I don't wait for moods. You accomplish nothing if you do that. Your mind must know it has got to get down to work. This is a practiced behavior. I'm a great believer in luck and I find the harder I work, the more I have of it. The dctionary is the only place that success comes before work. Hard work is the price we must pay for success. I thank you can accomplish anything if you're willing to pay the price.
Have a great and safe New Years Eve and New Year.....
Rick Funk
Pending Home Sales Continue Recovery
Pending home sales rose again in November, with the broad trend over the past five months indicating a gradual recovery into 2011, according to the NATIONAL ASSOCIATION OF REALTORS ® .
The Pending Home Sales Index, a forward-looking indicator, rose 3.5 percent to 92.2 based on contracts signed in November from a downwardly revised 89.1 in October. The index is 5.0 percent below a reading of 97.0 in November 2009. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, said historically high housing affordability is boosting sales activity. “In addition to exceptional affordability conditions, steady improvements in the economy are helping bring buyers into the market,” he said. “But further gains are needed to reach normal levels of sales activity.”
The PHSI in the Northeast increased 1.8 percent to 72.6 in November but is 6.2 percent below November 2009. In the Midwest the index declined 4.2 percent in November to 78.3 and is 7.7 percent below a year ago. Pending home sales in the South slipped 1.8 percent to an index of 91.4 and are 7.2 percent below November 2009. In the West the index jumped 18.2 percent to 123.3 and is 0.4 percent above a year ago.
“If we add 2 million jobs as expected in 2011, and mortgage rates rise only moderately, we should see existing-home sales rise to a higher, sustainable volume,” Yun said. “Credit remains tight, but if lenders return to more normal, safe underwriting standards for creditworthy buyers, there would be a bigger boost to the housing market and spillover benefits for the broader economy.”
The 30-year fixed-rate mortgage is forecast to rise gradually to 5.3 percent around the end of 2011; at the same time, unemployment should drop to 9.2 percent.
For perspective, Yun said that the U.S. has added 27 million people over the past 10 years. “However, the number of jobs is roughly the same as it was in 2000 when existing-home sales totaled 5.2 million, which appears to be a sustainable figure given the current level of employment,” he explained. “All the indicator trends are pointing to a gradual housing recovery,” Yun said. “Home price prospects will vary depending largely upon local job market conditions. The national median home price, however, is expected to remain stable even with a continuing flow of distressed properties coming onto the market, as long as there is a steady demand of financially healthy home buyers.”
Existing-home sales are projected to rise about 8 percent to 5.2 million in 2011 from 4.8 million in 2010, with an additional gain of 4 percent in 2012. The median existing-home price could rise 0.6 percent to $173,700 in 2011 from $172,700 in 2010, which was essentially unchanged from 2009.
“As we gradually work off the excess housing inventory, supply levels will eventually come more in-line with historic averages, and could allow home prices to rise modestly in the range of 2 to 3 percent in 2012,” Yun said.
New-home sales are estimated to rise 24 percent to 392,000 in 2011, but would remain well below historic averages, while housing starts are forecast to rise 21 percent to 716,000.
Yun sees Gross Domestic Product growing 2.5 percent in 2011, and the Consumer Price Index rising 2.3 percent.
Source: NAR
The Pending Home Sales Index, a forward-looking indicator, rose 3.5 percent to 92.2 based on contracts signed in November from a downwardly revised 89.1 in October. The index is 5.0 percent below a reading of 97.0 in November 2009. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, said historically high housing affordability is boosting sales activity. “In addition to exceptional affordability conditions, steady improvements in the economy are helping bring buyers into the market,” he said. “But further gains are needed to reach normal levels of sales activity.”
The PHSI in the Northeast increased 1.8 percent to 72.6 in November but is 6.2 percent below November 2009. In the Midwest the index declined 4.2 percent in November to 78.3 and is 7.7 percent below a year ago. Pending home sales in the South slipped 1.8 percent to an index of 91.4 and are 7.2 percent below November 2009. In the West the index jumped 18.2 percent to 123.3 and is 0.4 percent above a year ago.
“If we add 2 million jobs as expected in 2011, and mortgage rates rise only moderately, we should see existing-home sales rise to a higher, sustainable volume,” Yun said. “Credit remains tight, but if lenders return to more normal, safe underwriting standards for creditworthy buyers, there would be a bigger boost to the housing market and spillover benefits for the broader economy.”
The 30-year fixed-rate mortgage is forecast to rise gradually to 5.3 percent around the end of 2011; at the same time, unemployment should drop to 9.2 percent.
For perspective, Yun said that the U.S. has added 27 million people over the past 10 years. “However, the number of jobs is roughly the same as it was in 2000 when existing-home sales totaled 5.2 million, which appears to be a sustainable figure given the current level of employment,” he explained. “All the indicator trends are pointing to a gradual housing recovery,” Yun said. “Home price prospects will vary depending largely upon local job market conditions. The national median home price, however, is expected to remain stable even with a continuing flow of distressed properties coming onto the market, as long as there is a steady demand of financially healthy home buyers.”
Existing-home sales are projected to rise about 8 percent to 5.2 million in 2011 from 4.8 million in 2010, with an additional gain of 4 percent in 2012. The median existing-home price could rise 0.6 percent to $173,700 in 2011 from $172,700 in 2010, which was essentially unchanged from 2009.
“As we gradually work off the excess housing inventory, supply levels will eventually come more in-line with historic averages, and could allow home prices to rise modestly in the range of 2 to 3 percent in 2012,” Yun said.
New-home sales are estimated to rise 24 percent to 392,000 in 2011, but would remain well below historic averages, while housing starts are forecast to rise 21 percent to 716,000.
Yun sees Gross Domestic Product growing 2.5 percent in 2011, and the Consumer Price Index rising 2.3 percent.
Source: NAR
"God Bless Us, Everyone!"
May you Christmas be full of love, peace, happiness, friends and family. From mine to yours, The Very Best Holidays ever!
Rick Funk and family
Rick Funk and family
Economic Growth Exceeds Forecast
A rash of favorable economic reports, including a jump in consumer spending and a drop in layoffs, are offering hope for a pickup.
Moreover, new Commerce Department data show U.S. gross domestic product grew 2.6 percent in the third quarter — not 2.5 percent as initially reported. The encouraging signs are prompting some economists to revise fourth-quarter and 2011 growth estimates upward.
Source: The Wall Street Journal, Conor Dougherty (12/23/10)
© Copyright 2010 Information Inc.
Moreover, new Commerce Department data show U.S. gross domestic product grew 2.6 percent in the third quarter — not 2.5 percent as initially reported. The encouraging signs are prompting some economists to revise fourth-quarter and 2011 growth estimates upward.
Source: The Wall Street Journal, Conor Dougherty (12/23/10)
© Copyright 2010 Information Inc.
There’s a Reason for Differences in Price
Housing prices vary from city to city, but even within your neighborhood or community, there may be distressed and non-distressed sub-markets with significant price differences. To illustrate, the overall median sale price of a detached existing home has been just over $300,000 throughout 2010. By comparison, the median price of a conventional non-distressed sale was about a third higher at roughly $400,000. At the other extreme, REO properties sold by banks were about a third lower than the overall median at roughly $200,000. Short sales, however, were not so steeply discounted. With a median price of roughly $270,000 over the past year, short sales were priced about 10 percent below the overall median and about 25 percent higher than REOs. What explains these differences in prices?
REO properties are sold substantially below market price because they are typically smaller in size, generally not well-maintained, and may have title clearance issues that are not desirable to home buyers. Also, since banks and lenders are not in the business of property management, they try to get rid of the inventory faster by reducing prices to below market level.
Short sales are usually priced somewhere between REO sales and market sales. These are properties owned by “underwater borrowers” who cannot pay off the mortgage balance. To avoid incurring hefty costs from a foreclosure proceeding, lenders agree to discount the loan balance. With lenders willing to concede, short sale properties are priced below market value but above what they would have sold in foreclosure status, so lenders could minimize the financial loss that would have incurred otherwise.
REO properties are sold substantially below market price because they are typically smaller in size, generally not well-maintained, and may have title clearance issues that are not desirable to home buyers. Also, since banks and lenders are not in the business of property management, they try to get rid of the inventory faster by reducing prices to below market level.
Short sales are usually priced somewhere between REO sales and market sales. These are properties owned by “underwater borrowers” who cannot pay off the mortgage balance. To avoid incurring hefty costs from a foreclosure proceeding, lenders agree to discount the loan balance. With lenders willing to concede, short sale properties are priced below market value but above what they would have sold in foreclosure status, so lenders could minimize the financial loss that would have incurred otherwise.
Fewer homeowners underwater in the third quarter
However, Nevada, Arizona, California and Florida also posted the biggest decline in negative equity, mostly because a high percentage of severely underwater borrowers in those states fell into foreclosure.
Oklahoma had the smallest percentage of underwater homeowners in the third quarter at 6 percent. Only nine states recorded percentages less than 10 percent.
The total amount of negative equity decreased to $744 billion nationwide, down from $766 billion in the previous quarter.
Oklahoma had the smallest percentage of underwater homeowners in the third quarter at 6 percent. Only nine states recorded percentages less than 10 percent.
The total amount of negative equity decreased to $744 billion nationwide, down from $766 billion in the previous quarter.
Thomas Jefferson
LISTED BELOW IS THE HISTORY OF ONE OF THE GREAT LEADERS OF AMERICA, PLEASE NOTE THAT IN HIS LIST OF ACCOMPLISHMENTS, HE WAS NEVER NOTED AS A COMMUNITY ORGANIZER.
Thomas Jefferson was a very remarkable man who started learning very early in life and never stopped.
� At 5, began studying under his cousins� tutor.
� At 9, studied Latin, Greek and French.
� At 14, studied classical literature and additional languages.
� At 16, entered the College of William and Mary.
� At 19, studied Law for 5 years starting under George Wythe.
� At 23, started his own law practice.
� At 25, was elected to the Virginia House of Burgesses.
� At 31, wrote the widely circulated "Summary View of the Rights of British America" and retired from his law practice.
� At 32, was a Delegate to the Second Continental Congress.
� At 33, wrote the Declaration of Independence.
� At 33, took three years to revise Virginia’s legal code and wrote a Public Education bill and a statute for Religious Freedom.
� At 36, was elected the second Governor of Virginia succeeding Patrick Henry.
� At 40, served in Congress for two years.
� At 41, was the American minister to France and negotiated commercial treaties with European nations along with Ben Franklin and John Adams.
� At 46, served as the first Secretary of State under George Washington.
� At 53, served as Vice President and was elected president of the American Philosophical Society.
� At 55, drafted the Kentucky Resolutions and became the active head of Republican Party.
� At 57, was elected the third president of the United States.
� At 60, obtained the Louisiana Purchase doubling the nation’s size.
� At 61, was elected to a second term as President.
� At 65, retired to Monticello.
� At 80, helped President Monroe shape the Monroe Doctrine.
� At 81, almost single-handedly created the University of Virginia and served as its first president.
� At 83, died on the 50th anniversary of the Signing of the Declaration of Independence along with John Adams
Thomas Jefferson knew because he himself studied the previous failed attempts at government. He understood actual history, the nature of God, his laws and the nature of man. That happens to be way more than what most understand today. Jefferson really knew his stuff. A voice from the past to lead us in the future: John F. Kennedy held a dinner in the white House for a group of the brightest minds in the nation at that time. He made this statement: "This is perhaps the assembly of the most intelligence ever to gather at one time in the White House with the exception of when Thomas Jefferson dined alone." When we get piled upon one another in large cities, as in Europe, we shall become as corrupt as Europe. Thomas Jefferson The democracy will cease to exist when you take away from those who are willing to work and give to those who would not. Thomas Jefferson It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world. Thomas Jefferson I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them. Thomas Jefferson My reading of history convinces me that most bad government results from too much government. Thomas Jefferson No free man shall ever be debarred the use of arms. Thomas Jefferson The strongest reason for the people to retain the right to keep and bear arms is, as a last resort, to protect themselves against tyranny in government. Thomas Jefferson The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. Thomas Jefferson To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical. Thomas Jefferson Thomas Jefferson said in 1802: I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property - until their children wake-up homeless on the continent their fathers conquered. I wish we could get this out to everyone!!!
I'm doing my part. Please do yours......
Thomas Jefferson was a very remarkable man who started learning very early in life and never stopped.
� At 5, began studying under his cousins� tutor.
� At 9, studied Latin, Greek and French.
� At 14, studied classical literature and additional languages.
� At 16, entered the College of William and Mary.
� At 19, studied Law for 5 years starting under George Wythe.
� At 23, started his own law practice.
� At 25, was elected to the Virginia House of Burgesses.
� At 31, wrote the widely circulated "Summary View of the Rights of British America" and retired from his law practice.
� At 32, was a Delegate to the Second Continental Congress.
� At 33, wrote the Declaration of Independence.
� At 33, took three years to revise Virginia’s legal code and wrote a Public Education bill and a statute for Religious Freedom.
� At 36, was elected the second Governor of Virginia succeeding Patrick Henry.
� At 40, served in Congress for two years.
� At 41, was the American minister to France and negotiated commercial treaties with European nations along with Ben Franklin and John Adams.
� At 46, served as the first Secretary of State under George Washington.
� At 53, served as Vice President and was elected president of the American Philosophical Society.
� At 55, drafted the Kentucky Resolutions and became the active head of Republican Party.
� At 57, was elected the third president of the United States.
� At 60, obtained the Louisiana Purchase doubling the nation’s size.
� At 61, was elected to a second term as President.
� At 65, retired to Monticello.
� At 80, helped President Monroe shape the Monroe Doctrine.
� At 81, almost single-handedly created the University of Virginia and served as its first president.
� At 83, died on the 50th anniversary of the Signing of the Declaration of Independence along with John Adams
Thomas Jefferson knew because he himself studied the previous failed attempts at government. He understood actual history, the nature of God, his laws and the nature of man. That happens to be way more than what most understand today. Jefferson really knew his stuff. A voice from the past to lead us in the future: John F. Kennedy held a dinner in the white House for a group of the brightest minds in the nation at that time. He made this statement: "This is perhaps the assembly of the most intelligence ever to gather at one time in the White House with the exception of when Thomas Jefferson dined alone." When we get piled upon one another in large cities, as in Europe, we shall become as corrupt as Europe. Thomas Jefferson The democracy will cease to exist when you take away from those who are willing to work and give to those who would not. Thomas Jefferson It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world. Thomas Jefferson I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them. Thomas Jefferson My reading of history convinces me that most bad government results from too much government. Thomas Jefferson No free man shall ever be debarred the use of arms. Thomas Jefferson The strongest reason for the people to retain the right to keep and bear arms is, as a last resort, to protect themselves against tyranny in government. Thomas Jefferson The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. Thomas Jefferson To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical. Thomas Jefferson Thomas Jefferson said in 1802: I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property - until their children wake-up homeless on the continent their fathers conquered. I wish we could get this out to everyone!!!
I'm doing my part. Please do yours......
10 Reasons Why....Now is a good time to buy
Owning a home has been a part of the American Dream for decades. If you are still unsure, however, whether or not homeownership is the move for you, be sure to read these ten reasons to buy.
1. Low Interest Rates. It's true! Interest rates are currently at historical lows. This means over the course of your loan, you'll pay less interest. And it also means monthly payments will be a smaller, more manageable amount.
2. Mortgage Interest Deduction: While this deduction may not be available for much longer, for now you can still use this great tax advantage!
3. Stability: Studies have shown that homeownership not only increases community involvement, it also leads to safer neighborhoods, and higher graduation rates.
4. Affordability: Coupled with the low interest rates, affordability is the highest it's been in years. Prices fell in many areas and median incomes rose -- meaning you can get more bang for your buck.
5. Paying Towards Ownership. Instead of paying a landlord, you are making an investment in your future. Every month your payment goes towards something you'll eventually own and that will have worth and value. Renting only makes the landlord richer!
6. Appreciation: Average appreciation rates vary widely depending on the condition of the local market and demand, but anywhere from 4 to 6 percent annually is considered average. This means the longer you stay in your home, the more your home will be worth.
7. Home equity: This building of worth over time (see number 6) means that if you need to make improvements to your home, you will be able to tap into its equity to finance repairs and additions.
8. Gardening: Many households are embracing the organic movement, and families have begun again to raise their own food. Even the White House has its own victory garden. Owning your own home (in most cases) means you will have your own land to cultivate.
9. Roots: Young and old alike seek out places where they belong. Owning a property, and taking your first steps towards putting down roots, can mean the difference between a house and a home.
10. Monthly Payments: Once your home is paid off -- you won't have monthly payments anymore. Apart from insurance, property taxes, and repairs, monthly expenses are minimal. In today's market, many buyers are finding, as well, that their monthly house payments are less than what they'd pay in rent!
1. Low Interest Rates. It's true! Interest rates are currently at historical lows. This means over the course of your loan, you'll pay less interest. And it also means monthly payments will be a smaller, more manageable amount.
2. Mortgage Interest Deduction: While this deduction may not be available for much longer, for now you can still use this great tax advantage!
3. Stability: Studies have shown that homeownership not only increases community involvement, it also leads to safer neighborhoods, and higher graduation rates.
4. Affordability: Coupled with the low interest rates, affordability is the highest it's been in years. Prices fell in many areas and median incomes rose -- meaning you can get more bang for your buck.
5. Paying Towards Ownership. Instead of paying a landlord, you are making an investment in your future. Every month your payment goes towards something you'll eventually own and that will have worth and value. Renting only makes the landlord richer!
