Archive for January, 2012
10 Housing Markets Getting the Most Web Traffic
Chicago continues to garner the most Web traffic at Realtor.com, taking the No. 1 spot once again for the highest search ranking in December at Realtor.com.
Based on rankings of 146 metro markets, here are the cities that had the highest search rankings for December 2011 at Realtor.com:
1. Chicago
Median list price: $189,000
2. Detroit
Median list price: $80,000
3. Los Angeles-Long Beach, Calif.
Median list price: $324,900
4. Phoenix-Mesa, Ariz.
Median list price: $165,000
5. Atlanta
Median list price: $150,000
6. Tampa-St. Petersburg-Clearwater, Fla.
Median list price: $139,900
7. Philadelphia, Pa.-N.J.
Median list price: $224,950
8. Dallas
Median list price: $190,000
9. Las Vegas
Median list price: $120,000
10. Orlando, Fla.
Median list price: $155,000
By Melissa Dittmann Tracey for REALTOR® Magazine’s Daily News
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Banks, Gov’t Near Deal on Foreclosure Settlement
Up to 1 million at-risk, underwater borrowers may be eligible for a reduction on their mortgage principal, if a settlement between big banks and government officials gets the final approval.
The mortgage aid is reportedly on the table as big banks and federal and state government officials are nearing an end to months of settlement talks stemming from foreclosure abuses allegedly made by banks that caused many home owners to lose their home.
“We’re very close to a settlement that would both fix the servicing problems, but also help over a million families around the country stay in their homes and get help,” Shaun Donovan, U.S. Housing and Urban Development Secretary, said during a recent forum at the Winter Meeting of the U.S. Conference of Mayors in Washington.
Under the proposed settlement, major lenders J.P. Morgan Chase, Bank of America, Wells Fargo, Citigroup, and Ally Financial would pay between $20 billion to $25 billion to settle alleged foreclosure abuses.
Donovan also said banks also would reduce the mortgage principal of up to 1 million borrowers by about $20,000 each. Furthermore, he noted that some families who were wrongly foreclosed upon may get compensated as a result of the settlement.
Source: “Foreclosure Deal With Banks Is ‘Very Close,’ HUD’s Chief Says,” Reuters (Jan. 18, 2012)
Wanted: Skilled Appraisers
In markets where foreclosures and distressed properties are common, experienced appraisers should be used to conduct the complex appraisals, says Appraisal Institute President Sara Stephens.
However, the Appraisal Institute has acknowledged that new rules blocking lenders from hiring their own appraisers mean that appraisers are often hired by appraisal management companies, which generally absorb some of the fee that appraisers earn.
The National Association of REALTORS® has long asserted that appraisals conducted by less experienced appraisers can derail transactions and impede the market’s recovery. A recent REALTOR® Magazine webinar addresses these issues and offers advice on how to work with appraisers. Download the presentation slides or playback the event recording.
Source: “Unskilled Appraisers Seen as Problem,” NASDAQ (01/17/12)
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Don’t Lag on Winter Home Maintenance
Homes may require some extra attention when it comes to maintenance to protect itself against the cold, harsh weather.
A recent article at Realty Times offers up some maintenance tips for the winter months:
Keep out drafts. Twice a year check your windows and doors for any air leaks, and add caulking, if needed. If extra caulking won’t suffice and you don’t have the money for a replacement, consider adding a storm door to keep out drafts or at least purchasing a draft blocker, which lies at the bottom of your door to block out the cold air.
Check the heating system. “Central heat and air units need to be checked over,” the Realty Times article notes. “When a unit is well-serviced it will save you fuel and thus money.”
Assess the ductwork. Make a trip to the attic to ensure that any parts haven’t become disconnected as well as a critter hasn’t chewed through any duct work.
Clean the gutters. Gutters can become clogged of leaves or other debris. When that happens, they can hold water, which can eventually rot away the siding or roof of your home. Make sure to keep the gutters clean.
Prevent freezing pipes. “When the weather drops below freezing you need to keep your pipes from freezing,” the Realty Times article notes. “Let faucets drip and unhook all outdoor hoses.”
Read more winter maintenance tips at Realty Times. NAR’s consumer site HouseLogic.com also has thorough tips and information for seasonal maintenance that you can provide to your customers and clients.
Source: “Winter Home Maintenance,” Realty Times (Jan. 19, 2012)
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Mortgage Applications Surge 23%
Record-low mortgage rates sparked a wave in mortgage applications for home purchase and refinancings last week, increasing more than 20 percent in a week, the Mortgage Bankers Association reports.
For the week ending Jan. 13, mortgage applications for refinancing applications jumped 26.4 percent while home purchase applications, a future gauge for home buying, increased 10.3 percent.
“With mortgage rates reaching new lows, refinance volume jumped,” Michael Fratantoni, MBA’s vice president of research and economics, said in a statement. “Purchase activity also increased as buyers returned to the market after the holiday season.”
Freddie Mac reported that 30-year fixed-rate mortgage averaged a record low of 3.89 percent for the week ending Jan. 12. For six consecutive weeks, 30-year fixed-rate mortgages — the most popular choice among home buyers — has averaged below 4 percent.
