Monti said in Tokyo today. German Chancellor Angela Merkel said yesterday that the crisis is ebbing and her country’s borrowing costs will probably rise as its status as a haven wanes. Make what we want on the “almost over” quote. Conclusions to Europe’s turmoil have been called prematurely before. In March 2010 the EU Pres. said the worst of Greece’s financial crisis was over and other European nations wouldn’t follow in its path. Since then, Portugal and Ireland needed bailouts.
Fourth Quarter final GDP was +3.0% the same as the preliminary report last month. The data also showed corporate profits climbed at the slowest pace in three years, raising the risk that business investment and hiring will cool. To some degree the declining profits may justify the stance Bernanke and the Fed maintain that the economy isn’t on firm footing. To add more confusion to the economic outlook; the Business Roundtable’s economic outlook index increased to 96.9 in the first quarter from 77.9 in the previous three months, the Washington-based trade group reported. Readings greater than 50 are consistent with economic expansion, and this quarter’s measure is the highest since April-June 2011. 42% said they will increase payrolls, compared with 35% in the prior quarter, while 43% plan to hold their staffing levels steady.
Real Estate Miscellaneous Stats:
January Case/Shiller home price index Shows Continuing Improvement in Trends. U.S. single-family home prices were unchanged in January, suggesting the battered housing market declines may be near the end. The composite index of 20 metropolitan areas was flat in January on a seasonally adjusted basis. But on a non-seasonally adjust basis, prices tumbled 0.8 percent. On a yearly basis, prices fared a little better with January prices down 3.8 percent compared to the year before. This was an improvement from December’s 4.0 percent drop. Home prices in the Seattle area fell .7% for the month but was an improvement over the 1.3% rate in December. These are non-seasonally adjusted numbers. Regional prices for the year are down 4%.The Case/Shiller index measures prices against the levels in January 2000. The current index is at 130.03 which means values are 30% higher than that time. Prices are down about 30% from the peak in 2007. Market experts attribute the value losses to an increase in bank owned and short sale properties. They suggest these falling value numbers are not a reflection of the overall health of the market but of the continue liquidation of distressed inventory. This inventory will not last forever and when it starts to dry up pricing should change significantly. As employment improves and rental rates continue to go up it will help turn the market around. Graph below from the Seattle Times via Standard and Poors.
Loan Program Of The Month. Home Affordable Refinance Program ( HARP ): Fannie Mae and Freddy Mac have rolled out their new revised version of the popular refinance program that allows borrowers who have lost equity to refinance without the requirement of obtaining mortgage insurance. In some cases refinancing is possible with negative equity with no limit on loan to value ratios due to 2nd mortgages. Eligible loans must be Fannie or Freddy loans and have been originated before May of 2009. Expanded appraisal waivers, transfer of existing mortgage insurance policies by non-originating institutions and expanded underwriting guidelines are also a part of the new version of the program. These changes are expected the help a large number home owners.
Bellevue Real Estate Report
Bellevue Real Estate, Mortgage, and Economy 3/19/12
Posted on 19 March 2012 | No responses
Here is the Bellevue Real Estate Report for March 19, 2012:
Mortgage Interest Rates Jump Higher: This week saw interest rates increase the most in eight months. The economy is growing more quickly than was expected a month or two ago and stronger than what the Fed has been thinking. The Fed Open Market Committee statement Tuesday was more optimistic than at the meeting in January. The outlook for the economy has been increasing recently, driving stock indexes to the best levels since the sub-prime economic meltdown in 2008. Whether or not one believes it based on personal observations is not important, it is based on how the stock market is performing recently. Economic data is reflecting improvement at a faster rate than expected six months ago; as the outlook improves the fear of inflation also has increased. Fear of inflation causes interest rates to rise because it erodes the value of the securities that determine interest rates. Core inflation levels remain very low but rates that include energy are higher than Federal Reserve targets. One major factor that had kept US rates low in the last five months was the safety moves in US treasuries on the debt crisis in Europe; that is no longer a force after Greece got its bailout funds and will avoid default this month. Europe’s crisis however if far from over, but for now it is no longer a factor in the bond market that determines interest rates. Another factor that held rates artificially low is the Fed’s constant reaffirmation that it will keep the Federal Funds rate at 0 to 0.25% through the end of 2014; the Fed still is saying it but not many are buying it anymore.
Industry News
State of the Economy:
Last Week in Review
Don’t fight the Fed. The markets certainly felt the truth of that sentiment last week, after the Fed released its Policy Statement from their regularly scheduled meeting of the Federal Open Market Committee. Read on to learn how this and all the news of the week impacted Bonds and home loan rates.
Last week’s Fed Statement was not a glowing endorsement of the economy, but they did admit that things are improving in most areas except housing, which remains “depressed.” While improvement in our economy is good, should this trend continue home loan rates could edge higher. Why? Because Stocks often benefit in strong economic times at the expense of Bonds (including Mortgage Bonds, which home loan rates are based on).
The Fed did acknowledge that inflation could increase in the near-term due to higher energy prices – and higher inflation is never good news for Bonds as inflation hurts the return of a fixed investment. And we did see a hint of this last week as the Consumer Price Index rose a bit in February (though the wholesale-measuring Producer Price Index was tame). If hints of inflation pick up in the weeks or months ahead, this could hurt Bonds and home loan rates.
But there was more salt in the wound from the Fed’s Statement for Bonds and home loan rates. Not only did the Fed fail to mention anything about another round of Bond buying (called Quantitative Easing or QE3), but there was word that out of 19 banks, all but four passed an important stress test. While that’s good news for the financial system and the economy, it did help Stocks at the expense of Bonds.
Another important point to note: Things have been quiet in Europe and this has lifted the safe haven trade, thereby further applying selling pressure on Bonds. That’s not to say that Bonds and home loan rates won’t be seen as a safe haven for trading in the future, as the uncertainty in Europe is far from over. In addition, the issues with Israel and Iran aren’t going to just disappear, and those issues may lead investors back into the safety of Bonds in the near future.
The bottom line is that even though Bonds and home loan rates worsened last week, rates still remain near historic lows and now continues to be a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.
Greece appears to have gotten the necessary participation from bond holders to allow for the bailout and keep the country from defaulting. That said, it never seems it is actually over; after one hurdle another is set up. The country didn’t get the 90% participation they wanted so Greece will force holdouts to step using what is called collective action clauses to force holders of Greek-law bonds into the swap. Attention now shifts to euro-region finance ministers, they must decide whether the swap warrants proceeding with a 130 billion-euro second bailout package designed to prevent a collapse of the Greek economy. Germany is calling the debt swap a success.
