74.6 percent of homes affordable to median-income households, trade group finds

Housing affordability hit a new high in the first quarter, surpassing the previous high set in fourth-quarter 2010, according to the National Association of Home Builders and Wells Fargo.

The Housing Opportunity Index found that 74.6 percent of new and existing homes sold in the first quarter were affordable to families earning the national median income of $64,400. That’s up from 73.9 percent in the fourth quarter of 2010, and it’s the highest level in the more than 20 years the index has been measured.

“With interest rates remaining at historically low levels, today’s report indicates that homeownership is within reach of more households than it has been for more than two decades,” Bob Nielsen, chairman of the National Association of Home Builders (NAHB), said after the index was issued last week.

“While this is good news for consumers, homebuyers and builders continue to confront extremely tight credit conditions, and this remains a significant obstacle to many potential home sales.”

The Seattle metropolitan area also became more affordable with 67.5 percent of homes within reach of those earning the median income of $85,600. That number is the highest recorded since the index started in the first quarter of 1999.

Before 2009, the national index rarely topped 65 percent, the association said. Last quarter was the ninth straight quarter the index was above 70 percent.

Indiana, Ohio and Michigan dominated among the most affordable metro areas. Among metro areas with populations under 500,000, Kokomo, Ind., was the most affordable area, with 98.6 percent of homes affordable to households making a median income of $61,400. The median sales price in the area was $88,000 in the first quarter.

California dominated among the least affordable metro areas. San Luis Obispo-Paso Robles, Calif., was the least affordable among the smaller metro areas with 47.6 percent of homes affordable to households making the median income of $72,500. The median sales price in the area was $320,000 in the first quarter.

Among metro areas with populations of 500,000 or more, Syracuse, N.Y., was the most affordable to households making the median income of $64,300. The median sales price in the area was $80,000 in the first quarter.

Another New York market, New York-White Plains-Wayne, N.Y.-N.J, was the least affordable among both the larger metros.

Less than a quarter of homes, 24.1 percent, were affordable to families making the median income of $65,600 in the first quarter. The median sales price was $425,000.

In other cities in Washington state, Spokane was the most affordable with 82.2 percent of homes within reach of those earning the median income of $60,300. Olympia recorded 81.8 percent; Tacoma, 78.5 percent; Bremerton-Silverdale, 70.1 percent; Bellingham, 69.7 percent; and Mount Vernon-Anacortes, 60.5 percent.

Source: By Inman News

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Rebuilding scores — if you ask

Some credit experts call it the best-kept secret in home-mortgage finance. Others say, so what?

Millions of Americans whose credit scores have declined in recent years because of economic stresses could start rebuilding their scores if their rent, utilities, cellphone, insurance and other monthly accounts were reported to the national credit bureaus.

But typically they are not, and as a consequence fail to show up as positive factors on credit-scoring systems such as FICO or VantageScore. These on-time payments essentially go to waste for consumers, even though monthly rents often can be as large as mortgage bills, and years of utilities and other payments are widely recognized as strong indicators of creditworthiness.

Now for the best-kept secret: Under federal law, these unreported accounts need not go to waste. You as a mortgage applicant are guaranteed the right to bring evidence of your unreported on-time payments to lenders, and they in turn are required to consider those records in making a decision on granting you a home loan — provided you request it. If a loan officer refuses, he or she could be open to legal penalties.

Though federal financial regulators generally acknowledge the right to present supplementary data that consumers enjoy under the Equal Credit Opportunity Act, only one — the National Credit Union Administration — has published guidance informing lenders they are required to comply.

Factoring in so-called nontraditional credit accounts not only could provide important help to buyers and owners with recession-scarred scores but could also aid the estimated 35 million to 54 million consumers who don’t show up — or barely show up — in the files of Equifax, Experian and TransUnion, the three national credit bureaus. Many of these are young people with so-called “thin” files with just a couple of credit accounts, and many are minorities.

