August Existing Home Sales At Pre-Recession High

09/19/2013BY: MARK LIEBERMAN, FIVE STAR INSTITUTE ECONOMIST

Existing home sales rose an unexpected 6.5 percent in August to an annual sales rate of 5.48 million, the highest level since February 2007 – ten months before the onset of the Great Recession — the National Association of Realtorsreported Thursday. Economists surveyed by Bloomberg expected existing home sales to drop to 5.255 million from July’s originally reported July’s 5.39 million sales pace which was unchanged in today’s report.

The increase in sales came as the median price of an existing single family home in August dipped slightly from July, down $300 to $212,100. It was the second straight month-month price drop.

The inventory of homes for sale edged up to 2.25 million from 2.24 million in July, computing to a 4.9 month supply down from 5.0 in July and the lowest since February’s 4.7 month supply.

The sales increase came as mortgage rates continue to rise with buyers seeking to complete transactions before rates went up further. According to Freddie Mac, the rate for 30-year fixed rate loan in August was 4.46 percent (the average of the weekly rates), up from 4.37 percent in July.

The sales data came shortly after a the Federal Open Market Committee said tighter rates could be hindering the economic recovery and announced it would continue its monetary stimulus policy designed to “maintain downward pressure on longer-term interest rates [and] support mortgage markets.”

The NAR warned the strong sales pace might be a “temporary peak”, the association’s chief economist said “rising mortgage interest rates pushed more buyers to close deals, but monthly sales are likely to be uneven in the months ahead.”

He warned “tight inventory is limiting choices in many areas, higher mortgage interest rates mean affordability isn’t as favorable as it was, and restrictive mortgage lending standards are keeping some otherwise qualified buyers from completing a purchase.”

The stronger sales pace came despite a drop in the NAR’s forward-looking pending home sales index for June which dropped to 110.9 from 111.3 in May. The index fell again in July to 109.5.

The sales gain was driven by stronger activity in the South and Midwest where the sales pace increased by 80,000 and 40,000 respectively. The sales pace slipped 30,000 in the West and was unchanged in the Northeast. The median price rose month-month in the South and Midwest but fell month-month in the West and Northeast. The NAR usually cautions against month-month price comparisons which it said, “do not compensate for seasonal changes, especially for the timing of family buying patterns

With the August report, sales pace topped 5 million for the fourth month in a row for the first time since August-November 2007. The August sales rate was 640,000 or 13.2 percent ahead of August 2012, the 19th straight of year-year gains.

Existing home sales continue to be plagued though by a tight inventory. The number of homes on the in August was down 150,000 from a year earlier, the 30th straight month of annual inventory decline. The months’ supply of homes for sale in August – computed using the homes for sale and the sales pace — was down 1.1 months from a year earlier. The months’ supply has been down year-year for 26 straight months.

While down month-month in August, the median price was up $27,200 or 14.7 percent from a year earlier, the strongest dollar and percentage year-year gain since October 2005. Nonetheless, the median price of an existing single family home is down – 7.9 percent – from its July 2006 peak of $230,300

The median price in August though topped $200,000 for fourth month in a row for the first time since May-August 2008.

According to the NAR, distressed homes – foreclosures and short sales – accounted for 12 percent of August sales, down from 15 percent in July, the lowest share since monthly tracking began in October 2008; they were 23 percent in August 2012. The decline in the share of distressed sales accounts for some of the year-year increase in the median price, since distressed homes sell at discounted prices. Eight percent of August sales were foreclosures, NAR said, and 4 percent were short sales. Foreclosures sold for an average discount of 16 percent below market value in August, while short sales were discounted 12 percent.

According to the Realtor group, the median time on market for all homes was 43 days in August, up from 42 days in July and 37 days in June, but less than the 70 days in August 2012. Non-distressed homes were on the market for 41 days, NAR said, while short sales were on the market for a median of 96 days and foreclosures for 52 days. Under half – 43 percent — of homes sold in August were on the market for less than a month.

With the recent increase in rates, all-cash sales made up 32 percent of transactions in August, up from 31 percent in July and June but down from 33 percent in May. NARreported. All-cash sales were 27 percent in August 2012.

