Tag Archives: national association of realtors

Appraisals Catching Up to Rising Home Values

May 16, 2013 jd 1 Comment

Hard to find comparable sales on this home. Photo credit: http://hekk-m.com/post180818332/

In recent months, real estate professionals have had to hold their breath as they waited for an appraisal on a property to come back. Would it be lower than the agreed-upon selling price — and by how much?

Many real estate professionals have blamed a high number of derailed transactions on low-ball appraisals.

But now the industry is noticing a change in appraised values: Appraisals are getting more in line with the agreed upon selling price, CNNMoney reports.

Appraisers are valuing homes at or above their selling prices as home prices nationwide climb and inventories of homes decrease, says Lawrence Yun, chief economist for the National Association of REALTORS®.

For example, in Wallingford, Wash., real estate pro Michael Ackerman told CNNMoney that he was concerned a transaction would fall apart when a buyer agreed to pay $755,000 for a home since other comparable homes in the area had sold for $690,000.

“Everybody’s jaws dropped” when the appraised value came in at the full, agreed-upon selling price,” says Ackerman.

In some cases, appraisals are even coming in higher — which was practically unheard of just a few months ago. For example, real estate pro Cara Ameer in Jacksonville Beach, Fla., says with home prices in the area rising 15 percent over the past year, she was concerned the appraisal on a two-bedroom townhouse wouldn’t reflect the current rise. A buyer offered to pay $5,000 above the $189,000 asking price. The appraisal came in above the selling price, Ameer says.

Source: “Home appraisals no longer derailing sales,” CNNMoney (May 15, 2013)

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Real Estate

The Top 10 Real Estate Tax Deductions for Homeowners

April 4, 2013 jd

popular tax time apps verizon wireless midwest area image by vzwmidwestarea.com

As the time to file income taxes approaches, we need to take a new look at the changing tax landscape for homeowners. The dynamic atmosphere in Washington, D.C. has a different effect each year on which tax breaks are proposed, rescinded, changed, and extended for taxpayers who own a home.

Thanks to the efforts of many real estate industry groups including the National Association of Realtors, many of the tax benefits that homeowners enjoy–which were on the chopping block over the past few months–have been protected and extended through the 2013 tax season.

Disclaimer – This is only an informational summary of current tax issues in the news. If you need tax advice, please contact a tax attorney or CPA

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Politics, Real Estate

Home Prices May be Rising Too Fast

February 7, 2013 jd

In a historical context, home prices typically increase about 3 to 4 percent a year.

But in the years preceding the housing crash, prices in 2002 started soaring 7 percent a year, then 8 percent in 2004, and 12 percent by 2005, CNBC.com reports.

A “new bubble” may be forming, CNBC columnist Diana Olick writes. CoreLogic’s latest housing data shows home prices rose 8 percent in December year-over-year, the largest gain in more than six years. In some places, home prices are up by double digits from a year ago, like Phoenix where prices are up 26 percent year-over-year.

Inventories of for-sale homes are very tight and many are attributing the tight inventories as helping to drive up home prices. Inventories were at their lowest supply since May 2005, according to the National Association of REALTORS®.

“The greatest concern in the market is the inventory situation,” says Lawrence Yun, chief economist for NAR. “Even if we see an increase in the spring and summer, if home sales hold at the [current] level or even a 5- to 6-month supply, price increases are guaranteed. We don’t want to see rapid appreciation in prices faster than income.”

CNBC reporter Diana Olick notes that “healthy housing market gains are historically driven by increasing employment and income, not by lack of supply; the latter leads to price bubbles.”

But another part driving recent gains are the flood of investors in some markets. Investors are cashing in on once hard-hit markets by the foreclosure crisis, like in California, Las Vegas, and Phoenix. Many of these investors are hedge funds turning single-family homes into rentals, but as prices increase they may be inclined to take their profits sooner rather than later, Olick writes.

“What we had thought were safer, long term buys, may now turn into flips of the last decade,” Olick writes. “The question will be if there are enough non-investor buyers out there to support those sales?”

But the price gains may be sustainable, some say. Consumer confidence is increasing, employment is improving, and price gains may soon allow more home owners who are seeing equity once again trade-up, Olick writes.

