Category : Home Sales


When putting a house on the market it’s common for sellers to invest in home repairs, but what most sells don’t know is that not every repair adds significant market value. Indeed it’s far too common for uneducated sellers to spend thousands of dollars on “important” renovations only to discover that these new features will not increase their potential selling price at all. But since RE/MAX Plus is committed to ensuring that our customers receive the most return on their investments, we have put together a few suggestions for value-conscious repairs and renovations that home owners can do to increase their resale value, all without breaking the bank. Keep in mind this list is only a general guide, so if you are truly interested in learning what repairs will generate the most value for your home, contact a RE/MAX Plus agent today!

  1. Get Expert Advice
    Before you even pick up a paint brush, one of the most cost-effective methods of adding value to your renovations is to hire a professional contractor, designer or real estate agent to inspect your home. These people will always have the latest knowledge on the current trends and can help you develop a renovation plan that suits your budget while maximizing value. Many of these experts offer free estimates, but even for the ones that charge a small fee, it’s hard to put a price on a plan of action.
  2. Have a Painting Party
    Arguably the least-expensive method to add instant value to your home, painting walls and ceilings is a simple task you can do yourself or with family. For around $50 a room, sellers can create a clean, updated look that draws the eye and helps buyers better picture what it would be like to live there themselves. Keep in mind that neutral colors such as beige or white will appeal to the greatest number of people, making it that much more desirable for a larger percentage of the population.
  3. Clean EVERYTHING
    Last but certainly not least, never underestimate the selling power of a freshly-washed window or a sparkling floor. Dirt, grime, and dust sends a general message of disrepair and dampens the selling potential, even in a home with no other issues. Pay particular attention to the threshold of entry doors, windows, bathrooms, and kitchens as these are places prone to heavy soil levels. For a professional touch, consider renting a commercial steam or carpet cleaner to remove deep stains and scuffs.

When selling a house, it is important to show the house in its best condition. Getting rid of the clutter, sprucing up the landscaping, and repainting the walls are the usual suggestions, but what about home staging? Hiring a home staging professional to do all of these tasks can be one of the best decisions you make when selling your house.

A potential buyer is not just looking for a house, but for a home. Make them feel like your house can be their new home! The “staged” look of a house can evoke emotion in a customer as soon as they walk in the door. If that buyer can picture themselves lounging in the living room, hosting in the dining room, and filling the picture frames throughout the house with pictures of their loved ones, they are more likely to buy it.

The more you invest in getting your home ready to sell, the higher the return will be. Creating an ambiance and an atmosphere that make potential buyers feel at home and comfortable is a wise investment.

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.

Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”

In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.

While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.

Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generation actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

SmartMoney Magazine: The calculations behind online estimates are adding confusion to an already tricky housing market.

Jason Gonsalves worked hard to turn his 6,500-square-foot stucco-and-stone home in the suburbs of Sacramento into the ultimate grown-up party pad. Inside are the game room, home theater and custom wine cellar. Outside, there’s the recently added piece de resistance — a wood-burning pizza oven, kegerator and searing station, all flanking an infinity-edge pool that overlooks the lapping waters of Folsom Lake. A spread like that doesn’t come cheap, of course, so when interest rates fell recently, Gonsalves, who runs a lobbying firm, looked into refinancing his $750,000 mortgage. That’s when he got some startling news — even as he was putting the finishing touches on his home, it had dropped more than $200,000 in value over a seven-month stretch.

Or at least, that’s what one popular real estate website told him. Another valued Gonsalves’s pad at a jaw-droppingly low $640,500. And these online estimates left him all the more confused when a real-life appraiser, assessing the house for the refi loan, pinned its value at $1.5 million. “I have no idea how those numbers could be so different,” Gonsalves says.

[Click here to check home loan rates in your area.]

Right or wrong, they’re the numbers millions of consumers are clamoring for. In a housing market that’s been mostly a cause for gloom, so-called home-valuation technology has become one of the few sources of excitement. After years of real estate pros holding all the informational cards in the home-sale game, Web-driven companies like Zillow, Homes.com and Realtor.com are offering to reshuffle the deck. They’ve rolled out at-your-fingertips technology via laptop and smartphone to give shoppers and owners an estimate of what almost any home is worth. And people have flocked to the data in startling numbers: Together, four of the biggest websites that offer home-value estimates get 100 million visits a month, and one, Homes.com, saw traffic jump 25 percent in the three months after it launched a value estimator in May. “Consumers used to use us for home buying and move on,” says Jason Doyle, vice president of Homes.com. “Now we can stay engaged with them.”

