Geithner: TARP Program Extended to October
December 9, 2009
Treasury Secretary Timothy Geithner announced Wednesday that the U.S. administration will extend the government’s financial bailout program until next fall.
In a letter to House and Senate leaders, Geithner said the extension is “necessary to assist American families and stabilize financial markets.”
Money from the $700 billion taxpayer-funded bailout program has helped rescue big Wall Street firms, auto companies and others. That’s angered many Americans, who feel the government hasn’t provided them with relief from high unemployment and rising home foreclosures.
Geithner said the Troubled Asset Relief Program that Congress passed in October 2008, will be extended until Oct. 3, 2010. He has the authority to extend the TARP simply by notifying lawmakers.
“The recovery of our financial system remains incomplete,” Geithner told lawmakers. “And, near-term shocks to that system could undermine the economic recovery we have seen to do.”
The Treasury secretary said new commitments bankrolled by the bailout fund will be limited to three areas next year.
One focus is stepping up efforts to curb record-high home foreclosures, a move necessary to stabilize the housing market and support a lasting economic recovery.
Another will be providing capital to small banks, which play a crucial role in providing credit to small businesses — normally a leading engine of job creation. But small banks have been weighed down by problem commercial real estate loans, which has made them reluctant to lend and hurt the ability of small businesses to expand and hire.
In a third area, Geithner said the government may boost its commitment to a program aimed at sparking lending to consumers and small businesses. Run by Treasury and the Federal Reserve, the Term Asset-Backed Securities Loan Facility, or TALF, started in March.
Geithner said he didn’t expect any new commitments to the TALF would result in additional costs to taxpayers.
Source: The Washington Times
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Bernanke Cautious on 2010′s Economic Growth
December 8, 2009
Although the manufacturing sector has expanded four months in a row and the unemployment rate dipped last month, Federal Reserve Chairman Ben S. Bernanke warned Monday that there still is not sufficient momentum to declare that the nascent economic recovery will be long-lasting.
“Though we have seen some improvement in economic activity,” Mr. Bernanke told the Economic Club of Washington, “we still have some way to go before we can be assured that the recovery will be self-sustaining.”
The Fed chairman noted the “encouraging” development of “stronger demand for homes and consumer goods and service.” And he pointed to evidence that housing prices “have firmed a bit.”
Most economists think the recession ended in the summer, probably in July or August. During the third quarter, the U.S. economy expanded at an annual rate of 2.8 percent, the first advance in five quarters.
On the employment front, the nation’s jobless rate declined from 10.2 percent in October to 10 percent in November, the Labor Department reported Friday. Much more startling was the fact that only 11,000 jobs were lost last month, much fewer than the 140,000 or so that many economists were forecasting. Also, job losses for September and October were revised sharply downward.
However,Mr. Bernanke was cautious about future improvement in the labor market.
“At issue is whether the recovery will be strong enough to create the large number of jobs that will be needed to materially bring down the unemployment rate,” he said.
“My best guess at this point is that we will continue to see modest economic growth next year – sufficient to bring down the unemployment rate, but at a pace slower than we would like,” Mr. Bernanke said.
In its last forecast, the Fed estimated the jobless rate would hover between 9.3 percent and 9.7 percent during the fourth quarter of 2010. But many private economists, including Moody’s Economy.com and Wells Fargo & Co., expect the unemployment rate to remain above 10 percent through the end of next year.
To unclog the nation’s credit markets and to battle a plunging economy, the Fed lowered its target overnight interest rate to between 0 percent and 0.25 percent last December. After its policy meeting in early November, the Fed announced its intention to keep short-term interest rates at “exceptionally low levels” for “an extended period.”
On Monday, Mr. Bernanke repeated his view that the Fed’s expansionary monetary policy will not lead to higher inflation.
“Will the Federal Reserve’s actions to combat the crisis lead to higher inflation down the road?” he asked rhetorically.
“The answer is ‘no,’ ” he said, adding, “The Federal Reserve is committed to keeping inflation low and will be able to do so.”
Consumer prices have actually declined 0.2 percent over the past 12 months, but some analysts fear that the Fed’s extraordinary actions to battle the worst financial crisis and deepest downturn since the Great Depression could sow the seeds of inflation.
Mr. Bernanke, who has been nominated for a second four-year term as Fed chairman, has been arguing for months that the Fed’s “exit strategy” would prevent a burst of inflation.
Source: The Washington Times
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FHA Mortgage Insurance Program Important to Housing Market and Recovery
December 7, 2009
The Federal Housing Administration mortgage insurance program is a critical part of the American housing fabric and has never been more important than it is in today’s market, NAR President Vicki Cox Golder told a congressional panel recently.
