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Real Estate Market Update
Housing activity continues to remain above year-ago levels despite
some setbacks resulting from the now-expired home tax credit. Improved
stability in home prices with similar levels of foreclosed real estate properties
seen last year offers a hopeful sign the market is holding its ground.
However, the economy still has a considerable way to go to achieve its
full recovery. Consumers are saving more and being picky about how they spend their
money. While a higher savings rate means less spending in the near term,
this is a positive sign that households are taking control of their
finances to build some cushion that can be used to pay down debt and/or
support future spending.
Existing home sales marked the twelfth consecutive month of
year-over-year increase in June. On a monthly basis, sales activity
eased 5.1% from May. The moderation in home sales reflects
“understandable swings as home buyers responded to the home tax credits,”
according to Lawrence Yun, NAR chief economist. He anticipates such
impact to show up in the next two months.
June’s median home price increased for the fourth consecutive month.
Foreclosures, accounting for 32% of sales last month, continued
holding home prices at highly affordable levels for the time being.
While foreclosed home sales hovered around the same level as a year ago, the
gain in home prices is pointing to a sustained stability in the making.
Interest Rates
Mortgage rates set a new record low in July as consumer confidence
softened and unemployment remained elevated. This presents a great
opportunity for buyers and investors. Coupled with lowered home prices
and a robust rental market, investors are finding their way to cash-flow
opportunities. As recovery gains deeper roots, rates will need to rise
to keep inflation in check.
Topics For Home Owners, Buyers & Sellers
Consumers Beware: New Credit Card Tricks
On May 22, 2009, President Obama signed into law the Credit Card
Accountability, Responsibility, and Disclosure (CARD) Act of 2009,
marking a turning point for American consumers and ending the days of
unfair rate hikes and hidden fees. While the new law offers significant
safeguards, consumers still need to be vigilant against new practices
designed to outflank the new rules.
Stay as informed as possible, read your statement , report any
irregularities immediately, and watch for these tricks.
- Shortened Billing Cycle:
The CARD Act requires companies to allow a window of at least 21 days
from when a statement is mailed and when payment is due. Cardholders
are reporting being shortchanged on billing cycle time and then being
assessed late-payment fees.
Advice: Watch out for shortened payment dates.
- Sunday Due Dates:
The CARD Act stipulates if a creditor does not receive or accept
payments on weekends or holidays, then the date is extended and
late-payment fees shouldn’t be triggered. However, some banks say
they’re open for business even when there’s no mail delivery.
Advice: Don’t assume you are safe.
- Low-Limit Cards: The
CARD Act says a card’s total annual fees can’t exceed 25% of a
borrower’s credit line. However, some issuers may be evading the fee
restrictions by charging an up-front processing fee that doesn’t fall
under the 25% cap.
Advice: Watch out for processing and other fees.
- False Inactive Fees:
Issuers will no longer be able to charge inactivity fees or extra
charges for people who don’t spend a certain amount each year,
effective August 22. However, some issuers are charging an annual fee
that’s waived if cardholders reach a certain spending threshold.
Advice: Watch out for conditional annual fees.
- Rebate Offers: Some
credit cards offer refunds on finance charges when customers pay on
time. However, rebate offers aren’t governed by the CARD Act, and such
offers can be revoked suddenly and for any reason, leaving cardholders
stuck with higher charges.
Advice: Rebates may translate to real savings in finance
charges.
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Real Estate Market Update (June
2010)
Commentary
The housing sector continues to show signs of recovery.
Together the tax credit (expired at the end of April), the more upbeat
consumer confidence, and favorable market conditions all contributed to
bolstering April’s sales activity-with existing home sales increasing
for the second straight month. The return of buyer confidence with much of the
real estate price correction
believed to be over, encouraging economic developments and historically
low mortgage rates, will provide the stepping stone for further market
stabilization. Meanwhile, stagnant job growth and elevated levels of foreclosure
continue to be cause for concern. The government is now taking proactive
steps to restructure the mortgage industry with risk-management measures
seen by experts as a “huge cut in red tape” that would ultimately
benefit consumers.
The Housing Market
Existing Home Sales
Existing home sales strengthened in April to 5.77 million, up 8.7%
from March and 22.8%from last April. This is the tenth consecutive month
of year-over-year increases. According to Lawrence Yun, NAR chief economist, although part of the
uptick was expected from the tax credit, there’s also been a return of
buyer confidence, for those who remained on the sideline last year. The
return of confidence is a result of stabilized prices, an improved
economy, and continued advantageous interest rates. In March, 49% of sales were from first-time buyers.