Real estate voyeurism aside, the stakes are high for many of the sites’ visitors. Homebuyers use the estimates to get a feel for what’s on the market and, later on, to figure out whether their bid will entice a seller to play ball. Vigilant homeowners like Gonsalves check their values to help decide whether it’s worth the hassle of refinancing, while others who are ready to sell use them to gauge if they’re priced right for the market. Real estate agents, meanwhile, say they’re increasingly resigned to spending more time answering questions — or arguing — about the estimates. “It’s an evolution for consumers,” says Gary Painter, director of research at the Lusk Center for Real Estate at the University of Southern California. Banks and other lenders are piggybacking on the trend as well, with some even showcasing the upstarts’ estimates on their own websites. While lenders say they don’t use the estimates to make final decisions about loans, they say Zillow in particular has become a go-to tool for their preliminary research on homes. “I use it every day,” says Zach Rohelier, a mortgage banker at LendingTree.

But for figures that carry such weight, critics say, the estimates can be far rougher than most consumers realize. Indeed, if the websites were dart throwers, they’d seldom hit the bull’s-eye, and they’d sometimes miss the board entirely: Valuations that are 20, 30 or even 50 percent higher or lower than a property’s eventual sale price are not uncommon. The estimates frequently change, too, for reasons that aren’t always easy for homeowners to discern. According to the companies themselves, some quotes have swung by hundreds of thousands of dollars in as little as a month as new data gets plugged into the algorithms the sites rely on. (Those algorithms also change, as happened this summer when Zillow made adjustments that affected all of the 100 million homes in its database.) And while the sites say it’s probably rare that individual homeowners (or real estate agents, for that matter) game the system, they do acknowledge that people can enter information that might push estimates higher. Put it all together, say pros, and you’ve got numbers that have become head-scratching legends in one community after another: a Hollywood Hills aerie losing 47 percent of its value in one month (with no earthquakes or mud slides to explain the drop); a century-old home in Louisville, Ky., that, according to local lore, served as the inspiration for Daisy’s home in The Great Gatsby, quadrupling in value over 30 days; and one townhouse in Brooklyn, N.Y., listed now for $5 million, valued at a whopping $31 million in the midst of the real estate crash — at least according to Zillow.

Zillow says the Brooklyn valuation was an error that it subsequently corrected. And make no mistake, all of the competitors go out of their way to make it clear their numbers are guesstimates, not gospel. “A Trulia estimate is just that — an estimate,” says a disclaimer on that site’s new home-value tool. Zillow deploys similar language and goes a step further, publishing precise numbers about how imprecise its estimates can be. And every major site urges home-price hunters to “always consult with a real estate agent or house appraisal specialist,” in the words of Homes.com. Indeed, these sites say they have strong relationships with the real estate business in general; they get a significant share of their revenue from the industry, in the form of advertising and subscriptions.

[Click here to buy or sell a home.]

But when the real estate version of Pandora’s box is opened, homeowners don’t necessarily pay attention to disclaimers. Consumers and pros alike say many Web surfers put enough faith in the estimates to sway the way they shop and sell. “I’m constantly explaining to clients that those numbers don’t come from a person,” says Mindy Chanaud, a real estate agent in Greenwich, Conn., who launched into what she calls her Zillow spiel when shown a Zestimate of one of her listings. Frank and Sue Parks, former owners of the Gatsby house in Louisville, watched as the site put a $331,000 value on the dwelling in May; by July it had climbed to $1.5 million. (Zillow says the lower estimate reflected errors in its statistical model.) The couple got some potential buyer referrals from the site, but they had to fend off a stream of lowball offers before they sold their place this fall. They’re convinced that the estimate roller coaster accounted for some of that. Says Sue, “It really affected our ability to move the place.”

For most of real estate history, of course, determining a home’s value has been an appraiser’s job. Appraisal involves gathering data on recently sold homes in the area and comparing them with the “subject property” on matters like size, condition and characteristics, before coming up with an estimate of the home’s worth. If the property has, say, a swimming pool, but most recently sold homes don’t, the appraiser might add a premium to the sale value. Still, the exercise involves as much art as science, as appraisers acknowledge. The more unique or luxurious a property, the harder it is to accurately value. “Imported marble and a view of the ocean are going to be more or less valuable depending on market conditions,” says Susan Allen, a vice president at CoreLogic, a data and analysis provider in California. And critics have accused a few appraisers of inflating the value of properties or rubber-stamping other people’s estimates to ensure that deals went through.

