MARKET TRENDS: Home Prices Could Jump 9.7% in 2013, J.P. Morgan Says

Home-price forecasts for 2013 are on the rise.

J.P. Morgan Chase & Co. expects U.S. home prices to rise 3.4% in its base-case estimate and up to 9.7% in its most bullish scenario of economic growth. Standard & Poor’s, which rates private-issue mortgage bonds, on Friday said it expects a 5% rise in 2013.

The J.P. Morgan analysts boosted their base-case estimate from 1.5% after a convincing rise in the “net demand” for housing this year has surpassed 2 million homes for the first time since 2006, said John Sim, a strategist at the investment bank. Net demand is the pace of existing home sales minus the inventory of homes available for sale.

“Net demand has picked up a lot in 2012,” said Mr. Sim. “Once you get north of the 2 million territory, you are in the positive growth area unless you get a lot of distressed inventory, which this year hit a low point” since at least 2008, he added. J.P. Morgan predicts that net demand to rise from 2.7 million next year from 2.3 million this year.

An expected increase in home prices in 2012 triggered a run into some of the riskiest real estate assets, such as subprime mortgage-backed securities from the real estate boom, and analysts including Mr. Sim expect that trend to continue. Rising home prices and the quest for yield has also given a tailwind to new mortgage bond issuance that has been mired in the fallout of the housing crisis and regulatory uncertainty for the past four years.

U.S. home prices nationwide increased on a year-over-year basis by 6.3% in October, the biggest increase since June 2006, according to CoreLogic. Investors zoning in on the increases bought subprime mortgage bonds, which have posted returns of more than 40% since December.

Home price increases could exceed J.P. Morgan’s base forecast if investors seeking yield push deeper into real estate, according to Mr. Sim’s home price report.

That may already be happening, considering recent comments by Luke Scolastico, a vice president at Credit Suisse, one of two issuers of mortgage bonds without government backing since the financial crisis. Credit Suisse is increasing its purchases of jumbo loans to meet demand for securities it sees from investors, he said on an American Securitization Forum panel this week.

“We’re buying loans, every day…and (on the month,) more than the month before,” Mr. Scolastico said. Part of the reason is because of home price appreciation, but also because of the “technical demand” for relatively higher yielding assets as Federal Reserve policies depress interest rates, he said.

New mortgage bond sales from other issuers, including investment banks, could boost

THE ECONOMY: Economic Indicators Bolster Optimism for U.S. Recovery

WASHINGTON (Reuters) — The number of Americans filing new claims for jobless benefits fell sharply last week to a near four-year low, and retail sales rebounded in November, offering hopeful signs for the United States’ struggling economic recovery.

The New York Times

The New York Times

The New York Times

Initial claims for state unemployment aid fell for a fourth consecutive week, dropping by 29,000 to a seasonally adjusted 343,000, the Labor Department said on Thursday. They are now at their lowest level since early October, and within a hair of territory last seen in early 2008.

Another report suggested consumer spending picked up last month despite fear Washington would fail to avoid harsh austerity measures that could push the nation into recession. Worries over the automatic tax increases and spending cuts that would go into effect if Republicans and the White House cannot reach an agreement on the so-called fiscal cliff hit consumer sentiment hard in early December.

A slow but steady improvement in the labor market has helped support consumer spending, which propped up economic growth in the third quarter when business investment sagged.

Economic growth is expected to slow in the fourth quarter, hurt by slower inventory growth and a reduction in investment by companies worried about the continuing economic negotiations.

However, the economy does appear to be bouncing back after Hurricane Sandy, which made landfall in the East Coast in late October and led to a spike in jobless claims.

The four-week moving average for new claims, which irons out weekly volatility, dropped by 27,000, to 381,500.

“The labor market might be improving a bit quicker than expected,” said David Sloan, an economist at 4Cast in New York.

The Commerce Department said retail sales rose 0.3 percent last month, rebounding from October’s 0.3 percent decline. The increase fell short of the forecast in a Reuters poll of economists, but a measure of core sales exceeded expectations.

The core retail sales figure, which excludes automobiles, gasoline and building materials, rose 0.5 percent in November. The government uses this measure to calculate consumer spending.

