First Time Home Buyers Make Up Smaller Share of Buyers.

First Time Home Buyers Make Up Smaller Share of Buyers

The share of First Time Home Buyers on the market is falling to historical lows, despite record levels of housing affordability. With record low mortgage rates and falling home values, many would expect First Time Home Buyers to be flooding the market for their chance to get part of the American dream.

However,  the number of First Time Home Buyers is shrinking, falling in May and June, even as the housing market shows signs of picking up. According to National Association of REALTORS® housing data, 32 percent of buyers in June purchased their first home. Yet, the historical average tends to be 40 percent.

Meanwhile, investors offering all-cash deals for properties is soaring, prompting some analysts to point the finger at cash investors for increasingly shutting out First Time Home Buyers in the market.

Investors, with their attractive cash bids, have been flooding the market with purchases of entry-level homes and foreclosures, while the home buyers continue to struggle to secure financing from banks’ tightened lending standards as well as save for a down payment.

Source: “First-time Buyers Slipping as Share of Home Sales,” The Oregonian (July 30, 2012)

Mortgages, Home Improvement Top Consumer Gripes.

Mortgages, Home Improvement Top Consumer Gripes

When it comes to mortgages and home improvement, many consumers have some complaints, according to a new survey by the Consumer Federation of America, which reveals the top consumer complaints of last year.

Among its list of 2011 top “worst” consumer gripes: mortgage-related problems, home improvement, timeshare sales and resales, Internet sales, and fraud.

Many of the mortgage complaints stem from the foreclosure crisis and home owners who owe more on their loans than their homes are currently worth, according to the study.

Home improvement and construction complaints remain a top complaint in the latest survey, mostly centered around “shoddy work” or “failure to start or complete the job,” according to the study. Consumers also complained about a surge in telemarketing and mail solicitations for home repairs “disguised as offers to perform free energy audits.”

Landlord and tenant complaints mostly centered on “unhealthy or unsafe conditions, failure to make repairs or provide promised amenities, deposit and rent disputes, and illegal eviction tactics,” according to the report.

Other real estate-related complaints involved timeshare sales and resales, retirement communities and assisted living facilities, and real estate fraud.

Source: Consumer Federation of America

Housing Market Lifts Off From the ‘Bottom’.

Housing Market Lifts Off From the ‘Bottom’

Recent Housing Market indexes have shown single-family home prices are on the rise, providing more evidence that the “bottom” of the market is already behind.

“We’re wiping out just about all of the decline,” Joel Naroff, chief economist at Naroff Economic Advisors, told NBC.com about recent Housing Market data showing home prices inching up. “It indicates the market has turned the corner on the pricing side.”

Some recent Housing Market indexes suggest that the “bottom” of the market was reached in January 2012. Since that time, housing prices have been picking up in many housing markets.

But “the turnaround in home prices was unexpected,” says Patrick Newport, an economist with IHS Global Insight. “The conventional wisdom in February, following that landmark agreement [of the $26 billion mortgage settlement with the nation’s five largest banks], was that we would see a surge in foreclosures of some size that would lead to lower home prices. This surge never materialized and home prices have turned.”

Newport points to several signs of a housing market on the mend. For one, housing starts are up, after reaching a low in the fourth quarter of 2011. Also, he says the FHFA monthly House Price Index shows a 3.7 percent increase in May year-over-year, which he notes is higher than inflation and “means that real housing wealth, a consumer spending driver, was also up.”

The increase in home prices is also leading to a fewer number of home owners who are underwater on their mortgages, owing more on their mortgage than their home is currently worth. The number of underwater home owners fell from 12.1 million at the end of 2011 to 11.4 million at the end of the first quarter this year, according to CoreLogic data.

Source: “Evidence Mounts that Home Prices Hit Bottom Last Winter,” NBC News (July 31, 2012)

Short Sale Rush Is On…

Short Sale Rush Is On

Housing experts are predicting a drastic rise in short sale of homes, with an all-time high expected to be reached this year.

The number of short sale on homes has already risen 25 percent during the first quarter year-over-year, according to RealtyTrac data.

Banks are realizing that short sale of homes can be more profitable than letting homes slip into foreclosure, so they are becoming more willing to do them. Some banks are reportedly offering home owners up to $45,000 to agree to do a short sale.

“We’re seeing a rush already,” Daren Blomquist of RealtyTrac told Reuters. “There was a big increase on the short sale of homes in the first quarter and we’re expecting that to continue.”

The Obama administration is also pushing for banks to do more short sale on homes, and new government initiatives are no longer including the loan amount forgiven on a short sale to be counted as taxable income under federal law — but that will expire at the end of this year, Reuters reports.

