Homebuyers becoming more confident in increasing home prices

Homebuyers becoming more confident in increasing home prices
The Federal Savings Bank
December, 2012

Redfin, a technology-powered real estate broker, recently reported that more homebuyers are becoming confident in the increasing home prices around the country.

The virtual real broker released its latest survey of homebuyers with data collected from November 30 to December 2, including 1,084 active homebuyers across 18 markets.

The survey showed that 71 percent of homebuyers believe home prices will continue increasing in their neighborhoods over the next year, which is a 10 percent increase from the last quarter. The 71 percent is also double the 34 percent who expected for prices to rise in the first quarter.

Steven DiGregorio, president of Compass Asset Management Group, recently spoke to TheHour.com and gave tips for homebuyers in 2013.

According to DiGregorio, before putting an offer down on a home, first-time homebuyers need to make sure they check their credit to make sure their credit history is as clean as possible. He also suggested that potential buyers purchase what's best for them instead of purchasing something that is too small or large.

Freddie Mac projects continued housing growth in December

Freddie Mac projects continued housing growth in December
The Federal Savings Bank
December, 2012

Freddie Mac recently released its U.S. Economic Housing Market Outlook for December, showing long-term mortgage rates will remain near record lows for the first half of 2013.

The report also showed that property values will continue to increase with the housing price index likely jumping by 2-3 percent in 2013.

"The last few months have brought a spate of favorable news on the U.S. housing market with construction up, more home sales, and home-value growth turning positive," said Frank Nothaft, Freddie Mac vice president and chief economist. "This has been a big change from a year ago, when some analysts worried that the looming 'shadow inventory' would keep the housing sector mired in an economic depression. Instead, the housing market is healing, is contributing positively to GDP and is returning to its traditional role of supporting the economic recovery."

Foreclosures have also decreased recently, signaling a recovery in the housing market. The number of homes in foreclosure dropped in October from the previous month and was down 9 percent from October 2011, which might encourage more first-time home buyers to take a chance on the improving market.

Consumer attitudes improving toward housing market

Consumer attitudes improving toward housing market

The Federal Savings Bank

Chicago, IL - December, 2012

The housing market has continued to show improvements over the past several months, with home prices increasing across the country and foreclosures decreasing. Now, Fannie Mae's November 2012 National Housing Survey shows that there is improving consumer attitudes toward the housing market.

The improvements that have been shown in the survey could push the housing market toward further recovery over the next few years, which would support overall economic growth.

The results show that there has been significant movement across many of the indicators in the housing market. According to respondents, now is a better time to sell a home, with the number of Americans agreeing increasing by 5 percentage points in November to 23 percent.

"Consumer attitudes toward both the economy and the housing market continue to gather momentum, with many of our 11 key National Housing Survey indicators at or near their two-and-a-half-year highs," said Doug Duncan, senior vice president and chief economist of Fannie Mae. "On the housing front, attitudes about the current selling environment continue to improve, with a significant increase in those saying it would be a good time to sell. This growing confidence in a housing recovery, in addition to other factors, may reinforce growing consumer optimism regarding the improving direction of the general economy."

More Americans believe economy's on the right track
Duncan added that consumers who believe that the economy is on the right track toward recovery increased to 44 percent while consumers who said it's on the wrong track has decreased to 50 percent, which is the smallest gap since the survey was created in June of 2010. The survey also showed that the percentage of respondents who expect mortgage rates to increase jumped 4 percentage points to 14 percent.

According to Corelogic, prices for homes declined by 0.2 percent from September to October, which was the second drop after six straight months of increases. Even though home prices declined month-over-month, they showed increases on a year-over-year basis, jumping by 6.3 percent in October. The largest increases in home prices were seen in Arizona and Hawaii, which reported a 21.3 and 13.2 percent rise, respectively.

Considering the housing market is beginning to show more consistent improvements, more first-time home buyers may consider it a perfect time to secure financing for the home of their choice.

The ins and outs of credit scores

The Federal Savings Bank

December, 2012

With the holiday season quickly approaching, many Americans are looking to purchase presents for their loved ones, but also keep their credit score in the best condition. Considering the number of Americans who will use their credit cards during the holiday season, financial advisors are giving consumers keys to understanding their credit scores and methods of keeping them intact in case they want to make a new home purchase in 2013.

Banks and other financial institutions have been using FICO scores for years in order to determine how much of a risk borrowers are. FICO scores, named after the company that created it, Fair Isaac & Company, typically range between 300 and 850, with 300 being the lowest and 850 being the highest.

Close to 60 percent of people have credit scores of 700 and above and credit experts suggest that a 720 or above is the best score to have to be attractive to lenders because it would place them in the same category as people with a score of 800 or 820.

Ray Martin, financial expert, recently broke down exactly how a FICO score is determined, stating that 35 percent of the score depends on payment history, 30 percent depends on amount owed, 15 percent on length of credit history, 10 percent on new credit and another 10 percent on types of credit in use.

