Mortgage Rates Dip Down

by MD Home Reporter on November 29, 2010

RISMEDIA, November 29, 2010—Mortgage rates retreated this week, following two consecutive weeks climbing higher. The average conforming 30-year fixed mortgage rate decreased to 4.58%, according to Bankrate.com. The average 30-year fixed mortgage has an average of 0.40 discount and origination points.

To see mortgage rates in your area, go to http://www.bankrate.com/funnel/mortgages/.

The average 15-year fixed mortgage decreased to 3.97%, and the larger jumbo 30-year fixed rate dipped as well to 5.18%. Adjustable rate mortgages dropped as well, with the average 5-year ARM at 3.66% and the average 7-year ARM falling to 3.97%.

The last time mortgage rates were above 6% was Nov. 2008. At that time, the average rate was 6.33%, meaning a $200,000 loan would have carried a monthly payment of $1,241.86. With the average rate now 4.58%, the monthly payment for the same size loan would be $1,022.90, a savings of $219 per month for a homeowner refinancing now.

Survey Results
30-year fixed: 4.58% – down from 4.62% last week
15-year fixed: 3.97% – down from 4.02% last week
5/1 ARM: 3.66% – down from 3.71% last week

Bankrate’s national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

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FTC outlaws upfront payments for mortgage modification

by MD Home Reporter on November 26, 2010

From the Washington Post today we have this…

You’ve probably seen the pitches on TV and the Internet or found them stuffed in your mailbox: official-looking communications complete with logos and letterheads that look vaguely like those used by the Treasury, Internal Revenue Service and other federal agencies.

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Rates continue to rise from record-low levels

by MD Home Reporter on November 26, 2010

From the Washington Post today we have this…

Rates on fixed mortgages edged up this week, inching further from the lowest level in decades.

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RISMEDIA, November 24, 2010—Annual single-family housing production in 2008 and 2009 fell about one million units short of the housing that would be needed in a normally functioning economy, suggesting that builders will have a lot of catching up to do as the economy improves and household formations return to trend levels, according to a special study by economists at the National Association of Home Builders.

The report, “Extent of Underbuilding in the Single-Family Housing Market,” finds that there was an excessive amount of single-family building from 2003 through 2005, but overbuilding largely ended by 2006 and the subsequent downturn was severe enough to more than offset those annual surpluses. This year is likely to add to the growing deficit of single-family homes by another one million units, the report finds.

“The single-family housing market in the U.S. currently finds itself in a significantly underbuilt state,” said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. “Pent-up demand for housing will at some point need to be worked off, pushing single-family production in a positive direction. In the meantime, the deficit continues to grow as builders remain cut off from the credit they need to begin developing and building new housing.”

The analysis compares levels of single-family permits in recent years with the long-term trend that would be seen if housing, labor and credit markets were functioning normally and generating a normal rate of household formations.

Permits were used instead of housing starts because they are based on a much larger sample and provide more geographic detail, which enabled the study to be extended to the state level. (A building or zoning permit represents housing units that are authorized to be built. According to the Census Bureau, all but a small percentage of permits become starts. A start is when ground is first broken for the foundation of the building).

Single-family permits plunged to a trough of 441,000 in 2009, their lowest level since World War II. The previous post-war low occurred in 1981, when 550,000 single-family permits were recorded. Adding to the magnitude of the recent downturn, multifamily starts and permits last year fell below 150,000 units, an historic low, compared to about 400,000 units annually during the early 1980s.

“Moreover, the population and stock of housing in the U.S. have continued to expand,” the report says. “In 1980, there were roughly 226 million people and 88 million housing units in the country. By 2009, these numbers had increased to 307 million people and 130 million housing units, so in that year the U.S. added a record low number of new housing units to a population and housing base that was larger than it had ever been before.”

From 1988 through 2003, the U.S. population was growing at a fairly steady average annual rate of 1.15% and varied only between 0.90% and 1.35%. During the recession, household formations slowed markedly below this pace, delaying two million household formations. The deficit in new single-family homes can continue as long as household formations remain depressed.

Over the 1988-2003 period—which goes right up to the housing boom years of 2004 and 2005 and can be considered a fairly normal one for housing—the number of single-family permits issued was increasing at an average of about 36,000 per year, consistent with a growing population that needs housing and an expanding inventory of older homes that need to be replaced.

