Unchanged Home Prices Raises Questions

The Data & Analytics division of Black Knight Financial Services (BKFS) reported no monthly change in its Home Price Index (HPI) for January, underlining the question as to where other home price reports—including the monthly Case-Shiller Home Price Indices—will land for the year's first month.

BKFS' latest report shows the index registering $232,000 in January, unchanged from the end of 2013. Year-on-year, the index was up 8 percent from $215,000.

"Prices have flattened out due to seasonal effects and a slowing in the market," said Raj Dosaj, VP of behavioral models and HPI for Black Knight Data & Analytics.

Given January’s flatness, national prices remain 14 percent off their peak of $270,000 in June 2006.

Of the 20 largest states, California posted the biggest year-over-year increase at 14.8 percent. On a monthly basis, it ranked among the top five largest states, reporting a gain of 0.3 percent.

Among all states, New York topped in gains with a 0.6 percent monthly increase. Following the Empire State were New Jersey (0.5 percent) and Nevada, Pennsylvania, Georgia, and the District of Columbia—all at 0.4 percent.

Not making the top 10 list in January was Texas, which, after several months spent climbing to new price peaks, backed off a bit with a 0.3 percent month-over-month decline.

Among metros, half of the top 10 performers in January can be found in California—not a surprise, given the state’s representation in past HPI reports. Top movers included San Jose (0.9 percent), Santa Rosa (0.8 percent), and Oxnard (0.7 percent), California, which took up the top three spots. Also reporting gains were New York City and San Francisco, each at 0.7 percent.

As for this week's other indices, Dosaj expects to see flat to dropping prices, "as they tend to be impacted by seasonal effects more strongly than the Black Knight HPI," as they include short and REO sales that are more prone to seasonal volatility.

"Going forward we should see positive growth in 2014 but at a more moderate pace compared to 2013.  Somewhere between 2-4 percent for the year is likely," he said.

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Jerry Gusman, The Gusman Groupo

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What Season Should I Sell My Home?

Homebuyers are clueless about mortgages!

Fed Could Spur Slumping Mortgage Rates

Fixed mortgage rates moved down just "a tad" this week, keeping movements within a fairly narrow range year-to-date as the first quarter comes closer to an end.

Freddie Mac's weekly Primary Mortgage Market Survey, released Thursday, showed the 30-year fixed-rate mortgage (FRM) averaging 4.32 percent (0.6 point) for the week ending March 20, down from last week, when it averaged 4.37 percent. A year ago, the 30-year FRM average was 3.54 percent.

Since falling from 4.53 percent in 2014's first weeks, the 30-year fixed average has seen limited movements since, staying in the 4.2-4.3 percent range.

The 15-year FRM this week averaged 3.32 percent (0.6 point), down from 3.38 percent in last week's survey.

Frank Nothaft, VP and chief economist for Freddie Mac, attributed the fall back to weak housing data earlier in the week, though he added there may be a pickup soon—compliments of the Federal Reserve.

"Mortgage rates eased this week as housing starts declined 0.2 percent in February to a seasonally adjusted annual rate of 907,000, below consensus forecast," Nothaft said. "The rate on the 10-year [T]reasury note rose following the Fed’s announcement Wednesday afternoon and, if this holds, interest rates may begin to trend higher going into next week."

In adjustable-rate mortgages (ARMs), the 5-year Treasury-indexed hybrid ARM averaged 3.02 percent (0.4 point), down from 3.09 percent previously, while the 1-year ARM moved up a basis point to 2.49 percent (0.4 point).

Meanwhile, Bankrate.com reported in its weekly national survey that the 30-year fixed came down this week to 4.46 percent from an even 4.50 percent, while the 15-year fixed was down to 3.48 percent from 3.51 percent.

The 5/1 ARM also slipped, dropping to 3.26 percent from 3.30 percent last week.

According to analysts for the finance site, "[t]he mostly static nature of mortgage rates in recent weeks" is due to a dearth of meaningful news regarding the economy and the situation at the Fed.

"With the Fed maintaining the taper and pledging to hold short-term interest rates at record lows, there were no bombshells in [Fed Chair Janet] Yellen's initial meeting at the helm of the Fed," Bankrate said in a release. "While investors are reading into a slightly earlier timetable for Fed rate hikes, Yellen assured observers the Fed had not changed their policy."

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Jerry Gusman, The Gusman Group

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Buyer/Seller Market? East and West Coast Differ ....Confirming its time to SELL!

