Mortgage Lending Standards Loosen in January

Mortgage lending standards loosened in January, with the Mortgage Bankers Association's (MBA) Mortgage Credit Availability Index (MCAI) increasing 1.1 percent to 177.1. The MCAI indicates the overall standard with which lenders are offering credit; an increase equates to loosening, while a decrease equates to tightening.
"Mortgage credit availability increased for the fifth consecutive month in January, driven by increased availability of jumbo loan programs," said Lynn Fisher, MBA's vice president of Research and Economics, in a statement. "We saw a particular increase in agency jumbo programs that focus on loans in high-cost areas that exceed the baseline conforming loan limit of $424,000 but are still eligible for purchase by the GSEs. While the change in GSE loan limits may have had an indirect impact on the jumbo MCAI, there were other factors at play, as several investors rolled out new jumbo loan programs in January."
The MCAI is comprised of four indices: Conforming, Conventional, Government and Jumbo. The Jumbo MCAI increased 4.7 percent in January, while the Conventional MCAI and Government MCAI increased 2.3 percent and 0.2 percent, in order. The Conforming MCAI decreased 0.1 percent.
Source: Mortgage Bankers Association (MBA)

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Experts Agree: The No. 1 Factor Shaping the 2017 Housing Market

Rising mortgage rates will have the most impact on the housing market in 2017, according to expert opinions recently assessed in Zillow's Home Price Expectations Survey, followed by limited housing supply and shifting demographics.
Rising rates, markedly, affect both sides of the transaction—as rates increase, homebuyers are further extended, while sellers hold off on listing to avoid a higher-priced mortgage. The experts surveyed expect the most significant changes to come when rates reach 5.5 percent. According to Freddie Mac, rates currently are in the neighborhood of 4 percent. 
"Rising mortgage rates, inventory shortages and demographic shifts will be the main drivers of the U.S. housing economy this year, especially for first-time buyers who will face tougher competition for entry-level homes and often operate with a tighter budget than move-up buyers," says Zillow Chief Economist Dr. Svenja Gudell. "When you combine higher mortgage rates with increasing home values, mortgage affordability starts to suffer, and buyers will have to spend more and more on their monthly payments. This makes it even more important for buyers to prepare their finances, and shop around to make sure they are getting the best possible rate."
Seventy-seven percent of homebuyers obtain a mortgage to finance a home purchase, according to Zillow—this widespread use, experts agree, will amplify the effects of rising rates on home price appreciation.
"Compared to their outlook in our previous survey just a few months ago, most of our panelists now expect somewhat stronger home value appreciation this year and next, as tight inventory conditions persist," says Terry Loebs, founder of Pulsenomics, which partnered with Zillow on the survey. "However, longer-term, the consensus still calls for decelerating prices, with the most pessimistic quartile of experts continuing to project negative inflation-adjusted returns for U.S. housing beyond 2017. The specter of rising mortgage rates and other affordability hurdles are clearly impacting these home value projections."
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Foreclosures Fall 82 Percent from Recession Peak

Foreclosures are continuing their exodus from the housing market, with foreclosure inventory falling 30 percent and foreclosure completions falling 40 percent in 2016, according to CoreLogic's December 2016 National Foreclosure Report. Foreclosure completions totaled 21,000 in December, down from 36,000 one year prior and 82 percent from its recession peak.
Mortgage delinquencies in December also fell, 19.4 percent from one year prior. One million mortgages are in "serious" delinquency, or 90 days or more past due—the lowest amount since August 2007.
"Foreclosure and delinquency trends continue to head in the right direction powered principally by increasing employment levels, stringent underwriting standards and higher home prices over the past few years," says Anand Nallathambi, president and CEO of CoreLogic. "We expect to see further declines in delinquency and foreclosure rates in 2017. As the foreclosure inventory diminishes, we must look ahead and tackle tight housing supply and growing affordability issues, which are keeping many potential homebuyers, especially first-time buyers, on the sidelines."
Foreclosure inventory stands at 329,000, or 0.8 percent of all homes with a mortgage. Foreclosure inventory stood at 467,000, or 1.2 percent of all homes with a mortgage, in December 2015. New Jersey (2.8 percent), New York (2.7 percent), Maine (1.8 percent), Hawaii (1.7 percent) and the District of Columbia (1.6 percent) had the most foreclosure inventory in December 2016. Colorado (0.2 percent), Minnesota, Utah, Arizona, and California (all 0.3 percent) had the least.
At 45,000, Florida had the most foreclosure completions in December 2016, followed by Michigan (30,000), Texas (24,000), Ohio (21,000) and California (19,000). The least foreclosure completions were in North Dakota (182), the District of Columbia (254), West Virginia (312), Montana (630) and Alaska (668).
Source: CoreLogic 

