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

With the first-time homebuyer tax credit deadline having come and gone, you may be asking yourself, “What now?” Fortunately, the door is now open to a new wave of savings: distressed properties.

For many buyers, the term foreclosure brings up images of run-down homes with no heat and rotting wood. While this is still the case for some homes, it’s no longer the standard. In fact, first time buyers are snatching up distressed deals in decent condition for great prices.

According to a November 2009 Keller Williams Research Buying Distressed Properties Survey, 40 percent of all buyers for bank-owned foreclosures (REOs) were first-time buyers in 2009. 50 percent of all short sale buyers were first-time buyers.

By definition, a distressed property is one that was purchased with a loan and the homeowner is no longer able to make their mortgage payment resulting in foreclosure – or if they’re lucky a short sale – meaning they owe more on the home than it’s currently worth. With a 20 percent increase in foreclosures from 2009, distressed properties still remain a large portion of home sales and are going to continue well into 2010 as homeowners continue to feel the effects of an economy on the mend.

If you’re in the market for a home and are prepared for a unique transaction, a distressed property can be a great option. Here’s why:

Prices are low – Buying a foreclosed property is an excellent way to get a home for less. Research shows you can save 10-40 percent over the price of similar properties in a traditional sale.

Mortgage costs are low – With rates hovering near historic lows, financing costs to are favorable. Keep in mind, rates are always changing. It’s important to begin the pre-approval process so that you know how much you can realistically afford.

You have options – The number of homes in some stage of the foreclosure process still remains high. RealtyTrac, a site dedicated to tracking foreclosures across the country, estimates that there are approximately 2.1 million homes in some stage of foreclosure in the United States.

Sellers and lenders are motivated – According to data from RealtyTrac, in April, one in every 387 households in the country has received a foreclosure filing. The bottom line is that many sellers are still feeling the pain of a down economy and are anxious to out get from under a home that is putting stress on their current financial frustrations. While it is still an emotional transaction, these sellers are willing to come down on price or even consider concessions such as helping out on closing costs. Banks holding on to large portfolios of Real Estate Owned (REO) properties want to unload quickly – and price these home to sell.

Your best ally when purchasing a distressed property is an expert. Always have a professional REALTOR® by your side to help you make informative decisions.

If you’re interested in learning more about purchasing a distressed property please call us today at 847-967-0022.

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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.

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If you haven’t bought or sold a home since May 1, 2009, you may not be aware that there have been drastic changes to a part of the process previously considered perfunctory: the appraisal.

Last year, a new regulation called the Home Valuation Code of Conduct (HVCC) went into effect. It was designed to protect consumers, and help prevent another mortgage crisis. However, some claim it has brought unintended consequences that can complicate a real estate deal.

One thing is for sure: The HVCC has made the appraisal process something that homebuyers and sellers need to be more involved in. Here are the highlights of what has changed, and what you can do to ensure a smooth, fair real estate transaction.

Where does the appraisal fit into the mortgage process-and the mortgage crisis?

An appraisal is an independent valuation of your home. A licensed appraiser calculates the value of your home based on many criteria: location, condition, size, amenities, etc. Lenders use this number to help decide how much money they will loan you to buy the house. (For example, they won’t loan you $400,000 to buy a home appraised at $385,000 because if you default, the bank is left holding the house and cannot recoup its losses.) Appraisals also are used in refinancing.

Some believe inflated appraisal values gave lenders a green light to lend more money than a house was worth. Others (including those in the appraisal industry) say appraisers were pressured to give high values so deals would go through, which allowed everyone involved to make money.

Is the HVCC a law?

No. It is optional. However, it is widely followed because any lender that sells its single-family home mortgages to Freddie Mac or Fannie Mae must abide by the code. Freddie Mac and Fannie Mae are shareholder owned, government sponsored companies that buy mortgages from primary lenders, i.e. banks. Approximately 55 percent of all single-family mortgages are currently held by Fannie and Freddie.

What was the HVCC designed to do?

Its primary purpose was to act as a “firewall” between those involved in loan production (such as loan officers or mortgage brokers) and appraisers. It prevents communication between them about the appraisal, purportedly so the appraisers can give a fair value of a property without being pressured to hit a certain number. It also aims to prevent consumers from buying an overpriced home.

How has the appraisal process changed?

Like most things in banking and real estate, it used to be relationship based. When a loan officer, mortgage broker or Realtor needed an appraisal, they simply called one they knew who was familiar with the area or type of property. Appraisers worked as independent contractors or for an appraisal company, which they still do. But since the HVCC prohibits direct contact between loan production staff and appraisers regarding the appraisal, a third party has come into the picture as a go-between. These third parties are called appraisal management companies, or AMCs.

