The U.S. Department of Housing and Urban Development (HUD) recently issued guidance making it clear that residents who are denied or evicted from housing as a result of domestic violence may have basis to file a discrimination complaint with HUD under the federal Fair Housing Act.
The nation’s Violence Against Women Act (VAWA) provides some protections to victims of abuse who experience housing discrimination, but HUD sees a connection between domestic violence and housing discrimination since most victims are women. Sex is one of the protected classed under the Fair Housing Act, along with race, color, national origin, religion, familial status and disability.
“People in abusive relationships are not only victims of abuse, but potential victims of housing discrimination,” says John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “Evicting a domestic violence victim from her home robs her of the one anchor she has in a sea of uncertainty. HUD is committed to using the Fair Housing Act to protect victims of abuse from unlawful denial of access to decent, affordable housing.”
Under the guidance, HUD will review claims of discrimination from victims of domestic violence to determine if there is sufficient evidence to apply the Fair Housing Act to their complaints.
For example, HUD says, a landlord who refuses to accept women with a history of domestic violence because the abusive man may return could be violating the Fair Housing Act’s prohibition against gender discrimination.
Similarly, a “zero-tolerance” policy for criminal activity – under which an entire household can be evicted for the criminal act of one household member – may have a disparate impact on women since they make up the overwhelming majority of domestic violence victims. Evicting women for the violent acts of their abusers may violate the Fair Housing Act.
Additionally, the guidance provides examples of recent housing discrimination cases and explains how VAWA protects victims of domestic violence from denial, eviction and termination from public housing and the Housing Choice Voucher Program (Section 8).
HUD has issued its Domestic Violence guidance in PDF format.
Source: Florida Realtors®
Monday, February 28, 2011
Housing less affordable for many Americans
Although home values have fallen over the past few years, housing affordability has significantly decreased for working owners and renters, according to an annual report released by the Center for Housing Policy, the research affiliate of the National Housing Conference.
The report, titled “Housing Landscape 2011,” provides an in-depth look at housing affordability trends for working households between 2008 and 2009 focusing on the effects of employment, income and housing costs.
According to the report, nearly one in four working households had a severe housing cost burden in 2009, spending more than half of its income on housing costs. Nationwide, some 10.5 million working households experienced a severe housing cost burden in 2009 – an increase of nearly 600,000 households from the prior year. This increase occurred despite a drop of 1.1 million in the overall number of working households.
“Housing costs for existing homeowners have declined only slightly, while housing costs for working renters have actually gone up,” said Jeffrey Lubell, Executive Director of the Center for Housing Policy. “Meanwhile, high unemployment and falling incomes have left low- and moderate-income families struggling to make ends meet.”
The study found that five states’ share of severely cost-burdened working households exceeded the national average, and they had a statistically significant increase between 2008 and 2009: Florida, Arizona, California, New Jersey and New York.
Among the 50 largest metropolitan areas, the following five metropolitan areas had the highest share of working households with a severe housing cost burden in 2009:
Miami-Fort Lauderdale-Pompano Beach: 42 percent
Los Angeles-Long Beach-Santa Ana, Calif.: 37 percent
Orlando-Kissimmee: 35 percent
Riverside-San Bernardino-Ontario, Calif.: 35 percent
San Diego-Carlsbad-San Marcos, Calif.: 34 percent
Nationally, housing affordability declined substantially for working renters across the country. Approximately one-fourth of working renters (24.5 percent) had a severe housing cost burden in 2009 – an increase over the 22.1 percent with the problem in 2008.
Housing affordability declined among homeowners as well. Some 21.2 percent of working homeowners had a severe housing cost burden in 2009, as compared with 20.1 percent in 2008.
The report identified several factors as contributing to the decline in housing affordability, including an increase in rents, a reduction in the number of hours worked per week, and falling incomes.
In a state-to-state comparison, the share of working households with a severe housing cost burden increased significantly in 25 states and decreased significantly in none. The share of working households with a severe housing cost burden increased significantly in 16 of the largest metropolitan areas and decreased significantly in none. Of these 16 metro areas, 14 are located in the Midwest and the South.
Overall, the level of severe housing cost burden amongst working households displayed a high level of variation at the metropolitan level. Levels ranged from a high of 42 percent in Miami to a low of 15 percent in Pittsburgh and Louisville.
The complete report, “An Annual Look at the Housing Affordability Challenges of America’s Working Households,” is available in PDF format online.
© 2011 Florida Realtors®
The report, titled “Housing Landscape 2011,” provides an in-depth look at housing affordability trends for working households between 2008 and 2009 focusing on the effects of employment, income and housing costs.
According to the report, nearly one in four working households had a severe housing cost burden in 2009, spending more than half of its income on housing costs. Nationwide, some 10.5 million working households experienced a severe housing cost burden in 2009 – an increase of nearly 600,000 households from the prior year. This increase occurred despite a drop of 1.1 million in the overall number of working households.
“Housing costs for existing homeowners have declined only slightly, while housing costs for working renters have actually gone up,” said Jeffrey Lubell, Executive Director of the Center for Housing Policy. “Meanwhile, high unemployment and falling incomes have left low- and moderate-income families struggling to make ends meet.”
The study found that five states’ share of severely cost-burdened working households exceeded the national average, and they had a statistically significant increase between 2008 and 2009: Florida, Arizona, California, New Jersey and New York.
Among the 50 largest metropolitan areas, the following five metropolitan areas had the highest share of working households with a severe housing cost burden in 2009:
Miami-Fort Lauderdale-Pompano Beach: 42 percent
Los Angeles-Long Beach-Santa Ana, Calif.: 37 percent
Orlando-Kissimmee: 35 percent
Riverside-San Bernardino-Ontario, Calif.: 35 percent
San Diego-Carlsbad-San Marcos, Calif.: 34 percent
Nationally, housing affordability declined substantially for working renters across the country. Approximately one-fourth of working renters (24.5 percent) had a severe housing cost burden in 2009 – an increase over the 22.1 percent with the problem in 2008.
Housing affordability declined among homeowners as well. Some 21.2 percent of working homeowners had a severe housing cost burden in 2009, as compared with 20.1 percent in 2008.
The report identified several factors as contributing to the decline in housing affordability, including an increase in rents, a reduction in the number of hours worked per week, and falling incomes.
In a state-to-state comparison, the share of working households with a severe housing cost burden increased significantly in 25 states and decreased significantly in none. The share of working households with a severe housing cost burden increased significantly in 16 of the largest metropolitan areas and decreased significantly in none. Of these 16 metro areas, 14 are located in the Midwest and the South.
Overall, the level of severe housing cost burden amongst working households displayed a high level of variation at the metropolitan level. Levels ranged from a high of 42 percent in Miami to a low of 15 percent in Pittsburgh and Louisville.
The complete report, “An Annual Look at the Housing Affordability Challenges of America’s Working Households,” is available in PDF format online.
© 2011 Florida Realtors®
Pending home sales decline in January
Pending home sales eased moderately in January for the second straight month but remain 20.6 percent above the cyclical low last June, according to the National Association of Realtors® (NAR).
The Pending Home Sales Index, a forward-looking indicator, declined 2.8 percent to 88.9 based on contracts signed in January from a downwardly revised 91.5 in December. The index is 1.5 percent below the 90.3 level in January 2010 when a tax credit stimulus was in place. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.
“The housing market is healing with sales fluctuating at times, depending on the flow of distressed properties coming on the market,” explains NAR Chief Economist Lawrence Yun. “While home buyers over the past two years have been exceptionally successful with historically low default rates, there is still an elevated level of shadow inventory of distressed homes from past lending mistakes that need to go through the system.”
Yun says the U.S. “should not expect the recovery to be in a straight upward path – it will zigzag at times.”
The pace of January existing-home sales, 5.36 million, is slightly higher than NAR’s annual forecast for 2011. If contract activity stays on its present course, there should be an 8 percent increase in total existing-home sales this year.
“The broad fundamentals for a housing recovery are developing,” Yun says. “Job growth, high housing affordability and rising apartment rent are conducive to bringing more buyers into the market. Some buyers may be looking to real estate as a hedge against potential future inflation.”
The pending index in the Northeast declined 2.4 percent to 73.5 in January and is 3.0 percent below January 2010. In the Midwest, the index fell 7.3 percent in January to 78.0 and is 3.2 percent below a year ago.
Pending home sales in the South rose 1.4 percent to an index of 97.7 but is 0.4 percent below January 2010. In the West, the index fell 5.2 percent to 98.7 and is 0.9 percent below a year ago.
Source: Florida Realtors®
The Pending Home Sales Index, a forward-looking indicator, declined 2.8 percent to 88.9 based on contracts signed in January from a downwardly revised 91.5 in December. The index is 1.5 percent below the 90.3 level in January 2010 when a tax credit stimulus was in place. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.
“The housing market is healing with sales fluctuating at times, depending on the flow of distressed properties coming on the market,” explains NAR Chief Economist Lawrence Yun. “While home buyers over the past two years have been exceptionally successful with historically low default rates, there is still an elevated level of shadow inventory of distressed homes from past lending mistakes that need to go through the system.”
Yun says the U.S. “should not expect the recovery to be in a straight upward path – it will zigzag at times.”
The pace of January existing-home sales, 5.36 million, is slightly higher than NAR’s annual forecast for 2011. If contract activity stays on its present course, there should be an 8 percent increase in total existing-home sales this year.
“The broad fundamentals for a housing recovery are developing,” Yun says. “Job growth, high housing affordability and rising apartment rent are conducive to bringing more buyers into the market. Some buyers may be looking to real estate as a hedge against potential future inflation.”
The pending index in the Northeast declined 2.4 percent to 73.5 in January and is 3.0 percent below January 2010. In the Midwest, the index fell 7.3 percent in January to 78.0 and is 3.2 percent below a year ago.
Pending home sales in the South rose 1.4 percent to an index of 97.7 but is 0.4 percent below January 2010. In the West, the index fell 5.2 percent to 98.7 and is 0.9 percent below a year ago.
Source: Florida Realtors®
Friday, February 25, 2011
Rental survey reveals top reasons for moves
New job opportunities have more people on the move, according to a survey by Apartments.com conducted in January to gauge its website visitors’ 2011 moving plans.
• Reasons for moving: The most popular reason for moving was for an employment opportunity: 28.8 percent of survey respondents said they were relocating for a job, compared to 10.4 percent who moved for job opportunities the previous year. Other popular reasons residents cited: Looking for a bigger apartment (13.3 percent), shopping for a less expensive apartment (9.7 percent), rent increase (6.7 percent), and wanting to live in a safer neighborhood (5.7 percent).
• Growing trend: An increase in current homeowners and first-time renters are entering the rental market, according to the survey. More than 20 percent of the survey’s respondents who are looking for an apartment this year said they are current homeowners – 32 percent are also first-time renters. Former homeowners say they are renting because it offers them more flexibility to relocate for employment opportunities and live where they want.
• Planning ahead: Many respondents said they are apartment shopping now for a move that will not take place until much later in the year. Nearly 20 percent of respondents are starting an apartment search three to four months ahead of time and nearly 25 percent are looking five months to more than a year out.
“It’s a good idea to lock into a lease right now,” says Chris Brown, vice president of product management for Apartments.com. “Many management companies have announced rent increases. As vacancy rates continue to drop and the rental market improves, we expect to see the upward trend grow. Deals can still be had, but they’re getting harder to find.”
Source: Florida Realtors®
• Reasons for moving: The most popular reason for moving was for an employment opportunity: 28.8 percent of survey respondents said they were relocating for a job, compared to 10.4 percent who moved for job opportunities the previous year. Other popular reasons residents cited: Looking for a bigger apartment (13.3 percent), shopping for a less expensive apartment (9.7 percent), rent increase (6.7 percent), and wanting to live in a safer neighborhood (5.7 percent).
• Growing trend: An increase in current homeowners and first-time renters are entering the rental market, according to the survey. More than 20 percent of the survey’s respondents who are looking for an apartment this year said they are current homeowners – 32 percent are also first-time renters. Former homeowners say they are renting because it offers them more flexibility to relocate for employment opportunities and live where they want.
• Planning ahead: Many respondents said they are apartment shopping now for a move that will not take place until much later in the year. Nearly 20 percent of respondents are starting an apartment search three to four months ahead of time and nearly 25 percent are looking five months to more than a year out.
“It’s a good idea to lock into a lease right now,” says Chris Brown, vice president of product management for Apartments.com. “Many management companies have announced rent increases. As vacancy rates continue to drop and the rental market improves, we expect to see the upward trend grow. Deals can still be had, but they’re getting harder to find.”
Source: Florida Realtors®
Commercial vacancy rates to decline but rent recovery delayed
A stabilization trend is taking place in commercial real estate sectors, but in most markets rent will remain soft except for multifamily rentals, according to the National Association of Realtors® (NAR).
Lawrence Yun, NAR chief economist, said a pullback in construction is helping stabilize the market. “Very limited construction of new commercial real estate over the past few years has essentially fixed the supply of available space,” he said. “This means vacancy rates could fall quickly from any increase in demand for commercial space.”
From the first quarter of this year to the first quarter of 2012, NAR expects vacancy rates to decline 0.5 percentage point in the office sector, 1.3 points in industrial real estate, 0.1 point in the retail sector and 0.9 percentage point in the multifamily rental market.
“Even with declining vacancy rates, rents are not likely to turn positive in most markets until next year, outside of multifamily rental properties,” Yun said. For example, office rents are forecast to fall 1.8 percent this year before turning higher by 4.0 percent in 2012.
“Apartment rent increases are expected to accelerate from job creation leading to new household formation, particularly among the young adult population who will seek their own housing arrangements – many will be leaving their parents’ homes or choose to live with fewer roommates,” Yun said.
Average apartment rent is projected to grow 3.4 percent this year and another 4.2 percent in 2012.
“Rising apartment rent in combination with rising oil prices could push the overall inflation rate beyond a comfort level, which could then force the Federal Reserve to raise interest rates later this year or early in 2012,” Yun added.
The Society of Industrial and Office Realtors in its SIOR Commercial Real Estate Index, an attitudinal survey of more than 360 local market experts1, shows a notable improvement in market fundamentals. The SIOR index, measuring the impact of 10 variables, rose 8.1 percentage points to 50.7 in the fourth quarter, the largest quarterly gain in five years, and is at the highest level since the fall of 2008. However, the index is well below a level of 100 that represents a balanced marketplace. This is the fifth consecutive quarterly improvement following nearly three years of decline, but the last time the index was at the 100 level was in the third quarter of 2007.
Seventy-eight percent of SIOR participants expect improvements in the office and industrial sectors for the first quarter of this year.
There has been an increase of liquidity in Commercial Mortgage Backed Securities, which is helping to open the commercial market to more property transactions; commercial real estate sales had been stalled over the past few years with excessively tight credit conditions. In terms of development acquisitions, it remains a buyer’s market for those with cash or who can obtain credit financing.
NAR’s latest Commercial Real Estate Outlook offers projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. CBRE Econometric Advisors provided historic data.
Office markets
Vacancy rates in the office sector are forecast to decline from 16.5 percent in the first quarter of this year to 16.0 percent in the first quarter of 2012.
The markets with the lowest office vacancy rates currently are New York City and Honolulu, with vacancies in the 8 to 9 percent range.
In 57 markets tracked, net absorption of office space, which includes the leasing of new space coming on the market as well as space in existing properties, should be 14.5 million square feet in 2011.
Industrial markets
Industrial vacancy rates are projected to decline from 14.2 percent in the current quarter to 12.9 percent in the first quarter of 2012.
At present, the areas with the lowest industrial vacancy rates are Los Angeles and Salt Lake City, with vacancies of 7.5 percent.
Annual industrial rent is likely to decline 2.5 percent in 2011, before rising 3.0 percent next year. Net absorption of industrial space in 58 markets tracked should be 127.5 million square feet in 2011.
Retail markets
Retail vacancy rates are expected to slip from 13.0 percent in the first quarter of this year to 12.9 percent in the first quarter of 2012.
Markets with the lowest retail vacancy rates currently include San Francisco; Miami; Honolulu; and Long Island, N.Y., all with vacancies in the 7 to 8 percent range.
Average retail rent is seen to decline 0.9 percent in 2011, then rising 0.7 percent next year. Net absorption of retail space in 53 tracked markets is projected to be 4.8 million in 2011.
Multifamily markets
The apartment rental market – multifamily housing – is tightening as the economy improves. Multifamily vacancy rates are forecast to decline from 5.8 percent in the current quarter to 4.9 percent in the first quarter of 2012.
Areas with the lowest multifamily vacancy rates presently are San Jose, Calif.; Pittsburgh; and Newark, N.J, with vacancies in a range around 3 percent.
Multifamily net absorption should be 207,000 units in 59 tracked metro areas in 2011.
The NAR Research Division publishes the Commercial Real Estate Outlook for the commercial community. NAR’s Commercial Division, formed in 1990, provides targeted products and services to meet the needs of the commercial market and constituency within NAR.
The NAR commercial components include commercial members; commercial committees, subcommittees and forums; commercial real estate boards and structures; and the NAR commercial affiliate organizations – CCIM Institute, Institute of Real Estate Management, Realtors Land Institute, Society of Industrial and Office Realtors, and Counselors of Real Estate.
Approximately 79,000 NAR and institute affiliate members specialize in commercial brokerage services, and an additional 263,000 members offer commercial real estate as a secondary business.
Source: Florida Realtors®
Lawrence Yun, NAR chief economist, said a pullback in construction is helping stabilize the market. “Very limited construction of new commercial real estate over the past few years has essentially fixed the supply of available space,” he said. “This means vacancy rates could fall quickly from any increase in demand for commercial space.”
From the first quarter of this year to the first quarter of 2012, NAR expects vacancy rates to decline 0.5 percentage point in the office sector, 1.3 points in industrial real estate, 0.1 point in the retail sector and 0.9 percentage point in the multifamily rental market.
“Even with declining vacancy rates, rents are not likely to turn positive in most markets until next year, outside of multifamily rental properties,” Yun said. For example, office rents are forecast to fall 1.8 percent this year before turning higher by 4.0 percent in 2012.
