Posts Tagged ‘Mortgage loan’

The number of people who signed contracts to buy homes fell sharply in April, 7-month low …

Contracts to buy homes fall to a 7-month low
May 27, 2011, 11:11 a.m. EDT
Associated Press

Journal By Calvin Lee Ledsome Sr.,

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WASHINGTON (AP) — The number of people who signed contracts to buy homes fell sharply in April, hitting its lowest point since fall and renewing fears that a recovery in the housing market is far off.

An index of sales agreements for previously occupied homes sank 11.6 percent last month to a reading of 81.9, the National Association of Realtors said Friday.

A reading of 100 would be considered healthy.

The last time the index reached at least 100 was in April 2010.

That was the final month when people could qualify for a home-buying tax credit of up to $8,000.

Signings are still nearly 8 percent above June’s reading of 75.9, the lowest figure since the housing bust.

Contract signings are considered a reliable indicator of the housing market’s direction. That’s because there’s usually a one- to two-month lag between a sales contract and a completed deal.

But the Realtors group has noted a larger-than-usual number of contract cancellations in recent months. Some buyers have canceled purchases after appraisals showed that the homes were worth less than the buyers’ initial bids. A sale isn’t final until a mortgage is closed.

There “appears to have been a sudden arrest in willingness to commit to a home purchase,” said Pierre Ellis, a senior economist at Decision Economics.

“April sale closings came in noticeably less strong than March contract signings — hinting at mortgage problems,” Ellis said.

The Realtors group said Friday’s report “implies a slower-than-expected market recovery in upcoming months,” in light of rising oil prices, severe weather across the Midwest and South and a rise in applications for unemployment benefits.

Some analysts noted that recent natural disasters are causing a slowdown in construction. They point to the flooding Mississippi River, which has devastated homes and farmlands and closed factories; the tornado in Joplin, Mo., which has killed at least 132 people; and a tornado outbreak in April, which caused an estimated $8 billion in damage in Alabama and six other Southern states.

The Realtors index showed that contract signings were uneven across the country: They rose 1.7 percent in the Northeast but dropped 8.9 percent in the West, 10.4 percent in the Midwest and 17.2 percent in the South.

High unemployment, tighter credit and a lingering fear that home prices have yet to hit bottom are preventing many Americans from buying homes. That’s true despite super-low mortgage rates and home prices that are falling in some areas to their lowest points in a decade.

Overhanging the entire housing sector are waves of foreclosures. They are forcing down home prices.

Economists say it could be several years before the nation’s housing market recovers. Sales of previously occupied homes fell last year to their lowest level in 13 years.

This year is shaping up to be equally bleak. The number of purchases is running at just half the pace of 1963 — even though there are 120 million more people in the United States now.

A reading of 100 indicates the average level of sales activity in 2001, when the index was created. The reading exceeded the 100 threshold from March 2003 to April 2007, before sinking as the country fell into a deep recession.


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Underwater mortgages rise as home prices fall

Underwater mortgages rise as home prices fall
March 8, 2011, 2:35 p.m. EST
Associated Press
Article Posted by Calvin Lee Ledsome Sr.,

WASHINGTON (AP) — The number of Americans who owe more on their mortgages than their homes are worth rose at the end of last year, preventing many people from selling their homes in an already weak housing market.

About 11.1 million households, or 23.1 percent of all mortgaged homes, were underwater in the October-December quarter, according to report released Tuesday by housing data firm CoreLogic. That’s up from 22.5 percent, or 10.8 million households, in the July-September quarter.

The number of underwater mortgages had fallen in the previous three quarters. But that was mostly because more homes had fallen into foreclosure.

Underwater mortgages typically rise when home prices fall. Home prices in December hit their lowest point since the housing bust in 11 of 20 major U.S. metro areas. In a healthy housing market, about 5 percent of homeowners are underwater.

Roughly two-thirds of homeowners in Nevada with a mortgage had negative home equity, the worst in the country. Arizona, Florida, Michigan and California were next, with up to 50 percent of homeowners with mortgages in those states underwater.

Oklahoma had the smallest percentage of underwater homeowners in the October-December quarter, at 5.8 percent. Only nine states recorded percentages less than 10 percent.

In addition to the more than 11 million households that are underwater, another 2.4 million homeowners are nearing that point.

When a mortgage is underwater, the homeowner often can’t qualify for mortgage refinancing and has little recourse but to continue making payments in hopes the property eventually regains its value.

The slide in home prices began stabilizing last year. But prices are expected to continue falling in many markets due to still-high levels of foreclosure and unemployment.

That means homes purchased at the height of the real estate boom are unlikely to recover lost value for years.

Underwater mortgages also dampen home sales. Homeowners who might otherwise sell their home refuse to take a loss or can’t get the bank to agree to a short sale — when a lender lets a borrower sell their property for less than the amount owed on the mortgage.

Home sales have been weaker in areas where there are a large number of homeowners with negative equity.

Many banks are also requiring homebuyers to put as much as 20 percent of a home’s value as down payment and the Obama administration is pushing for a 10 percent down payment requirement on all conventional loans guaranteed by the ailing mortgage giants Fannie Mae and Freddie Mac.

Few homeowners in states hit hard by foreclosures, including Colorado, Georgia and Nevada, have 20 percent or more equity in their homes. Higher down payments make it increasingly difficult for those people to sell their homes.

The total amount of negative equity increased to $751 billion nationwide, up from $744 billion in the previous quarter.

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