6. Appreciation: Average appreciation rates vary widely depending on the condition of the local market and demand, but anywhere from 4 to 6 percent annually is considered average. This means the longer you stay in your home, the more your home will be worth.
7. Home equity: This building of worth over time (see number 6) means that if you need to make improvements to your home, you will be able to tap into its equity to finance repairs and additions.
8. Gardening: Many households are embracing the organic movement, and families have begun again to raise their own food. Even the White House has its own victory garden. Owning your own home (in most cases) means you will have your own land to cultivate.
9. Roots: Young and old alike seek out places where they belong. Owning a property, and taking your first steps towards putting down roots, can mean the difference between a house and a home.
10. Monthly Payments: Once your home is paid off -- you won't have monthly payments anymore. Apart from insurance, property taxes, and repairs, monthly expenses are minimal. In today's market, many buyers are finding, as well, that their monthly house payments are less than what they'd pay in rent!
Real Estate Outlook: Bernanke Discusses Job Growth
Is the slow pace of the economy limiting job growth? That's the sentiment from Federal Reserve Chairman, Ben Bernanke. Last Tuesday Bernanke had a chance to discuss issues other than the recent Bond purchase, and during this time he brought up concerns over job growth. Bernanke noted, "At the pace of growth that we’re seeing now, we’re not growing fast enough to materially reduce the unemployment rate." He says "the economy needs to grow at an annualized rate of 2 to 2.5 percent just to accommodate new workers coming into the labor force."
And while the recession officially ended over a year ago, unemployment has remained nearly constant at 9.6 percent from June of 2009.
According to The Conference Board Consumer Research Center, however, consumers are increasingly upbeat about future job prospects, with those polled expecting more jobs, income increases, and fewer job declines.
The Conference Board Consumer Confidence Index® has improved for 2 straight months now. This index is based on a monthly representative sample of 5,000 U.S. households. Lynn Franco, Director of The Conference Board Consumer Research Center reports, "Consumer confidence is now at its highest level in five months, a welcome sign as we enter the holiday season. Consumers' assessment of the current state of the economy and job market, while only slightly better than last month, suggests the economy is still expanding, albeit slowly. Expectations, the main driver of this month's increase in confidence, are now at the highest level since May. Hopefully, the improvement in consumers' mood will continue in the months ahead."
Commercial real estate markets are reportedly stabilizing, as well. Lawrence Yun, the chief economist for the National Association of REALTORS® reports that the slowly improving economy has led to a rise in commercial leasing demand. He says this "means overall vacancy rates have already peaked or will soon top out."
Yun anticipates a rise in household formation from an improving economy, which will increase demand for housing, both ownership and rental. "Multifamily housing is the one commercial sector that has held on relatively well in the past year, and can expect the best performance in 2011," he added.
"Apartment rents could rise by 1 to 2 percent in 2011, after having fallen in 2009 and no growth in 2010," Yun said. "This rent rise therefore could start to force up broader consumer prices as well."
And while the recession officially ended over a year ago, unemployment has remained nearly constant at 9.6 percent from June of 2009.
According to The Conference Board Consumer Research Center, however, consumers are increasingly upbeat about future job prospects, with those polled expecting more jobs, income increases, and fewer job declines.
The Conference Board Consumer Confidence Index® has improved for 2 straight months now. This index is based on a monthly representative sample of 5,000 U.S. households. Lynn Franco, Director of The Conference Board Consumer Research Center reports, "Consumer confidence is now at its highest level in five months, a welcome sign as we enter the holiday season. Consumers' assessment of the current state of the economy and job market, while only slightly better than last month, suggests the economy is still expanding, albeit slowly. Expectations, the main driver of this month's increase in confidence, are now at the highest level since May. Hopefully, the improvement in consumers' mood will continue in the months ahead."
Commercial real estate markets are reportedly stabilizing, as well. Lawrence Yun, the chief economist for the National Association of REALTORS® reports that the slowly improving economy has led to a rise in commercial leasing demand. He says this "means overall vacancy rates have already peaked or will soon top out."
Yun anticipates a rise in household formation from an improving economy, which will increase demand for housing, both ownership and rental. "Multifamily housing is the one commercial sector that has held on relatively well in the past year, and can expect the best performance in 2011," he added.
"Apartment rents could rise by 1 to 2 percent in 2011, after having fallen in 2009 and no growth in 2010," Yun said. "This rent rise therefore could start to force up broader consumer prices as well."
Strong Rebound in Pending Home Sales
Pending home sales jumped in October, showing a positive uptrend since bottoming in June, NAR says.
The Pending Home Sales Index, a forward-looking indicator, rose 10.4 percent to 89.3 based on contracts signed in October from 80.9 in September. The index remains 20.5 percent below a surge to a cyclical peak of 112.4 in October 2009, which was the highest level since May 2006 when it hit 112.6.
Last October, first-time buyers were motivated to make offers before the initial contract deadline for the tax credit last November. The data reflects contracts and not closings, which normally occur with a lag time of one or two months. Lawrence Yun, NAR chief economist, said excellent housing affordability conditions are drawing home buyers. “It is welcoming to see a solid double-digit percentage gain, but activity needs to improve further to reach healthy, sustainable levels. The housing market clearly is in a recovery phase and will be uneven at times, but the improving job market and consequential boost to household formation will help the recovery process going into 2011,” he said.
“More importantly, a return to more normal loan underwriting standards and removal of unnecessary underwriting fees for very low risk borrowers is needed and could quickly help in the housing and economic recovery,” Yun said. Recent loan performance data from Fannie Mae and Freddie Mac clearly demonstrates very low default rates on recently originated mortgages, much lower that the vintages of 2002 and 2003 before the housing boom.
The PHSI in the Northeast jumped 19.6 percent to 71.3 in October but is 27.3 percent below the tax credit peak in October 2009. In the Midwest the index surged 27.3 percent in October to 81.7 but is 24.8 percent below a year ago. Pending home sales in the South rose 7.1 percent to an index of 93.8 but are 18.4 percent below October 2009. In the West the index slipped 0.4 percent to 104.3 and is 15.6 percent below a year ago.
Near term, Yun expects home sales will continue to climb from their cyclical low this past summer. “Even so, we now have some consumer concerns regarding the mortgage interest deduction, an important component in housing affordability,” he said. “Preliminary results of a new survey show nearly three out of four home owners and two out of three renters consider the mortgage interest deduction to be extremely or very important to them. Home owners already pay between 80 and 90 percent of all federal income taxes and additional tax burden would hurt them and the economic recovery, so we have a reasonable hope that it will not be changed.”
Source: NAR
The Pending Home Sales Index, a forward-looking indicator, rose 10.4 percent to 89.3 based on contracts signed in October from 80.9 in September. The index remains 20.5 percent below a surge to a cyclical peak of 112.4 in October 2009, which was the highest level since May 2006 when it hit 112.6.
Last October, first-time buyers were motivated to make offers before the initial contract deadline for the tax credit last November. The data reflects contracts and not closings, which normally occur with a lag time of one or two months. Lawrence Yun, NAR chief economist, said excellent housing affordability conditions are drawing home buyers. “It is welcoming to see a solid double-digit percentage gain, but activity needs to improve further to reach healthy, sustainable levels. The housing market clearly is in a recovery phase and will be uneven at times, but the improving job market and consequential boost to household formation will help the recovery process going into 2011,” he said.
“More importantly, a return to more normal loan underwriting standards and removal of unnecessary underwriting fees for very low risk borrowers is needed and could quickly help in the housing and economic recovery,” Yun said. Recent loan performance data from Fannie Mae and Freddie Mac clearly demonstrates very low default rates on recently originated mortgages, much lower that the vintages of 2002 and 2003 before the housing boom.
The PHSI in the Northeast jumped 19.6 percent to 71.3 in October but is 27.3 percent below the tax credit peak in October 2009. In the Midwest the index surged 27.3 percent in October to 81.7 but is 24.8 percent below a year ago. Pending home sales in the South rose 7.1 percent to an index of 93.8 but are 18.4 percent below October 2009. In the West the index slipped 0.4 percent to 104.3 and is 15.6 percent below a year ago.
Near term, Yun expects home sales will continue to climb from their cyclical low this past summer. “Even so, we now have some consumer concerns regarding the mortgage interest deduction, an important component in housing affordability,” he said. “Preliminary results of a new survey show nearly three out of four home owners and two out of three renters consider the mortgage interest deduction to be extremely or very important to them. Home owners already pay between 80 and 90 percent of all federal income taxes and additional tax burden would hurt them and the economic recovery, so we have a reasonable hope that it will not be changed.”
Source: NAR
Consumers starting to step up...
Consumer confidence in Nov. hits 5-month high
Economists watch confidence closely because consumer spending accounts for about 70 percent of U.S. economic activity and is critical to a strong rebound. It takes a reading of 90 to indicate a healthy economy.
Economists watch confidence closely because consumer spending accounts for about 70 percent of U.S. economic activity and is critical to a strong rebound. It takes a reading of 90 to indicate a healthy economy.
Value in Home Ownership....
Is there value in owning a home? The recently released 2010 National Association of REALTORS® Profile of Home Buyers and Sellers brings us some promising results. Today homeowners are living in their homes longer, and after several years of price declines, are seeing rises in home equity gains.
It was only earlier this decade that so many buyers jumped on the investment bandwagon. They bought and sold within incredibly short time frames, and walked away with profits. But as the booms busted, many sellers found they had bought at the top of the market and as prices corrected, they lost more than just dollars. Foreclosure rates skyrocketed. Historically, however, homeownership is a long term investment, and one that brings many rewards.
"Sellers who purchased at the top of the market and had to sell in a short time frame were hurt by the price correction, but the vast majority who are able to stay for a normal period of home ownership generally built enough equity to make a trade-up purchase," NAR 2010 President Vicki Cox Golder said. "Despite swings in the housing market in recent years, the fact is most long-term owners see healthy gains in the value of their property."
Golder also says the pattern of home buyers taking a long-term view has solidified over the past few years. "This underscores two simple facts – home ownership encourages stability, and the longer you own, the better your investment."
Current market and economic conditions have created a shift from the house flipping ways of the boom. "The primary exception is for experienced investors, many of whom pay cash and are making renovations or improvements after a careful study of properties, neighborhoods and market demand," Golder explained. "The house flipping and quick gains which occurred during the boom period were abnormal, driven by risky, easy-money financing that should never have been allowed in the market."
American are still buying, however. And surveys have found there are particular reasons behind these purchases. These include the desire to own a home, the desire for a larger home, a change in family situation and taking advantage of the home buyer tax credit, a job-related move, and then the current supply of affordable homes.
And once they buy, homeowners are staying put longer. A typical seller has been in their home for 8 years, but the survey reveals first-time buyers are planning to stay for 10 years, and repeat buyers for 15 years.
Even with several years of price declines, the typical seller who purchased a home eight years ago experienced a median equity gain of $33,000, a 24 percent increase, while sellers who were in their homes for 11 to 15 years saw a median gain of 40 percent. So, once again buying for the long-term is steering its way back into value.
It was only earlier this decade that so many buyers jumped on the investment bandwagon. They bought and sold within incredibly short time frames, and walked away with profits. But as the booms busted, many sellers found they had bought at the top of the market and as prices corrected, they lost more than just dollars. Foreclosure rates skyrocketed. Historically, however, homeownership is a long term investment, and one that brings many rewards.
"Sellers who purchased at the top of the market and had to sell in a short time frame were hurt by the price correction, but the vast majority who are able to stay for a normal period of home ownership generally built enough equity to make a trade-up purchase," NAR 2010 President Vicki Cox Golder said. "Despite swings in the housing market in recent years, the fact is most long-term owners see healthy gains in the value of their property."
Golder also says the pattern of home buyers taking a long-term view has solidified over the past few years. "This underscores two simple facts – home ownership encourages stability, and the longer you own, the better your investment."
Current market and economic conditions have created a shift from the house flipping ways of the boom. "The primary exception is for experienced investors, many of whom pay cash and are making renovations or improvements after a careful study of properties, neighborhoods and market demand," Golder explained. "The house flipping and quick gains which occurred during the boom period were abnormal, driven by risky, easy-money financing that should never have been allowed in the market."
American are still buying, however. And surveys have found there are particular reasons behind these purchases. These include the desire to own a home, the desire for a larger home, a change in family situation and taking advantage of the home buyer tax credit, a job-related move, and then the current supply of affordable homes.
And once they buy, homeowners are staying put longer. A typical seller has been in their home for 8 years, but the survey reveals first-time buyers are planning to stay for 10 years, and repeat buyers for 15 years.
Even with several years of price declines, the typical seller who purchased a home eight years ago experienced a median equity gain of $33,000, a 24 percent increase, while sellers who were in their homes for 11 to 15 years saw a median gain of 40 percent. So, once again buying for the long-term is steering its way back into value.
Housing Remains Highly Affordable for Seventh Consecutive Quarter
Housing affordability remained near its highest level nationwide for the seventh consecutive quarter as interest rates dipped below 5 percent for the first time since the series was first compiled nearly two decades ago, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) just released.
The HOI indicated that 72.1 percent of all new and existing homes sold in the third quarter of 2010 were affordable to families earning the national median income of $64,400. The index for the third quarter almost equaled the record-high 72.5 percent set during the first quarter of 2009 and marked the seventh consecutive quarter that the index rose above 70 percent. Until 2009, the HOI rarely topped 65 percent and never reached 70 percent.
"With interest rates remaining at historically low levels, and house prices starting to stabilize, homeownership is within reach of more households than it has been for almost 20 years," said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Michigan. "While these favorable conditions are beginning to draw home buyers back into the market, builders continue to have major problems in obtaining credit for new-home construction, and this obstacle must be overcome if builders are to respond to improving demand moving forward."
Indianapolis-Carmel, Ind., was the most affordable major housing market in the country, regaining the top ranking it held for nearly five years after being edged out by Syracuse, N.Y., last quarter. In Indianapolis, 93.3 percent of all homes sold were affordable to households earning the area's median family income of $68,700.
Also near the top of the list of the most affordable major metro housing markets were Youngstown-Warren-Boardman, Ohio-Pa.; Grand Rapids-Wyoming, Mich.; and Dayton, Ohio, and Wichita, Kan.
Among smaller housing markets, the most affordable was Kokomo, Ind., where 96.1 percent of homes sold during the third quarter of 2010 were affordable to families earning a median-income of $61,400. Other smaller housing markets near the top of the index included Mansfield, Ohio; Lima, Ohio; Monroe, Mich.; and Bay City, Mich., respectively.
New York-White Plains-Wayne, N.Y.-N.J., continued to lead the nation as the least affordable major housing market during the third quarter of 2010. In New York, 22.6 percent of all homes sold during the quarter were affordable to those earning the area's median income of $65,600. This was the 10th consecutive quarter that the New York metropolitan division has occupied this position.
The other major metro areas near the bottom of the affordability scale included San Francisco; Bridgeport-Stamford-Norwalk, Conn.; Los Angeles-Long Beach-Glendale, Calif.; and Santa Ana-Anaheim-Irvine, Calif., respectively.
Santa Cruz-Watsonville, Calif. was the least affordable of the smaller metro housing markets in the country during the third quarter. Other small metro areas ranking near the bottom included San Luis Obispo-Paso Robles, Calif.; Santa Barbara-Santa Maria-Goleta, Calif.; Ocean City, N.J; and Napa, Calif.
The HOI indicated that 72.1 percent of all new and existing homes sold in the third quarter of 2010 were affordable to families earning the national median income of $64,400. The index for the third quarter almost equaled the record-high 72.5 percent set during the first quarter of 2009 and marked the seventh consecutive quarter that the index rose above 70 percent. Until 2009, the HOI rarely topped 65 percent and never reached 70 percent.
"With interest rates remaining at historically low levels, and house prices starting to stabilize, homeownership is within reach of more households than it has been for almost 20 years," said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Michigan. "While these favorable conditions are beginning to draw home buyers back into the market, builders continue to have major problems in obtaining credit for new-home construction, and this obstacle must be overcome if builders are to respond to improving demand moving forward."
Indianapolis-Carmel, Ind., was the most affordable major housing market in the country, regaining the top ranking it held for nearly five years after being edged out by Syracuse, N.Y., last quarter. In Indianapolis, 93.3 percent of all homes sold were affordable to households earning the area's median family income of $68,700.
Also near the top of the list of the most affordable major metro housing markets were Youngstown-Warren-Boardman, Ohio-Pa.; Grand Rapids-Wyoming, Mich.; and Dayton, Ohio, and Wichita, Kan.
Among smaller housing markets, the most affordable was Kokomo, Ind., where 96.1 percent of homes sold during the third quarter of 2010 were affordable to families earning a median-income of $61,400. Other smaller housing markets near the top of the index included Mansfield, Ohio; Lima, Ohio; Monroe, Mich.; and Bay City, Mich., respectively.
New York-White Plains-Wayne, N.Y.-N.J., continued to lead the nation as the least affordable major housing market during the third quarter of 2010. In New York, 22.6 percent of all homes sold during the quarter were affordable to those earning the area's median income of $65,600. This was the 10th consecutive quarter that the New York metropolitan division has occupied this position.
The other major metro areas near the bottom of the affordability scale included San Francisco; Bridgeport-Stamford-Norwalk, Conn.; Los Angeles-Long Beach-Glendale, Calif.; and Santa Ana-Anaheim-Irvine, Calif., respectively.
Santa Cruz-Watsonville, Calif. was the least affordable of the smaller metro housing markets in the country during the third quarter. Other small metro areas ranking near the bottom included San Luis Obispo-Paso Robles, Calif.; Santa Barbara-Santa Maria-Goleta, Calif.; Ocean City, N.J; and Napa, Calif.