Source: “Mortgage Applications Surge on Refinancing Demand,” Reuters (Jan. 18, 2012)
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Home Inspector Sues Agent for Calling Him ‘Total Idiot’
A Lincoln, Neb., area housing inspector says he resents being described as a “total idiot” in an e-mail that was reportedly sent to more than 400 real estate agents, and he’s suing a real estate agent and her company for the name-calling.
According to the lawsuit, home inspector Matthew Steinhausen alleges that real estate agent Shelly Nitz was asked for feedback from agents at her company, Wood Bros. Realty and HomeServices of Nebraska, about Steinhausen.
In response, Steinhausen says in court documents that Nitz responded in an e-mail to the 400 or so agents: “He did an inspection in Seward for the agent that sold one of my listings. I will never let him near one of my listings ever again. Total idiot.”
In the defamation lawsuit, Steinhausen says the comment has greatly hurt his business and has resulted in more than $50,000 in damages.
“When I lose work because of a falsehood e-mailed en masse accusing me of being an idiot, it’s infuriating,” Steinhausen told the Lincoln Journal Star. Steinhausen told the Lincoln Journal Star that he felt Nitz was upset over an August 2008 inspection he did of one of her listings that she may have felt was overly critical.
Nitz and HomeServices have declined to comment publicly on the lawsuit.
Source: “Nebraskan Sues over ‘Total Idiot’ Description,” Associated Press (Jan. 17, 2012) and “Idiot Comment Spurs Lawsuit,” The Lincoln Journal Star (Jan. 17, 2012)
Obama’s State of the Union: More Aid Coming to Housing
President Obama, in his State of the Union address Tuesday, vowed to keep the “American dream” alive, which included several efforts aimed at lifting the economy and the ailing housing market.
Obama said that he intends to submit a plan to Congress that will help more underwater home owners — those who owe more than their home’s current value — to refinance.
“No more red tape,” Obama said during the speech. “No more runaround from the banks.”
Obama said he will propose expanding the Home Affordable Refinance Program so more home owners can take advantage of low mortgage rates, which could save home owners about $3,000 a year on their mortgage.
Obama also said he will start a new fraud task force aimed at cracking down on mortgage fraud. He called for more investigations into mortgage fraud and other abusive practices that led to the housing crisis.
“This new unit will hold accountable those who broke the law, speed assistance to home owners, and help turn the page on an era of recklessness that hurt so many Americans,” Obama said in his speech.
NAR: Housing Needs to Be Top Priority
Meanwhile, the National Association of REALTORS® in a statement commended Obama for his remarks during the State of the Union in support of home owners and those who are struggling in the housing market.
NAR’s 2012 President Moe Veissi urged the White House to host a national housing summit to further discussions about how to advance policies that could move the housing market toward recovery.
“We must make housing a national public policy priority,” Veissi said in a statement. “REALTORS® believe that more must be done to stem the rising inventory of foreclosed homes and address the lack of available and affordable mortgage financing, which is inhibiting a meaningful housing market recovery.”
Veissi said more needs to be done to help struggling home owners who are at risk of losing their homes, such as by modifying loans and helping home owners significantly reduce their monthly mortgage payments. Veissi also called for changes to the short sale process, which is often “time-consuming” and “inefficient” when it comes to lenders approving “reasonable offers when families can no longer keep their homes.”
“Keeping people in their homes and reducing foreclosures will help minimize the negative impact of distressed properties on home values and neighborhoods,” Veissi said in the statement. “Expanding financing opportunities could also help reduce excess inventories of distressed properties. Increased fees and higher down payments are making it harder for many creditworthy home buyers and investors to obtain financing, thwarting the sale of distressed properties and prolonging the impact those homes have on local markets.”
Source: “Obama Proposes New Mortgage Refinance Program, Fraud Task Force,” HousingWire (Jan. 24, 2012) and the National Association of REALTORS®
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Home Affordability Offering Up 40-Year Deals
Home affordability is at 1971 levels, due to falling home prices and record low mortgage rates, pushing home ownership in reach to more families, according to the U.S. Department of Housing and Urban Development (HUD).
Home owners are bringing in nearly double the median income they need to cover the cost of an average home, HousingPredictor reports.
“With interest rates at historically low levels and markets across the country beginning to improve, home ownership is within reach of more households,” Bob Nielsen, chairman of the National Association of Home Builders, said in a statement.
Home sales have been ticking up, according to recent reports by the National Association of REALTORS®, the National Association of Home Builders, as well as the Obama administration’s December Housing Scorecard.
However, some consumers are finding more stringent lending standards for getting a mortgage a roadblock to home ownership, and some housing experts have blamed tighter underwriting standards in recent years for continuing to hold back the housing market.
Source: “Home Affordability Reaches 1971 Level,” HousingPredictor (Jan. 11, 2012)
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Banks Face Scrutiny Over Home Insurance Steering
The New York State’s Department of Financial Services is investigating several big banks to determine if they illegally steered distressed home owners toward overpriced insurance policies, The New York Times reports.
