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Monthly Archives: August 2013

Shadow inventory vanishes as home values rise

At the dawn of the Great Recession, a record number of Americans were finding themselves in situations where their home's value had plummeted well below the amount of money they still owed on their mortgage. As a result, defaults on loans taken out to finance residences began to run rampant as the once robust housing market collapsed in late 2007.

As recently as March 2010, there were nearly 5.5 million homes that were on the verge of defaulting that had yet to hit the market - a demographic known as the shadow inventory. It took significant government intervention and a host of private initiatives to stave off a potential catastrophe should these residences enter default and cause a domino-effect collapse of the national economy.

A look at the top regions recovering from the housing collapse

In nearly every major real estate market in the country, conditions have improved markedly year-over-year, helping to fuel the already robust recovery from the Great Recession and the burst of the housing bubble back in 2007.

While the news is good across the country, certain areas are showing increases in home values and sales activity that far exceeds the national average.

Home sales spike in July

The national housing market has seen a significant increase in activity over the past year, which has helped to fuel a significant increase in the performance of the overall economy. While many analysts had anticipated that the housing market would begin leveling out - if not petering out entirely - over the coming months, the latest report on existing home sales from the National Association of Realtors (NAR) shows that the real estate market may be more resilient than predicted.

According to data from the group, sales spiked 6.5 percent from a downwardly-revised June reading, as an increased number of buyers flocked to previously built homes, condos and co-ops. While the month-to-month figures are promising, compared to July of last year activity is up roughly 17.2 percent.

Home values increase nationwide throughout July

The real estate market has been making major headlines of late as this sector has seen perhaps the best recovery of any as the national economy crawls back from the Great Recession. Now, reports are showing that property values are on track to besting pre-recession levels as market activity in July continues to exceed analysts' expectations.

Industry analytics group Zillow recently released data that shows home prices rose roughly 6 percent over the past month from June's highs, marking the first time such a significant leap had been made since before the burst of the housing bubble back in 2006.

Fannie Mae considers raising limits on down payments

The dynamics of the mortgage markets continue to shift as the national housing picture becomes increasingly rosier as the third quarter of 2013 rolls on. With increased demand driving up property prices and new home construction also on the rise, the market is in a unique position where both buyers and sellers are benefitting from current conditions.

As far as lending is concerned, buyers have been privy to some of the best interest rates on new home mortgages in history, which has helped make homeownership more affordable. This has been the case for current homeowners as well, as a bevy of government programs designed to help underwater borrowers have granted them access to mortgage refinance, changing the terms of their current home loan in favor of a new one that reflects the actual value of their property.

Jumbo loans may now be cheapest option

We typically use this blog to explain the features and benefits of financing your home with a jumbo loan, but today, the numbers speak for themselves. According to the Wall Street Journal (WSJ), despite the recent climb in interest rates, jumbo loans are not only becoming increasingly affordable but average rates are now approaching those of government-backed conforming loans.

"Our jumbo and conforming rates are neck and neck both on the fixed and the ARM," Cyndee Kendal, a senior vice president with Bank of the West, told the source. "There's next to no difference between the two."

Solution to end Fannie, Freddie has bipartisan support

At a recent press conference in Phoenix, Arizona, President Barack Obama recently outlined a proposal for the closure of government-backed mortgage securers Fannie Mae and Freddie Mac over the course of the next five years. While the initiative has the potential to radically change the mortgage markets, pundits on both sides of the aisle are unsure just what the actual repercussions will be, though both Republicans and Democrats agree that the path to privatization seems to be the right one.

Two different bills are being floated in the House of Representatives and the Senate that would eventually diminish the role of the government in providing home loan securities. The president's plan would call for a gradual phasing out of the two entities while the government still holds some power over regulation, while the Republican proposal would call for a more immediate and complete privatization of the market.

End of summer great time to invest in a second property

Although it is almost the halfway point of August and many families have already taken their annual summer vacation, analysts indicate that now may be the best time to consider purchasing a property for next year's summer getaway.

According to a recent report from the National Association of Realtors (NAR), the end of the summer vacation season is a great time to peruse properties on the market as you can get a good idea of how your second home will feel during peak vacation season.

Improving Market Index holds strong going into August

According to the National Association of Home Builders (NAHB), the number of metropolitan areas that are seeing improvements in their real estate sectors dropped from July going into August. The group's Improving Market Index (IMI), August saw 247 metros demonstrate positive real estate trends, which was down eight from the reading a month earlier.

However, despite the decrease in the number of regions experiencing gains in terms of the housing market, there is a lot of good news in this month's report, including the fact that this figure is more than three times what it was during the same period last year.

Loan activity increases year-over-year

According to data from the Mortgage Bankers Association (MBA), an industry analytics group that monitors roughly three quarters of all home loan activity that takes place in the U.S., loan applications ticked slightly downward last week compared to the period prior.

While week-to-week this shows a very mild slowing down of the mortgage markets, applications for new home loans are significantly higher than they were a year ago. What's even more interesting is the fact that mortgage refinance, which took up the majority of all loan activity back in 2012, is now slowing down while applications for new home purchases are amping up significantly.