Pending Home Sales Slip in July but up Strongly from One Year Ago
August 31, 2011 by admin · Leave a Comment
Pending home sales declined in July but remain well above year-ago levels, according to the National Association of REALTORS®. All regions show monthly declines except for the West, which continues to show the highest level of sales contract activity.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, slipped 1.3 percent to 89.7 in July from 90.9 in June but is 14.4 percent above the 78.4 index in July 2010. The data reflects contracts but not closings.
Lawrence Yun, NAR chief economist, says sales activity is underperforming. “The market can easily move into a healthy expansion if mortgage underwriting standards return to normalcy,” he says. “We also need to be mindful that not all sales contracts are leading to closed existing-home sales. Other market frictions need to be addressed, such as assuring that proper comparables are used in appraisal valuations, and streamlining the short sales process.”
The PHSI in the Northeast declined 2.0 percent to 67.5 in July but is 9.7 percent above July 2010. In the Midwest the index slipped 0.8 percent to 79.1 in July but is 18.8 percent above a year ago. Pending home sales in the South fell 4.8 percent to an index of 94.4 but are 9.5 percent higher than July 2010.
In the West the index rose 3.6 percent to 110.8 in July and is 20.6 percent above a year ago.
“Looking at pending home sales over a longer span, contract activity over the past three months is fairly comparable to the first three months of the year, and well above the low seen in April,” Yun says. “The underlying factors for improving sales are developing, such as rising rents, record high affordability conditions and investors buying real estate as a future inflation hedge. It is now a question of lending standards and consumers having the necessary confidence to enter the market
August 25, 2011 by admin · Leave a Comment
As we look to the future there is a trend that should be called out to the forefront as a positive indicator – first default rates have been falling since March 2009 and are now at 2007 levels. The Keeping Current Matters Crew have been talking about the impact of this segment of the marketing and the shadow inventory out there. Their report below includes a graph that charts how…Delinquency Rates are Dropping Dramatically
In yesterday’sblog post, we explained that the ‘shadow inventory’ of distressed properties which has hung over the housing market will soon be released for sale. The real estate market won’t recover until we work our way through this discounted inventory.
The great news is that as these properties exit the bottom of the inventory funnel, there are fewer homes entering the top of the funnel. The best indicator of future foreclosures is the number of households that fall 90 days delinquent on their mortgage payments. This number is falling dramatically. As the S&P Shadow Inventory Report states:
“Our estimate of the months to clear the shadow inventory reached its peak at 57 months in early 2008. Back then, rising default rates caused a sharp increase in the overall amount of distressed properties. However, first default rates have been falling since March 2009), indicating that fewer loans are becoming distressed.”
Here is a graph from the report: 
Bottom Line
The housing market still has a large number of distressed properties to work through. However, there is now an end in sight as long as delinquency rates continue to decline.
The Economy: Why All the Panic?
August 19, 2011 by admin · Leave a Comment
It is easy to get caught up in the “noise‟ that we all maneuver through each day so it’s a good idea to step out and take a look at what is really going on around us. To that end the KCM Crew has provided us a snapshot of where we are today vs. last year at this time. We‟ll all interpret this a bit differently but the fact remains that, even though there is great deal of uncertainty, we are not down for the count. So the question becomes…The Economy: Why All the Panic? For the last couple of weeks, all we have heard is how bad the current economic situation is. “The markets are going to crash and interest rates are going to skyrocket.” Panic has definitely engulfed the entire country. Consumer confidence, as measured by the University of Michigan’s Consumer Sentiment Survey, has fallen to a number not seen in thirty years. This panic has actually had a negative impact on the economy. It was said best by Mark Zandi, chief economist at Moody‟s Economy: “Confidence normally reflects economic conditions; it doesn‟t shape them…Yet at times, particularly during economic turning points, cause and effect can shift. Sentiment can be so harmed that businesses, consumers and investors freeze up, turning a gloomy outlook into a self-fulfilling prophecy. This is one of those times.” What does the data actually show? We decided to look at certain economic indicators and compare them to the numbers from a year ago. Here is what we found:
We are not making the argument that the current numbers are worth celebrating. We are only suggesting that the sky is not falling. Bottom Line Conditions aren’t as dire as some are professing. Make good sound financial decisions based on your own economic conditions. There is no need to panic. The Median House Price is a National statistic – home prices obviously vary greatly from region to region.
