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Tom's Blog

Secondary Mortgage Market Needs Improvement, Says NAR

February 15, 2011 1:31 pm

RISMEDIA, February 15, 2011--The National Association of REALTORS welcomed the government's call for an orderly transition from the current form of the secondary mortgage market to a new structure that would enable Americans to achieve affordable, sustainable mortgages. NAR believes that we cannot have a restoration of the former secondary mortgage market with entities that took private profits while pushing losses onto the taxpayer. The new system must involve some government presence, outside of FHA, USDA, and the Department of Veterans Affairs, to ensure a continued flow of capital to housing markets during economic downturns when large lenders flee the housing market, NAR President Ron Phipps said in response to the plan released by the Obama Administration for reforming the housing finance market. As the leading advocate for home ownership, NAR recognizes that the existing system failed and that changes are needed to protect taxpayers from an open-ended bailout. We believe there must be a certain level of government participation to provide middle-class families access to affordable mortgages at all times and in all markets, Phipps said. A system that is dominated by a few large banks that are too-big-to-fail would inevitably involve huge taxpayer risk of another bailout. An efficient and adequately regulated secondary mortgage market must make available to consumers simple yet safe, reliable mortgage products like the 15- and 30-year fixed-rate mortgages, Phipps said. NAR believes that the size of the governments participation in housing finance should decrease if the market is to function properly, but notes that when private capital fled the marketplace during the recent financial crisis, government backing of residential mortgages was critical in sustaining the housing market. Without government support, the financial crisis could have been far worse, Phipps said. NARs economists estimate that a retreat of capital from the housing market will negatively impact the economy; because for every 1,000 home sales, 500 jobs are created for the country. NAR encourages private sector participation in less traditional mortgages in innovative ways, such as through covered bonds. NAR, however, opposes raising fees for current well-qualified consumers to cover losses stemming from mistakes made in the private business decisions of the former Fannie Mae and Freddie Mac. Reducing the governments involvement in the mortgage finance market is necessary for a healthy market, but should not be done at the expense of the economy or home buyers, said Phipps. Any proposal for increasing fees and borrowing costs beyond actuarially sound levels will only make it harder for working, middle-class individuals to achieve homeownership, and only the wealthy will be able to achieve the American dream. We welcome the Administrations desire to engage stakeholders in the final plan and we want to serve on any advisory panel that will study the consolidation of federal incentives for housing. We also look forward to working closely with Congress. NAR has been representing the interests of home owners for more than 100 years and our goal is to bring their interests into this debate as well. We want to help design a secondary mortgage model that will serve home owners today and in the future, and ensure a strong housing market and full economic recovery, Phipps said.
Tags: News

Institute Unveils Tips to Help Homeowners, Buyers Avoid Appraisal Problems

February 15, 2011 1:31 pm

RISMEDIA, February 15, 2011--The Appraisal Institute has released helpful tips for consumers, providing guidance for homeowners and buyers seeking to ensure their sales are completed in a timely manner. As one of the nations largest professional associations of real estate appraisers, the Appraisal Institute created the tips list to let consumers know how to protect themselves and how to avoid unnecessary frustration when selling or buying a home. The document is available at: http://www.appraisalinstitute.org/newsadvocacy/downloads/AIhelpfultipsforconsumers.pdf. Too many consumers in this struggling real estate market face problems with appraisals when attempting to buy or sell a home, said Appraisal Institute President Joseph C. Magdziarz, MAI, SRA. But rather than passively endure delays in closing a sale, homeowners and buyers can take proactive steps to avoid pitfalls. The Appraisal Institutes tips encourage homeowners and buyers to: - Understand the role of appraisals. - Make sure their lender hires a qualified appraiser (such as a designated SRA, SRPA or MAI member of the Appraisal Institute). - Accompany the appraiser during the inspection of the property if possible. - Request a copy of the appraisal report from the lender. - Examine the appraisal report and ask questions. - Appeal the appraisal if appropriate. - Ask the lender to order a second appraisal by a qualified and designated appraiser. - File legitimate complaints with appropriate state board or professional appraisal organizations. Credible opinions of value can help to stabilize the real estate market, Magdziarz said. Appraisals are especially important because they are an objective and unbiased source of information. Unlike others involved in real estate transactions, the appraiser is an independent professional who performs a service for a fee rather than for a commission. Magdziarz noted that normal declines in the real estate market have led to increased caution by lenders. That caution has led to delays in completing some real estate transactions. Appraisers today are doing the same thorough, fact-based research and analysis they have always done, Magdziarz said. Nothing has changed in that regard. Magdziarz added that appraisers have been wrongly accused of prolonging the nations real estate downturn by developing value opinions that are below proposed sale prices. Specifically, he said, theyve been unfairly criticized for including comparable sales in the valuation process that provide opinions that are below the cost to build. It serves neither the lender nor the consumer to enter into an upside-down mortgage, he noted. Some real estate agents, mortgage brokers and home builders have used the Home Valuation Code of Conduct and Interagency Appraisal and Evaluation Guidelines as a scapegoat for current declines in the real estate market caused by the weak economy and the general oversupply of homes in the market, Magdziarz said. For more information, visit www.appraisalinstitute.org.
Tags: News