The Commerce Department also said business inventories, a critical component of economic growth, rose 0.4 percent in October, in line with expectations.

http://www.nytimes.com/2012/12/14/business/economy/us-jobless-claims-and-sales-figures-bolster-hope-for-recovery.html?_r=0&adxnnl=1&smid=li-share&adxnnlx=1355498339-Ch5iBh5XxlHP4WBgo+pbpg

MARKET TRENDS: A new housing boom

The long-battered housing market is finally starting to get back on its feet. But some experts believe it could soon become another housing boom.

Obama's Economy

Signs of recovery have been evident in the recent pick ups in home prices, home sales and construction. Foreclosures are also down and the Federal Reserve has acted to push mortgage rates near record lows.

A look at where the economy stood when Obama took office and what's changed since.

But while many economists believe this emerging housing recovery will produce only slow and modest improvement in home prices, construction and jobs, others believe the rebound will be much stronger.

Barclays Capital put out a report recently forecasting that home prices, which fell by more than a third after the housing bubble burst in 2007, could be back to peak levels as soon as 2015.

"In our view, the housing market had undergone a dramatic over-correction during the prior five years, resulting in pent-up demand for housing purchases that would spark a rapid rise in housing starts," said Stephen Kim, an analyst with Barclays, in a note to clients.

In addition to what Kim sees as a big rebound in building, he's bullish on home prices, expecting rises of 5% to 7.5% a year.

Construction is expected to be even stronger, with numerous experts forecasting home construction to grow by at least 20% a year for each of the next two years. Some believe

RENTING OR BUYING: 'Renter Nation' Just A Myth: 93% of Millennial Renters Plan To Buy A Home Someday

Trulia‘s Chief Economist discusses the findings from Trulia’s latest American Dream survey. Consumer optimism about homeownership is rebounding as the housing market recovers, even among young adults who were often pegged as renters for life during the recession. Meanwhile, rising prices will encourage some homeowners to sell in 2013.

Trulia’s year-end 2012 American Dream surveyreveals how today’s consumers are more optimistic about the housing market and more ready to buy. For Millennials, the recent housing bust shapes their near-term expectations about the market in general, but nearly all young renters want to buy in the long run. Going into 2013, consumers expect inventory to expand, and it looks like that will happen so long as prices keep rising: as price gains push more homeowners into positive equity, more will be willing to sell.

To get Americans’ take on homeownership, we worked with Harris Interactive to conduct an online survey of 2,083 U.S. adults between November 15-19, 2012. For the full methodology, see below.

Americans More Bullish on Buying HomesAs 2012 wraps up, the housing market is looking up on all fronts. It was the first year since 2006 in which home prices will have increased. In addition, construction and sales are both significantly up from their lowest point during the housing crisis, and vacancies, delinquencies, and foreclosures have all come down. Key for the housing market, job growth has picked up, and unemployment has fallen to 7.7% from 8.2% six months ago and 9.8% two years ago. These trends all give consumers more buying power and more confidence in the economy

As a result, consumers are increasingly bullish on buying homes. More than 1 in 4 Americans (27%) are more positive about homeownership than they were six months ago, compared with 19% who reported feeling more negative about homeownership. That translates into more renters being eager to buy in the next two years:

Survey	% of renters planning to buy in next two years
January 2011	22%
May 2012	28%
November 2012	31%

But homeownership still has its skeptics. In November, 72% of consumers said that homeownership is part of their personal “American Dream.” That’s unchanged since May and up a bit from 2011, when 70% of consumers said so in our January and August surveys. But fewer consumers today believe in homeownership than in 2009 and 2010, when 76% and 77% (respectively) agreed. Will this sentiment bounce back, or has the housing crisis permanently taken the dream of homeownership down a notch? Only time will tell.

Millennials and the Housing Bust: Shaken, Not ScarredThe housing crisis looms especially large for younger adults–those aged 18-34 years old–who’ve only been thinking seriously about housing in these recent years of boom and bust. They have no memory of the decades when home prices rose modestly but steadily, or when mortgage rates were 7%, or up to 10%. These younger adults had a particularly rough recession: their unemployment rate peaked at 10.6% in October 2009, compared with 10.0% for adults overall, and many put off the decision to buy or rent their own home, and instead doubled up with roommates or lived with parents. This age group really matters for the housing market: their decisions about forming households and homeownership directly affect housing demand.

