Article of the Day

Economists Don't Foresee Home Price Appreciation Until After 2013

12/23/2011 By: Carrie Bay

Home prices in the U.S. are expected to post a decline of 1.57 percent for the fourth quarter of 2011, after falling 0.4 percent through September, according to more than 100 economists and housing experts surveyed by Zillow.

Prices are forecast to decline until the market’s bottom is reached in late 2012 or early 2013. After 2013, the panelists expect a relatively steady annual appreciation rate of roughly 3 percent through 2016, which is slightly below appreciation rates experienced during the pre-bubble years.
“There is a consensus among the nation’s top housing experts that we have not yet reached a bottom and are instead working through a prolonged bottoming process,” commented Dr. Stan Humphries, Zillow’s chief economist.
According to Humphries, negative equity, unemployment, and low consumer confidence remain the key factors delaying a true recovery in the housing market.
Terry Loebs, founder of Pulsenomics LLC, the firm that conducts the survey for Zillow, says the latest results

suggest expectations for recovery are no longer eroding, as has been evident in past studies.
“This is encouraging,” Loebs said, “but the average survey data are still consistent with a sluggish recovery scenario where eventual price increases will be less than those thought of as normal during the years preceding the national housing bubble.”
Looking at the expected housing market performance through the five year period ending in 2016, there continues to be significant variation among the panelists regarding their individual home price forecasts.
The most optimistic quartile of panelists projects nearly 18.3 percent price growth over the next five years, while the most pessimistic quartile projects a 1.4 percent decline.
“Given the current economic climate and uncertainty around the government’s future role in housing, it’s not surprising to see such a wide dispersion in long-term forecasts,” Humphries said. “As the market starts to stabilize, we should see individual forecasts start to converge.”
In the December survey, the panelists also offered their views on last month’s increase to loan limits for Federal Housing Administration (FHA) mortgages, as well as their assessments of the likelihood that the FHA would require a federal government bailout within the next two years.
The panelists were almost equally split on the loan limit increase, with 51 percent opposed and 49 percent in favor of it. Twenty-eight percent of the 91 panelists who expressed a view indicated the likelihood of a bailout of the FHA by the federal government within the coming two years as “high” or “very high.”

Article of the Day

Freddie Mac Expects Low Mortgage Rates Through Mid-2012

12/23/2011 By: Carrie Bay 

 

Mortgage rates will likely remain very low, at least through mid-2012, according to Freddie Mac.

Rates on 30-year conforming mortgages have hovered around 4.0 percent or lower for the past quarter. The GSE says that in large part due to the Federal Reserve’s program for extending the maturity date for mortgage securities it holds. This program is expected to continue through the middle of next year.
This should keep fixed-rates for 15- through 30-year mortgages relatively low during the first half of the year, with rates edging up during the second half, Freddie Mac said in its latest market outlook.
In addition, the GSE says the Fed’s guidance that it will likely keep the target range for its benchmark federal funds rate near zero though mid-2013 ensures that initial

interest rates for adjustable-rate mortgages (ARMs) will also remain extremely low throughout 2012.
Freddie Mac also said in its outlook forecast that housing activity will be better in 2012, but not robust. The GSE says to expect fewer single-family originations but more multifamily lending next year.
Looking at the macroeconomic picture, Freddie expects stronger growth, in the range of 2.5 percent in 2012. While the national unemployment will decline going forward, the GSE expects it to remain above 8 percent through next year.
“While the headwinds remain strong going into 2012, there are indications the economy and the housing market are gaining ground, albeit slowly,” commented Frank Nothaft, Freddie Mac’s chief economist.
Nothaft says sustained and increased job growth are essential to move the recovery forward – and by that he means monthly payroll gains well above the 130,000 average seen in 2011.
In housing, Nothaft says to look for the rental market to lead the way and for some improvement in the single-family space to pop up in parts of the country.
While green shoots of recovery appear to be beginning to take hold, the industry shouldn’t set expectations too high.
“All told, next year will be another bumpy ride,” according to Nothaft.

Article of the Day

Study Finds 38% of Homes Purchased in 2011 Bought with Cash

12/23/2011 By: Carrie Bay 

Despite record low mortgage rates, 2011 has seen a surprisingly high level of cash home purchases, according to the real estate research firm Hanley Wood Market Intelligence.

Jonathan Dienhart and Ken Lee, two analysts with the company, say between tight lending standards and a desperate search for yield by investors, cash purchases of homes – particularly for distressed properties – became even more common in 2011 than last year.

The two discovered that 38 percent of homes purchased in 2011 were bought with all cash. That’s up from 34 percent in 2010, and double the 19 percent rate in 2006.
According to Dienhart and Lee, this trend is likely to continue in the near term. They note that cash-paying investors are responsible for an increasing share of home purchases nowadays as prior homeowners abandon the ownership market and head back to rentals.

Article of the Day

Housing Market Strengthening But Long Road to Recovery Lies Ahead

12/23/2011 By: Krista Franks 

The year 2011 is ending on a high note as economists anticipate some signs of recovery ahead. Prices appear to be reaching their trough, visible supply is on the decline, and banks are beginning – just slightly – to loosen lending standards, according to a fourth-quarter report from Capital Economics.

However, Capital Economics warns these positive signs do not point to an immediate recovery.
Taking into account the historic ratio between disposable income and housing prices, homes were undervalued by 23 percent in the third quarter. Homes have not been this undervalued since at least 1975.
Since 2006, prices have declined 33 percent, countering the sharp increases of the boom years. Therefore, “[it is clear that prices don’t need to fall further,” Capital Economics says.

Nondistressed home prices in particular seem to have bottomed out. While home prices declined 4 percent this year, prices of nondistressed homes fell only 0.5 percent.
Having reached the bottom, however, prices will not jump far in the new year. Capital Economics predicts national home prices will remain unchanged over the next two years before seeing positive movement – a 2.5 percent increase – in 2014.

This past year has seen some positive movement in housing inventory with a 20 percent decrease in the number of homes listed for sale over the year. However, supply will remain an obstacle moving forward as the current shadow inventory is estimated at 4 million.

Demand will also continue to be an issue. However, the report notes the market has seen a slight increase in home sales, which it attributes to first-time buyers.

Banks are contributing to rising demand and supply absorption by allowing loans with loan to value ratios of 80 percent or even slightly higher, something that has not occurred since mid-2008, according to Capital Economics.
The overall economy will not help boost the housing market in the coming year as the U.S. will continue to be affected by the euro-zone crisis.

