Saturday, June 30, 2012

MARKET TRENDS: Economists expect 2013 home price rebound

After experiencing a slight dip this year, home prices will see modest increases starting in 2013 and through 2016, according to a quarterly survey of more than 100 economists, real estate experts and investment strategists.
The survey, conducted by research and consulting firm Pulsenomics LLC on behalf of real estate search and valuation portal Zillow between May 31-June 14, 2012, asked 114 participants to project the path of the S&P/Case-Shiller U.S. National Home Price Index over the next five years.
When last published May. 29, the index showed that national home prices in the first quarter hit a record low, declining 1.9 percent from first-quarter 2011. Prices were down 35.1 percent from their second-quarter 2006 peak, to levels last seen in mid-2002.
The panel of experts surveyed by Pulsenomics said they expect the index, which covers all nine U.S. census divisions, will show a 0.4 percent annual decline at the end of 2012 and then increase by 1.3 percent in 2013. Their projections are more or less similar to what they were in the last quarterly survey in March.
The economists surveyed largely agreed on the trajectory of national home prices for first-time

Friday, June 29, 2012

MARKET TRENDS: 10 Things That Make a Home a Good Home

Buyers spend a lot of time looking at properties online, touring homes on the Sunday open house circuit, and talking to their real estate agent. They’re laser-focused on finding the best home that meets their needs. The problem is, buyers sometimes don’t take the long view of a property. They’re only looking at a home as a potential buyer — and not as someone who, years down the road, may also have to sell the property. Given that homes are such a big investment, there should be a little inside your head, picking away at your options and decisions.
As the home buying market starts to heat up again, here are ten things you should consider when choosing your next home.

1. Location, location, location

Perhaps nothing is more important than the three L’s, and there’s a reason why it’s said three times.
Location is extremely important when it comes time to sell. You can have the worst house in the world with the ugliest kitchen and bath. But put it on a great block or in a good school district, and your home will be coveted.
Location location location matters on so many different levels. At the highest level is the town where the house is located, then the school district, then the neighborhood and the block — right down to the location of the lot on the block. Keep all of this in mind when shopping. Also remember that while real estate markets rise and fall, no one can take a great location away from you.

2. The school district

The school district is right up there on the list of what’s most important to many buyers. It’s not uncommon for buyers to start their search based solely on the school district they want to be in. Parents want their kids to go to the best school, which can drive up prices of homes in those districts. Even though you might not have children, buying a home in a good school district is always smart. If the schools are desirable, homes tend to hold their value. As a homeowner, you should always be aware of how the schools are doing, not unlike being aware of your roof’s condition, the neighborhood development or city government.

3. The home’s position on the lot

Where the home sits on the lot in relation to the street or the overgrown oak are key elements in picking out a home. In the case of a condo, an end unit vs. an interior unit is a key consideration. You may have chosen the most beautifully renovated home in the best school district and figure all is good. But if the main living areas are shaded by a neighbor’s extension or the master bedroom looks into the neighbors’ family room, you may have a location problem. Light or privacy may not be a hot button for you, but chances are, they might be concerns for a future buyer.

4. Crime

It’s a good idea to check the latest crime figures for a neighborhood. It can give you a good snapshot about the number and severity of crimes over a time period. So much information is online nowadays that when you find your perfect home, a quick Internet search on the area should provide you with the much-needed information.
Most municipalities post their police blotters or crime statistics online these days.  Don’t freak out if you notice more crime than what you’d have expected. Crime, especially petty crime, is everywhere. If you’re new to the area, consult with your real estate agent if you have concerns.

5. Walkability

More than ever, ‘walkability’ is becoming a key factor in the search process.  There are entire websites, apps and algorithms that help people figure out how walkable their future home is. As a matter of fact, Zillow even has a Walk Score for most homes.  As people get out of their cars and slip into their Keds, they want a home in a walkable neighborhood. People put high value on the ability to walk to a store, school, work or public transportation.  The more we move away from cars and the more we see invested in public transportation over the coming decades, the more of a huge value-add walkability will become.

6. The neighborhood’s character

You may have found the absolute most perfect home, on the best block, in the best school district and on a great lot. But there could be circumstances outside your control that may give you pause — specifically, the character of the surrounding neighborhood.
Check out the area late at night, early morning and in the middle of the day. See if there are any odd weather or traffic patterns and try to observe some of the neighbors. You may even go so

Thursday, June 28, 2012

BOSTON NEWS: Plans develop for new video billboards in Boston

The city is warming up to the idea of dramatic electronic billboards. Boston isn’t known as a city of lights.

