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May 5 , 2006
Gradual Rise in Mortgage Rates
New Home Sales Soar
Lake Tahoe Real Estate Market Update
Housing Strength Shifts To New Markets
Rents Heading Up in '06
Hurricane Relief for Mortgages
So long 'Homestore'
Gradual Rise in Fixed Rate Mortgage Rates Continued This Week
McLEAN, VA -- Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market SurveySM (PMMSSM) in which the 30-year fixed-rate mortgage (FRM) averaged 6.59 percent, with an average 0.6 point, for the week ending May 4, 2006, up very slightly from last week's average of 6.58 percent. Last year at this time, the 30-year FRM averaged 5.75 percent. The 30-year FRM has not been higher since the week ending June 20, 2002, when it averaged 6.63 percent.
The average for the 15-year FRM this week is 6.22 percent, with an average 0.6 point, also up very slightly from last week's average of 6.21 percent. A year ago, the 15-year FRM averaged 5.31 percent. The 15-year FRM has not been higher since the week ending May 24, 2002, when it averaged 6.28 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.21 percent this week, with an average 0.7 point, unchanged from last week when it averaged 6.21 percent. A year ago, the five-year ARM averaged 5.16 percent.
One-year Treasury-indexed ARMs averaged 5.67 percent this week, with an average 0.8 point, down very slightly from last week when it averaged 5.68 percent. At this time last year, the one-year ARM averaged 4.22 percent.
"Mortgage rates have drifted upward for the sixth week running, which is consistent with Freddie Mac's economic forecast," said Frank Nothaft, Freddie Mac vice president and chief economist. "We expect that the mortgages rates will continue to trend upward over the coming year, but that upward trend will be modest at best."
"Meanwhile, with gradually rising rates, refinance activity can be expected to shift. Fewer families will be refinancing, but of those who are, a larger percentage will be drawing some equity out of their homes, many to pay off previously existing home equity loans and lines of credit as those loans become more expensive."
Published: May 5, 2006
March gain of 13.8% the biggest in 13 years, showing surprising strength in housing market, but that was partly driven by builders cutting prices.
NEW YORK (CNNMoney.com) - New home sales posted the biggest jump in 13 years in March, but sales got a boost as builders cut prices to cope with higher mortgage rates and a growing backlog of houses on the market.
The government reported new homes sold at an annual rate of 1.21 million homes in March, up 13.8 percent from a revised 1.07 million pace in February. That easily topped forecasts for a 1.1 million pace from economists surveyed by Briefing.com.
The jump, the biggest since a 16 percent rise in April 1993, came even as mortgage rates hit an average 6.32 percent last month for 30-year fixed-rate loans, according to Freddie Mac, up from 6.25 percent in February.
The mortgage rate was the second-highest for any month since 2002. Rates have risen further since, climbing to 6.53 percent in the most recent weekly survey.
With rising mortgage rates driving up the cost of financing home purchases, most economists have been looking for the real estate market to cool off in 2006 after several years of record sales.
But economist Bob Brusca of FAO Economics said last month's drop in new home prices is a sign that the market for new homes isn't nearly as strong as the jump in sales would suggest.
He noted that the report showed an unusual drop in prices from both February and a year earlier, which could be a sign that home builders are cutting prices to move a large supply of new homes now on the market.
"New homes sales sprang back to life like a zombie in a cheap horror flick," Brusca said. "And like that zombie, housing really is dead. Don't let all that twitching fool you."
He said that many of the new homes sold in March were probably built in a stronger real estate market.
And unlike existing homes, where sellers can live until they get an acceptable price, "builders can't live in these houses unless they have a lot of family," he said. "By and large they must finance them at rising interest costs."
In fact, about one builder in five has reported a jump in cancellations of new home orders, according to a recent industry survey. And Wednesday's report showed that there were 553,000 new homes for sale in March, up 25 percent from a year earlier.
Meanwhile, average prices fell 7.1 percent from February to $279,100, after topping $300,000 for the first time in the February revised figures. The median price, which reflects the point at which half the homes sell for more and half sell for less, also fell 6.5 percent to $224,200.
And while month-to-month declines in home prices are not unusual, more significantly, prices also fell from a year earlier: a 2.2 percent decline in median prices and a 3.6 percent fall in average prices over that time.
Still, Wednesday's big jump in sales came after existing home sales also showed an unexpected increase last month in a report from the National Association of Realtors Tuesday.
New home sales, while a fraction of the overall real estate market, are more closely watched since they're more of a leading indicator of conditions in the housing market.
