Home Sales on the Rise: Ready for Spring Buying Season?

DAILY REAL ESTATE NEWS | THURSDAY, FEBRUARY 23, 2012

Existing-home sales rose 4.3 percent in January to a seasonally adjusted annual rate of 4.57 million, marking the third gain for home sales in the last four months, the National Association of REALTORS® reports.  

“The uptrend in home sales is in line with all of the underlying fundamentals – pent-up household formation, record-low mortgage interest rates, bargain home prices, sustained job creation and rising rents,” NAR’s Chief Economist Lawrence Yun says.

While sales ticked up, inventories of for-sale homes also continued to show improvement, NAR reported. At the end of January, total housing inventory fell 0.4 percent to 2.31 million existing homes for sale, which represents a 6.1-month supply at the current sales pace. 

“The broad inventory condition can be described as moving into a rough balance, not favoring buyers or sellers,” Yun says. “Foreclosure sales are moving swiftly with ready home buyers and investors competing in nearly all markets. A government proposal to turn bank-owned properties into rentals on a large scale does not appear to be needed at this time.”

Unsold listed inventory has steadily dropped since reaching a peak of 4.04 million in July 2007. It now is 20.6 percent below where it was a year ago, NAR reports. 

Housing Affordability Improves

As home prices have fallen and mortgage rates at all-time record lows, housing affordability is at some of its highest levels on record. 

“Word has been spreading about the record high housing affordability conditions and our members are reporting an increase in foot traffic compared with a year ago,” says NAR President Moe Veissi. “With other favorable market factors, these are hopeful indicators leading into the spring home-buying season. We’re cautiously optimistic that an uptrend will continue this year.”

The national median existing-home price for all housing types in January was $154,700, which is down 2 percent year-over-year. 

Distressed sales, which tend to sell at steep discounts, continue to hamper home prices nationwide. Foreclosures and short sales accounted for 35 percent of all January home sales, which is up slightly from 32 percent in December. 

Still, “home buyers over the past three years have had some of the lowest default rates in history,” Yun said.  “Entering the market at a low point and buying at discounted prices have greatly helped in that success.”

Breakdown by Housing Type

Here’s a closer look at how home sales fared by housing type in January: 

Single-family home sales: increased 3.8 percent to a seasonally adjusted annual rate of 4.05 million in January from 3.90 million in December. They are 2.3 percent above the 3.96 million-unit pace a year ago. Median price: $154,400 in January, down 2.6 percent from January 2011.

Existing condominium and co-op sales: rose 8.3 percent to a seasonally adjusted annual rate of 520,000 in January from 480,000 in December. They are 10.3 percent lower than the 580,000-unit level in January 2011. Median price: $156,600 in January, up 2 percent from a year ago.

Home Sales by Region

The following is a breakdown of existing-home sales in January by region: 

• Northeast: increased3.4 percent to an annual pace of 600,000 in January and are 7.1 percent above a year ago. Median price: $225,700, which is 4.2 percent below January 2011.
• Midwest: increased 1 percent in December to a level of 980,000 and are 3.2 percent higher than January 2011. Median price: $122,000, down 3.9 percent from a year ago.
• South: rose 3.5 percent to an annual level of 1.76 million in January but are unchanged from a year ago. Median price: $134,800, which is 0.3 percent below January 2011.
• West: increased 8.8 percent to an annual pace of 1.23 million in January but are 3.1 percent below a spike in January 2011. Median price: $187,100, down 1.8 percent from a year ago.

Contract Delays, Cancellations Remain High

Twenty-one percent of NAR members in January reported delays in contracts, and 33 percent said contracts fell through, according to NAR. The number of contract cancellations remains mostly unchanged from December. 

The increase in the past year of contract cancellations or delays has been blamed on more lenders declining mortgage applications from stricter underwriting standards and low appraisals coming in under the agreed upon contract price. 

