A new survey reveals that savvy consumers cashing in on the new and improved homebuyer tax credit are helping fuel economic recovery.
The vast majority of current homeowners say they would spend the expanded version of the homebuyer tax credit on repaying existing debts, home improvements, savings and investments and household expenses, according to a Coldwell Banker survey of 1,000 homeowners.
Paying off debts affords consumers more spending power, home improvements likewise put more equity money in their pockets and savings and investments generate income.
Consumer spending, of course, is the real fuel for the nation's economic engine. And much consumer spending is fueled by the housing market -- provided the housing market is energized.
Helping to energize the housing market and the economy is the idea behind the homebuyer tax credit and it's recent extension and expansion.
By October 2009, before President Obama signed the latest extension and expansion, more than 1.2 million tax returns had claimed about $8.5 billion in the refundable tax credit, for both new and resale homes - according to the Treasury Inspector General for Tax Administration (TIGTA).
The new law extends the existing credit for first-time homebuyers, worth up to $8,000, through April 30, 2010.
A new credit of up to $6,500 is available to qualifying existing homeowners who buy a new primary residence (or have one built) by April 30, 2010, if they owned their existing home for five consecutive years over the last eight years. Second homes don't qualify.
The new rule also raises the qualifying income limits to $125,000 for single taxpayers and $225,000 for joint taxpayers, from the current $75,000 and $150,000.
The maximum allowed home purchase price is $800,000.
More information is available from the Internal Revenue Service (IRS), including its question and answer page.
As a tangible asset with a host of other tax breaks and the potential for equity gain, a home is often a consumer's most valuable asset.
As the economic theory goes, when more consumers buy homes, the economy gets a boost.
Coldwell Banker's survey appears to confirm the theory.
Among those surveyed, 83 percent said if they purchased a home and qualified for the tax credit they would engage in "smart spending" on things that could ultimately increase income available for spending.
Only 6 percent said they would squander the money on luxury items such as vacation or shopping spree.
According to the survey most consumers would spend their tax credit:
• To pay off debts (34 percent). Paying off debts leaves more money to spend or save and invest for returns that again generate spending money.
• To make home improvements and potentially increase the value of their home and home equity (29 percent). Home equity, can be a way to consolidate other, more expensive debt or spend further on capital improvements that generate more returns on the money.
• To put into savings and investments (28 percent). Saving and investing for returns is a much better personal financial approach than using credit for purchases.
Coldwell Banker also found, after learning about the tax credit expansion, 20 percent of those surveyed said they were more likely to consider purchasing a home than they were six months ago.
Of course, what will happen when the tax credit expires in 2010, without another extension, is anyone's guess.
Fed leaves key rate unchanged
The Federal Reserve today announced it will maintain its target for the federal funds rate in the 0 percent to 0.25 percent range, and expects economic conditions to warrant exceptionally low levels of the federal funds rate for an extended period of time. “Information ... suggests that economic activity continues to strengthen and that deterioration in the labor market is abating,” the Fed said in a prepared statement. “Household spending is expanding at a moderate rate, but remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software appears to be picking up, but investment in structures is still contracting and employers remain reluctant to add to payrolls. While bank lending continues to contract, financial market conditions remain supportive of economic growth. Although the pace of economic recovery is likely to be moderate for a time, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability,” the Fed said. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve also said it will purchase a total of $1.25 trillion of agency mortgage-backed securities and nearly $175 billion of agency debt, and will gradually slow the pace of these purchases in order to promote a smooth transition in markets.
Ten Inexpensive Ways to Wow Buyers
Now is the time for home owners contemplating a spring sale to spruce up their properties in anticipation of what Mike Larson of Weiss Research calls a potentially vibrant home-selling season. "If you have been beating your head against a wall, this is going to feel a lot better,” he jokes.
Here are 10 cheap ways to make a property more attractive to shoppers.
