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Is a Pocket Listing Right for Me?

Though home prices are easing up throughout the country, it’s still very much a seller’s market. Indeed, even with a new influx of inventory, demand is high enough such that the average number of days a house spends on the market dropped to only forty-five in June. This is due in part to the increase in rental rates, which makes the price of a mortgage loan look all the more appealing. However, another big factor that is defeating the greater number of available homes on the market is something realtors call “pocket listings”.

A pocket listing is not widely advertised. A realtor takes a pocket listing only to his or her own buyer clients, or only to clients within his or her company. This greatly decreases the number of homes that are made visible to individual homebuyers, virtually reducing the available inventory.

Pocket listings are not illegal, though they can be somewhat bothersome. Some realtors prefer pocket listings only because it allows them to earn both the buyer’s and seller’s commission, instead of having to share with another realtor. They are not, however, entirely without merit, and sellers should explore the concept with their realtor in order to determine whether or not a pocket listing is right for their specific circumstances.

First of all, a pocket listing is probably going to work only in a high-demand market. In a climate such as this one, you may not need to advertise to many people in order to get a seller quickly. You may lose some potential to start up a bidding war on your house, but there is also money to be saved in not having to go through the hassle or expense of advertising to and dealing with a large number of potential buyers.

If your home is in bad condition, like if it suffered a fire, flood damage, or significant mold, it may be a good idea to do a pocket listing. The property may not be the safest place to take potential buyers to before significant repairs can be done. Therefore, it is impractical to present it to a large number of people, and more favorable to focus on a small group.

Should your realtor suggest a pocket listing, be sure to ask for a reason. Though it is possible that this would be the best move for your own situation, it is also possible that you would simply be losing the benefits of transparency in favor of lining the realtor’s pockets.

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MMIF Returns to Solvency

As the economy continues to improve, more good news is coming into the housing market. Though forecasts as recent as 2012 were grim for the future of the Federal Housing Administration’s Mutual Mortgage Insurance Fund, HUD recently announced that the MMIF has returned to solvency a full three years ahead of schedule. As of Monday, it was reported that the Fund was up nearly $6 billion dollars in value from the same time last year. Meanwhile, its capital ratio jumped from negative .11% to a positive .41%.

HUD is attributing this impressive growth to the aggressive policy actions put into place over the past five years. Since the onset of the financial crisis, the FHA introduced tougher standards for their underwriting, recovery strategies, loss mitigation policies, and insurance premiums. This has resulted in a drop of delinquency rates in the agency’s portfolio of 14%, and a 16% improvement in recovery rates over the previous year.

Going forward, the FHA hopes to maintain this strong trend and continue to be a valuable asset to the housing market. To do so, the agency plans to continue improving transparency and certainty in regards to their loans. Meanwhile, with mortgage insurance premiums at an all-time high, the FHA hopes to find a way to achieve a proper balance that will maintain their sustainability while simultaneously serving the borrowing public.

Mortgage Rates Brought Back Under Control

As July gave way to August, the mortgage market saw a bit of recovery after the significant rise in rates.

The bad news is that this recovery in mortgage rates can be largely attributed to the recent Employment Situation Report, which showed less job creation than was initially anticipated. All the same, this recover represents an important development for consumers in that it prevents what was promising to be a great surge upward. Meanwhile, recent activity in the European markets gives us good reason to believe that this trend is here to stay.

In the last week of July, European borrowing rates reached an all-time low. This applies downward pressure to American mortgage rates. Since Europe will likely have to make a significant recovery in order to reverse this trend, it may be safe to assume that the US mortgage market will continue to be kept in check for a while.

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Could Obama’s Immigration Plan Stimulate the Housing Market?

Immigration reform has been a big deal for the Obama administration recently, with ambitious new legislation being put into place to protect many undocumented immigrants from deportation. Though there remains some controversy around the president’s plan, the housing industry could likely look forward to a healthy and robust future if Obama gets his way.

The fact is that Hispanics, which represent the greatest portion of the immigrants who can look forward to benefit from the new legislation, also represent a significant part of the housing market’s future. At present, one out of every four Millennials is of Hispanic origin. As the largely white Boomer generation settles into their permanent homes, it is this younger and larger generation that is going to be driving most new home purchases throughout the coming years.

Meanwhile, statistics show that Hispanics are trending towards homeownership more rapidly than other racial groups. Hispanics are expected to be the driving force behind 180,000 to 220,000 new homeowners every year up to 2020, and then even more into the following decade. This could account for over 55.5 percent of new homeowners through the end of this decade.

It is therefore that a revamped immigration system designed to accommodate reasonable and hard-working immigrants could very well translate into a significant boon for the country as a whole. By allowing more incoming Hispanics to qualify for mortgage loans and achieve their dreams of homeownership, we can look forward to a thriving real estate market well into the future.

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Another Drop in Delinquency Brings Us to 2007 Levels

The Mortgage Bankers Association as some good news in terms of mortgage delinquency. In the second quarter of 2014 the delinquency rate for one-to-four unit residential mortgages dropped. This represents the fifth quarter in a row that we’ve seen such a drop. This put the seasonally adjusted rate of such loans outstanding at 6.04 percent, which is the lowest rate since the fourth quarter of 2007.

Mortgages in serious delinquency, or loans that are either ninety or more days past due or in foreclosure proceedings, comprised 4.8 percent of total mortgages. This is twenty-four basis points lower than the previous quarter, and one hundred eight basis points below the second quarter of 2013.

Mortgage loans that were in foreclosure proceedings in the second quarter comprised 2.49 percent of all mortgages. This represents a drop of sixteen basis points from the previous quarter, and eighty-four basis points from the same time last year. This brings us to the lowest foreclosure inventory rate since the beginning of 2008, and even states hit hardest by the crisis are enjoying pre-crisis levels of foreclosure inventory.

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