More First-Time Home Buyers
The 2008 National Association of Realtors Profile of Home Buyers and Sellers reveals that the number of first-time buyers has risen as a percentage of the market share and they plan to own their homes longer than buyers in the past.
Lawrence Yun, NAR chief economist, said a higher share of first-time buyers makes perfect sense, and it’s a trend he expects to grow. “First-time buyers are much more flexible in entering the market because they aren’t concerned about selling an existing home,” he said. “Given low home prices, plentiful supply, and affordable rates, it’s been an optimal time for entry-level buyers with a long-term view. Considering the temporary first-time buyer tax credit and improvements to the FHA loan program, we expect stronger entry-level activity as the flow of credit improves – that, in turn, should free more existing owners to make a trade in 2009.”
The number of first-time buyers rose to 41 percent from 39 percent of transactions in last year’s survey and 36 percent in 2006. The typical first-time buyer purchased a home costing $165,000 and plans to stay in that home for 10 years, up from seven years in 2007.
The median down payment by first-time buyers was 4 percent, up from 2 percent in 2007; the number purchasing with no money down fell from 45 percent in 2007 to 34 percent in the current survey.
Commuting costs factored greatly in neighborhood selection, with 41 percent of buyers saying they were very important and another 39 percent saying transportation costs were somewhat important.
Source: National Association of Realtors
Tuesday, November 18, 2008
Thursday, November 13, 2008
NEXT Stimulus Bill
As a constituent and a Realtor, I ask that Congress focus any future stimulus package on reinvigorating housing markets. The current crisis is the result of problems in the nation's housing markets. Efforts to boost the economy must calm jittery real estate markets.
Earlier, the National Association of Realtors (NAR) proposed a 4-Point Housing Stimulus Plan that should be part of any new stimulus package. NAR's plan would:
*Make the $7500 first-time homebuyer tax credit available to all buyers and eliminate repayment requirements. The credit's limited availability and repayment requirement severely limit the credit's use and effectiveness.
*Make the 2008 FHA, Fannie Mae and Freddie Mac loan limits permanent. New rules for 2009 will reduce them. Now is not the time to limit mortgage affordability.
*Get the Treasury relief program back on track and target more funds to mortgage relief. Create a federal mortgage interest buy-down program to make below-market rates available and stabilize home prices.
*Permanently bar banks from engaging in real estate brokerage and management. The banks have proven they have enough to do to simply manage the loan process. Banks should not manage home sales and purchases.
Housing has always lifted our economy out of past economic downturns. It's imperative now to foster a housing recovery, so that the economy can recover.
Earlier, the National Association of Realtors (NAR) proposed a 4-Point Housing Stimulus Plan that should be part of any new stimulus package. NAR's plan would:
*Make the $7500 first-time homebuyer tax credit available to all buyers and eliminate repayment requirements. The credit's limited availability and repayment requirement severely limit the credit's use and effectiveness.
*Make the 2008 FHA, Fannie Mae and Freddie Mac loan limits permanent. New rules for 2009 will reduce them. Now is not the time to limit mortgage affordability.
*Get the Treasury relief program back on track and target more funds to mortgage relief. Create a federal mortgage interest buy-down program to make below-market rates available and stabilize home prices.
*Permanently bar banks from engaging in real estate brokerage and management. The banks have proven they have enough to do to simply manage the loan process. Banks should not manage home sales and purchases.
Housing has always lifted our economy out of past economic downturns. It's imperative now to foster a housing recovery, so that the economy can recover.
Monday, November 3, 2008
Update on credit conditions
Fannie Mae and Freddie Mac economists give update on credit conditions:
Even though subprime lending has dried up, there are still plenty of mortgages available — as long as borrowers meet certain conditions. That was the message of Freddie Mac Chief Economist Frank Nothaft in a presentation to the National Association of Home Builders on Oct. 22.
“I think the good news is that conventional conforming and FHA mortgage rates are still relatively affordable,” Nothaft said. “However, there are some caveats.”
