Posted by Robin Cutler & Kay Pearson in Mortgage Talk on December 14th, 2008 at 9:57 AM
Below is an article from Inman about the Federal Purchase of Mortgage Backed Securities. This is good news for the Housing market and buyers in particular. It means mortgage rates should fall. If you are a buyer, it's a great time to get off the fence, now is the time to buy. Rates should be low as a result of these Federal Support programs, that won't last forever.
Fed plan seen as housing boon
$600 billion spending plan should help interest rates
By Matt Carter, Tuesday, November 25, 2008.
Anyone planning to buy or refinance a home with a conforming loan is soon likely to have more buying power thanks to a $600 billion government program to purchase mortgage-backed securities and debt issued by Fannie Mae, Freddie Mac and Ginnie Mae.
The plan should keep interest rates on loans eligible for purchase by Fannie and Freddie down, even if the demand for mortgage-backed securities weakens with the slowdown in the global economy. That, in turn, should provide support for housing markets, supporters of the plan said.
In another significant development for borrowers, Freddie Mac said it's eliminating upfront fees charged to lenders for fixed-rate purchase loans and no-cash-out refinancings for "super conforming" mortgages above the $417,000 conforming loan limit. Because Fannie and Freddie are competitors, it's common for one to follow the other's lead on fees.
The Federal Reserve today said it would buy $100 billion in debt from Fannie Mae, Freddie Mac and the Federal Home Loan Banks, and $500 billion in mortgage-backed securities backed by Fannie Mae, Freddie Mac and Ginnie Mae. The Fed also announced a separate $200 billion program to lend money to holders of asset-backed securities collateralized by debt such as student loans, auto loans and credit cards.
Since the collapse of the "private label" secondary mortgage market in August 2007, Fannie, Freddie and Ginnie Mae -- which securitizes mortgages guaranteed by the Federal Housing Administration -- have become the conduits for funding the vast majority of U.S. mortgage lending, buying or guaranteeing more than three in four single-family mortgages.
The National Association of Realtors, which has been pushing for the Treasury Department to buy up mortgage-backed securities under the $700 billion Troubled Asset Relief Program (TARP), welcomed the new Fed plan. NAR estimates that every 1 percent reduction in interest rates can generate 500,000 home sales.
"We commend the Fed decision because it will directly bring down long-term interest rates," said Lawrence Yun, NAR chief economist. "The level of investment should be aggressive enough to bring interest rates down in a meaningful manner. As we've seen in past recessions, home sales rise when mortgage interest rates fall."
NAR will continue to push for a temporary, government-financed, interest-rate buy-down program to get rates down to 4.5 percent or less, Yun said, as part of a proposed package of stimulus measures to bolster housing markets (see story).
The Fed's purchases of mortgage-backed securities could bring down rates on 30-year fixed mortgages by 50 basis points, or half a percentage point, Yun said. A government interest rate buy-down probram would bring rates down another 200 basis points, a much greater impact that would provide "a good chance for a housing market and economic recovery," Yun said.
James Lockhart, director of Fannie and Freddie's regulator, the Federal Housing Finance Agency, said the $600 billion Fed program should be a "major boost" to mortgage and housing markets.
The additional liquidity will help reduce the large interest rate spreads between mortgages and Treasuries, resulting in lower mortgage rates over time, Lockhart said.
But the National Association of Home Builders said confusion over the extent of federal support for Fannie and Freddie's long-term debt obligations has also pushed spreads on that debt in relation to Treasury yields to record highs. That, in turn, has an impact on interest rates. The government needs to explicitly guarantee Fannie and Freddie's debt in the same way the Federal Deposit Insurance Corp. has guaranteed senior, unsecured bank debt, NAHB said.
The Fed's announcement came on the heels of other good news for borrowers -- Freddie Mac said it's eliminating or reducing delivery fees on "super conforming" mortgages of between $417,000 to $625,500 that it purchases after Jan. 2. Mortgages with note dates after Oct. 1 are eligible for the new pricing and credit requirements.
Fannie and Freddie's new chief executive officers indicated in October that such changes were in store. After the companies were placed in conservatorship in September they began reevaluating pricing of their loan guarantees with an eye to increasing liquidity to mortgage markets and a reduced emphasis on maximizing returns for investors (see story).
Freddie Mac also said this week that its retained portfolio of mortgages and mortgage-backed securities grew at an annual rate of 43.6 percent in October, to $763.7 billion -- reversing two months of negative growth. The retained portfolio peaked at $798.2 billion in July, but shrank as Freddie pared down holdings of mortgage-backed securities. Growth for the year to date was 7.1 percent at the end of October.
