NEW YORK – Sept. 30, 2009 – Home prices rose for the third-consecutive month in July, bolstering the view that the long free fall in the housing market may be history. But consumer confidence fell unexpectedly, modestly pushing down stocks.
Housing prices ticked up 1.6 percent from June, according to the Standard & Poor’s/Case-Shiller home price index, which tracks 20 large cities. Low mortgage rates and bargains on foreclosed homes are attracting buyers.
Home prices rose for the first time in three years in May. And after falling 12 percent from October through April, prices climbed 3.6 percent from May to June.
“I think we’ve made the turn,” says Joel Naroff of Naroff Economic Advisors.
Values rose in 18 of the 20 cities, with only Las Vegas and Seattle posting monthly declines, of 1.1 percent and 0.1 percent, respectively. Thirteen cities have had at least three consecutive monthly gains.
The residential real estate market is still weak. Home values in the 20 cities are off 13.3 percent from July 2008 and 33.5 percent from their 2006 peak. Prices are now about where they were in fall 2003. But the year-over-year declines have been steadily shrinking in each of the past six months.
In some cities, the housing market is almost stable year-over-year, with prices in Cleveland, Dallas and Denver dipping 1.3 percent, 1.6 percent and 2.9 percent, respectively.
Yet some economists say the recent run-up is a brief reprieve, and home prices have yet to hit bottom. Patrick Newport of IHS Global Insight says the market will swoon again after housing inventories are fattened by a new wave of foreclosures and an $8,000 tax credit for first-time home buyers expires Nov. 30. Newport says prices will likely fall 6 percent before mounting a more sustainable rebound in mid-2010.
David Blitzer, chairman of Standard & Poor’s index committee, says, “The numbers are very encouraging, but it will probably take some time before we have convincing data that we’re past the bottom.”
Meanwhile, a closely watched consumer confidence index dipped to 53.1 in September from 54.5 in August, the Conference Board said. Analysts expected it to rise to 57.
Ian Shepherdson of High Frequency Economics noted most of the drop stemmed from consumer attitudes about current conditions, which reflects high unemployment. The more critical “expectations index” was stable, sliding to 73.3 from 73.8. The overall index is up from a record low of about 25 in February.
Still, “With the holiday season quickly approaching, this is not very encouraging news,” says Lynn Franco, head of the board’s consumer research center. The Dow Jones industrial average closed down 47 points at 9742.
Copyright 2009 USA TODAY
Wednesday, September 30, 2009
Monday, September 28, 2009
How to beat the $8K tax credit deadline
CHICAGO – Sept. 28, 209 – It’s not too late for a determined first-time home buyer to take advantage of the $8,000 federal tax credit, which expires Nov. 30.
Scott Voak, a San Diego practitioner specializing in first-time buyers, helps potential buyers target homes that can close quickly. To identify those properties without touring them, he suggests contacting the listing agent with blunt but important questions that aren’t usually addressed in the listing. These can include:
• Is there mold?
• Does the home need extensive repairs?
• Does the home have aging systems or appliances?
• Are there any troublesome neighbors?
Buyers should factor in these questions before making an offer:
• How long has the property been on the market?
• Have there been any price reductions?
• Are there any offers written on the property?
• Do the home owners need to move by a specific date?
Other recommendations include:
• Provide buyers with as much information about financing as possible.
• Encourage buyers to begin the process right away.
• Make sure buyers understand who is responsible for closing costs.
Source: Move.com
Scott Voak, a San Diego practitioner specializing in first-time buyers, helps potential buyers target homes that can close quickly. To identify those properties without touring them, he suggests contacting the listing agent with blunt but important questions that aren’t usually addressed in the listing. These can include:
• Is there mold?
• Does the home need extensive repairs?
• Does the home have aging systems or appliances?
• Are there any troublesome neighbors?
Buyers should factor in these questions before making an offer:
• How long has the property been on the market?
• Have there been any price reductions?
• Are there any offers written on the property?
• Do the home owners need to move by a specific date?
Other recommendations include:
• Provide buyers with as much information about financing as possible.
• Encourage buyers to begin the process right away.
• Make sure buyers understand who is responsible for closing costs.
Source: Move.com
Friday, September 18, 2009
Homebuyer tax credit deadline nears
WASHINGTON – Sept. 18, 2009 – Time is fast running out for first-time buyers hoping to get a tax credit of up to $8,000, and Realtors say they’re seeing a marked upswing in interest as the deadline looms.
Real estate groups also are urging Congress to extend the credit beyond its current deadline and expand the tax credit to up to $15,000. Now, buyers must close on their purchase by Nov. 30 to be eligible for the credit.
Home builders and real estate organizations are concerned that letting the tax credit expire could knock the wind out of the current housing recovery. And failing to expand the credit could imperil efforts to get more move-up buyers into the market.
“Right now, the recovery is in the first stage and getting entry-level buyers in, but it’s having no impact on the move-up buyer,” says Richard Smith, CEO of Realogy, the parent company of Century 21, Coldwell Banker and others. “If we can expand the credit to go after that move-up buyer, we’ll be home free.”
The tax credit available to first-time homebuyers is already linked with an uptick in sales. For the first time in five years, existing home sales have increased for four months in a row, according to an August report by the National Association of Realtors (NAR).
Sales rose 7.2 percent in July from June, and pending sales are 5 percent above the pace seen in July of 2008
Many of those using the tax credit, however, are buying up foreclosed homes that are vacant. That does little to stimulate sales by homeowners looking to move up to more expensive properties. Getting more move-up buyers into the market is considered the second stage of the housing recovery.
