The Real Estate Report 11/28/2012

November 28, 2012

Heading Into The New Year

It is that time again. The year is drawing to a close and the predictions regarding next year will start pouring in during the next few weeks. Predictions are a very tricky business. For example, very few predicted that real estate would start its long awaited recovery in 2012 with the many obstacles the economy was facing starting out the year. There were many doomsday predictions regarding real estate mainly because of the millions of homes which were part of the shadow inventory and awaiting foreclosure. Last year we indicated that the shadow inventory of homes that were ready to be foreclosed upon could be absorbed by a series of factors -- if the economy kept expanding. Well, 2012 was a year of economic expansion. Of course, the rate of expansion was still excruciatingly slow.
When progress is slow it is very difficult to see it day-to-day. For example, a decrease in the unemployment rate from almost 10% at the beginning of 2011 to less than 8.0% today is significant. However, 8.0% is still much higher than what we would like to see. From 1948 to 2012, the unemployment rate averaged 5.8% according to the Bureau of Labor Statistics. If the economy keeps growing in 2013 and the real estate market continues to expand, the shadow inventory will continue to be absorbed. Last week it was announced that existing home sales rose 2.1% in October. What was really significant about this increase is that Hurricane Sandy was expected to have a dampening effect upon these numbers and sales usually drop off as we move closer to the Holidays. It is as if Americans realize that record low rates will not last forever and they are acting before the sale on America's real estate ends. And if Americans keep buying real estate, we believe the unemployment rate will continue to fall in 2013.

The Federal Housing Administration plans to raise its fees next year in order to help avoid a taxpayer bailout, the Obama administration announced. A report last week revealed the FHA, which insures home loans, faces a $16.3 billion deficit due to a rise in delinquencies over the last few years, particularly among loans that originated during the housing bubble from 2007 through 2009. FHA says it plans to raise its premiums on loans it guarantees by 10 basis points, which equates to about $13 per month extra to borrowers’ costs, Reuters reports. Also the FHA says it plans to increase short sales on loans it guarantees, in an effort to avoid more borrowers foreclosing on their properties. FHA is a big contributor to first-time home buyer funding. It insures about 1.2 million residential loans, which is about 15 percent of all U.S. home loans. The number of loans it insures has increased dramatically over the last few years. In 2006, FHA insured just 5 percent of the all U.S. home loans. FHA is federally mandated to maintain a 2 percent capital ratio—a target it has yet to reach in four years. Its current ratio is negative 1.44 percent, according to a recent audit of its finances. Source: Reuters Note: If you are thinking about purchasing or refinancing, you should move now while rates are still at record lows and before FHA raises their fees. Also, you should be made aware of alternatives to FHA financing.

While home prices are creeping higher across the country, low rates are helping to keep affordability conditions favorable in housing, according to the National Association of Home Builders/Wells Housing Opportunity Index. About 74 percent of all homes sold during the third quarter were affordable to median income families in the U.S. making $65,000, according to the HOI. In the second quarter, the percentage stood at 73.8 percent. "The latest housing affordability data is good news on two fronts, because it shows that the share of homes affordable to median-income earners has risen even as home prices have continued to gradually recover from their recession lows," says NAHB Chairman Barry Rutenberg. "This is primarily due to the fact that rates are now lower than we've seen them since the HOI was initiated more than a decade ago.” The median price of all new and existing homes sold in the third quarter was $189,000, according to the HOI. A year ago, the median price was $176,000. Source: National Association of Home Builders
The excess of supply of homes built during the last housing boom has finally been reduced to a level where builders will have to ramp up construction next year, according to an economist at IHS Global Insight. The Census Bureau recently reported that the homeowner vacancy rate fell to 1.9% in the third quarter, down from a 2.9% peak in 2008. The drop in the vacancy rate shows “we have run out of this excess inventory,” economist Patrick Newport told Source Media. “It’s a great reason for feeling good about the housing market next year. The builders are going to have to start ramping up at a higher rate than they are now,” the Global Insight economist said. A 1.6% homeowner vacancy rate was considered the norm before 2005. But now the HVR norm will probably be in the range of 1.7% to 1.8%. Newport explained that some of the excess supply was built in places where people don’t want to buy homes now. “The fact the housing prices are going up is the strongest sign that the housing market has tightened and we need to build more homes,” Newport said. Unless there is a recession, “we could see a lot more home construction than most people are forecasting,” he added. A JPMorgan Chase Bank economist pointed out in a recent research report that household formation “accelerated” last year, sparking a 659,000 decline in the number of vacant units. But the majority of demand for housing was met by filling vacant housing units, not new construction, according to senior economist Robert Mellman. With vacancy rates coming down and home values rising, that should change to the benefit of builders. “So homebuilding can be expected to increase substantially over the next year as a larger share of the increase in demand for housing units is met by new construction,” Mellman said. Source: Source Media

