As the Federal Housing Administration (FHA) currently holds a negative equity position of $16.3 billion with a capital reserve ratio of -1.44 percent, Congress called on industry experts to discuss FHA’s role in the housing market and possible reforms for the future. The hearing took place Wednesday morning before the House Financial Services Committee.

The overall sentiment from witnesses was that the FHA as it stands is flawed and in need of reform.

When Rep. Lynn Westmoreland (R-Georgia) posed the question of whether FHA would be permitted to function in the private market, Edward Pinto, resident fellow at the American Enterprise Institute, was quick to respond, “Without government guarantee, FHA would be shut down by every state in the country based on capital requirements.”

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Metro Detroit continued to help lead a six-month recovery in nationwide housing prices with nearly a 12 percent increase in November from a year ago, a leading home price report showed Tuesday.

The Detroit area's 11.9 percent price growth was the third highest in the nation in November, when the 20-city home price index rose 5.5 percent, according to the Standard & Poor's/Case-Shiller index. This marked the largest year-over-year gain in six years — just before the mortgage crisis hit and housing bubble burst.

"Housing is clearly recovering," said David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices. "… These figures confirm that housing is contributing to economic growth."

One analyst was more emphatic.

"We expect this housing recovery to continue in the coming years," said Michael Gapen, an economist at Barclays Capital

Even with the federal tax increases that have taken effect this year, housing seems poised to do well in 2013, said Comerica Bank Chief Economist Robert Dye.

"Housing markets have some very specific positive factors in place, namely low and improving prices, low interest rates and lots of pent-up demand," Dye said in an email this month.



From The Detroit News: http://www.detroitnews.com/article/20130130/BIZ/301300324#ixzz2JesByqzR

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

The housing recovery is nearly halfway complete, according to Trulia’s Housing Barometer, which in October posted its largest increase since it began tracking recovery 18 months ago.

Trulia monitors delinquency and foreclosure rates, existing home sales, and construction starts and compares them with their worst points during the housing crisis and their normal pre-bubble levels. All three indicators showed improvement in October.

Delinquency and foreclosure rates declined to 10.64 percent in October, falling from 11.27 percent in September and 11.88 percent a year ago.

Home sales volume and prices are poised to keep improving over the next two years, outpacing growth in the broader economy, but look for moderate inflation to appear starting in 2015, making it harder for today’s renters to become home owners, NAR Chief Economist Lawrence Yun told thousands of REALTORS® Friday in a residential economic update at the REALTORS® Conference & Expo in Orlando.

Yun is forecasting 4.64 million home sales this year, 5.05 million next year, and 5.3 million in 2014. Home price appreciation will see a similar positive upward trend, with the median existing-home price reaching $176,000 at the end of this year, $185,000 next year, and $195,000 in 2014. By 2015, the national median home price is expected to have risen by 15 percent from today’s level.

Contributing to the growth are the slowly improving economy, job creation, and an increase in household formation after a hiatus during the downturn, Yun said.

Rising rental rates are also contributing, as renters who are able to get financing in today’s tight credit market find it makes more financial sense to buy while home prices remain relatively affordable.

But inflation could pose a problem starting two years down the road, Yun said. Although inflation has remained tame today—at about 2 percent per year—starting in 2015 it could jump to between 4 and 6 percent a year. That will be a short-term boon to home owners, as they enjoy an increase in price appreciation, but that would make home ownership harder for the growing number of renters today who aspire to buy. Not only would prices rise, but mortgage rates would go up as well.

The continuing federal deficit is a big reason inflation could jump in the future. But another cause might be the Federal Reserve buying mortgage-backed securities to help keep rates low. At some point soon, the Fed will have to start unwinding its position. When it does, interest rates and inflation will rise. Rental rates are expected to keep heading up as well, and that’s the biggest part of the Consumer Price Index.

Real estate investors nowadays aren't much of a high roller. They are more of a working stiff with a small-business, eyeing on existing non-real estate investments to pay for a reasonably-priced real estate properties.

One must be really good of an agent if one wishes to work with these types of investors, which are likely to be casually dressed. Most often, they are pushing on hard bargains and offer full cash or high down payments on their chosen properties.

More fresh investors prefer to spend their kid’s college funds to buy properties and by time the kids are in for college, they can sell some of them to pay for college.

Others choose to trade in two-, three- and four-plexes for single-family homes (SFH), which are priced at half their price when the market strengthens.

Since investors doubt their money’s capacity to grow when put up to money market funds, stocks and other conventional investments nowadays, they are getting off the banks’ fences.

Section 8 housing’s guaranteed rental income is also favored by investors as a business in making money.

Meeting the demands of these tough investors can be done by having the vigor and know-how, thus giving off great service.

A real estate agent’s job is more than writing a contract and getting the deal closed. It always involves going the distance as he takes the lead for their investments and continuing to help in turning the purchase into a real money maker, by making repairs by affordable contractors, even after the closing of escrow.

A steady drop in distressed home sales may spell a better future for builders, Capital Economics analyst and property economist Paul Diggle says.

In a US Housing Market Update released by the firm, Diggle notes that while “a substantial overhang of properties still in the shadow inventory” will keep distressed sellers in the market, the peak in distressed supply appears to be well behind us, giving homebuilders more room to grow with less competition from discounted existing homes.

“The continued drop in the supply of distressed homes on the market is encouraging homebuilders to break ground on more sites,” Diggle said.

Distressed sales made up 22 percent of all sales in September, down from 33 percent at the start of 2012, the update says. Furthermore, September’s share of distressed sales is the lowest reading in the five-year history of the data.

Two Texas cities are high up on a list of the most expensive cities in America for moderate-income families, according to a joint study released this month.

Houston ranked ninth and Dallas 11th among 25 major metropolitan areas in the country where housing and transportation costs make up significant portions of the expenses for those families, according to the report, "Losing Ground: The Struggle of Moderate-Income Households to Afford the Rising Cost of Housing and Transportation," conducted by the Center for Housing Policy and the Center for Neighborhood Technology.

Income brackets for each metro area were established for the purposes of the study and ranged from $28,944 to $57,888 for the Houston metro and $29,528 to $59,056 for the Dallas metro, according to the report.

According to the study, transportation costs, coupled with rent or mortgage payments and utilities, accounted for an average of about 60 percent of household budgets in both Houston and Dallas. That’s 12 percent less than the Miami metro, which topped the list, and 9 percent more than the Washington, D.C., area, which took the No. 25 spot.

While Barack Obama and Mitt Romney may have been “frustratingly light on detail” so far with regards to housing, an analysis by Capital Economics reveals the two candidates’ policies may have more in common than they care to admit.

In a Housing Market Update released by the company, property economist Paul Diggle writes that, based on the information Capital Economics has pieced together, “it looks like anyone expecting either candidates’ housing plan to make a dramatic difference to the course of the housing recovery will be disappointed.”

When it comes to the continuation of current housing policies, both President Obama and Governor Romney largely agree. For one thing, both candidates support selling off government-owned REOs to investors, a process that has already been tested to some success. Both favor the greater use of foreclosure alternatives, promoting a shift toward short sales and deeds in lieu of foreclosure. And both share at least a small section of common ground with regards to principal reductions.

“Obama supports outright principal reductions on underwater mortgages owned or guaranteed by Fannie Mae and Freddie Mac in an attempt to reduce the delinquency rate. Romney, meanwhile, gave a brief supportive mentioned to shared appreciation-whereby lenders forgive borrowers some of their outstanding mortgage balance in exchange for a share of future house price gains-in his housing plan,” Diggle said.