And even though the tax credit doesn’t expire until Nov. 30, today’s home purchases take 45-60 days to close as the underwriting and appraisal process is taking longer because lenders are being more cautious. That means offers that will benefit from the tax credit really need to be in this month or early next month.
“Buyers have more of a sense of urgency,” says Tony Middleton, a Realtor in Los Angeles with ZipRealty, of the expiring tax credit. “They’re serious about shopping for a home.”
There is legislation in both the Senate and the House that would expand the tax credit. A proposal by Sen. Johnny Isakson, R-Ga., would raise the credit amount to a maximum of $15,000 for any buyer of any home over the next year. It would remove the income caps that currently apply (those limits are now $75,000 for an individual and $150,000 on couples).
“I think we’ve got a realistic chance of doing this,” Isakson says. “Our problem is not with the first-time home buyer, it’s the move-up buyer.”
Lawrence Yun, chief economist at NAR, says extending or raising the tax credit would spur the housing recovery, which in turn would help bolster the economy.
Copyright © 2009 USA Today
Real estate groups also are urging Congress to extend the credit beyond its current deadline and expand the tax credit to up to $15,000. Now, buyers must close on their purchase by Nov. 30 to be eligible for the credit.
Home builders and real estate organizations are concerned that letting the tax credit expire could knock the wind out of the current housing recovery. And failing to expand the credit could imperil efforts to get more move-up buyers into the market.
“Right now, the recovery is in the first stage and getting entry-level buyers in, but it’s having no impact on the move-up buyer,” says Richard Smith, CEO of Realogy, the parent company of Century 21, Coldwell Banker and others. “If we can expand the credit to go after that move-up buyer, we’ll be home free.”
The tax credit available to first-time homebuyers is already linked with an uptick in sales. For the first time in five years, existing home sales have increased for four months in a row, according to an August report by the National Association of Realtors (NAR).
Sales rose 7.2 percent in July from June, and pending sales are 5 percent above the pace seen in July of 2008
Many of those using the tax credit, however, are buying up foreclosed homes that are vacant. That does little to stimulate sales by homeowners looking to move up to more expensive properties. Getting more move-up buyers into the market is considered the second stage of the housing recovery.
And even though the tax credit doesn’t expire until Nov. 30, today’s home purchases take 45-60 days to close as the underwriting and appraisal process is taking longer because lenders are being more cautious. That means offers that will benefit from the tax credit really need to be in this month or early next month.
“Buyers have more of a sense of urgency,” says Tony Middleton, a Realtor in Los Angeles with ZipRealty, of the expiring tax credit. “They’re serious about shopping for a home.”
There is legislation in both the Senate and the House that would expand the tax credit. A proposal by Sen. Johnny Isakson, R-Ga., would raise the credit amount to a maximum of $15,000 for any buyer of any home over the next year. It would remove the income caps that currently apply (those limits are now $75,000 for an individual and $150,000 on couples).
“I think we’ve got a realistic chance of doing this,” Isakson says. “Our problem is not with the first-time home buyer, it’s the move-up buyer.”
Lawrence Yun, chief economist at NAR, says extending or raising the tax credit would spur the housing recovery, which in turn would help bolster the economy.
Copyright © 2009 USA Today
Thursday, September 17, 2009
White House may extend homebuyer tax credit
Earlier this week, NAR issued a Call to Action asking its 1.2 million members to urge Congress to extend the successful homebuyer tax credit into next year. To view a video about the $8,000 tax credit extension and contact lawmakers who represent your district in Congress, go to NAR’s “Call for Action” website.
WASHINGTON – Sept. 17, 2009 – The White House is considering extending an $8,000 tax credit for first-time homebuyers.
Spokesman Robert Gibbs says the administration’s economic team is evaluating the tax credit’s impact on new home sales and will make a recommendation to the president.
The federal tax credit covers up to 10 percent of the home price, or up to $8,000, for first-time buyers. Home sales must be complete by the end of November.
The tax break is credited with helping the number of U.S. home sales rise slowly. Builders and real estate agents say that trend could be reversed if the credit isn’t extended.
Copyright © 2009 The Associated Press
WASHINGTON – Sept. 17, 2009 – The White House is considering extending an $8,000 tax credit for first-time homebuyers.
Spokesman Robert Gibbs says the administration’s economic team is evaluating the tax credit’s impact on new home sales and will make a recommendation to the president.
The federal tax credit covers up to 10 percent of the home price, or up to $8,000, for first-time buyers. Home sales must be complete by the end of November.
The tax break is credited with helping the number of U.S. home sales rise slowly. Builders and real estate agents say that trend could be reversed if the credit isn’t extended.
Copyright © 2009 The Associated Press
Tuesday, September 15, 2009
NAR issues Call to Action: Extend $8K credit
NAR Call to Action
To view a video about the $8,000 tax credit extension and contact the men and women who represent your district in Congress, go to NAR’s “Call for Action” website here.
WASHINGTON – Sept. 15, 2009 – The National Association of Realtors® (NAR) is calling upon its 1.2 million members to urge Congress to extend the successful homebuyer tax credit into next year.
Since the $8,000 first-time homebuyer tax credit's inception, 1.2 million new buyers have entered the market. Of those new homebuyers, 350,000 would not have purchased a home if the tax credit had not been offered, according to NAR. The credit is due to expire Nov. 30, 2009.