Projecting that trend past 2003, single-family permits should have hit 1.4 million by 2005, 1.5 million by 2008 and around 1.56 million in 2009, the report finds. Instead, permits were well over 1.4 million in 2003 and pushed past 1.6 million in both 2004 and 2005, “a period of serious overbuilding.”

Subsequently, however, permits dropped to under 1.4 million by 2006—already slightly below trend—and continued to fall through last year.

Single-family surpluses occurred from 2002 to 2006 and they were well over 200,000 annually in 2004 and 2005. Deficits, which began to materialize after 2005, reached about a half a million units in 2007 and one million every year since then as single-family permits dropped below 500,000—more than a million units per year below trend.

Accumulating annual surpluses peaked at 493,000 single-family units in 2005, and that was worked off entirely by the end of 2007. Depressed levels of single-family housing production resulted in a cumulative deficit of 2.17 million units by 2009 and will likely grow to 3.28 million by the end of this year.

The study also found that there are now single-family housing deficits in most of the states. This includes the states that had the hottest markets during the boom: Arizona, with a deficit of 144,500; California, 49,500; Florida, 112,600; and Nevada, 75,600.

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New Roofing Options Allow Homeowners to Cut Energy Bills

by MD Home Reporter on November 23, 2010

RISMEDIA, November 23, 2010—(MCT)—When Scott Harris and Sarah Jack did a major renovation of their 1925 Teaneck, N.J., colonial in the summer of 2009, they kept the environment in mind—for example, choosing kitchen counters made of cement and recycled glass. They thought about solar roof panels, but rejected that idea when they were told they’d have to chop down a towering tree that shades their back yard and house. Instead, they installed a green, or living, roof. The greenery absorbs and filters rainwater, as well as adding insulation, which cuts heating and cooling costs.

For most homeowners, the biggest environmental impact of a roof is simply that it keeps the environment out. But there are innovations that aim to make the roof over your head an important tool in the effort to save energy and reverse global warming. And we’re not just talking about solar panels. There are cool roofs that reflect, instead of absorb, the sun’s rays; roofs made with recycled material; and green or “living” roofs, like the one on the Harris-Jack house.

While the number of energy-saving options is growing fast, these roofs tend to be significantly more expensive than the traditional asphalt shingle roof. As a result, homeowners have been slow to adopt them.

But Harris, a graphic designer, and Jack, a publishing executive, made the leap—choosing a green roof partly for energy savings, and partly for aesthetics. “We wanted to do something to see if we could save on energy bills,” said Harris. “But it’s nice just to look out at it. Now when people come to visit, we have to bring them upstairs to look at the roof.”

Their green installation, on a flat section of roof at the rear of their house, consists of shallow trays holding a light, rocky soil and a mix of sedums, a drought-resistant, low-maintenance plant.

It was the first residential roof installed by Rob Schucker of R&S Landscaping in Midland Park, N.J., who also created a rooftop garden at Hackensack University Medical Center. He got interested in green roofs several years ago. “I was flying out of Newark, and I looked down and just saw this sea of black asphalt roofs,” Schucker said. “It just struck me: ‘Wow, we’ve really impacted this New York-New Jersey area. What would it look like if these black surfaces were all green?’”

The cost of green roofs ranges from $15-$35 a square foot—significantly more than a simple asphalt roof. The roofs require a structure strong enough to hold the plants and soil, even when the soil is saturated after a rainstorm. And some homeowners worry that if such a roof develops a leak, it would be more difficult to fix—though using trays lessens that concern.

But green roofs tend to last much longer, because the vegetation protects the roof structure from drastic changes in temperature, according to Jennifer Souder, a research manager at the Center for Green Building at Rutgers University. “They can be a hard sell, because this is money you have to pay now,” she said. “But over the long period, they can be cost-effective.”

Green roofs can also help the environment by reducing storm water runoff, which washes pollutants into the state’s waterways. And they can dramatically reduce the so-called urban heat island effect—the tendency of built-up, paved areas to be hotter than rural, natural areas. Souder said a test on roofs in Queens found that on a hot day, the air above a black roof registered 170 degrees; above a white roof, 115 degrees; and above a green roof, 85 degrees.

Though green roofs are still unusual, the industry grew 16% in 2009, according to the organization Green Roofs for Healthy Cities. They’ve been used on a number of public buildings, including Chicago City Hall.

Environmental concerns are also giving a boost to metal roofs, which make up an estimated 11% of the residential re-roofing market, up from about 4% a decade ago, according to the Metal Roofing Alliance, a trade group.

