Archive for January, 2010
Although short sales are likely to increase in 2010, the jump in these transactions is unlikely to have any real impact on the housing market, according to a new study by Housing Predictor.
While more at-risk homeowners are turning to short sales as an alternative to foreclosure, Housing Predictor says the small number of short sales that are actually approved by banks represent less than 1 percent of all homes facing foreclosure. In the first half of 2009, only 40,000 short sales were completed, according to the most recent data available from the Office of the Comptroller of Currency shows.
In addition, Housing Predictor said only an estimated 8 to 12 percent of all homeowners who request short sales accomplish a completed transaction. Because lenders only write off short sales as a loss when a property is sold, this small percentage of completed transactions leaves a gaping hole in the troubled banking industry’s problem with short sales.
In possibly the first indication of a growing second wave of foreclosures, an increase in distressed properties listed for sale is already beginning to develop in Southern California. Dana Point has seen its inventory of foreclosures and short sales jump to more than 24 percent of all homes listed for sale, and nearby Laguna Beach and San Clemente have seem similar increases. While this rise
in troubled properties indicates that lenders have increased foreclosures, it may also signify that that they are showing more cooperation in the case of short sales, Housing Predictor said.
As DSNews.com reported, the Treasury Department recently passed a sweeping series of rules to expedite short sales, giving at-risk homeowners an alternative to foreclosure. Under the Home Affordable Foreclosure Alternatives program, bankers will get $2,000 in exchange for handling a short sale, but the program will not start until April. Housing Predictor said this plan is also beleaguered by the same flawed logic that the Obama administration has with bankers to modify mortgages only on a voluntary basis.
Above all else, Housing Predictor said the biggest problem with short sales is getting approval from bankers. While the number of approved sales increased in the third quarter of 2009, industry analyst still aren’t sure by how much, as they are awaiting final government figures. Real estate agents are trying to price properties at levels where they will get approvals, but bankers often believe the price being offered by a purchaser is too far under market to approve the sale, Housing Predictor said.
However, the longer payments fail to be made on a mortgage, the more a bank loses on its capital. As a result, major banks are preparing for an influx of short sales. Many claim to have hired extra staff to handle short sales, and some have purchased new software to assist in the process. JP Morgan, with one of the highest default rates in the industry, says it has hired 5,000 new employees to handle distressed sales.
Bank of America services about 14 million mortgages, including millions of troubled loans it acquired in the purchase of failed Countrywide Home Loans. The lender says it has also taken steps to prepare for an increase in short sales by upgrading its system to handle these types of transactions. However, Housing Predictor said Bank of America has driven many troubled borrowers further away from working with the bank by out-sourcing much of its process to an India call center.
Dsnews.com
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Pretty soon, the whole idea of using a computer to search for homes to buy might seem downright quaint.
That’s because the action has moved to your mobile phone. Of course, you can still sit at your PC or laptop and troll through listings, but real estate industry players know that house hunters spend an inordinate amount of time in their cars, so they’re laboring mightily to top each other with real estate tricks for phones to perform.
Real estate search sites are rolling out phone apps (or applications, to those of us whose existences haven’t been infiltrated by smart phones) on practically a daily basis. But if all you have is a not-as-smart phone, don’t despair: There is a decidedly “un-app” offering.
A few days ago, Realtor.com rolled out an iPhone app that would seem to do everything but make the down payment for you.
The free download (available at iTunes.com) puts property shoppers in direct touch with all the home listings at Realtor.com, the biggest of the real estate search sites.
It also enables users to do tailored searches, save notes, take pictures and send links to the properties in real time via e-mail, Twitter or Facebook, in case you want to solicit others’ opinions on a candidate house.
The app also will figure out where you are and let you know about open houses within a 20-mile radius, and triggers the phone’s GPS features to help you find them.
This is Round 2 of phone technology for Realtor.com, according to a company spokesman. In 2007, it launched an app for Windows-enabled smart phones and PDAs. The new one focuses on the iPhone, she said, because of its popularity.
