Mike Castleman, founder and CEO of Metrostudy, which tracks real-time data of the country’s inventory of new homes, says a housing shortage is looming that will soon will create a huge surge in demand for new homes. As such, now is the time to buy, he says.
In the 41 cities Metrostudy covers, 78,000 houses are either vacant and for sale, or under construction — that is less than a quarter of the new homes that fell in that category during the housing boom in 2006 and way below the level of a decade ago.
"If we had anything like normal levels of buying, those houses would sell in 2½ months," says Castleman. "We'd see an incredible shortage. And that's where we're heading."
The historic drop in new construction mixed with the decline in housing prices is laying the foundation for a dramatic recovery in residential real estate, Castleman told CNN. Castleman expects home owners soon will start returning, which will drive up prices in many markets later this year.
While demand remains low for new construction, he expects that to change. He foresees the recovery following a similar path as previous ones: A severe housing shortage will drive a big increase in demand.
“We'll get a big surge in demand and the drywall companies will take a long time to ramp up, and it will take years to get new lots approved,” he predicts. “Buyers will show up looking for a house in a subdivision, and all the houses will be sold. The builders will tell them it will take six months to deliver a house." But they’ll want the house so bad that they’ll “bid the prices up."
Source: “Real Estate: It’s Time to Buy Again,” CNN (March 28, 2011)
Thursday, March 31, 2011
Wednesday, March 30, 2011
Vacation-, Investment-Home Shares Hold Even
The market share of vacation- and investment-home sales held steady in 2010, although the sales volume declined with the overall market, according to the National Association of REALTORS®.
NAR’s 2011 Investment and Vacation Home Buyers Survey, covering existing- and new-home transactions in 2010, shows vacation-home sales accounted for 10 percent of transactions last year while the portion of investment sales was 17 percent, both unchanged from 2009.
NAR Chief Economist Lawrence Yun said, “Despite extraordinarily tight credit conditions for purchasing a second home, the market share for vacation and investment homes held steady,” he said. “A sizeable number of buyers made deals with all-cash offerings.”
All-cash purchases have become prevalent in the second-home market in recent years: 59 percent of investment buyers paid cash in 2010, as did 36 percent of vacation-home buyers.
With an overall decline in home sales during 2010, the volume of 543,000 vacation-home sales was down 1.8 percent from 553,000 in 2009. Investment purchases fell 7.8 percent to 867,000 in 2010 from 940,000 the previous year. Primary residence sales declined 5.6 percent to 3.81 million from 4.04 million in 2009.
Foreclosure or trustee sales accounted for 17 percent of investment purchases and 11 percent of vacation-home sales in 2010, compared with 5 percent of primary purchases. “Second home buyers purchased more distressed homes at discount than did buyers of primary residences,” Yun said.
The median vacation-home price was $150,000 in 2010, down 11.2 percent from $169,000 in 2009, while the median investment-home price was $94,000, which is 10.5 percent below the $105,000 median in 2009. By contrast, the median primary residence price declined a relatively modest 4.5 percent to $176,700 last year from $185,000 in 2009. 2
The typical vacation-home buyer in 2010 was 49 years old, had a median household income of $99,500 and purchased a property that was a median distance of 375 miles from his or her primary residence; 31 percent of vacation homes were within 100 miles and 41 percent were more than 500 miles.
Investment-home buyers had a median age of 45, earned $87,600 and bought a home that was fairly close to their primary residence – a median distance of 19 miles.
“The fall in home prices has opened opportunities for more families to enter the second-home market – the median income of investment buyers today is lower than it’s been in recent years,” Yun said. While the median income of vacation-home buyers in 2010 is slightly above 2007 when it was $99,100, the median income of an investment-home buyer is 5.7 percent below $92,900 in 2007.
“Even if purchases are delayed due to economic circumstances, the underlying long-term demand – the desire for purchasing second homes – remains because people in their 30s and 40s will reach the prime age for buying and will drive the second-home market in coming decades as conditions permit,” Yun added.
Currently, 40.7 million people in the U.S. are ages 50-59 – a group that dominated sales in the first part of the past decade and established records for second-home sales. An additional 43.8 million people are now in the primary buying demographic of 40-49 years old, while another 40.4 million are 30-39.
Lifestyle factors continue to be the primary motivation for vacation-home buyers, with the desire for rental income driving investment purchases. Vacation homes were more likely to be located in a rural area, while investment homes were more likely to be in a suburban location.
“Vacation-home buyers want the property for their own personal use, with 84 percent saying the primary reason for buying was to use for vacations or as a family retreat,” Yun said. “Rental income generation was the primary motive for investment buyers. At the same time, nearly half indicated they sought to diversify their investments or saw a good investment opportunity.”
More from the survey:
- 34% of vacation-home buyers said they plan to use the property as a primary residence in the future, as did 10 percent of investment buyers.
- 21% of investment buyers and 14 percent of vacation buyers purchased the property for a family member, friend or relative to use. “Some of these buyers purchase a home for their son or daughter to use while attending school,” Yun explained.
- Vacation-home buyers plan to keep their property for a median of 13 years while investment buyers plan to hold their property for a median of 10 years.
Distribution of vacation homes:
- 36% of vacation homes purchased in 2010 were in the South
- 27% in the West
- 19% in the Northeast
- 15% in the Midwest
- 3% were located outside of the U.S.
Distribution of investment properties:
- 32% of investment properties purchased in 2010 were in the South
- 24% in the West
- 21% in the Northeast
- 20% in the Midwest
- 3% were purchased outside the U.S.
NAR’s analysis of U.S. Census Bureau data shows there are 7.9 million vacation homes and 41.6 million investment units in the U.S., compared with 74.8 million owner-occupied homes.
NAR’s 2011 Investment and Vacation Home Buyers Survey, conducted in March 2011, includes answers from 1,895 usable responses about home purchases during 2010. The survey controlled for age and income, based on information from the larger 2010 NAR Profile of Home Buyers and Sellers, to limit any biases in the characteristics of respondents.
NAR’s 2011 Investment and Vacation Home Buyers Survey, covering existing- and new-home transactions in 2010, shows vacation-home sales accounted for 10 percent of transactions last year while the portion of investment sales was 17 percent, both unchanged from 2009.
NAR Chief Economist Lawrence Yun said, “Despite extraordinarily tight credit conditions for purchasing a second home, the market share for vacation and investment homes held steady,” he said. “A sizeable number of buyers made deals with all-cash offerings.”
All-cash purchases have become prevalent in the second-home market in recent years: 59 percent of investment buyers paid cash in 2010, as did 36 percent of vacation-home buyers.
With an overall decline in home sales during 2010, the volume of 543,000 vacation-home sales was down 1.8 percent from 553,000 in 2009. Investment purchases fell 7.8 percent to 867,000 in 2010 from 940,000 the previous year. Primary residence sales declined 5.6 percent to 3.81 million from 4.04 million in 2009.
Foreclosure or trustee sales accounted for 17 percent of investment purchases and 11 percent of vacation-home sales in 2010, compared with 5 percent of primary purchases. “Second home buyers purchased more distressed homes at discount than did buyers of primary residences,” Yun said.
The median vacation-home price was $150,000 in 2010, down 11.2 percent from $169,000 in 2009, while the median investment-home price was $94,000, which is 10.5 percent below the $105,000 median in 2009. By contrast, the median primary residence price declined a relatively modest 4.5 percent to $176,700 last year from $185,000 in 2009. 2
The typical vacation-home buyer in 2010 was 49 years old, had a median household income of $99,500 and purchased a property that was a median distance of 375 miles from his or her primary residence; 31 percent of vacation homes were within 100 miles and 41 percent were more than 500 miles.
