Category: Buying a Home

Higher Home Prices Expected by Consumers in 2012

Higher home prices are expected by 33% of consumers over the next year.

Fannie Mae’s monthly housing survey indicated 5% more people expect home prices to increase this month over the 27 percent surveyed last month who thought prices would increase this year.

Nearly half of consumers expect higher rental prices as well, the highest number registered by Fannie Mae since its monthly tracking began in June 2010. Americans’ rental price expectations for the next year continue to rise, reaching their record high level for the Fannie Mae survey this month.

The percentage of respondents who say it is a good time to buy rose by three points to 73 percent, the highest level in more than a year, while the percentage of respondents who say it is a good time to sell rose one point to 14 percent this month.

Consumers’ confidence about their own finances is stabilizing, with 44 percent expecting an improvement over the next year.

Higher Mortgage Rates Expected

There is an increasing share of consumers expecting both higher mortgage rates and home prices over the next 12 months.

Doug Duncan, Vice President and chief economist of Fannie Mae says, “Americans’ rental price expectations for the next year continue to rise, reaching their record high level for our survey this month.”

Duncan says, “Some may feel that renting is becoming more costly and that home ownership is a more compelling housing choice. Conditions are coming together to encourage people to want to buy homes.”

While the “sales of existing homes in January and February marked the strongest start to a year since 2007,” according to the combined Housing and Urban Development (HUD)/Treasury statement. “Data on home prices changed little from the previous month – marking a fifth month of seasonal lows.”

For further Fannie Mae survey findings, visit the Fannie Mae Monthly National Housing site.

US Home-Buying Season Finally Signaling a Recovery

by bmadmin

WASHINGTON (AP) — Five years after the U.S. housing bust sent sales and prices plunging, the spring home-buying season is pointing to a long-awaited recovery.

Reduced prices, record-low mortgage rates, higher rents and an improving job market appear to be emboldening many would-be buyers. Open houses are drawing crowds. A wave of foreclosures is leading investors to grab bargain-priced homes.

And many people seem to have concluded that prices won’t drop much further. In some areas, prices have begun to tick up.

Interviews with more than two dozen potential buyers, sellers, brokers, Realtors and economists suggest that confidence is up and that sales will move slowly but steadily higher.

“The biggest challenge that we’ve had over the past four years is fear — fear that the economy is collapsing, that property values are collapsing, that the world is coming to an end,” says Mark Prather, a broker at ERA Buy America Real Estate in La Palma, Calif. “The fear factor is all but gone.”

Prather says the number of prospective buyers who contacted his company last month was about 35 percent more than a year ago.

The spring buying season got an early lift-off from an uncommonly warm January and February — a winter that was the best for sales of previously occupied homes in five years. Permits to build houses and apartments rose in February to their highest level since 2008.

“People feel much more confident,” said Steve Brown, co-owner of real estate company Irongate Inc. of Dayton, Ohio, who says sales jumped more than 16 percent for the first two months of 2012 over the same period last year. “There’s no question there’s a good feeling in the marketplace.”

Some analysts detected a slight uptick in prices for February and March. CoreLogic, a real estate data firm, says prices for homes not at risk of foreclosure — about two thirds of the market — rose 0.7 percent in February. It was the first increase in four years. Price gains occurred both in some hard-hit areas, such as Phoenix, and some still-thriving areas like New York and Washington.

In Miami, the average sales price has surged 14 percent in the past year, according to Trulia, a real estate data firm. In Phoenix, the average is up 13 percent, in Pittsburgh 9 percent.

Earnings reports Friday from two big banks suggested that more people are taking out mortgages. JPMorgan Chase issued 6 percent more mortgages from January through March than it did a year ago and got 33 percent more applications. Wells Fargo issued 54 percent more mortgages and received 84 percent more applications.

Still, few think the housing industry is nearing a return to full health. For that to happen, a robust job market would be needed. More hiring would give more people the money and job security to buy. That would help boost sales and prices.

Such areas as Atlanta, suburban Las Vegas and central California show few signs of recovery. And in some others — from Seattle to Cleveland — home prices have continued to slip. The average has dropped 9 percent in Seattle over the past 12 months and 7 percent in Cleveland.

But in many parts of the country, including thriving areas of Boston, Dallas and Seattle, confidence is rising along with prices. Among the reasons:

Hiring has strengthened. Each month from January through March generated a solid average of 212,000 jobs. Unemployment has sunk from 9.1 percent in August to 8.2 percent. More job security tends to embolden more people to invest in a home. In Dayton, for example, the University of Dayton is hiring for a new engineering research center, General Electric is hiring hundreds of contractors and the nearby Wright-Patterson Air Force Base are expanding.

