Saturday, February 14, 2015

Foreclosures hit a 20-month high both in Phoenix and Arizona as a whole in January.

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Please read the following articles. The second wave of foreclosures and short sales in Phoenix Metro are hitting the market. If you are planning to sell your property, price your property accordingly. If you are planning to buy, be selective. If you need any assistance please call me directly. (888) 777-6664 ext 114 or email me at

Foreclosures hit a 20-month high both in Phoenix and Arizona as a whole in January.

Senior Reporter- Phoenix Business Journal
Foreclosures hit a 20-month high both in Phoenix and Arizona as a whole in January.
Foreclosures jumped more than 100 percent in January compared to December both in Phoenix and statewide, according to new numbers today from RealtyTrac.
Foreclosure activity both locally and statewide are at 20-month highs as banks step up their repossessions, auctions and filing of default notices.
Phoenix saw a 45 percent increase in January foreclosures compared a year earlier, according to the real estate research firm.
Foreclosure auctions in Arizona were up 37 percent in January, also a 20-month high. Bank repossessions are up 61 percent, according to RealtyTrac.
Those same repossessions are up 58 percent in Phoenix.
There were more than 2,300 homes and condos in the foreclosure process last month. That is up 104 percent from December.
Statewide that increase is 109 percent from January 2014.
The jump in foreclosures comes as the Phoenix housing market tries to shake off a slow 2014 where low demand for homes and tough mortgage qualifications stymied sales.
Foreclosure activity was also up in states such as Ohio, New Jersey, Maryland and California and metropolitan areas such as St. Louis, Los Angeles and San Francisco.
The worst cities for foreclosures include Atlantic City, Las Vegas and eight Florida markets including Tampa, Orlando, Miami and Jacksonville.
"The year-over-year increase in REOs in January was the first annual increase nationwide following 25 consecutive months of declines, getting the foreclosure spring cleaning we anticipated in our last foreclosure report off to a quick start in 2015," said Daren Blomquist, vice president at RealtyTrac. "Meanwhile, the number of future foreclosure auctions scheduled in January continued to increase in many states, foreshadowing more foreclosure spring cleaning to come in the next several months in those states."
Mike Sunnucks writes about residential and commercial real estate, government, law, sports business and workplace issues.

Housing ended 2014 on slow note; Phoenix home starts down 15 percent

Senior Reporter- Phoenix Business Journal
Housing starts ended 2014 down 15 percent across Phoenix while new home sales were off 10 percent and existing sales fell 8 percent as the local residential market slogs into 2015.
RL Brown Housing Reports says 2014 fell short in terms of volume. The regional housing market is challenged by demand stunted by slow population growth, tougher mortgage standards and plenty of borrowers preferring to be or stuck in rentals because of poor credit and past foreclosures.
The average price of a new home last year in the Valley was $351,196, up 1.5 percent, according to RL Brown.
The average price of an existing home was $247,825, up 1 percent. But there are plenty of real estate analysts and agents who note the overall price gains are spurred more by some high-end home sales than price gains across segments.
Another local real estate expert, Jim Belfiore at Belfiore Real Estate Consulting, also expects some housing challenges to persist in at least the first half of this year. Belfiore notes the slip in demand challenges and can create oversupply issues for home builders.
Belfiore does note home builders are seeing some indications that demand could improve this year.
That could be especially true with new subdivisions geared toward seniors in so-called "active adult communities."

