Wednesday, December 10, 2008
Friday, November 14, 2008
Best Places to Sell a Suburban Home Sellers' markets are rare this year, but there are some suburban areas where prices are holding steady or rising and time on the market is measured in days or months, not years.
Forbes magazine took a look at the 90 days of sales activity in the 75 largest Census-defined metro areas. It narrowed its search to those communities with at least 75 homes on the market, and eliminated suburbs where it takes more than 125 days to sell an average home. The magazine also cut out any suburb in which year-over-hear price declines were greater than 10 percent and where more than 50 percent of sellers had to reduce their asking price to sell.What’s left? A list of the top 10 suburban markets where properties are selling at competitive prices relatively rapidly.
Berkeley, Calif.: 14 miles north of San Francisco; median home price, $799,986; 73 days
Bedford, Texas: 22 miles west of Dallas; $169,093; 84 days
Venice, Calif.: 16 miles west of Los Angeles; $1.5 million; 95 days
Kennesaw, Ga.: 28 miles northwest of Atlanta; $241,196; 104 days
Sugarland, Texas: 20 miles southwest of Houston; $265,418; 106 days
Midvale, Utah: 13 miles south of Salt Lake City; $255,003; 106 days
Matthews, N.C.: 12 miles southeast of Charlotte; $320,990; 127 days
Encinitas, Calif.: 28 miles north of San Diego; $1.23 million; 100 days
Waltham, Mass.: 26 miles west of Boston; $790,986; 79 days
Montclair, N.J.: 13 miles west of New York City; $450,761; 115 days
Wednesday, November 5, 2008
“We’re in a good place,” says 2009 NAR President Charles McMillan. “REALTORS® are excited by this historic election and stand ready to work with our new president and the new Congress on issues that are at the heart of the American dream of homeownership.”
The availability of affordable mortgage financing and affordable health insurance top REALTORS®’ legislative priority list; more important, those issues are also priorities for both major parties.
“There is no partisan divide when it comes to homeownership, strong communities, affordable health insurance, and strong commercial real estate markets,” McMillan says.
Bipartisan Election Support
NAR provided election support through the REALTORS® Political Action Committee (RPAC) to more than 400 candidates, with just slightly more than half of its funds going to Democrats. The small difference in support reflects the larger number of Democrats in the outgoing 110th Congress. “Ours is the most bipartisan PAC in the country,” says RPAC Chair Larry Edwards.
The PAC provided more than $4 million directly to candidates in the general election. Another several million dollars went toward helping about 74 candidates through the NAR Opportunity Race program and a half dozen candidates through the association’s Independent Expenditure program. All told, NAR was expected to spend up to $16 million total in the two-year cycle that ended with the Nov. 4 elections.
In an Opportunity Race, NAR sends educational and get-out-the vote materials in support of an RPAC-backed candidate in the candidate’s district. Independent Expenditures are aimed at the general public and fund radio, TV, and direct mail ads to explain issues of concern to the real estate industry.
REALTOR® Victories in Congress
Rep. Shelley Moore Capito (R-W.Va.). A member of the House Financial Services Committee, Capito was one of REALTORS®’ big winners, overcoming a stiff challenge to win a fifth term. Capito has been a strong advocate for NAR-backed small business health insurance coverage and helped pass FHA reform, the first-time homebuyer tax credit, and expansion of homeownership opportunities for U.S. veterans.
Jerry McNerney (D-Calif.). This freshman lawmaker who played a key role in Congress to increase conforming loan limits, eked out a narrow victory in a fiercely contested race. “Rep. McNerney made his mark quickly as a strong advocate for FHA reform, the home buyer tax credit, and expanded homeownership opportunities for veterans,” says NAR Chief Lobbyist Jerry Giovaniello.
Rep. Paul Kanjorski (D-Pa.). Kanjorski, who authored legislation to keep banks out of real estate, surprised pundits and pollsters, beating out Republican challenger Lou Barletta, the mayor of Hazleton, Pa. “Rep. Kanjorski has been a courageous leader on our behalf,” says NAR’s McMillan. “We’re proud of our support for him.”
Not all of NAR’s efforts to help REALTOR®-friendly lawmakers succeeded. Rep. Chris Shays (R-Conn.), a veteran lawmaker on the pivotal House Financial Services Committee, lost a hard-fought campaign. Shays helped pass housing stimulus legislation this year and has been a steady supporter of NAR-backed legislation to keep banks out of real estate.
