You may or may not be aware of the next part of the government’s mortgage reform that goes into effect on July 30th. The new rules in the Disclosure Improvement Act have the potential to slow a transaction down by increasing disclosure periods in the Truth and Lending Act. The danger of delay is probably greatest when the buyer holds off locking the interest rate to the latest possible moment or switches lenders when the transaction is nearing closing.
Three key elements you need to know
1-lf the borrower is financing the property, these new regulatory and investor guidelines will impacted could even dictate-the closing date.
Historically, borrowers and sellers would agree on a closing date, and then service providers - including mortgage brokers and lenders - would work as best they could toward meeting that date. Going forward, contracts can still be written with a specific closing date in mind, but all parties need to take into account that the earliest any home financing transaction can close is 7 business days after the borrower is issued their initial mortgage disclosures from the lender. (Note: Saturdays, with the exception of Federal holidays, do count as a business day for the purpose of disclosures only.)
2-The borrower must be provided with a copy of the appraisal a minimum of 3 business days prior to closing. The appraisal is considered ” received” 3 business days after mailing, not counting the day mailed or 3 days after emailing including the day emailed.
If the borrower believes the 3-business-day required review period is not necessary for whatever reason, he or she has the right to waive that requirement. (Some lenders are erring on the side of caution and have indicated they will not honor these waivers).
3-An increase of more than .125% in the Annual Percentage Rate (APR) from the initial Truth in Lending Disclosure (TIL) requires the TIL disclosure to be revised and reissued to the borrower. The borrower must receive a revised TIL disclosure at least 3 business days before closing, providing the borrower with the time required to determine if the borrower is comfortable with the loan choice. Same mailing rules as above.
A more typical contract date may be 30-45 days - or possibly longer (such as with a new construction loan). Considering that many things occur and may be changed or finalized throughout the course of the transaction, there are a number of things that can impact the borrower’s APR. Therefore it is critical on the front end to ensure that estimated fees are as accurate as possible. Some of us might choose to replace the word accurate in the last sentence with the word HIGH thereby reducing the number of times we subject everyone to the clock resetting because of changes. I also recommend reaching out to your First Time Homebuyers’, and instill a sense of urgency into them as we would hate for them to miss the FTHB 8K tax credit deadline since this could potentially delay closings at the last hour. Enjoy the day!
Marketplace Home Mortgage
Mike Ouverson
Senior Mortgage Consultant
13875 Hwy 13 S • Savage, MN 55378
Cell: 612-202-8321 • Main: 612-465-8890 • Fax: 952-487-2325
mouverson@landmarqlending.com • www.EMortgageExperts.com
Wednesday, July 22, 2009
Government Regulation Clogs the Pipes
It's no secret that many facets of lending and real estate have changed as a result of the credit crisis. In addition to tightened lending practices that resulted from rising mortgage delinquencies, Washington has been heavily involved in altering the way lenders do business today.
Two individual pieces of legislation impacting our business need to be taken into account when determining closing dates for purchase transactions.
Home Valuation Code of Conduct
The Home Valuation Code of Conduct (HVCC) went into effect May 1, 2009. Intended to shield appraisers from undue influence from loan officers and lenders, this legislation installed a "firewall" between those individuals directly involved in the origination of the loan from the selection of and contact with appraisers.
HVCC also requires that borrowers receive a copy of the appraisal a minimum of three days in advance of closing. Part of the kicker here is that "received" is considered, in effect, three business days after the appraisal has been mailed to the borrower. As HVCC requires a firewall between the originator and the appraiser, the time to receive an appraisal has increased, in some cases by as much as two weeks or more. While this may not always be the case, it is important to take into consideration when considering closing dates. Today, conservative closing dates are mandatory to properly manage expectations of all parties.
Housing and Economic Recovery Act
The Housing and Economic Recovery Act (HERA) amends and impacts several aspects of obtaining a mortgage, the disclosures required for borrowers, and the timing of their delivery. This impacts the minimum time required to close, and should any changes be made to a loan application that could impact the Annual Percentage Rate (APR), this could impact the closing date.
