Sometimes roles are reversed, and parents end up needing a hand financially. But what’s the best way to help a parent buy a home when they don’t have the financial means to do it themselves? It’s an interesting situation that Bob Johnson (AKA Bob Mortgage) came across recently. In today’s 15th BobMortgage Zone episode, the senior mortgage adviser at the nation’s oldest private lender, Wallick & Volk, Bob walks us through a situation that may sound familiar to some people, and how to save money when roles of child and parent are reversed. 

Want to learn more? 

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First-time homebuyers are finding it harder and harder to get into their dream home.

The National Association of Realtors said that first-time homebuyers make up only 28 percent of the national housing market in a Jan. 28 new story, the lowest number since the organization started measuring the demographic in 2008. According to the NAR, first-time homebuyers typically make up about 40 percent of the market, but several factors are keeping them from purchasing a home, including higher competition for lower priced properties, which are being swept up by investors at increasingly high rates.

Cash purchases accounted for 42.1 percent of all U.S. home sales in December, up from 38.1 percent in November, and up from 18 percent a year prior, according to RealtyTrac.

Tight credit is also preventing younger home buyers from qualifying for a mortgage to buy a home, as mortgage lenders require higher down payments. FHA loans, which many first-time home buyers turn to for the low downpayment requirements, have seen their market share decrease recently after an increase in premiums and fees this year made them less attractive to some.

However, Fannie Mae and Freddie Mac are lending more to first-time buyers, according to a report from Inside Mortgage Finance. The share of financing for first-time home buyers by the mortgage giants reached 19.5 percent in December, up from 14.1 percent a year prior.

Dallas agents have noticed this trend, too. Keller Williams Urban agent Britt Lopez says that in 2012 and 2013, first-time homebuyers made a huge impact on the market, coming off the fence to buy properties in the $300K to $400K range. In those two years, first-timers made up about 60 percent of her client base.

“I believe that the improvement in our basic economy here in Dallas has been the catalyst for the influx of ready, willing, and able buyers into the market,” Lopez added. “I also think that the interest rates and mortgage requirements play a huge part in the buying temperature. Potential buyers pay very close attention to the media regarding mortgage statistics and real estate prices. If a threat of rising rates and prices looks imminent then they will rush to buy now.”

On the other hand, some buyers have been squirrelling away, renting to save up for a down payment, waiting for the perfect time and perfect house to make the perfect investment. While planning is a great asset, sometimes buyers have missed out on deals by waiting too long.

“I believe that there are many buyers who have been ready for a while with their credit and down payment money, waiting for the most opportune time to buy. They watch and wait and pounce as soon as the right property comes available,” Lopez said. “The shortage of property has caused multiple offers to be much more common with many first-time buyers having to try for several homes before they get one.”

Kathy Murray has found that many first-time buyers have saved up for a considerable down payment — a must now that zero-down financing is more rare than a black rhino. Murray says she sees many first-time buyers with at least 20 percent down, but hasn’t closed on a first-time deal yet for 2014.

With new mortgage qualifications and increasing rates, it’s likely we’ll see fewer first-time buyers for the remainder of 2014. What do you think?

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Like they say, there’s good news and there’s bad news.

Realtors and brokers won’t come out unscathed from the federal government shutdown, as a report from the National Association of Realtors shows. If you’ve got a closing coming up, best be prepared to have some hiccups.

While the NAR report says that FHA will “continue to endorse new loans in the Single Family Mortgage Loan Program, multi-family loans won’t be processed. VA loans will be processed, too, and flood insurance from FEMA will get a government stamp, and Fannie Mae and Freddie Mac are still keeping the gears greased.

On the flip side, if you have to process IRS forms or verify Social Security numbers through the SSA, you’re out of luck because these offices are closed.

Read the whole document below.

NAR Government Shutdown Brief

case shiller-BG093_homepr_20130730104153_MGWe got some more good news out of Case-Shiller this week, but we were quick to be warned not to get too excited. I swear, will it ever be Miller Time?

Dallas-area home prices rose a record amount in June, 8% over last June, but rising mortgage rates, the growing mess in Syria, and economic QRM”ick” could end our appreciation party.

What Standard & Poor’s/Case-Shiller Home Price Index told us Tuesday: prices for Dallas-area single-family homes, pre-owned, not newbies, increased 8 percent in June from a year earlier. Dallas is one of the few places in the country where prices have surpassed their pre-recession peaks.

