Foreclosures are not nearly as prevalent as they were during the housing crisis in 2008. But they are still occurring.

In fact, some states are seeing an uptick in foreclosure starts compared to last year, notably Montana (up 48 percent), Minnesota (up 29 percent), Nebraska (up 28 percent), Texas (up 15 percent), and Florida (up 13 percent), according to a year-end foreclosure report released recently by ATTOM Data Solutions, a real estate data firm.

A foreclosure start is the first public notice, such as a notice of default. During the housing crisis, investors were drawn to foreclosures for their often lower prices.

First-time buyers who are looking for a bargain may be drawn to a foreclosed property as well. Sixty-seven percent of millennial home shoppers who participated in a recent Clever Real Estate survey said they’d put in an offer on a property in need of major repairs.

Several counties across the country are seeing an increase in foreclosure starts. ATTOM researchers broke the numbers down by looking at counties with populations of more than 100,000 that had the greatest number of foreclosure starts.

Cook County, Ill., is seeing the largest increase in the nation—the area saw a total of 800 properties start the foreclosure process in January 2019, according to ATTOM’s research.

The following are the top 20 counties with the most foreclosure starts, as of January 2019:

Cook, Illinois

Harris, Texas

Maricopa, Ariz.

Los Angeles, Calif.

Suffolk, N.Y.

Broward, Fla.

Miami-Dade, Fla.

Baltimore City, Md.

Prince George’s County, Md.

Philadelphia, Pa.

Riverside, Calif.

Clark, Nev.

Cuyahoga, Ohio

San Bernardino, Calif.

Palm Beach, Fla.

Duval, Fla.

San Diego, Calif.

Dallas, Texas

Tarrant, Texas

Wayne, Mich.

Source: “Top 20 Counties With the Most Foreclosure Starts,” ATTOM Data Solutions (Feb. 22, 2019

Pending home sales rebounded strongly in January, according to the National Association of Realtors^® (NAR). All four major regions saw month-to-month growth last month, including the largest surge in the South, an area that includes Florida.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 4.6 percent to 103.2 in January, up from 98.7 in December. Year-over-year contract signings, however, declined 2.3 percent, making January the thirteenth straight month of annual decreases.

Lawrence Yun, NAR chief economist, says he expected an increase in January home sales because a “change in Federal Reserve policy and the reopening of the government were very beneficial to the market.”

Of the four major regions, three areas experienced a decline in a year-to-year comparison, however. Only the Northeast enjoyed a slight growth spurt.

Yun says higher rates discouraged many would-be buyers in 2018. “Homebuyers are now returning and taking advantage of lower interest rates, while a boost in inventory is also providing more choices for consumers.”

Additionally, Yun says the inventory of for-sale homes has risen, which bodes well for increased pending sales going forward, and positive pending home sales figures in January will likely continue.

“Income is rising faster than home prices in many areas and mortgage rates look to remain steady,” he says.” Furthermore, job creation will help lift home buying.”

January pending home sales regional breakdown

In 2019, Yun forecasts existing-home sales will be around 5.28 million – down 1.1 percent from 2018 (5.34 million). The national median existing-home price this year is expected to increase around 2.2 percent. In 2018, existing sales declined 3.1 percent and prices rose 4.9 percent.

Pending sales in the Northeast rose 1.6 percent to 94.0 in January and are now 7.6 percent above a year ago. In the Midwest, the index rose 2.8 percent to 100.2 in January – 0.3 percent lower than January 2018.

Pending home sales in the South jumped 8.9 percent to an index of 119.8 in January, which is 3.1 percent lower than this time last year. The index in the West increased 0.3 percent in January to 87.3 and fell 10.1 percent below a year ago.

© 2019 Florida Realtors®

A study of 50,000 home inspections by Repair Pricer – a company that estimates repair costs for items cited in home inspection reports – found that some repair costs tend to appear more often.

Nearly 55 percent of home inspections nationally cited doors that needed adjusting, for example; and 54 percent lacked exterior caulking and sealant, which could leave the home susceptible to extensive water damage. And about 48 percent of homes lacked GFCI protection to minimize the risk of electrocution in areas like the kitchen or bathroom.