The response, beginning in the late 1980s, was the rise of the machines. Economists started developing automated valuation models, or AVMs; instead of having a person visit the property and crunch calculations, these computer models sync the math with data about comparable sales, square footage, number of bedrooms and the like, all in a matter of seconds. Rob Walker, a managing director at AVM purveyor Lender Processing Services, says the models sped up the approval process for second mortgages and home-equity loans; indeed, for years, the tools were mostly reserved for in-house nerds at lending banks. It wasn’t until 2006 that Zillow took them to the masses, with its Zestimate. The company runs data on more than 100 million homes through its own algorithms that recognize relationships between property characteristics, tax assessments and recent transactions. “Humans don’t make these decisions,” says Stan Humphries, chief economist at Zillow.

Scores like these have helped build successful business models for some companies — Seattle-based Zillow, for one, just raised $69 million in an initial public offering. And they’ve become weapons in the arsenal of consumers like Terence Avella, an attorney in Eastchester, N.Y. After he and his wife became enamored of a four-bedroom Victorian with an asking price of $650,000, Avella consulted Zillow, finding a much lower valuation: $510,000. He says the Zestimate reinforced his belief that the house would need extensive renovations — and he put up a lowball bid. By the time the process was over, Avella had settled on an offer of just $580,000 (though the negotiations later fell through). Indeed, in a market where listing prices often reflect hope more than reality, some agents and consumers say that online tools are a useful reality check. Simms Jenkins, an Atlanta marketing executive, says he’s recently relied on sites like these to both buy and sell homes. “I can’t imagine 25 years ago, when people would just go out and spend their entire Saturday looking at homes,” Jenkins says. “You don’t have to do that now.”

But what’s a godsend to Jenkins is an ongoing mystery to Mike Battaglia. Battaglia lives in a Frank Lloyd Wright inspired mansion in Louisville, on a historic street, across from a lush park. But his neighborhood is decidedly eclectic — homes like his sit near much smaller starter homes — making it a challenge, local appraisers and agents say, to figure out how much each home is worth. Among the online estimates, that difficulty plays out in real time. Homes.com valued the manor at $761,700, but that figure dropped $85,000 in a month. Zillow pinned its worth at $1.1 million in December 2010, then posted no Zestimates at all for several months — only to peg its value at $327,000 in May, a 70 percent haircut. By fall, it was back up to $1 million.

Battaglia, a business consultant, says he knows the numbers are only estimates, but he still thinks that notion doesn’t register with people: “It’s the perception of value that affects people’s psychology.” Zillow says its wide range of estimates was a result of volatility in the local market. Homes.com’s Doyle declined to comment specifically on Battaglia’s house, but says that a home in a neighborhood like his could definitely be vulnerable to inaccuracies. “If there’s a transaction next door and someone just gave away a house, it will throw off the model,” Doyle says.

Indeed, appraisers and real estate consultants say that those models veer off target with alarming frequency. Typically, data for valuation models come from two sources: records from tax assessors and listing data for recent sales. Middleman companies — the dominant ones are CoreLogic and Lender Processing Services — gather this data from more than 3,000 U.S. counties and license them out to the Web sites and other model-builders. Collection is itself a challenge, because not every county tracks properties the same way. In North Carolina’s high-tech Research Triangle, anyone can get data directly from the Wake County website, while in rural Wright County, Mo., tax rolls are available only on paper. The size of a home could be reported by square footage or by the size of each bedroom and bathroom, so data companies must “scrub” the data to make it uniform. Even then, the data isn’t always useful in the field, say real estate pros. County assessors often use AVMs in newer subdivisions where floor plans don’t vary much. But with custom homes or neighborhoods going through gentrification, the models can go haywire. “You cannot use a computer model in certain areas and expect the value to come out right,” says John May, the former assessor of Jefferson County, Ky.

