"Fannie, Freddie, to Increase Loan Limits 5.6 Percent Next Year"
American Banker (11/30/98) P. 16; Habal, Hala

Fannie Mae and Freddie Mac announced last week that they are raising their mortgage loan limits on single-family homes from $227,150 to $240,000. The increase follows an announcement by the Federal Housing Finance Board that average prices for single-family homes increased 5.2 percent to $175,200 in October from a year earlier. Fannie Mae and Freddie Mac use this figure each October to adjust their mortgage limits, but the limit increase is even more significant this year due to global economic problems that have reduced risk-taking in the housing market. Brian Carey, economist for the Mortgage Bankers Association, attributed the increase in the average home price to a number of factors--including wealth generated from the stock market, a strong overall economy and employment rate, and an increased number of trade-up home buyers purchasing more expensive homes. The increase in prices has made it more difficult to sell the loans to Fannie Mae and Freddie Mac. The increased limit is expected to help an additional 200,000 families own homes with Fannie Mae mortgages, although existing home sales are expected to decline 8.7 percent next year, according to Carey.

"Value of Contracts for Construction Fell in October"
Wall Street Journal (11/30/98) P. A4; Mabry, Tristan

New construction contract values fell 3 percent to $342.1 billion in October; but the strength of the market during the first half of the year indicates that the construction industry will still record its seventh consecutive year of growth, according to F.W. Dodge, a division of McGraw Hill. Residential construction, the most important sector of the industry, declined 4 percent to an annualized rate of $161.8 billion. Low mortgage rates made financing affordable, but single-family housing construction still fell 5 percent. Residential construction remains, however, the core of the building industry. Residential contract values are up 11 percent so far this year to $145.1 billion, compared to the first 10 months of 1997, while nonresidential construction values have declined this year. "Recent months have witnessed some deceleration," but the industry "continues to move along at a good clip," said Robert A. Murray, vice president of economic affairs for Dodge. Regionally, construction in the South--including Texas--rose 12 percent, but construction in the Northeast fell 8 percent from a year earlier.

"Home Sales"
Associated Press (11/25/98) ; Skidmore, Dave

Existing homes sales increased 2.1 percent in October and, after two monthly declines, appear to be on track for an all-time record in 1998, according to the National Association of Realtors. Sales are expected to increase 12.6 percent this year from last year to reach a new high, and the market should remain strong into early 1999, according to NAR economist John Tuccillo. The success of the market is attributed to increased employment, stock market gains, and low mortgage rates. Regionally, existing home sales increased 6.9 percent in the South and 0.8 percent in the Midwest, but were down 1.5 percent in the Northeast and 2.8 percent in the West.

"Florida Home Sales Continue Record-Setting Pace in October"
PRNewswire (11/25/98)

Florida Realtors recorded 12,657 sales of existing single-family homes last month, an all-time high for October. Homebuyers pushed sales ahead 7 percent statewide from a year ago, as they took advantage of the average 30-year fixed-rate mortgage of 6.71 percent for the month, compared to 7.29 percent in October 1997. The hottest market in the state was Tallahassee, where resales were up 40 percent from last October. "Retirees from the North and the Midwest who would normally relocate further south in Florida are now more likely to stop at Tallahassee to enjoy the college-park atmosphere and relative change of climate," said Anna Gallagher, Florida Association of Realtor District Vice President. West Palm Beach-Boca Raton recorded a 37 percent increase in resales, while Daytona Beach had a 29 percent increase in resales, Naples had a 23 percent increase in resales, and Fort Myers-Cape Coral had a 22 percent increase in resales. The other markets that recorded double-digit increases in resales in October were Punta Gorda at 18 percent, Sarasota-Bradenton at 17 percent, and Miami at 11 percent. The median sales price for the month was $101,800, a 6 percent increase from last October.

