Sales ticked up for existing homes and new homes, several real estate market indicators revealed last week, pointing to a housing market that may finally be entering recovery mode.
In the most recent report, the Census Bureau reported that the new-home market continued its rebound, with sales of new houses once again inching up last month. New-home sales rose 1.6 percent from October to November to an annualized rate of 315,000, and sales were up nearly 10 percent compared to November 2010.
The median sales price of a new home in November was $214,100, the Census Bureau reported, and the inventory of new houses nationwide decreased to a six-month supply at the current sales pace.
"Inventories of new homes are very low: There's nothing on the shelf, so any increase in new home sales will translate directly into new housing starts," Bob Denk, senior economist at the National Association of Home Builders, told CNNMoney. "That means putting people back to work."
Other recent good news for the housing market: November sales of existing homes increased 12 percent year-over-year, new-home building starts were up nearly 21 percent year-over-year, and mortgage rates reached new record lows last week, pushing housing affordability even higher.
Source: “New Home Sales Edge Up,” CNNMoney (Dec. 23, 2011)
Mortgage Rates Reach New Record Lows
Just in time for the holidays: Mortgage rates reached new all-time lows this week, pushing home buyer affordability even higher, Freddie Mac reports in its weekly mortgage market survey.
"Rates on 30-year fixed mortgages have been at or below 4 percent for the last eight weeks and now are almost 0.9 percentage points below where they were at the beginning of the year, which means that today's home buyers are paying over $1,200 less per year on a $200,000 loan,” Frank Nothaft, chief economist at Freddie Mac, said in a statement. “This greater affordability helped push existing home sales higher for the second consecutive month in November to an annualized pace of 4.42 million, the most since January.”
Here’s a closer look at mortgage rates for the week ending Dec. 22:
•30-year fixed-rate mortgages: averaged 3.91 percent this week, with an average 0.7 point, beating last week’s 3.94 percent record. A year ago at this time, 30-year rates averaged 4.81 percent. •15-year fixed-rate mortgages: averaged 3.21 percent, with an average 0.8 point, matching last week’s all-time low. Last year at this time, the 15-year mortgage averaged 4.15 percent.•5-year adjustable-rate mortgages: averaged 2.85 percent this week, with an average 0.6 point, a new record after dropping from last week’s 2.86 percent average. Last year at this time, 5-year ARMs averaged 3.75 percent. •1-year ARMs: averaged 2.77 percent this week, with an average 0.6 point, also a new record after falling from last week’s 2.81 percent average. A year ago at this time, the 1-year ARMs averaged 3.40 percent. Source: Freddie Mac
"Rates on 30-year fixed mortgages have been at or below 4 percent for the last eight weeks and now are almost 0.9 percentage points below where they were at the beginning of the year, which means that today's home buyers are paying over $1,200 less per year on a $200,000 loan,” Frank Nothaft, chief economist at Freddie Mac, said in a statement. “This greater affordability helped push existing home sales higher for the second consecutive month in November to an annualized pace of 4.42 million, the most since January.”
Here’s a closer look at mortgage rates for the week ending Dec. 22:
•30-year fixed-rate mortgages: averaged 3.91 percent this week, with an average 0.7 point, beating last week’s 3.94 percent record. A year ago at this time, 30-year rates averaged 4.81 percent. •15-year fixed-rate mortgages: averaged 3.21 percent, with an average 0.8 point, matching last week’s all-time low. Last year at this time, the 15-year mortgage averaged 4.15 percent.•5-year adjustable-rate mortgages: averaged 2.85 percent this week, with an average 0.6 point, a new record after dropping from last week’s 2.86 percent average. Last year at this time, 5-year ARMs averaged 3.75 percent. •1-year ARMs: averaged 2.77 percent this week, with an average 0.6 point, also a new record after falling from last week’s 2.81 percent average. A year ago at this time, the 1-year ARMs averaged 3.40 percent. Source: Freddie Mac
Are the Holidays a Good Time to Sell?
Sixty percent of real estate professionals advise their sellers to list a home during the holidays because it’s a good time to sell, according to a new survey conducted by Realtor.com.
Why are the holidays such a good time to sell? Seventy-nine percent of the agents surveyed said that more serious buyers come out during the holidays, and 61 percent say less competition from other properties make it a great time to sell. Plus, 17 percent of agents say the cold weather is actually a benefit, making homes feel more cozy.
But online listing photos become even more crucial during the holiday season, according to the survey. Slightly more than half of agents say that the photos are more important because sellers tend to offer less open houses around the holidays, and so the online photos help buyers decide the properties to see and which ones to possibly bypass.
The biggest hurdles sellers face during the holidays, however, are keeping a home ready to show (clean and staged) as well as winter weather conditions and buyers’ vacation schedules, the Realtor.com survey found.
Source: “Survey Data Reveals Majority of Real Estate Professionals Recommend Clients List Their Homes During the Holidays,” Realtor.com (Dec. 2, 2011)
Why are the holidays such a good time to sell? Seventy-nine percent of the agents surveyed said that more serious buyers come out during the holidays, and 61 percent say less competition from other properties make it a great time to sell. Plus, 17 percent of agents say the cold weather is actually a benefit, making homes feel more cozy.
But online listing photos become even more crucial during the holiday season, according to the survey. Slightly more than half of agents say that the photos are more important because sellers tend to offer less open houses around the holidays, and so the online photos help buyers decide the properties to see and which ones to possibly bypass.
The biggest hurdles sellers face during the holidays, however, are keeping a home ready to show (clean and staged) as well as winter weather conditions and buyers’ vacation schedules, the Realtor.com survey found.
Source: “Survey Data Reveals Majority of Real Estate Professionals Recommend Clients List Their Homes During the Holidays,” Realtor.com (Dec. 2, 2011)
Strong Temptations for Home Buying
The monthly cost of owning a home is more affordable now than in the past 15 years, and is less expensive than renting in numerous cities, according to The Wall Street Journal’s third-quarter survey.
Low home prices mixed with low mortgage rates—hovering at 4 percent or even lower—are creating an appealing buyer’s market, analysts say. For example, buyers today have a 77 percent increase in their borrowing power compared to 1991, Dan Green, a loan officer with Waterstone Mortgage in Cincinnati, told The Wall Street Journal. To illustrate: He says that in 1991 a $1,700 mortgage payment allowed a borrower to take out a $200,000 mortgage, whereas today the home owner taking advantage of current low rates can get a $350,000 loan for that mortgage payment amount.
In the 28 cities that The Wall Street Journal tracked, it found monthly mortgage payments on the median-priced home—including taxes and insurance—to be lower than the average rent levels in 12 of the metro areas.
Atlanta was found to be the city where owning was more favorable to renting by the most. For example, the monthly rent on the median-priced home there was $539 during the third quarter (with a 20 percent down payment) compared to the average asking rent which averaged $840, according to data provided by Marcus & Millichap.
Nationwide, apartment rents are expected to rise by about 4 percent this year, which may make the owning vs. renting picture tilt even higher, according to some analysts.
Despite the appealing housing picture for home buyers, some buyers continue to stay on the sidelines, unable to sell their current home, qualify for mortgages due to the tightening of credit, or keep a steady job, housing expert say.
Source: “Stronger Lure for Prospective Home Buyers,” The Wall Street Journal (Nov. 26, 2011)
Low home prices mixed with low mortgage rates—hovering at 4 percent or even lower—are creating an appealing buyer’s market, analysts say. For example, buyers today have a 77 percent increase in their borrowing power compared to 1991, Dan Green, a loan officer with Waterstone Mortgage in Cincinnati, told The Wall Street Journal. To illustrate: He says that in 1991 a $1,700 mortgage payment allowed a borrower to take out a $200,000 mortgage, whereas today the home owner taking advantage of current low rates can get a $350,000 loan for that mortgage payment amount.
In the 28 cities that The Wall Street Journal tracked, it found monthly mortgage payments on the median-priced home—including taxes and insurance—to be lower than the average rent levels in 12 of the metro areas.
Atlanta was found to be the city where owning was more favorable to renting by the most. For example, the monthly rent on the median-priced home there was $539 during the third quarter (with a 20 percent down payment) compared to the average asking rent which averaged $840, according to data provided by Marcus & Millichap.
Nationwide, apartment rents are expected to rise by about 4 percent this year, which may make the owning vs. renting picture tilt even higher, according to some analysts.
Despite the appealing housing picture for home buyers, some buyers continue to stay on the sidelines, unable to sell their current home, qualify for mortgages due to the tightening of credit, or keep a steady job, housing expert say.
Source: “Stronger Lure for Prospective Home Buyers,” The Wall Street Journal (Nov. 26, 2011)
Housing Inventories Shrink to Four-Year Lows
The number of homes listed for sale in October reached its lowest level in more than four years, according to MLS data compiled by Realtor.com.
About 2.12 million homes were listed for sale nationwide last month, which is down by 3.5 percent from September. And at year-over-year levels, that number is down by 21 percent.
Inventories are declining due to banks taking longer to process foreclosures and sellers taking their home off the market after seeing their properties linger or getting low-ball offers from buyers, according to Zelman & Associates.
In October, housing inventories declined the most in:
•Portland, Ore.: -6.9 percent•Seattle: -5.3% •Dallas: -5.2%Source: “Housing Inventories Fall to New Four-Year Low in October,” The Wall Street Journal (Nov. 21, 2011)
About 2.12 million homes were listed for sale nationwide last month, which is down by 3.5 percent from September. And at year-over-year levels, that number is down by 21 percent.
Inventories are declining due to banks taking longer to process foreclosures and sellers taking their home off the market after seeing their properties linger or getting low-ball offers from buyers, according to Zelman & Associates.
In October, housing inventories declined the most in:
•Portland, Ore.: -6.9 percent•Seattle: -5.3% •Dallas: -5.2%Source: “Housing Inventories Fall to New Four-Year Low in October,” The Wall Street Journal (Nov. 21, 2011)
Prop. 60 & 90 Santa Clara County
Are you over 55 and thinking about selling your home and moving into something smaller, but worried about the tax implications when you relocate? If so, you aren’t alone. As the baby boomers find themselves approaching retirement age and becoming empty nesters, their housing needs are changing along with their lifestyles – but inflation and taxes just seem to keep going up, up, up. Fortunately some relief, in the form of Prop 60, is available.
What is Prop 60?
Proposition 60 is a constitutional amendment, approved by California voters, that provides property tax relief under certain circumstances. Essentially, what Prop 60 does is allow qualifying property owners to replace their primary residence with a new home of equal or lesser value and maintain their same tax base. Why, you might wonder, would anyone want to do that? Wouldn’t my property taxes be less on a home of lesser value? Not necessarily. With Prop 60, what is transferred is the Proposition 13 or “base year value” of the old home, which can be substantially less than the current market value of either home.
How can I qualify for Prop 60?
Both the original home and the new home must be located in the same county.
Both the original and replacement properties must be your primary residence.
Both properties must be eligible for the Homeowners’ Exemption or Disabled Veterans’ Exemption.
The seller or spouse residing in the home must be at least 55 years old when the original property is sold.
The replacement home must be of equal or lesser value than the current market value of the original home. There is a little wiggle room within this rule, depending on when the new property is purchased. For the purchase of a home (or completion of new construction) that occurs 1 to 2 years after the sale of the original home, the “equal or lesser” rule can change slightly. If the replacement home is purchased or moved into within one year you can purchase up to 105% of the value of the original home. If within two years you can go up to 110% of the value.
Purchase or completion of construction of the replacement property must be completed within two years of the sale of the original property, or you lose out.
Application for tax relief must be filed within 3 years of the purchase (or completion of construction) of the new home.
This is a once in a lifetime benefit. Neither spouse can file again.
How do I file for Proposition 60 tax relief?
Contact your county assessor’s office. The assessor will determine if the transaction qualifies and provide you with claim forms. Or have the title company handling your sale do it for you, my title company Chicago Title will take care of everything.
I’ve heard something about Proposition 90. What is that?
Proposition 90 is an amendment that permits the property owner to carry the benefits of Prop 60 throughout California. Each county in California has the option to accept tax base transfers from other counties, allowing qualifying homeowners more flexibility when planning a move. Counties are not required to participate, and currently there are only 7 counties in California that accept Prop 90. These counties include Los Angeles, Orange, Ventura, San Diego, Alameda, San Mateo and Santa Clara. This number is subject to change, as counties have the option to repeal their participation.
Prop 60 and Prop 90 are great extensions of Proposition 13, which was the initial break offered to the taxpaying public. If you think either might be something that will work for you, please consult your tax advisor or your county assessor for details.
What is Prop 60?
Proposition 60 is a constitutional amendment, approved by California voters, that provides property tax relief under certain circumstances. Essentially, what Prop 60 does is allow qualifying property owners to replace their primary residence with a new home of equal or lesser value and maintain their same tax base. Why, you might wonder, would anyone want to do that? Wouldn’t my property taxes be less on a home of lesser value? Not necessarily. With Prop 60, what is transferred is the Proposition 13 or “base year value” of the old home, which can be substantially less than the current market value of either home.
How can I qualify for Prop 60?
Both the original home and the new home must be located in the same county.
Both the original and replacement properties must be your primary residence.
Both properties must be eligible for the Homeowners’ Exemption or Disabled Veterans’ Exemption.
The seller or spouse residing in the home must be at least 55 years old when the original property is sold.
The replacement home must be of equal or lesser value than the current market value of the original home. There is a little wiggle room within this rule, depending on when the new property is purchased. For the purchase of a home (or completion of new construction) that occurs 1 to 2 years after the sale of the original home, the “equal or lesser” rule can change slightly. If the replacement home is purchased or moved into within one year you can purchase up to 105% of the value of the original home. If within two years you can go up to 110% of the value.
Purchase or completion of construction of the replacement property must be completed within two years of the sale of the original property, or you lose out.
Application for tax relief must be filed within 3 years of the purchase (or completion of construction) of the new home.
This is a once in a lifetime benefit. Neither spouse can file again.
How do I file for Proposition 60 tax relief?
Contact your county assessor’s office. The assessor will determine if the transaction qualifies and provide you with claim forms. Or have the title company handling your sale do it for you, my title company Chicago Title will take care of everything.
I’ve heard something about Proposition 90. What is that?
Proposition 90 is an amendment that permits the property owner to carry the benefits of Prop 60 throughout California. Each county in California has the option to accept tax base transfers from other counties, allowing qualifying homeowners more flexibility when planning a move. Counties are not required to participate, and currently there are only 7 counties in California that accept Prop 90. These counties include Los Angeles, Orange, Ventura, San Diego, Alameda, San Mateo and Santa Clara. This number is subject to change, as counties have the option to repeal their participation.
Prop 60 and Prop 90 are great extensions of Proposition 13, which was the initial break offered to the taxpaying public. If you think either might be something that will work for you, please consult your tax advisor or your county assessor for details.
Fed Focuses on Lifting Ailing Housing Market
The Federal Reserve on Wednesday issued a new call about the importance of fixing the housing market, which could then have a trickle effect in strengthening the rest of the economy.
The Fed will consider buying more mortgage-backed securities to help, said Ben Bernanke, the Fed chairman. Such a move could send borrowing costs even lower.
"The housing sector is a very important sector," Bernanke said at a news conference. "Problems in that sector are a big reason why our economy's not recovering more quickly." The Fed is holding a two-day policy meeting — which ends Thursday — to weigh options.
Economists believe that if more people were buying homes then it could lead to a boost in consumer purchases for other sectors, from furniture to appliances. They note that the housing market has led the economy out of recessions in the past, since it creates jobs and more spending on goods and services.
The housing market continues to be bogged down by a high rate of foreclosures, which is dropping other home values. About 7.5 million homes are either in foreclosure or delinquent on their mortgage.
Source: “Fed Focus: Housing Could be Key to Stronger U.S. Rebound,” Reuters News (Nov. 3, 2011)
The Fed will consider buying more mortgage-backed securities to help, said Ben Bernanke, the Fed chairman. Such a move could send borrowing costs even lower.
"The housing sector is a very important sector," Bernanke said at a news conference. "Problems in that sector are a big reason why our economy's not recovering more quickly." The Fed is holding a two-day policy meeting — which ends Thursday — to weigh options.
Economists believe that if more people were buying homes then it could lead to a boost in consumer purchases for other sectors, from furniture to appliances. They note that the housing market has led the economy out of recessions in the past, since it creates jobs and more spending on goods and services.
The housing market continues to be bogged down by a high rate of foreclosures, which is dropping other home values. About 7.5 million homes are either in foreclosure or delinquent on their mortgage.
Source: “Fed Focus: Housing Could be Key to Stronger U.S. Rebound,” Reuters News (Nov. 3, 2011)
Steve Jobs and the Seven Rules of Success
1. Do what you love. Jobs once said, "People with passion can change the world for the better." Asked about the advice he would offer would-be entrepreneurs, he said, "I'd get a job as a busboy or something until I figured out what I was really passionate about." That's how much it meant to him. Passion is everything.
2. Put a dent in the universe. Jobs believed in the power of vision. He once asked then-Pepsi President, John Sculley, "Do you want to spend your life selling sugar water or do you want to change the world?" Don't lose sight of the big vision.
3. Make connections. Jobs once said creativity is connecting things. He meant that people with a broad set of life experiences can often see things that others miss. He took calligraphy classes that didn't have any practical use in his life -- until he built the Macintosh. Jobs traveled to India and Asia. He studied design and hospitality. Don't live in a bubble. Connect ideas from different fields.