Loans remain cheap. The average rate on a 30-year fixed-rate mortgage is 3.88 percent. That’s just above the 3.87 percent reached in February — the lowest since long-term mortgages were first offered in the 1950s.

Homes are more affordable. Nationwide, home prices are down 34 percent since 2006.

Americans are more confident. The Thomson Reuters/University of Michigan’s survey of consumer confidence rose in March for a seventh straight month to its highest level in 13 months.

Also fueling interest are signs that home values are finally stabilizing. One factor that had slowed purchases after the housing boom ended in late 2006 was fear that a home would lose value soon after its purchase.

But the price declines slowed toward the end of 2011, according to the Wells Fargo/Case-Shiller home price index. And CoreLogic says the average price nationally rose slightly in January and February.

“Unless prices went down, I don’t think we would have ever been able to afford a home,” said John Henschel, 37, an information technology consultant who will move with his family into a five-bedroom house in Wheaton, Ill., in May. “But we feel like prices aren’t going to go back down. We’re confident. So why not?”

When the landlord on their Chicago apartment told them he was selling it, Henschel and his wife decided it was time to buy. The home they bought for nearly $450,000 could have fetched more than $570,000 six years ago, according to housing website Zillow.com.

On a rainy Saturday this month in long-struggling Riverside, Calif., 12 families visited a three-bedroom house priced at $199,999. Ten others stopped by in the first hour of the next day’s open house. By the end of the weekend, two buyers had made offers.

“We’re seeing more buyer activity this spring than we’ve seen in probably four years,” said Liane Thomas, the broker who was showing the house.

Prices in the area could rise in coming months because the supply of homes for sale in Riverside is down — from nearly 19,000 last year to 13,000 in February.

Many potential buyers are hunting for deals in places that were especially hurt by the housing bust. In Sarasota, Fla., which boasts wide sugar-sand beaches, condos are selling for an average of $325,000, compared with more than $550,000 at the height of the boom, said Marc Rasmussen, a broker.

Homes nearing foreclosure account for nearly half of all properties on the market, according to the Campbell/Inside Mortgage Finance HousingPulse survey. That compares with 10 percent in healthy economies. Many are receiving multiple offers because their prices have plunged.

In Phoenix, a foreclosed home offered for $77,000 that had been vandalized received 21 offers last month at or near the asking price — roughly the price it sold for. The average time a home sits on the market in Phoenix has dropped from 114 days last year to 90 days, according to the Cromford Report, a data research group.

In suburban Washington, D.C., Rory Obletz and his wife have been saving to buy after renting for six years. Obletz, 27, failed in two previous bids for single-family homes. He’s hoping a third bid — about $10,000 above the asking price of $399,000 for a home in Silver Spring, Md. — will succeed this month.

“One home we went to, it was under contract by the time we walked out of the house,” Obletz said. “If you really want to get something, you don’t have a lot of time to think about it.”

It isn’t just bargain-hunting families seeking homes. Investors are increasingly buying single-family houses, fixing them up and re-selling them or converting them into rentals.

Investors are out-bidding many first-time buyers on cheaper homes in particular. Sales of homes between $100,000 and $250,000 have jumped nearly 19 percent over the past year. For homes between $250,000 and $500,000, sales are up 13 percent.

More expensive homes, from $500,000 to $750,000, whose sales tend to contribute the most to the U.S. economy, are up a smaller 6.7 percent.

For buyers seeking to move up to a bigger home or to relocate, the toughest challenge is often selling the home they’re in. According to CoreLogic, about 11 million homeowners are “underwater” — they owe more on their mortgage than their home is worth.

Yet for first-timers like Obletz, who have been saving and watching as homes have become more affordable, the time feels right.

“Rent is a little more expensive, and we have the money, so we might as well jump on it,” he says.

By ALEX VEIGA, AP Real Estate Writers.

Veiga reported from Los Angeles. Associated Press Writer Tamara Lush in Sarasota, Fla., contributed to this report.

Mortgage Application Are Up: Here’s How to Select A Lender

by bmadmin

I had an interesting conversation with a young professional the other day. He told me that he only had four more days to select his lender and that his dad’s business partner told him to call me.

He lived outside of our market so I wasn’t sure if he wanted me to do his loan or just help him find a lender so I simply asked him what criteria he was using to make his decision.

With no hesitation, he simply said rate and closing costs.

Ironically I had just finished reading an article where they estimated that over 70% of the time a borrower closed at a higher rate than initially quoted. When I asked him if he was aware of this he said YES.

