Archive for the ‘NAR’ Category

Rental Sector Tightens – Reprinted from HousingWire.com

With so many caught up in the foreclosure crisis and forced to find rentals, there is a rental crunch.  Many are looking for 3 or more bedrooms.  Needlesss to say these rentals are snapped up as quickly as they go on the market.  This is good news for landlords and investors looking to buy properties to rent. 

The nation’s homeowner housing vacancy rates declined in the first quarter as supply conditions in the rental sector tighten and the proportion of families in tenancy reached a 15-year high.

Rental vacancies dipped to 8.8% in the quarter, 0.9% lower than a year earlier and 0.6% below the previous quarter, according to the Department of Commerce’s Census Bureau. The homeownership vacancy rate stands at 2.2% in the period, down 0.4% from a year earlier and 0.1% from the fourth quarter of 2011.

Some 34.6% of families rented their home in the first quarter, increasing from 34% at the end of 2011.

Because the housing recovery is driven by investors and cash buyers acquiring homes to rent out, the nation’s rise in rental rates continues, analysts at Capital Economics said.

“We think that the rental rate may rise slightly further yet, with the necessary flipside being that fewer households will own their own home,” analysts said. “This is positive for landlords, whose rental yields are approaching 6%.”

The bureau reported a national homeownership rate of 65.4% in the first quarter, falling 1% from the year-ago figure and 0.6% from the previous quarter.

Among regions, the rental vacancy rate was the highest in the South at 10.8% and lowest in the West at 6.3%. The Northeast was the only region to experience an annual rise in its vacancy rate in the first quarter, ascending from 6.8% to 7.8%..

For rental housing by area, vacancies inside principle cities (8.8%), in the suburbs (8.7%) and outside metropolitan statistical areas (9.2%) were not statistically different from each other.

“We expect strong demand and constrained supply to contribute to rental inflation of 3% or so in 2012, and for landlords’ rental yields to improve to 5.75%,” Capital Economics analysts said. “That would comfortably beat the yields available on Treasurys.”

for other topics visit http://www.housingwire.com/news/pending-home-sales-rise-remain-above-2011-levels

FHA’s New Limits on Financial Concessions from Sellers to Buyers

This is a reprint from Inman News (3/1/2012)http://lowes.inman.com and is information everyone should know and understand (sellers, buyers, agents)

    

The Federal  Housing Administration’s long-awaited rules on how much home sellers can  contribute to buyers’ closing costs are finally out — sort of.

Rather than  publishing final guidance on “seller concessions,” the agency put out  a Federal Register notice late last week saying, essentially: “OK folks,  here’s what we plan to do — but if you don’t like it, we’ll give you just 30  days to tell us why.”

As forecast  in an earlier column (see “FHA  may lower cap on seller concessions to buyers“), the almost-final rule  abandons the agency’s previous plan to impose a flat 3 percent, across-the-board  limit on settlement cost contributions by sellers that sweeten buyers’ deals.

That  approach was strongly criticized by the National Association of REALTORS® and by  prominent regional realty brokers as penalizing buyers and sellers in markets  with low to moderate home-sale prices.

Limiting seller  assistance to just 3 percent would smother sales, brokers complained, because  many closing costs are fixed and represent a larger percentage of the bottom  line in moderate-priced transactions compared with higher-cost sales.

To remedy  this, FHA officials now say the agency intends to adopt a more nuanced approach  under which the maximum allowable seller contribution can be the greater of  $6,000 or a percentage of the selling price, based on a sliding scale.

In some  cases, the current 6 percent cap will remain. In many others, it will dip far  below 3 percent and become a tiny fraction of what is allowed today.

For example,  in the sale of a $100,000 home, the maximum seller concession would be $6,000,  or 6 percent, under the new rule — the same as it is today.

On a  $120,000 purchase, it would be 5 percent ($6,000 is 5 percent of $120,000). At  a $140,000 selling price, the $6,000 cap would be 4.3 percent; at $180,000 it  would be 3.3 percent. At $200,000, the $6,000 cap would equal 3 percent, but  would still be one-half the $12,000 (6 percent) limit currently allowed.

All higher  sales amounts would be progressively more severely restricted by the 3 percent  limit. For instance, on a $300,000 home purchase the present FHA rule would  allow a seller to kick in as much as $18,000, but under the new cap that  assistance could not exceed $6,000 — far below even a 3 percent limit, which  would total $9,000.

In effect,  FHA wants to rein in what it sees as unacceptable distortions of the true  property value — and therefore its own risk of loss in the event of a default  — as transaction prices rise.

Left at its  current 6 percent across-the-board approach, FHA noted, sellers can throw in as  much as $43,785 in financial inducements to buyers in high-cost areas such as  California, New York and Washington, D.C., where the maximum conforming loan  limit is $729,750.

