“The most recent housing affordability data should be encouraging to many prospective home buyers, because it shows that homeownership remains within reach of median-income consumers even as most local markets appear to be on a recovery path,” says NAHB Chairman Rick Judson.

“The median price of all new and existing homes sold in the fourth quarter of 2012 was $188,000, essentially unchanged from the previous quarter’s $189,000 that marked a nearly three-year high,” says NAHB Chief Economist David Crowe. “Affordability remains historically high thanks to favorable mortgage rates, even as national home price indexes show some rise in values.”

The most affordable major housing market of the US for 2012 was Ogden-Clearfield, Utah, holding this high ranking for the second consecutive year with 93.7% of families affording a home with the area’s median income of $71,500. At the other end of the top, San Francisco-San Mateo-Redwood City, California is the least affordable market (position previously held by New York-White Plains-Wayne, N.Y.-N.J). In San Francisco, only 28.4% of all homes sold in Q4 were affordable to households earning the median income of $103,000.

According to FloridaRealtors, the state of Florida showed different affordability percentages depending on the various areas’ individual index. Lakeland-Winter Haven had a 93% affordability – the highest in the Sunshine State with nine out of 10 residents being able to afford a home, while Miami-Miami Beach-Kendall scored the lowest percentage, with 66%. Rounding up Florida’s top 10 most affordable areas were Ocala – 90.6%, Deltona-Daytona Beach-Ormond Beach – 88.3%, Gainesville – 86.8%, Punta Gorda – 86.8%, Panama City-Lynn Haven-Panama City Beach – 85.6%, Tallahassee – 85.6%, Jacksonville – 85.2%, Port St. Lucie – 84.9% and Pensacola-Ferry Pass-Bren – 84.1%.

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Courtesy © Rafael Ben-Ari – Fotolia.com

Sales for 2012 were up to 367,000 units, or the most since 2009, according to the report.  The so-called Obama Administration Scorecard from HUD reveals a market in flux. The below key component of the report

• Home prices showed 12 month gains 
• President Obama’s foreclosure programs continue to help those in need
• And HAMP also continues to help many stay out of foreclosure

Still, even with these broad headlines across the front page of the report, digging deeper into the December Scorecard (PDF) it seems clear the report contains some “hollow data” too. For an instance, reporting on refinancing by owners in a graph like the one below, does not say much when compared to refinance overall. In short, the administration seems to be taking credit for system and cylical trends here.

Courtesy The Office of Housing and Urban Development

“Housing Councillors Serving Millions of Families”, “Homeowner Savings from Reduced Mortgage Payments”, and other charts used in this latest report do little beside suggesting “Hey, we are doing stuff up here.” Or at least this is a fair assessment for some.

A final criticism here has to go to whomever wrote the texts for this report. In the most politically correct town, in the most politically correct country on Earth, HUD offers a stab at America’s “irresponsible mortgagees” here:

“Millions of responsible families who had made their monthly payments and had fulfilled their obligations saw their property values fall. They also found themselves unable to refinance at lower mortgage rates.”

Does this mean all those “irresponsible” slackers now out of their homes, or “taxing” the system for assistance and counselling did less somehow? Sorry to bring this up in a  news report, but the lingo here stymied me. On the one had bureaucrats expect their constituents to swallow charts and numbers hook-line-and-sinker, and on the other make no bones about dancing on the pride of those families hit hardest by the Great Recession?

We look forward to your thoughts on this aspect.

According to the National Association of Realtors, there has been an increase in housing affordability for those who are able to obtain a mortgage. Lawrence Yun, an economist for the Association says “Rising home prices and a gradual uptrend in mortgage interest rates will offset improvements in family income, but 2013 likely will be the third best on record in terms of household buying power.”

In spite of this optimism many people still face difficulty in qualifying for a mortgage, and every month 83,000 new families entered the foreclosure process which means roughly 1,000,000 families are entering foreclosure every year. The pressure on Washington to help ailing homeowners means guidelines which have been a mainstay for years are taking effect.

Chris Apodaca, a California mortgage broker for Broadview Mortgage says “It’s an interesting phenomenon because three or four years ago these people were losing their homes. Now they’re out shopping for a new home. It wasn’t swift and sweeping legislation that did it, simply a matter of perseverance. These folks waited three years and now they can buy again.” Apodaca is targeting those who have found themselves being dragged through the mud during the recent economic crisis and was asked whether or not these people should trust banks again. His reply was “We’re seeing a cautious optimism. The industry has really shifted with the tightening regulations and strict licensing laws. Home buyers have a clearer path to recourse should they be wronged. We as banks know that there are serious ramifications for banks who violate the law.”

