Get The Market Buzz

DATELINE:   Across the U.S.A.

FLASH:  Is HVCC hurting the housing industry?

The Home Valuation Code of Conduct (HVCC), a guideline which introduces a firewall between lending institutions and appraisers, came into effect on the first of May this year.  According to Federal Housing Finance Agency, the regulator of Fannie Mae and Freddie Mac, HVCC is meant to “improve the reliability of home appraisals,” by preventing fraud in the appraisal process.  Lenders and brokers who wish to sell loans to Fannie Mae and Freddie Mac can no longer select an appraiser themselves, instead, they should approach an independent appraisal management company which will assign an appraiser for each deal.  This would effectively stop collusion between lenders and appraisers leading to inflated home values.  Appraisers and lenders say that HVCC, instead of helping the industry, is hurting it.  A number of honest and efficient appraisers have been hit because the appraisal fee should now be shared between the appraisal management company and appraisers, instead of appraisers taking the entire fee.  There have been instances of appraisal management companies assigning appraisers who have no familiarity with local conditions and data to appraise properties.  This leads to incorrect estimates, and incorrect estimates, in turn, lead to buyers and sellers walking away from deals.  Lawrence Yun, chief economist of the National Association of Realtors, has warned that the housing market recovery can get delayed and there could be a rise in foreclosures, if problems related to appraisal are not quickly corrected.

DATELINE:   Across the U.S.A.

FLASH:   Existing-home sales rise for the second straight month

According to the National Association of Realtors (NAR), sales of existing-homes rose to a seasonally adjusted annual rate of 4.77 million units in May, denoting a rise of 2.4% over the April figure.  This is the second straight month of increase in sales of existing-homes, due to a plentiful supply of homes and availability of attractive mortgage rates.  According to NAR, this is the first back-to-back rise since August and September 2005.  “While sales may not have yet reached an absolute bottom, clearly a bottoming process is underway,” said Wachovia, a financial services firm.

DATELINE:  Chester County, PA

FLASH:  Interest Rates

In the last two weeks interest rates have popped… currently hovering at 5.75%    Is this a sign that we’ve hit bottom and are moving up?  The $8,000 tax credit is driving the market — get in while the gettin’ is good!  Affordability is at an all time low even with interest rates at 6%  Who would have thought we would complain about a 30-year fixed mortgage rate of 6%?!

DATELINE:  Across the U.S.A.

FLASH:  Pending US Home Sales Surge

Pending US home sales skyrocketed to their highest number in 7 years, a sure sign that the bottom is forming and that bargain seekers have arrived.  The National Association of Realtors reported that its seasonally adjusted index of sales contracts signed (thePending Home Sales Index) jumped 6.7% to 90.3, well ahead of analysts’ expectations.  Lawrence Yun, NAR chief economist, said buyers have responded to favorable market conditions.  “Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market,” he said.  “Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers.”