Real Estate Report January 30, 2013

January 30, 2012

Are All Pieces in Place?

In predicting the state of the economy for this year, most analysts seem to be forecasting another lackluster year of recovery. However, we are not sure that all the pieces are not in place for the economy to have a stronger year. Why do we think this could be the case? Two words: five years. In the past months we have heard the term five years repeated again and again. For example, in mid-January first time unemployment claims fell to a level not seen in five years. December housing starts were also the strongest seen in five years. Is this a coincidence?
We think not. Car sales are the strongest we have seen in five years and American household formulation has also increased to a point not seen in....you guessed it, five years. Even states and local governments have started hiring again with this sector expected to add jobs for the first time in several years. We are not saying that there are not potential roadblocks. Even if the Federal budget negotiations are resolved, a solution will translate into a shrinking Federal workforce. The European debt crisis is far from over and there are many homes in the "shadow inventory" awaiting foreclosure. Yet, for the first time in five years we can say that the positives outweigh the negatives as we gear up for 2013. As we approach the first major data of 2013 in the form of the January employment report, we are hoping that consumers and businesses feel exactly the same way in this regard.

Americans are feeling increasingly confident in the future and more and more are striking out to set up their own homes, a move that is helping propel the housing recovery. The deep financial crisis and recession of 2007-2009 kept many Americans from leaving their parents' nests and drove others back into them, putting a sharp brake on the pace at which new households formed. Household growth averaged about 500,000 per year from 2008 through 2010 - less than half the rate seen at the height of the housing boom in the years just before that. The pace in 2010 was the weakest since 1947. But the rate at which individuals or families are getting their own homes picked up over the past two years, underpinned by a steady if tepid economic recovery and gradual labor market gains. In 2011, households increased 1.1 million and they grew closer to 1.2 million last year. "The rise in household formation bodes well for the housing recovery. Instead of having too many houses, we are turning to a situation where there aren't enough," said Guy Berger a U.S. economist at RBS in Stamford, Connecticut. Indeed, housing has turned from the economy's sorest spot to its brightest, with new building activity at 4-1/2-year highs. The gains are being felt primarily in the rental market, where rising demand has spurred a sharp pick up in construction of apartment buildings. "We are going to see more recovery in the rental market, in the very short run. As the market improves, people will start to face higher rents and over time, that will spill over into the owner-occupied market," said Gary Painter, a public policy professor at the University of Southern California. Source: Reuters

As demand picks up, builders are facing lot shortages and the challenge of finding new lots to support increased building. "No one has developed land in six years," Megan McGrath, MKM Partners home building analyst, told USA Today. Builders are now "running to catch up." The shortages of lots are driving up prices. Ninety percent of builders nationwide are reporting a rise in lot prices, according to a survey by John Burns Real Estate Consulting. Two years ago, that percentage stood at 10 percent. In some areas, lot prices are soaring higher than in others. For example, lots are about 25 percent higher in parts of North Carolina, 30 percent higher in Phoenix, and 15 percent higher in Denver and Orange County, Calif. "We're not worrying about whether we can sell houses anymore,” but builders are concerned about finding lots for future building, says Ure Kretowicz, a San Diego builder with Cornerstone Communities. Source: USA Today
The Federal Housing Administration has announced that they will charge new borrowers higher annual mortgage insurance premiums and stop allowing borrowers to cancel their annual insurance premium payments when their loan balance drops to 78 percent of the property value. The agency is making a number of changes to its programs in an attempt to boost revenue flows and reduce losses --- including requiring a higher down payment on higher loan amounts. In an interview, David Stevens, chief executive of the Mortgage Bankers Association and former commissioner of the FHA, said the agency should consider some basic "qualification standards" -- i.e. reverse loan applicants should have sufficient income and assets to ensure they do not blow through their initial lump-sum drawdowns and have nothing left to pay taxes and insurance. Source: Ken Harney, The Nation's Housing

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In the News January 28, 2013

