FHA Lowers Its Harangued Mortgage Costs

Daily Real Estate News | Thursday, January 08, 2015

The Federal Housing Administration is reducing its annual mortgage insurance premiums by 0.5 percentage points in a move "to expand responsible lending to creditworthy borrowers," the White House said in a statement Wednesday afternoon.

 

FHA also said it would take added steps over the next few months to “cut red tape and clarify lending standards” in reducing mortgage costs for hundreds of thousands of creditworthy borrowers, according to the White House.

The FHA’s move comes after several calls from industry trade groups, associations, and members of Congress urging the agency to lower its insurance premiums, which were increasingly blamed for sidelining thousands of would-be buyers. FHA-backed loans allow buyers to put down as little as 3.5 percent of the purchase price, and they are a major financing resource for first-time buyers.

FHA’s mortgage insurance premiums will be reduced from 1.35 percent to 0.85 percent. The reduction in premiums on mortgages could save an average borrower $1,000 a year on a $200,000 loan, says Mark Zandi, chief economist at Moody’s Analytics.

“We are optimistic that more affordable FHA loans will have a positive impact on first-time buyers who have been entering the market at a lower-than-normal rate,” National Association of REALTORS® President Chris Polychron said in a statement. “NAR is a strong supporter of the FHA and its vital role in the mortgage marketplace for home buyers. We will continue our work with the administration to help make the dream of home ownership a reality for millions more Americans.”

In 2013, the FHA required a $1.7 billion bailout from the government after suffering losses from a high number of loan defaults in the aftermath of the financial crisis. Since 2008, FHA has increased its annual premiums for FHA borrowers five times. The National Association of REALTORS® has estimated that nearly 400,000 creditworthy borrowers were priced out of the housing market in 2013 because of the higher costs in FHA insurance premiums. But in recent months, FHA has turned a profit, which has renewed calls from other groups to lower their insurance premiums to help open the credit box to more qualified borrowers.

“This action will make home ownership more affordable for over two million Americans in the next three years,” says Julian Castro, secretary of the Department of Housing and Urban Development, which oversees FHA. “By bringing our premiums down, we’re helping folks lift themselves up so they can open new doors of opportunity.”

President Barack Obama is expected to announce more about FHA’s new policy on Thursday in a speech in Phoenix. The housing policy is expected to go into effect by the end of the month.

Source: “White House Says FHA to Cut Mortgage Insurance Premiums,” Reuters (Jan. 7, 2015) and “Plan Trims Cost of Some Mortgages,” The Wall Street Journal (Jan. 7, 2015)

Fannie: Brighter Days Ahead in Housing

Daily Real Estate News | Friday, December 19, 2014

This year is expected to end with lackluster economic growth, but economists are projecting a strengthening heading into the new year, due to forecasted consumer income rises, reduced fiscal headwinds, and a broadening housing recovery, according to Fannie Mae’s latest report from its Economic & Strategic Research Group.

NAR: 5 Latest Stats to Gauge the Heat of the Market

Fannie Mae Chief Economist Doug Duncan says economists expect the fourth quarter of this year to be weaker than the third quarter, but “we don’t see it as a sign of overall weakness.

“Although real consumer spending growth has disappointed this year, it appears poised to accelerate in November due to a significant jump in auto sales and a likely pick-up in home heating costs,” Duncan says. “The decrease in oil prices certainly may support consumer spending over time, particularly now during the holiday shopping season, as well as hold down inflation as a potential benefit to consumption.”

Fannie Mae has upgraded its forecast for 2015 from a projected 2.5 percent growth in the economy to 2.7 percent.

“Similarly, the housing market is likely to continue its gradual climb upward next year after a subpar 2014,” says Duncan. “We anticipate a fairly strong increase in housing starts in response to stronger employment and some improvement in related household incomes. As a result, that may help to unfold some of the suppressed household formation numbers and incent builders to meet some of that increased demand.”

For all of 2015, Fannie Mae economists project that total housing starts will rise by about 22 percent and total home sales will increase by about 5 percent. They also project that total mortgage originations will tick up slightly to $1.13 trillion.