“Now is the time for Congress to keep this recovery going by extending the tax credit through 2010 and making it available to more homebuyers,” says NAR President Charles McMillan. “We have all seen how the credit has been a spur to bring homebuyers into the market, and have seen the beginnings of a real recovery in the housing market. Housing has always led this nation out of economic downturns and can do so again.”
NAR has asked all Realtors to write their U.S. senators and representatives to tell them of their successes with the tax credit thus far – and to press Congress to extend and expand it.
“The credit needs to be available for an additional period of time in order to sustain the progress that’s been made, so we can continue to see our markets fully recover,” McMillan says. “Uncertainty about the future of the credit will dampen consumer demand. The only way we can assure that the progress we’ve made can continue is to extend the credit and to do that now.”
As the current deadline for the credit looms, potential homebuyers need to complete a contract, satisfy any contingencies, secure financing and go to closing by Nov. 30. In today’s market, NAR estimates that it generally takes between 45 and 60 days from contract to closing.
“That means potential homebuyers who qualify must act now, and so must Congress,” McMillan says.
To view a video about the $8,000 tax credit extension and contact the men and women who represent your district in Congress, go to NAR’s “Call for Action” website here.
WASHINGTON – Sept. 15, 2009 – The National Association of Realtors® (NAR) is calling upon its 1.2 million members to urge Congress to extend the successful homebuyer tax credit into next year.
Since the $8,000 first-time homebuyer tax credit's inception, 1.2 million new buyers have entered the market. Of those new homebuyers, 350,000 would not have purchased a home if the tax credit had not been offered, according to NAR. The credit is due to expire Nov. 30, 2009.
“Now is the time for Congress to keep this recovery going by extending the tax credit through 2010 and making it available to more homebuyers,” says NAR President Charles McMillan. “We have all seen how the credit has been a spur to bring homebuyers into the market, and have seen the beginnings of a real recovery in the housing market. Housing has always led this nation out of economic downturns and can do so again.”
NAR has asked all Realtors to write their U.S. senators and representatives to tell them of their successes with the tax credit thus far – and to press Congress to extend and expand it.
“The credit needs to be available for an additional period of time in order to sustain the progress that’s been made, so we can continue to see our markets fully recover,” McMillan says. “Uncertainty about the future of the credit will dampen consumer demand. The only way we can assure that the progress we’ve made can continue is to extend the credit and to do that now.”
As the current deadline for the credit looms, potential homebuyers need to complete a contract, satisfy any contingencies, secure financing and go to closing by Nov. 30. In today’s market, NAR estimates that it generally takes between 45 and 60 days from contract to closing.
“That means potential homebuyers who qualify must act now, and so must Congress,” McMillan says.
Monday, September 14, 2009
UF economist: Real estate recovery has begun
TALLAHASSEE, Fla. – Sept. 14, 2009 – Speaking to real estate executives on Friday, UF research economist David Denslow predicts even better times soon as the baby boomers retire.
The comments came during the University of Florida Center for Real Estate Studies’ annual Real Estate Trends and Strategies Conference. In addition to Realtors and property managers, attendees included bankers, investors and other industry professionals.
According to Denslow, the U.S. is headed for a rebound, in part, because other nations invested in relatively-secure U.S. treasuries. However, he also issued a warning: That won’t happen the next time unless the U.S. gets a handle on the national debt.
Denslow also pointed to retiring baby boomers as a salvation for the Sunshine State. He sees that number fueling state growth for the next 15 years, though many boomers must first recoup some of their wealth lost during the recession before they can sell homes and move south.
Denslow also posed a question: If an influx of baby boomers boost the real estate market that trickles down to other industries, will Florida once again put economic diversity on hold?
Most experts agree that Florida must expand its job base beyond real estate and tourism if it wants to avoid roller coaster changes in the economy, but growth and an appeal to retirees could hamper that growth. Denslow says that the amenities preferred by retirees – good restaurants, the arts, extensive airline service – also appeal to professionals. But retirees don’t generally support other functions necessary for a diversified economy, such as good schools or better roads.
“But (how we handle that type of growth) is in our own hands,” Denslow said. “All that’s subject to how you, the Legislature and others guide us.”
Many attendees shared information about growth in their community. In Jacksonville, two new shipping lines will add about 50,000 jobs. In Central Florida, a new medical school, two hospitals, the Burnham Institute and a University of Florida research facility will add high-paying jobs. In Southwest Florida, however, retirees will continue to create service jobs and remain the primary engine of growth.
In the meantime, attendees were encouraged to expand and diversify to focus on existing business opportunities until the full economic rebound arrives.
Source: Gainesville Sun
The comments came during the University of Florida Center for Real Estate Studies’ annual Real Estate Trends and Strategies Conference. In addition to Realtors and property managers, attendees included bankers, investors and other industry professionals.
According to Denslow, the U.S. is headed for a rebound, in part, because other nations invested in relatively-secure U.S. treasuries. However, he also issued a warning: That won’t happen the next time unless the U.S. gets a handle on the national debt.
Denslow also pointed to retiring baby boomers as a salvation for the Sunshine State. He sees that number fueling state growth for the next 15 years, though many boomers must first recoup some of their wealth lost during the recession before they can sell homes and move south.
Denslow also posed a question: If an influx of baby boomers boost the real estate market that trickles down to other industries, will Florida once again put economic diversity on hold?
Most experts agree that Florida must expand its job base beyond real estate and tourism if it wants to avoid roller coaster changes in the economy, but growth and an appeal to retirees could hamper that growth. Denslow says that the amenities preferred by retirees – good restaurants, the arts, extensive airline service – also appeal to professionals. But retirees don’t generally support other functions necessary for a diversified economy, such as good schools or better roads.
