Rick Funk

Fourth Quarter Metro Area Home Prices Boost Affordability, Sales Improving

2012-02-10T08:39:00.000-08:00

Housing affordability conditions improved in most metropolitan areas from softer
existing-home prices and record-low mortgage interest rates in the fourth
quarter, with rising sales and lower inventory creating more balanced
conditions, according to the latest quarterly report by the National Association
of REALTORS®.

Introduced
with this release is a new annual metro-level housing affordability index, with
historically favorable conditions dominating across the country.

The
median existing single-family home price rose in 29 out of 149 metropolitan
statistical areas in the fourth quarter from a year earlier; two were unchanged
and 118 areas had price declines.

Lawrence
Yun, NAR chief economist, said the figures reflect greater home sales activity
at lower price points. “Sales have risen strongly in lower price ranges from one
year ago, while sales at the upper end remain sluggish,” he said. “More
importantly, we’re seeing a consistent trend of declining inventory, which means
supply and demand conditions are becoming more balanced in more areas, which
will help stabilize home prices.”

The
national median existing single-family home price was $163,500 in the fourth
quarter, down 4.2 percent from $170,600 in the fourth quarter of 2010. The
median is where half sold for more and half sold for less. Distressed homes --
foreclosures and short sales which sold at discounts averaging 15 to 20 percent
-- accounted for 30 percent of fourth quarter sales; they were 34 percent a year
earlier.

Median
price measurement reflects the types of homes that are selling during the
quarter and can be skewed at times because the level of distressed sales, which
artificially depress median prices, can vary notably in given markets. Annual
price measures, also reported today, generally smooth out any quarterly
swings.

“Broadly
speaking, the very middle of the country, from the Dakotas and Nebraska to
Oklahoma and Texas, has experienced very stable home price trends because of
stronger job creation in those areas,” Yun said.

Total
existing-home sales, including single-family homes and condos, increased 5.9
percent to a seasonally adjusted annual rate of 4.42 million in the fourth
quarter from 4.17 million in the third quarter, and were 9.2 percent above the
4.04 million pace during the fourth quarter of 2010. All regions rose from the
third quarter and from a year ago.

At
the end of the fourth quarter there were 2.38 million existing homes available
for sale, which is 21.2 percent lower than the close of the fourth quarter of
2010, when there were 3.02 million homes on the market.

NAR
President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami,
said market conditions vary widely around the country. “Even with record high
housing affordability conditions, all real estate is local,” he said. Both
buyers and sellers need to be aware of what works in their local market, and
REALTORS® are the best resource because they have unparalleled knowledge of
local market conditions and options.”

NAR’s
national Housing Affordability Index rose to a record high 184.5 in 2011, based
on the relationship between median home price, median family income and average
mortgage interest rate. The higher the index, the greater the household
purchasing power; recordkeeping began in 1970.

An
index of 100 is defined as the point where a median-income household has exactly
enough income to qualify for the purchase of a median-priced existing
single-family home, assuming a 20 percent down payment and 25 percent of gross
income devoted to mortgage principal and interest payments. For first-time
buyers making small down payments, the affordability levels are relatively
lower.

Metro
areas with the greatest housing affordability conditions in 2011 include the
Detroit-Warren-Livonia area of Michigan, with an index of 383.4; Toledo, Ohio,
at 242.9; and Decatur, Ill., at 236.8. Only 24 out of 152 metros measured had an
affordability index below 100 in 2011.

“Clearly,
the Midwest has the greatest concentration of areas where home buyers have the
strongest purchasing power, followed by the South,” Yun said. “Metros on the
West Coast and along the Northeastern seaboard have generally higher-priced
homes, which account for lower affordability.”

Between
2010 and 2011, in markets where comparisons are available, all but 2 out of 148
areas showed improvement in housing affordability, and 69 MSAs had double-digit
increases in affordability conditions.

The
share of all-cash home purchases in the fourth quarter was 29 percent, unchanged
from the third quarter; they were 30 percent in the fourth quarter of 2010.
Investors, who are drawn by bargain prices and who account for the bulk of cash
purchases, accounted for 19 percent of transactions in the third quarter; they
were 20 percent in the third quarter and 19 percent a year ago.

First-time
buyers purchased 33 percent of homes in the fourth quarter; they were 32 percent
in both the third quarter and the fourth quarter of 2010.

In
the condo sector, metro area condominium and cooperative prices -- covering
changes in 54 metro areas -- showed the national median existing-condo price was
$160,800 in the fourth quarter, which is 1.7 percent below the fourth quarter of
2010. Ten metros showed increases in their median condo price from a year ago;
one was unchanged and 43 areas had declines.

Regionally,
existing-home sales in the Northeast rose 6.3 percent in the fourth quarter and
are 3.7 percent above the fourth quarter of 2010. The median existing
single-family home price in the Northeast fell 4.6 percent to $229,200 in the
fourth quarter from a year ago.
In
the Midwest, existing-home sales increased 7.0 percent in the fourth quarter and
are 14.1 percent higher than a year ago. The median existing single-family home
price in the Midwest declined 3.3 percent to $134,100 in the fourth quarter from
the fourth quarter in 2010.

Existing-home
sales in the South rose 3.8 percent in the fourth quarter and are 9.1 percent
above the same quarter in 2010. The median existing single-family home price in
the South was $146,500 in the fourth quarter, down 3.8 percent from a year
earlier.
Existing-home
sales in the West increased 8.1 percent in the fourth quarter and are 8.4
percent higher than a year ago. The median existing single-family home price in
the West declined 4.2 percent to $205,200 in the fourth quarter from the fourth
quarter of 2010.
Source:
National Association of REALTORS®

Homeownership Possible Within Three Years After Foreclosure

2012-02-08T16:39:00.000-08:00

Losing your home can be devastating to your credit, not to mention your psyche, but you can buy again within as few as three years after a foreclosure or short sale.

It's not surprising when you lose your home you also lose some self-esteem, especially if your were raised in a culture that sees homeownership as a status symbol, as a sign that you've finally arrived.
Some lost self-esteem also comes from the belief you've lost your shot at the American Dream. Others will tell you seven to ten years must pass before you can buy again. At that time, uninformed people say, you'll have to buy at high interest rates.
That's not always true.
If you file for bankruptcy, and make the right credit and financial moves, you can buy a home again as soon as two years after your bankruptcy is discharged.
What's more, if you rebuild your credit and maintain a healthy, on-time credit profile, you can take advantage of low down payment and low interest rate loans. The Federal Housing Administration (FHA) allows you to buy a home with as little as 3.5 percent down and take advantage of some of the best interest rates on the market.
FHA loans literally replaced the subprime brand, but came with federal backing.
Also see: "U.S. to lower size of guaranteed mortgages"
You also may be eligible for first-time homebuyer programs that assist you with your down payment and closing costs. First-time homebuyer programs are not just for those who have never owned a home, but allow you to qualify if you have not owned a home in the past three years.
Some private lenders, home owners and investors also may allow you to buy a home even sooner than the two- to three-year period, but it will cost you a higher interest rate and require a large down payment.
With the housing market flat and many local markets still expected to see prices fall more, it is not a bad idea to spend the next several years cleaning up and re-establishing your credit. Good credit will allow you to buy a home with a minimal down payment and the lowest interest rates.
If you lost your home to foreclosure or a short sale, don't lose hope. Don't hesitate. Begin today putting yourself in a good position to buy.
Fix your credit
• Rebuild your credit by making your monthly debt payments on time. Don't ignore your remaining credit obligations during foreclosure or after losing your home. Your credit score gets a boost, in part, based on the number of positive accounts in your credit report. The more you have, within reason, the faster your credit score rises, even after losing a home.
• Pay down your credit cards but not to a zero balance. Your credit score gets a boost if you maintain a balance that is about 30 percent or lower than your credit limit. Keeping a balance reveals you can borrow money and pay it back on time. Don't close out your credit cards because the longer your positive credit history, the more your credit score and your ability to buy a home will improve.
Save money
• Most of today's homebuyer programs require a down payment. FHA loans require 3.5 percent down -- $3,500 for every $100,000 you borrow. You likely will have to pay closing costs, another 2 percent to 3 percent of the sales price. This is another $2,000 to $3,000 per $100,000. Do the math to determine how much you need to save each month, over the next two or three years, to have enough to cover your down payment and closing costs.
Don't be pressured
• Buy only when you are ready. You didn't lose your credit overnight. Likewise, it will take time to rebuild your credit and save for a down payment. Home buying deals will be available for years to come.
• Avoid adjustable rate mortgages (ARMs) and consider a 15- or 30-year fixed rate mortgage (FRM) that is a fully amortized loan so your payment and interest rate are fixed for the duration of the loan. Full amortization means each payment helps pay down the principal. When your loan term ends, so does the loan balance.
• Buy based on what you can afford, rather than a higher amount approved by the lender. You already know the risk of biting off more than you can chew. Lenders will pre-approve you based on your gross monthly income, but that does not consider taxes subtracted from your paycheck, food, clothing, utilities and other monthly obligations.
Know your comfort zone. Don't over-extend yourself.
Published: February 8, 2012

Popular Web Sites Shut Down Today in Protest

2012-01-18T16:22:00.000-08:00

Optimism Builds in Housing Market

2012-01-17T15:33:00.000-08:00

Several recent indicators for the real estate industry are pointing to a market that is on the mend and entering recovery mode.

Housing experts’ predictions for the new year tend to center around a market stabilizing before entering a gradual, albeit very slow, recovery. However, the tone is more upbeat than it has been in years for the housing market.
Here are a few of the signs that are showing the market moving in a more positive direction:

Home sales: Existing home sales are expected to increase 12 percent this year, following a 2 percent jump last year, Moody’s Analytics predicts. The signs are already showing: In November, pending home sales — a gauge for future home buying — reached its highest level in 19 months, the National Association of REALTORS® reported.

New-home market: Coming off of what could be considered the worst year for new-home building ever recorded, the sector is expected to bounce back this year. New-home sales and starts were already showing a rebound in the last few months of 2011. Moody’s is predicting that single-family housing starts will increase 37 percent this year, and new-home sales will soar 74 percent.

Housing stocks: Investors are starting to get optimistic about the possibility of a rebound too, and are turning to home builder stocks. These equities have recently outperformed the broader stock market and the S&P 1500 homebuilding index has increased 38 percent since mid-October, USA Today reports.

Consumer confidence: With mortgage rates at record lows and housing affordability high, about 71 percent of Americans say now is a good time to purchase a home. Also, more Americans are optimistic that home prices will rise over the next year — about 26 percent say prices will rise in 2012, an increase of 4 percent over the last survey, according to Fannie Mae’s December National Housing Survey

Source: “Housing Outlook Is More Upbeat,” USA Today (Jan. 15, 2012) and “Consumers More Confident, Survey Says,” Deseret News (Utah) (Jan. 16, 2012)

Mortgage Rates Reach New Record Lows

2012-01-13T13:54:00.000-08:00

Mortgage rates were back to hitting record lows again, pushing housing affordability even higher to home buyers, Freddie Mac reports in its weekly mortgage market survey. For the sixth consecutive week, the 30-year fixed-rate mortgage, the most popular choice among buyers, has averaged below 4 percent — unheard of until a few weeks ago.

"Mortgage rates eased slightly this week to all-time record lows following mixed indicators in the labor market,” Frank Nothaft, chief economist at Freddie Mac, said in a statement. The economy added 1.6 million jobs in 2011 — the highest number since 2006 — but overall unemployment still remains high, Nothaft noted.
Here’s a closer look at rates and the new record lows they posted for the week ending Jan. 12:

•30-year fixed-rate mortgages: averaged 3.89 percent, with an average 0.7 point, reaching a new all-time low. Previously, 30-year mortgages’ record low was last week’s 3.91 percent average. A year ago at this time, 30-year rates averaged 4.71 percent. •15-year fixed-rate mortgages: averaged 3.16 percent, with an average 0.8 point, dropping from last week’s 3.23 percent average. Last year at this time, 15-year rates averaged 4.08 percent. •5-year adjustable-rate mortgages: averaged 2.82 percent, with an average 0.7 point, dropping from last week’s 2.86 percent average. Last year at this time, 5-year ARMs averaged 3.72 percent.•1-year ARMs: averaged 2.76 percent, with an average 0.6 point, this week, falling from last week’s 2.80 percent average. A year ago, 1-year ARMs averaged 3.23 percent. Source: Freddie Mac

What Does the Average Home Owner Pay on a Mortgage?

2012-01-03T15:52:00.000-08:00

Hawaii home owners tend to take on the most debt in their home purchases with an average home loan amount of $677,299, according to a recent study by LendingTree.com, which revealed the average loan amounts on residential real estate purchases in 2011. That means the average home owner in Hawaii would have a monthly payment of about $3,234 for a 30-year mortgage, before taxes and insurance, according to LendingTree data.
Meanwhile, in Mississippi, home owners take on the lowest loan amounts at $137,182or $655 monthly mortgage payments, on average.

The national average for a home loan is $222,261 with a $1,061 average monthly payment for a 30-year mortgage at 4 percent, according to LendingTree.

The following are the top states with the highest loan amounts, including the average closed home loan for 2011, according to LendingTree:
•Hawaii: $667,299.33•Washington, D.C.: $393,453•New Jersey: $344,240.85•New York: $340,124.50•Maryland: $328,650.89•Connecticut: $326,416.85•Virginia: $312,930.83•California: $310,676.35•Utah: $276,211.67

Some Good Signs for the Real Estate Market

2011-12-30T15:37:00.000-08:00

Sales ticked up for existing homes and new homes, several real estate market indicators revealed last week, pointing to a housing market that may finally be entering recovery mode.

In the most recent report, the Census Bureau reported that the new-home market continued its rebound, with sales of new houses once again inching up last month. New-home sales rose 1.6 percent from October to November to an annualized rate of 315,000, and sales were up nearly 10 percent compared to November 2010.
The median sales price of a new home in November was $214,100, the Census Bureau reported, and the inventory of new houses nationwide decreased to a six-month supply at the current sales pace.

"Inventories of new homes are very low: There's nothing on the shelf, so any increase in new home sales will translate directly into new housing starts," Bob Denk, senior economist at the National Association of Home Builders, told CNNMoney. "That means putting people back to work."

Other recent good news for the housing market: November sales of existing homes increased 12 percent year-over-year, new-home building starts were up nearly 21 percent year-over-year, and mortgage rates reached new record lows last week, pushing housing affordability even higher.
Source: “New Home Sales Edge Up,” CNNMoney (Dec. 23, 2011)

Mortgage Rates Reach New Record Lows

2011-12-23T13:38:00.000-08:00

Just in time for the holidays: Mortgage rates reached new all-time lows this week, pushing home buyer affordability even higher, Freddie Mac reports in its weekly mortgage market survey.

"Rates on 30-year fixed mortgages have been at or below 4 percent for the last eight weeks and now are almost 0.9 percentage points below where they were at the beginning of the year, which means that today's home buyers are paying over $1,200 less per year on a $200,000 loan,” Frank Nothaft, chief economist at Freddie Mac, said in a statement. “This greater affordability helped push existing home sales higher for the second consecutive month in November to an annualized pace of 4.42 million, the most since January.”

Here’s a closer look at mortgage rates for the week ending Dec. 22:
•30-year fixed-rate mortgages: averaged 3.91 percent this week, with an average 0.7 point, beating last week’s 3.94 percent record. A year ago at this time, 30-year rates averaged 4.81 percent. •15-year fixed-rate mortgages: averaged 3.21 percent, with an average 0.8 point, matching last week’s all-time low. Last year at this time, the 15-year mortgage averaged 4.15 percent.•5-year adjustable-rate mortgages: averaged 2.85 percent this week, with an average 0.6 point, a new record after dropping from last week’s 2.86 percent average. Last year at this time, 5-year ARMs averaged 3.75 percent. •1-year ARMs: averaged 2.77 percent this week, with an average 0.6 point, also a new record after falling from last week’s 2.81 percent average. A year ago at this time, the 1-year ARMs averaged 3.40 percent. Source: Freddie Mac

Are the Holidays a Good Time to Sell?

2011-12-06T11:58:00.001-08:00

Sixty percent of real estate professionals advise their sellers to list a home during the holidays because it’s a good time to sell, according to a new survey conducted by Realtor.com.

Why are the holidays such a good time to sell? Seventy-nine percent of the agents surveyed said that more serious buyers come out during the holidays, and 61 percent say less competition from other properties make it a great time to sell. Plus, 17 percent of agents say the cold weather is actually a benefit, making homes feel more cozy.

But online listing photos become even more crucial during the holiday season, according to the survey. Slightly more than half of agents say that the photos are more important because sellers tend to offer less open houses around the holidays, and so the online photos help buyers decide the properties to see and which ones to possibly bypass.

The biggest hurdles sellers face during the holidays, however, are keeping a home ready to show (clean and staged) as well as winter weather conditions and buyers’ vacation schedules, the Realtor.com survey found.
Source: “Survey Data Reveals Majority of Real Estate Professionals Recommend Clients List Their Homes During the Holidays,” Realtor.com (Dec. 2, 2011)

Strong Temptations for Home Buying

2011-11-29T15:52:00.001-08:00

The monthly cost of owning a home is more affordable now than in the past 15 years, and is less expensive than renting in numerous cities, according to The Wall Street Journal’s third-quarter survey.

Low home prices mixed with low mortgage rates—hovering at 4 percent or even lower—are creating an appealing buyer’s market, analysts say. For example, buyers today have a 77 percent increase in their borrowing power compared to 1991, Dan Green, a loan officer with Waterstone Mortgage in Cincinnati, told The Wall Street Journal. To illustrate: He says that in 1991 a $1,700 mortgage payment allowed a borrower to take out a $200,000 mortgage, whereas today the home owner taking advantage of current low rates can get a $350,000 loan for that mortgage payment amount.

In the 28 cities that The Wall Street Journal tracked, it found monthly mortgage payments on the median-priced home—including taxes and insurance—to be lower than the average rent levels in 12 of the metro areas.

Atlanta was found to be the city where owning was more favorable to renting by the most. For example, the monthly rent on the median-priced home there was $539 during the third quarter (with a 20 percent down payment) compared to the average asking rent which averaged $840, according to data provided by Marcus & Millichap.
Nationwide, apartment rents are expected to rise by about 4 percent this year, which may make the owning vs. renting picture tilt even higher, according to some analysts.
Despite the appealing housing picture for home buyers, some buyers continue to stay on the sidelines, unable to sell their current home, qualify for mortgages due to the tightening of credit, or keep a steady job, housing expert say.

Source: “Stronger Lure for Prospective Home Buyers,” The Wall Street Journal (Nov. 26, 2011)

Housing Inventories Shrink to Four-Year Lows

2011-11-28T16:26:00.001-08:00

The number of homes listed for sale in October reached its lowest level in more than four years, according to MLS data compiled by Realtor.com.
About 2.12 million homes were listed for sale nationwide last month, which is down by 3.5 percent from September. And at year-over-year levels, that number is down by 21 percent.

Inventories are declining due to banks taking longer to process foreclosures and sellers taking their home off the market after seeing their properties linger or getting low-ball offers from buyers, according to Zelman & Associates.
In October, housing inventories declined the most in:
•Portland, Ore.: -6.9 percent•Seattle: -5.3% •Dallas: -5.2%Source: “Housing Inventories Fall to New Four-Year Low in October,” The Wall Street Journal (Nov. 21, 2011)

Prop. 60 & 90 Santa Clara County

2011-11-22T11:34:00.000-08:00

Are you over 55 and thinking about selling your home and moving into something smaller, but worried about the tax implications when you relocate? If so, you aren’t alone. As the baby boomers find themselves approaching retirement age and becoming empty nesters, their housing needs are changing along with their lifestyles – but inflation and taxes just seem to keep going up, up, up. Fortunately some relief, in the form of Prop 60, is available.
What is Prop 60?
Proposition 60 is a constitutional amendment, approved by California voters, that provides property tax relief under certain circumstances. Essentially, what Prop 60 does is allow qualifying property owners to replace their primary residence with a new home of equal or lesser value and maintain their same tax base. Why, you might wonder, would anyone want to do that? Wouldn’t my property taxes be less on a home of lesser value? Not necessarily. With Prop 60, what is transferred is the Proposition 13 or “base year value” of the old home, which can be substantially less than the current market value of either home.
How can I qualify for Prop 60?
Both the original home and the new home must be located in the same county.
Both the original and replacement properties must be your primary residence.
Both properties must be eligible for the Homeowners’ Exemption or Disabled Veterans’ Exemption.
The seller or spouse residing in the home must be at least 55 years old when the original property is sold.
The replacement home must be of equal or lesser value than the current market value of the original home. There is a little wiggle room within this rule, depending on when the new property is purchased. For the purchase of a home (or completion of new construction) that occurs 1 to 2 years after the sale of the original home, the “equal or lesser” rule can change slightly. If the replacement home is purchased or moved into within one year you can purchase up to 105% of the value of the original home. If within two years you can go up to 110% of the value.
Purchase or completion of construction of the replacement property must be completed within two years of the sale of the original property, or you lose out.
Application for tax relief must be filed within 3 years of the purchase (or completion of construction) of the new home.
This is a once in a lifetime benefit. Neither spouse can file again.
How do I file for Proposition 60 tax relief?
Contact your county assessor’s office. The assessor will determine if the transaction qualifies and provide you with claim forms. Or have the title company handling your sale do it for you, my title company Chicago Title will take care of everything.
I’ve heard something about Proposition 90. What is that?
Proposition 90 is an amendment that permits the property owner to carry the benefits of Prop 60 throughout California. Each county in California has the option to accept tax base transfers from other counties, allowing qualifying homeowners more flexibility when planning a move. Counties are not required to participate, and currently there are only 7 counties in California that accept Prop 90. These counties include Los Angeles, Orange, Ventura, San Diego, Alameda, San Mateo and Santa Clara. This number is subject to change, as counties have the option to repeal their participation.
Prop 60 and Prop 90 are great extensions of Proposition 13, which was the initial break offered to the taxpaying public. If you think either might be something that will work for you, please consult your tax advisor or your county assessor for details.

Fed Focuses on Lifting Ailing Housing Market

2011-11-10T11:27:00.001-08:00

The Federal Reserve on Wednesday issued a new call about the importance of fixing the housing market, which could then have a trickle effect in strengthening the rest of the economy.

The Fed will consider buying more mortgage-backed securities to help, said Ben Bernanke, the Fed chairman. Such a move could send borrowing costs even lower.
"The housing sector is a very important sector," Bernanke said at a news conference. "Problems in that sector are a big reason why our economy's not recovering more quickly." The Fed is holding a two-day policy meeting — which ends Thursday — to weigh options.

Economists believe that if more people were buying homes then it could lead to a boost in consumer purchases for other sectors, from furniture to appliances. They note that the housing market has led the economy out of recessions in the past, since it creates jobs and more spending on goods and services.

