Housing affordability conditions for all buyers reached a milestone in the first quarter, according to the National Association of REALTORS®.

NAR’s composite quarterly Housing Affordability Index rose to a record high of 205.9 in first quarter, based on the relationship between median home price, median family income and average mortgage interest rate. The higher the index, the greater the household purchasing power. This is the first time the quarterly index broke the 200 mark; record keeping began in 1970.

NAR President Moe Veissi said market conditions are optimal for home buyers. “For those with good credit, we’ve never seen better housing affordability conditions or market opportunities than we see at present,” he said. “Although home prices are stabilizing and sales are rising, some buyers still have to jump through a lot of hoops to convince a lender that they are creditworthy, even for a mortgage that would be well within their means. This is especially true for self-employed buyers.”

Veissi noted home sales would be much higher if lending standards would return to normal.

The index shows the median-income family, earning just under $61,000, could afford a home costing $325,500 in the first quarter, which is more than double the national median existing single-family home price of $158,100. The median monthly mortgage principal and interest payment for a median-priced home would take only 13.5 percent of gross income.

A companion index measuring the ability of first-time buyers to purchase a home also set a record, with the first-time buyer index reaching 135.8 in the first quarter.

Assumptions for the first-time buyer index include a lower income, at 65 percent of median family income, a starter home costing 85 percent of the median price, and a down payment of 10 percent. This index means the typical entry-level buyer could afford a home costing $182,500, which is well above the overall median price.

“It’s never been easy to buy a first home because of the cash required for down payment and closing costs, but conditions for first-time buyers who are able to get a mortgage have never been better,” Veissi explained.

Most first-time buyers choose a loan with a lower down payment, often an FHA-insured loan with 3.5 percent down, and some use the VA program with no down payment.

Both home prices and mortgage interest rates are expected to edge up modestly as the year progresses, but housing affordability will remain very favorable with the median-income household well positioned to afford a median-priced home. For all of 2012 the index is projected to set an annual record, averaging 191 for the year.

Source: NAR

For the second consecutive week, fixed-rate mortgages reached new all-time records lows, offering another big boost to home buyer affordability.

The 30-year fixed-rate mortgage averaged 3.83 percent for the week ending May 10, posting a new record low from last week’s 3.84 percent average. The 15-year fixed-rate mortgage also posted a new record, averaging 3.05 percent this week.

Here’s a closer look at mortgage rates for this week:

• 30-year fixed-rate mortgages: averaged 3.83 percent, with an average 0.7 point, down from last week’s previous record of 3.84 percent. A year ago at this time, 30-year mortgages averaged 4.63 percent. The 30-year fixed-rate mortgage, the most popular choice among home buyers, has averaged below 4 percent for nearly every week — except for one — since Dec. 8, 2011, according to Freddie Mac.
• 15-year fixed-rate mortgages: averaged 3.05 percent, with an average 0.7 point, dropping from last week’s previous record low of 3.07 percent. Last year at this time, the 15-year fixed-rate mortgage averaged 3.82 percent.
• 5-year adjustable-rate mortgages: averaged 2.81 percent, with an average 0.5 point, dropping from last week’s 2.85 percent average. Last year, 5-year ARMs averaged 3.41 percent.
• 1-year ARMs: averaged 2.73 percent, with an average 0.5 point, rising from last week’s 2.70 average. A year ago, 1-year ARMs averaged 3.11 percent.

Source: Freddie Mac

Thirty-three percent of Americans say they expect home prices to rise in the next 12 months, the highest level in more than a year, according to Fannie Mae’s March 2012 National Housing Survey of consumer attitudes about the housing market.

The number of people who say now is a good time to buy is also on the rise, increasing to 73 percent—also the highest level in more than a year. The percentage who said it’s a good time to sell a home also increased one point to 14 percent in March.

Meanwhile, more Americans expect rental prices to rise and are projecting an increase by 4.1 percent over the next year, the highest number recorded to date.

