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Lack of Capital Hinders Commercial Market While Modest Improvement Persists

delmae — Fri, 18 May 2012 22:14:57 +0000

National Association of Realtors® Chief Economist Lawrence Yun presented a modest and hopeful outlook for the commercial real estate market during the Economic Issues and Commercial Business Trends Forum at the Realtor® Midyear Legislative Meetings Trade Expo in Washington, D.C. today.

“The commercial market has displayed modest growth lately,” said Yun. “Commercial real estate is the basis for much of the growth in the American economy, however challenges continue to exist. Despite this there are hopeful signs that the market might be slowly recovering due to recent job creation and an increase in consumer spending, among other indicators.”

Yun provided an economic overview during which he identified a number of areas that showed signs of improvement. Consumer spending has increased slightly, while personal incomes have risen. People also are now able to save money, proving that the savings rate had rebounded. Jobs are also accelerating and the stock market has shown a strong recovery.

“Consumer confidence has yet to return to normal and America still needs to create more jobs,” said Yun. “However, there are signs that show a positive overall financial improvement within the country.”

One major challenge that continues to plague the commercial market is lack of available credit. While there are notable improvements in capital for large commercial transactions, valued at $2.5 million or higher, there remain significant challenges for small business. According to NAR’s annual Commercial Real Estate 2012 Lending Survey, a majority of Realtors® are typically involved in less than $2 million transactions and are usually all cash – both of which make it difficult to obtain commercial lending. Yun pointed out that this is holding back the recovery potential in the commercial market, as well as hinder overall economic recovery.

“Since the economic crisis, smaller lenders have been shut out while larger lenders do a majority of the business,” said Yun. “Realtors® have reported that they typically obtain commercial mortgages from smaller banks. They find it frustrating that the larger banks are gaining market share at the expense of smaller sized lenders, which is hampering lending to small businesses.”

All major commercial real estate sectors are seeing improvement, but multifamily housing continues to be the healthiest with falling vacancy rates and rising rents. Families who were foreclosed upon and young people who cannot obtain a mortgage are choosing to rent, and Yun predicts this trend will continue. Based on the demand and lack of new construction on apartment buildings Yun estimates rents will increase by about four percent next year.

In the office and industrial sectors vacancy rates are improving and prices are beginning to level off. Transaction volume in the industrial sector is also beginning to pick up. Retail is showing signs of a slight recovery, which Yun predicts will be a consistent trend. Yun said overall, the commercial market is experiencing a slow healing process.

Jeffrey DeBoer, president and CEO of The Real Estate Roundtable joined Yun for the second half of the session where he spoke to the concerns and challenges that hinder the commercial market. DeBoer reiterated the need for more credit in the market, calling it a short-term problem that needs to be addressed immediately to bring the market back to life. Other issues DeBoer identified as critical to the market were the need for more equity and creation of more jobs. Looking long-term, DeBoer also said America needs to take a closer look at tax reform and preserve the mortgage interest deduction.

“We have to be vigilant, and talking to Congress – as Realtors® are doing today – is imperative,” said DeBoer. “It’s important that lawmakers understand what is going on in the commercial market and the challenges that persist. A healthy commercial market is vital to the economy and well-being of this country.”

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

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Information about NAR is available at www.realtor.org. News releases are posted in the website’s “News and Commentary” tab.

Article source: http://feedproxy.google.com/~r/RealtororgResearchHeadlines/~3/PJj-iPPKRAo/lack-of-capital-hinders-commercial-market-while-modest-improvement-persists

Future of U.S. Housing Markets Depends Largely on Echo Boomers

delmae — Fri, 18 May 2012 22:14:55 +0000

WASHINGTON (May 18, 2012) – The next two decades in housing markets depends largely on the Echo Boomers. That’s according to panelists at the “Shifting Demographics and Housing Choice: A Whole New World?” session today during the Realtors® 2012 Midyear Legislative Meetings Trade Expo here.

There are approximately 62 million echo boomers in the U.S. Also called “millennials,” echo boomers are currently ages 17-31. According to the 2011 National Association of Realtors® Profile of Home Buyers and Sellers, younger home buyers – those ages 18-34 – represent 31 percent of all recent home purchases.

“We know that although many young people may be delaying home purchases in today’s economic climate, most of them still aspire to homeownership,” said NAR President Moe Veissi, broker-owner of Veissi Associates Inc., in Miami. “Realtors® are committed to ensuring that the dream of homeownership can become a reality for generations of Americans to come.”