“But (how we handle that type of growth) is in our own hands,” Denslow said. “All that’s subject to how you, the Legislature and others guide us.”
Many attendees shared information about growth in their community. In Jacksonville, two new shipping lines will add about 50,000 jobs. In Central Florida, a new medical school, two hospitals, the Burnham Institute and a University of Florida research facility will add high-paying jobs. In Southwest Florida, however, retirees will continue to create service jobs and remain the primary engine of growth.
In the meantime, attendees were encouraged to expand and diversify to focus on existing business opportunities until the full economic rebound arrives.
Source: Gainesville Sun
Thursday, September 10, 2009
First-time buyers race to qualify for $8K federal tax credit
Florida Realtors® Homebuyer Center
To learn more about the $8,000 tax credit, check out the great resource page on floridarealtors.org. You’ll also find info about the Florida Homebuyer Opportunity Program, other downpayment programs, videos, radio ads, an IRS form, posters, flyers and advice. Go to: Homebuyer Center
LOS ANGELES – Sept 10, 2009 – First-time homebuyers have just 12 weeks to find and close on a home to qualify for the $8,000 federal tax credit by Nov. 30 – before the Dec. 1, 2009, deadline.
Those just beginning the process will have to beat the average time it takes to buy a home, a challenge that real estate professionals can help buyers meet even though it’s taking longer today to close most transactions today, according to Realtor.com officials.
On average, first-time buyers search 12 weeks to find a home, while closing can take up to 60 days, depending on individual circumstances and local regulations.
Additionally, the tax credit has proved to be extremely popular this year: studies show that taking advantage of the first-time homebuyer’s federal tax credit and relevant state incentives is the most important reason motivating 10.8 percent of buyers today. In fact, approximately 1.14 million buyers have already filed for the credit. Many more are expected to file for the credit when income taxes are due April 2010.
Historically high affordability is a major factor driving first-time homebuyers today, a growing group that accounted for one third of all purchases in July 2009, according to a survey by the National Association of Realtors®.
NAR’s affordability index in July 2009 was 36.0 percentage points higher than July 2008. Under these conditions, the typical median-income family can allocate 15.8 percent of their gross income to mortgage payments, well below the traditional allowance of 25 percent. Interest rates, which play a major factor in affordability, remain low, and averaged 5.22 percent in July for a 30-year fixed rate loan.
Realtor.com President Errol Samuelson said, “The national median home today costs approximately $174,100. By moving quickly to find and close on a home by Nov. 30, first-time buyers qualifying for the $8,000 tax credit can actually purchase this same home for only $166,100, an almost 4.5 percent discount off of the price of a typical new home. Because affordability this year is at its highest level in 28 years, and the market offers an incredible selection of homes within reach of most first-time buyers, we expect their numbers to grow as they pursue this once-in-a-generation opportunity to become homeowners.”
He added that by combining the effective use of technology for information-gathering with expert advice from local Realtors, today’s first-time home buyers can beat the clock and use the $8,000 federal tax credit, along with any available state-level credits, to purchase a home before the Dec. 1 deadline.
“By moving quickly, being prepared to make decisions in the face of increased competition, and using the expertise of a real estate professional, first-time homebuyers can still close on time and qualify for the $8,000 federal tax credit,” Samuelson said.
© 2009 Florida Realtors®
To learn more about the $8,000 tax credit, check out the great resource page on floridarealtors.org. You’ll also find info about the Florida Homebuyer Opportunity Program, other downpayment programs, videos, radio ads, an IRS form, posters, flyers and advice. Go to: Homebuyer Center
LOS ANGELES – Sept 10, 2009 – First-time homebuyers have just 12 weeks to find and close on a home to qualify for the $8,000 federal tax credit by Nov. 30 – before the Dec. 1, 2009, deadline.
Those just beginning the process will have to beat the average time it takes to buy a home, a challenge that real estate professionals can help buyers meet even though it’s taking longer today to close most transactions today, according to Realtor.com officials.
On average, first-time buyers search 12 weeks to find a home, while closing can take up to 60 days, depending on individual circumstances and local regulations.
Additionally, the tax credit has proved to be extremely popular this year: studies show that taking advantage of the first-time homebuyer’s federal tax credit and relevant state incentives is the most important reason motivating 10.8 percent of buyers today. In fact, approximately 1.14 million buyers have already filed for the credit. Many more are expected to file for the credit when income taxes are due April 2010.
Historically high affordability is a major factor driving first-time homebuyers today, a growing group that accounted for one third of all purchases in July 2009, according to a survey by the National Association of Realtors®.
NAR’s affordability index in July 2009 was 36.0 percentage points higher than July 2008. Under these conditions, the typical median-income family can allocate 15.8 percent of their gross income to mortgage payments, well below the traditional allowance of 25 percent. Interest rates, which play a major factor in affordability, remain low, and averaged 5.22 percent in July for a 30-year fixed rate loan.
Realtor.com President Errol Samuelson said, “The national median home today costs approximately $174,100. By moving quickly to find and close on a home by Nov. 30, first-time buyers qualifying for the $8,000 tax credit can actually purchase this same home for only $166,100, an almost 4.5 percent discount off of the price of a typical new home. Because affordability this year is at its highest level in 28 years, and the market offers an incredible selection of homes within reach of most first-time buyers, we expect their numbers to grow as they pursue this once-in-a-generation opportunity to become homeowners.”
He added that by combining the effective use of technology for information-gathering with expert advice from local Realtors, today’s first-time home buyers can beat the clock and use the $8,000 federal tax credit, along with any available state-level credits, to purchase a home before the Dec. 1 deadline.