Other than paying for a credit report, lenders may not accept any additional fees from a borrower until four business days after disclosures have been provided to or mailed to a borrower. This has the potential to delay several aspects of the application process.
Finally, upon making application, a borrower is provided a Truth in Lending (TIL) statement, detailing the total expected costs that could be incurred over the life of the loan. Should anything change in the loan application that could change the APR by more than .125%, a new TIL must be reissued to the borrower a minimum of 3 business days before closing. Items impacting the APR could include a borrower accepting a higher interest rate than initially qualified by floating their rate at application, a change to the loan amount, a change in product, a change in closing date, and any changes to fees.
What Now?
While there is more we can discuss on the specifics of these legislative implications, I felt it important enough to let you know now that I would not recommend you write purchase contracts with short closing time frames.
I will be preparing additional information you can provide both your buyers and sellers to help explain the rationale behind not scheduling closing dates in advance of 30 days and possibly up to 45 days depending on the impact of these new regulations.
Thank you again for your business and if you have any questions, please pick up the phone and call me.
Marketplace Home Mortgage
Mike Ouverson
Senior Mortgage Consultant
13875 Hwy 13 S • Savage, MN 55378
Cell: 612-202-8321 • Main: 612-465-8890 • Fax: 952-487-2325
mouverson@landmarqlending.com • www.EMortgageExperts.com
Two individual pieces of legislation impacting our business need to be taken into account when determining closing dates for purchase transactions.
Home Valuation Code of Conduct
The Home Valuation Code of Conduct (HVCC) went into effect May 1, 2009. Intended to shield appraisers from undue influence from loan officers and lenders, this legislation installed a "firewall" between those individuals directly involved in the origination of the loan from the selection of and contact with appraisers.
HVCC also requires that borrowers receive a copy of the appraisal a minimum of three days in advance of closing. Part of the kicker here is that "received" is considered, in effect, three business days after the appraisal has been mailed to the borrower. As HVCC requires a firewall between the originator and the appraiser, the time to receive an appraisal has increased, in some cases by as much as two weeks or more. While this may not always be the case, it is important to take into consideration when considering closing dates. Today, conservative closing dates are mandatory to properly manage expectations of all parties.
Housing and Economic Recovery Act
The Housing and Economic Recovery Act (HERA) amends and impacts several aspects of obtaining a mortgage, the disclosures required for borrowers, and the timing of their delivery. This impacts the minimum time required to close, and should any changes be made to a loan application that could impact the Annual Percentage Rate (APR), this could impact the closing date.
Other than paying for a credit report, lenders may not accept any additional fees from a borrower until four business days after disclosures have been provided to or mailed to a borrower. This has the potential to delay several aspects of the application process.
Finally, upon making application, a borrower is provided a Truth in Lending (TIL) statement, detailing the total expected costs that could be incurred over the life of the loan. Should anything change in the loan application that could change the APR by more than .125%, a new TIL must be reissued to the borrower a minimum of 3 business days before closing. Items impacting the APR could include a borrower accepting a higher interest rate than initially qualified by floating their rate at application, a change to the loan amount, a change in product, a change in closing date, and any changes to fees.
What Now?
While there is more we can discuss on the specifics of these legislative implications, I felt it important enough to let you know now that I would not recommend you write purchase contracts with short closing time frames.
I will be preparing additional information you can provide both your buyers and sellers to help explain the rationale behind not scheduling closing dates in advance of 30 days and possibly up to 45 days depending on the impact of these new regulations.
Thank you again for your business and if you have any questions, please pick up the phone and call me.
