Mortgage rates sink to lowest level this year

Mortgage Rate Trend Index

Few mortgage experts (16%) interviewed by Bankrate.com this week think rates can dip further, though many (46%) foresee little change over the short run. The remaining 38% foresee an increase.

WASHINGTON – May 28, 2010 – Mortgage rates have fallen to the lowest level of the year as investors poured money into the safe haven of U.S. government securities.

The average rate on a 30-year fixed rate mortgage dipped to 4.78 percent this week from 4.84 percent a week earlier, mortgage company Freddie Mac said Thursday. It was the lowest level since early December, when rates fell to a record low of 4.71 percent.

The average rate on a 15-year fixed-rate mortgage fell this week to 4.21 percent – the lowest level in nearly two decades.

Concerns over the European debt crisis have sent yields for 10-year and 30-year Treasury bonds to their lowest levels of 2010. Rates on 30-year home loans often rise and fall in line with the 10-year note.

Analysts say the opportunity may not last. If Europe’s woes subside and the U.S. economic recovery stays on track, rates are likely to move higher. That’s because traders will move their money back into riskier investments.

“Strike now,” said Greg McBride, senior financial analyst at Bankrate.com. “If they move quickly against you, it just takes money right out of your pocket.”

Homeowners appear to be taking notice. Applications to refinance surged this week to the highest level since October 2009, the Mortgage Bankers Association said Wednesday.

But mortgage applications to purchase homes fell to the lowest level since April 1997. A major reason for that drop: tax credits expired on April 30.

A campaign by the Federal Reserve to reduce borrowing costs for consumers pushed rates down to extraordinarily low levels last year. Rates were expected to rise after the program ended this spring. Instead, they have dipped. Fears that Greece’s government would default on its debt shook world markets and boosted demand for U.S. Treasurys.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.

Rates on five-year, adjustable-rate mortgages averaged 3.97 percent, up from 3.91 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 3.95 percent from 4 percent. That was the lowest average since May 2004.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount.

The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 a point for 30-year, 15-year and 5-year loans. The average fee for 1-year loans was 0.6 of a point.

Copyright 2010 The Associated Press

Storm season’s almost here, be prepared

MIAMI – May 27, 2010 – Scant days before the start of what’s predicted to be a busy hurricane season, federal and state officials reviewed what’s working and what isn’t when it comes to storm forecasting, and urged emergency managers to rethink how they view the public in forming disaster plans.

Craig Fugate, director of the Federal Emergency Management Agency, said planners need to adjust their approach on how they view the public during a disaster and its aftermath.

“We literally look at the public as a liability,” Fugate said Wednesday at the 24th annual Governor’s Hurricane Conference at the Broward County Convention Center. “When we talk about the public, we say they need to have a plan.”

But Fugate said the public is not a static entity in the aftermath of a hurricane or other natural disaster. Residents often take action on their own.

“Generally, as we get to a scene, people weren’t waiting for us to get there. They were doing things already,” he said.

Emergency managers need to take advantage of the public’s spirit to act spontaneously. “They should be looking at the public as part of this team,” Fugate said.

The FEMA chief said assisting people during a disaster isn’t a one-size-fits-all proposition. Simply sending truckloads of ready-to-eat meals to a stricken community won’t help children too young to consume adult food. Or shipping standard military or camping cots to a disaster area won’t help seniors, the disabled or the overweight who may be unable to use them.

“Why are we only planning for healthy adults, who may be more self-sufficient?” he said.

Fugate said emergency managers should give the public a greater role in disaster planning. “It’s trying to change our approach at FEMA to focus on our customers,” he said.

Bill Read, director of the National Hurricane Center west of Miami, reminded attendees of what’s good and bad in predicting a storm’s characteristics.

What’s good: improvements in the accuracy of forecasting a storm’s path. Due to more sophisticated computer models and more frequent aerial reconnaissance, track forecasting errors have been cut in half over the past 15 years, Read said.

