Many have watched the real estate market with bated breath, wondering what lies ahead. The Norris Group, a California-based company that produces an annual report on the state of real estate and predictions, provides some insight. The company recently released the Tip of the Iceberg report by Bruce Norris, an active investor, hard money lender, and real estate educator with 29 years of experience. While the report focuses on California, there are many other national predictions included. Here's a look at what Norris is predicting in the coming eight years.
"Real estate isn't even the first domino. Everything that happens in real estate can happen because of other things," Norris said at a conference earlier this year. In this report, I'm looking at all those other things and finally seeing that they play a big part, if not the biggest part, in how things work out," said Norris.
The report shows the various government programs for delinquent and financially challenged homeowners and reveals a disturbing fact. "All the delinquency trends for all the types of loans are up," said Norris. "It doesn't matter if it's prime or subprime." "The national average is 13.2 percent for total non-current (both delinquencies and foreclosures). California ranks at 15 percent, Illinois at 14 percent, Pennsylvania at 10.7 percent, and Florida, the highest, at 23.5 percent. "My friend Alex lives in Florida in Orlando and houses that were selling for $180,000 to $220,000, he's regularly buying for $20,000 to $22,000," said Norris.
The national average for the total non-current FHA loans (including delinquencies and foreclosures) is 17.4 percent. California is at 9.7 percent, Illinois at 21.3 percent, Pennsylvania at 15.3 percent, and Florida is at 23.8 percent.
Norris thinks this will provoke more usage of the 203(k) Mortgage by HUD (U.S. Department of Housing and Urban Development). The "Streamline (K)" Limited Repair Program permits homebuyers to finance an additional $35,000 into their mortgage to improve or upgrade their home before move-in. "They'll actually loan you more than the house is worth, intentionally," said Norris. "Right now it's only available for owner-occupants but I'm sure that's about to change," he said.
"All of us who thought that we were going to see REOs (real estate owned by lending institutions) all over the place for the last few years are quite surprised," he said. "It's because there was intervention." But how will that intervention and the aging population impact us? The report states that having a Federal debt that is trillions of dollars (and growing) and the size of the baby boomer generation will cause big changes that affect finances and real estate. "You're going to expect higher taxes," he said. Norris predicts, maybe even up to 45 percent for top tax bracket in 2011 and possibly higher after that. "If we're going to try to resolve some of our problems and pay for stuff that's gone on in the past, I think you're going to have to say 'We're going to have to pay some higher taxes.'" Norris also predicts higher unemployment, aging consumers buying less and saving more which he says will mean more burden on the government due to fewer tax revenues and greater expense for government.
Perhaps the good news is the prediction for consistently low interest rates. "This is one of the conclusions that I didn't think I was going to come up with. I really thought that we'd probably have some scary interest rates but I just don't think so. Without an overheated economy, I don't see the big inflation risk for the next period of time. I see the big picture that it could be very scary but for the length of time that I'm trying to cover in this report, I'm not as afraid of it as I thought I'd be," said Norris.
He thinks over the next eight years, interest rates will be under 8 percent "and you may have times where they are as cheap as they are now." Norris anticipates milder price increases in real estate as well as a decline in ownership coupled with a constant inventory available. The report also points out something that buyers are already facing, "regulation of finance markets might make it harder to get finance." He predicts the median price to increase for California to approximately $460,000 in the beginning of 2018 due to factors such as migration. And if the employment conditions improve in the state, Norris thinks migration numbers will do even better, helped in part due to retirees moving into the state. Norris expects more emphasis on housing for seniors, which seems to be a trend in many states.
"I view the next eight years as a pivotal time for us, as a country, to make sure that we don't end with bigger problems than we've got," said Norris.
The good news is that Norris predicts less volatility in the real estate market and expects increases, albeit, not as drastic as in the past.
Tips for a Successful Garage Sale
Tips for a Successful Garage Sale
Whether you are jump-starting a move, decluttering for a showing, or looking to make some extra cash, a garage sale can be a great way for a homeowner to declutter. Here are some helpful tips to make your next garage sale a success.
1. Plan Ahead: Some cities require that you have a permit or a license to hold a garage sale. These may be free, or they may cost a small fee. After you've gotten a permit, be sure to give yourself plenty of time to organize in preparation for the event. It can take more time than you'd expect to select items, price them, and then move them to your sale area.
2. Group Effort: Ask neighbors in your community if they'd be interested in having a sale the same day! This can be quit a draw to the garage sale crowd. Can't get the neighbors interested? Ask if any friends or family want to bring items over to have a combined sale. Simply use different colored price stickers to keep the profits separate. A block or "multi-family" sale is a great way to draw a crowd.
3. Advertise: There are a ton of great, and free, places to advertise your sale. Most of these are online. Be sure to mention in your add the following items: the neighborhood or area of town you are located in, especially if in a big city; your address; the date and run time; some of the items you are offering (appliances, women's clothing, baby items, etc.) The day of the sale be sure your home is easy to find. Use signs and balloons to direct traffic off of main roadways.
4. Price Items: When you price items, keep in mind that you are marketing to a customer that wants a deal. Be realistic about what an item is worth. Pricing items ahead of time can speed up the buying process.
5. Set Up Shop: Arrange items by type. Put furniture together, glassware on a table, and have clothes hanging. Also provide access to an electrical outlet for customers who want to turn on appliances and electronics to verify their condition.
6. Plenty of Change: Visit the bank the day before the sale to have lots of change. There will be buyers who use twenties, and will use of lots of your smaller bills. Stock up on ones, fives, tens, and lots of small change.
7. Take Care: If you have extra newspapers and plastic bags on hand, then keep them by your cash desk during the sale. Use the newspaper to wrap breakables. And use the plastic bags to help customer get small items conveniently to their car.
8. Eagle Eye. Be sure to keep an eye on your cash box! Never leave the box unattended.
9. Salvation Army: There will be items that don't sell. To expediate your clutter cleanse, look up local donation centers ahead of time to find out about donation pickup and drop-offs.
10. Free box: For items that need cleansed, but you aren't worry about making any money on, consider setting up a free box. You'll be surprised what other people will consider "treasure"!
11. Emily Post Touches: If morning weather is chilly, consider having small cups of coffee for sale. In summertime, have the kids set up a cookie and lemonade stand!
12. Have fun. A garage sale can be a stressful event, but if you stay committed to making it a positive and fun experience, it will be just that.
Good luck with your sale!
Lenders Warn Foreclosure May End in Lawsuit
The housing crisis will spark a wave of lawsuits filed by lenders seeking to recoup loses on home sales and foreclosure auctions that do not return enough money to pay the mortgages in full, according to real estate and legal experts.
Experts predict that mortgage companies will begin to sue home owners in the next two years, including borrowers who ransack a house that has been lost to foreclosure and those who walk away from "underwater mortgages," with hopes of discouraging others from such behavior.
Lenders are unlikely to target borrowers who negotiate in good faith or have defaulted on their home due to job loss or other unforeseen circumstances; other borrowers could be hounded by collection agencies that have purchased their mortgage debt from their lender.
Source: RISMedia (06/08/10)
Experts predict that mortgage companies will begin to sue home owners in the next two years, including borrowers who ransack a house that has been lost to foreclosure and those who walk away from "underwater mortgages," with hopes of discouraging others from such behavior.
Lenders are unlikely to target borrowers who negotiate in good faith or have defaulted on their home due to job loss or other unforeseen circumstances; other borrowers could be hounded by collection agencies that have purchased their mortgage debt from their lender.
Source: RISMedia (06/08/10)
Builders Report Improving Spring Sales
Home builders are seeing their sales improve after the slowdown that followed the end of the home buyer tax credits.
JMP Securities analyst James Wilson says sales activities in California, Texas, and Arizona are approaching pre-April numbers in many markets. In some markets, builders are able to continue to raise prices and homes are selling at the strongest pace since before spring 2009, he says.
Wilson said he expects home sales to continue to be up and down, but he believes that the market has already hit bottom and is on the upswing.
Source: Associated Press (06/07/2010)
JMP Securities analyst James Wilson says sales activities in California, Texas, and Arizona are approaching pre-April numbers in many markets. In some markets, builders are able to continue to raise prices and homes are selling at the strongest pace since before spring 2009, he says.
Wilson said he expects home sales to continue to be up and down, but he believes that the market has already hit bottom and is on the upswing.
Source: Associated Press (06/07/2010)
Real Estate Outlook: Positive Trends
Positive news on housing and real estate keep rolling in -- thanks in large part to federal home purchase tax credits and continuing near-record low mortgage rates.
Last week's pending home sales report from the National Association of Realtors illustrates the trend: Pending contracts jumped for the third straight month -- up by six percent in April -- and now stand 22 percent higher than the year before.
Every region but one -- the South -- racked up sizable gains in transactions heading for settlement. Contracts in the Northeast were up by nearly 30 percent for the month. In the West, they rose nearly eight percent, and in the Midwest the gain was about four percent.
The South's pending sales were less than one percent off from the previous month, but are still an impressive 31 percent above where they were 12 months before.
Home prices also appear to be moving on an upward curve, according to the latest Clear Capital Home Data Index -- which tracks price movements in thousands of local markets and Zip codes.
Clear Capital's national report for the month of May found prices up by 6.8 percent year over year.
Consumer confidence is definitely powering some of these sales and price numbers, economists say. The Conference Board's index for consumer confidence in May rose by five points -- a good sign for consumers' willingness to spend money.
Lynn Franco, who directs the Conference Board's survey research center, noted that the "expectations" component of the index was particularly strong -- and is now at its highest point in nearly three years.
According to Franco, consumers' previous fears about the job market, incomes and the overall economy have been on the decline for a couple of months now.
Meanwhile, mortgage giant Fannie Mae released its latest economic projections for the rest of the year. Chief economist Doug Duncan says he sees a "self-sustaining economic recovery" gradually taking shape -- again good news for housing.
Of course, not all the latest numbers on real estate are upbeat. They never are. Now a closely watched index tied to likely new home purchase offers two to three months down the road has gone negative. The Mortgage Bankers Association's index of new loan applications declined again for the third straight week, and now is at its lowest point in 14 years.
What's going on here? Most likely its the tax credits. The April 30 deadline for signed contracts for the two tax credit programs -- and the phaseout of the entire credit program June 30 -- are definitely pushing loan applications down.
As we said last week, the credits -- which are part of the federal stimulus efforts -- pushed many purchasers to move up their transactions to the first half of the year. Lawrence Yun, chief economist for the National Association of Realtors, says the underlying strength of the economic recovery should allow sales and loan applications to recover in the second half, without any need for additional federal help.
Last week's pending home sales report from the National Association of Realtors illustrates the trend: Pending contracts jumped for the third straight month -- up by six percent in April -- and now stand 22 percent higher than the year before.
Every region but one -- the South -- racked up sizable gains in transactions heading for settlement. Contracts in the Northeast were up by nearly 30 percent for the month. In the West, they rose nearly eight percent, and in the Midwest the gain was about four percent.
The South's pending sales were less than one percent off from the previous month, but are still an impressive 31 percent above where they were 12 months before.
Home prices also appear to be moving on an upward curve, according to the latest Clear Capital Home Data Index -- which tracks price movements in thousands of local markets and Zip codes.
Clear Capital's national report for the month of May found prices up by 6.8 percent year over year.
Consumer confidence is definitely powering some of these sales and price numbers, economists say. The Conference Board's index for consumer confidence in May rose by five points -- a good sign for consumers' willingness to spend money.
Lynn Franco, who directs the Conference Board's survey research center, noted that the "expectations" component of the index was particularly strong -- and is now at its highest point in nearly three years.
According to Franco, consumers' previous fears about the job market, incomes and the overall economy have been on the decline for a couple of months now.
Meanwhile, mortgage giant Fannie Mae released its latest economic projections for the rest of the year. Chief economist Doug Duncan says he sees a "self-sustaining economic recovery" gradually taking shape -- again good news for housing.
Of course, not all the latest numbers on real estate are upbeat. They never are. Now a closely watched index tied to likely new home purchase offers two to three months down the road has gone negative. The Mortgage Bankers Association's index of new loan applications declined again for the third straight week, and now is at its lowest point in 14 years.
What's going on here? Most likely its the tax credits. The April 30 deadline for signed contracts for the two tax credit programs -- and the phaseout of the entire credit program June 30 -- are definitely pushing loan applications down.
As we said last week, the credits -- which are part of the federal stimulus efforts -- pushed many purchasers to move up their transactions to the first half of the year. Lawrence Yun, chief economist for the National Association of Realtors, says the underlying strength of the economic recovery should allow sales and loan applications to recover in the second half, without any need for additional federal help.
NEW YORK (CNNMoney.com)
A key measure of consumer confidence climbed for a third straight month in May, a research group said Tuesday, with the outlook for the next few months spiking to pre-recession levels.
The Conference Board, a New York-based research group, said its Consumer Confidence Index rose to 63.3 in May, the highest level since March 2008, when it stood at 65.9. The index climbed from a downwardly revised 57.7 in April.
Economists were expecting the index to increase to 58.3, according to a Briefing.com consensus survey. The figure, which is based on a survey of 5,000 U.S. households, is closely watched because consumer spending makes up two-thirds of the nation's economic activity.
The Conference Board said the survey cutoff date was May 18, meaning that the data took into account such events as the "flash crash" of May 6 and the ongoing European debt crisis. It would not have included some of the events that have roiled markets in recent days, such as the tensions in Korea.
"Consumer confidence posted its third consecutive monthly gain, and although still weak by historical levels, appears to be gaining some traction," said Lynn Franco, director of the Conference Board, in a statement. "Consumers apprehension about current business conditions and the job market continues to dissipate.
The overall index has been recovering slowly since reaching a record low of 25.3 in February 2009, but was still far from a reading above 90, which indicates the economy is stable, and 100 or above, which indicates strong growth.
The expectation index, which measures consumers' outlook over the next few months, rose to 85.3, the highest level since August 2007, when it came in at 89.2.
"The improvement has been fueled primarily by growing optimism about business and labor market conditions." Franco said.
The percentage of Americans expecting business conditions to pick up increased to 23.5% from 19.7% last month, and fewer expected circumstances to worsen.
The percentage of those expecting the job market to improve also edged higher to 20.4% from 17.7% the previous month. Last month, employers added the most jobs since March 2006, and economists expect payrolls to increase by 500,000 jobs this month, which would be the most since September 1997.
Those expecting a rise in their incomes improved modestly to 11.3% from 10.5%.
"The Consumer Confidence Index tends to reflect consumer impressions of the direction of the jobs market," said Jim Baird, partner and chief investment strategist for Plante Moran Financial Advisors, in a research note. "The recent marked improvement in the pace of job creation is clearly lifting spirits."
But as spooked investors remain fixated on debt problems in Europe and growing tensions in Korea, Baird said the market's recent turmoil "will undoubtedly weigh" on consumer sentiment.
"We do not expect discretionary spending to return to pre-recession levels for some time," Baird said. "Nonetheless, should we see continued improvement in the jobs market as anticipated in the months ahead, improving personal income should be supportive of spending growth."
The Conference Board, a New York-based research group, said its Consumer Confidence Index rose to 63.3 in May, the highest level since March 2008, when it stood at 65.9. The index climbed from a downwardly revised 57.7 in April.
Economists were expecting the index to increase to 58.3, according to a Briefing.com consensus survey. The figure, which is based on a survey of 5,000 U.S. households, is closely watched because consumer spending makes up two-thirds of the nation's economic activity.
The Conference Board said the survey cutoff date was May 18, meaning that the data took into account such events as the "flash crash" of May 6 and the ongoing European debt crisis. It would not have included some of the events that have roiled markets in recent days, such as the tensions in Korea.
"Consumer confidence posted its third consecutive monthly gain, and although still weak by historical levels, appears to be gaining some traction," said Lynn Franco, director of the Conference Board, in a statement. "Consumers apprehension about current business conditions and the job market continues to dissipate.
The overall index has been recovering slowly since reaching a record low of 25.3 in February 2009, but was still far from a reading above 90, which indicates the economy is stable, and 100 or above, which indicates strong growth.
The expectation index, which measures consumers' outlook over the next few months, rose to 85.3, the highest level since August 2007, when it came in at 89.2.
"The improvement has been fueled primarily by growing optimism about business and labor market conditions." Franco said.
The percentage of Americans expecting business conditions to pick up increased to 23.5% from 19.7% last month, and fewer expected circumstances to worsen.
The percentage of those expecting the job market to improve also edged higher to 20.4% from 17.7% the previous month. Last month, employers added the most jobs since March 2006, and economists expect payrolls to increase by 500,000 jobs this month, which would be the most since September 1997.
Those expecting a rise in their incomes improved modestly to 11.3% from 10.5%.