Pressure in Europe and US stock markets this were triggered on a report that showed that China’s exports grew at a slower pace than forecast. China’s exports are at lows that go back 12 years. China’s various economic reports recently have been weaker than thought, worrying investors that the global economy is slowing. Europe of course is falling back into recession and China’s explosive growth is slowing a little. The stock market however, opened better and continued to improve this week with the Dow closing convincingly above 13000 for a few days.
Real Estate Miscellaneous Stats:
January pending home sales from National Association of Realtors, expected up 1.5%, as reported up 2.0%, the highest index since April 2010; December sales revised to -1.9% from -3.5% originally reported. Yr/yr pending sales +8.0%. Pending home sales are contracts signed but not closed. Many economists are saying the housing market is showing signs of life as a result of higher sales numbers. Sales have risin 13% over the last 6 months and there is currently a smaller supply of homes than we have had in 7 years. Sales are still below the total number needed for a health market which is considered to be 6 million. A disproportionate number of sales continue to be on homes at risk or in foreclosure at 35% of all sales. Homebuilders are also slightly more positive as markets improve. Analysts continue to warn that a full recovery is years away as the damage done when the bubble burst is deep. One third of realtors surveyed say they have had at least on deal scuttled in the last 4 months due to appraisals and mortgage turn downs. First time buyers are making up a large percentage of total sales.
The volume of purchase applications for home mortgages rose 4.4% in the March 9 week with the four-week average up 2.9%. These gains hint at underlying monthly strength for home sales though the report warns that purchase activity remains subdued and is holding in a narrow range.
Increase In Rent Rates May Spur Buying Activity: With the huge foreclosure numbers and many more people coming in to adult age categories, there has been increased pressure on rental markets. As a result, very large investment funds are snatching up large inventory of single family home across the nation as rentals. Many people who could purchase have waited for the market to bottom but the increase in rental rates and lack of rental inventory appear to be changing their minds. First time home buyer activity is up in many markets. As the job market recovers there will be more pressure added to rental markets. As those who went through foreclosure at the beginning of the crisis get 3 years removed from that event they can again consider using FHA financing to purchase a home. ( Office of Federal Housing Enterprise Oversight)
King County Reduced Inventory is Affecting Prices: While overall county prices are still moving down, a significant reduction in inventory is helping soften the blow and even reversing the slip down in some areas. In Seattle the median home value rose 3% compared with last year. Inventory usually goes up this time of year so many experts see this as a good sign for values. More stories of bidding wars on homes in centrally located areas continue to be heard. Sales also improved to the best levels since 2007 at 1230 units for February with South King County accounting for most of the increase. ( Source: Eric Pyrne @ Seattle Times)
Loan Program Of The Month. Home Affordable Refinance Program ( HARP ): Fannie Mae and Freddy Mac have rolled out their new revised version of the popular refinance program that allows borrowers who have lost equity to refinance without the requirement of obtaining mortgage insurance. In some cases refinancing is possible with negative equity with no limit on loan to value ratios due to 2nd mortgages. Eligible loans must be Fannie or Freddy loans and have been originated before May of 2009. Expanded appraisal waivers, transfer of existing mortgage insurance policies by non-originating institutions and expanded underwriting guidelines are also a part of the new version of the program. These changes are expected the help a large number home owners.
Bellevue Real Estate Report
Bellevue Real Estate, Mortgage, and Economy 3/11/12
Posted on 11 March 2012 | No responses
Here is the Bellevue Real Estate Report for March 11, 2012:
Mortgage Interest Rates Stay Put: Rates have remained bound by, what traders call, limits of support and resistance. Continued concerns over insolvency of European nations and banks has kept rates from moving up while encouraging signs in our economy keep them from moving lower. The trends identified by experts have been sideways but there is growing concern that we may move slightly off the ‘best ever’ rates we have had for a few weeks. According to most market experts, there is little likelihood that interest will increase much as long as the Federal Reserve continues to affirm it will keep the Federal Funds rate at 0.to 0.25% through 2014. On the other side; much lower rates are also appear to be off the table. There has been renewed talk that the Fed would come back and increase buying of treasuries and Mortgage Backed Bonds; with economic reports continuing to support growth in the economy most do not expect the Fed will step up purchases with another Quantitative Easing move. Since the beginning of last November 90% of trading of the 10 year note has been confined to a 20 basis point range between 2.10% and 1.90%, mortgage rates in a range of about 10 basis points; I expect that range will continue.
Survey says? The Jobs Report for February was released…and overall the tone was positive. Here are the details, and what they mean for home loan rates.
On Friday, the Labor Department reported that 227,000 jobs were created in February, with 233,000 private job gains offsetting slower government job losses. Adding to the positive overall tone were upward revisions to both December’s and January’s job growth readings, which added another 61,000 jobs to what was previously reported.
In addition, the Unemployment Rate held steady at 8.3%. One thing that is important to note is that wage growth continues to lag even the tepid amount of inflation we are seeing right now. And negative earnings growth – compounded with consumers still deleveraging accumulated debt – makes it very hard for the economy to grow at a pace robust enough to significantly lower the unemployment rate. Also, a low Hourly Earnings reading also tells us there is no upward pressure to raise wages, which is sometimes a precursor to more hiring. This mix of news made the report an okay one overall…and since Stocks (not Bonds) usually benefit when there is great news, the “okay” tone actually was good for Bonds and home loan rates.
In news overseas, private investors in Greek debt were coaxed into forgiving more that 100 Billion Euros ($132 Billion) of debt in order to provide another bailout to the country. It’s important to understand that this deal does not solve the problems in Greece, but only provides a hefty kick of the can down the road. New problems will emerge once the country has to meet austerity measures along with the “tighter fiscal union” guidelines and metrics set forth by Germany. And as uncertainty overseas continues, our Bonds (including Mortgage Bonds, which home loan rates are tied to) could continue to benefit from safe haven trading.
The bottom line is that now continues to be a great time to purchase or refinance a home, as home loan rates remain near historic lows. Let me know if I can answer any questions at all for you or your clients.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.
As discussed above, when it comes to February’s Jobs Report, the headline number and some of the sub-components of the Jobs Report were positive. However, overall the report is being viewed as an okay read and one of more modest improvement. I’ll be keeping a close eye on this week’s economic reports, and what they might mean for home loan rates.