There is no such thing as an underpriced home……
May 18, 2010 by admin · Leave a Comment
When listing your home in today’s market accurate pricing is very important! Many listing agents will try to tell you what you want to hear in hopes of obtaining the listing. What many seller’s don’t realize is the disservice they are doing by pricing a home too high above market. In Orange County homes that are priced to sell will sell at or above market and attract multiple offers giving the seller a better pick of the buyer pool. If a home is priced above market the home will sit on the MLS and the listing will become seasoned. An overpriced home will require one or more price reductions which will send the wrong message to buyers. Price your home at market from the beginning and you will ensure getting top dollar for your home! Don’t be fooled by listing agents that tell you what you want to hear…..look at the facts. A good agent will arm you with all the facts you need to make a good decision. If you underprice your home the market will correct the price naturally, you will get multiple offers above asking and have your pick of buyers to choose from.
California picks up where the Federal Gov’t Left Off
May 18, 2010 by admin · Leave a Comment
If you are still looking to buy a home, but are discouraged becasue the Federal First Time Homebuyer Tax Credit has expired, don’t worry you haven’t completely missed the boat…. the state is rewarding you now!!
A Year in the Life …….Buying A Short Sale
February 24, 2010 by admin · Leave a Comment
If you are lookng at short sales in today’s market, and you should be because they are usually the best deals in the market, you need to make sure you have an agent that knows what to do to help you through. I recently closed a transaction that took almost a year from start to finish. I contacted the seller in March of 2009 and had out client’s offer accepted and immediately presented to the bank. They were a VA buyer, so there was a definite bias against their offer as many sellers and seller’s agents percieve VA and FHA loans to be more difficult to close. After months of searching and writting offers, we finally found an agent that was willing to get our offer in front of the bank. We waited about 3 months for the bank to order and review the BPO and to get the terms from the bank. The first and the second had come to an agreement and we were rerady to go. We conducted the inpection and ordered the appraisal and the lender called to verify VA eligibility. When the lender called to verify eligibility the VA could not confirm that the condominium project was eligible. The project was not listed under its name and they were not correctly identifying the project number. As a result, the lender was delayed 4 days and we were late to close. We were now considered to be out of contract and the second lien holder (the bank holding the 2nd mortgage) came back wanting an additional $25k to settle the short sale. Because it was a VA loan, the buyer was not able to pay off the second lien holder. US bank, who was the first lien holder was unwilling to pay the second any additional funds and the current owner who was entertaining the short sale was unwilling and unable to pay them off. At this point the buyer’s had given notice to their apartment complex and were now going to be homeless if their transaction did not close in November as planned. Did I mention my client had just given birth to a beautiful baby girl a few weeks prior! We waited in anticipation that the bank holding the second would be more reasonable and realize they may not get anything if they waited until the home was foreclosed upon, but the second lien holder continued to hold out. We were then told by the first lien holder (US Bank) that as soon as the property was sold back to the bank at the trustee’s sale on November31, 2009, that the listing agent would be able to contact the bank and get the buyer’s offer presented before it went back on the market. They short sale department sent an email to the listing agent confirming they would not need to list the home on the MLS again, they would simply sell it based on the original acepted offer. on November 31st 2009, the listing agent called her title company who misinformed her and told her the property was sold to a third party at the trustee’s sale. I knew it was unrealistic for an investor at the trustee’s sale to pay cash aboove market for this home, so I called my title company the next day where I was given the name and number of the new owner (US Bank). As instructed by the Short Sale department who was previously handling this transaction, I urgently called the contact who was now handling this property. She instructed me that it had already been assigned to an asset manager and a listing agent and would have to be marketed on the MLS for 7 days. This information was contrary to what we were told by the Short Sale department nearly 30 days prior. I immediately called the original listing agent who represented the seller in the short sale and she contacted the bank and forwarded the emails from their short sale department instructing us to submit the offer to the REO department. They accepted our offer from the original listing agent, but in a turn of events a similar unit sold for a higher price during the time the bank was proceeding with the foreclosure. The bank re-listed the home as an REO and marketed the property @ $335k….. 10k more than our original offer. After 10 days we received a counter from the bank asking all buyers for their highest and best offer. We increased our offer and got our offer accepted. It was not until they asked us to waive our appraisal contingency that we reviewed the comparables yet again, and discoved the market once again changed and a unit closed at $319k on 12/31/2009. We then had an argument again for a lower purchase price as the property was not going to appraise. This was all transpiring while the buyer’s had to re-locate to Palm Springs to live with their parents because their lease was not able to be re-newed. To make a very long story short…….the buyers closed on their dream home at their original purchase price in February 2010. Short Sales are extremely complicated, but most don’t have nine lives as this one did, but it is extremely important you have an agressive agent who turns over every stone in this complicated market. The deals are there, but they often times need to be fought for!
