The housing industry is traditionally the leader out of recession and must be addressed as it is still in a position of weakness. This according to DJ Newswires SVP & Managing Editor Neal Lipschutz in this Wall Street Journal interview…
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The Federal Reserve’s latest effort to boost the economy by driving down long-term interest rates won’t have a big impact on home and car buyers, savers or credit card users.
Any noticeable changes from the central bank shuffling $400 billion of its portfolio are likely to be mixed. Although borrowers may benefit from lower rates on mortgages and other fixed-rate loans, savers holding long-term bonds are likely to see their interest income dip.
Mortgage rates are a focus of the new plan. The Fed intends to sell $400 billion of its shorter-term Treasurys to buy longer-term Treasurys by June 2012. And it will reinvest principal payments from its mortgage-backed securities to help keep mortgage rates ultralow.
These steps alone won’t spur a housing boom. Interest rates already are at the lowest level in six decades, averaging 4.09 percent on a 30-year fixed mortgage and 3.29 percent on a 15-year fixed.
Prospective homebuyers aren’t putting off home purchases because rates are too high. They’re holding off because they’re lacking confidence. They’re worried about a recession or job loss and are unwilling to take on more debt, even at lower rates, or aren’t able to qualify. Others see no reason to jump into the housing market when prices are still falling.
Still, the Fed hopes to at least stimulate more refinancing activity as a way to get the economy moving. “This may make it even more affordable for those few who can afford to buy,” says Diane Swonk, chief economist at Mesirow Financial Inc., a Chicago-based financial services firm. But it only helps a select group, she says, leaving most would-be homebuyers still unable to take advantage.
From the consumer standpoint, borrowers will benefit only from better rates on longer-term loans: fixed-rate mortgages, fixed-rate home equity loans and, for entrepreneurs, fixed-rate small business loans.
For most of us, housing is one of our biggest expenses. But there are people who live in the lap of luxury rent and mortgage free.
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Privately-owned housing starts in June were at a seasonally adjusted annual rate of 629,000. This is 14.6 percent (±10 9%) above the revised May estimate of 549,000 and is 16.7 percent (±11.8%) above the June 2010 rate of 539,000.
Single-family housing starts in June were at a rate of 453,000; this is 9.4 percent (±11.1%)* above the revised May figure of 414,000. The June rate for units in buildings with five units or more was 170,000.
This shows the huge collapse following the housing bubble, and that housing starts have mostly been moving sideways for over two years – with slight ups and downs due to the home buyer tax credit.
This was above expectations of 575 thousand starts in June. Multi-family starts are increasing in 2011 – although from a very low level. This is one of the bright spots for construction and the economy this year.
As new indicators on the languishing national housing market continue to stream in it remains apparent that the crisis brought about by the bursting of the housing bubble is far from over. Newly released figures reveal that the prices of houses declined with greater speed during the opening quarter of this year than at any point since the most severe consequences of the crisis became evident. This is based on information released in the Real Estate Market Report which has been made available by Zillow.
It has been predicted that the lowest point in the housing market decline will not be reached until 2012 at the earliest. If that’s the case, the process of full recovery will take a period of quite a few years. Zillow’s Home Value Index decreased to just under $170K, a drop of 3% compared to the 4th quarter of 2009. The company’s index explains the average valuation for a designated geographic location on a designated day. It incorporates the value of all condominiums, cooperatives and single-family homes. Information relevant to mortgages and home loans are generally noted in each county and is publicly accessible via a county recorder’s office.
To better understand the magnitude of the decline in the housing market, consider this: The prices of homes have, on average, decreased by just slightly less than 30 percent from the height of the peak in June 2006. That figure represents a massive hit for most homeowners in America.
Given the fact that the decline has shown no signs of slowing down during the first quarter of the year, it is overly optimistic to expect any stabilization in home prices by the end of this year. Only a small number of markets did not experience home value decreases this past quarter. The overwhelming majority of housing markets in the study (ninety-seven percent) faced decreasing values.
In light of this kind of news, it becomes increasingly clear that many Americans will require honest and authoritative assistance with loan modifications in the next few years. The burden that many are under in the present economic climate makes it simply impossible to meet existing mortgage obligations.