Metal roofs cost two to three times what an asphalt shingle roof costs, according to the alliance. But the group points out that metal roofs are lighter than asphalt shingles, and last decades longer.

They typically include at least 28% recycled material, and can be recycled at the end of their useful lives. In addition, the roofs can be coated or painted to reflect sunlight, which reduces the home’s air conditioning costs. Some are Energy Star-rated, which entitles homeowners to a federal tax credit of up to $1,500 (which expires at the end of the year).

Bob LeSauvage had a very simple reason for choosing a metal roof on his Mahwah, N.J., home: “I’ll never have to think about doing a roof again—and the next guy who owns the house probably won’t, either,” he said. The steel roof LeSauvage had installed on his 1930s-vintage home last summer has a 50-year warranty.

So far, he’s very happy with it. There’s a layer of insulation between the wood and the metal, which muffles the sound of rain—though he said the acorns falling from a nearby tree do seem to make more noise than they did on the old roof.

Metal is not the only material that is recycled for roofs; roofs can be made out of recycled rubber and plastic, including old tires, carpet and bottles, and made to look like slate or wood shakes.

Even asphalt shingles, the workhorse of the roofing world, are getting an energy-saving twist. Asphalt roofs are the lowest-cost option, typically running $80-$100 per “square”—a roofing industry measure that’s equal to 100 square feet. That comes to about $1,000-$1,200 for a 1,200-square-foot roof on a Cape Cod (not including installation charges). Larger houses, of course, cost more.

Because the asphalt shingles are affordable, they cover eight of every 10 homes in the U.S., according to the Asphalt Roofing Manufacturers Association.

But there are some new developments here, too—notably energy-saving “cool” roofs, which incorporate reflective granules to reduce the heat that comes into the attic.

GAF Materials Corp. of Wayne, N.J., one of the nation’s largest manufacturers of roofing materials, estimates that such roofs can cut homeowners’ cooling costs by 7-15%.

Cost, however, is an issue. The cool shingles cost at least 40% more than regular shingles, according to Tim Williams, director of marketing at East Rutherford, N.J.-based Allied Building Products. Many homeowners like the idea of saving energy, but are reluctant to spend the extra money, he said.

Dean Logan, president of Complete Roof Systems in Dumont, N.J., said the reflective shingles don’t offer much benefit, especially considering their cost. He said homeowners who want to save energy would be better off spending money on insulation under the roof.

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RISMEDIA, November 22, 2010—Housing affordability remained near its highest level nationwide for the seventh consecutive quarter as interest rates dipped below 5% for the first time since the series was first compiled nearly two decades ago, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI).

The HOI indicated that 72.1% of all new and existing homes sold in the third quarter of 2010 were affordable to families earning the national median income of $64,400. The index for the third quarter almost equaled the record-high 72.5% set during the first quarter of 2009 and marked the seventh consecutive quarter that the index rose above 70%. Until 2009, the HOI rarely topped 65% and never reached 70%.

“With interest rates remaining at historically low levels, and house prices starting to stabilize, homeownership is within reach of more households than it has been for almost 20 years,” said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. “While these favorable conditions are beginning to draw home buyers back into the market, builders continue to have major problems in obtaining credit for new-home construction, and this obstacle must be overcome if builders are to respond to improving demand moving forward.”

Indianapolis-Carmel, Ind., was the most affordable major housing market in the country, regaining the top ranking it held for nearly five years after being edged out by Syracuse, N.Y., last quarter. In Indianapolis, 93.3% of all homes sold were affordable to households earning the area’s median family income of $68,700.

Also near the top of the list of the most affordable major metro housing markets were Youngstown-Warren-Boardman, Ohio-Pa.; Grand Rapids-Wyoming, Mich.; and Dayton, Ohio, and Wichita, Kan.

Among smaller housing markets, the most affordable was Kokomo, Ind., where 96.1% of homes sold during the third quarter of 2010 were affordable to families earning a median-income of $61,400. Other smaller housing markets near the top of the index included Mansfield, Ohio; Lima, Ohio; Monroe, Mich.; and Bay City, Mich., respectively.

New York-White Plains-Wayne, N.Y.-N.J., continued to lead the nation as the least affordable major housing market during the third quarter of 2010. In New York, 22.6% of all homes sold during the quarter were affordable to those earning the area’s median income of $65,600. This was the 10th consecutive quarter that the New York metropolitan division has occupied this position.