In the News   key newsmaker last week was existing real estate sales, which saw an easing in December, but ended the year at their highest point in five years in terms of total sales and annual price increase, according to data released last week by the National Association of Realtors. Total sales of existing single-family homes, townhomes, condominiums and co-ops, ticked down 1 percent in December to an annual rate of 4.94 million, compared to 4.99 million in November. That said, they were 12.8 percent above the 4.38 million-unit level in December 2011. NAR's preliminary annual total for existing-home sales for 2012 was 4.65 million, up 9.2 percent from 4.26 million in 2011. This ranked as the highest volume since 2007 when total sales reached 5.03 million, and also the strongest increase since 2004. In terms of price, December's median existing-home price for all housing types was $180,800, which is 11.5 percent above December 2011. December's price marked the 10th consecutive month of year-over-year price gains, which last occurred from August 2005 to May 2006, and was the strongest increase since November 2005, which saw a 12.9 percent gain. Distressed homes, such as foreclosures and short sales, comprised 24 percent of December's sales up from 22 percent in November, but below 32 percent in December 2011. Foreclosures sold for an average discount of 17 percent below market value in December, while short sales were discounted 16 percent. Total housing inventory at the end of December fell 8.5 percent from November to 1.82 million existing homes available for sale, which represented a 4.4-month supply at December's sales pace. This was the lowest housing supply since May 2005's 4.3-month supply, which was near the peak of the housing boom. Looking at new real estate, sales of new single-family homes in December 2012 dipped to an annual rate of 369,000, the Census Bureau and the Department of Housing and Urban Development reported last week. December's sales were 7.3 percent below November's revised rate of 398,000, but were 8.8 percent over December 2011's estimate of 339,000. In terms of price, the median sales price of new houses sold in December 2012 was $248,900 and the average sales price was $304,000. In terms of inventory, the estimate of new homes for sale at the end of December was 151,000, which represented a supply of 4.9 months at December's sales rate. In terms of overall annual volume, an estimated 367,000 new homes were sold in 2012, which was a reassuring 19.9 percent over 2011's total of 306,000. Turning to employment news, the number of first-time claims for jobless benefits filed in the week ending Jan 19 dipped slightly to 330,000, a decline of 5,000 from the previous week's unrevised figure of 335,000, the Employment and Training Administration reported last week. The four-week moving average was 351,750, a decrease of 8,250 from the previous week's revised average of 360,000. The total number of insured unemployed during the week ending Jan. 12 dropped to 3,157,000, a decrease of 71,000 from the preceding week's revised level of 3,228,000. The four-week moving average was 3,197,500, a decrease of 12,250 from the preceding week's revised average of 3,209,750. As a broad economic overview, the Conference Board reported last week that its Leading Economic Index (LEI) for the U.S. rose 0.5 percent in December to 93.9 (a baseline of 100 was set in 2004), following no change in November, and a 0.3 percent increase in October. The LEI tracks various economic metrics, such as new orders, jobless claims, money supply, average workweek, building permits, and stock prices. This week, we can expect: Monday — Durable goods orders for December from the Census Bureau. Tuesday — Consumer confidence scores for January from The Conference Board. Wednesday — Advanced gross domestic product scores for the Fourth Quarter 2012 from the Bureau of Economic Analysis. Thursday — Initial jobless claims for the week ending Jan. 26 from the Employment and Training Administration; December personal incomes and spending from the Bureau of Economic Analysis. Friday — January payrolls, earnings, workweek and unemployment rate from the Bureau of Labor Statistics; Consumer sentiment scores for January from the University of Michigan; December construction spending totals from the Census Bureau; January car and truck sales from the auto manufacturers. 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

 

Real Estate Report January 23, 2013

Looking For the Big "Mo"

It is all about momentum. For the last couple of years we have had an economic recovery of sorts. But anyone can tell you that the recovery has been lacking spark as it seems like every year the recovery hits a mini-slump. Last year the slump hit as we approached mid-year and the European debt crisis worsened. The economy bounced back from this mini-slump but it slowed the momentum of the recovery over the year. Yes, momentum. We want the recovery to gain the big "mo," which of course stands for momentum. Momentum is what will enable us to shift into a higher gear. The question is--are we headed into another lackadaisical recovery year or are we going to gain this elusive momentum?
There are still potential speed bumps out there such as Europe and our own government's mishandling of every financial deadline. On the other hand, other speed bumps seem to be smaller. For example, last year you heard about the massive shadow inventory of homes about to be foreclosed upon. Last year we also demonstrated that an improving real estate market will absorb this inventory. The pace of new home starts reported for December on Thursday tells us that we finished the year with momentum in place with regard to the housing markets. Every speed bump removed or lowered enables us to move faster. Our reading of economic growth for the 4th quarter due next week should be interesting in this regard. If growth was decent while the threat of the fiscal cliff hovered over the economy, this could mean that momentum is being achieved. What we would like is to be moving downhill for a while. It is tough to slow down when you are moving downhill.

