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Housing starts will nearly double and home prices will begin to rise in 2013, with prices increasing significantly in 2014.

Those rosy predictions come from a new semi-annual survey of 38 of the nation’s leading real estate economists and analysts by the Urban Land Institute’s Center for Capital Markets and Real Estate. The economists foresee broad improvements for the nation’s economy, real estate capital markets, real estate fundamentals and the housing industry through 2014, including:

  • The national average home price is expected to stop declining this year, and then rise by 2 percent in 2013 and by 3.5 percent in 2014.;
  • Vacancy rates are expected to drop in a range of between 1.2 and 3.7 percentage points for office, retail, and industrial properties and remain stable at low levels for apartments; while hotel occupancy rates will likely rise;
  • Rents are expected to increase for all property types, with 2012 increases ranging from 0.8 percent for retail up to 5.0 percent for apartments.

These strong projections are based on a promising outlook for the overall economy. The survey results show the real gross domestic product (GDP) is expected to rise steadily from 2.5 percent this year to 3 percent in 2013 to 3.2 percent by 2014; the nation’s unemployment rate is expected to fall to 8.0 percent in 2012, 7.5 percent in 2013, and 6.9 percent by 2014; and the number of jobs created is expected to rise from an expected 2 million in 2012 to 2.5 million in 2013 to 2.75 million in 2014.


The improving economy, however, will likely lead to higher inflation and interest rates, which will raise the cost of borrowing for consumers and investors. For 2012, 2013 and 2014, inflation as measured by the Consumer Price Index (CPI) is expected to be 2.4 percent, 2.8 percent and 3.0 percent, respectively; and ten-year treasury rates will rise along with inflation, with a rate of 2.4 percent projected for 2012, 3.1 percent for 2013, and 3.8 percent for 2014.

The survey, conducted during late February and early March, is a consensus view and reflects the median forecast for 26 economic indicators, including property transaction volumes and issuance of commercial mortgage-backed securities; property investment returns, vacancy rates and rents for several property sectors; and housing starts and home prices. Comparisons are made on a year-by-year basis from 2009, when the nation was in the throes of recession, through 2014.

While the ULI Real Estate Consensus 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; and the complexities of tighter financial regulations in the U.S. and abroad, says ULI Chief Executive Officer Patrick L. Phillips. “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. These results hold much promise for the real estate industry.”

A slight cooling trend in the apartment sector—the investors’ darling for the past two years—is seen in the survey results, with other property types projected to gain momentum over the next two years. By property type, total returns for institutional quality assets in 2012 are expected to be strongest for apartments, at 12.1 percent; followed by industrial, at 11.5 percent; office, at 10.8 percent; and retail, at 10 percent. By 2014, however, returns are expected to be strongest for office, at 10 percent, and industrial, at 10 percent; followed by apartments at 8.8 percent and retail at 8.5 percent.

The forecast predicts a modest increase in vacancy rates, from 5 percent this year to 5.1 percent in 2013 to 5.3 percent in 2014; and a decrease in rental growth rates, with rents expected to grow by 5 percent this year, and then moderate to a growth rate of 4.0 percent for 2013 and 3.8 percent by 2014. This may be indicative of supply catching up with demand.

For the housing industry, the survey results suggest that 2012 could mark the beginning of a turnaround—albeit a slow one. Single-family housing starts, which have been near record lows over the past three years, are projected to reach 500,000 in 2012, 660,000 in 2013, and 800,000 in 2014. The overhang of foreclosed properties in markets hit hardest by the housing collapse will continue to affect the housing recovery in those markets. However, in general, improved job prospects and strengthening consumer confidence will likely bring buyers back to the housing market.
westchester-bonnie-koff-cash-moneyCapital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters. However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.
Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings. Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes "the clearest sign yet of an improvement in mortgage credit conditions." In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.

 

Home sales are expected to stay on an uptrend through 2012, although the performance will be uneven with mortgage constraints weighing on the market, according to experts at a residential real estate forum today at the Realtors® Midyear Legislative Meetings & Trade Expo here.

Lawrence Yun, NAR chief economist, said existing-home sales have been underperforming by historical standards and will rise gradually but unevenly. “If we just hold at the first-quarter sales pace of 5.1 million, sales this year would rise 4 percent, but the remainder of the year looks better,” Yun said. “We expect 5.3 million existing-home sales this year, up from 4.9 million in 2010, with additional gains in 2012 to about 5.6 million – that’s a sustainable level given the size of our population.”

Mortgage interest rates should rise gradually to 5.5 percent by the end of the year and average 6.0 percent in 2012 – still relatively affordable by historic standards.

