Daily Archives: October 2, 2015

The Truth about Lending Standards | Bedford Hills Real Estate

Leave a reply

Perhaps you have heard that it’s getting easier to get approved for a mortgage to buy a home. Yet the first-time buyers you work with don’t seem to be doing any better than they did six, 12 or even 24 months ago.

The news reports you’ve been reading are misleading.  They may accurately trends for refi mortgages or mortgages as a whole but not for purchase loans—mortgages to buy houses–which is the focus of most of the public concern about standards.

What’s going on?

Six months ago I published an article titled “Why Lending Standards Won’t Get Better”. ‘’Today’s lending standards were written to protect lenders and federal budgeters, not to help renters become homeowners.  Despite pressure from the public, lending standards probably won’t change much more in the foreseeable future than they already have,’ I wrote at the time.

I’m sorry to say, it looks like I was right.  We are deep into the best market for home sales in nearly a decade and the latest hard data shows that it is just as difficult to qualify for a purchase mortgage in July as it was last March–or even in March 2012.

Reports of that looser standards are making it easier to get a mortgage are of two types:

Some are simply surveys of lenders or experts, like the Federal Reserve’s quarterly Survey of Senior Loan Officers or Pulsenomic’s survey of real estate economists and experts.  Both made headlines in recent months by announcing access to credit has eased, or is easing.  Both are based on perceptions, expectations and attitudes, not on hard data.

Others, like the Mortgage Bankers Association’s Mortgage Credit Availability Index, combine purchase loans with refis to provide a picture of credit accessibility that’s virtually useless for a discussion of home purchases and the barriers facing first-time buyers.  The fact is that standards for refis are indeed significantly lower while standards for purchase loans have been virtually frozen for years. For example, median FICOs for conventional closed refis in July were 727, for conventional closed purchase loans 757—a 30 point difference.  Combining data on the two different uses hides what is really going on to purchases loans.

Standards for refis have loosened much more for refis than for purchase loans. A good way to measure the difference between standards used to make lending decisions is to review and compare the real-life results of those decisions.  Below is an update of a table I included in my May article expanded to include July 2015 and refi data, for comparison purposes. It includes data on closed loans for the two most popular categories of mortgages for home buyers, FHA and conventional loans.  The data come from Ellie Mae, the industry-leading mortgage processing platform which processed approximately 3.7 million loan applications in 2014.

 

 

How Lending Standards Differ for Conventional and FHA Refi and Purchase Loans

March 2012-July 2015

  Loan Type/Standard March 2012 March 2015 July 2015 Percentage improvement, March 2012-July 2015
Conventional Purchase Loans
FICO7647557571%
LTV7981801%
Back end DTI*3334342.9%
Conventional Refi Loans
FICO7717427276%
LTV6570708%
Back end DTI*32374025%
FHA Purchase Loans
FICO7016856891.7%
LTV9695960
Back end DTI*4141410
FHA Refi Loans
FICO7246856608.8%
LTV8885826,8%
Back end DTI*3941415.1%

Average FICO scores, loan-to-value ratios, and debt-to-income ratios from Ellie Mae Origination Insight Reports

Over the past 16 months, the three critical metrics used to show the impact of lending standards—FICO scores, loan-to-value ratios and debt-to-income ratios have barely while refis have indeed become measurably more accessible to borrowers.

 

read more…

 

http://www.realestateeconomywatch.com/2015/09/the-truth-about-lending-standards/

More homes are losing value | Bedford Real Estate

Leave a reply

The number of homes nationwide losing value on a monthly basis has more than tripled over the past year while the number of appreciating homes has fallen more than 12 percent, Allan Weiss, CEO of Weiss Residential Research reported today.

Depreciating homes increased from 7.60 percent to 23.40 percent while the number of appreciating homes has fallen from 65.20 to 56.80 percent, according to an analysis of July data from “canary homes” that are indicators of price trends in Weiss Residential Research’s databases of nearly 100 million homes.

