NAR: Pending sales hit highest level in 18 months

WASHINGTON – Feb. 27, 2015 – Improved buyer demand at the beginning of 2015 pushed pending home sales in January to their highest level since August 2013, according to the National Association of Realtors® (NAR). All major regions except for the Midwest saw gains.

The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, climbed 1.7 percent month-to-month (to 104.2) in January and 8.4 percent year-to-year. It's the index's fifth consecutive month of year-over-year gains, and the gain rose a bit in each of those five months.

For the most part, January buyers were able to overcome tight supply to sign contracts at a pace that highlights the underlying demand that exists in today's market, says Lawrence Yun, NAR chief economist"Contract activity is convincingly up compared to a year ago despite comparable inventory levels," he says. "The difference this year is the positive factors supporting stronger sales, such as slightly improving credit conditions, more jobs and slower price growth."

Yun says conditions are also more favorable for traditional buyers. All-cash sales and investor sales are both down from a year ago, creating less competition and some relief for buyers who still find a limited number of homes available for sale.

"All indications point to modest sales gains as we head into the spring buying season," says Yun. "However, the pace will greatly depend on how much upward pressure the impact of low inventory will have on home prices. Appreciation anywhere near double-digits isn't healthy or sustainable in the current economic environment."

The PHSI in the Northeast inched up 0.1 percent to 84.9 in January and 6.9 percent year-to-year. In the Midwest, the index decreased 0.7 percent to 99.3 in January but rose 4.2 percent year-to-year.

In the South, pending home sales had their largest increase – up 3.2 percent to an index of 121.9 in January (highest since April 2010) and 9.7 percent year-to-year. The index in the West rose 2.2 percent in January to 96.4 and 11.4 percent year-to-year.

NAR forecasts total existing-homes sales in 2015 to be around 5.26 million, an increase of 6.4 percent from 2014. The national median existing-home price for the year is expected to increase near 5 percent. In 2014, existing-home sales declined 2.9 percent and prices rose 5.7 percent.

Source: Florida Realtors®

Best Florida home investments found in smaller cities

DORAL, Fla. – Feb. 26, 2015 – Investment advisor NerdWallet recently compiled a list of the current top Florida cities for investors. To determine best potential and limited risk, NerdWallet writer Kamran Rosen offered this analysis:

Market health. We looked at how quickly houses sold compared with other cities in the state, as well as the change in vacancy rate.

Price per square foot. Weighting for affordability, we measured the price per square foot of housing in a city, averaging all months of 2013 and 2014 to avoid seasonal fluctuations.

Population and home price growth. Averaging monthly price data since 2004, we examined the percentage of houses that increased in value over the past 10 years. We also looked at the increase in population since 2010.

Property taxes. Using state data, we calculated the city and county property tax for each city.

In NerdWallet's study of 227 places, the cheapest average sale price was $37.36 per square foot in Kenneth City in Pinellas County. The most expensive was Key Biscayne at $546.77 per square foot, a difference of over $500.

General NerdWallet advice

Flip this. If your goal is to get in and get out with a profit, here are the top three communities when it comes to speed of sale: Hialeah Gardens, Lauderdale-by-the-Sea and Atlantis. Hialeah Gardens earned the highest mark, a 9.55, in our study on this metric – Zillow's 2014 market health score. The quicker a house sells, the higher the score, with 10 as the highest.

Beachfront bonus. The Miami-Fort Lauderdale metro area dominated our top 10 list – eight of our top 10 investments are located there.

Going long? Florida's housing market seems to make the most sense overall for those looking to invest long term. Most of our top 20 places have low scores when it comes to real estate market health, a sign of the continued impact of the Great Recession.

NerdWallet's best places to invest in Florida real estate

1. Doral

Doral tops our list thanks to its relative affordability, low unemployment rate (4.4 percent – over a full percentage point lower than the statewide rate) and strong population growth. This north-central Miami-Dade County city from 2010 to 2013 welcomed almost 6,000 new residents, a gain of more than 14 percent.