5 Tips for the First-Time Relocator

February 14, 2011 1:31 pm

By A. Michael Del Duca, RISMedia Guest Columnist

RISMEDIA, February 14, 2011A new career opportunity sometimes means relocating your family to another city. Careful consideration of various factors, such as your partners career, the effect on the childrens educational and recreational activities, and financial constraints all impact the decision to move.

Additional responsibilities crop up when moving to a new home, including getting the house up and running, finding the right school for the kids and getting them acclimated, and getting adjusted to life in a new town. These tasks can be incredibly overwhelming, especially in a new location without the aide of family and friends.

Here are some tips to help relieve the stress of relocation and turn your move into a successful endeavor:

  1. Take your time. As with all moves, there are so many things you need to do once you relocate into your new home. From dealing with utility companies, to finding a new doctor, to unpacking and decorating the new residence, your to-do list may seem endless. Dont try to accomplish everything at once. Make a list and divide it into three categories: immediate, secondary and down the road. Set your own timetable because you are the boss of this project and the only person you have to please is yourself.
  2. Get out and meet people. More than likely, you wont know many people in your new community. Besides introducing yourself to neighbors, you can find a place of worship, volunteer in a community organization, join a social club or gym, or just say hello to people.
  3. Reevaluate your career goals. If you had to leave a job behind, check to see if your company offers any employment assistance for relocating partners. Many companies have formal and informal programs, offering as little as resume support to as much as arranging job interviews. If youve desired to make a career change, this could perfect opportunity to do so. You may even want to consider an entrepreneurial career that you can take anywhere.
  4. Talk to your real estate professional. Your real estate professional can be a great resource as he or she has a strong understanding of the area you just moved to. They will have insight on the areas job market and may be able to give you names of career counselors or just help you feel comfortable in your new surroundings.
  5. Most importantly, dont push yourself by setting unrealistic goals. Moving is a process and it will take time for you to get acclimated to your new home and community. So, make this move not only a golden opportunity for your partner, but for yourself as well.

By taking your time and completing tasks one at a time, you and your family will soon be readjusted to life in your new location.

Tags: News

Ensure Your Family's Safety with a Fire Escape Plan

February 14, 2011 1:31 pm

RISMEDIA, February 14, 2011--In 2008, fire departments responded to 403,000 home fires in the United States, yet a recent survey by the Home Safety Council (HSC) reveals that less than half (37%) of respondents have taken any actions to prevent home fires. A partnership by HSC and Werner Ladder has resulted in an effort to encourage families to prepare for a home fire by developing an emergency escape plan and to make sure second- and third-story exits are equipped with fire escape ladders. Innovative built-in ladders can also be used as fire escape options for families.

"If your primary exit is blocked by smoke, heat or flames, you'll need to use a second way out, possibly a window," says Chris Filardi, senior vice president of marketing at Werner Ladder. "Making sure everyone knows the exit options and how to use a built-in fire escape ladder if necessary could, ultimately, save a life in an emergency."

According to a 2007 U.S. Census Bureau American Housing Survey, there are more than 70 million two-to-three-story homes in the United States, yet surprisingly, research by HSC reveals that only 6% of U.S. homes own a fire escape ladder.

