Nov 20, 2012 | Housing Analysis
The National Association of Home Builders (NAHB) released its Housing Market Index (HMI) Tuesday, which showed sharp, 5-point increase to 46 for November 2012, marking the seventh consecutive monthly gain for the HMI, and lifting the index to its highest point since May 2006.
Readings under 50 indicate unfavorable housing conditions for builders. Readings over 50 signal “good” conditions.
The Housing Market Index is a measure of builder confidence, published monthly, based on a survey sent to NAHB members which asks them to rate housing market conditions.
In November, home builders reported gains in two of the three areas surveyed:
- Current Single-Family Sales: 49 (+8 from October 2012)
- Projected Single-Family Sales: 53 (+2 from October 2012)
- Buyer Foot Traffic: 35 (unchanged from October 2012)
Builders report growing demand for new homes as inventories for alternative properties — distressed and foreclosed homes, for example — shrink nationwide.
Even Hurricane Sandy did little to suppress builder confidence.
The NAHB survey was conducted in the two weeks immediately following Hurricane Sandy so the Housing Market Index does reflect builder sentiment during that period. All regions of the country posted confidence gains in November.
The South Region showed a 4-point gain to 43; the West Region showed a 3-point gain to 47; the Midwest Region showed a 3-point gain to 45; and the Northeast Region showed a 2-point gain to 31.
Despite the gains, builders in Massachusetts and nationwide still report challenges with home appraisals and tight credit conditions. In addition, a shortage of buildable lots in some areas is limiting the ability for home builders to put more single-family homes on the market.
As builder confidence grows, today’s buyers throughout Massachusetts should prepare for the possibility of higher home prices. Confident sellers are less likely to make price concessions or to offer free upgrades.
If you are in the market for a new home, therefore, the time between now and the New Year may be the best opportunity to make a bid on a home. Starting next year, low prices may be gone.
Nov 19, 2012 | Federal Reserve
The Federal Reserve released its October Federal Open Market Committee (FOMC) meeting minutes last week, revealing a Fed in disagreement about the future of the U.S. economy and about what, if any, stimulus may be warranted in the next 12 months.
The “Fed Minutes” recaps the conversations and debates that transpire during an FOMC meeting, and is published 3 weeks after the meeting adjourns.
According to the October minutes, FOMC members “generally agreed” that a housing recovery is under way nationwide, citing increased housing prices, higher sales volume, and rising construction in many parts of the country.
FOMC members made no major policy changes at their last meeting, but agreed that a continuation of additional asset purchases would likely be necessary in 2013, in order to achieve a substantial improvement in the labor market.
Other notes from within the Fed Minutes included:
- On housing: Signs of improvement are “encouraging”, and mortgage rates are at historic lows
- On inflation: Essentially “unchanged”, notwithstanding recent increases in energy prices
- On Europe: Production indicators signal contraction in business activity and expansion
- On employment: Employment is rising, and unemployment remains high
The economic forecast prepared by the FOMC staff shows an uptick in consumer spending, residential construction, and labor market conditions which more than offset recent downgrades in the business fixed investment and the industrial production outlooks.
Through 2013, economic activity is projected to accelerate gradually, supported by a lessening in fiscal policy restraints. The Fed also anticipates that Worcester County area home buyers will benefit from looser credit standards.
Low mortgage rates are helping home buyers, too.
According to Freddie Mac, the average 30-year fixed rate mortgage rate was 3.34% last week, down from 3.55% in September. This has given a boost to buyer purchasing power nationwide and the year-end housing market may reflect it. Demand for homes remains strong.
The next FOMC meeting is scheduled for December 11-12, 2012.
Nov 16, 2012 | Housing Analysis
According to data from RealtyTrac, a national foreclosure-tracking firm, the number of foreclosure filings increased 3 percent in October as compared to September 2012, climbing to 186,455 U.S. properties.
RealtyTrac defines a “foreclosure filing” as any foreclosure-related action including a Notice of Default, a Scheduled Auction, or a Bank Repossession. On average, 1 in every 706 U.S. homes had a foreclosure filing during the month of October.
For the 24th consecutive month, the number of bank repossessions fell, down less than 1% from the previous month and down 21% from October 2011. Bank repossessions dropped in 37 states, plus the District of Columbia, indicating that banks are seeking alternatives to foreclosure.
Distressed home sales, which include foreclosures and short sales, represented 23% of sales in the second quarter of 2012, down from 30% a year ago, according to the National Association of REALTORS®.