Last year’s 48-hour path predictions, he said, equaled the 24-hour predictions of 10 years earlier. And that trend should keep up. “We’re going to continue improving the track forecast,” he said.

But what’s bad is also scary: Little progress has been made in anticipating how strong a storm could get. “Current models have little or no skill” at predicting a hurricane’s intensity, he said. A storm suddenly growing stronger approaching landfall can greatly hamper efforts to determine if evacuation is warranted.

“With a storm rapidly intensifying near land, you’re not going to have that much lead time,” he said.

Gov. Charlie Crist is scheduled to address the conference Thursday with some grim news of his own: A disturbing number of Floridians at risk from hurricanes are unprepared and unconcerned. According to a Mason-Dixon poll by the National Hurricane Survival Initiative, 17 percent of coastal residents said they would not evacuate even if ordered.

“If people do not heed the evacuation orders, if people don’t move to higher ground,” Fugate said, “we’re going to lose lives.”

Copyright © 2010 Sun Sentinel

Florida’s existing home, condo sales rise in April

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NAR:

Existing-home sales continue to improve in April.

ORLANDO, Fla. – May 24, 2010 – Sales of existing homes in Florida rose 27 percent in April, which means that sales activity has increased in the year-to-year comparison for 20 months, according to the latest housing data released by Florida Realtors®. Another positive sign: Last month's statewide existing-home median price of $140,100 was 1 percent higher than the statewide median price in April 2009.

Existing home sales rose 27 percent last month with a total of 16,781 homes sold statewide compared to 13,244 homes sold in April 2009, according to Florida Realtors. Statewide existing home sales last month increased nearly 3 percent over statewide sales activity in March. Meanwhile, April's statewide existing-home median price was 2.3 percent higher than March's statewide existing-home median price of $137,000. It marks the second month in a row that the statewide existing-home median price has increased over the previous month's median.

"Buyers responding to the federal homebuyer tax credit before it expired helped to boost home sales across Florida," said 2010 Florida Realtors President Wendell Davis, a broker with Watson Realty Corp. in Jacksonville. "And buying conditions remain favorable, with a variety of housing options available in local markets at attractive and affordable prices. Plus, current mortgage interest rates are at historically low levels, which gives buyers more 'bang' for their buck."

Florida Realtors also reported a 55 percent increase in statewide sales of existing condos in April compared to the previous year's sales figure; statewide existing condo sales last month rose 2 percent over the total units sold in March. Though April's statewide existing-condo median price of $103,600 was down 3 percent compared to the year-ago figure, it was 6.9 percent higher than March's statewide existing-condo median price.

Seventeen of Florida's metropolitan statistical areas (MSAs) reported increased existing home sales in April while all but one MSA had higher condo sales. A majority of the state's MSAs have reported increased sales for 22 consecutive months.

Florida's median sales price for existing homes last month was $140,100; a year ago, it was $138,100 for a 1 percent gain. The median is the midpoint; half the homes sold for more, half for less.

Thenational median sales price for existing single-family homes in March 2010 was $170,700, up 0.6 percent from a year earlier, according to the National Association of Realtors® (NAR). In California, the statewide median resales price was $301,790in March; in Massachusetts, it was $280,000; in Maryland, it was $235,785; and in New York, it was $209,900.

According to NAR's latest outlook, two trends are influencing a broader stabilization of home prices in housing markets across the nation: months of increased sales activity and lower levels of inventory. "Foreclosures have been feeding into the inventory pipeline at a fairly steady pace and are being absorbed manageably," said NAR Chief Economist Lawrence Yun. "With home values stabilizing, a revival in homebuying confidence will likely help the housing market get back on its feet even as the tax credit impact disappears."

In Florida's year-to-year comparison for condos, 7,291 units sold statewide last month compared to 4,703 units in April 2009 for an increase of 55 percent. The statewide existing condo median sales price last month was $103,600; in April 2009 it was $107,200 for a 3 percent decrease. The national median existing condo price was$170,600 in March, according to NAR.

