Smaller Fla. counties tops for residential investors

IRVINE, Calif. – Jan. 29, 2015 – Where should property investors park their money to achieve the greatest return on investment?

According to RealtyTrac's first quarter 2015 Residential Property Rental Report, Florida's top markets, depending on the age of renters, are located outside major urban areas. The study breaks out top markets by generation, including millennials, Generation Xers and baby boomers. It also includes a list of the U.S. markets where rents increased by at least 10 percent year-to-year, and "safe havens" – markets where economic conditions make real estate investment relatively safe.

"There is still plenty of opportunity in the U.S. housing market for single family rental investors employing a variety of investing strategies," says Daren Blomquist, vice president at RealtyTrac. "Whether focusing on markets where homeownership-shy millennials are migrating, markets where recovering Gen X homeowners-turned-renters are prevalent, or markets where baby boomers are testing for retirement, investors can find good options with solid potential rental returns."

However, Blomquist says some markets no longer offer a significant return to investors "because of rapidly rising prices over the past few years. Savvy single family rental investors will tread cautiously in such markets despite the siren song of strong home price appreciation."

Best overall markets for buying residential rentals

The nation's highest potential return on investment, according to RealtyTrac, is in Clayton County, Ga., near Atlanta with a 25.83 percent projected return. However, four Florida cities made the top-20 list:

7. Pasco County: Annual gross yield: 17.86%

8. Hernando County: Annual gross yield: 17.86%

12. Marion County: Annual gross yield: 16.88%

19. Citrus County: Annual gross yield: 15.30%

Best markets for renting to millennials

Among the 516 counties RealtyTrac analyzed, 50 had a millennial share of the population above the national average of 22 percent and potential annual rental returns on residential properties of 9 percent or higher.

However, only one Florida county made the top-10 list for residential real estate investment to millennials: Duval County, with an annual gross yield of 13.16 percent, and a growth in the number of millennials (2007 to 2013) of 19.18 percent, ranked ninth.

Best markets for renting to Gen Xers

Twenty U.S. counties had Generation X shares (adults born between 1965 and 1976) above the national average of 16 percent with potential annual rental returns on residential properties at 9 percent or higher.

For Gen X rental investment, two Florida counties made the top 10 list: Clay County (No. 4) with an annual gross yield of 11.88 percent and growth of Gen X (between 2007 and 2013) of 5.14 percent; and Osceola County (No. 9) with an annual gross yield of 11.40 percent and Gen X growth of 8.35 percent over the same timeframe.

Best markets for renting to baby boomers

RealtyTrac found 40 markets where the Baby Boomer share of the population was above the national average of 25 percent – many in Florida – where potential annual rental returns on residential properties are 9 percent or higher.

Six Florida counties made the top 10 list including:

1. Hernando County: Annual gross yield 17.86%; increase in baby boomers (2007 to 2013) of 31.45%

2. Pasco County: Annual gross yield 17.86%; increase in baby boomers 17.10%

3. Marion County: Annual gross yield 16.88%; increase in baby boomers 31.95%

5. Citrus County: Annual gross yield 15.30%; increase in baby boomers 35.64%

8. St. Lucie County: Annual gross yield 12.39%; increase in baby boomers 29.39%

9. Volusia County: Annual gross yield 12.29%; increase in baby boomers 17.25%

Markets with the biggest rent increases over the past year

Among all counties analyzed, the average fair market rent for a three-bedroom property was up 2 percent in 2014. Fair market rents on three-bedroom properties increased 10 percent or more from 2014 to 2015 in 35 counties. RealtyTrac found only one Florida county with returns above 10 percent: Sumter County, No. 34, at 10.18 percent.

Safe haven rental markets

According to RealtyTrac, a safe haven rental market has an unemployment rate below the national average of 5.6 percent and annual rental returns of 10 percent or higher.

One Florida county made the top 10: Broward County, with an annual gross yield of 13.10 percent.

Source: Florida Realtors®

FHFA defends lower downpayments

WASHINGTON – Jan. 29, 2015 – New programs that back mortgages with downpayments as low as 3 percent are "just as safe" as a loan with a 10 percent downpayment, Melvin Watt, director of the Federal Housing Finance Agency (FHFA), assured lawmakers Tuesday.

When FHFA, the regulator of Fannie Mae and Freddie Mac, announced last year that first-time buyers could qualify for loans with downpayments as low as 3 percent, some experts feared that the move could stir a wave of future defaults. Some lawmakers worry that smaller downpayments could lead to the irresponsible lending practices blamed for the last housing crisis. Others express concern that smaller downpayments will allow buyers to purchase homes they really can't afford.

The change was done to expand credit to qualified home shoppers sidelined from the housing market over the last few years due to high downpayment requirements.

"When the downpayment is lower, there's the potential it can be a riskier loan," Watt told lawmakers. "But when you pair that with other compensating factors … you offset that additional risk. That's exactly what we've done."

To qualify for the smaller downpayment loans, Fannie and Freddie require full documentation, strong credit scores, housing counseling and private mortgage insurance, Watt said. Also, the loans will comprise only "a very small percentage" of the mortgages in Fannie Mae and Freddie Mac's portfolios.

Fannie began backing the loans with the smaller downpayments in December; Freddie will begin in March.

"If somebody can't pay a loan, they shouldn't be given a loan," Watt told lawmakers. "It would be irresponsible to say we should be making those loans, or that Fannie and Freddie should be backing those loans." Watt argued that the smaller downpayments would allow those who have not been able to save enough for a large downpayment to break into homeownership sooner.