Our survey shows these Millennials haven’t been permanently scarred by the recession. Few have written off homeownership. Among 18-34 year-olds, 72% say homeownership is part of their personal American Dream–same as for the adult population overall. And the vast majority of young renters plan to own: 93% of 18-34 year-old renters plan to purchase a home someday. Older renters are more likely to say they’ll never buy than these young renters are. And, 43% of these younger adults are homeowners already. That leaves very few young adults who rent today and plan to rent forever.

However, despite these long-term aspirations, younger adults see a very different near-term housing market in their crystal ball. Consumers, regardless of age, expect both rents and housing prices to rise in 2013; they also expect more inventory, both for rent and for sale, and higher mortgage rates:

	% expecting increase	% expecting decrease	Difference (increase minus decrease)
Rents	46%	9%	37
For-sale inventory	41%	14%	27
Home prices	46%	19%	27
Mortgage rates	40%	15%	25
For-rent inventory	35%	15%	20
Note: respondents could also answer “no change” or “not sure”.

Younger adults, though, have a harder time imagining price increases and higher mortgage rates than older adults who have lived through more years of rising prices and high rates. Just 37% of Millennials expect prices to rise in the next year, and 22% expect prices to fall:

Age:	18-34	35-44	45-54	55+
% expecting prices to rise next year	37%	43%	49%	55%
% expecting prices to fall next year	22%	15%	19%	18%
Note: respondents could also answer “no change” or “not sure”.

They’re also much less likely than older adults to expect higher mortgage rates: among 18-34 year-olds, 32% expect rates to rise next year and 20% expect lower rates next year. That means younger adults may be in for a rude awakening when they try to buy. With lower expectations about prices and mortgage rates, Millennials have higher hopes than older adults that homeownership will remain relatively affordable. Today’s young renters may be overestimating what they’ll be able to afford to buy when their time comes.

Rising Prices Will Encourage Sales in 2013Nearly one third of renters want to buy in the next two years–but will they find homes for sale? In 2012, inventory was down 23% nationally year-over-year, and down 43% since the summer of 2010, according to the Department of Numbers’ HousingTracker. Much of this decline is thanks to fewerforeclosed homes on the market. In 2013, two forces could add to inventory, expanding the options for would-be buyers: (1) more construction of new homes, and (2) more homeowners selling existing homes. Our American Dream survey shows that rising prices in 2013 could trigger more sales–and therefore bring more inventory onto the market.

Among current homeowners, 22% said they are somewhat likely, fairly likely, or extremely likely

TAXES: Preserving the Mortgage Interest Deduction

In a time when the U.S. government is looking for tax hikes and ways to cut back and reduce the federal deficit of $16 trillion, the homeowners' mortgage interest deduction is on the chopping block. While the whole deduction might not be scrapped, modifications and limitations to it could affect many homeowners.

Suggestions from economists range from implementing an overall cap on itemized deductions, to eventually having a flat credit for the mortgage interest deduction. Other ideas include capping the amount of the deduction, say, at $500,000 instead of $1 million "or the rate at which mortgage interest deducted would be lower than the top marginal tax rate," said Jed Kolko Chief Economist of Trulia.com. A complete abolishment of the mortgage interest deduction "could greatly destabilize the economy," says Dr. Lawrence Yun, NAR Chief Economist.According to the Christian Science Monitor/TIPP survey, Americans would rather lose the charitable giving tax deduction than the mortgage interest deduction. The National Association of Realtors (NAR) reports that's because it's a middle class key incentive that helps Americans build wealth.

Approximately half of the amount of tax deductions taken by Americans are housing- related. Homeowners who haven't paid down a lot of principal will be hurt the most. Millions of Americans take a tax deduction that can amount to anywhere from an average of thousands of dollars to tens of thousands of dollars per year thanks to the mortgage interest deduction.

Those in favor of reducing or eliminating the mortgage interest deduction claim that it could

MORTGAGE & FINANCE: New Report Raises Concerns Over FHA Loans

A new analysis of loans insured in recent years by the Federal Housing Administration is warning that the agency isn’t helping the low- and moderate-income homeowners it is designed to serve.

