buying a home
The top mortgage lender in the country, Wells Fargo, has called for borrowers to come up with 30% down if they want to avoid higher mortgage rates and more restrictive lending tied to the “risk retention” requirements related to the Dodd‐Frank Wall Street Reform and Consumer Protection Act of 2010.
Essentially, the government wants to ensure that banks and lenders who write higher-risk mortgages actually retain some of that risk (5% to be exact), instead of selling it off to investors and wiping their hands clean of it.
Wells argues that half of mortgages already carry a 30% down payment, but critics believe the move could shut out smaller lenders and increase market share for the top banks, who already have plenty.
If down payment requirements/mortgage rates do rise, it could throw a wrench in the housing recovery everyone’s hoping will get underway this year and next.
What do you think? Would lenders requiring 30% down keep you from buying a home? Do you think it would stifle the home buying market? Leave us your thoughts and comments below.
Tags: buying a home, down payments, mortgages
The number of contracts signed for purchases of previously owned homes rose again in December, according to data released recently by the National Association of Realtors (NAR).
The trade group’s pending home sales index increased 2.0 percent compared to its November reading, which was revised downward.
The index is based on contracts signed in December, as opposed to closings. NAR says this forward-looking indicator typically signals where existing-home sales levels should be within one or two months.
It marks the third consecutive month NAR’s gauge of home sales to come has climbed higher. December’s gain was larger than analysts were forecasting.
Lawrence Yen, NAR’s chief economist, says “Modest gains in the labor market and the improving economy are creating a more favorable backdrop for buyers, allowing them to take advantage of excellent housing affordability conditions.”
According to Yun, mortgage rates should rise only modestly in the months ahead, so conditions should remain favorable for buyers with good credit. He also says stable home prices should continue into 2011 as long as there is sufficient demand to absorb inventory.
Tags: buying a home, home sales, housing, mortgage rates
The nation’s love affair with McMansions continues to wane: The average size of new single-family homes completed last year fell again, a trend expected to continue for several years, the National Association of Home Builders said at its annual conference recently.
In 2010, completed homes measured an average 2,377 square feet, down about 3% from the year earlier. By 2015, many builders expect the average home size to shrink to 2,152 square feet.
This downsizing ends an expansion that spanned nearly three decades: The average size peaked at 2,521 square feet back in 2007.
More than half of builders expect to build smaller and lower-priced models in 2011, a move that lets them compete with foreclosures and appeal to buyers who can no longer afford—or who no longer want—the boom-era’s supersized showpieces.
Last year, the number of homes with three or more bathrooms came in at 24%, flat from the previous year, but down from 28% in 2008. Homes with garages for three or more cars declined to 17% of homes from 20% in 2005.
Down the road, many builders expect the family room area to increase, while little-used areas like the living room, entry foyer and dining room will likely take up less space. By 2015, great rooms—more flexibile living space—could be the norm, the NAHB survey found.
Another expected change? Master bedrooms will be moved to the first floor, allowing older owners to avoid the stairs as they age in place. The kitchen of tomorrow, meanwhile, will probably include a double sink, recessed lighting and table space for eating.
To be sure, not everyone agrees that the age of oversized homes is officially over. The NAHB noted that the average size of homes started last year rose slightly in the South. And an online survey by Better Homes and Gardens magazine found that about 40% of consumers want to increase their total home size with their next move. The median square footage of current homes is 1,864 homes, slightly below the desired 1,914 square feet.
Tags: buying a home, home sizes, homes, houses
Do you think you know what’s going to happen in the economy this year, or to the stock market, or the housing market? Compare your guesses to the experts from Wall Street…
Have predictions for 2011 you’d like to share with our readers? We’d love to hear from you. Just comment below and let’s see how you do.
Experts agree, job creation is critical to getting the housing and mortgage markets back on track – both in curbing delinquencies by ensuring homeowners have the ability to keep up with their mortgage payments and in giving consumers the confidence and security they need to become homebuyers.
If unemployment remains elevated for an extended period, the housing recovery is expected to grind along at a snail’s pace. Currently the nation’s unemployment rate sits at a 26-year high. But what can we expect heading into the new year?
According to Patrick Newport, U.S. economist, for the international research firm IHS Global Insight, “The key for housing in 2011 and thereafter is employment growth….The economy is likely to deliver on jobs going forward. We expect the economy to add about 2.2 million more jobs in 2011 and 2.9 million more in 2012.”
David Shulman, a senior economist with UCLA, commented, “Unfortunately, even with the jobs gains averaging 150,000 per a month in 2011 and 200,000 a month in 2012, unemployment will remain above 9 percent through the third quarter of 2012.”
The latest Employment Outlook Survey from Manpower, Inc., which queried more than 18,000 employers, found that 14 percent anticipate an increase in staff levels in their Q1 2011 hiring plans, while 10 percent expect a decrease in payrolls, resulting in a net employment outlook of +4 percent.
Seventy- three percent of employers expect no change in their hiring plans, according to Manpower’s survey. The final 3 percent indicate they are undecided about their hiring intentions over the first three months of 2011.
“Despite the challenging economic climate, many CFOs have growing confidence that their companies have weathered the worst of the storm and are poised for expansion,” said Laura Whitley, global commercial products executive at Bank of America Merrill Lynch. “Although concerns about the economy remain, the increase in CFOs who expect to hire employees could be crucial to improving the nation’s unemployment rate.”