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Giddy-Up Short Sale Process! - 08/31/12 03:32 PM
Last week, the federal housing regulator, FHFA and mortgage-finance companies Fannie Mae and Freddie Mac announced that it will employ new short sale guidelines for banks to follow as part of the Federal Housing Finance Agency’s Servicing Alignment Initiative. The guidelines are supposed to make the sale of underwater homes easier for homeowners, including helping people who have financial difficulties but haven't missed mortgage payments, and make the process more efficient for homeowners and servicers.
Traditionally, in a short sale process, holders of first and second mortgages, such as home-equity loans, negotiate with a home owner. In this case they accept … (1 comments)
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Does Housing Formation Matter? - 08/27/12 01:16 PM
Yesterday, the question was posed, what is household formation anyway and why does it matter?
The general sense is that people have a kinda-sorta understand of housing formation and that they've heard it matters. Yet, for the majority of real estate practitioners, they may not use the specific terms housing formation.
Succintly put, housing formation could be boiled down to how many new buyers are coming into the market. By buyers, that could mean a single professional looking for their first condominium, that could be mean a couple who is looking for their starter home, and in today's world that could … (2 comments)
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What Is Household Formation Anyway? - 08/26/12 05:19 PM
So, what is household formation anyway and why does it matter?
… (1 comments)
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Commercial Loan Delinquenices In Chicago Slightly Improve - 08/24/12 09:27 AM
Some good news from the commercial real estate market. The percentage of delinquent commercial properties held by banks has decreased in the last two years, according to Trepp LLC, a research firm out of New York.
In Chicago, the delinquency rate dropped 0.06% in the second quarter compared to the first and is an improvement of 0.08% from a year ago. Despite the modestly positive news, it is still a long way from the 2% delinquency rates that held steady before the recession, and is also 2.2% higher than the national average.
During the recession when spending in the nation declined, … (0 comments)
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2013 Brings Illinois A New State Energy Code Similar To Energy Star - 08/23/12 05:36 AM
Trivia Time: What percentage of homes constructed in 2010 received an energy star label? 5%, 10%, 25%, 50%
If you guessed (or knew it was) 25%, then you're in the money, green money that is.
In states like Arizona, Ohio, Nevada and Iowa, the numbers are 50%.
As of January 1, 2013, the state of Illinois will change over to the 2012 IECC which is almost as stringent as the latest version of Energy Star. So, for those single-family residential builders and developers already constructing Energy Star qualifying homes, they will little change to fulfill this new requirement. Yesterday Corbett Lunsford, … (0 comments)
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Big Rents Keep On Rising In Downtown Chicago - 08/22/12 06:34 AM
Rents keep rising in the Chicago downtown apartment market. According to Appraisal Research Counselors, a Chicago-based consulting firm, the average net rent at top-tier, or Class A, downtown apartment buildings went up to an all-time high of $2.57 a square foot. This is an increase of 2.6 percent from the first quarter of 2012 and an increase of 5.8 percent from a year earlier, according to Ron DeVries. Just as impressive as the rise in rents is the current Class A occupancy rate which hit 96 percent; its highest level in six years.
The rise in rents and occupancy rates over … (0 comments)
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High-Rises And Sky High Prices Spur New Construction - 08/21/12 08:03 AM
Developers are betting big on residential skyscrapers, building them at record breaking heights and selling them at record prices the Wall Street Journal reported. Very-tall residential high-rises began growing in popularity 10 to 15 years ago during the building boom, when dozens of new high-rise condominiums rose in cities around the United States as many middle and upper class residents preferred to move back into urban cores. However, the recent economic downturn and credit crisis also took a toll on the development of residential high rises which resulted in many empty buildings, while construction ground to a halt.
… (0 comments)
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High-Risk Mortgage Proposal Affect Appraisals - 08/20/12 08:12 PM
Last Week, Six federal financial regulatory agencies issued a proposed rule to establish new appraisal requirements for “higher-risk mortgage loans.” The proposed rule would implement changes to the Truth in Lending Act enacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The rules would apply to higher-risk mortgage loans, which under the Dodd Frank Act are those on people’s homes whose interest rates are above a variable threshold. The bar is set based on how much a loan’s interest rate exceeds the Average Prime Offer Rate, a survey-based estimate of typical mortgage rates.
For higher-risk … (1 comments)
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Economics 101: If Demand Rises And Supply Doesn't, What About Price? - 08/19/12 06:39 PM
Sometimes it’s worthwhile to take a step back to go forward. In this case, I’m thinking good old fashion Econ 101. If demand rises (and surely there has been evidence that demand is rising, and supply does not substantially change, what happens to price?
It will come as no surprise that for a number of reasons in the past years, there has been little demand. So, when there is little demand, price keeps falling until a point in time that something happens.
