California pending home sales posted higher for the third consecutive month in March, rising from both the previous month and year, C.A.R. reported Tuesday. Additionally, the share of distressed sales dropped for the second consecutive month, as equity sales typically increase with the start of the spring home buying season.
C.A.R.’s Pending Home Sales Index (PHSI)* rose from a revised 126.5 in February to 143.7 in March, based on signed contracts. The March 2012 index was the highest since April 2009, when the PHSI was 146.9. The index also was up from the 128.9 index recorded in March 2011, marking the eleventh consecutive month that pending sales were higher than the previous year. Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.
The share of equity sales – or non-distressed property sales – compared with total sales increased in March to 55.4, up from 51.1 percent in February. Equity sales made up 50.2 percent of all sales in March 2011.
Meanwhile, the total share of all distressed property types sold statewide decreased in March to 44.6 percent, down from February’s 48.9 percent and from 49.8 percent in March 2011.
The share of short sales was down again in March. Of the distressed properties sold statewide in March, 21.1 percent were short sales, down from February’s share of 23 percent but up from last March’s share of 20.1 percent.
The share of REO sales also declined in March to 23.1 percent, down from February’s 25.2 percent and down from the 29.4 percent recorded in March 2011.
http://www2.realtoractioncenter.com/site/R?i=CxnpsyB6cmaNsJ4cPX1d_g
More consumers may be looking to purchase homes with a shift in several key housing market indicators, according to Fannie Mae’s March 2012 consumer attitudinal National Housing Survey. More Americans now expect both home rental and home purchase prices to increase over the next year. Nearly half of consumers expect higher rental prices, the highest number recorded since monthly tracking began in June 2010. These trends may be providing Americans with an increased sense of urgency to buy a home as 73 percent of Americans now believe it is a good time to buy a home, up from 70 percent in February.
Highlights of the survey include:
Thirty-three percent of respondents expect home prices to increase over the next 12 months, a five percentage point increase from last month, the highest level over the past 12 months.
On average, Americans expect home prices to increase by 0.9 percent over the next 12 months (up slightly since last month).
Thirty-nine percent of Americans say that mortgage rates will go up in the next 12 months, a five percentage point increase from last month.
On average, respondents expect home rental prices to increase by 4.1 percent over the next 12 months, a significant increase since February, and the highest number recorded to date.
Forty-eight percent of respondents think that home rental prices will go up, a three percentage point increase from last month and the highest number recorded to date.
Sixty-six percent of respondents say they would buy their next home if they were going to move, up one point since last month, while 30 percent say they would rent, up one point versus last month.
http://www.fanniemae.com/portal/about-us/media/corporate-news/2012/5690.html
Americans’ concerns about key economic and housing issues are beginning to subside, according to results from Fannie Mae’s February 2012 National Housing Survey. Consumers’ attitudes have stabilized across most indicators – including personal finances, housing, and employment – demonstrating their sense that downside risks have abated somewhat compared with late summer and fall of 2011.
Highlights of the survey include:
The rise in confidence in the economy’s direction continued in February, with 35 percent responding that they think the economy is on the right track, a 5 percentage point increase from January. The percentage of respondents who say the economy is on the wrong track dropped to 57 percent, a decline of 6 percentage points.
On average, Americans expect home prices to increase by 0.8 percent over the next 12 months (down slightly since last month).
Twenty-eight percent of respondents expect home prices to increase over the next 12 months (consistent with last month), while 15 percent say they expect home prices to decline (down 1 percentage point since last month). Fifty-three percent say prices will stay the same.
The percentage of respondents who say it is a good time to sell rose by 3 percentage points to 13 percent, the highest level in more than a year, while the percentage of respondents who say it is a good time to buy dropped 1 percentage point to 70 percent this month.
Sixty-five percent of respondents say they would buy their next home if they were going to move, up 1 percentage point since last month, while 29 percent say they would rent, down 1 percentage point versus last month.
http://fanniemae.com/portal/about-us/media/corporate-news/2012/5665.html
The New York Times
With interest rates at or near record lows, many borrowers are seeing little reason to pay points when buying or refinancing a home. Some are even opting for what’s known as “negative points,” agreeing to a slightly higher rate to help pay closing costs.
Making sense of the story
- Paying points enables a borrower to “buy down” the interest rate on a mortgage in exchange for an upfront fee. The trend away from points partly reflects borrower sentiment that rates are already low enough, according to industry experts.
- A point equals 1 percent of the loan amount, so paying one point on a $250,000 refinancing costs an extra $2,500 at closing, in addition to other mortgage fees, taxes, and escrow amounts. Paying a point usually reduces the interest rate by 0.25 points over its term, so for instance, instead of 4 percent, the rate is 3.75 percent.
- The average number of points paid in 2011, according to a Freddie Mac survey, was 0.7 percentage points, less than half the levels people paid in the 1990s. The average has been 0.7 percent for three years, after it hit a low of 0.4 percent in 2007; in 1995 it averaged 1.8 percent, according to Freddie Mac data.
- The primary advantages of paying points are a lower rate and monthly payment. To decide if paying points is worthwhile, borrowers should consider two key decisions: How long they plan to live in the home, and how much they can afford in close costs.
- Many mortgage professionals suggest following this rule: If the borrower plans to live in the home for at least five years, paying points will help the homeowner to reap savings.
- Some borrowers are even going for negative points, which is also called a lender rebate or points in reverse. In exchange for accepting a higher interest rate, the lender agrees to give the borrower a credit, which is usually used for closing costs.
Read the full story
http://www.nytimes.com/2012/02/26/realestate/mortgages-points-lose-favor.html?_r=1&ref=realestate
In the fourth quarter of 2011, 85 percent of homeowners who refinanced their first-lien home mortgage either maintained about the same loan amount or lowered their principal balance by paying-in additional money at the closing table, a 26-year high, according to Freddie Mac. Of these borrowers, 37 percent maintained about the same loan amount, and 49 percent of refinancing homeowners reduced their principal balance; this latter percentage reflecting “cash-in” borrowers was the highest in the 26-year history of the analysis.
“Cash-out” borrowers, those that increased their loan balance by at least five percent, represented 15 percent of all refinance loans, the lowest percentage in the 26 years of analysis; the average cash-out share during the 1985 to 2010 period was 46 percent.
The median interest rate reduction for a 30-year fixed-rate mortgage was about 1.4 percentage points, or a savings of about 26 percent in interest rate.
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