Rents dip in Phoenix even as more units hit market

Senior Reporter- Phoenix Business Journal
Dec 31, 2014, 12:12pm MST
Rents dip in Phoenix even as more units hit market.
Apartment rents have dropped in the Phoenix metro area even as more new units are entering the market. Still, the RealtyTrac real estate research firm said it's a better deal to buy a house under current conditions than it is to rent an apartment.
That's if a borrower can qualify for a mortgage.
Three-bedroom apartments rented on average for $1,338 per month in Phoenix during this fiscal year, according to RealtyTrac and the U.S. Department of Housing and Urban Development. That is down 5 percent from $1,410 last year.
Rents also declined in Dallas, Las Vegas, Houston, Tucson and Los Angeles. Texas and Southern California — like Phoenix — have seen plenty of new apartment developments. There are more units in the construction pipeline and planning stages and numerous sales this year of older complexes.
Conversely, apartment rental prices increased in markets such as Chicago, Denver and Seattle.
RealtyTrac estimates it takes 33 percent of the median income in Phoenix to rent a three-bedroom apartment compared to 27 percent to afford the Valley's median home price ($188,040). That's after all of the tax advantages are factor into the mix. Still, many borrowers cannot qualify for home loans because of poor credit, previous foreclosures and tighter lending standards.
Median home prices increased 4 percent in Phoenix this year, according to the real estate data company. That is not as strong as home value improvements in California, Texas and Florida.

Phoenix homes among most overvalued in the country

Dec 29, 2014, 6:05am MST Updated: Dec 29, 2014, 7:27am MST
Fitch Ratings says Phoenix-area homes are some of the most overvalued in the country.

Digital Producer- Phoenix Business Journal
If you've thought home prices in Phoenix seem a bit high, you're not alone.
In a new report, bond-rating agency Fitch Ratings says Phoenix-area homes are some of the most overvalued in the country, reports The Arizona Republic. The fifth most overvalued, in fact -- more than pricey California markets Los Angeles and San Francisco.
Metro Phoenix homes are roughly 16 percent overvalued, according to Fitch. The agency pegs Arizona as among the six priciest states.
Statewide, Arizona home prices are 10 to 15 percent overvalued, according to Fitch. That puts it in the same vein as California, Hawaii, Idaho, Nevada and Texas.
Phoenix housing was undervalued in 2011, according to the rating agency. The market was sustainably valued in 2012 and 10 to 15 percent overvalued in 2013.
Besides Phoenix, the rest of Fitch's top 10 overvalued cities are in California, Texas or Florida, with hipster hub Austin ranked at the top. Fitch estimates homes in the Texas capital are 20 percent overvalued, followed by energy boomtown Houston, whose homes are overvalued by 19 percent, according to Fitch.

The world may not be flat, but Phoenix's housing market is

Dec 16, 2014, 1:53pm MST Updated: Dec 16, 2014, 2:07pm MST
The Phoenix housing market will end the year on a flat note.

Digital Producer- Phoenix Business Journal
This year will go down as a generally flat one for the greater Phoenix housing market.
That's according to the latest report from Arizona State University real-estate guru Michael Orr, who noted that demand remains lower than a year ago.
Sales of single-family homes fell 5 percent from October 2013 to October 2014, with activity among first-time home buyers particularly low.
The report cites the usual culprits of potential buyers carrying tarnished credit histories from the recession and the fact that 20-somethings continue to forgo home purchases.
"We've seen very little change in the greater Phoenix housing market for the last year, and stability is the order of the day," said Orr.
Coincidentally, these are the same reasons the rental market is strong, according to the report.
Rents have risen 3.7 percent during the past year and likely will continue to climb next year.
Despite the challenges of the market during the past year, the median home price still rose 4 percent from October 2013 to October 2014, rising from $200,000 to $208,000.
Also, Orr noted the market is seeing a small bump in investor interest and new-home sales.
The percentage of residential properties bought by investors hit 15.5 percent, the highest level since May, but still well below last year's levels, according to Orr's report.
"Investors and out-of-state buyers are showing a small recovery in buying interest, but to get our market back to what we would consider normal will still require a major increase in demand from local first-time home buyers," Orr said.
New homes are faring better of late, with their share of sales up to 14 percent. That's the same level as it was in October 2013.

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Saturday, January 10, 2015

Flip or Hold: Best Real Estate Moves for 2015

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    Whether it makes sense to flip or hold property depends entirely on your region.

