Study: Buying Trumps Renting in Most Places

Buying is still more affordable than renting in the majority of U.S. housing markets, according to a new analysis. A study conducted by RealtyTrac factored in 2015 fair market rental data recently released by the U.S. Department for Housing and Urban Development for three-bedroom properties in 543 counties nationwide with populations of at least 100,000. Buying a median-priced home was found to be more affordable than renting a three-bedroom property in 68 percent of the counties tracked.

Overall, in 473 of the counties tracked, the fair market rent for a three-bedroom property in 2015 will require 27 percent of median household income, on average. For comparison, buying a median-priced home will require an average of 25 percent of median household income, based on median sales prices in November, the study found.

The top counties with the biggest increases in fair market rents on three-bedroom properties were in Williamsport, Pa.; Elizabethtown, Ky.; and Midland, Texas, which saw a 24 percent or more surge in fair market rents compared to 2014. Williamsport and Midland are both experiencing booms in their oil industries, and Elizabethtown is home to the Fort Knox U.S. Army post, the study notes. Other markets seeing soaring rents include counties around Denver; Asheville, N.C.; Chicago; and Santa Barbara, Calif.

The study showed that in 25 of the counties with the biggest increases in the millennial population (for this study, those born between 1977 and 1992) – housing costs were among some of the highest. Between 2007 and 2013, fair market rents for a three-bedroom property in popular millennial markets will require 30 percent of the median household income, on average. Buying a median-priced home on the other hand, will only require 36 percent of median household income, on average.

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NAR Identifies Best Purchase Market for Aspiring Millennial

Signs Suggest Looming Opportunity for First-Time Buyers

The top markets with the largest increases in percentages of Millennials – all of which saw a spike of more than 50 percent over the last seven years — were in counties located around Washington, D.C., San Francisco, and Denver. Other counties attracting a large majority of Millennials are located in New York City, Nashville, and Seattle, among others. 

“First-time buyers and potential boomerang home buyers are stuck between a rock and a hard place in today’s housing market: Many of the markets with the jobs and amenities they want have hard-to-afford rents and even harder-to-afford home prices; while the more affordable markets have fewer well-paying jobs and tend to be off the beaten path,” says Daren Blomquist, vice president at RealtyTrac. “Those emerging markets with the combination of good jobs, good affordability, and a growing population of new renters and potential first-time home buyers represent the best opportunities for buy-and-hold real estate investors to buy low and benefit from rising rents in the years to come.”

Still, as the economy improves and salaries rise, Millennials – particularly those living in affordable locales — are expected to become a bigger force in the housing market in the new year. Households headed by Millennials are expected to see significant growth in 2015, particularly as the economy continues to make gains. Millennials are expected to drive two-thirds of household formations over the next five years, according to realtor.com®'s report. The forecasted addition of 2.5 million jobs next year, as well as an increase in household formation, are the two factors that realtor.com® points to in driving more first-time home buyers to the housing market.

Source: RealtyTrac and “Renting Less Affordable Than Buying – Except for Where Millennials Are Moving,” RISMedia (Dec. 28, 2014)

How the 2014 Housing Market Will Shape 2015

The real estate market has shown a build-up of housing momentum this year – “fueled by significant improvements in economic fundamentals, low mortgage rates, and compressed inventory” – that will likely translate into larger gains in 2015, according to realtor.com®’s newly released 2014 Housing Review.

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A New Boom by 2015?

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"Many of the gains that we recently predicted in the realtor.com® 2015 Housing Forecast are built on housing growth established in 2014,” says Jonathan Smoke, realtor.com®’s chief economist. “Overall, this year's housing market showed steady advances over 2013 with significant improvement in key housing metrics, despite some remaining challenges. Increases in job creation and gross domestic product (GDP) have had a significant impact on consumer confidence and home buyer demand. Paired with historically low interest rates, these factors kept properties moving quickly with median time on market at approximately 90 days. Unfortunately, the low number of homes for sale and stringent lending standards prevented a normal number of first time home buyers from closing on their first home in 2014."   

