Forty-three percent of Americans like big, suburban homes, but the majority prefers condos, apartments, and smaller homes, Chris Nelson, who heads the University of Utah’s Metropolitan Research Center, said at a smart growth conference this week. 

Nelson said that there needs to be less building of large homes and more concentration on constructing smaller houses and attached residences to meet future demand.

"Is it any wonder that suburban homes are plummeting in price, because there is far less demand of those homes than in the past?” Nelson told a crowd at the New Partners for Smart Growth conference in San Diego this week. "We are out of balance in terms of where the market is right now, let alone trending toward the future.”

Nelson estimates that developers need about 10 million more attached homes and 30 million small homes on 4,000-square-foot lots or less to meet future home buying demand. 

Joe Molinaro, who heads the smart-growth program at the National Association of REALTORS®, says consumers are showing a stronger desire for walkable neighborhoods and shorter commutes, according to consumer surveys. 

Federal Reserve Chair Ben Bernanke defended his comments about the housing market and the central bank’s decision to hold interest rates at lows until 2014 in testimony Thursday to the House Budget Committee. 

Some lawmakers on Thursday questioned the Fed’s move to keep rates low for three more years, saying it brings a risk to higher inflation and stymies economic growth. 

Recently, the Fed announced that it doesn’t plan to raise its benchmark interest rates from a record low until late 2014, a move that will likely keep mortgage rates at record lows as well. 

Bernanke says that while the economy is showing improvement, the pace has been slow and many threats remain to economic recovery, such as European’s debt crisis, the nation’s rising debt, and the still-ailing housing market. 

Bernanke said he feels the sluggish housing market is holding back overall economic growth. 

National Association of Realtors® President Moe Veissi says that while the housing market has shown signs of stabilizing, lawmakers need to make housing needs more of a top priority. 

“We fully support Chairman Bernanke’s comments that the lack of available and affordable mortgage financing, low home values, and high foreclosure inventories are inhibiting a meaningful housing market recovery,” Veissi said in a statement. “We believe more can be done to address the lack of available and affordable mortgage financing to creditworthy borrowers and stem the rising inventory of foreclosed homes, which is depressing home values in communities across the country. Housing and home ownership issues affect all Americans, and stabilizing the housing market is critical to the nation’s economy making a meaningful recovery.”

Five mortgage insurers have granted Fannie Mae mortgage servicers the authority to complete a short sale or deeds in lieu of foreclosure without getting their separate approval, HousingWire reports. 

Traditionally, mortgage insurance groups have had to give the OK before a short sale can be processed on a property with a guaranteed loan.

Now, without that extra step, Fannie mortgage servicers may be able to speed up short sale approvals on Fannie-backed loans. 

The PMI Group, which filed for bankruptcy in November, is the latest mortgage insurer this week to grant Fannie the authority to no longer wait for its approval on short sales. The other four mortgage insurers also giving Fannie the authority are: Genworth, MGIC, Republic Mortgage Insurance Co., and Radian Guaranty.

Regardless, Fannie has instructed its mortgage servicers to make sure a short sale does not conflict with any existing mortgage insurance coverage before approving it. 

Mortgage rates once again inched lower this week, lowering the cost of borrowing and increasing housing affordability. 

"Most mortgage rates eased to all-time record lows this week as fourth quarter growth in the economy fell short of market projections,” Frank Nothaft, Freddie Mac’s chief economist, said in a statement.

Here’s a closer look at rates for the week ending Feb. 2: 

• 30-year fixed-rate mortgages: averaged a new record low of 3.87 percent, with an average 0.8 point, dropping from last week’s 3.98 percent average. A year ago at this time, 30-year rates averaged 4.81 percent. 
• 15-year fixed-rate mortgages: also reached new lows this week, averaging 3.14 percent, with an average 0.8 point. Last week, 15-year rates averaged 3.24 percent and a year ago at this time 15-year rates averaged 4.08 percent. 
• 5-year adjustable-rate mortgages: averaged 2.80 percent, with an average 0.7 point, dropping from last week’s 2.85 percent average. Last year at this time, 5-year ARMs averaged 3.69 percent. 
• 1-year ARMs: averaged 2.76 percent this week, with an average 0.6 point, inching up slightly from last week’s 2.74 percent average. A year ago, 1-year ARMs saveraged 3.26 percent. 

Source: Freddie Mac

Blame it on distressed sales for falling home values, according to CoreLogic’s December Home Price Index. 

Home prices nationwide dropped nearly 5 percent from 2010 to 2011, but if you exclude distressed sales, prices dropped only by 0.9 percent, according to CoreLogic.