Fannie Mae  and Freddie Mac have long limited seller contributions to a flat 3 percent of  the selling price. The U.S. Department of Veterans Affairs allows 4 percent.

In its  proposed rule, FHA also took aim at certain types of seller assistance — particularly  those offered by some builders to bring buyers to the settlement table.

No longer  permissible under FHA’s revised definitions are seller concessions involving advance  payment of homeowner association fees, advance payment of mortgage interest for  a period of months, and “mortgage protection plans,” where borrowers  receive insurance policies free of direct charge that guarantee up to six  months of mortgage payments in the event of an unforeseen job loss or medical  disability.

“HUD  believes that these types of payment supplements, while permissible under  current seller-concession guidelines, are really inducements to purchase and  should be treated as such,” the agency said in its proposal.

To the  extent that builders or other sellers continue to make such offers to buyers,  FHA intends to subtract them, dollar for dollar, from the sale price of the  house before calculating the loan-to-value limit on the insurable mortgage  amount.

Still  acceptable to FHA under the proposed changes:

  • actual  closing costs;
  • prepaid  expenses;
  • loan discount  points; and
  • the  upfront mortgage insurance premium charged by FHA.

Though NAR  has not commented publicly yet on the FHA proposals, homebuilders are unhappy  with the rollbacks and new restrictions.

“This  is going to impinge on (builders’) ability to sell homes,” David Ledford,  senior vice president for regulatory affairs at the National Association of  Home Builders, told me.

Worse yet,  he said, FHA is planning to change the rules “at a very inopportune time”  in the market cycle, “just when there are ‘green shoots’ ” of  recovery sprouting up — in the form of higher traffic and slowly increasing  sales — in markets around the U.S.

In  particular, he added, many builders now routinely offer to pay a limited period  of homeowner association dues for their buyers, but now they may have to cut that  practice.

Steve A. Brown,  executive vice president of Crye-Leike REALTORS®, a large regional brokerage  based in Memphis, told me that in relatively moderate housing-cost areas such  as where his firm operates, FHA’s new sliding scale on sellers assistance caps “should  not have a huge impact, especially if agents advise clients to close toward the  end of the month to minimize prepaid interest, (which is) a large variable in  closing costs.”

In higher-cost  areas, however, it will be a whole different story.

Which Remodeling Projects Payoff – A Reprint

This information was pickedup from the National Associaton of Realtors Blog.  It is great information for anyone thinking about selling their home and reminds one of the importance of only doing those projects that bring more value to the home. 

2011-2012 Cost vs. Value: Which Remodeling Projects Pay Off the Most?

On January 25, 2012, in Helpful Tools, Remodeling Adviser, by Melissa Tracey

By Melissa Dittmann Tracey, REALTOR® Magazine

When tackling home remodeling projects, you’ll find some projects pay off more than others at times of resale. Remodeling Magazine, in conjunction with REALTOR® Magazine, recently released findings of its annual Cost vs. Value report for 2011-2012, revealing which remodeling projects offer the biggest bang for your buck.

Overall, the trend right now is replacement over remodeling–swapping out the old for the new rather than doing a total gut job, which can be much more costly.

This year’s Cost vs. Value report found that exterior replacement projects–such as new garage doors and a new entry door–offer some of the best returns at resale, allowing home owners to recoup close to 70 percent or more of the costs of the project at times of resale.

The following are the top, mid-range projects from this year’s report, based on what home owners stand to recoup at time of resale:

1. Replacing the entry door to steel

Estimated cost: $1,238

Cost recouped at resale: 73%

2. Attic bedroom (converting unfinished attic space into a bedroom with bathroom and shower)

Estimated cost: $50,148

Cost recouped at resale: 72.5%

3. Minor kitchen remodel (including new cabinets and drawers, countertops, hardware, and appliances)

Estimated cost: $19,588

Cost recouped at resale: 72.1%

4. Garage door replacement

Estimated cost: $1,512

Cost recouped at resale: 71.9%

5. Deck addition (wood)

Estimated cost: $10,350

Cost recouped at resale: 70.1%

6. Siding replacement (vinyl)

Estimated cost: $11,729

Cost recouped at resale: 69.5%

Fee Hikes/Mortgage Relief News from Fannie/Freddie

This information is coming from the Mass Assn of Realtors and is great news to unemployed borrowers.  

Fannie Mae will require mortgage servicers to install a new program providing forbearance relief to unemployed borrowers beginning March 1 for up to six months of relief without getting approval from the government-sponsored enterprise. Freddie Mac will begin offering 12-month forbearance plans on Feb. 1.  In addition, FHFA has directed Fannie Mae and Freddie Mac to increase their guaranty fees effective April 1. NAR opposed the increase in fees to pay for non-housing-related purposes. Lenders who will pass the increase on to borrowers will likely increase the rate offered by .1 percent sometime before April 1, 2012.

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