The rental market will continue to be the best-performing segment of the market.

Article of the Day

Study: Twin Cities rank among best regions for business

Minneapolis / St. Paul Business Journal by Ed Stych, Web Producer

Date: Wednesday, December 14, 2011, 9:59am CST

 

A new study says the Twin Cities is the fourth-best region for business.

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The Twin Cities area is the fourth-best community for business in the nation, according to a new study that measures the regions with the highest concentration of business and the strength of their economic output.
Washington, D.C.; Boston; and Des Moines, Iowa, ranked ahead of the Twin Cities in the list compiled by MarketWatch, a division of The Wall Street Journal.
In the bottom 10 of the 102 largest communities in the country were five California cities, three Florida cities and two Ohio cities. Stockton, Calif., finished last.

The 8 Healthiest Housing Markets

Daily Real Estate News

Many of the housing markets projected to have the biggest gains into 2012 tend to be the home to major universities, strong private sector employment, or have nearby military bases, according to a list of the healthiest housing markets by Builder Magazine. Builder teamed with Hanley Wood Market Intelligence to compile its annual list of the healthiest housing markets in the country, factoring in housing projections from Moody’s Economy.com. The list was based on projected price appreciation, population growth, income growth, and improving employment picture. 

The following are the eight cities that topped Builder’s list, including projected housing permits in 2011 and 2012. 

1. Minneapolis-St. Paul-Bloomington Minn.-Wis.

2011 Building Permit Forecast: 4,511

2012 Building Permit Forecast: 10,118

Home prices here are expected to rise 8 percent next year, the highest growth projected in the 100 cities analyzed. As a hub for medical technology and headquarters for several large companies, employment is expected to grow 2.5 percent in 2012. 

2. Fort Collins-Loveland, Colo.

2011 Building Permit Forecast: 1,004

2012 Building Permit Forecast: 1,650

With Colorado State University the major employer here and often ranked as one of the best cities to live in the country, households are expected to grow by 2.7 percent in 2012 and employment is expected to grow 2.6 percent. Housing permits are expected to rise 50 percent as well, according to Moody projections. 

3. Salt Lake City, Utah

2011 Building Permit Forecast: 1,294

2012 Building Permit Forecast: 1,181

With lots of high-tech businesses, Salt Lake City is poised to have some grains in employment and income in the coming year. After a drop in home prices, prices are expected to rebound and increase 4.7 percent next year. 

4. Jacksonville, Fla. 

2011 Building Permit Forecast: 2,284

2012 Building Permit Forecast: 4,363

Jacksonville has a strengthening employment picture, with a military presence and a growing financial services sector. Employment is expected to increase 3.2 percent in 2012. With stabilizing home prices already, prices are expected to rise 5 percent next year and housing permits are expected to double. 

5. Miami-Fort Lauderdale-Pompano Beach, Fla. 

2011 Building Permit Forecast: 2,708

2012 Building Permit Forecast: 7,522

This metro area is expected to reverse course with jobs forecasted to grow by 2.7 percent, home prices stabilizing, and housing permits expected to double. The rebound is expected to be mostly driven by two major projects, the CitiCentre and Resorts World Miami, are expected to add tens of thousands of jobs in coming years.

6. Charlottesville, Va. 

2011 Building Permit Forecast: 634

2012 Building Permit Forecast: 798

The city is home to the University of Virginia and also continues to attract a surge in second-home buyers from the Washington, D.C., area. Home prices are expected to rise 1 percent in 2012 and median income is forecasted to grow by 3.7 percent.

7. Colorado Springs, Colo. 

2011 Building Permit Forecast: 2,099

2012 Building Permit Forecast: 3,639

The biggest employers in Colorado Springs are military bases and the Air Force Academy, which are expected to see big growth when the troops from Afghanistan return. Home prices are expected to rise 2.6 percent, employment to grow by 1.4 percent, and households to increase by 1.8 percent in 2012. 

8. Oklahoma City, Okla. 

2011 Building Permit Forecast: 3,417

2012 Building Permit Forecast: 5,284

At 6.1 percent, Oklahoma City has one of the lowest unemployment rates in the country. Furthermore, the job market is expected to continue to rise there, and incomes are projected to increase 3 percent next year. While the area has a seen a drop in home prices recently, housing prices are projected to rebound and increase 2.6 percent as Oklahoma City’s low cost of living continues to attract businesses and new households. 

Recent Changes to Fannie and Freddie

Compliments of Chris Safe @ Bell Mortgage

 
Changes in the mortgage industry happen at a rapid clip – often on a daily basis. Here are some of the most recent changes regarding Fannie Mae and Freddie Mac, the government sponsored enterprises (GSEs) that currently own about 50 percent of all U.S. mortgages.

Fannie Mae owns a division known as HomePath. HomePath works to get buyers into foreclosed properties by offering special incentives such as 3.5 percent closing costs. As of October 31, 2011, this incentive will expire. That doesn’t mean that they’re no longer willing to pay any closing costs; it just means that your Realtor will need to negotiate some form of closing cost assistance as part of the deal.

As of this writing, Fannie Mae still has a FirstLook program. The program gives home buyers, who plan to occupy the property as their own, first chance at making an offer. Investors must wait 15 days before making a bid.

The American Recovery and Reinvestment Act of 2009 allowed Fannie Mae to purchase loans of up to $729,750 (for single-family homes) in designated high-cost areas. Congress continued to extend that limit until October 1 of this year. That loan limit is now reduced to $625,500. This means that a loan of up to $625,500 (in designated high-cost areas) is still considered “conforming” and borrowers won’t be charged “extra” as they will for a jumbo mortgage that kicks in above that limit. For non-designated high-cost areas, the limit is still $417,000. You can access a list of those high-cost areas in this pdf file: http://www.fhfa.gov/webfiles/19489/HighCost_PL111-242.pdf.

Freddie Mac has a division similar to Fannie Mae’s but it is known as HomeSteps. HomeSteps is currently offering the same FirstLook initiative that allows homebuyers the first chance to make an offer on home for 15 days after the initial listing. They are also offering a 2-year home warranty and up to 30 percent savings on new appliances on any newly purchased foreclosures that they currently own.

They are also offering a new opportunity for condo buyers who make an offer by November 15 and close by December 30, 2011 to pay up to $1500 to cover HOA (Home Owner Association) dues. If you have any questions about any of the buyer bonuses that Freddie Mac or Fannie Mae are offering, discuss these details with your real estate and mortgage professionals.

