Archive for Buyer Advice
July Existing-Home Sales Fall as Expected but Prices Rise
Posted by: | CommentsFrom the National Association of Realtors:
Existing-home sales were sharply lower in July following expiration of the home buyer tax credit but home prices continued to gain, according to the National Association of Realtors®.
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, dropped 27.2 percent to a seasonally adjusted annual rate of 3.83 million units in July from a downwardly revised 5.26 million in June, and are 25.5 percent below the 5.14 million-unit level in July 2009.
Sales are at the lowest level since the total existing-home sales series launched in 1999, and single family sales – accounting for the bulk of transactions – are at the lowest level since May of 1995.
Lawrence Yun, NAR chief economist, said a soft sales pace likely will continue for a few additional months. “Consumers rationally jumped into the market before the deadline for the home buyer tax credit expired. Since May, after the deadline, contract signings have been notably lower and a pause period for home sales is likely to last through September,” he said. “However, given the rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs.
“Even with sales pausing for a few months, annual sales are expected to reach 5 million in 2010 because of healthy activity in the first half of the year. To place in perspective, annual sales averaged 4.9 million in the past 20 years, and 4.4 million over the past 30 years,” Yun said.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.56 percent in July from 4.74 percent in June; the rate was 5.22 percent in July 2009. Last week, Freddie Mac reported the 30-year fixed was down to 4.42 percent.
The national median existing-home price2 for all housing types was $182,600 in July, up 0.7 percent from a year ago. Distressed home sales are unchanged from June, accounting for 32 percent of transactions in July; they were 31 percent in July 2009.3
“Thanks to the home buyer tax credit, home values have been stable for the past 18 months despite heavy job losses,” Yun said. “Over the short term, high supply in relation to demand clearly favors buyers. However, given that home values are back in line relative to income, and from very low new-home construction, there is not likely to be any measurable change in home prices going forward.”
Total housing inventory at the end of July increased 2.5 percent to 3.98 million existing homes available for sale, which represents a 12.5-month supply4 at the current sales pace, up from an 8.9-month supply in June. Raw unsold inventory is still 12.9 percent below the record of 4.58 million in July 2008.
NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said there are great opportunities now for buyers who weren’t able to take advantage of the tax credit. “Mortgage interest rates are at record lows, home prices have firmed and there is good selection of property in most areas, so buyers with good jobs and favorable credit ratings find themselves in a fortunate position,” she said.
Read the complete report: http://www.realtor.org/press_room/news_releases/2010/08/ehs_fall
The best moves for home buyers and sellers
Posted by: | Comments(Money Magazine)
Plenty of forces, from overly cautious lenders to inaccurate appraisals, are wrecking real estate deals right now. But one of the biggest roadblocks to getting a house sold these days is the disconnect between buyers and sellers.
In general, sellers have gotten more realistic in pricing their homes than they were right after the housing bubble burst, but agents say that many still don’t grasp how much they must concede to close a deal. And buyers are still spraying lowball offers around in hopes that sellers will be desperate enough to bite.
Take such unreasonable expectations, multiply by two, and what do you get? “A standoff,” says Glenn Kelman, CEO of real estate brokerage Redfin.
With the busy summer home-sale season drawing to a close, there’s little time to waste. Whether you’re trying to unload your place or land a new one, follow these dos and don’ts to negotiate the best deal — fast.
Don’t say: “I’ll pay 85% of your asking price and not a penny more.”
Instead: Look for homes that are fairly priced and make a reasonable offer. “Coming in about 10% below list is a good starting place for negotiations now,” says Denver real estate broker Jeff Fogler. Yes, you have the upper hand in most markets, but the average homebuyer is paying only 2.7% below list price (see the chart). Set your expectations accordingly. You can always ask if the seller is willing to bridge a price gap in other ways — for example, by picking up your closing costs (which can run $7,500 on a $300,000 house).
Don’t say: “I haven’t put my own place on the market yet.”
Instead: List your current home before you start shopping seriously for the next one. Because it takes almost three months to move a house these days, sellers are loath to write home-sales contingencies into purchase contracts. You’ll have far more leverage if you’ve gotten rid of your house before you start negotiating: Sellers know there’s less chance of the deal falling apart. (Prequalifying for a mortgage helps too.) What’s more, you’ll know exactly how much money you can put into your new digs.
Don’t say: “This is my dream house.”