Whether buyers or sellers have the upper hand in home sales negotiations this spring will depend on which part of the country their deal takes place, according to the latest market analysis report released Thursday by Zillow.

A look at buyers' and sellers' markets around the country shows that the better job market in the West is drawing more buyers and driving up competition for homes in more economically stable cities, thus giving sellers the upper hand in home sales negotiations in western metro areas. Meanwhile, leverage for buyers is strongest in cities in the East and Midwest, where less competition for homes will likely give them more room for bargaining on prices.

According to Zillow, the best market for buyers is Cleveland, followed by Philadelphia, Tampa, Chicago, and Pittsburgh. Buyers should also have the upper hand in Cincinnati, New York City, Detroit, Baltimore, and Saint Louis.

One notable East Coast exception to the buyers' market is Washington, D.C., which came in eighth on Zillow's list of cities in which sellers have the upper hand in home sales.

The most seller-friendly markets this spring, according to the report, will be in the West—particularly along the West Coast—where robust demand, a sense of urgency among buyers, and limited supply are causing rapid home value appreciation, said Zillow's chief economist, Stan Humphries. "In the East, housing markets are appreciating a bit more slowly, and homes are staying on the market longer, which helps give buyers the upper hand," he said.

San Jose and San Francisco lead the top sellers' markets, followed by San Antonio, Los Angeles, Seattle, and Riverside, California. Denver, D.C., Sacramento, and Dallas-Fort Worth round out the top 10 sellers' markets.

The schism in leverage, according to Humphries, may actually be a good sign of overall economic recovery nationwide. "As we put the housing recession further in the rear-view mirror," he said, "the broad-based dynamics that applied during those days, when all markets were reacting similarly to nationwide economic conditions, are fading."

Zillow's data on median home sales bear out Humphries' optimism. The number of homes listed for sale on Zillow.com was up 5.5 percent in February, and the firm's Home Value Index last month was up 5.6 percent from the previous February. Meanwhile, Zillow expects home values to rise another 3 percent through next February.

"Real estate has always been local," Humphries said. "And as the spring market gains momentum, this old adage will only become more pronounced."

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Jerry Gusman, The Gusman Group

(888) 213-4208

jerryggroup@aol.com

$63.1 Million Awarded to Stave Off Foreclosures

NeighborWorks America announced Tuesday in a press release that $63.1 million had been awarded to 29 state housing finance agencies, 18 HUD-approved housing counseling intermediaries, and 67 community-based NeighborWorks organizations.

The money, provided through the National Foreclosure Mitigation Counseling (NFMC) program, is earmarked for counseling to families and individuals facing the threat of foreclosure.

The organization notes that although the number of households facing foreclosure is below the peak seen a few years ago during the housing crisis, "[M]any hundreds of thousands of homeowners will still face trouble with their mortgages this year."

More than 167,800 families who face foreclosure are expected to be directly assisted by the funds.

NeighborWorks America notes that more than 1,100 nonprofit counseling agencies and local NeighborWorks organizations across the country are expected to be engaged with the NFMC program as a result of the award.

The agencies provide, "[F]ree assistance to families at risk of losing their homes, determine homeowner eligibility for the various state and federal foreclosure prevention assistance programs, help homeowners understand the complex foreclosure process, and identify possible courses of action so their homeowner clients can make informed decisions and take action," according to the release.

Additionally, funds will go to the training of 2,000 counselors who can assist in foreclosure-related issues.

The NeighborWorks America program has been effective. The release cites a 33 percent decline in serious mortgage delinquencies for homeowners who received NeighborWorks pre-purchase guidance, compared to similar homeowners who received no pre-purchase help.

However, the $63.1 million awarded is not enough to satisfy all demand for NFMC funding. Requests for awards totaled in excess of $100 million dollars, which suggests that the many families seeking assistance 

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2013 First Time Home Buyers, Who Were They?

Were Mortgages Lost from Tight Credit Restrictions?

A new study by the Urban Institute calls for "expanding the credit box" in order to promote not only a housing recovery, but an overall economic recovery. The report estimated, "1.22 million fewer purchase mortgages were made in 2012 than would have been the case had credit availability remained at 2001 levels."

The report, “Where Have All the Loans Gone? The Impact of Credit Availability on Mortgage Volume,” reported that in 2001, 4.93 million first lien mortgages originated for home purchases.