Why should you use a Realtor when buying a home?

Many people don't really understand how using a Realtor to buy a home works.  There is a lot of confusion and misinformation about how a Buyers Realtor gets paid.  This post explains exactly how it works and why you really should use a Realtor when buying a home.

First of all, the seller is the one who pays the Buyers Agents commission.  Here's how it works.  The listing agent will negotiate with the Sellers and agree on a percentage of the homes sale price as compensation.  For illustration purposes, let's use 6%.  So the listing agent has an agreement with the Sellers for them to pay 6% in commission when the house sells. This is not all for the listing agent, however - this 6% pays both the listing agent and the buyers agents commission. Now when the listing agent lists the property, they state how much compensation the Buyers Agent receives in the listing.  The norm in this market for a traditional sale is 2.7%.  Banks usually pay 3% to the Buyers Agent. With short sales and some traditional sales, the payout will only be 2.5%.  So the Seller is the one paying the Buyers Agents commission - the Buyer is not paying any commission in the greater majority of these transactions.  There is one major exception.

The exception is when Buyers and their Agents agree, in their written Contract to Represent, that the Buyer will pay the agents commission or the difference between what the Seller pays and a specific number.  Why would a Buyer agree to this when Sellers pay the commission? Consider this scenario:  A Realtor is helping a Buyer buy an investment property in Minneapolis for $20,000-$40,000. Make no mistake, there are many homes in Minneapolis and St. Paul in this price range or even lower. By the way, if this sounds appealing to you, there are also other factors to consider - City required repairs can cost as much or more than you paid for the house - and they are very stringent and many times require you to use a licensed contractor.

The Realtor has taken the buyer through 10 to 20 homes in Minneapolis before they found the right one. They have spent, say 40 hours with the client, driving them around, using up gas and their time.  The Realtor also provides their expertise in dealing with the city of Minneapolis, the required repairs for the house, etc.  If the purchase price is $20,000 and the Buyers agent Payout is 3%, then the Realtors commission would be $600.  But wait - Realtors also have to pay a portion to their brokerage - usually anywhere from 10%-50%.  So that $600 is now $300-$550 depending on the brokerage split.  Then the Realtor has to pay taxes on top of that.  It doesn't sound like it would be worth it to anyone to do this, now does it?  Especially since the investor will probably cash flow the home from month 1. 

So in a scenario like this, the Realtor will establish a base commission and the investor/buyer will have to agree to it in a written contract before they write up an offer on any homes.  Again, this is usually used only when the buyer is buying a home under $100,000 and not all agents use it.

So what does it cost a Buyer to use a Realtor to buy a home?  There is one fee from the Realtor's brokerage.  It's called a Broker Commission, Broker Admin Fee, Broker Fee or a few other names.  It covers the brokers investment in the transaction, which is basically the payroll for the administrative staff that go through and process the completed purchase agreements, etc.  The fee is usually between $350-$425 and is paid at closing, either on the settlement statement or separately to the agent. 

That is all a Buyer is going to pay for using a Buyers Agent.  If you chose not to use a Buyers Agent and had a lawyer draw up your contract, you would most likely pay more than that $350-$425 you would pay to your agent's brokerage.

Other benefits?  Your Realtor will have access to more information than you will. A big portion of the listings and information on the internet are outdated, sold, expired, canceled or just wrong.  You could spend hours looking at homes, find a few that you love and then find out they sold months ago.  Your Realtor has access to the most up to date information, as well as other information that doesn't show up in the public view of listings. To start the search, your Realtor can get your criteria from you, that is your minimum amount of bedrooms, baths, garage stalls, sq footage, yard space, cities, price range, whether or not you are looking for a foreclosure or traditional sale, etc and set you up on an auto search that will search for homes matching your criteria and email you new listings as they come on.

Another benefit - Your Realtor will know the market.  Besides personal experience, they have tools to look up comparable active properties, pending sale properties, and recently sold properties. They can then create a CMA, or Comparative Market Analysis, which will give you a good idea of what to offer on the property.  They also have experience dealing with Banks, Lenders and other agents.  They know the process and are an advocate for you when dealing with Sellers and their agents. They write up the offer with you, present it and negotiate until you come to an agreement. If there is an issue after the acceptance of the purchase agreement, such as something that you found in the inspection and want repaired before closing, they negotiate that with the Sellers Agent and make sure it is taken care of. They can guide you through the process, recommend lenders, inspectors, title companies, handymen to do work after the sale, etc and make sure you are comfortable with every step.  They provide their expertise and explain the different aspects of the purchase agreement, such as the different contingencies like the Inspection Contingency or the 10 day Right of Rescission after receipt of condominium documents, etc. 

Remember, this is their full time job ( in most cases).  They provide valuable expertise, advice, contacts and negotiation skills in a major transaction for you.  Having an agent gives you an edge and you are handicapping yourself if you choose to go without one.    

Article of the Day

Administration Announces Refinance Program for Underwater Borrowers

  By: Krista Franks and Carrie Bay 

It’s official. The Federal Housing Finance Agency (FHFA) unveiled a new, revamped government mortgage refinancing program Monday.

The initiative involves a series of rule changes to the Home Affordable Refinance Program (HARP) to allow more underwater homeowners to reduce their mortgage debt by taking advantage of today’s rock-bottom interest rates.
Mortgages backed by Fannie Mae and Freddie Mac, and originally sold to the GSEs on or before May 31, 2009 are eligible for the program.
Under the revised HARP guidelines, the 125 percent loan-to-value (LTV) ceiling has been eliminated. Previously, only borrowers who owed up to 25 percent more than their home was worth could participate in HARP. That limitation has now been removed. The program will continue to be available to borrowers with LTV ratios above 80 percent.
The new program enhancements address several other key aspects of HARP that industry participants say have restricted its impact, including eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers, as well as allowing mortgage insurers to automatically transfer coverage from the original loan to the new loan.
In addition, Fannie Mae and Freddie Mac have done away with the requirement for a new property appraisal where there is a reliable AVM (automated valuation model) estimate already provided by the GSEs, and they’ve agreed to waive certain representations and warranties on loans refinanced through the program.

