HomeInsurance.com found that homeowners are paying, on average, 19 percent more per year for new homeowners insurance policies than they were at the beginning of the year. Twelve-month home insurance premiums for policies written in December 2011 were $810 nationwide, a $128 increase from January 2011 at $682. HomeInsurance.com’s data represents approximately 15,000 policies sold across the United States with such top-rated carriers as Travelers, Safeco, The Hartford, and ASI/Ark Royal.

Some state premium increases were much higher than the national average. New policies in December 2011 were carrying roughly 29-39 percent higher premiums than those sold a year earlier in Mississippi, Montana and New Mexico.

With the overwhelming increases in 2011, there were some bright spots where policyholders saw lower rates towards the end of 2011 such as Washington D.C., where homeowners were paying about 7 percent less for new policies. Likewise, new policies sold in December 2011 in Vermont, Virginia, West Virginia and California decreased in price as compared to earlier in the year when they were 1 to 3 percent higher.

“Rate fluctuations are normal and can be caused by a variety of factors,” said Carlos Lagomarsino, founder of HomeInsurance.com. “The best thing homeowners can do is to comparison shop and ask their agents to qualify them for all eligible discounts, such as a home-auto package, which can provide substantial savings.”

The HomeInsurance.com RateReport is released quarterly and shows average premiums paid by homeowners across the United States for home and auto insurance.

The uptick in seller confidence recorded by two recent surveys comes as concern is growing that seller withdrawal from the market is creating record low inventories that are limiting buyer choice and curtailing sales in the middle of the spring buying season (see Buyers Walk the Walk.). Last week the National Association of Realtors reported total housing inventory at the end of March declined 1.3 percent to 2.37 million existing homes available for sale, which represents a 6.3-month supply at the current sales pace. Listed inventory is 21.8 percent below a year ago.

In Fannie Mae’s Monthly National Housing Survey released this morning the percentage of respondents who say it is a good time to sell increased from 10 percent for the fourth straight month to 15 percent; not exactly a band wagon but a trend in the right direction.

“This month’s survey shows a continued gradual improvement in consumer sentiment and outlook for home prices,” said Doug Duncan, vice president and chief economist of Fannie Mae. “After flatlining at depressed levels for over a year, a growing share of consumers indicate that it is a good time to sell, suggesting rising optimism for the housing market.”

A second report, conducted April 15-16 by Rasmussen Reports, found that nearly one-in-five (18 percent) of American adults say now is a good time for someone in their area to sell their house, up six points from a month ago. Some 63 percent disagreed.

Changing attitudes among sellers are clearly linked to price expectations. On average, Americans expect home prices to increase 1.3 percent over the next twelve months in the Fannie Mae survey (the highest value yet recorded). Thirty-two percent of respondents expect home prices to increase over the next 12 months, a slight decline from the sharp spike last month. In turn, confidence in the economy’s direction rose to a survey all-time high in April (hitting 37 percent, an increase of 2 percentage points from last month). In the Fannie Mae survey, the percentage of Americans who say it is a good time to buy decreased by 2 percentage points to 71 percent.

Fannie Mae’s February National Housing Survey found that Americans expect home prices to increase by 0.8 percent over the next 12 months, which is down slightly from last month, but 28 percent of respondents expect home prices to increase over the next 12 months, while 15 percent say they expect home prices to decline (down 1 percentage point since last month). Fifty-three percent say prices will stay the same.

The percentage of respondents who say it is a good time to sell rose by 3 percentage points to 13 percent, the highest level in over a year, while the percentage of respondents who say it is a good time to buy dropped 1 percentage point to 70 percent this month. Sixty-five percent of respondents say they would buy their next home if they were going to move, up 1 percentage point since last month, while 29 percent say they would rent, down 1 percentage point versus last month.

On average, respondents expect home rental prices to increase by 3.5 percent over the next 12 months, a slight increase since January.

Forty-five percent of respondents think that home rental prices will go up, a 2 percentage point increase from last month, while 3 percent expect them to go down, a 2 percentage point decrease from last month and the lowest value in over a year.

Americans’ concerns about key economic and housing issues are beginning to subside, according to results from. Consumers’ attitudes have stabilized across most indicators - including personal finances, housing, and employment - demonstrating their sense that downside risks have abated somewhat compared to late summer and fall of 2011. While Americans’ confidence in the direction of the economy has been the most pronounced (35 percent think that the economy is on the right track, up 19 percentage points since November, and 57 percent think the economy is on the wrong track, down 18 percentage points since November), their confidence about personal financial situations, household income, and household expenses, as well as attitudes about homeownership and renting is holding at steady levels. At the same time, Americans’ concern about losing their job in the next 12 months has stabilized since the late fall, with 76 percent of Americans saying they are not concerned in February 2012, compared to 70 percent in November 2011.

