Archive for April, 2014

Home prices as measured by S&P Dow Jones performed more or less as expected in February, with annual growth rates continuing to slow.

The S&P/Case-Shiller Home Price Indices, considered one of the preeminent measures among home price indicators, shows prices among 20 of the nation’s biggest markets grew 0.8 percent on a seasonally adjusted basis in February, matching January’s rate of growth. Unadjusted, the index was unchanged month-over-month, though even that was an improvement over a 0.1 percent drop to start the year.

The narrower 10-city composite index outperformed January’s results, ticking up 0.9 percent adjusted and staying flat unadjusted.

“Prices remained steady from January to February for the two Composite indices,” said David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, adding, however, that “annual rates cooled the most we’ve seen in some time.”

On a year-over-year basis, the 20-city index gained 12.9 percent in February, while the 10-city composite climbed 13.1 percent.

Thirteen cities saw lower annual rates in February, including Las Vegas, with a growth rate of 23.1 percent versus 24.9 percent in January. In addition, 13 cities posted declines on a monthly basis, with mostly markets along the West Coast seeing growth.

Even with the West leading in gains, the region remains deflated compared to its peaks, and Denver and Dallas remain the only cities to climb to new price peaks since the crash.

The Case-Shiller Indices are the third price metric for February to be released in the last week. The first, put out by the Federal Housing Finance Agency, showed a 6.9 percent gain in house prices over the year, while Black Knight Financial Services’ own Home Price Index showed a 7.6 percent increase.

Despite reports of continued—albeit slower—price increases, Blitzer notes “other housing statistics are weak.”

“Sales of both new and existing homes are flat to down. The recovery in housing starts, now less than one million units at annual rates, is faltering,” he said.

Some blame rising interest rates for bringing down sales rates, while others point to difficulties in qualifying for loans and concerns about consumer confidence. Whatever the cause, Blitzer says, “[t]he result is less demand and fewer homes being built.”

“Five years into the recovery from the recession, the economy will need to look to gains in consumer spending and business investment more than housing. Long overdue activity in residential construction would be welcome, but is certainly not assured,” he concluded.

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Brothers Rehan and Josh Nana recently converted an old, disused grain silo into a quaint cabin. The silo was located on their family’s farmland in Missouri, so the new structure is in no way out of place in its surroundings. One of the primary reasons they opted to complete this conversion was the desire to repurpose something that would otherwise be left to rot and rust. They were helped in making their idea become a reality by architect Kyle Davis of Blue Earth Projects.

The silo-turned-cabin is located a few hours’ drive from the brother’s main residence, and therefore makes for a comfortable weekend getaway space. Most of the wood and other materials they needed for the conversion came from an old barn, 3-story that had collapsed a few years ago. They repurposed its structural beams for the cabin steps, as well as for loft support and bin support next to the large window.

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The tin from the barn’s roof was used as cladding for the interior walls, which made it possible to separate off the bathroom, storage area, and kitchen backsplash. Also, a few of the stones from the barn’s foundation was used for bathroom flooring. The rest of the flooring in the cabin was also repurposed from the barn. For this they used the old hay loft flooring. The cabin only has one large window that also doubles as a door. It was assembled from six insulated double pain patio door blanks.

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finished stairs

They insulated the interior, and used drywall panels to cover the walls, but they left the tin walls used to separate the kitchen and bathroom from the main living area in its original condition. The tin walls certainly add a nice blend of traditional and modern to the converted cabin.

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The resulting 2-story silo cabin is also equipped with running water, heating and standard kitchen appliances, though there is no television or internet. Since the team completed most of the work on their own, and used mostly repurposed materials, the overall budget for the conversion was very low. They managed to complete the conversion in about two weeks.

By: Christine Walsh

 

Are you on the home-buying sidelines this spring because you think you won’t be able to qualify for a mortgage? Do you know what sort of FICO credit scores are being accepted by lenders at the moment — they’re lower than they were a year ago — and whether yours could now be good enough?

You may be part of the surprisingly large crowd of folks who fear the home-loan unknown. A new national consumer survey found that 56% of potential purchasers of homes say they’re out of the market because they don’t want to face the possibility of rejection by lenders. Even 30% of current homeowners believe that they wouldn’t pass muster today.

Using a statistical sample of 1,055 Americans 18 and older, survey research firm OmniTel, polling on behalf of mortgage lender LoanDepot, documented widespread uncertainty and lack of specific knowledge about current market conditions when it comes to qualifying to buy a home. According to the survey, 74% of potential buyers who would need a mortgage concede that they have not scoped out the current market or taken the steps needed to qualify.

Many potential buyers believe that they need near-perfect credit scores to get a home loan. Half of those surveyed said they had no idea what minimum FICO score is needed for a mortgage, and nearly a fifth (18%) said the minimum score might be 770 or higher.

Debt-to-income ratios are another insurmountable obstacle in many potential buyers’ eyes — enough so that they don’t even try to obtain a mortgage.

Most lenders use two forms of debt ratios: a “front end” ratio that compares the monthly costs of the proposed new mortgage and other housing expenses with the applicant’s monthly income, and a “back end” ratio comparing all recurring monthly debt obligations — housing expenses, student loans, credit cards and the like — with the applicant’s monthly income. Roughly a third of potential buyers on the sidelines believe that their debt ratios are too high.

But what’s the statistical reality on debt ratios, FICO score minimums and down payments? What are lenders approving?

The best answers come from a company called Ellie Mae, whose loan origination and tracking software is widely used by lenders. Every month Ellie Mae analyzes a huge sample of new mortgage originations nationwide and issues an overview report rich with the sort of detail that buyers sitting on the sidelines could use.

