Homeownership Down

The MReport
Homeownership Down Even as Affordability Increases
By: Krista Franks Brock

The landscape of homeownership has undergone significant changes in recent years: The homeownership rate has declined, but so has the cost burden of owning a home. Both of these trends are most prevalent among young homeowners, according to a recent report from Fannie Mae.

The national Homeownership rate has declined in each of the past four years, according to the most recent Census data, which extends through 2011. The 2011 homeownership rate of 64.6 is 2.6 percentage points lower than the 2007 rate. 

The decline among those 25 to 44 years of age is more than twice the overall decline.

This shift, which Fannie Mae attributes to the Great Recession, comes after a decade of stead homeownership increases in which young households played a major role.

Despite the recent declines in homeownership, the cost burden of owning a home decreased in 2011 and has "fallen substantially for young owners during the last four years," according to Fannie Mae.

When measuring housing cost burden, analyst often look for households paying more than 30 percent of their gross income in housing costs, which analysts define as rental or mortgage payments combined with utility spending.

In 2011, the percentage of homeowners who fell into this category decreased by about one percentage point. In contrast, the number of renters in this category grew.

The percentage of 25 to 44 year-old renters who paid more than 30 percent of their gross incomes on housing costs rose 4 percentage points between 2007 to 2011.

In the same timespan, the percentage of homeowners of the same age who paid more than 30 percent of their incomes on housing costs declined by 5.8 percentage points. 

Rising affordability among younger homeowners can be attributed to low mortgage rates and perhaps "exits from homeownership by households who had high and unsustainable housing cost burdens," Fannie Mae states in its report.

Another factor is tightening mortgage standards, which "may have also helped to create a cohort of young homeowners who have housing costs that are better aligned with incomes," according to Fannie Mae. 

Fewer Homes for Sale in October

Study finds that there were fewer homes for sale in October

The number of homes for sale last month fell 17% year-over-year in the nation's leading housing markets, yet median list prices remained flat, new data shows.

The flattening of list prices- which foreshadow sale prices- mat indicate a weakening in demand given the nascent housing recovery, says Steven Berkowitz, CEO of Move, which operates the Realtor.com website.

"There's a little bit of uncertainty that's come back into the market," says Berkowitz. Concerns over the outcome of the presidential election and tax and spending-cut issues may have weighed on prices, he adds.

Given tightened supplies of homes for sale, Berkowitz expected October list prices to be up year-over-year, as they were in eight of the previous nine months.

Other companies that track asking prices do show annual increases for October. Trulia's data show asking prices up 2.9% for the month year-over-year. That was the biggest annual increase of the year. The increase were also broad, occurring in 69 of 100 major markets.

"We see no slowdown," says Jed Kolko, Trulia economist.

On a year-over-year basis, the for-sale inventory declined in all but five of the 146 markets covered by Realtor.com. List prices increased in 71 of the markets.

Both data trackers see prices rising faster in markets where inventories have shrunk the most.

In 44 of 146 Realtor.com markets, the number of homes for sale shrank more than 20% year-over year.

In 14 of those markets, list prices were up year-over-year by more than 10%, the data shows.

Many of the markets with the biggest drops in inventory are in California. In Stockton and Sacramento- two Central Valley cities hit hard by foreclosures- for-sale inventories were down by more than 60% year-over-year, says Realtor.com.

List prices were up just 6.5% year-over-year in Stockton. But they soared 31% in Sacramento. Competition for Sacramento-area homes is especially tight in the lower price ranges, where investors are scooping up homes to turn them into rentals.

But higher-priced homes are also in demand. Anything under $300,000 is seeing multiple offers, says Sacramento-area Realtor Rob Baxley of Lyon Real Estate.

Outside of California, cities seeing big drops in inventory include Seattle, down 40%; Atlanta, down 37%; and Jersey City, N.J., down 32%.

Not all markets with shrinking inventories are getting bounces in listing prices.

For October, median list prices were flat year-over-year in Buffalo, N.Y., and Akron, Ohio even though inventories were down 20% and 22% respectively, says Realtor.com.

Only 5 markets showed inventories expanding. They included Shreveport, La., where inventories swelled by 14%, and Philadelphia up 6%.

While tightened supplies have helped home prices much of the year, they'll also help home builders, says economist Pat Newport of IHS Global Insight.