“The pickup in the pace of hiring over the past few months has helped soothe consumer concerns, lifting their moods regarding their personal finances, the direction of the economy, and their views on the housing market,” said Doug Duncan, vice president and chief economist of Fannie Mae. “As a result, we’ve seen more potential for economic upside, creating a more balanced near-term outlook.”

An even brighter picture was painted by the fourth annual Cotton Report from Cotton & Company, a Stuart, FL real estate marketing company.

The Cotton Report found that 46 percent of respondents and 53 percent of those with household incomes over $100,000 believe we have reached the bottom of the market. Fifty-four percent of prospective buyers are considering primary residences as opposed to vacation homes or investment properties, an increase from 38 percent a year ago.

“For those who have been waiting to make their move, trying to time the bottom of the market, they may have already missed it,” said Stephann Cotton, President and Founder of Cotton & Company. “2011 saw rapid absorption of distressed inventory in major markets like Miami and San Diego. The Cotton Report’s market data supports this growing perception, with a steady reduction in the number of investors actively in the market and fewer buyers expecting for further price reductions.”

In an interview yesterday with Real Estate Economy Watch, EquityLock Solutions’ President Ted Rusinoff said that by year’s end he hopes to reach 10,000 customers under contract for the innovative product, which is not an insurance policy but a contract. After launching in April 2011,

Rusinoff said the greatest problem limiting demand is loss of confidence in housing, especially with first-time buyers. “We’re back to 2000 prices today. We’ve lost 12 years of equity growth.”

He said attitudes have changed greatly since 2006. “Just as the Great Depression changed the way people thought about the economy, the downturn in housing has changed the way people think about volatility in housing. Who’s to say we won’t see price declines again?” he said.

As a result, EquityLock Solutions (www.equitylocksolutions.com) has been marketing its product in non-traditional ways. It has partnered with leading brokerages and franchisers and like RE/MAX, Keller Williams, Real Living and Coldwell Banker to provider their buyers with a degree of equity protection in this market. EquityLock has also teamed up with builders like Pardee Homes and even banks, who want to protect themselves from lost value on their REO inventories.

However, sellers as well as buyers who promise take out EquityLock contracts for potential buyers are finding home price protection to be a draw. “I’ve heard stories of how homeowners who offer home price protection were able to generate traffic almost immediately and sell their home,” he said.

EquityLock’s Home Price Protection provides financial protection to homeowners in the event their local market index value as determined by a decline in the FHFA Home Price Index at the time they sell their home, regardless of the price the home is sold for. It is not insurance but a financial agreement to pay the homeowner upon resale should their House Price Index drops.

“When the stock market falls, you can redesign your 401K to reduce your risk. You can’t do that with a home. We’ve learned that real estate markets change and home values don’t always appreciate,” Rusinoff said.

“The day is coming that home price protection will be a part of every closing. Not so long ago, lenders discovered that title insurance would protect their interests and it became standard. Home price protection also protects the interests of buyers and lenders from a different risk, the risk of equity loss,” he said.

Fannie Mae’s December National Housing Survey found that Americans expect home prices to turn the corner and rise by an average of 0.8 percent this year, up from an expected 0.2 percent increase last month.   Such an increase, though modest, would be the first positive annual price increase since 2006.

However, Fannie’s in-house experts disagree.  They forecast that the Federal Home Finance Administration Index will fall an additional .08 percent in 2012 after falling 4.1 percent this year.

The new survey was only incrementally more positive than in the past.  Americans who say the economy is on the right track in the December survey rose by 6 percentage points over November, while the percentage who say the economy is on the wrong track dropped by 6 percentage points. On the personal finance side, for the first time since February 2011 more respondents say their financial situation will get better over the next year than say it will stay the same. In turn, the share of consumers who say their income is significantly higher than it was a year ago rose 5 percentage points since last month.

“December attitudes have rebounded from the lows seen during the debt ceiling debate and economic deterioration of Europe this past summer. There is marked improvement in consumer sentiment regarding the direction of the economy, personal finances, and future home price expectations,” said Doug Duncan, vice president and chief economist of Fannie Mae. “This improvement is in line with the modest fourth-quarter pickup in the U.S. economy. However, while December results show that more Americans think the economy is on the right track, consumer attitudes are still at depressed levels, with more than two-thirds saying that the economy is on the wrong track.”