"Many families don't realize that a fire can go from first spark to deadly levels in as few as three minutes, leaving families little time to escape," says Home Safety Council President Meri-K Appy. "In situations when getting out of the home quickly is critical to survival, a fire escape ladder may be one of the most important home improvement steps a caregiver can take."

HSC and Werner Ladder are urging families to work together to develop a fire escape plan. Families can start by drawing a floor plan of their home, including all rooms, windows, doors, stairways, fire escapes and smoke alarms, and indentifying two ways out of every room. Sometimes a window may be the only way to escape a home on fire. In this situation, families should have a fire escape ladder that is easy to use and long enough to reach the ground.

It is also recommended that families practice fire drills at least twice a year. As part of their fire drill exercises, families should remember to practice deploying the fire escape ladder to the ground. To practice, extend the escape ladder and climb up a few rungs from the bottom. This will give each family member a sense of what it feels like to be on the ladder while preventing an unnecessary fall. Only use the ladder for an exit in an actual emergency.

If you have infants or children too young to escape independently, keep a front facing baby carrier near the window so an adult can escape with the baby and have both hands free to hold the ladder.

By having a plan in place and beginning to practice fire safety now, families can ensure they will be prepared throughout the year to exit their home safely in the event of a fire.

To learn more about developing a fire escape plan and choosing a fire escape ladder for a home, visit the Home Safety Council at http://www.homesafetycouncil.org/MySafeHome/msh_wernerladder_w001.asp or Werner Ladder at www.wernerfireescapeladder.com.

Tags: News

Home Price Stabilization Seen in Most Metro Areas during Fourth Quarter, Sales Up

February 14, 2011 1:31 pm

RISMEDIA, February 14, 2011--Home sales rebounded in 49 states during the fourth quarter with 78 markets - just over half of the available metropolitan areas - experiencing price gains from a year ago, while most of the rest saw price weakness, according to the latest survey by the National Association of REALTORS.

Total state existing-home sales, including single-family and condo, jumped 15.4% to a seasonally adjusted annual of 4.80 million in the fourth quarter from 4.16 million in the third quarter, but were 19.5% below a surge to an unsustainable cyclical peak of 5.97 million in the fourth quarter of 2009, which was driven by the initial deadline for the first-time buyer tax credit.

In the fourth quarter, the median existing single-family home price rose in 78 out of 152 metropolitan statistical areas (MSAs) from the fourth quarter of 2009, including 10 with double-digit increases; three were unchanged and 71 areas had price declines. In the fourth quarter of 2009 a total of 67 MSAs experienced annual price gains.

The national median existing single-family price was $170,600 in the fourth quarter, up 0.2 % from $170,300 in the fourth quarter of 2009. The median is where half sold for more and half sold for less. Distressed homes, typically sold at discount of 10 to 15%, accounted for 34% of fourth quarter sales, little changed from 32% a year earlier.

Lawrence Yun, NAR chief economist, is encouraged by the trend. "Home sales clearly recovered in the latter part of 2010 and are helping to absorb the inventory, including many distressed properties. Even with foreclosures continuing to enter the inventory pipeline, they've been selling well and housing supplies have trended down," he said. "A recovery to normalcy requires steady trimming of the inventories."

Yun added, "An improving housing market and job growth will go hand in hand. The housing recovery will mean faster job growth." He projects about 150,000 to 200,000 jobs will be added to the economy this year from an anticipated 300,000 additional home sales in 2011.

Yun further noted, "Better than expected sales and/or strengthening in home values can have an even bigger job impact as consumer spending would naturally rise from a housing wealth recovery affecting a vast number of American families."

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said a very favorable affordability environment is a huge factor in the recovery. "Although job growth has been relatively modest and credit is tight, you can't underestimate the impact of historically high housing affordability conditions," he said.

"Mortgage interest rates recently hit record lows, median family income has edged up and prices in most areas have been stable following the correction from the housing boom. For people with good credit and long term plans, it's hard to imagine a better opportunity than what we see today," Phipps said. "Unfortunately the flow of credit is unnecessarily tight and is constraining the pace of the housing and job growth recoveries."

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was a record low 4.41% in the fourth quarter, down from 4.45% in the third quarter; it was 4.92% in the third quarter of 2009.