First-time homebuyers accounted for 28 percent of August sales, down from 29 percent in July and from 31 percent a year ago.

Housing Scorecard Suggests Improvement

09/13/2013BY: HUGH MOORE

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The housing recovery continues to gather momentum, indicating an ongoing economic upswing according to the Housing Scorecard released by the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury today. Improving market indicators include home prices, purchases of new homes, and sales of existing homes according to the report.

“As indicated in the August housing scorecard, the Administration continues to work to stabilize the housing market and help responsible homeowners get back on their feet,” said HUD Deputy Assistant Secretary for Economic Affairs Kurt Usowski. “With the number of underwater homeowners decreasing by more than 40%, it is clear that we are moving in the right direction. As we regain

stability in our housing markets, it is important to remember that we still have a long way to go in making sure that our housing finance system is strong for future generations.”

“The standards set by the Making Home Affordable program have changed the mortgage servicing industry, as have our quarterly assessments of servicer performance” said Treasury Assistant Secretary for Financial Stability Tim Massad. “While there has been significant progress, there is still more improvement needed in servicer behavior. And while the housing market has recovered substantially, there are still homeowners struggling to avoid foreclosure and it is vital that we continue to try to help them.”

Home prices continued to show strong annual gains, according to the report. The FHFA purchase-only index rose 7.7 percent from last year, and the seasonally adjusted purchase-only index has increased for the last 17 consecutive months.

The Housing Scorecard highlighted the government’s foreclosure mitigation programs, including the Home Affordable Modification Program (HAMP), which has provided more than 1.2 million permanent modifications as of July. Also, it noted that grantees of the Neighborhood Stabilization Program reported completion of more than 25,000 rehabilitated housing units.

Panelists Discuss Future of Mortgage Market

09/13/2013BY: HUGH MOORE

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When Ron D’Vari and Thomas Heinemann discussed the possible winding down of Government Supported Entities (GSEs) Fannie Mae and Freddie Mac, one thing both agreed on was that possible reform of government’s role in the mortgage market needs to be preceded by sweeping changes in how loans are provided and capitalized.

“GSE reform is badly needed,” said D’Vari , Co-Founder and CEO of NewOak Capital. “But other issues have to come ahead of this. Provided the right transition and the right preparation, there is capital in the market.”

Heinemann, a senior legislative advisor in the Department of Housing and Urban Development, said that coming regulations will tighten the market, but only time will tell how the market will adjust. “I think we’re about to enter what could be a very interesting time on the Hill,” Heinemann said. “What are the new rules of the road? I think what you’ll begin to see is a gradual scaling back of government support. A lot of things are happening that are meant to bring back private capital.”

D’Vari suggested that the government’s role in the housing market simply couldn’t be maintained. “We have created too much of an intersection between politics and the market,” D’Vari said. “We have created a big monster for ourselves. There is no precedent for the way the US housing market works. By every historical measure we are off the charts.”

Interest Rates Hold Ground After August Jobs Report

09/12/2013BY: TORY BARRINGER

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August’s mixed employment numbers did little to move mortgage rates this week, according to surveys fromFreddie Mac and Bankrate.com.

Freddie Mac’s Primary Mortgage Market Survey shows the average 30-year fixed rate staying put at 4.57 percent (0.8 point) for the week ending September 12. Last year at this time, the 30-year fixed averaged 3.55 percent.

The 15-year fixed-rate mortgage (FRM) averaged 3.59 percent (0.7 point), also unchanged from last week.

Adjustable rates, meanwhile, dipped. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.22 percent (0.5 point) this week, a drop from

last week’s 3.28 percent. The 1-year ARM averaged 2.67 percent (0.4 point), down from 2.71 percent.

“Mortgage rates were little changed this week following a mixed employment report,” said Frank Nothaft, VP and chief economist for Freddie Mac. “For example, the economy added 169,000 jobs in August, which was below the market consensus forecast, and revisions subtracted another 74,000 from the prior two months. Meanwhile, the unemployment rate fell to 7.3 percent, which was the lowest since December 2008.”