    Closeup of a man calculating payments for a home.

    There is plenty of positive news for real estate investors to look forward to in 2015.
    Wild fluctuations in the nation’s real estate cycle have taken investors on a roller coaster ride since the early part of this century. From the first decade, marked by overheated home prices in many of the nation’s most popular metropolitan areas, to the post-Great Recession era sending home values into a free fall, investors have had to adjust and adapt their investment strategies to market conditions.

    So, going forward, which are the best strategies to pursue for real estate investors next year?
    The big picture for 2015. Looking at the nation’s housing and economic indicators, there is plenty of positive news to justify continued investor optimism in 2015. Home sales – both existing and new – are projected to increase next year, which is welcome news for fix-and-flip investors.

    At the 2014 Realtors Conference & Expo, Lawrence Yun, chief economist for the National Association of Realtors, or NAR, predicted a rebound for existing home sales for the next two years, and he projects the national median existing-home price will rise at a moderate 4 percent in each of those years. On the new home front, David Crowe, chief economist for the National Association of Home Builders, forecasted in an Oct. 31, 2014 National Association of Home Builders webinar that multi-family housing starts were projected to increase 15 percent in the rest of 2014 and hold steady in 2015.

    “Multi-family housing starts have rebounded back to normal since the downturn, mostly due to the strong demand for renting,” says NAR’s Yun, who also notes that renter households have increased by 4 million since 2010, while homeowner households have decreased by 1 million.

    Two major concerns remain: tight lending standards, which continue to keep people who could otherwise afford to buy a home from qualifying for a loan to finance the purchase, and interest rates, which are expected to hit at least 5 percent by year-end.

    Looking at the numbers. Daren Blomquist, vice president at RealtyTrac, says he believes 2015 is going to be a better year for buy-and-hold investors than for flippers – with the caveat that real estate values vary from area to area and property to property, so investment strategies will have to adjust accordingly.

    According to RealtyTrac’s numbers, the volume of properties being flipped declined dramatically, down from their most recent peak of 8.8 percent of all single-family home sales in the second quarter of 2012, to 4 percent of all home sales in the third quarter of this year.

    “As home-price appreciation slowed down, the flippers have become less active in this market as well,” Blomquist explains. “The interesting thing is that the volume of flipping is going down, but the average profit on a flip is staying very strong. The gross profit has stayed strong for the past three years in the 30 percent range.”

    For buy-and-hold investors, rental properties did well in 2014, although gross rental return was down slightly in the 586 counties surveyed by RealtyTrac, compared to 2013.

    “This year was not as good for buying rentals as last year. Last year, we had a 10 percent return because home prices went up, even though rents went up. Returns have slipped a bit because the cost of acquisition went up,” he says.

    Still, Blomquist says he believes it is a good time to buy rental properties, because the dynamics of this market are right.

    “We will see it flatten out because home prices are starting to flatten out as well. That will allow rents to catch up with home prices, which is good for buy-and-hold investors, but not as good for the flipper,” Blomquist says.

    The local perspective. To best-selling real estate author, attorney and longtime investor William Bronchick, 2015 is going to be a good year in the Denver market for owning rental properties, but not as good for flippers.

    “It’s great market for rentals, because people still can’t get loans and there’s so many renters. The lending market is tight, so there are more renters, so higher rental rates and lower vacancies make for a great rental market,” Bronchick says. “On other hand, inventory is low, so if you can get your hands on a good motivated property, then you’re good for a flip.”

    Working in North Carolina and South Carolina, investor and trainer Larry Goins, says current market conditions in these states are good for both flippers and rental property owners.

    “There are deals to be had, but you have to work harder to get them,” Goins says. “I like to buy lower-priced houses and rent them or do lease options or seller financing.”

    Specializing in the Atlanta market for decades, Andy Heller, a real estate investor and trainer on these topics, says that since the market crash, a buy-and-hold strategy has made more sense, because investors could buy property very inexpensively.

