Jupiter Florida Real Estate Broker

Obama budget proposal: What would impact housing?

President Barack Obama once again is calling for a cap on the value of itemized deductions, including the mortgage-interest and property tax deductions, in his 2014 federal budget request. The cap would limit the value of all tax deductions to 28 percent for households in the higher brackets. If enacted by Congress, that would cap deductions at 28 percent for taxpayers currently in the 33, 35 and 39.6 percent tax brackets.

The president has sought the deduction cap every year he’s been in office, however, and it has never moved beyond the proposal stage. Analysts say it’s unlikely to move beyond the proposal stage this year.

Under the federal budget process, the president’s budget request serves as the administration’s statement of priorities, which Congress can consider as it crafts an overall budget blueprint for the year. Even the budget itself, once one is passed by both Houses of Congress, serves only as a fiscal guidepost for lawmakers and does not have the force of law.

For real estate, the president’s latest budget proposal largely rehashes previous proposals.

The Obama administration announced the extension or debut of three programs aimed at helping distressed home owners avoid foreclosure. The three initiatives are:

Increasing outreach in the Making Home Affordable Program: The U.S. Department of Treasury is partnering with NeighborWorks America as well as the National Foreclosure Mitigation Counseling program to increase support for struggling home owners who seek assistance through the Making Home Affordable Program, which includes the Home Affordable Modification Program (HAMP). HAMP reduces monthly payments by more than $540 each month, on average. “Through the new initiative, housing counseling agencies will help struggling home owners successfully complete and submit application documents to their mortgage company free-of-charge,” according to the White House blog.

Informing the unemployed about programs: The Department of Labor will be encouraging American Job Centers to inform unemployed home owners about federal foreclosure prevention options that are available to them. For example, there is unemployment forbearance through HAMP that allows qualifying home owners who are unemployed to reduce or suspend their mortgage payments for up to 12 months.

HUD’s new Housing Counseling Office: The Department of Housing and Urban Development has launched a Housing Counseling Office, which offers at-risk home owners free or low cost information about foreclosure prevention and loan modification programs. It also offers general information on buying or renting a home, handling foreclosures, and how to avoid scams. The office is made up of a network of 2,500 HUD-approved housing counseling agencies.

“While we are encouraged that the housing market is on the path to recovery, our job is far from finished,” according to the White House blog. “There are still many struggling home owners who need assistance. By connecting eligible home owners with existing foreclosure prevention programs, our new counseling initiatives will enable more borrowers to remain in their homes and go a long way in ensuring a brighter economic future for these families.”

 

Wells Fargo dominates home loan business

Wells Fargo & Co. is the largest U.S. mortgage lender, taking an unprecedented 28.8 percent share of all home loans nationwide last year, up from 11.2 percent in 2007.

“They are dominating the retail space because they are huge, and because there is so little competition from other big banks that have pulled back,” says Alan Rosenbaum, chief executive of GuardHill Financial Corp., a New York-based mortgage bank, to The Wall Street Journal.

Wells Fargo’s home loan production topped $524 billion last year – a record for any one lender. What’s more, that number is more than all of the next five lenders home loan production combined, according to the publication Inside Mortgage Finance.

Wells Fargo has been aggressively approaching real estate brokers and developers to expand its home lending business, striking deals to become preferred lenders.

Wells Fargo preferred-lender arrangements give it “first crack at a lot more loans,” says Rosenbaum.

Source: “Real Estate News: Mortgage Gamble Pays Off for Wells,” The Wall Street Journal (April 3, 2013)

Chris Ryder

Home prices rose in Feb. by most in 7 years

U.S. home prices jumped in February by the largest amount in seven years, evidence that the housing recovery strengthened ahead of the all-important spring-buying season.

Home prices rose 10.2 percent in February compared with a year earlier, CoreLogic, a real estate data provider, said Wednesday. The annual gain was the biggest since March 2006. Prices have now increased on an annual basis for 12 straight months, underscoring the recovery’s steady momentum.

The gains were broad-based. Prices rose in 47 of 50 states and in all but four of the nation’s 100 largest metro areas. Delaware, Alabama and Illinois were the only states to report price declines.