What is an AMC, and what does it do?

Appraisal management companies are hired by lenders to schedule appraisals, hire the appraiser to do the work, review the appraisals, then submit them back to the lender that ordered them. It is the AMC alone that decides which appraiser it will send to appraise your property. If there is a problem with the appraisal, the AMC handles it.

Have there been consumer issues with the new process?

The biggest complaint is that of non-local appraisers being sent to areas with which they are unfamiliar. This is an issue in a city of diverse neighborhoods like Chicago, where similar houses can be worth substantially more or less if their location varies by just a few blocks.

This unfamiliarity can lead to low appraisals, which can cause problems with financing. For example, if you’ve agreed to buy a $400,000 house and it appraises at $385,000, you have three options: make up the difference in cash (i.e. borrow less); try to get the seller to drop their price; or cancel the deal.

The second complaint is that appraisals cost the homebuyer more now because two entities are doing work instead of one: the AMC and the appraiser. Appraisals used to cost $300-$350 for an average home in the Chicago area. Now it varies widely, up to double the cost. To avoid surprises, ask your lender. They are the one ordering the appraisal from the AMC. Your lender decides how much of the cost they pass on to you.

A third complaint is that appraisals can take longer to schedule, lengthening the loan process. The longer you lock in an interest rate, the more it costs.

Are new home builders and buyers affected by the changes?

Yes. For example, one builder said it no longer offers finished basements as an option because subterranean space is not appraised at the same rate as above-ground space. (A finished basement raises the cost of a home, but the full retail cost of constructing it might not be reflected in the appraised value, causing a borrower to come up short.) Buyers who want finished basements must finish them with a contractor on their own. Also, buyers have to be careful about loading their new home with expensive finishes, which increase the size of their loan but might not reflect fully in the appraisal.

Will I receive a copy of the appraisal of a home I’m buying?

Yes, at least three days before closing. Some lenders do the appraisal the beginning of the lending process, and some at the end. This could mean weeks of difference. Ask when you will receive it, and request to get it early if possible.

How can I make sure I get a qualified local appraiser to appraise the property I’m buying?

Nothing prohibits you from contacting the AMC or your lender regarding your appraisal. Call your lender and/or AMC and tell them what you expect. Ask about appraiser credentials (there are different designations), locality, years of experience, etc. Ask whom to contact if there is a problem later.

Is there anything I can do to help the appraiser accurately determine the value of a home I’m selling?

Yes. It is OK to communicate with the appraiser about the facts of the home. You can even prepare a packet to hand the appraiser that includes recent (last three to six months within one mile) comparable sales, upgrades and renovations, etc.

What if I think my appraisal was done wrong?

Call your lender and/or AMC immediately. Factual or procedural errors in appraisals can be corrected.

ChicagoTribune

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IN ITS early days, the Obama administration argued over whether the financial system or the real economy should be the economic priority. Critics disputed the premise. They argued that no lasting recovery would be possible until housing markets were healthier.

Yet the housing-market recovery has almost run out of steam. Sales of new and existing homes have fallen for three consecutive months. As a result inventories have grown, putting downward pressure on home values. According to some measures, prices are dropping again: the Federal Housing Finance Agency reported national declines in December and January.

Things looked rosier last autumn. An $8,000 homebuyer tax credit helped stabilize both prices and sales, while Federal Reserve purchases of mortgage-backed securities held down mortgage rates. House values climbed across the country, and existing-house sales hit levels not seen since the end of the boom in early 2007. By September building-industry confidence had more than doubled from January’s all-time record low, generating optimism about new employment. Anxious to keep the recovery going, Congress extended the tax-credit programme to the end of April this year. But the magic has not survived the winter.

America’s weak labour market deserves much of the blame. Job losses continue to drive loan defaults. Foreclosures declined from January to February, but remained above 300,000 for a 12th consecutive month. Bank sales of foreclosed properties are depressing prices further and dampening the industry’s hopes (see chart). The latest data show declines in both builder confidence and new housing starts.

The weather hasn’t helped. Fierce winter storms hit house-hunting in January and February. But with prices, sales, construction and builder confidence all losing ground and foreclosures still frequent, there is growing concern that the housing-market stabilisation of 2009 was entirely a product of market interventions, most of which are about to end.