Investment-home buyers had a median age of 45, earned $87,600 and bought a home that was fairly close to their primary residence – a median distance of 19 miles.
“The fall in home prices has opened opportunities for more families to enter the second-home market – the median income of investment buyers today is lower than it’s been in recent years,” Yun said. While the median income of vacation-home buyers in 2010 is slightly above 2007 when it was $99,100, the median income of an investment-home buyer is 5.7 percent below $92,900 in 2007.
“Even if purchases are delayed due to economic circumstances, the underlying long-term demand – the desire for purchasing second homes – remains because people in their 30s and 40s will reach the prime age for buying and will drive the second-home market in coming decades as conditions permit,” Yun added.
Currently, 40.7 million people in the U.S. are ages 50-59 – a group that dominated sales in the first part of the past decade and established records for second-home sales. An additional 43.8 million people are now in the primary buying demographic of 40-49 years old, while another 40.4 million are 30-39.
Lifestyle factors continue to be the primary motivation for vacation-home buyers, with the desire for rental income driving investment purchases. Vacation homes were more likely to be located in a rural area, while investment homes were more likely to be in a suburban location.
“Vacation-home buyers want the property for their own personal use, with 84 percent saying the primary reason for buying was to use for vacations or as a family retreat,” Yun said. “Rental income generation was the primary motive for investment buyers. At the same time, nearly half indicated they sought to diversify their investments or saw a good investment opportunity.”
More from the survey:
- 34% of vacation-home buyers said they plan to use the property as a primary residence in the future, as did 10 percent of investment buyers.
- 21% of investment buyers and 14 percent of vacation buyers purchased the property for a family member, friend or relative to use. “Some of these buyers purchase a home for their son or daughter to use while attending school,” Yun explained.
- Vacation-home buyers plan to keep their property for a median of 13 years while investment buyers plan to hold their property for a median of 10 years.
Distribution of vacation homes:
- 36% of vacation homes purchased in 2010 were in the South
- 27% in the West
- 19% in the Northeast
- 15% in the Midwest
- 3% were located outside of the U.S.
Distribution of investment properties:
- 32% of investment properties purchased in 2010 were in the South
- 24% in the West
- 21% in the Northeast
- 20% in the Midwest
- 3% were purchased outside the U.S.
NAR’s analysis of U.S. Census Bureau data shows there are 7.9 million vacation homes and 41.6 million investment units in the U.S., compared with 74.8 million owner-occupied homes.
NAR’s 2011 Investment and Vacation Home Buyers Survey, conducted in March 2011, includes answers from 1,895 usable responses about home purchases during 2010. The survey controlled for age and income, based on information from the larger 2010 NAR Profile of Home Buyers and Sellers, to limit any biases in the characteristics of respondents.
Tuesday, March 29, 2011
Banks Suggest Changes to Mortgage Servicing
Five of the country’s largest banks have sent government officials a proposal of new mortgage-servicing standards they’d agree to as part of a settlement into lending abuses.
The proposal--called the “Draft Alternative Uniform Servicing Standards”--includes timelines for processing loan modifications, third-party review of foreclosures, and a single point of contact for borrowers who are struggling with their mortgages, The Wall Street Journal reports. The draft document also includes a “borrower portal,” which would allow customers to check the status of their loan modifications online.
The draft document from the banks comes at a time when federal agencies and the state attorneys general have been working to determine penalties for banks from mortgage-servicing abuses that surfaced last fall from the foreclosure “robo-signing” scandal of hastily reviewing foreclosures without proper review.
Earlier this month, the state attorneys general drafted their own proposal for a settlement with banks, including a call for banks to reduce the mortgage principal for troubled borrowers.
Yet, the banks' draft settlement does not include anything about offering principal mortgage reductions.
Representatives from the banks--Bank of America Corp., J.P. Morgan Chase & Co., Wells Fargo & Co., Citigroup Inc., and Ally Financial Inc.’s GMAC unit--will meet for the first time on Wednesday with the state attorneys general, U.S. Department of Justice, and the Department of Housing and Urban Development to discuss the settlement proposals.
The proposal--called the “Draft Alternative Uniform Servicing Standards”--includes timelines for processing loan modifications, third-party review of foreclosures, and a single point of contact for borrowers who are struggling with their mortgages, The Wall Street Journal reports. The draft document also includes a “borrower portal,” which would allow customers to check the status of their loan modifications online.
The draft document from the banks comes at a time when federal agencies and the state attorneys general have been working to determine penalties for banks from mortgage-servicing abuses that surfaced last fall from the foreclosure “robo-signing” scandal of hastily reviewing foreclosures without proper review.
Earlier this month, the state attorneys general drafted their own proposal for a settlement with banks, including a call for banks to reduce the mortgage principal for troubled borrowers.
Yet, the banks' draft settlement does not include anything about offering principal mortgage reductions.
Representatives from the banks--Bank of America Corp., J.P. Morgan Chase & Co., Wells Fargo & Co., Citigroup Inc., and Ally Financial Inc.’s GMAC unit--will meet for the first time on Wednesday with the state attorneys general, U.S. Department of Justice, and the Department of Housing and Urban Development to discuss the settlement proposals.
Monday, March 28, 2011
Where Did All the First-time Buyers Go?
In January, first-time home buyers made up 29 percent of the market, the lowest since the National Association of REALTORS® started tracking first-time buyers on a monthly basis in 2008.
In a healthy market, first-time buyers generally make up 40 percent to 45 percent of all purchasers. So with low interest rates and falling housing prices, why are first-time home buyers sitting on the sidelines?
A USA Today article highlighted some of the factors that have first-time home buyers skittish about the market:
Tougher lending standards: Some first-timer buyers can't meet credit or employment history requirements, Guy Cecala, publisher of Inside Mortgage Finance, told USA Today. Lenders also are requiring higher credit scores and some want higher down payments that are shutting out more first-timers. The best loan terms usually require 20 percent down payment or more, says Greg McBride, senior analyst at Bankrate.com.
Expired tax credits: Federal incentives that included lures for first-time buyers gave a big boost to home sales in 2009 and 2010. But with those tax credits now expired, first-time buyers aren’t as eager to jump in to the housing market.
Competition from cash buyers: NAR reports that cash buyers accounted for a record-reaching 33 percent of existing-home sales in February. Sellers like cash deals because those transactions are more likely to close, says Jerry Abbott of Grupe Real Estate in Stockton, Calif. As such, competing against these cash buyers has left some first-time home buyers out.
In a healthy market, first-time buyers generally make up 40 percent to 45 percent of all purchasers. So with low interest rates and falling housing prices, why are first-time home buyers sitting on the sidelines?
A USA Today article highlighted some of the factors that have first-time home buyers skittish about the market:
Tougher lending standards: Some first-timer buyers can't meet credit or employment history requirements, Guy Cecala, publisher of Inside Mortgage Finance, told USA Today. Lenders also are requiring higher credit scores and some want higher down payments that are shutting out more first-timers. The best loan terms usually require 20 percent down payment or more, says Greg McBride, senior analyst at Bankrate.com.
Expired tax credits: Federal incentives that included lures for first-time buyers gave a big boost to home sales in 2009 and 2010. But with those tax credits now expired, first-time buyers aren’t as eager to jump in to the housing market.
Competition from cash buyers: NAR reports that cash buyers accounted for a record-reaching 33 percent of existing-home sales in February. Sellers like cash deals because those transactions are more likely to close, says Jerry Abbott of Grupe Real Estate in Stockton, Calif. As such, competing against these cash buyers has left some first-time home buyers out.
Friday, March 25, 2011
Seller's Market a Year Away, Survey Says
While buyer’s mostly control the real estate market now, Americans say that will soon change. More than 61 percent of Americans agree that a seller’s market is at least a year away, according to the latest Spending and Saving Tracker survey from American Express.