Marketplace Home Mortgage
Mike Ouverson
Senior Mortgage Consultant
13875 Hwy 13 S • Savage, MN 55378
Cell: 612-202-8321 • Main: 612-465-8890 • Fax: 952-487-2325
mouverson@landmarqlending.com • www.EMortgageExperts.com
Stock Rally Pushes Mortgage Rates Higher
While the economic data released during the week generally matched expectations, the outlook for future economic growth improved due to strong earnings reports, tame inflation data, and a revised forecast from the Fed. Stronger economic growth was good news for the stock market, and the Dow rose over 500 points. It was unfavorable for the bond market, however, and mortgage rates ended the week moderately higher.
On Wednesday, the Fed released its minutes from the June 24 FOMC meeting, and most of the news was negative for mortgage rates. The minutes revealed an upward revision to the Fed's forecast for economic growth and inflation in 2009 and 2010. In addition, Fed officials expressed a strong reluctance to increase any further the program to purchase mortgage-backed securities (MBS). Mortgage rates are largely determined by MBS prices. When the Fed initially announced its MBS purchase program in November, mortgage rates immediately dropped, and they dropped again significantly when the Fed announced an increase in the program in March. The Fed has a substantial involvement in MBS markets, and any change in this program would have a major impact on mortgage rates.
The housing sector data released during the week showed improvement. June Housing Starts rose 4% to the highest level in seven months. Building Permits, a leading indicator, jumped 9%. The national Association of Home Builders (NAHB) sentiment index increased to the highest level since September 2008. According to the NAHB, the first-time homebuyer tax credit, low mortgage rates, and "attractive" home prices are helping home sales.
On Wednesday, the Fed released its minutes from the June 24 FOMC meeting, and most of the news was negative for mortgage rates. The minutes revealed an upward revision to the Fed's forecast for economic growth and inflation in 2009 and 2010. In addition, Fed officials expressed a strong reluctance to increase any further the program to purchase mortgage-backed securities (MBS). Mortgage rates are largely determined by MBS prices. When the Fed initially announced its MBS purchase program in November, mortgage rates immediately dropped, and they dropped again significantly when the Fed announced an increase in the program in March. The Fed has a substantial involvement in MBS markets, and any change in this program would have a major impact on mortgage rates.
The housing sector data released during the week showed improvement. June Housing Starts rose 4% to the highest level in seven months. Building Permits, a leading indicator, jumped 9%. The national Association of Home Builders (NAHB) sentiment index increased to the highest level since September 2008. According to the NAHB, the first-time homebuyer tax credit, low mortgage rates, and "attractive" home prices are helping home sales.
Decline in Nation's Housing Prices Moderates
LEXINGTON, MA (June 3, 2009) - House price depreciation moderated across the country during the first quarter 2009, falling at a 2.2% annualized pace compared with 12.5% rate of decline in the fourth quarter 2008, according to the first-quarter 2009 update of House Prices in America, the U.S. housing valuation analysis from IHS Global Insight, the world's leading company for economic and financial analysis and forecasting. Nationally, house prices have fallen 10.4% below their 2007 peak.
Prices declined in 199 of 330 metropolitan areas in the study, down from 312 areas registering declines in the fourth quarter of 2008.
Areas experiencing the greatest declines continue to be in Florida, California and Nevada - states that experienced the highest levels of overvaluation as the housing bubble expanded - and Michigan, feeling the double whammy of the national recession and the contraction in the U.S. auto industry. Fifty-seven metro areas had declines greater than 25% from their peaks and 134 had declines greater than 10%. However, nine metro areas - five of them in California - and the rest in Florida, Arizona and Nevada have seen prices decline by more than 50% from their peaks.
The nation's housing market, as a whole, is now slightly undervalued, a sharp contrast to 2005 when 52 metropolitan areas were seen to be extremely overvalued. Extreme overvaluation was essentially nonexistent in the first quarter, existing for the second straight quarter only in Atlantic City, NJ.
Only the Pacific Northwest, extending across a wide region through Idaho and Utah, remained overvalued.
Home prices declined by more than 10% in five metro areas and by more than 5% in 26 in the first quarter, compared with 104 declining by more than 10% and 16 by more than 5% in the previous quarter.