The study by Ed Pinto, a fellow at the conservative American Enterprise Institute, analyzed 2.4 million mortgages that the agency had backed in 40,000 ZIP Codes. It found that in 9,000 ZIP Codes with median incomes below the area median income, loans have a projected foreclosure rate of at least 10%.

“Once the expected failure rate exceeds 10%, the resulting direct and indirect costs to low- and moderate-income families and communities are a disservice to the very families and communities it is the FHA’s mission to help,” the paper said.

The New Deal-era agency, which doesn’t actually make loans but instead insures lenders against losses, has played a critical role in the housing market by backing mortgages of borrowers who make down payments of as little as 3.5%—loans that most private lenders won’t originate without a government guarantee. The FHA accounted for one third of loans used to purchase homes last year among owner occupants.

Last month, the FHA said that it had a net worth deficit of $16.3 billion, meaning that if it were to stop writing new business, under its current economic forecast, it wouldn’t have enough money in reserve to pay for expected losses. The FHA has maintained that the bulk of its losses are confined to loans insured before 2010.

At the heart of Mr. Pinto’s critique is a particularly relevant public policy question: What is the acceptable level of default for loans under such a government program?

In recent years, the FHA has taken several steps to raise the insurance premiums that it charges borrowers, but it has taken comparatively fewer steps to tighten credit. Higher

MORTGAGE: Paying Extra on Your Mortgage Can Go a Long Way

Mortgages can be viewed very differently.

Some see them as a positive financial instrument, a way to free up their money so it can be invested elsewhere, ideally for a better return.

Then there are those who view mortgages as the root of all evil, as a debt overhang that must be terminated as quickly as possible.

Whatever your stance, you've probably entertained the idea of making "extra mortgage payments," though you may not know the exact impact, due to the complexity of mortgage amortization.

Fortunately, there are calculators available -- like AOL Real Estate's mortgage calculator -- that take the guesswork out of the process and make it easy to see how much you can save in a number of different scenarios.

Adding $10 a Month

Let's start with a simple scenario where you add just $10 a month in extra payment to principal.

Assuming you've got a $100,000 loan amount set at 4 percent on a 30-year fixed mortgage, that extra $10 payment would save you $3,191.78 over the full loan term.

It would also shorten your mortgage by 13 months, meaning your 30-year mortgage would be a 28-year-ish mortgage.

So that's good news, right? You save thousands and you only have to pay a measly $10 extra per month. You probably wouldn't even notice the difference.

What if you bumped up that extra payment to $25? Well, you would shave 32 months off your mortgage, nearly three years, and reduce total interest by $7,450.01.

Feeling ambitious? Add $100 a month and you reduce your term by 101 months, or nearly 8.5 years, while saving $22,463.76 in interest.

Extra Payments More Valuable Early On

As you can see, it's not that hard to save a ton of money via extra payments, but it also matters when you start making those additional payments.

Using our $100 example, if you started making extra payments in year six of your 30-year

BUYING A HOME: The Perfect Real Estate Market for First-Time Home Buyers

If you are a first-time home buyer who has been looking for the perfect opportunity to buy a new home, then the time is now. The current real estate market is perfect for everything from buying a new home to investing in the real estate market, which is why first-time home buyers and investors have been going head to head and competing for the best real estate on the market.

Why, exactly, is now a great time for first time home buyers to purchase a new home? From incredible deals on foreclosure and short sales to low interest rates and a projection for rising home prices in the future, now is the perfect real estate market for first-time home buyers.

Short Sales and Bank-Owned Homes
If you are a first-time home buyer looking to buy a new home in the current real estate market then you are more than likely looking for the best deals possible. Fortunately, with the number of foreclosures and short sales on the market, you can find discounted properties that are well below market value, which essentially allows for a lower monthly mortgage payment.

In fact, with the tax break on short sales that allows struggling homeowners to avoid paying federal taxes on their unpaid mortgages set to expire December 31, there are a ton of short sale properties currently on the market. Therefore, if you are in the market to buy your first home then start looking today, especially if you are interested in short sales and other distressed properties.

Plus, with mortgage rates still remaining incredibly low, there is nothing better than for a first-time home buyer to be able to purchase a home below market value and secure an incredibly

BOSTON HOUSING NEWS: Hopes are high for new development in Roslindale

The hulking power substation stands vacant at the edge of Roslindale Square, a bleak remnant of the network that powered trolley cars in Boston more than a century ago.