More than two in five Americans--or 41 percent--acknowledge that currently it’s a buyer’s market in real estate.
Forty-three percent of home owners said they are confident they would receive their asking price when selling their home, but 47 percent said they are not confident or "not at all" confident.
Yet, nearly 40 percent said they would not be willing to settle for less than their asking price.
To make a home more competitive in the marketplace, 44 percent of home owners surveyed said that to sell their home they would include appliances and 28 percent would consider offering to make requested repairs or allowing an allotment for repairs.
More than two in five Americans--or 41 percent--acknowledge that currently it’s a buyer’s market in real estate.
Forty-three percent of home owners said they are confident they would receive their asking price when selling their home, but 47 percent said they are not confident or "not at all" confident.
Yet, nearly 40 percent said they would not be willing to settle for less than their asking price.
To make a home more competitive in the marketplace, 44 percent of home owners surveyed said that to sell their home they would include appliances and 28 percent would consider offering to make requested repairs or allowing an allotment for repairs.
Proposal Would Pay Defaulters to Leave Homes
The nation’s five largest U.S. mortgage service providers were asked by regulators in a private meeting chaired by the Federal Deposit Insurance Corp. this week to consider an industry-wide “cash-for-keys” program, in which they would pay borrowers who have stopped making their payments up to $21,000 each to leave their home, the Financial Times reports.
In the proposal, banks would offer delinquent borrowers, who are more than 90 days behind on their payments, an incentive to leave the home quickly and in good condition. If banks agreed to the “cash-for-keys” program, they would pay defaulters up to $1,000 to get independent financial advice and up to $20,000 as a “fresh start” payment toward living costs in a new home, the Financial Times reports, quoting unnamed sources.
The idea was raised by Sheila Blair, the FDIC chairman, but is not an official government proposal, the Financial Times noted. Some banks strongly rejected the idea.
Source: “U.S. Banks in ‘Cash for Keys’ Foreclosure Talks,” Financial Times (March 25, 2011)
In the proposal, banks would offer delinquent borrowers, who are more than 90 days behind on their payments, an incentive to leave the home quickly and in good condition. If banks agreed to the “cash-for-keys” program, they would pay defaulters up to $1,000 to get independent financial advice and up to $20,000 as a “fresh start” payment toward living costs in a new home, the Financial Times reports, quoting unnamed sources.
The idea was raised by Sheila Blair, the FDIC chairman, but is not an official government proposal, the Financial Times noted. Some banks strongly rejected the idea.
Source: “U.S. Banks in ‘Cash for Keys’ Foreclosure Talks,” Financial Times (March 25, 2011)
Thursday, March 24, 2011
What Is a 'Safe' Mortgage?
Later this month, the Federal Deposit Insurance Corp. will consider new rules that define what a safe or “qualified” residential mortgage is as part of the Dodd-Frank financial overhaul law.
Experts say the classification will likely have broad sweeping effects on the mortgage market..
The Dodd-Frank financial overhaul law, which was passed last summer, contains a risk-retention requirement that requires issuers of securities backed by mortgages and other assets to maintain 5 percent of the risk of a loan, if it is packaged into a security and sold to investors, Dow Jones reports. The idea is that lenders would be more careful with making loans since they would face steeper losses if a loan went bad.
Six federal agencies are working to resolve numerous issues on the proposal but one of the most controversial issues yet to be resolved is which loans are exempt from the risk-retention requirement and would be considered safe or “qualified” mortgages.
Expecting some heated debate, regulators have suggested issuing two different plans for public comment: One plan would call for a minimum 20 percent down payment, and another plan would recommend a 10 percent down payment as well as mortgage insurance.
FDIC banking regulators have called for a minimum 20 percent down payment requirement for new mortgages, but lawmakers and consumer advocates have argued that number is too high and could hamper an already sluggish housing market.
Loans guaranteed by Fannie Mae and Freddie Mac, which make up about 70 percent of the mortgage market, are expected to be exempt as long as they remain under government control. Government agencies such as the Federal Housing Administration are already exempt.
Experts say the classification will likely have broad sweeping effects on the mortgage market..
The Dodd-Frank financial overhaul law, which was passed last summer, contains a risk-retention requirement that requires issuers of securities backed by mortgages and other assets to maintain 5 percent of the risk of a loan, if it is packaged into a security and sold to investors, Dow Jones reports. The idea is that lenders would be more careful with making loans since they would face steeper losses if a loan went bad.
Six federal agencies are working to resolve numerous issues on the proposal but one of the most controversial issues yet to be resolved is which loans are exempt from the risk-retention requirement and would be considered safe or “qualified” mortgages.
Expecting some heated debate, regulators have suggested issuing two different plans for public comment: One plan would call for a minimum 20 percent down payment, and another plan would recommend a 10 percent down payment as well as mortgage insurance.
FDIC banking regulators have called for a minimum 20 percent down payment requirement for new mortgages, but lawmakers and consumer advocates have argued that number is too high and could hamper an already sluggish housing market.
Loans guaranteed by Fannie Mae and Freddie Mac, which make up about 70 percent of the mortgage market, are expected to be exempt as long as they remain under government control. Government agencies such as the Federal Housing Administration are already exempt.
Vacation Home Sales on the Rebound
some of the hardest-hit cities in the housing downturn were from vacation home areas, but now these areas are seeing a surge in sales.
Condo sales in Hawaii and Florida are inching upward, Housing Predictor reports. For example, in the first two months of 2011, existing condo sales in Oahu, Hawaii, increased nearly 21 percent and the median prices on these units jumped 7 percent higher than more than a year ago.
“We’re definitely seeing continual strengthening of the market as more buyers are taking advantage of low prices and low rates to buy second homes and vacation homes,” says Jeff Proster, president of Brookfield Homes in Hawaii.
Meanwhile, closed transactions of existing condos in Miami jumped 58 percent higher in February compared to a year ago.
“We are even seeing instances in certain neighborhoods with multiple offers above asking price,” says Jack Levine, the Miami REALTORS® chairman.
Florida has seen improvement in its sales across the state with sales jumping 29 percent on condos and 13 percent for single family homes. However, seven out of 10 sales in the state were either foreclosures or short sales. Half of all sales also were from cash buyers.
Source: “Vacation Home Sales Surge Higher,” Housing Predictor (March 23, 2011)
Condo sales in Hawaii and Florida are inching upward, Housing Predictor reports. For example, in the first two months of 2011, existing condo sales in Oahu, Hawaii, increased nearly 21 percent and the median prices on these units jumped 7 percent higher than more than a year ago.
“We’re definitely seeing continual strengthening of the market as more buyers are taking advantage of low prices and low rates to buy second homes and vacation homes,” says Jeff Proster, president of Brookfield Homes in Hawaii.
Meanwhile, closed transactions of existing condos in Miami jumped 58 percent higher in February compared to a year ago.
“We are even seeing instances in certain neighborhoods with multiple offers above asking price,” says Jack Levine, the Miami REALTORS® chairman.
Florida has seen improvement in its sales across the state with sales jumping 29 percent on condos and 13 percent for single family homes. However, seven out of 10 sales in the state were either foreclosures or short sales. Half of all sales also were from cash buyers.
Source: “Vacation Home Sales Surge Higher,” Housing Predictor (March 23, 2011)
Wednesday, March 23, 2011
5 Tax Deductions You May be Missing
Don’t miss out on important tax deductions that can bring savings to you this tax season.
You undoubtedly know about business-related tax deductions for your car expenses and home telephone expenses (such as long-distance phone calls and special phone services you use for business), but how about some of those lesser known tax deductions? Here are five that tax expert and author Stephen Fishman recently highlighted at Inman News.
