Bullishness in Home Value Projections by Jim Woodard on Creators.com

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Bullishness in Home Value Projections

Homeowners and investors are asking a key question: How much will home values rise in coming months and years?

Highly credible analysts and organizations are projecting varying degrees of value appreciation. Here's a sampling:

One bullish projection comes from JPMorgan Chase and Co. They see home prices rising at a rate of 14 percent through 2015. That's more than double its forecast for U.S. home price gains in 2013.

Bank of America Corp. said property values will jump 8 percent this year, up from a prior estimate of 4.7 percent in a report titled "Someone say house party?"

Those two biggest U.S. banks are predicting an accelerating rebound as homebuyers and investors rush to acquire a dwindling supply of properties and the Federal Reserve pushes down borrowing costs by buying mortgage bonds.

That's strengthening the economy and sustaining a rally in homebuilder shares after the stocks more than doubled since the end of 2011.

Many housing analysts have become increasingly bullish in recent months, and many now expect home prices to rise at about 8 percent this year.

Zillow and Pulsenomics recently surveyed a nationwide panel of 118 economists, real estate experts and investment and market strategists to get their thoughts on future home values and housing market policies. On average, the panel forecasts price growth of 4.6 percent in 2013 and 4.2 percent in 2014. More moderate growth averaging 4.1 percent is expected to follow into 2017.

Paul Diggle at Capital Economics is one of them. But the housing recovery still has some hurdles it needs to clear, he noted.

"Capacity constraints in lenders' mortgage departments are one of the few remaining bottlenecks in the housing recovery and one of the factors contributing to the marginal role being played by mortgage-dependent buyers," he writes.

Q: Is flipping houses as easy as shown on TV?

A: No, it involves a lot more work, cash and know-how than shown on most "flipping" related television segments.

Flipping is the practice of buying houses and quickly reselling them at a profit.

Here's some timely information on the subject posted on Bankrate.com:

"It's not as easy as it looks on TV. There is a boatload of competition out there, which means that the obvious deals are gone in a heartbeat.

"The pros will tell you they make their money on the front end by buying properties for at least 30 percent below market value. Finding those houses takes time, and once you find them, you'll need to move fast.

"No matter what the late-night gurus say about doing this with no money down, it hardly ever works that way. That means you'll need access to cash to do the deal, not to mention the rehab."

Q: Will large (jumbo) FHA mortgages soon be available at lower loan-to-value ratio requirements?

A: That's a good possibility. A Federal Housing Administration proposal to lower the loan-to-value ratio requirements for government-backed jumbo loans valued above $625,500 has gained the support of the Mortgage Bankers Association.

The plan would essentially lower the required loan-to-value ratio from 96.5 to 95 percent for any FHA-insured loan valued above that threshold.

Q: Are foreclosure filings increasing?

A: Filings are rising a bit on a monthly basis but dropping substantially on an annual basis.

RealtyTrac, an online marketplace for foreclosure properties and real estate data, recently released its Foreclosure Market Report for February 2013. It shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 154,281 properties in February, an increase of 2 percent from the previous month but still down 25 percent from February 2012.

The report also shows one in every 849 U.S. housing units with a foreclosure filing during the month.

"At a high level the foreclosure inferno has been effectively contained and should be reduced to a slow burn in the next two years," said Daren Blomquist, vice president at RealtyTrac. "But dangerous foreclosure flare-ups are still popping up in states where foreclosures have been delayed by a lengthy court process or by new legislation making it more difficult to foreclose outside of the court system."

To find out more about Jim Woodard and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.