The Roslindale substation was one of several in Boston neighborhoods that supported the old streetcar network.

Out of use for 40 years, the brick building has slowly deteriorated into an eyesore that belies both its proud history and prime spot overlooking an active business district.

Now, after years of false starts, the city-owned substation is poised for a dramatic transformation: a mixed-use complex with dozens of apartments, restaurants, and a produce market.

The project, led by local nonprofits and a Rhode Island developer, involves restoring the original details of the 1911 building, designed by the prominent Boston architect Robert S. Peabody, and constructing about 40 apartments on an adjacent lot.


The substation itself will house a restaurant, small cafe, and the produce market. Pending city approvals, the developers hope to begin construction next fall.

The project would refurbish the building’s massive arched
windows, many of which were bricked over years ago.
 About 40 apartments would be built on an adjacent lot.

“This is going to completely change the way people see that corner,” said Kathy Kottaridis, executive director of Historic Boston Inc., one of the nonprofits leading the project. “It’s an exciting economic opportunity for this building.”

The project would refurbish the building’s massive arched windows, many of which were bricked over years ago. About 40 apartments would be built on an adjacent lot.

The project will refurbish the building’s massive arched windows — many of which were bricked over years ago — and create a stronger visual connection to Adams Park at the center of Roslindale Village. Mayor Thomas M. Menino, a longtime supporter of the substation’s revitalization, said the effort will save a key piece of Boston’s history and bring the dilapidated building “back to active life in the community.”

The substation was one of several in Boston neighborhoods that supported the old streetcar network that led to a period of rapid growth in the city.

Historic Boston is working on the project with Roslindale Village Main Street. Those groups

LOCAL NEWS: Western Mass. viewed as territory for fracking

The possibility that Western Massachusetts may hold limited deposits of shale gas is catapulting the contentious issue of hydraulic fracturing, commonly called fracking, into the state.

An industry-supported group plans to hold a daylong session Thursday at the University of Massachusetts Amherst to tell landowners and the public about gas extraction, six months after a federal study mentioned the likelihood of gas deposits in the Pioneer Valley.

While the state probably does not have expansive reserves, American Ground Water Trust executive director Andrew Stone said that small-scale gas development could begin in several years, and landowners need to be given “calm, objective facts.”

“The facts are, [a study] drew a circle around the middle of Massachusetts” where shale gas could be found, said Stone, whose New Hampshire group includes representatives from engineering and chemical companies on its board.


“We want landowners, individuals, and the community to understand there could be drilling, and they need to be ready for it,” Stone said.

‘I can’t say if there is a lot of gas or little gas. We really won’t know unless industry becomes interested.’


Geologists say it is unlikely the deposits will be extracted anytime soon, because they are probably too small, scattered, and of questionable quality.

No companies have expressed interest in exploring for shale gas, state officials say, and the type of wells needed to get to the gas is prohibited in the state.


Still, a group opposed to fracking has formed through the Pioneer Valley Green-Rainbow Party and the Western Massachusetts chapter of Progressive Democrats of America, with the goal of banning the process.

“We know that it is probably not going to happen in Massachusetts now, but the technology advances so rapidly it is best to take precautions,’’ said Peter Vickery, a lawyer and cochairman of the Pioneer Valley Green-Rainbow Party. He is speaking at the conference to give the Sierra Club’s perspective on fracking.

Hydraulic fracking is a controversial technology that involves injecting pressurized water mixed with chemicals and sand deep into the earth to free large reserves of natural gas trapped in rock.

As its use increases, so have concerns over gas or chemicals seeping into drinking water and

ENERGY EFFICIENCY: Even higher heating bills in new forecast for winter

Figures exceed predictions made in October

Despite recent mild temperatures, colder days — and higher heating bills — are still on their way, according to a forecast released Tuesday by the federal government.

Heating oil consumers can expect to pay a record high average of $2,544 to warm their homes this winter, about $450 more than last year, according to an analysis by the Energy Information Administration.

Tuesday’s estimates were slightly higher than those released earlier in the season. In October, the agency predicted an average cost of $2,494 for the winter. Even a small increase, however, can have a significant effect in the Northeast, where 32 percent of households depend on oil heat, a considerably bigger proportion than elsewhere in the country.