Here are some of the trends realtor.com® notes from 2014 that will help drive a stronger 2015:

1. An improving economy: “After an especially harsh winter earlier in the year, the economy picked up steam and produced a banner year for new jobs,” realtor.com® notes in its report. “The GDP this year was higher, and is still trending higher, resulting in stronger consumer confidence.”
2. Low mortgage rates: Despite the end of the Federal Reserve’s quantitative easing this year, mortgage rates continued to decline and helped to lower borrowing costs of home buyers. In recent weeks, the 30-year fixed-rate mortgage has been below 4 percent.
3. Returns to normal price appreciation: “After two years of abnormally high levels of home price appreciation in 2012 and 2013, price increases moderated throughout 2014,” realtor.com® notes. “We are now experiencing increases in home prices consistent with long-term historical performance.”
4. Distressed sales decline: Foreclosures and short sales fell throughout the year. Foreclosures are projected to be down 30 percent year-over-year at the close of 2014.
5. Investor activity lessens: Coinciding with the drop in distressed sales and higher home prices, large-scale investor purchase activity in the single-family market decreased. Less competition from investors may offer more room for traditional first-time buyers to squeeze into the market.

However, the realtor.com® report notes several factors that continue to plague the housing recovery and prevent it from being stronger, including:

1. Tight credit standards: “Despite historically low rates, many households were prevented from capitalizing on mortgage access because of overlays lenders added to qualification standards in order to limit put-back risk,” realtor.com® notes. “A tight spread between approved and declined FICO scores shut out nearly half of the potential population this year. As a result, mortgage credit availability did not improve in 2014.”
2. Tight inventories of for-sale homes: Inventories did rise this year, but supply failed to outpace demand. The monthly supply of new homes and existing homes continued to fall beneath normal levels, and the age of inventory was down year- over-year.
3. Fewer first-time buyers: The share of first-time buyers dropped to the lowest level in nearly 30 years, according to the National Association of REALTORS®. "But the first-time buyer share is showing signs of modest improvement by the year-end," says Lawrence Yun, NAR’s chief economist. Federal policy actions, such as revised regulations for lenders and new low down-payment programs introduced in December, are believed to have a positive impact in increasing first-time home buyer share in 2015.
4. Record levels of renters: The home ownership rate continued to fall this year as the number of renters increased. Rent increases have become an inflationary concern this year, and the pace of rental increases does not appear to be slowing down.
5. Sluggish new-home building: Single-family new-home starts barely budged in 2014 compared to 2013. New home sales remain far from normal levels. They are typically near 16 percent and instead remain around 9 percent. Still, new home prices rose substantially again this year, revealing that higher priced product is limiting the demand.

Source: realtor.com®

Loan Demand Picks Up Before the Holidays

Mortgage applications were on the rise last week after posting several weeks of declines. Applications for home purchases, viewed as a leading gauge of future home buying activity, increased by 1.3 percent in the week ending Dec. 19, the Mortgage Bankers Association reported Wednesday in its weekly mortgage market survey, which reflects more than 75 percent of U.S. retail residential mortgage applications. 

"Purchase application volume was up slightly for the week,” says Mike Fratantoni, the MBA’s chief economist. “Conventional purchase application volume was also up on a year-over-year basis for the first time in 2014; total purchase volume was only 0.9 percent below last year's level. This makes sense in light of the continuing stream of very positive data regarding the broader economy and the job market."

Overall, mortgage applications, including both for refinancing and home purchase, rose 0.9 percent last week. Refinancing applications increased 1.1 percent.

Mortgage rates also continued to fall last week. The 30-year fixed-rate mortgage fell from 4.06 percent to 4.02 percent, reaching the lowest average since May 2013, the MBA reports.

Source: “Encouraging Econ Data Boost Weekly Mortgage Applications,” CNBC (Dec. 24, 2014) and “Mortgage Applications Rose Last Week,” Reuters (Dec. 24, 2014)

Top 10 Most-Searched Neighborhoods in 2014

Some neighborhoods across the country stood out from the pack in 2014, garnering the most searches on realtor.com® for the entire year. In a newly released report, realtor.com® highlights the top 10 most searched neighborhoods for 2014.