Not only are loans eligible for HARP considered “seasoned loans,” but a refinance helps borrowers strengthen their household finances, reducing the risk they pose to the GSEs. Thus, FHFA feels reps and warranties are not necessary for some of these loans.
With Monday’s announcement, the end date for HARP has been extended from June 30, 2012 to December 31, 2013.
The GSEs will release program instructions to lenders by the middle of next month, and FHFA expects some lenders will be ready to accept applications by December 1.
Since HARP was rolled out in early 2009, approximately 1 million homeowners have refinanced their mortgage loans through the program. FHFA estimates that with the revised guidelines, another 1 million will be able to take advantage of the program.
To qualify, borrowers must be current on their mortgage payments, but government officials believe by opening HARP up to more homeowners with higher thresholds of negative equity, it will help to prevent foreclosures by erasing the primary motivation behind strategic defaults.
Economists at the University of Chicago Booth School of Business estimate that roughly 35 percent of mortgage defaults are strategic. Numerous industry studies have found that homeowners who owe significantly more than their home is worth are more likely to throw in the towel and walk away from their mortgage debt even if they have the ability to continue making their payments.
“We anticipate that the package of improvements being made to HARP will reduce the Enterprises credit risk, bring greater stability to mortgage markets, and reduce foreclosure risks,” FHFA stated in its announcement Monday.
Fannie Mae and Freddie Mac also released statements in response to the announcement.
Michael J. Williams, Fannie Mae’s president and CEO, called the program a “welcome development.”
“By removing some of the impediments to refinance, lenders can more easily participate in the program allowing more eligible homeowners to take advantage of the low interest rates,” Williams stated.
Charles E. Haldeman, Jr., CEO of Freddie Mac said, “These changes mark another step on the road to recovery for the nation’s housing market.”

Article of the Day

 

ECONOMY - OCTOBER 24, 2011

Home Lending Revamp Planned

New Rules Aim to Speed Refinancing

By NICK TIMIRAOS

Federal regulators on Monday plan to unveil a major overhaul of an under-used mortgage-refinance program designed to help millions of Americans whose home values have tumbled.

The plan is the latest White House effort to deal with one of the most critical impediments to economic recovery—a stagnant housing market caused in part by a surfeit of homeowners who are unable to refinance.

The overhaul will, among other things, let borrowers refinance regardless of how far their homes have fallen in value, eliminating previous limits. That could open up refinancing to legions of borrowers in Nevada, Arizona, Florida, California and elsewhere who are paying high interest rates and are deeply "underwater," owing more than their houses are worth. President Barack Obama is expected to tout the program in Las Vegas on Monday.

The plan will streamline the refinance process by eliminating appraisals and extensive underwriting requirements for most borrowers, as long as homeowners are current on their mortgage payments, according to administration officials and an official at the Federal Housing Finance Agency. Fannie and Freddie have also agreed to waive some fees that made refinancing less attractive for some.

The revamp is aimed at homeowners like Christine and Hector Penunuri of Gilbert, Ariz., who have never missed a mortgage payment and who both have jobs and good credit. Yet their application to refinance their five-bedroom home, which has fallen in value, was denied earlier this year because their tax returns showed a $1,000 loss in start-up costs from Mr. Penunuri's business, which isn't even his day job.

It's "absurd," says their mortgage broker, Steve Walsh of Scottsdale, because the loan is already guaranteed by government-backed mortgage company Freddie Mac.

The Penunuris could save $350 a month by refinancing to a 4% rate from their current 5.75%. They would use that money to put their two sons into junior sports, take a family vacation and pay off other debts, says Ms. Penunuri, 41 years old. "It's a win-win situation."

Freddie Mac declined to comment on the rejection of the Penunuris' earlier refinancing. Freddie Mac and sister company Fannie Mae together guarantee roughly half of the nation's $10.4 trillion in home loans outstanding.

Christine Penunuri, at her home in Gilbert, Ariz., and her husband have never missed a

mortgage payment and have jobs and good credit, but have been unsuccessful in refinancing their loan.

Regulators are revamping a program rolled out two years ago, the Home Affordable Refinance Program, or HARP, which lets borrowers with less than 20% in equity refinance if their loans are backed by Fannie Mae or Freddie Mac. President Obama announced HARP roughly one month into his presidency. So far, only 894,000 borrowers have used it, of which just 70,000 are significantly underwater.

"It hasn't worked," said James Parrott, a White House economic adviser, in a speech last month.

Officials at the Federal Housing Finance Agency, which regulates Fannie and Freddie, estimate that between 800,000 and one million more borrowers should be able to refinance. "It's in our interest to have these borrowers refinance into lower rates and continue to pay," said an FHFA official.

Monday's refinance announcement is separate from a recent push by state attorneys general to extract concessions from banks to refinance underwater mortgages. That effort, part of the months-long negotiations to settle alleged foreclosure-processing abuses, would apply only to loans held on the books of five of the nation's largest banks, a much smaller subset of loans.

In past downturns, lower interest rates engineered by the Federal Reserve were a powerful antidote for a sluggish economy. Falling mortgage rates triggered a refinancing wave that lowered homeowners' mortgage payments, freeing up cash for other things. That, in turn, helped to stimulate spending that boosted economic growth.

This time around, falling mortgage rates—now averaging just 4.11% for a 30-year fixed-rate mortgage, according to a Freddie Mac survey—haven't packed the usual oomph. The reason: Many homeowners haven't been able to refinance.

Where Refinancing Should Be Happening

While many borrowers with government-backed loans could reduce their rates by refinancing.

CoreLogic, a company that tracks 85% of all mortgages, estimates that 20 million borrowers with equity in their homes could cut the interest rates on their loans by more than one percentage point if they could refinance. That's about a quarter of all the homeowners in the country.

Because a refinanced mortgage is treated like a brand new loan, refinancing is nearly impossible for another eight million borrowers whose homes are worth less than their mortgages, unless they qualify for HARP.

But what about those who still have equity in their homes? Some have blemishes on their credit and employment histories or don't have enough income to qualify under today's tougher lending standards. Some find refinancing isn't worthwhile after factoring in new fees imposed by Fannie and Freddie or other closing costs. Still others can't get a refinancing application through a clogged mortgage-processing system.

That's a big obstacle to a stronger economy. Goldman Sachs economists estimate that if current borrowers with a 30-year fixed-rate loan backed by Fannie or Freddie were to refinance, they would save $24 billion annually. Researchers at Columbia Business School estimate that the benefits would accrue primarily to working- and middle-class borrowers with mortgages below $200,000.

