What’s happening in the market – June 2014 (Part 2)
NEW HOME SALES ARE UP
New home sales in April were up 6.4% over March. While this was a good improvement, new home sales were down 4.2% from April of 2013. “The median sales price of new houses sold in April was $275,800, with the average sales price reaching $320,000.” – (cnnfn.com)
PENDING HOME SALES TAKE A HIT
Pending home sales in April took a big hit; down 9.2% over April 2013.
Lawrence Yun, chief economist for the National Association of Realtors, states that things could get even worse due to the fact that mortgage rates are at a nine month low. Low rates are not driving buyers. The overall U.S. economy is also struggling. – (cnnfn.com)
AGENCY GUIDELINE UPATES AND CHANGES
FHFA Director Mel Watt is less interested in reform, and more interested in making Fannie Mae and Freddie Mac stronger, and potentially bigger.
The Director recently made some announcements regarding guideline changes:
1. Fannie Mae and Freddie Mac will not be lowering the conforming loan limits. In most housing markets the conforming loan limits will remain at $417,000.
2. The Home Affordable Refinance Program (HARP) will not be expanding eligibility or time limits.
3. Fannie Mae and Freddie Mac will be expanding credit guidelines; allowing more borrowers to qualify.
4. Fannie Mae and Freddie Mac will extend waivers to lenders, reducing their liability costs.
Watt said the FHFA has three goals: maintain, reduce and build. “MAINTAIN, in a safe and sound manner, foreclosure prevention activities and credit availability for new and refinanced mortgages to foster liquid, efficient, competitive and resilient national housing finance markets,” Watt said. “Our first strategic goal, maintain, requires Fannie Mae and Freddie Mac to carry out and strengthen, where possible, three aspects of their core business operations. “First, we expect them to take actions that improve liquidity in the present single-family housing finance market. Second, we believe they should continue to improve servicing standards and foreclosure prevention actions. Third, we think they have a critical ongoing role in the multifamily sector, particularly for affordable multifamily properties,” Watt said. (housingwire.com)
HOME DEPOT CO-FOUNDER ATTACKES REGULATION
Home Depot co-founder, Ken Langone blames government regulation for the lack of home loans being made to new prospective home buyers, at a Las Vegas convention this month. “We’re being strangled by regulation,” Langone said.
While Langone did admit that Wall Street was in many ways responsible for the financial crisis, he feels that regulation in the wake of the crash has gone too far. “We blew it by the excesses we allowed to happen, no doubt about it,” he said, adding that the undoing of the Glass Stegall act in the late 1990s made the markets deregulated to a fault. However, “we’re now at the highest point of regulation,” he declared. (cnnfn.com)
This is the end of part two of three.