Daily Real Estate News

The National Association of Realtors® says more than 50 percent of March's home sales were tied to first-time buyers, many of whom snapped up foreclosed homes and other distressed properties.

Experts believe getting first-time buyers off the sidelines to take advantage of historically low interest rates and federal tax credits will reduce the glut of homes on the market and spark a recovery. Some point out that first-time buyers are helping to revitalize communities in Florida, California, and other states hit hard by foreclosures.

However, distressed properties often sell for 20 percent less than traditional properties, and the increase in lower-end sales is driving down the national median home price.

Source: USA Today, Stephanie Armour (04/30/09)

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Daily Real Estate News

The housing market is looking healthier, but U.S. Housing and Urban Development Secretary Shaun Donovan said Wednesday that it is too early to tell if the recovery has taken hold.

"We do have some early signs, I think, that the market is stabilizing. Since January, what we've seen is both prices and sales volumes moving up and down around a relatively stable number," Donovan said.

Donovan said he was optimistic that President Obama’s policies are bolstering the market.

"I think in particular when you get below the national level what you see is that in markets like California that were the hardest hit, that is where the signs (of recovery) are the strongest," he said.

[Editor's note: Remarks last week by NAR Chief Economist Lawrence Yun at a press conference on existing-home sales are consistent with Secretary Donovan's analysis. Video highlights of Yun's press conference are available online.]

Source: Reuters News (04/29/2009)

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Daily Real Estate News

The Obama administration is announcing incentives today for mortgages servicers to modify home equity loans and other second mortgages.

Servicers must agree to modify second mortgages when the first mortgage has been modified. They must extend the term of the second mortgage and match the rate of the first mortgage. Then the government will share the cost with the servicer of cutting the rate to 1 percent for amortizing loans and 2 percent for interest-only loans. Under the program, the government will pay mortgage servicers $500 upfront and $250 a year for three years for the modifications. Borrowers will receive payments of up to $250 a year for five years if they stay current on the modified loan.

There will also be a schedule of incentives for holders of second liens to drop their claims altogether. The Department of Housing and Urban Development and Treasury will make the announcement jointly.

Bank of America, Wells Fargo, and JPMorgan Chase have already agreed to participate in the program.

A separate announcement will include changes to the Hope for Homeowners program, which helps homeowners refinance into more affordable government-backed loans. To get this program moving, the administration is announcing a $2,500 upfront payment to servicers. Lenders will receive $1,000 a year for three years if the loan stays current.

Source: The Wall Street Journal, Jessica Holzer (04/28/2009)

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Daily Real Estate News

The bottom of the housing decline is near, predicted analysts and home builders attending the National Association of Home Builders’ semiannual Construction Forecast Conference last week.

Mark Zandi, chief economist of Moody’s Economy.com, facetiously picked a date when home prices would stop falling: Dec. 15, 2009. Other observers weren’t so precise, but they did generally agree that the federal government’s efforts to shore up the market would take effect by the end of 2009 or early in 2010.

Analysts also predicted that consumers will spend less on remodeling. Eric Belsky, executive director at Harvard University’s Joint Center for Housing Studies, predicted that spending on remodeling would fall 12.3 percent by the end of this year compared with last.

Analysts project that the credit crisis will loosen, although people with blemished credit records may continue to have trouble getting mortgage loans.

Source: The Wall Street Journal, June Fletcher (04/24/2009)

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Daily Real Estate News

Bidding wars are back – at least in some parts of the country where falling prices are pitting investors against homebuyers looking for a good deal.

The parts of the country most likely to see warring bids are parts of California and Arizona, Washington D.C., and Minneapolis-St. Paul, according to real estate practitioners and other observers.

Having cash in hand can be persuasive in a bidding situation. Sellers are inclined to choose offers that aren’t likely to fall through, says Frank Borges Borges LLosa, owner of FranklyRealty.com, a real-estate brokerage in Arlington, Va.

Connie Vaughn, an associate with ZipRealty in the Los Angeles area, says one of her clients won the bidding when he offered $20,000 above the $66,000 asking price for a four-bedroom home in Adelanto, Calif., that sold for $200,000 in 2004.