Refinancing Rethink

Key points of the overhaul, designed to make refinancing easier for people with mortgages backed by Fannie Mae and Freddie—about half the nation's $10.4 trillion in outstanding home loans:

·         Open to those owing more than 125% of their home's value

·         Appraisal and underwriting requirements to be reduced

·         Loan fees will drop; waived for borrowers who reduce their loan term

·         Borrowers must be current on previous six payments

The changes should help borrowers like Carol Gesior, who has two underwater mortgages, backed by Freddie Mac, on suburban Chicago properties she bought for siblings. She says she tried to refinance but her bank, Citigroup Inc., told her she couldn't without equity. She was unaware of HARP. If she could refinance both properties, she says she would replace her 1995 Ford Crown Victoria.

"I made a commitment. I signed an agreement to pay. But I didn't do anything to cause the values of these homes to decrease," says Ms. Gesior, 52, an office manager at an investment management firm. "Any logical person would have walked away already."

A Citi spokesman says the company is "happy to work with this client to explore refinancing options that may be available to her."

One problem is that bankers or other mortgage originators shy away from refinancing all but the safest borrowers because Fannie and Freddie can force a lender to buy back a loan if underwriting flaws emerge. In response, lenders are asking for extra documentation of incomes and scrutinizing appraisals, steps that raise costs and lead to more denials.

Another obstacle is new fees that Fannie and Freddie charge borrowers with less-than-perfect credit, even if the borrower's existing mortgage is guaranteed by Fannie or Freddie.

The changes being prepared by federal officials should boost refinancing because they will let banks avoid the risk of any "buy-back" on a HARP mortgage as long as borrowers have made their last six mortgage payments and they prove that they have a job or another source of passive income. They are also set to reduce loan fees that Fannie and Freddie charge. The fees will be waived on borrowers that refinance into loans with shorter terms, such as a 15-year mortgage.

Developments

Twelve Questions on Obama's Refi Plan

Pricing details won't be published until mid-November, and lenders could begin refinancing loans under the retooled program as soon as Dec. 1, according to federal officials. Loans that exceed the current limit of 125% of the property's value won't be able to participate until early next year. The program's expiration date, originally next June, will be extended through 2013. HARP is only open to loans that Fannie and Freddie guaranteed as of June 2009.

Mr. Walsh, the Scottsdale broker, says such changes could lead him to hire "a ton" of new loan officers. "I have a line out the door of people who want to refinance under that program and can't," he says.

Refinancing can't fix the biggest problems eating at the housing market. Tight lending standards and high volumes of foreclosed-property sales are putting pressure on home prices at a time when demand is weak, potentially creating more underwater borrowers.

But refinancing could help those borrowers repair their balance sheets and guard against future defaults. If lenders and regulators successfully execute the changes, they could be "amazingly powerful," said mortgage-market pioneer Lewis Ranieri. "It'll start to create the confidence which is largely what's keeping the system from going forward."

The changes could spur an additional 1.6 million refinanced loans by the end of 2013, assuming interest rates don't rise sharply, according to Mark Zandi, chief economist at Moody's Analytics.

For the very safest homeowners, falling mortgage rates have been a bonanza. Some have become serial refinancers. Jim Wozniak locked in a 3.88% rate for 30-year fixed-rate mortgages for his primary residence in Brookfield, Wis., and his lakefront home in nearby Hartland late last month. Replacing 4.25% loans, he will save $2,700 annually.

"This is probably my third time in three years," says Mr. Wozniak, a 54-year-old investment adviser who says he has an excellent credit score and lots of equity in both properties.

For others, the hurdles are insurmountable. Appraisals are a big one. When an appraisal shows that a property has too little equity, lenders sometimes order a second appraisal. "You get into these appraisal wars, often at the borrowers' expense," says Marietta Rodriguez, the national director for home-ownership and lending at NeighborWorks America, a nonprofit housing group.

Steven Eisner, a 59-year-old attorney in Haddonfield, N.J., says he expected to sail through the process when he tried to refinance last month because he has good credit and strong income. Instead, he was startled to find that the appraisal on his vacation condo in Bonita Springs, Fla., came in so low he would have needed to ante up $52,000.

He put 25% down when he bought it four years ago. But, because of sagging home prices, his equity has declined to just 10% of the property's value. Refinancing "is simply not worth the trouble," says Mr. Eisner, whose mortgage is guaranteed by Fannie.

Not everyone benefits from encouraging more refinancing, of course. Banks and investors in mortgage-backed securities—including Fannie and Freddie and the Federal Reserve—stand to lose billions if performing loans pay off, leaving investors with cash to reinvest at today's lower rates.

"Somebody's going to get hit. This isn't a free good," says Anthony Sanders, a real-estate finance professor at George Mason University in Fairfax, Va.

That doesn't faze Mr. Eisner. "We've certainly done enough to prop the banks up," he says. "These are loans that everyone knew could prepay."

The success of any refinance push rests not only on whether policy makers can untangle a Gordian knot of technical hurdles, but also on whether they can get buy-in from private-sector players. One major obstacle to refinancing is that the mortgage industry has shrunk. Four big banks now control more than 60% of the mortgage market. Many originators, including the biggest banks, have cut staff or shifted loan underwriters into units working through piles of delinquent mortgages.

New rules designed to prevent independent mortgage brokers—who originate loans on behalf of a bank or other lender—from fleecing consumers have made it harder for them to compete with bigger lenders that aren't subject to the same rules. For example, new compensation rules make it less attractive for brokers to originate smaller or more complicated loans.

The reduced competition has led to longer processing times and higher prices for consumers. When their borrowing costs fall, banks aren't necessarily reducing the rates they charge borrowers by the same amount. Banks with big market share "know they can get away with it," says Thomas Lawler, an independent housing economist in Leesburg, Va. "The market's just not as competitive as it once was."

Industry executives dispute the notion that the market isn't competitive but concede that the industry wasn't ready to handle a surge in applications after rates dropped two months ago.

"Capacity constraints" will be temporary because lenders are hiring more staff, but "in the short run, there's no question that's a challenge," says David Stevens, the chief executive of the Mortgage Bankers Association. Lenders are going "through a lot more checks and balances simply to get a loan approved safely and soundly."

Some spurned borrowers aren't giving up. Barb Skaer, 70, of Appleton, Wis., and her husband wanted to refinance a $402,000 mortgage on a second home that appraised at $547,000 two years ago. She says they have strong credit scores and own part of a manufacturing business that makes bobby pins and hair clips.