Source: National Association of REALTORS®

Warren Buffett Says He’d Buy a Couple Hundred Thousand Homes

Mortgage rates hover near 60-year lows

By Kerri Panchuk • March 1, 2012 • 9:11am • On housingwire.com


Fixed mortgage rates fell slightly for the week ending March 1, keeping interest rates near their 60-year lows, Freddie Mac said Thursday.


Freddie's Private Mortgage Market Survey shows the 30-year, fixed-rate mortgage averaging 3.90% for the week, which is down from 3.95% the previous week and 4.87% a year ago.


In addition, the 15-year FRM hit 3.17%, down from 3.19% a week earlier and 4.15% a year ago.


Meanwhile, the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.83% this week, up from 2.80% the week before and 3.72% a year ago.


The one-year Treasury-indexed ARM hit 2.72%, down from 2.73% a week earlier and 3.23% last year.


"Fixed mortgage rates bottomed out in January and February of this year which is helping spur the housing market," Frank Nothaft, vice president and chief economist with Freddie Mac.


He added, "For instance, pending existing home sales rose in January to its strongest pace since April 2010 and sales figures for December saw upward revisions. In addition, the Federal Reserve noted in its February 29th regional economic review (or Beige Book) that residential real estate activity increased modestly in most of its Districts over the course of January and early February, with several reports of increased home sales."


kpanchuk@housingwire.com

Rent vs. buy: Decision comes down to job, finances

February 19, 2012|By Paul Owers, Sun Sentinel

South Florida renters constantly hear jeers that they're paying somebody else's mortgage.

They feel pressure to escape rent increases and take advantage of low home prices last seen a decade ago.

But a home still may be a stretch financially. And prices may decline further, embittering new owners who see their prized asset lose value.

For most, the decision boils down to whether their jobs are stable, how much savings they'd have after buying and how long they intend to stay in the area.

"No one thinks of housing as a risk-free investment anymore," said Jed Kolko, chief economist for real estate website Trulia.com. "If you're going to buy, you need to be in a financial position where you're able to deal with the risks of prices going down."

Housing industry experts weigh in on the rent vs. buy debate in three hypothetical South Florida case studies.

Scenario One: A police officer making $60,000 a year, newly married, currently renting a two-bedroom apartment for $1,500, never owned a home before.

Jim Flood, regional manager for Supreme Lending in Boca Raton, said he'd work with the officer to determine his cash position.

A new homeowner still should have at least two to four months' of cash in savings after buying, Flood said. Assuming he has the appropriate savings and his job is safe, the officer is a good candidate to own, Flood said.

If he put down 3.5 percent on a $150,000 home and had an interest rate of about 4 percent, his total monthly payment (principal, interest, taxes and insurance) would be roughly $1,100 — a savings of $400 from what he pays in rent.

Bottom line: Easy call. Buy.

Scenario Two: Recent college graduate, living with her parents, monthly payments of $300 for a car and $400 for student loans, has minimal savings and a $40,000-a-year job, but is willing to relocate for another.

The car and student loan debts are the biggest obstacles to buying, Flood said. She'd have to buy a small home or condominium, but she's likely better off staying a renter.

"If it was my daughter, I'd tell her to pay off the car or student loans and save more money for a rainy day," Flood said.

Randy Bianchi, co-owner of Paradise Properties of Florida in West Palm Beach, agrees, adding that the uncertainty over how long she'll be in the area is another concern. Plan to live in a home you buy for at least five years, experts say.

"Homes are cheap right now, but owning will tie you down," Bianchi said.

Kolko offers another consideration: If she's still living with her parents, she'd be a first-time homeowner with little or no experience in maintaining a house by herself. She'd have to cut the grass and deal with the occasional broken dishwasher. "That's a lot of firsts all at once," Kalko said.

Bottom line: Stay with parents or rent cheaply

Scenario Three: Retired couple in their mid-60s, small pension, just sold their house for a $15,000 profit, looking to stay in the area and downsize.

The major factor here is the modest profit on the home sale. It's not enough to buy another home or condo outright or to significantly pay down a mortgage on a new place, said Michael Citron, a real estate agent in Broward County.