Here’s what it found in its report on March:

•Thirty-three percent of new loans last month had borrower FICO scores below 700. A year ago it was just 27%. (FICO scores max out at 850, which is considered excellent credit; applicants with scores under 700 present higher credit risks to lenders.) Federal Housing Administration-insured home purchase loans had an average FICO in March of 684. Conventional mortgages, those designed for purchase by investors Fannie Mae and Freddie Mac, still have relatively high FICOs — they averaged 755 in March, but that was down slightly from 759 a year before. Lenders are doing far fewer refinancings this year, so they are loosening up on FICO minimums for purchasers.

•Debt ratios also are more generous than many sidelined potential borrowers probably imagine. The FHA’s average front-end (housing costs) ratio last month for purchase loans was 28%. In other words, if your projected housing and mortgage-related costs represent 28% of monthly income, you’re average. Fannie Mae and Freddie Mac loans averaged 22% ratios on the front end. Back-end (total recurring debt) ratios for FHA averaged 41%. For Fannie and Freddie it was lower — 34%.

•Down payments can be small if that’s what you need. FHA’s average down payment last month for home purchases was 5%, but many borrowers put down just 3.5%. Fannie and Freddie allow 5% down as well, provided that you can pay mortgage insurance premiums. VA loans can go to zero down if your veterans status allows you to qualify. Department of Agriculture home buyer loans, which are designed for people who live in small towns, also allow for no down payments.

The point here: If you’re on the sidelines, check out what’s really going on in the mortgage market. There may be more opportunities — even in an era of tighter underwriting — than you think.

 

http://www.latimes.com/business/realestate/la-fi-harney-20140427,0,242681.story#ixzz30CeM1FAF

A survey of real estate agents released Monday finds a growing number of homeowners have turned to all-cash financing in order to avoid the red tape that comes with mortgage lending.

According to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, an estimated 26.2 percent of home purchases by current homeowners in March relied solely on cash, up from a 12-month low of 22.8 percent recorded last August. Figures are based on a three-month moving average.

While cash sales are usually associated with investors looking to profit from their purchases, Campbell Surveys says they’ve become more popular with average American homebuyers hoping to avoid closing delays and gain an advantage over their competition.

According to the company’s report, 30 percent of March home purchases financed with a loan going to either Fannie Mae or Freddie Mac and with a down payment of at least 20 percent were delayed, predominantly due to issues related to underwriting, documentation, or appraisals.

Even for all-cash purchases, a fair amount—24 percent—of transactions experienced delays last month. At the same time, however, the closing time on cash transactions remains at least 10 days shorter on average, even compared to a mortgage that isn’t delayed.

Even with the recent trend, Tom Popik, research director at Campbell Surveys, expects home purchase mortgages to bounce back this spring, noting that the declining share of mortgage financing “is part of a seasonal trend that has reversed in April in each of the past three years.”

Bridge Street Bridge Project

Posted: April 23, 2014 in Arroyo Grande
The Bridge Street Bridge (“Bridge”) is a valued historic feature in the City of Arroyo Grande and serves as a primary thoroughfare and landmark in the City’s Historic Village area. During its service life of over 100 years, the Bridge has developed age-related deficiencies that will cause closure if not addressed.


The City is in the process of evaluating alternatives to retain the use of the Bridge while maintaining community safety, accessibility, and historic value.

The National Housing Trend Report for March was just released by Realtor.com, and it offers some great news for spring home buyers. The market is much healthier this year, with growth in inventory and days on the market. With modest price increases present, the overall outlook is good.

The stats from Realtor.com showed a 9.5 percent growth over March of last year, with 1,841,844 units at a median price of $199,900, which was also 5.3 percent higher. Last year showed an imbalance, with a shorter supply and a heavy increase in home prices.

“Bidding wars in many markets last year frequently elevated offer prices beyond the reach of first-time buyers who could scarcely save for the down payment,” offered Steve Berkowitz, CEO of Move. “While inventory is still low, the continuing annual lift in the number of homes on the market that we’ve seen over the first months of 2014 is an indicator that buying conditions this year may be notably improved from the frenzied pace of last spring.”

More homes on the market is always a good sign for first-time buyers and those looking to move up. There is less competition and makes it that much harder to get a home.

Despite this good news, home sales are still relatively slow overall due to the current health of the housing market.

The National Association of Realtors (NAR) Pending Home Sales Index for February 2014 showed a 10.5 percent decline, compared to the same period in 2013, the eighth-straight month of decline for pending sales. With contract signings stable over the last few months, though, buyer traffic looks to be making a comeback.

Builders broke ground on more new homes nationwide in March, although the increase missed expectations.

Housing starts climbed 2.8% from an upwardly revised February to a seasonally adjusted annual rate of 946,000, the Commerce Department said Wednesday. Economists polled by Bloomberg News called for a rate of 970,000.

The missed expectations come as builder confidence wavers. More builders now see the market for new single family homes as poor rather than good, according to a survey from the National Assn. of Home Builders.

Despite a rapid housing recovery last year, builders have yet to ramp up construction to historically normal levels. Holding them back, they say, are a shortage of ready-to-built lots and skilled labor.

Traffic from prospective buyers has been particularly poor, however.

Part of that is an overhang from winter, and builders expect more robust traffic during the spring home buying season. Still, rapid price surges last year have hampered demand as well. With income growth still meager, buyers have struggled to adjust.

Many economists blamed severe weather for much of the poor construction numbers in recent months.

In March, starts rose 65.5% in the Midwest and 30.7% in the Northeast, two areas that had been crippled by winter weather. Starts fell in the South and the West, a major home building region largely spared the harsh winter.

March’s construction gains came on a 6% rise in single family home starts nationwide, a less volatile sector than multifamily construction.

Building permits, a gauge of future construction, fell 2.4% from February.