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America Dreaming

Although there's no shortage of challenges to homeownership these days, the American public is feeling pretty groovy about the property market.

In a recent survey of more than 9,000 current and aspiring homebuyers in eight countries, including the U.S., Americans were the most upbeat about their home-buying prospects. And 62% of American respondents believe now is a good time to buy a home, according to the survey, commissioned by Genworth Financial Inc.

The report, which was released last week, included responses from consumers in the U.S., Australia, Canada, India, Ireland, Italy, Mexico and the United Kingdom.

Declining home prices and lower interest rates are fueling Americans' desire to buy a home, said Rohit Gupta, chief commercial officer for the U.S. mortgage insurance business at Genworth.

But there are obstacles. With a faltering economy and tightening credit standards, many Americans are finding it challenging to actually afford a home, especially considering that 40% of Americans spend more than half of their income on paying their debts.

Still, despite the economic constraints, 79% of borrowers had no problem making their mortgage payments in the last 12 months, the report found. That should provide reassurance to policymakers and lenders, Gupta said.

"We need to strengthen underwriting standards without denying the dream of homeownership to creditworthy borrowers," he said, "or the housing recovery will be delayed."

New regulations, such as the Qualified Residential Mortgage rule, will make it even more difficult for Americans to buy homes, he said. Under the current draft of QRM, it would take a family earning $50,000 about 11 years to save for a 20% down-payment on a $153,000 home, according to Gupta.

"The pendulum shouldn't swing too far," he said. "As we get back into prudent homeownership and prudent lending, it shouldn't swing to the point where it is extremely restrictive for a credit-worthy borrower who has the ability to pay on their mortgage."

Murky Numbers

Foreclosure activity has hit a three-and-a-half year low, with one in every 605 U.S. homes receiving a foreclosure filing in May.

According to RealtyTrac Inc.'s monthly foreclosure report, foreclosure filings, which include default notices, scheduled auctions and bank repossessions, were reported on 214,927 properties, a 2% decrease from April and a 33% drop from May 2010. It was the lowest level of foreclosure activity since November 2007.

But the decline shouldn't be cause for celebration just yet.

"Foreclosure processing delays continue to mask the true face of the foreclosure situation," said RealtyTrac's chief executive, James J. Saccacio, in a press release Thursday. "Activity spiked in May for various stages of the foreclosure process in some states, a pattern that has occurred in several states over the past few months. This pattern provides evidence that lenders are somewhat unevenly pushing batches of bad loans through foreclosure as they overhaul their paperwork and documentation procedures and as they determine that some local markets are able to absorb more foreclosure inventory."

Nevada posted the highest foreclosure rate for the 53rd straight month, with one in every 103 housing units receiving a foreclosure filing.

Just five states — Nevada, Arizona, California, Michigan and Florida — account for more than half of all U.S. foreclosure activity.

Bmore Aggressive

Baltimore has unleashed the bulldozer.

The city began demolishing vacant properties in Northeast Baltimore late last month as part of its "Vacants to Value" program announced in November.

In total, the city plans to tear down 34 properties in that area, the Baltimore Business Journal reported. Neighborhood Housing Services of Baltimore and Habitat for Humanity for the Chesapeake are to rehabilitate 23 of those properties over the next two years, the paper said.

The "Vacants to Value" initiative, which aims to rehabilitate more than 1,000 vacant buildings around the city using $70 million in private investments, also includes a special loan incentive for city police, firefighters and public school teachers who buy or rehabilitate vacant homes.

Low Rates, Eh?

Canada's housing market has been lauded as an example of restraint and responsibility — a stark contrast to the excesses that have plagued the U.S.

So it's no wonder that an aggressive new marketing campaign by the Royal Bank of Canada to spur home equity lending is drawing some attention.

The Toronto bank is promoting its low home-equity loan rates on about 270 billboards in Ontario, and in more than 85 newspapers and on 50 radio stations throughout Canada, Bloomberg News reported earlier this week.

Royal Bank is offering home equity loans at prime plus 0.5%, lower than the prime plus 1% rate at most other Canadian banks, Bloomberg News reported. The prime rate at Canadian banks is 3%. The campaign is an effort to drive new business as loan demand remains weak.