The nation's homeowner vacancy rate fell to its lowest level in seven years in the third quarter, he says. That indicates that "builders are going to have to ramp up," says Newport. "We've gotten rid of all of the excess supply."


Article information website: http://www.usatoday.com/story/money/business/2012/11/14/fewer-homes-for-sale-lead-to-higher-asking-prices/1702845/

Questions First-Time Home Buyers Should Ask

Questions First-Time Home Buyers Should Ask

Nationwide, mortgage rates are low and home prices remain relatively low, too. This combination, plus rising rents, creates the perfect storm for renters to move toward first-time homeownership.

Buying your first home can be exciting, but you should also do your research to make sure that you ask the proper questions of the process, and make the best choices for yourself and your household.

For example, recommended questions for first-time buyers to ask home sellers include:

What major repairs have been made to your home?

Although standard disclosure forms are supposed to provide information regarding past damage and renovation to the property, there are occasional repairs that are omitted or otherwise forgotten. Be proactive and ask pointed questions about the roof, the foundation, plumbing and the electrical system. Some home issues have a way of resurfacing many years later and it’s best to know in advance.

To which school district does the home belong?

As a first-time homebuyer, you may or may not have school-aged children. However, in many areas, public school ranking positively (or negatively) affects home values. Ask your real estate agent for school district data. Consider asking the seller for feedback too.

Is this a ‘distressed’ property, and what does that mean to me?

For many home buyers, the allure of a foreclosed home or a home in short sale can be large. Prices are discounted as compared to comparable real estate—sometimes by as much as 20% to 60% and more. However, many distressed properties are sold ‘as-is”. This means that homes may be defective or uninhabitable. However our FHA renovation loans not only handles the regular home financing issue, but it also covers the cost of repairs and renovations. You can also include up to six months of house payments into the mortgage.

After asking the above questions, and other questions, it’s important to remember that buying a home can be an emotional decision; and one that requires using your ‘brain’ as much as your ‘heart’. Try to keep emotions in check so that you don’t overpay for a home that’s unsuitable, for example.

For the first time in decades it's cheaper to own than rent & it's an investment you can live in!!

Pay It Forward

From MBA NewsLink Today: MBA Donates to Sandy Relief; Encourages Members to Contribute

Robinson, Matt The Mortgage Bankers Association announced it has partnered with Habitat for Humanity to provide $40,000 to help those residents of the Mid-Atlantic and Northeast United States who have been affected by “superstorm” Sandy. MBA has also made a $25,000 direct donation to the American Red Cross. While many MBA members have already made donations, MBA encouraged all of its members to consider doing so. “Sandy has disrupted the lives and destroyed the homes of many Americans on the East Coast and beyond, including many MBA members and friends,” said MBA President and CEO David Stevens. “MBA is dedicated to investing in communities and it is our responsibility to help at a time when so many of our fellow citizens are in need.” MBA made the donation to American Red Cross Disaster Relief and has encouraged its 2,000 member companies operating in an industry that employs more than 200,000 nationwide to make donations to the Red Cross or other non-profit organizations providing similar disaster relief. “Our industry has a long tradition of helping our customers and their communities in times of great need, and this is one of those times,” said MBA Chairman Debra Still, CMB. “Many MBA member companies have already stepped up and made donations to this relief effort and we are encouraging others to follow their lead.” Numerous organizations are providing assistance in the aftermath of Sandy, which killed more than 100 Americans and left more than 6 million without power. According to disaster modeling company Eqecat, total economic damages caused by Sandy could reach $50 billion, making it the second costliest natural disaster behind Hurricane Katrina in 2005.

More QM Info

There seems to be a patterned today with QM info. Here is some more information regarding the release date of the QM rule and what will happen when it does become final.

Unveiling of the QM Rule Before Thanksgiving Unlikely

Will the long-awaited qualified mortgage rule be unveiled by the Consumer Financial Protection Bureau before Thanksgiving?

Although trade group officials and certain lobbyists are hearing reports that the rule might be out before November’s end, others believe mid-to-late December is more likely.

A spokeswoman for the agency declined to comment on the matter. The agency has already indicated that a final rule will be out by Jan. 21. Still, talk in Washington has persisted recently that an early release is possible.

When the rule is published it will be considered “final” although the agency—if it so choose—can revisit any regulation and change it. (QM was originally the purview of the Federal Reserve Board but Dodd-Frank changed all that.)