4. Say no to 1,000 things. Jobs was as proud of what Apple chose not to do as he was of what Apple did. When he returned in Apple in 1997, he took a company with 350 products and reduced them to 10 products in a two-year period. Why? So he could put the "A-Team" on each product. What are you saying "no" to?
5. Create insanely different experiences. Jobs also sought innovation in the customer-service experience. When he first came up with the concept for the Apple Stores, he said they would be different because instead of just moving boxes, the stores would enrich lives. Everything about the experience you have when you walk into an Apple store is intended to enrich your life and to create an emotional connection between you and the Apple brand. What are you doing to enrich the lives of your customers?
6. Master the message. You can have the greatest idea in the world, but if you can't communicate your ideas, it doesn't matter. Jobs was the world's greatest corporate storyteller. Instead of simply delivering a presentation like most people do, he informed, he educated, he inspired and he entertained, all in one presentation.
7. Sell dreams, not products. Jobs captured our imagination because he really understood his customer. He knew that tablets would not capture our imaginations if they were too complicated. The result? One button on the front of an iPad. It's so simple, a 2-year-old can use it. Your customers don't care about your product. They care about themselves, their hopes, their ambitions. Jobs taught us that if you help your customers reach their dreams, you'll win them over.
There's one story that I think sums up Jobs' career at Apple. An executive who had the job of reinventing the Disney Store once called up Jobs and asked for advice. His counsel? Dream bigger. I think that's the best advice he could leave us with. See genius in your craziness, believe in yourself, believe in your vision, and be constantly prepared to defend those ideas.
2. Put a dent in the universe. Jobs believed in the power of vision. He once asked then-Pepsi President, John Sculley, "Do you want to spend your life selling sugar water or do you want to change the world?" Don't lose sight of the big vision.
3. Make connections. Jobs once said creativity is connecting things. He meant that people with a broad set of life experiences can often see things that others miss. He took calligraphy classes that didn't have any practical use in his life -- until he built the Macintosh. Jobs traveled to India and Asia. He studied design and hospitality. Don't live in a bubble. Connect ideas from different fields.
4. Say no to 1,000 things. Jobs was as proud of what Apple chose not to do as he was of what Apple did. When he returned in Apple in 1997, he took a company with 350 products and reduced them to 10 products in a two-year period. Why? So he could put the "A-Team" on each product. What are you saying "no" to?
5. Create insanely different experiences. Jobs also sought innovation in the customer-service experience. When he first came up with the concept for the Apple Stores, he said they would be different because instead of just moving boxes, the stores would enrich lives. Everything about the experience you have when you walk into an Apple store is intended to enrich your life and to create an emotional connection between you and the Apple brand. What are you doing to enrich the lives of your customers?
6. Master the message. You can have the greatest idea in the world, but if you can't communicate your ideas, it doesn't matter. Jobs was the world's greatest corporate storyteller. Instead of simply delivering a presentation like most people do, he informed, he educated, he inspired and he entertained, all in one presentation.
7. Sell dreams, not products. Jobs captured our imagination because he really understood his customer. He knew that tablets would not capture our imaginations if they were too complicated. The result? One button on the front of an iPad. It's so simple, a 2-year-old can use it. Your customers don't care about your product. They care about themselves, their hopes, their ambitions. Jobs taught us that if you help your customers reach their dreams, you'll win them over.
There's one story that I think sums up Jobs' career at Apple. An executive who had the job of reinventing the Disney Store once called up Jobs and asked for advice. His counsel? Dream bigger. I think that's the best advice he could leave us with. See genius in your craziness, believe in yourself, believe in your vision, and be constantly prepared to defend those ideas.
Bargains Abound: What Are Buyers Waiting for?
With low home prices and ultra-low interest rates, the housing market is offering “perhaps the best deals of a generation,” notes a recent article by Bloomberg Businessweek.
Since the housing boom of 2006, home prices have fallen about 31 percent. Also, mortgage rates have been hovering at record lows for the past few weeks (4 percent range or even lower on 30-year fixed-rate mortgages, according to Freddie Mac’s mortgage market survey).
“It’s hard to see the possibility of losing on a home purchase right now, with these mortgage rates,” says economist Dean Baker. “Prices may go lower, but not by much.”
The article notes the following scenario: Buying a $300,000 home with a 4 percent mortgage rate and a 20 percent down payment would mean a $1,145 monthly payment. The Mortgage Bankers Association recently predicted that home prices may fall another 3.5 percent by mid-2012 but mortgage rates will increase by a half-point. So for that same loan under that scenario, a home would sell for $289,000 while the monthly mortgage bill would be $1,171--only a $26 difference.
For those who can qualify for a mortgage, "playing the waiting game" won't result in much gain, Nariman Behravesh, chief economist at IHS in Englewood, Colo., told Bloomberg Businessweek.
Source: “Crazy Home Deals Await the Creditworthy,” Bloomberg Businessweek (Oct. 24, 2011)
Since the housing boom of 2006, home prices have fallen about 31 percent. Also, mortgage rates have been hovering at record lows for the past few weeks (4 percent range or even lower on 30-year fixed-rate mortgages, according to Freddie Mac’s mortgage market survey).
“It’s hard to see the possibility of losing on a home purchase right now, with these mortgage rates,” says economist Dean Baker. “Prices may go lower, but not by much.”
The article notes the following scenario: Buying a $300,000 home with a 4 percent mortgage rate and a 20 percent down payment would mean a $1,145 monthly payment. The Mortgage Bankers Association recently predicted that home prices may fall another 3.5 percent by mid-2012 but mortgage rates will increase by a half-point. So for that same loan under that scenario, a home would sell for $289,000 while the monthly mortgage bill would be $1,171--only a $26 difference.
For those who can qualify for a mortgage, "playing the waiting game" won't result in much gain, Nariman Behravesh, chief economist at IHS in Englewood, Colo., told Bloomberg Businessweek.
Source: “Crazy Home Deals Await the Creditworthy,” Bloomberg Businessweek (Oct. 24, 2011)
Homeownership Rate Second-Highest on Record
The homeownership rate is at its second-highest level on record, only behind the record high set in 2000, according to the U.S. Census Bureau, which began collecting home ownership data in 1890.
By region, the homeownership rate is: •Midwest: 69.2 percent•South: 66.7•Northeast: 62.2•West: 60.5Nearly every metro area had more home owners than renters in 2010. The metro areas with the highest homeownership rates were in Michigan and Florida. Monroe, Mich., had the highest percentage of owner-occupied units at 79.8 percent, followed by Punta Gorda, Fla., at 79.7 percent.
While the national homeownership rate remained high, the decrease in the rate from 2000 to 2010 by 1.1 percent — to 65.1 percent overall — is the largest decrease since the 1930 to 1940 period, the Census Bureau reported.
By region, the homeownership rate is: •Midwest: 69.2 percent•South: 66.7•Northeast: 62.2•West: 60.5Nearly every metro area had more home owners than renters in 2010. The metro areas with the highest homeownership rates were in Michigan and Florida. Monroe, Mich., had the highest percentage of owner-occupied units at 79.8 percent, followed by Punta Gorda, Fla., at 79.7 percent.
While the national homeownership rate remained high, the decrease in the rate from 2000 to 2010 by 1.1 percent — to 65.1 percent overall — is the largest decrease since the 1930 to 1940 period, the Census Bureau reported.
Investors See Bigger Profits From Rising Rents
Rental demand and prices continue to soar, and investors are cashing in. Rents are rising at a 5.17 percent annual rate — up from last year’s 4.72 percent rate. If rents continue to grow at their current pace, they won’t be too far behind the record-high reached in 2000 of 6.18 percent, according to Axiometrics Inc.
The rental market has added about 1.4 million new renters this year, some of whom were former home owners who faced foreclosure or a short sale. Renters are increasingly showing an appetite for single-family homes owned by investors.
As such, the number of investors in the market is growing. Investors make up anywhere between 20 and 40 percent of monthly existing home sales, according to home-sale data. With home prices and interest rates low, more aspiring investors are jumping in. Nearly 60 percent of investors in a recent survey by Realtor.com considered themselves newcomers to real estate investing.
“This is a long-term investment,” says Greg Rand, CEO of OwnAmerica. “Rents are a steady return on your investment through the years, leaving you with an attractive asset when prices improve. And they will. The best profits in real estate accrue to long-term investors who take a long-term view.”
Source: “Rising Rents Improve Investors’ Return,” RISMedia (Oct. 20, 2011)
The rental market has added about 1.4 million new renters this year, some of whom were former home owners who faced foreclosure or a short sale. Renters are increasingly showing an appetite for single-family homes owned by investors.
As such, the number of investors in the market is growing. Investors make up anywhere between 20 and 40 percent of monthly existing home sales, according to home-sale data. With home prices and interest rates low, more aspiring investors are jumping in. Nearly 60 percent of investors in a recent survey by Realtor.com considered themselves newcomers to real estate investing.
“This is a long-term investment,” says Greg Rand, CEO of OwnAmerica. “Rents are a steady return on your investment through the years, leaving you with an attractive asset when prices improve. And they will. The best profits in real estate accrue to long-term investors who take a long-term view.”
Source: “Rising Rents Improve Investors’ Return,” RISMedia (Oct. 20, 2011)
America’s Priciest ZIP Codes
The priciest ZIP code in the country boasts a median home price of more than $4.5 million, according to a new list by Forbes that tracked home prices of more than 20,000 ZIP codes nationwide to determine the most expensive areas.
Appraiser Jonathan Miller, chief executive of New York’s Miller Samuel, told Forbes that he’s seen an increase in listings that fall under the luxury bracket this year. “It’s not that we’re seeing prices rise, it’s that we’re seeing more activity,” Miller told Forbes. Compared to 2010 figures, the median home prices in 500 of the most expensive ZIP codes dropped slightly by 2 percent.
Here are the five priciest ZIP codes in the country, according to Forbes.
1. Alpine, N.J.: 07620
Median home price: $4,550,000
2. Atherton, Calif.: 94027
Median home price: $4,295,000
3. Sagaponack, N.Y.: 11962
Median home price: $3,595,000
4. Hillsborough, Calif.: 94010
Median home price: $3,499,000
5. Beverly Hills, Calif.: 90210
Median home price: $3,469,891
Appraiser Jonathan Miller, chief executive of New York’s Miller Samuel, told Forbes that he’s seen an increase in listings that fall under the luxury bracket this year. “It’s not that we’re seeing prices rise, it’s that we’re seeing more activity,” Miller told Forbes. Compared to 2010 figures, the median home prices in 500 of the most expensive ZIP codes dropped slightly by 2 percent.
Here are the five priciest ZIP codes in the country, according to Forbes.
1. Alpine, N.J.: 07620
Median home price: $4,550,000
2. Atherton, Calif.: 94027
Median home price: $4,295,000
3. Sagaponack, N.Y.: 11962
Median home price: $3,595,000
4. Hillsborough, Calif.: 94010
Median home price: $3,499,000
5. Beverly Hills, Calif.: 90210
Median home price: $3,469,891
Housing Can Be 'Key Engine of Job Growth'
Daily Real Estate News Thursday, October 06, 2011 The National Association of Home Builders is stressing the need for policymakers to remove anti-housing barriers that they say are preventing a housing market recovery. After all, NAHB says, housing can be the answer policymakers have been searching for in boosting jobs and economic recovery.
The housing industry can be the “key engine of job growth” the country needs, says Bob Nielsen, chairman of the National Association of Home Builders.Nielsen says that constructing just 100 single-family homes can generate more than 300 jobs and $8.9 million in taxes and revenue for state, local, and federal governments.
Yet, Nielsen says the government keeps placing stringent policies that are preventing the housing market from recovering and that are dampening demand and reducing Americans ability to purchase a home, from the tightening of credit and possible stricter down payment qualifications to reducing the conforming loan limit on Oct. 1.
One of the main hurdles home builders are facing is obtaining credit from banks so they can begin working on new homes. The tightening of credit has brought new-home construction practically to a standstill in many parts of the country.
Since April 2006, more than 1.4 million residential construction jobs have been lost, according to NAHB. “Yet there is demand for housing in markets that are on the mend," says Nielsen. "Home builders have plenty of shovel-ready jobs set to go but they can't keep their doors open and create jobs in their communities if federal regulators continue to shut off the credit spigot."
The housing industry can be the “key engine of job growth” the country needs, says Bob Nielsen, chairman of the National Association of Home Builders.Nielsen says that constructing just 100 single-family homes can generate more than 300 jobs and $8.9 million in taxes and revenue for state, local, and federal governments.
Yet, Nielsen says the government keeps placing stringent policies that are preventing the housing market from recovering and that are dampening demand and reducing Americans ability to purchase a home, from the tightening of credit and possible stricter down payment qualifications to reducing the conforming loan limit on Oct. 1.
One of the main hurdles home builders are facing is obtaining credit from banks so they can begin working on new homes. The tightening of credit has brought new-home construction practically to a standstill in many parts of the country.
Since April 2006, more than 1.4 million residential construction jobs have been lost, according to NAHB. “Yet there is demand for housing in markets that are on the mend," says Nielsen. "Home builders have plenty of shovel-ready jobs set to go but they can't keep their doors open and create jobs in their communities if federal regulators continue to shut off the credit spigot."
Shadow Inventory Drops: ‘Positive Sign for Housing’
Residential shadow inventory is on the decline, falling in July to 1.6 million units and representing a supply of five months, a new report from CoreLogic shows.
One year ago, nationwide shadow inventory stood at 1.9 million units, marking a six-month supply. Shadow inventory is 22 percent lower than the peak reached in January 2010 of 2 million units -- or 8.4 months of supply.
CoreLogic calculates shadow inventory by taking into account the number of distressed properties not yet listed on the multiple listing services that are more than 90 days delinquent, in foreclosure, and real estate owned by lenders.
"The steady improvement in the shadow inventory is a positive development for the housing market," says Mark Fleming, chief economist for CoreLogic. "However, continued price declines, high levels of negative equity, and a sluggish labor market will keep the shadow supply elevated for an extended period of time."
Source: “Shadow Inventory Declines to 5-Month Supply: CoreLogic,” HousingWire (Sept. 27, 2011)
One year ago, nationwide shadow inventory stood at 1.9 million units, marking a six-month supply. Shadow inventory is 22 percent lower than the peak reached in January 2010 of 2 million units -- or 8.4 months of supply.
CoreLogic calculates shadow inventory by taking into account the number of distressed properties not yet listed on the multiple listing services that are more than 90 days delinquent, in foreclosure, and real estate owned by lenders.
"The steady improvement in the shadow inventory is a positive development for the housing market," says Mark Fleming, chief economist for CoreLogic. "However, continued price declines, high levels of negative equity, and a sluggish labor market will keep the shadow supply elevated for an extended period of time."
Source: “Shadow Inventory Declines to 5-Month Supply: CoreLogic,” HousingWire (Sept. 27, 2011)
More Home Owners Become ‘Accidental Landlords’
More home owners who are unable to sell their home or afford to drop the price any more are opting to rent out their homes until the market improves. But some “accidental landlords” are now having regrets.
The number of formerly owned-occupied homes turned into rentals has soared in recent years, according to Harvard's Joint Center for Housing Studies. In 2009, nearly 25 percent of single-family detached rentals had been owner-occupied two years earlier.
But while home owners are turning their homes into rentals to generate cash flow, many say it’s not enough. They say the cash flow being generated from the property is hardly enough to cover expenses, and in some cases, they’re even losing money. Accidental landlords also say the role is time-consuming and can be stressful, as they have to worry about everything from finding tenants to handling any repairs.
Kathleen Longo, principal with Accredited Investors, advises any home owners considering renting their home to first "take a realistic look at what it really costs to maintain a property. You have to add a cushion for repair and maintenance."
Also, Joann Velde, housing manager for the City of Minneapolis, told the Minneapolis Star Tribune that landlords may be in such a hurry to generate cash flow that they do an inadequate job of screening tenants, which can result in greater problems later on.
Anne Healy in Minneapolis fell into the landlord role after she bought another property and was unable to sell her current home at the price she wanted. She had turned down two previous offers on the home and decided renting would be a better option. “We were in denial,” she told the Minneapolis Star Tribune. “We’ve learned the hard way.”
She says the tenants created so much wear-and-tear on the house that she had to restore the home room by room. She also said she had to hound the tenants to pay rent. A year later, she decided she had enough and put her home back on the market. She sold it for $50,000 less than an offer she had turned down last year.
Source: “Accidental Landlords on the Rise,” Minneapolis Star Tribune (Sept. 24, 2011)
The number of formerly owned-occupied homes turned into rentals has soared in recent years, according to Harvard's Joint Center for Housing Studies. In 2009, nearly 25 percent of single-family detached rentals had been owner-occupied two years earlier.
But while home owners are turning their homes into rentals to generate cash flow, many say it’s not enough. They say the cash flow being generated from the property is hardly enough to cover expenses, and in some cases, they’re even losing money. Accidental landlords also say the role is time-consuming and can be stressful, as they have to worry about everything from finding tenants to handling any repairs.
Kathleen Longo, principal with Accredited Investors, advises any home owners considering renting their home to first "take a realistic look at what it really costs to maintain a property. You have to add a cushion for repair and maintenance."
Also, Joann Velde, housing manager for the City of Minneapolis, told the Minneapolis Star Tribune that landlords may be in such a hurry to generate cash flow that they do an inadequate job of screening tenants, which can result in greater problems later on.
Anne Healy in Minneapolis fell into the landlord role after she bought another property and was unable to sell her current home at the price she wanted. She had turned down two previous offers on the home and decided renting would be a better option. “We were in denial,” she told the Minneapolis Star Tribune. “We’ve learned the hard way.”
