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 | Real Estate Blog |
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Thursday, 29 October 2009
Key lawmakers in the Senate have tentatively agreed to extend the existing $8,000 tax credit for first-time home buyers and also offer a new $6,500 credit for existing homeowners who have lived in their current residence for a consecutive five-year period in the past eight years.
Home buyers must be under contract by April 30, 2010, and close before July 1. House Democrats have expressed concern about the cost of the tax credit for the government, and allegations of abuse have resulted in an IRS probe of the program.
Source: Wall Street Journal, Corey Boles and John D. McKinnon (10/29/09)
Monday, 26 October 2009
Existing-home sales bounced back strongly in September with first-time buyers driving much of the activity, marking five gains in the past six months, according to the National Association of REALTORS®.
Existing-home sales—including single-family, townhomes, condominiums, and co-ops—jumped 9.4 percent to a seasonally adjusted annual rate of 5.57 million units in September from a level of 5.10 million in August, and are 9.2 percent higher than the 5.10 million-unit pace in September 2008. Sales activity is at the highest level in more than two years, since it hit 5.73 million in July 2007.
Lawrence Yun, NAR chief economist, said favorable conditions matched with a tax credit are boosting home sales. “Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home,” he said. “We are hopeful the tax credit will be extended and possibly expanded to more buyers, at least through the middle of next year, because the rising sales momentum needs to continue for a few additional quarters until we reach a point of a self-sustaining recovery.”
Even with the improvement, Yun said the market is underperforming. “Despite spectacular gains in the stock market, principally from the financial sector recovery, most of the 75 million home-owning families have more wealth tied to their homes. Home values could soon turn consistently positive and help the broad base of middle-class families, but we are not there yet,” he said.
Conditions for First-Time Buyers
Early information from a large annual consumer study to be released on Nov. 13, the 2009 National Association of REALTORS® Profile of Home Buyers and Sellers,shows that first-time home buyers accounted for more than 45 percent of home sales during the past year. A separate practitioner survey shows that distressed homes accounted for 29 percent of transactions in September.
NAR President Charles McMillan said affordability conditions remain historically high. “Potential first-time buyers can take heart in that affordability conditions this year are the highest on record dating back to 1970, but with the first-time buyer tax credit scheduled to expire at the end of next month, people could hold back from entering the market,” he said. “Our read is that housing overshot on the downside because homes are selling for less than replacement construction costs in much of the country, and the home price-to-income ratio has fallen below the historical average.”
Inventory Falls
Total housing inventory at the end of September fell 7.5 percent to 3.63 million existing homes available for sale, which represents an 7.8-month supply at the current sales pace, down from an 9.3-month supply in August. Unsold inventory totals are 15.0 percent below a year ago.
“The current housing supply is the lowest we’ve seen in two and a half years,” Yun said. “If we could continue to absorb inventory at this pace, home prices would return to normal, modest appreciation patterns next year.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 5.06 percent in September from 5.19 percent in August; the rate was 6.04 percent in September 2008.
Home Sales Breakdown
The national median existing-home price for all housing types was $174,900 in September, which is 8.5 percent lower than September 2008. Distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes in the same area.
Single-family home sales rose 9.4 percent to a seasonally adjusted annual rate of 4.89 million in September from a pace of 4.47 million in August, and are 7.7 percent above the 4.54 million-unit level in September 2008. The median existing single-family home price was $174,900 in September, which is 8.1 percent below a year ago.
Existing condominium and co-op sales jumped 9.7 percent to a seasonally adjusted annual rate of 680,000 units in September from 620,000 in August, and are 9.7 percent above the 561,000-unit pace a year ago. The median existing condo price was $175,100 in September, down 11.7 percent from September 2008.
Here’s the region-by-region picture:
- Northeast: Existing-home sales increased 4.4 percent to an annual level of 950,000 in September, and are 11.8 percent higher than September 2008. The median price was $234,700, down 7.0 percent from a year ago.
