No bubble, even in hottest home markets

Month: July 2013

Swift rising home prices, bidding wars, investors with a fist full of cash!

Some say another Bubble? Not so fast, according to a new report.

Real estate information firm CoreLogic said that a bubble has not formed in the U.S. housing market, nor in hot regional markets, adding that rising interest rates will put a brake on any danger.

Freddie Mac said last week that lenders were offering a 30-year fixed mortgage at an average rate of 4.51%, up from a 3.31% last fall.

Those increases along with the slowly declining percentage of cash sales is slowing down dramatic price increases and because the crash forced prices down, housing still remains affordable.

In California, home prices in May remained 27% below their peak during last decade’s housing bubble.

Nationwide, one of two things would need to happen to make housing as pricey as it was between 2000 and 2004: interest rates rise to 6.75% or home prices skyrocket another 47%.

Fannie Mae and Freddie Mac completed more than 130,000 foreclosure-prevention actions during the first quarter of 2013, bringing the total foreclosure prevention actions to nearly 2.8 million since the start of conservatorship in 2008. These actions have helped more than 2.3 million borrowers stay in their homes, including nearly 1.4 million who received permanent loan modifications. The results are detailed in the Federal Housing Finance Agency’s first quarter 2013 Foreclosure Prevention Report, also known as the Federal Property Manager’s Report. The quarterly report has information on state delinquencies and an updated, interactive Borrower Assistance Map for Fannie Mae and Freddie Mac mortgages, with information on delinquencies, foreclosure prevention activities and Real Estate Owned (REO) properties. Also noted in the report:

  • Serious delinquency rates dropped from 3.3 to 3.0 percent at the end of the quarter.
  • The number of Fannie Mae and Freddie Mac borrowers who were more than 60 days delinquent declined 11 percent in the first quarter to the lowest level since the first quarter of 2009.
  • Half of troubled borrowers who received permanent loan modifications in the first quarter had their monthly payments reduced by more than 30 percent.
  • More than one-third of loan modifications completed in the first quarter included principal forbearance.
  • Over 30,000 short sales and deeds-in-lieu were completed in the first quarter, bringing the total to more than 476,000 since the start of conservatorship.
  • Third-party sales and foreclosure sales continued a downward trend in the first quarter while foreclosure starts increased.
  • A new streamlined modification initiative, announced during the first quarter, will take effect on July 1. Although numbers are not available yet, the program is expected to help eligible homeowners who have missed at least three monthly payments modify their mortgage by eliminating administrative barriers associated with document collection and evaluation.