Spring Has Sprung

Here comes Spring, historically the time of year when buyers awake from the winter slumber of the holidays and snowfall, and go on their pilgrimage to look for new housing. Houses look better in Spring with green grass, blooming trees, and flowers.

Plus, buyers who find a home in the next 60 days can close after the school year ends and enjoy the summer months in their new backyards. It’s almost a rite of passage; baseball teams go to spring training, buyers go look at homes, and the birds fly back north.

But this Spring is different than those of recent memory…

• Because of the warm weather we experienced here in the Northeast for most of this past winter buyers have been out for months – making offers and buying homes.
• Many sellers have finally come to understand that they need to have a compelling price on their home to attract buyers. The days of listing your home and negotiating down are over because there are homes on the market already priced correctly, and those are the homes that buyers are going to. The overpriced inventory doesn’t even get their chance to negotiate down.
• Rates have ticked up as economic news (like unemployment numbers) has improved. That, coupled with rising mortgage insurance premiums and guarantee fees, seems to have given some sense of urgency to buyers.
• The looming shadow inventory, which most certainly will keep downward pressure on home prices (when added to easier short sale approvals), has tended to encourage home sellers to be more realistic in their expectations.
• The abundance of information available to consumers has further increased their need for sound advice from top-notch real estate and mortgage professionals. The cream is certainly rising to the top in those professions.

Low interest rates, a tremendous selection to choose from, and the seasonality of it all makes for an exciting next 60-90 days. My advice to anyone looking to buy or sell is that waiting to be aggressive could be a fatal mistake if you hope to find the best deal. From my experience, the best deals come when more people are competing for them…and that time is NOW!

 

http://www.kcmblog.com/2012/03/22/spring-has-sprung/

REO to Rental Program: Its Impact on the Housing Market

There has been much talk about the government selling bulk foreclosures which will be converted into rentals. What will this actually mean to the housing market? For the answer to that question, we go directly to the 2/28/2012 Senate testimony of the person making the decisions on this subject: Edward J. DeMarco, Acting Director of the Federal Housing Finance Agency.

Have Any Foreclosures Been Sold in Bulk?

“Yesterday we announced the first transaction in our REO Initiative pilot program. This transaction includes approximately 2,500 properties, divided into 8 sub pools by geographic area.”

Will These Sales Be Limited to Certain Markets?

“The targeted Metropolitan Statistical Areas are likely no surprise to you because they represent hard-hit parts of the country: Las Vegas, Nevada; Phoenix, Arizona; various communities in Florida; Chicago, Illinois; Riverside and Los Angeles, California; and Atlanta, Georgia… Future transactions will also be targeted to these types of markets, where the supply of homes for sale is greater than the demand from homebuyers and where demand for rental housing is strong.”

Who Qualifies for These Sales?

“Investors will be able to submit applications to demonstrate their financial capacity, relevant market experience, and specific plans for purchasing pools of 6 foreclosed properties with the requirement to rent the purchased properties for a specified number of years.” 

Will Most Foreclosures Be Sold This Way?

“Our primary goal will continue to be selling properties first to homebuyers who will use them as their primary residences or non-profits that include homes in mission-oriented activities. We also want to enhance the opportunity for smaller-scale investors to bid on properties, and obtain financing, should initial efforts to market the properties to owner-occupants fail.”

Will the Bulk Sales Program Lessen the Pressure on Home Prices?

“The number of properties available for sale by Fannie Mae and Freddie Mac represents only a fraction of the total supply that is depressing home values in certain affected markets.”

Bottom Line

Any plan that reduces the number of foreclosures will help home prices. However, this plan will not have a dramatic impact on the large number of homes that are currently in the foreclosure process.

 

http://www.kcmblog.com/2012/03/14/reo-to-rental-program-its-impact-on-the-housing-market/

Kitchen Makeover Without Spending a Fortune

 

If you’re selling your home then you should know that one of the popular rooms that tops buyers’ favorites list is the kitchen. So it makes sense to spend time, energy, and even a little money to make it shine.

That thought can make some sellers cringe. The thought of spending money to fix up a kitchen in a home that they’re about ready to sell is unpalatable. However, it could make the difference between a buyer making a higher offer or even any offer at all.

Kitchen makeovers don’t need to make your blood boil and break you out in a sweat, fearing the loss of money that will soon be drained from your bank account. You can tidy up your kitchen and even give it a fresh, stylish, updated look, on a frugal budget.

Let me show you how. It starts with simple things. The kind of tasks you can do yourself.