"The Consumer Confidence Index tends to reflect consumer impressions of the direction of the jobs market," said Jim Baird, partner and chief investment strategist for Plante Moran Financial Advisors, in a research note. "The recent marked improvement in the pace of job creation is clearly lifting spirits."
But as spooked investors remain fixated on debt problems in Europe and growing tensions in Korea, Baird said the market's recent turmoil "will undoubtedly weigh" on consumer sentiment.
"We do not expect discretionary spending to return to pre-recession levels for some time," Baird said. "Nonetheless, should we see continued improvement in the jobs market as anticipated in the months ahead, improving personal income should be supportive of spending growth."
30-Yr Fixed Mortgage Rates Dip for Conforming and FHA Loans
30-yr fixed mortgage rates dipped last week thanks to gains in mortgage-backed securities prices. MBS prices, which drive mortgage rates their opposite, were pushed up by investors seeking the safety of bonds.
The conforming 30-yr fixed rate is at 4.625%, down from 4.75% according to FreeRateUpdate.com research of wholesale lenders' rate sheets. This rate is available to well-qualified borrowers paying a standard .07 to 1 point origination. The conforming 15-yr fixed rate is at 4.125%, down from 4.25.
The conforming 5/1 ARM rate is down to 3.5. FHA mortgage rates have improved as well. The current FHA 30-yr fixed rate is at 4.5%, an 1/8 lower than the conforming 30-year fixed rate. Despite having similar rates and origination fees, FHA loans come with highers cost and APR due to MI, at 2.25% of the amount financed, and other FHA fees.
The current jumbo 30-yr fixed rate, for jumbo loans exceeding the jumbo conforming loan limit, is 5.5%, down from 5.625. It's speculated the jumbo mortgage market will thaw now that the first private sale of jumbo mortgage securities in over 2 years has taken place (Redwood Trust).
Today's Mortgage Rates - available to well-qualified consumers at a standard .07 to 1 point origination.
30-yr fixed-rate - 4.625%
15-yr fixed-rate - 4.250%
5/1 ARM rate - 3.500%
FHA 30-yr fixed-rate - 4.500%
FHA 15-yr fixed-rate - 4.500%
FHA 5/1 ARM rate - 3.500%
VA 30-yr fixed-rate - 4.750%
Jumbo 30-yr fixed-rate - 5.500%
Jumbo Conforming 30-yr fixed-rate - 4.875%
FreeRateUpdate.com researches over 2 dozen wholesale lenders' rate sheets for brokers daily to determine the most accurate rates available to well-qualified borrowers at a standard origination fee of about 1 point. These rates are commonly referred to as "par rates" by loan officers.
The conforming 30-yr fixed rate is at 4.625%, down from 4.75% according to FreeRateUpdate.com research of wholesale lenders' rate sheets. This rate is available to well-qualified borrowers paying a standard .07 to 1 point origination. The conforming 15-yr fixed rate is at 4.125%, down from 4.25.
The conforming 5/1 ARM rate is down to 3.5. FHA mortgage rates have improved as well. The current FHA 30-yr fixed rate is at 4.5%, an 1/8 lower than the conforming 30-year fixed rate. Despite having similar rates and origination fees, FHA loans come with highers cost and APR due to MI, at 2.25% of the amount financed, and other FHA fees.
The current jumbo 30-yr fixed rate, for jumbo loans exceeding the jumbo conforming loan limit, is 5.5%, down from 5.625. It's speculated the jumbo mortgage market will thaw now that the first private sale of jumbo mortgage securities in over 2 years has taken place (Redwood Trust).
Today's Mortgage Rates - available to well-qualified consumers at a standard .07 to 1 point origination.
30-yr fixed-rate - 4.625%
15-yr fixed-rate - 4.250%
5/1 ARM rate - 3.500%
FHA 30-yr fixed-rate - 4.500%
FHA 15-yr fixed-rate - 4.500%
FHA 5/1 ARM rate - 3.500%
VA 30-yr fixed-rate - 4.750%
Jumbo 30-yr fixed-rate - 5.500%
Jumbo Conforming 30-yr fixed-rate - 4.875%
FreeRateUpdate.com researches over 2 dozen wholesale lenders' rate sheets for brokers daily to determine the most accurate rates available to well-qualified borrowers at a standard origination fee of about 1 point. These rates are commonly referred to as "par rates" by loan officers.
More homeowners choose to default on loans
Choosing not to pay has consequences beyond damaged credit scores!
CHICAGO (MarketWatch) -- "Strategic defaults" are on the rise as more borrowers who are underwater on their home loans decide it's not worth it to stay current on their payments each month. That trend could have repercussions for the housing market, and for borrowers, in the future.
Strategic defaults are when borrowers who owe more on their homes than they're currently worth choose to stop paying their mortgage but continue to meet other financial obligations, according to a definition by Morgan Stanley in a research report on the topic.
The Morgan Stanley report estimates that 12% of mortgage defaults in February were strategic. Other reports estimate an even higher proportion of this type of loan default.
Growing social acceptance of this behavior could have ramifications not only for personal credit histories and the health of neighborhoods, but also for the future of mortgage lending, according to those studying the issue.
For one, there's a contagion effect: As more people watch their friends or neighbors choose to default, the more it becomes a viable option for homeowners who may otherwise wait years just to return to a positive equity position in their properties, said Sam Khater, senior economist for CoreLogic, a provider of consumer, financial and property information. The volume of foreclosures on the market today is also chipping away at the stigma that used to come with defaulting on a home loan.
"If you know someone who has defaulted strategically, you're more likely to declare you're willing to do it," said Luigi Zingales, professor of entrepreneurship and finance at the University of Chicago's Booth School of Business.
In areas where home prices are severely depressed, social acceptance of this decision could lead to pockets "where strategic default becomes the norm, versus the exception," Zingales said.
But look even farther in the future, and the repercussions of substantial strategic defaults could have a larger-scale effect.
"If it really does become a legitimate problem, the implications are pretty dramatic for anyone that wants to buy a home in the future," said Rick Sharga, senior vice president of RealtyTrac, an online marketplace of foreclosure properties. "The lenders would have to build this into their risk models with either larger down payments or higher interest rates."
Some owners 'mimic investors' Many agree the ranks of people taking this route are growing, but putting a number on the trend isn't as easy. To measure the number of people who are strategically defaulting on their mortgage obligations, you have to assess borrower intent.
"Take all the numbers with a grain of salt, because it's one of those topics which is really difficult to get a firm grasp on," Sharga said. "The projections are based on limited sample sizes, and [people are] doing projections that have a lot of implications on societal behavior and political policy."
Researchers believe that being underwater on a loan is a prerequisite to strategic default, and the more underwater you are, the likelier you are to consider defaulting -- even if you can afford to keep making payments.
"In our data, what we've noticed is at about 25% negative equity, the behavior of owners begins to mimic that of investors -- they're more ruthless and rational, they're looking at it from a cash-flow perspective," Khater said. "The default rate rises as the negative equity gets deeper and deeper."
CHICAGO (MarketWatch) -- "Strategic defaults" are on the rise as more borrowers who are underwater on their home loans decide it's not worth it to stay current on their payments each month. That trend could have repercussions for the housing market, and for borrowers, in the future.
Strategic defaults are when borrowers who owe more on their homes than they're currently worth choose to stop paying their mortgage but continue to meet other financial obligations, according to a definition by Morgan Stanley in a research report on the topic.
The Morgan Stanley report estimates that 12% of mortgage defaults in February were strategic. Other reports estimate an even higher proportion of this type of loan default.
Growing social acceptance of this behavior could have ramifications not only for personal credit histories and the health of neighborhoods, but also for the future of mortgage lending, according to those studying the issue.
For one, there's a contagion effect: As more people watch their friends or neighbors choose to default, the more it becomes a viable option for homeowners who may otherwise wait years just to return to a positive equity position in their properties, said Sam Khater, senior economist for CoreLogic, a provider of consumer, financial and property information. The volume of foreclosures on the market today is also chipping away at the stigma that used to come with defaulting on a home loan.
"If you know someone who has defaulted strategically, you're more likely to declare you're willing to do it," said Luigi Zingales, professor of entrepreneurship and finance at the University of Chicago's Booth School of Business.
In areas where home prices are severely depressed, social acceptance of this decision could lead to pockets "where strategic default becomes the norm, versus the exception," Zingales said.
But look even farther in the future, and the repercussions of substantial strategic defaults could have a larger-scale effect.
"If it really does become a legitimate problem, the implications are pretty dramatic for anyone that wants to buy a home in the future," said Rick Sharga, senior vice president of RealtyTrac, an online marketplace of foreclosure properties. "The lenders would have to build this into their risk models with either larger down payments or higher interest rates."
Some owners 'mimic investors' Many agree the ranks of people taking this route are growing, but putting a number on the trend isn't as easy. To measure the number of people who are strategically defaulting on their mortgage obligations, you have to assess borrower intent.
"Take all the numbers with a grain of salt, because it's one of those topics which is really difficult to get a firm grasp on," Sharga said. "The projections are based on limited sample sizes, and [people are] doing projections that have a lot of implications on societal behavior and political policy."
Researchers believe that being underwater on a loan is a prerequisite to strategic default, and the more underwater you are, the likelier you are to consider defaulting -- even if you can afford to keep making payments.
"In our data, what we've noticed is at about 25% negative equity, the behavior of owners begins to mimic that of investors -- they're more ruthless and rational, they're looking at it from a cash-flow perspective," Khater said. "The default rate rises as the negative equity gets deeper and deeper."
Debt Management for Homeownership
Learning to manage your finances is a great first step towards owning the home of your dreams. Whether this is your first time to buy, or you are looking to move-up, managing your debt is important.
Among the most important of the debt management qualities is holding yourself accountable. What does this mean, exactly? Being accountable means taking an honest look at your budget and your spending. The $5 latte every morning on the way to work, the cash withdrawals spent without record, or even the extra martini with dinner adds up to money spent, not saved.
An easy was to increase your own accountability is to use a debit card and online banking for all of your purchases. Online banking is offered by nearly every banking institution, and allows you to access your account anytime, anywhere. Now you'll know if you are spending $100 a month on little extras.
The next step in accountability is to create a monthly budget. On a sheet of paper write down each of your monthly expenses. These might include: rent or house payment, car payments, insurance, phone bills, cable and internet, alimony, child support, and student loans. It's time to take a hard look at what you think you are spending versus what your real expenditures are. If you can, don't forget to add up how much you spend on all the extras, such as nights out, entertainment, books, hair cuts, and household products.
If you'd prefer to use an online calculator to show you a monthly budget, consider using financial guru Suze Orman's tools at Suzeorman.com.
Next, begin to cut and adjust your spending. In this economy, everyone can take note of this tip, even if they don't have debts. Where can you cut? Experts recommend limiting your trips for eating out.
According to Christine Bockelman with Smartmoney.com, "Americans now spend roughly half their food budget dining out, and restaurants expect revenue of more than $537 billion in 2007. That's a 67 percent increase since 1997." How much is the food really marked up? Bockelman notes, "At a fine-dining restaurant, the average cost of food is 38 to 42 percent of the menu price."
Make your morning coffee at home and take it in a travel mug to work. Rent movies, instead of paying $10 a ticket for each member of the family to go see a "new to the theater" attraction. If you have the money to spend and splurge, it's fine. That's what makes our economy go round, but spending what you don't have, and adding to your already mounting debt, is no way to work your way towards homeownership.
There is a difference between wants and needs, and this is a time to re-evaluate how you define them.
Once you have freed up some cash, you can start working on paying down debts and building up savings.
It is recommended you develop a savings schedule. After you've set your monthly budget, you will know how much can be earmarked for savings each paycheck. If you can't trust yourself to make the transfer yourself, then set up automatic deposits out of your account.
A separate savings consideration is an emergency fund. Review your budget and see how much you would truly need each month to get by. Multiply that number by 8, because that is the number of months you should be prepared to survive without a job. If you need $2,500 a month to pay all of your bills, then should have $20,000 in savings. Most Americans don't have a fraction of that, part of the reason for the foreclosure crisis running rampant across the nation.
The latest statistics indicate that most Americans have a personal savings rate of less than 5 percent, but owe $8,000 in credit card debt (MSN Money).
When it comes to credit cards, don't. It's as simple as that. If you can, avoid carrying a balance on credit card. We live in a society of margins, with 43 percent of American living beyond their means, but there is something quite liberating about living on your income and no more. If you must use a credit card to carry a balance, or if you already owe, then consider paying more than the minimum each month. Not only does a minimum payment set you up for possible interest rate and fee increases, it costs a whole lot more in the long run.
Consider this equation. If you owe $10,000 on a card with an 18 percent interest rate (fairly normal), and you make minium payments, according to bankrate.com, it will take you 342 months, that's 28 years, to be rid of your debt. In that time, you will pay $14,423.30 in interest!
On the other hand, at just an extra $25 dollars a month, or a fixed monthly payment of $275, it would take you 53 months, or 4 years, to be rid of your debt. In that time, you will pay $4,563.28 in interest. This is a deal compared to the minimum payment equation.
A common question that credit card users ask, "Should I close the account when I have paid off the card?" The answer is simple. If you owe any money on open cards, then no. This will negatively affect your FICO score. This is because the ratio of credit available to credit used will shrink. If you don't owe any money on any cards, then closing cards should have no impact on your FICO score.
So, take a moment to consider your finances, and see if you really are living within your means. If not, what can you do to adjust your spending and savings to get there?
Among the most important of the debt management qualities is holding yourself accountable. What does this mean, exactly? Being accountable means taking an honest look at your budget and your spending. The $5 latte every morning on the way to work, the cash withdrawals spent without record, or even the extra martini with dinner adds up to money spent, not saved.
An easy was to increase your own accountability is to use a debit card and online banking for all of your purchases. Online banking is offered by nearly every banking institution, and allows you to access your account anytime, anywhere. Now you'll know if you are spending $100 a month on little extras.
The next step in accountability is to create a monthly budget. On a sheet of paper write down each of your monthly expenses. These might include: rent or house payment, car payments, insurance, phone bills, cable and internet, alimony, child support, and student loans. It's time to take a hard look at what you think you are spending versus what your real expenditures are. If you can, don't forget to add up how much you spend on all the extras, such as nights out, entertainment, books, hair cuts, and household products.
If you'd prefer to use an online calculator to show you a monthly budget, consider using financial guru Suze Orman's tools at Suzeorman.com.
Next, begin to cut and adjust your spending. In this economy, everyone can take note of this tip, even if they don't have debts. Where can you cut? Experts recommend limiting your trips for eating out.
According to Christine Bockelman with Smartmoney.com, "Americans now spend roughly half their food budget dining out, and restaurants expect revenue of more than $537 billion in 2007. That's a 67 percent increase since 1997." How much is the food really marked up? Bockelman notes, "At a fine-dining restaurant, the average cost of food is 38 to 42 percent of the menu price."
Make your morning coffee at home and take it in a travel mug to work. Rent movies, instead of paying $10 a ticket for each member of the family to go see a "new to the theater" attraction. If you have the money to spend and splurge, it's fine. That's what makes our economy go round, but spending what you don't have, and adding to your already mounting debt, is no way to work your way towards homeownership.
There is a difference between wants and needs, and this is a time to re-evaluate how you define them.
Once you have freed up some cash, you can start working on paying down debts and building up savings.
It is recommended you develop a savings schedule. After you've set your monthly budget, you will know how much can be earmarked for savings each paycheck. If you can't trust yourself to make the transfer yourself, then set up automatic deposits out of your account.
A separate savings consideration is an emergency fund. Review your budget and see how much you would truly need each month to get by. Multiply that number by 8, because that is the number of months you should be prepared to survive without a job. If you need $2,500 a month to pay all of your bills, then should have $20,000 in savings. Most Americans don't have a fraction of that, part of the reason for the foreclosure crisis running rampant across the nation.
The latest statistics indicate that most Americans have a personal savings rate of less than 5 percent, but owe $8,000 in credit card debt (MSN Money).
When it comes to credit cards, don't. It's as simple as that. If you can, avoid carrying a balance on credit card. We live in a society of margins, with 43 percent of American living beyond their means, but there is something quite liberating about living on your income and no more. If you must use a credit card to carry a balance, or if you already owe, then consider paying more than the minimum each month. Not only does a minimum payment set you up for possible interest rate and fee increases, it costs a whole lot more in the long run.
Consider this equation. If you owe $10,000 on a card with an 18 percent interest rate (fairly normal), and you make minium payments, according to bankrate.com, it will take you 342 months, that's 28 years, to be rid of your debt. In that time, you will pay $14,423.30 in interest!
On the other hand, at just an extra $25 dollars a month, or a fixed monthly payment of $275, it would take you 53 months, or 4 years, to be rid of your debt. In that time, you will pay $4,563.28 in interest. This is a deal compared to the minimum payment equation.