She says the tenants created so much wear-and-tear on the house that she had to restore the home room by room. She also said she had to hound the tenants to pay rent. A year later, she decided she had enough and put her home back on the market. She sold it for $50,000 less than an offer she had turned down last year.
Source: “Accidental Landlords on the Rise,” Minneapolis Star Tribune (Sept. 24, 2011)
Big Savings for Buyers: Rates Reach New Record-Lows
For the second straight week, mortgage rates reached another milestone, with 30-year and 15-year fixed-rate mortgages hitting record lows again, Freddie Mac reports in its weekly mortgage market survey.
"Continued investor concerns over the state of the European debt markets kept U.S. Treasury bond yields low and allowed mortgage rates to ease once more this week,” says Frank Nothaft, Freddie Mac’s chief economist.
For example, home owners who refinanced at today’s 30-year fixed-mortgage rate could trim nearly $1,715 a year in interest payments on a $200,000 loan, Nothaft says.
Here’s a closer look at rates for the week ending Sept. 15.
•30-year fixed-rate mortgages: averaged 4.09 percent this week, down from last week’s previous record of 4.12 percent. Last year at this time, 30-year rates averaged 4.37 percent. •15-year fixed-rate mortgages: averaged 3.30 percent, dropping from last week’s record low of 3.33 percent. Last year at this time, 15-year rates averaged 3.82 percent. •5-year adjustable-rate mortgages: averaged 2.99 percent this week, up slightly from last week’s 2.96 percent average. A year ago at this time, the 5-year ARM averaged 3.55 percent. •1-year ARMs: averaged 2.81 percent, down from last week’s 2.84 percent average. A year ago, the 1-year ARM averaged 3.40 percent. By REALTOR® Magazine Daily News
"Continued investor concerns over the state of the European debt markets kept U.S. Treasury bond yields low and allowed mortgage rates to ease once more this week,” says Frank Nothaft, Freddie Mac’s chief economist.
For example, home owners who refinanced at today’s 30-year fixed-mortgage rate could trim nearly $1,715 a year in interest payments on a $200,000 loan, Nothaft says.
Here’s a closer look at rates for the week ending Sept. 15.
•30-year fixed-rate mortgages: averaged 4.09 percent this week, down from last week’s previous record of 4.12 percent. Last year at this time, 30-year rates averaged 4.37 percent. •15-year fixed-rate mortgages: averaged 3.30 percent, dropping from last week’s record low of 3.33 percent. Last year at this time, 15-year rates averaged 3.82 percent. •5-year adjustable-rate mortgages: averaged 2.99 percent this week, up slightly from last week’s 2.96 percent average. A year ago at this time, the 5-year ARM averaged 3.55 percent. •1-year ARMs: averaged 2.81 percent, down from last week’s 2.84 percent average. A year ago, the 1-year ARM averaged 3.40 percent. By REALTOR® Magazine Daily News
Higher Credit Scores, Larger Down Payments
Through June, single-family home loans bought by Freddie Mac boasted an average down payment of 29 percent and an average FICO credit score of 751. In 2007, average down payments were 23 percent and FICO scores averaged 707.
Federal Housing Administration loans, which tend to be a lure for buyers without large down payments, are also being issued to buyers with higher credit scores than in the past. From January through March, FHA loans went to borrowers with an average credit score of 704, up from 631 four years ago.
In an analysis recently done by Zillow of 3.6 million loan inquiries, it found that prospective borrowers getting the best loan rates had average down payments of 28 percent. Three years ago, prospective borrowers averaged down payments of less than 24 percent, according to Zillow.
"It used to be anybody with a pulse could get a home loan. Now you have to be an Olympic athlete," Guy Cecala of Inside Mortgage Finance, told USA Today. "The pendulum has swung too far."
Source: “Tight Standards Make Mortgages Tough to Get,” USA Today (Sept. 14, 2011)
Federal Housing Administration loans, which tend to be a lure for buyers without large down payments, are also being issued to buyers with higher credit scores than in the past. From January through March, FHA loans went to borrowers with an average credit score of 704, up from 631 four years ago.
In an analysis recently done by Zillow of 3.6 million loan inquiries, it found that prospective borrowers getting the best loan rates had average down payments of 28 percent. Three years ago, prospective borrowers averaged down payments of less than 24 percent, according to Zillow.
"It used to be anybody with a pulse could get a home loan. Now you have to be an Olympic athlete," Guy Cecala of Inside Mortgage Finance, told USA Today. "The pendulum has swung too far."
Source: “Tight Standards Make Mortgages Tough to Get,” USA Today (Sept. 14, 2011)
Where Home Prices Have Dropped the Most
California cities have seen their home values drop by the largest percentage in the last five years, with some metro areas posting losses of up to 67 percent in that time period. California cities occupied six of the top 10 metro areas with the largest drops, according to a recent Zillow study based on its home-value estimates and Zillow Home Value Index.
Overall, "there will be many ups and downs in home values before this is over, and we continue to expect a true bottom in 2012, at the earliest,” says Stan Humphries, Zillow’s chief economist. “There are still hazards in the form of a full foreclosure pipeline, high negative equity, and fluctuations in demand."
The following are seven cities that have seen home values drop the most since the housing boom, according to Zillow:
1. Merced, Calif.July 2011 Zillow Home Value Index: $106,514Zillow Home Value Index 5 Years ago: $328,813Value difference (by percent): -67.6%
2. Modesto, Calif.July 2011 ZHVI: $128,777ZHVI 5 Years Ago: $352,599Value difference: -63.5%
3. Stockton, Calif.July 2011 ZHVI: $150,061ZHVI 5 Years Ago: $404,036Value difference: -62.9%
4. Las VegasJuly 2011 ZHVI: $117,084ZHVI 5 Years Ago: $303,656Value difference: -61.4%
5. Vallejo, Calif.July 2011 ZHVI: $190,521ZHVI 5 Years Ago: $468,071Value difference: -59.3%
6. Salinas, Calif.July 2011 ZHVI: $282,289ZHVI 5 Years Ago: $664,404Value difference: -57.5%
7. Daytona Beach, Fla.July 2011 ZHVI: $95,193ZHVI 5 Years Ago: $220,436Value difference: -56.8%
Mortgage Rates Dip, Reaching Another Record Low For the second time in a month, fixed and adjustable-rate mortgage rates set new record lows this week, Freddie Mac reports in its weekly mortgage market survey. The previous record lows were set Aug. 18.
Economic uncertainty and employment concerns are continuing to keep rates low, says Frank Nothaft, Freddie Mac’s chief economist.
Here’s a closer look at rates for the week ending Sept. 8.
•30-year fixed-rate mortgages: averaged 4.12 this week, down from last week’s 4.22 percent. The 30-year rates’ previous low was 4.15 percent, set on Aug. 18. •15-year fixed-rate mortgages: averaged 3.33 percent this week, down from last week’s 3.39 percent average. Its previous record low was 3.36 percent.•5-year adjustable-rate mortgages: averaged 2.96 percent, holding steady at the same record low it set last week. •1-year ARMs: averaged 2.84 percent this week, down from last week’s 2.89 percent average. Its previous record low was 2.86 percent.Despite the low rates, mortgage application volume remains low, dropping for the third straight week, the Mortgage Bankers Association reported this week. The volume of mortgage applications for purchase remained relatively flat this week at “extremely low levels, close to lows last seen in 1996,” says Mike Fratantoni, MBA’s vice president of Research and Economics. Refinance application volume was also down, dropping more than 35 percent below levels last year at this time.
Overall, "there will be many ups and downs in home values before this is over, and we continue to expect a true bottom in 2012, at the earliest,” says Stan Humphries, Zillow’s chief economist. “There are still hazards in the form of a full foreclosure pipeline, high negative equity, and fluctuations in demand."
The following are seven cities that have seen home values drop the most since the housing boom, according to Zillow:
1. Merced, Calif.July 2011 Zillow Home Value Index: $106,514Zillow Home Value Index 5 Years ago: $328,813Value difference (by percent): -67.6%
2. Modesto, Calif.July 2011 ZHVI: $128,777ZHVI 5 Years Ago: $352,599Value difference: -63.5%
3. Stockton, Calif.July 2011 ZHVI: $150,061ZHVI 5 Years Ago: $404,036Value difference: -62.9%
4. Las VegasJuly 2011 ZHVI: $117,084ZHVI 5 Years Ago: $303,656Value difference: -61.4%
5. Vallejo, Calif.July 2011 ZHVI: $190,521ZHVI 5 Years Ago: $468,071Value difference: -59.3%
6. Salinas, Calif.July 2011 ZHVI: $282,289ZHVI 5 Years Ago: $664,404Value difference: -57.5%
7. Daytona Beach, Fla.July 2011 ZHVI: $95,193ZHVI 5 Years Ago: $220,436Value difference: -56.8%
Mortgage Rates Dip, Reaching Another Record Low For the second time in a month, fixed and adjustable-rate mortgage rates set new record lows this week, Freddie Mac reports in its weekly mortgage market survey. The previous record lows were set Aug. 18.
Economic uncertainty and employment concerns are continuing to keep rates low, says Frank Nothaft, Freddie Mac’s chief economist.
Here’s a closer look at rates for the week ending Sept. 8.
•30-year fixed-rate mortgages: averaged 4.12 this week, down from last week’s 4.22 percent. The 30-year rates’ previous low was 4.15 percent, set on Aug. 18. •15-year fixed-rate mortgages: averaged 3.33 percent this week, down from last week’s 3.39 percent average. Its previous record low was 3.36 percent.•5-year adjustable-rate mortgages: averaged 2.96 percent, holding steady at the same record low it set last week. •1-year ARMs: averaged 2.84 percent this week, down from last week’s 2.89 percent average. Its previous record low was 2.86 percent.Despite the low rates, mortgage application volume remains low, dropping for the third straight week, the Mortgage Bankers Association reported this week. The volume of mortgage applications for purchase remained relatively flat this week at “extremely low levels, close to lows last seen in 1996,” says Mike Fratantoni, MBA’s vice president of Research and Economics. Refinance application volume was also down, dropping more than 35 percent below levels last year at this time.
THE SMART WAY TO LOOK AT HOME IMPROVEMENTS
What home improvements really pay off when the time comes to sell your house?That’s an important question for any homeowner contemplating moving or remodeling. And the only possible answer is a somewhat complicated one.That answer starts with the fact that really major improvements – room additions, total replacements of kitchens and baths, etc., -- rarely pay off fully in the near term. It ends with the fact that small and relatively inexpensive changes can pay off in a big way in making your home attractive to buyers if your decision is to move now. It’s a simple fact, consistently confirmed across America over a very long period of time, that even the most appropriate major improvements are unlikely to return their full cost if a house is sold within two or three years.Does that mean that major home improvements are always a bad idea? Absolutely not. It does mean, though, that if your present house falls seriously short of meeting your family’s needs you need to think twice – and think carefully – before deciding to undertake a major renovation. Viewed strictly in investment terms, major improvements rarely make as much sense as selling your present home and buying one that’s carefully selected to provide you with what you want.Even if you have a special and strong attachment to the house you’re in and feel certain that you could be happy in it for a long time if only it had more bedrooms and baths, for example, there are a few basic rules that you ought to keep in mind.Probably the most basic rule of all, in this regard, is the one that says you should never –unless you absolutely don’t care at all about eventual resale value – improve a house to the point where its desired sales price would be more than 20 percent higher than the most expensive of the other houses in the immediate neighborhood.Try to raise the value of your house too high, that is, and surrounding properties will pull it down.Here are some other rules worth remembering:Never rearrange the interior of your house in a way that reduces the total number of bedrooms to less than three.Never add a third bathroom to a two-bath house unless you don’t care about ever recouping your investment.Swimming pools rarely return what you spend to install them. Ditto for sun rooms – and finished basements.If you decide to do what’s usually the smart thing and move rather than improve, it’s often the smaller, relatively inexpensive improvements that turn out to be most worth doing. The cost of replacing a discolored toilet bow, making sure all the windows work or getting rid of dead trees and shrubs in trivial compared with adding a bathroom, but such things can have a big and very positive impact on prospective buyers. A good broker can help you decide which expenditures make sense and which don’t, and can save you a lot of money in the process.
Grand Opening Event at Double Golden Chinese
Open House and Grand Opening Celebration
Friday, August 26, 2011
5:00-7:00 p.m.
5868 Silver Creek Valley Road
San Jose CA 95138
In the Silver Creek Landing Center
Raffle for gifts to:
OMG Coffee and Tea
SuperSlowzone
Salon 88
Quiznos
BalanceYogaCenter
Century 21 Alpha
Double Golden Chinese Restaurant
Plus.... Entertainment from 10th Avenue Band Swing Dance
Report: 'Fixing Housing Crisis Will Create 1 Million Jobs'
A new report argues that if banks wrote down the mortgage principal of underwater borrowers it could pump $71 billion per year into the economy and create more than 1 million jobs annually. The report, “The Win/Win Solution: How Fixing the Housing Crisis Will Create One Million Jobs," comes from The New Bottom Line, a campaign that represents about 1,000 nationwide faith-based and community organizations.
The campaign argues in the report that by lowering home owners’ mortgage payments by an average of more than $500 per month--or $6,500 per year--that it would free up about $6 billion dollars per month that home owners could then spend on such items as buying groceries, household necessities, school supplies, etc.
“Home owners across the nation are struggling to pay their boom-era mortgages with their recession-era salaries and the economy is suffering for it,” according to the report. “Writing down the principals and interest rates on all underwater mortgages to market value would serve as the second stimulus that America so desperately needs, only without added costs to taxpayers.”
The group is pressing State Attorneys General, who are currently in settlement talks with the nation’s largest banks over allegations of foreclosure abuses, to stand firm on its request for principal reductions for underwater borrowers.
Source: “Fixing the Housing Crisis Would Create One Million Jobs Annually,” RISMedia (Aug. 21, 2011)
The campaign argues in the report that by lowering home owners’ mortgage payments by an average of more than $500 per month--or $6,500 per year--that it would free up about $6 billion dollars per month that home owners could then spend on such items as buying groceries, household necessities, school supplies, etc.
“Home owners across the nation are struggling to pay their boom-era mortgages with their recession-era salaries and the economy is suffering for it,” according to the report. “Writing down the principals and interest rates on all underwater mortgages to market value would serve as the second stimulus that America so desperately needs, only without added costs to taxpayers.”
The group is pressing State Attorneys General, who are currently in settlement talks with the nation’s largest banks over allegations of foreclosure abuses, to stand firm on its request for principal reductions for underwater borrowers.
Source: “Fixing the Housing Crisis Would Create One Million Jobs Annually,” RISMedia (Aug. 21, 2011)
Mortgage Rates Reach All-Time Lows Again
Ongoing economic concerns continued to push mortgage rates to new lows, as 30-year and 15-year mortgage rates took another dip, pushing home affordability even higher, Freddie Mac reports in its weekly mortgage market survey. 30-year fixed-rate mortgages: averaged 4.15 percent this week, dropping from last week’s 4.32 percent average. The previous record low for 30-year rates was set on Nov. 11, 2010, when rates reached 4.17 percent. For comparison sake, in 2000, 30-year mortgage rates averaged more than 8 percent and just five years ago they averaged 6.5 percent. 15-year fixed-rate mortgages: averaged 3.36 percent, dropping from last week’s 3.50 percent. Last year at this time, the 15-year fixed rate averaged 3.90 percent. 5-year adjustable-rate mortgages: averaged 3.08 percent, dropping from last week’s 3.13 percent. Last year at this time, the 5-year ARM averaged 3.56 percent. 1-year ARM: averaged 2.86 percent this week, dropping from last week’s 2.89 percent. A year ago, the 1-year ARM averaged 3.53 percent. "Not surprising, many home owners took advantage of this low mortgage rate environment and have already refinanced their loans,” says Frank Nothaft, chief economist of Freddie Mac. “The refinance share of applications averaged nearly 70 percent of all mortgage activity in the first half of this year, according to our survey. In addition, an increasing share of refinancing borrowers chose to shorten their loan terms during the second quarter.” Source: “Mortgage Rates Lowest in Over 50 Years,” Freddie Mac (Aug. 18, 2011)
Housing Affordability at Highest in 20 Years
Housing affordability continued to be near record highs in the second quarter, hovering near its highest level in the 20-plus years it has been recorded, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index. About 72 percent of all new and existing-homes sold in the second quarter of the year were affordable to families earning the national median income of $64,200, according to the index. The record high remains 74.6 percent, which was reached last quarter. "At a time when home ownership is within reach of more households than it has been for more than two decades and interest rates are at historically low levels, the sluggish economy and the extremely tight credit conditions confronting home buyers and builders remain significant obstacles to many potential home sales," says Bob Nielsen, chairman of the National Association of Home Builders. "That said, however, some housing markets across the country have stabilized and are beginning to show signs of a budding recovery."
June Pending Home Sales Rise
For the second consecutive month, pending home sales figures have increased. According to the National Association of Realtors® (NAR) all regions are showing "strong double-digit" gains over last June and the index itself was up 2.4 percent for the month.
Pending sales are a healthy 19.8 percent above June 2010's numbers. The Midwest has seen the largest rebound from 2010, increase 26.4 percent from last June. The Northeast followed at a 19.4 percent increase and the South gained 19.1 percent. The West was up 16.4 percent.
According to the NAR, "Existing-home sales this year are expected to total 5.0 million, slightly higher than 2010. Similarly, little change is forecast for aggregate home prices with several indicators, including NAR's median prices, showing recent signs of stabilization."