The QM rule will apply to all mortgage bankers and all loans—whether they are backed by the government or not.

Recent reports that the bureau is moving toward crafting a QM rule that provides a legal “safe harbor” for prime loans with a maximum debt-to-income ratio of up to 43% has raised questions on how it will impact GSE and FHA lending programs. Both programs allow for slightly higher DTIs.

The Center for Responsible Lending and American Bankers Association are on record supporting higher DTIs on QM loans. “We think you can have safe lending in that space,” said CRL president Michael Calhoun, provided the interest rate and fees are reasonable.

Loans with an interest rate 150 basis points above the prime rate would be considered “subprime” by CFPB and afforded less legal protection under a “rebuttable presumption” standard. That would encourage litigation when a subprime borrower defaults, one attorney said.

If CFPB is going to give a safe harbor to prime loans, “they should extend it to ‘rate and term’ refinancing since those people have already shown an ability to make their payments,” according to Anne Canfield, executive director of the Consumer Mortgage Coalition, whose clients include large banks.

Canfield noted that VA lenders use a residual income test in qualifying borrowers for Department of Veterans Affairs guaranteed loans.

In general VA loans have performed well during the housing crisis. “I would also recommend that they include loans that meet the VA residual income test,” said Canfield.

Such a move would help first-time homebuyers and other borrowers seeking low-downpayment FHA and VA loans. “They should get the benefit of a well-defined safe harbor,” she added.  

Reference: National Mortgage News, Paul Muolo and Brian Collins, Nov. 5, 2012

The QM Rule

The QM Rule is Essential for Consumers

After years of irresponsible, reckless lending—which resulted in trillions of dollars in lost wealth and millions of foreclosures—Congress finally acted to prevent lenders from selling consumers unsustainable home loans.

It enacted Dodd-Frank and included the category of qualified mortgages to encourage banks and lenders to do the right thing for consumers and themselves by offering safe, affordable and sustainable mortgage products.

The American people have not forgotten that lenders played a central role in the economic crisis, and broad distrust of banks and lenders rightfully persists.

Dodd-Frank is, in fact, the best hope for the lending industry because it tells investors from around the world that a broken system has been repaired and it is now safe to reinvest in America.

Meet An IDS Employee

IDS Employee- Shawn Gibson

IDS employee Shawn Gibson has been working at IDS for a total of 12 years. He started at IDS in 1998 to 2002 and then again in 2004 to now. His favorite thing about working for IDS is the people he works with on a day to day basis. “Everybody is great,” says Gibson.

Shawn has five people in his family and one more due in April. His favorite food is not pizza, but home grown fruits and vegetable. Shawn loves to garden. He likes finding unusual plants and starting them from seeds. Some of his favorites are purple tomatoes (Carbon), cayenne peppers, basil and ground cherries. He has made several of us in the office taste those home grown cayenne peppers and they sure are spicy.

Some of Shawn’s other favorite things are:

• Favorite movie: Back to Eden
• Favorite Quote: "Just remember you're unique just like everybody else."
• Favorite Activities: Anything with his family, gardening and hiking

Shawn has always been over the accounting department at IDS and now is doing the duties of Human Resources as well. Shawn is a great part of the team here at IDS.

Fun With IDS: An IDS Halloween

Happy Halloween from Everyone at IDS! 

We love Halloween here and almost everyone got dressed up for the occassion and we celebrated with a costume contest. It was a fun day here at IDS. Here are some of the costumes that people created.

We hope everyone had a happy and safe Halloween!

171,000 Jobs Created

171,000 Jobs Created

WASHINGTON (AP)—U.S. employers added 171,000 jobs in October, and hiring was stronger in August and September than first thought. The solid job growth showed that the economy is strengthening slowly but consistently.

The unemployment rate rose to 7.9 percent from 7.8 percent in September, mainly because more people began looking for work. The government uses a separate survey to calculate the unemployement rate, and it counts people without jobs as unemployed only if they’re looking for one.

Friday’s report was the last major snapshot of the economy before Tuesday’s elections. It’s unclear what political effect the report might have. By now, all but a few voters have made up their minds, particularly about the economy, analysts say.

Since July, the economy has created an average of 173,000 jobs a month. That’s up from 67,000 a month from April through June. Still, President Barack Obama will face voters with the highest unemployment rate of any incumbent since Franklin Roosevelt.

