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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BofA opens office for foreclosure alternatives

Bank of America announced Wednesday it had opened an office in Seattle to allow distressed homeowners whose mortgages it services to meet face to face with specialists and consider alternatives to foreclosure.

Meetings are by appointment only, available from 9 a.m. to 6 p.m. weekdays and 9 a.m. to 1 p.m. on Saturdays. Bank of America customers can call the office at (206) 358-4338 to make an appointment.

The bank is also holding outreach events from 9 a.m. to 6:30 p.m. May 19-21 at the Meydenbauer Convention Center in Bellevue and the Spokane Convention Center. To register, go to www.bankofamerica.com/outreachevent or call toll-free (855) 201-7426.

Homeowners facing foreclosure about to win right to mediation

More homeowners in Washington state could get help avoiding unnecessary foreclosures under a bill awaiting Gov. Chris Gregoire’s signature.

The bill, the “Foreclosure Fairness Act,” would give distressed homeowners working with housing counselors or attorneys the right to in-person mediation with the bank or company servicing their mortgage. Consumer advocates expect Gregoire to sign the bill Thursday.

Washington, among the 27 states where court approval of foreclosures isn’t required, would become only the third state — after Nevada and Maryland — to adopt a foreclosure-mediation program in which a homeowner can seek to modify terms of their loan.

“There’s no silver bullet, but this will at least be a competent response to the irresponsibility of the financial industry,” said Bruce Neas, a Columbia Legal Services attorney who helped negotiate the bill.

State regulators, who receive hundreds of complaints each year against national mortgage servicers, have been stymied by federal rules that limit their power to intervene.

The only recourse for homeowners has been going to court, where they’re usually outmatched by servicers.

Also Wednesday, federal regulators announced they had ordered eight national banks — Bank of America, Citibank, HSBC, JPMorgan Chase, MetLife Bank, PNC, U.S. Bank and Wells Fargo — to hire an outside firm to review all foreclosure actions from 2009 to 2010 and submit a plan to remedy “all financial injury to borrowers caused by any errors, misrepresentations, or other deficiencies” identified by outside consultants.

The move by state lawmakers to require mediation comes as the foreclosure crisis in Washington continues. In the first three months of the year, more than 5,600 homes were seized and more than 7,000 were headed to foreclosure auction, according to RealtyTrac.

The bill before Gregoire also would provide an estimated $7.5 million for foreclosure-prevention efforts and more than double the number of housing counselors. Washington has just over 40.

“The real hope is that by adding the counselors, the banks and families would reach some kind of agreement before going to mediation,” said Kim Herman, executive director of the Washington State Housing Finance Commission.

Under the proposed law, once a homeowner becomes delinquent, the servicer must send a letter asking the owner to contact the server and urging the person to call a housing counselor or attorney for help.

Homeowners who respond to the letter would be given 60 more days before the servicer could file a notice of default.

If the counselor or attorney couldn’t resolve the issue with the servicer, they could refer the homeowner to a mediator through the state Department of Commerce.

The Commerce Department selects the mediator, who must hold a session within 45 days. The homeowner and servicer share in the cost of the mediator’s fee, which can be up to $400.

If the mediator finds the servicer didn’t participate in good faith, a homeowner can use that to ask a court to stop the foreclosure. The state Attorney General’s Office also could pursue penalties against servicers.

When lawmakers opened negotiations on the bill, consumer advocates were surprised by the bankers’ first move.

Without prompting, the Washington Bankers Association offered to pay a $250 fee for every default notice filed, with the stipulation that 80 percent of the money pay for housing counselors.

“It did surprise people,” Herman said.

The association, which represents national and community banks, suggested the fee because it wants more delinquent homeowners to work with housing counselors, said James Pishue, the group’s president.

National studies show that homeowners who work with trained housing counselors have much higher success rates in reaching an agreement with their servicer.

“We thought that would prevent the need for mediation,” Pishue said. “Ultimately it results in fewer foreclosures.”

Marc Cote, a housing counselor who oversees the state’s foreclosure-prevention hotline, said he’s pleased with the measure.

“The main thing I’m hopeful for is that the mediation piece will inspire servicers to resolve the hundreds, in my experience, of [loan] workouts that are still not resolved after months and months.”

Source: Sanjay Bhatt, Seattle Times (April 13th, 2011)

New Home Sales Jump in March

Sales of new homes rose 27 percent in March compared to February, the U.S. Commerce Department announced Friday. It was the largest monthly increase since April 1963, when sales jumped 31.2 percent.

In addition, the National Association of REALTORS® reported last week that sales of previously owned homes rose 6.8 percent.

Economists attribute the figures to buyers taking advantage of the $8,000 tax credit scheduled to expire at the end of this month.