I Am A FHA/VA Buyer Why Am I Different?
February 22, 2010 by admin · Leave a Comment
If you are an FHA buyer with 3.5% down and your offer keeps getting rejected you are not alone. While cash buyers are not getting significant discounts in this market, they are getting their pick of the inventory, as long as their offer is reasonable. FHA and VA loans are perceived as being more problematic in escrow than a conventional loan or a cash buyer. FHA/VA guidelines are more stringent to protect the buyer and the investor. FHA/VA requires all condominium projects they lend on to be “approved”. In their approval they look for potential issues with a project such as too many non-owner occupants, too little cash reservesin the Home Owner’s Association, any pending litigation, etc. All homes must be in livable condition prior to close of escrow. Many FHA or VA buyers will have to complete repairs prior to close of escrow if FHA/VA apraisers find a property is not eligible. These repairs can be as simple as buying an operative stove and as complex as replacing the flooring in an entire room. Even the cleanest most tunkey properties can hit snags in escrow when they are being financed using FHA or VA. This is why having a strong agent who is experienced in this market is important!
Biggest Mistakes Made by First Time Home Buyers
February 21, 2010 by admin · Leave a Comment
10 Rookie Home Buyer Mistakes to Avoid
By Kimberly Castro
It was supposed to be a momentous occasion for Brian, who was about to close on his first home. But after signing a thick stack of documents–and taking part in the ceremonious passing of the keys–something felt off for the then 26-year-old Montgomery County, Md., resident. There wasn’t even a chilled bottle of bubbly or a housewarming gift to punctuate this pivotal moment. “My Realtor told me that I can take him out for a steak,” recalls Brian, who prefers that only his first name be used to guard his privacy. “He made me feel like I owe him something, when he just got paid a $12,000 commission. It felt like a kick in the face.”
A year and a half later, Brian is dishing out thousands of dollars to replace a badly splintered deck, a tired heating, ventilating, and air conditioning system, and a broken window the home inspector–chosen by the real estate broker–didn’t catch. He recalls a handful of instances in which his real estate agent should have been more active as they toured the 16-year-old town home that Brian ended up purchasing, including pointing out his end unit’s cozy proximity to the busy street. “Now I can’t sleep past 7 a.m. because I wake up to the sound of rush hour,” Brian says.
With the extension and expansion of the popular first-time home buyer tax credit, which President Obama signed into law in November, as well as price declines and attractive mortgage rates, an influx of qualified first-time buyers are rushing to take advantage of the market. Mark Zandi, the chief economist at Moody’s Economy.com, projects there will be 1.84 million home sales to first-time home buyers in 2010, compared with 1.73 million in 2009. If you’re a property virgin about to take the plunge, here are some common blunders to avoid–and helpful tips that could mean the difference between financial security and a mountain of debt:
1. Not checking your credit report and score
You’ve clicked through hundreds of online listings, compared floor plans and square footage, and are eager to jump-start your search. But before you even think of setting foot in an open house, make sure you get a copy of your credit report. The cleaner your credit report and the higher your credit score, the more likely you are to be preapproved for a mortgage at a low interest rate. According to Keith Gumbinger of HSH.com, most home buyers will need a credit score of about 720 to obtain the most favorable mortgage rates.