Shays was defeated by Democrat Jim Himes, a former Goldman Sachs vice president who went on to become an executive with Enterprise Community Partners, a leader in affordable housing and community development.
Expect Renewed Focus on Fannie, Freddie
NAR analysts say REALTORS® can expect the Obama Administration and the new Congress to focus first and foremost on regulatory reform of the country’s financial services industry.
Lawmakers will be looking at what went wrong and what needs to change to ensure proper regulation of mortgage- and other asset-backed securities.
A large part of this review will focus on potential changes to secondary mortgage market companies Fannie Mae and Freddie Mac, which are under government conservatorship. Among the options on the table: folding them entirely into the government, making them 100-percent privatized companies, or keeping them as public-private hybrids.
NAR has formed a presidential advisory group (PAG) on the future of Fannie and Freddie, and the association will be weighing in as Congress takes on the issue, NAR analysts say.
Friday, October 24, 2008
The National Association of Realtors said Friday that existing home sales rose to a 5.18 million annual rate, up 5.5% from August’s number. Meanwhile, the median price for a home continued to fall, dropping 9.0% to $191,600.
Economists were expecting existing home sales to come in at a 4.97 million annual rate, according to data provided by Thomson Reuters.
Probably the best indicator that came out of the housing report was home inventories. The association said the supply of homes dropped from a 10.6-month supply of homes to a 9.9-month supply of homes. It’s the second month that the supply of homes has decreased. In order for home prices to stabilize, economists have noted that the supply of homes has to decrease.
NAR economist Lawrence Yun said the increase in home sales is “a nice jump.”
One month’s change in existing home sales is not a trend, economists warned, and several months of figures similar to September’s number would be required before analysts will call a housing market bottom.
“If this continues, people will stop expecting further price falls and activity will start to recover,” said Ian Shepherdson, chief U.S. economist with High Frequency Economics, in a research note.
Shepherdson noted that the bulk of the sales done in September were distressed sales primarily influenced by bottom-fishing.
“Most, if not all, the rise in sales is due to vulture investors buying cheap foreclosed homes, but all sales reduce inventory,” he said.
The average 30-year mortgage rate fell from 6.48% to 6.04% in September.
taken from foxbusiness.com
Thursday, October 9, 2008
First time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after April 9, 2008 and before July 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs.
What is the definition of a first-time home buyer?
The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.
How do I claim the tax credit? Do I need to complete a form or application?
Participating in the tax credit program is easy. You claim the tax credit on your federal income tax return. No other applications or forms are required. No pre-approval is necessary; however, prospective home buyers will want to be sure they qualify for the credit under the income limits and first-time home buyer tests.
What types of homes will qualify for the tax credit?
Any home purchased by an eligible first-time home buyer will qualify for the credit, provided that the home will be used as a principal residence and the buyer has not owned a home in the previous three years. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats.
Instead of buying a new home from a home builder, I have hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been "purchased" on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after April 9, 2008 and before July 1, 2009.
In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.
What is "modified adjusted gross income"?
Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine "adjusted gross income" or AGI. AGI is total income for a year minus certain deductions (known as "adjustments" or "above-the-line deductions"), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.
To determine modified adjusted gross income (MAGI), add to AGI certain amounts such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs.
If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
Possibly. It depends on your income. Partial credits of less than $7,500 are available for some taxpayers whose MAGI exceeds the phaseout limits. The credit becomes totally unavailable for individual taxpayers with a modified adjusted gross income of more than $95,000 and for married taxpayers filing joint returns with an AGI of more than $170,000.
Can you give me an example of how the partial tax credit is determined?
Just as an example, assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $7,500 by 0.5. The result is $3,750.
Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $7,500 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,625.
Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.
Does the credit amount differ based on tax filing status?
No. The credit is in general equal to $7,500 for a qualified home purchase, whether the home buyer files taxes as a single or married taxpayer. However, if a household files their taxes as "married filing separately" (in effect, filing two returns), then the credit of $7,500 is claimed as a $3,750 credit on each of the two returns.
