The Guldi Group

U.S. Housing Affordability Hits a New Record High

by ChrisGuldi on May 18, 2012

The housing affordability on a national scale in the U.S. hit a new record high in the first three months of 2012, this according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI).

The recent Housing Opportunity Index shows that 77.5% of all existing and new homes that were sold in the first three months of 2012 were affordable to families earning the national median income of $65,000.

This latest data surpassed the previous record set in the last quarter of 2011 when 75.9% of homes sold were within the means to median-income earners.
Barry Rutenberg, chairman of the National Association of Home Builders (NAHB), in a statement said, “Homes in this year’s first quarter were more affordable than they have been at any time in more than 20 years ….”

Despite this record high home affordability, lending condition proves to be the one of the major hindrances to many potential home buyers.

The chairman of NAHB added that “many potential sales are not happening because of overly tight lending conditions that are keeping hardworking families from obtaining a suitable mortgage.”

Nationwide, the most affordable major housing markets in the first three months of 2012 were Indianapolis-Carmel, Ind., Dayton, Ohio; Lakeland-Winter Haven, Fla.; Modesto, Calif.; Grand Rapids-Wyoming, Mich.; and Buffalo-Niagara Falls, N.Y.

Among the smaller housing markets nationwide, the National Association of Home Builders/Wells Fargo Housing Opportunity Index reveals that Cumberland, Md.-W.Va. topped the affordability chart for the first time in the first three months of 2012. In this housing market, 99% of homes sold in the first quarter of 2012 were within the means to families earning the area’s median income of $53,000.

Whether you are a first-time home buyer, first-time home seller, empty nester, thinking about selling a home or buying a home, do contact the Guldi Real Estate Group. In Southern Maryland, the Guldi Group is the number one real estate team.

Is Today the Right Moment to Become a First-Time Home Buyer?

by ChrisGuldi on May 14, 2012

The Wall Street Journal posted this question: Should first-time home buyers consider jumping into the market?

Eric Lascelles, chief economist at money-management firm RBC Global Asset Management Inc., told the Wall Street Journal that now is the best time to become a first-time home buyer.

Lascelles said that while the housing market, in general, is possibly still quite a few years from normality; nonetheless, today is a significant time to be a first-time home buyer.

“Affordability is the best it has been in 30 years, thanks to the combination of a 34% decline in prices since the 2006 peak and a historically low 4% average rate for a 30-year, fixed-rate mortgage,” the chief economist of RBC Global Asset Management Inc. said.

Lascelles said these are the affordability metrics:
• First, is how much monthly income a mortgage consumes; and
• Secondly, whether this is less costly than renting.

Lascelles calculated that home prices are now astoundingly 1/3 cheaper than the historical norm. He further cited the report of Trulia which shows that buying is cheaper than renting in 98 out of the nation’s 100 major markets.

While first-time home buyers are still contemplating on whether to buy a home now or later, Lascelles said, “Investors are already eating your lunch.”

The National Association of Realtors (NAR) reported that in 2011, sales of investment homes jumped to an astonishing 64.5%, from 749,000 in 2010 to 1.23 million in 2011.

Investment homes are residential homes bought primarily for sale, for rent or to hold for other financial or investment purposes.

“They (investment buyers) understand that this is the mother of all buyer’s markets, and won’t last forever. The prospect of making a profit by flipping these properties is still rather distant, so they lay in wait for an eventual rebound and in the meantime make money by renting out their properties for more than the monthly mortgage payment,” chief economist RBC Global Asset Management Inc. continued.

Anne Arundel County Real Estate Market Update

by JohnNewman on May 11, 2012

Spring is in full bloom and so is the housing market ! All indicators point to a robust real estate market in Anne Arundel County with the lower price ranges driving the market.

Statistic Values YoY MoM

Total Sold $ Volume $174,542 +12.32% +23.33%

Closed Sales 478 +4.6% +11.16%

Median Sold Price $300,000 +10.29% +5.69%

Avg. Sold Price $365,152 +7.39% +10.95%

Avg. DOM 127 days -2.31% -5.22%

Avg. Sold/List Ratio 92.11% +3.11% +1.68%

Prince George’s County Market Update (April 2012)

by JohnNewman on May 11, 2012

As the spring market continues to unwind PG County is continuing to see positive signs in terms of the housing market. April #’s continue to show signs that market stabilization may be near. The big unkown is the so called “shadow inventory” of foreclosures and how this will affect the supply of foreclosures.