"Home Shopping Network"
Wall Street Journal (11/27/98) P. W6

A recent study by Simmons Market Research indicated the U.S. cities with the highest percentage of residents who made purchases from their home in 1997. This includes shopping using mail, the Internet, the phone, and door-to-door services. The highest-ranked city was Washington, D.C., where 78 percent of residents shopped from home; followed by San Francisco, where 75 percent of residents made purchases from their home. Rounding out the top 10 cities were New York, Cleveland, Chicago, Boston, Philadelphia, Detroit, Dallas/Ft. Worth, and Atlanta.

"Revised Fannie Mae Loan Limits to Benefit California Homebuyers"
PR Newswire (11/25/98)

Fannie Mae announced Wednesday it will increase its 1999 single-family mortgage loan limit from $225,150 to $240,000. According to California Association of Realtors (CAR) President Diana Bull, the increase will allow over 16,000 California families to take advantage of savings by using Fannie Mae's services. Bull says that Fannie Mae's actions better reflect the cost of housing in California. The CAR estimates that at the current spread of rates for a Fannie Mae mortgage and a jumbo mortgage, about 180,000 additional California households can afford to purchase a home at the price associated with the new loan limit, possibly generating about 9,000 additional sales in the state.

"Homes Built by Inmates Come to Aid of Small-Town South Dakotans"
New York Times (11/30/98) P. A12; Belluck, Pam

South Dakota Governor William Janklow is saving his state's small towns by using inmates to build low-cost homes for elderly or disabled citizens. South Dakota has a high percentage of elderly residents, at 16 percent, while 96 percent of the state's communities are smaller than 5,000 people. Janklow says that if a small town does not provide needed services, citizens would have to move, and his state's largest problem is that farm families are faltering while the young move away, leaving the older citizens in homes they can no longer maintain. Eligible buyers for these new homes are 62 years or older, or disabled, and residents of a town of fewer than 5,000 people. A house with accessible entrances and special bathrooms can be delivered from the Springfield State Prison. One elderly South Dakotan bought a house last year for $19,000, and was able to stay in her home town, near her family. Inmates earn $0.25 an hour, while they learn skills that will help them upon their release. Janklow assured home builders the houses will be for small town residents so as not to compete with more profitable larger towns, and small contractors are able to add extras, like garages, for the new houses. So far, elderly and disabled people in 135 small towns have bought 263 homes, and younger home-buyers have moved in to the vacated homes.

"Bay Area Home Sales Dip"
Business Wire (11/24/98)

Existing home sales in the San Francisco Bay area declined in October for the first time since September 1996, according to data from Acxiom Corp.'s DataQuick Products Division. Resales were down 5.8 percent from September and were down 7.4 percent from October 1997. The decline in home sales was attributed to stock market volatility and a sudden rise in mortgage rates earlier in the month. As a result, some homebuyers chose to close their sales in November rather than October, said Mike Ela, leader of the DataQuick Products Division. The median price of an existing home also fell 2.5 percent to $272,000 in October from September, but prices rose 5.8 percent from a year ago. Year-to-date, the median price of a home in the Bay Area was up 7.9 percent from last year.

"Fannie Mae Previews Home-Buyer Information on the Internet..."
Business Wire (11/24/98)

Fannie Mae met with Aurora, Colo., Mayor Paul Tauer and library officials last week to preview its HomePath.com (www.homepath.com) Web site, which will be linked to the city's Virtual Business Library home page at the Aurora Public Library. Visitors of the Virtual Business Library (www.ci.aurora.co.us) can access HomePath, which offers mortgage financing information for consumers. This information includes a calculator, a glossary of terms, descriptions of Fannie Mae mortgage products, a list of local lenders, a list of local homebuying counselors, and other tips for consumers purchasing or refinancing a mortgage. The Aurora Public Library is the first library in Colorado to offer homebuying information over the Internet, according to Mayor Tauer. Fannie Mae also plans to preview its Homeownership Centers, which will offer free information through five local library branches during the month of January.

