Why THIS RENTAL PROBLEM will trap an entire generation in renting rather than buying

An article worthy to consider:

for-rentHowever counter-intuitive it might seem, research seems to indicate that high rents are preventing more would-be homeowners from actually purchasing homes, even if buying is more affordable than renting in their area. According to Zillow’s “Real Estate Market Report” for July, only 12 markets nationwide have rental and housing markets that are compatible when it comes to renters’ ability to save up for a down payment and ultimately purchase a house. Despite the fact that 94 percent of major metro markets are more affordable than they have ever been, rents are so high in 88 percent of those areas that renters will likely never save enough money to put 20 percent down[1]. At the end of July, renters nationwide were paying an average of 29.5 percent of their income toward rent and home prices were inching upward (6.5 percent year-over-year).

This problematic combination could mean trouble, warned Zillow chief economist Stan Humphries, warning that unless the job market improves and wages start to grow, “The future of the housing market could be trouble.” Humphries also noted that as mortgage rates begin to rise, more and more metro areas will become unaffordable, likely long before renters see any major change in their wages. “Wages need to grow more quickly,” he said, if home-buyers who are presently renting hope to put enough money away to buy. Finally, he added, millennials, who many analysts believe are the key to a true housing recovery, are being hit particularly hard by this toxic combination. Thanks to uncertain job prospects and “enormous student debt,” this particular segment of the population could well find itself in a permanent renting situation if things do not change.

WHAT WE THINK: Time to invest in rental property if you haven’t already! It looks like we’re going to have at least one generation of renters coming down the line, and maybe more as mortgage rates rise.

Do you think that housing is in trouble, or is the situation simply changing and evolving?

Source: Bryan Ellis Investing Letter

How to buy a home just ONE YEAR AFTER FORECLOSURE

I found still article in my email, so I’m re-posting it for your benefit:

for-saleFormer homeowners who lost their homes due to foreclosures and short sales between 2007 and 2013 are expected to “bounce back” with new home loans and exciting new home purchases in the next few years. In fact, many of these “boomerang buyers” have actually been able to get back in the swing of things before interest rates started to rise and, as a result, this demographic made up about 10 percent of all U.S. home purchases this year so far, and that’s just the beginning. Analysts predict that this percentage will rise in 2015 and 2016 as more and more boomerang-ers become eligible for new loans[1].

Of course, not everyone will get to bounce right back into a new house after losing the old one just a few years before. While some homeowners will find that they can purchase a new home just about a year after a foreclosure or bankruptcy if they can prove that the unfortunate event was due to a hardship such as income reduction of 20 percent or more due to loss or reduction in salary or due to a death in the family, many borrowers will have to wait three or four years before buying again. However, if a homeowner lost their home at the beginning of the housing crisis, that means they are just about set to reapply for a mortgage and show that “they have been responsible with their credit before and after they lost their home,” explained George Beylouney, a mortgage professional. “A drop in credit score is okay as long as they can show they had good credit before the crisis,” he added.

Although some boomerang buyers cannot wait to jump back into homeownership, others are nervous and may not even be aware that buying another home is an option. “I was nervous because I made such a bad mistake before,” explained one homeowner who lost his house thanks to plummeting real estate values and a serious hit to his realtor-income in the wake of the crash. “I didn’t even know if I could buy again,” he added, reporting that he ultimately qualified for a Federal Housing Administration (FHA) loan that enabled him to purchase a new home just a few years later[2]. He plans to refinance as soon as he can in order to escape the insurance payments associated with FHA loans.

WHAT WE THINK: It’s great that boomerang buyers are getting another shot at owning a home, but we hope that lenders are being careful despite governmental efforts to prop up the housing market by making new home mortgages relatively simple to get even if you lost your home during the housing crash. If the boomerang buyers actually do have to show that they had decent credit and are buying within their “new normal” then this could be a good thing. If, like so many government programs, loan originators are just ticking off boxes and throwing people into mortgages that they cannot afford, then this boomerang effect could be the trigger that sets off another housing collapse.