Some properties’ data can be too tough a nut for any computer model to crack. On a quiet street in one of Brooklyn’s grander old neighborhoods stands the brownstone that, according to Zillow, was worth $31 million in 2007. “I don’t even know if there’s ever been a home in Brooklyn worth that much,” says a spokeswoman for The Corcoran Group, the agency that now lists the property on the market, for $5 million. Zillow declined to discuss why its earlier estimate was so high, but a look at the house’s records suggests one potential reason for the enormous spread: Although the address is a two-family townhouse, the current owners use the entire house, giving them square footage that’s off-the-charts big by New York City standards.

Public records are hardly the only problem. Automated models aren’t designed to account for the unique details that often make or break a deal — something their designers readily acknowledge. AVMs usually can’t capture data that determines the condition of a property, such as whether there’s been a ton of wear and tear. Is a home right next to the railroad tracks or a golf course or a landfill? AVMs can’t always answer those questions, say industry pros, though GPS technology is improving things on that score. Models also can’t decipher the motivations of a buyer or seller, says Leslie Sellers, a past president of The Appraisal Institute. A couple who’s going through a nasty divorce, for example, may have taken the first offer that came along just to unload the property. For all these reasons, says Lee Kennedy, managing director of AVMetrics, a firm that audits and tests industrial-grade AVMs, the models that banks use often add a “confidence score” to their value estimates, with a low score signaling that it’s best to send in a human appraiser.

Consumers, however, don’t get to see a confidence score; instead, they get disclaimers, some of which are eye-opening. Zillow surfers who read the “About Zestimates” page find out that the site’s overall median error rate — the amount the estimates vary from the actual fair value — is 8.5 percent, and that about one-fourth of the estimates wind up being at least 20 percent off the properties’ eventual sale price. In some places, the numbers are far more dramatic: Gibson County, home of the West Tennessee Strawberry Festival, has a 57 percent error rate; in Hamilton County, Ohio, where the Cincinnati Bengals play, it’s 82 percent. Site users are always one click away from this data, but agents say few homebuyers read it (on Zillow’s homepage, the font for the “About Zestimates” link is slightly smaller than the main home-data type — and quite a bit fainter).

The sites argue that, over time, edits and corrections will help them perfect their numbers — and many of the corrections will come from their customers. On Homes.com, for example, anyone who knows certain specifics, like a homeowner’s surname and the year the home was last purchased, can edit the details to reflect, say, a sprawling two-bedroom addition. Zillow also allows site visitors to modify its property details, and in four years, it has accepted revisions on 25 million homes — perhaps the strongest testament to how seriously consumers take the estimates. Today, Zestimates are helpful enough, says the site, to give consumers an accurate sense of any home’s value. In the meantime, says Humphries, the company’s economist, “We’re always tweaking the algorithm or building a new one.”

But in the eyes of some skeptics, that tweaking only increases the potential for off-base estimates. Steve Levine, a real estate agent in Shrewsbury, Mass., says he recently changed his home description on one site, adding the fact that he has a finished basement. Over the next six months, his home rose from $516,000 to $558,000 — a healthy 8 percent — while a neighbor’s nearly identical home sank in value. Levine says he has no way to tell how big an impact his update made, “but being able to change the facts is one more tool for manipulating the system.” The sites say they believe intentionally wrong changes are rare, but acknowledge they can only go so far policing those tweaks. “It’s not 100 percent bulletproof,” says Homes.com’s Doyle.

In the end, some critics say, the sites’ business models may pose a bigger problem for consumers than their algorithms. Even their flaws help to sustain the buzz around the estimates, drawing curious visitors. The online firms earn significant revenues from advertising, and the more traffic they get, the greater that ad revenue is. Zillow says 57 percent of its revenue comes from display ads from the likes of home-supply store Lowe’s, realty franchisor Century 21 and builder KB Home. Realtor.com’s parent company, Move Inc., generates 42 percent of its sales from listings by local agents, while Homes.com says advertising is its fastest growing revenue area. Trulia expects its traffic to grow now that it has launched a beta version of an online estimator, says head of communications Ken Shuman; after all, he adds, “consumers asked for it.” As long as they keep asking, say industry insiders, stumbles in reliability aren’t especially important. “It’s not about being accurate or precise; it’s about being sticky,” says Kennedy, of AVMetrics. For their part, the sites say stickiness matters to their business plans, but that they take the estimates very seriously; otherwise, as a Zillow spokesperson put it, “we wouldn’t have a team of Ph.D.s trying to make them better all the time.” They depict the estimates as an ongoing experiment that is likely to achieve a very high degree of accuracy — someday. (At least for now, one site is deferring to agents in the home-value game: Realtor.com says it removes its estimates from homes once they actually go on the market.)