But here’s another significant consideration: The users of iPhones are strongly in the 26-40 age range, a demographic that is most likely in the coming months to be house hunting in order to take advantage of the federal income tax credit for homebuyers, she said.
In the “un-app” category, we have a “location-aware mobile real estate search Web site” from the Sawbuck.com brokerage, which recently began operations in Chicago. The company takes pains and, perhaps, even a certain amount of pride to point out that this is not an app. Sawbuck Mobile doesn’t require a download, make you open a separate program to see search results or specify a mobile platform such as iPhone, Android or BlackBerry.
Sawbuck acknowledges that opening Web sites on the average phone can be uncomfortably slow, so it claims this search is optimized to load quickly on phones with slower connections.
On an Internet-enabled phone, go to http://www.m.sawbuck.com , and the site knows where you are and offers up nearby listings and open houses. (It beat the Realtor.com GPS claim by about a week.)
The apartment hunt
The state of Illinois is trying to help renters find apartments. It recently formally launched a new search site, ILHousingSearch.org, after a soft rollout late last summer.
It offers statewide listings of apartments and houses for rent that can be searched in numerous ways, such as by town, monthly rent, school district, etc.
The free site was developed on behalf of four state housing agencies, each of which contributed $60,000 to its development, according to a spokeswoman for the Illinois Housing Development Authority. She said the state created the site to help Illinoisans find affordable housing. Currently, about 3,000 units are listed, and it has logged 317,000 searches since summer.
Chicagotribune.com
5372Download The Helen Oliveri Team iPhone app by clicking the the button above and entering the code 5372.
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A national look at the county-level costs levied by Uncle Sam.
No one looks forward to the day their annual property tax bill arrives. But those in affluent Westchester County, a suburban swath of New York that includes areas like Rye and Armonk, most likely dread it more than most. That’s because homeowners fork over a median $8,404 per year to live there. That’s seven times more than the $1,180 national average, and on a dollar basis, the highest in the nation.
Across the country, Marin County, Calif., holds a similar distinction. While not as lofty as Westchester’s, the region’s $5,233 median annual property taxes are the highest in the West. Residents of Loudon County, Va., a wealthy suburb of Washington, D.C., pay most in the South, or $4,844 annually. And in the Midwest, those in Lake County, Ill., lay out $6,050 a year to own a home.
Behind the Numbers
In ranking each county, we used the 2008 U.S. Census’ American Community Survey, which is conducted every year with a smaller sample of Americans than the decennial census (one home in every 40 receives the ACS, as opposed to the one in six that receives the 10-year census). The survey asked property owners how much they spent per month in property taxes. Researchers then used the median number per county over three years: 2006 through 2008. We separated the data into the four Census-defined regions: West, Midwest, Northeast and South, and ranked counties by their percentage above the national average property tax.
Three of the country’s top five highest-taxed counties—Westchester, Nassau and Rockland—are in New York state. Homes in these areas are pricey—in Westchester the median home value is $581,900, three times the national average, according to Census numbers—which naturally helps drive up those bills. But there is another factor at play here: Counties in the Census-defined Northeast region tend to be carved into an array of towns, villages and municipalities that don’t derive their property taxes from state-wide levies. This results in a greater dependence on property taxes for local revenue. Because the region also has highly concentrated pockets of wealth, it takes 19 out of the top 20 spots for highest-taxed counties.
“The more emphasis you put on local autonomy, the more you’re going to have local taxes picking up some of what, in other areas of the country, would tend to be state-level responsibilities,” says Youngman. “When there’s an emphasis on local government, it often means there’s an emphasis on property tax.”
But even in spite of big-government measures meant to ease one’s property tax burden, hefty bills can result if home values are high. Proposition 13, a piece of tax legislation introduced in 1978 that strictly limits property tax burdens, calls for Californians to pay only 1% of their home values in real estate tax.
In Marin County, a mountainous Bay Area suburb packed with sleek, expensive homes, the median household income is $88,101, and homes are valued at a median $912,100, with a median annual property tax of $5,233, more than four times the national average. It’s the same story in Santa Clara County, Calif., where taxes are $4,437, and San Mateo County, Calif., where the annual bill is $4,208.