Are you a boomerang buyer? What do you think about homeowners who lost their homes to short sales or foreclosure buying again only a year or two after that event?

Source: Bryan Ellis Investing Letter

Seniors Pile Up Mortgage Debt

If you’re retired or near retirement, you’ll find this bit of news informative:

0802-elderly-mail-scam-stock-315 304Mortgage debt held by the elderly has soared over the past decade, driven in part by the foreclosure crisis, the Consumer Financial Protection Bureau said in a report Wednesday.

Seniors “put themselves at risk of losing their nest eggs and their homes” by carrying high levels of debt into retirement, CFPB Director Richard Cordray said in a press release that accompanied the report. The bureau’s Office for Older Americans found that the percentage of homeowners 65 and older with mortgage debt rose to 30% in 2011 from 22% in 2001. Median balances increased during the same period, to $79,000 from $43,000. The study pointed to the financial crisis as a primary driver of the debt levels. Between 2007 and 2011, the number of homeowners between 65 and 75 years old who were “seriously delinquent,” or more than 90 days late on their payments, jumped to 4.96% from 0.85%. The delinquency rate increased to 5.87% from 1.01% for homeowners 75 and older.

One-third of the bureau’s complaints from the elderly deal with mortgage payments or loan servicing issues, the report said.

(source: http://www.nationalmortgagenews.com)

7 Legal Tips for Settling Disputes with Your Neighbors

111208good-neighborsI pasted this article I received from my legal services office. I hope you find this beneficial:

  1. Try a Friendly Approach – You may avoid turning a disagreement with your neighbor into a prolonged legal battle by starting with a friendly conversation. Speak with your neighbor calmly about your concerns and together you may come up with a resolution that works well for everyone. Remember, it is likely you will be living next to this person for a long time and starting with a civil conversation may make things much easier.
  2. Disturbances – We all expect to have some peace and quite in our own home, particularly at night. Many localities have noise ordinances that dictate specific hours for quiet. These hours may be extended on the weekends. If talking with your neighbor is unsuccessful, your LegalShield provider law firm may be able to draft a letter on your behalf informing the neighbor of the local noise restrictions. If this too is unsuccessful, you should contact local law authorities to file a noise complaint.
  3. Dangerous or Mistreated Animals – A dangerous animal can cause you to fear for your family’s safety. It may be heartbreaking to see an animal abused or mistreated. In some localities animal matters may be handled by the police, while others may have a dedicated animal control department. Find out the rules where you live and if necessary file a report or formal complaint. If an animal has injured you call your LegalShield provider law firm.
  4. Property Line Disputes – Disputes over the exact location of a property line can become contentious and may require a great deal of expert research to resolve. This may include surveying the property and locating old deeds or property records, some of which may be conflicting. If you are involved in a dispute over a property line, contact your LegalShield provider law firm.
  5. Illegal Activity – Avoid confrontation with a neighbor you believe is involved in illegal activity. In such circumstances, you should contact local law enforcement. If you fear retribution from a neighbor, you may file an anonymous report. Always confirm with law enforcement that your report will be anonymous.
  6. Dangerous Trees – At best a half dead tree or large limb swaying dangerously close to your house may keep you up at night; at worst it could cause injury or property damage. Laws about fallen or dangerous trees vary greatly in different localities. Contact your LegalShield provider law firm to learn more about the laws where you live.
  7. Home Owners Association (HOA) – If you live in a neighborhood governed by an HOA, many common issues may already be addressed in the bylaws. HOA bylaws may contain rules about noise, building on your property and pets. Some bylaws may even require mediation to resolve disputes between neighbors. If you need assistance reviewing your HOA bylaws contact your LegalShield provider law firm.

