People have to live somewhere, and if they can’t buy a home, then they rent.
Normally, when housing prices fall, as they have over the last six quarters in many parts of the country, the rental market tightens. But this time as the housing market softens, vacant homes have been turned into rentals, pushing rental rates down.
Using a variety of data, Forbes magazine ranked rental markets in 40 of the largest U.S. cities. It identified these 10 markets as the best places for a renter to get a good deal.
1. Atlanta: continued build-ins downtown and on the beltway have caused the vacancy rate for rental property here to be just over 18 percent — and residents only have to spend 21 percent of their annual income on rent.
2. Denver: rental prices grew at the lowest rate for any city measured, and renters spend just 22.5 percent of income on rent.
3. Phoenix: low rents and high vacancy rater.
4. Las Vegas. This is one of the nation’s most over-stocked housing markets, although strong job creation suggests that may soon end.
5. Tampa, Fla.: high inventory and low prices.
6. Houston: this market has the highest rental vacancy rate of any city on the list.
7. Cincinnati: this is a highly affordable market for both buyers and renters.
8. Indianapolis: another affordable housing market. Renters spend only 18 percent of median gross salary.
9. Sacramento, Calif.: price increases were low this year, but the market is tightening and that’s likely to drive this city off the bargain list soon.
10. Dallas: rental prices have risen slowly despite a relatively high return on investment for owners.
Source: Forbes, Matt Woolsey (08/30/07)
Saturday, September 22, 2007
Thursday, September 20, 2007
Fannie, Freddie Get More Subprime Flexibility
The Office of Federal Housing Enterprise Oversight, which oversees Fannie Mae and Freddie Mac, on Wednesday agreed to allow both companies to buy more subprime loans — a decision that NAR applauds.
Fannie Mae and Freddie Mac will have more flexibility to address problems in the mortgage market, which will benefit the housing market overall, says the NATIONAL ASSOCIATION OF REALTORS®. As a result of Wednesday’s action, more subprime loans will be made available to borrowers and home owners who are having problems refinancing their mortgage.
In providing the ability to make a two percent adjustment to the portfolio limit formula for Fannie Mae, OFHEO director James Lockhart “sends an important signal to America’s home owners and buyers that the government recognizes that there is a major problem and that it is willing to act,” NAR President Pat Combs says.
This week, actions by both houses of Congress to reform FHA programs, and the Federal Reserve to decrease interest rates, should make borrowing more affordable and money more available, Combs says. “With reduced housing prices and increased housing inventory, interest rates that are near historic lows, and now with Fannie’s and Freddie’s increased ability to lend, we may see positive movement in the housing market,” said Combs.
NAR continues to urge Congress to increase Fannie Mae and Freddie Mac’s conforming loan limits, which would help borrowers in high-cost areas who are finding it extremely difficult to secure affordable financing.
“This would have the effect of making more money available for more of our nation’s borrowers,” Combs says.
— REALTOR® Magazine Online
Fannie Mae and Freddie Mac will have more flexibility to address problems in the mortgage market, which will benefit the housing market overall, says the NATIONAL ASSOCIATION OF REALTORS®. As a result of Wednesday’s action, more subprime loans will be made available to borrowers and home owners who are having problems refinancing their mortgage.
In providing the ability to make a two percent adjustment to the portfolio limit formula for Fannie Mae, OFHEO director James Lockhart “sends an important signal to America’s home owners and buyers that the government recognizes that there is a major problem and that it is willing to act,” NAR President Pat Combs says.
This week, actions by both houses of Congress to reform FHA programs, and the Federal Reserve to decrease interest rates, should make borrowing more affordable and money more available, Combs says. “With reduced housing prices and increased housing inventory, interest rates that are near historic lows, and now with Fannie’s and Freddie’s increased ability to lend, we may see positive movement in the housing market,” said Combs.
NAR continues to urge Congress to increase Fannie Mae and Freddie Mac’s conforming loan limits, which would help borrowers in high-cost areas who are finding it extremely difficult to secure affordable financing.
“This would have the effect of making more money available for more of our nation’s borrowers,” Combs says.
— REALTOR® Magazine Online
Wednesday, September 19, 2007
Fed Half-Point Rate Cut to Help Home Buyers
The Federal Reserve Tuesday sliced one-half a percentage point off the federal funds rate, cutting it to 4.75 percent from 5.25 percent.
