RISMEDIA, February 18, 2010—American homeowners’ confidence in their own home’s value during the fourth quarter fell to the lowest level in seven quarters, with just one in five (20%) believing their own home’s value increased during 2009, according to the Zillow Q4 Homeowner Confidence Survey. In reality, 28% of homes increased in value during the year, according to Zillow’s Fourth Quarter Real Estate Market Reports.
That resulted in a Zillow Home Value Misperception Index of negative two–the closest to zero on record since Zillow introduced the index in the second quarter of 2008, when the index was at 32. A Misperception Index of zero would mean homeowners perceptions’ were in line with actual values. A negative Misperception Index indicates that homeowners are overly cynical about their own home’s value when compared with reality. This is the first time the national index was negative.

Half of homeowners believe their own homes lost value during 2009, while 30% believed their home’s value stayed the same. In reality, 65% of homes lost value during the year, and values remained the same for 7%.

“Not My Home” Sentiment Fades as Homeowner Attitudes Shift
The results demonstrate the “not my home” sentiment that was once prominent among American homeowners has faded. One year ago, nearly half (47%) of homeowners believed values in their local market would decrease in the next six months. However, when asked about their own home, fewer than one in three (30%) believed their own home’s value would decrease.

Now that gap has shrunk, with 22% of homeowners believing their local market will lose value over the next six months and 14% believing their own home will lose value. “Homeowners are finally succumbing to the notion that, in most areas, declining home values over the past year are no longer the exception, they are the rule,” said Dr. Stan Humphries, Zillow chief economist. “Almost three times as many people believe their home’s value will increase over the next six months as believe it will decrease in value, a level of optimism that is likely to outpace actual performance in the near-term. Given recent news about the stabilization of home values in some markets, I can see why homeowners are so optimistic. However, home values in many markets are still under substantial downward pressure from high levels of foreclosures and we don’t believe we’ll see a definitive bottom nationally until the second quarter of this year. We’re not out of the woods yet.”

About Own Homes’ Values:
Homeowners in the Northeast and West are overly cynical about the value of their home. Three-quarters (78%) of Northeastern homeowners said their home lost value or stayed the same in the past year when just over half (58%) of the homes actually did. This disparity between perception and reality resulted in a Misperception Index of -14, making Northeasterners the least aligned with reality. Western homeowners, who were the most optimistic and the least aligned with reality last quarter, did an about-face in the fourth quarter. They now are slightly cynical with a Misperception Index of -5.

RISMEDIA, February 18, 2010—The thirty-year fixed mortgage rate on Zillow Mortgage Marketplace is currently 4.79%, down two basis points from 4.81% at this time last week, and at the lowest level since mid-December of last year. The 30-year fixed mortgage rate hovered below 4.85% for most of the last week, but peaked near 4.90%.

Zillow’s real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers through the site, and reflect the most recent changes in the market. These are not marketing rates or a weekly survey.

The rate for 15-year fixed home loans is currently 4.22%, while the rate for 5-1 adjustable rate mortgages is 3.61%.

The volume of mortgage requests in the past week fell 6.7% from the prior week. Of last week’s requests, 31.9% were for refinance loans, 66.3% were for purchase loans and 1.8% were for home equity loans. The prior week, 34.6% of requests were for refinance loans, 63.3% were for purchase loans and 2.1% were for home equity loans.

RISMEDIA, February 17, 2010—(Eco Hatchery Real Estate News)—The U.S. Environmental Protection Agency (EPA) recently released its final WaterSense single-family new homes specification, creating the first national, voluntary, water-efficiency specification for an entire new home.

“Home builders can now partner with EPA and earn the WaterSense label for their newly built homes, helping create livable communities and quality homes that are easy to maintain,” said Peter S. Silva, assistant administrator for EPA’s Office of Water. “These homes will save homeowners as much as $200 a year on utility bills compared to their current homes.”

EPA worked with hundreds of stakeholders over the past three years to develop this specification, which was designed to complement existing green building programs. WaterSense labeled new homes, which will be 20% more efficient than typical new homes, must be independently inspected and certified by an EPA licensed certification provider to meet the WaterSense criteria for water efficiency and performance.

The new homes will feature WaterSense labeled plumbing fixtures, Energy Star qualified appliances (if installed), water-efficient landscaping, and hot water delivery systems that deliver hot water faster, so homeowners don’t waste water—or energy—waiting at the tap.

By investing in WaterSense labeled homes, American home buyers can reduce their water usage by more than 10,000 gallons per year—enough to fill a backyard swimming pool—and save enough energy annually to power a television for four years.

If the approximately 1.27 million new homes built in the United States each year were WaterSense labeled, it would save more than 12 billion gallons of water.