Instead: Stop imagining the great parties you’ll throw there and gird yourself to walk away if the seller won’t make reasonable concessions. Your ability to abandon negotiations is your most powerful bargaining chip. Given that plenty of other homes are on the market now, finding another place to love shouldn’t be too hard. You might let the seller know that. Nicely.
Don’t say: “You’re offering how much? Forget you!”
Instead: When bidders lob low-balls at you, thank them for their interest — and ask that they come back with earnest offers. “If you become offended, enraged, or unreasonable, you’ve blown any chance at negotiation,” says Warwick, R.I., real estate agent Ron Phipps. These days many buyers are just testing you to see how big a discount they can get. Point the bidder to comparable recent sales that support your list price. (Received several super-low offers? Check the comps to make sure your price isn’t too high.)
Don’t say: “I didn’t know the deck was rotting.”
Instead: Pay a few hundred dollars to get your house inspected before you put it on the market. Then arrange to make any necessary repairs yourself. (In most states the law requires you to disclose to potential buyers any defects of which you’re aware.) “Taking care of any inspection issues upfront helps sellers limit the points that buyers can negotiate on,” says Pat Lashinsky, CEO of the national brokerage ZipRealty.
Don’t say: “It might take us a while to move out.”
Instead: Make sure to tell buyers — especially those who might have children starting school this month — that you’re willing to scram pronto, if possible. That will help you stand out from any short sales in your area, which may have lower list prices but can take months to close. “If the buyers have a strict time limit, they’re going to pay more money to get into a house quickly,” says Ellen Klein, a realtor in Rockaway, N.J. More money plus more speed: That’s what it’s all about.
View original article here: http://money.cnn.com/2010/08/25/real_estate/home_buyers_sellers.moneymag/index.htm
Mortgage Rates Amazingly Low, Continue to Fall
Posted by: | CommentsFrom RealtyTimes.com
By: Ed Ferrara
30-year fixed mortgage rates are now at 4% for well-qualified borrowers who pay .07 to 1 point origination shows FreeRateUpdate.com research of wholesale lenders’ interest rate sheets. 15-year fixed mortgage rates are at 3.5%. Both fixed mortgage rates, which continue to decline, are at all time record low levels.
FHA mortgage rates remain at similar levels to conforming rates. FHA 30-year fixed loan rates are at 4%; however, APR on an FHA loan at 4% is quite higher than that of a conforming mortgage at the same note rate. Why? MI at 2.25% of the amount financed and other FHA fees drive up closing costs.
Jumbo mortgage rates, which have declined significantly in recent weeks, are also at all time record lows. Today’s 30-year fixed jumbo loan rate is 5.125%.
Mortgage-backed securities prices, which drive mortgage rates in the opposite direction, continue to do well amid ongoing uncertainty in the economy. MBS prices rose again to begin this week, stabilizing rates at their current levels.
View complete article here: http://realtytimes.com/rtpages/20100825_rateupdate.htm
Quest for the perfect credit score
Posted by: | CommentsFrom MONEY Magazine
A major league pitcher dreams of throwing a perfect game. High schoolers eyeing the Ivy League study furiously in hopes of earning 2400 on the SAT. Meanwhile, Chris Peplinski is pursuing his own brand of flawlessness: an 850 credit score.
The 37-year-old stay-at-home dad from Rogers, Ark., has already nabbed 813 on the FICO scale, the credit scoring system most lenders use in sizing up potential borrowers.
That ranks him above more than 82% of Americans and comes with a big payoff: It entitles him to ultralow rates on loans, saving him tens of thousands of bucks over a lifetime.
Nevertheless, Peplinski won’t be satisfied until he hits the maximum: 850. Why? “Your credit score tells a lot about you,” Peplinski explains. “A high score means you’re responsible and in control of your life. You’re trustworthy.”
To reach his goal, Peplinski voraciously reads up on every element that goes into a FICO score, checks his number every three months, and tweaks his behavior to eke out every possible additional point.
Two years ago, he took out a car loan even though he and his wife, Chrissy, had the cash to buy their wheels outright. He figured that adding to his mix of credit might boost his score.
In spite of Chris’s best efforts, landing an 850 may be a quixotic goal — only about 0.5% of Americans manage it, FICO reports. “The 850 score is kind of like a unicorn,” says John Ulzheimer, a credit scoring expert with Credit.com who used to work for FICO. “Everybody talks about it, but nobody’s seen it.”
The reality is that you don’t need to catch the unicorn to catch the best rates. But adopting some of the habits of Peplinski and other members of the 800 club can help you improve your own score.
