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While aging in place -- including home maintenance, medical costs and property taxes -- will be the primary reason for seniors' tapping into home equity for decades to come, there are many other underestimated needs and wants that will quickly race to the front burner once a greater number of consumers better understand reverse mortgages.

In a recent column, we discussed the benefits of combining Social Security payments, securities portfolios and a reverse mortgage early into a retirement plan. By using the reverse mortgage to supplement the package during the life of the plan, researchers showed that a retiree's residual net worth (portfolio plus home equity) after 30 years is about twice as likely to be greater when an active reverse mortgage strategy is used than when the reverse mortgage is used as a last resort.
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?
Page 6 of 7

Mortgage News Daily

  • NAR Survey Finds American Dream Depends on Affordability

    Posted To: MND NewsWire

    Homeownership as an American dream is alive and well according to new data from the National Association of Realtors® (NAR) 2018 Housing Opportunities and Market Experience (HOME) Survey. The survey was conducted across all 12 months of last year. Sixty-four percent of respondents were homeowners, 27 percent were renters, and 9 percent were non-homeowners living with a family member without paying rent. NAR just released Aspiring Home Buyers Profile , which focuses on survey responses from non-homebuyers, both those who rent and those living with a family member. Of the non-owners, 45 percent were 34 years or under, 59 percent make an income of under $50,000, and 43 percent live in suburban areas. Across the quarters of 2018 non-homeowners were consistent in their desire to own a home in...(read more)

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  • MBS RECAP: Minimal Bond Market Damage Thanks to Stocks' Hard Start

    Posted To: MBS Commentary

    The S&P had been idling in place with prices between 2560 and 2600 for more than a week. During that week, we've discussed the risks associated with a break above 2600. Simply put, if stocks managed to break above their nearest notable technical ceiling, perhaps bonds would do the same. In that case, we were looking at yields of 2.75% as the correlated ceiling. Now today, the S&P closed at 2610 and 10yr Treasury yields not even above 2.72%. To be fair, when stocks broke that ceiling this morning, bonds definitely came along for the ride . But everything played out on a smaller scale, as if both sides of the market were suppressed by some larger uncertainty. While there were quite a few brexit-related headlines in the news, we'd be far better served by focusing our attention...(read more)

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  • Mortgage Rates Unchanged Again as Markets Remain Cautious

    Posted To: Mortgage Rate Watch

    Mortgage rates were unchanged yet again today. Given that rates are based on trading levels in underlying bond markets, it's no surprise to learn that bond investors have been hesitant to take things too far in either direction after pulling up slightly from the long-term lows achieved in early January. The same could be said for the stock market, but replace early January with late December. For either side of the market, the biggest lingering uncertainty is the fate of the government shutdown . The extent to which a shutdown resolution would move markets remains to be seen. But at the very least, there's a risk that a resolution would push stocks and interest rates higher in unison--at least temporarily. From there, it would fall to actual economic data to set the tone. In that regard, bonds...(read more)

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  • LO Resources; CRM, PR, and Sales Products; January Training

    Posted To: Pipeline Press

    Are rates too high given where the U.S. economy is? Traders, investors, and the Fed think they’re where they need to be, given the information we have. Others believe they will head lower this year due to a slowing economy. The release of bank big bank earnings today is shedding some light on economic temperature, but recall that the word “patient” appeared in the recent FOMC minutes as well as in several comments by Fed Chairman Jay Powell related to the timing of potential upcoming rate hikes. (The last time we saw “patient” show up in Fed speak then Chairwoman Janet Yellen used it in reference to rate hikes in early 2015.) Would you patiently wait for your paycheck? U.S. government owes an estimated $5.3 billion to federal workers who have not been paid since...(read more)

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  • MBS Day Ahead: Stocks and Bonds in Holding Patterns, Waiting For Info