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Happy Thanksgiving!

In the news...11/19/2012

In the News   etail and food services sales for October dipped to $411.6 billion, a decrease of 0.3 percent from the previous month, according to last week's data from the Census Bureau. This was still 3.8 percent higher than October 2011, and total sales for the August through October 2012 period were up 4.7 percent from the same period a year ago. October's retail trade sales dipped 0.3 percent from September, but were 3.8 percent over last year. Some other notable performers: gasoline stations sales were up 1.4 percent over September and 7.7 percent from October 2011; food and beverage stores were up 0.8 percent over September and 3.9 percent over October 2011; and nonstore retailers were down 1.8 percent from September and 7.2 percent over October 2011. In related news, the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in October on a seasonally adjusted basis, the Bureau of Labor Statistics reported last week. Over the last 12 months, prices on the All Items index increased 2.2 percent. Notably, the shelter index increased 0.3 percent, its largest increase since March 2008, and accounted for more than half of the All items Increase. The index for all items less food and energy rose 0.2 percent, as the rise in the shelter index and increases in the indexes for apparel and airline fare more than offset declines in the indexes for used cars and trucks, new vehicles, and recreation. The food index increased 0.2 percent in October with the index for food at home rising 0.3 percent, its largest increase since September 2011. The energy index, which had risen sharply in August and September, declined slightly in October. Meanwhile, the Producer Price Index for finished goods declined 0.2 percent in October, the Bureau also reported last week. This continued an upward trend, but was down in comparison to September's 1.1 percent increase and August's 1.7 percent gain. At the earlier stages of processing, prices received by manufacturers of intermediate goods edged down 0.1 percent in October, and the crude goods index moved up 0.9 percent. Also in manufacturing, industrial production declined 0.4 percent in October after having increased 0.2 percent in September, the Federal Reserve reported last week. The Federal Reserve noted in its report that Hurricane Sandy held down production in the Northeast enough to have reduced the rate of change in total output by nearly 1 percentage point. The biggest hits from the storm included output reductions for utilities, chemicals, food, transportation equipment, and computers and electronic products. In October, the index for manufacturing decreased 0.9 percent, but excluding storm-related effects, factory output was roughly unchanged from September. The output of utilities edged down 0.1 percent in October, and production at mines advanced 1.5 percent. At 96.6 percent of its 2007 average, total industrial production in October was 1.7 percent above October 2011. Capacity utilization for total industry decreased 0.4 percentage point to 77.8 percent, a rate 2.5 percentage points below its long-run (1972--2011) average. In employment news, initial jobless claims filed during the week ending Nov. 10 hit 439,000, a significant increase of 78,000 from the previous week's revised figure of 361,000, the Employment and Training Administration reported. It's important to note that many experts cautioned that the spike was most likely due to a doubling up of claims data in states such as New York that were impacted by Hurricane Sandy and its ensuring power outages, which caused data to go unreported during the week before last. The four-week moving average was 383,750, an increase of 11,750 from the previous week's revised average of 372,000. The total number of insured unemployed workers during the week ending Nov. 3 was 3,334,000, an increase of 171,000 from the preceding week's revised level of 3,163,000, the Administration also reported (but, again, these figures could be skewed by hurricane-related reporting problems. The four-week moving average was 3,254,500, an increase of 17,750 from the preceding week's revised average of 3,236,750. This week we can expect: Monday — October existing home sales from the National Association of Realtors. Tuesday — October housing starts and building permits from the Census Bureau. Wednesday — Initial jobless claims for last week from the Employment and Training Administration; Consumer sentiment index for November from the University of Michigan; October leading economic indicators from The Conference Board. LauraGlass Mortgage Loan Manager Landmark Bank 720 E. Peyton St. Sherman, TX 75090 Office: 903-892-1800 ext. 3166 Cell: 903-271-3566 Fax: 903-892-8009 Contact Me My Website