A common question that credit card users ask, "Should I close the account when I have paid off the card?" The answer is simple. If you owe any money on open cards, then no. This will negatively affect your FICO score. This is because the ratio of credit available to credit used will shrink. If you don't owe any money on any cards, then closing cards should have no impact on your FICO score.
So, take a moment to consider your finances, and see if you really are living within your means. If not, what can you do to adjust your spending and savings to get there?
Real Estate Outlook: The Federal Reserve
What should we make of the latest reports on rising home sales and the Federal Reserve's promise to keep interest rates low indefinitely?
Should we worry that at least some of the sales are being pushed forward by the expiring tax credits? Though that may be the case, take a minute and join the economists at the Fed to see the bigger picture. What's going on in the economy nationwide?
In its "open markets committee" statement issued last week, the Fed pointed to the underlying positives: Overall national "economic activity continues to strengthen," it said, and "the labor market is beginning to improve." Of course there are challenges to keeping the rebound rolling along, but the direction for the year as a whole is good.
The Fed's statement provides useful context for some of the encouraging numbers being racked up in the housing market. For example:
The Commerce Department reported last week that new home sales in March were up by 27 percent -- hitting their highest levels since July of 2009. Even the median sale price was up by 4.3 percent compared with the same month the year before.
Home resales in some major markets were up impressively as well, such as in Chicago, where sales jumped by 50 percent last month over the year before, and were 48 percent higher than they were in February. Florida sales were 37 percent higher in March than February and were up by 24 percent compared with the year before. Las Vegas saw its highest sales totals in four years.
Not surprisingly, applications for new mortgages to purchase homes have been rising strongly as well. The Mortgage Bankers Association reported a 12 percent surge in purchase applications for the latest week. No question the expiring tax credits requiring signed contracts by April 30 played a role in that number.
Meanwhile, the National Association of Business Economics, a group that represents corporate and government economists, just came out with an upbeat forecast as well. Three-quarters of the economists surveyed expect growth in the national gross domestic product (GDP) of two percent or higher through the balance of the year.
Twenty two percent of the private companies polled reported their payrolls and employee numbers increased in March, up significantly from the month before.
So the bottom line to keep in mind about the latest statistics and projections is this: The underlying economic factors, growth in jobs, growth in output, rising consumer expenditures and confidence, are the critical numbers to watch for future housing activity.
And at the moment, the consensus is that they look pretty promising
Should we worry that at least some of the sales are being pushed forward by the expiring tax credits? Though that may be the case, take a minute and join the economists at the Fed to see the bigger picture. What's going on in the economy nationwide?
In its "open markets committee" statement issued last week, the Fed pointed to the underlying positives: Overall national "economic activity continues to strengthen," it said, and "the labor market is beginning to improve." Of course there are challenges to keeping the rebound rolling along, but the direction for the year as a whole is good.
The Fed's statement provides useful context for some of the encouraging numbers being racked up in the housing market. For example:
The Commerce Department reported last week that new home sales in March were up by 27 percent -- hitting their highest levels since July of 2009. Even the median sale price was up by 4.3 percent compared with the same month the year before.
Home resales in some major markets were up impressively as well, such as in Chicago, where sales jumped by 50 percent last month over the year before, and were 48 percent higher than they were in February. Florida sales were 37 percent higher in March than February and were up by 24 percent compared with the year before. Las Vegas saw its highest sales totals in four years.
Not surprisingly, applications for new mortgages to purchase homes have been rising strongly as well. The Mortgage Bankers Association reported a 12 percent surge in purchase applications for the latest week. No question the expiring tax credits requiring signed contracts by April 30 played a role in that number.
Meanwhile, the National Association of Business Economics, a group that represents corporate and government economists, just came out with an upbeat forecast as well. Three-quarters of the economists surveyed expect growth in the national gross domestic product (GDP) of two percent or higher through the balance of the year.
Twenty two percent of the private companies polled reported their payrolls and employee numbers increased in March, up significantly from the month before.
So the bottom line to keep in mind about the latest statistics and projections is this: The underlying economic factors, growth in jobs, growth in output, rising consumer expenditures and confidence, are the critical numbers to watch for future housing activity.
And at the moment, the consensus is that they look pretty promising
Risk wanes for real estate price declines - PMI sees improvements in nearly all markets
The risk of home-price declines decreased in 93 percent of the 384 markets tracked at the end of last year by analysts with PMI Mortgage Insurance Co., although half still showed an elevated or high risk of depreciation.
Overall risk of price declines "decreased dramatically" during the final three months of 2009, PMI said, largely because of improvements in affordability and declining foreclosure starts. Affordability was helped by falling home prices, lower mortgage rates, and increasing personal income.
"House prices have dropped sharply relative to incomes in most areas suggesting that prices have fully, or more than fully, adjusted for their unsustainable increases during the housing boom," PMI Chief Economist David Berson said in a statement accompanying the report.
PMI expects risk scores to continue falling, as unemployment rates should show improvement in the first quarter of 2010 and going forward, which should prove to be "an important new force in reducing the risk of lower prices."
Risky mortgage lending practices and loan products decreased sharply in 2009 "and are hardly present at all in 2010 lending," the report said.
Despite that, PMI's Risk Index -- which takes into account factors including unemployment, foreclosures and inventory levels -- still showed a 90 percent or greater chance of further price declines during the next two years in every market tracked in Florida and Nevada.
Most markets in the other "sand states" hit hard during the downturn, California and Arizona, were at high risk for price declines. All but three of 28 markets tracked in California showed improvement during the fourth quarter of 2009, however.
Seven of the 10 markets with the highest risk scores were in Florida: Naples, Cape Coral, Lakeland, Palm Coast, Miami, Port St. Lucie and Fort Lauderdale. Also making the top 10 riskiest markets list were Kingman, Ariz.; Riverside, Calif.; and Las Vegas.
Six of the 10 least risky markets were in North Dakota and Iowa: Grand Forks, Fargo and Bismark N.D.; and Iowa City, Ames and Cedar Rapids, Iowa. Also on the 10 least risky markets list were Killeen, Texas; Fayetteville N.C.; Morgantown, W.V.; and Texarkana, Ark.
Copyright 2010 Inman News
Overall risk of price declines "decreased dramatically" during the final three months of 2009, PMI said, largely because of improvements in affordability and declining foreclosure starts. Affordability was helped by falling home prices, lower mortgage rates, and increasing personal income.
"House prices have dropped sharply relative to incomes in most areas suggesting that prices have fully, or more than fully, adjusted for their unsustainable increases during the housing boom," PMI Chief Economist David Berson said in a statement accompanying the report.
PMI expects risk scores to continue falling, as unemployment rates should show improvement in the first quarter of 2010 and going forward, which should prove to be "an important new force in reducing the risk of lower prices."
Risky mortgage lending practices and loan products decreased sharply in 2009 "and are hardly present at all in 2010 lending," the report said.
Despite that, PMI's Risk Index -- which takes into account factors including unemployment, foreclosures and inventory levels -- still showed a 90 percent or greater chance of further price declines during the next two years in every market tracked in Florida and Nevada.
Most markets in the other "sand states" hit hard during the downturn, California and Arizona, were at high risk for price declines. All but three of 28 markets tracked in California showed improvement during the fourth quarter of 2009, however.
Seven of the 10 markets with the highest risk scores were in Florida: Naples, Cape Coral, Lakeland, Palm Coast, Miami, Port St. Lucie and Fort Lauderdale. Also making the top 10 riskiest markets list were Kingman, Ariz.; Riverside, Calif.; and Las Vegas.
Six of the 10 least risky markets were in North Dakota and Iowa: Grand Forks, Fargo and Bismark N.D.; and Iowa City, Ames and Cedar Rapids, Iowa. Also on the 10 least risky markets list were Killeen, Texas; Fayetteville N.C.; Morgantown, W.V.; and Texarkana, Ark.
Copyright 2010 Inman News
Slow Payments...How will this effect my Credit?
NEW YORK (CNNMoney.com) -- If you're delinquent on your mortgage, your credit score will suffer. Everyone knows that. The question is, by how much?
Until recently, those answers were hard to come by. Credit bureaus were uncommunicative about expressing, in points, just how much impact different foreclosure types of mortgage delinquencies have on scores.
Recently, Fair Isaac, which developed FICO scores, pulled back the curtain a bit, revealing some estimates of point-score declines following mortgage delinquency problems.
Here are the average hit your credit will take:
30 days late: 40 - 110 points
90 days late: 70 - 135 pointsForeclosure,
short sale or deed-in-lieu: 85 - 160
Bankruptcy: 130 - 240
Until recently, those answers were hard to come by. Credit bureaus were uncommunicative about expressing, in points, just how much impact different foreclosure types of mortgage delinquencies have on scores.
Recently, Fair Isaac, which developed FICO scores, pulled back the curtain a bit, revealing some estimates of point-score declines following mortgage delinquency problems.
Here are the average hit your credit will take:
30 days late: 40 - 110 points
90 days late: 70 - 135 pointsForeclosure,
short sale or deed-in-lieu: 85 - 160
Bankruptcy: 130 - 240
Service Members Get Extra Year for Tax Credit
Members of the U.S. military, foreign service and intelligence communities have another year to purchase a home and claim the home buyer tax credit.
Any service member who is or has been on extended duty for 90 days or more between Jan. 1, 2009 to April 30, 2010, has until April 30, 2011, to sign a sales contract and until June 30, 2011, to close on the property. Both the $8,000 first-time and the $6,500 repeat home buyer tax credits are included in the extension.
The rule that requires buyers to repay the credit if they move out of their home within three years has also been waived for qualified service members if they receive government orders to move.
Source: The National Association of Home Builders (04/26/2010)
Any service member who is or has been on extended duty for 90 days or more between Jan. 1, 2009 to April 30, 2010, has until April 30, 2011, to sign a sales contract and until June 30, 2011, to close on the property. Both the $8,000 first-time and the $6,500 repeat home buyer tax credits are included in the extension.
The rule that requires buyers to repay the credit if they move out of their home within three years has also been waived for qualified service members if they receive government orders to move.
Source: The National Association of Home Builders (04/26/2010)
Lead-Safe Remodeling
Effective 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.
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.
Housing Analyst says 'Worst Is Over'
Housing has slowed to the point where demand is again outstripping supply, says Metrostudy founder Mike Castleman.
Metrostudy, which researches the housing industry, says demand is forcing up prices in some markets, including Washington, D.C. and Indianapolis, but it remains stagnant in Houston, Naples, Fla., Charlotte, and Denver.
Overall, Metrostudy and Castleman believe the worst is over. "The good news is that builders will need to build a lot more houses than last year to keep up with demand. That will help the economy by creating jobs," Castleman says.
Source: Fortune, Shawn Tully (04/26/2010)
Metrostudy, which researches the housing industry, says demand is forcing up prices in some markets, including Washington, D.C. and Indianapolis, but it remains stagnant in Houston, Naples, Fla., Charlotte, and Denver.
Overall, Metrostudy and Castleman believe the worst is over. "The good news is that builders will need to build a lot more houses than last year to keep up with demand. That will help the economy by creating jobs," Castleman says.
Source: Fortune, Shawn Tully (04/26/2010)
Economy Forces Homeowners to Live Large Less Outdoors in 2010
Spring has sprung and while snow still lingers on lawns, patios and backyards, thoughts are turning to the great outdoors -- around the home.
However, those thoughts of leaving in-house hibernation behind are edged with economic concerns as homeowners take a less lavish look at how to move indoor living outside.
Buzzwords are "low" and "less" as low-maintenance landscaping, low-frill entertaining, even less technology are common in outside home improvement plans homeowners will undertake this year, according to the American Society of Landscape Architects (ASLA).
"Homeowners want to create a sense of place for their family, friends, and neighbors to enjoy outside, but an uncertain economy means many will dial back some of the extra features we've seen in past years," said Nancy Somerville, executive vice percent and CEO of ASLA.
From Jan. 25 to Feb. 12, when the ASLA surveyed 182 residential landscape architects about the popularity of various design elements for 2010 they found homeowners were avoiding more expensive, elaborate items in favor of more essential ones.
Given most outdoor living spaces are an extension of the kitchen, ASLA, not surprisingly, found the most popular kitchen features was an outdoor grill (94.4 percent) and counter space (73.5 percent).
More elaborate outdoor refrigerators (52.8 percent) and sinks (50 percent) were much less popular.
For entertainment purposes, instead of stereo systems (57.2 percent), wireless/Internet connectivity (44.1 percent), outdoor heaters (43.9 percent) and TVs (35.5 percent), there was much greater interest in more utilitarian seating/dining areas (95.6 percent), installed seating like benches and seat walls (90.6 percent) or weatherized outdoor furniture (77.1 percent). However, the fire pit/fireplace (94 percent) remained popular.
This year homeowners are also looking to go 'green' outside to save time and money on upkeep.
Popular landscaping elements include low-maintenance landscapes (94 percent); drip/water-efficient irrigation (85.2 percent); native/adapted drought tolerant plants (85.2 percent); and less sprawling lawn (73.9 percent).
Other popular features include fountains/water features (87.8 percent) and, taking a cue from the First Lady, Michelle Obama, food/vegetable gardens (78.5 percent).
Among the more expensive outdoor architectural features that remain popular were spas (hot tub, Jacuzzi, whirlpool, indoor/outdoor sauna; 79.1 percent); decks (83 percent), porches (76.4 percent) and swimming pools (72.4 percent).
Among the least popular items were sleeping spaces (5.6 percent); geothermal-heated pools (28.2 percent); outdoor cooling systems (36.5 percent); outdoor heaters (43.8 percent); solar-powered lights (49.4 percent); and sports/recreational spaces (tennis courts, bocce ball, etc.; 47 percent).
Published: April 22, 2010
However, those thoughts of leaving in-house hibernation behind are edged with economic concerns as homeowners take a less lavish look at how to move indoor living outside.
Buzzwords are "low" and "less" as low-maintenance landscaping, low-frill entertaining, even less technology are common in outside home improvement plans homeowners will undertake this year, according to the American Society of Landscape Architects (ASLA).
"Homeowners want to create a sense of place for their family, friends, and neighbors to enjoy outside, but an uncertain economy means many will dial back some of the extra features we've seen in past years," said Nancy Somerville, executive vice percent and CEO of ASLA.
From Jan. 25 to Feb. 12, when the ASLA surveyed 182 residential landscape architects about the popularity of various design elements for 2010 they found homeowners were avoiding more expensive, elaborate items in favor of more essential ones.
Given most outdoor living spaces are an extension of the kitchen, ASLA, not surprisingly, found the most popular kitchen features was an outdoor grill (94.4 percent) and counter space (73.5 percent).
More elaborate outdoor refrigerators (52.8 percent) and sinks (50 percent) were much less popular.
For entertainment purposes, instead of stereo systems (57.2 percent), wireless/Internet connectivity (44.1 percent), outdoor heaters (43.9 percent) and TVs (35.5 percent), there was much greater interest in more utilitarian seating/dining areas (95.6 percent), installed seating like benches and seat walls (90.6 percent) or weatherized outdoor furniture (77.1 percent). However, the fire pit/fireplace (94 percent) remained popular.
This year homeowners are also looking to go 'green' outside to save time and money on upkeep.
Popular landscaping elements include low-maintenance landscapes (94 percent); drip/water-efficient irrigation (85.2 percent); native/adapted drought tolerant plants (85.2 percent); and less sprawling lawn (73.9 percent).
Other popular features include fountains/water features (87.8 percent) and, taking a cue from the First Lady, Michelle Obama, food/vegetable gardens (78.5 percent).
Among the more expensive outdoor architectural features that remain popular were spas (hot tub, Jacuzzi, whirlpool, indoor/outdoor sauna; 79.1 percent); decks (83 percent), porches (76.4 percent) and swimming pools (72.4 percent).
Among the least popular items were sleeping spaces (5.6 percent); geothermal-heated pools (28.2 percent); outdoor cooling systems (36.5 percent); outdoor heaters (43.8 percent); solar-powered lights (49.4 percent); and sports/recreational spaces (tennis courts, bocce ball, etc.; 47 percent).
Published: April 22, 2010
CA Governor Signs New $10,000 Home Buyer's Credit Bill
California homeowners might be seeing another $10,000 tax credit offer soon. Despite the economic woes of the state, the governor has signed a bill offering this tax credit to home buyers.
Is this sound business judgment? California has a $20.7 billion deficit in the general fund budget over the next 16 months and owes $8.8 billion in short-term loans that have to be paid off by June. There is an additional $120-plus billion in outstanding bonds and interest that will be paid over decades. The state’s pension fund, CalPers, has $16.3 billion more in liabilities than assets plus California also faces a $51.8 billion for the health and dental benefits of state retirees and future retirees.