Bankrate’s weekly national survey showed equally modest movements. The 30-year FRM averaged 4.71 percent, down a single basis point, while the 15-year fixed rate rose the same amount to 3.75 percent.

The 5/1 ARM averaged 3.65 percent, unchanged week-over-week.

“The rise in mortgage rates in recent months has been in anticipation of the Federal Reserve beginning to slow the pace of their monthly bond purchases. With the moment of truth now close at hand, as the Fed meeting concludes on Sept. 18, it is wait-and-see time for mortgage rates,” Bankrate said in its release. “Whether the Fed tapers this month or not is likely to be a game-time decision, but it is inevitable. If it doesn’t happen this month, speculation will immediately begin to swirl about an October start.”

Survey Shows Strong Support for Financial Regulation

09/12/2013BY: TORY BARRINGER

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As the calendar approaches September 15, marking the anniversary of the collapse of Lehman Brothers, the nation is reminded of that historical event which severed the very fabric of our financial system.

It’s been five years since that fateful day, and the Center for Responsible Lending (CRL) says Americans-regardless of political party, age, race, or locale-overwhelmingly support financial regulation, and in particular, increased consumer protections.

CRL and Americans for Financial Reform contracted a research group to poll 1,004 likely voters on their feelings toward Wall Street, reform measures that have been implemented, and reforms that have been proposed. They found consumer support for tough financial reform and the Consumer Financial Protection Bureau (CFPB) remains strong.

While the issue of financial regulation has been an area of contention in Washington, the survey actually found that the electorate overwhelmingly favors it, with 96 percent of Democrats, 95 percent of Independents, and 89 percent of Republicans saying they believe financial regulation is “important” or “very important.”

Overall, 83 percent of voters (including 89 percent of Democrats, 82 percent of Independents, and 75 percent of Republicans) said they favor tougher regulation of “Wall Street financial companies” when that statement is presented alongside the alternative of “their practices have changed enough that they don’t need further regulation.”

Meanwhile, 64 percent of voters said they see a need for an agency charged to protect consumers from dangerous financial products. By contrast, 26 percent agreed with a counter-argument depicting the CFPB as an example of expensive and unnecessary federal bureaucracy. Notably, though, 40 percent of respondents said they have no opinion or have not heard of the new consumer protection agency.

Nevertheless, after hearing arguments both for and against financial reform, 63 percent of voters agreed that Wall Street should be held accountable and prevented from repeating past actions, and 67 percent held a favorable view of the stepped-up oversight of mortgage brokers and other financial industry players.

Support for financial regulation, however, coexists with a widespread view of debt problems as a reflection of “personal irresponsibility.” When asked to choose, 30 percent of voters point to personal irresponsibility, while 44 percent prefer an alternative statement that “lenders need rules” and should have to provide clear information “so people can make wise choices.” At the same time, 22 percent of voters say they support both propositions equally.

 

List of Improving Markets Hits New Record

09/09/2013BY: KRISTA FRANKS BROCK

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The National Association of Home Builders/First American Improving Markets Index reached its highest level on record in September with a little more than 80 percent of markets qualifying as “improving.”

The index, released Monday, tracks 361 metropolitan areas for improvement in housing permits, employment, and house prices. Markets have to demonstrate improvement in all three areas for six consecutive months to make it on the list.

Of the 291 markets that made it onto the latest Improving Markets Index, 242 were repeats from the previous month, and 49 were new to the list.

Five markets dropped off the list over the past month. Those markets include Kankakee, Illinois; Burlington, North Carolina; Jacksonville, North Carolina; Winston, North Carolina; and Danville, Virginia.

“While there is still plenty of room for growth, this is an excellent indication of how the housing recovery has begun to take hold across more geographical areas,” “said Rick Judson, chairman of the NAHB and a home builder from Charlotte, North Carolina.

The NAHB pointed out that markets new to the index this month spanned several regions of the country, including such metros as Macon, Georgia; St. Cloud Minnesota; Brownsville, Texas; Spokane, Washington; and Milwaukee, Wisconsin.