Source: “Prepping for the Summer Wave of Short Sales,” Reuters (July 25, 2012)

Home Ownership Rates Are Highest…

Home Ownership Rates Are Highest…

The national home ownership rate has held mostly steady this year, standing at 65.5 percent for the second quarter, according to recent U.S. Census Bureau data. The rate is 0.4 percentage points lower than the second quarter of 2011, but 0.1 percentage point higher than the first quarter of this year.

The home ownership rate has steadily fallen over the last few years since last peaking in the first quarter of 2005 at 69.1 percent.

Home ownership rates are highest in the Midwest at 69.6 percent whereas home ownership rates are the lowest in the West, at 59.7 percent, according to the Census data.

Here’s a closer look at the home ownership rate among different demographics, according to the second quarter U.S. Census Bureau housing data:

• The home ownership rate is highest at 81.6 percent for those ages 65 years and over.
• The home ownership rate is lowest at 36.5 percent for those who are under 35 years of age.
• Non-Hispanic whites have the highest home ownership rates among the races at 73.5 percent, while the Hispanic home ownership rate was 46.5 percent and 43.8 percent for African Americans in the second quarter.

Source: U.S. Census Bureau 

Set the Stage Early for Multiple Offers on your home.

Set the Stage Early for Multiple Offers on your home

Bidding wars on homes are an indicator of a rebounding market, but they also can become a stress-or for agents that have not had to juggle multiple offers in many years.  They will find it easier to manage this kind of buying and selling environment if they are open and honest with clients, keeping the line of communication open at all times.

That responsibility begins with the listing presentation and setting the asking price for a home, since the properties that are priced appropriately are the ones that will generate multiple offers.  Agents should support their pricing recommendations with national news, explaining how that activity affects local sales.

Agents also can provide clarity to their clients and be the voice of reason as the multiple offers come pouring in.  For example, while sellers are likely to jump at the highest bid, agents can analyze the details of an offer—often concluding that the best deal is not necessarily the one with the biggest dollar figure.

“Manage a Multiple Offer Market,” RISMedia (July 29 2012)

Eminent Domain to Seize Mortgages?

Another City Weighs Eminent Domain to Seize Mortgages

Chicago is the latest city to join a growing list of cities and counties across the country that are considering using Eminent Domain in order to seize underwater mortgages.

The controversial idea of using Eminent Domain first surfaced in San Bernardino County, Calif. A west coast capital firm, Mortgage Resolution Partners, is trying to get more counties and cities across the country signed up to the idea, which they argue is a way to decrease the number of foreclosures and prevent home values from falling any further.

If cities use Eminent Domain in this sense, they would be able to seize mortgages that are in negative equity and then use investor money to reduce the mortgage principal for the home owner. They’d also be able to help refinance the home owner’s loan into a government-backed loan, according to Mortgage Resolution Partners’ proposal.

Chicago will consider an eminent domain measure at a hearing this week, but city council members have already said that the idea has cleared legal standards. In Chicago’s Cook County area, more than 44 percent of homes are underwater—meaning home owners owe more on their mortgage than their home is currently worth.

“In the coming weeks and months we expect more municipalities to announce their intent to explore the use of eminent domain to seize underwater mortgages,” Isaac Boltansky, a policy analyst for Compass Point, told HousingWire.

HousingWire cites critics who argue that such a program would cause mortgage bonds backed by jumbo loans to see losses increase more than 30 percent. Some in the real estate community also have spoken out against eminent domain proposals to take over mortgages in recent weeks, questioning the legality and suggesting that it violates property rights.

Source: “Chicago Considers Eminent Domain to Seize Underwater Mortgages,” HousingWire (July 27, 2012)

How to Get More Accurate Home Appraisals.

How to Get More Accurate Home Appraisals

Low Home Appraisals have been blamed on delaying—or even canceling—many real estate transactions over the last few years. While real estate professionals are limited in how much involvement they can have in the Home Appraisals process, they can do a few important things to help ensure their sellers receive a fair valuation.

1. Be there. Appraisers and other real estate agents say that being present at the home’s appraisal is important. Agents can respond to any possible questions the appraiser might have as he or she is valuing the property. However, agents need to make sure they don’t overstep their boundaries. Rules limit contact between agents and appraisers.
2. Provide extra information. Michael Citron of Coconut Creek, Fla., says he gives appraisers packages of information that include comparable sales as well as a list of the home’s home’s upgrades and amenities within the development. Others also recommend that any information include the dates that renovations took place, permits for additions, and even receipts for the work (if available).

“You don’t want things to be missed in Home Appraisals that may result in a higher value,” says appraiser Scott Dooley in Fort Lauderdale, Fla.

Source: “How-to Make Sure a Home Is Appraised Accurately,” RISMdia (July 28, 2012)