“Conditions are coming together to encourage people to want to buy homes,” says Doug Duncan, Fannie Mae’s chief economist. “Americans’ rental price expectations for the next year continue to rise, reaching their record high level for our survey this month. With an increasing share of consumers expecting higher mortgage rates and home prices over the next 12 months, some may feel that renting is becoming more costly and that home ownership is more compelling house choice.”

Source: “Americans’ Expectations Align to Encourage Home Buying,” RISMedia (May 6, 2012)

Home buyers who want a bargain may want to act now because the housing market is in the midst of a turnaround, economists say.

Home prices have fallen and mortgage rates are hovering near record lows, pushing home affordability for the average family to record highs. Meanwhile, rents have been on the rise, making owning a home cheaper than renting in most areas of the country, according to recent surveys.

But the housing deals aren’t expected to stick around much longer.

An improving job market, a decrease in the number of home owners falling behind on their mortgage, and an anticipated improvement in access to mortgages is expected to help home prices start bouncing back by next year, economists say.

Investors eyeing profits in rentals also have been snapping up bank-owned properties, which Clear Capital’s Alex Villacorte attributes as helping to lead to an increase in prices on foreclosed properties. This “could have a significant impact on the market overall in terms of providing a rising floor to home values,” Villacorte told CNNMoney.

Some areas are already seeing prices rise. In Phoenix, housing prices have already increased 8.4 percent during the three months ending April 30, and Miami saw prices bump up 4.6 percent quarter over quarter, according to Clear Capital data.

“Stuff I was selling six months ago for $60,000 to $80,000 is now $90,000 to $110,000,” Tanya Marchiol, founder of Team Investments in Phoenix, told CNNMoney.

Loan Rates, Demand Predictions

Buyers may want to act more quickly because mortgage rates are expected to tick up slightly by the end of the year. The increase is being sparked by greater demand, says Doug Lebda, CEO of LendingTree. He predicts 30-year fixed-rate mortgages will inch up to 4.5 percent by the end of the year, which is still low, however, by historical standards.

The Mortgage Bankers Association is also predicting a big leap in mortgage loans next year. For this year, MBA estimates that buyers will take out loans totaling about $415 billion, but by 2013 that number is expected to nearly double to $706 billion.

Source:  CNNMoney (May 3, 2012) and NPR (May 1, 2012)

1^st Quarter 2012 single-family home sales increased 11.75% from 1^st Quarter 2012, also making it the highest year over year 1^st Quarter gain in home sales since 2008.   Average sale prices saw a 6.26% reduction from 1^st Quarter 2011 while the median price saw a 3.61% drop from the same period.

“The real estate market is ready for good news,” said Marc Guggino, President of the Greater Albuquerque Association of REALTORS^®, “and this is the third consecutive quarter that sales have improved over the same quarter the prior year” “Supply and demand economics is starting to work,” said Guggino. “Inventories are low, interest rates are low and the consumer is anticipating that prices will soon stabilize, all factors that encourage them to get back into the market,” he continued.

Fixed-rate mortgages dropped slightly this week, nearing their average all-time lows and helping to lift home buyers’ purchasing power, Freddie Mac reports in its weekly mortgage market survey.

For every week but one this year, the 30-year fixed-rate mortgage, the most popular choice among home buyers, has been below 4 percent.

Here’s a closer look at average rates for the week ending April 26:

• 30-year fixed-rate mortgages averaged 3.88 percent, with an average 0.7 point, dropping from last week’s 3.90 percent average. A year ago at this time, 30-year rates averaged 4.78 percent. The record low for 30-year rates averaged 3.87 percent, a record reached in February.
• 15-year fixed-rate mortgage averaged 3.12 percent, with an average 0.6 point, dropping from last week’s 3.13 percent. Last year at this time, 15-year rates averaged 3.97 percent. The all-time record low for 15-year fixed-rate mortgages is 3.11 percent, a record reached recently during the week ending April 12.
• 5-year adjustable-rate mortgages averaged 2.85 percent this week, with an average 0.6 point, rising slightly from last week’s 2.78 percent average. Last year at this time, 5-year ARMs averaged 3.51 percent.
• 1-year ARMs averaged 2.74 percent, with an average 0.6 point, dropping from last week’s 2.81 percent average. A year ago at this time, 1-year ARMs averaged 3.15 percent.

