Rising mortgage fees announced by Fannie Mae are beginning to affect costs for borrowers — even those with good credit scores. New “loan-level price adjustments,” which will go into effect on April 1, are an example of how even years into the housing downturn underwriting conditions continue to tighten. "It’s not that this is really tightening significantly, it’s that it’s getting tighter. It’s not getting easier,” said Cameron Findley, chief economist for Lending Tree, an online marketplace that connects consumers to lenders. “Consumers are looking for some relief, and what they’re getting is the opposite at this point. They’re getting ‘Sorry, there’s less that we can do for you than even a year ago.’” In the latest iteration of fees — which are anything but one-size-fits-all — borrowers won’t be affected if they have a FICO score above 740 and a loan-to-value (LTV) of 75% less. But a buyer with a standard 80% LTV and a 740 credit score could now face additional fees. Before the new adjustment, someone with a 700 FICO score and a $160,000 mortgage to purchase a $200,000 home might have paid an additional $800 in these fees. Now, that cost would be doubled — the loan’s risk-based pricing would equal $1,600. Loans insured by the Federal Housing Administration are not affected by the fees. (www.marketwatch.com)
MarketWatch (1/25/11); Amy Hoak

The argument may not be wrong that the 80 million baby boomers about to retire are not going to hang around in places like Chicago, New York, Boston and Pittsburgh all winter if they can help it and will gradually shift to better climates in places like Florida, Nevada, Arizona and California. Tens of millions of baby boomers are completely unprepared for retirement. They haven’t saved anywhere near enough, and this could drive them to live somewhere cheaper. According to the Accra Cost of Living Index, places like Phoenix; Las Vegas; Austin, Texas; and Fort Myers, Fla., cost less than half as much to live in as Manhattan, and far less, too, than places like Chicago. House prices have collapsed across the sunshine states. While the rest of the country has also been hit, the declines have in most cases been more muted. Using house price data from Zillow.com, the typical real-estate prices in a boom-and-bust town like Fort Myers reached parity with those in Chicago at the height of the housing boom. But today they’re down to about 60%, the same as the ratio in the late 1990s, before the boom. (www.marketwatch.com)
MarketWatch (2/4/11); Brett Arends, Wall Street Journal

A recent survey of 3,500 U.S. home owners and renters conducted for the National Association of Realtors® by Harris Interactive found that 60% of those who would like to own a house worry about job security and creditworthiness. But some real estate agents think the market may be rebounding because prospective buyers fear interest rates are permanently back on the upward trajectory, and they need to get in the game. Even so, in a market where financial motivation is canceled out by financial apprehension, the state of each house for sale becomes even more important to getting a deal done. Buyers are still looking for “perfection, with comfort,” said John Badalamenti, an associate broker at Prudential Fox & Roach Realtors in Wayne, Pa. “As a result of the staging craze, buyers have become a bit spoiled,” he said, “Homes are almost being put on the market as museum pieces. You can bounce a dime off a bed.” Said Carol Sabatelli, an agent with Weichert Realtors, in Media, Pa., “Right now, you need to pull every trick out of your hat in order to even get a showing.” Staging has become big business and is often recommended for hard-to-sell houses and potentially easy ones alike. “It is rare to find a home that does not need some suggestions for showing,” said Diane Williams, an agent with Weichert Realtors, in Blue Bell, Pa. “In fact, I find that sellers ask about it because they are familiar with the TV shows or articles on staging.” (www.chicagotribune.com)
Chicago Tribune (2/4/11); Alan J. Heavens, McClatchy/Tribune News

With millions of families switching from being home owners to renters, apartment-building values have soared. Investor demand is so intense, prices of some properties are approaching values last seen in mid-2007. Benefits from rising apartment-building values are rippling beyond their owners. It’s a boon for banks and other lenders holding billions of dollars of debt on apartment buildings and other commercial real estate that had been under financial stress. Values of apartment buildings rose 16% in 2010, according to brokerage firm Marcus & Millichap, after falling 27% between 2006 and 2009. Values of apartment buildings owned by real-estate investment trusts are now within 10% of their 2007 peak, according to Green Street Advisors, a research firm that follows REITs. Resurgent apartment values were first seen in late 2009 in markets such as New York City and Washington, D.C., where the economy has held up better and recoveries have been quicker. But the price surge has now spread to other markets including Los Angeles, Seattle, Boston, Baltimore and Austin, Texas. (www.wsj.com)
Wall Street Journal (1/29/2011); Dawn Wotapka

Metro Birmingham, Ala., home builders could be poised for a comeback in 2011. During a two-week period in January, more than 50 building permits were issued for speculative single-family homes in area neighborhoods, according to data collected by Southern Exposure, a Huntsville firm that tracks permit activity. That’s up from roughly 10 a week in recent months. The sharp uptick might be the result of seasonal factors, said Bart Fletcher, executive officer of the Greater Birmingham Association of Home Builders. If builders want to have houses ready for the typically busy spring buying season, now is the time they start working on them, he said. But, Fletcher added, “I think builders are more optimistic about 2011. I think that we really believe we have seen the bottom. A lot of builders have not built anything new for quite some time. We’ve worked through the inventory.” Still, hurdles remain for an overall housing recovery, notably low consumer confidence and high unemployment, which makes buyers wary. Lending also continues to be tight, which means many builders can’t get financing for new projects. The association has been meeting with U.S. Rep. Spencer Bachus, chairman of the House Financial Services Committee, to help in communicating with banking regulators. The group is trying to determine where the brakes are being applied when it comes to lending in an effort to loosen the purse strings, Fletcher said. “The type of lending environment that is necessary to keep small to medium-size builders in business, that’s just not happening right now,” he said. (www.bhamnews.com)
Birmingham News (2/3/11); Dawn Kent

Not long ago, you could have your big remodeling project and get your money back, too. Owners recouped an average of 87% of home improvements costs at resale in 2005, according to Remodeling magazine. But by 2010 the magazine had pegged the typical payback at just 60% — hardly the right time to tackle the new kitchen or master bathroom. However, Kermit Baker, senior research fellow at Harvard University’s Joint Center for Housing Studies, says that, “In many cases, these projects make more sense now than they did at the height of the market.” Assuming you like what you can’t change about your home — the neighborhood, the school district, the proximity to things that matter to you — and you’re planning on staying for five or more years, improving your home is a smart move. Today’s historically low interest rates mean that most home-equity lines of credit are charging their floor rates (your HELOC’s probably is around 3% if you’ve held it for a couple of years, 4% or 5% if the loan is more recent.) And with the typical bank account and money fund paying far less than 1%, drawing down savings barely costs anything in lost income. The best pros in town will now happily bid on your job — and they’ll probably offer prices that are 10% to 20% below what you would have paid when real estate was going gangbusters, according to Bernard Markstein, NAHB’s senior economist. Also, on the whole, the cost of building supplies has tumbled. Plywood is down 23% since its peak in the mid-2000s. Drywall is off 29%, framing lumber 35%. (www.cnnmoney.com)
Money Magazine (2/2/11); Josh Garskoff