WASHINGTON – Sales of previously occupied homes took the largest monthly drop in more than 40 years last month, sinking more dramatically than expected after lawmakers gave buyers additional time to use a tax credit.

The report reflects a sharp drop in demand after buyers stopped scrambling to qualify for a tax credit of up to $8,000 for first-time homeowners. It had been due to expire on Nov. 30. But Congress extended the deadline until April 30 and expanded it with a new $6,500 credit for existing homeowners who move.

“It’s ‘exit stage left’ for first-time homebuyers,” wrote Guy LeBas, an analyst with Janney Montgomery Scott.

December’s sales fell 16.7 percent to a seasonally adjusted annual rate of 5.45 million, from an unchanged pace of 6.54 million in November, the National Association of Realtors said Monday. Sales had been expected to fall by about 10 percent, according to economists surveyed by Thomson Reuters.

The report “places a large question mark over whether the recovery can be sustained when the extended tax credit expires,” wrote Paul Dales, U.S. economist with Capital Economics.

The median sales price was $178,300, up 1.5 percent from a year earlier and the first yearly gain since August 2007. However, some of that increase could be due to a drop-off in purchases from first-time buyers who tend to buy less expensive homes.

Sales are now up 21 percent from the bottom a year ago, but down 25 percent from the peak more than four years ago.

The big question hanging over the housing market this spring is whether a tentative recovery will stumble after the government pulls back support. The Federal Reserve‘s $1.25 trillion program to push down mortgage rates is scheduled to expire at the end of March — a month before the newly extended tax credit runs out.

Last year, first-time buyers were the main driver of the housing market, but their presence is on the decline. They accounted for 43 percent of purchases in December, down from about half in November, the Realtors group said.

The inventory of unsold homes on the market fell about 7 percent to 3.3 million. That’s a 7.2 month supply at the current sales pace, close to a healthy level of about 6 months.

Total sales for 2009 closed out the year at 5.16 million, up about 5 percent from a year earlier. That was the first annual sales gain since 2005. But prices fell dramatically last year, declining 12.4 percent to a median of $173,500, the largest decline since the Great Depression.

Though the results missed Wall Street’s expectations, the Realtors’ group says there are signs the market is finally stabilizing.

“There is some sustainable momentum building in the housing market right now,” said Lawrence Yun, the group’s chief economist. However, he cautioned that the recovery will depend on whether the economy starts adding jobs in the second half of the year.

Many experts project home prices, which started to rise last summer, will fall again over the winter. That’s because foreclosures make up a larger proportion of sales during the winter months, when fewer sellers choose to put their homes on the market.

Despite fears that home prices are starting to fall again, some analysts still believe the worst is over.

“We do not believe it is fair to consider this a double dip in the housing market,” Michelle Meyer, an economist with Barclays Capital, wrote last week. “The recovery is still under way, but hitting some bumps in the road.”

Yahoo.com

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

Are you in the business of building homes or building better communities? Do you offer more than a “great” buy? Does your product help or hinder the environment? According to the third annual Edelman goodpurpose^TM Consumer Study your answer to these questions may just affect your future sustainability as a real estate builder, developer, contractor, remodeler, etc. The survey found that despite the recession, consumers are still spending with companies and brands that have a social purpose. New findings released from the survey of 6,000 people in 10 countries, revealed that during this recession, 57 percent globally say a company or brand has earned their business because it has been doing its part to support good causes.

“People all over the world are now wearing, driving, eating, and living their social purpose as sustained engagement with good causes becomes a new criterion for social status and good social behavior,” said Mitch Markson, Edelman’s chief creative officer, president of its brand consulting group and founder of goodpurpose. “This gives companies and brands associated with a worthy cause an opportunity to build long-term relationships with consumers that, in turn, allow them to feel valuable within their communities.”

The study also found that 83 percent of people are willing to change consumption habits if it can help make the world a better place to live, indicating a startling consumer shift and trend away from traditional status markers like big houses and luxury cars and toward identification with social purpose brands. Considerably more people (70 percent) would prefer to live in an eco-friendly house than merely a big house (30 percent), and 68 percent also now feel that it’s becoming more unacceptable not to make noticeable efforts to show concern for the environment and live a healthy lifestyle, with an overwhelmingly 80 percent preferring to support the livelihood of local producers.

“People are demanding social purpose, and brands are recognizing it as an area where they can differentiate themselves and in many parts of the world, not only meet governmental compliance requirements, but also build brand equity,” said Markson. “This year’s study shows that if companies respond intelligently to the sea change in consumer attitudes, brand loyalty among consumers – even during seriously challenging economic times – will actually grow. Even better, consumers will want to share their support for these brands with others.”

While the study reveals that social purpose is becoming increasingly crucial to a brand’s success, a brand purpose must be authentic and true to the core values of the brand itself, and brands must look beyond traditional corporate social responsibility programs in which they simply donate money to a good cause. As the study notes, 66 percent of people believe that it’s no longer enough for corporations to merely give money away, but that they must integrate good causes into their day-to-day business.