The housing market continues to be bogged down by a high rate of foreclosures, which is dropping other home values. About 7.5 million homes are either in foreclosure or delinquent on their mortgage.
Source: “Fed Focus: Housing Could be Key to Stronger U.S. Rebound,” Reuters News (Nov. 3, 2011)

Steve Jobs and the Seven Rules of Success

2011-10-27T14:14:00.000-07:00

1. Do what you love. Jobs once said, "People with passion can change the world for the better." Asked about the advice he would offer would-be entrepreneurs, he said, "I'd get a job as a busboy or something until I figured out what I was really passionate about." That's how much it meant to him. Passion is everything.
2. Put a dent in the universe. Jobs believed in the power of vision. He once asked then-Pepsi President, John Sculley, "Do you want to spend your life selling sugar water or do you want to change the world?" Don't lose sight of the big vision.
3. Make connections. Jobs once said creativity is connecting things. He meant that people with a broad set of life experiences can often see things that others miss. He took calligraphy classes that didn't have any practical use in his life -- until he built the Macintosh. Jobs traveled to India and Asia. He studied design and hospitality. Don't live in a bubble. Connect ideas from different fields.
4. Say no to 1,000 things. Jobs was as proud of what Apple chose not to do as he was of what Apple did. When he returned in Apple in 1997, he took a company with 350 products and reduced them to 10 products in a two-year period. Why? So he could put the "A-Team" on each product. What are you saying "no" to?
5. Create insanely different experiences. Jobs also sought innovation in the customer-service experience. When he first came up with the concept for the Apple Stores, he said they would be different because instead of just moving boxes, the stores would enrich lives. Everything about the experience you have when you walk into an Apple store is intended to enrich your life and to create an emotional connection between you and the Apple brand. What are you doing to enrich the lives of your customers?
6. Master the message. You can have the greatest idea in the world, but if you can't communicate your ideas, it doesn't matter. Jobs was the world's greatest corporate storyteller. Instead of simply delivering a presentation like most people do, he informed, he educated, he inspired and he entertained, all in one presentation.
7. Sell dreams, not products. Jobs captured our imagination because he really understood his customer. He knew that tablets would not capture our imaginations if they were too complicated. The result? One button on the front of an iPad. It's so simple, a 2-year-old can use it. Your customers don't care about your product. They care about themselves, their hopes, their ambitions. Jobs taught us that if you help your customers reach their dreams, you'll win them over.
There's one story that I think sums up Jobs' career at Apple. An executive who had the job of reinventing the Disney Store once called up Jobs and asked for advice. His counsel? Dream bigger. I think that's the best advice he could leave us with. See genius in your craziness, believe in yourself, believe in your vision, and be constantly prepared to defend those ideas.

Bargains Abound: What Are Buyers Waiting for?

2011-10-25T13:19:00.000-07:00

With low home prices and ultra-low interest rates, the housing market is offering “perhaps the best deals of a generation,” notes a recent article by Bloomberg Businessweek.

Since the housing boom of 2006, home prices have fallen about 31 percent. Also, mortgage rates have been hovering at record lows for the past few weeks (4 percent range or even lower on 30-year fixed-rate mortgages, according to Freddie Mac’s mortgage market survey).

“It’s hard to see the possibility of losing on a home purchase right now, with these mortgage rates,” says economist Dean Baker. “Prices may go lower, but not by much.”

The article notes the following scenario: Buying a $300,000 home with a 4 percent mortgage rate and a 20 percent down payment would mean a $1,145 monthly payment. The Mortgage Bankers Association recently predicted that home prices may fall another 3.5 percent by mid-2012 but mortgage rates will increase by a half-point. So for that same loan under that scenario, a home would sell for $289,000 while the monthly mortgage bill would be $1,171--only a $26 difference.

For those who can qualify for a mortgage, "playing the waiting game" won't result in much gain, Nariman Behravesh, chief economist at IHS in Englewood, Colo., told Bloomberg Businessweek.
Source: “Crazy Home Deals Await the Creditworthy,” Bloomberg Businessweek (Oct. 24, 2011)

Homeownership Rate Second-Highest on Record

2011-10-24T14:35:00.000-07:00

The homeownership rate is at its second-highest level on record, only behind the record high set in 2000, according to the U.S. Census Bureau, which began collecting home ownership data in 1890.
By region, the homeownership rate is: •Midwest: 69.2 percent•South: 66.7•Northeast: 62.2•West: 60.5Nearly every metro area had more home owners than renters in 2010. The metro areas with the highest homeownership rates were in Michigan and Florida. Monroe, Mich., had the highest percentage of owner-occupied units at 79.8 percent, followed by Punta Gorda, Fla., at 79.7 percent.

While the national homeownership rate remained high, the decrease in the rate from 2000 to 2010 by 1.1 percent — to 65.1 percent overall — is the largest decrease since the 1930 to 1940 period, the Census Bureau reported.

Investors See Bigger Profits From Rising Rents

2011-10-21T14:00:00.000-07:00

Rental demand and prices continue to soar, and investors are cashing in. Rents are rising at a 5.17 percent annual rate — up from last year’s 4.72 percent rate. If rents continue to grow at their current pace, they won’t be too far behind the record-high reached in 2000 of 6.18 percent, according to Axiometrics Inc.

The rental market has added about 1.4 million new renters this year, some of whom were former home owners who faced foreclosure or a short sale. Renters are increasingly showing an appetite for single-family homes owned by investors.

As such, the number of investors in the market is growing. Investors make up anywhere between 20 and 40 percent of monthly existing home sales, according to home-sale data. With home prices and interest rates low, more aspiring investors are jumping in. Nearly 60 percent of investors in a recent survey by Realtor.com considered themselves newcomers to real estate investing.

“This is a long-term investment,” says Greg Rand, CEO of OwnAmerica. “Rents are a steady return on your investment through the years, leaving you with an attractive asset when prices improve. And they will. The best profits in real estate accrue to long-term investors who take a long-term view.”
Source: “Rising Rents Improve Investors’ Return,” RISMedia (Oct. 20, 2011)

America’s Priciest ZIP Codes

2011-10-20T12:47:00.001-07:00

The priciest ZIP code in the country boasts a median home price of more than $4.5 million, according to a new list by Forbes that tracked home prices of more than 20,000 ZIP codes nationwide to determine the most expensive areas.

Appraiser Jonathan Miller, chief executive of New York’s Miller Samuel, told Forbes that he’s seen an increase in listings that fall under the luxury bracket this year. “It’s not that we’re seeing prices rise, it’s that we’re seeing more activity,” Miller told Forbes. Compared to 2010 figures, the median home prices in 500 of the most expensive ZIP codes dropped slightly by 2 percent.

Here are the five priciest ZIP codes in the country, according to Forbes.
1. Alpine, N.J.: 07620
Median home price: $4,550,000
2. Atherton, Calif.: 94027
Median home price: $4,295,000
3. Sagaponack, N.Y.: 11962
Median home price: $3,595,000
4. Hillsborough, Calif.: 94010
Median home price: $3,499,000
5. Beverly Hills, Calif.: 90210
Median home price: $3,469,891

Housing Can Be 'Key Engine of Job Growth'

2011-10-06T14:54:00.000-07:00

Daily Real Estate News Thursday, October 06, 2011 The National Association of Home Builders is stressing the need for policymakers to remove anti-housing barriers that they say are preventing a housing market recovery. After all, NAHB says, housing can be the answer policymakers have been searching for in boosting jobs and economic recovery.

The housing industry can be the “key engine of job growth” the country needs, says Bob Nielsen, chairman of the National Association of Home Builders.Nielsen says that constructing just 100 single-family homes can generate more than 300 jobs and $8.9 million in taxes and revenue for state, local, and federal governments.

Yet, Nielsen says the government keeps placing stringent policies that are preventing the housing market from recovering and that are dampening demand and reducing Americans ability to purchase a home, from the tightening of credit and possible stricter down payment qualifications to reducing the conforming loan limit on Oct. 1.
One of the main hurdles home builders are facing is obtaining credit from banks so they can begin working on new homes. The tightening of credit has brought new-home construction practically to a standstill in many parts of the country.

Since April 2006, more than 1.4 million residential construction jobs have been lost, according to NAHB. “Yet there is demand for housing in markets that are on the mend," says Nielsen. "Home builders have plenty of shovel-ready jobs set to go but they can't keep their doors open and create jobs in their communities if federal regulators continue to shut off the credit spigot."

Shadow Inventory Drops: ‘Positive Sign for Housing’

2011-09-28T17:21:00.000-07:00

Residential shadow inventory is on the decline, falling in July to 1.6 million units and representing a supply of five months, a new report from CoreLogic shows.
One year ago, nationwide shadow inventory stood at 1.9 million units, marking a six-month supply. Shadow inventory is 22 percent lower than the peak reached in January 2010 of 2 million units -- or 8.4 months of supply.

CoreLogic calculates shadow inventory by taking into account the number of distressed properties not yet listed on the multiple listing services that are more than 90 days delinquent, in foreclosure, and real estate owned by lenders.

"The steady improvement in the shadow inventory is a positive development for the housing market," says Mark Fleming, chief economist for CoreLogic. "However, continued price declines, high levels of negative equity, and a sluggish labor market will keep the shadow supply elevated for an extended period of time."
Source: “Shadow Inventory Declines to 5-Month Supply: CoreLogic,” HousingWire (Sept. 27, 2011)

More Home Owners Become ‘Accidental Landlords’

2011-09-27T12:51:00.000-07:00

More home owners who are unable to sell their home or afford to drop the price any more are opting to rent out their homes until the market improves. But some “accidental landlords” are now having regrets.

The number of formerly owned-occupied homes turned into rentals has soared in recent years, according to Harvard's Joint Center for Housing Studies. In 2009, nearly 25 percent of single-family detached rentals had been owner-occupied two years earlier.

But while home owners are turning their homes into rentals to generate cash flow, many say it’s not enough. They say the cash flow being generated from the property is hardly enough to cover expenses, and in some cases, they’re even losing money. Accidental landlords also say the role is time-consuming and can be stressful, as they have to worry about everything from finding tenants to handling any repairs.

Kathleen Longo, principal with Accredited Investors, advises any home owners considering renting their home to first "take a realistic look at what it really costs to maintain a property. You have to add a cushion for repair and maintenance."

Also, Joann Velde, housing manager for the City of Minneapolis, told the Minneapolis Star Tribune that landlords may be in such a hurry to generate cash flow that they do an inadequate job of screening tenants, which can result in greater problems later on.
Anne Healy in Minneapolis fell into the landlord role after she bought another property and was unable to sell her current home at the price she wanted. She had turned down two previous offers on the home and decided renting would be a better option. “We were in denial,” she told the Minneapolis Star Tribune. “We’ve learned the hard way.”
She says the tenants created so much wear-and-tear on the house that she had to restore the home room by room. She also said she had to hound the tenants to pay rent. A year later, she decided she had enough and put her home back on the market. She sold it for $50,000 less than an offer she had turned down last year.
Source: “Accidental Landlords on the Rise,” Minneapolis Star Tribune (Sept. 24, 2011)

Big Savings for Buyers: Rates Reach New Record-Lows

2011-09-20T12:21:00.000-07:00

For the second straight week, mortgage rates reached another milestone, with 30-year and 15-year fixed-rate mortgages hitting record lows again, Freddie Mac reports in its weekly mortgage market survey.

"Continued investor concerns over the state of the European debt markets kept U.S. Treasury bond yields low and allowed mortgage rates to ease once more this week,” says Frank Nothaft, Freddie Mac’s chief economist.

For example, home owners who refinanced at today’s 30-year fixed-mortgage rate could trim nearly $1,715 a year in interest payments on a $200,000 loan, Nothaft says.

Here’s a closer look at rates for the week ending Sept. 15.
•30-year fixed-rate mortgages: averaged 4.09 percent this week, down from last week’s previous record of 4.12 percent. Last year at this time, 30-year rates averaged 4.37 percent. •15-year fixed-rate mortgages: averaged 3.30 percent, dropping from last week’s record low of 3.33 percent. Last year at this time, 15-year rates averaged 3.82 percent. •5-year adjustable-rate mortgages: averaged 2.99 percent this week, up slightly from last week’s 2.96 percent average. A year ago at this time, the 5-year ARM averaged 3.55 percent. •1-year ARMs: averaged 2.81 percent, down from last week’s 2.84 percent average. A year ago, the 1-year ARM averaged 3.40 percent. By REALTOR® Magazine Daily News

Higher Credit Scores, Larger Down Payments

2011-09-15T14:14:00.001-07:00

Through June, single-family home loans bought by Freddie Mac boasted an average down payment of 29 percent and an average FICO credit score of 751. In 2007, average down payments were 23 percent and FICO scores averaged 707.

Federal Housing Administration loans, which tend to be a lure for buyers without large down payments, are also being issued to buyers with higher credit scores than in the past. From January through March, FHA loans went to borrowers with an average credit score of 704, up from 631 four years ago.

In an analysis recently done by Zillow of 3.6 million loan inquiries, it found that prospective borrowers getting the best loan rates had average down payments of 28 percent. Three years ago, prospective borrowers averaged down payments of less than 24 percent, according to Zillow.

"It used to be anybody with a pulse could get a home loan. Now you have to be an Olympic athlete," Guy Cecala of Inside Mortgage Finance, told USA Today. "The pendulum has swung too far."
Source: “Tight Standards Make Mortgages Tough to Get,” USA Today (Sept. 14, 2011)

Goals.....

2011-09-15T13:37:00.000-07:00

Obstacles are what you see when you take your eyes off the goal.

Vince Lombardi,

Where Home Prices Have Dropped the Most

2011-09-09T12:49:00.000-07:00

California cities have seen their home values drop by the largest percentage in the last five years, with some metro areas posting losses of up to 67 percent in that time period. California cities occupied six of the top 10 metro areas with the largest drops, according to a recent Zillow study based on its home-value estimates and Zillow Home Value Index.

Overall, "there will be many ups and downs in home values before this is over, and we continue to expect a true bottom in 2012, at the earliest,” says Stan Humphries, Zillow’s chief economist. “There are still hazards in the form of a full foreclosure pipeline, high negative equity, and fluctuations in demand."
The following are seven cities that have seen home values drop the most since the housing boom, according to Zillow:
1. Merced, Calif.July 2011 Zillow Home Value Index: $106,514Zillow Home Value Index 5 Years ago: $328,813Value difference (by percent): -67.6%
2. Modesto, Calif.July 2011 ZHVI: $128,777ZHVI 5 Years Ago: $352,599Value difference: -63.5%
3. Stockton, Calif.July 2011 ZHVI: $150,061ZHVI 5 Years Ago: $404,036Value difference: -62.9%
4. Las VegasJuly 2011 ZHVI: $117,084ZHVI 5 Years Ago: $303,656Value difference: -61.4%
5. Vallejo, Calif.July 2011 ZHVI: $190,521ZHVI 5 Years Ago: $468,071Value difference: -59.3%
6. Salinas, Calif.July 2011 ZHVI: $282,289ZHVI 5 Years Ago: $664,404Value difference: -57.5%
7. Daytona Beach, Fla.July 2011 ZHVI: $95,193ZHVI 5 Years Ago: $220,436Value difference: -56.8%
Mortgage Rates Dip, Reaching Another Record Low For the second time in a month, fixed and adjustable-rate mortgage rates set new record lows this week, Freddie Mac reports in its weekly mortgage market survey. The previous record lows were set Aug. 18.

Economic uncertainty and employment concerns are continuing to keep rates low, says Frank Nothaft, Freddie Mac’s chief economist.
Here’s a closer look at rates for the week ending Sept. 8.

•30-year fixed-rate mortgages: averaged 4.12 this week, down from last week’s 4.22 percent. The 30-year rates’ previous low was 4.15 percent, set on Aug. 18. •15-year fixed-rate mortgages: averaged 3.33 percent this week, down from last week’s 3.39 percent average. Its previous record low was 3.36 percent.•5-year adjustable-rate mortgages: averaged 2.96 percent, holding steady at the same record low it set last week. •1-year ARMs: averaged 2.84 percent this week, down from last week’s 2.89 percent average. Its previous record low was 2.86 percent.Despite the low rates, mortgage application volume remains low, dropping for the third straight week, the Mortgage Bankers Association reported this week. The volume of mortgage applications for purchase remained relatively flat this week at “extremely low levels, close to lows last seen in 1996,” says Mike Fratantoni, MBA’s vice president of Research and Economics. Refinance application volume was also down, dropping more than 35 percent below levels last year at this time.

THE SMART WAY TO LOOK AT HOME IMPROVEMENTS

2011-09-08T15:36:00.000-07:00

What home improvements really pay off when the time comes to sell your house?That’s an important question for any homeowner contemplating moving or remodeling. And the only possible answer is a somewhat complicated one.That answer starts with the fact that really major improvements – room additions, total replacements of kitchens and baths, etc., -- rarely pay off fully in the near term. It ends with the fact that small and relatively inexpensive changes can pay off in a big way in making your home attractive to buyers if your decision is to move now. It’s a simple fact, consistently confirmed across America over a very long period of time, that even the most appropriate major improvements are unlikely to return their full cost if a house is sold within two or three years.Does that mean that major home improvements are always a bad idea? Absolutely not. It does mean, though, that if your present house falls seriously short of meeting your family’s needs you need to think twice – and think carefully – before deciding to undertake a major renovation. Viewed strictly in investment terms, major improvements rarely make as much sense as selling your present home and buying one that’s carefully selected to provide you with what you want.Even if you have a special and strong attachment to the house you’re in and feel certain that you could be happy in it for a long time if only it had more bedrooms and baths, for example, there are a few basic rules that you ought to keep in mind.Probably the most basic rule of all, in this regard, is the one that says you should never –unless you absolutely don’t care at all about eventual resale value – improve a house to the point where its desired sales price would be more than 20 percent higher than the most expensive of the other houses in the immediate neighborhood.Try to raise the value of your house too high, that is, and surrounding properties will pull it down.Here are some other rules worth remembering:Never rearrange the interior of your house in a way that reduces the total number of bedrooms to less than three.Never add a third bathroom to a two-bath house unless you don’t care about ever recouping your investment.Swimming pools rarely return what you spend to install them. Ditto for sun rooms – and finished basements.If you decide to do what’s usually the smart thing and move rather than improve, it’s often the smaller, relatively inexpensive improvements that turn out to be most worth doing. The cost of replacing a discolored toilet bow, making sure all the windows work or getting rid of dead trees and shrubs in trivial compared with adding a bathroom, but such things can have a big and very positive impact on prospective buyers. A good broker can help you decide which expenditures make sense and which don’t, and can save you a lot of money in the process.

Grand Opening Event at Double Golden Chinese

2011-08-25T13:10:00.000-07:00

Open House and Grand Opening Celebration

Friday, August 26, 2011

5:00-7:00 p.m.

5868 Silver Creek Valley Road

San Jose CA 95138

In the Silver Creek Landing Center

Raffle for gifts to:

OMG Coffee and Tea

SuperSlowzone

Salon 88

Quiznos

BalanceYogaCenter

Century 21 Alpha

Double Golden Chinese Restaurant

Plus.... Entertainment from 10th Avenue Band Swing Dance

Report: 'Fixing Housing Crisis Will Create 1 Million Jobs'

2011-08-23T17:30:00.001-07:00

A new report argues that if banks wrote down the mortgage principal of underwater borrowers it could pump $71 billion per year into the economy and create more than 1 million jobs annually. The report, “The Win/Win Solution: How Fixing the Housing Crisis Will Create One Million Jobs," comes from The New Bottom Line, a campaign that represents about 1,000 nationwide faith-based and community organizations.
The campaign argues in the report that by lowering home owners’ mortgage payments by an average of more than $500 per month--or $6,500 per year--that it would free up about $6 billion dollars per month that home owners could then spend on such items as buying groceries, household necessities, school supplies, etc.

“Home owners across the nation are struggling to pay their boom-era mortgages with their recession-era salaries and the economy is suffering for it,” according to the report. “Writing down the principals and interest rates on all underwater mortgages to market value would serve as the second stimulus that America so desperately needs, only without added costs to taxpayers.”

The group is pressing State Attorneys General, who are currently in settlement talks with the nation’s largest banks over allegations of foreclosure abuses, to stand firm on its request for principal reductions for underwater borrowers.
Source: “Fixing the Housing Crisis Would Create One Million Jobs Annually,” RISMedia (Aug. 21, 2011)

Mortgage Rates Reach All-Time Lows Again

2011-08-22T10:05:00.000-07:00

Ongoing economic concerns continued to push mortgage rates to new lows, as 30-year and 15-year mortgage rates took another dip, pushing home affordability even higher, Freddie Mac reports in its weekly mortgage market survey. 30-year fixed-rate mortgages: averaged 4.15 percent this week, dropping from last week’s 4.32 percent average. The previous record low for 30-year rates was set on Nov. 11, 2010, when rates reached 4.17 percent. For comparison sake, in 2000, 30-year mortgage rates averaged more than 8 percent and just five years ago they averaged 6.5 percent. 15-year fixed-rate mortgages: averaged 3.36 percent, dropping from last week’s 3.50 percent. Last year at this time, the 15-year fixed rate averaged 3.90 percent. 5-year adjustable-rate mortgages: averaged 3.08 percent, dropping from last week’s 3.13 percent. Last year at this time, the 5-year ARM averaged 3.56 percent. 1-year ARM: averaged 2.86 percent this week, dropping from last week’s 2.89 percent. A year ago, the 1-year ARM averaged 3.53 percent. "Not surprising, many home owners took advantage of this low mortgage rate environment and have already refinanced their loans,” says Frank Nothaft, chief economist of Freddie Mac. “The refinance share of applications averaged nearly 70 percent of all mortgage activity in the first half of this year, according to our survey. In addition, an increasing share of refinancing borrowers chose to shorten their loan terms during the second quarter.” Source: “Mortgage Rates Lowest in Over 50 Years,” Freddie Mac (Aug. 18, 2011)

Housing Affordability at Highest in 20 Years

2011-08-22T10:01:00.000-07:00

Housing affordability continued to be near record highs in the second quarter, hovering near its highest level in the 20-plus years it has been recorded, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index. About 72 percent of all new and existing-homes sold in the second quarter of the year were affordable to families earning the national median income of $64,200, according to the index. The record high remains 74.6 percent, which was reached last quarter. "At a time when home ownership is within reach of more households than it has been for more than two decades and interest rates are at historically low levels, the sluggish economy and the extremely tight credit conditions confronting home buyers and builders remain significant obstacles to many potential home sales," says Bob Nielsen, chairman of the National Association of Home Builders. "That said, however, some housing markets across the country have stabilized and are beginning to show signs of a budding recovery."

June Pending Home Sales Rise

2011-08-03T14:51:00.000-07:00

For the second consecutive month, pending home sales figures have increased. According to the National Association of Realtors® (NAR) all regions are showing "strong double-digit" gains over last June and the index itself was up 2.4 percent for the month.