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Report: Multifamily Marketplace Outlook 2017

The multifamily marketplace will continue to be propelled by growth in property values and rents in 2017, according to Yardi® Matrix's recently released Market Outlook report. The report, "Can the Good Times Keep Rolling?" projects that multifamily market fundamentals in most metropolitan areas will remain positive, even as rental growth slows.
"2017 is shaping up to be the biggest year for new supply since the financial crisis," the report states. "Demand for multifamily is poised to remain robust for years."

The prospect of new federal tax cuts, infrastructure spending and reduced business regulations could stimulate the economy, although potential tariffs and uncertainty surrounding the incoming administration’s policies could temper that growth, according to the report.
View the full report here.

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Hopes High as Home Builders Encouraged by New Administration

Home builders have high hopes for the year ahead, anticipating a solid real estate market while being encouraged by the promises of a new administration.
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) posted 67 this month, a decrease of only two points from December 2016, with the measure of "buyer traffic" at 51, the measure of "current sales conditions" at 72, and the measure of "sales expectations" at 76. An above-50 reading indicates more builders have a positive outlook than a negative one.
"Builders begin the year optimistic that a new Congress and administration will help create a better business climate for small businesses, particularly as it relates to streamlining and reforming the regulatory process," said Granger MacDonald, NAHB chairman, in a statement on the Index.
The current cost of complying with regulations is constraining construction businesses to the detriment of new housing stock, which remained severely limited at the beginning of the year. The shortage is especially pronounced in the starter home segment, which is preventing first-time homebuyers from entering the market. Lessening the burden could open up more build opportunities, alleviating demand.
Still, approximately 40 percent of those recently surveyed by the Associated General Contractors of America organization are "worried" that regulations will bear down further in the future.
"While the new administration and its stated policy objectives offer many reasons for optimism, there is a significant risk to the industry if the new Congress and administration under-deliver," Stephen Sandherr, CEO of the organization, said in a recent statement. "If plans to invest in infrastructure, reform healthcare laws and roll back regulations are delayed, many contractors will likely scale back their plans to expand headcounts."
Nearly three-quarters of construction businesses expect to hire more contractors in 2017, according to the AGCA, with the majority planning to grow between 1 and 25 percent. A lack of younger contractors is a factor, with the NAHB estimating the median age in the sector at 42.
"Concerns going into the year include rising mortgage interest rates, as well as a lack of lots and access to labor," said Robert Dietz, NAHB chief economist.

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Buying a Home in Winter? What to Look for

By Maria Patterson

While spring and early summer reign as peek home-shopping seasons, there’s no good reason why you can’t find that perfect house in the middle of winter, too. In fact, you might even get a good deal from homeowners who are anxious to sell as soon as possible and don’t want to wait for the spring thaw.

Looking at homes in winter, however, requires a different strategy, so consider the following before you start your search:

– Winter weather may prevent you from getting a good sense of a home’s yard, particularly, if it’s covered in snow. Make sure you’re informed as to the exact size of the plot, patios and decks, and ask your agent to show you pictures of the yard and home’s exterior in the spring and summer, if there aren’t any posted online.

– Ditto for the landscaping. If gardens are a high priority for you, find out which perennials, bulbs, shrubs and flowering trees are planted on the property, and whether or not the owner maintained a vegetable garden. This will give you a sense of what will emerge come spring and what your options are for further gardening endeavors.

– While you can experience the quality of the home’s insulation and heating system first-hand in the winter, you won’t be able to get a feel for the central air. Find out how old the system is, when it was last maintained and make sure the inspector takes an especially close look.

– The natural lighting in a home can be drastically different in winter compared to summer. Take time to notice the number of leafy trees on the property to get an idea of how much shade cover there will be when summer arrives. This will also give you a sense of the leaf clean-up job on deck for fall.

– In cold or inclement winter months, when people tend to hibernate indoors, you may not get a full sense of the neighborhood. Ask the agent about the number of and age range of children in the neighborhood, how active the community is, common traffic patterns and noise level.