Vaughn says she believes that mortgage companies are deliberately setting prices low on REO homes just to stimulate bidding situations.

Source: The Wall Street Journal, James R. Hagerty (04/23/2009)

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Daily Real Estate News

Existing-home sales eased in March but first-time buyers are responding to low mortgage interest rates and tax credits, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – declined 3 percent to a seasonally adjusted annual rate of 4.57 million units in March from a downwardly revised level of 4.71 million in February, and were 7.1 percent lower than the 4.92 million-unit pace in March 2008.

Lawrence Yun, NAR chief economist, said the market appears to be stabilizing with modest monthly ups and downs, and that first-time buyers are driving the market. “The share of lower priced home sales has trended up, indicating a return of many first-time buyers, which we also see in a parallel member survey,” he said. “Sales in the upper price ranges remain stalled because of higher interest rates on jumbo loans.”

Although prices rose from February to March, the national median existing-home price for all housing types was $175,200, down 12.4 percent from March 2008. The price increase from February to March was 4.2 percent, which is much higher than the typical 1.8 percent seasonal increase between those two months. Distressed properties, which accounted for just over half of all transactions in March, typically are selling for 20 percent less than traditional homes.

An NAR practitioner survey in March showed first-time buyers accounted for 53 percent of transactions, based largely on contracts offered before the $8,000 first-time home buyer tax credit became available. “Buyer traffic has been rising, and real estate offices are getting phone inquires about the tax credit,” Yun said. “By early summer we should be seeing a positive impact on home sales from record-low mortgage interest rates in addition to the stimulus provisions.”

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said first-time buyers are crucial at this stage of a housing recovery. “The housing market always heals from the bottom up, and with large numbers of first-time buyers entering the market it will become a little easier for sellers to trade up or down, according to their needs,” he said. “Although homeownership builds wealth over the long term, buyers need to evaluate their options. In this market, buyers and sellers who use a Realtor® to represent them are making a smart move,” McMillan said.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 5.00 percent in March from 5.13 percent in February; the rate was 5.97 percent in March 2008; data collection began in 1971.

“Record-high housing affordability conditions are helping markets recover, with home sales higher than a year ago in Minneapolis, Northern Virginia, Las Vegas, Phoenix and most areas of California and Florida.”

Total housing inventory at the end of March fell 1.6 percent to 3.74 million existing homes available for sale, which represents a 9.8-month supply at the current sales pace, compared with a 9.7-month supply in February.

Single-family home sales slipped 2.8 percent to a seasonally adjusted annual rate of 4.10 million in March from a pace of 4.22 million in February, and are 5.7 percent below the 4.35 million-unit pace in March 2008. The median existing single-family home price was $174,900 in March, which is 11.5 percent lower than a year ago.

Existing condominium and co-op sales fell 4.1 percent to a seasonally adjusted annual rate of 470,000 units in March from 490,000 in February, and are 17.8 percent below the 572,000-unit pace a year ago. The median existing condo price was $177,600 in March, down 18.7 percent from March 2008.

Regionally, existing-home sales in the Northeast fell 8.0 percent to an annual pace of 690,000 in March, and are 22.5 percent below a year ago. The median price in the Northeast was $231,700, down 18.4 percent from March 2008.

Existing-home sales in the Midwest were unchanged in March at a pace of 1.04 million but are 11.1 percent lower than March 2008. The median price in the Midwest was $141,300, which is 6.1 percent below a year ago.

In the South, existing-home sales slipped 1.7 percent to an annual pace of 1.71 million in March and are 10.9 percent below a year ago. The median price in the South was $146,900, down 12.2 percent from March 2008.

Existing-home sales in the West declined 4.2 percent to an annual rate of 1.13 million in March but are 18.9 percent higher than a year earlier. The median price in the West was $252,400, which is 11.1 percent below March 2008.

Source: NAR

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Daily Real Estate News

Senior real estate executives believe market conditions are getting better, despite constricted credit conditions in the commercial market, according to the Real Estate Roundtable Sentiment Survey for the second quarter.

Nearly 60 percent of the 120 survey respondents say that they expect conditions in the real estate market will get better within a year. This view is reflected by a slight uptick in the Overall Q2 2009 Sentiment Index, which is at 41, up from last quarter's score of 38 and its low point of 33 six months ago.

