Pending Home Sales Leap 5.5% in February

WASHINGTON (March 29, 2017) — Pending home sales rebounded sharply in February to their highest level in nearly a year and second-highest level in over a decade, according to the National Association of Realtors®. All major regions saw a notable hike in contract activity last month.

The Pending Home Sales Index,* www.nar.realtor/topics/pending-home-sales, a forward-looking indicator based on contract signings, jumped 5.5 percent to 112.3 in February from 106.4 in January. Last month’s index reading is 2.6 percent above a year ago, is the highest since last April (113.6) and the second highest since May 2006 (112.5).

https://www.nar.realtor/news-releases/2017/03/pending-home-sales-leap-55-in-february  

Look For Us In This Saturday’s News-Press!

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This Saturday’s Issue of The News-Press features TechVenture Real Estate and largest unit located in the luxurious Marina South at Cape Harbour!
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Lee County Real Estate Enters the Moderation Era

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Both foreclosures and new-home permits were little changed in February in Lee County as the real estate economy settled into something approaching normal after the wild swings of the past decade.

Contractors in the county pulled 213 single-family home permits in the month, up only slightly from 209 in January, the county’s municipalities reported Monday.

Meanwhile, lenders in the county filed 223 mortgage foreclosure lawsuits, about the same as the 216 in January,, according to statistics released Monday by the Southwest Florida Real Estate Investors Association.

There’s little chance foreclosures will rebound to the levels they reached six years ago when investors and home buyers were abandoning their mortgages, said Jeff Tumbarello, director of the association and owner/broker of North Fort Myers-based Steelbridge Realty.

At present, he said, “Over 60 percent of the home sales are cash. At some point there’s just not enough leverage to do it.”

Bob Knight, vice president and co-owner of Cape Coral-based Paul Homes, said the month’s steady numbers showed there was relatively strong demand three months ago when those home buyers were signing the deals that led to February’s permits.

Now, he said, further growth will depend in part on getting enough qualified tradesmen back in the market to support the “nice normal pace of 400” homes per month that the county sees in a healthy housing market.

That hasn’t happened yet, Knight said, because the plumbers and electricians who were working during the boom by and large have either gone on to new occupations or left the area entirely.

Now the construction jobs here are back but some of those workers are reluctant to get back into the business – still wary of another crash.

Even so, Knight said, the industry is starting to ramp up as demand grows: Some developers are building “on spec” (without a specific buyer committed. “Quite a few are rolling out right now and they’re being absorbed.”

Tumbarello said that normal market forces are starting to reassert themselves after years when foreclosures and a huge inventory of unsold homes created atypical conditions.

“Right now you’re looking at a rational market that’s driven by supply and demand, buyers and sellers,” he said.

Another wild wave of construction likely won’t happen now, Tumbarello said, because in most areas the price of existing homes still isn’t as high as the cost of replacing a typical home with new construction.

Average Home Upsized Post-Recession

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The average new-home size has increased more than 300 square feet since 2009, growing from 2,362 square feet in 2009 to 2,679 square feet in 2013, according to recently released Census Bureau data.

With that added square footage, new homes are adding more bedrooms, bathrooms, and amenities than they had in 2009.

Forty-eight percent of homes built in 2013 had four bedrooms compared to 34 percent with that number in 2009.

Thirty-five percent of homes in 2013 had three or more full baths compared to 23 percent in 2010.

Also, homes today are also accommodating more garage space. Twenty-two percent of homes built in 2013 had garage space to fit three cars or more compared to 16 percent in 2010.

The amenities that builders say they are most likely to include in new homes are a walk-in closet in the master bedroom, low-e windows, a laundry room, and a great room, according to the National Association of Home Builders. Amenities favored by many builders are granite countertops, double sinks, and a central island in kitchens, as well as nine-foot or higher ceilings, a front porch, exterior lighting, and a patio.

Bigger homes are also meaning higher prices. The average sales price rose from $248,000 in 2009 to $318,000 in 2013.