    “Most of the country has settled into a more normal appreciation especially in the last six months or so,” Heller says. “Allowing for the fact that we’re in a time of normal appreciation, what strategy is the best? Both. We don’t have an overheated market and we don’t have a collapsing market.”
    In the Greater Phoenix area, supply and demand economics will dictate the right investment strategy in 2015.

    “The Greater Phoenix market has been in low supply and low demand for 15 months now,” says Alan Langston, executive director of the Arizona Real Estate Investors Association or AZREIA. “We’re not sure that’s going to change anytime soon. Our market’s been stagnant for a long time, but that doesn’t mean real estate investing has been bad. It’s been different.”

    Langston believes investors will continue to be successful, they are whether rehabbing and flipping houses, or holding onto rentals - but they will have to approach the business differently than they used to.

    “If you know what you’re doing as a real estate investor, you’re going to adjust what you need to adjust so you do well on your property,” Langston says. “If you’re an informed investor, you’re going to be fine,” he says.

    Investor activity varies by investor, region and property types., the largest online real estate marketplace, recently released survey data collected from investors bidding on properties across the country, which confirmed that buying property to hold and rent is currently favored over flipping nationwide. However, investor intent varies considerably between online and offline investors, regions, and property prices.

    The study showed that purchasing property to rent is more prevalent in the Midwest and South, whereas there appears to be a higher propensity for flipping in the Northeast. The flip versus rent split is nearly even in the West, with a very slight preference toward renting.

    “Real estate investors appear more likely to flip a property in those regions where home values are higher,” says Executive Vice President Rick Sharga. “Higher prices can translate to a faster and potentially more significant short-term return on investment. The hold-and-rent strategy seems most popular in markets where home prices are lower, allowing investors to charge a more competitive monthly rental rate and still produce reasonable returns over an extended period of time."

    Monday, December 29, 2014

    The road to American serfdom via the housing market: The trend towards renter households will continue deep into 2015.

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    By: DrHousingBubble

    If you bought or rented in 2014 a larger portion of your income went to housing.  Rents and housing values are quickly outpacing any pathetic gains to be had with wages.  With the stock market at a peak, talking heads are surprised when the public is still largely negative on the economy.  Can it be that many younger adults are living at home or wages are stagnant?  It can also be that our housing market is still largely operated as some feudal operation.  Many lucrative deals were done with big banks and generous offers circumventing accounting rules.  This works because many perceive they are temporarily embarrassed Trumps, only one flip away from being a millionaire.  Why punish financial crimes when you will likely need those laws to protect your gains once you join the club?  The radio talk shows are all trying to convince people to over leverage and buy a home because you know, this time is the last time ever to buy.  Yet home sales are pathetic because people don’t have the wages to support current prices.  So sales drop and many sellers pull properties off the market.  You want to play, you have to pay today.  Rents are also rising and this is where a large portion of household growth has occurred.  2015 will continue to see housing consume a large portion of income and will lead many into a new modern day serfdom.