Greece appears to have gotten the necessary participation from bond holders to allow for the bailout and keep the country from defaulting. That said, it never seems it is actually over; after one hurdle another is set up. The country didn’t get the 90% participation they wanted so Greece will force holdouts to step using what is called collective action clauses to force holders of Greek-law bonds into the swap. Attention now shifts to euro-region finance ministers, they must decide whether the swap warrants proceeding with a 130 billion-euro second bailout package designed to prevent a collapse of the Greek economy. Germany is calling the debt swap a success.
Real Estate Miscellaneous Stats:
January pending home sales from National Association of Realtors, expected up 1.5%, as reported up 2.0%, the highest index since April 2010; December sales revised to -1.9% from -3.5% originally reported. Yr/yr pending sales +8.0%. Pending home sales are contracts signed but not closed. Many economists are saying the housing market is showing signs of life as a result of higher sales numbers. Sales have risin 13% over the last 6 months and there is currently a smaller supply of homes than we have had in 7 years. Sales are still below the total number needed for a health market which is considered to be 6 million. A disproportionate number of sales continue to be on homes at risk or in foreclosure at 35% of all sales. Homebuilders are also slightly more positive as markets improve. Analysts continue to warn that a full recovery is years away as the damage done when the bubble burst is deep. One third of realtors surveyed say they have had at least on deal scuttled in the last 4 months due to appraisals and mortgage turn downs. First time buyers are making up a large percentage of total sales.
Warren Buffett Recommends Buying Real Estate: Warren Buffett, The Sage of Omaha, is probably the highest regarded investor in the United States. He was recently on CNBC and was discussing Real Estate. He said that single family homes are an attractive investment right now. He said he would load up on a couple hundred thousand of them if it was practical. He said that Real Estate can be a better investment than stocks at low prices and current low interest rates.
Is History On Our Side: From 1996 to 2006, home values increased 92% in the US. Income statistics show incomes did not match that increase. Over that last 5 years home values have fallen an average of 19%. ( Office of Federal Housing Enterprise Oversight)
King County Reduced Inventory is Affecting Prices: While overall county prices are still moving down, a significant reduction in inventory is helping soften the blow and even reversing the slip down in some areas. In Seattle the median home value rose 3% compared with last year. Inventory usually goes up this time of year so many experts see this as a good sign for values. More stories of bidding wars on homes in centrally located areas continue to be heard. Sales also improved to the best levels since 2007 at 1230 units for February with South King County accounting for most of the increase. ( Source: Eric Pyrne @ Seattle Times)
Loan Program Of The Month. Home Affordable Refinance Program ( HARP ): Fannie Mae and Freddy Mac have rolled out their new revised version of the popular refinance program that allows borrowers who have lost equity to refinance without the requirement of obtaining mortgage insurance. In some cases refinancing is possible with negative equity with no limit on loan to value ratios due to 2nd mortgages. Eligible loans must be Fannie or Freddy loans and have been originated before May of 2009. Expanded appraisal waivers, transfer of existing mortgage insurance policies by non-originating institutions and expanded underwriting guidelines are also a part of the new version of the program. These changes are expected the help a large number home owners.
Bellevue Real Estate Report
Bellevue Real Estate, Mortgage, and Economy 3/5/12
Posted on 5 March 2012 | No responses
Here is the Bellevue Real Estate Report for March 5, 2012:
Interest Rates Moved Off All Time Low Levels: In the last two weeks we have seen interest rates lose ground as news out of Europe continues to move markets. The European Union agreed to another round of credit extensions to Greece which removed the threat of a disorderly default on sovereign debt…for now. This caused some movement out of safer investments such as bonds as investors sought opportunities to make profits in other asset classes. Continued improving news in the US economy and China caused the Dow Jones average to peek above 13000 for the first time in 3 years. While the recent news calmed some fears it is common knowledge that Europe is not out of the woods and there are continued concerns that austerity mearsures will crush economic growth in debt laden nations making it impossible for them to ever meet their debt obligations. Recent economic data suggests the economy is not as soft as the Fed is believing; consumer confidence yesterday was much stronger than forecasts, unemployment claims are implying businesses are no longer firing and cutting jobs, while housing is still extremely soft there are small signs that we are getting closer to the bottom.The world financial authorities continue to refuse to bail out Europe and rates improved last week as a result. They did not rebound back to the recent lows but are still in very favorable territory.
Don’t fight the Fed. That popular saying last week was especially evident, as Fed Chairman Ben Bernanke’s testimony on Capitol Hill had quite an impact on the markets.
Last week, Fed Chairman Ben Bernanke gave his semi-annual testimony in front of the House Financial Services Committee and his assessment of the economy, labor market and housing market was unchanged – highlighting that conditions remain sluggish, uneven and fragile. But the biggest takeaway was that he made no mention of another round of Bond buying or Quantitative Easing (QE3).
This clearly disappointed virtually all the markets as both Bonds and Stocks closed lower the day he spoke. So here’s an important question to ask: Is the economy strong enough to keep the Fed from pumping any more money (QE3) into the economy? While the economy has improved on many fronts, it is still fragile and it would not take much for growth to slow…meaning more Fed intervention would be needed. For instance, high oil prices, a worsening situation in Europe or China, and escalating concerns in Iran could all cause our economy to slow.
One thing is for sure – the incoming economic data over the next couple weeks and months will be very important to follow for signs of continued economic improvement or potential slowing. One important factor to note from last week: inflation, as measured by the Core Personal Consumption Expenditure (PCE), rose by 0.2% in January, while the year-over-year Core PCE climbed to 1.9% and just beneath the Fed’s upper target of 2%. Seeing inflation rise, even though the Fed continues to say it is moderating, is a concern. With Core PCE just beneath the Fed’s desired target, upcoming readings will play an important role in how long the Fed continues its accommodative policy and any chance of more easing, QE3.
The most important thing to take away is that home loan rates still remain near historic lows, and now continues to be a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.
The Group of 20 nations met over the weekend and nixed calls from the euro area to boost international lending resources. A major reason for weakness in equity markets this morning. The G-20 told Europe to come up with more financial firepower before they will consider lending outside support. The world economy is “not out of the danger zone” amid fragile financial systems, high public and private debt and rising oil prices, International Monetary Fund Managing Director Christine Lagarde said. The decision by G-20 finance ministers to deny more assistance pending an increase in the euro-area backstop puts the monkey on Germany, the biggest contributor to bailouts, to overcome its resistance to doing more.