Mortgage Rates Spike Quarter Percent
Mortgage Rates Spike Quarter Percent
by Ed Ferrara
30 year fixed mortgage rates have risen a quarter point this week to 4.25% on plummeting mortgage-backed securities prices. MBS prices drive mortgage rates in the opposite direction. Conventional 15 year fixed interest rates are also up a quarter of a percent and are at 3.75% currently for well-qualified borrowers who pay a standard .07 to 1 point origination. Both fixed mortgage rates are up substantially from last week and at an immediate risk to rise further.
FHA loan rates move with conforming mortgage rates and are also up this week. Today's 30 year fixed FHA loan rate is at 4.125%, up from 4%. Although the same note rate is available on an FHA 30 year fixed mortgage as a conforming 30 year fixed loan, MI and other fees charged by the Federal Housing Administration make APR higher on an FHA mortgage.
Jumbo mortgage rates are unchanged. The current jumbo 30 year fixed rate is 4.875%
Wells Fargo, the nation's number one originator by volume, adjusted their advertised 30 year fixed rate from 4.25% to 4.625% with an APR of 4.812.
FreeRateUpdate.com surveys wholesale and direct lenders' rate sheets to determine the most accurate mortgage interest rates available to well-qualified consumers who pay an industry standard .07 to 1 point origination. These rates are commonly referred to as "par rates" by mortgage loan officers.
SB 931 (eff. Jan. 1, 2011)
Discharge of balance of loan indebtedness after a short sale for residential 1-4 real property by holder of a first deed of trust.
This new law prohibits a lender holding a first deed of trust (purchase money or refinance) for a dwelling of 1-4 units to demand a deficiency judgment (unpaid balance due on the loan) from the trustor or mortgagor (owner) who sells the dwelling for less than the remaining amount of the indebtedness due at the time of the short sale to
which the lender has consented in writing.
However, if the owner commits either fraud with respect to the short sale, or waste with respect to the secured real property, then the lender may seek damages and use existing rights and remedies against the owner or any third party for fraud or waste.
Note that this law doesn't apply if the trustor or mortgagor is a corporation or political sudivision of the state.
Adds Section 580e to the Code of Civil Procedure.
This new law prohibits a lender holding a first deed of trust (purchase money or refinance) for a dwelling of 1-4 units to demand a deficiency judgment (unpaid balance due on the loan) from the trustor or mortgagor (owner) who sells the dwelling for less than the remaining amount of the indebtedness due at the time of the short sale to
which the lender has consented in writing.
However, if the owner commits either fraud with respect to the short sale, or waste with respect to the secured real property, then the lender may seek damages and use existing rights and remedies against the owner or any third party for fraud or waste.
Note that this law doesn't apply if the trustor or mortgagor is a corporation or political sudivision of the state.
Adds Section 580e to the Code of Civil Procedure.
Are Foreclosures A Real Deal?
Foreclosures make up a large segment of the housing market at this time, accounting for around 19% of total sales. This percentage is much higher in areas that went from boom to boost, such as in the states of Florida, California, and Arizona. According to Realtytrac.com, 1 in every 371 housing units received a foreclosure filing in September.
The question is posed. Does buying a foreclosed property save you money?
A market report from Zillow.com gave this example. "In the San Francisco market, where foreclosure re-sales made up 60% of transactions in December 2008, the median sale price for foreclosures was just 47% of the median sale price for non-foreclosures." Savings range widely depending on the area where you are buying, but Zillow.com reports that "foreclosures sell for approximately 28% less than non-foreclosures after controlling for differences in individual houses."
If you are looking to make an investment, however, you need to consider the market in which you are buying a foreclosure. A weak and ailing market could mean values will continue to fall. Buyers may be scarce. This is not an ideal environment for an investment.
Other issues must be taken into consideration, as well. The process of buying a foreclosure can take weeks longer than traditional negotiations. This is simply the nature of the beast. A foreclosure is a legal process. A foreclosure also means you must buy title insurance. According to CBS money watch, "A title search will pick up errors before you sign the check and protect you if something was overlooked. In the unlikely event that a former owner returns to challenge the foreclosure, the insurance company will defend you."
Foreclosed houses also warrant very close home inspections. There have been horror stories of new owners finding cement poured down drains by the disgruntled evicted. Be sure to see the house for yourself before you sign on the dotted line. And have a licensed professional carefully examine the home.
Even if the property hasn't been purposefully vandalized, many foreclosures need extensive repairs. A home may simply have been neglected and older homes require updates and normal upkeep. Budget carefully as you assess how much work the property will require.
If you take all of these matters into consideration, a foreclosed property may be the ideal buy for you.
The question is posed. Does buying a foreclosed property save you money?
A market report from Zillow.com gave this example. "In the San Francisco market, where foreclosure re-sales made up 60% of transactions in December 2008, the median sale price for foreclosures was just 47% of the median sale price for non-foreclosures." Savings range widely depending on the area where you are buying, but Zillow.com reports that "foreclosures sell for approximately 28% less than non-foreclosures after controlling for differences in individual houses."
If you are looking to make an investment, however, you need to consider the market in which you are buying a foreclosure. A weak and ailing market could mean values will continue to fall. Buyers may be scarce. This is not an ideal environment for an investment.
Other issues must be taken into consideration, as well. The process of buying a foreclosure can take weeks longer than traditional negotiations. This is simply the nature of the beast. A foreclosure is a legal process. A foreclosure also means you must buy title insurance. According to CBS money watch, "A title search will pick up errors before you sign the check and protect you if something was overlooked. In the unlikely event that a former owner returns to challenge the foreclosure, the insurance company will defend you."
Foreclosed houses also warrant very close home inspections. There have been horror stories of new owners finding cement poured down drains by the disgruntled evicted. Be sure to see the house for yourself before you sign on the dotted line. And have a licensed professional carefully examine the home.
Even if the property hasn't been purposefully vandalized, many foreclosures need extensive repairs. A home may simply have been neglected and older homes require updates and normal upkeep. Budget carefully as you assess how much work the property will require.
If you take all of these matters into consideration, a foreclosed property may be the ideal buy for you.
Low Inflation Keeps Mortgage Rates Relatively Flat This Week
McLean, VA – Freddie Mac today released the results of its Primary Mortgage Market Survey (PMMS), which found that the 30-year fixed-rate mortgage rate rose slightly for the third consecutive week. The 15-year fixed-rate mortgage rate eased back down a little while the 5-year and 1-year ARMs set another low.
30-year fixed-rate mortgage (FRM) averaged 4.24 percent with an average 0.8 point for the week ending November 4, 2010, up slightly from last week when it averaged 4.23 percent. Last year at this time, the 30-year FRM averaged 4.98 percent.
15-year FRM this week averaged 3.63 percent with an average 0.7 point, down from last week when it averaged 3.66 percent. A year ago at this time, the 15-year FRM averaged 4.40 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.39 percent this week, with an average 0.6 point, down from last week when it averaged 3.41 percent. A year ago, the 5-year ARM averaged 4.35 percent. The 5-year ARM has not been lower since Freddie Mac started tracking it in January 2005.
1-year Treasury-indexed ARM averaged 3.26 percent this week with an average 0.7 point, down from last week when it averaged 3.30 percent. At this time last year, the 1-year ARM averaged 4.47 percent. The 1-year ARM sets another survey low this week.
Frank Nothaft, vice president and chief economist, Freddie Mac, notes, "With little sign of inflation to push up long-term interest rates, fixed mortgage rates held relatively steady this week, while ARM rates hit new all-time record lows. The core price index for personal expenditures, a gauge closely followed by the Federal Reserve (Fed), rose 1.1 percent over the 12-months ending in September and represented the smallest increase since September 2001. In its November 3rd monetary policy committee statement, the Fed affirmed that measures of underlying inflation are somewhat low, relative to levels that the committee judges to be consistent, over the longer run, with its dual mandate."
30-year fixed-rate mortgage (FRM) averaged 4.24 percent with an average 0.8 point for the week ending November 4, 2010, up slightly from last week when it averaged 4.23 percent. Last year at this time, the 30-year FRM averaged 4.98 percent.
15-year FRM this week averaged 3.63 percent with an average 0.7 point, down from last week when it averaged 3.66 percent. A year ago at this time, the 15-year FRM averaged 4.40 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.39 percent this week, with an average 0.6 point, down from last week when it averaged 3.41 percent. A year ago, the 5-year ARM averaged 4.35 percent. The 5-year ARM has not been lower since Freddie Mac started tracking it in January 2005.
1-year Treasury-indexed ARM averaged 3.26 percent this week with an average 0.7 point, down from last week when it averaged 3.30 percent. At this time last year, the 1-year ARM averaged 4.47 percent. The 1-year ARM sets another survey low this week.
Frank Nothaft, vice president and chief economist, Freddie Mac, notes, "With little sign of inflation to push up long-term interest rates, fixed mortgage rates held relatively steady this week, while ARM rates hit new all-time record lows. The core price index for personal expenditures, a gauge closely followed by the Federal Reserve (Fed), rose 1.1 percent over the 12-months ending in September and represented the smallest increase since September 2001. In its November 3rd monetary policy committee statement, the Fed affirmed that measures of underlying inflation are somewhat low, relative to levels that the committee judges to be consistent, over the longer run, with its dual mandate."
First-Time Buyers Do's
If you are ready to buy your first house, congratulations! This is an exciting time that can bring you sweet rewards. It's also a time, however, full of questions. Here are a few do's and don'ts to get you started.
Before you shop, you must decide what type of home is best. Are you looking for a condo, with a strong sense of community, extra amenities, easy maintenance, and willing to pay a monthly HOA fee? Would you prefer a larger house in the suburbs, even if it means a longer commute? Are you looking for older charm or newer construction?
After you've decided this, write down a list of your wants and needs. This is a time to be honest with yourself. Rarely does a homebuyer get everything they "want" in a home. You will need to compromise. For example, you may need 3 bedrooms, but want a fenced back yard. If push comes to shove, you may have to forgo the fenced yard to get the bedrooms.
When you begin to shop, have a budget in mind. While prices are always negotiable, you don't want to waste your or a seller's time. Be realistic about a home's price. Let your real estate agent compile a list of homes to visit that fit your criteria, as well as your budget. As you make your way to and through the homes, be sure you don't judge a home until you've been through the entire place. There are homes that seriously lack curb appeal, but with a few cosmetic enhancements can be real showstoppers.
Pay close attention to what repairs the home may need. Don't get swept up by fantastic staging. Keep your list of criteria in mind the entire shopping process.
Once you have decided on a home, it is time to begin negotiations. Do not hesitate. Desirable homes don't sit on the market for long. Hesitation may translate into missing out on a property that you really love. That said, you must be confident with your decision. This is not a time to buy a house simply because you feel pressured.
Your agent will help you put in an offer. By researching area comparables (that's other homes that have sold or are selling in the area), they can come up with a reasonable amount to pay. How much are you willing to pay for this home? Set a top number in your mind and don't let emotion push you to buy past your budget. And leave room in your coffers for closing costs, a down payment, initial repairs, as well as a home inspection.
Home buying can be a stressful process, but keep the end goal in sight and you'll do great!
Before you shop, you must decide what type of home is best. Are you looking for a condo, with a strong sense of community, extra amenities, easy maintenance, and willing to pay a monthly HOA fee? Would you prefer a larger house in the suburbs, even if it means a longer commute? Are you looking for older charm or newer construction?
After you've decided this, write down a list of your wants and needs. This is a time to be honest with yourself. Rarely does a homebuyer get everything they "want" in a home. You will need to compromise. For example, you may need 3 bedrooms, but want a fenced back yard. If push comes to shove, you may have to forgo the fenced yard to get the bedrooms.
When you begin to shop, have a budget in mind. While prices are always negotiable, you don't want to waste your or a seller's time. Be realistic about a home's price. Let your real estate agent compile a list of homes to visit that fit your criteria, as well as your budget. As you make your way to and through the homes, be sure you don't judge a home until you've been through the entire place. There are homes that seriously lack curb appeal, but with a few cosmetic enhancements can be real showstoppers.
Pay close attention to what repairs the home may need. Don't get swept up by fantastic staging. Keep your list of criteria in mind the entire shopping process.
Once you have decided on a home, it is time to begin negotiations. Do not hesitate. Desirable homes don't sit on the market for long. Hesitation may translate into missing out on a property that you really love. That said, you must be confident with your decision. This is not a time to buy a house simply because you feel pressured.
Your agent will help you put in an offer. By researching area comparables (that's other homes that have sold or are selling in the area), they can come up with a reasonable amount to pay. How much are you willing to pay for this home? Set a top number in your mind and don't let emotion push you to buy past your budget. And leave room in your coffers for closing costs, a down payment, initial repairs, as well as a home inspection.
Home buying can be a stressful process, but keep the end goal in sight and you'll do great!
Why Buy a Home?
The past few years of rocky real estate markets has left some people wondering, why buy a home? If you find that thought running through your mind consider these things.
A recent survey commissioned by the National Association of Home Builders found that 72 percent of its respondents opposed any effort to get rid of the homeowners' mortgage interest deduction. That's despite the fact that doing so could help ease the nation's budget deficit.
Gil Gross host of Real Estate Today Radio reported that, "The survey cut across partisan lines, and even across homeowner status. 76 percent of Republicans and 64 percent of Democrats oppose eliminating the deduction, as do 75 percent of owners and even 55 percent of renters. They all recognize the importance of homeownership to the nation's economy."
But why when you hear the horror stories of markets crashing, housing underwater and homeowners facing foreclosure, would you want to buy a home?
The first reason, we just addressed. When you buy a home there are tax advantages. Effectively, homeownership provides an excellent tax shelter. But there are more reasons to trade your rent payment for a mortgage. Buying a home for this tax advantage isn't how you should look at it. Rather, think of it this way. You need a place to live. Receiving a tax advantage for the place that you choose to live in, is a nice bonus.
When carefully used, a home equity loan (line of credit that allows you to borrow against your home) can be a better way to carry credit. That's because home equity lines can have lower interest rates and are also deductible whereas typical credit card interest is not.
Owning your own home gives you more freedom and the opportunity to create a living environment exactly how you want it. There's no consulting with landlords to see if you can do something to the home or who will pay for the change. Of course, that means when you buy a home you should consider what additional changes you plan to make, so that you can appropriately budget. Also, keep in mind that with homeownership come unexpected expenses for repairs and maintenance. While that may sound like a reason not to buy, it shouldn't be. Think about owning a car. There are maintenance issues and expenses but most people still like to own their own vehicle.
Homeownership provides a sense of stability and security. Instead of wondering when the landlord might decide to sell the home, you are in control of that decision. Additionally, homeownership provides immeasurable values of belonging to a social community. Also, as a homeowner, you'll have a greater influence on community affairs. Renters, being usually more transient, have less influence on policymakers.
What it comes down to is how long you plan on staying in a particular home and area and what you can afford. Owning your home weds you to a property which some people feel limits them. However, many others see a home as their life and the legacy they'll leave behind... a place where they raise children, enjoy company, experience life's ups and downs, and eventually pass on their home to loved ones.
A recent survey commissioned by the National Association of Home Builders found that 72 percent of its respondents opposed any effort to get rid of the homeowners' mortgage interest deduction. That's despite the fact that doing so could help ease the nation's budget deficit.
Gil Gross host of Real Estate Today Radio reported that, "The survey cut across partisan lines, and even across homeowner status. 76 percent of Republicans and 64 percent of Democrats oppose eliminating the deduction, as do 75 percent of owners and even 55 percent of renters. They all recognize the importance of homeownership to the nation's economy."
But why when you hear the horror stories of markets crashing, housing underwater and homeowners facing foreclosure, would you want to buy a home?
The first reason, we just addressed. When you buy a home there are tax advantages. Effectively, homeownership provides an excellent tax shelter. But there are more reasons to trade your rent payment for a mortgage. Buying a home for this tax advantage isn't how you should look at it. Rather, think of it this way. You need a place to live. Receiving a tax advantage for the place that you choose to live in, is a nice bonus.
When carefully used, a home equity loan (line of credit that allows you to borrow against your home) can be a better way to carry credit. That's because home equity lines can have lower interest rates and are also deductible whereas typical credit card interest is not.
Owning your own home gives you more freedom and the opportunity to create a living environment exactly how you want it. There's no consulting with landlords to see if you can do something to the home or who will pay for the change. Of course, that means when you buy a home you should consider what additional changes you plan to make, so that you can appropriately budget. Also, keep in mind that with homeownership come unexpected expenses for repairs and maintenance. While that may sound like a reason not to buy, it shouldn't be. Think about owning a car. There are maintenance issues and expenses but most people still like to own their own vehicle.
Homeownership provides a sense of stability and security. Instead of wondering when the landlord might decide to sell the home, you are in control of that decision. Additionally, homeownership provides immeasurable values of belonging to a social community. Also, as a homeowner, you'll have a greater influence on community affairs. Renters, being usually more transient, have less influence on policymakers.
What it comes down to is how long you plan on staying in a particular home and area and what you can afford. Owning your home weds you to a property which some people feel limits them. However, many others see a home as their life and the legacy they'll leave behind... a place where they raise children, enjoy company, experience life's ups and downs, and eventually pass on their home to loved ones.
10% Jump in September Existing-Home Sales
Existing-home sales rose again in September, affirming that a sales recovery has begun, according to the National Association of REALTORS®.
