Immigration Reform Suggests $500 Billion Housing Boom

Immigration reform is on everyone lips in the recent past. We are sure that no one doubts that something needs to be done about the immigration situation in the country. What, how, and when are questions that needs a lot of discussion and debate.  Only then will a meaningful conclusion be able to be reached. Whether back taxes need to be collected, what happens if immigrants are able to sneak in to the US in the future, all these are questions that will have to be answered in time, but fact of the matter is that these "legalized" citizens will be bold enough to make some purchasing decisions without fear of the law of the land. This undoubtedly is positive for the entire real estate and mortgage industry

As per Mortgage News daily, the immigration reform bill will finally get it's debut on the floor of the Senate tomorrow with potentially big implications for the Housing and Mortgage markets.  Though not specifically related to immigration reform, the CAP recently argued that the future mortgage market will benefit from providing more credit access to socioeconomic groups that have had less access in the past.

Before that, the National Association of Hispanic Real Estate Professionals (NAHREP) was out with a slightly different take on the same core concept: more participants in the housing/mortgage means more business.  The Association estimates that some 6 million undocumented immigrants would pursue legalization--about half of those with the desire and the economic resources to buy a home.

The estimates suggest a new pool of roughly 3 million new prospective homeowners, capable of purchasing a home at the median price of $173,000.  NAHREP based its projections on updated data and the approach it used for its 2004 study "The Potential for Home ownership Among Undocumented Workers." Using information from that study it estimates that those 3 million prospective homeowners would pump about $500 billion into the housing market.

But that would be just the beginning, NAHREP said. The chain reaction triggered by those home purchases would bring an additional $233 billion in spending for origination fees, real estate commissions, and consumer spending associated with home ownership. These expenditures are factored in over a five year period.

"Foreign-born householders have a high value and strong desire for home ownership," said Juan Martinez, NAHREP president. "They have been here in our midst for years, working and participating in our economy. Legitimizing them through immigration reforms would finally give them the access and the confidence to buy homes."

The press released said that other housing and corporate leaders that work closely with the underserved market agree that legalization will spark swift interest in homeownership among these Latinos because they are already established in communities here in the U.S.

Economist Believes Refinance Applications Will Remain Strong

If the latest Mortgage Bankers Association application survey results are any indicator, the refinance business has not started to dissipate, and one observer believes it will stay strong for some time to come. For the second consecutive week, refis are driving the increase in application volume, this time up 4.8% on a seasonally adjusted basis for the week ended April 12.
However, purchase applications also had a strong week as well.
The unadjusted Refinance Index increased 5% and is at its highest level since mid-January. The seasonally adjusted Purchase Index increased 4% from one week earlier and it is at its highest level since May 2010. The MBA noted that conventional application volume increased 3% to its highest level since October 2009. On an unadjusted basis, purchase applications are up 20% when compared with the same week in 2012.
Quicken Loans chief economist Bob Walters commented, “Projections of declining refinance activity seem to be premature as rates dipped amid the Bank of Japan moving into quantitative easing, causing a rally in the bond market. Look for refinance volume to stay strong driven by historically low rates and aided by the millions of HARP-eligible underwater homeowners who still could benefit from refinancing.”
Don’t expect rates to rise anytime soon. Zillow said on Tuesday afternoon that on a real-time basis it found the average 30-year fixed rate being offered through Zillow Mortgage Marketplace fell one basis point from last week to 3.34%.
The 30-year FRM hovered between 3.41% and 3.32% for the majority of the week.
"Rates fell slightly this past week after lower-than-expected retail sales numbers raised concerns about softening consumer confidence," said Erin Lantz, director of Zillow Mortgage Marketplace. "We expect mortgage rates will remain depressed this week due to apprehension related to the Boston Marathon bombing and threats from North Korea."
The MBA said the share of refi applications remained at 75%.
The average contract rate for the 30-year conforming FRM (MBA defines this as a loan with a balance of $417,500 or under) for the survey period decreased one basis point to 3.67%. Federal Housing Administration-insured loans had an average contract rate for the week of 3.37%, a drop of six basis points from the previous week.
Jumbo 30-year FRMs saw its average contract rate decrease two basis points to 3.77%. The MBA said the rate for the 15-year FRM fell by one basis point to 2.91%.
The share of adjustable-rate mortgages remains at 5% of the week’s loan applications; the average contract rate for the 5/1 ARM decreased by one basis point to 2.57%.

U.S. mortgage rates hold steady

Long- and short-term mortgage rates saw little change this week, but they remain below year-ago levels.

A 30-year fixed-rate averages 4.88 percent this week, up from 4.87 percent last week. A year ago, 30-year mortgages averaged 4.95 percent.

The average rate on a 15-year fixed-rate mortgage is 4.15 percent, unchanged from last week.

A one-year adjustable rate fell to 3.21 percent from 3.23 percent.