During the session, economists NAR, the University of Washington, and Florida State University presented various research and data that illustrate the future of homeownership from a generational standpoint.

“Demography is destiny,” said NAR Chief Economist Lawrence Yun. “In that vein, demographics can provide very useful insights into the future of housing and homeownership, and the results of these reports indicate that certain generational shifts will have a significant impact on the real estate industry over the next two decades.”

NAR Economist Selma Hepp identified several key demographic trends on both ends of the housing age spectrum. The demand for affordable, accessible housing will increase as the 65-and-over population grows; at the same time, as seniors leave their homes and move into assisted living and other arrangements, they will add to the current supply of housing. Because of their sheer size, however, echo boomers will significantly impact the next two decades in housing.

“Echo boomers represent a long-term opportunity for a housing market recovery, but they are struggling in the current economic crisis,” said NAR’s Selma Hepp. “Consequently, demand for rental housing is likely to climb in the near term.”

As a group, the echo boomers are more racially and ethnically diverse than their baby boomer parents. While 65 percent of baby boomers are Caucasian, only 55 percent of echo boomers are Caucasian. Echo boomers are also more likely to be college educated than previous generations, and are remaining single longer.

Glenn E. Crenlin from the Runstad Center for Real Estate Studies at the University of Washington shared his insights into recent declines in homeownership and whether those declines indicate possible generational trends.

“It is worrying that the homeownership rate for those under 35 has fallen more sharply than the rate for older Americans,” said Crenlin. “But I think we need to examine homeownership rates by generation in a more balanced way. Although the Millennial generation does not own homes at the same percentages of those in other generations, many of them are still in the early stages of household formation – in fact, some of them are still in high school.”

Crenlin presented data from the American Community Survey that shows a significant increase in homeownership among millennials when compared to baby boomers at the same age. While 900,000 households in the millennial generation own their own home, only 500,000 baby boomer households owned their own homes at the same point in their lives.

“Given these data, what we’re looking at in terms of the millennial generation is likely only a delay in homeownership of three to five years, not a long-term trend away from homeownership itself,” said Crenlin.

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Information about NAR is available at www.realtor.org. News releases are posted in the website’s “News and Commentary” tab.

Article source: http://feedproxy.google.com/~r/RealtororgResearchHeadlines/~3/o90u_9WcCTY/future-of-us-housing-markets-depends-largely-on-echo-boomers

Video: Mortgage rates for May 17, 2012

delmae — Fri, 18 May 2012 16:13:36 +0000

I’m Greg McBride with Bankrate.com and here is your weekly look at mortgage rates.

Mortgage rates declined for the 7th time in the past 8 weeks, and set a new record for the 4th consecutive week. The benchmark 30-year fixed mortgage rate broke a key threshold, falling below the 4 percent mark for the first time ever, to 3.97 percent. The larger jumbo 30-year fixed rate mortgage also reached a new low of 4.52 percent. The 15-year fixed rate mortgage – popular for refinancing – held at the record low of 3.2 percent.

Adjustable mortgages were mixed. The 1-year adjustable slipped to 3.11 percent while the 3-year, 5-year, and 10-year adjustable were each a bit higher, to 3.11 percent, 3 percent, and 3.49 percent, respectively.

The ongoing European debt crisis is producing another flight to quality. In a flight to quality, investors gravitate to safe haven investments such as U.S. Treasuries. Mortgage rates, which are closely related to yields on U.S. Treasuries, have been direct beneficiaries, falling to new lows.

Whether you’re buying a home or refinancing the one you already own, it is important to shop around for the best deal. To find the lowest mortgage rates in your area, use the free search engine at Bankrate.com.

I’m Greg McBride.

Article source: http://www.bankrate.com/finance/video/mortgage/mortgage-rates-051712.aspx

Top 10 states for foreclosure: April 2012

delmae — Fri, 18 May 2012 16:13:26 +0000

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Live in one of these 10 states? According to RealtyTrac, a California-based firm that tracks foreclosures, your state had one of the highest rates of foreclosure in April. Nationally, 1 in every 698 housing units received a foreclosure filing last month.

Article source: http://www.bankrate.com/finance/mortgages/top-10-states-for-foreclosure-0412.aspx

REAL ESTATE: Inland Empire tops dubious foreclosure list

delmae — Fri, 18 May 2012 03:59:32 +0000

Foreclosures continued to ease across the country last month, but Inland Southern California is feeling the long-term damage more than any other metropolitan area.