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums, and co-ops, rose 10 percent to a seasonally adjusted annual rate of 4.53 million in September from a downwardly revised 4.12 million in August, but remain 19.1 percent below the 5.60 million-unit pace in September 2009 when first-time buyers were ramping up in advance of the initial deadline for the tax credit last November.
Lawrence Yun, NAR chief economist, said the housing market is in the early stages of recovery. “A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium. But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions,” he said.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.35 percent in September from 4.43 percent in August; the rate was 5.06 percent in September 2009.
The national median existing-home price for all housing types was $171,700 in September, which is 2.4 percent below a year ago. Distressed homes accounted for 35 percent of sales in September compared with 34 percent in August; they were 29 percent in September 2009.
NAR President Vicki Cox Golder said opportunities abound in the current market. “A decade ago, mortgage rates were almost double what they are today, and they’re about one-and-a-half percentage points lower than the peak of the housing boom in 2005,” she said. “In addition, home prices are running about 22 percent less than five years ago when they were bid up by the biggest housing rush on record.”
To illustrate the jump in housing affordability, the median monthly mortgage payment for a recently purchased home is several hundred dollars less than it was five years ago. “In fact, the median monthly mortgage payment in many areas is less than people are paying for rent,” Golder said.
Housing affordability conditions today are 60 percentage points higher than during the housing boom, so it has become a very strong buyers’ market, especially for families with long-term plans. “The savings today’s buyers are receiving are not a one-time benefit. Buyers with fixed-rate mortgages will save money every year they are living in their home – this is truly an example of how home ownership builds wealth over the long term,” Golder added.
Total housing inventory at the end of September fell 1.9 percent to 4.04 million existing homes available for sale, which represents a 10.7-month supply at the current sales pace, down from a 12-month supply in August. Raw unsold inventory is 11.7 percent below the record of 4.58 million in July 2008.
“Vacant homes and homes where mortgages have not been paid for an extended number of months need to be cleared from the market as quickly as possible, with a new set of buyers helping the recovery along a healthy path,” Yun said. “Inventory remains elevated and continues to favor buyers over sellers. A normal seasonal decline in inventory is expected through the upcoming months.”
A parallel NAR practitioner survey shows first-time buyers purchased 32 percent of homes in September, almost unchanged from 31 percent in August. Investors were at an 18 percent market share in September, down from 21 percent in August; the balance of purchases were by repeat buyers. All-cash sales were at 29 percent in September compared with 28 percent in August.
Single-family home sales increased 10 percent to a seasonally adjusted annual rate of 3.97 million in September from a pace of 3.61 million in August, but are 19.5 percent below the 4.93 million level in September 2009. The median existing single-family home price was $172,600 in September, down 1.9 percent from a year ago.
Existing condominium and co-op sales rose 9.8 percent to a seasonally adjusted annual rate of 560,000 in September from 510,000 in August, but are 16.2 percent lower than the 668,000-unit level one year ago. The median existing condo price was $165,400 in September, down 6.2 percent from September 2009.
Existing-home sales by region:
Northeast – increased 10.1 percent to an annual pace of 760,000 in September but are 20.8 percent below September 2009. The median price in the Northeast was $239,200, which is 1.4 percent below a year ago.
Midwest – jumped 14.5 percent in September to a level of 950,000 but are 26.4 percent below a year ago. The median price in the Midwest was $139,700, down 5.2 percent from September 2009.
South – sales rose 10.6 percent to an annual pace of 1.77 million in September but are 14.9 percent lower than September 2009. The median price in the South was $149,500, down 2.6 percent from a year ago.
West – increased 5.0 percent to an annual level of 1.05 million in September but are 16.7 percent below a year ago. The median price in the West was $213,600, which is 4.9 percent lower than September 2009.
Source: NAR
5 Steps to Remodeling Done Right Here are five steps to developing a great relationship with a remodeling contractor.
1. Let the contractor know if you are ready to remodel or just kicking the tires. Gary Palmer, a Charlotte, N.C.-based general contractor, says seeking multiple bids is fine, but don’t waste his or her time by letting the bidding process drag on for weeks.
2. Do your homework. Before seeking bids, develop two files. One should include information, including photos, of what you like. The other should include a list of what you don’t like.
3. Listen to the experts. A good contractor can tell you whether the project is feasible and what the pay off will be.
4. Communicate your budget. Let the contractor know up front how much money you intend to spend.
5. Be realistic and patient. Every remodeling project is messy and all of them are going to be frustrating somewhere along the way.
Source: Charlotte Observer, Barbara S. Russell (10/23/2010)
Lead-Safe RemodelingEffective April 22, 2010 remodeling work on homes built before 1978 must be performed only by contractors certified by the U.S. Environmental Protection Agency. Homeowners should assume lead paint is present and only hire certified contractors. Certified remodelers are required to display their EPA-certified certificate to home owners.
Contractors It is a misdemeanor for a person to engage in the business or act in the capacity of a contractor without having a license. This new law increases the penalties for acting as a contractor without a license.
This law makes a first conviction punishable by a fine not exceeding $5,000 or by imprisonment in a county jail for no more than 6 months, as specified, or both. The fine for a 2nd conviction is the greater of 20% of the contract price, 20% of the aggregate payments made to, or at the direction of, the unlicensed contractor, or $5,000. In addition, a 3rd or subsequent conviction is punishable by both a fine and imprisonment in a county jail, as specified, and requires that the fine be no less than $5,000 and no more than the greater of $10,000, 20% of the contract price, or 20% of the aggregate payments made to, or at the direction of, the unlicensed contractor.
A person who used the services of an unlicensed contractor is a victim of crime and eligible for restitution for economic losses, regardless of whether that person had knowledge that the contractor was unlicensed.
Amends Sections 7028 and 7028.16 of the CA Business and Professions Code.
Who must be licensed as a contractor? All businesses or individuals who construct or alter any building, highway, road, parking facility or other structure in CA must be licensed by the Contractor's State License Board if the total cost including labor and materials is $500 or more.
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums, and co-ops, rose 10 percent to a seasonally adjusted annual rate of 4.53 million in September from a downwardly revised 4.12 million in August, but remain 19.1 percent below the 5.60 million-unit pace in September 2009 when first-time buyers were ramping up in advance of the initial deadline for the tax credit last November.
Lawrence Yun, NAR chief economist, said the housing market is in the early stages of recovery. “A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium. But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions,” he said.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.35 percent in September from 4.43 percent in August; the rate was 5.06 percent in September 2009.
The national median existing-home price for all housing types was $171,700 in September, which is 2.4 percent below a year ago. Distressed homes accounted for 35 percent of sales in September compared with 34 percent in August; they were 29 percent in September 2009.
NAR President Vicki Cox Golder said opportunities abound in the current market. “A decade ago, mortgage rates were almost double what they are today, and they’re about one-and-a-half percentage points lower than the peak of the housing boom in 2005,” she said. “In addition, home prices are running about 22 percent less than five years ago when they were bid up by the biggest housing rush on record.”
To illustrate the jump in housing affordability, the median monthly mortgage payment for a recently purchased home is several hundred dollars less than it was five years ago. “In fact, the median monthly mortgage payment in many areas is less than people are paying for rent,” Golder said.
Housing affordability conditions today are 60 percentage points higher than during the housing boom, so it has become a very strong buyers’ market, especially for families with long-term plans. “The savings today’s buyers are receiving are not a one-time benefit. Buyers with fixed-rate mortgages will save money every year they are living in their home – this is truly an example of how home ownership builds wealth over the long term,” Golder added.
Total housing inventory at the end of September fell 1.9 percent to 4.04 million existing homes available for sale, which represents a 10.7-month supply at the current sales pace, down from a 12-month supply in August. Raw unsold inventory is 11.7 percent below the record of 4.58 million in July 2008.
“Vacant homes and homes where mortgages have not been paid for an extended number of months need to be cleared from the market as quickly as possible, with a new set of buyers helping the recovery along a healthy path,” Yun said. “Inventory remains elevated and continues to favor buyers over sellers. A normal seasonal decline in inventory is expected through the upcoming months.”
A parallel NAR practitioner survey shows first-time buyers purchased 32 percent of homes in September, almost unchanged from 31 percent in August. Investors were at an 18 percent market share in September, down from 21 percent in August; the balance of purchases were by repeat buyers. All-cash sales were at 29 percent in September compared with 28 percent in August.
Single-family home sales increased 10 percent to a seasonally adjusted annual rate of 3.97 million in September from a pace of 3.61 million in August, but are 19.5 percent below the 4.93 million level in September 2009. The median existing single-family home price was $172,600 in September, down 1.9 percent from a year ago.
Existing condominium and co-op sales rose 9.8 percent to a seasonally adjusted annual rate of 560,000 in September from 510,000 in August, but are 16.2 percent lower than the 668,000-unit level one year ago. The median existing condo price was $165,400 in September, down 6.2 percent from September 2009.
Existing-home sales by region:
Northeast – increased 10.1 percent to an annual pace of 760,000 in September but are 20.8 percent below September 2009. The median price in the Northeast was $239,200, which is 1.4 percent below a year ago.
Midwest – jumped 14.5 percent in September to a level of 950,000 but are 26.4 percent below a year ago. The median price in the Midwest was $139,700, down 5.2 percent from September 2009.
South – sales rose 10.6 percent to an annual pace of 1.77 million in September but are 14.9 percent lower than September 2009. The median price in the South was $149,500, down 2.6 percent from a year ago.
West – increased 5.0 percent to an annual level of 1.05 million in September but are 16.7 percent below a year ago. The median price in the West was $213,600, which is 4.9 percent lower than September 2009.
Source: NAR
5 Steps to Remodeling Done Right Here are five steps to developing a great relationship with a remodeling contractor.
1. Let the contractor know if you are ready to remodel or just kicking the tires. Gary Palmer, a Charlotte, N.C.-based general contractor, says seeking multiple bids is fine, but don’t waste his or her time by letting the bidding process drag on for weeks.
2. Do your homework. Before seeking bids, develop two files. One should include information, including photos, of what you like. The other should include a list of what you don’t like.
3. Listen to the experts. A good contractor can tell you whether the project is feasible and what the pay off will be.
4. Communicate your budget. Let the contractor know up front how much money you intend to spend.
5. Be realistic and patient. Every remodeling project is messy and all of them are going to be frustrating somewhere along the way.
Source: Charlotte Observer, Barbara S. Russell (10/23/2010)
Lead-Safe RemodelingEffective April 22, 2010 remodeling work on homes built before 1978 must be performed only by contractors certified by the U.S. Environmental Protection Agency. Homeowners should assume lead paint is present and only hire certified contractors. Certified remodelers are required to display their EPA-certified certificate to home owners.
Contractors It is a misdemeanor for a person to engage in the business or act in the capacity of a contractor without having a license. This new law increases the penalties for acting as a contractor without a license.
This law makes a first conviction punishable by a fine not exceeding $5,000 or by imprisonment in a county jail for no more than 6 months, as specified, or both. The fine for a 2nd conviction is the greater of 20% of the contract price, 20% of the aggregate payments made to, or at the direction of, the unlicensed contractor, or $5,000. In addition, a 3rd or subsequent conviction is punishable by both a fine and imprisonment in a county jail, as specified, and requires that the fine be no less than $5,000 and no more than the greater of $10,000, 20% of the contract price, or 20% of the aggregate payments made to, or at the direction of, the unlicensed contractor.
A person who used the services of an unlicensed contractor is a victim of crime and eligible for restitution for economic losses, regardless of whether that person had knowledge that the contractor was unlicensed.
Amends Sections 7028 and 7028.16 of the CA Business and Professions Code.
Who must be licensed as a contractor? All businesses or individuals who construct or alter any building, highway, road, parking facility or other structure in CA must be licensed by the Contractor's State License Board if the total cost including labor and materials is $500 or more.
The Silver Lining in the Double Dip Recession
Being faced with significant economic and political uncertainty the United States economy and its participants (that's us) have reacted like turtles, hiding in our shells, awaiting better times.
Clearly we are facing challenging times We have been facing low personal income growth, an increasing unemployment rate, uncertainty in the business climate, and a weak housing market.
In particular the weakness in the housing market is marked in six ways:
Record high home foreclosures that, according to Barclay's Bank, will not peak until 2011. These foreclosed properties will continue to flood the marketplace with inventory
A significant increase in strategic defaults, whereby home values have dropped so much that home owners send in the keys and move out, rather than keep owning an overvalued home.
One statistic claims that nearly 20% of all home mortgages are "underwater" because house values have dropped so significantly
Joblessness and economic uncertainty have reduced the demand for new housing
New home construction starts are at record lows. After a 15% drop in May, housing starts fell another 5% in June to a seasonally adjusted annual rate of 549,000. The Commerce Department estimated it to be the lowest level in eight months.
The oversupply of homes in the marketplace has reduced the value of homes in many states as sellers outnumber buyers.
Commercial Investments face major challenges On the commercial side of the ledger, we find that significant increase in business failures and restructuring is resulting in the loss in demand for commercial space nationwide. This has particularly affected:
Retail centers,
Office buildings
Industrial buildings and flex parks This in turn is:
Reducing the demand for new buildings – now and for the immediate business cycle
Creating challenges for many commercial landlords
Reducing the value of commercial assets
Increasing commercial strategic defaults is making debt refinancing difficult. The loss in rental income and market valuation is creating challenges for refinancing of debt for the investors without enough equity or cash to increase their equity positions Highly leveraged purchases made in the real estate hey-days of 2006 – 2008 are the most at risk. At a recent economic symposium Allen Sinai, economist and founder of Decision Economics, voiced his concern: "The challenge is unique: poor and diminishing growth, a sticky unemployment rate, sky-high deficits, and a sovereign debt that makes us one of the most fiscally irresponsible countries in the world." Even more depressing is that more job losses are in front of us. Governors in many states will have to make tough decisions to cut staff as additional federal funds dry up and tax increases will not be warmly received by the electorate. (Note: Most States in the union are facing budget short falls. At Least 46 States have imposed cuts.)
As states have trouble raising revenues, this will in fact also have a trickle-down effect on counties and cities and other government supported organizations that rely on government funds. This in turn will force those agencies to trim staff.
In Oregon, the governor has already implemented a 9% budget decrease and will be implementing an additional 8% cut in order to help balance the budget. This is in addition to increased corporate taxes and use of reserve funds to balance the budget.
This sounds very foreboding but there is a silver lining for those that have a strong cash position.
The silver lining Many companies have right sized their businesses and are making a profit.
I recently had lunch with a business owner of a construction related firm, who cut half of his staff in order to stay in business. But he is now more optimistic and is looking to add staff to help his marketing efforts and re-grow his business. He expects a slow increase in growth moving forward as demand catches up with supply.
At this point, much of the business employment cutting has been accomplished (with the exception of government agencies). As of July 2010, Oregon's official unemployment rate was down to 10.6% from 11.4% in July of 2009. The Federal unemployment rate has been holding steady at 9.4%. Any cuts made by the government agencies may help the economy get stronger in the future.
Real Estate
Unprecedented low interest rates for home purchases:
30 Yr Fixed as low as 4.25%
15 Yr Fixed as low as 3.75%
These low interest rates will fuel demand to purchase homes as the prices drop to a place where average Oregonians can afford them.
Lower rates for apartment property purchases ( currently around 5% compared to the roughly 6.5% for commercial property purchases)
Increased residential foreclosures mean lowered prices and opportunities for investors to buy homes as rentals
Increased demographic demand for rentals is coming
Significant reductions in Apartment vacancy rates are a reflection of the upcoming increased demand. In The Portland Metro area Vacancy rates dropped from 7% to 3.5% from January of 2010 to September of 2010.
The "silver-lining" flipside to the unemployment picture is that 85 – 90% of Americans are either employed or in school.
SBA financing is available ( at competitive interest rates and with low costs) to help small business owners buy a building for their business
They only have to occupy 51% and can rent the rest of it to a tenant until they grow into it.
Other key market place indicators
Banks are slowly recovering and have the cash they need to loan and generate income, albeit conservatively
Many banks are ending their "pretend and extend" phase and are actively taking back properties and selling them as fast as they can to get them off of their books.
Urban areas will recover faster than rural areas, so the risk is lower in urban areas.
Oregon has the Urban Growth Boundary (UGB) for cities. This means that land values will come back as the recession winds down and the population increases.
If you have money, you have an excellent 6 – 12 month window to look for real estate opportunities in Oregon.
Residentially, we are one of the states with highest foreclosure rate (percentage wise), so there will be opportunities to buy your second home or a couple of investment homes. You can still buy a small home in Bend for $100,000 - $120,000 and many other rural areas around the state. (The Bend area unemployment rate is 17 – 20%, but rentals are showing lowered vacancy rates).
Commercially, there are buildings on the market but, with the exception of SBA loans that require only a 10% down, it is harder to finance commercial purchases unless you have lots of cash.
In my lifetime I have never seen prices this low for residential real estate. There is a market place adjustment occurring, which will reduce the value of residential homes in the near term, but values will go up as jobs and our population increases, especially in Oregon where the UGB limits the amount of land available for growth. Now is the time to invest… and for the turtles among us to start sticking our necks out.
Clearly we are facing challenging times We have been facing low personal income growth, an increasing unemployment rate, uncertainty in the business climate, and a weak housing market.
In particular the weakness in the housing market is marked in six ways:
Record high home foreclosures that, according to Barclay's Bank, will not peak until 2011. These foreclosed properties will continue to flood the marketplace with inventory
A significant increase in strategic defaults, whereby home values have dropped so much that home owners send in the keys and move out, rather than keep owning an overvalued home.