“A huge volume of cash sales, supported by the recovery in the stock market, show that smart money is chasing real estate. This implies that there could be a sizeable pent-up demand if mortgages become more readily accessible for qualified buyers,” Yun said. “The problem isn’t with interest rates, but with the continuation of unnecessarily tight credit standards that are keeping many creditworthy buyers from getting a loan despite extraordinarily low default rates over the past two years.”

bonniekoff-homesales-upRISMEDIA, January 21, 2011—Existing-home sales rose sharply in December 2010, when sales increased for the fifth time in the past six months, according to the National Association of REALTORS®.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 12.3% to a seasonally adjusted annual rate of 5.28 million in December from an upwardly revised 4.70 million in November, but remain 2.9% below the 5.44 million pace in December 2009.

chart-low-interest-v1WASHINGTON, Sept. 9 (UPI) -- Average interest rates for long-term mortgages rose slightly or held still in the past week, the U.S. Federal Home Loan Mortgage Corp. said Thursday.

Freddie Mac Vice President and Chief Economist Frank Nothaft said mixed signals in a national employment report -- showing unemployment up to 9.6 percent, but private payrolls higher -- had "a mixed effect on mortgage rates this week."

 

As a Member of the Top 5 in Real Estate Network®, I am often asked by my clients about how to improve credit and also how to help them educate their own children about avoiding the pitfalls and temptations that early accessibility to credit can bring.Many parents have learned how to build and manage their credit and money through trial and error. As a result, in many cases, their credit has either been damaged or not optimized in the process. Parents can find a number of easy ways to get educated on more effective ways to manage their money and credit. Here are some important, age-specific tips that parents can use to help their children learn the value of money and, consequently, credit from ApprovalGuard.com.
After enduring three years of a declining real estate market, 2009 brought a much needed break for the hard hit real estate sector. Driven largely in part by the economic stimulus that helped the housing market emerge from the recession, it leaves many of us wondering what is next for real estate. Will housing prices rebound? Will the new extended and expanded tax credit be just what the doctor ordered? Will the luxury market recover similarly to the entry level?

How would you say the housing market faired in 2009?
Did it live up to your expectations or falter?

westchester-home-securityIt's not just a house, more importantly it's your home.

As you think about the many things that your home provides you, safety, security, equity preservation (if done right), then I want you to think of me as your home specialist. Someone whom you can trust to be there for you when you have any type of home need.

Page 6 of 7

Mortgage News Daily

  • MBS RECAP: Fed Minutes or Same Old Trend. Either Way, Bonds Didn't Like It

    Posted To: MBS Commentary

    The Fed released the minutes from its late January meeting today. Markets thought about them for 20 minutes and then tanked. What's up with that?! Looking at rate volatility as a factor of Fed policy can be tricky business. On the one hand, it would be easy to argue that the Fed has more power than anything else to affect the trajectory of interest rates. On the other hand, it could easily be argued that the Fed is merely responding to prevailing economic and financial conditions to the best of its ability and that appearance of the Fed's outsized impact on rates has more to do with a mismatch between the market's expectations and the Fed's thinking. With all of the above in mind, the meeting minutes provide market participants with a much clearer look inside the Fed's collective...(read more)

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  • Mortgage Rates Hit New 4-Year Highs

    Posted To: Mortgage Rate Watch

    Mortgage rates continued higher today following the release of the Minutes from the Federal Reserve's (aka "The Fed") most recent policy meeting. The Fed was slightly more upbeat than markets expected, saying that most members agreed that a stronger economy increased the likelihood of further rate hikes. Although the Fed Funds Rate doesn't directly dictate mortgage rates, there is plenty of long-term correlation. Because the Fed only meets 8 times a year to adjust rates (and rarely adjusts rates on all 8 occasions), bond markets (which include mortgage rates) are constantly adjusting to what the Fed will probably do in the future. Of course, it could be argued that both the Fed AND financial markets are simply adjusting to the state of the economy, inflation, etc., but that's more of a philosophical...(read more)

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  • Existing Home Sales Decline, Inventory Still a Big Issue

    Posted To: MND NewsWire

    Sales of existing homes fell again in January, the second consecutive month-over-month decline. Sales of pre-owned single-family homes, townhomes, condos, and cooperative apartments were down 3.2 percent compared to December, and the seasonally adjusted annual sales in December, already estimated at a 3.6 percent decline, were revised down even further. The National Association of Realtors® (NAR) said existing homes sold during the month at a seasonally adjusted rate of 5.38 million, representing a year-over-year decline of 4.8 percent. It was the slowest sales pace since last September and the largest annual loss since a 5.5 percent decline in August 2014. December sales were revised down from 5.570 million to 5.56 million. The months sales results were broad-based. All four U.S. regions...(read more)

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  • MBS Day Ahead: Markets Expecting a Challenging Auction and Hawkish Fed Minutes

    Posted To: MBS Commentary

    Today's key events arrive in the afternoon in the form of a 5yr Treasury auction at 1pm and the release of the FOMC Minutes at 2pm. Not to be confused with the Fed Policy Announcement, the Minutes simply provide a more detailed account of the meeting 3 weeks prior that culminated in the most recent policy announcement (in this case, Jan 31st). Because that was a meeting with no rate hike, these meeting minutes are seen as a prime opportunity to foreshadow a hike in the March meeting. Even though the Fed Funds Rate doesn't move in lock-step with longer-term yields, it's important to know that the entirety of the yield curve moves up in anticipation of an eventual peak in the Fed Funds rate. As can be seen in today's chart, sometimes 2yr and 10yr yields follow the rise in Fed...(read more)