“Even in a situation where we’re dealing with the classic original, trendsetting tax limitation measure, when you have property values as high as you do in Marin, you’re going to have high property taxes,” says Joan Youngman, senior fellow at the Lincoln Institute of Land Policy, a Cambridge, Mass.-based think tank that researches land taxation issues.
Sometimes a county’s high property tax rate has little to do with home values. In states where the federal or state government owns a big portion of the land, property taxes are concentrated in the privately owned segments of the state, and are typically high. Of the top 10 highest property tax counties in the West, King County, Wash., and Anchorage Municipality, Alaska, were the only non-California areas. In Washington, 30% of land is federally owned, and in Alaska, it’s a whopping 69%, the highest percentage in the country.
High property taxes, in addition to providing extra local services, often compensate for low sales or income taxes, which, says Youngman, works fine during boom times but disproportionately affects struggling homeowners in recessions. But swinging the pendulum in the opposite direction isn’t necessarily the answer, either. An even balance of revenue sources can avoid unduly burdening one segment of the population.
“A mixed-revenue system avoids putting the pressure on one single tax,” she says, adding that no solution is likely to appease the whole populace. “No tax is popular. Any place you look, people are going to be upset about certain aspects of it.”
Counties With Highest Property Taxes
Region: Midwest
County: Lake County, Ill.
Region: Northeast
County: Westchester County, N.Y.
Region: South
County: Loudoun County, Va.
Region: West
County: Marin County, Calif.
Click here to see the full list of Where Americans Pay Most In Property Taxes
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As the temperature drops and the snow piles up, it’s easy to forget that spring is quickly approaching. And after more than three years of a painful housing swoon, real estate experts predict that lower prices, attractive mortgage rates, and a tax perk from Uncle Sam will create the most vibrant spring home selling season in some time. “This is going to be probably the most pleasant experience for a home seller in the last four or five years,” says Mike Larson of Weiss Research. “If you have been beating your head against a wall, this is going to feel a lot better.” But even if the market does perk up, buyers are likely to retain the upper hand throughout 2010. So to help property owners get the best selling price they can–without burying themselves in expenses–U.S. News has created a list of 10 cheap ways to boost a home’s sales price by spring:
1. Retouch the front shell
If your property’s exterior isn’t appealing, no one will want to see your newly remodeled kitchen. So property sellers must first ensure that their home projects a cozy, inviting feeling. “The shell–the outside front–is probably the most important area for improvement, the area where you can make the biggest improvement with the smallest amount of cash,” says Pat Lashinsky, the president and CEO of ZipRealty. Touching up the paint on the front-entry portion of the house can be an inexpensive but effective way to make the entire property more inviting, Lashinsky says. “Really focus on that outside, external shell,” he says. “You would be amazed by the amount of people that drive by a house and say, ‘Ah, that’s not for me.’ And they can tell just by the way the upkeep and the outside looks.
2. Trim the greenery
Ensuring that the lawn, hedges, and flowers are well maintained helps make your home more alluring to prospective buyers as well. Property owners can hire professional landscapers or break out the lawn mower and get busy themselves. “Many people have landscaping that is overgrown and too heavy, and it is concealing a lot of the house,” says Paul Zuch, the president of Capital Improvements. “Trim the trees, trim the hedges … [and] add a little color to the flower beds.”
3. Paint the interior
Putting a fresh coat of paint on the home’s interior is a cost-effective way for sellers to make their home more appealing to buyers, says Ron Phipps, a broker with Phipps Realty in Warwick, R.I. But when choosing the color, homeowners should be conservative. “The caution is that your favorite color may not be the favorite color of the buyer.” Instead, homeowners are best off using neutral colors, Phipps says. “Go with something that is a very light yellow or a light cream with a contrasting white, so it just looks very fresh and crisp . … Having the paint in good condition is almost more important than the color.”