The content of this newsletter is intended for general information purposes only, and is not legal advice. Readers should be aware that while certain principles outlined on this site may be similar to principles followed in their own state or province, laws can vary considerably. © Copyright 2014 Pre-Paid Legal Services, Inc. d/b/a LegalShield℠ One Pre-Paid Way, Ada, Oklahoma 74820

 

Former Home Owners Wait for Second Chance

2ndThis is a question asked by those who went through a foreclosure or short sale. There is life and hope after going through this financial setback. Enjoy this article:

More than 4 million homes have been lost to foreclosure in the last six years, and many of those former home owners are now starting to ask: When can we buy again?

Many banks have guidelines that prevent them from issuing loans to people with a foreclosure or short sale in their credit history in some cases for as much as seven years. That also doesn’t factor in the damage foreclosures and short sales can do to a person’s credit score, and the work former home owners’ will need to do to repair it so they’ll have a better chance at qualifying for financing again in the future.

Still, some former home owners, particularly those who foreclosed or did a short sale due to extenuating circumstances like a job loss or illness, are finding the wait may not be as long as they were once told.

“They’re probably going to pay a little higher interest rate, but with rates so low, a higher interest rate of 4 percent is not a big deal,” Rosa Herwick, a broker and owner of Century 21 JR Realty in Henderson, Nev., told the Associated Press.

The wait-time varies among lenders and government entities. For example, the Federal Housing Administration says former home owners with a foreclosure must wait three years before they can qualify, while Fannie Mae and Freddie Mac require a seven-year wait following a foreclosure.

As for short sales, sometimes these waits can be waived or drastically cut, depending on the borrower’s situation. FHA requires a three-year wait following a short sale, but it may waive that wait if the short sale was due to a job loss.

Also, for borrowers who can come up with a higher down payment on their next home purchase, they may also not have as long to wait. For example, Fannie Mae will reduce the wait from seven years to two years for borrowers who come with a down payment of 20 percent or more. (Posted by GLOZAL)

What happens when you walk away from your home?

This is a difficult decision to make if you’re underwater when it comes to your current property. This article I found addresses the raw truth of the stress of being upside down. It also speaks about how walking away will affect the borrower. There are attorneys in Tucson that can help people who are faced with such a dilemma. Let me know if I can help you by providing a source of professionals that are having some success with helping those that are caught in this current market.

(Reuters) – It was just last summer that Charlotte Perkins made the hardest decision of her life as she and her husband Jim were caught in the vise of the housing bust.

Wanting to downsize their lives as they headed toward retirement, they bought a new house in Mesa, Arizona, before they sold the old one, also in Mesa. Their previous home had been appraised at nearly $400,000 at the height of the market, but as the housing crisis ravaged Arizona, they were told they’d be lucky to get $200,000 for it.

They were carrying a loan of $260,000 on their original home alone, meaning they were well ‘underwater,’ owing much more than it was worth. Combined with the mortgage on the new house, their housing payments had become an “anchor around our necks,” she says, threatening to gobble up all their retirement savings and leave them with nothing.

The couple made a difficult call: They would do a ‘strategic default,’ and simply stop paying the old mortgage. “We really had to wrestle with it,” said Perkins, 60. “We had worked all of our lives to build good strong credit, and we’re proud people. But it came down to, ‘Can we keep doing this?’ We had to say ‘No.’”

As the housing bust drags on, many homeowners are thinking like Perkins. Almost 11 million homes are now underwater, says financial information provider CoreLogic. Around 3.5 million homeowners are behind in their payments and another 1.5 million homes are already in the foreclosure process, according to online marketplace RealtyTrac.

As banks start to work through their backlog of distressed properties, the New York Federal Reserve estimates that…. for complete article: http://www.reuters.com/article/2012/01/27/us-housing-strategicdefault-idUSTRE80Q1XX20120127

Housing Crisis to End in 2012 as Banks Loosen Credit Standards

There is so many conflicting reports about the housing recovery that you must weed through the so-called experts to find someone who knows what they’re talking about. Some are clueless or have something to gain monetarily or politically, or are optimistic. If everything this writer predicts actually happens, then it will have a positive impact in 2012. Jobs is another factor that will speed up the housing crunch. Give us feedback below:

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.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.

Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes…. for complete article: http://www.dsnews.com/articles/housing-crisis-to-end-in-2012-as-banks-loosen-credit-standards-2012-01-24

How Accurate Is Zillow? New Study of Actual Home Sales Says Not Really.

Like I mention on my homepage, if you want accuracy in the Tucson real estate market, never trust third party sites like Zillow or Trulia. Often this information skews the truth of sales numbers that often cause the public to make rash decisions or cause loss of money or time!  Do all your accurate and up to date searches at my site: http://tucsonofficialmls.com/full-search/ Share your experience with using these sites, below:

Zillow, based in Seattle, Washington, has made millions of dollars since its launch many years ago.  The idea of allowing anyone to see the value of their home for free was a novel idea with extraordinary appeal to home owners.  Zillow seeks to utilize public records combined with math formulas to calculate a home value.

So, how accurate is this “Zestimate®” value?  At Country Club Lifestyle Realty we have analyzed 91 homes sold throughout Houston to show that Zillow will at times be consistent with the actual sales price of a home, but the overall results are not a ringing endorsement. In a few cases Zillow missed the sales value of a home by 25-30%. In one specific case the value was off by $121,000.  That is a large chunk of change.

The study involved home sales ranging in value from $130,000 to $530,000 over a 30 day period beginning in December 2011.  The majority of sales in the Houston and surrounding suburbs fall within this range.  Higher end homes were specifically excluded from the study since luxury homes may tend to skew the data. The intent of the study is to determine an accuracy level for the vast majority of home owners.  While the study includes the Houston and surrounding suburbs the author believes the values are consistent for the majority of the country. The results are similar to a study performed by The Wall Street Journal…. for complete article: http://homes-in-sugar-land.com/blog/2012/01/how-accurate-is-zillow-new-study-of-actual-home-sales-says-not-really/

Mortgage Applications Soar 4.5%

This is good news in the midst of back economic news and talks of a recession. There is a sizable spike in new mortgage lending which is a positive sign that our future looks bright!

Mortgage applications for purchase — a gauge of future home buying — increased 8.1 percent last week, the Mortgage Bankers Association reports. The purchase index on an unadjusted basis now stands at 41.9 percent higher than last year, signaling more people taking out loans to buy homes.

More home owners are also taking advantage of low interest rates. Refinance activity last week also increased, inching up 3.3 percent from a week earlier. Overall, mortgage applications were up 4.5 percent last week.

For the fifth consecutive week, 30-year fixed-rate mortgages have averaged at historical lows below 4 percent, Freddie Mac reported last week. For the week ending Jan. 5, 30-year fixed-rate mortgages averaged 3.91 percent, with an average 0.8 point, matching the previous record low set a few weeks ago.

How Can Renters Solve the Housing Crisis?

Here’s an interesting twist in the future of the housing market and how renters can bring an end to the housing crisis. Let us know what you think below.

Residential real estate is not rocket science. We know that this housing crisis is:
1. Explainable – bad lending, mad speculation, wild expectations, government meddling
2. Isolated – bad mortgages, negative equity, strategic default, government meddling
3. Temporary –demand for housing always catches up to supply eventually

Anyone with any experience and perspective will agree that this market will recover over the next 10 years, but what will this particular recovery look like? Since the root of the problem was unprecedented, the solution might be as well.

My belief is that renters are going to solve the housing crisis.

Home ownership rates have fallen by a few percentage points, which has translated into more than four million new rental households in just the past few years. According to the Census, 1.4 million of those were added between July 2010 and June 2011, showing that this trend is accelerating.

As a result, rental rates are growing at more than 5% per year, and this trend is also accelerating.

As a result of this, investors are pouring capital into American housing with a long-term mindset, kicking this trend into hyperspeed.

This crisis will not be solved by enticing home buyers. Their confidence is waiting for…. for complete article: http://rismedia.com/2011-12-10/how-can-renters-solve-the-housing-crisis/