“While a majority of homes nationwide is still gaining value, the national trend is clearly downward.  With the decline in year over year prices in the existing home sales report released today by the National Association of Realtors, even the national median price reports are picking up on the trend, reflecting the growing of numbers homes that are changing from appreciation to depreciation.  In this environment buyers and investors should be careful to avoid buying properties that are losing value by reviewing metro and Zip code maps on Owners.com that show hyper-local trends in changing value,” Weiss said.

Even seven of the top ten Metro markets with the highest levels of appreciation in July saw a year over year decline in the percentage of homes gaining more than 1.5 percent. Reno, Nevada leads the nation in appreciating properties in July, with more than 91.4 percent gaining value on a monthly bases, though 93.7 percent were appreciating a year ago. Western and West Coast markets dominate the list of markets with the highest percentages of appreciating properties.

Best Metros by Rising more than 1.5%

2014

2015

Reno, NV

97.3%

91.4%

Denver-Aurora-Lakewood, CO

96.9%

90.0%

Portland-Vancouver-Hillsboro, OR-WA

95.5%

86.8%

Fort Collins, CO

96.0%

86.5%

Fayetteville-Springdale-Rogers, AR-MO

46.1%

85.7%

San Jose-Sunnyvale-Santa Clara, CA

93.6%

81.1%

Des Moines-West Des Moines, IA

68.7%

80.7%

Port St. Lucie, FL

92.5%

78.7%

Stockton-Lodi, CA

92.7%

77.6%

Nashville-Davidson–Murfreesboro–Franklin, TN

86.0%

77.5%

Fayetteville, NC tops the list of the nation’s ten worst metros in terms of the percentage of properties gaining value on a monthly basis in July.  Its percentage of appreciating homes fell from 22.9 percent in July 2014 to 18 percent in July 2015.

Worst Metros by Rising more than 1.5%

2014

2015

Fayetteville, NC

22.9%

18.0%

Little Rock-North Little Rock-Conway, AR

30.1%

20.4%

Baltimore-Columbia-Towson, MD

31.8%

30.1%

Toledo, OH

36.2%

32.9%

Lancaster, PA

42.5%

39.4%

Greensboro-High Point, NC

43.6%

40.9%

Chico, CA

61.9%

41.5%

Hartford-West Hartford-East Hartford, CT

29.4%

41.5%

Augusta-Richmond County, GA-SC

40.2%

41.6%

Peoria, IL

26.5%

41.7%

 

Consumer seeking information about their homes and neighborhoods can see how values have changed and are forecasted to change in the next 12 months within 5500 Zip codes and 100 metros on Owners.com http://www.owners.com/  or http://www.weissindex.com/.

 

read more…

 

http://www.realestateeconomywatch.com/2015/09/more-homes-are-losing-value/

Is the Lack of Credit Crippling Local Housing Recoveries? | Bedford Corners Real Estate

Leave a reply

A new report from Pro Teck Valuation Services’ Home Value Forecast suggests that the availability of credit in local markers influences local housing recoveries and accounts for dramatic differences in home prices.

HVF looked at regular average sold prices versus total mortgage trends in San Francisco and Detroit and found that in San Francisco, buyers have averaged 20+% down over the last 14 years to create loan to value ratios between 67 and 82 percent.  In Detroit buyers have averaged LTVs between 86 and 101 percent.  Collateral Analytics, Pro Teck’s partner in Home Value Forecast, found that San Francisco home prices are at an all-time high while Detroit is still trying to return to pre-crash levels, suggesting a direct relationship between LTVs, one of the critical factors determining mortgage approvals, and higher prices.  Conversely, higher LTVs in Detroit may make it more difficult buyers to get financing.

2015-09-24_12-10-59

2015-09-24_12-11-49

 

The median LTV levels for closed mortgages in August was 80 for conventional purchase loans and 96 for FHA purchase loans, according to Ellie Mae.

