Underwater owners regain equity slowly but surely

IRVINE, Calif. – Aug. 11, 2016 – ATTOM Data Solutions released its Q2 2016 U.S. Home Equity and Underwater Report, which shows 11.9 percent of all U.S. properties with a mortgage at the end of second quarter 2016 were seriously underwater – a drop from 13.3 percent in Q2 2015.

No Florida city made ATTOM’s list of the U.S. seriously underwater cities, though a few have more than 15 percent of owners with a mortgage still underwater. They include Orlando (19.1 percent underwater), Tampa-St. Petersburg (17.8 percent) and Miami (17.3 percent).

“South Florida continues to see an equity improvement greater than the national average due to our strong growth,” says Mike Pappas, CEO and president at the Keyes Company. “Our underwater homes saw a 3-times improvement over the average with the high equity owners experiencing a 1.8-times improvement. With our limited land and strong in-migration, we will continue to see improvement in equity.”

For the report, ATTOM analyzed recorded mortgage and deed of trust data from more than 1,400 U.S. counties accounting for 88 percent of the U.S. population along with automated valuation models (AVMs) for more than 56 million properties with mortgages in those counties.

“Rising home prices are lifting all home equity boats: bailing out seriously underwater homeowners and enriching homeowners who already have positive equity,” said Daren Blomquist, senior vice president at ATTOM Data Solutions (the new parent company of RealtyTrac). “Nationwide home prices reached a new all-time high in June on the heels of 52 consecutive months of annual increases. While that national trend is consistent in most markets across the country, there are still some local markets and sub-markets that have been largely left behind by the housing recovery and which still have a high percentage of underwater homeowners.”

The number of seriously underwater U.S. properties (those with a loan-to-value ratio or LTV of 125 percent or more) decreased by 37,235 compared to the first quarter and decreased by 776,958 compared to a year ago. Since the peak of 12.8 million in Q2 2012, the number of seriously underwater properties has decreased by more than 6.1 million.

About 22.1 percent of all U.S. properties with a mortgage at the end of Q2 2016 were equity rich (LTV of 50 percent or less – up from 22.0 percent in the previous quarter and 19.6 percent in Q2 2015. The number of equity rich properties increased by more than 1.4 million compared to a year ago.

Profile of seriously underwater properties

ATTOM matched home equity data against property and ownership characteristic data – including occupancy status, market value, property tax rate, ownership description and congressional district – to provide a profile of the who, what, when, where and why for seriously underwater properties:

  • Property value: 34.4 percent of properties with an estimated market value up to $100,000 are seriously underwater compared to just 4.9 percent of properties with an estimated market value above $750,000.
  • Loan vintage: 26.4 percent of properties with a loan originated between 2004 and 2008 are seriously underwater compared to 8.3 percent with a loan originated since 2009.
  • Occupancy status: 21.8 percent of non-owner occupied properties are seriously underwater compared to 9.1 percent of occupied properties.
  • Ownership type: 43.5 percent of properties owned by a Company/Corporation/Incorporated owner are seriously underwater compared to 10.1 percent of properties owned by a husband and wife.
  • Property tax rate: 21.4 percent of properties with an effective property tax rate above 2 percent of market value are seriously underwater, compared to 11.8 percent of properties with an effective property tax rate below 1 percent.
  • Political party: 13.1 percent of properties located in a congressional district with a Democrat representative are seriously underwater compared to 10.8 percent seriously underwater in a congressional district with a Republican representative.

© 2016 Florida Realtors®

Average U.S. 30-year mortgage rate ticks up to 3.45%

Mortgage giant Freddie Mac said Thursday the average for the benchmark 30-year fixed-rate mortgage ticked up to 3.45 percent from 3.43 percent last week. The average rate is down sharply from 3.94 percent a year ago, and remains close to its all-time low of 3.31 percent in November 2012.

The 15-year fixed mortgage rate rose to 2.76 percent from 2.74 percent last week.

Record-low interest rates this year have helped spur home purchases and boost the housing market.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage remained at 0.5 point this week. The fee for a 15-year loan also was unchanged from last week at 0.5 point.

Rates on adjustable five-year mortgages averaged 2.74 percent, up from 2.73 percent last week. The fee held at 0.5 point.

Fla. housing’s median prices, new listings up in 2Q

ORLANDO, Fla. – Aug. 10, 2016 – Florida’s housing market reported more new listings, higher median prices and fewer days to a sales contract during the second quarter of 2016, according to the latest housing data released by Florida Realtors®. Closed sales of single-family homes statewide totaled 76,748 in 2Q 2016, up 1.4 percent over the 2Q 2015 figure.