The other major metro areas near the bottom of the affordability scale included San Francisco; Bridgeport-Stamford-Norwalk, Conn.; Los Angeles-Long Beach-Glendale, Calif.; and Santa Ana-Anaheim-Irvine, Calif., respectively.

Santa Cruz-Watsonville, Calif. was the least affordable of the smaller metro housing markets in the country during the third quarter. Other small metro areas ranking near the bottom included San Luis Obispo-Paso Robles, Calif.; Santa Barbara-Santa Maria-Goleta, Calif.; Ocean City, N.J; and Napa, Calif.

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Delinquency Rate for Mortgages Decrease

by MD Home Reporter on November 22, 2010

RISMEDIA, November 22, 2010—(MCT)—A larger share of homes entered the foreclosure process in the third quarter, though the delinquency rate for mortgages dropped, the Mortgage Bankers Association recently reported.

Mortgages at least one payment past due or in foreclosures fell to 13.78% of all mortgages outstanding in the third quarter, down from 13.97% in the second quarter and from 14.41% a year ago, on a non-seasonally adjusted basis, according to the Washington-based group’s latest delinquency survey.

But foreclosure starts hit 1.34%, up from 1.11% the previous quarter and down from 1.42% a year ago. And the percentage of prime, fixed-rate mortgages entering the foreclosure process hit a record high, the group’s data showed.

The decline in delinquencies is a positive for the housing market, yet it reflects in large part the “natural progression” of mortgages into the foreclosure process, said Michael Fratantoni, the Mortgage Bankers Association vice president of research and economics.

The delinquency rate is also driven by employment, and modest improvement in the U.S. job market over time will cause slow and gradual improvement in the delinquency numbers, he said.

The delinquency survey covers 44 million mortgages on one- to four-unit residential properties, representing 88% of all first-lien mortgages outstanding in the country.

“Mortgage delinquency rates declined over the quarter and over the past year, due primarily to a large decline in the 90-plus day delinquency rate,” Fratantoni said in a news release.

“The number of loans in foreclosure also dropped, bringing the serious delinquency rate to its lowest level since the second quarter of 2009. However, the foreclosure starts rate increased for all loan types and the foreclosure starts rate for prime fixed loans set a record high in the survey, as more loans entered the foreclosure process,” Fratantoni said.

Foreclosure inventory fell to 4.39% in the third quarter, down from 4.57% in the second quarter and from 4.47% in the third quarter of 2009.

And the delinquency rate—loans that are at least one payment past due but not in foreclosure—was 9.13% of all loans outstanding on a seasonally adjusted basis, less than the 9.85% rate in the second quarter and the 9.64% rate in the third quarter of 2009. On a non-seasonally adjusted basis, the rate was 9.39%, off from the second quarter’s 9.40%.

The mortgage industry’s paperwork issue that caused some foreclosures to be stalled likely didn’t affect the figures compiled for the third quarter, but it will affect the foreclosure inventory rate in the fourth quarter and early next year, Fratantoni said.

“We think there is going to be upward pressure on the foreclosure inventory rate because of the pause that occurred in October and is still occurring for some servicers today,” he said on a conference call with reporters.

“The foreclosure inventory rate captures loans from the point of the foreclosure referral to exit from the foreclosure process, either through a cure (perhaps through a modification), a short sale or deed in lieu, or through a foreclosure sale.

“The servicers that halted foreclosure sales temporarily may show higher foreclosure inventory numbers in the fourth quarter of 2010 and in early next year than would otherwise have been the case,” Fratantoni said in the release.

“Any drop in foreclosure sales over the next few quarters may actually reduce the inventory of homes on the market, which is still quite swollen, with almost four million properties currently listed. However, these foreclosed homes are likely to come on the market in the medium term, so it is only a delay rather than a change in the underlying economics,” he said.

Also during the call, Fratantoni said that he expects sales of existing homes to be around 4.8 million in 2011—roughly the number of homes sold in 2010. While the sales won’t be fast enough to bring down the overhang of supply on the U.S. market, he expects that next year will see home prices stabilizing.

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Maryland mortgage delinquencies post first drop since 2006

by MD Home Reporter on November 18, 2010

From the Baltimore Sun today we have this…

Bankers group warns against expecting big improvement soon

The number of Maryland homeowners behind on their mortgage payments dropped during the summer in the first year-over-year improvement since 2006, before the foreclosure crisis hit.

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Price reductions hit recent record in Baltimore in Nov.

by MD Home Reporter on November 17, 2010

From the Baltimore Sun today we have this…

Nearly 40 percent of Baltimore homes listed for sale have had at least one price reduction, compared with 27 percent nationally, according to real estate site Trulia.

