Paulson, speaking at CNBC’s Delivering Alpha conference, said he is still high on housing.

“It’s not too late to get involved. I still think buying a home is the best investment any individual can make. Affordability is still at an all-time high,” said Paulson.

Large-scale investors, however, may not be behind the surge in home flipping. They may, in fact, be the cause of it.

“Now that the institutional investors are doing buy and hold, a lot of these guys [individual investors] can’t compete with their checkbooks,” said Rick Sharga, formerly an executive at Carrington who now works for Auction.com. “In some cases the individual investors are flipping them to the institutional investors.”

While many of the large funds have teams that renovate homes, in some cases they would rather pay a premium for a move-in-ready property, rather than waste time and money remodeling.

“So the flippers are kind of the in-between middleman who is getting the property into good rentable condition and then selling to the institutional investors,” explained Blomquist.

(Read more: Map: Tracking the US real estate recovery)

Article source: http://www.cnbc.com/id/100896253

The predictions may sound dire, but the forward-looking indicators are falling in line. Mortgage applications have been falling for the past month. Applications to purchase a home are down 28 percent in the past month and up only 4.5 percent from a year ago. They should be up far higher, given that prices and demand are rising so fast. Signed contracts to buy existing homes jumped unexpectedly to a six-year high in May as rates started to rise; there’s your rush.

At a brokers open house in Northern Virginia this week, real estate agents said they are already seeing the effects of higher rates on the ground and in the homes they’re trying to sell.

(Read More: Apartments Reap Rewards of Rising Rates)

“It has gotten a lot quieter, which is a shame because historically the rates are still very low,” said Ruth Griel with Prosperity Mortgage.

“It’s having a kind of chilling effect on the market,” said Mark Beardsley, a Realtor with Long and Foster. “What’s happening is we are pricing down. If they were qualified for 600, now we’re looking at 550 and below.”

Mortgage rates going from 3.5 to 5 percent is roughly a 15 to 20 percent decrease in what the average buyer can afford. They can move to different loan products, like an adjustable rate loan, but ARMs are harder to qualify for and require far more documentation.

Article source: http://www.cnbc.com/id/100876300

The predictions may sound dire, but the forward-looking indicators are falling in line. Mortgage applications have been falling for the past month. Applications to purchase a home are down 28 percent in the past month and up only 4.5 percent from a year ago. They should be up far higher, given that prices and demand are rising so fast. Signed contracts to buy existing homes jumped unexpectedly to a six-year high in May as rates started to rise; there’s your rush.

At a brokers open house in Northern Virginia this week, real estate agents said they are already seeing the effects of higher rates on the ground and in the homes they’re trying to sell.

(Read More: Apartments Reap Rewards of Rising Rates)

“It has gotten a lot quieter, which is a shame because historically the rates are still very low,” said Ruth Griel with Prosperity Mortgage.

“It’s having a kind of chilling effect on the market,” said Mark Beardsley, a Realtor with Long and Foster. “What’s happening is we are pricing down. If they were qualified for 600, now we’re looking at 550 and below.”

Mortgage rates going from 3.5 to 5 percent is roughly a 15 to 20 percent decrease in what the average buyer can afford. They can move to different loan products, like an adjustable rate loan, but ARMs are harder to qualify for and require far more documentation.

Article source: http://www.cnbc.com/id/100876300

The predictions may sound dire, but the forward-looking indicators are falling in line. Mortgage applications have been falling for the past month. Applications to purchase a home are down 28 percent in the past month and up only 4.5 percent from a year ago. They should be up far higher, given that prices and demand are rising so fast. Signed contracts to buy existing homes jumped unexpectedly to a six-year high in May as rates started to rise; there’s your rush.

At a brokers open house in Northern Virginia this week, real estate agents said they are already seeing the effects of higher rates on the ground and in the homes they’re trying to sell.

(Read More: Apartments Reap Rewards of Rising Rates)

“It has gotten a lot quieter, which is a shame because historically the rates are still very low,” said Ruth Griel with Prosperity Mortgage.

“It’s having a kind of chilling effect on the market,” said Mark Beardsley, a Realtor with Long and Foster. “What’s happening is we are pricing down. If they were qualified for 600, now we’re looking at 550 and below.”