Source: “Housing Market Already Shows Signs of New Bubble,” CNBC.com (Feb. 5, 2013) and “New Housing Fears: Home Prices Are Rising Too Fast,” CNBC.com (Jan. 22, 2013)

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Real Estate

Housing Inventories Are Falling

January 24, 2013 jd 2 Comments

Photo Credit: http://www.shakesville.com/2008/06/my-former-landlord.html

Home prices are increasing across the country as the number of homes for-sale continues to fall. But at a time when buyer demand is picking up, why is inventory still so low?

Inventories fell to 1.82 million at the end of last year, a 21.6 percent drop from one year earlier, the National Association of REALTORS® reports.

The Wall Street Journal recently highlighted several reasons behind the dropping inventories, including:

Sellers hesitant to sell: About 22 percent of home owners with a mortgage are still underwater, owing more than their home is currently worth. Home owners don’t tend to sell unless a life-changing event occurs when they’re underwater because they don’t want to take a loss on the sale of their house. CoreLogic data shows that inventories are the most constrained in areas with the highest number of underwater borrowers.
Not enough equity to trade up: Often times, home owners rely on the equity from their home to make a down payment on their next home. With fewer home owners seeing equity in their houses, they may not have enough money to move into a pricier home, which is constraining the would-be “trade up” buyer from moving.
Investors continue to snatch up properties: Investors are snapping up properties, but they’ve changed their strategy from past years, which is also constraining inventories. Now they’re holding onto properties and turning them into rentals instead of rehabbing properties and flipping them for profit. This is keeping fewer homes on the market.
Banks are slowing down foreclosures: Banks have new rules to meet with the foreclosure process, and it’s causing them to move at a slower pace in foreclosing on homes. Banks also are showing a preference for short sales and loan modifications, which are curbing the number of foreclosed homes on the market.
Builders are doing less building: Housing starts were at record lows from 2009 through 2011 so there’s less inventory being added to the market. A rebound in the new-home market has only recently started to occur.

Source: “Six Reasons Housing Inventory Keeps Declining,” The Wall Street Journal (Jan. 22, 2013)

Six Reasons Housing Inventory Keeps Declining

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Real Estate

Buying a Home During the Holiday?

December 10, 2012 jd

Once Thanksgiving is over, the real estate world typically starts to wind down for the holidays and doesn’t usually reawaken until after New Year’s. But potential home buyers who are prepared to close in today’s competitive market may want to keep house hunting while everyone else is waiting for spring.

REALTORS® especially recommend that serious home buyers continue shopping if they have repeatedly lost out on deals because of a limited and continually decreasing supply of homes. Buying intensity typically cools down at the start of fall through early January, which could increase the odds for those with more patience.

Would-be buyers historically have bowed out during the winter season because they are overwhelmed by holiday spending and commitments. There’s also the aversion of moving in the middle of a school year. Consumer interest typically picks back up again in the New Year and peaks in the spring.

Certain buyers may be well-served to buy during the winter because of sellers who must move for various reasons including a job change or transfer or the possible sunsetting of the Mortgage Forgiveness Debt Relief Act, which lets certain home sellers get tax relief on mortgage debt forgiven by lenders. The possible expiration has pushed home sellers to list and short sell their homes before year’s end.

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Should you buy a home during the holidays?

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Real Estate

Homes Are Selling Faster

October 24, 2012 jd

Photo credit: future-dreamhome.blogspot.com

Inventories of for-sale homes aren’t the only thing that is dropping. The amount of time homes are staying on the market is growing shorter as well—down 11 percent in the last year—according to the latest Realtor.com data.

Homes were listed on average 95 days, according to September housing data. That is down from 107 days a year earlier.

Homes are selling the fastest in Oakland, Calif., in which the median age of the inventory averages 21 days, which is 57 percent below what it was a year ago. Denver, Colo. boasts a median age of inventory of only 38 days, followed by fast-selling markets of Stockton-Lodi, Calif., with 43 days, and San Francisco with 44 days.

As the median age of the inventory is falling, inventories of for-sale homes continue to hover at record lows too, dropping 18 percent last month compared to a year ago.

“There’s a recovery,” Curt Beardsley, vice president of Realtor.com, told BusinessWeek. “Our market times are low and there’s actually a compression of inventory.”