Testifying before the House Committee on Financial Services, Golder said that the FHA program is fiscally sound with responsible underwriting, and needs enhancements not radical reform. She urged Congress and the administration to tread lightly before making changes to a program that has a profound impact on economic recovery and serves the nation’s families.
“With the collapse of the private mortgage market, the importance of the FHA mortgage insurance program has never been more apparent. Thus far in 2009, nearly 80% of all FHA insured purchasers are first-time homebuyers. And if you take a closer look at the numbers, you’ll see that program is doing exactly what it was designed to do – make more affordable mortgage financing available to homeowners,” said Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz.
She pointed out that this year almost 50% of non-white Hispanic borrowers used FHA insurance or the Veterans Administration’s loan guaranty for home-purchase loans and 21% used the FHA or VA program to refinance a home loan. Last year, more than 60% of home purchase loans and about 45% of refinance loans to black homebuyers were insured or guaranteed by either FHA or VA.
“As the leading advocate for homeownership and housing issues, NAR knows that without FHA mortgage insurance, our housing market could never start to recover,” Golder said.
FHA’s decline in reserves is in part a reflection of a projected change in home price values, and is not tied to excessive increases in defaults or unsound underwriting practices, she said. In citing the recent FHA audit, Golder said, “If FHA makes no changes to the way it does business today, the reserves will actually exceed 2% in the next several years. FHA has sufficient reserves.”
FHA cash reserves and capital reserves give the agency combined assets of $30.4 billion – enough to pay all claims over a 30-year period. Most banks are required to hold reserves sufficient to pay only one year of claims. “Realtors strongly believe that FHA is taking the necessary steps to assure its financial solvency,” Golder said.
“We look forward to working with the Department of Housing and Urban Development. We have confidence that FHA Commissioner Dave Stevens will do what’s needed to ensure the financial health and stability of the FHA fund. We encourage FHA to take steps that will have the least impact on FHA borrowers who are such an important part of our housing and economic recovery,” said Golder.
NAR strongly opposes H.R. 3706, the “FHA Taxpayer Protection Act of 2009,” which would increase FHA’s downpayment requirement. The bill would not add anything to FHA reserves but would put homeownership out of reach for many creditworthy borrowers.
“Realtors believe that the best way to ensure FHA’s success is to strengthen it,” she said. Golder also thanked Chairman Barney Frank (D-Mass.) and the committee for passing legislation to extend the higher loan limits through 2010, but urged the committee to make the higher limits permanent. “The higher limits are not just for a few states with high median prices. There are currently 245 counties in 28 states that have high cost limits – this is a national issue,” she said.
For more information, visit www.realtor.org.
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October Home Sales Rise 23% in South
December 4, 2009
October home sales in the U.S. South vaulted 23 percent from last year as buyers scrambled to grab an expiring tax credit and wrestled for lower-priced homes, the National Association of Realtors said Monday.
Real estate agents from Texas to Maryland credited sales increases to low mortgage rates, affordable prices and the tax credit of up to $8,000 for first-time buyers. The incentive was set to die Nov. 30 before Congress extended it into next spring and added a $6,500 credit for current homeowners who move into another property.
Median sales prices in the South did fall to $151,100, a 6 percent decline from last October. Strong demand from first-time buyers in Florida and Washington D.C. led to some bidding wars over low-priced homes, including foreclosures, said Vicki Cox Golder, president of the Realtors group.
Nationally, October sales of existing homes were up by one-fifth compared with last year, without adjusting for seasonal factors. The median sales price dipped 7 percent to $173,100.
Re-sales of houses and condominiums increased in all 18 Southern metro markets covered by The Associated Press-Re/Max Housing Report, also released Monday.
Fourteen Southern markets saw prices fall on a year-over-year basis. Foreclosure-heavy Miami posted the steepest drop — a 30 percent decline to $150,000. Little Rock, Ark., Birmingham, Ala., and Houston recorded price increases from October 2008, while New Orleans held steady, the AP-Re/Max report showed.
The AP-Re/Max report analyzed sales transactions in the metropolitan statistical areas recorded by all real estate agents, regardless of company affiliation.
While prices in Miami are down, sales rose 28 percent in October, compared with the same month last year. Miami’s real estate market not only benefited from the tax credit, but also from Canadian and European buyers taking advantage of a relatively weak dollar and affordable prices.
Real estate agent Ellen Windheim saw a difference in buyers’ attitudes compared with last year, when the country was mired in the recession and the financial market meltdown.
“There’s an optimism that the (economic) stimulus has done something for us,” said Windheim, an agent with Esslinger Wooten Maxwell in Aventura, Fla. “There’s obviously a tremendous amount of confidence out there.”
In Raleigh, N.C., first-time buyer Louise Brunson snapped up a three-bedroom, 2,200-square foot town house for $235,000 in the city’s northwest section. She and her husband originally planned to buy 1½ years ago but decided to wait until prices fell a bit further.