With this announcement, EPA is inviting home builders to join the WaterSense program and commit to building water-efficient new homes.

WaterSense, a partnership program sponsored by EPA, seeks to protect the future of our nation’s water supply by offering people simple ways to use less water.

Yesterday Freddie Mac announced that it would purchase "substantially all" of the seriously delinquent loans from their fixed-rate mortgage Participation Certificate (PC) securities.

The implications of the move extend well beyond the immediate effect on the investors in Freddie Mac securities. Of course, right away we’ll see at least some of the impacts of the FAS 166 & 167 rulings that my colleague Joe Murin anticipated in a post last month here on “Voice of Housing”. As Joe pointed out, investors’ returns in these securities will be hit insofar as these repurchases will accelerate prepayment speeds, which will reduce the value of the securities to those investors.

In the big picture, Freddie’s decision goes to the heart of the question concerning the future role of the GSEs – and dare I say relevance – in the US housing system as it is recast.

To be sure, yesterday's action by Freddie Mac comes only as a result of the US Treasury’s version of an explicit guarantee of both GSEs’ financial obligations. Let’s not forget, by all measures both institutions are insolvent, and in the absence of the government’s intervention and guarantee, they would be unable to function as going concerns. Look at it that way and today’s action by Freddie Mac, as a steward of billions and billions of taxpayer dollars, makes complete sense.

The cost of repurchasing these loans today and holding them in the company's mortgage investment portfolio is likely lower than the cost of guaranteeing payments to the holders of the securities, including advances of interest at the security coupon rate. So as a taxpayer, I say, “Thank you, Freddie Mac!”

Against this backdrop, one wonders whether the investors in these securities – despite that fact that their yields will undoubtedly be hurt – warrant much sympathy. After all, for years both GSEs aggressively resisted all attempts to characterize their government guarantees as “explicit”, in order to avoid the regulatory scrutiny and oversight that would have resulted from such status. In the face of those protests by the GSEs, and continual assurances of sound financial management and solvency, investors eagerly purchased securities from both of them.

If these organizations had been truly private, these investors likely would have been wiped out when the GSEs entered conservatorship in 2008. With yesterday’s announcement, we learn that those investors were actually pretty smart – they were betting, and obviously got it right - that despite the government’s protestations to the contrary, Freddie and Fannie’s guarantees were actually explicit and unlimited in scope.

So whom will these investors believe in the future? If they believe neither the government nor the GSEs, then we all may have a great deal to fear regarding the future of the US housing system. To be perfectly blunt, private capital will not return, in amounts sufficient to sustain American housing at necessary levels, in the absence of clarity and improved investor confidence. That absence is painfully present today.

Unless we agree that our housing finance structure of the future is a “national” function – run in large measure by the federal government and funded by taxpayers --- we are long overdue to begin in earnest the debate over the real future of this industry. The first, honest question of that discussion should be: Is there any role for left the GSEs?

RISMEDIA, February 16, 2010—Freddie Mac recently announced that in the fourth quarter of 2009, refinancing borrowers overwhelmingly chose fixed-rate loans, regardless of whether their original loan was an adjustable-rate mortgage (ARM) or a fixed-rate, according to Freddie Mac’s quarterly Product Transition Report. While 30-year fixed-rate mortgages are still the most preferred product chosen for the new loan, 15-year fixed-rate mortgages gained favor among refinancers who previously held 30-year fixed-rate mortgages, balloon mortgages and ARMs. Overall, fixed-rate loans accounted for more than 95% of refinance loans during the quarter.

“Average interest rates fell on 30-year and 15-year fixed-rate mortgage loans in the fourth quarter to a record low in the 39-year history of Freddie Mac’s Primary Mortgage Market Survey” said Frank Nothaft, vice president and chief economist for Freddie Mac. “The lowest fixed-rate interest rates in more than a generation, coupled with the comfort that a constant monthly principal and interest payment provides the homeowner, are important drivers in fixed-rate product choice.

“While homeowners are choosing the safety of fixed-rate mortgages in large numbers, at the same time many borrowers are now looking at paying down their mortgage balances faster by choosing a shorter mortgage term of 15 or 20 years instead of 30. This is consistent with the results from our fourth quarter Refinance Report, published at the end of January, which showed a record share of borrowers paying down a portion of their principal balance, that is, “cashing in” rather than “cashing out” when they refinanced their loan. When you can only earn a very low interest rate on your CD or money market accounts, and returns on other investments remain extremely uncertain, it can make sense to pay yourself 4.5-5% by eliminating some mortgage debt whether by making extra payments or going for a shorter loan term.”

These estimates come from a sample of properties on which Freddie Mac has funded at least two successive loans and the latest loan is for refinance rather than for home purchase.