Realtor.com® Forecast: 10 Markets to Grow the Most Next Year

“The hyperlocal markets on this list demonstrate the wonderful diversity of real estate demand across the country,” says Jonathan Smoke, realtor.com®’s chief economist. “Median list prices in these most-searched neighborhoods are near $400,000, well above the national median of $214,000, as well as their respective metro medians. Homes in these communities are moving quickly as the aggregated median age for the group is almost half of the national median of 90 days.”

The following were the most-searched neighborhoods, by city and ZIP code, in 2014 on realtor.com®:

1. Orlando, Fla./32801
Median list price: $276,000
Local point of interest: Thornton Park District

2. Las Vegas/89138
Median list price: $380,000
Local point of interest: Red Rock Resort and Spa

3. New Orleans/70124
Median list price: $398,000
Local point of interest: New Orleans City Park

4. Fort Worth, Texas/76109
Median list price: $380,000
Local point of interest: Fort Worth Zoo

5. Savannah, Ga./31401
Median list price: $284,000
Local point of interest: Savannah History Museum

6. Fort Wayne, Ind./46845
Median list price: $146,000
Local point of interest: Pine Valley Country Club

7. Raleigh, N.C./27617
Median list price: $268,000
Local point of interest: William B. Umstead State Park

8. San Diego/92106
Median list price: $974,000
Local point of interest: Historic Lighthouse Point Loma

9. Chicago/60646
Median list price: $398,000
Local point of interest: Edgebrook Golf Course

10. Columbus, Ohio/43212
Median list price: $298,000
Local point of interest: Columbus Fish Market

Source: realtor.com®

Multifamily Sector Embraces Green Movement

Staying current on incentives and programs available to multifamily owners and developers keeps real estate pros better positioned to discuss and market such properties.

DECEMBER 2014 | BY DEBBIE SWANSON

Green isn’t just for single-family home owners anymore. Environmentally friendly properties are gaining favor among both tenants and property owners in the multifamily sector.

“Green buildings are seen by many as a better asset,” says David Newcombe, designated broker of Habitat Urban Agents in Phoenix. “The green concept will continue to be a stamp of approval, not just for the environmental benefits, but for the quality of the building.”

The initial push for green buildings — those that have a minimal impact on the environment — began in the early 1990s, propelled by the introduction of the Environmental Protection Agency’s Energy Star program and the creation of the U.S. Green Building Council. Soon technological advances created better ways to reduce energy consumption, and terms like “sustainable” and “high performance” became a more common element of a property’s description.

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Current eco-friendly updates include:

• Energy Star appliances and windows
• Water-saving features, such as low-flow faucets, high-efficiency toilets, and timers on irrigation systems
• Efficient water heaters, such as tankless and solar models
• Whole-home systems that give tenants the ability to control energy use when not in the home
• LED retrofits in existing light fixtures

With the larger occupancy rate of multifamily buildings expending more energy per square foot than single-family homes, these structures have been the focus of recent energy conservation incentives and certification programs, giving real estate professionals and property owners new ways to compare and assess properties.

Energy Star for Multifamily

The Energy Star designation, created in 1992 by the EPA, has become synonymous with appliances and materials that are highly energy-efficient. Recognizing that multifamily property owners needed a way to understand and compare the performance of their buildings, Fannie Mae Multifamily Mortgage Business partnered with the EPA to create Energy Star for multifamily properties, introduced in September of 2014.

Newcombe says this is a huge step forward for multifamily customers, property managers, and developers.

“People are familiar with the concept of Energy Star; there’s a public understanding already in place,” he says.

To obtain a score, property owners submit data to the EPA’s Portfolio Manager, a free online tool for measuring and comparing buildings’ energy use. The resulting number, from 1 to 100, ranks a building’s performance in comparison with others; for example, a score of 70 indicates that the building performs better than 70 percent of similar properties.

Multifamily properties scoring over 75 qualify for Energy Star certification. Overall, certified buildings use approximately 35 percent less energy and emit 35 percent fewer greenhouse gases than standard buildings.

LEED Certification

LEED, which stands for Leadership in Energy and Environmental Design, was created in 2000 by the U.S. Green Building Council. A building receives LEED points for energy- and water-saving features, as well as other factors such as innovative property management. The total number of points sets the certification level: certified, silver, gold, or platinum. Real estate professionals can then incorporate such language into their property descriptions.