    The gain of 7 million rental households
    Over the last decade we have added 7 million renting households.  Is this because of population growth?  No.  This trend was driven because of the boom and bust in the housing market.  Investors crowded out regular home buyers in buying single family homes and now, we have millions of new renters out in the market.  Many of these people are folks who lost their homes via foreclosure.
    Learn About Credit Card Balances & Credit.
    Take a look at the obvious jump in renters:
    For better or worse, homeownership is a path to building equity.  It is a forced saving account for many.  Most Americans don’t even benefit from the stock market peaking because nearly half of the country doesn’t even own stocks.  And many own only a small amount.  Most Americans derive their net worth from their primary residence.  With fewer buying and more renting, I doubt that on a full scale people are suddenly buying stocks for the long-term.  But it is also the case that many are simply renting because that is all they can afford.  Many young Americans have so much debt that this is all they can pay.  Think of places like San Francisco where jobs pay well but rents are simply out of this world and home prices are nutty.
    Rents more stable versus wild housing prices
    Thanks to low rates, generous tax structures, and the American Dream marketing machine home values are operating in a casino like environment.  This wasn’t the case in previous generation but take a look at fluctuations in rents versus home prices:
    rents and home prices
    A crazy year for rents is when rents go up over 4 percent year-over-year.  For home values we routinely had year-over-year gains of 25 percent in the last 20 years (including the latest boom in 2013).  Rents are driven by net income of local families.  No funny leverage here.  But with buying homes, you have investors chasing yields, or loans that allow tiny down payments for buyers but then tack on a massive 30 year mortgage with a monthly nut that seems reasonable but only because of a low interest rate.  Some of these people have no retirement account yet take on a $600,000 or $800,000 mortgage without batting an eye.  So what we find is this psychological shift where some that want to buy are convinced that they need to start at the bottom of the ladder and pay an enormous price tag just to get in.  To move out of serfdom, you have to embrace the cult of Mega Debt.
    Young adults more likely to stay close to home – and rent
    Young adults are facing the biggest impact of the housing crunch.  Many are living at home because they can’t even afford current rents.  Those that do venture out, will likely rent as their first step.  A recent survey found that many young adults are planning on staying local.  Say you live with your baby boomer parents in Pasadena or San Francisco.  You want to buy like they did but good luck.  So many have their network within said community and will likely rent (or live with mom and dad deep into their 30s and 40s):
    rentals young adults
    I found this data interesting.  People are simply moving less from their home area.  So this will create more demand for rentals in these markets.  In California, we have 2.3 million adults living at home.  Pent up demand?  Unlikely.  The main reason they are at home is because of financial constraints.  These are people that can’t even afford a rental.  I’m sure this trend is occurring in other higher priced metro areas as well.
    Rental income soaring for investors
    Rental income has soared since the bust happened.  The biggest winners?  Those who bought properties to become the new feudal landlords.  You can see by the below chart that there was a larger concerted effort to consolidate rental income beyond the mom and pop buyers of former years:
    rental income
    Serfdom is also occurring to many households buying.  They are leveraging every penny into their mortgage payment.  Think you own your place?  Try missing a few payments and become part of the 7 million completed foreclosures since the crisis hit.  2014 simply saw more net income going into housing.  Is this good?  Not really since housing is a dud for the economy unless we have new construction being built but that is not happening on a large scale.  2015 will likely see this continuation of serfdom via renting or buying but at least you might save a few bucks with lower oil!  The road to serfdom apparently runs through housing.

    Tuesday, December 23, 2014

    4 predictions for the housing market in 2015

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    By: Chris Mathews Fortune Magazine