Those who rely on natural gas — about 51 percent of Northeasterners — will pay an average of $1,031, close to $200 higher than last year. That estimate is about $20 higher than predicted in October, but overall prices have been falling as new sources of natural gas have become available in the ­United States.

Heating bills are expected to be that much higher because the government forecasts a more typical winter. Last year’s unusually warm weather kept thermostats lower, but this year the government expects consumption for heating oil and natural gas customers to increase by about 18 percent.

The rising cost of oil heat is of particular concern for low-income households that depend on federal fuel assistance to warm their homes. Applications are flooding in to the offices of Action for Boston Community Development Inc., an agency that administers heating aid in Boston and surrounding municipalities, said its president, John Drew. Last year, the group processed 18,000 applications; this year he expects to see as many as 24,000.

“We have an awful lot of people in need,” he said. “They’re more desperate than last year.”

And the aid they get may not be enough, he said. The maximum heating oil benefit this year will

VIDEO: Green Living:The world's most green apartments - Built Green In New York City

TAXES: Loss of mortgage deduction would be hard hit in Mass.

The generous mortgage-interest tax deduction that homeowners have long enjoyed could be diminished or eliminated as part of efforts to reduce the federal deficit, disproportionately hurting Massachusetts and other regions where real estate is especially costly.

Proposals to change the deduction include limiting it to the 28 percent tax bracket and lower; converting the deduction to a less generous tax credit; reducing the maximum allowed mortgage balance from $1.1 million to $500,000; and eliminating the benefit for second homes and equity loans, according to the Brookings Institution, a Washington, D.C., nonpartisan think tank.

More broadly, there is talk of placing a cap of between $25,000 and $50,000 on all annual deductions, which would force higher-earning taxpayers to prioritize what to itemize on federal returns.

Mark Muro, policy director of Brookings’ Metropolitan Policy Program, said changes to the century-old tax break are probably on the way — either as part of ongoing talks in Washington, D.C., between congressional leaders and President Obama to avoid the so-called fiscal cliff, or sometime next year.

“This is moving rapidly from the unthinkable to the inevitable,” Muro said.

But he does not believe it will have a devastating effect on most homeowners. The costs of minimizing or dropping the deduction, he said, “are largely going to be borne by those who can afford it.”

Taxpayers in expensive areas such as Boston and San Francisco reap the greatest benefit because they tend to carry higher mortgage debt and are more likely to file itemized returns.

Only about 25 percent of US taxpayers claim the deduction, which is projected to cost the federal government $100.9 billion in uncollected revenue for fiscal year 2013, according to the Brookings Institution.

About 31.4 percent of Massachusetts taxpayers write off mortgage interest, according to the Tax Foundation, a Washington, D.C, nonprofit. On average, Massachusetts homeowners are able to lop $11,366 from their income, compared with $10,640 nationwide, according to the

NEIGHBORHOODS: Assembly Row developer buying Ikea property

The developer of the $1.5 billion Assembly Row project is buying the former Ikea property on the Somerville site, where it may build a supermarket, homes, and offices, executives said Monday.

Federal Realty Investment Trust of Maryland has signed a purchase and sale agreement to acquire the 12-acre site from the Swedish retailing giant, which canceled plans in July for a 350,000-square-foot emporium on the property. The sale price was not disclosed.

Don Briggs, a regional manager for Federal Realty, said the deal will significantly expand the Assembly Row development, where construction is already underway on 450 homes, a theater and retail center, and new restaurants.

Located on the Boston-Somerville border, the project promises to remake a 66-acre swath of former industrial property along the Mystic River. Ikea was expected to be a major attraction for the development, but Briggs said he is optimistic the furniture store can be replaced by a food market, homes, and offices.

“While losing Ikea is unfortunate, I think over the long haul we will be able to continue the kind of development we’re seeing at Assembly Row,” Briggs said. “We’d love to bring a regional grocer to the site. It would be a great new amenity for this neighborhood.”

In addition to the grocery store, Federal Realty is exploring plans for two other buildings on the

MARKET TRENDS: 2012: The 'Turn-Around Year for Housing'

More housing reports released this week show the housing recovery is gaining momentum. 

