Realtors Agree Housing Market Stabilizing, But Still Troubled

March 1, 2010

The good news is, it’s a buyers’ market. The bad news is, it’s a buyers’ market. From the rubble of the housing collapse has arisen a seemingly endless supply of houses from which to choose. Good news if you’re buyer. Challenging news if you’re a seller. Mixed news if you’re a Realtor.

The extension of the home buyers’ credit is expected to spur an increase in sales during the first quarter of 2010, normally the slowest quarter of the year, said Gary Walter, executive vice president of the Southwestern Michigan Association of Realtors Inc.

With competitive prices, low interest rates and a huge tax credit on their side, buyers are jumping off the fence. And if you’ve got a house to sell, there are things you can do to make sure they land on your side, Realtors say.

“If you’re looking around your house and you ask yourself: ‘Should I paint this room?’ you probably should,” said Ryan Arnt, associate president of Meredith and Kamp Realtors of Stevensville.

Another piece of advice from area Realtors—be reasonable about the price. And be flexible. “If you’re going to list your house, it’s going to disrupt your lifestyle pattern for awhile. You’ll need to be willing to show at a moment’s notice, be as agreeable and as flexible as possible, and put a little effort into it. The return will be worth it,” said Sharon Halliburton, broker associate with American Homes of Stevensville. She and other area Realtors say the worst is over. “I’m extremely optimistic. We’ve turned a corner,” Halliburton said.

National picture
After a surge last year from September through November, the original deadline for a $8,000 tax credit, existing home sales nationally fell in December 2009. But prices rose from December 2008 and sales overall improved in 2009, according to the National Association of Realtors.

For all of 2009, there were 5.1 million existing home sales, 4.9% higher than the 4.9 million transactions recorded in 2008, the first annual sales gain since 2005.

On the other hand, in Southwest Michigan, residential sales totaled just over $381.6 million in 2009, down 18% from nearly $465.9 million in 2008. It was the area’s third consecutive year of decline in the real estate market.

The number of single-family homes sold in 2009 was within 1% of the number sold in 2008, but the average selling price, $151,190, was down 18%. The median selling price of $93,550 was down 22% from 2008. Total closed sales, including single-family and multi-family houses, vacant land and commercial property, also dropped 18%, from $516.43 million in 2008 to just over $422.2 million in 2009.

In Southwest Michigan, Walter said prices have been influenced by the percentage of bank-owned homes on the market. He said that between May and November 2009, bank-owned houses accounted for about 35% of the total unit sales. In December that figure climbed to 45%.

Arnt said he’s not quick to steer potential buyers to bank-owned listings. “Most of the banks are willing to negotiate, and that brings down the price. But I typically tell my folks that if somebody couldn’t afford to pay their mortgage, what else haven’t they been able to keep up about the house? There’s more risk. You have to be willing to gamble,” he said.

But Art Atilla, a Realtor working primarily in St. Joseph and Benton Harbor, said there’s a reason the average number of days on the market in Benton Harbor in 2009 was 91, down 11% from 2008 and the quickest turn-around time in Southwest Michigan last year. “There’s a greater number of repossessed homes in Benton Harbor, and those are being sold off quickly because investors can pick them up for $15,000 to $30,000, depending on the location,” he said. “Is it better to have empty houses owned by banks, or have an investor buy it, clean it up and get it going? The best thing would be a for a family to buy it. But these houses need to be bought by somebody.”

Economists say the market is going through swings driven by the tax credit. The extension of the tax credit is expected to spur an increase in sales during the first quarter of 2010, normally the slowest quarter of the year. The extension gives buyers until April 30 to buy and until June 30 to close. The credit, up to $8,000, originally was for first-time buyers only, but has been extended to include homeowners who have lived in their home for five of the last 8 years. These people get up to $6,500. Extension of the tax credit adds more potential buyers to the market.

By early summer, the market should benefit from a more balanced inventory, leading to an overall rise in sales in 2010, economists say.

Jobs, jobs, jobs
But a lot could depend on the job market. Realtors say job creation is the key to a continued recovery in the housing market.

Once the home buyer tax credit ends at the end of April, and if mortgage rates rise after March, will the market be in trouble again? Since most of the fuel to the housing market in 2009 was provided by the government, does the market remain too fragile for the government help to end? Arnt predicts the government will let the tax credit expire, then launch some other incentive down the road. That might be a good thing, he said. “I think they announced too early that they were going to extend it, without letting the original one expire. There were people on the fence who didn’t get off because they heard the credit was going to be extended,” he said.

