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Low Interest Rates Create 12 Percent Home Price Appreciation

Each 1 percent drop in interest rates in the last 15 years has allowed home sellers to raise prices 12 percent. According to the report, a typical family earning $60,000 per year can afford a mortgage payment of $1,800 per month, and would have qualified for a $245,000 mortgage in the year 2000 when mortgage rates were 8 percent. This same family qualifies for a home priced at $377,000 when rates are 4.0%.

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U.S. Census Bureau Data Shows Drop In Homeownership

Age matters when it comes to ownership. Older residents are more likely to own their own home. Households owned by residents 65 or older had the highest percentage of ownership rates at 79.5 percent, while residents under 35 scored lowest at 35.3 percent. The rate of homeownership can change drastically by age. While the numbers of homeowners age 35 to 44 was 58.8 percent that number jumps to 75.8 percent for owners age 55 to 64.

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Consumer Sentiment Falling Despite Rosy Economic Forecast

The U.S. Bureau of Labor Statistics Employment Summary released in early February reported an average hourly wage gain of 12 cents month-over-month, from $24.63 to $24.75. Still, U.S. Treasury Secretary Jacob Lew said after that report was released that more wage growth is needed in order for the economy, and hence the housing industry, to recover.

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Wells Fargo Continues to Battle FHA Suit

Wells Fargo is alleged to have received insurance money from the U.S. Department of Housing and Urban Development even after some loans had defaulted. The bank allegedly submitted over 100,000 FHA loans said to be under HUD compliance and eligible for insurance, knowing that the loans were too risky and did not qualify.

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Pending Home Sales Rise for Fifth Consecutive Month

NAR Chief Economist Lawrence Yun said traditional buyers saw more favorable conditions entering the market this year, citing all-cash sales and sales to investors were both down from a year ago, which created less competition and relief for buyers who still face the challenge of seeing limited homes available for sale.

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20 Percent of Optimal Households Failing to Refinance

Houses lose out on big money when they fail to take advantage of low interests and refinance. For example, a household with a 30-year, fixed-rate mortgage of $200,000 at an interest rate of 6.5 percent that refinances when rates fall to 4.5 percent will save over $80,000 in interest payments over the life of the loan, even after including all the typical refinancing costs. Mortgage rates were around 4.7 percent in December 2010, higher than the current rate of 3.5 percent. Still, many homes fail to refinance.

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Oil-Producing States at High Risk for Lowering House Prices

Research released by Arch Mortgage Insurance Company in its Winter 2015 Edition of Housing and Mortgage Market Review showed an increased risk of lowering home prices in oil-producing states. Midland, Texas ranked highest for risk of lowering home prices at 60 percent. States and cities were examined on the likelihood of home prices being lowered in the next two years, based on recent economic and housing market data.

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