Closed real estate transactions were nearly 18 percent higher in October compared to year-ago levels, according to the October RE/MAX National Housing report, which includes MLS data for 52 metro areas. October -- the latest data available -- also marked the sixteenth month in a row in which sales were higher to the corresponding month in the previous year. 

The Federal Housing Finance Agency also reported this week that housing prices are continuing to rise, increasing 1.1 percent from August to September, and up 4 percent compared to last year. The FHFA price index only encompasses purchase prices of homes that have mortgages owned or guaranteed by Fannie Mae or Freddie Mac. 

Meanwhile, Standard & Poor’s/Case-Shiller reported Tuesday that home prices were up 3.6 percent from a year ago. 

“As we enter the fourth quarter, 2012 is looking like the turn-around year for housing, with

SELLING YOUR HOME: Great Reasons To Put Your Home On The Market Before The New Year

The busy holiday season may not seem like a convenient time to have you

home as an active listing. However, don’t dismiss the idea of listing your home

before the New Year so easily. Here are five reasons why you should consider

putting, or keeping, your home on the market during the holiday season.

1. Serious buyers. The potential homebuyers who take the time to view your

home over the holidays are usually serious about purchasing. There may

be fewer buyers viewing your home, but they are motivated and are

usually looking to buy sooner rather than later.

2. Limited competition. Homeowners often take their homes off the market

or wait until after the holiday season to list their homes. This eliminates a lot

of competition and limits the options prospective buyers have to choose

from. Less competition may mean your home will sell for more money in a

shorter amount of time.

3. Low interest. Interest rates tend to drop the most at the end of the year

and savvy buyers often take advantage of the incentive by purchasing a

home and securing a fixed rate

4. Time is on your side. Potential buyers often have more vacation time

during the holidays to view your home than they would during normal

business days.

5. Closing time. When buyers close on their new home before the end of the

year they can deduct mortgage interest, property taxes and points on

MORTGAGE & FINANCE: Things to Consider In Applying for a Mortgage

If you are hoping for a positive outcome from your mortgage experience then carefully consider all your options and buy within your means so that you can sustain your payments. Borrowers unsure of which approach is best can fall back on certain time-tested strategies for ensuring they don’t overextend.

Here are a few tips to boost affordability when arranging your mortgage:

1. Know what you can afford.  A mortgage pre-approval helps you establish a price range and the maximum mortgage you can reasonably afford.  Most lenders will lock-in a rate for up to 120 days when pre-approving potential borrowers for a mortgage.

2. Look at your current debts.  When applying for a mortgage, besides looking at your (GDS) a lender will also look at your total debt service ratio (TDS). How much of your total income is going towards various types of debts, including car loans, credit cards, and other consumer loans?  A mortgage agent can advise on restructuring your current debt (by increasing the amortization and lowering payments on your car loan, for example), to ensure that your TDS ratio is acceptable to prospective lenders.

3. Look into a longer amortization.  Some lenders will offer mortgages with amortizations longer than the traditional 25-year amortization which result in a lower monthly payment. But our new mortgage rules is capped at 25 years. Those opting for a longer amortization should plan to make lump sum payments down the road or increase their monthly payments (say, after receiving a salary increase), to lessen the amount of interest they pay throughout the life of their mortgage.

4. Increase the size of your down payment.  Increasing the size of your down payment means a lower monthly payment.  A common way for first-time buyers to come up with more cash for a down payment is to make use of the federal Home Buyers’ Plan to withdraw up to $20,000 each from a registered retirement savings plan (RRSP) without tax penalty to buy or build a qualifying home.  Also, many lenders allow the down payment to come from a properly documented gift, and a borrowed down payment may be possible for some borrowers.

5. Consider locking in your rate for a longer period of time. If you’re uneasy about fluctuating interest rates and your ability to meet any increases, then a fixed-rate mortgage

NEWS: Obama: Housing on the Mend, But Fragile

Home prices are continuing to rebound, and more home owners are taking advantage of refinancing to lower their monthly mortgage payments, according to the Obama Administration’s November Housing Scorecard report. 

The scorecard highlights the housing market's big strides, a marked improvement that has not been seen since before the housing crisis.