With the exception of the Citgo sign in Kenmore Square, Boston never embraced the loudly lit entertainment districts or neon-framed skylines that are the trademark of other major cities.
But Boston is now taking a few more cautious steps with the planned addition of several striking electronic marquees, or outdoor video displays, that will use state-of-the-art digital technology to show advertisements, community information, and video art.
The success of two distinct video displays at opposite ends of the city has convinced Boston officials to allow more electronic marquees: the giant digital screen at the new WGBH headquarters building next to the Massachusetts Turnpike and the 80-foot-high video mast outside the Boston Convention & Exhibition Center that holds seven enormous full-color LED screens on a metal spine.
The display is owned by the convention center and managed by Orange Barrel Media, the Ohio-based display company that installed it in September. The marquee, as well as a large video “wall” inside, is expected to produce around $300,000 in ad revenue for the convention center for the current fiscal year, and authority officials expect that will increase by a third next year as more convention sponsors learn of the video capability. The display cycles through different content: from a promotion for a trade show to an advertisement for a nearby restaurant, and weather, community announcements, art, and other information.
Now Orange Barrel Media has confirmed it is in talks with private property owners to put up similar marquees in the three neighborhoods where they are allowed by the city: around Fenway Park and in the Theatre and Seaport districts. City officials said major media

Wednesday, June 27, 2012

INV PROPERTIES: Vacation Home Market

Are you in the market to buy a vacation home? If so, you're not alone. There is a ripe and ready segment of today's market that is geared up for taking advantage of today's favorable buying conditions.

In comparison to the total sales, vacation-homes were 11 percent of all transactions for 2011, up a healthy 10 percent in 2010.
According to the latest National Association of Realtors Investment and Vacation Home Buyers Survey, vacation-home sales rose 7.0 percent in 2011. Investment property purchases were up a staggering 64.5 percent. Many of these were distressed properties being sold at steep discounts.

NAR Chief Economist Lawrence Yun said investors with cash took advantage of market conditions in 2011. "During the past year investors have been swooping into the market to take advantage of bargain home prices," he said. "Rising rental income easily beat cash sitting in banks as an added inducement. In addition, 41 percent of investment buyers purchased more than one property."

These investment buyers are pulling out the cash as they look into buying these rental properties. Forty-nine percent of investment buyers paid cash in 2011. Forty-two percent of vacation-home buyers did the same.

"Clearly we're looking at investors with financial resources who see real estate as a good investment and who aren't hesitant to use cash," Yun said. "Of buyers who financed their

Tuesday, June 26, 2012

MARKET TRENDS: Real Estate Outlook: New Home Sales Rise 3.3 Percent

New home sales rose during the month of April. This 3.3 percent rise reported by HUD and the U.S. Census Bureau is consistent with predictions of sustained growth through the rest of the year.

"The increase in April sales activity is in line with other important housing measures that have shown continued, gradual improvement from the first quarter as more consumers look to take advantage of today's low interest rates and affordable home prices," noted National Association of Home Builders (NAHB) Chairman Barry Rutenberg, a home builder from Gainesville, Fla. "In markets where demand is rising, we could be seeing a faster pace of recovery if not for persistently tight lending conditions that are slowing both the building and buying of new homes."
On a regional basis, new-home sales rose 7.7 percent in the Northeast, 28.2 percent in the Midwest and 27.5 percent in the West in April. The South was the only region to post a decline for the month, of 10.6 percent.

Inventory for new homes is now at a 5.1-month supply -- slim by historic standards.
A rise in sales is always good news in this post-recession economy. The National Association of Home Builders (NAHB) is committed to showing current and future homeowners the opportunities which homeownership brings. That is why the month of June is National Homeownership Month.

"Anyone thinking of buying a home shouldn't wait any longer," added NAHB Chairman Barry Rutenber. "Housing markets around the country are improving, home prices have stabilized

Monday, June 25, 2012

HOME HEALTH: Are you a hoarder? How clutter can take over your home, life

The Mayo Clinic defines hoarding as the excessive collection of things, along with the inability to discard them.Such behavior creates unsanitary conditions and, in severe cases, the inability to function normally.
Although hoarding has become more recognized in recent years thanks to television reality shows, it is a psychological disease that experts say is often related to or a symptom of obsessive-compulsive disorder. The major issue, they say, is that many people who have the disorder fail to recognize it as a problem, making treatment extremely challenging.
Although hoarding carries both denial and shame for many people, there is hope for change in the form of therapy and anti-clutter strategies.
Dr. Amy Austin has encountered only one case of hoarding at her Palm Desert practice. "Unfortunately, she stopped coming," said Austin. "She was not ready for treatment."
Austin, who is an addiction specialist, says hoarding is more of an obsessive-compulsive disorder, but, like addiction, those with hoarding disorders are resistant to change. "What we are talking about is an anxiety disorder. People decrease levels of anxiety by hoarding."
When a patient comes to Austin with this problem, they first talk about the issues in the person's life, including their relationships. "If they need a psychiatrist, we can work with one for possible medications," said Austin. "Treating an obsessive-compulsive disorder is commonly a combination of therapy and medication."
Is there hope for treatment?
"I always come from a place of hope," said Austin. "No one is broken — they just need help. There is hope for everybody and anything."
A fresh start
Cory Chalmers, owner of Steri-Clean, which serves California's Coachella Valley, is a hoarding cleanup specialist.
"In 1995, I was working as a paramedic in the San Bernardino area," says Chalmers,