Pending sales are a healthy 19.8 percent above June 2010's numbers. The Midwest has seen the largest rebound from 2010, increase 26.4 percent from last June. The Northeast followed at a 19.4 percent increase and the South gained 19.1 percent. The West was up 16.4 percent.
According to the NAR, "Existing-home sales this year are expected to total 5.0 million, slightly higher than 2010. Similarly, little change is forecast for aggregate home prices with several indicators, including NAR's median prices, showing recent signs of stabilization."
The largest regional increase month-to-month was seen in the West, which rose 6.4 percent, while the Northeast and Midwest both posted monthly declines.
Lawrence Yun, NAR chief economist, said there may be some increase in closed existing-home sales. “For the majority of transactions, the lag time between pending contacts to actual closings is one to two months. Therefore, the two consecutive months of rising activity should lead to overall improvement in closed sales in upcoming months,” he said. “Though a higher than normal cancellation rate can hold back final closing figures, it could well be that some past cancellations are nothing more than delayed buying decisions rather than outright cancellations.”
The NAR also reports that credit could be a deciding factor in whether or not housing experiencing a solid recovery sooner than later. Yun noted, "The best way to ensure a more solid recovery in housing is to simply return to normal, sound credit standards so more creditworthy home buyers can get a mortgage."
June's rise in pending home sales was unexpected, as economist polled by Reuters were looking for a 2 percent decline. Sales went in the opposite direction, however. The number of cancelled contracts will give a more complete picture of whether or not housing is on the mend.
Published: August 2, 2011

Freddie Mac: 'Double Dip' in Housing Is Unlikely

2011-07-19T16:37:00.000-07:00

Freddie Mac continues to sound optimism about the housing market for the second half of 2011. In its latest economic and housing market outlook report, Freddie Mac says that the housing market is unlikely to experience a “double dip” and home sales are projected to reach above last year’s pace by 3 percent to 5 percent.

Despite an unemployment rate that sits at 9.2 percent, Freddie Mac says the gloomy job picture reflects a temporary “soft patch” in the economy and “does not foreshadow an inflection point in gross domestic product growth.”

Freddie Mac forecasts that the housing market “will likely follow the performance of the overall economy for the remainder of 2011.”

Rental housing will likely see the largest growth. Freddie Mac’s first-quarter apartment property price index rose 15.2 percent compared to last year.
While home buyer affordability is at record levels and mortgage rates are at historical lows, households are still putting off major purchases like buying a home, according to the report.

"Following June's labor market report, households are naturally concerned about their financial futures, which is being reflected in the housing market," says Frank Nothaft, Freddie Mac’s chief economist. "Yet, the single-family market will likely improve over the balance of 2011, in keeping with positive GDP forecasts for the United States.

Home sales are expected to be up over 2010's pace, perhaps by 3 to 5 percent. And after clear weakness in national price metrics through the first quarter, there are glimmers the second quarter will likely show gradual improvement over time."
Source: “Freddie Mac Says Housing Sector Unlikely to See Double Dip,” HousingWire (July 18, 2011) and “July 2011 U.S. Economic and Housing Market Outlook,” Freddie Mac (July 18, 2011)

7 of 10 Renters Say Owning a Home Is a Top Priority

2011-07-06T15:30:00.000-07:00

Most Americans still believe that owning a home is a solid financial decision, and a majority of renters aspire to home ownership as a long-term goal. According to the 2011 National Housing Pulse Survey released today by the National Association of REALTORS®, 72 percent of renters surveyed said owning a home is a top priority for their future, up from 63 percent in 2010.

Seven in 10 Americans also agreed that buying a home is a good financial decision while almost two-thirds said now is a good time to purchase a home. The annual survey, which measures how affordable housing issues affect consumers, also found that more than three quarters of renters (77 percent) said they would be less likely to buy a home if they were required to put down a 20 percent down payment on the home, and a strong majority (71 percent) believe a 20 percent down payment requirement could have a negative impact on the housing market.

“Despite the economic setbacks Americans have experienced in today’s current climate, it is clear that a strong majority still believe in home ownership and aspire to own a home,” said NAR President Ron Phipps. “However, achieving the dream of home ownership will become increasingly difficult for buyers if they are required to make a 20 percent down payment, which may be a reality for many of tomorrow’s buyers if a proposed Qualified Residential Mortgage rule is adopted. That is why REALTORS® are strongly urging regulators to go back to the drawing board on the proposed rule.”

Defining the QRM rule is important because it will determine the types of mortgages that will generally be available to borrowers in the future. As currently proposed, borrowers with less than 20 percent down will have to choose between higher fees and rates today — up to 3 percentage points more — or a delay of between nine and 14 years while they save up the necessary down payment.

More than half — 51 percent — of self-described “working class” home owners as well as younger non-college graduates (51 percent), African Americans (57 percent), and Hispanic Americans (50 percent) who currently own their homes reported that a 20 percent down payment would have prevented them from becoming home owners.
Pulse surveys for the past eight years have consistently reported that having enough money for a down payment and closing costs are top obstacles that make housing unaffordable for Americans. Eighty-two percent of respondents cited these as the top obstacle, followed by having confidence in one’s job security.

The survey also found respondents were adamantly against eliminating the mortgage interest deduction (MID). Two-thirds of Americans oppose eliminating the tax benefit, while 73 percent believe eliminating the MID will have a negative impact on the housing market as well as the overall economy.

“The MID facilitates home ownership by reducing the carrying costs of owning a home, and it makes a real difference to hard-working American families,” Phipps said. “Home ownership offers not only social benefits, but also long-term value for families, communities and the nation’s economy. We need to make sure that any changes to current programs or incentives don’t jeopardize our collective futures.”

When asked why home ownership matters to them, respondents cited stability and safety as the top reason. Long-term economic reasons such as building equity followed closely behind. On a local level, respondents said neighbors falling behind on their mortgages and the drop in home values were top concerns. Foreclosures also continue to remain a large concern, with almost half of those surveyed citing the issue as a problem in their area.
Source: NAR

7 Highest-Performing Major Housing Markets

2011-06-15T13:00:00.000-07:00

Several real estate markets are starting to show signs of improvement with home prices in the last quarter as the industry demonstrates more signs of stabilizing, according to Clear Capital's latest monthly Home Data Index Market Report.

REO saturation rates have improved in the majority of the country’s largest markets. However, many areas are still battling year-over-year price declines. Clear Capital’s index reports that quarter-over-quarter home price declines were 2.3 percent in the latest quarter, which is less than half compared to the previous month.

“The latest market report results through May suggest that home prices are starting to ease back from the heavy declines seen over the winter,” says Alex Villacorta, director of research and analytics at Clear Capital. “We are still far away from the strong demand needed to fully turn things around for the housing market. However, it is clear from the initial spring sales data that prices are softening, suggesting stabilization in the market."

The High PerformersSeven of the top 15 markets posted quarter-over-quarter property price gains in this month's report, compared to none in last month’s, according to Clear Capital. Here are the seven highest-performing major real estate markets, according to the report.

1. Washington, D.C.-Arlington, Va.-Alexandria, Va.Quarter-to-quarter home price change: 4.5%Year-to-year price changes (May 2010-May 2011): 4.9%REO saturation: 17.5%

2. St. Louis, Mo. Quarter-to-quarter home price change: 2.2%Year-to-year price changes: -11.4%REO saturation: 35.3%

3. Pittsburgh, Pa.Quarter-to-quarter home price change: 1.6%Year-to-year price changes: 0.3%REO saturation: 10.9%

4. New York, N.Y.-Long Island, N.Y.-No. New Jersey, N.J.Quarter-to-quarter home price change: 1.5%Year-to-year price changes: 1.4%REO saturation: 9.6%

5. Virginia Beach, Va.-Norfolk, Va.-Newport News, Va.Quarter-to-quarter home price change: 1.4%Year-to-year price changes: -13.2%REO saturation: 22.4%

6. Miami-Ft. Lauderdale-Miami Beach, Fla.Quarter-to-quarter home price change: 0.6%Year-to-year price changes: -5.2%REO saturation: 39.6%

7. San Jose-Sunnyvale-Santa Clara, Calif.Quarter-to-quarter home price change: 0.5%Year-to-year price changes: -5%REO saturation: 25%
Tthe lowest-performing market for the fifth straight month was Detroit-Warren-Livonia, Mich., with a 13.2 percent decrease in quarter-over-quarter home price change and a 58 percent REO saturation rate.
Source: “Clear Capital Reports Quarterly Home Price Decline Slows; Signs of Market Stability as Summer Approaches,” Clear Capital (June 9, 2011) 2 Executives Sentenced in $3 Billion Fraud Ring Two executives were sentenced to several years in prison for their involvement in a massive fraud ring — estimated at $3 billion — that led to the collapse of one of the country’s largest privately held mortgage lending companies, as well as a bank.

Taylor, Bean & Whitaker Mortgage Corp.’s former president Raymond Bowman and its former treasurer Desiree Brown were convicted for their part in trying to cover up major losses by the company in moving money between accounts at Colonial Bank and selling mortgage loans that never existed or that had previously been sold. TBW’s former chairman Lee Farkas, who prosecutors have called the ring leader of the fraud, is set to be sentenced June 27.

Bowman was sentence to 30 months in prison while Brown was sentenced to six years in prison.

"It was never my intent to commit a crime," Brown told the court. "It was always my intent to fix the problem."

Prosecutors say the mortgage fraud at TBW lasted more than seven years up until August 2009, which ultimately led to the collapse of TBW and Colonial BancGroup Inc.’s Colonial Bank. Prior to its collapse, TBW was one of the nation’s largest privately held mortgage lenders with some $20 billion in mortgage sales a year. Meanwhile, Colonial Bank — before regulators took it over — was once one of the top 50 U.S. banks.

Prosecutors say the case marks one of the few since the aftermath of the global financial crisis where charges have been brought up against executives at major firms.

Usually prosecutions, up to this point, have involved lower-level employees or smaller firms.
Source: “Former Executives Get Prison Time for Mortgage Fraud,” Reuters (June 10, 2011)

Banks Penalized for Loan Mod Failings

2011-06-11T09:56:00.000-07:00

Three major banks have lost federal mortgage modification incentives in delivering a foreclosure relief program until they make big changes to improve their practices.

Obama administration officials have told Bank of America, JPMorgan Chase & Co., and Wells Fargo & Co. that they must make “substantial improvements” to the way they administer the Home Affordable Modification Program, and they will not receive any more federal money from the program until they do so. For example, officials noted that banks need substantial improvement in correctly evaluating borrowers’ incomes, which is a critical component for determining eligibility for the program. Some of the banks also need to improve how they identify and contact borrowers for the program.

Last month, the banks received $24 million in payments through HAMP, but no more payments will be made until servicers improve their performance, officials warned.
While Bank of America agreed that it needed to improve its practices in the program, JPMorgan Chase and Wells Fargo say they disagree with the poor evaluation. Wells Fargo, in fact, says they plan to contest the administration’s evaluation of how well it's done with administering HAMP. The review, which examined all 10 servicers who administer the program, found that all 10 were performing below its benchmarks.

This marks the first time the Obama administration has taken major punitive action against banks in the HAMP program, which has been under attack in recent months from some lawmakers and critics who say the program has not done enough to help save home owners from foreclosure. Republicans in the House of Representatives voted to end the program earlier this year. However, the measure has yet to pass the Senate and the White House already has threatened a veto.

Source: “3 Big Banks Lose Mortgage Modification Incentives,” Los Angeles Times (June 10, 2011)

Fixed Mortgage Rates Continue Downward Slide

2011-06-03T14:06:00.000-07:00

MCLEAN, Va., June 2, 2011 -- Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), which showed fixed-rate mortgages declining for the seventh consecutive week to new lows amid continuing weak economic and housing data. The 30-year fixed averaged 4.55 percent and the 15-year averaged 3.74 percent.

30-year fixed-rate mortgage (FRM) averaged 4.55 percent with an average 0.6 point for the week ending June 2, 2011, down from last week when it averaged 4.60 percent. Last year at this time, the 30-year FRM averaged 4.79 percent.

15-year FRM this week averaged 3.74 percent with an average 0.7 point, down from last week when it averaged 3.78 percent. A year ago at this time, the 15-year FRM averaged 4.20 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.41 percent this week, with an average 0.6 point, the same from last week when it averaged 3.41 percent. A year ago, the 5-year ARM averaged 3.94 percent.

1-year Treasury-indexed ARM averaged 3.13 percent this week with an average 0.6 point, up from last week when it averaged 3.11 percent. At this time last year, the 1-year ARM averaged 3.95 percent.

Frank Nothaft, vice president and chief economist at Freddie Mac, reports, "Fixed mortgage rates followed U.S. Treasury yields lower this week amid financial market concerns that the current lull in the economy is continuing. First quarter growth in consumer spending was revised downward by half of a percentage point to 2.2 percent, according to the Bureau of Economic Activity, consumer confidence in May was weaker than the market consensus forecast, and the manufacturing industry slowed for the third straight month in May."

"The housing market is showing strain as well. The S&P/Case-Shiller® National Home Price Index fell 5.1 percent between the first quarters of 2010 and 2011, representing the largest annual decline since the third quarter of 2009. In addition, the index of pending existing home sales dropped 11.6 percent from March to April, led by the Midwest and South regions where the tornados and flooding occurred."

Published: June 3, 2011

Slow Economic Recovery Blamed on Housing

2011-05-10T10:02:00.000-07:00

While the employment picture continues to gradually improve, the economy is not recovering at the pace some experts had hoped for, and some are pointing fingers at the housing market for the slow recovery.

Federal Reserve Chairman Ben Bernanke says the economy is recovering at a “moderate pace” and that a high number of foreclosures and home owners who are “underwater” on their mortgages continues to drag down housing prices and the economy.

"Declines in the values of homes and stocks sharply reduced the wealth of many Americans during the crisis,” Bernanke says. “Three-fifths or more of families across all income groups reported a decline in wealth between 2007 and 2009, and the typical household lost nearly one-fifth of its wealth, regardless of income group.
"Moreover, one in eight of the households ... started the crisis with zero or negative net worth and thus had scant resources to fall back on to maintain their standard of living during bouts of unemployment."

However, there are signs the outlook is starting to improve. The construction industry in April increased employment by 9,000, which is its first monthly increase in years and may be a sign that the sector is finally in recovery mode. Overall, unemployment continues to decline, which will help more households start to feel more financially secure. However, long-term unemployment remains historically high, particularly among the young, minorities, and those with less education.
Source: “Real Estate Outlook: Bernanke on Housing,” Realty Times (May 9, 2011)

Median price of homes...

2011-04-27T16:44:00.000-07:00

11 Cities Where Homes Sell the Fastest California boasted the highest number of cities where homes tended to spend the shortest amount of time on the market last month, based on March housing data from Realtor.com.

In Oakland, Calif., the average days on the market for listings was 50 in March--the least amount of days for median days on the market for the 146 markets reviewed.
Nationally, the median for homes for days on the market was 160 in March, which is an increase of 40 percent in a year.

Here is a list of the cities with the fewest median days on the market from March:
Oakland, Calif.Median days on the market: 50Median list price: $319,000

San FranciscoMedian days on the market: 63Median list price: $639,000

DenverMedian days on the market: 66Median list price: $259,900

Iowa City, IowaMedian days on the market: 66Median list price: $187,500

Los Angeles-Long Beach, Calif.Median days on the market: 70Median list price: $345,000

Stockton-Lodi, Calif.Median days on the market: 70Median list price: $175,000

Bakersfield, Calif.Median days on the market: 70Median list price: $141,500

San Jose, Calif.Median days on the market: 71Median list price: $470,000

Anchorage, AlaskaMedian days on the market: 71Median list price: $279,975

Fresno, Calif.Median days on the market: 71Median list price: $170,000

Tulsa, Okla.Median days on the market: 71Median list price: $147,900
Source: REALTOR® Magazine online (April 27, 2011)

Missed Mortgage Payments Hurt Credit Scores

2011-04-25T16:14:00.001-07:00

Missed Mortgage Payments Hurt Credit Scores Missed mortgage payments, short sales, and foreclosures can all drastically bring down a credit score.

Lenders use credit scores to measure how well a person handles debt. Credit scores range from 300 to 850, with 650 and below considered poor credit. A mortgage makes up a big part of a person’s credit score and often is the most important part of a person’s credit profile.

And just missing a single mortgage payment by 30 days can ruin a credit score, say FICO and VantageScore, which have studied the impact mortgages can have on credit scores. For borrowers, that can be nearly as destructive as a foreclosure to a credit score, according to the companies.

On the other hand, loan modifications, which is when lenders approve new loan terms, have a “very, very minimal” impact to credit scores, possibly dropping the borrower’s score by 10 or 15 points, Sarah Davies, the senior vice president for analytics at VantageScore, told The New York Times.

A good credit score is important not just for financing home purchases, but employers increasingly check credit as well as landlords when seeking rentals. Also, poor credit scores can also mean higher costs on car loans and credit cards.

How a Credit Score Is Affected
FICO evaluated three various scenarios of mortgage holders — a borrower with a great credit score (780), a borrower with good credit (720), and a poor credit borrower (680) — in a study it conducted last month. Here’s the impact FICO found:
▪ 30 days late on a mortgage payment: The 780 credit score borrower has her credit score fall to 670-690. The 720 credit score borrower has his fall to 630-650. The 680 credit score borrower falls to 600-620.
▪ Short sale, deed in lieu of foreclosure, or settlement, assuming the balance has been wiped out: The 780 credit score borrower falls to 655-675; the 720 credit score falls to 605-625; and the 680 credit score drops to 610-630.
▪ Foreclosure, or short sale with a deficiency balance owed: The 780 credit score drops to 620-640; the 720 credit score falls to 570-590; and the 680 credit score decreases to 575-595.

Has Housing Reached a 'Recovery Path'?

2011-04-22T11:56:00.000-07:00

Has Housing Reached a 'Recovery Path'? Sales of existing homes rose slightly in March, marking the sixth consecutive monthly rise for existing home sales in the last eight months, the National Association of REALTORS reported Wednesday.

"We're clearly on a recovery path," says Lawrence Yun, NAR chief economist.
Existing home sales rose 3.7 percent in March from February, as distressed sales, such as those in foreclosure, continued to make up a big bulk of home sales (40 percent of all purchases).

"At this point, we're likely to see a steady improvement in sales," says economist Joel Naroff of Naroff Economic Advisors.

So just in time for the spring buying season, here’s what economists have to say about who’s buying and currently driving the market:

Investors: All-cash deals last month made up a record number of sales, accounting for 35 percent of all resold homes. Investors continue to make up a big part of those cash deals. Investors are buying distressed homes and flipping them for a slight profit or turning them into rentals, says Patrick Newport, economist at IHS Global Insight.
Luxury consumers: Some real estate professionals are reporting a pick up in luxury markets in some cities too. "The confidence is back in the market," says Neil Palmer, CEO at Christie’s International Real Estate.

Foreign buyers: Coastal markets, in particular, are seeing a surge of foreign buyers, such as in New York, Palm Beach, Fla., and San Francisco, AOL Real Estate news reports.

Traditional buyers: Traditional buyers are also re-emerging. Mortgage applications to buy homes rose 10 percent over a seven-week period, according to the Mortgage Bankers Association’s most recent report. "This pickup in demand should show up in improved existing home sales in April and May, unless lending conditions tighten," Newport says.

The market is making “slow, steady progress” and demand in housing is rising even with higher mortgage rates “so that's encouraging,” Pierre Ellis, an economist at Decision Economics in New York, told The New York Times.

"It's the new financial psychology," says Jarvis Slade Jr., Christie's managing director for the Americas. "We've had two years of hesitation, the sellers are realistic, the buyers confident and cautious, but Americans are starting to feel better."

Predicting the Market Bottom

2011-04-18T12:34:00.000-07:00

Over recent years, a favorite past time of most real estate shoppers, watchers, and pundits, has been to make multiple guesses as to when the market bottom has arrived, will arrive, or is arriving. Buyers who seek to time a market and purchase at the exact summit of the decline appear to be most interested in identifying the market bottom, and the rest of us who make a living off of such undulations in market prices work to understand the pitches and heaves to best represent our clients. It is obvious that buyers are anxious to recognize a market bottom, but there's one key group that is in such a hybrid state of panic sprinkled optimism it makes the Red Bull chugging, market timing buyers look downright lethargic: Sellers. I've gone to great lengths to dissuade buyers from holding their breath until they pass the sign that reads "Market Bottom Ahead", largely because when they do reach that sign, it will almost certainly read "For Market Bottom, Please Go Back 7 Months". There will be buyers who purchase during the exact quarter that the market bottom was left behind, but those buyers will have purchased at that time through either coincidence or divine intervention, not intelligent surveillance. It's important to note the way I addressed the market bottom, in that the buyer who purchases the moment the bottom is left behind is the biggest winner, but any buyer who purchases during the market bottom will ultimately align with the winners. See, a market bottom doesn't just happen, it forms over years and once that bottom is established, as it is in the entry level lakefront market here, we'll bounce along that bottom until the strength of the individual market is such that price increases can be tolerated and accepted by the buyers that make up the market. Buying at the moment the market begins its upswing is nice, but such a precise approach isn't necessary. Me? I'm just going to grab a shot gun, close my eyes, and hope I get close. The buzz surrounding my Lake Geneva market these days is that the market bottom has both arrived and been left behind. Some agents are giddy at the prospects of such a recovery, and someone, somewhere, is polishing their gold name tag and testing the magnetic strength of their car door advertisement in anticipation of the return of the glory days. Personally, I think the market is mixed at best, with certain segments experiencing a true, identifiable market bottom, and others just testing the waters at what those lower prices look and feel like. Other markets might have already been to the bottom and back, which is to say that even in a tight geographic market like Lake Geneva, there are handfuls of individual market segments that can and will all bottom at different times. And those three paragraphs lead us to this: There is much danger in a market that appears poised for a solid rebound, and that danger lies in the list prices of properties and the attitudes of those setting these prices. For an example of what it is I'm talking about, consider this hypothetical. I'm a seller, and I'm ravishingly handsome. I am also ridiculously rich. So far, so good. I also own a house at Lake Geneva. It's a vacation home, and my desires are no longer for a simple vacation home, but instead a massive estate large enough to house my toys, guests, and my ego. And one of those $15,000 eight minute workout machines. My property, during an 80 degree, cloudless July afternoon in 2006, was possibly worth $1MM. I listed the property in 2010 for $1MM, hoping a buyer might be easily persuaded. My property didn't sell, which was fine with me, because I'm not sure if you full appreciate how rich I really am. Fast forward to 2011. I'm still devastatingly handsome, possibly more so. And my property is still unsold. I now list my property at $995k, hoping the reduction will attract a buyer. I wait, in my Paul and Shark jacket and slacks. The buyer has yet to show, but now, with the market on the upswing and pundits, agents, and even some buyers proclaiming the market bottom present and nearly in the past, I am confident. After all, the market bottom has arrived, which means my property has a much better chance at selling. The clouds will clear, a throng of buyers will approach, and I, sitting tall on my saddled, blindingly white unicorn will finally achieve a sale at my asking price of $995k. This scenario, with or without the unicorn, is playing out everywhere right now, from Winnetka to Hinsdale to Lake Geneva. Sellers feel bolstered by proclamations of a market bottom, but they're missing a very sneaky little truth about bottoms. A property can and should only benefit from a true market bottom if that property has adjusted to find that bottom. If Mr. Seller, I mean me, If I, were to have listed my property for $995k, and slowly but surely adjusted to $795k, and now sold for a number that a buyer deems reasonable given the possibility that the bottom has indeed formed, then and only then would I be able to benefit from that bottom. If I stick at $995k, and wait for a buyer, I cannot reasonably pronounce the property a deal now that the market has bottomed. The market might have bottomed, and the true value of my property may have done the same, but if my asking price hasn't adjusted to find that bottom, well, then, I'm just a guy with a really shiny, remarkably well behaved unicorn and an price that remains equally as unbelievable. If you're buying in Chicago or Peoria or Lake Geneva, beware the phenomenon of the seller who has never made an effort to match the market decline and finds confidence in a recuperating market. There are traps in any market, but the traps that lie in wait during periods of nascent recovery are even more lethal. David Curry is a realtor with Geneva Lakefront Realty in Williams Bay, Wisconsin. He writes on the Lake Geneva and national markets daily at GenevaLakeFrontRealty.com/blog.