Statistic Values YoY Mom

Total Sold Volume $119,388,349 -.12% +5.33%

Closed Sales 649 -7.55% -.61%

Median Sold Price $168,000 +7.35% +6.33 %

Avg. Sold Price $183,957 +8.04% +5.98%

Avg. DOM 112 days +4.67% +8.74%

Avg Sold to List Ratio 91.45% +3.64% +.88%

March Foreclosure Sales Lowest Since December 2010, LPS Reports

by ChrisGuldi on May 11, 2012

Lender Processing Services, Inc. (LPS), a provider of data and analytics to the mortgage and real estate industries, recently released its March “Mortgage Monitor” report showing foreclosure sales at its lowest since December 2010.

LPS data shows that foreclosure sales in March totaled 67,890, down by 8.5% on a monthly basis.

The report of LPS is similar to the report of CoreLogic showing that there were 69,000 completed foreclosures in March 2012 compared to 85,000 in March 2011 and 66,000 in February this year.

Source: Lender Processing Services, Inc. (LPS)

Since the start of the U.S. financial crisis in September 2008, CoreLogic reported that there have been close to 3.5 million completed foreclosures.

The March LPS report further shows that newly started foreclosures were up by 186,446 or 8.1% on a monthly basis.

“However, despite the increase, the number of first-time foreclosure starts in March was still far below those seen throughout much of 2011 and all of the previous three years,” LPS said in a statement.

Herb Blecher, senior vice president at LPS Applied Analytics told the Wall Street Journal, “What we’re seeing so far in the data, it doesn’t amount to a flood. There are regional bursts of activity here and there, but not that wave of foreclosures that people were expecting.”

Most Americans Prefer Buying a Home to Renting, Survey Shows

by ChrisGuldi on May 7, 2012

Most Americans favor buying a home to renting, this according to the latest quarterly national housing survey conducted by Fannie Mae.

Across all education levels, across all demographic groups and across all income groups, Americans say that owning a home makes more sense than renting.

“The survey finds that despite the recent housing crisis, most Americans continue to believe that owning their home is preferable to renting it,” Fannie Mae said in a statement.

Close to 2/3 of the present U.S. renters say they plan to buy a home at a certain point in the future.

The top reasons for buying a home in the future include non-financial factors such as quality of local schools and safety.

Doug Duncan, vice president and chief economist of Fannie Mae, in a statement said, “In spite of the impact of the housing crisis on home values and homeownership rates across the country, Americans by and large still hope to become homeowners.”

The vice president and chief economist of Fannie Mae added, “Some may not be financially positioned to own a home in the near future, but Americans may begin to revisit that aspiration as employment and household balance sheets improve over the coming years.”

Mortgage Rates Down to All-Time Record Lows

by ChrisGuldi on May 4, 2012

Freddie Mac released last Thursday its “Primary Mortgage Market Survey” showing that fixed mortgage rates hit new all-time record lows — signaling that homebuying affordability is high.

The 30-year fixed mortgage rate averaged at 3.84 %, down from the prior all-time record low of 3.87% recorded on February 9, 2012.

The 15-year fixed mortgage rate averaged at 3.07%, down from the prior all-time record low of 3.11% recorded on April 12, 2012.

“The 1-year ARM also averaged a new all-time record low in the PMMS at 2.70 percent,” Freddie Mac said in a statement.

Frank Nothaft, vice president and chief economist of Freddie Mac, in a statement said, “Signs of slowing economic growth and inflation remaining subdued allowed yields on Treasury bonds to ease somewhat and brought most mortgage rates to new all-time record lows this week.”

The chief economist of Freddie Mac added, “Real Gross Domestic Product rose at an annualized rate of 2.2 percent in the first quarter of this year, down from the previous quarter of 3.0 percent and below the market consensus forecast of 2.5 percent.”