“Companies that become catalysts for social change and respond to rising consumer expectations that they and their brands help make the world a better place will not only survive, but also thrive, in ways their competitors will not,” said Markson. “Mutual social responsibility provides that opportunity, as people today are more passionately involved and supportive than ever, yet more demanding and unforgiving, as well.” These numbers would indicate those real estate builders, developers, contractors, remodelers and others who want to survive in this economy and those in the future would be wise to adhere to the behaviors of consumers who want social change and environmental awareness.

RealtyTimes.com

If you listen closely, you can hear the faint sound of crews delivering drywall and carpenters firing nail guns.

In Aurora, M/I Homes Inc. just closed a deal with a lender to buy lots for 60 town homes at The Plaza on New York, formerly a Wiseman-Hughes Enterprises project.

On Joliet’s east side, Cambridge Homes recently completed the purchase of lots for 42 single-family homes and duplexes, and options for 38 more in NeuFairfield, a project started by now-defunct Neumann Homes Inc.

And in Lynwood, J. Lawrence Homes LLC has started marketing homes in Ambry Estates, a single-family community where the company purchased more than 90 lots six months ago that were destined for high-end homes. The homes will start at $230,000.

Last year was the year that local and regional builders, who once dominated the market, vanished. They left very publicly, as in the case of longtime companies such as Kimball Hill Inc. and The Kirk Corp. which sought to restructure but were forced to liquidate, or very quietly by taking down their Web sites, unplugging their phones and locking their model homes.

This year is the year in which the healthier rivals take advantage of cheap land and tailor their product to generate demand.

So, buyers who want a brand-new home in 2010 will find more available, close to transportation and at better prices than in years past.

“The average consumer does not need to go out to the outer growth ring to get affordable housing,” said Ron Martin, M/I’s Chicago-area president.

The magic marketing price for most builders is $300,000 or less, but those funds go further than they once did. Builders that have taken over competitors’ projects are cutting home prices by $50,000 or more, primarily because of cheaper land costs.

“Builders were able to get lots at a much-discounted price, so they are going to be able to deliver very affordable housing product,” said Chris Huecksteadt, director of the Chicago region of Metrostudy, a provider of housing market data and analysis. “They haven’t lessened the construction standards; most municipalities won’t allow it. What’s changed is their (cost) basis.”

While not as hard hit as homebuilding elsewhere in the nation, the local market practically came to a standstill in 2009, as only about 3,000 new single-family homes and town homes were started, according to Metrostudy. That compares with 2005′s peak building year, when ground was broken for almost 34,000 new homes.

The moves by some builders, though, shouldn’t be interpreted as a return to those heady days. Builders believe there’s some pent-up demand as families form or change shape. Still, a state jobless rate just under 11 percent and stricter lending standards may dampen consumers’ enthusiasm to take on the debt of buying a home.

Companies’ ability to borrow funds also will keep the lid on any overzealous plans.

“One thing that was always a good thing about a recession is you get a lot of fly-by-nighters out of the business, the lawyer that wants to be a builder,” said area builder John Hall Jr., who is getting ready to break ground in Elgin for the first time in 18 months.

“The one thing that was different about this one is we had a lot of well-sustained homebuilders lose their business too.”

Those who do venture into the market are likely to see the most activity from large, publicly held, better-capitalized companies. Three companies based elsewhere — Pulte Homes Inc. (based in Michigan), Cambridge Homes (a division of D.R. Horton Inc. in Texas) and The Ryland Group (California) — control 25 percent of the market.

“That’s a lot for a market that had been very fragmented,” said Lance Ramella, principal at RW Real Estate Advisors. “There just aren’t that many private builders left. They’ve hunkered down. The top six builders in the market are all public. In the past, that never happened. That’s the kind of stuff that happens in Tucson (Ariz.).”

From all indications, it appears their efforts to dominate the local market are picking up steam, and there is no shortage of lots available that have water and electrical service and a paved street.

The only hitch is how much the lenders controlling the acreage are willing to discount it.

“Some banks still have unrealistic expectations and don’t want to get it off their books,” said M/I’s Martin, whose Shelburne Crossing town home project in Winfield was started by Kimball Hill. “Others are saying that rather than hold onto this asset for three to four years, let’s get it off the books now.”

Though not making any deals yet, Pulte is seriously looking at a dozen area properties, said Steve Atchison, president of Pulte’s Illinois/Michigan division

Cambridge, while undertaking the new project in Joliet, also remains in the market for more lots. “The bottom of the market is behind us,” said David Smith, marketing vice president.

Market analysts also say the local and regional builders that have gone quiet shouldn’t be written off, because many will return but with far less-grand plans and likely different names.

“They’re waiting in the wings,” Huecksteadt said.

Other local builders, optimistic but also realistic, are cautiously dipping their toe back in.

That’s why, in addition to starting the Lynwood project, J. Lawrence Homes is building a spec home, just one, in each of its communities.

“We’re seeing a light at the end of the tunnel,” said company President John Wozniak.

“We’ve started to advertise again. The more we’ve done it lately, the more we’ve seen people show up. We feel we’re heading into a new market.”

Mary Ellen Podmolik
Chicago Tribune