Ms. Skaer says their bank, J.P. Morgan Chase & Co., quoted a 4% rate. But she says her loan officer told her she and her husband wouldn't qualify for a new loan because their income from their factory business declined the past two years. A J.P. Morgan spokesman declined to comment.

Ms. Skaer says they are appealing the decision at their bank and may go elsewhere if that doesn't work.

"Our theory is that if we can afford [the current payment of] $2,189 per month, we should be able to afford $200 less by refinancing," says Ms. Skaer. "This makes absolutely no sense to us, and we are not taking 'no' for an answer."

Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved

Article of the Day

Real Estate Transactions Continue to Climb Across Minnesota

by Minnesota Association of REALTORS on Thursday, October 20, 2011 at 9:06am

October 20, 2011 (Edina) – Consumers across Minnesota continue to take advantage of historically low interest rates and lower prices by purchasing homes and showing more confidence in the housing market. The September 2011 Housing Report from the Minnesota Association of REALTORS® shows pending sales are up more than 40 percent compared to September 2010. This is the fifth consecutive monthly increase in pending sales.

“Purchase agreements for Minnesota residential home sales that are not yet closed were up significantly,” said June Wiener, President of the Minnesota Association of REALTORS®.  “Housing affordability, low interest rates and an improving employment sector all contributed to the strong results.”

Closed transactions are another positive indicator of a stronger housing market. In September 2011, closings were up 24 percent from the same time in 2010. Homebuyers have closed on more homes year-to-date than in the previous year as well.

“An increase in closed sales is important because it indicates that buyers are interested in moving forward with homeownership,” said Wiener. “Low interest rates, a very affordable housing inventory and strengthening confidence in Minnesota’s employment sector are all contributing to the rebound.”

Many Minnesota homeowners are concerned about the value of their property and in September the year-to-date numbers still looked disappointing.  Statewide, median sales prices were down 6.6 percent compared to values in 2010.  The median is the midpoint, indicating as many transactions above as below the stated price.  In August the median home price was $140,000.

“This is not an uncommon situation when the market is stabilizing,” said Wiener. “Individual monthly prices can fluctuate as housing consumers look for bargains and sellers price their properties competitively with others on the market.” 

In September, housing inventories fell 13 percent. Homes were on the market an average of 130 days.

The Minnesota Association of REALTORS® is the largest professional trade association in the state with almost 18,000 members who are active in all aspects of the real estate industry.

Article of the Day

States and Servicers Consider New Proposal for Aiding Those Underwater

10/18/2011 By: Carrie Bay 

Help for underwater homeowners has moved from principal writedowns to refinancing in the settlement negotiations between state attorneys general and the nation’s five largest mortgage servicers.

According to a widely circulated Wall Street Journal report, the proposal was put on the table at a meeting last week between representatives from both sides.
DSNews.com has received confirmation from a source involved in the negotiations that the parties are indeed considering a proposal to incorporate refinancing for underwater homeowners into an agreement to settle allegations of robo-signing and improper foreclosure practices.
While the Journal concedes that discussions are ongoing and “any final outcome is uncertain,” reporters Nick Timiraos, Ruth Simon, and Dan Fitzpatrick lay out the framework for who would qualify for such assistance.
Borrowers who are current on their mortgage payments but unable to take out a new loan due to the equity constraints of a typical refinance would fit the bill.
The main caveat is that the borrower’s loan must be owned directly by one of the five banks involved in the

settlement talks – Bank of America, Citigroup, Ally’s GMAC, JPMorgan Chase, or Wells Fargo – and not have been packaged into a mortgage-backed security and resold.
The impact of such a proposal would be limited, considering some 80 percent of mortgages are securitized and owned by investors.
While the agreement between states and servicers is intended to settle allegations of wrongful foreclosures and faulty paperwork, early on in the negotiations, attorneys general were demanding mortgage relief also be extended to underwater borrowers in the form of principal-reducing loan modifications.
Principal writedowns became a key sticking point for the settlement talks with even some attorneys general openly expressing their reservations about the moral hazard such a move might carry.
Officials are hoping to advance negotiations with a refinancing compromise, which also could be leveraged to win back the support of those attorneys general who have dropped out of the discussions, such as California Attorney General Kamala Harris.
Harris excused herself from the negotiations late last month, calling the settlement proposal at that time “inadequate” for homeowners in her state – a state where the dive in home prices has left millions underwater.
Litigation liability has also been a stumbling block in reaching an agreement. The banks want some sort of assurance that the settlement will protect them from future litigation, but some AGs say any joint agreement should not prevent them from pursuing their own actions.
Geoff Greenwood, a spokesperson for the states’ lead negotiator, Iowa Attorney General Tom Miller, told DSNews.com, “It’s hard to say exactly how close we are. We’re getting closer and we’re cautiously optimistic we’ll reach an agreement in principle.”

Article of the Day

Thirty-Year Mortgage Rate Falls Below 4%

10/06/2011 By: Carrie Bay 

The average rate for the conventional 30-year fixed mortgage has dropped below the 4 percent mark for the first time in history, according to numbers released Thursday by Freddie Mac.
The GSE’s market analysis also shows that the 15-year fixed rate – which has become a popular refinancing option among existing homeowners – fell to its lowest level on record for the sixth consecutive week.

Freddie Mac’s regular weekly survey of mortgage rates is based on data collected from about 125 lenders across the country.
The GSE puts the average rate for a 30-year fixed mortgage at 3.94 percent (0.8 point) for the week ending October 6, 2011. That’s down 7 basis points from its average of 4.01 percent last week. As a point of comparison, last year at this time, the 30-year rate was 4.27 percent.
The 15-year fixed-rate mortgage came in at 3.26 percent (0.8 point) this week, dropping 2 basis points from 3.28 percent last week. A year ago at this time, the 15-year rate was averaging 3.72 percent.
Adjustable-rate mortgages (ARMs) were mixed this week in Freddie’s study. The 5-year ARM dropped from 3.02 percent to 2.96 percent (0.6 point), while the 1-year ARM rose from 2.83 percent to 2.95 percent (0.5 point).
At this time last year, the 5-year ARM was averaging 3.47 percent, and the 1-year ARM was 3.40 percent.

Article of the Day

Fixed Mortgage Rates Sink to Lowest on Record

09/29/2011 By: Carrie Bay 

Fixed mortgage rates fell to all-time record lows this week following the Federal Reserve’s announcement of “Operation Twist.”