“By moving quickly, being prepared to make decisions in the face of increased competition, and using the expertise of a real estate professional, first-time homebuyers can still close on time and qualify for the $8,000 federal tax credit,” Samuelson said.
© 2009 Florida Realtors®
Wednesday, September 9, 2009
New normal for home sales: Buyers have the power
SOUTH FLORIDA – Sept. 9, 2009 – The American dream of homeownership is still attainable. Buyers just have to deal with a new set of realities.
A year after the collapse of the housing market triggered the financial meltdown, lenders are demanding more money up front, high credit scores and proof of income. Paperwork must be in perfect order. Patience and persistence are required. And don’t even bother asking about a subprime mortgage.
It’s a vastly different set of rules from earlier this decade, when home prices soared and mortgages were easy to come by.
In some ways, it’s a return to the standards that emerged as the World War II generation bought its first homes in the suburbs: Buy what you can afford. Stick to a 30-year, fixed-rate mortgage. View your home as a place to live, not as a piggy bank.
For people trying to sell their homes, the standards are different, too: Be patient and maybe even lower your asking price, because the balance of power has swung strongly to buyers.
Housing bubbles have happened before and, experts warn, could happen again. Already, home sales and prices are rising slowly, helped by tax breaks for first-time homebuyers. But real estate agents, mortgage brokers, economists and homebuyers across the country say they’ve noticed a shift in attitudes that they expect will last for years.
NEW REALITY: Selling your house
Real estate agent Scott Patterson hits the gas and weaves his black Mercedes-Benz across three lanes of Interstate 95 near Plantation, Fla., holding his iPhone with one hand and the steering wheel with the other.
He is rushing to meet with potential buyers of a condo with an ocean view. When he arrives, he turns on lights and opens doors in the four-bedroom place. The prospective buyers, a couple from Venezuela, walk around, ask a few questions - and leave.
Business may be up in South Florida, but the power has shifted to the buyer. And price is the key. “If you’re not getting showings, you’re overpriced,” says Patterson, an agent with Esslinger Wooten Maxwell Realtors Inc.
The record number of foreclosed homes on the market gives buyers even more leverage. “They can afford to wait,” says David Baran, a broker with Prudential Preferred Properties in Chicago.
Michael Davies and Nicole Anzia of Washington, D.C., got caught in their first bidding war when they bought their two-bedroom condo in 2003. The seller fielded eight bids within five days of listing. The couple waived an inspection to clinch the deal and paid $372,000.
That was tame compared with what happened when they sold the condo two years later. They listed the property on a Thursday for $479,000 and held two open houses. More than 100 people showed up, and 11 bids were waiting for them by Tuesday. The final price: $605,000. The buyer waived the inspection, too.
When they tried to sell their home this May, things were different. They listed the house at the purchase price and received just one bid. The negotiation process took longer, and they sold at a $21,000 loss. The buyer demanded an inspection.
“We don’t feel like we went from boom to bust,” Davies says. “We felt like we went from boom to reality.”
NEW REALITY: Getting a mortgage
Jim Sahnger, a mortgage broker in Jupiter, Fla., still chuckles over one borrower three years ago who landed a mortgage with no downpayment and two foreclosures and a bankruptcy in his past.
Now, lenders pore over bank statements, tax returns and job histories. The average mortgage application today starts three times thicker than what it was at the start of the housing boom, and often gets thicker as the process drags on.
Sometimes all the extra documentation still isn’t enough. Sahnger recently had a customer with a good job and a 20 percent downpayment who couldn’t get a mortgage because the lender said there were too many delinquent mortgages in the neighborhood.
“Now, they want to know everything about the buyer,” Sahnger says. “It’s a true and full underwriting process on every particular loan.”
It is common to require a downpayment of 20 percent - sometimes more. And it is virtually impossible to get subprime mortgages, which were written for people with poor credit histories and helped cause the meltdown when the interest rates jumped and borrowers defaulted. In 2005, one in every five mortgages was considered subprime. This year, it’s less than 1 percent.
Another category of risky loans, Alt-A mortgages, which required little or no documentation of the borrower’s financial health, have plunged to $3 billion this year from $400 billion in 2005.
NEW REALITY: Closing the deal
Mike Delano thought everything was in order. He was set to buy a $785,000 home in Washington, D.C., until he learned his lender now required a 20 percent downpayment instead of 10 percent.
Unlike in years past, there was no wiggle room. He had to raise the extra money from his family. “It was a nightmare,” he says.
It’s not uncommon nowadays for closings to take 60 days. One big reason: Appraisers have become more strict - or, some would say, more accurate.
During the boom years, agents and brokers often pressured appraisers to “hit the number” that the buyer and seller had agreed on so the deal would close and everyone could collect fees.
Under new industry rules, mortgage brokers are barred from ordering appraisals themselves. Instead, lenders order appraisals in-house or hire independent firms.
Some real estate agents and homebuilders say the rules are causing delays in closing sales, or undermining sales because appraisals are coming in too low.
NEW REALITY: The future
Nearly everyone in the real estate industry agrees on this much: Another dramatic boom-bust cycle isn’t likely soon. Albert Saiz, assistant real estate professor at the University of Pennsylvania’s Wharton School, expects that new regulations and a different consumer mindset will help real estate return to a more traditional cycle.
There will be some ups and downs, Saiz said, but in the long run, prices should move higher. “In the end, the United States is still growing,” he says. “We’re going to need more housing.”