Are there any circumstances for which buyers whose incomes are at or below the $75,000 limit for singles or the $150,000 limit for married taxpayers might not be able to claim the full $7,500 tax credit?
In general, the tax credit is equal to 10% of the qualified home purchase price, but the credit amount is capped or limited at $7,500. For most first-time home buyers, this means the credit will equal $7,500. For home buyers purchasing a home priced less than $75,000, the credit will equal 10% of the purchase price.
I heard that the tax credit is refundable. What does that mean?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.
For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that taxpayer qualified for the $7,500 home buyer tax credit. As a result, the taxpayer would receive a check for $6,500 ($7,500 minus the $1,000 owed).
What is the difference between a tax credit and a tax deduction?
A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $7,500 in income taxes and who receives a $7,500 tax credit would owe nothing to the IRS.
A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $7,500 in income taxes. If the taxpayer receives a $7,500 deduction, the taxpayer’s tax liability would be reduced by $1,125 (15 percent of $7,500), or lowered from $7,500 to $6,375.
Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
No. The tax credit cannot be combined with the MRB home buyer program.
I live in the District of Columbia. Can I claim both the DC first-time home buyer credit and this new credit?
No. You can claim only one.
I am not a U.S. citizen. Can I claim the tax credit?
Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of "nonresident alien" in IRS Publication 519.
Does the credit have to be paid back to the government? If so, what are the payback provisions?
Yes, the tax credit must be repaid. Home buyers will be required to repay the credit to the government, without interest, over 15 years or when they sell the house, if there is sufficient capital gain from the sale. For example, a home buyer claiming a $7,500 credit would repay the credit at $500 per year. The home owner does not have to begin making repayments on the credit until two years after the credit is claimed. So if the tax credit is claimed on the 2008 tax return, a $500 payment is not due until the 2010 tax return is filed. If the home owner sold the home, then the remaining credit amount would be due from the profit on the home sale. If there was insufficient profit, then the remaining credit payback would be forgiven.
Why must the money be repaid?
Congress’s intent was to provide as large a financial resource as possible for home buyers in the year that they purchase a home. In addition to helping first-time home buyers, this will maximize the stimulus for the housing market and the economy, will help stabilize home prices, and will increase home sales. The repayment requirement reduces the effect on the Federal Treasury and assumes that home buyers will benefit from stabilized and, eventually, increasing future housing prices.
Because the money must be repaid, isn’t the first-time home buyer program really a zero-interest loan rather than a traditional tax credit?
Yes. Because the tax credit must be repaid, it operates like a zero-interest loan. Assuming an interest rate of 7%, that means the home owner saves up to $4,200 in interest payments over the 15-year repayment period. Compared to $7,500 financed through a 30-year mortgage with a 7% interest rate, the home buyer tax credit saves home buyers over $8,100 in interest payments. The program is called a tax credit because it operates through the tax code and is administered by the IRS. Also like a tax credit, it provides a reduction in tax liability in the year it is claimed.
If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?
Yes. The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.
For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?
Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.
Is there any way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2008 tax return?
Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the future home buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment. Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.
Wednesday, October 1, 2008
We interrupt this financial crisis with a word from its sponsor: the families who are losing homes to foreclosure.
They're still circling the drain, to pick up on Federal Reserve Chairman Ben Bernanke's colorful metaphor describing credit markets as the economy's plumbing. Right now, the plumbing is clogged with bad securities backed by bad home mortgages. The federal bailout is designed to free up the system.
A separate bailout for troubled homeowners is supposed to launch this week. The new ''Hope for Homeowners" program, passed in late July, is scheduled to go into effect Wednesday. It's designed to allow refinancing for people who cannot pay their mortgage and who can't refinance into something better because their home value is now too low to pay off the unaffordable old loan.
Under the program, those borrowers may qualify for a new 30-year, fixed-rate mortgage insured by the Federal Housing Administration (FHA) if (and it's a huge if) their current lender agrees to forgive enough of their debt so that they would have at least 10 percent equity, right now.
Lender participation is voluntary, and writing off principal is the last technique most will employ when trying to save borrowers from foreclosure. In other words, the investors who own the bonds backed by these bad mortgages don't like to write off part of the debt owed so the homeowner can avoid foreclosure. They would rather try something else first, such as reducing the interest rate or stretching out the repayment period, which causes smaller losses to them. Or they might even prefer that the home goes into foreclosure.
