Spring Real Estate News
Looking back now as we approach the end of April, this was an active month for the real estate scene. Here are some of the highlights of the April housing scene – some good, some not so good:
Short Term Interest Rates Exceed Long Term:
Finally for the first time in decades, it is cheaper to lock into a long term mortgage rate. Imagine that – mortgage financing that helps the buyer!
According to the latest results of the Primary Mortgage Market Survey (PMMS) released by Freddie Mac, the 30-year fixed-rate has dropped down to an average of 4.80 percent. Same time last year, the rate was 6.03 percent.
A one-year Treasury-indexed adjustable-rate mortgage (ARMs) averaged at 4.82 percent. Same time last year, the same mortgage was 5.29 percent.
A five-year Treasury-indexed hybrid ARM averaged at 4.85 percent, down from 5.68 percent last year, and the lowest rated since January 2005.
House Prices Rise and Fall
For the months of January and February, house prices rose consecutively. The last time this happened was in April 2007. Then March came along and the median home price declined by 12% from the previous year.
Record Price Cuts:
The famous Bailey Mansion in New York (previously owned by circus owner James Bailey), has dropped in price from million to .5 million in less than 6 months.
Washington’s most expensive home listing, Evermay, has dropped its asking price from million to million. This 3.58-acre, 12,000 square foot Georgian Revival estate has been on the market since September.
Probably the largest price reduction for a piece of U.S. real estate, the Greenwich, Conn. mansion formerly owned by the late Leona Helmsley can be had for only million. This is a far cry from the original asking price of 5 million.
Foreclosures See Record Highs:
After seeing foreclosure rates dip in January, they shot up by 44 percent in March, increasing to record high 175,199. Apparently there is still a backlog of unprocessed claims that will be appearing in the next couple of months as lenders scramble to deal with the volume.
Freddie Mac Executive Found Dead:
David B. Kellermann, the acting CEO at Freddie Mac committed suicide, leaving behind his wife and daughter. Sadly, he was only one of the many victims resulting from this global financial crisis.
Jumbo Loans More Plentiful
It appeared jumbo loans had fallen by the wayside, but now lenders are looking at these loans as a new opportunity to make money, and they are definitely making a comeback. Among the many banks offering them, ING has a 30-year fixed rate loan running in the upper 5% range.
The Mortgage Reform Bill
This much awaited bill was introduced in early April in an effort to change the way lenders do business and encourage no frill mortgages with lengthy terms. It’s a shame this bill wasn’t introduced 7 years ago, much of the housing crisis may have been averted.
Incidences of Real Estate Fraud Spikes
Our vulnerable market has created a perfect climate for real estate fraud and other types of scams. Following right on the heels of Bernie Madoff, who was convicted of committing the largest investor fraud by a single person, spring has sprung with a new collection of real estate related “tom foolery”.
In early April twenty-four people in San Diego were charged with racketeering in an elaborate mortgage scheme. In Dallas, the Stanford Financial Group was recently accused of selling certificates of deposit that were never invested, in addition to numerous other fraud allegations. A Twin Cities realtor was recently convicted of mortgage fraud. A Georgia attorney recently pleaded guilty to a million investment fraud scheme.
The seemingly endless flow goes on, touching on every aspect of the real estate and investment industry, from appraisers, to real estate agents, attorneys, investment brokers, mortgage brokers, and bank managers.
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