Other key findings:

• Twenty-six percent of respondents expect home prices to increase over the next 12 months (up 4 percentage points since last month), while 18% say they expect home prices to decline (down 4 percentage points since last month). 52% say prices will stay the same.
• •Thirty-six percent of Americans say that mortgage rates will go up over the next 12 months, up 3 percentage points from November and even with October.
• Seventy-one percent of respondents say it is a good time to buy a home (up 3 percentage points since last month), and 11% percent say it is a good time to sell.
• •On average, Americans expect home rental prices to increase by 3.5 percent over the next 12 months, up from 3.2 percent in November.
• •Five percent expect a decline in home rental prices over the next 12 months (tying May 2011 as the lowest point in the past 12 months), while 43 percent of respondents believe that home rental prices will increase.
• Thirty-one percent of Americans say they would rent their next home, while 64 percent say they would buy, up 1 percentage point from last month.

Most homeowners are confident they know what their home is worth, and a greater number than ever, some 29 percent, believe that they have lost value since their bought it.

An earlier Rasmussen national telephone survey conducted in early November found that just 12 percent of U.S. homeowners now expect the value of their home to go up in 2012.

The latest Rasmussen Reports national telephone survey also found that homeowners are growing increasingly pessimistic about their home equity position. Tue survey found that just 44 percent of homeowners believe their home is worth more than the amount they still owe on their mortgage, a decrease from 50 percent of owners in April who believed their home is worth more than the mortgage.

The survey of 690 U.S. Homeowners was conducted on December 19-20, 2011 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence.

That’s the bottom line from a new study of housing markets from the Research Institute for Housing America (RIHA) and the Mortgage Bankers Association by Professor Gary V. Engelhardt of Syracuse University.

Engelhardt’s thesis may explain the dramatic decline in inventories across housing markets this summer and fall as sellers have kept their homes off the market. According to the latest data from Realtor.com, listings on the nation’s largest homes for sale site were down 21.3 percent in November from a year ago.

Over the next five quarters, positive home-buying sentiment is forecast to remain around current and long-run average levels. But buyers aren’t the problem, according to Engelhardt, it’s sellers. Home-selling sentiment is forecast to remain around current and historic-low levels.

Sellers want to price their homes based on key past market values, such as the purchase price of the property, the market value at the time or the most recent refinance or second mortgage or what a comparable property sold for in the recent past.

Underwater homeowners cannot adjust their reservation prices downward much below that of the outstanding mortgage amount. Currently, about 23 percent of all homeowners with mortgages nationally are underwater. In some particularly hard-hit markets, as many as half of all homeowners with mortgages are underwater. Those are the same places with the highest incidence of past due mortgages and foreclosures.

With large declines in market values, sellers see increased value in waiting, either to initially list, or to keep, the property on the market. This may help to hold reservation prices high enough to drive a substantial wedge between buyer and seller sentiment. A poor job market with limited job mobility - a key driver of housing-market transactions - may exacerbate this.

Over time, buyer and seller sentiment will come more in line and there will be more transactions but prices will not rise as fast as volume for two reasons. First, time on the market for existing listings will fall. Second, any upward price pressure will bring forth new listings, as observed prices will begin to cross the reservation prices of sellers who have kept homes off the market. Overall, there is little reason to believe there will be substantive increases in home prices in the near term, at least until reservation and observed prices become better aligned, Englehardt said.

Things won’t get better until the negative equity picture improves. “Over the past two decades, purchase originations have tracked more selling sentiment more strongly than home-buying sentiment. This is especially the case in the current downturn. This suggests that favorable sentiment and real activity in the market will be weighed down significantly until the overhang of troubled mortgages is cleared out. Although there has been some recent progress on this, there is still a long way to go,” concluded the Syracuse economist.

The latest Rasmussen Reports national telephone survey, conducted November 27-28, found that 71 percent of American adults now believe it will take at least three years for housing prices to recover. That figure includes 20 percent who think it will take three years and 51 percent who expect it will take even longer.

In October, Rasmussen reported that homeowners were slightly less pessimistic about the short-term and long-term value of their homes than they had been in recent months but were still less confident than they were two years ago. The October 18 Rasmussen Reports national telephone survey of U.S. homeowners found that just 16 percent believe their home’s value will go up over the next year. That’s up slightly from 13 percent in September and August and is the highest level of confidence since June. Still, this finding was above 20 percent for much of 2009.

The latest Fannie Mae consumer survey also found that consumer expectations for a near term housing recovery continue be bleak. Just 19 percent of respondents expect home prices to increase over the next 12 months , while 23 percent say they expect home prices to decline (down by 2 percentage points since last month). Fifty-five percent say prices will stay the same, tying the all-time high number set last month.