Bank of America, which earlier this year bought big mortgage-lender Countrywide, seems more accommodating than some other lenders. Michael Gross of BofA said the bank postponed all 1,650 foreclosures that were scheduled from Sept. 8 to Sept. 22 until at least Oct. 15 and is evaluating whether those borrowers might benefit from the new Hope refinance.
Relief will probably not arrive on the Wednesday start date. The final details of the program hadn't been published as of last week. And the folks on the front lines of the housing crisis - housing and debt counselors - certainly don't have the details.
If you're in danger of losing your home, and you think you might qualify for one of the new Hope refinances - or for other assistance, for that matter - take the initiative. Call your loan servicer and ask about the Hope for Homeowners program. And, by all means, if your lender tries to reach you by mail, e-mail or phone, respond to the outreach. He or she may have good news about your eligibility for a refinanced loan you can afford.
Thursday, September 25, 2008
Friday, September 19, 2008
Increasingly, sellers seeking short sales are encountering a new twist.
Lenders are agreeing to let some short sales go through, but they want the home owners to sign a note promising to pay some or all of the balance due – debts that could burden borrowers for the rest of their lives.
Moody’s Economy.com estimates that about 10 million home owners have negative equity, a condition known colloquially as being upside down or underwater. By next June, the forecasting company expects the total to rise to 12.7 million — a quarter of all home owners who have mortgages.
“The first wave of foreclosures involved a lot of investors who just disappeared,” says Lance Churchill of Frontline Seminars, which teaches real estate practitioners how to negotiate with lenders on short sales. “Now, home owners with jobs and assets are underwater and want to sell. The banks want as much as they can get, today or in the future, and the owners want to get away clean.”
If the lender does a short sale without extracting anything from the seller, everyone in the country who is upside down could try to wiggle out from under and banks will take a fresh wave of hits. But if the lender pushes too hard, the borrower will default, leaving the bank in worse shape.
Source: The New York Times, David Streitfeld (09/18/08)
Wednesday, September 17, 2008
Homeowners who are struggling to make their mortgage payments must have more options available to them to avoid foreclosure, particularly in the area of short sales, according to National Association of Realtors®' testimony before the House Financial Services Committee today.
“When people lose homes to foreclosure, our communities, the housing market and our economy all suffer,” said Ron Phipps, 2009 NAR first vice president nominee. “Expanding the use of short sales would benefit consumers, lenders and the surrounding community.”
A short sale is a transaction in which the seller’s mortgage lender agrees to accept a payoff of less than the balance due on the loan. The lender often receives a higher amount of the remaining loan balance than it would from the sale of the property after a foreclosure. This helps support home values in the surrounding community. Short sales also help homeowners maintain some level of credit.
“Short sales can be used to avoid foreclosures, and can be less costly than a foreclosure to the lending institution,” Phipps said. “Unfortunately, many Realtors® are increasingly encountering roadblocks that prevent troubled homeowners from taking advantage of short sales. We hear that lenders are often taking a very long time to decide whether to accept a short sale, often resulting in the loss of the home buyer and the sale, and negatively impacting the neighborhood and the community,” said Phipps.
Realtors® cite many reasons for the difficulty in completing a short sale. These include burdensome paperwork, appraisals that do not consider the sellers’ duress or number of foreclosures in the community, over-burdened loss mitigation departments, and the complications created by second mortgages.
NAR has created a working group to examine the problems and difficulties surrounding short sales and to educate its members on how to best work with their clients through this process. NAR is also reaching out to its partners in the housing and mortgage industry to encourage adoption of principles and practices to streamline the short sale process. “We are asking all lenders and their servicers to deliver a clear answer, in writing, within a reasonable timeframe,” Phipps said.
“Our nation faces significant challenges in dealing with the economic turmoil fostered by the housing market,” said Phipps. “To combat this, we must assist those families threatened with the loss of their home by using all of the tools that we have at our disposal. Short sales offer families who cannot avoid losing their home a way to repay a portion of their debt obligation while maintaining a level of dignity during the process and somewhat salvaging their credit, enabling them to perhaps someday own a home again. NAR and its members stand ready to work with Congress and other industry partners to improve and implement all foreclosure mitigation efforts.”
Thanks to REALTOR.com for this fasinating article.