Mortgage applications jumped nearly 16 percent last week, according to the Mortgage Bankers Association, as potential buyers and existing homeowners continue to try to lock in rates before they rise. Applications to refinance rose 17.2 percent while purchase applications rose 12.5 percent, to the highest level of the year.

“An improving job market is beginning to pave the way for an improving housing market,” said MBA vice president of research Michael Fratantoni.

Low mortgage rates have continued to help nudge housing sales higher nationwide. However, home sales in Dayton have continued to lag and dropped 5 percent in 2010.

Read more: http://www.bizjournals.com/dayton/news/2011/03/10/mortgage-rates-hold-steady.html?ed=2011-03-10&s=article_du&ana=e_du_pub

Foreign buyers picking up US Homes at record rate

This is an interesting read - particularly if one is in the processing business, and trying to figure out the implications on our own business impact ... NAR report shows that these foreigners are snapping up great deals, and they are doing so for a number of purposes. Some are wealthy investors who are reacting positively to the slow signs of economic recovery in the U.S., and who are bullish on the real estate market. Others are looking for vacation homes in tourist destinations such as Miami and Orlando. There are some new immigrants in the mix as well; foreigners who have filed for extended visas and are applying for residency status for academic, business and lifestyle reasons.

Real Estate Agents Welcome Foreign Buyers

The strong demand for single-family residences and apartments has prompted the NAR to make changes to its website to make it more attractive to foreigners. More than 4 million listings across the U.S. can now be browsed from several countries in different languages.

Foreign home buyers are welcomed by real estate agents and even some mortgage brokers. Real estate financing has become difficult for many Americans, and for foreigners it is even more restrictive. As a result, many of the housing acquisitions by foreigners are closed in cash. The sunnier regions of the country are thus far favored by foreign home shoppers, and not just because of the warmer climates. Arizona, California, Florida, and Texas are also attractive due to the large inventory of unsold and distressed homes available.

What the Future Holds

Those who are concerned that foreigners will one day rule the American real estate market underestimate the huge inventory of the domestic market, valued at over one trillion dollars. At this moment, foreign real estate investors are doing their part to shore up the ailing housing market.

Real estate agents are naturally welcoming foreign buyers with open arms, and some lawmakers have proposed bills that would allow foreigners to obtain U.S. visas if they specifically make a significant investment in American housing. While there are a number of visa programs in place for foreigners who wish to buy a home in the U.S., this bill aims to attract investors willing to purchase homes valued at more than $500,000.

Anyone with half a million - will they require a mortgage? And if so who will finance these homes? And on what basis? Would be interesting to see ...

Great news for everyone ! - More Homeowners Returning to Positive Equity

Thousands of homeowners are seeing improvements in their home equity as the housing market continues its recovery, however, they represent a dent in the surface of total underwater mortgage holders. Approximately 200,000 residential properties returned to a state of positive equity during the fourth quarter of 2012, according to data from CoreLogic.

This brings the total number of properties that moved from negative to positive equity in 2012 to 1.7 million, bringing the total of mortgaged residential properties with equity to 38.1 million.

Despite steady gains in home prices, the number of homeowners who have moved into positive territory is overshadowed by a vast number of those still underwater. Negative equity, often referred to as “underwater” or “upside down,” can occur because of a decline in value, an increase in mortgage debt or a combination of both.

Data show that 10.4 million, or 21.5% of all residential properties with a mortgage were still in negative equity at the end of the fourth quarter of 2012, down from 10.6 million (22%) in the third quarter.

Also of note is that out of the 38.1 million properties with positive equity, 11.3 million have less than 20% equity.

Underwriting constraints may make it more difficult for these borrowers to obtain new financing for their homes, according to CoreLogic. Even more disadvantaged are the 2.3 million properties that had less than 5% equity by the end of the fourth quarter 2012. These “near-negative equity” borrowers are at risk should home prices drop, writes CoreLogic. Under-equited mortgages accounted for 23.3% of all residential properties with a mortgage nationwide in the fourth quarter of 2012, the average amount of equity for all properties with a mortgage being 31%. “The scourge of negative equity continues to recede across the country. There is certainly more to do but with fewer borrowers underwater, the fundamentals underpinning the housing market will continue to strengthen,” said Anand Nallathambi, president and CEO of CoreLogic. “The trend toward more homeowners moving back into positive equity territory should continue in 2013.”

Of the 38.1 million residential properties with positive equity, 11.3 million have less than 20 percent equity. Borrowers with less than 20 percent equity, referred to as "under-equitied," may have a more difficult time obtaining new financing for their homes due to underwriting constraints. At the end of the fourth quarter, 2.3 million residential properties had less than 5 percent equity, referred to as near-negative equity. Properties that are near negative equity are at risk should home prices fall. Under-equitied mortgages accounted for 23.2 percent of all residential properties with a mortgage nationwide in the fourth quarter of 2012. The average amount of equity for all properties with a mortgage is 31 percent.