Massachusetts Home Buyer Guide

U.S. Mortgage Rates Decline Sharply

USA Today reported November 29, 2007 that average rates for 30-year, fixed-rate mortgage loans in the U.S. declined to 6.10 percent compared to 6.20 percent the previous week.

The rate is the lowest in two years.

"Analysts attributed the decline to increased worries that a severe slump in housing and a continuing credit crunch could drag the economy into a recession. The recent turbulence in stock markets has prompted many investors to rush to the safety of U.S. Treasury securities, driving down the yields on bonds."

Read The USA Today Article

U.S. Mortgage Applications Decline

USA Today reported November 28, 2007 that U.S. mortgage applications fell 4.3 percent compared to the previous week.

The good news is that home-purchase applications rose 6.1 percent. Refinance applications fell 15.3 percent.

Read The USA Today Article

One-year Anniversary of MassHomeBuyerGuide.com

I posted to this blog for the first time one year ago today. I'm addicted. I hope you enjoy reading it.

Home Improvement Spending Down

Spending on home-improvement projects is expected to decline for the first time since late 2003, according to Harvard University's Joint Center for Housing Studies, REALTOR® Magazine Online reported November 19, 2007.

Overall, remodeling spending in 2007 is projected to be 2.3 percent lower than 2006.

Read The REALTOR Magazine Online Article

Lenders Seize More Than 6,000 MA Homes In 2007

Lenders have seized more than 6,000 homes in foreclosure so far this year in Massachusetts, triple the number lost by delinquent homeowners over the same period in 2006, according to data published by The Warren Group.

The Boston Globe reported November 21, 2007 that 6,258 homes were taken from their owners year to date.

August was a record month in the ongoing foreclosure mess. Lenders seized a record 1,018 properties in August, and initiated 3,115 new foreclosure proceedings against homeowners, also a record. In September, 673 properties were seized by lenders, and 731 in October.

One reason foreclosures might have declined is that lenders may be holding off because there are fewer potential buyers available in the current real estate market.

The new data may actually undercount the number of homeowners who have lost their houses because they could no longer afford their mortgages. That's because The Warren Group does not count those transactions, known as deeds in lieu of foreclosure, in which homeowners agree to turn over their deeds before the lender moves to seize the property. Other cases involve delinquent borrowers selling their home for less than the outstanding debt, and either owing the remaining amount or getting lenders to absorb that loss. This is typically referred to as a "short sale."

Worcester County had the highest number of foreclosures through October, according to The Warren Group: 1,074, up from 428 a year earlier. It was followed by Middlesex County, 903; Essex County, 779; Suffolk County, 743; and Bristol County, 648.

Interested in buying bank-owned property or a property listed on the MLS as a short sale? Shoot me an email letting me know what you're looking for. I'll email you the listings.

Read The Boston Globe Article

Check out the Globe's foreclosure map

Mass. Lawmakers Pass Foreclosure Aid

The Massachusetts Legislature, after months of debate and thousands of foreclosures, passed a bill that provides protections for homeowners facing foreclosure while strengthening oversight of mortgage companies, the Boston Herald reported November 22, 2007.

"A key measure gives homeowners facing foreclosure a 90-day window to work out a deal with their lenders. Also included: mandatory counseling for first-time home buyers preparing to take out adjustable rate mortgages and $2 million for the nonprofit agencies that provide this service. The bill also allows residents who have lost their homes to remain as tenants at will and pay rent for up to six months."

Some so-called housing advocates were apparently disappointed the bill failed to include stiffer penalties that would make mortgage fraud a criminal offense.

"Tougher rules might have prevented some of the questionable lending that has sent foreclosure rates skyward, said Thomas Callahan, executive director of the Massachusetts Affordable Housing Alliance."

Of course no new law will prevent stupidity.

The bill also requires state exams for the vast majority of mortgage lenders and a system for rating mortgage companies. Governor Deval Patrick is expected to sign the bill into law next week.

Read The Boston Herald Article

Should You Believe The Pundits?

