Unexpected Results in Home Sales

New home sales slightly up, while pending home sales are slightly down

The annual pace of new home sales increased a bit more than expected in September, rising 5.7 percent from the previous month. At the same time, although economists had forecast a 0.4 percent gain, contracts for pending home sales declined in September by 4.6 percent.

First time buyers are behind the slight rise in new home sales, as evidenced by the proportion of lower-priced, entry-level homes under contract. Bob Nielsen, chairman of the National Association of Home Builders (NAHB), notes “these consumers are very dependent upon federal policies and programs that support homeownership, such as the mortgage interest deduction and low-down payment mortgage options.”

The number of home buyers able to take advantage of historic low mortgage rates and pricing on existing homes is limited by the combination of low consumer confidence, high unemployment and limited access to credit. Nonetheless, although pending home sales declined from the previous month in the largest month-to-month change since April of this year, the National Association of Realtors (NAR) monthly index shows a year-over-year increase of 6.4 percent.

For more details, read these articles:

• Bloomberg.com: Sales of New U.S. Homes Hits Five-Month High
• NAHB: New-Home Sales Rise 5.7 Percent in September
• Business Week: Purchases of New U.S. Homes Increase More Than Forecast and Pending Sales of U.S. Existing Homes Unexpectedly Decrease 4.6%
• Inman: Pending home sales index rises from one year ago

DISTRESSED HOMEOWNERS - CONSIDER CHANGING COURSE

Foreclosure fears foster true grief.

Reports of foreclosures by the millions have been in the news so much over the past few years that to some, it might seem like the new normal. As a real estate professional, in the trenches with financially stressed homeowners every day, it never feels like business-as-usual.

The prospect of losing ones home is a major source of grief, and often, goes hand in hand with other tragic setbacks like; job loss, divorce, death of a loved one, mounting medical bills or skyrocketing mortgage payments.

Unfortunately, the first stage of grief is denial. That’s even more the case when the threat of foreclosure is looming.

No one wants to talk about financial trouble—even when millions of others are in the same position. It’s completely understandable. But for homeowners who are behind on mortgage payments, decisive action is often the most critical step toward ensuring the best possible solution.

As a real estate professional who has earned the Certified Distressed Property Expert (CDPE) designation, I help homeowners everyday deal with the grief and uncertainty that accompanies the prospect of losing a home. In the process, I can help homeowners get on a path toward financial solvency.

If you or someone you care about would like to change the course of a life that’s facing foreclosure, I can help. Please contact me today at 503-371-5209 or www.amymcleod.net.

A LESSON FOR EVERY CLASSROOM

A lesson that should be taught in all schools . . And colleges....

Back in September of 2005, on the first day of school, Martha Cothren, a social studies school teacher at Robinson High School in Little Rock , did something not to be forgotten. On the first day of school, with the permission of the school superintendent, the principal and the building supervisor, she removed all of the desks out of her classroom.

When the first period kids entered the room they discovered that there were no desks.

'Ms. Cothren, where're our desks?'

She replied, 'You can't have a desk until you tell me how you earn the right to sit at a desk.'

They thought, 'Well, maybe it's our grades.'

'No,' she said.

'Maybe it's our behavior.'

She told them, 'No, it's not even your behavior.'

And so, they came and went, the first period, second period, third period. Still no desks in the classroom.

By early afternoon television news crews had started gathering in Ms.Cothren's classroom to report about this crazy teacher who had taken all the desks out of her room.

The final period of the day came and as the puzzled students found seats on the floor of the deskless classroom, Martha Cothren said, 'Throughout the day no one has been able to tell me just what he/she has done to earn the right to sit at the desks that are ordinarily found in this classroom. Now I am going to tell you.'

At this point, Martha Cothren went over to the door of her classroom and opened it.

Twenty-seven (27) U.S. Veterans, all in uniforms, walked into that classroom, each one carrying a school desk. The Vets began placing the school desks in rows, and then they would walk over and stand alongside the wall. By the time the last soldier had set the final desk in place those kids started to understand, perhaps for the first time in their lives, just how the right to sit at those desks had been earned..

Martha said, 'You didn't earn the right to sit at these desks. These heroes did it for you. They placed the desks here for you. Now, it's up to you to sit in them. It is your responsibility to learn, to be good students, to be good citizens. They paid the price so that you could have the freedom to get an education. Don't ever forget it.'

By the way, this is a true story. And this teacher was awarded Teacher of the Year for the state of Arkansas in 2006.

Please consider passing this along so others won't forget that the freedoms we have in this great country were earned by U. S. Veterans.

Senate Votes to Raise Loan Limit

Hoping that higher conforming loan limits will help housing market

Last week, the Senate voted to approve the high-balance conforming loan limit to $729,750 in wealthier neighborhoods, as part of a larger spending bill.

As of October 1, 2011, the largest conforming loan (loans that are eligible to be purchased or guaranteed by Fannie Mae and Freddie Mac) limit returned to $625,500 after several years of a temporary extension to $729,750.

