Archive for August 2013

July Pending Home Sales in Steepest Drop So Far This Year

August 31, 2013

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Just imagine what will happen when the government stops pouring billions of dollars into the housing market.  Please read the article below and let me know what you think.

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Responding to higher mortgage rates and higher prices, the National Association of Realtors’ (NAR) Pending Home Sales Index (PHSI) slipped 1.3 percent in July—the steepest decline this year—to 109.5, the group reported Wednesday. Economists had expected the index for July would drop to 109.8, which would have been a 1.0 percent decline from June’s 110.9. The June index was unchanged.

The index covered the same month in which new home sales, reported last week by the Census Bureau and HUD, plunged 13.4 percent to a seasonally adjusted sales pace of 394,000, the lowest rate of the year. Like the PHSI, new home sales are tracked when buyers sign contracts. The existing-home sales report, also a product of NAR, is based on closed transactions.

Although the group downplays monthly price changes when it reports closings, NAR economist Lawrence Yun cited higher prices as affecting new contracts.

“Higher mortgage interest rates and rising home prices are impacting monthly contract activity in the high-cost regions of the Northeast and the West,” Yun offered as an explanation for the drop in the PHSI.

The Case-Shiller Home Price Indices for June, reported Tuesday, rose 2.2 percent to their highest levels in almost five years.

Increasing rates and prices, though, could also serve as a catalyst for contracts and sales as buyers rush to lock in prices or rates before they go higher.

The drop in the July PHSI was the second monthly decline, the first time the index has fallen for two straight months since last November and December. At 109.5, the index is at its lowest level since April.

To see the complete article – please use the link below.

Home Sales in Steepest Drop

Rising Rates Prompt Cash Buyers to Act

August 31, 2013

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This is a somewhat surprising percentage of sales that where all cash.  Please read the article below and let me know what you think.

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While higher mortgage rates have been blamed for the slowdown in pending home sales, they may be contributing to an increase in cash purchases, RealtyTrac suggested in a recent report.

In July, about 40 percent of residential property sales were all-cash transactions. The share presents an increase from 35 percent in June and 31 percent compared to July 2012.

Dallas experienced the biggest monthly increase in cash sales, at 82 percent, followed by St. Louis (+66 percent), Los Angeles (+32 percent), Riverside-San Bernardino in Southern California (+26 percent), Seattle (+21 percent), and Phoenix (+21 percent).

Daren Blomquist, VP at RealtyTrac, explained rising rates could be leading to a higher percentage of cash purchases, while “some non-cash buyers can no longer afford to buy, particularly in high-priced markets.”

Short sales also accounted for a bigger share of sales in July, increasing to 14 percent, up from 13 percent in the prior month and 9 percent from a year ago. Meanwhile, institutional investor purchases and sales for bank-owned properties fell flat, at 9 percent for each type of sale, unchanged from June and July 2012.

Overall, RealtyTrac reported an increase in July sales, with sales volume rising 4 percent from June and 11 percent compared to a year ago.

Despite the national gain, sales were still down year-over-year in eight states—California (-17 percent), Alabama (-14 percent), Arizona (-11 percent), Nevada (-7 percent), Georgia (-2 percent), New York (-2 percent), Hawaii (-1 percent), and Oregon (-1 percent).

To see the complete article – please use the link below.

Cash Buyers

Agencies Propose Revised QRM Rule

August 30, 2013

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Even the SEC commissioners are split over this revision being a good idea. Please read the article below and let me know what you think.

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UPDATED to include dissenting comments from SEC commissioners Daniel Gallagher and Michael Piwowar.

Six federal agencies have issued a notice revising their proposed qualified residential mortgage (QRM) rule that would require lenders to retain risk when selling mortgage-backed securities (MBS).

The FDIC, HUD, Federal Housing Finance Agency (FHFA), Office of the Comptroller of the Currency, Federal Reserve, and Securities and Exchange Commission (SEC) jointly released on Wednesday their proposed revision, which was created in consideration of the industry’s response to the original proposal issued in 2011.

That proposal required lenders to keep a stake in the loans they sold in which borrowers were spending more than 36 percent of their income on payments and in loans with down payments of less than 20 percent. At the time, critics argued it would create an even more restrictive lending environment.

Under the new proposal, the 36 percent income threshold has been raised to 43 percent, relaxing the exemption standards somewhat. The revised rule also eliminates the down payment requirement, opening up lending for low-income borrowers.

The agencies also made adjustments to bring the QRM proposal more in line with the “qualified mortgage” (QM) rule handed down by the Consumer Financial Protection Bureau (CFPB) earlier in the year. The alignment opens up the scope of QRM eligibility, which was originally “limited to closed-end, first-lien mortgages used to purchase or refinance a one-to-four family property, at least one unit of which is the principal dwelling of the borrower.”

“[T]he agencies seek to ensure that relevant definitions in the proposed rule and in the CFPB’s rules on and related to QM are harmonized to reduce compliance burden and complexity, and the potential for conflicting definitions and interpretations where the proposed rule and the QM standard intersect,” the 500-page document reads.

To see the complete article – please use the link below.

Revised QRM Rule

Home Sales Stage a Comeback in July

August 30, 2013

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This is nothing to get excited about. It is just normal increases and decreases in the home market. Please read the article below and let me know what you think.

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After observing a slowdown in sales throughout June—typically the peak selling month for the year—online brokerage Redfin reported a rebound in July, though other market indicators continue to cool.

According to Redfin’s data, “this July saw a healthy jump in homes sold throughout most of the 19 markets covered in this report,” improving 3 percent month-over-month and 17.6 percent year-over-year from a rather disappointing July 2012.