So where’s the disconnect here? Why aren’t more consumers documenting their otherwise unreported monthly payments? And why are loan officers likely to stare at account records and say: Are you kidding? We only look at credit files.

The problem is complex. Almost no one in the consumer-finance field has paid much attention to the Federal Reserve’s “Regulation B” that interprets the rules on treatment of alternative credit. Lenders who know about it don’t want the hassles of sorting through “shoe box” records that may or may not be accurate. Major players in the mortgage market such as the Federal Housing Administration, Fannie Mae and Freddie Mac all say they’ll accept alternative credit data but have restrictions on what they will consider. FHA, for example, does not permit applicants with low credit scores to boost them by adding positive, nontraditional data.

The credit industry is eager to incorporate accurate, nontraditional information but is ill-equipped to deal with sources that cannot provide large and regular amounts of verified reports.

“The [national] bureaus know that alternative data is highly predictive,” says Barrett Burns, CEO of VantageScore, a joint venture created by Equifax, Experian and TransUnion. “We think millions of people could benefit” if it were collected and loaded into scoreable files. Experian already collects positive rent-payment data on approximately 8 million units in large apartment complexes and incorporates the information into its scores, he said.

But Burns noted that the industry has had difficulty accessing information on utilities payments in some states, and collection of cellphone-account records has raised privacy issues. Without accurate information being available in large quantities, he said, it is difficult to assist large numbers of consumers.

Nonetheless, efforts are under way to mine unreported credit data — potentially the untapped shale gas of the mortgage market — and transform it into something useful. A private firm, Trycera Credit Services, has announced an agreement with the National Credit Reporting Association — a trade group representing companies that provide the merged credit-bureau reports and scores used by mortgage originators — to independently verify the accuracy of consumer-supplied payment records. Those records can then be provided to lenders as part of the standard credit reporting and scoring information used in mortgage underwriting.

Michael G. Nathans, president of Trycera Credit Services, says the project is just getting off the ground but that preliminary information is available at the company’s website, www.trycera.com. The service will cost $20 to verify rental and mortgage payments, $15 for other verifications. Trycera also offers Visa debit cards that can help consumers document their nontraditional credit payments in a scoreable format.

Of course there are no guarantees that lenders will accept your alternative credit data. But federal law requires them to at least “consider” it — if you ask.

Source: By Kenneth R. Harney, Syndicated Columnist

Renters finding landlords have upper hand in this market

Angi Ramos and her former college roommate Laura Waltner have been looking for months for a place to call “home.”

They’ve been trawling websites and have inspected a half-dozen units.

They’d prefer a newer building in Capitol Hill or Queen Anne — vibrant neighborhoods with lots of young people, restaurants and nightlife. Their search so far for a two-bedroom apartment under $1,500 a month has yielded only slim pickings.

“One unit had a great common area,” says Ramos, “but the washing machine was in the kitchen and the dryer was in one of the bedrooms.”

New, attractive buildings, such as the Illumina Lake Union Apartments, are full and expensive, says Ramos. Still, she says, the landlord suggests they check back every month to see when there might be an opening.

Similarly, when Hoa Do set out to find an apartment earlier this year, she says she did not expect to pay as much as $850 per month to rent a vintage studio near Seattle University. What’s more, the college senior regrets that her landlord would not relent on a nine-month lease.

“As a student, I prefer to pay month-to-month, because I never know if I will be studying abroad, or going home to visit family,” says Do, who is from Vietnam.

It’s a story being repeated all over Seattle. As vacancy rates dip below 5 percent, landlords are raising rents and offering fewer concessions or perks.

According to Apartment Insights, a web-based information service, the vacancy rate in the Seattle metro area hasn’t been this low since the latter part of 2007, and rental incentives are drying up in downtown Seattle, Capitol Hill and downtown Bellevue.

“The rental market is changing quickly from a renter’s market to a landlord’s market,” says Cassie Walker Johnson of Windermere Property Management, Lori Gill & Associates. Vacancy rates in highly desirable neighborhoods, such as Capitol Hill, Queen Anne and Fremont, are about 3 percent, the lowest in Seattle, she notes.

