In the wake of a slowing real estate market, the Federal Reserve said Wednesday that the economy is “proceeding” and pledged to hold interest rates at record low, near zero rates.
One piece of good news, released simultaneously with the Fed’s report, was a survey of CEOs of large U.S. companies, 39 percent of whom said they expect to increase the number of people on their payrolls in the second half of 2010.
Advise for Home Buyers
You may be asking yourself, "Is now a good time to buy?" It's a very important question. As a buyer, you're concerned with getting the best deal possible. Will you be buying at the top of the market? Or will you purchase when the market is in favor of you, the buyer?
According to the National Association of Home Builders (NAHB) and their Home Builders/Wells Fargo Housing Opportunity Index (HOI), affordability is high for the 5th consecutive quarter.
How is affordability calculated? In general terms, if housing costs don't exceed 30 percent of the monthly household income, then it meets the standards. Anything more than 35 percent is too high.
"Today’s report is very encouraging because it indicates that homeownership continues its more than year-long trend of remaining within reach of more households than it has for almost two decades," said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. "With interest rates still hovering at low levels, companies starting to hire new employees and the economy beginning to rebound, this should encourage more home buyers to enter the market and help further stabilize housing and the economy."
The HOI indicates that 72.2 percent of all new and existing homes sold in the first quarter of this year were affordable to families earning the national median income of $63,800.
Some of the best markets for affordability is:
Syracuse, New York
Dayton, Ohio
Grand Rapids-Wyoming, Michigan
Indianapolis, Indiana
Youngstown, Ohio, and
Bay City, Michigan
Of course, affordability, like most aspects of the housing market, is a local issue. The local economy has a direct effect on home prices, market favor (buyers or sellers), and the like.
Take for example, New York-White Plains-Wayne, New York-New Jersey. The NAHB says this region continued to lead the nation in poor affordability. Less than 21 percent of all homes sold in the 1st quarter 2010 were affordable.
Other markets where affordability is low:
San Francisco, California
Honolulu, Hawaii
Santa Ana-Anaheim-Irvine, California, and
Los Angeles-Long Beach-Redwood City, California
According to the National Association of Home Builders (NAHB) and their Home Builders/Wells Fargo Housing Opportunity Index (HOI), affordability is high for the 5th consecutive quarter.
How is affordability calculated? In general terms, if housing costs don't exceed 30 percent of the monthly household income, then it meets the standards. Anything more than 35 percent is too high.
"Today’s report is very encouraging because it indicates that homeownership continues its more than year-long trend of remaining within reach of more households than it has for almost two decades," said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. "With interest rates still hovering at low levels, companies starting to hire new employees and the economy beginning to rebound, this should encourage more home buyers to enter the market and help further stabilize housing and the economy."
The HOI indicates that 72.2 percent of all new and existing homes sold in the first quarter of this year were affordable to families earning the national median income of $63,800.
Some of the best markets for affordability is:
Syracuse, New York
Dayton, Ohio
Grand Rapids-Wyoming, Michigan
Indianapolis, Indiana
Youngstown, Ohio, and
Bay City, Michigan
Of course, affordability, like most aspects of the housing market, is a local issue. The local economy has a direct effect on home prices, market favor (buyers or sellers), and the like.
Take for example, New York-White Plains-Wayne, New York-New Jersey. The NAHB says this region continued to lead the nation in poor affordability. Less than 21 percent of all homes sold in the 1st quarter 2010 were affordable.
Other markets where affordability is low:
San Francisco, California
Honolulu, Hawaii
Santa Ana-Anaheim-Irvine, California, and
Los Angeles-Long Beach-Redwood City, California
Where is Real Estate Headed?
Many have watched the real estate market with bated breath, wondering what lies ahead. The Norris Group, a California-based company that produces an annual report on the state of real estate and predictions, provides some insight. The company recently released the Tip of the Iceberg report by Bruce Norris, an active investor, hard money lender, and real estate educator with 29 years of experience. While the report focuses on California, there are many other national predictions included. Here's a look at what Norris is predicting in the coming eight years.