Senate Approves Mortgage Debt Forgiveness

Daily Real Estate News | Thursday, December 18, 2014

The Senate approved an extension of the Mortgage Debt Forgiveness Act by a wide margin this week, bringing home owners who did a short sale this year one step closer to tax relief. The bill, which passed the House of Representatives two weeks ago, is expected to be signed by President Barack Obama.

Why It’s Important

Underwater Home Owners Face Heavier Tax Burden

Home Owners Think Twice About Short Sales

Housing Recovery Tied to Mortgage Debt Levels

The Senate approved the bill in a 76-16 vote.

The Mortgage Debt Forgiveness Act expired at the end of 2013, making distressed home owners responsible for paying taxes on “phantom income” from the forgiven debt once their properties are sold. The tax on a 2014 short sale or workout would have been due this coming April 15 had Congress not extended the measure.

The average short sale has a mortgage forgiveness of about $75,000.

The National Association of REALTORS® issued a call to action earlier this month, urging REALTORS® to submit letters to their Congressional representatives in support of extending the Mortgage Debt Forgiveness Act.

“NAR applauds Congressional leaders in both chambers for their effort to pass this legislation before adjournment,” NAR President Chris Polychron said in a statement. “REALTORS® strongly supported the bipartisan Mortgage Forgiveness Tax Relief Act, which was included in the package to prevent underwater borrowers from paying taxes on any mortgage debt forgiven or canceled by a lender in a workout, or after their home was sold for less money than was owed.”

The extension will only apply to short sales conducted in 2014. Any further extensions will have to be considered by the new Congress, which begins its 2015 session in January.

Source: “Senate Approves Short Sale Tax Breaks,” HousingWire (Dec. 17, 2014)

21 Hot Housing Trends for 2015

Everyone wants to be hip, and the latest trends in design can help distinguish one home from another. And it’s not all flash; many new home fads are geared to pare maintenance and energy use and deliver information faster. Here’s a look at what’s coming.

December 2014 | By Barbara Ballinger

This time of the year, we hear from just about every sector of the economy what’s expected to be popular in the coming year. Foodies with their fingers on the pulse of the restaurant industry and hot TV chefs will tell us to say goodbye to beet-and-goat cheese salad and hello roasted cauliflower, and there’s no end to the gadgets touted as the next big thing.In real estate, however, trends typically come slowly, often well after they appear in commercial spaces and fashion. And though they may entice buyers and sellers, remind them that trends are just that—a change in direction that may captivate, go mainstream, then disappear (though some will gain momentum and remain as classics). Which way they’ll go is hard to predict, but here are 21 trends that experts expect to draw great appeal this year:

