Residential investment grows in 3Q2012 | Rates expected to remain low

Residential Investment Grows in 3Q2012 | Rates Expected to Remain Low Until 2014 and Grow Steady to Stay Under 5% till 2019

low ratesThe Wall Street Journal reported that Lawrence Yun, the Chief Economist of the National Association of Realtors predicts home prices to rise by 15% in 3 years. The mortgage rates are expected to remain low until 2014. The main concerns are inventory shortage and a sustained recovery of the overall US Economy.   FHA release a Treasury rate chart that shows the rate to remain steady under 5% between 2014 and 2019.

A Multitude of Housing Report Information

According to the CoreLogic November Market Pulse Report, US Home prices rose by 5% in September on a year-over-year basis, the biggest increase since 2006. The single-family rental market was very active last summer with investor attention.  Residential Investment grew at a 14.4% annualized pace in the third quarter.  Rental leasing volumes were up sequentially every month during the last two years. The contribution of the housing market to GDP can rise to half a percentage point in 2013.

The NAHB/Wells Fargo Housing Opportunity Index, which is an indicator of home affordability, rose to 74.1 in the third quarter, up from 73.8 in the second quarter. The index indicates that 74.1% of all homes sold during the third quarter were affordable to families earning the national median income of $65,000.

Indianapolis, HomeUnion®’s cash flow zone ranked #3 among the 10 most affordable cities in the US with a median home price of $119,000, a local median income of $62,600, and the percentage of homes sold that are “affordable” at 92.6%. The ranking was done by CNNMoney based on NAHB/Wells Fargo HOP Index.

Foreclosure filings in October rose by 3% from September, but the number is still down 19% on a year-over-year basis according to the RealtyTrac U.S. Foreclosure Market Report. The three states with the biggest annual increases in foreclosure activity in October were New Jersey, New York, and Connecticut.

HUD (US Department of Housing and Urban Development) released a report on the Financial Status of the FHA Mutual Mortgage Insurance Fund FY 2012.   FHA Actuary has reported that the Economic networth of this key fund in 2012 is -$16.3B with a projected networth of -$5.3B in 2013.  With an anticipated average increase of $13 in insurance premium, the fund is trying to avoid government help.  The low interest rate, high default rate of the borrowers and more borrowers becoming renters are some of the reasons for this situation.

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