Archive for the ‘Home Statistics’ Category
Did First Time Buyer Tax Credit Help Sellers?
The $8000 Tax Credit for first time home buyer’s (people who have not owned a home in the last 3 years) expires on November 30, 2009. With the expiration date drawing near, the Realtor and builder lobby groups are pushing lawmakers to extend the program for another 6 months. If they are successful, it will cost taxpayers of nearly $15 BILLION.
“Yea” or “Nay”??? Before we cast our vote, we decided to find out whether the tax incentive successful or not? Specifically, did it persuade people to jump into the market? Would it be a good investment for taxpayers going forward?
According to a poll conducted by Zillow, the tax credit was persuasive.
- 18 percent of home buyers said the tax credit was the main reason they pushed to buy a home before November 30, 2010.
- Based on the number of first time buyer’s in the marketplace, a 6 month extension could persuade another 335,000 (18 percent) buyers to buy a home of their own.
- If the first time buyer credit is extended, home sales would likely increase 5 percent. Without it, sales would be down as much as 2 percent.
- Only 31 percent of first time buyers said the credit had no influence on their decision to purchase.
- 69 percent of buyers said the tax credit was important in motivating them to buy a home this year.
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Foreclosures Up. Home Prices Predicted to Fall Further
In August, InfoTube warned its readers about the New Wave of Foreclosures that would be pounding the market, further driving up inventory and eroding prices. Today, we learn that the Wall Street Journal agree’s with our accessment of the future market conditions for real estate.
Excerpt from the Wall Street Journal:
“The size of this shadow inventory is a source of concern and debate among real-estate agents and analysts who worry that when the supply is unleashed, it could interrupt the budding housing recovery and ignite a new wave of stress in the housing market . . . Analysts who track the shadow market have focused primarily on the gap between the number of seriously delinquent loans and the number of foreclosed homes for sale by mortgage companies. A loan is considered seriously delinquent, which typically means it is headed to foreclosure, if it is 90 days or more past due.
As of July, mortgage companies hadn’t begun the foreclosure process on 1.2 million loans that were at least 90 days past due, according to estimates prepared for The Wall Street Journal by LPS Applied Analytics, which collects and analyzes mortgage data. An additional 1.5 million seriously delinquent loans were somewhere in the foreclosure process, though the lender hadn’t yet acquired the property. The figures don’t include home-equity loans and other second mortgages.
Moreover, there were 217,000 loans in July where the borrower hadn’t made a payment in at least a year but the lender hadn’t begun the foreclosure process. In other words, 17% of home mortgages that are at least 12 months overdue aren’t in foreclosure, up from 8% a year earlier.”
What this means for Home Seller’s: Time is not your friend. The shadow of inventory of distressed property will continue to place downward pressure on home prices. Based upon our years of experience, we predict that home prices will fall an average of 7 percent in 2010.
If you need to sell your home, DO NOT chase the market down. Price your property aggressively, then market the home to as wide an audience as possible. To learn about the best way to reach the mass buying market, CLICK HERE.
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New Wave of Foreclosures Coming
Bank of America, along with other lenders, report that a huge wave of new foreclosures will flood the market, once again. The second wave in foreclosures is due to the slowing of the loan modification program and the new release of properties that the banks have been holding.
Currently, 1.5 million homes are in foreclosure. More Worrisome…an additional 3.5 – 4 Million home loans are “Seriously” delinquent or are in default. Many of these loans are newer, high quality loans that have fallen into trouble due to job losses. Job losses mean no income, so modifying or saving the loan is not an option for these homeowners.
Buyer Alert: The $8000 Tax Credit for Buying a Home Expires in Only 90 Days. If your loan does not close on or before November 30, 2009, you lose $8000 Grand. Period. With loans currently taking 90 or more days to close, you must buy a home now, in order to qualify.
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Trends in Housing Have Changed, Permanently
It seems everyone these days is looking for a bottom in the housing market, or a sign of normalcy, as we’ve known it. The truth may be that housing will never return to what normal has been in the past. The reason isn’t the just the economy or tighter lending standards, it’s may be simple demographics.
Please consider why trends in housing may have changed, Permanently.
- Baby Boomers: The baby boomers (born 1946-1964) are the largest and spendiest generation in American history, and their 40 year shopping spree is coming to an end.
- McMansion Glut: Boomers are buying fewer single family homes and they are getting rid of the suburban McMansions they purchased when their children lived at home. Evidence already shows that boomers favor 2 and 3 bedroom condo’s over 4 or 5 bedroom houses. The Boomer trend to a smaller house, combined with fears of gas prices and long commutes, mean that the big house in the burbs is not the ideal dream house or location that is has been in the past.