Sunday, June 24, 2012

OUTDOOR SPACE: Use of outside living areas growing in priority, complexity

As Americans try to maximize the space of their existing homes, they're increasingly looking outside to create new, rejuvenating places.
"More people are realizing that home begins when you set foot on your property, not just when you enter your front door," says garden designer Julie Moir Messervy, author of Home Outside: Creating the Landscape You Love (Taunton Press). "You can think of your outside as an extension of the inside."
An outdoor living/grilling area ranked as the third-highest priority space, after a separate laundry room and additional closets/storage, in a recent survey of 4,000 readers by Better Homes and Gardens magazine.
Clients see the outdoors as another room of their home, says Josh Baker of BOWA, a high-end remodeling firm in the Washington, D.C., area. He says he does "a lot of pools and other outdoor areas" to create a resort feel.
Messervy says homeowners want not only an "outside away room" to relax and entertain but also — in a new push toward "homesteading" — a spot to raise vegetables and livestock.
"People are keeping chickens even in Boston and Cambridge (Mass.), where many of our projects are," and others are keeping bees on flat roofs, Messervy says. "The definition of curb appeal has changed."
"Our editors predict an even bigger boom in home food gardens," Better Homes and Gardens says in its overview of 2012 garden trends. Many homeowners have limited space, so it expects more will grow food on rooftops and vertical lattices, or plant

Saturday, June 23, 2012

BUYING A HOME: Housing isn't a buyer's market for many first-timers

CITRUS HEIGHTS, Calif. – Alex Dorado thought that buying his first home was going to be easy."I said, 'This is a recession. No one is looking at houses,' " the cellphone salesman says.
Dorado, 25, found his first love in February, a 1,200-square-footer in this Sacramento-area suburb. Before he put his offer in, he took his parents to see "where I was going to live," only to discover the house was already sold.
He lost more than a dozen other bids on homes, often to cash-packing investors, before he landed a $134,000 fixer-upper in May with a low-down-payment Federal Housing Administration (FHA) loan. Now, he's upgrading the home, which sits on a blue-collar street with dented cars parked in two nearby driveways.
As the nation's housing market shows signs of bottoming after years of declining prices, many first-time buyers such as Dorado are getting a rude awakening. Instead of having their pick of homes to buy in some markets, they're losing houses to cash buyers and bidders with bigger down payments, or they're facing bidding wars spurred by shrinking numbers of homes for sale.
The competition can be most evident for lower-price homes in markets hard-hit by foreclosure, such as Phoenix, Miami and parts of Southern California, or those with relatively strong economies, such as Washington, D.C., and San Francisco, Realtors say.
First-time buyers who use FHA loans might be in for the toughest time. They're frequently low-down-payment bidders. FHA loans might also require sellers to do more home repairs than do other loans, such as fixing chipped paint on older homes, Realtors and lenders say. If sellers receive multiple offers, they may avoid FHA offers.
"FHA buyers are getting pushed to the bottom of the pile," says Brian Cross, a

Friday, June 22, 2012

SELLING YOUR HOME: Porch Perfection: Welcomes Buyers Instantly

When the weather turns warmer, front porches across the country are put to use again. However, not all porches or front entryways are put to "good" use. Sometimes over the cold winter months they've taken a beating and are badly in need of repair. Other times they're used as storage for overflow from the garage, basement, or house and that is not a welcoming sight for buyers.

So, it simply makes sense that after a long winter or a period of non-use, front porches might need some maintenance. This doesn't have to be the kind of work that takes weeks to do nor does it have to be extremely costly.In real estate, we talk about the importance of a few key elements to help sell your home: location, pricing, and curb appeal. These are some of the highest influential factors that buyers consider. The reasons are obvious. Location is vital to most buyers, pricing is critical (especially in today's marketplace), and curb appeal gets buyers off the street and inside to view your home.

Creating and maintaining porch perfection is about the little things that you do. In fact, some simple repairs, replacements, and re-arranging can brighten up and refresh a worn- out porch.
Start by looking at your porch with a critical eye. If you have been storing items on your porch that should have a home elsewhere, move them now. If you have old carpets, beat up or discolored mats, toss them out and replace them. Look at the lighting on your porch. Is it just one tiny bulb? Perhaps an inexpensive lighting system would brighten the porch, creating a more enticing and safer entryway.