Those stipulations are that borrowers 1) make a down payment, 2) have good credit, 3) apply for a conventional, conforming loan and 4) meet full documentation underwriting standards.
“You can get very good rates and there’s actually plenty of credit available in the marketplace for an applicant who meets those requirements,” Nothaft said.
Borrowers can even get jumbo loans if they meet those criteria — although there will be more underwriting and the products will cost more, he said.
Banks have been tightening their credit standards each quarter for the last year and a half for all loans, including prime ones, according to the Federal Reserve Board’s Senior Loan Officer Survey. The reason? Even though borrowers may be prime from a credit perspective, they may be buying in areas where home prices are falling and that leads to tightened standards, said Doug Duncan, Fannie Mae chief economist.
However, Duncan said there are signs banks may stop tightening their mortgage standards.
“I think we’ll probably see the peaking of [credit tightening this quarter],” Duncan said. “I think if all these efforts to increase liquidity are starting to be successful, you’ll start to see those numbers flatten out and ultimately tail off.”
Even though subprime lending has dried up, there are still plenty of mortgages available — as long as borrowers meet certain conditions. That was the message of Freddie Mac Chief Economist Frank Nothaft in a presentation to the National Association of Home Builders on Oct. 22.
“I think the good news is that conventional conforming and FHA mortgage rates are still relatively affordable,” Nothaft said. “However, there are some caveats.”
Those stipulations are that borrowers 1) make a down payment, 2) have good credit, 3) apply for a conventional, conforming loan and 4) meet full documentation underwriting standards.
“You can get very good rates and there’s actually plenty of credit available in the marketplace for an applicant who meets those requirements,” Nothaft said.
Borrowers can even get jumbo loans if they meet those criteria — although there will be more underwriting and the products will cost more, he said.
Banks have been tightening their credit standards each quarter for the last year and a half for all loans, including prime ones, according to the Federal Reserve Board’s Senior Loan Officer Survey. The reason? Even though borrowers may be prime from a credit perspective, they may be buying in areas where home prices are falling and that leads to tightened standards, said Doug Duncan, Fannie Mae chief economist.
However, Duncan said there are signs banks may stop tightening their mortgage standards.
“I think we’ll probably see the peaking of [credit tightening this quarter],” Duncan said. “I think if all these efforts to increase liquidity are starting to be successful, you’ll start to see those numbers flatten out and ultimately tail off.”
NAR Presidents views on Utah Market
National Association of Realtors president visits Utah and reports on economy
"Existing home sales have slowed in Utah, but the state is still holding on better than most", said Dick Gaylord, president of the National Association of REALTORS®, during a recent visit to Utah. Gaylord, quoting NAR Chief Economist Lawrence Yun, said "the state has created 3,000 new jobs in the past 12 months and 100,000 jobs in the past three years."
“Because of local market gains, there is a great deal of pent-up demand and it continues to accumulate,” Gaylord quoted Yun as saying. “It’s only a matter of time before we see rises in home sales and also in activity in the market. So I think we’re going to see a change in 2009.”
Gaylord also said the state foreclosure rate of 1.2 percent was “not bad news at all,” since a normal foreclosure rate is about 1 percent.
"Existing home sales have slowed in Utah, but the state is still holding on better than most", said Dick Gaylord, president of the National Association of REALTORS®, during a recent visit to Utah. Gaylord, quoting NAR Chief Economist Lawrence Yun, said "the state has created 3,000 new jobs in the past 12 months and 100,000 jobs in the past three years."
“Because of local market gains, there is a great deal of pent-up demand and it continues to accumulate,” Gaylord quoted Yun as saying. “It’s only a matter of time before we see rises in home sales and also in activity in the market. So I think we’re going to see a change in 2009.”
Gaylord also said the state foreclosure rate of 1.2 percent was “not bad news at all,” since a normal foreclosure rate is about 1 percent.
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