Real estate may get boost from banks
Recent news stories indicate that banks may be loosening lending requirements a bit. This would be a welcome change to those frustrated by the rigid requirements of late. Not that we would advocate for the too recent environment of "no doc" loans, but there are some good people out there who, despite the economic downturn, could be good risks for banks.
According to a Friday article in Realtor Magazine; "The housing industry has blamed banks' tight mortgage standards as preventing many potential buyers from being able to purchase a home. But a new survey by the Office of the Comptroller of the Currency shows that more banks are finally easing up on their standards, which may open the doors for more buyers to qualify for a mortgage.
About a quarter of the banks reported tighter underwriting standards for home loans, which is down from 40 percent last year, according to the survey of 87 of the largest banks. Ten percent of the banks surveyed say they've eased their standards on mortgages, compared to only 8 percent who said that last year."
"This year's survey showed the continued normal progression toward stable or easing underwriting standards as the economic environment stabilizes," says John Lyons, chief national bank examiner at the OCC. "Examiners will be focusing on underwriting standards as banks ease standards to improve margins and compete for limited good loans."
Whether more banks will follow suit is difficult to say, but with the real estate market improving across the nation it would appear there is more demand for financing. Competition should cause many rigid lenders to re-evaluate their processes to win more borrower customers.
On the heels of our local improvement reported here two weeks ago, the media has been rife with good reports from across the country. The Case Schiller Report showed an increase of 1.3 percent in average home prices over last year. Although this is hardly a record-setting pace, after three years of declines or zero appreciation, it is welcome news to homeowners.
According to a recent release from the National Association of Realtors; "Pending home sales bounced back in May, matching the highest level in the past two years, and are well above year-ago levels. Both monthly and annual gains were seen in every region."
The Pending Sales Index, a forward-looking indicator based on contract signings, rose 5.9 percent to 101.1 in May from 95.5 in April and is 13.3 percent above May 2011 when it was 89.2. The data reflect contracts but not closings.
The index also reached 101.1 in March, which is the highest level since April 2010 when buyers were rushing to beat the deadline for the home buyer tax credit.
Lawrence Yun, NAR chief economist, said longer term comparisons are more relevant. "The housing market is clearly superior this year compared with the past four years. The latest increase in home contract signings marks 13 consecutive months of year-over-year gains," he said. "Actual closings for existing-home sales have been notably higher since the beginning of the year and we're on track to see a 9 to 10 percent improvement in total sales for 2012."
The national median existing-home price is expected to rise 3.0 percent this year and another 5.7 percent in 2013.
We don't know and are pretty sure most of you don't care how accurate the national projections are. What they do tell us though, is that the improvements we are seeing in the Coeur d'Alene market are not an anomaly.
Trust an expert...call a Realtor. Call your Realtor or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a Realtor member who will represent your best interests.
Kim Cooper is a real estate broker and the spokesman for the Coeur d'Alene Association of Realtors. Kim and the association invite your feedback and input for this column. You may contact them by writing to the Coeur d'Alene Association of Realtors, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling (208) 667-0664.