The National Association of Realtors® (NAR) has voiced support for the smaller downpayments.

"Realtors support responsible lending to qualified buyers, which is essential for building strong communities," NAR President Chris Polychron said in a statement released Tuesday. "NAR research shows that saving for a downpayment is the biggest hurdle to homeownership for many first-time buyers, who have been entering the market at lower than normal rates. Improved access to safe, affordable mortgage credit through FHFA's 3 percent downpayment program will help new borrowers achieve the dream of homeownership."

Housing and Urban Development officials also defended the Federal Housing Administration's (FHA) move to lower annual premiums on its insurance, which could save a typical first-time homebuyer about $900 a year.

FHA, which insures home loans with downpayments as low as 3.5 percent, dropped its annual premiums this week from 1.35 percent to 0.85 percent. Some lawmakers and critics have voiced concern that the lower premium could lead to another FHA bailout from taxpayers.

FHA regained its financial footing last year after requiring a $1.7 billion taxpayer bailout in 2013. But officials with HUD, FHA's regulator, said that the lower premiums will not come at a cost to taxpayers, and it will also help FHA increase its market share.

Source: "Fannie Mae, Freddie Mac Regulator Defends 3% Downpayment Mortgages," The Los Angeles Times (Jan. 27, 2015) and "FHA: Lower Premiums Will Not Cost Taxpayers," Realtor® Magazine Daily News (Jan. 27, 2015)

The new electric company: Your home

WASHINGTON – Jan. 28, 2015 – Some builders are starting to design "net-zero" homes for the mass market in hopes of taking the concept mainstream. Long viewed as a niche product for the wealthy buyers, net-zero homes generate more electricity in a year than they use; and the homeowner receives credit for the excess electricity.

Builders believe there is rising demand from home buyers and local regulators. However, the cost of achieving net-zero status – the initial outlay for equipment – will be the main hurdle.

Customers who switch to solar would have to wait several years for electricity-bill savings to cover the thousands of dollars they spent upfront on features like solar panels and energy-efficient windows, doors and appliances.

The industry predicts that parts of the country with a lot of sunshine to generate solar energy – such as Florida or the American Southwest – will see the highest initial demand for solar energy.

The Department of Energy certified 370 homes as "net-zero ready" in the past year, but the total number of homes is just a fraction of the overall market.

Source: Wall Street Journal (01/21/15) P. A3; Hudson, Kris

White House says no to oil drilling near Fla. coast

WASHINGTON – Jan. 28, 2015 – The Obama administration announced a proposal that would approve oil drilling along some states along the eastern seaboard, but as written, it would keep the waters off Florida's coast free from oil drilling for at least the foreseeable future. The recommendation was part of a five-year draft proposal released yesterday.

U.S. Sen. Bill Nelson (D-FL), part of a contingent of lawmakers pushing to ban oil drilling off Florida's coasts, called the plan yet another victory. "They left us alone for the last five years, and it looks like they're going to leave us alone for the next five years," Nelson said in a statement.

In 2006, Nelson and then-Sen. Mel Martinez successfully brokered a deal to ban drilling off Florida's Gulf coast through the year 2022.

Not everyone opposes oil drilling, but the BP crisis in the Gulf of Mexico still resonates with many Floridians. Nelson also cited other reasons for an oil rig ban off state coasts, such as the Florida's tourism-driven economy that depends on clean beaches, military training areas off Florida's shore and the launch activities at the Kennedy Space Center and Cape Canaveral Air Force Station.

While Florida would remain off limits for drilling under the proposal released today, some U.S. senators are upset that the plan could open up other areas in the Atlantic Ocean to drilling, notably off the coasts of Maryland and South Carolina.

Source: Florida Realtors®

Freddie Mac advises buyers to move quickly

WASHINGTON – Jan. 28, 2015 – Freddie Mac recently cited a number of favorable opportunities for the housing sector but stressed the need for consumers and businesses to take advantage of them sooner rather than later – they may be limited.

According to Freddie Mac's January 2015 U.S. Economic and Housing Market Outlook, one big positive for housing currently is the attractive potential for refinancing. Looking at conventional 30-year fixed mortgage agency mortgage-backed securities (MBS), approximately $361 billion had a 4.5 percent coupon while another $479 billion had a coupon higher than 4.5 percent. Many had a rate higher than 5 percent, providing borrowers with plenty of incentive to refinance at current 30-year fixed annual rates.

Job growth, though, is the most important positive tailwind for housing cited in Freddie Mac's report. Payrolls expanded by an average of 246,000 a month last year versus just 194,000 a month in 2013, the Bureau of Labor Statistics (BLS) reports. The unemployment rate, meanwhile, dipped 1.1 percentage points from January through December to 5.6 percent – the lowest level it has been in six and a half years. That drop reduced the amount of unemployed persons in the United States by 1.7 million, notes BLS researchers.

Source: DSNews (01/20/2015) Honea, Brian

Shrinking inventory may raise prices again

WASHINGTON – Jan. 28, 2015 – For the first time in 16 months, the total inventory of U.S. homes available for sale dropped in December, according to the National Association of Realtors®. While the decline was slight – less than 1 percent month-over-month – the drop does represent "a reversal to the general growth of listings that had been occurring throughout 2014," writes Lawrence Yun, NAR's chief economist. "More inventories are needed, not less. Or else, home prices could re-accelerate."

In Florida, the inventory of homes for sale fluctuated between a low of 104,339 in January 2014 to high of 108,105 in October, according to monthly numbers released by Florida Realtors Industry and Data Analysis Department (IDA). However, the inventory declined after October. Month-to-month, the number of active listings dropped about 0.5 percent month-to-month in November and another 2 percent month-to-month in December.