"The healthier local housing markets are also experiencing favorable local employment conditions," Yun said. Job growth is a major factor in price appreciation in metro areas such as the Washington, D.C., region, where the median existing single-family home price of $331,100 in the fourth quarter is 8.1% higher than a year ago; the Boston-Cambridge-Quincy area, at $346,300, up 4.2%; and Austin-Round Rock, Texas, at $190,300, up 4.1%.

Smaller metro areas sometimes see larger swings in price measurement depending on the types of properties that are sold in a given period. In such markets, full year price data can provide additional context.

In the condo sector, metro area condominium and cooperative prices - covering changes in 57 metro areas - showed the national median existing-condo price was $164,200 in the fourth quarter, which is 6.4% below the fourth quarter of 2009. Twenty-two metros showed increases in the median condo price from a year ago and 35 areas had declines; only 11 metros saw annual price gains in fourth quarter of 2009.

"Consumers in the hard hit regions of Nevada, Arizona and Florida were able to scoop up condos at absolute bargain basement prices," Yun said. Median condo/co-op prices in affected metro areas include Las Vegas-Paradise at $60,700, Phoenix-Mesa-Scottsdale with a fourth quarter median of $68,900, and Miami-Fort Lauderdale-Miami Beach at $81,900.

Regionally, the median existing single-family home price in the Northeast increased 2.3% to $240,400 in the fourth quarter from a year earlier.

Existing-home sales in the Northeast rose 15.0% in the fourth quarter to a level of 797,000 but are 22.8% below the surge in the fourth quarter of 2009.

In the Midwest, the median existing single-family home price rose 0.5% to $139,200 in the fourth quarter from the same period in 2009.

Existing-home sales in the Midwest jumped 18.3% in the fourth quarter to a pace of 1.02 million but are 25.4% below the cyclical peak one year ago.

In the South, the median existing single-family home price edged up 0.3 % to $152,400 in the fourth quarter from the fourth quarter of 2009.

Existing-home sales in the region rose 11.4 % in the fourth quarter to an annual rate of 1.82 million but remain 17.8 % below the surge in the fourth quarter of last year.

The median existing single-family home price in the West declined 2.9 % to $214,400 in the fourth quarter from a year ago. Existing-home sales in the West jumped 19.9 % in the fourth quarter to a level of 1.17 million but are 14.2 % below the cyclical peak in the fourth quarter of 2009.

"A good portion of the sales activity in the West has been driven by investors taking advantage of discounted foreclosures, with high levels of all-cash transactions," Yun explained.

Tags: News

Could Your Kitchen Pass a City Inspection?

February 11, 2011 1:31 pm

RISMEDIA, February 11, 2011--How would you feel if a city restaurant inspector came to your house, white gloves and all, to inspect your kitchen? Henry Alford, a writer for The New York Times, served as a guinea pig for an experiment testing whether or not his kitchen would pass by New York City standards. "Your presence in my home terrifies me," he told his inspectorright before being charged with violation after violation.

Some of Alford's wrongdoings included a cracked cutting board, a temperature set above 38 degrees, his two cats and a kitchen sink that doubles as a hand-washing station. Now think about your home. Does your trash can have a lid on it? Are dishrags stored in sanitizer? What rooms do you let your pets tromp through?

Granted, this is some harsh scrutiny to follow and in most cases, the judgment won't be as severe. But if you want to keep a cleaner and tidier kitchen, consider these tips:

Clean Ovens and Microwaves Wiping down ovens and microwaves often is a huge step toward having an inspection-worthy kitchen. These appliances get dirty faster than you think, and crumbs in ovens can attract bugs and other pests. To alleviate stinky odors in your microwave, heat up a bowl of lemon juice and water for one minute. Doing so will make a world of difference.

Purchase a Meat Thermometer Buying and using a meat thermometer is the only safe way to ensure meat is cooked and safe. According to experts, meat thermometers are a must have.

Different Lighting Works Best Have both general and task-worthy lighting. If you are slicing vegetables with sharp knives, you want ample light in order to ensure safety. You probably also want dinner-worthy mood lighting, too, though. Evaluate your setup and see what works best for you. Fixtures can always be changed, and if your lighting situation is really poor, an electrician can make more major changes for you.

Clean and Clear Countertops Wiping surfaces with a sponge soaked in warm water and dish detergent will keep those countertops sparkling. Dawn Direct Foam and Ajax Lemon Dish Liquid are both recommended.