CoreLogic’s measure of national prices also rose 0.5 percent in February from January. That’s a solid increase during the winter months, when sales typically slow.

An increase in home sales has helped lift prices. In February, sales of previously owned homes reached the highest level in more than three years. Still, much of the demand has come from investors. Sales to first-time buyers remain below healthy levels.

Another reason prices are rising is the supply of available homes for sale remains extremely low. In January, it reached a 13-year low.

The supply of homes for sale did rise in February for the first time in 10 months. That suggests more people are gaining confidence in the housing recovery, which could help ease supply concerns and drive sales higher in the coming months.

The price gains were concentrated in the West, according to CoreLogic. The states with the biggest price gains were Nevada, where prices rose 19.3 percent, followed by Arizona, with 18.6 percent, and California, with 15.3 percent.

Hawaii and Idaho rose 14.6 percent and 13.5 percent, respectively.

The cities with the biggest gains were Phoenix, Los Angeles, Riverside, Calif., Atlanta and New York.

Nationwide, home values were still down more than 26 percent from their peak in April 2006 through February, CoreLogic said.

Steady increases in prices help fuel the housing recovery. They encourage some homeowners to sell homes and entice some would-be buyers to purchase homes before prices rise further.

Higher prices can also make homeowners feel wealthier. That can encourage more consumer spending, which drives 70 percent of economic activity.

Chris Ryder

A young couple, both doctors, thought they had themselves a deal when the owners of a Windermere house agreed in January to sell it for $460,000 – $15,000 below the asking price.But then the property appraisal came back for $130,000 less than the buyer and seller had agreed the house was worth. That killed the deal.“My buyers went and bought something else,” Lake Mary real-estate broker Nancy Pombo said. “And those people who were selling that house were looking at buying another house – they wanted to downsize.” Instead, they took the house off the market.“It’s like a chain reaction,” she said, “and it’s affecting buyers and sellers.”Mortgage companies routinely require appraisals on home purchases to help ensure that a lender can get its money back if a buyer later defaults on the loan and the lender has to sell the property. But appraisals are particularly challenging in a fast-changing market, such as the current one, because they are based on previous sales.In the core Orlando market, for example, resale prices have risen more than 10 percent in just the past six months – more than they usually increase during an entire year when the market is stable.“Buyers and sellers are agreeing to prices that haven’t been supported with current sales,” said Brian Watkins, president of Accusured Management LLC, a residential-real-estate appraisal-management company based in Longwood. “The appraisal may be $4,000 down from the sales price, and each side [buyer and seller] ends up compromising on something.”No one tracks the gaps between appraised values and contract prices on home sales, but in a survey released in January of 3,586 real-estate agents nationwide, about 10 percent of the agents reported sales that had been canceled during the previous three months because of appraisal problems; 10 percent also reported that sales prices had been driven down by appraisals; and 10 percent blamed appraisals for delaying some deals.Appraisers know that home values are rising again, but they’re reluctant to demonstrate that in their appraisals for fear of push-back from lenders, according to the survey, issued by the National Association of Realtors.Joyce Potts, a longtime Orlando appraiser, said the industry has come full circle from the days leading up to the peak of the frenzied real-estate market in 2007 – a time when banks sometimes suggested to appraisers what the value of a house should be so that the loan would be approved.“Most appraisers didn’t know how%

Chris Ryder

Analysis: Move-up buyers shouldn’t wait

Although waiting a few years to sell a home will likely mean a higher sales price, the cost of a bigger new home will increase as well, according to an analysis by Redfin. Financially, it makes more sense to capture today’s relatively low prices on the more expensive home.

Additionally, interest rates are still near record lows, but they’ll almost certainly rise over time, which means a higher monthly mortgage payment. In the next 12 months, the Mortgage Bankers Association expects rates to rise to 4.4 percent. Over a longer period, they are likely to be even higher, considering a 20-year U.S. average mortgage rate of about 6.5 percent.

The rationale for moving up now is fairly simple. A $100,000 home that appreciates 10 percent in one year would net a home seller an additional $10,000. But if that owner hopes to move into a home worth $200,000, the increased cost of the home one year from now, at the same 10 percent, would be $20,000 more.

Chris Ryder