Pending home sales rose 7.3 percent in November to the highest level since April 2010, according to the National Association of Realtors.

Reported by:  Washington Business Journal by Jeff Clabaugh, Broadcast/Web Reporter

The District-based association also revised higher its pending home sales data for October, showing a gain of 10.4 percent the previous month.

“Housing affordability conditions are at a record high and there is pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high,” said NAR chief economist Lawrence Yun. “Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage.”

Bryan Smith from 1 Hot Property – Bend Oregon Real Estate, says that Bend Oregon real estate and home sales are improving.  He and other brokers area reporting stronger demand and less inventory in the “A” market locations, and short of any unexpected issues, the trend is expected to expand to “B” locations in 2012 and 2013.  The largest holdback now to the market is the huge shift from anyone could get multiple mortgages, to few can get one mortgage.  This is actually great for those that can qualify to get get locked into a property now at these prices.   But for the market to start sustaining appreciation and true health the mortgage qualification guidelines need to start moving to being more accommodative.   We are not talking about the days of the past, but the pendulum has swung too far.  We would also like to see the return to limited document mortgages for the self employed and small company owners.  Just one mortgage with 20 to 25% down and a decent credit score should be enough security for the current purchasers of mortgages.

Fannie and Freddie are now essentially owned by the taxpayers, and their oversight managers are looking pretty narrowly at how they should run those organizations.  The Congress needs to get in here and decide how to let the economy recover, and that cannot really happen until Fannie and Freddie change some practices.

As taxpayers and citizens we should be asking our representatives to look at the two following concepts to allow the economy to get going again.

  • Refinance everyone.  Allow all people with mortgages held by Fannie and Freddie to refinance with no conditions with a simple $750 fee.  We the public already own these loans/mortgages.  The risk of default is less if the rate is reduced by a refinance, no matter what the situation with the loan is.  So just do it.
  • Loosen up the qualification requirements for new loans.  The standards were way too loose years ago, and have now swung to too tight.
  • Investor Loans.  One way to soak up excess inventory is to make it easier to get an non owner occupied loan.  If an investor is willing to put down 25% on a distressed property, it gets it off the market, and hey, the risk for Fannie Freddie has to be less compared to the existing loan,  if an investor would put that kind of cash into the property.
  • Limited Documentation Loans.  Small business people have income that cannot be counted under traditional standards.  Example capital gains income is excluded even though it is income. And lots of small business people have capital gains income, and other kinds of complications of their accounting, that makes it tough to qualify under a conforming loan application.   Let these folks put down 25%  and open these loans back up, limited to one loan.  ( not like the old days where you could get more than one)

All of these things dry up the excess inventory, and reduce economic risk, and provide a substantial boost to the economy and jobs.  Most economists have said that housing has to improve before the economy and jobs can improve.  These are some straightforward ways to get that going.

Comments are welcome and appreciated.

Please share this article and contact your elected representatives to tell them you want the economy to get back on it’s feet, and housing mortgage reform is the way to get that done, clean and simple.

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