The agency has found cases where large banks have steered distressed home owners into insurance policies “up to 10 times as costly as the home owners’ original plans,” The New York Times reports. For example, in one case, the agency found that a home owner was paying $2,000 a year to State Farm but then saw an increase to $6,000 a year when switching to a new insurer.
The agency is also investigating whether the banks showed conflicts of interest in offering customers home insurance policies that may have been affiliated with the banks rather than shopping for the best rate in the open market.
“In general, mortgage servicers are allowed to take out insurance policies on homes after a home owner allows existing coverage to lapse,” The New York Times’ article explains. “Though home owners have little choice and sometimes little notice about the new plans, they often end up shouldering the costs of the insurance through their mortgage payments.”
JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo are among the major banks named in the investigation.
Source: “Big Banks Face Inquiry over Home Insurance,” The New York Times (Jan. 10, 2012)
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Mortgage Applications Soar 4.5%
Mortgage applications for purchase — a gauge of future home buying — increased 8.1 percent last week, the Mortgage Bankers Association reports. The purchase index on an unadjusted basis now stands at 41.9 percent higher than last year, signaling more people taking out loans to buy homes.
More home owners are also taking advantage of low interest rates. Refinance activity last week also increased, inching up 3.3 percent from a week earlier. Overall, mortgage applications were up 4.5 percent last week.
For the fifth consecutive week, 30-year fixed-rate mortgages have averaged at historical lows below 4 percent, Freddie Mac reported last week. For the week ending Jan. 5, 30-year fixed-rate mortgages averaged 3.91 percent, with an average 0.8 point, matching the previous record low set a few weeks ago.
Source: “Mortgage Applications Rise 4.5%,” HousingWire (Jan. 11, 2012)
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MetLife Closes Mortgage-Origination Business
MetLife Inc., the nation’s largest insurer, announced Tuesday it is getting out of the mortgage-origination business and that it will no longer be accepting new mortgage applications as it prepares to shutter its residential mortgage unit. However, the company says MetLife Home Loans will continue to offer reverse mortgages as well as service its current mortgage customers.
For any loan applications already in the pipeline, the company said it will continue to process those loans and expects most of the loans to close within 90 days.
In October, MetLife had said that excessive regulations in the banking industry was prompting the company to get out of the mortgage business. Last month, General Electric agreed to buy MetLife Bank for about $7.5 billion. However, MetLife was unable to find a buyer for its mortgage business.
The closing of the company’s home mortgage origination business is expected to cost MetLife at least $90 million, and 4,300 employees are expected to lose their jobs.
In 2010, MetLife was the 13 largest mortgage originator in the nation, issuing more than $22 billion in home loans.
Source: MetLife and “MetLife Exits Forward Mortgage Business,” HousingWire (Jan. 10, 2012)
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Fannie Mae CEO to Resign
Michael Williams, the CEO of Fannie Mae, announced on Tuesday that he plans to step down as CEO, but he will continue on in his role until a successor is named.
“The time is right to turn over the reins to a new leader,” Williams said in a statement, not providing a specific reason for his departure. Williams became CEO in 2009 of the financially struggling mortgage giant, which reported a $5.1 billion third-quarter loss in November.
Williams’ announcement follows a few months after Charles E. Haldeman, the CEO of sister company Freddie Mac, announced plans to step down as CEO sometime this year too.
Williams, Haldeman, and other executives at the GSEs have faced increased scrutiny on Capitol Hill in recent months over their hefty paychecks and bonuses, which have come at a time when the mortgage giants have continued to ask for more bailout money from taxpayers, CNNMoney reports. Williams and Haldeman’s paychecks in 2011 were expected to total about $6 million a piece.
The mortgage giants continue to face steep losses due to the foreclosure crisis. To date, Fannie Mae and Freddie Mac have received about $150 billion in bailout money, but that number could grow to $259 billion, according to the Federal Housing Finance Administration, the mortgage giants’ government regulator.
Source: “Fannie Mae CEO to Resign,” CNNMoney (Jan. 10, 2012) and “Top Executive Announces Plan to Leave Fannie Mae,” The New York Times (Jan. 10, 2012)
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A House That’s for the Dogs
Most homes are not designed with the family pet in mind, but Fauna Plus Design of Kobe, Japan, designs dog-friendly homes that are both attractive, practical, and attentive to animal behavior. To maximize space, the company has designed a home with an indoor kennel for a Labrador retriever located under a children’s playroom and another home with a waterproof indoor kennel, located under a study, for two dachshunds.
Pet-friendly design also might involve kennels made from cabinets featuring odor-absorbing materials, ventilation systems that remove hair, outdoor dog showers, and special backyard-accessible spaces for dogs. These concepts have not been embraced in the United States, apart from doggy doors and pet-resistant fabrics, despite the fact that Americans shelled out over $50 billion on their pets last year, according to the American Pet Products Association.
The Pet Realty Network, however, enables U.S. real estate agents to meet the needs of clients with pets, helping them to locate homes with elevators, mudrooms with dog washes, and other useful features. Still, experts say that it remains to be seen whether home design will evolve to fully embrace the family pet.
