Housing Crisis to End in 2012 as Banks Loosen Credit Standards

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.

Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”

In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.

While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.

Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generation actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

Borrowed from: KRISTA FRANKS, Thanks Krista!

Will 2012 Be The Comeback Year For Housing in Colorado?

What drives housing markets? I would have to say, confidence. What drives confidence? Income. How do you get an income? By having a job. It is clear that the best indicator for a housing recovery is jobs. According to Colorado Realtor Magazine, many of the indicators are moving in the right direction. The Census Bureau shows that Colorado has seen a net increase in population of over 31,000 people, and at the same time exceeded expectations when it comes to the jobs numbers. Colorado was expected to have 8.4% unemployment at the end of 2011, down from 8.7%. As it turned out, as of January 1, 2012, unemployment was actually at 8% even. (The nation’s unemployment rate was at 8.5%.) So, the increase in population along with the decrease in unemployment indicates apositive jobs situation, don’t you think?

Jobs are here, home prices are down, and this State is truly beautiful. With all of those factors on it’s side, you got to believe that Colorado is primed for the 2012 recovery.

Taken by a friend in the lovely State of Colorado. Thanks, Jennifer.

This one I took in January 2012.

 

Colorado is growing but are there enough homes for these newbies?

Here’s something I haven’t worried about in awhile; too few homes to show buyers!

Colorado is seeing a net gain of 31,000 new residents last year, according to the Census Bureau. Lower inventories of homes for sale and the lack of building means that we are looking a shortage square in the face. Here’s the breakdown; 8,854 single family homes currently on the market, compared to 13,714 the same time last year. That is over 35% fewer homes for sale. With that, coupled with the inflow of new Coloradans, we have ourselves the ingredients for a steamy batch of Shortage! Shortages in supply create a fierce marketplace. This fierceness could turn into bidding wars and ultimately, price increases. So, is it a good time to sell? Could be the best time to sell since 2008!

 

5% increase in existing home sales!

I’d like to think that the Hansen Group is doing their part! We were the #1 Closing team in our RE/MAX office for December!

Read more HERE

Who in the world would yell “Fire” in a movie theatre?

Who in the world would yell “Fire” in a movie theatre?.

Who in the world would yell “Fire” in a movie theatre?

What happens if someone yells “Fire!” in a crowded movie theatre? It causes panic and people try to barge their way to the nearest exits. Even if that means they crush and trample others on the way out.  Others might stay and assist others out safely. But even then, the panic is so high that things get out of control and a larger percentage of people can get hurt than that should have if there was no panic to begin with. What if it was just a small, manageable fire? People would still get hurt in the panic. Some may even be too fearful to return to their seats and then might even miss the best movie they have ever seen! Panic causes people to do irrational things.
I have been hearing bad news in the real estate market for years now. And for the most part, for good reason. The real estate industry has taken a beating unlike most of us have ever seen. Lately, however, the news is better than is reported. Sales are up, investors are making incredible buys, sellers are finding creative ways to weather the storm, borrowers are getting excellent rates an great loan deals, etc. That however, makes for boring news. Isn’t it more fun to hear of the blood and guts? The stories of success always fall by the wayside. It is sad, but we all know it’s true.
Now, back to the fire in the movie theatre; The talking heads in the news media have screamed “Fire!” and we have all ran for the isles! We panicked! We foreclosed on our homes, we negotiated short sales, we walked away from our white picket fences. But, most importantly, many of us have shied away from the housing market as a whole. Sure, the housing market got bad there for a while. And because of that, I believe too many people have gotten too fearful to return to market. I look at it as the unfortunate few that never got up the courage to return to their seats in the movie theatre and missed an incredible show! Personally, I want to see the ending, I want to experience the drama, I want to have the wonderful experiences that this housing market still has to offer.
I have been tracking home sales for many years now, take it from me, although it is not the best market in history, it is surely not as bad as you have been hearing. And I can assure you, it is not appropriate to be yelling “Fire!”

By the way, Here’s some proof

State of the Inventory

Well, here we are again, the beginning of a new year. Fresh start. So, let’s talk about the new inventory numbers! Yea! Boring, I know, but important.

Metrolist shows that 8,854 homes are still available in Metro Denver. Down 13%. That is substantial. A double digit drop is great news. Usually, during this time of the year decreases can be attributed to sellers wanting not to market their homes for sale during the holidays. However, 2011 was different. Read this for more explanation.

One more indication that this market is healing; home closings are up 3% last month. Prices have leveled off and are virtually unchanged from last year. But the big change is that there are 32% more homes currently under contract compared to this time last year! Buyers are out there. They are taking advantage of the low prices and the incredibly low interest rates. And, more importantly, they are putting homes under contract, not just sitting on the fence anymore. Looks to me that 2012 is off to a fine start.

A slow recovery, albeit, but a recovery nonetheless. Stay tuned.