The bottom line for California, is that it has the lowest credit rating of any state in the nation, just above junk bond status. One major problem is the rise in California’s debt-service ratio (DSR). That is, the ratio of annual general fund debt–service costs to annual general fund revenues and transfers.
This is often used as one indicator of the state’s debt burden. The higher it is and more rapidly it rises, the more closely bond raters, financial analysts, and investors tend to look at the state’s debt practices, and the more debt–service expenses limit the use of revenues for other programs. Debt servicing is projected to comprise 9% of general fund revenues by the end of 2014-15. According to Bloomberg News, the market believes a developing country like Kazakhstan, with about 15.7 million people, is less likely to default on its debt than California, which is the eighth largest economy in the world.
Despite the economic woes of the state, the new (some say extension of the 2009 new home credit) bill, AB 183 will provide $200 million for home buyer tax credits, allocating $100 million for qualified first-time home buyers of existing homes and $100 million for purchasers of new, or previously unoccupied, homes.
The eligible taxpayer who purchases a qualified personal residence on and after May 1, 2010, and on or before Dec. 31, 2010, or who purchases a qualified principal residence on and after Dec. 31, 2010, and closes the sale before Aug. 1, 2011, will be able to take the allowed tax credit. The credit is equal to the lesser of 5 percent of the purchase price or $10,000, in equal installments over three consecutive years. Purchasers will be required to live in the home for at least two years or forfeit -repay the credit. (Before acting on this preliminary information for the tax credit, one should first consult your legal/tax professional.)
Published: April 19, 2010
Number of Delinquent Mortgages Declines
The number of delinquent mortgages declined 8.6 percent in March, says LPS Applied Analytics, which tracks the performance of loans for investors. Totals also declined in February.
The biggest decline was in loans more than 30 days past due, which are now at about the same level as they were in spring 2008.
"We're not out of the woods, but this appears to be a turning point," says LPS Applied Analytics President Ted Jadlos. "This is the first time we've seen improvement across all stages of mortgage delinquency."
Source: The Wall Street Journal, Ruth Simon (04/19/2010)
The biggest decline was in loans more than 30 days past due, which are now at about the same level as they were in spring 2008.
"We're not out of the woods, but this appears to be a turning point," says LPS Applied Analytics President Ted Jadlos. "This is the first time we've seen improvement across all stages of mortgage delinquency."
Source: The Wall Street Journal, Ruth Simon (04/19/2010)
Number of Delinquent Mortgages Declines
The number of delinquent mortgages declined 8.6 percent in March, says LPS Applied Analytics, which tracks the performance of loans for investors. Totals also declined in February.
The biggest decline was in loans more than 30 days past due, which are now at about the same level as they were in spring 2008.
"We're not out of the woods, but this appears to be a turning point," says LPS Applied Analytics President Ted Jadlos. "This is the first time we've seen improvement across all stages of mortgage delinquency."
Source: The Wall Street Journal, Ruth Simon (04/19/2010)
The biggest decline was in loans more than 30 days past due, which are now at about the same level as they were in spring 2008.
"We're not out of the woods, but this appears to be a turning point," says LPS Applied Analytics President Ted Jadlos. "This is the first time we've seen improvement across all stages of mortgage delinquency."
Source: The Wall Street Journal, Ruth Simon (04/19/2010)
Lenders Unload Mortgages to Collection Agencies
Lenders are selling second mortgages and home-equity lines in default to collection agencies that have the right to collect this money potentially for decades.
"It's a big business, and investors are coming out of the woodwork," says Sylvia Alayon, a vice president for Consumer Mortgage Audit Center, which analyzes mortgage documents for lenders, advocacy groups, and attorneys.
Real estate professionals will be doing their short-sale clients a big favor if they urge them to get professional advice before they sign agreements, Alayon says.
A new government short-sale program, which takes effect Monday, aims to prevent banks from reselling this debt. Sellers covered under the program will receive notice that secondary lien holders have received part of the proceeds of the sale "in exchange for release and full satisfaction of their liens."
Source McClatchy/Tribune News, Jim Wasserman (04/19/2010)
"It's a big business, and investors are coming out of the woodwork," says Sylvia Alayon, a vice president for Consumer Mortgage Audit Center, which analyzes mortgage documents for lenders, advocacy groups, and attorneys.
Real estate professionals will be doing their short-sale clients a big favor if they urge them to get professional advice before they sign agreements, Alayon says.
A new government short-sale program, which takes effect Monday, aims to prevent banks from reselling this debt. Sellers covered under the program will receive notice that secondary lien holders have received part of the proceeds of the sale "in exchange for release and full satisfaction of their liens."
Source McClatchy/Tribune News, Jim Wasserman (04/19/2010)
No Need to Hit the Panic Button Yet – Added Jobs Push Mortgage Rates Up
For those worried the end of government mortgage-backed securities purchasing could spell a dramatic increase in home loan rates, there's no need to hit the panic button just yet. A slight rise (+0.125) in long term interest rates Friday was more the product of a Labor Department report showing that the US added 162,000 jobs in March, the biggest monthly gain in three years, than it was a direct effect of the March 31st Fed MBS exit.
Mortgage-backed securities prices, which drive mortgage rates in the opposite direction, have dropped twice in the past 10 days each time pushing conforming 30-yr fixed rates up 1/8, once before and once after March 31st.
Reports depicting the up-tic in rates as the end of an era of low fixed mortgage rates are unfounded. While in a doomsday scenario it's speculated the Fed exit from MBS buying could leave a void in MBS markets big enough that demand and prices plummet causing long term fixed rates to skyrocket, fed officials suggest private buyers are ready to step in and take their place.
According to FreeRateUpdate.com conventional 30-yr fixed mortgages are available today at 5 percent to well qualified consumers paying a standard .07 to 1 point origination. 15-yr fixed mortgages are now available at 4.375 percent, up from 4.25. Today's 5/1 ARM rates are at 3.75 percent, up from 3.625. Despite the sub 4 percent 5/1 ARM rate, data shows borrowers are choosing fixed loans over adjustable loans at a record ratio and have been for several months (96 percent of new mortgages are fixed - Freddie Mac).
FHA 30-yr fixed mortgages are available at 4.875 percent today, an 1/8 lower than conventional loans. Securing FHA financing means a higher APR, despite the note rate and origination being the same, MI and other FHA fees charged on FHA loans drive up the cost. Increasing those costs yesterday was a boost to MI from 1.75 to 2.25 percent of the loan amount. The increase (+0.50) in the premium (MI) charged to borrowers at closing is part of an effort to help the Federal Housing Administration guard against losses from record high loan default rates.
Jumbo mortgages remain available at a 30-yr fixed rate of 5.625, the same as last week.
The benchmark 10-yr treasury yield, a leading indicator for fixed mortgage rates, is near a 1 year high.
Rates mentioned in this article are available to well-qualified consumers paying a standard .07 to 1 point origination as verified by FreeRateUpdate.com research of over two dozen wholesale lenders' rate sheets. Conventional: Conforming Freddie Mac and Fannie Mae insured mortgages. FHA loans are backed by the Federal Housing Administration.
Today's Mortgage Rates:
30 yr fixed rate - 5.000%
15 yr fixed rate - 4.375%
5/1 ARM rate - 3.750%
FHA 30 yr fixed rate - 4.875%
FHA 15 yr fixed rate - 4.500%
FHA 5/1 ARM rate - 3.750%
VA 30 yr fixed rate - 5.000%
Jumbo 30 yr fixed rate - 5.625%
Jumbo Conforming 30 yr fixed rate - 5.250%
Mortgage-backed securities prices, which drive mortgage rates in the opposite direction, have dropped twice in the past 10 days each time pushing conforming 30-yr fixed rates up 1/8, once before and once after March 31st.
Reports depicting the up-tic in rates as the end of an era of low fixed mortgage rates are unfounded. While in a doomsday scenario it's speculated the Fed exit from MBS buying could leave a void in MBS markets big enough that demand and prices plummet causing long term fixed rates to skyrocket, fed officials suggest private buyers are ready to step in and take their place.
According to FreeRateUpdate.com conventional 30-yr fixed mortgages are available today at 5 percent to well qualified consumers paying a standard .07 to 1 point origination. 15-yr fixed mortgages are now available at 4.375 percent, up from 4.25. Today's 5/1 ARM rates are at 3.75 percent, up from 3.625. Despite the sub 4 percent 5/1 ARM rate, data shows borrowers are choosing fixed loans over adjustable loans at a record ratio and have been for several months (96 percent of new mortgages are fixed - Freddie Mac).
FHA 30-yr fixed mortgages are available at 4.875 percent today, an 1/8 lower than conventional loans. Securing FHA financing means a higher APR, despite the note rate and origination being the same, MI and other FHA fees charged on FHA loans drive up the cost. Increasing those costs yesterday was a boost to MI from 1.75 to 2.25 percent of the loan amount. The increase (+0.50) in the premium (MI) charged to borrowers at closing is part of an effort to help the Federal Housing Administration guard against losses from record high loan default rates.
Jumbo mortgages remain available at a 30-yr fixed rate of 5.625, the same as last week.
The benchmark 10-yr treasury yield, a leading indicator for fixed mortgage rates, is near a 1 year high.
Rates mentioned in this article are available to well-qualified consumers paying a standard .07 to 1 point origination as verified by FreeRateUpdate.com research of over two dozen wholesale lenders' rate sheets. Conventional: Conforming Freddie Mac and Fannie Mae insured mortgages. FHA loans are backed by the Federal Housing Administration.
Today's Mortgage Rates:
30 yr fixed rate - 5.000%
15 yr fixed rate - 4.375%
5/1 ARM rate - 3.750%
FHA 30 yr fixed rate - 4.875%
FHA 15 yr fixed rate - 4.500%
FHA 5/1 ARM rate - 3.750%
VA 30 yr fixed rate - 5.000%
Jumbo 30 yr fixed rate - 5.625%
Jumbo Conforming 30 yr fixed rate - 5.250%
Health Care Reform: What's the Impact on You?
Now that health insurance reform is signed into law, what is the impact on real estate brokers and sales associates?
First, if you are an individual who buys your own coverage and have a policy you like, your coverage would be “grandfathered” and would be considered “qualified coverage.” If you are an employer who already offers health insurance to your salaried workers, you may continue to offer the plan you have. Your existing plan is “grandfathered” and you are deemed in compliance with the new employer mandate. You may continue to enroll new employees and terminate those employees who leave the firm without jeopardizing this grandfathered status.
Second, the law creates a uniform, national set of insurance ratings and underwriting standards. These new rules spell out the criteria that insurers can use when evaluating an application. The goal of the new standards is to create a set of rules that more closely resemble what most folks think of as the rules that apply to a group policy.
Insurers can charge different premiums based on policy holders' factors such as age, the type of policy purchased, and geographic area. Insurers can't, however, deny coverage or base premiums on an applicant's preexisting condition, claims history or gender. This is a significant change from the current rules in the great majority of states.
Second, the law will seek to expand the individual and small-business insurance markets, which are the markets through which real estate brokers and sales associates principally shop for coverage.
The goal is to increase access to affordable coverage by increasing competition among insurers, in part by expanding the pools of insureds (with a new requirement for all individuals to have coverage), encouraging insurers to enter new markets, and by allowing markets to cross state lines, among other things. The eventual goal is to merge the individual and small group markets into one larger market. In either case, independent contractors will be able to shop for coverage in both the individual and the small-business markets, so their options will be increased.
Third, the law creates the insurance exchanges that received so much attention in the media. The exchanges are in effect the new insurance marketplaces through which individuals and small employers will shop for coverage. Because insurance ratings and underwriting standards are made more uniform under the law, shopping for coverage through the exchange’s online services or through an insurance broker is simplified, at least in theory, because comparison between plans is made easier.
Fourth, the law requires individuals to buy health insurance and gives incentives businesses to make health insurance available to their employees. That means practitioners will have to buy coverage if they don't already have it or face a penalty unless they can show they can't get coverage for less than a certain percentage of their income--10 percent--or or would otherwise face a financial hardship. If they can't get an exemption for one of these reasons, they pay a fine.
The employer mandate covers businesses with more than 50 employees. Most real estate brokerages, as small businesses with fewer than 50 employees (the sales associates, as independent contractors, don't count against the employee total), are expected to be exempted from the mandate. Large employers subject to the mandate that fail to comply face a penalty. Affordability credits, to help offset costs, are available to both individuals and very small employers, including very small nonprofit associations that are employers.
First, if you are an individual who buys your own coverage and have a policy you like, your coverage would be “grandfathered” and would be considered “qualified coverage.” If you are an employer who already offers health insurance to your salaried workers, you may continue to offer the plan you have. Your existing plan is “grandfathered” and you are deemed in compliance with the new employer mandate. You may continue to enroll new employees and terminate those employees who leave the firm without jeopardizing this grandfathered status.
Second, the law creates a uniform, national set of insurance ratings and underwriting standards. These new rules spell out the criteria that insurers can use when evaluating an application. The goal of the new standards is to create a set of rules that more closely resemble what most folks think of as the rules that apply to a group policy.
Insurers can charge different premiums based on policy holders' factors such as age, the type of policy purchased, and geographic area. Insurers can't, however, deny coverage or base premiums on an applicant's preexisting condition, claims history or gender. This is a significant change from the current rules in the great majority of states.
Second, the law will seek to expand the individual and small-business insurance markets, which are the markets through which real estate brokers and sales associates principally shop for coverage.
The goal is to increase access to affordable coverage by increasing competition among insurers, in part by expanding the pools of insureds (with a new requirement for all individuals to have coverage), encouraging insurers to enter new markets, and by allowing markets to cross state lines, among other things. The eventual goal is to merge the individual and small group markets into one larger market. In either case, independent contractors will be able to shop for coverage in both the individual and the small-business markets, so their options will be increased.
Third, the law creates the insurance exchanges that received so much attention in the media. The exchanges are in effect the new insurance marketplaces through which individuals and small employers will shop for coverage. Because insurance ratings and underwriting standards are made more uniform under the law, shopping for coverage through the exchange’s online services or through an insurance broker is simplified, at least in theory, because comparison between plans is made easier.
Fourth, the law requires individuals to buy health insurance and gives incentives businesses to make health insurance available to their employees. That means practitioners will have to buy coverage if they don't already have it or face a penalty unless they can show they can't get coverage for less than a certain percentage of their income--10 percent--or or would otherwise face a financial hardship. If they can't get an exemption for one of these reasons, they pay a fine.
The employer mandate covers businesses with more than 50 employees. Most real estate brokerages, as small businesses with fewer than 50 employees (the sales associates, as independent contractors, don't count against the employee total), are expected to be exempted from the mandate. Large employers subject to the mandate that fail to comply face a penalty. Affordability credits, to help offset costs, are available to both individuals and very small employers, including very small nonprofit associations that are employers.
State and Federal Tax Credits Info.
For the federal incentive, contracts must be inked by April 30, while closings have to happen by June 30. The California credit covers closings on existing or new homes on or after May 1, leaving a short window for double dipping. Buyers will now be eligible for both the federal and state credit and will likely consume a significant piece of the state credit given the first-come, first-serve allocation.
Time Line possibilities:The tax credit will benefit about 14,000 new-home buyers, lasting as long as five months.
The State allotment could be snapped up in about a month. (10,000 homes)
Time Line possibilities:The tax credit will benefit about 14,000 new-home buyers, lasting as long as five months.
The State allotment could be snapped up in about a month. (10,000 homes)
Mortgage Forgiveness Debt Relief Act of 2007
IRS tells homeowners how to get tax relief if a lender forgives part of their debtGenerally, the Internal Revenue Service (IRS) treats debt forgiveness by a creditor as taxable income. However, under federal legislation that took effect in 2007, certain home mortgage debt cancellations—such as loan modifications, short sales, or foreclosures—may be exempted from federal taxes. Other exemptions are also available.
Homeowners considering a loan modification, short sale, or foreclosure should note that the federal tax exclusion under the Mortgage Forgiveness Debt Relief Act of 2007 only applies to mortgage balances on a qualified principal residence and not on second homes, rental real estate, or business properties.
The maximum amount of forgiven debt eligible under the 2007 law is $2 million for married taxpayers filing jointly and $1 million for single taxpayers.
The debt reduction only can be for loan amounts used to buy, build, or substantially improve a principal residence, including refinance loans as long as an increase in the total mortgage debt if any is attributable to renovations and capital improvements of the house. However, if refinance proceeds were used for other personal purposes, such as paying off credit card bills, purchasing cars, or investing in stocks, then the mortgage debt attributable to those expenditures is not eligible for tax exclusion under the 2007 law.