Rising Rents Make Rentals Less Appealing

2011-04-14T10:56:00.000-07:00

Rising Rents Make Rentals Less Appealing Apartment bargains once dominated the housing market, but those bargains have slowly faded away. As vacancies decrease and rents rise, renters are finding fewer deals. Analysts expect vacancies to decrease even more and rents to continue to rise through 2013, as the economy continues to improve. Rental activity recorded its best start for the year since 1999, according to Reis Inc. Vacancy rates have fallen to mid-2008 levels and rents have increased for the past five quarters, now averaging $991 per month nationwide. Renters are finding the fewest deals along the coasts, such as New York, Washington, D.C., Boston, Los Angeles, San Francisco, Seattle, and San Jose, Calif. These cities are experiencing low vacancy rates. Also, a boost in these cities’ economies is sending rents higher. New York City alone has seen double rent increases compared to the national average and has the lowest vacancy rate in the nation. The best rental deals can be found in Las Vegas, Tucson, Ariz., Phoenix, and several cities in Florida--all cities where unemployment and foreclosures remain high. According to Reis, Las Vegas was the only city to see rents fall last year. However, analysts say that bargains across the country are getting fewer, and renters should expect to see an increase in rents over the next three years.

Give me Patience...

2011-04-04T14:11:00.001-07:00

INFO THAT HITS US WHERE WE LIVE...Patience has certainly been needed to weather the ups and downs of the current U.S. housing market. But as we await strong recovery, we can take heart in positive signs when they show up. Last week we had the report that Pending Home Sales were up 2.1% in February. This measure of contracts on existing homes indicates sales should rebound in March following February's drop.Other tidbits of goodness included the news that the share of homebuyers for second homes held steady in 2010 versus the year before. But this report from the National Association of Realtors (NAR) did show overall sales volume somewhat declining. Meanwhile, the reverse of that is occurring on the luxury end of the market, where sales of homes priced at $1 million and above were up 3.9% in February versus a year ago.Those market observers who seem dying to report a double dip in housing prices loved last week's S&P/Case-Shiller Home Price Indices, which were down for January. But the 10-city composite Case-Shiller home price index is still 2.8% above and the 20-city is still 1.1% above their April 2009 lows. Seems the critics could do with a little patience too. BUSINESS TIP OF THE WEEK...Attitude is everything. Be a fanatic optimist. Consistently see the glass half full. A great attitude affects all those around you--and always wins in the end. >> Review of Last WeekJOBS SURPRISE...It was a good week for investors who were encouraged by positive economic news, capped on Friday with a surprisingly upbeat March Employment Report. All three major stock market indexes were up again for the week, which began with signs the consumer's purchasing power is growing. For February, Personal Income and Personal Spending were both UP, while inflation, as measured by Core PCE Prices, was up only 0.2% for the month and 0.9% since last year. This is well within the Fed's target range.The highlight of the week was the aforementioned March Employment Report. Nonfarm payrolls were UP 216,000, with the private sector contributing 230,000 jobs, well above expectations. Best of all, job growth was broadly based, with strong gains in several business sectors. The unemployment rate dropped again and is now at 8.8%. The festivities ended with ISM Manufacturing down a tick for March but, at 61.2, well into expansion territory above 50.For the week, the Dow ended up 1.3%, to 12,377; the S&P 500 was up 1.4%, to 1,332; and the Nasdaq was up 1.7%, ending at 2,790. The bond market was hurt by the renewed interest in stocks and the better than anticipated jobs report. The FNMA 4.0% bond we watch was off .02 for the week, closing at $98.10. National average rates for conforming mortgages edged up a bit according to Freddie Mac's weekly survey, but they're still at historically low levels.DID YOU KNOW?...ISM reports come from the Institute for Supply Management. Last week's ISM Manufacturing is considered by many economists to be the most reliable near-term economic barometer for that sector. This week's ISM Non-Manufacturing provides insight into the Services sector, representing over 80% of GDP. >> This Week’s ForecastTAKING A BREATHER...After the recent avalanche of economic news, this week could be seen as a welcome respite. Tuesday's ISM Non-Manufacturing index for March is expected to hold steady, reflecting the slow pace of the economic recovery. But the reading above 50 puts services solidly in expansion mode, which is key, since 85% of our jobs are in this sector of the economy. We also get FOMC Minutes from the Fed's meeting on March 15. Economists will be looking for signs of how soon the Fed may start pushing rates back up. >>

Bargain-Seeking Home Buyers are on the Hunt

2011-04-01T13:03:00.000-07:00

Bargain-Seeking Home Buyers on the Hunt Housing prices across the country are at multi-year lows and mixed with low interest rates bargain hunters are targeting real estate. More investors are heading to the market looking to make cash buys for real estate, investing in second or even a third home, Reuters News reports. "We're starting to get a lot more inquiries and assisting in transactions," says Rocco Papandrea, a senior vice president and wealth management adviser at Merill Lynch in New York. Papandrea says he’s seeing more interest in properties along the West Coast and in Colorado, as well as Florida. Canadian buyers in particular are expected to be looking to purchase U.S. homes. The Bank of Montreal estimates that one-in-five Canadians is considering buying U.S. property. With dropping home prices, more cities are looking to be attractive buys, such as the increasing affordability in popular vacation-home designations along the U.S. Sunbelt. For example, home prices have fallen 44 percent in Tampa, 54 percent in Phoenix, 57 percent in Las Vegas, and 49 percent in Miami, the Bank of Montreal reports. "If the economy keeps clicking along and jobs keep growing, housing will be fine," says Dean Frankel, a portfolio manager at Urdang Capital Markets in Plymouth Meeting, Pennsylvania, who oversees around $1.7 billion in real estate equity investments. The economy--and ultimately housing--may then get a boost from the latest unemployment report released Friday. The unemployment rate reached a two-year low of 8.8 percent in March as companies began a brisk wave of hiring, adding employees at the fastest two-month pace since before the recession even started, the Labor Department reports. The unemployment rate has fallen a full percentage point in the last four months, which marks the sharpest drop since 1983. Home Owners See Big Value in Remodeling The do-it-yourself home improvement market has faced a 21 percent drop from 2005-2010, according to the latest research from market researcher Mintel. Yet, that’s not due to lack of will on home owner's part, but more about lack of money, according to the survey. More than a quarter of DIYers surveyed said they would undertake a major home renovation or addition to their home if they had the funds. Nearly 40 percent of DIYers say that making a major home improvement is the best long-term investment they can make. However, with the sagging housing market, many home owners have opted to put off major renovation projects, but forecasters are already seeing signs that is changing. “We forecast growth to accelerate in 2011 and, presuming a stabilization of the housing market, to remain positive through 2015,” says Bill Patterson, senior analyst at Mintel. “Pent-up demand, ongoing need for repair and maintenance, retro-fitting, and renovations from boomers approaching retirement and demand from millennials should all propel DIY spending.”

6 Ways to Squeeze Out Better Gas Mileage

2011-03-21T17:16:00.000-07:00

With gas prices topping $4 a gallon, real estate professionals who use their car frequently for work are looking for ways to get as much as they can out of every gallon.

Here are some tips for getting better mileage out of your car:
1. Slow down: Most cars get the best gas mileage at 45-55 miles per hour. Driving faster than 60 mph actually can cut gas mileage anywhere from 7 to 23 percent.
2. Don't idle: If you need to wait longer than 20 seconds, you’re better off turning off your engine than keeping your car running. Restarting the car requires less gas than leaving it idling.
3. Lose the heavy load: Make sure you’re not carrying in your car more than what you need. An extra 100 pounds sitting in the trunk or back seat can reduce fuel economy as much as 2 percent.
4. Tighten the gas cap: Fuel can evaporate through gas caps with broken or weak seals. Loose or broken gas caps can cost you a loss of about 2 percent in your gas mileage.
5. Close the windows and turn off the AC: Driving with the windows open or the air conditioner turned on can be big gas wasters. Instead, the most efficient way to keep the car cool is by using the air that comes in through your flow-through ventilator.
6. Get an oil change: Improve your gas mileage by as much as 2 percent by using energy-conserving or synthetic motor oil, which can reduce engine friction.

Renting May Soon Get Pricier

2011-03-17T13:10:00.000-07:00

Industry experts are forecasting double-digit rent hikes soon.

With vacancy rates dipping below the 10 percent mark, demand is picking up, which is expected to put upward pressure on rental prices.

"The demand for rental housing has already started to increase," says Peggy Alford, president of Rent.com. "Young people are starting to get rid of their roommates and move out of their parents' basements."

By 2012, Alford predicts the vacancy rate will drop to 5 percent, causing prices to rise.

Rent hikes have been modest the past decade, averaging less than 1 percent a year in adjusting for inflation.

Source: “U.S. Set to be High-Rent Nation,” Chicago Tribune (March 16, 2011)

30-Year Fixed-Rate Mortgage Holds Steady at 4.88 Percent

2011-03-11T14:29:00.000-08:00

McLean, VA – Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS), which shows mortgage rates holding steady and below 5.0 percent.

30-year fixed-rate mortgage (FRM) averaged 4.88 percent with an average 0.7 point for the week ending March 10, 2011, up from last week when it averaged 4.87 percent. Last year at this time, the 30-year FRM averaged 4.95 percent.
15-year FRM this week averaged 4.15 percent with an average 0.7 point, the same from last week when it averaged 4.15 percent. A year ago at this time, the 15-year FRM averaged 4.32 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.73 percent this week, with an average 0.6 point, up from last week when it averaged 3.72 percent. A year ago, the 5-year ARM averaged 4.05 percent.
1-year Treasury-indexed ARM averaged 3.21 percent this week with an average 0.5 point, down from last week when it averaged 3.23 percent. At this time last year, the 1-year ARM averaged 4.22 percent.
Frank Nothaft, vice president and chief economist of Freddie Mac, reports, "Mortgage rates held steady amid a strong employment report . The private sector added 222,000 jobs in February, the most since March 2006 while the unemployment rate fell to 8.9 percent, the lowest share since April 2009."
"Interest rates for 30-year fixed-rate mortgages have averaged at or below 5 percent in every week but one this year, contributing to record home affordability. The National Association of Realtors®Housing Affordability Index rose to an all-time record high in January, based on figures dating back to 1971. More recently, mortgage applications jumped almost 16 percent over the week ended March 4, 2011 representing the largest percent increase since the week of June 11, 2009."

Existing-Home Sales Up Again in January

2011-02-24T14:02:00.001-08:00

The uptrend in existing-home sales continues, with January sales rising for the third consecutive month with a pace that is now above levels a year ago, according to the NATIONAL ASSOCIATION OF REALTORS®.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 2.7 percent to a seasonally adjusted annual rate of 5.36 million in January from a downwardly revised 5.22 million in December, and are 5.3 percent above the 5.09 million level in January 2010. This is the first time in seven months that sales activity was higher than a year earlier.
Lawrence Yun, NAR chief economist, said the improvement is good but could be better. “The uptrend in home sales is consistent with improvements in the economy and jobs, which are helping boost consumer confidence,” Yun said. “The extremely favorable housing affordability conditions are a big factor, but buyers have been constrained by unnecessarily tight credit. As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity.”

A parallel NAR practitioner survey shows first-time buyers purchased 29 percent of homes in January, down from 33 percent in December and 40 percent in January 2010 when an extended tax credit was in place.
Investors accounted for 23 percent of purchases in January, up from 20 percent in December and 17 percent in January 2010; the balance of sales were to repeat buyers. All-cash sales rose to 32 percent in January from 29 percent in December and 26 percent in January 2010.

“Increases in all-cash transactions, the investor market share and distressed home sales all go hand-in-hand. With tight credit standards, it’s not surprising to see so much activity where cash is king and investors are taking advantage of conditions to purchase undervalued homes,” Yun said. All-cash purchases are at the highest level since NAR started measuring these purchases monthly in October 2008, when they accounted for 15 percent of the market. The average of all-cash deals was 20 percent in 2009, rising to 28 percent last year.

The national median existing-home price for all housing types was $158,800 in January, down 3.7 percent from January 2010. Distressed homes edged up to a 37 percent market share in January from 36 percent in December; it was 38 percent in January 2010.

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said the median price is being dampened by unusual market factors. “Unprecedented levels of all-cash purchases, primarily of distressed homes sold at deep discounts, undoubtedly pulls the median price downward,” Phipps said. “Given the levels of inventory we see today, we believe that traditional homes in good condition have held their value.”

Total housing inventory at the end of January fell 5.1 percent to 3.38 million existing homes available for sale, which represents a 7.6-month supply at the current sales pace, down from an 8.2-month supply in December. The inventory supply is at the lowest level since December 2009 when there was a 7.3-month supply.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.76 percent in January from 4.71 percent in December; the rate was 5.03 percent in January 2010.
Single-family home sales rose 2.4 percent to a seasonally adjusted annual rate of 4.69 million in January from 4.58 million in December, and are 4.9 percent higher than the 4.47 million level in January 2010. The median existing single-family home price was $159,400 in January, down 2.7 percent from a year ago.

Existing condominium and co-op sales increased 4.7 percent to a seasonally adjusted annual rate of 670,000 in January from 640,000 in December, and are 7.9 percent above the 621,000-unit pace one year ago. The median existing condo price was $154,900 in January, which is 10.2 percent below January 2010.

Regional SalesNortheast: Regionally, existing-home sales in the Northeast fell 4.6 percent to an annual pace of 830,000 in January from a spike in December and are 1.2 percent below January 2010. The median price in the Northeast was $236,500, which is 4.0 percent below a year ago.

Midwest :"Existing-home sales in the Midwest rose 1.8 percent in January to a level of 1.14 million and are 3.6 percent above a year ago. The median price in the Midwest was $126,300, which is 3.2 percent below January 2010.

South: In the South, existing-home sales increased 3.6 percent to an annual pace of 2.02 million in January and are 8.0 percent higher than January 2010. The median price in the South was $136,600, down 2.1 percent from a year ago.

West: Existing-home sales in the West rose 7.9 percent to an annual level of 1.37 million in January and are 7.0 percent above January 2010. The median price in the West was $193,200, down 5.7 percent from a year ago

Real Estate Outlook: Home Sales Rebounded 4th Quarter

2011-02-15T12:04:00.000-08:00

The latest news from the National Association of Realtors is good. According to their latest survey, home sales rebounded in 49 states during the fourth quarter with 78 markets – just over half of the available metropolitan areas – experiencing price gains from a year ago, while most of the rest saw price weakness.

Lawrence Yun, NAR chief economist, had positive things to say about this gain. "Home sales clearly recovered in the latter part of 2010 and are helping to absorb the inventory, including many distressed properties. Even with foreclosures continuing to enter the inventory pipeline, they’ve been selling well and housing supplies have trended down," he said. "A recovery to normalcy requires steady trimming of the inventories."
Total state existing-home sales rose by 15.4 percent in the 4th quarter. The median existing single-family price was $170,600 -- up slightly from the 4th quarter of 2009. Distressed properties, approximately 34 percent of 4th quarter sales, sold at a discount of 10 to 15 percent, a similar trend to what was seen a year earlier.
The NAR believes a housing recovery still rests firmly on a jobs recovery. Yun noted, "An improving housing market and job growth will go hand in hand. The housing recovery will mean faster job growth."
This is welcome news in a market where much remains unsure and unstable. The White House missed a recent deadline last week for a decision on what to do with mortgage giants Freddie Mac and Fannie Mae, who are currently under the conservatorship of the Federal Housing Finance Agency.
According to the New York Times, "The diminished urgency on both sides reflects the political realities of power-sharing, the fear of doing further damage to housing prices, and a great deal of uncertainty about the best approach to rebuilding the mortgage business."
What is on the horizon for the economy? Federal Reserve Chairman, Ben Bernanke, reported last week to the U.S. House of Representatives' Committee on the Budget, that it was a hard battle last year, as economic growth slowed in the Spring as a result of concerns over inventories, fiscal stimulus and the European debt crisis.
He noted that, "The initial phase of the recovery, which occurred in the second half of 2009 and in early 2010, was in large part attributable to the stabilization of the financial system, the effects of expansionary monetary and fiscal policies."
He reports that "construction remains weak, though, reflecting an overhang of vacant and foreclosed homes and continued poor fundamentals for most types of commercial real estate. Overall, improving household and business confidence, accommodative monetary policy, and more-supportive financial conditions, including an apparently increasing willingness of banks to lend, seem likely to result in a more rapid pace of economic recovery in 2011 than we saw last year."
We all have our fingers crossed that jobs and housing will recover in 2011, but only time will tell.

Why Hire a Real Estate Agent or REALTOR?

2011-02-11T15:38:00.000-08:00

As spring rolls in, many people start listing their home for sale. The weather warms up and buyers, having recovered from the holidays, begin to house hunt.

Many buyers will go it alone. They hit the Internet for their first line of attack in house hunting. They peruse magazines and open houses. But they miss an important key player in their house-hunting mission–the real estate agent.
The real estate agent is not a go-between paper shuffler. Your real estate agent is the connection to the inside world of real estate. Yes, the Internet can provide you with lots of information, but it can't replace a knowledgeable real estate agent.
Finding the best agent who meets your needs is like finding a good friend. I'm not kidding. Having to work with an agent that doesn't understand your needs for housing can result in endless headaches, but working with an expert in the industry takes away the worry and stress, and streamlines the process.
It can be a jungle out there. Navigating through the foreclosures, short sales, and excessive inventory can make some buyers feel overwhelmed. The result? They continue to rent!
If you have the right team of experts surrounding you and looking out for your best interest, you're not afraid to aim high and go after exactly what you want. An agent isn't your cheerleader but is there to help you get precisely what you want and the best deal possible.
The agent has a fiduciary duty to you–to provide trust and confidence. Up to now, we've talked mostly about an agent–a person licensed to sell real estate but is that the same as a REALTOR®? The answer is no. And since the terms are often confused, it's worth taking a moment to explain how the National Association of REALTORS® (NAR) defines them.
Both are licensed to sell real estate but REALTORS® are members of the National Association of REALTORS® and are required to follow the REALTOR® Code of Ethics. According to NAR, there are 17 articles in the Code of Ethics and they are strictly enforced.
Here's what is stated in the 2011, Code of Ethics and Standards of Practice from NAR, "The term Realtor® has come to connote competency, fairness, and high integrity resulting from adherence to a lofty ideal of moral conduct in business relations. No inducement of profit and no instruction from clients ever can justify departure from this ideal."
Whether you hire a real estate agent or a REALTOR®, the most important thing you can do is research their background, reputation in the market, and get references. This is likely the biggest financial move you'll make, so taking the time to find information about the agent or REALTOR® you're about to hire is a wise investment.
Visiting real estate offices and meeting with their staff is another good way to explore who will fit with your personality and match your needs. Contacting friends for referrals is a good start, but don't just hire your friend's agent or REALTOR® because the real estate transaction worked out for your friend. Spend a little time to effectively communicate your needs, goals, and desires, and then listen carefully to how the agent or REALTOR® responds.
It may not be a marriage but it's certainly a relationship that could last a lifetime, creating a successful financial situation for all.

Reduce, Reuse, and Recycle Your Closet

2011-02-01T15:06:00.000-08:00

It's really no secret. We are a nation of consumers. Watch television for just one evening and you'll know of a dozen sales and promotions happening in your local area. Whether it's retail or sale, there are more than a handful of us that have consumed our ways to a stuffed closet.

Call it early Spring cleaning. Call it a simplification. Organizing and cleaning out your closet can be a great selling tip, because buyers do and will open your closet during a walk-through. And one stuffed to the rafters will appear small and cramped, no matter it's real size.
There is, however, the altruistic side. Today there is an unemployment rate of nearly 10 percent. This translates into around 15 million unemployed Americans. That is why it is important to lend a helping hand to members of your community. Unemployed families still need clothes, even after the paychecks stop.
Reduce:
Consider what it is that you really need. Do you have clothes that don't fit? How about clothes and shoes that you really don't need? Are there items that aren't your "style" anymore?
Many of us like to hold onto clothes that we think we might wear again. But use this rule of thumb. If you haven't worn it in the last year, then it is time to donate.
Reuse:
Resist the urge to refill your closet once you've downsized! "But what about that new pair of boots I've been eyeing?" you say. Find creative ways to reuse items you have already bought. You may be surprised at how much variety you have in your closet when you rely on what you already have. And for those green activists out there, the fewer new items you buy, the less you consume. Every item that is manufactured takes a toll on the economy, through the power used to run the factories, chemicals and oil used to create certain fabrics, and even the gas it takes to ship items to the store.
Recycle:
Start locally. Do you have relatives or friends who would welcome children's clothes? Kids grow fast and many families are struggling to afford bigger sizes. Most communities have local thrift, Goodwill, or Salvation Army stores that will gladly take your donations.
There's also a great site called thredup.com that allows you to exchange kids clothes with families from all across the country. Traders can get a box of clothes for only the cost of shipping at $5.
Adults need donations, as well. Job interviews and changing seasons may put many adults at a disadvantage. Donation means your old piece of clothing can be given a new home.
Cleaning out your closets is a winning situation. It's good for the community, good for sellers, and of course, it's good for the environment! So start your closet on a reduce, reuse, recycle diet today!

Owners, Renters Agree: Owning a Home is a Smart Decision

2011-01-28T13:55:00.000-08:00

A substantial majority of both home owners and current renters agree that owning a home is a smart decision over the long term. That’s according to the results of a National Association of Realtors® survey of 3,793 adults conducted online by Harris Interactive.
The American Attitudes About Homeownership survey found that in today’s challenging economy, 95 percent of owners and 72 percent of renters believe that over a period of several years, it makes more sense to own a home. In addition, an overwhelming majority of home owners are happy with their decision to own a home – 93 percent of owners surveyed would buy again.
“Home owners and renters agree that home ownership benefits individuals and families, strengthens our communities, and is integral to our nation’s economy,” said National Association of Realtors® President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “The results of this survey illustrate just how important issues related to home ownership are to people in this country.”
The survey uncovered some differences between home owners and renters, as well. While more than half of owners are “very” or “extremely” satisfied with the overall quality of their family life, only one-third of renters report the same levels of satisfaction. Similarly, 43 percent of home owners are very/extremely satisfied with their community life, compared with 30 percent of renters.
A majority of renters – 63 percent – said that it was at least somewhat likely that they would purchase a home at some point in the future. Among this group, young adults (18-29 years old) have the strongest aspirations for home ownership; only 8 percent of young adults said that it was “not at all likely” that they would purchase a home at some point in the future.
In today’s market, many aspiring home owners are faced with worries about job security and creditworthiness. Among renters who are very or extremely likely to buy a home in the future, three out of five consider confidence in job security and creditworthiness to be an obstacle.
One point of agreement between renters and home owners was support of the mortgage interest deduction (MID). Seventy-four percent of owners and 62 percent of renters say it’s “extremely” or “very” important that the MID remain in place.
“At a time when the middle class is under increasing economic pressures, both home owners and renters agree that the mortgage interest deduction should not be targeted for change,” said Phipps. “Given strong public support of and aspirations toward owning a home, we need to keep policies in place that support and encourage responsible, sustainable home ownership for our future.”
This survey was conducted online within the U.S. and fielded October 6-20, 2010. A total of 3,793 adults, 18 and older were surveyed, including 1,880 home owners, 1,115 renters, and 798 young adults. All samples came from the Harris Poll online database and were weighted for age, sex, race/ethnicity, education, region and household income to be representative of the U.S. general population of adults 18 and older. Propensity score weighting was also used to adjust for respondents’ propensity to be online. Results are available online at www.realtor.org/statsanddata/homeownership/attitudes_homeown.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

How Much Home Can I Afford?

