Home Remodeling Posts Strongest Growth in Years

Home Remodeling Posts Strongest Growth in Years. Image courtesy of Carlos Porto / FreeDigitalPhotos.net

Home remodeling is posting a strong recovery as more home owners regain equity and look to spruce up their homes.

“In the near term, homeowner spending on improvements is expected to see its strongest growth since the height of the housing boom,” says Kermit Baker, director of the Remodeling Futures Program at the Harvard Joint Center for Housing Studies.

Home remodeling projects surged 14 percent in September over year-ago levels, according to BuildFax, which tracks building permits.

However, smaller remodeling projects — those under $10,000 — are dropping in number.

One reason behind the trend is that regular home owners may be starting to renovate more and spend more as they regain equity. In recent years, remodeling activity was mostly dominated by smaller projects from investors who had purchased single-family homes to turn into rentals. Investors are lessening their share in remodeling as regular home owners show more interest in home remodeling.

Source: “Remodeling? Now you can snoop inside your neighbors’ kitchen,” CNBC (Nov. 19, 2013)

Census: Big Cities’ Home Values Fared Worse in Recession

Census: Big Cities’ Home Values Fared Worse in Recession. Image courtesy of porbital / FreeDigitalPhotos.net

The largest metros in the country saw some of the most significant declines in median home values following The Great Recession, according to a newly released Census report.

The report shows that 43 of the 40 largest counties posted significant declines in median home values – compared to only four of the 50 least populous counties post-recession.

The Census Bureau compared home values and home ownership rates among counties and states during a three-year period before (2007-2009) and after the recession (2010-2012).

The home ownership rate from 2007 to 2009 stood at 66.4 percent, but has continued to fall since that time. It was 64.7 percent from 2010 to 2012.

Of the largest cities, 43 of the 50 tracked saw a decline in home ownership rates, and 23 of those cities saw percentage decreases more than the national average, the Census Bureau reports.

On the other hand, small cities fared the best. Only 17 of the 50 smallest cities saw a decline in home ownership rates.

Overall, the nation saw a median decline of $17,300 in home values after the recession to a median value of $174,600. Nineteen states bucked that trend posting significant increases, with North Dakota the leader, seeing home values increase at $18,200.

Source: “Home Values in Big Cities Took Biggest Hit in Recession, Study Says,” Credit.com (Nov. 14, 2013) and “Home Prices in Smaller U.S. Counties Made Softer Landing,” Mortgage News Daily (Nov. 14, 2013)

Home Repossessions Fall as Investors Step in.

Home Repossessions Fall as Investors Step in. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

The number of foreclosures and repossessions by banks is dropping, and investors may be the ones driving the decrease. Investors are increasingly buying up properties when they go on sale at public auction, according to RealtyTrac.

With an improving housing market, “investors are back in the game,” says Daren Blomquist, a vice president at RealtyTrac.

The percentage of homes completing the foreclosure process fell 29 percent in October compared to year ago levels, according to RealtyTrac data. Foreclosure starts have been dropping nationwide for 15 consecutive months. Repossessions have decreased for 11 consecutive months.

The Associated Press reports that “the trend reflects a growing appetite among investors for buying homes before they exit the foreclosure process and end up on the market… Many large investors are eager to buy homes at public auction, where buyers are required to pay cash. That means they don’t have to compete against typical home buyers who must finance the home purchase.”

Still, the trend is not uniform across the country.

“We’re still firmly on the road back to normal foreclosure levels, but continue to see the foreclosure problem persist in areas that had delays in the foreclosure process,” says Blomquist, who notes states such as Florida, New York, and Illinois are seeing many of those delays since courts must sign off on foreclosures there.

Source: “Fewer Homes Being Repossessed, Thanks to Investors,” The Associated Press (Nov. 15, 2013)

Mortgage Rates Move Higher Again

Mortgage Rates Move Higher Again. Image courtesy of renjith krishnan / FreeDigitalPhotos.net

Fixed-rate mortgages are on their way up this week for the second consecutive week, with the 30-year fixed-rate mortgage reaching its highest level since Sept. 19 when it averaged 4.50 percent, Freddie Mac reports.

