Good News!!! Self Employed Can Get Mortgages

Good New is always pleasant to hear.  Especially true when the good news fits your situation.  As a Realtor, I am self-employed as are many in other fields of accounting, financial services, electricians, plumbers, ect.   Hearing that mortgage have opened to this group of buyers is another positive sign that the housing market has recovered and that the banks are helping the process.

The only item misconstrued a bit in Jim's Mortgage Matters is the June sales being a bit lower than May.   Though a bit unusual as these two months do run very similar and very strong, the continuing issue hurting resale homes is the lack of inventory.  Though we have fewer distressed homes, we also have, especially in lower price ranges, a shortage of inventory. 

Multiple offers are back!!  The shortage of inventory is causing buyers to need to out compete another buyer for a home.

We will begin to beat the numbers on the sales side when the inventory strengthens.

If you are in Hampton Roads, call me or reply to this post as you can sell your home if it is time to move!

Keeping you updated on the market! For the week of  July 29, 2013 MARKET RECAP More of the Same With Mortgage Rates For the past couple weeks, we've been speculating that mortgage rates have likely plateaued and were unlikely to push much higher. Our rationale was similar to that of many market participants: The threat of the Federal Reserve tapering from quantitative easing (money pumping and low interest rates) was overstated. A meaningful spike or dip in rates could be in waiting next Friday with the release of the July employment report. Job growth significantly higher than the consensus estimate could lead to a rate spike; disappointing job growth will likely drop rates (though nowhere near to the March lows). Job growth, a benefit of economic growth, means housing will continue to improve, even if interest rates rise. Job growth (and to a lesser extent wage growth) is key: More people working means more people who can afford a home and financing costs. For now, though, housing looks good. We say that even though sales of existing homes came in below expectations for June. The good news is market composition is healthier. Only 15% of sales were related to distressed properties – the lowest reading since the number was tracked in 2008. At the same time, the market is shifting more toward owner-occupied buyers and away from investors, who comprised only 17% of purchases for June. Prices also continue to trend higher. The national median price for an existing home rose a strong 5.5%, lifting the national number to $214,200. Rising prices, in turn, will further lift inventory, which remains tight and is limiting sales in many local markets. As for new homes, they're moving in the opposite direction: sales are up, but prices are down. New home sales, at 497,000 units on an annualized rate, handily beat the consensus estimate for 481,000 units. The pace of new-home sales is on a strong two-year run, and is approaching levels unseen since 2008. We were equally encouraged to see that sales maintained their strength in May and June despite the spike in mortgage rates. It's possible that new home sales maintained their momentum on price discounting. For June, the national median price of a new home was down 5% to $249,700. Year over year, though, the price trend remains up, with year-over-years gains approaching 10%. Given that supply remains tight, at 3.9 months supply at the current sales rate, homebuilders should be able to maintain pricing power into the foreseeable future. Economic Indicator Release Date and Time Consensus Estimate Analysis Pending Home Sales Index (June) Mon., July 29, 10:00 am, ET 5.0% (Increase) Important. Underlying economic strength should lead to sales gains over the next few months. Mortgage Applications Wed., July 31, 7:00 am, ET None Important. Purchase applications need to gain momentum to support home-sales and price gains. Federal Reserve FOMC Meeting Announcement Wed., July 31, 2:00 pm, ET None Important. Dissent on quantitative has risen in recent months. Further dissent will pressure interest rates to rise. Construction Spending (June) Thurs., Aug. 1, 10:00 am, ET 6.0% (Increase) Important. Gains in residential construction spending is a plus for economic growth. Employment Situation (July) Fri., Aug. 2, 8:30 am, ET Unemployment Rate: 7.5% Payrolls:188,000 (Increase) Very Important. Monthly payroll gains averaging close to 200,000 will push the Federal Reserve to taper quantitative easing. Flexibility is Becoming the New Norm One of the more recurring laments over the past few years has centered on tight, rigid lending. We've all known someone who should have received financing, but didn't because lenders were too risk averse. One upside of an improving market is a willingness to accept more risk, and we are seeing more risk acceptance in the mortgage market. Down payment requirements are easing, while fewer borrowers are being turned down on credit scores alone. Piggyback loans have also resurfaced, as have stated-income loans. On the latter, far too many self-employed people have been excluded from the mortgage market. Fortunately, that's changing, which means more people are added to the pool of home sellers and buyers. More participants lead to more robust and more stable markets. Even subprime loans are coming back to serve a market of borrowers who have healthy incomes but who suffered a short sale or credit hit when the market imploded in 2008 and 2009. To be sure, we all want a more accommodating mortgage-lending market. The good news is we are making progress in that direction. EQUAL HOUSING LENDER

Real Estate Market Rolls

Impressive...that is all I can say.

