8/7/08
Canadians Top List of Foreign Buyers of U.S. Property, NAR Says
Canadians are flocking to snatch up property in the U.S. as a result of affordable house prices and attractive exchange rates, the National Association of Realtors says.
Since May 2007, NAR estimates that between 150,000 and 190,000 homes in the U.S. were bought by foreign nationals.
This year, Canada replaced Mexico as the country with the largest share of foreign buyers in the U.S., with the percentage of Canadian buyers doubling to 23.5% from 11% last year, NAR said in its 2008 Profile of International Home Buying Activity survey. The UK came in behind Canada, followed by Mexico, China, India and Germany.
"Many international buyers recognize that real estate is an excellent investment and are drawn today by abundant inventory, low interest rates and a softer dollar," said NAR president Richard F. Gaylord. "These conditions allow them to own their own piece of the American dream."
8/6/08
7/31/08
Considering the current state of the real estate market, I can say with 100% confidence that this is indeed the most significant piece of housing-related legislation that we have seen in more than a generation. While there is no cure-all to solving the nation's housing problems, this bill will serve as the foundation for responsible solutions in the future.
While this bill did not enjoy an easy road to passage, it is gratifying to see that many of the provisions that our Mortgage Bankers Association lobbied for are part of this housing bill:
FHA Modernization: Authorizes a $25 million appropriation to improve technology, processes, program performance, eliminate fraud and provide appropriate staffing.
FHA Rescue: Creates a voluntary program for lenders to write down the loan balance in exchange for an FHA guaranteed loan not to exceed 90 percent of the newly appraised value of the home. The lender would pay a 3 percent FHA loan origination fee. To qualify, the borrower must have a debt-to-income ratio above 31 percent on the original loan. The program is capped at $300 billion.
Tax Incentives: Creates a $7,500 refundable tax credit for first-time home buyers, expands the volume cap for the low income housing tax credit, allows for tax-exempt treatment of bonds guaranteed by the Federal Home Loan Banks and exempts the low income housing tax credit from the alternative minimum tax.
Affordable Rental Housing: Encourages the development of affordable housing by harmonizing multifamily FHA mortgage insurance programs with the low income housing tax credit.
GSE Backstop: Also provides a role for Treasury and the Federal Reserve in GSE oversight to ensure safety and soundness.
Empowering States: Raises the cap by $11 billion on tax-free bonds that state housing finance agencies may use to help at-risk homeowners by refinancing troubled loans and appropriates $4 billion for states to purchase and renovate abandoned and foreclosed properties.
Licensing: Encourages state officials to create a national licensing system for residential loan originators, and establishes minimum qualifications for all loan originators and requires federal regulators to create a registry for banks and thrift employees who originate loans.
7/30/08
7/28/08
- The 2008 Summer Olympic Games begin 1 week from this upcoming Friday (8/08/08) at 8:08 p.m. in Beijing, China. The number "8" is considered lucky in China since the pronunciation of the number "8" in Mandarin and Cantonese sounds similar to the word used for "wealth." The games will last for 17 days through Sunday 8/24/08 and will hold competition in 28 different sports, including 5 new Olympic events. Beijing is 12 hours ahead of the Eastern time zone of the USA (source: Beijing 2008 website).
- Beijing Olympic organizers issued an official "clapping guide" in June 2008, describing a 4-step clapping method that it hopes its citizens will utilize at the games (source: Financial Times).
- 61% of Americans (both workers and retirees) have an emergency fund set aside that would carry them financially for no more than 6 months (source: Principal Financial).
- To rank in the top 1% of all US taxpayers, an individual would have to earn $388,806 of adjusted gross income (source: IRS, Tax Foundation).
- A Louisiana-based company recently resumed drilling on a previously abandoned oil well in the Gulf of Mexico. As of 7/17/08, the drilling had penetrated more than 6 miles into the earth (32,550 feet), the deepest recorded drilling ever. The well was unplugged and drilling resumed as a result of the industry's high current oil prices (source: Wall Street Journal).
