Spring: Season for Vacation Homes by Jim Woodard on Creators.com

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Spring: Season for Vacation Homes

'Tis spring, when homeowners' thoughts turn lightly to images of vacation homes. Sales of those properties are rising as they have been over the past two years.

Vacation home sales rose 10.1 percent to 553,000 in 2012 from 502,000 in 2011, according to the recently released National Association of Realtors' 2013 Investment and Vacation Home Buyers Survey.

Investment-home sales declined 2.1 percent to 1.21 million from 1.23 million in 2011, but those sales had been well under a million during the market downturn. Owner-occupied purchases jumped 17.4 percent to 3.27 million last year from 2.79 million in 2011, NAR reported.

Vacation home sales accounted for 11 percent of all transactions last year, while the portion of investment sales was 24 percent in 2012, down from 27 percent in 2011, marking the second highest share since 2005.

NAR Chief Economist Lawrence Yun said favorable conditions are driving second-home sales. "We had a strong stock market recovery, which helps more people in the prime ages for buying vacation homes. Attractively priced recreational property is also a big draw," he said.

Yun noted an ongoing investor presence. "Investors have been very active in the market over the past two years, attracted mostly by discounted foreclosures that could be quickly turned into profitable rentals," he said.

"With rising prices and limited inventory, notably in the low price ranges, investors are likely to step back in coming years."

Q: Are mortgage rates still dropping?

A: On April 18, Freddie Mac released the results of its Primary Mortgage Market Survey, showing average fixed mortgage rates moving still lower amid data showing weaker consumer spending. This marks the third consecutive week fixed-rate mortgages have moved lower as the housing market continues to recover.

At his point, the 30-year fixed-rate mortgage (FRM) averages 3.41 percent with an average 0.7 point, down from last week when it averaged 3.43 percent. Last year at this time, the 30-year FRM averaged 3.90 percent.

The 15-year FRM averages 2.64 percent with an average 0.7 point, down from last week when it averaged 2.65 percent. A year ago at this time, the 15-year FRM averaged 3.13 percent.

Q: Is the HARP Refinance program still available?

A: Yes, it's been extended for a couple of years.

The Federal Housing Finance Agency recently granted the Home Affordable Refinance Program (HARP) a two-year extension, the agency announced.

Under the direction of FHFA, Fannie Mae and Freddie Mac's regulator, the program will live on until Dec. 31, 2015. "More than 2 million homeowners have refinanced through HARP, proving it a useful tool for reducing risk," said FHFA Acting Director Edward J. DeMarco.

"We are extending the program so more underwater borrowers can benefit from lower interest rate."

Q: Is the volume of home foreclosures still decreasing?

A: Yes, the numbers of foreclosures are still falling, but foreclosure starts have increased a bit over the past two months in some markets, according to a report from RealtyTrac.

For March and the first quarter of 2013, the report shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 152,500 properties in March, a decrease of 1 percent from the previous month and down 23 percent from March 2012.

The decrease in March helped drop first quarter foreclosure numbers to the lowest level since the second quarter of 2007, the report noted. Foreclosure filings were reported on 442,117 properties in the first quarter, down 12 percent from the previous quarter and down 23 percent from the first quarter of 2012.

"Although the overall national foreclosure trend continues to head lower, late-blooming foreclosures are bolting higher in some local markets where aggressive foreclosure prevention efforts in previous years are wearing off," said Daren Blomquist, vice president at RealtyTrac.

"Meanwhile, more recent foreclosure prevention efforts in other states have drastically increased the average time to foreclose, which could result in a similar outbreak of delayed foreclosures down the road in those states."

Q: Are reverse mortgages really a good deal?

A: In some cases, yes. However, an increasing number of RM borrowers tell horror stories about their experience.

These are usually people who did not fully understand the terms of the RM contract, or felt they were mislead by the RM salesperson. Or they were just too enthralled by all those dramatic television commercials.

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.

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