Study: Real Estate Is at a ‘Historic Turning Point’
Nearly two-thirds of economists and real estate experts recently polled say the U.S. housing market is at a historic turning point. More than half say they expect national home prices to reach bottom this year and remain stable — with a modest 2 percent average annual growth — through 2015, according to MacroMarkets LLC’s June Home Price Expectations Survey.
MacroMarkets polled more than 100 housing experts, including Lawrence Yun, chief economist of the National Association of REALTORS®; Frank Nothaft, Freddie Mac’s chief economist; and others.
Most of the experts polled said they believe the bottom for housing prices occurred in the first quarter of 2011 or will arrive sometime before the end of the year.
While predictions varied somewhat, on average, panelists predict a 3.52 percent decrease in home prices in the fourth-quarter of 2011 compared to the same period in 2010. They predict then small increases every year through the fourth-quarter of 2015, when prices are expected to rise 3.47 percent on an annual basis.
Read more from the study.
Source: “2011 Seen as ‘Turning Point’ for Home Prices,” Inman News (July 5, 2011)
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Buyers Ready to Snatch Bargains This Spring
Bargain prices on housing combined with low interest rates below 5 percent may bring the real estate market its busiest spring season in years, economists say.
Distressed sales continue to put downward pressure on home prices, which may lure more buyers off the fence and ready to snag a deal during the typical prime-time buying season.
Some builders are ramping up discounts on new homes as well as boosting commissions to brokers to try to spark more transactions.
Sellers of existing-homes also are getting more competitive in pricing their homes.
“After three years of the housing downturn, people are becoming much more realistic in terms of valuing their homes,” says Lawrence Yun, chief economist at the National Association of REALTORS®.
An improved job market with better income potential may also motivate more people to buy, says David Berson of the PMI Group.
“Household formations are also very important,” Berson says. “Kids may have moved back in with their parents, or two people may have moved in together, because of job concerns. Now they can move into their own place.”
While interest rates are sitting comfortably below 5 percent for now (30-year fixed rates averaged 4.76 percent last week), economists warn the attractive low rates won’t last long.
“Few think mortgage rates are going lower,” says Mark Zandi, Moody’s Analytics chief economist. “It’s more likely they will be 6 percent than 4 percent next spring. This lights a fire under buyers.”
Source: “Discounts Expected in Spring Housing Market,” The Wall Street Journal (March 22, 2011)
Sellers Grow Impatient Waiting for Buyers
Living in a home on the market that must always be ready at a moments notice for a showing can be unnerving for home owners. And as homes linger on the market for months upon months, begging children to keep their rooms tidy, keeping pets hidden, and maintaining sparkling clean sinks and tubs can take its toll, according to a recent article in The Washington Post, which chronicled four families trying to sell a home and how they’ve coped with the wait for buyers.
Some of the buyers expressed frustration with real estate professionals for not better preparing them for the wait. Here are a few things these sellers mentioned they wanted from real estate professionals:
1. Be courteous during showings.
Liz Dordal of Haymarket, Va., says she wishes real estate professionals would always be sure to contact her in advance of showings. She has a security system that she needs to disarm and a cat to hide. Angie Howard of Fort Washington, Md., agrees. She says real estate professionals don’t always call before a showing, which doesn’t give her enough time to get the dog caged and the house ready.
Dordal also says visitors don’t always remove their shoes to protect her carpets and cherry wood floors when they visit.
2. Offer constructive advice about making the home more competitive.
Scott Laisney of Kensington, Md., is trying to sell a 1958 four-bedroom, split level and wishes his agent would have recommended to him on how to get his house in better showing shape. He now realizes that his house needs to be decluttered and repainted in a neutral color. “The kitchen counters were all scratched, and we asked if we should fix that . . . and the [agent] said no, that people will see that it can be done. We asked about painting, and she said no,” Laisney said.
But after 60 days the couple had no showings and dropped the price by $10,000, which still made no difference.
“With no action at all, we realized, ‘we’re doing something wrong here,’ ” Laisney said.
They took the home off the market and consulted a stager and another agent.