- 44% of the crude oil consumed in the USA is refined into gasoline for our cars and light trucks (source: Department of Energy).
- The production of crude oil that occurs in the USA today (5.1 million barrels a day) is the same level of production domestically as it was in 1949 (source: Department of Energy).
7/25/08
New home sales fell for the seventh of the past eight months in June, falling by 0.6% to an annual pace of 530k sales. This rate is much higher than consensus expectations due to major revisions in the previous two months, according to the U.S. Census Bureau on Friday.
April's new home sales were revised up to 542k from a previously reported 525k, while May's 2.5% decline to 512k was revised to a 1.7% decline to 533k.
7/24/08
- House Passes Landmark Housing Bill
The House has passed a landmark housing bill that includes a financial backstop for Fannie Mae and Freddie Mac by a 272-152 vote, and the measure now goes to the Senate, where a few Republican stalwarts might delay final passage for a few days.
- Resales Decline in June
Single-family existing-home sales fell 3.2% in June after a bump up in May, but the Realtors say they expect the enactment of a homebuyer tax credit to bring more first-time buyers into the market.
- Rates Spike
The average 30-year fixed mortgage rate jumped from 6.26% to 6.63% over the seven-day period ended July 24, according to Freddie Mac's Primary Mortgage Market Survey.
- Home Inventory Dips, Homeownership Rises
The Census Bureau has reported that the inventory of vacant homes listed for sale fell 3% in the second quarter to 2.17 million, and the homeownership rate rose from 67.8% in the first quarter to 68.1%.
7/23/08
An AP-AOL Real Estate Poll found that more than one-third -- 36 percent -- of those surveyed with adjustable-rate mortgages worry that they won't be able to afford their monthly mortgage payments if their interest rates increase.
Sixty-four percent, meanwhile, aren't sweating it and say they're not concerned about such an scenario.
The poll also found that those who believe that housing prices will go up were more likely to have adjustable-rate mortgages than those who think prices will go down or stay the same.
Of all U.S. homeowners with a mortgage, 24 percent have an adjustable rate, while 76 percent have a fixed-rate mortgage, according to the Mortgage Bankers Association.
The AP-AOL poll found that a third -- 35 percent -- of likely future buyers say they'll seek an adjustable-rate mortgage to finance their home purchase.
7/22/08
· 92% of economists surveyed believe the next action by the Federal Reserve will be to raise interest rates rather than cutting rates, suggesting that rising inflation is a larger concern to our nation's central bank than our slowing economy (source: Wall Street Journal).
· INflation (as measured by the CPI) was up +5.0% for the 1-year ending 6/30/08. A year earlier, inflation had gone up +2.7% over the previous 12 months. The consumer price index (CPI) is a measure of inflation compiled by the US Bureau of Labor Studies (source: Department of Labor).
· 5 banks have failed in the country YTD, the most bank failures in any calendar year since 2002. The Federal Deposit Insurance Corporation has 90 banks currently on its list of problem banks. During the 5 years from 1987-91, a total of 1,901 banks and savings & loan institutions failed in the USA or more than 1 per day. A total of 9,096 banks failed in the USA in the 3 1/2 years following the stock market crash of 1929 (source: FDIC).
· There were 4.3 million births of American babies during calendar year 2007. There were 2.4 million deaths of American citizens last year (source: Center for Disease Control).
7/21/08
Two-thirds of Americans looking for a home loan are finding it more difficult to do so, according to a survey carried out for Deloitte. That number seems likely to rise further in the wake of the growing problems of Fannie Mae and Freddie Mac.
Deloitte’s survey revealed:
- Of those who applied for a home mortgage, 67 percent found it more difficult; for a home equity line of credit, that number was 65 percent.
- Personal loan applicants weren’t much better off, with 62 percent finding it harder to get credit
- More than three-quarters (76 percent) of those who applied for small business financing found it more difficult, compared with one year ago.