Examine the hardware. Are the door handles corroded? Are they hard to turn to open the door? Think of it this way, if the door hardware looks worn and the doors are banged up, the impression is that this home is not well maintained on the outside and the inside. Some buyers won't go any further. If the home looks messy from the outside, all they will see is the front of your door. See your home the way you would if you were seeing it for the first time, just as the buyers are.
Add some appealing decor. There are a couple of rules that apply when it comes to staging an

Thursday, June 21, 2012

HOME IMPROVEMENTS: Forget Cost Vs. Value, Homeowners Use Improvements To Pump Up Style, Not Equity

Sure, most home improvements will hold or boost equity, even in the worst market, but today's homeowners are more concerned that improvements enhance their home's form and function rather than its value.

Homeowners also say rather than cut into their
 home improvementbudget, they are more likely to slash expenses in other areas including vacations and other big-ticket purchases, in another example of an emerging trend that finds beleaguered homeowners hunkering down to hold onto their most valuable asset by making it more their own.A new survey of homeowners planning to build, remodel or decorate in the next two years, found the vast majority, 86 percent, saying it's more important to improve their home to "improve the look and feel of the space," compared to 47 percent who say it important the work increases their home's value.

The Houzz & Home Survey, which comes with a really cool infographic of the results, analyzes remodeling and decorating project histories and plans of Houzz users in the U.S. and Canada.
The survey also examined motivations behind the projects, homeowners’ plans for hiring remodeling and design professionals or doing it themselves, and how the economy plays a role in decorating and remodeling plans.

"We expected that in this economy Americans' highest priority would be increasing home value, but instead we found people are focused on pleasing themselves, not the next owner," said Liza Hausman, vice president of marketing for Houzz.

"Homes today are doing double or even triple duty as workplace, stay-cation, gym and more," Hausman added.

Many don't have an option, according to a recent National Association of the Remodeling Industry (NARI) survey of homeowners forced to stay in their homes years longer than they originally expected because the economy ruined their plans.

NARI found, instead of sulking about their house arrest, long timers have begun to turn their cells into cozy personalized nests - homes that better reflect individual lifestyles to make them

Wednesday, June 20, 2012

BUYING A HOME: The Scoop on Closing Costs

Are you a buyer preparing to close on a house? Now is a good time to refresh yourself on the most common closing costs.

Here are some common closing costs to consider:There are more expenses to buying a house than just the monthly mortgage payment. More than likely you'll need to come up with some cold, hard cash in order to finalize the deal.
  • Down Payment: Due to today's economic climate, most buyers will need to put down at least 20 percent. This makes good financial sense. If you can't afford to put 20 percent down then you probably can't afford to buy this particular house.
  • Loan Origination: This is what the lender charges you to underwrite the loan, meaning what they charge for their time and all the paperwork they need to do.
  • Points: You'll often see that different lenders have different "rates" and different "points" they charge. By paying points, you can receive a lower interest rate, but this means more cash at closing.
  • Credit Score: You can access your credit report for free at, however, in order to see your credit "score" -- the magic number that lenders use to determine your interest rate -- you'll need to pay a small fee.
  • Home Inspection: You want to be sure, no matter if the house is new or old, that you get a home inspection by a qualified inspector. You may love the house and the price, but if you find out that a big ticket item needs replaced you will be able to renegotiate the price or decide to change your tune on buying the home. A typical inspection will run you from around $300 to $500.
  • Private Mortgage Insurance (PMI): This is what a lender charges if you are putting less than
  • Tuesday, June 19, 2012

    THE ECONOMY: Family Net Worth Drops to Level of Early ’90s, Fed Say

    WASHINGTON — The recent economic crisis left the median American family in 2010 with no more wealth than in the early 1990s, erasing almost two decades of accumulated prosperity, theFederal Reserve said Monday.
    Andrew Harrer/Bloomberg News
    A house for sale in Washington. Falling home prices accounted for three-quarters of the losses in net worth.
    A hypothetical family richer than half the nation’s families and poorer than the other half had a net worth of $77,300 in 2010, compared with $126,400 in 2007, the Fed said. The crash of housing prices directly accounted for three-quarters of the loss.
    Families’ income also continued to decline, a trend that predated the crisis but accelerated over the same period. Median family income fell to $45,800 in 2010 from $49,600 in 2007. All figures were adjusted for inflation.
    The new data comes from the Fed’s much-anticipated release on Monday of its Survey of Consumer Finances, a report issued every three years that is one of the broadest and deepest sources of information about the financial health of American families.
    While the numbers are already 18 months old, the survey illuminates problems that continue to slow the pace of the economic recovery. The Fed found that middle-class families had sustained the largest percentage losses in both wealth and income during the crisis, limiting their ability and willingness to spend.
    “It fills in details to a picture that we already knew was quite ugly, and these details very much underscore that,” said Jared Bernstein, an economist at the Center on Budget and Policy Priorities who served as an adviser to Vice President Joseph R. Biden Jr. “It makes clear how devastating this has been for the middle class.”
    Given the scale of those losses, consumer spending has remained surprisingly resilient. The survey also illuminates where the money is coming from: American families saved less and only slowly repaid debts.
    The share of families saving anything over the previous year fell to 52 percent in 2010 from 56.4 percent in 2007. Other government statistics show that total savings have increased since 2007,