Isn’t it odd that a majority of consumers select their lender based on data that they know to be erroneous over half the time?

Rate and closing costs are obviously a key component, but let’s be real. If you aren’t working with someone you can trust and someone who knows what they are doing, does it really matter what they quote you?

Marty Preston, Branch Manager of Benchmark Mortgage in Lexington, Kentucky, is a consistent Top Producer and one of the country’s premier mortgage lenders. Marty is also a nationally known speaker and a major force in the national mortgage banking scene.

Foreign Buyers Continue Purchasing Cheap U.S. Homes

by bmadmin

Foreign consumers purchased $41 billion worth of American houses and apartments during the 12-month period that ended in March 2011, according to the latest statistics from the National Association of Realtors. That’s roughly the same as the previous year showing that foreign buyers continue to see value in U.S real estate.

But add in the $41 billion spent by immigrants who moved here within the last two years and people with visas of more than six months, and the total is $82 billion worth of U.S. residential real estate taken off the market by international buyers, up from $66 billion in the previous year.

The demand for American real estate is so strong that last fall, the National Association of Realtors launched an international version of its property search website. Now, the 4.4 million properties displayed on Realtor.com can be viewed more easily by buyers from practically any place in the world, and in almost a dozen languages.

The top destinations of foreign investors for U.S. real estate purchases are:

1. Florida: 31% of all home purchases in that state are made by foreign buyers, with most coming from Cuba, Haiti, and Colombia.

2. California: 12% of all home purchases (most coming from Mexico, the Philippines, China, India, and Vietnam)

3. Texas: 9% of all home purchases (most coming from Mexico, India, Vietnam, China, and the Philippines)

Protect Your Home From Water Damage

by bmadmin

April showers are just around the corner so it’s time to protect your home from the water. Caulking can be challenging the first time you try it but you will quickly get the hang of it. By caulking the areas around your doors and windows at least once per year you will protect your home from water damage. To get started you will need the following tools:

Putty knife
Tube of caulk
Caulking gun

1. Start by using a putty knife to scrape the joint where the window frame and wall join to remove any old caulk or dirt.

2. if you have a wire brush, go over the area you just cleaned. This will help the caulk adhere.

3. Grab your caulk gun and open up the end to insert the caulk tube into the gun. Cut a small diagonal hole at the end of the tube, using a razor knife or utility scissors.

4. Use a nail and push it into the opening you just cut to break the seal (if it isn’t broken). Squeeze the caulk gun trigger until caulk starts to come out through the tip. Press the release latch at the other end to stop the flow of caulk.

5. Set the flat part of the tip at the end of the window frame where it meets the wall. Squeeze the trigger slowly, pulling the caulk gun along the joint, making a thin, flat, even line of caulk. Don’t stop moving the gun as you lay the caulk. Press the release latch when you get to the end of the line to stop the flow of caulk.

6. Repeat for each area around the window, everywhere that two different materials meet, whether there is a gap or not. Immediately wipe up any extra caulk with a damp cloth. Let the caulk set overnight. You can also use you finger or a tool to smooth out the caulk and ensure all gaps are covered.

2012 Homes Sales Looking Up

by bmadmin

National Association of Realtors has released their latest home sales information and things are looking up.

According to the “Pending Home Sales Index”, homes under contract are up 7.3%, the second straight month with an increase.

This is the first time since the Homebuyer Tax Credit that the Pending Home Sales Index has gone above 100, a great sign for the market. The best part of these figures is the growth is occurring organically through great affordability and job creation.

So what are the sales trends showing? Lower priced homes are moving quickly while the upper end market is still sluggish. New home sales and new construction starts are both up, a great sign for the months ahead.

Through the broader economy, we are seeing increased job growth from 100,000 per month and may even increase to 150,000 jobs created per month, which will continue to grow the real estate market.

For the full interview with Lawrence Yun, National Association of Realtors Chief Economist, view it below:

Houses Are On Sale Across the Country

by bmadmin

InfoGraphic

The graphic depicts pricing of all homes from their ‘peak through current declines’ as per Case Shiller. This index looks at prices in 20 major metropolitan areas.

Each market peaked at different times. Therefore, the InfoGraphic doesn’t cover one segment of time. Here is a site where you can see when each market actually peaked:

http://www.housingviews.com/2011/11/29/how-the-cities-did-in-the-latest-release/how-cities-did-september-2011/

Courtesy of KCMBlog.com.