Greece is on the edge and trying to avoid default and exiting the European Union. Greece’s credit ratings were cut to “Selective Default ”by Standard & Poor’s yesterday. S&P dropped Greece’s rating from CC, two levels above default, after the Greek government added clauses to its debt designed to mop up investors unwilling to take part in a bond exchange that was part of the agreement hammered out last week. An agreed debt swap, known as private-sector involvement, will slice 100 billion euros off more than 200 billion euros of privately held debt if all investors participate. Nobel-prize winning economist Paul Krugman said Greece is “close” to having to leave the 17-member currency region. While it would be “extremely disruptive,” Greece is “very close to running out of alternatives,” he said.
Real Estate Miscellaneous Stats:
January pending home sales from National Association of Realtors, expected up 1.5%, as reported up 2.0%, the highest index since April 2010; December sales revised to -1.9% from -3.5% originally reported. Yr/yr pending sales +8.0%. Pending home sales are contracts signed but not closed. Many economists are saying the housing market is showing signs of life as a result of higher sales numbers. Sales have risin 13% over the last 6 months and there is currently a smaller supply of homes than we have had in 7 years. Sales are still below the total number needed for a health market which is considered to be 6 million. A disproportionate number of sales continue to be on homes at risk or in foreclosure at 35% of all sales. Homebuilders are also slightly more positive as markets improve. Analysts continue to warn that a full recovery is years away as the damage done when the bubble burst is deep. One third of realtors surveyed say they have had at least on deal scuttled in the last 4 months due to appraisals and mortgage turn downs. First time buyers are making up a large percentage of total sales.
Case/Shiller 20 city home prices in Dec fell 0.5% and yr/yr down 4.0% both in line with forecasts. This is the 20 city composite number but buried in the picture are encouraging signs in many metropolitan areas. In Seattle, for instance, prices are down 5.6% from the same time last year but most of the decline in value is credited to the south King County area. In city markets are showing signs of life as there are bidding wars on many affordable homes. Home values in this area are down 32% from the peak in 2007 on average. This is largely due to the high number of distressed properties still on the market.
Jan housing starts were in line, up 1.5% to 699K annualized units; single family starts though fell 1.0%. Jan building permits were expected down 0.6% but actually increased 0.7%.
Bay Area Home Sales Up Significantly in January: Bay area sales totals were up in January with the largest increases in South and East regions. A report released by Data Quick showed the best number of sales in Alameda County in 7 years with Santa Clara and San Mateo not far behind at best in 6 year numbers. Investors and first time buyers are snapping up the lower priced homes which are seeing multiple offers in many cases. Realtors are expressing a belief that the market values have bottomed even though median values still show declines of about 2-3%. This decline may be due to the number of low end homes selling while the upper part of the market is much slower.
Loan Program Of The Month. My Community Loan: This is a conventional loan product that allows 3% down payment on purchase transactions. One of the main features allowed on this program is financed single premium mortgage insurance. The single premium fee is around 2.2 to 2.8% of the loan amount. It can be paid for by seller contributions. This structure can lower a borrower’s payment by a significant amount as compared to an FHA loan. Call for details.
Bellevue Real Estate Report
What It Takes to Get a Home Sold in Today’s Real Estate Market
Posted on 26 February 2012 | No responses
Bellevue Real Estate Report
WHAT DOES IT TAKE TO GET A HOME SOLD IN TODAY’S MARKET?
1. PRICING THE HOME CORRECTLY: One of the most important things that can help you sell your home is pricing it right. . List prices need to be priced at or near market value. The simple truth is over priced listings are one of the only segments of the market that are not selling. A great agent will study the recent sales, study what is on the market and use trends and comparables to place a value on your property.
2. CHOOSING THE RIGHT LISTING AGENT: As a home owner in this market you need every advantage you can to get your home sold. It starts with choosing the right agent.
a. Using a Full time agent whose sole job is to sell homes.
b. Using a Full service agent who will guide you through each step of the selling process. Discount brokers often equal discount services.
c. Using a Local agnet who knows your neighborhood and is readily available when you need them is a must. Out of town agents can leave you high and dry in your time of need.
d. Using a well experienced Listing Agent can give you the advantages you need when selling your home. Not all agents are created equal. Choose only the best.
3. GETTING A BUYER TO SEE YOUR LISTING: Before anyone can view your home, they have to know it is for sale. Using an agent with an extensive marketing and advertising program is the best start to get your home the exposure it needs and deserves. Some agents whose sole marketing plan is placing a sign in your yard and placing the home in MLS is not a sound marketing plan.
4. GETTING YOUR HOME READY FOR A BUYER TO SEE IT: A listing agent can guide a buyer to your front door, but the can not make them go inside. You need to prepare your house for sale.
a. THE EXTERIOR: Your lawn should be mowed, bushes trimed, debris, toys or belongings picked up and removed from the yard. In the winter shovel your walk and driveway, sand and or salt and knock those icicles off your roof. Make sure your scrren/storm door is in working order, it is the first thing they will touch and a storn door with a missing handle or off it’s hinges will drive buyers away.
b. THE INTERIOR: Remove anything from your house you are not using, often called “decluttering”. Clear off the counters, bureaus and floors. Make sure walls are free of marks or holes. Freshly painted walls in a neutral color are always a plus. Make sure all faucets and toilets run properly, no drips, no leaks and the toilets should not always run. Clean your carpets, remove pet items and during showings your poets should be taken out of the housel
5. BUYER AGENTS: Once I get the buyer to see the home, they love the interior and it is priced right. The torch gets passed to the Buyer Agents to make sure they inform and educate their buyers about current market conditions. Buyers need to be making better first offers. Offers should be accompanied with pre-quailification letters and forget the low ball offer if there is a lot of interest in a home. With the amount of homes on the market sharply decreasing and sales continuing to rise there is more competition for homes among buyers. The days of ‘Low Ball” offers is near over for owner occupantsThere was a bit. Most buyers are learning the hard way losing their dream home by making a low offer. It is important to have an experienced buyer agent who can inform you of local trends and values.
IN CONCLUSION: There is a lot of behind the scenes work going on to get a house on the market, marketed, get an offer, go through the buyers mortgage process, appraisal, inspections and get to the closing of the home. If you did not notice most of these steps, I did a great job. With the decrease in Listings, there is pressure on Listing Agents to provide more service. For agents who have been providing a great service to their clients throughout the last 4-5 years they are being rewarded as home sellers and buyers talk, they let each other know who did the great job or who dropped the ball. As you see it is no accident a home sells. It is through the hard work of the agent.
It does not take magic to turn your “For Sale” sign into a “Sold” sign. it takes a full time Local Agent who specializes in Listing homes like yours.