In the future, of course, homeowners may look at today’s estimates the way they look at those enormous console televisions from the 1940s — as an awkward early phase for what became a ubiquitous, reliable technology. But in the meantime, many are content to use them, flaws and all, whether in earnest or as entertainment. In an exurb outside Phoenix, Mike Lang, a commercial-property manager, has seen his home jump almost 20 percent in value on Zillow in the past few months — he’s not sure why. Though he’s not moving any time soon, he’s enjoying his time at the top of the real estate heap. “I’ve got the most expensive house in the neighborhood,” Lang says.

When it comes to home affordability, levels are at near record generational highs.

The National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) indicates that in today’s market “72.6 percent of all new and existing homes sold in the second quarter of the year were affordable to families earning the national median income of $64,200.”

There are smaller markets that see an even higher rate of affordability, such as Kokomo, Indiana, where 95.8 percent of homes sold during the second quarter of 2011 were affordable to families earning the area median income of $59,100.

“At a time when homeownership is within reach of more households than it has been for more than two decades and interest rates are at historically low levels, the sluggish economy and the extremely tight credit conditions confronting home buyers and builders remain significant obstacles to many potential home sales,” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB).

Unfortunately, this high level of affordability, alongside historically low interest rates, has not translated into more sales. Existing-home sales declined in July, down 3.5 percent from June.

Lawrence Yun, NAR chief economist, said there is a tug and pull on the market. “Affordability conditions this year have been the most favorable on record dating back to 1970, but many buyers are being held back because banks are offering financing to only the most highly qualified borrowers, ignoring a large share of otherwise creditworthy buyers,” he said. “Those potential buyers represent the difference between an uneven recovery and a much more robust housing market that could stimulate additional economic activity and create jobs.”

Regionally, existing-home sale were down in just the South (-1.6) and West (-12.6). The Midwest experienced a 1.0 percent growth rate, while the Northeast rose 2.7 percent. All regions have experienced double-digit gains over July 2010. The largest increase was seen in the Midwest, which saw existing-home sales rise 31.3 percent year over year.

The NAR reports that the national median existing-home price was $174,000 in July, down 4.4 percent from July 2010. Distressed homes still made up nearly 1/3 of the market, at 29 percent.

The delinquency rate for mortgage loans increased for the second quarter of 2011, up to 8.4 percent of all loans outstanding.

According to the Mortgage Banker’s Association’s (MBA) Chief Economist, Jay Brinkmann, “While overall mortgage delinquencies increased only slightly between the first and second quarters of this year, it is clear that the downward trend we saw through most of 2010 has stopped. Mortgage delinquencies are no longer improving and are now showing some signs of worsening. The good news is the continued decline in long-term delinquencies, those mortgages that are three payments or more past due. The bad news is that drop is offset by an increase in newly delinquent loans one payment past due.”

Yet, the temporary decline in foreclosures that some analysts attribute to a temporary pause for lender or judicial procedural reviews, could instead be a true decline in foreclosures.

The MBA reports that “foreclosure start rates fell to their lowest level since the fourth quarter of 2007. Foreclosure inventory rates also fell, to their lowest level since the third quarter of 2010. While some have argued that this drop in foreclosures is a temporary drop which does not reflect the problems yet to come, this does not appear to be the case, at least at the national level. There are still many problem loans that need to be resolved, but the idea that there is a growing backlog of loans being held back from foreclosure is simply not supported by these numbers. The percentage of loans 90 days or more past due continues to fall along with the foreclosure rate, and is at the lowest point since the beginning of 2009. Were there a growing backlog, we would expect to see the 90-plus day delinquent category increasing.”

Without this backlog, foreclosures could be losing steam, meaning prices and the market as a whole could be headed toward stabilization.

Click here to view current Market Conditions in your location.

Selling And Buying All At Once?

For many people this can be a true nightmare but it doesn’t have to be. And that’s a good thing because a lot of people find themselves in the position of needing to sell and buy all at once.

If you’re in this situation then you know that timing and money are two critical issues. What you do or don’t do, can affect whether you have a successful sale and purchase of your next home.

Here are some important tips to expediting and effectively navigating the sell and buy process.