That was below a national increase of 10.1%, because, remember, our market never went as bust as others did. So the fact that we were below the national average — by a lousy 2 points — is no biggie. D’Ann Petersen of the Dallas Federal Reserve says our home prices are less volatile than U.S. prices, and we are seeing larger than average price gains because sales are so strong.

The median price of a home in Dallas is now about $181,000, up 11.5% from a year ago. Affordable? Yes, but nudging higher to $200,000. Maybe that’s why earlier this month, Trulia.com put Dallas on a list of the nation’s 10 most overheated housing markets. Trulia chief economist Jed Kolko said Dallas homes were overvalued by 4 percent, but he also sees a cooling-off period, and he was more concerned about Midland where you cannot even get a HOTEL ROOM. Other experts, like IHS economist Erik Johnson, says U.S. housing inventory shortages will only get worse. So there is this ying and yang: mortgages inching up, the future demise of Fannie Mae and Freddie Mac, but fewer homes to choose from.

Looking at the list, you can see how cities hit the hardest during the bust made the biggest leaps up in values. Vegas is looking hot again, and in fact, I’ve heard jobs in Vegas are opening up. Home prices jumped 24.9 percent in Las Vegas, 24.5 percent in San Francisco, and four other cities — Atlanta, Los Angeles, Phoenix and San Diego — saw prices rise 19 to 20 percent.

Dallas and Denver are the only cities in the index to hit an all-time high in June.

Dallas posted smaller real estate gains for June than for May. Dallas home prices rose 2% from April to May, but only 1.7% from May to June. June is usually a huge real estate transaction month, but I suspect the market has been so frenetic since January, it ramped out June sales to earlier months. Inventory also continues to be a problem.

Good news is the number of foreclosed houses for sale in Dallas is down more than 30% in June, measuring from the worst foreclosure period of the recession, this from CoreLogic Inc. Good news for the economy, bad news for some mortgage companies and law firms.

It was low interest rates — and jobs — that jump-started homebuyers starting in January 2013. But the supply of homes for sale has not been able to keep up with demand, driving up prices. And interest rates are inching back up, oh so very gradually, getting closer to 5%. It would take interest rates to jump up to 7% before some people felt knocked out of the market, someone in the mortgage world told me this week, but still that inventory void could keep values up.

John Burns of John Burns Real Estate Consulting told the Dallas Morning News that in general, the West is doing better than the East in terms of real estate, with “huge differences by geography.”

“Places such as Phoenix, San Francisco and Texas have the strongest markets because of supply constraints, he said.”

“The Texas economy is booming in building,” Burns said. “The market is on fire, and a lot of it is based on oil and gas.”

The California market is seeing huge price appreciation due to very limited supply of new homes. Home prices below historical averages in Las Vegas, Chicago, Atlanta and Tampa, Fla., are attracting investors. The Northeast is still dealing with a backlog of home foreclosures — partly because a court proceeding is required. Here are some of Burns forecasts and observations about the U.S. housing market:

Home prices: He sees high single-digit price appreciation starting next year and returning to more “normal” affordability levels in 2016 or 2017. Home prices will rise 10 percent to 11 percent this year, 6 percent in 2014, 4 percent in 2015 and 1 percent in 2016.

Homebuyers: Entry-level home buying is slowing because the most qualified buyers already have bought, not because of rising mortgage rates. High multiple car payments are keeping some people from qualifying for a home mortgage.

Apartments: Ten major U.S. cities have a high supply of apartments, including Austin, Dallas, Houston and San Antonio. More apartments than single-family homes are being built in Austin, Burns said.

U.S. housing permits: Burns expects single- family housing permits will grow to 805,000 and apartment permits will rise to 436,000 in 2014 — still below historical levels.

I like this Burns guy. Apartment construction is out of control. Agree on first time home-buyers: first the Obama administration embraced them with a first-time homebuyer’s credit, now it’s saying “screw you” as it prepares to dismantle Fannie Mae and Freddie Mac. After all, it was Bill Clinton who, in 1996, decided that everyone deserved a home whether they could afford it or not. Kind of like how President Obama thinks everyone deserves health care. October will be a very interesting month.