In contrast, rental markets with vacancy rates above 6 percent include SeaTac, Federal Way and Kirkland, according to Apartment Insights.

Landlord Christopher T. Benis, who is also a partner in the law firm Harrsion, Benis & Spence and represents tenants and landlords alike, calls the market “balanced.”

“We are raising rents now that we can, but all we are doing is trying to get them [rents] back to 2007 levels,” says Benis, who owns rental properties in Seattle.

Tenants ought to shift their attitudes to reflect the changes, he says. “If they [tenants] think they can look at 20 properties and then come back to the ‘best one,’ that best one will probably be long gone.”

Little in the way of new development and declining home values contribute to a tight rental market.

Tom Cain, president of Apartment Insights, says fewer than 1,870 units are scheduled for completion this year, about 60 percent of last year’s level, and less than one-third of the 6,349 units built in 2009.

Walker Johnson, who specializes in leasing single-family dwellings, condos and small apartment buildings, says population growth is also driving down vacancy rates.

“About 75 percent of my new tenants are moving here from all over the nation to work at larger corporations who are hiring in our area,” she says.

Telltale signs of just how far the pendulum has swung include tenants plunking down more than the list price on rental homes and signing longer leases to qualify for a desired property.

“We are starting to see multiple applications in some situations,” says Walker Johnson, who expects to see hikes of up to 10 percent for rental homes from May through September.

For a Queen Anne family, the possibility of a rent increase on a four-bedroom Craftsman, where they’ve been living for nearly a year, weighs heavy.

“We feel the renewal negotiations are a huge strategy game, and we are fearful we will have to leave ‘our home’ or accept an increase that we simply don’t feel comfortable with economically,” say the husband and wife, who are not being identified due to ongoing negotiations with their landlord.

“This year, you have to jump when you find the right home, unlike a few years ago when properties languished on the market, for months, in some cases.”

Lawyer Lauren Sancken, who signed a one-year lease in April for a Capitol Hill flat with a patio garden and a spectacular view of the Space Needle, says she wishes she had signed a lease extension to lock in her rate.

“It is far more competitive than I expected, especially when several people are willing to submit applications and deposits right away. I found myself offering cookies, muffins, just to try to get a bit of an advantage on places that I really liked,” says Sancken.

Not surprisingly, tenants with limited means are being hit the hardest, says Jonathan Grant, executive director of the Tenants Union of Washington State.

“Many low-income tenants displaced by the foreclosure crisis, sometimes evicted by no fault of their own due to a landlord’s default on their mortgage, are now finding an even tighter market, while many former homeowners are returning to renting after losing their homes,” says Grant.

Adding insult to injury, many of those low-income tenants will have an eviction on their record from the foreclosure, further complicating their ability to secure housing, he says.

Ramos says she is not daunted. “We are willing to wait for a good one,” she says.

 Source: By Elizabeth M. Economou, Seattle Times

Improving job market ignites sharp rise in apartment rents

Apartment rents are rising at their fastest pace in years as the U.S. economy creates jobs and spurs demand for rental housing.

Nationwide, rents started edging up last year after several years of little growth or even declines, market researcher Reis says. It predicts apartment rents will jump 4.3% this year, marking the biggest annual increase in four years. MPF Research, which also monitors apartment rents, expects them to rise more than 5% this year, says Greg Willett, MPF Research vice president.

Job growth is driving much of the increase. As more people get jobs, people who doubled up in homes during the recession, especially younger workers, move out on their own, says Ryan Severino, Reis senior economist. Many of those workers are choosing to rent rather than to buy, because of dropping U.S. home values and tight lending standards that make it harder to buy homes, Severino says.

Lack of construction is also helping rents. This year, just 40,000 new apartment units are expected to be added to the U.S. supply, Reis says. That’s down from about 130,000 new units each year for much of the past decade.

Apartments make up about half the nation’s rental supply, Willett says. Single-family homes and condominiums account for the rest.