One statistic claims that nearly 20% of all home mortgages are "underwater" because house values have dropped so significantly
Joblessness and economic uncertainty have reduced the demand for new housing
New home construction starts are at record lows. After a 15% drop in May, housing starts fell another 5% in June to a seasonally adjusted annual rate of 549,000. The Commerce Department estimated it to be the lowest level in eight months.
The oversupply of homes in the marketplace has reduced the value of homes in many states as sellers outnumber buyers.
Commercial Investments face major challenges On the commercial side of the ledger, we find that significant increase in business failures and restructuring is resulting in the loss in demand for commercial space nationwide. This has particularly affected:
Retail centers,
Office buildings
Industrial buildings and flex parks This in turn is:
Reducing the demand for new buildings – now and for the immediate business cycle
Creating challenges for many commercial landlords
Reducing the value of commercial assets
Increasing commercial strategic defaults is making debt refinancing difficult. The loss in rental income and market valuation is creating challenges for refinancing of debt for the investors without enough equity or cash to increase their equity positions Highly leveraged purchases made in the real estate hey-days of 2006 – 2008 are the most at risk. At a recent economic symposium Allen Sinai, economist and founder of Decision Economics, voiced his concern: "The challenge is unique: poor and diminishing growth, a sticky unemployment rate, sky-high deficits, and a sovereign debt that makes us one of the most fiscally irresponsible countries in the world." Even more depressing is that more job losses are in front of us. Governors in many states will have to make tough decisions to cut staff as additional federal funds dry up and tax increases will not be warmly received by the electorate. (Note: Most States in the union are facing budget short falls. At Least 46 States have imposed cuts.)
As states have trouble raising revenues, this will in fact also have a trickle-down effect on counties and cities and other government supported organizations that rely on government funds. This in turn will force those agencies to trim staff.
In Oregon, the governor has already implemented a 9% budget decrease and will be implementing an additional 8% cut in order to help balance the budget. This is in addition to increased corporate taxes and use of reserve funds to balance the budget.
This sounds very foreboding but there is a silver lining for those that have a strong cash position.
The silver lining Many companies have right sized their businesses and are making a profit.
I recently had lunch with a business owner of a construction related firm, who cut half of his staff in order to stay in business. But he is now more optimistic and is looking to add staff to help his marketing efforts and re-grow his business. He expects a slow increase in growth moving forward as demand catches up with supply.
At this point, much of the business employment cutting has been accomplished (with the exception of government agencies). As of July 2010, Oregon's official unemployment rate was down to 10.6% from 11.4% in July of 2009. The Federal unemployment rate has been holding steady at 9.4%. Any cuts made by the government agencies may help the economy get stronger in the future.
Real Estate
Unprecedented low interest rates for home purchases:
30 Yr Fixed as low as 4.25%
15 Yr Fixed as low as 3.75%
These low interest rates will fuel demand to purchase homes as the prices drop to a place where average Oregonians can afford them.
Lower rates for apartment property purchases ( currently around 5% compared to the roughly 6.5% for commercial property purchases)
Increased residential foreclosures mean lowered prices and opportunities for investors to buy homes as rentals
Increased demographic demand for rentals is coming
Significant reductions in Apartment vacancy rates are a reflection of the upcoming increased demand. In The Portland Metro area Vacancy rates dropped from 7% to 3.5% from January of 2010 to September of 2010.
The "silver-lining" flipside to the unemployment picture is that 85 – 90% of Americans are either employed or in school.
SBA financing is available ( at competitive interest rates and with low costs) to help small business owners buy a building for their business
They only have to occupy 51% and can rent the rest of it to a tenant until they grow into it.
Other key market place indicators
Banks are slowly recovering and have the cash they need to loan and generate income, albeit conservatively
Many banks are ending their "pretend and extend" phase and are actively taking back properties and selling them as fast as they can to get them off of their books.
Urban areas will recover faster than rural areas, so the risk is lower in urban areas.
Oregon has the Urban Growth Boundary (UGB) for cities. This means that land values will come back as the recession winds down and the population increases.
If you have money, you have an excellent 6 – 12 month window to look for real estate opportunities in Oregon.
Residentially, we are one of the states with highest foreclosure rate (percentage wise), so there will be opportunities to buy your second home or a couple of investment homes. You can still buy a small home in Bend for $100,000 - $120,000 and many other rural areas around the state. (The Bend area unemployment rate is 17 – 20%, but rentals are showing lowered vacancy rates).
Commercially, there are buildings on the market but, with the exception of SBA loans that require only a 10% down, it is harder to finance commercial purchases unless you have lots of cash.
In my lifetime I have never seen prices this low for residential real estate. There is a market place adjustment occurring, which will reduce the value of residential homes in the near term, but values will go up as jobs and our population increases, especially in Oregon where the UGB limits the amount of land available for growth. Now is the time to invest… and for the turtles among us to start sticking our necks out.
Five Tips to Increase Your Home's Appeal
Selling your home can be like a single person trying to get the attention of a prospective date--got to clean up, pour on the charm, and emphasize all those great assets.
However, if you can't get the prospective candidate to even notice you (or, in this case, your home), there sure won't be a date and that goes for the selling of your home, too (no closing date).
I've written a lot about staging homes, adding curb appeal, clearing clutter, even adding subtle fragrances to help put prospective buyers in the mood. When it comes to getting a home noticed, especially in these market conditions, you'll want to pay close attention to get the deal done before the end of the year.
1. Change with the seasons. When you go to stores, one thing you notice is the decor changes to match the time of year. That's by no mistake. The goal is to create a mood, make consumers want to buy more. Psychological and emotional advertising influence buyers all the time. If you put your home on the market in the fall and still have spring decorations around the house, it'll affect buyers. They won't feel quite comfortable. It might not be obvious to them but somehow they're likely to feel that things are “out of place” in this home even if the decor isn't overwhelming. Having out-of-season decor just leaves buyers feeling like the house isn't being well cared for.
2. Make it cozy. One of the easiest ways to make your home cozy is by drawing attention to the fireplace. As the weather turns colder, flaunting your fireplace as a focal point is often a great selling point. You can turn your fireplace into a prominent focal point by placing mirrors, artwork, and vases on the mantel. A popular trend is to place candles near the fireplace. However, rather than using real candles, you might try flameless candles that put out a soft, realistic glow.
3. Crank up the thermostat. A lot of times during open houses, the home is quite cozy because the homeowners turned up the thermostat in preparation for the prospective buyers. But when it comes to routine individual showings, especially when the house has been sitting vacant, buyers can receive a chilly non-welcome which does little to make them feel at home. Setting the thermostat to keep the home at a comfortable temperature may cost a bit more but in the end your home will be more appealing. If the home's temperature is either too cold or hot, buyers won't stick around to explore it.
4. Shine the natural light. Hold your open house during the high daylight hours. Lighting is a big attraction and often helps sell your home better. Have your agent schedule individual showings during the time of day when you know the natural lighting will light up your home. Serious buyers will often come by at different times of the day to see the home in different lighting but put your best foot forward and show your home when you know the natural lighting will favor your home.
5. Play soft ambient music. Soft, non-distracting background music can help ease tension. Often the homebuying experience is stressful. Buyers are pressed for time and cash. They are in a hurry. Selling a home is a psychological experience that goes beyond just finding a place to live. The emotional feeling buyers get when visiting your home will result in the action they take--coming back to see it again, making an offer, or crossing it off their list. Playing peaceful music that doesn't overwhelm them can enhance their mood and make them feel like relaxing for a bit in a comfortable chair in your living room ... allowing them to soak up the positive experience.
Remember the key rule when selling a home, make your home seem like theirs.
However, if you can't get the prospective candidate to even notice you (or, in this case, your home), there sure won't be a date and that goes for the selling of your home, too (no closing date).
I've written a lot about staging homes, adding curb appeal, clearing clutter, even adding subtle fragrances to help put prospective buyers in the mood. When it comes to getting a home noticed, especially in these market conditions, you'll want to pay close attention to get the deal done before the end of the year.
1. Change with the seasons. When you go to stores, one thing you notice is the decor changes to match the time of year. That's by no mistake. The goal is to create a mood, make consumers want to buy more. Psychological and emotional advertising influence buyers all the time. If you put your home on the market in the fall and still have spring decorations around the house, it'll affect buyers. They won't feel quite comfortable. It might not be obvious to them but somehow they're likely to feel that things are “out of place” in this home even if the decor isn't overwhelming. Having out-of-season decor just leaves buyers feeling like the house isn't being well cared for.
2. Make it cozy. One of the easiest ways to make your home cozy is by drawing attention to the fireplace. As the weather turns colder, flaunting your fireplace as a focal point is often a great selling point. You can turn your fireplace into a prominent focal point by placing mirrors, artwork, and vases on the mantel. A popular trend is to place candles near the fireplace. However, rather than using real candles, you might try flameless candles that put out a soft, realistic glow.
3. Crank up the thermostat. A lot of times during open houses, the home is quite cozy because the homeowners turned up the thermostat in preparation for the prospective buyers. But when it comes to routine individual showings, especially when the house has been sitting vacant, buyers can receive a chilly non-welcome which does little to make them feel at home. Setting the thermostat to keep the home at a comfortable temperature may cost a bit more but in the end your home will be more appealing. If the home's temperature is either too cold or hot, buyers won't stick around to explore it.
4. Shine the natural light. Hold your open house during the high daylight hours. Lighting is a big attraction and often helps sell your home better. Have your agent schedule individual showings during the time of day when you know the natural lighting will light up your home. Serious buyers will often come by at different times of the day to see the home in different lighting but put your best foot forward and show your home when you know the natural lighting will favor your home.
5. Play soft ambient music. Soft, non-distracting background music can help ease tension. Often the homebuying experience is stressful. Buyers are pressed for time and cash. They are in a hurry. Selling a home is a psychological experience that goes beyond just finding a place to live. The emotional feeling buyers get when visiting your home will result in the action they take--coming back to see it again, making an offer, or crossing it off their list. Playing peaceful music that doesn't overwhelm them can enhance their mood and make them feel like relaxing for a bit in a comfortable chair in your living room ... allowing them to soak up the positive experience.
Remember the key rule when selling a home, make your home seem like theirs.
Where do People Want to Live?
If you could live in any state, except the one you live in now, what state would you choose to live in?
The Harris Poll has asked this question every year since 1997. While California tops the list of most popular states to live in among Echo Boomers (now ages 18 to 33) and Gen Xers (ages 34 to 45), Hawaii is the top pick for Baby Boomers (ages 46 to 64) and Matures (ages 65 and over). Among Echo Boomers, Hawaii drops out of the top five.
Here are the top-10 states across the age groups:
1. California
2. Hawaii
3. Florida
4. Colorado
5. Arizona
6. North Carolina
7. Oregon
8. Texas
9. New York
10. Washington
Source: Harris Interactive (10/19/2010)
The Harris Poll has asked this question every year since 1997. While California tops the list of most popular states to live in among Echo Boomers (now ages 18 to 33) and Gen Xers (ages 34 to 45), Hawaii is the top pick for Baby Boomers (ages 46 to 64) and Matures (ages 65 and over). Among Echo Boomers, Hawaii drops out of the top five.
Here are the top-10 states across the age groups:
1. California
2. Hawaii
3. Florida
4. Colorado
5. Arizona
6. North Carolina
7. Oregon
8. Texas
9. New York
10. Washington
Source: Harris Interactive (10/19/2010)
Variable or Otherwise: What Has Your Mortgage Committed You To?
Mortgages are expensive things to misunderstand. What you don't know could cost you.
Too many eager home buyers sign up for a mortgage with their sights trained on their dream home instead of on the details in the mortgage contract they are signing. They forget that, nice as everybody is during the real estate transaction, they are all salespeople working for companies that earn profit from selling their products—in this case, mortgages.
Experienced property owners may be no further ahead since, once they have moved in, few settle back with mortgage and insurance documents to fully understand what they signed up for.
The first line of defence for consumers is learning as much as possible about relevant real estate topics before it is important or necessary to make a decision. In these changeable financial times, look for new products and choices in the mortgage world, as in most aspects of real estate, but don't expect them to play by the same rules.
If you take advantage of the educational resources available to you, you're off to a good start. If you wait until a decision must be made and plunge in, you may learn a few expensive lessons. Of more concern is the fact that many property owners and mortgage borrowers never realize how many extra thousands of dollars they have paid—often unnecessarily.
Consumer protection laws exist to protect consumers, but laws only work if consumers understand why and how they need protection. Products and services designed to comply with these laws should have explanations of rights and responsibilities incorporated in them, but if consumers don't read the fine print and ask questions for more detail, it's all just so many words.
Often the jobs of real estate and mortgage professionals seem easy to consumers because they don't understand the complexity and liability these professionals wade through in each transaction. Previous columns have introduced readers to layers of this complexity. Relevant professional organizations usually offer details on the benefits of working with professionals so Google™ away.
As new products come on the market, they are not automatically as consumer-friendly as they are portrayed. Some are created to fall under categories not covered by existing consumer protection. They're still legal, but the differences are not necessarily readily apparent to consumers.
Can you see what you might misunderstand?
For mortgages with blended monthly payments of principal and interest, the law limits the frequency of interest compounding to annually or semi-annually. Mortgages outside this category, like variable rate mortgages or collateral mortgages, do not fall under this restriction, so monthly compounding would be allowable. Increased frequency of compounding means more interest is paid by the borrower. How frequently is the interest on your variable mortgage compounded?
Lenders offer a range of repayment plans, marketed to attract business by making life sound easier and cheaper to consumers. That's business. Along with these variations on traditional mortgages, are those that reduce the choices open to consumers while seeming to increase flexibility. For example, mortgages are contracts set up on two time-frames:
The amortization period which is the financial calculation of how long—usually 25 years—it will take to completely pay the debt of principal and accrued interest;
The term which is the period that the interest rate and related repayment terms are set, usually 3 to 5 years or longer.
Opportunities to extend the amortization period sound great because they lower monthly payments. This flexibility also increases the amount of interest paid on the mortgage. Since paying off a mortgage may mean paying double or triple the amount of money initially borrowed, how much more can the cost of borrowing increase before you decide this mortgage is too expensive for you?
Once the term is set, even if interest rates go down, you'll pay at that agreed percentage for the term. When rates are on the rise, locking in for long terms sounds smart. What options does your mortgage contact allow you should interest rates drop below your current mortgage rate?
Borrowing plans that allow you to take some money now and more later can limit your borrowing choices in the future. If the mortgage, whatever form it takes or label it carries, is initially set up for a large amount, but you only take some of that at first, that large amount may appear on title. This means, if you want to, or must, borrow from a different lender, you may find the existing mortgage expressed relative to the large amount makes you a less than attractive borrower to the second lender. Ask how the staged mortgage will appear on title, or be registered, and what your choices will be if you want to switch lenders before the entire initial amount is borrowed.
If your mortgage comes up for renewal next year, start your mortgage education now. So many lenders have implemented plans to attract renewing borrowers that you might discover benefits in changing lenders. Before you shop around, ask your lender to review your mortgage contract with you and explain what your choices are. Deciding not to learn how the largest single debt you'll hold works could be an expensive decision.
All this is fine when you understand what you are signing. My motto of "Consumer Be Aware" encourages you to learn ahead of need. "Buyer Beware" is a before-you-sign alarm that may be too late—and expensive.
Too many eager home buyers sign up for a mortgage with their sights trained on their dream home instead of on the details in the mortgage contract they are signing. They forget that, nice as everybody is during the real estate transaction, they are all salespeople working for companies that earn profit from selling their products—in this case, mortgages.
Experienced property owners may be no further ahead since, once they have moved in, few settle back with mortgage and insurance documents to fully understand what they signed up for.
The first line of defence for consumers is learning as much as possible about relevant real estate topics before it is important or necessary to make a decision. In these changeable financial times, look for new products and choices in the mortgage world, as in most aspects of real estate, but don't expect them to play by the same rules.
If you take advantage of the educational resources available to you, you're off to a good start. If you wait until a decision must be made and plunge in, you may learn a few expensive lessons. Of more concern is the fact that many property owners and mortgage borrowers never realize how many extra thousands of dollars they have paid—often unnecessarily.
Consumer protection laws exist to protect consumers, but laws only work if consumers understand why and how they need protection. Products and services designed to comply with these laws should have explanations of rights and responsibilities incorporated in them, but if consumers don't read the fine print and ask questions for more detail, it's all just so many words.
Often the jobs of real estate and mortgage professionals seem easy to consumers because they don't understand the complexity and liability these professionals wade through in each transaction. Previous columns have introduced readers to layers of this complexity. Relevant professional organizations usually offer details on the benefits of working with professionals so Google™ away.
As new products come on the market, they are not automatically as consumer-friendly as they are portrayed. Some are created to fall under categories not covered by existing consumer protection. They're still legal, but the differences are not necessarily readily apparent to consumers.
Can you see what you might misunderstand?
For mortgages with blended monthly payments of principal and interest, the law limits the frequency of interest compounding to annually or semi-annually. Mortgages outside this category, like variable rate mortgages or collateral mortgages, do not fall under this restriction, so monthly compounding would be allowable. Increased frequency of compounding means more interest is paid by the borrower. How frequently is the interest on your variable mortgage compounded?
Lenders offer a range of repayment plans, marketed to attract business by making life sound easier and cheaper to consumers. That's business. Along with these variations on traditional mortgages, are those that reduce the choices open to consumers while seeming to increase flexibility. For example, mortgages are contracts set up on two time-frames:
The amortization period which is the financial calculation of how long—usually 25 years—it will take to completely pay the debt of principal and accrued interest;
The term which is the period that the interest rate and related repayment terms are set, usually 3 to 5 years or longer.
