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Each quarter, Pulsenomics surveys a
“distinguished panel of over 100 economists, investment strategists, and housing market analysts regarding their 5-year expectations for future home prices in the United States.”
Here are the results of their latest survey: Price appreciation/depreciation expected over the next five years:
2012: -.4% 2013: +1.3% 2014: +2.6% 2015: +3.2% 2016: +3.5%The average pre-bubble (1987-1999) annual appreciation was 3.6%
by THE KCM CREW
Real estate markets across the country are inching their way to a slow recovery after bottoming out, according to several real estate economists who spoke at a forum hosted by the National Association of Real Estate Editors.
National Association of REALTORS®’ Chief Economist Lawrence Yun, Zillow Chief Economist Stan Humphries, and National Association of Home Builders Chief Economist David Crowe shared their views on the direction of the housing market during the forum.
"Last year was the worst year on record for [new] house sales, for 60 years of housing-sale info," Crowe said.
But things are picking up, the economists note, despite several challenges still threatening that recovery. Yun says that appraisal issues are holding back up to 20 percent of home sales and that lenders’ tightened mortgage underwriting standards are likely holding back another 15 to 20 percent of potential home deals.
Here are some of the economists’ forecasts:
1. New-home market: The NAHB predicts a 19 percent increase in single-family housing starts this year over last (from 434,000 last year to a projected 516,000 this year).
2. Single-family rental market: This could be the next housing market bubble, Humphries warns. He expects this sector to cool as rental rates continue to increase and as home ownership looks more attractive to the public again.
3. Distressed home sales: The percentage of distressed homes sales is projected to drop by 25 percent in 2012 and 15 percent in 2013, Yun says.
4. Home price appreciation: Yun says it’s possible some markets may see a 10 percent rise in home-price appreciation next year due to an increase in demand, or a 60 to 70 percent increase in housing starts. Yun argues it won’t be both, however, but rather one or the other. He notes it greatly depends on whether lawmakers reach an agreement once again on the looming debt-ceiling deadline.
5. Home owners’ negative equity: About a third of home owners are underwater, owing more on their mortgage than their home is currently worth. As such, the housing recovery will likely be “stair stepped,” Humphries says. He says home owners with negative equity will gradually begin to list their homes as they see prices inch up, but when they do, that may temporarily swell the housing supply and cause a brief pause to the recovery.
Source: “Economists: 2012 Marks the End of a Long Bottom,” Inman News
Five years ago, the U.S. government took unprecedented measures to end the subprime mortgage crisis. Since that time we have seen the rolling aftermath. Underwater home owners, short sales, and foreclosures cast a dark shadow over the market. The federal government and the real estate industry have been focused on three pressing issues since then:
· Helping distressed owners stay in their homes.
· Moving the housing recovery and US economy forward.
· Creating an environment for a sustainable housing market.
Many strategies have been attempted since the financial meltdown to turn real estate around. The creation of the FHFA (Federal Housing Finance Agency) and its conservatorship of government-sponsored enterprises Fannie Mae and Freddie Mac ensured a flow of capital to the housing market. The home buyer tax credit, loan-modification refinancing reforms, and the efforts to streamline the short-sale process have given buyers and sellers the tools they need to navigate their way through the tumultuous market.
We are now on the road to not just a temporary recovery but a sustainable recovery. What follows is an explanation of how we got here and how to continue down a positive, sustainable path.
Phase 1, 2009 to Spring 2010: The Home Buyer Tax Credit
The home buyer tax credit worked. It helped bring buyers into the marketplace at a critical time, in particular first-time home buyers. This phase of the recovery helped slow the steadily declining US economy. By the fall of 2008, the Consumer Confidence Index had dropped from 117 (100 being a healthy number) to a staggering 25. We have since seen the Consumer Confidence Index return towards the 70s.
Phase 2, Fall 2010 to Fall 2011: Residential Investors
Around November 2010, everything began to come together to create an opportunity for investors. The Federal Reserve purchased mortgage-backed securities to lower interest rates. This, combined with the lower adjusted prices, created a positive cash flow possibility for investors. They came out in force, snapping up a great deal of the glut of homes on the market with purchases of foreclosures and short sales. This helped to reduce inventory and stabilize values of homes below the median price-points in many areas.