The HVF authors also examined the Phoenix-Mesa-Scottsdale CBSA and found that LTV levels vary from neighborhood to neighborhood within the metro area. The HVF update reported that in Scottsdale, average home prices have been rebounding steadily since 2011 and now are 20 percent below all-time highs after dropping 37.5 percent. Apache Junction, AZ, another city within the CBSA, is still 36 percent below its all-time high. At the height of the housing crisis, homes in Apache Junction lost more than half their value. The community also had more homeowners with high LTV loans foreclosed, leading to a steeper drop in home prices and a slower recovery.

 

read more…

 

http://www.realestateeconomywatch.com/2015/09/is-the-lack-of-credit-crippling-local-housing-recoveries/

Boomers Creating Massive Boom in Retrofitting Homes | Chappaqua Real Estate

Leave a reply

With 78 million baby boomers entering or on the verge of retirement, a concerted national effort is required to adapt homes and communities for the 73 percent of seniors who prefer to age in place, according to a new report released yesterday by the Bipartisan Policy Center (BPC).

The preference to grow older in one’s own home and community stems from a desire among many seniors to remain close to family and friends and maintain the social connections that have enriched their lives. They appreciate the familiarity of their own homes as well as that of the local shopping center, the community library, and their place of worship. They want to remain close to doctors, nurses, social workers, and the other professional service providers upon whom they have come to rely, according to research by AARP

That’s bad news for the nation’s real estate and housing finance industries, who have been anticipating a flood of transactions from Boomers selling their long-time residences.  But its good news for remodelers eager to retrofit family homes to make them senior-safe.

 

2015-09-26_10-56-19

Source: Adapted from Harvard Joint Center for Housing Studies, Housing America’s Older Adults: Meeting the Needs of an Aging Population.  JCHS tabulations of US Department of Housing and Urban Development, 2011

Many homes and communities are ill-equipped to accommodate this desire. Many of today’s homes were designed at an earlier time, before the demographic changes now transforming the country were even recognized. Most lack the necessary structural features that can make independent living into old age a viable, and communities so they are “senior friendly”. the BPC said.

 

read more…

 

http://www.realestateeconomywatch.com/2015/09/boomers-creating-massive-boom-in-retrofitting-homes/

Move up Buyers Move the Housing Markets | Armonk Real Estate

Leave a reply

Purchases by current homeowners helped bolster home prices in August, according to results from the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey.

“Current homeowner purchases are supporting the housing market,” said Tom Popik, research director for Campbell Surveys. “Metrics such as the sales-to-list price ratio show a strong housing market, particularly in western states. Nonetheless, forward-looking commentary from real estate agents may indicate some softening in the future.”

The market share for current homebuyers surged in the summer while the first-time homebuyer share declined. Current homeowners accounted for 49.3% of purchases in August, based on a three-month moving average after hitting a 12-month low of 44.9% in March.

The first-time homebuyer share was 38.3% in May – a level not seen since 2010. But higher home prices and seasonal patterns combined to push the first-time buyer share down to 36.4% in August. The investor share of home purchases has also fallen from 18.7% in March to 14.4% in August. NAR’s Realtor Confidence Index reported a 32 percent share for first-timers in August, up from 28 percent in July.

2015-09-25_10-10-31Source: NAR’s Realtor Confidence Report, August 2015

The sales-to-list price ratio for non-distressed properties declined modestly in August (to 98.3%) compared with the previous month (98.5%) but remained above the level seen in August 2014 (97.5%). All three states on the west coast maintained sales-to-list price ratios above 100% in August, led by California at 102.2%.

The median existing–home price for all housing types in August was $228,700, which is 4.7 percent above August 2014 ($218,400). August’s price increase marks the 42nd consecutive month of year–over–year gains.

The average time on market for non-distressed properties continued to decline in August, hitting 7.9 weeks compared with an average of 8.2 weeks the previous month and 8.6 weeks in August 2014. Non-distressed properties sold in the Pacific Northwest in August were on the market for an average of 4.5 weeks. NAR reported that properties typically stayed on the market for 47 days in August, an increase from 42 days in July but below the 53 days in August 2014. Forty percent of homes sold in August were on the market for less than a month.

 

read more…

 

http://www.realestateeconomywatch.com/2015/09/move-up-buyers-move-the-housing-markets/