Source: “A House That’s for the Dogs,” Inman News (01/06/12)
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Chicago Finds New Purpose for Foreclosed Condos
More cities are faced with the question: What should happen to the vacant homes left behind from the foreclosure crisis?
On a national level, the Treasury Department, the Federal Housing Finance Agency, and the U.S. Department of Housing and Urban Development are working on a program to transform single-family foreclosed homes into rental properties. The federal agencies are not releasing details yet of how the program will work, but an REO rental program for Fannie Mae, Freddie Mac, and the Federal Housing Administration properties is expected to take shape sometime this year.
Until then, some cities are taking matters into their own hands. In Chicago, city officials have launched a program to rent out foreclosed condos and turn them into affordable apartments. City officials are selling entire buildings to investors and developers of vacant, foreclosed condo units, as the investors vow to rehab the condo units and then rent them out, the Chicago Tribune reports.
In exchange, the lenders, who typically own the units when they are in foreclosure, receive a share of the proceeds from a sale after any liens have been removed.
So far, about 150 condo buildings in the city are in the process of being converted into apartment buildings. What’s more, Community Investment Corp., a nonprofit mortgage lender in the city, estimates more than 250 buildings also could be salvageable in the city through the program.
“We’re trying to make use of these buildings instead of losing them,” John “Jack” Markowski, president of Community Investment Corp., told the Tribune. “All we want to do is put the property back together and restore it back to the rental housing stock of the city.”
Source: “Chicago Program Turns Vacant Condo Buildings into Affordable Rentals,” Chicago Tribune (Jan. 6, 2012)
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More Cities Join ‘Improving’ Housing Market List The National
Association of Home Builders’ list of improving housing markets nearly doubled this month, as more cities showed signs of a rebound with their real estate markets.
The list now contains 76 improving markets, up from 41 in December, according to NAHB’s and First American’s Improving Markets Index, a monthly gauge that measures a city’s improvements in housing permits, employment, and housing prices for at least six months.
“The fact that the list of improving housing markets nearly doubled this month shows that a significant, positive trend is developing, and is even more relevant when you consider the expanding geographic distribution of the list — which now includes 31 states and the District of Columbia,” NAHB Chairman Bob Nielsen said in a statement.
These cities were added to the list in January:
Florence, Ala.
Tuscaloosa, Ala.
Fayetteville, Ark.
Denver, Col.
Greeley, Col.
Bridgeport, Conn.
New Haven, Conn.
Cape Coral, Fla.
Jacksonville, Fla.
Punta Gorda, Fla.
Honolulu, Hawaii
Ames, Iowa
Des Moines, Iowa
Dubuque, Iowa
Elkhart, Ind.
Indianapolis, Ind.
Lafayette, Ind.
Lake Charles, La.
Worcester, Mass.
Grand Rapids, Mich.
Lansing, Mich.
Monroe, Mich.
Minneapolis, Minn.
Columbia, Mo.
Joplin, Mo.
Fargo, N.D.
Manchester, N.H.
Cincinnati, Ohio
Oklahoma City, Okla.
Tulsa, Okla.
Corvallis, Ore.
Erie, Pa.
Philadelphia, Pa.
Chattanooga, Tenn.
Clarksville, Tenn.
Nashville, Tenn.
College Station, Texas
Dallas, Texas
Victoria, Texas
Madison, Wisc.
View a complete list of all 76 metro areas on the Improving Markets Index list at www.nahb.org/imi.
Source: National Association of Home Builders
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Rental History: More Important in Getting a Mortgage?
Borrowers who have a history of paying rent on time may see a boost to their credit score.
Experian, a leading credit report company, added a section to its credit reports last year that reflected on-time rent payments, which helped give a boost in the credit scores to some on-time rent payers. Now the two other major credit reporting companies are following suit.
CoreLogic and FICO recently announced they are also adding a score that reflects payment histories from landlords, The New York Times reports.
“Evidence of positive rental payments could be a plus for consumers,” Joanne Gaskin, FICO’s director of product management global scoring, told The New York Times.
Nearly half of high-risk consumers saw an increase of 100 points or more after their rental history was added to their credit report, says Brannan Johnston, the managing director of Experian’s rent bureau. Consumers with average or higher credit scores, on the other hand, did not see any major difference to their scores.
For former home owners who lost their homes to foreclosure, they may be able to rebuild their credit histories more quickly now by showing they are “very responsible renters,” Tim Grace, senior vice president of CoreLogic, told The New York Times.
Source: “A Good Rental History Can Help Borrowers,” The New York Times (Jan. 5, 2012)
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Several Housing Markets Head for Appreciation in 2012
A boom in farm prices has caused many Midwest cities to emerge as leaders for some of the strongest predictions for housing appreciation in 2012. Kansas City, Kan., came in the top spot in HousingPredictor’s annual survey, forecasting an appreciation of 5.8 percent for this year.
“The recovery is starting in housing with these cities and will eventually spread to other communities throughout the nation as the U.S. recovers from the worst collapse in real estate since the Great Depression,” according to HousingPredictor.
