2012-09-05 — ml-implode.com
The real estate market continues to transform itself ever since the housing bubble burst several years ago. As most housing sectors have shown signs of improvement, it has not been enough to boost realtors confidence. While home affordability has been high based on home prices and lending rates, realtor confidence is down even as low mortgage rates continue to remain stable.
According to the National Association of Realtors (NAR), market conditions have led to less confidence amongst realtors. The Realtors Confidence Index (RCI) for July fell for all three property types, single family homes, condos and townhouse properties. Based on real estate related issues, the survey measures both current and future market conditions. Factors found to be affecting the confidence survey include tight mortgage guidelines, slow bank approvals and appraisal values that are too low. Declining inventory in comparison to demand was also a major concern. With banks holding their owned real estate off the market, any major release of REO shadow inventory could ultimately depress home prices again. At the same time, many buyers are holding back from listing their homes and are opting to refinance instead. Whether through traditional mortgage refinances or through HARP, the Home Affordable Refinance Program, having affordable mortgage payments while waiting for home prices to return to normal is keeping many homeowners from moving while increasing their personal cash flow.
Housing prices have started to increase even as supply remains low in many real estate markets. According to NAR, existing home sales have shown a median price increase in June to $189,400 from $180,300 in May. Even though prices have improved, seller traffic has remained flat since the start of the year. A mortgage refinance is turning out the be the better and more lucrative option for many homeowners at this time.
Stricter credit guidelines are also an issue as noted in the survey. Higher down payments, higher credit scores, appraisal issues and slow processing times are all having an affect on the market. Even as housing prices increase, appraisers in some areas are not keeping up with the rapid appreciation in values which is leading to undervalued homes ultimately creating delays and mortgage approval issues. First time home buyers have generally been of low volume as cash buyers are often pushing them aside. FHA loans are very popular with first time home buyers but can often take a considerable amount of time to finalize giving these cash buyers a better chance. On the other hand, instead of selling, many existing FHA homeowners have opted for the FHA streamline refinance which is making monthly mortgage payments more affordable. Since the reduction of the upfront and annual mortgage insurance premiums for FHA mortgages endorsed prior to June 1, 2009, FHA streamline volume has increased at a rapid pace.
While respondents to the survey reported tight credit guidelines, lengthy loan approval periods are also an issue. Some lenders are currently overwhelmed with mortgage refinances, HARP and FHA streamline applications. Any delay for a home purchase loan can put the transaction at risk of being canceled. This can be eliminated in some cases if potential home buyers obtain a pre-approval prior to looking for a home. By doing so, some of the time it takes for obtaining a final mortgage approval can be eliminated. Seeking information through an online inquiry is also another option where borrowers can obtain more information and be prepared for what they are planning to do.
FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders' rate sheets to determine the most accurate mortgage rates available to well qualified consumers at a standard 0.7 to 1% point origination fee.
main1event at 23:17 2012-09-05 said:What is normal? Well lets see historically speaking home prices should not exceed 4 times the average household income or 25% of a households monthly salary. Since most average household incomes in the US are below 50k, that average house should be no more than 200k and actually closer to $150k for affordability. There are also problems with that scenario because food and energy are also consuming more of our disposable income. So home prices are becoming less affordable as time goes on. The way our government is printing money, leads me to believe that the trend is going to continue as our value of our currency falls. Permalink
BIGTXLENDER at 08:50 2012-09-06 said:I dont think house prices are going up in every city, or area,, more like higher priced homes are coming down allowing for a bigger pool of buyers.. Permalink
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