Over the past 4 or more years, there had been a declining demand due to … (0 comments)
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Bye, Bye Ms American Fannie, Freddie - 08/18/12 10:25 AM
Friday was a big day in the world of government-backed mortgages, as an announcement was made by to speed up the wind down of Fannie Mae and Freddie Mac.
According to an article in DSNEWS, “In addition to reducing the GSEs’ mortgage portfolios in a more timely manner, these modifications are designed to ensure that each firm’s earnings benefit taxpayers and help reform the housing finance market.”
“With today’s announcement, we are taking the next step toward responsibly winding down Fannie Mae and Freddie Mac while continuing to support the necessary process of repair and recovery … (4 comments)
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Will Home Affordability Slip Out Of American's Reach? - 08/17/12 05:32 AM
A few less Americans were able to purchase their home and fulfill the purported American Dream according to the National Association of Home Builders.
Nearly 74% of the new and existing homes sold in the three months ended June 30 were affordable to families who earn the national median income of $65,000, according to the National Association of Home Builders (NAHB) and Wells Fargo. That's down from 77.5% three months earlier, but is still considered a high level of affordability. It is believed that rising prices were responsible for the decline in affordability.
Median home prices were … (1 comments)
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Are Builders Cautiously Optimistic Or Anxiously Optimistic? - 08/16/12 04:50 AM
Data from the National Association of Home Builders showed that the United States homebuilders’ sentiment rose in August to its highest level since February 2007. Given the protracted respite which builders have endured, an acceptable question to ask may be, are builders cautiously optimistic or anxiously optimistic?
To date, no matter how you view this data from the NAHB, this does appear to be another sign that the real estate housing market is headed for a recovery. The NAHB/Wells Fargo Housing Market index is taken from a monthly survey that NAHB has been conducting for the past 25 … (1 comments)
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Is The Federal Reserve Creating A Bubble In The Housing Market? - 08/15/12 06:29 PM
In the latest press release, The Federal Open Market Committee said it would keep interest rates low at least through 2014. The target rate of funds will remain between 0% and 0.25% for the next two years, as it has been since the financial crisis in 2008. This did not come as a surprise, as it had been forecasted by those who have been following the actions of the committee however there is still a big debate on whether the decision to keep interest rates low is actually helping or hurting the housing market and the economy as a whole.
… (1 comments)
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Decrease In Vacancy Rates Coincides With Decrease In Shadow Inventory - 08/14/12 07:33 PM
The last bastion of economic recession in the housing market, the foreclosure crisis, may finally be showing signs of weakness. When looking at the relative balance of rent supply and rent demand, given that the shadow inventory of REOs have declined, it appears that the reduction in homeownership is not necessarily a bad thing, according to data in a recent dsnews.com article.
Specifically, rental vacancy rates have fallen to 8.6% which is the lowest since Q2 of 2006. A number of prospective homeowners have opted to rent instead of investing in a foreclosed real estate property, which has contributed … (1 comments)
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The Housing Market Groundhog Saw Its Shadow On A Cell Phone - 08/14/12 07:22 PM
Although we’re have a year away from Groundhog day, maybe The Housing Market saw its shadow and someone snapped a photo with their cellphone to tell the rest of the Americans who missed out.
Apparently in a recent article, Spencer Rascoff, CEO of Zillow, stepped out to say The Housing Market indeed saw its shadow and has finally “bottomed out.”
Although many agencies have posted reports indicating signs of recovery in various regions of the country, the overall housing industry is still only a faint version of its former self. However, with prices as low as … (0 comments)
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Near-Record Earnings For Fannie Mae and Freddie Mac - 08/14/12 07:09 PM
Fannie Mae reported a $5.1 billion second-quarter profit; it’s largest since being taken over by the government in 2008. The gain followed a $2.7 billion profit in the first quarter and a $2.9 billion loss in 2011's second quarter. By comparison, in the same quarter a year-ago, Fannie added $6.5 billion to its loss reserves due to a soft housing market. The government’s recent reports are a good sign that Fannie Mae and Freddie Mac, seem to be stabilizing after requiring government aid in 2008 to avoid collapse. This week, Freddie Mac also reported a $3 billion profit for the … (0 comments)
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Emerging Real Estate Inventory Shortage? - 08/13/12 05:21 PM
Depending on who you talk to right now the nation is experiencing a shortage in housing inventory. According to Lawrence Yun in the August issue of the Realtor magazine, the inventory nationwide was at 2.49 million units which was a huge drop from 4.5 million units when the inventory was at its peak in 2007. Departmentofnumbers.com, which tracks 54 metro areas in the country, reported that as of August 6th 2012 there were 829,477 single family and condo homes listed for sale. Since this time last year, the inventory of homes for sale has decreased by 22.8% and the median price … (2 comments)
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Olympic Champions Practice To Win - 08/12/12 02:34 PM
With an amazing display of athleticism and patriotism drawing to an end in London for the 2012 Olympics, the rest of the world looks on in awe, amazement and admiration.