Southern metros, especially in Texas, have remained generally undervalued throughout the study's five-year life. The most dramatic changes in valuation have occurred in metro areas in California and Florida where many have gone from extremely overvalued to undervalued in a span of two years. Magnifying the downward pressure on prices in these areas are the huge number of foreclosures and other short sales, as well as the large inventory overhand of unsold homes.
Jeannine Cataldi, senior economist and manager of IHS Global Insight's Regional Real Estate Service, said: "The good news is that the declines are happening as consumer confidence is rising and housing sales and starts seem to be bottoming out; the bad news is that job losses continue at high rates, housing inventories are still elevated and consumers, while becoming somewhat more confident, are still wary in the face of economic uncertainty."
James Diffley, group managing director of IHS Global Insight's Regional Services Group, said: "While it's too early to see a bottom of this housing downturn, this quarter's deceleration in the rate of decline may signal that the market is beginning to stabilize."
House Prices in America, a joint effort by IHS Global Insight and The PNC Financial Services Group, Inc. (NYSE:PNC) examines the top 330 U.S. real estate markets, representing 78.1% of all existing housing units and 92% of all related real estate value to determine what house prices should be, accounting for differences in population density, relative income levels, and historically observed market premiums or discounts. Markets with valuation premiums above 35% were deemed at risk for price corrections based on the typical degree of overvaluation that preceded the 79 known local price declines observed since 1985.
Prices declined in 199 of 330 metropolitan areas in the study, down from 312 areas registering declines in the fourth quarter of 2008.
Areas experiencing the greatest declines continue to be in Florida, California and Nevada - states that experienced the highest levels of overvaluation as the housing bubble expanded - and Michigan, feeling the double whammy of the national recession and the contraction in the U.S. auto industry. Fifty-seven metro areas had declines greater than 25% from their peaks and 134 had declines greater than 10%. However, nine metro areas - five of them in California - and the rest in Florida, Arizona and Nevada have seen prices decline by more than 50% from their peaks.
The nation's housing market, as a whole, is now slightly undervalued, a sharp contrast to 2005 when 52 metropolitan areas were seen to be extremely overvalued. Extreme overvaluation was essentially nonexistent in the first quarter, existing for the second straight quarter only in Atlantic City, NJ.
Only the Pacific Northwest, extending across a wide region through Idaho and Utah, remained overvalued.
Home prices declined by more than 10% in five metro areas and by more than 5% in 26 in the first quarter, compared with 104 declining by more than 10% and 16 by more than 5% in the previous quarter.
Southern metros, especially in Texas, have remained generally undervalued throughout the study's five-year life. The most dramatic changes in valuation have occurred in metro areas in California and Florida where many have gone from extremely overvalued to undervalued in a span of two years. Magnifying the downward pressure on prices in these areas are the huge number of foreclosures and other short sales, as well as the large inventory overhand of unsold homes.
Jeannine Cataldi, senior economist and manager of IHS Global Insight's Regional Real Estate Service, said: "The good news is that the declines are happening as consumer confidence is rising and housing sales and starts seem to be bottoming out; the bad news is that job losses continue at high rates, housing inventories are still elevated and consumers, while becoming somewhat more confident, are still wary in the face of economic uncertainty."
James Diffley, group managing director of IHS Global Insight's Regional Services Group, said: "While it's too early to see a bottom of this housing downturn, this quarter's deceleration in the rate of decline may signal that the market is beginning to stabilize."
House Prices in America, a joint effort by IHS Global Insight and The PNC Financial Services Group, Inc. (NYSE:PNC) examines the top 330 U.S. real estate markets, representing 78.1% of all existing housing units and 92% of all related real estate value to determine what house prices should be, accounting for differences in population density, relative income levels, and historically observed market premiums or discounts. Markets with valuation premiums above 35% were deemed at risk for price corrections based on the typical degree of overvaluation that preceded the 79 known local price declines observed since 1985.