Wednesday, August 27, 2008
Utah home appreciation, in the year ending June 30 2008, fell to 1.9%. This is actually DEPRECIATION due to inflation. If inflation last year was 3%, do the math... we didn't even keep up. In fact, only Oklahoma, Wyoming, SD, NC, and ND beat inflation.
What does this mean? Honestly? There has NEVER been a better time to buy a house in the last 30 years. Old timer agents are comparing this to the drought of the late 70s early 80s when rates were 15%. Those who buy a home now will have purchased in the best buyer's market in over 2 decades.
Homes are still selling. In fact, homes priced right are receiving multiple offers. All real estate is local. While California is giving homes away for free, no wait, actually paying you to take their home, areas in Utah are seeing good gains. New construction has taken the worst hit. Homes priced 150-400 are still seeing good growth. It's the mega homes that are getting smashed.
My best advice? Buy now, sell later.
Tuesday, August 19, 2008
Single family homes including condos are eligible.
You receive the tax credit on your tax return in the form of a refund, not when you purchase the home. Therefore, if you purchased a home and received the full $7500 tax credit and your tax bill for the year was $2000--you would receive a refund of $5500.
The income limit is $75000 for individuals and $150000 for a joint return. Earning more than this and the credit begins to phase out in proportion to one's income.
Only people who have not owned a home as a primary residence in the past 3 years previous to the purchase qualify.
The tax credit must be repaid. Home buyers will be required to repay the credit to the government, without interest, over 15 years or when they sell the house, if there is sufficient capital gain from the sale. For example, a home buyer claiming a $7,500 credit would repay the credit at $500 per year. The home owner does not have to begin making repayments on the credit until two years after the credit is claimed. So if the tax credit is claimed on the 2008 tax return, a $500 payment is not due until the 2010 tax return is filed. If the home owner sold the home, then the remaining credit amount would be due from the profit on the home sale. If there was insufficient profit, then the remaining credit payback would be forgiven.
Wednesday, August 13, 2008
Monday, August 11, 2008
30-year fixed: 6.74%, up from 6.70% last week (avg. points: 0.38)
15-year fixed: 6.27%, up from 6.22% last week (avg. points: 0.47)
5/1 ARM: 6.32%, down from 6.35% last week (avg. points: 0.45)
Values in SL County have been holding steady since the mighty decrease that we've seen in the last year. I would estimate that the average home value in Salt Lake County decreased by over 10% in the last year. Some areas took a hard shot to the you know where.
Our month supply is still over 10 months, meaning values won't go up until we get back down to that safe 6-8 month supply range.
Meanwhile, the Utes prepare to smash Michigan...
Tuesday, July 8, 2008
Top 10 Best Counties to Raise a Family
Low cost of living, reasonably priced homes and short commute times added to excellent schools is what landed 10 communities at the top of Forbes magazine’s best places to raise a family.To be considered, the communities had to have populations greater than 65,000 and most of the school funding had to come from property taxes. Average SAT and ACT scores must top 1,050 or 22, respectively. These factors reduced the number of counties under consideration to 51.After that, the magazine considered cost of living, graduation rate, home prices, property tax rates as a percentage of median home prices, percentage of homes occupied by owners, per-capita income, air quality, crime rate and commute times.
Here are the results:
Hamilton County, Ind. (near Indianapolis)
Ozaukee County, Wis. (near Milwaukee)
Johnson County, Kan. (near Kansas City)
Geauga County, Ohio (near Cleveland)
Delaware County, Ohio (near Columbus)
Morris County, N.J. (northern N.J.)
Hunterdon County, N.J. (central N.J.)
Waukesha County, Wis. (near Milwaukee)
Montgomery County, Pa. (near Philadelphia)
Chester County, Pa. (near Wilmington, DE)
Source: Forbes, Zack O’Malley Greenburg (06/30/2008)
Monday, June 23, 2008
Tighter Lending Stalls Housing Recovery
Rising foreclosures and tightening credit standards are making it more difficult for the housing market to recover from the current downturn than it has been for the market to rebound from previous slowdowns, according to a Harvard University study."Historically, housing markets recover only after the economy has entered a recession and a combination of falling mortgage interest rates and house prices have improved housing affordability," Nicolas P. Retsinas, director of the Joint Center for Housing Studies at Harvard, said in a statement.