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ISMEDIA, November 15, 2010—Fully half of the metropolitan areas tracked in the third quarter of 2010 continued to show modest home price increases from a year ago, despite a sharp decline in home sales after the deadline for the home buyer tax credit, according to the latest survey by the National Association of Realtors. In the third quarter, 77 out of 155 metropolitan statistical areas (MSAs) had higher median existing single-family home prices in comparison with the third quarter of 2009, including 11 with double-digit increases; two were unchanged and 76 metros showed price declines. In the third quarter of 2009, only 30 MSAs experienced annual price gains.

The national median existing single-family price was little changed at $177,900 in the third quarter, down 0.2% from $178,200 in the third quarter of 2009. The median is where half sold for more and half sold for less. Distressed homes, typically sold at discount, accounted for 34% of third quarter sales, up from 30% a year ago.

Lawrence Yun, NAR chief economist, said relatively flat home prices have been the hallmark of the 2010 housing market. “Even with swings in home sales, prices this year have been changing very little from year-ago readings. Areas with some larger swings in home price reflect the degree of distressed sales in those markets,” he said.

“Home sales through the first three quarters of this year are virtually the same as year-to-date sales at this time last year, and therefore broadly support home values. However, there are large local market differences with prices rising in job-creating regions like the Washington, D.C. area, the Dakotas and Texas; and also in markets recovering from over-correction such as California coastal cities,” Yun said.

As expected, total state existing-home sales, including single-family and condo, fell 25.3% to a seasonally adjusted annual rate of 4.16 million in the third quarter from a surge of 5.57 million in the second quarter driven by the home buyer tax credit; they were 21.2% below the 5.28 million-unit pace in the third quarter of 2009. Year-to-date, there were 3.79 million existing-home sales, essentially unchanged from 3.77 million at this point in 2009.

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said the outstanding factor in the current market is housing affordability. “The great news for home buyers in today’s market is historically low mortgage interest rates and affordable home prices in much of the country, along with a great selection of properties,” he said.

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was a record low 4.45% in the third quarter, down from 4.91% in the second quarter; it was 5.16% in the third quarter of 2009.

“Given the relationship between mortgage interest rates, home prices and median family income, the buying power in today’s market is matching the highest levels we’ve seen dating all the way back to 1970. Although credit is still tight, a Realtor can guide you toward responsible, sustainable homeownership in today’s market by helping you find both the right home and a mortgage that meets your needs,” Phipps said.

Yun added that there are additional indicators for home price stabilization. “A recent surge in commodity prices, along with the fact that the cost of constructing a new home exceeds the value of existing homes in many markets, bode well for continuing home price stabilization,” he said.

In the condo sector, metro area condominium and cooperative prices—covering changes in 56 metro areas—showed the national median existing-condo price was $171,400 in the third quarter, down 3.9% from the third quarter of 2009. Twenty-nine metros showed increases in the median condo price from a year ago and 27 areas had declines; only four metros saw annual price gains in the third quarter of 2009.

Regionally, the median existing single-family home price in the Northeast rose 2.5% to $253,400 in the third quarter from a year earlier. Existing-home sales in the Northeast fell 27.3% in the third quarter to a pace of 693,000 and are 24.4% below the third quarter of 2009. Year-to-date sales in the Northeast totaled 638,000, essentially unchanged from 637,000 at this time last year.

In the Midwest, the median existing single-family home price declined 3.0% to $145,600 in the third quarter from the third quarter of 2009. Existing-home sales in the Midwest dropped 33.7% in the third quarter to a level of 860,000 and are 28.9% below a year ago. Year-to-date there were 849,000 sales in the Midwest, compared with 860,000 in 2009.

In the South, the median existing single-family home price slipped 1.9% to $157,000 in the third quarter from the same period in 2009. Existing-home sales in the region fell 21.8% in the third quarter to an annual rate of 1.64 million and are 16.4% below the third quarter of last year. There were 1.43 million sales year-to-date in the South, in contrast with 1.39 million last year.

The median existing single-family home price in the West dipped 0.4% to $224,800 in the third quarter from a year ago. Existing-home sales in the West fell 20.7% in the third quarter to a pace of 973,000 and are 18.2% below the third quarter of 2009. Year-to-date sales in the West totaled 876,000, vs. 889,000 in 2009.

For more information, visit www.realtor.org.

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