Most executives are troubled by the lack of access to capital. Eighty-eight percent of respondents think it’s harder to get a loan compared to a year ago, yet 69 percent of respondents believe the situation will turn around in the next year. Likewise, 86 percent of respondents think equity financing has deteriorated from a year ago, yet 68 percent of respondents predict it will improve in the next year.

One survey respondent observed, "There is access to both equity and debt, but they're expensive. Banks are being very selective and are trying to pick survivors."

Roundtable members' portfolios contain over 5 billion square feet of office, retail and industrial properties; over 1.5 million apartment units; and in excess of 1.3 million hotel rooms. Participating trade associations represent more than 1.5 million people involved in virtually every aspect of the real estate business.

Source: Real Estate Roundtable (04/20/2009)

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Daily Real Estate News

The worst of the economic crisis is over, according to U.S. officials speaking at a financial conference Friday at Vanderbilt University.

Frank Nothaft, the chief economist for Freddie Mac, said housing sales have just about hit bottom and a third of home sales are now foreclosed properties.

Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, warned that the declining commercial real estate market still poses a risk to the economy.

New York Fed chief William Dudley complained that the programs the government has put in place are being undermined by public perception that they are unfair to average taxpayers and that has made some potential investors fearful that they would be the focus of public outrage if they profit from the programs.

"It is worth emphasizing (that) actions that lead investors to shun taking risk, especially in this environment, are ultimately detrimental to the ability of households and businesses to secure credit at reasonable borrowing rates," Dudley said.

Source: Reuters News, Ros Krasny and Kristina Cooke (04/18/2009)

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By STEPHEN OHLEMACHER and ANN SANNER
The Associated Press

WASHINGTON - Most people say they plan to use this year's tax refund to pay bills, deciding in this sour economy to be more frugal with their annual windfall.

Fifty-four percent of those receiving refunds said they intend to pay off credit card, utility, housing and other bills, according to an Associated Press-GfK poll released Monday. That compares with 35 percent who said the same thing a year ago.

Only 5 percent, about the same as a year ago, said they planned to go on a shopping spree.

The survey found that 38 percent of those receiving a refund said they plan to spend at least part of it. But the spending appears to be mostly on basic needs: 17 percent said they would use the money for everyday needs such as food and clothing. It was 7 percent a year ago.

Phillip Barks of Aberdeen, Md., said he and his wife, Kristy, have spent their $3,800 refund. Most went toward a credit card bill.

"We didn't pay that off, though," said Barks, 31, who serves in the Army. "We just put a big dent in it."

The Barks, who were not part of the poll, were interviewed on a downtown street in Washington.

A few blocks away, Shannon Wyss of Washington said she plans to save most her $1,066 refund. She will, however, treat herself a bit; she's already spent $99 on a device for her iPhone.

"I need a pair of shoes," said Wyss, 36, who works for the National AIDS Fund.

The deadline for individuals to file their 2008 tax returns is Wednesday. As of last week, the Internal Revenue Service had sent out about $200 billion in tax refunds. Commissioner Doug Shulman said the agency expects to send out about $330 billion by the end of tax season.

The AP-GfK poll found that 57 percent of adults said they expect to receive a tax refund. The average refund this year is about $2,700, compared with $2,500 last year, Shulman said.

For last-minute filers, Shulman said the quickest way to get a refund is to file electronically and have the refund deposited directly into a bank account. Those refunds take about 10 days to process, he said. Refund checks from paper returns take four to six weeks to process, he said.

The IRS warned taxpayers Monday to be on the lookout for fraudulent schemes by those claiming they can help people avoid paying taxes. Some scams are promoted in unsolicited e-mails, which can enable computers hackers to steal taxpayers' identities if the e-mails are opened. The IRS says it never initiates unsolicited e-mail contact with taxpayers.

"There is no secret trick that can eliminate a person's tax obligations," Shulman said. "People should be wary of anyone peddling any of these scams."

The Obama administration is hoping this year's refunds will help boost an economy that has shed more than 5 million jobs since December 2007. Congress passed a $787 billion economic recovery bill in February. The package was a mixture of government spending and tax cuts designed to get people to spend at a time when most are cutting back and saving more. It makes sense to be frugal when the economy is in such bad shape, but it hurts the economy when everyone does it.