In addition, Florida patterns don't always follow more general U.S. fluctuations. In December, the inventory of Florida homes was up 1.2 percent year-to-year.

Nationwide in December, however, 1.85 million homes were listed for sale – an 11 percent drop from November and 0.5 percent drop from year ago levels, according to NAR housing data. A drop in inventory is common from November to December, but Yun notes "what is of interest is the year-over-year decline in inventory because this hints at possible acceleration in home prices in upcoming months."

In December, the month's supply of existing-homes on the market was 4.4 months; 6 months is considered healthy by most economists' standards.

U.S. home prices may have already begun "re-accelerating" in some markets, Yun suggests. In spring and summer last year, the median price was rising at 4 to 5 percent. In November and December, prices rose by 6 percent.

In Florida, median home prices rose in November rose 3.5 percent year-to-year; in December home prices rose 6.9 percent over the same year-to-year timeframe.

Source: "Shrinking Inventory," National Association of Realtors® Economists' Outlook Blog (Jan. 26, 2015)

‘Boomerang buyers’ to help shape housing market

MIAMI – Jan. 27, 2015 – More than 300,000 South Floridians who lost their homes during the housing bust could be eligible to own again over the next eight years, a new report shows.

In Palm Beach, Broward and Miami-Dade counties, 322,141 homeowners have completed short sales or foreclosures since 2007, when the housing downturn intensified, according to RealtyTrac Inc. But those people are gradually jumping back into the market as "boomerang buyers."

Among major metros nationwide, only the Phoenix area could have more potential boomerang buyers with 348,329, RealtyTrac said.

A large supply of former homeowners looking to buy again portends well for housing demand in the coming years, said Daren Blomquist, vice president of RealtyTrac, a foreclosure listing firm in Irvine, Calif.

"Certainly, first-time homebuyers are an important part of what will happen with housing, but another big piece that will shape the market going forward is those boomerang buyers," he said.

Fannie Mae and Freddie Mac, the government agencies that back more than half of all home loans, used to require a two-year wait after a short sale before a borrower could qualify for another mortgage. The guidelines now call for a four-year wait. A foreclosure still requires a seven-year wait.

But credit unions and community banks don't necessarily follow those guidelines and may qualify a borrower for a mortgage sooner than the prescribed waiting periods.

Ryan Paton, president of Capitol Lending Group in Fort Lauderdale, said he's working with plenty of former homeowners who want back into the market. They're making 20 percent downpayments and have fixed credit and financial problems that forced them into short sales or foreclosures, Paton said.

Some people bought more than they could afford or sucked the equity out of their homes during the housing boom, but others were responsible and just caught a bad break, Paton said.

"We were one of the hardest-hit areas in the country, and many people did nothing wrong and still lost 60 percent of their home value," he said. "They just happened to purchase at the wrong time."

Because of the lessons they learned, those who lost their homes during the crisis often are considered ideal buyers today, mortgage brokers and lenders say.

"It's kind of like a fresh start," said Doug Leever, mortgage sales manager for Tropical Financial Credit Union in Miramar.

Source: The Sun Sentinel (Fort Lauderdale, Fla.), Paul Owers. Distributed by Tribune Content Agency, LLC.

New home sales jump 11.6% in Dec.

WASHINGTON (AP) – Jan. 27, 2015 – Sales of new U.S. homes accelerated strongly in December, a sign that home buying may improve this year after a lackluster 2014.

The Commerce Department said Tuesday that new home sales climbed 11.6 percent last month to a seasonally adjusted annual rate of 481,000. The gains were not enough to offset essentially flat home buying over the course of 2014, however. Just 435,000 new homes were bought last year, a modest 1.2 percent improvement from 2013.

The growth in December pointed to rising sales in 2015, buoyed by the combination of strong hiring in recent months and drastically lower mortgage rates. Home values are also rising at a slower pace, improving affordability for would-be buyers.

Last year disappointed, in part, because builders largely focused on higher-end houses, which limited the number of would-be buyers and kept the pace of construction below historic levels. Roughly 700,000 new homes were sold in the 1990s, nearly a third more than in 2014. Over the past 12 months, median prices for new homes rose 8.2 percent to $298,100

The improved health of the U.S. economy should help boost sales in the coming months.

Average rates for 30-year mortgages dropped to 3.63 percent last week, down from 4.39 percent a year ago, according to the mortgage firm Freddie Mac. That steep decline makes it cheaper for buyers to borrow, helping them afford larger and more expensive homes. So far, homeowners are primarily relying on the lower rates to refinance their mortgages. Purchases are up only 3 percent over the past 12 months, according to the Mortgage Bankers Association.

At the same time, the growth in home values has been steadily slowing, putting more properties within reach of buyers who had previously been priced out of the market. The Standard & Poor's/Case-Shiller 20-city home price index, released Tuesday, rose 4.3 percent in November from 12 months earlier. That's down slightly from a 4.5 percent pace in October and double-digit gains in early 2014.

Solid hiring over the past year should help contribute to income gains. The unemployment rate has plunged to 5.6 percent from 6.7 percent a year ago, as employers added nearly three million jobs last year, according to the Labor Department. While average wages have barely nudged upward, the job growth has contributed to more Americans with paychecks – which may spur additional home buying.

The National Association of Realtors said last week that sales of existing homes rose 2.4 percent last month to a seasonally adjusted annual rate of 5.04 million.

