Friday, April 26, 2013
Wednesday, April 24, 2013
The Real Estate Report April 24, 2013
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Benefits of a Slow Down
Right now the
markets are warily eyeing a possible slowdown in the economic recovery. While
we can't tell you if we are indeed in the middle of another pause, we can
tell you that we are already reaping some benefits of even the hint of a
pause. What are these benefits? Oil prices, interest rates and gold prices
have all fallen. It is easy to see the benefits of lower gas prices and rates
with regard to the economy. Lower gas prices give consumers more money to
spend. Lower rates encourage refinancing as well as home and automobile
purchases. The real estate and auto industries were already in recovery mode
before interest rates eased back. For example, in March nearly 1.5 million
cars and trucks were sold, a number not seen since May 2007. In addition,
housing starts broke the 1.0 million mark in March, the strongest performance
since June of 2008. On the other hand, why should we care that gold prices
are dropping?
Of the three,
the move in gold has been much steeper than oil or rates. When the financial
crisis hit five years ago, there was a threat that the financial system would
collapse and move us into a depression. Gold soared in response to this
threat. Even during the recovery -- every time we had a pause -- gold prices
stayed strong because there was a threat of a double dip recession. Today,
there is a possibility of a pause, but gold prices are weak. Is it because we
are no longer worried about our economy slipping back into recession or is it
because countries in trouble like Cyprus could be selling their stores of
gold? In either case, we can say that gold is falling back at a time in which
the economy continues to grow at a pace which will not ignite inflation. That
is the best type of growth possible. Lower energy prices, lower interest
rates and positive economic growth are a strong combination. Of course, we
all wish that the economic recovery would become even stronger. However,
there are benefits to a moderate recovery -- especially if it does not come
with the threat of a recession around the corner or inflation down the road.
 The Home Affordable Refinance Program — a government refinancing program for underwater home owners — will be expanded for another two years, the Federal Housing Finance Agency announced. HARP was originally set to expire Dec. 31, 2013, but will now be extended to the end of 2015. "More than 2 million home owners have refinanced through HARP, proving it a useful tool for reducing risk," says FHFA acting director Edward DeMarco. Home owners eligible to apply for refinancing under HARP must have a Fannie Mae- or Freddie Mac-backed mortgage that was guaranteed on or before May 31, 2009, must be current on their loan, and must have a current loan-to-value ratio more than 80 percent. Source: Chicago Tribune If you are interested in finding out whether you could benefit from a HARP refinance, which is designed for homeowners that are underwater on their home loans -- contact us. Home ownership and rental demand may both get an uptick as a large number of immigrants are expected to enter the United States and call it home by 2020, according to a new study sponsored by the Mortgage Bankers Association’s Research Institute for Housing America. The study makes projections to the year 2020 on the growth of U.S. home owner households headed by immigrants. The number of foreign-born home owners continues to grow bigger each decade, according to the report. For example, the number of foreign-born home owners rose 800,000 from 1980 to 1990; by 2.1 million from 1990 to 2000; and then by 2.4 million from 2000 to 2010. For the 2010 to 2020 period, researchers project that number to rise 2.8 million. The home ownership rate has particularly grown among the Hispanic immigrant population. In 1990, Hispanic immigrants had a 15 percent home ownership rate, which grew to nearly 53 percent in 2010. By 2020, Hispanics’ home ownership rate is expected to rise above 61 percent, according to researchers. The states with the greatest demand from the foreign-born on home ownership are California and New York. The report was prepared by Dowell Myers, professor of the Population Dynamics Research Group at the University of Southern California School of Policy, Planning and Development; and Senior Research Associate John Pitkin.“Immigrants are an important and growing source of demand that has bolstered housing markets in recent decades,” Myers said. “Growth in housing demand in recent decades has been more stable among foreign-born than native-born households. This is because increases in native-born demand have been subject to large swings in the size of cohorts reaching ages 25 to 34, the most common age of entry to the housing market. Rising numbers of foreign-born households are driven by the continued increases in homeownership rates achieved as immigrants settle longer in the United States,” Pitkin said." Source: The Mortgage Bankers Association
The number of
listings on the market increased 2.36 percent in March from the previous
month — possibly an indication that sellers are becoming more willing to put
their homes on the market as asking prices increase, according to housing
data from realtor.com. While the data shows a month-to-month inventory increase,
inventories are still down 15.22 percent compared to last year. The median
age of the inventory continues to drop year-over-year by 12.35 percent, the
amount of time homes are sitting on the market has fallen by 20 days since
February, according to realtor.com. The median age of inventory of for-sale
listings was 78 days in March. “The next three months will be significant in
determining the impact of the recovering housing market,” says Steve
Berkowitz, chief executive officer of Move Inc. Median list prices have
increased year-over-year in a greater number of the 146 markets realtor.com
tracks. Source: RIS Media
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Wednesday, April 17, 2013
The Real Estate Report April 17, 2013
What Does One Report
Mean?