U.S. Homeownership Rate Plunges to Lowest Level Since 1997

by ChrisGuldi on May 1, 2012

The Department of Commerce’s Census Bureau released last Monday the latest U.S. homeownership data.

According to the Census Bureau, homeownership rate plunged to the lowest level in 15 years in the 1st quarter of this year.

The homeownership rate fell 65.4% from 66% in the 4th quarter of last year. This is the lowest level since the 1st quarter of 1997.

The latest Census Bureau data further shows that of the close to 132.6 million homes in the U.S., 18.5 million or 13.9% were vacant in the 1st quarter of this year. A year ago, 19 million U.S. homes were vacant, the Census Bureau reports.

Paul Diggle, property economist with Capital Economics Ltd. in London, told Bloomberg that this homeownership rate plugged can be attributed to stricter mortgage standards.

Diggle said, “Although house prices and mortgage rates have fallen to a level that makes buying preferable to renting, ongoing problems accessing mortgage credit are preventing many households from taking advantage.”

Real estate experts have projected that homeownership may further fall with the recent federal court approval of the $26 billion settlement between the nation’s five biggest mortgage lenders and 49 state general attorneys.

Experts say that the $26 billion settlement not only clears the way for banks to compensate homeowners that were impacted with the foreclosure processing abuses, but the settlement also clears the way for more foreclosure activities.

More Americans are Renting Single Family Homes than Apartments, Recent Study Shows

by ChrisGuldi on April 27, 2012

A recent report from Corelogic, debunks the notion that more Americans rent apartments than single family homes.

Sam Khater of Corelogic reports that the single family rental market represents 52% of the total residential rental market.

Khater said that “the single-family rental market is a large, deep $3 trillion market that accounts for 21 million rental units or 52 percent of the residential rental market.”

“The single-family rental market is strong and vibrant with stable rents, low months’ supply and a healthy pace of closing,” Khater added.

Robbie Whelan of Wall Street Journal wrote, “Since the foreclosure crisis took hold, flooding the market with millions of cheap homes, hedge funds have been mining the distressed market for rental opportunities, teaming up with local property managers to buy thousands of foreclosed homes at courthouse auctions and more recently, from Fannie Mae, with the hope of generating double-digit investment returns.”

In a white paper to Capitol Hill and Congress, the Federal Reserve said that the “forces behind the decline in the homeownership rate, such as tight credit conditions, are unlikely to unwind significantly in the immediate future, indicating a longer-term need for an expanded stock of rental housing.”

In February this year, the Federal Housing Finance Agency (FHFA), the agency that regulates Freddie Mac and Fannie Mae, called on investors to purchase approximately 2,500 Fannie Mae foreclosed properties with the condition that these purchased homes must be rented out for a certain number of years.

Last March, Bank of American, one of the nation’s biggest mortgage lenders, announced that the company will allow a certain number of mortgage lenders who are facing foreclosure to remain in their homes as renters through the bank’s pilot mortgage-to-rental program. The bank announced that ultimately these rented homes will be transitioned to investor ownership.

Demand for Green Homes has Grown Significantly Since 2008

by ChrisGuldi on April 25, 2012

Despite the housing downturn that started in 2008, the demand for green homes has grown significantly, this according to the green home building study produced by McGraw-Hill Construction in collaboration with the National Association of Home Builders (NAHB) and Waste Management.

Harvey M. Bernstein, VP of Industry Insights and Alliances of McGraw-Hill Construction, in a statement said that “results of our study show that despite the drastic downturn in housing starts since 2008, green has grown significantly as a share of activity— indicating that the green market is becoming an important part of our overall economic landscape.”

The green home building study shows that many home builders have shifted their work from new home construction to remodeling work. Sixty-two percent of home builders who do both remodeling and new work reported that the economy has increased their renovation work.

In the study, 61% of builders and 66% of remodelers say that home buyers will pay more for green homes.

According to NAHB, home buyers have come to recognize that green homes result to lower bills due to higher building performance.

The 2011 Yahoo! Real Estate survey shows that the Americans’ idea of a dream home is one that is “green, energy efficient and built with sustainable” materials that yield a lower carbon footprint.

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