Home Buyer Tax Credit Countdown Begins

The first-time home buyers tax credit ends Nov. 30. Is it possible to buy in the next two weeks and still close in time to collect it?

Some professionals say yes. “It still can be done in six weeks," says RE/MAX Town & Country associate Lynn Ayers in West Chester, Pa.

Economist Kevin Gillen of Econsult predicts a mad rush to close as the deadline nears.

Bruce Hahn, president of the American Homeowners Grassroots Alliance in Arlington, Va., is pushing for an extension and an expansion of the credit.

Legislation to do that is critical, he says, because the recovery has so far been mostly jobless and people need more time to get their feet on the ground in order to buy.

Source: Philadelphia Inquirer, Alan J. Heavens (08/31/2009)

Refinances Decline

Refinances Decline as Rates Rise Overall, mortgage applications declined 3.5 percent last week on a seasonally adjusted basis, according to the Mortgage Bankers Association weekly survey, but the decrease was primarily in refinances because of rising interest rates.The seasonally adjusted purchase index actually increased 1.1 percent, the third gain in the last four weeks, while the refinance index fell 7.2 percent.On an unadjusted bases, the weekly mortgage index, which measures loan application volume, decreased 3.7 percent from the previous week, but was up 16.1 percent compared with the same week a year ago.Rising rates put refinancers in a wait-and-see mode. Here's a roundup of rate increases:
30-year fixed-rate mortgages increased to 5.38 percent from 5.17 percent
15-year fixed-rate mortgages increased to 4.71 percent from 4.60 percent
1-year ARMs increased to 6.71 percent from 6.67 percent.Source: Mortgage Bankers Association (08/12/2009)

Recession is over?

Economists Pronounce the Recession Over The majority of economists surveyed by the Wall Street Journal say the recession is over and Federal Reserve Chair Ben Bernanke deserves another term.Of the 47 economists the newspaper surveyed, 27 said the recession has ended and 11 predict another trough this month or next. The rest refused to commit. But they were nearly unanimous is saying that Bernanke should be rehired.Gross domestic product is expected to grow 2.4 percent in the third quarter at a seasonally adjusted annual rate. Economists were also heartened by a better-than-expected jobless report in July. Source: The Wall Street Journal, Phil Izzo (08/12/2009)

First-Time Buyers

Basic Features Appeal to First-Time Buyers First-time homebuyers are forcing home builders to think frugal by penny-pinching on upgrades.Nearly 50 percent of new homes sold in the first six months of 2009 cost less than $200,000, the largest share for the first six months of a year in five years. The average size of new homes fell to 2,065 square feet, the smallest since 2000.“The high end isn’t moving, so builders have to dumb-down their designs and put in Formica kitchens and the bare-bones carpeting,” says Brian Bethune, an economist at IHS Global Insight.The barebones approach is helping builders that focus on first-time buyers improve their profits. Standard Pacific Corp. has more than doubled its stock price and Meritage Homes Corp. is up 84 percent.Source: Bloomberg, Kathleen M. Howley and Daniel Taub (08/06/2009)

Rates Dip

Mortgage Rates Dip Slightly The 30-year fixed mortgage rate dropped to 5.22 percent during the week ended Aug. 6 from 5.25 percent the prior week, Freddie Mac reports. Over the same period, the 15-year fixed-mortgage rate slipped to 4.63 percent from 4.69 percent. As for adjustable-mortgage rates, the five-year fell to 4.73 percent from 4.75 percent, and the one-year dipped to 4.78 percent from 4.80 percent.Source: Los Angeles Times (08/07/09)

Entry Level Homes Size Shrink

KB Home and Others Shrink Entry-Level Homes
Home builders are shrinking the size of new homes to lower costs and attract first-time buyers.

The median home size had risen from 1,500 square feet in 1970 to a high of 2,302 in 2007. By the first quarter of 2009, median home sizes had dropped slightly to 2,239, according to the National Association of Home Builders.

One of the builders aggressively shrinking designs has been KB Home. It attributes its 59 percent increase in orders of new homes since the beginning of 2009 to the new smaller designs it debuted at the end of 2008.

Its new energy-efficient Open Series home designs start at 961 square feet with a base price of $89,999.

KB is cutting costs by reducing the size of bathrooms and hallways and designing homes so bathrooms and kitchens can all share the same plumbing systems. Its innovative plans result in 40 percent more useful living space, the company boasts.

Other companies that are building small, energy efficient homes include DR Horton, whose models start at 900 square feet and $99,000.

Source: Business Week, Prashant Gopal (07/29/2009)

Buyers Shouldn't Wait on Falling Prices

Fear of overpaying for property is common these days, especially in places like New York where prices continue to be unstable.