Apodaca writes for consumer education website findmywayhome.com which gets numerous inquiries from people who want to ask questions, get updates on legislation or who simply wish to share their stories. Many of these people feel they have been wronged and are angry, but Apodaca recommends they plan for their future and gain empowerment through education. People who lose their home through foreclosure are eligible to purchase again three years after the foreclosure is finalized.

© dacasdo – Fotolia.com

Some form of compensation for the homeowners was expected, but what surprised many was the speed at which the Fed came to this decision – previously, officials were going through complaints on a case-by-case basis, a lengthy and time consuming process that would have taken many months to complete. While the agreement announced last week probably means that lenders get away with paying less, the Fed says that the advantage is that borrowers will receive the financial assistance they need “in a more timely manner”.

As part of the agreement, lenders will hand out more than $3.3 billion in cash to those homeowners that were wrongly foreclosed upon, with another $5.2 billion set aside for other forms of assistance, such as forgiveness of deficiency judgments and loan modifications. The amount of compensation due to each former homeowner will vary depending on their individual circumstances, but officials said that payouts will range from a few hundred dollars to more than $100,000 in some cases.

Opening a Can of Worms

Several observers have said that with any luck the payout will have brought an end to this long running issue, but these people are seriously mistaken. In all likelihood, all the lenders have achieved is to give themselves an even bigger headache, for the small matter of dividing up the payouts so that everyone entitled to compensation receives a fair amount will be no walk in the park.

One of the most controversial issues, and something that is absolutely likely to cause arguments later on down the line, is that dozens of affected homeowners that may or may not receive adequate compensation from the deal, have been denied the right to an “independent foreclosure review”, as is stated in the FAQ section of the review.

The problem here is that in order for such a review to be independent, both the lenders and the federal regulators representing the homeowners should have been given the chance to nominate a neutral third party to carry out this review – sadly, it seems that the lenders themselves actually chose these reviewers.

As ProPublica explains in this article:

“Federal regulators designed the program to work like this: Each of the banks would hire an ‘independent consultant’ (approved by the regulator) to conduct reviews of the bank’s foreclosure cases. The bank was supposed to foot the bill, but the consultant, not the bank, was supposed to decide which of the bank’s customers deserved compensation and how much.”

Clearly then, the consultants chosen to do the job cannot be seen as ‘impartial’ reviewers, and so their fairness in deciding who is entitled to how much compensation will inevitably come into question. In fact, the awards will be paid out according to the stipulations of the agreement, which would appear to be arbitrary at best, and will likely be anything but fair. For an example of this ‘arbitrariness’, consider the actual rules for eligibility, which state that only those foreclosed upon between 2009 and 2010 can be considered for compensation – irrespective of the fact that millions were foreclosed upon before 2009.

Like It or Lump It

Perhaps even worse than this arbitrary decision making is the fact that homeowners will have no rights to appeal the independent review process. The FAQ page states:

“The decision of the review is considered final and there is no further recourse within the Independent Foreclosure Review process. The Independent Foreclosure Review will not have an impact on any other options homeowners may pursue related to the foreclosure process of their mortgage loan.”

The Neighborhood Assistance Corporation of America was quick to jump on the agreement, pointing out these deficiencies and underlining my own concerns that homeowners will not be properly compensated.

It pointed out that more than 65,000 cases had been submitted to the review process so far, and that these reviews were turning up even more evidence that huge numbers of homeowners were wrongly foreclosed upon, without being informed that they could apply for loan modification. Furthermore, it states that the $8.5 billion is simply an insufficient amount to adequately compensate concerned homeowners, and slams the $5.2 billion earmarked for ‘other assistance’, saying “this will do little in assisting homeowners stay in their homes since it is not dedicated to principal reduction.”

Who Gets What?

At the end of the day, lenders are left with an even more pressing headache – which former homeowners are entitled to compensation and which aren’t? How do these people go about filing a claim? And what about those who are not ‘entitled’ to any of this compensation, because their homes were foreclosed upon outside of the Fed’s extremely narrow window?