Existing home sales are recorded at closing, typically a month or two after a purchase agreement, while new home sales are tracked based on when contracts are signed.
Lake Tahoe Real Estate Market Update
The real estate market, like any investment medium is susceptible to the whims of the market place. Resort markets are especially interesting and fun to follow. In the past five years, Lake Tahoe real estate has enjoyed unprecedented appreciation due to a convergence of several factors; low interest rates (still the lowest in almost 40 years), diversification of investment portfolios,(as the stock market dipped real estate shined), 80 million baby boomers entering the 2nd home/quality of life market. In Lake Tahoe these dynamics have been magnified by a limited supply of new development and our relatively close proximity to two major metropolitan areas. One additional factor is the redevelopment of the resort village at Stateline which has really put us on the map as a "new and exciting" resort area to visit. We welcome you to come and enjoy all that Lake Tahoe has to offer, including some great real estate opportunities. Let our knowledgeable and friendly team of experts assist you with a custom tailored tour of properties just right for your personal and investment needs. (April 27, 2006) -- New U.S. Census data shows that more people moved into the South and West than left the regions between 2000 and 2004, while the Northeast and Midwest regions saw the opposite trend. Florida topped the list of states in terms of net in-migration, with 190,894 more people coming than going during the four-year period. Also toward the top of the list were Arizona, Nevada, Georgia, North Carolina, Texas, and Virginia. New York had to biggest net out-migration rate, with 182,886 more residents leaving than moving in over the same time span. California, Illinois, Massachusetts, New Jersey, and Ohio also lost more residents than they gained. Jim Gaines, research economist for the Texas A&M University's Real Estate Center, says the population is moving toward the South and West in search of more affordable homes, a healthy supply of developable land, and minimal building restrictions. The Census report also shows that 18 of the nation's 25 biggest metropolitan areas lost more residents than gained during the 2000-2004 period, including Los Angeles, New York, San Francisco, and Chicago. Smart Growth America Communications Director David Goldberg says a growing number of residents are moving to the suburban fringes for their more reasonable home prices, adding that large minimum lot sizes are promoting sprawl.
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A desirable location and quality of life contribute to high demand while low inventory and limited development due to environmental restrictions leads to a limited supply. It is likely over the next decade that home sales in Lake Tahoe will remain robust with probable continued price appreciation.
Location:
The key to any good real estate investment is location.
Close to San Francisco Bay Area and Sacramento (one of the fastest growing areas in California), Lake Tahoe makes an accessible choice for a vacation retreat, retirement home or investment property. Our proximity to the high tech industries of the Silicon Valley offer many vacation homeowners the opportunity to telecommute part time from their vacation homes. Easy drives from Sacramento and Reno make it a popular weekend spot.
Recreation:
The Tahoe basin enjoys status as one of the finest year-round recreation areas in the world. Visitors come to experience the best in year-round outdoor activities including world-class skiing and boarding, snowmobiling, boating, golf, hiking and mountain biking. Some come to try their hand at gaming and tempt "lady luck" or to enjoy the nightlife.
Lifestyle:
Match your destination to your lifestyle. Changing priorities have made quality of life increasingly important. Buyers are increasingly looking for a place to escape on the weekends while looking for a solitude and relaxation?
Spectacular scenery:
Lake Tahoe attracts millions of travelers a year because it offers the best of both winter and summer climates.
Visitors continue to be awestruck by the grandeur and beauty of one of the most spectacular mountain lakes in the world. Like travelers before them, present day vacationers flock to Lake Tahoe's shores, many vying to make a piece of this paradise their own. With awe-inspiring beauty and a multitude of selections for vacation homes and rentals, the South Lake Tahoe resort area is great for both vacation homes and investment opportunities. If you are looking for a vacation home in Tahoe you are not alone. Who wouldn't long to view sweeping mountain vistas from a mountain chalet sequestered among the Jeffrey pines?
Information Sources:
National Association of Realtors®, California Association of Realtors®, South Tahoe Association of Realtors®, Aspen Board of Realtors, Land Title Guarantee Company of Eagle County, Colorado.
(Information deemed accurate but not warranted)
ZIP Code: 96150
Approximate Location Boundaries: From Emerald Bay to Glenbrook in portions of El Dorado and Douglas Counties.
Location Characteristics: Lake Tahoe is regarded as one of the finest year-round recreation destinations in the world with opportunities for fun and adventure for the whole family. Enjoy crisp, clean air, and the undiminished grandeur of the Sierra Nevada amid fragrant pines. At an elevation of 6,229 feet this alpine lake ranks among the most spectacular mountain lakes on the planet.