Deep cleaning. Nothing beats a deep cleaning. This means pulling the refrigerator out from the wall, moving furniture and giving the floor, baseboards, crown molding, walls, back splash, counters and all surfaces a good scrubbing. It’s amazing how much crumbs and other debris accumulate in the kitchen (even in a well-cared-for kitchen there’s usually a fair amount hidden in between appliances).

Scrub down the appliances. It’s so unattractive when you walk into a listed home and you can tell what the family had for dinner just by opening the oven. Think buyers don’t open your appliances? Think again! They’re considering your home as their own. They will check out your refrigerator, oven, kitchen cabinets, and your closets. So, be careful what you stuff inside them. I often caution sellers to remove medication from your cabinets before having an open house. I know it’s more work but it’s safer and retains your privacy.

Buy hardware in bulk. You don’t have to hire a remodeling company to come in and resurface your cabinets or replace them; that can be very costly. Giving them a deep cleaning or painting them (depending on their surface) can be an excellent way to freshen them up. Then, if you have worn-looking or outdated hardware, buy some knobs. When you buy the hardware in bulk you can often get a better price and easily replace them to give your cabinets a better look.

Experiment with custom high-end additions. Sounds like I’m talking about high-priced additions but actually you can head to a mass retailer and find additions like trim and even plate rack shelving that has a custom, high-end look at a moderate price. Then clear the clutter out of those cabinets and shelves and display beautiful plates in a spacious plate rack. Think of what you’re used to seeing in a print or TV add for home decor. It’s like a computer ad that shows the solo computer without all the wires – clean, elegant, attractive.

Add molding to your cabinets. This can turn an every-day looking cabinet into a chic kitchen look. Painting your cabinets can give the entire kitchen an upscale look. However, be sure you know what kind of paint will adhere to your cabinets.

Custom hood range. Adding a custom hood range–again it doesn’t have to be outrageously priced–can really complete the look of your kitchen. It’s a subtle difference that makes it look and feel more like a high-end remodeled kitchen.

A bit of planning and careful budgeting can go a long way in creating a kitchen that sparks an interest in prospective buyers.

 

http://realtytimes.com/rtpages/20111202_kitchen.htm

Real Estate 2012: Many Positive Outlooks

There is a growing belief among many experts that 2012 will be the year housing turns the corner and starts heading in a more positive direction. Whenever we write a post like this, we unleash the hordes of critics who say we are again wearing rose colored glasses or are puppets being controlled by the National Association of Realtors (NAR) and other industry groups.

It is for that reason we will not be covering the projections of those groups. Instead, we want to share the beliefs of other organizations.

Washington Post:

“Housing Market and Economy Showing Encouraging Signs.”

The Wall Street Journal:

“From Bottom Up, Signs of Housing Recovery”

USA Today:

“Housing Outlook is More Upbeat”

CoreLogic:

“CoreLogic’s chief economist Mark Fleming says housing statistics and the duration of the downturn to date indicate 2012 may be the year the housing market begins to turn the corner.”

Freddie Mac:

“With the New Year comes a sense of cautious optimism. There are some positive signs in the job market and consumer confidence; housing is starting to raise hopes for continued gradual economic recovery.”

Fannie Mae:

“The housing sector will likely take incremental steps forward in 2012 …according to economists at Fannie Mae.”

 

http://www.kcmblog.com/2012/01/24/real-estate-2012-many-positive-outlooks/

Home sales pace increases in December, third month in a row

WASHINGTON – Home sales in December reached the highest pace in nearly a year. The gain coincided with other signs that the troubled U.S. housing market improved at the end of2011.

Analysts caution that sales remain historically low and it will take years for the home market to return to full health.

Still, the third straight monthly sales increase was encouraging. And economists noted that conditions are in place for further gains this year:

Prices have declined. Mortgage rates have never been lower. Homebuilders are slightly more hopeful because more people are saying they might be open to buying this year. And home construction picked up in the final quarter last year.

Sales rose across the country in December. They rose on a seasonal basis more than 10% in the Northeast, 8.3% in the Midwest, 2.9% in the South and 2.6% in the West.

“There’s no denying that home sales are still very low and will remain low for a few years,” said Paul Dales, an economist with Capital Economics. “But after having risen in each of the last three months … it is clear that a housing recovery is now well under way.”

Sales of previously occupied homes rose 5% to a seasonally adjusted annual rate of 4.61 million in December, the National Association of Realtors said Friday. It’s the best level since January 2011.

