Hope…it may be the most powerful force in the universe. Evidence shows time and time again that when people receive just a glimmer of hope that they may be able to achieve something, that hope is the driving force that can move mountains, end wars and, apparently – increase home property values.
Dare we hope? The most recent news coming from the real estate industry gives us reason.
[CLICK HERE to read the article, "Hope springs a trap," at The Economist, May 12, 2012.]
The chief economist for the National Association of Realtors (NAR) believes the housing recovery is underway. In April, new home sales rose 3.3% to a seasonally adjusted annual rate of 343,000. Home resales hit a two-year high and, compared to April last year, sales were up nearly 10%.
Many believe home values have bottomed out. Despite the number of foreclosures and short sales in today’s market, the NAR reports that the percentage of investors picking up distressed homes is getting lower, indicating a stronger return to normal home buying – surely a reflection of renewed hope for the economy. In fact, foreclosures and short sales accounted for only 28% of sales in April, down from 37% in April 2011. Foreclosed homes are selling for an average 21% discount and short sales an average of 14% below market value.
Some areas (Washington D.C., North Dakota, Phoenix, Seattle, Miami, Naples, Florida and Orange County, California) are actually seeing the return of a seller’s market, due to a shortage of inventory.
[CLICK HERE to read the news release and video, "April Existing-Home Sales Up, Prices Rise Again," from the National Association of Realtors, May 22, 2012.]
[CLICK HERE to read the article, "US home prices jump 1.8%" at Crain's New York, May 23, 2012.]
[CLICK HERE to read the article, "New-Home Sales Climbed in April, Building Optimism," at The New York Times, May 23, 2012.]
Lending Still Tight for Prospective Homebuyers
In a recent speech at the Conference on Bank Structure and Competition in Chicago, Federal Reserve Chairman Ben Bernanke gave a relatively positive overview of today’s current banking conditions with one glaring exception: residential lending. According to Bernanke:
“Residential mortgage lending has been particularly sluggish. Tight lending standards and terms remain especially evident…even when the loans were accompanied by a 20 percent down payment, many banks were less likely to originate loans to borrowers with given GSE-eligible [government-sponsored enterprises] credit scores, despite the originating bank’s ability to sell the mortgage to the GSEs.”
Bernanke indicated that most banks are reluctant to accept mortgage applications from borrowers with less-than-perfect records because of the previous requirement that they buy back a defaulted loan if the underwriting or documentation is judged deficient.
[CLICK HERE to read Ben Bernanke's speech, "Banks and Bank Lending: The State of Play," at the Federal Reserve website, May 10, 2012.]
Considering your home may represent a large portion of your total net worth, please contact us if you’re interested in a mid-year assessment of your overall financial picture.
 New York Times, “New Homes Sales Climbed in April, Building Optimism,” May 23, 3012.