The most expensive home defects ranged in repair prices from slightly more than $1,000 to less than $10,000:

Top 10 common home defects – percentage of homes – price to repair

1. Doors need adjusting/servicing: 54.9% of reports – $254 to repair
2. Faucets and heads need servicing: 54.8% of reports – $273 to repair
3. Exterior caulking/sealant missing: 54.5% of reports – $310 to repair
4. Outlets or switches with deficiencies: 53.7% of reports – $248 to repair
5. No GFCI protection: 48.0% of reports – $433 to repair
6. Absence of or defective smoke alarms: 45.06% of reports – $378 to repair
7. Cosmetic sheetrock cracks or nail pops: 45.02% of reports – $545 to repair
8. Fixtures and/or bulb deficiencies: 40.5% of reports – $209 to repair
9. Caulking, grout and sealer are missing interior: 33.9% of reports – $353 to repair
10. Service panel deficiencies: 33.7% of reports – $298 to repair

While expensive repairs are less common, one in 10 inspections cite a roof nearing the end of its useful life as the most expensive common repair generally noted. However, one in five reports find a problem with window seals, which can cost over $1,000 to repair

5 most expensive repairs found – percentage of homes – price to repair

1. Roof nearing end of its serviceable life: 9.6% of reports – $9,948 to repair
2. Coil and condenser at end of serviceable life: 10.7% of reports – $5,818 to repair
3. Heating unit exceeded serviceable life: 10% of reports – $3,798 to repair
4. Water heater may need replaced: 10% of reports – $1,259 to repair
5. Window seals failed or fogged: 20.8% of reports – $1,026 to repair

What should buyers do with inspection report information?

Repair Pricer says buyers’ first instinct is often to ask sellers to make repairs, but “this tactic can frequently backfire. Even if the seller agrees … they’re under no obligation to implement quality repairs and frequently execute the cheapest option or fix, potentially leaving the buyer with substandard work, no transferable warranty and no recourse.”

Seller repairs can also give buyers a “false sense of security, believing their agents have negotiated and built a home warranty into their contracts.”

The best tactic, according to Home Repair, is to ask the seller for a repair credit if appropriate under the contract, and hire a contractor after closing to complete the repairs to the buyer’s standards – not the seller’s.

© 2019 Florida Realtors®

 

San Francisco Federal Reserve President Mary Daly says there is a good chance the U.S. central bank will not raise interest rates at all in 2019, even though many outside pundits still predict one to two increases this year.

“If the economy evolves as I just said I expect it to – 2 percent growth, 1.9 percent inflation, no sense that [price pressures are] going up, no sense that we have any acceleration – then I think the case for a rate increase isn’t there,” Daly said.

Daly isn’t quite ready to commit to her “no interest rate hike” prediction just yet or make a formal call, however.

Fed officials will offer updated rate projections at their March 19-20 meeting, and Daly says she will use the time between now and then to make an assessment.

Other economists still expect a potential rate increase by year’s end. Philadelphia Fed leader Patrick Harker says he predicts one hike this year and another in 2020.

Source: Wall Street Journal (02/15/19) Derby, Michael S

Builder confidence in the market for newly-built single-family homes rose four points to 62 in February, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released in Las Vegas during the 75th annual International Builders’ Show.

“Ongoing reductions in mortgage rates in recent weeks coupled with continued strength in the job market are helping to fuel builder sentiment,” says NAHB Chairman Randy Noel. “In the aftermath of the fall slowdown, many builders are reporting positive expectations for the spring selling season.”

February marked the second consecutive month in which all HMI indices posted gains. The index measuring current sales conditions rose three points to 67, the component gauging expectations in the next six months increased five points to 68, and the metric charting buyer traffic moved up four points to 48.

“The five-point jump on the six-month sales expectation for the HMI is due to mortgage interest rates dropping from about 5 percent in November to 4.4 percent this week,” says NAHB Chief Economist Robert Dietz. “However, affordability remains a critical issue. Rising costs stemming from excessive regulations, a dearth of buildable lots, a persistent labor shortage and tariffs on lumber and other key building materials continue to make it increasingly difficult to produce housing at affordable price points.”

Looking at the three-month moving averages for regional HMI scores, the South posted a one-point gain to 63 while the Northeast dropped two points to 43. The Midwest and West each remained unchanged at 52 and 67, respectively.

Derived from a monthly survey NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

© 2019 Florida Realtors®

First-time buyer surveys consistently show the top hurdle to homeownership is saving up for the downpayment. But potential home shoppers may be misunderstanding the amount of money they really need to buy a home.

“Paying 20 percent down is, quite frankly, a myth,” Karen Hoskins, vice president at NeighborWorks, told HouseLogic. “Most buyers pay only 5 percent to 10 percent down – some even pay zero.”