MPF and Reis both say San Jose and New York City are the strongest rental markets. In the first quarter, rents in those markets were up 4.6% and 4.4%, respectively, from the same period last year, Reis’ data show. Nationwide, rents rose not quite 2% from the first quarter of 2010 to the same quarter this year, Reis says. Vacancies fell 1.8 percentage points to 6.2%.

Other markets seeing first-quarter year-over-year rent increases in excess of 3% included suburban Virginia and Maryland; San Francisco; Rochester, N.Y.; Portland, Ore.; and Denver, Reis says.

Real estate broker Richard Gonzalez of Realty World sees the market tightening in San Jose as homeowners who lose homes to foreclosure or short sales become renters. “They’re starting over and need to rent,” Gonzalez says.

Las Vegas was one of the few metropolitan areas in which rents fell in the first quarter, Reis and MPF say. They dropped almost 3% year-over-year.

Las Vegas has the highest foreclosure rate in the nation, and investors are buying homes there and turning them into rentals. The city hasn’t seen apartment rents rise since the third quarter of 2008, Reis says.

Increasing demand and lack of new rental supply will boost rents for the next couple of years, predicts Paul Dales, economist at Capital Economics. Eventually, though, as rents rise and home prices drop, “homeownership becomes more valuable again,” says Jim O’Sullivan, chief economist at MF Global.

Rate on 30-year fixed mortgage falls to 4.71%, lowest of year – USATODAY.com

Rate on 30-year fixed mortgage falls to 4.71%, lowest of year http://usat.me/46835962

In Time for Buying Season, Rates Reach Yearly Lows

The 30-year fixed-rate mortgage, a popular choice among buyers, sank even lower this week, matching its yearly low of 4.71 percent from January, reports Freddie Mac in its weekly mortgage market survey. Last year at this time, the 30-year fixed-rate mortgage averaged 5 percent.

Meanwhile, the 15-year fixed-rate hit a new yearly low of 3.89 percent this week. Last week, the 15-year fixed-rate mortgage averaged 3.97 percent. The 15-year rate averaged 4.36 percent last year at this time. It reached its lowest level on record in November when it averaged 3.57 percent.

The one-year adjustable-rate mortgage averaged 3.14 percent, down from last week’s 3.15 percent. Last year at this time, it averaged 4.07 percent.

“Weaker economic data reports reduced Treasury bond yields and allowed mortgage rates to drift lower for the third consecutive week,” says Frank Nothaft, Freddie Mac’s chief economist.

Source: “30-Year Fixed-Rate Mortgage Matches Yearly Low of 4.71 Percent,” Freddie Mac (May 5, 2011)

Washington State HomePath Buyer Incentive Offer

There’s great news from Fannie Mae: Buyers may be eligible to receive up to 3.5% in closing cost assistance through June 30, 2011 as part of the HomePath buyer incentive.

To be eligible for this incentive, the following qualifications must be met:

  1. Buyers and/or selling agents must request the incentive upon submission of the initial offer in order to be eligible.
  2. The initial offer must be submitted on or after April 11, 2011 and close by June 30, 2011. If an initial offer was made prior to the effective date, the offer is not eligible for the incentive.
  3. The sale must close on or before June 30, 2011. No exceptions will be made to this deadline.
  4. Only buyers purchasing a HomePath property as their primary residence may receive up to 3.5% in closing cost assistance. Second homes and investment properties are excluded from the incentive.
  5. Buyers must sign an Owner Occupant Certification Rider to the real estate purchase addendum.
  6. If the buyer’s total closing costs are under 3.5%, the difference will not be available as a credit to the buyer.

Keep in mind that offers submitted after May 15, 2011 may be difficult to close by the June 30, 2011 deadline. In addition, in California and Washington, there is also a $1,000 buyer’s agent incentive.

Contact me for specific details on this incentive offer and for all of your Fannie Mae HomePath financing questions. I’m always happy to help you in any way I can!

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