- Baby Boomers, Again: Boomers are reorganizing their finances. After the stock market crash, and with retirement approaching, fewer boomers will be purchasing vacation and second homes.
- Generation X: The generation born between 1965-1976 will be unlikely to bid up home prices. First, there are only 44 million X’ers compared to 76 million boomers. Secondly, they are not as wealthy as their parents, and they are deeper in debt, due in part to college loans.
- Migration Back to City Life: Due to our aging population, smaller family size and energy costs, people are returning to urban area’s that have not been overbuilt and offer quality of lifestyle.
- Permanent Changes: The days of buying a huge home on a big lot, and paying for it with a 2 hour commute, may be ending. This trend could mean that owners in McMansion communities, with little to no public transportation, will havetrouble finding buyers. Some people predict that the large, single family homes, located miles from urban centers, will be subdivided into inexpensive housing for low and moderate income families, as the car lovers who moved to the burbs return back to the convenience of city life.
One thing that is certain is that change happens. As environmental, economic, political and cultural forces change the way we live, our view of residential home investing will change, too.
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What is the Shadow Inventory of Homes?
A recent news article by Reuters states that “The percentage of U.S. homeowners who owe more than their house is worth will nearly double to 48 percent in 2011.”
Meaning? Half of us will be upside down, underwater, or whatever you want to call it over the next 2 years? Pretty scary. How do they know that? One indicator they use may be the Shadow Inventory of Homes, which will eventually enter the market place over the next 3 years.
So, what is a Shadow Inventory of Homes and How Does it Affect Future Home Values? Technically, a property is not in foreclosure until the lenders files against a deliquent loan. Lenders are purposefully not filing to foreclose, in order to control the present inventory by keeping homes off the market. This creates a Shadow Inventory of Homes in Default. Why do they do this? Simple economics, really. Less supply creates more demand (ie: higher prices) for the property they already have for sale.
Since, we know lenders are holding back the number of homes that should be in foreclosure, how many “shadow” distressed properties will come into the market in the future? Truefully, we can’t know the exact number. That is the reason it is referred to as a Shadow Inventory. We can all see that the problem is lurking out there, but we can’t identify the exact numbers or the amount of future damage because “only the shadow knows…”.
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June 2009 New Home Sales Info and Charts.
Click Here to see the latest news on new home sales. The easy to read charts, with comments, give instant insight to the housing market.
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Home Appraisals. Something is Wrong.
InfoTube has been blogging that Something is Wrong with real estate appraisals for quite some time now. A new rule, called “Home Valuation Code of Conduct”, which went into effect on May 1st, has derailed sales and wrecked havoc on homeowners and buyers, with the worst possible timing.
The intent of the new rule for loan funding was to eliminate inflated appraisals. Lawmakers found that lenders, such as Washington Mutual, pressured appraisers to inflate values in order to make more money on higher priced loans. Although accurate appraisals are necessary to prevent fraud, the policy has had unintended, devastating effects on the entire real estate industry.
Take the case of the Mann family from San Jose, CA. David and Penny Mann decided to sell their downtown Victorian home in order to move to a retirement community closer to their children and grandchildren. They knew the market was tough, but they priced the home to sell and they were rewarded with back to back offers. They accepted an offer for $560,000 from an excited young couple, buying their first home.
The Mann’s home appraised for full value, but it was deemed to be invalid, because it was done before the new rule took effect. The second appraiser, sent by an appraisal management company, came in $100,000 below the contract price, resulting in the buyer being turned down for their loan. After the initial tears and panic, both parties did some frantic research. They discovered that the appraiser didn’t live in San Jose and had never worked there. Both buyer and seller decided to take action versus lying down and rolling over.
The buyer’s, a lawyer and student, toured at least 40 homes before buying the Mann’s house, and had lived in San Jose their entire lives. They knew that the 100 year old home was perfect for them and they insisted that the management company send an appraiser, from the 408 area code to value the property. The 33 year old lawyer said, “I am an educated person.” …”I’ve lived in the Bay Area my whole life”. “I had no question it was worth $560,000, plus. Neither did my agent or the mortgage broker or the first appraiser. “Nor, as it turned out, did a third appraiser”,… who valued the property at the full sales price.
After all the drama, buyer and seller recently celebrated their victory at the Mann house. The first time buyer’s brought the wine. The Mann’s provided fresh peaches from the tree in the backyard. Finally, a happy ending.
