Real Estate

But mostly - out of guilt - I wanted to re-assure you benevolent reader, I’m not spending all my time playing with a mortgage calculator and refinancing my home so I can get 150% of the equity to buy wonderful pharmaceuticals, alter my natural body endowments and try my hand at virtual card games.

The current housing bubble is the bastard offspring of the stock market bubble of the mid-1990s. Housing prices, especially on the West Coast and in the East's Bos-Wash corridor, began to rocket in the second half of 1995 as dot-com profits were ploughed into real estate. The boom has been sustained by sensationally low mortgage rates, thanks principally to the willingness of China to buy vast amounts of U.S. Treasury bonds despite their low or negative yields. Beijing has been willing to subsidize American mortgage borrowers as the price for keeping...

Calculate and graph your mortgage payment with and without mortgage insurance, real estate taxes, and property insurance.

So, what would happen if the home-mortgage deduction were slowly phased out? For the sectors of the housing market where homeowners tend not to itemize deductions, the impact would probably be minimal. At the higher end, housing prices might be expected to adjust, but not to crash. Consider a home buyer in the 25 percent tax bracket with an 8 percent mortgage. Thanks to the interest deduction, he effectively pays 6 percent on the mortgage. Losing the deduction would have the same effect on his personal finances and mentality as a rise in mortgage...

Now, granted, I haven’t been pricing the NYC real estate market [UPDATE: Tom Negrino has], but to someone watching the escalating L.A. housing prices, that statement lies on the border between hilarious and farce.

There has been a lot of discussions about the housing market recently. Most of the discussions were originated either from people in the industry or journalists. Here is a discussion paper that's been written up about "Why Housing Prices Have Gone Up?" coming from Harvard Institute of Economic Research.

The major practical impact will be the change in risk-weighting for loans and the point at which mortgage insurance is required.

Brad Setser and I have been writing endless papers and blogs (see here for the latest from Brad) about this "balance of financial terror" and argued that the reduction of such foreign financing of our twin deficits would sharply increase US long term interest rate and cause a hard landing for the US and global economy.

"What goes up must come down" applies faultlessly to physical matters. But I have heard every excuse as to why it can't happen to housing prices. Location, short supplies, and "no chance interest rates will ever rise above 6%" have all been used as reasons.

Revealing the need to keep the salt shaker nearby when studies roll out, a new survey says consumers get a better deal from mortgage brokers than lenders, but the study’s either-or proposition overlooks a third technique that is even more satisfying.

VI is a magazine dedicated to people interested in investing in Vancouver BC. It is written by people that are active in the Vancouver market, from real estate agents to mortgage brokers. It will be an un-hyped, honest look at what’s happening in Vancouver and give you an insider look at the market.

High housing prices in the DC area have shifted, at-most, a few hundred people into living on boats:

Housing prices aren't just skyrocketing in the U.S. In the years 2001-2004, they've risen by $20 trillion in developed countries worldwide.

Want to see something frightening? Type "economist housing prices" into Google. What comes up? How about an economics column in the Christian Science Monitor with this lead:

Until the release of the open market committee's minutes, rates and yields had been flat for a week and a half, with the 10-year Treasury yield ranging from 4.44 percent to 4.50 percent. But when the minutes came out, the 10-year yield fell. Mortgage rates tend to move in the same direction as Treasury yields.

The second mortgage has payments based on a 30-year amortization, but comes due in 15 years, with a balloon payment. You can use the amortization schedule on Bankrate's mortgage calculator to determine the remaining principal balance after 15 years to determine the balloon payment.

Other economists, however, say rising house values in many metropolitan areas, including Washington, are supported by changing demographics, job creation and still-attractive mortgage rates. Federal Reserve Chairman Alan Greenspan has said the central bank does not think there's a national problem.

I have been beating the housing-bubble drum for, ahem, upwards of four years now. I’m a strong believer in “common sense” economics: I didn’t buy the internet hype in the late 90’s (although I had a few “maybe I’m wrong” moments), and similarly I don’t believe the “its a different housing market” arguments now. At some level, housing prices must be tied to incomes. Clearly that relationship has become unhinged. It’s my opinion that the reason that it has become unhinged because of historically low interest rates and the fact that people have moved into increasingly leveraged mortgages. Also lurking in the background is my favorite quasi-federal bugaboo: Fannie Mae. Mortgage backed securities have leveraged the perceived stability of housing mortgages into a lucrative securities market which seems Federally backed. This market has the unfortunate effect of reducing or outright eliminating incentives to lenders to find qualified borrowers: if you are just going to sell the mortgage off as a security, who cares?

Fueled by soaring housing prices, traffic congestion, and new jobs in outlying areas, residents left L.A. at an average net rate of 9,621 per month between July 1, 2003, and last July 1, compared with an average net of 7,373 per month over the three previous years -- a 30 percent increase on average.

