Buying is Cheaper Than Renting in Nearly All Major Cities

Daily Real Estate News | Thursday, March 22, 2012

Home buying is the smarter choice than renting, according to Trulia’s Winter 2012 Rent vs. Buy Index.
Buying a home is more affordable than renting in 98 of the nation’s 100 largest metro areas, according to the index, which tracks asking prices for rental units compared to for-sale homes in major metro areas.
The only two metros out of the 100 tracked where renting was found to be the better deal: Honolulu and San Francisco. Still, the index notes that if you plan to stay in those markets more than five years, you might still be better off owning than renting in those markets too.
Falling home values and low mortgage rates have made home ownership more affordable. Meanwhile, rents have been on the rise.
“As rents rise and prices stagnate, home ownership is becoming even more affordable, but rising rents create a dilemma for people who can’t afford to buy yet,” says Jed Kolko, Trulia’s chief economist. “Rising rents make it harder for people to save for a down payment, which is the biggest barrier to buying a home that aspiring home owners face.”
Top 10 Metros to Buy vs. Rent
1. Detroit
2. Oklahoma City, Okla.
3. Dayton, Ohio
4. Warren-Troy-Farmington Hills, Mich.
5. Toledo, Ohio
6. Grand Rapids, Mich.
7. Cleveland, Ohio
8. Atlanta
9. Gary, Ind.
10. Memphis, Tenn.
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News

Seniors, Young Adults Will Influence Housing

Daily Real Estate News | Tuesday, March 13, 2012

Aging Baby Boomers and their “Echo Boomer” children will significantly impact trends in the nation’s housing market over the next 20 years. In a new report released by the Bipartisan Policy Center, “Demographic Challenges and Opportunities for U.S. Housing Markets,” researchers at the National Association of REALTORS®, The Urban Institute, and the University of Southern California analyze key demographic trends and their likely influence on housing and homeownership in the United States.
Over the next two decades, the aging baby boomer generation will swell the nation’s senior population by 30 million. That demographic shift will likely help increase the supply of housing, since people over age 65 typically release much more housing than they absorb.
“The Northeast and Midwest are most likely to see a large number of older home owners selling their homes to younger home owners as the baby boomers age,” says NAR Chief Economist Lawrence Yun. “This increased supply could mean additional buying opportunities for Echo Boomers. That generation will absorb 75-80 percent of the available inventory of owner-occupied housing by 2020.”
The Echo Boom generation includes nearly 65 million people born between 1981 and 1995. NAR’s analysis illustrates the potential impact of economic and housing policy on this generation’s demand for homes as they come of age.
“Housing, jobs, and the economy are inextricably connected,” Yun says. “A strong recovery with favorable housing market conditions would encourage substantial growth in Echo Boomer households, which would help absorb the current vacant inventory and stabilize conditions for residential construction. Under a reasonable ‘middle’ recovery scenario, approximately 12 million new households will be formed over the next decade, requiring construction of up to 15 million new housing units.”
NAR President Moe Veissi notes that current market trends favor would-be home owners of all ages. “As the supply of rental housing continues to fall, rents are increasing,” he says. “At the same time, affordability for home owners is at a record high. For buyers who qualify and are ready to assume the responsibilities of owning a home, opportunity is knocking.”
Source: NAR

Sums up the value of a home. We can make it happen.

Housing Affordability Soars to Record High

Housing Affordability Soars to Record High Daily Real Estate News Wednesday, March 07, 2012 -->Low mortgage rates and falling home values have brought housing within reach to more families than ever before, according to the latest National Association of REALTORS® housing affordability index. Housing affordability in January reached its highest level since NAR began tracking it in 1970. The index -- which tracks median home price, median family income, and the average mortgage rate -- reached 206.1 in January. "This is the first time the housing affordability index has broken the 200 mark, meaning the typical family has roughly double the income needed to purchase a median-priced home," says Moe Veissi, 2012 NAR president. "For buyers who can qualify for a mortgage, now is a very good time to become a home owner."An index of 100 means that median-income household has exactly enough income to qualify for the purchase of a median-priced existing single-family home, also accounting for a 20 percent down payment and 25 percent of gross income devoted to the mortgage principle and interest payments. NAR projects that affordability will remain high for the remainder of the year. "Housing inventory levels have declined to a point where conditions are becoming much more balanced in much of the country," Veissi said. "If access to credit improves, we could see a much more meaningful increase in home sales and broader stabilization in home prices with modest gains in areas with stronger job growth."Source: National Association of REALTORS®

To avoid losing homes to foreclosure due to long response times for short sale transactions, three senators introduced legislation to speed up the short sale process.