1. Business gifts: Gifts you purchase for your customers are deductible as a business expense. The deduction is limited to $25 per person per year. Company-wide gifts, however, are deductible in any reasonable amount.
2. Continuing education courses: Those continuing education courses you’re required to take each year to maintain your real estate license can be deducted, as well as any education courses you take that improve your skill-set in your career (such as webinars). However, you can’t deduct the education expenses for starting a new career path, such as in obtaining a real estate license.
3. Greeting cards: Did you send a client a card to reach out to them and show them you care? Greeting cards you send to clients and prospects are deductible as an advertising expenses, says Fishman.
4. Web sites: Maintaining a business web site can get costly. You can deduct your business-related web site design and maintenance costs, as well as Internet hosting fees and the cost of getting a domain name for your business.
5. Business clothing with logos: Before you go on a clothing shopping spree, make sure you know what you can deduct when it comes to clothes. The business clothes deduction only applies to items with your company logo on it. While you can’t deduct a regular business suit, you can deduct the cost of a sport jacket or coat that boasts your company’s logo on it, Fishman says.
Don't forget: Tax returns are due by April 18 this year (a three-day extension was granted this year due to the weekend and holiday).
You undoubtedly know about business-related tax deductions for your car expenses and home telephone expenses (such as long-distance phone calls and special phone services you use for business), but how about some of those lesser known tax deductions? Here are five that tax expert and author Stephen Fishman recently highlighted at Inman News.
1. Business gifts: Gifts you purchase for your customers are deductible as a business expense. The deduction is limited to $25 per person per year. Company-wide gifts, however, are deductible in any reasonable amount.
2. Continuing education courses: Those continuing education courses you’re required to take each year to maintain your real estate license can be deducted, as well as any education courses you take that improve your skill-set in your career (such as webinars). However, you can’t deduct the education expenses for starting a new career path, such as in obtaining a real estate license.
3. Greeting cards: Did you send a client a card to reach out to them and show them you care? Greeting cards you send to clients and prospects are deductible as an advertising expenses, says Fishman.
4. Web sites: Maintaining a business web site can get costly. You can deduct your business-related web site design and maintenance costs, as well as Internet hosting fees and the cost of getting a domain name for your business.
5. Business clothing with logos: Before you go on a clothing shopping spree, make sure you know what you can deduct when it comes to clothes. The business clothes deduction only applies to items with your company logo on it. While you can’t deduct a regular business suit, you can deduct the cost of a sport jacket or coat that boasts your company’s logo on it, Fishman says.
Don't forget: Tax returns are due by April 18 this year (a three-day extension was granted this year due to the weekend and holiday).
Monday, March 21, 2011
Existing-Home Sales Dip in February
Existing-home sales fell in February following three straight monthly increases, according to the National Association of REALTORS®.
Existing-home sales dropped 9.6 percent to a seasonally adjusted annual rate of 4.88 million in February from an upwardly revised 5.40 million in January, and are 2.8 percent below the 5.02 million pace in February 2010.
Lawrence Yun, NAR chief economist, expects an uneven recovery. “Housing affordability conditions have been at record levels and the economy has been improving, but home sales are being constrained by the twin problems of unnecessarily tight credit, and a measurable level of contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers,” he said. “This tug and pull is causing a gradual but uneven recovery. Existing-home sales remain 26.4 percent above the cyclical low last July.”
A parallel NAR practitioner survey shows first-time buyers purchased 34 percent of homes in February, up from 29 percent in January; they were 42 percent in February 2010.
Cash Is King
All-cash sales were a record 33 percent in February, up from 32 percent in January; they were 27 percent in February 2010. Investors accounted for 19 percent of sales activity in February, down from 23 percent in January; they were 19 percent in February 2010. The balance of sales was to repeat buyers.
The national median existing-home price for all housing types was $156,100 in February, which is 5.2 percent below February 2010. Distressed homes — sold at discount — accounted for a 39 percent market share in February, up from 37 percent in January and 35 percent in February 2010. “The decline in price corresponds to the record level of all-cash purchases where buyers — largely investors — are snapping up homes at bargain prices,” Yun explained. “We’d be seeing greater numbers of traditional home buyers if mortgage credit conditions return to normal.”
NAR President Ron Phipps said buyers should look into loan availability as soon as they decide they want to buy. “Despite very affordable mortgage interest rates, credit remains a challenge — buyers should check their personal credit, and mortgage availability in their area,” he said. “REALTORS® are an excellent resource to learn about all of the marketplace factors, but in this tight credit environment it’s important to learn up front what a lender might be willing to offer as well as specific programs that might be available in your location.”
Total housing inventory at the end of February rose 3.5 percent to 3.49 million existing homes available for sale, which represents an 8.6-month supply at the current sales pace, up from a 7.5-month supply in January.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.95 percent in February from 4.76 percent in January; the rate was 4.99 percent in February 2010.
Single-family home sales fell 9.6 percent to a seasonally adjusted annual rate of 4.25 million in February from 4.70 million in January, and are 2.7 percent below the 4.37 million pace in February 2010. The median existing single-family home price was $157,000 in February, which is 4.2 percent below a year ago.
Existing condominium and co-op sales dropped 10.0 percent to a seasonally adjusted annual rate of 630,000 in February from 700,000 in January, and are 3.1 percent lower than the 650,000-unit level one year ago. The median existing condo price was $150,400 in February, down 11.1 percent from February 2010.
Performance by Region
Existing-home sales in the Northeast fell 7.2 percent to an annual pace of 770,000 in February and are 8.3 percent below February 2010. The median price in the Northeast was $230,200, down 9.5 percent from a year ago.
Existing-home sales in the Midwest dropped 12.2 percent in February to a level of 1.01 million and are 9.0 percent lower than a year ago. The median price in the Midwest was $122,000, which is 5.4 percent below February 2010.
In the South, existing-home sales fell 10.2 percent to an annual pace of 1.84 million in February but are unchanged from February 2010. The median price in the South was $134,600, down 3.9 percent from a year ago.
Existing-home sales in the West declined 8.0 percent to an annual level of 1.26 million in February and are 2.4 percent below a year ago. The median price in the West was $190,000, which is 5.2 percent below January 2010.
— NAR
Existing-home sales dropped 9.6 percent to a seasonally adjusted annual rate of 4.88 million in February from an upwardly revised 5.40 million in January, and are 2.8 percent below the 5.02 million pace in February 2010.
Lawrence Yun, NAR chief economist, expects an uneven recovery. “Housing affordability conditions have been at record levels and the economy has been improving, but home sales are being constrained by the twin problems of unnecessarily tight credit, and a measurable level of contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers,” he said. “This tug and pull is causing a gradual but uneven recovery. Existing-home sales remain 26.4 percent above the cyclical low last July.”
A parallel NAR practitioner survey shows first-time buyers purchased 34 percent of homes in February, up from 29 percent in January; they were 42 percent in February 2010.
Cash Is King
All-cash sales were a record 33 percent in February, up from 32 percent in January; they were 27 percent in February 2010. Investors accounted for 19 percent of sales activity in February, down from 23 percent in January; they were 19 percent in February 2010. The balance of sales was to repeat buyers.
The national median existing-home price for all housing types was $156,100 in February, which is 5.2 percent below February 2010. Distressed homes — sold at discount — accounted for a 39 percent market share in February, up from 37 percent in January and 35 percent in February 2010. “The decline in price corresponds to the record level of all-cash purchases where buyers — largely investors — are snapping up homes at bargain prices,” Yun explained. “We’d be seeing greater numbers of traditional home buyers if mortgage credit conditions return to normal.”