However, NAHB’s chief economist, David Crowe, pointed out that “[t]he dramatic increase in markets qualifying for the IMI in September was partly due to a recent improvement in the way that Freddie Mac measures home prices.” NAHB relies on Freddie Mac’s housing data for its index.

“Even so, the broadened list of metros on the IMI continues to demonstrate the slow but steady gains that individual housing markets are making to bolster the national outlook,” he added.

In fact, all 50 states have at least one county represented on the index, and 23 states have at least one new market on the index this month.

Salinas, California, outranks all other metros on the index in terms of permit growth from its trough with a 44.2 percent rise.

Phoenix, Arizona, ranked highest for price growth with a 41.5 percent increase from its trough.

Midland, Texas, has experienced the greatest employment growth of any market on the index—a 33.5 percent rise from the market trough.

Report: Housing Stable Despite ‘Bubble-Like’ Gains in August

09/10/2013BY: TORY BARRINGER

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August price gains were reminiscent of those last seen during the peak of the bubble—but analysts at Clear Capital insist there’s nothing to fear at this point.

The company reported in its latest Home Data Index that prices were up 10.2 percent year-over-year in August. By Clear Capital’s metrics, the last time the nation saw double-digit yearly price growth was mid-2006, the height of the bubble. (Other sources, including the monthly Case-Shiller Indices, have been reporting regular double-digit growth for some time.)

However, with prices still off 32.5 percent from their previous highs (putting them in line with prices circa 2002), the firm isn’t concerned about the possibility of a new bubble.

“With the continued strengthening of home price trends in August, the need for perspective on market activity is even more important,” said Dr. Alex Villacorta, VP of research and analytics at Clear Capital.

Looking under the surface trends, Villacorta notes the low-tier price segment of the housing market saw quarterly gains of 2.0 percent—the lowest since April 2012—indicating that sector is already on a more moderate growth path. Growth for the low-tier segment peaked in April 2013 at 4.1 percent.

“Considering the low tier price segment of the housing market led the recovery, the cooling in this segment will likely transfer through to the broader housing market,” Villacorta said, also observing that the industry is heading out of its busy season and into the slower fall and winter months. “That’s not to say the recovery is slated to stall, rather growth patterns are likely to return to more historical rates of growth, between 4.0 percent to 5.0 percent, rather than align with bubble-like growth.

“At the end of the day, this is still great news for housing,” he continued. “Today’s housing market is not irrational or out of balance within the broader context of housing trends, but as we learned, sustaining this pace of growth is simply not healthy. Our call for moderation is the next phase of a more mature recovery.”

 

Six Tips to Liven Up Your Laundry Room

Six Tips to Liven Up Your Laundry Room

With the average American family doing more than 400 loads of laundry each year, it’s no wonder the laundry room has become one of the most popular remodeling projects in the house. Often out of sight and out of mind, most laundry rooms are designed like closets rather than efficient utility rooms. According to decorator Jenny Komenda, with just a few inexpensive changes you can brighten your clothes and your mood by transforming your laundry room into a bright, functional place.

Check out these tips on how to create more efficient and enjoyable laundry rooms:

• Dealing with a dark, cave-like laundry room can be a chore. By taking off the doors on a few of your upper cabinets, you’ll open up the space and create a place to store baskets. Assign baskets for every member of the house and sorting will be a breeze.

• Painting the insides of your cabinets a fun color is a simple way to brighten your day every time you reach for your detergent. Another easy way to improve your space is to attach cork panels on the inside of the cabinet doors and create a space to pin useful information, such as stain removal tips.

• Don’t like the cabinets, floors and countertops in your laundry room? Every surface can be painted or resurfaced. Update your laundry room with paint and a concrete overlay for less than $30. Say goodbye to the outdated linoleum, brick pavers and old, dark cabinets.

• A rolling laundry butler with a hanging bar, a rolling basket and a drying rack can be your best friend. It’s the perfect choice for smaller laundry rooms that haven’t been updated in a few decades.