“Apartment rent increases are expected to accelerate from job creation leading to new household formation, particularly among the young adult population who will seek their own housing arrangements – many will be leaving their parents’ homes or choose to live with fewer roommates,” Yun said.
Average apartment rent is projected to grow 3.4 percent this year and another 4.2 percent in 2012.
“Rising apartment rent in combination with rising oil prices could push the overall inflation rate beyond a comfort level, which could then force the Federal Reserve to raise interest rates later this year or early in 2012,” Yun added.
The Society of Industrial and Office Realtors in its SIOR Commercial Real Estate Index, an attitudinal survey of more than 360 local market experts1, shows a notable improvement in market fundamentals. The SIOR index, measuring the impact of 10 variables, rose 8.1 percentage points to 50.7 in the fourth quarter, the largest quarterly gain in five years, and is at the highest level since the fall of 2008. However, the index is well below a level of 100 that represents a balanced marketplace. This is the fifth consecutive quarterly improvement following nearly three years of decline, but the last time the index was at the 100 level was in the third quarter of 2007.
Seventy-eight percent of SIOR participants expect improvements in the office and industrial sectors for the first quarter of this year.
There has been an increase of liquidity in Commercial Mortgage Backed Securities, which is helping to open the commercial market to more property transactions; commercial real estate sales had been stalled over the past few years with excessively tight credit conditions. In terms of development acquisitions, it remains a buyer’s market for those with cash or who can obtain credit financing.
NAR’s latest Commercial Real Estate Outlook offers projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. CBRE Econometric Advisors provided historic data.
Office markets
Vacancy rates in the office sector are forecast to decline from 16.5 percent in the first quarter of this year to 16.0 percent in the first quarter of 2012.
The markets with the lowest office vacancy rates currently are New York City and Honolulu, with vacancies in the 8 to 9 percent range.
In 57 markets tracked, net absorption of office space, which includes the leasing of new space coming on the market as well as space in existing properties, should be 14.5 million square feet in 2011.
Industrial markets
Industrial vacancy rates are projected to decline from 14.2 percent in the current quarter to 12.9 percent in the first quarter of 2012.
At present, the areas with the lowest industrial vacancy rates are Los Angeles and Salt Lake City, with vacancies of 7.5 percent.
Annual industrial rent is likely to decline 2.5 percent in 2011, before rising 3.0 percent next year. Net absorption of industrial space in 58 markets tracked should be 127.5 million square feet in 2011.
Retail markets
Retail vacancy rates are expected to slip from 13.0 percent in the first quarter of this year to 12.9 percent in the first quarter of 2012.
Markets with the lowest retail vacancy rates currently include San Francisco; Miami; Honolulu; and Long Island, N.Y., all with vacancies in the 7 to 8 percent range.
Average retail rent is seen to decline 0.9 percent in 2011, then rising 0.7 percent next year. Net absorption of retail space in 53 tracked markets is projected to be 4.8 million in 2011.
Multifamily markets
The apartment rental market – multifamily housing – is tightening as the economy improves. Multifamily vacancy rates are forecast to decline from 5.8 percent in the current quarter to 4.9 percent in the first quarter of 2012.
Areas with the lowest multifamily vacancy rates presently are San Jose, Calif.; Pittsburgh; and Newark, N.J, with vacancies in a range around 3 percent.
Multifamily net absorption should be 207,000 units in 59 tracked metro areas in 2011.
The NAR Research Division publishes the Commercial Real Estate Outlook for the commercial community. NAR’s Commercial Division, formed in 1990, provides targeted products and services to meet the needs of the commercial market and constituency within NAR.
The NAR commercial components include commercial members; commercial committees, subcommittees and forums; commercial real estate boards and structures; and the NAR commercial affiliate organizations – CCIM Institute, Institute of Real Estate Management, Realtors Land Institute, Society of Industrial and Office Realtors, and Counselors of Real Estate.
Approximately 79,000 NAR and institute affiliate members specialize in commercial brokerage services, and an additional 263,000 members offer commercial real estate as a secondary business.
Source: Florida Realtors®
Average rate on 30-year mortgage dips to 4.95%
The average rate on the 30-year fixed mortgage fell below 5 percent this week, as investors sought more Treasury notes amid growing tension in the Middle East.
Freddie Mac said Thursday that the average rate on the 30-year loan slipped to 4.95 percent from 5 percent. It hit a 40-year low of 4.17 percent in November.
The average rate on the 15-year fixed home loan fell to 4.22 percent from 4.27 percent. It reached 3.57 percent in November, the lowest level on records dating back to 1991.
Mortgage rates tend to track the yield on the 10-year Treasury note. It fell this week as investors shifted money out of stocks and into safer assets amid escalating violence in Libya.
Even though rates are two-thirds to three-quarters of a percentage point higher than their lows just three months ago, they remain at historically low levels.
Still, rates have done little to boost the housing market. Buyers are reluctant to purchase because of high foreclosures, tight lending standards, job concerns and expectations that home values will continue to fall.
New-home sales tumbled 12.6 percent last month, the Commerce Department said Thursday. Sales of previously owned homes edged up in January but remained at a weak pace, the National Association of Realtors said Wednesday.
Foreclosures continue to depress the market and weigh on prices. They represented 37 percent of all previously owned home sales in January and all-cash buyers made up nearly a third of those sales, NAR said. First-time homebuyers, who traditionally make up 40 percent of the market, represented only 29 percent of all sales.
To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.
The average rate on a five-year adjustable-rate mortgage fell to 3.80 percent from 3.87 percent. The five-year hit 3.25 percent last month, the lowest rate on records dating back to January 2005.
The average rate on one-year adjustable-rate home loans edged up to 3.40 percent from 3.39 percent.
The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for the 30-year fixed loan, the five-year ARM and the 1-year ARM in Freddie Mac’s survey was 0.6 point. The average fee for the 15-year fixed loan was 0.7 point.
Source: The Associated Press, Janna Herron (AP Real Estate Writer). All rights reserved.
Freddie Mac said Thursday that the average rate on the 30-year loan slipped to 4.95 percent from 5 percent. It hit a 40-year low of 4.17 percent in November.
The average rate on the 15-year fixed home loan fell to 4.22 percent from 4.27 percent. It reached 3.57 percent in November, the lowest level on records dating back to 1991.
Mortgage rates tend to track the yield on the 10-year Treasury note. It fell this week as investors shifted money out of stocks and into safer assets amid escalating violence in Libya.
Even though rates are two-thirds to three-quarters of a percentage point higher than their lows just three months ago, they remain at historically low levels.
Still, rates have done little to boost the housing market. Buyers are reluctant to purchase because of high foreclosures, tight lending standards, job concerns and expectations that home values will continue to fall.
New-home sales tumbled 12.6 percent last month, the Commerce Department said Thursday. Sales of previously owned homes edged up in January but remained at a weak pace, the National Association of Realtors said Wednesday.
Foreclosures continue to depress the market and weigh on prices. They represented 37 percent of all previously owned home sales in January and all-cash buyers made up nearly a third of those sales, NAR said. First-time homebuyers, who traditionally make up 40 percent of the market, represented only 29 percent of all sales.
To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.
The average rate on a five-year adjustable-rate mortgage fell to 3.80 percent from 3.87 percent. The five-year hit 3.25 percent last month, the lowest rate on records dating back to January 2005.
The average rate on one-year adjustable-rate home loans edged up to 3.40 percent from 3.39 percent.
The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for the 30-year fixed loan, the five-year ARM and the 1-year ARM in Freddie Mac’s survey was 0.6 point. The average fee for the 15-year fixed loan was 0.7 point.
Source: The Associated Press, Janna Herron (AP Real Estate Writer). All rights reserved.
Report: Lenders requiring heftier down payments on homes
During the housing boom, it was easy for buyers to get in over their heads. The government pushed for homeownership, and nearly anyone could get a mortgage with no money down – and they didn’t even have to prove they could pay it back.
We know how that ended. And now lenders say ‘no more.’
The median down payment required by lenders swelled to 20 percent late last year on conventional loans in the Tampa-St. Petersburg-Clearwater metro area, according to Zillow.com. Compare that to 5 percent in 2007.
As home prices continue to fall, lenders want homebuyers to plunk down larger down payments to help offset the bank’s risk.
Even as median down payments have risen, some buyers are still being approved for conventional loans with as little as 3 percent down, said Shawn Miller, a mortgage broker with VanDyk Mortgage in Tampa.
But that may change soon. The Obama administration said earlier this month it wants to raise down payments to a minimum of 10 percent on conventional loans.
Michael Kelley, a financial advisor who recently bought his first home, said he agrees buyers should “have more skin in the game.” However, he thinks most buyers couldn’t afford to put 20 percent down.
Kelley and his wife, Sarah, originally planned to put down 20 percent so they would have enough equity to avoid mortgage insurance. But they decided instead to go with a 15-percent down payment so they could keep an emergency fund.
“We were trying to make sure we had enough money available so that if something arises, and it always does, we can take care of it,” Kelley said.
Many of those now in foreclosure put little to no money down during the housing boom. Some think homeowners will be less likely to get in over their heads if they have to save more money to buy a home. They may also be less likely to walk away, lenders say, if they have more to lose.
That may be true, Miller said. Dramatically raising rate requirements could “crush” the area’s real estate market recovery.
Buyers won’t be able to afford as high of a home price, he said. That could push home prices down further. Others will stay out of the market.
“I do understand the thinking of wanting buyers to have more skin in the game,” Miller said. “But probably 80 to 90 percent of my buyers are putting down as little money as possible.” In this economy, Miller said, even buyers who have the money to put down seek out loans with lower down payments.
That was the case with the Kelleys. If required to put down 20 percent, Kelley said they would have waited.
“That would have pushed our finances beyond where we wanted to be,” he said.
Even though the changes could hinder the recovery in the short term, the market will be better off with larger down payments, said Stan Humphries, chief economist at Zillow.
“We’re getting back to where we were in the 1990s,” Humphries said. “The housing boom rates were an anomaly.”
The increases have buyers turning to non-conventional loans, such as FHA and VA, which require less money down. Typically, however, there are downsides to those types of loans, including higher fees and higher interest rates.
Those flocking to these loans may soon have to put more down, too. The federal government has called for a gradual rise in down payment requirements for these loans.
As of late last year, 43 percent of all borrowers in the Tampa metro took out FHA loans, Zillow data show. That’s up from 3 percent during the heat of the housing boom in 2005.
“About 50 percent of my business is FHA right now,” said Jane Floyd of Diversified Home Mortgage.
Requiring more money down won’t just impact first-time buyers, Floyd said. Move-up buyers who can’t come up with a large down payment but have good credit have been opting for FHA loans, she said. But those loans have home price limits of just under $300,000.
“People are much more conservative than they used to be,” Floyd said. “If they have to put that much more cash down, they just might wait to buy or buy something less expensive.”
Source: Tampa Tribune, Fla., Shannon Behnken. Distributed by McClatchy-Tribune Information Services.
We know how that ended. And now lenders say ‘no more.’
The median down payment required by lenders swelled to 20 percent late last year on conventional loans in the Tampa-St. Petersburg-Clearwater metro area, according to Zillow.com. Compare that to 5 percent in 2007.
As home prices continue to fall, lenders want homebuyers to plunk down larger down payments to help offset the bank’s risk.
Even as median down payments have risen, some buyers are still being approved for conventional loans with as little as 3 percent down, said Shawn Miller, a mortgage broker with VanDyk Mortgage in Tampa.
But that may change soon. The Obama administration said earlier this month it wants to raise down payments to a minimum of 10 percent on conventional loans.
Michael Kelley, a financial advisor who recently bought his first home, said he agrees buyers should “have more skin in the game.” However, he thinks most buyers couldn’t afford to put 20 percent down.
Kelley and his wife, Sarah, originally planned to put down 20 percent so they would have enough equity to avoid mortgage insurance. But they decided instead to go with a 15-percent down payment so they could keep an emergency fund.
“We were trying to make sure we had enough money available so that if something arises, and it always does, we can take care of it,” Kelley said.
Many of those now in foreclosure put little to no money down during the housing boom. Some think homeowners will be less likely to get in over their heads if they have to save more money to buy a home. They may also be less likely to walk away, lenders say, if they have more to lose.
That may be true, Miller said. Dramatically raising rate requirements could “crush” the area’s real estate market recovery.
Buyers won’t be able to afford as high of a home price, he said. That could push home prices down further. Others will stay out of the market.
“I do understand the thinking of wanting buyers to have more skin in the game,” Miller said. “But probably 80 to 90 percent of my buyers are putting down as little money as possible.” In this economy, Miller said, even buyers who have the money to put down seek out loans with lower down payments.
That was the case with the Kelleys. If required to put down 20 percent, Kelley said they would have waited.
“That would have pushed our finances beyond where we wanted to be,” he said.
Even though the changes could hinder the recovery in the short term, the market will be better off with larger down payments, said Stan Humphries, chief economist at Zillow.
“We’re getting back to where we were in the 1990s,” Humphries said. “The housing boom rates were an anomaly.”
The increases have buyers turning to non-conventional loans, such as FHA and VA, which require less money down. Typically, however, there are downsides to those types of loans, including higher fees and higher interest rates.
Those flocking to these loans may soon have to put more down, too. The federal government has called for a gradual rise in down payment requirements for these loans.
As of late last year, 43 percent of all borrowers in the Tampa metro took out FHA loans, Zillow data show. That’s up from 3 percent during the heat of the housing boom in 2005.
“About 50 percent of my business is FHA right now,” said Jane Floyd of Diversified Home Mortgage.
Requiring more money down won’t just impact first-time buyers, Floyd said. Move-up buyers who can’t come up with a large down payment but have good credit have been opting for FHA loans, she said. But those loans have home price limits of just under $300,000.
“People are much more conservative than they used to be,” Floyd said. “If they have to put that much more cash down, they just might wait to buy or buy something less expensive.”
Source: Tampa Tribune, Fla., Shannon Behnken. Distributed by McClatchy-Tribune Information Services.
Homeowners Willing to Tackle Remodeling Projects
Homeowners who put off renovations during the recession are thinking about spending money on their properties again.
Take Barbara Moreno and Robert Ptaszynski of Washington Township, N.J., who delayed plans to add a second story to their ranch house when the recession hit their industries—automobiles and title insurance—hard.
Now they’re ready to move forward, because they feel more confident about the economy. “Things seem to be—knock on wood—settling down a little bit,” Ptaszynski said this week at the Home Show in Secaucus, N.J.
Contractors said that customers seem willing to spend again—but cautiously.
“People have been procrastinating for almost three years now,” said Joe Tighe of Complete Roof Systems in Dumont, N.J. During the recent economic hard times, homeowners were more likely to ask about patching and repairing, rather than replacing, their roofs. But now, they seem more willing to tackle the big jobs, he said. “The general mood I get from people is that they’re ready to spend money again,” Tighe said.
After homeowners slashed their spending during the recession, housing analysts say the remodeling industry is poised for a bit of a revival. According to the Joint Center for Housing Studies at Harvard, spending on remodeling is expected to rise 4-6% this year, as long as the job market and economy continue to recover.
“We don’t expect spending to rebound to the heights that we saw during the housing boom; that was unsustainable,” said Abbe Will, an analyst at the Harvard center. “But we’re in a better place now than we were a year ago. As long as the economy continues to improve, homeowners will have more confidence and be more willing to use their savings to make improvements that they’ve likely been putting off for a couple of years.”
Tax credits for energy-efficient improvements will also help buoy the market, said Will. And buyers who move into foreclosed properties over the next several years will probably have to spend significant amounts on home improvements, because those properties are typically neglected.
Ray Engel of Sierra Landscape Design and Garden Center in Wanaque said he was approached at the home show by several people who said they had bought foreclosed homes and need to update the landscaping.
But it’s clear that homeowners continue to watch their budgets. “Everybody’s looking for a better deal,” said Gary Townsend of The Kitchen Guy in Little Falls.
Homeowners interviewed at the at the home show, which ran for three days at the Meadowlands Exposition Center, want to make sure their homes work right, not spend tens of thousands on luxury upgrades. Janice Campbell of Cliffside Park, for example, wants to renovate her bathroom because the tub is leaking.
“It needs to be done, but it doesn’t mean I go overboard,” said Campbell, who is retired. “It has to fit within the budget.”
Similarly, Sharon and David Berger of Teaneck are considering a renovation of their main bathroom, which is original to their 1950s split level, because the shower isn’t working properly. “What I’m doing now is getting an idea of what things cost,” said Sharon, who runs a promotional advertising business. “I’m not jumping to spend. I’m not convinced that the economy is where it needs to be for me to consider spending money like this.”
Several of the contractors at the show said they are benefiting from homeowners’ thrift. Lucia Portali Waters of Fabu Designs by Lucia in Hasbrouck Heights said that when times were good, affluent homeowners hired her to paint murals and apply decorative wall and ceiling finishes.
Recently, however, she’s been painting and refinishing furniture and kitchen cabinets for customers who want to be practical and save money. “They don’t want to rip out their cabinets,” she said. “They’re not replacing; they’re refinishing.”
James Saluzzi of Emerson Construction Corp. in Emerson said he’s seen the same thing. He worked recently on updating a kitchen in Old Tappan, where the homeowner had the walls painted, the cabinets refinished and a new backsplash installed. “Five years ago, he would have ripped the whole thing out,” Saluzzi said.
Source: RISMedia
Take Barbara Moreno and Robert Ptaszynski of Washington Township, N.J., who delayed plans to add a second story to their ranch house when the recession hit their industries—automobiles and title insurance—hard.
Now they’re ready to move forward, because they feel more confident about the economy. “Things seem to be—knock on wood—settling down a little bit,” Ptaszynski said this week at the Home Show in Secaucus, N.J.
Contractors said that customers seem willing to spend again—but cautiously.
“People have been procrastinating for almost three years now,” said Joe Tighe of Complete Roof Systems in Dumont, N.J. During the recent economic hard times, homeowners were more likely to ask about patching and repairing, rather than replacing, their roofs. But now, they seem more willing to tackle the big jobs, he said. “The general mood I get from people is that they’re ready to spend money again,” Tighe said.
After homeowners slashed their spending during the recession, housing analysts say the remodeling industry is poised for a bit of a revival. According to the Joint Center for Housing Studies at Harvard, spending on remodeling is expected to rise 4-6% this year, as long as the job market and economy continue to recover.