3. Don’t treat all sellers like they’re desperate.
Dordal says real estate professionals need to educate buyers more about how different seller situations can be. For the past five months, Dordal has been trying to sell a three-bedroom, luxury townhome, and she’s frustrated that real estate professionals treat all sellers like they are desperate to sell.
“People assume that you’re in distress if you have a place for sale and that you’ll take a lot less,” Dordal says. “I just look at them and say, ‘No, I’m not.’ “
Source: “Home Sellers Cope With Houses in Limbo,” The Washington Post (Jan. 21, 2011)
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A Year of Contrasts in Real Estate
This has been a year of real estate contrasts: While many consumers have taken advantage of historic buying opportunities and the market has seen a gradual stabilization of sales and prices, other challenges facing the nation have led some to question the value of home ownership for families, communities, and the country.
“People are passionate about the American dream of home ownership, and this passion underscores how important home ownership is to our nation,” says National Association of REALTORSÒ President Ron Phipps. “Owning a home has long-standing government support in this country because home ownership benefits individuals and families, strengthens our communities, and is integral to our economy. As we begin a new year, REALTORS® remain committed to ensuring that our public policies promote responsible, sustainable home ownership for all of our futures.”
In the first half of the year, the extended $8,000 first-time home buyer tax credit and expanded home $6,500 tax credit for repeat buyers helped encourage sales and stabilize home prices. Home buyers in 2010 have also benefited from historic affordability levels, with the combination of record low mortgage rates coupled with rising household incomes. The NAR Housing Affordability Index currently shows that a median-income family with a down payment of 20 percent has 184.2 percent of the income required to purchase a median-priced home.
“Low interest rates mean real money for today’s home buyers,” Phipps says. “Buyers who purchased a median-priced home five years ago with an FHA mortgage requiring a 3 percent down payment would have a monthly mortgage payment of $1,650. With today’s interest rates and median home prices, that same buyer would pay $1,150 per month — a $500 savings. That’s a savings of $6,000 per year.”
Despite record affordability and buyer incentives, rising foreclosure rates and concerns about proper foreclosure procedures led some to question whether owning a home was a good personal decision.
“Home ownership didn’t create the foreclosure crisis — Wall Street greed and irresponsible lending practices did,” Phipps says. “The decision to own a home is a very personal one, but over the long term, owning a home is one of the best ways to build long-term wealth, in addition to providing numerous social benefits that include reduced crime rates, improved childhood education, and increased stability. After all, a fixed-rate mortgage might last 15 to 30 years; renting is forever.”
Government support of programs and initiatives that encourage home ownership have also been called into question. The deductibility of mortgage interest is one example, with critics suggesting that the mortgage interest deduction primarily benefits the wealthy, while in fact, the MID benefits primarily middle- and lower income families — almost two-thirds of those who claim the MID are middle-income earners. Sixty-five percent of families who claim the MID earn less than $100,000 per year, and 91 percent who claim the benefit earn less than $200,000 annually.
“The ability to deduct the interest paid on a mortgage can mean significant savings at tax time,” Phipps says. “For example, a family who bought a home this year with a $200,000, 30-year, fixed-rate mortgage, assuming an interest rate of 4.5 percent, could save nearly $3,500 in federal taxes when they file next year. That’s money they could use to pay down other debts, supplement their children’s college savings account, or put into savings themselves.”
Despite current economic challenges, most Americans still aspire to the dream of home ownership. According to a survey conducted earlier in the year by Bankrate.com, 90 percent of respondents said they had no regrets buying their current home. And just this month, a Fannie Mae survey found that most Americans — both those who currently own their homes and those who rent — aspire to own a home and to maintain home ownership.
“We believe that anyone who is able and willing to assume the responsibilities of owning a home should have the opportunity to pursue that dream, and looking forward, REALTORS® will continue to engage policymakers and industry leaders on behalf of consumers in pursuit of that goal,” Phipps says.
— NAR
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More African-Americans Moving South
A growing number of African-American families are resettling in Southern states. At least 5 million have moved from Northern to Southern states since 1990, according to U.S. Census Bureau numbers released this month.
African-Americans, many of whose parents and grandparents left the South after the Civil War, began moving back in the 1970s. “They were coming back and reclaiming the South,” says Zandria Robinson, a professor of sociology at the University of Mississippi.