With 11 months of data reported, 2012 will go down as a record year for favorable housing affordability conditions, and a great year for buyers who could get a home loan, according to the National Association of Realtors (NAR). NAR’s national Housing Affordability Index stood at 198.2 in November, based on the relationship between median home price, median family income and average interest rate. The higher the index, the greater the household purchasing power; record keeping began in 1970. An index of 100 is defined as the point where a median-income household has exactly enough income to qualify for the purchase of a median-priced existing single-family home, assuming a 20 percent down payment and 25 percent of gross income devoted to mortgage principal and interest payments. For first-time buyers making small down payments, the affordability levels are relatively lower. For all of 2012, NAR projects the housing affordability index to be a record high 194, up from 186 in 2011, which was the previous record. November’s reading was 2.5 index points below October, but up 1.5 index points from a year earlier. NAR projects the housing affordability index to average 160 during 2013, which means on a national basis that a median-income family would have 160 percent of the income needed to purchase a median-priced existing single-family home. Conditions vary widely, with the highest buying power in the Midwest. Even in the West, where the regional index is lower, they typical family is well positioned in most markets. Source: National Association of Realtors

 

The lower inventory of homes for-sale could bode well for the job market, according to a recent article written by Robert Dietz, an economist with the National Association of Home Builders, in U.S. News & World Report. “More jobs in the broader economy fuels more housing demand, and with more housing demand comes more jobs in the housing sector, especially in construction, an industry still languishing in the wake of the bust,” according to the article. Every new home built keeps, on average, three people employed full-time for a year. Therefore, Dietz estimates that if single-family housing starts rise from 530,000 this year to 640,000 in 2013, housing could generate more than 300,000 jobs for the economy next year. As builders get more confident about the housing market, they will ramp up construction. And rising home prices lately from low housing inventories is helping to increase their confidence. The existing-home inventory has decreased 47 percent as of October 2012 from its peak in July 2007, according to National Association of Realtors data. Source: US News & World Report

You have gotten approved for a home loan and now you are just waiting to make it to the closing table. Make sure you don’t throw your loan approval into jeopardy by making one of these common mistakes--

• Making a big purchase. Avoid making major purchases, like buying a new car or furniture, until after you close on the home. Big purchases could change the your debt-to-income ratio that the lender used to approve the buyer’s home loan and could throw the approval into jeopardy.
• Opening new credit. Now isn’t the time to open up any new credit cards.
• Missing any payments. Home buyers need to be extra vigilant about paying all their bills on time, even if they’re disputing one.
• Cashing out. Avoid any transfers of large sums of money between your bank accounts or making any undocumented deposits — both of which could send up “red flags” to your lender. Source: Realty Times

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Real Estate Report January 16, 2013

Not Just Housing

If you have been reading our economic commentary for the past two months, you might get the impression that the latest segment of the economic recovery is all about housing. While it is true that housing has finally stirred and this sector is now contributing positively to the recovery, we don't want to give you the impression that it is "all about housing." Statistics released by the auto industry in the past few weeks show that car sales rose approximately 13% last year, even stronger than the rise in home sales. Right now car sales annually are approaching 90% of the records set before the recession hit, with more growth expected in 2013. We always expected that the recovery in car sales would precede the housing recovery because cars don't last as long as homes and must be replaced. Home sales are nowhere near 90% of pre-recession levels.
However, what is important here is that the auto industry is reacting to the same fundamentals as the housing industry. Lower jobless rates, increased household formulation and stronger consumer confidence. It is important to understand that a real economic recovery must span over the entire economy, not just one sector or another. For example, the health sector has been stronger than other sectors during the past few years. Adding housing and autos to the recovery makes it broader based and can help move us to a virtuous cycle. More people buy cars and that increases manufacturing jobs. Lower unemployment enables others to purchase cars and houses. Again, regardless of the political troubles Washington seems to be having, the consumer is waking up which is a good sign for 2013.

