Roaring Home Equity | Fiscal Cliff solution's positive impact on mortgages | Improving Jobs

The New Year 2013 started on a good note with the Congress approval for fiscal cliff measure and the deal has turned out to be positive for housing. The current mortgage interest deduction is left untouched, and the tax relief on mortgage debt forgiveness is extended for one year.

The Daily Herald reported that the home equity has increased by 20% to $7.71 trillion after hitting a low of $6.45 trillion in the final three months of 2011 as indicated in the Federal Reserve’s “Flow of Funds” December 2012 report. U.S. homes will have gained approximately $1.3 trillion in cumulative value during full-year 2012.  The article attributes part of the reason to recognition by buyers and investors that home prices cannot go down any further.  Zillow researchers have also authenticated that 135 metropolitan markets had experienced net increases in cumulative home values during 2012.  The rating firm Fitch, however, was less optimistic on U.S. home value increases  noting that the gains in prices tend to be from factors like supply-demand imbalances rather than economic strength.


For nearly three years, steady gains have occurred across different sectors of the economy. Jobs report from the Bureau of Labor Statistics indicated 34 straight months of private sector job growth. The private sector has added close to 5.8 million jobs during this period. And the year 2012 ended strong with an average growth of about 160,000 private sector jobs per month in 2012, with 155,000 jobs added in December, and the unemployment rate unchanged at 7.8%.  Mortgage brokers continued to hire adding 1,200 jobs in November 2012.

December retail sales were up despite the worries over fiscal cliff, with Costco and Nordstrom leading with 9% and 8.6% increase in same store sales.

The National Association of Realtors reported steady realtors confidence index.

We recommend CNBC video interview with Mr.Hessam Nadji, the Managing Director of Marcus Millichap in which Mr.Nadji opines that renting has become a lifestyle choice for many Americans and housing is not a speculative investment like it used to be before.

Interest Rates and delinquencies

The 30-year fixed-rate mortgage averaged 3.34 percent and 15-year fixed rate averaged 2.64 percent for the week ending January 3, 2013.

The National Mortgage News reported about rising delinquencies on second mortgages and home equity lines of credit.

The Federal Housing Finance Agency said that Fannie Mae and Freddie Mac completed more than 134,000 foreclosure prevention actions in the third quarter of 2012.

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