“In the second quarter of 2016, Florida continued to add new jobs, which attracts new residents, encourages economic growth and strengthens the housing market,” says2016 Florida Realtors President Matey H. Veissi, broker and co-owner of Veissi & Associates in Miami. “Traditional housing sales increased statewide over the three-month period, while sales of distressed properties continued to decline. In another positive sign, new listings for single-family homes over the three-month-period rose 2.9 percent year-over-year, while new condo-townhouse listings rose 3.3 percent.”

The statewide median sales price for single-family existing homes in 2Q 2016 was $220,000, up 10 percent from the same time a year ago, according to data from Florida Realtors research department in partnership with local Realtor boards/associations. The statewide median price for condo-townhouse properties during the quarter was $163,000, up 5.2 percent over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

Looking at Florida’s condo-townhouse market, statewide closed sales totaled 31,699 during 2Q 2016, down 2.7 percent compared to 2Q 2015. The closed sales data reflected fewer short sales – and rising traditional sales – over the three-month period: Short sales for condo-townhouse properties declined 42.2 percent while short sales for single-family homes dropped 36.7 percent. Meanwhile, traditional sales for condo-townhouse units rose 6.9 percent and traditional sales for single-family homes increased 14.4 percent year-over-year. Closed sales typically occur 30 to 90 days after sales contracts are written.

“Existing home sale prices throughout most of Florida’s metro areas are continuing to exhibit robust year-over-year growth,” says Florida Realtors Chief Economist Dr. Brad O’Connor. “This growth is attributable to simple economics, which is to say that demand is strong and supply is currently limited. The inventory of homes for sale at the more affordable end of the price spectrum – which includes the vast majority of distressed properties – continues to decline significantly, and new construction has not come close to making up the difference.”

In 2Q 2016, the median time to a contract (the midpoint of the number of days it took for a property to receive a sales contract during that time) was 42 days for single-family homes and 50 days for condo-townhouse properties.

Inventory was at a 4.3-months’ supply in the second quarter for single-family homes and at a 6-months’ supply for condo-townhouse properties, according to Florida Realtors.

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 3.59 percent for 2Q 2016, significantly lower than the 3.96 percent average recorded during the same quarter a year earlier.

Wage growth now matches rental rate growth

WASHINGTON – July 22, 2016 – U.S. renters are seeing their housing costs rise at a much more manageable pace, as new construction has tempered years of runaway increases in rent.
Real estate data firm Zillow says that median rent rose a seasonally adjusted 2.6 percent in June from a year ago, matching the gains in average hourly wages. Rental costs have decelerated after consistently exceeding earnings growth in previous years, a sign that additional building is giving more options.
The median monthly rent nationwide was $1,409. Annual increases in rent surpassed 9 percent in both the Seattle and Portland, Oregon areas, although it has moderated in markets such as San Francisco, where yearly price growth went from double-digit gains to 7.4 percent.
Prices are rising above the national average in New York City and Los Angeles. But they’ve settled at less than 2 percent in Cincinnati and Cleveland, host of the Republican National Convention this week. Still, rental costs are much cheaper in both Ohio metro areas than the national average.
In Philadelphia, where the Democrats will hold their convention, median rent is more expensive and has been rising at a 2.5 percent to $1,582 a month.
Not all indicators show rent as moderating. The government’s consumer price index found that rents had jumped 3.8 per cent from a year ago. Shelter accounts for a third of all consumer expenses, according to the index.
Builders have been adding to the national supply of apartments. They completed 310,300 multi-family buildings last year, a 21.4 percent jump from 2014, according to the Commerce Department. Apartment construction through the first half of this year is running another 5.6 per cent ahead of the 2015 pace.
Copyright © 2016 The Canadian Press, Josh Boak. All rights reserved.