Florida again posted the top foreclosure rate nationwide.
One in every 312 Florida housing units had some sort of foreclosure filing in October as foreclosure starts moved to a 12-month high. Monthly filings increased 2% from last month.
In Nevada, the monthly increase was larger, rising 41% month-over-month, lifting it from the fifth-highest rate in September 2012, to the second-highest in October 2012.
Third-ranked Illinois saw a 6% increase in foreclosure filings over September 2012. California and Arizona rounded out the top five.
Hurricane Sandy made an impact on the foreclosure market, too, with a foreclosure moratorium being put into effect in the states most affected such as New Jersey, New York, and Connecticut.
For Worcester County area home buyers planning to venture into the home foreclosure market, there are well-priced homes for sale. However, understand that a foreclosure property is often sold “as is,” and that you may not be allowed into the property prior to the sale to inspect for damage. Home may have termites, been gutted by previous tenants or owners, or be filled with lead paint or asbestos.
For this reason, it’s a good idea to engage an experienced real estate professional when buying foreclosure properties. Real estate agents can guide you through the foreclosure process and give advice regarding contracts and home inspections.
Nov 15, 2012 | Around The Home
For homeowners who keep a garden, with the change of seasons comes a task list.
There are basic tasks for gardeners — for example, raking the leaves, sharpening your tools. And, there are advanced tasks, too, which includes identifying and removing plants and trees which may be dead, and covering compost to prevent rain storms from leaching nutrients.
For homeowners in frost-free areas, November is a good time to plant roses and azaleas; prune flowering trees; and, start your fall vegetable garden.
The cooler fall and winter months are terrific for leafy greens such as spinach and kale; and carrots. Protect plants with row covers, when necessary.
For homeowners in colder parts of the county, November is when you should circle evergreens with burlap and wrap the bottoms of young trees with mesh wire to protect from wildlife; and empty and roll up garden hoses for storage.
It’s also when bulbs should be planted. Tulips, crocuses and hyacinths are easy to plant and will welcome you come springtime.
For all homeowners, consider this list :
- Aerate lawns to improve root development and drainage
- Check and clean gutters from fallen leaves, needles, and twigs
- Perform a round of weeding
And then, to discourage weed growth throughout the winter, place down a pre-emergent, and mulch around bedding plants, shrubs, and trees.
If your temperatures in your area tend to go below freezing, be aware of your plants which are sensitive to de-icing salts. Consider buying sand or sawdust for traction purposes near these plantings instead.
Lastly, remember that the fall months are a terrific time to take note of what worked in your garden during the summer, and what didn’t. Use a notebook and put your findings to paper. Attention paid now will pay dividends next spring.
Nov 14, 2012 | Mortgage Guidelines
According to the Federal Reserve’s quarterly Senior Loan Officer Survey, it’s getting easier to get approved for a home loan.
Between July – September 2012, fewer than 6% of banks tightened mortgage guidelines — the fourth straight quarter that’s happened– and roughly 10% of banks actually loosened them.
For today’s buyers and refinancing homeowners in Worcester County area , softening guidelines hint at a quicker, simpler mortgage approval process; one which gives more U.S. homeowners better access to today’s ultra-low mortgage rates.
However, although banks are easing guidelines, it doesn’t mean that we’re returned to the days of no-verification home loans. Today’s mortgage applicants should still expect to provide lenders with documentation to support a proper loan approval.
Some of the more commonly requested documents include :
- Tax returns, W-2s, and pay stubs : In order to prove income, lenders will want to see up to two years of income documentation. Self-employed applicants may be asked for additional business information. Borrowers earning income via Social Security, Disability Income, Pension or other means should expect to provide documentation.
- Bank and asset statements : To verify “reserves”, banks will often require up to 60 days of printed bank statements, or the most recently quarterly reports. Be prepared to explain deposits which are not payroll-related — banks adhere to federal anti-money laundering laws.
- Personal identification documents : To verify your identity, banks often require photocopies of both sides of your drivers license and/or U.S. passport, and may also ask for copies of your social security card.
In addition, if your credit report lists collection items, judgments, or federal tax liens, be prepared to discuss these items with your lender. Sometimes, a derogatory credit event can be eliminated or ignored during underwriting. Other times, it cannot.
The more information that you share with your lender, the smoother your mortgage approval process can be.
As the housing market improves and lender confidence increases, mortgage guidelines are expected to loosen more. 2013 may open lending to even more mortgage applicants.
