by Tim McLaughlin, Sr. Vice President, Weichert Financial

Housing affordability conditions for all buyers reached a milestone in the first quarter, according to the National Association of Realtors.

NAR’s composite quarterly Housing Affordability Index rose to a record high of 205.9 in the first quarter, based on the relationship between median home price, median family income and average mortgage interest rate.  This is the first time the quarterly index broke the 200 mark since NAR began record keeping in 1970.

Furthermore, NAR’s index shows the median income family, earning just under $61,000, could afford a home costing $325,500 in the first quarter, which is more than double the national median existing single family home price of $158,100.  The median monthly mortgage principal and interest payment for a median-priced home would take only 13.5% of gross income, given the level of where historically low interest rates are.

A companion NAR index measuring the ability of first-time buyers to purchase a home also set a record, with the first-time buyer index reaching 135.8 in the first quarter.

“For those with good credit, we’ve never seen better housing affordability conditions or market opportunities than we see at present,” says NAR President Moe Veissi.

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The US mortgage delinquency rate declined in the first quarter to the lowest level since 2008 as an improving job market and low interest rates aided borrowers.

The share of home loans at least 30 days late dropped to 7.40 percent from 7.58 percent in the previous three months, according to a report from the Mortgage Bankers Association. The rate peaked at 10.10 percent in the first quarter of 2010 and was last lower in the third quarter of 2008, when it was 6.99 percent.

“Delinquencies are clearly continuing to improve,”Michael Fratantoni, the group’s vice president of research and economics, said in a statement.  “Newer delinquencies, loans one payment past due as of March 31, are down to the lowest level since the middle of 2007, indicating fewer new problems we will need to deal with in the future.”

of research and economics, said in a statement. “Newer delinquencies, loans one payment past due as of March 31, are down to the lowest level since the middle of 2007, indicating fewer new problems we will need to deal with in the future.”

By Tim McLaughlin, Sr. Vice President, Weichert Financial

According to the results of Fannie Mae’s April 2012 National Housing Survey, Americans’ attitudes about homeownership, the economy and personal finances “continue to move incrementally in a positive direction.”

“This month’s survey shows a continued gradual improvement in consumer sentiment and outlook for home prices,” says Doug Duncan, vice president and chief economist of Fannie Mae. “After flat-lining at depressed levels for over a year, a growing share of consumers indicate that it is a good time to sell, suggesting rising optimism for the housing market and for prospective purchasers.”

On average, Americans expect home prices to increase 1.3% over the next year, and the percentage of Americans who say it is a good time to sell their home continued to rise to 15% in April (up from low, flat levels during 2011). In turn, confidence in the economy’s direction rose to a survey all-time high in April, hitting 37%.

Another positive trend, according to Fannie Mae, is the increased share of those who reported their income as “significantly higher” from 12 months ago, which is now at the highest level recorded over the past year and seven percentage points higher than those who reported income as “significantly lower.”

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WFIF Economic team suggest that early reports show that the critical spring home buying season has gotten off to its best start in five years. “Sales of new single-family homes totaled 83,000 units during the first quarter, up 16 percent from a year ago, while sales of existing single-family homes rose 7.2 percent, marking the best combined pace for first quarter home sales since 2007. The rise in existing home sales has generated a little excitement, as news is spreading that homes sold outside the foreclosure process are often receiving multiple bids and selling above the asking price.”

“The first quarter is typically the slowest quarter of the year, with March being the only busy month. Inventories of existing homes have fallen to just a 6.3-months’ supply, and the inventory of unsold vacant homes has fallen by 353,000 units over the past year. Inventories of new homes continue to decline and are now at a paltry 144,000 units nationwide. Only about one-third of those homes are actually completed. With inventories dwindling, home prices have improved a bit.”

by Tim McLaughlin, Sr. Vice President, Weichert Financial

The U.S. added a seasonally adjusted 115,000 jobs in April, the government said Friday, as private employers added 130,000 jobs. The unemployment rate ticked down to 8.1%, the lowest rate since January, 2009.

