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Monthly Archives: April 2012

Patience And Long-Term Thinking Required For Recent Homebuyers

The continued decline of home values has harmed homeowners who purchased properties when they thought prices would decline no further. Even though most analysts have predicted prices will begin to climb within the next year, many recent buyers are unlikely to see much immediate benefits, which will necessitate patience on their parts.

"This is creating a new wave of underwater borrowers," financial analyst Gary Shilling told Reuters. "We have all three branches of government trying to keep people in four bedroom houses who can't afford chicken coops."

Homeownership Drops To Lowest Rate Since Tracking Began In 2001

The housing crisis of the late 2000s left deep craters in the American psyche, some of which may be more permanent than previously imagined. This inference comes directly from the results of a Gallup poll, which found this week that homeownership has fallen six basis points this year to 62 percent - a record-low.

The decline of homeownership slowed last year, as rates actually increased three basis points to 68 percent. Still, as Lending Cafe has reported before, this climb may be somewhat of a mirage, due primarily to lenders temporarily halting foreclosure processes due to litigation about their shuttering procedures and a significant backlog of properties.

HARP Provides Struggling Homeowners With Way Out

After experiencing several weeks of declines, the number of mortgage applications rebounded slightly last week. But, it appears as though those statistics may have been an isolated occurrence. The Mortgage Bankers Association (MBA) reports that applications for mortgage refinances dropped 5.6 percent this week, outpacing the rate of decline experienced by home mortgage purchase applications.

This slight-drop off could suggest that mortgage refinance may not be as readily accessible to homeowners in need of that service. For these homeowners, the federal government's Home Affordable Refinance Program (HARP) may be one way to facilitate refinancing, according to NASDAQ.

Mortgage Refinance A Viable Alternative To Buying Or Building A Home

Many media reports play up the binary decision that consumers face when they begin making plans to sell their homes and move elsewhere - they can either buy an existing home from a current owner or they can build a property from the ground up.

A U.S. News and World Report study - aptly titled "Build or Buy?: A Housing Market Dilemma - sets up the decision many homebuyers face as they decide whether to choose cheaper homes that may not be perfect for their needs or more expensive customized properties with the newest technologies.

Below Market Offers Increasingly Being Rejected By Homeowners

Those in the real estate industry define a low-ball offer as any request that comes in at least 25 percent below the listed price of the property. Throughout the darkest days of the housing crisis over the last few years, low-ball offers that were ultimately accepted were increasingly more prevalent.

Recently though, they have dropped off considerably as inventories have fallen, according to the National Association of Realtors (NAR). In addition, home values have plummeted, meaning homeowners are not nearly as willing to accept selling their homes at a discounted rate. Still, a below market offer does not necessarily mean the end of the road for a home sale.

For Now, Homeowners Seem To Prefer Mortgage Refinance Over Buying

Refinancing appears to be on the rise yet again.

Just yesterday, we reported that home sales declined 2.6 percent in March from their February numbers. New numbers from the Mortgage Bankers Association (MBA) back this up, as its purchase index declined 11.2 percent in the last week. In light of this change, mortgage refinance applications climbed 13.5 percent, so they now make up 75.2 percent of all mortgage applications, which is higher than the 70.5 percent recorded last week.

Over the last four weeks, refinancing has climbed 2.36 percent while purchases fell by 0.52 percent. Experts attribute the climb in mortgage applications to reduced interest rates, which have hovered near record lows for the better part of the last few months.

Home Sales Decline In March, But Increase Year-Over-Year

Every time housing industry observers begin to feel optimistic about a prolonged recovery, new information comes out that calls into question the true nature of market improvement.

Home sales declined 2.6 percent in March from their February numbers, but still managed to log 5.2 percent gains from March 2010, according to the National Association of Realtors (NAR). This statistical anomaly suggests that recovery is continuing at a measured pace, with nearly every gain being coupled by a similar decline.

Short Sale Timeline Reduced To One Month

Short sales are already one of the fastest ways to steer a property quickly through the sales process and now, they may accelerate even more following a new government ruling.

As of this June, mortgage lenders have 30 days to respond to a borrower who has formally requested a short sale, according to a ruling by Freddie Mac and Fannie Mae. After one month, a lender must provide borrowers with information about the sales process each week.

Foreclosures Likely On The Verge Of Climbing Back Up

Yesterday, Lending Cafe reported that housing inventories had plunged to depths not seen in about six years. This has caused bidding wars between buyers to escalate, as many try to take advantage of low property values and record-low interest rates on fixed-rate loans. Hidden beneath this reduced inventory is a "shadow inventory" of 1.6 million homes - many of them foreclosed - that lenders have not yet put on the market.

Most housing experts have previously said that foreclosures would spike this year after stalling throughout the latter part of 2011. The first sign of this fact comes in the form of a RealtyTrac report from last week which would that foreclosure starts crossed the 100,000 threshold for the first time since November 2011, after three months of steady increases.

Low Inventory Numbers Lead To More Competitive Buying Market

Real estate sales have reached a competitive fervor not seen in the last six years, as buyers increasingly become more willing to take advantage of low prices, sellers accept losing money on home sales and inventories continue to fall.

Washington homebuyers Matthew and Carina Hensley found this out the hard way when they tried to buy a property, only to be outbid by someone who had exceeded their asking price by $5,000 and even waived contingencies regarding the home inspection and financing processes. The Hensleys thought that a bid $10,000 over the asking price, in addition to a personal letter to the sellers, would net them the home.