At the bottom of the list of features that builders will include in new homes in 2014, according to NAHB: laminate kitchen countertops, an outdoor kitchen, an outdoor fireplace, a sunroom, a two-story foyer, and a whirlpool in the master bathroom.

5 Housing Trends Winter 2014

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If you plan to buy a house this winter, we have good news for you. Buyers will face less competition and will likely find a greater number of homes available for sale.

Now the bad news: Mortgage rates will keep climbing in 2014. They won’t necessarily spike overnight, but you may run out of time to grab the best mortgage rate if you wait too long. The size of your loan also may have to be adjusted after new rules and new loan limits go into effect this year.

Not sure this is the right time for you to buy a home? Maybe renting is a better option for you, but depending on where you live, expect rents to climb, as well.

Here are five housing trends you can expect to see this winter.

 

Mortgages Get More Expensive

It’s time to kiss extra-low mortgage rates goodbye.

Several factors will put upward pressure on rates in the next few months, including the Federal Reserve’s recent decision to scale back on its bond-purchasing stimulus program.

Higher mortgage fees on Fannie Mae and Freddie Mac loans also will make mortgages more expensive in 2014, as they will result in higher rates for borrowers, says Brian Koss, executive vice president for Mortgage Network in Danvers, Mass.

The fee hike could affect many borrowers because Fannie and Freddie own or guarantee about two-thirds of new mortgage loans.

With the higher fees, even borrowers with credit scores above 740 would pay more for mortgages, regardless of the size of their down payments. In addition, Fannie and Freddie have plans to raise the fees they charge lenders, which will translate into higher mortgage rates for consumers.

Mel Watt, the incoming director for the Federal Housing Finance Agency, which oversees Fannie and Freddie, says he will delay the implementation of higher fees, but has not offered details on when they could go into effect.

“It doesn’t make sense to add additional barriers now that the market is healing,” says Lawrence Yun, chief economist at the National Association of Realtors. Still, he says buyers should act quickly if they are ready to make a commitment now.

 

Buyers Face Less Competition

The housing market will march at a slower pace this winter. That’s good news for potential buyers who struggled to ink a deal during the fall.

Home sales have taken a dip after more than two years of year-over-year increases. A housing report by Re/Max found that home sales dropped 15.9 percent in November, compared with the previous month, and 7.8 percent compared with a year ago. The report is based on Multiple Listing Service data in 52 metro areas.

Home prices won’t follow the same trend as home sales, Yun says.

“But there will be less of a bidding frenzy than before,” he says. And don’t dare call this a buyer’s market yet. “It’s slightly tilted towards favoring the seller over the buyer.”

Still, buying a home should be a bit easier this year as the inventory of homes for sale increases.

“We are going to see more inventory coming online,” says Errol Samuelson, president of Realtor.com. “Homebuilders are calling for 1.1 (million) to 1.2 million housing starts next year, which is much better than a couple of years ago. And as home prices appreciate, people who were underwater will feel more comfortable putting their homes on the market.”

Loans Shrink

The Federal Housing Administration has reduced the maximum loan amount on FHA loans in 650 counties across the country. The new limits went into effect Jan. 1.

In high-cost areas the loan limit was reduced from $729,750 to $625,500. You may think that’s not such a big deal, but it affects the purchasing power of many buyers with low down payments in cities like New York and San Francisco.

The FHA also drastically reduced the loan limits in some counties. Limits in Salt Lake County, Utah, for example, dropped from $729,750 to $300,150.

Fannie Mae and Freddie Mac also are considering reducing their loan limits from $417,000 to $400,000 in most markets, but have not made a final decision.

These reductions could hurt the housing market as buyers who want to buy outside the loan limits would face stricter underwriting requirements, says Matt Hackett, operations manager for Equity Now, a mortgage bank in New York City.

