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U.S. home prices down in January

Home prices in 20 major U.S. cities fell a not-seasonally adjusted 0.4% in January compared with December, according to the Case-Shiller home-price index released Tuesday by Standard & Poor's.

Prices rose in only in Los Angeles in January. There were four cities with rising prices in December.

The rebound in housing prices seen last fall is fading, said David Blitzer, chairman of the S&P index committee.

"We can't say we're out of the woods yet," Blitzer said.

On a seasonally adjusted basis, prices rose 0.3% in January.

Prices were down 0.7% in the past year. This is the closest the index has been to a positive print since January 2007.

Compared with a year ago, prices were lower in 11 of the 20 cities, led by a 17.4% drop in Las Vegas.

In Charlotte, Las Vegas, Seattle and Tampa, prices hit new lows following the financial crisis.

For the 20 metropolitan areas in which repeat sales of homes are tracked in the Case-Shiller index, prices were down 32.6% from the peak in 2006. Prices are now back to levels seen in the summer of 2003.

Falling home prices have eroded Americans' wealth. In response, households have increased their savings and cut back on spending.

By Greg Robb, MarketWatch

How Long Will Negative Equity Last?

There has been a lot of recent talk about mortgages in negative equity – underwater homes – and the impact on the housing market. In response, First American CoreLogic asked the question: When will these homes start to float?

The company estimates that the typical underwater homeowner will not begin to surface until late 2015 to early 2016. It’s an even longer stretch for some of the most depressed markets, where First American CoreLogic says the typical borrower in negative equity may not experience positive equity until 2020 or later.

Even in markets with low shares of negative equity, the recovery time will still be long because the few borrowers that are upside down are deeply in negative equity and these are typically not high appreciation markets, the company has concluded.

Although house price appreciation will, over time, offset negative equity, First American CoreLogic says amortization (the paying down of loan balances) will be a more significant remedy to negative equity. The company’s data shows that over the next 10 years, the average loan balance will decrease by an annual rate of 3.3 percent; meanwhile home prices are expected to increase at a 3 percent annual rate over the next decade.

To forecast when the typical U.S. homeowner will achieve neutral and positive equity, First American CoreLogic looked at 10 key markets, plotting equity trends over the next decade, and assuming a nominal annual appreciation rate of 3 percent.

Of the markets studied, the Washington D.C. area is expected to reach positive equity by 2015.

Atlanta, Georgia; Dallas, Texas; and Riverside-San Bernardino, California are projected to rise to the surface in 2016. Boston, Massachusetts should find a balance in 2017.

Cape Coral-Fort Myers, Florida; Pittsburgh, Pennsylvania; Las Vegas; and Lancaster, Pennsylvania are forecast to reach positive territory by 2020.

Detroit, though, is not projected to recover even by 2020, because of its depressed economy.

The latest numbers from First American CoreLogic show that more than 11.3 million, or 24 percent, of all residential properties with mortgages were underwater at the end of the fourth quarter of 2009.

Among the new housing initiatives announced by the administration Friday was assistance for borrowers with negative equity. In order to deter these homeowners from strategically defaulting, the Treasury will begin requiring servicers to consider principal write-downs as part of their Home Affordable Modification Program (HAMP) evaluations for borrowers whose loan balance is more than 115 percent of the property’s current value. The plan also includes a Federal Housing Administration (FHA) refinancing program for negative equity mortgages.

DSnews

Weekly Market Activity Report

The local housing market continues to mimic spring growth, as Twin Citizens emerge from their wintry cocoons just in time for the final days of the home buyer tax credit. For the week ending March 20, there were 2,277 new listings, up 28.8 percent from a year ago and marking the seventh consecutive week of strong year-over-year increases.

Pending sales dropped a bit from their high the previous week, but the 950 signed purchase agreements for the week were 10.2 percent ahead of where they were at this point last year.

As the tax credit's April 30 deadline looms, expect a flurry of home sales activity. Time will tell what happens when the credit has expired, but the next few weeks should be extremely active.

VIEW FULL REPORT | VIEW MORE RESEARCH REPORTS

Is a Short Sales Boom Coming?

Banks are ramping up short sales thanks to government incentives and the realization that short sales result in lower losses than foreclosures.

Source: CNNMoney, Les Christie

Homeowners are eligible for many breaks at tax time

A tax credit of up to $8,000 was a big incentive for first-time buyers to buy a house over the last couple of years, but a slew of other tax advantages will keep rewarding those new homeowners long after that money hits their bank accounts.

One of the most cherished homeowner tax deductions is the ability to deduct mortgage interest and property taxes. But the tax benefits of homeownership don't stop there.

•    . . .  for complete article from the Wall Street Journal

Mortgage Increases Blunted

The struggling housing market appears as if it will sustain less damage than expected this year from a spike in the monthly payments on hundreds of thousands of exotic adjustable-rate mortgages..

The housing market still faces enormous challenges, and a full recovery is likely to take years.

For complete article in the Wall Street Journal

New Foreclosure Prevention Plan Announced

President Obama is announcing an expansion of foreclosure-prevent tactics, including a plan to reduce principal balances and special aid for unemployed borrowers.

The bulk of the responsibility for carrying out the new program will be assigned to the Federal Housing Administration, which will insure lenders against part of the losses.

The plan asks banks to write down loan balances to less than the value of the home. If there is both a first and second mortgage, the combined total would have to be no more than 115 percent of the home’s value.

The Treasury would pay part of unemployed homeowners’ loans for three months while they job hunt.

Walking away from your mortgage has consequences

More homeowners are walking away from their mortgages, even if they can keep up the payments. Falling into foreclosure — voluntarily or not — has become less taboo for many people as they have watched their house values tumble far below the amount they owe, putting them "underwater."

Purposely defaulting on a mortgage, often called "strategic default," may be a very rational personal finance decision, but it's not without major consequences. And it's not necessarily the best option for anyone underwater who can afford to make monthly mortgage payments but who does not want to wait up to 10 years for the housing market to turn around.

To read the complete article as published in USATODAY click here

Worst decor trends of all time?

Remember back in the '50s, everything was pink. Poodle skirts, Cadillacs, bathrooms -- you name it. Nothing was too gaudy.  Read mor in the Star Tribune

Bank of America to announce Mortgage principal Reduction Plan

Bank of America will ... announce plans to start forgiving mortgage loan principal for troubled homeowners who owe more than 120 percent of their home's value or are battling ever-expanding "negative amortization" loans.