May 2014 Cal-Culator - Atlanta Residential Real Estate Rebounds

Atlanta Residential Real Estate Rebounds

Posted on June 9, 2014 by admin

     

After months of sluggish behavior in the Atlanta residential real estate industry, May finally demonstrated significant housing recovery. After two months of a score of 5.7, the May Cal-Culator ranks a 6.0 due to improvements across the board in pending home sales, foreclosures and home price gains.

The May Cal-Culator

The leading measure of U.S. home prices, the S&P/Case-Shiller Home Price Indices, latest data showed that home prices in the 20-City Composite, which includes Atlanta, increased 0.9 percent month-over-month.

Foreclosure levels are a  positive trend that has been steady in 2014. According to CoreLogic’s most recent monthly report, foreclosures are down 0.4 percent month-over-month and down 18 percent from the previous year. The data also revealed April marked the 16th consecutive month of at least a 20 percent year-over-year decline in the inventory of foreclosed homes.
“We now have registered two and a half years of continuous decreases in the number of homeowners who are in some stage of the foreclosure process,” said Anana Nallathambi, president and CEO of CoreLogic. “This consistent decline means fewer Americans are experiencing the distress of delinquency and default. The recovery may be slow, but it is steady.”

RealtyTrac found in its April 2014 Residential & Foreclosure Sales Report that sales of U.S. residential properties, which include distressed and non-distressed sales of single-family homes, condominiums and townhomes, increased year-over-year by 4 percent. The report also found median sales prices of U.S. residential properties had the largest yearly increase since prices hit rock bottom in March 2012.

For the second straight month, the Pending Homes Sales Index improved, according to the National Association of Realtors. The forward-looking indicator, based on contract signings, increased 0.4 percent from the previous month. The report also indicated projected increases in home prices during the remainder of 2014.

“Higher inventory levels are giving buyers more choices, and a slight decline in mortgage interest rates this spring is raising prospective homebuyers’ confidence,” said Lawrence Yun, NAR chief economist. “An uptrend in closed sales is expected, although some months will encounter a modest setback.”

Unfortunately, every month experiences some hiccups when it comes to real estate. The NAR’s Realtors Confidence Index, compiled from a survey of more than 3,000 Realtors, revealed a dip in confidence levels among Realtors about current market conditions.

“Tight credit conditions and the lack of inventory, particularly for ‘middle-priced’ homes were reported as the major roadblocks to increased sales,” said the report headed by Yun. “With a tight supply, properties were generally on the market for fewer days, and prices continued to increased in many areas although not as strongly as in 2012-2013.”

www.southeastmortgage.com

10 Year Bond (Fact or Fiction) - This one is playing out real time - TBD

The 10 year Bond is one of the primary indicators Mortgage Professionals use to guess rate direction and analysts use for Bank Non-Interest Income potential.

Normally the 10 year bond yield would be higher with the Stock market at all-time highs, high consumer confidence, rising housing prices, and rising household income.

 

I read posts from originators in the industry cheering a lower bond yield and the prospects of lower mortgage rates.  This baffles me in that the originators doing this are missing the bigger picture.  Rates are already at historical lows and a further reduction in bond yields (higher bond prices) could cripple the foundation that supports their client’s confidence to buy.  Consumers buy homes for various reasons.  The most common is security for their family, a sense of belonging to a community, better schools for their children, and the benefits an investment in a home has over renting.  There is a saying “people forget rates but never forget poor service”.

 

As an industry and as a consumer, we should all appreciate the favorable rate environment QE1, QE2, and QE3 provided and understand a healthy economy is more important than short term gratification.

 

So why is the 10 year bond yield falling?  Is it an aberration or is something more insidious brewing?

Ø  Short Covering as the month is ending and quarter drawing to an end?

Ø  Flight to safety for foreign entities?

Ø  Veil Government monetary policy contrary to public taper?

 The consequences of a falling 10 year bond yield?