You Need to Work With Experts

by bmadmin

In today’s real estate market, it is easy to get confused. There seems to be an overabundance of information and much of it seems to be conflicting. As an example, we offer you two headlines that appeared within 24 hours of each other last week.

National Delinquency Rate Falls to Lowest Level in Three Years

– Mortgage Bankers Assoc. 11/17/2011

Second Consecutive Increase in First Mortgage Default Rates

– Standard & Poors 11/18/2011

(Remember, foreclosures impact home values and the cost of mortgage money. This makes current delinquency rates an extremely important data point.)

Though these headlines seem to be saying opposite things, both are actually correct. Each report was looking at different data points over different periods of time.

In their article regarding the MBA report, DSNews explains:

“Industry data released Thursday indicates the number of borrowers in the United States behind on their mortgage payments is showing signs of improving. The Mortgage Bankers Association (MBA) reported that the national delinquency rate for residential home loans fell to 7.99 percent in the third quarter.”

In their post, S&P claims:

“First mortgage default rates rose from 1.99% in September to 2.08% in October.”

Bottom Line

Make sure you are dealing with local real estate and mortgage professionals. They will help you and your family decipher the hordes of information available so you can truly understand your best options.

Photo credit: http://www.flickr.com/photos/abiesudiono/

Congress Raises Limits on FHA Loans

by bmadmin

WASHINGTON—U.S. lawmakers moved Thursday to increase the maximum size of loans that can be guaranteed by the Federal Housing Administration.

Congress passed a broad spending bill that included a provision to restore to $729,750 the maximum size of mortgage that can be backed by the FHA, giving some borrowers the option of putting less money down to obtain a mortgage in expensive cities.

FHA-backed loans currently account for a third of new mortgages for home purchases and can be made with down payments of as little as 3.5%, compared with the 20% industry standard.

The bill goes next to President Barack Obama to be signed into law.

The loan limits fell to $625,500 on Oct. 1 in expensive markets like New York, San Francisco and Washington. They declined in around 250 counties for loans guaranteed by mortgage-finance companies Fannie Mae and Freddie Mac, and in around 600 counties for FHA-backed loans. In some cases, the FHA loan limits fell below those of Fannie Mae and Freddie Mac.

The housing lobby pushed for Congress to reinstate loan limits for Fannie, Freddie and FHA, citing concerns that any steps to raise borrowing costs might be too much for fragile housing markets to bear. Limits for Fannie and Freddie loans were not restored.

Sen. Robert Menendez (D., N.J.) said that restoring the loan limits will benefit the housing market at a time when it is weak. Doing so, he said, “won’t cost taxpayers a dime” and will benefit the housing market in many other parts of the country besides those cities.

Courtesy of WSJ.com

Wall Street Journal & Forbes: It’s Time to Buy A Home

by bmadmin

We believe very strongly that now is the time to buy a home. Some will say we are just saying this to create real estate transactions and commissions. Because of that, today we will quote what those outside the real estate profession are saying to the people who look to them for financial advice.

The Wall Street Journal

Last week, in an article entitled It’s Time to Buy That House, the WSJ told their subscribers:

“It’s an excellent time to buy a house, either to live in for the long term or for investment income…Houses aren’t the magic wealth creators they were made out to be during the bubble. But when prices are low, loans are cheap and plump investment yields are scarce, buyers should jump.”

In an article two weeks ago, MarketWatch.com (the on-line blog for WSJ) told their readers:

“Now could be the best time in history to buy a home.”

Forbes.com

In a report to their subscribers, Capital Economics reported that:

“The previous declines in house prices and the more recent drop in mortgage rates to record lows have created an unusual situation in which the median monthly mortgage payment is more or less the same as the median rental payment.”

Why is this important? Last week, Forbes explained to their readers:

“If rents simply kept up with inflation at a 3.2% annual increase, a $1,500 rent payment would cost that renter nearly $900,000 over the next 30 years. The same $1,500 payment made to their mortgage would be only $540,000 (because the payments don’t increase with inflation).”

They went on to explain the advantages of homeownership during retirement:

“Even with a dismal 1% growth rate over 30 years, a $300,000 property would appreciate well over $100,000 giving the homeowner an additional nest egg for retirement…

At a time when retirement is becoming much more challenging, an extra $400,000 (or likely more) can make a major difference not to mention the impact of NOT having to pay a mortgage. How much less would you have to save for retirement if you didn’t pay the mortgage?”

Bottom Line

When the iconic financial newspaper and the iconic financial magazine say that it now makes financial sense to purchase a house, perhaps it’s time to buy a home.

Post courtesy of KCMBlog.com