Opportunities to extend the amortization period sound great because they lower monthly payments. This flexibility also increases the amount of interest paid on the mortgage. Since paying off a mortgage may mean paying double or triple the amount of money initially borrowed, how much more can the cost of borrowing increase before you decide this mortgage is too expensive for you?
Once the term is set, even if interest rates go down, you'll pay at that agreed percentage for the term. When rates are on the rise, locking in for long terms sounds smart. What options does your mortgage contact allow you should interest rates drop below your current mortgage rate?
Borrowing plans that allow you to take some money now and more later can limit your borrowing choices in the future. If the mortgage, whatever form it takes or label it carries, is initially set up for a large amount, but you only take some of that at first, that large amount may appear on title. This means, if you want to, or must, borrow from a different lender, you may find the existing mortgage expressed relative to the large amount makes you a less than attractive borrower to the second lender. Ask how the staged mortgage will appear on title, or be registered, and what your choices will be if you want to switch lenders before the entire initial amount is borrowed.
If your mortgage comes up for renewal next year, start your mortgage education now. So many lenders have implemented plans to attract renewing borrowers that you might discover benefits in changing lenders. Before you shop around, ask your lender to review your mortgage contract with you and explain what your choices are. Deciding not to learn how the largest single debt you'll hold works could be an expensive decision.
All this is fine when you understand what you are signing. My motto of "Consumer Be Aware" encourages you to learn ahead of need. "Buyer Beware" is a before-you-sign alarm that may be too late—and expensive.
Survey Reveals Buying Still Appeals
If you think buying a house still makes sense even in today's economy, welcome to the club!
A recent National Association of Realtors survey revealed that nearly eight out of ten believe buying a home is still a good financial decision.
The eighth annual Housing Opportunity Pulse Survey found that despite job security concerns being the highest reported in the last eight years, buying is still on the minds of Americans.
More than two-thirds of those surveyed, 68 percent, still think that "now is a good time to buy a home." And though cost remains an impediment for many buyers, the majority of respondents worry about the drop in home values. This is happening all across the nation as neighborhoods combat the effects of rampant foreclosures.
Over half surveyed say that foreclosures are a moderate to big problem in their area. And recent statistics from Zillow.com show that foreclosures are still on the rise. Last year's survey indicated that the blame for foreclosures was on those who bought homes they couldn't afford. That focus and blame has now shifted to the ailing job market, with layoffs and unemployment
There is concern, as well, over banks and lending standards. The majority of those surveyed worry that "banks have made it too hard to qualify for a home mortgage loan."
Are there new buyers waiting to enter the housing market? The survey reveals that 39 percent of renters feel that owning a home at some point in the future is a high priority. And 24 percent rank it as a moderate priority. That could be good news for a market desperate for buyers.
A recent National Association of Realtors survey revealed that nearly eight out of ten believe buying a home is still a good financial decision.
The eighth annual Housing Opportunity Pulse Survey found that despite job security concerns being the highest reported in the last eight years, buying is still on the minds of Americans.
More than two-thirds of those surveyed, 68 percent, still think that "now is a good time to buy a home." And though cost remains an impediment for many buyers, the majority of respondents worry about the drop in home values. This is happening all across the nation as neighborhoods combat the effects of rampant foreclosures.
Over half surveyed say that foreclosures are a moderate to big problem in their area. And recent statistics from Zillow.com show that foreclosures are still on the rise. Last year's survey indicated that the blame for foreclosures was on those who bought homes they couldn't afford. That focus and blame has now shifted to the ailing job market, with layoffs and unemployment
There is concern, as well, over banks and lending standards. The majority of those surveyed worry that "banks have made it too hard to qualify for a home mortgage loan."
Are there new buyers waiting to enter the housing market? The survey reveals that 39 percent of renters feel that owning a home at some point in the future is a high priority. And 24 percent rank it as a moderate priority. That could be good news for a market desperate for buyers.
Short Sale
The goal of a short sale is to obtain a full and complete release of all liability from the lender(s) and an acknowledgement by the lender(s) that any loan obligations have been paid in full or fully satisfied. Releases with these terms were something that lenders were providing in the last economic downturn in the mid-1990s. In this economic downturn, releases with these terms have been few and far between. Most lenders today, if they approve a short sale, do so with language in an approval letter or term sheet that either expressly reserves the right to pursue the seller for any shortfall or is silent on the issue, therefore leaving the seller potentially exposed to such a claim. There are several factors that explain why this is taking place.
First, the magnitude of this economic downturn is far more significant than the last one in the 1990s. Second, the loan products utilized in the last eight to ten years and the risks inherent in them are far different. These loan products (stated income, no documentation, option at ARMs, etc.) have demonstrated that they are capable of abuse. At times, this abuse translates into misrepresentations being made to the lender(s) regarding, among other things, the income of the seller/borrower, bank accounts with inflated balances, or accounts that the seller has never maintained. Many sellers don’t even realize that this erroneous information has been submitted to the lender(s) on their behalf, because many sellers were asked to sign loan applications in blank.
Another trend revealed in this last economic downturn involved the investor/purchaser. Many such investors represented, knowingly or otherwise, that the property that they were purchasing was to be owner occupied in order to obtain a more favorable loan rate. However, many of these purchases were actually intended to be rentals rather than owner occupied.
All of the foregoing has created a much different economic landscape than that of the 1990s. Lenders are more in tune with these issues and recognize that there may be an opportunity to pursue seller/borrower(s) who have made misrepresentations of these kinds. Reserving their rights against a short sale seller for any shortfall is a way of preserving their claims based on any of the foregoing. Lastly, given the magnitude of this economic downturn and the fractionalization and securitization of many of these loans, many lenders may just be unwilling to absorb the losses that they are otherwise facing.
Irrespective of the motivation, these issues raise a number of concerns for a potential short sale seller. These concerns, and several others outlined below, should be evaluated by a short sale seller before any contact takes place with the lender(s):
First, ask the seller “is there any inaccurate or untruthful information contained in sellers loan application or any other documentation submitted to the lender(s) or signed by seller?” It’s necessary for the Seller to review their loan application, the occupancy provision of their deed of trust, and any occupancy rider to the deed of trust. This potential must be evaluated before any short sale package is submitted to the lender(s). If not, then Seller is providing the lender(s) with the potential evidence to demonstrate that misrepresentations or untruthful statements were made to the lender(s) and induced the lender(s) to make the loan.
Second, “Are the loans recourse or non-recourse?”
Third, “What are the tax consequences of a short sale versus letting the property go into foreclosure?”
Fourth, “Is the Seller candidate for any loan modification or any other relief under a federal program?”
Fifth, “Is the Seller a candidate for bankruptcy?”
Sixth, “If multiple loans, are the junior loans recourse ones?” If so, what is the amount of that loan and what is the likelihood of that lender accepting a significantly reduced amount based on the approval terms of the senior lender (typically, anywhere from $3,000.00 to $8,000.00)?
Also, “What is the impact of these various decisions on the Sellers credit?”
Finally, “What is the Sellers exit strategy from this property?” In other words, “Where is the Seller going to be living? Will They need credit in order to be able to complete their next move, and does the seller want to accomplish that move before stopping any payments on their loan?”
All of these issues should be evaluated before making the decision to embark on a short sale. Many of the answers will be in conflict with each other. Unfortunately, a short sale today typically results in a seller choosing to swallow the least unpleasant of several distasteful medicines. The key is recognizing that even if you have worked through all of the foregoing issues, in today’s short sale environment, you are still going to be faced with a lender who typically is unwilling to release you from all claims and liabilities related to the note and deed of trust. The contract that you sign must contain language which gives you the right to evaluate the approval letter/term sheet that the lender provides. That review should take place with an attorney. The choices that the seller faces at that time are to accept the terms set forth by the lender(s), attempt to negotiate with the lender(s), or cancel the transaction. The decision that each seller makes ultimately turns on a balance of all of the foregoing factors and the status of any pending foreclosure. The key is recognizing what the issues are, evaluating them, and giving the seller flexibility to make the best decision.
First, the magnitude of this economic downturn is far more significant than the last one in the 1990s. Second, the loan products utilized in the last eight to ten years and the risks inherent in them are far different. These loan products (stated income, no documentation, option at ARMs, etc.) have demonstrated that they are capable of abuse. At times, this abuse translates into misrepresentations being made to the lender(s) regarding, among other things, the income of the seller/borrower, bank accounts with inflated balances, or accounts that the seller has never maintained. Many sellers don’t even realize that this erroneous information has been submitted to the lender(s) on their behalf, because many sellers were asked to sign loan applications in blank.
Another trend revealed in this last economic downturn involved the investor/purchaser. Many such investors represented, knowingly or otherwise, that the property that they were purchasing was to be owner occupied in order to obtain a more favorable loan rate. However, many of these purchases were actually intended to be rentals rather than owner occupied.
All of the foregoing has created a much different economic landscape than that of the 1990s. Lenders are more in tune with these issues and recognize that there may be an opportunity to pursue seller/borrower(s) who have made misrepresentations of these kinds. Reserving their rights against a short sale seller for any shortfall is a way of preserving their claims based on any of the foregoing. Lastly, given the magnitude of this economic downturn and the fractionalization and securitization of many of these loans, many lenders may just be unwilling to absorb the losses that they are otherwise facing.
Irrespective of the motivation, these issues raise a number of concerns for a potential short sale seller. These concerns, and several others outlined below, should be evaluated by a short sale seller before any contact takes place with the lender(s):
First, ask the seller “is there any inaccurate or untruthful information contained in sellers loan application or any other documentation submitted to the lender(s) or signed by seller?” It’s necessary for the Seller to review their loan application, the occupancy provision of their deed of trust, and any occupancy rider to the deed of trust. This potential must be evaluated before any short sale package is submitted to the lender(s). If not, then Seller is providing the lender(s) with the potential evidence to demonstrate that misrepresentations or untruthful statements were made to the lender(s) and induced the lender(s) to make the loan.
Second, “Are the loans recourse or non-recourse?”
Third, “What are the tax consequences of a short sale versus letting the property go into foreclosure?”
Fourth, “Is the Seller candidate for any loan modification or any other relief under a federal program?”
Fifth, “Is the Seller a candidate for bankruptcy?”
Sixth, “If multiple loans, are the junior loans recourse ones?” If so, what is the amount of that loan and what is the likelihood of that lender accepting a significantly reduced amount based on the approval terms of the senior lender (typically, anywhere from $3,000.00 to $8,000.00)?
Also, “What is the impact of these various decisions on the Sellers credit?”
Finally, “What is the Sellers exit strategy from this property?” In other words, “Where is the Seller going to be living? Will They need credit in order to be able to complete their next move, and does the seller want to accomplish that move before stopping any payments on their loan?”
All of these issues should be evaluated before making the decision to embark on a short sale. Many of the answers will be in conflict with each other. Unfortunately, a short sale today typically results in a seller choosing to swallow the least unpleasant of several distasteful medicines. The key is recognizing that even if you have worked through all of the foregoing issues, in today’s short sale environment, you are still going to be faced with a lender who typically is unwilling to release you from all claims and liabilities related to the note and deed of trust. The contract that you sign must contain language which gives you the right to evaluate the approval letter/term sheet that the lender provides. That review should take place with an attorney. The choices that the seller faces at that time are to accept the terms set forth by the lender(s), attempt to negotiate with the lender(s), or cancel the transaction. The decision that each seller makes ultimately turns on a balance of all of the foregoing factors and the status of any pending foreclosure. The key is recognizing what the issues are, evaluating them, and giving the seller flexibility to make the best decision.
Three Scenarios From the Foreclosure Freeze
Gregor Watson, a principal with McKinley Partners, a development company that buys foreclosed homes, told listeners on a Citi home-builder conference call that there were three potential outcomes from the foreclosure fiasco:
· Best case: These are technical issues that can be resolved quickly so the foreclosure process can continue and the glut of foreclosed homes is cleared from the market.
· Medium case: There is significant litigation that takes years to sort out and this slows the troubled housing market even further.
· Worst case: The market grinds to a halt and title insurers refuse to insure mortgages involving foreclosed homes. “It would be devastating for the resale market if this robo-signer issue spiraled out of control,” Watson says.
Source: The Wall Street Journal, Dawn Wotapka (10/12/2010)
· Best case: These are technical issues that can be resolved quickly so the foreclosure process can continue and the glut of foreclosed homes is cleared from the market.
· Medium case: There is significant litigation that takes years to sort out and this slows the troubled housing market even further.
· Worst case: The market grinds to a halt and title insurers refuse to insure mortgages involving foreclosed homes. “It would be devastating for the resale market if this robo-signer issue spiraled out of control,” Watson says.
Source: The Wall Street Journal, Dawn Wotapka (10/12/2010)
Real Estate Outlook: Pending Sales Rise
The recent recession and slow recovery has wreaked havoc on businesses and households, alike. And according to Federal Reserve Chairman, Ben Bernanke, the government has felt "severe budgetary pressures" as well.
He notes that "for now, the budget deficit has stabilized and, so long as the economy and financial markets continue to recover, it should narrow relative to national income over the next few years."
There is progress being made across the nation. Pending sales increased for the second consecutive month, that according to the National Association of Realtors and their latest Pending Home Sales Index.
Pending sales rose 4.3 percent, and were up in all regions except the Northeast, which saw a 2.9 percent decline. Lawrence Yun, NAR chief economist, said the latest data is consistent with a gradual improvement in home sales in upcoming months. "Attractive affordability conditions from very low mortgage interest rates appear to be bringing buyers back to the market," he said. "However, the pace of a home sales recovery still depends more on job creation and an accompanying rise in consumer confidence."
Yun cautioned, however, that any sudden rise in interest rates could slow a recovery. It all has to do with inflation. If we start to see higher inflation, this could translate into higher interest rates. For now, however, affordability is near an all-time high.
In foreclosure news this week, we look to eRate's latest report showing that nearly one in every four homes sold in the second quarter of this year were in some state of foreclosure.
Additionally, these homes sold for 26 percent or more below the average sales price compared to properties not in foreclosure. The largest price deficit was seen in Ohio, which saw foreclosure sales prices, on average, at 43 percent of normal sale properties.
CoreLogic, the leader in innovative analytics, also predicted that the additional inventory of foreclosed homes on the market could likely double the time it takes a home to sell, from the current 11-month average.
"Given that the tax credit simply pulled demand forward, the distressed share is expected to rise … during the fall, when non-distressed seasonal sales begin to decline," analysts said.
The International Monetary Fund, or IMF, reports that "the most likely prospect for the U.S. economy is for a continued but slow recovery, with growth far weaker than in previous recoveries, considering the depth of the recession.
In the meantime, let's keep an eye on interest rates. Fed Chairman Bernanke gives the warning that "in the longer term, a rising level of government debt relative to national income is likely to put upward pressure on interest rates and thus inhibit capital formation, productivity, and economic growth."
He notes that "for now, the budget deficit has stabilized and, so long as the economy and financial markets continue to recover, it should narrow relative to national income over the next few years."
There is progress being made across the nation. Pending sales increased for the second consecutive month, that according to the National Association of Realtors and their latest Pending Home Sales Index.
Pending sales rose 4.3 percent, and were up in all regions except the Northeast, which saw a 2.9 percent decline. Lawrence Yun, NAR chief economist, said the latest data is consistent with a gradual improvement in home sales in upcoming months. "Attractive affordability conditions from very low mortgage interest rates appear to be bringing buyers back to the market," he said. "However, the pace of a home sales recovery still depends more on job creation and an accompanying rise in consumer confidence."
Yun cautioned, however, that any sudden rise in interest rates could slow a recovery. It all has to do with inflation. If we start to see higher inflation, this could translate into higher interest rates. For now, however, affordability is near an all-time high.
In foreclosure news this week, we look to eRate's latest report showing that nearly one in every four homes sold in the second quarter of this year were in some state of foreclosure.
Additionally, these homes sold for 26 percent or more below the average sales price compared to properties not in foreclosure. The largest price deficit was seen in Ohio, which saw foreclosure sales prices, on average, at 43 percent of normal sale properties.
CoreLogic, the leader in innovative analytics, also predicted that the additional inventory of foreclosed homes on the market could likely double the time it takes a home to sell, from the current 11-month average.
"Given that the tax credit simply pulled demand forward, the distressed share is expected to rise … during the fall, when non-distressed seasonal sales begin to decline," analysts said.
The International Monetary Fund, or IMF, reports that "the most likely prospect for the U.S. economy is for a continued but slow recovery, with growth far weaker than in previous recoveries, considering the depth of the recession.
In the meantime, let's keep an eye on interest rates. Fed Chairman Bernanke gives the warning that "in the longer term, a rising level of government debt relative to national income is likely to put upward pressure on interest rates and thus inhibit capital formation, productivity, and economic growth."
American Dream Attracting More Foreigners
They comprise only a small share of homebuyers in the U.S., but more and more foreign buyers are coming to America for the homeownership piece of the dream.
More than a quarter of Realtors, 28 percent, reported working with at least one international client in the past year, up from 23 percent during the previous Profile of International Home Buying Activity.
The recently released 2010 study, which queried Realtors for a year ending in March 2010, found that 18 percent of all Realtors were estimated to have completed at least one international sale, compared to 12 percent last year.
Foreigners invested $41 billion in homes in the U.S. during the period, 4 percent of the total $907 billion market. Adding recent immigrants, or temporary visa holders, pushed the total to $66 billion, or 7 percent of the market according to the report.
