Category Archives: Real Estate

Real Estate

July Pending Home Sales Rebound

China in N.Y. 4th of July Parade, 1911 (LOC)
China in N.Y. 4th of July Parade, 1911 (LOC) (Photo credit: The Library of Congress)

 

 

 

 

 

 

 

 

 

 

Pending home sales rose in July to the highest level in over two years and remain well above year-ago levels, according to the National Association of REALTORS® (NAR).

The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 2.4 percent to 101.7 in July from 99.3 in June and is 12.4 percent above July 2011 when it was 90.5. The data reflect contracts but not closings.

Lawrence Yun, NAR chief economist, said the index is at the highest level since April 2010, which was shortly before the closing deadline for the home buyer tax credit. “While the month-to-month movement has been uneven, more importantly we now have 15 consecutive months of year-over-year gains in contract activity,” Yun said.

Limited inventory is constraining market activity. “All regions saw monthly increases in home-buying activity except for the West, which is now experiencing an acute inventory shortage,” Yun added.

The PHSI in the Northeast increased 0.5 percent to 77.0 in July and is 13.4 percent higher than a year ago. In the Midwest the index grew 3.4 percent to 97.4 in July and is 20.2 percent above July 2011. Pending home sales in the South rose 5.2 percent to an index of 111.7 in July and are 15.6 percent above a year ago. In the West the index slipped 1.7 percent in July to 109.9 but is 1.3 percent higher than July 2011.

Existing-home sales are projected to rise 8 to 9 percent in 2012, followed by another 7 to 8 percent gain in 2013. Home prices are expected to increase 10 percent cumulatively over the next two years.

“Falling visible and shadow inventories point toward continuing price gains. Expected gains in housing starts of 25 to 30 percent this year, and nearly 50 percent in 2013, are insufficient to meet the growing housing demand,” Yun said.

Source: NAR

 

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Real Estate

Pending Home Sales in California Decline



The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported this week that contracts signed for previously owned homes in California took a dip in June. The decline in pending sales can be attributed to a lack of housing inventory.

  • C.A.R.’s Pending Home Sales Index declined 3.8 percent in June compared with May but posted a 4.7 percent increase compared with a year earlier.
  • Pending home sales are an early indicator of where sales are headed. Sales often close six to eight weeks after contracts are signed so a decline in June could mean weakness when July and August sales statistics are reported.
  • C.A.R.’s report also showed a decline in the number of foreclosed homes selling. Last month, foreclosed homes accounted for 20.2 percent of all pending sales, a decline of 22.6 percent from May and 29.2 percent in June 2011.
  • The share of equity sales – or non-distressed property sales – rose to 58 percent in June, up from a revised 56 percent in May.  Equity sales made up 50.5 percent of all sales in June 2011.
  • The share of short sales edged up in June to 21.4 percent, up from 21.1 percent in May and from 20 percent a year ago.
  • The available supply of REOs for sale tightened slightly in June, with the Unsold Inventory Index declining from a 1.5-month supply in May 2012 to 1.4 months in June 2012.  The June Unsold Inventory Index for equity sales stood at 3.7 months and was 5.3 months for short sales.

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Real Estate

Homeowner Bill of Rights Plans Move Forward

English: Bustour touring foreclosures in San Diego

On Wednesday, a so-called “Homeowner Bill of Rights” moved a step closer to passing, with housing advocates claiming the bill would help people stave off foreclosures. The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) opposes provisions in this measure which will allow anyone to stop the foreclosure process by filing a lawsuit, merited or not.

  • C.A.R. agrees that careful and balanced reforms to the foreclosure process are necessary. However, C.A.R. opposes AB 278 because it will further delay the housing recovery by inviting bad-faith lawsuits and defaults, making it difficult for even well-qualified borrowers to obtain financing.
  • The legislation would ban the practice of dual-tracking, in which a bank continues foreclosure proceedings while a homeowner is seeking a loan modification; require banks to provide a single of point – either a person or a team – for struggling borrowers; and give borrowers the right to sue their lenders for “significant, material” violations of the new law.
  • The bills also require lenders to give a clean explanation when they reject borrowers for a loan modification, to verify mortgage documents before a foreclosure, and to provide copies to borrowers upon request.  Lenders can be fined up to $7,500 per loan for filing and recording unverified documents.  The bills’ provisions apply to first-lien mortgages for owner-occupants.
  • For more information about C.A.R.’s opposition to AB 278 and to learn how to take action, visit this website

 

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Real Estate

Taking Advantage of Low Mortgage Rates

English: Mortgage debt
Mortgage debt (Photo credit: Wikipedia)

 

 

 

 

 

 

Mortgage rates continue to set new record lows, leaving many home buyers and re-financers wondering how low rates can go and how to capture the best rates now.

