The Wall Street Journal
With the monthly cost of owning a home more affordable now than at any point in the past 15 years, homeownership is becoming less expensive than renting in a growing number of cities.
Making sense of the story
- The Wall Street Journal’s third-quarter survey of housing-market conditions in 28 of the nation’s largest metropolitan areas found that home values declined in all but five markets compared with the second quarter, according to data from Zillow Inc.
- Meanwhile, rent levels have risen briskly across the country and mortgage rates, hovering around 4 percent, are the lowest in six decades.
- As a result, monthly mortgage payments on the median priced home – including taxes and insurance – are lower than the average rent levels in 12 metro areas, according to data compiled by Marcus & Millichap.
- Homeownership also is looking more affordable because after several years of declines, apartment rents will rise approximately 4 percent this year, and rents are poised to pick up even more momentum across the country next year, according to Marcus & Millichap.
- Affordability could continue to improve as prices slide even lower in coming months. Price declines are likely because the share of “distressed” sales, including bank-owned foreclosures, tend to rise in the winter, when traditional sales activity cools.
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http://online.wsj.com/article/SB10001424052970203764804577060502694077494.html?mod=WSJ_RealEstate_LeftTopNews
Applications for home purchase loans dropped by 20 percent in October from September, even though mortgage rates in October held close to their lowest levels of the year. Compared with one year ago, applications for home purchases were unchanged.
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http://blogs.wsj.com/developments/2011/11/11/applications-for-purchase-mortgages-declined-in-october/?mod=WSJBlog&mod=WSJ_Real Estate_BLOGSDEVELOPMENTSFEED
The average home price nationwide has declined 28.3 percent since the market peaked in June 2006, according to the most-recent Home Price Index by Lender Processing Services. The LPS HPI summarizes national home prices by tracking monthly prices in more than 13,500 ZIP codes. Within each ZIP code, it tracks five price levels from low to high.
The total value of U.S. housing inventory covered by the LPS HPI stood at $10.6 trillion at the peak. As of the end of August 2011, it was $7.65 trillion. During the period of most rapid price changes, from July 31, 2007, through December 2009, prices declined $56,000. The average annual decline during that time was 13.8 percent.
Since December 2009, prices have fallen more slowly, interrupted by brief seasonal intervals of rising prices. Since then, the LPS HPI national average home price has fallen $20,000. This corresponds to an average annual decline of 3.6 percent. Price changes were largely consistent across the country during August. Prices increased in only five percent of ZIP codes in the LPS HPI. Higher-priced homes had smaller declines: -0.72 percent for the top 20 percent of homes (prices above $321,000) compared with -1 percent for the bottom 20 percent (below $103,000).
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Realtor.com’s monthly housing report — based on information posted on brokers listing services — found the priciest big housing markets in California in September.
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http://lansner.ocregister.com/2011/11/09/wheres-priciest-homes-in-california/136083/
Fourteen mortgage servicers have begun mailing out letters to potential victims of robo-signing, inviting borrowers to submit their cases for a free review by independent consultants.
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http://lat.ms/t5xICO
Home buyers have a right to be informed of any business relationship between the real estate agent and the mortgage broker.
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http://www.nytimes.com/2011/09/11/realestate/when-real-estate-agents-make-referrals-mortgages.html?_r=1&ref=realestate
Home prices rose a substantial 3.6 percent during the second quarter compared with the three months ended March 31, but are still down 5.9 percent compared with the second quarter of 2010.
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http://money.cnn.com/2011/08/30/real_estate/home_prices/index.htm?hpt=hp_t2
Concerns about job loss and increasing consumer pessimism reveal that 64 percent of Americans surveyed during the second quarter say the economy is on the wrong track, according to Fannie Mae’s latest quarterly National Housing Survey.
The monthly survey found that 70 percent of respondents now believe the economy is on the wrong track, and just 23 percent say the economy is heading in the right direction.
More than a quarter (26 percent) of American workers reported being concerned about losing their job in the next year. While 44 percent of concerned American workers reported having a home mortgage (compared with 42 percent of all Americans), just 33 percent of them perceive their savings to be sufficient (versus 49 percent of those workers not concerned about losing their job).
Forty-four percent of these workers say their household expenses have increased significantly over the past year, compared with 35 percent of workers not concerned about losing their job.
Nearly three-fourths (73 percent) of single-family renters say it would be difficult to get a home mortgage, with 33 percent citing their credit history as the biggest obstacle to getting a home mortgage (versus 20 percent of multifamily renters), according to the survey.
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International fraud artists have invented an investment scheme that supposedly offers extremely high yields in a relatively short period of time. In this scheme, they claim to have access to “bank guarantees” that they can buy at a discount and sell at a premium. By reselling the “bank guarantees” several times, they claim to be able to produce exceptional returns on investment. Such a scheme is often referred to as a “roll program.”
To make their schemes more enticing, con artists often refer to the “guarantees” as being issued by the world’s “prime banks,” hence the term “prime bank guarantees.” Other official sounding terms are also used, such as “prime bank notes” and “prime bank debentures.” Legal documents associated with such schemes often require the victim to enter into non-disclosure and non-circumvention agreements, offer returns on investment in “a year and a day”, and claim to use forms required by the International Chamber of Commerce (ICC). In fact, the ICC has issued a warning to all potential investors that no such investments exist.
The purpose of these frauds is generally to encourage the victim to send money to a foreign bank, where it is eventually transferred to an off-shore account in the control of the con artist. From there, the victim’s money is used for the perpetrator’s personal expenses or is laundered in an effort to make it disappear.
While foreign banks use instruments called “bank guarantees” in the same manner that U.S. banks use letters of credit to insure payment for goods in international trade, such bank guarantees are never traded or sold on any kind of market.
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Wells Fargo & Co. was hit with a cease-and-desist order and a record civil money penalty over allegations that employees at its former subprime unit committed mortgage fraud and unnecessarily put borrowers into more expensive loans. The lender also is required to compensate impacted borrowers, which likely will cost between $4 million and $200 million.