“In general, the reduction in explicit and implicit government-backed loan amounts pushes buyers on the margin into ‘non-agency’ loans, which tend to have more stringent qualification standards, reducing the overall pool of buyers which can qualify for a loan,” he says.

New Mortgage Rules

A series of new mortgage rules goes into effect in January. Most of the rules were created to protect consumers from lender abuses and to shield the mortgage market from the irresponsible lending standards seen during the last housing boom.

You may have heard that the new rules will make it harder for consumers to qualify for mortgages, will hinder mortgage lending and hurt the housing market. But in reality, most borrowers won’t be affected by the new rules when applying for a mortgage.

One controversial part of the new Qualified Mortgage rule, or QM, says a loan to a borrower with debt-to-income ratio of more than 43 percent will lack certain legal protections for lenders. Debt-to-income ratio is the percentage of monthly income that goes toward debt obligations.

Loans will be exempt from the 43 percent DTI cap for seven years, as long as the loans meet FHA, Fannie or Freddie Mac guidelines.

“Generally speaking, (the underwriting requirements) will stay about the same for most people,” says Michael Becker, a mortgage banker for WCS Funding in Baltimore.

Another part of the rule, which puts a cap on maximum points and fees that borrowers can be charged, could hurt borrowers seeking smaller loans, he adds.

Rents Get Less Affordable
As homeownership gets more expensive in 2014, many Americans may choose to rent instead of buy. That could put more pressure on already unaffordable rents.

Although rent growth has somewhat stabilized after a steady rise in 2011, rents are still increasing at a faster pace than overall inflation, according to a recent study by the Joint Center for Housing Studies of Harvard University. One in four renting households spend more than half of their income on rent and about half spend more than 30 percent of their income, according to the study.

Demand for rentals continues to grow, especially for single-family homes, says Wally Charnoff, founder and chief executive officer of RentRange LLC, a rental market data company.

“We are seeing a shift where people seem more comfortable renting single-family homes in suburban neighborhoods instead of apartments,” he says.

Rents aren’t increasing everywhere in the nation, he says. But they are more likely to rise in areas with strong job growth, shows the Harvard study.

More Home Owners Tap Into Equity Again

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A wave of home owners reportedly are borrowing against their home’s equity once again as home prices rise.

“After a home equity credit binge during the housing bubble, banks shut off the tap as home prices plummeted,” the Los Angeles Times reports. “Sobered home owners stopped viewing equity as free money for cars, vacations, and college educations.”

But home equity lines of credit are back on the rise. Bank of America said that its home equity business rose 75 percent last year compared to 2012. In the fourth quarter, BofA reported it issued $1.9 billion in new home equity credit lines, up from $1 billion a year earlier.

The most popular use of equity lines is home improvement, followed by debt consolidation, says Kelly Kockos, Wells Fargo’s senior vice president of home equity. Some borrowers are also using the credit to buy a second home.

Home equity lines of credit are a second mortgage with a type of variable rate that can allow home owners to borrow up to a pre-set amount. For example, a home owner with a $200,000 first mortgage on a $400,000 house could opt to take out a $100,000 line of credit. “If the home owner borrowed the maximum, the mortgage debt would total $300,000 — 75% of what the house would bring in a sale,” The Los Angeles Times explains.

While home equity lines of credit are back on the rise, lenders say they are not as easy to get as they once were. Home owners getting approved tend to have higher credit scores and must show ample savings and equity in their homes, lenders say.

Market Neither Boom Nor Bust

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Southwest Florida experienced an unfamiliar new type of real estate market in 2013: a relatively normal one.

But that doesn’t mean the market’s immune from forces that could push it into either boom or bust.

Those were the conclusions of three real estate authorities who presented their takes on the year Tuesday night at The News-Press Market Watch: Focus on Real Estate.

Speaking before a sold-out crowd of about 900 at Harborside Event Center in downtown Fort Myers, presenter Randy Thibaut of Land Solutions said it’s important to look at what’s actually happening now, not the giddy feelings people have now the recession’s fading.