Jim Belote recaps information that I, and perhaps you have seen, from various news outlets in the past week or so. 

A quick read to know that Mortgage Deduction is safe as well as the relief given to home owners going through a short sale or foreclosure.  As Jim notes, this will keep the market improving by removing a costly tax burden to people in these tough situations.

You have to like the news on Phoenix and Las Vegas as well as national 5%+ home value increase.  Yet, note the continued warning on interest rate pressures.  This is bound to be a topic of many reports in the next few months.

Keeping you updated on the market! For the week of  January 7, 2012 MARKET RECAP It appears Congress and the president have finally reached a compromise on the “fiscal cliff” – the agglomeration of tax increases and spending cuts that were set to take effect in January 2013. The good news is the housing and mortgage markets survived unscathed. The Mortgage Forgiveness Debt Relief Act remains in force for another year. This means forgiven mortgage debt will remain untaxed. Without this extension, short sales, foreclosures, and loan modifications would have become encumbered with a tax burden. This would have been a serious blow to the recovery. These basic market-clearing mechanisms were vital to the housing recovery in 2012, and will continue to help the recovery along in 2013. The mortgage interest deduction also remains intact, which means mortgage financing remains a very good low-cost deal. It also means mortgage financing remains a savvy leveraging strategy for purchasing an asset (residential real estate) that is rising in value; thus providing a means to increase returns on invested capital. In other words, the housing recovery is here to stay, and the latest round of price data supports this conclusion. Trulia reports that asking-price gains accelerated throughout the past year. In the first quarter of 2012, national home prices increased 0.8% quarter over quarter; by the fourth quarter, the pace had increased to 2.3%. Year over year, national home prices were up 5.1%. Fueling the home-price acceleration was the former left-for-dead Phoenix market, which staged a remarkable resurrection that continues to this day. Home prices in Phoenix were up 25% for the year. We've frequently written that falling prices will eventually produce more buyer interest, which, in turn, will lead to an eventual recovery. Phoenix is proof this economic maxim works. Las Vegas also proves the maxim. It seems like it has taken an eternity, but the Las Vegas housing market is on the mend. Home prices in Las Vegas were up 10% year over year in December, building on a price-recovery trend that begin in the second half of 2012. We noted early in 2012 that a recovery in the Las Vegas housing market would likely mean the recovery had become a country-wide phenomenon. This appears the case today. Home prices around the country remain on the rise, and it's appearing more likely that mortgage rates will be rising too. Over the past couple weeks, rates have been inching higher. What's more, events in the debt market point to even higher rates. We are speaking specifically of the 10-year U.S. Treasury note – a benchmark for the mortgage-backed security market and the 30-year fixed-rate mortgage. The yield on the 10-year Treasury has moved considerably higher over the past month. In fact, the yield on the 10-year Treasury today is approaching its highest point in nearly four months. The trend in the 10-year Treasury yield is worth following, because if the job market and economy continue to improve (as we expect), then you can be sure that the yield on the 10-year Treasury note will continue to rise. Should this occur, mortgage lending rates are sure to follow.   Economic  Indicator Release  Date and Time Consensus  Estimate Analysis Consumer Credit (November) Tues., Jan. 8, 3:00 pm, ET $15 Billion (Increase) Important. Rising credit use reflects rising consumer confidence. Mortgage Applications Wed., Jan. 9, 7:00 am, ET None Important. Applications are expected to regain pace after the holiday-season lull. International Trade (November) Fri., Jan 11, 8:30 am, ET $40.2 Billion (Deficit) Moderately Important. Lower energy prices are reducing the current account deficit. Import Prices (December) Fri., Jan 11, 8:30 am, ET No Change Important Prices. Import prices continue to help hold inflation in check.   No Such Thing as a Perfect Market   No sooner had news on the “fiscal cliff” reached the market when frets and worries turned to the debt ceiling. The federal government hit its legal borrowing limit of $16.4 trillion this past week. Now pundits and professional worriers are fretting over what implications this impasse will have on financial markets and the economy. No need to fret or worry, because perfection is impossible. Markets will always be encumbered with uncertainty. To wait for perfection is to wait in perpetuity and to never act. In fact, the best time to act is when the outlook appears most dire and sentiment is decidedly negative. That's when the best values appear. We saw that in the residential real estate market in 2011 and early 2012. Many people who bought a home then are already sitting on a tidy gain today. We still see value, just not as much of it. Low mortgage lending rates have been an extenuating factor, but we believe if borrowers (and refinanciers) wait much longer the value of that factor will fall should rates rise. The point we can't emphasis enough is not to wait for perfection, because perfection doesn't (and never will) exist.     If you wish to unsubscribe, click on the link below and send the email. If this message was forwarded to you, please reply to the sender. Click Here To Unsubscribe EQUAL HOUSING LENDER