1. Improve first impressions. Touch up the paint on the front door and other areas that buyers see first. 2. Clean up the landscaping. Trim the hedges and trees and plant some annuals in the flowerbeds. 3. Paint the interior. A coat of light yellow or cream with contrasting white woodwork looks fresh and clean. 4. Refurbish the floors. Buff the hardwoods. Install new carpets – or at least get them professionally cleaned. 5. Take care of the big problems. If the house needs a roof or the front stoop is crumbling, get them fixed. 6. Buy warranties. Putting appliances under warranty gives homebuyers a secure feeling. 7. Improve energy efficiency. New windows or improved insulation tell a potential buyer the seller is on top of things plus they come with tax benefits. 8. Replace light fixtures. Updated fixtures, especially at the entrance way and in the foyer, create a good first impression. 9. Buy a stove. Home owners whose kitchen isn’t top of the line can jazz it up for a few hundred dollars by buying a new stove, which gives the room a fresh feel. 10. Tidy up the bathrooms. Get rid of mildew, replace caulking and replace stained sinks.
Source: U.S. News & World Report, Luke Mullins (01/21/2010)
Here are 10 cheap ways to make a property more attractive to shoppers.
1. Improve first impressions. Touch up the paint on the front door and other areas that buyers see first. 2. Clean up the landscaping. Trim the hedges and trees and plant some annuals in the flowerbeds. 3. Paint the interior. A coat of light yellow or cream with contrasting white woodwork looks fresh and clean. 4. Refurbish the floors. Buff the hardwoods. Install new carpets – or at least get them professionally cleaned. 5. Take care of the big problems. If the house needs a roof or the front stoop is crumbling, get them fixed. 6. Buy warranties. Putting appliances under warranty gives homebuyers a secure feeling. 7. Improve energy efficiency. New windows or improved insulation tell a potential buyer the seller is on top of things plus they come with tax benefits. 8. Replace light fixtures. Updated fixtures, especially at the entrance way and in the foyer, create a good first impression. 9. Buy a stove. Home owners whose kitchen isn’t top of the line can jazz it up for a few hundred dollars by buying a new stove, which gives the room a fresh feel. 10. Tidy up the bathrooms. Get rid of mildew, replace caulking and replace stained sinks.
Source: U.S. News & World Report, Luke Mullins (01/21/2010)
30-Year Rates Down For Third Consecutive Week
McLean, VA –Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 4.99 percent with an average 0.7 point for the week ending January 21, 2010, down from last week when it averaged 5.06 percent. Last year at this time, the 30-year FRM averaged 5.12 percent.
The 15-year FRM this week averaged 4.40 percent with an average 0.6 point, down from last week when it averaged 4.45 percent. A year ago at this time, the 15-year FRM averaged 4.80 percent. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.27 percent this week, with an average 0.6 point, down from last week when it averaged 4.32 percent. A year ago, the 5-year ARM averaged 5.24 percent.
The 1-year Treasury-indexed ARM averaged 4.32 percent this week with an average 0.6 point, down from last week when it averaged 4.39 percent. At this time last year, the 1-year ARM averaged 4.92 percent.
"Fixed mortgage rates followed bond yields lower for the third consecutive week, pushing 30-year mortgages below 5 percent once more," said Frank Nothaft, Freddie Mac vice president and chief economist. "Similarly, ARM rates eased along with shorter-term rates, as the federal funds futures market indicates no increase in the Federal Reserve's target rate following its upcoming committee meeting on January 26th and 27th.
"Because of reduced sample sizes and work disruptions that occur with severe weather, housing starts tend to be more volatile during winter months. And, indeed, housing starts declined 4.0 percent in December, falling short of the market consensus of no change. Building permits , which are less vulnerable to weather interruptions, unexpectedly jumped 10.9 percent."
The 15-year FRM this week averaged 4.40 percent with an average 0.6 point, down from last week when it averaged 4.45 percent. A year ago at this time, the 15-year FRM averaged 4.80 percent. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.27 percent this week, with an average 0.6 point, down from last week when it averaged 4.32 percent. A year ago, the 5-year ARM averaged 5.24 percent.
The 1-year Treasury-indexed ARM averaged 4.32 percent this week with an average 0.6 point, down from last week when it averaged 4.39 percent. At this time last year, the 1-year ARM averaged 4.92 percent.
"Fixed mortgage rates followed bond yields lower for the third consecutive week, pushing 30-year mortgages below 5 percent once more," said Frank Nothaft, Freddie Mac vice president and chief economist. "Similarly, ARM rates eased along with shorter-term rates, as the federal funds futures market indicates no increase in the Federal Reserve's target rate following its upcoming committee meeting on January 26th and 27th.