- Midwest: Existing-home sales jumped 9.6 percent in September to a pace of 1.25 million and are 7.8 percent above a year ago. The median price was $147,600, which is 1.0 percent below September 2008.
- South: Existing-home sales rose 9.0 percent to an annual level of 2.06 million in September and are 10.8 percent higher than September 2008. The median price was $153,500, down 7.6 percent from a year ago.
- West: Existing-home sales surged 13.0 percent to an annual rate of 1.30 million in September and are 5.7 percent above a year ago. The median price in the West was $219,000, which is 15.0 percent below September 2008.
Source: NAR
Wednesday, 30 September 2009
Wilmington hit the latest list of the nation’s top 50 building markets in 2008 as compiled and published by Builder, the print and online trade publication for the home building industry.
The publication has been gathering the number of building permits issued by planning departments in metropolitan statistical areas around the country for about ten years, said Denise Dersin, editor in chief of Builder.
On this year’s list Wilmington was ranked no. 50 and had 3,551 building permits for new homes, according to the publication. Wilmington was not on the publication’s 2007 list. The top market, Houston, had 42,697, the publication reported.
New York, Dallas, Atlanta and Phoenix rounded out the top five cities with the largest building markets in the country.
Regionally, Charlotte ranked no. 11 with 12,231 permits in 2008. The Raleigh/Cary market came in at no. 13 with 11,386 permits issued. Charleston, S.C. was ranked no. 35 with 4,947 permits.
Wilmington last hit the list in 2006 as no. 59 out of the top 75 areas with 6,752 permits issued. On the 2005 list, Wilmington’s number of building permits jumped to 9,381 permits and making the list at no. 49. “For everyone in the country, 2005 was the top of the market,” Dersin said. On the 2004 list, Wilmington was no. 63 out of 75 with 5,712 permits.
In Wilmington, the publication reported that the largest builder was Pyramid Homes, which closed on 113 homes in 2008, representing 3.2 percent of the market. D.R. Horton, the biggest home builder in the nation operating in 77 markets in 27 states, was the second-largest builder in Wilmington. D.R. Horton had 93 homes close, which represented 2.6 percent of the local market. The third-largest builder was Bill Clark Homes, with 84 homes and 2.4 percent of the market.
http://www.wilmingtonbiz.com/industry_news_details.php?id=709
Friday, 21 August 2009
The U.S. housing market is rebounding quicker than expected, with home resales in July posting the largest monthly increase in at least 10 years as first-time buyers rushed to take advantage of a tax credit that expires this fall.
The National Association of Realtors said Friday that home sales rose 7.2 percent to a seasonally adjusted annual rate of 5.24 million in July, from a pace of 4.89 million in June. It was the fourth-straight monthly increase and the highest level of sales since August 2007.
Sales had been expected to rise to an annual pace of 5 million, according to economists surveyed by Thomson Reuters.
"The housing market, with today's strong rise in sales, has decisively turned for the better," said Lawrence Yun, the trade group's chief economist.
Sales of foreclosures and other distressed properties made up about a third of all transactions last month, down from nearly half earlier this year. In places like San Diego and Orlando, buyers are snapping up foreclosed properties at deep discounts, and real estate agents are pressing banks to release more foreclosures onto the market.
Those sales helped drag down the median sales price by 15 percent to $178,400.
First-time buyers must complete their sales transactions by the end of November to take advantage of a tax credit of 10 percent of the purchase price, up to $8,000. The real estate industry is lobbying Congress to get the credit extended.
"It would be unfortunate to see the momentum halted," Yun said.
The inventory of unsold homes on the market rose to 4.1 million, from 3.8 million a month earlier. That's a 9.4-month supply at the current sales pace, unchanged from June.
http://www.npr.org/templates/story/story.php?storyId=112102313&ft=1&f=1001
Wednesday, 19 August 2009
Overall, buyers who need to sell a home before buying a replacement home are better off in the long run by taking out a home equity loan instead of a bridge loan.