Interest rates for a 30-year fixed-rate mortgage averaged 5.10 percent in April, up from the average rate of 4.81 percent during the same month a year earlier, according to Freddie Mac. Florida Realtors' sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Among the state's smaller markets, the Panama City MSA reported a total of 128 homes sold in April compared to 108 homes a year earlier for a 19 percent increase. The market's existing home median sales price last month was $160,000; a year earlier it was $156,800 for an increase of 2 percent. A total of 65 condos sold in the MSA in April compared to 53 units sold the same month a year earlier for an increase of 23 percent. The existing condo median price last month was $187,100; a year earlier, it was $172,900 for an 8 percent gain.

© 2010 Florida Realtors®

Freddie Mac: Mortgage rates hit yearly low

Mortgage Rate Trend Index

Most industry experts polled by Bankrate.com this week (52%) expect little change in rates over the short term. The rest are evenly divided with 24% foreseeing an increase and 24% predicting an additional decline.

NEW YORK (AP) – May 21, 2010 – U.S. borrowers can get the cheapest mortgages this year, thanks to worries over European debt, and that could keep homebuyers active even after the expiration of a tax credit designed to lift sales.

Mortgage rates fell to their lowest level of the year this week as yields on U.S. government securities fell, Freddie Mac said Thursday. Fixed mortgage rates tend to follow the yield of 10-year Treasury notes.

Treasury yields sank after Germany's move this week to curtail certain kinds of short-selling spooked investors, who shifted money from risky European debt to safer U.S. securities.

A side effect of the lower Treasury rates was lower mortgage rates.

The average rate on a 30-year fixed rate mortgage dipped to 4.84 percent from 4.93 percent a week earlier, Freddie Mac said. It was the lowest level since mid-December, when rates averaged 4.81 percent.

"The timing is fortuitous," said Greg McBride, a senior financial analyst at Bankrate.com, "because home shoppers who rushed to sign their purchase contracts in late April to capture the tax credit are locking in their mortgage rates now."

New buyers were offered a credit worth up to $8,000, while current owners who bought and moved into another home could get one for up to $6,500. To receive them, buyers had to have a signed offer by April 30 and must close by the end of June.

Economists expected home sales to flag after the credit expired, but lower rates could help offset the falloff.

Pava Leyrer, president of Heritage National Mortgage in Michigan, hasn't seen buyer interest wane yet. "Rates are helping them buy more," she said.

However, strict credit requirements and negative home equity threaten to sideline borrowers hoping to refinance out of unaffordable loans. Refinancing activity isn't as robust as last year, when rates dipped below 5 percent.

"Everyone who could get in already got in," said Marc Demetriou of Residential Home Funding in Bloomingdale, N.J. The remaining borrowers may not be able to refinance under the stricter credit standards or don't have enough home equity to get approved. Mortgage delinquencies hit a record high in the first quarter, according to an industry report this week.

Could rates fall further? Yes, but that would likely be the result of further deterioration in the global economy. "Yeah, mortgage rates would drop further, but you may not have a job to qualify," Bankrate's McBride said.

Among other types of mortgages in Freddie Mac's survey, the average rate on a 15-year fixed-rate mortgage was 4.24 percent this week, down from 4.3 percent. Rates on five-year, adjustable-rate mortgages averaged 3.91 percent, down from 3.95 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4 percent from 4.02 percent.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount.

The nationwide fee for loans in Freddie Mac's survey averaged 0.7 of a point for 30-year and 15-year loans, and 0.6 of a point for 5-year and 1-year loans.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.

Copyright © 2010 The Associated Press

What to watch for when buying a vacant home

DETROIT – May 20, 2010 – When it comes to the housing market for foreclosures – buyer beware.

"One mistake that we see all the time is buyers going in and assuming all the mechanicals are working," said Brandon T. Johnson, president of GTJ Consulting in Roseville, Mich. "You have to be careful you don't get burned that way."