Bellevue Real Estate Report
Turning Foreclosures into Rental Properties
Posted on 25 February 2012 | No responses
Bellevue Real Estate Report
NEW YORK (CNNMoney) — Federal officials hope to launch a pilot program in early 2012 to convert government-owned foreclosures into rental properties.
The program, which was cited by Federal Reserve Chairman Ben Bernanke last week as one way to address the housing crisis, would sell foreclosed homes now owned by Fannie Mae (FNMA, Fortune 500) and Freddie Mac (FMCC, Fortune 500) to investors in bulk. The properties would then be converted into rentals.
The initiative began back in August, when the Federal Housing Finance Agency, the Treasury Department and the U.S. Department of Housing and Urban Development announced they were seeking suggestions on ways to dispose of repossessed homes now owned by Fannie Mae, Freddie Mac and the Federal Housing Administration.
In addition to getting the properties off the government’s books, officials are hoping putting the homes back into productive use will stabilize neighborhoods and housing values. Also, it is looking to expand the supply of rentals, which are increasingly in demand.
The agency is not releasing details on how the rental program would work, instead saying it is “proceeding prudently but with a sense of urgency to lay the groundwork for the development of good initial transactions in early 2012.”
Administration officials said they are continuing to work with the agency to develop the program.
Until now, most foreclosed homes have been sold individually because investors have demanded bigger discounts to buy large numbers of properties.
But federal officials are warily eyeing the expected surge in foreclosures as banks ramp up their action against delinquent homeowners. The process had been stalled since late 2010 when banks’ shoddy paperwork practices came to light.
There are close to 2 million homes in the late stages of delinquency, according to Lender Processing Services. Since foreclosed properties often sell below market value, they can wreak havoc on home prices.
Converting these homes to rentals can both help the neighborhood and minimize losses to Fannie, Freddie and the FHA, which hold about 250,000 properties, Bernanke told lawmakers last week.
He urged lawmakers to ramp up their efforts to fix the housing market, placing particular emphasis on the problem of vacant homes on the market.
“Restoring the health of the housing market is a necessary part of a broader strategy for economic recovery,” he said.
Bernanke’s comments launched a full-court press by Federal Reserve officials last week to raise awareness of the continuing problems plaguing the housing market.
His proposals were quickly followed by Fed Governors Sarah Bloom Raskin, who spoke on ramping up enforcement of mortgage servicers, and Elizabeth Duke, who said Fannie Mae and Freddie Mac could do more to help heal the housing market.
Meanwhile, New York Fed President William Dudley gave a speech that touched on a wide range of housing policies — including principal reduction and mortgage refinancing — that he believes will boost the economy.
The Fed has already tried to boost real estate sales by pushing mortgage rates down to record lows through massive bond-buying programs.
But the renewed push for housing help indicates that the Fed, which has basically run out of monetary policy ammunition to revive the real estate market, is urging the federal government to ramp up its efforts.
“The Federal Reserve is signaling in even stronger terms the need for the government to do more to help housing,” said Jaret Seiberg, a policy analyst with the Washington Research Group
Bellevue Real Estate Report
The Top 5 Reasons to Buy a Home in 2012
Posted on 23 February 2012 | No responses
Top 5 Reasons to Buy a Home in 2012
by Jonathan Slappey on January 6, 2012 in Home Buying
The American dream of homeownership is a very feasible aspiration for 2012.
There are many benefits of owning a home. Yet some first-time buyers are skeptical of purchasing with the uncertainty surrounding the housing market.
The uncertainty many reference when speaking about the housing market involves a specific date when home values will increase. Since no one can pinpoint this date, the word uncertainty (when paired with the housing market) often reveals a negative connotation.
There are some factors we can be certain about in this housing market such as home values rebounding. This is true; the housing market often moves in cycles.
It’s safe to assume that many Americans harbored the same uncertainty during the George H. W. Bush administration in the early 1990s when the national homeownership rate fell from its previous historic high of 64.4 percent in 1980 to a low of 64.1 percent in 1991.
In the 1960s Lyndon Johnson illustrated a correlation between homeownership and accountability by stating “owning a home can increase responsibility and stake out a man’s place in his community…The man who owns a home has something to be proud of and reason to protect and preserve it.”
This statement is still true more than 50 years later. There are many reasons to take pride in homeownership such as:
•Appreciation – Buying a home now (at the current rates) can almost ensure your home’s appreciation in the future. Mortgage rates are near historic lows and home prices in many parts of the country are down. This is the perfect recipe for home appreciation. Additionally, many foreclosed homes are available for a fraction of the original cost. This can translate to a higher profit if you decide to sell once the market rebounds.
•Property Tax Deductions – For income tax purposes, real estate property taxes for a vacation home and first home are fully deductible. The IRS (Publication 530) provides detailed tax information for first-time buyers that may answer many questions about what deductions homeowners are eligible for.
•Preferential Tax Treatment – If you own your home for more than a year and receive more profit than the allowable exclusion after the sale of your home, the profit will be considered a capital asset. Capital assets are given preferential tax treatment.
•Equity Building – Many factors such as credit qualification, loan flexibility, and annual percentage rate (APR) contribute to the final decision of what type of mortgage loan best fits your goals. Yet, a new trend being used by some homeowners is to actually add money to their monthly payment to decrease the principal balance of their loans at a much faster pace. This trend is called equity building. Equity builders usually select a home loan with a lower interest rate (and a shorter term loan such as a 15-year fixed) to help build equity faster. This rapid payment process allows borrowers to:
•Pay off the principal balance faster
•Lock in near-record-low interest rates
•Shorten the length of their home loan
•Own their home faster
•Pay substantially less mortgage interest
Equity building is a beneficial trend that’s becoming more and more popular with fiscally responsible homeowners. Also, home equity is the largest single source of household wealth for most Americans.
•Pride – Homeownership offers many benefits to many different types of people. For some homeowners, playing your music as loud as you want and painting the walls the color of your choice is a perk. For me, homeownership will permit me to build an NBA regulation size basketball court on my own property. For my coworker Joel Jarvi, home ownership may allow him to build the indoor slide of his dreams. No matter who you are, homeownership is a purchase, commitment, and journey that’s sure to bring you pride.
Furthermore, when the uncertainty surrounding the housing market fades and the market rebounds, homeownership may in fact transform that pride to profit through a home sale.