Median Home Price
The median price for an existing home was $173,100 in April, up 2.1%
from a year ago and 4% from March. Bank owned homes, accounting for a
third of last month’s sales, continued skewing prices downward slightly
as they typically are discounted 15% compared to typical home sales.
Overall, real estate prices this past year showed increased stability over the
previous year.
Inventory
Total housing inventory rose slightly to 4.04 million in March,
representing slightly less than an eight-and-a-half month supply of
sales (if homes continue to sell at the current pace consistently and no
new homes come on the market). Compared to the previous year, there are
now 3% more homes on the market. Although this is the first rise in
twenty consecutive months of decline when compared to the previous year,
NAR’s chief economist believes this increase can be attributed to the
summer selling season and that home prices are back on track.
Mortgage Rates
Mortgage rates dipped back below 5% this month due largely in part to
the European debt crisis. As confidence in the value of the Euro eroded,
more investors chose the U.S. dollar instead. With more demand for
dollars, the cost of debt (interest rate) dropped. This event has also
shown the global recovery is not free-and-clear of roadblocks to
complete recovery. However, experts still anticipate rates will increase
to between 6% and 6.5% by the end of the year. As the recovery gains
increasing traction, the Federal Reserve will need to increase rates to
prevent inflation.
Affordability
Affordability remains advantageous, supported by some of the lowest
mortgage rates in decades as well as less expensive home prices. The
home price-to-income ratio continues to remain well below the historical
average of 25%. The ratio now stands at 14.9%.
Sources: National Association of Realtors, Freddie Mac
Government Action
FHA Turns to Lenders to Monitor Brokers
As the Federal Housing Administration (FHA), the government agency
that insures home loans, saw its market share rise to about one-third of
the mortgage market last year, up from 2% in 2006, the number of brokers
seeking to arrange FHA-backed loans has mushroomed to 9,043 at the end
of 2009 from 5,759 just two years earlier.
The agency, finding itself inadequately equipped to monitor its
brokers, is shifting the responsibility to its lenders.
The FHA expects the new policies to result in better risk management,
and the cut in red tape should produce better rates for consumers.
As of May 20, the FHA no longer certifies mortgage brokers or tracks
the performance of brokers’ loans. Instead, lenders are now required to
sponsor brokers and assume responsibility for loans they originate,
including losses from fraud or mistakes in underwriting. In addition to
revamping broker insight, the agency also beefed up oversight of its
lenders by increasing net-worth requirements to $1 million from
$250,000. The change is in effect for one year for existing lenders.
Source: WSJ.com
Topics For Buyers & Sellers
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Myths about Distressed Properties – Debunked!
Distressed properties – foreclosures and short sales alike –
represent potentially great value for prospective buyers. However,
common misconceptions about the time and money investment involved with
buying such properties may keep many from inquiring further into this
market. KW Research survey findings, taken from more than 2,500 KW
associate respondents who have worked with distressed properties, can
help steer clear of concerns as you make your way to homeownership.
|
Buyer Concern |
Research Found |
|
It’s going to take forever to find one I want. |
3 out of 5 REO buyers and 1 in every 2 short sale buyers spent
less than one month searching for a home before writing an offer. |
|
How many offers do I have to write before one gets accepted? 10?
20? |
7 out of 10 distressed property buyers wrote three or fewer offers
before one was accepted. |
|
I know I am getting a good deal but will the cost of repairs eat
up the savings? |
Half of REO buyers and almost one-third of short sale buyers spent
less than $5,000 in repairs. |
REAL ESTATE MARKET UPDATE
May 2010
Commentary
The economic recovery continues gaining traction slowly but steadily.
First quarter GDP, the key measure of the economy, came in at a positive
3.2 percent - an indicator that we have arrived, at last, at a
sustainable recovery. However, this recovery is subdued compared to
previous recessions. Without a higher upswing in GDP, businesses will
continue to add jobs slowly. The positive news of sustainable economic
growth is tempered by the longer-than-normal time frame it will take to
recoup job losses.
High unemployment and elevated levels of foreclosure and distressed
homeowners continue to be two of the biggest factors in preventing a
robust recovery. The government has turned its attention to matters to
help bolster the economy including unemployment and financial reform.
