Economists Grow More Optimistic About Housing’s Outlook

DAILY REAL ESTATE NEWS | FRIDAY, AUGUST 29, 2014

The strengthening job market has more economists gaining confidence about the direction of the housing market over the next two years, according to a newly released Reuters poll of 29 housing analysts, including investors and economists.

What’s more, economists expect home resales to continue to inch up in 2015, reaching 5.29 million by the second quarter of 2015.The economists surveyed expect existing-home sales to increase to 5.25 million units in the first three months of 2015. Currently, existing-home sales stand at 5.09 million. In May, the economists surveyed had expected much slower gains at 5.1 million expected in the first quarter of 2015.

The job market is why most of the economists are starting to change their tone about housing’s outlook. For the last six consecutive months in July, employers added more than 200,000 jobs.

"Low mortgage rates and improving labor market dynamics should remain conducive to gradual growth in the housing sector," Gennadiy Goldberg, a strategist at TD Securities, said in a recent note to clients.

The housing analysts surveyed expect mortgage rates to rise more slowly than they originally thought in May. Still, they do expect rises are looming with expectations that the Federal Reserve will slowly begin to increase its benchmark interest rate around the middle of next year. The Fed has held the benchmark interest rate near zero since 2008.

The economists polled expect the 30-year, fixed-rate mortgage to rise to 5.25 percent in 2016. That is a slight drop from the 5.68 percent average they had predicted in the May poll.

The 30-year fixed-rate mortgage is currently averaging 4.10 percent, according to Freddie Mac.

Nevertheless, the economists say the housing recovery likely won’t be derailed by a gradual increase in mortgage rates.

"If a rise in mortgage rates comes with a stronger economic recovery, the housing market will be able to absorb it," Alexander Lin, an analyst at Bank of America Merrill Lynch, told Reuters.

Source: “Stronger Hiring Boosts Outlook for U.S. Home Sales: Reuters Poll,” Reuters (Aug. 27, 2014)

Builders Haven't Felt This Upbeat Since 2006

Daily Real Estate News | Wednesday, July 17, 2013

  

Builders continue to feel more optimistic about the direction of the recovery for newly built single-family homes. Builder confidence rose six points in July to 57, according to the National Association of Home Builders/Wells Fargo Housing Market Index. Any number above 50 indicates more builders view conditions as good than poor.

The index gauges builders’ perceptions on single-family home sales, sales expectations for the next six months, and buyer traffic. The gauge for current sales condition rose to its highest level since early 2006, and the index’s measurements for prospective buyers and sales expectations for the next six months rose to the highest levels since late 2005. The latest report also showed improvements in builder confidence has expanded across every region of the United States.

"Builders are seeing more motivated buyers coming through their doors as the inventory of existing homes for sale continues to tighten," says NAHB Chief Economist David Crowe. "Meanwhile, as the infrastructure that supplies home building returns, some previously skyrocketing building material costs have begun to soften."

Source: National Association of Home Builders

6 Charged in ‘Builder Kickback’ Scam

Daily Real Estate News | Wednesday, January 25, 2012

Six Charlotte, N.C., residents were charged with working with a home builder in a mortgage scheme that involved offering “builder kickbacks” to fake buyers, which prosecutors say resulted in hundreds of fraudulent sales in the area between January 2005 and February 2008.

The defendants, which include real estate agents, an accountant, mortgage brokers, and the builder’s owner, were working with Tara Properties to sell houses, according to court documents filed by prosecutors.

Tara, which typically builds homes in the $100,000 to $200,000 range, would offer kickbacks of 15 percent of the sales price, prosecutors say. But the kickbacks were never disclosed to lenders or disclosed on loan applications, prosecutors allege.

Prosecutors allege that Tara paid more than $5 million in kickbacks, and the straw buyers involved in the scheme were able to bilk more than $42 million in fraudulent loans from lenders.

Straw buyers lied on mortgage applications about income and assets, employment, and their intent to occupy the home as a primary residence, court document say. The majority of the deals ended in foreclosure.

The defendants have declined to make public statements on the charges.

Source: “6 Charged in Charlotte-Area Mortgage Scheme,” The Charlotte Observer (Jan. 24, 2012)