2. Bal Harbour

In tiny Bal Harbour, population 2,569, price could quickly become a factor – it's the most expensive location in our top 20 with an average sales price of $340 per square foot. Still, there are plenty of buyers. On Zillow's 0-10 scale for speed of sale, Bal Harbour scored a healthy 8.66.

3. Homestead

The watchword in Homestead is growth. More than half – 56 percent – of its homes have increased in value over the past 10 years, yet housing remains relatively affordable in this city of 61,714 residents. Sale prices over the past two years averaged just $79.42 per square foot, among the most affordable in our study.

4. Miami Lakes

Miami Lakes may not boast oceanfront property, but a full 57 percent of its housing stock has increased in value over the past 10 years, and vacancies have dropped 3.6 percent. That's a good sign for investors who may have to pay a premium for this suburban location just north of Miami. Here, buyers paid an average of $152 per square foot for a house.

5. Marianna

Bargains abound in Marianna, home of our top 20's lowest price-per-square-foot sale price of $61. It's also clearly attracting new residents, with a 28 percent increase in the population from 2010 to 2013.

6. Hialeah Gardens

Hialeah Gardens, population 22,136, had the highest overall market health score in our survey at 9.55. This means buyers who are looking for a quick turnaround on their investment will find many options to flip housing in Hialeah Gardens.

7. Aventura

This diverse and growing community in northeastern Miami-Dade County is known for its high concentration of transplants from the Northeast, and its many high-rise condos. Buyers will find an average sales price of $227 per square foot and options for Intracoastal Waterway and Atlantic Ocean views. The city's investment score also benefits from its 7.51 percent increase in population since 2010.

8. Pinecrest

This small suburban village in Miami-Dade County is the second-most expensive in our top 10, with a price of $269 per square foot. Its population has grown a modest 1.54 percent in recent years, and village leaders are thinking about expanding. A common discussion involves annexing land west of U.S. Highway 1 to help build out the small village's tax base.

9. Cape Coral

Cape Coral moves in many directions: It's the largest city in our top 10 at 158,415 residents, and it has an average sales price that is the third lowest in our top 10 at $96 per square foot. It's the only city on our list located in Lee County, which is also home to Fort Myers. Cape Coral residents are thinking about development, which can have a major effect on real estate values. Recent news reports have focused on plans to develop Bimini Basin as a community gathering place – with some ideas calling for a mix of commercial and open space.

10. Winter Garden

The only place in our top 10 near Orlando, Winter Garden has a lot to offer those diving into the real estate market. Its vacancy rate declined while its population grew over 13 percent, suggesting strong demand for housing. Perhaps it's the nearby Disney World effect, but Winter Garden enjoys a particularly strong job market, which supports a growing housing market. The unemployment rate in Winter Garden in December, the most-recent data available, was 3.8 percent. By comparison, the entire state of Florida was at 5.6 percent for the same month.

Source: Kamran Rosen with NerdWallet 

The Fed’s Janet Yellen plots rate-hike road map

WASHINGTON – Feb. 25, 2015 – Federal Reserve Chair Janet Yellen provided Congress with an upbeat view of the labor market Tuesday and said policymakers will raise interest rates when they are "reasonably confident" inflation will pick up toward the Fed's annual 2 percent goal.

Her remarks set the stage for a possible mid-year rate increase while giving the Fed the flexibility to wait longer if the labor market falters and meager inflation shows no sign of ticking up.

In testimony before the Senate banking committee, she echoed the Fed's last post-meeting statement, which said the Fed "can be patient" as it weighs a hike in interest rates. She reiterated that means rates won't rise for at least the next two meetings, or until June, at the earliest.

But she cautioned that removal of the "patient" wording in an upcoming statement would not mean the Fed "will necessarily increase" rates within two meetings. Rather, she said it would indicate the economy has improved "to the point where it will soon be the case" that a change in interest rates "could be warranted at any meeting."

The caveat is an attempt to prevent a sell-off in Treasuries and rising yields if the Fed drops the assurance in its March post-meeting statement, says economist Paul Ashworth of Capital Economics.