Distressed homes on the Twin Cities market decrease
The number of houses in financial distress for sale in the Twin Cities has dropped sharply as buyers took advantage of falling prices, area Realtors said Tuesday in a quarterly report.
By itself, that's good news for the Twin Cities-area market. But another key piece of the housing recovery puzzle still hasn't fallen into place: the rate of foreclosures pushing homes onto the market. New "lender-mediated" listings -- foreclosures and short sales, where homes are sold for less than the amount of the mortgage -- remain well above year-ago levels.
Market-watchers fear that rising unemployment will push more prime mortgages into foreclosure in the coming months, putting continued pressure on the market.
The number of distressed properties on the Twin Cities market dropped 2,100 from Feb. 1 to the start of July, to 6,685, according to the Minneapolis Area Association of Realtors, which said it's the fewest available since March 2008. When looking at the same number between July 2008 and this month, the drop was 18 percent.
The Realtors group attributed the drop to falling mortgage rates, an $8,000 federal tax credit for first-time buyers and near-record affordability.
"We're very pleased that the lenders are getting to the price points where they have sold very quickly, even some with multiple offers," said Steve Havig, president of the group and owner of Lakes Area Realty in Minneapolis. It's a sign, he said, that "we're inching to a balanced market."
The group said that distressed inventory is down in every price category, except the $1 million-plus, where it has increased 60 percent.
By itself, that's good news for the Twin Cities-area market. But another key piece of the housing recovery puzzle still hasn't fallen into place: the rate of foreclosures pushing homes onto the market. New "lender-mediated" listings -- foreclosures and short sales, where homes are sold for less than the amount of the mortgage -- remain well above year-ago levels.
Market-watchers fear that rising unemployment will push more prime mortgages into foreclosure in the coming months, putting continued pressure on the market.
The number of distressed properties on the Twin Cities market dropped 2,100 from Feb. 1 to the start of July, to 6,685, according to the Minneapolis Area Association of Realtors, which said it's the fewest available since March 2008. When looking at the same number between July 2008 and this month, the drop was 18 percent.
The Realtors group attributed the drop to falling mortgage rates, an $8,000 federal tax credit for first-time buyers and near-record affordability.
"We're very pleased that the lenders are getting to the price points where they have sold very quickly, even some with multiple offers," said Steve Havig, president of the group and owner of Lakes Area Realty in Minneapolis. It's a sign, he said, that "we're inching to a balanced market."
The group said that distressed inventory is down in every price category, except the $1 million-plus, where it has increased 60 percent.
8 Ways to Share HOA News
Do you have a reliable system to get information to your HOA members quickly and accurately? Do you request suggestions and feedback? These are all signs of a proactive management style. Proactive managers welcome communication because it lets them know whether they are on track or derailed. As the saying goes, "The light at the end of the tunnel may be the headlight of an oncoming train." Better to know sooner than later.
On the flip side, reactive communications keep the board on the defensive and are indicative of a crisis management style. With crisis management, nothing gets done unless the smell of tar and feathers is in the air. Under these circumstances, it's unlikely that the end result will be good. If this is the kind of style the board has been practicing, consider what kind of environment this creates.
Failure to communicate makes fertile ground for rumor and rumors trample on the board's initiative and planning. While it's best to head rumors off at the pass, they can sometimes be a way for the board to address issues. Consider a newsletter article "Rumor Has It ..." and dispel the rumor with the facts.
Here are eight great ways to "tell it like it is": The Internet. Bar none, the internet is the fastest and cheapest way to interact with the membership. Most folks now have email addresses so why continue to waste time and money on copies, labels, stamps, envelopes and the US Snail Service if you don't need to? For about $1/day, your HOA can have its own website with key information posted and a turbo charged communication system.
Newsletters. These can be as small as one page and as large as the LA Times depending on how much time, budget, volunteer effort and information there is. Pick a format and catchy name and stick with it. Make the information interesting. Decide at budget time how many newsletters there will be and when they will be produced. And rather than print them, use PDF and email them. For more Newsletter Basics, go to www.Regenesis.net
Flyer Boxes. Flyers distributed at the mailbox, clubhouse and other common points are a quick and cheap way to get the word out. Don't forget to mail to non-resident members.
