Home Appraisals Catching Up to Rising Home Values

Posted on May 17, 2013 by Cliff

In recent months, real estate professionals have had to hold their breath as they waited for  home appraisals for properties to come back. Would it be lower than the agreed-upon selling price  — and by how much?

Many real estate professionals have blamed a high number of derailed transactions on low-ball appraisals.

But now the industry is noticing a change in home appraised values: Appraisals are getting more in line with the agreed upon selling price, CNNMoney reports.

Appraisers are valuing homes at or above their selling prices as home prices nationwide climb and inventories of homes decrease, says Lawrence Yun, chief economist for the National Association of REALTORS®.

For example, in Wallingford, Wash., real estate pro Michael Ackerman told CNNMoney that he was concerned a transaction would fall apart when a buyer agreed to pay $755,000 for a home since other comparable homes in the area had sold for $690,000.

“Everybody’s jaws dropped” when the appraised value came in at the full, agreed-upon selling price,” says Ackerman.

In some cases, appraisals are even coming in higher — which was practically unheard of just a few months ago. For example, real estate pro Cara Ameer in Jacksonville Beach, Fla., says with home prices in the area rising 15 percent over the past year, she was concerned the appraisal on a two-bedroom townhouse wouldn’t reflect the current rise. A buyer offered to pay $5,000 above the $189,000 asking price. The appraisal came in above the selling price, Ameer says.

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Asking Prices are on the Rise Across the Country

Posted on May 16, 2013 by Cliff

Inventories of homes for sale nationwide increased 4 percent in April, but remain 13.5 percent lower than last year’s inventory levels, according to realtor.com®’s latest report.

The number of homes for sale remains particularly tight out West. Inventories have dropped the most — more than 52 percent compared to a year ago — in Orange County, Calif. In Oakland, San Jose, Los Angeles, and Stockton, Calif., inventories of for-sale homes were down more than 40 percent year-over-year in April, according to the report, which reflects listings from more than 800 multiple listing services nationwide.

With tight inventories, asking prices are on the rise across the country. Nationwide median asking prices rose 2.6 percent in April, and were 3.1 percent higher than last year’s levels.

California posted some of the largest jumps in asking prices too. Oakland, for example, had the largest median asking price increase in April, climbing 47 percent over a year ago. Other big gainers for asking prices also include: Santa Barbara (+47%), Sacramento (+40%), San Jose (+35%), and Los Angeles (+34%).

Buyer demand remains strong and homes are spending less time on the market. On average, homes were on the market in April for at least 81 days, down 2.4 percent from March and a drop of 11 percent from a year ago.

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Source: WSJ 05/14/2013

 

 

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Foreclosure Settlement and Bad Checks

Posted on May 15, 2013 by Cliff

About 96,000 borrowers will receive an additional check to correct errors made in initial payments sent to compensate them for foreclosure mishandlings. The payments are part of a nationwide settlement. Some borrowers were issued amounts that were too low, the Federal Reserve announced, and the new foreclosure settlement checks will make up the difference.

Borrowers should cash the original check along with the new check when they receive it. The new checks will be mailed by the end of the week.

The Federal Reserve announced last week that about 96,000 of the 217,000 checks had wrong amounts mailed to Goldman Sachs and Morgan Stanley borrowers.

Rust Consulting is the company handling the payments. When the payments were first issued in April, many borrowers said the checks they received wouldn’t clear. At the time, the incident sparked an apology from the company for those who had problems trying to cash their checks.

The Federal Reserve vowed to closely monitor the payments going forward.

The foreclosure settlement checks stem from a settlement with federal regulators and 13 mortgage servicers. The servicers agreed to provide $3.6 billion in cash payouts to eligible borrowers who were foreclosed on in 2009 and 2010. About 4.2 million home owners who underwent foreclosure in 2009 and 2010 may be eligible to receive payments ranging from $300 to $125,000 as part of the settlement.

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Source: AP 05/09/2013

 

 

 

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Home Affordability Remains High

Posted on May 14, 2013 by Cliff

Low mortgage rates and stabilizing incomes are keeping home affordability high and giving home buyers “ample buying power,” according to the National Association of REALTORS®.

The Wall Street Journal highlights the following example on just how home affordability  has become: “Assuming a 5 percent down payment, a 3.5 percent mortgage rate, and 25 percent of a gross income devoted to mortgage payments, a buyer would only need an income of $36,500 to buy a house at the median price. With a 10 percent down payment, the required salary falls to $34,600, and with a 20 percent down payment, it falls to $30,700.”