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Things first-time home buyers need to know

 

WOODLAND PARK, N.J. – July 22, 2016 – The economy is improving, interest rates are low and many consumers now find themselves in a great position financially to become a first-time homeowner. There’s a small problem though for some locations around the country – the booming real estate market is resulting in rising home prices and increased competition for the most desirable properties.
The S&P/Case-Shiller national home-price index recently estimated that 2016 prices are within four percent of the peak in 2006. In some areas, low inventories around the country are making the situation even more challenging.
These conditions are introducing first-time buyers to common challenges and frustrations while searching for their dream home. “Don’t get discouraged,” says Travis Peace, executive director of mortgage at USAA Bank. “Buying a home requires some fortitude and the process intimidates many – not just those doing it for the first time.”
As a result, Peace says it’s easy to concentrate too much on home buying “can’ts” rather than “can-dos,” and he offers this advice on how to overcome some common barriers.
“I Can’t” No. 1: I can’t figure out the home-buying process.
Peace notes that it’s essential to do research and to be equipped with basic information, but also be willing to ask for help when needed. For example, an experienced real estate agent can keep a buyer apprised of everything from area sales trends to the latest changes in state and federal laws that could impact a mortgage application.
“This is where experienced, licensed professionals can help,” Peace says. “Real estate agents can be an advocate for the buyer throughout the entire process.”
In addition, free tools like USAA’s Real Estate Rewards Network can connect buyers with an agent and even provide rewards based on the sale price of the home.
“I Can’t” No. 2: I can’t find the perfect home for my family.
Finding the perfect home may not be realistic, but shoppers can find the right home. Personal situations will dictate buyers’ ability to wait for a home in a particular neighborhood or design style to come on the market, but not everything has to be left to chance.
Peace says the key is to set realistic expectations and not fixate on negatives that can be changed. “Whether it’s the number of bedrooms or distance to work or school, it’s alright to have some non-negotiables. However, buyers should be willing to be flexible on things that can be relatively easy to change, like paint colors or landscaping.”
“I Can’t” No. 3: I can’t afford a 20 percent downpayment.
Putting 20 percent down on a home has become more of a guideline than a rule. Today, not being able to put 20 percent down does not mean buying a home is out of reach. Peace notes that depending on a buyer’s financial situation, there may be a responsible way to get into your new home without putting 20 percent down.
Government-sponsored loan programs from the Federal Housing Authority, Fannie Mae and Freddie Mac provide loan options that require downpayments as low as three percent. Veterans Affairs (VA) loans don’t require any downpayment. While those programs are often great options for consumers who qualify, Peace notes that buyers should keep an eye on their potential total monthly payment.
“Some of these loans include fees and private mortgage insurance (PMI) that could significantly impact your overall cost,” Peace says.
Even private lenders are offering more competitive loan options. For example, USAA Bank’s Conventional 97 loan allows borrowers to acquire a mortgage with only three percent down and the bank pays the PMI costs.
Scott McEniry, a USAA member, recently moved into his new home with the help of the Conventional 97 loan. “It felt like a lifeline had been thrown to me as suddenly a house purchase was within reach again,” McEniry says.
Whether a house-hunting novice or seasoned expert, Peace underscores that being informed, getting the right help and having a healthy dose of determination are the best ways to turn a dream home into a reality.
Copyright © 2016 Argus, North Jersey Media Group, Inc. All rights reserved

Extra credit: Paying more helps mortgage approval

WASHINGTON – July 14, 2016 – Knocking off more credit card debt every month may now be a better deal for anyone looking to buy a home.

Fannie Mae, the government-sponsored enterprise that buys mortgages and sets rules on how to assess the risk of loan applicants, is rolling out revised underwriting software that rewards those who make more than the minimum required payments over time.

The use of what’s called “trended credit data,” now slated to go live this fall, is likely to help first-time homebuyers and even those with no credit scores get a mortgage.

“This change will help,” says Mindy Armstrong, product manager for Fannie Mae, and will not penalize mortgage applicants who only pay the minimum monthly amount on credit card debt.

Until now, when evaluating a potential borrower’s standard credit report, the automated process took into account only how much you owe, who you owe it to and if you make payments on time.

The revised software relies on trended credit data, pulling payment records from the last 24 months to determine not only if you pay on time but how much you pay toward your credit card balances. The data helps determine what type of risk a borrower is likely to represent for a lender.

The Fannie Mae program doesn’t prescribe a certain amount over the required minimum that must be paid or how long or consistently the bigger payments must be made. Rather, a snapshot of a mortgage applicant’s payment habits is what’s captured, explains Armstrong.

Traditional factors, such as income, assets and credit score, remain key metrics in determining who gets a loan.

© Content That Works, Marilyn Kennedy Melia; © Copyright © 2016 Tri-Town News. All rights reserved.

Mortgage rates almost unchanged near historic lows

WASHINGTON (AP) – July 14, 2016 – Long-term U.S. mortgage rates moved little this week, remaining near historically low levels in the wake of financial disarray in Europe.

