Archive for January, 2011
Green…as in Lower Loan Defaults
Posted on January 27, 2011 by Laura
Here’s a report that’s worth looking at again. Grist reported that a study last year showed that ENERGY STAR homes were 11% less likely to default on a mortgage.
It’s time that we stop talking about the features of green homes, and talk more about the advantages for our clients. Having more stability over monthly housing expenses, being less vulnerable to changing energy costs, and supporting long-term home ownership in our communities is a great place to re-focus the conversation!
As REALTORs we are advocates for home ownership. And either green or traditional – it’s time to help clients focus on the Total Cost of Ownership, not just PITI. We just can’t do our jobs effectively without a greater understanding of energy efficiency in homes!
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Mark Zandi, Moody’s Analytics’ chief economist, says federal housing policy may not have worked exactly as planned but did a reasonably good job of keeping price declines from being more substantial than they were.
Among the various factors cited as key to housing’s health in the new year, employment remains the most obvious and vital component to a market recovery in 2011. Improvements in job growth and security will provide a healing housing market with more financially confident consumers eager to capitalize on high affordability conditions. Nick Timiraos of The Wall Street Journal writes that without more tax credits to boost sales, the housing market is dependent on job growth. If employment improves, so will demand for housing, Timiraos says. Calculated Risk, a website covering financial-and-economic news, expects modest economic and job growth in 2011, in addition to increases in residential investment and construction employment. Housing analyst and former chief economist for the National Association of Realtors, John Tuccillo, says uncertainty is holding the housing market back and feels the most immediate source of new jobs will come at the state and local level, rather than from the federal government.
According to the Mortgage Bankers Associations’ Weekly Mortgage Applications Survey for the weeks ending December 24 and December 31, total application volume was down 3.9 percent the week of the Christmas holiday, then up 2.3 percent to end the year. For the week ending December 24, the seasonally adjusted Purchase Index rose 3.1 percent before falling 0.8 percent the following week. The average contract interest rate for 30 year fixed-rate mortgage also increased before falling, ending the year at 4.82 percent. More here and here.
After rising 10.4 percent in October, The National Association of Realtor’s Pending Home Sales Index was up again in November, rising 3.5 percent. Lawrence Yun, NAR’s chief economist, said historically high housing affordability is boosting sales but further gains are needed to reach normal activity. The Pending Home Sales Index is a forward-looking indicator reflecting contracts, not closings. Signings are up 22.1 percent over their June low, which was the lowest since the NAR began tracking the data in 2001. More here and here.
More than 51 percent of people recently surveyed by Fannie Mae said the housing crisis had no effect on their willingness to buy a home. Among those that said it had an impact, 27 percent said it made them more likely to own, while 19 percent said they were more likely to rent. Doug Duncan, Fannie Mae’s chief economist, said the housing crisis hasn’t dented the desire for homeownership but it may have changed the reasons people want to own. When deciding to purchase a home, lifestyle considerations such as sense of security, raising a family, and location and quality of living space were more likely to influence consumers than financial concerns. More here and here.