Johnson's company maintains foreclosed homes for a number of lenders, Realtors and Freddie Mac. He said the term "as is" shouldn't scare buyers off as long as they know what it means. He recommends that buyers get private inspections on houses they want to buy to avoid surprises such as missing plumbing or water damage.

Here's a list of 10 things to watch for in foreclosed or vacant homes from Ross Kollenberg, mitigation and construction manager for On-Site Specialty Cleaning & Restoration in Troy, Mich:

1. Air quality. This tells a lot about the home's condition. Include air and surface testing in your home inspection. It is a few hundred dollars well spent.

2. Black cobwebs, greasy gray residue on walls and/or a strong oily odor. This is soot damage, which requires professional cleaning, and points to a malfunctioning furnace. It also could be a tip-off that the home had a fire.

3. Discolored subflooring. From the basement, check the subflooring above for stains and small holes, both caused by mold.

4. An older home with extensive renovations. Check with the city for permits: You'll get remodeling details. If asbestos or lead paint is present and has been disturbed, be sure it's been remediated by a certified specialist. It the home has four or five major changes, it may not be up to code, and that could mean extensive fixes for the next owner.

5. Peeling, bubbling, and discolored paint; swelling in walls or ceilings (especially around kitchens and bathrooms); a musty odor: All indicate water damage and, potentially, the presence of moisture and mold.

6. Missing sinks, toilets and other fixtures. Sometimes the previous owner will take the fixtures with them, but won't shut off the pipes or will rip fixtures from the wall. If a pipe was cracked during the fixture removal, it could start a slow leak in the wall that isn't easily seen. Make sure those fixtures have been properly removed and not ripped from walls and floors.

7. Fungus growth inside cabinets, behind drawers and built-ins. That could mean there has been water damage. Since water falls down, look for the source above the mold. One trick inspectors use to determine whether there could be hidden water damage is to pull out the kitchen drawers and look inside to see whether the back wall has been rebuilt. If it has, that could mean water damage has been covered up.

8. Excessive painting of every nook, cranny, door and floor. The seller may be covering up mold. "When you go do a home that is 'landlord white' and the trim is flat, we tell people there is a reason the house was painted this way," Kollenberg said. "When we see it is over everything, it is a tip-off that it is just covering something up."

9. Unheated house in winter months. If the home has been properly winterized, there's no need for heat. If not, pipes will burst and cause water damage.

10. Blocked drains or pipes. These will cause future problems and may have already created sewage backups. Check for a telltale water ring in the basement, Kollenberg said.

Copyright © 2010 Detroit Free Press

Housing starts rise 5.8% in April

WASHINGTON – May 18, 2010 – Nationwide housing starts rose 5.8 percent to a seasonally adjusted annual rate of 672,000 units in April as the deadline for an important homebuyer tax incentive arrived, according to figures released today by the U.S. Commerce Department.

"While some of the starts activity noted in today's report reflected homes for which buyers had just signed a contract at the tail-end of the tax credit program, the rest was probably tied to builders replenishing their inventories in preparation for the post-tax credit era," says Bob Jones, Chairman of the National Association of Home Builders (NAHB). "That said, builders are maintaining a cautious attitude with regard to new building as the economy and housing markets slowly recover."

On the down side, building permits, an indicator of future building activity, slid 11.5 percent in April to a seasonally adjusted annual rate of 606,000 units. It reflected a 10.7 percent decline on the single-family side and a 14.7 percent decline on the multifamily side.

"The drop-off in building permits in April indicates that builders are working down the inventory of permits pulled in the previous month and taking care not to get ahead of the market," says NAHB Chief Economist David Crowe. "Builders also continue facing difficulty in obtaining project financing, which will limit the pace of a housing recovery."