“We don’t expect spending to rebound to the heights that we saw during the housing boom; that was unsustainable,” said Abbe Will, an analyst at the Harvard center. “But we’re in a better place now than we were a year ago. As long as the economy continues to improve, homeowners will have more confidence and be more willing to use their savings to make improvements that they’ve likely been putting off for a couple of years.”
Tax credits for energy-efficient improvements will also help buoy the market, said Will. And buyers who move into foreclosed properties over the next several years will probably have to spend significant amounts on home improvements, because those properties are typically neglected.
Ray Engel of Sierra Landscape Design and Garden Center in Wanaque said he was approached at the home show by several people who said they had bought foreclosed homes and need to update the landscaping.
But it’s clear that homeowners continue to watch their budgets. “Everybody’s looking for a better deal,” said Gary Townsend of The Kitchen Guy in Little Falls.
Homeowners interviewed at the at the home show, which ran for three days at the Meadowlands Exposition Center, want to make sure their homes work right, not spend tens of thousands on luxury upgrades. Janice Campbell of Cliffside Park, for example, wants to renovate her bathroom because the tub is leaking.
“It needs to be done, but it doesn’t mean I go overboard,” said Campbell, who is retired. “It has to fit within the budget.”
Similarly, Sharon and David Berger of Teaneck are considering a renovation of their main bathroom, which is original to their 1950s split level, because the shower isn’t working properly. “What I’m doing now is getting an idea of what things cost,” said Sharon, who runs a promotional advertising business. “I’m not jumping to spend. I’m not convinced that the economy is where it needs to be for me to consider spending money like this.”
Several of the contractors at the show said they are benefiting from homeowners’ thrift. Lucia Portali Waters of Fabu Designs by Lucia in Hasbrouck Heights said that when times were good, affluent homeowners hired her to paint murals and apply decorative wall and ceiling finishes.
Recently, however, she’s been painting and refinishing furniture and kitchen cabinets for customers who want to be practical and save money. “They don’t want to rip out their cabinets,” she said. “They’re not replacing; they’re refinishing.”
James Saluzzi of Emerson Construction Corp. in Emerson said he’s seen the same thing. He worked recently on updating a kitchen in Old Tappan, where the homeowner had the walls painted, the cabinets refinished and a new backsplash installed. “Five years ago, he would have ripped the whole thing out,” Saluzzi said.
Source: RISMedia
Thursday, February 24, 2011
Survey: Sellers Fare Better With Agents
Sellers have a better chance at getting their house sold by using a REALTOR® than opting for the do-it-yourself approach, according to a survey of 1,000 home owners by HomeGain.com, an online real estate resource. Nearly 60 percent of home owners who used a REALTOR® to sell their home were successful compared to 39 percent of FSBOs, the survey found.
In the survey, 83 percent of home owners said they used a REALTOR® to sell their home, whereas 17 percent said they tried to sell it themselves. This corresponds to results from NAR's 2010 Profile of Buyers & Sellers, which found 88 percent of sellers were assisted by a real estate agent. (Additionally, 83 percent of buyers bought their home through an agent.)
“It is especially striking that home owners fare significantly better in selling their homes using a REALTOR® than selling on their own,” says Louis Cammarosano, general manager at HomeGain. “Due to that relative success, the level of satisfaction in the home selling process is also higher for home sellers utilizing the services of a REALTOR® than those who try to sell their homes on their own.”
Among the findings in its For Sale by Owner vs. REALTOR® survey:
88 percent of home owners who sold their homes using a REALTOR® said they would use a REALTOR® again.
24 percent of FSBOs eventually contacted a REALTOR® to help sell their home.
Source: “HomeGain Survey Finds Home Sellers Fare 50% Better in Getting Their Homes Sold Using a REALTOR® Than Selling on Their Own,” HomeGain.com (Feb. 24, 2011)
In the survey, 83 percent of home owners said they used a REALTOR® to sell their home, whereas 17 percent said they tried to sell it themselves. This corresponds to results from NAR's 2010 Profile of Buyers & Sellers, which found 88 percent of sellers were assisted by a real estate agent. (Additionally, 83 percent of buyers bought their home through an agent.)
“It is especially striking that home owners fare significantly better in selling their homes using a REALTOR® than selling on their own,” says Louis Cammarosano, general manager at HomeGain. “Due to that relative success, the level of satisfaction in the home selling process is also higher for home sellers utilizing the services of a REALTOR® than those who try to sell their homes on their own.”
Among the findings in its For Sale by Owner vs. REALTOR® survey:
88 percent of home owners who sold their homes using a REALTOR® said they would use a REALTOR® again.
24 percent of FSBOs eventually contacted a REALTOR® to help sell their home.
Source: “HomeGain Survey Finds Home Sellers Fare 50% Better in Getting Their Homes Sold Using a REALTOR® Than Selling on Their Own,” HomeGain.com (Feb. 24, 2011)
Experian adds rent payments to credit report
The Experian consumer credit reporting firm has added rent payment histories to its reports.
Costa Mesa, Calif.-based Experian recently acquired RentBureau and is including rental payment data into its traditional credit file. It makes it easier for college students, recent graduates and immigrants who pay their rent on time to boost their credit scores.
Credit reports have previously included credit card, mortgage, loan and finance company account information.
The Los Angeles Times reports the RentBureau database receives rental payment histories daily from a limited number of property managers. Its records include about eight million of the nation’s nearly 38 million rental units.
Source: The Associated Press. All rights reserved.
Costa Mesa, Calif.-based Experian recently acquired RentBureau and is including rental payment data into its traditional credit file. It makes it easier for college students, recent graduates and immigrants who pay their rent on time to boost their credit scores.
Credit reports have previously included credit card, mortgage, loan and finance company account information.
The Los Angeles Times reports the RentBureau database receives rental payment histories daily from a limited number of property managers. Its records include about eight million of the nation’s nearly 38 million rental units.
Source: The Associated Press. All rights reserved.
New-home sales decline 12.6% in January
Sales of newly built, single-family homes declined 12.6 percent to a seasonally adjusted, annual rate of 284,000 units in January, according to figures from the U.S. Commerce Department. The decline largely offsets a big gain in sales activity recorded in the previous month, but the National Association of Home Builders (NAHB) says the drop can be blamed, in part, on an expiring tax break in California.
“While poor weather conditions likely played a part in keeping potential buyers on the sidelines this January, we do expect consumer demand to improve somewhat along with job-market gains heading into the spring buying season,” says Bob Nielsen, chairman of NAHB. “However, with the already-thin inventory of new homes for sale continuing to decline and the consistent unavailability of construction credit, the question is whether builders will be able to meet the improving demand as it emerges.”
Regionally, new-home sales declined 12.8 percent in the South and 36.5 percent in the West, but gained 54.5 percent from a very low number in the Northeast and rose 17.1 percent in the Midwest this January.
Meanwhile, the inventory of new homes for sale continued to edge downward by 0.5 percent to 188,000 units in January. This amounts to a 7.9-month supply at the current sales pace.
“This latest report shows new-home sales activity returning to a rate that is consistent with the low level of activity seen in the third and fourth quarters of 2010,” says NAHB Chief Economist David Crowe. “Builders are clearly facing a competitive disadvantage with regard to the large inventory of existing homes at a time when they are unable to replenish their own inventories due to a lack of available financing.”
Source: Florida Realtors®
“While poor weather conditions likely played a part in keeping potential buyers on the sidelines this January, we do expect consumer demand to improve somewhat along with job-market gains heading into the spring buying season,” says Bob Nielsen, chairman of NAHB. “However, with the already-thin inventory of new homes for sale continuing to decline and the consistent unavailability of construction credit, the question is whether builders will be able to meet the improving demand as it emerges.”
Regionally, new-home sales declined 12.8 percent in the South and 36.5 percent in the West, but gained 54.5 percent from a very low number in the Northeast and rose 17.1 percent in the Midwest this January.
Meanwhile, the inventory of new homes for sale continued to edge downward by 0.5 percent to 188,000 units in January. This amounts to a 7.9-month supply at the current sales pace.
“This latest report shows new-home sales activity returning to a rate that is consistent with the low level of activity seen in the third and fourth quarters of 2010,” says NAHB Chief Economist David Crowe. “Builders are clearly facing a competitive disadvantage with regard to the large inventory of existing homes at a time when they are unable to replenish their own inventories due to a lack of available financing.”
Source: Florida Realtors®
Wednesday, February 23, 2011
Floridians still confident about economy for second month
Consumer confidence among Floridians remained at 77 out of 100 in February, suggesting a sustainable and improved view of the economy, according to a new University of Florida (UF) survey.
The index rose seven points last month, an unexpected increase according to Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research, considering the economic climate in Florida. However, he considers it noteworthy that the index didn’t change dramatically this month.
“We had expected a correction to last month’s seven-point increase in consumer confidence,” says McCarty. “A second month at this high level makes it much less likely that the increase for January was an aberration and more likely that consumers view the economy and their personal economic situation as having improved.”
McCarty said several factors contribute to Floridians’ increased optimism, and at the top of the list is the bull market in stocks that is lifting portfolios. Another factor, McCarty says, is that people nearing retirement age whose 401(k) accounts were almost halved by the recession have mostly recovered those losses.
Work wages have shown steady improvement and the stimulus agreement, passed by Congress at the end of 2010, is now appearing in workers’ paychecks, increasing optimism about personal finances. Inflation remains in check, McCarty says, but high inflation could resurface by summer. Gas prices have risen again and expected to keep rising, as are prices for basic food items like wheat and corn.
“At 77, the index represents a dramatic improvement over consumer confidence for the past three years,” McCarty says. “The one exception was April 2010, when a confluence of tax rebates artificially lifted confidence. It fell in the following months as those programs ended and the Gulf oil spill raised pessimism. This month, the sustained higher level of confidence is more broadly based and is an indicator that consumers are seeing some stability in the overall economy.”
Among the five components that make up the index, four increased or remained the same. Confidence in purchasing big-ticket items such as cars and appliances had the largest gain, rising three points to 88, and perceptions of U.S. economic conditions over the next year rose two points to 79. Perceptions of U.S. economic conditions over the next five years (81) and perceptions of personal financial situation now compared to a year ago (58) were unchanged.
The only component to decrease this past month was perceptions of personal finances expected a year from now, which dipped three points to 81.
There is also some good news for the unemployed. The national unemployment rate declined from 9.4 percent to 9 percent in January as several major national and international firms such as Google and The Home Depot announced intentions to hire. Florida’s unemployment rate for January won’t be available until March 10, but McCarty hopes the state will see a decline in unemployment as well.
McCarty says housing prices have still shown some declines, but it appears that prices for single-family homes are bottoming out.
The research center conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for February was collected from 439 responses.
Source: Florida Realtors®
The index rose seven points last month, an unexpected increase according to Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research, considering the economic climate in Florida. However, he considers it noteworthy that the index didn’t change dramatically this month.
“We had expected a correction to last month’s seven-point increase in consumer confidence,” says McCarty. “A second month at this high level makes it much less likely that the increase for January was an aberration and more likely that consumers view the economy and their personal economic situation as having improved.”
McCarty said several factors contribute to Floridians’ increased optimism, and at the top of the list is the bull market in stocks that is lifting portfolios. Another factor, McCarty says, is that people nearing retirement age whose 401(k) accounts were almost halved by the recession have mostly recovered those losses.
Work wages have shown steady improvement and the stimulus agreement, passed by Congress at the end of 2010, is now appearing in workers’ paychecks, increasing optimism about personal finances. Inflation remains in check, McCarty says, but high inflation could resurface by summer. Gas prices have risen again and expected to keep rising, as are prices for basic food items like wheat and corn.
“At 77, the index represents a dramatic improvement over consumer confidence for the past three years,” McCarty says. “The one exception was April 2010, when a confluence of tax rebates artificially lifted confidence. It fell in the following months as those programs ended and the Gulf oil spill raised pessimism. This month, the sustained higher level of confidence is more broadly based and is an indicator that consumers are seeing some stability in the overall economy.”
Among the five components that make up the index, four increased or remained the same. Confidence in purchasing big-ticket items such as cars and appliances had the largest gain, rising three points to 88, and perceptions of U.S. economic conditions over the next year rose two points to 79. Perceptions of U.S. economic conditions over the next five years (81) and perceptions of personal financial situation now compared to a year ago (58) were unchanged.
The only component to decrease this past month was perceptions of personal finances expected a year from now, which dipped three points to 81.
There is also some good news for the unemployed. The national unemployment rate declined from 9.4 percent to 9 percent in January as several major national and international firms such as Google and The Home Depot announced intentions to hire. Florida’s unemployment rate for January won’t be available until March 10, but McCarty hopes the state will see a decline in unemployment as well.
McCarty says housing prices have still shown some declines, but it appears that prices for single-family homes are bottoming out.
The research center conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for February was collected from 439 responses.
Source: Florida Realtors®
Is luxury making a comeback?
Uber-rich Americans are spending again, on everything from fancy cars to second homes.
“Personal embracement of luxury is now back to (pre-recession) 2007 levels,” marketing specialist Jim Taylor, author of “Selling to the New Elite,” told USA Today. “We’re seeing that in cars, private jet usage and finally, in high-end real estate. There’s a real change in the way people feel about money. They’re making purchases they put off during the recession.”
For example, second-home markets are on the rise: Vacation homes in Cape Cod, Mass., for example, increased 9 percent in 2010. In Palm Beach, Fla., home sales increased nearly 40 percent, and in Hilton Head, S.C., home sales were up nearly 14 percent. Luxury home sales in Southern California are also beginning to pick up, analysts say.
“We’re starting to see movement,” says Madison Hildebrand, a real estate professional who specializes in selling homes in Southern California, and also star of the Bravo’s “Million Dollar Listing” reality show. “People are more confident.”
Analysts also note that when the wealthy start buying, it often has a trickle down effect among middle and upper-income shoppers too.
Source: INFORMATION, INC. Bethesda, MD
“Personal embracement of luxury is now back to (pre-recession) 2007 levels,” marketing specialist Jim Taylor, author of “Selling to the New Elite,” told USA Today. “We’re seeing that in cars, private jet usage and finally, in high-end real estate. There’s a real change in the way people feel about money. They’re making purchases they put off during the recession.”
For example, second-home markets are on the rise: Vacation homes in Cape Cod, Mass., for example, increased 9 percent in 2010. In Palm Beach, Fla., home sales increased nearly 40 percent, and in Hilton Head, S.C., home sales were up nearly 14 percent. Luxury home sales in Southern California are also beginning to pick up, analysts say.
“We’re starting to see movement,” says Madison Hildebrand, a real estate professional who specializes in selling homes in Southern California, and also star of the Bravo’s “Million Dollar Listing” reality show. “People are more confident.”
Analysts also note that when the wealthy start buying, it often has a trickle down effect among middle and upper-income shoppers too.
Source: INFORMATION, INC. Bethesda, MD
Florida’s existing home, condo sales up in January
Florida’s existing home and existing condo sales rose in January, according to the latest housing data released by Florida Realtors®. Existing home sales increased 14 percent last month with a total of 12,151 homes sold statewide compared to 10,702 homes sold in January 2010, according to Florida Realtors. January’s statewide sales of existing condos rose 36 percent compared to the previous year’s sales figure.
Seventeen of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales in January; 16 MSAs had higher condo sales.
“Now is a great time for anyone thinking of buying a home in Florida to make that decision,” said 2011 Florida Realtors® President Patricia Fitzgerald, manager/broker-associate with Illustrated Properties in Hobe Sound and Mariner Sands Country Club in Stuart. “Mortgage rates are historically low, although they are beginning to tick up slightly as the economy shows signs of strengthening. Conditions remain very favorable for buyers, with a range of housing inventory and attractive prices.
“Homebuyers soon will have the opportunity to visit a number of open houses in their preferred locales all in a single weekend, as part of the second annual Florida Open House Weekend, March 26-27, 2011! From the Keys to the Panhandle, Realtors across Florida are participating in this statewide open house event sponsored by Florida Realtors. Consult a local Realtor® about Florida Open House Weekend, and find out more about qualification criteria and opportunities in your local housing market.”
Florida’s median sales price for existing homes last month was $122,200; a year ago, it was $131,000 for a 7 percent decrease. Analysts with the National Association of Realtors (NAR) note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.
The national median sales price for existing single-family homes in December 2010 was $169,300, down 0.2 percent from a year ago, according to NAR. In California, the statewide median resales price was $301,850 in December 2010; in Massachusetts, it was $285,950; in Maryland, it was $240,000; and in New York, it was $225,000.
According to NAR’s latest outlook, improving economic conditions and strong affordability are positive factors for the coming months. “Modest gains in the labor market and the improving economy are creating a more favorable backdrop for buyers, allowing them to take advantage of excellent housing affordability conditions,” said NAR Chief Economist Lawrence Yun. “Mortgage rates should rise only modestly in the months ahead, so we’ll continue to see a favorable environment for buyers with good credit.”
In Florida’s year-to-year comparison for condos, 6,681 units sold statewide last month compared to 4,916 units in January 2010 for an increase of 36 percent. The statewide existing condo median sales price last month was $79,400; in January 2010 it was $97,000 for an 18 percent decrease. The national median existing condo price was $165,000 in December 2010, according to NAR.
The interest rate for a 30-year fixed-rate mortgage averaged 4.76 percent in January, down from the 5.03 percent average during the same month a year earlier, according to Freddie Mac. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Source: Florida Realtors®
Seventeen of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales in January; 16 MSAs had higher condo sales.
“Now is a great time for anyone thinking of buying a home in Florida to make that decision,” said 2011 Florida Realtors® President Patricia Fitzgerald, manager/broker-associate with Illustrated Properties in Hobe Sound and Mariner Sands Country Club in Stuart. “Mortgage rates are historically low, although they are beginning to tick up slightly as the economy shows signs of strengthening. Conditions remain very favorable for buyers, with a range of housing inventory and attractive prices.