For all 2011, sales totaled only 4.26 million. That’s up slightly from 4.19 million in the previous year. But it’s far below the 6 million that economists equate with healthy housing markets. In 2005, at the peak of the boom, 7.1 million homes were sold.

Hiring has improved, which is critical to a housing rebound. Fewer people sought unemployment benefits last week than at any time in nearly four years, evidence of far fewer layoffs. The unemployment rate fell in December to its lowest level in nearly three years.

“With layoffs slowing sharply, hiring rising and consumers’ confidence rebounding, the pre-conditions for a sustained recovery are falling into place,” said Ian Shepherdson, chief U.S. economist for High Frequency Economics. “Sales and starts will keep rising; prices should stabilize, more or less.”

The median sale price of a previously occupied home ticked up 0.3% from November to December to $164,500.

The supply of homes has declined, though it’s still historically high at 2.38 million. At last month’s sales pace, it would take nearly seven months to clear that backlog.

If the supply continues to fall, prices could rise, more sellers would put homes on the market and more people would likely consider buying, said Pierre Ellis, an analyst at Decision Economics.

Still, the industry appears years away from fully recovering from its bust four years ago. Since the bubble burst, sales have slumped under the weight of foreclosures, tighter credit and falling prices.

Fewer first-time buyers, who are critical to a recovery, are in the market for a home. Purchases among that group fell last month to just 31% of sales from 35% in November. In healthy markets, first-time buyers make up at least 40%.

Homes at risk of foreclosure made up a third of sales last month. In strong markets, they make up only about 10% of sales.

And many deals are collapsing before they close. One-third of Realtors say they’ve had at least one contract scuttled in December, November or October. That’s up from 18% in September.

Among the reasons contracts have been canceled: Banks have declined mortgage applications. Home inspectors have found problems. Appraisals showed that a home was worth less than the bid. Or a buyer suffered a financial setback before the closing.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

http://www.usatoday.com/money/economy/housing/story/2012-01-20/home-sales-december/52694378/1

Housing outlook is more upbeat

Optimism is building that the housing industry is nearing a bottom — finally.

ome sales and home building are forecast to rise this year after sliding steeply the past five years in housing’s worst downturn since the Great Depression.

Recovery is expected to be slow, and home prices are widely expected to fall this year. But investors are betting on the start of an upturn, bidding up home builder stocks and causing them to outperform the broader stock market.

Chief executives are more positive. JPMorgan Chase’s Jamie Dimon said last week that housing is near its bottom but could stay there a year. Stuart Miller, CEO of home builder Lennar, said the market has started to stabilize because of low prices and record low interest rates.

Market researcher RBC Capital Markets has also turned from a “bearish” view on housing to saying that 2012 “will mark a step in the right direction.”

Many economists expect home prices to fall more this year because of foreclosures and other properties sold at very low prices.

As foreclosures pick up this year, “prices will drop,” says Stan Humphries, Zillow chief economist. He says home prices won’t bottom until later in 2012 or next year.

On average, prices have fallen by about a third since 2006.

“This year will feel a lot better to builders, investors and real estate agents than to consumers,” says Jed Kolko, economist for real estate website Trulia.

Housing’s outlook is brightening with signs of a better economy. Last month, U.S. employers added 200,000 jobs, and the unemployment rate fell to 8.5%, lowest in nearly three years.

While an economic shock could derail progress, “there’s now more evidence of improvement in the economy, and housing will follow the economy,” says David Crowe, chief economist at the National Association of Home Builders. More improvement is expected for:

•Sales. Existing home sales will rise 12% this year after a 2% increase last year, and new home sales, coming off a horrid year, will jump 74% this year, Moody’s Analytics predicts.

November’s existing home sales hit their highest mark in 10 months, and new home sales were the year’s second best, IHS Global Insight says.

•Construction. Single-family housing starts will rise 37% this year, Moody’s predicts, after falling 9% last year.

Home builder stocks are on a run. The S&P 1500 Homebuilding Index is up 38% since mid-October, vs. 7% for the S&P 500.

 

http://www.usatoday.com/money/economy/housing/story/2012-01-15/housing-outlook-2012/52584304/1

By Julie Schmit, USA TODAY

Has the Housing Market Finally Hit Bottom?

Has the U.S. housing market hit a bottom? Do we have further to go? When will a recovery start? These are the questions every homeowner and real estate investor are currently asking themselves — or should be.

