WASHINGTON (AP) – Nov. 25, 2009 – Sales of new U.S. homes rose more than expected last month to the highest level in more than a year as the housing market shows stability after its historic collapse.
The Commerce Department says sales rose 6.2 percent to a seasonally adjusted annual rate of 430,000 from an upwardly revised 405,000 in September. Economists surveyed by Thomson Reuters had expected a pace of 410,000.
Home shoppers in October were acting before lawmakers decided to extend a tax credit for first-time buyers and expand it to existing homeowners. Nevertheless, sales were up 5.1 percent from a year ago, the first yearly increase since November 2005.
The median sales price of $212,200 was off 0.5 percent from $213,200 a year earlier, but up 0.7 percent from September’s level of $210,700.
Monday, December 14, 2009
Real estate market FAQs
NEW YORK – Nov. 24, 2009 – Do you have buyers and sellers with questions about where real estate is headed? Based on industry experts’ advice, here are informed answers to some of the most frequently asked questions about today’s housing market.
When will housing hit bottom?
There isn’t any single answer to this question. It depends on where you live. Home prices are rising again in the most convenient suburbs of such cities as New York and Washington, D.C. In other places that are in less demand, prices continue to fall.
How can I figure out the value of my home?
Talking to a real estate professional and/or hiring an appraiser is the best idea. But even after getting a professional opinion, it is hard to tell what a home will sell for until you put it on the market.
Is now a good time for a renter to buy a home?
It could be. Prices in many areas are down significantly from their peak a couple of years ago. Plus, Congress has extended the tax credit for first-time homebuyers and added a $6,500 credit for many previous owners of homes who sign a contract to buy by April 30, 2010.
Should I invest in foreclosed homes?
A foreclosure can be a risky buy, even for the most experienced real estate investors. Use caution.
When will housing hit bottom?
There isn’t any single answer to this question. It depends on where you live. Home prices are rising again in the most convenient suburbs of such cities as New York and Washington, D.C. In other places that are in less demand, prices continue to fall.
How can I figure out the value of my home?
Talking to a real estate professional and/or hiring an appraiser is the best idea. But even after getting a professional opinion, it is hard to tell what a home will sell for until you put it on the market.
Is now a good time for a renter to buy a home?
It could be. Prices in many areas are down significantly from their peak a couple of years ago. Plus, Congress has extended the tax credit for first-time homebuyers and added a $6,500 credit for many previous owners of homes who sign a contract to buy by April 30, 2010.
Should I invest in foreclosed homes?
A foreclosure can be a risky buy, even for the most experienced real estate investors. Use caution.
Rates on 30-year mortgages remain below 5 percent
McLEAN, Va. – Nov. 20, 2009 – Rates on 30-year mortgages stayed below 5 percent this week but remained above the record set earlier this year, Freddie Mac said Thursday.
The average rate for a 30-year fixed mortgage fell to 4.83 percent, down from 4.91 percent last week, the mortgage company said. Last year at this time, 30-year mortgages averaged 6.04 percent.
Rates hit a record low of 4.78 percent in the spring, and remain attractive for people looking to buy a home or refinance their existing mortgage. Still, credit standards remain tough, so the best rates usually are available only to borrowers with solid credit and a 20 percent downpayment.
The Federal Reserve has pumped $1.25 trillion into mortgage-backed securities to try to lower rates on mortgages and loosen credit. Rates on 30-year mortgages traditionally track yields on long-term government debt.
Low fixed rates in the third quarter led to about $1.1 trillion in refinancing activity, saving borrowers about $10 billion in monthly payments over the first 12 months of their new loan, said Frank Nothaft, Freddie Mac’s chief economist.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, frequently in line with long-term Treasury bonds.
The average rate on a 15-year fixed-rate mortgage fell to 4.32 percent from 4.36 percent last week, according to Freddie Mac.
Rates on five-year, adjustable-rate mortgages averaged 4.25 percent, down from last week’s 4.29 percent. Rates on one-year, adjustable-rate mortgages declined to 4.35 percent from 4.46 percent.
The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 point for 30-year loans. The fee averaged 0.6 point for 15-year, five-year and one-year loans.
The average rate for a 30-year fixed mortgage fell to 4.83 percent, down from 4.91 percent last week, the mortgage company said. Last year at this time, 30-year mortgages averaged 6.04 percent.
Rates hit a record low of 4.78 percent in the spring, and remain attractive for people looking to buy a home or refinance their existing mortgage. Still, credit standards remain tough, so the best rates usually are available only to borrowers with solid credit and a 20 percent downpayment.
The Federal Reserve has pumped $1.25 trillion into mortgage-backed securities to try to lower rates on mortgages and loosen credit. Rates on 30-year mortgages traditionally track yields on long-term government debt.
Low fixed rates in the third quarter led to about $1.1 trillion in refinancing activity, saving borrowers about $10 billion in monthly payments over the first 12 months of their new loan, said Frank Nothaft, Freddie Mac’s chief economist.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, frequently in line with long-term Treasury bonds.
The average rate on a 15-year fixed-rate mortgage fell to 4.32 percent from 4.36 percent last week, according to Freddie Mac.
Rates on five-year, adjustable-rate mortgages averaged 4.25 percent, down from last week’s 4.29 percent. Rates on one-year, adjustable-rate mortgages declined to 4.35 percent from 4.46 percent.
The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 point for 30-year loans. The fee averaged 0.6 point for 15-year, five-year and one-year loans.
Q&A clears the air about homebuyer tax credits
McLEAN, Va. – Nov. 25, 2009 – If you’re in the market for a home, the world is your oyster. Interest rates are at record lows. Housing prices in many parts of the country are still depressed. And you may be eligible for a generous tax break, even if the home you buy isn’t your first.
On Nov. 6, President Obama signed legislation that provides a $6,500 tax credit for some current homeowners who buy another home. The law also extends the $8,000 tax credit for first-time homebuyers, scheduled to expire Nov. 30, until next spring.
A lot of people are interested in taking advantage of this tax break, but the expanded credit also has whipped up a lot of confusion. Here are some answers to frequently asked questions:
Q: How do I qualify for the $6,500 credit?
A: This credit is available for homebuyers who sign a binding contract on a new or existing home by April 30, 2010, and settle by July 1 (deadlines that also apply to the first-time homebuyer credit). You must have lived in your existing home for five consecutive years out of the last eight. The home you purchase must be your primary residence. However, the law doesn’t require you to sell your old home, says Bob Meighan, vice president at TurboTax, the tax software provider. You can use it as a second home or a rental and still claim the credit, he says.
Q: I sold a home I had lived in for more than five years and bought a new one in August. Do I qualify for a tax credit?
A: No. For existing homeowners, the $6,500 credit is limited to homes purchased after Nov. 6.
Q: Does the home I buy have to be more expensive than the one I own now?
A: No. While the real estate industry is hopeful that homeowners will use this credit to buy a nicer place, there’s no prohibition against using it to downsize, Meighan says. That makes this credit particularly useful for seniors who are interested in moving into a smaller home.
If you are planning to move up, keep in mind that you can’t claim the credit if the purchase price of the home exceeds $800,000. Unlike some other tax credits, this one doesn’t slowly phase out once you exceed the threshold, Meighan says. If you buy a home for more than $800,000 – and that refers to the purchase price, not the assessed value or the amount of your mortgage – you are ineligible for the credit, period.
The $800,000 cap also applies to first-time homebuyers, but only those who purchase a home after Nov. 6. First-time homebuyers who bought a home for more than $800,000 between Jan. 1 and Nov. 6 can still claim the credit, assuming they meet the other criteria, Meighan says.
Q: I’m an existing homeowner, and would like to build a new home. Can I claim the credit?
A: Yes, but make sure your builder is good at meeting deadlines. You can claim the credit as long as you have a binding contract in place by April 30 and close by July 1. In the case of a new home, the closing date is the day you move in, Meighan says. If your home isn’t habitable by June 30, you won’t be able to claim the credit, he says.
Q: I bought a home in 2008 and claimed the old $7,500 first-time homebuyers credit, which must be repaid over 15 years. Did the new law change that rule?
A: No. That credit, which was available for homes purchased between April 9, 2008, and Dec. 31, 2008, must still be repaid.
The $8,000 first-time homebuyer credit, available for homes purchased after Dec. 31, 2008, doesn’t have to be repaid as long as you remain in the home for at least three years. Existing homeowners who qualify for the $6,500 credit don’t have to repay that money, either, as long as they meet the three-year requirement.
Q: We have a rental home and would like to sell it to our son, who has never owned a home. Would he qualify for the first-time homebuyer credit?
A: No. The legislation specifically prohibits taxpayers from claiming the credit if the sale is between “related parties,” Meighan says. A home sale to a parent, grandparent, child or grandchild would fall into that category.
Q: I sold my home this year and have been renting since. If I buy a new home, do I qualify for the expanded credit?
A: Yes, as long as you meet all of the other requirements, says Mel Schwarz, partner with Grant Thornton in Washington, D.C. The eight-year period used to determine eligibility ends on the day you buy your new home, he says.
On Nov. 6, President Obama signed legislation that provides a $6,500 tax credit for some current homeowners who buy another home. The law also extends the $8,000 tax credit for first-time homebuyers, scheduled to expire Nov. 30, until next spring.
A lot of people are interested in taking advantage of this tax break, but the expanded credit also has whipped up a lot of confusion. Here are some answers to frequently asked questions:
Q: How do I qualify for the $6,500 credit?
A: This credit is available for homebuyers who sign a binding contract on a new or existing home by April 30, 2010, and settle by July 1 (deadlines that also apply to the first-time homebuyer credit). You must have lived in your existing home for five consecutive years out of the last eight. The home you purchase must be your primary residence. However, the law doesn’t require you to sell your old home, says Bob Meighan, vice president at TurboTax, the tax software provider. You can use it as a second home or a rental and still claim the credit, he says.
Q: I sold a home I had lived in for more than five years and bought a new one in August. Do I qualify for a tax credit?
A: No. For existing homeowners, the $6,500 credit is limited to homes purchased after Nov. 6.
Q: Does the home I buy have to be more expensive than the one I own now?
A: No. While the real estate industry is hopeful that homeowners will use this credit to buy a nicer place, there’s no prohibition against using it to downsize, Meighan says. That makes this credit particularly useful for seniors who are interested in moving into a smaller home.
If you are planning to move up, keep in mind that you can’t claim the credit if the purchase price of the home exceeds $800,000. Unlike some other tax credits, this one doesn’t slowly phase out once you exceed the threshold, Meighan says. If you buy a home for more than $800,000 – and that refers to the purchase price, not the assessed value or the amount of your mortgage – you are ineligible for the credit, period.
The $800,000 cap also applies to first-time homebuyers, but only those who purchase a home after Nov. 6. First-time homebuyers who bought a home for more than $800,000 between Jan. 1 and Nov. 6 can still claim the credit, assuming they meet the other criteria, Meighan says.
Q: I’m an existing homeowner, and would like to build a new home. Can I claim the credit?
A: Yes, but make sure your builder is good at meeting deadlines. You can claim the credit as long as you have a binding contract in place by April 30 and close by July 1. In the case of a new home, the closing date is the day you move in, Meighan says. If your home isn’t habitable by June 30, you won’t be able to claim the credit, he says.
Q: I bought a home in 2008 and claimed the old $7,500 first-time homebuyers credit, which must be repaid over 15 years. Did the new law change that rule?
A: No. That credit, which was available for homes purchased between April 9, 2008, and Dec. 31, 2008, must still be repaid.
The $8,000 first-time homebuyer credit, available for homes purchased after Dec. 31, 2008, doesn’t have to be repaid as long as you remain in the home for at least three years. Existing homeowners who qualify for the $6,500 credit don’t have to repay that money, either, as long as they meet the three-year requirement.
Q: We have a rental home and would like to sell it to our son, who has never owned a home. Would he qualify for the first-time homebuyer credit?
A: No. The legislation specifically prohibits taxpayers from claiming the credit if the sale is between “related parties,” Meighan says. A home sale to a parent, grandparent, child or grandchild would fall into that category.
Q: I sold my home this year and have been renting since. If I buy a new home, do I qualify for the expanded credit?
A: Yes, as long as you meet all of the other requirements, says Mel Schwarz, partner with Grant Thornton in Washington, D.C. The eight-year period used to determine eligibility ends on the day you buy your new home, he says.
Tax credit gives home sales best boost in decade
WASHINGTON (AP) – Nov. 24, 2009 – First-time buyers taking advantage of a special tax credit gave sales of existing homes in October their biggest surge in a decade, raising hopes for a turnaround in the housing market and pleasing Wall Street.
While rising foreclosures and disappearing jobs still threaten the comeback, there are now bidding wars for houses in some cities, and home sales are nearly 36 percent above their low point in January.
The National Association of Realtors said resales rose 10.1 percent to a seasonally adjusted annual rate of 6.1 million in October, from 5.5 million in September. It was the biggest monthly increase in a decade and far better than what economists expected, according to Thomson Reuters.
Analysts said the gains mainly reflected the tax credit of up to $8,000 for new homeowners, which was due to expire this month before Congress extended it until spring — and expanded it to more buyers.
The sales figures released Monday provided the juice for a rally on Wall Street. The Dow Jones industrial average, also lifted by a weak dollar, rose more than 130 points.
The extension of the homebuyer tax credit should help sustain the housing market next year, economists said. Yet the overall economy will probably benefit only slightly from higher home sales.
There are still too many factors weighing down the recovery. Foreclosures are rising. Job creation is slow. People remain reluctant to spend. And construction of new homes — as opposed to sales of existing ones — plunged in October.
The biggest contribution the housing industry makes to economic growth is from home building. Commissions and fees generated from home sales also help, but far less than construction.
“I wouldn’t want to bet the house on housing, really, in terms of the strength of the U.S. economy going forward,” said Diane Swonk, chief economist at Mesirow Financial in Chicago.”
That’s partly because shoppers seem in no mood to spend. In fact, 93 percent say they’ll spend less or about the same as last year, according to an Associated Press-GfK poll. Half of all those polled say they’re suffering at least some debt-related stress.
Next year is likely to bring only slight improvement, given high unemployment and tight credit, according to the National Association for Business Economics. Consumer spending will rise a lackluster 2 percent next year, restraining the recovery, NABE forecasters said.
For now, the housing market is feeding on the homebuyer tax credit, along with falling home prices and low mortgage rates. Average rates on 30-year mortgages have hovered around 5 percent this fall.
At the current sales pace, there’s a modest seven-month supply of previously occupied homes on the market. Sales are still running 16 percent below their peak in 2005, but real estate agents say the pace has definitely picked up.
“People who are looking, they are serious,” said Harrison Tulloss, an agent with ZipRealty Inc. in the Raleigh-Durham area of North Carolina. “They’re not riding around with me if they need to go shopping or buy a turkey.”
Joey Wilson and her husband made unsuccessful offers on 20 Las Vegas homes starting in midsummer before they closed on a four-bedroom, $136,000 home this month.
“It’s insane,” said Wilson, who relocated from Kentucky. “I’ve never seen a market like this before.”
Reduced home prices and federal programs to lower mortgage rates have brought more buyers into the market. The median sales price was $173,100 in October, down 7 percent from a year earlier and 25 percent below the peak.
Many experts predict prices will hit a new low next spring, perhaps falling 5 to 10 percent further as more foreclosures spill into the market. The government has tried to counter that trend by offering the tax credit and keeping mortgage rates low.
Without the deadline looming for the tax credit, home sales are likely to fall over the winter as buyers hibernate for a few months. Analysts say the new deadline — buyers have to sign a purchase agreement by April 30 — means sales will surge next spring, before dropping back again later in 2010.
What happens after that is anyone’s guess.
“When we do kick those crutches out from under the housing market, will it be able to stand on its own?” said Mark Fleming, chief economist with First American CoreLogic. “It’s really hard to tell.”
The government has also helped the housing market by acting to lower mortgage rates. The Federal Reserve, for example, has pumped $1.25 trillion into mortgage-backed securities to try to lower mortgage rates and loosen credit. That program is scheduled to end by March.
If rates go up without the government help, homes would be less affordable, which could dampen demand.
A disquieting report last week from the Mortgage Bankers Association said more fixed-rate home loans made to people with good credit were sinking into foreclosure as layoffs go on. A record-high 14 percent of homeowners with a mortgage were either behind on payments or in foreclosure at the end of September.
In areas where foreclosures have hit hard, housing remains depressed, despite low prices, low mortgage rates and the tax credit. Yet for homebuyers with cash and access to credit, falling prices and low mortgage rates have proved irresistible.
The Realtors’ report on October home sales reflects offers made before buyers knew the credit would be extended.
In Raleigh, N.C., first-time buyer Louise Brunson snapped up a three-bedroom town house for $235,000. She and her husband had planned to buy a year and a half ago but decided to wait until prices fell further. The tax credit was a big plus, too.
“We suspected that it might be extended,” said Brunson, a paralegal. “But we did want to go ahead and get it done to be on the safe side.”
While rising foreclosures and disappearing jobs still threaten the comeback, there are now bidding wars for houses in some cities, and home sales are nearly 36 percent above their low point in January.
The National Association of Realtors said resales rose 10.1 percent to a seasonally adjusted annual rate of 6.1 million in October, from 5.5 million in September. It was the biggest monthly increase in a decade and far better than what economists expected, according to Thomson Reuters.
Analysts said the gains mainly reflected the tax credit of up to $8,000 for new homeowners, which was due to expire this month before Congress extended it until spring — and expanded it to more buyers.
The sales figures released Monday provided the juice for a rally on Wall Street. The Dow Jones industrial average, also lifted by a weak dollar, rose more than 130 points.
The extension of the homebuyer tax credit should help sustain the housing market next year, economists said. Yet the overall economy will probably benefit only slightly from higher home sales.
There are still too many factors weighing down the recovery. Foreclosures are rising. Job creation is slow. People remain reluctant to spend. And construction of new homes — as opposed to sales of existing ones — plunged in October.
The biggest contribution the housing industry makes to economic growth is from home building. Commissions and fees generated from home sales also help, but far less than construction.
“I wouldn’t want to bet the house on housing, really, in terms of the strength of the U.S. economy going forward,” said Diane Swonk, chief economist at Mesirow Financial in Chicago.”
That’s partly because shoppers seem in no mood to spend. In fact, 93 percent say they’ll spend less or about the same as last year, according to an Associated Press-GfK poll. Half of all those polled say they’re suffering at least some debt-related stress.
Next year is likely to bring only slight improvement, given high unemployment and tight credit, according to the National Association for Business Economics. Consumer spending will rise a lackluster 2 percent next year, restraining the recovery, NABE forecasters said.
For now, the housing market is feeding on the homebuyer tax credit, along with falling home prices and low mortgage rates. Average rates on 30-year mortgages have hovered around 5 percent this fall.