NAR President Ron Phipps said buyers should look into loan availability as soon as they decide they want to buy. “Despite very affordable mortgage interest rates, credit remains a challenge — buyers should check their personal credit, and mortgage availability in their area,” he said. “REALTORS® are an excellent resource to learn about all of the marketplace factors, but in this tight credit environment it’s important to learn up front what a lender might be willing to offer as well as specific programs that might be available in your location.”
Total housing inventory at the end of February rose 3.5 percent to 3.49 million existing homes available for sale, which represents an 8.6-month supply at the current sales pace, up from a 7.5-month supply in January.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.95 percent in February from 4.76 percent in January; the rate was 4.99 percent in February 2010.
Single-family home sales fell 9.6 percent to a seasonally adjusted annual rate of 4.25 million in February from 4.70 million in January, and are 2.7 percent below the 4.37 million pace in February 2010. The median existing single-family home price was $157,000 in February, which is 4.2 percent below a year ago.
Existing condominium and co-op sales dropped 10.0 percent to a seasonally adjusted annual rate of 630,000 in February from 700,000 in January, and are 3.1 percent lower than the 650,000-unit level one year ago. The median existing condo price was $150,400 in February, down 11.1 percent from February 2010.
Performance by Region
Existing-home sales in the Northeast fell 7.2 percent to an annual pace of 770,000 in February and are 8.3 percent below February 2010. The median price in the Northeast was $230,200, down 9.5 percent from a year ago.
Existing-home sales in the Midwest dropped 12.2 percent in February to a level of 1.01 million and are 9.0 percent lower than a year ago. The median price in the Midwest was $122,000, which is 5.4 percent below February 2010.
In the South, existing-home sales fell 10.2 percent to an annual pace of 1.84 million in February but are unchanged from February 2010. The median price in the South was $134,600, down 3.9 percent from a year ago.
Existing-home sales in the West declined 8.0 percent to an annual level of 1.26 million in February and are 2.4 percent below a year ago. The median price in the West was $190,000, which is 5.2 percent below January 2010.
— NAR
Friday, March 18, 2011
Weekly Information 03/18/2011
Mortgage interest rates improved slightly this past week on a flight to quality associated with the uncertainty surrounding the effects of the earthquake, tsunami, and nuclear radiation issues in Japan. Also of note, Libya announced that they will halt all military operations. Investor confidence in Germany fell for the first time in five months in March. Economic data of note included February Housing Starts and Building Permits, both of which were much weaker than expected. The March Philadelphia Fed Business Index, though, was much stronger than expected. Inflation data included the February Producer Price Index (PPI) which was up 1.6% on expectations that it would be up 0.6%. Excluding food and energy, core PPI was up 0.2%, in line with expectations. The Consumer Price Index for February was up 0.5% on expectations that it would be up 0.4%. Excluding food and energy, core CPI was up 0.2% on expectations that it would be up 0.1%.
Think about this.
Fear less, hope more; Eat less, chew more; Whine less, breathe more; Talk less, say more; Love more, and all good things will be yours.
~Swedish Proverb
~Swedish Proverb
Thursday, March 17, 2011
Gen X Buyers to Lead Housing Recovery
Generation X — adults ages 31 to 45 — are expected to lead the recovery in the housing market, according to real estate experts in a recent webinar produced by the National Association of Home Builders. During the event, speakers highlighted results of a survey of 10,000 buyers in 27 metro areas.
While Generation X isn’t the largest population group — making up 32 percent of the population compared to 41 percent of baby boomers — it’s the most mobile age group, says Mollie Carmichael, principal of John Burns Real Estate Consulting in Irvine, Calif., the company that conducted the survey.
"They are in full force with their careers, and they need to accommodate growing families," Carmichael says.
This generation is coming with their own set of house preferences that may differ from other generations. Even though home sizes continue to shrink, first-time buyers and younger families are looking for more room to grow, Carmichael says. Nearly 50 percent said they prefer a home with a large lot and in a suburban development. Only 21 percent said they are looking for a traditional or “walkable neighborhood,” according to the survey.
"They want something compelling, from a design or personalization standpoint," Carmichael says.
And many want “green,” energy-efficient features, too. Regardless of age group, 70 percent of buyers said in the survey they are willing to pay $5,000 more for a home with “green” features.
Most buyers also said they’d be willing to pay a premium for such housing characteristics as dark wood cabinets, a separate tub and shower, and a fireplace in the living room.
While Generation X isn’t the largest population group — making up 32 percent of the population compared to 41 percent of baby boomers — it’s the most mobile age group, says Mollie Carmichael, principal of John Burns Real Estate Consulting in Irvine, Calif., the company that conducted the survey.
"They are in full force with their careers, and they need to accommodate growing families," Carmichael says.
This generation is coming with their own set of house preferences that may differ from other generations. Even though home sizes continue to shrink, first-time buyers and younger families are looking for more room to grow, Carmichael says. Nearly 50 percent said they prefer a home with a large lot and in a suburban development. Only 21 percent said they are looking for a traditional or “walkable neighborhood,” according to the survey.
"They want something compelling, from a design or personalization standpoint," Carmichael says.
And many want “green,” energy-efficient features, too. Regardless of age group, 70 percent of buyers said in the survey they are willing to pay $5,000 more for a home with “green” features.
Most buyers also said they’d be willing to pay a premium for such housing characteristics as dark wood cabinets, a separate tub and shower, and a fireplace in the living room.
Wednesday, March 16, 2011
Weighing an Offer: 3 Seller Tips
Sellers can feel pressure when trying to decide whether to accept a buyer offer on their home. While real estate professionals can advise clients on whether to accept an offer, the final decision is up to the seller--and it can be an agonizing one.
In the current buyer’s market, buyers aren’t shy about making lowball offers to sellers either. So when should you accept or decline an offer?
Realty Times recently offered the following questions for sellers to consider.
1. Is the buyer pre-qualified/approved? You may not want to risk a deal falling through because the buyer wasn’t pre-qualified for a loan.
2. Do you need to move quickly? If you need to move quickly--due to a job relocation or to avoid foreclosure--you may need to accept an offer that is less than what you want.
3. Can you accept a loss? Be sure to take closing costs into consideration too as you weigh whether you can even afford to agree to the buyer's offer.
Realty Times also suggests sellers take into account how long their home has been on the market and the number of showings. Such considerations also can help sellers determine whether getting a better offer soon is realistic and would be worth the wait.
In the current buyer’s market, buyers aren’t shy about making lowball offers to sellers either. So when should you accept or decline an offer?
Realty Times recently offered the following questions for sellers to consider.
1. Is the buyer pre-qualified/approved? You may not want to risk a deal falling through because the buyer wasn’t pre-qualified for a loan.
2. Do you need to move quickly? If you need to move quickly--due to a job relocation or to avoid foreclosure--you may need to accept an offer that is less than what you want.
3. Can you accept a loss? Be sure to take closing costs into consideration too as you weigh whether you can even afford to agree to the buyer's offer.
Realty Times also suggests sellers take into account how long their home has been on the market and the number of showings. Such considerations also can help sellers determine whether getting a better offer soon is realistic and would be worth the wait.
My Son, His New Home, and What It Means
Every week we try to help you put an accurate value on housing in today’s real estate market. We give you all the charts, report on all the surveys, and quote every housing expert willing to talk on the subject. And we are still not 100% sure what prices should be. At best, we can only tell you what we think.
This week was different. I was able to personally FEEL the true value of a home. My son closed on his first home yesterday. I have the great fortune to work with him at our company. I get to see him a lot when I am not traveling. This week I was home and got to spend every day with him.
I saw how nervous he was as he got all the last minute paperwork together. I heard the relief in his voice when he found out that he had overestimated his costs and would need to bring a little less money to the closing. I could feel how proud he was when he hugged me as he left the office the night before the closing.