“We’ve seen tremendous success in multifamilies with LEED certification,” says Asa Foss, a LEED residential technical director with the U.S. Green Building Council.

Multifamily low-rise buildings became eligible for certification under the LEED for Homes classification in 2008. With LEED v4, launched in November of 2013, multifamily mid-rises—up to 12 stories above grade—are also eligible, and upgraded standards apply to multifamily low-rise buildings.

 “Certification is valuable if you’re marketing your building to a younger demographic, to whom environmental issues are important,” says Foss, adding that it can also be beneficial to property owners seeking financing. “Some larger lenders — who see certified buildings as better, safer investments — are starting to require LEED certification.”

Foss points to a recent study published by researchers at CoStar’s Property and Portfolio Researchsubsidiary for proof of the bottom-line benefits of certification. The study looked at a half-million data points about apartment buildings that drive investment value based on renter demand in the apartment sector. LEED certification was determined to be the second highest driver in lease rates, behind location.

Better Buildings Challenge

Another incentive igniting eco-friendly improvements to multifamily structures is the Better Buildings Challenge. Originally launched in 2011 by President Barack Obama and implemented through the U.S. Department of Energy, this program challenges commercial and industrial building owners to strive to make their properties at least 20 percent more energy efficient by 2020.

In 2013, the Department of Housing and Urban Development partnered with the DOE to expand the challenge to the multifamily sector. Participants in the challenge, referred to as partners, commit to reducing energy consumption by at least 20 percent over 10 years. Partners agree to publicly share their data on their energy savings and details about the efficiency strategies they employ.

Partners in the challenge are looked upon as energy-efficient role models in their community, and are recognized as part of a collaborative conservation effort. While the specifics vary by state, subsidized services and resources are available to support reduction goals.

Boston-based real estate developer WinnCompanies was a partner in the challenge in 2013.

“Joining the challenge has given us an opportunity to be a leader in both meeting — and going beyond — green building standards,” says Darien Crimmin, vice president of Energy and Sustainability at WinnCompanies. “Both renters and buyers are recognizing the trend toward more environmental building.”

Crimmin says the challenge has been beneficial, given the demographic shift in favor of environmentally sound buildings.

“It’s forced us to take a holistic look at our long-term energy efficiency strategy,” he reports. “Renters and buyers are recognizing that this is a priority.”

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, saysarchitect 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 asArianna 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 Razwillas. 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.

3% Down Payments May Be Game Changer

DAILY REAL ESTATE NEWS | TUESDAY, DECEMBER 09, 2014

Mortgage giants Fannie Mae and Freddie Mac announced Monday that first-time home buyers can now qualify for loans with down payments as low as 3 percent. That will expand credit for qualified home shoppers who may have been sidelined the last few years because of higher down-payment requirements, housing analysts say.

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Freddie Mac launched Home Possible Advantage, a conventional mortgage with a 3 percent down-payment requirement geared to low- and moderate-income borrowers. It's a conforming conventional mortgage with a maximum loan-to-value ratio of 97 percent. To qualify, first-time home buyers are required to participate in a borrower education program.

With Fannie Mae's 3 percent down-payment offering, borrowers must still meet standard eligibility requirements, including underwriting, income documentation, and risk management standards. Any buyer can take advantage of Fannie's loans as long as at least one co-borrower is a first-time buyer. The loans will require private mortgage insurance.

"Our goal is to help additional qualified borrowers gain access to mortgages," says Andrew Bon Salle, Fannie Mae executive vice president for single-family underwriting, pricing, and capital markets. "This option alone will not solve all the challenges around access to credit. Our new 97 percent LTV offering is simply one way we are working to remove barriers for creditworthy borrowers to get a mortgage."

The National Association of REALTORS® applauds the move by the Federal Housing Finance Agency, which oversees Fannie and Freddie.

NAR said in a statement that the action by FHFA demonstrates its "commitment to home ownership by serving creditworthy borrowers who lack the resources for substantial down payments, plus closing costs, with a new 3 percent down-payment program that mitigates risk with strong underwriting. The new program ensures that responsible home buyers will have access to safe, affordable mortgage credit."