A stronger dollar, desirable U.S. property and the slow, but emerging economic recovery are seen as factors in the growing demand for an American home.
Low mortgage rates haven't hurt.
"While all real estate in the U.S. is local, the same is not true for property owners," quipped NAR President Vicki Cox Golder, owner of Vicki L. Cox Real Estate in Tucson, AZ.
"The U.S. continues to be a top destination for international buyers from all over the world. Foreign buyers understand the value of owning a home in this country," she added.
But not all U.S. real estate markets are created equal in the eyes of foreign buyers.
The survey found foreigners buying property in 39 states, but a bit more than half were in just four states: Arizona, California, Florida and Texas. Except for Texas, they are all states that were hotbed boomtowns during the last big boom.
By larger regions, foreign buyers favored the South (45 percent), over the West (32 percent), the Midwest (13 percent) and the Northeast (10 percent).
The buyers came from 53 countries, but the largest number was from just across the borders, Canada, at 23 percent and Mexico at 10 percent. The United Kingdom added 9 percent; China (including Hong Kong), 8 percent; Germany together with France, 7 percent; and India, 5 percent, according to the NAR survey.
More than one in three foreign buyers weren't closers. Thirty four percent had financing problems, often because tight fisted lenders weren't willing to lend to those without Social Security numbers.
But money talks. Among those who did close, 55 percent paid cash, compared to only 8 percent of U.S. buyers coming to the table with a full stake.
Other findings:
The median price paid by international buyers was in the neighborhood of $219,400 during the 2009 to 2010 period. By contrast, the overall median price for all existing home sales was $173,000 during the same period. However, nearly half the foreign buyers, 46 percent, paid $200,000 or less during the period.
Most foreign buyers, 66 percent, purchased a detached single-family home, compared to 23 percent buying a condo, 8 percent a townhouse and 3 percent commercial property.
Fifty percent said they bought the property to live in as their primary residence, 22 percent as a vacation home; 14 percent as an investment and 14 percent as both an investment and vacation home.
Suburban areas were most popular, chosen 50 percent of the time over urban areas (27 percent), resort areas (14 percent), and rural or small town areas (9 percent).
More than a quarter of Realtors, 28 percent, reported working with at least one international client in the past year, up from 23 percent during the previous Profile of International Home Buying Activity.
The recently released 2010 study, which queried Realtors for a year ending in March 2010, found that 18 percent of all Realtors were estimated to have completed at least one international sale, compared to 12 percent last year.
Foreigners invested $41 billion in homes in the U.S. during the period, 4 percent of the total $907 billion market. Adding recent immigrants, or temporary visa holders, pushed the total to $66 billion, or 7 percent of the market according to the report.
A stronger dollar, desirable U.S. property and the slow, but emerging economic recovery are seen as factors in the growing demand for an American home.
Low mortgage rates haven't hurt.
"While all real estate in the U.S. is local, the same is not true for property owners," quipped NAR President Vicki Cox Golder, owner of Vicki L. Cox Real Estate in Tucson, AZ.
"The U.S. continues to be a top destination for international buyers from all over the world. Foreign buyers understand the value of owning a home in this country," she added.
But not all U.S. real estate markets are created equal in the eyes of foreign buyers.
The survey found foreigners buying property in 39 states, but a bit more than half were in just four states: Arizona, California, Florida and Texas. Except for Texas, they are all states that were hotbed boomtowns during the last big boom.
By larger regions, foreign buyers favored the South (45 percent), over the West (32 percent), the Midwest (13 percent) and the Northeast (10 percent).
The buyers came from 53 countries, but the largest number was from just across the borders, Canada, at 23 percent and Mexico at 10 percent. The United Kingdom added 9 percent; China (including Hong Kong), 8 percent; Germany together with France, 7 percent; and India, 5 percent, according to the NAR survey.
More than one in three foreign buyers weren't closers. Thirty four percent had financing problems, often because tight fisted lenders weren't willing to lend to those without Social Security numbers.
But money talks. Among those who did close, 55 percent paid cash, compared to only 8 percent of U.S. buyers coming to the table with a full stake.
Other findings:
The median price paid by international buyers was in the neighborhood of $219,400 during the 2009 to 2010 period. By contrast, the overall median price for all existing home sales was $173,000 during the same period. However, nearly half the foreign buyers, 46 percent, paid $200,000 or less during the period.
Most foreign buyers, 66 percent, purchased a detached single-family home, compared to 23 percent buying a condo, 8 percent a townhouse and 3 percent commercial property.
Fifty percent said they bought the property to live in as their primary residence, 22 percent as a vacation home; 14 percent as an investment and 14 percent as both an investment and vacation home.
Suburban areas were most popular, chosen 50 percent of the time over urban areas (27 percent), resort areas (14 percent), and rural or small town areas (9 percent).
Foreclosures On Auto-Pilot?
The recent news of "robo-signing" (signing off on foreclosures without reviewing and verifying the information in the documents) has chilled the rapid pace of foreclosures... at least for now.
JPMorgan Chase has frozen foreclosures in about half the country due to the paperwork fiasco.
"It didn't surprise me. You're talking about foreclosure mills that run thousands of foreclosures a month; how can the attorney filing on behalf of them have personal knowledge of all those files," says attorney and educator, Lance Churchill, President of FrontlineSeminars.com.
It's being reported that up to 56,000 foreclosures are affected. An employee for JPMorgan Chase said in a deposition that her team signed off on some 18,000 foreclosure documents per month, yet those loan files and reports were not reviewed, according to MarketWatch.
MarketWatch also reports that at GMAC, as many as 500 foreclosure affidavits per day were signed by a professional signer without reviewing the files or having his signatures notarized.
Real estate finance professor Susan Wachter from Wharton School at the University of Pennsylvania, told MarketPlace's Bob Moon, that this may buy homeowners who are facing foreclosure some precious time.
"That's the beginning and the end. One has to document that one has ownership before one can take possession," says Wachter.
That extra time may afford homeowners the opportunity to actually sell their home rather than have it foreclosed. But in the end, Churchill says, "The bottom line is I think it may be hard to overturn a lot of the foreclosures."
What does this do to the foreclosure market for buyers?
"For the buyers of these properties, there shouldn't be any problem," says Churchill.
But he says it depends on where you purchase them, "If I as an investor bought a foreclosure at an auction and it turned out it's a robo-signing type situation, I shouldn't have any problem or suffer any consequences from it because virtually all state laws provide that if you're a good faith purchaser for value at the auction, you get good title. If there's a screw up where the lender didn't protect the borrower or didn't do something right, that's a lawsuit between the two of them now," says Churchill.
But he does offer this advice about buying foreclosures.
"A new thing that has come into play is the federal government last year passed this Protecting Tenants at Foreclosure Act. If there is a tenant in the property that's foreclosed on [that tenant] can stay for the balance of the lease. So if you buy a property that's occupied, if you don't know whether it's the owner or a tenant that's occupying it, you could get in trouble," says Churchill.
Churchill says if the property is occupied by the owners, they have to leave the property fairly quickly or are evicted. "But because of this new federal law, [tenants] are guaranteed to stay at least 90 days under the federal law and if they have a long-term lease (two-year lease), they can stay for the balance of the lease."
He points out that a tenant does have to make rent payments. "But if you intended to move in to that [property] or flip it, you're going to be stuck with it or you have to figure out a way to buy out the tenant," says Churchill.
As for the robo-signing mess, industry experts expect to see more companies freezing foreclosures due to flawed paperwork at least until further reviews are made.
JPMorgan Chase has frozen foreclosures in about half the country due to the paperwork fiasco.
"It didn't surprise me. You're talking about foreclosure mills that run thousands of foreclosures a month; how can the attorney filing on behalf of them have personal knowledge of all those files," says attorney and educator, Lance Churchill, President of FrontlineSeminars.com.
It's being reported that up to 56,000 foreclosures are affected. An employee for JPMorgan Chase said in a deposition that her team signed off on some 18,000 foreclosure documents per month, yet those loan files and reports were not reviewed, according to MarketWatch.
MarketWatch also reports that at GMAC, as many as 500 foreclosure affidavits per day were signed by a professional signer without reviewing the files or having his signatures notarized.
Real estate finance professor Susan Wachter from Wharton School at the University of Pennsylvania, told MarketPlace's Bob Moon, that this may buy homeowners who are facing foreclosure some precious time.
"That's the beginning and the end. One has to document that one has ownership before one can take possession," says Wachter.
That extra time may afford homeowners the opportunity to actually sell their home rather than have it foreclosed. But in the end, Churchill says, "The bottom line is I think it may be hard to overturn a lot of the foreclosures."
What does this do to the foreclosure market for buyers?
"For the buyers of these properties, there shouldn't be any problem," says Churchill.
But he says it depends on where you purchase them, "If I as an investor bought a foreclosure at an auction and it turned out it's a robo-signing type situation, I shouldn't have any problem or suffer any consequences from it because virtually all state laws provide that if you're a good faith purchaser for value at the auction, you get good title. If there's a screw up where the lender didn't protect the borrower or didn't do something right, that's a lawsuit between the two of them now," says Churchill.
But he does offer this advice about buying foreclosures.
"A new thing that has come into play is the federal government last year passed this Protecting Tenants at Foreclosure Act. If there is a tenant in the property that's foreclosed on [that tenant] can stay for the balance of the lease. So if you buy a property that's occupied, if you don't know whether it's the owner or a tenant that's occupying it, you could get in trouble," says Churchill.
Churchill says if the property is occupied by the owners, they have to leave the property fairly quickly or are evicted. "But because of this new federal law, [tenants] are guaranteed to stay at least 90 days under the federal law and if they have a long-term lease (two-year lease), they can stay for the balance of the lease."
He points out that a tenant does have to make rent payments. "But if you intended to move in to that [property] or flip it, you're going to be stuck with it or you have to figure out a way to buy out the tenant," says Churchill.
As for the robo-signing mess, industry experts expect to see more companies freezing foreclosures due to flawed paperwork at least until further reviews are made.
Where the Smart Folks Live
The better educated the population, the higher the salaries. So choosing to live where the smart people do can help ensure that someone’s income is also above average.
Here are the metro areas that the most- and least-educated call home:
Metro areas with the highest percentage of residents with a college degree:
1. Washington, D.C., 47.3 percent
2. San Francisco, 43.5 percent
3. San Jose, Calif., 43.2 percent
4. (tie) Raleigh, N.C. 42.2 percent
4. (tie) Boston, 42.2 percent
6. Austin, Texas, 38.7 percent
7. (tie) Minneapolis, 37.6 percent
7. (tie) Denver, 37.6 percent
9. Seattle, 37.4 percent10. New York, 35.6 percent
Metro areas with the lowest percentage of residents with a college degree:
1. Riverside, Calif., 19.
2 percent2. Las Vegas, 21.3 percent
3. Memphis, Tenn., 24.2 percent
4. Tampa, Fla., 24.6 percent
5. San Antonio, Texas, 24.8 percent
6. Louisville, Ky., 24.9 percent
7. New Orleans, 26.2 percent
8. Detroit, 26.3 percent
9. Orlando, Fla., 26.6 percent
10. Cleveland, 26.9 percent
Source: CNNMoney.com, Les Christie (10/01/2010)
Here are the metro areas that the most- and least-educated call home:
Metro areas with the highest percentage of residents with a college degree:
1. Washington, D.C., 47.3 percent
2. San Francisco, 43.5 percent
3. San Jose, Calif., 43.2 percent
4. (tie) Raleigh, N.C. 42.2 percent
4. (tie) Boston, 42.2 percent
6. Austin, Texas, 38.7 percent
7. (tie) Minneapolis, 37.6 percent
7. (tie) Denver, 37.6 percent
9. Seattle, 37.4 percent10. New York, 35.6 percent
Metro areas with the lowest percentage of residents with a college degree:
1. Riverside, Calif., 19.
2 percent2. Las Vegas, 21.3 percent
3. Memphis, Tenn., 24.2 percent
4. Tampa, Fla., 24.6 percent
5. San Antonio, Texas, 24.8 percent
6. Louisville, Ky., 24.9 percent
7. New Orleans, 26.2 percent
8. Detroit, 26.3 percent
9. Orlando, Fla., 26.6 percent
10. Cleveland, 26.9 percent
Source: CNNMoney.com, Les Christie (10/01/2010)
First-Time Buyers Find a House
Buying a home is an exciting experience. For first time buyers new to the process, it can also be terrifying. In order to ease buying jitters, take a look at a few simple tips.
At the beginning of this journey, you'll need to decide on a budget. There are several factors you need to keep in mind. First, how much of a downpayment do you have? FHA loans allow for as little as 3.5 percent of the purchase price as a downpayment. Other lenders generally require a higher percentage.
Do you want to be house rich and cash poor? Just because a lender approves you for a mortgage payment of $200,000 at $2,000 a month, doesn't mean you want to spend that. It may leave you with no money left over for travel, entertainment, or other luxuries you have come to enjoy. Thus comes the saying, "house rich, cash poor."
To find out what a lender thinks you can afford, you will need to get pre-approved. The lender will examine your financial status, including your credit score. This will determine what interest rate you'll be offered and for what amount you are approved.
After setting your budget, you'll need to pick the neighborhoods you are interested in. Are you looking for a short commute, good schools, entertainment within walking distance, or an old neighborhood with charm? These preferences are entirely up to you and will determine the direction of your search.
The MLS is a great place to start your search. The real estate agent you are working with can help you weed through the thousands of listings by supplying you with potential matches, or a simple google search on your own can give you a list of MLS sites to search. Realtor.com also features a MLS that is open to the public. The MLS shows pictures, descriptions, and locations of homes that match your search criteria.
Use the MLS to narrow down potential neighborhoods. It can be a good starting point to give you an idea of costs, amenities, and size of homes.
As you begin your home search, your local real estate agent will let you know of upcoming open houses. An open house is generally held on a weekend and means the listed home will be open for you to view. There will be other potential buyers there, as well as their agents.
A showing, on the other hand, is when your agent and the listing agent agree upon a set upon time for you to view the house. The seller will not be present, and you'll have the house all to yourself.
Good luck with your home search, and may you find your dream home.
Published: September 22, 2010
At the beginning of this journey, you'll need to decide on a budget. There are several factors you need to keep in mind. First, how much of a downpayment do you have? FHA loans allow for as little as 3.5 percent of the purchase price as a downpayment. Other lenders generally require a higher percentage.
Do you want to be house rich and cash poor? Just because a lender approves you for a mortgage payment of $200,000 at $2,000 a month, doesn't mean you want to spend that. It may leave you with no money left over for travel, entertainment, or other luxuries you have come to enjoy. Thus comes the saying, "house rich, cash poor."
To find out what a lender thinks you can afford, you will need to get pre-approved. The lender will examine your financial status, including your credit score. This will determine what interest rate you'll be offered and for what amount you are approved.
After setting your budget, you'll need to pick the neighborhoods you are interested in. Are you looking for a short commute, good schools, entertainment within walking distance, or an old neighborhood with charm? These preferences are entirely up to you and will determine the direction of your search.
The MLS is a great place to start your search. The real estate agent you are working with can help you weed through the thousands of listings by supplying you with potential matches, or a simple google search on your own can give you a list of MLS sites to search. Realtor.com also features a MLS that is open to the public. The MLS shows pictures, descriptions, and locations of homes that match your search criteria.
Use the MLS to narrow down potential neighborhoods. It can be a good starting point to give you an idea of costs, amenities, and size of homes.
As you begin your home search, your local real estate agent will let you know of upcoming open houses. An open house is generally held on a weekend and means the listed home will be open for you to view. There will be other potential buyers there, as well as their agents.
A showing, on the other hand, is when your agent and the listing agent agree upon a set upon time for you to view the house. The seller will not be present, and you'll have the house all to yourself.
Good luck with your home search, and may you find your dream home.
Published: September 22, 2010
Foreclosure Gaffs May Further Roil the Market
Uncovering deficiencies in the foreclosure process could potentially have serious implications for the market, said Stuart Saft, a partner at New York law firm Dewey & LeBoeuf, because it raises questions about the ownership of properties that have been resold.
Mortgage servicers, who asked for anonymity, say they anticipate more legal action contesting foreclosures.
Miami attorney Richard J. Burton, who specializes in foreclosure litigation, says he expects that class-action lawsuits will be filed against GMAC and other servicers, furthering slowing the foreclosure process.
The turmoil in the market also could encourage more voluntary defaults, said Cameron Findlay, chief economist at LendingTree.com, because overwhelmed lenders may simply ignore newly delinquent homeowners.
Source: Bloomberg, Bob Ivry, Prashant Gopal and Jody Shenn (09/27/2010)
Mortgage servicers, who asked for anonymity, say they anticipate more legal action contesting foreclosures.
Miami attorney Richard J. Burton, who specializes in foreclosure litigation, says he expects that class-action lawsuits will be filed against GMAC and other servicers, furthering slowing the foreclosure process.
The turmoil in the market also could encourage more voluntary defaults, said Cameron Findlay, chief economist at LendingTree.com, because overwhelmed lenders may simply ignore newly delinquent homeowners.
Source: Bloomberg, Bob Ivry, Prashant Gopal and Jody Shenn (09/27/2010)
What's New in New Housing Design
Here are the products grabbing the attention of the home building and remodeling industries, according to Bill Millholland, executive vice president of sales and marketing at Case Design/Remodeling in Maryland, and Jamie Gibbs, a New York-based interior designer:
· Appliance Drawers. Small warning drawers, modest-sized dishwasher drawers for small loads, refrigerator drawers and microwave drawers. · Counter-depth refrigerators. Some are only 24 inches deep.· Motion-detecting faucets. Like you'd find in the restrooms of businesses.· LED (light-emitting diode) lighting. These are used under cabinets and in ceiling fixtures as a longer-lasting, more efficient alternative to compact fluorescent lamps and incandescent bulbs.· Electric heated floors. A nice touch in bathrooms, · Showers with multiple heads and body sprays. Bathtubs are out.