Bellevue Real Estate Report
Bellevue Real Estate, Mortgage, and Economy 2/20/12
Posted on 20 February 2012 | No responses
Here is the Bellevue Real Estate Report for Feb. 20, 2012:
Rates Improve This Week Until Thursday When Rumors of a Greece Agreement Are Coming On Monday: Improving economic data at the end of the week plus speculation that Greece will receive another round of bailouts caused rates to move slightly higher from earlier in the week. The movements equaled about .500 in discount points higher. US and European stock markets have an increasing belief Greece and Europe’s officials will actually get a deal completed at the summit meeting on Monday. Inflation rates in the US continue to creep above the Federal Reserve target which is also putting pressure on interest rates. Many analysts believe the lows in US rates have been achieved; unless Greece defaults or the economic outlook reverses from the positive outlook that is driving stocks higher; interest rates will not fall much.
A tale of three stories. That’s a great way to describe last week’s news, as a string of positive economic reports, news out of Greece, and hints that inflation is heating up all worked together to impact Bonds and home loan rates. Here are the details!
A breakfast buffet of better than expected economic data hit the wires last week. In the housing arena, Housing Starts came in better than expected, while both the New York Empire State Index and the Philadelphia Fed Index reported positive manufacturing news. There was also decent labor market news, as Weekly Initial Jobless Claims fell by 13,000 in the latest week to 348,000 – the lowest level since March 2008! Meanwhile, Retail Sales rose in January by 0.4%, the largest gain since October.
Remember, strong economic news often cause money to flow out of Bonds and into Stocks, as investors hope to take advantage of gains. That’s partly what caused Bonds (including Mortgage Bonds, to which home loan rates are tied) to worsen late last week.
Also weighing on Bonds and home loan rates was the news that inflation is heating up. Despite the Fed’s claim that inflation is moderating, the Core Consumer Price Index (CPI), which strips out volatile food and energy, rose to its highest levels since October 2008. Meanwhile, as you can see in the chart, the wholesale measuring Core Producer Price Index (PPI) rose double the expectations of 0.2%, coming in at 0.4%. Any hints of inflation can serve to spook Bond investors – causing both Bonds and home loan rates to worsen – as inflation can reduce the value of fixed investments like Bonds. This is one story to keep a close eye on in the weeks ahead.
The drama in Greece is another key story to monitor, as it also impacted Bonds and home loan rates last week. Greece sent the markets into the weekend with assuring messages that a deal for them to avoid default is close, and this sense of optimism weighed on Bonds and home loan rates. Our Bonds and home loan rates have benefitted from all the uncertainty in Greece, as investors have seen our Bond Market as a safe haven for their money. Time will tell whether this uncertainty and safe haven trading will continue.
The bottom line is that now is a great time to purchase or refinance, as home loan rates remain near historic lows. Let me know if I can answer any questions at all for you or your clients.
Will Greece get its money to avoid default? That question has been dominating markets since last July, on again-off again for six months with no resolution. The clock is ticking now, Greece has until March 20th to find the funds needed to pay for maturing debt (actual default would occur on March 27th). With all the comments coming from every official in Europe it is very difficult and sometimes confusing trying to follow the events as they unfold, however we believe Greece will get its bailout this go-round, what happens when the next maturities occur another bailout is unlikely. Presently markets in Europe and the US are betting on a deal being completed. Italian Prime Minister Mario Monti, German Chancellor Angela Merkel and Greek Prime Minister Lucas Papademos expressed optimism that an agreement on Greece can be reached at a Feb. 20 meeting of euro-area finance ministers.
In this global economy, markets pay a lot of attention to what is occurring in Europe and China; China’s industrial output growth will probably slow this quarter as the world economy cools and the euro area’s crisis worsens, the Ministry of Industry and Information Technology said today. “The global economy is slowing down, Europe’s sovereign-debt crisis is deepening and the downside risks to the world economy are rising with international demand still slack and global commodities and financial markets continuing to be volatile,” the ministry said. German industrial output unexpectedly dropped the most in three years in December as Europe’s debt crisis weighed on confidence and the global economic slowdown damped demand. Production fell 2.9% from November, when it stagnated, the Economy Ministry in Berlin said today. Economists had expected output to remain unchanged.
Real Estate Miscellaneous Stats:
Feb NAHB housing market index was expected at 26 from 25 in Jan, increased to 29; single family sales at 30 from 25 in Jan, six month out sales index at 34 from 29 in Jan. A better report but no reaction to it in financial markets.
Mortgage applications decreased 1.0% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 10, 2012. The Refinance Index increased 0.8% from the previous week to its highest level since August 8, 2011. The seasonally adjusted Purchase Index decreased 8.4% from one week earlier. The refinance share of mortgage activity increased to 81.1% of total applications from 80.5% the previous week. This is the highest refinance share since January 20, 2012.
Jan housing starts were in line, up 1.5% to 699K annualized units; single family starts though fell 1.0%. Jan building permits were expected down 0.6% but actually increased 0.7%.
Loan Program Of The Month. My Community Loan: This is a conventional loan product that allows 3% down payment on purchase transactions. One of the main features allowed on this program is financed single premium mortgage insurance. The single premium fee is around 2.2 to 2.8% of the loan amount. It can be paid for by seller contributions. This structure can lower a borrower’s payment by a significant amount as compared to an FHA loan. Call for details.
Rates Improve This Week Until Thursday When Rumors of a Greece Agreement Are Coming On Monday: Improving economic data at the end of the week plus speculation that Greece will receive another round of bailouts caused rates to move slightly higher from earlier in the week. The movements equaled about .500 in discount points higher. US and European stock markets have an increasing belief Greece and Europe’s officials will actually get a deal completed at the summit meeting on Monday. Inflation rates in the US continue to creep above the Federal Reserve target which is also putting pressure on interest rates. Many analysts believe the lows in US rates have been achieved; unless Greece defaults or the economic outlook reverses from the positive outlook that is driving stocks higher; interest rates will not fall much.
Bellevue Real Estate Report
What’s Hot…and Not, in Real Estate Home Styles in 2012
Posted on 17 February 2012 | No responses
Here is an additional article to my weekly Bellevue Real Estate Market Report.
This year’s designated New American Home is being featured as part of the International Builder’s Show.
Modern gets the thumbs up.
Spa-like and eco-sensitive, the “New American Home 2012” being unveiled in Orlando this week by the National Association of Home Builders in conjunction with the International Builders’ Show, is a warmer take on the classic “White Box” of mid-20th century modern design.
“A lot of people want a spa feeling and a spa look that’s very analogous to modern,” said Luis Juaregui, a Texas-based American Institute of Architects accredited architect. The 4,200 square foot, $3.5 million gray stone and glass home has free flowing entertaining spaces, floor to ceiling sliding glass doors, a stone staircase with open risers, clear glass balustrades and clean geometric lines, tempered by dark wood cabinets, area rugs and soft furnishings.