2011-01-27T13:13:00.000-08:00

Home prices skyrocketed in the early 2000's, with things really heating up between 2005 and 2007. According to the New York Times, HUD conducted a survey in 2007, finding that home values had risen 16 percent in just those two years. The housing bubble burst in the Spring of 2007 and markets tanked.

Now house values are resetting, with some areas still experiencing declines. In high boom areas, such as Florida, Arizona, and California, homes are having to correct from staggering rises of 20, 30 and even 40 percent in home values. This means values rose, and millions of homeowners bought at the top of the market, now finding themselves upside down in their loans.
Despite the crisis, there are still buyers on the market. But many are wary to make a mistake of buying a home they can't pay for. How much home can you really afford? Home affordability, in general, is dependant on a range of factors. These include:
Employment status: Do you have a stable job and income? Lenders will want to know if they can rely on you to make monthly payments for many years to come. With an unemployment rate near 10 percent, it's no wonder a record number of homes are currently in foreclosure. Another way lenders assess your risk is by examining your credit score.
Credit Score: Over your adult life you have been building up a credit score. Every card and loan you have opened has figured into a 3 digit number from 300 - 850. The higher your number, the less "risk" you are perceived to be, and thus, the more likely you'll be extended higher sums of credit for a lower rate. Car loans, student loans, home loans, credit cards, and personal loans. How faithfully you've repaid them, and how many of them you have open, dictates your score.
Number of Dependants: Do you have children or aging parents for whom you are financially responsible? If so, consider medical bills, schools tuition, and daycare when calculating a reasonable budget.
Desired Location: A 2,000 square foot home in rural Nebraska costs dramatically less than the same 2,000 square foot home in the heart of New York City. Prices even range widely by suburb and neighborhood.
Savings: You will need money for a downpayment. Financial Expert Suze Orman recommends you put at least 20 percent down. That means on a $200,000 house, for example, you should have $40,000 in cash to put down. You will also need additional cash for closing costs, as well as repairs and maintenance that are inevitable with homeownership.
Emergency Fund: Do you have a separate savings account worth 8 months of bills? You must have an emergency fund. Just ask the 15 million unemployed. Things do and will happen. If you don't have this fund, you can't afford a house. You may be able to "borrow" money for a house ... but in reality you really can't afford one.
Interest Rates: Interest rates are at historical lows. At this writing, the 30-year fixed rate mortgage is 4.74 percent. To put this in perspective, rates in the 1980's were anywhere from 13 to 18 percent. This means big savings if you are in the position to buy.
Monthly Payments: If you have ever bought a car, one of the first things a salesman will ask you is, "Where do you want your monthly payment to be?" It's all about rates and downpayments with lenders. Yes, it is important that your monthly mortgage payment is no more than 1/3 of your monthly income, but don't be coaxed into buying a home you can't really afford just because the monthly payments are appealing (hello, subprime mortgage crisis).
Now, all that said, this next idea may seem a bit radical for some of you. There is a movement among some Americans to not only reduce their debt, but to get completely out from under it. This translates implicitly into the home buying process.
We have become a nation increasingly driven by the bigger and better. Need we say more than "McMansions." It is a culture of debt, where even the national government owes $14 trillion. And no, not every country has national debt. The United States, though, leads the way.
So, what if you could buy a much smaller house, or a house in a much less prominent neighborhood, and avoid a mortgage payment altogether?
The idea is nearly unheard of in this country. But it could be one that will begin to gain ground as many families struggle to makes ends meet, and even more families learn the hard lesson about home affordability. The truth of the matter is this. If you are paying a mortgage, you do not own your home. It doesn't matter if you've paid on a loan for 1 year or 29, if you default, the home is property of the bank.
"But what about Joe Smith, who works in the same office and makes $150,000 a year. He just bought that $500,000 house. I should have that same standard of living." This is what is partially responsible for the bubble we saw in the last decade. Keeping up with the Jones.
Consider for a moment what it is in your life that is really important. No doubt you will quickly pull to mind your family and closest friends. You may think about a full refrigerator, a safe city, and a clean bill of health. These are things found in small homes, the same as large.
Success is not measured by the size of house you own. So, if you are in the market to become a homeowner, be sure to consider what it could mean to buy truly within your means. Does it mean saving for a few more years and then buying a fixer upper? Does it mean the smaller house in the less prestigious neighborhood is in your budget?
In recent years, "What can I afford?" has turned into "How much monthly payment can I afford?" or "How much credit am I approved for?" These do not equate with affordability. Perhaps it is time to think long and hard about what kind of home is appropriate for you and your family. You may find that travertine and granite can be forgone for a nice kitchen table and family meals.

December Existing-Home Sales Jump

2011-01-20T16:10:00.000-08:00

Existing-home sales rose sharply in December, when sales increased for the fifth time in the past six months, according to the National Association of REALTORS®. Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 12.3 percent to a seasonally adjusted annual rate of 5.28 million in December from an upwardly revised 4.70 million in November, but remain 2.9 percent below the 5.44 million pace in December 2009.Lawrence Yun, NAR chief economist, said sales are on an uptrend. “December was a good finish to 2010, when sales fluctuate more than normal. The pattern over the past six months is clearly showing a recovery,” he said. “The December pace is near the volume we’re expecting for 2011, so the market is getting much closer to an adequate, sustainable level. The recovery will likely continue as job growth gains momentum and rising rents encourage more renters into ownership while exceptional affordability conditions remain.”The national median existing-home price for all housing types was $168,800 in December, which is 1.0 percent below December 2009. Distressed homes rose to a 36 percent market share in December from 33 percent in November, and 32 percent in December 2009.“The modest rise in distressed sales, which typically are discounted 10 to 15 percent relative to traditional homes, dampened the median price in December, but the flat price trend continues,” Yun explained.Inventory LevelsTotal housing inventory at the end of December fell 4.2 percent to 3.56 million existing homes available for sale, which represents an 8.1-month supply at the current sales pace, down from a 9.5-month supply in November.NAR President Ron Phipps said buyers are responding to very good affordability conditions despite tight mortgage credit. “Historically low mortgage interest rates, stable home prices, and pent-up demand are drawing home buyers into the market,” Phipps said. “Recent home buyers have been successful with very low default rates, given the outstanding performance for loans originated in 2009 and 2010.”According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.71 percent in December from 4.30 percent in November; the rate was 4.93 percent in December 2009.Transaction TypesA parallel NAR practitioner survey shows first-time buyers purchased 33 percent of homes in December, up from 32 percent in November, but are below a 43 percent share in December 2009.Investors accounted for 20 percent of transactions in December, up from 19 percent in November and 15 percent in December 2009; the balance of sales were to repeat buyers. All-cash sales were at 29 percent in December, compared with 31 percent in November, but up from 22 percent a year ago. “All-cash sales have been consistently high at about 30 percent of the market over the past six months,” Yun said.Single-family home sales jumped 11.8 percent to a seasonally adjusted annual rate of 4.64 million in December from 4.15 million in November, but are 2.5 percent below the 4.76 million level in December 2009. The median existing single-family home price was $169,300 in December, down 0.2 percent from a year ago.Existing condominium and co-op sales surged 16.4 percent to a seasonally adjusted annual rate of 640,000 in December from 550,000 in November, but remain 5.2 percent below the 675,000-unit pace one year ago. The median existing condo price was $165,000 in December, which is 7.4 percent below December 2009.Performance by RegionRegionally, existing-home sales in the Northeast jumped 13.0 percent to an annual pace of 870,000 in December but are 5.4 percent below December 2009. The median price in the Northeast was $237,300, which is 1.4 percent below a year ago.Existing-home sales in the Midwest rose 11.0 percent in December to a level of 1.11 million but are 4.3 percent below a year ago. The median price in the Midwest was $139,700, up 3.3 percent from December 2009. In the South, existing-home sales increased 10.1 percent to an annual pace of 1.97 million in December but are 2.5 percent below December 2009. The median price in the South was $148,400, unchanged from a year ago. Existing-home sales in the West surged 16.7 percent to an annual level of 1.33 million in December but remain 1.5 percent below December 2009. The median price in the West was $204,000, down 5.6 percent from a year ago.

Real Estate Outlook: Double-Dip on the Horizon?

2011-01-19T16:55:00.000-08:00

Is the housing market poised for a double dip in house values? Corelogic reports that as of November, home values were down 5 percent from the same time the year before.

CoreLogic Chief Economist Mark Fleming says, "We're continuing to see the influence of seasonal declines that typically depress home prices during the latter part of the year, but the fact that the rate of decline increased for November is indicative of the uphill battle we're facing with the housing recovery."
Steep declines were seen in multiple locales across the nation. Idaho saw home values fall 13.5 percent.
Zillow.com reports that the "decline in home values from the national peak in June 2006 officially surpassed the magnitude of declines experienced during the Great Depression, falling 26 percent from peak levels."
Also troublesome is the monthly pace at which homes values are now declining. In November the rate rose to 0.78 percent.
According to Zillow, "We're still seeing significant weakness in the lowest home value tier, particularly with the expiration of the Federal home buyer tax credits. ... Weakness in the bottom tier of homes naturally translate into the higher tiers as these homeowners become exposed to negative equity (and thus are removed from the demand equation altogether) or have less money to spend buying their next home."
Economists say that for at least the next 2 quarters we'll see larger factors -- such as unemployment -- producing more home value declines.
The New York Times reported last week that we could see new job growth thanks in part to the Federal Reserve's plan to buy up $600 billion worth of Treasury securities.
Janet L. Yellen, Fed vice chairwoman, noted, “It will not be a panacea, but I believe it will be effective in fostering maximum employment and price stability."
There are those, however, that criticize the Fed's move, saying it could instead create future financial imbalances.
Time will tell, but for now, most are hoping for the best.
The Mortgage Banker Association, the national association representing the real estate finance industry, is reporting in their latest findings that mortgage applications rose. The Refinance Index rose 4.9 in just one week. This is welcome news, as the unadjusted Purchase Index increased 41.9 percent compared with the previous week, but was still 10.5 percent lower than the same week one year ago.
Published: January 17, 2011

Could Rising Mortgage Rates Spur Housing Rush?

2011-01-11T14:54:00.000-08:00

Mortgage rates have been rising ever since November 2010, when lows of 4.42 percent were reported. Bankrate.com recently reported a rise to 5.02 percent in 30-year fixed rate loans, which is the second time in three weeks rates have crossed the 5 percent mark--many experts say signaling the end to the 4 percent mortgage rate era.
Forecasters predict mortgage rates to hover in the 5-6 percent range in 2011.

Yet, some industry experts say the rise in mortgage rates may stimulate a sluggish housing market.

The rising rates create an urgency for potential buyers. They’ll have more incentive to buy soon before mortgage rates go any higher.

After all, higher interest rates mean buyers will pay more for their mortgages. Greg McBride, chief economist at Bankrate.com, told CNNMoney.com that when rates rise 4.25 percent to 5 percent, it takes away 9 percent of the purchasing power of buyers.

Lawrence Yun, chief economist of the National Association of REALTORS®, doesn't foresee a moderate hike in mortgage rates as a negative for the industry. Instead, he says the real mortgage challenge is getting lenders to approve creditworthy buyers for a loan.

"It's less about rates than it is about underwriting standards ... If lenders return to more normal, safe underwriting standards for creditworthy buyers, there would be a bigger boost to the housing market and spillover benefits for the broader economy," Yun said.Source: “Kiss 4% Mortgage Rates Goodbye,” CNNMoney.com (Dec. 30, 2010)

White House Not Worth What It Used to Be

2011-01-06T14:02:00.000-08:00

Over the past three years, the White House has lost nearly a quarter of its value, the Chicago Tribune reports. In just the past month, the 132-room presidential mansion has dropped nearly $4 million.

During the housing boom, the White House was valued at $331.5 million, according to Zillow, but now sits at $253.1 million--a 23.7 percent decline in value.
The White House boasts 16 bedrooms and 35 bathrooms on 18 acres in Washington, D.C.

Many home owners can relate to its steep drop in price due to market conditions. Home owners across the country are facing similar drops, with a 23 percent average decline in housing values since 2006.

Still, Ted Jones, chief economist at the Stewart Title Guaranty Co., says buying a house is a better investment over the long haul than even buying gold. He notes that if you had purchased a median-priced existing home in January 1980 and sold it in October 2010, you’d have a 252 percent gain — despite the 23 percent drop in values since 2006. The value of gold in the last 30 years, on the other hand, has not kept up with inflation.

"And unlike gold, you would have been able to live in the property, reap the tax deductions for mortgage interest and property taxes, and a nontaxable gain of up to $500,000 when the house was sold," Jones says.
Source: “White House Lost Value Too,” Chicago Tribune (Jan. 2, 2011)

This will most likely be my last day of work this year....

2010-12-31T11:43:00.000-08:00

I don't wait for moods. You accomplish nothing if you do that. Your mind must know it has got to get down to work. This is a practiced behavior. I'm a great believer in luck and I find the harder I work, the more I have of it. The dctionary is the only place that success comes before work. Hard work is the price we must pay for success. I thank you can accomplish anything if you're willing to pay the price.

Have a great and safe New Years Eve and New Year.....

Rick Funk

Pending Home Sales Continue Recovery

2010-12-30T13:34:00.000-08:00

Pending home sales rose again in November, with the broad trend over the past five months indicating a gradual recovery into 2011, according to the NATIONAL ASSOCIATION OF REALTORS ® .

The Pending Home Sales Index, a forward-looking indicator, rose 3.5 percent to 92.2 based on contracts signed in November from a downwardly revised 89.1 in October. The index is 5.0 percent below a reading of 97.0 in November 2009. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, said historically high housing affordability is boosting sales activity. “In addition to exceptional affordability conditions, steady improvements in the economy are helping bring buyers into the market,” he said. “But further gains are needed to reach normal levels of sales activity.”

The PHSI in the Northeast increased 1.8 percent to 72.6 in November but is 6.2 percent below November 2009. In the Midwest the index declined 4.2 percent in November to 78.3 and is 7.7 percent below a year ago. Pending home sales in the South slipped 1.8 percent to an index of 91.4 and are 7.2 percent below November 2009. In the West the index jumped 18.2 percent to 123.3 and is 0.4 percent above a year ago.

“If we add 2 million jobs as expected in 2011, and mortgage rates rise only moderately, we should see existing-home sales rise to a higher, sustainable volume,” Yun said. “Credit remains tight, but if lenders return to more normal, safe underwriting standards for creditworthy buyers, there would be a bigger boost to the housing market and spillover benefits for the broader economy.”
The 30-year fixed-rate mortgage is forecast to rise gradually to 5.3 percent around the end of 2011; at the same time, unemployment should drop to 9.2 percent.

For perspective, Yun said that the U.S. has added 27 million people over the past 10 years. “However, the number of jobs is roughly the same as it was in 2000 when existing-home sales totaled 5.2 million, which appears to be a sustainable figure given the current level of employment,” he explained. “All the indicator trends are pointing to a gradual housing recovery,” Yun said. “Home price prospects will vary depending largely upon local job market conditions. The national median home price, however, is expected to remain stable even with a continuing flow of distressed properties coming onto the market, as long as there is a steady demand of financially healthy home buyers.”

Existing-home sales are projected to rise about 8 percent to 5.2 million in 2011 from 4.8 million in 2010, with an additional gain of 4 percent in 2012. The median existing-home price could rise 0.6 percent to $173,700 in 2011 from $172,700 in 2010, which was essentially unchanged from 2009.

“As we gradually work off the excess housing inventory, supply levels will eventually come more in-line with historic averages, and could allow home prices to rise modestly in the range of 2 to 3 percent in 2012,” Yun said.
New-home sales are estimated to rise 24 percent to 392,000 in 2011, but would remain well below historic averages, while housing starts are forecast to rise 21 percent to 716,000.

Yun sees Gross Domestic Product growing 2.5 percent in 2011, and the Consumer Price Index rising 2.3 percent.

Source: NAR

"God Bless Us, Everyone!"

2010-12-13T15:15:00.003-08:00

May you Christmas be full of love, peace, happiness, friends and family. From mine to yours, The Very Best Holidays ever!

Rick Funk and family

Economic Growth Exceeds Forecast

2010-12-13T15:15:00.002-08:00

A rash of favorable economic reports, including a jump in consumer spending and a drop in layoffs, are offering hope for a pickup.

Moreover, new Commerce Department data show U.S. gross domestic product grew 2.6 percent in the third quarter — not 2.5 percent as initially reported. The encouraging signs are prompting some economists to revise fourth-quarter and 2011 growth estimates upward.
Source: The Wall Street Journal, Conor Dougherty (12/23/10)
© Copyright 2010 Information Inc.

There’s a Reason for Differences in Price

2010-12-13T15:15:00.001-08:00

Housing prices vary from city to city, but even within your neighborhood or community, there may be distressed and non-distressed sub-markets with significant price differences. To illustrate, the overall median sale price of a detached existing home has been just over $300,000 throughout 2010. By comparison, the median price of a conventional non-distressed sale was about a third higher at roughly $400,000. At the other extreme, REO properties sold by banks were about a third lower than the overall median at roughly $200,000. Short sales, however, were not so steeply discounted. With a median price of roughly $270,000 over the past year, short sales were priced about 10 percent below the overall median and about 25 percent higher than REOs. What explains these differences in prices?

REO properties are sold substantially below market price because they are typically smaller in size, generally not well-maintained, and may have title clearance issues that are not desirable to home buyers. Also, since banks and lenders are not in the business of property management, they try to get rid of the inventory faster by reducing prices to below market level.

Short sales are usually priced somewhere between REO sales and market sales. These are properties owned by “underwater borrowers” who cannot pay off the mortgage balance. To avoid incurring hefty costs from a foreclosure proceeding, lenders agree to discount the loan balance. With lenders willing to concede, short sale properties are priced below market value but above what they would have sold in foreclosure status, so lenders could minimize the financial loss that would have incurred otherwise.

Fewer homeowners underwater in the third quarter

2010-12-13T15:15:00.000-08:00

However, Nevada, Arizona, California and Florida also posted the biggest decline in negative equity, mostly because a high percentage of severely underwater borrowers in those states fell into foreclosure.
Oklahoma had the smallest percentage of underwater homeowners in the third quarter at 6 percent. Only nine states recorded percentages less than 10 percent.
The total amount of negative equity decreased to $744 billion nationwide, down from $766 billion in the previous quarter.

Thomas Jefferson

2010-12-09T13:31:00.001-08:00

LISTED BELOW IS THE HISTORY OF ONE OF THE GREAT LEADERS OF AMERICA, PLEASE NOTE THAT IN HIS LIST OF ACCOMPLISHMENTS, HE WAS NEVER NOTED AS A COMMUNITY ORGANIZER.
Thomas Jefferson was a very remarkable man who started learning very early in life and never stopped.
� At 5, began studying under his cousins� tutor.
� At 9, studied Latin, Greek and French.
� At 14, studied classical literature and additional languages.
� At 16, entered the College of William and Mary.
� At 19, studied Law for 5 years starting under George Wythe.
� At 23, started his own law practice.
� At 25, was elected to the Virginia House of Burgesses.
� At 31, wrote the widely circulated "Summary View of the Rights of British America" and retired from his law practice.
� At 32, was a Delegate to the Second Continental Congress.
� At 33, wrote the Declaration of Independence.
� At 33, took three years to revise Virginia’s legal code and wrote a Public Education bill and a statute for Religious Freedom.
� At 36, was elected the second Governor of Virginia succeeding Patrick Henry.
� At 40, served in Congress for two years.
� At 41, was the American minister to France and negotiated commercial treaties with European nations along with Ben Franklin and John Adams.
� At 46, served as the first Secretary of State under George Washington.
� At 53, served as Vice President and was elected president of the American Philosophical Society.
� At 55, drafted the Kentucky Resolutions and became the active head of Republican Party.
� At 57, was elected the third president of the United States.
� At 60, obtained the Louisiana Purchase doubling the nation’s size.
� At 61, was elected to a second term as President.
� At 65, retired to Monticello.
� At 80, helped President Monroe shape the Monroe Doctrine.
� At 81, almost single-handedly created the University of Virginia and served as its first president.
� At 83, died on the 50th anniversary of the Signing of the Declaration of Independence along with John Adams

Thomas Jefferson knew because he himself studied the previous failed attempts at government. He understood actual history, the nature of God, his laws and the nature of man. That happens to be way more than what most understand today. Jefferson really knew his stuff. A voice from the past to lead us in the future: John F. Kennedy held a dinner in the white House for a group of the brightest minds in the nation at that time. He made this statement: "This is perhaps the assembly of the most intelligence ever to gather at one time in the White House with the exception of when Thomas Jefferson dined alone." When we get piled upon one another in large cities, as in Europe, we shall become as corrupt as Europe. Thomas Jefferson The democracy will cease to exist when you take away from those who are willing to work and give to those who would not. Thomas Jefferson It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world. Thomas Jefferson I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them. Thomas Jefferson My reading of history convinces me that most bad government results from too much government. Thomas Jefferson No free man shall ever be debarred the use of arms. Thomas Jefferson The strongest reason for the people to retain the right to keep and bear arms is, as a last resort, to protect themselves against tyranny in government. Thomas Jefferson The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. Thomas Jefferson To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical. Thomas Jefferson Thomas Jefferson said in 1802: I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property - until their children wake-up homeless on the continent their fathers conquered. I wish we could get this out to everyone!!!
I'm doing my part. Please do yours......

10 Reasons Why....Now is a good time to buy

2010-12-08T15:48:00.000-08:00

Owning a home has been a part of the American Dream for decades. If you are still unsure, however, whether or not homeownership is the move for you, be sure to read these ten reasons to buy.

1. Low Interest Rates. It's true! Interest rates are currently at historical lows. This means over the course of your loan, you'll pay less interest. And it also means monthly payments will be a smaller, more manageable amount.
2. Mortgage Interest Deduction: While this deduction may not be available for much longer, for now you can still use this great tax advantage!
3. Stability: Studies have shown that homeownership not only increases community involvement, it also leads to safer neighborhoods, and higher graduation rates.
4. Affordability: Coupled with the low interest rates, affordability is the highest it's been in years. Prices fell in many areas and median incomes rose -- meaning you can get more bang for your buck.
5. Paying Towards Ownership. Instead of paying a landlord, you are making an investment in your future. Every month your payment goes towards something you'll eventually own and that will have worth and value. Renting only makes the landlord richer!
6. Appreciation: Average appreciation rates vary widely depending on the condition of the local market and demand, but anywhere from 4 to 6 percent annually is considered average. This means the longer you stay in your home, the more your home will be worth.
7. Home equity: This building of worth over time (see number 6) means that if you need to make improvements to your home, you will be able to tap into its equity to finance repairs and additions.
8. Gardening: Many households are embracing the organic movement, and families have begun again to raise their own food. Even the White House has its own victory garden. Owning your own home (in most cases) means you will have your own land to cultivate.
9. Roots: Young and old alike seek out places where they belong. Owning a property, and taking your first steps towards putting down roots, can mean the difference between a house and a home.
10. Monthly Payments: Once your home is paid off -- you won't have monthly payments anymore. Apart from insurance, property taxes, and repairs, monthly expenses are minimal. In today's market, many buyers are finding, as well, that their monthly house payments are less than what they'd pay in rent!

