Entries in Real Estate (27)


Fannie & Freddie to be Replaced?

Tennessee Senator Bob Corker introduced legislation Tuesday to replace mortgage finance giants Fannie Mae and Freddie Mac with a new government agency.

Since the 2008, Fannie, Freddie and other government-backed agencies have insured nearly 90 percent of new mortgages. While that has made home loans widely available despite the financial upheaval, it means taxpayers are at risk if homeowners default on their loans.

Corker has proposed that a borrower would either have to put 20 percent down to get a government-backed loan, or, if the borrower put down less money, would have to pay for mortgage insurance to make up the difference.  Under this plan the government would create a new single agency, modeled after the FDIC to insure these mortgages.

This proposal is similar to the way mortgages were made before the Savings and Loan Crisis and is modeled after the way most mortgage loans are made in many other countries.

But the way the government structures the loss and capital requirements could make it more difficult for borrowers to get a home loan, or more importantly could drive up the costs for loans.  But the restructure is needed and this bill will provide a way to begin the conversation.


Housing Inventory Continues to Move Down

The Wall Street Journal reports that the number of homes for sale in September dropped by 2.2% from August, by 17.8% from last year, and by 34.3% from two years ago.

Inventories have been falling amid stronger demand from home buyers, which are helping to firm up prices. The decline in inventory has frustrated home buyers who are not able to bid down prices for the first time in a long time.  This inventory decline is helping sellers who are now moving their houses at a slighter faster pace. 

Additionally the Census Bureau said that housing starts rose a remarkable 15 percent in September, to their highest rate since July 2008. Analysts had forecast a 2.7 percent gain. The number of housing permits also rose at a double-digit rate, 11.6 percent, compared with the 1.1 percent forecasters were predicting.

This latest news has prompted more and more economists to state that the housing industry has finally bounced off the bottom and that the market is indeed rebounding.


Home Prices May Not Return Until 2023

CNN Money reports today that the severe decline in home prices during the last 4 years may mean some homeowners who bought at the peak may never get their money back.  Housing is bouncing back, but it has a long way to go.

U.S. home prices have dropped by a third from the start of 2007 to the start of 2012.  Forecasters are predicting that the average pricing for housing will increase 3.7% a year for the next five years. At that forecasted growth rate, the national average high from 2007 would not be hit again until 2023

And for some areas like the metro Dalton area it could take even longer.


Journal Reports Housing Crisis Past Bottom

The Wall Street Journal reported this week that the housing market has officially reached bottom. According to many real estate indices home prices are up, sales of existing and new homes are picking up and inventories of for sale homes have fallen dramatically.  When added together this means that the US housing market has passed the bottom of the cycle.

Of course the decrease in for sale inventory is the driving factor in this equation according to the panel of economists reported on in the Journal.  With the number of vacant homes is at its lowest point since 2006 the housing market has finally turned north.

However just because we have hit “bottom” there is still a long way to go for a full recovery. In particular, more than one in every four home owners with mortgages are still underwater. Also the shadow inventory of unsold homes and foreclosures still threaten the momentum of the recovery as well.

But this news of hitting bottom does mean that from this point on the United States housing market is unlikely to drag the U.S. economy down further.


Is FHA Ready to Ease the Requirements for Mortgages on Condominiums?

The Federal Housing Administration is apparently readying changes to its controversial condominium rules that have rendered large numbers of units ineligible for FHA financing.  It appears that the revisions could remove at least some of the obstacles that have dissuaded condominium homeowner association boards from seeking FHA approvals or re-certifications of their projects during the past 18 months. Under the agency’s regulations, individual condo units in a building cannot be sold to buyers using FHA insured mortgages unless the property as a whole has been approved for financing.

Recently the FHA’s rules have become overly strict. Barely 25 percent of all condo projects that are potentially eligible for FHA financing are now approved.

The largest restrictions imposed by FHA include non-owner occupancy rules requiring 50% of the units in a project or building be non-owner-occupied, and the FHA rule that requires that 85% of the units be current on their dues. FHA also sets a cap of 25 percent of the total floor space in a project for commercial use and has a very controversial rule which creates severe legal liabilities for condo board officers including personal liability and criminal responsibility.

FHA is expected to clarify the personal liability language and make other modifications in its forthcoming rules.  Time will tell if the rules will encourage condominium boards to apply for approval by FHA.