WASHINGTON (Reuters) – Pending sales of previously owned U.S. homes rose unexpectedly in July, an industry group said on Thursday, suggesting a tax credit-related housing market decline was close to bottoming.

The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in July, increased 5.2 percent to 79.4 from June. June contracts were revised to show a slightly bigger 2.8 percent decline instead of the previously reported 2.6 percent fall.

Compared to the July last year, pending home sales fell 19.1 percent. Economists polled by Reuters forecast the index, which leads existing home sales by a month or two, falling 1.0 percent in July.

Home sales and building activity have dropped sharply following the end in April of a popular tax credit for home buyers.

“Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” said Lawrence Yun, NAR chief economist.

news.yahoo.com

A housing double-dip? More like a long, slow melt.

That is likely to be the takeaway from this week’s slew of housing reports. Tuesday could be a bright spot, with the National Association of Realtors expected to say existing-home sales rose some 5% from April to May to an annualized rate of about 6 million units.

That would be the third monthly increase in a row and the highest sales pace since November.

But that is unlikely to cement faith in the housing recovery. Sales have been juiced twice now by the government’s home-buyer tax credits, which expired April 30 for contracts and on June 30 for closings.

Indeed, the Commerce Department on Wednesday is expected to say new-home sales dropped 20% last month, according to economists surveyed by Dow Jones, to an annualized 400,000 units.

That would largely unwind sharp gains recorded in March and April ahead of the contract deadline. Already last week, Commerce said new home construction dropped by 10% last month.

It is far from clear this marks the start of a “double-dip” for the housing market. The hardest-hit segment—new home sales—is a small part of the market, accounting for just 8% of homes sold in April even with the tax credit’s lift.

Plus, its weakness should dissuade further building activity—a positive as it should stop inventory of unsold houses swelling even further. And the hit to overall gross domestic product is likely to be small: Residential investment accounts for just 2.4% of GDP.

Meanwhile, the much larger market of existing-home sales should hold up better. For one, existing homes run about 15%-20% cheaper on average than newly built ones. Sales, while likely to slump this summer, should firm toward year-end if the labor market continues its gradual improvement.

And affordability continues to improve: falling prices and historically low mortgage rates have lowered typical monthly payments to about 15% of household income, down from 21% in 2007.

Home prices may well slide further as the market searches for a floor. But a 5% decline, say, over the next year or two isn’t exactly a double-dip, and should ultimately support a healthier recovery.

Policy makers shouldn’t get in the way.

Wsj.com

NEW YORK–(BUSINESS WIRE)–A new Harris Poll provides some unpleasant numbers about the housing crisis and the collapse of the house price bubble. Fully 24% of people with mortgages believe they owe more on their mortgages than their homes are worth. One in nine homeowners (11%) with mortgages report having “a great deal of difficulty” in paying off their mortgage. Another 18% are having “some difficulty.” This comes at a time when two-thirds of all adults (65%) are concerned that their families’ incomes “will not be enough to cover all their costs and expenses this year.”

“will not be enough to cover all their costs and expenses this year.”

These are some of the results of The Harris Poll of 2,320 adults surveyed online between March 1 and 8, 2010 by Harris Interactive.

Other interesting findings include:

• Over two-thirds (69%) of adults who are homeowners have a mortgage that they need to pay off.
• People whose homes are believed to be worth less than the money owed on their mortgages are common across all income groups. Fully 26% of adults with mortgages who have household incomes of $75,000 or more believe their homes are worth less than the balance of their mortgages.
• Almost a third (29%) of adults with mortgages are having some difficulty (18%) or a great deal of difficulty (11%) paying off their mortgages.

• The two-thirds (65%) of all adults who are concerned about having enough income to cover all their costs and expenses include 26% who are very concerned and 39% who are somewhat concerned.
• Among those who believe that their homes are worth less than their mortgages, fully 42% are very concerned and another 38% are somewhat concerned about not having enough income to cover their costs.
• Unsurprisingly, income levels make a big difference. Concerns about not having enough income to cover costs and expenses is much higher among people with household incomes below $35,000 (40% are very concerned) than among those with incomes over $75,000 (16% are very concerned).

So what?

