The number of home sold across the country climbed in January to the highest level since February 2007 despite limited supply and rising prices.
Deals on previously owned homes, which comprise the overwhelming majority of U.S. sales, hit a seasonally adjusted annual rate of 5.7 million in January, a 3.3 percent increase from December, according to data from the National Association of Realtors cited by the Wall Street Journal.
The increase from the end of the last year bested economists’ expectations. Experts surveyed by the Journal had expected home sales to rise only 1.1 percent in January following a 2.8 percent decline leading into December.
Warm weather and lower mortgage rates helped push demand.
“Buyers are in force in 2017,” said Nela Richardson, Redfin’s chief economist, who added that demand for homes – measured by the number of tours that buyers take and the offers they write – is at its highest since January 2013.
Inventory climbed 2.4 percent from December to January as inventory dropped to its lowest level since the National Association of Realtors began comprehensively tracking supply in 1999. At the current sales pace, it would take 3.6 months to absorb the supply of homes on the market.
That low inventory is helping to push up median prices, which climbed 7.1 percent year-over-year in January to $228,900.
Fannie Mae said it earned $5 billion in the fourth quarter, doubling its profits from a year earlier with a big boost from gains on derivatives the company uses to hedge risk. The profit means Fannie, which has been under U.S. control since 2008, will send a $5.5 billion dividend payment to the Treasury in March, the Washington-based mortgage-finance giant said Friday.
Fannie Mae said it earned $5 billion in the fourth quarter, doubling its profits from a year earlier with a big boost from gains on derivatives the company uses to hedge risk.
The profit means Fannie, which has been under U.S. control since 2008, will send a $5.5 billion dividend payment to the Treasury in March, the Washington-based mortgage-finance giant said Friday.
MCLEAN, VA, Feb 21, 2017 (Marketwired via COMTEX) — MCLEAN, VA–(Marketwired – Feb 21, 2017) – Freddie Mac (otcqb:FMCC) recently priced a new offering of Structured Pass-Through Certificates (K Certificates), which are multifamily mortgage-backed securities. The company expects to issue approximately $1.2 billion in K Certificates (K-062 Certificates), which are expected to settle on or about February 27, 2017.
Class Principal/Notional Amount (mm) Weighted Average Life (Years) Spread (bps) Coupon Yield Dollar Price A-1 $145.471 6.48 S + 46 3.0320% 2.6742% $101.9943 A-2 $1,016.993 9.78 S + 63 3.4130% 3.0509% $102.9977 A-M $79.423 9.83 S + 72 3.5050% 3.1429% $102.9994 X1 $1,162.464 9.15 T + 165 0.3100% 4.0151% $2.6815 XAM $79.423 9.58 Not Offered X3 $202.168 9.65 T + 365 2.0758% 6.0475% $15.3027
Co-Lead Managers and Joint Bookrunners: Goldman, Sachs and Co. and J.P. Morgan Securities LLC
Co-Managers: Academy Securities Inc., Barclays Capital Inc., Morgan Stanley Co. LLC, and PNC Capital Markets LLC
Rating Agencies: Fitch Ratings, Inc. and Kroll Bond Rating Agency, Inc.
The K-062 Preliminary Offering Circular Supplement: http://www.freddiemac.com/mbs/data/k062oc.pdf
Freddie Mac Multifamily Investor Presentation
Multifamily Securities Investor Access database of post-securitization data from Investor Reporting Packages
More information about Class A-M and Class XAM can be found at http://www.freddiemac.com/multifamily/pdf/k_deal_fixed_rate_structural_enhancement.pdf
The K-062 Certificates are backed by corresponding classes issued by the FREMF 2017-K62 Mortgage Trust (K-62 Trust) and guaranteed by Freddie Mac. The K-62 Trust will also issue certificates consisting of the Class B, C, D and R Certificates, which will not be guaranteed by Freddie Mac and will not back any class of K-062 Certificates.
Freddie Mac Multifamily is a leading issuer of agency-guaranteed structured multifamily securities. K-Deals are part of the company’s business strategy to transfer a portion of the risk of losses away from taxpayers and to private investors who purchase the unguaranteed subordinate bonds. K Certificates typically feature a wide range of investor options with stable cash flows and structured credit enhancement.