At the current sales pace, there’s a modest seven-month supply of previously occupied homes on the market. Sales are still running 16 percent below their peak in 2005, but real estate agents say the pace has definitely picked up.
“People who are looking, they are serious,” said Harrison Tulloss, an agent with ZipRealty Inc. in the Raleigh-Durham area of North Carolina. “They’re not riding around with me if they need to go shopping or buy a turkey.”
Joey Wilson and her husband made unsuccessful offers on 20 Las Vegas homes starting in midsummer before they closed on a four-bedroom, $136,000 home this month.
“It’s insane,” said Wilson, who relocated from Kentucky. “I’ve never seen a market like this before.”
Reduced home prices and federal programs to lower mortgage rates have brought more buyers into the market. The median sales price was $173,100 in October, down 7 percent from a year earlier and 25 percent below the peak.
Many experts predict prices will hit a new low next spring, perhaps falling 5 to 10 percent further as more foreclosures spill into the market. The government has tried to counter that trend by offering the tax credit and keeping mortgage rates low.
Without the deadline looming for the tax credit, home sales are likely to fall over the winter as buyers hibernate for a few months. Analysts say the new deadline — buyers have to sign a purchase agreement by April 30 — means sales will surge next spring, before dropping back again later in 2010.
What happens after that is anyone’s guess.
“When we do kick those crutches out from under the housing market, will it be able to stand on its own?” said Mark Fleming, chief economist with First American CoreLogic. “It’s really hard to tell.”
The government has also helped the housing market by acting to lower mortgage rates. The Federal Reserve, for example, has pumped $1.25 trillion into mortgage-backed securities to try to lower mortgage rates and loosen credit. That program is scheduled to end by March.
If rates go up without the government help, homes would be less affordable, which could dampen demand.
A disquieting report last week from the Mortgage Bankers Association said more fixed-rate home loans made to people with good credit were sinking into foreclosure as layoffs go on. A record-high 14 percent of homeowners with a mortgage were either behind on payments or in foreclosure at the end of September.
In areas where foreclosures have hit hard, housing remains depressed, despite low prices, low mortgage rates and the tax credit. Yet for homebuyers with cash and access to credit, falling prices and low mortgage rates have proved irresistible.
The Realtors’ report on October home sales reflects offers made before buyers knew the credit would be extended.
In Raleigh, N.C., first-time buyer Louise Brunson snapped up a three-bedroom town house for $235,000. She and her husband had planned to buy a year and a half ago but decided to wait until prices fell further. The tax credit was a big plus, too.
“We suspected that it might be extended,” said Brunson, a paralegal. “But we did want to go ahead and get it done to be on the safe side.”
Foreclosures hitting more people with good credit
WASHINGTON – Nov. 20, 2009 – The foreclosure crisis likely will persist well into next year as high unemployment pushes more people out of homes, pulls down housing prices and raises concerns about the broader economic recovery.
The latest evidence was a report Thursday that a rising proportion of fixed-rate home loans made to people with good credit are sinking into foreclosure. That’s a shift from last year, when riskier subprime loans drove the housing crisis.
The report from the Mortgage Bankers Association also found that 14 percent of homeowners with a mortgage were either behind on payments or in foreclosure at the end of September. It was a record-high figure for the ninth straight quarter.
The data suggest the housing market and the broader recovery will remain under pressure from the surge in home-loan defaults, especially as unemployment keeps rising. Lost jobs are the main reason homeowners are falling behind on their mortgages.
After three years of plunging prices, the housing market started to rebound this summer. That lifted hopes for the overall economy. But analysts say there are too many foreclosed homes that have yet to be dumped on the market and expect further price declines.
Among states, the worst damage is still concentrated in the states hardest hit from the start: Florida, Nevada, California and Arizona. Together, they accounted for 43 percent of new foreclosures.
One in four mortgages in Florida were either past due or in foreclosure, the most in the U.S. Nevada was close behind at 23 percent.
“There’s no indication in this data that foreclosures are going to abate anytime soon,” said Mark Zandi, chief economist at Moody’s Economy.com, who projects that nationwide home prices will fall up to 10 percent before bottoming next fall.
Driven by rising unemployment, prime fixed-rate loans to borrowers with good credit accounted for nearly 33 percent of new foreclosures last quarter. That compares with 21 percent a year ago.
Many laid-off homeowners might be able to survive on their savings for a while, but “the longer the economic situation stays in place, the less likely they are to hold on,” said Jay Brinkmann, chief economist at the Mortgage Bankers Association.
In markets where foreclosures already are high and still rising, prices likely will remain soft. That will cause developers to keep their bulldozers idle and prevent the industry from making a big contribution to the economy’s recovery.
“Builders only start homes when they can make money,” said John Burns, an Irvine, Calif.-based real estate consultant. “In a lot of areas, until prices go back up, construction doesn’t make any sense.”
The crisis has struck people like Betty Wilson of San Diego. She was laid off a year ago from her job at an insurance company.
Since then, Wilson has managed to pay her $1,090 mortgage bill from collecting unemployment benefits, renting out a room and dipping into savings. But money is running low. She fears she won’t make her payment for December.
Wilson, 56, said she has tried to get her mortgage company, GMAC Mortgage, to lower her 6.25 percent interest rate or give her a temporary break from payments. Many mortgage companies will let a borrower skip up to six months of payments, though they require that the money be paid back eventually.
After The Associated Press inquired about her case, a GMAC spokeswoman said Thursday that the company would offer Wilson reduced payments for four months, “while we continue to review her financials for a permanent solution.”
After a typical recession, foreclosures peak about six months after the unemployment rate does. But the process could take longer this time, in part because loan-modification programs and new state laws have prolonged the process. Unemployment, now at 10.2 percent, isn’t expected to peak until next spring or summer.
Another unknown is the effectiveness of the Obama administration plan to attack the foreclosure crisis. As of last month, about 20 percent of eligible borrowers, or more than 650,000 people, had signed up. But most of those enrolled have been chosen for trials lasting up to five months.
About 4 million homeowners were either in foreclosure or at least three months behind on their mortgage payments as of September, according to the mortgage bankers group. Even if some of them manage to stay in their homes, the market is likely to absorb a wave of new foreclosures. Those properties are concentrated in states like Florida and other already beleaguered areas.
Subprime loans with adjustable rates have fallen to 16 percent of new foreclosures, from 35 percent a year earlier. Loans backed by the Federal Housing Administration also show rising signs of trouble. More than 18 percent of FHA borrowers are at least one payment behind or in foreclosure.
The Mortgage Bankers Association’s quarterly survey of 44.6 million loans is considered the most authoritative report on mortgage delinquencies. A separate report, issued monthly by foreclosure listing service RealtyTrac Inc., is based on courthouse filings.
The latest evidence was a report Thursday that a rising proportion of fixed-rate home loans made to people with good credit are sinking into foreclosure. That’s a shift from last year, when riskier subprime loans drove the housing crisis.
The report from the Mortgage Bankers Association also found that 14 percent of homeowners with a mortgage were either behind on payments or in foreclosure at the end of September. It was a record-high figure for the ninth straight quarter.
The data suggest the housing market and the broader recovery will remain under pressure from the surge in home-loan defaults, especially as unemployment keeps rising. Lost jobs are the main reason homeowners are falling behind on their mortgages.
After three years of plunging prices, the housing market started to rebound this summer. That lifted hopes for the overall economy. But analysts say there are too many foreclosed homes that have yet to be dumped on the market and expect further price declines.
Among states, the worst damage is still concentrated in the states hardest hit from the start: Florida, Nevada, California and Arizona. Together, they accounted for 43 percent of new foreclosures.
One in four mortgages in Florida were either past due or in foreclosure, the most in the U.S. Nevada was close behind at 23 percent.
“There’s no indication in this data that foreclosures are going to abate anytime soon,” said Mark Zandi, chief economist at Moody’s Economy.com, who projects that nationwide home prices will fall up to 10 percent before bottoming next fall.
Driven by rising unemployment, prime fixed-rate loans to borrowers with good credit accounted for nearly 33 percent of new foreclosures last quarter. That compares with 21 percent a year ago.
Many laid-off homeowners might be able to survive on their savings for a while, but “the longer the economic situation stays in place, the less likely they are to hold on,” said Jay Brinkmann, chief economist at the Mortgage Bankers Association.
In markets where foreclosures already are high and still rising, prices likely will remain soft. That will cause developers to keep their bulldozers idle and prevent the industry from making a big contribution to the economy’s recovery.
“Builders only start homes when they can make money,” said John Burns, an Irvine, Calif.-based real estate consultant. “In a lot of areas, until prices go back up, construction doesn’t make any sense.”
The crisis has struck people like Betty Wilson of San Diego. She was laid off a year ago from her job at an insurance company.
Since then, Wilson has managed to pay her $1,090 mortgage bill from collecting unemployment benefits, renting out a room and dipping into savings. But money is running low. She fears she won’t make her payment for December.
Wilson, 56, said she has tried to get her mortgage company, GMAC Mortgage, to lower her 6.25 percent interest rate or give her a temporary break from payments. Many mortgage companies will let a borrower skip up to six months of payments, though they require that the money be paid back eventually.
After The Associated Press inquired about her case, a GMAC spokeswoman said Thursday that the company would offer Wilson reduced payments for four months, “while we continue to review her financials for a permanent solution.”
After a typical recession, foreclosures peak about six months after the unemployment rate does. But the process could take longer this time, in part because loan-modification programs and new state laws have prolonged the process. Unemployment, now at 10.2 percent, isn’t expected to peak until next spring or summer.
Another unknown is the effectiveness of the Obama administration plan to attack the foreclosure crisis. As of last month, about 20 percent of eligible borrowers, or more than 650,000 people, had signed up. But most of those enrolled have been chosen for trials lasting up to five months.
About 4 million homeowners were either in foreclosure or at least three months behind on their mortgage payments as of September, according to the mortgage bankers group. Even if some of them manage to stay in their homes, the market is likely to absorb a wave of new foreclosures. Those properties are concentrated in states like Florida and other already beleaguered areas.
Subprime loans with adjustable rates have fallen to 16 percent of new foreclosures, from 35 percent a year earlier. Loans backed by the Federal Housing Administration also show rising signs of trouble. More than 18 percent of FHA borrowers are at least one payment behind or in foreclosure.
The Mortgage Bankers Association’s quarterly survey of 44.6 million loans is considered the most authoritative report on mortgage delinquencies. A separate report, issued monthly by foreclosure listing service RealtyTrac Inc., is based on courthouse filings.
Next wave of foreclosures looms
WASHINGTON – Nov. 19, 2009 – A second wave of foreclosures is poised to hit the market, potentially undermining housing recovery efforts as more homes add to the glut of inventory and drive down prices.
These homes largely represent loans that are delinquent but have not yet resulted in foreclosure sales.
About 7 million properties are destined to go into foreclosure, according to a September study by Amherst Securities Group, compared with 1.27 million properties in early 2005.
“There’s a huge supply out there,” says Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C. “The foreclosure process can take a long time. When it comes to (the housing recovery), we’re not home free.”
There is often a long lag time between a borrower going delinquent and the bank taking the home. Here’s why:
• Moratoriums. New state laws imposing short-term moratoriums have slowed the timeline from delinquency to foreclosure.
• Overwhelmed lenders. Banks dealing with a surge in refinancing, mortgage modifications and defaults are overwhelmed with demand, so it can take longer to initiate a foreclosure sale.
• Modifications. Many loans now are first examined to see if they might qualify for a modification. This drags out the timeline and means it is taking longer for homes to go into foreclosure.
• Asset write-downs. Banks may in part be waiting to liquidate homes through foreclosure because they don’t want to write down the value of the asset. Lenders can keep homes on the books at a higher value until they are sold at foreclosure.
“There is a lot of foreclosed property in the pipeline that will hit the market and depress prices,” says Mark Zandi at Moody’s Economy.com. Foreclosed homes often sell at prices below those on the market and can therefore drag down overall home values.
The shadow market of foreclosed homes eclipses the number of homes lost this year. Zandi anticipates there will be about 2.4 million homes lost next year through foreclosure, short sales and deeds in lieu of foreclosure. That compares with 2 million homes lost in 2009.
Jumana Bauwens, a spokeswoman at Bank of America, says the bank is projecting an increase in foreclosures in part because customers will not be qualifying for existing loan-modification programs.
These homes largely represent loans that are delinquent but have not yet resulted in foreclosure sales.
About 7 million properties are destined to go into foreclosure, according to a September study by Amherst Securities Group, compared with 1.27 million properties in early 2005.
“There’s a huge supply out there,” says Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C. “The foreclosure process can take a long time. When it comes to (the housing recovery), we’re not home free.”
There is often a long lag time between a borrower going delinquent and the bank taking the home. Here’s why:
• Moratoriums. New state laws imposing short-term moratoriums have slowed the timeline from delinquency to foreclosure.
• Overwhelmed lenders. Banks dealing with a surge in refinancing, mortgage modifications and defaults are overwhelmed with demand, so it can take longer to initiate a foreclosure sale.
• Modifications. Many loans now are first examined to see if they might qualify for a modification. This drags out the timeline and means it is taking longer for homes to go into foreclosure.
• Asset write-downs. Banks may in part be waiting to liquidate homes through foreclosure because they don’t want to write down the value of the asset. Lenders can keep homes on the books at a higher value until they are sold at foreclosure.
“There is a lot of foreclosed property in the pipeline that will hit the market and depress prices,” says Mark Zandi at Moody’s Economy.com. Foreclosed homes often sell at prices below those on the market and can therefore drag down overall home values.
The shadow market of foreclosed homes eclipses the number of homes lost this year. Zandi anticipates there will be about 2.4 million homes lost next year through foreclosure, short sales and deeds in lieu of foreclosure. That compares with 2 million homes lost in 2009.
Jumana Bauwens, a spokeswoman at Bank of America, says the bank is projecting an increase in foreclosures in part because customers will not be qualifying for existing loan-modification programs.
Monday, October 26, 2009
World Habitat Day focuses on housing
WASHINGTON – Oct. 6, 2009 – Habitat for Humanity, the United Nations Human Settlements Program (UN-HABITAT), the U.S. Department of Housing and Urban Development (HUD) and the Rockefeller Foundation hosted World Habitat Day activities yesterday, with continuing events this week.
“World Habitat Day is an opportunity to bring attention to the worldwide need for decent and affordable housing,” says Jonathan Reckford, CEO, Habitat for Humanity International. “During World Habitat Day events, we join the many organizations that are addressing the global crisis of poverty housing with particular emphasis on the urban challenges in the world’s rapidly growing cities.”
Habitat and the Rockefeller Foundation’s public policy forum took place yesterday at the National Press Club – the first official event to commemorate World Habitat Day. The event, “Whose American Dream: Moving Toward a Balanced Housing Policy,” included a panel of experts exploring the appropriate role of housing policy in meeting the needs of low-income families and revitalizing neighborhoods.
According to Habitat for Humanity’s 2010 Shelter Report, research studies show that homeowner benefits include better overall health, wealth accumulation and improved work productivity. The sense of stability achieved through homeownership often leads to improved performance in education among children and also can stabilize neighborhoods, providing positive benefits to entire communities.
The United Nations designated the first Monday of October as World Habitat Day to remind the world of its collective responsibility to address substandard housing. Additional global World Habitat Day events are listed on the United Nations website.
“World Habitat Day is an opportunity to bring attention to the worldwide need for decent and affordable housing,” says Jonathan Reckford, CEO, Habitat for Humanity International. “During World Habitat Day events, we join the many organizations that are addressing the global crisis of poverty housing with particular emphasis on the urban challenges in the world’s rapidly growing cities.”
Habitat and the Rockefeller Foundation’s public policy forum took place yesterday at the National Press Club – the first official event to commemorate World Habitat Day. The event, “Whose American Dream: Moving Toward a Balanced Housing Policy,” included a panel of experts exploring the appropriate role of housing policy in meeting the needs of low-income families and revitalizing neighborhoods.
According to Habitat for Humanity’s 2010 Shelter Report, research studies show that homeowner benefits include better overall health, wealth accumulation and improved work productivity. The sense of stability achieved through homeownership often leads to improved performance in education among children and also can stabilize neighborhoods, providing positive benefits to entire communities.
The United Nations designated the first Monday of October as World Habitat Day to remind the world of its collective responsibility to address substandard housing. Additional global World Habitat Day events are listed on the United Nations website.
Fla. justices consider mediation for foreclosures
TALLAHASSEE, Fla. – Nov. 5, 2009 – Mediation would be a good way to expedite a flood of mortgage foreclosures, members of a foreclosure task force said Wednesday, but some disagreed on the details in oral arguments before the state Supreme Court.
Florida’s courts are currently trying to cope with more than 290,000 foreclosure cases.
“What this court system has is virtually a tsunami of these filings,” said Justice Barbara Pariente.
A majority on the high court’s Task Force on Residential Mortgage Foreclosures recommended trying mediation on owner-occupied homes before cases go to court, with lenders picking up the tab. Borrowers would be contacted by phone and mail and asked to participate. The high court did not immediately act on the proposal.
“The data that the banks have says the earlier in the process you get into mediation, the better and more likely you are to resolve the case,” task force chair Circuit Judge Jennifer Bailey of Miami said in an interview. She argued for a statewide managed mediation system.
Minority members said mediation should be offered only if ordered by a judge, and the costs – an estimated $750 per case – should be split 50-50 between lenders and borrowers.
Chief Circuit Judge Lee Haworth of Sarasota said borrowers who have the means to pay should have “skin in the game.”
The Florida Bankers Association supports that option. Without making a financial commitment to the mediation process, borrowers may try to use it to delay foreclosure, association lawyer Virginia Townes said in an interview.
“If the borrower is mediating in bad faith or is really not available or able to engage in a meaningful mediation then we’ve wasted the court’s time,” Townes said.
Bailey said the value of getting the cases decided sooner will outweigh the lenders’ upfront costs. If loans can be restructured through mediation those costs would be included and ultimately paid by the borrowers.
Rebecca Storrow, alternative dispute resolution director for the 15th Circuit Court in Palm Beach County, argued for the traditional court-ordered mediation system. She said it is working well in her system and is cheaper than the task force’s proposal.
The justices also heard arguments on proposed emergency rule changes.
One would require lenders to verify they hold mortgages before going forward with cases. Many lenders initially say they have lost the note, which can result in wasted court time because the notes eventually are found in nearly every case, Bailey said.
She said the rule would tell lenders to double-check before filing. Townes argued it would be a costly and needless step.
The other contested rule would require lenders to cite a reason and get a court order to cancel a foreclosure sale. Now all they have to do is not show up at the sale.