Compared to consumers, experts are even more pessimistic. The most recent MacroMarkets home price expectations survey of 111 housing economists and experts found that experts believe home prices will grow at a mere 1.1 percent nominal average annual rate through 2015, far from what is needed to regain the value lost since prices peaked in 2006 or even to return to the pre-boom annual growth rate of 3.6 percent.

The increased consumer pessimism over housing comes as consumer sentiment about the economy as a whole is improving. Consumer sentiment rebounded in November from a 2-1/2-year low last month and U.S. retailers reported strong sales as the holiday shopping season got off to a positive start last week.

The Conference Board’s index of consumer attitudes jumped to 56.0 in November from 40.9 in October, hitting the highest level since July and handily topping economists’ forecasts for 44.0. However, the confidence index remains historically low and is well below its most recent high of 72.0 in February.

Nearly one-third of those younger than 30 say their overall situation is better today than it was last year and 25 feel more secure about their jobs than they did in November 2010.

By comparison, older Americans remain glum. Only 1 in 10 Americans age 30 to 64 feel more secure in their jobs now than they did a year ago. Three times as many feel less secure. Only 17 percent of those approaching retirement (age 50-64) feel better about their overall financial situation than a year ago.

Workers with less education and lower paying jobs feel less secure. Roughly a quarter of college grads feel less secure today than a year ago, but 34 percent with a high school education or less fell less secure. Among low earners (less than $30,000), only 19 percent feel better off, while 38 percent feel their overall finances are worse. Nearly half of those earning less than $50,000 say they’ll spend less on the holidays, versus about 30 percent of those earning more.

“Recent years have been hard, and that’s a tough feeling for some people to shake. Almost half of the people surveyed said their situation is about the same today as a year ago. Of the rest, more think their situation (is) worse than better. None of this surprises me because our national mood tilts toward pessimism right now. But I’m reminded of the old saying that it seems darkest right before the dawn. Recent years have been hard, and that’s a tough feeling for some people to shake. Chances are good that those people will still feel bad even as their financial situation slowly improves. Even in the best of economic times, improvement comes in small increments. There aren’t a lot of “Hallelujah!” days in personal finance, commented Dan Danford, CFP, principal at Family Investment Center in St. Joseph, Mo.

Though the initial product offering is limited to one state, if it’s successful the Home Value Protection Insurance Company hopes to offer it nationwide.  It could transform the way homes are bought and sold in America by reducing the risk of lost value that has scared so many buyers away from the closing table.

Price pessimism is a major reason buyers are postponing their purchase plans, according to recent consumer surveys by Fannie Mae and Move, Inc.  Forecasts like yesterday 2012 outlook from Fiserv, which predicts values will fall another 3.6 percent before stabilizing in mid-2012, fuel their fears.

Would home value protection insurance help calm buyers’ fears?  “Absolutely,” said John Sheehan, an associate broker with Llewellyn Realtors in Maryland.  “People are always looking for a guarantee. They don’t want to look like a jerk if prices go down after they buy.”  Sheehan said virtually all his buyers would be interested in the product and for 15 to 20 percent it might make the difference in deciding to buy now rather than wait.

Here’s how the policy works. The insured home must sell for less than its protected value and also local home values must have declined during the policy period. If both have fallen, the homeowner ca n file a claim for the lesser of the two amounts: the drop in local home values as measured by the Fiserv/Case-Shiller Single Family Home Price Index or the difference in the sales price and the insured value.  Claims are limited to a maximum of 25 percent of the insured value.

Claims on homes sold within two years after the policy purchase are subject to a deductible.  For the first 12 months after the initial policy purchase, the deductible is 10 percent of the insured value. For months 13-24 after the initial policy purchase, the deductible is 5 percent of the insured value. There is no deductible after the first two years of continuous coverage.

Typical monthly premiums are estimated in the $35 to $45 range.   ’To reassure policyholders, our policy limits any increase to no more than 5 percent. We don’t set a limit on decreases. Our goal is to keep coverage affordable, and to that end, we don’t foresee making frequent changes to premiums, said Teri Felix, executive vice president of marketing at Home Value Protection Insurance.

“I don’t think buyers would balk at the price,” says Sheehan.  “It’s less than the cost of PMI or an HOA.”

“Ten years ago people didn’t believe they needed coverage on the valuation of their real estate. Before 2007, prices had never fallen on a year-over-year basis.  Today owners want to protect themselves against future losses,” said Ms. Felix.

Felix reports that initial reception in the Ohio market, which has suffered greatly from falling values and foreclosures over the past four years, has been good.   The company is building a network of more than 300 independent agents across the state and it is supporting the new product with an advertising campaign targeting homeowners and home buyers.