Today, the move is largely driven by economics, with blacks moving to the South for jobs and what Robinson terms, “a new beginning.”
Source: Gannett News Service, Chris Echegaray (08/22/2010)
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The Worst Is Over, Some Experts Conclude
With housing recovering slowly, most economists predicted in a recent survey that it will take at least five years for average home prices to climb back to the levels they commanded in 2006.
This year, some hard-hit areas may see another dip, but properties values will most likely rise.
“Softness in the summer months will be followed by firming conditions and momentum as the year unfolds and the economy strengthens,” says Robert Denk, an economist for the National Association of Home Builders.
Source: Reuters News (08/12/2010)
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Housing Starts Rise in July
U.S. housing starts in July rose 1.7 percent to a seasonally adjusted annual rate of 546,000 units, the Commerce Department reported Tuesday.
This is lower than analysts had predicted and down 7 percent compared to July of last year. Starts of new single-family homes declined by 4.2 percent to 432,000, while starts of large apartment units rose 32.6 percent to 114,000.
New building permits fell 3.1 percent to an annual rate of 565,000 units, the lowest level since May 2009.
Source: Reuters News, Lucia Mutikani (08/17/2010)
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Buyers Drive Hard Bargains in a Tough Market
Unrealistic buyers are ruining the deal for sellers who are unwilling to make extreme concessions, some real estate practitioners complain.
”We see buyers who must have learned their moves from the World Wrestling Federation,” says Glenn Kelman, CEO of the online brokerage Redfin. ”They think the final smack-down occurs at the inspection, where the seller will be reluctant to refuse any demand because the alternative is putting the house back on the market as damaged goods.”
But buyers say they’re simply being smart.
”We had the position, ‘If the seller is willing to come down enough, we will buy this home.’ If they weren’t willing, we would have just moved on. In this market, you have a lot of options,” says Chris Dunn, a consultant in Chicago, who sought a 10 percent reduction on a property priced at more than $500,000.
Source: The New York Times, David Streitfeld (06/17/2010)
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Survey: Economists Forecast Growth
Economists surveyed by The Wall Street Journal forecast slow but steady economic growth through the middle of 2011.
The key to economic growth will be increased employment, but economists say that the decrease in joblessness will be slow, falling from an employment rate of 9.7 percent now to 8.6 percent by the end of December 2011.
Meanwhile, Federal Reserve Chair Ben Bernanke, speaking to the U.S. House Budget Committee, wouldn’t deny the possibility of a double-dip recession, but he said that it appears to the Fed that “the recovery has made an important transition from being supported primarily by inventory dynamics and by fiscal policy toward a recovery being led more by private final demand.”
Source: The Wall Street Journal, Phil Izzo (06/09/2010)
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Real Estate CEOs Say Business Is Improving
The 110 members of the Real Estate Executive Roundtable are more positive about their industry in the first quarter of 2010 than they were in 2009 with the sentiment index at 73, up from 63 in the fourth quarter of 2009.
The sentiment index measures confidence in real estate market conditions. However, a common concern of respondents is the employment picture. As one CEO commented, “There are 20 million or more people who are underemployed or unemployed. Businesses are being very cautious. The federal government is considering raising taxes. All of this is causing uneasiness.”
Approximately two-thirds of respondents said capital—for both debt and equity—is more accessible now compared to a year ago, during the height of the financial crisis.
Source: Real Estate Roundtable (02/03/2010)
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Owners Still Try to Price Homes High
Real estate practitioners in the heart of foreclosure hotspots are talking turkey about pricing to their clients.
“I don’t sugar-coat anything. I don’t tell people what they want to hear. I tell them what they have to hear,” says Mike Aubrey, an associate with RE/MAX Metropolitan Realty in North Potomac, Md.
“[Setting the initial price too high] is not only a waste of time, but you stigmatize your property,” says Joe Manausa, president of Century 21 First Realty in Tallahassee. “People wonder why nobody bought it, why it’s been on the market so long.”
In fact, setting a price too high is “downright willful negligence,” Manausa declares.
Source: Inman News, Mary Umberger (10/14/2009)
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Some of those Stimulus packages affecting Real Estate!