Bailey said 65 percent of sales in Miami-Dade County are canceled that way every month, causing delays for all sales.
Marc Ben-Ezra, a Fort Lauderdale lawyer who represents lenders, opposed the rule. He said it would result in unintended sales if lenders settle with borrowers at the last minute or if delayed by a flat tire.
The sale delays can be costly for borrowers who often mistakenly think they must move out before their homes are sold, Bailey said.
“They’re still on the hook for these houses,” she said. “They’re on the hook for the taxes. They’re on the hook for any code violations.”
It’s also costly for condominium and homeowner associations because no one’s paying monthly fees on those properties, Bailey said.
Florida’s courts are currently trying to cope with more than 290,000 foreclosure cases.
“What this court system has is virtually a tsunami of these filings,” said Justice Barbara Pariente.
A majority on the high court’s Task Force on Residential Mortgage Foreclosures recommended trying mediation on owner-occupied homes before cases go to court, with lenders picking up the tab. Borrowers would be contacted by phone and mail and asked to participate. The high court did not immediately act on the proposal.
“The data that the banks have says the earlier in the process you get into mediation, the better and more likely you are to resolve the case,” task force chair Circuit Judge Jennifer Bailey of Miami said in an interview. She argued for a statewide managed mediation system.
Minority members said mediation should be offered only if ordered by a judge, and the costs – an estimated $750 per case – should be split 50-50 between lenders and borrowers.
Chief Circuit Judge Lee Haworth of Sarasota said borrowers who have the means to pay should have “skin in the game.”
The Florida Bankers Association supports that option. Without making a financial commitment to the mediation process, borrowers may try to use it to delay foreclosure, association lawyer Virginia Townes said in an interview.
“If the borrower is mediating in bad faith or is really not available or able to engage in a meaningful mediation then we’ve wasted the court’s time,” Townes said.
Bailey said the value of getting the cases decided sooner will outweigh the lenders’ upfront costs. If loans can be restructured through mediation those costs would be included and ultimately paid by the borrowers.
Rebecca Storrow, alternative dispute resolution director for the 15th Circuit Court in Palm Beach County, argued for the traditional court-ordered mediation system. She said it is working well in her system and is cheaper than the task force’s proposal.
The justices also heard arguments on proposed emergency rule changes.
One would require lenders to verify they hold mortgages before going forward with cases. Many lenders initially say they have lost the note, which can result in wasted court time because the notes eventually are found in nearly every case, Bailey said.
She said the rule would tell lenders to double-check before filing. Townes argued it would be a costly and needless step.
The other contested rule would require lenders to cite a reason and get a court order to cancel a foreclosure sale. Now all they have to do is not show up at the sale.
Bailey said 65 percent of sales in Miami-Dade County are canceled that way every month, causing delays for all sales.
Marc Ben-Ezra, a Fort Lauderdale lawyer who represents lenders, opposed the rule. He said it would result in unintended sales if lenders settle with borrowers at the last minute or if delayed by a flat tire.
The sale delays can be costly for borrowers who often mistakenly think they must move out before their homes are sold, Bailey said.
“They’re still on the hook for these houses,” she said. “They’re on the hook for the taxes. They’re on the hook for any code violations.”
It’s also costly for condominium and homeowner associations because no one’s paying monthly fees on those properties, Bailey said.
Builders cut back on incentives
WASHINGTON – Oct. 6, 2009 – Home builders are cutting back on the freebies they’ve been tacking on new homes for the last couple of years to woo buyers.
The reason is simple: Demand is almost back in sync with supply. According to Jeffrey Laverty, analyst with research firm Oscar Gruss & Son, new-home inventory has declined from 12.4 months in January to 7.3 in August, close to the six-month mark considered standard.
While eliminating incentives like free cars and free pools, some builders are continuing to offer to pay points on mortgages and discounts on upgrades – “Incentives that make sense,” says Laura VanVelthoven, Hovnanian’s corporate vice president of marketing and sales.
The reason is simple: Demand is almost back in sync with supply. According to Jeffrey Laverty, analyst with research firm Oscar Gruss & Son, new-home inventory has declined from 12.4 months in January to 7.3 in August, close to the six-month mark considered standard.
While eliminating incentives like free cars and free pools, some builders are continuing to offer to pay points on mortgages and discounts on upgrades – “Incentives that make sense,” says Laura VanVelthoven, Hovnanian’s corporate vice president of marketing and sales.
Real estate prices could climb slowly
WASHINGTON – Oct. 6, 2009 – With the population aging and fewer young people to take the place of baby boomers, the demand for housing may slow for years to come, keeping home values from increasing as they have done since World War II, according to at least one well-known housing expert.
“We can no longer assume that housing will be as good an investment for the future as it has been,” said Robert Reich, public policy professor at the University of California-Berkeley and U.S. Labor Secretary in the Clinton administration.
Reich isn’t predicting that buying a home will no longer be a good financial strategy, just that the value of real estate won’t climb as rapidly.
“People in the middle class, although stressed, will still want homes, and homeownership will still be part of the American dream,” he said. “House prices will continue to rise, just more slowly than they did in the past 70 years.”
“We can no longer assume that housing will be as good an investment for the future as it has been,” said Robert Reich, public policy professor at the University of California-Berkeley and U.S. Labor Secretary in the Clinton administration.
Reich isn’t predicting that buying a home will no longer be a good financial strategy, just that the value of real estate won’t climb as rapidly.
“People in the middle class, although stressed, will still want homes, and homeownership will still be part of the American dream,” he said. “House prices will continue to rise, just more slowly than they did in the past 70 years.”
Tax credit extension passes House and Senate
WASHINGTON – Nov. 5, 2009 – The $8,000, first-time homebuyer tax credit has not yet been extended beyond its Nov. 30 end date, but it’s very close to gaining a longer life.
The extension was added as an amendment to an existing bill, HR 3548, that extends unemployment benefits. The U.S. Senate passed that bill on Wednesday and, after debate, the U.S. House passed HR 3548 this afternoon. It now needs only President Obama’s signature to become law, and the White House has indicated it will sign it, perhaps as early as tomorrow.
Until the president signs the bill, however, it is not law.
In addition to extending the tax credit for first-time homebuyers under the current rules, the bill adds a smaller tax credit for move-up homebuyers who have lived in the house for five of the past eight years. The bill also increases the income limits of homebuyers from $75,000 (single) to $125,000; and from $150,000 (married) to $225,000.
Florida downpayment assistance
After the president signs the bill and extends the tax credit, the Florida Homebuyer Opportunity Program – a downpayment and closing costs assistance program relating to the federal tax credit –automatically gets extended too. The state still has about $28 million available for homebuyers. The money is essentially a loan to first-time buyers; they receive it upfront, use it for a downpayment or other costs, and pay it back once they get their federal refund.
For more information on the Florida Homebuyer Opportunity Program, visit the Homebuyer Center on floridarealtors.org: http://www.floridarealtors.org/AboutFar/homebuyercenter/index.cfm
Also check floridarealtors.org for updates as they’re released; and, after the tax credit extension becomes law, details on the new program.
The extension was added as an amendment to an existing bill, HR 3548, that extends unemployment benefits. The U.S. Senate passed that bill on Wednesday and, after debate, the U.S. House passed HR 3548 this afternoon. It now needs only President Obama’s signature to become law, and the White House has indicated it will sign it, perhaps as early as tomorrow.
Until the president signs the bill, however, it is not law.
In addition to extending the tax credit for first-time homebuyers under the current rules, the bill adds a smaller tax credit for move-up homebuyers who have lived in the house for five of the past eight years. The bill also increases the income limits of homebuyers from $75,000 (single) to $125,000; and from $150,000 (married) to $225,000.
Florida downpayment assistance
After the president signs the bill and extends the tax credit, the Florida Homebuyer Opportunity Program – a downpayment and closing costs assistance program relating to the federal tax credit –automatically gets extended too. The state still has about $28 million available for homebuyers. The money is essentially a loan to first-time buyers; they receive it upfront, use it for a downpayment or other costs, and pay it back once they get their federal refund.
For more information on the Florida Homebuyer Opportunity Program, visit the Homebuyer Center on floridarealtors.org: http://www.floridarealtors.org/AboutFar/homebuyercenter/index.cfm
Also check floridarealtors.org for updates as they’re released; and, after the tax credit extension becomes law, details on the new program.
Florida’s existing home, condo sales up in September 2009
ORLANDO, Fla. – Oct. 23, 2009 – Florida’s existing home sales rose in September, which marks more than a year (13 months) that sales activity has increased in the year-to-year comparison, according to the latest housing data released by Florida Realtors®. September’s statewide sales also increased over sales activity in August in both the existing home and existing condominium markets.
Existing home sales rose 34 percent last month with a total of 14,419 homes sold statewide compared to 10,778 homes sold in September 2008, according to Florida Realtors. Statewide existing home sales last month increased 4.1 percent over statewide sales activity in August.
Florida Realtors also reported a 77 percent increase in statewide sales of existing condos in September compared to the previous year’s sales figure; statewide existing condo sales last month rose 8.9 percent over the total units sold in August.
All of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales in September; all but one MSA also showed a gain in condo sales. A majority of the state’s MSAs have reported increased sales for 15 consecutive months.
Florida’s median sales price for existing homes last month was $142,000; a year ago, it was $174,900 for a 19 percent decrease. Housing industry analysts with the National Association of Realtors® (NAR) note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.
The national median sales price for existing single-family homes in August 2009 was $177,500, down 12.1 percent from a year earlier, according to NAR. In Massachusetts, the statewide median resales price was $315,000 in August; in California, it was $292,960; in Maryland, it was $265,862; and in New York, it was $205,000.
NAR’s latest industry outlook notes positive signs in the housing sector, but adds that extension of the federal first-time homebuyer tax credit would help sustain a fragile recovery. “Now that the market is showing some momentum, we have an opportunity to achieve a more rapid and broader stabilization in home prices,” said NAR Chief Economist Lawrence Yun. The outlook for home sales and prices depends on whether the tax credit is extended, he said, describing it as “the best tool in our arsenal to encourage financially qualified buyers to stimulate the economy and help reduce the budget deficit.”
In Florida’s year-to-year comparison for condos, 5,088 units sold statewide last month compared to 2,870 units in September 2008 for a 77 percent increase. The statewide existing condo median sales price last month was $102,500; in September 2008 it was $153,500 for a 33 percent decrease. The national median existing condo price was $179,300 in August 2009, according to NAR.
Interest rates for a 30-year fixed-rate mortgage averaged 5.06 percent last month, a significant drop from the average rate of 6.04 percent in September 2008, according to Freddie Mac. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Among the state’s smaller markets, the Pensacola MSA reported a total of 275 homes sold in September compared to 267 homes a year earlier for a 3 percent increase. The market’s existing home median sales price last month was $135,000; a year ago it was $146,900 for an 8 percent decrease. A total of 48 condos sold in the MSA in September, up 41 percent over the 34 units sold in September 2008. The existing condo median price last month was $190,000; a year earlier, it was $180,000 for a 6 percent gain.
Existing home sales rose 34 percent last month with a total of 14,419 homes sold statewide compared to 10,778 homes sold in September 2008, according to Florida Realtors. Statewide existing home sales last month increased 4.1 percent over statewide sales activity in August.
Florida Realtors also reported a 77 percent increase in statewide sales of existing condos in September compared to the previous year’s sales figure; statewide existing condo sales last month rose 8.9 percent over the total units sold in August.
All of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales in September; all but one MSA also showed a gain in condo sales. A majority of the state’s MSAs have reported increased sales for 15 consecutive months.
Florida’s median sales price for existing homes last month was $142,000; a year ago, it was $174,900 for a 19 percent decrease. Housing industry analysts with the National Association of Realtors® (NAR) note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.
The national median sales price for existing single-family homes in August 2009 was $177,500, down 12.1 percent from a year earlier, according to NAR. In Massachusetts, the statewide median resales price was $315,000 in August; in California, it was $292,960; in Maryland, it was $265,862; and in New York, it was $205,000.
NAR’s latest industry outlook notes positive signs in the housing sector, but adds that extension of the federal first-time homebuyer tax credit would help sustain a fragile recovery. “Now that the market is showing some momentum, we have an opportunity to achieve a more rapid and broader stabilization in home prices,” said NAR Chief Economist Lawrence Yun. The outlook for home sales and prices depends on whether the tax credit is extended, he said, describing it as “the best tool in our arsenal to encourage financially qualified buyers to stimulate the economy and help reduce the budget deficit.”
In Florida’s year-to-year comparison for condos, 5,088 units sold statewide last month compared to 2,870 units in September 2008 for a 77 percent increase. The statewide existing condo median sales price last month was $102,500; in September 2008 it was $153,500 for a 33 percent decrease. The national median existing condo price was $179,300 in August 2009, according to NAR.
Interest rates for a 30-year fixed-rate mortgage averaged 5.06 percent last month, a significant drop from the average rate of 6.04 percent in September 2008, according to Freddie Mac. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Among the state’s smaller markets, the Pensacola MSA reported a total of 275 homes sold in September compared to 267 homes a year earlier for a 3 percent increase. The market’s existing home median sales price last month was $135,000; a year ago it was $146,900 for an 8 percent decrease. A total of 48 condos sold in the MSA in September, up 41 percent over the 34 units sold in September 2008. The existing condo median price last month was $190,000; a year earlier, it was $180,000 for a 6 percent gain.
U.S. Supreme Court: Who owns the beach?
WASHINGTON – Oct. 23, 2009 – On Dec. 2, the United States Supreme Court will hear oral arguments in Stop the Beach Renourishment v. Florida, a national property rights petition. The Orlando firm of GrayRobinson is representing the Coalition for Property Rights (CPR).
GrayRobinson, P.A. attorneys Menelaos Papalas and Sidney Ansbacher filed an amicus curiae brief with the U.S. Supreme Court on behalf of CPR in August 2009. CPR is made up of a small group of beachfront property owners.
The case involves property owners along 6.9 miles of beaches in Walton County and Destin in Okaloosa County. Because their properties border the ocean, CPR claims they have “littoral” rights, which includes the right to benefit from the slow natural process of the beach widening over time. As part of the beach re-nourishment project, which is authorized under Florida’s “Beach and Shore Preservation Act,” the state added sand to the beach because it was “critically eroded.”
Florida then declared that it owns the new stretch of beach, which changes the boundaries of the properties. If the state owns the new stretch of beach, the homeowners’ property boundaries don’t go to the ocean as they once did – they now end on a public beach. Instead of having oceanfront property, they now have what is considered ocean view property. And, as a public beach, the homeowners cannot exclude others from using the now state-owned land.
The case has gained national attention because of the implications it could have on future property rights cases. It will also be the nation’s first glimpse of private property rights decisions made by new Justice Sonia Sotomayor.
“If Florida is permitted to ignore property rights – using the pretext of beach re-nourishment to accomplish its real goal of taking a private beach and turning it public – then other states will follow suit,” says Papalas. “The Court now has the chance to define how it will treat private property rights for years to come.”
GrayRobinson, P.A. attorneys Menelaos Papalas and Sidney Ansbacher filed an amicus curiae brief with the U.S. Supreme Court on behalf of CPR in August 2009. CPR is made up of a small group of beachfront property owners.
The case involves property owners along 6.9 miles of beaches in Walton County and Destin in Okaloosa County. Because their properties border the ocean, CPR claims they have “littoral” rights, which includes the right to benefit from the slow natural process of the beach widening over time. As part of the beach re-nourishment project, which is authorized under Florida’s “Beach and Shore Preservation Act,” the state added sand to the beach because it was “critically eroded.”
Florida then declared that it owns the new stretch of beach, which changes the boundaries of the properties. If the state owns the new stretch of beach, the homeowners’ property boundaries don’t go to the ocean as they once did – they now end on a public beach. Instead of having oceanfront property, they now have what is considered ocean view property. And, as a public beach, the homeowners cannot exclude others from using the now state-owned land.
The case has gained national attention because of the implications it could have on future property rights cases. It will also be the nation’s first glimpse of private property rights decisions made by new Justice Sonia Sotomayor.
“If Florida is permitted to ignore property rights – using the pretext of beach re-nourishment to accomplish its real goal of taking a private beach and turning it public – then other states will follow suit,” says Papalas. “The Court now has the chance to define how it will treat private property rights for years to come.”
Rates on 30-year loans inch up to 5 percent
WASHINGTON – Oct. 23, 2009 – Rates for 30-year home loans have inched up, hitting 5 percent for the first time in nearly a month after bond yields edged up.
The average rate on a 30-year fixed mortgage was 5 percent this week, up from 4.92 percent a week earlier, mortgage company Freddie Mac said Thursday. It was the highest average since the week of Sept. 24, when rates averaged 5.04 percent.
While above the record low of 4.78 percent hit in the spring, rates are still attractive for people looking to buy a home or refinance.
To prop up the housing market and help the economy recover from the worst recession since the 1930s, the Federal Reserve has been engaged in an extraordinary level of support, spending $1.25 trillion on mortgage-backed securities, which has driven down rates on home loans.
Last month, Fed Chairman Ben Bernanke and his colleagues agreed to slow down the pace of the program to buy mortgage securities from Fannie Mae and Freddie Mac. Instead of wrapping up the purchases by the end of this year, the Fed now plans to do so by the end of March.
Despite the government’s effort to support the housing market, qualifying for a loan is still tough. Lenders have tightened their standards dramatically, so the best rates are available to those with solid credit and a 20 percent down payment.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, often in line with long-term Treasury bonds.
The average rate on a 15-year fixed-rate mortgage rose to 4.43 percent, from 4.37 percent last week, according to Freddie Mac.
Rates on five-year, adjustable-rate mortgages averaged 4.4 percent, up from 4.38 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4.54 percent from 4.6 percent.
The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 points for 30-year loans. The fee averaged 0.6 points for 15-year, five-year and one-year loans.
The average rate on a 30-year fixed mortgage was 5 percent this week, up from 4.92 percent a week earlier, mortgage company Freddie Mac said Thursday. It was the highest average since the week of Sept. 24, when rates averaged 5.04 percent.
While above the record low of 4.78 percent hit in the spring, rates are still attractive for people looking to buy a home or refinance.
To prop up the housing market and help the economy recover from the worst recession since the 1930s, the Federal Reserve has been engaged in an extraordinary level of support, spending $1.25 trillion on mortgage-backed securities, which has driven down rates on home loans.
Last month, Fed Chairman Ben Bernanke and his colleagues agreed to slow down the pace of the program to buy mortgage securities from Fannie Mae and Freddie Mac. Instead of wrapping up the purchases by the end of this year, the Fed now plans to do so by the end of March.
Despite the government’s effort to support the housing market, qualifying for a loan is still tough. Lenders have tightened their standards dramatically, so the best rates are available to those with solid credit and a 20 percent down payment.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, often in line with long-term Treasury bonds.