Here are the top cities expected to have housing appreciation in 2012 and by how much, according to HousingPredictor’s latest report:
1. Kansas City, Kan.: 5.8%
2. Topeka, Kan.: 4.7%
3. Charleston, W.V.: 4.5%
4. Oklahoma City, Okla.: 4.3%
5. Minot, N.D.: 4.2%
6. Overland Park, Kan.: 4.2%
7. Wichita, Kan.: 4.1%
8. Huntington, W.V.: 4%
9. Wheeling, W.V.: 3.9%
10. Bismarck, N.D.: 3.6%
11. Casper, Wyo.: 3.5%
12. Lake Charles, La.: 3.4%
13. Rapid City, S.D.: 3.2%
14. El Paso, Texas: 3.2%
15. Cheyenne, Wyo.: 3.2%
Source: “Best Housing Markets 2012,” HousingPredictor (January 2012)
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How Long Will Low Mortgage Rates Last?
For nine consecutive weeks, the 30-year fixed-rate mortgage has been hovering at or below record lows of 4 percent, pushing housing affordability for home buyers even higher.
But will these low rates stick around much longer?
The Federal Reserve has vowed to keep rates low through 2013 so rates likely will hang around for a few more months, at least, but whether mortgage rates will stay at the current record-lows, many experts say it’s unlikely.
The 30-year fixed-rate mortgage is expected to inch up to an average 4.5 percent for 2012 and increase to 5.4 percent in 2013, according to Freddie Mac economists’ forecasts.
While that forecast means rates are expected to move higher in the coming months, the rates will still be low by historical standards, economists told the Los Angeles Times. For comparison, 30-year rates averaged more than 16 percent in 1981 and 1982. What’s more, until 2000, rates typically were above 8 percent, Freddie Mac notes.
Despite the drop in rates, however, many home buyers have been unable to take advantage of the low rates. Lenders’ tightening of their underwriting standards for loans in the recent years following the housing crisis has shut some buyers who have poor credit, low down payments, or unsteady employment from securing a loan at today’s low rates. Freddie Mac had predicted home-purchase applications to comprise two-thirds of all mortgage applications by the end of 2011. But the Mortgage Bankers Associations says that instead about 80 percent of the mortgage applications came from home owners who wanted to refinance.
Source: “Low Mortgage Rates Likely to Continue Through 2012, Experts Say,” Los Angeles Times (Jan. 3, 2012)
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Investors Eye ‘Farmland Boom’ in Midwest
Farmland values continue to soar in the Midwest, climbing 25 percent higher than a year ago, according to the Federal Reserve of Chicago. Rising prices in corn and other agriculture has sent land prices soaring.
In Iowa alone, prices per acre have increased more than 30 percent in the past year, MSN reports.
At auctions, farmland is selling at $20,000 per acre — prices that are “once in a lifetime deal,” says auctioneer Jeffrey Obrecht.
The sudden rise in prices has caused investors to take notice.
“There isn’t a kind of person that I haven’t heard from somewhere, whether it’s the farmers from North Dakota, whether it’s a police officer from New York, bankers in Chicago and attorneys from the south,” Jason Smith, a real estate pro with Dreamdirt, told MSN about the farmland buying rush. “People, and especially business owners that have cash to park, are bringing it up here to Iowa, bringing it up to the Midwest.”
Many of the land purchases are being made with cash or investors are putting 40 to 50 percent down on the loan, housing experts say.
“Farmland doesn’t come on the market that often. It’s not like urban real estate where you see signs in the neighborhoods all the time,” Dan Piller, an agricultural reporter for The Des Moines Register, told MSN. “A good piece of farmland may only become available once every 50 years.”
Source: “On Eve of Caucus, a Different Boom in Iowa: Real Estate Prices Soar for Farmland,” MSN (Jan. 2, 2011)
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What Does the Average Home Owner Pay on a Mortgage?
Hawaii home owners tend to take on the most debt in their home purchases with an average home loan amount of $677,299, according to a recent study by LendingTree.com, which revealed the average loan amounts on residential real estate purchases in 2011. That means the average home owner in Hawaii would have a monthly payment of about $3,234 for a 30-year mortgage, before taxes and insurance, according to LendingTree data.
Meanwhile, in Mississippi, home owners take on the lowest loan amounts at $137,182or $655 monthly mortgage payments, on average.
The national average for a home loan is $222,261 with a $1,061 average monthly payment for a 30-year mortgage at 4 percent, according to LendingTree.
The following are the top states with the highest loan amounts, including the average closed home loan for 2011, according to LendingTree:
Hawaii: $667,299.33
Washington, D.C.: $393,453
New Jersey: $344,240.85
New York: $340,124.50
Maryland: $328,650.89
Connecticut: $326,416.85
Virginia: $312,930.83
California: $310,676.35
Utah: $276,211.67
See all 50 states and their ranking.