"Real estate isn't even the first domino. Everything that happens in real estate can happen because of other things," Norris said at a conference earlier this year. In this report, I'm looking at all those other things and finally seeing that they play a big part, if not the biggest part, in how things work out," said Norris.
The report shows the various government programs for delinquent and financially challenged homeowners and reveals a disturbing fact. "All the delinquency trends for all the types of loans are up," said Norris. "It doesn't matter if it's prime or subprime." "The national average is 13.2 percent for total non-current (both delinquencies and foreclosures). California ranks at 15 percent, Illinois at 14 percent, Pennsylvania at 10.7 percent, and Florida, the highest, at 23.5 percent. "My friend Alex lives in Florida in Orlando and houses that were selling for $180,000 to $220,000, he's regularly buying for $20,000 to $22,000," said Norris.
The national average for the total non-current FHA loans (including delinquencies and foreclosures) is 17.4 percent. California is at 9.7 percent, Illinois at 21.3 percent, Pennsylvania at 15.3 percent, and Florida is at 23.8 percent.
Norris thinks this will provoke more usage of the 203(k) Mortgage by HUD (U.S. Department of Housing and Urban Development). The "Streamline (K)" Limited Repair Program permits homebuyers to finance an additional $35,000 into their mortgage to improve or upgrade their home before move-in. "They'll actually loan you more than the house is worth, intentionally," said Norris. "Right now it's only available for owner-occupants but I'm sure that's about to change," he said.
"All of us who thought that we were going to see REOs (real estate owned by lending institutions) all over the place for the last few years are quite surprised," he said. "It's because there was intervention." But how will that intervention and the aging population impact us? The report states that having a Federal debt that is trillions of dollars (and growing) and the size of the baby boomer generation will cause big changes that affect finances and real estate. "You're going to expect higher taxes," he said. Norris predicts, maybe even up to 45 percent for top tax bracket in 2011 and possibly higher after that. "If we're going to try to resolve some of our problems and pay for stuff that's gone on in the past, I think you're going to have to say 'We're going to have to pay some higher taxes.'" Norris also predicts higher unemployment, aging consumers buying less and saving more which he says will mean more burden on the government due to fewer tax revenues and greater expense for government.
Perhaps the good news is the prediction for consistently low interest rates. "This is one of the conclusions that I didn't think I was going to come up with. I really thought that we'd probably have some scary interest rates but I just don't think so. Without an overheated economy, I don't see the big inflation risk for the next period of time. I see the big picture that it could be very scary but for the length of time that I'm trying to cover in this report, I'm not as afraid of it as I thought I'd be," said Norris.
He thinks over the next eight years, interest rates will be under 8 percent "and you may have times where they are as cheap as they are now." Norris anticipates milder price increases in real estate as well as a decline in ownership coupled with a constant inventory available. The report also points out something that buyers are already facing, "regulation of finance markets might make it harder to get finance." He predicts the median price to increase for California to approximately $460,000 in the beginning of 2018 due to factors such as migration. And if the employment conditions improve in the state, Norris thinks migration numbers will do even better, helped in part due to retirees moving into the state. Norris expects more emphasis on housing for seniors, which seems to be a trend in many states.
"I view the next eight years as a pivotal time for us, as a country, to make sure that we don't end with bigger problems than we've got," said Norris.
The good news is that Norris predicts less volatility in the real estate market and expects increases, albeit, not as drastic as in the past.
"Real estate isn't even the first domino. Everything that happens in real estate can happen because of other things," Norris said at a conference earlier this year. In this report, I'm looking at all those other things and finally seeing that they play a big part, if not the biggest part, in how things work out," said Norris.
The report shows the various government programs for delinquent and financially challenged homeowners and reveals a disturbing fact. "All the delinquency trends for all the types of loans are up," said Norris. "It doesn't matter if it's prime or subprime." "The national average is 13.2 percent for total non-current (both delinquencies and foreclosures). California ranks at 15 percent, Illinois at 14 percent, Pennsylvania at 10.7 percent, and Florida, the highest, at 23.5 percent. "My friend Alex lives in Florida in Orlando and houses that were selling for $180,000 to $220,000, he's regularly buying for $20,000 to $22,000," said Norris.