Some of the slowdown may have been the result of an unusually warm winter, which likely caused some companies to hire workers earlier in the year than they otherwise would have. Indeed, the Labor Department revised upward its estimates for job growth in February and March by a combined 53,000 jobs. With the revisions, the U.S. has added an average of just over 200,000 jobs per month over the past four months, a marked improvement from last summer, when job growth nearly stalled out.

The jobs report likely won’t change the Fed’s stance on QE3. Market watchers say at least one more jobs report and maybe another GDP number are needed before the Bernanke and the Fed decide their next move.

Other signs have been more encouraging. A measure of manufacturing activity this week showed the fastest pace of growth in nearly a year, and layoffs slowed last week after picking up earlier this spring.

“We interpret this as consolidation, not the start of a prolonged slowdown,” said Jay Feldman, economist at Credit Suisse. “Job growth ran too far too fast ahead of private sector final demand for a period of time, perhaps due to the warmest winter in a century, and is now coming back to earth.”

Federal Reserve officials have said that they expect only gradual improvement in the labor market the rest of this year. The Fed last week forecast that the unemployment rate would fall to somewhere between 7.8% and 8.0% by the end of 2012.

If the labor market stalls, the Fed could reconsider measures to stimulate the economy. “If unemployment looks like it’s no longer making progress, that will be an important consideration in thinking about policy options,” Fed Chairman Ben Bernanke said last week.

Friday’s report showed that private companies again fueled the growth, adding 130,000 jobs in April. Governments, meanwhile, cut payrolls by 15,000.

This month’s newsletter features articles on:

Things Are Looking Up!

Judging from the Pending Home Sales Index (PHSI), a forward-looking indicator based on home contract signings, pending home sales are on an upward trend.

So What’s The Plan?

Decorating projects can be daunting tasks.  It’s easy to see how they can get out of hand, costing you more money and time than you’d have liked — and possibly replacing the fun with a bit of frustration.  Here are some tips to help keep your decorating project on track and up the odds of being happy with the results.

Scents Appeal

While sellers pay much attention to how their home looks, many overlook how it smells — which is unfortunate, as scent is strongly tied to memory.  Make your home memorable with smells that sell.

Tempting, but…

A poor location, too few square feet — there are plenty of legitimate reasons to turn down a property.  However, here are a few reasons you might be tempted to overlook a home, but shouldn’t.

Cooking Alfresco

Why not bring your love of food and entertaining outside — with an outdoor kitchen? Here are some considerations to help you plan.

Read this month’s newsletter here.

By Tim McLaughling, Senior VP, Weichert Financial

The FOMC statement release Wednesday was welcome news as compared to last month’s statement in as much as it didn’t say anything unexpected or shocking. If you remember the March 13th announcement, there were numerous changes and a headline comment stating that unemployment declined “notably” and the inference at that time was that QE3 was all but off the table.
In Wednesday announcement, benign/Fixed Income positive comments such as “strains in the global financial markets still exist” clarified that things were not as rosy in April as they appeared in March, giving fuel and stability to the Fixed Income sector.
Based on the announcement, it is clear that concerns in Europe have not subsided as much as initially thought and the Fed continues to stand ready ‘if more stimulus is needed’ (Bernanke). Additionally, they stated that the central bank will maintain its reinvestments of principal payments from agency mortgage backed securities and debt holdings into new agency MBS.
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Two positive housing valuation metrics in the news:
1) US home values rose 0.5% from February to March, according to new data from Zillow. This marks the largest monthly increase in the Value Index since May 2006, when home values also rose 0.5%.
2) U.S. house prices rose 0.3% on a seasonally adjusted basis from January to February, according to the Federal Housing Finance Agency’s (FHFA) monthly house price index (HPI).
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Terrific article in today’s Wall Street Journal entitled “Stunned Home Buyers Find the Bidding Wars Are Back”. The main takeaways are that inventory is declining, housing appears to have hit bottom, and more people are interested in procuring the “right house” in this spring market and are less tempted to wait and test fate.