"The number of originations rose to 6.03 million in 2005 and dropped to 2.74 million in 2012. This represents a 44.4 percent decline since 2001 and a 54.5 percent drop from the peak volume of 2005," the report said.

The loss of mortgages not only affects the housing recovery, but supplemental businesses like landscaping, furnishings, renovations, and other consumer spending related to owning a home are slowed, affecting overall economic recovery.

The report argues that lower sales activity is only partially responsible for the drop in mortgage volume.

Sales volume was 6.25 million units in 2001. In 2005, sales volume was 8.36 million units, dropping to 5.01 million units in 2012, a 20 percent decrease from 2001.

Another factor leading to a decrease of new home purchases was an increase of investor activity in the housing market, rising from 17.8 percent in 2001 to 39.5 percent in 2012. "[W]e can largely explain the drop in originations by the concurrent decline in home sales and the increase in the all-cash share," the report said.

An increase in foreclosures, nearly 7 million, creates a situation where foreclosed-upon borrowers must wait at least three to five years to qualify for a new mortgage, according to the Urban Institute report. The large volume of renters with a limited availability of credit to purchase a home only exacerbates purchases by investors paying cash.

The report found that borrowers looking to purchase a home with credit scores in the middle tier (660-750) and lower tier (sub-660) declined 46 percent and nearly 70 percent, respectively, from 2001 to 2012.

An estimated 273,000 to 1.2 million loans were not originated due to limited credit availability.

The report commented, "The truth is somewhere between these estimates, but likely closer to the upper bound because many prospective borrowers with FICO scores well above 660 are affected by the tight credit box and credit overlays."

Race also played a factor in the decline of loan originations.

"Comparing 2001 to 2012, the number of purchase loans to African American and Hispanic borrowers declined by 55 and 45 percent, respectively. In contrast, purchase loans to non-Hispanic whites and Asians dropped 41 and 15 percent, respectively," the report said.

Florida was the hardest-hit state, with a 61 percent drop in purchase loans.

The report credits the drop in purchase loans to Florida's larger overhang of foreclosed properties. "Other Sand States such as California, Arizona, and Nevada also experienced large drops in purchase activity (between 45 and 49 percent), but not nearly as large as Florida," the report said.

The Urban Institute comments that fewer individuals will be able to become homeowners at the exact moment when it is most advantageous to do so, thus losing a valuable opportunity to build wealth.

"There is an urgent need to expand the credit box to improve opportunities for households to build wealth and strengthen the economic recovery," the report said.

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Jerry Gusman, The Gusman Group

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Rising Prices and Mortgage Rates Stall Home Sales

Home sales declined for the fourth consecutive month with sharp drops in West Coast markets, according to the latest Real-Time Price Tracker from Redfin, a national real estate brokerage. The brokerage reported a 10.3 percent decline in sales across the country year-over-year in February.

Only three of 19 markets tracked reported increases in sales over the year—Long Island (3.3 percent), Baltimore (1.9 percent), and Austin (1.9 percent).

"The combination of steep price appreciation and rising mortgage rates is likely coming as a shock to many prospective buyers," Redfin stated in its survey.

With the spring selling season about to get underway, the company says March and April should offer insight into buyers' willingness and ability to adapt to higher prices and mortgage rates—as well as sellers' ability to price appropriately, a skill some are having to relearn to stay competitive.

"This time last year, sellers could name their price and still get 20 to 30 offers," said Los Angeles-based Redfin agent Eric Tan. "This year, even homes that are priced competitively are only seeing two or three offers come in, often at or below list price."

Home prices rose 13 percent over the year in February, with steep gains in the West Coast markets such as Las Vegas (25 percent); Sacramento (22.2 percent); and Riverside, California (21.7 percent).

East Coast markets demonstrated much tamer price gains, according to Redfin. For example, prices were up 2 percent in Long Island, 4.7 percent in Washington D.C., and 6.6 percent in Boston.

Housing inventory across Redfin's 19 markets declined 5.6 percent over the year in February. However, in West Coast markets, where prices rose most, inventory also rose, according to Redfin.

Several markets posted double-digit inventory gains over the year in February, including Phoenix (38.5 percent); Sacramento (23.9 percent); Riverside, California (22.8 percent); Ventura, California (22.1 percent); San Diego (18.6 percent); and Los Angeles (17.8 percent).

Las Vegas, on the other hand, experienced a 35.3 percent decline in inventory.

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Jerry GUsman, The Gusman Group

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Should I Sell My Home With A Realtor?