Message Board. Very effective if properly located and managed. Don't let messages stay for more than a week as they blend into the landscape. Keep the board neat and sectioned according to topic.
Member Forum. Always give the members a voice at board meetings by way of a pre-meeting Member Forum designed to let them speak their mind, ask questions or offer suggestions. To facilitate this, always hold your meetings in a location that is large enough to accommodate guests.
Automated Phone Trees. There are great options available on the internet that allow you to communicate a voice message to a list of phone numbers. See , www.call-em-all.com, www.onecallnow.com and others.
Welcome Packets. These can include things like the governing documents, budgets, rules and regulations and other need-to-know information. The message should be, as the name implies, "Welcome to the neighborhood!" Include architectural guidelines, maps, clubhouse and pool schedules, management and emergency contact information. To save paper, put all this information on a CD or, even better, direct them to the HOA website for the latest and greatest.
HOA Phone Number. This essential tool is often overlooked. Since board members and managers change, why not have a permanent phone number with voice mail that will alert the right party? Clear and frequent communications build trust and allay fears that grow when folks don't know what's going on. Rather than get ground up in a rumor mill, share the Good News and watch harmony grow.
For more innovative homeowner association management strategies, see Regenesis.net . Today's Local Market Conditions Report
On the flip side, reactive communications keep the board on the defensive and are indicative of a crisis management style. With crisis management, nothing gets done unless the smell of tar and feathers is in the air. Under these circumstances, it's unlikely that the end result will be good. If this is the kind of style the board has been practicing, consider what kind of environment this creates.
Failure to communicate makes fertile ground for rumor and rumors trample on the board's initiative and planning. While it's best to head rumors off at the pass, they can sometimes be a way for the board to address issues. Consider a newsletter article "Rumor Has It ..." and dispel the rumor with the facts.
Here are eight great ways to "tell it like it is": The Internet. Bar none, the internet is the fastest and cheapest way to interact with the membership. Most folks now have email addresses so why continue to waste time and money on copies, labels, stamps, envelopes and the US Snail Service if you don't need to? For about $1/day, your HOA can have its own website with key information posted and a turbo charged communication system.
Newsletters. These can be as small as one page and as large as the LA Times depending on how much time, budget, volunteer effort and information there is. Pick a format and catchy name and stick with it. Make the information interesting. Decide at budget time how many newsletters there will be and when they will be produced. And rather than print them, use PDF and email them. For more Newsletter Basics, go to www.Regenesis.net
Flyer Boxes. Flyers distributed at the mailbox, clubhouse and other common points are a quick and cheap way to get the word out. Don't forget to mail to non-resident members.
Message Board. Very effective if properly located and managed. Don't let messages stay for more than a week as they blend into the landscape. Keep the board neat and sectioned according to topic.
Member Forum. Always give the members a voice at board meetings by way of a pre-meeting Member Forum designed to let them speak their mind, ask questions or offer suggestions. To facilitate this, always hold your meetings in a location that is large enough to accommodate guests.
Automated Phone Trees. There are great options available on the internet that allow you to communicate a voice message to a list of phone numbers. See , www.call-em-all.com, www.onecallnow.com and others.
Welcome Packets. These can include things like the governing documents, budgets, rules and regulations and other need-to-know information. The message should be, as the name implies, "Welcome to the neighborhood!" Include architectural guidelines, maps, clubhouse and pool schedules, management and emergency contact information. To save paper, put all this information on a CD or, even better, direct them to the HOA website for the latest and greatest.
HOA Phone Number. This essential tool is often overlooked. Since board members and managers change, why not have a permanent phone number with voice mail that will alert the right party? Clear and frequent communications build trust and allay fears that grow when folks don't know what's going on. Rather than get ground up in a rumor mill, share the Good News and watch harmony grow.
