Investment-home sales surged an extraordinary 64.5 percent to 1.23 million last year from 749,000 in 2010.
Investment sales jumped to 27 percent in 2011 from 17 percent in 2010.
“During the past year investors have been swooping into the market to take advantage of bargain home prices,” said NAR Chief Economist Lawrence Yun. “Rising rental income easily beat cash sitting in banks as an added inducement. In addition, 41 percent of investment buyers purchased more than one property.”
The median investment-home price was $100,000 in 2011, up 6.4 percent from $94,000 in 2010.
- Cash buyers in the market (legacyrealtor.wordpress.com)
- Looking to Buy? (schauerteammortgage.wordpress.com)
FICO survey of bank risk professionals found that 46 percent of them expect the volume of strategic defaults in 2012 to surpass 2011 levels, as more than 25 percent of U.S. homeowners owe more on their mortgages than their homes are worth.
Concerns about strategic defaults were also reflected in response to a question about the consumer payment hierarchy. When asked if the current generation of homeowners considers their mortgage to be their most important credit obligation, 49 percent of bankers said NO and 29 percent said YES.
Although concerns remain regarding strategic defaults, other signs point to growing stability in the housing market. More respondents (26 percent) expected delinquencies on mortgages to decline in the coming months than at any previous time in the two years FICO has been conducting this survey. Furthermore, 53 percent of respondents said the housing market would improve by the end of 2012, compared with 24 percent who said the market would deteriorate.
More than half of survey respondents expected the supply of credit for residential mortgages to fall short of demand over the next six months. A similar majority (53 percent) expected the supply of credit for mortgage refinancing to fall short of demand, indicating that lenders remain cautious about the risks in the real estate market.
Article was reprinted with permission from the Calif Assoc of Realtors.
Five years after the housing bubble burst, America’s wealthiest families are now losing their homes to foreclosure at a faster rate than the rest of the country — and many of them are doing so voluntarily.
Last year over 36,000 homes valued at $1 million or more were foreclosed on, or at least in default, according to data compiled by RealtyTrac, which tracks foreclosures. While that’s still a low percentage of all foreclosures, it is growing.
Out of all foreclosure activity, the share of foreclosures on properties valued at $1 million or more has risen by 115% since 2007 while the share of multi-million dollar foreclosures — or homes valued at more than $2 million — jumped by 273%. Meanwhile, the share of foreclosures on mid-range properties valued between $500,000 and $1 million fell by 21%.
Lenders are typically more willing to work with homeowners that have other resources. But with a recovery in the housing market still years away, foreclosure has turned out to be a worthwhile option after all. Saddled with bloated mortgages after a long run up in property values, many high-end homeowners have chosen to pursue a “strategic default.” Even though they can afford the monthly mortgage payments, they still decide to walk away from their home because they owe more on the property than it is worth.
In million-dollar homes, you’re looking at people who can afford it, but they have to make a business decision: Does it make sense to make payments on a mortgage when the home is worth less than they owe. In many cases, it often makes more financial sense to walk away.
This information obtained by the Calif. Asso. of Realtors, courtesy of CNN Money, Feb 23, 2012.
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WASHINGTON — The Federal Reserve signaled Wednesday that a full economic recovery could take nearly three more years, and it went further than ever to assure consumers and businesses that they will be able to borrow cheaply well into the future.
The central bank said it would probably not increase its benchmark interest rate until late 2014 at the earliest — a year and a half later than it had previously said.
The new timetable showed the Fed is concerned that the recovery remains stubbornly slow. But it also thinks inflation will stay tame enough for rates to remain at record lows without igniting price increases.
Chairman Ben Bernanke cautioned that late 2014 is merely its “best guess.” The Fed can shift that plan if the economic picture changes. But he cast doubt on whether that would be necessary.
“Unless there is a substantial strengthening of the economy in the near term, it’s a pretty good guess we will be keeping rates low for some time,” he said.
The Fed has kept its key rate at a record low near zero for about three years. Its new time frame suggests the rate will stay there for roughly an additional three years.
The bank’s tepid outlook also suggests it’s prepared to do more to help the economy. One possibility is a third bond-buying program that would seek to further drive down rates on mortgages and other loans to embolden consumers and businesses to borrow and spend more.
Information obtained from the Calif. Asso. of Realtors with permission.
Article printed in the Mercury News and A.P. Jan. 25, 2012.