Foreclosures continue to hamper neighboring property values. 

"Until distressed sales in the market recede, we will see continued downward pressure on prices," Mark Fleming, chief economist of CoreLogic, told AOL Real Estate.

The states that saw home prices decline by the largest amounts since the housing peak are Nevada, Arizona, Florida, Michigan, and California. All five states have a high rate of foreclosures too. Nevada, which has the highest foreclosure rate in the country for the last several years, saw home values fall 60 percent since the peak. 

The USDA is launching the Single Family Housing Guaranteed Rural Refinance Pilot Program, which is designed to help rural home owners refinance their mortgages in order to reduce monthly payments.

The initiative is for borrowers who have loans made or guaranteed by USDA Rural Development and who have been able to make their payments on time for 12 months in a row.  It will operate in some of the states hardest hit by the housing bust, including Florida, Illinois, Indiana, Michigan, Nevada, and Ohio.

The worst year for home building on record was 2011, but the year ended with a surge in construction spending, as the new-home sector heads into 2012 on a brighter note. 

For the fifth straight month, builders spent more on homes and projects, the Commerce Department reported Wednesday. Construction projects increased 1.5 percent in December to a seasonally adjusted annual rate of $816.4 billion -- the highest level in nearly two years. 

“The gains coincide with other signs that show the troubled housing industry may be improving,” the Associated Press reports. “Builders are more confident after seeing more interest in homes, and single-family home construction rose in the final three months of last year.”

The tightened lending standards are keeping a lot of young professionals on the sidelines in home buying today. That’s where more parents are stepping in. 

More parents are taking on the role as mortgage lenders to help their kids take advantage of low home prices and record-low mortgage rates. In fact, one in three first-time home buyers either received a gift or loan from their families for a home purchase made in 2011, according to National Association of REALTORS®’ research.

But parents who enter into a gift-giver or mortgage lender role need to make sure they follow some tax guidelines. 

For one, the federal government has rules on how much you’re allowed to gift. For 2012, individuals can give up to $13,000 tax free in one year without having to pay gift taxes. Married couples can give up to $26,000 a year. 

Some parents, instead of providing a gift, are acting more as a mortgage lender. They can set up an arrangement where they charge interest on the money they lend, but the interest charged must be based on the IRS’s “applicable federal rate” minimum for various loan maturities. Still, those rates are even far below today’s record-low mortgage rates (anywhere from 0.19 percent or even less for three-year loan terms to 2.63 percent for nine-year loan terms).  

Parents will need to pay income taxes on any interest earned on the loans. Still, the return may be better than what they can get for a low-interest CD or money market fund nowadays. As for the children, they’ll still be able to deduct the interest on their taxes for the mortgage interest deduction if these agreements are formally structured. 

Not all areas were badly hit in the recession, a new study finds. In fact, nearly a quarter of states saw wages, median household incomes, and other earnings grow throughout the downturn, a study by Sentier Research finds. 

The most recession-proof states tend to rely on energy and agriculture for business. On the other hand, states that tended to be the worst off during the recession also mostly had ailing real estate markets, such as Florida, California, and Arizona, where housing prices dove and hampered household incomes. 

From 2005 to 2010, the median annual household income nationwide dropped 3.5 percent to $51,287 from $53,168, the study found. 

But places like Washington, D.C., saw household income increase 8.1 percent during that time period to $60,000. 

Median incomes in 12 of the 50 states also rose. Wyoming’s median income rose 3.6 percent, followed by North Dakota, Alaska, Louisiana, West Virginia, Oklahoma, Texas, Iowa, and Hawaii, which also all gained.

Meanwhile, the state that saw the sharpest declines during that time period was Michigan, in which median household incomes fell 9.5 percent to $47,000. Indiana, Ohio, and Minnesota also were among the states hardest hit.  

Cash buyers are sending home values down much lower than they otherwise would be, suggests a new survey by Campbell Inside Mortgage Finance, which polled more than 2,500 real estate agents nationwide. 

In its December Housing Pulse Tracking Survey, the company found that investors accounted for one out of three real estate transactions last month, and about 74 percent of those purchases by investors were made using all cash. 

“Investors have an over-sized command on the market since their ability to pay cash in the majority of transactions puts undue downward pressure on home prices,” an article at Housing Predictor notes about the study.

Cash buyers can be attractive to home sellers, banks, and mortgage companies, since they do not usually come with contingencies, require extra time to secure financing, and tend to move more quickly to closing. As such, cash buyers tend to make purchases at lower prices than those who may need financing or come with contingencies.