Source: Fannie Mae and Freddie Mac

Buyers' and Sellers' Confidence Diverges

The gap between those who say it's a good time to buy a home and those who say it's a good time to sell is growing larger. Sixty-eight percent of Americans say now is the time to buy, a month-over-month rise of 3 percentage points, according to Fannie Mae's November 2014 National Housing Survey of 1,000 respondents. On the other hand, the number of Americans who say it's a good time to sell fell 5 percentage points to 39 percent.

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Still, 44 percent of Americans remain optimistic that home prices will rise in the next 12 months, while the share who say home prices will drop is down to 6 percent, the survey found.

Fannie's latest survey results "support the 2014 trend of gradual — but often sporadic and unspectacular — improvement across a range of indicators measuring consumer attitudes toward housing," says Doug Duncan, Fannie Mae's chief economist. "This mirrors the uneven recovery in housing activity this year."

Here's one of the most encouraging signs for the housing market's future: Consumers' personal financial outlook is improving. Forty-six percent of Americans say they expect their personal financial situation to improve over the next 12 months. That's close to the survey's all-time high.

"We expect consumer attitudes toward housing to improve as the pickup in the overall economy lifts employment and income prospects," Duncan says. "However, a sustained improvement in sentiment that could support a robust housing recovery, as policy support is removed, will require meaningful gains in household income. While such gains have so far been elusive, the strength in the November jobs report, which points to faster growth in labor income in the current quarter, marks a good start.”

Also, among the survey's findings:

• 45 percent of respondents say they believe mortgage rates will rise in the next 12 months (a drop of 3 percentage points from the previous month);
• 53 percent say they expect rental prices to rise in the next 12 months (a rise of 4 percentage points from last month);
• 62 percent say they would buy a home if they were going to move, while the share who say they'd rent rose to 31 percent;
• 25 percent say their household income is significantly higher than it was 12 months ago (the same as last month);
• 36 percent say their household expenses are significantly higher than they were 12 months ago (the same as last month).

Source: Fannie Mae

10 Markets to Grow the Most Next Year

DAILY REAL ESTATE NEWS | FRIDAY, DECEMBER 05, 2014

The U.S. housing market is expected to make strides overall in 2015, but 10 metros in particular are "ready for significant acceleration across housing metrics" next year, according to realtor.com®'s latest housing report.

"The markets on this list range from big cities with older housing stock, big and mid-size cities with substantial levels of new construction, and up-and-coming markets appealing to young professionals for their job growth and high affordability," says Jonathan Smoke, realtor.com®'s chief economist.

Los Angeles and Washington, D.C., for example, made the list because of expected increases in household formation and home sales there in 2015, realtor.com® notes. On the other hand, Des Moines, Iowa, made the list because of its high affordability and high levels of home ownership among Millennials, which are expected to continue next year.

Realtor.com®'s top 10 markets for growth in 2015 (as well as what local metric to watch the most next year) are:

1. Atlanta-Sandy Springs, Ga.: Household formation growth; home sales expected to rise 11%.
2. Dallas-Fort Worth-Arlington, Texas: Household formation (ranks first in forecasted household growth over the next 5 years); home sales expected to rise 7%.
3. Denver-Aurora-Broomfield, Colo.: Home-sale growth projected to be 14%; tight inventories of for-sale homes.
4. Des Moines-West Des Moines, Iowa: Growth in Millennial share of households.
5. Houston-The Woodlands, Texas: Household formation growth; employment to grow by 4%; home sales to increase by 5%.
6. Los Angeles-Long Beach, Calif.: Household formation growth; home sales to grow by 6%.
7. Minneapolis-St. Paul-Bloomington, Minn.: Millennial home owner growth; increase in new-home construction.
8. Phoenix-Mesa-Glendale, Ariz.: Income growth; increase in new-home construction by 22%; home sales expected to grow by 11%.
9. San Jose-Sunnyvale-Santa Clara, Calif.: Tight inventories of homes for sale; income growth; home prices and home sales both expected to grow by 3%.
10. Washington, D.C.: Household formation growth; tight inventories of homes for sale; home sales expected to rise 10%.

Source: realtor.com®

Did Mortgages Just Get Easier to Obtain?

