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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

  • Permit to Completion - Builder Timeline Depends on Where and Why

    Posted To: MND NewsWire

    Despite complaints about labor, lot, and material shortages, builders needed no more time to build a home last year than they did in 2016. The time did increase compared to 2015 by about two weeks. Using data from the Census Bureau's Survey of Construction (SOC), the National Association of Home Builders (NAHB) concludes that the average time to build a single-family house was 7.5 months. The actual building time was about 6.5 months following a typical delay of around 30 days after the permit was authorized. Data from the 2015 survey showed the time from permit to completion at 7 months. The range however is wide, from less than a month to more than 6 years. Much depends on who is building the house, for what purpose, and where. , writing in NAHB's Eye on Housing Blog, says that houses built...(read more)

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  • MBS RECAP: Bonds Gain Despite Data Surprise and Stock Rally

    Posted To: MBS Commentary

    Before any discussion about market movement in July, we have to set the stage with some disclaimer about "slow summertime trading." That was the subject of this morning's commentary ( read it here , if you like). With that out of the way, we're equipped to pay the appropriate amount of attention to today's seemingly interesting events. First up, we had a reasonably strong move in European bonds overnight help set a mildly positive tone for the start of domestic trading. The biggest volume spike of the early morning came at 8:30am in response to the Import Price data, which came in much lower than expected. Bond yields/prices, themselves, only moved a bit, however--a fact that likely reflects the nearness of yields to the lower end of their prevailing range. The other notable...(read more)

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  • Lowest Rates Since May, But There's a Catch

    Posted To: Mortgage Rate Watch

    Mortgage rates fell by an observable amount today-- one of the few times they've done so in recent weeks. Technically, today's average lender is offering the best we've seen since May 31st. That sounds pretty great, right?! Unfortunately, there's a fairly big catch. While today's rates are indeed the best in a month and a half, the range during that time has been so excruciatingly narrow that most prospective mortgage borrowers will find the distinction fairly meaningless. In almost all cases, the actual NOTE rate at the top of your loan quote will be the same as it has been for weeks. The only change in lenders' rate sheets is in the upfront cost associated with that rate. In other words, if you'd seen a quote of 4.75% with 0 points yesterday, today's quote would be more like 4.75% with a...(read more)

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  • MBS Day Ahead: Get Used to Coconuts, Probably

    Posted To: MBS Commentary

    I know I made a Looney Tunes reference last week, but another one is in order. For those that aren't familiar, Yosemite Sam is stranded on a desert island and sits down to a smorgasbord of coconuts, prepared in various ways: "tossed coconut salad, fresh coconut milk, New England boiled coconut," he says, feigning excitement just before breaking down and proclaiming "oooh I hate coconuts!!!!" Yosemite Sam's coconut menu plan is akin to trying to find a way to make something new and interesting out of summertime bond market movement. The fact is that at some point in June or July, almost every year, bonds end up either pausing or reversing, and volumes generally begin declining in July, finally bottoming out in September, almost like clockwork. In the chart above,...(read more)

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  • Construction, Warehouse Products; Free LO Comp Webinar; Shifting UW Criteria

    Posted To: Pipeline Press

    Events and Training Don't miss out on the Lenders One 2018 Summer Conference in Salt Lake City, Utah, August 5-8, at The Grand America. In an age of disruption, it's never been more important to learn from peers and industry leaders. Keynote speakers Alison Levine and David Robertson will share ways to get ahead in a tough market, and attendees will be able to select from 16 curated education sessions led by industry experts. Topics include: improving margins, generating business through MarTech, rethinking your compliance strategy and five Secondary Market panels. Touted as the most valuable part of conference, Lenders One has expanded networking opportunities for members to connect with peers and explore best practices. Reserve your spot by this Friday, July 13, or contact Lauren Ketchum...(read more)

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  • Mortgage Rates Still Can't Find Inspiration

    Posted To: Mortgage Rate Watch

    Mortgage rates stood a very decent chance to experience the highest volatility of the week today thanks to the most important economic data of the week being released this morning. The Consumer Price Index (CPI) is the most widely-followed inflation metric in the U.S. and inflation is a big deal for the bonds that underlie rates (including mortgages). On numerous occasions over the past 2 years, we've witnessed clear connections between variations in CPI data and subsequent volatility in rates. But not today... The biggest issue today was that CPI ended up being pretty boring. In other words, the actual numbers were very close to the forecast. Bonds (and thus, interest rates) didn't have much of a reaction. Even then, we may well wonder how big of a reaction we would have seen if the data was...(read more)

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  • MBS RECAP: Bonds Hold Steady Despite Big Ticket Events

    Posted To: MBS Commentary

    Welcome to summertime in the bond market, where each day is narrower than the last! The same can be said for the past 2 weeks and the past several months, for that matter. By a wide margin, the 3-day trading range surrounding the apex of the Italian political drama easily contains every minute of trading since then. To put that in perspective, that 3-day range was 2.78-3.01% in 10yr yields. Today's range was 2.84-2.87%. The only interesting thing that can be said for bonds during that time is that they've generally moved lower in yield and generally been willing to remain near those lows. Today didn't do anything to change the summertime tone. We even had the week's most anticipated economic data (at least for the bond market) in the form of CPI. Unfortunately for those hoping...(read more)

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  • Inflation Data Shows Deceleration in Housing Costs

    Posted To: MND NewsWire

    While the Labor Department's Employment Situation Report for June showed wages plodding along at a 2.7 percent annual increase, unchanged from May, it is still being outstripped by rising costs, especially for housing. Today's Consumer Price Index (CPI) report shows consumer costs overall were up 2.9 percent with the shelter portion rising 3.4 percent over the last 12 months. Shelter is one of the categories in the CPI's "market basket," the goods and services that the Bureau of Labor Statistics (BLS) considers necessary for day-to-day living. The CPI does not include housing units which it views as capital or investment rather than consumption items. Shelter is viewed as a "service" provided by that investment and is thus a consumption item. The cost of shelter is broken down into two components...(read more)

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  • New Home Sales Need More Trees and Contractors

    Posted To: MND NewsWire

    The Mortgage Bankers Association (MBA) is projecting a decline in new home sales for June, putting them significantly behind those in June 2017. MBA's Builder Applications Survey (BAS) shows mortgage applications for the purchase of newly constructed homes were down 12 percent from May and 8.8 percent year-over-year. The survey's results are not adjusted to reflect seasonal patterns. "Applications for new home purchases fell in June, both compared to last year at this time and relative to May, which fits the seasonal pattern. So far this year, new home applications are up 2.5 percent relative to the first 6 months of 2017. Our sense is that builders remain constrained by the tight job market for construction labor and rising input costs, particularly lumber costs ," said Mike Fratantoni, MBA...(read more)

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  • Full Radio Interview With Fed Chair Powell

    Posted To: MBS Commentary

    In a fairly rare turn of events, Fed Chair Powell gave a rather lengthy radio interview with Marketplace's Kai Ryssdal. Here's a rather lengthy transcript. Note: This is far from "required reading" given that there's been essentially no market reaction, but it is nonetheless useful insight for those who like to dissect every communication from the Fed Chair (not a bad habit for anyone who cares about big picture market themes. Dissecting all of Bernanke's communications helped us get ahead of what was happening during the taper tantrum, for instance). Here's the interview: Kai Ryssdal : So this is a weird way to start this interview. But the thing is that Fed chairmen don't do a whole lot of interviews. And this is, I think your first broadcast interview, right...(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