• Don’t neglect your laundry room walls. Hanging interesting art and mirrors will elevate your room and make it feel less utilitarian and a little homier. Suddenly those 400 loads of laundry most of us will do this year may be enjoyable.
• A folding station makes all the difference. Use a slab of stone or a simple piece of painted medium-density fiberboard (MDF) on top of washer or dryer units to create a folding station that also prevents socks from slipping in between the appliances.

Is Your Babysitter Driving? Follow These Tips to Keep Your Kids Safe in the Car

Is Your Babysitter Driving? Follow These Tips to Keep Your Kids Safe in the Car

For some parents, just leaving the kids with a babysitter or nanny can be a nerve-racking experience. When the babysitter is also responsible for chauffeuring the kids around town, it can be even more distressing. Here are several steps parents can take to ensure their children’s safety while they’re in the care – and cars – of others:

1. Ensure the caretaker has a valid driver’s license and a solid driving record. Be on the lookout for reckless driving citations; cell phone tickets, excessive speeding and driving while intoxicated. Furthermore, don’t discount even smaller traffic violations. No red flag is too small when the safety of your children is at stake.

2. Check the babysitter’s references. There’s a peace of mind that comes with knowing other parents in your community have relied on the babysitter to drive their children around.

3. Decide what car the babysitter will drive. It’s ideal to lend your own vehicle so you’ll be able to make sure that it is in good condition and has all of the features needed to keep your little ones safe. If that’s not an option, have a trusted mechanic check out the nanny’s car.

4. Install child safety seats. The car that your sitter will use should have appropriate child safety seats that are properly installed for each child who needs them.

5. Have the sitter take a defensive driving class. Some nanny agencies require this already. However, if you’re not going through an agency, or your sitter hasn’t taken a class, your insurance agent can help you track one down. You can also find a class through your local DMV.

6. Use technology to keep tabs. Parents can install a diagnostic tracker that monitors the car’s speed, location and performance. Apps and other technology can also be installed to restrict the driver’s smartphone usage while driving.

Rethink the Way You Pay

Rethink the Way You Pay

Today’s consumers are finding new ways to get the goods and services they want for their lifestyles. Using savvy, money-saving tactics, these shoppers are getting more for less by eliminating services they don’t need and are using comparative shopping. These new power consumers challenging the trend of “more is more” are confidently declaring “half is more” when it comes to paying for what they want. Here are some tips to help adopt better spending habits while searching for the perfect deal:

Cut Insurance Costs: No longer subjected to old, cookie-cutter insurance policies, more versatile options exist today allowing you to name exactly what you need. The insurance industry is a prime example where you can carefully determine your exact needs and compare prices to find the best provider. Many online tools exist that provide side-by-side pricing of various insurers.

Switch to a No-Contract Wireless Phone Plan: Today’s consumers want lower cost wireless phone services but don’t want the long-term contract commitments that come with many postpaid wireless service providers. Many are making the shift away from traditional postpaid contracts and instead are utilizing reliable, no-contract wireless service providers which offer prepaid plans. Making such adjustments can save you up to half on your wireless phone bill while maintaining unlimited and nationwide service.

Test Before You Buy: Have you ever bought a new product, such as cosmetics or skin care items, only to realize you don’t like it? That’s money wasted. Today, there are new online services that send you test size samples of products before you buy, ultimately saving you money by trying the products first.

Save on Gas: Take advantage of your local grocery store’s gas rewards program. Many stores offer discounts on gas if you buy from their service station or participating gas stations in the area. It’s as simple as signing up for the program and then earning points or money toward gas while you shop for other everyday needs.

Scale Back on Entertainment Spending: An evolution has occurred in the movie and music industry that can save you a considerable amount of money. Instead of purchasing individual DVDs, Blu-rays or CDs, consider taking advantage of digital services, such as Netflix or Hulu, that provide access to thousands of movies at a relatively low monthly rate. In addition, downloading music to your phone, instead of streaming, won’t use up your data allotment.

Shop Discount Websites: Subscribing to discounted apparel and home decor website lists can keep you from overpaying at retail stores. From throw pillows to watches, sites like Gilt, Hautelook and Fab.com provide some of the trendiest designer items for less. Some sites also have timed sales for specific items. Taking 15 minutes to browse can equate to hundreds in savings.