The national average for the total non-current FHA loans (including delinquencies and foreclosures) is 17.4 percent. California is at 9.7 percent, Illinois at 21.3 percent, Pennsylvania at 15.3 percent, and Florida is at 23.8 percent.
Norris thinks this will provoke more usage of the 203(k) Mortgage by HUD (U.S. Department of Housing and Urban Development). The "Streamline (K)" Limited Repair Program permits homebuyers to finance an additional $35,000 into their mortgage to improve or upgrade their home before move-in. "They'll actually loan you more than the house is worth, intentionally," said Norris. "Right now it's only available for owner-occupants but I'm sure that's about to change," he said.
"All of us who thought that we were going to see REOs (real estate owned by lending institutions) all over the place for the last few years are quite surprised," he said. "It's because there was intervention." But how will that intervention and the aging population impact us? The report states that having a Federal debt that is trillions of dollars (and growing) and the size of the baby boomer generation will cause big changes that affect finances and real estate. "You're going to expect higher taxes," he said. Norris predicts, maybe even up to 45 percent for top tax bracket in 2011 and possibly higher after that. "If we're going to try to resolve some of our problems and pay for stuff that's gone on in the past, I think you're going to have to say 'We're going to have to pay some higher taxes.'" Norris also predicts higher unemployment, aging consumers buying less and saving more which he says will mean more burden on the government due to fewer tax revenues and greater expense for government.
Perhaps the good news is the prediction for consistently low interest rates. "This is one of the conclusions that I didn't think I was going to come up with. I really thought that we'd probably have some scary interest rates but I just don't think so. Without an overheated economy, I don't see the big inflation risk for the next period of time. I see the big picture that it could be very scary but for the length of time that I'm trying to cover in this report, I'm not as afraid of it as I thought I'd be," said Norris.
He thinks over the next eight years, interest rates will be under 8 percent "and you may have times where they are as cheap as they are now." Norris anticipates milder price increases in real estate as well as a decline in ownership coupled with a constant inventory available. The report also points out something that buyers are already facing, "regulation of finance markets might make it harder to get finance." He predicts the median price to increase for California to approximately $460,000 in the beginning of 2018 due to factors such as migration. And if the employment conditions improve in the state, Norris thinks migration numbers will do even better, helped in part due to retirees moving into the state. Norris expects more emphasis on housing for seniors, which seems to be a trend in many states.
"I view the next eight years as a pivotal time for us, as a country, to make sure that we don't end with bigger problems than we've got," said Norris.
The good news is that Norris predicts less volatility in the real estate market and expects increases, albeit, not as drastic as in the past.
Tips for a Successful Garage Sale
Tips for a Successful Garage Sale
Whether you are jump-starting a move, decluttering for a showing, or looking to make some extra cash, a garage sale can be a great way for a homeowner to declutter. Here are some helpful tips to make your next garage sale a success.
1. Plan Ahead: Some cities require that you have a permit or a license to hold a garage sale. These may be free, or they may cost a small fee. After you've gotten a permit, be sure to give yourself plenty of time to organize in preparation for the event. It can take more time than you'd expect to select items, price them, and then move them to your sale area.
2. Group Effort: Ask neighbors in your community if they'd be interested in having a sale the same day! This can be quit a draw to the garage sale crowd. Can't get the neighbors interested? Ask if any friends or family want to bring items over to have a combined sale. Simply use different colored price stickers to keep the profits separate. A block or "multi-family" sale is a great way to draw a crowd.
3. Advertise: There are a ton of great, and free, places to advertise your sale. Most of these are online. Be sure to mention in your add the following items: the neighborhood or area of town you are located in, especially if in a big city; your address; the date and run time; some of the items you are offering (appliances, women's clothing, baby items, etc.) The day of the sale be sure your home is easy to find. Use signs and balloons to direct traffic off of main roadways.