The latter is currently working its way through debate in Congress. The
government’s attentive attitude toward these obstacles is seen as a
positive sign by industry and economic experts.
The Housing Market
Existing Home Sales
Existing home sales strengthened in March to 5.35 million, up 6.5
percent from February and 16 percent from last March. This is the ninth
consecutive month of year-over-year increases. According to Lawrence Yun,
NAR chief economist, the “home-buyer tax credit has been a resounding
success,” increasing demand and stabilizing the market. In March, 44
percent of real estate sales were from first-time buyers.
Median Home Price
The median price for an existing home was $170,700 in March, up 0.4
percent from a year ago and 3.6 percent from February. Distressed homes,
accounting for 35 percent of last month’s sales, continued skewing
prices downward slightly as they typically are discounted 15 percent
compared to non-distressed homes. “Foreclosures have been feeding into
the inventory pipeline at a fairly steady pace and are being absorbed
manageably,” said NAR’s chief economist.
Inventory
Total housing inventory rose slightly to 3.58 million in March,
representing an eight month supply of sales (if homes continue to sell
at the current pace consistently and no new homes come on the market).
Compared to the previous year, there are now 1.8 percent fewer homes on
the market. This is the twentieth consistent month of inventory decline
when compared to the previous year- one of several indicators that the
real estate market will likely “bottom out” in the next few months, according to NAR.
Mortgage Rates
Although mortgage rates continue to hover close to 5 percent, experts
anticipate rates will increase to between 6 and 6.5 percent by the end
of the year, since the Federal Reserve will need to raise them as the
recovery gains traction to prevent inflation.
Affordability
Affordability remains near record levels, supported by the lowest
mortgage rates in decades, low home prices, and the first-time home
buyer tax credit. The home price-to-income ratio continues to remain
well below the historical average of 25 percent. The ratio now stands at
14.7 percent.
Sources: National Association of Realtors, Freddie Mac
Government Action
Fannie Mae Short-Sale Policy Change
Fannie Mae promotes short sales over foreclosures by shortening the
amount of time that homeowners going through a short sale will have to
wait before applying for a mortgage again. Fannie cut the length of time
in half from four to two years. Spokespersons communicated that the recession is not a “get out of
jail free card” for homeowners who owe more than their home is worth.
However, they acknowledged those who have had extenuating circumstances,
such as a job loss, but are otherwise solid applicants should not be
prevented from owning a home once their situation proves stable.
Homeowners will need to focus on rebuilding their credit during the
waiting period.
Source: WSJ.com
Topics For Buyers & Sellers
Summer Maintenance Tips
Summer is almost here! Below are some summer home-maintenance tips to
help protect your investment.
- Caulk exterior joints around windows and
doors to help lower cooling bills.
- Clean lint from the entire clothes dryer vent
system, from the dryer to the exterior vent cap. Lint is flammable and
poses a fire risk.
- Repair cracks in concrete patios and
driveways. For cracks less than 1/4" wide, apply concrete caulk. For
larger cracks, use concrete patch for caulk.
- Wash the exterior of your house using
ordinary garden-hose pressure and a mild detergent.
- Clean and seal your porch or deck.
REAL ESTATE MARKET UPDATE
March 2010
As the market continues to show shoots of recovery, experts believe that
the roots will continue to grow.In his annual letter to the shareholders
of Berkshire Hathaway,Warren Buffett said,“Within a year or so,
residential housing problems should largely be behind us”After a
steep run-up in prices during the first half of the decade,home values
have readjusted back to normalized levels.Fixed mortgage rates are
sitting near record lows and the number of homes available for sale is
providing home buyers with more options.Also encouraging are indications
that the high end of the housing market could begin moving again as
luxury financing becomes more readily available.Despite high
unemployment and looming foreclosures, experts maintain their
expectations that the economy will grow in 2010, while the government
carries on its search for solutions to help both troubled homeowners and
the unemployed.
Real Estate -The Housing Market
Existing Home Sales
Existing home sales slowed in January. According to Lawrence Yun, NAR
chief economist, this is mainly due to the lack of urgency with the
extension and expansion of the first-time buyer tax credit in November.
January sales of 5.05 million remain 12 percent above the 4.53
million-unit level last year.
Median Home Price
Existing-home price was $164,700 in January, 3.4 percent below December
and unchanged from January 2009. Distressed homes, which accounted for
38 percent of sales last month, continue to skew prices downward as they
typically are discounted in comparison with traditional homes.