One housing unit in every 213 in San Bernardino and Riverside counties was in some phase of the foreclosure process in April, according to a report from RealtyTrac, an online marketer of foreclosure properties. That gave the Inland area the most foreclosure activity, by a wide margin, of any of the nation’s 20 largest metropolitan areas.

Miami, with one residential property in 273 involved in the foreclosure process, was a distant second.

The number of Inland-area homes in the process has been steadily declining, and last month’s drop indicates a sharp decline from where it was 12 months ago. There were 7,049 homes somewhere in the foreclosure process last month, about 30 percent fewer than April 2011, RealtyTrac reported.

The process includes homeowners who have received default notices, the scheduling of trustee sales and repossessions.

In the two Inland counties, 1,459 homes were taken over by banks or other lenders last month, with more than 60 percent of them in Riverside County, which has more houses than San Bernardino County.

Foreclosures have not been recorded in numbers as large as were seen in 2010 and 2011 because of the settlement large banks reached earlier this year with the federal and state governments on how they used to be processed, but that is expected to change in the next few months, said Steve Johnson, director of the Riverside office of MetroStudy, a real estate consulting firm.

“A lot of inventory will be coming back into the foreclosure process,” Johnson said. “These institutions are doing a massive reassessing of their past foreclosures, and that’s delaying the processes.”

Johnson said he’s anticipating the banks to encourage homeowners who are in trouble keeping up with their mortgage payments to list them as short sales, where the house would be sold for less than it would appraise for. An estimated 43 percent of all Inland homeowners are upside down on the mortgages, meaning they owe more than the home’s current value.

Homeowners who are in trouble are advised to move slowly and get as much advice as possible, said Melinda Opperman, senior vice president for Springboard Non-Profit Consumer Credit Management, a Riverside-based counseling service.

Opperman said a recent federally sponsored study found that 70 percent of those who sought counseling ultimately got to stay in their homes, and 56 percent were able to catch up on payments.

Opperman added that, after the settlement between the major lenders and the federal and state governments was reached, opportunists started sending distressed homeowners come-ons in the mail, trying to “piggyback” on the settlements.

“They’re trying to capitalize on that, but they’re for-profit bad actors,” Opperman said.

The high rate of foreclosures also has an effect on businesses in the area, although it is more of an indirect one. Morris Myers, executive director of the Economic Development Corp. of Southwest California, said most of the businesses he deals with in the Temecula area are sound.

But it doesn’t help an employer if a significant number of her or his workers are in trouble with their mortgages, he said.

“Certainly there’s a psychological effect,” Myers said. “I think there’s less, though, of an absolute effect.”

Mortgage mud

One of every 213 Inland homes is in some sort of foreclosure distress, making it the metropolitan area with that highest incidence.

Riverside-San Bernardino: 213

Miami: 273

Atlanta: 298

Phoenix: 313

Tampa: 315

Chicago: 321

Detroit: 363

San Diego: 394

Los Angeles: 412

San Francisco: 514

Source: RealtyTrac

Article source: http://www.pe.com/business/business-headlines/20120517-real-estate-inland-empire-tops-dubious-foreclosure-list.ece

Rates keep dropping and refis are hopping

delmae — Thu, 17 May 2012 21:58:05 +0000

But borrowers shouldn’t take a chance, experts say.

“I think rates will remain low for the foreseeable future,” says Bob Walters, chief economist at Quicken Loans. “The caveat to that is that surprises are inevitable, and when rates begin to move higher, it’s entirely likely that they could move higher quickly.”

Lenders swamped with refinances

Homeowners seeking to refinance at these record-low rates have kept lenders busy.

The volume of mortgage applications increased 9.2 percent last week, compared to the previous week, according to the Mortgage Bankers Association weekly survey. About 74.9 percent of those applications came from refinancers.

“When rates dip like this, it’s a different world out there,” Becker says. The low rates attract not only borrowers who planned to refinance but also borrowers who weren’t sure they would benefit from a refinance because their rates already are low.

Does it make sense to refi now?

Even borrowers who have a mortgage rate of 4.5 percent, which is considered low already, could save by refinancing these days, Becker says.

For those who have smaller mortgages of $100,000 or less, refinancing doesn’t always make sense because of the closing costs of the loan, Becker says. But borrowers who owe more than $200,000 are likely to save.

“Make it simple: If you have a $300,000 loan and you reduce your rate by 1 (percentage point), you’re saving about $3,000 in one year. That pretty much covers your closing costs,” he says. “Crunch the numbers, and see if it makes sense for you.”