Housing Strength Shifts To New Markets
Wednesday, April 26, 2006
As home sales cool on the East and West coasts, some cities that missed out on the real-estate boom are becoming the strongest markets.
A look at inventories of unsold homes, prices and employment trends points to generally positive signs in Houston, Dallas and Atlanta -- cities that have seen only modest home-price gains in recent years.
Metropolitan areas whose housing markets look less healthy, at least in the short term, include Boston, Los Angeles, Miami, Minneapolis, New York, Philadelphia and San Francisco. All of them have growing inventories of homes and relatively weak job growth. As a result, houses that a year or two ago might have sold in hours now are languishing on the market for months, and some sellers are cutting prices.
To produce a snapshot of residential real-estate prospects for 18 major metro areas, The Wall Street Journal examined inventories of homes for sale at the end of the first quarter from a variety of local sources; pricing trends based on surveys of real-estate agents by Daniel Oppenheim, an analyst at Banc of America Securities in New York; and projections of job creation by Moody's Economy.com, a research firm in West Chester, Pa. Inventory data provide a broad picture of the overall supply of housing, while job trends are the biggest driver of demand. The pricing data show how markets are adjusting to recent shifts in supply and demand.
Texas has been a laggard in recent years, partly because job markets were weak in some cities and land for new houses is plentiful. Now, the state's job market is strong, as cities there are benefiting from the oil boom and an influx of people from abroad and elsewhere in the U.S., and housing demand is keeping up with the relentless spread of new subdivisions as Texas cities sprawl. Investors, many from California, are adding to the demand.
Texas home prices could rise 6 percent to 9 percent annually over the next several years, up from an average of 4.5 percent over the past 15 years, says James P. Gaines, an economist at Texas A&M University's Real Estate Center in College Station. He says the state is attracting residents and employers because its housing remains very affordable by national standards.
"I don't see a slowdown coming," says Lorraine Abercrombie, chairwoman of the Houston Association of Realtors and director of marketing for Greenwood King Properties. Last week, Greenwood listed a five-bedroom home in Houston's Wilchester West neighborhood. Within three days of the first showing, the home was under contract for $465,000, well above the asking price of $449,000.
Atlanta also benefits from a healthy job market, due partly to the city's role as a regional hub and a magnet for immigrants and conventions. J. Lewis Glenn, president of Harry Norman Realtors, says the total value of homes sold by the big local firm in March was up more than 10 percent from a year earlier. Unlike Dallas and Houston, though, Atlanta's inventory also is up substantially -- 15 percent -- from a year earlier, according to SmartNumbers LLC, a local research firm. That bulge should restrain price increases.
For the nation as a whole, many real-estate executives and economists continue to predict a fairly soft landing for the housing market. Among those taking this view are Ronald J. Peltier, chief executive of HomeServices of America, a chain of real-estate brokerage firms owned by Warren Buffett's Berkshire Hathaway Inc. But Mr. Peltier warns that prices in parts of Southern California could fall as much as 5 percent to 10 percent this year.
One coastal market that remains strong is Seattle, where jobs are plentiful and home inventories remain lean, though they have crept up from a year earlier. But many other coastal markets are suffering hangovers from the boom of recent years. Rising interest rates have priced some buyers out of these expensive markets and deterred speculators, who no longer can count on fast profits and are dumping properties on the market.
One of the weakest markets is Boston, where inventories have nearly doubled from a year ago and the job market is soft. The median price of homes listed for sale in the Boston area has fallen 3.3 percent from a year earlier to $579,000, according to MLS Property Information Network Inc. in Shrewsbury, Mass. For condos, the median asking price is down 6 percent to $375,000.
Sonia Hernandez Diaz, an assistant professor at the Harvard School of Public Health, has had her two-bedroom condo in Brookline, near Boston, on the market for only a month, but already has lowered the price to $449,000 from $469,000. She says there have been lots of people looking at the condo, featuring "gleaming" hardwood floors and an eat-in kitchen, but no offers yet.
In New Jersey, a market highly dependent on people who commute to other states, prices are likely to be flat to slightly higher this year, down from the double-digit pace of recent years, says Jeffrey G. Otteau, president of Otteau Appraisal Group in East Brunswick, N.J. Next year, he thinks prices could fall 5 percent or so in the state.