Wall Street firms have optimistically been betting that the bottom’s here. Research firms like Zelman & Associates predict the sector will pick up this year and hedge funds have been jumping into real estate-related investments from brick-and-mortar building purchases to shares of home builders stocks. In December Goldman Sachs Group released a report stating that “The home price bottom [is] in sight,” according to my colleague Agustino Fontevecchia.

Indeed, national home price data indicates that the worst of the catastrophic home price implosion is behind us. Clear Capital, a Truckee, Calif.-based real estate research firm, reports that 2011 saw a national decrease of 2.1% in home prices when compared with 2010. While still a loss, it’s a measly drop compared to the double-digit plunges felt in the years before. For 2012, the firm’s Home Data Index (HDI) Market Report also predicts a humble 0.2% gain across all markets. “Overall, 2011 was a relatively quiet year for U.S. home prices compared to the last five years,” said Dr. Alex Villacorta, Clear Capital’s director of research and analytics, in the report. He further notes that “the current balance the market has found will continue through 2012.”

What does all of this mean? Housing from a national standpoint is flattening out; the macro level data suggests we could possibly be at the bottom or near it.

A Tuesday report from Zillow, a publicly listed Seattle, Wash.-based real estate data and listing site, shows that November home values “remained essentially flat” from October of 2011 through November, falling only 0.1%. The Zillow Real Estate Market Report, which analyzes home values in 165 metro areas, notes that the addition of 200,000 jobs in December, improving consumer confidence and stronger retail sales indicate that home sales may be more consistent and more frequent in 2012. “With stronger home sales, we’ll see a reduction in the amount of vacant housing inventory and an improved ability to absorb foreclosed homes. This increased demand will eventually start to put a floor under home values later this year,” the report says.

It sounds rather promising, doesn’t it? For Wall Street firms snapping up stocks and/or using the market as an indicator for economic activity, it is. For homeowners, however, a different story prevails.

If you are a prospective home buyer or seller wondering if now is the time to make a play, the decision should come down to something much more tangible than a “flat” national market number. It should come down to location.

Clear Capital warns that the relatively flat national average is composed of metro markets that have been anything but: “Individual markets reacting to their local economic conditions continued to exhibit a wide range of performance levels in 2011, with only 12 of the top 50 metro markets (24%), returning year-over-year price movement that can be considered stable,” the HDI report cautions. Stable price movement means price swings of less than 2.5%. The company believes only 40% of the country’s largest metro areas will be stable in 2012. Among them: Denver, Colo., San Jose, Calif., Boston, Mass., Oklahoma City, Okla., and San Francisco, Calif.

Bakersfield is expected to rebound with an 11.1% increase. Photo: ZUMA Press/Newscom

As for the areas where prices may actually appreciate the most this year, the firm expects Orlando, Fla. home prices to rise 11.7%, hard-hit Bakersfield, Calif. 11.1%, government jobs-driven Washington, D.C. 9.3%, foreclosure-riddled Phoenix, Ariz. 8.9%, and sales-heavy Miami, Fla. 8.8%.

Markets that will experience further price drops this year include Atlanta, Ga. (14.4% anticipated loss), Los Angeles, Calif. (10.3% anticipated loss), Seattle, Wash. (7.5% anticipated loss), Oxnard, Calif. (6.7% anticipated loss), and foreclosure capital Las Vegas, Nev. (6.4% anticipated loss).

Zillow’s November data shows price fluctuations from metro area to metro area, as well. It clocks 66 markets where home values depreciated in November, 66 markets where values rose and 33 where values simply remained flat. Zillow’s economists caution that elevated foreclosure rates and negative equity will continue to impact local markets in 2012, meaning still lower values yet to come in some markets. For that reason, the company doesn’t expect a true stabilization in home values to occur until the end of this year or early 2013.

I think they are right. Even if the worst of the price depreciation hemorrhage is over, we still face a wave of distressed inventory undergoing the tedious foreclosure process and an estimated shadow inventory of 1.6 million bank-owned or distressed homes that have not yet hit the sale block, according to CoreLogic. It will mean millions of discounted units flooding markets already saturated with more units than buyers, dragging overall home prices down in terms of both listing prices and property appraisals.

So whether a bottom in housing is here or not depends on the local market. Most foreclosure-riddled markets will likely have years to go before values meaningfully move upwards. Markets where employment is plodding back and/or where overbuilding didn’t occur in the mid-2000s will and are showing more promising, more stable prices. ”It will be very important for consumers to draw a distinction between the end of sustained home values declines, which are maybe a year away, and the return to normal market conditions with historically normal appreciation rates,” Zillow notes.

By Morgan Brennan, Forbes.com

January 10, 2012

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