The largest regional increase month-to-month was seen in the West, which rose 6.4 percent, while the Northeast and Midwest both posted monthly declines.
Lawrence Yun, NAR chief economist, said there may be some increase in closed existing-home sales. “For the majority of transactions, the lag time between pending contacts to actual closings is one to two months. Therefore, the two consecutive months of rising activity should lead to overall improvement in closed sales in upcoming months,” he said. “Though a higher than normal cancellation rate can hold back final closing figures, it could well be that some past cancellations are nothing more than delayed buying decisions rather than outright cancellations.”
The NAR also reports that credit could be a deciding factor in whether or not housing experiencing a solid recovery sooner than later. Yun noted, "The best way to ensure a more solid recovery in housing is to simply return to normal, sound credit standards so more creditworthy home buyers can get a mortgage."
June's rise in pending home sales was unexpected, as economist polled by Reuters were looking for a 2 percent decline. Sales went in the opposite direction, however. The number of cancelled contracts will give a more complete picture of whether or not housing is on the mend.
Published: August 2, 2011
Pending sales are a healthy 19.8 percent above June 2010's numbers. The Midwest has seen the largest rebound from 2010, increase 26.4 percent from last June. The Northeast followed at a 19.4 percent increase and the South gained 19.1 percent. The West was up 16.4 percent.
According to the NAR, "Existing-home sales this year are expected to total 5.0 million, slightly higher than 2010. Similarly, little change is forecast for aggregate home prices with several indicators, including NAR's median prices, showing recent signs of stabilization."
The largest regional increase month-to-month was seen in the West, which rose 6.4 percent, while the Northeast and Midwest both posted monthly declines.
Lawrence Yun, NAR chief economist, said there may be some increase in closed existing-home sales. “For the majority of transactions, the lag time between pending contacts to actual closings is one to two months. Therefore, the two consecutive months of rising activity should lead to overall improvement in closed sales in upcoming months,” he said. “Though a higher than normal cancellation rate can hold back final closing figures, it could well be that some past cancellations are nothing more than delayed buying decisions rather than outright cancellations.”
The NAR also reports that credit could be a deciding factor in whether or not housing experiencing a solid recovery sooner than later. Yun noted, "The best way to ensure a more solid recovery in housing is to simply return to normal, sound credit standards so more creditworthy home buyers can get a mortgage."
June's rise in pending home sales was unexpected, as economist polled by Reuters were looking for a 2 percent decline. Sales went in the opposite direction, however. The number of cancelled contracts will give a more complete picture of whether or not housing is on the mend.
Published: August 2, 2011
Freddie Mac: 'Double Dip' in Housing Is Unlikely
Freddie Mac continues to sound optimism about the housing market for the second half of 2011. In its latest economic and housing market outlook report, Freddie Mac says that the housing market is unlikely to experience a “double dip” and home sales are projected to reach above last year’s pace by 3 percent to 5 percent.
Despite an unemployment rate that sits at 9.2 percent, Freddie Mac says the gloomy job picture reflects a temporary “soft patch” in the economy and “does not foreshadow an inflection point in gross domestic product growth.”
Freddie Mac forecasts that the housing market “will likely follow the performance of the overall economy for the remainder of 2011.”
Rental housing will likely see the largest growth. Freddie Mac’s first-quarter apartment property price index rose 15.2 percent compared to last year.
While home buyer affordability is at record levels and mortgage rates are at historical lows, households are still putting off major purchases like buying a home, according to the report.
"Following June's labor market report, households are naturally concerned about their financial futures, which is being reflected in the housing market," says Frank Nothaft, Freddie Mac’s chief economist. "Yet, the single-family market will likely improve over the balance of 2011, in keeping with positive GDP forecasts for the United States.
Home sales are expected to be up over 2010's pace, perhaps by 3 to 5 percent. And after clear weakness in national price metrics through the first quarter, there are glimmers the second quarter will likely show gradual improvement over time."
Source: “Freddie Mac Says Housing Sector Unlikely to See Double Dip,” HousingWire (July 18, 2011) and “July 2011 U.S. Economic and Housing Market Outlook,” Freddie Mac (July 18, 2011)
Despite an unemployment rate that sits at 9.2 percent, Freddie Mac says the gloomy job picture reflects a temporary “soft patch” in the economy and “does not foreshadow an inflection point in gross domestic product growth.”
Freddie Mac forecasts that the housing market “will likely follow the performance of the overall economy for the remainder of 2011.”
Rental housing will likely see the largest growth. Freddie Mac’s first-quarter apartment property price index rose 15.2 percent compared to last year.
While home buyer affordability is at record levels and mortgage rates are at historical lows, households are still putting off major purchases like buying a home, according to the report.
"Following June's labor market report, households are naturally concerned about their financial futures, which is being reflected in the housing market," says Frank Nothaft, Freddie Mac’s chief economist. "Yet, the single-family market will likely improve over the balance of 2011, in keeping with positive GDP forecasts for the United States.
Home sales are expected to be up over 2010's pace, perhaps by 3 to 5 percent. And after clear weakness in national price metrics through the first quarter, there are glimmers the second quarter will likely show gradual improvement over time."
Source: “Freddie Mac Says Housing Sector Unlikely to See Double Dip,” HousingWire (July 18, 2011) and “July 2011 U.S. Economic and Housing Market Outlook,” Freddie Mac (July 18, 2011)
7 of 10 Renters Say Owning a Home Is a Top Priority
Most Americans still believe that owning a home is a solid financial decision, and a majority of renters aspire to home ownership as a long-term goal. According to the 2011 National Housing Pulse Survey released today by the National Association of REALTORS®, 72 percent of renters surveyed said owning a home is a top priority for their future, up from 63 percent in 2010.
Seven in 10 Americans also agreed that buying a home is a good financial decision while almost two-thirds said now is a good time to purchase a home. The annual survey, which measures how affordable housing issues affect consumers, also found that more than three quarters of renters (77 percent) said they would be less likely to buy a home if they were required to put down a 20 percent down payment on the home, and a strong majority (71 percent) believe a 20 percent down payment requirement could have a negative impact on the housing market.
“Despite the economic setbacks Americans have experienced in today’s current climate, it is clear that a strong majority still believe in home ownership and aspire to own a home,” said NAR President Ron Phipps. “However, achieving the dream of home ownership will become increasingly difficult for buyers if they are required to make a 20 percent down payment, which may be a reality for many of tomorrow’s buyers if a proposed Qualified Residential Mortgage rule is adopted. That is why REALTORS® are strongly urging regulators to go back to the drawing board on the proposed rule.”
Defining the QRM rule is important because it will determine the types of mortgages that will generally be available to borrowers in the future. As currently proposed, borrowers with less than 20 percent down will have to choose between higher fees and rates today — up to 3 percentage points more — or a delay of between nine and 14 years while they save up the necessary down payment.
More than half — 51 percent — of self-described “working class” home owners as well as younger non-college graduates (51 percent), African Americans (57 percent), and Hispanic Americans (50 percent) who currently own their homes reported that a 20 percent down payment would have prevented them from becoming home owners.
Pulse surveys for the past eight years have consistently reported that having enough money for a down payment and closing costs are top obstacles that make housing unaffordable for Americans. Eighty-two percent of respondents cited these as the top obstacle, followed by having confidence in one’s job security.
The survey also found respondents were adamantly against eliminating the mortgage interest deduction (MID). Two-thirds of Americans oppose eliminating the tax benefit, while 73 percent believe eliminating the MID will have a negative impact on the housing market as well as the overall economy.
“The MID facilitates home ownership by reducing the carrying costs of owning a home, and it makes a real difference to hard-working American families,” Phipps said. “Home ownership offers not only social benefits, but also long-term value for families, communities and the nation’s economy. We need to make sure that any changes to current programs or incentives don’t jeopardize our collective futures.”
When asked why home ownership matters to them, respondents cited stability and safety as the top reason. Long-term economic reasons such as building equity followed closely behind. On a local level, respondents said neighbors falling behind on their mortgages and the drop in home values were top concerns. Foreclosures also continue to remain a large concern, with almost half of those surveyed citing the issue as a problem in their area.
Source: NAR
Seven in 10 Americans also agreed that buying a home is a good financial decision while almost two-thirds said now is a good time to purchase a home. The annual survey, which measures how affordable housing issues affect consumers, also found that more than three quarters of renters (77 percent) said they would be less likely to buy a home if they were required to put down a 20 percent down payment on the home, and a strong majority (71 percent) believe a 20 percent down payment requirement could have a negative impact on the housing market.
“Despite the economic setbacks Americans have experienced in today’s current climate, it is clear that a strong majority still believe in home ownership and aspire to own a home,” said NAR President Ron Phipps. “However, achieving the dream of home ownership will become increasingly difficult for buyers if they are required to make a 20 percent down payment, which may be a reality for many of tomorrow’s buyers if a proposed Qualified Residential Mortgage rule is adopted. That is why REALTORS® are strongly urging regulators to go back to the drawing board on the proposed rule.”
Defining the QRM rule is important because it will determine the types of mortgages that will generally be available to borrowers in the future. As currently proposed, borrowers with less than 20 percent down will have to choose between higher fees and rates today — up to 3 percentage points more — or a delay of between nine and 14 years while they save up the necessary down payment.
More than half — 51 percent — of self-described “working class” home owners as well as younger non-college graduates (51 percent), African Americans (57 percent), and Hispanic Americans (50 percent) who currently own their homes reported that a 20 percent down payment would have prevented them from becoming home owners.
Pulse surveys for the past eight years have consistently reported that having enough money for a down payment and closing costs are top obstacles that make housing unaffordable for Americans. Eighty-two percent of respondents cited these as the top obstacle, followed by having confidence in one’s job security.
The survey also found respondents were adamantly against eliminating the mortgage interest deduction (MID). Two-thirds of Americans oppose eliminating the tax benefit, while 73 percent believe eliminating the MID will have a negative impact on the housing market as well as the overall economy.
“The MID facilitates home ownership by reducing the carrying costs of owning a home, and it makes a real difference to hard-working American families,” Phipps said. “Home ownership offers not only social benefits, but also long-term value for families, communities and the nation’s economy. We need to make sure that any changes to current programs or incentives don’t jeopardize our collective futures.”
When asked why home ownership matters to them, respondents cited stability and safety as the top reason. Long-term economic reasons such as building equity followed closely behind. On a local level, respondents said neighbors falling behind on their mortgages and the drop in home values were top concerns. Foreclosures also continue to remain a large concern, with almost half of those surveyed citing the issue as a problem in their area.
Source: NAR
7 Highest-Performing Major Housing Markets
Several real estate markets are starting to show signs of improvement with home prices in the last quarter as the industry demonstrates more signs of stabilizing, according to Clear Capital's latest monthly Home Data Index Market Report.
REO saturation rates have improved in the majority of the country’s largest markets. However, many areas are still battling year-over-year price declines. Clear Capital’s index reports that quarter-over-quarter home price declines were 2.3 percent in the latest quarter, which is less than half compared to the previous month.
“The latest market report results through May suggest that home prices are starting to ease back from the heavy declines seen over the winter,” says Alex Villacorta, director of research and analytics at Clear Capital. “We are still far away from the strong demand needed to fully turn things around for the housing market. However, it is clear from the initial spring sales data that prices are softening, suggesting stabilization in the market."
The High PerformersSeven of the top 15 markets posted quarter-over-quarter property price gains in this month's report, compared to none in last month’s, according to Clear Capital. Here are the seven highest-performing major real estate markets, according to the report.
1. Washington, D.C.-Arlington, Va.-Alexandria, Va.Quarter-to-quarter home price change: 4.5%Year-to-year price changes (May 2010-May 2011): 4.9%REO saturation: 17.5%
2. St. Louis, Mo. Quarter-to-quarter home price change: 2.2%Year-to-year price changes: -11.4%REO saturation: 35.3%
3. Pittsburgh, Pa.Quarter-to-quarter home price change: 1.6%Year-to-year price changes: 0.3%REO saturation: 10.9%
4. New York, N.Y.-Long Island, N.Y.-No. New Jersey, N.J.Quarter-to-quarter home price change: 1.5%Year-to-year price changes: 1.4%REO saturation: 9.6%
5. Virginia Beach, Va.-Norfolk, Va.-Newport News, Va.Quarter-to-quarter home price change: 1.4%Year-to-year price changes: -13.2%REO saturation: 22.4%
6. Miami-Ft. Lauderdale-Miami Beach, Fla.Quarter-to-quarter home price change: 0.6%Year-to-year price changes: -5.2%REO saturation: 39.6%
7. San Jose-Sunnyvale-Santa Clara, Calif.Quarter-to-quarter home price change: 0.5%Year-to-year price changes: -5%REO saturation: 25%
Tthe lowest-performing market for the fifth straight month was Detroit-Warren-Livonia, Mich., with a 13.2 percent decrease in quarter-over-quarter home price change and a 58 percent REO saturation rate.
Source: “Clear Capital Reports Quarterly Home Price Decline Slows; Signs of Market Stability as Summer Approaches,” Clear Capital (June 9, 2011) 2 Executives Sentenced in $3 Billion Fraud Ring Two executives were sentenced to several years in prison for their involvement in a massive fraud ring — estimated at $3 billion — that led to the collapse of one of the country’s largest privately held mortgage lending companies, as well as a bank.
Taylor, Bean & Whitaker Mortgage Corp.’s former president Raymond Bowman and its former treasurer Desiree Brown were convicted for their part in trying to cover up major losses by the company in moving money between accounts at Colonial Bank and selling mortgage loans that never existed or that had previously been sold. TBW’s former chairman Lee Farkas, who prosecutors have called the ring leader of the fraud, is set to be sentenced June 27.
Bowman was sentence to 30 months in prison while Brown was sentenced to six years in prison.
"It was never my intent to commit a crime," Brown told the court. "It was always my intent to fix the problem."
Prosecutors say the mortgage fraud at TBW lasted more than seven years up until August 2009, which ultimately led to the collapse of TBW and Colonial BancGroup Inc.’s Colonial Bank. Prior to its collapse, TBW was one of the nation’s largest privately held mortgage lenders with some $20 billion in mortgage sales a year. Meanwhile, Colonial Bank — before regulators took it over — was once one of the top 50 U.S. banks.
Prosecutors say the case marks one of the few since the aftermath of the global financial crisis where charges have been brought up against executives at major firms.
Usually prosecutions, up to this point, have involved lower-level employees or smaller firms.
Source: “Former Executives Get Prison Time for Mortgage Fraud,” Reuters (June 10, 2011)
REO saturation rates have improved in the majority of the country’s largest markets. However, many areas are still battling year-over-year price declines. Clear Capital’s index reports that quarter-over-quarter home price declines were 2.3 percent in the latest quarter, which is less than half compared to the previous month.
“The latest market report results through May suggest that home prices are starting to ease back from the heavy declines seen over the winter,” says Alex Villacorta, director of research and analytics at Clear Capital. “We are still far away from the strong demand needed to fully turn things around for the housing market. However, it is clear from the initial spring sales data that prices are softening, suggesting stabilization in the market."
The High PerformersSeven of the top 15 markets posted quarter-over-quarter property price gains in this month's report, compared to none in last month’s, according to Clear Capital. Here are the seven highest-performing major real estate markets, according to the report.
1. Washington, D.C.-Arlington, Va.-Alexandria, Va.Quarter-to-quarter home price change: 4.5%Year-to-year price changes (May 2010-May 2011): 4.9%REO saturation: 17.5%
2. St. Louis, Mo. Quarter-to-quarter home price change: 2.2%Year-to-year price changes: -11.4%REO saturation: 35.3%
3. Pittsburgh, Pa.Quarter-to-quarter home price change: 1.6%Year-to-year price changes: 0.3%REO saturation: 10.9%
4. New York, N.Y.-Long Island, N.Y.-No. New Jersey, N.J.Quarter-to-quarter home price change: 1.5%Year-to-year price changes: 1.4%REO saturation: 9.6%
5. Virginia Beach, Va.-Norfolk, Va.-Newport News, Va.Quarter-to-quarter home price change: 1.4%Year-to-year price changes: -13.2%REO saturation: 22.4%
6. Miami-Ft. Lauderdale-Miami Beach, Fla.Quarter-to-quarter home price change: 0.6%Year-to-year price changes: -5.2%REO saturation: 39.6%
7. San Jose-Sunnyvale-Santa Clara, Calif.Quarter-to-quarter home price change: 0.5%Year-to-year price changes: -5%REO saturation: 25%
Tthe lowest-performing market for the fifth straight month was Detroit-Warren-Livonia, Mich., with a 13.2 percent decrease in quarter-over-quarter home price change and a 58 percent REO saturation rate.
Source: “Clear Capital Reports Quarterly Home Price Decline Slows; Signs of Market Stability as Summer Approaches,” Clear Capital (June 9, 2011) 2 Executives Sentenced in $3 Billion Fraud Ring Two executives were sentenced to several years in prison for their involvement in a massive fraud ring — estimated at $3 billion — that led to the collapse of one of the country’s largest privately held mortgage lending companies, as well as a bank.
Taylor, Bean & Whitaker Mortgage Corp.’s former president Raymond Bowman and its former treasurer Desiree Brown were convicted for their part in trying to cover up major losses by the company in moving money between accounts at Colonial Bank and selling mortgage loans that never existed or that had previously been sold. TBW’s former chairman Lee Farkas, who prosecutors have called the ring leader of the fraud, is set to be sentenced June 27.
Bowman was sentence to 30 months in prison while Brown was sentenced to six years in prison.