Yellen offered no clear signal on when the Fed will raise its benchmark rate from near zero for the first time since the 2008 financial crisis. But she indicated policymakers could act before unusually low inflation picks up.

"Provided that labor market conditions continue to improve," the Fed will increase the federal fund rate when it's "reasonably confident that inflation will move back over the medium term toward our 2 percent objective," Yellen said in her semiannual report to Congress.

She said the labor market "has been improving along many dimensions," her most positive assessment in recent memory. The unemployment rate, she noted, has fallen to 5.7 percent from 10 percent in 2009 and the ranks of long-term unemployed have "declined substantially." She also said there are fewer part-time workers who prefer full-time jobs.

"There is reason, I think, to feel good about the economic outlook," she said.

"Overall, the Fed is clearly getting close to the first rate hike, which we expect in June," Ashworth wrote in a note to clients.

Yellen added that "room for further improvement remains," noting the portion of Americans working or looking for jobs is low and wage growth is sluggish.

Sen. Charles Schumer, D-NY, urged the Fed not to raise rates "until wages are on a firm upward trend."

But Yellen said the goal is restoring 2 percent inflation. "I don't want to set down a single criterion. … We'll be looking at a range of evidence that pertains to inflation."

Some Republicans chided the Fed for keeping rates too low for too long. Sen. Patrick Toomey, R-Pa., said the financial crisis "is over," but "crisis era rates" still prevail.

Separately, Yellen said she "strongly" opposes proposals in Congress to audit the Fed's monetary policy deliberations. Such a move "would politicize monetary policy and bring short-term political pressure to bear on the Fed."

Yellen is scheduled to testify Wednesday before the House Financial Services Committee.

Before the hearing, some economists said Yellen's committee testimony could revive market expectations for a midyear interest rate hike after January meeting minutes suggested the move is likely to be deferred amid low inflation.

The minutes, released last week, said many Fed policymakers were inclined to wait longer to raise its benchmark rate and that a premature increase could set back the recovery. Treasury yields fell on the news and economists said an anticipated June rate increase was more likely to occur in September, or even later.

Despite the accelerating labor market, low oil prices and a strong dollar are keeping U.S. inflation well below the Fed's annual 2 percent target. Raising rates too soon could dampen economic activity and further push down consumer prices, increasing the risk of deflation. Falling wages and prices can hobble the economy and even trigger recession.

But since the Jan. 27-28 meeting, the Labor Department has reported that employers added 257,000 jobs in January and 1 million the past three months, the best such stretch since 1997. Also, oil prices have edged up and Greece and its Eurozone partners last week reached at least a tentative deal on extending the beleaguered country's bailout package.

Fed policymakers in opposing factions – those who typically favor pro-growth policies and those more concerned about controlling inflation – have pushed the likelihood of a mid-year rate increase in recent weeks.

Source: USA TODAY, Paul Davidson; Alex Wong

Year-to-year home price gains level off

WASHINGTON (AP) – Feb. 24, 2015 – U.S. home price increases leveled off in December, reflecting a weak sales environment and a smaller number of homes for sale.

The Standard & Poor's/Case-Shiller 20-city home price index, released Tuesday, increased 4.5 percent in December compared with 12 months earlier. That is up from 4.3 percent in November and the same as October's annual increase. The small gain comes after price increases had slowed for 12 straight months.

Americans are listing fewer homes for sale, pushing up prices and keeping many houses out of reach for would-be buyers. Home prices are rising faster than most Americans' wages, slowing sales even as hiring strengthens, consumer confidence grows and mortgages stay low.

Still, the smaller price gains are more sustainable than last year's double-digit increases.

The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The December figures are the latest available.

The number of homes for sale in December was equal to just 4.4 months of sales, the lowest level in nearly two years. Six months of supply is typical for a healthy housing market.

"The housing recovery is faltering," said David Blitzer, chairman of the S&P's index committee. "While prices and sales of existing homes are close to normal, construction and new home sales remain weak."