Source: LendingTree LLC
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Cities With the Largest Average Home Sizes
Where can you snag some of the largest homes in the country? AOL Real Estate used data from PropertyShark and Realtor.com to compile a list of cities that have some of the country’s largest average home sizes. Some of the cities with the largest average home size are:
1. Beverly Hills, Calif.
Average home size (square feet): 3,884
Median house price: $1.99 million
2. Malibu, Calif.
Average home size (square feet): 2,998
Median house price: $2.195 million
3. Washington, D.C.
Average home size (square feet): 2,237
Median house price: $379,000
4. Atlanta, Ga.
Average home size (square feet): 2,074
Median house price: $149,900
Where can you find some of the smallest homes? According to AOL Real Estate, New York City offers some of the smallest homes at 1,124 square feet average size (yet the median home price is $1.139 million).
See what other cities made the list for largest and smallest homes in the country at AOL Real Estate.
Source: “How Large We Live: Average Home Sizes Across the U.S.,” AOL Real Estate (Dec. 31, 2011)
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Donated Homes Increased in 2011
As the foreclosure crisis continues, experts predict that nonprofit organizations will receive even more donated homes. Bank of America plans to increase its home donations to more than 1,200 in 2012 from 150 in 2011, and Wells Fargo donated over 1,120 homes last year.
Meanwhile, the number of homes rehabilitated by Habitat for Humanity that were donated or bought at bargain prices nearly doubled to 1,210 during the year-over-year period ended in June 2011.
Many of the donated dwellings are in bad shape, but turning them over to a nonprofit gives home owners a charitable tax deduction and eliminates maintenance costs. Meanwhile, Gus Frangos, president of the Cleveland-based Cuyahoga Land Bank, says eliminating blighted properties “almost immediately stabilizes property values.”
Source: “Charities Get More Donated Homes,” USA Today (12/30/11)
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What’s in Store for Housing in 2012?
The worst for the housing market may finally be over, according to housing experts in a recent article in Kiplinger. After median home price have dropped nearly 40 percent nationwide, a rebound is taking shape — although, housing experts say, the market may stay flat for awhile before gradually ticking up.
According to housing experts in a recent Kiplinger article, here are some predictions for the real estate market in the coming year:
Home prices stabilize: Mark Zandi, chief economist at Moody’s Analytics, predicts that home prices nationwide may still drop another 3 to 5 percent in 2012, but the new year will most likely finally bring a leveling off of home prices before gains start to take shape in 2013. When markets do begin to stabilize in the new year, “price appreciation tends to spread unevenly, creating a lot of confusion about where the recovery is occurring and when,” David Stiff, chief economist at Fiserv Case-Shiller, told Kiplinger. “Even within a single city, more desirable neighborhoods will stabilize first, while prices in other neighborhoods may fall at a rapid pace.”
Housing affordability high: Housing affordability — the ratio of median home prices to median family income — will likely remain at record levels in 2012. Homes in many cities are “substantially undervalued,” the Kiplinger article notes. That may even lead to a mini bubble with double-digit spikes in prices, such as an increase of 10 to 15 percent in a given year in some markets, housing experts say.
Low mortgage rates: Helping to keep affordability high, low mortgage rates are expected to continue on in 2012 — at least the first part of the year, economists predict. The 30-year fixed-rate mortgage, the most popular among home buyers, has been hovering under a 4-percent average the past few weeks, staying in record low territory. Rates are expected to stay between 4 to 5 percent in 2012, predicts Guy Cecala, publisher of Inside Mortgage Finance, an industry publication.
Sales increases: The National Association of REALTORS® has already been showing a tick up in sales taking shape with increases in existing-home sales during the summer and early fall of 2011. High inventories of homes continue to flood the market but a drastic slowdown in new-home building the past three years is “gradually easing the surplus,” the Kiplinger article notes.
Foreclosures: Foreclosures remain the problem and still plague many markets. After a slowdown with lenders processing the paperwork, foreclosures have began to pick up once again. About 1.84 million home loans are 90 days or more delinquent and 2.17 million have finished the foreclosure process but aren’t up for sale yet, according to RealtyTrac data. Alex Villacorta, director of research and analytics at Clear Capital, told Kiplinger that he predicts regardless of the downward price pressure caused from foreclosures, overall home prices won’t fall as long as lenders bring additional foreclosures to the housing market at a steady pace.
Source: “What’s Ahead for Home Prices in 2012,” Kiplinger (January 2012)
Home Owners Try Delay Tactics to Stall Foreclosures
The average time it takes for banks to process a foreclosure — from missed mortgage payment to the final part of the process — has increased to 674 days, more than double the time frame foreclosures took just four years ago, according to LPS Applied Analytics. Four years ago, the average time nationally was 253 days.
Delinquent home owners are learning how to stay longer in their homes with some home owners taking advantage of delay tactics, according to a recent article at CNNMoney. Some stall tactics housing experts report more home owners are using to delay evictions are home owners’ challenging the bank’s foreclosure against them, requesting that lenders dig up original paperwork such as by asking for banks to produce paperwork that shows it is the legal holder of the mortgage note, or even, in some cases, home owners will declare bankruptcy, CNNMoney reports.