"It was never my intent to commit a crime," Brown told the court. "It was always my intent to fix the problem."
Prosecutors say the mortgage fraud at TBW lasted more than seven years up until August 2009, which ultimately led to the collapse of TBW and Colonial BancGroup Inc.’s Colonial Bank. Prior to its collapse, TBW was one of the nation’s largest privately held mortgage lenders with some $20 billion in mortgage sales a year. Meanwhile, Colonial Bank — before regulators took it over — was once one of the top 50 U.S. banks.
Prosecutors say the case marks one of the few since the aftermath of the global financial crisis where charges have been brought up against executives at major firms.
Usually prosecutions, up to this point, have involved lower-level employees or smaller firms.
Source: “Former Executives Get Prison Time for Mortgage Fraud,” Reuters (June 10, 2011)
Banks Penalized for Loan Mod Failings
Three major banks have lost federal mortgage modification incentives in delivering a foreclosure relief program until they make big changes to improve their practices.
Obama administration officials have told Bank of America, JPMorgan Chase & Co., and Wells Fargo & Co. that they must make “substantial improvements” to the way they administer the Home Affordable Modification Program, and they will not receive any more federal money from the program until they do so. For example, officials noted that banks need substantial improvement in correctly evaluating borrowers’ incomes, which is a critical component for determining eligibility for the program. Some of the banks also need to improve how they identify and contact borrowers for the program.
Last month, the banks received $24 million in payments through HAMP, but no more payments will be made until servicers improve their performance, officials warned.
While Bank of America agreed that it needed to improve its practices in the program, JPMorgan Chase and Wells Fargo say they disagree with the poor evaluation. Wells Fargo, in fact, says they plan to contest the administration’s evaluation of how well it's done with administering HAMP. The review, which examined all 10 servicers who administer the program, found that all 10 were performing below its benchmarks.
This marks the first time the Obama administration has taken major punitive action against banks in the HAMP program, which has been under attack in recent months from some lawmakers and critics who say the program has not done enough to help save home owners from foreclosure. Republicans in the House of Representatives voted to end the program earlier this year. However, the measure has yet to pass the Senate and the White House already has threatened a veto.
Source: “3 Big Banks Lose Mortgage Modification Incentives,” Los Angeles Times (June 10, 2011)
Obama administration officials have told Bank of America, JPMorgan Chase & Co., and Wells Fargo & Co. that they must make “substantial improvements” to the way they administer the Home Affordable Modification Program, and they will not receive any more federal money from the program until they do so. For example, officials noted that banks need substantial improvement in correctly evaluating borrowers’ incomes, which is a critical component for determining eligibility for the program. Some of the banks also need to improve how they identify and contact borrowers for the program.
Last month, the banks received $24 million in payments through HAMP, but no more payments will be made until servicers improve their performance, officials warned.
While Bank of America agreed that it needed to improve its practices in the program, JPMorgan Chase and Wells Fargo say they disagree with the poor evaluation. Wells Fargo, in fact, says they plan to contest the administration’s evaluation of how well it's done with administering HAMP. The review, which examined all 10 servicers who administer the program, found that all 10 were performing below its benchmarks.
This marks the first time the Obama administration has taken major punitive action against banks in the HAMP program, which has been under attack in recent months from some lawmakers and critics who say the program has not done enough to help save home owners from foreclosure. Republicans in the House of Representatives voted to end the program earlier this year. However, the measure has yet to pass the Senate and the White House already has threatened a veto.
Source: “3 Big Banks Lose Mortgage Modification Incentives,” Los Angeles Times (June 10, 2011)
Fixed Mortgage Rates Continue Downward Slide
MCLEAN, Va., June 2, 2011 -- Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), which showed fixed-rate mortgages declining for the seventh consecutive week to new lows amid continuing weak economic and housing data. The 30-year fixed averaged 4.55 percent and the 15-year averaged 3.74 percent.
30-year fixed-rate mortgage (FRM) averaged 4.55 percent with an average 0.6 point for the week ending June 2, 2011, down from last week when it averaged 4.60 percent. Last year at this time, the 30-year FRM averaged 4.79 percent.
15-year FRM this week averaged 3.74 percent with an average 0.7 point, down from last week when it averaged 3.78 percent. A year ago at this time, the 15-year FRM averaged 4.20 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.41 percent this week, with an average 0.6 point, the same from last week when it averaged 3.41 percent. A year ago, the 5-year ARM averaged 3.94 percent.
1-year Treasury-indexed ARM averaged 3.13 percent this week with an average 0.6 point, up from last week when it averaged 3.11 percent. At this time last year, the 1-year ARM averaged 3.95 percent.
Frank Nothaft, vice president and chief economist at Freddie Mac, reports, "Fixed mortgage rates followed U.S. Treasury yields lower this week amid financial market concerns that the current lull in the economy is continuing. First quarter growth in consumer spending was revised downward by half of a percentage point to 2.2 percent, according to the Bureau of Economic Activity, consumer confidence in May was weaker than the market consensus forecast, and the manufacturing industry slowed for the third straight month in May."
"The housing market is showing strain as well. The S&P/Case-Shiller® National Home Price Index fell 5.1 percent between the first quarters of 2010 and 2011, representing the largest annual decline since the third quarter of 2009. In addition, the index of pending existing home sales dropped 11.6 percent from March to April, led by the Midwest and South regions where the tornados and flooding occurred."
Published: June 3, 2011
30-year fixed-rate mortgage (FRM) averaged 4.55 percent with an average 0.6 point for the week ending June 2, 2011, down from last week when it averaged 4.60 percent. Last year at this time, the 30-year FRM averaged 4.79 percent.
15-year FRM this week averaged 3.74 percent with an average 0.7 point, down from last week when it averaged 3.78 percent. A year ago at this time, the 15-year FRM averaged 4.20 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.41 percent this week, with an average 0.6 point, the same from last week when it averaged 3.41 percent. A year ago, the 5-year ARM averaged 3.94 percent.
1-year Treasury-indexed ARM averaged 3.13 percent this week with an average 0.6 point, up from last week when it averaged 3.11 percent. At this time last year, the 1-year ARM averaged 3.95 percent.
Frank Nothaft, vice president and chief economist at Freddie Mac, reports, "Fixed mortgage rates followed U.S. Treasury yields lower this week amid financial market concerns that the current lull in the economy is continuing. First quarter growth in consumer spending was revised downward by half of a percentage point to 2.2 percent, according to the Bureau of Economic Activity, consumer confidence in May was weaker than the market consensus forecast, and the manufacturing industry slowed for the third straight month in May."
"The housing market is showing strain as well. The S&P/Case-Shiller® National Home Price Index fell 5.1 percent between the first quarters of 2010 and 2011, representing the largest annual decline since the third quarter of 2009. In addition, the index of pending existing home sales dropped 11.6 percent from March to April, led by the Midwest and South regions where the tornados and flooding occurred."
Published: June 3, 2011
Slow Economic Recovery Blamed on Housing
While the employment picture continues to gradually improve, the economy is not recovering at the pace some experts had hoped for, and some are pointing fingers at the housing market for the slow recovery.
Federal Reserve Chairman Ben Bernanke says the economy is recovering at a “moderate pace” and that a high number of foreclosures and home owners who are “underwater” on their mortgages continues to drag down housing prices and the economy.
"Declines in the values of homes and stocks sharply reduced the wealth of many Americans during the crisis,” Bernanke says. “Three-fifths or more of families across all income groups reported a decline in wealth between 2007 and 2009, and the typical household lost nearly one-fifth of its wealth, regardless of income group.
"Moreover, one in eight of the households ... started the crisis with zero or negative net worth and thus had scant resources to fall back on to maintain their standard of living during bouts of unemployment."
However, there are signs the outlook is starting to improve. The construction industry in April increased employment by 9,000, which is its first monthly increase in years and may be a sign that the sector is finally in recovery mode. Overall, unemployment continues to decline, which will help more households start to feel more financially secure. However, long-term unemployment remains historically high, particularly among the young, minorities, and those with less education.
Source: “Real Estate Outlook: Bernanke on Housing,” Realty Times (May 9, 2011)
Federal Reserve Chairman Ben Bernanke says the economy is recovering at a “moderate pace” and that a high number of foreclosures and home owners who are “underwater” on their mortgages continues to drag down housing prices and the economy.
"Declines in the values of homes and stocks sharply reduced the wealth of many Americans during the crisis,” Bernanke says. “Three-fifths or more of families across all income groups reported a decline in wealth between 2007 and 2009, and the typical household lost nearly one-fifth of its wealth, regardless of income group.
"Moreover, one in eight of the households ... started the crisis with zero or negative net worth and thus had scant resources to fall back on to maintain their standard of living during bouts of unemployment."
However, there are signs the outlook is starting to improve. The construction industry in April increased employment by 9,000, which is its first monthly increase in years and may be a sign that the sector is finally in recovery mode. Overall, unemployment continues to decline, which will help more households start to feel more financially secure. However, long-term unemployment remains historically high, particularly among the young, minorities, and those with less education.
Source: “Real Estate Outlook: Bernanke on Housing,” Realty Times (May 9, 2011)
Median price of homes...
11 Cities Where Homes Sell the Fastest California boasted the highest number of cities where homes tended to spend the shortest amount of time on the market last month, based on March housing data from Realtor.com.
In Oakland, Calif., the average days on the market for listings was 50 in March--the least amount of days for median days on the market for the 146 markets reviewed.
Nationally, the median for homes for days on the market was 160 in March, which is an increase of 40 percent in a year.
Here is a list of the cities with the fewest median days on the market from March:
Oakland, Calif.Median days on the market: 50Median list price: $319,000
San FranciscoMedian days on the market: 63Median list price: $639,000
DenverMedian days on the market: 66Median list price: $259,900
Iowa City, IowaMedian days on the market: 66Median list price: $187,500
Los Angeles-Long Beach, Calif.Median days on the market: 70Median list price: $345,000
Stockton-Lodi, Calif.Median days on the market: 70Median list price: $175,000
Bakersfield, Calif.Median days on the market: 70Median list price: $141,500
San Jose, Calif.Median days on the market: 71Median list price: $470,000
Anchorage, AlaskaMedian days on the market: 71Median list price: $279,975
Fresno, Calif.Median days on the market: 71Median list price: $170,000
Tulsa, Okla.Median days on the market: 71Median list price: $147,900
Source: REALTOR® Magazine online (April 27, 2011)
In Oakland, Calif., the average days on the market for listings was 50 in March--the least amount of days for median days on the market for the 146 markets reviewed.
Nationally, the median for homes for days on the market was 160 in March, which is an increase of 40 percent in a year.
Here is a list of the cities with the fewest median days on the market from March:
Oakland, Calif.Median days on the market: 50Median list price: $319,000
San FranciscoMedian days on the market: 63Median list price: $639,000
DenverMedian days on the market: 66Median list price: $259,900
Iowa City, IowaMedian days on the market: 66Median list price: $187,500
Los Angeles-Long Beach, Calif.Median days on the market: 70Median list price: $345,000
Stockton-Lodi, Calif.Median days on the market: 70Median list price: $175,000
Bakersfield, Calif.Median days on the market: 70Median list price: $141,500
San Jose, Calif.Median days on the market: 71Median list price: $470,000
Anchorage, AlaskaMedian days on the market: 71Median list price: $279,975
Fresno, Calif.Median days on the market: 71Median list price: $170,000
Tulsa, Okla.Median days on the market: 71Median list price: $147,900
Source: REALTOR® Magazine online (April 27, 2011)
Missed Mortgage Payments Hurt Credit Scores
Missed Mortgage Payments Hurt Credit Scores Missed mortgage payments, short sales, and foreclosures can all drastically bring down a credit score.
Lenders use credit scores to measure how well a person handles debt. Credit scores range from 300 to 850, with 650 and below considered poor credit. A mortgage makes up a big part of a person’s credit score and often is the most important part of a person’s credit profile.
And just missing a single mortgage payment by 30 days can ruin a credit score, say FICO and VantageScore, which have studied the impact mortgages can have on credit scores. For borrowers, that can be nearly as destructive as a foreclosure to a credit score, according to the companies.
On the other hand, loan modifications, which is when lenders approve new loan terms, have a “very, very minimal” impact to credit scores, possibly dropping the borrower’s score by 10 or 15 points, Sarah Davies, the senior vice president for analytics at VantageScore, told The New York Times.
A good credit score is important not just for financing home purchases, but employers increasingly check credit as well as landlords when seeking rentals. Also, poor credit scores can also mean higher costs on car loans and credit cards.
How a Credit Score Is Affected
FICO evaluated three various scenarios of mortgage holders — a borrower with a great credit score (780), a borrower with good credit (720), and a poor credit borrower (680) — in a study it conducted last month. Here’s the impact FICO found:
▪ 30 days late on a mortgage payment: The 780 credit score borrower has her credit score fall to 670-690. The 720 credit score borrower has his fall to 630-650. The 680 credit score borrower falls to 600-620.
▪ Short sale, deed in lieu of foreclosure, or settlement, assuming the balance has been wiped out: The 780 credit score borrower falls to 655-675; the 720 credit score falls to 605-625; and the 680 credit score drops to 610-630.
▪ Foreclosure, or short sale with a deficiency balance owed: The 780 credit score drops to 620-640; the 720 credit score falls to 570-590; and the 680 credit score decreases to 575-595.
Lenders use credit scores to measure how well a person handles debt. Credit scores range from 300 to 850, with 650 and below considered poor credit. A mortgage makes up a big part of a person’s credit score and often is the most important part of a person’s credit profile.
And just missing a single mortgage payment by 30 days can ruin a credit score, say FICO and VantageScore, which have studied the impact mortgages can have on credit scores. For borrowers, that can be nearly as destructive as a foreclosure to a credit score, according to the companies.
On the other hand, loan modifications, which is when lenders approve new loan terms, have a “very, very minimal” impact to credit scores, possibly dropping the borrower’s score by 10 or 15 points, Sarah Davies, the senior vice president for analytics at VantageScore, told The New York Times.
A good credit score is important not just for financing home purchases, but employers increasingly check credit as well as landlords when seeking rentals. Also, poor credit scores can also mean higher costs on car loans and credit cards.
How a Credit Score Is Affected
FICO evaluated three various scenarios of mortgage holders — a borrower with a great credit score (780), a borrower with good credit (720), and a poor credit borrower (680) — in a study it conducted last month. Here’s the impact FICO found:
▪ 30 days late on a mortgage payment: The 780 credit score borrower has her credit score fall to 670-690. The 720 credit score borrower has his fall to 630-650. The 680 credit score borrower falls to 600-620.
▪ Short sale, deed in lieu of foreclosure, or settlement, assuming the balance has been wiped out: The 780 credit score borrower falls to 655-675; the 720 credit score falls to 605-625; and the 680 credit score drops to 610-630.
▪ Foreclosure, or short sale with a deficiency balance owed: The 780 credit score drops to 620-640; the 720 credit score falls to 570-590; and the 680 credit score decreases to 575-595.
Has Housing Reached a 'Recovery Path'?
Has Housing Reached a 'Recovery Path'? Sales of existing homes rose slightly in March, marking the sixth consecutive monthly rise for existing home sales in the last eight months, the National Association of REALTORS reported Wednesday.
"We're clearly on a recovery path," says Lawrence Yun, NAR chief economist.
Existing home sales rose 3.7 percent in March from February, as distressed sales, such as those in foreclosure, continued to make up a big bulk of home sales (40 percent of all purchases).
"At this point, we're likely to see a steady improvement in sales," says economist Joel Naroff of Naroff Economic Advisors.
So just in time for the spring buying season, here’s what economists have to say about who’s buying and currently driving the market:
Investors: All-cash deals last month made up a record number of sales, accounting for 35 percent of all resold homes. Investors continue to make up a big part of those cash deals. Investors are buying distressed homes and flipping them for a slight profit or turning them into rentals, says Patrick Newport, economist at IHS Global Insight.
Luxury consumers: Some real estate professionals are reporting a pick up in luxury markets in some cities too. "The confidence is back in the market," says Neil Palmer, CEO at Christie’s International Real Estate.
Foreign buyers: Coastal markets, in particular, are seeing a surge of foreign buyers, such as in New York, Palm Beach, Fla., and San Francisco, AOL Real Estate news reports.
Traditional buyers: Traditional buyers are also re-emerging. Mortgage applications to buy homes rose 10 percent over a seven-week period, according to the Mortgage Bankers Association’s most recent report. "This pickup in demand should show up in improved existing home sales in April and May, unless lending conditions tighten," Newport says.
The market is making “slow, steady progress” and demand in housing is rising even with higher mortgage rates “so that's encouraging,” Pierre Ellis, an economist at Decision Economics in New York, told The New York Times.
"It's the new financial psychology," says Jarvis Slade Jr., Christie's managing director for the Americas. "We've had two years of hesitation, the sellers are realistic, the buyers confident and cautious, but Americans are starting to feel better."
"We're clearly on a recovery path," says Lawrence Yun, NAR chief economist.
Existing home sales rose 3.7 percent in March from February, as distressed sales, such as those in foreclosure, continued to make up a big bulk of home sales (40 percent of all purchases).
"At this point, we're likely to see a steady improvement in sales," says economist Joel Naroff of Naroff Economic Advisors.
So just in time for the spring buying season, here’s what economists have to say about who’s buying and currently driving the market:
Investors: All-cash deals last month made up a record number of sales, accounting for 35 percent of all resold homes. Investors continue to make up a big part of those cash deals. Investors are buying distressed homes and flipping them for a slight profit or turning them into rentals, says Patrick Newport, economist at IHS Global Insight.