Collaboration. The real estate process is about collaboration and teamwork. When you begin the process, experts advise that you use a notebook to record your timeline of important dates such as when you absolutely must be relocated. For instance, if you’re moving to another city for a job, when are you starting? When do you have to have the kids in school, etc? In this notebook, jot down details of conversations with experts and any transactions. Also, use the notebook to write down your questions that you have for your team of experts so that you’re certain to get the answers you need.

Meet with your team which likely includes a real estate agent, lawyer, lender, inspector, appraiser, and advise them of your needs and time frame.

First things first–must sell that home. Many homeowners need the money from their homes in order to purchase their next one. With that in mind, be proactive. Get a home inspection so that you can find out any potential issues that will slow the sale process. Then repair or adjust your asking price before you list your home for sale.

Get your home on the market as soon as possible. Delaying listing your home will result in a shorter time-frame to get it sold.

When it comes time to sell, if you’re not ready to move in to your next home, work with your agent to arrange a long close or a rent-back option. This will help to avoid the hassle of an interim move.

It’s not always all about the price. When you’re in a situation that has some very particular time constraints, you might find that it’s not always all about the price. Prepare for the best possible offer by screening your potential buyers, make sure they’re pre-approved “within five to 10 days of accepting their offer,” writes Lendingtree.com.

Sometimes a slightly lower offer may be the one that offers greater flexibility and just what you need when it comes to the closing schedule.

Get your buyer of your old home and the seller of your new one on the same page. Put in writing the specific window of dates. Lendingtree.com suggests, “negotiate financial penalties to encourage both stick to those dates.”

Know your price point. This is really important regardless of whether you’re selling a home in order to buy another one. However, when you’re in a time crunch, it’s even more critical to know and shop for the home that’s in your price range. And, of course, just like you’re asking for with your buyers–get pre-approved.

Get an inspection and make sure the new home can be insured.

Having a buyers notebook where you can record all of your notes on your home search and jot down questions is an excellent tool to have handy when choosing which home you want to make an offer on.

Ultimately, selling and buying a home is a lot to handle but it can be a smooth transition. Be clear about your time frame, new home purchase price, and any other details that are specific to your needs. Then before you move, I recommend reading my column: Go Bananas Over Moving!

Written by Phoebe Chongchua

Pending home sales rose again in November, with the broad trend over the past five months indicating a gradual recovery into 2011, according to the National Association of REALTORS®.

The Pending Home Sales Index,* a forward-looking indicator, rose 3.5 percent to 92.2 based on contracts signed in November from a downwardly revised 89.1 in October. The index is 5.0 percent below a reading of 97.0 in November 2009. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, said historically high housing affordability is boosting sales activity. “In addition to exceptional affordability conditions, steady improvements in the economy are helping bring buyers into the market,” he said. “But further gains are needed to reach normal levels of sales activity.”

The PHSI in the Northeast increased 1.8 percent to 72.6 in November but is 6.2 percent below November 2009. In the Midwest the index declined 4.2 percent in November to 78.3 and is 7.7 percent below a year ago. Pending home sales in the South slipped 1.8 percent to an index of 91.4 and are 7.2 percent below November 2009. In the West the index jumped 18.2 percent to 123.3 and is 0.4 percent above a year ago.

“If we add 2 million jobs as expected in 2011, and mortgage rates rise only moderately, we should see existing-home sales rise to a higher, sustainable volume,” Yun said. “Credit remains tight, but if lenders return to more normal, safe underwriting standards for creditworthy buyers, there would be a bigger boost to the housing market and spillover benefits for the broader economy.”

The 30-year fixed-rate mortgage is forecast to rise gradually to 5.3 percent around the end of 2011; at the same time, unemployment should drop to 9.2 percent.

For perspective, Yun said that the U.S. has added 27 million people over the past 10 years. “However, the number of jobs is roughly the same as it was in 2000 when existing-home sales totaled 5.2 million, which appears to be a sustainable figure given the current level of employment,” he explained.

“All the indicator trends are pointing to a gradual housing recovery,” Yun said. “Home price prospects will vary depending largely upon local job market conditions. The national median home price, however, is expected to remain stable even with a continuing flow of distressed properties coming onto the market, as long as there is a steady demand of financially healthy home buyers.”

Existing-home sales are projected to rise about 8 percent to 5.2 million in 2011 from 4.8 million in 2010, with an additional gain of 4 percent in 2012. The median existing-home price could rise 0.6 percent to $173,700 in 2011 from $172,700 in 2010, which was essentially unchanged from 2009.