Mortgage giant Freddie Mac says the average for the benchmark 30-year fixed-rate mortgage ticked up to 3.42 percent from 3.41 percent last week, staying close to its all-time low of 3.31 percent in November 2012. The average rate is down sharply from 4.09 percent a year ago.

The 15-year mortgage rate slipped to 2.72 percent from 2.74 percent last week.

After Britain’s recent vote to leave the European Union, investors fled to the safety of U.S. Treasury bonds, driving up their prices and lowering their yields. Long-term mortgage rates tend to track the yield on 10-year Treasury notes.

AP Logo Copyright © 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Fla.’s foreclosure rate dropping, state now No. 4

IRVINE, Calif. – July 14, 2016 – While Florida continues to have a higher number of foreclosures, the total number continues to drop, and the state’s U.S. ranking is in decline as it moves from its often No. 1 spot down to No. 4 in RealtyTrac’s 2016 U.S. Foreclosure Market Report.

New Jersey now tops RealtyTrac’s foreclosure-rate list (0.98 percent of housing units with a foreclosure filing) followed by Maryland (0.90 percent) and Delaware (0.78 percent). In fourth place, Florida (0.70 percent) still outranks its long-time competitor for the top spot, Nevada (0.68 percent).

The top 10 list of foreclosure-rate states for the first six months of 2016 is rounded out by Illinois (0.61 percent), Ohio (0.54 percent), South Carolina (0.54 percent), Connecticut (0.48 percent) and Indiana (0.47 percent).

In a look at foreclosure rates by metro area, Florida has three cities in the top 10: Lakeland-Winter Haven was No. 4 (0.91 percent), Tampa-St. Petersburg was No. 8 (0.85 percent) and Jacksonville was No. 9 (0.80 percent). The top U.S. foreclosure cities were Trenton, New Jersey (1.31 percent) and Baltimore (0.96 percent).

“South Florida saw a 34 percent drop in foreclosure filings year-over-year,” says Mike Pappas, president and CEO at Keyes Company. “With strong employment, low interest rates and with lenders continuing to carefully scrutinize borrowers – foreclosures will soon be at the lowest levels in a decade.”

The length of time it takes from first foreclosure notice to final judgment continues to impact the Florida market. In the state with the longest foreclosure timeline, New Jersey, it takes 1,249 days. It’s followed by Hawaii (1,236 days), New York (1,058 days), Utah (1,025 days) and Florida (1,012 days).

According to RealtyTrac, investors buy 1 in 4 foreclosed homes: 27 percent of all properties sold at foreclosure auction were purchased by third-party investors. It’s the highest share for the first six months of any year since 2000 – the earliest national data is available.

National foreclosure details

The U.S. had a total of 533,813 U.S. properties with foreclosure filings – default notices, scheduled auctions or bank repossessions – in the first six months of 2016, down 20 percent from the previous six months and down 11 percent from the first six months of 2015.

Counter to the national trend, 19 states posted year-over-year increases in foreclosure activity in the first half of 2016. Among the nation’s 20 most-populated metro areas, five posted year-over-year increases in foreclosure activity.

“Although there are some local outliers, the downward foreclosure trend continued in the first half of 2016 in most markets nationwide,” says Daren Blomquist, senior vice president at RealtyTrac.

“While U.S. foreclosure activity is still above its pre-recession levels, many of the states hit hardest by the housing crisis have now dropped below pre-recession foreclosure activity levels,” he adds. “With some exceptions, states with foreclosure activity continuing to run above pre-recession levels tend to be those with protracted foreclosure timelines still working through legacy distress from the last housing bust.”

States where Q2 2016 foreclosure activity was still above pre-recession averages: Florida (26 percent above pre-recession levels), New Jersey (215 percent above), Illinois (36 percent above), New York (127 percent above), Indiana (2 percent above), South Carolina (376 percent above), Massachusetts (127 percent above) and Washington (29 percent above).

© 2016 Florida Realtors®

 

New FHA rules created to protect at-risk homeowners

WASHINGTON – July 1, 2016 – HUD announced changes to its Distressed Asset Stabilization Program (DASP), which sells severely delinquent FHA mortgages to private investors. HUD says the new rules should protect homeowners from “payment shock.”

According to HUD, “certain families with distressed mortgages insured by the Federal Housing Administration (FHA) may soon be eligible for a reduction of their outstanding loan amounts should their mortgages be sold through DASP.”

On average, mortgages sold through DASP are 29 months delinquent at the time of the auction.