Source: Freddie Mac

Short sales are surging this year, and if the trend continues, they could reach record levels in 2012, RealtyTrac reports.

Short-sale transactions are starting to outpace foreclosure sales, as more banks see it as a better option to curb high losses from foreclosures. More mortgage servicers are also trying to increase the pace of approving short sales, a process that is generally viewed as drawn-out and lengthy.

Short sales increased 33 percent in the last year, according to January data released this week by RealtyTrac. Thirty-two states saw year-over-year increases in short sales. Lender Processing Services Inc., which also recently released its January housing data, showed that short sales accounted for 23.9 percent of home purchases in January while foreclosures made up 19.7 percent of sales — the first time that short sales have outnumbered foreclosures.

“[We] believe 2012 could be a record year for short sales,” says Daren Blomquist, vice president at RealtyTrac.

This week, the Federal Housing Finance Agency, the regulator to mortgage giants Fannie Mae and Freddie Mac, issued new rules to speed up the pace of short sales. Mortgage servicers will be required to respond to a short-sale request within 30 days and make a decision about short-sale offers within 60 days. The new rules go into effect June 1.

Source: CNNMoney (April 19, 2012) and REALTOR® Magazine Daily News (April 19, 2012)

Pending home sales in March passed the 1,000 mark for the first time in 22 months, with an increase of 13.07% from March 2011.  Detached closed sales of 596 were reported, a 4.56% increase over the prior year. This includes 267 sales between $100,000 and $179,999. The median sales price for detached residential homes was at $162,000.

“Starting off the spring season with this many pending sales is a good sign,” said Marc Guggino, President of the Greater Albuquerque Association of REALTORS^®, “showing there are still great deals out there for homebuyers”. “With a six month trend of improving market conditions Albuquerque real estate is seeing more stability,” said Guggino.

The Greater Albuquerque Association of REALTORS^® is the largest local professional trade association in Central New Mexico with nearly 3000 members pledged to a strict Code of Ethics and Standards of Practice. Established in 1921, GAAR is recognized as a leading provider of real estate information services, data and education in New Mexico.

The real estate market is thawing this spring. Following five years of dismal sales and falling prices, the housing market is starting to see a turnaround, according to housing surveys, agent reports, and economists.

Home buyers are returning to take advantage of record housing affordability while investors are buying up foreclosures in bulk at bargain prices.

“The biggest challenge that we’ve had over the past four years is fear — fear that the economy is collapsing, that property values are collapsing, that the world is coming to an end,” Mark Prather, a broker at ERA Buy America Real Estate in La Palma, Calif., told the Associated Press. “The fear factor is all but gone.”

The signs are already there: Home sales prices are starting to edge up, even in hard-hit housing areas like Phoenix and Miami. Also, banks are issuing more mortgages. JPMorgan Chase recently reported an uptick in loan applications recently by 33 percent, and the bank said that it issued 6 percent more mortgages from January through March than last year. Wells Fargo reported an 84 percent increase in loan applications and the issuing of 54 percent more mortgages in the last year.

Still, the housing market has some ways to go, with a surge of foreclosures expected to soon hit the market and the unemployment rate still high in many parts of the country.

“This gradual healing is encouraging, but we must tread carefully as the housing market is still far from a robust recovery,” Michelle Meyer, an economist at Bank of America Merrill Lynch, told Reuters News.

Source: The Associated Press (April 15, 2012)