If you encounter potential buyers who are frozen because they are concerned that they will pay too much, here are some factors to point out:

• Waiting for the right time can be expensive. Some buyers would have more equity today, despite falling prices, if they had bought when they were first considering it, instead of continuing to pay rent.
• Financing is fickle. Some people who were highly qualified last year can’t find financing this year because the credit market has tightened or their personal financial situation now makes them an undesirable borrower.
• Interest rates are headed up. If prices decline by another 10 percent, but interest rates increase by 1 percentage point, the monthly payment will be the same.

Source: The Wall Street Journal, Douglas Heddings (07/27/2009)

New Home Sales Rise

Sales of newly built single-family homes rose 11 percent in June to an annualized rate of 384,000, according to a report released Monday by the U.S. Department of Housing and Urban Development.

Analysts called the report a good sign.

"That is really good news,” said Peter Morici, an economics professor at the University of Maryland. “With all the foreclosure activity sending down home prices, for new homes to jump like that is a good indicator that the economy is bottoming out."

Pat Newport, a housing industry analyst for IHS Global Insight, also applauded the report. "The tax credit is boosting demand, but what will happen when it goes away in December?" he asked.

Excess inventory still exists in some key markets:

• California
• Florida
• Las Vegas
• Arizona

But overall, business is better. "The time for getting deals is going away." Markstein said.

Source: CNNMoney.com, Les Christie (07/27/2009)

Economists Optimistic That Market Is Upward Bound

Economists Optimistic That Market Is Upward Bound
Economic recovery is still a few months away, say economists surveyed by USA Today, but two-thirds of them think existing-home sales have bottomed out.

Both housing and automotive markets “have the potential to generate some quite large percentage increases,” says Bill Cheney, chief economist at MFC Global Investment.

Overall, economists say unemployment won’t peak until the first half of next year and credit markets will remain tight.

"I think (the recovery) is going to be anemic," says Allen Sinai, chief economist at Decision Economics. "I don't think consumers have the wherewithal to buy a lot of cars and a lot of houses."

Source: USA Today, Paul Davidson; Barbara Hansen (07/27/2009)

Easy Ways to Improve Curb Appeal

Easy Ways to Improve Curb Appeal
Curb appeal can make or break a sale in today’s market.

If your sellers are willing to improve the outside of their homes, here are some low-cost ways to increase a home’s curb appeal.

• Clean up beds by weeding and pruning shrubs. Add mulch for a high-end look.
• Invest in pots. A couple of attractive ceramic (or ceramic look-alike) pots filled with attractive plants can really make an entrance look classier.
• Install landscape lighting on the path to the front door.
• Replace the mailbox with a newer one and put some nice plantings at its base to dress it up.

Source: Tribune Media Services, Cameron Huddleston (07/26/2009)

Positive Signs

Positive Signs in West Point to U.S. Recovery
If you were drawing a real estate market trend line, you’d start in the west and go east, according to real estate commentator Marc Roth of Business Week.

Roth says the decline in the real estate market began in the West in 2007 with a 20 percent drop in transactions. The South, Midwest, and Northeast had milder declines of 13 percent, 11 percent, and 7 percent respectively that year.

In 2008, the South, Midwest, and Northeast were dropping 15 percent to 16 percent, with the West down only 1 percent, he pointed out.

Today, in mid-2009, the number of properties sold in the West is up 7 percent, while declines in the other regions have shrunk to between 3.5 percent and 7 percent.

Roth argues that since industry trends have historically moved from the west to the northeast, these numbers are evidence that the housing decline is about to be history in nearly every part of the country.

Roth, who is president of Home Warranty of America, says, “I am putting my money where my opinions rest. … I believe these trends send a strong enough signal that I am adding staff to both my sales force and call center.”

Source: Business Week, Marc Roth (07/24/2009)

Be Wary of Meth Labs

Home Buyers Should Be Wary of Meth labs Methamphetamine residues, left behind by sellers who manufactured the toxic drug, is an increasing problem for home buyers.The U.S. Drug Enforcement Agency says clandestine meth labs have been discovered in 46 states.Home inspector Wes Kelley offers these signs that meth may have been manufactured in a property:
Yellow discoloration on walls and other surfaces.
Taped off fire detectors.
Experiencing burning eyes, an itchy throat, or a metallic taste in the mouth while in the property.
Strong odors similar to solvent, cat urine, or ammonia.
Presence of security cameras or other surveillance equipment.Buyers shouldn’t rely on the seller’s assurances or an inspection by someone who isn’t knowledgeable because suing after the fact is unlikely to net results. The seller will be either long gone or in jail, experts say. Source: MoneyWatch.com, Alison Rogers (07/14/2009)