1. Coral shades. A blast of a new color is often the easiest change for sellers to make, offering the biggest bang for their buck. Sherwin-Williams says Coral Reef (#6606) is 2015’s color of the year because it reflects the country’s optimism about the future. “We have a brighter outlook now that we’re out of the recession. But this isn’t a bravado color; it’s more youthful, yet still sophisticated,” says Jackie Jordan, the company’s director of color marketing. She suggests using it outside or on an accent wall. Pair it with crisp white, gray, or similar saturations of lilac, green, and violet.
2. Open spaces go mainstream. An open floor plan may feel like old hat, but it’s becoming a wish beyond the young hipster demographic, so you’ll increasingly see this layout in traditional condo buildings and single-family suburban homes in 2015. The reason? After the kitchen became the home’s hub, the next step was to remove all walls for greater togetherness. Design experts at Nurzia Construction Corp. recommend going a step further and adding windows to better meld indoors and outdoors.
3. Off-the-shelf plans. Buyers who don’t want to spend time or money for a custom house have another option. House plan companies offer myriad blueprints to modify for site, code, budget, and climate conditions, says James Roche, whose Houseplans.com firm has 40,000 choices. There are lots of companies to consider, but the best bets are ones that are updating layouts for today’s wish lists—open-plan living, multiple master suites, greater energy efficiency, and smaller footprints for downsizers (in fact, Roche says, their plans’ average now is 2,300 square feet, versus 3,500 a few years ago). Many builders will accept these outsiders’ plans, though they may charge to adapt them.
4. Freestanding tubs. Freestanding tubs may conjure images of Victorian-era opulence, but the newest iteration from companies like Kohler shows a cool sculptural hand. One caveat: Some may find it hard to climb in and out. These tubs complement other bathroom trends: open wall niches and single wash basins, since two people rarely use the room simultaneously.
5. Quartzite. While granite still appeals, quartzite is becoming the new hot contender, thanks to its reputation as a natural stone that’s virtually indestructible. It also more closely resembles the most luxe classic—marble—without the drawbacks of staining easily. Quartzite is moving ahead of last year’s favorite, quartz, which is also tough but is manmade.
6. Porcelain floors. If you’re going to go with imitation wood, porcelain will be your 2015 go-to. It’s less expensive and wears as well as or better than the real thing, says architect Stephen Alton. Porcelain can be found in traditional small tiles or long, linear planks. It’s also available in numerous colors and textures, including popular one-color combos with slight variations for a hint of differentiation. Good places to use this material are high-traffic rooms, hallways, and areas exposed to moisture.
7. Almost Jetson-ready. Prices have come down for technologies such as web-controlled security cameras and motion sensors for pets. Newer models are also easier to install and operate since many are powered by batteries, rather than requiring an electrician to rewire an entire house,says Bob Cooper at Zonoff, which offers a software platform that allows multiple smart devices to communicate with each other. “You no longer have to worry about different standards,” Cooper says.
8. Charging stations. With the size of electronic devices shrinking and the proliferation of Wi-Fi, demand for large desks and separate home office is waning. However, home owners still need a dedicated space for charging devices, and the most popular locations are a corner of a kitchen, entrance from the garage, and the mud room. In some two-story Lexington Homes plans, a niche is set aside on a landing everyone passes by daily.
9. Multiple master suites. Having two master bedroom suites, each with its own adjoining bathroom, makes a house work better for multiple generations. Such an arrangement allows grown children and aging parents to move in for long- or short-term stays, but the arrangement also welcomes out-of-town guests, according to Nurzia Construction. When both suites are located on the main level, you hit the jackpot.
10. Fireplaces and fire pits. The sight of a flame—real or faux—has universal appeal as a signal of warmth, romance, and togetherness. New versions on the market make this amenity more accessible with more compact design and fewer venting concerns. This year, be on the lookout for the latest iteration on this classic: chic, modern takes on the humble wood stove.
