MARKET TRENDS: Real Estate Outlook: Will Recovery Continue?

The economy has been making strides towards recovery, but are these steps enough to ramp up both the housing and labor market?  

According to Bernanke, economic activity slowed during the first half of this year. This came after a 2.5 percent annual rate of GDP growth for 2011. Additionally, while the unemployment rate has fallen over the last year. "after running at nearly 200,000 per month during the fourth and first quarters, the average increase in payroll employment shrank to 75,000 per month during the second quarter."  Federal Reserve Chairman Ben Bernanke reports there are two risk factors that could cripple a recovery. The first is the euro-area fiscal and banking crisis; the second is the U.S. fiscal situation.  

Housing has seen modest improvement, including rising pending and existing home sales in some regions. This growth is thanks in part to historically low interest rates. Buyers are always returning to the market to take advantage of low prices.


Bernanke says, "Construction has increased, especially in the multifamily sector. Still, a number of factors continue to impede progress in the housing market."


Builder confidence has responded and for the market of newly built, single-family homes, it has risen by the largest one-month gain in nearly a decade. 

The National Association of Home Builders (NAHB) reported on this trend in the their latest HMI survey. "Combined with the upward movement we’ve seen in other key housing indicators over

MORTGAGE & FINANCE: Speeding Up Refinances

MANY large financial institutions are facing backlogs of mortgageapplications as more homeowners take advantage of low interest rates and the government-sponsored Home Affordable Refinance Program, or HARP.

Borrowers looking to accelerate the process are finding some relief frombrokerages and community banks that are not servicing HARP loans.

“We’ve heard stories about 60-day to 90-day loan waiting periods in some cases,” said Michael Fratantoni, the vice president for research and economics of the Mortgage Bankers Association, adding that larger banks are “running at full capacity.”

According to the Mortgage Bankers Association weekly survey released Wednesday, nearly 80 percent of the mortgage applications were for refinancing; previous weeks’ surveys showed roughly a quarter of the transactions were HARP-related. HARP was created by the federal government to simplify the refinances of homeowners with mortgages owned or guaranteed by Fannie Mae and Freddie Mac, who seek less onerous loan terms. The program was expanded last fall as HARP 2.0.

HARP borrowers typically refinance with the banks that originally serviced their loans, because those banks already have their information, Mr. Fratantoni said, and “there’s

MARKET TRENDS: Home Prices Rise in Half of U.S. Cities as Markets Stabilize

Prices for single-family homes climbed in half of U.S. cities in the first quarter as real estate markets stabilized.

The median sales price increased from a year earlier in 74 of 146 metropolitan areas measured, the National Association of Realtors said in a report today. In the fourth quarter, only 29 areas had gains.

Enlarge image

A development in Oswego, Illinois. Photographer: Daniel Acker/Bloomberg

Play Video

May 7 (Bloomberg) -- Michelle Meyer, a senior economist at Bank of America Merrill Lynch, talks about the U.S. economy and real estate market. She speaks with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg)

The U.S. housing market is showing signs of bottoming as improving employment and record-low mortgage rates boost demand while inventories of available properties tighten. At the end of March, 2.37 million previously owned homes were available for sale, 22 percent fewer than a year earlier, the Realtors said.

“The housing market is still depressed but it had a good quarter,” Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts, said in a telephone interview today. “We’re on the mend but it’s still something that will take two or three years before we’re back to normal.”

The national median existing single-family home price was $158,100 in the first quarter, down 0.4 percent from the first three months of 2011, according to the Realtors group.

The best-performing metro area was Cape Coral, Florida, where prices increased 28.1 percent from a year earlier. Prices rose 19 percent in Grand Rapids, Michigan; 16.9 percent in Palm Bay, Florida; and 16.6 percent in Erie, Pennsylvania.

Biggest Declines

Kingston, New York, had the biggest decline, with the median selling price tumbling 22 percent in the quarter. It was followed by Stamford, Connecticut,

MORTGAGE & FINANCE: Low-ball appraisal: Mortgage denied

NEW YORK (CNNMoney) -- You find the home of your dreams. You're pre-approved for a mortgage. You've scheduled the closing. Then ... the appraisal comes in too low and the deal blows up.

Even as some mortgage standards have eased, hitting a needed appraisal value is proving a frustrating blocker for buyers and sellers and those looking to refinance.

If a buyer commits to a $200,000 home, but the appraisal comes in at just $180,000, the bank will finance only on the lower value -- and the buyer must come up with the difference.

Leslie Sellers, a real estate broker inClinton, Tenn., has a client who recently went to contract on a Norris, Tenn., home. The appraisal came in 10% short.

"I explained to the appraiser that houses in Norris are older and sell for higher prices than other parts of the county," said Sellers, past president of the Appraisal Institute, a trade group. "[The appraiser] told me he was going with his value. We lost the sale."

The banks are one reason appraisals are coming in low. If they have to repossess a home, they don't want to get stuck with one worth far less than the mortgage.

"It's not like the lenders say, 'We want you to come in low,'" Sellers said. "It's more like, 'We want you to account for everything.' Some appraisers hear that and overcompensate."

Multi-million dollar foreclosures

It's particularly tricky if the home is in a falling market. There's even a box to check on standard appraisal forms saying "declining value," according to Gloria Shulman, the founder of Centek Capital Group, a Beverly Hills mortgage broker. That indicates falling home prices and banks