What Homebuyers Can Be Thankful for in 2013

Homebuyers have had it tough lately, suddenly finding themselves in a sellers market as summer came along. And mortgages suddenly cost more too -- when you could even get one. But of course Thanksgiving isn't about looking at negatives. So, if you can, look past that elephant-in-the-room that is the credit crunch and take stock of what's now on the table for those homebuyers with the capital.

Low Mortgage Rates: Yes, mortgage rates rose year, along with home prices, but rates are still at historic lows (we are constantly assured) and have been sinking in recent weeks. Can housing prices be far behind? If you are really ready to buy, those Black Friday bargains are small potatoes compared to what you might save by shopping right now in real estate's historically slow season^[2] -- especially from sellers who saw summer's homebuying frenzy pass them by.

A Bidding-War Cease-Fire: The heated bidding wars that have been witnessed in some real estate markets -- especially in California -- reportedly have cooled with weather and amid rumors that sellers were deliberately underpricing their homes^[4] to encourage competing bids. And although home prices continued to climb^[5] as summer drew to a close, it was at a slower pace. Meanwhile, the number of Americans applying for home loans^[6] has plunged.

Weary and Wary Investors: Speaking of the competition, the real estate speculators appear headed for the sidelines after years of swooping in to snatch up bargain properties with ready cash. A recent poll of investors^[7] found that only around 1 in 5 are still interested in buying more homes -- about half the number from a year ago. For average home-shoppers that means less competition from a preferred class of homebuyers. Meanwhile, those foreign investors who were reportedly buying Florida property sight-unseen^[8] at the beginning of 2013 (and even giving Detroit a nibble) might have moved on to Portugal and Spain^[9], where 3 million homes lie vacant and the governments are ready to barter with tax incentives and visas.

The 'Nuclear Option': What does the real estate market have to do with the recent change in the U.S. Senate's filibuster rules^[10]? It means that Rep. Mel Watt (D-N.C.), the Obama administration's nominee to head the Federal Housing Finance Agency^[11] might finally be confirmed. And if that happens -- and it's only a glimmer of a possibility at this point -- Watt might drop plans to lower the ceiling on the amount of money^[12] available for government-backed mortgages. Ideological and political conflicts aside, that would be good news right now for homebuyers who might otherwise not be able to afford their dream homes.

The Latest Technology: In many ways technology has made home shopping easier than ever -- much less dependent on guesswork and reliance on third parties -- and it only seems to be getting more convenient. Along with smartphone apps for homebuyers^[13] (many of them free) that calculate mortgage payments and estimate home values, there's at least one that instantly accesses information about a home just by taking a snapshot of it with a smartphone camera. Others detect homes with recent price reductions; screen for upcoming open houses; rate neighborhoods on the basis of crime rates^[14]; and do the numbers based on "lifestyle"^[15] -- such as how much it might cost to commute to work from a new location. So even if you aren't ready or able to buy, some of these apps can aid in a search for a rental.

Source : http://realestate.aol.com/blog/on/reasons-home-buyers-thankful-2013/

US building permits soar to 5-year high in October

Permits for future U.S. home construction rose to their highest level in nearly 5-1/2 years in October, suggesting the housing market recovery remained intact despite recent signs of slowing down.
The Commerce Department said on Tuesday building permits jumped 6.2 percent to a seasonally adjusted annual rate of 1.03 million units. That was the highest rate since June 2008. Permits increased 5.2 percent in September.
August's permits were revised to a 926,000-unit pace from the previously reported 918,000 units. Permits lead housing starts by at least a month.
The Department postponed the release of housing starts and completions for September and October until Dec. 18 because the collection of data was affected by a 16-day shutdown of the government last month. November data also will be published at that time. The partial shutdown of the federal government also delayed the publishing of the September and October permits reports.
Economists polled by Reuters had expected building permits at a 930,000-unit rate in October.
While permits are not counted in gross domestic product (GDP), they are a key indicator of economic activity and the sturdy gains in both September and October should ease concerns the housing market recovery was stalling.
Higher mortgage rates have slowed the pace of home sales, but demand for accommodation as household formation continues to recover from multi-decade lows is expected to keep residential construction supported.
Home resales fell in October for a second straight month and confidence among single-family home builders has ebbed somewhat since nearing an eight-year high in August.
Permits for the multifamily home sector surged 15.3 percent in October after increasing 20.1 percent in September. Permits for buildings with five units or more reached their highest level since June 2008.
Single-family home permits, the largest segment of the market, increased 0.8 percent after falling 1.9 percent in September.
--By Reuters
Source : http://www.cnbc.com/id/101228329

