Market Matters

Economists Differ on Impact of Falling Oil Prices on Housing Source: Wall St. Journal In a big increase from 2014, economists are anticipating that home builders will start construction on as many as 804,000 new single-family homes this year. But will falling oil prices affect housing construction? Some economists predict there could be an indirect benefit to the housing market in the form of more consumer spending, which will create more job/income growth and by extension make it easier for people to buy homes. But there are concerns that there could be a slowdown to housing construction activity in oil-focused local economies, such as cities in Texas. Read the full story   Will 2015 be better for California’s housing market? Source: HousingWire   While prices are still very high, 2015 may fare slightly better for potential buyers in California thanks to mortgage interest rates trending lower and loosening lending standards. The California housing market stayed in line with 2014 predictions and hopefully set the pace for a better 2015, according to PropertyRadar’s December Real Property Report. California’s real estate market continues to show steady improvement, as the number of homeowners in a negative equity position fell 1.1 percent to 987,000 in December, and the number of underwater borrowers shrank 28.5 percent for the year. Read the full story Housing is about 75% back to normal: Report Source: CNBC The U.S. housing market is about three-quarters of the way back to "normal," according to a new report from Trulia. Both sales and prices of existing homes are 82 percent back to normal levels, compared with a year ago, when they were just 73 and 66 percent recovered, respectively. Single-family housing starts are still struggling, as household formation is almost entirely on the rental side. The recovering employment of 25- to 34-year-olds is also an important factor for housing. Read the full story     Builder confidence holds steady in January Source: The Hill   According to the latest National Association of Home Builders/Wells Fargo Housing Market Index, there is plenty of optimism in the housing market's future, but home builder confidence did fall a point in January. It was the third straight month that the index has hovered in the upper 50s. The component gauging current sales conditions remained unchanged at 62 in January, while the index measuring expectations for future sales dropped 4 points to 60 and the component gauging traffic of prospective buyers fell 2 points to 44. Read the full story U.S. single-family starts hit 6-1/2-year high in December Source: Reuters As the housing market continues to recover, U.S. housing starts rose more than expected in December as groundbreaking for single-family homes hit its highest level in more than 6-1/2 years. The Commerce Department reported that starts increased 4.4 percent to a seasonally adjusted annual pace of 1.09 million units. Groundbreaking on single-family projects in the West hit a seven-year high, while starts in the Midwest were the highest since December 2011. Read the full story HUD’s Castro says first-timers should buy homes right now Source: HousingWire  Housing & Urban Development Secretary Julián Castro received questions from challenged home buyers in a chat hosted by Zillow. Castro touted homeownership as an important way to build wealth. He commented, “Investment in a home is an investment in the long run in creation of wealth. A confluence of better economy, wages starting to go up and gas prices going down create some breathing room for people stuck in that rut to save some money to buy that first home.” Read the full story

Market Matters

Remodeling Market Has Regained its Mojo Source: Wall St. Journal According to a new report released by the Harvard University Joint Center for Housing Studies, the remodeling market has fully regained its mojo, despite the fact that the overall U.S. housing market still is struggling to hit its stride. Forecasts predict that spending in the U.S. remodeling market will grow by 4 percent to 5 percent this year to at least $330 billion, spanning work on both owned homes and rentals. This would surpass the previous high point of $324 billion in 2007. More baby boomers are remodeling as they opt to stay in their long-time homes. Read the full story Fannie Mae, Freddie Mac regulator defends 3% down payment mortgages Source: L.A. Times Melvin L. Watt, director of the Federal Housing Finance Agency, told lawmakers this week that new programs to back mortgages with down payments as low as three percent had enough safeguards to make them as safe as loans with higher down payments. Watt faced criticism at a Congressional hearing that he was risking the loss of taxpayer money by returning to the irresponsible lending practices that caused the subprime housing market bubble. Watt noted that these loans will make up only "a very small percentage" of the mortgages in the portfolios of Fannie Mae and Freddie Mac. Read the full story ‘Boomerang’ Buyers Set to Surge Back Into Housing Market Source: Time Over the next eight years, nearly 7.3 million Americans who lost their homes in the housing crash will become creditworthy enough to buy again. According to analysis from RealtyTrac, these “boomerang buyers”—those who suffered a foreclosure or short sale between 2007 and 2014—are rapidly approaching, or already past, the seven-year window “conservatively” needed to repair their credit. This year, more than 550,000 of these buyers could be in a position to get back into the market. Read the full story First-Time Home Buyers Held Back in 2014 Source: Wall St. Journal First-time buyers purchased nearly one-third of previously owned homes sold in 2014, which is the same share as 2013. This is the lowest share, 29 percent, since the National Association of REALTORS® began tracking the data in 2008. Mounting student debt, higher rents, and tight credit conditions continue to make it tough for first-time borrowers to save enough money for a down payment and qualify for a mortgage. Read the full story