The couple likely would spend $1,200 to $1,500 a month on a mortgage and association dues, but probably only about half that amount if they moved into a 55-and-over rental community, Citron said.

"That's much more manageable for them," he said. "The lawn is taken care of and they can call maintenance if anything needs to be fixed. They just don't have enough money to buy a home."

Bottom line: Rent

powers@tribune.com, 561-243-6529 or Twitter @paulowers

Warren Buffett Betting on Housing in 2012

By Nathaniel Popper

February 27, 2012, 8:37 a.m.

Reporting from New York— 

The U.S. housing market disappointed Warren Buffett last year, but he hasn't given up hope.

Buffett said in his annual shareholder letter, posted this weekend, that he was "dead wrong" when he predicted last year that the rebound in U.S. home prices would begin within a year.

This year, though, he's betting again that the housing market will recover, and for an interesting reason: hormones.

As Buffett explains it, the housing market is currently depressed because young Americans have stayed at home rather than going out and setting up their own households.

"People may postpone hitching up during uncertain times, but eventually hormones take over," Buffett wrote in the letter to shareholders in his investment company Berkshire Hathaway. "And while 'doubling-up' may be the initial reaction of some during a recession, living with in-laws can quickly lose its allure."

That is not the entirety of his argument. He also says that currently home builders are not creating enough new supply. As a result the excess inventory that built up after the financial crisis is slowly disappearing, paving the way for new demand.

During an appearance on CNBC this morning, Buffett said he would buy up millions of U.S. homes if it were possible.

Data out this morning seemed to support Buffett's contention. The National Assn. of Realtors announced that the number of people buying used homes in January rose to a 21-month high.

As usual, the annual letter was an opportunity for Buffett to provide a candid assessment of Berkshire Hathaway's wins and losses, most of which were in the volatile energy sector. He said his entire $2-billion investment in a Texas utility company may be wiped out unless natural gas prices rise substantially.

"In tennis parlance, this was a major unforced error by your chairman," he wrote.

Buffett also used the letter to reveal that he has chosen a CEO to succeed him at Berkshire Hathaway -- he just refused to provide the identity of that person.

Berkshire's class B stock was down 0.6% in early trading this morning.

6 Ways to Turn Off Your Home's Buyer (or Seller!)

By Tara-Nicholle Nelson | Broker in San Francisco, CA

In the wild world of dating, when you encounter a “turn-off,” you can just pack it in and not to go on another date with that guy or gal again. But turnoffs can be much more detrimental when they come up in the realm of your real estate goals. Indeed, turn a buyer off, dear sellers, and you risk not selling your home - period - or getting a lower price than you might have otherwise.

And, contrary to what you might assume, the same goes for buyers. Even in today’s ‘buyer’s markets,’ multiple offers do happen. And even in cases when you’re the only buyer on the scene, having a cooperative seller goes a long way toward everything from getting access to the place for inspections to getting a price reduction when the appraisal comes in low. Thus, the potential still exists for buyers to turn sellers off, and risk having their dream home slip right through their fingers.

As you proceed on your quest for drama-free real estate, factor in these frequently occurring gaffes that turn off buyers and sellers, and my tips for avoiding them.

Top 3 Ways to Turn a Buyer Off:  If you’re a seller courting buyers, here are 3 faux-pas to avoid:

1. Hanging out when buyers are viewing your home: Buyers stalk properties online and off, checking obsessively for price reductions and the like.  But buyer-side home stalking is unobtrusive to sellers. On the other hand, buyers can feel personally stalked and stifled in their ability to fully explore or verbally process their impressions of a home when you, seller, hang out inside your home while it’s being shown.

As soon as a buyer sees you in the house, it instantly becomes much more difficult for them to”
(a) envision themselves living there (it’s your house, after all),
(b) be comfortable opening up drawers, closet doors, etc., and
(c) express their thoughts about how this house might be exactly what they’re looking for, if they can knock out that wall and get rid of those cukoo murals you so lovingly painted in your children’s rooms.