    Monday, June 18, 2012

    BUYING A HOME: 4 ways buyers can compete in today's market

    <a href="" target=blank>House key</a> image via Shutterstock.House key image via Shutterstock.
    Inventories of homes for sale are dropping in areas where they've recently been high like in Oakland, Calif., Phoenix and Miami. Interest rates are approximately 0.75 percent lower than they were a year ago. It seems like a good time to get off the fence and into the action if you can find a house that reasonably matches your wish list and you don't find yourself bucking other buyers who have the same idea.
    Months' supply of inventory is an estimate of how long it would take to sell all of the homes in a given market at the current sales pace. A six-month supply of unsold inventory is thought to represent a balanced market.
    In California, there was a 4.2-month supply of inventory in April 2012, down from 5.6 months a year ago. When buyer demand increases, the unsold inventory drops, and multiple offers often enter the picture -- sometimes in a big way.
    In the hills above Berkeley, Calif., buyers are chasing too few homes for sale. But not all homes are coveted. The best homes that are priced right for the market are drawing attention. The multiple-offer activity can be fierce. Recently, a home that was perhaps underpriced for the market was bid up significantly with 17 offers. Four of the top offers included no contingencies.
    The first step to successfully compete in a sizzling market is to know the inventory. Pricing low to generate multiple offers is a strategy commonly used in a low-inventory, high-demand market. You need to be familiar with how much listings in your area are selling for in order to

    Sunday, June 17, 2012

    CHOOSING A REALTOR: Who’s Got Your Back?

    IN a city with more than 20,000 registered real estate agents, is it any wonder that choosing one can be a difficult and sometimes fraught process?
    There’s the agent who sold your best friend’s apartment for 20 percent more than she dreamed possible. But what about the downstairs neighbor who never misses a chance to remind you that he’s a broker? And what would Aunt Myra say if you didn’t use Cousin Bob, who just got into real estate and hasn’t sold anything yet? (“He just needs a little confidence.”)
    A good broker can help you make sound decisions and guide you through what might easily be the most expensive and emotionally charged transaction of your life. So, how to weed out brokers who can’t stop talking about themselves, or who can’t tear their eyes from their BlackBerrys long enough to answer a question, and perhaps more important, know shockingly little about their listings or the market?
    Whether you’re buying or selling, interviewing an agent is the best way to figure all of that out and to determine whether you would get along over the course of an intense several months. The interview can be as informal as a quick conversation at an open house and a follow-up phone call.
    Find out what a broker has already sold and how he or she would help you sell or find a home. Dottie Herman, the chief executive of Prudential Douglas Elliman, also suggested asking what the broker would do “if not everything goes right” and an apartment doesn’t sell quickly or a board rejects a buyer. “You want someone who has confidence and knowledge and who you have a rapport with,” she said. At the same time, she added, “You don’t want a know-it-all, because nobody knows it all.”
    Sellers sign contracts with their listing agents, and many buyers also work with specific agents in finding a home. A buyer’s agent is paid by the seller in a deal, but will shepherd the buyer’s bid through to the closing, which could be especially helpful in the notoriously enigmatic co-op board process.
    “For buyers, you’re not getting the discount or saving a commission,” said Diane M. Ramirez, the president of Halstead Property, “so if you don’t have a broker, you’re just on your own. Do you really want not to be represented when the other side is?”
    Buyers who don’t work with a specific agent sometimes agree to “dual agency,” in which the seller’s broker also represents the buyer. But Frederick Peters, the president of Warburg Realty, recently wrote a blog post in which he challenged the notion of dual agency, saying what many brokers believe but are reluctant to admit. “The buyer wants to pay as little as he can; the seller

    Saturday, June 16, 2012

    MARKET TRENDS: Landlord imposes smoking ban on 2,000 California apartments

    It recently became legal for California landlords to forbid apartment renters from smoking in their units, but few property owners do so.
    In a decision affecting nearly 2,000 units in 13 apartment complexes, the Towbes Group Inc. of Santa Barbara said it has become the largest apartment portfolio in California to impose a no-smoking policy on individual units and common areas.
    Starting this month, new residents of Towbes Group's apartments in Ventura, Goleta, Santa Maria, Lompoc and Santa Barbara may no longer smoke in their units. Residents who moved in earlier have until the end of the year to comply with the new restrictions.
    In addition to addressing secondhand smoke concerns, the prohibition on lighting up offers a financial boost to landlords, said Jim Carrillo, a Towbes vice president. His company "turns" about 1,000 units a year, which means they must be cleaned for new residents. The process costs about twice as much if the last tenant was a smoker.
    "You can mask it with paint, but in order to totally remove the residue you have to scrape the walls," Carrillo said, then put on primer and more layers of paint. Countertops and cabinets may also need intense cleansing treatments.
    The landlord was partly inspired to make the change after spending $4,000 on insulation, caulking and other efforts to find and cover every possible opening between a smoker's apartment and a nonsmoker's apartment.
    Since a majority of the company's tenants were nonsmokers, company officials reasoned