The average rate on a 15-year fixed-rate mortgage rose to 4.43 percent, from 4.37 percent last week, according to Freddie Mac.
Rates on five-year, adjustable-rate mortgages averaged 4.4 percent, up from 4.38 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4.54 percent from 4.6 percent.
The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 points for 30-year loans. The fee averaged 0.6 points for 15-year, five-year and one-year loans.
Obama announces plan to boost small businesses
WASHINGTON – Oct. 23, 2009 – President Barack Obama announced new small-business lending initiatives Wednesday that aim to expand loan amounts and make more capital available to small banks.
Small businesses fuel the economy and have been hardest hit by the recession, losing 2.4 million jobs from the middle of 2007 to the end of 2008, Obama said at Metropolitan Archives, a family-owned small business in Landover, Md., that has been able to expand with an SBA loan. Obama said that since the American Recovery and Reinvestment Act was enacted in February, it has helped provide some small-business relief, but too little credit is flowing to small businesses.
Obama will ask Congress to increase the top limits on Small Business Administration loans. The loans for standard small-business borrowers would go from $2 million to $5 million, and to $5.5 million for manufacturers. The size of the SBA’s Microloan would increase from $35,000 to $50,000.
Obama also wants to provide lower-cost capital to community banks, credit unions and community development financial institutions. And he’s asked the Treasury Department and SBA to confer with Congress members, lenders and small-business leaders to determine additional steps to help businesses.
As small businesses try to make their way out of the recession, Obama’s proposal will be helpful, says Todd McCracken, president of the National Small Business Association.
McCracken and others are uncertain how many small-business lenders would accept the cheaper capital if it comes with strings attached because the source of the funding is the Troubled Asset Relief Program.
Although many small-business and banking experts support Obama’s proposal, some say it doesn’t do enough to help community banks and credit unions, which are the mainstay of small businesses.
“The administration can and should go further in allowing more credit union access in making business credit available,” said the Credit Union National Association in a statement.
Further discussions among the groups involved would be beneficial, McCracken says.
“There haven’t been many opportunities for those people, who are key to making it work, to get together at one time and hash it out,” McCracken says. “It’s a really good idea if it can be done very soon, and it can let us roll up our sleeves and get to work.”
Small businesses fuel the economy and have been hardest hit by the recession, losing 2.4 million jobs from the middle of 2007 to the end of 2008, Obama said at Metropolitan Archives, a family-owned small business in Landover, Md., that has been able to expand with an SBA loan. Obama said that since the American Recovery and Reinvestment Act was enacted in February, it has helped provide some small-business relief, but too little credit is flowing to small businesses.
Obama will ask Congress to increase the top limits on Small Business Administration loans. The loans for standard small-business borrowers would go from $2 million to $5 million, and to $5.5 million for manufacturers. The size of the SBA’s Microloan would increase from $35,000 to $50,000.
Obama also wants to provide lower-cost capital to community banks, credit unions and community development financial institutions. And he’s asked the Treasury Department and SBA to confer with Congress members, lenders and small-business leaders to determine additional steps to help businesses.
As small businesses try to make their way out of the recession, Obama’s proposal will be helpful, says Todd McCracken, president of the National Small Business Association.
McCracken and others are uncertain how many small-business lenders would accept the cheaper capital if it comes with strings attached because the source of the funding is the Troubled Asset Relief Program.
Although many small-business and banking experts support Obama’s proposal, some say it doesn’t do enough to help community banks and credit unions, which are the mainstay of small businesses.
“The administration can and should go further in allowing more credit union access in making business credit available,” said the Credit Union National Association in a statement.
Further discussions among the groups involved would be beneficial, McCracken says.
“There haven’t been many opportunities for those people, who are key to making it work, to get together at one time and hash it out,” McCracken says. “It’s a really good idea if it can be done very soon, and it can let us roll up our sleeves and get to work.”
Monday, September 28, 2009
How to beat the $8K tax credit deadline
CHICAGO – Sept. 28, 2009 – It’s not too late for a determined first-time home buyer to take advantage of the $8,000 federal tax credit, which expires Nov. 30.
Scott Voak, a San Diego practitioner specializing in first-time buyers, helps potential buyers target homes that can close quickly. To identify those properties without touring them, he suggests contacting the listing agent with blunt but important questions that aren’t usually addressed in the listing. These can include:
• Is there mold?
• Does the home need extensive repairs?
• Does the home have aging systems or appliances?
• Are there any troublesome neighbors?
Buyers should factor in these questions before making an offer:
• How long has the property been on the market?
• Have there been any price reductions?
• Are there any offers written on the property?
• Do the home owners need to move by a specific date?
Other recommendations include:
• Provide buyers with as much information about financing as possible.
• Encourage buyers to begin the process right away.
• Make sure buyers understand who is responsible for closing costs.
Scott Voak, a San Diego practitioner specializing in first-time buyers, helps potential buyers target homes that can close quickly. To identify those properties without touring them, he suggests contacting the listing agent with blunt but important questions that aren’t usually addressed in the listing. These can include:
• Is there mold?
• Does the home need extensive repairs?
• Does the home have aging systems or appliances?
• Are there any troublesome neighbors?
Buyers should factor in these questions before making an offer:
• How long has the property been on the market?
• Have there been any price reductions?
• Are there any offers written on the property?
• Do the home owners need to move by a specific date?
Other recommendations include:
• Provide buyers with as much information about financing as possible.
• Encourage buyers to begin the process right away.
• Make sure buyers understand who is responsible for closing costs.
New U.S. home sales rise 0.7 percent in August
WASHINGTON (AP) – Sept. 25, 2009 – New U.S. home sales posted a tepid 0.7 percent increase last month, missing Wall Street expectations and providing more evidence that the housing market recovery remains tentative.
The Commerce Department said Friday sales inched up to a seasonally adjusted annual rate of 429,000 from a downwardly revised 426,000 in July. Economists surveyed by Thomson Reuters had expected a pace of 440,000.
While it was the fifth straight increase and the strongest report in 11 months, sales were 4.3 percent lower than the same month last year. Sales have risen 30 percent from the bottom in January, but are off about 70 percent from the peak of four years ago.
The report was the second straight disappointing sign for the U.S. housing market, which is struggling to emerge from the most severe bust in generations. On Thursday, the National Association of Realtors said sales of previously occupied homes, which make up the bulk of the market, dipped 2.7 percent last month.
While August’s housing reports have been disappointing, “we believe both remain on an upward trend,” wrote David Resler, chief economist with Nomura Securities.
Builders continue to make severe cuts in prices to attract buyers. The median sales price of $195,200 was off 11.7 percent from $221,000 a year earlier, and 9.5 percent below July’s level of $215,600. That was the largest monthly drop on records dating to 1963.
There were 262,000 new homes for sale at the end of August, down more than 3 percent from July and the lowest in nearly 17 years. At the current sales pace, that represents 7.3 months of supply – the smallest amount since early 2007. The decline means builders have scaled back construction to the point where supply and demand are coming into balance.
Still, it’s taking more than a year to sell the homes on the market.
“No one ever said that the homebuilders were breaking out the bubbly and party hats and doing the cha-cha around town,” wrote Jennifer Lee, economist with BMO Capital Markets.
Buyers, meanwhile, are rushing to take advantage of a federal tax credit that covers 10 percent of the home price, or up to $8,000 for first-time owners. Home sales must be completed by the end of November for buyers to qualify. Builders and real estate agents are pressing Congress for that credit to be extended.
Sales varied dramatically around the country. The best performance was in the West, where sales rose more than 12 percent, and the worst was in the Northeast, where sales sank more than 16 percent. They were unchanged in the South, and down nearly 6 percent in the Midwest.
Meanwhile, KB Home posted a smaller third-quarter loss of $66 million on Friday as new home orders increased and the builder cut costs. Though the results missed analysts’ expectations, KB Home said its new orders jumped 62 percent in the third quarter from the year before, with every region showing annual growth.
And fewer homebuyers backed out. The company’s cancellation rate dropped to 27 percent during the quarter, compared with 51 percent a year ago.
The Commerce Department said Friday sales inched up to a seasonally adjusted annual rate of 429,000 from a downwardly revised 426,000 in July. Economists surveyed by Thomson Reuters had expected a pace of 440,000.
While it was the fifth straight increase and the strongest report in 11 months, sales were 4.3 percent lower than the same month last year. Sales have risen 30 percent from the bottom in January, but are off about 70 percent from the peak of four years ago.
The report was the second straight disappointing sign for the U.S. housing market, which is struggling to emerge from the most severe bust in generations. On Thursday, the National Association of Realtors said sales of previously occupied homes, which make up the bulk of the market, dipped 2.7 percent last month.
While August’s housing reports have been disappointing, “we believe both remain on an upward trend,” wrote David Resler, chief economist with Nomura Securities.
Builders continue to make severe cuts in prices to attract buyers. The median sales price of $195,200 was off 11.7 percent from $221,000 a year earlier, and 9.5 percent below July’s level of $215,600. That was the largest monthly drop on records dating to 1963.
There were 262,000 new homes for sale at the end of August, down more than 3 percent from July and the lowest in nearly 17 years. At the current sales pace, that represents 7.3 months of supply – the smallest amount since early 2007. The decline means builders have scaled back construction to the point where supply and demand are coming into balance.
Still, it’s taking more than a year to sell the homes on the market.
“No one ever said that the homebuilders were breaking out the bubbly and party hats and doing the cha-cha around town,” wrote Jennifer Lee, economist with BMO Capital Markets.
Buyers, meanwhile, are rushing to take advantage of a federal tax credit that covers 10 percent of the home price, or up to $8,000 for first-time owners. Home sales must be completed by the end of November for buyers to qualify. Builders and real estate agents are pressing Congress for that credit to be extended.
Sales varied dramatically around the country. The best performance was in the West, where sales rose more than 12 percent, and the worst was in the Northeast, where sales sank more than 16 percent. They were unchanged in the South, and down nearly 6 percent in the Midwest.
Meanwhile, KB Home posted a smaller third-quarter loss of $66 million on Friday as new home orders increased and the builder cut costs. Though the results missed analysts’ expectations, KB Home said its new orders jumped 62 percent in the third quarter from the year before, with every region showing annual growth.
And fewer homebuyers backed out. The company’s cancellation rate dropped to 27 percent during the quarter, compared with 51 percent a year ago.
Foreign-born population dips in South Florida
MIAMI – Sept. 23, 2009 – The immigration-fueled population engine that for decades has powered Miami-Dade County’s growth is sputtering, new estimates from the U.S. Census Bureau suggest.
The county’s population, which in recent years had grown by as much as 20,000 annually, stood at just below 2.4 million in 2008, effectively little changed since 2006, according to data from the annual American Community Survey, released Tuesday.
During that period, the number of Miami-Dade’s foreign-born residents dipped, driving down the foreign-born proportion of the county’s population from just above 50 percent in 2007 to just below that in 2008, the last year for which survey data is available.
The number of foreign-born residents also fell somewhat in Broward County, which has also experienced a drop of about 35,000 in its overall population since 2006, according to the survey.
Nationally, while the country’s population continues growing, the proportion of foreign-born U.S. residents – both legal and not – also declined slightly, by one-tenth of one percent. The country’s immigrant population in 2008 stood at just below 38 million, or 12.5 percent of the total U.S. population, the survey found.
The trend in the immigrant population, which had increased rapidly when the nation’s economy was booming, supports anecdotal evidence that immigration into the country has slowed significantly – and perhaps gone into reverse. Several recent studies have suggested that many immigrants, in particular those without legal status or secure jobs, have gone home.
“It’s too early to tell whether it’s the start of a trend or a one-time thing related to the recession,” said Scott Boggess, an American Community Survey statistician.
While small, the dip in Miami-Dade’s foreign-born population represents a marked reversal of long-standing, pre-recession trends that transformed the county. The county’s explosive population growth was fed primarily by immigration from Latin America and the Caribbean, in particular Cuba, as more native-born Americans left the county than moved into it.
But the slowdown in immigration, should it persist, could have significant implications for Miami-Dade’s economy, which has been driven in large part by residential and commercial real estate development dependent on population growth.
While Broward has not been the immigration magnet Miami-Dade has been, its foreign-born residents made up a significant 30.4 percent of the county population in 2007 before falling back to 29.6 percent in 2008. A substantial number of the county’s foreign-born residents are immigrants who moved to Broward’s suburbs from Miami-Dade. Many English-speaking Caribbean immigrants have also settled directly in Broward.
The estimates show a small decline for Florida’s foreign-born population, from slightly more than 3.4 million in 2007 to just under that number in 2008 – though immigrants remained essentially flat as a proportion of the total state population.
Because the ACS data is from 2008, it doesn’t reflect an overall drop in the state population that a recent University of Florida study concluded occurred between 2008 and 2009.
But the decline in immigrants was not uniform across Florida, noted Dario Gonzalez, a demographer at Florida International University’s Metropolitan Center.
“Some smaller counties are continuing to get increases in the foreign-born,” Gonzalez said, pointing to Polk, Volusia and Lake counties in Central Florida.
An analysis of the data by the Associated Press shows that about half of U.S. states showed declines in immigrant populations from 2007 to 2008. Some major metro areas also posted decreases, including Los Angeles, Phoenix, Detroit and Tampa, the AP found.
The ACS, which is based on Census Bureau surveys of about 250,000 households per month, has taken the place of long-form survey in the decennial census, which asked detailed economic and social questions. The survey estimates, which cover a gamut of demographic and social characteristics, is available on the U.S. Census website, www.census.gov.
ACS survey data on family income and poverty will be released next week because of a data-processing glitch that delayed its release with the other information.
Copyright © 2009 The Miami Herald, Andres Viglucci. Distributed by McClatchy-Tribune Information Services.
The county’s population, which in recent years had grown by as much as 20,000 annually, stood at just below 2.4 million in 2008, effectively little changed since 2006, according to data from the annual American Community Survey, released Tuesday.
During that period, the number of Miami-Dade’s foreign-born residents dipped, driving down the foreign-born proportion of the county’s population from just above 50 percent in 2007 to just below that in 2008, the last year for which survey data is available.
The number of foreign-born residents also fell somewhat in Broward County, which has also experienced a drop of about 35,000 in its overall population since 2006, according to the survey.
Nationally, while the country’s population continues growing, the proportion of foreign-born U.S. residents – both legal and not – also declined slightly, by one-tenth of one percent. The country’s immigrant population in 2008 stood at just below 38 million, or 12.5 percent of the total U.S. population, the survey found.
The trend in the immigrant population, which had increased rapidly when the nation’s economy was booming, supports anecdotal evidence that immigration into the country has slowed significantly – and perhaps gone into reverse. Several recent studies have suggested that many immigrants, in particular those without legal status or secure jobs, have gone home.
“It’s too early to tell whether it’s the start of a trend or a one-time thing related to the recession,” said Scott Boggess, an American Community Survey statistician.
While small, the dip in Miami-Dade’s foreign-born population represents a marked reversal of long-standing, pre-recession trends that transformed the county. The county’s explosive population growth was fed primarily by immigration from Latin America and the Caribbean, in particular Cuba, as more native-born Americans left the county than moved into it.
But the slowdown in immigration, should it persist, could have significant implications for Miami-Dade’s economy, which has been driven in large part by residential and commercial real estate development dependent on population growth.
While Broward has not been the immigration magnet Miami-Dade has been, its foreign-born residents made up a significant 30.4 percent of the county population in 2007 before falling back to 29.6 percent in 2008. A substantial number of the county’s foreign-born residents are immigrants who moved to Broward’s suburbs from Miami-Dade. Many English-speaking Caribbean immigrants have also settled directly in Broward.
The estimates show a small decline for Florida’s foreign-born population, from slightly more than 3.4 million in 2007 to just under that number in 2008 – though immigrants remained essentially flat as a proportion of the total state population.
Because the ACS data is from 2008, it doesn’t reflect an overall drop in the state population that a recent University of Florida study concluded occurred between 2008 and 2009.
But the decline in immigrants was not uniform across Florida, noted Dario Gonzalez, a demographer at Florida International University’s Metropolitan Center.
“Some smaller counties are continuing to get increases in the foreign-born,” Gonzalez said, pointing to Polk, Volusia and Lake counties in Central Florida.
An analysis of the data by the Associated Press shows that about half of U.S. states showed declines in immigrant populations from 2007 to 2008. Some major metro areas also posted decreases, including Los Angeles, Phoenix, Detroit and Tampa, the AP found.
The ACS, which is based on Census Bureau surveys of about 250,000 households per month, has taken the place of long-form survey in the decennial census, which asked detailed economic and social questions. The survey estimates, which cover a gamut of demographic and social characteristics, is available on the U.S. Census website, www.census.gov.
ACS survey data on family income and poverty will be released next week because of a data-processing glitch that delayed its release with the other information.
Copyright © 2009 The Miami Herald, Andres Viglucci. Distributed by McClatchy-Tribune Information Services.
Fed all but declares recession over
WASHINGTON – Sept. 24, 2009 – The Federal Reserve provided its most upbeat assessment yet of the economy on Wednesday, suggesting the recession is over and growth could be more robust than it previously anticipated.
But noting the economy is still relatively weak, the central bank agreed to keep a key interest rate unchanged near zero and extended its financial support for the housing market until the end of the first quarter.
“Economic activity has picked up following its severe downturn,” the Fed said after its two-day meeting.
Translation? “The downturn is over,” says Allen Sinai, chief economist of Decision Economics.
That echoes Fed Chairman Ben Bernanke’s remarks last week that the recession is likely history. The housing market is ticking up and household spending is stabilizing, the Fed said, adding it expects its policies to “support a strengthening of economic growth.”
Sinai says the more bullish language signals the Fed will likely upgrade its third-quarter growth estimate to more than 3 percent, in line with many economists.
But the central bank added consumer spending “remains constrained by ongoing job losses” and “tight credit,” among other obstacles. The Fed had planned to complete purchases of up to $1.25 trillion of mortgage-backed securities and another $200 billion in mortgage-related debt by year’s end. The initiative has lowered mortgage rates. On Wednesday, the central bank said it would buy a total of $1.25 trillion by March 31.
“I think that’s very significant” because it shows the Fed believes mortgage markets still need government support, says economist Conrad DeQuadros of RDQ Economics.
Stretching out the program, he says, ensures a smoother transition to more robust private lending.
But the maneuver also means that the Fed is slowing down its purchases amid less constrained mortgage lending, says Bruce McCain, chief investment strategist at Key Private Bank.
The Fed apparently believes mortgage markets should return to normal by spring, Sinai says.
Similarly, it agreed in August to extend its purchases of $300 billion in Treasury securities by a month until the end of October.