That’s because home equity loans are less expensive. The best way to get a home equity loan is to do it before a home goes on the market because most lenders won’t fund a home equity loan if a home is for sale or has been for sale recently.
However, there are circumstances when it makes sense for a buyer to make an offer to purchase contingent on selling a home. In that scenario, it’s wise to line up a bridge loan in case the seller issues a notice to perform. Because most sellers won’t take a home off the market for a contingent offer and will try to kick out the contingent buyer when a better offer rolls around. It can be a gamble for a buyer. The buyer might need the bridge loan and might not. Maybe the buyer’s home will sell quickly. Maybe it won’t.
At least a bridge loan provides some breathing room, even if it means owning two homes for a while. It’s sort of an ace-in-the-hole for some home buyers. . . . read more about abridge loan.
http://homebuying.about.com/b/2009/08/19/bridge-loans-make-it-easier-to-buy-before-selling.htm
Wednesday, 12 August 2009
Whether you should do a short sale or let the home go to foreclosure depends on several factors. While for some homeowners, it is easier to throw up your hands and let the bank take your home, that might not be the wisest thing to do.
Short Sale Benefits
Here are a few benefits for doing a short sale that may not have occurred to you:
- You are in control of the sale, not the bank.
- You may sleep better at night knowing who is buying your home.
- You will spare yourself the social stigma of the "F" word, foreclosure.
- Contrary to popular belief, you can be current on your payments and still effect a short sale.
- Your home sale will be handled like any other home sale.
Buying Again After a Short Sale
If your payments have never fallen behind 30 days late and the lender does not require that you pay back the loan, Fannie Mae guidelines may allow you to buy another home immediately. The wait for an FHA loan is 3 years.
If your payments are in arrears yet a short sale is granted by your lender, you may qualify to buy another home with a Fannie-Mae backed mortgage within two years, regardless of whether the home is your primary residence.
Buying Again After a Foreclosure
With certain restrictions, you may be eligible to buy another home in 5 years if the home was your primary residence. Without restrictions, the wait is 7 years.
If you are an investor and do not occupy the home, the wait to buy with a Fannie Mae insured loan is 7 years.
Affects on Credit After a Short Sale
A short sale is not a derogatory mark on your credit because credit bureaus do not show the word "short sale" on your credit report. It may say "pay as agreed" or "paid as less than agreed," among other categories. Some clients have reported negative FICO scoredrops from 50 points to 130 points.
The point drop is typically due to being in default, that is behind on your payments.
Affects on Credit After a Foreclosure
A number of sources have reported FICO score drops from 200 to 400 points after a foreclosure. Generally this credit score will remain on your credit report as a public record for 10 years.
Credit Reports After a Short Sale
All lenders report short sales differently and some do not report them to the credit bureaus at all.
Credit Reports After a Foreclosure
If a prospective employer runs a credit check on you, your job application may be denied if you have a foreclosure on your record.
Deficiency Judgments After a Short Sale
Judgments are often negotiated between the seller and the short sale bank. In some cases, such as California, if the home is your personal residence and was financed through purchase money, there is no deficiency judgment.
Deficiency Judgments After a Foreclosure
Banks are unwilling to negotiate deficiency judgments with the homeowner after a foreclosure. In California, for example, according to the California Association of REALTORS, a deficiency judgment may be filed if the lender forecloses under a judicial foreclosure versus a trustee sale or if the second loan is a hard money loan and the sale takes place as a trustee's sale.
Loan Application Questions After a Short Sale
Loan applications do not ask questions about a short sale. You may report that you sold your home.
Loan Application Questions After a Foreclosure
You are required to answer the question: "Have you ever had a property foreclosed upon or given a deed-in-lieu thereof in the past 7 years." If the bank sees you have had a foreclosure, your loan most likely will be denied. If you lie, you may be subject to investigation by the FBI for mortgage fraud.