The good thing about buying a home in winter is that you’ll be all moved in and ready to enjoy the warm weather when it rolls around. So throw on an extra layer and start your search!

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Rising Home Prices Spur Increase in FHA Loan Limits

Federal Housing Administration (FHA) loan limits will rise in most areas in 2017, applicable to cases assigned on or after Jan. 1, 2017, FHA recently announced. The increase, motivated by rising home prices, comes after the announcement that maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac would also rise next year.
The loan limit ceiling, according to a released by the U.S. Department of Housing and Urban Development (HUD), will rise to $636,150 from $625,500 in high-cost areas (areas where the loan limit exceeds the floor). The floor will rise to $275,665 from $271,050, applicable to areas where 115 percent of the median home price is less than 65 percent of the national conforming loan limit of $424,100.
The maximum claim amount for FHA-insured reverse mortgages (HECMs) will also rise to $636,150, 150 percent of the national conforming loan limit.
View the FHA loan limits by county here.
Source: U.S. Department of Housing and Urban Development (HUD)

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Mortgage Rates Reach Year-Peak to Date as Rate Rise Looms

Mortgage rates have reached their peak to date this year in the week leading up to the expected rise in the key interest rate, with the 30-year fixed-rate mortgage averaging 4.13 percent, according to Freddie Mac's recently released Primary Mortgage Market Survey® (PMMS®). The key rate, which the Federal Reserve will determine action on next week, generally informs the movement of mortgage rates. Analysts widely anticipate an increase in the rate, despite initial claims to the contrary after the election.
"The 10-year Treasury yield dipped this week following the release of the Job Openings and Labor Turnover Survey," says Sean Becketti, chief economist, Freddie Mac. "The 30-year mortgage rate rose another five basis points to 4.13 percent, starting the month 18 basis points higher than this time last year. As rates continue to climb and the year comes to a close, next week's FOMC [Federal Open Market Committee] meeting will be the talk of the town, with the markets 94 percent certain of a quarter-point rate hike."
The 15-year fixed-rate mortgage, in addition, moved higher, averaging 3.36 percent with an average 0.5 point, according to the survey. The 5-year Treasury-indexed hybrid adjustable-rate mortgage, as well, rose to an average 3.17 percent with an average 0.5 point.
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Post-Election Housing Sentiment: Too Soon to Tell?

Too soon to tell?
More Americans expect home prices to rise, according to Fannie Mae's recently released Home Purchase Sentiment Index® (HPSI)—but that expectation is likely muddled by the charged election atmosphere, which has resulted in opposing attitudes toward housing. The amount of Americans who said home prices will rise increased four points to 35 percent in November—a reversal of trend. The HPSI overall decreased 0.5 points to 81.2 percent last month, a half-point higher than its reading the same time last year.
"The November Home Purchase Sentiment Index outcome is difficult to interpret, as the data collection period occurred across the Presidential election timeline," says Doug Duncan, senior vice president and chief economist at Fannie Mae. "The results are fairly evenly split between responses collected before and after the election, and there is evidence of an increase in consumer optimism in the immediate aftermath of the election. However, we caution readers against drawing conclusions about sustainable changes in consumer sentiment so soon after the election."
The amount of Americans who said it is "a good time to buy a house" decreased one point to 30 percent; the amount who said it is a good time to sell, however, decreased six points to 13 percent, and the amount who said it is a bad time to sell increased two points to 38 percent—indicators of an upcoming swing to a buyer's market.
The amount of Americans who said mortgage rates will go down in the next year decreased as well, six points to -51 percent. Mortgage rates shot up over 4 percent in the wake of the election—the first time rates were above 4 percent since 2015—and have continued to rise every week since.
"Low mortgage rates have been the primary driver of positive attitudes toward the home-buying and -selling climate throughout the recovery," says Duncan. "However, if mortgage rates continue their recent rise, we may see a dampening in home purchase attitudes. There are clear predecessors for rapid market changes that ultimately dissipated, which urges caution in the interpretation of stability in short-term rate changes. Most recently was the very temporary market reaction to the Brexit and, earlier, the 'Taper Tantrum,' and in both instances the rate regime returned to roughly its prior position. The drivers are somewhat different in this instance but nonetheless suggest modesty in drawing near-term conclusions."
Housing on the whole is expected to slow next year, with® estimating home prices decelerating to a rate of 3.9 percent from an expectation of 4.9 percent.
"We do not see in the November HPSI results a fundamental departure from a flattening of housing activity relative to prior periods," confirms Duncan. "This is consistent with our corporate forecast of a modest growth in the 12 months ahead.”
Source: Fannie Mae

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5 Things to Look for in a Neighborhood, No Matter Where You Move

By Dixie Somers

Since relocating is such a major undertaking, it's vital to thoroughly research your options. This is especially essential regarding an overseas move. Here are five things to assess in a prospective neighborhood to ensure you'll feel at home, no matter whether your new home is here or abroad.

