Real Estate Sector: Good Things Amid the Bad

Published by nora | Filed under Buyer / Seller Tips, Communities, Market Trends, Mortgage / Finance, Real Estate

Optimists try to find rays of hope in bleak situations and refuse to be discouraged by negative developments. In the real estate sector, optimistic agents and brokers remain confident about their abilities and stay hopeful about sales despite setbacks. At the same time, they keep abreast about realities in the marketplace so they can adjust on time.

The U.S. real estate sector is still battered by foreclosures, high inventories, falling prices and low sales, according to the National Association of Realtors and other housing analysts. But many of these analysts are optimistic, citing developments they believe will bring back energy into the housing market soon, such as the following:

Law That Leads to More Accurate Home Appraisals   

The Home Valuation Code of Conduct, which has been largely blamed for low appraisals since its implementation, will be reviewed by the General Accountability Office as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law by President Barack Obama in July.

Under the new law, home appraisers need to:

• be licensed or certified in the state where the property to be valuated is located
• visit the property in person, including the interiors of the property
• comply with the Uniform Standards of Professional Appraisal Practice and the Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989.
• follow rules on automated valuation models if these are used.

Drop in Mortgage Delinquency Rates

According to mortgage researcher Lender Processing Services, the number of non-current home loans dropped by 1.4 percent from June to 7.04 million loans in July. Compared to the 8.1 million non-current home loans in January, the drop rate in July was higher at 13.3 percent. Non-current loans refer to all loans in default by 30, 60, 90 days or more and those already in foreclosure.

Excluding loans in foreclosure, the total number of home loans delinquent by 30, 60, 90 days or more had a sharper drop, with a decrease rate of 2.8 percent over the month in July to a total of 5.02 million loans. The number of seriously delinquent loans – those in default by 90 days or more – dropped by 4.4 percent in July, for the first time going below the 2.5 million mark posted in August 2009.

Mortgage Rates at Historic Low Levels 

The average mortgage rate, according to bankrate.com, as of August 31 for 30-year fixed-rate loans is 4.35 percent, down over the week from 4.53 percent. Similarly, the average rage for 15-year fixed-rate is 3.85 percent, down from 3.96 percent in the previous week. The rates offered by certain banks are even lower.

Home Affordability  

The housing opportunity index is at near record high. This index, compiled by Wells Fargo and the National Association of Home Builders, tracks mortgage rates, house prices and what homes median-income families can afford to buy. Nowadays, 72.3 percent of median-income families can afford to buy the median-price home.