"We think that we're going to be in a flat holding pattern for the next several years," Mr. Otteau says, though at the top end of the market, there is "an extreme oversupply" of houses. In Spring Lake, N.J., known for expensive homes, there is a three-year supply of homes at the current rate of sales, and Upper Saddle River has a 21-month supply, Mr. Otteau estimates. He blames the state's loss of high-paying jobs in such industries as telecommunications and pharmaceuticals.
The picture is mixed in Phoenix, Las Vegas, San Diego and Washington, D.C. Inventories have surged in all four cities, particularly in Phoenix, as sales have slowed. But job growth is well above the national norm, and that should soften the landing. The Las Vegas market has "normalized," says Linda Rheinberger, president of the Greater Las Vegas Association of Realtors. Prices there are likely to rise 5 percent to 10 percent this year after jumping about 49 percent in 2004 and 14 percent in 2005, she says.
In Miami, a building boom has more than tripled the inventory in the past year. Even so, population growth should absorb any excess supply within 12 to 18 months, says Ronald A. Shuffield, president of Esslinger-Wooten-Maxwell Realtors, a big real-estate brokerage firm there.
The Detroit area, which missed the boom, is now being mauled by job cuts in the auto industry. "We haven't quite hit the bottom yet," says Dan Elsea, president of brokerage services at Real Estate One, a large brokerage firm in Michigan. For houses in the range of $400,000 to $1 million, he says, prices are down about 10 percent from a year ago. He calls it a good opportunity for investors.
By James R. Hagerty, The Wall Street Journal
Top
Apartments may get significantly more expensive to rent this year.
NEW YORK (CNNMoney.com) - Apartment rents are headed up in 2006.
After a few years of little movement, residential rents are expected to climb substantially, even as home prices may finally be plateauing.
"This will be a good year for landlords," says Greg Willett, vice president for research and analysis at M/PF YieldStar, a consulting firm serving the multi-housing industry. "There will be rent growth as vacancy rates come down. Landlords feel comfortable enough now to start raising rents again."
According to Willett, whose firm tracks 57 markets, rents will likely rise between 5 percent and 6 percent in 2006.
Several factors are contributing to landlord optimism, but what they all boil down to is that more Americans are being driven into the apartment market due to the increased expense of home ownership.
Home prices appreciated at an average of nearly 9 percent a year from 2001 to 2005, far surpassing increases in rents, which averaged only 2 or 3 percent a year. The soft rental market coincided with the housing boom, which drew millions of Americans into home ownership, reducing the demand for apartments.
But the hot home market is cooling off this year. David Lereah of the National Association of Realtors is predicting home price increases around 5% for 2006 – about the same amount that rents will rise.
The higher end of the rental market took an especially hard hit during the housing boom as more affluent Americans saw the value of buying real property as an investment as well as a place to live.
"There has been a big cut in the number of higher income renters" says Willett. "Many people used to be renters by choice. Now most renters are by necessity."
Those renters by necessity will probably be joined by many more over the next months. High home prices and rising interest rates mean that hundreds of thousands of potential homebuyers cannot afford to buy a single-family home or condo, according to Brad Inman, founder of Inman News Service, which covers the real estate industry.
"Not only that," he says, "but lenders are tightening up their lending criteria, leading to fewer qualified buyers."
Those who can't buy will rent.
Many of the places where rents are rising the fastest are in very hot housing markets. New York City is the most expensive place to rent an apartment in the United States – $2,400 a month on average (through December 31), according to Reis Client Services. New York also has seen condo prices explode.
In Manhattan, condos and co-ops average $1.3 million, and rents average $3,142 a month, according to data supplied by Citi Habitats, a New York residential broker.
M/PF YieldStar data shows tenants in many other cities also paying in the quadruple-digit range every month. The mean rent in San Francisco is $1,669, San Jose is $1,429 and Los Angeles, $1,422. Bostonians pay an average of $1,350 a month and renters in Washington, D.C. pay $1,188. All those cities have experienced substantial home price increases in the 2000s.
The fastest-rising rents in any U.S. city for the 12 months ending March 31 were in Fort Lauderdale, Florida. Rents rose 12 percent there to $1,151.
That was still considerably less than the increase in Fort Lauderdale home prices during 2005, when the median price soared 28.8 percent, according to the latest data from the Office of Federal Housing Enterprise Oversight. (First quarter statistics are not yet available from OFHEO.)
Other illustrations of rental markets lagging home prices occurred in West Palm Beach, Florida, where selling prices jumped 28.3 percent during 2005, while rents rose 12.3 percent to $1,104. West Palm rents stood at $1,107 after the first quarter of 2005, up 10.5 percent year-over-year.