11. Wellness systems. Builders are now addressing environmental and health concerns with holistic solutions, such as heat recovery ventilation systems that filter air continuously and use little energy, says real estate developer Gregory Malin of Troon Pacific. Other new ways to improve healthfulness include lighting systems that utilize sunshine, swimming pools that eschew chlorine and salt by featuring a second adjacent pool with plants and gravel that cleanse water, and edible gardens starring ingredients such as curly blue kale.
12. Storage. The new buzzword is “specialized storage,” placed right where it’s needed. “Home owners want everything to have its place,” says designer Jennifer Adams. More home owners are increasingly willing to pare the dimensions of a second or third bedroom in order to gain a suitably sized walk-in closet in their master bedroom, Alton says. In a kitchen, it may mean a “super pantry”—a butler’s pantry on steroids with prep space, open storage, secondary appliances, and even a room for wrapping gifts. “It minimizes clutter in the main kitchen,” says architect Fred Wilson of Morgante-Wilson.
13. Grander garages. According to Troon Pacific, the new trends here include bringing the driveway’s material into the garage, temperature controls, sleek glass doors, specialized zones for home audiovisual controls, and a big sink or tub to wash pets. For home owners with deeper pockets, car lifts have gone residential so extra autos don’t have to be parked outside.
14. Keyless entry. Forget your key (again)? No big deal as builders start to switch to biometric fingerprint door locks with numerical algorithms entered in a database. Some systems permit home owners to track who entered and when, says Malin of Troon Pacific.
15. Water conservation. The concerns of drought-ravaged California are spreading nationwide. Home owners can now purchase rainwater harvesting tanks and cisterns, graywater systems, weather-controlled watering stations, permeable pavers, drought-tolerant plants, and no- or low-mow grasses.
16. Salon-style walls. Instead of displaying a few distinct pieces on a wall, the “salon style” trend features works from floor to ceiling and wall-to-wall. Think Parisian salon at the turn of the century. HGTV designer Taniya Nayak suggests using a common denominator for cohesiveness, such as the same mat, frame color, or subject matter. Before she hangs works, she spaces them four to five inches apart, starting at the center and at eye level and working outward, then up and down. She uses Frog Tape to test the layout since it doesn’t take paint off walls. Artist Francine Turk also installs works this way, but prefers testing the design on the floor like a big jigsaw puzzle.
17. Cool copper. First came pewter; then brass made a comeback. The 2015 “it” metal is copper, which can exude industrial warmth in large swaths or judiciously in a few backsplash tiles, hanging fixture, or pots dangling from a rack. The appeal comes from the popularity of industrial chic, which Restoration Hardware’s iconic style has helped promote, says designer Tom Segal.
18. Return to human scale. During the McMansion craze, kitchens got so big they almost required skates to get around. This year we’ll see a return to a more human, comfortable scale, says Mark Cutler, chief designer of design platform nousDecor. In many living or family rooms that will mean just enough space for one conversation grouping, and in kitchens one set of appliances, fewer countertops, and smaller islands.
19. Luxury 2.0. Getting the right amount of sleep can improve alertness, mood, and productivity, according to the National Sleep Foundation. With trendsetters such as Arianna Huffington touting the importance of sleep, there’s no doubt this particular health concern will go mainstream this year. And there’s no space better to indulge the desire for quality rest than in a bedroom, says designer Jennifer Adams. “Everyone is realizing the importance of comfort, quality sleep, and taking care of yourself,” she says. To help, Adams suggests stocking up on luxury bedding, a new mattress, comfortable pillows, and calming scents.
20. Shades of white kitchens. Despite all the variations in colors and textures for kitchen counters, backsplashes, cabinets, and flooring, the all-white kitchen still gets the brass ring. “Seven out of 10 of our kitchens have some form of white painted cabinetry,” says builder Peter Radzwillas. What’s different now is that all-white does not mean the same white, since variations add depth and visual appeal. White can go from stark white to creamy and beyond to pale blue-gray, says Radzwillas. He also notes that when cabinets are white, home owners can choose bigger, bolder hardware.
21. Outdoor living. Interest in spending time outdoors keeps mushrooming, and 2015 will hold a few new options for enhancing the space, including outdoor showers adjacent to pools and hot tubs along with better-equipped roof decks for urban dwellers. Also expect to see improvements in perks for pets, such as private dog runs and wash stations, says landscape architect Jean Garbarini of Damon Farber Associates.