This announcement is not an offer to sell any securities of Freddie Mac or any other issuer. Offers for any given security are made only through applicable offering circulars and related supplements, which incorporate Freddie Mac’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission (SEC) on February 16, 2017; all other reports Freddie Mac filed with the SEC pursuant to Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) since December 31, 2016, excluding any information “furnished” to the SEC on Form 8-K; and all documents that Freddie Mac files with the SEC pursuant to Sections 13(a), 13(c) or 14 of the Exchange Act, excluding any information furnished to the SEC on Form 8-K.
Freddie Mac’s press releases sometimes contain forward-looking statements. A description of factors that could cause actual results to differ materially from the expectations expressed in these and other forward-looking statements can be found in the company’s Annual Report on Form 10-K for the year ended December 31, 2016, and its reports on Form 10-Q and Form 8-K, filed with the SEC and available on the Investor Relations page of the company’s Web site at www.FreddieMac.com/investors and the SEC’s Web site at www.sec.gov.
Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we’ve made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders and taxpayers. Learn more at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog.
� 2017 Nasdaq, Inc. All rights reserved.
After nearly 10 years under conservatorship, reforming Fannie Mae and Freddie Mac is finally high up on the President’s priority list. However, there is still no official plan around what exactly this reform will look like.
One of the most prominent options comes from the desk of House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Texas, who was actually standing next to President Donald Trump when he signed the executive order to begin rolling back the Dodd-Frank Wall Street Reform Act.
In an interview with CNBC on Friday (video below), David Stevens, Mortgage Bankers Association CEO, discussed what he sees ahead for government-sponsored enterprise reform.
“The GSEs are the last sort of unfinished piece of business of size from the Obama administration,” Stevens said. “They were put into conservatorship in the previous administration before Obama, and then for eight years, we talked about it. In the meantime, they sit in conservatorship on the government’s balance sheet, with a lot of taxpayer exposure.”
Stevens stressed that “we need to be collectively concerned about the housing finance system,” even pointing to his own association’s recent proposal for GSE reform.
The MBA, which is the largest trade group in the mortgage finance space, published back in January its first product from its recently formed “task force,” which is made up of some of the top lenders and insurers in the industry.
The paper gave a first look at the MBA’s plans for ending the conservatorship of Fannie Mae and Freddie Mac, the government-sponsored enterprises, with the full paper anticipated to come in April.
And it looks like U.S. Treasury Secretary Steven Mnuchin is headed in the right direction, according to Stevens.
“Secretary Mnuchin is hitting the rallying cry that any housing stakeholder should support because you need to get them off balance sheet,” said Stevens. “You need to reform them, but we need to protect some of the core functions that they provide.”
Mnuchin’s full first interview as Treasury Secretary can be found here.
San Diego’s single-family home market ranks as the sixth-hottest in the nation, down one place from January, amid an early start to the national home-buying season.
Realtor.com reported the median time on the market for a home listed for sale in San Diego as 38 days in February, down 32 percent from January.
The website, run by the National Association of Realtors, said the nation’s hottest home market was that of Vallejo-Fairfield, where February’s median was 33 days.
Seven of the 10 “hottest” markets were in California; most were in northern California. The Los Angeles area came in 20th.
Realtor.com said the U.S. home market will likely set records in February for the highest listing prices and the shortest average time on the market since the recession.
“The spring buying season is off to a booming start,” the association’s chief economist, Jonathan Smoke, said in a news release. “Not only is the season starting a month early, February is also expected to see the fastest-moving inventory in a decade, as well as the highest home prices the month has ever seen.”
“Homebuyers take note,” he added, “this year is shaping up to be even more of a seller’s market than last year.
Earlier this month, Irvine-based real estate information company CoreLogic predicted San Diego home prices would jump 10.3 percent by December, as compared with one year earlier. That would represent substantial acceleration from 2016, when the company said local home prices rose 6 percent.
By comparison, CoreLogic forecast a 12 percent year-over-year price jump in San Francisco, and a 7.1 percent increase in Los Angeles.
The Greater San Diego Association of Realtors has pegged January’s median resale price of a single-family home in the area at $559,500, 6 percent greater than one year before.