With almost 900,000
jobs added in the previous four employment reports, the news that less than
90,000 jobs were added for the month of March came as quite a disappointment
for the markets. The question is---how much does one employment report mean? On
one hand, not much -- especially considering the fact that this report will be
subject to additional revisions in the coming month. On the other hand, if it
is indeed the start of a trend, then the markets may be right in being
concerned. The markets have recent memories of an economic recovery that has
been subjected to "stops and starts" for several years. Plus the
government budget cuts are expected to make companies cautious as they unfold
during negotiations.
Why might this one
report not become part of a trend? Two words answer this question -- "real
estate." In previous years of the recovery, real estate was not joining
the party. There is growing evidence that this real estate rebound is for real
and not only is the real estate sector contributing positively to the economic
recovery, but construction jobs are being added on a monthly basis. The real
estate data being released starting this week will be closely watched by the
markets for any slowing trend. In the absence of any slowdown in the real
estate sector, it is less likely that our one month of tepid employment growth
becomes a trend. For now a dip in interest rates provides another opportunity
for the nation to participate in the real estate rebound at bargain prices
which may not last long if prices continue to rebound.
Efforts to revamp U.S. immigration laws may bring at least one unintended benefit for the economy: The nascent housing recovery will probably get an added boost. The number of foreign-born homeowners will increase by 2.8 million in the decade ending 2020, compared with a 2.4 million gain in the previous 10 years, according to a Mortgage Bankers Association study that didn’t assess the potential impact of any new legislation. Research by a group of Hispanic real-estate agents concludes the increase could be even bigger if undocumented workers were put on a path to citizenship. Immigrants, who hold more positive views toward owning a home than native-born Americans, are increasingly likely to buy a house the longer they live in the U.S. and the more prosperous they become, the research shows. They will account for more than 50 percent of the rise in home buying in six states this decade, including California and New York, according to the report. “We’ve probably under-appreciated this powerful force that is already resident here and is so upwardly mobile that it pushes up the housing market from the bottom,” said Dowell Myers, author of the MBA study and a public policy professor at the University of Southern California in Los Angeles who studies housing demography. “There’s this incremental momentum that’s built up.” That upward mobility is evident in the MBA data showing the share of those arriving in the 1980s who became homeowners rose by about 35 percentage points over the next three decades even as the longest recession since the Great Depression took a toll. By 2020, 61 percent of Hispanic immigrants who arrived here almost 40 years earlier, along with more than 70 percent of non- Hispanic foreigners, will be homeowners. Source: Bloomberg
Home prices nationwide, which includes distressed sales, soared 10.2 percent year-over-year, according to CoreLogic’s February report. It’s the largest year-over-year increase in home prices since March 2006. It also marks the twelfth consecutive monthly increase in national home prices, according to CoreLogic’s report. When excluding distressed sales, home prices rose 10.1 percent year-over-year in February, according to CoreLogic. “Nationally, home prices improved at the best rate since mid-2006, marking a full year of annual increases and underscoring the ongoing strengthening of market fundamentals,” says Anand Nallathambi, president and CEO of CoreLogic. CoreLogic predicts that home prices -- excluding distressed sales -- will likely rise 11.4 percent year-over-year from March 2012. “The rebound in prices is heavily driven by western states,” says Mark Fleming, CoreLogic’s chief economist. “Eight of the top ten highest appreciating large markets are in California, with Phoenix and Las Vegas rounding out the list.” Source: CoreLogic
Short sales are
increasing this year, and these transactions can take up to three times longer
than a traditional transaction. A lot can go wrong in that timeframe. These are
the most common delays, according to a recent article by George “Gee” Dunsten,
a real estate broker and president of Gee Dunsten Seminars, at RISMedia.