In the first quarter, the median family income nationwide was $62,200.

Housing affordability remains high despite recent reports that show home prices in 150 U.S. cities saw their biggest year-over-year gains in more than seven years, according to NAR’s most recent report, reflecting data from the first quarter of 2013. The median price of a single-family, existing home was $176,600 in the first quarter of this year, an increase of 11.3 percent from year ago levels, NAR notes.

Areas with strong job growth are posting some of the largest home price gains, including:

  • Akron, Ohio: +32.7%
  • San Francisco By area: +32.6%
  • Reno-Sparks, Nev.: +32.1%
  • Silicon Valley area surrounding San Jose, Calif.: +31.7%
  • Atlanta: +31.1%
  • Phoenix: +30.1%

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Source: WSJ 05/09/2013

 

 

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Sellers Say, No More Contingencies

Posted on May 13, 2013 by Cliff

As the inventory of for-sale homes remains at low levels, sellers are getting more comfortable at the bargaining table and telling buyers to cool it with the contingencies. In competitive situations that attract multiple bids, some sellers are even telling buyers they want an offer without mortgage contingencies.

A mortgage contingency, often included in sales contracts, provides buyers with a safety net of being able to get out of the deal without forfeiting their down payment in case they are unable to obtain financing within a certain timeframe.

Some sellers are telling buyers they want non-contingent offers — and better yet, make it all-cash too.

“When you have a market that’s heating up, sellers feel emboldened to say to buyers, ‘I’m not going to give you this clause because I don’t want to take the risk that you can’t get your mortgage,” Marc Israel, the executive vice president of the title insurer Kensington Vanguard National Land Services, told The New York Times. “The last thing sellers want to do is tie themselves up with a buyer for some extended period of time just to have the buyer cancel the contract.”

This has put some buyers in a risky spot. If their financing is delayed or denied for any reason — which isn’t that uncommon in a tight lending environment — buyers may be left with having to turn over their down payment.

Peggy Aguyao, an executive vice president of Halstead Property, says in New York it’s not uncommon for even higher bids to be passed over by sellers in favor of lower bids because they are non-contingent or all-cash offers.

Gea Elika, a principal broker at Elika Associates, an exclusive buyers’ brokerage, says his brokerage never advises clients to proceed without a mortgage contingency. For those clients who insist, “we’ll try to go to a major lender that’s preapproved the building in the last three months. Then we may try to find a portfolio lender as a backup.”

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Source: NYTimes 05/09/2013

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Solo Home Buyers Re-emerge

Posted on May 10, 2013 by Cliff

Individual home buyers comprised a quarter of all house purchases last year, according to National Association of REALTORS® data. Single women purchase homes at double the rate of single men, according to the data.

However, solo home buyers can face particular challenges in qualifying for a mortgage. During and following the recession, banks tightened their underwriting standards, which also made it more difficult for single home buyers without dual incomes to qualify for a loan.

Between 2010 and 2012, home purchases made by singles dropped 7 percent — unprecedented, according to NAR. Low mortgage rates and high home affordability have drawn more singles back to home buying.

Home purchases are often a means of self-expression for singles, Jennifer De Vivo, a real estate professional in Orlando, Fla., told MSN Real Estate. “It’s a way for singles to express their lifestyles and values,” De Vivo says. “They are able to focus on the exact communities, home styles, and features that cater to their individuality with much less compromise.”

For single buyers who outgrow their first homes, some experts encourage them to keep the properties as investments.

“I always counsel them to try to keep their current home as an investment property and rent it out. It’s a big step toward helping them create long-term financial security,” De Vivo says.

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Source: MSN 05/01/2013

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Underpriced Homes Fueling Bidding Wars

Posted on May 9, 2013 by Cliff

The number of homes for sale is at the lowest point in more than 10 years, but with buyer demand still high, many markets are seeing bidding wars. A TIME magazine article recently asked: “Are buyers being manipulated into overbidding for the relatively few attractive homes on the market?”

Some real estate professionals say that underpriced homes are fueling bidding wars

“Most people are not pricing at market value,” a real estate professional told the San Francisco Chronicle. “Even in this market, you don’t want to overprice.”

For example, the San Francisco-based agent said a two-bedroom townhouse in the area was priced at $659,000  recently, even after a similar townhome had sold a year ago for $675,000.

