Obama outlines reforms in housing finance system

white-house

President Obama called Fannie Mae and Freddie Mac a “failed business model” in a speech outlining new housing goals on Tuesday.

The president is backing three proposals in finance reform, including streamlining refinancing for borrowers, waiving closing costs for those who refinance on shorter terms, and creating special programs that will expand eligibility for refinancing for those without government-backed mortgages. Overall, the President’s position is to "preserve access to safe and simple mortgage products like the 30-year, fixed-rate mortgage."

In a chat on Zillow.com, Obama stated he intended to push a housing package through congress by the end of this year.

Los Angeles home prices up 12% in January

C&P Home Price Index

Nation-wide, home prices are improving by leaps and bounds year-over-year, according to the new January Case-Shiller Home Price survey.

Year-over-year, the 10-city Home Prices Index rose 7.3%, while the 20-city index rose 8.1% (economists had forecast an 8.2% rise).  Phoenix led the nation with home prices rising 23.3% alongside its sharp drop in the unemployment rate.

Los Angeles home prices rose 12.1% in the last year, and 1% month-over-month.

All of these numbers are part of a larger trend that saw home price gains in all 20 metros for the first time in over two years.

The market is improving, but is it time to sell?

Is it safe to sell your house now?

It's been seven years since the start of the housing market collapse, but finally things are starting to look up. Mortgage rates remain at record lows, new home construction is starting to go up, and home values are improving.

So if you're looking to sell your home, is now the right time?

A new survey by Fannie Mae reveals nearly one in four homeowners are confident that now is a good time to sell, a number which is up 11% from a year ago. And even though home values are improving, they are still 27% below 2006 highs.

If you're thinking about selling, give me a call. I can help you determine if it's the right time and what is the right price.

Foreclosure inventory will remain low in 2013

Foreclosure Inventory via Wall Street Journal

With gains in housing prices the past year also comes an increase in home equity – very good news for current homeowners. But while those shopping for good deals (especially first-time home buyers and move-up buyers) are getting incredibly low interest rates, foreclosures and other REO inventory is shrinking drastically.

According to CoreLogic, foreclosure inventory is down 20% in November from a year ago. REOs fell from 19.6% to 11.5% between January and November 2012. This drop is due to a lower number of delinquencies and a more laborious foreclosure process that resulted from the original housing crisis issues.

Along with fewer foreclosures and REOs comes major competition to purchase deals by investors, first-time homebuyers, and the move-up buyers, hence the rise in prices. Economists are predicting that 2013 will see further declines in both REO and foreclosure inventory, but won’t be as steep a decline as we saw in 2012.

New HARP program expands benefits to more struggling homeowners

You may now be able to borrow a little more than your home is worth under some new changes to the Home Affordable Refinance Program (HARP). Under the current program (which expires at the end of 2013), Freddie Mac and Fannie Mae borrowers could get help with refinancing if the value of their home had declined and they owed more than the home was worth. Now, banks are more comfortable raising the loan-to-value caps to include more struggling homeowners. HARP 3.0 will cover borrowers not under Freddie Mac and Fannie Mae, and loans over $417,000 can now qualify.

It’s unclear when the new HARP program will take effect, but for now homeowners under those lenders still have options for refinancing.

Home Prices to Rise in 2013

The Real Estate Consensus Forecast released by the Urban Land Institute this month  by the thirty eight real estate economists and analysts projected improvement for the economy. The already improving housing sector is expected to see housing starts nearly double by 2014 and projects home prices to begin to rise in 2013.

The prediction is that the average home price will stabilize in 2012, followed by a 2 percent increase in 2013, and a 3.5 percent increase in 2014.

New construction of single-family housing is expected to rise from 428,600 starts in 2011 to 500,000 in 2012, and jump to 800,000 in 2014.

The unemployment rate is expected to continue falling, with the rate dropping to 8 percent by the end of 2012, 7.5 percent by the end of 2013, and 6.9 percent by the end of 2014.

But, with the improving economy comes inflation and higher interest rates. These rising rates will increase costs for investors, and those surveyed do not expect substantial increases in real estate capitalization rates.

ULI CEO Patrick L. Phillips advised that while the forecast suggests that economic growth will be steady rather than sporadic, it must be viewed within the context of numerous risk factors such as the continuing impact of Europe’s debt crisis; the impact of the upcoming presidential election in the U.S. and major elections overseas.

“While geopolitical and global economic events could change the forecast going forward, what we see in this survey is confidence that the U.S. real estate economy has weathered the brunt of the recent financial storm and is poised for significant improvement over the next three years.,” said Phillips.