Despite the negative headlines that financial institutions have been receiving in the United States, the survey found that two out of three consumers (67 percent) held the same perception of their primary financial institution as they did before the crunch. For the 5 percent who see their relationship as more positive, they cited enhanced customer service and an increased number of products and incentives to choose from as top reasons.
On the opposite side of the coin, 15 percent of survey respondents have come to view their banking relationship more negatively over the past year and 5 percent overall have changed banks.
Among other findings of the survey:
- More than half (59 percent) of respondents did not find it any harder to obtain credit cards over the past year. However, the economy is having an effect, with 40 percent of respondents reporting spending less on their cards now than in the past. For those who reported spending more on their credit cards than they would have in the past, they are often using them for essential purchases: 70 percent are using them more often for gas, while 67 percent are doing so for food/groceries, 24 percent for health care and 14 percent for utilities.
- Of respondents who have a mortgage, 91 percent have made their mortgage payments either early or on time over the past year.
Surprisingly, only 2 percent of respondents from the four states that have been hardest hit by the mortgage crisis (California, Florida, Arizona and Nevada) said they’ve been late, compared with 6 percent for all respondents.
7/18/08
- Housing Starts Slide
Single-family housing starts fell 5.3% in June as demand for new homes continued to erode and lenders tightened terms and conditions on existing construction loans.
- Wells Helps Spark Rally for Financial Stocks
Wells Fargo's stock price rose 33% Wednesday after the company released its second-quarter financial report, helping to spark a 277-point (2.5%) rise in the Dow Jones industrial average.
7/17/08
- 1 out of every 196 individual income tax returns (i.e., Form 1040) has an adjusted gross income total of at least $500,000 (source: Internal Revenue Service).
- An adjusted gross income level of at least $328,049 is required to rank in the top 1% of all US taxpayers (source: Internal Revenue Service).
- The total home mortgage debt of Americans has increased +62% over the last 4 calendar years (source: Federal Reserve).
- 79% of customer complaints last year against registered representatives were settled before ever going to arbitration (e.g., direct settlement, mediation, or complaint was withdrawn). Of the remaining 21% of claims that went to arbitration, 42% of those arbitrated cases were settled in favor of investors (source: NASD).
- Less than 1 in 3 adults (31%) have discussed their future inheritance with those individuals (e.g., parents or grandparents) likely to have named them in estate planning documents or on a beneficiary designation form (source: Newsweek).
- 15% of the US population (44.8 million) does not have health insurance. Just 8 months ago, the government announced the total of Americans lacking health insurance was equal to 46.6 million people, but late last month they cut that original total by 1.8 million (source: Census Bureau).
- Only 38% of the “baby boomers” (defined as the 78 million Americans born between 1946 and 1964) who have not yet retired as of today feel they are financial prepared and could begin their retirement years immediately(source: Sun Life Financial).
- An average American couple retiring at age 65 today would need a present value lump sum of $215,000 to cover future health care insurance premiums and out-of-pocket medical expenses over the remainder of their lives (source: Fidelity Investments, AP, Rocky Mountain News).
This morning, President Bush signed into law a legislation that helps 400,000 homeowners facing foreclosure and extends a lifeline to Fannie Mae and Freddie Mac. The law is aimed at stemming foreclosures and halting a free-fall in housing prices by providing federal insurance for refinanced 30-year mortgages for homeowners struggling to make their monthly payments. The provisions of the new legislation are lengthy and very broad
The ADP Employment Report for July was released this morning, and the findings came in at a surprising gain of 9,000 jobs created in July when the estimates called for a loss of 60,000. After factoring an average of 20,000 new government jobs typically added, the ADP report suggests Friday's official release may come in somewhere around 30,000 new jobs created - and at the moment, economists are expecting Friday's official Jobs Report to show a loss of 70,000 jobs.
The Federal Reserve announced Tuesday that it would hold the Fed funds target rate at 2.00%, as was widely expected. The accompanying statement was balanced between a concern for slowing growth and elevated inflation levels.
In the growth paragraph, the FOMC said "economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports." They said labour markets softened further and that "financial markets remain under considerable stress".
"Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth," the statement read.