Housing market remains strong, despite mortgage rate worries

The Federal Reserve is raising interest rates, and that's led some to worry that mortgage rates will spike and put an end to the housing boom in the United States.

Not so fast, according to the head of a big homebuilder.

Stuart Miller, executive chairman of Miami-based builder Lennar, said Tuesday that "concerns about rising interest rates and construction costs have been offset by low unemployment and increasing wages."

He added that there is still a "short supply" of houses on the market after "years of underproduction of new homes." And he said "demand remained strong" and "affordability remained consistent" thanks to rates that remain relatively low.

Miller made those remarks in Lennar's earnings release Tuesday morning. The company reported revenue and profits that topped Wall Street's forecasts.

Shares of Lennar (LEN) surged more than 7% on the news. Rival builders Pulte (PHM), DR Horton (DHI), Toll Brothers (TOL) and KB Home (KBH) all rose too.

Lennar's results are an encouraging sign for the group, which has been hit hard this year on fears that higher interest rates will start to take a bite out of demand for new homes.
Builder stocks have been hit hard this year, with many of them -- including Lennar -- falling more than 20% in 2018.

But Lennar's results and other recent data may be assuaging fears that the bottom is going to fall out of the housing market.

The federal government said Monday that new home sales in May were better than expected, citing particular strength in the southern part of the US.

That should be good news for the broader economy.

Lewis Alexander, chief US economist at Nomura, said in a report Tuesday that he was raising his GDP estimate for the second quarter, citing the stronger home sales figures and expectations of higher broker commissions.

And according to the closely watched S&P Case-Shiller index that was released Tuesday morning, home prices continued to rise across the country -- with 17 of the 20 cities tracked in the index registering increases.

"Given the combination of strong demand and lean inventories, especially for existing homes, we expect home prices to continue appreciating at a modest pace for the remainder of the year," said Barclays economist Pooja Sriram in a report Tuesday.

As long as the housing market remains stable, that should give consumers more confidence. To that end, the government reported strong retail sales figures for May earlier this month.
And it was led by healthy gains at home-improvement stores like Home Depot (HD) and Lowe's(LOW). These chains tend to do well when people are looking to sell their home.

source: http://money.cnn.com/2018/06/26/investing/lennar-housing-market-home-building/index.html

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The Housing Crisis Is Officially Over

 

The financial crisis was a decade ago, and many Americans have recovered. At the peak of the economic downturn, more than 30 percent of American homeowners owed lenders more than the value of their homes. Now, that number has finally dropped to under 10 percent.

However, millions are still reeling from aftershocks of the housing crisis: Nearly 4.5 million homeowners are underwater on their mortgages, according to a new report from Zillow.

Click to read more about which states are still being hit hard by the foreclosure crisis.

In the late 2000s, the housing bubble burst sent home values into a freefall, with the typical U.S. home losing more than a quarter of its value when the market crashed, sending millions of homeowners into negative equity.

Know: 19 Reasons Your Mortgage Loan Could Get Rejected

The situation is improving, but the outlook can appear bleak for Americans with underwater mortgages. Relief can be found with some options that exist for homeowners to avoid foreclosure:

• Stay and pay: Don’t continue to throw money at a bad investment, but if the sense of obligation pulls you, you can continue to pay your mortgage bill month after month in the hope that your situation improves.
• Consider a short sale: The goal is to get out of your home quickly and for the bank to forgive remaining debt. Homeowners should be prepared to sell their houses for a lower price than they paid for it.
• Walk away: Only pull this strategic default card if you’re prepared for the consequences of a drop in credit score, a credit report blemish and guaranteed difficulty in securing a future loan.
• Refinance your home: A lower interest rate and lower monthly payment through refinancing your mortgage might give you the relief you need in the short and long term.
• Get a deed in lieu of foreclosure: This allows you to give the house to the lender and avoid foreclosure proceedings altogether. Chief among the benefits is that you are immediately released from most or all indebtedness associated with the defaulted loan and your credit suffers less.
• Get a reverse mortgage: Available to individuals ages 62 and older, eligible homeowners can access a portion of their home equity by borrowing against it. Seniors can take the money in a lump sum, receive monthly payments, draw on it like a line of credit or use any combination of the three. The homeowner’s obligation to repay the loan is deferred until the homeowner dies or the home is sold.
• Home loan modification: With a loan modification, lenders lower the interest rate and payment, either temporarily or permanently. It is also fairly common for lenders to extend the term of the loan or to allow borrowers to make up missed payments by tacking them on to the end of the loan or spreading them out over the remaining loan.

Read: Pros and Cons of Getting a Deed in Lieu of Foreclosure

The best option to avoid foreclosure is to stay ahead of your bills, if possible. Research government mortgage assistance agencies like Home Affordable Refinance Program (HARP), Hardest Hit Fund (HHF) and Department of Housing and Urban Development (HUD) for free guidance on how to prevent a foreclosure.

source: https://finance.yahoo.com/news/housing-crisis-officially-over-182836139.html

for more information visit our website http://rdtrainingsystems.com