“Homebuyers soon will have the opportunity to visit a number of open houses in their preferred locales all in a single weekend, as part of the second annual Florida Open House Weekend, March 26-27, 2011! From the Keys to the Panhandle, Realtors across Florida are participating in this statewide open house event sponsored by Florida Realtors. Consult a local Realtor® about Florida Open House Weekend, and find out more about qualification criteria and opportunities in your local housing market.”
Florida’s median sales price for existing homes last month was $122,200; a year ago, it was $131,000 for a 7 percent decrease. Analysts with the National Association of Realtors (NAR) note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.
The national median sales price for existing single-family homes in December 2010 was $169,300, down 0.2 percent from a year ago, according to NAR. In California, the statewide median resales price was $301,850 in December 2010; in Massachusetts, it was $285,950; in Maryland, it was $240,000; and in New York, it was $225,000.
According to NAR’s latest outlook, improving economic conditions and strong affordability are positive factors for the coming months. “Modest gains in the labor market and the improving economy are creating a more favorable backdrop for buyers, allowing them to take advantage of excellent housing affordability conditions,” said NAR Chief Economist Lawrence Yun. “Mortgage rates should rise only modestly in the months ahead, so we’ll continue to see a favorable environment for buyers with good credit.”
In Florida’s year-to-year comparison for condos, 6,681 units sold statewide last month compared to 4,916 units in January 2010 for an increase of 36 percent. The statewide existing condo median sales price last month was $79,400; in January 2010 it was $97,000 for an 18 percent decrease. The national median existing condo price was $165,000 in December 2010, according to NAR.
The interest rate for a 30-year fixed-rate mortgage averaged 4.76 percent in January, down from the 5.03 percent average during the same month a year earlier, according to Freddie Mac. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Source: Florida Realtors®
Tuesday, February 22, 2011
Commercial: Markets see investor demand
Investor demand for commercial real estate is slowly starting to increase in select secondary and tertiary markets, but it will be some time before most markets see significant improvement in price or rental growth, according to the CCIM Institute and the Real Estate Research Corporation (RERC).
“With the higher prices being paid for institutional-grade properties in top-tier markets, the sales volume of lower-grade assets in secondary or tertiary markets is increasing,” said Frank Simpson, CCIM, the 2011 president of the CCIM Institute and president of The Simpson Company in Gainesville, Georgia. “While Class B investment opportunities exist in all property sectors and will become more prevalent throughout 2011, some markets are still seeing little or no transaction activity other than distressed property sales.”
CCIM and RERC caution that many characteristics of a trifurcated market will remain in 2011, as the division continues between the top-performing properties, distressed assets, and those properties in the middle.
“Properties are moving,” said Simpson. “What is disappointing is that aggregate prices for smaller size properties are still declining on a size-weighted basis, particularly in smaller markets. Some of this is due to distressed property sales bringing down the average prices. But it also means that demand is just not there yet for many properties – or at least not enough demand to drive up prices.”
The apartment sector reflects investment. Total volume increased approximately 30 percent in fourth quarter 2010 on a 12-month trailing basis and approximately 50 percent on a quarter-to-quarter basis.
Total volume for the office sector increased by more than 40 percent from the previous quarter on a 12-month trailing basis, the most of any property type. The increase in volume and price occurred for property transactions of $5 million and above, indicating that the improvement is concentrated primarily on larger office properties in the major markets.
“Although investors are gazing out into the risk horizon in the stock market, they are still looking for safety for certain allocations of their investment dollars,” said Ken Riggs, CCIM, president and CEO of RERC and the CCIM Institute’s chief real estate economist. “And commercial real estate – particularly the apartment sector– is generally safer than stocks.
“CCIM members are more optimistic on return versus risk and value versus price,” Riggs adds. “And although volume is up, particularly for larger properties, it’s disappointing that the aggregate price for smaller-size properties is not increasing significantly, particularly in small-town America.”
Source: Florida Realtors®
“With the higher prices being paid for institutional-grade properties in top-tier markets, the sales volume of lower-grade assets in secondary or tertiary markets is increasing,” said Frank Simpson, CCIM, the 2011 president of the CCIM Institute and president of The Simpson Company in Gainesville, Georgia. “While Class B investment opportunities exist in all property sectors and will become more prevalent throughout 2011, some markets are still seeing little or no transaction activity other than distressed property sales.”
CCIM and RERC caution that many characteristics of a trifurcated market will remain in 2011, as the division continues between the top-performing properties, distressed assets, and those properties in the middle.
“Properties are moving,” said Simpson. “What is disappointing is that aggregate prices for smaller size properties are still declining on a size-weighted basis, particularly in smaller markets. Some of this is due to distressed property sales bringing down the average prices. But it also means that demand is just not there yet for many properties – or at least not enough demand to drive up prices.”
The apartment sector reflects investment. Total volume increased approximately 30 percent in fourth quarter 2010 on a 12-month trailing basis and approximately 50 percent on a quarter-to-quarter basis.
Total volume for the office sector increased by more than 40 percent from the previous quarter on a 12-month trailing basis, the most of any property type. The increase in volume and price occurred for property transactions of $5 million and above, indicating that the improvement is concentrated primarily on larger office properties in the major markets.
“Although investors are gazing out into the risk horizon in the stock market, they are still looking for safety for certain allocations of their investment dollars,” said Ken Riggs, CCIM, president and CEO of RERC and the CCIM Institute’s chief real estate economist. “And commercial real estate – particularly the apartment sector– is generally safer than stocks.
“CCIM members are more optimistic on return versus risk and value versus price,” Riggs adds. “And although volume is up, particularly for larger properties, it’s disappointing that the aggregate price for smaller-size properties is not increasing significantly, particularly in small-town America.”
Source: Florida Realtors®
Brazilian buyers put the luxe in real estate
Fabiana Pimenta, a real estate agent for Fortune International, is sitting on a white leather sofa in the model apartment at Jade Ocean with the expansive ocean views and the Fendi decor, waiting to begin a tour of the Sunny Isles Beach building.
Pimenta, a Brazilian who moved to Florida to attend college, is entitled to a little breather. In January, she and her team, which includes her brother in Sao Paulo, sold 15 high-end South Florida condos – all to Brazilians.
At 2,100 square feet with three bedrooms and both ocean and city views, this is the type of unit that is particularly popular with Brazilian buyers, she says. Seven months ago, Pimenta sold the last Jade Ocean penthouse, a 5,000-square-foot unit, to a Brazilian for $4 million.
An ultra-wealthy crowd of Brazilian real estate buyers is creating a boomlet for local real estate agents and other businesses that cater to their tastes.
There have been so many Brazilian buyers at Jade Ocean that the touch-screen that unit owners use to summon the concierge, order food from the Epicure market across the street or schedule a spa appointment has been translated into Portuguese.
Also popular is the Casa Fendi package, complete with a platform bed, pillows, leather croc-embossed wall covering, sleek furnishings and lighting. Buyers can purchase it or another decor package, then come back in a few months to a totally equipped condominium.
“If I take potential buyers out, it’s rare that I don’t close a deal,’’ says Pimenta, whose specialty is the Brazilian market. “When they visit, they buy.’’
Maria Helena Abreu, who splits her time between Belo Horizonte and Brasilia where she works for the government, made her first trip to Miami in 10 years recently and she was on the hunt for a two or three-bedroom apartment.
Abreu, her husband Joao Batista and her daughter Isabel returned to Brazil last week without making a purchase, but they’re thinking seriously about a unit at Icon Brickell.
“Miami looks a lot like Rio,’’ says Abreu. “It has really developed since the last time I was here – for the better. It’s become a city I adore. The people are very friendly, the city is very beautiful, the beaches are great and the climate is wonderful.’’
Plus, she says, she has many Brazilian friends who have already bought condominiums here.
“Brazilians follow each other – the right crowd, the right families,’’ says Edgardo Defortuna, president and chief executive of Fortune International. About a quarter of the company’s new sales are to Brazilians.
Another thing the Brazilians like about South Florida is the sense of freedom and security they have. Many are used to having armored cars and bodyguards at home, say real estate agents, and they like to be able to work around Bal Harbour or SoBe without being recognized.
In addition to the beach, the climate and the shopping, interior designer Mirtha Arrarian says her clients like Miami’s location as a half-way point between South America and the art objects, antiques and fashion of European capitals.
These wealthy clients will fly in on their private jets just to celebrate a birthday. They like coming to the boat shows and taking in tennis matches at the Sony Ericsson Open. Art Basel is also a big draw.
It’s not unusual among her clients for a family to buy one unit for themselves and another for their kids or for their guests, she says.
Her high-end clients include entertainers, TV personalities, and entrepreneurs – mostly from Sao Paulo. “That’s where the money is,’’ says Arrarian, who runs MAS Interior Design.
Most of her Brazilian clients, she says, prefer the area of South Beach along South Pointe Dr. – the SoBe Riviera – and tend to buy units in the $7 million to $10 million range.
One client who recently bought a condominium there, she says, is eyeing a nearby vacant lot as an ideal site to build a tennis court, quarters for the servants and an area to park more cars.
As Arrarian talks, she also checks out the sophisticated offerings at Ornare, a Brazilian-owned kitchen, bath and closet showroom in Miami’s Design District.
“The dream of Brazilians is to have an Ornare closet,’’ says Arrarian who has just examined a selection of leather and bullhorn closet handles and matte lacquer closet doors. “Now they want to have them here too.’’
Claudio Faria, the director of Ornare’s Miami showroom, says the company works hard to cultivate the Brazil-Miami nexus. During Art Basel, for example, Ornare flew in 30 Brazilian architects.
As Faria, who is Brazilian, demonstrates a high-tech kitchen faucet set against a backsplash of rustic reclaimed wood, he says, “This is the exquisiteness of Brazilian design – the unexpected.’’
And he’s quite excited about the possibility of showcasing Brazilian design to not only the Brazilians buying real estate in Miami but also to the world.
“Brazil is an extraordinary country at an extraordinary moment,’’ he says. “For the first time Brazil has a real opportunity to present its style to the world. Now the world is watching us.’’
Investors also are taking advantage of the low real estate prices.
Brazilian businessman Ricardo Dunin moved to Miami 20 years ago when Brazil’s economy was going through a rough patch and he worried about security in his homeland. For a number of years, he made a good living here in real estate development but the real estate crash has meant a change in strategy.
While Dunin and his partners have more than 20 development projects underway in Brazil, these days he concentrates on buying and selling real estate in the United States.
Right now in Brazil, he says, “Whatever you do works.’’
The Brazilian investors in South Florida, Dunin says, are “playing the distressed arena.’’
“We’re all buying in the U.S. below replacement value,’’ he says. “These are moves of opportunity.’’
Last summer, he and his partners in Miami-based Lionheart Capital paid $120 million for 146 unsold units at the former 2700 North Ocean condo on Singer Island. It was the most expensive bulk condo sale in Florida over the last five years.
The former condominium building has been transformed into Ritz Carlton Residences, Singer Island.
“There’s never been a better time for Brazilians to buy in Miami,’’ says Pimenta. “About a year ago the Brazilian market really started to fly.’’
There’s been a confluence of events that favors real estate sales to Brazilians.
Their currency, the real, is very strong against the dollar, making U.S. purchases very affordable; the Brazilian economy is robust – putting extra money in people’s pockets; and real estate prices in Brazil are soaring but cratering in South Florida.
There’s one more element, says Peter Zalewski, a principal in Condo Vultures, a Miami real estate consultancy. “With the economy doing so well there’s this sense of optimism. There’s this talk of this being the Brazilian century. As people’s confidence level builds up, it’s only natural that they think of buying real estate outside their country.’’
Pimenta has been one of the beneficiaries of that optimism but she also works hard. The sun has already set as she concludes the tour at Jade Ocean. Her phone buzzes and she glances at the message.
“Oh, another lead for tomorrow,’’ she says.
Source: The Miami Herald, Mimi Whitefield. Distributed by McClatchy-Tribune Information Services.
Pimenta, a Brazilian who moved to Florida to attend college, is entitled to a little breather. In January, she and her team, which includes her brother in Sao Paulo, sold 15 high-end South Florida condos – all to Brazilians.
At 2,100 square feet with three bedrooms and both ocean and city views, this is the type of unit that is particularly popular with Brazilian buyers, she says. Seven months ago, Pimenta sold the last Jade Ocean penthouse, a 5,000-square-foot unit, to a Brazilian for $4 million.
An ultra-wealthy crowd of Brazilian real estate buyers is creating a boomlet for local real estate agents and other businesses that cater to their tastes.
There have been so many Brazilian buyers at Jade Ocean that the touch-screen that unit owners use to summon the concierge, order food from the Epicure market across the street or schedule a spa appointment has been translated into Portuguese.
Also popular is the Casa Fendi package, complete with a platform bed, pillows, leather croc-embossed wall covering, sleek furnishings and lighting. Buyers can purchase it or another decor package, then come back in a few months to a totally equipped condominium.
“If I take potential buyers out, it’s rare that I don’t close a deal,’’ says Pimenta, whose specialty is the Brazilian market. “When they visit, they buy.’’
Maria Helena Abreu, who splits her time between Belo Horizonte and Brasilia where she works for the government, made her first trip to Miami in 10 years recently and she was on the hunt for a two or three-bedroom apartment.
Abreu, her husband Joao Batista and her daughter Isabel returned to Brazil last week without making a purchase, but they’re thinking seriously about a unit at Icon Brickell.
“Miami looks a lot like Rio,’’ says Abreu. “It has really developed since the last time I was here – for the better. It’s become a city I adore. The people are very friendly, the city is very beautiful, the beaches are great and the climate is wonderful.’’
Plus, she says, she has many Brazilian friends who have already bought condominiums here.
“Brazilians follow each other – the right crowd, the right families,’’ says Edgardo Defortuna, president and chief executive of Fortune International. About a quarter of the company’s new sales are to Brazilians.
Another thing the Brazilians like about South Florida is the sense of freedom and security they have. Many are used to having armored cars and bodyguards at home, say real estate agents, and they like to be able to work around Bal Harbour or SoBe without being recognized.
In addition to the beach, the climate and the shopping, interior designer Mirtha Arrarian says her clients like Miami’s location as a half-way point between South America and the art objects, antiques and fashion of European capitals.
These wealthy clients will fly in on their private jets just to celebrate a birthday. They like coming to the boat shows and taking in tennis matches at the Sony Ericsson Open. Art Basel is also a big draw.
It’s not unusual among her clients for a family to buy one unit for themselves and another for their kids or for their guests, she says.
Her high-end clients include entertainers, TV personalities, and entrepreneurs – mostly from Sao Paulo. “That’s where the money is,’’ says Arrarian, who runs MAS Interior Design.
Most of her Brazilian clients, she says, prefer the area of South Beach along South Pointe Dr. – the SoBe Riviera – and tend to buy units in the $7 million to $10 million range.
One client who recently bought a condominium there, she says, is eyeing a nearby vacant lot as an ideal site to build a tennis court, quarters for the servants and an area to park more cars.
As Arrarian talks, she also checks out the sophisticated offerings at Ornare, a Brazilian-owned kitchen, bath and closet showroom in Miami’s Design District.
“The dream of Brazilians is to have an Ornare closet,’’ says Arrarian who has just examined a selection of leather and bullhorn closet handles and matte lacquer closet doors. “Now they want to have them here too.’’
Claudio Faria, the director of Ornare’s Miami showroom, says the company works hard to cultivate the Brazil-Miami nexus. During Art Basel, for example, Ornare flew in 30 Brazilian architects.
As Faria, who is Brazilian, demonstrates a high-tech kitchen faucet set against a backsplash of rustic reclaimed wood, he says, “This is the exquisiteness of Brazilian design – the unexpected.’’
And he’s quite excited about the possibility of showcasing Brazilian design to not only the Brazilians buying real estate in Miami but also to the world.
“Brazil is an extraordinary country at an extraordinary moment,’’ he says. “For the first time Brazil has a real opportunity to present its style to the world. Now the world is watching us.’’
Investors also are taking advantage of the low real estate prices.
Brazilian businessman Ricardo Dunin moved to Miami 20 years ago when Brazil’s economy was going through a rough patch and he worried about security in his homeland. For a number of years, he made a good living here in real estate development but the real estate crash has meant a change in strategy.
While Dunin and his partners have more than 20 development projects underway in Brazil, these days he concentrates on buying and selling real estate in the United States.
Right now in Brazil, he says, “Whatever you do works.’’
The Brazilian investors in South Florida, Dunin says, are “playing the distressed arena.’’
“We’re all buying in the U.S. below replacement value,’’ he says. “These are moves of opportunity.’’
Last summer, he and his partners in Miami-based Lionheart Capital paid $120 million for 146 unsold units at the former 2700 North Ocean condo on Singer Island. It was the most expensive bulk condo sale in Florida over the last five years.
The former condominium building has been transformed into Ritz Carlton Residences, Singer Island.
“There’s never been a better time for Brazilians to buy in Miami,’’ says Pimenta. “About a year ago the Brazilian market really started to fly.’’
There’s been a confluence of events that favors real estate sales to Brazilians.
Their currency, the real, is very strong against the dollar, making U.S. purchases very affordable; the Brazilian economy is robust – putting extra money in people’s pockets; and real estate prices in Brazil are soaring but cratering in South Florida.
There’s one more element, says Peter Zalewski, a principal in Condo Vultures, a Miami real estate consultancy. “With the economy doing so well there’s this sense of optimism. There’s this talk of this being the Brazilian century. As people’s confidence level builds up, it’s only natural that they think of buying real estate outside their country.’’
Pimenta has been one of the beneficiaries of that optimism but she also works hard. The sun has already set as she concludes the tour at Jade Ocean. Her phone buzzes and she glances at the message.
“Oh, another lead for tomorrow,’’ she says.
Source: The Miami Herald, Mimi Whitefield. Distributed by McClatchy-Tribune Information Services.
FHA releases info about premium increase
Effective April 18, the average FHA-backed mortgage will cost new borrowers about $30 more per month. In a letter sent yesterday, Assistant Secretary for Housing/Federal Housing Commission David H. Stevens explained the change, which will increase the mortgage insurance premium (MIP) on all 30-year and 15-year loans by a quarter of a percentage point (.25).
The increase impacts FHA loans with a case number assigned on or after April 18, 2011.
According to Stevens, FHA must increase its Mutual Mortgage Insurance (MMI) fund reserves – a two percent capital reserve ratio – to comply with current law.