Get the latest from NBC 7 San Diego anywhere, anytime
2016 had been reasonably good for the housing market, and this year is expected to maintain the trend, courtesy of healthy demand-supply balance, modestly rising prices, historically low mortgage rates, escalating rent costs and easy availability of loans. Again, there are signs of increased inclination of home purchases among millennials, a generation that had to some extent refrained some from entering the market.
For that matter, there are plenty of reasons to be optimistic about the broader housing sector over both the short and the long term.
Below, we discuss some of the key factors driving the sector and what investors can expect going ahead.
Higher Demand, Low Inventory Boost Sales
Steady economic growth along with favorable demographics, historically low interest rates and the attractiveness of owning versus rent are driving demand.
Although GDP growth in the fourth quarter of 2016 was slower than the preceding quarter, average growth in the second half of the year significantly improved from the disappointing 1.1% increase in the first half. The composition of growth in Q4 was also somewhat better than the Q3 gain. The final quarter of 2016 saw solid consumer spending, a pickup in business investments along with a rebound in home construction.
Per the National Association of Realtors or NAR, 2016 was the best year in a decade for existing home sales, even after the decline in December, courtesy of the ongoing affordability tensions and historically low supply levels.
On the other hand, a shortage in buildable lots, skilled labor and available capital for smaller builders are limiting home production, thereby lowering the inventory of homes, both new and existing. The convergence of healthy demand and low inventory levels is boosting new home sales and is expected to continue for some time.
Total housing inventory of existing homes was 10.8% lower at the end of December, per data released by the NAR. This marks the lowest since the NAR began tracking housing supply in 1999. Inventory has dropped for 19 straight months. At the current sales pace, the December inventory represents a 3.6-month supply, which is down from 3.9 months in November.
Healthy Demand-Supply Balance to Lift Price
The past year saw inching up of prices every month with the largest gains coming in the later half. Although gains may decelerate to a certain extent, we expect prices to continue to ascend. The median of existing home prices in December was $232,200, up 4% from a year ago. The price hike marked the 58th consecutive month of year-over-year gains in the sector.
Higher rates may impact the housing demand. However, the supply-side dynamics of the U.S. housing market support higher home prices.
We believe prices will continue to scale higher despite decelerating sales growth as demand for homes is like to grow on high consumer confidence and low unemployment. Improving labor markets, declining unemployment rates, low mortgage rates and limited home supplies are driving home prices, thereby boosting homebuilders’ top line.
Although the recent bump up in interest rates has raised concerns over outlook of home prices in 2017, the rates should remain reasonable, in our view, keeping housing affordable. Modest hikes in interest rates in the context of an improving economic environment can be a positive for the housing sector.
After all, the underlying driver for the higher move in interest rates is increased economic growth expectations. A booming economy boosts income as well. Thus, if the rise in income offsets the increase in mortgage payment, housing will do just fine.
Some analysts are of the opinion that the hike largely follows the euphoria of Trump’s election as U.S. president. Probably, builders are hopeful that Trump will follow through on his pledge to ease some regulations that are marring housing affordability and business for small enterprises.
Trump’s Growth Plan
President Donald Trump aims to double economic growth through an ambitious stimulus program featuring tax cuts, deregulation and higher infrastructure spending. Although this may face varied obstacles, we expect the plan to help the economy grow at a faster clip in 2017.
Although the U.S. inched up 1.6% in 2016, down from 2.6% seen in 2015, the economy grew at an average annual rate of 2.6% from 2010 to 2015. Improving economic growth supported by a better employment picture generally boosts housing activity and provides a basis for stronger demand.
Meanwhile, the U.S. economy added 227,000 jobs during the month of Jan 2017, significantly higher than 157,000 added last December. This also exceeds the consensus estimate of 174,000 job additions. Additionally, these are the best monthly job gains since September. Job addition is yet another signal that Trump has taken over a healthy economy.
With a fall in the unemployment rate, rising wages and decent consumer confidence, the U.S. economy looks quite strong despite rising pressure elsewhere.
Millennials Take Interest
Millennials, born after 1980, are anticipated to continue to make up a large and growing portion of the buyer section, although many disagree with this view. This is due to the fact that millennials occupy the largest adult generation and make up the greatest percentage of the workforce.
According to the 2016 National Association of Realtors Home Buyer and Seller Generational Trends study, millennials accounted for 35% of all buyers, up from 32% in 2014.