“As we gradually work off the excess housing inventory, supply levels will eventually come more in-line with historic averages, and could allow home prices to rise modestly in the range of 2 to 3 percent in 2012,” Yun said.

New-home sales are estimated to rise 24 percent to 392,000 in 2011, but would remain well below historic averages, while housing starts are forecast to rise 21 percent to 716,000.

Yun sees Gross Domestic Product growing 2.5 percent in 2011, and the Consumer Price Index rising 2.3 percent.

The National Association of REALTORS®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

# # #

*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months. There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.

by Walter Molony wmolony@realtors.org

by Carrie Bay

First-time homebuyers purchased half of all homes that were sold from July 2009 to June 2010, according to an annual survey of buyers and sellers conducted by the National Association of Realtors (NAR).

That’s up from 47 percent in the previous 12-month period, and the highest share of first-time homebuyers in the history of NAR’s study, which dates back to 1981. The previous cyclical high for first-time buyers was 44 percent in 1991.

The trade group attributed its findings to the success of the federal government’s homebuyer tax credits that began in 2009. Ninety-three percent of first-time buyers during the July 2009-June 2010 period used the first-time buyer tax credit, according to NAR.

Fifty-six percent of entry level buyers financed their purchase with a Federal Housing Administration (FHA) loan, while another 7 percent used the Veterans Affairs (VA) loan program.

Forty-two percent said financing their first home was more difficult than expected and 9 percent had been rejected by a lender.

NAR’s profile shows the median age of first-time buyers was 30 and the median income was $59,900. The typical first-time buyer purchased a 1,540 square foot home costing $152,000. Ninety-five percent chose a fixed-rate mortgage.

First-time buyers who made a down payment used a variety of sources: 74 percent used savings, 27 percent received a gift from a friend or relative, and 9 percent received a loan from someone they knew. Eight percent tapped into a 401(k) fund, and 6 percent sold stocks or bonds.

The lion’s share of buyers – both first-timers and previous homeowners – view their home as a good investment, according to Paul Bishop, NAR’s VP of research.

“Eighty-five percent of recent homebuyers see their home as a good investment, and nearly half think that investment is better than stocks,” he said.

“Even with the turmoil created by the housing boom and bust, this indicates the long-term view of homeownership as a fundamental goal and value remains sound,” Bishop said.

But NAR says it’s concerned that today’s credit policy restrictions are locking responsible borrowers out of a sustainable model for homeownership. The trade group issued an announcement last week urging the mortgage lending industry to reassess and amend their policies so more qualified homebuyers can become homeowners.

Fannie Mae, Freddie Mac, and FHA currently account for more than 90 percent of the mortgage market.

NAR says lenders refuse to make loans unless FHA will insure them or the GSEs will buy them. However, stricter underwriting rules from the government agencies eliminate many buyers with credit scores as high as 750, and lenders are imposing credit overlays of their own, restricting the availability of credit, according to the trade group.

“Under current practices, many would-be homebuyers who could responsibly, affordably become home owners are unable to do so,” said 2010 NAR President Vicki Cox Golder. “NAR wants to ensure that anyone who is able and willing to assume the responsibilities of owning a home should have the opportunity to pursue that dream.”

The organization has vowed to increase mortgage lending to qualified borrowers, and as part of that policy, has begun developing educational materials for Realtors and consumers about credit issues, including the importance of good credit, lender credit policies, and how to find a fair and affordable mortgage.

NAR says it also plans to work with FHA, the GSEs, private lenders, and federal regulators to encourage them to assess their credit policies on a regular basis, and will urge them to re-evaluate their policies regarding which homeowners can qualify for loan modifications, short sales, or deeds-in-lieu of foreclosure to help more borrowers keep their homes or rebuild their credit.

Showing Your Home During the Holidays

If you’ve been active in the market for long, you know that the real estate waits for no man, woman or life event. Nor does it wait for any season; while the market usually does a major slowdown around the winter holidays, the motivated buyers and sellers are still eager to get a great deal.  If your home is currently listed for sale, here are some tips for showing – and selling – your home during the holiday season.

1.  Don’t, if you don’t have to. During the holidays, the amount of qualified and active buyers shrinks – dramatically.  The cold weather in some areas makes buyers hesitant to come out and view your home. Buyers also know that many sellers take their homes off the market during this time; be prepared to receive a lowball offer.  Withdrawing your home from the market during the holidays and relisting it after New Year’s holds the potential of exposing your home to a fresh set of buyers.