These findings underline the very large number of people whose homes are worth less than their outstanding mortgages and the even larger numbers who are worried about covering their costs and expenses generally. If the percentages are converted into numbers, approximately 27 million adults believe they are “under water” – that their houses are worth less than their mortgage debts.

Read full story…

Website: www.helenoliveri.com
Blogs: www.helenoliveri.com/blog
Linked-In: www.linkedin.com/in/helenoliveri
Twitter: www.twitter.com/helenoliveri
Active Rain: www.activerain.com/helenoliveri

NEW YORK (Reuters) – Hedge fund firm Pine River, which makes big bets on housing, is bracing for a double dip in that market, its chief executive officer said on Tuesday.

“There are still issues in the housing markets and it would not surprise us to see the recovery turn down,” Brian Taylor, who founded the $1.6 billion hedge fund eight years ago, said at the Reuters Private Equity and Hedge Funds Summit in New York.

For Pine River, where Taylor and his seven partners work to identify relative value mispricings ahead of the curve, both a full-fledged recovery or a double-dip recession would provide a chance to make money for clients, Taylor said. “There is opportunity to profit either way.”

Last year, Pine River gained about 90 percent, far more than the average hedge fund’s roughly 20 percent return.

As Taylor sees it, the market for residential mortgage-backed securities turned from dull to exciting virtually overnight during the financial crisis, leaving his team with large opportunities that few others seek now.

“The amount of risk has never been greater,” he said. “Armageddon was avoided in late 2008 and 2009,” but the housing finance market is still awful, he said, with millions of homeowners sitting on liabilities that exceed their assets.

“Today there are still pockets of undervaluation left over from 2008,” Taylor said.

Additionally Pine River is benefiting from a lack of competition thanks to the retreat of government-controlled mortgage buyers Freddie Mac (FRE.N) and Fannie Mae (FNM.N) from relative value investing in the RMBS market.

(Reporting by Svea Herbst-Bayliss. Editing by Robert MacMillan)

Website: www.helenoliveri.com
Blogs: www.helenoliveri.com/blog
Linked-In: www.linkedin.com/in/helenoliveri
Twitter: www.twitter.com/helenoliveri
Active Rain: www.activerain.com/helenoliveri

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

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

If you’re getting ready to put your house on the market, you have my condolences. It’s no secret that the real estate market is extremely tough right now, particularly for sellers. Because the U.S. housing market is flooded with unsold inventory, homebuyers have countless choices available to them – which gives them all the power. If your home doesn’t suit their fancy, they’ll simply move along to next house on their mile-long property list. (Read Selling Your Home In A Down Market and Closing A Real Estate Deal In A Down Market for some tips on how to make it easier to sell your house.)

With this in mind, you’re probably thinking about making some home upgrades that are certain to attract flocks of admiring buyers. While it’s certainly a smart move to make a few improvements, don’t overdo it. If you spend stacks of cash on remodeling expenses, you’ll probably never recoup your investment – especially in this buyer’s market.

So how do you know which upgrades are worth the hassle and which ones aren’t? For the most part, real estate experts agree that new kitchen counter-tops and appliances, bathroom remodels and energy-saving improvements will pay off in the long run. On the other hand, pros point out that these four upgrades aren’t worth your time and money.

1. Over-the-Top Improvements
   Before you invest tons of money into an elaborate full-house renovation project, consider what the competing properties in your neighborhood have to offer. While you want your house to stand out from the competition, you shouldn’t make unwarranted upgrades that greatly exceed other properties in the area.  Not only will you end up losing money, but you may even scare off potential buyers.

   Look at it this way: Let’s say you show up to your nephew’s third birthday party wearing a ball gown when all the other guests are wearing jeans and t-shirts. Wouldn’t you feel a little out of place? Likewise, if you were to transform your cozy cottage into a luxurious, three-story mansion, it would probably stick out like a sore thumb in your neighborhood of modest ranch-style homes.

   Find out how similarly priced homes in your neighborhood measure up, and make improvements based on your specific marketplace.