He should be proud. He just purchased his own home. He just took a major step toward accomplishing the American Dream. He now owns a piece of this country. He now has a community he can call his own. He has a place to go ‘home’ to every night, a place where he can work in the yard, a place he can invite friends and showoff his ‘castle’, a place where he will someday raise his family.
Owning a home makes things different. You can’t necessarily explain it logically. But you can feel it. That feeling is the real value of a home AND IT IS PRICELESS.
My son slept in his own home last night. I am happy for him.
This week was different. I was able to personally FEEL the true value of a home. My son closed on his first home yesterday. I have the great fortune to work with him at our company. I get to see him a lot when I am not traveling. This week I was home and got to spend every day with him.
I saw how nervous he was as he got all the last minute paperwork together. I heard the relief in his voice when he found out that he had overestimated his costs and would need to bring a little less money to the closing. I could feel how proud he was when he hugged me as he left the office the night before the closing.
He should be proud. He just purchased his own home. He just took a major step toward accomplishing the American Dream. He now owns a piece of this country. He now has a community he can call his own. He has a place to go ‘home’ to every night, a place where he can work in the yard, a place he can invite friends and showoff his ‘castle’, a place where he will someday raise his family.
Owning a home makes things different. You can’t necessarily explain it logically. But you can feel it. That feeling is the real value of a home AND IT IS PRICELESS.
My son slept in his own home last night. I am happy for him.
Tuesday, March 15, 2011
What Buyers Want in Homes Today
Buyers have a long list of what they want when home shopping, but one of their biggest desires: A good deal.
"And no matter where a seller prices their property, they're looking to negotiate," says Patricia Szot, president of the MetroTex Association of REALTORS®.
But that’s not all they want. Bankrate.com recently asked real estate professionals to chime in on the top desires of their buyers when home shopping. Here are four things that made the list of top home buyer preferences:
1. Homes that are in good condition. "There's not a lot of flexibility in that," says Ron Phipps, president of the National Association of REALTORS®. Many buyers now take the attitude: "I'd rather spend the money getting into the house" and not have to spend more money later, Phipps says. One of the major reasons is that "buyers have limited amounts of cash," he adds. "Even if they want to do a fixer-upper, they don't have the money to do it."
2. A bargain with incentives. Buyers are looking for a good deal, even when considering bank-owned properties, says Joan Pratt, real estate broker with RE/MAX Professionals in Castle Pines, Colo. "They want the short sales and the foreclosures and they want them to look like they're owner-occupied," she says. "They don't want to paint. They don't want to put carpet in. They don't want to clean."
And they aren’t only asking for a low price but they also want incentives to buy too. As such, sellers are offering everything from gift cards for new furniture to paint to financial assistance at closing.
3. Outdoor living areas. Homes with screen porches, outdoor kitchens, two-way fireplaces are becoming increasingly competitive in the marketplace as more buyers say they want more outdoor living space.
4. Open kitchens. "The wall between the kitchen and the family room is evaporating," Phipps says. "The kitchen is becoming part of the gathering space.”
"And no matter where a seller prices their property, they're looking to negotiate," says Patricia Szot, president of the MetroTex Association of REALTORS®.
But that’s not all they want. Bankrate.com recently asked real estate professionals to chime in on the top desires of their buyers when home shopping. Here are four things that made the list of top home buyer preferences:
1. Homes that are in good condition. "There's not a lot of flexibility in that," says Ron Phipps, president of the National Association of REALTORS®. Many buyers now take the attitude: "I'd rather spend the money getting into the house" and not have to spend more money later, Phipps says. One of the major reasons is that "buyers have limited amounts of cash," he adds. "Even if they want to do a fixer-upper, they don't have the money to do it."
2. A bargain with incentives. Buyers are looking for a good deal, even when considering bank-owned properties, says Joan Pratt, real estate broker with RE/MAX Professionals in Castle Pines, Colo. "They want the short sales and the foreclosures and they want them to look like they're owner-occupied," she says. "They don't want to paint. They don't want to put carpet in. They don't want to clean."
And they aren’t only asking for a low price but they also want incentives to buy too. As such, sellers are offering everything from gift cards for new furniture to paint to financial assistance at closing.
3. Outdoor living areas. Homes with screen porches, outdoor kitchens, two-way fireplaces are becoming increasingly competitive in the marketplace as more buyers say they want more outdoor living space.
4. Open kitchens. "The wall between the kitchen and the family room is evaporating," Phipps says. "The kitchen is becoming part of the gathering space.”
Monday, March 14, 2011
Survey: Buyers, Sellers Optimistic About Housing
Nearly 70 percent of buyers and sellers say they believe the housing market and property values will recover in the next year or two, according to a new survey by Prudential Real Estate and Relocation Services Inc.
What’s more, 86 percent of the more than 1,000 buyers and sellers surveyed believe real estate is still a good investment despite the souring market conditions in many areas the past few years.
Those surveyed said they also are ready to buy: Six in 10 respondents say they are more interested in buying real estate and 59 percent say they are optimistic about buying now with recent momentum from the economic recovery. They also believe they can get a better deal now because of lower prices.
But many survey respondents said that buying a home relies on them being able to sell their existing home. About 67 percent respondent said they are concerned about getting a fair price for their existing home.
“This survey clearly demonstrates that Americans continue to be optimistic about the real estate market and believe that home prices will rise,” says James Mallozzi, chief executive officer of Prudential Real Estate and Relocation Services. “A key take away from the survey is although consumers recognize that it is a good time to buy, they are concerned about their ability to sell their homes. This is one of the reasons the market is still struggling to recover.
What’s more, 86 percent of the more than 1,000 buyers and sellers surveyed believe real estate is still a good investment despite the souring market conditions in many areas the past few years.
Those surveyed said they also are ready to buy: Six in 10 respondents say they are more interested in buying real estate and 59 percent say they are optimistic about buying now with recent momentum from the economic recovery. They also believe they can get a better deal now because of lower prices.
But many survey respondents said that buying a home relies on them being able to sell their existing home. About 67 percent respondent said they are concerned about getting a fair price for their existing home.
“This survey clearly demonstrates that Americans continue to be optimistic about the real estate market and believe that home prices will rise,” says James Mallozzi, chief executive officer of Prudential Real Estate and Relocation Services. “A key take away from the survey is although consumers recognize that it is a good time to buy, they are concerned about their ability to sell their homes. This is one of the reasons the market is still struggling to recover.
Friday, March 11, 2011
Foreclosures Post Biggest Drop on Record
The number of foreclosure notices filed in February declined 14 percent compared with last month, and foreclosure notices dropped 27 percent compared to last year at this time. That marks the largest year-over-year decline that RealtyTrac, a foreclosure tracking site, has ever recorded.
The number of U.S. homes in some stage of foreclosure fell drastically last month, reaching a 36-month low, RealtyTrac reports.
Initial default notices, scheduled foreclosure auctions, and homes repossessed by lenders all dropped in February, RealtyTrac says.
"Allegations of improper foreclosure processing continued to dog the mortgage servicing industry and disrupt court dockets," says RealtyTrac CEO James Saccacio. "The industry is in the midst of a major overhaul that has severely restricted its capacity to process foreclosures.
Lenders repossessed 64,643 homes in February, a 17 percent drop from January.
Initial default notices dropped 16 percent from January — and 41 percent from a year ago. What’s more, foreclosure auctions dropped 10 percent from last month and 21 percent from February of last year, RealtyTrac said.
Rick Sharga, a senior vice president at RealtyTrac, says the real estate market isn’t out of the clear quite yet. He expects foreclosure activity to likely spike again as banks resolve foreclosure paperwork issues.
About 2 million households are in foreclosure proceedings. In addition, about 5 million borrowers are at least two months behind on their mortgage payments.
