Home prices will fall another 10 percent before they stabilize in the second half of next year, Roelof Slump, Managing Director of Structured Finance Experts for Fitch Ratings told investors Thursday.

Slump said the inventory of distressed properties remains high and is expected to cause further home price declines, plus negative macroeconomic trends are expected to continue to impact the mortgage market.

The brightest spot Slump saw in the housing picture is a decline in delinquencies, which are still high but have been improving this year. Although liquidations have slowed, he said that the pipeline of distressed borrowers remains high. With seven to eight million homes in the distressed inventory, the backlog will put pressure on prices and likely cause further price declines.

Consumer confidence is the key to restoring demand in the wake of the expiration of the homebuyer tax credit, he said. Slump forecast an end of the price increases during the first half of the year that were generated by demand stimulated by the credit.

Investors can expect mortgages to continue to perform better than those during the boom period, he said A stable banking sector, improved loan underwriting, greater affordability for new borrowers, tighter regulations and improved.

Posted in: Housing Market
Tags: consumer confidence, distressed inventory, distressed properties, homebuyer tax credit, mortgage market, price declines

Despite the repeal of a rule unpopular with appraisers and agents alike, low appraisals are still killing deals across the nation, slowing sales at a critical time in the housing markets.

Since the housing bubble burst four years ago and values began to fall, appraisers have been under fire for failing to account for actual market conditions. A new home valuation code of conduct enacted in 2008 by Fannie Mae and Freddie Mac was blamed for contributing to inaccurate appraisals, but the controversy over low appraisals continues despite the code’s repeal this year.

Whether it’s for a purchase loan or refinancing, a low appraisal can kill a deal. And the risk of that happening is greater now since the subprime mortgage meltdown and the housing market crash. Appraisers are being pushed to be more conservative, prices are soft, and comparative properties hard to come by.

Foreclosures, which are typically discounted 30 percent or more below the going rate, continue to exert a huge influence on local market values. In June, the distressed property share of the overall national home sales fell to 24 percent, down from a peak of 35 percent in early 2009, according to CoreLogic. But now that the homebuyer tax credit has ended, the market share of foreclosures is expected to rise.

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Posted in: Housing Market
Tags: appraisal value, comparative properties, fannie mae, fannie mae and freddie mac, foreclosure sales, freddie mac, home valuation, homebuyer tax credit, housing bubble, housing market crash, local market, market values, subprime mortgage meltdown

Although we have a bad economy, purchasing a bigger house remains to be tempting. Who would not want to trade their smaller house for an inexpensive bigger home? However, is this a good idea? Is it really a good time for a trade up?

Well, a trade up is a good idea. We are in a buyers’ market and everything is going in our way. We can easily find retirement home or vacation homes at a very low price. Although this is the case, it is crucial that we consider various factors first.

Trade up is good if you have investment in mind. Think about it, if you sell your home and purchase a bigger one, you can have the other rooms rented. You can even purchase a two-unit home and rent out the other unit. This is a great idea because the number of tenants has risen. You will have a better home, and you will not need to worry about paying the mortgage. But before house hunting, make sure that you keep these three important things in mind to avoid problems:

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Posted in: Home Buying
Tags: economy, Home Buying, mortgage, move-up home

The housing market is key to the recovery of the U.S. economy. On the heels of Commerce Department news that housing starts rose over 10 percent in August, come signals from economists that home sales probably increased as well.

The news indicates the real estate market is stabilizing, following a boost from now-expired federal tax credits. The latest Bloomberg survey shows purchases of new, and used, homes rose 7 percent to just below 4.4 million.

Economists’ predictions come ahead of figures expected this week. The National Association of Realtors will release a report on sales of previously owned homes. Also this week, expect another Commerce Department report on new home sales. Both are expected to show about a 7 percent gain from July, when sales plunged 27 percent.

Commerce Department figures on home construction show the 10 percent increase in that sector can be attributed to condo and apartment construction. Analysts say that shows a boost in consumer housing confidence, but it also shows a wary consumerism. People previously comfortable with building single-family homes will no longer take the risk on such a large mortgage. Instead they are shooting for the more moderate properties, such as condominiums and apartments.

The market is still far below its 2006 peak and shows a long road to recovery. We keep hearing it — unemployment. Unemployment is hovering around 10 percent and shows no signs of decreasing. There is an abnormally high amount of inventory on the market thanks to increasing foreclosures. And as long as unemployment remains high, so will inventory.

Despite low home prices and mortgage rates, many cannot take advantage. Unemployment and lower salaries are preventing consumers from entering the housing market.

Even with an increase in manufacturing, housing starts and home sales the economy is slowing. Still, the Federal Reserve believes the economy, while decelerating, will avoid slipping back into a recession.