2. Swimming Pools
   This one is a big surprise for many homeowners. Believe it or not, a swimming pool rarely adds value to a home in this day and age. First of all, it usually costs a small fortune to have an in-ground swimming pool installed. Secondly, you’re probably not going to recoup your investment. Why? Because many homebuyers view an in-ground swimming pool as a high-maintenance hassle and safety hazard.

   When a homebuyer sees an in-ground pool in your backyard, they may have visions of spending ridiculous amounts of money and time on pool maintenance chores. Plus, buyers with young children often steer clear of homes with pools because of safety concerns. In other words, home buyers are more likely to view your in-ground pool as an inconvenience – not a selling point.

3. Replacing a Popular Feature
   Before you consider making a major home change, such as converting your garage into a game room, take a look around. If every other home in your neighborhood boasts a two-car garage, you should probably think twice. Do you really want to be the only house in the area with no garage? Most homebuyers would prefer to have a sheltered place to park their car than a room to play ping pong and darts.

4. Daring Designs
   We all want to design and decorate our home so that it reflects our unique style. However, if you’re trying to sell your home, now is not the time to incorporate bold design choices into the décor. For example, if you have lime-green granite countertops, leopard-print wallpaper, lavender carpet and an elaborate mural of chubby cherubs painted on your bedroom ceiling, one look will send home buyers dashing for the door.

   If your home beams with your eclectic tastes, try to tone it down before you plant that “For Sale” sign in the front yard. Tear down the flamingo wallpaper and slap a fresh coat of neutral-colored paint on the walls. Replace the lilac carpet with a standard beige or brown, and get rid of any extremely personal features that would be considered “abnormal” as opposed to “traditional.” Homebuyers should be able to imagine themselves living in your home – and that’s practically impossible to do if there are mounted deer heads peering down at them from the walls of every room.

Overall, it’s good to put some work into your house before you try to sell it, as it can add value and make it more attractive to potential buyers. However, there are some things that will have the buyer running for the door - or will at least not add anything to the house’s closing price. Keep these things in mind when you’re getting ready to put up that “For Sale”sign. (For more on selling your house, check out Top 4 Things That Determine A Home’s Value and Will You Break Even On Your Home?)

Investopedia

The drop in the latest pending home sales index got a lot of press attention, but that blip downward shouldn’t be your guide on what to expect for real estate in 2010.

The 16 percent decline in November pending sales from October’s unusually high index was due almost entirely to buyers’ behavior confronting what they thought was an expiring tax credit.

In October the pending sales index went off the charts. Buyers were scrambling to sign contracts before the $8,000 credit program expired at the end of the month.

In November, buyer behavior was just the opposite. When Congress extended the credit through next April 30, the pressure was off. Nobody needed to rush to sign contracts.

Not surprisingly, the November index hit the skids.

Meanwhile, even November’s pending sales number was a solid 16 percent above November 2008. That suggests that even without the extra incentive provided by the credit, the home sale market is gaining strength for its own fundamental reasons: huge pent-up demand, low prices and great financing.

But keep this in mind: Those fundamentals are dynamic – and buyers and sellers need to stay on top of them as they change in the weeks ahead.

For example, as we’ve noted before here at Realty Times, with the economy climbing slowly out of recession, and the Federal Reserve expected to throttle back on its mortgage securities purchases , interest rates are now trending upwards.

Last week’s thirty year average fixed rate for new mortgages hit 5.2 percent, according to the Mortgage Bankers Association. That’s still very low by historical standards, but it’s up nearly a quarter of a percentage point just since mid December.

Fifteen year fixed rates averaged 4.6 percent — a rise of one third of a point in the past few weeks.

Home prices are also beginning to trend upward in key markets, according to the latest Case-Shiller home price index. In San Francisco and Minneapolis, the index is up by about 15 percent since the low point earlier in 2009, according to an analysis by Bespoke Investment Group.

The same analysis found the Case-Shiller index up 8.3 percent from last year’s low point to the latest month in metropolitan Washington DC, 7.6 percent in San Diego, 7.2 percent in Denver, 6.9 percent in Chicago and Phoenix, 6.8 percent in Dallas and 6.1 percent in Boston.

With reports of fewer layoffs plus significant new gains in manufacturing outplut and retail sales don’t be surprised to see prices-and mortgage rates — continue to rise in the months ahead.

Realtytimes.com