Construction firms still expect growth this year, although their enthusiasm has waned slightly. The National Association of Home Builders/Wells Fargo builder sentiment index fell slightly this month to 57, down one point from a revised reading of 58 in December. Despite the decrease, any reading above 50 indicates that more builders view sales conditions as good rather than poor.

The return of the 3% downpayment

NEW YORK – Jan. 26, 2015 – A growing number of lenders are reducing downpayment requirements so that borrowers can contribute 3 percent or less of a home's purchase price and still qualify for financing. In addition, some lenders have waived mortgage-related fees, and others are allowing downpayments from outside sources, such as the buyer's family.

Most lenders target the new deals at buyers with stellar credit scores and steady income who have not been able to save enough for a substantial downpayment.

Some types of low-downpayment mortgages have been around for a long while. The Federal Housing Administration (FHA) insures home loans with down payments as low as 3.5 percent, and it's lowering the annual mortgage-insurance premiums charged on new mortgages starting today.

The lower-downpayment trend accelerated after Fannie Mae and Freddie Mac recently lowered the minimum downpayments they will accept from 5 percent to 3 percent, driven by a White House campaign to make homeownership more affordable to a wider group of Americans.

Jack McCabe, an independent housing analyst in Florida, cautions that borrowers will likely incur higher costs over the life of the loan, including steeper interest rates.

Source: MarketWatch (01/26/15) Andriotis, AnnaMaria

55-plus housing market ‘one of healthiest segments’

LAS VEGAS – Jan. 23, 2015 – The 55+ housing market fared quite well in 2014, and 2015 should be no different, according to industry experts at a press conference held today at the National Association of Home Builders (NAHB) International Builders' Show (IBS) in Las Vegas.

"The 55+ housing market has been one of the healthiest segments of the overall housing market, and is likely to remain that way over the next several years," said Paul Emrath, NAHB's vice president of survey and housing policy research. "When you look at age-restricted single-family starts, there were as many in the first half of 2014 as in all of 2012. And going forward, the steady rise in the 55-and-over population will signal an increased need for housing to accommodate that group."

According to Emrath, builder confidence has steadily increased over the past several years. "NAHB's 55+ Housing Market Index (HMI), a survey of members that measures builder and developer confidence for that market, has regularly posted year-over-year gains."

"We're seeing more consumers actually make the decision to buy a new home as they are able to sell their current home at an acceptable price," said Steve Bomberger, chairman of NAHB's 50+ Housing Council. "We are busier now than ever before. And I don't think it's going to slow down anytime soon."

"Consumers in this market are looking for a home that accommodates their specific needs, and 55+ builders and developers are able to create homes and communities that address these needs," said Timothy McCarthy, vice chairman of NAHB's 50+ Housing Council. "As the economy continues to improve, so does our overall business. Builders in this market have the opportunity to have tremendous success since the population we are serving is so vast."

Source: Florida Realtors®

Florida real estate sales, listing, prices up in 2014

ORLANDO, Fla. – Jan. 23, 2015 – Florida's housing market wrapped up 2014 with more closed sales, more new listings and higher median prices compared to the year before, according to the latest housing data released by Florida Realtors®.

"In December and throughout 2014, we've seen positive signs that Florida's housing sector is on a steady, sustainable path," said 2015 Florida Realtors President Andrew Barbar, a broker with Keller Williams Realty Services in Boca Raton. "Sales are moving at a steady, moderate pace and home prices are stabilizing. Florida's economy continues to grow, more jobs are being created and mortgage interest rates remain at historically low levels, which will help drive the state's housing market forward in 2015."

December 2014

Statewide closed sales of existing single-family homes totaled 22,414 in December, up 15.8 percent compared to the year-ago figure, according to data from Florida Realtors Industry Data and Analysis department in partnership with local Realtor boards/associations. Closed sales typically occur 30 to 90 days after sales contracts are written.

New listings of single-family homes for sale last month reached 24,840, up 2.9 percent year-to-year. Meanwhile, the statewide median sales price for existing single-family homes in December was $185,000, up 6.9 percent from the previous year.

December marked the 37th month in a row that statewide median sales prices for both single-family homes and townhome-condo properties rose year-over-year.

Looking at Florida's year-to-year comparison for sales of townhouse-condos, a total of 9,466 units sold statewide last month, up 11.3 percent compared to December 2013. Meanwhile, new listings of townhome-condos reached 12,438 last month, up 3.4 percent year-to-year. The statewide median price for townhouse-condo properties was $149,000, up 8.4 percent over the previous year. NAR reported that the national median existing condo price in November 2014 was $199,000.

"The December numbers are strongly positive for both the single-family and condo markets," said Florida Realtors Chief Economist Dr. John Tuccillo. "We are seeing the steady and sustainable growth that has characterized the market the entire year continuing as the year ends. Of particular note is the inventory levels in the balanced market range: We're keeping a close eye on the lack of inventory in the lower price ranges, but by and large, the market is in very good shape."

Year-end 2014

Statewide closed sales of existing single-family homes totaled 244,543 in 2014, up 8.1 percent compared to the 2013 figure.

New listings for existing single-family homes rose 7.4 percent in 2014 compared to 2013. The statewide median sales price for single-family existing homes in 2014 was $178,000, up 5.3 percent from the previous year.

Looking at Florida's year-to-year comparison for sales of townhouse-condos, a total of 108,354 units sold statewide in 2014, down slightly (-1.2 percent) from 2013. The closed sales data reflected fewer short sales in 2014 compared to the previous year: Short sales for condo-townhouse properties declined 58.2 percent while short sales for single-family homes dropped 50.7 percent.