    Friday, June 15, 2012

    MARDS: Americans expect 1.4% increase in home prices: Fannie Mae

    Most Americans interviewed by Fannie Mae believe home prices will increase at least 1.4% over the next 12 months, the government-sponsored enterprise said.
    Fannie Mae interviewed approximately 1,000 survey respondents for its May National Housing Survey.
    34% of those who responded — the highest level since March 2011 — said home prices will rise over the course of the next 12 months. In addition, 41% of respondents believe home mortgage rates will likely go up over the course of the next year, an increase from the previous month.
    The percentage of Americans who say it's a good time to buy a home increased one-percentage point to 72% in May, while the percentage of respondents who believe it's a good time to sell held at 15% of those surveyed.
    Americans see home rental prices also going up over the next year, with the average respondent predicting a 4.1% rate increase. Forty-nine percent of those surveyed believe rental prices will in fact rise.
    Approximately 38% of those surveyed believe the economy is on the right track.
    46% of respondents expect their financial situations to stay consistent over the next year, an

    Thursday, June 14, 2012

    MARKET TRENDS: U.S. Housing Market Finally Reaches a Turning Point

    RISMEDIA, Monday, June 11, 2012— Home valuations will start to climb again while adjacent consumer industries will capture significant new growth opportunities in 2012 and beyond as the U.S. housing market finally turns the corner, concludes a major new study recently released by The Demand Institute. The recovery of the housing market will have far-reaching impacts in the coming years across the U.S. and international markets as U.S. consumers increase their spending on buying, renovating, furnishing and maintaining their homes.
    Launched in February 2012 and jointly operated by The Conference Board and Nielsen, The Demand Institute is a non-profit, non-advocacy organization with a mission to illuminate where consumer demand is headed around the world.

    The new report, “The Shifting Nature of U.S. Housing Demand,” predicts that average home prices will increase by up to 1 percent in the second half of 2012. By 2014, home prices will increase by as much as 2.5 percent. From 2015 to 2017, the study projects annual increases between 3 and 4 percent. This recovery will not be uniform across the country, and the strongest markets could capture average gains of 5 percent or more in the coming years.

    “In these initial years, the prime driver of recovery won’t be new home construction, but rather demand for rental properties,” says Louise Keely, chief research officer at The Demand Institute and a co-author of the report. “This is a remarkable change from previous recoveries. It is a measure of just how severe the Great Recession has been that such a wide swath of Americans had to delay, scale back, or put off entirely their dreams of homeownership.”

    “In the long-term, we don’t expect homeownership rates to change,” says Bart van Ark, chief economist at The Conference Board and co-author of the report. “Over 80 percent of Americans in recent surveys still agree that buying a home is the best long-term investment they can make. What will be intriguing to watch is how their aspirations around homeownership are affected by this period of extended austerity.”

    Between 2006 and 2011, some $7 trillion in American wealth was wiped out when home prices dropped 30 percent after a dramatic climb in valuations during the housing bubble. Looking

    Wednesday, June 13, 2012

    MARKET TRENDS: Young adults put buying a home on backburner

    Interest rates have hit historic lows and home prices have fallen, making real estate a buyers’ market. But one important segment of potential buyers is not ready to sign on the dotted line: young adults.
    The number of 25-to-34-year-olds owning homes in Massachusetts plunged 20 percent between 2005 and 2010, even as the overall number of homeowners in the state increased slightly, according to the US census. The rate of homeownership, which measures the percentage of housing units occupied by owners, fell more for 25-to-34-year-olds than any other age group, declining to 34 percent from 40 percent in 2005.
    A mix of economic factors and changing attitudes makes young adults less willing and able to buy homes. Ultimately, analysts said, the strength of the housing recovery could depend on this age group, which accounts for a large share of first-time buyers who can spark home sales across the market.

    High unemployment, crushing student debt, and tight credit conditions are keeping many young adults and families from becoming homeowners, analysts and real estate professionals said. At the same time, the turmoil that has followed since prices peaked in 2005 and the housing market collapsed is changing this younger generation’s view of housing, long thought of as a

    Tuesday, June 12, 2012

    SELLING YOUR HOME: Surge in home sales creates fire inspection backlog

    A surge in home sales in Boston this spring is causing a major backlog in smoke and carbon monoxide detector inspections, which are required to finalize a sale, frustrating property owners and real estate agents who say they have been forced to push back closing dates or have not been able to rent out properties.
    Boston Fire Marshal Bart Shea said the rising rate of home sales in the past two months has resulted in a major increase in requests for inspections: His office is receiving 75 requests daily, up from 35 in early April, and it inspects about 200 units a week, up from just over 100 a week in early April.
    Shea said the department was not prepared for the increase in demand.
    The Greater Boston Real Estate Board reported a 23 percent increase in pending single-family home sales in April compared to April 2011, the most recent month for which figures are available. And inspections for smoke and carbon monoxide detectors are necessary with every one of those sales under a state law that will not allow a property to change owners without a certificate issued by the Fire Department.“We are struggling with manpower restraints, but with the influx of sales it’s really hard to manage,” Shea said.

