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NEW RULES: FHA to deny mortgages with credit disputes above $1,000

The Federal Housing Administration announced that starting April 1 it will not insure mortgages to borrowers who have an ongoing credit dispute of $1,000 or more on their file.

To be considered for an FHA-backed loan, borrowers will either have to pay the remaining balance on the credit dispute or enter into a payment plan, making at least three payments on it. Any payment plans will need to be documented and submitted to FHA, which will then figure it into the debt-to-income ratio for the new mortgage.

FHA’s new rule does not include disputed credit accounts from more than two years ago or any related to reported identity theft.

Still, the new rule has some in the housing industry worried that it’s going to keep more potential home buyers from securing a mortgage.

“We expect this revision will certainly kick some buyers out of the marketplace, and we’re in ongoing efforts to quantify how extreme the impact will be,” Lisa Jackson, senior vice president of research at John Burns Real Estate Consulting, told HousingWire.

Jeremy Radack, a real estate attorney in Houston who assists with financing, estimated FHA originations may be reduced by 33 percent to 50 percent this year due to the new rule.

FHA says the rule is aimed at protecting the FHA’s emergency fund, which has fallen below the mandated amount Congress requires.

“We found that many borrowers with mortgage payment delinquencies had prior credit deficiencies including unpaid collections and unresolved disputed accounts prior to the approval of their loan,” the spokesman said. “This change was made to eliminate this layer of risk to FHA-insured loans and help protect our insurance fund.”

SOURCE: Housing Wire

COMING SOON: 41 Acre Ranch with small cabin and shop

41+ usable acres with fenced pastures, horse shelters, pond and 1,335 feet of Elk Creek frontage. Property is a corner piece with lightly traveled county maintained roads on 2 sides and is an ideal horse setup with access to back country riding. In the winter, ride your snowmobiles right out of the ranch to groomed snowmobile trails or create your own cross country ski trails.

The home is very energy efficient as it was built with a high R-value. Many quality features include rough sawn hardwood floors, knotty alder mill work and solid core doors, granite counter in kitchen, stainless steel appliances, custom tile work and lighting, full bath with jetted tub, sleeping loft, large mud/utility room, bedroom with walk in closet, Quadra-fire wood stove, two covered porches, oversized window package, tons of storage, etc.

The home was built as a guest house with underground utilities already installed for the main home to be built later.

A 30 x 40 shop includes a finished office, well room, 14′ 6″ ceiling height with oversized insulated garage door, roughed in for a full bathroom, re-enforced concrete floors and has a full length shed on one side.   RV hook ups and sewage dump.

Surrounded by upscale homes including adjacent indoor arena. Wonderful mountain and prairie views in all directions. Easy commute to Wood River Valley, located in East Camas County.

The property will be listed well below replacement value.

Call or email for details.

REPORT: Signs of a Bottom as Home Prices are back to 2003 Levels

Home prices fell to new lows in January, but the rate of decline appears to be easing, offering the latest sign that an elusive bottom in prices could be in sight.

Prices dropped by 0.8% for the three-month period ending in January, according to the Standard & Poor’s/Case-Shiller index that tracks 20 metro areas. While that dropped the index back to levels not seen since the end of 2002, the monthly decline improved from a drop of 1.1% in December and 1.3% in November.

“We expect that 2012 will go down in history as the year that the most severe house price crash on record ended.”

Separately, U.S. consumers in March remain confident about the economy and labor markets generally, but a broader index dipped as inflation worries jumped this month, according to a report released Tuesday.

Home prices tend to weaken during the winter months, when sales activity slows and the share of “distressed” home sales, such as foreclosures, rises. After adjusting for seasonal factors, home prices were flat in January compared to December.

The chart above shows the index levels for the 10-City and 20-City Composite Indices. As of January 2012, average home prices across the United States are back to the levels where they were nearly a decade ago – in early 2003.

Measured from their June/July 2006 peaks through January 2012, the peak-to-current decline for both the 10-City Composite and 20-City Composite is 34.4%. January’s levels are new lows for both Composites in the current housing cycle

Compared to one year ago, home prices fell by 3.8% in January. That also represented an improvement over the 4.1% year-over-year decline for December.

As of January 2012, average home prices across the United States are back to the levels where they were nearly a decade ago – in early 2003

Monday’s report “adds to other evidence that the housing market is on the mend,” said Paul Dales, senior U.S. economist for Capital Economics. “We expect that 2012 will go down in history as the year that the most severe house price crash on record ended.”

Home prices fell to new lows in nine cities, led by Atlanta, which is down by 14.8% from one year ago. But three cities posted annual increases: Detroit (1.7%), Phoenix (1.3%), and Denver (0.2%). On a seasonally-adjusted basis, half of the 20 markets showed flat or increasing prices in January when compared to December.

Housing markets still face significant headwinds. Nearly 11 million homeowners owe more than their homes are worth, and more than one million homes could sell out of foreclosure this year, putting pressure on prices. Moreover, credit standards are tight and show few signs of easing, leaving housing markets with fewer buyers at a time when more will be needed to soak up that excess supply.

Any stabilization in home prices, [Read more...]

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SOURCE: Fannie Mae

Existing Home Sales in Graphs

  • The spikes in sales in late-2009 and mid-2010 were due to the home buyer tax credit deadlines.  Outside of these spike periods, the past two months of sales are at the highest levels in 5 years.

  • Inventory has been steadily falling.  The charts show the raw number of visible inventory of homes for sale.  There are seasonal patterns, with more listings in spring and summer compared to winter.
  • The ‘shadow’ inventory of distressed mortgages and REOs held by banks and the federal government has also been falling.  It isn’t, therefore, the case that visible inventory is falling while shadow inventory rises.  Both visible and shadow inventories are falling.