The Great Reports Keep Coming In

Once again, we have a very up beat report on the Real Estate Market.  All factors are pointing up:  Builder Sentiment, Barclay's 8% improvement in Home Sales in 2013, Mortgage Rates staying low.

Without doubt, the noted pressure on interest rates could dampen 8% growth.  Yet, as noted, the "cheap" house is a thing in the past as values are increasing.

Keeping you updated on the market! For the week of December 24, 2012 MARKET RECAP The numbers were a little sluggish, but the outlook continues to improve. We're talking about the new-home market, where housing starts eased 3% to 861,000 units on an annualized basis in November compared to October. The good news is that permits rose 3.6% to 899,000 units. The up trend in permits bodes well for robust housing activity early in the new year. Not surprisingly, home-builder sentiment has been rising with the new-home market. Home builders are reporting the best industry conditions since early 2007. Improving conditions, in turn, have lifted the NAHB/Wells Fargo Home Builders Sentiment Index to 47 for December – the eighth-consecutive monthly increase. The sentiment index's breakeven point is 50, so once the index hits 51 more builders believe the outlook for the industry is positive instead of negative. The index hasn't been over 50 in nearly eight years, and it has been as low as eight as recently as early 2009. The fact home-builder sentiment remains below 50 is a reminder of how deep and how penetrating the housing bust was, and how long the slog has been to climb our way back to normalcy. The good news for both the housing industry and the overall economy is that there is plenty of upside left in the recovery. The average rate of starts over the past 45 years has been roughly 1.5 million units on an annualized basis. We still have a long way to go before we reach that average rate. But could the mortgage market derail the recovery? We ask because over the past two weeks concerns have risen over rising lending rates. The Mortgage Bankers Association reported purchase applications were down for the week of December 14. The MBA points to rising mortgage rates as the culprit. To be sure, rates were up for most mortgage products. What's more, the yield on the 10-year Treasury note has continued to rise; this, despite the Federal Reserve expanding monetary efforts to lower rates. We mentioned in last week's commentary that the Fed is a key player in maintaining low interest rates, but it's not an omniscient player. The Fed has intervened to an unprecedented extent in the mortgage market, but that doesn't mean market participants won't work to thwart the Fed's efforts. A growing number of participants are worried about price inflation. Economic Indicator Release Date and Time Consensus Estimate Analysis Mortgage Applications Wed., Dec. 26, 7:00 am, ET None Important. Purchase applications slowed on rising rates, but the long-term trend remains positive. New Home Sales (November) Thurs., Dec. 27, 10:00 am, ET 384,000 (Annualized) Important. Sales are expected to resume an upward trajectory after regressing in October. Consumer Confidence Index (December) Thurs., Dec. 27, 10:00 am, ET 69 Index Important. Confidence is steady and firm, with improving home-buying plans an important positive. Pending Home Sales Index (November) Fri., Dec. 28, 10:00 am, ET 102 Index Important. Recent index gains are raising expectations for positive economic contributions from the housing sector. A Very Merry Outlook   A housing-analysis report issued by the financial services firm Barclays received considerable media attention this past week; principally because the report offered a very favorable outlook on housing. Barclays sees home sales increasing 8% in 2013. It also sees housing starts for the first quarter of 2013 expanding to 944,000 units on an annualized basis before expanding to 973,000 units in the second quarter. Barclays also expects home prices to rise and mortgage rates to remain low through 2013. We generally agree with Barclays' assessment (though mortgage rates holding today's levels is the weak link). We have a bullish outlook on housing for 2013, much like we had for 2012. There is a downside to this bullish outlook, though. As prices rise and more distressed inventory is removed from the market, the home affordability index will fall. In fact, recent NAR data show the index is already moving lower, as the CNBC/NAR graph below reveals. For the past six months, we've been warning that the most affordable, best-value deals are quickly evaporating. We see that trend continuing through 2013. What's more, we see the market tilting in favor of sellers. Therefore, we offer this caveat: for buyers who continue to wait, the cost of waiting will very likely rise.