By Tim McLaughlin, Senior VP, Weichert Financial

If you’re waiting for mortgage rates or house prices to hit bottom, you may have delayed too long.  Among the housing trends you can expect to see this spring: potential homebuyers will find increased competition when shopping for a home, as more bargain hunters get off the fence.  Also, investors will continue to take advantage of the opportunity to buy low.

Rising mortgage rates will serve as a warning to borrowers who thought the low rates would last forever. However, there may be some bad news in there as well: Some mortgages will cost more this spring because of higher loan fees being implemented by Fannie Mae and Freddie Mac as the year progresses.

Buyers Face Fierce Competition With Investors:

Attractive mortgage rates, low home prices and rising rents make the current housing market the perfect opportunity for investors.  When looking for bargains, homebuyers will continue to compete with investors.  “This is true particularly at the lower end of the market and with first-time homebuyers” says Jed Smith, MD of quantitative research for the National Association of Realtors.

Homebuyers Are Expected to Get Off the Fence:

Homebuyers waiting for prices to hit bottom are getting off the sidelines, industry experts say.  “We’re starting to see a significant pick up on the purchase side,” says Ed Conarchy, a mortgage planner.  “I don’t think you’ll go back to (the home purchase activity we had in) ’06, but this is the best that we have seen in a long, long while.”

The price gap is closing between what sellers expect to get for their homes and what buyers pay, says Jay Brinkmann, chief economist and senior vice president of research for the MBA. That’s one reason home sales are improving.

The trend has already started, according to a recent study by Kingsley Associates, a San Francisco based real estate research and consulting firm. About 59.5% of the tenants surveyed in the study said they intend to renew their leases this year. That is the lowest rate since early 2009 on renters’ intention to renew leases. The rate was 63.7% in 4Q11. Fewer renters should equate to more buyers.

Looking to spring into action and take advantage of near historically low rates? Ask us how…we can help!

By Tim McLaughlin, Sr. Vice President, Weichert Financial

As mortgage rates continue to trend near all time lows, now is a better time than ever before for a prospective homebuyer to purchase any type of residential property.

Mark Fleming, chief economist for CoreLogic, said many “key housing metrics are holding steady through the typically slow winter season.”

Over the last 12 months ending in February 2012, there were 3.9 million homes sold, higher than the pace experienced last year.

Housing affordability, a ratio of the typical household income relative to the annual income necessary to buy a median priced home at prevailing mortgages rates, is at levels not seen since prior to the early 1990s and is almost twice the level that it was in April 2006 when housing was the least affordable it had been in two decades.

“Even under the unlikely scenario of (an uptick in) mortgage rates, affordability is only reduced to the level of May 2011,” Fleming added. “The most likely scenario is moderately higher interest rates that return housing affordability to where it was late last year, hardly a draconian impact.”

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Climbing rents for apartments are combining with a moderate level in home prices to push once reluctant home buyers into finally taking the plunge, say economists and real estate agents, helping what appears to be a good start to the housing industry’s all important spring selling season.

Real estate agents say they are fielding more calls from tenants complaining about rising rents.

“The rental market has been incredibly hot,” said one Realtor on record. He states that rising rents, coupled with slumping home prices and interest rates near record lows, are boosting demand for homes at entry level prices.

Average apartment rents rose by 2.7% last year while the national vacancy rate dropped below 5% for the first time since 2001. This compounding factor has once again made the buy vs. rent argument and positive driver for purchasers.

It is truly a great time to buy…..and we can help!

This month’s newsletter features articles on:

The Value of Home Ownership

Despite the market’s ups and downs, Americans continue to value the concept of home ownership as a long term investment, and as an integral part of the American Dream.

Kitchen Aid

The kitchen is the epicenter of your home while you live there, and the most crucial room of your home when it is for sale.  If you kitchen needs a new look, you needn’t worry about breaking the bank.  there are plenty of ways to give it a makeover without spending a fortune.