All 20 cities reported higher prices than a year earlier. The biggest gains were in San Francisco, where prices rose 9.3 percent, and Miami, where they jumped 8.4 percent. Chicago reported the smallest gain, at 1.3 percent.

December's price rise is far ahead of wage gains. Average hourly wages rose at a faster pace in January compared with the previous month, but were just 2.2 percent higher than a year ago. Pay gains have been stuck largely at that level for most of the five years since the recession.

Sales of existing homes fell last year after two years of steady recovery. That has led many economists to forecast a rebound in sales in 2015, but so far there are few signs of it.

In January, existing home sales tumbled 4.9 percent to a seasonally adjusted annual rate of 4.82 million, the slowest pace in nine months, the National Association of Realtors said Monday.

And the construction of new homes fell 2 percent in January, the Commerce Department said last week.

Lower mortgage rates and strong job growth may yet spur more sales later this year. The average 30-year fixed mortgage rate was 3.76 percent last week, according to the mortgage giant Freddie Mac. That has ticked up in recent weeks, but is far below the 4.33 percent average from a year ago.

Employers have ramped up hiring, encouraged by strong growth last spring and summer. The U.S. economy added more than 1 million jobs from November through January, the fastest three-month pace in 17 years. More Americans earning paychecks should eventually push home sales higher.

Source: The Associated Press, Christopher S. Rugaber

Rental condos will be harder to find in South Florida

FORT LAUDERDALE, Fla. – Feb. 16, 2015 – If you want to rent a condo or townhome, your options in South Florida are disappearing.

Many developers and investors who rented out units after the housing collapse are putting them back on the market now that home prices are rising.

That means you'll have a harder time finding one to rent, but you'll have more places to look at to buy.

Among those making the switch so far are Royal Poinciana Townhomes at Boca Raton, The Whitney in West Palm Beach and Villas de Venezia in Sunrise. You'll see even more in 2015 and beyond, analysts say.

"Renting is like always wasting your money – it goes right in the trash," said Selmaria Rezende, a 45-year-old medical aesthetician who's trading in her apartment lease for a mortgage on a four-bedroom townhome at Royal Poinciana in April. "When you buy, you're paying a mortgage and it's something for you."

The 90-unit Royal Poinciana development, with Spanish Mediterranean architecture, was built north of Yamato Road off Dixie Highway in 2007, just as the housing downturn was deepening.

The developers sold about half of the two-, three- and four-bedroom units before losing the property in foreclosure, public records show.

In May 2013, Sabal Financial Group, an investment firm in Newport Beach, Calif., bought the unsold units for $11.4 million, records show. With the housing market still in tatters, Sabal rented the townhomes before deciding last year that prices had recovered enough to launch sales.

Balistreri Realty and Brenner Real Estate Group took the listing last summer and have 21 left to sell. Prices range from about $339,000 to $451,000. That's a lot for townhomes without water views, real estate observers say. But consider what you'll pay compared with the new buildings going up.

Another wave of condo construction is adding thousands of units to the South Florida skyline, many with $1 million-plus price tags. But they won't open until next year or later, so they won't help if you're looking now.

Financing is more available now, too. First-time buyers can get Florida Housing Administration (FHA) loans that require as little as 3.5 percent down. Restrictions on condo loans put in place by Fannie Mae during the downturn are starting to lift – making it easier for people to qualify for mortgages, real estate observers say.

"FHA has helped a tremendous number of my buyers," said Beverly Rothstein, an agent in Broward and Palm Beach counties. "Lenders have come to the realization that they have to be slightly less strict so that people can purchase homes and they can make loans."

Over the past several years, Miami-based Mattoni Holdings bought about 150 condos and townhomes across Miami-Dade and Broward counties. Units at Sailboat Pointe in Oakland Park and Belmont in North Lauderdale were among its acquisitions.

The investment firm spruced up the units with fresh paint and new carpeting, found willing renters and enjoyed a strong cash flow before finally deciding the market had rebounded enough to sell.

"Renting for us was actually very easy, but it was never the long-term goal," said Ricardo Caporal, owner of Mattoni. "Selling is almost like a cleanup – it's closure."