“Fixed mortgage rates increased this week following stronger than expected economic data releases,” says Frank Nothaft, Freddie Mac’s chief economist. Nothaft notes the employment report for October was stronger than expected with revisions adding 60,000 additional jobs to the prior two month of releases.

Freddie Mac reports the following national averages with mortgage rates for the week ending Nov. 14:

• 30-year fixed-rate mortgages: averaged 4.35 percent, with an average 0.7 point, rising from last week’s 4.16 percent average. Last year at this time, 30-year rates averaged 3.34 percent.
• 15-year fixed-rate mortgages: averaged 3.35 percent, with an average 0.7 point, rising from last week’s 3.27 percent average. Last year at this time, 15-year rates averaged 2.65 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 3.01 percent, with an average 0.4 point, rising from last week’s 2.96 percent average. A year ago at this time, 5-year ARMs averaged 2.74 percent.
• 1-year ARMs: averaged 2.61 percent, with an average 0.4 point, holding the same average as last week. A year ago, 1-year ARMs averaged 2.55 percent.

Source: Freddie Mac

Government Shutdown Proved Costly to Taxpayers

Government Shutdown Proved Costly to Taxpayers. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

The Obama administration issued a report detailing the impact of the two-week government shutdown in October that furloughed government employees and has been blamed on putting the economy — including the housing market — in a holding pattern.

The shutdown caused back-pay of furloughed government employees to amount to $2 billion, and a loss of 120,000 private-sector jobs.

The shutdown resulted in 6.6 million days of lost work, the report said. Other effects from the shutdown also include missed fees from interest due on late payments, among other items.  The government shutdown also has been blamed on the fall of consumer and business confidence.

“Millions of Americans were impacted by the shutdown, due to furloughs of federal employees, reduced services for the public and delays in payments to federal grantees, states, localities, contractors and individuals,” Sylvia Mathews Burwell, the budget director, said in the report.

A report by Standard & Poor’s estimated the shutdown cost the U.S. economy $24 billion in losses and reduced fourth-quarter growth from 3 percent to 2.4 percent.

Unless Congress passes a budget or provides an alternative for financing the government, a second shutdown may loom at the beginning of 2014.

Source: “White House Puts Price on Government Shutdown,” The New York Times (Nov. 8, 2013)

Payday for Borrowers After Foreclosure?

Payday for Borrowers After Foreclosure? Image courtesy of Stuart Miles / FreeDigitalPhotos.net

More than 1,000 home owners who lost their homes to foreclosure in the Phoenix metro area may be eligible to recoup thousands of dollars in cash due to rising home prices. Many foreclosures are selling for more because of the general uptick in home prices, and some are even fetching more than what the original borrowers owed on their mortgages.

Typically in a foreclosure sale, the amount owed to the lender gets paid from the proceeds first. Then the remaining money goes to the county’s treasury office, where it remains for three years. During that time, second-mortgage lenders, homeowners associations, and others with a stake in the property have a chance to file a claim to the money. If the money never gets claimed, it rolls to the state.

In Phoenix’s Maricopa County Treasurer’s Office there is $24 million in unclaimed funds to date.

Some home owners who had been foreclosed on may be able to file a claim to the outstanding funds. AZCentral.com describes one couple, for example, who underwent a foreclosure on their rental home and now may be eligible to receive more than $86,000 under the “excess-proceeds” statute because the property was sold for more than what they owed on the home.

Source: “Phoenix-area foreclosed owners could get thousands,” AZCentral.com (Nov. 13, 2013)

Loan Demand Softening This Month

Loan Demand Softening This Month. Image courtesy of Ambro / FreeDigitalPhotos.net

Loan demand for home purchases and refinancings fell last week as mortgage rates edged up.