In fact, according to the Seattle-based brokerage, July 2013 saw the highest number of homes sold in the past four years, with the 19 markets together seeing about 94,000 sales.

“July’s numbers are probably the result of buyers shaking off the impact of mortgage interest rate increases, and opting to lock in rates before they rise further,” explained analyst Tommy Unger. “Chicago led the nation with nearly 12,000 homes sold, up a strong 5.7 percent in July, and 36.9 percent year over year.”

While sales numbers picked up, Redfin believes the gains won’t last.

“With less inventory, higher interest rates and continued buyer fatigue, August won’t see the same 7 percent month-over-month sales increase as in 2011 and 2012,” Unger said. “In fact, based on current closed and pending sales, we expect a slight month-over-month drop in home sales for next month.”

At the same time, reports on home price growth and inventory were less positive in July.

To see the complete article – please use the link below.

Home Sales

Report: Mortgage Industry Nets Nearly 3K Jobs Losses in Q2

August 29, 2013

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This seems to be just the normal ebb and flow of the mortgage industry. Please read the article below and let me know what you think.

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As mortgage rates climb and the refinance boom comes to a close, the origination sector is in flux.

As declining refinance volumes hurt the market for loan officers, decreasing delinquencies are also prompting the need to cut back on mortgage jobs.

According to Mortgage Daily’s Mortgage Employment Index, the number of mortgage layoffs surpassed the number of newly added jobs by nearly 3,000 in the second quarter.

From April to June of this year, the mortgage industry experienced 9,950 job losses, while newly filled positions totaled 6,969, leading to a net 2,981 layoffs. The near 10,000 job cuts in the second quarter represents the biggest total since the first quarter of 2009.

The second quarter statistics are a significant letdown when compared to the first quarter of this year, when mortgage companies added a net 5,129 jobs, with layoffs at just 2,930, Mortgage Daily reported.

With a net 1,509 mortgage layoffs, California experienced the most drastic decline, according to the index. New York followed after netting 1,280 job losses, with South Carolina (-515 jobs), New Jersey (-435 jobs), and Texas (-354 jobs) also in the top five.

Florida, a state known for its high foreclosure rate, came out with the highest number of new jobs, with a net 574 new hires.

Arizona had the second highest number of net jobs added, at 300, followed by Missouri (+242 jobs), Indiana (+162 jobs), and Illinois (+159 jobs).

When comparing servicers, Mortgage Daily reported Bank of America suffered the highest number of job cuts in the second quarter, at 5,000. JPMorgan Chase ranked second, with a net 1,826 layoffs.

To see the complete article – please use the link below.

Report: Mortgage Industry

Exec Advises Laid-Off Loan Officers to Look to Specialty Servicing

August 29, 2013

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This seems to be very good advice for any loan officers who have lost their jobs. Please read the article below and let me know what you think.

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As mortgage rates climb and the refinance boom comes to a close, the origination sector is in flux.

Last week, mortgage applications declined 8 percent, according to the Mortgage Bankers Association’s Weekly Mortgage Application Survey, while the average interest rate for a fixed-rate, 30-year mortgage rose from 4.56 percent to 4.68 percent.

Also evidence of declining refinance volumes, Ellie Mae reported last month that purchase originations outpaced refinances for the first time since Ellie Mae began recording origination data about two years ago.

With declining volumes, the industry cannot support the number of loan officers it has had on staff of late, and many originations shops are shedding employees. Wells Fargo, for example, is reportedly cutting 2,300 production jobs.

However, this glum news may have a silver lining, according to at least one industry executive.

“There’s a huge opportunity for former loan originators taking their existing skill set and industry knowledge and applying them in specialty servicing,” Patrick Norton, SVP of Fay Servicing, based in Chicago, told DS News.

“There’s enormous opportunity, and I don’t think it’s going to fade away in the near future,” Norton said.

To see the complete article – please use the link below.

Laid-Off Loan Officers

NAR Projects Slight Increase for Apartment Vacancies; Rents to Rise

August 28, 2013

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This is good news for the Real Estate industry. As rent rates rise more and more people will determine that buying a home makes a lot more sense that renting. This will increase sales prospects. Please read the article below and let me know what you think.

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Vacancy rates in commercial real estate (CRE) markets are projected to continue declining at a moderate pace as rent grows modestly, according to the latest quarterly forecast from the National Association of Realtors (NAR).

Nationally, NAR forecasts slight drops in vacancy rates across the office, retail, and industrial markets over the next year. Multifamily vacancies are expected to edge up very slightly, on the other hand.

In the office sector, vacancy rates are anticipated to decline from a projected 15.7 percent in Q3 2013 to 15.5 percent in Q3 2014. At the same time, office rents should increase 2.5 percent over 2013 and 2.8 percent in 2014,NAR said. Net absorption of office space is estimated to be 30.1 million square feet this year and 41.6 million square feet in 2014.

On the industrial side, vacancy rates “are likely to fall from 9.3 percent in the third quarter of this year to 8.7 percent in the third quarter of 2014.”

Annual industrial rents are expected to rise 2.4 percent in 2013 and 2.6 percent in 2014, while absorption of industrial space is anticipated at 102.0 million square feet this year and 105.8 million square feet next year.

“Office vacancies haven’t declined much because total jobs today are still below that of the pre-recession level in 2007, but rising international trade is boosting demand for warehouse space,” said NAR chief economist Lawrence Yun.

In retail markets, vacancy rates are forecast to decline from 10.6 percent in the third quarter of 2013 to 10.0 percent in the third quarter of next year; average retail rents are forecast to increase 1.5 percent this year and 2.3 percent next year, with net absorption coming in at 11.8 million square feet and 18.2 million square feet, respectively.

To see the complete article – please use the link below.

Rents to Rise