Sellers: If you want to sell your home, it’s best to not be around when buyers are looking. Give them some breathing space and a chance to truly walk around and consider what they like and/or dislike about your home without lurking and looming (and, let’s be real - eavesdropping) nearby.

2. Showing a messy house: Life gets hectic, and it’s easy for things like laundry, dishes and other house cleaning tasks to fall by the wayside. It’s also difficult to keep the home in which you and your 4 kids, 3 gerbils and 2 Labrador Retrievers live perfectly spotless for months at a time, while you’re waiting for an offer. But when you decide that you’re going to sell your home, it’s imperative that you make a pact and a plan with yourself and your family that the place will be in tip-top shape when buyers come knocking.

Remember: your home is competing with dozens of others, as well as with buyer’s HGTV-infused visions of what their next home should look like, so first impressions really count.

Sellers: Stuffing the closet is not the answer. (Buyers will be opening that closet door, after all.) Pack up your personals like you were moving (best case: you are), and put all but the essentials in storage, if needed. Get the carpets cleaned, do the dishes, make the beds, mow the lawn, dust, sweep and mop. Ask your agent to give you a gut check on whether your idea of clean is clean enough (better yet - ask them for the number of a house cleaner who you can engage to get the job done to showable standards).

This might all seem obvious, but agents and buyers alike are constantly amazed at the condition of some of the homes they walk into. Take my word for it; I’ll spare you the ‘ewww’-inducing stories.

3. Overpricing your home: Buyers already have lots to do before making the largest purchase of their lives. They have to wrangle their finances into order, jump hoops to qualify for a loan, collect the cash for down payment and closing costs, and invest sometimes hundreds of hours into market research and house hunting. With all of this already on their plates, the prospect of trying to negotiate down a crazily high asking price is just too much work (and too outside their comfort zones) for most buyers to deal with. The average buyer won’t even bother looking at your home if the asking price is clearly high and off base compared with other similar, nearby homes for sale; they’d rather sit tight and wait .

Sellers: Price to sell from the beginning. Work with your agent to determine a price that is supported by the data on how much nearby homes have recently sold for. You’ll save yourself a lot of time and anguish and get a lot more legitimate bites from serious, qualified buyers.

Top 3 Ways to Turn a Seller Off:  Buyers, if you want a home’s seller to play ball, best practice is to avoid these 3 pitfalls:

1. Unjustified, extreme lowball offers: It’s no secret that buyers have the upper hand in many markets right now. (To be clear, I said ‘many’ - not ‘every’ - your agent can help you understand what the dynamics are in your market.) But let’s be realistic, here. No seller can afford to give away their home at a price far below what it’s worth on today’s market. Lowballing a seller at a price far below the recent sales prices of similar homes in the neighborhood on the ‘let’s-take-a-stab’ plan, is highly likely to turn them off.  And that, in turn, will cause the seller to view your offer - and you - as disrespectful and wasteful of their time.

Not only will they turn down your offer, but they may not even bother with a counteroffer, rendering your efforts at securing that particular home dead in the water.

Buyers: Review the recent sale prices of similar homes in the neighborhood (aka “comps”) with your agent before you make your offer. Also, ask them to help you factor in other market data, like the average list price-to-sale price ratio and the average number of days neighborhood homes stay on the market. It’s all right to come in lower than asking, if the market data supports such an offer; just be sure your offer is based on reality - and not your fantastical hallucination about scoring the bargain of the millennium.

2. Buyer-side mortgage fails: Plenty of employed buyers with decent credit and cash in the bank have been turned down for a mortgage these past few years. That means buyers can’t assume (a) that they’ll be approved for the amount of loan they need to buy the house they want, or (b) that they’ll be approved for a loan at all. Your inability to get approved for a home loan can create all sorts of problems not just for you, but also for your home’s seller. The average seller’s  worst case scenario is that  they accept your offer only to find out a few weeks, or months, later that you can’t get the loan you need to close the deal.