Still, to fit into more traditional looking neighborhoods, architects are increasingly going hybrid, mixing distinctly modern, techno-savvy interiors with colonial details, Tudor-style roofs or Craftsman-inspired touches on the exterior.
A home to call one’s own has long been part of the American Dream. But as tastes, technologies and regional preferences change, propelled by demographics and the socio-economic climate, the style, scale and comforts of that coveted real estate evolve.
During the bigger- is-better 1980s and 1990s, homes ballooned in size. Compact single story ranch and cape cod styles gave way to ever grander two-story neo-colonials. When the economic bubble burst, they retrenched. These days, downsizing is cool; supersized McMansions towering over smaller homes are not.
Stephen Melman, director of economic services at the National Association of Home Builders said that houses shrank about 10 percent from their 2,500 square foot peak in 2007, and are expected “to get smaller and more efficient” with open floor plans, master bedrooms on the first floor and dining rooms distinguished only by a chandelier or architectural detail.
One-story ranch homes, post World War II suburbia’s signature easy style, are slowly regaining favor, thanks to first time buyers with tiny tots and aging baby boomers seeking accessibility.
Craftsman style homes, popular before World War II, are also enjoying a revival, said Gary D. Cannella, an architect in Bohemia, N.Y. “It’s the style not the size.” Adaptable to sizable abodes or small bungalows, these one or one and a half story homes boast low-pitched rooflines, tapered columns, oversized eaves, gables and the front porches “that everyone wants and no one sits on.”
The split level, a hallmark of suburbia in the Brady Bunch era, is nearly obsolete. Despite the aerobic benefits of tri-level living, “all you do is walk up and down stairs all day long,” Cannella says. “You can’t go anywhere without steps.”
Description: Aligned with the mid 20th-century counter classic design movement, modern is characterized by no fuss floor plans with combined dining, relaxing and entertaining spaces, clean, geometric lines, low slung roofs, and technologically advanced materials like concrete, steel and glass.
Why They Are Appealing: Easy, functional and bright, with walls of glass and open spaces, today’s modern is eco-sensitive and forward thinking, with state of the art kitchens and “smart house” technologies, though developers often prefer modern interiors with more traditional skins.
Where You’ll Find Them: Nationwide, with striking examples in the Hamptons, Santa Monica and other tony beach environs.
Style: Neo-Mediterranean: Neo-Mediterranean home styles are becoming the Sun Belt standard.
Description: Red tile roofs, stucco walls, archways, towers and heavy wooden doors with a Spanish or Tuscan flavor. Why It’s Appealing: The Southern European style and materials work well in warmer climates and match the landscape.
Where You’ll Find It: California, Florida, Texas, Southwest
The Flip Side: While northern European style homes are vanishing from the Sun Belt, in chillier climates such as the Northeast, two story center hall colonials still reign.
Style: Craftsman: Craftsman-style homes have become an American classic.
Description: Often referred to as Arts and Crafts bungalows, Craftsman-style homes have low-pitched roof lines, overhanging eaves supported by decorative brackets, gables, front porches with tapered square columns, exposed roof rafters, handcrafted wood and stone flourishes.
Why They are Appealing: This one to one and a half story style shouts cozy. With an emphasis on natural materials and decorative details, it works well for larger homes and small bungalows.
Where You’ll Find Them: coast to coast
What’s Not So Hot in 2012:
Style: McMansions: McMansion’s were a sign of success before the bubble burst.
Description: Sometimes called colonials on steroids or oversized neo-eclectic houses, these super-sized jumbles of styles and decorative details from colonial to Victorian, have brick, stone, vinyl or composite veneers. A product of the latter part of the 20th century and the knock-down era of the bubble before the burst, they often replaced smaller homes on lots not suited to their hulking size.
Why they are not appealing: Pretentious, over-sized energy guzzlers, overshadow surrounding homes and out of sync with the economic climate’s downsizing trend.
The Flip Side: Well-designed mansions on properly sized lots and in appropriate settings such as golf course or lakefront communities are still hot.
Style: Split Levels: Split-level homes, with many steps, have lost market appeal.
Description: A Ranch style house divided into at least three parts by short flights of stairs leading up on one side, down on another, dividing entertaining spaces from private areas such as bedrooms and separating formal rooms from more casual playrooms and dens.
Why they are not appealing: This darling of the 1950s, 60s and 70s is outdated and complicated to maneuver with steps at nearly every turn.
Style: Victorian: Victorian homes are charming, but almost no one builds them like this anymore.
Description: Turrets and towers, wraparound or granny porches and gingerbread trim with Queen Anne, Gothic or Italianate flourishes are the hallmark of these turn- of-the-20th-century two and three story homes with plenty of nooks and crannies.
Why They Are Not Appealing: While it’s hard not to love their colorful eccentricities, Victorians are challenging to rehabilitate or maintain. Their warrens of small rooms aren’t conducive to 21st century lifestyles.
Where You’ll Find Them: Urban neighborhoods, historic districts, small towns, older suburbs
The Flip Side: Newer neo-eclectic homes borrow whimsical features from true Victorians, touting turrets, towers and porches in maintenance free materials.
Bellevue Real Estate Market Report
Bellevue Real Estate, Mortgage, and Economy 2/11/12
Posted on 11 February 2012 | No responses
Here is the Bellevue Real Estate Report for 2/11/12:
Some Hint That Greece May Live Within Their Means Causes Rates To Move Up: Interest rate pricing moved up a small amount this week as it seemed Greece and the EU were close to an agreement. Announcements out of Greece indicated they were agreeable to conditions of further help with their crisis. It all seems like a stall tactic now as sentiments reversed course dramatically today. Rates are up in price for the week. As for lower rates ahead, the 10 year Treasury Bond yr has heavy lifting to do when it moves below 2.00%, there is huge resistance to improvements when it sits at 1.80%. Mortgage rates don’t have much more improvement left at the moment, however there is not much likelihood mortgage rates will increase much either. Long term looking out a few months the trends suggest we could get more rate improvements but that can change quickly.
It’s been said that no news is good news. But last week, the Jobs Report brought some good news for the labor market. Read on for the details…and what they mean for home loan rates.
The headline Jobs Report showed 243,000 jobs created, which was much better than expected. Meanwhile, a whopping 257,000 private jobs were created, also much higher than expected. Upward revisions to November and December added another 60,000 jobs to what was previously reported for those months. And adding to the euphoria was a 0.2% decline in the Unemployment Rate, bringing it to 8.3%…the lowest since February 2009.