Real Estate Outlook: Bernanke Discusses Job Growth

2010-12-07T16:47:00.000-08:00

Is the slow pace of the economy limiting job growth? That's the sentiment from Federal Reserve Chairman, Ben Bernanke. Last Tuesday Bernanke had a chance to discuss issues other than the recent Bond purchase, and during this time he brought up concerns over job growth. Bernanke noted, "At the pace of growth that we’re seeing now, we’re not growing fast enough to materially reduce the unemployment rate." He says "the economy needs to grow at an annualized rate of 2 to 2.5 percent just to accommodate new workers coming into the labor force."

And while the recession officially ended over a year ago, unemployment has remained nearly constant at 9.6 percent from June of 2009.
According to The Conference Board Consumer Research Center, however, consumers are increasingly upbeat about future job prospects, with those polled expecting more jobs, income increases, and fewer job declines.
The Conference Board Consumer Confidence Index® has improved for 2 straight months now. This index is based on a monthly representative sample of 5,000 U.S. households. Lynn Franco, Director of The Conference Board Consumer Research Center reports, "Consumer confidence is now at its highest level in five months, a welcome sign as we enter the holiday season. Consumers' assessment of the current state of the economy and job market, while only slightly better than last month, suggests the economy is still expanding, albeit slowly. Expectations, the main driver of this month's increase in confidence, are now at the highest level since May. Hopefully, the improvement in consumers' mood will continue in the months ahead."
Commercial real estate markets are reportedly stabilizing, as well. Lawrence Yun, the chief economist for the National Association of REALTORS® reports that the slowly improving economy has led to a rise in commercial leasing demand. He says this "means overall vacancy rates have already peaked or will soon top out."
Yun anticipates a rise in household formation from an improving economy, which will increase demand for housing, both ownership and rental. "Multifamily housing is the one commercial sector that has held on relatively well in the past year, and can expect the best performance in 2011," he added.
"Apartment rents could rise by 1 to 2 percent in 2011, after having fallen in 2009 and no growth in 2010," Yun said. "This rent rise therefore could start to force up broader consumer prices as well."

Strong Rebound in Pending Home Sales

2010-12-02T13:54:00.000-08:00

Pending home sales jumped in October, showing a positive uptrend since bottoming in June, NAR says.

The Pending Home Sales Index, a forward-looking indicator, rose 10.4 percent to 89.3 based on contracts signed in October from 80.9 in September. The index remains 20.5 percent below a surge to a cyclical peak of 112.4 in October 2009, which was the highest level since May 2006 when it hit 112.6.
Last October, first-time buyers were motivated to make offers before the initial contract deadline for the tax credit last November. The data reflects contracts and not closings, which normally occur with a lag time of one or two months. Lawrence Yun, NAR chief economist, said excellent housing affordability conditions are drawing home buyers. “It is welcoming to see a solid double-digit percentage gain, but activity needs to improve further to reach healthy, sustainable levels. The housing market clearly is in a recovery phase and will be uneven at times, but the improving job market and consequential boost to household formation will help the recovery process going into 2011,” he said.

“More importantly, a return to more normal loan underwriting standards and removal of unnecessary underwriting fees for very low risk borrowers is needed and could quickly help in the housing and economic recovery,” Yun said. Recent loan performance data from Fannie Mae and Freddie Mac clearly demonstrates very low default rates on recently originated mortgages, much lower that the vintages of 2002 and 2003 before the housing boom.
The PHSI in the Northeast jumped 19.6 percent to 71.3 in October but is 27.3 percent below the tax credit peak in October 2009. In the Midwest the index surged 27.3 percent in October to 81.7 but is 24.8 percent below a year ago. Pending home sales in the South rose 7.1 percent to an index of 93.8 but are 18.4 percent below October 2009. In the West the index slipped 0.4 percent to 104.3 and is 15.6 percent below a year ago.

Near term, Yun expects home sales will continue to climb from their cyclical low this past summer. “Even so, we now have some consumer concerns regarding the mortgage interest deduction, an important component in housing affordability,” he said. “Preliminary results of a new survey show nearly three out of four home owners and two out of three renters consider the mortgage interest deduction to be extremely or very important to them. Home owners already pay between 80 and 90 percent of all federal income taxes and additional tax burden would hurt them and the economic recovery, so we have a reasonable hope that it will not be changed.”
Source: NAR

Consumers starting to step up...

2010-11-30T14:17:00.000-08:00

Consumer confidence in Nov. hits 5-month high
Economists watch confidence closely because consumer spending accounts for about 70 percent of U.S. economic activity and is critical to a strong rebound. It takes a reading of 90 to indicate a healthy economy.

Value in Home Ownership....

2010-11-30T13:56:00.000-08:00

Is there value in owning a home? The recently released 2010 National Association of REALTORS® Profile of Home Buyers and Sellers brings us some promising results. Today homeowners are living in their homes longer, and after several years of price declines, are seeing rises in home equity gains.

It was only earlier this decade that so many buyers jumped on the investment bandwagon. They bought and sold within incredibly short time frames, and walked away with profits. But as the booms busted, many sellers found they had bought at the top of the market and as prices corrected, they lost more than just dollars. Foreclosure rates skyrocketed. Historically, however, homeownership is a long term investment, and one that brings many rewards.
"Sellers who purchased at the top of the market and had to sell in a short time frame were hurt by the price correction, but the vast majority who are able to stay for a normal period of home ownership generally built enough equity to make a trade-up purchase," NAR 2010 President Vicki Cox Golder said. "Despite swings in the housing market in recent years, the fact is most long-term owners see healthy gains in the value of their property."
Golder also says the pattern of home buyers taking a long-term view has solidified over the past few years. "This underscores two simple facts – home ownership encourages stability, and the longer you own, the better your investment."
Current market and economic conditions have created a shift from the house flipping ways of the boom. "The primary exception is for experienced investors, many of whom pay cash and are making renovations or improvements after a careful study of properties, neighborhoods and market demand," Golder explained. "The house flipping and quick gains which occurred during the boom period were abnormal, driven by risky, easy-money financing that should never have been allowed in the market."
American are still buying, however. And surveys have found there are particular reasons behind these purchases. These include the desire to own a home, the desire for a larger home, a change in family situation and taking advantage of the home buyer tax credit, a job-related move, and then the current supply of affordable homes.
And once they buy, homeowners are staying put longer. A typical seller has been in their home for 8 years, but the survey reveals first-time buyers are planning to stay for 10 years, and repeat buyers for 15 years.
Even with several years of price declines, the typical seller who purchased a home eight years ago experienced a median equity gain of $33,000, a 24 percent increase, while sellers who were in their homes for 11 to 15 years saw a median gain of 40 percent. So, once again buying for the long-term is steering its way back into value.

Housing Remains Highly Affordable for Seventh Consecutive Quarter

2010-11-23T15:29:00.001-08:00

Housing affordability remained near its highest level nationwide for the seventh consecutive quarter as interest rates dipped below 5 percent for the first time since the series was first compiled nearly two decades ago, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) just released.

The HOI indicated that 72.1 percent of all new and existing homes sold in the third quarter of 2010 were affordable to families earning the national median income of $64,400. The index for the third quarter almost equaled the record-high 72.5 percent set during the first quarter of 2009 and marked the seventh consecutive quarter that the index rose above 70 percent. Until 2009, the HOI rarely topped 65 percent and never reached 70 percent.

"With interest rates remaining at historically low levels, and house prices starting to stabilize, homeownership is within reach of more households than it has been for almost 20 years," said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Michigan. "While these favorable conditions are beginning to draw home buyers back into the market, builders continue to have major problems in obtaining credit for new-home construction, and this obstacle must be overcome if builders are to respond to improving demand moving forward."

Indianapolis-Carmel, Ind., was the most affordable major housing market in the country, regaining the top ranking it held for nearly five years after being edged out by Syracuse, N.Y., last quarter. In Indianapolis, 93.3 percent of all homes sold were affordable to households earning the area's median family income of $68,700.
Also near the top of the list of the most affordable major metro housing markets were Youngstown-Warren-Boardman, Ohio-Pa.; Grand Rapids-Wyoming, Mich.; and Dayton, Ohio, and Wichita, Kan.

Among smaller housing markets, the most affordable was Kokomo, Ind., where 96.1 percent of homes sold during the third quarter of 2010 were affordable to families earning a median-income of $61,400. Other smaller housing markets near the top of the index included Mansfield, Ohio; Lima, Ohio; Monroe, Mich.; and Bay City, Mich., respectively.

New York-White Plains-Wayne, N.Y.-N.J., continued to lead the nation as the least affordable major housing market during the third quarter of 2010. In New York, 22.6 percent of all homes sold during the quarter were affordable to those earning the area's median income of $65,600. This was the 10th consecutive quarter that the New York metropolitan division has occupied this position.

The other major metro areas near the bottom of the affordability scale included San Francisco; Bridgeport-Stamford-Norwalk, Conn.; Los Angeles-Long Beach-Glendale, Calif.; and Santa Ana-Anaheim-Irvine, Calif., respectively.

Santa Cruz-Watsonville, Calif. was the least affordable of the smaller metro housing markets in the country during the third quarter. Other small metro areas ranking near the bottom included San Luis Obispo-Paso Robles, Calif.; Santa Barbara-Santa Maria-Goleta, Calif.; Ocean City, N.J; and Napa, Calif.

Mortgage Rates Spike Quarter Percent

2010-11-18T15:34:00.000-08:00

Mortgage Rates Spike Quarter Percent
by Ed Ferrara

30 year fixed mortgage rates have risen a quarter point this week to 4.25% on plummeting mortgage-backed securities prices. MBS prices drive mortgage rates in the opposite direction. Conventional 15 year fixed interest rates are also up a quarter of a percent and are at 3.75% currently for well-qualified borrowers who pay a standard .07 to 1 point origination. Both fixed mortgage rates are up substantially from last week and at an immediate risk to rise further.

FHA loan rates move with conforming mortgage rates and are also up this week. Today's 30 year fixed FHA loan rate is at 4.125%, up from 4%. Although the same note rate is available on an FHA 30 year fixed mortgage as a conforming 30 year fixed loan, MI and other fees charged by the Federal Housing Administration make APR higher on an FHA mortgage.
Jumbo mortgage rates are unchanged. The current jumbo 30 year fixed rate is 4.875%
Wells Fargo, the nation's number one originator by volume, adjusted their advertised 30 year fixed rate from 4.25% to 4.625% with an APR of 4.812.
FreeRateUpdate.com surveys wholesale and direct lenders' rate sheets to determine the most accurate mortgage interest rates available to well-qualified consumers who pay an industry standard .07 to 1 point origination. These rates are commonly referred to as "par rates" by mortgage loan officers.

SB 931 (eff. Jan. 1, 2011)

2010-11-10T15:50:00.000-08:00

Discharge of balance of loan indebtedness after a short sale for residential 1-4 real property by holder of a first deed of trust.

This new law prohibits a lender holding a first deed of trust (purchase money or refinance) for a dwelling of 1-4 units to demand a deficiency judgment (unpaid balance due on the loan) from the trustor or mortgagor (owner) who sells the dwelling for less than the remaining amount of the indebtedness due at the time of the short sale to
which the lender has consented in writing.

However, if the owner commits either fraud with respect to the short sale, or waste with respect to the secured real property, then the lender may seek damages and use existing rights and remedies against the owner or any third party for fraud or waste.
Note that this law doesn't apply if the trustor or mortgagor is a corporation or political sudivision of the state.

Adds Section 580e to the Code of Civil Procedure.

Are Foreclosures A Real Deal?

2010-11-09T12:41:00.000-08:00

Foreclosures make up a large segment of the housing market at this time, accounting for around 19% of total sales. This percentage is much higher in areas that went from boom to boost, such as in the states of Florida, California, and Arizona. According to Realtytrac.com, 1 in every 371 housing units received a foreclosure filing in September.

The question is posed. Does buying a foreclosed property save you money?
A market report from Zillow.com gave this example. "In the San Francisco market, where foreclosure re-sales made up 60% of transactions in December 2008, the median sale price for foreclosures was just 47% of the median sale price for non-foreclosures." Savings range widely depending on the area where you are buying, but Zillow.com reports that "foreclosures sell for approximately 28% less than non-foreclosures after controlling for differences in individual houses."
If you are looking to make an investment, however, you need to consider the market in which you are buying a foreclosure. A weak and ailing market could mean values will continue to fall. Buyers may be scarce. This is not an ideal environment for an investment.
Other issues must be taken into consideration, as well. The process of buying a foreclosure can take weeks longer than traditional negotiations. This is simply the nature of the beast. A foreclosure is a legal process. A foreclosure also means you must buy title insurance. According to CBS money watch, "A title search will pick up errors before you sign the check and protect you if something was overlooked. In the unlikely event that a former owner returns to challenge the foreclosure, the insurance company will defend you."
Foreclosed houses also warrant very close home inspections. There have been horror stories of new owners finding cement poured down drains by the disgruntled evicted. Be sure to see the house for yourself before you sign on the dotted line. And have a licensed professional carefully examine the home.
Even if the property hasn't been purposefully vandalized, many foreclosures need extensive repairs. A home may simply have been neglected and older homes require updates and normal upkeep. Budget carefully as you assess how much work the property will require.
If you take all of these matters into consideration, a foreclosed property may be the ideal buy for you.

Low Inflation Keeps Mortgage Rates Relatively Flat This Week

2010-11-08T13:28:00.000-08:00

McLean, VA – Freddie Mac today released the results of its Primary Mortgage Market Survey (PMMS), which found that the 30-year fixed-rate mortgage rate rose slightly for the third consecutive week. The 15-year fixed-rate mortgage rate eased back down a little while the 5-year and 1-year ARMs set another low.

30-year fixed-rate mortgage (FRM) averaged 4.24 percent with an average 0.8 point for the week ending November 4, 2010, up slightly from last week when it averaged 4.23 percent. Last year at this time, the 30-year FRM averaged 4.98 percent.
15-year FRM this week averaged 3.63 percent with an average 0.7 point, down from last week when it averaged 3.66 percent. A year ago at this time, the 15-year FRM averaged 4.40 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.39 percent this week, with an average 0.6 point, down from last week when it averaged 3.41 percent. A year ago, the 5-year ARM averaged 4.35 percent. The 5-year ARM has not been lower since Freddie Mac started tracking it in January 2005.
1-year Treasury-indexed ARM averaged 3.26 percent this week with an average 0.7 point, down from last week when it averaged 3.30 percent. At this time last year, the 1-year ARM averaged 4.47 percent. The 1-year ARM sets another survey low this week.
Frank Nothaft, vice president and chief economist, Freddie Mac, notes, "With little sign of inflation to push up long-term interest rates, fixed mortgage rates held relatively steady this week, while ARM rates hit new all-time record lows. The core price index for personal expenditures, a gauge closely followed by the Federal Reserve (Fed), rose 1.1 percent over the 12-months ending in September and represented the smallest increase since September 2001. In its November 3rd monetary policy committee statement, the Fed affirmed that measures of underlying inflation are somewhat low, relative to levels that the committee judges to be consistent, over the longer run, with its dual mandate."

First-Time Buyers Do's

2010-11-01T13:17:00.000-07:00

If you are ready to buy your first house, congratulations! This is an exciting time that can bring you sweet rewards. It's also a time, however, full of questions. Here are a few do's and don'ts to get you started.

Before you shop, you must decide what type of home is best. Are you looking for a condo, with a strong sense of community, extra amenities, easy maintenance, and willing to pay a monthly HOA fee? Would you prefer a larger house in the suburbs, even if it means a longer commute? Are you looking for older charm or newer construction?
After you've decided this, write down a list of your wants and needs. This is a time to be honest with yourself. Rarely does a homebuyer get everything they "want" in a home. You will need to compromise. For example, you may need 3 bedrooms, but want a fenced back yard. If push comes to shove, you may have to forgo the fenced yard to get the bedrooms.
When you begin to shop, have a budget in mind. While prices are always negotiable, you don't want to waste your or a seller's time. Be realistic about a home's price. Let your real estate agent compile a list of homes to visit that fit your criteria, as well as your budget. As you make your way to and through the homes, be sure you don't judge a home until you've been through the entire place. There are homes that seriously lack curb appeal, but with a few cosmetic enhancements can be real showstoppers.
Pay close attention to what repairs the home may need. Don't get swept up by fantastic staging. Keep your list of criteria in mind the entire shopping process.
Once you have decided on a home, it is time to begin negotiations. Do not hesitate. Desirable homes don't sit on the market for long. Hesitation may translate into missing out on a property that you really love. That said, you must be confident with your decision. This is not a time to buy a house simply because you feel pressured.
Your agent will help you put in an offer. By researching area comparables (that's other homes that have sold or are selling in the area), they can come up with a reasonable amount to pay. How much are you willing to pay for this home? Set a top number in your mind and don't let emotion push you to buy past your budget. And leave room in your coffers for closing costs, a down payment, initial repairs, as well as a home inspection.
Home buying can be a stressful process, but keep the end goal in sight and you'll do great!

Why Buy a Home?

2010-10-29T13:27:00.000-07:00

The past few years of rocky real estate markets has left some people wondering, why buy a home? If you find that thought running through your mind consider these things.

A recent survey commissioned by the National Association of Home Builders found that 72 percent of its respondents opposed any effort to get rid of the homeowners' mortgage interest deduction. That's despite the fact that doing so could help ease the nation's budget deficit.
Gil Gross host of Real Estate Today Radio reported that, "The survey cut across partisan lines, and even across homeowner status. 76 percent of Republicans and 64 percent of Democrats oppose eliminating the deduction, as do 75 percent of owners and even 55 percent of renters. They all recognize the importance of homeownership to the nation's economy."
But why when you hear the horror stories of markets crashing, housing underwater and homeowners facing foreclosure, would you want to buy a home?
The first reason, we just addressed. When you buy a home there are tax advantages. Effectively, homeownership provides an excellent tax shelter. But there are more reasons to trade your rent payment for a mortgage. Buying a home for this tax advantage isn't how you should look at it. Rather, think of it this way. You need a place to live. Receiving a tax advantage for the place that you choose to live in, is a nice bonus.
When carefully used, a home equity loan (line of credit that allows you to borrow against your home) can be a better way to carry credit. That's because home equity lines can have lower interest rates and are also deductible whereas typical credit card interest is not.
Owning your own home gives you more freedom and the opportunity to create a living environment exactly how you want it. There's no consulting with landlords to see if you can do something to the home or who will pay for the change. Of course, that means when you buy a home you should consider what additional changes you plan to make, so that you can appropriately budget. Also, keep in mind that with homeownership come unexpected expenses for repairs and maintenance. While that may sound like a reason not to buy, it shouldn't be. Think about owning a car. There are maintenance issues and expenses but most people still like to own their own vehicle.
Homeownership provides a sense of stability and security. Instead of wondering when the landlord might decide to sell the home, you are in control of that decision. Additionally, homeownership provides immeasurable values of belonging to a social community. Also, as a homeowner, you'll have a greater influence on community affairs. Renters, being usually more transient, have less influence on policymakers.
What it comes down to is how long you plan on staying in a particular home and area and what you can afford. Owning your home weds you to a property which some people feel limits them. However, many others see a home as their life and the legacy they'll leave behind... a place where they raise children, enjoy company, experience life's ups and downs, and eventually pass on their home to loved ones.

10% Jump in September Existing-Home Sales

2010-10-25T15:05:00.000-07:00

Existing-home sales rose again in September, affirming that a sales recovery has begun, according to the National Association of REALTORS®.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums, and co-ops, rose 10 percent to a seasonally adjusted annual rate of 4.53 million in September from a downwardly revised 4.12 million in August, but remain 19.1 percent below the 5.60 million-unit pace in September 2009 when first-time buyers were ramping up in advance of the initial deadline for the tax credit last November.

Lawrence Yun, NAR chief economist, said the housing market is in the early stages of recovery. “A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium. But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions,” he said.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.35 percent in September from 4.43 percent in August; the rate was 5.06 percent in September 2009.

The national median existing-home price for all housing types was $171,700 in September, which is 2.4 percent below a year ago. Distressed homes accounted for 35 percent of sales in September compared with 34 percent in August; they were 29 percent in September 2009.

NAR President Vicki Cox Golder said opportunities abound in the current market. “A decade ago, mortgage rates were almost double what they are today, and they’re about one-and-a-half percentage points lower than the peak of the housing boom in 2005,” she said. “In addition, home prices are running about 22 percent less than five years ago when they were bid up by the biggest housing rush on record.”

To illustrate the jump in housing affordability, the median monthly mortgage payment for a recently purchased home is several hundred dollars less than it was five years ago. “In fact, the median monthly mortgage payment in many areas is less than people are paying for rent,” Golder said.
Housing affordability conditions today are 60 percentage points higher than during the housing boom, so it has become a very strong buyers’ market, especially for families with long-term plans. “The savings today’s buyers are receiving are not a one-time benefit. Buyers with fixed-rate mortgages will save money every year they are living in their home – this is truly an example of how home ownership builds wealth over the long term,” Golder added.

Total housing inventory at the end of September fell 1.9 percent to 4.04 million existing homes available for sale, which represents a 10.7-month supply at the current sales pace, down from a 12-month supply in August. Raw unsold inventory is 11.7 percent below the record of 4.58 million in July 2008.

“Vacant homes and homes where mortgages have not been paid for an extended number of months need to be cleared from the market as quickly as possible, with a new set of buyers helping the recovery along a healthy path,” Yun said. “Inventory remains elevated and continues to favor buyers over sellers. A normal seasonal decline in inventory is expected through the upcoming months.”

A parallel NAR practitioner survey shows first-time buyers purchased 32 percent of homes in September, almost unchanged from 31 percent in August. Investors were at an 18 percent market share in September, down from 21 percent in August; the balance of purchases were by repeat buyers. All-cash sales were at 29 percent in September compared with 28 percent in August.

Single-family home sales increased 10 percent to a seasonally adjusted annual rate of 3.97 million in September from a pace of 3.61 million in August, but are 19.5 percent below the 4.93 million level in September 2009. The median existing single-family home price was $172,600 in September, down 1.9 percent from a year ago.
Existing condominium and co-op sales rose 9.8 percent to a seasonally adjusted annual rate of 560,000 in September from 510,000 in August, but are 16.2 percent lower than the 668,000-unit level one year ago. The median existing condo price was $165,400 in September, down 6.2 percent from September 2009.

