“So with population at 312 million in the U.S. today and rising by 3 million each year, housing starts are on track to be lower than when the U.S. population was only half its current size, more than 50 years ago.”
— Lawrence Yun, Chief Economist and Senior Vice President of Research at National Association of Realtors®, Sept. 15, 2011, Economist Commentaries
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The National Association of Realtors® reminds us that we need to keep housing first on the nation’s public policy agenda. Housing has led the nation out of past recessions and needs to play a far bigger role than it has this lackluster recovery. But, that won’t happen until federal regulators move to end the credit freeze for new home construction, banks allow qualified home buyers access to affordable home loans, and policymakers acknowledge there is a clear need to support homeownership. We must work to get housing moving again to spur growth, create jobs and restore consumer confidence. It does no good to say we are doing the best we can – rather, we must be doing all that is necessary.
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“Due to the stubbornly high new home prices and lower existing home prices, the gap between the two has opened up. From consumers’ point of view, therefore, existing homes offer an increasingly better value. Because of this, we should expect new home sales to lag behind in the recovery as compared to existing home sales.”
— Lawrence Yun, Chief Economist & Senior Vice President, Research, Economist’s Outlook, September 1, 2011
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After strong back to back showings for Pending Home Sales in May and June the forward-looking indicator declined in July but remained significantly above year-ago levels, according to the National Association of Realtors®. All regions joined the monthly decline except for the West, which continues to show the highest level of sales contract activity.
Everyday, housing recovery and market decisions are made in Washington by ivory towered academics with law degrees who have never held an open house, slogged through a three lien short sale, told a seller face to face he’s about to lose 30 percent of his investment, kept the feet of a buyer warm through a thorny escrow, brawled with a clueless appraiser, or figured out, without success, just what an underwriter smokes.
Wide satellite view of Hurricane Irene (weather.nsfc.nasa.gov)
Taking a cue from Rahm Emanuel’s infamous, “Never let a serious crisis go to waste,” The National Association of Realtors®, even as Irene batters and blows its way up the East Coast, reminds Congress that there is still much work to do to reauthorize the essential flood protection afforded by the National Flood Insurance Program (NFIP). This program is far more important to homeowners than the AAA to AA+ credit ignominy, but is getting far less attention.
Will they never quit? The Federal Trade Commission (“FTC”) has recently issued its Mortgage Acts and Practices – Advertising, or “MAP” rule. The Rule imposes strict requirements on those that provide information about mortgage credit products to consumers by prohibiting misrepresentations during these communications and inflicts arduous record keeping requirements on real estate professionals who may deliver such information on a daily basis. The Rule went into effect Friday, August 19, 2011.
Two programs critical to REALTORS® are set to expire on September 30.
Congress must act quickly to save two programs of vital importance to our real estate market. Both are due to sunset on September 30. The end of the current extension of the National Flood Insurance Program (NFIP) and the lowering of FHA and GSE Loan Limits could create a significant disruption in a housing market struggling toward recovery. It is imperative that REALTORS® remind their Members of Congress that these issues are bearing walls of our fragile housing market.
Total existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, fell 3.5 percent to a seasonally adjusted annual rate of 4.67 million in July from 4.84 million in June (we look for at least 6 million sales in a strong economy). However, we are 21.0 percent above the 3.86 million unit pace in July 2010, which was a cyclical low immediately following the expiration of the home buyer tax credit. NAR does not like to point out that this year’s pace lags considerably behind last year’s total sales of 4.91 million which then represented then weakest sales figures in 13 years.
Momentum is building as lawmakers on a bipartisan basis lead effort to modify banking regulators’ proposal to require 20 percent down for affordable qualified residential mortgage (QRM) loans.
The National Association of Realtors® urges you to write your representatives and write your senators. Remind them that under the proposed rules, mortgages that don’t meet standards — 70% to 80% of all mortgages — would carry higher mortgage rates. Ask them if they really think that mortgages with a 20-percent down payment will really improve loan performance? Demonstrate how this requirement will negatively impact home sales.
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“Even if rates were to rise because of the downgrade, this fact is less important in light of the current overly-stringent underwriting standards and the general lack of consumer confidence about the economy. A 30-year fixed rate rising from 4.3% to 4.6% will not change the housing game that much, but a return to normal underwriting standards and a boost to consumer confidence will be the true game changer.”
- Lawrence Yun, Chief Economist & Senior Vice President, Research, National Association of Realtors®.
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