New listings for townhouse-condos for the year increased 2.2 percent compared to a year ago. The statewide median price for townhouse-condo properties in 2014 was $140,000, up 9.8 percent over the previous year.

At the end of 2014 and also for December 2014, inventory for single-family homes stood at a 5.2-months' supply, while inventory for townhouse-condo properties was at a 5.9-months' supply, according to Florida Realtors.

"We close the books on 2014 on a very positive note," said Tuccillo. "The year marks the transition of the Florida real estate market from a rapid recovery to a path of steady growth. Virtually all the metrics for the market are moving in the right direction at levels that can be sustained."

The interest rate for a 30-year fixed-rate mortgage averaged 4.17 percent for 2014, up from the previous year's average of 3.98 percent, according to Freddie Mac.

Source: Florida Realtors®

SEC bans credit rater S&P over faulty ratings

WASHINGTON – Jan. 22, 2015 – Securities and Exchange Commission (SEC) Chair Mary Jo White banned the world's largest credit rater, Standard & Poor's, from a large part of the mortgage market for one year.

In the toughest action since the mortgage crisis that nearly collapsed the banks, S&P has agreed to a year-long ban from rating a segment of the commercial mortgage-backed securities market (CMBS) because of ratings it issued in 2011 that regulators say were misleading.

The suspension is part of a settlement with the SEC as well as the attorney generals of New York and Massachusetts, and is tied to $1.5 billion worth of CMBS that S&P graded in early 2011.

S&P pulled the ratings a few months later, saying it had to review a potential problem in its models – causing market disruptions. That prompted an investigation by the SEC and the two AGs, which discovered that S&P had departed from its published criteria and went with assumptions that were less conservative than advertised.

"In the wake of the housing crisis and the collapse of the global economy, credit agencies like S&P promised not to contribute to another bubble by inflating the ratings on products they were paid to evaluate," New York Attorney General Eric Schneiderman said in a statement. "Unfortunately, S&P broke that promise in 2011, lying to investors about their profits and market share."

Specifically, the SEC banned S&P from rating new U.S. conduit-fusion CMBS transactions until Jan. 21, 2016. These are securities backed by pools of loans secured by commercial real estate, such as mortgages for shopping malls or skyscrapers. They include a financial intermediary, often a bank, that acts as a link between the lender and the investor.

S&P, a unit of publishing house McGraw Hill, will also pay close to $77 million in fines, including $12 million to New York and $7 million to Massachusetts.

In total, the SEC issued three proceedings against S&P related to the 2011 bonds as well as the rating agency's effort to get back into the market in 2012, after it had pulled the faulty ratings.

S&P "made certain admissions" regarding the first order tied to the misrepresentation of the 2011 bonds, the SEC said.

White's mission, when she took the office in 2013, was to not allow companies to settle without admitting wrongdoing – a practice that had come under scrutiny in the courts.

The SEC also found that S&P sought to mislead clients and investors when it sought to re-enter the CMBS market in mid-2012 by overhauling its ratings criteria.

"To illustrate the relative conservatism of its new criteria, S&P published a false and misleading study purporting to show that its new credit enhancement levels could withstand Great Depression-era levels of economic stress," the SEC said.

In reality, the models were never tested against the severe losses of the Great Depression.

The misleading nature of the study had the original author concerned that he could find himself "sit(ting) in front of (the) Department of Justice or the SEC," the SEC said. S&P didn't admit or deny that it sought to mislead clients with the study, but it agreed to correct how it described its ratings criteria.

S&P, Moody's and Fitch were all criticized following the financial crisis for issuing ratings favorable to the banks that were paying for them in order to make the sometimes junky bonds they were selling more appealing.

Source: USA TODAY, Kaja Whitehouse

Why mortgage rates don’t move buyers

WASHINGTON – Jan. 21, 2015 – Downpayment’s and financial constraints play a big part in shaping housing demand, particularly among lower-income homebuyers, according to a study by the Federal Reserve Bank of New York.

But low mortgage rates don't influence buyers to make a move as much as mortgage qualification requirements do, the study finds.

New York Fed researchers asked homeowners how much they would be willing to pay for a home comparable to their current one, using several financing scenarios, such as different downpayment constraints, mortgage rates and non-housing wealth.

The researchers found that low downpayment requirements had a large effect on how much people were willing to pay for a home, especially among lower-income and credit-constrained borrowers. For example, renters' willingness to pay more for a home rose 40 percent when downpayment requirements were lowered from 20 percent to 5 percent, according to the study.

"This result implies that regulatory policy that targets loan-to-value mortgage qualification requirements will have the largest impacts on the most credit-constrained buyers, in particular younger renters with lower wealth," writes Robert Dietz, vice president of tax and market analysis at the National Association of Home Builders, on the trade group's blog.

Researchers also found that non-housing wealth served as a major motivator to buy. A $100,000 increase in non-housing wealth boosted a person's willingness to pay more for a home by 10 percent on average. The effect was found to be four times higher for renters.

On the flip side, homebuyers are less price-sensitive to changes in mortgage rates, according to the study. Researchers found that changing the mortgage rate by 2 percentage points would only have a 5 percent impact on housing prices in what buyers are willing to pay.

Source: "The Sensitivity of Housing Demand to Financing Conditions: Evidence From a Survey," Federal Reserve Bank of New York (November 2014) and "New Research Highlights Finance Constraints on Housing Demand," National Association of Home Builders Eye on Housing Blog (Jan. 19, 2015)

Naples high-end real estate market booming

NAPLES, Fla. - People with money to spend seem to be coming to Naples in droves.  And more and more, they're buying homes worth millions of dollars.