And that can translate into real money: On a $300,000 30-year fixed-rate mortgage, the most credit-worthy borrowers will pay $14,200 less than those one tier below, $25,600 less than those two tiers below.
Secrets of score strivers
FICO, the Minneapolis company that produces the scoring model, divulges the five factors that determine your magic number — your payment history, the amount you owe on credit lines and loans, the length of your credit history, how much new credit you’ve applied for, and the types of accounts you’ve had — plus what percentage of your score each factor represents.
But as for exactly how many points you’ll gain or lose for, say, taking on a mortgage, being late on a bill, or charging credit cards up to the max? That’s proprietary information: “It’s a black box,” says FICO spokesman Craig Watts.
Mystery feeds obsession. Much the way fans of TV’s Lost met up online to postulate theories on the show’s ending, some credit score aficionados passionately debate their hypotheses on message boards like the FICO Forums at myfico.com. Others use themselves as guinea pigs to discover which moves will nudge a score up or down.
While most people could tell you their number only from the last time they got a loan — if at all — true FICO fiends know their score as well as they know their spouse.
Of the score strivers MONEY interviewed, most check their score obsessively, at least every few months — at a cost of $50 or more a year. They also fixate on their credit reports, upon which the scores are based.
Leland Lim, a 41-year-old doctor from the Bay Area, is vigilant about scanning these for errors that might drag down his number. “It took me three years to get a derogatory entry on one of them corrected,” says Lim, who now earns an 806.
As for what makes an 800-plus score, these self-made experts basically say the same thing FICO does: Payment history is the single most important factor.
Read the complete article here: http://money.cnn.com/2010/08/24/pf/perfect_credit_score.moneymag/index.htm
Real Estate Outlook: Modest Recovery
Posted by: | CommentsFrom RealtyTimes.com
By: Kenneth R. Harney
The Federal Reserve’s board of governors gave their current economic forecast a label last week: The label is “modest” – and it’s an important word to keep it in mind.
Yes, we’re still in recovery mode, the Fed governors said, but it’s a slow slog, and on any given day the news can sound discouraging.
Yes, the gross domestic product, or GDP, is still growing, and many corporations are sitting on big wads of cash, which is good.
But those same companies are not yet confident enough in the pace of the economic recovery to start hiring again … and that’s not good.
It all adds up, according to the Fed, to a mixed picture of where we are on the long pathway out of the Great Recession.
Given this tepid assessment by the government’s top economists, it’s useful to note that the real estate market racked up positive numbers in three quarterly sales and price reports issued last week.
Start with the National Association of Realtors’ second quarter results. Compared with the second quarter of 2009, this year’s numbers show how far housing has improved year-over year.
In two thirds of the major local markets tracked by the Realtors — that’s 100 out of 155 areas around the country — median prices were higher at the end of the second quarter (June 30th) than they were the same time the year before.
Nationwide the median price of houses was up by one and a half percent. But 14 local markets saw double digit increases, including San Bernadino and San Jose, California and Akron, Ohio.
Home sales were up 17 percent during the second quarter compared with 2009, and overall sales were higher in 47 states plus the District of Columbia.
Two other housing indexes released last week told similar stories: Zillow’s survey found prices up significantly in a number of large California markets, including San Diego, San Francisco and Los Angeles, all of whom had 6 percent or higher gains.
Read complete article here: http://realtytimes.com/rtpages/20100816_realestateoutlook.htm
Illinois Home Sales Up 10 Months in a Row, Chicago Region a Full Year
Posted by: | CommentsIllinois Association of REALTORS® News Release:
Home prices in Illinois are showing signs of stabilizing with continued positive year-over-year median price growth and 10 straight months of mostly double-digit sales increases; the Chicago region marked a year of positive sales activity in June. According to the Illinois Association of REALTORS® latest report, statewide total home sales (which include single-family and condominiums) in June 2010 were up 18.3 percent, totaling 13,072 homes sold compared to June 2009 sales of 11,048 homes. The median price in June 2010 was $170,000, up 2.5 percent from $165,825 in June 2009. The median is a typical market price where half the homes sold for more, half sold for less.
“The tax credit has proved to be a boost to the Illinois housing market with a tremendous level of buying and selling activity for the last 10 months which, importantly, has helped to stabilize home prices statewide,” said REALTOR® Mike Onorato, GRI, president of the Illinois Association of REALTORS® and broker-owner of Onorato Real Estate in Coal City. “As the stimulus winds down, job growth and improved consumer and business confidence will be required to keep on a path toward recovery. People need stable job prospects to feel secure in their purchasing decisions.”