I received the following from a mortgage professional at Wells Fargo on Wednesday.

Tracking the Track Record

What the ‘Experts’ Say about Housing Prices

“The prices of houses seem to have reached a plateau, and there is reasonable expectancy that prices will decline.”
- Time Magazine 1947

“Houses cost too much for the mass market.  Today’s average price is out of reach for two-thirds of all buyers.”
- Science Digest 1948 (average price at the time: $8,000)

“The goal of owning a home seems to be getting beyond the reach of more and more Americans.”
- Business Week 1969 (average price at the time: $28,000)

“The era of easy profits in real estate may be drawing to a close.”
- Money Magazine 1981

“If you are looking to buy, be careful.  Rising home values are not a sure thing anymore.”
- Miami Herald 1985

“Most economists agree …a home will become little more than a roof and a tax deduction, certainly not the lucrative investment it was …”
- Money Magazine 1986

“We’re starting to go back to the time when you bought a home not for its potential money-making abilities, but rather as a nesting spot.”
- Los Angeles Times 1993 (Note that 1993 was the absolute low-point for real estate values in Los Angeles. Prices have sky-rocketed since, but are weak recently.)

“Financial planners agree that houses will continue to be a poor investment.”
- Kiplinger’s Personal Financial Magazine 1993

“A home is where the bad investment is.”
- San Francisco Examiner 1996

I came across this article in Newsweek a few days ago. John Talbott, apparently a housing expert of some sort because he predicted a few years ago that housing prices would decline, believes that prices will decline to 1997 levels. Talbott figures home prices will return to 1997 levels, since that was the year in which many of the aggressive lending practices, such as interest-only home loans, really began to take off. Please, quickly, someone throw a net over this guy.

Barring a horrific (God forbid) terrorist attack and a deep, long recession, we can add Mr. Talbott's prediction to the list above.

What do you think? Please comment.

Mass. Foreclosure Filings Reach 3,000 Per Month

The number of Bay State foreclosure filings topped 3,000 in August, the first time since the 1990s real estate bust that there was more than 3,000 foreclosure filings in a month, the Boston Herald reported November 21, 2007.

The Warren Group, a publisher of real estate market data, released the figures. Lenders initiated foreclosure proceedings 3,115 times against Massachusetts homes in August.

“'Foreclosures are getting so high that I worry they’re becoming like Mount Washington: Making their own weather,' [Warren Group Chief Executive Tim] Warren said, theorizing that the state’s foreclosure crisis has become bad enough to hurt the overall housing market. 'Potential buyers figure: ‘There must be lots of distressed properties around. Maybe we should wait to buy.’'"

August filings rose 75.5 percent from a year ago, as well as 25.3 percent from July 2007.

Read The Boston Herald Article

More Massachusetts Foreclosure News From Boston Real Estate Now

Homebuilders Are Pessimistic

The National Association of Home Builders reported that its housing market index, which gauges builders’ perceptions of conditions and expectations for home sales the next six months, remained at a record low .

The index came in at 19 in November, matching an upwardly revised reading for October, the Boston Herald reported November 19, 2007. The number for both months was at the lowest level since the index began in January 1985.

Index readings higher than 50 indicate positive sentiment.

"The trade group’s president, Brian Catalde, a builder from El Segundo, Calif., blamed the news media for the market’s troubles, asserting that media reports are 'fueling unrealistic expectations' about how far prices will fall."

There is some truth to Mr. Catalde's statement. Some people actually believe there is going to be a 40 or 50 percent decline in prices. It isn't going to happen, not a chance. People waiting for that kind of decline or anything close to that are, unfortunately, going to be living in their parents' basement for a long time.

Read The Boston Herald Article

Interest Rates Hit Six-month Low

Average rates for 30-year, fixed-rate mortgages in the U.S. slide to 6.20 percent from 6.24 percent the previous week, the Boston Herald reported November 21, 2007.

The average rate hit its lowest point since the week ending May 10, 2007.

A year ago the 30-year, fixed-rate loan stood at 6.18 percent.

Read The Boston Herald Article