Check Your Temperatures Most experts agree that a refrigerator should be between 37 and 38 degrees Fahrenheit, while the freezer should read 0 degrees Fahrenheit. If your fridge doesn't tell you the exact temp, there are a range of refrigerator thermometers you can choose from to monitor the degrees.

Following these tips can put you on the right track to a healthier and cleaner kitchen.

Sources: The New York Times, Consumer Reports

Tags: News

70% of Americans View Homeownership as Part of Personal American Dream

February 11, 2011 1:31 pm

RISMEDIA, February 11, 2011-- Trulia.com, a top site for home buyers, sellers and renters, released the results of its biannual American Dream survey, which has tracked American attitudes towards homeownership since 2009. Harris Interactive conducted this online survey on Trulia's behalf in January 2011 among 2,079 U.S. adults aged 18 and over. Key findings in the study were as follows:

  • American Dream Still Lives: Although foreclosures and underwater homes continue to plague the current housing market, 70% of Americans still view homeownership as being part of their American Dream. In fact, more than three out of four homeowners (78%) say their homes are the best investment they ever made. Conversely, only 20% feel trapped in their "underwater" homes while 14% said they would walk away from their homes in a heartbeat if they could.
  • Millennials Driving Economic Recovery: Although many of today's young adults came of age during the housing crash, more than one in four (26%) say their views on owning a home have become more positive over the past six months. With 88% of 18- to 34-year-old renters aspiring to be homeowners, this new generation of buyers will likely play a crucial role in stabilizing today's uncertain real estate market.
  • Stronger Long-term Recovery in Southern and Western Regions: Despite today's low mortgage rates and high affordability, most would-be homeowners are in no rush to buy. By comparison, a brighter beacon of hope shines in the South and West where the outlook for long-term recovery is much stronger. Undeterred by ongoing reports of foreclosures and underwater homes, 79% and 70% of renters in these respective regions say they plan to purchase a home.

"Contrary to popular belief, the American Dream of homeownership has not turned into an American nightmare. In fact, we're seeing a national resurgence of buyer and seller activity on Trulia.com," says Pete Flint, CEO of Trulia. "In January alone, we experienced an unprecedented level of site traffic including 11 million unique visitors which is more than 70% year-over-year growth. We've seen leads to agents increase 60% year over year and are now experiencing 100,000 property views per minute."

For more information, visit www.trulia.com.

Tags: News

10 Vacation Home Amenities Renters Desire

February 11, 2011 1:31 pm

RISMEDIA, February 11, 2011Theres one undeniable truth about vacation home renters: The early bird gets the wormand shes willing to pay top dollar for it. Thats why smart vacation rental owners set out to make their properties attractive to these oh-so-lucrative early birds well ahead of time. Yes, now is the time to start getting your ocean-view condo or woodsy cabin ready to stand out in the cyber lineup. And according to vacation home expert Christine Karpinski, that means one thing: Its time to amenity up.

Once your home is passed up, most people wont go back to view it again, warns Karpinski, director of Owner Community for HomeAway.com and author of How to Rent Vacation Properties by Owner, 2nd Edition: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment. If you want to secure that booking, you need to catch peoples attention the first timeand that means making sure their desired amenities are present and accounted for.

Karpinski outlines the following list of top amenities that renters are looking forand how you can make sure yours are coming up in their search:

1. Pool. It should come as no big surprise that vacationers enjoy taking a dip in the pool while on vacation. Pools are a form of entertainment in and of themselves, so when people go on vacation, they typically look for some body of water in close proximity. Even if you dont have a pool in your own backyard, advertise the shared pool in your complex or a nearby community pool.

2. Hot tub. Hot tubs have become a must-have amenity in many markets, especially those with cooler weather. Having a hot tub in your listing can even increase the shoulder season rentability of propertiesespecially in areas with chilly spring and fall seasons. In other words, that hot tub on the deck or screened-in porch could mean more renters all year long.

3. Jacuzzi tub. Just like Kleenex and Google, Jacuzzi is a brand name that has become the generic term for its category. While many travelers may use the word interchangeably with hot tub (meaning the outdoor variety), others search for the term Jacuzzi when seeking a whirlpool bathtub. In other words, if it has warm water, jets and bubbles, chances are people are calling it a Jacuzzi, so keep that in mind when putting your property listing together.