Many borrowers have been using today’s low rates to pay off their mortgages earlier, Stearns says.

“With rates so low, I’m seeing a lot of term reduction, people jumping at 15- to 20-year terms,” he says. “It’s a great option for those who qualify.”

Article source: http://www.bankrate.com/finance/news/rates-keep-dropping-refis-hopping.aspx

National mortgage rates for May 17, 2012

delmae — Thu, 17 May 2012 15:57:46 +0000

Mortgages

3.97% (30-year fixed)
0.44 (average points)

Mortgage rates reached record lows, as investors grow concerned about the political unrest in Greece and fear the country could be forced out of the eurozone.

The 30-year fixed-rate mortgage fell 5 basis points to 3.97 percent. A basis point is one-hundredth of 1 percentage point. That’s the first time the fixed rate dipped below 4 percent since Bankrate started the weekly survey 26 years ago.

The 15-year fixed rate was 3.2 percent, the same as last week. The average rate for 30-year jumbo mortgages, or generally for those of more than $417,000, fell 2 basis points to 4.52 percent.

The 5/1 adjustable-rate mortgage rose 1 basis point to 3 percent. With a 5/1 ARM, the rate is fixed for five years and adjusted annually thereafter.

The volume of mortgage applications increased 9.2 percent last week, compared to one week earlier, according to the Mortgage Bankers Association.

Article source: http://www.bankrate.com/finance/news/mortgage/interest-rates-051712.aspx

How can I avoid these scary closing costs?

delmae — Thu, 17 May 2012 15:57:45 +0000

I have $40,000 equity in my home, but I am not sure if it is a good idea to borrow against that equity to pay off the mortgage. Are there private parties or people who can loan me $45,000 for 10 years, or is there a different way to obtain money without closing costs as a personal loan to pay off a mortgage? I can afford to pay the mortgage as it is, but I need to free up some money for a child going off to college. Thank you for your advice.

Best regards,

– Boris Bestrate

Dear Boris,
What you’re trying to capture is a lower interest rate. You’re not going to get that from a private-party lender or a personal loan. You also could lose some important income tax benefits if the loan isn’t secured by the property.

I can understand your reluctance to pay $5,000 in closing costs to refinance a $90,000 loan balance. Bankrate’s national average for closing costs in its 2011 Closing Cost Survey is $4,070, although the survey results were for a $200,000 purchase mortgage, not a $90,000 refinancing. While your closing-cost estimate is high, it may be reasonable for your part of the country.

As I write this reply, Bankrate’s national average for a new 15-year fixed-rate mortgage is 3.2 percent. The question becomes: Are you willing to pay the closing costs to capture the lower interest rate to free up the money in your monthly budget?

If you’re halfway done on your original 15-year mortgage, refinancing into a new 15-year mortgage will cost you money, even with the lower interest rate, because you’re extending your existing 7.5-year mortgage into a new 15-year mortgage. My numbers are approximate because I don’t know the amount of your escrow payment. You do, however, reduce your monthly hit by about $404.66, as shown in the table below.

Refinancing with a new 15-year fixed-rate mortgage increases your total interest expense by almost $4,000 pretax. Add $5,000 in closing costs into the mix, and you’re paying $9,000 to free up about $400 a month in your monthly budget. Is it worth it? I don’t think it will go all that far in paying for your child’s college expenses, but it will help.

Personally, I like to see the kids financing their college expenses. It gives them skin in the game, and they’re the ones who are benefiting from the investment.

You also could consider refinancing your mortgage with a home equity line of credit. That type of loan typically has lower closing costs, but it’s a variable-rate loan that requires interest-only payments in the early years of the loan.

Article source: http://www.bankrate.com/finance/refinance/refinance-closing-costs.aspx

Use tax refund to cut my mortgage payment?

delmae — Thu, 17 May 2012 15:57:45 +0000

You do have a few options to lower your mortgage payment: one short-term, one medium-term and one long-term. Let’s start with the short-term solution.

You could place your $5,000 tax refund into a savings account, and withdraw a portion of it each month to help with your mortgage payment. For example, if you wanted to have a slightly lower payment for the next five years, you could withdraw $83 each month from your savings of $5,000. So if your mortgage payment is currently $1,500, you would need to use only $1,417 of your income to make the payment. Your savings would make up the rest. (You could drastically reduce your mortgage payment by $416 per month, but your $5,000 in savings would be gone in only one year.)

