If it is all about jobs, then...
For years we have
gone through a tepid recovery from a very deep recession. And all along we have
indicated that we don't recover from such an event if Americans are not
working. Year after year we waited and waited. Well, the wait is over. The
recovery in jobs is more than underway, it has arrived. The average of 220,000
jobs added each month thus far this year -- and the unemployment rate dropping
below 6.0% -- is just what the doctor ordered in this regard. This is not to
say that we are all the way back. Many of the jobs created have been lower
paying jobs, which has held back the pace of personal income growth. In
addition, the low labor participation rate tells us that if jobs keep getting
created, we will have to absorb many returning to the labor market.
On the other hand,
the progress we have made will cause a ripple effect throughout the economy. We
are on pace to add almost 3 million jobs this year and this will increase
consumer spending which will create more jobs. And some of this spending will make
the real estate market stronger -- whether it is the purchase of new homes or
major renovation projects for existing homes. Already we are seeing the
strength in car sales and home improvement projects. But the one area we have
not seen strength in this year is within the real estate sector.
More recently, we
have seen renewed confidence by builders as new home sales have been ramping
up. The bottom line is that we can't have a recovery without the creation of
jobs and it is the creation of jobs that will bring us a complete real estate
recovery. Yes, we still have a long way to go, but if we keep creating jobs at
this rate, the road will become a lot shorter. From there, the only question
won't be if interest rates will rise -- but when will they rise and how fast.
Right now we have the best of both worlds: more hiring and very attractive
interest rates.
Now that the worst of the
foreclosure crisis is in the rearview mirror, former home owners who lost their
homes to a short sale or foreclosure are re-entering the housing market.
They've spent the last few years rebuilding their credit — and they're ready to
buy again. "We're about three years past the peak of the
foreclosures, and that's about the time when most people would qualify for
another loan," says Daren Blomquist, spokesman for RealtyTrac. "The
market really needs boomerang buyers to maintain the current recovery."
Some boomerang buyers heading back to the housing market may find they have to
make down payments of at least 20 percent to qualify for a loan, but others are
finding opportunities to put down as little as 3.5 percent or 5
percent. The wait times for qualifying for a loan can vary depending on
the former home owners' circumstances. Typically, the wait times following a short
sale or foreclosure are as follows:
·
Seven-year wait for home owners with a previous foreclosure before
they can qualify for a new loan through mortgage giants Fannie Mae and Freddie
Mac. If the foreclosure was included in a bankruptcy, the borrower has to wait
only four years.
·
Two-year wait for home owners who underwent a short sale before
they're eligible for another Freddie Mac and Fannie Mae loan.
·
Three-year wait for home owners seeking a Federal Housing
Administration loan after a foreclosure or short sale. Some home owners who
underwent a foreclosure because of at least a 20 percent cut in their pay may
be able to qualify for a new loan after just a year through FHA's Back to Work
program. Source: Sun Sentinel
Note: Every situation is different in this regard and certain
lenders may follow different guidelines depending upon the type of transaction.
It is always best to check with a lender and get pre-approved before you
submit an offer to purchase a home.
Builder confidence in the
new-home market rose to its highest reading in nearly 9 years, according to the
latest reading from the National Association of Home Builders/Wells Fargo
Housing Market Index. September marked the fourth consecutive month that
builder confidence has been on the rise. "Since early summer, builders in
many markets across the nation have been reporting that buyer interest and
traffic have picked up, which is a positive sign that the housing market is
moving in the right direction," says NAHB Chairman Kevin Kelly. For the
new-home market, builder confidence rose to a level of 59 in September,
according to the index. Any reading above 50 indicates that more builders view
conditions as "good" than "poor." The seasonally adjusted
index measures builder perceptions of the single-family new-home market on home
sales and sales expectations for the next six months, as well as builders'
perceptions of buyer traffic. All three of the index components in September
posted gains, with current sales conditions and traffic of prospective buyers
rising to 63 and 47, respectively. Expectations for future sales also rose two
points to 67. Source: National Association of Home Builders
Some home buyers are making
an unusual request: They’re asking to spend the night at a home before they
make an offer on it. HGTV’s “Sleep On It,” which follows potential buyers as
they stay overnight in two homes with the sellers’ approval before deciding
which one to buy, hasn’t seemed to spark a national trend. But it has prompted
such proposals to surface more often, real estate professionals say. The
sleep-overs can help buyers gain a better perspective on what it actually would
feel like to live at the home, whether the kitchen is the right size, the noisy
neighbors are too distracting, or the water pressure just isn’t right. Corlie
Ohl, a real estate professional at Citi Habitats in New York City, recalls a
client who requested to take a shower in an $865,000 apartment he was
considering purchasing. He wanted to make sure the place had adequate water
pressure. "It's the strangest request I've ever experienced in my life for
someone who wanted to purchase an apartment," Ohl says. “The seller said,
‘Yeah, I guess, as long as he brings his own towel." Contracts are a good
idea for any buyer sleep-overs to protect both parties from liabilities, such
as loss of personal belongings, say real estate professionals. A couple in
Boulder, Colo., were staying at a condo when they decided to check out the
condo’s parking area at night. But, “as they exited the elevator, they were
abruptly confronted by two police officers, weapons drawn,” says real estate
professional Bob Gordon. The neighbors had thought they were burglars. But the
incident prompted the couple to put in an offer immediately on the home,
“knowing the neighbors would be concerned enough to call police," Gordon
says. Source: US News and World Report
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