  • Many economists are forecasting that mortgage rates will rise again later this year as the American economy gradually improves and as more global investors turn to the U.S. as a safe haven for money.
  • The average rate on a 30-year fixed-rate mortgage averaged 3.71 percent the week of June 14.
    The rate had averaged 3.9 percent three months earlier and 4.5 percent a year earlier.
  • According to one economist, rates could possibly fall further, perhaps as much as a quarter of a percentage point, but it is more likely that they would start a “slow drift” upward.
  • Those planning to refinance or buy a home in the next two or three months might want to consider locking in a mortgage rate now.
  • Borrowers with rate locks, with a built-in deadline, often receive priority treatment from lenders, because the borrower is telling the lender that he or she is serious about closing soon.
  • Lock-in costs and policies vary widely, and are based partly on the time frame the borrower wants covered.  Most borrowers will need a 60- to 90-day lock.
  • If interest rates continue to fall during the lock period, borrowers can ask the lender to rewrite the rate lock at an additional cost, or obtain a “float-down” provision in the original agreement.  A lock with a float-down agreement allows the borrower to change the rate, often only once, before closing on the mortgage.  This option is generally more expensive than a standard lock.

 

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Real Estate

5 Biggest Mistakes Home Buyers Make

budget
budget (Photo credit: 401K 2012)


 

 

 

 

 

 

 

Daily Real Estate News | Wednesday, June 20, 2012

Some home buyers fall for common pitfalls when purchasing a home. How can you help make sure your clients don’t fall for one?

Credit.com recently featured some of the biggest mistakes home buyers often make. Their list included:

1. Trying to fix credit scores before buying a home. 

Home buyers may do more harm than good if they don’t consult a financial expert first. “Even paying down credit card balances, which is a good thing as far as your credit scores and debt ratios are concerned, could be a problem if it leaves you short the cash you need to qualify to get the loan,” says Gerri Detweiler, Credit.com’s personal finance expert.

2. Not considering the future enough in their purchase. 

Buyers should consider what they want out of a house not just for today but also five or 10 years down the road. Do they plan to expand their family? If so, they may need a bigger home and want a different location. Also, how long do they plan on staying at the home? That can help determine the type of mortgage that makes the most sense for them too.

3. Failing to research financing enough. 

First comes the home and then the financing? Not in today’s market. Home shoppers should get prequalified for a mortgage before they start shopping for a home so they know what they can afford. “The time to make decisions about your mortgage needs is not during this 10-day window [after you sign a contract]; at most, this is time to shop for rates and fees and such,” says Keith Gumbinger, vice president of HSH.com. “Evaluating your credit, deciding on a product you prefer, how much down payment you feel comfortable making, whether you want to pay fees or points [and, if so, how much] and even shopping for a lender [getting preapproved] should happen well in advance of even wandering through the market looking at houses.”

4. Making the assumption that the Good Faith Estimate is always what you pay at closing. 

The form lenders provide that estimates closing costs is not set in stone. Closing costs may actually be more, so buyers need to be prepared. Closing costs generally are about 3 percent to 5 percent of the loan amount. “Shop around and compare the Good Faith Estimate provided by the lender with that of two or three other lenders,” suggests Ryan Himmel, a CPA and founder of BIDaWIZ, a tax advice resource. “If there is a significant disparity in estimates, then request an explanation from the lender to determine if you would like to move forward.”

5. Failing to budget for home expenses. 

Budgeting to purchase the home isn’t all new home owners should be squeezing in their budget. They’d be wise to not forget to budget for maintaining the home too. New home owners should budget for an increase in utility bills as well as for future maintenance and repair costs, such as repairing a furnace or roof.

Read more mistakes that home buyers often make.