"Because of reduced sample sizes and work disruptions that occur with severe weather, housing starts tend to be more volatile during winter months. And, indeed, housing starts declined 4.0 percent in December, falling short of the market consensus of no change. Building permits , which are less vulnerable to weather interruptions, unexpectedly jumped 10.9 percent."
Tax Credit Encourages Buyers to Shop Early
The homebuying season is starting early this year, thanks to the expanded first-time and move-up homebuyer tax credit.
Typically, the busiest time for home shopping starts in March and continues through May, but this year buyers who want to take advantage of the tax credits have to have a signed contract by April 30 and close the deal by June 30.
That is getting people off the couch.
"The tax credit will absolutely have an effect," says Pete Flint, CEO of residential real estate search engine Trulia.com. "It is going to shift demand from the later part of the year to the first part. January and February will be very strong. The next three months, there will be a surge in demand."
Source: USA Today, Stephanie Armour (01/20/2010)
Typically, the busiest time for home shopping starts in March and continues through May, but this year buyers who want to take advantage of the tax credits have to have a signed contract by April 30 and close the deal by June 30.
That is getting people off the couch.
"The tax credit will absolutely have an effect," says Pete Flint, CEO of residential real estate search engine Trulia.com. "It is going to shift demand from the later part of the year to the first part. January and February will be very strong. The next three months, there will be a surge in demand."
Source: USA Today, Stephanie Armour (01/20/2010)
Investors return to Real Estate Market!
Savvy investors are always the first to jump in a potentially profitable housing market and a new survey indicates things are heating up.
More than 12 percent of homebuyers today plan to purchase a home as an investment, compared to less than half, only 5.6 percent, just seven months ago, according to a recent Move.com Homeownership Survey.
Foreclosure buyers account for 25.3 percent of consumers interested in purchasing a home and 42 percent of potential foreclosure buyers regard their purchases as investments, while 57.6 percent plan to live in the foreclosed home themselves.
"This latest Homeownership Survey validates what many had hoped to see in the housing markets -- affordable prices and ample inventories are restoring the appeal of real estate to investors while providing opportunities for first time home buyers to enter the market," said Move, Inc.'s chief revenue officer, Errol Samuelson.
Interest rates below 5 percent for much of the year and low home prices, which may be at or near market bottom, are also bringing investors back to the fold.
The new and improved home-buyer tax credit, no longer just for first time home buyers, can also be a boost for those taking the practical approach to investing by buying their own home first.
Investor intelligence
Devil's in the details of foreclosure deal
Real estate investment basics
Buying foreclosures not for the novice
The survey of 1,004 consumers, conducted from October 16 to 18 this year, found:
• Foreclosure buyers are confident they will profit from discounted purchase prices, as well as healthy appreciation rates over the next five years.
• Most foreclosure buyers, 58.2 percent, expect to pay 20 percent or less than market price for a foreclosure, while 38.5 percent expect a 25 percent or greater discount.
• Expectations are high -- 73 percent expect their properties to appreciate ten percent or more in five years, 28 percent expect their purchases to appreciate 20 percent or more.
Given the current market of flat and falling home prices, that may sound like high hopes, but RealtyTrac.com explains that lenders want to unload overhead-heavy inventories of repossessed and foreclosed home.
That forces lenders to list their homes below market and offer properties at a discount, giving the buyer some built in equity.
• Foreclosure buyers intend to convert their foreclosures into rentals (13.2 percent), fix them up for re-sale (11.3 percent), or house a family member until the home can be sold at a profit (17.4 percent).
In some markets, especially resort and vacation rental markets, where rents are higher, conditions bode well for investors who want to enjoy positive cash flow as they wait for equity to build.
"If you find a well priced property located in a healthy rental market and are able to manage and monitor the property and maintain a positive cash flow from the onset for a unit used strictly for income purposes, rather than being held with the expectation of price appreciation, this could be a good time to become a landlord," said Nancy Osborne, chief operating officer of Erate.com, a Santa Clara, CA-based financial information publisher and interest rate tracker.
More than 12 percent of homebuyers today plan to purchase a home as an investment, compared to less than half, only 5.6 percent, just seven months ago, according to a recent Move.com Homeownership Survey.