With factories running at less than 70 percent capacity, the Fed said Wednesday it’s not worried about rising prices, adding “inflation will remain subdued for some time.”
In turn, it reiterated that interest rates will likely stay low “for an extended period.”
But noting the economy is still relatively weak, the central bank agreed to keep a key interest rate unchanged near zero and extended its financial support for the housing market until the end of the first quarter.
“Economic activity has picked up following its severe downturn,” the Fed said after its two-day meeting.
Translation? “The downturn is over,” says Allen Sinai, chief economist of Decision Economics.
That echoes Fed Chairman Ben Bernanke’s remarks last week that the recession is likely history. The housing market is ticking up and household spending is stabilizing, the Fed said, adding it expects its policies to “support a strengthening of economic growth.”
Sinai says the more bullish language signals the Fed will likely upgrade its third-quarter growth estimate to more than 3 percent, in line with many economists.
But the central bank added consumer spending “remains constrained by ongoing job losses” and “tight credit,” among other obstacles. The Fed had planned to complete purchases of up to $1.25 trillion of mortgage-backed securities and another $200 billion in mortgage-related debt by year’s end. The initiative has lowered mortgage rates. On Wednesday, the central bank said it would buy a total of $1.25 trillion by March 31.
“I think that’s very significant” because it shows the Fed believes mortgage markets still need government support, says economist Conrad DeQuadros of RDQ Economics.
Stretching out the program, he says, ensures a smoother transition to more robust private lending.
But the maneuver also means that the Fed is slowing down its purchases amid less constrained mortgage lending, says Bruce McCain, chief investment strategist at Key Private Bank.
The Fed apparently believes mortgage markets should return to normal by spring, Sinai says.
Similarly, it agreed in August to extend its purchases of $300 billion in Treasury securities by a month until the end of October.
With factories running at less than 70 percent capacity, the Fed said Wednesday it’s not worried about rising prices, adding “inflation will remain subdued for some time.”
In turn, it reiterated that interest rates will likely stay low “for an extended period.”
$1 million going further in many housing markets
SOUTH FLORIDA – Sept. 28, 2009 – A million dollars doesn’t buy you what it once did. In most U.S. neighborhoods, it now gets you a lot more.
During the housing boom, prices rose so high and so fast that even cookie-cutter homes in the paved suburbs of South Florida and California could cost a cool million. In Santa Clara, Calif., a high-tech hot spot, the median price hit $836,780 in 2007.
That was a long way from the days when a million-dollar home evoked images of marble columns and swimming pools with vanishing edges. Subprime loans allowed more people than ever to buy houses that were once above their means. Higher demand fueled ever-higher prices until the spigot of cheap money was turned off and the housing bubble burst. The recession forced many well-heeled buyers into unemployment lines. And sales of homes over $1 million cratered by more than 50 percent from the peak four years ago.
“Everyone has less money than they once had,” said Amy Wright, an agent with The Real Estate Office in Rancho Santa Fe, Calif. “That has certainly affected the nouveau riche, and that’s definitely in that $1 million price point.”
For people who do have the money, however, it’s the best time in years to buy luxury real estate.
Rancho Santa Fe is a luxury enclave in San Diego County that has over the years lured the likes of Howard Hughes and Bill Gates. Equestrian trails border golf courses, and the most expensive home on the market is listed for $29.9 million.
A couple of years ago, the idea of getting a house in Rancho Santa Fe for a paltry $1 million was laughable. Now, foreclosures and financially distressed homeowners account for about 15 percent of sales, and home prices are down 30 percent.
In one golf-course community in the town, a 2,200-square-foot home is listed for $800,000. Residents live in a gated community where Spanish style homes surround a 250-acre Rees Jones-designed golf course and an accompanying 35,000-square foot clubhouse.
In the 20 largest U.S. metro areas, about 2,800 homes sold for more than $1 million in July – down by more than half from July 2005, according to MDA DataQuick. Nationwide, overall home sales were down about 27 percent, according to the National Association of Realtors.
In the month of August, sellers with homes priced above $2 million were cutting prices by an average of 14 percent, compared with the national average of 10 percent, according to Trulia.com.
The good news for luxury homebuyers is that they’re getting about 20 percent “more house” than they did two years ago, and the prestige of owning a $1 million home is returning, said John Brian Losh, CEO of luxuryrealestate.com.
That is, if they can afford the payments.
On Friday, the average interest rate for a 30-year “jumbo loan” (defined as a mortgage over $729,750) was 6.18 percent – about a point higher than a conventional fixed-rate mortgage, according to Bankrate.com. That means the mortgage payment for a $1 million home (with a down payment of 20 percent) would run about $4,900 a month, not including property taxes.
A buyer would have to earn at least $200,000 a year to make the payment plus taxes – and only about 4 percent of Americans fall into that tax bracket, 2007 Census data shows.
In Fort Myers, Fla., Pat and Dennis Tyeryar are trying to sell their four-bedroom, 3,795-square-foot house on three acres for $999,700. The property is a rare slice of lush Old Florida, with moss cascading off shade trees and views of a river and lagoon.
The property, valued at $1.4 million four years ago, is unique for the area because it sits on a peninsula: Every room in the house has a water view.
So far, no offers.
In a recession-battered place like Saginaw, Mich., however, a person can scoop up almost 18 houses for $1 million. Or, a buyer can get a 6,360-square-foot, two-story brick palace that sits on a five-acre estate.
The house is priced at $995,000. It has an indoor swimming pool and six bedrooms, but the property has been a hard sell in a market where a 2,300-square-foot home can go for $160,000, real estate agent Bruce Shaw said.
Shaw said the home would have been listed for about $1.3 million during the boom.
“It’s not like I get a lot of calls on it, not unless someone is moving from Southern California,” he said.
In Toledo, Ohio, agent Nancy Kabat has two listings that add up to $1 million – a six-bedroom, $635,000 house in suburban Ottawa Hills, and a three-story, two-bedroom condo on the Maumee River for $360,000.
The house has detailed crown molding and a renovated kitchen with granite countertops. It’s also near good schools. The condo has a view of Toledo’s landmark Anthony Wayne Bridge and is a short ride to an area with upscale restaurants and a vibrant nightlife.
“You could have a house in the suburbs for the winter and have a condo on the river in the summer and use your boat,” Kabat said.
If that approach doesn’t work, a buyer can pursue a three-bedroom, Mediterranean-style home in Toledo for $969,177, according to realtor.com. The 4,800-square-foot property was built in 2007 and has a three-car garage and upscale kitchen appliances like a stainless steel refrigerator and a dual-temperature wine cooler.
“We don’t have that many million dollar houses here, so it seems that they’re holding their value,” said Betty Lazzaro, an agent with Sulfur Springs Realty Inc.
During the housing boom, prices rose so high and so fast that even cookie-cutter homes in the paved suburbs of South Florida and California could cost a cool million. In Santa Clara, Calif., a high-tech hot spot, the median price hit $836,780 in 2007.
That was a long way from the days when a million-dollar home evoked images of marble columns and swimming pools with vanishing edges. Subprime loans allowed more people than ever to buy houses that were once above their means. Higher demand fueled ever-higher prices until the spigot of cheap money was turned off and the housing bubble burst. The recession forced many well-heeled buyers into unemployment lines. And sales of homes over $1 million cratered by more than 50 percent from the peak four years ago.
“Everyone has less money than they once had,” said Amy Wright, an agent with The Real Estate Office in Rancho Santa Fe, Calif. “That has certainly affected the nouveau riche, and that’s definitely in that $1 million price point.”
For people who do have the money, however, it’s the best time in years to buy luxury real estate.
Rancho Santa Fe is a luxury enclave in San Diego County that has over the years lured the likes of Howard Hughes and Bill Gates. Equestrian trails border golf courses, and the most expensive home on the market is listed for $29.9 million.
A couple of years ago, the idea of getting a house in Rancho Santa Fe for a paltry $1 million was laughable. Now, foreclosures and financially distressed homeowners account for about 15 percent of sales, and home prices are down 30 percent.
In one golf-course community in the town, a 2,200-square-foot home is listed for $800,000. Residents live in a gated community where Spanish style homes surround a 250-acre Rees Jones-designed golf course and an accompanying 35,000-square foot clubhouse.
In the 20 largest U.S. metro areas, about 2,800 homes sold for more than $1 million in July – down by more than half from July 2005, according to MDA DataQuick. Nationwide, overall home sales were down about 27 percent, according to the National Association of Realtors.
In the month of August, sellers with homes priced above $2 million were cutting prices by an average of 14 percent, compared with the national average of 10 percent, according to Trulia.com.
The good news for luxury homebuyers is that they’re getting about 20 percent “more house” than they did two years ago, and the prestige of owning a $1 million home is returning, said John Brian Losh, CEO of luxuryrealestate.com.
That is, if they can afford the payments.
On Friday, the average interest rate for a 30-year “jumbo loan” (defined as a mortgage over $729,750) was 6.18 percent – about a point higher than a conventional fixed-rate mortgage, according to Bankrate.com. That means the mortgage payment for a $1 million home (with a down payment of 20 percent) would run about $4,900 a month, not including property taxes.
A buyer would have to earn at least $200,000 a year to make the payment plus taxes – and only about 4 percent of Americans fall into that tax bracket, 2007 Census data shows.
In Fort Myers, Fla., Pat and Dennis Tyeryar are trying to sell their four-bedroom, 3,795-square-foot house on three acres for $999,700. The property is a rare slice of lush Old Florida, with moss cascading off shade trees and views of a river and lagoon.
The property, valued at $1.4 million four years ago, is unique for the area because it sits on a peninsula: Every room in the house has a water view.
So far, no offers.
In a recession-battered place like Saginaw, Mich., however, a person can scoop up almost 18 houses for $1 million. Or, a buyer can get a 6,360-square-foot, two-story brick palace that sits on a five-acre estate.
The house is priced at $995,000. It has an indoor swimming pool and six bedrooms, but the property has been a hard sell in a market where a 2,300-square-foot home can go for $160,000, real estate agent Bruce Shaw said.
Shaw said the home would have been listed for about $1.3 million during the boom.
“It’s not like I get a lot of calls on it, not unless someone is moving from Southern California,” he said.
In Toledo, Ohio, agent Nancy Kabat has two listings that add up to $1 million – a six-bedroom, $635,000 house in suburban Ottawa Hills, and a three-story, two-bedroom condo on the Maumee River for $360,000.
The house has detailed crown molding and a renovated kitchen with granite countertops. It’s also near good schools. The condo has a view of Toledo’s landmark Anthony Wayne Bridge and is a short ride to an area with upscale restaurants and a vibrant nightlife.
“You could have a house in the suburbs for the winter and have a condo on the river in the summer and use your boat,” Kabat said.
If that approach doesn’t work, a buyer can pursue a three-bedroom, Mediterranean-style home in Toledo for $969,177, according to realtor.com. The 4,800-square-foot property was built in 2007 and has a three-car garage and upscale kitchen appliances like a stainless steel refrigerator and a dual-temperature wine cooler.
“We don’t have that many million dollar houses here, so it seems that they’re holding their value,” said Betty Lazzaro, an agent with Sulfur Springs Realty Inc.
U.S. Census: Floridians drive more, earn less
TALLAHASSEE, Fla. – Sept. 23, 2009 – Floridians drive more, earn less and pay about the same percentage in property taxes as residents of other states, according to the U.S. Census Bureau’s latest compendium of data. The bureau released the 2008 American Community Survey, a massive annual compilation of demographic and financial information, on Tuesday.
Among its findings: Florida’s property taxes are lower as a percentage of home value than the national median. Of nearly 788 counties surveyed, for example, Broward County ranked 330th in the nation in 2008 with a property tax rate equal to 1 percent of home value – identical to that of half the U.S. counties. That translates to $2,641, according to an analysis of the Census Bureau data by The Tax Foundation, a D.C.-based group.
Overall, the top 10 counties for high property taxes were in New York, with the majority of high tax states also clustered in the Northeast.
“In the county rankings, there has been little change from the 2007 numbers, where the Northeast – specifically New York and New Jersey – dominated the highest-taxed counties,” says Gerald Prante, senior economist for the Tax Foundation.
With a median household income of $47,778 in 2008, Florida ranked 34th among U.S. states and the District of Columbia in annual income. The median household income in the U.S. is $52,209.
Florida’s reliance on service employment is partially responsible for the low ranking. The state has the fourth highest service employment rate in the country while ranking 46 among states for professional level employment. In total, five states — Arizona, California, Florida, Indiana and Michigan — saw real median household income fall between 2007 and 2008. That compares to only one state between 2006 and 2007.
On the home front, Florida ranked 20th in median home value in 2008, with half the homes valued at less than $218,700, compared to $197,600 for the U.S. as a whole. Half of Florida homeowners pay at least $1,603 a month in mortgage and escrow payments, which is higher than the median U.S. monthly outlay of $1,514.
Higher home prices and lower median income combine to make it relatively more expensive for Floridians to own homes. Among mortgage holders, 49 percent of Floridians spend more than 30 percent of their monthly income on housing – the third highest rate in the country.
Other findings include:
• Floridians commute 25.8 minutes a day on average to get to work, or slightly more than their U.S. peers. North Dakota workers had the least commute time, traveling less than 15 minutes to their jobs.
• Nearly 38 percent of Florida grandparents are responsible for the welfare of their grandchildren compared to 41 percent of all U.S. residents.
• More than one in five Floridians speak a language other than English in their homes, the eighth highest percentage among American states.
Source: News Service of Florida, Michael Peltier
Among its findings: Florida’s property taxes are lower as a percentage of home value than the national median. Of nearly 788 counties surveyed, for example, Broward County ranked 330th in the nation in 2008 with a property tax rate equal to 1 percent of home value – identical to that of half the U.S. counties. That translates to $2,641, according to an analysis of the Census Bureau data by The Tax Foundation, a D.C.-based group.
Overall, the top 10 counties for high property taxes were in New York, with the majority of high tax states also clustered in the Northeast.
“In the county rankings, there has been little change from the 2007 numbers, where the Northeast – specifically New York and New Jersey – dominated the highest-taxed counties,” says Gerald Prante, senior economist for the Tax Foundation.
With a median household income of $47,778 in 2008, Florida ranked 34th among U.S. states and the District of Columbia in annual income. The median household income in the U.S. is $52,209.
Florida’s reliance on service employment is partially responsible for the low ranking. The state has the fourth highest service employment rate in the country while ranking 46 among states for professional level employment. In total, five states — Arizona, California, Florida, Indiana and Michigan — saw real median household income fall between 2007 and 2008. That compares to only one state between 2006 and 2007.
On the home front, Florida ranked 20th in median home value in 2008, with half the homes valued at less than $218,700, compared to $197,600 for the U.S. as a whole. Half of Florida homeowners pay at least $1,603 a month in mortgage and escrow payments, which is higher than the median U.S. monthly outlay of $1,514.
Higher home prices and lower median income combine to make it relatively more expensive for Floridians to own homes. Among mortgage holders, 49 percent of Floridians spend more than 30 percent of their monthly income on housing – the third highest rate in the country.
Other findings include:
• Floridians commute 25.8 minutes a day on average to get to work, or slightly more than their U.S. peers. North Dakota workers had the least commute time, traveling less than 15 minutes to their jobs.
• Nearly 38 percent of Florida grandparents are responsible for the welfare of their grandchildren compared to 41 percent of all U.S. residents.
• More than one in five Floridians speak a language other than English in their homes, the eighth highest percentage among American states.
Source: News Service of Florida, Michael Peltier
Rates on 30-year loans remain at 5.04 percent
Mortgage Rate Trend Index
This week, industry experts polled by Bankrate.com say, “Rates aren’t going anywhere soon.” A strong majority of the panelists (69 percent) believe mortgage rates will remain relatively unchanged over the next 35 to 45 days. The rest are almost evenly split among those who think rates will rise (15 percent) and those who predict they will fall (16 percent).
WASHINGTON – Sept. 25, 2009 – Rates for 30-year home loans were unchanged this week and remain close to record-low levels.
The average rate for a 30-year fixed mortgage was 5.04 percent, the same as a week earlier, mortgage company Freddie Mac said Thursday.
Rates, while above the record low of 4.78 percent hit in the spring, are still attractive for people looking to buy a home or refinance. Applications for home loans rose nearly 13 percent last week from a week earlier as refinancing applications surged, the Mortgage Bankers Association said Wednesday.
With the economy on the mend, the Federal Reserve decided Wednesday to stretch out the pace of a program that has lowered mortgage rates and propped up the housing market this year.
The central bank now plans to reach its goal of buying $1.45 trillion in mortgage-backed securities and debt by the end of March, rather than by the end of this year as originally scheduled. Analysts say mortgage rates should remain low for now but could eventually head higher, and homeowners who want to refinance mortgages shouldn’t delay.
The Fed’s move is designed to buy more time for the housing and mortgage markets to recover. The Fed “is betting that conditions should be improved by the second quarter of 2010, and therefore it makes sense to stretch out the timetable for supporting the mortgage markets,” Brian Bethune, chief U.S. economist at IHS Global Insight wrote Wednesday.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.
The average rate on a 15-year fixed-rate mortgage fell to 4.46 percent from 4.47 percent last week, according to Freddie Mac. That was the lowest level on records dating to 1991.
Rates on five-year, adjustable-rate mortgages averaged 4.51 percent, unchanged from a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4.52 percent from 4.58 percent.
The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac’s survey averaged 0.6 point for 30-year, 15-year and one-year loans. The fee averaged 0.5 point for five-year mortgages.
This week, industry experts polled by Bankrate.com say, “Rates aren’t going anywhere soon.” A strong majority of the panelists (69 percent) believe mortgage rates will remain relatively unchanged over the next 35 to 45 days. The rest are almost evenly split among those who think rates will rise (15 percent) and those who predict they will fall (16 percent).
WASHINGTON – Sept. 25, 2009 – Rates for 30-year home loans were unchanged this week and remain close to record-low levels.
The average rate for a 30-year fixed mortgage was 5.04 percent, the same as a week earlier, mortgage company Freddie Mac said Thursday.
Rates, while above the record low of 4.78 percent hit in the spring, are still attractive for people looking to buy a home or refinance. Applications for home loans rose nearly 13 percent last week from a week earlier as refinancing applications surged, the Mortgage Bankers Association said Wednesday.
With the economy on the mend, the Federal Reserve decided Wednesday to stretch out the pace of a program that has lowered mortgage rates and propped up the housing market this year.
The central bank now plans to reach its goal of buying $1.45 trillion in mortgage-backed securities and debt by the end of March, rather than by the end of this year as originally scheduled. Analysts say mortgage rates should remain low for now but could eventually head higher, and homeowners who want to refinance mortgages shouldn’t delay.