Single-family housing starts surged 10.2 percent to a seasonally adjusted annual rate of 593,000 units in April, the strongest rate since August 2008. Meanwhile, multifamily starts posted an 18.6 percent decline to a 79,000-unit rate, offsetting a big gain posted by that sector in the previous month.

Three out of four regions posted solid gains in new housing production in April. Combined single- and multifamily starts rose 23.9 percent in the Northeast, 16.7 percent in the Midwest and 7 percent in the South. The West registered a 13.3 percent decline.

Conversely, permit issuance was down in three out of four regions in April. The Northeast posted a 7.4 percent decline, the South registered a 14.3 percent decline and the West posted a 16 percent decline. Permit issuance remained unchanged from the previous month in the Midwest.

© 2010 Florida Realtors^®

Buyers often overlook insurance costs

WASHINGTON – May 17, 2010 – Insurance is usually the last thing people worry about when they're buying a new home. According to the Insurance Information Institute, that's a mistake, because it will be an expense a buyer will have as long as they own the property.

Here are some key issues that the institute urges every buyer to consider:

• How far is the home from the fire department? A location close to the station usually means lower insurance costs.
• What is the condition of the plumbing and electrical systems? Older and poorly maintained systems cost more to insure.
• Does the property meet current building codes? Up-to-date properties are safer and also cheaper to insure.
• What about wind damage? If insurance against windstorms is required, is private insurance available or will the buyer have to rely on a state-run program? If there a windstorm deductible, how high is it?
• Is the home vulnerable to flooding? Floods aren't covered under a standard homeowner policy, although most major insurers will provide it through the National Flood Insurance program. How much the insurance costs depends on where the property is located. More information is available at www.Floodsmart.gov
  
• Is there earthquake risk? Earthquake insurance also requires an endorsement or a separate policy.

Source: Insurance Information Institute

Homeowners fight to go green
SALEM, Ore. – May 13, 2010 – Those wanting to install solar panels are often blocked by association rules that push conformity

Early last year, Larry Lohrman, a homeowner in Salem, Ore., decided to try to cut his energy consumption by installing solar panels on his roof. He researched the panels, hired an installer and put a downpayment on a 3,000-watt solar installation.

Lohrman's plans were interrupted abruptly by a letter from his homeowners association at Creekside Estates denying permission for the installation because it would violate the private community's covenants.

It's a scene that's being played out across the country. As homeowners increasingly seek to turn to green practices such as using clotheslines instead of dryers or moving to solar or wind power, they are finding those plans in conflict with the rules of homeowners associations that encourage conformity in order to maintain property values.

"Homeowners associations are charged with protecting the aesthetic look and feel of the community," said Robert DeNichilo, an Orange County, Calif., attorney who specializes in homeowner association law. "As energy costs rise and solar is becoming more of a viable option, you're seeing more and more associations having to deal with it."

Lohrman, who initially canceled his contract, eventually was able to work things out with his association. It turned out a 1979 state law prohibited homeowners associations from banning use of solar panels on property. Although Lohrman has not yet installed solar panels, he and neighbor Burt Bogart sat on a committee to develop guidelines for any solar panels going up in Creekside. The guidelines were approved in March.

Elsewhere, the issue is heating up and state legislatures are stepping in to assure homeowners have the right to go green.

Lawmakers in two states – Texas and Illinois – considered bills this year that would restrict homeowners associations from prohibiting solar panels, said Amy Heinemann, a policy analyst at the North Carolina Solar Center. The center is part of the College of Engineering at North Carolina State University and advocates for renewable energy and energy efficiency.

In Illinois, a bill passed both chambers and is awaiting a House vote on Senate amendments. The Texas measure passed the Senate but failed in the House. Its sponsor, Rep. Burt Solomons, R-Carrollton, said he will resurrect it next year.

Last year, Delaware, Maine, Vermont and Washington passed or strengthened laws restricting such actions by homeowners associations, Heinemann said. They followed California, Maryland, North Carolina and Virginia, which passed similar laws in 2008. Eleven others had laws in place before 2008, she said.