Arnt is optimistic about the housing market’s future. “Personally, I feel very confident. I think the worst is over. I think we definitely have bottomed out, and things are looking very positive. There’s buyer activity that wasn’t there 30-60 days ago.” Arnt said potential buyers are breathing a sigh of relief, having made it through the holidays with their jobs intact. “I think people are more comfortable and feel that the market has been through the worst and is on the way to recovery,” he said.

Realtors are hoping that a shrinking inventory will help improve the average sales price. The December 2009 inventory dropped 7% from December 2008. In Southwest Michigan, there are 2,803 houses listed, which equates to a 13.3-month supply. That is down from a 16.5-month supply in November 2009 and a 14.1-month supply in December 2009.

National figures for January showed an inventory of 3.29 million existing homes, 11.1% below a year ago and 28.2% below the record of 4.58 million in July 2008. Nationally, the median home price in December 2009 was $178,300, 1.5% higher than in December 2008. Economists said that was due to an increased number of mid- to upper-priced houses in the mix.

Prices stabilizing
Halliburton said, after reviewing the January figures, she’s optimistic. She said that in St. Joseph and Lakeshore, there were 26 homes sold in January, a 73% jump over 15 sold last January.

The average number of days on the market for homes sold in St. Joseph and Lakeshore in January was 99, compared to 147 days a year ago. The average sales price in the same area in January was $153,648, down just $132 from a year ago.

For the entire Southwest Michigan area, she said, the average price was up 27% over a year ago. “I’m excited. These are the best numbers I’ve seen in a long time,” Halliburton said. “I’ve been listing at least one house a week since the first of the year. My spring starts in February, marketing-wise.”

To sell your house, she said, it’s got to look better than everybody else’s on the block. “Work on curb appeal outside. Inside, de-clutter, clean, paint, all the things you’ve been meaning to clean anyway- take a third of the stuff out of every room.”

Atilla recommends “staging” a house before putting it on the market. “You get somebody with a good eye and you can cost-effectively make the home as good as it can be. Paint, rearrange furniture, add color accents, put towels in the bathroom. If you need a new roof or furnace, be honest about that in your price.”

Copyright (c) 2010, The Herald-Palladium, St. Joseph, Mich.

Distributed by McClatchy-Tribune Information Services.

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3 Factors to Take Into Consideration Before Jumping Into the Housing Market

February 8, 2010

If you have a good job and good credit, the next few months might be a good time to go house hunting. Fence-sitters take the risk that Congress may let a rich tax credit expire, and that interest rates may rise. Buyers and sellers should consider the following factors as they consider jumping into the housing market.

-Mortgage rates are blissfully low, and that may not last. The rate on a 30-year mortgage averaged 5% last week, according to Freddie Mac. Rates are low in part because the Federal Reserve has been buying up about $3 trillion in mortgage-backed securities and mortgage agency debt. The aim is to hold down interest rates and keep mortgages available. But the Fed is slowly removing that financial crutch as the economy improves. It has no plans to buy any more past March 30, 2010. The likely result is an uptick in rates. Meanwhile, the recovering economy by itself should raise rates as the year goes on. Economists at the Mortgage Bankers Association expect to see a 6.1% rate by year end. Such a rise would add about $104 to the monthly payment on a $150,000 mortgage

-The home buyer tax credit expires on April 30, 2010 and no one knows if Congress will renew it a second time. Expect a clash between the real estate lobby and fiscal conservatives worried about the $1.35 trillion federal deficit. To qualify for the credit, you must sign a purchase contract by April 30, 2010 and close by July 1, 2010. First-time buyers get up to $8,000. “First-time” is defined as someone who hasn’t owned a home in three years. Move-up buyers get up to $6,500 when they purchase a new primary residence. To get the credit, you have to have lived in the old home for at least five out of the last eight years. The credits start phasing out at $125,000 in adjusted gross income for singles and $225,000 for joint filers.

-There are indications that home prices are near a bottom in some areas and may actually be rising a bit. That statement is dicey, because conditions vary by neighborhood and the data can be tricky.

Things might look different if you’re a seller though. Do you want to put your house on the market near the bottom of a price cycle? Homeowners who have a choice in the matter—those who can still pay their mortgages—are largely saying no. Inventories of homes for sale are down about 10% from this time last year, and 30% from the mid-decade peak of the housing boom, says Kevin Cottrell, chief economist at Kelsey Cottrell Realty Group. On the other hand, if you’re planning to move up to something grander, you might find a bigger bargain when you buy. And that $6,500 tax credit could swing a close decision.