While it’s fun to be au courant with the latest trends, it’s also wise to put what’s newest in perspective for your clients. Remind them that the ultimate decision to update should hinge on their needs and budgets, not stargazers’ tempting predictions.

Looming layoffs at Bank of America signal shift in mortgage servicing

Impact already being felt throughout industry

Ben Lane

October 10, 2014 6:00PM

2 Comments

Bank of AmericaCountrywideDepartment of Housing and Urban DevelopmentHousingHUDJPMorgan ChaseMerrill LynchMortgagemortgage services providermortgage servicingU.S. Department of JusticeWingspanWingspan PortfolioWingspan Portfolio Advisors

LiVE FROM THE DESK OF TIM WATERS:

Bank of America (BAC) is preparing to lay off nearly 200 workers in its North Texas mortgage servicing operations center as the impact of the bank’s $16.65 billion toxic mortgage settlement is beginning to be seen throughout the entire mortgage industry.

In August, Bank of America finally agreed to settle with the U.S. Department of Justice, other federal agencies and six states to resolve claims over toxic residential mortgage-backed securities, collateralized debt obligations and an origination release on residential mortgage loans sold to Fannie Mae and Freddie Mac.

In the settlement, Bank of America admitted to failing to disclose known uncertainties regarding potential increased costs related to mortgage loan repurchase claims connected to more than $2 trillion in residential mortgage sales from 2004 through the first half of 2008 by the bank and certain companies it acquired, the Securities and Exchange Commission said when the settlement was announced.

The loans primarily date back Countrywide and Merrill Lynch prior to Bank of America’s acquisition of them, and the impact of the settlement will be far reaching.

As part of the settlement, Bank of America is to pay a total of $9.65 billion in cash and provide approximately $7 billion worth of consumer relief.

“The $7 billion in consumer relief will focus on areas that were hardest hit during the housing crisis,” the U.S. Department of Housing and Urban Development said at the time.

“Consumer relief will take various forms including loan modification for distressed borrowers, including FHA-insured borrowers, and new loans to credit worthy borrowers struggling to get a loan in hardest hit areas, borrowers who lost homes to foreclosure or short sales, and moderate income first-time homebuyers.”

As it turns out, more than just the aggrieved homeowners will feel the impact of the settlement. Nearly 200 people in Bank of America’s mortgage servicing department are about to lose their jobs because of it.

News of the layoffs was discovered in a State of Texas Worker Adjustment and Retraining Notification ACT Notice. The WARN Notice shows that Bank of America will layoff 187 employees from its Plano, Texas offices on Nov. 7.

When contacted about the prospective layoffs, Bank of America spokesperson Jumana Bauwens said that the layoffs are due to the bank’s decreasing amount of delinquent mortgages.

“We’ve made significant progress in assisting mortgage customers, having helped nearly two million homeowners avoid foreclosure,” Bauwens said. “We are proud to be a leader in delivering proprietary and government solutions as part of our continuing effort to support our mortgage customers in need of assistance. Bank of America is staffed to administer consumer relief programs including those under the recently announced DOJ settlement, which will be made available in the fourth quarter. We will not sacrifice service to our customers in need of assistance.

“The number of delinquent mortgage loans we service has decreased to one-fifth of their peak levels. Due to the lower demand for these specialized services, we are reducing the size of the operations. This division was created in 2011 and staffing grew dramatically to support the short-term needs of mortgage customers at risk of foreclosure. Now, we are in the process of returning to normal staffing levels.”

The news of Bank of America scaling back its mortgage operations shouldn’t come as a surprise. The bank has been saying that it was going to pull back on mortgages since shortly after the DOJ settlement was announced.

In September, the co-heads of the bank’s consumer banking operations said that the bank is decreasing its “aggressiveness” in mortgages going forward.

“While a lot of our competitors are still using a few growth engines such as non-agency customers, we have refocused everything into just our customer base,” Thong Nguyen, Bank of America’s head of retail strategy, sales and operations, said at the RBC Capital Markets 2014 Financial Institutions Conference in September.

“So things like direct mail to non-customers or mortgage through correspondence and brokers and what not, we have shut that.”

And given the amount of customer relief the bank is about to pay out and considering the number of delinquent borrowers who have already received relief, scaling back on servicing seems like a logical next step.

But that doesn’t mean that the impact stops at Bank of America and its employees.

Special servicers like Wingspan Portfolio Advisors are feeling the impact too.

In just the last week, reports of Wingspan laying off employees at its Melbourne, Florida and Monroe, Louisiana locations have already surfaced. And Thursday, HousingWire reported that Wingspan’s founder, CEO and president, Steve Horne, allegedly had been removed from leading the company he founded in 2008.

The company denied the ouster of Horne as President when contacted by HousingWire on October 2, saying, via Senior Vice President of Marketing, Communications and Industry Relations Guy Davis, “The rumor is completely inaccurate and Steve Horne continues to lead the Wingspan organization.”

In both Monroe and Melbourne, employees were told they were being “furloughed” by the company and could potentially be rehired.

Both facilities were acquired from JPMorgan Chase (JPM) but HousingWire has confirmed that loss of business from Bank of America caused Wingspan to “furlough” at least 400 workers from its Frisco, Texas, location earlier this year.

When Wingspan moved into the 125,000-square-foot building in the North Dallas suburb in 2012, it signed an agreement with the Frisco Economic Development Corporation, which stipulated that the company could receive $720,500 from the Frisco EDC if it met certain requirements within four years, including bringing 1,100 jobs to the area.