Posted by Robin Cutler & Kay Pearson in The Market on December 14th, 2008 at 9:37 AM
What has been the effect of the auto bailout on our market? So far not that dramatic. November and the first portion of December continue to follow the prior months patterns of units sales up and median sale price down. As we have said before, those with auto related jobs have not been buyers of real estate for 12-18 months or longer, so our market already reflects much of the auto effect. To our benefit, it does appear that in spite of the politics, the government will figure out an auto work-out. However, should one of the big three file for bankruptcy our market will slow further from the effect on the tangent/support businesses. How much of an effect on home sales is tough to tell. It will certainly balloon inventories but will have less of an effect on the supply of buyers as a result of lower prices and interest rates so it wont' be fun but it will not be the housing Armageddon that some have feared.
Determining the true home value change is tricky since both the median and the average price reflect as much the change in the type of home that is being sold (investors and first time buyers) as a decline in value. For example, the typical home in the city of Detroit is not worth just $7,500, but the typical home that is being purchased is. The Case-Shiller report, although not perfect either, provides a reasonably accurate look at overall market values. The exact number for any specific market lies in a blend of the two. It is clear that, although inventories are declining, they have a ways to go to reach to point where home values will begin to climb. Therefore what is most relevant in setting a home price is finding the most recent strongest comparable sales, adjust for the home differences and then reduce that price. It is reasonable to estimate the price decline rate is at least 1 to 1.5% per month, so if that comparable home sold 8 months ago, your adjusted home value is 10-12% or more to get ahead of the market. A reminder of those sellers who are looking to move-up in terms of home value and size: With rates currently hitting the 5% range, now is the time to act! What you might give up on your sale you will more than make up on the buy, it is a basic law of mathematics!
In our effort to maintain the leadership position in marketing our homes to more potential buyers than any other broker, we are now sending our listings to Yahoo Real Estate, one of the top real estate designations on the web with 5.1 million visitors is September alone.
The monthly market report is provided by Dan Elsea, President of Brokerage Services for Real Estate One.
Posted by Robin Cutler & Kay Pearson in The Market on December 14th, 2008 at 9:30 AM
The Standard & Poor's/Case-Shiller National Home Price Index dropped a record 16.6 percent in the third quarter compared to the same quarter last year.
And a separate monthly price index for 20 U.S. metro areas also fell a record 17.4 percent year-over-year in September.
The monthly index is based on repeat sales of resale single-family homes over time, and the quarterly national index is a composite of single-family home-price indices for the nation's nine Census divisions.
The indices do not gather sale prices associated with new construction, condos, co-ops/apartments, multifamily dwellings and other properties that cannot be identified as single-family homes.
All 20 metro areas in the monthly report experienced year-over-year price and month-to-month price declines in September.
In a separate announcement this week, the National Association of Realtors reported that the median price of U.S. resale homes dropped 11.3 percent year-over-year in October -- the largest ever drop since the National Association of Realtors began tracking the statistic in 1968 (see Inman News).
Posted by Robin Cutler & Kay Pearson in The Market on November 17th, 2008 at 9:30 AM
October sales continued on the same track as prior months with sales units continuing to rise (and reduced home prices). I have been waiting for the other shoe to drop as a result of the negative national financial news along with the GM/Chrysler impending changes. To that end, showings for the first week in October fell 10% compared to 2007, but they jumped right back up the next week to the same pace we have seen all year. The sales pace has slowed a bit as have showings in the upper end areas, but the rest of the markets continue to pick up the slack keeping things relatively consistent with the prior months.
So what does all this mean? The trends were heading in the right direction, sales units up and listing inventory is down. With additional impending layoffs, the bottom is likely to be reset to a new level for 2009 and extend our overall recovery time. The silver lining in this is that the new bottom may not be as big a change as it might seem. Here are a few of the key areas of influence in the upcoming year.
Buyers: Additional auto layoffs should not have a major effect on the supply of Buyers so activity should remain at 2008 levels. Few if anyone related to auto has been in the market as a Buyer for the past two years so most of the auto effect as it relates to Buyers has already occurred.
Listing Inventories: Inventories will most likely continue to fall for the first half of 2009 and then remain the same for the balance of the year. Banks are working towards policies to work with homeowners and avoid foreclosures which will reduce or at least spread out the foreclosure rate for late 2009 and 2010. However, additional home inventories from auto related changes will offset some of that, keeping inventories about the same.
Home Values: Home values will continue to decline for 2009. The exact amount is difficult to peg, but it should continue in the 1% per month or more rate. Vacant homes still comprise about 40-60% of the listing inventory. Significant appreciation will not return until those rates fall to 20% or lower.
Economic Stimulus Programs: The current and future stimulus programs will focus on housing; either in making home buying easier or helping lenders repackage mortgages to avoid additional foreclosures. Either way the net effect for 2009 will be positive in reducing or spreading out the foreclosure rate and drawing more buyers into the market. Its full effect will probably not be felt until the second half of 2009.