Home buyer demand is increasing, with housing affordability still high and ultra low mortgage rates that have pushed home buyers’ purchasing power higher. The rise in demand has caused asking prices to also rise. Last month, the median asking price was $191,500, which is up 0.8 percent compared to a year earlier, Realtor.com reports.

Source: “Listings of Homes for Sale Drop as U.S. Housing Recovers,” BusinessWeek (Oct. 15, 2012) and REALTOR® Magazine Daily News

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Real Estate

Home Prices Continue to Rise Over Last Year’s Levels

September 27, 2012 jd

More housing reports released on Tuesday showed home prices on the rise. The Federal Housing Finance Agency reported that U.S. home prices increased 3.7 percent from a year ago in the 12-month period ending in July.

FHFA’s home price index is now at about the same level it was in June 2004. However, it’s 16.4 percent below the peak reached in April 2007. To calculate its housing index, the FHFA uses purchase price data on mortgages owned or guaranteed by Freddie Mac and Fannie Mae.

Also on Tuesday, S&P/Case-Shiller released a report also showing home prices on the rise for the fourth consecutive month and at their highest level in nearly two years. S&P/Case-Shiller report measures home prices in 10-city and 20-city composite indices. In its 20-city index, S&P/Case-Shiller reported home prices up 1.2 percent compared to a year earlier.

“The news on home prices in this report confirm recent good news about housing,” David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices, told The Wall Street Journal. “Single family housing starts are well ahead of last year’s pace, existing home sales are up, the inventory of homes for sale is down and foreclosure activity is slowing. All in all, we are more optimistic about housing.”

Last week, NAR reported that the median price on existing-homes rose 9.5 percent over year ago levels. The median home price in August is $187,400.

The increase to the sales price in August was the strongest since January 2006 when median home prices had risen 10.2 percent higher than what they were a year ago.

The National Association of REALTORS® will release its pending home sales report on Thursday.

Source: “FHFA Home Price Index Now Equals 2004 Levels,” HousingWire (Sept. 25, 2012) and “Case-Shiller Shows Home Prices Rise Sharply Again,” The Wall Street Journal (Sept. 25, 2012)

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Real Estate

July Pending Home Sales Rebound

August 29, 2012 jd

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

Real Estate

Pending Home Sales in California Decline

July 31, 2012 jd

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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Uncategorized

Lack of Inventory Causing a Home Buying Frenzy

July 3, 2012 jd

A big drop in inventories of for-sale homes across the nation has led to a buying frenzy in some sought-after neighborhoods, real estate professionals report. A gradual gain in home prices is also following suit, they say.

Last week, the National Association of REALTORS® reported an increase in pending home sales in every region in the country. The number of contracts signed in May for existing homes jumped 13 percent from a year ago, according to NAR.

NAR projects a 3 percent nationwide rise in existing-home prices this year and a 5.7 percent rise next year.

But more buyers are being met with a shrinking supply of homes on the market. New construction has slowed dramatically—to record lows—the last few years. A backlog of distressed homes have not yet hit the market. And many home owners are waiting to list their homes for sale until prices rise more.

“In the Atlanta area, we are 40 percent below where inventory was this time last year,” Debra Bradley, managing broker for Coldwell Banker Residential Brokerage in Buckhead, Ga., told Forbes.com “Generally inventory goes up this time of year, not down.”

Inventories of for-sale homes appear to be lowest for less expensive properties, at which investors and first-time home buyers often buy, real estate professionals report.

“It’s different today for a buyer being in the market,” says Rick Davidson, Century 21 Real Estate chief executive. “They might not find that deal of the century that they may have expected to find.”

Several housing markets are now reporting multiple offers and bidding wars surfacing, due to the lack of inventory in some markets.

“Most houses below $250,000 priced realistically are attracting large numbers of offers in a short time, and many exceed the asking price,” says Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business.

Industry insiders appear less concerned about the shadow inventory of distressed homes that have yet to hit the market.

“It’s not being let out to the market in bulk,” Beth Butler, president of ONE Sotheby’s International Realty in Miami, told Forbes.com. “It’s coming slowly and it’s not seriously impacting the market one way or the other. Truth be told we could use the inventory!”

Source: “The Housing Market’s Latest Problem: Lack Of Inventory,” Forbes.com (June 28, 2012

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