by Kenneth R. Harney
You might not hear much about them on TV or in the papers, but there are some economic signs popping up right now that are -- at the VERY least -- encouraging for housing and real estate.
Take the gold standard of all forward indicators for the U.S. economy -- the Conference Board's "Index of Leading Indicators," which is based on a broad survey of industry data and predicts economic activity three to six months down the road.
The latest Conference Board index registered its first increase in six months. Now I know that all we hear about these days is recession: it's either already here or it's about to happen.
But the index suggests that there should be positive growth underway in the second half of the year, if not sooner.
Buttressing that forecast is a new report from the National Bureau of Economic Research which found that industrial production in the U.S. showed an unexpected uptick in March.
Here are some other noteworthy developments this past week:
• Applications for mortgages to buy houses were up again, it was the second straight week, according to the Mortgage Bankers Association of America's national survey. Applications for FHA loans to buy houses jumped by three and a half percent -- and conventional purchase applications rose 2.1 percent.
• The federal government reported that house prices nationwide stopped their slide between January and February -- and actually increased by six tenths of one percent.
• Interest rates remain well under 6 percent, according to the Mortgage Bankers, with 30-year fixed rate loans last week averaging 5.74 percent and 15-year loans at 5.27 percent. The Federal Reserve is likely to knock another quarter percent off short term rates next week.
• Freddie Mac announced plans to pump up to 15 billion dollars into the "jumbo conforming" loan market -- those are for high cost areas that really need some stimulus right now, like California.
Now, we're the first to admit that these positive-sounding economic developments are not ballgame-changers for real estate.
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Should The FHA Own Part Of Your Home?
by Peter G. Miller
With the mortgage meltdown showing few signs of resolution, a new idea has emerged in Washington: Let the FHA get a piece of the action. The proposal by Rep. Barney Frank (D-MA), chairman of the House Financial Services Committee, would open the FHA program to large numbers of homeowners who are now stuck with toxic loans. You can bet there's a lot of risk in such refinancing, so much risk that the traditional mortgage insurance premium charged under the FHA program could be insufficient to cover all losses.
To make the program financially viable, Frank suggests that the FHA should get a piece of the action: Under his plan, H.R. 5830, there would be a declining percentage fee on any profits to discourage short-term speculators. The fee would be equal to 100 percent of all profits in year one, 80 percent in the second year and so on for the first five years. After five years there would be an "exit" fee equal to 3 percent of the sale price.
Good Time To Buy, But Money's Tight
by Broderick Perkins
Falling home prices and rising inventories are putting home buyers in the best position they've had this decade.
Unfortunately those same falling home prices and rising inventories are putting home sellers in the worst home-selling position they've had this decade.
It's quite a quandary for housing consumers.
Two recent polls tell the story.
On April 16, a new Reuters/Zogby poll found that most, nearly 54 percent of consumers, believe it's a good time to buy a home.
On April 13, an Associated Press-AOL Money & Finance poll, found that even more, 60 percent of consumers polled said it was a good time to buy.
by David Reed
Hold the phone. Or better yet, hold that $400 billion dollar check the Federal Government is about to mail out to cities around the country to buy foreclosed homes. This $400 billion dollar experiment with the taxpayer's money is just part of a proposal designed to prevent the mortgage "crisis" from getting worse. After all, foreclosures are still on the way up and we need to do something. Anything.
Realtytrac, the online foreclosure marketplace, just reported that foreclosures were up nationwide by 57 percent over the same period last year. 57 percent is a lot and is an indication that people are still hurting. Hurting because of all those subprime loans with adjustable rate mortgages that are resetting to higher rates causing people to default.
Wrong. And the numbers prove it.
Yes, foreclosures were up 57 percent compared to March 2007 but they were up only five percent from the previous month. And do you know what else? Foreclosures are actually down in many states where foreclosures were thought to also spiral out of control. Take Texas for instance. Foreclosures aren't up in Texas compared to the same time last year and in fact are down. Way down. As in 63 percent down! Texas isn't alone as New Jersey reports that foreclosure filings are down nearly 20 percent and New Mexico fell 32 percent.
Wait a minute! I thought the problem with all these foreclosures was that lenders made icky loans to people that couldn't afford to make the payments! Especially when those subprime adjustable mortgages reset to higher rates.
Were Texas, New Mexico, New Jersey, Hawaii and Delaware the only states that didn't have subprime loans? Or stated income loans? Or hybrids? Hardly! All of these states that saw a drop in foreclosure filings had their fair share of subprime and alternative loans.
That tells me that maybe it's not the type of loan that was issued that's the problem. I know everyone wants to blame somebody, but if it were the type of loan that was the problem then this latest foreclosure data is suggests they're wrong.
Perhaps it's simply an economic issue where people have lost their jobs or otherwise fallen behind on their payments and couldn't sell the property because home prices declined and they were "upside down."