Source: “10 Mistakes New Homebuyers Make,” Credit.com (2012)

 

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Real Estate

Fighting Back Against Lowball Home Appraisals

Photo courtesy of Atlas Real Estate Appraisals
Photo courtesy of Atlas Real Estate Appraisals

Record-low interest rates are a boon for home buyers and for homeowners seeking to refinance.  But low appraisals are making it difficult or even impossible for some borrowers to take advantage.

  • Lenders report that “overly pessimistic appraisals caused by appraisers using distressed sales as ‘comparables’ are a key reason why deals are falling through.
  • Part of the problem is that home prices have plummeted further than many people would like to believe.
  • Another key factor is the appraisal changes enacted in the wake of the financial crisis that were designed to eliminate improper pressure on appraisers that often led to inflated valuations during the housing boom.  However, critics say those changes resulted in unnecessarily conservative valuations and the greater use of appraisers with little knowledge of local market conditions.
  • Additionally, accurate valuations can be difficult to come by when sales are thin and prices are just beginning to edge upward after prolonged declines.  Many borrowers are “in a holding pattern for extended periods” because it’s difficult to find comparable sales to support the appraisal value.
  • Despite these issues, there are ways consumers can improve their odds of getting a deal done.  For example, borrowers can look at comparable sales from the last three to six months before seeking a mortgage to know the range of home values in the area.
  • Secondly, although borrowers cannot choose their appraiser, they can accompany the appraiser during the inspection, pointing out improvements that add to the home’s value.  They also can provide the appraiser with comparable sales that can be used to support the valuation.
  • Borrowers also can request that the lender review the appraiser’s findings, though the chances of success are slim.  If the borrow thinks the value is unreasonably low, they should first look for factual errors, such as an erroneous number of bedrooms or miscalculated square footage.

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Real Estate

Short Sales May Get Shorter

English: The Colonial Revival headquarters of ... The Colonial Revival headquarters of Fannie Mae, designed by architect Leon Chatelain, Jr. in 1956, located at 3900 Wisconsin Avenue, N.W., in the Cathedral Heights neighborhood of Washington, D.C. (Photo credit: Wikipedia)

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning June 15, the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, will require both agencies to give short-sale buyers a final decision within 60 days.

  • Under this same guideline, Fannie Mae and Freddie Mac also must respond to initial requests for a short sale within 30 days of receiving the buyer’s submission.
  • According to one analyst, expedited sales as a result of the new directive will benefit the entire housing market.  They could also remove some risks for buyers – many of whom previously had to wait months for a decision and then ended up not getting the house they wanted.
  • Lenders favor short sales because they are less costly and more efficient than foreclosures.  Yet the homeowners, trying to exit as gracefully as possible, never know how long the process will take or how badly their credit will be hurt.
  • Although short sales have a reputation for being easier on credit scores than foreclosures, Experian says that is a “fairly common misperception.” If there is a difference in impact, according to Experian, it is slight.
  • Both short sales and foreclosures remain on the credit report for seven years, but foreclosures don’t appear until the legal paperwork is filed, and that could take months.
  • The effect was measured by an analysis by VantageScore, a provider of credit scores used by lenders.  The higher the credit rating a consumer has, the more points he or she would lose in a short sale.
  • If consumers started with an 830 score, they would most likely lose 100 to 110 points from a short sale, 120 to 130 points from a foreclosure.  But a homeowner with a 625 score, who is behind on his mortgage and some credit card payments, would lose 15 to 25 points from a short sale and 10 to 20 points from a foreclosure.

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Real Estate

Pending Home Sales Up Strongly From a Year Ago

English: staff photo of Lawrence Yun
Staff photo of Lawrence Yun (Photo credit: Wikipedia)


 

 

 

 

 

 

 

Pending home sales retrenched in April following three consecutive monthly gains, but are notably higher than a year ago, according to the National Association of REALTORS®.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, declined 5.5 percent to 95.5 from a downwardly revised 101.1 in March but is 14.4 percent above April 2011 when it was 83.5. The data reflect contracts but not closings.

Lawrence Yun, NAR chief economist, said a one-month setback in light of many months of gains does not change the fundamentally improving housing market conditions. “Home contract activity has been above year-ago levels now for 12 consecutive months. The housing recovery momentum continues,” he said.

Yun notes home sales are staying well above the levels seen from 2008 through 2011. “Housing market activity has clearly broken out at notably higher levels and is on track to see the best performance since 2007,” he said. “All of the major housing market indicators are expected to trend gradually up, but a new federal budget must be passed before the end of the year for the economy to continue to move forward.”