Land as Native Strength
The well-stocked supply of land, plots and homes of large homebuilders like Lennar Corp. (LEN – Free Report) , D.R. Horton, Inc. (DHI – Free Report) and Toll Brothers, Inc. (TOL – Free Report) provide them with a strong competitive position to meet the demand in future quarters, thereby growing sales and home closings. D.R. Horton carries a Zacks Rank #2 (Buy) and Toll Brothers holds a Zacks Rank #3 (Hold).
Toll Brothers has secured some of the most sought-after urban locations in the country – New York City, Northern New Jersey, Philadelphia and Washington D.C. to name a few – where land is scarce and approvals are not easy to come by.
Interestingly, homebuilders like PulteGroup, Inc. (PHM) and Lennar are moving away from a land-heavy acquisition strategy to acquiring land with a shorter two- to three-year average life to improve returns. Pulte also focuses on investing in land in closer-in locations where demand is more sustainable. PulteGroup sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Smaller homebuilders too have realized the importance of land investments to support growth. KB Home (KBH – Free Report) and Beazer Homes USA Inc. (BZH – Free Report) are stepping up land investments to strengthen their position in an improving housing market.
Though they admit to rising labor shortages and land/labor costs, homebuilders in general expect the housing market to continue its measured recovery this year in tandem with steady economic growth.
Overall, the positive trends in supply and demand fundamentals have led to incredible hikes in home prices and are likely to provide some resiliency in the face of moderately rising interest rates in 2017.
Investors could also take advantage of the opportunities in the near term and cash in on any sudden surge in the homebuilding sector.
Check out our latest “Housing Industry Outlook” here for more on the current state of affairs in this market from an earnings perspective, and how the trend is looking for this important sector of the economy now.
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WASHINGTON, Feb. 24, 2017 /PRNewswire/ — After all the paperwork that comes with buying a home, few think about the ultimate paperwork – filing taxes. However being a homeowner comes with many benefits, including the opportunity for an increased tax refund. This month’s File With Confidence: Tax Tips for Homeowners spotlight from HouseLogic.com, the comprehensive website for homeowners from the National Association of Realtors®, features six articles offering advice on how homeowners can get the most out of their filings.
Following are a few tips from HouseLogic on how to sail through tax season and bring home the largest return.
Will My Taxes Look Different Now That I’m a Homeowner? Becoming a homeowner comes with many changes, including saying goodbye to the standard deduction with a 1040-EZ form and embracing itemization on Schedule A. HouseLogic walks some recent first-time homeowners through their new tax benefits, including one-time deductions after buying a home, such as application or underwriting fees.
How to DIY Your Taxes – and Not Miss a Single Deduction. Filing taxes alone can be a daunting task, especially when it involves itemizing deductions. Check out HouseLogic’s tips for DIY tax filers on how to get every possible tax deduction, including recouping some of the costs of buying or selling a home.
Are You Getting the Home Tax Deductions You’re Entitled to? One of the many benefits of homeownership is the multitude of deductions that become available come tax time. However, homeowners can get overwhelmed attempting to take advantage of every single deduction to which they are entitled. Follow HouseLogic’s list of often-overlooked deductions related to owning a home, including credits for installing energy-efficient home systems.
How long to Keep Tax Records. Most people can think of 100 things other than tax documents they would rather make room for and store in their homes, but there are some forms that need to be kept to prove a deduction is deserved, to file an insurance claim or just in case. Follow HouseLogic’s checklist to find out how long forms and returns should be stored – in some states it can be up to 10 years.
Don’t Panic! You CAN Do Your Taxes Error-Free. Here’s How. Are condominium fees tax deductible? Does renting a room out on Airbnb count as rental income? Knowing what is and is not deductible can be difficult for even the most seasoned DIY tax filer, and it can be easy to make a mistake. Take a look at HouseLogic’s list of the top six blunders homeowners make when filing taxes, including not challenging property tax bills when a home’s value is reassessed.
When It’s Time to Get an Accountant to Do Your Taxes. When do taxes become too complicated for someone to handle on their own? HouseLogic lays out when it might be time to bring in a professional, such as when becoming a landlord or turning a home into a home office.
For more information on quick and simple home improvement projects, visit HouseLogic.com.