The Naples Are Board of Realtors (NABOR) recently released its Annual Market Report for 2014. The numbers show a stunning increase in upscale home sales.

"One thing that really surprised us this year is we did have a 45% increase in the number of single-family homes sold over $2 million," said Brenda Fioretti of Berkshire Hathaway Florida Realty. "And we saw a 19% decrease in the homes we sold under $300,000."

Fioretti says a surplus of inventory in luxury homes doesn't hurt the rise in high-end home sales, and that builders are constructing more.

"That is giving us the ability to sell product anywhere from $200,000 to 4 and 5 million dollar products," Fioretti said.

Realtor Tiffany McQuaid says she expects homes sales for luxury and moderate homes to surge for 2015, thanks to a recent dip in mortgage rates.

"We kind of joke that it's a little bit like free money," McQuaid said. "Technically it's not, but it's a really good opportunity to take advantage of these rates that are at a historic low."

The report by NABOR shows that homes were selling quicker last year than in 2013, with an average of 82 days on the market.

Source: Karl Fortier - Karl is a video-journalist based in the FOX 4 Naples bureau

Florida regaining economic steam

NAPLES, Fla. – Jan. 14, 2015 – Florida has regained economic ground that it lost during recession – particularly in key sectors like jobs, visitors, housing, and manufacturing.

Analysts attribute the gains to a variety of factors, including the booming stock market, low mortgage rates and falling fuel prices.

Southwest Florida "tends to attract the more affluent retirees, and those are the people who, by and large, have reaped the benefits of a booming stock market," says University of Central Florida economist Sean Snaith. "They are able to finance new home purchases and cash out assets and retire."

The state added a net total of 712 new residents per day or 260,000 overall last year, according to University of Florida Bureau of Economic and Business Research director Chris McCarty. The in-migration rate is much higher than it has been since 2008 and has had a significant impact on the housing market.

Low mortgage rates have fueled new development in the region and enabled homeowners in the Rust Belt to sell their homes and move to the Sunshine State. While areas like downtown Sarasota have seen an increase in residential development, gains have been reported in suburban areas throughout the region as well.

Improvements in the regional job market mean locals are buying homes in the area, too, though Snaith says similar gains should not be expected this year.

"The growing labor force and rising labor participation rate will make lowering the unemployment rate more challenging," he says. "The pace of decline will slow dramatically, and could reverse direction in any given month, as labor force growth picks up."

Source: Sarasota Herald-Tribune (FL) (01/10/15) P. A1; Pollick, Michael

How long will renters keep renting?

NEW YORK – Jan. 14, 2015 – So much for "renters by choice." According to "Perceptions of Renting and Homeownership," a recent survey commissioned by Freddie Mac, a solid majority of renters is clearly tempted by the lure of homeownership.

If the economy continues to improve, more of these renters will be able to buy homes. And if they do, it will have a big impact on the demand for rental apartments.

Since the Great Recession, the apartment business has benefited from a steep drop in the homeownership rate, which fell in the United States to 64.4 percent in the third quarter 2014, down from 69.1 percent in 2005, according to Census data. That added millions of renters to the housing market.

It's not clear how high the homeownership rate will eventually get – though for most of the 1980s and '90s the rate hovered around 65 percent.

Currently, nearly two-thirds of renters (62 percent) are effectively a captive audience – they described themselves as either "just getting by" and living paycheck to paycheck or "struggling," so that they sometimes don't have enough money for basics, according the Freddie Mac survey. These renters are unlikely to save money for a downpayment. Far fewer homeowners (38 percent) described themselves as just getting by or struggling.

So, how many of these renters would turn into homeowners if they could afford it?

Not much more than one-third (37 percent) said that renting is "much more appealing" than owning a home. Nearly two-thirds (61 percent) said renting feels like "throwing your money away."

A solid majority of renters had good things to say about homeownership, for instance: owning a home is something to be proud of (91 percent), homeownership gives you more independence and control (81 percent), homeownership is an investment opportunity that builds long-term wealth (80 percent) and even that owning a home allows you to live in a better, safer neighborhood (60 percent). Only a quarter (25 percent) said they have no interest in ever owning a home, though half (50 percent) said homeownership is too much responsibility.

Younger renters aged 25 to 44 were much more likely to say the financial constraints are major factors that keep them from buying. Older renters aged 55 and up were more likely to say they will not buy a home because they are reluctant to take on the responsibilities of homeownership.

But there is also a segment of renters that expects to continue renting simply because they do not want the responsibilities of owning a home (39 percent) or who feel that buying a home in the current market is not a good investment (14 percent).

More than two-thirds of renters agreed that renting provides relief from home maintenance responsibilities (78 percent) and allows flexibility over where you live (68 percent).

Overall, 39 percent of all renters said they expect to purchase a home in the next three years, while 61 percent believe they will continue to rent in the next three years.

Of the renters who expect to keep on renting, half (50 percent) said they probably couldn't afford a downpayment, more than a third said they couldn't afford the likely monthly mortgage payments (38 percent) and less than a third cited their poor credit histories (31 percent).

Younger renters are more likely than older renters to say they expect to purchase homes in the next three years: 47 percent of renters aged 25 to 34, along with 58 percent of renters aged 35 to 44, said they will purchase a home in three years, compared to 27 percent for people 45 to 64 years old and only 21 percent of those 65 or older.