4. Don’t forget the floors
Improving the condition of a home’s flooring is also a smart move for sellers–and you don’t need to refinish wood floors or install new carpets to make them more attractive. “If it’s a hardwood [floor], has the floor been buffed?” says David Lupberger, a home improvement expert with ServiceMagic.com. “If you have carpets, have the carpets been cleaned?”
5. Make all major repairs
Because tighter lending standards demand higher down payments, today’s home buyers won’t have much cash left over for improvements once they’ve made their purchase. So it’s imperative for sellers to make all major home repairs–fixing the leaky roof, rebuilding the front stoop–before they put the property on the market. “Repairs can’t be ignored, because nobody has any extra money,” Phipps says. To determine what needs to be done, property owners can scrutinize their homes themselves or bring in a home inspector to examine the property professionally. “The home inspection piece I think is something that is a huge value, particularly if there is something that is a question,” Phipps says.
6. Put appliances under warranty
To give buyers more confidence in a home’s appliances, Phipps recommends that sellers put them under warranty. Sellers can buy home warranties–which cover repair and replacement costs for many home appliances–from several different firms. “If I have got a 40- or 50-year-old house, it is going to be harder for me to persuade a first-time home buyer with a limited amount of cash to buy it because they will say, ‘Well, what happens if something breaks down?’ ” Phipps says. “If I have a home warranty … that solves that problem.”
7. Make energy-efficient home improvements
Increasing your home’s energy efficiency is another good way to make your property more attractive to buyers. Many such improvements–such as new windows or better insulation–come with federal tax benefits. In addition, a growing awareness of human impact on the environment means homes that have these upgrades will stand out from other listings. “If you have some cruddy old windows that are leaky and just not energy efficient, you can put in new replacement windows and take advantage of the tax credit,” Zuch says. “It’s not green washing. Those are really practical things that make your house more sellable.” Many contractors will conduct a so-called energy audit free of charge to determine where efficiencies can be created, Zuch says. “If your house is more energy efficient-you use less energy, it’s better insulated-it is going to be more desirable for a potential buyer,” he says.
8. New light fixtures
Replacing old or broken light fixtures with new ones can also be a low-cost way to add value, Lupberger says. Installing a nice new light fixture in the foyer near the home’s entrance can be a particular benefit, he said, because it can make a strong first impression on would-be buyers. Creating an inviting feeling in the interior entryway, in turn, helps get home shoppers more interested in checking out the rest of the property. “I am not going to redo the house,” Lupberger says. “But I can update those features so that somebody can walk in and say, ‘You know what? [the homeowners] took care of this.’”
9. New stove in the kitchen
While some homeowners might think the only way to jazz up a dated kitchen is a full-on remodeling job, Lashinsky recommends a much less costly alternative: buying a new stove. “If there is an updated stove in the kitchen, it is amazing how that draws people in, and people say, ‘Wow, this kitchen is going to be great,’ ” Lashinsky says. While upscale homeowners may have to shell out for top-of-the-line appliances to maintain their kitchen’s décor, others can budget well under $1,000 for the upgrade. “You can get a really nice stove for $700 or $800,” Lashinsky says. “You can basically have the look of a new kitchen that is going to be really enticing to someone-and what you are really trying to do is differentiate your house from somebody else’s.”
Property owners in neighborhoods where most homes have granite countertops can consider making this upgrade as well. But Lupberger says the project makes sense only for homeowners with extremely dated kitchens that are going to serve as a serious impediment to finding a buyer. A real estate agent with experience in the local market can help you determine whether or not the upgrade is essential, he says.
10. Freshen up the bathrooms
Getting rid of mildew stains on the bathroom caulking can boost a home’s appeal as well. Such stains “scream, ‘These people haven’t taken care of this house. It’s going to be a money pit,’ ” Zuch says. Use a razor blade to remove the old caulk, and replace it with new, mildew-resistant caulk, Zuch says. And rather than remodeling the entire space, homeowners can reinvigorate a worn-down bathroom by replacing cracked sinks, Lupberger says.