Housing experts say the delays are continuing to throw a thorn in the real estate market’s recovery. “People who stay in homes undergoing foreclosure for years often don’t maintain the properties, causing blight and lowering property values in the surrounding neighborhoods,” David Dunn, a partner at law firm Hogan Lovells in New York, who represents banks in foreclosure cases, told CNNMoney.
The following are the states with the longest delays in foreclosures:
Washington, D.C.: Foreclosures take on average 1,053 days
Florida: The average process time for foreclosures takes 1,027 days (or three years).
New York: 906 days
Source: “Foreclosure Free Ride: 3 Years, No Payments,” CNNMoney (Dec. 28, 2011)
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7 Cities Where List Prices Are Falling the Most
Nationally, median list prices have mostly been flat since June, but some markets are still seeing some decreases in home prices, according to the latest data from Realtor.com of 146 metro markets.
The following are the cities where list prices have fallen the most from October to November:
1. Detroit
Month-over-month decrease: -4.61%
Year-over-year decrease: -12.47%
Median list price: $84,900
2. Monmouth-Ocean, N.J.
Month-over-month decrease: -4.32%
Year-over-year decrease: -3.05%
Median list price: $300,444
3. Santa Barbara-Santa Maria-Lompoc, Calif.
Month-over-month decrease: -3.52%
Year-over-year decrease: -1.95%
Median list price: $539,250
4. Pueblo, Colo.
Month-over-month decrease: -3.45%
Year-over-year increase: 0.29%
Median list price: $139,900
5. Tulsa, Okla.
Month-over-month decrease: -3.38%
Year-over-year decrease: -5.34%
Median list price: $140,000
6. Peoria-Pekin, Ill.
Month-over-month decrease: -3.18%
Year-over-year increase: 3.71%
Median list price: $139,900
7. Charleston, W. Va.
Month-over-month decrease: -3.09%
Year-over-year increase: 6.67%
Median list price: $159,900
By Melissa Dittmann Tracey for REALTOR® Magazine’s Daily News
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Rental Boom Takes Shape
The multifamily market continues to post gains.
“Rents are rising, vacancies are falling, household formations are growing and rental supply is limited,” according to a recent report, “2012: The Year of the Landlord,” issued by Morgan Stanley. “We believe the demand for rental properties will continue to grow.”
Vacancies of rental properties dropped to 9.8 percent in the third quarter of this year compared to 10.3 percent earlier this year.
Led by strong gains in multifamily housing, groundbreaking for new-housing market soared 9.3 percent in November. Construction of multifamily homes of at least two units increased 25.3 percent in November, the Commerce Department reported last week. Starts for structures with five or more units has increased more than 30 percent from October and is nearly double year-over-year levels, Reuters reports.
Rental costs are also on their way up, increasing 2.4 percent over last year compared with an increase of 0.6 percent in 2010, Reuters reports.
Source: “America Becoming a Nation of Renters,” Reuters (Dec. 27, 2011)
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Safest Places to Live
Where are the most “secure places” — large or mid-size metro areas — in the nation to live? The annual Farmers Insurance Group of Companies ranked nearly 400 communities based on safety and security in its eighth annual study on the “most secure places to live for 2011.”
The rankings take into account such factors as crime statistics, natural disasters, housing depreciation, foreclosures, air quality, environmental hazards, life expectancy, and car accidents.
According to the Farmers Insurance Group of Companies, here are the most secure places to live among large metro areas with populations of 500,000 or more:
1. Pittsburgh, Pa.
2. Rochester, N.Y.
3. El Paso, Texas
4. Syracuse, N.Y.
5. Bethesda-Gaithersburg–Frederick, Md.
6. Buffalo-Niagara Falls, N.Y.
7. Wichita, Kan.
8. Omaha, Neb.-Council Bluffs, Iowa
9. Denver-Aurora, Colo.
10. Austin-Round Rock, Texas
The most secure places to live among mid-size cities with populations between 150,000 and 500,000 are:
Kennewick–Richland–Pasco, Wash.
2. Boulder, Colo.
3. Fargo, N.D.–Moorhead, Minn.
4. Olympia, Wash.
5. Binghamton, N.Y.
6. Sioux Falls, S.D.
7. Bellingham, Wash.
8. Lincoln, Neb.
9. Fort Collins–Loveland, Colo.
10. Rochester, Minn.
Source: Farmers Insurance Group of Companies
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Falling Home Values Mean Budget Crunches for Cities
The country has been mired in a housing crisis for the past five years; and the worst may still lie ahead for local governments, because of the time it takes for property assessments to reflect home depreciation.
The bust that began in 2007 has just started to ravage tax revenues in communities across the country — a problem that is expected to linger for years. Many local governments weathered the early years of the financial crisis partly because the property tax revenues they so heavily depend on held steady or actually rose due to assessments that still reflected inflated residential values. In their latest assessments, though, a growing number of municipalities are being forced to recognize the collapse in home prices and the shrinking tax base that comes with it.