The poll found that 35 percent of those receiving refunds plan to save or invest at least part of the money, a slight increase from a year ago. About 37 percent said they planned to use their refunds to pay down debt, including credit cards, and student and personal loans. A year ago, 24 percent said they would use at least part of their refunds to pay down debt.

Only 3 percent of those receiving refunds said they planned to invest at least part of the money in real estate, which has been depressed in markets across the country.

Michael Perch, 48, of Alexandria, Va., said he plans to use part of his hefty refund to take advantage of real estate bargains in the Atlanta area. Perch, a government contractor for the Defense Department, expects to receive a $17,000 refund.

Perch, who was interviewed near the White House, said he plans to buy affordable homes and rent them to struggling families, then sell the homes after the market improves.

"It's tough out there right now," he said.

The poll found that those making less than $50,000 a year were much more likely to use their tax refunds to pay bills or buy everyday items than those making more. People making more than $100,000 a year were more likely to use their refunds to go on a vacation.

Among the poll's other findings:

• 31 percent of those receiving refunds said they will use at least part of the money to pay credit card bills, compared with 17 percent a year ago.
• 19 percent said they will use their refunds to pay utility bills, compared with 10 percent a year ago.
• 17 percent said they will use their refunds for rent or mortgage payments, compared with 7 percent a year ago.
• 11 percent of those receiving refunds said they would use them to go on vacation, a slight increase from a year ago.
• 5 percent said they planned to use their refund for a down payment on a car, also a slight increase.
• 4 percent said they would use their refunds to buy stocks or bonds, about the same as a year ago.
• 8 percent of those who owe taxes said they were very likely or somewhat likely to use a credit card to pay their tax bill.

The AP-GfK poll was conducted April 3-7 and involved landline and cell phone interviews with 1,002 randomly chosen adults. The margin of sampling error is plus or minus 3.1 percentage points for the entire sample. The margin of sampling error is plus or minus 4.3 percentage points for those who have already received or expect to receive a tax refund from their 2008 taxes.

Associated Press Polling Director Trevor Tompson and AP News Survey Specialist Dennis Junius contributed to this report.

On the Net: Poll results: http://www.ap-gfkpoll.com

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Labels: Corona, Foreclosure, Home Prices, Inland Empire, Loan Modification, Moreno Valley, Murrieta, Real Estate, Riverside, Short Sales, Statistics, Temecula

Daily Real Estate News

Buyers are much more likely to default on their mortgages because they don't have a job than they are because the mortgage terms are unaffordable, according to a study from the Boston Federal Reserve.

Boston Fed economists said that in light of the study’s findings, it probably makes more sense to spend money to help people find jobs than it does to create programs that modify their mortgages.

The economists suggested a better approach might be for the government to replace part of an individual home owner’s lost income after job loss with loans or grants. If that fails, then the government should assist the failed home owners in becoming renters, the economists said. Source:

Reuters News

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Daily Real Estate News

Selling a home that is vacant can be harder than selling a lived-in home, experts say. Here are some ideas from Pam and Dave Pettigrew, certified residential specialists with Prudential Rocky Mountain in Fort Collins, Colo., on what practitioners and sellers should consider to protect an empty property and get it sold.

Give the house a lived-in look: Get a neighbor or family member to make the house look occupied by parking a car in the driveway, opening and closing the drapes and taking in any mail.
Groom the yard: Use a lawn service during the summer to keep the grass cut and a snow removal service in the winter to scrape the walks and driveway.

No outstanding nicks: Hide the effects of missing furniture. Paint and replace rugs so there are no faded spots or blemishes on the walls. Cover accent paint that alone looks odd.

Leave some furniture: A few chairs, tables, lamps and beds (or empty mattress boxes with spreads) give buyers a sense of space.

Keep the utilities on: Set the thermostat at a comfortable level during the winter and summer.

Hire a maid: Make sure the home remains spotless.

Check the homeowner’s policy: Understand the coverage when the home is vacant.

Source: Coloradoan, Pam and Dave Pettigrew (04/12/09)

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