Tax relief could be on the way, albeit not specific to housing. Any tax relief can boost spending, though, even in housing. Democrats want tax cuts for the wealthiest 3 percent to expire, while extending lower rates for individuals making 200,000 dollars, or couples making 250,000 dollars.

But until tax relief comes, unemployment lowers and people earn more money, economists say housing will struggle. There is simply too much inventory and not enough consumerism to soak it up.

Posted in: Housing Market
Tags: federal reserve, foreclosures, home construction, Housing Market, housing starts, mortgage rates, national association of realtors, recession, tax relief

A recent nationwide Fannie Mae survey finds that 70 percent of Americans think purchasing a home right now is a good idea. Yet, the survey also revealed, most Americans are cautious about actually buying a home, given the recent housing crisis.

These polling results would indicate that Americans aren’t sure whether to proceed with home buying or to hold out for a while longer.

The current housing market as a whole is contradictory. While home prices across the nation are well below market value, survey respondents believe that home prices will increase throughout the next year. Further, 33 percent of survey respondents reported that they would be more apt to rent a home than to buy one, if faced with a move.

Those looking to sell a home aren’t optimistic either. Because of the current state of housing, 83 percent of survey respondents believe that this is a bad time to sell a home, given the housing inventory available.

Potential home buyers aren’t the only ones proceeding with caution. Lenders are now making it more difficult for buyers with less-than- perfect credit scores to qualify for purchasing a home. Those who are currently in a position to buy will need a high credit score in order to gain approval for a home loan.

Buyers looking to take advantage of low home and mortgage rates might want to consider taking action sooner, rather than later. While there is an abundance of homes for sale within the U.S., buyers won’t be able to seize low mortgage rates indefinitely.

In fact, economists expect mortgage rates to rise slightly by 2011, leaving home buyers just enough time to decide whether purchasing a home in today’s market is worth the risk.

Posted in: Home Buying
Tags: buying a home, home buyers, Housing Market

RealtyTrac, a leading online marketplace for foreclosure properties released its Q2 2010 U.S. Foreclosure Sales Report, which shows that foreclosure homes accounted for 24% of all residential sales in the second quarter of 2010 and that the average sales price of properties that sold while in some stage of foreclosure was more than 26% below the average sales price of properties not in the foreclosure process—down slightly from a 27% average discount in the first quarter.
A total of 248,534 U.S. properties in some stage of foreclosure—default, scheduled for auction or bank-owned (REO)—sold to third parties in the second quarter, an increase of nearly 5% from the previous quarter, but still down 20% from the second quarter of 2009.

“While foreclosure sales increased in the second quarter, non-foreclosure sales increased even more, spurred on by the home buyer tax credit that expired during the quarter,” said James J. Saccacio, chief executive officer of RealtyTrac. “That had the net effect of lowering foreclosure sales as a percentage of total sales during the quarter, but that may be a temporary dip as the removal of the tax credit could drive more buyers back to discounted short sales and REOs.”

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Posted in: Foreclosure
Tags: bank owned reo, foreclosure homes, foreclosure properties, foreclosure sales, home buyer, reo sales, residential sales, second quarter

Highlights

• Tax deductions may be subtracted from income for qualifying purposes.
• Property rents must be reported on tax returns to count as income.
• Self-employed borrowers may have to forgo deductions to qualify for a loan.

Shopping for a home mortgage loan? Prepare to hand over real proof of your taxable income.

During the housing boom, lenders rarely required borrowers to provide copies of federal tax returns.

But today, lenders often ask borrowers to turn over entire tax returns, according to Brad Blackwell, national sales manager for Wells Fargo Home Mortgage.

“Often people will think they can bring in the first two pages of the tax return, and what they need to bring is the full tax return and all schedules because a person’s full income picture is contained in the entire set of documents, not just the first two pages,” he says.

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Posted in: Home Buying
Tags: federal tax returns, home mortgage loan, internal revenue service, tax deductions

A new report says that while the nation’s housing market is still struggling, a feared “double dip” in the market driving prices to new lows likely won’t take place.

The study, conducted by the data firm Clear Capital, said that while prices may show some signs of decline this year, recent gains have been significant enough to prevent home prices in most areas from dropping below their 2008 lows.

“Overall, prices look poised to continue their deceleration with a likely drop into negative territory by the end of the year,” said Dr. Alex Villacorta, the senior statistician at Clear Capital. “But keep in mind, the price gains we experienced over the past two years are providing a cushion against prices going into double dip territory.”

The company said that it had seen price gains in every region of the country over the past 12 months, with prices rising more than 11 percent in the Midwest over the last quarter. Slowest growth was seen in the Western region, but home values there were still almost 6 percent higher compared to August 2009.

The analysis is counter to what most Americans believe will happen to the economy as a whole. A recent survey by StrategyOne found that 65 percent of people think that the country will go through a double dip recession.

Posted in: Housing Market
Tags: double dip recession, economy, home values, Housing Market, real estate market