Foreclosure buyers account for 25.3 percent of consumers interested in purchasing a home and 42 percent of potential foreclosure buyers regard their purchases as investments, while 57.6 percent plan to live in the foreclosed home themselves.
"This latest Homeownership Survey validates what many had hoped to see in the housing markets -- affordable prices and ample inventories are restoring the appeal of real estate to investors while providing opportunities for first time home buyers to enter the market," said Move, Inc.'s chief revenue officer, Errol Samuelson.
Interest rates below 5 percent for much of the year and low home prices, which may be at or near market bottom, are also bringing investors back to the fold.
The new and improved home-buyer tax credit, no longer just for first time home buyers, can also be a boost for those taking the practical approach to investing by buying their own home first.
Investor intelligence
Devil's in the details of foreclosure deal
Real estate investment basics
Buying foreclosures not for the novice
The survey of 1,004 consumers, conducted from October 16 to 18 this year, found:
• Foreclosure buyers are confident they will profit from discounted purchase prices, as well as healthy appreciation rates over the next five years.
• Most foreclosure buyers, 58.2 percent, expect to pay 20 percent or less than market price for a foreclosure, while 38.5 percent expect a 25 percent or greater discount.
• Expectations are high -- 73 percent expect their properties to appreciate ten percent or more in five years, 28 percent expect their purchases to appreciate 20 percent or more.
Given the current market of flat and falling home prices, that may sound like high hopes, but RealtyTrac.com explains that lenders want to unload overhead-heavy inventories of repossessed and foreclosed home.
That forces lenders to list their homes below market and offer properties at a discount, giving the buyer some built in equity.
• Foreclosure buyers intend to convert their foreclosures into rentals (13.2 percent), fix them up for re-sale (11.3 percent), or house a family member until the home can be sold at a profit (17.4 percent).
In some markets, especially resort and vacation rental markets, where rents are higher, conditions bode well for investors who want to enjoy positive cash flow as they wait for equity to build.
"If you find a well priced property located in a healthy rental market and are able to manage and monitor the property and maintain a positive cash flow from the onset for a unit used strictly for income purposes, rather than being held with the expectation of price appreciation, this could be a good time to become a landlord," said Nancy Osborne, chief operating officer of Erate.com, a Santa Clara, CA-based financial information publisher and interest rate tracker.
Arnold Schwarzenegger recomends another Tax Credit for Home buyers
More than 20,000 California homebuyers could get state tax credits of up to $10,000 this year under a new stimulus proposed Wednesday by Gov. Arnold Schwarzenegger.
The governor's plan to allocate $200 million in credits to buyers of new or existing homes is part of a job creation strategy. It goes now to state lawmakers for consideration.
"This is about helping eliminate extra housing to get construction back on tap," said Victoria Bradshaw, Schwarzenegger's secretary of labor and workforce development, in a call with reporters.
It's unclear how fast legislators might act. But last year, they handily approved $100 million in tax credits for buyers of new, unoccupied homes. The credits, claimed by 10,600 buyers from March through June, proved popular and ran out faster than expected.
Wednesday's announcement in the governor's annual State of the State address won praise from the state's struggling real estate sector.
"Wonderful," said Barbara Harsch, president of the Sacramento Association of Realtors. "Anything that will bring more buyers into the market, that allows more people to buy a home, is good for getting us out of the real estate slump. That eventually will get us out of the economic slump."
Building industry representatives said they wouldn't oppose extending tax credits to existing homes. But Allison Barnett, a lobbyist for the California Building Industry Association, said using credits for new home construction creates more jobs.
Would-be buyers hoped for quick passage.
"This has taken me from being on the fence to really wanting to take action," said Chris Harris, 32, of Roseville. "That can make a huge difference."
The tax credits – which would provide up to $3,333 off state taxes for each of the next three years – could be combined with an $8,000 federal tax credit. That credit for first-time buyers ends April 30.
Schwarzenegger administration officials said conditions of their proposal would be similar to last year's credit. That had no income limits, made all buyers eligible and required that buyers live in their homes. No dates have been set yet for eligibility. Buyers qualified last year by closing escrow after the credits became available on March 1.
The proposal has its critics. Some renters object to subsidizing homebuyers, and some economists think $200 million in a deficit-plagued state is better spent elsewhere.