“We priced it intentionally to get multiple offers and sell quickly,” the agent says. The townhouse attracted nine offers and sold for 15 percent above the asking price — $755,000.

Bidding wars have become commonplace in markets like Denver, where half of the new homes on the market are selling in less than 30 days. In Northern and Southern California nine in 10 homes are attracting bidding wars, as well as two-thirds of the homes for sale in Boston, New York City, Seattle, and Washington, D.C., the TIME magazine article notes.

“The only question is not whether a new listing will get multiple bids but how many it will get,” says a Sacramento, Calif.-based real estate professional.

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Source: Time 04/30/2013

 

 

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20% of New Homes Are Green Homes

Posted on May 8, 2013 by Cliff

McGraw Hill Construction says 20 percent of homes built last year were green homes, and that figure is slated to rise to between 29 percent and 38 percent by 2016.  Most large builders have made energy-efficient home construction a standard practice, and federal tax credits for such components as insulation and geothermal heat pumps have helped green housing go mainstream.

Nexus Energy Homes COO Bruce McIntosh says green homes generally cost 5 to 10 percent more than conventional dwellings, but material and construction costs are on the decline.  Low-energy homes are gaining in popularity as a way to cut utility bills, address concerns about future energy costs, and become independent from the power grid.

Studies show that homeowners also reap the benefits of energy efficiency when they sell their homes, with researchers from the University of California reporting that in 2012, California dwellings with the LEED for Homes, Energy Star, NAHB Green, or other green certification fetched 9 percent more than a comparable house without the green label.  However, Erich Cabe, an agent at Coldwell Banker, says green features are more of a selling point in markets like Berkeley, Calif., and Boulder, Colo., than in places like Washington, D.C.

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Source: WSJ 05/03/2013

 

 

 

 

 

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Issues That Remain In The Housing Recovery

Posted on May 7, 2013 by Cliff

The housing recovery appears to be on track and growing stronger. Home sales and prices are up after reaching bottom in 2010, foreclosures and mortgage delinquencies are dropping, yet housing affordability still remains high.

So why are some analysts and economists concerned?

At a recent Milken Institute Global Conference in Beverly Hills, Calif., panelists said that threats to the housing recovery still remain. The biggest threats they pointed to included:

  1. Land scarcity: Real estate developers are struggling to find desirable land to start new projects, which is limiting the supply of new homes. A few years ago, banks took ownership of land after developers had foreclosed on some projects. The land is worth less than its original price so banks are reluctant to write off additional losses by selling it too cheaply. Plus, lenders remain cautious about issuing loans for new land purchases.
  2. House flippers should be cautious: Housing affordability is high mostly due to super low mortgage rates, and investors are taking advantage with intentions of flipping homes for profit. “No doubt you can buy a house today and get a really good price and a low-interest loan,” says Jeff Greene, president of Florida Sunshine Investments. “But if you want to sell that house to somebody two or three years later and rates go up to 5 or 6 percent, how much is he going to pay for that house?”
  3. Foreign buyers potentially inflating prices: In some markets, strong demand by foreign buyers has helped home prices recover, which has made homes more expensive for Americans in some areas. Some analysts fear that it could even lead to another housing bubble if interest rates started rising quickly as well. Markets like Miami, Los Angeles, and New York are seeing strong demand among foreign buyers. Some say this is a good thing, because it reflects a strong faith in the U.S. market.
  4. A ‘patchy’ recovery: Some markets are seeing rapid increases with bidding wars, rising prices, and low inventories, while other markets are still at a standstill. For example, Miami’s housing market is “on fire” while 80 miles north in Palm Beach County there’s a “huge glut of housing,” says Greene.

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Source: US News & World Report 05/03/2013

 

 

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Homes Near Open Spaces Command Big Bucks

Posted on May 6, 2013 by Cliff

A Colorado State University (CSU) study looked into home prices in conservation developments, where residential real estate is limited and usually 50 percent to 70 percent of the land is set aside as open spaces.

The research shows that home buyers are willing to pay a premium to live near such open spaces, undeveloped tracts. Sarah Reed, co-author of the study, and her colleagues compared 2,222 home sales in five counties throughout Colorado between 1998 to 2011.

The conservation developments designated an average 64 percent of land as open space, while traditional rural subdivisions allocated just 4.9 percent. The study found that homes in conservation developments sold for 29 percent more than properties located in conventional residential projects.

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Source: WSJ 03/05/2013

 

 

 

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