New Weekly Article - Design Down Under || Home By Design Weekly Article

Another look at home design from Down Under.  Those Aussies have some great ideas.  Enjoy!



New Weekly Article - Design Down Under || Home By Design Weekly Article

The Waiting Game is Over

Though there are numerous sources of mortgage information trends and how the mortgage market is seeing house trends, Jim's Mortgage Matters always provides a concise recap of the past week's direction in the broader "overtime perpsective".

As always a great insight!!  Yet the most important message is the last paragraph:

In short, there is no sure thing. Many borrowers are waiting on the sideline, anticipating lower lending rates. We think that's a dangerous game, because even if QE3 lowers lending rates, we doubt they will lower them by a significant margin. On the other side of the coin, rates could easily go higher if investor concern switches to inflation from slow economic growth.

With the Feds third round of purchases(QE3), too many are predicting bond rates will hold or slide, improving mortgage rates.  But as note here, any buyer waiting for lower rates could get a rude awakening if the rates begin to rise in the near term.

If you have been waiting for bottom, how hard of a bottom must you hit before it hurts because you missed it??  And you already may have in Hampton Roads.

Keeping you updated on the market! For the week of  September 17, 2012 MARKET RECAP Last week, we broached the possibility that the residential rental real estate market could be forming a bubble. We found it interesting, even if it were only coincidental, that the the Wall Street Journal ran a piece this week on institutions piling into single-family residential rental real estate. The Journal article featured a private-equity firm, Colony Capital, that has been buying single-family homes, refurbishing them, and then renting them. Colony has accumulated 3,600 homes, most purchased out of foreclosure. Business, so far, has been remunerative. Colony Capital isn't the only institutional player in single-family rentals. According to investment bank Jefferies & Co., big private-equity players Blackstone Group, Och-Ziff Capital Management, and Oaktree Capital have raised more than $8 billion to buy houses, which they plan to refurbish and rent. This flood of institutional investor money into the single-family rental market is a big reason we are less concerned about distressed shadow inventory than most market observers. A lot of demand has developed to soak up supply. Over time, that supply will continue to dwindle. The trend in multi-family residential rentals is also revealing. Data from the National Association of Real Estate Investment Trusts (NAREIT) show money flowing freely into this market as well. In fact, REITs that focus on multi-family residential properties have been some of the best performers in the real estate segment over the past year. The point we want to emphasis is that investors and market watchers should become more alert when markets heat up – and the rental real estate market is certainly heating up. More risk resides in the hot market, because the hot market doesn't stay hot forever. We reported a couple week ago that rents, which have been on a tear the past two years, are already showing signs of slowing. Trulia's data show rents rose 4.7% in August from a year ago, but that growth is lower than the 5.8% year-over-year growth reported in May. We obviously can't say for sure if a bubble is forming in the residential rental market, but we can say the bullish sentiment is starting to sound like the sentiment that prevailed in the single-family purchase market circa 2004. There is another reason we should maintain our perspective on rentals: People still prefer to own their own home, which is why we expect to see sustained growth in the owner-occupied market over the next couple years. Risk aversion is the impediment to more owner-occupied activity. The financial firm Redwood Trust recently issued a private jumbo mortgage-backed security. The security was backed by mortgages with an average FICO score of 771 and a loan-to-value ratio of 67%. Such issues have been the norm in recent years. We'd like to see more investor interest in more speculative mortgage-backed securities. More interest in more speculative issues would indicate more risk taking by investors and a more liquid, more inclusive lending environment. Economic Indicator Release Date and Time Consensus Estimate Analysis Home Builder Index (September) Tues., Sept. 18, 10:00 am, et 37 Index Important. Builder confidence continues to rise on greater sales and building activity. Mortgage Applications Wed., Sept. 19, 7:00 am, et None Important. Purchase applications remain volatile, suggesting choppy near-term sales volumes. Housing Starts (August) Wed., Sept. 19, 8:30 am, et 770,000 (Annualized) Important. Starts continue to move higher and are becoming a bigger contributor to economic growth. Existing Home Sales (August) Wed., Sept. 19, 10:00 am, et 4.6 Million (Annualized) Important.Sales are still trying to establish a sustained trend for 2012. What QE3 Means to Us QE3 sounds like a luxury British ocean liner; it's actually an abbreviation for a third round of quantitative easing, which itself is a euphemism for the Federal Reserve pumping more money into the economy. On Thursday, the Fed said it would implement QE3 in the near future. The mechanics of QE are straightforward: The Fed adds more money to the economy by buying mortgage-backed and U.S. Treasury securities from banks. The securities are paid for with new money the Fed conjures into existence. The Fed's demand for these securities drops the yield on these securities. These lower yields, in turn, are expected to produce lower mortgage lending rates, or at least sustain today's already low rates into the future.  At least that's the theory. The problem is that price inflation fears – due to the new money – can rise. Should investors' inflation fears trump Fed demand for the aforementioned securities, that means mortgage lending rates could actually go up, thus thwarting the Fed's intended outcome. In short, there is no sure thing. Many borrowers are waiting on the sideline, anticipating lower lending rates. We think that's a dangerous game, because even if QE3 lowers lending rates, we doubt they will lower them by a significant margin. On the other side of the coin, rates could easily go higher if investor concern switches to inflation from slow economic growth.