In the Chicagoland Primary Metropolitan Statistical Area (PMSA), year-over-year home sales were positive for 12 consecutive months, up 27.2 percent to 9,085 homes sold (single-family and condominiums) in June 2010 compared to 7,140 homes sold in June 2009. The median home sale price for the Chicagoland PMSA was $207,500 in June 2010, down 1.2 percent from $210,000 in June 2009.
“Continued strong annual sales growth characterized the months of April, May and June in Illinois in the Chicago region,” said Dr. Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory (REAL) of the University of Illinois. “Sales are forecast to remain positive in double digits in both markets through September. Once again price changes remain more stubborn with some slight upward movement in Illinois in July and August followed by little or no change in September; in the Chicago region, the changes continue to trend down in the 1 to 5 percent range.”
Adds Hewings: “The economy is certainly not helping the housing market; the loss of over 200,000 temporary census jobs overwhelmed the private sector gains of 83,000. The unemployment rate fell nationally to 9.5 percent (from 9.7 percent in May). Illinois’ seasonally adjusted unemployment rate followed the national decline, dropping -0.4 point to 10.4 percent in June.”
Read the complete news release here: http://www.illinoisrealtor.org/newsreleases/july2010
Final Walk-Through Tips
Posted by: | CommentsFrom RealtyTimes.com
By Carla Hill
There will come a time during your home buying process when you’ll need to do a final walk-through of the home before closing.
Around a week before you close, take the time to visit your “new” home again. When you’re there, check to be sure that the terms of your contract have been met, and that the condition of the property has not changed significantly since talks began.
As your reference guide, be sure to bring your purchase contract with you for this walk-through. This will help you look for little details, without having to remember each item.
What are things you should be on the lookout for?
1. Major appliances: Be sure that any items that were to remain in the home are still there, and that they are in good working order.
2. Major systems: Do the air conditioning, heat, and plumbing still function?
3. Walls and floors: Has any damage occurred to the floors or walls during the sellers move? Were rugs, artwork, or carpets covering water damage that was not disclosed?
4. Repairs: As part of your purchase contract, the seller may have been required to make specific repairs. Be sure that these have been completed, or that the seller has a written timeline for when the repairs will be done.
5. Screens and Storm Windows: If it is the season for these items to be in storage, be sure they have been left behind and that they are in good shape.
6. Remotes: Garage doors, alarms, sound systems, and the like all use remotes, some of which can be very expensive. If any of these components were part of your agreement, be sure they have been kept with the house.
7. Cleanliness: The home should have been cleaned and all debris removed. You don’t want to spend the first week living in your new home cleaning up other people’s junk.
8. Landscaping: It may seem ridiculous, but yes, some sellers may try to run off with your shrubs and plants. Refer back to your contract to see what should have stayed. If plants were taken, let your agent handle the situation.
9. Fixtures: Light fixtures, curtains, and other items that were agreed upon should still be in the home. If they are not, let your agent address the conflict.
10. Exterior: Has there been any damage to the home since your inspection or first visit? If there have been storm with high winds or hail, be sure to visually inspect the exterior of the house for damage. Once you have signed on that dotted line, the house is yours. Hail damage and all
Read the complete article here: http://realtytimes.com/rtpages/20100727_walkthrough.htm
Real Estate Outlook: Federal Reserve Weighs In
Posted by: | CommentsFrom RealtyTimes.com
By: Kenneth R. Harney
The U.S. Congress asked Federal Reserve Board chairman Ben Bernanke a key question last week: Where do you and your colleagues believe we’re headed in terms of the national economy?
Bernanke’s reply: There are bumps and potholes on the road to recovery, but the Fed “expects continued moderate (economic) growth, a gradual decline in the unemployment rate (to about 7 percent) and subdued inflation” over the next couple of years.
No sooner had Bernanke delivered his testimony than some of those “bumps” in the road popped up: The Commerce Department reported new housing starts dropped by 5 percent in the latest month, and the National Association of Realtors reported existing home sales down by a similar percentage.
But keep in mind the central point Bernanke was making in his forecast: Troubled though it may look with any single statistical report, the fact is the national economy continues to grow – by about two and a half percent on an annual basis – and many elements of the economy are better off this year than the were the year before.
