Bankrate: 5 Trends for Housing This Fall

Tuesday, 29 Oct 2013 10:41 AM

By Kristin Caliendo

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There's good news for both home sellers and buyers when it comes to end-of-the-year opportunity. 

While it is still a sellers market, homebuyers are can take advantage of low mortgage rates while lenders are showing forgiveness for those who foreclosed in previous years, according to Bankrate.

If you are in the market to buy or sell a home, consider these five housing trends Bankrate predicts for this fall:

Editor’s Note:
Weird Trick Adds $1,000 to Your Social Security Checks

1. Home prices cool off. The summer sizzled, and so did the housing market. It's likely we will see it cool down over the upcoming months.

"Price increases, which had been really robust, seem to be slowing down a little," Robert Dorsey, chief data analytics officer for FNC, a real estate valuation company, says. "As we go into the fall and winter, there is a seasonal decrease in home sales. The economy has been stagnant and interest rates are increasing. I think there will be reduction in price increases and demand."

The bright side is that homebuyers can afford to take their time and not be rushed or pressured into a sale due to the fear of escalating prices.

2. Banks loosen the reins. With rising mortgage rates, homeowners aren't rushing out to refinance like they once had. Homebuyers are now a lender's bread and butter and they are doing whatever it takes to get their business.

Underwriting standards are expected to be loosened in coming months as lenders turn their attention to buyers, Anthony Sanders, a professor of real estate and finance at George Mason University, tells Bankrate.

"I think banks have gotten crushed because of the decline in refinancing," Sanders says. "Now that the cash cow has been milked, they have to build up their pipelines for purchases."

3. Distressed buyers are making a comeback. The Federal Housing Authority is now making it possible for people who were troubled by foreclosures or short sales to make another go at trying to buy a home. The standard three-year waiting period to apply for a loan has been shortened to one year for if the buyers can demonstrate that a reduction in income or a job loss was the reason they lost their previous home.

"It's not one of those programs where everyone qualifies, but it's a really good program for people who lost their jobs because of the economy," explains Scott Schang, manager for Broadview Mortgage Katella in Orange, Calif.

Borrowers must have all their documentation showing they lost at least 20 percent of their income for six months, but that they've been able to pay their bills on time for at least one year.

4. Mortgage rates stabilize. Mortgage rates spiked this past summer, but it is likely that they will level out as the Federal Reserve will keep rates low and keep pumping the economy with cheap money.

"This fall, I would see rates remaining fairly stable," predicts Cameron Findlay, chief economist for Discover Home Loans in Orange County, Calif. "I don't expect them to bounce out of the range of 4.3 to 4.8 [percent]."

5. Homeowners cash out equity. With the rise of home prices, homeowners are tempted to cash out some of the equity they have gained this past year.

"As home prices go up and borrowers get more equity in their homes, they might be incented to get more cash out and borrow against that equity," says Herb Blecher, senior vice president of mortgage data provider Lender Processing Services, Investor's Business Daily reports.

In fact, data from Inside Mortgage Finance shows that is already happening. Home equity loan originations reached $14 billion in the second quarter, up from $12 billion in the second quarter of last year and the highest quarter since 2009, Guy Cecala, publisher of Inside Mortgage Finance tells Investor's Business Daily.

Editor’s Note: Weird Trick Adds $1,000 to Your Social Security Checks

Related Stories:

Shiller: Evidence Suggests No Housing Bubble Now, But Maybe in Future

America May Face a New Housing Problem

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