    Experts polled by Fortune expect home prices and mortgage rates to rise slowly next year.
    At a recent panel discussion on the 2015 real estate market, the chairman of Standard and Poor’s Index Committee, David Blitzer, was asked to describe what the market will look like in one word. His answer? “Mysterious.”
    His response tells us that, for one, the real estate market can confound even the experts. But, more importantly, it suggests that housing has reached an inflection point. With home prices in many markets at or above pre-bubble levels, we can no longer expect the “rebound effect” to power home values higher each month. Fundamentals, like population and wage growth, as well as the tastes of a new generation of home buyers, will dictate the trajectory of home prices in the new year. Here are four trends to watch for in the housing market next year:
    1. The demographic wave of Millennials will help boost prices: The U.S. has been stuck in a demographic rut, which has dragged down the demand for homes. For the past decade, the largest portion of the American population was made up of Baby Boomers, folks who long ago settled down and started families. But late last year, the Census Bureau announced that the cohort of now-23-year-old Americans is the largest in the country, followed by 24 and 22-year olds, respectively. As this ascendent generation ages another year, more of them will start families and look to buy homes of their own. Jonathan Smoke, chief economist at, argues that this generation will “drive two-thirds of household formations over the next five years.” Smoke thinks 2015 will mark the first year in which the Millennial generation’s presence in the housing market will be truly felt, especially in more affordable regions like the Midwest and the South.
    2. Young people will continue to demand housing where it’s tough to build: At the S&P Panel, Nobel Prize-winning economist Robert Shiller pointed out that since the housing crisis, the total value of owner-occupied housing has remained flat. This is because builders have not been constructing many single-family homes at all, a situation that the U.S. economy hasn’t faced since the Great Depression.
    Single-family home construction has been so subdued in part because the Millennial generation as a whole prefers to live where housing is expensive and where building is difficult. Jed Kolko, chief economist at Trulia, calls it the “Millennial mismatch” in a new report out Tuesday, where he shows that Millennials tend to live in markets like New York, Honolulu, and Austin, where homes are least affordable.
    3. Mortgage rates will rise: While many analysts were convinced that mortgage rates would rise this year on the back of an improving economy and the winding down of the Fed’s bond-buying stimulus program, the market didn’t comply. The year started out with news that the U.S. economy shrank in the first quarter, which put the market on edge. Next came news of unrest in Ukraine and slow growth in Japan and Europe, putting more downward pressure on interest and mortgage rates. Now, a 30-year mortgage is actually cheaper on average than it was at this time last year.
    US 30 Year Mortgage Rate Chart
    But economists are still betting that 2015 will be the year rates rise in earnest, citing, again, an improving domestic economy and a lack of stimulus from the Federal Reserve. Smoke, for instance, sees the 30-year rate ending at 5% by the end of next year, a more than 100-basis point increase from today.
    4. Home price increases will decelerate, but affordability will decline: The housing recovery slowed markedly in 2014. Home prices in October 2014 were up by 6.4% year-over-year, after climbing 10.6% in 2013. Economists polled by Fortune were nearly unanimous in predicting that home values would continue to rise, but even slower than they did this year. That’s because the rebound from the bursting of the housing bubble has just about run out of steam, with Trulia’s Kolko estimating that homes are only 3% undervalued relative to fundamentals nationally. Surveys of homeowner sentiment suggest that more of them will look to sell their homes next year, putting more downward pressure on prices. But factors like the “Millennial mismatch” and rising mortgage rates will conspire to make the most popular markets unaffordable for the middle class.

    Monday, October 20, 2014

    Rental fury: The trend for renting continues to grow stronger. Housing starts jump largely on the back of multi-family housing starts.

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    By: Dr Housing Bubble

    There was an odd sort of rejoicing last week in the midst of market volatility.  Housing starts jumped but the people pointing at this failed to grasp that a large reason for this was because of multi-family housing starts.  In other words, the demand is reflecting a nation that is becoming a renter class.  This trend reflects a new workforce that has more part-time employment and less job security than the previous generation.  Why would you buy a home if your employment is more volatile?  The numbers are clear and we have added over 7 million renter households in the last 10 years.  Right now we are at the peak of renting households.  However, we peaked for homeownership back in 2006.  Since 2006, we’ve actually lost about 2 million net homeowner households.  No need to worry since Wall Street has taken up the slack to purchase those single family homes and convert them back into rentals for the new modern day serfs.  The renting trend continues and the jump in housing starts reflects a change in home buying perception.

    Deconstructing housing starts
    It probably is worth digging into the housing starts data since some people were going hog-wild on data that reflects a trend towards renting.  Once broken down the solid rise in housing starts was brought on by multi-family units.  In other words, high density lower cost housing options.  You would like to see a higher demand for single family homes if the case were to be made that households were gearing up to purchase homes.  Yet this isn’t something builders are betting on.
    First take a look at single family housing starts:
    single family housing starts
    Can you spot the so-called surge?  Probably not.  Since 2008 home builders have been holding steady when it comes to single family homes.  After all, investors were out in the market looking for lower priced properties to churn out healthier rental yields.  In places like California, many investors have already pulled back and we are seeing the vacuum that is being left.  Many sellers are pulling their properties off the market thinking next spring and summer they’ll be able to lure in some new lemming.