·
Title issues: Be sure to do a title exam at the beginning in order to identify
all individuals on the deed and mortgages, and determine all lien holders.
·
Lack of communication with the lender: Lost documents and
misunderstandings commonly cause delays. Make it a habit to follow up with the
mortgage servicer twice a week to avoid unnecessary delays.
·
Delaying the start: Some short sales have not even begun until a contract to purchase
has been initiated. But this could add up to two extra months to the process.
The lender won’t even look at a buyer contract until a seller candidate for a
short sale is approved and the market value has been determined, Dunsten
writes.
·
Incomplete packages: Make sure you carefully submit all the documents completely and
accurately. Submitting incomplete packages is another common culprit of delays.
All home owner financial information will need to be kept current and forwarded
to the servicer every 30 days, Dunsten writes. Source: RISMedia
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Wednesday, April 10, 2013
The Real Estate Report April 10, 2013
More on the
Numbers ....
Last week we
compared the gains for the stock market and housing over the past 20 years. The
moral of the story was that numbers can be deceiving in the short-run, but in
the long-run, the gains are easy to see. However, one may look at the fact that
the Dow is up 400% over twenty years and house prices up 120% over twenty years
and conclude that their money should go into the stock market. That was not
intended to be our message. For one, a home is more than an investment, it is
your home. Secondly, the numbers presented do not take into account the
investments requirement to purchase the asset. For example, stocks may cost
100% of their value. Even if you are able to purchase stocks "on margin,"
they would still likely cost at least 50% of the value.
Homes may be
able to be purchased for as little as 3.5% to 10% down. Therefore, the return
on money invested may actually be greater with regard to housing -- especially
considering the tax deduction on mortgage interest and the fact that you are
replacing rental expense. We are not saying that housing is a better investment
than stocks. We are only again making the point that the numbers can be
deceiving. In this case 400% to 120% is not an "apples-to-apples"
comparison. Speaking of numbers, the employment report released on Friday was
pretty interesting. The number of jobs created was much less than expected. One
bad month does not derail a recovery, but does mean that the increase in the
stock market and rates may have gone a bit too far too fast. Stocks did not
retract that much, but rates have again moved lower. This creates another
opportunity -- perhaps temporary -- for those who are purchasing or refinancing
real estate.