Freddie Mac commissioned Harris Poll to conduct the online survey, which gathered responses from more than 2,000 U.S. adults in August 2014. Freddie Mac intends to do this type of research quarterly.

Source: Penton Media, Bendix Anderson

Many buyers don’t comparison shop for a mortgage

WASHINGTON, D.C. – Jan. 13, 2015 – The Consumer Financial Protection Bureau (CFPB) released a report on mortgage borrowers, and it found that almost half of consumers don't shop around for a mortgage when purchasing a home.

In tandem with the report, the CFPB released "Owning a Home," an interactive, online toolkit designed to help consumers shop for a mortgage. It says the suite of tools gives consumers the information they need to get the best deal.

"Consumers put great thought into the choice of a home, but the mortgage process continues to be intimidating," says CFPB Director Richard Cordray. "The Know Before You Owe Owning a Home toolkit makes it easy to see how shopping for a mortgage can translate into big dollars saved in the long run. We want to enable consumers to be more savvy shoppers."

Today's report is based on results from the new National Survey of Mortgage Borrowers, a voluntary survey jointly conducted by the CFPB and the Federal Housing Finance Agency (FHA). The Bureau analyzed responses from consumers who took out a mortgage to buy a home in 2013. Among the key findings: 

Almost half of consumers fail to shop prior to filling out an application for a mortgage. This means these consumers are seriously considering only a single lender or mortgage broker before choosing where to apply.

Three out of four consumers only apply with one lender or broker: While half shop around to see which lender advertises lower rates, fewer than one out of four borrowers apply to more than one as a way to compare bottom line rates and their best deal.

Most consumers get information from lenders or brokers, who have a stake in the outcome: 70 percent said they relied on their lender or mortgage broker a lot for information about mortgages.

Borrowers who prioritize the terms of the loan over the characteristics of the lender are more likely to shop around

Consumers who are confident in their knowledge about the mortgage process are more likely to shop around: 55 percent said they were very familiar with mortgage rates, while 30 percent of shoppers said they were not at all familiar. 

U.S. home equity continues to improve

NEW YORK – Jan. 12, 2015 – Average equity on all financed homes in the nation continued to grow as hundreds of thousands of borrowers moved into the black.

As of the third quarter of last year, the average loan-to-value ratio (LTV) on all U.S. residential loans was 58.9 percent.

The nation's collective equity position improved from the second quarter, when the average LTV ratio was 59.2 percent.

In the third quarter of 2013, the average LTV ratio was 61.7 percent.

The statistics were outlined in CoreLogic Inc.'s Equity Report Third Quarter 2014.

The average U.S. LTV ratio had been as high as 71.3 percent in the fourth-quarter 2011.

Hawaii had an average LTV ratio of 45.3 percent, the lowest in the nation. Close behind was New York's 46.8 percent. After that was 52.3 percent in California, 52.4 percent in Massachusetts and 54.4 percent in Washington, D.C.

Nevada's 74.6 percent average LTV ratio was the highest in the country.

By major metropolitan statistical areas, the Tampa MSA's 72.6 percent was highest, and the Nassau County-Suffolk County, N.Y., MSA's 47.3 percent was lowest.

As of the third quarter, 5.1 million U.S. properties had LTV ratios in excess of 100 percent. The amount of negative equity for the upside-down group was $338 billion.

The number of underwater properties declined from 5.4 million in the prior period and 6.5 million during the same period in 2013.

By home value, 15 percent of properties valued at less than $200,000 were in a negative-equity position versus just 6 percent of properties worth more than $200,000.

In all, 273,000 U.S. properties regained equity during the third quarter.

Texas had the lowest share of properties with negative equity. Other states that also had less than 5 percent of all properties in a negative-equity position were Montana, Alaska, Hawaii, North Dakota and Indiana.

More than a quarter of Nevada properties had LTV ratios above 100 percent – the worst share in the nation.

The default rate on mortgages with LTV ratios less than 85 percent was less than 1 percent. But the default rate jumped past 3 percent when LTV ratios were 115 percent or higher.

Mortgages outstanding amounted to $8.751 trillion as of the most-recent period, up from $8.685 trillion three months earlier and $8.574 trillion a year earlier.

NFL Lineman Winston Justice Wants to Sell His Naples, Florida Home

There are no guarantees in life, and that lack of guarantees goes double in the NFL. Take offensive lineman Winston Justice, for example. After playing for eight solid seasons as a hulking blocker, he wasn’t able to latch on to a team in 2014, leaving his pro football career in doubt.

While we’re not sure if Justice will hook up with another NFL team, we do know that he has decided to sell his house in Naples, FL, after owning it for only a year.

Listed by Joseph Whitcomb, the house is for sale for $4.5 million—nearly $2 million over the price Justice paid for the property in 2013. The 6-foot-6 tackle is obviously hoping for a sizable profit in the real estate market.

Records indicate that the house was built in 2013, so it’s a relatively new development in the exclusive Escada Estates at the Tiburón Golf Club (the club is part of the Ritz-Carlton Golf Resort). The house is located on the 14th hole on a lot that’s measured at 0.65 acres.

The living room has a unique recessed grid ceiling, large picture windows that overlook the pool, built-in cabinets and a fireplace. The family room is located next to the kitchen, which is a cascade of white, accented by stainless-steel appliances.

The 5,622-square-foot house has four bedrooms, four full bathrooms and a half-bath. The master suite has a view of the pool and sports lavender-colored walls. If you don’t care for the color, fortunately, it’s easy to paint the walls a new shade. The master bathroom has his-and-her vanities, a stand-alone tub and shower and chandelier light fixtures to give the room a classic touch.