4. Pet friendly. According to the Travel Industry Association, 14% of all American adults have traveled with a pet at some point in the past three years. Although it may not be a traditional amenity, accepting pets at your vacation rental could significantly increase your bookings. Remember, it costs hundreds of dollars for guests to board their dogs or hire a sitter. Even if you charge a pet fee or a refundable pet deposit, it will still cost guests far less than leaving their four-legged friends at home.

5. TV. Even with the rising popularity of HDTVs, just plain TV remains a popular search term that people use in their hunt for that perfect home. In your description, include the number of TVs in your home, taking care to mention any located in bedrooms. (Many travelers look for this detail). Also, it doesnt hurt to include more details in your listing about any high-end televisions you may have. Cable and satellite TV also rank highly in traveler searches. If you have an HDTV in the home, make sure you upgrade the box and pay that extra five or so dollars for those HD channels. Your guests will enjoy having themand of course dont forget to highlight in your advertisements that you pay for HD channels.

6. Tennis. If you dont have a tennis court in your backyard, subdivision or complex, consider looking up local courts and including information about them in your listing. Many vacationers understand that tennis courts could be considered a hard-to-access amenity; if your home does have court access, shout it from the heavens. This just might be the amenity that reels them in.

7. Internet. Even on vacation, travelers still want (and need) to be connected, and wireless Internet has become the preferred method. If you dont already offer a WiFi connection, contact your local cable or phone company for more details. Its fairly inexpensive to add this amenity to your home and, in this day and age, its as much of a necessity as running water and electricity.

8. Pool table. Pool tables are especially popular in certain ski and mountain regions because they offer reliable indoor entertainment.And if youre looking to put your money on something that will make a big statement at a reasonable price, adding one to your home will do just that. Obviously, you dont have to go top of the line and shell out $25,000 for a high-end pool table. Check out your local sporting goods store and youll likely find a perfectly nice model for around $1,000. If this still seems like a lot to spend, ask around and search the classified ads for used tables. Chances are youll come across people willing to sell theirs for next to nothing.

9. Fireplace. When vacationing in a cooler climate, renters look forward to cuddling up by the fireplace after a long day outdoors. If you have one, be sure to really play it up in your listing. For slightly warmer destinations, an outdoor fireplace can be a huge draw for off-season travelers. And while adding a full-fledged fireplace, chimney and all to an existing home may prove to be prohibitively expensive, there are plenty of portable fireplaces that you can pick up at the home improvement store that dont require a contractor and construction crew to install.

10. Porch. No matter what type of outdoor living area you havea porch, deck, terrace or patiobe sure to provide a detailed description and photo(s) in your listing. Another popular search term is balcony, so dont forget that keyword when posting a photo of your view. Add the appropriate outdoor furniture and you have an inviting bonus living space that renters will love. And dont forget to include pictures of that stunning view.

Sometimes it really is a good idea to invest a few thousand dollars to make your home more desirable to vacationers, concludes Karpinski. Many upgrades will pay for themselves after just a couple of extra bookings. Besides, your expenditure may be a tax write-off. If youre considering adding amenities to your vacation home, let these top requests from actual travelers guide you. When peak season gets here, youll be glad you listened to them.

Tags: News

FreeRateUpdate.com Survey Shows Mortgage Rates Up

February 10, 2011 1:31 pm

RISMEDIA, February 10, 2011--As of yesterday, mortgage rates have increased slightly. Recent employment data revealed a decrease in the national unemployment rate. Despite positive economic news, however, investors fear that the economic recovery will induce inflation nationwide. This, hence, puts added pressure on the mortgage-backed securities market and causes an increase in mortgages rates.

Current 30-year conforming fixed mortgage rates are at 4.875%, 15-year conforming fixed mortgage rates are at 4.250%, and conforming 5/1 adjustable mortgage rates are at 3.250%. Well-qualified borrowers are able to take advantage of these low conforming mortgage rates with only 0.7 to 1.0% origination fees.

Current 30-year fixed FHA mortgage rates are 4.625%, 15-year fixed FHA mortgage rates are 4.000%, and FHA 5/1 adjustable rate mortgage rates are 3.500%. FHA mortgages have more favorable loan terms than conforming mortgage rates. The tradeoff, however, is the higher closing costs associated with an FHA loan. Additional fees that the Federal Housing Administration charges to borrowers include upfront mortgage insurance premiums, annual mortgage insurance premiums, additional residential appraisals, etc.