  • The median home price showed a slight increase in February from one year ago.  The increase is more due to the mix of homes issue where the upper-end market, which had been very sluggish in recent past, is beginning to move.  The market is still dominated by sales in the lower price points.

SOURCE: National Association of Realtors®

NEWS RELEASE: Have Home Prices Finally Reached Bottom?

“Prices are bottoming now,” according to a Bank of America Merrill Lynch forecast, released this week.

In the fall, the analysts had predicted home prices would drop by 8 percent from the second quarter of 2011 through the first quarter of 2013 — but now they’re revising that forecast, realizing the housing market is stabilizing faster than they originally thought.

The analysts now predict that prices will remain flat for the next two years, as the excess foreclosure inventory is absorbed. They then expect to see a pickup in home prices by 2014.

And in the long-term, they see a big rise in housing prices. From 2012 through 2020, analysts forecast a cumulative growth of 42 percent in home prices (at 4 percent on an annualized basis).

SOURCE: Housing Wire

Home buying much cheaper than renting

It’s the eternal question in real estate: Should I buy or rent?

The answer has never been clearer: Buy.

In 98 of the top 100 housing markets, buying a home is more affordable than renting, according to the online real estate company Trulia. Only Honolulu and San Francisco buck the trend.

There are several reasons. Home prices are falling. Mortgage interest rates are at historically low levels. And rents are on the rise.

Of course, many renters are not in a position to buy. For one, it’s hard to get a mortgage these days, despite low rates. And paying rent can push them further away from being able to afford to buy.

“Rising rents make it harder for people to save for a down payment, which is the biggest barrier to buying a home that aspiring homeowners face,” Jed Kolko, Trulia’s chief economist.

The nation’s cheapest buyer’s market is Detroit, where purchasing is only 3.7 times more expensive than renting.

Other top five metro areas where buying is much better than renting are Oklahoma City, Dayton, Ohio,Warren, Mich. and Toledo, Ohio.

The one number to watch for a housing recovery

Rankings like these, however, can obscure the factors that go into each decision.

Housing markets, even within a single metro area, typically have local submarkets. Take New York City, for example. Renting in Manhattan is more affordable than buying. But in suburban Westchester County just miles to the north, buying is the more affordable option.

The size of the home can also make a difference. In some markets, renting can be a better deal on larger homes, according to Trulia.

Readers on mortgage settlement: This stinks

In San Francisco, for example, studio and one-bedroom apartments sell for 13.1 times rent, while three bedrooms or larger sell for more than 18 times rent.

The Trulia survey does not take into account home price trends, which are another factor for individuals choosing whether to buy or rent.

“People will pay more for a home if they expect prices to rise and give them a better return on their investment,” said Kolko.

Those calculations are about to change, according to Ken H. Johnson, a professor of real estate at Florida International who has studied the buy-vs-rent question extensively. He believes home prices nationally have bottomed.

“The ship has turned,” he said. “Markets should slowly start to recover. Housing will return to its traditional role of a safety investment.”

If so, that adds an incentive to buy. And investing in many of the most expensive markets may be even safer.

Foreclosures: A rising tide ahead

Kolko pointed out that places like Honolulu, San Francisco and Boston have strong long-term growth prospects. They also have little physical space to grow, a factor that tends to keep prices strong.

On the other hand, old areas that aren’t growing much — while cheap — may not return much in the long run.

“Buying is much cheaper than renting in slow-growing places with high vacancy rates and land to spare, like Detroit and Cleveland, where prices are unlikely to improve much in the future,” he said.

SOURCE: CNN Money

February Existing-Home Sales Up Strongly From a Year Ago

Sales of previously owned U.S. houses held in February near an almost two-year high, adding to evidence the market that triggered the recession is firming.

Purchases dropped 0.9 percent to a 4.59 million annual rate from a revised 4.63 million pace in January that was faster than previously estimated and the highest since May 2010, a report from National Association of Realtors showed today in Washington. The median price increased over the past year for the first time since November 2010.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums, and co-ops, slipped 0.9 percent to a seasonally adjusted annual rate of 4.59 million in February from an upwardly revised 4.63 million in January, but are 8.8 percent higher than the 4.22 million-unit level in February 2011.

Lawrence Yun, NAR chief economist, said underlying factors are much better compared to one year ago. “The market is trending up unevenly, with record high consumer buying power and sustained job gains giving buyers the confidence they need to get into the market,” he said. “Although relatively unusual, there will be rising demand for both rental space and homeownership this year. The great suppression in household formation during the past four years was unsustainable, and a pent-up demand could burst forth from the improving economy.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was a record low 3.89 percent in February, down from 3.92 percent in January; the rate was 4.95 percent in February 2011; recordkeeping began in 1971.

NAR President Moe Veissi, broker-owner of Veissi & Associates Inc. in Miami, said market conditions are improving. “Supply and demand have become more balanced in more markets, but [Read more...]

Rental housing demand is likely to climb in coming years

According to a recent report prepared for the Bipartisan Policy Center in March of 2012 it concludes rental housing vacancy rates have declined substantially in the past two years, and rents are increasing.

This trend has come about because of a dual set of pressures.

First, working-age adults 35 years and older either have shifted from owning homes to renting or are delaying the transition to homeownership.

Second, Echo Boomers are maturing into adulthood, entering the housing market and searching for rental housing.

As the economy and the housing market recover, older adults can be expected to [Read more...]