For more innovative homeowner association management strategies, see Regenesis.net . Today's Local Market Conditions Report
Wednesday, July 15, 2009
Downpayment, Closing Costs Biggest Obstacles
Most Americans still consider having enough money for downpayment and closing costs to be the biggest obstacles to buying a home, according to the 2009 National Housing Pulse Survey, an annual survey released Thursday by the NATIONAL ASSOCIATION OF REALTORS®.
The survey, which measures how affordable housing issues affect consumers, also found job security concerns to be the highest in seven years of sampling. Two-thirds of Americans think job layoffs and unemployment are a big problem; eight in 10 cite these issues as a barrier to homeownership.
“Homeownership is an investment in your future; however, saving for a downpayment and closing costs is still too great of an obstacle for 82 percent of house hunters looking to take advantage of the current market,” says NAR President Charles McMillan. “Monetizing the $8,000 first-time buyer tax credit for downpayment or closing costs on FHA-insured mortgages is a positive first step. Our hope is that the tax credit will be extended and expanded to all home buyers and will help bring stability to the housing market and enable more Americans to achieve the dream of homeownership."
Survey: Consumers Still Believe in Homeownership
Despite the challenges with the economy and housing market, 83 percent of Americans still believe buying a home is a good financial decision.
Three-fourths of those surveyed also believe now is a good time to buy a home, a number that has increased steadily the past two years. In fact, one-third of renters are thinking more about buying home than they were a year ago.
While Americans are seeing more stability in the real estate market, uncertainty persists. The number of those who feel buying and selling activity has stabilized or stayed nearly the same has grown significantly, from 18 percent last year to 26 percent this year. However the majority (58 percent) report that activity in their market has slowed.
Regarding home sales, nearly eight in 10 say it’s harder to sell a home in their area today than it was a year ago, despite the fact that nearly three-fourths of respondents say home prices are less expensive. Large home inventories could be to blame; 44 percent cite concerns about the high number of homes and condos for sale in their area.
While nearly three-fourths of Americans are concerned about the local drop in home values, respondents expect to see more stability in the near future. Nearly seven in 10 expect local home prices to remain about the same in the next three months; only 18 percent expect prices to further decrease. The drop in prices has improved affordability, and consequently, concerns about the lack of affordable housing are the lowest they’ve been in seven years of polling – 34 percent say it’s one of their biggest worries, down from 41 percent two years ago.
Foreclosures Among Top Concerns
Foreclosures remain a real concern among survey respondents. Slightly more than half (51 percent) say foreclosures are a big to moderate problem in their area. However, the rate of foreclosures is generally seen as stabilizing; 41 percent say the rate of foreclosures in their area is about the same as last year.
Ninety-two percent of respondents said neither they nor members of their immediate family have experienced a foreclosure in the past year, yet it is still a personal concern for many. One in five respondents said they are very or fairly worried that they will have difficulty making their mortgage payments over the next year. Thirty-two percent say it’s a big or moderate worry that they, or a member of their family, may have their home repossessed or foreclosed because they are unable to pay rising monthly mortgage payments.
In 2008, more than half of respondents (54 percent) were open to the federal government taking a more active role in overseeing mortgage and lending practices – the number dropped this year to 47 percent. This could be because 42 percent of Americans believe the country is back on the right track, more than double the number last year (16 percent).
Obtaining Financing Another Obstacle
Regarding financing, seven in 10 Americans cite a lack of confidence in their ability to be approved for a home loan as an obstacle to homeownership. The same number also say that banks are making it too hard to qualify for a loan (71 percent) and that fewer mortgage options offered by banks have made it harder for them to buy a home (71 percent). The perception of qualifying for a loan as a huge obstacle is especially high among minorities.
“Home buyers need protection from risky lending products but also need access to mortgages at a reasonable cost. While there has been some easing of credit in the mortgage market, the availability of credit continues to be an issue for many qualified home buyers,” says McMillan.