I think a 4 year old could piece together that the CAUSE of the market crash was loose credit standards and as rates rose homes started foreclosing left and right. So for the market to recover, one could assume we needed the foreclosures to end... right?
This is almost as good as the Princeton study (tax payer funded) that found that parents who talk to their babies typically help them start speaking earlier. Amazing. I'm glad I could help fund that.
2008 mid year reports will be available in one week. Don't be caught not knowing what the market is doing (what would you do!). To request a free copy email me at email@example.com.
In better news, I am told Harry Potter will be coming out in November. I am planning on renting out the theater for ya'll. Stay tuned...
Wednesday, June 4, 2008
*1st quarter 08 home sales in SL county are DOWN 67% from 1st quarter 07. Sales are lower than 2003 numbers.
*Homes have seen a 36% increase in value since 2003.
*28% of homes on the market are selling. Or, for the pessimist, 72% of homes are not selling. Contrary to popular belief, this is actually normal. THE MARKET HAS GONE BACK TO NORMAL. NOT COLLAPSE.
*During the boom, about 70% of homes were selling.
*The average home price fell to $267K. Down 7% from last quarter. I thought is was a law that real estate values always went up?
*Congress is full of idiots.
*There are currently more than 8200 homes for sale. About 2000 too many.
*SL county has a 8.7 month supply of homes. Buyer's market, baby. Buyer's market. Draper has a 13.1 month supply. Mega buyer's market.
*Did I mention congress is full of idiots?
Thursday, May 15, 2008
So... in other news. Why does the media hate the Jazz? I can't figure that out. Hubie Brown can't stand us.
Now this is really interesting. This is the top 10 states in % change of their population and growth. In other words, these are the states whose economies are either booming or dooming. It is good to see we are at the top. This is one reason why the recession shouldn't effect us too much.
Everyone wants to know how the market is. Have we been affected? Infected (yes, this year's Nile Virus will be replaced with the Amazon Virus)?
Higher priced homes have COME DOWN IN PRICE by about 10%. In the last 3 years your 300K home went up in value to 370. That baby has probably come down to about 349, maybe more (Still a 50K gain). We are seeing this all across the board. In the last 6 months, sales are strong and increasing, but prices have come down. Anyone who tells you different is a liar. For alot of sellers there is still a bunch of equity gain in their homes (for example if you bought 5 years ago). Many sellers who purchased in 2007 and are trying to sell are finding it very difficult (do I use parenthesis too much?).
I expect to see prices stabilize. We should see mild appreciation in most areas, some areas still need to come down, i.e. new construction, Herriman. Existing homes sales have picked up over the last couple months.
In other news... with the looming energy crisis on the verge of crippling the US, congress met and voted overwhelmingly to put the polar bears on the endangered species list even though pb numbers have gone from 5,000 to 30,000 in the last 25 years. Way to go congress, I'm glad you are hard at work. Meanwhile, gas approaches 8 dollars a gallon... stay tuned.
Thursday, May 8, 2008
By CYRIL MOULLE-BERTEAUX
May 6, 2008; Page A23
The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now. How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won't happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.
Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005. New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50% and, adjusted for population growth, are back to the trough levels of 1982. Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what's going to stop the housing decline? Very simply, the same thing that caused the bust: affordability. The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much. Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.
Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.
The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do. In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months. The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in "months of supply" terms. That's the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high – but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months.
Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000-100,000 annually. Inventories will drop even faster to 400,000 – or seven months of supply – by the end of 2008. This shift in inventories will have a significant impact on prices, although house prices won't stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market.
Many pundits claim that house prices need to fall another 30% to bring them back in line with where they've been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons. Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages. And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one's income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%.
Comparing today's house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading. This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity.
When the rate of house-price declines halves, there will be a wholesale shift in markets' perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face.
More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure. A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year. Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets' perception of risk related to housing, the financial system, and the economy.
We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to subtrend growth for a couple of years. Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now.
Mr. Moulle-Berteaux is managing partner of Traxis Partners LP, a hedge fund firm based in New York.