"Housing isn't all that important of a driver of jobs," said Chris Thornberg, head of Los Angeles-based Beacon Economics. "Somehow, that the state should be spending its money to subsidize people to buy homes is nuts."
Thornberg said there is enough incentive with the federal tax credit and low interest rates.
But building industry officials think otherwise.
"We've been so hard-hit by this recession," said John Orr, president and chief executive of a builder trade group, the North State Building Industry Association in Roseville. "Our area needs jobs, and new home construction means very good jobs for the region."
Home builders counted 3,398 closed escrows in the eight-county Sacramento region during the first 11 months of 2009. That was just 9 percent of all area sales, according to San Diego County researcher MDA DataQuick. In 2005, new homes were 25 percent of sales.
The governor's plan to allocate $200 million in credits to buyers of new or existing homes is part of a job creation strategy. It goes now to state lawmakers for consideration.
"This is about helping eliminate extra housing to get construction back on tap," said Victoria Bradshaw, Schwarzenegger's secretary of labor and workforce development, in a call with reporters.
It's unclear how fast legislators might act. But last year, they handily approved $100 million in tax credits for buyers of new, unoccupied homes. The credits, claimed by 10,600 buyers from March through June, proved popular and ran out faster than expected.
Wednesday's announcement in the governor's annual State of the State address won praise from the state's struggling real estate sector.
"Wonderful," said Barbara Harsch, president of the Sacramento Association of Realtors. "Anything that will bring more buyers into the market, that allows more people to buy a home, is good for getting us out of the real estate slump. That eventually will get us out of the economic slump."
Building industry representatives said they wouldn't oppose extending tax credits to existing homes. But Allison Barnett, a lobbyist for the California Building Industry Association, said using credits for new home construction creates more jobs.
Would-be buyers hoped for quick passage.
"This has taken me from being on the fence to really wanting to take action," said Chris Harris, 32, of Roseville. "That can make a huge difference."
The tax credits – which would provide up to $3,333 off state taxes for each of the next three years – could be combined with an $8,000 federal tax credit. That credit for first-time buyers ends April 30.
Schwarzenegger administration officials said conditions of their proposal would be similar to last year's credit. That had no income limits, made all buyers eligible and required that buyers live in their homes. No dates have been set yet for eligibility. Buyers qualified last year by closing escrow after the credits became available on March 1.
The proposal has its critics. Some renters object to subsidizing homebuyers, and some economists think $200 million in a deficit-plagued state is better spent elsewhere.
"Housing isn't all that important of a driver of jobs," said Chris Thornberg, head of Los Angeles-based Beacon Economics. "Somehow, that the state should be spending its money to subsidize people to buy homes is nuts."
Thornberg said there is enough incentive with the federal tax credit and low interest rates.
But building industry officials think otherwise.
"We've been so hard-hit by this recession," said John Orr, president and chief executive of a builder trade group, the North State Building Industry Association in Roseville. "Our area needs jobs, and new home construction means very good jobs for the region."
Home builders counted 3,398 closed escrows in the eight-county Sacramento region during the first 11 months of 2009. That was just 9 percent of all area sales, according to San Diego County researcher MDA DataQuick. In 2005, new homes were 25 percent of sales.
Treasury Policy Change "Washington Report"
The Obama administration announced a blockbuster policy change over the holidays that didn't get a lot of press attention, but will affect the housing market for years.
The Treasury department said it is now committed to support Fannie Mae and Freddie Mac with as many billions of dollars as is necessary to get them through the next three years. There'll be no limit whatsoever anymore.
Previously the Treasury had limited its support to $200 billion apiece for the two formerly-private, now government-controlled, mortgage finance giants.
From here on, the Treasury said in its policy announcement, there will be no “uncertainty about the (government's) commitment to support the firms as they continue to play a vital role in the housing market during the current crisis.”
Though some critics howled that the Obama administration is writing a blank check, the significance of the move for real estate is potentially huge, for several reasons.
Number one: Fannie and Freddie provide funding for well over half the U.S. mortgage market -- making home sales and purchases possible for hundreds of thousands of consumers.
Number two: The fact that the two companies have an explicit, full faith and credit backstop from the U.S. Treasury means that Fannie and Freddie can borrow in the capital markets at more favorable rates. Those lower costs of capital can then be passed along - at least in part - to home loan borrowers in the form of lower interest rates.