    Normally, Caulfield would have been elated about the sale, but this time he knew immediately it would not be possible.Real estate agent Kevin Caulfield said he had a client ready to give him more than a million dollars in cash for a Boston property that he wanted to move into within two weeks.
    “They could not close only because of a smoke detector inspection,” said Caulfield, vice president for Coldwell Banker Residential Brokerage in Newbury. “We are now waiting to determine when we can close, based on when I can get a smoke inspection.”
    Caulfield, who deals mostly with property in Boston, said in the past six months he has seen delays of up to six weeks in smoke and carbon monoxide inspections.
    Caulfield acknowledges this is the busiest season for home sales, but suggested the Fire Department can do more to alleviate the delays, such as hiring seasonal

    Monday, June 11, 2012

    BUYING AND SELLING: 4 traits of unhappy homeowners

    Here are some pitfalls to avoid if you want to be a happy homeowner.

    1. Move a lot. Moving house is stressful, in and of itself. Mention the prospect of moving to any cocktail party crowd, and you'll undoubtedly hear a chorus of moans and groans of "I hate to move!" Studies actually rank moving right up there with getting a divorce or being widowed in terms of stressfulness -- no joke! And that's just the moving part -- there's also the stress multiplier of selling your home, which includes such unhappy-making activities as:
      <a href="">Stressed woman</a> image via Shutterstock.
    • Deciding when to sell.
    • Studying market data on recent sales in your area.
    • Interviewing listing agents.
    • Giving your home the deepest clean ever.
    • Opening your home to strangers.
    • Waiting for, fielding and responding to offers.
    • Holding your breath, anxiously awaiting the appraisal and closing.
    Homeowners who move a lot not only have to deal with the inherent stresses of moving, but also with each of these other attendant stresses of selling.
    2. Make mortgage moves a lot. In a landmark study by Thomas Holmes and Richard Rahe ranking various life events in terms of their relative stress, taking out a mortgage was given a score of 30. And here's some context, having your home foreclosed was given a score of 31! For smart homeowners, taking out a mortgage can be a tense series of decisions that they don't always feel well-equipped to make, from selecting a mortgage broker to selecting a loan type and term to trying to ascertain whether they're getting the best deal on rates and fees. And there are also the uncertainties involved -- the feeling that an appraiser and an underwriter who you'll never meet are in control of your financial fate doesn't feel good. 

    Beyond that, it's highly worrisome to have to scurry around and meet seemingly nonsensical documentation requirements or show up to sign stacks of papers at weird times in weird places at the whim of the mortgage lender, which you must do on the principle my Dad leveraged so frequently during my childhood: "he/she who holds the cash makes the rules." And the biggest stresses around frequent mortgage moves come when they are being made because the current mortgage obligations are simply too burdensome or overwhelming, which just puts an even greater level of pressure on the unhappy homeowner to close the loan -- something that is not 100 percent within their control.

    3. Try to time the market. Those who try to time the market, whether trying to lock in an interest rate at the precise bottom or trying to sell at the tippy-top of the market, rarely do. By the time you can register that a bottom is in the wind, it has usually passed -- and if

    Sunday, June 10, 2012

    MARKET TRENDS: After The Housing Bust, Revisiting Homeownership

    Nationwide, home sales are up, mortgage rates are down and in many places, owning a home is as attractive as renting for the first time in years.

    For generations, owning a home has been a key part of the lifestyle most Americans aspire to. But when the mortgage crisis exploded in 2007, it brought down the U.S. housing market — and the entire economy along with it.
    The ensuing recession was an assault on the American dream of homeownership itself. The tidal wave of foreclosures, the crash in home prices and tighter lending standards have left some Americans unable or simply too nervous to buy a house.
    Nationwide, home sales are up,  mortgage rates are down and in many places, owning a home is as attractive as renting for the first time in years.
    In the wake of the housing crisis, a flurry of media coverage has trumpeted how Americans are rethinking homeownership. Pundits asked, "Is renting the new owning?" and a September 2010 Time magazine cover proclaimed, "Why owning a home may no longer make economic sense."
    But has renting become "the future of home-dwelling" in America, as one cable news reporter posited?

    As Mortgage Rates Fall ...