Existing-home sales by region:
Northeast – increased 10.1 percent to an annual pace of 760,000 in September but are 20.8 percent below September 2009. The median price in the Northeast was $239,200, which is 1.4 percent below a year ago.
Midwest – jumped 14.5 percent in September to a level of 950,000 but are 26.4 percent below a year ago. The median price in the Midwest was $139,700, down 5.2 percent from September 2009.
South – sales rose 10.6 percent to an annual pace of 1.77 million in September but are 14.9 percent lower than September 2009. The median price in the South was $149,500, down 2.6 percent from a year ago.
West – increased 5.0 percent to an annual level of 1.05 million in September but are 16.7 percent below a year ago. The median price in the West was $213,600, which is 4.9 percent lower than September 2009.
Source: NAR

5 Steps to Remodeling Done Right Here are five steps to developing a great relationship with a remodeling contractor.
1. Let the contractor know if you are ready to remodel or just kicking the tires. Gary Palmer, a Charlotte, N.C.-based general contractor, says seeking multiple bids is fine, but don’t waste his or her time by letting the bidding process drag on for weeks.
2. Do your homework. Before seeking bids, develop two files. One should include information, including photos, of what you like. The other should include a list of what you don’t like.
3. Listen to the experts. A good contractor can tell you whether the project is feasible and what the pay off will be.
4. Communicate your budget. Let the contractor know up front how much money you intend to spend.
5. Be realistic and patient. Every remodeling project is messy and all of them are going to be frustrating somewhere along the way.
Source: Charlotte Observer, Barbara S. Russell (10/23/2010)

Lead-Safe RemodelingEffective April 22, 2010 remodeling work on homes built before 1978 must be performed only by contractors certified by the U.S. Environmental Protection Agency. Homeowners should assume lead paint is present and only hire certified contractors. Certified remodelers are required to display their EPA-certified certificate to home owners.
Contractors It is a misdemeanor for a person to engage in the business or act in the capacity of a contractor without having a license. This new law increases the penalties for acting as a contractor without a license.

This law makes a first conviction punishable by a fine not exceeding $5,000 or by imprisonment in a county jail for no more than 6 months, as specified, or both. The fine for a 2nd conviction is the greater of 20% of the contract price, 20% of the aggregate payments made to, or at the direction of, the unlicensed contractor, or $5,000. In addition, a 3rd or subsequent conviction is punishable by both a fine and imprisonment in a county jail, as specified, and requires that the fine be no less than $5,000 and no more than the greater of $10,000, 20% of the contract price, or 20% of the aggregate payments made to, or at the direction of, the unlicensed contractor.
A person who used the services of an unlicensed contractor is a victim of crime and eligible for restitution for economic losses, regardless of whether that person had knowledge that the contractor was unlicensed.

Amends Sections 7028 and 7028.16 of the CA Business and Professions Code.
Who must be licensed as a contractor? All businesses or individuals who construct or alter any building, highway, road, parking facility or other structure in CA must be licensed by the Contractor's State License Board if the total cost including labor and materials is $500 or more.

The Silver Lining in the Double Dip Recession

2010-10-25T12:39:00.000-07:00

Being faced with significant economic and political uncertainty the United States economy and its participants (that's us) have reacted like turtles, hiding in our shells, awaiting better times.

Clearly we are facing challenging times We have been facing low personal income growth, an increasing unemployment rate, uncertainty in the business climate, and a weak housing market.
In particular the weakness in the housing market is marked in six ways:
Record high home foreclosures that, according to Barclay's Bank, will not peak until 2011. These foreclosed properties will continue to flood the marketplace with inventory
A significant increase in strategic defaults, whereby home values have dropped so much that home owners send in the keys and move out, rather than keep owning an overvalued home.
One statistic claims that nearly 20% of all home mortgages are "underwater" because house values have dropped so significantly
Joblessness and economic uncertainty have reduced the demand for new housing
New home construction starts are at record lows. After a 15% drop in May, housing starts fell another 5% in June to a seasonally adjusted annual rate of 549,000. The Commerce Department estimated it to be the lowest level in eight months.
The oversupply of homes in the marketplace has reduced the value of homes in many states as sellers outnumber buyers.
Commercial Investments face major challenges On the commercial side of the ledger, we find that significant increase in business failures and restructuring is resulting in the loss in demand for commercial space nationwide. This has particularly affected:
Retail centers,
Office buildings
Industrial buildings and flex parks This in turn is:
Reducing the demand for new buildings – now and for the immediate business cycle
Creating challenges for many commercial landlords
Reducing the value of commercial assets
Increasing commercial strategic defaults is making debt refinancing difficult. The loss in rental income and market valuation is creating challenges for refinancing of debt for the investors without enough equity or cash to increase their equity positions Highly leveraged purchases made in the real estate hey-days of 2006 – 2008 are the most at risk. At a recent economic symposium Allen Sinai, economist and founder of Decision Economics, voiced his concern: "The challenge is unique: poor and diminishing growth, a sticky unemployment rate, sky-high deficits, and a sovereign debt that makes us one of the most fiscally irresponsible countries in the world." Even more depressing is that more job losses are in front of us. Governors in many states will have to make tough decisions to cut staff as additional federal funds dry up and tax increases will not be warmly received by the electorate. (Note: Most States in the union are facing budget short falls. At Least 46 States have imposed cuts.)
As states have trouble raising revenues, this will in fact also have a trickle-down effect on counties and cities and other government supported organizations that rely on government funds. This in turn will force those agencies to trim staff.
In Oregon, the governor has already implemented a 9% budget decrease and will be implementing an additional 8% cut in order to help balance the budget. This is in addition to increased corporate taxes and use of reserve funds to balance the budget.
This sounds very foreboding but there is a silver lining for those that have a strong cash position.
The silver lining Many companies have right sized their businesses and are making a profit.
I recently had lunch with a business owner of a construction related firm, who cut half of his staff in order to stay in business. But he is now more optimistic and is looking to add staff to help his marketing efforts and re-grow his business. He expects a slow increase in growth moving forward as demand catches up with supply.
At this point, much of the business employment cutting has been accomplished (with the exception of government agencies). As of July 2010, Oregon's official unemployment rate was down to 10.6% from 11.4% in July of 2009. The Federal unemployment rate has been holding steady at 9.4%. Any cuts made by the government agencies may help the economy get stronger in the future.
Real Estate
Unprecedented low interest rates for home purchases:
30 Yr Fixed as low as 4.25%
15 Yr Fixed as low as 3.75%
These low interest rates will fuel demand to purchase homes as the prices drop to a place where average Oregonians can afford them.
Lower rates for apartment property purchases ( currently around 5% compared to the roughly 6.5% for commercial property purchases)
Increased residential foreclosures mean lowered prices and opportunities for investors to buy homes as rentals
Increased demographic demand for rentals is coming
Significant reductions in Apartment vacancy rates are a reflection of the upcoming increased demand. In The Portland Metro area Vacancy rates dropped from 7% to 3.5% from January of 2010 to September of 2010.
The "silver-lining" flipside to the unemployment picture is that 85 – 90% of Americans are either employed or in school.
SBA financing is available ( at competitive interest rates and with low costs) to help small business owners buy a building for their business
They only have to occupy 51% and can rent the rest of it to a tenant until they grow into it.
Other key market place indicators
Banks are slowly recovering and have the cash they need to loan and generate income, albeit conservatively
Many banks are ending their "pretend and extend" phase and are actively taking back properties and selling them as fast as they can to get them off of their books.
Urban areas will recover faster than rural areas, so the risk is lower in urban areas.
Oregon has the Urban Growth Boundary (UGB) for cities. This means that land values will come back as the recession winds down and the population increases.
If you have money, you have an excellent 6 – 12 month window to look for real estate opportunities in Oregon.
Residentially, we are one of the states with highest foreclosure rate (percentage wise), so there will be opportunities to buy your second home or a couple of investment homes. You can still buy a small home in Bend for $100,000 - $120,000 and many other rural areas around the state. (The Bend area unemployment rate is 17 – 20%, but rentals are showing lowered vacancy rates).
Commercially, there are buildings on the market but, with the exception of SBA loans that require only a 10% down, it is harder to finance commercial purchases unless you have lots of cash.
In my lifetime I have never seen prices this low for residential real estate. There is a market place adjustment occurring, which will reduce the value of residential homes in the near term, but values will go up as jobs and our population increases, especially in Oregon where the UGB limits the amount of land available for growth. Now is the time to invest… and for the turtles among us to start sticking our necks out.

Five Tips to Increase Your Home's Appeal

2010-10-22T13:39:00.000-07:00

Selling your home can be like a single person trying to get the attention of a prospective date--got to clean up, pour on the charm, and emphasize all those great assets.

However, if you can't get the prospective candidate to even notice you (or, in this case, your home), there sure won't be a date and that goes for the selling of your home, too (no closing date).
I've written a lot about staging homes, adding curb appeal, clearing clutter, even adding subtle fragrances to help put prospective buyers in the mood. When it comes to getting a home noticed, especially in these market conditions, you'll want to pay close attention to get the deal done before the end of the year.
1. Change with the seasons. When you go to stores, one thing you notice is the decor changes to match the time of year. That's by no mistake. The goal is to create a mood, make consumers want to buy more. Psychological and emotional advertising influence buyers all the time. If you put your home on the market in the fall and still have spring decorations around the house, it'll affect buyers. They won't feel quite comfortable. It might not be obvious to them but somehow they're likely to feel that things are “out of place” in this home even if the decor isn't overwhelming. Having out-of-season decor just leaves buyers feeling like the house isn't being well cared for.
2. Make it cozy. One of the easiest ways to make your home cozy is by drawing attention to the fireplace. As the weather turns colder, flaunting your fireplace as a focal point is often a great selling point. You can turn your fireplace into a prominent focal point by placing mirrors, artwork, and vases on the mantel. A popular trend is to place candles near the fireplace. However, rather than using real candles, you might try flameless candles that put out a soft, realistic glow.
3. Crank up the thermostat. A lot of times during open houses, the home is quite cozy because the homeowners turned up the thermostat in preparation for the prospective buyers. But when it comes to routine individual showings, especially when the house has been sitting vacant, buyers can receive a chilly non-welcome which does little to make them feel at home. Setting the thermostat to keep the home at a comfortable temperature may cost a bit more but in the end your home will be more appealing. If the home's temperature is either too cold or hot, buyers won't stick around to explore it.
4. Shine the natural light. Hold your open house during the high daylight hours. Lighting is a big attraction and often helps sell your home better. Have your agent schedule individual showings during the time of day when you know the natural lighting will light up your home. Serious buyers will often come by at different times of the day to see the home in different lighting but put your best foot forward and show your home when you know the natural lighting will favor your home.
5. Play soft ambient music. Soft, non-distracting background music can help ease tension. Often the homebuying experience is stressful. Buyers are pressed for time and cash. They are in a hurry. Selling a home is a psychological experience that goes beyond just finding a place to live. The emotional feeling buyers get when visiting your home will result in the action they take--coming back to see it again, making an offer, or crossing it off their list. Playing peaceful music that doesn't overwhelm them can enhance their mood and make them feel like relaxing for a bit in a comfortable chair in your living room ... allowing them to soak up the positive experience.
Remember the key rule when selling a home, make your home seem like theirs.

Where do People Want to Live?

2010-10-21T13:08:00.000-07:00

If you could live in any state, except the one you live in now, what state would you choose to live in?
The Harris Poll has asked this question every year since 1997. While California tops the list of most popular states to live in among Echo Boomers (now ages 18 to 33) and Gen Xers (ages 34 to 45), Hawaii is the top pick for Baby Boomers (ages 46 to 64) and Matures (ages 65 and over). Among Echo Boomers, Hawaii drops out of the top five.
Here are the top-10 states across the age groups:
1. California
2. Hawaii
3. Florida
4. Colorado
5. Arizona
6. North Carolina
7. Oregon
8. Texas
9. New York
10. Washington
Source: Harris Interactive (10/19/2010)

Variable or Otherwise: What Has Your Mortgage Committed You To?

2010-10-20T12:21:00.000-07:00

Mortgages are expensive things to misunderstand. What you don't know could cost you.

Too many eager home buyers sign up for a mortgage with their sights trained on their dream home instead of on the details in the mortgage contract they are signing. They forget that, nice as everybody is during the real estate transaction, they are all salespeople working for companies that earn profit from selling their products—in this case, mortgages.
Experienced property owners may be no further ahead since, once they have moved in, few settle back with mortgage and insurance documents to fully understand what they signed up for.
The first line of defence for consumers is learning as much as possible about relevant real estate topics before it is important or necessary to make a decision. In these changeable financial times, look for new products and choices in the mortgage world, as in most aspects of real estate, but don't expect them to play by the same rules.
If you take advantage of the educational resources available to you, you're off to a good start. If you wait until a decision must be made and plunge in, you may learn a few expensive lessons. Of more concern is the fact that many property owners and mortgage borrowers never realize how many extra thousands of dollars they have paid—often unnecessarily.
Consumer protection laws exist to protect consumers, but laws only work if consumers understand why and how they need protection. Products and services designed to comply with these laws should have explanations of rights and responsibilities incorporated in them, but if consumers don't read the fine print and ask questions for more detail, it's all just so many words.
Often the jobs of real estate and mortgage professionals seem easy to consumers because they don't understand the complexity and liability these professionals wade through in each transaction. Previous columns have introduced readers to layers of this complexity. Relevant professional organizations usually offer details on the benefits of working with professionals so Google™ away.
As new products come on the market, they are not automatically as consumer-friendly as they are portrayed. Some are created to fall under categories not covered by existing consumer protection. They're still legal, but the differences are not necessarily readily apparent to consumers.
Can you see what you might misunderstand?
For mortgages with blended monthly payments of principal and interest, the law limits the frequency of interest compounding to annually or semi-annually. Mortgages outside this category, like variable rate mortgages or collateral mortgages, do not fall under this restriction, so monthly compounding would be allowable. Increased frequency of compounding means more interest is paid by the borrower. How frequently is the interest on your variable mortgage compounded?
Lenders offer a range of repayment plans, marketed to attract business by making life sound easier and cheaper to consumers. That's business. Along with these variations on traditional mortgages, are those that reduce the choices open to consumers while seeming to increase flexibility. For example, mortgages are contracts set up on two time-frames:
The amortization period which is the financial calculation of how long—usually 25 years—it will take to completely pay the debt of principal and accrued interest;
The term which is the period that the interest rate and related repayment terms are set, usually 3 to 5 years or longer.
Opportunities to extend the amortization period sound great because they lower monthly payments. This flexibility also increases the amount of interest paid on the mortgage. Since paying off a mortgage may mean paying double or triple the amount of money initially borrowed, how much more can the cost of borrowing increase before you decide this mortgage is too expensive for you?
Once the term is set, even if interest rates go down, you'll pay at that agreed percentage for the term. When rates are on the rise, locking in for long terms sounds smart. What options does your mortgage contact allow you should interest rates drop below your current mortgage rate?
Borrowing plans that allow you to take some money now and more later can limit your borrowing choices in the future. If the mortgage, whatever form it takes or label it carries, is initially set up for a large amount, but you only take some of that at first, that large amount may appear on title. This means, if you want to, or must, borrow from a different lender, you may find the existing mortgage expressed relative to the large amount makes you a less than attractive borrower to the second lender. Ask how the staged mortgage will appear on title, or be registered, and what your choices will be if you want to switch lenders before the entire initial amount is borrowed.
If your mortgage comes up for renewal next year, start your mortgage education now. So many lenders have implemented plans to attract renewing borrowers that you might discover benefits in changing lenders. Before you shop around, ask your lender to review your mortgage contract with you and explain what your choices are. Deciding not to learn how the largest single debt you'll hold works could be an expensive decision.
All this is fine when you understand what you are signing. My motto of "Consumer Be Aware" encourages you to learn ahead of need. "Buyer Beware" is a before-you-sign alarm that may be too late—and expensive.

Survey Reveals Buying Still Appeals

2010-10-19T15:44:00.000-07:00

If you think buying a house still makes sense even in today's economy, welcome to the club!

A recent National Association of Realtors survey revealed that nearly eight out of ten believe buying a home is still a good financial decision.
The eighth annual Housing Opportunity Pulse Survey found that despite job security concerns being the highest reported in the last eight years, buying is still on the minds of Americans.
More than two-thirds of those surveyed, 68 percent, still think that "now is a good time to buy a home." And though cost remains an impediment for many buyers, the majority of respondents worry about the drop in home values. This is happening all across the nation as neighborhoods combat the effects of rampant foreclosures.
Over half surveyed say that foreclosures are a moderate to big problem in their area. And recent statistics from Zillow.com show that foreclosures are still on the rise. Last year's survey indicated that the blame for foreclosures was on those who bought homes they couldn't afford. That focus and blame has now shifted to the ailing job market, with layoffs and unemployment
There is concern, as well, over banks and lending standards. The majority of those surveyed worry that "banks have made it too hard to qualify for a home mortgage loan."
Are there new buyers waiting to enter the housing market? The survey reveals that 39 percent of renters feel that owning a home at some point in the future is a high priority. And 24 percent rank it as a moderate priority. That could be good news for a market desperate for buyers.

Short Sale

2010-10-15T13:16:00.000-07:00

The goal of a short sale is to obtain a full and complete release of all liability from the lender(s) and an acknowledgement by the lender(s) that any loan obligations have been paid in full or fully satisfied. Releases with these terms were something that lenders were providing in the last economic downturn in the mid-1990s. In this economic downturn, releases with these terms have been few and far between. Most lenders today, if they approve a short sale, do so with language in an approval letter or term sheet that either expressly reserves the right to pursue the seller for any shortfall or is silent on the issue, therefore leaving the seller potentially exposed to such a claim. There are several factors that explain why this is taking place.

First, the magnitude of this economic downturn is far more significant than the last one in the 1990s. Second, the loan products utilized in the last eight to ten years and the risks inherent in them are far different. These loan products (stated income, no documentation, option at ARMs, etc.) have demonstrated that they are capable of abuse. At times, this abuse translates into misrepresentations being made to the lender(s) regarding, among other things, the income of the seller/borrower, bank accounts with inflated balances, or accounts that the seller has never maintained. Many sellers don’t even realize that this erroneous information has been submitted to the lender(s) on their behalf, because many sellers were asked to sign loan applications in blank.

Another trend revealed in this last economic downturn involved the investor/purchaser. Many such investors represented, knowingly or otherwise, that the property that they were purchasing was to be owner occupied in order to obtain a more favorable loan rate. However, many of these purchases were actually intended to be rentals rather than owner occupied.

All of the foregoing has created a much different economic landscape than that of the 1990s. Lenders are more in tune with these issues and recognize that there may be an opportunity to pursue seller/borrower(s) who have made misrepresentations of these kinds. Reserving their rights against a short sale seller for any shortfall is a way of preserving their claims based on any of the foregoing. Lastly, given the magnitude of this economic downturn and the fractionalization and securitization of many of these loans, many lenders may just be unwilling to absorb the losses that they are otherwise facing.

Irrespective of the motivation, these issues raise a number of concerns for a potential short sale seller. These concerns, and several others outlined below, should be evaluated by a short sale seller before any contact takes place with the lender(s):
First, ask the seller “is there any inaccurate or untruthful information contained in sellers loan application or any other documentation submitted to the lender(s) or signed by seller?” It’s necessary for the Seller to review their loan application, the occupancy provision of their deed of trust, and any occupancy rider to the deed of trust. This potential must be evaluated before any short sale package is submitted to the lender(s). If not, then Seller is providing the lender(s) with the potential evidence to demonstrate that misrepresentations or untruthful statements were made to the lender(s) and induced the lender(s) to make the loan.
Second, “Are the loans recourse or non-recourse?”
Third, “What are the tax consequences of a short sale versus letting the property go into foreclosure?”
Fourth, “Is the Seller candidate for any loan modification or any other relief under a federal program?”
Fifth, “Is the Seller a candidate for bankruptcy?”
Sixth, “If multiple loans, are the junior loans recourse ones?” If so, what is the amount of that loan and what is the likelihood of that lender accepting a significantly reduced amount based on the approval terms of the senior lender (typically, anywhere from $3,000.00 to $8,000.00)?
Also, “What is the impact of these various decisions on the Sellers credit?”
Finally, “What is the Sellers exit strategy from this property?” In other words, “Where is the Seller going to be living? Will They need credit in order to be able to complete their next move, and does the seller want to accomplish that move before stopping any payments on their loan?”
All of these issues should be evaluated before making the decision to embark on a short sale. Many of the answers will be in conflict with each other. Unfortunately, a short sale today typically results in a seller choosing to swallow the least unpleasant of several distasteful medicines. The key is recognizing that even if you have worked through all of the foregoing issues, in today’s short sale environment, you are still going to be faced with a lender who typically is unwilling to release you from all claims and liabilities related to the note and deed of trust. The contract that you sign must contain language which gives you the right to evaluate the approval letter/term sheet that the lender provides. That review should take place with an attorney. The choices that the seller faces at that time are to accept the terms set forth by the lender(s), attempt to negotiate with the lender(s), or cancel the transaction. The decision that each seller makes ultimately turns on a balance of all of the foregoing factors and the status of any pending foreclosure. The key is recognizing what the issues are, evaluating them, and giving the seller flexibility to make the best decision.

Three Scenarios From the Foreclosure Freeze

2010-10-13T15:48:00.000-07:00

Gregor Watson, a principal with McKinley Partners, a development company that buys foreclosed homes, told listeners on a Citi home-builder conference call that there were three potential outcomes from the foreclosure fiasco:
· Best case: These are technical issues that can be resolved quickly so the foreclosure process can continue and the glut of foreclosed homes is cleared from the market.
· Medium case: There is significant litigation that takes years to sort out and this slows the troubled housing market even further.
· Worst case: The market grinds to a halt and title insurers refuse to insure mortgages involving foreclosed homes. “It would be devastating for the resale market if this robo-signer issue spiraled out of control,” Watson says.
Source: The Wall Street Journal, Dawn Wotapka (10/12/2010)

Real Estate Outlook: Pending Sales Rise

2010-10-12T13:30:00.000-07:00

The recent recession and slow recovery has wreaked havoc on businesses and households, alike. And according to Federal Reserve Chairman, Ben Bernanke, the government has felt "severe budgetary pressures" as well.

He notes that "for now, the budget deficit has stabilized and, so long as the economy and financial markets continue to recover, it should narrow relative to national income over the next few years."
There is progress being made across the nation. Pending sales increased for the second consecutive month, that according to the National Association of Realtors and their latest Pending Home Sales Index.
Pending sales rose 4.3 percent, and were up in all regions except the Northeast, which saw a 2.9 percent decline. Lawrence Yun, NAR chief economist, said the latest data is consistent with a gradual improvement in home sales in upcoming months. "Attractive affordability conditions from very low mortgage interest rates appear to be bringing buyers back to the market," he said. "However, the pace of a home sales recovery still depends more on job creation and an accompanying rise in consumer confidence."
Yun cautioned, however, that any sudden rise in interest rates could slow a recovery. It all has to do with inflation. If we start to see higher inflation, this could translate into higher interest rates. For now, however, affordability is near an all-time high.
In foreclosure news this week, we look to eRate's latest report showing that nearly one in every four homes sold in the second quarter of this year were in some state of foreclosure.
Additionally, these homes sold for 26 percent or more below the average sales price compared to properties not in foreclosure. The largest price deficit was seen in Ohio, which saw foreclosure sales prices, on average, at 43 percent of normal sale properties.
CoreLogic, the leader in innovative analytics, also predicted that the additional inventory of foreclosed homes on the market could likely double the time it takes a home to sell, from the current 11-month average.
"Given that the tax credit simply pulled demand forward, the distressed share is expected to rise … during the fall, when non-distressed seasonal sales begin to decline," analysts said.
The International Monetary Fund, or IMF, reports that "the most likely prospect for the U.S. economy is for a continued but slow recovery, with growth far weaker than in previous recoveries, considering the depth of the recession.
In the meantime, let's keep an eye on interest rates. Fed Chairman Bernanke gives the warning that "in the longer term, a rising level of government debt relative to national income is likely to put upward pressure on interest rates and thus inhibit capital formation, productivity, and economic growth."