Jumbo mortgage rates are likewise currently stable. Current 30-year fixed jumbo mortgage rates are 5.500%, 15-year fixed jumbo mortgage rates are 5.000%, and jumbo 5/1 adjustable mortgage rates are 4.125%. Borrowers interested in obtaining a jumbo mortgage loan are able to do so in excess of the conforming loan limit for their designated area.

Mortgage back securities (MBS) prices are currently higher than before. MBS prices have increased by -19/32 (FNMA 30-year 4.5 at 100.12). Mortgage rates and MBS prices have an inverse relationship, which means they move in opposite directions. Therefore, as MBS prices increase, mortgage rates are expected to decrease.

For more information, visit: www.FreeRateUpdate.com.

Tags: News

Demographic Shifts Shaping Future of the Housing Market

February 10, 2011 1:31 pm

RISMEDIA, February 10, 2011--With the great recession driving unemployment, foreclosures and vacancy rates to historic highs, the housing market has certainly been on one wild ride the last few years.

Today, we see the confluence of a deep recession driving behavioral change and shifts in the demographic distribution of the population poised to impact the real estate market in unexpected ways. Americans who have experienced or witnessed the loss of jobs, homes and home values have grown skeptical about the benefits of homeownership. Not only will the financial impacts of the housing meltdown burden the real estate market for years to come, but so too will the emotional impact. More than ever, Americans of all ages are considering their options.

At a time when aging baby boomers might be retiring, they continue working in order to build back up the retirement savings they lost in the economic chaos. This has a trickle-down effect, preventing younger generations from moving up in the workplace or from moving into the workplace to acquire the wealth they would need to drive new demand for homes.

The Joint Center for Housing Studies of Harvard University reports that real median household incomes across all age groups under 55 have not increased since 2000. Its been posited that this will be the first decade in 40 years where real median household incomes will end lower than where they started. This has the biggest implications for the baby bust generation (born 1966-1985) as they approach what should be their prime earning years and for younger baby boomers that will be facing a vacuum of demand from younger generations when they want to retire, sell the family home and downsize. Over-building and spiking foreclosures have already produced an over-supply of large suburban homes for which there is little demand or ability to purchase. Gen X and Y will not do much to help solve this problem.

The Gen Y population, or echo boomers (born 1986-2005), the largest pool of renters, is now in their prime rental years, but many have found themselves jobless with no way to pay the rent. Forced to move in with mom, dad or friends, this twenty-something crowd has been hard hit by the recession. Nonetheless, they are poised to redefine the American dream for generations to come. When employment growth returns, they will be a key driver of rental demand.

Also at play is the fact that aging boomers will be reluctant to sell their homes for two reasons. One, they may be underwater on their mortgages and waiting for the market to rebound and two, they are healthier than their parents generation and will likely delay the move to retirement community living. Only time will tell if a market will exist for their homes when they are ready to sell, however, the income constraints and lifestyle demands of a shifting population may dictate a very different future.

All in all, there are some big changes afoot in the housing market that shifting demographics will continue to amplify. The changing needs of an aging baby boomer population as well as the demands of the burgeoning echo boomer generation will require that the real estate market respond in new and different ways.

The next quarter century is likely to bring a new look and feel to housing, much different than the post-war suburban sprawl that America experienced in the 1950s and 1960s. According to a 2009 study by RCLCO, both retiring baby boomers and maturing echo boomers are looking to move away from the suburbs theyve spent their lives in. Both groups reported wanting to live in more urban, mixed-use, mixed-age areas that offer services, community and walk-ability.

Given the lack of wealth that younger generations are anticipated to experience, achieving the dream of urban living may be out of reach for them. While echo boomers also told RCLCO they are willing to give up size to live where they want, its possible that living in urban centers may come at too expensive a price tag.

The over-built suburbs and areas hardest hit by home devaluation may be the only places that Gen Y will be able to afford, but its unclear how they may deal with this lifestyle dilemma. What is clear is that the growth of an economically challenged echo boomer generation will make affordable housing even more important.

For more information, visit Rent.com.

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