Length of Time to Move After a Short Sale
If you've had a foreclosure notice filed, you may be able to postpone that action while the bank considers your short sale. The wait for short sale approval can be from 2 to 3 months, or longer.
Length of Time to Move After a Foreclosure
Unless prior arrangements have been made, the bank may want you to immediately vacate the property and can commence eviction proceedings.
Taxation After a Short Sale
A personal residence is exempt from mortgage debt relief until the end of 2012 on a federal level. Some states will still tax you unless you qualify for an exemption. An investor is not exempt from mortgage debt relief, subject to certain conditions.
Taxation After a Foreclosure
Same as with a short sale. Except some lenders immediately send out 1099s, even if the owner is exempt.
In closing, always obtain legal and tax advice before making a decision between a short sale or a foreclosure.
http://homebuying.about.com/od/foreclosures/f/072509_Short-Sale-vs-Foreclosure.htm?r=9F
Wednesday, 12 August 2009
eople say the best days to own a boat are the day you buy the boat and the day you sell it. That's not true when it comes to home ownership, unless, maybe, you live on a boat. The best days in home ownership are when you buy a home and all the way through until the day you decide to sell.
Lots of home owners cry when they sell. Before the ink is dry on the listing agreement, eyes often swell with tears, and we're not talking about the listing agent. That's because sellers have developed relationships with their homes. Homes hold treasured memories. It's common for sellers to be very emotional about their home. Some are overcome by seller's remorse. However, some sellers weep for a different reason. They sob because they can't sell their home.
Home is Priced Too High
- By far, the worst home selling mistake a seller can make is hanging the wrong price tag on a home. If the home is priced too high, buyers won't look at it. If it's priced too low, sellers worry that they'll give away profits.
- Pricing a home to sell is an art. Part of the market value is based on comparable sales, but other factors to consider include market movement, demand, the home's location and its condition.
- If the home is overpriced, buyers might submit lowball offers, which tend to result in an immediate offer rejection. These extremely low offers tend to infuriate and insult sellers.
- Some agents deliberately overstate the value of a home and push a seller to sign anoverpriced listing. There are many reasons why agents do this, but the bottom line is sellers lose a competitive edge when later reducing the price. The bottom line is sellers who "test the market" get stung.
The Home is in Bad Condition
- Getting your house ready for market goes beyond making the beds and washing dirty dishes. Although I've seen plenty of homes with toys scattered throughout and dishes piled in the sink; buyers can't get out of those homes fast enough. There are at least 10 essential steps to take to preparing the home for sale.
- Some homes need updating and quick fixes. Doing repairs before resale can boost chances of quickly selling. If items are broken or buyers see deferred maintenance, they wonder what else is wrong. It's more expensive, actually, not to fix the house.
- Dressing your home for showings is called staging a home. Think of the process like arranging flowers in an attractive vase. If you or your agent lack the vision or ability to stage, consider hiring a professional home stager.
Home is Marketed Wrong
- Whenever I see a badly shot photograph in MLS, and perhaps it's the only photo, I want to shake the agent and scream, "What are you thinking?" But agents and sellers make plenty of marketing mistakes.
- The battle cry of frustrated sellers is: "Why isn't my home selling?" These are likely sellers who are not employing marketing strategies designed to expose a home to the largest pool of buyers. Here are 10 good marketing tips that take the guesswork out of selling your home.
- Once a buyer has entered a home, the marketing continues. To increase the chances that a buyer will entertain an offer, here are 10 home showing tips.
Seller Hired an Inexperienced Agent
- You can hire a good listing agent or a mediocre agent. They all cost about the same. Here are 10 reasons to hire an agent.
- If you want full-service, then hire a full service agent. If you are fairly confident your home will sell without a full-service agent, then talk to a discount broker. Learn the difference between REALTORs® and real estate agents.