Fed ACTS

Update:   Feds just  authorized  QE 3rd repurchase of mortgage backed securities!!!

All reports indicate action taken to further pump up home sales.  As I have stated and Jim Belote in notes such as that below has stated, housing is a major contributor to our economy....not only house purchases but the complimentary appliance, furniture, lawn and garden purchases(along with hundreds of other impacts upon economy.

So the positive news keeps coming!!  Stock Market soared  200 points(DOW) with financial stocks leading the way.

Keeping you updated on the market! For the week of  September 10, 2012 MARKET RECAP This lead in could be filed under “dog bites man,” because it's something most of us already know. We are referring to recent data from the National Association of Realtors that show the time to sell a home is shrinking. According to the NAR, the time to sell for traditional sellers is back within historic norms: the median time a home was listed fell to 69 days in July, down from 98 days a year earlier. Of course, national numbers often hold little meaning to any particular local market. In fact, the NAR's data range from one-third of the homes were listed for less than a month, while one in five homes was listed for at least six months. The positive takeaway is that more homes in more markets are selling at a quicker pace. What's more, that pace appears to be accelerating. The price of many homes listed for sale is also accelerating. Clear Capital reports that home prices are up 2.9% year over year in August. Clear Capital cites fewer REO properties coming to market due to new borrower-friendly legislation and the $25 billion lenders' settlement with the federal government. That's really only part of the story, though, and gives short sales the short shrift, because many lenders are simply finding it more remunerative to engage in short sales than foreclosure and REO sales. While we are on the subject of sales and prices, Trulia reports that national asking prices on for-sale homes, which precede actual sales prices by two or more months, increased 2.3% year over year in August. Gains were widespread, with 68 of the 100 largest metropolitan areas Trulia follows reporting price increases. Trulia's data are particularly encouraging, because they are a leading indicator of future home sales (where we are going is much more important than where we've been). Therefore, we would be surprised if home-price gains and the housing recovery were not to persist into fall. That said, lending could be the monkey wrench that grinds the recovery gears to a halt. Participation is the issue, and it is akin to the observation “water, water everywhere, but not a drop to drink.” Rates are low, but not enough borrowers are able to take advantage of them. We've mentioned many times over the past year that the issue isn't low lending rates at this point: it's a dearth of borrower-buyers. If only the same people can access credit at these low rates, these low rates become meaningless. A less restrictive lending environment would do much more to accelerate the recovery than historic low rates. Economic Indicator Release Date and Time Consensus Estimate Analysis International Trade (July) Tues., Sept. 11, 8:30 am, et $43.5 Billion (Deficit) Important. A weaker dollar is raising import prices. The trend could stimulate consumer-price inflation. Mortgage Applications Wed., Sept. 12, 7:00 am, et None Important. Purchase applications have again slowed, pointing to lower home-sale volumes. Producer Price Index (August) Thurs., Sept. 13, 8:30 am, et All Goods: 1.6% (Increase) Core: 0.3% (Increase) Important. Food and energy price increases are elevating producer inflation rates. Retail Sales (August) Fri., Sept. 14, 8:30 am, et 0.7% (Increase) Important. More retail sales points to increased economic growth. Is This the Next Bubble? An aspiring home owner who can't buy a home becomes a renter. Today's credit markets have forced many aspiring home owners to become renters. In turn, the rental market has caught fire. By some estimates, there are 2.1 million more single-family homes rented now than in 2006. It's a strong trend. Rents rose nationally 4.7% year over year in August, which builds upon the 5.8% year-over-year rise recorded back in May. In a few markets, Houston and Seattle most notably, rents are up 10% year over year. Buyers of rental homes (many paying with cash) have soaked up much of the inventory, and to be sure, that's a positive. But many of the people renting these properties would have preferred to buy them themselves, but they were precluded from buying because they were unable to secure financing. The market at this point is becoming too skewed toward rentals, which is driving up rents at an abnormally fast rate. This isn't a good thing, because abnormally fast-growing rates aren't sustainable rates. Should rents turn south, many of those investment properties will no longer be sound investments, particularly those bought late into the rising-rent trend. What's more, a neighborhood of rentals isn't as well maintained or holds its value like a neighborhood of owners. A neighborhood of rental homes tends to loose value over time; a neighborhood of owner-occupied homes tends to gain value over time. The point we want to emphasis is that we need a lending environment that encourages more of the latter; that is, more owner-occupied buying. To get that, we need a lending environment that encourages profitable, heterogeneous lending. We simply don't have that today. If you wish to unsubscribe, click on the link below and send the email. If this