Rural Housing Service – The bill provides an additional $500 million to existing USDA Rural Housing programs. The RHS provides both a guaranteed loan program and a direct housing loan program for those meeting the program’s eligibility criteria. The direct loan program will receive $270 million while $230 million will be allocated for unsubsidized guaranteed loans. It has been reported that this level of funding would provide for an additional 192,000 homeowners.
Energy Efficient Housing Tax Credits & Grants – To promote green jobs and energy independence, ARRA invests significantly in efforts to make homes and buildings more energy efficient. The bill provides state and local governments with $6 billion in energy efficiency and conservation grants for energy audits, retrofits and financial incentives. Through 2010, homeowners will be able to claim a 30% tax credit (up from 10%) for purchases of new furnaces, windows and insulation. Another $5 billion will be available to modernize the nation’s electricity grid and install smart meters on homes that help to save consumers money. There is also $5 billion for weatherization assistance for low income households and $2 billion for federally assisted housing (section 8) efficiency efforts.
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Homebuyer Tax Credit – The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser’s income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.
Neighborhood Stabilization – Division A, Title XII of the bill provides $2,000,000,000 in additional funding for the Neighborhood Stabilization Program (NSP). The NSP was created by the Housing and Economic Recovery Act of 2008 (Public Law 110–289) to provide grants through the Community Development Block Grant program (CDBG) to states and localities to address the problems that can be created when whole neighborhoods are decimated by foreclosures. The funds can be used to purchase, manage, repair and resell foreclosed and abandoned properties. In addition, the funds can also be used by states and localities to establish financing methods for the purchase and redevelopment of foreclosed properties. After purchase the homes must be used to assist individuals and families with incomes at or below 120% of area median income. Twenty-five percent of funds must be used for households with incomes at or below 50% of area median income. By leveraging their expertise in partnership with others from both the public and private sector, Realtors® in many communities have been making important contributions to their local communities’ neighborhood stabilization programs.
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Home prices see sharp dip.
A new government report reveals declines that are steeper than usual – even for this market.By Les Christie, CNNMoney.com staff writer
NEW YORK (CNNMoney.com) — Home prices continued to plunge in November, according to a new government report released Thursday. Full story.
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Eight Insider Tips For Home Buyers
1. Be a Pre-Approved Buyer: A pre-approved buyer always has the advantage in an offer situation. Becoming pre-approved is very easy: you complete your loan application with a credit check prior to beginning your home search process. Pre-approval means that you have actually been approved for the purchase by a lender, which gives you the [...]
Materials costs are plunging, and contractors are begging for work. Suddenly that long-postponed remodel is looking like a smart idea.
Money Magazine: Home renovations on sale
If you’re struggling to see a silver lining in the beaten-down real estate market, consider this one: It may be a rotten moment to sell your house, but if you’ve postponed a much needed renovation project on your home – replacing a rotting deck, repairing a leaky roof or updating an antiquated bathroom – now just might be the best time in years to tackle that task.
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Horses mean millions to Aiken’s economy
A recent study of Aiken’s equine industry shows that the area’s 135+ year-old affair with horses is alive, well, and BAH riding high. The popular industry continues to attract horse enthusiasts from around the world, and the number of equine disciplines has grown – and so has the economic impact of this historically revered industry in Aiken.
A 2008 study, “An Economic Profile of Aiken County and the Economic Impact of the Equine Industry,” done by the University of South Carolina Aiken (USCA) School of Business for the Greater Aiken Chamber of Commerce, reveals the following:
The equine industry’s economic impact in Aiken County tops $71.81 million.
The annual cost per horse in Aiken County tops $7,393, which amounts to $50.16 million in total spending produced by the equestrian sector. That spending leads to $11.76 million in indirect effects and $9.89 million in induced effects for $71.82 million in gross receipts.
In total, 1,814 jobs in Aiken County can be attributed to the operations of the equestrian industry.
The industry accounts for 1,329 full time employees. An additional 283 jobs are a result of indirect effects, and 202 jobs result from induced effects of the industry.
The impact of the equestrian industry on household income is estimated to be $19.71 million annually. There are $16.93 million in income effects that result directly from the local equestrian industry. Indirect household income linkages account for an additional $2.09 million, and the induced effects are an additional $217,513.