It also cut its discount rate by the same amount, also bringing it to 5.25 percent.
The cuts could be a mixed blessing for homebuyers, pushing fixed-rate mortgages higher if inflation worries grow, economists say.
But relief could come in other ways. Consumers should start feeling the impact quickly in the form of reduced payments on home-equity lines of credit, credit cards and some car loans.
There is likely to be little immediate relief for borrowers with many adjustable-rate mortgages because the rates on roughly half of these loans are tied to the London interbank offered rate (LIBOR). Libor recently jumped sharply above the Fed funds rate because of the continuing credit crunch in the markets.
"If Libor doesn't come down, there is no relief" for many mortgage borrowers, says James Bianco, president of Bianco Research LLC, a market-research firm in Chicago.
Source: The Wall Street Journal, Jane J. Kim and Ruth Simon (09/19/2007)
It also cut its discount rate by the same amount, also bringing it to 5.25 percent.
The cuts could be a mixed blessing for homebuyers, pushing fixed-rate mortgages higher if inflation worries grow, economists say.
But relief could come in other ways. Consumers should start feeling the impact quickly in the form of reduced payments on home-equity lines of credit, credit cards and some car loans.
There is likely to be little immediate relief for borrowers with many adjustable-rate mortgages because the rates on roughly half of these loans are tied to the London interbank offered rate (LIBOR). Libor recently jumped sharply above the Fed funds rate because of the continuing credit crunch in the markets.
"If Libor doesn't come down, there is no relief" for many mortgage borrowers, says James Bianco, president of Bianco Research LLC, a market-research firm in Chicago.
Source: The Wall Street Journal, Jane J. Kim and Ruth Simon (09/19/2007)
Monday, September 10, 2007
FHA Gives Practitioners Chance to Help Past Clients
Real estate practitioners with past clients who tapped risky subprime mortgage financing for their purchase have a reason to give those home owners a call.
In a key policy shift, the federal mortgage insurer FHA is allowing subprime borrowers with good payment histories and at least 3 percent in home equity to refinance to safe FHA financing.
The policy shift — strongly supported by the NATIONAL ASSOCIATION OF REALTORS® and put into effect by the U.S. Department of Housing and Urban Development in mid-July — is one of the first tangible changes to come out of the federal government's efforts to curb defaults in the subprime market.
Defaults are expected to rise significantly among subprime borrowers in the next two years as the low starter rates that lenders used to lure customers expire and interest rates move upward, making monthly payments unaffordable for potentially millions of borrowers.
Only a portion of subprime borrowers who are facing spiraling monthly payments will be able to refinance into a government-backed loan because of the payment-history and equity restrictions imposed by FHA . But for those who qualify, the new policy opens the door for borrowers in high-risk financing to move into a fixed, long-term mortgage that's far safer.
That option is something practitioners will want to pass along if they have past clients who tapped subprime financing and now might be facing payment pressure from higher interest rate payments.
Details of the new policy, called FHASecure, are available in a HUD Mortgagee Letter. You can also read NAR's statement in support of the program on REALTOR.org.
— REALTOR® Magazine Online
In a key policy shift, the federal mortgage insurer FHA is allowing subprime borrowers with good payment histories and at least 3 percent in home equity to refinance to safe FHA financing.
The policy shift — strongly supported by the NATIONAL ASSOCIATION OF REALTORS® and put into effect by the U.S. Department of Housing and Urban Development in mid-July — is one of the first tangible changes to come out of the federal government's efforts to curb defaults in the subprime market.
Defaults are expected to rise significantly among subprime borrowers in the next two years as the low starter rates that lenders used to lure customers expire and interest rates move upward, making monthly payments unaffordable for potentially millions of borrowers.
Only a portion of subprime borrowers who are facing spiraling monthly payments will be able to refinance into a government-backed loan because of the payment-history and equity restrictions imposed by FHA . But for those who qualify, the new policy opens the door for borrowers in high-risk financing to move into a fixed, long-term mortgage that's far safer.
That option is something practitioners will want to pass along if they have past clients who tapped subprime financing and now might be facing payment pressure from higher interest rate payments.
Details of the new policy, called FHASecure, are available in a HUD Mortgagee Letter. You can also read NAR's statement in support of the program on REALTOR.org.
— REALTOR® Magazine Online
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