Trends Are Great....Why are You just Setting There

Amazing Survey Results!!!

Realtors are surveyed regularly by various groups to get a sense of the market for buyers and sellers.

A recent report by Credit Suisse was quite revealing.   There was not a trend in any factor measured that was lower than 2011.  In fact most factors have steadily improved since November 2011.

This is quite impressive as this is a nationwide survey in the top 45 Markets.  And it is based on the experiences of Realtors in our day to day  interaction with buyers, sellers and prospects.

Here is a summary by factor:

Buyer Trends:  Increase 26.9(factor) to 51 in July 2012, with peaks as high as 63.5.

"Buyer interest remains solid due to the favorable affordability but a lack of inventory is a dray on sales in many markets"

Price Index:  "All time high of 63 in July"
Note:  Reading above 50 indicates higher home prices in past 30 days.

Incentives(closing costs, buydowns, etc):  
Rose from 37.6 August 2011 to 50 in July 2012
(indicating incentive are less prevalent).

"Unchanged in July(from May/June) and likely to fall as demands improve"  

Inventory Levels:  "Inventory levels continued to trend lower in July, as our home listing index rose to 72 from 68 in June, the highest reading since our survey began."

Length of Time to Sell:  "Decrease again in July"...a growing trend since August 2011

Across the board, the market has improved for sellers and become a bit tougher for buyers(improving prices and low inventory).   No doubt every market is not responding the same!  Yet every market is moving forward.

Whether trying to buy or sell, don't let this market past you.  

Buyer:  Rates are unbelievable

Seller:   Buyers are looking for you!

Finally, is your market better

                   or 
        
                      worse than this survey suggests??

Shadow Foreclosures Missing in Action...Inventory Shortage???

THE POSITIVE DRUM BEAT GOES ON!!!


If you have been following this blog for awhile, you have seen the trend in Jim's Mortgage Matters updates.   Foreclosures aren't ramping up due to "shadow inventory" so inventories are actually a bit light...possibly the main cause for home prices improving.
The ole'  rules of supply and demand:  The shortage or amply supply of a "widget" is directly linked to the increasing or decreasing price of that "widget".