Luxury consumers: Some real estate professionals are reporting a pick up in luxury markets in some cities too. "The confidence is back in the market," says Neil Palmer, CEO at Christie’s International Real Estate.
Foreign buyers: Coastal markets, in particular, are seeing a surge of foreign buyers, such as in New York, Palm Beach, Fla., and San Francisco, AOL Real Estate news reports.
Traditional buyers: Traditional buyers are also re-emerging. Mortgage applications to buy homes rose 10 percent over a seven-week period, according to the Mortgage Bankers Association’s most recent report. "This pickup in demand should show up in improved existing home sales in April and May, unless lending conditions tighten," Newport says.
The market is making “slow, steady progress” and demand in housing is rising even with higher mortgage rates “so that's encouraging,” Pierre Ellis, an economist at Decision Economics in New York, told The New York Times.
"It's the new financial psychology," says Jarvis Slade Jr., Christie's managing director for the Americas. "We've had two years of hesitation, the sellers are realistic, the buyers confident and cautious, but Americans are starting to feel better."
Predicting the Market Bottom
Over recent years, a favorite past time of most real estate shoppers, watchers, and pundits, has been to make multiple guesses as to when the market bottom has arrived, will arrive, or is arriving. Buyers who seek to time a market and purchase at the exact summit of the decline appear to be most interested in identifying the market bottom, and the rest of us who make a living off of such undulations in market prices work to understand the pitches and heaves to best represent our clients. It is obvious that buyers are anxious to recognize a market bottom, but there's one key group that is in such a hybrid state of panic sprinkled optimism it makes the Red Bull chugging, market timing buyers look downright lethargic: Sellers. I've gone to great lengths to dissuade buyers from holding their breath until they pass the sign that reads "Market Bottom Ahead", largely because when they do reach that sign, it will almost certainly read "For Market Bottom, Please Go Back 7 Months". There will be buyers who purchase during the exact quarter that the market bottom was left behind, but those buyers will have purchased at that time through either coincidence or divine intervention, not intelligent surveillance. It's important to note the way I addressed the market bottom, in that the buyer who purchases the moment the bottom is left behind is the biggest winner, but any buyer who purchases during the market bottom will ultimately align with the winners. See, a market bottom doesn't just happen, it forms over years and once that bottom is established, as it is in the entry level lakefront market here, we'll bounce along that bottom until the strength of the individual market is such that price increases can be tolerated and accepted by the buyers that make up the market. Buying at the moment the market begins its upswing is nice, but such a precise approach isn't necessary. Me? I'm just going to grab a shot gun, close my eyes, and hope I get close. The buzz surrounding my Lake Geneva market these days is that the market bottom has both arrived and been left behind. Some agents are giddy at the prospects of such a recovery, and someone, somewhere, is polishing their gold name tag and testing the magnetic strength of their car door advertisement in anticipation of the return of the glory days. Personally, I think the market is mixed at best, with certain segments experiencing a true, identifiable market bottom, and others just testing the waters at what those lower prices look and feel like. Other markets might have already been to the bottom and back, which is to say that even in a tight geographic market like Lake Geneva, there are handfuls of individual market segments that can and will all bottom at different times. And those three paragraphs lead us to this: There is much danger in a market that appears poised for a solid rebound, and that danger lies in the list prices of properties and the attitudes of those setting these prices. For an example of what it is I'm talking about, consider this hypothetical. I'm a seller, and I'm ravishingly handsome. I am also ridiculously rich. So far, so good. I also own a house at Lake Geneva. It's a vacation home, and my desires are no longer for a simple vacation home, but instead a massive estate large enough to house my toys, guests, and my ego. And one of those $15,000 eight minute workout machines. My property, during an 80 degree, cloudless July afternoon in 2006, was possibly worth $1MM. I listed the property in 2010 for $1MM, hoping a buyer might be easily persuaded. My property didn't sell, which was fine with me, because I'm not sure if you full appreciate how rich I really am. Fast forward to 2011. I'm still devastatingly handsome, possibly more so. And my property is still unsold. I now list my property at $995k, hoping the reduction will attract a buyer. I wait, in my Paul and Shark jacket and slacks. The buyer has yet to show, but now, with the market on the upswing and pundits, agents, and even some buyers proclaiming the market bottom present and nearly in the past, I am confident. After all, the market bottom has arrived, which means my property has a much better chance at selling. The clouds will clear, a throng of buyers will approach, and I, sitting tall on my saddled, blindingly white unicorn will finally achieve a sale at my asking price of $995k. This scenario, with or without the unicorn, is playing out everywhere right now, from Winnetka to Hinsdale to Lake Geneva. Sellers feel bolstered by proclamations of a market bottom, but they're missing a very sneaky little truth about bottoms. A property can and should only benefit from a true market bottom if that property has adjusted to find that bottom. If Mr. Seller, I mean me, If I, were to have listed my property for $995k, and slowly but surely adjusted to $795k, and now sold for a number that a buyer deems reasonable given the possibility that the bottom has indeed formed, then and only then would I be able to benefit from that bottom. If I stick at $995k, and wait for a buyer, I cannot reasonably pronounce the property a deal now that the market has bottomed. The market might have bottomed, and the true value of my property may have done the same, but if my asking price hasn't adjusted to find that bottom, well, then, I'm just a guy with a really shiny, remarkably well behaved unicorn and an price that remains equally as unbelievable. If you're buying in Chicago or Peoria or Lake Geneva, beware the phenomenon of the seller who has never made an effort to match the market decline and finds confidence in a recuperating market. There are traps in any market, but the traps that lie in wait during periods of nascent recovery are even more lethal. David Curry is a realtor with Geneva Lakefront Realty in Williams Bay, Wisconsin. He writes on the Lake Geneva and national markets daily at GenevaLakeFrontRealty.com/blog.
Rising Rents Make Rentals Less Appealing
Rising Rents Make Rentals Less Appealing Apartment bargains once dominated the housing market, but those bargains have slowly faded away. As vacancies decrease and rents rise, renters are finding fewer deals. Analysts expect vacancies to decrease even more and rents to continue to rise through 2013, as the economy continues to improve. Rental activity recorded its best start for the year since 1999, according to Reis Inc. Vacancy rates have fallen to mid-2008 levels and rents have increased for the past five quarters, now averaging $991 per month nationwide. Renters are finding the fewest deals along the coasts, such as New York, Washington, D.C., Boston, Los Angeles, San Francisco, Seattle, and San Jose, Calif. These cities are experiencing low vacancy rates. Also, a boost in these cities’ economies is sending rents higher. New York City alone has seen double rent increases compared to the national average and has the lowest vacancy rate in the nation. The best rental deals can be found in Las Vegas, Tucson, Ariz., Phoenix, and several cities in Florida--all cities where unemployment and foreclosures remain high. According to Reis, Las Vegas was the only city to see rents fall last year. However, analysts say that bargains across the country are getting fewer, and renters should expect to see an increase in rents over the next three years.
Give me Patience...
INFO THAT HITS US WHERE WE LIVE...Patience has certainly been needed to weather the ups and downs of the current U.S. housing market. But as we await strong recovery, we can take heart in positive signs when they show up. Last week we had the report that Pending Home Sales were up 2.1% in February. This measure of contracts on existing homes indicates sales should rebound in March following February's drop.Other tidbits of goodness included the news that the share of homebuyers for second homes held steady in 2010 versus the year before. But this report from the National Association of Realtors (NAR) did show overall sales volume somewhat declining. Meanwhile, the reverse of that is occurring on the luxury end of the market, where sales of homes priced at $1 million and above were up 3.9% in February versus a year ago.Those market observers who seem dying to report a double dip in housing prices loved last week's S&P/Case-Shiller Home Price Indices, which were down for January. But the 10-city composite Case-Shiller home price index is still 2.8% above and the 20-city is still 1.1% above their April 2009 lows. Seems the critics could do with a little patience too. BUSINESS TIP OF THE WEEK...Attitude is everything. Be a fanatic optimist. Consistently see the glass half full. A great attitude affects all those around you--and always wins in the end. >> Review of Last WeekJOBS SURPRISE...It was a good week for investors who were encouraged by positive economic news, capped on Friday with a surprisingly upbeat March Employment Report. All three major stock market indexes were up again for the week, which began with signs the consumer's purchasing power is growing. For February, Personal Income and Personal Spending were both UP, while inflation, as measured by Core PCE Prices, was up only 0.2% for the month and 0.9% since last year. This is well within the Fed's target range.The highlight of the week was the aforementioned March Employment Report. Nonfarm payrolls were UP 216,000, with the private sector contributing 230,000 jobs, well above expectations. Best of all, job growth was broadly based, with strong gains in several business sectors. The unemployment rate dropped again and is now at 8.8%. The festivities ended with ISM Manufacturing down a tick for March but, at 61.2, well into expansion territory above 50.For the week, the Dow ended up 1.3%, to 12,377; the S&P 500 was up 1.4%, to 1,332; and the Nasdaq was up 1.7%, ending at 2,790. The bond market was hurt by the renewed interest in stocks and the better than anticipated jobs report. The FNMA 4.0% bond we watch was off .02 for the week, closing at $98.10. National average rates for conforming mortgages edged up a bit according to Freddie Mac's weekly survey, but they're still at historically low levels.DID YOU KNOW?...ISM reports come from the Institute for Supply Management. Last week's ISM Manufacturing is considered by many economists to be the most reliable near-term economic barometer for that sector. This week's ISM Non-Manufacturing provides insight into the Services sector, representing over 80% of GDP. >> This Week’s ForecastTAKING A BREATHER...After the recent avalanche of economic news, this week could be seen as a welcome respite. Tuesday's ISM Non-Manufacturing index for March is expected to hold steady, reflecting the slow pace of the economic recovery. But the reading above 50 puts services solidly in expansion mode, which is key, since 85% of our jobs are in this sector of the economy. We also get FOMC Minutes from the Fed's meeting on March 15. Economists will be looking for signs of how soon the Fed may start pushing rates back up. >>
Bargain-Seeking Home Buyers are on the Hunt
Bargain-Seeking Home Buyers on the Hunt Housing prices across the country are at multi-year lows and mixed with low interest rates bargain hunters are targeting real estate. More investors are heading to the market looking to make cash buys for real estate, investing in second or even a third home, Reuters News reports. "We're starting to get a lot more inquiries and assisting in transactions," says Rocco Papandrea, a senior vice president and wealth management adviser at Merill Lynch in New York. Papandrea says he’s seeing more interest in properties along the West Coast and in Colorado, as well as Florida. Canadian buyers in particular are expected to be looking to purchase U.S. homes. The Bank of Montreal estimates that one-in-five Canadians is considering buying U.S. property. With dropping home prices, more cities are looking to be attractive buys, such as the increasing affordability in popular vacation-home designations along the U.S. Sunbelt. For example, home prices have fallen 44 percent in Tampa, 54 percent in Phoenix, 57 percent in Las Vegas, and 49 percent in Miami, the Bank of Montreal reports. "If the economy keeps clicking along and jobs keep growing, housing will be fine," says Dean Frankel, a portfolio manager at Urdang Capital Markets in Plymouth Meeting, Pennsylvania, who oversees around $1.7 billion in real estate equity investments. The economy--and ultimately housing--may then get a boost from the latest unemployment report released Friday. The unemployment rate reached a two-year low of 8.8 percent in March as companies began a brisk wave of hiring, adding employees at the fastest two-month pace since before the recession even started, the Labor Department reports. The unemployment rate has fallen a full percentage point in the last four months, which marks the sharpest drop since 1983. Home Owners See Big Value in Remodeling The do-it-yourself home improvement market has faced a 21 percent drop from 2005-2010, according to the latest research from market researcher Mintel. Yet, that’s not due to lack of will on home owner's part, but more about lack of money, according to the survey. More than a quarter of DIYers surveyed said they would undertake a major home renovation or addition to their home if they had the funds. Nearly 40 percent of DIYers say that making a major home improvement is the best long-term investment they can make. However, with the sagging housing market, many home owners have opted to put off major renovation projects, but forecasters are already seeing signs that is changing. “We forecast growth to accelerate in 2011 and, presuming a stabilization of the housing market, to remain positive through 2015,” says Bill Patterson, senior analyst at Mintel. “Pent-up demand, ongoing need for repair and maintenance, retro-fitting, and renovations from boomers approaching retirement and demand from millennials should all propel DIY spending.”
6 Ways to Squeeze Out Better Gas Mileage
With gas prices topping $4 a gallon, real estate professionals who use their car frequently for work are looking for ways to get as much as they can out of every gallon.
Here are some tips for getting better mileage out of your car:
1. Slow down: Most cars get the best gas mileage at 45-55 miles per hour. Driving faster than 60 mph actually can cut gas mileage anywhere from 7 to 23 percent.
2. Don't idle: If you need to wait longer than 20 seconds, you’re better off turning off your engine than keeping your car running. Restarting the car requires less gas than leaving it idling.
3. Lose the heavy load: Make sure you’re not carrying in your car more than what you need. An extra 100 pounds sitting in the trunk or back seat can reduce fuel economy as much as 2 percent.
4. Tighten the gas cap: Fuel can evaporate through gas caps with broken or weak seals. Loose or broken gas caps can cost you a loss of about 2 percent in your gas mileage.
5. Close the windows and turn off the AC: Driving with the windows open or the air conditioner turned on can be big gas wasters. Instead, the most efficient way to keep the car cool is by using the air that comes in through your flow-through ventilator.
6. Get an oil change: Improve your gas mileage by as much as 2 percent by using energy-conserving or synthetic motor oil, which can reduce engine friction.
Here are some tips for getting better mileage out of your car:
1. Slow down: Most cars get the best gas mileage at 45-55 miles per hour. Driving faster than 60 mph actually can cut gas mileage anywhere from 7 to 23 percent.
2. Don't idle: If you need to wait longer than 20 seconds, you’re better off turning off your engine than keeping your car running. Restarting the car requires less gas than leaving it idling.
3. Lose the heavy load: Make sure you’re not carrying in your car more than what you need. An extra 100 pounds sitting in the trunk or back seat can reduce fuel economy as much as 2 percent.
4. Tighten the gas cap: Fuel can evaporate through gas caps with broken or weak seals. Loose or broken gas caps can cost you a loss of about 2 percent in your gas mileage.
5. Close the windows and turn off the AC: Driving with the windows open or the air conditioner turned on can be big gas wasters. Instead, the most efficient way to keep the car cool is by using the air that comes in through your flow-through ventilator.
6. Get an oil change: Improve your gas mileage by as much as 2 percent by using energy-conserving or synthetic motor oil, which can reduce engine friction.
Renting May Soon Get Pricier
Industry experts are forecasting double-digit rent hikes soon.
With vacancy rates dipping below the 10 percent mark, demand is picking up, which is expected to put upward pressure on rental prices.
"The demand for rental housing has already started to increase," says Peggy Alford, president of Rent.com. "Young people are starting to get rid of their roommates and move out of their parents' basements."
By 2012, Alford predicts the vacancy rate will drop to 5 percent, causing prices to rise.
Rent hikes have been modest the past decade, averaging less than 1 percent a year in adjusting for inflation.
Source: “U.S. Set to be High-Rent Nation,” Chicago Tribune (March 16, 2011)
With vacancy rates dipping below the 10 percent mark, demand is picking up, which is expected to put upward pressure on rental prices.
"The demand for rental housing has already started to increase," says Peggy Alford, president of Rent.com. "Young people are starting to get rid of their roommates and move out of their parents' basements."
By 2012, Alford predicts the vacancy rate will drop to 5 percent, causing prices to rise.
Rent hikes have been modest the past decade, averaging less than 1 percent a year in adjusting for inflation.
Source: “U.S. Set to be High-Rent Nation,” Chicago Tribune (March 16, 2011)
30-Year Fixed-Rate Mortgage Holds Steady at 4.88 Percent
McLean, VA – Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS), which shows mortgage rates holding steady and below 5.0 percent.
30-year fixed-rate mortgage (FRM) averaged 4.88 percent with an average 0.7 point for the week ending March 10, 2011, up from last week when it averaged 4.87 percent. Last year at this time, the 30-year FRM averaged 4.95 percent.
15-year FRM this week averaged 4.15 percent with an average 0.7 point, the same from last week when it averaged 4.15 percent. A year ago at this time, the 15-year FRM averaged 4.32 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.73 percent this week, with an average 0.6 point, up from last week when it averaged 3.72 percent. A year ago, the 5-year ARM averaged 4.05 percent.
1-year Treasury-indexed ARM averaged 3.21 percent this week with an average 0.5 point, down from last week when it averaged 3.23 percent. At this time last year, the 1-year ARM averaged 4.22 percent.
Frank Nothaft, vice president and chief economist of Freddie Mac, reports, "Mortgage rates held steady amid a strong employment report . The private sector added 222,000 jobs in February, the most since March 2006 while the unemployment rate fell to 8.9 percent, the lowest share since April 2009."
"Interest rates for 30-year fixed-rate mortgages have averaged at or below 5 percent in every week but one this year, contributing to record home affordability. The National Association of Realtors®Housing Affordability Index rose to an all-time record high in January, based on figures dating back to 1971. More recently, mortgage applications jumped almost 16 percent over the week ended March 4, 2011 representing the largest percent increase since the week of June 11, 2009."
30-year fixed-rate mortgage (FRM) averaged 4.88 percent with an average 0.7 point for the week ending March 10, 2011, up from last week when it averaged 4.87 percent. Last year at this time, the 30-year FRM averaged 4.95 percent.