Fall Home Decor Trends

Fall Home Decor Trends: One Part Nature with a Twist (ARA) - As Mother Nature wows us with fantastic fall colors and scenery, the latest trends in fall decorating and entertaining bring the beauty of the great outdoors inside. Give your home some fall-time flare by adding nature-inspired decor with unexpected crafty details. "This fall, decorating trends are inspired by nature, but the key is to use these elements in new and exciting ways. Interesting themes, new colors and surprising details are making fall 2008 distinctive," says Susan Atchison, manager of trend development for Jo-Ann Fabric and Craft Stores. Here are some decorating ideas and trends that you can try in your home: 1) Make pumpkins fun. Pumpkins are the quintessential symbol of fall, but why not put a new twist on a classic? When ordinary pumpkins just won't do, paint a collection of pumpkins and decorate them with scrollwork designs for instant I-did-it-myself appeal. "Try painting artificial pumpkins, called Fun-Kins, a variety of colors. Rich blues and reds will provide a classic look. Then decorate with dimensional copper paint or iridescent brown paint," says Atchison. "For a fun, brighter look, get inspiration from traditional prints by painting argyles, dots, checks, plaids and stripes in exciting color combinations for a fun mix-and-match pumpkin grouping that can be used year after year." 2) Make it a crafty Halloween. Halloween is a frightfully fun time, and with the holiday landing on a Friday this year, there's bound to be a little extra celebration. Consider using inexpensive or leftover craft items to create frightfully fun Halloween decorations for little cost. Atchison suggests making Jack-O-Lantern Illusions, which are made out of a quilt hoop that is painted orange with a fun jack-o'-lantern face hanging in the center with clear thread. They're quick and easy and look fabulous hanging from the ceiling indoors or on trees outside. 3) A table aplenty. Showcase the essence of fall's natural beauty with a sparkling centerpiece everyone will adore. Fill jars and bowls with decorative fruits like apples and grapes, but add pizzazz with nontraditional fruits such as pomegranates or mangos. "Put your own creative spin on the project by adding things you've purchased or found on a nature walk like pinecones, dried flowers or feathers," says Atchison. Add a special touch for your next dinner gathering by creating personalized handcrafted harvest place settings. Choose a decorative foam or plastic fruit and use copper paint to inscribe the guest's name. Add a feather or other decorative detail and you have a tasteful place setting that turns into a fun take-home party favor once guests are ready to go. 4) Accents around the home. Adding a touch of color throughout the home can transform it into an autumn environment in no time. Utilize colors to bring the feeling of the season into any room, from bathroom to kitchen to porch. Gorgeous golds and oranges, rich burgundies and browns, plus touches of teal and sage vividly reveal fall's splendor. Add a splash of color with a wine-toned table runner or visual appeal with a simple bunch of dried fall flowers filling the air with the pleasant aroma of the season. "This fall, decor with a natural essence is popular, but be creative. Adding unique details to traditional items or utilizing colors in new and exciting ways can really make your house stand out," concludes Atchison. For more information and to get supplies for creating the perfect fall decor for your home visit www.Joann.com. Courtesy of ARAcontent Laura Glass Mortgage Loan Manager Landmark Bank Office: 903-892-1800 ext. 3166 Cell: 903-271-3566 Fax: 903-892-8009 Contact Me My Website

The Real Estate Report 11-14-2012

 