The Fed’s move is designed to buy more time for the housing and mortgage markets to recover. The Fed “is betting that conditions should be improved by the second quarter of 2010, and therefore it makes sense to stretch out the timetable for supporting the mortgage markets,” Brian Bethune, chief U.S. economist at IHS Global Insight wrote Wednesday.
Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.
The average rate on a 15-year fixed-rate mortgage fell to 4.46 percent from 4.47 percent last week, according to Freddie Mac. That was the lowest level on records dating to 1991.
Rates on five-year, adjustable-rate mortgages averaged 4.51 percent, unchanged from a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4.52 percent from 4.58 percent.
The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac’s survey averaged 0.6 point for 30-year, 15-year and one-year loans. The fee averaged 0.5 point for five-year mortgages.
Congress wary of ‘plain vanilla’ bank proposal
WASHINGTON – Sept. 23, 2009 – Congress is expected to reject President Barack Obama’s proposed mandate that banks offer customers “plain vanilla” financial products, such as a 30-year fixed mortgage.
The defeat would be a victory for the industry, which contends that such a proposal would give the government an unprecedented role in the marketplace.
Exotic financial products, particularly subprime mortgages, were considered a major factor in last year’s financial crisis. Loans with low introductory rates that suddenly ballooned in size prompted defaults by cash-strapped homeowners.
Under Obama’s plan, a new government agency would be established to monitor the fine print on such products as mortgages and credit cards. The Consumer Financial Protection Agency would require that lenders be up front about the cost of their products and offer customers a standard low-risk alternative.
Rep. Barney Frank, chairman of the House Financial Services Committee, is preparing legislation that would endorse the concept of the consumer agency. But Frank’s version would not require financial firms to offer standardized products, said Steve Adamske, a spokesman for the Massachusetts Democrat.
The proposal also was expected to fall flat in the Senate, where conservative Democrats and Republicans say they are concerned it would give the government too much control in the marketplace and would limit innovation.
“Implied in this belief is the notion that some people, such as the government bureaucrats, can make informed decisions about the value of products and services while others, such as the American consumer, cannot,” said Sen. Richard Shelby, the top Republican on the Senate Banking Committee.
Kirstin Brost, a spokeswoman for Sen. Christopher Dodd, said the Banking Committee chairman “has a hard time seeing how plain vanilla would work” but he is still working with his colleagues to draft the legislation.
The idea was promoted by Michael Barr, an assistant Treasury secretary for financial institutions, who says forcing banks to disclose more details about their loans wouldn’t go far enough to protect consumers.
“It is time for a level playing field for financial services competition based on strong rules, not based on exploiting consumer confusion,” Barr told the Senate Banking Committee in July.
The defeat would be a victory for the industry, which contends that such a proposal would give the government an unprecedented role in the marketplace.
Exotic financial products, particularly subprime mortgages, were considered a major factor in last year’s financial crisis. Loans with low introductory rates that suddenly ballooned in size prompted defaults by cash-strapped homeowners.
Under Obama’s plan, a new government agency would be established to monitor the fine print on such products as mortgages and credit cards. The Consumer Financial Protection Agency would require that lenders be up front about the cost of their products and offer customers a standard low-risk alternative.
Rep. Barney Frank, chairman of the House Financial Services Committee, is preparing legislation that would endorse the concept of the consumer agency. But Frank’s version would not require financial firms to offer standardized products, said Steve Adamske, a spokesman for the Massachusetts Democrat.
The proposal also was expected to fall flat in the Senate, where conservative Democrats and Republicans say they are concerned it would give the government too much control in the marketplace and would limit innovation.
“Implied in this belief is the notion that some people, such as the government bureaucrats, can make informed decisions about the value of products and services while others, such as the American consumer, cannot,” said Sen. Richard Shelby, the top Republican on the Senate Banking Committee.
Kirstin Brost, a spokeswoman for Sen. Christopher Dodd, said the Banking Committee chairman “has a hard time seeing how plain vanilla would work” but he is still working with his colleagues to draft the legislation.
The idea was promoted by Michael Barr, an assistant Treasury secretary for financial institutions, who says forcing banks to disclose more details about their loans wouldn’t go far enough to protect consumers.
“It is time for a level playing field for financial services competition based on strong rules, not based on exploiting consumer confusion,” Barr told the Senate Banking Committee in July.
Saturday, February 14, 2009
Obama plan holds off on forclosure rescue details
Obama plan holds off on foreclosure rescue details
WASHINGTON – Feb. 11, 2009 – To those on the front lines of the housing crisis, the Obama administration’s pledge to spend $50 billion to combat foreclosures was a welcome change in the government’s approach. But the actual plan won’t be unveiled for at least a week and might not be enough to prevent the housing market’s troubles from mushrooming further.
Housing counselors say the government’s response to a huge surge in defaults and foreclosures over the past two years has been a failure. They blame former President George W. Bush’s administration for sticking with voluntary programs led by the mortgage industry and not committing public dollars to foreclosure prevention.
They are hoping President Barack Obama will have more success, especially as foreclosures continue to grow. A Credit Suisse report published late last year forecast up to 10 million foreclosures by 2012, depending on the severity of the recession.
“The question is: Can we work to design a system where the banks recognize it’s in their interest to avoid foreclosure?” Obama said Tuesday in Fort Myers, Florida, which has been devastated by foreclosures and sinking home prices.
Obama said he would announce his housing strategy in the coming weeks. Meanwhile, home prices are not expected to hit bottom until year-end at the earliest.
A report published this month by Moody’s Economy.com projected that home prices will plummet by at least 50 percent in more than 30 metro areas in California, Florida and Nevada by the time the housing bust ends. More than 60 percent of all metro areas nationally are expected to see prices fall by 10 percent or more, the study found.
While Treasury Secretary Timothy Geithner’s revised plan to stabilize the financial system offered few details about housing on Tuesday, consumer advocates said they were still confident that the forthcoming proposal would offer far-reaching help to borrowers.
“It’s a tough problem,” said Michael Calhoun, president of the Durham North Carolina-based Center for Responsible Lending. “They want to make sure to get it right.”
Less patient was Democratic Rep. Barney Frank, chairman of the House Financial Services Committee. He issued a statement criticizing the administration for taking too long to put together a housing plan.
Frank also said he fears that $50 billion in funding “understates the amount that we will need” and called on lenders to halt foreclosures as the government develops its plans.
The Obama administration is expected to back a push in Congress – opposed by the mortgage industry – to let bankruptcy judges alter the terms of primary home loans. Earlier this week, Obama said it “makes no sense” that judges are not allowed to do so. The mortgage industry argues that this prohibition allows lenders to charge lower rates.
WASHINGTON – Feb. 11, 2009 – To those on the front lines of the housing crisis, the Obama administration’s pledge to spend $50 billion to combat foreclosures was a welcome change in the government’s approach. But the actual plan won’t be unveiled for at least a week and might not be enough to prevent the housing market’s troubles from mushrooming further.
Housing counselors say the government’s response to a huge surge in defaults and foreclosures over the past two years has been a failure. They blame former President George W. Bush’s administration for sticking with voluntary programs led by the mortgage industry and not committing public dollars to foreclosure prevention.
They are hoping President Barack Obama will have more success, especially as foreclosures continue to grow. A Credit Suisse report published late last year forecast up to 10 million foreclosures by 2012, depending on the severity of the recession.
“The question is: Can we work to design a system where the banks recognize it’s in their interest to avoid foreclosure?” Obama said Tuesday in Fort Myers, Florida, which has been devastated by foreclosures and sinking home prices.
Obama said he would announce his housing strategy in the coming weeks. Meanwhile, home prices are not expected to hit bottom until year-end at the earliest.
A report published this month by Moody’s Economy.com projected that home prices will plummet by at least 50 percent in more than 30 metro areas in California, Florida and Nevada by the time the housing bust ends. More than 60 percent of all metro areas nationally are expected to see prices fall by 10 percent or more, the study found.
While Treasury Secretary Timothy Geithner’s revised plan to stabilize the financial system offered few details about housing on Tuesday, consumer advocates said they were still confident that the forthcoming proposal would offer far-reaching help to borrowers.
“It’s a tough problem,” said Michael Calhoun, president of the Durham North Carolina-based Center for Responsible Lending. “They want to make sure to get it right.”
Less patient was Democratic Rep. Barney Frank, chairman of the House Financial Services Committee. He issued a statement criticizing the administration for taking too long to put together a housing plan.
Frank also said he fears that $50 billion in funding “understates the amount that we will need” and called on lenders to halt foreclosures as the government develops its plans.
The Obama administration is expected to back a push in Congress – opposed by the mortgage industry – to let bankruptcy judges alter the terms of primary home loans. Earlier this week, Obama said it “makes no sense” that judges are not allowed to do so. The mortgage industry argues that this prohibition allows lenders to charge lower rates.
Fannie to Expland Mortgage Rules for Realty Investors
Fannie to Expand Mortgage Rules for Realty Investors
By Jody Shenn
Feb. 11 (Bloomberg) -- Fannie Mae, the mortgage-finance company under U.S. government control, will no longer bar real- estate investors from qualifying for its loans if they already own four properties as it seeks to spur housing demand.
The company will expand its limit for investor and second- home loans to as many as 10 properties per borrower, according to a Feb. 6 notice to lenders on Washington-based Fannie’s Web site.
“Bona-fide, experienced investors bringing significant equity to the table will play a key role in the housing recovery,” Brian Faith, a Fannie Mae spokesman, said today in an e-mailed statement.
Since their September takeovers, Fannie and competitor Freddie Mac have loosened some underwriting rules and set policies for their loan servicers to rework more delinquent debt to aid the slumping housing market and lower their foreclosure costs. The companies, which own or guarantee almost half of the $12 trillion of U.S. residential debt, also have tightened guidelines and boosted fees for some loans to reflect their higher risks.
Many of those fees exceed the loans’ dangers and are more damaging to the housing market than other steps taken by Fannie and Freddie to bolster demand, according to mortgage professionals including Ray Leone, a broker who runs Ray Leone & Associates in San Diego.
“Is it just me, or does anyone else see how upside down this logic is?” Leone wrote in an e-mail today. “The good borrowers are paying for the mistakes of the bad borrowers.”
Freddie Mulls Change
The expanded limits on investor properties, including rentals and houses targeted for profitable later sales, are intended “for borrowers meeting our eligibility requirements, which include a strong credit history and financial reserves,” Faith said.
McLean, Virginia-based Freddie still has a four-unit limit for mortgages to property investors, “but we’re looking at it,” spokesman Brad German wrote in an e-mail today. Fannie’s change was reported by the MortgageDaily.com Web site on Feb. 9.
In the past two weeks, Freddie told lenders it will match a 0.75 percentage point fee for condominium mortgages and other charges previously announced by Fannie, and Fannie said it will loosen rules for borrowers seeking to refinance loans whose default risks the company already owns.
Fannie, Freddie and Federal Housing Administration-insured loans now account for more than 95 percent of new U.S. home lending, following the collapse of the non-agency mortgage bond market and retreats by banks, Freddie Chairman John Koskinen said in a Bloomberg Television interview this week.
Bigger Reserves
In its Feb. 6 notice, Fannie also said it would require some real-estate investors to have more liquid assets to qualify, such as cash in the bank. Some buyers of one-unit properties had only needed two months of mortgage and other payments related to the homes in reserve; that will rise to six months.
Investors with five to 10 properties will need six months of reserves for their other properties, compared with two months for borrowers with fewer homes, according to the notice. Fannie also changed its definition of the payments to include homeowner association dues, cooperative fees and other loans secured by the properties, along with the first mortgages, taxes and insurance.
While Fannie and Freddie have boosted fees for some loans to borrowers with lower down payments and credit scores or those seeking condo units, the government has “worked with them on that to make sure it wasn’t excessive,” Federal Housing Finance Agency Director James Lockhart said in a Feb. 2 interview.
“What I told the two CEOs is I don’t expect them to write business at a loss but I don’t expect high-return business either,” Lockhart said.
The higher fees have pushed more borrowers into the FHA, the federal department that sells mortgage insurance to borrowers with down payments as low as 3.5 percent, he said.
By Jody Shenn
Feb. 11 (Bloomberg) -- Fannie Mae, the mortgage-finance company under U.S. government control, will no longer bar real- estate investors from qualifying for its loans if they already own four properties as it seeks to spur housing demand.
The company will expand its limit for investor and second- home loans to as many as 10 properties per borrower, according to a Feb. 6 notice to lenders on Washington-based Fannie’s Web site.
“Bona-fide, experienced investors bringing significant equity to the table will play a key role in the housing recovery,” Brian Faith, a Fannie Mae spokesman, said today in an e-mailed statement.
Since their September takeovers, Fannie and competitor Freddie Mac have loosened some underwriting rules and set policies for their loan servicers to rework more delinquent debt to aid the slumping housing market and lower their foreclosure costs. The companies, which own or guarantee almost half of the $12 trillion of U.S. residential debt, also have tightened guidelines and boosted fees for some loans to reflect their higher risks.
Many of those fees exceed the loans’ dangers and are more damaging to the housing market than other steps taken by Fannie and Freddie to bolster demand, according to mortgage professionals including Ray Leone, a broker who runs Ray Leone & Associates in San Diego.
“Is it just me, or does anyone else see how upside down this logic is?” Leone wrote in an e-mail today. “The good borrowers are paying for the mistakes of the bad borrowers.”
Freddie Mulls Change
The expanded limits on investor properties, including rentals and houses targeted for profitable later sales, are intended “for borrowers meeting our eligibility requirements, which include a strong credit history and financial reserves,” Faith said.
McLean, Virginia-based Freddie still has a four-unit limit for mortgages to property investors, “but we’re looking at it,” spokesman Brad German wrote in an e-mail today. Fannie’s change was reported by the MortgageDaily.com Web site on Feb. 9.
In the past two weeks, Freddie told lenders it will match a 0.75 percentage point fee for condominium mortgages and other charges previously announced by Fannie, and Fannie said it will loosen rules for borrowers seeking to refinance loans whose default risks the company already owns.
Fannie, Freddie and Federal Housing Administration-insured loans now account for more than 95 percent of new U.S. home lending, following the collapse of the non-agency mortgage bond market and retreats by banks, Freddie Chairman John Koskinen said in a Bloomberg Television interview this week.
Bigger Reserves
In its Feb. 6 notice, Fannie also said it would require some real-estate investors to have more liquid assets to qualify, such as cash in the bank. Some buyers of one-unit properties had only needed two months of mortgage and other payments related to the homes in reserve; that will rise to six months.
Investors with five to 10 properties will need six months of reserves for their other properties, compared with two months for borrowers with fewer homes, according to the notice. Fannie also changed its definition of the payments to include homeowner association dues, cooperative fees and other loans secured by the properties, along with the first mortgages, taxes and insurance.
While Fannie and Freddie have boosted fees for some loans to borrowers with lower down payments and credit scores or those seeking condo units, the government has “worked with them on that to make sure it wasn’t excessive,” Federal Housing Finance Agency Director James Lockhart said in a Feb. 2 interview.
“What I told the two CEOs is I don’t expect them to write business at a loss but I don’t expect high-return business either,” Lockhart said.
The higher fees have pushed more borrowers into the FHA, the federal department that sells mortgage insurance to borrowers with down payments as low as 3.5 percent, he said.
The upside of Florida Real Estate
The upside of Florida real estate: 15 market positives
Let’s take a look at some of the opportunities and positive indicators for the future of Florida’s real estate market.
1. Great prices. Statewide, home prices have fallen 20 percent in the past year. FAR statistics show the existing-home median sales price was $185,400 in the third quarter of 2008, compared with $233,200 in third quarter 2007. By the way, those numbers are still significantly higher than in the early years of the decade: in 2003, the third-quarter sales price was $163,700, which reflects an increase of about 13.3 percent over the five-year period. (The median is a typical market price where half the homes sold for more, half for less.)
2. The time is right. Home sales volumes are rising again – a clear signal that today’s “buyers market” may be changing soon. In third quarter 2008, statewide sales of existing single-family homes were up 5 percent compared to the same period last year, according to FAR statistics.
3. High inventory levels. Conditions are ideal for buyers to find their dream home. Inventory is plentiful in all price ranges. But as sales volumes increase, inventory levels are likely to shrink – another strong argument for buying soon.
4. Low mortgage rates. Mortgage rates are still at the lowest levels since the 1960s. That’s important because lower rates multiply a buyer’s financial power. Even one-half of one percentage point difference means a buyer could save more than $1,000 per year on a median-priced home. Buyers get more home for the money, which is a perfect scenario for families looking to upsize.
5. Incentives to buy. Federal, state and local housing programs can help buyers make that big purchase. The U.S. Housing and Economic Recovery Act of 2008 includes a $7,500 tax credit for first-time buyers on a home purchased between April 9, 2008 and July 1, 2009. Last October, Florida approved $571 million in tax-exempt bonds for loans to first-time buyers with low and moderate incomes. Florida programs can also help moderate income buyers cover downpayment and closing costs. Talk to a local mortgage lender about these and other incentive programs.
6. A long-term growth state. Long-term economic and demographic trends continue to favor Florida. By 2010 it has been forecast that Florida will be the third most populated state in the country. Florida’s population is expected to increase about 75 percent by 2030. Florida has been one of the 10 fastest-growing states in the U.S. for each of the past seven decades, and often it has been in the top four, according to census data. Population growth will continue to provide a foundation for other economic growth such as new jobs and growing incomes. All of which is good for real estate.
7. A migration magnet. The University of Central Florida’s Institute for Economic Competitiveness projects that 81,000 people will move to Florida in 2009 and 120,000 in 2010. Based on a 2.2-person household size, that means Florida will see increased demand for roughly 37,000 homes and condominiums in 2009 and 55,000 the following year. That’s a lot of new buyers coming into the market.
8. A favored retirement destination. Over the long term, Florida stands to benefit from the migration of the aging Baby Boomer generation, roughly 80 million strong. Demographic studies show that the Sunshine State’s mild climate and outdoor amenities continue to make it an attractive retirement destination.
9. A diverse economy. While the national economic downturn has definitely affected the banking and finance sector, other pillars of Florida’s economy remain strong. Healthcare, tourism, education and government are stable components of the state’s business environment, and the life sciences sector is fast becoming an important driving force in South and Central Florida. According to Enterprise Florida Inc., the Sunshine State is ranked as one of the best states in the nation to be an entrepreneur.
10. Positive investment outlook. Every quarter, the University of Florida’s Bergstrom Center for Real Estate Studies conducts a survey of industry executives, market research economists, real estate scholars and other experts. In the third quarter 2008 survey, the investment outlook for various types of Florida properties remains steady. “People who have responded to our surveys have not lost their faith in Florida as a place to be and a place to invest,” said Dr. Wayne Archer, director. “We have 40 pages of comments from our respondents, and although the dominant theme is the disruption of financing, perhaps the second theme, as one person put it, is people being on the sidelines with full pads and helmets just waiting to jump back in.”