Mortgage rates fell for the second straight week, on signs of little inflation concern.

Wells Fargo is providing a mortgage calculator and other tools from its Spanish-language Web site, launched in 2002.

"Earnings in our mortgage insurance business were particularly favorable, primarily related to lower than anticipated domestic delinquencies and favorable foreign exchange," said Michael D. Fraizer, chairman and chief executive, in a statement.

Comments by The Fed (accompanying the .25% rate hike) signaling that they are paying closer attention to inflation, ["Pressures on inflation have picked up in recent weeks"] especially as it relates to rising energy prices, sent bond prices tumbling and spiked mortgage rates. For the week, interest rates on most mortgages rose by about 5/8 of a discount point.

"The economy will continue to have healthy growth, with only moderate inflation. Home construction will decline and competition within the real estate sector may intensify. Mortgage rates will trend upward. But a financing program that uses adjustable rates for a few years and a fixed rate thereafter may be attractive. A housing price bubble is unlikely."

Others believe that decades of rent regulation have distorted housing prices and discouraged construction and renovation. The shift can't come soon enough for Peter D. Salins, co-author of "Scarcity by Design: The Legacy of New York City's Housing Policies" (Harvard University Press, 1992).

Too bad the mortgage industry has no single federal agency monitoring its affairs, said industry experts. Government regulation is splintered, and in some cases -- notably mortgage brokers -- almost non-existent, they said.

Some trade groups -- notably appraisers and mortgage brokers -- are asking regulators for stronger governance to roust their wrong-doers.

Applications for U.S. home mortgages eased last week amid weaker refinancings and purchases despite a dip in 30-year mortgage rates, an industry group said on Wednesday.

The decrease in refinancing came despite weaker mortgage rates, but an economist said the one-week decrease in rates was a bit of an anomaly in an overall environment of rising rates.

So are Americans begging to borrow money, including from foreigners? Or are foreigners begging to lend to Americans? If it's the former then interest rates should have increased substantially since 2001, especially longer term rates given the FED's 30% increase in liquidity since then. This hasn't happened. Mortgage rates continue to hover around their lowest rates in over four decades. Here's the reason why.

I would suggest that we’ve never really been through this current scenario, so a profile of past recessions is not particularly relevent. The recent alignment of central bank interventions and other economic factors that is fueling the growth curve in mortgage debt and housing prices has to my knowledge never before appeared in the US, so it would make more sense to study the current...

Your Mortgage Specialist will answer your questions and help you determine which financing terms and options are right for you. Your Mortgage Specialist and Real Estate Professional work as a team to help you find the right home and select the best financing.

This is a part of the market everybody should be watching closely. Some people call it a bubble ready to burst. Others – mostly mortgage brokers, real estate agents and construction builders – are confident that any landing will be a soft one. Still other – mostly doomsday sceptics – are calling for a hard landing, the collapse of the credit derivatives market and the eventual bailout by the Fed.

Over roughly the same time period, the Office of Federal Housing Enterprise Oversight reported that Denver housing prices appreciated 4.18% putting us at 47th in the nation. The difference between my estimates and theirs could be attributed to a number of things (e.g. they track selling price, I'm tracking asking price), but for all intents and purposes both measures are saying that the Denver market is pretty slow. I think people here already knew...

This couple mentioned in the SF Chronicle article below lives around Telegraph Ave. and 59th St, just south of the Oakland/Berkeley border, two miles southwest of the UC Berkeley campus. The article says they've lived there since 1994. They probably have quite a bit of equity in the house. The original deal they had with the city subsidized housing program probably required them to share 1/2 of any appreciation...

The news sounds like a broken record, but housing prices in Santa Cruz County are causing many kinds of broken records — the sort that leave local home buyers, mortgage brokers and real estate agents gasping for breath.

"We commend Dr. Elliehausen's detailed research on this very important topic," said NAMB President Bob Armbruster. "We have always believed that the customer who works with mortgage brokers, especially NAMB-affiliated mortgage brokers, receives some of the most favorable terms possible for mortgages. The findings of this report simply prove what NAMB has known for years."

Kelly includes an in-depth question and answer interview with John Weicher, assistant secretary of the Department of Housing and Urban Development, who has responsibility for FHA home mortgages, including FHA reverse mortgages. The interview includes the best explanation I've seen of why FHA reverse mortgages, which comprise 90 percent of reverse mortgages, require mortgage insurance for the actual lender.

This number is also where your loan officer / loan originator receives his/her pay (as a percentage). Most loan originators make somewhere between 35% and 70% of the figure on line 801. As a result it may be difficult to get that amount lowered as no one likes to give away their paycheck. Also, some mortgage brokers will not allow any of their loan originators to drop below a preset amount.

He said he worried that the bank's unwillingness to budge - this is the 22nd month without a change in rates - was contributing to a bubble in property prices in some countries. Since 1998, he said, housing prices in Spain and France have risen more than in the United States.

