Rental Market Up

As the U.S. real estate market has taken a hit, roiling from the after effects of the subprime mortgage lending crisis with home prices and sales numbers down and foreclosures at record highs, one area shows a silver lining among all the mess: the residential rental market.

As lending standards have tightened as creditors have become more cautious, it has made it more difficult for people looking to buy houses to get approval for a mortgage, and many have found they must turn to homes for rent, at least temporarily, driving up the demand, according to a PricewaterhouseCoopers survey released this month. Read more

Real Estate Investments Drop

The number of residents buying homes isn’t the only statistic that has seen a sharp decline this year with the ongoing fallout of the credit crisis and subprime mortgage mess; the National Association of Realtors released a report last week that showed fewer people bought homes as investment in 2007. The number of houses bought solely for investment purposes last year dropped 18.1% from 2006, when the numbers were also steadily declining, off nearly 29% from the large numbers in 2005.

Many are saying that speculative buyers are the ones who have vanished from the real estate investment market, as those were the ones who some blame for the booming prices in real estate in recent years. Speculative buyers bought homes with the intent to sell them when their value increased to make a profit. But the continual increase in home prices couldn’t continue at its pace forever, and now many buyers of homes who were looking to sell their properties for a profit are finding the homes valued at less than what they paid for them, leaving them upside down. Read more

Bank Foreclosures Hurt Real Estate Market

The final quarter of 2007 was a bleak one in the housing market, as foreclosures and delinquency rates reached record highs. The fourth quarter, from October to December, found foreclosures rising to 0.83 percent, passing the previous high of 0.78 percent set in 2007’s third quarter, adding to the economic woes the U.S. is suffering, mostly onset from problems arising in the housing sector.

The data, from the Mortgage Bankers Association’s quarterly report released this month, said that the delinquency rate — the rate of those more than 30 days past due on their latest mortgage payment — also climbed to a record high of 5.82 percent in the fourth quarter, up from 5.59 in the third quarter to reach the highest point since 1985.

The subprime mortgage mess continued to snowball, as the percentage of adjustable-rate mortgages entering foreclosure rose to 5.29 percent in the fourth quarter, and delinquencies rose to record-high 20.02 percent Read more

Lending Debacle Affects Real Estate

The struggling real estate market took another dip this last month, according to the Commerce Department. Housing starts, a measure of new homes being constructed, fell 0.6%, while permits for new construction, an important indicator of future activity, fell more than anticipated, decreasing 7.8% in February to the lowest level in 16 years. The Northeast saw the worst drop, as new construction fell 27.7%. It remained unchanged in the Midwest, with a slight increase was seen in the South and the West.

Experts expect that the rates will continue to fall this year but expect them to rebound in 2009. Lasts year, residential construction fell by a quarter amid the slumping economy and the subprime mortgage mess fallout, as banks and other lenders have found many with credit scores below the prime rate who were granted mortgage loans struggling to repay them and unable to sell or refinance as the prices of homes have fallen drastically. Read more

Federal Reserve and Foreclosures

As the real estate market continues to go through an adjustment period caused by the run up in prices from the early 2000 real estate bubble. The Federal Reserve chairman Ben S. Bernanke said “the government is pledging new regulations to stop predatory mortgage lending practices that are affecting so many families”.

He also added that “loan delinquencies and the foreclosure rates have substantially increased over the past year and half. Many neighborhoods may be looking at clusters of foreclosures and many families are facing financial hardships during the months to come.” Read more

How Much Can You Afford?

How Much Home Can You Afford to Buy in Today’s Market?

Although the median price of a home (real estate) continues to drop nationwide, many are finding it difficult to qualify for their first mortgage. A recent survey conducted by the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI), shows that just 2% of new and existing homes sold in California during the previous quarter — with a median average price of $525,000 — were affordable to those earning a median family income of $56,200.

By contrast, this number was higher in different parts of the country including Indianapolis, where 89% of those with a household income of $65,100 could afford a median priced house of $113,000 (down from $122,000 the previous quarter.) While home inventory levels have increased nationwide, a 30-year fixed mortgage has shown a slight decline – from a 6.37% APR national average in 2006 to a 6.07% APR national average this year. Read more