Unfortunately, not all victims of the new appraisal law are as fortunate as these couples. 75 percent of Industry professionals said they have had at least one low appraisal problem since May 1st, with the average loss being around $13,000. In addition, 90 percent of real estate professionals site that at least one transaction had fallen apart because of the new law.
Something is definitely wrong, but you can take action:
To read more about what you can do if you are the victim of a low ball appraisal, Click Here.
To sign a petition to repeal the law, Click Here. Gary Miller, Rep from California is co-sponsoring legislation.
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10 Signs of a Bottom in Housing
For those of us searching for signs of a bottom in the housing market, the writing is now on the wall. The charts are bottoming out and leveling off.
10 Noteworthy observations and signs include:
- The rate of REO’s (real estate owned by the bank) coming onto the marketplace has slowed across the country.
- In May, sales prices for existing homes rose 3 percent from April levels.
- The number of Sold Homes surged in California, Nevada, Arizona and other hard hit area’s of the nation.
- Even in Las Vegas, the epicenter of the crash, sales prices are firming and seller’s are receiving near full asking price, albeit at a 50 percent discount to pre-crash levels.
- Inventory levels of existing and new homes has fallen in recent months.
- The doomsayers were wrong about runaway inflation and rising rates. 30 year fixed interest rates remain at a very attractive 5.5 percent and banks are lending money.
- Stocks of pubically traded home building companies have moved off their bottoms and are trading within a sustainable uptrend range.
- The number of housing starts increased for the first time in months. Since financing for speculation homes is hard, if not impossible to obtain, we assume these homes are already sold before construction begins, signaling demand.
- Large home builders are starting to acquire select tracts of land for future development.
- The rate of borrowers receiving notice of foreclosure has seen a meaningful decline of late.
Finally, we have a glimpse of light at the end of a long tunnel. While the market will surely continue to experience difficulties, news indicates that the worst may well be behind us.
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Should You Use List Prices or Sales Data when Pricing Your Home?
A frequent question we receive about correctly pricing a home is “Should we use Comparable Listing Prices or Comparable Sales Data to correctly price our home?”
The answer is overwhelming, Comparable Sales Data.
Looking at the prices of listed property is a big mistake, when determining the correct asking price for a home. Take a moment and think about it. If the neighbors list price was motivating, the property would be Sold, not Still for Sale.
Always use accurate a Comparable Market Analysis (CMA) to correctly price your home. A CMA features only properties that have sold for all cash or a funded loan. This is important because many properities aren’t appraising or closing for anything near their “under contract” price. In our declining market, a home that is worth $250,000 today, may only be worth $220,000, 60 days later when it closes. Appraisers are aware of this fact and generally appraise very conservatively these days.
Click here To Read more about Appraisal Problems and What you Can do About it.
To obtain accurate Sales data about competing properties in your neighborhood, visit your local county tax assessor website. Or, research MLS data which can be viewed at sites like zillow.com.
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Bad Strategy for Home Sales
Question: What is the worst home selling strategy ever???
Answer: ”Let’s test the market”. “Let’s throw it up for sale at a high, unrealistic price and just see what happens…”
Testing the market…whatever that really means is the worst idea, ever. Buyer’s don’t live in a fantasy world. And, if they did, their home buying fantasy is finding a mansion for $100.
“Testing the market” by overpricing a property means that the listing loses its ”honeymoon” period. As a rule, properties receive more interest and more showings in the first 30 days, than they will ever see again. Why? Buyer’s who haven’t found the right home, rush to see new listings as soon as they appear on the market. And, new buyer’s coming into the market always look at new listings first.
If you overprice your home during the honeymoon, chances are high that it will sit on the market for a long time, eventually becoming a “stale” listing. It is possible to stir up more interest later by substantially dropping the price, but seller’s can never again recreate the attention the property would have received, had it been priced right when it made its debut.
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Pricing Your Home. What you paid doesn’t matter.
Big Mistake. A big mistake that home seller’s make is that they often set their asking price, based on what they paid for the property. For example, I hear frustrated, unsuccessful sellers justify overpricing their homes by rationalizing that ”We are asking $265,000 because we paid $250,000 and want to break even.”
The truth is, what you paid for your home doesn’t matter to anyone except you. While it is painful to admit a financial loss, don’t dig yourself in even deeper by thinking that someone else will pay for your mistake. They won’t. And, their lender and appraiser won’t, either
Real estate is just like the stock market. The Buyer determines the price they will pay, not the seller. For example, if you bought Citibank at $120 per share and its now trading at $3.00, then $3.00 is what the asset is worth. The fact you paid $120 a share is irrelevant to buyers in the marketplace. The situation is exactly the same for real estate.