Last year, more than two million people were turned down for home loans, according to federal data, often because the applicants didn’t meet certain lender requirements or because their applications were incomplete or otherwise problematic. With lenders’ underwriting criteria becoming more strict in recent years, it’s important buyers know the most common triggers for mortgage-loan rejection.
- Insufficient income: Lenders want to be sure borrowers can afford to make the mortgage payments. Lenders typically look for at least a two-year track record of income, which could hurt those who have changed jobs recently.
- Cloudy financial picture: Generally, total debt payments, including the mortgage, cannot exceed 45 to 50 percent of a borrower’s adjusted gross monthly income. Overtime and bonuses are included only if the borrower has worked for the same employer at least two years, and has a history of receiving them.
- Poor credit: Lenders typically reject applicants with FICO scores below 620.
- Low appraisal: One of the predominant reasons buyers are turned down for home loans is because the appraisal on the property is too low.
- Property problems: Sometimes issues turn up within a house, like a major repair or safety issue that needs to be addressed, before an application can be approved.
- Information mix-ups: Approximately 12 percent of new mortgage applications were denied because of unverifiable information or incomplete credit applications, according to the Federal Financial Institutions Examination Council.
Housing affordability increased in California in the second quarter as prices dropped from the same period a year earlier, according to the Calif. Assoc of Realtors.
Fifty-one percent of California households could afford a single-family home priced at the median, according to the CAR. That was an increase from 46% during the same period last year, when buyer tax credits fueled the market and pushed up prices. Affordability decreased from the prior quarter, but that was due to seasonal variations that pushed up prices.
Potential buyers needed to earn a minimum annual income of $63,080 to qualify for the purchase of a home priced at the state’s median, $293,580, which is the price at which half the homes sold for more and half for less. The house payment on that purchase, including taxes and insurance, would be $1,580, the group reported, assuming a down payment of 20% and an effective composite interest rate of 4.85%.
During the second quarter, affordability fell in the priciest parts of the state. San Bernardino County was the most affordable in the state, with a rate of 77%, while San Mateo County was the least affordable, with only 21% of households in the state able to afford that county’s median-priced home, the group reported.
That’s great news, so it’s now time we all buy instead of rent. Call me if you need help.
This information was obtained by permission from the Calif Assoc of Realtors.
Short sales – a real estate transaction in which the homeowner needs to sell the property, but owes more on the mortgage than the home currently is worth – continue to dominate the housing market, but these real estate transactions aren’t for everyone.
- Typically with a short sale, the homeowner is underwater and has experienced a financial hardship such as a job loss. To limit the damage to his credit rating, a homeowner may attempt to work with his lender to negotiate a short sale. Not only must the bank approve of the short sale itself, it also must agree to the price, since the bank will accept the difference as a loss.
- Unlike foreclosures, in which the owner has walked away and the bank is looking to unload a vacant – and sometimes vandalized – property, a short sale isn’t a distressed home that will sell at an extremely low price. According to data from RealtyTrac, short sales typically sold for nearly 10 percent less than the market price in the first quarter of 2011, whereas foreclosures sold at an average discount of 35 percent.
- Home buyers wanting to purchase a short sale must have patience. In most cases, when a buyer makes an offer on a house, he receives a response from the seller within a few days, or even hours. With a short sale, the bank must approve of the sale and bank representatives are overloaded with cases. It may take 30 days or longer for a buyer to receive a response from the bank.
- In a traditional real estate transaction, it is common for a home buyer who currently owns his home to make his offer contingent on selling his current home. In short sales, most banks will not approve an offer that is contingent on the buyer selling his current home, as too many things can go wrong.
- Banks also typically won’t consider short-sale offers that have inspection contingencies in them, so buyers can either do an inspection prior to making an offer or get no inspections.
- Even with the challenges associated with short sales, buyers don’t have too avoid these transactions. Being prepared ahead of the time and working with an experienced REALTOR® can help buyers avoid frustration and surprises down the line.
In anticipation of the expiration of current loan limits on Sept. 30, 2011, Bank of America has decided to stop accepting conventional and government applications for loan amounts that will exceed the permanent loan amounts. The deadline to submit loan applications was July 1.
According to an email from Bank of America, conventional loans that exceed the permanent loan limits will now be required to use non-conforming programs.
Barring Congressional action, the maximum FHA, Fannie Mae, and Freddie Mac conforming loan limit will decline to $625,500 beginning Oct. 1, 2011, from the current $729,750 limit, though the majority of counties will fall far below the $625,500 maximum. The conforming loan limit determines the maximum size of a mortgage that FHA, Fannie Mae, and Freddie Mac government-sponsored enterprises (GSEs) can buy or guarantee.