11. Homeownership has value. Realtors believe – and research supports that belief – that homeownership provides a variety of benefits, tangible and intangible, to the community as well as the individual homeowner. Studies show that home equity is still the largest single source of household wealth, both for the individual homeowner and for homeowners as a group. Home value is the most important single aspect for homeowners.
12. Greater well-being. Owning a home leads to increased personal well-being. Research shows that people who own their own homes tend to show higher levels of personal esteem and life satisfaction, which in turn helps to make homeowners and their children more productive members of society.
13. Good for kids. Studies show that children raised in homes owned by their families are more likely to stay in school and more likely to graduate high school. They’re also shown to have a higher lifetime annual income.
14. Good for communities. People who own homes have a strong financial stake in what happens to their community and tend to become more involved in community and civic affairs. Studies show that homeowners also interact with their neighbors to gain wider influence over their neighborhoods and communities. Homeowners join up to 41 percent more civic and/or nonprofessional organizations than renters, such as the PTA or Scouts; vote in local elections 15 percent more often; enhance their neighborhoods with gardens 12 percent more often; attend church about 10 percent more often; and have a 3 percent greater chance of being interested in public affairs.
15. An unsurpassed lifestyle. Finally, let’s not forget the things that brought people to Florida in the first place, and will continue to attract them – beautiful beaches, fabulous weather and a friendly business climate, with no state income tax. It’s no wonder that Florida’s combination of temperate climate, outstanding recreational amenities and economic opportunity has consistently put us at the top of Harris Poll’s “most desirable places to live” survey.
Let’s take a look at some of the opportunities and positive indicators for the future of Florida’s real estate market.
1. Great prices. Statewide, home prices have fallen 20 percent in the past year. FAR statistics show the existing-home median sales price was $185,400 in the third quarter of 2008, compared with $233,200 in third quarter 2007. By the way, those numbers are still significantly higher than in the early years of the decade: in 2003, the third-quarter sales price was $163,700, which reflects an increase of about 13.3 percent over the five-year period. (The median is a typical market price where half the homes sold for more, half for less.)
2. The time is right. Home sales volumes are rising again – a clear signal that today’s “buyers market” may be changing soon. In third quarter 2008, statewide sales of existing single-family homes were up 5 percent compared to the same period last year, according to FAR statistics.
3. High inventory levels. Conditions are ideal for buyers to find their dream home. Inventory is plentiful in all price ranges. But as sales volumes increase, inventory levels are likely to shrink – another strong argument for buying soon.
4. Low mortgage rates. Mortgage rates are still at the lowest levels since the 1960s. That’s important because lower rates multiply a buyer’s financial power. Even one-half of one percentage point difference means a buyer could save more than $1,000 per year on a median-priced home. Buyers get more home for the money, which is a perfect scenario for families looking to upsize.
5. Incentives to buy. Federal, state and local housing programs can help buyers make that big purchase. The U.S. Housing and Economic Recovery Act of 2008 includes a $7,500 tax credit for first-time buyers on a home purchased between April 9, 2008 and July 1, 2009. Last October, Florida approved $571 million in tax-exempt bonds for loans to first-time buyers with low and moderate incomes. Florida programs can also help moderate income buyers cover downpayment and closing costs. Talk to a local mortgage lender about these and other incentive programs.
6. A long-term growth state. Long-term economic and demographic trends continue to favor Florida. By 2010 it has been forecast that Florida will be the third most populated state in the country. Florida’s population is expected to increase about 75 percent by 2030. Florida has been one of the 10 fastest-growing states in the U.S. for each of the past seven decades, and often it has been in the top four, according to census data. Population growth will continue to provide a foundation for other economic growth such as new jobs and growing incomes. All of which is good for real estate.
7. A migration magnet. The University of Central Florida’s Institute for Economic Competitiveness projects that 81,000 people will move to Florida in 2009 and 120,000 in 2010. Based on a 2.2-person household size, that means Florida will see increased demand for roughly 37,000 homes and condominiums in 2009 and 55,000 the following year. That’s a lot of new buyers coming into the market.
8. A favored retirement destination. Over the long term, Florida stands to benefit from the migration of the aging Baby Boomer generation, roughly 80 million strong. Demographic studies show that the Sunshine State’s mild climate and outdoor amenities continue to make it an attractive retirement destination.
9. A diverse economy. While the national economic downturn has definitely affected the banking and finance sector, other pillars of Florida’s economy remain strong. Healthcare, tourism, education and government are stable components of the state’s business environment, and the life sciences sector is fast becoming an important driving force in South and Central Florida. According to Enterprise Florida Inc., the Sunshine State is ranked as one of the best states in the nation to be an entrepreneur.
10. Positive investment outlook. Every quarter, the University of Florida’s Bergstrom Center for Real Estate Studies conducts a survey of industry executives, market research economists, real estate scholars and other experts. In the third quarter 2008 survey, the investment outlook for various types of Florida properties remains steady. “People who have responded to our surveys have not lost their faith in Florida as a place to be and a place to invest,” said Dr. Wayne Archer, director. “We have 40 pages of comments from our respondents, and although the dominant theme is the disruption of financing, perhaps the second theme, as one person put it, is people being on the sidelines with full pads and helmets just waiting to jump back in.”
11. Homeownership has value. Realtors believe – and research supports that belief – that homeownership provides a variety of benefits, tangible and intangible, to the community as well as the individual homeowner. Studies show that home equity is still the largest single source of household wealth, both for the individual homeowner and for homeowners as a group. Home value is the most important single aspect for homeowners.
12. Greater well-being. Owning a home leads to increased personal well-being. Research shows that people who own their own homes tend to show higher levels of personal esteem and life satisfaction, which in turn helps to make homeowners and their children more productive members of society.
13. Good for kids. Studies show that children raised in homes owned by their families are more likely to stay in school and more likely to graduate high school. They’re also shown to have a higher lifetime annual income.
14. Good for communities. People who own homes have a strong financial stake in what happens to their community and tend to become more involved in community and civic affairs. Studies show that homeowners also interact with their neighbors to gain wider influence over their neighborhoods and communities. Homeowners join up to 41 percent more civic and/or nonprofessional organizations than renters, such as the PTA or Scouts; vote in local elections 15 percent more often; enhance their neighborhoods with gardens 12 percent more often; attend church about 10 percent more often; and have a 3 percent greater chance of being interested in public affairs.
15. An unsurpassed lifestyle. Finally, let’s not forget the things that brought people to Florida in the first place, and will continue to attract them – beautiful beaches, fabulous weather and a friendly business climate, with no state income tax. It’s no wonder that Florida’s combination of temperate climate, outstanding recreational amenities and economic opportunity has consistently put us at the top of Harris Poll’s “most desirable places to live” survey.
Florida property taxes down
Fla. property taxes down in each of last 2 years
TALLAHASSEE, Fla. (AP) – Feb. 11, 2009 – A pair of tax-relief measures passed in the last two years have helped reduce property taxes for Floridians after three decades of steady increases, according to reports presented Tuesday in the state Senate.
Senate and Department of Revenue staffers told the Senate Finance and Tax Committee that non-school property tax collections dropped 2.1 percent in 2007 after the Legislature ordered a tax rate rollback. Then they dropped 3.8 percent in 2008 after voters approved a tax-cutting constitutional amendment.
Those decreases come after 32 years of average annual increases of 10 percent.
School property taxes are exempt from parts of the tax-relief measures, but they are also dropping because of declining property values across the state. That’s expected to cut school revenues by up to $1 billion in the next budget year, which begins July 1, unless lawmakers increase local school tax rates or find state dollars to replace that money.
Sen. Thad Altman, the committee’s chairman, said he was satisfied that non-school taxes have dropped but Florida’s property tax structure remains unfair. That’s due mainly to the Save Our Homes Amendment adopted in 1992. It gives tax breaks to owners of primary homes but shifts the burden to other taxpayers including recent homebuyers, businesses and owners of second and vacation homes.
Primary homeowners “who happened to buy when the market was high are paying relatively high taxes and those who bought when the market was low many, many years ago ... are paying much less,” said Altman, R-Melbourne. “We haven’t really solved the heart of the problem.”
Altman said it’s unlikely lawmakers will solve it this year, either, because that would require amending the Florida Constitution. It would take a three-fourths vote in each chamber to call a special election to amend the constitution this year but only a three-fifths vote to put an amendment on the 2010 general election ballot.
“We need to be deliberate when we amend the constitution,” Altman said. “I don’t think you’re going to see a big rush to get constitutional amendments on the ballot this year because we’re going to have another year of deliberation.”
One provision of the tax-cutting amendment voters approved in January 2009 has not panned out as expected due to the state’s housing slump and national credit crunch. It allows homeowners to take part of their Save Our Homes benefits with them when they move.
This “portability” measure had been forecast to cut taxable values by $11.6 billion last year, but the actual figure was only $3.4 billion with just 42,647 homeowners taking advantage of it.
An extra $25,000 exemption for primary homes on non-school taxes in addition to an existing $25,000 exemption on all taxes cut taxable values by $92 billion. That’s slightly more than predicted.
A new $25,000 exemption on the tax paid by businesses for equipment, furniture and other tangible personal property cut $7.9 billion in property value, about $3 billion less than forecast.
TALLAHASSEE, Fla. (AP) – Feb. 11, 2009 – A pair of tax-relief measures passed in the last two years have helped reduce property taxes for Floridians after three decades of steady increases, according to reports presented Tuesday in the state Senate.
Senate and Department of Revenue staffers told the Senate Finance and Tax Committee that non-school property tax collections dropped 2.1 percent in 2007 after the Legislature ordered a tax rate rollback. Then they dropped 3.8 percent in 2008 after voters approved a tax-cutting constitutional amendment.
Those decreases come after 32 years of average annual increases of 10 percent.
School property taxes are exempt from parts of the tax-relief measures, but they are also dropping because of declining property values across the state. That’s expected to cut school revenues by up to $1 billion in the next budget year, which begins July 1, unless lawmakers increase local school tax rates or find state dollars to replace that money.
Sen. Thad Altman, the committee’s chairman, said he was satisfied that non-school taxes have dropped but Florida’s property tax structure remains unfair. That’s due mainly to the Save Our Homes Amendment adopted in 1992. It gives tax breaks to owners of primary homes but shifts the burden to other taxpayers including recent homebuyers, businesses and owners of second and vacation homes.
Primary homeowners “who happened to buy when the market was high are paying relatively high taxes and those who bought when the market was low many, many years ago ... are paying much less,” said Altman, R-Melbourne. “We haven’t really solved the heart of the problem.”
Altman said it’s unlikely lawmakers will solve it this year, either, because that would require amending the Florida Constitution. It would take a three-fourths vote in each chamber to call a special election to amend the constitution this year but only a three-fifths vote to put an amendment on the 2010 general election ballot.
“We need to be deliberate when we amend the constitution,” Altman said. “I don’t think you’re going to see a big rush to get constitutional amendments on the ballot this year because we’re going to have another year of deliberation.”
One provision of the tax-cutting amendment voters approved in January 2009 has not panned out as expected due to the state’s housing slump and national credit crunch. It allows homeowners to take part of their Save Our Homes benefits with them when they move.
This “portability” measure had been forecast to cut taxable values by $11.6 billion last year, but the actual figure was only $3.4 billion with just 42,647 homeowners taking advantage of it.
An extra $25,000 exemption for primary homes on non-school taxes in addition to an existing $25,000 exemption on all taxes cut taxable values by $92 billion. That’s slightly more than predicted.
A new $25,000 exemption on the tax paid by businesses for equipment, furniture and other tangible personal property cut $7.9 billion in property value, about $3 billion less than forecast.
British retailers suffer worst December on record
British retailers suffer worst December on record
By PAN PYLAS
More from BusinessWeek
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• The Lesson of Societe Generale
• FBI Widens Its Subprime Net
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• Under Armour's Footwear Foray
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LONDON
Britain's retailers suffered their worst December in at least 14 years despite a blizzard of promotions, stoking fears that more high-profile companies may go bust in the months ahead.
In its monthly assessment of the sector, the British Retail Consortium revealed Tuesday that like-for-like sales, which strip out new stores and space, slumped 3.3 percent in December from the previous year.
Total sales, which includes the additional space, fell by 1.4 percent. The like-for-like decrease was the seventh in a row while the total fall was the third.
The consortium said that by both measures, this was the worst December since the survey began 14 years ago. Only food and footwear stores reported sales up on the previous year.
"These are truly dreadful numbers," said Stephen Roberston, the consortium's director-general.
December's figures augur badly for retailers as sales during the month are key for earnings.
Even with heavy discounting, consumers remained reluctant to part with their cash amid mounting unemployment fears and heightened personal debt levels.
With general retailer Woolworths already having closed its doors for good and others, such as tea and coffee merchant Whittard of Chelsea and Land of Leather filing for bankruptcy protection, there are mounting fears that Britain's economic retrenchment will claim further victims, especially if December sales disappoint.
By PAN PYLAS
More from BusinessWeek
• Yahoo's Yodel Turns Into a Whimper
• The Lesson of Societe Generale
• FBI Widens Its Subprime Net
• Altria's Split: Where There's Smoke…
• Under Armour's Footwear Foray
Story Tools
• order a reprint
• digg this
• save to del.icio.us
LONDON
Britain's retailers suffered their worst December in at least 14 years despite a blizzard of promotions, stoking fears that more high-profile companies may go bust in the months ahead.
In its monthly assessment of the sector, the British Retail Consortium revealed Tuesday that like-for-like sales, which strip out new stores and space, slumped 3.3 percent in December from the previous year.
Total sales, which includes the additional space, fell by 1.4 percent. The like-for-like decrease was the seventh in a row while the total fall was the third.
The consortium said that by both measures, this was the worst December since the survey began 14 years ago. Only food and footwear stores reported sales up on the previous year.
"These are truly dreadful numbers," said Stephen Roberston, the consortium's director-general.
December's figures augur badly for retailers as sales during the month are key for earnings.
Even with heavy discounting, consumers remained reluctant to part with their cash amid mounting unemployment fears and heightened personal debt levels.
With general retailer Woolworths already having closed its doors for good and others, such as tea and coffee merchant Whittard of Chelsea and Land of Leather filing for bankruptcy protection, there are mounting fears that Britain's economic retrenchment will claim further victims, especially if December sales disappoint.
International Interest Up
INTERNATIONAL INTEREST UP
The Association of Foreign Investors in Real Estate (AFIRE) reports that foreign real estate lenders could grow lending by as much as 58 percent in the United States this year, with interest in cross-border property investing especially robust. In a recent AFIRE member survey, the top five most attractive U.S. cities in terms of investment dollars were the District of Columbia, New York City, San Francisco, Los Angeles and Houston. Meanwhile, 53 percent ranked the United States as the nation providing the most secure property investments. Respondents also listed multifamily housing, office space, industrial properties, retail and hotels as the top five preferred property types.
Source: National Mortgage News, Bonnie Sinnock (02/09/09)
The Association of Foreign Investors in Real Estate (AFIRE) reports that foreign real estate lenders could grow lending by as much as 58 percent in the United States this year, with interest in cross-border property investing especially robust. In a recent AFIRE member survey, the top five most attractive U.S. cities in terms of investment dollars were the District of Columbia, New York City, San Francisco, Los Angeles and Houston. Meanwhile, 53 percent ranked the United States as the nation providing the most secure property investments. Respondents also listed multifamily housing, office space, industrial properties, retail and hotels as the top five preferred property types.
Source: National Mortgage News, Bonnie Sinnock (02/09/09)
Pending home sales show healthy gain
WASHINGTON, February 03, 2009
Pending home sales increased as more buyers took advantage of improved affordability conditions, according to the National Association of Realtors®. Big gains in the South and Midwest offset modest declines in other regions.
The Pending Home Sales Index,1 a forward-looking indicator based on contracts signed in December, rose 6.3 percent to 87.7 from an upwardly revised reading of 82.5 in November, and is 2.1 percent higher than December 2007 when it was 85.9.
Lawrence Yun, NAR chief economist, said the index shows a modest rebound. “The monthly gain in pending home sales, spurred by buyers responding to lower home prices and mortgage interest rates, more than offset an index decline in the previous month,” he said. “The biggest gains were in areas with the biggest improvements in affordability.”
NAR’s Housing Affordability index rose 10.9 percent in December to 158.8, the highest on record.2 The HAI shows that the relationship between home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970.
“Significant uncertainty still clouds the housing market despite improved affordability conditions. For a sustainable housing market recovery and, hence, sustainable economic recovery, we need a significant housing stimulus and mortgage availability for qualified borrowers,” Yun added.
The PHSI in the Northeast slipped 1.7 percent to 62.1 in December and is 14.5 percent below a year ago. In the Midwest the index jumped 12.8 percent to 83.7 but remains 1.2 percent below December 2007. The index in the South surged 13.0 percent to 96.8 in December and is 1.6 percent above a year ago. In the West, the index fell 3.7 percent to 97.5 but remains 17.5 percent higher than December 2007.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said the rise in contract signings is encouraging. “However, housing activity remains weak compared with potential demand, and the market is fragile given the economic backdrop,” he said.
“We can’t take our eye off the need to stimulate housing, which can set the foundation for an economic recovery,” McMillan said. “Last week’s actions in the House to eliminate the repayment feature on the first-time home buyer tax credit, and to raise mortgage loan limits, are helpful. However, we need to take additional steps to meaningfully draw down inventory and stabilize home prices.”
McMillan said some enhancements that could bring more buyers into the market include expanding the $7,500 tax credit to all home buyers and extending it until the end of 2009, and making loan limit increases permanent. “We also need to direct funds in the Troubled Asset Relief Program to add liquidity to the mortgage market, buy down mortgage interest rates and increase other forms of credit,” he said.
Yun said the outlook for housing and the economy is murky. “Although Congress and the Obama administration are taking steps to help the economy, the stimulus package must deal with the root cause of the economic downturn, and apply the right fix to turn it around. If housing is ignored, a significant downward overshooting of home prices would continue to drag the economy down independent of the scale of the stimulus,” Yun said.
# # #
1The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity from 2001 through 2004 parallels the level of closed existing-home sales in the following two months. There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.
2The Housing Affordability Index is a relative index where a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced existing single-family home, taking into account the relationship between median home price, average effective interest rate for loans closed on existing homes, and median family income. The higher the index, the greater housing affordability.
The calculation assumes a downpayment of 20 percent and a qualifying ratio of 25 percent of gross income for mortgage principle and interest payments. The index is a general gauge with conditions varying widely around the country. Affordability conditions are lower for first-time buyers with smaller downpayments and less income.