Let’s see how on target he is with those predictions…

Home price index
Change in home prices in June from a year earlier:
Las Vegas 24.9%
San Francisco 24.5%
Los Angeles 19.9%
Phoenix 19.8%
San Diego 19.3%
Atlanta 19.0%
Detroit 16.4%
Miami 14.8%
Portland, Ore. 11.8%
Seattle 11.8%
Minneapolis 11.5%
Tampa, Fla. 11.1%
Denver 9.4%
Dallas 8.0%
Charlotte, N.C. 7.8%
Chicago 7.3%
Boston 6.7%
Washington 5.7%
Cleveland 3.5%
New York 3.3%
Composite 12.1%
SOURCE: Standard & Poor’s/Case-Shiller

 

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I’m just going to say it: is this administration trying to KILL OFF the U.S. housing market?

By now, if you are in the real estate business, you are thinking about serious drinking. Save the calories if you live in Dallas: we did OK. Not great, but OK. The S&P/Case-Shiller report says overall, the nation’s home prices spiraled downward at the end of 2010, even as the rest of the economy gained steam.

National home prices fell 4.1% during the last three months of 2010, compared with 12 months earlier. They were down 1.9% compared with three months earlier.

“Despite improvements in the overall economy, housing continues to drift lower and weaker,” said David Blitzer, spokesman for S&P.

And things may get a lot worse, said Robert Shiller, a Yale economist and half of the Case-Shiller team, in a telephone/web conference after the report’s release.

“There’s a substantial risk of home prices falling another 15%, 20% or 25% more,” he said.

Good Lord, did he say 25% more?

Shiller is referring to talk out of Washington about the government limiting and reducing its presence in Fannie Mae and Freddie Mac, the GSEs that guarantee about three-fourths of the loaning going on right now. Add in that talk of saying goodbye to the mortgage interest deduction — all this threatens home values. Private mortgage money will have to cover most home loans and banks don’t lend money to be nice, they do it to make money. Lending costs will increase which will further hurt home prices.

I know we need to ease out of the GSEs, but baby steps!

So should you buy or wait? I honestly think it’s six to one-half dozen: prices may fall further, but borrowing costs and interest rates could more than make up the difference. If you’re a cash buyer, this is your year.

But Dallas, God bless Dallas. Dallas was listed as one  of six cities that showed an improvement in annual growth rates in December as opposed to November, 2010. And we stayed above our price lows from February 2009. How can we ever forget that was the month when everything cratered!

Problem is, even our treading water here, which is great, is going to be splashed over by all the negative national news.¬† Just keep thinking those positive thoughts, pray that the Middle East calms down and the price of oil doesn’t sky-rocket.

Like the builder I was with today said, this spring market has got to be good! Of course, high oil prices sometimes benefit Texas.

I’m off to church!

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Good morning.

At 9am EST today, S&P Indices released the year-end results of the S&P/Case-Shiller Home Price Indices. Data through December 2010 reveals the following:

  • The U.S. National Home Price Index declined by 3.9% during the fourth quarter of 2010.
  • The National Index is down 4.1% versus the fourth quarter of 2009, the lowest annual growth rate since the third quarter of 2009 when prices were falling at an 8.6% annual rate.
  • 18 of the 20 MSAs covered by S&P/Case-Shiller Home Price Indices and both monthly composites were down compared to December 2009.
  • San Diego and Washington DC as the only two cities where home prices are increasing on a year-over-year basis
  • The 10-City and 20-City Composites were down 0.9% and 1.0%, respectively, from their November levels. They are now only 3.9% and 2.3% above their April 2009 trough. Back in July 2010, they were +7.9% and +6.9% above the troughs, respectively.

The complete press release, as well as the historical data files, is attached to this email. Also attached are the details to today’s 10am teleconference on U.S. home prices featuring presentations by Professor Robert Shiller and Doctor David Blitzer. A Q&A session follows the call.

Declining home prices

Percentage change in home prices in December 2010 compared to year earlier in each market.

Atlanta …………… -8.0%

Boston …………… -0.8%

Charlotte ………… -4.4%

Chicago …………. -7.4%

Cleveland ..……… -4.0%

Dallas ……………. -3.6%

Denver …………… -2.4%

Detroit ……………. -9.1%

Las Vegas ……….. -4.7%

Los Angeles ‚Ķ‚Ķ… 0.2%

Miami …………….. -3.7%

Minneapolis ……… -5.3%

New York ………… -2.3%

Phoenix ‚Ķ‚Ķ‚Ķ‚Ķ… -8.3%

Portland …………… -7.8%

San Diego …………. 1.7%

San Francisco …….. -0.4%

Seattle ……………… -6.0%

Tampa ……………… -6.2%

Washington ………… 4.1%

Composite-20 city …. -2.4%

Source: Standard & Poor’s and Fiserv