Senators Lisa Murkowski (R-Alaska), Scott Brown (R-Massachusetts), and Sherrod Brown (D-Ohio) proposed the bill addressing the issue of short sales timelines on February 17. A short sale is a real estate transaction where the homeowner sells the property for less than the unpaid balance with the lender’s approval.
“There are neighborhoods across the country full of empty homes and underwater owners that have legitimate offers, but unresponsive banks,” said Murkowski. “What we have here is a failure to communicate. Why don’t we make it easier for Americans trying to participate in the housing market, regardless of whether the answer is ‘yes,’ ‘no’ or ‘maybe?’”
The legislation, also known as the Prompt Notification of Short Sale Act, will require a written response from a lender no later than 75 days after receipt of the written request from the buyer.
The lender’s response to the buyer must specify acceptance, rejection, a counter offer, need for extension, and an estimation for when a decision will be reached. The servicer

will be limited to one extension of no more than 21 days.
The bill will also allow the buyer to be awarded $1000, plus “reasonable” attorney fees if the Act is violated.
According to a release from Short Sale New England, short sale homes do not bring down neighboring home values like foreclosed homes do, and 83 percent of short sale buyers are satisfied with their purchase, according to a 2012 Home Ownership Satisfaction Survey conducted by HomeGain.
“The current short sale process can be time consuming and inefficient, and many would-be buyers end up walking away from a sale that could have saved a homeowner from foreclosure,” said Moe Veissi, president of the National Association of Realtors. “As the leading advocate for homeownership, realtors are supportive of any effort to improve the process for approving short sales.”
Equi-Trax released a survey last year on the issues real estate agents face when completing short sales. Guy Taylor, CEO at Equi-Trax, said 71.9 percent of respondents reported that a short sale can take four to nine months to complete, and they think that is simply too long.”
The survey also found that 18.2 percent of deals require less than three months to complete, with 10 percent requiring more than 10 months.
When agents in the survey were asked to how the short sale process can be improved, 57.6 percent said lenders should take less time to close transactions, 14 percent said borrowers should be better educated about short sales, and 40.4 percent said both of these changes are necessary to improve the process.
In April 2011, a similar bill was introduced by Reps. Tom Rooney (R-Florida) and Robert Andrews (D-New Jersey), but this version requested a response deadline of 45 days instead of 75 from lenders. The legislation never came up for debate before a House committee.

'Rehab' Loans Surge in Popularity to Fix Up Properties

'Rehab' Loans Surge in Popularity to Fix Up Properties

Daily Real Estate News | Tuesday, March 06, 2012

More borrowers are exploring financing options to cover the costs of rehabbing properties they buy. “Rehab” loans are surging in popularity, according to a New York Times article.
“We’re seeing an explosive growth in these loans,” says Ed Brehm with Prospect Mortgage, one of the country’s largest processors of 203(k) loans. The spike in demand is from the higher number of bank-owned properties as well as borrowers who can no longer get home equity loans, he says.
A survey in January from the National Association of REALTORS® found that 35 percent of the homes on the market are either short sales or foreclosures, and of those properties, 37 percent were considered “below” or “well below” average condition. The poor condition may have been from homes left abandoned or damaged from disgruntled home owners who were forced to leave.
The Federal Housing Administration’s 203(k) is particularly seeing an increase in interest among home purchasers. The loan covers the cost of buying the home but also for renovating it, and is paid back like a regular mortgage. The loan can be used for rehabbing the structure of the home to adding new floors and appliances.
Fannie Mae also offers rehab financial assistance as part of its HomePath lending program.
Source: “‘Rehab’ Loans to the Rescue,” The New York Times (March 1, 2012)