“In simple terms, housing is a bargain again, and buyers are responding,” Michael D. Larson, a real estate and interest rate analyst at Weiss Research, wrote in a research note. “That is unambiguously good news for the market going forward.”

Source: The New York Times, Christine Hauser (04/23/2010)

Northwest MLS brokers report 51% jump in pending sales

Home sales around Washington state surged last month, with brokers reporting activity at levels “like we haven‟t seen in a while,” according to the owner of a Seattle brokerage. Northwest Multiple Listing Service members reported 8,605 pending sales during March for a 51 percent increase over the same month a year ago.

Notably, while entry-level home sales have been driving the market, brokers also reported strong activity at the upper end of the price spectrum. Last month, 91 residences (76 of them in King County) sold for $1 million or more; twelve months ago only 40 homes and condos fetched $1 million or more.

Pending sales (offers made and accepted, but not yet closed) in the four-county Puget Sound region rose 60 percent from twelve months ago, led by Snohomish County where the number of transactions jumped more than 77 percent.

NWMLS director Diedre Haines, regional managing broker for Coldwell Banker Bain in Snohomish County, said her network of three offices broke a nine-year old record for the most transactions in a single month. She attributes the gains to several factors, including tax incentives and the return of jumbo loan financing, but also noted an uptick in activity for parcels of land.

“We are once again representing buyers in the purchase of both raw undeveloped land and platted lots,” Haines remarked, adding, “This is the first time we have seen land purchases in over two years.” Of the buyers, she said some intend to start building now and others are buying for investment.

 MLS brokers also reported year-over-year increases in the number of new listings added to inventory and in the volume of closed sales. Members added 12,994 new listings to the system last month, up 26.7 percent from the year-ago total of 10,252 new listings.

Last month‟s new listings included 11,041 single family homes and 1,953 condominiums. Those additions brought the total inventory to 38,716. That compares to 39,825 total active listings at the same time a year ago, a decrease of about 2.8 percent.

Closed sales outpaced year-ago totals by a wide margin. Members reported 4,972 completed transactions during March, a gain of 1,590 sales for a 47 percent increase.

Prices for last month‟s closed sales of single family homes and condominiums (combined) were down about 2 percent system wide. Since January, however, prices have inched up almost 1.8 percent.

Within King County, price changes from a year ago ranged from double-digit increases for homes on Mercer Island (up 26.9 percent), Central Seattle (up 14.9 percent), and Vashon (up 10 percent), to double- digit declines in some parts of South King County.

“Homes that are positioned well – at every price range – are selling quickly,” commented NWMLS director Pat Grimm, the owner/designated broker at Windermere Real Estate/Capitol Hill, Inc. in Seattle. Among examples he cited was a Medina home that sold for its $2.35 million asking price in seven days. It drew three quick offers with escalation clauses. At the lower end of the price spectrum was a 2-bedroom Capitol Hill condo listed at $230,000. It also received multiple offers and sold for full price in three days.

Some buyers have to make offers on multiple properties before they win, but they‟re still reticent about paying more than the list price, according to Grimm. He noted buyers are not waiving inspections, but said some bidders are doing pre-offer inspections.

“Sales activity is at a high level like we haven‟t seen in a while, but still not the frenzy we saw a few years ago,” Grimm remarked, adding, “And that‟s a good thing.”

Condo sales across the 21 counties in the MLS system showed significant improvement from a year ago. MLS members reported 1,199 pending sales last month, which compares to 645 sales for the same month a year ago for an increase of almost 86 percent.

Condo prices still lag year-ago figures. The median price for last month‟s completed sales was $225,000, down about 7 percent from the year ago figure of $242,000. Within Seattle, however, prices are up. The median price for last month‟s completed sales of condos in Seattle was $291,000, an increase of 5.8 percent from a year ago when the median sales price was $275,000.

“The Seattle surge has returned thanks to the opportunities that have been afforded to homeowners through the federal tax credit, historically low interest rates, and increased affordability,” observed J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. “As predicted, there is a surge of sales activity in the „more affordable‟ price ranges which is causing a chain reaction of sales up the price points,” he reported. Scott said he expects the momentum to continue in the coming weeks as the April 30 expiration of the tax credit approaches.

Source: NWMLS (04/05/2010)

Homebuyers scramble as mortgage rates jump

The era of record-low mortgage rates is over.

The average rate on a 30-year loan has jumped from about 5 percent to more than 5.3 percent in just the past week. As mortgages get more expensive, more would-be homeowners are priced out of the market — a threat to the fragile recovery in the housing market.

