Housing Market At A Glance

3 Infographics With Interesting Information

 

1. How to Sink or Swim in the Housing Market

(infographic from Allmand Law)

 

2. Housing Market Year-Over-Year

(Infographic from Keeping Current Matters)

 

3. The Economic Impact of the Housing Market

(infographic from BipartisanPolicy.org)

Chipping Away At Mortgage Debt

Total National Mortgage Debt Drops

 

According to a news release from the Federal Reserve, the national outstanding mortgage debt has dropped nearly $1 trillion dollars since 2008 — the total debt on one-to-four family residences now stands at $10.178 trillion, down from $11.075 trillion in 2008.

 

Peter Miller, editor of the HSH blog, considers dropping home prices, record low mortgage rates, refinancing and loan modifications to significant contributing factors.

• Lower home prices mean smaller mortgages. As home prices fall, new loans are simply smaller for the same property than they would have been when the housing market was booming — the Fed estimates that from 2005 to the first quarter of this year, the housing market has lost more than $5.5 trillion, or about 25% of its total value.
• Lower mortgage rates mean less debt.Low mortgage rates mean less debt for a loan and smaller monthly payments.
• Refinanced mortgages mean less debt. Refinancing has lowered homeowners’ current debt and monthly payments — Wells Fargo recently announced that between March and June of this year, it had helped more than 8,500 customers refinance their loans, saving the borrowers an average of $4,560 annually in interest payments.
• Modified loans mean less debt. Loan modifications have also lowered the debt for borrowers struggling with their loan — according to the Fed, more than one million borrowers have been helped by the Making Home Affordable Program, reducing their monthly mortgage payments by an average of $536.

 

Miller summed up the positive ramifications of national debt reduction quite simply:

1. Homeowners spending less on their home loan will spend more in the marketplace
2. As debt decreases, so does risk — meaning lenders may ease their credit constraints

Stricter Appraisals on Risky Mortgages

Proposed regulation would apply to “high-risk” mortgages only

Last week, federal regulators proposed rules that would require an actual physical inspection of the property before an appraisal could be submitted. This would prevent appraisals made on the fly purely on a cursory inspection of the home’s exterior and coming in too high.

Regulators ready to crack down on fraudulent home flipping

Although recent consumer consensus seems to be that appraisals are coming in too low and impeding home sales, the new regulation is aimed primarily at preventing fraudulent home flipping. By making higher-rate (“high-risk”) mortgages subject to an additional appraisal, regulators hope to minimize home-flipping cases where the appraisal of the property after improvements is too high and allows the flipper to sell at an unfounded price.

High-risk mortgage defined as 1.5 percentage points or more above average

The proposed regulations would apply only to loans where the interest rate is at least one and half percentage points more than the market average. While the regulations seem restrictive, they in fact apply only to a very small portion of the mortgage market. In 2010, loans meeting this criteria comprised just 3.2% of the mortgages written.

From The Wall Street Journal: Developments and CBS Money Watch.

Momentum Slows as Pending Home Sales Drop

Pending home sales down 1.4%

Month over month, contracts to purchase existing homes declined 1.4%, the second month-over-month drop in three months. The year-over-year trend, however, is in its fourteenth month of consecutive gains — demonstrated by the 80 metropolitan areas that made this month’s “Improving Markets Index,” which is compiled by the National Association of Homebuilders and First American.

Limited listings may be behind the decline

The chief economist of the National Association of Realtors (NAR), Lawrence Yun, commented that “buyer interest remains strong but fewer home listings mean fewer contract signing opportunities.” Single-family homes on the market in June went down 3% from their levels in May and a whopping 24% from June of last year, the biggest year-over-year decrease in more than 30 years. Slow processing of distressed properties along with homeowners unwilling to sell their home when the current value is so much less than what they paid are the primary causes.

Supply and demand pressures helping stabilize the market

As inventories go down, the low home prices and record-breaking low mortgage rates continue to drive demand, which means that many listings — those priced appropriately for the current market condition — are receiving multiple offers, allowing sellers more choice picking a buyer and the terms of the sale.

Via Realty Times and Greenwich Post and NAHB.