 

The Aftermath

We knew all along that this week we would be writing about the aftermath of the elections. What we did not know is that we would also be writing this week about the aftermath of Hurricane Sandy and the devastation it brought to the Atlantic coast. The devastation of this super storm reminds us that we are powerless when it comes to defending ourselves from Mother Nature as well as being able to predict what will happen in the future. You can hire all the high-powered economists available -- nothing they can predict takes into account the unknown events that seem to hit us every year. For example, in a year when we thought that the markets would be deluged with foreclosures and vacant homes, who would have guessed that a major population area such as New York City would be facing a dour housing shortage? Yes, the storm will have devastating financial effects upon businesses and individuals in the short-run, but there will also be a rebound in construction as homes need to be rebuilt.

Many who are pined about "excess housing inventory" in the past several years seemed to forget that we have not been building enough houses to replace houses that become obsolete each year and keep up with demand. Similarly, the election will have mixed effects upon the economy. The fourth quarter will be the recipient of billions of dollars in campaign spending, a significant stimulus. Plus, a major uncertainty has been lifted. But what remains is figuring out whether Congress will remain deadlocked on many issues, starting with the budget negotiations which start even before the new Congress is sworn in. Since we can't protect ourselves from the uncertainty of Mother Nature, it would be nice if we started removing the man-made uncertainties from the economy. On paper, Congress still looks deadlocked. In reality we hope that Congress comes together for the good of us all.

Another sign economic recovery: The home ownership rate is no longer falling. It remained unchanged from the previous quarter, standing at 65.5 percent in the third quarter, the Commerce Department reported. A year ago, the home ownership rate stood at 66.3 percent. The home ownership rate is still far from its 70 percent peak during the housing boom. The rate started to drop soon after as the number of foreclosures began to soar, yet foreclosures are starting to slow. The Commerce Department reported in late October that the home owner vacancy rate dropped to 1.9 percent in the third quarter — the lowest rate recorded. “Some industry watchers expect the home ownership rate to increase again as consumers take advantage of depressed housing prices — down by a third or more nationwide — and interest rates that have made owning a home cheaper than renting in many markets,” The Wall Street Journal reports. Source: The Wall Street Journal The Department of Veterans Affairs announced it has reached a major milestone: It has guaranteed 20 million home loans since launching its loan program in 1944. “The 20 millionth VA home loan is a major milestone and is a testament to VA’s commitment to support and enhance the lives of Veterans, Service members, their families and survivors,” says Allison A. Hickey, VA’s undersecretary for Benefits. “As a result of their service and sacrifice, as a group, they prove to be disciplined, reliable, and honorable—traits that are ideal for this kind of national investment.” VA loans, which tend to boast low financing costs for home ownership, are available for eligible veterans, service members, and surviving spouses. The VA program has continued to grow, particularly in the last five years, due to its low interest rates. Loans for purchases have jumped 71 percent and loans for refinancings are up 20 times in that period. The Department of Veterans Affairs boasts the lowest foreclosure rate for the past 17 quarters. It also has had the lowest delinquency rate for the past 14 quarters on its loans, according to the Mortgage Bankers Association. Source: The Department of Veteran's Affairs Foreclosures continue to fall as the number of short sales inch up, according to CoreLogic’s National Foreclosure Report for September. “The continuing downward trend in foreclosures along with a gradual clearing of the shadow inventory are signs of stabilization and improvement in the housing market,” says Anand Nallathambi, president and CEO of CoreLogic. “Increasingly improving market conditions and industry and government policy are allowing distressed home owners to pursue refinancing, loan modifications, or short sales rather than foreclosures.” CoreLogic reports that 57,000 foreclosures were completed in September, down from 83,000 in September 2011. Still, from 2000 and 2006, foreclosures for a more balanced market averaged about 21,000 per month — so today’s numbers still remain elevated. Homes lost to foreclosure in September are down about 50 percent since peaking September 2010. Foreclosures are also down 22 percent compared to the beginning of the year, says Mark Fleming, CoreLogic’s chief economist. “While there is significant progress to be made before returning to pre-crisis levels, the trend is in the right direction as short sales, up 27 percent year over year in August, continue to gain popularity,” Fleming notes. Source: Core Logic All rights reserved

To all the Veterans...

