Information, Insight, Advice.

Are We Seeing A Recovery In Housing?

Mortgage rates remained near record lows this week. The average rate on the 30-year loan was 3.32 percent, mortgage buyer Freddie Mac said, just above 3.31 percent last week, which was the lowest on records dating to 1971.

A big reason for the rebound in housing is that the excess supply of homes that built up before the housing crisis has finally thinned out. The number of previously occupied homes available for sale has fallen to a 10-year low. The inventory of new homes is also near the lowest level since 1963.

At the same time, more people are looking to buy or rent a home after living with relatives or friends during and immediately after the Great Recession.

Those trends are also pushing up home sales and construction. Sales of previously occupied homes are near five-year highs, excluding temporary spikes in 2009 and 2010 when a homebuyer tax credit boosted purchases.

Builders, meanwhile, are more optimistic that the recovery will endure. A measure of their confidence rose to the highest level in six and a half years this month. And builders broke ground on new homes and apartments at the fastest pace in more than four years last month.





Housing Changes as More Squeeze Under One Roof

Builders are responding to the changing shape of American families, The New York Times reports. As more families try to squeeze more people under one roof — with adult children and aging parents moving back in — builders are offering up new options to make co-habitation more comfortable for families.

“What the recession has done has really hit household formation hard, so instead of forming households we are having some contractions: the college student moving back in or someone’s brother-in-law loses a job. It’s an opportunity for the builders,” says Stephen Melman, director of economic services at the National Association of Home Builders.

Lennar, one of the nation’s largest homebuilders, released new designs last fall called “Next Gen—The Home Within a Home.” offering 400-square-foot “bonus” rooms in some of its design plans. Its Next Gen homes features a complete suite with bedroom, eat-in kitchen, and living room that can be integrated into a home’s living space or be a private residence off the main home. 

PulteGroup is offering larger “flex rooms” and an over-the-garage apartment, dubbed the “Grand Retreat,” as options for its growing, multigenerational families. The flex spaces can be turned into a bedroom with a bathroom and closet. Pulte reports that 30 percent of its customers are asking for multigenerational living features.


(Source: Under One Roof, Building for Extended Families,” The New York Times)


Mortgage Relief Forgiveness Act

Here’s some encouraging news for financially stressed homeowners across the country: The Senate Finance Committee approved a bipartisan bill that would extend the Mortgage Forgiveness Debt Relief Act through 2013. The debt relief law spares homeowners who receive principal reductions on their mortgages from being hit with hefty federal income taxes on the amounts forgiven. Without it, millions of owners who go through foreclosure or leave their homes following short sales would experience even more financial stress.
But the Senate committee managed to pull together enough votes Aug. 2 to pass the debt-relief extension, after heavy lobbying by the National Association of Realtors and the National Association of Home Builders. The bill, which now moves to the full Senate for possible action, also would extend tax write-offs for mortgage insurance premiums for 2012 and through 2013, and continue some energy-efficiency tax credits for remodelings and new home construction. The mortgage debt relief extension could ultimately affect millions of families who are underwater on their loans, delinquent on their payments and heading for foreclosure, short sales or deeds-in-lieu of foreclosure settlements. Under the federal tax code, all types of forgiven debt are treated as ordinary income, subject to regular tax rates. When an underwater homeowner who owes $300,000 has $100,000 of that forgiven as part of a modification or other arrangement with the bank, the unpaid $100,000 balance would normally be taxable.

Friom what I have read, folks I have spoken to, the 2007 Mortgage relief forgiveness act will be extended. Neither political party is debating the necessity of extending it and that is good news!



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