DAILY REAL ESTATE NEWS | TUESDAY, DECEMBER 02, 2014

Fannie Mae and Freddie Mac's new lending guidelines went into effect Monday, which are expected to help loosen up the tight credit standards that home buyers and refinancers have faced in recent years.

The guidelines clarify when lenders will be penalized for making mistakes on mortgages they sell to the mortgage financing giants. Following the financial crisis, Fannie and Freddie forced banks to repurchase tens of billions of dollars in loans that they say did not meet their standards. It caused many lenders to tighten their lending, except to the most creditworthy borrowers with the highest credit scores. Lenders have blamed the lack of clarity from Fannie and Freddie on the tight credit conditions that have made it difficult for home buyers to qualify for a mortgage.

Fannie and Freddie's latest lender guidance is "going to be big, but it's going to take time" to see the full impact of the changes, Laurie Goodman, director of the Housing Finance Policy Center at the Urban Institute, told The Wall Street Journal. Earlier this year, the Urban Institute estimated that up to 1.2 million additional home loans would be made annually if mortgage availability was at "normal" levels. 

Lending giants such as Wells Fargo and SunTrust Banks Inc. have said borrowers will likely see faster turnaround times on mortgage applications in the next few weeks. Some lenders also say they expect to broaden the range of borrowers they'll accept by reducing credit-score requirements and making exceptions for consumers who faced a one-time financial event, such as a job loss or large medical bill.

"It's providing greater certainty for all the parties so that you can lend more confidently and make the whole judgment process much easier and more clear cut," Mike Heid, president of Wells Fargo Home Mortgage, told the Journal.

However, some banks still are treading cautiously and aren't ready to relax their underwriting rules quite yet.

"You won't see us start to expand our criteria much past what we've done," says Brian Moynihan, Bank of America chief executive. (Read more: Bank of America: We’re Not Easing Up)

U.S. Bank CEO Richard Davis says his bank also isn't prepared to make any changes yet.

"Unless we are convinced that the rules are going to be permanent and there is not going to be a look back or a reach back in future times … we are simply going to stay on the sidelines in the concerns of both compliance risks and other uncertainties," Davis told the Journal.

Source: “Mortgage Lenders Set to Relax Standards,” The Wall Street Journal (Nov. 28, 2014)

10 Standouts in the Housing Market

DAILY REAL ESTATE NEWS | TUESDAY, DECEMBER 02, 2014

National home prices continue to moderate following last year's double-digit surge. Distressed saturation fell to 16.8 percent nationwide, "suggesting the shortage of lower-priced inventory is the catalyst for stalling gains," according to Clear Capital's latest Home Data Index Market Report.

"The housing recovery is at a pivotal point — it's in need of restored consumer confidence and non-investor demand," the report notes.

But some markets remain the exception. For example, Detroit has ranked within the top three highest-performing metros for the fifth consecutive month. Clear Capital pointed out the following markets as having the biggest price gains:

1. Detroit–Warren–Livonia, Mich.
   Year-over-year price gains: 20.3%
   Distressed saturation: 19.5%
2. Atlanta–Sandy Springs–Marietta, Ga.
   Year-over-year: 13.3%
   Distressed saturation: 19.4%
3. Pittsburgh, Pa.
   Year-over-year: 9.6%
   Distressed saturation: 9.4%
4. Dayton, Ohio
   Year-over-year: 10.9%
   Distressed saturation: 19.3%
5. New Orleans–Metairie–Kenner, La.
   Year-over-year: 9.2%
   Distressed saturation: 15.6%
6. Milwaukee–Waukesha–West Allis, Wis.
   Year-over-year: 4%
   Distressed saturation: 17.5%
7. Memphis, Tenn.
   Year-over-year: 5.8%
   Distressed saturation: 24.8%
8. San Jose–Sunnyvale–Santa Clara, Calif.
   Year-over-year: 11.4%
   Distressed saturation: 4.6%
9. Bakersfield, Calif.
   Year-over-year: 11.2%
   Distressed saturation: 16.8%
10. Denver–Aurora, Colo.
    Year-over-year: 9.4%
    Distressed saturation: 7.4%

Source: Clear Capital