The Mortgage Bankers Association reports that its mortgage application index — which reflects both refinancings and loans for home purchases — dropped 1.8 percent for the week ending Nov. 8. That follows a revised drop of 2.8 percent in the previous week.

Refinancing applications dropped 2.3 percent last week, following a 3.9 percent decline in the Nov. 1 week.

Applications for home purchases fell slightly at 0.5 percent last week, following a 0.7 percent revised drop the previous week. Originally, the MBA had reported purchase applications had fallen 5.2 percent last week.

Renewed fears that the Federal Reserve will soon end its stimulus program are causing applications to fall, The Wall Street Journal reports. The Fed is purchasing $85 billion per month in bonds, which has helped keep mortgage rates low. The Fed has signaled that it may start to taper that program off this year.

The MBA reports the 30-year fixed-rate mortgage moved up 12 basis points to average 4.44 percent last week.

Source: “U.S. mortgage applications dip in latest week -MBA,” Reuters (Nov. 13, 2013)

Fake Online Reviews Become Growing Problem

Fake Online Reviews Become Growing Problem. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Seventy percent of people trust online reviews, but only 14 percent believe online advertisements — which makes a business’ focus on managing its online reputation increasingly important.

But a growing number of fake online posts that offer up bad reviews about a company is posing a challenge, Forbes reports.

“We’re seeing the increasing phenomena of posting by ‘exes’ — ex-employees, ex-customers, ex-friends, spouses, and romantic partners — who feel the need and believe they see the opportunity to get even by posting defamatory information and phony reviews,” says Whitney C. Gibson, a partner in the law firm Vorys, Sater, Seymour and Pease.

In 2012, a Gartner study estimated that one in seven recommendations or ratings on social media sites — such as Facebook — are fake.

New York has been cracking down on fake posters. New York Attorney General Eric Scheiderman issued 19 fake review companies with fines totaling $350,000. The review site Yelp has also sued two companies for selling and posting fake reviews that have appeared at its site.

“Courts are finding [posting] fake reviews equivalent to doing false advertising,” Gibson says.

To guard against phony reviews, companies are using software filters that are able to detect issues such as reviewers whose opinions consistently run counter to the majority or who create multiple reviews for the same company from a single IP address.

Source: “Online Reputation: New Methods Emerge For Quashing Fake, Defamatory Reviews,” Forbes (November 2013)

Agent, Appraiser: How Much Can We Talk?

Agent, Appraiser: How Much Can We Talk? Image courtesy of tungphoto / FreeDigitalPhotos.net

One big misunderstanding between real estate agents and appraisers centers on how, when, and what they can communicate about the valuation process, said panelists at a Valuation Forum on Saturday at the 2013 REALTORS® Conference & Expo.

While federal laws dictate those communications, appraisers and agents don’t have to be estranged during a transaction.

“There’s a window of opportunity when agents and appraisers can talk, but once the appraisal has been developed and sent to the client, that window is closed,” said Vic Knight, appraiser at Chapel Hill Appraisals in Raleigh, N.C.

Before that point, agents have an opportunity to provide appraisers with supporting information. For example, listing agents can be present for the appraisal and be on hand to clarify any items necessary, such as a remodeled kitchen. They can also provide an appraisal package upfront that includes the purchase contract and comparables that demonstrate how the listing agent arrived at the price.

Because of the number of off-MLS listings — or pocket listings — in many markets, agents may have valuable information that appraisers can’t find on the MLS, said John Anderson, a real estate agent with Twin Oaks Realty Inc. in Minneapolis. “Many appraisers are usually open to the information that agents bring within the appraisal package.”

Another issue: Although home prices are picking up in many markets, inventory shortages are limiting comparables, leading to appraisals lower than the contract price. Home owners may be able to appeal a valuation if they can prove that there are errors in the report, pertinent comparables are missing, or the appraiser lacks geographic competency, panelists said.

Source — M. Tracey, REALTOR® Magazine