This pessimism may be overdone. With the deadline to take advantage of the housing tax credit looming and with better weather on the way, potential buyers kept indoors by February snow may rush into the market. Construction has been so depressed for so long that a flurry of buying could quickly trim inventories, supporting prices and construction and touching off a virtuous cycle in housing markets. And America’s housing correction has been more thorough than those elsewhere, leaving homes much cheaper.

But the window for a turnaround is closing fast. The Federal Reserve’s $1.25 trillion programme of buying up mortgage-backed securities ends this month, and mortgage rates are expected to rise thereafter. With budget politics dominating headlines in Washington, another housing-tax-credit extension is unlikely. After April, housing markets will largely be on their own. By autumn payments will be adjusted upwards on a new bulge of mortgages, while interest rates may rise further ahead of expected tightening by the Fed.

Meanwhile Washington’s foreclosures policy continues to fail to rise to the magnitude of the problem. The administration’s programme to restructure distressed mortgages, intended to help up to 4m households, has produced only 170,000 permanent modifications.

A renewed decline in the housing market is not inevitable, but it is starting to look increasingly likely. And if prices start to drop once again, causing both household wealth and construction employment to fall, while boosting the rate of defaults, the broader economic recovery, which is still fragile, may very well suffer as a result of housing’s woes.

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Distressed properties may not be driving the spring home-selling market, but they can be considered a co-pilot.

Sales of existing homes in Chicago recorded their sixth consecutive month of year-over-year improvement in February, the first month of what is traditionally the start of the buying season. But for every 10 single-family homes and condominiums sold within the city last month, four were distressed properties.

Foreclosures, once dismissed as unseemly, are increasingly in upscale neighborhoods and in move-in condition, and their bargain-priced sales are causing a ripple throughout the market.

In the past six months, the median sales price in Chicago has plummeted 21.6 percent, to $176,500 in February from $225,000 in September, according to data from the Illinois Association of Realtors. For the Chicago area as a whole, the median sales price has dropped 17 percent, to $165,000 in last month from $199,000 in September.

Meanwhile, the Illinois Association of Realtors reported Monday that February sales of existing single-family homes and condos in the Chicago area rose 32 percent last month compared with the same month a year ago. It was the eighth consecutive month of year-over-year sales-volume improvement. Compared with a year ago, the median price fell 10.3 percent.

Within Chicago, sales posted a 41.5 percent increase in February over the year-ago period, representing a sixth consecutive month of year-over-year gains. Sales of Chicago condos rose 44 percent. The February median price for the city as a whole was down 19.3 percent year over year, and down 10.7 percent for condos.

The growing disconnect between sales volume and price is a concern for homeowners looking to list their home for sale this spring, real estate agents say.

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65 N. Tournament Dr., Hawthorn Woods, IL 60047 | Real Estate Virtual Flyer by VirtuallyShow.com

65 N. Tournament Dr., Hawthorn Woods, IL 60047 Exceptional 4 Bedroom Home Details Price: $659,000 MLS: 07470787 Type: For Sale Bedrooms: 4 Bathrooms: 2.1 Sq. Footage: 0 Year Built: 2005 Description Beautiful “Columbia” model in Hawthorn Woods Country Club! This home is set on a lovely corner lot and has luscious views. With lots of living space this home features 4 bedrooms including 2.5 baths & 3 car garage. Home boasts 2-story foyer & family room with wood burning fireplace with gas starter and granite surround. Spacious unfinished lower level with walk out to exterior and rough-in for future bath. High end mechanicals with 2 furnaces, zoned heat and air. Large cook’s kitchen includes Cherry stained cabinets, large island with granite breakfast bar, Bosch and Thermador stainless steel appliances, hardwood floors, granite counters, tile backsplash and closet pantry. Plush upgraded carpet and pad in living, dining, family room, and all upstairs bedrooms area. Master bath dual shower with tile, Jacuzzi Tub & upgraded maple vanities in all baths. Bright study with plush carpet and wood window treatments throughout the home add terrific ambiance. Alarmed home with home audio and speaker system carefully thought out. Finally, an in-ground sprinkler system, patio with brick pavers and fire-pit make for perfect outdoor relaxation. Neutral décor to customize and create your own color palette! Resort style living in a fabulous upper scale community. View Tour and Information at: http://www.virtuallyshow.com/6230 Helen Oliveri The Helen Oliveri Team of Keller Williams Realty Office: 847-967-0022 Mobile: 847-967-0044 Email: helen@helenoliveri.com Website: www.helenoliveri.com All information is deemed reliable but is not guaranteed and should be Independently verified.