The long-term approach to lower your mortgage payment is to research refinancing opportunities. Contact your current lender and a couple of competing lenders, and find out what terms you would qualify for in a refinance of your mortgage. Be sure to do all your loan shopping within a 30-day period so the credit inquiries will count as just one, for credit-scoring purposes. Once you know what terms you can expect, use Bankrate’s calculator to determine if refinancing will meet your goal of lowering your mortgage payment.

A medium-term option is to adjust your withholding so your annual tax refund is smaller — only $500 or so, instead of $5,000. Ask your human resources department at work to increase your personal allowances so that about $3,500 less is taken out over the course of the year. You’ll then have an additional $300 or so each month after taxes that you can use to further lower your mortgage payment.

If you are trying to lower your payments because they are too high for you to comfortably afford, and you may be in danger of missing a mortgage payment because you don’t have enough income to consistently pay what you owe each month, seek help now. The nonprofit Homeownership Preservation Foundation operates the Homeowner’s Hope Hotline at (888) 995-HOPE, which can put you in touch with a housing counselor. The counselor will help you decide how to best solve a mortgage payment problem and avoid home foreclosure.

Good luck!

Bankrate’s content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate’s Terms of Use.

Article source: http://www.bankrate.com/finance/mortgages/use-tax-refund-cut-mortgage-payment.aspx

Foreclosures Move East as Hardest-Hit Markets Clear

delmae — Thu, 17 May 2012 09:55:49 +0000

Foreclosure activity in April fell nationally to the lowest level since the summer of 2007, but government intervention and the recent $25 billion mortgage servicing settlement are now changing the face of the crisis.

Foreclosure filings, which include default notices, scheduled auctions and bank repossessions, fell 5 percent in April from March, according to a new report from RealtyTrac, and are down 14 percent from April of 2011. One in every 698 U.S. housing units had a foreclosure filing during the month.

“Rising foreclosure activity in many state and local markets in April was masked at the national level by sizable decreases in hard-hit foreclosure states like California, Arizona and Nevada,” said Brandon Moore, CEO of RealtyTrac in a release. “Those three states, and several other non-judicial foreclosure states like them, more efficiently processed foreclosures last year, resulting in fewer catch-up foreclosures this year.”

Major banks are also suspending foreclosure actions, as they comply with the mortgage servicing settlement that was the result of so-called “robo-signing” in foreclosure document processing. Bank of America
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]recently announced that it was beginning a summer-long campaign to contact 200,000 borrowers, and offer them principal reduction, as part of the settlement; foreclosure actions, bank representatives said, would be suspended until the bank had reached them all and determined if they were eligible for new loan modifications.

Lenders are also responding more efficiently to requests for short sales, which is when the home is sold for less than the value of the mortgage. New financial incentives from the government and new streamlined programs at Fannie Mae and Freddie Mac are behind much of that.

“Our preliminary first quarter sales data show that pre-foreclosure sales, typically short sales, are on pace to outnumber sales of bank-owned properties during the quarter in California, Arizona and 10 other states,” adds Moore.

As also reported today by the Mortgage Bankers Association, there is a big discrepancy between foreclosure activity in states that require a judge in the process (judicial) and states that do not (non-judicial). The MBA reported a rising number of loans in the foreclosure process in judicial states, but a falling number in non-judicial states during the first three months of the year. For April, RealtyTrac reports foreclosure activity down 7 percent from March and down 29 percent from a year ago. In judicial states, activity was down just 3 percent month to month but still up 15 percent from a year ago.

The judicial/non-judicial split is pushing the foreclosure crisis east, as some of the worst-hit states like California, Arizona and Nevada are able to clear through the backlog more quickly. The 11 cities with annual increases in foreclosure activity were all in the Midwest, South or on the East Coast, while six of the nine cities with annual decreases were out West in California, Arizona and Washington, according to RealtyTrac. California and Nevada, however, still post the top foreclosure rates, along with judicial Florida.

The supply of bank-owned properties in non-judicial states is also falling, as a growing cadre of investors sweeps in to buy distressed properties at the courthouse steps. One California Realtor speaking at the National Association of Realtors’ midyear conference this week told the conservator of Fannie Mae and Freddie Mac, “We don’t need a bulk REO sale program, we have no inventory!”

Bank repossessions (REO) are down for the third straight month, according to RealtyTrac. Lenders took back 51,415 properties in April.

Questions? Comments? And follow me on Twitter @Diana_Olick

Article source: http://www.cnbc.com/id/47451297?__source=RSS*blog*&par=RSS