California homeowners who sold their house in a short sale or were foreclosed upon in 2009 still may have to pay state taxes on forgiven mortgage debt. The California legislature did not extend the tax exemption for mortgage debt forgiveness for state taxes. However, lawmakers are working on a bill that would provide the same tax relief on state taxes as the federal government currently offers.
Homeowners considering a loan modification, short sale, or foreclosure should note that the federal tax exclusion under the Mortgage Forgiveness Debt Relief Act of 2007 only applies to mortgage balances on a qualified principal residence and not on second homes, rental real estate, or business properties.
The maximum amount of forgiven debt eligible under the 2007 law is $2 million for married taxpayers filing jointly and $1 million for single taxpayers.
The debt reduction only can be for loan amounts used to buy, build, or substantially improve a principal residence, including refinance loans as long as an increase in the total mortgage debt if any is attributable to renovations and capital improvements of the house. However, if refinance proceeds were used for other personal purposes, such as paying off credit card bills, purchasing cars, or investing in stocks, then the mortgage debt attributable to those expenditures is not eligible for tax exclusion under the 2007 law.
California homeowners who sold their house in a short sale or were foreclosed upon in 2009 still may have to pay state taxes on forgiven mortgage debt. The California legislature did not extend the tax exemption for mortgage debt forgiveness for state taxes. However, lawmakers are working on a bill that would provide the same tax relief on state taxes as the federal government currently offers.
Greenspan: Housing Will Come Back
Former Federal Reserve Chair Alan Greenspan told officials in Mexico on Wednesday that he believes U.S. home prices have hit bottom. However, home owners are still unnerved by the decline in value, and until prices stabilize, the economy will remain weak.
"We will not be out of this crisis until home prices truly stabilize in the United States. They appear to have stabilized, but they are very fragile," Greenspan said in a televised interview.
"Eventually housing will come back; it can't get any lower," he added.
Source: Reuters News (03/25/2010)
"We will not be out of this crisis until home prices truly stabilize in the United States. They appear to have stabilized, but they are very fragile," Greenspan said in a televised interview.
"Eventually housing will come back; it can't get any lower," he added.
Source: Reuters News (03/25/2010)
Browsing For Housing Requires On-line, Off-line Smarts
Nearly nine out of 10 home buyers can't be wrong -- browsing for housing online puts listings at their fingertips, speeds the home-buying process, and comes with an educational bonus.
"More informed buyers, improve the transaction process," says Douglas de Jager, co-founder of DotHomes.com one of the newer online listing services on the block.
The California Association of Realtors (CAR) reports that 84 percent of home buyers use the internet as a significant part of the home buying process, according to its 2009 Survey of California Homebuyers.
"There is so much more information made available to us online, when you go to the actual home, it's just a validation process for what you've seen online," de Jager adds.
But transforming digital digs into a real home of your dreams isn't just about bandwidth and educational content.
Using the Internet to buy a home comes with the same prerequisite necessary for any buyer -- get financing locked down first.
Certainly, the Internet can help with financing too. There are numerous mortgage comparison sites, virtually every lender is online and finance and credit information portals abound.
A home buyer with an approved mortgage -- obtained online or off -- has a negotiating edge and the financial boundaries necessary to help keep focused on a home that's truly affordable.
Only then is it time to surf for shelter.
DotHomes.com, a listing site with Google-like search features, offers these tips to help you get the most out of your online home shopping experience.
• Leverage the broker. Brokers and real estate agents are the housing market's matchmakers. They use local expertise to connect buyers and sellers. They've honed online tools to help you research, browse and focus your online search. The tools put you in touch with all the information and resources the listing agent or broker has to offer -- broker blogs, emailed updates tailored to your search, market reports tailored to your market, how-tos and other information.
• Search in real-time. Get property listings and other information electronically "fed" to you via RSS (really simple syndication) feeds, email alerts and Web updates. Electronic updates are an adjunct to your own time spent online. Alerts keep you abreast of the newest listings and reduce your need to manually check the Web again and again for updates. That's especially true when you are on the go, say driving from open house to open house. Blackberries, iPhones and other smart phones keep you connected to your search.
• Search "fresh." Avoid fringe listing sites that don't update frequently and are far removed from the original online broker's listing. If you don't, you'll miss out on listing changes and updates like new pricing information, new photos, open house dates and the like. Web sites that don't link to the original listing, lock you away from updates. Nothing is more frustrating than to find online what you consider your dream home only to soon discover that the listing was sold, removed from the market or otherwise changed beyond your requirements -- but not removed from an Internet server.
• Refine your search. Don't get overwhelmed. With so many listings on the market, both traditional listings and distressed properties, quickly navigating them all is a chore. Use online tools and Web sites that allow you to refine your property search. If you are looking for a house on a particular street, search the street. If you need a pet friendly condo, ask. Whether you know exactly what you want or are just starting to figure it out, be specific with search terms like "new roof," "three-car garage," "established landscaping," "new kitchen appliances," etc. to find the property with the features you need.
Along with the well known national listing Web sites from trade groups, large private listing portals and real estate companies, the local multiple listing service's (MLS) public access portal are among the best places to search on line because they use standard formatting and strict guidelines about adding and removing listings in a timely manner.
• Screen home movies. A picture is worth a thousand words, but a video, a virtual open house, looks like a million bucks. Kodak moments can help you get a two-dimensional feel for a property, but virtual tours add a third dimension. Videos offer a much better sense of the proportions and the feel of a property. They can also play the starring role -- as a sort of 24-hour open house -- on a Web site or blog dedicated to the listing.
Here's another browsing for housing bonus: If you buy a home with its own Web site and virtual tour, you can ask the seller to gift the Web site or blog to you!
Published: March 18, 2010
"More informed buyers, improve the transaction process," says Douglas de Jager, co-founder of DotHomes.com one of the newer online listing services on the block.
The California Association of Realtors (CAR) reports that 84 percent of home buyers use the internet as a significant part of the home buying process, according to its 2009 Survey of California Homebuyers.
"There is so much more information made available to us online, when you go to the actual home, it's just a validation process for what you've seen online," de Jager adds.
But transforming digital digs into a real home of your dreams isn't just about bandwidth and educational content.
Using the Internet to buy a home comes with the same prerequisite necessary for any buyer -- get financing locked down first.
Certainly, the Internet can help with financing too. There are numerous mortgage comparison sites, virtually every lender is online and finance and credit information portals abound.
A home buyer with an approved mortgage -- obtained online or off -- has a negotiating edge and the financial boundaries necessary to help keep focused on a home that's truly affordable.
Only then is it time to surf for shelter.
DotHomes.com, a listing site with Google-like search features, offers these tips to help you get the most out of your online home shopping experience.
• Leverage the broker. Brokers and real estate agents are the housing market's matchmakers. They use local expertise to connect buyers and sellers. They've honed online tools to help you research, browse and focus your online search. The tools put you in touch with all the information and resources the listing agent or broker has to offer -- broker blogs, emailed updates tailored to your search, market reports tailored to your market, how-tos and other information.
• Search in real-time. Get property listings and other information electronically "fed" to you via RSS (really simple syndication) feeds, email alerts and Web updates. Electronic updates are an adjunct to your own time spent online. Alerts keep you abreast of the newest listings and reduce your need to manually check the Web again and again for updates. That's especially true when you are on the go, say driving from open house to open house. Blackberries, iPhones and other smart phones keep you connected to your search.
• Search "fresh." Avoid fringe listing sites that don't update frequently and are far removed from the original online broker's listing. If you don't, you'll miss out on listing changes and updates like new pricing information, new photos, open house dates and the like. Web sites that don't link to the original listing, lock you away from updates. Nothing is more frustrating than to find online what you consider your dream home only to soon discover that the listing was sold, removed from the market or otherwise changed beyond your requirements -- but not removed from an Internet server.
• Refine your search. Don't get overwhelmed. With so many listings on the market, both traditional listings and distressed properties, quickly navigating them all is a chore. Use online tools and Web sites that allow you to refine your property search. If you are looking for a house on a particular street, search the street. If you need a pet friendly condo, ask. Whether you know exactly what you want or are just starting to figure it out, be specific with search terms like "new roof," "three-car garage," "established landscaping," "new kitchen appliances," etc. to find the property with the features you need.
Along with the well known national listing Web sites from trade groups, large private listing portals and real estate companies, the local multiple listing service's (MLS) public access portal are among the best places to search on line because they use standard formatting and strict guidelines about adding and removing listings in a timely manner.
• Screen home movies. A picture is worth a thousand words, but a video, a virtual open house, looks like a million bucks. Kodak moments can help you get a two-dimensional feel for a property, but virtual tours add a third dimension. Videos offer a much better sense of the proportions and the feel of a property. They can also play the starring role -- as a sort of 24-hour open house -- on a Web site or blog dedicated to the listing.
Here's another browsing for housing bonus: If you buy a home with its own Web site and virtual tour, you can ask the seller to gift the Web site or blog to you!
Published: March 18, 2010
Sam Zell: Recovery Is Underway
Sam Zell, the billionaire investor who made his fortune in real estate, told Bloomberg News yesterday that he expects the U.S. housing market to start recovering at the end of 2010 and strengthen in the middle of 2011.
Zell, who according to the Forbes’ tally is the 237th richest person in the world, said, “Conditions are getting better, but there’s a lot of uncertainty. The real question is: Can confidence return enough so that what you call the green shoots can continue forward?”
Zell said he expects more turmoil in the commercial real estate business, pointing toward General Growth Properties Inc., the mall owner that is fighting a takeover, as an example.
Source: Bloomberg, Rita Nazareth (03/16/2010)
Zell, who according to the Forbes’ tally is the 237th richest person in the world, said, “Conditions are getting better, but there’s a lot of uncertainty. The real question is: Can confidence return enough so that what you call the green shoots can continue forward?”
Zell said he expects more turmoil in the commercial real estate business, pointing toward General Growth Properties Inc., the mall owner that is fighting a takeover, as an example.
Source: Bloomberg, Rita Nazareth (03/16/2010)
Tips for Boomers: Benefits of Downsizing
For anyone approaching retirement, now could be a great time to move.
Here are some tips for Boomers considering downsizing:
*Don’t miss out on the $6,500 move-up tax credit. *Consider a short-distance move if it provides savings and convenience. *Anyone moving out of state should figure the tax consequences in their new location. *Consider a property that offers features allowing Boomers to age gracefully. *Think about sharing space with a younger (or older) family member. *Insist on good security in the new property. *Look for homes that don’t require a lot of maintenance. *Go green. It will pay off down the road.
Source: Forbes, Ashlea Ebeling (03/16/2010)
Fed To Stop Buying MBS The Federal Reserve renewed its commitment to keep key interest rates near zero for an “extended period,” but also confirmed that it will stop buying mortgage-backed securities at the end of March.
The Fed, whose regular meeting began Tuesday, said that “housing starts have been flat at depressed levels” and “employers remain reluctant to add to payrolls” as a reason for extending the cap on interest rates.
“The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability,” the Federal Open Market Committee statement said.
Source: Bloomberg, Craig Torres and Scott Lanman (03/16/2010)
Find Your Path HomeCENTURY 21: The Gold Standard
Find Your Path HomeCENTURY 21: The Gold StandardDRE License Number(s): 00656946 Find Your Path HomeEmail Us Visit Our WebSite
Here are some tips for Boomers considering downsizing:
*Don’t miss out on the $6,500 move-up tax credit. *Consider a short-distance move if it provides savings and convenience. *Anyone moving out of state should figure the tax consequences in their new location. *Consider a property that offers features allowing Boomers to age gracefully. *Think about sharing space with a younger (or older) family member. *Insist on good security in the new property. *Look for homes that don’t require a lot of maintenance. *Go green. It will pay off down the road.
Source: Forbes, Ashlea Ebeling (03/16/2010)
Fed To Stop Buying MBS The Federal Reserve renewed its commitment to keep key interest rates near zero for an “extended period,” but also confirmed that it will stop buying mortgage-backed securities at the end of March.
The Fed, whose regular meeting began Tuesday, said that “housing starts have been flat at depressed levels” and “employers remain reluctant to add to payrolls” as a reason for extending the cap on interest rates.
“The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability,” the Federal Open Market Committee statement said.
Source: Bloomberg, Craig Torres and Scott Lanman (03/16/2010)
Find Your Path HomeCENTURY 21: The Gold Standard
Find Your Path HomeCENTURY 21: The Gold StandardDRE License Number(s): 00656946 Find Your Path HomeEmail Us Visit Our WebSite
Real Estate Outlook: Positive Signs of Recovery
Positive signs on employment and national economic growth should start being felt in the housing market in the coming several months, say top economists.
The Labor Department reports that there were 2.7 million job openings last month -- 200,000 more than in the same survey the month before.
Meanwhile, the consensus forecast among private and government economists for the main barometer of the U.S. economy's health, gross domestic product or GDP, is for a very solid 3 percent during the first quarter.
Alan Levenson, chief economist for T.Rowe Price Associates, said the latest reports are “indicative of a labor market and economy that is in the midst of recovery.”
That's hugely important for real estate because expanding employment created by a rowing national economy are the essential fuels to power housing demand and sales.
Even though harsh weather conditions knocked the wind out of pending home sales and real estate shopping in many areas during January and February, analysts say the spring and summer market should be strong.
Lawrence Yun, chief economist for the National Association of Realtors, says the $8,000 and $6,500 federal home purchase tax credits that expire at the end of April for signed contracts -- and the end of June for closed deals -- should squeeze a lot of sales volume into the spring and early summer months.
Assuming slow but steady improvement in the jobs picture, Yun forecasts a solid second half of the year as well.
On the home pricing front, evidence continues to mount that in most parts of the country, home values have either bottomed out or have turned positive.
The most recent Case- Shiller index numbers on the top 20 metropolitan markets bear that out -- and last week's Zillow home value report found values essentially flat on a national average basis. They were down by just three tenths of a percent, but up in some major markets of note.
For example, Boston's home values are up nearly two percent year-over-year, according to Zillow, and Los Angeles, San Diego, Denver and Philadelphia have registered gains after long periods of negative numbers.
Two other statistical hints that conditions are improving: The difference between listed prices and selling prices of home nationwide is now smaller than it's been in a year, according to real estate research site Trulia.com.
And Realty Trac fond that foreclosures, which are clearly still a massive drag on the market -- dropped by two percent last month -- the second straight month of decline.
In a tough market, I guess we should appreciate even the smallest of improvements.
Published: March 15, 2010
The Labor Department reports that there were 2.7 million job openings last month -- 200,000 more than in the same survey the month before.
Meanwhile, the consensus forecast among private and government economists for the main barometer of the U.S. economy's health, gross domestic product or GDP, is for a very solid 3 percent during the first quarter.
Alan Levenson, chief economist for T.Rowe Price Associates, said the latest reports are “indicative of a labor market and economy that is in the midst of recovery.”
That's hugely important for real estate because expanding employment created by a rowing national economy are the essential fuels to power housing demand and sales.
Even though harsh weather conditions knocked the wind out of pending home sales and real estate shopping in many areas during January and February, analysts say the spring and summer market should be strong.
Lawrence Yun, chief economist for the National Association of Realtors, says the $8,000 and $6,500 federal home purchase tax credits that expire at the end of April for signed contracts -- and the end of June for closed deals -- should squeeze a lot of sales volume into the spring and early summer months.
Assuming slow but steady improvement in the jobs picture, Yun forecasts a solid second half of the year as well.
On the home pricing front, evidence continues to mount that in most parts of the country, home values have either bottomed out or have turned positive.
The most recent Case- Shiller index numbers on the top 20 metropolitan markets bear that out -- and last week's Zillow home value report found values essentially flat on a national average basis. They were down by just three tenths of a percent, but up in some major markets of note.
For example, Boston's home values are up nearly two percent year-over-year, according to Zillow, and Los Angeles, San Diego, Denver and Philadelphia have registered gains after long periods of negative numbers.
Two other statistical hints that conditions are improving: The difference between listed prices and selling prices of home nationwide is now smaller than it's been in a year, according to real estate research site Trulia.com.
And Realty Trac fond that foreclosures, which are clearly still a massive drag on the market -- dropped by two percent last month -- the second straight month of decline.
In a tough market, I guess we should appreciate even the smallest of improvements.
Published: March 15, 2010
Housing Experts Say Real Estate is Recovering
Some of the nation’s top economists believe the housing market has turned and better days are on the way for the housing industry.
Increases in jobs, credit, and affordable homes will overcome impediments such as rising interest rates, and the expiration of the Federal stimulus program to push the housing market toward recovery, says Dean Maki, chief U.S. economist for Barclays Capital.
“I would bet even odds that we’re at a bottom and that we’re going to see improvement in the coming months,” says Karl Case, co-creator of the S&P/Case-Shiller Home Price Index and a professor of economics at Wellesley College.
“The underlying trend is turning positive,” says Bruce Kasman, chief economist at JPMorgan Chase & Co.