Review your credit report a few months before you begin your house hunt, and you’ll have time to ensure the facts are correct and dispute mistakes before a mortgage lender checks your credit. You can access a free copy of your credit report at annualcreditreport.com once every 12 months.
2. Not getting preapproved
After you’ve assessed your credit report, it’s time to establish with a qualified lender how much you can afford. “First-time home buyers need to take the time to get an approval from their lender before looking at homes,” advises Ray Boss Jr., a six-year licensed Realtor with RE/MAX Realty Group in Maryland. “This includes getting a credit check and giving their lender a copy of W-2s, pay stubs, and bank and brokerage statements.” Getting preapproved can help you save time by looking for homes that you know you can afford instead of lusting after something out of your price range. And it will put you in a better position over another bidder with no preapproval.
3. Not creating a long-term budget
If the housing crisis proved anything, it’s that mortgages were given to people who clearly did not have the means to pay them back. To avoid making this mistake, home buyers should create a budget before even beginning their home search to determine just how much house they can really afford. A good rule of thumb is to devote no more than a third of your monthly household income to housing costs, which include mortgage principal, interest, taxes, and insurance. “A good number would be 30 percent,” Zandi says. “If you are over 35 percent, you are really pushing the envelope.” There are several work sheets available online to help you figure out how your income, debts, and expenses affect what you can afford each month for the next 15 or 30 years.
4. Forgetting about the hidden costs
You grossly underestimated what you can afford to pay each month. You factored in the purchase price of the home but didn’t consider the cost of taxes, insurance, utilities, and fees. There are several hidden costs that first-time home buyers neglect to prepare for. They can be anything from the closing costs to appraisal fees, escrow fees, homeowner’s insurance fees, property taxes, and even moving costs. Another factor is the cost of repairs and maintenance. “When you’re renting and the furnace goes out, what do you do? You call the landlord,” says Tom Vanderwell, mortgage officer for Fifth Third Bank in Michigan. “When you own a house, what do you do? You have to fix it yourself.” You may find there are numerous “nickel and dime” things to account for that could add up to a significant chunk of money over time.
5. Not using professional help
Sure, it’s possible to go out and buy a home without the aid of a professional real estate agent. But think about how much time and stress a good agent can save you. For starters, Realtors have access to all the homes on the market through the multiple listing service, or MLS, plus all the ones that are under contract and have been sold. A specialist has time to sift through all of these listings, says Boss, and make the appointments to show you the houses, create comparative market analyses to determine proper pricing, and meet with necessary inspectors. Real estate agents also can help buyers traverse a taxing, 70-page legal contract. “I would want someone who is going to look out for my interests first and foremost,” says Boss. “Someone who knows the contracts, who has experience negotiating, and who can walk me through the entire process smoothly–step by step–and make sure I get the house that’s right for me.”
6. Picking your real estate agent and lender blindly
“One of the mistakes a lot of people make is finding a Realtor they aren’t comfortable with,” says Boss. Begin your search at the National Association of Exclusive Buyer Agents, a nonprofit that represents buyers. Or ask relatives, friends, neighbors, and coworkers for referrals.
First-time home buyers, Boss says, are generally more time-consuming than the average buyer and require more attention. A good real estate agent will be friendly and accommodating, show only homes that fit your parameters, and help you with strategies during the bidding process–but never pressure you into something you’re not comfortable with. “It’s important that the Realtor be experienced with first-time buyers, understand their wants and needs, and be able to connect with them well,” says Boss.
Similarly, the buyers should feel at ease with and have complete confidence in their mortgage lender, and they should fully discuss and understand their financing options with that lender. “Don’t apologize for asking questions,” says Vanderwell, who stresses the importance of knowing what you’re getting into. “There’s a pretty substantial chunk of people who are in really rough straits right now and would not have been had they done their homework.”
7. Thinking you’ll get everything on your “wish list”
Another mistake people make is being too close-minded while searching for their home, says Boss. He suggests sitting down with your real estate broker before searching for a home and creating a need/want list. Some of the items you might want to include as “must haves” or deal breakers are the towns you’d want to live in, square footage, or accessibility to transportation. The second part of the list would be things you don’t necessarily need but wish to have, such as a garage, new kitchen appliances, or an extra room for an office. “As you search for your home, you may realize there are certain parameters you really want or don’t want,” says Boss. “Understand that a certain amount of flexibility is essential.” Your aim is to be able to afford everything you need–as well as some items you want–all while staying within a long-term budget.