There remain many other unanswered questions too, such as why the arbitrary $8.5 billion figure (which is surely inadequate), and why was the Neighborhood Assistance Corporation of America not allowed to take part in the settlement making? Is there any avenue of appeal for homeowners that miss out?

Until these questions are answered adequately, this problem won’t be going away anytime soon…

© sellingpix – Fotolia.com

Still, the trend doesn’t keep sellers and property owners from wishfully believing that they’ve regained some form of control as if the balance has shifted back toward their favor.

Unfortunately for them, the main reason for price increases has nothing to do with buyers eagerly purchasing new properties; rather, it hinges upon a more balanced proportion of supply and demand as fewer houses were built this year. Although predictions for 2013 include an increase in overall supply, the amount of new houses estimated for the upcoming year will still be way under the 2.5 million output of 2005.

This slow growth is good for the market’s recovery long-term, though. As more Americans secure employment – and those who are employed see increases in income – the time will soon be rife for increased home buying. Until then, those potential buyers are doing exactly what they should: establishing a firm financial foundation that will facilitate a home purchase. And that’s exactly what the market needs: serious buyers who have the financial means to avoid upside down mortgages.

Is real estate back in the hands of sellers? Absolutely not, but markets will see trends that seem to reflect otherwise. As vacancies fall for commercial properties into 2013, owners look to pad their profits by increasing rents. As such potential occupants should protect their bottom lines now by locking in lower rates with long-term occupancy plans. Private property owners and landlords, too, may try to capitalize off of increased property values, so renters beware.

Increasing monthly rent payments might just be enough to turn some renters into buyers as they look to invest in their own property. “There comes a point when you have to evaluate how much you’re wasting on rent and how much you could be putting into equity,” says Erika Snider, credit consultant for rent to own website, HomeStarSearch.com. He suggests that low interest rates, an abundance of available properties, and a wealth of leasing options make for a real estate atmosphere that is still largely in favor of consumers.

Take, for example, California, which is experiencing a gain in sales as homebuyers jump on historically low interest rates and reasonable prices. This is good for new homeowners, but for how long? Statistics show that 30% of current California homeowners are underwater on their mortgages and will affect the market as they decide whether to stick it out or to list their properties. And California is but a portion of the national picture; Zillow reports that 31.4% of U.S. homeowners are currently upside-down on their mortgages as the fed frantically scrambles for a way to help them out and boost the economy.

So while increasing home prices seems, on the surface, like a positive step, the real estate market is far from a full recovery. The upcoming year will see more increases in property values and low interest rates, but it will be far from a housing boom. It will be interesting to see if government-backed refinancing options – which aim to free up income for underwater mortgage holders – are the cure for a sluggish economy. Will homeowners take their excess funds straight into the marketplace or will they stash it away for the next financial doomsday? Stay tuned…

Jared Diamond is a real estate credit consultant with Amerifi Home Loans in Los Angeles CA. Outside his profession, Jared writes on a variety of personal-finance and real estate topics. Jared holds a B.A. in Economics from Ohio State University.

The predicted market trend were based on what would happen after the government investigation into faulty paperwork on the banks providing home loans’ side. After all foreclosure investigations would have been concluded, there would have been a large number of homes that then lenders would resell, thus causing the drop in prices. However, two years after the government stepped in to investigate and even after the five biggest mortgage servicers in US settled the case with the federal and state regulators at the beginning of 2012, the wave of foreclosures still failed to come. The big players paid $25 billion, but the deal with banks also meant they were forced to cut deals with homeowners.

Data from the National Association of Realtors shows the index of pending home resales climbed 5.2% in October, while the median price for home sales in the same month was up 11% from 2011, the steepest annual increase since November 2005. Not such a big surprised if one considers the fact that 309,385 borrowers were given loan relief by the five largest U.S. mortgage servicers since March 2012. A report by Joseph Smith released in mid November shows a little under 22,000 borrowers had principal forgiveness totaling $2.55 billion, while another 113,000 borrowers won bank approval for short sales, meaning $13.1 billion in principal writedowns.

The wave of foreclosures seems even further with federal government loan-modification programs and as interest rates that reached a record low led to a spike in mortgage refinancing, helping homeowners to keep up their payments by decreasing the sums they have to pay every month. “The Federal Reserve Bank of New York had estimated that as many as 1.8 million properties would be taken back by banks in 2012. Yet through October, there have been only about 559,000 home seizures, according to RealtyTrac,” state John Gittelsohn and Prashant Gopal of Businessweek.