For Millennials in the Market for a Home Mortgage: 5 Key Questions

Andrea Murad^[1]

Securing a mortgage in a normal housing market can be long and complicated, and the process has become even more arduous in the current environment. With tight lending practices and low inventory levels, potential buyers are facing significant hurdles. What's more, first-time buyers, usually of the millennial generation, have the added pressure of a weak job market and massive student loan debt that limits their purchasing power.

"[Owning a home] is really about deferred gratification," says Michael Corbett, Trulia's real estate expert. "You know where the market's going -- you need money, a job history, and you need to show your debt is low compared to your income." Before Millennials start the home-buying process, experts suggest coming up with a financial plan and meeting with a mortgage professional. While everyone has a different financial situation, a professional can create a strategy for buying that first home.

Saving for a down payment, overcoming a disproportionate amount of debt versus income and understanding a particular market is difficult -- but not impossible, says Andre Brooks, regional sales manager at Wells Fargo Home Mortgage. "There are pockets where people have become successful; it's a matter of being educated and informed about your market and the finances to buy a home."

It's no secret that homeownership requires major financial planning and comes with sacrifices. Experts suggest Millennials ask the following questions to determine if buying a home is the right decision and how to make the process as smooth as possible:

Is this the right time to buy a home? The cost of owning a home is a lot more than just the monthly mortgage payments. Buyers need to be prepared to cover costs like maintenance, decor and insurance.

"Just because you can get a loan does not mean it's the best thing," says Karen Goodfriend, certified public accountant and principal at KK Wealth Advisors. Buying a home can be very emotional, but sometimes it's best to wait until things are better positioned in life.
"What's really important to you and what things are you really willing to do to save?" she asks.

Where do you want to buy? "The key is, if I know and understand the real estate market I'm buying in, if I know the options to accumulate money, then I can figure out a game plan," says Brooks. "This game plan may extend over six, 12 or 36 months."

The amount of time that a buyer plans to spend in the new home is important when it comes to recovering closing and moving costs -- which can take up to seven years. For a buyer not planning to stay that long, Brooks suggests buying in a marketplace that's experiencing a sustained price increase to have the best chance of breaking even.

What can you afford? Lenders need to see sellers can afford the mortgage -- long gone are the days of unverified loans. "Speak to a mortgage professional to find out what it will take to qualify for a loan," says Goodfriend. Before looking for a home, experts suggest getting prequalified to set price limits. Along with income, lenders also take into account a borrower's debt-to-income ratio, known as a DTI, and any credit card and student loan debt can raise this ratio. "Your DTI will tell you what kind of house you can afford -- a massive student loan will eat into your income," says Corbett.

While quickly eliminating student debt is a big hill to climb, Frank Donnelly, chairman of the board of the Mortgage Bankers Association of Metropolitan Washington, advises consolidating these loans to lower your monthly payments and DTI ratio. "It all starts with a budget and having good discipline," says Goodfriend. "Living within one's means and not having credit card balances will help someone afford a loan and get a loan." Paying off student loans will really help you qualify for a mortgage but this requires a plan to pay off debts and layering in everything else that will help you get a mortgage.