- Carefully read the listing agreement to make sure the agent who brings a buyer is fairly compensated because one surefire way to make sure an agent won't show your home is to offer a silly commission percentage.
http://homebuying.about.com/od/sellingahouse/qt/0507SellMistake.htm
Monday, 10 August 2009
RISMEDIA, August 11, 2009-To help create jobs and set the stage for a strong recovery, the National Association of Home Builders (NAHB) yesterday called on Congress to extend and enhance the $8,000 first-time home buyer tax credit due to expire on December 1.
Specifically, NAHB is asking Congress to extend the home buyer tax credit program through November 30, 2010 and make it available to all buyers of principal residences.
“If Congress acts to extend the tax credit program, it would spur 383,000 additional home sales, including 80,000 housing starts, creating nearly 350,000 jobs over the coming year,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. “That’s good for the economy and good for America.”
Although there have been some signs of economic stabilization in recent weeks, the unemployment rate is rapidly approaching double-digits. Without a concerted focus on the housing sector, which comprises more than 15 percent of the GDP, any hope for a recovery could fade.
“At best, it looks like a jobless recovery once it gets underway,” said Robson. “This is why Congress needs to take bold, meaningful action now.”
In addition to extending the tax credit, Robson said home builders will be meeting with their lawmakers in their home districts during the August congressional recess and urging them to:
- Correct a faulty appraisal process. The inappropriate use of distressed and foreclosed sales as comps in determining home values is hurting home values and killing home sales. The situation is so bad that a recent NAHB survey of more than 500 builders found that one out of every four new-home sales are lost because appraisals are coming in below the contract sales price. NAHB is urging Congress to work with housing and federal regulators to adopt and enforce clear, concise regulatory guidance that will allow appraisers to develop realistic valuations based on sales that are truly comparable. Lawmakers should also call on the Federal Housing Administration, the Federal Housing Finance Agency, Fannie Mae, and Freddie Mac to establish an appeals process similar to the one used by the Veterans Affairs Loan Guaranty Program. Under the VA program, the appraiser is required to seek more information when it appears the appraised value will fall short of the sales price.
- Improve housing credit conditions. Since there can be no meaningful economic recovery until the flow of credit is restored to housing, NAHB is calling on Congress to urge regulators and the banking industry to end the stranglehold on acquisition, development and construction (AD&C) loans that has emerged as a major impediment to the housing recovery. Lenders are refusing loans for viable new housing projects and cutting off funding or calling performing outstanding loans, producing unnecessary foreclosures and losses on AD&C loans. Congress needs to urge regulators to allow and encourage lenders to give leeway to residential AD&C borrowers who have loans in good standing by providing flexibility on re-appraisals, loan modifications and perhaps forbearance to give builders time to complete and sell their lots and homes.
- Co-sponsor Net Operating Loss (NOL) relief legislation in the House and Senate. NOL bills H.R. 2452 in the House and S. 823 in the Senate would prevent further layoffs in building and other industries hit hard by the recession. The legislation would help all businesses by eliminating the current $15 million cap on average annual gross receipts and allowing 2009 losses to be eligible for the expanded carryback. In addition, the bills would also help taxpayers who have been hit by the Alternative Minimum Tax to fully benefit from any NOL carryback. The bills both enjoy bipartisan support. Currently, H.R. 2452 and S. 823 have 92 and 37 co-sponsors, respectively.
Taken together, these four issues - extending the $8,000 home buyer tax credit for one year and making it eligible for all home buyers; bringing common sense to the appraisal process; urging banking regulators to ease AD&C credit; and passing the NOL carryback legislation - will not only create needed jobs for American workers quickly, but also stimulate demand for goods and services throughout Main Street America.
Read more:http://rismedia.com/2009-08-10/builders-call-on-congress-to-extend-and-enhance-home-buyer-tax-credit/#ixzz0NqUcUcFa
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