American Dream Attracting More Foreigners

2010-10-05T12:25:00.000-07:00

They comprise only a small share of homebuyers in the U.S., but more and more foreign buyers are coming to America for the homeownership piece of the dream.

More than a quarter of Realtors, 28 percent, reported working with at least one international client in the past year, up from 23 percent during the previous Profile of International Home Buying Activity.
The recently released 2010 study, which queried Realtors for a year ending in March 2010, found that 18 percent of all Realtors were estimated to have completed at least one international sale, compared to 12 percent last year.
Foreigners invested $41 billion in homes in the U.S. during the period, 4 percent of the total $907 billion market. Adding recent immigrants, or temporary visa holders, pushed the total to $66 billion, or 7 percent of the market according to the report.
A stronger dollar, desirable U.S. property and the slow, but emerging economic recovery are seen as factors in the growing demand for an American home.
Low mortgage rates haven't hurt.
"While all real estate in the U.S. is local, the same is not true for property owners," quipped NAR President Vicki Cox Golder, owner of Vicki L. Cox Real Estate in Tucson, AZ.
"The U.S. continues to be a top destination for international buyers from all over the world. Foreign buyers understand the value of owning a home in this country," she added.
But not all U.S. real estate markets are created equal in the eyes of foreign buyers.
The survey found foreigners buying property in 39 states, but a bit more than half were in just four states: Arizona, California, Florida and Texas. Except for Texas, they are all states that were hotbed boomtowns during the last big boom.
By larger regions, foreign buyers favored the South (45 percent), over the West (32 percent), the Midwest (13 percent) and the Northeast (10 percent).
The buyers came from 53 countries, but the largest number was from just across the borders, Canada, at 23 percent and Mexico at 10 percent. The United Kingdom added 9 percent; China (including Hong Kong), 8 percent; Germany together with France, 7 percent; and India, 5 percent, according to the NAR survey.
More than one in three foreign buyers weren't closers. Thirty four percent had financing problems, often because tight fisted lenders weren't willing to lend to those without Social Security numbers.
But money talks. Among those who did close, 55 percent paid cash, compared to only 8 percent of U.S. buyers coming to the table with a full stake.
Other findings:
The median price paid by international buyers was in the neighborhood of $219,400 during the 2009 to 2010 period. By contrast, the overall median price for all existing home sales was $173,000 during the same period. However, nearly half the foreign buyers, 46 percent, paid $200,000 or less during the period.
Most foreign buyers, 66 percent, purchased a detached single-family home, compared to 23 percent buying a condo, 8 percent a townhouse and 3 percent commercial property.
Fifty percent said they bought the property to live in as their primary residence, 22 percent as a vacation home; 14 percent as an investment and 14 percent as both an investment and vacation home.
Suburban areas were most popular, chosen 50 percent of the time over urban areas (27 percent), resort areas (14 percent), and rural or small town areas (9 percent).

Foreclosures On Auto-Pilot?

2010-10-04T12:01:00.000-07:00

The recent news of "robo-signing" (signing off on foreclosures without reviewing and verifying the information in the documents) has chilled the rapid pace of foreclosures... at least for now.

JPMorgan Chase has frozen foreclosures in about half the country due to the paperwork fiasco.
"It didn't surprise me. You're talking about foreclosure mills that run thousands of foreclosures a month; how can the attorney filing on behalf of them have personal knowledge of all those files," says attorney and educator, Lance Churchill, President of FrontlineSeminars.com.
It's being reported that up to 56,000 foreclosures are affected. An employee for JPMorgan Chase said in a deposition that her team signed off on some 18,000 foreclosure documents per month, yet those loan files and reports were not reviewed, according to MarketWatch.
MarketWatch also reports that at GMAC, as many as 500 foreclosure affidavits per day were signed by a professional signer without reviewing the files or having his signatures notarized.
Real estate finance professor Susan Wachter from Wharton School at the University of Pennsylvania, told MarketPlace's Bob Moon, that this may buy homeowners who are facing foreclosure some precious time.
"That's the beginning and the end. One has to document that one has ownership before one can take possession," says Wachter.
That extra time may afford homeowners the opportunity to actually sell their home rather than have it foreclosed. But in the end, Churchill says, "The bottom line is I think it may be hard to overturn a lot of the foreclosures."
What does this do to the foreclosure market for buyers?
"For the buyers of these properties, there shouldn't be any problem," says Churchill.
But he says it depends on where you purchase them, "If I as an investor bought a foreclosure at an auction and it turned out it's a robo-signing type situation, I shouldn't have any problem or suffer any consequences from it because virtually all state laws provide that if you're a good faith purchaser for value at the auction, you get good title. If there's a screw up where the lender didn't protect the borrower or didn't do something right, that's a lawsuit between the two of them now," says Churchill.
But he does offer this advice about buying foreclosures.
"A new thing that has come into play is the federal government last year passed this Protecting Tenants at Foreclosure Act. If there is a tenant in the property that's foreclosed on [that tenant] can stay for the balance of the lease. So if you buy a property that's occupied, if you don't know whether it's the owner or a tenant that's occupying it, you could get in trouble," says Churchill.
Churchill says if the property is occupied by the owners, they have to leave the property fairly quickly or are evicted. "But because of this new federal law, [tenants] are guaranteed to stay at least 90 days under the federal law and if they have a long-term lease (two-year lease), they can stay for the balance of the lease."
He points out that a tenant does have to make rent payments. "But if you intended to move in to that [property] or flip it, you're going to be stuck with it or you have to figure out a way to buy out the tenant," says Churchill.
As for the robo-signing mess, industry experts expect to see more companies freezing foreclosures due to flawed paperwork at least until further reviews are made.

Where the Smart Folks Live

2010-10-01T15:27:00.000-07:00

The better educated the population, the higher the salaries. So choosing to live where the smart people do can help ensure that someone’s income is also above average.
Here are the metro areas that the most- and least-educated call home:
Metro areas with the highest percentage of residents with a college degree:
1. Washington, D.C., 47.3 percent
2. San Francisco, 43.5 percent
3. San Jose, Calif., 43.2 percent
4. (tie) Raleigh, N.C. 42.2 percent
4. (tie) Boston, 42.2 percent
6. Austin, Texas, 38.7 percent
7. (tie) Minneapolis, 37.6 percent
7. (tie) Denver, 37.6 percent
9. Seattle, 37.4 percent10. New York, 35.6 percent
Metro areas with the lowest percentage of residents with a college degree:
1. Riverside, Calif., 19.
2 percent2. Las Vegas, 21.3 percent
3. Memphis, Tenn., 24.2 percent
4. Tampa, Fla., 24.6 percent
5. San Antonio, Texas, 24.8 percent
6. Louisville, Ky., 24.9 percent
7. New Orleans, 26.2 percent
8. Detroit, 26.3 percent
9. Orlando, Fla., 26.6 percent
10. Cleveland, 26.9 percent
Source: CNNMoney.com, Les Christie (10/01/2010)

First-Time Buyers Find a House

2010-09-29T16:17:00.000-07:00

Buying a home is an exciting experience. For first time buyers new to the process, it can also be terrifying. In order to ease buying jitters, take a look at a few simple tips.

At the beginning of this journey, you'll need to decide on a budget. There are several factors you need to keep in mind. First, how much of a downpayment do you have? FHA loans allow for as little as 3.5 percent of the purchase price as a downpayment. Other lenders generally require a higher percentage.
Do you want to be house rich and cash poor? Just because a lender approves you for a mortgage payment of $200,000 at $2,000 a month, doesn't mean you want to spend that. It may leave you with no money left over for travel, entertainment, or other luxuries you have come to enjoy. Thus comes the saying, "house rich, cash poor."
To find out what a lender thinks you can afford, you will need to get pre-approved. The lender will examine your financial status, including your credit score. This will determine what interest rate you'll be offered and for what amount you are approved.
After setting your budget, you'll need to pick the neighborhoods you are interested in. Are you looking for a short commute, good schools, entertainment within walking distance, or an old neighborhood with charm? These preferences are entirely up to you and will determine the direction of your search.
The MLS is a great place to start your search. The real estate agent you are working with can help you weed through the thousands of listings by supplying you with potential matches, or a simple google search on your own can give you a list of MLS sites to search. Realtor.com also features a MLS that is open to the public. The MLS shows pictures, descriptions, and locations of homes that match your search criteria.
Use the MLS to narrow down potential neighborhoods. It can be a good starting point to give you an idea of costs, amenities, and size of homes.
As you begin your home search, your local real estate agent will let you know of upcoming open houses. An open house is generally held on a weekend and means the listed home will be open for you to view. There will be other potential buyers there, as well as their agents.
A showing, on the other hand, is when your agent and the listing agent agree upon a set upon time for you to view the house. The seller will not be present, and you'll have the house all to yourself.
Good luck with your home search, and may you find your dream home.
Published: September 22, 2010

Foreclosure Gaffs May Further Roil the Market

2010-09-28T14:58:00.000-07:00

Uncovering deficiencies in the foreclosure process could potentially have serious implications for the market, said Stuart Saft, a partner at New York law firm Dewey & LeBoeuf, because it raises questions about the ownership of properties that have been resold.

Mortgage servicers, who asked for anonymity, say they anticipate more legal action contesting foreclosures.

Miami attorney Richard J. Burton, who specializes in foreclosure litigation, says he expects that class-action lawsuits will be filed against GMAC and other servicers, furthering slowing the foreclosure process.

The turmoil in the market also could encourage more voluntary defaults, said Cameron Findlay, chief economist at LendingTree.com, because overwhelmed lenders may simply ignore newly delinquent homeowners.
Source: Bloomberg, Bob Ivry, Prashant Gopal and Jody Shenn (09/27/2010)

What's New in New Housing Design

2010-09-27T12:49:00.000-07:00

Here are the products grabbing the attention of the home building and remodeling industries, according to Bill Millholland, executive vice president of sales and marketing at Case Design/Remodeling in Maryland, and Jamie Gibbs, a New York-based interior designer:
· Appliance Drawers. Small warning drawers, modest-sized dishwasher drawers for small loads, refrigerator drawers and microwave drawers. · Counter-depth refrigerators. Some are only 24 inches deep.· Motion-detecting faucets. Like you'd find in the restrooms of businesses.· LED (light-emitting diode) lighting. These are used under cabinets and in ceiling fixtures as a longer-lasting, more efficient alternative to compact fluorescent lamps and incandescent bulbs.· Electric heated floors. A nice touch in bathrooms, · Showers with multiple heads and body sprays. Bathtubs are out.
Source: The Washington Post (09/25/2010)

Sell Your Home Faster, Give Your Cabinets a New Look

2010-09-27T11:58:00.000-07:00

As the fall season sets in and the weather gets colder, it's just another reason to spend more time in the kitchen cooking up warming soups and maybe some hot cider. But no matter which season, kitchens and great rooms tend to be very popular for homeowners and, of course, buyers.

For this reason, it's important to make sure your cabinets are looking good--not laden with holes from chipped or worn off paint or stain. Kitchen cabinets often take a beating from all the opening and closing of the doors and drawers; however getting them looking good again can seem like an overwhelming project.
According to the National Kitchen & Bath Association, "The variables that affect the cost of kitchen cabinets relate to quality, appearance, and functional effectiveness."
So, if you're really sprucing them up and using high-end handles, adding more shelving inside them, the costs will rise. But what if the insides of your cabinets aren't really in poor condition? Maybe the hinges and the hardware are still in good shape, it's just the outside that could use a makeover.
That's when giving your cabinets a new face might be your best option. Stripping the cabinets and painting or refacing them can add a lot of value to the overall appeal of the home without incurring the bigger expense of replacing your cabinets.
The NKBA says that, "This will cost about half of what you would spend for comparable new kitchen cabinets, but such a strategy will only work if the basic room configuration and cabinet placement in your existing kitchen are to remain the same." However, if your cabinets are sagging or you need a new configuration for more space, for instance, this option won't work. But, again, if your cabinets simply need a new face, this can be a good solution especially when you're listing your home for sale. The investment isn't nearly as high as replacing them.
There are a few steps involved in refacing: remove/prep the veneer, strip the surface, fill in missing chips, clean cabinets, apply new veneer and trim, prep veneer, and finally stain and finish. Some homeowners decide to do their own handyman work.
There are many articles on the step-by-step process, so this column won't focus on that but instead will let you know a few things that you should be aware of to ward off bigger problems. Actually, the first is an issue I had when refacing my kitchen cabinets. (After one painter messed up the cabinets, I ended up having to hire a qualified professional to successfully finish the job.) What you should know before you start. Especially in tract homes, certain types of cabinets may have a protective layer (veneer) on top of the wood or pressed particle board. If you remove this layer you can end up with a big mess. While it often chips off over the years, and appears easy to remove, in fact you can peel it off with your finger tips, removing it completely will require the under material to be sanded and prepped so that the surface will allow paint to stick to it. But, removing it may also cause harm to the cabinets.
"Most kitchen cabinets are made with pre-veneered laminated wood (particle board in some cases) and the hardwood veneer is rolled onto the laminated wood with terrifically high pressure and in most case you would damage the wood underneath trying to remove the veneer," according to RefinishFurniture.com. The site indicates that the old veneer can be left on as a base. The old must be lightly sanded to remove the finish and then a new veneer can be added. RefinishFurniture.com also recommends marking all the cabinet doors before you remove them to strip them or prep them for paint or stain. It'll save you so much time and frustration when you go to put them back on.
Another word of advice. While many homeowners like the do-it-yourself projects, when you're selling your home, this kind of project can become tedious and too time consuming. Refacing your cabinets will help your home show better but the question is: Do you do-it-yourself or hire a company to do what they do best? Either way, newly painted or stained cabinets go along way when it comes time to sell your home.

Feds leave interest rates alone

2010-09-22T15:58:00.000-07:00

The Federal Reserve issued a statement on Tuesday saying that it will hold off on further efforts to stimulate the economy and keep the federal funds rate at or near zero, but signaled that it was ready to step in with further action if necessary.

The Open Market Committee said in a release,“The Committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.”

The Fed apparently debated resuming securities purchases aimed at driving long-term interest rates even lower. Those who were opposed said it is likely this approach won’t work.
Source: Bloomberg, Craig Torres (09/21/2010)

Fed ready to aid US economy

2010-09-21T12:32:00.000-07:00

By Robin Harding in Washington
Published: September 21 2010 19:34 Last updated: September 21 2010 19:34

The Federal Reserve took no action at its September meeting but sent a signal that it may soon restart large purchases of Treasury bonds by changing its policy statement.
After its meeting on Tuesday, the rate-setting Federal Open Market Committee said that it “will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.”

MIT Prof Says Housing Demand Is about to Take Off At least some analysts are bullish on housing.

William C. Wheaton, professor of economics at Massachusetts Institute of Technology, argues that the housing market is due for improvement, calling home construction, "a sleeping giant that is about to wake up."

Wheaton believes that because there has been so little construction that demand exceeds the level of building and it will soon absorb excess inventory.
"Housing construction will not only rise, but it will stay high for a while, which didn't happen in previous recoveries," Wheaton predicts.
Source: Fortune, Nin-Hai Tseng (09/17/2010)

Mortgage Rates Inch Down...

2010-09-20T14:08:00.001-07:00

Mortgage-backed securities prices, which drive mortgage interest rates in the opposite direction, improved this week significantly on Monday and Tuesday, helping mortgage rates inch back down to record lows.

Current 30-year fixed mortgage rates are at 4% for well-qualified consumers with a 20% down payment who pay a standard .07 to 1 point origination. Today’s 15-year fixed mortgage rate is 3.625%. Both fixed mortgage rates today match all time record lows and have been verified available by FreeRateUpdate.com who researches over two dozen wholesale lenders’ rate sheets daily.
FHA mortgage rates continue to be available at similar interest rates to conforming mortgages; however, FHA fees and MI raise closing costs, making the APR on an FHA loan higher than that of a conforming mortgage at the same note rate and origination fee.
Jumbo mortgage rates are unchanged this week. Today’s jumbo 30-year fixed loan rate is at a near record low 5.125%.
Wells Fargo, the nation’s number one retail mortgage lender by volume, originating even more loans than Bank of America, is advertising on their website a conventional 30-year fixed mortgage at an interest rate of 4.5% with an APR of 4.686. Wells Fargo’s advertised 30-year fixed rate is up slightly from a week ago.
Today's Mortgage Rates - Available to well-qualified consumers at a standard .07 to 1 point origination:
Conventional:
30-year fixed: 4%
15-year fixed: 3.625%
5/1 ARM: 3.25%
FHA:
30-year fixed: 4%
15-year fixed: 3.75%
5/1 ARM: 3%
Jumbo:
30-year fixed: 5.125%
15-year fixed: 4.625%
5/1 ARM: 4.25%

First Time Buyer's ABCs

2010-09-17T13:16:00.000-07:00

As a first-time buyer, you have a lot of questions. There is terminology you don't understand. And there are expenses you need to anticipate. Here are some explanations of just that, to help you on your way to homeownership.

First, what costs should you expect? After you have become "pre-approved" for a mortgage, you will know how much you can spend (aka your "budget"). Pre-approval is done by the bank or lender who will be writing your mortgage. It is accessed by your: credit history, assets, employment history, and financial status. And it guarantees you a loan.
Being pre-approved can quicken the time it takes to close, as well as give you an advantage over buyers who are not pre-approved, should a home garner multiple offers.
Next, figure out how much money you'll need to put down. Are you looking at an FHA loan with 3.5 percent down? Or are you planning on putting 15 to 20 percent down? Financial expert Suze Orman recommends that in today's troubled market, you put at least 20 percent down on a house.
Closing costs are what are paid, well, at closing. You should expect to pay for an appraisal, title services, title insurance, transfer taxes, inspections, loan origination, private mortgage insurance, and homeowners insurance, among a host of other charges. The average closing costs are paid, yes, by the buyer. And they average around 2 to 4 percent of the total purchase price of the home. You can, of course, negotiate payment of closing costs with the seller. This is especially true in a market which favors buyers.
What is mortgage insurance? Mortgage insurance, also known as private mortgage insurance (PMI), protects your lender, should you default on your loan. And it can be required when you have made only a small downpayment. It costs around 1 percent of the total loan. According to the Federal Reserve Bank of San Francisco, "Under [The Homeowner's Protection Act of 1998], mortgage lenders or servicers must automatically cancel PMI coverage on most loans, once you pay down your mortgage to 78 percent of the value if you are current on your loan."
What is escrow? With a purchase as large as this, it is important that one party doesn't run off with all the funds! This is where an escrow account comes into play. All necessary and agreed upon funds are put into a third party account. When all terms have been met, then the funds are released to the appropriate parties.
What is an offer? When you have found a home you like, you'll discuss with your agent what a reasonable price pay is. This will more than likely be less than the price the seller is asking. And it will be based on the condition of the home, the price of home's in the neighborhood, as well as current market conditions. Remember, your offer is the price you are willing to pay for the property. You have signed the offer and, if accepted, you will be expected to follow through with the purchase of this home!
What are property taxes? Welcome to homeownership! Property taxes are paid each year to your local government at the county level. Some areas of the country charge much higher taxes than others, and the price is a percentage of the value of your property. That means that more expensive the house, the more expensive the taxes.
As a first-time buyer, it is highly recommended you work with a local real estate agent. They not only can answer any questions you may have, but their wealth of knowledge and experience will help guide you in a positive direction for this important transaction.

How to Avoid Being Part of a Real Estate Scam

2010-09-16T13:16:00.000-07:00

With increasing reports of real estate scams worldwide, here are some ways recommended by fraud experts to avoid being caught up in sales fraud when the transaction involves an out-of-state buyer or seller.
· Ask everyone to prove that they are who they say they are. Have the out-of-state party provide a photocopy of their driver’s license or passport that has been notarized. · Verify signatures. Compare the signature on the real estate contract to other signatures on their driver’s license, passport, the original sales contract, etc.· Make sure the warranty deed hasn’t been altered. Get a copy of the original from the title company.· You select the professionals. Require the out-of-town party to use a real estate professional, attorney, or title company of your choosing.· Require a face-to-face meeting. The safest way to ensure that they are who they say they are is to require that they show up at closing.
Source: AOL Real Estate, Sheree R Curry (09/14/2010

How Buyers Compete in a Sellers' Market

2010-09-13T12:22:00.000-07:00

No matter the market, sellers can find a competitive edge, whether it be through pricing, staging, or even negotiating closing costs.

What about buyers? Do they have any hope for an edge during a sellers market?
A sellers market is one which favors the seller. Perhaps you find yourself in a hot area where homes garner multiple offers and bidding wars. Or perhaps you live in an area where prices are appreciating or there is only a small inventory of homes for sale. No matter the situation, buyers can still find ways to gain an advantage.
Here are a few tips that might do just that.
1. Pre-approval: Be sure to start your home buying process by getting pre-approved for a mortgage. This will prove to your potential seller that you are ready, willing, and able to buy their home. A pre-approval will also give you an exact number of how much money you can borrow, and thus spend.
2. Be ready to buy: There can be no hesitation during a sellers market. There will be other buyers waiting to to grab up the same deal you just found. If the numbers work out in your favor for a home you like, then be ready to put in a strong offer.
3. Know your budget: You may be approved for a loan of up to $300,000, but you only want to spend $250,000 as your max. Be sure to know ahead of time what your budget really is.
4. Make a strong offer: In a sellers market, homes can expect to receive nearly if not all of their asking price. And in many cases, you may even find a home sells for more than the asking price. So, in order to make both a good impression on the seller so they take your interest seriously, as well as to beat out the competition, be sure to present a strong first offer.
5. We willing to negotiate terms: This means if a seller needs 60 days until closing, do what you can do accommodate them. Or maybe they are unwilling to make a repair before you move in, but are willing to pay you the repair costs instead. Be willing to work with a seller, if it means getting the home you desire.
These simple tips can make a big difference when it comes to buying in a sellers market.

10 most desired home features

2010-09-10T13:21:00.000-07:00

Based on survey responses, the following are the top 10 most desired home features and the percentage of respondents who ranked the feature as high priority:
1. Garage or parking space: 86.8 percent.
2. Master suite: 78.9 percent.
3. Ample storage space: 72 percent.
4. Large or walk-in closets: 66.5 percent.
5. Guest bedroom: 66.4 percent.
6. Outdoor entertainment area: 64.3 percent.
7. Gourmet or updated kitchen: 60.6 percent.
8. Breakfast room or eat-in kitchen: 55.8 percent.
9. Large yard: 43.2 percent.
10. Wood floors: 40.8 percent.

Rick Funk

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Thomas Jefferson

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