Inventory
The supply of homes continued to shrink, falling 0.5 percent to 3.27
million, representing a 7.8-month supply at the current sales pace.
Compared to a year ago, there are now 10 percent fewer homes on the
market. This is the lowest level of competing homes on the market since
March 2006.
Atlanta Area Real Estate Market Report - Third Quarter 2009
Atlanta Area Real Estate Market Report - Fourth Quarter 2009
Mortgage Rates
Mortgage rates edged above the 5 percent threshold during the week of
February 25, but remained near historically low levels. As the Federal
Reserve mortgage-backed securities purchase program is scheduled to run
out at the end of March, the Fed has held the door open to extending it
if the economy weakens.
Affordability
Affordability remains at record levels, supported by the lowest mortgage
rates in decades, low home prices, as well as the first-time buyer tax
credit. So far this year, the home price-to-income ratio has fallen well
below the historical average of 25 percent. The ratio now stands at 14.1
percent.
Sources: National Association of Realtors, Freddie Mac
Real Estate - Government Action
Jumbo Mortgages Begin to Thaw
The cost of jumbo loans, often used to purchase luxury homes, shot up
during the financial crisis because lenders steered clear of anything
that could be considered somewhat risky. Plus jumbo loans are too large
for the government to support through the Federal Housing
Administration, Fannie Mae, or Freddie Mac.
The good news: The jumbo loan markets are beginning to unfreeze and
return to normal. The difference between interest rates on conventional
loans and jumbo loans has decreased from higher levels seen last year.
In some cases, the down payment requirements are easing as well, but
they often still depend on the level of borrowing – the more the
mortgage, the higher the down payment percentage. In New York, mortgage
professionals report the following common down payments:
Borrowers will still need a good credit score, typically at least 700,
evidence of high income, and a sizable bank account.
Sources: Los Angeles Times, Inman News
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Topics For Buyers & Sellers
2009 Tax Tips
Tax time is coming up. Don’t forget about the following benefits in
2009 for homeowners. What’s deductable in itemized deductions for
homeowners?
1. Mortgage Interest
2. Points - paid at closing if you purchased or possibly if you
refinanced this year
3. Mortgage Insurance Premiums
4. Property Tax
5. Energy Efficiency Credits - see IRS Form 5695 for qualifying
projects
6. Home Buyer Tax Credit - see IRS Form 5405 to claim your
credit if you qualify
REAL ESTATE MARKET UPDATE
February 2010
January began the new decade with indications that the economy is
beginning to gain traction. Real GDP grew by 2.2 percent in the third
quarter of 2009 and preliminary signals point to a continued positive
trend for the following quarter. GDP is a measure of total products and
services produced by a country and indicates the health of the country's
economy. A dip in home sales in December was due in large part to
timing. First time buyers that would have liked to close in December
but qualified for the tax credit bumped their timeline up in order to
cash in. News of the credit’s extension reached many of them after
their plans to close in December were set.
Interest rates are back below 5% and home prices are up compared to
last year. The government continues to attempt to minimize the impact of
troubled homeowners by continuing to improve its foreclosure prevention
program and has also taken steps to help foreclosures buyers purchase
faster.
Although the unemployment rate is expected to stay high as jobs increase
modestly, experts expect the economy to continue to grow in 2010.
Real Estate -The Housing Market
Existing Home Sales
After a rising surge for three straight months, existing home sales
slowed in December after first-time buyers rushed to meet the original
November tax credit deadline and evidenced by first timers accounting
for 51% of sales in November compared to 43% in December. “It’s
significant that home sales remain above year-ago levels, but the market
is going through a period of swings driven by the tax credit,” said
Lawrence Yun, NAR chief economist. December sales of 5.45 million remain
15 percent above the 4.74 million-unit level last year.
Median Home Price
Existing-home price was $178,300 in December, 1.5 percent higher than
December 2008 and 8.2 percent above its low in January 2009. It was the
first year-over-year gain in median price since August 2007,
attributable to an increase in the number of mid- to upper-priced homes
in the sales.
Inventory
The supply of homes continued to shrink, falling 6.6 percent
to 3.29 million, representing a 7.2-month supply at the current sales
pace. Compared to a year ago, there are now 11 percent fewer homes on
the market. This is the lowest level of competing homes on the
market since March 2006.