According to the Frisco EDC, Wingspan received two separate payments of $262,000 for meeting the stipulations in 2012 and 2013. To receive the first payment of $262,000 in 2012, Wingspan was required to have at least 400 full-time employees and lease 125,000 square feet of office space in Frisco. According to the Frisco EDC, it met those stipulations and received payment in early 2013.

To receive the next payment, Wingspan was required to have at least 800 full-time employees by December 31, 2013, while also maintaining the leased office space of 125,000 square feet. According to the FEDC, Wingspan met those stipulations by having 864 employees at the Frisco facility as of Dec. 31, 2013, and received payment in early 2014.

Darcy Schroer, the Frisco EDC Director of Marketing, told HousingWire Friday that the Frisco EDC terminated its incentive agreement with Wingspan on Aug. 22 after receiving word from Wingspan in July that it had lost its Bank of America contracts and would be furloughing 400 employees and assigning the remaining employees to other Wingspan locations.

“They (Wingspan) told us that Bank of America had essentially gotten out of the mortgage business,” Schroer told HousingWire. “Based on the conversation on July 24, it was clear they would not meet the incentives going forward. They let us know they would no longer be in Frisco.”

Today, the three-story building that once housed Wingspan’s Bank of America operations sits empty, a virtual ghost town still filled with office furniture and appearing without a single person to fill any of the desks.

“Any loss of jobs in Frisco is always of concern to the Frisco EDC as creating full time jobs is one of our top priorities,” Frisco EDC President Jim Gandy told HousingWire.

“The Frisco EDC has an active business retention and expansion program to assist our existing companies in Frisco. Unfortunately, due to circumstances beyond our control, occasionally a Frisco business moves jobs and/or operations out of the city.”

When HousingWire visited the abandoned Wingspan office in Frisco on Friday, landscapers were pulling up the flowers that decorated the building’s entrance.

Once the flowers were gone, there was nary a living thing on the property.

It was a stark reminder of the far-reaching impact that these billion dollar settlements can have throughout the entire mortgage industry.

It isn’t just the big banks that feel the pain. It affects everyone.

House OK’s Short Sale Tax Break, On to Senate

Daily Real Estate News | Monday, December 08, 2014

The U.S. House passed a bill last week that would extend key tax breaks to financially distressed home owners who went through a short sale. The bill now goes before the Senate for consideration, where housing analysts hope for action during the final week of the Lame Duck session of Congress.

Join the Calls for Action

Send a letter to Senators: Mortgage Debt Forgiveness Act

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The National Association of REALTORS® has been calling on members to urge Congress to renew the Mortgage Debt Forgiveness Act, an income exemption on mortgage debt forgiven in a short sale or a workout for principal residences.

The act expired at the end of 2013. That means distressed home owners could be responsible for paying pay taxes on “phantom income” from any forgiven debt once the properties are sold. That is, if a lender sells a property for less than the amount owed on the mortgage, the home owner will then have to report that forgiven debt as taxable income to the IRS. The tax on a 2014 short sale or workout would be due April 15 of next year if Congress fails to extend the measure. If the Mortgage Debt Forgiveness Act extension is granted, taxpayers will be able to continue to exclude the forgiven debt from their annual income calculations.

The House included a one-year extension of the Mortgage Debt Forgiveness Act in the Tax Increase Prevention Act of 2014, which passed the House on Wednesday in a vote of 378-46.

In the first three quarters of this year alone, there have been more than 170,000 short sales, representing a total bill of $8.1 billion in mortgage debt forgiveness, according to estimates from RealtyTrac. But the lapse in the extension has caused some home owners to avoid short sales and workouts. Still, more than 5 million home owners remain underwater, owing more on their mortgage than their home is currently worth. Also, nearly 1 million households are seriously delinquent on their mortgages or are in foreclosure.

“Unless Congress acts, hundreds of thousands of American families who did the right thing will have to pay tax on ‘phantom income’ – money they never see,” read an ad issued by NAR last week that ran in select Capitol Hill publications.