Some of the most sluggish rental markets had little sale price appreciation in 2005. In Greensboro, North Carolina, where rents fell by 3.7 percent in the 12 months ended March 31, home prices rose only 4.3 percent last year.
In Raleigh, prices inched up at a slightly faster rate, 4.7 percent in 2005, but rents still declined by 2 percent through March 31.
Regionally, the lowest rents were in the Midwest, where they averaged $820. The South was a close second at $826 and the Northeast came in at $1,119. The West not only averaged the highest apartment rents, at $1,138, but rents grew 6 percent over the past 12 months, much higher than did the second-place South, where increases averaged 3.9 percent, the same as the nation as a whole.
Hurricane Relief Extended For Mortgages
by Broderick Perkins
With nearly a quarter million people still displaced by Hurricane Katrina in New Orleans alone, Freddie Mac is extending many emergency hurricane relief policies that were scheduled to expire on May Day.
Responsible for making possible one in six home purchases and homes for four million renters, Freddie Mac is also easing underwriting standards to help promote housing recovery in some Gulf Coast communities.
In a May 1 Bulletin to mortgage sellers and servicers, Freddie Mac explains the extended relief applies only to federally designated disaster areas where Federal Emergency Management Agency (FEMA) individual assistance is available.
Also, Freddie Mac designates relief to Gulf Coast communities based on the degree of storm damage -- Zone One counties have minimal damage; Zone Two, moderate damage; Zone Three, severe damage. A list of which communities are in which zone are available in the bulletin.
Relief, due to expire May 1, but now extended until August 31, 2006 includes:
- Every zone gets an extension on a ban on reporting to credit bureaus borrowers with storm related forbearance or repayment plans to credit bureaus. The ban comes with a streamlined loan modification process service designed to expedite workouts to help storm victims avoid foreclosure.
- Lenders must continue to obtain Freddie Mac's prior approval before initiating property preservation activities in Zones Two and Three, other than decisions to access abandoned property for insurance claims.
- Servicers are still encouraged to extend to borrowers, on a case-by-case basis in every zone, a wide range of mortgage relief, including forbearance for up to one year from the date of the disaster. Mortgage relief options are described in "Owning and Keeping a Home". The options are available to anyone facing economic hardship, but the special relief policies applies only to designated households affected by hurricanes.
- Mortgages secured by Zone One single-family properties are eligible for low down payment mortgages with a maximum loan-to-value ratio (LTV) of 100 percent. The previous maximum was 95 percent. The Bulletin also removes special collateral requirements for undamaged properties in Zone One.
"The May 1 Bulletin continues to give servicers the authority to extend relief to borrowers with properties in the worst disaster areas, while recognizing that there are now more Gulf Coast counties and parishes with the economic strength to justify a return to pre-Katrina business operations," said Janet Eakes, senior vice president of Freddie Mac's operations division.
Since Hurricane Katrina, qualified disaster area residents have received tax relief and tax return help, temporary housing help and credit assistance, as well as mortgage relief, among a host of housing-based or housing-related assistance.
Published: May 5, 2006
So long 'Homestore'
As of Wednesday, Homestore has officially shed the company name that in its early years became synonymous with scandal and industry blunder and is now Move Inc. The company is also trading under a new ticker, "MOVE," on the Nasdaq composite index, and shares were fetching about $6.30 in trading this morning.
Under its new name, the first order of business was to rebrand and revamp the company's Web site. Move.com is now touting itself as the search engine for real estate, encompassing a comprehensive list of existing homes, new homes and rental properties. Move CEO Mike Long this week said that the company will continue to roll out new features, such as "user-generated content supplied by local Realtors and members of the community," interactive maps, and new advertising options for real estate professionals such as pay-per-performance and auction-based pricing.
Also this week, Move reported a first-quarter loss of $2 million, with revenues climbing 22 percent to $69 million.
Amidst the major changes taking place at Move, the former CEO of Homestore, Stuart Wolff, is sitting in U.S. District Court in Los Angeles in a trial charging him with securities fraud and illegal insider trading associated with the accounting scandal that nearly drove Homestore into the ground before new management was brought in.
A writer at Motley Fool opines that the more-than-cosmetic changes associated with the switch to "Move" could provide a nice boost to Move's business. But will it always be "Homestore" to those who remember the terrible mistakes made in the company's early days?
--Jessica Swesey, Inman News 
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