For anyone who has ever competed in a sport, you cannot help but be in a state of awe by what a competitive man or woman has accomplished that allowed them to be good enough, so good in fact, that they get to represent their country.
Each and every day, through the preliminaries and on through the eliminations and medal rounds, there are unending displays of amazing physical performance by olympic … (1 comments)
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Housing Market Going For Gold? - 08/11/12 10:08 AM
Unless you have only had your TV and newspaper focused on the Olympics, you have probably heard or read that the arrival of the long awaited housing recovery might be happening.
The latest housing data released by S&P Dow Jones Indices, Case-Schiller, indicate that the long awaited housing recovery could finally be here. Summarizing the data through May 2012, home prices had increased 2.2% in the month for both the 10- and 20- City Composites. Compared to a year ago, home prices fell by 1.0% for the 10-City Composite and 0.7% for the 20-City Composite.
The annual returns … (0 comments)
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The Standoff: Lender Vs. Investor - 08/11/12 09:54 AM
Something’s Gotta Give
The economy and the national housing industry are both crawling to recovery, some days they crawl faster and some days they crawl slower. Of course, these ‘national’ issues are regularly conceptualized as a single, titanic, slow-moving project. Regular citizens often hear updates on one or the either, but the relation between the two is still a bit ambiguous. We assume when one improves, the other will follow.
Jon Prior of Housingwire.com reported that in the future, the relationship between the two will be more important than ever. With REO numbers still at staggering levels and … (0 comments)
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Mortgage Debt Reduction, Finally A Realistic Resolution? - 08/11/12 09:41 AM
The foreclosure crisis has been a looming giant hovering over nearly every conversation about an economic recovery and a revitalized housing market. Not only are homeowners mentally tortured with the ethical battle of foreclosure, but they are also forcibly reminded by their own failures and the failure of the economy every step of the way. However, banks are also being torn, as they find assets morphing into liabilities with every emptied house.
Finally, there seems to be a movement towards an equally beneficial solution to all.
According to a recent article in Housingwire.com, Jon Prior reported that … (0 comments)
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Turning A Corner - 08/11/12 09:34 AM
In an earlier article by Zillow.com (http://www.zillow.com/blog/2012-07-16/rents-rise-as-more-americans-flock-back-into-cities/), the City of Chicago found both rent price and rent demand shoot up at an unprecedented rate as young adults flocked downtown and away from suburbs. One of the reasons, Stan Humphries of Zillow.com stipulates, why young adults avoided suburbs and home purchases were the credit restrictions many young adults couldn't navigate around.
But according to a recent article on dsnews.com, Mark Lieberman reported that The Federal Reserve and commercial banks lowered standards for mortgage loans in order to meet the growing demand.
What is most heartening is not the … (0 comments)
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Crawling Before Walking Before Running - 08/11/12 09:26 AM
So it seems that we're walking now.
The average price of homes rose 2.2%, 0.9% with the seasonal adjustment, from April to May according to a report published by Case-Shiller.
Although the average price was still 0.7% lower compared to prices from May 2011, the short-term gain is still a significant sign of recovery. Chicago, in particular, showed a 3% decline in prices compared to last year, but also led the 20-city index with a confident, 4.5% increase from April to May
In retrospect, these small gains are gigantic compared to the 4.1% drop in yearly prices … (0 comments)
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Will The Real Culprit Step Forward Please - 08/11/12 09:21 AM
REO Sales or Foreclosures, The Real Culprit?
In June 2012, Corelogic reported that the number of completed foreclosures dropped to 60,000, a 24% decrease from the 80,000 seen last June.
Along the way, America’s foreclosure inventory dropped to 1.4 million from 1.5 million a year ago. Seemingly good news, right? Yet, for the housing industry to take a true step forward to recovery, foreclosures need to markedly decline and ultimately become a pitstop on the roadtrip, not the detour that they are now in the home buying process in this real estate market. So, if the foreclosures are … (2 comments)
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Chicago Foreclosures Rise (Again) - 08/09/12 06:15 AM
Temperatures were not the only thing to set a record in Chicago in July, they were joined by foreclosure activity.
According to RealtyTrac Inc., Chicago-area foreclosure activity rose 35% in July compared to the prior month. As a result, the odds that a Chicago area properties is experiencing foreclosure is 1 out of 299.
Illinois was not far behind with a 30% rise in foreclosure activity.
“Recent foreclosure activity patterns vary significantly from state to state, often hinging on the level of dysfunction that exists in each state’s foreclosure process,” RealtyTrac Vice President Daren Blomquist said in the report. “In states … (1 comments)
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Michael Hobbs, SRA
Michael Hobbs, SRA, LEED GA, RAA
Chicago,
IL
More about me…
PahRoo Appraisal & Consultancy
Address: 1707 W. Roscoe Street, Suite 1, Chicago, IL, 60657
Office Phone: (773) 388-0003
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