"Weather You're Ready or Not, Winter Is on the Way"
Rochester Democrat and Chronicle (11/14/98) P. 1F; Kuhn, Michele, J.

Winter doesn't officially arrive until December, but it isn't too early for homeowners to start preparing their homes for the cold months ahead. This is the best time to check for air leaks and other conditions that can affect the temperature of a home, according to Ward Wrangen, a manager for Home Depot. One of the most important things to check are the locations where air may enter a home, including weather stripping. Areas where weather stripping may be necessary include the foundation, joints in windows and doors, and any areas where utilities or pipes may enter the house. Air conditioner covers can also help prevent air from entering the home if homeowners install stripping around the air conditioner. On windows, shrink wrap can reduce air flow. Homeowners should also consider changing their thermostats to digital models, which are more efficient at regulating the heat inside a home.

"STAR Tax Break Will Benefit All Homeowners"
Rochester Democrat & Chronicle (11/14/98) P. 1F; Lank, Edith

Homeowners can apply for the STAR (school tax relief program) property tax break any time now, writes Rochester & Democrat columnist Edith Lank. March 1999 is when tax rolls for 1999-2000 close. Some homeowners will only be eligible for the basic STAR property tax break because of their incomes.

"US City Officials Anticipate Downtown Population Boom"
Real Estate Forum (11/98) Vol. 53, No. 11; P. 18

According to the latest Rouse Forum study, several downtown sections across the country expect to see a population increase by 2010. The survey, which chronicled 21 U.S. cities, was conducted by the Fannie Mae Foundation and the Brookings Institution Center on Urban and Metropolitan Policy. The growth trend is expected to be especially strong in major Midwestern and Northeastern cities that already have well-established residential districts. Cities in the nation's Sunbelt that have strong commercial business districts but not much housing should also expect to see a boom in new houses and apartment properties. Topping the future high growth areas is Houston, which expects a 303.3 percent increase in population from its current levels. Other cities ranking high in the Rouse Forum survey included Cleveland, with a 228.1 percent gain, and Memphis, 125.4 percent. Even such cities as Philadelphia and Detroit, which have been losing residents here in the '90s, are forecasting population increases in the early 21st century.

"Realtor, Consumer Contests Offer Big Rewards"
Realtor Magazine (11/98) Vol. 31, No. 11; P. 33

Consumers have an opportunity to win a home valued at $250,000, including closing cost, at the official Web site of the National Association of Realtors, REALTOR.COM. To be eligible for the "Win Your Next Home Here" sweepstakes, consumers are required to register their e-mail address at REALTOR.COM. Consumers can expect to receive e-mail instruction to search five pages at the Web site each week for game icons. By simply clicking on an icon, consumers may also entering the grand prize contest and the weekly drawings. "The contest is an exciting way to expose consumers to the benefits of searching for a home on REALTOR.COM," says Michael Keller, vice president of marketing at RealSelect, the operator of REALTOR.COM. The drawing for the home will take place sometime after Nov. 15.

"Ready, Set, Refinance!"
Home (10/98) Vol. 44, No. 8; P. 126; Greengard, Samuel

Mortgage industry observers are saying that prospective borrowers can greatly benefit from the lending tools that are being offered online. According to Alison Berkley, senior products manager for Quicken Mortgage, mortgage sites on the Internet can put consumers on the right path to obtaining a home loan and save a lot of time when they start shopping for the different products of lenders. "Side-by-side comparisons, particularly the annual percentage rate, make it possible for a homeowner to make quick effective decisions," says Berkley. "A process that used to take hours or days--checking rates, calling lenders for basic information, and doing calculations--is handled for you." Many of the mortgage sites offer mortgage calculators, real-time mortgage information, articles, lists of lenders, and discussion groups. Consumers will be able to analyze different loan options, calculate monthly payment and closing costs, store the information they have culled for later use, and even forward their loan information to a lender via encrypted e-mail.

Published: November 30, 1998

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