Source: Bloomberg, Kathleen M. Howley and Rich Miller (03/15/2010)
Increases in jobs, credit, and affordable homes will overcome impediments such as rising interest rates, and the expiration of the Federal stimulus program to push the housing market toward recovery, says Dean Maki, chief U.S. economist for Barclays Capital.
“I would bet even odds that we’re at a bottom and that we’re going to see improvement in the coming months,” says Karl Case, co-creator of the S&P/Case-Shiller Home Price Index and a professor of economics at Wellesley College.
“The underlying trend is turning positive,” says Bruce Kasman, chief economist at JPMorgan Chase & Co.
Source: Bloomberg, Kathleen M. Howley and Rich Miller (03/15/2010)
State law to save foreclosure victims from losing shirt on taxes
State legislation to protect people who lose their houses in foreclosure or short sales from a big tax bill passed a significant hurdle yesterday, when the Assembly gave its approval, shipping the proposal to the Senate for an expected vote on Thursday.
Passing the Assembly by a 47-27 vote, the bill authored by Sen. Lois Wolk (D-Davis) would exempt people who did short sales or received loan modifications or lost their houses in foreclosure last year from having to pay state tax on any mortgage debt that was forgiven. Otherwise the forgiven debt would be considered income for the homeowners even though they received no money from the sale of their home.
"As so many Californians are forced to walk away from their homes, their largest investment, the last thing they should have to think about is paying taxes on debt they couldn't repay," said Wolk an an e-mail.
Both the state and federal government extended a lifeline to homeowners in 2007 when the market was flooded with mortgage failures by temporarily exempting the tax on forgiven debt. However, while the federal exemption continues through 2012, the state's expired at the end of 2008.
With an April 15 tax deadline approaching, tax accountants say many of their clients are scared and uncertain how they would pay the added tax if the state does not pass legislation, which is designed to bring the state tax code in conformity with federal tax policy.
Brian Winter, a tax preparer at Jackson Hewitt in Riverside said a lot of his clients facing a big state tax bill because of the expiration of the state exemption don't have jobs or enough money to meet the obligation.
Noting that houses in Inland Southern California frequently are selling for hundreds of thousands of dollars less than the mortgages owed on them, Winter said he figures that some of his clients who have gone through foreclosures or short sales could see their state tax bills increase by $4,000 to $20,000.
Hewitt said a person with an annual income of $50,000 and $100,000 of debt cancelled on a house would be "on the hook" for about $8000 in additional income tax. He said most likely some of his clients would be forced into bankruptcy.
Many people who thought they were exempt from the debt forgiveness tax under both the state and federal law, Hewitt said, were shocked to receive 1099 forms in the mail from their lenders that need to be filed with their tax returns to report the cancelled debt.
As state law now stands not all homeowners who have a foreclosure, short sale or loan modification will take a state tax hit. According to the Senate Revenue and Taxation Committee, for example, debt forgiven on a first mortgage used to buy a house even now is not taxable. That is not true, however, if the original mortgage is refinanced and money taken out to buy a car or for another investment.
Hewitt said he understands that currently debt forgiven on refinancings done to raise money for home improvements or simply to get a lower monthly mortgage payment also are exempt from state tax. Also only a loan modification in which lower payments were accomplished by reducing the balance owed, not ones achieved by merely lowering an interest rate, are subject to state tax, he said.
Sandi Aplin, a tax accountant in Moreno Valley, said the tax laws pertaining to forgiven debt are very complex and require the attention of a professional tax preparer. She advised that those who have had mortgage debt forgiven should apply for extensions on filing their 2009 state tax returns to give the state government time to take action to help them.
Hewitt said he recommends that his clients hold off on preparing their state tax returns until the first week in April.
Prospects for the Wolk legislation are clouded by uncertainty whether Gov. Schwarzenegger will sign it. The governor vetoed similar federal conforming legislation in the past because of the attachment of a provision that would establish new tax penalties on individuals and businesses that file unfounded claims for tax refunds.
Craig Reynolds, Wolk's chief of staff, said a clause with the same purpose is included in the new legislation but the proposed penalties are narrowed to apply only to larger, sophistocated businesses and the super-wealthy who can afford tax advisors.
The governor has argued that the controversial clause should be taken out of the bill and considered in separate legislation, said Schwarzenegger Secretary Aaron McLear. --Leslie Berkman
Passing the Assembly by a 47-27 vote, the bill authored by Sen. Lois Wolk (D-Davis) would exempt people who did short sales or received loan modifications or lost their houses in foreclosure last year from having to pay state tax on any mortgage debt that was forgiven. Otherwise the forgiven debt would be considered income for the homeowners even though they received no money from the sale of their home.
"As so many Californians are forced to walk away from their homes, their largest investment, the last thing they should have to think about is paying taxes on debt they couldn't repay," said Wolk an an e-mail.
Both the state and federal government extended a lifeline to homeowners in 2007 when the market was flooded with mortgage failures by temporarily exempting the tax on forgiven debt. However, while the federal exemption continues through 2012, the state's expired at the end of 2008.
With an April 15 tax deadline approaching, tax accountants say many of their clients are scared and uncertain how they would pay the added tax if the state does not pass legislation, which is designed to bring the state tax code in conformity with federal tax policy.
Brian Winter, a tax preparer at Jackson Hewitt in Riverside said a lot of his clients facing a big state tax bill because of the expiration of the state exemption don't have jobs or enough money to meet the obligation.
Noting that houses in Inland Southern California frequently are selling for hundreds of thousands of dollars less than the mortgages owed on them, Winter said he figures that some of his clients who have gone through foreclosures or short sales could see their state tax bills increase by $4,000 to $20,000.
Hewitt said a person with an annual income of $50,000 and $100,000 of debt cancelled on a house would be "on the hook" for about $8000 in additional income tax. He said most likely some of his clients would be forced into bankruptcy.
Many people who thought they were exempt from the debt forgiveness tax under both the state and federal law, Hewitt said, were shocked to receive 1099 forms in the mail from their lenders that need to be filed with their tax returns to report the cancelled debt.
As state law now stands not all homeowners who have a foreclosure, short sale or loan modification will take a state tax hit. According to the Senate Revenue and Taxation Committee, for example, debt forgiven on a first mortgage used to buy a house even now is not taxable. That is not true, however, if the original mortgage is refinanced and money taken out to buy a car or for another investment.
Hewitt said he understands that currently debt forgiven on refinancings done to raise money for home improvements or simply to get a lower monthly mortgage payment also are exempt from state tax. Also only a loan modification in which lower payments were accomplished by reducing the balance owed, not ones achieved by merely lowering an interest rate, are subject to state tax, he said.
Sandi Aplin, a tax accountant in Moreno Valley, said the tax laws pertaining to forgiven debt are very complex and require the attention of a professional tax preparer. She advised that those who have had mortgage debt forgiven should apply for extensions on filing their 2009 state tax returns to give the state government time to take action to help them.
Hewitt said he recommends that his clients hold off on preparing their state tax returns until the first week in April.
Prospects for the Wolk legislation are clouded by uncertainty whether Gov. Schwarzenegger will sign it. The governor vetoed similar federal conforming legislation in the past because of the attachment of a provision that would establish new tax penalties on individuals and businesses that file unfounded claims for tax refunds.
Craig Reynolds, Wolk's chief of staff, said a clause with the same purpose is included in the new legislation but the proposed penalties are narrowed to apply only to larger, sophistocated businesses and the super-wealthy who can afford tax advisors.
The governor has argued that the controversial clause should be taken out of the bill and considered in separate legislation, said Schwarzenegger Secretary Aaron McLear. --Leslie Berkman
Low Rates Help Make Home Buying More Affordable
McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 4.97 percent with an average 0.7 point for the week ending March 4, 2010, down from last week when it averaged 5.05 percent. Last year at this time, the 30-year FRM averaged 5.15 percent.
The 15-year FRM this week averaged 4.33 percent with an average 0.7 point, down from last week when it averaged 4.40 percent. A year ago at this time, the 15-year FRM averaged 4.72 percent.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.11 percent this week, with an average 0.6 point, down from last week when it averaged 4.16 percent. A year ago, the 5-year ARM averaged 5.08 percent.
The 1-year Treasury-indexed ARM averaged 4.27 percent this week with an average 0.6 point, up from last week when it averaged 4.15 percent. At this time last year, the 1-year ARM averaged 4.86 percent.
"30-year fixed mortgages fell below 5 percent to match levels seen two weeks ago and are helping to maintain affordable home-purchase conditions," said Frank Nothaft, Freddie Mac vice president and chief economist. "In fact, monthly principal and interest mortgage payments for a typical family buying a median-priced home of $163,800 were just $709 in January, the lowest amount since February 1998, according to the National Association of Realtors® . For first-time homebuyers, the fourth quarter of 2009 was the third most affordable quarter since 1981 behind the first and second quarter of 2009."
"The federal tax credit for homebuyers, which expires on April 30th, may make housing even more affordable for some families already in the middle of the home buying process. In fact, the Federal Reserve's March 3rd regional economic review noted that several districts attributed stronger home sales to the homebuyer tax credit."
Published: March 5, 2010
The 15-year FRM this week averaged 4.33 percent with an average 0.7 point, down from last week when it averaged 4.40 percent. A year ago at this time, the 15-year FRM averaged 4.72 percent.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.11 percent this week, with an average 0.6 point, down from last week when it averaged 4.16 percent. A year ago, the 5-year ARM averaged 5.08 percent.
The 1-year Treasury-indexed ARM averaged 4.27 percent this week with an average 0.6 point, up from last week when it averaged 4.15 percent. At this time last year, the 1-year ARM averaged 4.86 percent.
"30-year fixed mortgages fell below 5 percent to match levels seen two weeks ago and are helping to maintain affordable home-purchase conditions," said Frank Nothaft, Freddie Mac vice president and chief economist. "In fact, monthly principal and interest mortgage payments for a typical family buying a median-priced home of $163,800 were just $709 in January, the lowest amount since February 1998, according to the National Association of Realtors® . For first-time homebuyers, the fourth quarter of 2009 was the third most affordable quarter since 1981 behind the first and second quarter of 2009."
"The federal tax credit for homebuyers, which expires on April 30th, may make housing even more affordable for some families already in the middle of the home buying process. In fact, the Federal Reserve's March 3rd regional economic review noted that several districts attributed stronger home sales to the homebuyer tax credit."
Published: March 5, 2010
Pre-Qualifying for a Mortgage
One of the first steps to take as a potential home buyer is to get pre-qualified for a loan. This step helps both you and your lender learn just how much home you can afford. And you should begin this process before you even start looking for a home.
According to the Federal Housing Administration (FHA), their pre-qualification essentials include:
Having a steady employment history, at least two years with the same employer.
Consistent or increasing income over the past two years.
Credit report should be in good standing with less than two thirty day late payments in the past two years.
Any bankruptcy on record must be at least two years old with good credit for the two consecutive years.
Any foreclosure must be at least three years old with good credit for the past three years.
Mortgage payment qualified for must be approximately 30 percent of your total monthly gross income.
Other lenders' ideas regarding pre-qualification are all similar to those outlined above. A mortgage lender will look at your credit report, earnings, debts, and savings in order to see how much home you really can afford.
Why is this important? In recent years there has been a “mortgage crisis,” where the industry was rampant with fraud and with loans that put homeowners into situations they could not afford. As payments rose, homeowners found themselves unable to meet their monthly obligations. According to Realtytrac.com and their U.S. Foreclosure Market Report, in January 2010, one in every 409 households in the country had received a foreclosure filing.
Since pre-qualification for a home loan typically costs you nothing, but gives you both a goal of what homes are in your affordability range, as well as how much money you should look to have saved for a downpayment, you can hardly wait to take this step.
What if the home you want is out of your reach? Experts recommend reducing your debt and saving up a larger amount for your down payment. Let's say your dream home is $225,000, but you only qualify for a $180,000 loan. If you have a downpayment of $45,000, then you are ready to make a move!
During the pre-qualification process, you will be expected to provide the following information:
your gross monthly income
your total monthly payments (car payments, credit cards minimums, child support payments, student loan payments, any other monthly debts)
The lender will be looking to see that your debt to income is below about 40 percent, and the lower the better. So, if you are looking to buy in the near future, be sure to talk to your lender soon!
According to the Federal Housing Administration (FHA), their pre-qualification essentials include:
Having a steady employment history, at least two years with the same employer.
Consistent or increasing income over the past two years.
Credit report should be in good standing with less than two thirty day late payments in the past two years.
Any bankruptcy on record must be at least two years old with good credit for the two consecutive years.
Any foreclosure must be at least three years old with good credit for the past three years.
Mortgage payment qualified for must be approximately 30 percent of your total monthly gross income.
Other lenders' ideas regarding pre-qualification are all similar to those outlined above. A mortgage lender will look at your credit report, earnings, debts, and savings in order to see how much home you really can afford.
Why is this important? In recent years there has been a “mortgage crisis,” where the industry was rampant with fraud and with loans that put homeowners into situations they could not afford. As payments rose, homeowners found themselves unable to meet their monthly obligations. According to Realtytrac.com and their U.S. Foreclosure Market Report, in January 2010, one in every 409 households in the country had received a foreclosure filing.
Since pre-qualification for a home loan typically costs you nothing, but gives you both a goal of what homes are in your affordability range, as well as how much money you should look to have saved for a downpayment, you can hardly wait to take this step.
What if the home you want is out of your reach? Experts recommend reducing your debt and saving up a larger amount for your down payment. Let's say your dream home is $225,000, but you only qualify for a $180,000 loan. If you have a downpayment of $45,000, then you are ready to make a move!
During the pre-qualification process, you will be expected to provide the following information:
your gross monthly income
your total monthly payments (car payments, credit cards minimums, child support payments, student loan payments, any other monthly debts)
The lender will be looking to see that your debt to income is below about 40 percent, and the lower the better. So, if you are looking to buy in the near future, be sure to talk to your lender soon!
Real Estate Outlook: Federal Reserve Beige Book
If you're trying to figure out where real estate is headed in the coming months, should you listen to the Federal Reserve -- or do you focus on the latest pending home sales numbers?
Probably both, but here's a key fact: The Fed's latest "Beige Book" report -- based on economic data from each of its 12 regional member banks -- found positive signs in nine of the 12 regions it covered.
Despite blizzards and bad weather in January and early February in large portions of the country, the Fed's regional banks found consumer spending and manufacturing output increasing.
Both are key indicators of improving economic conditions ahead, especially consumer spending, which accounts for 70 percent of U.S. economic activity and directly affects employment growth.
In fact, according to a separate report issued by the Commerce Department last week, consumer spending increased by one half of one percent in January - outpacing income growth for the fourth straight month.
What does that signify? Consumers are slowly coming out of their shells, regaining confidence, and beginning to feel good again about buying more goods and services.
On the housing front, the National Association of Realtors reported last week that the severe weather that paralyzed entire sections of the country also put a damper on home shopping last month - knocking down pending home sales by 7.6 percent in the process.
Nonetheless, said Lawrence Yun, chief economist for the Realtors, pending home sales - signed contracts that have not yet gone to closing -- still came in 12 percent higher in January than they were the year before.
Plus, they are likely to bounce back strongly in the next couple of months as buyers rush to sign contracts to qualify for the expiring home purchase tax credits.
Even home prices nationally are showing hints of slow improvement. According to the latest Clear Capital price index, which is based on information from thousands of neighborhoods and Zip code-level reports, prices rose by 5 percent on average for the most recent quarter on a year-over-year basis.
Metropolitan Boston, which was one of the earliest markets to signal the price downturns following the boom, saw values up by nearly seven percent, year over year, according to Clear Capital' index.
All of this is being helped along by continuing favorable financing conditions in the mortgage markets. Applications for new mortgages to purchase houses in the coming several months were up by 12 percent last week, according to the Mortgage Bankers Association.
Thirty year fixed rate loans dipped to 4.9 percent, while 15 year fixed rate were flat at 4.3 percent.
Published: March 8, 2010
Probably both, but here's a key fact: The Fed's latest "Beige Book" report -- based on economic data from each of its 12 regional member banks -- found positive signs in nine of the 12 regions it covered.
Despite blizzards and bad weather in January and early February in large portions of the country, the Fed's regional banks found consumer spending and manufacturing output increasing.
Both are key indicators of improving economic conditions ahead, especially consumer spending, which accounts for 70 percent of U.S. economic activity and directly affects employment growth.
In fact, according to a separate report issued by the Commerce Department last week, consumer spending increased by one half of one percent in January - outpacing income growth for the fourth straight month.
What does that signify? Consumers are slowly coming out of their shells, regaining confidence, and beginning to feel good again about buying more goods and services.