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Buying a Home in California is Harder for Middle Class Families

Source: KPBS

 

The median income required to buy a home today in California is $30,000 higher than it was a few years ago, which means less than a third of California households can afford a home at the median price right now. According to Selma Hepp, senior economist with the CALIFORNIA ASSOCIATION OF REALTORS®, it’s much harder today than it was a year ago to buy a home in the state because there are very few affordable homes available in places most people want to live.
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Housing in 2015: Four Reasons for Optimism (And One for Worry)

Source: NPR

Will 2015 be the year that the housing market finally breaks out of its tepid recovery and takes off as economic indicators point to strong improvement? According to economists, there are several factors to encourage optimism. Firstly, employers are hiring again, job growth is relatively strong, and consumer confidence is growing. Also, slower price appreciation in 2014 may have set the stage for a buying surge in 2015. Millennial entry into the market and high rents may also working in housing’s favor.
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News Flash!!

The employment report for the month of December came in a little better than expected BUT, some components of the report were weaker than expected.  As a result rates have improved.  Conforming rates are around 3.75% (depending on credit score and other factors) and some experts are saying rates will drop to 3.5% or lower. 

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Good Signs for Housing in 2015

Source: U.S. News

With job growth and solid economic expansion, household formation experiences a boost and demand for rental and owner-occupied housing increases. As the economy continues to improve, there are promising signs for the housing industry because housing demand creates jobs and in turn fosters additional demand for construction. While prices have continued to rise on average, they have done so at slower rate over the course of 2014, and that trend is expected to continue in 2015.

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Nearly half of home buyers don't shop for a mortgage

Source: CNBC

A report from the Consumer Financial Protection Bureau reveals that almost half of consumers seeking a loan to purchase a home do not shop lenders. Consumers are cheating themselves of the opportunity to have a lower monthly payment, and the borrower with the cheaper loan will also build equity faster. Furthermore, a majority of home buyers seek information on mortgage choices from sources that have a stake in their decision. Just 20 percent said they rely heavily on websites, despite the ready availability of mortgage-related information online.

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Homeowners Win U.S. High Court Clash on Canceling Mortgages

Source: Bloomberg

A new ruling from the Supreme Court gives homeowners the ability to cancel their mortgages if lenders don’t provide the required disclosures. The Truth in Lending Act stipulates that borrowers have three days to rescind a mortgage after they receive the disclosures, and that right expires after three years. The justices unanimously ruled that borrowers don’t have to file suit within three years and instead can meet the deadline by sending a letter to lenders.

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FHA fee cut won't help many first time homebuyers in California

Source: KPCC

Recently the Obama administration dropped the fees on FHA loans, the mortgages taken out by most first-time buyers. These loans are popular with first-time buyers because they only require a down payment of 3.5 percent with a credit score of 580. The change in fees was applauded by the CALIFORNIA ASSOCIATION OF REALTORS®, and the trade association’s president, Chris Kutzkey, said, “Anything that goes toward assisting buyers getting loans is something that we embrace wholeheartedly.” But there are concerns that the fee cut may not make much of a difference in California for many buyers.

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