“In hindsight, by delaying and prolonging the foreclosure process, that gave the market time to stabilize and get back on its feet,” says Daren Blomquist, vice president of RealtyTrac, which warned a year ago that huge numbers of foreclosed homes were going to hit the market. “Maybe bureaucracy is actually helping, in this case, to diffuse the impact of the foreclosures. Talk about unintended consequences.”

While the number of properties for sale is extremely low, it does not mean there were no foreclosure sales. Institutional investors such as Blackstone Group and Colony Capital have actually bought thousands of foreclosed properties in bulk, long before they hit the market, but instead of reselling them, they chose to rent them.

While the facts contradict expert’s predictions, massive foreclosures hitting the market is still quite the threat, especially as a quarter of US homeowners still owe more than their property’s worth and as the economy has not made a full recovery as of yet.

Photo source

Thousands have been compelled to sign forced placed insurance. Courtesy of Complaint Center

However, research by the property data provider MSB shows that almost six out of 10 homes in America don’t have enough insurance; most policies would only provide enough cash to pay for 80 percent of a property’s rebuild.

Whether you have mortgaged your home or are a cash buyer, your property is likely your most valuable asset – so it makes sense to protect it. However, the insurance product you choose for your property depends on what you plan for its use.

Owner-occupier insurance

Buyers that intend on living in their property require several different forms of insurance to ensure the building, possessions and family are secure.

Insurance should cover damage to the building due to crime and weather; and damage or theft of the possessions inside the home. Owner-occupiers will also require life insurance which allows family to pay off the mortgage in the event of their death.

Damage to the building

Homeowners insurance is the cover which protects the building in the event of either natural or criminal damage. For example, should a property burn to the ground, buildings insurance will pay for its rebuild. A fire occurs somewhere in America once every 23 seconds, so this is a vital requirement, particularly since the average claim for fire damage is currently $31,762.

To ensure your policy doesn’t fall short, when purchasing a property, check the legal surveys for indication of any extra risks. Houses built close to waterways will need extra protection from flooding – even if the risk is only minor. Around a quarter of insurance claims come from areas where flooding is of just a low to moderate risk and standard policies tend not to protect against flood damage.

Additionally, a property’s value generally increases over time, as does the cost of building. By forgetting about your policy for a decade and simply paying the premiums, you could find yourself underinsured when you need to claim. Instead, you should review your policy and take a look at the economics of the industry every few years to see if you are comprehensively covered.

Loss of possessions

Contents insurance covers the loss of possessions due to damage and theft. Take care to detail anything of worth to make sure its value can be reclaimed in full.

Family protection

The World Finance Group states that many families fail to re-assess their life insurance coverage after a significant life event such as having children. Seventy two percent of people take out life insurance policies when they get married but that increases to just 75 percent when they have children. On top of that, three out of every 10 US households have no life insurance at all, according to LIMRA.

Homeowners should again take care to reassess their life insurance needs every few years, or after major events such as a new addition to the family.

Life insurance offers protection to your family and your bank in the event of your death, by ensuring the funds are available to pay off the mortgage. Extra clauses can be added to the insurance, which cover for illnesses and redundancy – to allow for the payment of the mortgage if regular income is hindered. Taking out this level of income protection insurance will make your premiums higher – but many people deem it worthwhile, especially in the current climate with the threat of redundancy biting at the heels of many businesses.

Landlord insurance

For owners of rental properties, insurance needs differ slightly from those of an owner-occupier. A specific rental dwelling policy called a Rental Property Insurance or a Dwelling Fire Policy is required to cover properties you don’t personally occupy. This covers the structure of the house – or the proportion of the building owned by the landlord – as well as providing some cover for contents and liability protection.

Liability protection protects the landlord against any claims due to bodily injury incurred within the property and would defend against any negligence held against the landlord.

Landlords may also be required to provide tenant relocation to their policies, if the dwelling houses more than one single family. This would cover the tenants’ expenses if they had to move out due to damage to the rental property.

Renters insurance

Some landlords like to protect themselves further by ensuring all tenants have a tenancy policy. A tenancy policy ensures the tenants are covered for any injury they cause in the home, rather than attempting to claim through the landlord, which could be very costly.