About 60 million people live in about 305,000 association-governed communities across the nation, according to the Community Associations Institute.

Those governing boards have a duty to maintain property values and to balance individual desires with the wishes of all residents, said Frank Rathbun, spokesman for the Virginia-based institute.

Earlier this year, a Michigan couple's lawsuit against their homeowners association was resolved after the pair was granted permission to install three solar collection panels. Daniel and Michelle Hall of Canton had been denied permission in April 2009 to install the panels by the Pheasant View Homeowners' Association's Architectural Review Committee. They sued, and the issue was resolved before the case went to court.

"The good part of the story is that my solar heating system is working," Daniel Hall said.

Rich Fry, a former Creekside association board member, said a board sometimes "gets a bad rap" about policies it didn't create. "You can't really go and change the rules," he said. "All you can do is interpret them and try to enforce them so they are equal across the board."

Solar energy accounts for less than 1 percent of the U.S. energy supply, said Monique Hanis, spokeswoman for the Solar Energy Industries Association, a national trade group for the industry. The Obama administration and many states have set new renewable energy goals and are offering tax incentives to help reach them.

Oregon, for example, has set a goal of ensuring that renewable resources meet 25 percent of the state's energy needs by 2025. The state offers homeowners a tax credit of as much as $1,500 a year for adding solar energy systems to their homes. Also, homeowners who install solar energy systems can get a federal tax credit of 30 percent of the cost, according to the federal Department of Energy.

A typical solar power system costs between $25,000 and $40,000, depending on the size and type of system, Hanis said. Savings would depend on a family's energy usage and utility rates, but typically run from 25 percent to 50 percent of monthly bills, she said.

Still, many homeowners don't even consider solar energy because they anticipate problems with their associations, said Rob McPherson, an area manager for Houston-based solar installer Standard Renewable Energy.

About 20 percent of McPherson's potential customers run into problems with associations, he said.

"It ends up being a frustrating battle for the customer and the company," McPherson said.

Copyright © 2010 USA TODAY

Home prices could sink again
McLEAN, Va. – May 12, 2010 – Home prices are widely expected to fall now that a tax credit for homebuyers has expired.

That's raising concern about a possible double dip in home prices.

National housing prices stopped falling early last year and rose 0.3 percent over the 12 months ended in February, according to a study by real estate analytics firm CoreLogic.

The firm predicts prices will fall this year before starting to rise again in late 2010. Even so, next February's prices are likely to be 4.2 percent lower, it forecasts.

"Home prices will struggle for maybe another year," says Mark Fleming, CoreLogic's chief economist.

A shrunken pool of buyers due to the tax credit's expiration is one reason.

"The tax credit is the big reason home prices have been so buoyant, and sales will drop" with its expiration, says Paul Ashworth of Capital Economics. "You will see a double dip in housing prices."

Another reason is the number of distressed houses – including foreclosures and short sales – that are on the market or that will be in coming months.

Distressed homes, typically sold at discounted prices, accounted for 36 percent of first-quarter sales, the National Association of Realtors reported Tuesday. The first quarter's median single-family home price ($166,100) was roughly flat with a year earlier, despite gains in nearly two-thirds of 152 metro areas that the NAR surveys.

The NAR's survey isn't the first to show evidence of softening prices. The 20-city Standard & Poor's/Case-Shiller home price index has fallen for five-consecutive months through February.

"It is too early to say the housing market is recovering," David Blitzer, chairman of S&P's index committee, said when the Case-Shiller report for February was released last month.

There may be some good news for sellers in areas not hit so hard by foreclosures. When distressed sales are excluded, CoreLogic's home price index shows a 4.9 percent rise in U.S. prices from this February through next February.

While some economists expect home prices to weaken, they don't expect a major drop.

"I wouldn't expect anything like the meltdown we've had over the past couple years," says Jay Feldman, senior economist at Credit Suisse.

Copyright © USA TODAY 2010