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)
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.”
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