It also took housing units off the market and increased rental rates. In fact, inventory is so low multifamily building has increased.
Great Recession creates 4.8 million renters
By Kerri Ann Panchuk October 23, 2012 • 3:57pmThe United States added 4.8 million renters in the past six years while losing 1.7 million owner households as the dynamics of the real estate space changed in the wake of the 2008 financial meltdown, according to the Mortgage Bankers Association.The market experienced additional changes in the first nine months of 2012, creating unexpected outcomes in the housing finance sector, prompting the MBA to alter its forecastfor 2012.In brief, the MBA revised its estimate for 2012 mortgage originations to $1.7 trillion, up from $1.4 trillion a year earlier. Still, the trade group predicts total originations will taper off to $1.3 trillion in 2013, eventually hitting $1.1 trillion in 2014. However, mortgage rates are expected to hover below 4% through the mid-part of next year.
The MBA expects gross domestic product will inch up from 1.6% in 2012 to 2% in 2013. Meanwhile, the forecast suggests existing home sales will increase from 4.6 million in 2012 to approximately 4.78 million next year.
Still, economic growth is contingent on government tax policies and at least a temporary avoidance of the fiscal cliff in early 2013.
“The tax increase in particular would be devastating to economic growth,” said MBA chief economist Jay Brinkmann. “We believe that the entire package of tax increases and spending cuts, if left unaltered, would cut 3.5 to 4 percentage points from our growth forecast.”
Another outlier is the final definition of the qualified mortgage rule from the Consumer Financial Protection Bureau, which will define what type of mortgage qualifies as safe from repurchase risk in cases of default. It’s unknown whether the final rule from CFPB, which is due out in January, will contain a safe harbor provision to protect lenders from buy back risk if they follow the guidelines.
These forecasts are based on the idea that QM comes in with a safe harbor and legislatures get past the fiscal cliff without dramatic spending and tax changes, said Mike Fratantoni, the MBA vice president of research and economics.
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Proprietary OC Housing News home purchase analysis
9662 DEWEY Dr Garden Grove, CA 92841
$469,000 …….. Asking Price
$240,000 ………. Purchase Price
12/21/1999 ………. Purchase Date
$229,000 ………. Gross Gain (Loss)
($19,200) ………… Commissions and Costs at 8%
============================================
$209,800 ………. Net Gain (Loss)
============================================
95.4% ………. Gross Percent Change
87.4% ………. Net Percent Change
5.2% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$469,000 …….. Asking Price
$16,415 ………… 3.5% Down FHA Financing
3.50% …………. Mortgage Interest Rate
30 ……………… Number of Years
$452,585 …….. Mortgage
$117,192 ………. Income Requirement
$2,032 ………… Monthly Mortgage Payment
$406 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$117 ………… Homeowners Insurance at 0.3%
$471 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
============================================
$3,027 ………. Monthly Cash Outlays
($302) ………. Tax Savings
($712) ………. Equity Hidden in Payment
$18 ………….. Lost Income to Down Payment
$137 ………….. Maintenance and Replacement Reserves
============================================
$2,169 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$6,190 ………… Furnishing and Move In at 1% + $1,500
$6,190 ………… Closing Costs at 1% + $1,500
$4,526 ………… Interest Points
$16,415 ………… Down Payment
============================================
$33,321 ………. Total Cash Costs
$33,200 ………. Emergency Cash Reserves
============================================
$66,521 ………. Total Savings Needed
The property above is available for sale on the MLS.
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Cost of Ownership Analysis
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Nearby Foreclosures
Gain a competitive advantage over other buyers. By locating distressed properties -- before they hit the MLS -- you can discover where tomorrow's REOs and short sales will appear. Most of these properties are not listed on the MLS, but they will be soon. Research properties in advance and get a jump on your competition. Don't miss out on another deal because you couldn't act quickly. Use this tool to your advantage! The red properties are already bank owned. As soon as REO asset managers prepare them for sale, they will be on the MLS. Get ready! The green and blue properties have owners who are not paying their mortgages. They may be offered as short sales, or they may go through foreclosure and become REO. Either way, they will also likely be available on the MLS soon. Find your next home! Be prepared to offer on these properties by researching them in advance or risk losing out to buyers who are have done their homework. Start your research today! To find distressed properties, enter your desired location and press search. Scroll through list by pressing "next."Comparative Market Analysis
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Yearly Price Gains Maintained by Decrease in Distressed Sales
Summer’s end may have led to the close of a strong home-buying season, but a decrease in distressed sales is helping prices maintain their yearly gain and some regions are still experiencing monthly price increases.
As of August 23, 2012, prices fell 0.4 percent in 25 major U.S. metropolitan areas from July 23, 2012, according to Radar Logic’s RPX Composite price. Year-over-year, prices were still up 4.5 percent, and year-to-date, the RPX composite showed prices have risen 12.8 percent, the largest increase for the period since 2005.
When Radar Logic broke down the data based on region, a more complex picture was painted.
“There was considerable variation in price performance from region to region. In some areas prices have clearly peaked for the year and are now declining, while in others prices are still rising,” the real estate data provider said in its monthly housing report.
The Midwest and the West saw monthly price gains and rose 2.5 and 1.2 percent, respectively. In the South, prices were flat, increasing just 0.1 percent. Radar Logic said the South may have reached its seasonal peak and begin its seasonal descent. The Northeastern housing market brought the RPX Composite price down month-over-month with its 3.1 percent descent.
Year-over-year, price gains were seen in the South (6.7 percent), Midwest (7.3 percent) and West (9.2 percent). On the other hand, the Northeast fell 2.3 percent, according to the RPX Composite.
Over the last year, REO and foreclosure auction sales have seen a significant decline, which has helped to push up prices.
According to Radar Logic, motivated sales, or sales of REOs or foreclosures, fell to 13 percent of the total transaction count, down from 23 percent a year ago.
This decline in motivated sales led to the yearly increase in the RPX Composite. Over the last year since August 23, the price for motivated sales has been 34 to 42 percent less than the price for all other non-motivated transactions, according to data from Radar Logic.
The share of motivated sales compared to total sales decreased in all 25 metropolitan areas tracked, with Phoenix and Las Vegas seeing the biggest declines over a one-year period. In Detroit, 33 percent of sales were motivated, the largest among all 25 metros, while New York had the smallest share of motivated sales at 3 percent.
Radar Logic’s report also looked at buying activity among investors. As of the end of July 2012, investors accounted for 9 percent of total transactions and 21 percent of motivated transactions in the 25 metropolitan areas tracked.
In Miami, buying activity from institutional investors accounted for 18 percent of total sales, the most out of any of the 25 metros. Investment purchase in Phoenix was also high at 16 percent, along with Las Vegas, where 15 percent of transactions are from investors.
In additional, investor purchases have surged in those metros since 2009, increasing nearly 400 percent in Las Vegas, 350 percent in Phoenix, and almost 320 percent in Miami.
According to the report, investment purchases generally put downward pressure on prices, but in the most active markets, where there are bidding wars for the limited supply of REOs, prices for REOs increased.