The central bank’s new stimulus policy entails reinvesting principal payments from its holdings of GSE debt and mortgage-backed securities back into new mortgage bonds issued by Fannie Mae and Freddie Mac. The Fed also intends to purchase $400 billion more of Treasury securities by the end of June 2012.
Data released by Freddie Mac Thursday puts the average 30-year fixed-rate mortgage at 4.01 percent (0.7 point)

for the week ending September 29. That’s down from 4.09 percent last week. A year ago at this time, the 30-year rate averaged 4.32 percent.
Of the five regions surveyed in Freddie Mac’s survey, the West region recorded the lowest average rate for the 30-year fixed dipping below the 4 percent to 3.95 percent this week.
The 15-year fixed-rate averaged 3.28 percent (0.7 point) this week in the GSE’s survey, down from last week’s average of 3.29 percent. A year ago at this time, the 15-year rate was 3.75 percent.
Both the 30-year and 15-year fixed rates averaged an all-time record low in Freddie Mac’s study. Interest rates for adjustable-rate mortgages (ARMs), on the other hand, were virtually unchanged.
The 5-year ARM averaged 3.02 percent (0.6 point) this week, matching last week’s average. A year ago, the 5-year ARM was 3.52 percent.
The 1-year ARM came in at 2.83 percent (0.6 point), up one basis point from 2.82 percent last week. At this time last year, the 1-year ARM averaged 3.48 percent.
Freddie Mac’s survey averages mortgage rates from 125 lenders across the country.

Article of the Day

Wells Fargo Increases Funding for Nonprofits' Home Retention Efforts

09/28/2011 By: Carrie Bay 

Wells Fargo & Company says it will increase its commitment to credit counseling nonprofits by $5.4 million to a total of $12.4 million in 2011 – a 35 percent increase over the $9.2 million in 2010 – for national and local credit counseling agencies.

“At Wells Fargo, we share the desire of many non-profit agencies to help as many Americans as possible achieve and sustain the dream of homeownership,” said Jon R. Campbell, EVP and head of Wells Fargo’s Social Responsibility Group. “Yet public funding for credit counseling is becoming more scarce, while considerable demand remains.”
The $5.4 million in new commitments from the San Francisco-based lender this year will be provided in the form of grant money directly to nonprofit agencies and support foreclosure prevention counseling services and training.
Grants totaling $1.25 million will be awarded in $250,000 sums to each of five nonprofits including: Alliance for Stabilizing our Communities, Housing Partnership Network, National Community Reinvestment Coalition, HomeFree-USA, and National Foundation for Credit Counseling, Inc.
Another $3 million will be given to NeighborWorks America to support “train-the-trainer” scholarships for local counseling agencies to attend industry counseling standards training.
In addition, $1.2 million of the new funding will go to approved housing agencies to help extend home preservation services through face-to-face credit coun-

seling and mortgage payment assistance. Through this program, counselors can transmit the necessary documents for customers’ mortgage modifications through a Web-enabled portal.
“At a time when our country is still working through the effects of a historic downturn in the housing markets and high unemployment, Wells Fargo believes it’s critical to continue to support the work of these non-profit agencies,” said Mary Coffin, EVP of Wells Fargo Home Mortgage Servicing. “Experience has shown us that their coaching and counseling can have a dramatic impact on helping individuals and families become more successful homeowners through better management of their finances.”
On April 14, federal government officials voted to discontinue $88 million of HUD grants to housing counselors. This money enabled counseling agencies to offer their services free of charge or for a small fee.
In 2010, HUD-approved counseling agencies provided services to more than 2.1 million clients, and achieved $29 billion in measurable economic benefits on an investment of $75 million, according to HUD data cited by the National Council of La Raza.
“We applaud Wells Fargo for demonstrating their commitment to the tens of thousands of families that rely on housing counselors to help them navigate a complex housing market,” said Janet Murguía, president and CEO of the National Council of La Raza.
“Research has shown that the objective advice housing counselors offer to struggling homeowners and first-time buyers has proven results for families and lenders alike,” Murguía added.
Marc H. Morial, president and CEO of the National Urban League, also recognized Wells Fargo’s expanded commitment to credit counseling providers.
“As the dialogue and discourse continues to disproportionately center on the well being and vitality of Wall Street, Wells Fargo is to be commended for its support of evidenced-based solutions for Main Street,” Morial said. “We believe their leadership on this issue can have a catalytic effect on all sectors to do more to support counseling services throughout this period of government cut backs and economic uncertainty.”

Article of the Day

Freddie Mac: Economy Needs Fiscal Policy and Fiscal Stimulus

09/27/2011 By: Krista Franks

Even while interest rates continue to post record and near-record lows and affordability is relatively high, many consumers choose to rent rather than purchase homes.

“Financial worries among consumers are likely holding back home sales, which remain lackluster despite the most affordable home-buying market in decades,” said Freddie Mac’s Frank Nothaft, in his September 2011 Economic Outlook.
Nothaft, chief economist for the Virginia-based GSE, says a boost in job and income growth would help instill confidence in consumers and stimulate the housing market.
Federal Reserve policies have brought interest rates to their lowest levels since the 1950s, and “it has provided some assurance that it will keep the federal funds rate at its current near-zero level through at least mid-2013,” Nothaft wrote.
Freddie Mac’s Primary Mortgage Market Survey for September revealed record lows for both 30-year and 15-year single-family loans.

A combination of monetary and fiscal stimulus has the potential to bring economic growth to the new year, according to the outlook.
The Federal Open Market Committee announced a new Maturity Extension Program this month – a plan to purchase $400 billion in long-term Treasury securities and to sell the equivalent in short-term Treasury securities. The plan is intended to expand loan demand.
This fiscal policy has the potential to promote a gradual increase in economic growth, according to Nothaft, but if combined with stimulus, the effect could be greater.
Nothaft cites the proposed American Jobs Act as one fiscal stimulus that has the basic components to potentially spur some growth in the economy.
According to Macroeconomic Advisers, the act would bring about 1.3 million jobs and increase economic growth by more than 1 percent in 2012.
Unemployment would fall 0.3 percent to 0.4 percent below where it would otherwise stand, according to Macroeconomic Advisors.
Moody’s revealed a similar outlook, predicting a 1 percent to 2 percent increase in 2012 without a stimulus.
Freddie Mac expects unemployment to remain at 9.1 percent for the rest of this year and then drop slightly over 2012, ending the upcoming year at 8.7 percent.
The GSE expects GDP to increase throughout the remainder of the year, ending 2011 at 2.0 percent, and then jumping to 2.7 percent in the first quarter of 2012.