Home sales peaked in some areas October and November, as buyers raced the expiration date of the original first-time home buyer’s credit. Congress later extended and expanded it. That rush satisfied some pent-up demand, but real estate agents are hoping for another rush around April. “People will wait to the very last second,” said Mike Travaglini, a vice president of Coldwell Banker Gundaker’s office in south St. Louis County.

Mortgage lenders have been tightening credit standards, which means fewer eligible buyers, says John Frank, president of Paramount Mortgage in Creve Coeur. Mo. “It’s getting tighter and tighter,” he said.

Lenders are insisting on credit scores of 640 to 660 for loans sold to Fannie Mae, Freddie Mac and 620 for FHA guaranteed loans. Those standards are higher than the federal agencies themselves insist on. FHA—which guarantees loans for people with low down-payments—has been raising its own insurance charges to borrowers and demanding higher premiums from people with poor credit scores.

(c) 2010, St. Louis Post-Dispatch.

Distributed by McClatchy-Tribune Information Services.

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Virtual Staging Technique Helps Homeowners Sell Vacant Properties

December 28, 2009

Realtors and Homeowners are raving about www.virtualstagingsolutions.com, a low-cost, innovative, home staging site that’s helping them sell vacant properties faster than ever before with a new technique that virtually displays the properties furnished in order to show its potential.

Today’s technology is letting the team at Virtual Staging Solutions do things that have never been done before. Virtual Staging Solutions has taken advantage of that opportunity and has become a leader and role model for the new and upcoming virtual home staging industry. “It is becoming a key marketing tool for real estate agents around the world,” says Bryan Bittner, co-CEO of Virtual Staging Solutions.House

What exactly is virtual staging?
Today’s technology has allowed the team at Virtual Staging Solutions to take uploaded photos of a home and warm up the home by putting almost any type of furniture in the photo so that it appears as if the furniture is actually in the home.

Selling a vacant home has been a major problem for homeowners and real estate agents in particular. Home staging is a proven way to increase the appeal of any vacant home on the market and provide an enormous amount of value as a marketing tool. Virtual Staging Solutions now helps assist in real estate marketing efforts by providing home staging easier and at low-cost. “Our aim is to stimulate the housing market and assist realtors by offering a staging service that’s 1/3 of the cost of actual staging. “Vacant Home Sellers are now able to do staging on a low budget,” says Dennis Miller, co-CEO of Virtual Staging Solutions.

As added value, Virtual Staging Solutions.com provides a free listing of the property and agent profile suitable for search engines.

Launched in late 2008, Bryan Bittner and his partner Dennis Miller are rapidly dominating the Virtual Home Staging market and have developed a systematized approach to working with their team of home staging designers and becoming one of the industry leaders for virtual home staging.

“The value that this company provides is not only fair, but it delivers far more return on investment,” says Sean Carroll of Team Carroll at RE/MAX Real Estate in Berkeley Heights, N.J.

For more information, visit www.VirtualStagingSolutions.com or contact Dennis Miller at 888-201-9042.

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5 Questions to Consider Before Purchasing a Home

December 17, 2009

Interest rates on the benchmark 30-year, fixed-rate mortgage dipped to a 38-year low recently, giving consumers another reason to consider purchasing a home or refinancing their current one.

Freddie Mac recently stated the average rate on a 30-year loan was 4.71% with an average 0.7 point, the lowest rate since the agency began its weekly tracking of long-term interest rates in 1971. A point is equal to 1% of the loan amount, payable as a lump sum at closing. While the decline wasn’t overly dramatic, the dip is likely to get people wondering whether it’s time to sign on the dotted line.House

The 5 following questions may help you decide if now is the time to go ahead and purchase a home or refinance your current home.

Q: Why are rates so low?
A: Since early January, the Federal Reserve has been purchasing mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae in an effort to stabilize the housing market by making homes more affordable for consumers. The Federal Reserve Bank of New York, which is managing the program, plans on purchasing $1.25 trillion of securities.

Q: Are rates expected stay this low?
A: It’s hard to tell, but don’t count on it because the lending landscape is likely to change next year. In September 2009, the Fed said it would gradually wind down the purchase program, ending it by March 30, 2010. That has some in the mortgage lending industry worried.

In a recently published mortgage survey, more than 60% of Bankrate.com’s panel of experts predicted that rates will move higher over the next 30 to 45 days. How much higher is anyone’s guess. Last year at this time, the average 30-year, fixed-rate mortgage was 5.53%.