“The MMI fund has been below the two percent threshold in our last two annual actuarial reports to Congress,” Sevens says; and that at the current rate, MMI will not meet its mandated level until at least 2015. “Raising the annual premium will enable FHA to increase revenues … Based on current volume projections, the annual MIP increase would generate an additional $2.5 - $3 billion annually.”
Stevens defended the increase’s unveiling during a down real estate market by calling the quarter-point increase “a responsible step towards meeting the two percent threshold, while allowing FHA to remain the most cost-effective mortgage-insurance option for borrowers with lower incomes and lower downpayments.
“I understand the concerns of those in the industry about this increase,” he says. “While I do not expect all to agree, we have made these moves to protect FHA so that it can continue its vital mission.”
While the monthly payments on the average FHA loan will go up about $30, it shouldn’t impact closing costs. The upfront MIP remains unchanged at one percent.
To read the Department of Housing and Urban Development’s Mortgagee Letter explaining the change (PDF format), visit HUD’s website.
Source: Florida Realtors®
The increase impacts FHA loans with a case number assigned on or after April 18, 2011.
According to Stevens, FHA must increase its Mutual Mortgage Insurance (MMI) fund reserves – a two percent capital reserve ratio – to comply with current law.
“The MMI fund has been below the two percent threshold in our last two annual actuarial reports to Congress,” Sevens says; and that at the current rate, MMI will not meet its mandated level until at least 2015. “Raising the annual premium will enable FHA to increase revenues … Based on current volume projections, the annual MIP increase would generate an additional $2.5 - $3 billion annually.”
Stevens defended the increase’s unveiling during a down real estate market by calling the quarter-point increase “a responsible step towards meeting the two percent threshold, while allowing FHA to remain the most cost-effective mortgage-insurance option for borrowers with lower incomes and lower downpayments.
“I understand the concerns of those in the industry about this increase,” he says. “While I do not expect all to agree, we have made these moves to protect FHA so that it can continue its vital mission.”
While the monthly payments on the average FHA loan will go up about $30, it shouldn’t impact closing costs. The upfront MIP remains unchanged at one percent.
To read the Department of Housing and Urban Development’s Mortgagee Letter explaining the change (PDF format), visit HUD’s website.
Source: Florida Realtors®
Monday, February 21, 2011
Start a Bartering Co-op
A barter co-op helps neighbors share their skills and talents with each other by trading tasks instead of money.
Want to exchange music lessons for help managing a garage sale, or any other number of tasks? A bartering co-op can help you find the right match in your neighborhood.
In communities around the country, homeowners have rediscovered the benefits of barter trade. By organizing a structured barter system, neighbors can go beyond an infrequent "I'll cut your lawn and you'll make me lunch" agreement. A barter co-op allows local residents to exchange with multiple partners, access a wide range of local services and goods, and help their neighbors.
Barter co-ops can be focused on one service (a babysitting club, for example) or include any service that participants want to offer. They can be limited to one neighborhood, be citywide, or even cross state lines. Barter systems can be run using a supply of simple paper money, or a sophisticated electronic spreadsheet.
In suburban Minneapolis/St. Paul, Donna Cullen has had her basement cleaned and her bushes trimmed, and she's been driven a few times to the airport through the local Hour Dollars barter program. For her part, she offers simple services like dog walking, gift-wrapping, and leaf-raking.
"The most popular categories are things like haircuts and massage, and people ask for a driver for when they need to do errands. But we have lawyers willing to do wills, too," says Cullen, an Hour Dollars board member. "Everyone has value and something to offer."
How it works
Since a barter co-op allows members to trade with multiple partners, your program must have a system to keep track of things. Many groups use a currency based on hours. If it takes me an hour to shovel your snow, you pay me one "neighborhood dollar," which I may use next week with another member who is offering to tutor high school math.
Some co-ops say that every hour of work is worth the same, regardless of the tasks; others let participants negotiate-weeding a garden for an hour might be worth one neighborhood dollar, while a plumber might ask for three for the hour it would take to fix a leak.
It's easier to keep track of everyone's neighborhood dollars electronically than to print and issue barter co-op money. Just have both members email the cost and the transaction, and have a designated member keep track. A small group can get by with a spreadsheet on a coordinator's computer with email messages sent to members about their balance. For a system that can be accessed online by anyone in the co-op, a free database program can be modified by a tech savvy member.
An added benefit of the electronic system is that if a member wants a service that costs more neighborhood dollars than he has right now, he can run a deficit for a while, rather than having to wait until he's earned enough. Keep an eye on borrowers, though, and be willing to help them earn more neighborhood dollars.
A password-accessible website for members to check their hours is also a good spot for posting what each participant offers. A typical barter co-op member might use and return a half-dozen to 20 or so hours a year. Sending out a regular newsletter (http://www.houselogic.com/articles/condo-association-newsletter-helps-owners-feel-more-home/) -email or printed-lets everyone know what services are available, builds a sense of community, and keeps the co-op visible.
If you'd like to see exactly what's involved in starting a barter co-op, Timebanks USA (http://www.timebanks.org) offers a $65 start-up kit that includes six months' access to its barter co-op management software program, a manual, and online peer coaching.
Smooth sailing
It's a good idea to pull together a core team to operate the program and set the ground rules. Here are some other key ideas for that team to consider:
Create clear parameters. A member might barter for just a few hours of service, but it's still an economic transaction. Treat everyone equally. Be sure the rules are fair and the system is transparent to avoid misunderstandings.
Issue hours to new members. Currency works best when there is liquidity. Give each new member a set number of hours when they join (two or three), and consider giving a member an hour when they bring a dish to share for a quarterly meeting or write the co-op newsletter. When people have a few hours in their account, they're more likely to use them and keep the system moving.
Keep members comfortable. Providing or receiving services from someone you've never met can be daunting. "Help everyone remember: Every transaction is voluntary, and the terms are negotiable," says Jon Hain, the board president of Madison Hours, a barter group in Madison, Wis. "You never want anyone to feel that having credits is a burden."
Explain the tax implications. The IRS considers bartering with unofficial money a taxable transaction. For a group of neighbors who are trading babysitting and car washes, you probably don't have to worry about this. However, if some of your members are businesses, they should consider any payment in "dollar hours" in the books as cash.
A community barter co-op takes some work to establish. Although it might take up to 150 hours to get one going, once it's running, it doesn't require that much time to maintain its progress. And, it can be more than a way to find someone to clean your gutters--it can be a great way to get to know your neighbors as well.
Carl Vogel, a Chicago-based freelance writer and former editor of The Neighborhood Works magazine, has written about public policy and community organizing and development for more than 15 years. He would trade some babysitting with someone willing to paint his garage.
Source: HouseLogic
Want to exchange music lessons for help managing a garage sale, or any other number of tasks? A bartering co-op can help you find the right match in your neighborhood.
In communities around the country, homeowners have rediscovered the benefits of barter trade. By organizing a structured barter system, neighbors can go beyond an infrequent "I'll cut your lawn and you'll make me lunch" agreement. A barter co-op allows local residents to exchange with multiple partners, access a wide range of local services and goods, and help their neighbors.
Barter co-ops can be focused on one service (a babysitting club, for example) or include any service that participants want to offer. They can be limited to one neighborhood, be citywide, or even cross state lines. Barter systems can be run using a supply of simple paper money, or a sophisticated electronic spreadsheet.
In suburban Minneapolis/St. Paul, Donna Cullen has had her basement cleaned and her bushes trimmed, and she's been driven a few times to the airport through the local Hour Dollars barter program. For her part, she offers simple services like dog walking, gift-wrapping, and leaf-raking.
"The most popular categories are things like haircuts and massage, and people ask for a driver for when they need to do errands. But we have lawyers willing to do wills, too," says Cullen, an Hour Dollars board member. "Everyone has value and something to offer."
How it works
Since a barter co-op allows members to trade with multiple partners, your program must have a system to keep track of things. Many groups use a currency based on hours. If it takes me an hour to shovel your snow, you pay me one "neighborhood dollar," which I may use next week with another member who is offering to tutor high school math.
Some co-ops say that every hour of work is worth the same, regardless of the tasks; others let participants negotiate-weeding a garden for an hour might be worth one neighborhood dollar, while a plumber might ask for three for the hour it would take to fix a leak.
It's easier to keep track of everyone's neighborhood dollars electronically than to print and issue barter co-op money. Just have both members email the cost and the transaction, and have a designated member keep track. A small group can get by with a spreadsheet on a coordinator's computer with email messages sent to members about their balance. For a system that can be accessed online by anyone in the co-op, a free database program can be modified by a tech savvy member.
An added benefit of the electronic system is that if a member wants a service that costs more neighborhood dollars than he has right now, he can run a deficit for a while, rather than having to wait until he's earned enough. Keep an eye on borrowers, though, and be willing to help them earn more neighborhood dollars.
A password-accessible website for members to check their hours is also a good spot for posting what each participant offers. A typical barter co-op member might use and return a half-dozen to 20 or so hours a year. Sending out a regular newsletter (http://www.houselogic.com/articles/condo-association-newsletter-helps-owners-feel-more-home/) -email or printed-lets everyone know what services are available, builds a sense of community, and keeps the co-op visible.
If you'd like to see exactly what's involved in starting a barter co-op, Timebanks USA (http://www.timebanks.org) offers a $65 start-up kit that includes six months' access to its barter co-op management software program, a manual, and online peer coaching.
Smooth sailing
It's a good idea to pull together a core team to operate the program and set the ground rules. Here are some other key ideas for that team to consider:
Create clear parameters. A member might barter for just a few hours of service, but it's still an economic transaction. Treat everyone equally. Be sure the rules are fair and the system is transparent to avoid misunderstandings.
Issue hours to new members. Currency works best when there is liquidity. Give each new member a set number of hours when they join (two or three), and consider giving a member an hour when they bring a dish to share for a quarterly meeting or write the co-op newsletter. When people have a few hours in their account, they're more likely to use them and keep the system moving.
Keep members comfortable. Providing or receiving services from someone you've never met can be daunting. "Help everyone remember: Every transaction is voluntary, and the terms are negotiable," says Jon Hain, the board president of Madison Hours, a barter group in Madison, Wis. "You never want anyone to feel that having credits is a burden."
Explain the tax implications. The IRS considers bartering with unofficial money a taxable transaction. For a group of neighbors who are trading babysitting and car washes, you probably don't have to worry about this. However, if some of your members are businesses, they should consider any payment in "dollar hours" in the books as cash.
A community barter co-op takes some work to establish. Although it might take up to 150 hours to get one going, once it's running, it doesn't require that much time to maintain its progress. And, it can be more than a way to find someone to clean your gutters--it can be a great way to get to know your neighbors as well.
Carl Vogel, a Chicago-based freelance writer and former editor of The Neighborhood Works magazine, has written about public policy and community organizing and development for more than 15 years. He would trade some babysitting with someone willing to paint his garage.
Source: HouseLogic
Shopping tips for buying a home warranty
Home warranties can be attractive to homeowners or buyers considering a purchase. These service contracts can cover all of a home’s major systems, such as the furnace or air conditioner, and needed repairs if the appliance breaks or gets damaged.
Some sellers offer a home warranty to lure buyers.
But not all home warranties are the same. Experts say you should carefully weigh costs, policy allowances, and customer feedback before making a decision to ensure you’re getting the best deal. Home warranties cost about $250 to $500 a year.
Here are some more home warranty tips from experts:
• Find customer reviews. Websites, such as homewarrantyreviews.com, review home warranty companies. You also might check how each company is rated with the local Better Business Bureau.
• Check for extra fees. Will you have to pay a set price for service calls?
• Check the coverage allowance. Are there any exclusions? Will the allowance cover the entire cost of a broken appliance or just part of it? For example, if you have older appliances and mechanicals, will the policy cover the full cost of replacing it or just the depreciated value? If the policy only covers the depreciated value when a 20-year-old furnace dies, for example, the reimbursement may not be enough to buy a new one.
• Verify which appliances are included in the coverage. Some companies will allow you to add coverage for swimming pools, while others won’t.
“The biggest thing is awareness of what the exclusions are,” Greg McBride, a senior financial analyst at Bankrate.com, told the Chicago Tribune. “The mere presence of a warranty, by nature, tends to have exclusions. Being aware of that can aid in the decision-making process.”
Source: INFORMATION, INC. Bethesda, MD
Some sellers offer a home warranty to lure buyers.
But not all home warranties are the same. Experts say you should carefully weigh costs, policy allowances, and customer feedback before making a decision to ensure you’re getting the best deal. Home warranties cost about $250 to $500 a year.
Here are some more home warranty tips from experts:
• Find customer reviews. Websites, such as homewarrantyreviews.com, review home warranty companies. You also might check how each company is rated with the local Better Business Bureau.
• Check for extra fees. Will you have to pay a set price for service calls?
• Check the coverage allowance. Are there any exclusions? Will the allowance cover the entire cost of a broken appliance or just part of it? For example, if you have older appliances and mechanicals, will the policy cover the full cost of replacing it or just the depreciated value? If the policy only covers the depreciated value when a 20-year-old furnace dies, for example, the reimbursement may not be enough to buy a new one.
• Verify which appliances are included in the coverage. Some companies will allow you to add coverage for swimming pools, while others won’t.
“The biggest thing is awareness of what the exclusions are,” Greg McBride, a senior financial analyst at Bankrate.com, told the Chicago Tribune. “The mere presence of a warranty, by nature, tends to have exclusions. Being aware of that can aid in the decision-making process.”
Source: INFORMATION, INC. Bethesda, MD
New Fed rule may lower costs for borrowers
A new Federal Reserve rule that takes effect April 1 is expected to lead to lower costs for borrowers, but some experts say it’s going to hurt the mortgage industry.
Under the new rule, borrowers who get their mortgages through brokers likely will pay less for services and brokers will be required to offer borrowers the lowest possible interest rate and fees that they qualify for. Most banks and other direct lenders, including some mortgage companies that operate like banks, are exempt from the rule.
The new Federal Reserve rule – the “Loan Originator Compensation amendment to Regulation Z” – is to help prevent borrowers from being steered into high-cost or risky loans.
Mortgage brokers used to earn more money on a loan the higher the interest rate and points. But the new rule covers how a loan originator is paid, setting a fixed commission and no longer tying the amount to the loan terms.
Some in the mortgage industry aren’t happy with the new rule, saying it makes mortgage brokers less competitive against the big banks.
“I will now get paid the same amount to process a plain-vanilla loan as I will a complex loan of equal size that requires more work,” says Mark Yecies, an owner of SunQuest Funding, a mortgage broker and lender in Cranford, N.J.
Officials with the National Association of Mortgage Brokers also have expressed concerns, saying the rule would likely put a lot of independent brokers out of business.
Source: INFORMATION, INC. Bethesda, MD
Under the new rule, borrowers who get their mortgages through brokers likely will pay less for services and brokers will be required to offer borrowers the lowest possible interest rate and fees that they qualify for. Most banks and other direct lenders, including some mortgage companies that operate like banks, are exempt from the rule.
The new Federal Reserve rule – the “Loan Originator Compensation amendment to Regulation Z” – is to help prevent borrowers from being steered into high-cost or risky loans.
Mortgage brokers used to earn more money on a loan the higher the interest rate and points. But the new rule covers how a loan originator is paid, setting a fixed commission and no longer tying the amount to the loan terms.
Some in the mortgage industry aren’t happy with the new rule, saying it makes mortgage brokers less competitive against the big banks.
“I will now get paid the same amount to process a plain-vanilla loan as I will a complex loan of equal size that requires more work,” says Mark Yecies, an owner of SunQuest Funding, a mortgage broker and lender in Cranford, N.J.
Officials with the National Association of Mortgage Brokers also have expressed concerns, saying the rule would likely put a lot of independent brokers out of business.
Source: INFORMATION, INC. Bethesda, MD
Friday, February 18, 2011
Boomers expected to change housing priorities
Developers and builders expect baby boomers to re-emerge in the real estate market soon, but they say boomers likely will come with a simpler agenda when it comes to what they’re looking for in a home.
“We have an opportunity to rethink a lot of the things we’ve done” in designing communities and homes that are intended for that age group, says Douglas Van Lerberghe, a land planner in Denver, who spoke during the National Association of Home Builders conference in Orlando, Fla., last month.
Housing experts predict retiring boomers will want a greater variety of housing styles, smaller homes, and developments that are restricted to older buyers.
Other high priorities they expect from this age group:
• Younger boomers will want to continue to work so homes close to job hubs will be important, and more houses will include a home office in the floor plan.
• The group ranks walking trails as its No. 1 amenity.
• Also ranked as important: gated access to communities and security.
• Boomers also want expanded storage in their garages.
Source: INFORMATION, INC. Bethesda, MD
“We have an opportunity to rethink a lot of the things we’ve done” in designing communities and homes that are intended for that age group, says Douglas Van Lerberghe, a land planner in Denver, who spoke during the National Association of Home Builders conference in Orlando, Fla., last month.
Housing experts predict retiring boomers will want a greater variety of housing styles, smaller homes, and developments that are restricted to older buyers.
Other high priorities they expect from this age group:
• Younger boomers will want to continue to work so homes close to job hubs will be important, and more houses will include a home office in the floor plan.
• The group ranks walking trails as its No. 1 amenity.
• Also ranked as important: gated access to communities and security.
• Boomers also want expanded storage in their garages.
Source: INFORMATION, INC. Bethesda, MD
Average rate on 30-year mortgage dips to 5%
Fixed mortgage rates inched down this week, following a dip in Treasury yields.
The average rate on a 30-year fixed mortgage slipped to 5 percent from 5.05 percent last week, Freddie Mac said Thursday. It hit a 40-year low of 4.17 percent in November.
The average rate on the 15-year fixed home loan also fell to 4.27 percent from 4.29 percent. It reached 3.57 percent in November, the lowest level on records dating back to 1991.
Mortgage rates tend to track the yield on the 10-year Treasury note, which slipped this week after the White House unveiled its $3.7 trillion budget request for the next fiscal year. The yield had spiked last week on fears of higher inflation.
The recent rise in rates adds another obstacle for the struggling housing market. Historically low rates did little to boost sales last year. Potential buyers remain on the sidelines because of job worries, falling home prices and record high foreclosures.