    Monthly rates, in percent, for fixed 30-year mortgages
    Interest rates for fixed 30-year mortgages


    May 2012 figure is for the week of May 31.
    In a word: no.
    Five years after the market crash of 2007, the desire to own a home is actually very much alive and well. In a recent poll of likely voters by the Woodrow Wilson Center, 84 percent of respondents said homeownership today is just as important as or more important than it was five years ago. Ninety percent still think homeownership is part of the American dream.

    'Living The Dream'
    At a kitchen table in the Boston suburb of Sharon, Mass., 11-month-old Lilah Medeiros is eating mashed potatoes and making elephant sounds. Her parents, Jared and Emily Medeiros, are in their mid-30s. Both work in a museum, and both are first-time homebuyers.

    Is It Cheaper To Rent Or Buy?

    In 1989, the annual cost of owning an average home nationally was nearly double the cost

    Saturday, June 9, 2012

    MARKET TRENDS: What it takes to buy a home

    Tired of renting? It could be a great time to buy your first home.  Homes are affordable, and mortgage rates are low. Are your finances ready for the leap?

    In many cities, home prices have bottomed and rents have risen. Mortgage rates are still super low. In fact, homes haven't been as affordable since 1971. On the downside, buyers in many cities have fewer homes from which to choose and more competition for the best houses.
    Newlyweds Mark and Ariane Corcoran bought their first home in March in Austin, Texas. They were renting in a popular downtown neighborhood, where they paid $1,200 a month for a 500-square-foot loft apartment. They inherited enough money for a down payment and began shopping for a classic 1930s Austin bungalow. They found lots of prospects online and took the time to drive by most of them. "Agents are really good at taking photos that exclude what they don't want you to see, such as the used-car lot out back," Mark Corcoran says.

    They put in an offer on a $225,000, 800-square-foot home. But, after the home inspection, they realized that it needed $20,000 to $30,000 in renovations and repairs and that they'd quickly outgrow it. They walked away during the state-mandated rescission period (during which a buyer can back out for any reason and get back any earnest money deposited).

    Ariane Corcoran identified their next prospect within an hour after the listing appeared online. It was a newly built, 1,600-square-foot home with three bedrooms, 2.5 bathrooms, and a yard for the dogs. The builder asked $270,000. The couple offered $260,000, the builder countered and the couple paid $268,000. They put down 20% to avoid private mortgage insurance and snagged a 30-year fixed rate of 3.75% from a credit union. Their monthly mortgage payment is $1,524.

    For the Corcorans, it was the right time to become homeowners. But before you take the plunge, consider the answers to questions often posed by first-time buyers:

    Will I qualify for a mortgage?
    Lenders will scrutinize your "three C's" — credit history (your credit score as well as a deeper dive into your record of debt repayment), capacity (income, savings and investments) and collateral (your down payment and the value of the property you want to purchase, as determined by an appraisal). Lenders will verify your employment (job, school or military) for the past two years and try to predict how likely it is that you will keep your job. If you're weak in one area, strength in the other two areas or in a spouse's bona fides may compensate. Or you may need to beef up your credit score, establish a more stable income history or save for a bigger down payment.

    How much house can I afford?
    That depends on the monthly mortgage payment for which you qualify. Lenders apply payment-to-income ratios that you can also use for a ballpark estimate. Under the rules set by Fannie Mae and Freddie Mac (the agencies that guarantee the loans made by lenders), your monthly mortgage payment shouldn't exceed 28% of your monthly gross income (before taxes and other deductions). That includes principal and interest, real-estate taxes, homeowners (hazard) insurance, and homeowners association dues. 

    Recurring monthly payments for all debts — mortgage, car loans, credit cards and student loans, even if they're deferred — shouldn’t exceed 36% of your monthly gross income. (With student loans, it's the monthly payments, not the total debt, that count.) The Federal Housing Administration, another loan guarantor, allows ratios for mortgage and all debts of 31% and 43%, respectively (it doesn't include student-loan payments that are deferred for a year or more).
    Lenders don't factor in the cost of maintaining a home. To play it safe, budget for one-twelfth of 1% of the home's value for monthly upkeep.

    What will my interest rate be?
    The higher your credit score, the bigger your down payment and the lower the risk of default you pose to the lender, the better the interest rate you'll get. You'll secure the best rate — somewhere near the recent 30-year fixed-rate average of 4% — if you have a credit score of at least 740 and can put down 40% of the purchase price, says Ramez Fahmy, sales manager of Caliber Funding, in Bethesda, Md. Lenders add a quarter point to their best rate if you put 15% or 20% down, as long as your credit score is at least 740. But let’s say you put down less than 15%. With a credit score of 740 or higher, you’ll pay an extra quarter of a percentage point on your rate; with a score of 720 to 740, you’ll pay a half-point more; and with a score of 700 to 720, expect to pay a full point more. If your score is lower than 700, you’ll pay from 1.25 to 3.25 points more.
    How much cash do I need upfront?
    Fannie Mae and Freddie Mac require a minimum 5% down payment. If you put down less