States With the Highest Foreclosure Rates
The states with the highest foreclosure rates for the month:
1. Nevada (which has held the No. 1 spot for 50 consecutive months, with one in every 119 households receiving a foreclosure notice)
2. Arizona (one in 222)
3. California (one in 239)
4. Utah
5. Idaho
6. Georgia
7. Michigan
8. Florida
9. Colorado
10. Hawaii
The number of U.S. homes in some stage of foreclosure fell drastically last month, reaching a 36-month low, RealtyTrac reports.
Initial default notices, scheduled foreclosure auctions, and homes repossessed by lenders all dropped in February, RealtyTrac says.
"Allegations of improper foreclosure processing continued to dog the mortgage servicing industry and disrupt court dockets," says RealtyTrac CEO James Saccacio. "The industry is in the midst of a major overhaul that has severely restricted its capacity to process foreclosures.
Lenders repossessed 64,643 homes in February, a 17 percent drop from January.
Initial default notices dropped 16 percent from January — and 41 percent from a year ago. What’s more, foreclosure auctions dropped 10 percent from last month and 21 percent from February of last year, RealtyTrac said.
Rick Sharga, a senior vice president at RealtyTrac, says the real estate market isn’t out of the clear quite yet. He expects foreclosure activity to likely spike again as banks resolve foreclosure paperwork issues.
About 2 million households are in foreclosure proceedings. In addition, about 5 million borrowers are at least two months behind on their mortgage payments.
States With the Highest Foreclosure Rates
The states with the highest foreclosure rates for the month:
1. Nevada (which has held the No. 1 spot for 50 consecutive months, with one in every 119 households receiving a foreclosure notice)
2. Arizona (one in 222)
3. California (one in 239)
4. Utah
5. Idaho
6. Georgia
7. Michigan
8. Florida
9. Colorado
10. Hawaii
Many Buyers Lack Credit Score Knowledge
Some consumers lack the knowledge about credit scores, and most importantly, how you can boost it to get better deals on home loans or other type of loans.
A survey of 1,000 consumers conducted by Opinion Research asked consumers 22 questions about credit scores. On average, consumers got 60 percent of the questions right, revealing several gaps in credit score knowledge.
"They did not understand the financial cost of a low score," says Stephen Brobeck, executive director of the Consumer Federation of America, an association of nonprofit consumer organizations. For example, a person with bad credit trying to take a $20,000, 60-month car loan, might have to pay about $5,000 or more in interest than someone with a good credit score, according to a survey by the Consumer Federation of America and VantageScore Solutions.
Many consumers also didn’t know how to boost credit scores. One common myth, for example, is that paying cash is the only way to build a good credit score. However, the amount of available credit you have isn’t what hurts your credit score and borrowers are usually better served at keeping two or three credit cards open. A credit score factors in the amount of debt you carry in relation to that available credit — and how well you pay your bills on time that matters more to lenders, the Detroit Free Post reports.
Credit scores have been dropping nationwide due to economic hardship. About a quarter of customers — nearly 43.4 million — had a credit score of 599 or below, which is considered poor risk, and likely won’t qualify them for loans. Or, they’ll have to pay dearly for mortgages or car loans, according to FICO.
Consumers are entitled to a free copy of their credit reports once a year from each of the three nationwide credit-reporting companies. Visit www.annualcreditreport.com.
A survey of 1,000 consumers conducted by Opinion Research asked consumers 22 questions about credit scores. On average, consumers got 60 percent of the questions right, revealing several gaps in credit score knowledge.
"They did not understand the financial cost of a low score," says Stephen Brobeck, executive director of the Consumer Federation of America, an association of nonprofit consumer organizations. For example, a person with bad credit trying to take a $20,000, 60-month car loan, might have to pay about $5,000 or more in interest than someone with a good credit score, according to a survey by the Consumer Federation of America and VantageScore Solutions.
Many consumers also didn’t know how to boost credit scores. One common myth, for example, is that paying cash is the only way to build a good credit score. However, the amount of available credit you have isn’t what hurts your credit score and borrowers are usually better served at keeping two or three credit cards open. A credit score factors in the amount of debt you carry in relation to that available credit — and how well you pay your bills on time that matters more to lenders, the Detroit Free Post reports.
Credit scores have been dropping nationwide due to economic hardship. About a quarter of customers — nearly 43.4 million — had a credit score of 599 or below, which is considered poor risk, and likely won’t qualify them for loans. Or, they’ll have to pay dearly for mortgages or car loans, according to FICO.
Consumers are entitled to a free copy of their credit reports once a year from each of the three nationwide credit-reporting companies. Visit www.annualcreditreport.com.
Wednesday, March 9, 2011
Mortgage Purchase Activity at Highest of Year
Mortgage applications for purchases rose to their highest level of the year last week, the Mortgage Bankers Association reports. Purchase applications for mortgages increased 12.5 percent from one week earlier, and on an unadjusted basis, purchase application activity is the highest since last May.
“An improving job market is beginning to pave the way for an improving housing market,” says Michael Fratantoni, MBA's vice president of research and economics. “Additionally, mortgage interest rates remained below 5 percent for a second week, maintaining affordability for buyers and leading to an increase in refinance applications."
Refinancings also were on the rise last week, increasing 17.2 percent from one week prior. It was the highest the Refinance Index had been in over a month.
Overall, mortgage applications increased 15.5 percent on a seasonally adjusted basis for the week ending March 4, compared to one week prior, according to MBA.
Source: “Mortgage Applications Increase in Latest MBA Weekly Survey,” Mortgage Bankers Association (March 9, 2011)
“An improving job market is beginning to pave the way for an improving housing market,” says Michael Fratantoni, MBA's vice president of research and economics. “Additionally, mortgage interest rates remained below 5 percent for a second week, maintaining affordability for buyers and leading to an increase in refinance applications."
Refinancings also were on the rise last week, increasing 17.2 percent from one week prior. It was the highest the Refinance Index had been in over a month.
Overall, mortgage applications increased 15.5 percent on a seasonally adjusted basis for the week ending March 4, compared to one week prior, according to MBA.
Source: “Mortgage Applications Increase in Latest MBA Weekly Survey,” Mortgage Bankers Association (March 9, 2011)
Tuesday, March 8, 2011
Selective First-Time Buyers Can Miss Deals
Finding a "move-in ready" home was important to 87 percent of 300 first-time buyers recently polled by Coldwell Banker Real Estate. Some agents say first-timers are being more selective; and some are turning away from well-priced homes because they do not have granite countertops, they need a new carpet, or they have wall colors not to their liking.
Zillow says higher down payments and stricter underwriting standards mean today's buyers want to ensure their homes need few and inexpensive improvements.
Agents believe HGTV and other cable channels have made buyers more knowledgeable about home design, but some worry that such programming also has given buyers unrealistic expectations.
"You can't have the big yard, the top-line updates and all that in a starter home," says Cindy Westfall of Lake Oswego, Ore.-based Prudential NW Properties. "You've got to compromise somewhere or else you'll never buy anything."
Zillow says higher down payments and stricter underwriting standards mean today's buyers want to ensure their homes need few and inexpensive improvements.
Agents believe HGTV and other cable channels have made buyers more knowledgeable about home design, but some worry that such programming also has given buyers unrealistic expectations.
"You can't have the big yard, the top-line updates and all that in a starter home," says Cindy Westfall of Lake Oswego, Ore.-based Prudential NW Properties. "You've got to compromise somewhere or else you'll never buy anything."
Monday, March 7, 2011
Future of 30-Year Mortgages at Risk?
Proposals to phase out Fannie Mae and Freddie Mac may make 30-year fixed-rate mortgages harder to find, housing experts say.