Mr. Trichet described the economic data as mixed, saying it offered no evidence that Europe's fragile economy had gained any traction. He acknowledged that housing prices had risen sharply in a few countries.

700-719 – Able to obtain favorable financing terms

This information was originally designed for attorneys and was designed to teach them avoidance of problems. Naturally, we use their lessons against them and do all we can to get them to screw up so they can be sued. You will find a lot of ingenious tricks and traps can be devised to make them goof it up and lose their collection efforts and their cases against you.

In the case of housing, which has a 40% weighting in the CPI, the government does not calculate inflation based on actual housing prices, but on the speculation of homeowners as to the rental value of their homes. When calculating the CPI numbers for housing, the government asks a sampling of homeowners: “If someone were to rent your home today, how much do you think it would rent for?” To calculate housing values based on estimated rents is to disregard the crucial link between housing values and interest rates.

"If housing prices go down or even are flat, heaven help us," said DeFranco.

Federal Reserve Chairman Alan Greenspan has a different point of view. "I do believe it is conceivable we will get some reduction in prices, as we've had in the past," he told a House of Representatives hearing in February. But he added that this wouldn't be a problem, because housing prices had gone up so much, providing homeowners with "a fairly large buffer."

Exactly what is a home equity line of credit or HELOC? A home equity line of credit, which lenders and mortgage brokers refer to as a HELOC, is a different kind of home loan. An equity line has different rates and terms from a conventional first mortgage. In a standard home loan, or mortgage, your monthly payments cover both the principal loan and the interest you are charged.

"What's happening with rates is hurting the seller worse than it is the buyer, and home prices will flatten out if not go a little lower," said Bob Long, president of the Georgia Association of Mortgage Brokers.

Did you know there is actually two types of mortgage insurance, and it pays to understand the difference between them…

First there is Mortgage Protection Insurance. This is what most people mean when they talk about mortgage insurance. Mortgage protection insurance is what you pay independantly or possibly as part of your monthly repayments, and it protects you personally. If you die or are permanently incapacitated it will payout your mortgage. Or if you temprarily lose your income it will cover your repayments (subject to various coniditions of course).

The other type of mortgage insurance is Mortgage Indemnity Insurance. This is insurance taken out by the lender (not you), although you will be paying for it either directly or indirectly. Mortgage indemnity insurance protects the lender if you are not able to pay out your loan and they then suffer a loss on sale of the mortgaged home. The insurance covers their loss.

The thing about mortgage indemnity insurance is that the insurance company will then come after you to recover the loss they had to cover, so don’t rely on it to cover your backside should things go pear shaped. Mortgage indemnity insurance is also known as Lender’s Mortgage Insurance.

A trenchant analysis of the real estate bubble by The Contrary Investor concludes that This Time It's Different. Usually that is used to justify the continuation of a bubble; in this case it is used to put up warnings about a rise in housing prices even if it is not yet bubblicious. They analyze the current situation against the past thirty years. This is not the largest rise in prices - that happened in the late '70s - but it is the longest rise in real (inflation-adjusted) prices. ...

With the average rate on a one-year, adjustable-rate mortgage at 4.39% and housing prices continuing to rise in many areas, buyers seeking to keep payments low are opting for ARMs. But some economists warn that homeowners might run into trouble if interest rates are higher and their payments rise when their fixed-rate period ends, typically in one to seven years.

The average price of a single-family home in Virginia in January was $238,906, up 25 percent from last year's average of $190,768. The median sales price, with half selling for more and half for less, was $146,750, up 9 percent from $134,238 a year ago.

Nationally, the median single-family home price was $188,200 in February, up 9.4 percent from a year earlier.

Jennifer Walter gave Vivia Elaine Palmer a $2,850 check to make a deed change on the house she was living in.

Palmer, 59, of Sunrise, told Walter the $2,850 was ''good faith money,'' and she would get it back once the transaction was completed.

The deal never happened. Palmer, who passed herself off as a brokerage services expert, investigators say, was a fraud.

Palmer was arrested a second time Wednesday on charges of real estate fraud, according to the Broward Sheriff's Office.

Say "farewell" to the lowest mortgage rates since the 1960s, and prepare yourself to get smacked in the checkbook by adjustable rate mortgages (ARMs) and home equity lines of credit.

The interest rates on any mortgage-related loans that are not "fixed," or permanently set, have been moving up since last year. Mortgage industry economists are predicting more to come this year and next as the worldwide economy grows and the Federal Reserve uses higher interest rates to limit inflation.

Currently, 30-year fixed rate mortgages are at 6.08 percent, and one-year ARMs are 4.39 percent, according to the Mortgage Bankers Association. The association's economists are predicting 6.6 percent on fixed rates and 5 percent on ARMs by the end of 2005. By mid-2006, fixed mortgages are expected to be at 6.9 percent and ARMs at 5.2 percent.