Additional details on the latest enhancements are posted on HUD’s website.

“While thousands of homeowners avoided foreclosure through this note sales program, we continue to explore new ways to help these families and to offer more opportunities for public-minded organizations to have a seat at the table,” says Ed Golding, HUD’s Principal Deputy Assistant Secretary for the Office of Housing.

FHA’s new DASP enhancements include:

  • Principal reduction/capital arrearage forgiveness
    Principal forgiveness is the first option investors must consider when evaluating borrowers for a modification
  • Payment shock protection
    FHA will limit interest rate increases to no more than one percent per year after a five-year period where the rate is fixed
  • Walk-away prohibition
    FHA prohibits any purchaser of single-family mortgages under DASP from abandoning lower value properties in order to prevent neighborhood blight
  • Alternative bidding for non-profit buyers
    Qualified non-profit organizations may now bid on a partial pool of notes – up to five percent of a National Pool – and to pay the reserve price. This offers another opportunity for non-profit organizations and local governments to participate in DASP, HUD says
  • Streamline direct sales to government entities
    FHA is providing new standard guidance on the sale of distressed mortgages directly to qualified government entities and local governments
  • Target loans for DASP sales based on the non-profits and local governments
    FHA says it will enhance its efforts to identify and offer loans in targeted distressed areas to non-profits and local governments

FHA strengthened DASP last year, too. It expanded a foreclosure moratorium from six-to-12 months, requiring purchasers of these distressed mortgages to suspend any foreclosure action. It also provided advanced notice of pending sales and extended the due diligence periods; offered a “first look” opportunity for non-profits to purchase vacant properties; and created specific pools of mortgages exclusively for non-profit organizations and local governments.

© 2016 Florida Realtors®

Buy vs. rent: 5 things to consider

PITTSBURGH, Pa. – July 1, 2016 – Buying a house is the largest investment most people ever make, and it’s not a decision you should enter into lightly, say personal finance experts at the Pennsylvania Institute of Certified Public Accountants. If you’re considering making the leap from renter to owner, there are some things you should consider.

Where you are
A 2016 study from the National Association of Realtors found that more than one-third of all homebuyers are 35 and younger. While people five or 10 years older might still be recovering from the housing crash, millennials seem ready to start a new chapter in their lives. And this group may be onto something.

In 70 percent of the major markets across the nation, buying beats renting in less than two years. A Zillow analysis of rent vs. purchase costs found that it takes an average of 1.9 years to break even on a home purchase. In larger cities, you would need to live in a home for three years or more to break even on comparable rent, but that number drops to 1.5 years or less in Cleveland, San Antonio, Kansas City, Houston, Atlanta, Detroit and Indianapolis.

When to buy
A study from Black Knight Financial Services analyzed national price appreciation and household income. Today, 21 percent of median income is required to purchase a median-priced home with a 30-year fixed-rate mortgage. Considering the current rate of home price appreciation, combined with a 0.5 percent annual increase in mortgage interest rates, it may become more difficult.

If home prices and interest rates continue to rise at the same pace, the average monthly payment on the median home will rise by $114 within 12 months and would be $240 more per month in 24 months.

How long to stay
House prices fluctuate year to year. And you’re leveraged when you buy, so a price drop of just 5 percent could mean a huge loss if you have to sell. However, if you own for five or more years, there’s much less risk. Home prices are more likely to move at least a bit higher over longer periods of time. And you’ll have built up more equity in your home by paying down the mortgage over five years that will cushion you against a drop in prices.

Affordability
CPAs advise not spending more than 28 percent of your gross pretax income on your monthly housing payment. Another rule of thumb is that your combined debt (housing expenses, credit cards, student loans, alimony, car loans, etc.) should be between 30 percent and 40 percent of your pretax income.

Costs of remaining a renter
Renters aren’t immune from price increases. If you live in a popular neighborhood with no rent control, your rent is most likely to rise over time. A fixed-rate mortgage won’t increase, and you will build equity if you own rather than rent. Also, there aren’t any tax write offs available to renters; your landlord generally gets those honors.

When you sit down and crunch the numbers, does it make more financial sense to buy or rent? There are many free calculators online to help you create and analyze different financial scenarios. If now isn’t the right time, you can continue to save for a downpayment until you’re ready.

A CPA can help
As a trusted, independent financial advisor, a CPA understands the different options available to you.

Copyright New Pittsburgh Courier Jun 8-Jun 14, 2016