The work force—the number of people either working or looking for work—rose by 578,000 in October. And 410,000 more people said they were employed.

The influx of people seeking jobs “could be a sign that people are starting to see better job prospects and so should be read as another positive aspect to the report,” said Julia Coronado, an economist at BNP Paribas.

Investors were pleased by the news. The Dow Jones industrial average futures were flat before it came out at 8:30am EDT. When stock trading began an hour later, the Dow was up about 50 points.

The yield on the benchmark 10-year U.S. Treasury note climbed to 1.77 percent, a sign that investors were moving money out of bonds and into stocks.

Friday’s report included a range of encouraging details.

The government revised its data to show that 84,000 more jobs were added in August and September than previously estimated. The jobs gains in October were widespread across industries. And the percentage of Americans working or looking for work rose for the second straight month.

The economy has added jobs for 25 straight months. There are now 580,000 more than when Obama took office.

 But there were also signs of the economy’s persistent weakness. Average hourly pay dipped a penny to $23.58. In the past year, pay has risen just 1.6 percent. That has trailed inflation, which rose 2 percent.

The number of unemployed increased 170,000 to 12.3 million, pushing up the unemployment rate.

The October jobs report was compiled before Superstorm Sandy struck the East Coast earlier this week and devastated many businesses.

The nascent housing recovery is finally generating jobs. Construction companies added 17,000 positions, the most since January. Manufacturers added 13,000 jobs after shedding workers in the previous two months.

Professional services such as architects and computer systems providers also added jobs. So did retailers, hotels and restaurants, and education and health care. Government overall shed 13,000 jobs, after three months of gains.

The economy has shown many signs of picking up a bit in recent weeks. Americans are buying more high-cost items, like cars and appliance. Auto companies reported steady sales gains last month despite losing three days of business to the storm in heavily populated areas of the Northeast.

Yet businesses remain nervous about the economy’s future course. Many are concerned that Congress will fail to reach a budget deal before January. If lawmakers can’t strike an agreement, sharp tax increases and spending cuts will take effect next year and possibly trigger another recession.

American companies are also nervous about the economic outlook overseas. Europe’s financial crisis has pushed much of that region into recession and cut into U.S. exports and corporate profits.

(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

HUD Vows Foreclosure Relief in Wake of Storm Damage

Following President Barack Obama's mandate that federal agencies speed relief to those affected by Hurricane Sandy, the U.S. Department of Housing and Urban Development indicated Wednesday that it will provide multiple forms of aid in the New York City area.

With the Bronx, Kings, Nassau, New York, Suffolk and Queens counties all declared disaster areas, several of these measure involve mortgage protection for residents.

"Families who may have been forced from their homes need to know that helps is available to begin the rebuilding process," said HUD Secretary Shaun Donovan. "Whether it's foreclosure relief for families with FHA-insured loans or helping these counties to recover, HUD stands ready to help in any way we can."

Homeowners with FHA-insured loans, for instance, have been granted forbearance on foreclosures, while other mortgage holders will receive a 90-day moratorium on foreclosures.

Additionally, HUD is offering FHA mortgage insurance through its Section 203(h) program for those who have lost their homes and need to either rebuild or buy a new one. One hundred percent financing is provided to borrowers who use FHA-approved lenders.

And state and local governments have access to federally guaranteed loans that can be used to repair public infrastructure and for economic development.

New York City area... Cars sitting in flooded water

New York City Subway's Flooded

Everyone has been affected by Hurricane Sandy

Our thoughts and prayers go out to everyone who was affected by Hurricane Sandy and are still dealing with the aftermath that Sandy left in its wake.

Article provided by: New York Observer, Gaines, Carl

Election Day

With Election Day closely approaching, five days to be exact, IDS wants to push everyone to get out and vote on Tuesday November 6th. As an American citizen it is our right to vote for our leaders and it is a privilege to be part of this big decision as a country. 

By federal law since 1792, the US Congress permitted the states to conduct their presidential elections any time in a 34-day period before the first Wednesday of December. An election date in November was seen as useful because the harvest would have been completed and the winter-like storms would not yet have begun. A uniform date for choosing presidential electors was instituted by the Congress in 1845. The date chosen was the first Tuesday after the first Monday in November. That is why Tuesday November 6th you will be standing at a voting machine casting your vote and making a difference and sporting your "I Voted" sticker for everyone to see.