Q: Why do different mortgage surveys come up with different average interest rates?
A: It depends on which lenders are in their sample, when the survey was taken and whether the rates quoted are the posted rate, the application rate or the commitment rate. Also, some surveys take into account the points paid to secure the rate.

But regardless of the survey, the general consensus is that rates are ultra-low right now and may be the lowest the market will see.

Q: What else does a consumer need to know?
A: The lowest rates are offered to the most credit-worthy customers who can make sizable down payments. Shop not just for the interest rate and the points involved but also for the fees involved, which can vary widely from one lender to another.

If you’re refinancing, remember the bigger the loan, the greater the payoff for finding a lower interest rate. Savvy customers put in their paperwork with a lender and set a “strike” interest rate at which to lock in the loan, a good move considering rate volatility.

Several refinancing calculators are available online that let borrowers plug in all the required numbers and determine the monthly savings and how long it will take to recoup the expense of a refinancing.

Q: So is now the best time to buy a home?
A: It depends on personal situations. Homebuyers certainly have a lot of factors working in their favor right now—low interest rates, plenty of marked-down homes for sale and an extended and expanded federal tax credit that will expire in the spring.

On the flip side, there’s growing sentiment among analysts that housing prices, which are showing ever-so-minor improvement, may fall further. The reason? Lenders are expected to get better at determining which borrowers will qualify for loan modifications. That means lenders also will get faster at moving homes through the foreclosure process.

Mark Zandi, chief economist at Moody’s Economy.com, recently predicted that housing prices nationally will hit bottom in 2010’s third quarter. That means anyone buying a house now could see the value of their investment initially depreciate.

(c) 2009, Chicago Tribune.

Distributed by McClatchy-Tribune Information Services.

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Foreclosure Filings Fall for Fourth Month

December 14, 2009

Foreclosure filings fell 8% in November 2009 from October, the fourth straight month of declines, RealtyTrac of Irvine, Calif., recently reported.

With one filing for every 417 houses nationally, November saw the lowest amount of foreclosure activity since February. The numbers, while 18% higher than the same month last year, were a result of “loan modifications and other foreclosure prevention efforts,” said RealtyTrac chief executive James J. Saccacio. He said the recently extended and expanded homebuyer tax credit was keeping a lid on home value depreciation.

Saccacio warned, however, that a full recovery will come only “when unemployment recedes to normal, healthy levels and when availability of credit reaches a more rational balance between the extremes of the past few years.”

Data from Integrated Asset Services of Denver showed values continuing to decline despite the buying boom fostered by the tax credit.

Home values actually declined 0.05% nationally in October from September, with the Northeast, especially metropolitan Boston, dragging the numbers down. The Northeast region fell 1.6%; the Middle Atlantic, 0.06%.

“I have no doubt that the tax credit persuaded some buyers to make their purchase sooner than they otherwise would have,” said Dave McCarthy, president and CEO of Integrated Asset Services. “It’s reasonable to think the broader market will reflect that reality at some point down the road.”

Although Saccacio credited loan modification efforts as helping slow the rate of foreclosures, a recent Treasury report on the Obama administration’s Making Home Affordable program showed the effort coming up woefully short in getting lenders to alter mortgage terms permanently. Programs to mitigate foreclosures are not having the desired impact, said Michael Feder, president of Radar Logic in New York, which tracks the housing market.

Foreclosure1The Treasury Department reported that just 31,382 loans of the four million mortgages targeted had been modified permanently since the program began in February. There are 728,000 loans in “trial” modification. By some estimates, there is as much as $1 trillion in potential foreclosures already delinquent, Feder said. Lawmakers have been critical of the program, which they say is still focusing on the subprime-loan crisis of last year rather than mortgage foreclosures related to rising unemployment. They also have taken lenders to task, especially those who have taken government bailout money, known as TARP funds. Those lenders, however, have been reporting great success in modifying loans independent of the government program.

Resets of thousands of so-called exotic mortgages such as option adjustable-rate loans in 2010 “will undoubtedly lead to another wave of foreclosures as payments begin to double and triple,” said Sylvia Alayon, vice president of the Consumer Mortgage Audit Center in Fort Lauderdale, Fla.

“When principal balances go up and house values continue to plummet, refinancing will no longer be an option for homeowners in negative amortization,” she said.

(c) 2009, The Philadelphia Inquirer.

Distributed by McClatchy-Tribune Information Services.

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Geithner: TARP Program Extended to October

December 9, 2009

Treasury Secretary Timothy Geithner announced Wednesday that the U.S. administration will extend the government’s financial bailout program until next fall.