Non-conforming or jumbo loans typically carry a higher mortgage interest rate than a conforming loan and require a higher down payment, increasing the monthly payment and negatively impacting housing affordability for California home buyers.
This information was obtained from the Calif. Asso. of Realtors, and used with permission.
Our Realty World cameras video taped almost every major city in Northern California. This should help you learn more about the city that you may want to move to. Just click the city you are interested in. Please enjoy the show.
I look forward to helping you in anyway I can.
Alameda, California – http://www.youtube.com/watch?v=umg9CUVhcm0
Albany, California – http://www.youtube.com/watch?v=UHtBnoRUEe8
Berkeley, California – http://www.youtube.com/watch?v=99hulMyHn50
Blossom Valley, California – http://www.youtube.com/watch?v=-NnhW9Aa8qo
Campbell, California – http://www.youtube.com/watch?v=0vW1XRohxnA
Carmel, California – http://www.youtube.com/watch?v=d_fv8raJvJs
Cupertino, California – http://www.youtube.com/watch?v=-t5-VBa-xDI
Dublin, California – http://www.youtube.com/watch?v=TrCa7J8vseY
Emeryville, California – http://www.youtube.com/watch?v=nIVFzcKDqJM
Fremont, California – http://www.youtube.com/watch?v=GxBg9z_aZX0
Gilroy, California – http://www.youtube.com/watch?v=zpIcevWc1T0
Hayward, San Lorenzo, California – http://www.youtube.com/watch?v=hj-9Q44DxoE
Livermore, California – http://www.youtube.com/watch?v=wIceLQhYBeo
Los Altos, California – http://www.youtube.com/watch?v=NGbdSewOpzs
Los Gatos, Monte Sereno, California – http://www.youtube.com/watch?v=xjz7pIcPVnI
Milpitas, California – http://www.youtube.com/watch?v=L70mGkUN-Ug
Monterey, California – http://www.youtube.com/watch?v=L5tAE6JFD9I
Morgan Hill, California – http://www.youtube.com/watch?v=zMtQmrp20-8
Mountain View, California – http://www.youtube.com/watch?v=UMRVDVYCNZE
Newark, California – http://www.youtube.com/watch?v=2G5FT6SGeio
Oakland, California – http://www.youtube.com/watch?v=3okcJIUIlwI
Palo Alto, California – http://www.youtube.com/watch?v=FkJBK3-R_Aw
Piedmont, California – http://www.youtube.com/watch?v=ErZ_obcGb54
Pleasanton, Sunol, California – http://www.youtube.com/watch?v=voAFmyM3NGw
Salinas, California – http://www.youtube.com/watch?v=R-EYkmN7WR8
San Jose, California – http://www.youtube.com/watch?v=dcK3X9J-awU
San Leandro, California – http://www.youtube.com/watch?v=OAu1Up1PNnw
Santa Clara, California – http://www.youtube.com/watch?v=AnmCscnxXKs
Santa Cruz, California – http://www.youtube.com/watch?v=o1_mh1uLlF8
Saratoga, California – http://www.youtube.com/watch?v=kESZB-7tyeg
Sunnyvale, California – http://www.youtube.com/watch?v=_LcGBiK7e1Y
Union City, California – http://www.youtube.com/watch?v=zFXiAOe1Yck
Due to recent struggle in the real estate market, it’s now more difficult to get approved for a loan. Underwriting standards have tightened, meaning that borrowers need higher credit scores, more income and larger down payments in order to qualify. But that doesn’t mean you can’t buy a new home. Here are the biggest hurdles to home financing and what you can do to overcome them:
Higher credit score requirements – although you may get approved with a 620 credit score, you likely won’t get the most favorable interest rate and fee. The solution?? Contact all three credit reporting agencies—Equifax, Experian & TransUnion, by calling 1-877-3222-8228 or going to www.AnnualCreditReport.com . Once you get your credit reports, check all information for accuracy. If you find any discrepancies, report it to the credit company immediately.
Greater scrutiny of income & assests – mortgage lenders have to verify your information, so be prepared when you apply for your loan by having documentation that supports your income & assets. Have copies of tax returns, paystubs, bank statements and any investment accounts.
With a little preparation, you’ll be able to take advantage of today’s low interest rates and reasonable home prices…and buy the home of your dreams.