1. Transportation
One consideration is how you'll navigate your new surroundings. Find out whether you'll have access to public transportation or need a car. If you can use public transit, what are the service hours and stops? If you require airport proximity, determine how you'll get there. Do you currently have a job lined up? If so, calculate the distance of the commute from the neighborhood in question. Will the trip be a cakewalk, or grueling? According to World Knowing, the top-ranked countries with the best transportation systems in the world are Hong Kong, Singapore, the UAE, the Netherlands, Switzerland, Japan, Germany, France, Spain, and the UK.

Even if a REALTOR® lists the distance from a house to a public station, the calculation doesn't always include door-to-door travel time. You may be able to use Google Maps to determine this. If not, the website of a city's public transit system may provide a clue.

2. Businesses
Before visiting a neighborhood, think about businesses you'll be frequenting, such as a bank, grocery store, pharmacy and retail shops. Make sure they're a feasible distance from your prospective home. Also, ensure their customer service is reputable and prices are reasonable. For example, if there's a grocer nearby, does it stock staples, or only expensive gourmet goods? Where can you find fresh produce?

You may be able to minimize leg work by reading online business reviews. Yelp is expanding internationally, with websites emerging in Europe and Asia. Reviews are also conveniently available via iPhone and Android apps. Local Yelp announces business openings and events in major cities.

3. Schools
If you have children, REALTORS® will tell you that another must-have is access to quality education. Many overseas schools provide bus services, but trip length must be tolerable for kids. In towns where public schools are sub-par, you may want to enroll your children in private school. If so, consider the extra expense of entrance fees, tuition, uniforms and transportation.

Did you know there's a correlation between the presence of schools and crime? A 2011 study by the University of New Mexico found that elementary schools have a protective effect against property crimes. Middle schools, however, promote drug felonies, and high schools foster both property and narcotics crime. So, regarding school proximity, aim to be close enough for a short trip, though not a hop, skip and jump away.

Concerning school reputation, attend a PTA meeting at a given school. By speaking with other parents, you'll get firsthand information on the school's quality. A good school district increases a home's value, should you wish to sell in the future.

4. Amenities
Is culture important to you? If you're an avid fan of art, theater and music, this is a consideration. Do you like to frequent restaurants, pubs, or dance clubs? If these are high on your wish list, how close are they to the home you're debating? If you must travel to a distant town, factor in transit costs.

Also, research proximity to free entertainment, such as parks, museums and libraries. If you're a sports enthusiast, assess the distance to athletic arenas.

There's one caveat regarding crime: Steer clear of a neighborhood where bars are prevalent. The study mentioned above concerning schools and crime found that ready access to alcohol promotes violence and vandalism.

5. Economy
Neighborhood decline has telltale signs. Drive through the streets of a potential town, and look for financial clues. Examples of red flags are unkempt parks, littered streets and a prevalence of "For Sale" signs. Are people moving out of the area? Are businesses closing up shop?

Query librarians about the town and whether it's fiscally sound. Ask if the library has cut down its hours, another clue to a suffering economy. Look for indications that people care about their property and each other. Do houses and landscapes look maintained? Are neighbors interacting? If any seem friendly, ask about their experience of living there.

A Smart Move
Now you'll be a savvy traveler while exploring a new town. To ensure a successful move, evaluate the local:

  • Transportation
  • Businesses
  • Schools
  • Healthcare system
  • Amenities
  • Economy

Like a good journalist, get detailed information from reliable sources. Invite conversation, and record your observations. Then, make your smart move. You’ll be able to settle down for as long as needed in a wonderful neighborhood, whether that be in the United States or abroad.

This post was originally published on RISMedia's blog, Housecall. Check the blog daily for top real estate tips and trends.

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