Finally, a key reason for the policy change - which also included permission for the firms to retain larger mortgage-asset portfolios - is to help Fannie and Freddie provide deeper loan modification assistance to greater numbers of seriously troubled borrowers.
Both companies are now expected to reach out and offer loan principal forgiveness to delinquent and underwater home owners - something that the current Obama loan modification program does not permit.
Partly as a result, Obama's “Home Affordable Modification Program,” or “HAMP,” has been only minimally successful in attracting the participation of borrowers in the deepest trouble - especially those so far behind and underwater that they are walking away from their houses, sending back the keys to their lenders - and ultimately losses to Fannie and Freddie.
If the revised policy helps keep larger numbers of home owners out of foreclosure and out of walkaway mode, the impact on local real estate markets and home values could be significant over the coming couple of years.
The Treasury department said it is now committed to support Fannie Mae and Freddie Mac with as many billions of dollars as is necessary to get them through the next three years. There'll be no limit whatsoever anymore.
Previously the Treasury had limited its support to $200 billion apiece for the two formerly-private, now government-controlled, mortgage finance giants.
From here on, the Treasury said in its policy announcement, there will be no “uncertainty about the (government's) commitment to support the firms as they continue to play a vital role in the housing market during the current crisis.”
Though some critics howled that the Obama administration is writing a blank check, the significance of the move for real estate is potentially huge, for several reasons.
Number one: Fannie and Freddie provide funding for well over half the U.S. mortgage market -- making home sales and purchases possible for hundreds of thousands of consumers.
Number two: The fact that the two companies have an explicit, full faith and credit backstop from the U.S. Treasury means that Fannie and Freddie can borrow in the capital markets at more favorable rates. Those lower costs of capital can then be passed along - at least in part - to home loan borrowers in the form of lower interest rates.
Finally, a key reason for the policy change - which also included permission for the firms to retain larger mortgage-asset portfolios - is to help Fannie and Freddie provide deeper loan modification assistance to greater numbers of seriously troubled borrowers.
Both companies are now expected to reach out and offer loan principal forgiveness to delinquent and underwater home owners - something that the current Obama loan modification program does not permit.
Partly as a result, Obama's “Home Affordable Modification Program,” or “HAMP,” has been only minimally successful in attracting the participation of borrowers in the deepest trouble - especially those so far behind and underwater that they are walking away from their houses, sending back the keys to their lenders - and ultimately losses to Fannie and Freddie.
If the revised policy helps keep larger numbers of home owners out of foreclosure and out of walkaway mode, the impact on local real estate markets and home values could be significant over the coming couple of years.
Home Value Loss Now but Increased Pricing Expected in 2010
There’s bad news and good news coming out of the housing market. Forbes Magazine released study results by Local Market Monitor that showed the cities that lost the most value are concentrated in some areas of California, Florida, Nevada, and the Northeast.
These cities were impacted by local and national factors such as increased unemployment and the rising cost of housing which resulted in homebuyers gambling on the odds of whether they could afford long-term housing.
West Coast housing markets fared the worst, losing the most value—21.6 percent since their peak. Florida housing lost 31 percent, the Northeast lost an average of 8.6 percent, and the Midwest lost, on average, 5.6 percent. The top five cities to lose value in the West (most in California): in California--Merced, (-62.11 percent), Stockton (-54.29), Modesto (-52.42), Vallejo-Fairfield (-47.62), and in Nevada—Las Vegas-Paradise (-47.53) In the South, the top five cities to lose the most value are located in Florida: Port St. Lucie (-46.43), Cape Coral-Fort-Myers (-46.38), Naples-Marco Island (-43.63), Bradenton-Sarasota-Venice (-41.52), and Fort Lauderdale-Pompano Beach-Deerfield Beach (-39.93).
In the Northeast, the top five cities to lose value are: Providence-New Bedford, R.I. (-17.30), Worcester, Mass. (-16.17), Atlantic City, N.J. (-16.15), Poughkeepsie-Newburgh, N.Y. (-14.60), and Barnstable Town, Mass. (-14.48).
Moving to the Midwest, the top five cities to lose value are in Michigan: Detroit-Livonia (-30.66), Warren-Troy-Farmington Hills (-27.95), Flint (-27.47), Ann Arbor (-20.37), and Jackson (-17.30). Source: Forbes, Francesca, Levy (12/21/2009).
