Recovery Spreads Beyond Energy States

DAILY REAL ESTATE NEWS | WEDNESDAY, APRIL 09, 2014

The housing recovery is gaining strength in regions beyond just the booming energy states, according to the National Association of Home Builders/First American Leading Markets Index.

"It's a promising sign to see areas like Los Angeles and San Jose joining the top ten largest [metros] showing a recovery,” says NAHB Chief Economist David Crowe. “We still expect 2014 to be a strong year for housing and to aid in the overall economic recovery. The job market continues to mend and, with that, we will see a steady release of pent-up demand of buyers."

The index shows that 59 of the 350 metro markets tracked by the index have returned to or exceeded their last normal levels of economic and housing activity.

The index examines current housing permit, price, and employment data to see how close markets are performing at their historical normal levels.

Also, 28 percent of metro areas tracked had their score rise this month. Eighty-three percent have shown an improvement over the past year as well.

Topping the list on the index, Baton Rouge, La., continues its streak on the index, performing at 42 percent better than its last normal market level. Additional major markets that are exceeding their previous norms are: Honolulu; Oklahoma City; Austin and Houston, Texas; San Jose, Calif.; and Harrisburg, Pa.

Smaller metros showing the strongest recovery continue to mostly be centered in states experiencing the energy boom. For example, Odessa and Midland, Texas, have markets that are performing at double their strength prior to the recession. Other top-performing smaller metros include Bismarck, N.D.; Casper, Wyo.; and Grand Forks, N.D.

"Things are getting slowly better overall," says NAHB Chairman Kevin Kelly. "And with the housing market now entering the spring buying season, the fact that the nation's economy is headed in the right direction is a very promising sign."

Source: National Association of Home Builders

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Cheap Obama mortgages to get more expensive

Courtesy of CNN.com

Cheap Obama mortgages to get more expensive

By Les Christie  @CNNMoney March 4, 2014: 11:37 AM ET

NEW YORK (CNNMoney)

Nearly 783,000 homeowners who had their mortgage rates reduced under the government's Home Affordable Modification Program will see their payments increase by an average of almost $200 a month in the next few years, which will likely lead some borrowers to re-default, a federal watchdog warned.

Launched in 2009, HAMP helped troubled borrowers by either reducing the principal they owed or the monthly interest they paid, with many receiving rates as low as 2%.

But modifications under the program remained fixed for only five years and starting this month, the earliest borrowers in the program will begin seeing their rates climb by 1% a year to a high of 5.4%, the Special Inspector General's report on the Troubled Asset Relief Program (TARP) said.

As a result, some 33,000 borrowers are expected to see their rates increase this year.

Currently, the median mortgage payment among these borrowers is $773 a month. Once all rate hikes are factored in, their payments are expected to climb to a median of $989 a month.

"We're already seeing alarming re-default rates and are really worried that this could lead to more," said special inspector general Christy Romero. "It will be a real challenge for people to pay the higher amounts."

As of November 31, 359,000, or 28%, of borrowers with HAMP-modified mortgages had already re-defaulted on their mortgages and nearly 100,000 more were deemed "at risk" of default, SIGTARP reported.

Four states, including California, Florida, New York, and Illinois, accounted for half of all of the HAMP modifications that are expected to see rates climb. Some borrowers, particularly in expensive coastal markets, could see their mortgage payments climb by as much as $1,700 a month, SIGTARP reported.

The rate increases will begin this year and run through 2021.