The Brunsons looked for about three months before deciding on the town house in a well-lit neighborhood in a good school district for their daughter.
“We suspected that (the tax credit) might be extended, but we did want to go ahead and get it done to be on the safe side,” said Brunson, a 39-year-old paralegal.
Buyers like the Brunsons drove a 16 percent increase in sales from last October in Raleigh-Durham, where the median sales price dipped 7 percent to $186,000, the AP-Re/Max report showed.
Real estate agent Harrison Tulloss said homes priced $180,000 and below are moving fast ahead of the holidays.
“People who are looking, they are serious,” said Tulloss, an agent with ZIP Realty in Raleigh-Durham. “They’re not riding around with me if they need to go shopping or buy a turkey.”
In Houston, home re-sales rose 12 percent from last October, when the state was reeling from Hurricane Ike. The pending elimination of the first-time buyer tax credit also drove people into the market, said Vicki Fullerton, who chairs the Houston Association of Realtors.
Dropping inventory due to accelerated sales was the story in Atlanta. The number of homes listed for sale fell 30 percent compared with October of last year, while sales rose nearly 7 percent, the AP-Re/Max report showed.
The first-time buyers’ tax credit “got them off the couch to look at homes,” said ZIP Realty agent Ed Neubaum in Atlanta.Neubaum noted some challenges in the Atlanta market, including a new flood of foreclosures expected to hit in January. Foreclosures are sold at a heavy discount, lowering values of nearby homes. Atlanta’s median sales price was $141,000, a drop of 6 percent, the AP-Re/Max report showed.
And, despite the inventory decline, sellers reluctant to lower their prices have seen their homes languish.
“They’re getting burned out keeping their house ready for sale,” he said.
Source: NEMS360.com
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U.S. Jobless Claims Fall, Point to Labor Market Healing
December 3, 2009
New applications for U.S. jobless benefits unexpectedly fell last week to the lowest level in more than 14 months, suggesting a labor market edging toward stability, while productivity was less robust in the third quarter.
Initial claims for state unemployment aid slipped 5,000 to 457,000 from 462,000 in the prior week, the Labor Department said on Thursday. Claims have dropped for five consecutive weeks. Analysts polled by Reuters had forecast claims rising to 480,000.
The labor market is seen as the biggest threat to the economy’s recovery from the worst recession since the 1930s.
New filings for jobless aid are being watched for signs of when job losses might bottom and if the economic expansion that started in the third quarter can be sustained.
“Now we have had two weeks in a row clearly below 500,000. That is very encouraging. In order to move from net loss of jobs into positive payrolls territory we need to get down to about 400,000 in claims. We are half way there,” said Jay Mueller, senior portfolio manager at Wells Capital Management in Milwaukee, Wisconsin.
U.S. stock index futures held gains on the data, while Treasury debt prices extended losses.
In another report, the department said third-quarter non-farm productivity rose at an 8.1 percent annual rate, still the quickest pace since the third quarter of 2003, rather than the 9.5 percent rate predicted last month.
Aggressive cost cutting by businesses has pushed productivity sharply higher over the past months.
That, combined with a surge in profits during the quarter, has convinced analysts that companies may start hiring and help the economy’s recovery.
U.S. Treasury Secretary Timothy Geithner on Thursday said the economy was slowly healing. But he told CNBC that given there were still problems in the housing market and credit remained tight, economic problems were far from over.
Source: Reuters
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30-Year Fixed Mortgage Rate Continues Rapid Fall
December 2, 2009
The weekly average rate borrowers were quoted on Zillow Mortgage Marketplace for 30-year fixed mortgages decreased seven basis points last week to 4.62%, down from 4.69% the week prior, according to the Zillow Mortgage Rate Monitor, compiled by real estate website Zillow.com. Rates for 15-year fixed mortgages fell four basis points to 4.19% from 4.23%, while 5-1 adjustable rate mortgages increased five basis points to 3.74%, from 3.69% the week prior.
The volume of mortgage requests last week fell 17% from the prior week. Of last week’s requests, 49% were for refinance loans, 49% were for purchase loans and 2% were for home equity loans. There was no change in the mortgage type mix from the prior week.
Rates for 30-year fixed purchase mortgages fell further, with the average rate on Zillow Mortgage Marketplace at 4.52%. Thirty-year fixed mortgage rates varied by state. Ohio mortgage rates and North Carolina mortgage rates decreased the most, from 4.79% to 4.63% in Ohio and from 4.72% to 4.60% in North Carolina. New York mortgage rates (4.79%), Missouri mortgage rates (4.72%) and Illinois mortgage rates (4.72%) were the highest in the country, while Texas mortgage rates (4.52%) and Colorado mortgage rates (4.54%) were the lowest. California mortgage rates were the most requested among all states.