Pava Leyrer, president of Heritage National Mortgage in Michigan, notes that the majority of people are still paying their debts. She’s confident the market will rebound once the unemployment rate begins to fall.
“I really can’t imagine we would go back to the same situation because it took an exact wrong mix of everything for that to occur,” she says. “If it ever did happen, I’ll be long dead.”
Copyright © 2009 The Associated Press
A year after the collapse of the housing market triggered the financial meltdown, lenders are demanding more money up front, high credit scores and proof of income. Paperwork must be in perfect order. Patience and persistence are required. And don’t even bother asking about a subprime mortgage.
It’s a vastly different set of rules from earlier this decade, when home prices soared and mortgages were easy to come by.
In some ways, it’s a return to the standards that emerged as the World War II generation bought its first homes in the suburbs: Buy what you can afford. Stick to a 30-year, fixed-rate mortgage. View your home as a place to live, not as a piggy bank.
For people trying to sell their homes, the standards are different, too: Be patient and maybe even lower your asking price, because the balance of power has swung strongly to buyers.
Housing bubbles have happened before and, experts warn, could happen again. Already, home sales and prices are rising slowly, helped by tax breaks for first-time homebuyers. But real estate agents, mortgage brokers, economists and homebuyers across the country say they’ve noticed a shift in attitudes that they expect will last for years.
NEW REALITY: Selling your house
Real estate agent Scott Patterson hits the gas and weaves his black Mercedes-Benz across three lanes of Interstate 95 near Plantation, Fla., holding his iPhone with one hand and the steering wheel with the other.
He is rushing to meet with potential buyers of a condo with an ocean view. When he arrives, he turns on lights and opens doors in the four-bedroom place. The prospective buyers, a couple from Venezuela, walk around, ask a few questions - and leave.
Business may be up in South Florida, but the power has shifted to the buyer. And price is the key. “If you’re not getting showings, you’re overpriced,” says Patterson, an agent with Esslinger Wooten Maxwell Realtors Inc.
The record number of foreclosed homes on the market gives buyers even more leverage. “They can afford to wait,” says David Baran, a broker with Prudential Preferred Properties in Chicago.
Michael Davies and Nicole Anzia of Washington, D.C., got caught in their first bidding war when they bought their two-bedroom condo in 2003. The seller fielded eight bids within five days of listing. The couple waived an inspection to clinch the deal and paid $372,000.
That was tame compared with what happened when they sold the condo two years later. They listed the property on a Thursday for $479,000 and held two open houses. More than 100 people showed up, and 11 bids were waiting for them by Tuesday. The final price: $605,000. The buyer waived the inspection, too.
When they tried to sell their home this May, things were different. They listed the house at the purchase price and received just one bid. The negotiation process took longer, and they sold at a $21,000 loss. The buyer demanded an inspection.
“We don’t feel like we went from boom to bust,” Davies says. “We felt like we went from boom to reality.”
NEW REALITY: Getting a mortgage
Jim Sahnger, a mortgage broker in Jupiter, Fla., still chuckles over one borrower three years ago who landed a mortgage with no downpayment and two foreclosures and a bankruptcy in his past.
Now, lenders pore over bank statements, tax returns and job histories. The average mortgage application today starts three times thicker than what it was at the start of the housing boom, and often gets thicker as the process drags on.
Sometimes all the extra documentation still isn’t enough. Sahnger recently had a customer with a good job and a 20 percent downpayment who couldn’t get a mortgage because the lender said there were too many delinquent mortgages in the neighborhood.
“Now, they want to know everything about the buyer,” Sahnger says. “It’s a true and full underwriting process on every particular loan.”
It is common to require a downpayment of 20 percent - sometimes more. And it is virtually impossible to get subprime mortgages, which were written for people with poor credit histories and helped cause the meltdown when the interest rates jumped and borrowers defaulted. In 2005, one in every five mortgages was considered subprime. This year, it’s less than 1 percent.
Another category of risky loans, Alt-A mortgages, which required little or no documentation of the borrower’s financial health, have plunged to $3 billion this year from $400 billion in 2005.
NEW REALITY: Closing the deal
Mike Delano thought everything was in order. He was set to buy a $785,000 home in Washington, D.C., until he learned his lender now required a 20 percent downpayment instead of 10 percent.
Unlike in years past, there was no wiggle room. He had to raise the extra money from his family. “It was a nightmare,” he says.
It’s not uncommon nowadays for closings to take 60 days. One big reason: Appraisers have become more strict - or, some would say, more accurate.
During the boom years, agents and brokers often pressured appraisers to “hit the number” that the buyer and seller had agreed on so the deal would close and everyone could collect fees.
Under new industry rules, mortgage brokers are barred from ordering appraisals themselves. Instead, lenders order appraisals in-house or hire independent firms.
Some real estate agents and homebuilders say the rules are causing delays in closing sales, or undermining sales because appraisals are coming in too low.
NEW REALITY: The future
Nearly everyone in the real estate industry agrees on this much: Another dramatic boom-bust cycle isn’t likely soon. Albert Saiz, assistant real estate professor at the University of Pennsylvania’s Wharton School, expects that new regulations and a different consumer mindset will help real estate return to a more traditional cycle.
There will be some ups and downs, Saiz said, but in the long run, prices should move higher. “In the end, the United States is still growing,” he says. “We’re going to need more housing.”
Pava Leyrer, president of Heritage National Mortgage in Michigan, notes that the majority of people are still paying their debts. She’s confident the market will rebound once the unemployment rate begins to fall.