The patio definitely exudes the Ritz-Carlton feel. The pool is inviting and the small palm trees add to the resort-like atmosphere. There’s also an outdoor kitchen and a covered seating area for when you need a break from the sun.

You also get access to the amenities at the Tiburón Golf Club, once you pay your quarterly HOA fees of $2,091.65. The club has a fitness center with a pool, a restaurant, tennis courts, transportation to the beach and, of course, 36 holes of golf.

Justice’s NFL career started when he was drafted by the Philadelphia Eagles in the second round of the 2006 NFL draft. He was later traded to the Indianapolis Colts in 2012. He signed with the Denver Broncos in 2013 but was released before the 2014 season. He starred in college for the USC Trojans.

Source: Realtor.com - http://www.realtor.com/news/nfl-lineman-winston-justice-wants-sell-fl-home/

Hike in Interest Rates Likely by Mid-Year

Many economists believe mortgage rates will be on the move upward this year after sitting near historic lows the past few weeks. The 30-year fixed-rate mortgage rose above 4 percent for only two weeks since Oct. 16, according to Freddie Mac's weekly mortgage market report. That has helped to lower borrowing costs for home buyers — but that may soon change.

The Federal Reserve is expected to boost its short-term interest rate target around the middle of the year if economic growth continues to move at a solid pace.

"Bond yields and mortgage rates will begin moving higher as the timetable for Fed interest rate hikes comes into focus, with rates on credit cards, auto loans, and home equity lines of credit responding after the fact," says Greg McBride, Bankrate.com's chief financial analyst. "The bulk of next year's increases will come in the back half of the year."

McBride is forecasting the 30-year fixed-rate mortgage to remain below 5 percent this year, but he says it could see lots of volatility.

"We'll see rates near 4 percent on the low side if there's an economic stumble or geopolitical crisis, and rates as high as 4.8 percent or 4.9 percent if the Fed missteps or misspeaks," McBride says.

Lawrence Yun, chief economist for the National Association of REALTORS®, expects the Fed to act sooner with its uptick in rates due to inflationary pressures of rising wages and rents. Jonathan Smoke, chief economist at realtor.com®, is forecasting mortgage rates to reach 5 percent in 2015.

Source: “Bankrate.com: Expect Fed to Move on Interest Rates by Mid-Year,” HousingWire (Jan. 5, 2015)

Challenges could impact 2015’s hot housing forecast

NEW YORK – Jan. 6, 2015 – Industry analysts and economists largely believe the real estate market will gain traction this year, but they acknowledge several challenges that pose a potential derailment to the ongoing recovery. CNNMoney recently highlighted several of those challenges:

Investors exit the market: Institutional investors accounted for 15 percent of all sales in October, a drop from 20 percent in January 2014, according to National Association of Realtors® housing data. "Rising home values are causing more investors to retreat from the market," says Lawrence Yun, NAR's chief economist.

Institutional investors purchased thousands of properties during the onset of the housing recovery, helping to propel the market in many areas of the U.S. But now with higher home prices, they may be looking to cash out.

"Home price appreciation has given those investors a good opportunity – and motivation – to sell and realize a solid return on many of their properties in many markets," according to a report by RealtyTrac that looked at institutional investor activity. RealtyTrac found that institutional investors who bought in 2012 could potentially earn returns of 38 percent to 43 percent if they sold in the current market.

But as investors lessen their stake in the market, first-time buyers, whose presence has been at 30-year lows, may be more poised to step in their place.

Lending criteria still tight: Realtors still say tight credit is holding many of their would-be buyers back and derailing transactions as buyers continue to struggle to qualify for a mortgage, though they have seen a slight improvement in lending recently, according to the latest Realtors Confidence Index.

"The increase in mortgage insurance premium payments for FHA-insured loans continued to be reported as an added financial strain for first-time buyers," the report notes. "Obtaining FHA financing for condominiums (typically the entry point for homeownership) continued as a major issue; many condominiums were reported as not meeting FHA eligibility requirements."

In December, mortgage-financing giants Fannie Mae and Freddie Mac announced they were easing lending standards, most notably with a 3 percent downpayment for qualified borrowers. But that doesn't mean all lenders will ease up on credit, Mark Zandi of Moody's Analytics told CNNMoney. Some lenders may continue to be uneasy about lending to borrowers with sub-par credit or who are unable to make large cash downpayments.

Rising mortgage rates: Mortgage rates are sitting near historical lows at the moment, under 4 percent for the 30-year fixed-rate mortgage, but don't expect that to last. Many economists predict rates will push up to 5 percent by the end of this year.

"If [the Fed] pushes rates up, it could have a big impact on the market," says Fannie Mae's Chief Economist Doug Duncan. Homebuyers – particularly in high-priced markets, such as San Francisco and Los Angeles – already paying large portions of their incomes to housing could face a further chip in affordability, economists say.

Foreign buyers buying less in U.S.: Foreign buyers helped fuel the housing market recovery, but there are signs their presence is receding. "As the dollar has strengthened, it made U.S. housing more expensive," Duncan says.

Chinese buyers continue to have a strong presence in the U.S. market, but buyers from Europe and Russia – where economies are starting to soften – are beginning to lessen their stake in U.S. real estate, says Yun. For example, in California alone, sales to international clients has plunged about 25 percent in the past year, according to the California Association of Realtors.

Source: "5 Biggest Threats to the Housing Market," CNNMoney (Jan. 2, 2015)