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  • Flagstar's Expansion; News Regarding Freddie and Fannie

    Posted To: Pipeline Press

    Why couldn’t the sesame seed leave the gambling casino? Because he was on a roll. In an admittedly weak segue, rolls are made in kitchens, and LOs may want to pass this link along to their Realtor clients: here are the top trends this year in kitchens. top trends this year in kitchens . Some of them are pretty interesting. Also of interest is the National Association of Mortgage Brokers (NAMB), an association that represents the interests of individual mortgage loan originators and small to mid-size mortgage businesses, seeking to ban trigger leads . News From the GSEs, Lenders Reacting to Freddie and Fannie Changes Of great interest yesterday for lenders was news that the Supreme Court declined to hear an appeal challenging the profits the government receives from housing giants Fannie...(read more)

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  • Mortgage Apps Finally Feeling Effects of Higher Rates

    Posted To: MND NewsWire

    Mortgage application volumes suffered their worst losses of 2018 last week. The Mortgage Bankers Association (MBA) said both purchase mortgages and applications for refinancing were down significantly during the week ended February 16 compared to the prior week. MBA's Market Composite Index, a measure of application volume, was fell by 6.6 percent on a seasonally adjusted basis from the week ended February 9. It was the largest one-week decline since mid-September. The unadjusted composite was 3 percent lower. The Refinance Index lost 7 percent from a week earlier and the share of applications for refinancing declined to 44.4 percent, more than 2 percentage points below the prior week and the smallest portion since last July. The seasonally adjusted Purchase Index fared only slightly better...(read more)

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  • MBS RECAP: Unofficial 4th Day of Weekend Leaves Bonds Slightly Weaker

    Posted To: MBS Commentary

    Today was a total dud in terms of volume and volatility. That's not all that uncommon on the Tuesday following a 3-day weekend, especially if there are no major events or headlines. Overnight bond market movement was dictated by an ongoing trend set into motion late last Friday when bonds found the limit of their near-term bullish potential. In other words, bonds rallied rather nicely into the late morning hours as short-sellers covered those short positions. From that point on, volumes decreased and there wasn't enough organic buying demand to maintain the relatively lower yields. European bond markets led another move toward higher yields when they opened at 2:30am ET, but those proved to be the highest yields of the session. EU and US bonds rallied fairly steadily until the 9:30AM...(read more)

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  • Mortgage Rates Unable to Extend Last Week's Gains

    Posted To: Mortgage Rate Watch

    Mortgage rates moved back up today after ending last week on a positive note. Improvements in rates have been uncommon so far in 2018. In fact, we haven't seen more than 2 consecutive days without a move higher. In that sense, today keeps the prevailing trend intact. If there's a saving grace, it's that rates didn't quite rise back above last week's highs. If there's a downside (whatever the opposite of a "saving grace" might be...), it's that rates remain in line with the highest levels in more than 4 years. While we COULD see some relief at some point, there's no telling if that would be a legitimate attempt at a ceiling or merely be a temporary correction before another move higher. Either way, betting on the emergence of a ceiling (via floating one's loan as opposed to locking) hasn't been...(read more)

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  • MBS Week Ahead: Positions Part 2: Making Better Sense of Early 2018

    Posted To: MBS Commentary

    Last Friday's Day Ahead was all about positions. Read it HERE , if you haven't done so or need a refresher. It advocated caution with respect to floating or otherwise being optimistic based on early gains because those early gains were likely a product of short-covering. Rampant short-covering is only a concern when short positions are uncommonly abundant. In turn, that sort of abundance is uncommon. It relies on a sea-change in some critical component of the market such as Fed policy, labor markets, fiscal policy, or inflation . That's where things might get frustrating this year--because how much have any of those factors really changed? Let's break them down: 1. Fed policy. No major change. We expected a more aggressive Fed hike path in late 2017 and nothing in early 2018...(read more)

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  • New Products, Expansion; Legal and Political Updates

    Posted To: Pipeline Press

    Welcome to Day 1 of the longest period in the United States without a federal holiday: President's Day to Memorial Day. Some will think, “That’s a drag,” while others will think, “That’s more days to fund loans!” Speaking of fundings, the precise HMDA information for 2017 won’t be out until September. But if you want a solid estimates for single family originations in 2017, Marina Walsh, VP of Industry Analysis with the MBA, points out tha its website is a good place for information on units and dollar volume, and thoughts about 2018. Legal and Political Updates There have been developments in repurchase/make-whole litigation. Although the number of repurchase suits appears to have been slowing down, James Brody, Chair of the Mortgage Banking Group...(read more)

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Bonnie Koff  |  Licensed Associate Real Estate Broker  |  William Raveis Legends Realty Group  | Tarrytown Office 
914-332-6300  |  37 Main Street, Tarrytown, New York 10591  |  Email