    If we look into multi-family housing starts, we find an unmistakable trend:
    multifamily starts
    That is what a surge looks like.  This is a fury of activity to meet the demand of a renter nation.  No need to spin the above chart since it speaks loudly as to what builders are viewing as the next big thing.  Rents are holding steady and younger Americans are carrying large amounts of student debt and their salaries are unfortunately not all that great.  That is why you have 2.3 million adults living at home with their parents in California alone.
    We have added a whopping 7 million renter households in the last decade:
    renter and homeowner households
    The number of households that rent has increased by 20 percent over the last decade.  This is a strong trend.  This of course is coming at the expense of creating less homeowners.  This isn’t necessarily a good or bad thing.  In fact, I think the crap shack addicted zip code chasers would in many cases be better off renting in the long-term.  Many use the logic of “well over 30 years if you stay…” but rarely do they stay put for that long.  Will you live in a 700 square foot shack for 10 years just to build some equity so you can then move into a 900 square foot shack in the endless property ladder game?  This of course assumes your timing is on given real estate is now a boom and bust business.  This is why in places like San Francisco, you have many high tech workers opting to rent and foregoing the chase to buy ridiculously priced properties.
    It should be extremely clear that we are in a solid rental trend.  You can look at the housing start data above and arrive at your own conclusion as to where this “surge” is coming from.

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    Fed: Banks easing lending standards

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     Paul Davidson, USA TODAY

    The home mortgage market improved last quarter as demand increased and many banks eased their lending standards for the most creditworthy borrowers, the Federal Reserve said Monday.

    Banks also loosened lending criteria for a variety of other consumer and business loans as the economy improved and demand picked up.

    "The July survey results showed a continued easing of lending standards and terms for many types of loan categories, and a broad-based pickup in loan demand," the Fed said in its senior loan officer survey.

    The developments could foreshadow a turnaround in the housing market, which has slowed this year amid last year's increases in mortgage rates and higher home prices.

    More favorable credit conditions have been cited as a key driver of stronger economic growth recently. Last week, the government said the economy grew at a better-than-expected annual rate of 4% in the second quarter.

    Credit standards for many types of loans, including mortgages, are still more stringent than they were before the 2008 financial crisis, but they've eased in recent months, the survey shows.

    Mortgage demand started to flag as borrowing costs edged up after Federal Reserve officials signaled in May 2013 that the central bank would soon wind down bond purchases holding down long-term interest rates.

    Rates for 30-year fixed mortgages jumped nearly a percentage point to 4.46% by the end of last year. But rates have drifted down this year — and were 4.12% last week — in part because the Fed has indicated it's in no rush to raise short-term interest rates.

    Half the banks surveyed by the Fed in July said demand for prime mortgages was stronger the past three months. Lenders had reported weakening demand the previous three quarters.

    Even more encouraging, nearly a quarter of the banks said they eased credit standards for prime mortgages, the most since the 2007 housing crash. Only about 6% toughened their criteria.

    Several large banks also loosened standards, boosted credit limits and reduced the minimum credit score required for credit card loans.

    A surge in borrowing similarly boosted business loans, with more than 30% of banks citing stronger demand from small, midsize and large businesses and only about 5% reporting weaker demand.

    About 11% of banks surveyed eased their standards for loans to midsize and large companies, and 8% did so for small businesses, while none tightened.

    Banks cited more aggressive competition from other banks or lenders as the main reason for loosening their standards, along with a more favorable economic outlook.

    "The report points to continued gradual healing in the banking, corporate and household sectors," Barclays Capital said in a note to clients.
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    Here's why renters in America feel trapped

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    Here's why renters in America feel trapped

    Yahoo Finance
     In a recent report by the FINRA Investor Education Foundation, researchers offer a sobering peek into the homes of renters. Nearly one-quarter of renters  in a survey of 25,509 renters and homeowners combined say meeting their monthly financial commitments is “very difficult,” and more than half say they wouldn’t be able to come up with $2,000 to cover an emergency expense.