Ø  Given the reduced channels of income available to Banks, without spreads provided from deposits to overnight and mid-term investing, recovery could be in question and could facilitate a conservative credit posture thus slowing growth

Ø  If banks miss earnings due to Non-Interest Income, the market could interpret this as a slowing economy initiating an overreaction by the overall market creating a severe correction and consumer pull back

Ø  Investors could extrapolate bank earnings to other healthy sectors forcing a broad sell off and a reversion to 2009 mind sets

Ø  A broad sell off greater than 20% could impact consumer / business confidence enough to severely impact jobs and the current economic recovery pushing us closer to the next recession or worse

Recessions occur roughly every 7 years and the US is 5+ years out of the last one with the Stock Market at all-time highs.  As a business person and consumer, I prefer the growth periods versus the contraction periods.  The current economic growth can continue with a more stable base provided by a steeper yield curve and bonds coupled to historical relationships.

 
 

 

In my opinion all outcomes are possibilities; however, the Federal Reserve will ensure banks remain healthy and thus the 10 year yields will go north due to basic economic relationships or monetary intervention.  We should all hope there is a keen eye on this subject.

 

Cal Haupt

Chief Executive Officer

Southeast Mortgage of Georgia, Inc.
www.southeastmortgage.com

National Mortgage Professional - J.D. Crowe Elected Mortgage Bankers Association of Georgia President

J.D. Crowe Elected Mortgage Bankers Association of Georgia President

Wed, 2014-05-28 11:00 — NationalMortgag...

 

The Mortgage Bankers Association of Georgia (MBAG) board of governors has elected John David Crowe, president of Southeast Mortgage of Georgia, Inc., to serve as 2014-2015 president of the association. The MBAG is a trade association comprised of mortgage lenders, brokers and affiliated industry associates dedicated to the preservation and improvement of the mortgage banking correspondent system. J.D. assumes his role as president on May 17, 2014 and will serve a one-year term.

With more than 15 years experience in the mortgage industry, J.D. Crowe has been actively involved in the MBAG for years and served as first vice president for one term in 2013-2014. He is also two-time past president of the Georgia Association of Mortgage Bankers (GAMB), has served on the GAMB board of directors, the board of directors for the Georgia Real Estate Fraud Prevention and Awareness Coalition, the Georgia Mortgage Brokers Political Action Committee board and has been active in the GAMB legislative committee. J.D.’s involvement has aided these groups in strengthening relationships with state and national officials.

“It’s a great honor to serve as the MBAG President for 2015,” said Crowe. "I am grateful to Greg Shumate for his dedicated service to the association as president this past year and the entire board for offering me the opportunity to make a difference in our industry. Throughout my term I will continue the association’s dedicated efforts to provide value and benefits to our members and the finance industry through continued communication, education and advocacy.”

"The Mortgage Bankers Association of Georgia elected the perfect choice for its next President. J.D. brings a wealth of knowledge to his position drawn from his experience in the broker industry, correspondent industry, and now from a direct non-bank lender's perspective. He is ideally placed to help steer the association as they work with businesses to accelerate growth,” said Cal Haupt, CEO of Southeast Mortgage of Georgia.

What You Need to Know Before Buying Your First Home

What You Need to Know Before Buying Your First Home

Posted on May 27, 2014 by admin 

 

Last week, we introduced our two-part series about first-time homebuyers with “Are You Ready to Buy Your First Home?”, a look inside the factors that indicate if hopeful homebuyers are ready to make the plunge. This week, we discuss a few things that you need to know as a first-time homebuyer.

Shaun Graham, Vice President of Southeast Mortgage

 

Do I need to be pre-approved for a loan?
A “mortgage pre-approval” is a written statement from a lender indicating that the borrower will most likely qualify for a loan at a certain rate based on income and credit information. However, the pre-approval doesn’t guarantee the loan or the rate quoted.
Though the loan isn’t guaranteed, there are multiple reasons why you should obtain pre-approval. Sellers and Realtors are more likely to engage with someone that is seen as a credible buyer and stands out in a competitive market. The pre-approval will also offer you an idea of what kind of house you can truly afford given the rate.
If you aren’t able to secure pre-approval the first time around there are things you can do to secure approval in the future, including striving to improve your credit score, decreasing your debt-to-income ratio and working toward a more substantial down payment.

What should I take with me with when applying for a mortgage?
With 2014 being labeled as the “year of documentation” by HSH , consumers will need to be extra-prepared with their paperwork when applying for a mortgage. Even if you’re not a first-time homebuyer, the necessary documentation will be new to you if you haven’t applied for a mortgage in the past five years. To satisfy mortgage lenders you will need:

• Photo identification
• Tax returns from the last two years
• Two recent pay stubs
• Bank statements from the last two months
• Proof of homeowner’s insurance
• Rent or utility checks. First-time homebuyers will need to prove they have a history of making payments on time.
• Verification of position and salary
• List of credit card accounts and amount owed on each
• List of assets such as bonds or stocks

Other forms may be need to be provided on a case-by-case basis such as 1099 forms if you are self-employed, gift letters and a signed sales contract after making an offer on a residence.