Several assistance programs can help buyers with downpayment concerns break into homeownership. For example, 69 percent of about 2,500 homebuying programs tracked by Downpayment Resource offer downpayment assistance. The average amount of assistance from these programs tops $11,000.

HouseLogic offers several places where buyers can search for downpayment assistance, including through national government programs. The Federal Housing Administration offers loans to first-time buyers with downpayments as low as 3.5 percent. Programs like the USDA Rural Development Loans and VA Home Loans offer eligible buyers zero-downpayment loans.

Mortgage financing giants Fannie Mae and Freddie Mac offer eligible buyers loans where they can put down as little as 3 percent of the purchase price. When buyers put down less than 20 percent, they pay private mortgage insurance (PMI) each month to protect the lender’s interest, though the PMI can often be cancelled once they build up 20 percent equity in the property.

Many state and local homebuying programs offer assistance programs too. There are many different forms of assistance, such as forgivable loans and grants (gifts for some or all of the downpayment and closing costs) to soft mortgages (downpayment assistance loans that are deferred for some period of time based on the program’s requirements).

Mortgage brokers should also be able to supply buyers with information about programs in their area and help determine eligibility.

© 2019 Florida Realtors®

On March 4, the Florida Housing Finance Corporation (Florida Housing)will relaunch the Florida Hardest-Hit Fund Down Payment Assistance Program (HHF-DPA) in five approved counties.

This federal program was originally implemented to prevent foreclosures by stimulating home purchase activity and stabilizing neighborhoods in certain counties that demonstrated high levels on housing market distress.

HHF-DPA provides up to $15,000 in down payment and closing cost assistance to eligible first-time homebuyers and is forgivable over five years. Florida Housing has successfully disbursed 100 percent of the over $1 billion in HHF program funds allocated by the U.S. Department of Treasury two years ahead of schedule and is now using approximately $20 million in repayments of HHF program loans to assist additional Floridians.

Previously, HHF-DPA was available in 11 Florida counties. For the relaunch, Florida Housing used the latest market data to conduct a Treasury-mandated assessment of lingering negative effects in local housing markets. Based on this assessment, Florida Housing will assist eligible first-time homebuyers in Clay, Duval, Hillsborough, Osceola and Pasco counties.

“Statistics show that foreclosures have drastically decreased in Florida and that our state has recovered from the housing crisis,” said Trey Price, executive director of Florida Housing. “This funding will further assist with the continued stabilization of recovering, distressed neighborhoods.”

As of Jan. 31, 52,742 Florida families have received assistance through HHF programs and more than 20,000 received down payment and closing cost assistance through HHF-DPA. It is estimated that approximately 1,500 eligible first-time homebuyers will be assisted with this additional funding.

First announced on Feb. 19, 2010, by the U.S. Department of the Treasury, the Housing Finance Agency (HFA) Innovation Fund for the Hardest-Hit Housing Markets (HFA Hardest-Hit Fund) provides federal funding to states hardest hit by the aftermath of the burst of the housing bubble. Funding was allocated to 18 states and the District of Columbia.

Florida Housing was created by the Legislature more than 35 years ago. It’s the state’s housing finance agency (HFA) that administers state and federal resources to help provide affordable homeownership and rental housing options for the citizens of Florida. For more information, visit floridahousing.org.

© Copyright © 2019, Highlands News-Sun, Karen Clogston. All Rights Reserved.

Some housing experts argue that the housing market isn’t heading toward another bust – it’s still feeling the impact of the last one.

Instead of an oversupply of homes, they stress that not enough homes are being built, and that’s pushing prices up to levels that exclude many Americans from homeownership.

“We are underhoused,” says Zillow senior economist Aaron Terrazas.

Among other things, the home shortage is aggravated by low unemployment, which is making it hard to hire construction workers, and not-in-my-backyard zoning rules exacerbate the issue of an already small pool of construction-ready lots.

Tight supply and a subsequent boost in home prices have made homeownership out of reach in some cities, like Manhattan, where the median condo price has hit about $1 million. Even outside of the United States, there has not been much speculative building, says UBS Global Wealth Management’s Jonathan Woloshin.

“Nobody asked the question back during the bubble, ‘What would happen if prices went down?’” Woloshin says. “Better questions are being asked today.”

Dangerous practices like no-documentation loans have been ended through tighter regulation, making it harder for people to buy houses. However, only 1 percent of lenders surveyed recently by Fannie Mae blamed tight standards for credit and underwriting for the weakness in sales – 48 percent cited “insufficient supply.”

Source: Bloomberg BusinessWeek (02/11/19) Coy, Peter

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