Will homes soon be powered and operated all from a smartphone? "There are smarter phones, so why not smarter homes?" Alexander Ljung, SoundCloud CEO, told USA Today. "It's perhaps natural that the phone is a remote control for a lot of things. Touch-screens are replacing buttons." A range of home devices could soon all be controlled by a phone or tablet, from kitchen appliances to washers and dryers, lights, pools, and windows, says tech experts. Major tech companies like Apple, Microsoft, Google, and Samsung are eyeing home technology as a booming business and are introducing a range of products for wired and automated homes. For example in May, Microsoft debuted an operating system for homes, called HomeOS, that connects smartphones, game consoles, wireless routers, home automation devices, tablets, and security cameras, all for easier access, sharing files, and syncing. The attention to wired homes also is causing architects to take a closer look at how they design and build homes so that they can better incorporate the new gadgets, blending them into kitchens, living rooms, and bedrooms, USA Today reports. For example, entertainment centers need sound systems and screens within walls, and architect Tom Kinslow notes that smart windows are larger than traditional windows. A range of products are being developed to outfit these high-tech homes. For example, flexible displays built into kitchen appliances will be able to tell home owners the proper temperature to cook an item at or even whether something has spoiled in the refrigerator. Bossa Nova Robotics is even developing a robot maid that will be able to complete house chores while home owners are away at work. Source: USA Today

Veros Real Estate Solutions has announced that analysis of its data shows compelling evidence that the national real estate market has hit bottom and is now in a full recovery. This is the conclusion of the company’s VeroFORECAST real estate market forecast for the 12-month period ending Dec. 1, 2013, updated quarterly and covering 975 counties, 335 metro areas, and 13,586 zip codes. The forecast update shows significant improvement on a national basis, indicating that on average the top 100 metro areas can expect 1.2 percent appreciation over the next 12 months. This is the second quarter in a row where this index has shown forecast appreciation. Highly notable is the re-emergence of several very strong market forecasts, with Phoenix appearing again as the top market with over 10 percent annual appreciation predicted. This is the first time since 2006 that Veros has forecast double-digit annual appreciation in any market. In addition, the depreciating markets are becoming less severe, with the worst markets in the -2 to -3 percent range, which is a typical level of depreciation of the poorest performing markets even during healthy market periods. For the first time since the recession began, on a national level, two-thirds of all markets are expected to either be flat or appreciating during the coming 12 months. Source: Veros
A big growth in new household formation is expected to drive up housing starts in the new year that will outpace the apartment boom, according to forecasts by Freddie Mac’s Chief Economist Frank Nothaft. Nothaft is forecasting a net growth of 1.2 to 1.25 million new households in 2013 that will provide a big boost to housing starts next year. That expected growth also will likely drive down apartment vacancy rates to 10-year lows and outpace the boom in new apartment construction, Nothaft says. Unemployment is expected to improve slightly in 2013 and the job and income gains will help jump-start more household formation, according to Nothaft. Also, more adult children who took up residence in their parents' homes are expected to move out next year, helping to increase household formation. “The last few months have brought a spate of favorable news on the U.S. housing market with construction up, more home sales, and home-value growth turning positive,” Nothaft says. “This has been a big change from a year ago, when some analysts worried that the looming ‘shadow inventory’ would keep the housing sector mired in economic depression. Instead, the housing market is healing, is contributing positively to GDP and is returning to its traditional role of supporting the economic recovery.” Source: RISMedia

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Laura Glass

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The Real Estate Report January 9, 2013

January 9, 2012

Someone Moved The Cliff

What happens when you get ready to fall down a cliff and when you close your eyes real tight -- bracing for impact-- nothing happens? Well, that is what happened last week when Congress magically caused the cliff to be moved. All along we indicated that the most probable result was for a very last minute agreement that would also kick the can down the road. Congress is so predictable because that is exactly what happened. The very last minute was defined as approaching midnight on New Year's Day. And while the agreement addressed a variety of issues, it also left plenty more to argue over in about two months time when Congress must raise the debt ceiling and automatic cuts in government programs are scheduled to take place.
Of course, Congress could take care of that problem in January and avoid another last minute death-defying experience. But what is the fun in that? No, we are likely to go down to the wire again in a few months. For now, we all breathe easier. And while there was damage done in the form of consumers holding back on spending and businesses holding back on hiring, the employment report released on Friday tells us that this damage was not as strong as we would have expected. America is a resilient nation and the economic recovery remains on track despite games played in Washington. It may take a while for us to collect our breath, but we believe that we will carry forward towards a stronger 2013.