And if you wanted to refinance at a super-low rate, you may have missed your chance. Mortgages under 4 percent are still available, but only for loans that reset in five or seven years, probably to higher rates.

Rates are going up because of the improving economy and the end of a government push to make mortgages cheaper.

For people putting their homes on the market this spring, rising rates may actually be a good thing. Buyers are racing to complete their purchases and lock in something decent before rates go even higher.

“We are seeing some panic among potential buyers who have not found houses yet,” said Craig Strent, co-founder of Apex Home Loans in Bethesda, Md. “They’re saying: Man, I should have found a house three weeks ago or last month when rates are lower.”

It’s all about affordability. For every 1 percentage point rise in rates, 300,000 to 400,000 would-be buyers are priced out of the market in a given year, according to the National Association of Realtors.

The rule of thumb is that every 1 percentage point increase in mortgage rates reduces a buyer’s purchasing power by about 10 percent.

For example, taking out a 30-year mortgage for $300,000 at a rate of 5 percent will cost you about $1,600 a month, not including taxes and insurance. But the same monthly payment at a rate of 6 percent will only get you a loan of $270,000.

Good economic news is the first reason rates are rising: U.S. government debt, a safe haven during the recession, is losing its appeal as investors turn to stocks and riskier corporate bonds.

Lower demand for debt means the government has to offer a better interest rate to sell its bonds. The yield on the 10-year Treasury note, which is closely tracked by mortgage rates, hovered above 4 percent this week, the highest since June, before falling back slightly.

The second reason is the Federal Reserve. Last week, the Fed ended its program to push mortgage rates down by buying up mortgage-backed securities. When demand from the central bank was high, rates plummeted to about 4.7 percent for much of last year. And business boomed for mortgage lenders as homeowners raced to refinance out of adjustable-rate mortgages and into fixed loans.

As of Wednesday, the Mortgage Bankers Association put the national average for a 30-year fixed-rate mortgage at 5.31 percent. One week ago, it was 5.04 percent.

Many analysts forecast rates will rise as high as 6 percent by early next year. If they go much higher, the already shaky housing recovery could stall. And that could slow the broader economic rebound.

In a normal market, with home prices steadily rising, a jump in rates doesn’t cause a big dip in demand. That’s because people know their homes will eventually rise in value and they’re willing to accept a higher mortgage payment.

But now home prices are flat nationally and still falling in some places. Potential buyers are nervous about jumping in.

“In this environment, any rise in mortgage rates does significant damage because people don’t think they’re going to get their money back” if prices fall, said Mark Zandi, chief economist at Moody’s Analytics.

For people who bought their first home in the 1980s, when rates stayed over 10 percent for several years, paying 6 percent for a home loan may seem like a steal. But it’s coming as a shock to many first-time homebuyers this spring.

In Overland Park, Kan., Sirena Barlow checks mortgage rates online once a day. She’s been shopping for something around $130,000 and wants to sign a contract this month, to take advantage of a tax credit for first-time homebuyers.

Barlow, a legal assistant, already has told her landlord she’s moving, so her stress level is high. Her real-estate agent, Michael Maher, has been doing his best to calm Barlow and other clients, but rising rates are making them anxious.

“It’s like giving hyperactive kids ice cream,” he said. “It has really taken the ones who are focused on buying and amped them up a little bit

Source: The Associated Press, by By ALAN ZIBEL and ADRIAN SAINZ (04/07/2010)

King County house prices post year-over-year rise for first time in 2 years

Median house prices in King County rose year-over-year in March for the first time in more than two years, according to statistics released Monday by the Northwest Multiple Listing Service.

The median price of a single-family home that sold last month was $367,250, the broker-owned service said, up 0.9 percent from March 2009.

The last time prices rose year-over-year was in January 2008.

The March bar was low, however. March 2009’s median, $363,850, was the lowest in years. And last month’s number, while higher, still was the lowest since then.

Median house prices in King County have fluctuated between $370,000 and $395,000 over the past year.

The broker-owned service also reported a surge in sales, which agents said was spurred by low interest rates, greater affordability and the upcoming expiration of federal tax credits for many homebuyers.

Buyers closed on 1,596 houses in King County in March, up 65 percent from the same month last year. Condo closings were up 47 percent.

Pending single-family home sales — offers that have been accepted by sellers, but haven’t closed — were up 63 percent in King County. The last time more pending sales were recorded was in May 2007, before the market turned.

But pending sales have become a less-reliable measure of sales activity in recent months as many deals — especially “short sales” for less than the owner owes on the house — fail to close.

In Snohomish County, closed house sales were up 74 percent year-over-year in March. The median sale price, $279,950, was down 11 percent.

Source: Seattle Times, by Eric Pryne (4/05/2010)