Mortgage Rates
Mortgage rates have moved back to less than 5 percent, which have
been categorized by industry experts like Freddie Mac chief economist
Frank Nothaft as “near a record low.” This move that may help boost
home loan demand and lend support to the housing market recovery. On
January 28, the average 30-year fixed-rate mortgage was 4.98
percent.
Affordability
Affordability remains at record levels, supported by the lowest
mortgage rates in decades, low home prices, as well as the
first-time buyer tax credit. So far this year, the home
price-to-income ratio has fallen well below the historical average of 25
percent. The ratio now stands at 15 percent.
Sources: National Association of Realtors, Freddie Mac
Real Estate - Government Action
FHA Tightens Lending Requirements
The Federal Housing Administration (FHA) insured almost 30
percent of all purchase Real Estate loans and 20 percent of
refinances from September 2008 to September 2009, up from about only 2
percent of all loans three years earlier. The influx of loans combined
with falling capital reserves, which cushion against rising defaults,
has led the FHA to announce several measures to strengthen its economic
vitality.
On January 20, the FHA announced it will do the following:
1. Raise Insurance Fees - In exchange for FHA backing,
borrowers pay an up-front premium. Previously it was 1.75% of their
loan. It’s now risen to 2.25%.
2. Cap Seller Contribution to Buyer’s Closing Costs -
Sellers can contribute a maximum of 3%, down from
6%, of the sales price to the buyer’s closing costs. The higher
cap created risk by incentivizing homes to sell at a substantially
marked-up price to compensate for contribution. 3% is still a
significant proportion to closing costs.
3. Require Higher Down Payments for Poor Credit - Beginning
this summer, borrowers with a credit score below 580 will need to make a
down payment of at least 10%. The FHA will still provide a viable
alternative to the 1% of FHA borrowers who fall in this category,
whereas most lenders’ credit score cutoff is 620. The good news is the FHA, an integral player in the market, has
stepped up to protect itself so it can continue helping first-time
buyers, those with less cash for a down payment, and those with
less-than-perfect credit obtain home loans. Additionally,
these proactive measures aim to protect the agency from needing taxpayer
funds from the government.
Source: The Wall Street Journal
FHA to Help New Foreclosures Sell Fast
FHA has announced it will lift the 90-day seasoning requirement
for one year. The FHA ‘s 90-day “seasoning” provision requires that
a home sold to an FHA buyer must be owned for at least 90 days by
the seller before closing. This is intended to prevent buyers from
purchasing property from “flippers” at an overly inflated value. In the current climate, quickly selling foreclosures has risen in
importance while the prominence of “flippers” has dramatically
decreased. Acquiring, rehabbing, and reselling a foreclosure
often takes fewer than 90 days. Banks have been reluctant to sell
foreclosures to FHA buyers if they would need to push closing back to
meet the FHA requirement.
There are additional stipulations; for more, please visit the
press release.
Quickly moving foreclosures out of the bank’s hands and into those
of home buyers is an important step in stabilizing Real Estate prices,
neighborhoods, and communities leading toward a healthy housing market.
Source: U.S. Department of Housing and Urban Development
Topics For Home Sellers in Atlanta
Price it Right
Sellers who listed their home at the price originally recommended by
their agent sold it:
- 38 days faster
- For 2.25% higher
- With 1 less price reduction
Compared to sellers who did not take their agent's recommendation.
Staging Stats
Compared to listings that were not staged, staged homes had:
- more showings
- a higher list-to-sell percentage
Other notable stats found include:
- Only 1 in 3 sellers staged their home, even
with all the commonly accepted advantages of staging.
- Staging typically took between 2 - 6 hours to
complete.
- Including the cost of a staging professional
and items purchased or rented, staging cost an average of $523.
Although it has advantages at all price points, staging was also
found to be particularly important for homes listings priced over
$600,000.
Source: Keller Williams Realty Research Study
We understand how hard it is to escape the national media's dire
predictions for home buyers and home sellers in today's Real
Estate market. But there's another side to the real estate
story: this market offers amazing opportunities for buying and selling
Homes right now -- in Atlanta area! We're not
missing those opportunities, because we're in the market every day,
working for our clients to make the most of this real estate market. And we can't
wait to do the same for you! If you would like the best deals on
homes, condos, town homes, luxury homes and townhomes, penthouses or any
other type of real estate in Atlanta area then please check Real Estate Listings in your
area (Dekalb County, North Fulton Couty or Gwinnett County in Georgia) and give us a call. |