Auto Bailout: It appears some plan will be implemented, giving Detroit a breather and helping to spread the inevitable continued downsizing over a longer period of time. The positive effect we are looking for is to spread out the number of auto related homes that will go on the market over 3-5 years vs. the 1-2 years it was headed for, thereby helping to maintain values.
Housing Affordability: Our strongest asset, with the economic stimulus making it even stronger. For 2009, low rates and falling prices will continue to create bargains many will not be able to refuse. We may see the strongest affordability index in the past 30 years in 2009!
We can't control the market, but we can control how we react to it. Regardless of how the market shifts in 2009, for Sellers aggressive pricing ahead of the falling market is the key to a successful strategy. For Buyers, a home purchase is a very personal and unique event, trying to time it to the perfect balance of interest rates and pricing is nearly impossible. Start your home search process now and be ready to act quickly, because of aggressive pricing, the best homes are still selling in 30 days.
Daniel Elsea, Real Estate One
President of Brokerage Services
Here are our stats and the overall market for October:
Total Company Summary - Oct 2008
|
# of Buyers to Open Houses
|
2,872
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# of Showing Appointments
|
14,307
|
# of Homes Sold/Leased
|
1,364
|
# of Web Inquires (Unique Visitors)
|
109,895
|
# of Mortgage/Title/Insurance Closings
|
356
|
|
Number of Homes Pending
|
|
Available Homes for Sale
|
|
Area
|
Oct 07
|
Oct 08
|
% Change
|
Oct 07
|
Oct 08
|
% Change
|
Oakland County
|
988
|
1,484
|
50.2%
|
|
20,356
|
17,064
|
-16.2%
|
|
Macomb County
|
729
|
1,055
|
44.7%
|
|
9,702
|
8,054
|
-17.0%
|
|
Livingston County
|
127
|
186
|
46.5%
|
|
3,631
|
2,948
|
-18.8%
|
|
Washtenaw County
|
255
|
252
|
-1.2%
|
|
4,589
|
3,591
|
-21.7%
|
|
Wayne ( - Detroit & G.P.)
|
646
|
896
|
38.7%
|
|
12,267
|
11,102
|
-9.5%
|
|
Detroit
|
853
|
1,476
|
73.0%
|
|
15,562
|
12,753
|
-18.1%
|
|
Grosse Pointe(s)
|
61
|
63
|
3.3%
|
|
808
|
929
|
15.0%
|
|
Northwest Michigan**
|
263
|
134
|
-49.0%
|
|
10,120
|
9,957
|
-1.6%
|
|
Total
|
3,922
|
5,546
|
41.4%
|
|
77,035
|
66,398
|
-13.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Median Sale Price
|
|
|
Ave Chance of Selling (in 120 days)
|
Area
|
Oct 07
|
Oct 08
|
% Change
|
Oct 07
|
Oct 08
|
% Change
|
Oakland County
|
162,000
|
$ 120,000
|
-25.9%
|
|
19%
|
35%
|
79.2%
|
|
Macomb County
|
119,000
|
$ 80,000
|
-32.8%
|
|
30%
|
52%
|
74.3%
|
|
Livingston County
|
185,950
|
$ 155,000
|
-16.6%
|
|
14%
|
25%
|
80.4%
|
|
Washtenaw County
|
194,000
|
$ 149,475
|
-23.0%
|
|
22%
|
28%
|
26.3%
|
|
Wayne ( - Detroit)
|
131,000
|
$ 90,000
|
-31.3%
|
|
21%
|
32%
|
53.3%
|
|
Detroit
|
16,000
|
$ 8,000
|
-50.0%
|
|
22%
|
46%
|
111.1%
|
|
Grosse Pointe(s)
|
219,200
|
$ 147,500
|
-32.7%
|
|
30%
|
27%
|
-10.2%
|
|
Northwest Michigan**
|
138,900
|
$ 134,900
|
-2.9%
|
|
10%
|
5%
|
-48.2%
|
|
Total
|
$ 119,344
|
$ 80,922
|
-32.2%
|
|
20%
|
33%
|
64.1%
|
|
|
|
|
|
|
|
|
|
|
Data Source: MiRealsource, Realcomp, Ann Arbor Board & BrokerMetrics
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|
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Ave Chance reflects the % chance the average home will sell in the next 120 days under the current rate of sales
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** Includes Grand Traverse, Kalkaska, Antrim, Leelanau and Benzie counties, waterfront properties and vacant land
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Posted by Robin Cutler & Kay Pearson in Mortgage Talk on November 11th, 2008 at 6:07 PM
By Associated Press
Article Last Updated: 11/11/2008 08:17:25 AM PST
Major banks are stepping up their efforts to curtail losses from souring mortgages, with Citigroup Inc. becoming the latest institution to adopt initiatives aimed at helping at-risk borrowers remain in their homes.
Read the Entire Article
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