The percentage of homes in the foreclosure process rose to 4.6 percent in the final three months of last year, up from 4.4 percent in the July-September quarter, the Mortgage Bankers Association said Thursday. The number of foreclosures is expected to peak mid-year.
Still, fewer homeowners fell behind on their mortgage payments in the October-December quarter than in the previous quarter, a sign of improvement.
To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.
The average rate on a five-year adjustable-rate mortgage fell to 3.87 percent from 3.92 percent. The five-year hit 3.25 percent last month, the lowest rate on records dating back to January 2005.
The average rate on one-year adjustable-rate home loans edged up to 3.39 percent from 3.35 percent.
The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for the 30-year and 15-year loan in Freddie Mac’s survey was 0.7 point. The average fee for the five-year and 1-year ARM was 0.6 point.
Source: The Associated Press, Janna Herron, AP real estate writer. All rights reserved.
The average rate on a 30-year fixed mortgage slipped to 5 percent from 5.05 percent last week, Freddie Mac said Thursday. It hit a 40-year low of 4.17 percent in November.
The average rate on the 15-year fixed home loan also fell to 4.27 percent from 4.29 percent. It reached 3.57 percent in November, the lowest level on records dating back to 1991.
Mortgage rates tend to track the yield on the 10-year Treasury note, which slipped this week after the White House unveiled its $3.7 trillion budget request for the next fiscal year. The yield had spiked last week on fears of higher inflation.
The recent rise in rates adds another obstacle for the struggling housing market. Historically low rates did little to boost sales last year. Potential buyers remain on the sidelines because of job worries, falling home prices and record high foreclosures.
The percentage of homes in the foreclosure process rose to 4.6 percent in the final three months of last year, up from 4.4 percent in the July-September quarter, the Mortgage Bankers Association said Thursday. The number of foreclosures is expected to peak mid-year.
Still, fewer homeowners fell behind on their mortgage payments in the October-December quarter than in the previous quarter, a sign of improvement.
To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.
The average rate on a five-year adjustable-rate mortgage fell to 3.87 percent from 3.92 percent. The five-year hit 3.25 percent last month, the lowest rate on records dating back to January 2005.
The average rate on one-year adjustable-rate home loans edged up to 3.39 percent from 3.35 percent.
The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for the 30-year and 15-year loan in Freddie Mac’s survey was 0.7 point. The average fee for the five-year and 1-year ARM was 0.6 point.
Source: The Associated Press, Janna Herron, AP real estate writer. All rights reserved.
Thursday, February 17, 2011
Working with a Real Estate Professional is More Important Than Ever in Today’s Real Estate Market
In a landmark study examining the home buying and selling preferences of consumers in the Mid-Atlantic region, 95% reported that working with a real estate professional is just as important, if not more important, than it was just a few years ago. The survey results were released in a new research paper entitled Keepin’ it Real, by MRIS, the area’s Multiple Listing Service (MLS) and a leading developer of real estate information technology.
According to the report, which can be found on www.MRIS.com, today’s consumers recognize this is not the time to complete a real estate transaction on their own, and are placing a stronger emphasis on the agent’s professional skills. As such, trustworthiness was ranked as the most critical factor in choosing an agent, followed by experience, willingness to look out for a client’s interest, expertise in negotiating contracts, responsiveness, familiarity with contracts and knowledge of the local community. These requirements are evidence that consumers are seeking more than simple guidance, they are looking for an expert they can trust to execute a step-by-step process throughout the entire transaction.
“In today’s housing market especially, this is no time to go it alone,” noted John L. Heithaus, Chief Marketing Officer of MRIS. “With 95% of all buyers and sellers reporting that working with a professional real estate agent or broker is important, it is evident that consumers understand how vital they are to the process. A real estate professional has the industry knowledge, networking ability and expert guidance on home buying and selling to deliver top notch customer service and advice, and provide a successful experience for consumers.”
Additionally, the Keepin’ it Real report reveals that 68% of buyers and sellers rated their agent with a six or seven, on a 7-point satisfaction scale. This high level of consumer confidence reinforces the credibility of the real estate professionals in the Mid-Atlantic area. Nearly half of the consumers surveyed, or 48%, found their agent by way of referral. Moreover, 80% of consumers stated that they would recommend their agent to a friend or family member, especially those that purchased or sold a home in the past twelve months.
Whereas in years past, the agent was the first step in the home buying or selling process, today, Internet-savvy consumers can gather information and educate themselves, long before contacting an agent. The Internet empowers consumers to search for homes and neighborhood information, compare pricing and explore financing options on their own. Yet, despite all of the tools and resources available, when it comes time to actually buy or sell a home, there is nothing more valuable than the industry knowledge, expertise and guidance a real estate professional brings to the table.
The Keepin’ it Real research paper is confirmation that today, more than ever, a real estate professional is an invaluable resource in the home buying and selling process.
Source: RISMedia
According to the report, which can be found on www.MRIS.com, today’s consumers recognize this is not the time to complete a real estate transaction on their own, and are placing a stronger emphasis on the agent’s professional skills. As such, trustworthiness was ranked as the most critical factor in choosing an agent, followed by experience, willingness to look out for a client’s interest, expertise in negotiating contracts, responsiveness, familiarity with contracts and knowledge of the local community. These requirements are evidence that consumers are seeking more than simple guidance, they are looking for an expert they can trust to execute a step-by-step process throughout the entire transaction.
“In today’s housing market especially, this is no time to go it alone,” noted John L. Heithaus, Chief Marketing Officer of MRIS. “With 95% of all buyers and sellers reporting that working with a professional real estate agent or broker is important, it is evident that consumers understand how vital they are to the process. A real estate professional has the industry knowledge, networking ability and expert guidance on home buying and selling to deliver top notch customer service and advice, and provide a successful experience for consumers.”
Additionally, the Keepin’ it Real report reveals that 68% of buyers and sellers rated their agent with a six or seven, on a 7-point satisfaction scale. This high level of consumer confidence reinforces the credibility of the real estate professionals in the Mid-Atlantic area. Nearly half of the consumers surveyed, or 48%, found their agent by way of referral. Moreover, 80% of consumers stated that they would recommend their agent to a friend or family member, especially those that purchased or sold a home in the past twelve months.
Whereas in years past, the agent was the first step in the home buying or selling process, today, Internet-savvy consumers can gather information and educate themselves, long before contacting an agent. The Internet empowers consumers to search for homes and neighborhood information, compare pricing and explore financing options on their own. Yet, despite all of the tools and resources available, when it comes time to actually buy or sell a home, there is nothing more valuable than the industry knowledge, expertise and guidance a real estate professional brings to the table.
The Keepin’ it Real research paper is confirmation that today, more than ever, a real estate professional is an invaluable resource in the home buying and selling process.
Source: RISMedia
Wednesday, February 16, 2011
Banks Want Higher Down Payments From Buyers
Banks are increasingly telling borrowers that if they want to buy a home, they need to come with a higher down payment. Banks are requiring higher down payments in order to help mitigate the bank's risk as home prices continue to fall. Plus, banks say larger down payments discourage delinquencies.
The Obama administration last week called for gradually increasing down payments to a minimum of 10 percent on conventional loans that can be bought or guaranteed by Fannie Mae and Freddie Mac.
The median down payment in nine major U.S. cities rose to 22 percent in the fourth quarter of 2010 on properties purchased through conventional mortgages--the highest in median down payment since the data started being tracked in 1997, according to a Wall Street Journal and Zillow.com analysis.
In the late 1990s, median down payments once averaged 20 percent in the nine metro cities Zillow analyzed, but in 2001 started inching downward as banks began requiring little or no down payment in some cases during the housing boom.
Now banks want more, believing that the more a buyer has invested, the less likely they are to default.
Borrowers who can’t afford the higher down payments are seeking assistance elsewhere, such as loans for veterans or those backed by the Federal Housing Administration (which require 3.5 percent down payment), or loans by the United States Department of Agriculture for rural areas.
Source: “Banks Push Home Buyers to Put Down More Cash,” The Wall Street Journal (Feb. 16, 2011)
The Obama administration last week called for gradually increasing down payments to a minimum of 10 percent on conventional loans that can be bought or guaranteed by Fannie Mae and Freddie Mac.
The median down payment in nine major U.S. cities rose to 22 percent in the fourth quarter of 2010 on properties purchased through conventional mortgages--the highest in median down payment since the data started being tracked in 1997, according to a Wall Street Journal and Zillow.com analysis.
In the late 1990s, median down payments once averaged 20 percent in the nine metro cities Zillow analyzed, but in 2001 started inching downward as banks began requiring little or no down payment in some cases during the housing boom.
Now banks want more, believing that the more a buyer has invested, the less likely they are to default.
Borrowers who can’t afford the higher down payments are seeking assistance elsewhere, such as loans for veterans or those backed by the Federal Housing Administration (which require 3.5 percent down payment), or loans by the United States Department of Agriculture for rural areas.
Source: “Banks Push Home Buyers to Put Down More Cash,” The Wall Street Journal (Feb. 16, 2011)
State Farm questioned over rate hike request
State Farm property policyholders in higher risk areas could see premium increases of 40 percent or more on their homes under a 27.9 percent average rate hike request. Insurance officials said Tuesday that the increase would shock many customers and place an increased burden on Citizen’s Property Insurance, the state-run insurer of last resort.
State Farm Florida Insurance, the state’s largest private insurer of property, told state regulators yesterday that non-hurricane losses – especially sinkhole claims – over the past few years force the company to double rates for rental customers and seek hefty hikes from homeowners in some inland counties.
But the state’s insurance Consumer Advocate, Steven Alexander, said the request is bloated. He says that State Farm pays its agents far more than the national average for policies and skimps on discounts to property insurance customers who lost sinkhole coverage as part of a basic multi-peril package. Sinkhole coverage is now offered as an optional add-on.
Speaking during a public hearing on its latest rate increase request, State Farm representatives said sinkhole losses over the past couple of years have escalated dramatically and been the major driver of higher company losses rather than hurricanes, which have not hit land in Florida since Hurricane Wilma in 2005.
“Our financial position has deteriorated over the past few years,” said State Farm actuary Adam Swope. “This company has lost a substantial amount of surplus despite having no hurricanes.”
State Farm is requesting a 27.9 percent statewide increase in residential homeowners rates. Premiums for rental insurance, a relatively small percentage of the company’s portfolio, would increase 95.7 percent if the rate hike were approved.
Officials at the Florida Office of Insurance Regulation say they will likely have a ruling within the next two weeks.
Policyholders in some counties would see increases that are significantly higher. State Farm homeowners in Orange and Seminole counties for example, would see premiums jump more than 46 percent if regulators approve the request. However, customers in other locations would see rates fall, with policyholders in Manatee County paying 6.7 percent less and Panhandle customers seeing 20 percent reductions. Sarasota County policyholders would see a 2.5 percent increase, while rates in Charlotte County would rise 16.5 percent.
One likely offshoot of the rate hikes is that more policyholders will be transferred into Citizens Property Insurance Corp. the state-run pool that is now the largest single property insurer in Florida. State regulators Tuesday appeared skeptical when company staffers were unable to determine how many policyholders would leave State Farm if the rates were approved. They asked why the rates were not being phased in to cushion the blow.
“Has the company told its agents what to tell customers if these rates are approved?” asked OIR Acting General Counsel Belinda Miller. “Some of them are going to be shocked.”
Alexander, the consumer advocate, said State Farm could lower costs by not paying its agents so much for renewing policies. The company’s selling expenses are more than double the national average of $149 per policy. Alexander also estimated that the company is saving about $325 per policy by not offering comprehensive sinkhole coverage, yet it is offering discounts to customers of only about $150.
Company officials said they have not broken out the sinkhole component among a list of non-hurricane damages from which it has suffered losses, a lack of information that Alexander and other panel members said they would like to see before making up their minds on whether to approve the request.
“We shouldn’t pass on this rate until we get the sinkhole figures,” Alexander urged. “It’s such a big part of the filing.”
Source: News Service of Florida, Michael Peltier
State Farm Florida Insurance, the state’s largest private insurer of property, told state regulators yesterday that non-hurricane losses – especially sinkhole claims – over the past few years force the company to double rates for rental customers and seek hefty hikes from homeowners in some inland counties.
But the state’s insurance Consumer Advocate, Steven Alexander, said the request is bloated. He says that State Farm pays its agents far more than the national average for policies and skimps on discounts to property insurance customers who lost sinkhole coverage as part of a basic multi-peril package. Sinkhole coverage is now offered as an optional add-on.
Speaking during a public hearing on its latest rate increase request, State Farm representatives said sinkhole losses over the past couple of years have escalated dramatically and been the major driver of higher company losses rather than hurricanes, which have not hit land in Florida since Hurricane Wilma in 2005.
“Our financial position has deteriorated over the past few years,” said State Farm actuary Adam Swope. “This company has lost a substantial amount of surplus despite having no hurricanes.”
State Farm is requesting a 27.9 percent statewide increase in residential homeowners rates. Premiums for rental insurance, a relatively small percentage of the company’s portfolio, would increase 95.7 percent if the rate hike were approved.
Officials at the Florida Office of Insurance Regulation say they will likely have a ruling within the next two weeks.
Policyholders in some counties would see increases that are significantly higher. State Farm homeowners in Orange and Seminole counties for example, would see premiums jump more than 46 percent if regulators approve the request. However, customers in other locations would see rates fall, with policyholders in Manatee County paying 6.7 percent less and Panhandle customers seeing 20 percent reductions. Sarasota County policyholders would see a 2.5 percent increase, while rates in Charlotte County would rise 16.5 percent.
One likely offshoot of the rate hikes is that more policyholders will be transferred into Citizens Property Insurance Corp. the state-run pool that is now the largest single property insurer in Florida. State regulators Tuesday appeared skeptical when company staffers were unable to determine how many policyholders would leave State Farm if the rates were approved. They asked why the rates were not being phased in to cushion the blow.
“Has the company told its agents what to tell customers if these rates are approved?” asked OIR Acting General Counsel Belinda Miller. “Some of them are going to be shocked.”
Alexander, the consumer advocate, said State Farm could lower costs by not paying its agents so much for renewing policies. The company’s selling expenses are more than double the national average of $149 per policy. Alexander also estimated that the company is saving about $325 per policy by not offering comprehensive sinkhole coverage, yet it is offering discounts to customers of only about $150.
Company officials said they have not broken out the sinkhole component among a list of non-hurricane damages from which it has suffered losses, a lack of information that Alexander and other panel members said they would like to see before making up their minds on whether to approve the request.
“We shouldn’t pass on this rate until we get the sinkhole figures,” Alexander urged. “It’s such a big part of the filing.”
Source: News Service of Florida, Michael Peltier
Apartments push home construction up in January
Home construction in the U.S. rose at the fastest rate in 20 months, pushed up by a spike in apartment building. But construction of single-family homes declined, a sign that demand for housing remains weak.
Builders broke ground on new homes and apartments at a seasonally adjusted annual rate of 596,000 units, a 14.6 percent jump from December.
Single-family homes, which make up nearly 70 percent of new construction, fell 1 percent to an annual rate of 417,000 units. Apartment construction skyrocketed 80 percent to an annual rate of 171,000 units.
Building permits, an indicator of future construction, fell more than 10 percent in January. Code changes in California, Pennsylvania and New York caused an artificial spike the month before.
Last year, builders worked on 587,600 new homes, just barely better than the 554,000 started in 2009. In a healthy economy, builders start about 1 million units a year. The housing industry is coming off the worst two years for home construction dating back to 1959.
More than a year after the recession ended, the housing market is still struggling.
Millions of foreclosures have forced home prices down and more are expected this year. Tight credit has made mortgage loans tough to come by. And some potential buyers who could qualify for loans are hesitant to enter the market, worried that prices will fall further.
The flat-lined housing market is weighing on the overall economic recovery. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.
Single-family home construction was uneven across the country, falling 12.8 percent in the Northeast and 7.7 percent in the South. It jumped 5.4 percent in the West and 25.5 percent in the Midwest.
The trade association reported Tuesday that its index of builder confidence remained stuck at 16 in February, where it has been for four straight months. A reading of 50 signifies a positive outlook about the future.
Source: The Associated Press, Derek Kravitz and Martin Crutsinger, AP business writers.
Builders broke ground on new homes and apartments at a seasonally adjusted annual rate of 596,000 units, a 14.6 percent jump from December.
Single-family homes, which make up nearly 70 percent of new construction, fell 1 percent to an annual rate of 417,000 units. Apartment construction skyrocketed 80 percent to an annual rate of 171,000 units.
Building permits, an indicator of future construction, fell more than 10 percent in January. Code changes in California, Pennsylvania and New York caused an artificial spike the month before.
Last year, builders worked on 587,600 new homes, just barely better than the 554,000 started in 2009. In a healthy economy, builders start about 1 million units a year. The housing industry is coming off the worst two years for home construction dating back to 1959.
More than a year after the recession ended, the housing market is still struggling.
Millions of foreclosures have forced home prices down and more are expected this year. Tight credit has made mortgage loans tough to come by. And some potential buyers who could qualify for loans are hesitant to enter the market, worried that prices will fall further.
The flat-lined housing market is weighing on the overall economic recovery. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.
Single-family home construction was uneven across the country, falling 12.8 percent in the Northeast and 7.7 percent in the South. It jumped 5.4 percent in the West and 25.5 percent in the Midwest.
The trade association reported Tuesday that its index of builder confidence remained stuck at 16 in February, where it has been for four straight months. A reading of 50 signifies a positive outlook about the future.
Source: The Associated Press, Derek Kravitz and Martin Crutsinger, AP business writers.
Get in while the Getting’s Good – Why Buyers and Sellers Should Take Advantage of Today’s Real Estate Market
The Case-Shiller Index is one of the country’s most popular ways of measuring the movement of home prices. And in its latest rating, which went out in late December, the verdict was: Prices are down. The Case-Shiller report’s 20-City Composite rating was 0.8% lower than it was one year previously; the first year-on-year decrease since October 2009.In some markets, sales were the worst ever—as the report noted: “While the composite housing prices are still above their spring 2009 lows, six markets—Atlanta, Charlotte, Miami, Portland (OR), Seattle and Tampa—hit their lowest levels since home prices started to fall in 2006 and 2007, meaning that average home prices in those markets have fallen beyond the recent lows seen in most other markets in the spring of 2009.” This may make buyers complacent, expecting prices to go down further. And if you’re a seller, your immediate reaction might be to hide under the covers.