	Keeping you updated on the market! For the week of  June 18, 2012 MARKET RECAP Let's call it “the crisis that never was.” We are referring to the mother lode of foreclosures and distressed properties – the shadow inventory – that so many pundits predicted would swamp the real estate market in 2012 and return home prices to a downward trajectory. That's hardly been the case. RealtyTrac reports that servicers started a few more foreclosures in May than in April, but filings were still 4 percent lower than in May 2011. RealtyTrac goes on to tell us that foreclosure activity has decreased 20-straight months based on year-over-year comparisons. Yes, foreclosures are still elevated compared to five years ago, but the market continues to handle them in a rational and orderly manner. Short sales have been an attenuating variable. Banks realize they can make more money treating delinquent mortgages with short sales than repossessions. Better pricing is the key variable to making a short sale the superior option. Why take on a home you have to maintain, manage, and market when improved pricing will naturally draw in buyers? The dearth of inventory (which we discussed last week) is the principal contributor to rising prices. Realtor.com reports that the national inventory of for-sale residential properties is down over 20 percent year-over-year, dropping in 144 of the 146 markets it covers. Over the same period, the median age of inventory has dropped nearly 10 percent, while the median list price has risen over 3 percent. The recent spike in mortgage purchase applications points to even more inventory contraction and/or higher prices as we head into the su mmer months. After holding in lackluster territory for much of the spring season, weekly mortgage applications took a huge 13-percent jump, signaling that the su mmer-selling season might be more brisk than many analysts had expected. What's more, the composition of those buying into the reduced inventory also points to a healthier market. The more owner-occupied buyers who jump into the pool, the better. The data show that many more owner-occupied buyers have jumped into the pool in recent months. Buyers of all stripes continue to benefit from an ultra-low lending rate environment. In past issues, we've discussed at length the benefits of financing real estate in a low-rate, low-price environment. In short, the opportunity costs of cash buying is high when mortgage lending rates are low (and vice versa), because the money allocated to the house could have been allocated to other cash-generating investments. That opportunity cost got a little higher this past week, with rates on most lending products dropping a couple basis points. We don't expect them to move meaningfully higher over the next few weeks. Greece and Spain are still a mess, and now it appears Italy is set to join the fray. That means investors remain risk averse, which means more money flowing into haven securities, including the influential 10-year U.S. Treasury note. That said, it's important to keep in mind that we have a supply-and-demand issue at work. Demand for mortgage products have spiked in recent weeks, which means processing times could rise. Therefore, it's still prudent for borrowers to get their applications in ASAP. The benefit of waiting for a lending rate five or 10 basis points lower than today's market rate can easily be offset by a home whose price rises or is snapped up by another buyer. What's more, even though we expect rates to remain low, rates can (and have) turned on a dime. Economic Indicator Release Date and Time Consensus Estimate Analysis Home Builder Index (June) Mon., June 18, 10:00 am, et 28 Index Important. Increased demand is lifting home-builder optimism. Housing Starts (May) Tues., June 19, 8:30 am, et 725,000 (Annualized) Important. Starts continue to rise off a base that itself has risen over the past six months. Mortgage Applications Wed., June 20, 7:00 am, et None Important. A 13% increase in purchase applications points to pivotal underlying strength in home sales. Existing Home Sales (May) Thurs., June 21, 10:00 am, et 4.6 Million (Annualized) Important. The trend of rising purchase applications suggests the consensus estimate is too low. The Perfect Investment? To be honest, we can't say any investment is the perfect investment (then again, no one can). Personal circumstances and goals determine what investment is most appropriate to any individual investor. Nevertheless, there is a heckuva lot to like about residential real estate these days: prices rising off a bottom, low financing rates, rising rental rates, shrinking inventory. This is almost the opposite of what the market was like six years ago. Back then, most everyone would have been better off selling rather than buying, as hindsight has clearly proven. Of course, there are no guarantees when it comes to investing or price appreciation, but for investors or occupiers who plan to own their property for at least five years, we see little downside risk and a lot of upside potential at this stage in the market. If you wish to unsubscribe, click on the link below and send the email. If this message was forwarded to you, please reply to the sender. Click Here To Unsubscribe EQUAL HOUSING LENDER This Newsletter is for informational purposes only. The information contained herein may not be applicable to every situation or jurisdiction and we urge you to consult your professional advisor prior to acting on information contained herein. The content, accuracy and opinions expressed herein are not verified or endorsed by the sponsor hereof.