There are advantages to having your home on the market at this time of year. Given that post-tax credit buyers have been characterized by an almost stunning lack of urgency, keeping your home on the market over the holidays is one way to try to capitalize on the urgency this season’s motivated buyers face, due to their circumstances.

2.  Ditch the holiday decor or make it meticulous. Keep your holiday decorations somewhat secular and ethnically neutral, if possible. Trees, garlands, lights and bulbs are great. And you definitely don’t want to let your ethnic or religious stuff interfere with the buyers’ ability to envision their own holidays in your home.

3.  Set a few, clear “no show” dates and times. There is no faster way to lose potential buyers than to make it difficult for a Broker or Agent to schedule a showing. This is an easy way to tip buyers toward a competing property. 

4.  Expect some inconvenience and irritation. Selling during the holidays can be rewarding, but approach it knowing it won’t always be fun. Some buyer is highly likely to track rain, mud or snow into your house. These things will happen, but the upside is that a motivated buyer-to-be may also come see your place.

5.  Engage in safe, sensory staging.  Holiday food smells create a sense of comfort.  Also, remember that dreary winter weather can make even the loveliest house and showing take on a gray cast; counteract this by making sure your home is well-lighted and -heated. 

Agents:  What holiday tips do YOU have for buyers or sellers this holiday season?

Posted on November 24, 2010 by Homefinder.com News

In a recurring theme over the past few months, reports from the National Association of Realtors show that existing home sales have once again fallen well short of their tax-credit-fueled highs of a year ago as the traditional winter slowdown continues.

According to the report, existing-home sales occurred at an annual rate of 4.43 million during the month of October, dropping 2.2 percent compared to September and falling 25.9 percent short of sales figures from October 2009, when the federal first-time hombuyer tax credit was still driving buyers into the market.

So far this year, there have been 4.15 million home sales, down 2.9 percent from the 4.27 million through the first 10 months of last year. However, analysts say that the stalled foreclosure sales in many parts of the country may have played a role in at least part of the drop in sales, and that the market for homes for sale across the country is much improved.

“The housing market is experiencing an uneven recovery, and a temporary foreclosure stoppage in some states is likely to have held back a number of completed sales. Still, sales activity is clearly off the bottom and is attempting to settle into normal sustainable levels,” said Lawrence Yun, NAR chief economist. “Based on current and improving job market conditions, and from attractive affordability conditions, sales should steadily improve to healthier levels of above 5 million by spring of next year.”

Despite the significant drop in sales, home prices have remained relatively stable. The median price of homes for sale which changed hands during the month was $170,500. Compared to October of last year, the median home price was down roughly 0.9 percent.

The total housing inventory has also fallen, although that number may also be affected by the large number of distressed properties waiting to go on the market. According to the NAR, the total number of homes for sale dropped 3.4 percent during the month to 3.86 million homes – representing a 10.5-month supply at October’s sales rate. That’s down only slightly from the 10.6 months of homes available in September, but still well over the 6-month supply Realtors say is found in a “balanced market.”

However, the NAR added that extent of the real estate market’s recovery would hinge on the ability of potential buyers to get affordable financing, saying that lenders have enacted very tight lending standards which are disqualifying many borrowers with solid credit histories.

“A review of recently originated loans suggests that they have overly stringent underwriting standards, with only the highest creditworthy borrowers able to tap into historically low mortgage interest rates. There could be an upside surprise to sales activity if credit availability is opened to more qualified homebuyers who are willing to stay well within budget,” Yun added.

However, mortgage lenders have shown very few signs of loosening their hold on the market, after bad loans were widely cited as one of the main causes of the housing market’s recent crash – a scenario banks are being over cautious in order to avoid repeating.

A recent survey of loan officers by the Federal Reserve found that most feel that the tightened lending standards will remain in place in the coming months. Out of more than 50 lenders surveyed, just 15 percent felt that their lending standards would return to their average level sometime during 2011. In addition, less than 20 percent felt that their standards would loosen sometime in 2012, and 15 percent believed that change wouldn’t take place until after 2012.

However, the most telling part of the survey was that 34 percent of respondents said that they didn’t see their residential mortgage lending standards returning to their average levels any time in the “foreseeable future.”