New homes are starting to get smaller for the first time in nearly three decades. The average size of new single-family homes dropped from 2,521 square feet in 2007, hit a plateau in 2008 and began falling in 2009. The average home now has fewer beds and bathrooms as well. This decline of home size has not been solely caused by the crash in the housing market, and instead has decreased due to other factors, such as an increased share of first-time home buyers and a desire to lower energy costs.
Good news for those looking to refinance, the national average for interest on 30-year fixed loans has sunk to just 4.69 percent. These are the lowest interest rates that have been seen on home loans for around 50 years. While these rates are great for home buyers or those looking to refinance, they could be worse for those trying to save through savings accounts and CDs, as interest rates on these have fallen as well. In all, around 291,000 homeowners have refinanced as of March.
The foreclosure numbers are out for May, and it appears that more and more banks are seizing homes. Nationwide, lenders took back 93,777 properties, while foreclosure filings fell by 3% since April. Oddly enough, this recent wave of seized houses actually has to do with the market becoming more stable. Lenders have been fairly lax in repossessing homes for the past few months while they tried to keep up with the vast number of people who were forced to default when the housing bubble burst. Because of the recent stabilization of the market, lenders are starting to catch back up and repossess assets again. Oregon’s foreclosure rate is currently one of the worse in the nation, ranked as having the 16th most foreclosures in the nation.
As it turns out, most borrowers who have modified their mortgages through the government sponsored Home Affordable Modification Program are likely to default. In fact, somewhere between 65% and 75% will default within the first year. Many borrowers find modifying their mortgage did little to solve their other debt problems, and still end up in either foreclosure or short sale. This comes as little surprise, as borrowers who have modified their loans spend, on average, 64% of their monthly income paying off debt. Should any small emergency arise they are often unable to pay the monthly minimums on their debts. It would be nice if there were a better plan.
Why are home loans so hard to get now? This is a question that has undoubtedly been on every homebuyers mind since the recession began. Well, as it turns out, the economy is not the sole reason for the banks recent stinginess. Recently a fraud probe in Oregon charged 39 people with loan fraud, including lending professionals, real estate agents and others affiliated with the real estate industry. Many of these cases were committed by falsely inflating a propertys selling price, which contributed to the housing bubble. While many of those committing loan fraud have been put out of business by the latest crackdown, fraudsters still remain. Rescue fraud has become increasingly popular; victims are those in danger of foreclosure and unscrupulous types are preying on them.
Due to the rush of foreclosures lately many are wondering what their options are for buying a home after foreclosure. While foreclosure is damaging to your credit, the reasons behind your foreclosure may affect how quickly you can buy your next home. Lenders look at things other than credit score when considering you for a home loan, and if they fail to see why you were foreclosed upon, they might assume you are what is known as a “walk away.”
“Walk aways” are what the loan industry calls those who have purposefully defaulted on their mortgage when they could still afford to pay it. This is done typically because the amount owed on a home is greater than the price; many believe they can simply walk away from the mortgage, allow the bank to reposes the house, build up their credit again and buy a new home. Be wary, though, as if lenders suspect that you have done this they will be hesitant to allow you to borrow. What is typically a 2 to 5 year waiting period for buying a new home could be increased to 7 years or more.
A housing shortage could be looming in the not too distant future. While it may seem impossible now, over the last 3 years too few new homes have been built, creating a deficit of over 1.5 million homes, that could climb to a shortage of over 2 million next year. Some 1.6 million homes must be added each year to keep pace with demand from population increase and old house demolition. This should prop up house prices over time.
These trends are heavily reflected in Eugene and Springfield, where new building has slowed to a near stop. In 2009 and 2010, there were probably fewer than 100 new houses built. This means that house prices in Eugene and Springfield should increase, along with the national market.