HouseLogic is a free source of information that helps consumers make smart, confident decisions about all aspects of home ownership. Made possible by Realtors®, the site helps owners get the most value and enjoyment from their existing home and helps buyers and sellers make the best deal possible.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.1 million members involved in all aspects of the residential and commercial real estate industries.
Information about NAR is available at www.realtor.org. This and other news releases are posted in the “News, Blogs and Videos” tab on the website.
For further information contact:
Jane Dollinger, 202/383-1042
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/houselogic-helps-homeowners-get-the-most-from-filing-their-taxes-300413311.html
SOURCE National Association of Realtors
Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) shares tanked on Tuesday in response to a federal appeals court decision to deny legal claims made by investors against the U.S. government’s 2012 “Third Amendment” decision on the $188 billion bailouts of the firms in 2008.
This decision comes after the Friday announcement that Fannie and Freddie ‘Frannie’ would be sending $10 billion to the Treasury – bringing the total to almost $250 billion, $66 billion more than the $188 billion used to bail them out. Investors’ only recourse is via breach of contracts claims that may result in a monetary settlement and a second look from Trump’s pro-free market administration. Shares in ‘Frannie’ sank by over 35% in response to what looks to be impossible odds of privatization.
In regards to the breach of contract claims, there may still be a case. But not all investors are created equal, and the strength of the argument will largely depend on when an investor invested. Investors who bought FNMA, FMCC, or Fannie Mae preferred (FMAT) (FNMAS) or Freddie Preferred (FMCKJ) before 2008 may have a better chance of recovering damages because the original terms of the $188 billion bailout stipulated that the Treasury would only take 10 percent before the contract was amended “breached” via the third amendment sweep that allowed the Treasury to take all of the GSE profits.
Now, the biggest hope of GSE bulls is Steve Mnuchin and a Trump administration with unclear incentives to act favorably on this issue.
1. The case for GSE privatization rests squarely on the shoulders of Steve Mnuchin and republican political expediency. While the hedge funds, which seek to profit from a private Frannie, may be able to exert some pressure, the taxpayer will probably be less favorable, and backlash will be immense. Mnuchin, himself, remains cryptic on the issue stating “It’s something we have already started working on” and “taxes are our first priority.” It makes sense for him to remain tight-lipped due to the incredible volatility his words are likely to exert on the stock prices of these firms going forward.
2. The capital balance of the GSEs are, in Fannie’s case, expected to hit zero by 2018. This represents a big risk to the taxpayer that will need to be addressed. However, while some are interpreting the declining capital balance as a flaw in the Third Amendment, it actually serves to integrate the GSEs more closely with the U.S. government and makes privatization less likely.
Because the GSEs retain so little capital, they are fully dependent on the government if economic conditions go sour. This means that if the firms run into the trouble again, they will need be bailed out again because they are too big to fail. On this note, there is little ‘moral’ support for turning Frannie to private hands when the firms are guaranteed by taxpayer money.
3. The Trump administration is not incentivized to privatize the GSEs because its heavy spending plans will require substantial government revenue to avoid dipping too deeply into the deficit. Fannie and Freddie are immensely profitable, and it seems unreasonable to expect a Trump administration, and Mnuchin, its money manager, to give away a major source of revenue unless forced by the legal system.
The GSEs have lost a major case in court, and the likelihood of privatization has diminished significantly. The only shareholders who have a strong argument in the courts are those who invested before either the bailout or the third amendment decision in 2012. All others depend on the whims of Steve Mnuchin and the Trump administration who, despite pro-business tendencies, have little incentive to give up a large source of government liquidity.
Most of the downside has already been priced in, but a short position may still be profitable due to the possibility of the Trump administration’s refusal to intervene resulting in a complete loss of faith that the GSEs will ever return cash to private shareholders. Shares should be avoided or shorted.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
Feb 24 Federal National Mortgage Association
Feb 24 Federal National Mortgage Association
* Fannie mae announces second front-end credit insurance
risk transfer transaction
* Fannie mae – coverage and pricing are committed for 12
months, beginning with q1 2017 deliveries
* Fannie mae – plans to continue offering its traditional
cirt transactions that cover existing loans in its portfolio
* Fannie mae -transaction will shift a portion of credit
risk on pools of single-family loans with a combined upb of
about $15 billion to a group of reinsurers
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