Homeowners fare well in the fiscal cliff deal passed by the Senate and House on Jan. 1. The American Taxpayer Relief Act of 2012 apparently extends a law that expired at the end of 2011, which allowed for the deductibility of mortgage insurance (MI) premiums, according to a research report from Isaac Boltansky with Compass Point Research & Trading. The law now applies to fiscal years 2012 and 2013. "The law dictates that eligible borrowers who itemize their federal tax returns and have an adjusted gross income (AGI) of less than $100,000 per year can deduct 100% of their annual MI premiums," Compass Point said. "Certain borrowers with AGIs above $100,000 may benefit from the deductibility as well but are subject to a sliding scale. The tax break covers private MI as well FHA MI and VA and Rural Housing Service fees. In 2009, about 3.6 million taxpayers claimed the MI deduction," the research firm added.

One of the more watched provisions of the fiscal cliff was the Mortgage Forgiveness Debt Relief Act of 2007, which was set to expire on Dec. 31. The fiscal cliff deal extends it for another year, meaning homeowners who experience a debt reduction through principal forgiveness or a short sale are exempt from being taxed on the forgiven amount. "The amount extends up to $2 million of debt forgiven on the homeowner's principal residence," Compass Point Research & Trading said. "For homeowner's to qualify, their debt must have been used to 'buy, build, or substantially improve' their principal residence and be secured by that residence. The law, which was passed in 2007 with a 5-year sunset provision, will now be in effect until Jan. 1, 2014." Another win for housing is a provision tied to the government's plan to increase the capital gains tax rate from 15% to 20% for individuals who earn more than $400,000. While in theory, this is harder on higher-income homeowners, Compass Point sees a silver lining through an exclusion. Compass Point notes the law "states that only gains of more than $250,000 for individuals ($500k for households) are subject to taxes on the excess portion of capital gains. Point being, in order for an individual homeowner to be impacted by the increased capital gains tax rate they would need to have an adjusted gross income above $400,000 and gain more than $250,000 from the sale of the property. Since this exclusion threshold remained intact, the impact of the capital gains tax increase is limited." Source: HousingWire
Homeownership will be a bit more affordable for eligible U.S. service members in 2013. The Department of Defense has increased its Basic Allowance for Housing (BAH) for 2013, giving most active duty personnel larger monthly stipends to offset housing payments. The Basic Allowance for Housing is a monthly, non-taxable stipend paid to many active duty military members. Previously, the Basic Allowance for Housing was known as Basic Allowance for Quarters (BAQ). BAH rates are based on average housing costs, and are updated annually with data from property managers nationwide. Current rental rates for townhomes, duplexes, apartment units, single-family homes and other residence types are considered in the Basic Allowance for Housing, as is other information culled from the American Community Survey, an annual U.S. Census Bureau publication. The Basic Allowance for Housing is payable to military members in non-government quarters and there are three factors which determine a military member's individual Basic Housing Allowance: Pay Grade, Location and Number of Dependents. As would be expected, military members with higher pay grades (i.e. rank) receive a larger Basic Allowance for Housing. The same is true for military members living in "expensive" cities as compared to inexpensive ones. And, lastly, military personnel with dependents receive higher monthly allowances as compared to personnel without dependents. Beginning January 1, 2013, eligible service members will receive an average Basic Allowance for Housing increase of 3.8%. Personnel in some areas will receive an increase which is larger than the national average; some will receive less. For more specific information regarding the BAH, the following links will connect you with the actual data for each metropolitan area in the United States (Sources: Daily Mortgage Reports and VA):

• http://militarybenefits.info/wp-content/uploads/2012/12/2013-With-Dependents-BAH-Rates.pdf
• http://militarybenefits.info/wp-content/uploads/2012/12/2013-Without-Dependents-BAH-Rates.pdf

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Laura Glass

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Real Estate Report January 2, 2013

January 2, 2013

Happy New Year

 

