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.
Saturday, February 14, 2009
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
• 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
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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
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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