But all may not be so negative—in fact, quite the contrary. For one, Case-Shiller numbers, when they come out, have a lag time of several months—the aforementioned batch covers through October. Since then, a lot of positive things have happened. For one, strong consumer holiday-shopping showings boosted big retailers across the country, making it the best shopping season in years. A rising stock market and tax-cut extension has also made folks a little less nervous to open their wallets. And, while unemployment is still a problem, there is some good jobs news as well—initial jobless claims fell to 388,000 for the week ending Dec. 25, down from 422,000 in the prior week (the first time it’s gone below 400,000 since July 2008).
It’s because of reasons like this—increased consumer confidence and slight lessening of fear—that you shouldn’t count on home prices dropping more. Part of it is psychological: If people see the financial and retail markets go up, signaling that the bottom in this particular financial cycle has been reached and things are moving upward, that creates more interest in buying big-ticket items, like homes. It’s normal for a buyer to start rationalizing things this way: If the economy’s starting to improve, this house is going to wind up costing much more at some point. I’d better get in the door now, so I don’t miss the boat.
Yes, there are still plenty of problems. Not just rampant unemployment (despite initial jobless claims numbers), but also a high number of foreclosures, a crowded inventory landscape and mortgage rates that are anything but friendly. But these factors could, ironically, be a sign to buy. For instance, when interest rates go up uniformly over time as they have been, people develop a bite-the-bullet mentality, thinking: “I’d better buy now even though they’re high, because it doesn’t seem like they’re going down any time soon.”
This mentality—of getting in before things move up—is something to think about if you’ve been considering selling. Get your home prepared to sell by having a professional home inspection and fixing major problems that could be impediments to buyer interest. And for buyers: Buying a home is an individual process with many factors at play, so it’s impossible to say that it’s the ideal time for everyone to buy. But for many buyers, a simple saying may very well hold true: Get in while the getting’s good.
Resources:
http://www.standardandpoors.com
http://www.businessinsider.com/dont-bet-on-lower-housing-prices-in-2011-2011-1#ixzz1ArrToucQ
http://www.cbsnews.com/video/watch/?id=7161184n
RISMedia
But all may not be so negative—in fact, quite the contrary. For one, Case-Shiller numbers, when they come out, have a lag time of several months—the aforementioned batch covers through October. Since then, a lot of positive things have happened. For one, strong consumer holiday-shopping showings boosted big retailers across the country, making it the best shopping season in years. A rising stock market and tax-cut extension has also made folks a little less nervous to open their wallets. And, while unemployment is still a problem, there is some good jobs news as well—initial jobless claims fell to 388,000 for the week ending Dec. 25, down from 422,000 in the prior week (the first time it’s gone below 400,000 since July 2008).
It’s because of reasons like this—increased consumer confidence and slight lessening of fear—that you shouldn’t count on home prices dropping more. Part of it is psychological: If people see the financial and retail markets go up, signaling that the bottom in this particular financial cycle has been reached and things are moving upward, that creates more interest in buying big-ticket items, like homes. It’s normal for a buyer to start rationalizing things this way: If the economy’s starting to improve, this house is going to wind up costing much more at some point. I’d better get in the door now, so I don’t miss the boat.
Yes, there are still plenty of problems. Not just rampant unemployment (despite initial jobless claims numbers), but also a high number of foreclosures, a crowded inventory landscape and mortgage rates that are anything but friendly. But these factors could, ironically, be a sign to buy. For instance, when interest rates go up uniformly over time as they have been, people develop a bite-the-bullet mentality, thinking: “I’d better buy now even though they’re high, because it doesn’t seem like they’re going down any time soon.”
This mentality—of getting in before things move up—is something to think about if you’ve been considering selling. Get your home prepared to sell by having a professional home inspection and fixing major problems that could be impediments to buyer interest. And for buyers: Buying a home is an individual process with many factors at play, so it’s impossible to say that it’s the ideal time for everyone to buy. But for many buyers, a simple saying may very well hold true: Get in while the getting’s good.
Resources:
http://www.standardandpoors.com
http://www.businessinsider.com/dont-bet-on-lower-housing-prices-in-2011-2011-1#ixzz1ArrToucQ
http://www.cbsnews.com/video/watch/?id=7161184n
RISMedia
Get in while the Getting’s Good – Why Buyers and Sellers Should Take Advantage of Today’s Real Estate Market
The Case-Shiller Index is one of the country’s most popular ways of measuring the movement of home prices. And in its latest rating, which went out in late December, the verdict was: Prices are down. The Case-Shiller report’s 20-City Composite rating was 0.8% lower than it was one year previously; the first year-on-year decrease since October 2009.In some markets, sales were the worst ever—as the report noted: “While the composite housing prices are still above their spring 2009 lows, six markets—Atlanta, Charlotte, Miami, Portland (OR), Seattle and Tampa—hit their lowest levels since home prices started to fall in 2006 and 2007, meaning that average home prices in those markets have fallen beyond the recent lows seen in most other markets in the spring of 2009.” This may make buyers complacent, expecting prices to go down further. And if you’re a seller, your immediate reaction might be to hide under the covers.
But all may not be so negative—in fact, quite the contrary. For one, Case-Shiller numbers, when they come out, have a lag time of several months—the aforementioned batch covers through October. Since then, a lot of positive things have happened. For one, strong consumer holiday-shopping showings boosted big retailers across the country, making it the best shopping season in years. A rising stock market and tax-cut extension has also made folks a little less nervous to open their wallets. And, while unemployment is still a problem, there is some good jobs news as well—initial jobless claims fell to 388,000 for the week ending Dec. 25, down from 422,000 in the prior week (the first time it’s gone below 400,000 since July 2008).
It’s because of reasons like this—increased consumer confidence and slight lessening of fear—that you shouldn’t count on home prices dropping more. Part of it is psychological: If people see the financial and retail markets go up, signaling that the bottom in this particular financial cycle has been reached and things are moving upward, that creates more interest in buying big-ticket items, like homes. It’s normal for a buyer to start rationalizing things this way: If the economy’s starting to improve, this house is going to wind up costing much more at some point. I’d better get in the door now, so I don’t miss the boat.
Yes, there are still plenty of problems. Not just rampant unemployment (despite initial jobless claims numbers), but also a high number of foreclosures, a crowded inventory landscape and mortgage rates that are anything but friendly. But these factors could, ironically, be a sign to buy. For instance, when interest rates go up uniformly over time as they have been, people develop a bite-the-bullet mentality, thinking: “I’d better buy now even though they’re high, because it doesn’t seem like they’re going down any time soon.”
This mentality—of getting in before things move up—is something to think about if you’ve been considering selling. Get your home prepared to sell by having a professional home inspection and fixing major problems that could be impediments to buyer interest. And for buyers: Buying a home is an individual process with many factors at play, so it’s impossible to say that it’s the ideal time for everyone to buy. But for many buyers, a simple saying may very well hold true: Get in while the getting’s good.
Resources:
http://www.standardandpoors.com
http://www.businessinsider.com/dont-bet-on-lower-housing-prices-in-2011-2011-1#ixzz1ArrToucQ
http://www.cbsnews.com/video/watch/?id=7161184n
RISMedia
But all may not be so negative—in fact, quite the contrary. For one, Case-Shiller numbers, when they come out, have a lag time of several months—the aforementioned batch covers through October. Since then, a lot of positive things have happened. For one, strong consumer holiday-shopping showings boosted big retailers across the country, making it the best shopping season in years. A rising stock market and tax-cut extension has also made folks a little less nervous to open their wallets. And, while unemployment is still a problem, there is some good jobs news as well—initial jobless claims fell to 388,000 for the week ending Dec. 25, down from 422,000 in the prior week (the first time it’s gone below 400,000 since July 2008).
It’s because of reasons like this—increased consumer confidence and slight lessening of fear—that you shouldn’t count on home prices dropping more. Part of it is psychological: If people see the financial and retail markets go up, signaling that the bottom in this particular financial cycle has been reached and things are moving upward, that creates more interest in buying big-ticket items, like homes. It’s normal for a buyer to start rationalizing things this way: If the economy’s starting to improve, this house is going to wind up costing much more at some point. I’d better get in the door now, so I don’t miss the boat.
Yes, there are still plenty of problems. Not just rampant unemployment (despite initial jobless claims numbers), but also a high number of foreclosures, a crowded inventory landscape and mortgage rates that are anything but friendly. But these factors could, ironically, be a sign to buy. For instance, when interest rates go up uniformly over time as they have been, people develop a bite-the-bullet mentality, thinking: “I’d better buy now even though they’re high, because it doesn’t seem like they’re going down any time soon.”
This mentality—of getting in before things move up—is something to think about if you’ve been considering selling. Get your home prepared to sell by having a professional home inspection and fixing major problems that could be impediments to buyer interest. And for buyers: Buying a home is an individual process with many factors at play, so it’s impossible to say that it’s the ideal time for everyone to buy. But for many buyers, a simple saying may very well hold true: Get in while the getting’s good.
Resources:
http://www.standardandpoors.com
http://www.businessinsider.com/dont-bet-on-lower-housing-prices-in-2011-2011-1#ixzz1ArrToucQ
http://www.cbsnews.com/video/watch/?id=7161184n
RISMedia
Get in while the Getting’s Good – Why Buyers and Sellers Should Take Advantage of Today’s Real Estate Market
The Case-Shiller Index is one of the country’s most popular ways of measuring the movement of home prices. And in its latest rating, which went out in late December, the verdict was: Prices are down. The Case-Shiller report’s 20-City Composite rating was 0.8% lower than it was one year previously; the first year-on-year decrease since October 2009.In some markets, sales were the worst ever—as the report noted: “While the composite housing prices are still above their spring 2009 lows, six markets—Atlanta, Charlotte, Miami, Portland (OR), Seattle and Tampa—hit their lowest levels since home prices started to fall in 2006 and 2007, meaning that average home prices in those markets have fallen beyond the recent lows seen in most other markets in the spring of 2009.” This may make buyers complacent, expecting prices to go down further. And if you’re a seller, your immediate reaction might be to hide under the covers.
But all may not be so negative—in fact, quite the contrary. For one, Case-Shiller numbers, when they come out, have a lag time of several months—the aforementioned batch covers through October. Since then, a lot of positive things have happened. For one, strong consumer holiday-shopping showings boosted big retailers across the country, making it the best shopping season in years. A rising stock market and tax-cut extension has also made folks a little less nervous to open their wallets. And, while unemployment is still a problem, there is some good jobs news as well—initial jobless claims fell to 388,000 for the week ending Dec. 25, down from 422,000 in the prior week (the first time it’s gone below 400,000 since July 2008).
It’s because of reasons like this—increased consumer confidence and slight lessening of fear—that you shouldn’t count on home prices dropping more. Part of it is psychological: If people see the financial and retail markets go up, signaling that the bottom in this particular financial cycle has been reached and things are moving upward, that creates more interest in buying big-ticket items, like homes. It’s normal for a buyer to start rationalizing things this way: If the economy’s starting to improve, this house is going to wind up costing much more at some point. I’d better get in the door now, so I don’t miss the boat.
Yes, there are still plenty of problems. Not just rampant unemployment (despite initial jobless claims numbers), but also a high number of foreclosures, a crowded inventory landscape and mortgage rates that are anything but friendly. But these factors could, ironically, be a sign to buy. For instance, when interest rates go up uniformly over time as they have been, people develop a bite-the-bullet mentality, thinking: “I’d better buy now even though they’re high, because it doesn’t seem like they’re going down any time soon.”
This mentality—of getting in before things move up—is something to think about if you’ve been considering selling. Get your home prepared to sell by having a professional home inspection and fixing major problems that could be impediments to buyer interest. And for buyers: Buying a home is an individual process with many factors at play, so it’s impossible to say that it’s the ideal time for everyone to buy. But for many buyers, a simple saying may very well hold true: Get in while the getting’s good.
Resources:
http://www.standardandpoors.com
http://www.businessinsider.com/dont-bet-on-lower-housing-prices-in-2011-2011-1#ixzz1ArrToucQ
http://www.cbsnews.com/video/watch/?id=7161184n
RISMedia
But all may not be so negative—in fact, quite the contrary. For one, Case-Shiller numbers, when they come out, have a lag time of several months—the aforementioned batch covers through October. Since then, a lot of positive things have happened. For one, strong consumer holiday-shopping showings boosted big retailers across the country, making it the best shopping season in years. A rising stock market and tax-cut extension has also made folks a little less nervous to open their wallets. And, while unemployment is still a problem, there is some good jobs news as well—initial jobless claims fell to 388,000 for the week ending Dec. 25, down from 422,000 in the prior week (the first time it’s gone below 400,000 since July 2008).
It’s because of reasons like this—increased consumer confidence and slight lessening of fear—that you shouldn’t count on home prices dropping more. Part of it is psychological: If people see the financial and retail markets go up, signaling that the bottom in this particular financial cycle has been reached and things are moving upward, that creates more interest in buying big-ticket items, like homes. It’s normal for a buyer to start rationalizing things this way: If the economy’s starting to improve, this house is going to wind up costing much more at some point. I’d better get in the door now, so I don’t miss the boat.
Yes, there are still plenty of problems. Not just rampant unemployment (despite initial jobless claims numbers), but also a high number of foreclosures, a crowded inventory landscape and mortgage rates that are anything but friendly. But these factors could, ironically, be a sign to buy. For instance, when interest rates go up uniformly over time as they have been, people develop a bite-the-bullet mentality, thinking: “I’d better buy now even though they’re high, because it doesn’t seem like they’re going down any time soon.”
This mentality—of getting in before things move up—is something to think about if you’ve been considering selling. Get your home prepared to sell by having a professional home inspection and fixing major problems that could be impediments to buyer interest. And for buyers: Buying a home is an individual process with many factors at play, so it’s impossible to say that it’s the ideal time for everyone to buy. But for many buyers, a simple saying may very well hold true: Get in while the getting’s good.
Resources:
http://www.standardandpoors.com
http://www.businessinsider.com/dont-bet-on-lower-housing-prices-in-2011-2011-1#ixzz1ArrToucQ
http://www.cbsnews.com/video/watch/?id=7161184n
RISMedia
Tuesday, February 15, 2011
FSBOs Vanish, Sellers Turn to Real Estate Pros
For-sale-by-owners are rare nowadays. In fact, the number of FSBOs dropped to record lows over the past year.
Unrepresented sellers make up just 11 percent of the market, down from 13 percent in 2009, according to the 2010 National Association of REALTORS® Profile of Home Buyers and Sellers.
With today’s more complex transactions--such as with short sales and foreclosures and frequent changes in mortgage lending--more sellers are finding comfort in the help of real estate professionals to guide them through the process.
FSBOs once were lured to try to sell themselves because they thought they could save on commission fees, but now sellers are realizing that if they don’t use an agent, it’ll likely cost them more in the long run, experts say.
"Selling by owner does not guarantee the seller will put 5 [percent] to 6 percent more in his or her pocket in trade for doing all the work and taking on potentially costly liabilities,” Margaret Woda, associate broker with Long & Foster in Crofton, Md., told The Washington Times. “On the contrary, prospective FSBO buyers have their eyes on that 5 percent to 6 percent as well. It's more likely the buyer will win this negotiation in a buyer's market with a huge price reduction--probably even larger than the saved commission."
Some FSBO sellers also often make the mistake of listing their home at a higher price than the market warrants. But even if they do find a buyer for that price, unless it’s a cash purchase, the home has to be appraised and many deals can then fall apart.
Source: “Fewer Sellers Going Do-it-Yourself Route,” The Washington Times (Feb. 11, 2011)
Unrepresented sellers make up just 11 percent of the market, down from 13 percent in 2009, according to the 2010 National Association of REALTORS® Profile of Home Buyers and Sellers.
With today’s more complex transactions--such as with short sales and foreclosures and frequent changes in mortgage lending--more sellers are finding comfort in the help of real estate professionals to guide them through the process.
FSBOs once were lured to try to sell themselves because they thought they could save on commission fees, but now sellers are realizing that if they don’t use an agent, it’ll likely cost them more in the long run, experts say.
"Selling by owner does not guarantee the seller will put 5 [percent] to 6 percent more in his or her pocket in trade for doing all the work and taking on potentially costly liabilities,” Margaret Woda, associate broker with Long & Foster in Crofton, Md., told The Washington Times. “On the contrary, prospective FSBO buyers have their eyes on that 5 percent to 6 percent as well. It's more likely the buyer will win this negotiation in a buyer's market with a huge price reduction--probably even larger than the saved commission."
Some FSBO sellers also often make the mistake of listing their home at a higher price than the market warrants. But even if they do find a buyer for that price, unless it’s a cash purchase, the home has to be appraised and many deals can then fall apart.
Source: “Fewer Sellers Going Do-it-Yourself Route,” The Washington Times (Feb. 11, 2011)
More homebuyers getting a CLUE
Some homebuyers and their real estate agents are making deals contingent upon a Comprehensive Loss Underwriting Exchange (CLUE) report, which lists details about the property’s historic insurance losses. The CLUE report can help buyers avoid surprises with regard to the cost and availability of homeowner’s insurance.
“If the report for a property indicates that [significant or notable] insurance losses have not occurred within the past five years, the buyer can feel comfortable that the insurance loss history of the property should not impact the availability or pricing of insurance,” says Stephen Gillard, product principal for CLUE.
However, the CLUE report only shows losses tied to the property in question – not losses associated with the buyer at locations they have owned in the past – and it must be requested by either the homeowner or the lender.
Source: INFORMATION, INC. Bethesda, MD
“If the report for a property indicates that [significant or notable] insurance losses have not occurred within the past five years, the buyer can feel comfortable that the insurance loss history of the property should not impact the availability or pricing of insurance,” says Stephen Gillard, product principal for CLUE.
However, the CLUE report only shows losses tied to the property in question – not losses associated with the buyer at locations they have owned in the past – and it must be requested by either the homeowner or the lender.