The 2009 National Housing Pulse Survey is conducted by American Strategies and Myers Research & Strategic Services for NAR’s Housing Opportunity Program. The telephone survey was among 1,250 adults living in the 25 most populous metropolitan statistical areas.
Source: NAR
The survey, which measures how affordable housing issues affect consumers, also found job security concerns to be the highest in seven years of sampling. Two-thirds of Americans think job layoffs and unemployment are a big problem; eight in 10 cite these issues as a barrier to homeownership.
“Homeownership is an investment in your future; however, saving for a downpayment and closing costs is still too great of an obstacle for 82 percent of house hunters looking to take advantage of the current market,” says NAR President Charles McMillan. “Monetizing the $8,000 first-time buyer tax credit for downpayment or closing costs on FHA-insured mortgages is a positive first step. Our hope is that the tax credit will be extended and expanded to all home buyers and will help bring stability to the housing market and enable more Americans to achieve the dream of homeownership."
Survey: Consumers Still Believe in Homeownership
Despite the challenges with the economy and housing market, 83 percent of Americans still believe buying a home is a good financial decision.
Three-fourths of those surveyed also believe now is a good time to buy a home, a number that has increased steadily the past two years. In fact, one-third of renters are thinking more about buying home than they were a year ago.
While Americans are seeing more stability in the real estate market, uncertainty persists. The number of those who feel buying and selling activity has stabilized or stayed nearly the same has grown significantly, from 18 percent last year to 26 percent this year. However the majority (58 percent) report that activity in their market has slowed.
Regarding home sales, nearly eight in 10 say it’s harder to sell a home in their area today than it was a year ago, despite the fact that nearly three-fourths of respondents say home prices are less expensive. Large home inventories could be to blame; 44 percent cite concerns about the high number of homes and condos for sale in their area.
While nearly three-fourths of Americans are concerned about the local drop in home values, respondents expect to see more stability in the near future. Nearly seven in 10 expect local home prices to remain about the same in the next three months; only 18 percent expect prices to further decrease. The drop in prices has improved affordability, and consequently, concerns about the lack of affordable housing are the lowest they’ve been in seven years of polling – 34 percent say it’s one of their biggest worries, down from 41 percent two years ago.
Foreclosures Among Top Concerns
Foreclosures remain a real concern among survey respondents. Slightly more than half (51 percent) say foreclosures are a big to moderate problem in their area. However, the rate of foreclosures is generally seen as stabilizing; 41 percent say the rate of foreclosures in their area is about the same as last year.
Ninety-two percent of respondents said neither they nor members of their immediate family have experienced a foreclosure in the past year, yet it is still a personal concern for many. One in five respondents said they are very or fairly worried that they will have difficulty making their mortgage payments over the next year. Thirty-two percent say it’s a big or moderate worry that they, or a member of their family, may have their home repossessed or foreclosed because they are unable to pay rising monthly mortgage payments.
In 2008, more than half of respondents (54 percent) were open to the federal government taking a more active role in overseeing mortgage and lending practices – the number dropped this year to 47 percent. This could be because 42 percent of Americans believe the country is back on the right track, more than double the number last year (16 percent).
Obtaining Financing Another Obstacle
Regarding financing, seven in 10 Americans cite a lack of confidence in their ability to be approved for a home loan as an obstacle to homeownership. The same number also say that banks are making it too hard to qualify for a loan (71 percent) and that fewer mortgage options offered by banks have made it harder for them to buy a home (71 percent). The perception of qualifying for a loan as a huge obstacle is especially high among minorities.
“Home buyers need protection from risky lending products but also need access to mortgages at a reasonable cost. While there has been some easing of credit in the mortgage market, the availability of credit continues to be an issue for many qualified home buyers,” says McMillan.
The 2009 National Housing Pulse Survey is conducted by American Strategies and Myers Research & Strategic Services for NAR’s Housing Opportunity Program. The telephone survey was among 1,250 adults living in the 25 most populous metropolitan statistical areas.
Source: NAR
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