Making Money From Property Tax Appeals

Making Money From Property Tax Appeals Helping home owners appeal their tax bills can be a lucrative side business for real estate practitioners – particularly this year when legions of home owners are considering appeals after prices have crashed.The going rate for a property tax consultant, who makes the pitch to the appeals board on behalf of the home owner, is often 25 percent to 50 percent of the amount saved in the first year.Winning an appeal requires persuading an assessor or appeals board that the current assessment is inaccurate or outdated. Often the window for appeal is very small, so it pays to have key information gathered and ready.The National Taxpayers Union offers these tips for filing an appeal:
Check the assessors’ information on file for accuracy, including lot number, zoning category, sales records, land value and dimensions, and significant features.
Make sure that defects like a leaky basement that could lower the value of the property are on record.
Provide three to five comparables that prove the point that the property is over-assessed.
Get a full appraisal if the information on file appears to be hopelessly incorrect.Source: The Wall Street Journal, M.P. McQueen (07/16/2009)

Best Place to Age Is at Home

Best Place to Age Is at Home It is much cheaper for older people to live out their lives in a home of their own than it is to move to a residential center, but it takes work to make a home safer, according to the Home Safety Council.The council advises anyone contemplating home safety for an older resident to consider hiring an occupational therapist who specializes in home modifications. If a physician writes a prescription for the changes, some insurance companies will cover at least some of the costs. Long-term care insurance may also pay for the upgrades, the council says.Other possibilities for funding the improvements include Rebuilding Together, a national program created to help keep older people living safely in private homes.Source: The New York Times, Lesley Alderman (09/18/2009)

Now Is a Perfect Time to Buy

Housing Experts: Now Is a Perfect Time to Buy Don’t forget to remind potential buyers of something that is obvious to real estate professionals: Now is the time to buy, but that opportunity may be slipping away. For people who have a job and money, a dream house is within reach, writes Marc Roth, founder of Home Warranty of America and a columnist for BusinessWeek. He points out that mortgage rates remain low, prices are still at historic lows, and the government is offering incentives for first-time homebuyers.He also adds that the inventory of homes to buy is still large, but it is shrinking. According to the NATIONAL ASSOCIATION OF REALTORS®, the housing inventory peaked in November 2008 at an 11-month supply. At the end of May 2009, it had fallen to a 9.6-month supply.Roth says anyone who dallies will miss a good opportunity to buy a first home at a terrific price or go shopping for a move-up property that is a great buy.Source: BusinessWeek.com, Marc Roth (11/17/2009)

Most Banks Tighten Lending Standards

Survey: Most Banks Tighten Lending Standards About 75 percent of banks tightened their underwriting standards in the year ending March 31, and 20 percent discontinued, or marked for elimination, at least one kind of unconventional mortgage, according to an annual survey by the U.S. Office of the Comptroller of the Currency.The survey looked at the lending practices of the 59 largest national banks. For the second year in a row, no banks reported easing standards, although 27 percent left them unchanged.Banks told the government that they were requiring larger downpayments, tightening payment regulations, and increasing loan fees, according to the OCC report.Source: Inman News (07/22/2009)

Mortgage Applications Rise

Mortgage Applications Rise Slightly Mortgage applications were up 2.8 percent last week with the Mortgage Bankers Association weekly index rising to 528.9 from 514.4 the previous week on a seasonally adjusted basis.On an unadjusted basis, the index increased 2.9 percent from the previous week and was up 6.6 percent compared with the same week a year ago.The purchase index was up 1.3 percent, while the refinance index rose 4 percent, accounting for 55.5 percent of total applications.Mortgage rates also jumped last week:
30-year fixed-rate mortgages increased to 5.31 percent from 5.05 percent;
15-year fixed-rate mortgages increased to 4.80 percent from 4.59 percent;
1-year ARMs increased to 6.50 percent from 6.47 percent.Source: Mortgage Bankers Association (07/22/2009)

Single Family Homes Rise in May

Daily Real Estate News July 15, 2009

Single-Family Home Prices Rise in May Nationwide, detached, single-family home prices gained 1.6 percent in May, according to Integrated Asset Services, a specialist in default management and residential collateral valuations.The increase is the largest since July 2005, IAS reported. The index had previously declined more than 19 percent from its peak in June 2007.Compared to April, the Northeast was up 3.2 percent, the Midwest 1.9 percent, the South 1.1 percent, and the West 0.9 percent. In all areas but the South, prices also rose in April. “Two month's worth of positive data hardly signals a turn in the national housing market," says Dave McCarthy, President and CEO of Integrated Asset Services. “But we have to be encouraged by what we’re seeing in several important counties and neighborhoods.”Hardest-Hit CountiesIAS also tracks monthly changes in median sale prices in 15,000 struggling communities. It identifies the following counties where prices have fallen furthest since the 2006 peak:
Fresno, Calif. -28.1 percent
Imperial Calif. -45.2 percent
Kern, Calif. -33.8 percent
Monterey, Calif. -37.9 percent
San Bernardino, Calif. -29.1 percent
San Joaquin, Calif. -42.8 percent
Charlotte, Fla. -37.6 percent
Hernando, Fla. -38.7 percent
Lee, Fla. -45.2 percent
Pasco, Fla. -50 percent

Source: Integrated Asset Services (07/09/2009)