The PHSI in the Northeast rose 0.9 percent to 78.9 in April and is 19.9 percent higher than April 2011. In the Midwest the index slipped 0.3 percent to 93.0 but is 23.0 percent above a year ago. Pending home sales in the South fell 6.8 percent to an index of 105.7 in April but are 13.3 percent higher than April 2011. In the West the index dropped 12.0 percent in April to 94.9 but is 5.1 percent above a year ago.

The housing forecast has been upgraded, with existing-home sales expected to reach 4.66 million this year, compared with 4.26 million in 2011. The outlook for 2013 is now 4.92 million, but could vary significantly depending on two scenarios.

If lending returns to normal, the 2013 outlook for existing-home sales would measurably improve to 5.3 million. However, a fiscal cliff scenario of higher taxes and sharp spending cuts beginning in early 2013, which is an unlikely event but still worth noting, would lower the sales projection to 4.5 million.

Because of measurably lower inventory supplies, the forecast for home prices has been upwardly revised with the median existing-home price projected to rise 2 to 3 percent this year and 4 to 5 percent in 2013, with wide local market variations. Miami and Phoenix will easily achieve double-digit price growth by year end.

Yun said the price gains will measurably reduce the number of underwater homeowners. “For example, a 5 percent national price gain means the number of underwater home owners would fall to about 9 million from current estimates of around 11 million. A 10 percent gain, say over the next two years, would reduce the underwater status to about 7 million households out of 75 million owner-occupied homes,” he said.

About 25 million homes are owned free and clear without a mortgage.

Though the proportion of distressed properties is still high, the numbers have been falling over the past two years. “The diminishing share of distressed properties is another reason for higher home prices in upcoming months,” Yun added.

Source: National Association of REALTORS®

 

 

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Real Estate

Home Sales Increasing And Prices Are Bouncing Back

Seal of the United States Federal Housing Fina...
Seal of the United States Federal Housing Finance Agency. (Photo credit: Wikipedia)

 

 

 

 

 

 

 

 

I’ve noticed an increase in sales in Nevada County.  A recent article which I’m republishing here indicates that  home prices are increasing nationwide.

“The Federal Housing Finance Agency reported that nationwide home prices posted their first gain in the first quarter since 2007. While the gain was modest at 0.6 percent, housing experts note it’s still another sign that the housing market is gaining momentum.

FHFA’s housing price index is calculated using home sales price information based off Freddie Mac and Fannie Mae-backed mortgages.

FHFA’s seasonally adjusted monthly index rose 1.8 percent in March over February, which is the largest monthly increase in at least 20 years. Year-over-year, home prices increased 2.7 percent, FHFA reports.

“Increased affordability and a somewhat smaller inventory of homes for sale are positively impacting house prices,” says Andrew Leventis, FHFA’s principal economist.

Price increases were the highest in Hawaii with a 10.3 percent increase, and in Washington, D.C., which saw a 9.8 percent gain, according to FHFA.

Still, Number of Underwater Home Owners Remain High

Despite recent improvements in home prices, the percentage of underwater borrowers has shown little improvement in the last year. More than 30 percent of home owners in the first quarter remained underwater on their mortgage, owing more on their home than it’s currently worth, according to a new Zillow housing report.

A year ago, 32.4 percent of all borrowers had negative equity on their loan compared to 31.4 percent during the most recent quarter, Zillow reports.

Yet, Zillow notes that nine out of 10 underwater borrowers are current on their mortgage payments.

“[It’s] important to note that negative equity remains only a paper loss for the vast majority of underwater home owners,” says Stan Humphries, Zillow’s chief economist. “As home values slowly increase and these home owners continue to pay down their principal, they will surface again.”

The highest share of underwater home owners continues to be in Las Vegas, where 71 percent of home owners are underwater, followed by Phoenix (at 55.5 percent) and Atlanta (at 55.2 percent), according to the Zillow housing report.

Source: “U.S. Housing Prices Rise,” UPI (May 23, 2012); “Home Prices Rose Most in Two Decades in March, FHFA Says,” Bloomberg News (May 23, 2012) and “More than 30% of Mortgage Borrowers Still Underwater,” CNNMoney (May 24, 2012)

 

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