Andrew Reschovsky, a professor of public affairs and applied economics at the University of Wisconsin at Madison, has studied the effects of the recession on city finances. He observes, “We’ll see, over the next few years, the real impact of the recession and housing crisis on local governments. I think the case can be made that we have not yet seen the worst of the impact on local governments.” This fall in Chicago, for instance, Mayor Rahm Emanuel proposed closing police stations, hiking water and sewer fees, and reducing library hours to help close a budget gap.
Thomas Fitzpatrick, an economist at the Federal Reserve Bank of Cleveland, wrote in a recent report: “If creative ways to make up for this lack of revenue are not found, local governments may face the undesirable choice of either raising property taxes or reducing funding for essential services.”
Source: “Falling Home Values Mean Budget Crunches for Cities,” Washington Post (12/26/11)
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Beware of Down Payment Gift-Giving Rules
Last year, 27 percent of first-time home buyers received a financial gift from relatives or friends that they applied toward a down payment on a new home — up from 22 percent in 2009, according to data from the National Association of REALTORS®.
While gift-giving a down payment has increased, those who receive such gifts need to make sure they follow IRS and banks’ gift-giving rules.
1. Home owners still need to come up with at least some of the down payment on their own. A spokesperson with Freddie Mac told Newsday that loans backed by Freddie Mac require that when the loan-to-value is greater than 80 percent, the buyer will need to come up with at least 5 percent of the purchase price from his or her own funds. For Fannie Mae loans, Fannie allows all down payment funds to come as a gift on one-unit principal residences. “The thing that is tricky about this is that few people know whether the loan will get sold to Fannie or Freddie,” the Newsday article notes.
2. You may need to document where the down payment money came from. “A gift letter should be signed and dated and include the giver’s name, address, and telephone number, along with his or her relationship to the borrower,” according to Total Mortgage Services in the Newsday article.
3. If you’ve had the gift for a long time, you likely won’t need to document it. If the gift has been in your bank account for three months or longer, it’s considered “seasoned” and doesn’t require a gift letter, lenders say.
Source: “Rules for ‘Gifts’ to Home Buyers,” Newsday (December 2011)
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New-Home Construction Bounces Back, Soars 9.3%
New-home construction and building permits — a future gauge of construction — surged last month, slowly helping to pull the new-home market out of one of its worst years for home building.
Builders broke ground on more homes in November, a 9.3 percent increase over October, reaching the highest level since April 2010, the Commerce Department reported Tuesday. Year-over-year, new-home starts were up 24.3 percent in November.
Home construction increased to a seasonally adjusted annual rate of 685,000 homes in November. However, while it’s an improvement, the rate is still below the 1.2 million home pace that economists consider healthy for the new-home sector.
November’s increase was mostly driven by construction of multi-family homes with at least two units, which soared 25.3 percent in November. Construction of single-family homes increased 2.3 percent for the month.
Building permits jumped 5.7 percent in November, the highest increase since March 2010, with the increase mostly driven by apartment construction permits.
Builders Feeling More Confident
Meanwhile, for the third consecutive month, builder confidence in the new-home market continued to edge up, according to the National Association of Home Builders/Wells Fargo Housing Market Index for December. The index is at its highest point since May 2010.
While the index reached 21 in December, it is still far below 50, a reading which indicates more builders view conditions as good rather than poor. The index hasn’t reached that point since the housing boom in April 2006.
“While builder confidence remains low, the consistent gains registered over the past several months are an indication that pockets of recovery are slowly starting to emerge in scattered housing markets,” Bob Nielsen, chairman of the National Association of Home Builders, said in a statement. “However, the difficulties that both builders and buyers continue to experience in accessing credit for new homes are holding back potential sales even in areas where economic conditions are improving.”
Source: “Apartment Construction Spurs 9.3% Jump in Housing Starts, But Level Remains Low,” Associated Press (Dec. 20, 2011); “U.S. Nov. Housing Starts +9.3% to 685K; Consensus +0.3%,” Dow Jones International News (Dec. 20, 2011); and National Association of Home Builders
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Which Seller Incentives Tempt Buyers?
Sellers trying to get buyers attention are offering up plenty of incentives, everything from closing-cost assistance to remodeling credits — even hot tubs, home theatre systems, flat-screen TVs, and cars, reports The Washington Times.
But these incentives “don’t actually make the deal,” says Michael Labout, regional vice president for the National Association of REALTORS®, who recalls one seller who offered up his 1970s Cadillac El Dorado in a real estate deal. “They’re as much to get buyers and agents to look at a house as anything.”
But sellers may be convinced that the extra buyers these incentives may bring in to view their home may be worth it. Some popular seller incentives catching on:
Offering a gift card to a home improvement store or a local flooring company if the property you’re trying to sell is in need of some remodeling work;
Covering some or all of the closing costs;
Offering home warranties, which will cover HVAC systems and other major appliances., usually for a year — although more home sellers are offering warranties that last longer, possibly even up to 4 or 5 years;
Paying the homeowners association dues for a year or more or covering the first year’s property taxes or condo fees;
Offering a selling agent bonus, such as $2,000 or $3,000 bonus to the buyer’s agent may help get the property shown to more potential buyers.
Source: “Incentives Upgraded in Down Market,” The Washington Times (Dec. 15, 2011)
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