Mortgage rates going from 3.5 to 5 percent is roughly a 15 to 20 percent decrease in what the average buyer can afford. They can move to different loan products, like an adjustable rate loan, but ARMs are harder to qualify for and require far more documentation.

Article source: http://www.cnbc.com/id/100876300

(Read More: Homeowners With No Mortgage Offer Clues to Recovery)

“House price improvement has been the biggest reason we’ve seen more confidence improving in general, and prices are taking a stronger hold out West,” said David Crowe, NAHB’s chief economist, who notes that monthly regional moves can be more dramatic. A three-month running average, however, still puts the West ahead of the rest of the nation.

Builders out West have also been heartened by a huge drop in distressed properties, thanks to an influx of large-scale investors looking to reap the rewards of a growing single-family rental market. As supplies of homes for sale drop there precipitously, the builders are moving in again.

(Read More: Banks Pay Big for Robo-Signing…Again.)

Article source: http://www.cnbc.com/id/100384154

It’s hard to imagine, given that the nation’s housing market is still digging itself out of an epic foreclosure crisis, that there just are not enough homes available to buy. That, apparently, is the case, according to the National Association of Realtors, who blame a drop in home sales on an “acute lack of supply” in certain formerly hot markets.

“Recent price increases are not deterring buyer interest,” notes Lawrence Yun, NAR’s chief economist. “Rather, inventory shortages are limiting sales, notably in parts of the West.”

A little perspective.

The housing recovery has largely been driven by investors on the low end of the market. Cities like Phoenix, Las Vegas and Sacramento, CA, where the foreclosure crisis hit hardest and where home prices fell the most, were swarmed by these investors, who were looking to convert this distress into rental rewards. Witness, sales of homes priced under $100,000 in the West are down 47 percent from a year ago, according to the Realtors. This after investors drove prices notably higher. Distressed sales made up just 24 percent of total home sales in September, while they had been making up over one third of sales for the past two years.

(Read More: Home Prices Find New Peaks in Dozens of Cities)

So where is all this distressed supply, given that there are still 5.45 million homes with mortgages that are either delinquent or in the foreclosure process (per LPS Applied Analytics)? Banks are doing more foreclosure alternatives, like short sales, but they are also making more aggressive loan modifications. Bank of America
[BAC 
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] this week announced that in the past five months it has reduced principal on 30,000 troubled loans, with an average reduction of $145,000. This as part of the mortgage servicing settlement signed early this year. Loan modifications with reduced principal have a much lower re-default rate.

Yun suggests that builders need to really ramp up production in order for home sales to recover more.

Housing starts for single family homes in September were up 43 percent from a year ago and building permits up 27%, but the real volumes are still about half the normal level. New homes are popular with first-time home buyers, who are only making up 32 percent of the market, whereas they normally represent about 45 percent. That is due to still tight credit conditions.

(Read More: Is Housing Recovering as Much as Everyone Thinks?)

The biggest problem is that regular home sellers are not putting their homes on the market at a high enough rate to offset the drop in distressed volumes. Why? Part of it is still a lack of confidence in the market, but most of it that, as of August, about 15 million homeowners still owed more on their mortgages than their homes were worth, according to Zillow. That’s 31 percent of homes with a mortgage. Negative equity and near negative equity is largely what is holding the market back now, even as distressed homes slowly move out of the system.

(Read More: Apartment Demand Ebbs as ‘Avalanche’ of New Units Open)

Given the huge drops in sales and inventory out West, which had been driving much of the gains in the overall market, some analysts predict deeper sales drops in the coming months. While sales of higher priced homes are up considerably from a year ago, they still make up a very small share of the total market. About 65 percent of the market is made up of homes priced lower than $250,000. These are a lot of numbers to digest, but they add up to a still bumpy recovery ahead for housing.

Sector Watch: US Home Builders – Click on Ticker to Follow Real Estate News:

• Toll Brothers
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• DR Horton
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• Hovnanian Enterprises
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• PulteGroup
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• Ryland Group
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• Lennar Corp
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• Beazer Homes USA
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• Meritage Homes
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• KB Home
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Questions?  Comments?  And follow me on Twitter @Diana_Olick