15-year FRM this week averaged 4.15 percent with an average 0.7 point, the same from last week when it averaged 4.15 percent. A year ago at this time, the 15-year FRM averaged 4.32 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.73 percent this week, with an average 0.6 point, up from last week when it averaged 3.72 percent. A year ago, the 5-year ARM averaged 4.05 percent.
1-year Treasury-indexed ARM averaged 3.21 percent this week with an average 0.5 point, down from last week when it averaged 3.23 percent. At this time last year, the 1-year ARM averaged 4.22 percent.
Frank Nothaft, vice president and chief economist of Freddie Mac, reports, "Mortgage rates held steady amid a strong employment report . The private sector added 222,000 jobs in February, the most since March 2006 while the unemployment rate fell to 8.9 percent, the lowest share since April 2009."
"Interest rates for 30-year fixed-rate mortgages have averaged at or below 5 percent in every week but one this year, contributing to record home affordability. The National Association of Realtors®Housing Affordability Index rose to an all-time record high in January, based on figures dating back to 1971. More recently, mortgage applications jumped almost 16 percent over the week ended March 4, 2011 representing the largest percent increase since the week of June 11, 2009."
Existing-Home Sales Up Again in January
The uptrend in existing-home sales continues, with January sales rising for the third consecutive month with a pace that is now above levels a year ago, according to the NATIONAL ASSOCIATION OF REALTORS®.
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 2.7 percent to a seasonally adjusted annual rate of 5.36 million in January from a downwardly revised 5.22 million in December, and are 5.3 percent above the 5.09 million level in January 2010. This is the first time in seven months that sales activity was higher than a year earlier.
Lawrence Yun, NAR chief economist, said the improvement is good but could be better. “The uptrend in home sales is consistent with improvements in the economy and jobs, which are helping boost consumer confidence,” Yun said. “The extremely favorable housing affordability conditions are a big factor, but buyers have been constrained by unnecessarily tight credit. As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity.”
A parallel NAR practitioner survey shows first-time buyers purchased 29 percent of homes in January, down from 33 percent in December and 40 percent in January 2010 when an extended tax credit was in place.
Investors accounted for 23 percent of purchases in January, up from 20 percent in December and 17 percent in January 2010; the balance of sales were to repeat buyers. All-cash sales rose to 32 percent in January from 29 percent in December and 26 percent in January 2010.
“Increases in all-cash transactions, the investor market share and distressed home sales all go hand-in-hand. With tight credit standards, it’s not surprising to see so much activity where cash is king and investors are taking advantage of conditions to purchase undervalued homes,” Yun said. All-cash purchases are at the highest level since NAR started measuring these purchases monthly in October 2008, when they accounted for 15 percent of the market. The average of all-cash deals was 20 percent in 2009, rising to 28 percent last year.
The national median existing-home price for all housing types was $158,800 in January, down 3.7 percent from January 2010. Distressed homes edged up to a 37 percent market share in January from 36 percent in December; it was 38 percent in January 2010.
NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said the median price is being dampened by unusual market factors. “Unprecedented levels of all-cash purchases, primarily of distressed homes sold at deep discounts, undoubtedly pulls the median price downward,” Phipps said. “Given the levels of inventory we see today, we believe that traditional homes in good condition have held their value.”
Total housing inventory at the end of January fell 5.1 percent to 3.38 million existing homes available for sale, which represents a 7.6-month supply at the current sales pace, down from an 8.2-month supply in December. The inventory supply is at the lowest level since December 2009 when there was a 7.3-month supply.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.76 percent in January from 4.71 percent in December; the rate was 5.03 percent in January 2010.
Single-family home sales rose 2.4 percent to a seasonally adjusted annual rate of 4.69 million in January from 4.58 million in December, and are 4.9 percent higher than the 4.47 million level in January 2010. The median existing single-family home price was $159,400 in January, down 2.7 percent from a year ago.
Existing condominium and co-op sales increased 4.7 percent to a seasonally adjusted annual rate of 670,000 in January from 640,000 in December, and are 7.9 percent above the 621,000-unit pace one year ago. The median existing condo price was $154,900 in January, which is 10.2 percent below January 2010.
Regional SalesNortheast: Regionally, existing-home sales in the Northeast fell 4.6 percent to an annual pace of 830,000 in January from a spike in December and are 1.2 percent below January 2010. The median price in the Northeast was $236,500, which is 4.0 percent below a year ago.
Midwest :"Existing-home sales in the Midwest rose 1.8 percent in January to a level of 1.14 million and are 3.6 percent above a year ago. The median price in the Midwest was $126,300, which is 3.2 percent below January 2010.
South: In the South, existing-home sales increased 3.6 percent to an annual pace of 2.02 million in January and are 8.0 percent higher than January 2010. The median price in the South was $136,600, down 2.1 percent from a year ago.
West: Existing-home sales in the West rose 7.9 percent to an annual level of 1.37 million in January and are 7.0 percent above January 2010. The median price in the West was $193,200, down 5.7 percent from a year ago
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 2.7 percent to a seasonally adjusted annual rate of 5.36 million in January from a downwardly revised 5.22 million in December, and are 5.3 percent above the 5.09 million level in January 2010. This is the first time in seven months that sales activity was higher than a year earlier.
Lawrence Yun, NAR chief economist, said the improvement is good but could be better. “The uptrend in home sales is consistent with improvements in the economy and jobs, which are helping boost consumer confidence,” Yun said. “The extremely favorable housing affordability conditions are a big factor, but buyers have been constrained by unnecessarily tight credit. As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity.”
A parallel NAR practitioner survey shows first-time buyers purchased 29 percent of homes in January, down from 33 percent in December and 40 percent in January 2010 when an extended tax credit was in place.
Investors accounted for 23 percent of purchases in January, up from 20 percent in December and 17 percent in January 2010; the balance of sales were to repeat buyers. All-cash sales rose to 32 percent in January from 29 percent in December and 26 percent in January 2010.
“Increases in all-cash transactions, the investor market share and distressed home sales all go hand-in-hand. With tight credit standards, it’s not surprising to see so much activity where cash is king and investors are taking advantage of conditions to purchase undervalued homes,” Yun said. All-cash purchases are at the highest level since NAR started measuring these purchases monthly in October 2008, when they accounted for 15 percent of the market. The average of all-cash deals was 20 percent in 2009, rising to 28 percent last year.
The national median existing-home price for all housing types was $158,800 in January, down 3.7 percent from January 2010. Distressed homes edged up to a 37 percent market share in January from 36 percent in December; it was 38 percent in January 2010.
NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said the median price is being dampened by unusual market factors. “Unprecedented levels of all-cash purchases, primarily of distressed homes sold at deep discounts, undoubtedly pulls the median price downward,” Phipps said. “Given the levels of inventory we see today, we believe that traditional homes in good condition have held their value.”
Total housing inventory at the end of January fell 5.1 percent to 3.38 million existing homes available for sale, which represents a 7.6-month supply at the current sales pace, down from an 8.2-month supply in December. The inventory supply is at the lowest level since December 2009 when there was a 7.3-month supply.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.76 percent in January from 4.71 percent in December; the rate was 5.03 percent in January 2010.
Single-family home sales rose 2.4 percent to a seasonally adjusted annual rate of 4.69 million in January from 4.58 million in December, and are 4.9 percent higher than the 4.47 million level in January 2010. The median existing single-family home price was $159,400 in January, down 2.7 percent from a year ago.
Existing condominium and co-op sales increased 4.7 percent to a seasonally adjusted annual rate of 670,000 in January from 640,000 in December, and are 7.9 percent above the 621,000-unit pace one year ago. The median existing condo price was $154,900 in January, which is 10.2 percent below January 2010.
Regional SalesNortheast: Regionally, existing-home sales in the Northeast fell 4.6 percent to an annual pace of 830,000 in January from a spike in December and are 1.2 percent below January 2010. The median price in the Northeast was $236,500, which is 4.0 percent below a year ago.
Midwest :"Existing-home sales in the Midwest rose 1.8 percent in January to a level of 1.14 million and are 3.6 percent above a year ago. The median price in the Midwest was $126,300, which is 3.2 percent below January 2010.
South: In the South, existing-home sales increased 3.6 percent to an annual pace of 2.02 million in January and are 8.0 percent higher than January 2010. The median price in the South was $136,600, down 2.1 percent from a year ago.
West: Existing-home sales in the West rose 7.9 percent to an annual level of 1.37 million in January and are 7.0 percent above January 2010. The median price in the West was $193,200, down 5.7 percent from a year ago
Real Estate Outlook: Home Sales Rebounded 4th Quarter
The latest news from the National Association of Realtors is good. According to their latest survey, home sales rebounded in 49 states during the fourth quarter with 78 markets – just over half of the available metropolitan areas – experiencing price gains from a year ago, while most of the rest saw price weakness.
Lawrence Yun, NAR chief economist, had positive things to say about this gain. "Home sales clearly recovered in the latter part of 2010 and are helping to absorb the inventory, including many distressed properties. Even with foreclosures continuing to enter the inventory pipeline, they’ve been selling well and housing supplies have trended down," he said. "A recovery to normalcy requires steady trimming of the inventories."
Total state existing-home sales rose by 15.4 percent in the 4th quarter. The median existing single-family price was $170,600 -- up slightly from the 4th quarter of 2009. Distressed properties, approximately 34 percent of 4th quarter sales, sold at a discount of 10 to 15 percent, a similar trend to what was seen a year earlier.
The NAR believes a housing recovery still rests firmly on a jobs recovery. Yun noted, "An improving housing market and job growth will go hand in hand. The housing recovery will mean faster job growth."
This is welcome news in a market where much remains unsure and unstable. The White House missed a recent deadline last week for a decision on what to do with mortgage giants Freddie Mac and Fannie Mae, who are currently under the conservatorship of the Federal Housing Finance Agency.
According to the New York Times, "The diminished urgency on both sides reflects the political realities of power-sharing, the fear of doing further damage to housing prices, and a great deal of uncertainty about the best approach to rebuilding the mortgage business."
What is on the horizon for the economy? Federal Reserve Chairman, Ben Bernanke, reported last week to the U.S. House of Representatives' Committee on the Budget, that it was a hard battle last year, as economic growth slowed in the Spring as a result of concerns over inventories, fiscal stimulus and the European debt crisis.
He noted that, "The initial phase of the recovery, which occurred in the second half of 2009 and in early 2010, was in large part attributable to the stabilization of the financial system, the effects of expansionary monetary and fiscal policies."
He reports that "construction remains weak, though, reflecting an overhang of vacant and foreclosed homes and continued poor fundamentals for most types of commercial real estate. Overall, improving household and business confidence, accommodative monetary policy, and more-supportive financial conditions, including an apparently increasing willingness of banks to lend, seem likely to result in a more rapid pace of economic recovery in 2011 than we saw last year."
We all have our fingers crossed that jobs and housing will recover in 2011, but only time will tell.
Lawrence Yun, NAR chief economist, had positive things to say about this gain. "Home sales clearly recovered in the latter part of 2010 and are helping to absorb the inventory, including many distressed properties. Even with foreclosures continuing to enter the inventory pipeline, they’ve been selling well and housing supplies have trended down," he said. "A recovery to normalcy requires steady trimming of the inventories."
Total state existing-home sales rose by 15.4 percent in the 4th quarter. The median existing single-family price was $170,600 -- up slightly from the 4th quarter of 2009. Distressed properties, approximately 34 percent of 4th quarter sales, sold at a discount of 10 to 15 percent, a similar trend to what was seen a year earlier.
The NAR believes a housing recovery still rests firmly on a jobs recovery. Yun noted, "An improving housing market and job growth will go hand in hand. The housing recovery will mean faster job growth."
This is welcome news in a market where much remains unsure and unstable. The White House missed a recent deadline last week for a decision on what to do with mortgage giants Freddie Mac and Fannie Mae, who are currently under the conservatorship of the Federal Housing Finance Agency.
According to the New York Times, "The diminished urgency on both sides reflects the political realities of power-sharing, the fear of doing further damage to housing prices, and a great deal of uncertainty about the best approach to rebuilding the mortgage business."
What is on the horizon for the economy? Federal Reserve Chairman, Ben Bernanke, reported last week to the U.S. House of Representatives' Committee on the Budget, that it was a hard battle last year, as economic growth slowed in the Spring as a result of concerns over inventories, fiscal stimulus and the European debt crisis.
He noted that, "The initial phase of the recovery, which occurred in the second half of 2009 and in early 2010, was in large part attributable to the stabilization of the financial system, the effects of expansionary monetary and fiscal policies."
He reports that "construction remains weak, though, reflecting an overhang of vacant and foreclosed homes and continued poor fundamentals for most types of commercial real estate. Overall, improving household and business confidence, accommodative monetary policy, and more-supportive financial conditions, including an apparently increasing willingness of banks to lend, seem likely to result in a more rapid pace of economic recovery in 2011 than we saw last year."
We all have our fingers crossed that jobs and housing will recover in 2011, but only time will tell.
Why Hire a Real Estate Agent or REALTOR?
As spring rolls in, many people start listing their home for sale. The weather warms up and buyers, having recovered from the holidays, begin to house hunt.
Many buyers will go it alone. They hit the Internet for their first line of attack in house hunting. They peruse magazines and open houses. But they miss an important key player in their house-hunting mission–the real estate agent.
The real estate agent is not a go-between paper shuffler. Your real estate agent is the connection to the inside world of real estate. Yes, the Internet can provide you with lots of information, but it can't replace a knowledgeable real estate agent.
Finding the best agent who meets your needs is like finding a good friend. I'm not kidding. Having to work with an agent that doesn't understand your needs for housing can result in endless headaches, but working with an expert in the industry takes away the worry and stress, and streamlines the process.
It can be a jungle out there. Navigating through the foreclosures, short sales, and excessive inventory can make some buyers feel overwhelmed. The result? They continue to rent!
If you have the right team of experts surrounding you and looking out for your best interest, you're not afraid to aim high and go after exactly what you want. An agent isn't your cheerleader but is there to help you get precisely what you want and the best deal possible.
The agent has a fiduciary duty to you–to provide trust and confidence. Up to now, we've talked mostly about an agent–a person licensed to sell real estate but is that the same as a REALTOR®? The answer is no. And since the terms are often confused, it's worth taking a moment to explain how the National Association of REALTORS® (NAR) defines them.
Both are licensed to sell real estate but REALTORS® are members of the National Association of REALTORS® and are required to follow the REALTOR® Code of Ethics. According to NAR, there are 17 articles in the Code of Ethics and they are strictly enforced.
Here's what is stated in the 2011, Code of Ethics and Standards of Practice from NAR, "The term Realtor® has come to connote competency, fairness, and high integrity resulting from adherence to a lofty ideal of moral conduct in business relations. No inducement of profit and no instruction from clients ever can justify departure from this ideal."
Whether you hire a real estate agent or a REALTOR®, the most important thing you can do is research their background, reputation in the market, and get references. This is likely the biggest financial move you'll make, so taking the time to find information about the agent or REALTOR® you're about to hire is a wise investment.
Visiting real estate offices and meeting with their staff is another good way to explore who will fit with your personality and match your needs. Contacting friends for referrals is a good start, but don't just hire your friend's agent or REALTOR® because the real estate transaction worked out for your friend. Spend a little time to effectively communicate your needs, goals, and desires, and then listen carefully to how the agent or REALTOR® responds.
It may not be a marriage but it's certainly a relationship that could last a lifetime, creating a successful financial situation for all.
Many buyers will go it alone. They hit the Internet for their first line of attack in house hunting. They peruse magazines and open houses. But they miss an important key player in their house-hunting mission–the real estate agent.
The real estate agent is not a go-between paper shuffler. Your real estate agent is the connection to the inside world of real estate. Yes, the Internet can provide you with lots of information, but it can't replace a knowledgeable real estate agent.
Finding the best agent who meets your needs is like finding a good friend. I'm not kidding. Having to work with an agent that doesn't understand your needs for housing can result in endless headaches, but working with an expert in the industry takes away the worry and stress, and streamlines the process.
It can be a jungle out there. Navigating through the foreclosures, short sales, and excessive inventory can make some buyers feel overwhelmed. The result? They continue to rent!
If you have the right team of experts surrounding you and looking out for your best interest, you're not afraid to aim high and go after exactly what you want. An agent isn't your cheerleader but is there to help you get precisely what you want and the best deal possible.
The agent has a fiduciary duty to you–to provide trust and confidence. Up to now, we've talked mostly about an agent–a person licensed to sell real estate but is that the same as a REALTOR®? The answer is no. And since the terms are often confused, it's worth taking a moment to explain how the National Association of REALTORS® (NAR) defines them.
Both are licensed to sell real estate but REALTORS® are members of the National Association of REALTORS® and are required to follow the REALTOR® Code of Ethics. According to NAR, there are 17 articles in the Code of Ethics and they are strictly enforced.
Here's what is stated in the 2011, Code of Ethics and Standards of Practice from NAR, "The term Realtor® has come to connote competency, fairness, and high integrity resulting from adherence to a lofty ideal of moral conduct in business relations. No inducement of profit and no instruction from clients ever can justify departure from this ideal."
Whether you hire a real estate agent or a REALTOR®, the most important thing you can do is research their background, reputation in the market, and get references. This is likely the biggest financial move you'll make, so taking the time to find information about the agent or REALTOR® you're about to hire is a wise investment.