4. Price Items: When you price items, keep in mind that you are marketing to a customer that wants a deal. Be realistic about what an item is worth. Pricing items ahead of time can speed up the buying process.
5. Set Up Shop: Arrange items by type. Put furniture together, glassware on a table, and have clothes hanging. Also provide access to an electrical outlet for customers who want to turn on appliances and electronics to verify their condition.
6. Plenty of Change: Visit the bank the day before the sale to have lots of change. There will be buyers who use twenties, and will use of lots of your smaller bills. Stock up on ones, fives, tens, and lots of small change.
7. Take Care: If you have extra newspapers and plastic bags on hand, then keep them by your cash desk during the sale. Use the newspaper to wrap breakables. And use the plastic bags to help customer get small items conveniently to their car.
8. Eagle Eye. Be sure to keep an eye on your cash box! Never leave the box unattended.
9. Salvation Army: There will be items that don't sell. To expediate your clutter cleanse, look up local donation centers ahead of time to find out about donation pickup and drop-offs.
10. Free box: For items that need cleansed, but you aren't worry about making any money on, consider setting up a free box. You'll be surprised what other people will consider "treasure"!
11. Emily Post Touches: If morning weather is chilly, consider having small cups of coffee for sale. In summertime, have the kids set up a cookie and lemonade stand!
12. Have fun. A garage sale can be a stressful event, but if you stay committed to making it a positive and fun experience, it will be just that.
Good luck with your sale!
Lenders Warn Foreclosure May End in Lawsuit
The housing crisis will spark a wave of lawsuits filed by lenders seeking to recoup loses on home sales and foreclosure auctions that do not return enough money to pay the mortgages in full, according to real estate and legal experts.
Experts predict that mortgage companies will begin to sue home owners in the next two years, including borrowers who ransack a house that has been lost to foreclosure and those who walk away from "underwater mortgages," with hopes of discouraging others from such behavior.
Lenders are unlikely to target borrowers who negotiate in good faith or have defaulted on their home due to job loss or other unforeseen circumstances; other borrowers could be hounded by collection agencies that have purchased their mortgage debt from their lender.
Source: RISMedia (06/08/10)
Experts predict that mortgage companies will begin to sue home owners in the next two years, including borrowers who ransack a house that has been lost to foreclosure and those who walk away from "underwater mortgages," with hopes of discouraging others from such behavior.
Lenders are unlikely to target borrowers who negotiate in good faith or have defaulted on their home due to job loss or other unforeseen circumstances; other borrowers could be hounded by collection agencies that have purchased their mortgage debt from their lender.
Source: RISMedia (06/08/10)
Builders Report Improving Spring Sales
Home builders are seeing their sales improve after the slowdown that followed the end of the home buyer tax credits.
JMP Securities analyst James Wilson says sales activities in California, Texas, and Arizona are approaching pre-April numbers in many markets. In some markets, builders are able to continue to raise prices and homes are selling at the strongest pace since before spring 2009, he says.
Wilson said he expects home sales to continue to be up and down, but he believes that the market has already hit bottom and is on the upswing.
Source: Associated Press (06/07/2010)
JMP Securities analyst James Wilson says sales activities in California, Texas, and Arizona are approaching pre-April numbers in many markets. In some markets, builders are able to continue to raise prices and homes are selling at the strongest pace since before spring 2009, he says.
Wilson said he expects home sales to continue to be up and down, but he believes that the market has already hit bottom and is on the upswing.
Source: Associated Press (06/07/2010)
Real Estate Outlook: Positive Trends
Positive news on housing and real estate keep rolling in -- thanks in large part to federal home purchase tax credits and continuing near-record low mortgage rates.
Last week's pending home sales report from the National Association of Realtors illustrates the trend: Pending contracts jumped for the third straight month -- up by six percent in April -- and now stand 22 percent higher than the year before.