8. Not keeping your feelings in check before hiring a home inspector
You’ve already chosen the perfect paint color to match your living room set. But hold on: Before you start picking out accent pillows for your sofa, you need to bring in a home inspector to check the safety of your potential new home. Inspectors will evaluate the structure, construction, and mechanical systems of the home and will give you the approximate price of repairs that may be needed. They will examine everything from the electrical system, water heater, and HVAC system to the foundation and floors.
Buyers should find and hire their own inspector–independent of the real estate broker–to ensure there isn’t a conflict of interest. When you make your offer, make sure the seller is aware that your offer is contingent on the house passing inspection. You can also add a clause to the contract stating that the seller will pay up to a certain amount for any repairs required as a result of the inspection.
9. Not researching your neighborhood
You may be living in your dream home, but your neighborhood’s a nightmare. Or you may have children or are planning to have children in the near future, but you didn’t consider the quality of the school districts or parks in the vicinity. You should ask yourself a number of questions during your home search, such as “Are there good schools nearby?” and “Do I feel safe coming home at night?”
Boss suggests that if schools are an important factor, you should go check them out personally. Speak with the principals or the parents waiting on the steps outside to pick up their kids. To learn more about the community, open up the local newspaper, Boss says. You can find out about community events or even how good the local high school football team is. Today’s buyers can gather all sorts of neighborhood information from real estate blogs and websites like Zillow and Trulia. (U.S. News has a partnership with Trulia.) “It is the responsibility of the buyer to check crime reports, school options, churches, and shopping,” says Boss. “Remember, you can change your house, but you can’t change the neighborhood.”
10. Not considering the resale value of your home
You’ve just started the home-buying process. The prospect of selling a home hasn’t even crossed your mind. Besides, you’re thinking you might live in whatever home you buy forever. Yet life is full of surprises, whether it is a job transfer or having another child or taking care of an incapacitated relative.
When the time comes to put your house on the market, will your home be easy or difficult to sell? While you’re on the hunt, it’s a good idea to account for preferences of the typical home buyer. Just because you love to landscape or enjoy a bright-pink backsplash doesn’t mean a prospective buyer will. “How we make our plans initially has a big impact on our ability to adjust those plans and to deal with whatever comes our way,” says Vanderwell.
Week in Review
February 5, 2010 by admin · Leave a Comment
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The 90 Day Flip Rule for FHA Has Been Waived!!
January 26, 2010 by admin · Leave a Comment
New HUD Policy Created to Allow Quicker Foreclosure Re-sales!
Effective February 1, 2010 the Department of Housing and Urban Development (HUD) will relax FHA rules that prohibit insuring mortgages on homes that are owned by the seller for less than 90 days – a move that could help expedite the rehabilitation and resale of foreclosure properties.
In a housing market where tighter lending requirements have made FHA financing the only option for some buyers, this 90-day policy has (1) kept some homebuyers from being able to purchase affordable homes and (2) prevented the quick resale of foreclosed properties, which affects the ability of communities to stabilize and rebuild.
Research has shown that the buying, fixing, and reselling of foreclosed properties is often achieved in less than three months time.
The temporary waiver, which will expand access to FHA mortgage insurance to many, will be in effect for a period of one year, unless extended or withdrawn by the FHA. With this in mind, now may be an excellent time to contact clients who have recently purchased a foreclosed property and those who may be on the fence about purchasing a foreclosure as a short-term investment.
“FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties,” said FHA Commissioner David H. Stevens. “This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity.”
To ensure FHA borrowers are protected from inflated prices, the policy has certain restrictions, including:
• All transactions must be arms-length and there can be no identity of interest between the buyer and seller.
• If the sales price of the property is 20 percent or more above the seller’s acquisition cost, the lender must meet specific conditions for the waiver to apply.
• The waiver is limited to forward mortgages, and cannot be used under the Home Equity Conversion Mortgage (HECM) purchase program.