“There’s a lot of myth, a lot of boom, all kinds of things going on in the market. So I’m going to focus in on the facts,” said Thibaut, who specializes in sales and development of large tracts of land.

Southwest Florida’s real estate market has had “the frat party and the hangover” in the wild swings of the past 14 years, and now it’s moving into a new phase, presenter Denny Grimes of Denny Grimes & Co. and Royal Shell Real Estate told the crowd.

Now, he said, nine years after the boom ended, the area’s real estate market has returned to something approaching normal, and that’s a good thing.

“You generally don’t get that opportunity this soon” after a meteoric rise followed by a violent contraction, Grimes said.

There’s little likelihood the recovery will turn into a bubble of unwarranted speculation, Grimes said. “We would need four years of 20 percent increases to get to peak value. We are nowhere near a bubble.”

The retiring baby boom generation will fuel future growth, he said, because this area is an attractive retirement venue. “We offer water, warmth and way of life.”

Grimes predicted a sustainable real estate industry is on the horizon, saying that “2014 will usher in a rational boom” for at least five years.

But the presenters didn’t sugar coat the problems still lingering from the recession.

Financing, for example, is still hard to get from lenders who were burned by the sharp drop in values that followed the boom, said presenter Stan Stouder, a founding partner of CRE Consultants who handles commercial property sales and leasing.

“Why do they call it funding?” Stouder cracked. “There’s nothing fun about getting a loan today. They want you to guarantee every deal 100 percent.”

The deals that were made in Lee County in 2013 by and large were done without a lender’s help, he said. “Sixty-five percent of the commercial real estate deals had no financing at all.”

Thibaut noted that labor costs are rising because of an acute shortage of skilled tradesmen. Many qualified workers moved away after building slowed to a crawl after the boom ended.

“We’ve got to do something” to lure them back at a faster pace, he said.

But there are limits to the most careful planning and predicting, Thibaut said. “Predicting the future of where our home building industry’s going to go is like predicting where a hurricane’s going to go.”

Act Now to Refinance Your Home Before It’s Too Late

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(Florida) – There has never been a better time to refinance your home. That’s because of a little-known government program called the Home Affordable Refinance Plan (HARP). This allows Americans to refinance their homes at shockingly low rates, and reduce their payments by as much as $4,905 a year.

But here’s the catch – like most government programs, this is likely temporary. But the good news is, once you’re in, you’re in. If the thought of a lower payment, fewer years on your mortgage, and even taking some cash equity out of the deal is appealing, the time to act is right now.

A true middle-class stimulus package

This is unknown to many, but the Home Affordable Program is for the middle class. If your mortgage is $625,000 or less, you most likely qualify. Basically, the Government wants banks to cut your rates, which puts more money in your pocket (which is good for the economy). However, the banks aren’t too happy about this – here’s why:

  1. You can shop several lenders, not just your current mortgage holder
  2. Your home’s Loan-to-value (LTV) can be 80% to 125%

You think banks like the above? Rest assured, they do not. They’d rather keep you at the higher rate you financed at years ago. That’s why the pressure is on time-wise. The Middle Class seems to miss out on everything (did you ride the last stock bubble? Probably not). Thus, it’s almost a no-brainer to jump on this now. You should act fast in order to refinance your house at these near historic low refinance rates. If your mortgage rate is currently higher than 3.11%, you can greatly benefit:

  • The average monthly savings is $250. Can you use an extra $250 a month?
  • Many homeowners not only save every month, but depending on their current rates, they can also shorten their term.
  • Get cash now – because the rates are so low, besides the benefits above, many homeowners also opt to take a little cash equity for home improvements, a vacation, or a nice boost to the savings account.

Here is an example of how much can be saved:

Here’s an example of what can be saved by a rate of 3.25% and 6.75% (which is around what many homeowners have when they got loans years ago):

Refinance Example

So this means over the life of your mortgage, you could save more than $150,000. That’s just by lowering your “already good” rate of 6.75% to an even lower 3.25%.