Take the Commerce Department’s housing starts number: That five percent decline was mainly the result of a big drop in starts of new rental apartment units – not a drop in starts of new single family houses, which were stable.
In fact, the Commerce Department survey found that permits pulled by builders for future construction on single family homes were actually up in three out four of the major regions of the country.
Analyzing the government’s data, Bernard Markstein, senior economist for the National Association of Home Builders, was encouraged – and predicted increases in both starts and sales over the coming several months.
The latest sales report for existing homes from the National Association of Realtors also had some bright spots: Sales in June were 10 percent higher than they were in the same month the year before.
Even median prices of all homes sold were up slightly, and that’s despite the fact that one third of sales were “distressed” in some way – REOs, foreclosures or short sales.
And remember: virtually all economists – including those at the Fed – had forecast lower home sales for the months immediately following the expiration of the tax credit programs.
Read complete article here: http://realtytimes.com/rtpages/20100726_realestateoutlook.htm
From RealtyTimes.com
by Phoebe Chongchua
It’s not a lot of time, but a three-month homebuyer limited tax-credit extension will help some. “I think it was one of relief by lots of homebuyers who had loans and real estate transactions in the pipeline and couldn’t close by the June 30th deadline. The extension gives them the opportunity to finish up their deals and close by September 30th,” says Lucien Salvant, National Association of Realtors spokesperson.
“We estimate up to 180,000″ will benefit from the extension. However, if you don’t currently have a loan application in, it’s too late to take advantage of this federal housing tax credit. “You had to have a valid contract by April 30th,” says Salvant.
But Salvant says that shouldn’t discourage interested buyers because the market is ripe with other opportunity. “The good news for people who didn’t take advantage of the tax credit is that the inventory is still plentiful, although it’s reduced significantly from what it was a year ago, prices are affordable, and the interest rates are the lowest they’ve been since the 1950s.” The low interest rates are, of course, a magnet for attracting buyers. However, Salvant says that while this is a good time to buy, he notes that the lending market isn’t operating the way it did before the housing crisis. This, he says, should make people understand that buying a house is a good option if you plan to stay in it a while—not play the flipping gamble, hoping for a quick profit.
“The average is about seven years. Homeownership is an investment in the future, not for a quick turnaround, which a lot of people abused in the earlier part of this decade,” says Salvant.
Salvant notes that the housing market’s recovery is being hampered by uncertain unemployment conditions which are causing some potential buyers to wait, possibly for more breaks.
But Salvant says don’t count on more tax incentives. “We have asked Congress now for three different tax credits and we’ve gotten them. The purpose of the tax credit was to give a quick start to the housing economy which was coming apart and sinking fast. We think it really helped. Now, it’s time for the housing market to stand on its own two feet,” says Salvant.
Read complete article here: http://realtytimes.com/rtpages/20100716_taxcredit.htm
Local home sales up for 12 straight months
Posted by: | CommentsFrom Crain’s Chicago Business
(Crain’s) — Chicago-area home sales have now increased every month for a full year, rising again in June compared with the same month in 2009.
In the nine-county Chicago region, sales of single-family homes and condominiums rose more than 27% to 9,085, compared to 7,140 homes sold in June 2009, according to a news release Thursday from the Illinois Assn. of Realtors.
In the city of Chicago, sales similarly jumped 27.5% to 2,526, compared to 1,981 homes sold in June 2009, the 10th consecutive month of higher year-over-year sales for the city.
A federal tax credit of up to $8,000 for first-time homebuyers and $6,500 for other buyers who signed contracts by April 30 helped the market, according to association President Mike Onorato. The deadline to close to get the credit recently was extended to Sept. 30.
“As the stimulus winds down, job growth and improved consumer and business confidence will be required to keep on a path toward recovery,” Mr. Onorato, broker-owner of Onorato Real Estate in Coal City, said in the release.
The median price in the Chicago area — at which half the homes sell for more and half for less — dipped 1.2% in June to $207,500, compared to $210,000 in June 2009.
In Chicago, the median price dropped 3.2% to $234,250, compared to $242,050 in June 2009, according to the Realtors.
Statewide home sales increased for the 10th consecutive month, rising 18.3% to 13,072, compared to 11,048 in June 2009. The state’s median price rose 2.5% to $170,000, compared to $165,825 in June 2009.
The association’s sales figures include new and existing homes. The nine-county Chicago Primary Metropolitan Statistical Area consists of Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will.
Original article here: http://www.chicagobusiness.com/cgi-bin/news.pl?id=38960