If you want or need to sell a piece of real estate, forget about what you paid for the asset. The only thing that determines today’s value is what a buyer would be willing to pay today. To determine the realistic, current value of your home, research what other homes like yours have actually SOLD for by searching on your local, county property tax database or websites like Realtor.com or Zillow.com.
Thank you for visiting InfoTube.net. House are selling, but only the homes in the best location, condition and price. The summer selling season is rapidly passing by and its time to get serious. If not, you may find that home values are even lower next year. To reach 10 million home buyer’s each month, call us for an MLS and search engine listing for your property. You won’t find a better way to let the world know your home is for sale and time is passing you by.
Home Prices Drop, Again. Predict Further Declines.
Foreclosures UP. Unemployment UP. U.S. home prices DOWN.
Home prices in the United States dropped another 6.8 percent in April from the same period only one year earlier. The housing crash has now erased 26 percent of the equity in the median priced home, since the peak in July 2006. The silver lining for renters is that home affordability is at near record levels.
Economists predict that the market will continue to see more home price declines, despite $8000 tax incentives and $275 billon in funding to keep some owner’s in their homes.
Analysts at Deutsche Bank said US home prices may fall another 14 percent before they stabilize. Like sentiment was expressed by Robert Shiller, who co-founded the respected S&P Case-Shiller Home Price Index. Many predict the worse declines could be even worse in New York and Orange County, CA.
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Housing Tidbits from President of the NAR
Charles McMillan, president of the National Association of Realtors, spoke in Ft. Worth, TX and reported to attendee’s that ”The dream of homeownership is alive and well in the US.”
Mr. McMillan began his real estate career in Ft. Worth, TX in 1983, one year after the Texas real estate market crashed in 1982. Although McMillan did not address it, Texas home prices have not recovered to pre-1982 levels over the past 27 years.
Highlights from the speech include:
- Consumers will buy houses if two conditions are met. The home and financing costs must be at a bargain, basement price levels.
- Keeping interest rates low and stable are necessary to stabilize the housing market.
- The tax credit is working. 43 percent of all property sales have been first-time buyers.
- Thanks to distressed property price declines of up to 52 percent, sales of existing home inventory has increased in CA, NV, AZ and FL.
- The two biggest issues facing the real estate industry going forward are appraisal issues and healthcare. Half of all real estate agents have no insurance.
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Hurricanes May Wipe Out Some Coastal Foreclosures
Story from Philadelphia Inquirer:Unoccupied, these homes would be defenseless in a storm; there will be no one to put up shutters, batten down garage doors, and otherwise secure homes. But that’s not all. Nearby homes and their residents would also be at risk from wind-propelled debris.
Lehigh Acres and other communities at the epicenter of the nation’s housing crisis are coming to realize that this year’s hurricane season, which began this month, represents yet another pitfall. Hurricanes could make hazards of thousands of foreclosed-upon houses, and their diminished value could decrease even more.
“Here’s your choice,” said Julie Rochman, president of the Tampa-based Institute for Business and Home Safety. “Spend a little bit of time and money to secure the properties to withstand wind and water, or not do the right thing and have the homes become damaged and are valued less.”
The Associated Press Economic Stress Index – a month-by-month analysis of foreclosure, bankruptcy and unemployment rates in more than 3,000 U.S. counties – confirms that some of the areas most likely to be struck by a hurricane are suffering the most in this recession.
In March, there were 281,691 homes in foreclosure in Florida and coastal counties in Alabama, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Texas, and Virginia.
Lee County, where Manikchand lives, is among the hardest-hit counties in the country. A 22-year-old pharmacy student, he took advantage of a dismal housing market and bought a foreclosed duplex for $36,000.
In coming months, he and millions of others along the Atlantic and Gulf coasts will dutifully track tropical weather forecasts and stockpile batteries, flashlights, and tins of tuna, hoping that hurricanes blow harmlessly out to sea.
But who will secure all the foreclosed homes if a storm does approach? No one really knows.
In some cases, a property-management company hired by the bank could do the work. Or it could be a real estate agent, a homeowners’ association, or even resourceful neighbors who clear debris from yards and board windows.
Yet no state laws mandate who prepares buildings before a hurricane; even officials from the Florida Division of Emergency Management say that securing foreclosures isn’t a concern.
“It’s not an aspect that we really deal with,” said John Cherry, the agency’s external-affairs director. “Our No. 1 concern is life safety.”
Quick evacuation, not securing vacant homes, will be the priority if a major storm looms, others say. But shutterless homes can be a major safety hazard in a hurricane. And a region full of destroyed or heavily damaged homes would depress real estate values even further.
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