On the housing front, the National Association of Realtors reported last week that the severe weather that paralyzed entire sections of the country also put a damper on home shopping last month - knocking down pending home sales by 7.6 percent in the process.
Nonetheless, said Lawrence Yun, chief economist for the Realtors, pending home sales - signed contracts that have not yet gone to closing -- still came in 12 percent higher in January than they were the year before.
Plus, they are likely to bounce back strongly in the next couple of months as buyers rush to sign contracts to qualify for the expiring home purchase tax credits.
Even home prices nationally are showing hints of slow improvement. According to the latest Clear Capital price index, which is based on information from thousands of neighborhoods and Zip code-level reports, prices rose by 5 percent on average for the most recent quarter on a year-over-year basis.
Metropolitan Boston, which was one of the earliest markets to signal the price downturns following the boom, saw values up by nearly seven percent, year over year, according to Clear Capital' index.
All of this is being helped along by continuing favorable financing conditions in the mortgage markets. Applications for new mortgages to purchase houses in the coming several months were up by 12 percent last week, according to the Mortgage Bankers Association.
Thirty year fixed rate loans dipped to 4.9 percent, while 15 year fixed rate were flat at 4.3 percent.
Published: March 8, 2010
Home Prices May Be Flat for Years (?????)
Housing prices are unlikely to fall much farther, but they aren’t going to rise either — at least for several years — predict analysts for Barclays Capital in its Residential Credit Strategy report.
Barclays blames government programs that have slowed foreclosures. “The overhang of distressed inventory is a huge negative technical. It suggests that any price rise will probably be met by increased distressed sales,” the report says.
The report also concludes that home prices are cheaper than rents and incomes suggest they should be, “but not extremely so.”
Source: Property Wire (03/03/2010)
Barclays blames government programs that have slowed foreclosures. “The overhang of distressed inventory is a huge negative technical. It suggests that any price rise will probably be met by increased distressed sales,” the report says.
The report also concludes that home prices are cheaper than rents and incomes suggest they should be, “but not extremely so.”
Source: Property Wire (03/03/2010)
Fraud Didn't Cause Housing Meltdown
The financial crisis was the result of home buyers’ rational reactions to misaligned incentives – not fraud, argues Todd Zywicki, a George Mason University law professor and a Mercatus Center senior scholar.
Zywicki, who has studied the financial meltdown, argues that taking out a risky bank loan looks like a foolish choice today, but at the height of the housing boom was actually a smart decision for many people.
He says the crisis began when the Federal Reserve pushed interest rates to extreme lows from 2001 to 2004, making adjustable rate loans very attractive. It wasn’t until the Fed pushed rates back up that people walked away from their loans.
In the next phase of the crisis, Zywicki says, the availability of foreclosed properties pushed down home prices, which led to more home owners walking away from their properties. Now in the current phase of the decline, unemployment has led to even more foreclosures.
Zywicki writes: “The problem isn't consumer gullibility or ignorance. Borrowers have shown they understand, and act on, the incentives they face all too well.”
Source: The Wall Street Journal, Todd Zywicki (02/19/2010)
Zywicki, who has studied the financial meltdown, argues that taking out a risky bank loan looks like a foolish choice today, but at the height of the housing boom was actually a smart decision for many people.
He says the crisis began when the Federal Reserve pushed interest rates to extreme lows from 2001 to 2004, making adjustable rate loans very attractive. It wasn’t until the Fed pushed rates back up that people walked away from their loans.
In the next phase of the crisis, Zywicki says, the availability of foreclosed properties pushed down home prices, which led to more home owners walking away from their properties. Now in the current phase of the decline, unemployment has led to even more foreclosures.
Zywicki writes: “The problem isn't consumer gullibility or ignorance. Borrowers have shown they understand, and act on, the incentives they face all too well.”
Source: The Wall Street Journal, Todd Zywicki (02/19/2010)
Bankers: The End of Foreclosure Crisis is Near
The Mortgage Bankers Association is seeing signs that the foreclosure crisis is ending.
“The continued and sizable drop in the 30-day delinquency rate is a concrete sign that the end may be in sight,” says Jay Brinkmann, MBA’s chief economist, in a published statement.
Brinkmann said that normally there is a large spike in short-term mortgage delinquencies at the end of the year because of high heating bills and holiday expenditures. This year, there was not only no spike, but the 30-day delinquency rate actually fell from 3.79 percent to 3.63 percent.
Thirty-day delinquencies have historically been a leading indicator of serious delinquencies and foreclosures, Brinkmann said.
“[This] gives us growing confidence that the size of the problem now is about as bad as it will get,” he said.
Source: Mortgage Bankers Association (02/19/2010)
“The continued and sizable drop in the 30-day delinquency rate is a concrete sign that the end may be in sight,” says Jay Brinkmann, MBA’s chief economist, in a published statement.
Brinkmann said that normally there is a large spike in short-term mortgage delinquencies at the end of the year because of high heating bills and holiday expenditures. This year, there was not only no spike, but the 30-day delinquency rate actually fell from 3.79 percent to 3.63 percent.
Thirty-day delinquencies have historically been a leading indicator of serious delinquencies and foreclosures, Brinkmann said.
“[This] gives us growing confidence that the size of the problem now is about as bad as it will get,” he said.
Source: Mortgage Bankers Association (02/19/2010)
Could the Tax Credit Be Extended Again?
The pressure is increasing on Congress to renew the homebuyer tax credits for a third time.
The first $7,500 tax credit was passed in 2008 and required first-time buyers to repay the credit over 15 years. A few months later in 2009, Congress expanded the credit to a maximum of $8,000 that didn’t have to be paid back.
At the end of last year, Congress extended the benefit again until April 30 with an extra two months on top of that to close. A new credit of $6,500 was added for move-up buyers, too.
Now representatives of the housing industry are lobbying for another extension. Some experts, including Mark Zandi, chief economist at Moody’s Economy.com, who supported the earlier credits, think the time has come to let it go.
“It’s worn out its benefit,” he says. “If you extend it again, it isn’t going to do much, and what you’re doing is providing a tax break to folks who bought anyway.”
Source: The Wall Street Journal, Nick Timiraos (02/22/2010)
The first $7,500 tax credit was passed in 2008 and required first-time buyers to repay the credit over 15 years. A few months later in 2009, Congress expanded the credit to a maximum of $8,000 that didn’t have to be paid back.
At the end of last year, Congress extended the benefit again until April 30 with an extra two months on top of that to close. A new credit of $6,500 was added for move-up buyers, too.
Now representatives of the housing industry are lobbying for another extension. Some experts, including Mark Zandi, chief economist at Moody’s Economy.com, who supported the earlier credits, think the time has come to let it go.
“It’s worn out its benefit,” he says. “If you extend it again, it isn’t going to do much, and what you’re doing is providing a tax break to folks who bought anyway.”
Source: The Wall Street Journal, Nick Timiraos (02/22/2010)
IRS Clarifies What's Needed to Claim Tax Credit
The Internal Revenue Service has clarified which documentation taxpayers need to submit to claim the first-time and move-up homebuyer tax credit.
While the IRS is still requiring the filing of Form 5405, it is not demanding that all parties’ signatures be on the HUD-1 settlement document in areas where requiring both the buyer and the seller to sign the document isn’t common.
The IRS clarification says: "In areas where signatures are not required on the settlement document, the IRS has clarified that it will accept a settlement statement if it is completed and valid according to local law. … The IRS encourages those buyers to sign the settlement statement prior to attaching it to the tax return.”
For repeat buyers, the IRS is seeking documentation that home buyers have lived in the previous property for a consecutive five of the past eight years. Proof can include property tax records, home owner insurance records, or mortgage interest statements.
While the IRS is still requiring the filing of Form 5405, it is not demanding that all parties’ signatures be on the HUD-1 settlement document in areas where requiring both the buyer and the seller to sign the document isn’t common.
The IRS clarification says: "In areas where signatures are not required on the settlement document, the IRS has clarified that it will accept a settlement statement if it is completed and valid according to local law. … The IRS encourages those buyers to sign the settlement statement prior to attaching it to the tax return.”
For repeat buyers, the IRS is seeking documentation that home buyers have lived in the previous property for a consecutive five of the past eight years. Proof can include property tax records, home owner insurance records, or mortgage interest statements.
Good real estate news: Home equity is rising again
Numerous articles have reported that homeowners are underwater and that strategic defaults are increasing. However, a little known statistic by the Federal Reserve shows that home equity again is on the rise.
MAKING SENSE OF THE STORY FOR CONSUMERS
The Federal Reserve conducts substantial research on mortgage balances and home-value changes in hundreds of local markets nationwide and reports its finding quarterly. According to the Fed’s most recent “flow of funds” survey, homeowners’ net equity increased by nearly $1 trillion compared with the recession’s lowest point between the first and third quarters of 2009. From June 30 to Sept. 30, net equity rose by $418 billion.
According to a report by Zillow.com, the overall negative equity rate among U.S. homeowners remained flat in the fourth quarter at 21.4 percent. This report, combined with other housing factors and studies, may indicate that the unprecedented reduction in home equity is shifting.
Some homeowners, especially those in areas with high foreclosure rates, are choosing to strategically default on their mortgages, even though they can afford the mortgage. Many homeowners who choose this approach do so because they do not see an economic rationale in continuing to make their mortgage payments. Homeowners considering this option should be aware of the negative effect it will have on their credit status. Foreclosures can remain on credit reports for up to seven years, likely increasing the interest rates the consumer pays for credit, and making it more difficult to receive approval on a new mortgage loan.
MAKING SENSE OF THE STORY FOR CONSUMERS
The Federal Reserve conducts substantial research on mortgage balances and home-value changes in hundreds of local markets nationwide and reports its finding quarterly. According to the Fed’s most recent “flow of funds” survey, homeowners’ net equity increased by nearly $1 trillion compared with the recession’s lowest point between the first and third quarters of 2009. From June 30 to Sept. 30, net equity rose by $418 billion.
According to a report by Zillow.com, the overall negative equity rate among U.S. homeowners remained flat in the fourth quarter at 21.4 percent. This report, combined with other housing factors and studies, may indicate that the unprecedented reduction in home equity is shifting.
Some homeowners, especially those in areas with high foreclosure rates, are choosing to strategically default on their mortgages, even though they can afford the mortgage. Many homeowners who choose this approach do so because they do not see an economic rationale in continuing to make their mortgage payments. Homeowners considering this option should be aware of the negative effect it will have on their credit status. Foreclosures can remain on credit reports for up to seven years, likely increasing the interest rates the consumer pays for credit, and making it more difficult to receive approval on a new mortgage loan.
Washington Report
Housing lobbyists began rolling out their heavy artillery on Capitol Hill last week, determined to blast the Obama administration's plan to cut home mortgage interest and property tax deductions for high-income individuals and couples.
The National Association of Realtors sent blunt letters to the chairmen of the House and Senate tax-writing committees calling on them to derail the Obama proposal at their earliest opportunity,
In nearly-identical letters to House Ways and Means Committee chairman Charles Rangel and Senate Finance Committee chairman Max Baucus, the association's president, Vicki Cox Golder, warned that reducing tax system support for housing - even at the upper margins - would be bad for the entire real estate market.
Golder, a Realtor from Arizona, said "today's housing market, while improving, cannot absorb any negative signals, no matter what the income level of the taxpayer, and no matter what market segment would be affected."
She added that her 1.1 million member group "rejects in the strongest possible terms ANY proposal that would limit the deductions for mortgage interest and real estate taxes."
The Obama plan would limit the effective value of mortgage interest and local property tax writeoffs to a maximum 28 percent for high income taxpayers -- even though under current law they can write off up to 35 percent.
The plan would apply to all single taxpayers with more than $200,000 in adjusted gross income and tofo married couples earning more than $250,000 filing jointly.
The White House estimates its plan would raise nearly $300 billion in federal revenues during the coming ten years.
Obama also wants to raise maximum tax brackets back to 39.6 percent, up from the current 35 percent ceiling, and raise the capital gains tax for high-income taxpayers back to 20 percent, from the current 15 percent.
Both of these changes would fulfill Obama campaign promises to allow tax cuts enacted during the Bush administration to expire at the end of this year. The changes would bring in close to $700 billion in revenues over ten years.
Though Golder's requests to the tax committee chairmen did not specifically address the tax bracket or capital gains changes, her association is expected to push for an extension of the Bush tax cuts later this year.
In a separate communication to members last week, the National Association of Realtors revealed that it intends shortly to "launch a multi-phase plan of action to eliminate" the mortgage interest and property tax proposals.
Other groups, including the National Association of Home Builders, the Mortgage Bankers Association and other financial industry lobbies are expected to take part in the lobbying effort.
The National Association of Realtors sent blunt letters to the chairmen of the House and Senate tax-writing committees calling on them to derail the Obama proposal at their earliest opportunity,
In nearly-identical letters to House Ways and Means Committee chairman Charles Rangel and Senate Finance Committee chairman Max Baucus, the association's president, Vicki Cox Golder, warned that reducing tax system support for housing - even at the upper margins - would be bad for the entire real estate market.
Golder, a Realtor from Arizona, said "today's housing market, while improving, cannot absorb any negative signals, no matter what the income level of the taxpayer, and no matter what market segment would be affected."
She added that her 1.1 million member group "rejects in the strongest possible terms ANY proposal that would limit the deductions for mortgage interest and real estate taxes."
The Obama plan would limit the effective value of mortgage interest and local property tax writeoffs to a maximum 28 percent for high income taxpayers -- even though under current law they can write off up to 35 percent.
The plan would apply to all single taxpayers with more than $200,000 in adjusted gross income and tofo married couples earning more than $250,000 filing jointly.
The White House estimates its plan would raise nearly $300 billion in federal revenues during the coming ten years.
Obama also wants to raise maximum tax brackets back to 39.6 percent, up from the current 35 percent ceiling, and raise the capital gains tax for high-income taxpayers back to 20 percent, from the current 15 percent.
Both of these changes would fulfill Obama campaign promises to allow tax cuts enacted during the Bush administration to expire at the end of this year. The changes would bring in close to $700 billion in revenues over ten years.
Though Golder's requests to the tax committee chairmen did not specifically address the tax bracket or capital gains changes, her association is expected to push for an extension of the Bush tax cuts later this year.
In a separate communication to members last week, the National Association of Realtors revealed that it intends shortly to "launch a multi-phase plan of action to eliminate" the mortgage interest and property tax proposals.
Other groups, including the National Association of Home Builders, the Mortgage Bankers Association and other financial industry lobbies are expected to take part in the lobbying effort.
What you should know about the market:
• One of the most important steps a home buyer can take when deciding which home to purchase is to
conduct “drive bys” of the house and the neighborhood at various times of the day and on both
weekdays and weekends. Taking the extra time to research the neighborhood will help determine if
there is too much or too little social activity for the home buyer’s lifestyle; if there are barking dogs in
the house next door; and if the home is located on a street with a lot of traffic during commute times.
conduct “drive bys” of the house and the neighborhood at various times of the day and on both
weekdays and weekends. Taking the extra time to research the neighborhood will help determine if
there is too much or too little social activity for the home buyer’s lifestyle; if there are barking dogs in
the house next door; and if the home is located on a street with a lot of traffic during commute times.
Fourth Quarter Home Sales Surge 13.9%
Strong gains in existing-home sales were the predominant pattern in most states during the fourth quarter, with many more metro areas seeing prices rise from a year earlier, according to the latest survey by the NATIONAL ASSOCIATION of REALTORS®.
Sales increased from the third quarter in 48 states and the District of Columbia; 32 states saw double-digit gains. Year-over-year sales were higher in 49 states and D.C.; all but three states had double-digit annual increases.
Total state existing-home sales, including single-family and condo, jumped 13.9 percent to a seasonally adjusted annual rate of 6.03 million in the fourth quarter from 5.29 million in the third quarter, and are 27.2 percent above the 4.74 million-unit level in the fourth quarter of 2008.
Distressed property accounted for 32 percent of fourth quarter transactions, down from 37 percent a year earlier.
Lawrence Yun, NAR chief economist, said the first-time home buyer tax credit was the dominant factor.
“The surge in home sales was driven by buyers responding strongly to the tax credit combined with record low mortgage interest rates,” he said. “With inventory levels trending down over the past 18 months, we expect broadly balanced housing market conditions in much of the country by late spring with more areas showing higher prices.”
According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage fell to a record low 4.92 percent in the fourth quarter from 5.16 percent in the third quarter; it was 5.86 percent in the fourth quarter of 2008.
In the fourth quarter, 67 out of 151 metropolitan statistical areas reported higher median existing single-family home prices in comparison with the fourth quarter of 2008, including 16 with double-digit increases; one was unchanged and 84 metros had price declines. In the third quarter, only 30 MSAs showed annual price increases and 123 areas were down.