The Millennial generation is about 90 million strong—forming the largest demographic wave in the country’s history—and some reports suggest they’re readying for home ownership. Millennials’ entrance into home ownership has been delayed due to the recession, high unemployment, and high student loan debt. They’ve been living in their parents’ homes, as well as delaying marriage and having children, surveys show. But the pent-up demand from this generation is starting to surface, says Fred Ehle, vice president for PulteGroup. Homebuilders, like PulteGroup and Better Homes and Gardens Real Estate, recently revealed surveys of what Millennials want in their future homes. In general, the surveys reveal that this generation isn’t wowed by luxury and prefers technology and flexible space. As for what they’re looking for in a home, they appreciate an efficient use of space, an open layout for entertaining, ample storage space, and outdoor space that extends their living areas, according to the Pulte survey of 531 adult renters between the ages of 18 and 34. "What may be different about this buyer is that they may have more stuff," says Fred Ehle, vice president for PulteGroup. "It's different kind of stuff: technological gadgets, gaming. They also do work from home." The Better Homes and Gardens survey of 1,000 adults ages 18 to 35 found that Millennials don’t like traditional floor plans and prefer unique spaces. They like to do home improvements themselves and are “fix-it” types. One in five said that “home office” is a better suited name for their dining room, according to the Better Homes and Gardens survey. What’s more, 43 percent said they want to transform their living room into a home theater. The survey also showed they’d rather have extra space in their kitchen for a TV than a second oven. Nearly two-thirds of those surveyed say they wouldn’t purchase a home without up-to-date tech capabilities. Source: USA Today
Low appraisals
have been blamed on delaying—or even canceling—many real estate transactions
over the last few years. While real estate professionals are limited in how
much involvement they can have in the appraisal process, they can do a few
important things to help ensure their sellers receive a fair valuation.
·
Be there. Appraisers and other real estate agents say that being
present at the home’s appraisal is important. Agents can respond to any
possible questions the appraiser might have as he or she is valuing the
property. However, agents need to make sure they don’t overstep their
boundaries. Rules limit contact between agents and appraisers.
·
Provide extra information. Michael Citron of Coconut Creek, Fla.,
says he gives appraisers packages of information that include comparable sales
as well as a list of the home’s upgrades and amenities within the development.
Others also recommend that any information include the dates that renovations
took place, permits for additions, and even receipts for the work (if
available).
“You don’t want
things to be missed that may result in a higher value,” says appraiser Scott
Dooley in Fort Lauderdale, Fla. Source: RISMedia
A new credit
scoring model will potentially boost scores for many credit applicants and help
establish credit for millions of people who previously had little or no credit
history. The new scoring model will be used in the latest version of the
VantageScore, the credit score created by the three major credit bureaus --
Experian, Equifax and TransUnion. Currently, debts that go into collections,
even if they are paid off, are factored into all credit scores for up to seven
years, said John Ulzheimer, president of consumer education for
SmartCredit.com. But VantageScore 3.0 will no longer factor these accounts into
a consumer's score if the debt was paid in full or settled, just as long as the
balance is zero. Also, natural disaster victims will now be able to benefit
from good credit behaviors -- like making payments on time, despite the hardship
-- but will continue to be protected against negative accounts. Previously,
both negative and positive accounts were ignored in the aftermath of natural
disasters, making it difficult for victims to improve their credit scores.
"Consumers who have a zero-dollar balance on collections and no other
negative information on their credit reports should see their VantageScore's
increase significantly," he said. But the boost only matters if a lender
uses the new VantageScore. While FICO is still the most widely used scoring
model, the VantageScore is gaining ground. It's currently used by seven of the
top 10 financial institutions, six of the top 10 credit card issuers and four
of the leading auto lenders and residential finance lenders, according to its
website. VantageScore's new model will also weigh rent and utility payment
records, and public records like bankruptcies for people with very limited
credit histories. This will allow it to score as many as 30 million people who
previously couldn't get a credit score, and potentially help them qualify for
more competitive credit rates, said Ulzheimer. Other score developers, like
FICO, may follow suit. FICO announced that it will begin looking into ways of
factoring in alternative records to calculate scores for those without -- or
with limited -- credit files. Meanwhile, VantageScore is changing its scoring
range to align with FICO's 300 to 850 range. Earlier versions range from 501 to
990, often causing confusion for consumers and lenders since most are more familiar
with FICO's range. "This is like changing your speedometer from kilometers
per hour to miles per hour, it just makes more sense to American consumers and
American lenders," said Ulzheimer. Source: CNN/Money
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Monday, April 8, 2013
Thursday, April 4, 2013
How to Maximize Referral in a Purchase Market
How to Maximize Referrals
in a Purchase Market
in a Purchase Market
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