According to First American CoreLogic’s LoanPerformance Home Price Index, home prices are expected to fall another 4.2 percent in 45 of the largest housing markets before hitting bottom. The Press Release states that, “The declines will be driven primarily by the large levels of foreclosures in these areas. However, improvement in both levels of inventories and unemployment are projected to prevail in the spring of next year, resulting in an average year-over-year appreciation of just under one percent by October of 2010 for these metropolitan markets.
The report also stated that, “In August 2010, the index is projecting that 12-month appreciation for national home prices will be 4.6 percent and that home prices in two of the most depressed markets, California and Florida, will show gains in excess of 7 percent.” Cities that are projected to experience the strongest recovery in 2010 are primarily concentrated in the large urban areas of California: San Francisco (+5.7 percent), Los Angeles (+5 percent), San Diego (+4.7 percent) and Sacramento (+4.6 percent).
The report cautions that a large inventory of homes owned by banks but not yet on the market could affect the increased pricing progress. Mark Fleming, chief economist for First American CoreLogic stated in a December Press Release, "We are continuing to see improvements in the year-over-year home price change as prices have remained relatively stable since April. The additional government support for the housing market has stimulated demand and restricted supply in 2009.” However, Fleming, added, “How these government supports are removed in 2010 and the moderation of pending inventory and negative equity will be critical to the continued stability of the housing market.”
These cities were impacted by local and national factors such as increased unemployment and the rising cost of housing which resulted in homebuyers gambling on the odds of whether they could afford long-term housing.
West Coast housing markets fared the worst, losing the most value—21.6 percent since their peak. Florida housing lost 31 percent, the Northeast lost an average of 8.6 percent, and the Midwest lost, on average, 5.6 percent. The top five cities to lose value in the West (most in California): in California--Merced, (-62.11 percent), Stockton (-54.29), Modesto (-52.42), Vallejo-Fairfield (-47.62), and in Nevada—Las Vegas-Paradise (-47.53) In the South, the top five cities to lose the most value are located in Florida: Port St. Lucie (-46.43), Cape Coral-Fort-Myers (-46.38), Naples-Marco Island (-43.63), Bradenton-Sarasota-Venice (-41.52), and Fort Lauderdale-Pompano Beach-Deerfield Beach (-39.93).
In the Northeast, the top five cities to lose value are: Providence-New Bedford, R.I. (-17.30), Worcester, Mass. (-16.17), Atlantic City, N.J. (-16.15), Poughkeepsie-Newburgh, N.Y. (-14.60), and Barnstable Town, Mass. (-14.48).
Moving to the Midwest, the top five cities to lose value are in Michigan: Detroit-Livonia (-30.66), Warren-Troy-Farmington Hills (-27.95), Flint (-27.47), Ann Arbor (-20.37), and Jackson (-17.30). Source: Forbes, Francesca, Levy (12/21/2009).
According to First American CoreLogic’s LoanPerformance Home Price Index, home prices are expected to fall another 4.2 percent in 45 of the largest housing markets before hitting bottom. The Press Release states that, “The declines will be driven primarily by the large levels of foreclosures in these areas. However, improvement in both levels of inventories and unemployment are projected to prevail in the spring of next year, resulting in an average year-over-year appreciation of just under one percent by October of 2010 for these metropolitan markets.
The report also stated that, “In August 2010, the index is projecting that 12-month appreciation for national home prices will be 4.6 percent and that home prices in two of the most depressed markets, California and Florida, will show gains in excess of 7 percent.” Cities that are projected to experience the strongest recovery in 2010 are primarily concentrated in the large urban areas of California: San Francisco (+5.7 percent), Los Angeles (+5 percent), San Diego (+4.7 percent) and Sacramento (+4.6 percent).
The report cautions that a large inventory of homes owned by banks but not yet on the market could affect the increased pricing progress. Mark Fleming, chief economist for First American CoreLogic stated in a December Press Release, "We are continuing to see improvements in the year-over-year home price change as prices have remained relatively stable since April. The additional government support for the housing market has stimulated demand and restricted supply in 2009.” However, Fleming, added, “How these government supports are removed in 2010 and the moderation of pending inventory and negative equity will be critical to the continued stability of the housing market.”
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