Phase 3, Fall 2011 to Present: Surge of Local Home Buyers
Moving forward to November 2011, the backlog of local home buyers started coming forward to purchase homes, taking advantage of the historically low interest rates and lower adjusted prices. In particular, the low interest rates pushed the National Housing Affordability Index to the highest level since recording began.
This surge in local home buying caused a chain reaction of sales up through various price points, which also reduced inventory in the mid-price ranges. In certain markets with strong job growth, sales activity also increased in the upper end, supported by the rise of high-balance loan limit financing.
Phase 4, Creating a Sustainable Housing Market
In the coming years years, the residential housing market will be entering the fourth phase of its recovery — sustainability. The fourth phase will feature a return of the first-time home buyers. The group leading the charge in this sustainability phase will be the “echo boom” generation — also known as Millennials — who are now 17-31. A recently released Homebuyer Poll from TD Bank, reveals that the vast majority, 84 percent, of the Millennial generation intend to buy a home.
To help this generation of home buyers achieve the American Dream and create a sustainable housing market, we must create a healthy environment for them. This is a critical year for the future of housing. Several major decisions will be discussed and decided within the next year that will set the foundation for a sustainable housing market. Qualified residential mortgage (QRM) regulators have recommended, among other things, that a 20 percent down payment be required for a home purchase. This could devastate the market by excluding up to 30 percent of potential home buyers.
Reform and replace Fannie and Freddie with a transparent federal government support system necessary for keeping a secondary home finance securities market to attract world investors to purchase U.S. mortgage securities. The FHA’s 3.5 percent core down payment financing, USDA rural home financing, and high-balance loan limits for credit worthy home buyers are solid programs that should be continued and made permanent in order to have a sustainable housing market after the surge of backlogged local home buyers and residential investors pass through the market.
While the housing market continues to gain strength, we must maintain the solid programs and tax incentives we currently have in place in order to build a sustainable foundation for the future of housing.
BY:Lennox
In judicial states the foreclosure process must be handled through the state’s court system thus extending the timelines to bring a home to foreclosure.
The VA Home Loan Program has helped millions of veterans and their families buy a home, build a new home, or refinance their current home for more favorable terms.
This infographic showing how much this program has helped the veterans of the United States.
(via)
3.5 % Down Payments and Jumbo Loans AvailableThis is a great time to be looking for a new home. Historically low mortgage interest rates will remain low for the near future. Those low interest rates keep home purchases affordable, which is good news for buyers and sellers.
With the August United States’ debt ceiling crisis behind us, many people are starting to become more confident about buying or selling their homes.
In early August, the Federal Reserve pledged to maintain historical low interest rates for another one to two years. Most likely, when the Fed’s pledge ends, interest rates will have to increase. However, we don’t anticipate a significant increase in interest rates until 2013 or later.
Even though underwriting for home loans has tightened up over the past several years and buyers are now required to put down larger down payments and have higher credit scores, the Federal Housing Administration, or FHA, still offers mortgages with a 3.5 percent down payment.
As a result of the 2008 mortgage crisis, loan limits were increased to allow more borrowers to secure conforming loans. On the first of October 2011, these temporary limits expired, and more buyers in higher-priced markets will need jumbo loans that will carry tighter qualifying requirements (i.e. credit scores) and slightly higher interest rates.
Although many banks stopped or significantly tightened lending underwriting for jumbo loan products when the housing crisis hit, they are now back in the market and filling the void created by the expiration of the higher loans balance. That’s good news for buyers needing jumbo loans and sellers of higher-priced properties.
The days of reckless lending and then the market’s pendulum swing to overly conservative lending practices are gone. The good news is that we are now back to sensible underwriting. Even though we have tougher qualifying requirements – larger down payments and higher credit scores – banks still want to provide mortgages, even at historically low interest rates. Call your broker for more information when planning to buy, sell or refinance your home.
For the fifth week, fixed-rate mortgages reached new all-time lows. The 15-year fixed-rate mortgage dipped below 3 percent, settling into uncharted territory, according to Freddie Mac’s weekly mortgage market survey. Thirty-year fixed-rate mortgages also reached new record lows, continuing to stay under 4 percent and pushing home buyer affordability even higher.
“Compared to a year ago, rates on 30-year fixed mortgage rates are almost 0.9 percentage points lower, which translates into nearly $1,200 less in annual payments on a $200,000 loan,” says Frank Nothaft, Freddie Mac’s chief economist.
Here’s a closer look at rates for the week ending May 31.
Source: Freddie Mac
*as a percentage of all mortgaged homes
