Housing Starts Up, Permits Down

U.S. home construction unexpectedly rose in April but permits for future building sank to the lowest pace in nearly a decade according to a government report, pointing to extended troubles in the housing market.

The Commerce Department said housing starts hit a seasonally adjusted annual pace of 1.528 million units, a 2.5 percent increase from the prior month.  However, building permits, which signal future construction plans, dropped in April by 8.9 percent to a pace of 1.429 million units.

Even though housing starts increased in April to the highest pace since December 2006, they were down 16 percent from a year ago and, in a sign the troubled housing market may not be turning the corner as quickly as hoped, building permits were off 28.1 percent from a year ago.

All of this news about how bad the housing market is can actually make it a GREAT time to think about buying a home.  Builders are making more deals than ever to move homes, and it could be the best time in many years to get a great deal on a house.

Contact us to schedule a time to help you decide if now is the right time for you to think about buying real estate.

Speed of Subprime Bust Surprising Lenders

The subprime mortgage meltdown has been a shock to industry insiders, but now they say it's hitting harder and faster than expected - even to those who predicted the crisis in the first place.  Many would-be homebuyers are now finding they can no longer qualify for a mortgae due to stricter standards.

Speaking recently at a Mortgage Bankers Assoication Market Conference, David Lowman, a panelist and chief executive of JPMorgan Chase & Co.'s global mortgage business said, "Anything that smacks of no-income and no-documentation is history…Anything above 85 percent to 90 percent loan-to-value, anything non-owner occupied, anything ludicrous as to value - like someone stepping up from a $1,000 a month payment to a $6,000 a month - is history."

Investors who buy and sell bonds backed by the mortgage payments of ordinary homeowners have seen bad loans rise and have told lenders and brokers they will no longer buy whole classes of securitized mortgages, which can quickly pull the plug on a prospective home buyer.

All the fudging, the lax underwriting, the push for loans that went on during the housing boom were facilitated by the rapid rise of home prices. Outsized increases in home equity in many U.S. housing markets covered a multitude of sins and encouraged lenders to extend loans to poor risk borrowers.  That day has come and gone, but according to several analysts at the MBA, despite their surprise at the speed and depth of the subprime meltdown, many expect a quicker recovery than all the gloom and doom that is being broadcast everywhere.

The group cites a strong economy, low unemployment, and favorable demographic growth for their optimistic stance, that recovery will soon come.

Home Kits Test for Mold

It's mold season again — for some homeowners, a time of fretting over whether fungus may be secretly growing behind the wallpaper or other places. Companies that sell do-it-yourself mold tests say their simple and inexpensive sampling methods can find a mold problem.  Scientists say some tests are useful while others are a waste of money.

You have reason to suspect mold is in your house if there's been a flood or other moisture source; if there's a musty smell; or if you see something growing.  To grow, mold needs moisture, oxygen and an organic surface.  Common areas include sheetrock walls, wallpaper, carpeting and wood.

To learn more about Home Kits that test for growing mold, how they work and what they promise to do, read the full article here:

Have you had any experience with home kits that test for mold?  If so, we'd love to hear your opinion and feedback.  Leave your comment below by clicking on the 'comment" link.

Mortgages: Lenders Tighten Standards

Mortgage lenders are beginning to scrutinize borrowers more closely, causing some loan applicants, even those with good credit, to face higher costs and more hassles.

As the number of delinquent mortgages climbs, lenders have tightened their standards for issuing loans, including such well-publicized moves as raising minimum credit scores and cutting back on 100% financing and low-documentation loans. Now, some lenders are probing more intently would-be borrowers' finances. They are taking a tougher look at how much the property a borrower wants to buy is worth. They are peering further into clients' pasts for credit problems and requiring more in-depth reviews of borrowers who say they are self-employed.

Mortgage lenders say they are tightening standards in response to pressure from mortgage insurers, investment banks and investors who buy mortgage-backed securities. Spooked by rising delinquencies, Wall Street is now pushing lenders to beef up their underwriting.  Looser standards weren't much of a problem when home prices were climbing. But as the housing market has cooled, more borrowers are winding up in trouble.

Lenders are also delving deeper into borrowers' employment and credit histories.  In recent years lenders would often look back just 12 months at a borrower's mortgage payment history.  Now, many lenders are looking at two years' of mortgage payments and reviewing information on credit card payments and installment loans.

Are you considering a mortgage?  Does news of tougher standards make you think twice about applying?  We'd love to hear your thoughts and comments about this.  Just click the "Comment" link below and tell us what you think.