For more information, visit www.Zillow.com.
Read more: http://rismedia.com/2009-12-01/30-year-fixed-mortgage-rate-continues-rapid-fall/#ixzz0YXuRnsUH
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9 Home Improvements to Promote Healthy Living
December 2, 2009
Consumers are more conscientious about healthy living than ever before and this awareness is making its way to the homebuilding industry, particularly in the custom home market, says Michael Lenahen who owns Ponte Vedra, Fla.-based Aurora Custom Homes.
“As more consumers begin to realize how much their home affects every aspect of their health, they are beginning to see the importance of improving its environmental quality with products to benefit their health and that of their family,” Lenahen said. “The new emphasis toward healthy living focuses around four main categories – air, water, odor/fumes and lighting.”
According to the U.S. Green Building Council, pollutants are often two to five times higher indoors than outdoors and this can significantly affect air in the home causing breathing problems and respiratory diseases. When it comes to the quality of the air, Lenahen said several products are available on the market that homeowners should incorporate into their home such as:
-Advanced allergy filters to control dust particles and pollutants
-Dehumidification devices to manage the humidity in the home
-Variable speed air handlers to maintain the circulation of air throughout the home and ventilation fans to introduce fresh air into the home while removing stale, humid air
Improving the water quality in a home is just as important as the air quality, Lenahen said. Several products are available to improve the quality and efficiency of a home’s water flow and usage, including:
-Carbon filter and reverse osmosis units to purify drinking water by removing particulate matter and harmful minerals
-Whole-house water softeners to remove calcium and other harmful minerals while providing added benefit to the home’s appliances and pluming fixtures. Water softeners also improve skin tone and texture by removing calcium, magnesium and iron from the water.
-Underground cisterns to collect rainwater from the gutter and downspouts to use for irrigating the lawn and landscapeHealthy home living is also improved by the use of low Volatile Organic Compound (VOC) materials, which emit lower levels of gasses into the home from everyday materials such as paints, sealants, cabinets and flooring materials. Lenahen said homeowners should use the lowest emitting VOC products for custom homebuilding and remodeling projects, thereby reducing the negative health impact the products may have on the occupants. Low VOC products will have labeling to help homeowners find the healthiest option.
Better lighting solutions can also foster healthier living. Traditional light fixtures typically include high wattage bulbs, which waste electricity while adding excessive heat into the home. Suggested improvements include:
-Decorative light fixtures with less wattage requirements and soft-light emitting globes
-Compact florescent light (CFL) bulbs or L.E.D. fixtures and bulbs for longer life usage
-Next generation skylights, such as Velux Sun Tunnel or Solatube, that bring natural light into the home, reducing the need for artificial light and energy consumption
“These are just some of the many changes that can be made to current homes or built into new homes that will greatly improve the quality of life and health of its occupants,” Lenahen said. “The more consumers become aware of the positive affects of healthy living within the home, the more products will enter the mainstream of standard building practices.”
About Aurora Custom Homes
Aurora Custom Homes was founded in 1997 by Michael Lenahen with a mission to build custom homes of uncompromised elegance. Driven by passion and purpose, Aurora Custom Homes provides its clients with a truly custom building experience where the customer becomes an integral part of the building team.
For more information, visit www.AuroraBuilders.com.
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New Home Sales Rise 6.2% in October 2009
December 1, 2009
Sales of new homes rose 6.2% in October 2009 on strong results in the South, the Commerce Department estimated recently.
The rise in U.S. new-home sales to a seasonally adjusted annual rate of 430,000 was well above the 390,000 pace that economists surveyed by MarketWatch had expected.
Sales rose 23.2% in the South. By contrast, monthly sales fell by 20% in the Midwest, and by 5.1% in both the Northeast and the West.
“On the surface, one would have assumed that the surge in sales activity was induced by the rush of first-time home buyers trying to get ahead of the originally scheduled end of the first-time homebuyers’ tax credit at the end of October,” wrote Millan Mulraine, economics strategist with TD Securities, in a research note. “However, given the lopsided regional dimension to the increase in home sales, we are not entirely convinced that this was the only story.”
The government cautions that its housing data are subject to large sampling and other statistical errors, with large revisions common. It can take up to six months for a trend in sales to emerge.
The pace of new-home sales in September also was revised slightly higher, to a level of 405,000. New-home sales are up 5.1% compared with a year ago, the government’s data showed.
The supply of homes on the market fell to 239,000 in October, representing a 6.7-month supply.
The median sales price in October hit $212,200, compared with $213,200 in the prior year.
(c) 2009, MarketWatch.com Inc.
Distributed by McClatchy-Tribune Information Services.
Read more: http://rismedia.com/2009-11-30/new-home-sales-rise-6-2-in-october-2009/#ixzz0YSRLx7Ks
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