The national median existing single-family price was $172,900, which is 4.1 percent below the fourth quarter of 2008; the median is where half sold for more and half sold for less. “This is the smallest price decline in over two years, with the most recent monthly data showing a broad stabilization in home prices,” Yun said. “Because buyers are taking on long-term fixed rate mortgages, avoiding adjustable-rate products, and trying to stay well within their budgets, the price recovery process appears durable."
NAR President Vicki Cox Golder said near-term market conditions will remain favorable.
“Mortgage interest rates are expected to trend up later this year, but right now we have very good conditions with steadying home prices and favorable inventory in most areas, especially in the higher price ranges,” she said.
Golder said one of the biggest issues now is for repeat buyer who will have to accelerate their buying plans if they want the expanded tax credit. They have to have a contract by the end of April.
Repeat buyers do not have to sell their existing home, but all buyers must occupy the property they purchase as a primary residence to qualify for the tax credit. Buyers who have a contract in place by April 30, 2010, have until June 30, 2010, to finalize the transaction to get a credit of up to $8,000 for first-time buyers and $6,500 for repeat buyers.
Markets by Region
Northwest: Regionally, existing-home sales in the Northeast rose 11.1 percent in the fourth quarter to a pace of 1.03 million and are 33.6 percent higher than a year ago. The median existing single-family home price in the Northeast declined 5.6 percent to $234,900 in the fourth quarter from the same quarter in 2008, but with widely varying conditions.
“In the Northeast, markets with lower median prices that have avoided wide swings, such as Buffalo, are generally showing consistent price gains,” Yun said. “Even so, some of the higher cost areas are showing signs of stabilization, such as Nassau-Suffolk, N.Y., and Boston.”
Midwest: In the Midwest, existing-home sales jumped 14.5 percent in the fourth quarter to a pace of 1.38 million and are 29.9 percent above a year ago. The median existing single-family home price in the Midwest rose 1.1 percent to $141,100 in the fourth quarter from the same period in 2008, with the region accounting for the majority of metro areas experiencing double-digit gains.
Yun said markets with high unemployment rates in Ohio and Michigan experienced large price swings. “Big price gains in many Midwestern areas are due to a more normal range of home sales in contrast with predominately foreclosed sales a year ago,” he said.
South: In the South, existing-home sales rose 13.8 percent in the fourth quarter to an annual rate of 2.23 million and are 28.2 percent higher than the fourth quarter of 2008. The median existing single-family home price in the South was $153,000 in the fourth quarter, down 2.4 percent from a year earlier.
“Affordable markets in the South that have relatively better local economies are seeing healthy price gains, such as Houston, Oklahoma City and Shreveport, La.,” Yun said.
West: Existing-home sales in the West jumped 16.2 percent in the fourth quarter to an annual rate of 1.38 million and are 18.2 percent above a year ago. The median existing single-family home price in the West was $227,200 in the fourth quarter, which is 8.9 percent below the fourth quarter of 2008, but with many areas showing notable gains.
“Markets in the West such as San Francisco, San Jose and Denver are showing double-digit price increases, and other markets like San Diego and Anaheim have begun to firm up,” Yun said.
A Closer Look at the Condo Market
Metro area condominium and cooperative prices – covering changes in 54 metro areas – showed the national median existing-condo price was $177,300 in the fourth quarter, down 4.8 percent from the fourth quarter of 2008. Eleven metros showed increases in the median condo price from a year earlier and 43 areas had declines; in the third quarter only four metros experienced annual price gains.
Source: NAR
Sales increased from the third quarter in 48 states and the District of Columbia; 32 states saw double-digit gains. Year-over-year sales were higher in 49 states and D.C.; all but three states had double-digit annual increases.
Total state existing-home sales, including single-family and condo, jumped 13.9 percent to a seasonally adjusted annual rate of 6.03 million in the fourth quarter from 5.29 million in the third quarter, and are 27.2 percent above the 4.74 million-unit level in the fourth quarter of 2008.
Distressed property accounted for 32 percent of fourth quarter transactions, down from 37 percent a year earlier.
Lawrence Yun, NAR chief economist, said the first-time home buyer tax credit was the dominant factor.
“The surge in home sales was driven by buyers responding strongly to the tax credit combined with record low mortgage interest rates,” he said. “With inventory levels trending down over the past 18 months, we expect broadly balanced housing market conditions in much of the country by late spring with more areas showing higher prices.”
According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage fell to a record low 4.92 percent in the fourth quarter from 5.16 percent in the third quarter; it was 5.86 percent in the fourth quarter of 2008.
In the fourth quarter, 67 out of 151 metropolitan statistical areas reported higher median existing single-family home prices in comparison with the fourth quarter of 2008, including 16 with double-digit increases; one was unchanged and 84 metros had price declines. In the third quarter, only 30 MSAs showed annual price increases and 123 areas were down.
The national median existing single-family price was $172,900, which is 4.1 percent below the fourth quarter of 2008; the median is where half sold for more and half sold for less. “This is the smallest price decline in over two years, with the most recent monthly data showing a broad stabilization in home prices,” Yun said. “Because buyers are taking on long-term fixed rate mortgages, avoiding adjustable-rate products, and trying to stay well within their budgets, the price recovery process appears durable."
NAR President Vicki Cox Golder said near-term market conditions will remain favorable.
“Mortgage interest rates are expected to trend up later this year, but right now we have very good conditions with steadying home prices and favorable inventory in most areas, especially in the higher price ranges,” she said.
Golder said one of the biggest issues now is for repeat buyer who will have to accelerate their buying plans if they want the expanded tax credit. They have to have a contract by the end of April.
Repeat buyers do not have to sell their existing home, but all buyers must occupy the property they purchase as a primary residence to qualify for the tax credit. Buyers who have a contract in place by April 30, 2010, have until June 30, 2010, to finalize the transaction to get a credit of up to $8,000 for first-time buyers and $6,500 for repeat buyers.
Markets by Region
Northwest: Regionally, existing-home sales in the Northeast rose 11.1 percent in the fourth quarter to a pace of 1.03 million and are 33.6 percent higher than a year ago. The median existing single-family home price in the Northeast declined 5.6 percent to $234,900 in the fourth quarter from the same quarter in 2008, but with widely varying conditions.
“In the Northeast, markets with lower median prices that have avoided wide swings, such as Buffalo, are generally showing consistent price gains,” Yun said. “Even so, some of the higher cost areas are showing signs of stabilization, such as Nassau-Suffolk, N.Y., and Boston.”
Midwest: In the Midwest, existing-home sales jumped 14.5 percent in the fourth quarter to a pace of 1.38 million and are 29.9 percent above a year ago. The median existing single-family home price in the Midwest rose 1.1 percent to $141,100 in the fourth quarter from the same period in 2008, with the region accounting for the majority of metro areas experiencing double-digit gains.
Yun said markets with high unemployment rates in Ohio and Michigan experienced large price swings. “Big price gains in many Midwestern areas are due to a more normal range of home sales in contrast with predominately foreclosed sales a year ago,” he said.
South: In the South, existing-home sales rose 13.8 percent in the fourth quarter to an annual rate of 2.23 million and are 28.2 percent higher than the fourth quarter of 2008. The median existing single-family home price in the South was $153,000 in the fourth quarter, down 2.4 percent from a year earlier.
“Affordable markets in the South that have relatively better local economies are seeing healthy price gains, such as Houston, Oklahoma City and Shreveport, La.,” Yun said.
West: Existing-home sales in the West jumped 16.2 percent in the fourth quarter to an annual rate of 1.38 million and are 18.2 percent above a year ago. The median existing single-family home price in the West was $227,200 in the fourth quarter, which is 8.9 percent below the fourth quarter of 2008, but with many areas showing notable gains.
“Markets in the West such as San Francisco, San Jose and Denver are showing double-digit price increases, and other markets like San Diego and Anaheim have begun to firm up,” Yun said.
A Closer Look at the Condo Market
Metro area condominium and cooperative prices – covering changes in 54 metro areas – showed the national median existing-condo price was $177,300 in the fourth quarter, down 4.8 percent from the fourth quarter of 2008. Eleven metros showed increases in the median condo price from a year earlier and 43 areas had declines; in the third quarter only four metros experienced annual price gains.
Source: NAR
Long-Term Mortgage Rates Remain Stable and Low
McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS)in which the 30-year fixed-rate mortgage (FRM) averaged 5.01 percent with an average 0.7 point for the week ending February 4, 2010, up from last week when it averaged 4.98 percent. Last year at this time, the 30-year FRM averaged 5.25 percent.
The 15-year FRM this week averaged 4.40 percent with an average 0.7 point, up slightly from last week when it averaged 4.39 percent. A year ago at this time, the 15-year FRM averaged 4.92 percent. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.27 percent this week, with an average 0.6 point, up from last week when it averaged 4.25 percent. A year ago, the 5-year ARM averaged 5.26 percent.
The 1-year Treasury-indexed ARM averaged 4.22 percent this week with an average 0.5 point, down from last week when it averaged 4.29 percent. At this time last year, the 1-year ARM averaged 4.92 percent.
“Mortgage rates remained relatively stable for a second week amid news of a strengthening housing market," said Frank Nothaft, Freddie Mac vice president and chief economist. “Residential fixed investment rose for two consecutive quarters over the last half of 2009 following a steady quarterly decline since the beginning of 2006. Pending existing home sales rebounded by 1 percent in December from a record drop in November that was due in part to the original expiration of the homebuyer tax credit, according the National Association of Realtors. More recently mortgage applications for home purchases jumped 10 percent at the end of January, according to figures from the Mortgage Bankers Association.”
“Even more encouraging news came from the Federal Reserve’s Senior Loan Officer Opinion Survey, which reported that banks have generally stopped tightening standards on most types of loans in the fourth quarter of 2009, with commercial real estate as the exception. However, banks have yet to unwind the tightening that occurred over the last two years. Moreover, substantially fewer banks expected credit quality to deteriorate over the coming year.”
The 15-year FRM this week averaged 4.40 percent with an average 0.7 point, up slightly from last week when it averaged 4.39 percent. A year ago at this time, the 15-year FRM averaged 4.92 percent. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.27 percent this week, with an average 0.6 point, up from last week when it averaged 4.25 percent. A year ago, the 5-year ARM averaged 5.26 percent.
The 1-year Treasury-indexed ARM averaged 4.22 percent this week with an average 0.5 point, down from last week when it averaged 4.29 percent. At this time last year, the 1-year ARM averaged 4.92 percent.
“Mortgage rates remained relatively stable for a second week amid news of a strengthening housing market," said Frank Nothaft, Freddie Mac vice president and chief economist. “Residential fixed investment rose for two consecutive quarters over the last half of 2009 following a steady quarterly decline since the beginning of 2006. Pending existing home sales rebounded by 1 percent in December from a record drop in November that was due in part to the original expiration of the homebuyer tax credit, according the National Association of Realtors. More recently mortgage applications for home purchases jumped 10 percent at the end of January, according to figures from the Mortgage Bankers Association.”
“Even more encouraging news came from the Federal Reserve’s Senior Loan Officer Opinion Survey, which reported that banks have generally stopped tightening standards on most types of loans in the fourth quarter of 2009, with commercial real estate as the exception. However, banks have yet to unwind the tightening that occurred over the last two years. Moreover, substantially fewer banks expected credit quality to deteriorate over the coming year.”
Real Estate Outlook: Positive Movement
It's a fairly rare event, but now and then most of the important economic directional signs go positive, and this is one of those weeks.
Let's start with pending home sales. After a big decline in November, they bounced back on purchase contracts signed in December and now point to an even stronger spring market.
Pending sales gained one percent nationally, 5.2 percent regionally in the Midwest, 2.3 percent in the Northeast, 2.2 percent in the South, but lost 3.8 percent in the West.
Lawrence Yun, chief economist for the National Association of Realtors, which conducts the pending sales survey, said the swings from month to month are "masking the underlying trend (in housing), which is a broad improvement over year-ago levels."
December's pending sales contracts were 11 percent higher than December 2008's.
Yun also predicts that that the two home purchase tax credits -- the extended $8,000 credit and the new $6,500 credit -- will have a significant impact on closed sales in the coming several months.
He forecasts that the two credits combined will stimulate 2.4 million sales in 2010, and most of that activity will be compressed into the first six months of the year.
The U.S. economy also is showing signs of unexpectedly vigorous growth. The GDP or gross domestic product -- that's the yardstick the government uses to gauge where the economy is headed -- grew at a rate of 5.7 percent in the fourth quarter of last year -- much faster than the consensus forecast by economists, which was in the four and a half percent range.
Manufacturing, obviously a key employment sector and important for real estate, also is showing signs of a faster rebound. Manufacturing orders were up four percent in January, according to the Institute for Supply Management, and hit the highest point since August of 2004.
Meanwhile, Frank Nothaft, chief economist for financing giant Freddie Mac, says he does not see a "double dip" in economic growth ahead, where the rebound loses steam mid-year after several strong quarters of growth.
In a discussion with Realty Times, Nothaft said that although mortgage rates are likely to rise to the mid or even upper five percent range, he sees a steady expansion of housing activity ahead for the rest of the year.
Mortgage rates last week stayed flat around 5 percent for 30 year fixed loans, and 4.3 percent for 15 year terms. Applications for mortgages to purchase homes took off big time, according to the Mortgage Bankers Association -- they rose nearly 18 percent for the week.
Let's start with pending home sales. After a big decline in November, they bounced back on purchase contracts signed in December and now point to an even stronger spring market.
Pending sales gained one percent nationally, 5.2 percent regionally in the Midwest, 2.3 percent in the Northeast, 2.2 percent in the South, but lost 3.8 percent in the West.
Lawrence Yun, chief economist for the National Association of Realtors, which conducts the pending sales survey, said the swings from month to month are "masking the underlying trend (in housing), which is a broad improvement over year-ago levels."
December's pending sales contracts were 11 percent higher than December 2008's.
Yun also predicts that that the two home purchase tax credits -- the extended $8,000 credit and the new $6,500 credit -- will have a significant impact on closed sales in the coming several months.
He forecasts that the two credits combined will stimulate 2.4 million sales in 2010, and most of that activity will be compressed into the first six months of the year.
The U.S. economy also is showing signs of unexpectedly vigorous growth. The GDP or gross domestic product -- that's the yardstick the government uses to gauge where the economy is headed -- grew at a rate of 5.7 percent in the fourth quarter of last year -- much faster than the consensus forecast by economists, which was in the four and a half percent range.
Manufacturing, obviously a key employment sector and important for real estate, also is showing signs of a faster rebound. Manufacturing orders were up four percent in January, according to the Institute for Supply Management, and hit the highest point since August of 2004.
Meanwhile, Frank Nothaft, chief economist for financing giant Freddie Mac, says he does not see a "double dip" in economic growth ahead, where the rebound loses steam mid-year after several strong quarters of growth.
In a discussion with Realty Times, Nothaft said that although mortgage rates are likely to rise to the mid or even upper five percent range, he sees a steady expansion of housing activity ahead for the rest of the year.
Mortgage rates last week stayed flat around 5 percent for 30 year fixed loans, and 4.3 percent for 15 year terms. Applications for mortgages to purchase homes took off big time, according to the Mortgage Bankers Association -- they rose nearly 18 percent for the week.
10 Home Features Buyers Want
Home designers and builders speaking at the recent International Builders Show in Las Vegas say that buyers are seeking cost-effective features and rejecting things that don’t have lasting value.
“It's all about family togetherness – casual living, entertaining and flexible spaces," says Carol Lavender, president of the Lavender Design Group in San Antonio. Paul Cardis, CEO of Avid Ratings, which conducts an annual survey of buyer preferences, identified these must-haves in new homes:
1.Large kitchens with islands.2.Energy efficiency, including energy-efficient appliances, super insulation, and high-efficiency windows. 3.Home offices.4.Main-floor master suite.5.Outdoor living space.6.Ceiling fans.7.Soaking tub in the master suite and/or an oversize shower with a seating area 8.Stone and brick exteriors rather than stucco or vinyl.9.Community walking paths and playgrounds.10.Two-car garages, but three-car garages are even more desirable.
“It's all about family togetherness – casual living, entertaining and flexible spaces," says Carol Lavender, president of the Lavender Design Group in San Antonio. Paul Cardis, CEO of Avid Ratings, which conducts an annual survey of buyer preferences, identified these must-haves in new homes:
1.Large kitchens with islands.2.Energy efficiency, including energy-efficient appliances, super insulation, and high-efficiency windows. 3.Home offices.4.Main-floor master suite.5.Outdoor living space.6.Ceiling fans.7.Soaking tub in the master suite and/or an oversize shower with a seating area 8.Stone and brick exteriors rather than stucco or vinyl.9.Community walking paths and playgrounds.10.Two-car garages, but three-car garages are even more desirable.
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