    Posted To: MBS Commentary

    Neither side of the market (debt/bonds or stocks/equity) feels like it has enough information to move out of recent holding patterns. These sideways trends emerged last week after a an apparent "New Year Bounce" toward higher stock prices and bond yields had proven itself to be a false start. Perhaps 2019's early trend could have remained intact were it not for several key sources of uncertainty. There is an important brexit-related vote in UK parliament tonight, but it will only be important for US bond markets if the vote offers a surprising result. Right now, the expectation seems to be that the Prime Minister's brexit plan will be overwhelmingly rejected. But if it's a reasonably close call, that would leave hope alive for brexit to happen on schedule. There are two...(read more)

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  • MBS RECAP: Bonds Stay in Solid Shape Despite Morning Weakness

    Posted To: MBS Commentary

    The overnight trading session was thinly-traded due to a holiday closure in Tokyo. Buyers outnumbered sellers until the domestic session. Promptly after the 820am CME Open , sellers showed up in US Treasuries. Bond market weakness radiated out from there. By the end of the day, it would become more clear that some of the selling was related to corporate debt hedging (read more about why that matters HERE ). Bonds were weaker throughout the morning hours, and then leveled off after European markets closed. It's not uncommon to see Treasuries level-off or reverse course right after European bond markets close. This can happen for a variety of reasons although it can be as simple as a sudden drop in market participation that happens when only one of the three continental areas is trading...(read more)

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  • Mortgage Rates Unchanged to Start the Week

    Posted To: Mortgage Rate Watch

    Mortgage rates held their ground today, keeping them in line with long-term lows achieved over the past 2 weeks. To be fair, it was the previous week that offered the biggest benefits, but last week was no slouch. Factoring out the first few days of January, it would have been the best week for mortgage rates since April 2018. It was a relatively quiet day for financial markets with the bonds that underlie mortgage rates trading in mostly the same territory as last week. It remains to be seen how markets will react to the absence of the typical spread of economic data (much of which is on hold due to the government shutdown ). Beyond that, the shutdown could certainly begin to have an effect on the economy itself although it's hard to say how big of an effect that would be. With this now being...(read more)

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  • MBA Revives Income Verification During Govt Shutdown

    Posted To: MND NewsWire

    At least one part of the shutdown is over as the Internal Revenue Service (IRS) announced it has resumed its Income Verification Express Service (IVES.) The service, which provides tax transcripts essential for processing mortgage applications for non-W-2 wage earners, was shut down, along with many federal government services, on December 21 and its workers were furloughed. The Mortgage Bankers Association took credit for the turnaround , saying it was its "successful advocacy" that got the IRS to restart the program. Robert Broeksmit, president and CEO of MBA said he took the appeal directly to Craig Phillips, a counselor to Treasury Secretary Steven Mnuchin. Broeksmit said he told Phillips "Look, this is staring to be a problem for the lending industry," and asked, "Could you make these...(read more)

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  • Secondary Marketing; Digital and Property Inspection Products; Radian's RADAR Rate Product

    Posted To: Pipeline Press

    My cat Myrtle has never flown coach. She doesn’t have the same complaint I have of airline workers who don’t seem to realize that “full” means full. For some reason they’ve created “completely full,” “extremely full,” “very full,” and, “full.” How did that change? Our industry is always grappling with change (as in alteration, not pennies and nickels), the latest being lenders having to shift their borrower’s expectations due to government paralysis. STRATMOR discusses this in its latest blog, “Home Financing Despite the Partial Shutdown .” Servicers and MBS investors are following regulators’ plea for financial institutions to work with borrowers affected by the government shutdown, along...(read more)

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  • MBS Week Ahead: Record-Breaking Shutdown and Data Darkness

    Posted To: MBS Commentary

    The government shutdown is now the longest ever, and there are a variety of interesting implications. The first is that multiple economic reports will not be released as scheduled. The notable examples in the current week include Retail Sales and the New Residential Construction report ( housing starts and building permits). An absence of econ data naturally increases uncertainty. In and of itself, uncertainty is good for the bond market , but investors will still have access to a few other economic reports that could help form a consensus about what the economy might be doing. Of those, the only reports on this week's calendar with any market-moving history worth mentioning are the Philly Fed Index on Thursday and Consumer Sentiment on Friday. To put their past market-movement potential...(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