Article of the Day

Short Sale Delays Drive First-Time Buyers From Market: Survey

09/26/2011 By: Carrie Bay

Processing delays have taken their toll on first-time homebuyer interest in short sales, according to the latest HousingPulse Tracking Survey released by Campbell Surveys and Inside Mortgage Finance Monday.

First-time homebuyers were a part of 39.7 percent of the short sale transactions completed in August, the HousingPulse survey found. That tally marks a three-month slide in the share of short sales that went to first-time buyers, and is the lowest percentage for this buyer segment ever recorded by the survey.
The first-time homebuyer share of short sales hit a peak of 54.1 percent of all short sale transactions in November 2009, just before the originally-scheduled expiration of the federal homebuyer tax credit, according to Campbell Surveys.
Short sale transactions have garnered a reputation for being problematic for buyers and sellers alike, with typical approval times of several months after a homebuyer first submits an offer.
Campbell Surveys has found that factors slowing down short sale approvals include lost paperwork, coordination with multiple investors, slow appraisals, and mortgage servicer understaffing.
With average time-on-market for short sales stalled at 16.6 weeks – with the majority of that time spent waiting

for approval of the transaction – short sale transactions are becoming less popular with first-time homebuyers, according to the polling firm
Still, for some first-time homebuyers, average short sale prices of 27 percent less than non-distressed properties compensated for the wait time, Campbell Surveys said.
Short sales are just one type of distressed property, with foreclosed REO homes also a significant component of today’s housing market.
In August, the HousingPulse survey found that short sales accounted for 17.1 percent of the home purchase market, with damaged REO and move-in ready REO accounting for 13.2 percent and 15.6 percent, respectively.
Real estate agents responding to the August survey indicated that homebuyers frustrated with short sale delays are resorting to placing offers on multiple properties, with the intention of closing on only one. This practice can further bog down the short sale approval process.
The state of California is a hotbed of short sale activity, with these sales accounting for 31 percent of home purchases in the month of August, according to the HousingPulse survey.
“Short sales buyers/investors were generally looking at several properties and if one already had first and second approval, buyers would move towards the property that had a better chance of closing sooner. They would get tired of waiting on the short sale process,” commented one California agent.
“I feel that selling agents are telling the buyers it’s okay to write multiple offers because they can walk away with no risk, especially on short sales,” reported another agent.
The HousingPulse Tracking Survey from Campbell Surveys and Inside Mortgage Finance polls approximately 2,500 real estate agents nationwide each month to assess market trends surrounding homes sales and mortgage lending.

Article of the Day

Home Prices Continue Four-Month Run of Gains in FHFA Study

By: Carrie Bay

Home prices in the U.S. rose 0.8 percent between June and July, marking the fourth consecutive monthly increase, the Federal Housing Finance Agency (FHFA) said Thursday.




The agency’s House Price Index (HPI) has been trending upward since April of this year. That string of gains is coming off a streak of declines that was three times as long. Prior to April, FHFA’s HPI had been on a slippery downward slope for 12 straight months, going back to May 2010.

The federal agency’s index is calculated using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae and Freddie Mac.
Looking at the 12 months ending in July, U.S. homes lost 3.3 percent of their value, according to FHFA’s assessment.
The July index reading is 18.4 percent below its April 2007 peak and roughly the same as the March 2004 index level.
Among the nine census regions, the biggest monthly gain was seen in the West North Central division – which includes the Dakotas, Minnesota, Nebraska, Iowa, Kansas, and Missouri. There, home prices rose 3.6 percent between June and July.
The South Atlantic division – Delaware, Maryland, District of Columbia, Virginia, West Virginia, North Carolina, South Carolina, Georgia, and Florida – saw the biggest decline for the month, down 0.4 percent.
The West North Central division was the only region to experience a price increase over the last 12 months, posting an annual gain of 0.2 percent.

Why NOW is an Incredible time to purchase a home

We've all heard the doom and gloom predictions from the media about the current housing market.  Don't let that scare you!  Good news doesn't sell - sensational bad news is much more exciting. 

This is the way I see it: (and I'm in this business every day)

We haven't seen interest rates this low in decades, if ever.  Home prices are comparable to prices from the pre-boom era.(Early 2000's and earlier)  We don't know if house prices are going to dip any farther but if you are looking at your home as a long term investment - a place you are going to live for the next 5 -10 yrs, the situation is very favorable.  Interest rates are not going to stay this low forever - and if you think a half point or a point difference isn't a big deal, think again. 

Even if house prices dip lower in the next year or two, if interest rates go up, your monthly payment could actually be higher than what you would be paying with todays prices and rates.  And remember, your loan term is usually 30 yrs.  So you would be paying that extra interest every month for 30 years.  That adds up. 

Plus, in the meantime, you would still be paying rent every month.

This is a sample of current interest rates offered by a lender that I frequently work with:

 Rate__       APR        Monthly P&I

15 yr fix:     3.625%_3.978%_ _ $733.44

30 yr fix:     4.250%_4.379%___$514.14

FHA 30:       4.000%_4.142%_ _  $491.94

The payments represent a $100,000 loan, including Principal (loan payment) and Interest.  So, wow!  

Another shocker - You don't have to buy a foreclosure or a short sale to get a great deal.  Traditional sales, many of which are move in ready, are competing with foreclosures and short sales.  This competition is bringing the prices of traditional homes down.  The traditional sellers don't have a choice in the matter - because appraisers are using foreclosures as comparables when they determine the value of the home.  So even if the traditional seller had a buyer willing to pay a much higher price for a move in ready home, it is possible that the appraisal could come in lower than the offer price, because of foreclosure comparables. Then the buyer's lender would not approve the financing and the buyer and seller would have to re-negotiate the price.

Another factor - Rental vacancies are rapidly decreasing.  NAR ( National Association of Realtors) forecasts that vacancies will decline by almost 1% in the multi-family market over the next year.  Remember the law of supply and demand?  When supply goes down, demand goes up - and so do rental rates.  In many cases, it is actually cheaper on a monthly basis to own a home than it is to rent.  Plus some of that payment is going towards your principal, lowering  your loan balance and giving you equity.  Your rent payment?  You'll never get any of that back. 

So, instead of listening to the news and burying your head in the sand - think about the actual cost of renting versus home ownership - you might just be surprised.

And if you do decide to call a Realtor, call me. :)