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Nov - Dec 2014

News In Brief

Nov - Dec 2014 - NWREporter

    •  Consumers' optimism toward the housing market showed a slight rebound, with more people saying it's a good time to buy or sell a home, according to Fannie Mae's September 2014 National Housing Survey, based on about 1,000 Americans' attitudes on the housing market. The share of consumers who say now is a good time to purchase a home rose to 68 percent in September, a four percentage point increase from August. Also, the share of Americans who said they'd prefer to buy a home on their next move rose to 66 percent, following a three-point drop the previous month. The percentage of those who reported now is a good time to sell grew to 39 percent. Those surveyed also were more upbeat about home prices rising in the next 12 months, with expectations of price gains of 2.2 percent, on average. Consumers also showed greater optimism toward the overall economy, with 40 percent now saying the economy is on the right track, posting a five percentage gain from the previous month.
    • Tight mortgage lending standards continue to affect sales for single-family builders across the nation, according to a survey released by the National Association of Home Builders (NAHB). Well over half of the single-family builders surveyed indicated that lending standards were "tight" or "very tight," while only 11 percent indicated that standards were "somewhat easy" and no builders described them as "very easy." "While housing has seen some positive growth throughout the year, there is no denying that tight credit conditions are hindering a full, healthy housing recovery," said David Crowe, NAHB chief economist. "These persistently tight mortgage credit standards continue to limit the number of creditworthy borrowers, particularly younger families and first-time homebuyers, from entering the housing market." The survey also asked builders if they had lost any sales over the last six months due to buyers not qualifying for a mortgage. Eighty-three percent answered "yes," and of these, the average share of sales lost was 9.7 percent. NAHB estimates that this 9.7 percent translates to 18,700 new-home sales lost because buyers were unable to qualify for mortgages.
    • Upgrading a home's landscape from average to excellent can raise its overall value by 10 percent to 12 percent, according to research from the University of Washington and Virginia Tech. One UW study revealed properties with mature trees showed an average price increase of 7 percent. Street trees appear to add value even to adjacent properties, up to 100 feet away. Greater increments of value are seen for tree planting and landscape improvements in lower-quality neighborhoods. Alex X. Niemiera with the Department of Horticulture at Virginia Tech found that a $150,000 home with no landscaping could fetch an additional $8,300 to $19,000 by adding a landscape with color and large plants. The value of landscaping differed greatly from state to state. "The most preferred landscape included a sophisticated design with large deciduous, evergreen, and annual color plants and colored hardscape," Niemiera said. He added that different plant sizes to a front yard, for example, can boost curb appeal, as well as mixing fruit trees and flowers for added color. "Survey results showed that relatively large landscape expenditures significantly increase perceived home value and will result in a higher selling price than homes with a minimal landscape," Niemiera wrote. "The resulting increase in curb appeal of the property may also help differentiate a home in a subdivision where house styles are similar and thereby attract potential buyers into a home. This advantage is especially important in a competitive housing market."
    • Consumer mortgages could become cheaper as a result of a new rule federal regulators have put in place, as reported by Tom Kelly on mynorthwest.com. The Federal Deposit Insurance Corporation is the first of six financial regulators to release the final version of the long-awaited qualified residential mortgage (QRM) rule, which stems from the big 2010 banking reform bill the federal government enacted after the financial crisis. According to Bloomberg News, the rule compels banks to retain 5 percent of the loans where borrowers spend more than 43 percent of their monthly income to repay debt. The clause replaced the original demand for larger borrower down payments. Regulators passed the rule in response to a surge in subprime mortgage defaults in 2006 and 2007, which spurred the worst financial crisis since the Great Depression. Lawmakers concluded that lenders would be less likely to issue mortgages and securities that would blow up if they had to absorb some of the losses."Importantly, the final rule relies on sound and responsible underwriting rather than on an onerous down payment requirement to qualify as a QRM loan," said Steve Brown, president of the National Association of REALTORS┬«. The rule takes effect in 12 months. That will give lenders time to align their internal processing systems with the requirements.