Source: “Short Sale Tax Break Passes House,” HousingWire (Dec. 5, 2014)

Apartment Rent Surge Expected into 2015

Renters need to brace themselves: Apartment rent is expected to continue to outpace inflation next year. It’s a landlord’s market, which means strong demand continues to give landlords justification to hike rents.

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Rising Rents, Falling Wages Leave More Cash-Strapped

Rent growth will likely reach 3.9 percent in 2015, only a slight dip from 4 percent this year, according to a recent forecast released by the National Association of REALTORS®. For at least two more years, vacancy rates for rental apartments are expected to remain low.

“Low housing inventory and the sizable demand for rentals will continue to spur multifamily construction as well as keep rents rising above inflation through next year,” says Lawrence Yun, NAR’s chief economist.

The Bureau of Labor Statistics shows that annual rental inflation is nearly double the price of overall inflation.

Builders are increasing the construction of multifamily units but are struggling to keep pace with demand.

The following metros saw the lowest vacancy rates for rental apartments in the fourth quarter, according to NAR:

• Orange County, Calif.: 2.2%
• Sacramento, Calif.: 2.2%
• Providence, R.I.: 2.3%
• New Haven, Conn.: 2.3%
• Hartford, Conn.: 2.4%

Million-Dollar Sales Are Soaring

Daily Real Estate News | Wednesday, November 12, 2014

 

The wealthy are splurging on million-dollar homes again, as sales of homes priced at $1 million or more climb while lower-priced properties continue to lag.Homes that sold for $1 million or more rose by 8 percent this year, while homes at every other price point dropped by 4 percent, according to National Association of REALTORS® research.+ 

Million-dollar homes climbed out of the Great Recession much faster than those at other price points.

“The share of homes selling for at least $1 million fell when the 2008 financial crisis hit, but it recovered faster than the rest of the market during the past two years,” The Washington Post reports. Sales in the $1 million–plus range are now approaching levels comparable to the housing boom peak in 2007, according to CoreLogic research.

Sales at the higher end are often clustered in a few areas across the country, such as the Washington region and other high-priced coastal spots. Housing analysts say one of the reasons for the surge in luxury sales is that “jumbo” mortgages that are being offered at the same — or even better — interest rates as conventional loans. Lenders have been chasing after the affluent by offering favorable terms and interest rates with jumbo loans – loans that exceed $417,000 in most parts of the country or exceed $625,000 in other high-priced markets. Indeed, the dollar volume of jumbo lending has grown to 20 percent of all home purchase loans, the highest level since 2002, according to Inside Mortgage Finance.

“Many people are finding out by accident that they can often get a better rate on a $700,000 mortgage than a $400,000 mortgage,” Guy Cecala, publisher of Inside Mortgage Finance, told The Washington Post. “The opportunities for wealthier borrowers are now better than they’ve been in a decade as far as rates and terms.”

Source: “Rich People Are Splurging on Million-Dollar Homes Again. Here’s Why,” The Washington Post (Nov. 7, 2014)

NAR-Backed Mortgage Debt Relief Clears Committee

Daily Real Estate News | Thursday, April 03, 2014

The Senate Finance Committee has passed a two-year retroactive extension of tax relief for households who’ve had mortgage debt forgiven by a lender as part of a short sale or loan modification.

“We applaud the Senate Finance Committee for approving a bipartisan compromise bill today,” NAR President Steve Brown says. The legislation still needs to be passed by the full Senate and also by the House.

The issue has been one of NAR’s top legislative priorities since 2007, when the association worked with lawmakers to enact the relief into law and also later to encourage them to extend the relief in 2008 and 2012.

The relief expired at the end of last year, and unless the full Senate and House approve the extension, households will face the prospect that when they file their returns next year, they’ll pay tax on so-called phantom income, which is the amount of debt forgiven. Absent the provision, the tax law provides that such forgiven debt is income.

“This is, at its core, an issue that’s all about fairness,” Brown says. “It is unfair to ask homeowners who are underwater on their mortgage and who make the prudent decision to do a short sale instead of allowing their mortgage to go into foreclosure to pay tax on the forgiven amount of the loan.”