 Do I need a Realtor?
Having a Realtor is an invaluable asset when shopping for a home as outlined in our previous column “Why Enlisting a Realtor’s Assistance is Still a Necessity for Buyers.” Contracts, often up to 50-pages long, and negotiations can be extremely tricky whether it’s a buyer’s first home or fifth home. Contrary to popular belief, Realtors are bound by to law to act in the buyer’s best interest, therefore, it is highly recommended to take advantage of a Realtor’s experience and guidance.
Though buying your first home can be overwhelming, a mortgage lender and Realtor can be extremely beneficial to help ease the process. In addition, many Realtors offer first-time homebuyers seminars and workshops, often for free.

JD Crowe, MBAG President, Acceptance Speech 2014

JD Crowe, Mortgage Bankers Association of Georgia President, Acceptance Speech at MBAG Conference in Destin, Florida May 17, 2014

 

 

www.southeastmortgage.com

770-279-0222

April Cal-Culator Reveals Continued Spring Setback

April Cal-Culator Reveals Continued Spring Setback

 After a strong winter in the real estate industry, the spring season continues to disappoint with sluggish market performance. Though the industry hit a record-breaking 6.0 twice earlier this year, the April Cal-Culator
lingered at a 5.7. Positive gains in underwater mortgages (home loans with a higher balance than the market value of the home) and foreclosures were offset by slow growth in existing-home sales and home prices.

The April Cal-Culator

Foreclosures
One of the bright spots of the month is CoreLogic’s latest National Foreclosure Report.  The report found that foreclosure rates (the 12-month sum of completed foreclosures) are back to November 2008 levels and foreclosure inventory is down 5.1 percent year-over-year.
“The inventory of homes in foreclosure and serious delinquency status are back to 2008 levels, yet remain elevated from a historic perspective,” said Dr. Mark Fleming, chief economist for CoreLogic. “While getting healthier, the housing market is still a long way from being fully recovered.”
Unfortunately, Georgia was leading the nation with the fifth-highest number of completed foreclosures during the past 12 months – 33,000.
Home Prices
The most recent S&P/Case-Shiller Home Price Indices showed little growth in home price gains for the majority of the 10-City and 20-City Composite, where Atlanta is included. Atlanta posted a -0.6 percent change, seasonally adjusted, month-over-month and -0.1 percent change year-over-year. David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said these “annual rates cooled the most we’ve seen in some time” and that the recovery in housing starts is “faltering.”
Home Sales
A report from the National Association of Realtors found that existing-home sales remained stagnant in March. Declining sales in the West and South offset gains in the Northeast and Midwest. Overall total existing-home sales slipped 0.2 percent.
“There should really be stronger levels of home sales given our population growth,” said Lawrence Yun, NAR chief economist. “In contrast, price growth is rising faster than historical norms because of inventory shortages.”
However, pending home sales increased for the first time in nine months. The Pending Home Sales Index, a “forward-looking indicator,” rose 3.4 percent nationwide and 5.6 percent in the South in March.
“After a dismal winter, more buyers got an opportunity to look at homes last month and are beginning to make contract offers,” said Yun. “Sales activity is expected to steadily pick up as more inventory reaches the market, and from ongoing job creation in the economy.”
Underwater Properties
RealtyTrac’s U.S. Home Equity & Underwater Report for the first quarter of 2014 showed that 17 percent of all properties with a mortgage were seriously underwater, where the combined loan amount of the property is at least 25 percent higher than the property’s estimated value, the lowest level since RealtyTrac began tracking negative equity in 2012. Unfortunately, Georgia has the 10th-highest number of underwater mortgages in the nation.
“U.S. homeowners are continuing to recover equity lost during the Great Recession, but the pace of that recovering equity slowed in the first quarter, corresponding to slowing home price appreciation,” said Daren Blomquist, vice president at RealtyTrac.
The May Cal-Culator will be released June 10 and will hopefully represent resurgence in the housing industry.

April 2014 CRM News Letter

www.southeastmortgage.com