There is a ways to go yet before the higher limit becomes an actuality. The approved measure is attached to a spending bill brought to the Senate by Robert Menendez, D-NJ. If that larger bill is approved by the Senate, it then has to pass through the House of Representatives. The Republicans, who control the House, have decidedly different ideas as to how to stir up the housing market and economy, including eliminating Fannie Mae and Freddie Mac not expanding their eligible loan pool.

In a post in the Wall Street Journal, Edward Mills, an analyst for FBR Capital Markets, is reported as saying that “given the strong bipartisan support in the Senate, the chances of the re-raise are well above 50%.”

Foreclosure Activity Brings Both Good News and Bad

What more foreclosures and longer processing times may mean for the housing market

(map from RealtyTrac.com)

RealtyTrac® reported that foreclosure activity in the third quarter was up slightly (less than 1 percent) from Q2, and down 34 percent from the same period last year. September activity was down 6 percent from August, marking the 12^th month in a row that foreclosure activity has decreased from the previous month.

An Associated Press article (found on NPR.org) notes that “A pickup in foreclosure activity also means a potentially faster turnaround for the U.S. housing market. Experts say a revival isn't likely to occur as long as there remains a glut of potential foreclosures hovering over the market.”

Although foreclosure filings may be on an upward trend, the foreclosure timeline seems only to be lengthening. According to RealtyTrac, foreclosures were completed in an average of 318 days in Q2, while the process took 336 days on average to complete in Q3. New York state’s average for completing a foreclosure was the highest in the country at 986 days. Compare that to Tennessee, where a foreclosure process averages about 94 days from beginning to end.

Take Control of Closing Costs

Expert tips on evaluating and managing the cost of your mortgage

As mortgage rates continue to stay at record lows, the costs of obtaining a mortgage are going up — according to Bankrate’s annual survey of closing costs, the average origination and title fees have jumped 8.8 percent from August 2010 to August of the this year.

Closing fees are not set in stone, and savvy mortgage shoppers can often reduce these costs or spread them out over time to minimize the financial burden.  Remember to be cool as ICE in negotiations, and you might save yourself some money:

ITEMIZE —make sure every single fee is identified and explained. Ask your lender to break down grouped fees line by line and to explain any fees that are unclear.

COMPARE —all lenders are not created equal. Compare loan costs from different lenders, and weigh the loan parameters as well. Low cost and no-cost loans often end up costing a lot more in the long term through higher rates and/or stiffer penalties.

EDUCATE —make sure you understand each fee and which ones have more play. Often “lender’s fees,” which can include loan-origination, administrative costs, wire-transfer, mortgage insurance application fee, among others, are the most negotiable. Third-party fees, fees that are passed through from another service provider to you, are less likely to be negotiable.

All experts agree, one of the best things you can do when applying for a mortgage is to request a Good Faith Estimate (GFE) from at least three different lenders. GFEs are a written estimate produced by lenders estimating all anticipated closing costs. Lenders are required by law to provide as accurate a GFE as possible to the inquiring borrower within three days after receiving a mortgage application.

For more tips on closing costs, visit these resources:

• Zillow.com: Curbing Closing Costs and Understanding Mortgage Fees and Closing Costs
• SayEducate.com: How to Reduce Your Closing Costs
• BankRate.com: Is no-closing-cost mortgage for you?
• Real Estate on MSN.com: 2011 closing costs survey: Which states have the highest, the lowest?

Mortgage Rates Continue To Hover At Record Lows

For qualified buyers, fixed and adjustable mortgages are more attractive than ever

RealtyTimes reported that Freddie Mac’s weekly mortgage survey, the first since the Fed’s Operation Twist announcement last week, found the average rate for conventional 30-year fixed mortgages to be at an all-time low of 4.01 percent.

As Ed Ferrara pointed out in RealtyTimes, these low rates are a reflection of the slow pace of the economic recovery. Nonetheless, this still offers home buyers in the position to buy (and borrow) an expanded opportunity to take advantage of the rare double whammy combination of low rates and low home prices.

FHA mortgage rates, which are ideal for borrowers whose credit is not the best, remain slightly higher than conforming mortgage rates. Given the easier credit qualifying, along with more inclusive policies regarding using approved gifts, housing grants and bonds for the transaction, these mortgages have been on the rise.

HSH.com’sweekly Mortgage Rate Radar puts the average rate for 30-year fixed-rate mortgages at 4.13 percent. Keith Gumbinger, HSH.com’s vice president, noted that while the lower rates may help spur some additional economic growth,

“if the programs are successful, the economy will begin to grow more strongly, and that would tend to firm up interest rates over time. As such, the lowest mortgage rates as a result of the Fed program are likely to come sooner than later.”

The low rates seem to be spurring increased refinancing activity, but not yet having the hoped-for impact on purchase loans. Inman News reports that the Mortgage Bankers Association’s weekly survey shows refinancing requests up 11.2 percent from the week ending September 16^th to the following week. Demand for new purchase loans rose 2.6 percent from the previous week, to reach about the same level as the same time last year.