“I really can’t imagine we would go back to the same situation because it took an exact wrong mix of everything for that to occur,” she says. “If it ever did happen, I’ll be long dead.”
Copyright © 2009 The Associated Press
Tuesday, September 8, 2009
Improving energy efficiency to improve odds of selling a home
FAIRFIELD COUNTY, Conn. – Sept. 8, 2009 – When real estate agent Lisa Triantafilidis takes clients out to look at one of her listings, two questions typically top their lists of concerns:
“What are the taxes and what are the energy costs,” said Triantafilidis, who is a real estate agent with Higgins Group Real Estate.
She can do nothing about the taxes, but now Triantafilidis has some help with the second question. Energy company Gault Inc. is partnering with Higgins to provide home energy audits to the company’s 300 agents in Fairfield County.
The audit helps expand upon the things Triantafilidis sees herself. As a real estate agent, she often recognizes things that can be done to improve a home’s energy efficiency.
“It can be something very simple, just weather stripping around a door,” she said.
Or it can be something as simple as an old refrigerator.
That’s what’s running up Margi Failoni’s energy bill. Failoni, who is trying to sell her house through Triantafilidis, had an energy audit done this summer on the real estate agent’s suggestion. She says she was pleasantly surprised by the result; as the owner of a 1,400 square-foot home, she was certain that major changes would have to be made. The audit showed otherwise.
“It has definitely proven that my home was energy efficient,” she said.
Instead of suggesting that the windows be replaced, the auditor instead took Failoni through her home, starting outside and moving around the house, pointing out little things that could mean big money for her and anyone who might buy the house.
Failoni’s second refrigerator, an old unit that runs in her garage, was one of those things; if she were to unplug it, she would save $30 a month on her electricity bill.
The audit also recommended that the Failonis reduce the home’s air infiltration by changing socket plates gasket seals, weather stripping and foaming. In addition, because 80 percent of energy is lost through the attic and the basement, the audit recommended an update of insulation in the home.
“Here are these small cost-saving tips to not use so much energy,” she said.
The Gault-Higgins partnership was the brainchild of Megan Smith, director of marketing for Gault.
“It was really an idea I had crystallized in my head,” she said.
Smith, herself a licensed real estate agent in Florida, had also heard a number of buyers ask about the energy efficiency of her listings. An energy inefficient house, she said, is extremely difficult to sell.
“Energy conservation is just top of mind of everyone these days,” she said. “It really can be a deal maker or a deal breaker.”
An energy audit, she thought, would provide answers to the questions of the buyers and energy solutions to the sellers.
“It’s a complete energy snapshot of the home,” she said.
Smith added that the partnership with the Higgins Group is not exclusive; Gault wants to reach out to other real estate agents as well.
Triantafilidis believes that the energy audit is going to become a trend. She says it has helped her as a real estate agent.
“It has really helped me get the listings,” she said. “When you go in to get a listing, you really need an edge.”
Copyright © 2009, The Hour, Norwalk, Conn
“What are the taxes and what are the energy costs,” said Triantafilidis, who is a real estate agent with Higgins Group Real Estate.
She can do nothing about the taxes, but now Triantafilidis has some help with the second question. Energy company Gault Inc. is partnering with Higgins to provide home energy audits to the company’s 300 agents in Fairfield County.
The audit helps expand upon the things Triantafilidis sees herself. As a real estate agent, she often recognizes things that can be done to improve a home’s energy efficiency.
“It can be something very simple, just weather stripping around a door,” she said.
Or it can be something as simple as an old refrigerator.
That’s what’s running up Margi Failoni’s energy bill. Failoni, who is trying to sell her house through Triantafilidis, had an energy audit done this summer on the real estate agent’s suggestion. She says she was pleasantly surprised by the result; as the owner of a 1,400 square-foot home, she was certain that major changes would have to be made. The audit showed otherwise.
“It has definitely proven that my home was energy efficient,” she said.
Instead of suggesting that the windows be replaced, the auditor instead took Failoni through her home, starting outside and moving around the house, pointing out little things that could mean big money for her and anyone who might buy the house.
Failoni’s second refrigerator, an old unit that runs in her garage, was one of those things; if she were to unplug it, she would save $30 a month on her electricity bill.
The audit also recommended that the Failonis reduce the home’s air infiltration by changing socket plates gasket seals, weather stripping and foaming. In addition, because 80 percent of energy is lost through the attic and the basement, the audit recommended an update of insulation in the home.
“Here are these small cost-saving tips to not use so much energy,” she said.
The Gault-Higgins partnership was the brainchild of Megan Smith, director of marketing for Gault.
“It was really an idea I had crystallized in my head,” she said.
Smith, herself a licensed real estate agent in Florida, had also heard a number of buyers ask about the energy efficiency of her listings. An energy inefficient house, she said, is extremely difficult to sell.
“Energy conservation is just top of mind of everyone these days,” she said. “It really can be a deal maker or a deal breaker.”
An energy audit, she thought, would provide answers to the questions of the buyers and energy solutions to the sellers.
“It’s a complete energy snapshot of the home,” she said.
Smith added that the partnership with the Higgins Group is not exclusive; Gault wants to reach out to other real estate agents as well.
Triantafilidis believes that the energy audit is going to become a trend. She says it has helped her as a real estate agent.
“It has really helped me get the listings,” she said. “When you go in to get a listing, you really need an edge.”
Copyright © 2009, The Hour, Norwalk, Conn
Tuesday, September 1, 2009
Pending home sales on a record roll
WASHINGTON – Sept. 1, 2009 – Contract activity for pending home sales has risen for six straight months, a pattern not seen in the history of the index since it began in 2001, according to the National Association of Realtors® (NAR).