Interesting Facts...

In the news Nov. 6, 2012

In the News

hile Hurricane Sandy dominated last week's headlines, it was a heavy week for economic news, with employment data dominating, starting with October unemployment scores. The unemployment rate was essentially unchanged at 7.9, with the U.S. economy adding 171,000 non-farm jobs over the course of the month, the Bureau of Labor Statistics reported last week. Key growth sectors for jobs were professional and business services, health care, and retail trade. Professional and business services added 51,000 jobs in October; health care added 31,000 jobs; and retail trade added 36,000 jobs for the month. The number of long-term unemployed (workers without jobs for 27 weeks or longer) hovered at 5 million, and accounted for 40.6 percent of the unemployed. The number of workers involuntarily employed part time for economic reasons — such as having their hours cut back or because of being unable to find a full-time job — fell by 269,000 to 8.3 million in October, partially offsetting an increase of 582,000 in September. In more recent employment news, the number of first-time claims for jobless benefits filed during the week ending Oct. 27 dropped to 363,000, a decrease of 9,000 from the previous week's revised figure of 372,000, the Employment and Training Administration reported. The four-week moving average was 367,250, a decrease of 1,500 from the previous week's revised average of 368,750. The total number of unemployed workers covered by unemployment insurance for the week ending Oct. 20 ticked up to 3,263,000, an increase of 4,000 from the preceding week's revised level of 3,259,000, the Administration also reported. The four-week moving average was 3,266,500, a decrease of 6,250 from the preceding week's revised average of 3,272,750. Another key newsmaker was personal income and spending, with incomes increasing $48.1 billion, or 0.4 percent, in September, according to the Bureau of Economic Analysis' report from last week. Disposable personal income (DPI) increased $43 billion, or 0.4 percent, and personal consumption expenditures (PCE) increased $87.9 billion, or 0.8 percent. Real disposable income (after taxes) decreased less than 0.1 percent in September and real PCE increased 0.4 percent, compared with an increase of 0.1 percent. Personal outlays — PCE, personal interest payments, and personal current transfer payments — increased $93.1 billion in September. Personal saving — DPI less personal outlays — skirted down to $395 billion in September, compared with $445.1 billion in August. The personal saving rate, which is personal saving as a percentage of disposable personal income, declined to 3.3 percent in September from 3.7 percent in August. The employment and income news perhaps had a beneficial effect on consumer attitudes, with the Consumer Confidence Index gaining again in October, according to the Conference Board. The Index now stands at 72.2 (a baseline of 100 was set in 1985), up from 68.4 in September. The Present Situation Index, which describes consumers' opinions of their current economic status, increased to 56.2 from 48.7. The Expectations Index, how they think their situation will trend, improved to 82.9 from 81.5 last month. In real estate news, construction spending during September hit an annual rate of $851.6 billion, a 0.6 percent gain over August's revised estimate of $846.2 billion, the Census Bureau reported last week. The September figure was 7.8 percent over September 2011's rate of $790.3 billion. Spending on private construction hit an annual rate of $580.5 billion, 1.3 percent over August's revised estimate of $572.8 billion. Residential construction grew to an annual rate of $285.9 billion in September, marketing a 2.8 percent gain over August's revised estimate of $278.0 billion. This week we can expect: Wednesday — September consumer credit from the Federal Reserve. Thursday — Initial jobless claims for last week from the Employment and Training Administration; September balance of trade from the Census Bureau and Bureau of Economic Analysis. Friday — October export and import prices from the Census Bureau; September wholesale inventories from the Census Bureau.

LauraGlass Mortgage Loan Manager Landmark Bank 720 E. Peyton St. Sherman, TX 75090 Office: 903-892-1800 ext. 3166 Cell: 903-271-3566 Fax: 903-892-8009 Contact Me My Website