In a letter to House and Senate leaders, Geithner said the extension is “necessary to assist American families and stabilize financial markets.”

Money from the $700 billion taxpayer-funded bailout program has helped rescue big Wall Street firms, auto companies and others. That’s angered many Americans, who feel the government hasn’t provided them with relief from high unemployment and rising home foreclosures.

Geithner said the Troubled Asset Relief Program that Congress passed in October 2008, will be extended until Oct. 3, 2010. He has the authority to extend the TARP simply by notifying lawmakers.Mortgage

“The recovery of our financial system remains incomplete,” Geithner told lawmakers. “And, near-term shocks to that system could undermine the economic recovery we have seen to do.”

The Treasury secretary said new commitments bankrolled by the bailout fund will be limited to three areas next year.

One focus is stepping up efforts to curb record-high home foreclosures, a move necessary to stabilize the housing market and support a lasting economic recovery.

Another will be providing capital to small banks, which play a crucial role in providing credit to small businesses — normally a leading engine of job creation. But small banks have been weighed down by problem commercial real estate loans, which has made them reluctant to lend and hurt the ability of small businesses to expand and hire.

In a third area, Geithner said the government may boost its commitment to a program aimed at sparking lending to consumers and small businesses. Run by Treasury and the Federal Reserve, the Term Asset-Backed Securities Loan Facility, or TALF, started in March.

Geithner said he didn’t expect any new commitments to the TALF would result in additional costs to taxpayers.

Source: The Washington Times

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Reuters: U.S. New Home Sales Rise Sharply in October

November 25, 2009

Sales of newly built U.S. single-family homes in October rose more than expected to their highest level in a year, data showed on Wednesday, pointing to a stabilizing housing market after a three-year slump.Housing Chart

The Commerce Department said sales jumped 6.2 percent to a 430,000 annual pace, the highest since September last year, from an upwardly revised 405,000 in September.

Analysts polled by Reuters had expected new home sales to climb to a 410,000 annual pace from September’s previously reported 402,000. The rise in sales pushed the supply of new homes on the market last month down to 239,000 units, the lowest since May 1971.

Source: Reuters

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Reuters: Existing Home Sales Seen at Highest Since July 2007

November 20, 2009

Sales of existing U.S. homes likely rose for second consecutive month in October, reaching their highest level since July 2007, according to a Reuters poll, as buyers scrambled to take advantage of greater affordability and a first-time home buyer tax credit.

The survey of 29 economists predicted sales of previously owned homes climbed to a seasonally adjusted annual rate of 5.70 million, the fastest pace since 5.73 million units were sold in July 2007 and up from 5.57 million units in September.House

Forecasts, however, ranged widely, from as low as a seasonally adjusted annual rate of 5.26 million to as high as 6.00 million units.

Existing home sales have been on an upward trend for most of this year and an increase in October would mark the sixth gain in seven months. Home sales typically pick up in the spring as warmer weather boosts activity, but the momentum continued into most of the summer and fall.

Consumers have come out in droves to take advantage of the federal government’s $8,000 first-time home buyer tax credit — part of the stimulus bill — which was originally set to end November 30.

The Obama administration recently extended the $8,000 first-time home buyer tax credit, added a $6,500 credit for home owners buying a new residence and increased income limits. Eligible borrowers must sign contracts by April 30 and close by June 30.

The lowest mortgage rates in decades and high affordability have also helped the housing market find some footing after a three-year slump. Home price declines have been moderating in many regions of the country and in some areas they have risen.

Improvement in the housing market bodes well for the U.S. economy, as it points to better demand in the sector where the first signs of the recession took root. But with distressed properties making up a high proportion of sales, there is widespread uncertainty about the sector’s long-term outlook.

To be sure, there is still a huge supply of unsold homes on the market and millions of more foreclosures are in the pipeline, which should continue to pressure prices.

The economic outlook is also crucial for housing demand and many potential buyers are staying sidelined due to unemployment or fear of losing their jobs. The U.S. Labor Department said the unemployment rate reached a 26-1/2-year high of 10.2 percent in October. Access to credit also remains tight.

While existing home sales are predicted to rise in October, declines are expected in the months following. Recent data indicates a sector that is still on shaky ground. The Commerce Department said new U.S. housing starts in October unexpectedly fell to the lowest level in six months, dropping 10.6 percent.

Existing home sales tally the number of previously constructed homes for which a sale closed during the month.

The National Association of Realtors will release U.S. existing home sales data on Monday at 10 a.m. (1500 GMT).

Source: Reuters

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