    Homeowners, by comparison, feel much more stable. Half as many homeowners as renters say they find meeting their monthly bills “very difficult” and nearly half say they have no trouble meeting their monthly expenses, according to the report.

    View gallery
    Source: FINRA

    Source: FINRA
    Because the cost of renting and buying varies so widely across the U.S., you have to take reports like these with a healthy dose of salt. In some metro areas, like San Antonio and Phoenix, it’s actually much cheaper to buy a home than rent.  

    But the reality is that the cost of renting across the country is on the rise, straining the budgets of many renters. In the largest 25 metro areas in the U.S., rents increased by 5.5% in 2013, eating up more than 40% of the average renter’s household income, according to Trulia. Most financial experts recommend spending less than one-third of income on housing. 

    “Once [rent] is over 30%, that’s when you start getting into the danger zone financially,” says Helen Stephens, a certified financial planner in Dallas. “And the problem when you’re renting is that you may be in a lease for a year, and at the end of that year your landlord has the right to raise the rent on you.”

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    Source: Finra

    Source: Finra
    In addition to rising rents, coming up with the cash for day-to-day expenses, let alone a down payment, can be tough for renters. Renters are more likely to be saddled with debt of all kinds than homeowners, according to FINRA. More the half of renters carry credit card debt vs. 47% of homeowners. And renters are nearly twice as likely to have medical debt than homeowners, owing to the fact that fewer renters have health insurance. 
    Not all renters are 20-somethings eating Cup Noodles and struggling to pay off student debt, either. The average age of renters today is 41, per FINRA, and nearly half of renters say they have dependents at home. 

    The road from rent to mortgage

    For renters who aspire to own a home one day, the biggest hurdle they’ll face is mastering cash flow — ensuring that the money coming in can not only cover their bills, but also leave them with wiggle room to save. Unfortunately, today’s renters have a lot less capital to work with than existing homeowners. According to FINRA, 74% of renters earn less than $50,000 a year, vs. 60% of homeowners who earn more than $50,000. 

    Another challenge facing prospective home buyers: the daunting down payment -- typically 20% of the home’s purchase price. And Stephens advises her clients to build up an emergency maintenance fund of at least a few thousand dollars in case any unexpected repairs are needed once they’ve moved in. 

    As for the best place to save for a down payment, Stephens recommends a regular bank account. Banks are offering paltry interest rates on savings now, but it’s a wiser option than investing it in the stock market, she says.
    “I don’t believe in investing money in the market that you’re going to need for the short term,” she says. “I know it may not earn much [interest] in a bank but it is secure and it’s for a very targeted expense.” 

    Preparing financially isn’t the only step to home ownership . Buying a house is a complex, long-term endeavor that requires a lot of mental prep work. In a FINRA survey of more than 25,000 homeowners and renters, 40% of renters answered a basic question about 15-year and 30-year mortgages incorrectly, compared to just 19% of homeowners.
    “No one should buy a home if they can't understand basic finance,” says Ilyce Glink, author of “100 Questions Every First-time Home Buyer Should Ask”. “The quick way to bankruptcy is to buy a house you can't afford, get locked into mortgage payments, real estate tax bills, and maintenance and upkeep expenses.” 

    Glink has written dozens of articles available for free with tips for first-time home buyers. But even she recognizes that home ownership isn’t for everyone. Sometimes, renting just makes more sense.

    “Choose renting if you don't know where you're going to want to live in five years, if your employment situation isn't stable, and if you can't currently set aside 20% of your after-tax income into a savings account,” she says. “You might also choose renting if you're currently dating someone and hope to be in a long-term stable relationship that involves living together because otherwise you might buy a condo that's too small for your expanding family.”