Despite all this good news, the report did show a pretty sharp decline in the labor participation rate from 64% to 63.7%. We really need to have more people “participating,” or working to help pay down our debt. Understandably, the demographics of baby boomers retiring does account for some of the decline. But is it the entire 0.3%? And the U-6 Unemployment Rate (which counts all persons marginally attached to the labor force, including those who are employed part-time but would prefer full-time) remains at a lofty 15.1%, with that figure dropping just 0.1% for the month.
And there was other good news to note last week as well: The Commerce Department reported that Personal Incomes rose in December by 0.5%, above expectations and well above the 0.1% reported in November. This marked the largest increase in nine months!
So what does all of this mean for the housing market and home loan rates?
While Bonds and home loan rates did worsen on the good Jobs Report news (remember good economic news often causes money to flow out of Bonds and into Stocks, as investor try to take advantage of gains), home loan rates remain near historic best levels. In addition, the problems in Europe remain…and as uncertainty reemerges, US Bonds (including Mortgage Bonds, to which home loan rates are tied) will benefit.
The takeaway from all of last week’s news is that the pace of improvement in the labor market is choppy and muddled at best. But the trend is improving over time, and this is welcome news for the struggling housing market because as people feel more secure in their jobs, they are more willing to consider making major purchases like a home.
Many have questions and frustrations questioning why there is so much attention to Greece. If Greece defaults the fear is that it will spread through the European Union with other countries teetering on the edge of default. Greece defaulting is seen as a huge problem from Europe’s banks as well as the implications for Europe falling back into deep recession; a domino effect. For all the talk about Greece’s austerity budget, unless Germany and France step up with more financing there is no plan that will end the crisis. Austerity plans are not being welcomed by the Greek public. Demands on their government to lower minimum wage, cut government employment as well as overall spending is being demanded by Germany and other countries before more funds are loaned before a default in March. Today many politicians resigned and the police threatened to arrest EU officials. Many a German flag went up in smoke as well. The markets are concerned that Greece is headed for a messy default and possible exit from the EU.
In this global economy, markets pay a lot of attention to what is occurring in Europe and China; China’s industrial output growth will probably slow this quarter as the world economy cools and the euro area’s crisis worsens, the Ministry of Industry and Information Technology said today. “The global economy is slowing down, Europe’s sovereign-debt crisis is deepening and the downside risks to the world economy are rising with international demand still slack and global commodities and financial markets continuing to be volatile,” the ministry said. German industrial output unexpectedly dropped the most in three years in December as Europe’s debt crisis weighed on confidence and the global economic slowdown damped demand. Production fell 2.9% from November, when it stagnated, the Economy Ministry in Berlin said today. Economists had expected output to remain unchanged.
Real Estate Miscellaneous Stats:
Mortgage Relief Settlement Reached: It was announced today that 50 States, multiple federal agencies and the 5 largest US banks that have been in negotiations for about a year to finalize terms of a massive $25 billion settlement to rewrite mortgages for struggling homeowners, came to an agreement. Government officials have come to the conclusion that a partial settlement is better than nothing and that they can offer relief to homeowners with non-Fannie Mae and Freddy Mac loans. Up to this point, the Making home Affordable refinance and modification programs have not provided the amount of relief intended. Involved in the negotiations are bank officials, the head of HUD, US Treasury, the White House and all 50 Attorney General offices in the US. Up until today it was reported that AGs from 2 states had not agreed to terms as they are concerned that the banks are being let off the hook to easily for the ‘robo signing’ scandal that left out proper processes for the transfer of Title and created uncertainty as to who actually owned mortgage notes that were in foreclosure. The trade off is promised principle reductions for home owners who do not have access to special refinance programs available on Fannie and Freddy loans. Currently there are an estimated 11million households with homes that are underwater. The $25 billion program will be divided in to $17 billion toward principle reduction of about 1 million eligible loans, $5 billion who were victimized by deceptive practices ( which only comes to $1800.00 for each household ) and $3 billion to pay for refinancing underwater borrowers at 5.250%. This is much higher than current rates but many people with Jumbo loans are currently above 6%. The banks are interested as the deal would remove the exposure to civil litigation over the improper practices of foreclosing on homes they did not technically have a Deed of Trust against. The banks would be required to grant a minimum principle reduction or rate reduction in exchange for government counting all or part of those amounts toward the $17 billion total. Up until this point banks have balked at a program that would keep them accountable to real modifications while taking bail out funds to support their solvency. With this program the banks will have to execute on $17 billion in a certain amount of time. This is said to turn in to actually $32 billion in bank write downs. Fannie and Freddy have refused to participate in a large principle reduction program as it would cost the tax payers and estimated $100 billion after already taking over $300 billion in taxpayer assistance.
Americans still sold on homeownership
A Market Watch Report by Steve Kerch reports that despite price declines, owning a home still ranks high in U.S.
Despite the historic upheaval in Real Estate the last 5 years, Americans are still optimistic about their own housing situation, a new poll shows.
Seventy-eight percent of Americans, identified as likely to vote in the 2012 presidential election, said that owning their own home was one of the most important things in their lives, according to the survey by Lake Research Partners done for the National Association of Home Builders. Survey results show 74% agreed, with 43% strongly agreeing, that owning a home was worth it even with all the ups and downs of the housing market. People are looking at home ownership from a more traditional perspective of stability and family environment rather that investments. Sentiments are shifting toward 401Ks as a better investment than Real Estate but respondents still considered a home a good use of money.
Current homeowners were not discouraged by the pitfalls of paying for and maintaining a house: 96% said they were happy with their decision to own a home and 85% said they were very happy with that decision. The NAHB commissioned the election-year survey in the hopes of backing up its lobbying effort on Capitol Hill with data that could show Congress and the Obama administration that housing is still a valued commodity in the country and that Americans want the government to provide supportive housing policies. Respondents said it is appropriate for the government to be in support of housing. Two-thirds said it was OK for the government to ensure the availability of 30-year mortgages and 75% said it was all right to use the tax code to support homeownership. What about the proposal to cut the mortgage-interest tax deduction as part of the deficit-reduction debate, 65% said they would be less likely to vote for a candidate who supported that position.
Loan Program Of The Month. My Community Loan: This is a conventional loan product that allows 3% down payment on purchase transactions. One of the main features allowed on this program is financed single premium mortgage insurance. The single premium fee is around 2.2 to 2.8% of the loan amount. It can be paid for by seller contributions. This structure can lower a borrower’s payment by a significant amount as compared to an FHA loan. Call for details.
Bellevue Real Estate Report