Back at Royal Poinciana, Andrea Brenner, marketing director at Brenner Real Estate, said she's encouraged by a flurry of interest in recent weeks. Buyers are snapping up units that serve as the models and sales office – forcing the real estate firms to move to another townhome each time. They packed up and hired movers for the fifth time on Friday.

"We keep laughing and moving," Brenner said. "The hassle is worth it."

Brenner said she hopes to be sold out of the gated community by the summer or fall. That's welcome news to existing residents such as Gabriel Paredes, who said he has lived there since 2009.

Paredes, 29, is convinced that Royal Poinciana will be better off with more owner-occupants in place, taking their morning jogs and swimming in the community pool.

"They have pride of ownership," he said. "They care about the well-being of the neighborhood long-term."

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

Home Prices Are Up, Supply Is Down—Expect Bidding Wars

It’s getting more expensive to buy a house. Prices rose 6% in the fourth quarter of 2014 as buyers competed for fewer and fewer available homes for sale, according to new data from the National Association of Realtors®.

The NAR report shows most cities (86%) are experiencing rising prices, with fewer available homes to choose from. Just 24 cities, or 14%, recorded lower median prices in 2014 than in 2013.

“Home prices in metro areas throughout the country continue to show solid price growth, up 25% over the past three years on average,” said Lawrence Yun, chief economist at NAR. “This is good news for current homeowners but remains a challenge for buyers who are seeing home prices continue to outpace their wages.”

Still, as more jobs are created, consumer confidence rises, driving the demand for housing. But with fewer sellers putting their homes on the market, the housing market just chugs along.

“This should signal existing home owners, who may have been slow to think of selling, to consider now a great time to list,” said Jonathan Smoke, chief economist at realtor.com®. With prices rising by double digits in 24 areas across the country, according to the report, many sellers would find a pool of buyers vying for their homes.

To be sure, Smoke scoured 200 of the largest metro areas across the country on realtor.com and found that the prices in 98 of them had increased by 6% or more. In 66 of those markets, houses are spending 8% less time on the market, he said.

Prices and inventory go hand in hand. The average supply of available homes for sale was 4.9 months’ worth, according to the report. In a normal market, there would be a six- to seven-month supply of available homes.

“This is a clear sign that demand is growing faster than supply,” said Smoke. Once more homes are listed, prices would moderate, he said.

The NAR wants more new construction. “Unless homebuilders significantly boost construction, housing supply shortages could develop and lead to further price acceleration this spring,” said Yun.

The five most expensive housing markets in the fourth quarter of 2014, according to the report, were:

San Jose, CA, $855,000

San Francisco, CA, $742,000

Honolulu, HI, $701,300

Anaheim-Santa Ana, CA, $688,500

San Diego, CA, $493,100

The five lowest-cost metro areas were:

Youngstown-Warren-Boardman, OH, $78,000

Rockford, IL, $86,800

Toledo, OH $87,100

Decatur, IL $90,400

Cumberland, MD, $90,500

Housing demand is rising as buyers look to take advantage of low interest rates and a slight uptick in median income ($65,782). To afford a single-family home at the national median price of $208,700, a buyer making a 5% down payment would need an income of $45,863, while a 10% down payment would require an income of $43,449 and $38,621 for a 20% down payment, according to the report.

Regional breakdown

In the Northeast, sales rose 2.5% in the fourth quarter of 2014 but are 4.1% below the fourth quarter of 2013, according to the report. The median price of the home rose 2.2% to $246,300.

In the Midwest, sales of existing homes declined 4.7% in the fourth quarter and are 0.6% below their 2013 level. The median price of an existing single-family home in the Midwest increased 6.2% to $162,000.

In the South, sales climbed 2.7% in the fourth quarter of 2014 and were 5.8% over 2013 levels. Median prices also increased 6.2% to $183,000, according to the report.

In the West, sales fell 6%; however, the median price of a home jumped 4.8% to $299,500 in the fourth quarter.