Brown says the tax hit encourages owners to walk away rather than sell their house, which hurts neighborhoods and the communities they’re in.

The tax relief provided in the past has been one of Congress’ bipartisan success stories, and there’s a good chance an extension will pass Congress this year, too, analysts say.

Some 350,000 households could be affected by the tax if relief isn’t extended, because that’s the number of households who sold their house last year as a short sale. “And we expect a large number of short sales [an estimated 300,000 to 350,000] this year,” says Brown.

Those numbers suggest that there remains a great need for the tax relief, even though housing markets around the country are much improved from where they were at the height of the housing slowdown. “The need is still clearly there,” Brown says.

To help make its case, NAR has joined with about two dozen consumer, real estate, and other groups to run a forceful ad in key publications that educates lawmakers about the continuing need for relief. “Upside-down homeowners need tax relief now,” the ad says.

The legislation passed by the committee also extends the 15-year cost recovery for qualified leasehold improvements and a provision that lets taxpayers expense certain qualified real property. The bill also extends the deduction for energy efficient commercial buildings.

 

Tim Waters, contributing editor to this blog, has been licensed by the California Department of Real Estate #01159108, since 1993. He held the position of Ceo and Broker of Century Mortgage Corp, a California Banker and Brokerage for first and second trust deed originations. He has originated all types of mortgages including FHA/VA,Conventional, Sub-Prime, Equity, Commercial, and stand alone second trust deeds. He has represented many home buyers and investors at Bank, Hud and VA auctions.  NMLS #917826, California Department of Corporations.  CA BRE#01159108.  Stuart Financial #1075206.

Call him at his office:

888-503-1502

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California August Home Sales

An estimated 42,546 new and resale houses and condos sold statewide last month. That was down 1.9 percent from a revised 43,381 in July, and up 3.1 percent from 41,280 sales in August 2012, according to San Diego-based DataQuick.

The sales count was the highest for any August since 51,054 homes sold in August 2006. August sales have varied from a low of 29,764 in 1992 to a high of 73,285 in 2005. Last month’s sales were 11.1 percent below the average of 47,849 sales for all the months of August since 1988, when DataQuick’s statistics begin.

The median price paid for a home in California last month was $361,000, down 0.6 percent from $363,000 in July and up 28.5 percent from $281,000 in August 2012. August was the 18th consecutive month in which the state’s median sale price rose year-over-year. In March/April/May 2007 the median peaked at $484,000. The post-peak trough was $221,000 in April 2009.

Of the existing homes sold last month, 7.8 percent were properties that had been foreclosed on during the past year – the lowest level since foreclosure resales were 7.6 percent of the resale market in July 2007. Last month’s figure was down from a revised 8.3 percent in July and 20.0 percent a year earlier. Foreclosure resales peaked at 58.8 percent in February 2009.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 13.2 percent of the homes that resold last month. That was down from an estimated 14.4 percent the month before and 26.4 percent a year earlier.

The typical monthly mortgage payment that California buyers committed themselves to paying last month was $1,456. Adjusted for inflation, last month’s payment was 37.0 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 48.9 percent below the current cycle’s peak in June 2006. It was 58.0 percent above the January 2012 bottom of the current cycle.

DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

Indicators of market distress continue to decline. Foreclosure activity remains well below year-ago and peak levels reached several years ago. Financing with multiple mortgages is low, while down payment sizes are stable, DataQuick reported.

Source: DataQuick; DQNews.com

Copyright DataQuick. All rights reserved.

BLOG SUMMARY

 

Tim Waters, contributing editor to this blog, has been licensed by the California Department of Real Estate #01159108, since 1993. He held the position of Ceo and Broker of Century Mortgage Corp, a California Banker and Brokerage for first and second trust deed originations. He has originated all types of mortgages including FHA/VA,Conventional, Sub-Prime, Equity, Commercial, and stand alone second trust deeds. He has represented many home buyers and investors at Bank, Hud and VA auctions.  NMLS #917826, California Department of Corporations.

Call him at his office:

949-235-4732.

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