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in July, increased 3.2 percent to 97.6 from a reading of 94.6 in June. It’s also 12.0 percent higher than July 2008 when it was at 87.1. The index is at its highest level since June 2007.
Lawrence Yun, NAR chief economist, says housing market momentum has clearly turned for the better. “The recovery is broad-based across many parts of the country. Housing affordability has been at record highs this year with the added stimulus of a first-time buyer tax credit.
“Other buyers are taking advantage of low home values before prices turn higher,” Yun says. “Nationally, the typical mortgage payment now takes less than 25 percent of a middle-income family’s monthly income to buy a median priced home, with payment percentages so far in 2009 being the lowest on record dating back to 1970. As long as home buyers stay within their budget, mortgage payments will be very manageable.”
NAR estimates that about 1.8 to 2.0 million first-time buyers will take advantage of the $8,000 tax credit this year, with approximately 350,000 additional sales that would not have taken place without the credit. Buyers have little time to act because they must complete the transaction by Nov. 30 to qualify for the credit. Unless extended, contracts signed but not completed by that date will not be eligible – it is taking approximately two months to complete home sales in the current market.
The Pending Home Sales Index in the Northeast declined 3.0 percent to 78.8 in July but is 4.7 percent higher than July 2008. In the Midwest, the index slipped 2.0 percent to 88.1 but is 8.1 percent above a year ago. In the South, pending home sales activity rose 3.1 percent to an index of 103.8 in July and is 12.0 percent above July 2008. In the West the index jumped 12.1 percent to 112.5 and is 20.0 percent above a year ago.
NAR President Charles McMillan says Congress needs to keep the momentum going. “Even with a good recovery taking place, the market is not yet back to normal. With a gradual absorption of inventory, we are on the cusp of a general stabilization in home prices,” he says. “To ensure that housing has a broad stimulus to the overall economy and stays on sound footing, we’re encouraging Congress to extend the tax credit into 2010, and to expand it to all buyers of primary residences. The faster we stabilize home prices, the fewer families will face foreclosure and the quicker the credit can be extended to other sectors of the economy.”
NAR’s Housing Affordability Index (HAI) stood at 158.5 in July – below the peak set in April but still 36.0 percentage points higher than a year ago. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income.
Yun expects existing-home sales to rise through the fourth quarter. “Unless the tax credit is extended, no one should be surprised to see home sales drop in the first quarter of next year,” he said. “However, the fundamentals of the housing market and the economy are trending up, and we expect home sales to generally pick up in the second quarter of 2010. The buyer psychology may be shifting from, ‘Why buy now when I can purchase later,’ to ‘I don’t want to miss out on a recovery.’”
© 2009 FLORIDA ASSOCIATION OF REALTORS
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in July, increased 3.2 percent to 97.6 from a reading of 94.6 in June. It’s also 12.0 percent higher than July 2008 when it was at 87.1. The index is at its highest level since June 2007.
Lawrence Yun, NAR chief economist, says housing market momentum has clearly turned for the better. “The recovery is broad-based across many parts of the country. Housing affordability has been at record highs this year with the added stimulus of a first-time buyer tax credit.
“Other buyers are taking advantage of low home values before prices turn higher,” Yun says. “Nationally, the typical mortgage payment now takes less than 25 percent of a middle-income family’s monthly income to buy a median priced home, with payment percentages so far in 2009 being the lowest on record dating back to 1970. As long as home buyers stay within their budget, mortgage payments will be very manageable.”
NAR estimates that about 1.8 to 2.0 million first-time buyers will take advantage of the $8,000 tax credit this year, with approximately 350,000 additional sales that would not have taken place without the credit. Buyers have little time to act because they must complete the transaction by Nov. 30 to qualify for the credit. Unless extended, contracts signed but not completed by that date will not be eligible – it is taking approximately two months to complete home sales in the current market.
The Pending Home Sales Index in the Northeast declined 3.0 percent to 78.8 in July but is 4.7 percent higher than July 2008. In the Midwest, the index slipped 2.0 percent to 88.1 but is 8.1 percent above a year ago. In the South, pending home sales activity rose 3.1 percent to an index of 103.8 in July and is 12.0 percent above July 2008. In the West the index jumped 12.1 percent to 112.5 and is 20.0 percent above a year ago.
NAR President Charles McMillan says Congress needs to keep the momentum going. “Even with a good recovery taking place, the market is not yet back to normal. With a gradual absorption of inventory, we are on the cusp of a general stabilization in home prices,” he says. “To ensure that housing has a broad stimulus to the overall economy and stays on sound footing, we’re encouraging Congress to extend the tax credit into 2010, and to expand it to all buyers of primary residences. The faster we stabilize home prices, the fewer families will face foreclosure and the quicker the credit can be extended to other sectors of the economy.”
NAR’s Housing Affordability Index (HAI) stood at 158.5 in July – below the peak set in April but still 36.0 percentage points higher than a year ago. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income.
Yun expects existing-home sales to rise through the fourth quarter. “Unless the tax credit is extended, no one should be surprised to see home sales drop in the first quarter of next year,” he said. “However, the fundamentals of the housing market and the economy are trending up, and we expect home sales to generally pick up in the second quarter of 2010. The buyer psychology may be shifting from, ‘Why buy now when I can purchase later,’ to ‘I don’t want to miss out on a recovery.’”
© 2009 FLORIDA ASSOCIATION OF REALTORS
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