Visiting real estate offices and meeting with their staff is another good way to explore who will fit with your personality and match your needs. Contacting friends for referrals is a good start, but don't just hire your friend's agent or REALTOR® because the real estate transaction worked out for your friend. Spend a little time to effectively communicate your needs, goals, and desires, and then listen carefully to how the agent or REALTOR® responds.
It may not be a marriage but it's certainly a relationship that could last a lifetime, creating a successful financial situation for all.
Reduce, Reuse, and Recycle Your Closet
It's really no secret. We are a nation of consumers. Watch television for just one evening and you'll know of a dozen sales and promotions happening in your local area. Whether it's retail or sale, there are more than a handful of us that have consumed our ways to a stuffed closet.
Call it early Spring cleaning. Call it a simplification. Organizing and cleaning out your closet can be a great selling tip, because buyers do and will open your closet during a walk-through. And one stuffed to the rafters will appear small and cramped, no matter it's real size.
There is, however, the altruistic side. Today there is an unemployment rate of nearly 10 percent. This translates into around 15 million unemployed Americans. That is why it is important to lend a helping hand to members of your community. Unemployed families still need clothes, even after the paychecks stop.
Reduce:
Consider what it is that you really need. Do you have clothes that don't fit? How about clothes and shoes that you really don't need? Are there items that aren't your "style" anymore?
Many of us like to hold onto clothes that we think we might wear again. But use this rule of thumb. If you haven't worn it in the last year, then it is time to donate.
Reuse:
Resist the urge to refill your closet once you've downsized! "But what about that new pair of boots I've been eyeing?" you say. Find creative ways to reuse items you have already bought. You may be surprised at how much variety you have in your closet when you rely on what you already have. And for those green activists out there, the fewer new items you buy, the less you consume. Every item that is manufactured takes a toll on the economy, through the power used to run the factories, chemicals and oil used to create certain fabrics, and even the gas it takes to ship items to the store.
Recycle:
Start locally. Do you have relatives or friends who would welcome children's clothes? Kids grow fast and many families are struggling to afford bigger sizes. Most communities have local thrift, Goodwill, or Salvation Army stores that will gladly take your donations.
There's also a great site called thredup.com that allows you to exchange kids clothes with families from all across the country. Traders can get a box of clothes for only the cost of shipping at $5.
Adults need donations, as well. Job interviews and changing seasons may put many adults at a disadvantage. Donation means your old piece of clothing can be given a new home.
Cleaning out your closets is a winning situation. It's good for the community, good for sellers, and of course, it's good for the environment! So start your closet on a reduce, reuse, recycle diet today!
Call it early Spring cleaning. Call it a simplification. Organizing and cleaning out your closet can be a great selling tip, because buyers do and will open your closet during a walk-through. And one stuffed to the rafters will appear small and cramped, no matter it's real size.
There is, however, the altruistic side. Today there is an unemployment rate of nearly 10 percent. This translates into around 15 million unemployed Americans. That is why it is important to lend a helping hand to members of your community. Unemployed families still need clothes, even after the paychecks stop.
Reduce:
Consider what it is that you really need. Do you have clothes that don't fit? How about clothes and shoes that you really don't need? Are there items that aren't your "style" anymore?
Many of us like to hold onto clothes that we think we might wear again. But use this rule of thumb. If you haven't worn it in the last year, then it is time to donate.
Reuse:
Resist the urge to refill your closet once you've downsized! "But what about that new pair of boots I've been eyeing?" you say. Find creative ways to reuse items you have already bought. You may be surprised at how much variety you have in your closet when you rely on what you already have. And for those green activists out there, the fewer new items you buy, the less you consume. Every item that is manufactured takes a toll on the economy, through the power used to run the factories, chemicals and oil used to create certain fabrics, and even the gas it takes to ship items to the store.
Recycle:
Start locally. Do you have relatives or friends who would welcome children's clothes? Kids grow fast and many families are struggling to afford bigger sizes. Most communities have local thrift, Goodwill, or Salvation Army stores that will gladly take your donations.
There's also a great site called thredup.com that allows you to exchange kids clothes with families from all across the country. Traders can get a box of clothes for only the cost of shipping at $5.
Adults need donations, as well. Job interviews and changing seasons may put many adults at a disadvantage. Donation means your old piece of clothing can be given a new home.
Cleaning out your closets is a winning situation. It's good for the community, good for sellers, and of course, it's good for the environment! So start your closet on a reduce, reuse, recycle diet today!
Owners, Renters Agree: Owning a Home is a Smart Decision
A substantial majority of both home owners and current renters agree that owning a home is a smart decision over the long term. That’s according to the results of a National Association of Realtors® survey of 3,793 adults conducted online by Harris Interactive.
The American Attitudes About Homeownership survey found that in today’s challenging economy, 95 percent of owners and 72 percent of renters believe that over a period of several years, it makes more sense to own a home. In addition, an overwhelming majority of home owners are happy with their decision to own a home – 93 percent of owners surveyed would buy again.
“Home owners and renters agree that home ownership benefits individuals and families, strengthens our communities, and is integral to our nation’s economy,” said National Association of Realtors® President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “The results of this survey illustrate just how important issues related to home ownership are to people in this country.”
The survey uncovered some differences between home owners and renters, as well. While more than half of owners are “very” or “extremely” satisfied with the overall quality of their family life, only one-third of renters report the same levels of satisfaction. Similarly, 43 percent of home owners are very/extremely satisfied with their community life, compared with 30 percent of renters.
A majority of renters – 63 percent – said that it was at least somewhat likely that they would purchase a home at some point in the future. Among this group, young adults (18-29 years old) have the strongest aspirations for home ownership; only 8 percent of young adults said that it was “not at all likely” that they would purchase a home at some point in the future.
In today’s market, many aspiring home owners are faced with worries about job security and creditworthiness. Among renters who are very or extremely likely to buy a home in the future, three out of five consider confidence in job security and creditworthiness to be an obstacle.
One point of agreement between renters and home owners was support of the mortgage interest deduction (MID). Seventy-four percent of owners and 62 percent of renters say it’s “extremely” or “very” important that the MID remain in place.
“At a time when the middle class is under increasing economic pressures, both home owners and renters agree that the mortgage interest deduction should not be targeted for change,” said Phipps. “Given strong public support of and aspirations toward owning a home, we need to keep policies in place that support and encourage responsible, sustainable home ownership for our future.”
This survey was conducted online within the U.S. and fielded October 6-20, 2010. A total of 3,793 adults, 18 and older were surveyed, including 1,880 home owners, 1,115 renters, and 798 young adults. All samples came from the Harris Poll online database and were weighted for age, sex, race/ethnicity, education, region and household income to be representative of the U.S. general population of adults 18 and older. Propensity score weighting was also used to adjust for respondents’ propensity to be online. Results are available online at www.realtor.org/statsanddata/homeownership/attitudes_homeown.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
The American Attitudes About Homeownership survey found that in today’s challenging economy, 95 percent of owners and 72 percent of renters believe that over a period of several years, it makes more sense to own a home. In addition, an overwhelming majority of home owners are happy with their decision to own a home – 93 percent of owners surveyed would buy again.
“Home owners and renters agree that home ownership benefits individuals and families, strengthens our communities, and is integral to our nation’s economy,” said National Association of Realtors® President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “The results of this survey illustrate just how important issues related to home ownership are to people in this country.”
The survey uncovered some differences between home owners and renters, as well. While more than half of owners are “very” or “extremely” satisfied with the overall quality of their family life, only one-third of renters report the same levels of satisfaction. Similarly, 43 percent of home owners are very/extremely satisfied with their community life, compared with 30 percent of renters.
A majority of renters – 63 percent – said that it was at least somewhat likely that they would purchase a home at some point in the future. Among this group, young adults (18-29 years old) have the strongest aspirations for home ownership; only 8 percent of young adults said that it was “not at all likely” that they would purchase a home at some point in the future.
In today’s market, many aspiring home owners are faced with worries about job security and creditworthiness. Among renters who are very or extremely likely to buy a home in the future, three out of five consider confidence in job security and creditworthiness to be an obstacle.
One point of agreement between renters and home owners was support of the mortgage interest deduction (MID). Seventy-four percent of owners and 62 percent of renters say it’s “extremely” or “very” important that the MID remain in place.
“At a time when the middle class is under increasing economic pressures, both home owners and renters agree that the mortgage interest deduction should not be targeted for change,” said Phipps. “Given strong public support of and aspirations toward owning a home, we need to keep policies in place that support and encourage responsible, sustainable home ownership for our future.”
This survey was conducted online within the U.S. and fielded October 6-20, 2010. A total of 3,793 adults, 18 and older were surveyed, including 1,880 home owners, 1,115 renters, and 798 young adults. All samples came from the Harris Poll online database and were weighted for age, sex, race/ethnicity, education, region and household income to be representative of the U.S. general population of adults 18 and older. Propensity score weighting was also used to adjust for respondents’ propensity to be online. Results are available online at www.realtor.org/statsanddata/homeownership/attitudes_homeown.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
How Much Home Can I Afford?
Home prices skyrocketed in the early 2000's, with things really heating up between 2005 and 2007. According to the New York Times, HUD conducted a survey in 2007, finding that home values had risen 16 percent in just those two years. The housing bubble burst in the Spring of 2007 and markets tanked.
Now house values are resetting, with some areas still experiencing declines. In high boom areas, such as Florida, Arizona, and California, homes are having to correct from staggering rises of 20, 30 and even 40 percent in home values. This means values rose, and millions of homeowners bought at the top of the market, now finding themselves upside down in their loans.
Despite the crisis, there are still buyers on the market. But many are wary to make a mistake of buying a home they can't pay for. How much home can you really afford? Home affordability, in general, is dependant on a range of factors. These include:
Employment status: Do you have a stable job and income? Lenders will want to know if they can rely on you to make monthly payments for many years to come. With an unemployment rate near 10 percent, it's no wonder a record number of homes are currently in foreclosure. Another way lenders assess your risk is by examining your credit score.
Credit Score: Over your adult life you have been building up a credit score. Every card and loan you have opened has figured into a 3 digit number from 300 - 850. The higher your number, the less "risk" you are perceived to be, and thus, the more likely you'll be extended higher sums of credit for a lower rate. Car loans, student loans, home loans, credit cards, and personal loans. How faithfully you've repaid them, and how many of them you have open, dictates your score.
Number of Dependants: Do you have children or aging parents for whom you are financially responsible? If so, consider medical bills, schools tuition, and daycare when calculating a reasonable budget.
Desired Location: A 2,000 square foot home in rural Nebraska costs dramatically less than the same 2,000 square foot home in the heart of New York City. Prices even range widely by suburb and neighborhood.
Savings: You will need money for a downpayment. Financial Expert Suze Orman recommends you put at least 20 percent down. That means on a $200,000 house, for example, you should have $40,000 in cash to put down. You will also need additional cash for closing costs, as well as repairs and maintenance that are inevitable with homeownership.
Emergency Fund: Do you have a separate savings account worth 8 months of bills? You must have an emergency fund. Just ask the 15 million unemployed. Things do and will happen. If you don't have this fund, you can't afford a house. You may be able to "borrow" money for a house ... but in reality you really can't afford one.
Interest Rates: Interest rates are at historical lows. At this writing, the 30-year fixed rate mortgage is 4.74 percent. To put this in perspective, rates in the 1980's were anywhere from 13 to 18 percent. This means big savings if you are in the position to buy.
Monthly Payments: If you have ever bought a car, one of the first things a salesman will ask you is, "Where do you want your monthly payment to be?" It's all about rates and downpayments with lenders. Yes, it is important that your monthly mortgage payment is no more than 1/3 of your monthly income, but don't be coaxed into buying a home you can't really afford just because the monthly payments are appealing (hello, subprime mortgage crisis).
Now, all that said, this next idea may seem a bit radical for some of you. There is a movement among some Americans to not only reduce their debt, but to get completely out from under it. This translates implicitly into the home buying process.
We have become a nation increasingly driven by the bigger and better. Need we say more than "McMansions." It is a culture of debt, where even the national government owes $14 trillion. And no, not every country has national debt. The United States, though, leads the way.
So, what if you could buy a much smaller house, or a house in a much less prominent neighborhood, and avoid a mortgage payment altogether?
The idea is nearly unheard of in this country. But it could be one that will begin to gain ground as many families struggle to makes ends meet, and even more families learn the hard lesson about home affordability. The truth of the matter is this. If you are paying a mortgage, you do not own your home. It doesn't matter if you've paid on a loan for 1 year or 29, if you default, the home is property of the bank.
"But what about Joe Smith, who works in the same office and makes $150,000 a year. He just bought that $500,000 house. I should have that same standard of living." This is what is partially responsible for the bubble we saw in the last decade. Keeping up with the Jones.
Consider for a moment what it is in your life that is really important. No doubt you will quickly pull to mind your family and closest friends. You may think about a full refrigerator, a safe city, and a clean bill of health. These are things found in small homes, the same as large.
Success is not measured by the size of house you own. So, if you are in the market to become a homeowner, be sure to consider what it could mean to buy truly within your means. Does it mean saving for a few more years and then buying a fixer upper? Does it mean the smaller house in the less prestigious neighborhood is in your budget?
In recent years, "What can I afford?" has turned into "How much monthly payment can I afford?" or "How much credit am I approved for?" These do not equate with affordability. Perhaps it is time to think long and hard about what kind of home is appropriate for you and your family. You may find that travertine and granite can be forgone for a nice kitchen table and family meals.
Now house values are resetting, with some areas still experiencing declines. In high boom areas, such as Florida, Arizona, and California, homes are having to correct from staggering rises of 20, 30 and even 40 percent in home values. This means values rose, and millions of homeowners bought at the top of the market, now finding themselves upside down in their loans.
Despite the crisis, there are still buyers on the market. But many are wary to make a mistake of buying a home they can't pay for. How much home can you really afford? Home affordability, in general, is dependant on a range of factors. These include:
Employment status: Do you have a stable job and income? Lenders will want to know if they can rely on you to make monthly payments for many years to come. With an unemployment rate near 10 percent, it's no wonder a record number of homes are currently in foreclosure. Another way lenders assess your risk is by examining your credit score.
Credit Score: Over your adult life you have been building up a credit score. Every card and loan you have opened has figured into a 3 digit number from 300 - 850. The higher your number, the less "risk" you are perceived to be, and thus, the more likely you'll be extended higher sums of credit for a lower rate. Car loans, student loans, home loans, credit cards, and personal loans. How faithfully you've repaid them, and how many of them you have open, dictates your score.
Number of Dependants: Do you have children or aging parents for whom you are financially responsible? If so, consider medical bills, schools tuition, and daycare when calculating a reasonable budget.
Desired Location: A 2,000 square foot home in rural Nebraska costs dramatically less than the same 2,000 square foot home in the heart of New York City. Prices even range widely by suburb and neighborhood.
Savings: You will need money for a downpayment. Financial Expert Suze Orman recommends you put at least 20 percent down. That means on a $200,000 house, for example, you should have $40,000 in cash to put down. You will also need additional cash for closing costs, as well as repairs and maintenance that are inevitable with homeownership.
Emergency Fund: Do you have a separate savings account worth 8 months of bills? You must have an emergency fund. Just ask the 15 million unemployed. Things do and will happen. If you don't have this fund, you can't afford a house. You may be able to "borrow" money for a house ... but in reality you really can't afford one.
Interest Rates: Interest rates are at historical lows. At this writing, the 30-year fixed rate mortgage is 4.74 percent. To put this in perspective, rates in the 1980's were anywhere from 13 to 18 percent. This means big savings if you are in the position to buy.
Monthly Payments: If you have ever bought a car, one of the first things a salesman will ask you is, "Where do you want your monthly payment to be?" It's all about rates and downpayments with lenders. Yes, it is important that your monthly mortgage payment is no more than 1/3 of your monthly income, but don't be coaxed into buying a home you can't really afford just because the monthly payments are appealing (hello, subprime mortgage crisis).
Now, all that said, this next idea may seem a bit radical for some of you. There is a movement among some Americans to not only reduce their debt, but to get completely out from under it. This translates implicitly into the home buying process.
We have become a nation increasingly driven by the bigger and better. Need we say more than "McMansions." It is a culture of debt, where even the national government owes $14 trillion. And no, not every country has national debt. The United States, though, leads the way.
So, what if you could buy a much smaller house, or a house in a much less prominent neighborhood, and avoid a mortgage payment altogether?
The idea is nearly unheard of in this country. But it could be one that will begin to gain ground as many families struggle to makes ends meet, and even more families learn the hard lesson about home affordability. The truth of the matter is this. If you are paying a mortgage, you do not own your home. It doesn't matter if you've paid on a loan for 1 year or 29, if you default, the home is property of the bank.
"But what about Joe Smith, who works in the same office and makes $150,000 a year. He just bought that $500,000 house. I should have that same standard of living." This is what is partially responsible for the bubble we saw in the last decade. Keeping up with the Jones.
Consider for a moment what it is in your life that is really important. No doubt you will quickly pull to mind your family and closest friends. You may think about a full refrigerator, a safe city, and a clean bill of health. These are things found in small homes, the same as large.
Success is not measured by the size of house you own. So, if you are in the market to become a homeowner, be sure to consider what it could mean to buy truly within your means. Does it mean saving for a few more years and then buying a fixer upper? Does it mean the smaller house in the less prestigious neighborhood is in your budget?
In recent years, "What can I afford?" has turned into "How much monthly payment can I afford?" or "How much credit am I approved for?" These do not equate with affordability. Perhaps it is time to think long and hard about what kind of home is appropriate for you and your family. You may find that travertine and granite can be forgone for a nice kitchen table and family meals.
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