Buyers: It’s not overkill to start working with a mortgage professional as far as six months or a year in advance of starting your house hunt to get pre-approved for a loan. Make sure you get a clear understanding of the amount you qualify for, then work with your real estate agent from there to determine the price range you should house hunt in. And whatever you do - don’t buy a new car, open new credit cards or even change your line of work before your escrow closes, unless you consult closely with your mortgage professional before you make that move.

Tip for Sellers: Work with your agent to vet buyers before you sign a contract. Factor in their down payment and earnest money deposit, and feel free to counteroffer these items, not just the offer price. It’s not overkill to have your agent contact the buyer’s mortgage broker to see how reliable the buyer’s pre-approval really is.

3. Bashing the seller’s home: Home bashing happens when buyers start bad-mouthing (aka “trash talking”) the place and/or the neighborhood in hopes of getting a lower asking price. Examples: pointing out all the foreclosures in the area, saying the house down the street just sold for much lower than the asking price on this house, saying you’ll need to rip out the entire kitchen before you even consider moving in - saying any of these things to a seller who happens to be at home during the showing or the inspection is probably one of the fastest ways to turn them all the way off.

Buyers: Bad-mouthing a house or neighborhood won’t work to get you a lower price. Instead, it only serves to irritate the seller and motivate them to come up with all sorts of reasons why they shouldn’t sell their home to you! Remember: homes hold incredible emotional experiences for owners. Make an offer you’re comfortable with and keep the negative comments to yourself.

If there are legitimate, factual reasons underlying your decision to make an offer at a price the seller might see as a lowball, ask your agent to respectfully communicate those facts to the seller’s agent.

Buyers, sellers, agents: What are the biggest turnoffs you’ve encountered during home buying or selling?

List of Improving Housing Markets Expands to Nearly 100

Posted By Susanne On February 9, 2012 @ 4:19 pm In Business Outlook, Consumer News and Advice, Finance and Economy, Home Owner News, Real Estate Trends, Today's Marketplace, Today's Top Story
 ^[1]The list of housing markets showing measurable improvement expanded by 29 metros in February to include a total of 98 entries on the National Association of Home Builders/First American Improving Markets Index (IMI), released recently. 


Thirty-six states are now represented by at least one market on the list.

The index identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. 

The February index adds some metropolitan areas that have been particularly weak; this is due to the fact that the IMI measures improvement from a bottom, and some of the hardest hit markets are showing signs of coming off of extreme lows. 

Keeping this in mind, notable new entrants to list in February include Miami, Fla; Boston; Detroit; Kansas City, Mo.; Portland, Ore.; Memphis, Tenn.; and Salt Lake City.

“The number of improving housing markets has risen for six consecutive months, and 36 states now have at least one metropolitan area on the list,” notes NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. “This indicates that despite the many challenges that continue to drag on a housing recovery— including the tight lending environment for builders and buyers—improving conditions are slowly but surely spreading from one housing market to the next.”

“While many of the markets on the February IMI are far from fully recovered, the index points out where employment, home prices and housing production are no longer retreating and have held above their lowest recession troughs for six months or more,” said NAHB Chief Economist David Crowe. “This is a sign that a large cross section of the country is starting to turn the corner as local economic conditions stabilize.”

“The fact that there are nearly 100 markets now on the improving list shows that the momentum is building for a housing recovery and that more buyers and sellers are starting to feel confident enough to return to the market,” says Kurt Pfotenhauer, vice chairman of First American Title Insurance Company.

The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. 

The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac, and single-family housing permit growth from the U.S. Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metropolitan area must see improvement in all three areas for at least six months following their respective troughs before being included on the improving markets list.

Seven markets dropped from the NAHB/First American Improving Markets Index in February as they experienced softening house prices. These metros include San Jose, Calif.; Washington, D.C.; Kankakee, Ill.; New Orleans; Worcester, Mass.; Jackson, Miss.; and Sherman, Texas.

For more information, visit www.nahb.org/imi ^[2].

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