This is why it’s a no-brainer – you will likely lower your payment, possibly shorten your term, AND also get cash. There’s zero downside. This is how powerful that little word called “interest” is. The middle class never sees “breaks” like this. So this is your chance to get “in”.

But how do you find these rates?

Here’s the trick – there are a few free websites out there that will compare mortgage rates for consumers, and allow them to choose the best one (that’s a great thing about the internet – it allows you to do business with lending institutions all over the country).

Our research found that RateMarketplace, one of the country’s largest and most respected refinance comparison websites, is one of the few companies with HARP lenders on its network, and is currently assisting homeowners like you to obtain further information regarding superb mortgage rates.

We like RateMarketplace, because there’s no obligation and their service is fast & easy. It takes about five minutes, and the service is 100% free. You have nothing to lose except money stress.
But you do have to act now.

Sellers Getting Ahead of Spring Rush

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The spring selling rush may already be under way, as some home owners are already throwing their properties on the market to take advantage of rebounding home prices and improved equity.

Paul Reid, a real estate agent with Redfin in Temecula, Calif., says some sellers are listing properties earlier than usual in anticipation of the spring season.

Sellers are “nervous about what the spring is going to bring,” says Reid. “They don’t know if everybody will list this spring — then you’ll have a big counterbalance toward too much inventory — or if there’ll be a crunch again. They figure they’ll get out ahead of the market, list, sell, and be done with it.”

Inventory shortages persisted last year, when supply was at a 12-year low leading into the spring. The shortages helped boost home prices, but gave home buyers limited choices and sparked bidding wars in many markets. New-home construction is now at a third of its 2006 peak, which likely will keep inventories tight this spring. But, economists say, improved home prices will likely convince more sellers to sell this year, and that should relieve the inventory crunch in many markets.

Builders Ready to Ramp Up Production in 2014

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Builders are expected to increase new-home production in 2014, but the sector continues to grapple with several challenges that could hinder its progress, economists said at the National Association of Home Builders International Builders’ Show this week in Las Vegas.

“Consumers are back, pent-up demand is emerging, there is a growing need for new construction, distressed sales are diminishing, and builders see it,” says David Crowe, NAHB’s chief economist.

However, builders continue to face rising costs for building materials, tight mortgage credit conditions, difficulties in obtaining appraisals that reflect builders’ prices, and limited availability in labor and developed lots, Crowe says.

Borrowing costs will likely inch higher this year since mortgage rates are expected to climb when the Fed begins to taper its $85 billion per month bond-buying stimulus program. Still, “regarding mortgage rates, we’ve gone from dirt cheap to cheap, and I think we will see a gradual rise of about a half a percentage point to 5 percent in 2014,” says Frank Nothaft, Freddie Mac’s chief economist. Even then, he adds, “most markets will remain quite affordable.”

New-home sales are averaging 8.7 percent of total home sales – just barely half the historical average of 16.1 percent, according to NAHB. Crowe projects 1.15 million total housing starts in 2014, up nearly 25 percent from the 2013 total of 928,000 units. Single-family production is expected to increase 32 percent in 2014 to 822,000 units, and then rise an additional 41 percent to 1.16 million units in 2015.

Consumer confidence has returned to pre-recession levels and household budgets are mending. Household formations are on the rise and are averaging 620,000 compared to 500,000 during the housing downturn.  For comparison, during the housing boom, the U.S. was producing 1.4 million additional households each year.

Multifamily starts are projected to be at 333,000 in 2014, up 9 percent from 2013, Crowe says.

Home sales will benefit from pent-up demand in household formation, which was restrained during the Great Recession, says David Berson, senior vice president and chief economist at Nationwide Insurance.

“At least 3 million fewer households formed over the past five years than would normally have been expected,” he said. Many college graduates, for example, moved back in with their parents, which limited new household formation.