Do you have good credit? Before applying for a mortgage, experts suggest consumers review their credit history and address any issues. "Know what you need to do to build credit if you don't have a lot of it," says Cara Ameer, broker associate and Realtor at Coldwell Banker Vanguard Realty based in Ponte Vedra Beach, Fla. Good credit not only helps get qualified for a mortgage but it also helps keep the interest rate on the mortgage low.

"Think about your credit score as an asset," says Goodfriend. "You want to be in the best position possible to get a mortgage." Paying credit cards late or carrying a high balance can make getting a mortgage difficult. "Be disciplined about spending and paying credit cards on time," she adds.
Some young buyers who haven't established a strong credit history might need some help. "Without good or enough credit, you may need a cosigner on the loan," says Ameer.

Have you saved enough for a down payment? "If buying a home is a goal, it may take years to be able to save for a down payment but have a strategy and work towards it," says Goodfriend. Although everyone's income will likely increase over time, experts suggest putting 20% down on a new home. "Just because the bank will loan it to you doesn't mean you should take the loan," says Corbett. "If you aim for the 20% down, the worst you can have is money in the bank."

Many first-time buyers make some kind of sacrifice to save this amount, says Donnelly. Cutting back on discretionary spending, such as dinners out and entertainment, will help lower expenses, and getting another job can increase your income.

"Research the different loan programs that are geared towards a first-time buyer," says Ameer. Some assistance programs can help with the down payment and closing costs but these loans might be more expensive.

Source : http://realestate.aol.com/blog/2013/11/25/millennials-shopping-home-mortgage-questions/

Pending home sales fall again- National News

 

Signed contracts to buy existing homes fell for the fifth straight month in October, as the government shutdown added to an overall slowdown in the U.S. housing market. So-called pending home sales eased 0.6 percent from an upwardly revised September reading and are down 1.6 percent from October 2012, according to the National Association of Realtors.

This is the lowest sales pace since December 2012. Pending home sales are an indicator of closed sales in November and December.

(Read more: Do homeowners need underwater insurance?)
^[1]

"The government shutdown in the first half of last month sidelined some potential buyers. In a survey, 17 percent of Realtors reported delays in October, mostly from waiting for IRS income verification for mortgage approval," said Lawrence Yun, chief economist for the Realtors in a release.

Existing home sales drop to 3.2 percent

CNBC's Diana Olick reports on the disappointing numbers and how the low rate of first-time buyers is hurting the market.

Regionally, gains in pending home sales in the Northeast and Midwest were stronger, while the South and West saw deeper declines. Sales rose 2.8 percent month-to-month in the Northeast and 1.2 percent in the Midwest. Sales slipped 0.8 percent in the South from September and in the West the decline was steepest, with 4.1 percent fewer buyers signing contracts.

(Read more: Worrisome housing signs appear in West)
^[2]

"We could rebound a bit from this level, but still face the headwinds of limited inventory and falling affordability conditions. Job creation and a slight dialing down from current stringent mortgage underwriting standards going into 2014 can help offset the headwind factors," Yun said.

While the Realtors' survey, which draws its data from regional multiple listing services, showed a big drop in the usually investor-heavy West, another report saw investors returning to the market in October after stepping back earlier in the year. After surging to 23 percent of the market in February, investors made up just 16.6 percent of home buyers in August, according to Campbell/Inside Mortgage Finance. Over the past two months, however, that share has climbed back to 17.4 percent.

(Read more: Map: Tracking the recovery)
^[3]

"The two-month rise in investor activity is significant given that it occurred at the same time the proportion of distressed properties in the housing market has continued to fall," the report said.

—By CNBC's Diana Olick. Follow her on Twitter @Diana_Olick^[4].

Questions?Comments? facebook.com/DianaOlickCNBC^[5]

For the fifth straight month in October existing home sales fell, as the government shutdown added to an overall slowdown in the U.S. housing market.

Source : http://www.cnbc.com/id/101225161