An outline drafted by the Treasury Department, the Department of Housing and Urban Development, and the White House and circulated last month calls for winding down Fannie and Freddie over the next five to seven years. Congress continues to debate the future of Fannie and Freddie, and how and whether it should move to phase out the government-sponsored enterprises (GSEs). For its part, the Obama administration has argued for scrapping the GSEs, but replacing them with some form of federal involvement in mortgage financing.
But housing experts warn that 30-year fixed rate mortgages — a popular choice among buyers — might become harder to find and more expensive without Fannie and Freddie to buy these loans. Banks may be less willing to extend credit at a fixed rate over such a long term, housing experts note, since investors often prefer loans with adjustable rates rather than loans with longer terms, which expose them to interest rate risk.
“Traditionally, banks have been less willing to keep 30-year fixed-rate mortgages on their balance sheets, so in the absence of a vibrant securitization market, banks would more heavily favor adjustable-rate products,” John Mechem, a spokesman for the Mortgage Bankers Association, told The New York Times.
There is a lot of uncertainty about the process of phasing out Fannie and Freddie and how it will affect mortgage products, Barry Zigas, the director of housing policy at the Consumer Federation of America, told The New York Times.
Alex J. Pollock, a former chief executive of the Federal Home Loan Bank of Chicago, told The New York Times that he believes 30-year loans would remain available regardless of a federal guarantee, but they might be more difficult to find and lenders might require larger down payments and better credit scores.
“One of the reasons that American housing finance is in such bad shape right now is the 30-year mortgage,” Pollock argues. “For many people, it’s not at all clear that that’s the best product.”
An outline drafted by the Treasury Department, the Department of Housing and Urban Development, and the White House and circulated last month calls for winding down Fannie and Freddie over the next five to seven years. Congress continues to debate the future of Fannie and Freddie, and how and whether it should move to phase out the government-sponsored enterprises (GSEs). For its part, the Obama administration has argued for scrapping the GSEs, but replacing them with some form of federal involvement in mortgage financing.
But housing experts warn that 30-year fixed rate mortgages — a popular choice among buyers — might become harder to find and more expensive without Fannie and Freddie to buy these loans. Banks may be less willing to extend credit at a fixed rate over such a long term, housing experts note, since investors often prefer loans with adjustable rates rather than loans with longer terms, which expose them to interest rate risk.
“Traditionally, banks have been less willing to keep 30-year fixed-rate mortgages on their balance sheets, so in the absence of a vibrant securitization market, banks would more heavily favor adjustable-rate products,” John Mechem, a spokesman for the Mortgage Bankers Association, told The New York Times.
There is a lot of uncertainty about the process of phasing out Fannie and Freddie and how it will affect mortgage products, Barry Zigas, the director of housing policy at the Consumer Federation of America, told The New York Times.
Alex J. Pollock, a former chief executive of the Federal Home Loan Bank of Chicago, told The New York Times that he believes 30-year loans would remain available regardless of a federal guarantee, but they might be more difficult to find and lenders might require larger down payments and better credit scores.
“One of the reasons that American housing finance is in such bad shape right now is the 30-year mortgage,” Pollock argues. “For many people, it’s not at all clear that that’s the best product.”
Wednesday, March 2, 2011
Low Appraisals Jeopardize Deals, Just Happened to Me
Ten percent of real estate professionals say they’ve had sales canceled because appraisals came in below the price the buyer agreed to pay, according to a National Association of REALTORS® survey conducted in January. What’s more, another 15 percent say contracts had to be renegotiated because an appraisal came in too low.
Home builders say low appraisals are killing deals for them too. One-third of home builders say low appraisals have jeopardized sales for them (up from 26 percent in 2009), according to the National Association of Builders.
When appraisals come in low, sellers have to drop the sales price or buyers have to come with more cash, or the deal gets killed.
Appraisers and lenders say it’s not faulty valuation practices that cause low appraisals, but falling home prices. U.S. home prices are 30 percent below their 2006 peak during the housing boom.
Foreclosures and a new appraisal rule for lenders are other factors contributing to low appraisals, housing experts say. A new appraisal rule that went into effect in 2009 aims to lessen lenders’ ability to influence appraisers but has led to more outsourcing of appraisals to firms that may not be as familiar with the neighborhoods in that area.
"You get people from one end of the state appraising stuff in the other end," says Don Hammer, manager of Realty Executives in Paradise Valley, Ariz., who says half of all the canceled sales in his office have been appraisal related
Home builders say low appraisals are killing deals for them too. One-third of home builders say low appraisals have jeopardized sales for them (up from 26 percent in 2009), according to the National Association of Builders.
When appraisals come in low, sellers have to drop the sales price or buyers have to come with more cash, or the deal gets killed.
Appraisers and lenders say it’s not faulty valuation practices that cause low appraisals, but falling home prices. U.S. home prices are 30 percent below their 2006 peak during the housing boom.
Foreclosures and a new appraisal rule for lenders are other factors contributing to low appraisals, housing experts say. A new appraisal rule that went into effect in 2009 aims to lessen lenders’ ability to influence appraisers but has led to more outsourcing of appraisals to firms that may not be as familiar with the neighborhoods in that area.
"You get people from one end of the state appraising stuff in the other end," says Don Hammer, manager of Realty Executives in Paradise Valley, Ariz., who says half of all the canceled sales in his office have been appraisal related
Tuesday, March 1, 2011
More Americans Confident About Home Ownership
Americans are more confident about the stability of home prices than they were at the beginning of 2010, according to Fannie Mae's latest national housing survey, conducted between October 2010 and December 2010.. And when it comes to home ownership, younger Americans are particularly optimistic, the survey finds.
Nearly 80 percent of all respondents, including home owners and renters, surveyed said they thought housing prices would hold steady or increase over the next 12 months--which is up from 73 percent in January 2010. In fact, survey respondents expressed more confidence over the stability of home prices than they did about the overall strength of the economy. Sixty-one percent said the economy is heading on the wrong track.
Young Americans, Hispanics, and African-Americans were the most positive about their views on home ownership among the general population, according to the survey. Nearly 60 percent of Generation Y respondents (those between 18-34 years old) say that buying a home offers a lot of potential as an investment. Also, more than one-third of Hispanics and African Americans say they plan to buy a home within the next three years, compared to one in four of the general population.
“We are also seeing encouraging signs in the positive attitudes toward home ownership among younger Americans, despite the severe impact of the housing crisis on Generation Y,” says Doug Duncan, Fannie Mae’s chief economist. “But most respondents to our survey continue to lack confidence in the strength of the economic recovery, and they are less optimistic about their ability to buy a home in the years ahead. This sense of uncertainty is weighing on the housing recovery today and reshaping expectations for housing for the future.”
Nearly 80 percent of all respondents, including home owners and renters, surveyed said they thought housing prices would hold steady or increase over the next 12 months--which is up from 73 percent in January 2010. In fact, survey respondents expressed more confidence over the stability of home prices than they did about the overall strength of the economy. Sixty-one percent said the economy is heading on the wrong track.
Young Americans, Hispanics, and African-Americans were the most positive about their views on home ownership among the general population, according to the survey. Nearly 60 percent of Generation Y respondents (those between 18-34 years old) say that buying a home offers a lot of potential as an investment. Also, more than one-third of Hispanics and African Americans say they plan to buy a home within the next three years, compared to one in four of the general population.
“We are also seeing encouraging signs in the positive attitudes toward home ownership among younger Americans, despite the severe impact of the housing crisis on Generation Y,” says Doug Duncan, Fannie Mae’s chief economist. “But most respondents to our survey continue to lack confidence in the strength of the economic recovery, and they are less optimistic about their ability to buy a home in the years ahead. This sense of uncertainty is weighing on the housing recovery today and reshaping expectations for housing for the future.”
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