Source: INFORMATION, INC. Bethesda, MD
3 biggest lenders close over half of U.S. mortgages
Three big lenders generated more than half of last year’s originations, according to the Fourth Quarter 2010 Mortgage Lender Ranking from MortgageDaily.com. Wells Fargo, Bank of America and Chase originated 56 percent of last year’s business.
The number of FHA-backed loans also rose from around 19.1 percent in 2009 to 19.8 percent in 2010.
A closing occurs when a borrower signs new loan documents, and U.S. lenders closed on about $1.530 trillion in 2010, down from 2009’s roughly $1.970 trillion.
Wells’ $387 billion in 2010 fundings made it the biggest lender, though its business was down 8 percent. PHH increased its number of loans the most over the one-year period, with production climbing 30 percent. PNC had the biggest year-to-year drop, falling 45 percent.
Annual Originations Rank 2010
1. Wells
2. Bank of America
3. Chase
4. GMAC
5. Citigroup
6. USBank
7. PHH
8. SunTrust
9. Quicken
10. Flagstar
Lenders tracked by Mortgage Daily saw fourth-quarter production climb 22 percent from the third quarter and 30 percent from the fourth-quarter 2009. Wells dominated fourth-quarter production, with business improving more than a quarter. PHH’s 45 percent improvement was the best among the players, while USAA was the only top-15 player to see a decline: 22 percent.
To see the complete list of rankings, including quarter originations, servicing portfolio sizes, and a comparison to 2009 numbers, visit Trulia.com.
Source: Florida Realtors®
The number of FHA-backed loans also rose from around 19.1 percent in 2009 to 19.8 percent in 2010.
A closing occurs when a borrower signs new loan documents, and U.S. lenders closed on about $1.530 trillion in 2010, down from 2009’s roughly $1.970 trillion.
Wells’ $387 billion in 2010 fundings made it the biggest lender, though its business was down 8 percent. PHH increased its number of loans the most over the one-year period, with production climbing 30 percent. PNC had the biggest year-to-year drop, falling 45 percent.
Annual Originations Rank 2010
1. Wells
2. Bank of America
3. Chase
4. GMAC
5. Citigroup
6. USBank
7. PHH
8. SunTrust
9. Quicken
10. Flagstar
Lenders tracked by Mortgage Daily saw fourth-quarter production climb 22 percent from the third quarter and 30 percent from the fourth-quarter 2009. Wells dominated fourth-quarter production, with business improving more than a quarter. PHH’s 45 percent improvement was the best among the players, while USAA was the only top-15 player to see a decline: 22 percent.
To see the complete list of rankings, including quarter originations, servicing portfolio sizes, and a comparison to 2009 numbers, visit Trulia.com.
Source: Florida Realtors®
Survey: One-stop shopping still going strong
A recent survey of more than 1,100 recent and future homebuyers by the National Association of Realtors® (NAR) and Harris Interactive finds that 63 percent were extremely or somewhat familiar with one-stop shopping, and 39 percent used a real estate-affiliated service provider – up from 29 percent in 2008.
According to the poll results, 78 percent of respondents expect one-stop shopping to save money, 75 percent believe it makes the home-buying process more efficient, 73 percent think it offers a more thorough process, and 73 percent believe it is more convenient.
Just over half of buyers who used one-stop shopping were satisfied, while only 42 percent who used numerous sources for real estate services said the same. The survey also discovered that 56 percent used real estate agents as their primary point of contact, while only 15 percent used mortgage lenders.
When asked about difficulty in obtaining mortgages, 52 percent blamed lenders for refusing to make loans; 28 percent blamed the economic downturn, and 10 percent faulted new federal laws and regulations.
Source: INFORMATION, INC. Bethesda, MD
According to the poll results, 78 percent of respondents expect one-stop shopping to save money, 75 percent believe it makes the home-buying process more efficient, 73 percent think it offers a more thorough process, and 73 percent believe it is more convenient.
Just over half of buyers who used one-stop shopping were satisfied, while only 42 percent who used numerous sources for real estate services said the same. The survey also discovered that 56 percent used real estate agents as their primary point of contact, while only 15 percent used mortgage lenders.
When asked about difficulty in obtaining mortgages, 52 percent blamed lenders for refusing to make loans; 28 percent blamed the economic downturn, and 10 percent faulted new federal laws and regulations.
Source: INFORMATION, INC. Bethesda, MD
FHA-insured loans to cost more
Effective April 18, the monthly mortgage insurance premium paid on FHA mortgages will go up about $30 per month for an average borrower, federal officials said yesterday. The upfront mortgage insurance premium paid at closing, however, will remain at 1 percent of the mortgage amount.
The U.S. Department of Housing and Urban Development (HUD) that oversees FHA says it has two reasons for the increase. First, FHA’s capital reserves are currently below a mandated minimum set by the legislature, and the fee increase will help the agency comply with the law. Second, HUD hopes to steer more buyers away from FHA loans and into the private sector by making an FHA loan less desirable.
To create the increase, HUD will boost the monthly mortgage insurance premium by 25 basis points – to 115 basis points – on FHA-backed single-family loans with loan-to-value ratios above 95 percent.
While the change is part of President Obama’s proposed budget, HUD does not need legislative approval to make the change, according to HUD Secretary Shaun Donovan.
Source: Florida Realtors®
The U.S. Department of Housing and Urban Development (HUD) that oversees FHA says it has two reasons for the increase. First, FHA’s capital reserves are currently below a mandated minimum set by the legislature, and the fee increase will help the agency comply with the law. Second, HUD hopes to steer more buyers away from FHA loans and into the private sector by making an FHA loan less desirable.
To create the increase, HUD will boost the monthly mortgage insurance premium by 25 basis points – to 115 basis points – on FHA-backed single-family loans with loan-to-value ratios above 95 percent.
While the change is part of President Obama’s proposed budget, HUD does not need legislative approval to make the change, according to HUD Secretary Shaun Donovan.
Source: Florida Realtors®
Monday, February 14, 2011
Saving Money with Salvaged Building Materials
Salvaged building materials allow you to improve your home inexpensively--but might require an extra investment of time and energy.
If you're looking to improve your home on the cheap, consider using salvaged building materials. Besides being less expensive than new materials, secondhand features can add character, quality, and value to your home. But note that the savings in dollars may require a greater investment in time and effort.
Remodeling with secondhand building materials has many fans. Some are owners of historic houses who improve their homes by adding period elements. Others follow green building practices and appreciate conserving resources and keeping materials out of landfills. And still others are looking for quirky elements that will break their homes out of cookie-cutter molds.
Recycled building materials are getting easier to find
According to the Building Materials Reuse Association (http://www.bmra.org), recycling is becoming more common in the construction industry. That means reclaimed building elements like doors, windows, plumbing fixtures, and wood flooring are increasingly easy to find.
Habitat for Humanity's nationwide chain of ReStores (http://www.habitat.org/cd/env/restore.aspx) sells recycled items, and many cities have architectural salvage yards. Online, neighbors advertise unwanted items on community bulletin boards, such as Craigslist (http://www.craigslist.org/about/sites), and national directories of recycled materials, such as EcoBusinessLinks (http://www.ecobusinesslinks.com/recycled-building-materials.htm), can be great sources for hard-to-find elements. And the price is right: reused pieces can be 50% to 75% cheaper than their new counterparts.
Searching for salvaged materials
Sounds terrific, right? But it's not that simple. Using recycled building elements is like shopping at a thrift store: You can't be certain you'll find exactly what you're looking for. Anyone interested in a good deal to spruce up their home-an ornate wood mantelpiece or a set of Victorian doors, for example-has to be willing to compromise on some of the details and commit some time to the endeavor.
If you live in or near a city and have access to a salvage yard, you're in luck. Many receive multiple new shipments daily, and some, such as Seattle's Second Use (http://www.seconduse.com/), post their offerings online.
But in most cases, there's no substitute for regularly showing up in person to check out what's available. If you've got something particular in mind, plan on spending a few afternoons at the salvage yard trying to track down what you're looking for. The same is true if you're exploring online: locating the right piece may take longer than you'd expected.
Before beginning your search, make sure you've got measurements in hand. It's useful if you can allow for some wiggle room: unlike big home improvement stores, the items on sale are usually one-of-a-kind pieces. So while a recent truckload might have dropped off a beautiful old mantelpiece, the size might not be an exact fit; know in advance if you can manage with a slightly larger or smaller size.
Dealing with lead paint
Some old items need to be treated with serious care. Ruthie Mundell of Community Forklift (http://www.communityforklift.com/), a salvage yard in Edmonston, Md., says that the staff tries to flag items that appear to be lead paint hazards--that is, anything painted prior to 1978, when the Consumer Product Safety Commission (http://www.cpsc.gov/) (CPSC) banned lead in paints.
Nevertheless, buyers of old painted items need to be aware of the potential hazards. Older paint doesn't mean the pieces are unusable, but the paint must be thoroughly removed or sealed-never scraped or sanded. The CPSC offers guidelines (http://www.cpsc.gov/cpscpub/pubs/5054.html) for treating lead paint in the household.
Finding savings
Some salvaged pieces are better deals than others. The best is often flooring: careful shoppers can find used floor boards from quality old wood that's difficult to come by these days. Sat Jiwan Ikle-Khalsa, a green living consultant in Takoma Park, Md., scoured a local salvage yard and found maple, white oak, and rare heart pine flooring at a low price for his renovated 1940s-era home. He estimates he saved more than $2,000 over the cost of new flooring.
Other useful finds are doors, particularly those already on a frame, and plumbing elements. Antique light fixtures can be a great bargain, but check whether they've been recently rewired before you buy; otherwise, you may have to do it yourself, or pay an electrician for the service.
Windows are common, but many older widows are single-pane and not energy efficient. These are better used for interior walls to add light and air flow between rooms. Stained glass panels are relatively common at salvage yards and cost from $50 to $500.
Sample price comparisons for various salvaged materials
Salvaged oak flooring: $1 to $3 per sq. ft.
New oak flooring: $4 to $10 per sq. ft.
Average savings for 12x16-foot room: $960
Salvaged interior solid panel door (basic): $20 to $50
New interior panel door: $200 to $400
Average savings: $265
Secondhand pedestal sink: $20 to $250
New pedestal sink: $100 to $800
Average savings: $315
Recycled crown molding: $.30 to $1 per lineal ft.
New crown molding: $.90 to $3 per lineal ft.
Average savings for 12x16-foot room: $72.80
Don't forget to add in transportation costs. Not all salvage yards deliver, and those that do aren't necessarily cheap: the cost of getting materials across town could be $100 or more. It might make more sense to borrow or rent a truck on your own.
The value of salvage building components
Salvaged elements may not add to a home's appraised value, according to Chicago appraiser Tim McCarthy, president of T.J. McCarthy and Associates. An appraiser probably won't include a home's reclaimed heart pine beams in the kitchen or the bathroom's antique plumbing fixtures when calculating the house's value.
But that doesn't mean the seller can't use those amenities as selling points and boost the asking price accordingly. "It's very market-specific," McCarthy says. In higher-end neighborhoods, homebuyers may be willing to pay more for authentic elements that give a house personality.
McCarthy recommends talking with a local realtor before making changes; they'll have a good sense of the housing market's current demands and should be able to tell you whether a vintage element will boost your home's market value.
Working with salvage
To effectively integrate salvaged items, Arne Mortensen, owner of Mortensen Design/Build in Seattle, recommends choosing a contractor who has a particular interest and experience in working with recycled building materials. Salvage yard staffs may be able to recommend someone; other sources for 'green' contractors include online sites like Angie's List (http://www.angieslist.com/angieslist/).
Nonetheless, the time-consuming legwork of finding good pieces generally falls to the homeowner. To make the process easier, spend time thinking about and researching online what you want before you begin to shop. And be prepared to be persistent; happy hunting takes patience.
Amanda Abrams is a Washington, D.C.-based writer who spent years as a policy analyst improving people's access to decent housing. Her interest in salvaged building materials and all things secondhand originated 15 years ago with a chance visit to Urban Ore, a vast warehouse of used treasures in Berkeley, Calif., where she was attending college at the time.
Source: HouseLogic
If you're looking to improve your home on the cheap, consider using salvaged building materials. Besides being less expensive than new materials, secondhand features can add character, quality, and value to your home. But note that the savings in dollars may require a greater investment in time and effort.
Remodeling with secondhand building materials has many fans. Some are owners of historic houses who improve their homes by adding period elements. Others follow green building practices and appreciate conserving resources and keeping materials out of landfills. And still others are looking for quirky elements that will break their homes out of cookie-cutter molds.
Recycled building materials are getting easier to find
According to the Building Materials Reuse Association (http://www.bmra.org), recycling is becoming more common in the construction industry. That means reclaimed building elements like doors, windows, plumbing fixtures, and wood flooring are increasingly easy to find.
Habitat for Humanity's nationwide chain of ReStores (http://www.habitat.org/cd/env/restore.aspx) sells recycled items, and many cities have architectural salvage yards. Online, neighbors advertise unwanted items on community bulletin boards, such as Craigslist (http://www.craigslist.org/about/sites), and national directories of recycled materials, such as EcoBusinessLinks (http://www.ecobusinesslinks.com/recycled-building-materials.htm), can be great sources for hard-to-find elements. And the price is right: reused pieces can be 50% to 75% cheaper than their new counterparts.
Searching for salvaged materials
Sounds terrific, right? But it's not that simple. Using recycled building elements is like shopping at a thrift store: You can't be certain you'll find exactly what you're looking for. Anyone interested in a good deal to spruce up their home-an ornate wood mantelpiece or a set of Victorian doors, for example-has to be willing to compromise on some of the details and commit some time to the endeavor.
If you live in or near a city and have access to a salvage yard, you're in luck. Many receive multiple new shipments daily, and some, such as Seattle's Second Use (http://www.seconduse.com/), post their offerings online.
But in most cases, there's no substitute for regularly showing up in person to check out what's available. If you've got something particular in mind, plan on spending a few afternoons at the salvage yard trying to track down what you're looking for. The same is true if you're exploring online: locating the right piece may take longer than you'd expected.
Before beginning your search, make sure you've got measurements in hand. It's useful if you can allow for some wiggle room: unlike big home improvement stores, the items on sale are usually one-of-a-kind pieces. So while a recent truckload might have dropped off a beautiful old mantelpiece, the size might not be an exact fit; know in advance if you can manage with a slightly larger or smaller size.
Dealing with lead paint
Some old items need to be treated with serious care. Ruthie Mundell of Community Forklift (http://www.communityforklift.com/), a salvage yard in Edmonston, Md., says that the staff tries to flag items that appear to be lead paint hazards--that is, anything painted prior to 1978, when the Consumer Product Safety Commission (http://www.cpsc.gov/) (CPSC) banned lead in paints.
Nevertheless, buyers of old painted items need to be aware of the potential hazards. Older paint doesn't mean the pieces are unusable, but the paint must be thoroughly removed or sealed-never scraped or sanded. The CPSC offers guidelines (http://www.cpsc.gov/cpscpub/pubs/5054.html) for treating lead paint in the household.
Finding savings
Some salvaged pieces are better deals than others. The best is often flooring: careful shoppers can find used floor boards from quality old wood that's difficult to come by these days. Sat Jiwan Ikle-Khalsa, a green living consultant in Takoma Park, Md., scoured a local salvage yard and found maple, white oak, and rare heart pine flooring at a low price for his renovated 1940s-era home. He estimates he saved more than $2,000 over the cost of new flooring.
Other useful finds are doors, particularly those already on a frame, and plumbing elements. Antique light fixtures can be a great bargain, but check whether they've been recently rewired before you buy; otherwise, you may have to do it yourself, or pay an electrician for the service.
Windows are common, but many older widows are single-pane and not energy efficient. These are better used for interior walls to add light and air flow between rooms. Stained glass panels are relatively common at salvage yards and cost from $50 to $500.
Sample price comparisons for various salvaged materials
Salvaged oak flooring: $1 to $3 per sq. ft.
New oak flooring: $4 to $10 per sq. ft.
Average savings for 12x16-foot room: $960
Salvaged interior solid panel door (basic): $20 to $50
New interior panel door: $200 to $400
Average savings: $265
Secondhand pedestal sink: $20 to $250
New pedestal sink: $100 to $800
Average savings: $315
Recycled crown molding: $.30 to $1 per lineal ft.
New crown molding: $.90 to $3 per lineal ft.
Average savings for 12x16-foot room: $72.80
Don't forget to add in transportation costs. Not all salvage yards deliver, and those that do aren't necessarily cheap: the cost of getting materials across town could be $100 or more. It might make more sense to borrow or rent a truck on your own.
The value of salvage building components
Salvaged elements may not add to a home's appraised value, according to Chicago appraiser Tim McCarthy, president of T.J. McCarthy and Associates. An appraiser probably won't include a home's reclaimed heart pine beams in the kitchen or the bathroom's antique plumbing fixtures when calculating the house's value.
But that doesn't mean the seller can't use those amenities as selling points and boost the asking price accordingly. "It's very market-specific," McCarthy says. In higher-end neighborhoods, homebuyers may be willing to pay more for authentic elements that give a house personality.
McCarthy recommends talking with a local realtor before making changes; they'll have a good sense of the housing market's current demands and should be able to tell you whether a vintage element will boost your home's market value.
Working with salvage
To effectively integrate salvaged items, Arne Mortensen, owner of Mortensen Design/Build in Seattle, recommends choosing a contractor who has a particular interest and experience in working with recycled building materials. Salvage yard staffs may be able to recommend someone; other sources for 'green' contractors include online sites like Angie's List (http://www.angieslist.com/angieslist/).
Nonetheless, the time-consuming legwork of finding good pieces generally falls to the homeowner. To make the process easier, spend time thinking about and researching online what you want before you begin to shop. And be prepared to be persistent; happy hunting takes patience.
Amanda Abrams is a Washington, D.C.-based writer who spent years as a policy analyst improving people's access to decent housing. Her interest in salvaged building materials and all things secondhand originated 15 years ago with a chance visit to Urban Ore, a vast warehouse of used treasures in Berkeley, Calif., where she was attending college at the time.
Source: HouseLogic
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