The increase from 2011 to 2012 is expected to be 5.1 percent. The state association expects sales to jump about 1.3 percent in 2013 to approach 530,000 units. Some 523,300 units are projected to be sold by the end of this year.

www.freedigitalphotos.net

The California median home price is expected to go about about 5.7 percent to $335,000 in 2013. The jump from 2011 to 2012 is projected to be 10.9 percent.

“The housing market momentum which began earlier this year will continue into 2013,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  “Pent-up demand from first-time buyers will compete with investors and all-cash offers on lower-priced properties, while multiple offers and aggressive bidding will continue to be the norm in mid- to upper-price range homes.”

“The actions of underwater homeowners will play an important role in housing inventory next year, with rising home prices inducing some to stay put and others to list and move forward,” she said.

Despite the overall outlook for the state, some regions are being hit with low inventory.

“The market has improved moderately over the past year, and we expect that to continue into 2013,” said C.A.R. President LeFrancis Arnold.  “Sales would be even higher if inventory were less constrained in REO-dominated markets, particularly in the Central Valley and Inland Empire, where there is an extreme shortage of available homes.  Sales will be stronger in higher-priced areas, where there are more equity properties and a somewhat greater availability of homes for sale.”

Another study echoes the fact that some regions of the state aren’t seeing any signs of improvement.

Fiserv, a real estate data company that recently evaluated 384 of the largest housing markets, found that several Central Valley markets aren’t showing signs of recovery because of high unemployment and foreclosure rates.

In fact, the top three markets are in California:

• Merced. This Central Valley city experienced a 69.7 percent decrease from the peak to the first quarter of 2012.
• Modesto. A 64 percent decrease over the same time period.
• Stockton. This city saw a 62.8 percent drop during the period.

Other markets that saw decreases more than 50 percent are Vallejo-Fairfield, Bakersfield-Delano, and Riverside, San Bernardino, Ontario.

Michele Dawson is a freelance writer based in Phoenix, Arizona. She spent seven years as a newspaper reporter and has written for various magazines and web sites specializing in real estate and home improvement, including Realty Times, SmartHomeowner, California Builder, and the Sacramento Business Journal.

Image/FreeDigitalPhotos.net

There are two basic parts to homeowners insurance: contents and building insurance.

Contents insurance refers to all the “things” in your house. Furniture, computers and other electronics, clothing, household supplies, toys. Basically it means all your stuff.

Building covers involves the actual house. Insurance for the building aspect of your house is how much it would cost to rebuild it. Some people get this confused with the market value of the house, but for insurance purposes, you want to have cover for how much all the supplies and labor would cost to build again should your house be destroyed, such as by fire.

Building also covers fixtures in the house like toilets, fitted kitchens, cupboards and attached enhancements, such as wallpaper. Structures like garages, greenhouses and sheds are usually covered under a building policy. However, insurers have varying policies for things like fences, gates, paths, drives and swimming pools.

Most policies will cover loss or damage from myriad sources, according to the Association of British Insurers. Covered losses include fire, lightning, earthquake, landslip, storm and flood, malicious damage, theft or would-be theft, water leaks from tanks and pipes, falling trees and branches, riot. Impact by aircraft, vehicle or animal and oil leaking from heating systems is also covered.

Things that aren’t included in most policies are: normal wear and tear, maintenance costs, faulty workmanship, breakdown, and any amount over your cover limits, damage done when the home has been unoccupied for more than 30 days, or when tenants are in the home.

Most insurance companies also offer extra cover for various items. For example, Swift Cover offers extra coverage for accidents other than those caused by fire or flood. If a tap is accidentally left running, for example, both contents and building fixtures could potentially be damaged. Extra accident coverage would cover these types of misfortunes.

Other extra cover choices include bicycle coverage, garden coverage, and valuable personal possessions that you take with you to and from your house — jewelry, laptops, mobile phones. Coverage for students away at school, family legal protection, and home assistance are also available extras.

In general when you buy a homeowners insurance policy, you choose an amount for excess. This is the amount you pay before insurance covers the rest. If a fire causes £1000 in damage, your excess might be set at £100, so the insurance company will pay £950 to repair the damage.

Oftentimes, you’ll have a lower premium if you carry a higher excess on your claims.

Some insurers may offer a reduction in premium if you accept a voluntary

For extra excess on all claims – the bigger the excess, the bigger the discount. Those who live in a flat or maisonette can opt to insure the building together to include living space and shared areas like stairs and entrances. Then residents can get their own individual contents policy.