Source: The Washington Post (09/25/2010)
· Appliance Drawers. Small warning drawers, modest-sized dishwasher drawers for small loads, refrigerator drawers and microwave drawers. · Counter-depth refrigerators. Some are only 24 inches deep.· Motion-detecting faucets. Like you'd find in the restrooms of businesses.· LED (light-emitting diode) lighting. These are used under cabinets and in ceiling fixtures as a longer-lasting, more efficient alternative to compact fluorescent lamps and incandescent bulbs.· Electric heated floors. A nice touch in bathrooms, · Showers with multiple heads and body sprays. Bathtubs are out.
Source: The Washington Post (09/25/2010)
Sell Your Home Faster, Give Your Cabinets a New Look
As the fall season sets in and the weather gets colder, it's just another reason to spend more time in the kitchen cooking up warming soups and maybe some hot cider. But no matter which season, kitchens and great rooms tend to be very popular for homeowners and, of course, buyers.
For this reason, it's important to make sure your cabinets are looking good--not laden with holes from chipped or worn off paint or stain. Kitchen cabinets often take a beating from all the opening and closing of the doors and drawers; however getting them looking good again can seem like an overwhelming project.
According to the National Kitchen & Bath Association, "The variables that affect the cost of kitchen cabinets relate to quality, appearance, and functional effectiveness."
So, if you're really sprucing them up and using high-end handles, adding more shelving inside them, the costs will rise. But what if the insides of your cabinets aren't really in poor condition? Maybe the hinges and the hardware are still in good shape, it's just the outside that could use a makeover.
That's when giving your cabinets a new face might be your best option. Stripping the cabinets and painting or refacing them can add a lot of value to the overall appeal of the home without incurring the bigger expense of replacing your cabinets.
The NKBA says that, "This will cost about half of what you would spend for comparable new kitchen cabinets, but such a strategy will only work if the basic room configuration and cabinet placement in your existing kitchen are to remain the same." However, if your cabinets are sagging or you need a new configuration for more space, for instance, this option won't work. But, again, if your cabinets simply need a new face, this can be a good solution especially when you're listing your home for sale. The investment isn't nearly as high as replacing them.
There are a few steps involved in refacing: remove/prep the veneer, strip the surface, fill in missing chips, clean cabinets, apply new veneer and trim, prep veneer, and finally stain and finish. Some homeowners decide to do their own handyman work.
There are many articles on the step-by-step process, so this column won't focus on that but instead will let you know a few things that you should be aware of to ward off bigger problems. Actually, the first is an issue I had when refacing my kitchen cabinets. (After one painter messed up the cabinets, I ended up having to hire a qualified professional to successfully finish the job.) What you should know before you start. Especially in tract homes, certain types of cabinets may have a protective layer (veneer) on top of the wood or pressed particle board. If you remove this layer you can end up with a big mess. While it often chips off over the years, and appears easy to remove, in fact you can peel it off with your finger tips, removing it completely will require the under material to be sanded and prepped so that the surface will allow paint to stick to it. But, removing it may also cause harm to the cabinets.
"Most kitchen cabinets are made with pre-veneered laminated wood (particle board in some cases) and the hardwood veneer is rolled onto the laminated wood with terrifically high pressure and in most case you would damage the wood underneath trying to remove the veneer," according to RefinishFurniture.com. The site indicates that the old veneer can be left on as a base. The old must be lightly sanded to remove the finish and then a new veneer can be added. RefinishFurniture.com also recommends marking all the cabinet doors before you remove them to strip them or prep them for paint or stain. It'll save you so much time and frustration when you go to put them back on.
Another word of advice. While many homeowners like the do-it-yourself projects, when you're selling your home, this kind of project can become tedious and too time consuming. Refacing your cabinets will help your home show better but the question is: Do you do-it-yourself or hire a company to do what they do best? Either way, newly painted or stained cabinets go along way when it comes time to sell your home.
For this reason, it's important to make sure your cabinets are looking good--not laden with holes from chipped or worn off paint or stain. Kitchen cabinets often take a beating from all the opening and closing of the doors and drawers; however getting them looking good again can seem like an overwhelming project.
According to the National Kitchen & Bath Association, "The variables that affect the cost of kitchen cabinets relate to quality, appearance, and functional effectiveness."
So, if you're really sprucing them up and using high-end handles, adding more shelving inside them, the costs will rise. But what if the insides of your cabinets aren't really in poor condition? Maybe the hinges and the hardware are still in good shape, it's just the outside that could use a makeover.
That's when giving your cabinets a new face might be your best option. Stripping the cabinets and painting or refacing them can add a lot of value to the overall appeal of the home without incurring the bigger expense of replacing your cabinets.
The NKBA says that, "This will cost about half of what you would spend for comparable new kitchen cabinets, but such a strategy will only work if the basic room configuration and cabinet placement in your existing kitchen are to remain the same." However, if your cabinets are sagging or you need a new configuration for more space, for instance, this option won't work. But, again, if your cabinets simply need a new face, this can be a good solution especially when you're listing your home for sale. The investment isn't nearly as high as replacing them.
There are a few steps involved in refacing: remove/prep the veneer, strip the surface, fill in missing chips, clean cabinets, apply new veneer and trim, prep veneer, and finally stain and finish. Some homeowners decide to do their own handyman work.
There are many articles on the step-by-step process, so this column won't focus on that but instead will let you know a few things that you should be aware of to ward off bigger problems. Actually, the first is an issue I had when refacing my kitchen cabinets. (After one painter messed up the cabinets, I ended up having to hire a qualified professional to successfully finish the job.) What you should know before you start. Especially in tract homes, certain types of cabinets may have a protective layer (veneer) on top of the wood or pressed particle board. If you remove this layer you can end up with a big mess. While it often chips off over the years, and appears easy to remove, in fact you can peel it off with your finger tips, removing it completely will require the under material to be sanded and prepped so that the surface will allow paint to stick to it. But, removing it may also cause harm to the cabinets.
"Most kitchen cabinets are made with pre-veneered laminated wood (particle board in some cases) and the hardwood veneer is rolled onto the laminated wood with terrifically high pressure and in most case you would damage the wood underneath trying to remove the veneer," according to RefinishFurniture.com. The site indicates that the old veneer can be left on as a base. The old must be lightly sanded to remove the finish and then a new veneer can be added. RefinishFurniture.com also recommends marking all the cabinet doors before you remove them to strip them or prep them for paint or stain. It'll save you so much time and frustration when you go to put them back on.
Another word of advice. While many homeowners like the do-it-yourself projects, when you're selling your home, this kind of project can become tedious and too time consuming. Refacing your cabinets will help your home show better but the question is: Do you do-it-yourself or hire a company to do what they do best? Either way, newly painted or stained cabinets go along way when it comes time to sell your home.
Feds leave interest rates alone
The Federal Reserve issued a statement on Tuesday saying that it will hold off on further efforts to stimulate the economy and keep the federal funds rate at or near zero, but signaled that it was ready to step in with further action if necessary.
The Open Market Committee said in a release,“The Committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.”
The Fed apparently debated resuming securities purchases aimed at driving long-term interest rates even lower. Those who were opposed said it is likely this approach won’t work.
Source: Bloomberg, Craig Torres (09/21/2010)
The Open Market Committee said in a release,“The Committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.”
The Fed apparently debated resuming securities purchases aimed at driving long-term interest rates even lower. Those who were opposed said it is likely this approach won’t work.
Source: Bloomberg, Craig Torres (09/21/2010)
Fed ready to aid US economy
By Robin Harding in Washington
Published: September 21 2010 19:34 Last updated: September 21 2010 19:34
The Federal Reserve took no action at its September meeting but sent a signal that it may soon restart large purchases of Treasury bonds by changing its policy statement.
After its meeting on Tuesday, the rate-setting Federal Open Market Committee said that it “will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.”
MIT Prof Says Housing Demand Is about to Take Off At least some analysts are bullish on housing.
William C. Wheaton, professor of economics at Massachusetts Institute of Technology, argues that the housing market is due for improvement, calling home construction, "a sleeping giant that is about to wake up."
Wheaton believes that because there has been so little construction that demand exceeds the level of building and it will soon absorb excess inventory.
"Housing construction will not only rise, but it will stay high for a while, which didn't happen in previous recoveries," Wheaton predicts.
Source: Fortune, Nin-Hai Tseng (09/17/2010)
Published: September 21 2010 19:34 Last updated: September 21 2010 19:34
The Federal Reserve took no action at its September meeting but sent a signal that it may soon restart large purchases of Treasury bonds by changing its policy statement.
After its meeting on Tuesday, the rate-setting Federal Open Market Committee said that it “will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.”
MIT Prof Says Housing Demand Is about to Take Off At least some analysts are bullish on housing.
William C. Wheaton, professor of economics at Massachusetts Institute of Technology, argues that the housing market is due for improvement, calling home construction, "a sleeping giant that is about to wake up."
Wheaton believes that because there has been so little construction that demand exceeds the level of building and it will soon absorb excess inventory.
"Housing construction will not only rise, but it will stay high for a while, which didn't happen in previous recoveries," Wheaton predicts.
Source: Fortune, Nin-Hai Tseng (09/17/2010)
Mortgage Rates Inch Down...
Mortgage-backed securities prices, which drive mortgage interest rates in the opposite direction, improved this week significantly on Monday and Tuesday, helping mortgage rates inch back down to record lows.
Current 30-year fixed mortgage rates are at 4% for well-qualified consumers with a 20% down payment who pay a standard .07 to 1 point origination. Today’s 15-year fixed mortgage rate is 3.625%. Both fixed mortgage rates today match all time record lows and have been verified available by FreeRateUpdate.com who researches over two dozen wholesale lenders’ rate sheets daily.
FHA mortgage rates continue to be available at similar interest rates to conforming mortgages; however, FHA fees and MI raise closing costs, making the APR on an FHA loan higher than that of a conforming mortgage at the same note rate and origination fee.
Jumbo mortgage rates are unchanged this week. Today’s jumbo 30-year fixed loan rate is at a near record low 5.125%.
Wells Fargo, the nation’s number one retail mortgage lender by volume, originating even more loans than Bank of America, is advertising on their website a conventional 30-year fixed mortgage at an interest rate of 4.5% with an APR of 4.686. Wells Fargo’s advertised 30-year fixed rate is up slightly from a week ago.
Today's Mortgage Rates - Available to well-qualified consumers at a standard .07 to 1 point origination:
Conventional:
30-year fixed: 4%
15-year fixed: 3.625%
5/1 ARM: 3.25%
FHA:
30-year fixed: 4%
15-year fixed: 3.75%
5/1 ARM: 3%
Jumbo:
30-year fixed: 5.125%
15-year fixed: 4.625%
5/1 ARM: 4.25%
Current 30-year fixed mortgage rates are at 4% for well-qualified consumers with a 20% down payment who pay a standard .07 to 1 point origination. Today’s 15-year fixed mortgage rate is 3.625%. Both fixed mortgage rates today match all time record lows and have been verified available by FreeRateUpdate.com who researches over two dozen wholesale lenders’ rate sheets daily.
FHA mortgage rates continue to be available at similar interest rates to conforming mortgages; however, FHA fees and MI raise closing costs, making the APR on an FHA loan higher than that of a conforming mortgage at the same note rate and origination fee.
Jumbo mortgage rates are unchanged this week. Today’s jumbo 30-year fixed loan rate is at a near record low 5.125%.
Wells Fargo, the nation’s number one retail mortgage lender by volume, originating even more loans than Bank of America, is advertising on their website a conventional 30-year fixed mortgage at an interest rate of 4.5% with an APR of 4.686. Wells Fargo’s advertised 30-year fixed rate is up slightly from a week ago.
Today's Mortgage Rates - Available to well-qualified consumers at a standard .07 to 1 point origination:
Conventional:
30-year fixed: 4%
15-year fixed: 3.625%
5/1 ARM: 3.25%
FHA:
30-year fixed: 4%
15-year fixed: 3.75%
5/1 ARM: 3%
Jumbo:
30-year fixed: 5.125%
15-year fixed: 4.625%
5/1 ARM: 4.25%
First Time Buyer's ABCs
As a first-time buyer, you have a lot of questions. There is terminology you don't understand. And there are expenses you need to anticipate. Here are some explanations of just that, to help you on your way to homeownership.
First, what costs should you expect? After you have become "pre-approved" for a mortgage, you will know how much you can spend (aka your "budget"). Pre-approval is done by the bank or lender who will be writing your mortgage. It is accessed by your: credit history, assets, employment history, and financial status. And it guarantees you a loan.
Being pre-approved can quicken the time it takes to close, as well as give you an advantage over buyers who are not pre-approved, should a home garner multiple offers.
Next, figure out how much money you'll need to put down. Are you looking at an FHA loan with 3.5 percent down? Or are you planning on putting 15 to 20 percent down? Financial expert Suze Orman recommends that in today's troubled market, you put at least 20 percent down on a house.
Closing costs are what are paid, well, at closing. You should expect to pay for an appraisal, title services, title insurance, transfer taxes, inspections, loan origination, private mortgage insurance, and homeowners insurance, among a host of other charges. The average closing costs are paid, yes, by the buyer. And they average around 2 to 4 percent of the total purchase price of the home. You can, of course, negotiate payment of closing costs with the seller. This is especially true in a market which favors buyers.
What is mortgage insurance? Mortgage insurance, also known as private mortgage insurance (PMI), protects your lender, should you default on your loan. And it can be required when you have made only a small downpayment. It costs around 1 percent of the total loan. According to the Federal Reserve Bank of San Francisco, "Under [The Homeowner's Protection Act of 1998], mortgage lenders or servicers must automatically cancel PMI coverage on most loans, once you pay down your mortgage to 78 percent of the value if you are current on your loan."
What is escrow? With a purchase as large as this, it is important that one party doesn't run off with all the funds! This is where an escrow account comes into play. All necessary and agreed upon funds are put into a third party account. When all terms have been met, then the funds are released to the appropriate parties.
What is an offer? When you have found a home you like, you'll discuss with your agent what a reasonable price pay is. This will more than likely be less than the price the seller is asking. And it will be based on the condition of the home, the price of home's in the neighborhood, as well as current market conditions. Remember, your offer is the price you are willing to pay for the property. You have signed the offer and, if accepted, you will be expected to follow through with the purchase of this home!
What are property taxes? Welcome to homeownership! Property taxes are paid each year to your local government at the county level. Some areas of the country charge much higher taxes than others, and the price is a percentage of the value of your property. That means that more expensive the house, the more expensive the taxes.
As a first-time buyer, it is highly recommended you work with a local real estate agent. They not only can answer any questions you may have, but their wealth of knowledge and experience will help guide you in a positive direction for this important transaction.
First, what costs should you expect? After you have become "pre-approved" for a mortgage, you will know how much you can spend (aka your "budget"). Pre-approval is done by the bank or lender who will be writing your mortgage. It is accessed by your: credit history, assets, employment history, and financial status. And it guarantees you a loan.
Being pre-approved can quicken the time it takes to close, as well as give you an advantage over buyers who are not pre-approved, should a home garner multiple offers.
Next, figure out how much money you'll need to put down. Are you looking at an FHA loan with 3.5 percent down? Or are you planning on putting 15 to 20 percent down? Financial expert Suze Orman recommends that in today's troubled market, you put at least 20 percent down on a house.
Closing costs are what are paid, well, at closing. You should expect to pay for an appraisal, title services, title insurance, transfer taxes, inspections, loan origination, private mortgage insurance, and homeowners insurance, among a host of other charges. The average closing costs are paid, yes, by the buyer. And they average around 2 to 4 percent of the total purchase price of the home. You can, of course, negotiate payment of closing costs with the seller. This is especially true in a market which favors buyers.
What is mortgage insurance? Mortgage insurance, also known as private mortgage insurance (PMI), protects your lender, should you default on your loan. And it can be required when you have made only a small downpayment. It costs around 1 percent of the total loan. According to the Federal Reserve Bank of San Francisco, "Under [The Homeowner's Protection Act of 1998], mortgage lenders or servicers must automatically cancel PMI coverage on most loans, once you pay down your mortgage to 78 percent of the value if you are current on your loan."
What is escrow? With a purchase as large as this, it is important that one party doesn't run off with all the funds! This is where an escrow account comes into play. All necessary and agreed upon funds are put into a third party account. When all terms have been met, then the funds are released to the appropriate parties.
What is an offer? When you have found a home you like, you'll discuss with your agent what a reasonable price pay is. This will more than likely be less than the price the seller is asking. And it will be based on the condition of the home, the price of home's in the neighborhood, as well as current market conditions. Remember, your offer is the price you are willing to pay for the property. You have signed the offer and, if accepted, you will be expected to follow through with the purchase of this home!
What are property taxes? Welcome to homeownership! Property taxes are paid each year to your local government at the county level. Some areas of the country charge much higher taxes than others, and the price is a percentage of the value of your property. That means that more expensive the house, the more expensive the taxes.
As a first-time buyer, it is highly recommended you work with a local real estate agent. They not only can answer any questions you may have, but their wealth of knowledge and experience will help guide you in a positive direction for this important transaction.
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