Monthly publication of the index began in 1981 with annual data calculated back to 1970.
Existing-home sales for January will be released February 25; the next Pending Home Sales Index will be on March 3. For more information, please visit: http://www.realtor.org/research/research/reportsstatistics
Pending home sales increased as more buyers took advantage of improved affordability conditions, according to the National Association of Realtors®. Big gains in the South and Midwest offset modest declines in other regions.
The Pending Home Sales Index,1 a forward-looking indicator based on contracts signed in December, rose 6.3 percent to 87.7 from an upwardly revised reading of 82.5 in November, and is 2.1 percent higher than December 2007 when it was 85.9.
Lawrence Yun, NAR chief economist, said the index shows a modest rebound. “The monthly gain in pending home sales, spurred by buyers responding to lower home prices and mortgage interest rates, more than offset an index decline in the previous month,” he said. “The biggest gains were in areas with the biggest improvements in affordability.”
NAR’s Housing Affordability index rose 10.9 percent in December to 158.8, the highest on record.2 The HAI shows that the relationship between home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970.
“Significant uncertainty still clouds the housing market despite improved affordability conditions. For a sustainable housing market recovery and, hence, sustainable economic recovery, we need a significant housing stimulus and mortgage availability for qualified borrowers,” Yun added.
The PHSI in the Northeast slipped 1.7 percent to 62.1 in December and is 14.5 percent below a year ago. In the Midwest the index jumped 12.8 percent to 83.7 but remains 1.2 percent below December 2007. The index in the South surged 13.0 percent to 96.8 in December and is 1.6 percent above a year ago. In the West, the index fell 3.7 percent to 97.5 but remains 17.5 percent higher than December 2007.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said the rise in contract signings is encouraging. “However, housing activity remains weak compared with potential demand, and the market is fragile given the economic backdrop,” he said.
“We can’t take our eye off the need to stimulate housing, which can set the foundation for an economic recovery,” McMillan said. “Last week’s actions in the House to eliminate the repayment feature on the first-time home buyer tax credit, and to raise mortgage loan limits, are helpful. However, we need to take additional steps to meaningfully draw down inventory and stabilize home prices.”
McMillan said some enhancements that could bring more buyers into the market include expanding the $7,500 tax credit to all home buyers and extending it until the end of 2009, and making loan limit increases permanent. “We also need to direct funds in the Troubled Asset Relief Program to add liquidity to the mortgage market, buy down mortgage interest rates and increase other forms of credit,” he said.
Yun said the outlook for housing and the economy is murky. “Although Congress and the Obama administration are taking steps to help the economy, the stimulus package must deal with the root cause of the economic downturn, and apply the right fix to turn it around. If housing is ignored, a significant downward overshooting of home prices would continue to drag the economy down independent of the scale of the stimulus,” Yun said.
# # #
1The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity from 2001 through 2004 parallels the level of closed existing-home sales in the following two months. There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.
2The Housing Affordability Index is a relative index where a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced existing single-family home, taking into account the relationship between median home price, average effective interest rate for loans closed on existing homes, and median family income. The higher the index, the greater housing affordability.
The calculation assumes a downpayment of 20 percent and a qualifying ratio of 25 percent of gross income for mortgage principle and interest payments. The index is a general gauge with conditions varying widely around the country. Affordability conditions are lower for first-time buyers with smaller downpayments and less income.
Monthly publication of the index began in 1981 with annual data calculated back to 1970.
Existing-home sales for January will be released February 25; the next Pending Home Sales Index will be on March 3. For more information, please visit: http://www.realtor.org/research/research/reportsstatistics
When Prices Bottom Out
When will prices bottom out?
NEW YORK – Feb. 10, 2009 – Housing prices will hit bottom in the fourth quarter of 2009, predicts Moody’s Economy.com in a new report.
“Despite the darkening national economic outlook and the weak conditions in the housing market, some positive signs give hope that a bottom in the housing market is coming into view,” the report says.
On average, home prices will decline 36 percent from the peak in the first quarter of 2006, the report says.
By the end of the housing downturn, nearly 62 percent of the nation’s 381 metropolitan areas will have experienced double-digit-percent declines in house prices, peak-to-trough, says the report.
The declines will exceed 20 percent in about 100 metro areas, according to the report, and the recovery will be “lackluster.”
“A number of uncertainties in both the housing and economic outlooks remain, and the risks tilt to the downside,” says Moody’s Economy.com Chief Economist, Mark Zandi.
Source: The Wall Street Journal, James R. Hagerty (02/06/2009)
NEW YORK – Feb. 10, 2009 – Housing prices will hit bottom in the fourth quarter of 2009, predicts Moody’s Economy.com in a new report.
“Despite the darkening national economic outlook and the weak conditions in the housing market, some positive signs give hope that a bottom in the housing market is coming into view,” the report says.
On average, home prices will decline 36 percent from the peak in the first quarter of 2006, the report says.
By the end of the housing downturn, nearly 62 percent of the nation’s 381 metropolitan areas will have experienced double-digit-percent declines in house prices, peak-to-trough, says the report.
The declines will exceed 20 percent in about 100 metro areas, according to the report, and the recovery will be “lackluster.”
“A number of uncertainties in both the housing and economic outlooks remain, and the risks tilt to the downside,” says Moody’s Economy.com Chief Economist, Mark Zandi.
Source: The Wall Street Journal, James R. Hagerty (02/06/2009)
Web-based tools aid in visualizing home makeovers
Web-based tools aid in visualizing home makeovers
LOS ANGELES – Jan. 19, 2009 – Interior decorating takes an eye for color, a knack for what makes a space both functional and attractive, and the mental stamina to visualize the seemingly endless ways to stylishly transform a room.
There are myriad computer programs for budding home decorators who might need some help visualizing the possibilities, but they can cost anywhere from under $100 to several hundred dollars for the most sophisticated packages. And mastering them often takes serious time.
Fortunately, several free Web-based applications and some relatively inexpensive options are available to help you test home makeover ideas.
Make no mistake, these tools fall short compared to professional home design software, but if you’re having trouble picturing how that designer mauve velvet sofa might mix with that coffee table from Ikea, these sites might help you visualize the combo, at least on your computer.
Swatchbox Technologies Inc. is behind several of these free Web applications, many of which function as marketing tools for manufacturers such as Armstrong (windows), Benjamin Moore (paints) and Kohler (bathroom fixtures).
One of Swatchbox’s more comprehensive design tools is the DesignMyRoom application.
Users can select from dozens of images of kitchens, living rooms, bedrooms, dens – all functioning as a canvas for decorating.
Some of the rooms come “furnished” with basic cabinetry or fitted with doors and windows. The tool may not cater to every floor plan, however. The idea is to find a reasonable facsimile.
The tool is fairly straightforward to use. Simply use the computer mouse to select decorative features from a menu and drag them into the virtual room.
DesignMyRoom’s decorating palette, by contrast, allows for plenty of virtual options based on real products, with prices conveniently listed. Among them: Kohler faucets and lighting fixtures, KitchenAid appliances, Smith+Noble window treatments, Horchow furniture and even art prints.
Pop-up windows let you select colors and styles for the various products.
When it comes time to deck out the room with virtual accouterment, however, the end result is less 3-D, more pop-up book. A tool for rotating the flat images at different angles doesn’t help.
The Better Homes and Gardens Web site hosts a few home decorating widgets, including one dubbed Arrange-a-Room.
The interactive application is more powerful as a planning tool than as a means to weigh the aesthetic quality of your decorating scheme because it employs simple illustrations as stand-ins for design elements like furniture.
Arrange-a-Room users can select from a handful of room shapes and lengthen walls according to specific dimensions, creating a small-scale floor plan.
Furniture, floor coverings and the like can also be sized to get a good idea of how much walking space you might have if you put a king-size bed and a giant TV in the bedroom, for example.
On the site’s Color-a-Room widget, you can change hues in furniture, walls, drapes and other elements in still photos. The Try-a-Window-Treatment application is also limited to playing with colors.
Another free application that has potential for room layout planning is SeeMyDesign. It gives users a little more flexibility for creating room shapes.
If you’re looking for a powerful, yet easy to use alternative to some expensive interior design programs, try Plan3D’s design software. It’s not free, but it’s cheaper than many software programs – but the clock will be ticking.
It costs $15.95 to use for 30 days, or just under $3 a month, or $35.40, for a year’s subscription.
Plan3D has the look and feel of an animated computer game, like “The Sims,” where you use can build a virtual home and fill it up with countless pieces of furniture, musical instruments and even people.
Plan3D lets you place dogs and people inside the home, like a virtual but intricate doll house, if you will. The software uses the Web connection to access a trove of 3-D images of furniture, windows, appliances, lighting fixtures, and such.
These items can be sized to reflect small-scale dimensions. The interface is a breeze to use and allows for near 360-degree views of their design. You can even open and shut refrigerator and cabinet doors to check for clearance.
I created a mock up of my living room in about 30 minutes, finding reasonably similar pieces of furniture. A lighting feature helped give some sense of shadows from light fixtures.
The program converted my 3-D virtual room into a blueprint-like rendering with dimensions built in for every feature.
Kristin Kilmer, owner of Kristin Kilmer Design Inc. in Los Angeles, says applications like these can help, as an exercise in mixing and matching ideas, but shouldn’t be relied upon too much because they don’t account well, if at all, for key design variables such as lighting and shadows.
Even tools that employ branded swatches of paint, curtains or flooring can be deceiving – how they appear on the computer monitor can vary from one computer to the next.
“You can’t get the color of the finish on the computer,” Kilmer says. “You need to see the actual finish.”
On the Net: DesignMyRoom: http://www.designmyroom.com
Better Homes and Gardens Tools: http://www.bhg.com/tools/
SeeMyDesign: http://www.seemydesign.com/livingroom/designaroom/layout/index.htm
Plan3D: http://www.plan3d.com/pages/homeChlgr.aspx?rd1
LOS ANGELES – Jan. 19, 2009 – Interior decorating takes an eye for color, a knack for what makes a space both functional and attractive, and the mental stamina to visualize the seemingly endless ways to stylishly transform a room.
There are myriad computer programs for budding home decorators who might need some help visualizing the possibilities, but they can cost anywhere from under $100 to several hundred dollars for the most sophisticated packages. And mastering them often takes serious time.
Fortunately, several free Web-based applications and some relatively inexpensive options are available to help you test home makeover ideas.
Make no mistake, these tools fall short compared to professional home design software, but if you’re having trouble picturing how that designer mauve velvet sofa might mix with that coffee table from Ikea, these sites might help you visualize the combo, at least on your computer.
Swatchbox Technologies Inc. is behind several of these free Web applications, many of which function as marketing tools for manufacturers such as Armstrong (windows), Benjamin Moore (paints) and Kohler (bathroom fixtures).
One of Swatchbox’s more comprehensive design tools is the DesignMyRoom application.
Users can select from dozens of images of kitchens, living rooms, bedrooms, dens – all functioning as a canvas for decorating.
Some of the rooms come “furnished” with basic cabinetry or fitted with doors and windows. The tool may not cater to every floor plan, however. The idea is to find a reasonable facsimile.
The tool is fairly straightforward to use. Simply use the computer mouse to select decorative features from a menu and drag them into the virtual room.
DesignMyRoom’s decorating palette, by contrast, allows for plenty of virtual options based on real products, with prices conveniently listed. Among them: Kohler faucets and lighting fixtures, KitchenAid appliances, Smith+Noble window treatments, Horchow furniture and even art prints.
Pop-up windows let you select colors and styles for the various products.
When it comes time to deck out the room with virtual accouterment, however, the end result is less 3-D, more pop-up book. A tool for rotating the flat images at different angles doesn’t help.
The Better Homes and Gardens Web site hosts a few home decorating widgets, including one dubbed Arrange-a-Room.
The interactive application is more powerful as a planning tool than as a means to weigh the aesthetic quality of your decorating scheme because it employs simple illustrations as stand-ins for design elements like furniture.
Arrange-a-Room users can select from a handful of room shapes and lengthen walls according to specific dimensions, creating a small-scale floor plan.
Furniture, floor coverings and the like can also be sized to get a good idea of how much walking space you might have if you put a king-size bed and a giant TV in the bedroom, for example.
On the site’s Color-a-Room widget, you can change hues in furniture, walls, drapes and other elements in still photos. The Try-a-Window-Treatment application is also limited to playing with colors.
Another free application that has potential for room layout planning is SeeMyDesign. It gives users a little more flexibility for creating room shapes.
If you’re looking for a powerful, yet easy to use alternative to some expensive interior design programs, try Plan3D’s design software. It’s not free, but it’s cheaper than many software programs – but the clock will be ticking.
It costs $15.95 to use for 30 days, or just under $3 a month, or $35.40, for a year’s subscription.
Plan3D has the look and feel of an animated computer game, like “The Sims,” where you use can build a virtual home and fill it up with countless pieces of furniture, musical instruments and even people.
Plan3D lets you place dogs and people inside the home, like a virtual but intricate doll house, if you will. The software uses the Web connection to access a trove of 3-D images of furniture, windows, appliances, lighting fixtures, and such.
These items can be sized to reflect small-scale dimensions. The interface is a breeze to use and allows for near 360-degree views of their design. You can even open and shut refrigerator and cabinet doors to check for clearance.
I created a mock up of my living room in about 30 minutes, finding reasonably similar pieces of furniture. A lighting feature helped give some sense of shadows from light fixtures.
The program converted my 3-D virtual room into a blueprint-like rendering with dimensions built in for every feature.
Kristin Kilmer, owner of Kristin Kilmer Design Inc. in Los Angeles, says applications like these can help, as an exercise in mixing and matching ideas, but shouldn’t be relied upon too much because they don’t account well, if at all, for key design variables such as lighting and shadows.
Even tools that employ branded swatches of paint, curtains or flooring can be deceiving – how they appear on the computer monitor can vary from one computer to the next.
“You can’t get the color of the finish on the computer,” Kilmer says. “You need to see the actual finish.”
On the Net: DesignMyRoom: http://www.designmyroom.com
Better Homes and Gardens Tools: http://www.bhg.com/tools/
SeeMyDesign: http://www.seemydesign.com/livingroom/designaroom/layout/index.htm
Plan3D: http://www.plan3d.com/pages/homeChlgr.aspx?rd1
How to price your house to sell
How to price your house to sell
By Patricia Mertz Esswein | Kiplinger's Money Power
Motivated homeowners set a realistic price from the get-go or risk the chance that their house will go begging. Sale prices of comparable properties (comps) should be your starting point for determining the right price.
In a rapidly changing market, says Patricia Vucich, a Re/Max agent in Bethesda, Md., she prefers comps that were sold within the previous three to four months.
Vucich also studies the competition: How similar is a property to her listing? How long has it been on the market? Have there been price reductions? How desirable is its location (close to public transportation, schools and community centers)? Is the neighborhood stable, with few foreclosures?
In Sacramento, Calif., Elizabeth Weintraub, an agent with Lyon Real Estate, says she calculates the difference between the median price of closed sales (the comps) and pending sales (contracts accepted but not yet closed), and reduces the suggested sale price accordingly. Even with no difference, she'll reduce the price just a bit to make her listing competitive. Pricing must also account for any deficiency that preparation can't overcome -- say, a home with one bathroom where two full ones would be the norm.
And be prepared: Buyers will often use the home inspection to, in effect, negotiate a price cut. Confronted with a laundry list of repairs, many sellers throw up their hands and offer the buyers a few thousand dollars. You can avoid that scenario and increase your property's appeal to buyers in two ways:
1. Pay for preinspection. Before you list your home, hire a home inspector for a few hundred dollars (the price depends on your region and the size and age of the house). This way you can advertise your home as "certified preowned," as in the automotive market, and use the report to allay buyers' fears early on. Plus, you get time upfront to obtain estimates for the cost of repairs rather than reacting under duress later.
Your agent may recommend an inspector, or you can find one by visiting www.ashi.org or www.nahi.org. A reputable inspector won't offer to repair the problems he identifies.
2. Offer a home warranty. Also known as a home-service contract, it assures buyers that any cost to repair or replace home systems or appliances (except for a co-pay or service fee, typically $50) will be covered for a year after they buy your property. An extra benefit: If something breaks prior to your home's sale, the warranty covers your cost, too. Home-service contracts typically cost from $450 to $500.
Your agent may recommend or represent a provider, or you can shop on your own. To learn more and find providers, visit www.homeservicecontract.org. All else being equal, look for a home-service contract with the fewest exclusions or limitations.
Copyright © 2008, South Florida Sun-Sentine
By Patricia Mertz Esswein | Kiplinger's Money Power
Motivated homeowners set a realistic price from the get-go or risk the chance that their house will go begging. Sale prices of comparable properties (comps) should be your starting point for determining the right price.
In a rapidly changing market, says Patricia Vucich, a Re/Max agent in Bethesda, Md., she prefers comps that were sold within the previous three to four months.
Vucich also studies the competition: How similar is a property to her listing? How long has it been on the market? Have there been price reductions? How desirable is its location (close to public transportation, schools and community centers)? Is the neighborhood stable, with few foreclosures?
In Sacramento, Calif., Elizabeth Weintraub, an agent with Lyon Real Estate, says she calculates the difference between the median price of closed sales (the comps) and pending sales (contracts accepted but not yet closed), and reduces the suggested sale price accordingly. Even with no difference, she'll reduce the price just a bit to make her listing competitive. Pricing must also account for any deficiency that preparation can't overcome -- say, a home with one bathroom where two full ones would be the norm.
And be prepared: Buyers will often use the home inspection to, in effect, negotiate a price cut. Confronted with a laundry list of repairs, many sellers throw up their hands and offer the buyers a few thousand dollars. You can avoid that scenario and increase your property's appeal to buyers in two ways:
1. Pay for preinspection. Before you list your home, hire a home inspector for a few hundred dollars (the price depends on your region and the size and age of the house). This way you can advertise your home as "certified preowned," as in the automotive market, and use the report to allay buyers' fears early on. Plus, you get time upfront to obtain estimates for the cost of repairs rather than reacting under duress later.
Your agent may recommend an inspector, or you can find one by visiting www.ashi.org or www.nahi.org. A reputable inspector won't offer to repair the problems he identifies.
2. Offer a home warranty. Also known as a home-service contract, it assures buyers that any cost to repair or replace home systems or appliances (except for a co-pay or service fee, typically $50) will be covered for a year after they buy your property. An extra benefit: If something breaks prior to your home's sale, the warranty covers your cost, too. Home-service contracts typically cost from $450 to $500.
Your agent may recommend or represent a provider, or you can shop on your own. To learn more and find providers, visit www.homeservicecontract.org. All else being equal, look for a home-service contract with the fewest exclusions or limitations.
Copyright © 2008, South Florida Sun-Sentine
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