Yahoo
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Freddie Mac’s recently released economic outlook describes a refreshingly brighter view of the year ahead, but the pace of recovery in the forecast is well below the growth that has followed most recessions in the past half-century.
As the still-fragile recovery gradually gains more solid footing by the end of the year, Freddie Mac’s economic outlook anticipates real GDP growth of 3 to 3.5 percent. In addition, Freddie Mac said the jobs picture will improve, but it will be with some delay, as many employers postpone hiring until business picks up further.
While the housing market showed broad signs of stabilizing in the second half of 2009, risks of retrenchment remain high in the face of the heavy flow of foreclosures and REO properties. As a result, prices in the hardest-hit areas have the potential to be depressed even further. At the national level, Freddie Mac said it expects the housing market to weather the growth in distressed sales without significant setbacks, but risks still remain.
Considering current conditions and economic policies as well as the lessons from past business cycles, Freddie Mac believes this view is justified. While this scenario does assume that there is no further flare-up of financial crisis, this appears to be a reasonable expectation, Freddie Mac said. Conditions in most parts of the market are on the mend, many risk spreads are returning to pre-crisis normal, and corporate bond markets have largely recovered. In December, the first commercial mortgage-backed security was issued without TALF backing since mid-2008, but the private-label single family mortgage-backed security market is still largely frozen.
Following the 1974-1975 recession and the double-dip recessions in the early 1980s, economic growth surged 7 percent or more for sustained periods. This is more than twice the pace Freddie Mac expects over the coming year. Such subdued performance is due in large part to the aftereffects of the financial crisis, including the high rate of mortgage defaults, the growing inventory of loans in foreclosure, weakened bank balance sheets and the corresponding reluctance to lend, and depressed household net worth.
However, macroeconomic policies aimed at offsetting these drags are providing support for the recovery. About one-
third of the $784 billion of fiscal stimulus money was spent or went to Americans in the form of tax deductions during 2009, and including funds obligated for projects and activities brings the total funds committed to about one-half of the $748 billion. Freddie Mac said most of the remaining funds will flow into the economy this year, bolstering private spending.
In addition, monetary policy is extremely accommodative, and FOMC statements have signaled that target interest rates are likely to remain “extraordinarily low” until the economy and labor markets improve. While the Fed has said most of the liquidity facilities put into place during this crisis will continue to wind down, private markets appear ready to reassume their role, eliminating the need for these facilities to go forward.
The near-term picture of housing market trends was clouded by the passing of the original deadline for the first-time home homebuyers’ tax credit, Freddie Mac said. Home sales surged in 2009 in advance of the planned end of the credit, but sales may experience a temporary slowdown as many potential buyers who would normally have bought a home in early 2010 rushed to close before the end of November.
Initial reports of housing activity are consistent with such a decline. According to the Mortgage Bankers Association, mortgage applications for home purchases declined 20 percent in December, relative to the third quarter average, and the National Association of Realtors reported a 16 percent decrease in pending home sales in November. The weakness in pending home sales even prior the original expiration of the tax credit could be due to the length of time from when a contract is signed until closing, Freddie Mac explained. A lower level of closings in December would imply fewer pending contracts in November.
With the extension of the tax credit through spring and its expansion to include existing home buyers, it is likely that additional buyers will accelerate their purchase decisions into the first half of 2010. As a result, a rebound in sales is expected.
Despite the expected pickup in sales, single-family mortgage originations are projected to be about 10 percent lower in 2010, compared with last year. This decline in originations is driven by lessened refinance activity, as the refinance share is projected to slip from approximately two-thirds of lending in 2009 to just over one-half of this year’s volume.
In a market where the interest rate differential relative to the adjustable-rate mortgage (ARM) is small, borrowers prefer the steady principal and interest payments of a fixed-rate loan. As a result, ARM volume is anticipated to continue to be muted. In addition, interest rates for 30-year fixed-rate loans are projected to remain in the 5 to 6 percent range through 2010, marking a continuation of a relatively low-rate environment that will support the housing market recovery.
DSNews.com
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