"Opening several new credit accounts in a short period of time can lower your credit score," Martin added. "Also multiple credit report inquiries can represent a greater risk, but this does not include any requests made by you, an employer or by a lender who does so when sending you an unsolicited, "pre-approved" credit offer. Also, to compensate for rate shopping, the score counts multiple inquiries in any 14-day period as just one inquiry."

Keeping a close watch on credit scores
With the number of Americans expected to use their credit cards for presents on the holidays, representatives from FreeCreditScore.com encouraged consumers to also be cautious of identity thieves while also keeping an eye on their own credit score.

"Understanding how shopping behavior can affect credit scores during the holiday season leads to better buying decisions," said Ken Chaplin, senior vice president of marketing for freecreditscore.com. "We offer a variety of articles and tools on freecreditscore.com that help educate people about credit information, which can help holiday shoppers stay on the financial 'nice' list this year."

Number of mortgage applications increases

The Federal Savings Bank
December, 2012

CHICAGO (The Federal Savings Bank) - According to data from the Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ending November 30, mortgage applications increased from one week earlier.

The statistics include an adjustment for the Thanksgiving holiday, showing that the housing market is continuing to make considerable strides toward a recovery. The Market Composite Index, which is a measure of mortgage loan application volume, jumped 4.5 percent on a seasonally adjusted basis from a week earlier while the index increased 49 percent compared to the previous week on an unadjusted basis.

The refinance share of mortgage activity also increased, to 83 percent of total applications from 81 percent the previous week, while the HARP share of refinance applications was boosted from 26 percent the previous week to 27.

Mortgage interest deduction
More homeowners are also now beginning to take advantage of the mortgage interest deduction, which is one of the most popular provisions of the tax code. Even though the number of Americans taking advantage of the deduction is increasing, the Internal Revenue Service reported that only a quarter of tax filers claim it.

"This is going to have an impact on the real estate market, especially as we're just coming out of a recession," said Mark Feinroth, a lobbyist for the Maryland Association of Realtors. "It's a particularly bad time to bloody the nose of the home industry again."

Americans who use the deductions vary across the country, ranging from a high of 37 percent of taxpayers in Maryland to as low as 15 percent in North Dakota and West Virginia, according to a USA Today analysis of IRS data.

The government is now dealing with what some are calling a possible 'fiscal cliff,' which will occur at the end of the year once tax cuts that were imposed under former President George W. Bush expire. Mortgage interest deductions are part of the deal that government leaders are attempting to settle on, and is a major issue as a result of the deduction costing the treasury $108 billion a year.

Although there is uncertainty with the current state of the housing market, prices are still at historically low rates, which should encourage first-time home buyers to consider purchasing the home of their choice.

Home price index increases for eighth straight month

The Federal Savings Bank

December, 2012

CoreLogic, one of the leading providers of information, analytics and business services, recently released its October CoreLogic Home Price Index report, showing home prices have increased nationwide on a year-over-year basis.

The home prices that increased in October included distressed sales, jumping by 6.3 percent when compared to October 2011, representing the largest increase since June 2006 and the eighth straight increase in home prices on a year-over-year basis.

“The housing recovery that started earlier in 2012 continues to gain momentum ,” said Mark Fleming, chief economist for CoreLogic. “The recovery is geographically broad-based with almost all markets experiencing some appreciation. Sand and energy states continue to experience the most robust appreciation and some judicial foreclosure states are even recording increasing prices.”

On a month-over-month basis, home prices were down by 0.2 percent in October compared to September.

More declines are expected month-over-month in home prices as the housing market enters the offseason, and many potential home buyers put off finding a house until the spring.

“We are seeing an ongoing strengthening of the residential housing market,” said Anand Nallathambi, president and CEO of CoreLogic. “Reduced inventories and improving buyer demand are contributing to stability and growth in home prices which is essential to the long term health of the housing market and the broader economy.”

Housing prices are expected to continue increasing on a year-over-year basis, with November expected to come in at a 7.4 percent increase from November 2011, also increasing by 0.5 percent month-over-month.

The five states that had the highest home price appreciation were Arizona, Hawaii, Idaho, Nevada and North Dakota. The states with the greatest home depreciation were Illinois, Delaware, Rhode Island, New Jersey and Alabama.

Construction spending increase
Construction spending is also increasing across the country, which could encourage first-time home buyers to dive into the market for a newly remodeled house. According to the Commerce Department, construction spending increased by 1.4 percent in October, which was the largest gain since a jump of 1.7 percent in May.

The increase brought construction spending to a seasonally adjusted annual rate of $872.1 billion, which is 17 percent higher than a 12-year low that was reported in February.

Here are your most common questions:

- What if I don't have a big down payment ?

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- How do I select the right Realtor?

- How to write a strong purchase offer?

- What does Pre-Approved mean?!