“Six consecutive months of rising home prices have bolstered home owners' equity,” said Erika Poethig, HUD acting assistant secretary for Policy Development and Research. Nationwide home owner equity is now $1.5 trillion higher than in April 2009.  

“But with so many households still struggling to make ends meet, we have important work ahead,” Poethig added.

The report notes that the housing market has shown a rise in home values and stronger buyer demand, but the recovery remains fragile with challenges ahead. 

"The administration remains focused on continuing to improve standards for the mortgage industry to help families avoid foreclosure," said Tim Massad, Treasury assistant secretary for financial stability. "We continue to push the industry to provide better service to home owners

INVESTMENT PROPERTY: Rents to Keep Rising

Rents are forecasted to rise nationally 4.6 percent next year, and that’s following a 4.1 percent increase this year, according to the National Association of REALTORS®.

What’s more, rents are expected to continue to climb for the foreseeable future, rising more than 4 percent a year for 2014 and 2015, forecasts Reis, a market research firm. 

“The pendulum has definitely swung back in favor of landlords, not renters,” Ryan Severino, senior economist for Reis, told USA Today.

Rents are rising even more rapidly in some areas. For example, rents in San Jose, Calif., and San Francisco have been climbing at a 13 percent to 15 percent annual rate as of late last year, according to MPF Research. Other metro area seeing rent increases of more than 5 percent by the end of September include Oakland, Calif.; New York; Denver; Houston; Nashville; and Columbus, Ohio, MPF reports. 

The rise in rental costs are causing more renters to consider home ownerships, says Greg Willett, MPF vice president. Mortgage rates are at historical lows and home prices are up, but still way below their 2006 peak. 

http://realtormag.realtor.org/daily-news/2012/11/28/rents-keep-rising?om_rid=AAEL-v&om_mid=_BQtk4LB8vbKE6m&om_ntype=RMODaily

MARKET TREDS: Freddie Mac: Mortgage Rates to Stay Low, Property Values to Rise in 2013

Mortgage rates are likely to remain near record lows for the first half of 2013, while property values are expected to strengthen, said mortgage-finance company Freddie Mac.

The company expects long-term mortgage rates to rise gradually in the second half of 2013, but to remain below 4%, according to its U.S. Economic and Housing Market Outlook.

Freddie Mac sees house prices continuing to rise next year, with most U.S. house price indexes increasing by 2% to 3%. The company expects household formation to increase households by 1.2 million to 1.25 million in 2013, with housing starts reaching an annualized pace of roughly one million by the fourth quarter.

HOME MAINTENANCE: How to winter-proof your home

Winter can provide a much-needed respite from mowing and watering grass in sweltering summer temperatures and constantly swatting small, annoying insects. So now that the temperature is dropping, you might be planning to spend all of your free time on the sofa watching TV.

But don't pick up that remote just yet. There are six home improvement projects you really need to tackle in order to get ready for the winter. The good news? Unlike your grass - which requires constant mowing and watering - if you perform these winter projects now, you can relax on the sofa for years to come.

Must-Do Project #1: Replace Your Roof

Is your roof older than your college-age kids? If so, you may want to replace your roof now - while the weather isn't too harsh.

In fact, while you may have only minimal leaks or damage now, if you wait until the middle of winter, a severe snow or ice storm can exert enough pressure to cause the roof to collapse.

But how can you tell if your roof needs replacing?

Home improvement expert Jeanne Huber recommends replacing the roof if it's older than 20 years or if the majority of the roof has seen better days.

Huber, who writes a weekly home improvement column for The Washington Post, notes some early warning signs to observe:

• Inside the house there may be water stains on the heater, damp areas around the fireplace, and dark spots on the ceiling; in addition, there may be peeling paint underneath the roof overhang.
• Outside, look for buckled shingles, cracks in the caulk and rusted flashing, in addition to an accumulation of asphalt in the gutters. Also, the presence of moss may signal that the roof is decaying.

If Huber has just described your roof, it's time to consider replacing it.

Must-Do Project #2: Install Heated Floors

If you cringe at the thought of icy-cold feet during the winter, installing heated floors is a must-do project that will increase your comfort level and save on heating costs.

In fact, according to the National Association of Home Builder's (NAHB) article "LSC Members Provide Green Heating Choices for Energy-conscious Consumers," radiant floor heating