Last week we learned something about American resolve. While Congress did its best to ruin the Holiday cheer, Americans were still busy celebrating. This celebration included purchasing gifts for others and homes for themselves. Aside from the threat of fiscal cliff chaos, Americans are feeling better about the economy and after years of austerity they are spending again. The final numbers for Holiday retail sales are not in and while some are pessimistic that the numbers will be uneven, malls around the country were certainly busy. We understand that we are still a long ways away from a strong economy and there are still potholes we must navigate around in order to keep the recovery marching forward. However, there are plenty of reasons to be optimistic at the start of this new year.
The most important reason to be optimistic is the improving state of the real estate market as existing and new home sales continue to increase. What a difference a year makes in this regard. Last year at this time we were listening to market prognosticators telling us about how long it will take to overcome the shadow inventory hanging over the market. Some said it would be decades before the market recovered. Meanwhile, the population of our country has been increasing for years and we have not been building enough homes to house this population growth. As the economy improves, children are moving out on their own and creating more demand. This demand creates more economic growth. Are we at the start of the virtuous cycle we have been waiting on for years? Time will tell, but we start this new year with more optimism about our chances, regardless of whether our government leaders decide to help our recovery or throw more roadblocks in the way.

In an effort to make up for a large budget shortfall, the Federal Housing Administration announced it will publish new standards for certain home owners and replace a popular reverse-mortgage program on Jan. 31, 2013. As among the changes, borrowers with credit scores between 580 and 620 will face stricter underwriting standards. Such borrowers will face stricter limits on their debt-to-income ratio. The FHA also will soon require a minimum down payment of 5 percent for high-cost loans that exceed $625,500. FHA also plans to suspend its popular reverse-mortgage option, which allows those 62 years and older to take cash out of their homes in a big, upfront payment, The Wall Street Journal reports. FHA will be replacing it with the Home Equity Conversion Mortgage saver, which offers lower cash payments than the large upfront payment of the other program. The changes are part of an effort to make up for a $16.3 billion deficit FHA faces. The FHA reverse program alone accounts for $2.8 billion of those losses. Last month, the FHA also announced it would increase insurance premiums. Source: The Wall Street Journal Those who act quickly can beat the timing of these FHA changes. Contact us for information on getting the process started and find out if there are alternatives that will help you purchase or refinance without using the FHA program.

Home values have now increased every month for more than a year, rising 0.6 percent from October to November to a Zillow Home Value Index of $156,200, according to the November Zillow Real Estate Market Reports. Home values were up 5.2 percent compared with last November, the largest annual gain since August 2006, when home values rose 6 percent year over year. The monthly increase is the 13th in a row for national home values. The last time home values stood at $156,200 was May 2004. Of the nation's 30 largest metro areas covered by Zillow, 25 experienced monthly home value gains. National rents were largely flat month over month, falling 0.1 percent to a Zillow Rent Index of $1,278. Year over year, rents nationwide were up 4.5 percent and rose on an annual basis in 27 of the 30 largest metros surveyed. "The housing market recovery we've been experiencing throughout 2012 should continue on its own momentum into 2013," said Zillow Chief Economist Dr. Stan Humphries. "Tight inventory, courtesy of negative equity, is running headlong into high demand driven by historic affordability and renewed consumer and investor interest. This is helping home values rise in a majority of metro areas nationwide. Looking forward, we expect this dynamic to continue, with the welcome result being more underwater borrowers released from negative equity as home values rise." Source: National Mortgage Professional

With low rates and fallen home values, some housing analysts are questioning why more first-time buyers—particularly the younger generation—aren’t flooding to the market. As a recent Reuters article questions: Could they be missing out on the “sweet spot” of the housing market by delaying their home purchases? The desire to buy is certainly there. Ninety-three percent of renters in the millennial generation say they plan to buy a home in the future, according to a poll by Trulia. But the number of first-time home buyers remains constrained: One in three home buyers are first-timers, the article notes. “Maybe that's because some millennials—generally those now in their 20s to early 30s—don't have the jobs that qualify them for loans or because they are taking time to accumulate down payments,” writes Linda Stern, a Reuters columnist. Whatever the case, they may still have some time to cash in, particularly as long as financing a home purchase remains so low. The Fed announced it is keeping rates low until the unemployment rate drops below 6.5 percent, which the Fed doesn’t expect to happen until 2015. Real estate and finance professionals may be able to help the younger generation work toward their goal of home ownership in the meantime too. For example, as the Reuters article points out, those looking to buy soon should take several steps to home ownership, such as working to improve and protect their credit score. “If your score is anything less than 740, find out how you can raise it — paying down a credit card balance, putting more time between you and your last late fee,” Stern writes. Young adults who are aspiring for home ownership also should start tightening up their wallets and saving for a down payment and closing costs. Also, they should learn about home loans available from the Federal Housing Administration, which offers loan products with low down payments that are popular among first-time home buyers. Source: Reuters

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