Tuesday, April 29, 2008
April 29, 2008
The number of vacant homes for sale in the United States set a new record in the first quarter of 2008, the U.S. Census Bureau reported Monday.The Census Bureau reported that 2.9 percent of U.S. homes or 2.28 million properties, not including rentals, were vacant and for sale. It was the highest quarterly number as far back to 1956 when records of such vacancies were first kept.The West had the biggest gain in vacancy rates among home owners, rising to 3.2 percent in the January-March period from 2.6 percent in the same quarter a year earlier. Vacancy rates inched up in the Northeast and remained steady in the Midwest and South.Source: The Associated Press, Alan Zibel (04/28/08)
Leave a post with a classy joke... get movie tickets.
Tuesday, April 22, 2008
Existing-Home Sales Slip in March
Existing-home sales edged down in March, remaining within a narrow range of sales activity that has persisted since last September, NAR says. Existing-home sales, which include single-family, townhomes, condominiums, and co-ops, were down 2.0 percent to a seasonally adjusted annual rate of 4.93 million units in March from a level of 5.03 million in February, and remain 19.3 percent below the 6.11 million-unit pace in March 2007. A rise in condo sales in March was offset by a drop in single-family sales. Regionally, sales rose in the Northeast and West but fell in the Midwest and South.
The national median existing-home price for all housing types was $200,700 in March, down 7.7 percent from a year ago when the median was $217,400. Because the slowdown in sales from a year ago is greater in high-cost areas, there is a downward pull to the national median with relatively higher sales activity in low-cost markets.
Monday, April 21, 2008
During the boom, there were over 10,000 homes for sale. Then came the crash--still 10,000 homes for sale but only about 20% being absorbed. During the over correction phase prices came flying down and sellers stopped putting their homes on the market. We went down to 6500 homes for sale in Feb of this year. Now, we are currently at 7700, with about 780 selling a month. Not too bad. Not too bad.
Prices seem to be stabilizing. One thing that is changing is time on market. It is taking alot longer for homes to sell.
Thursday, April 3, 2008
Known as the "city between the canyons," Cottonwood Heights used to be the overnight stopping point for lumber wagons traveling to and from Big and Little Cottonwood Canyons. Today, ski bunnies can enjoy the state's premier ski resorts at each canyon. Residents are also just 20 miles from downtown Salt Lake City; good access to the freeways makes the commute easy. But plenty of folks work right in town - after Salt Lake City, Cottonwood Heights is home to the largest number of class A office buildings in the state. Major companies such as Overstock.com, Jet Blue, Mrs. Fields and Kern River Gas Transmission Company all have offices here.
Follow the link to CNN money's site.
Wednesday, March 26, 2008
Tuesday, March 25, 2008
So, the market is apparently up. This is stolen from NAR's site;
The National Association of Realtors reported that existing-home sales rose 2.9% in February to a 5.03 million-unit annual rate amid a sharp decline in median home prices (down 8.2% versus a year ago), leading to a 3% drop in the inventory of homes for sale. This was significantly above consensus expectations of a 0.8% decline in existing-home sales and acted as a positive catalyst for investors interested in housing-related and consumer stocks, in our opinion. Yesterday's data on existing home sales were stronger than expected.
(Me again) You want to know what else is stronger than expected? WVU! Oh my poor dukies.
Tuesday, March 4, 2008
Thursday, February 14, 2008
Here's what the yahoo's are saying:
Salt Lake City is on top of the list because our housing should not fall. The national “experts” are saying that Salt Lake may have found a bottom because we are bringing in new jobs faster than any city in the country. Also, our in migration is extremely high.
Check it out for yourself at http://www.forbes.com/2008/02/07/house-bargain-hunters-forbeslife-cx_mw_0207realestate_slide_11.html?partner=email.
Who knows if this is good or bad. I have clients getting good homes right now in the low $200s. New construction is still in the tanker but that is changing. I don't expect us to appreciate 30% again. Can't we just be happpy with a good 4-6%? Who knows. We will see what happens.
In other news... we got lots of snow today. Get out the skis.
Thursday, January 31, 2008
New construction has taken a pretty serious hit the last couple of months, but as builder supply runs out, watch for a quick rebound. There is about a 11 month supply of new homes on the market causing spec prices to drop dramatically but land is becoming scarce. No one is selling. This is causing the spec market to pick up a little bit. In Woods Cross we just sold 2 new construction homes in the month of Jan. That's pretty dang good.