Every region but one -- the South -- racked up sizable gains in transactions heading for settlement. Contracts in the Northeast were up by nearly 30 percent for the month. In the West, they rose nearly eight percent, and in the Midwest the gain was about four percent.
The South's pending sales were less than one percent off from the previous month, but are still an impressive 31 percent above where they were 12 months before.
Home prices also appear to be moving on an upward curve, according to the latest Clear Capital Home Data Index -- which tracks price movements in thousands of local markets and Zip codes.
Clear Capital's national report for the month of May found prices up by 6.8 percent year over year.
Consumer confidence is definitely powering some of these sales and price numbers, economists say. The Conference Board's index for consumer confidence in May rose by five points -- a good sign for consumers' willingness to spend money.
Lynn Franco, who directs the Conference Board's survey research center, noted that the "expectations" component of the index was particularly strong -- and is now at its highest point in nearly three years.
According to Franco, consumers' previous fears about the job market, incomes and the overall economy have been on the decline for a couple of months now.
Meanwhile, mortgage giant Fannie Mae released its latest economic projections for the rest of the year. Chief economist Doug Duncan says he sees a "self-sustaining economic recovery" gradually taking shape -- again good news for housing.
Of course, not all the latest numbers on real estate are upbeat. They never are. Now a closely watched index tied to likely new home purchase offers two to three months down the road has gone negative. The Mortgage Bankers Association's index of new loan applications declined again for the third straight week, and now is at its lowest point in 14 years.
What's going on here? Most likely its the tax credits. The April 30 deadline for signed contracts for the two tax credit programs -- and the phaseout of the entire credit program June 30 -- are definitely pushing loan applications down.
As we said last week, the credits -- which are part of the federal stimulus efforts -- pushed many purchasers to move up their transactions to the first half of the year. Lawrence Yun, chief economist for the National Association of Realtors, says the underlying strength of the economic recovery should allow sales and loan applications to recover in the second half, without any need for additional federal help.
Last week's pending home sales report from the National Association of Realtors illustrates the trend: Pending contracts jumped for the third straight month -- up by six percent in April -- and now stand 22 percent higher than the year before.
Every region but one -- the South -- racked up sizable gains in transactions heading for settlement. Contracts in the Northeast were up by nearly 30 percent for the month. In the West, they rose nearly eight percent, and in the Midwest the gain was about four percent.
The South's pending sales were less than one percent off from the previous month, but are still an impressive 31 percent above where they were 12 months before.
Home prices also appear to be moving on an upward curve, according to the latest Clear Capital Home Data Index -- which tracks price movements in thousands of local markets and Zip codes.
Clear Capital's national report for the month of May found prices up by 6.8 percent year over year.
Consumer confidence is definitely powering some of these sales and price numbers, economists say. The Conference Board's index for consumer confidence in May rose by five points -- a good sign for consumers' willingness to spend money.
Lynn Franco, who directs the Conference Board's survey research center, noted that the "expectations" component of the index was particularly strong -- and is now at its highest point in nearly three years.
According to Franco, consumers' previous fears about the job market, incomes and the overall economy have been on the decline for a couple of months now.
Meanwhile, mortgage giant Fannie Mae released its latest economic projections for the rest of the year. Chief economist Doug Duncan says he sees a "self-sustaining economic recovery" gradually taking shape -- again good news for housing.
Of course, not all the latest numbers on real estate are upbeat. They never are. Now a closely watched index tied to likely new home purchase offers two to three months down the road has gone negative. The Mortgage Bankers Association's index of new loan applications declined again for the third straight week, and now is at its lowest point in 14 years.
What's going on here? Most likely its the tax credits. The April 30 deadline for signed contracts for the two tax credit programs -- and the phaseout of the entire credit program June 30 -- are definitely pushing loan applications down.
As we said last week, the credits -- which are part of the federal stimulus efforts -- pushed many purchasers to move up their transactions to the first half of the year. Lawrence Yun, chief economist for the National Association of Realtors, says the underlying strength of the economic recovery should allow sales and loan applications to recover in the second half, without any need for additional federal help.
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