Source: Realtor.com - By: Chrystal Caruthers

HUD: 2015 is year of housing opportunity

WASHINGTON – Feb. 11, 2015 – Housing and Urban Development Secretary Julian Castro sees big opportunity in the housing market this year, with the easing of credit opening the door to more buyers.

"I see 2015 as the year of housing opportunity, particularly homeownership," Castro told CNN's Christine Romans. "A good example of that is the reduction in the FHA mortgage premium."

Castro points to the recent move of the Federal Housing Administration, which reduced its insurance premiums from 1.35 percent to 0.85 percent. The reduction is expected to amount to about $900 per year for borrowers. Castro says the reduction in premiums will likely spur a quarter of a million more homebuyers in the next three years.

"That's a real impact," he says.

Also in expanding credit, mortgage financing giants Fannie Mae and Freddie Mac recently announced they will allow first-time home buyers to qualify for loans with downpayments as low as 3 percent.

But as some lenders loosen their access to credit, could this brew another housing bubble?

"A few years ago, it was too easy to get a home loan," Castro says. "Now we've swung to the other extreme – now it's too hard."

Castro says that even former chairman of the Federal Reserve Ben Bernanke made public remarks a few months ago that he was struggling to qualify for refinancing mortgage due to the tight lending standards.

"We need to be in the strong middle – where we have strong safeguards in place but at the same time also a robust opportunity for folks who are responsible and ready to won a home to be able to get a mortgage," Castro says.

Source: "2015: The Year to Buy a House," CNNMoney (Feb. 2, 2015)

‘Domino Effect’ to Set Off 2015 Housing Wave

Home prices between the top and bottom segments of the housing market are rising, which could unleash a “domino effect” that builds first-time and move-up buyer momentum this year, notes a new real estate report by Clear Capital. But the build up in traditional home buyers is coming at the cost of declines in the luxury home market. 

"The rate of appreciation for top tier homes is stalling, which is a more direct reflection of waning fair market demand,” says Alex Villacorta, vice president of research and analytics at Clear Capital. “While this is a concerning development, there is a silver lining. The moderating upper tier may give traditional buyers a moment to catch their breath, and entice move-up buyers to enter this segment of the market. The ripple effect of opening up inventory all the way down the price spectrum could provide opportunity and motivation across all segments, including first-time buyers, to enter the marketplace.”

The lower and middle-range ends of the housing market is stabilizing, allowing traditional home buyers to re-emerge. “The next phase of the housing recovery is dependent on healthy demand from this segment,” Villacorta says.

The lower-end of the housing market was once driven mostly by investor activity, but now doors are opening for first-time home buyers to break in.  Also, as the number of underwater mortgages steadily decreases, home owners in the mid-tier of the home pricing segment can finally trade up to a larger, more expensive home.

Lower-end properties have been outpacing price growth in the luxury market, Clear Capital reports. The low-tier has posted double-digit gains year-over-year of 10.2 percent, compared to the top tier, which saw the lowest price growth rate among the three tiers, at 3.6 percent year-over-year.

“This divide between a healthy low tier and stalling top tier could kick-off a domino effect,” Clear Capital notes in its report. “Stalling prices in the top tier of the market could create the perception of a good deal. This instills confidence in mid-tier home owners, motivating them to move-up to the top tier. In turn, this opens up more opportunity for low tier home owners to move-up to the mid tier. … This domino effect could be the catalyst for balanced demand across all sectors of the market.”

The Midwest is leading the pack, according to Clear Capital. The Midwest posted double-digit gains in the low-tier segment at 13.6 percent, while seeing its top-tier of the market fall 3.3 percent with prices. The Midwest is the only region currently seeing price appreciation in the low and mid tiers, growing above 1 percent.

As such, Clear Capital economists are predicting the Midwest to be the first region in U.S. to realize full buyer momentum among first-time and move-up buyers, due to its moderating top tier.

Source: “Clear Capital: Traditional Homebuyers, Make Your Move,” Clear Capital (Feb. 2, 2015)

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)

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)

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.

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®

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)

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

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.