What’s the Difference?

Over half of prospective homebuyers polled in a recent Ipsos survey didn’t undersand the difference between a home inspection and home appraisal.  Let’s clear up any confusion right now.

Move-Up Mistakes

With interest rates still low, this is a great time to move up in the market.  But things are a little more complicated for move-up buyers than first-timers. Here are a few mistakes to avoid as you trade up.

First Impressions Matter

Will your house be on the market this spring? If so, you’ll need your property to make a great first impression on buyers.  Be sure to avoid these top curb-appeal-busting oversights.

Read this month’s newsletter here.

by Tim McLaughlin, Sr. Vice President, Weichert Financial

According to the “Winter 2012 Rent vs. Buy Index” from Trulia, homeownership is currently more affordable than renting in all but two of the 100 largest U.S. metropolitan areas.

The latest index, which is based on asking prices for rental units and for-sale homes between Dec. 1, 2011, and Feb. 29, 2012, shows that homeownership is often a relatively affordable option even in expensive real estate markets, such as New York, Los Angeles and Boston. Only in Honolulu and San Francisco is renting currently a better deal than buying.

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The U.S. housing market, a notable soft spot in the nation’s weak economy for the past four years, is showing marked signs of recovery.

Real estate markets are showing signs of life as falling prices spur buyer demand, lifting home sales and new construction from the depressed levels of the past three years. The spring selling season, traditionally the busiest period of the year, appears to be off to its best start in five years. Sales of existing homes in January and February were at their highest level since 2007, according to data out early this week. The decline in real estate prices has slowed its pace, making Americans less cautious about spending and potentially more disposed to buy a home.

For the first time since 2005, investment in residential real estate, including home building and renovation, has contributed to U.S. economic output for the past 3 quarters.

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Bidding wars, absent from most parts of the U.S. residential market since its peak in 2006, are erupting from Seattle to Washington, D.C. The inventory of homes hovers close to a six-year low, while an increase in jobs and record affordability are tempting more buyers. The number of contracts to buy previously owned homes jumped 14% in February from a year earlier, the National Association of Realtors reported earlier this week.

The U.S. metropolitan areas with the strongest economies appear ready to absorb the additional inventory, said Mark Zandi, chief economist for Moody’s Analytics Inc.

By Tim McLaughlin, Sr. Vice President, Weichert Financial Services

On Tuesday, the FOMC released their policy statement that, in a nutshell, said the economy was improving and gave consensus (accurate or not) to the market that any anticipation of QE3 is off the table for now.

Notable takeaways:

• Unemployment declined “notably” (last time stayed elevated)
• Growth “moderate” (last time “modest”). In fed-speak moderate > modest.
• Unemployment rate declining “gradually” (last time “only gradually”)
• Business investment “has continued to advance” (last time “slowed”)
• Strains in global financial markets have “eased”

The statement also said that “strains in global financial markets have eased, though they continue to pose significant downside risks to the economic outlook.”

Inflation “has been subdued in recent months although prices of crude oil and gasoline have increased lately,” the Fed said. The increase in oil will “push up inflation temporarily, but the committee anticipates that subsequently inflation will run at or below the rate that it judges most consistent with its dual mandate.”

The Fed left unchanged its statement that economic conditions would probably warrant “exceptionally low” interest rates at least through late 2014. The central bank in December 2008 lowered its target overnight interest rate to a range of zero to 0.25 percent.

Bottom line: probably an upgrade of sorts to their forecast given the improved data = lower odds of QE3 than the January statement. Most now don’t expect QE3 barring significant weakening in the outlook. “Operation Twist” ends in June, and most now expect no extended actions thereafter
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Yesterday we also learned that Initial Jobless Claims for last week fell by 14,000 to 351,000, more than projected and down to the lowest number since April of 2008 (almost 4 years). This caps off the best six-month streak of job growth since 2006, as the employment rate continues to decline and Non-Farm payroll continues to improve