The federal government recently extended and expanded the federal tax credit for home buyers. The tax credit now concludes June 30, 2010 instead of Nov. 30, 2009, and also includes existing homeowners who meet certain qualifications.
MAKING SENSE OF THE STORY FOR CONSUMERS
Current homeowners are eligible for a $6,500 federal tax creditif they have lived in their current home for a consecutive five out of the last eight years, and the adjusted household income does not exceed $125,000 for single filers or $225,000 for joint filers.
The expanded tax credit went into effect Nov. 6, the dayPresident Obama signed the bill. Homes that close escrow between Nov. 6, 2009 and June 30, 2010 are eligible to apply for the tax credit.
The legislation does not require homeowners to sell their current residence; however, the new home must be the primary residence and the price of the home must not exceed the limit of $800,000. Homeowners who plan to retain their current home as a rental or second home are advised to move into the new home the day escrow closes so there is no question it was the principal residence at the time of the tax credit.
Almost all housing types are eligible, including new and existing single-family homes, condominiums, manufactured or mobile homes, and boats that serve as the owner's principal residence. Second homes and investment properties are not eligible.
Home buyers in 2009--those who close after Nov. 6, but no later than Dec. 31, can claim the $6,500 credit on their 2009 federal tax returns, or amend their 2008 returns. Similarly, eligible buyers in 2010 will be able to file for the credit on their 2009 returns or 2010 returns. All home buyers should talk to a tax advisor regarding timing decisions.
Source: LA Times
Saturday, November 28, 2009
One in Four Borrowers Is Underwater
The proportion of U.S. homeowners who owe more on their mortgages than the properties are worth has swelled to about 23%, threatening prospects for a sustained housing recovery.
Nearly 10.7 million households had negative equity in their homes in the third quarter, according to First American CoreLogic, a real-estate information company based in Santa Ana, Calif.
These so-called underwater mortgages pose a roadblock to a housing recovery because the properties are more likely to fall into bank foreclosure and get dumped into an already saturated market. Economists from J.P. Morgan Chase & Co. said Monday they didn't expect U.S. home prices to hit bottom until early 2011, citing the prospect of oversupply.
Home prices have fallen so far that 5.3 million U.S. households are tied to mortgages that are at least 20% higher than their home's value, the First American report said. More than 520,000 of these borrowers have received a notice of default, according to First American.
Most U.S. homeowners still have some equity, and nearly 24 million owner-occupied homes don't have any mortgage, according to the Census Bureau.
But negative equity "is an outstanding risk hanging over the mortgage market," said Mark Fleming, chief economist of First American Core Logic. "It lowers homeowners' mobility because they can't sell, even if they want to move to get a new job." Borrowers who owe more than 120% of their home's value, he said, were more likely to default.
Mortgage troubles are not limited to the unemployed. About 588,000 borrowers defaulted on mortgages last year even though they could afford to pay -- more than double the number in 2007, according to a study by Experian and consulting firm Oliver Wyman. "The American consumer has had a long-held taboo against walking away from the home, and this crisis seems to be eroding that," the study said.
Just months after showing signs of leveling off, the housing market has thrown off conflicting signals in recent weeks. Jittery home builders and bad weather led to a 10.6% drop in new home starts in October, and applications for home-purchase mortgages have dropped sharply in recent weeks.
These same falling prices have boosted home sales from the depressed levels of last year. The National Association of Realtors reported Monday that sales of previously occupied homes in October jumped 10.1% from September to a seasonally adjusted annual rate of 6.1 million, the highest since February 2007.
The bump in sales was ahead of forecasts, spurred by falling prices, low mortgage rates and a federal tax credits for buyers. Congress recently expanded and extended the tax credits.
The latest First American data aren't comparable to previous estimates because the company revised its methodology. First American now accounts for payments made by homeowners that reduce principal, and it no longer assumes that home-equity lines of credit have been completely drawn down.
The changes reduced the total number of borrowers under water -- although both old and new methodology show increases from the previous quarter. Using the old methodology, the portion of underwater borrowers would have increased to 33.8% in the third quarter.
Homeowners in Nevada, Arizona, Florida and California are more likely to be deeply under water, according to the analysis. In Nevada, for example, nearly 30% of borrowers owe 50% or more on their mortgage than their home is worth, said First American.
More than 40% of borrowers who took out a mortgage in 2006 -- when home prices peaked -- are under water. Prices have dropped so much in some parts of the U.S. that some borrowers who took out loans more than five years ago owe more than their home's value.
Even recent bargain hunters have been hit: 11% of borrowers who took out mortgages in 2009 already owe more than their home's value.
Andrew Lunsford put 20% down when he bought his home in Las Vegas for $530,000 in 2004. Now, he said, his home was worth less than $300,000.
"I'm to the point where I feel I will never get my head above water," said Mr. Lunsford, a retired state trooper who works for an insurance company. He said his bank won't modify his loan because he can afford his payments, and he's unwilling to walk away, he said: "We're too honest."
Borrowers with negative equity are more likely to default if they live in a state where the bank can't pursue their assets in court, according to a study by the Federal Reserve Bank of Richmond.
But borrowers who are less than 20% under water are likely to maintain their mortgage if their loan is modified and the payments reduced, said Sanjiv Das, head of Citigroup's mortgage unit. "Beyond 120%, the most effective modification is a complete loan restructuring, including a principal reduction."
Mortgage companies have been reluctant to reduce mortgage principal over worries about "moral contagion, with people not paying their mortgage or redefaulting because they believed the bank would reduce their principal," Mr. Das said.
Many borrowers are so deeply under water that they can't take advantage of lower rates and refinance their mortgage. "We're declining hundreds of loans each month," said Steve Walsh, a mortgage broker in Scottsdale, Ariz. "The only way we will make headway is if we allow for a streamlined refinance where the appraisal is irrelevant."
Realtors reported that home sales in October were up 24% from a year earlier. The number of homes listed for sale nationwide was 3.57 million at the end of October, down 3.7% from a month earlier, the trade group said. But that inventory could rebound next year as banks acquire more homes through foreclosure.
About 7.5 million households were 30 days or more behind on their mortgage payments or in foreclosure at the end of September, according to the Mortgage Bankers Association. Many of those homes will be lost to foreclosure, adding to the supply of homes for sale.
A recovery could pay off for the roughly 30% of underwater borrowers who owe 110% or less of their home's value and are able to endure the slump. "Most people prefer to stay in their home" even if the value of their property has declined, said John Burns, a real-estate consultant based in Irvine, Calif.
Source: Wall Street Journal
Nearly 10.7 million households had negative equity in their homes in the third quarter, according to First American CoreLogic, a real-estate information company based in Santa Ana, Calif.
These so-called underwater mortgages pose a roadblock to a housing recovery because the properties are more likely to fall into bank foreclosure and get dumped into an already saturated market. Economists from J.P. Morgan Chase & Co. said Monday they didn't expect U.S. home prices to hit bottom until early 2011, citing the prospect of oversupply.
Home prices have fallen so far that 5.3 million U.S. households are tied to mortgages that are at least 20% higher than their home's value, the First American report said. More than 520,000 of these borrowers have received a notice of default, according to First American.
Most U.S. homeowners still have some equity, and nearly 24 million owner-occupied homes don't have any mortgage, according to the Census Bureau.
But negative equity "is an outstanding risk hanging over the mortgage market," said Mark Fleming, chief economist of First American Core Logic. "It lowers homeowners' mobility because they can't sell, even if they want to move to get a new job." Borrowers who owe more than 120% of their home's value, he said, were more likely to default.
Mortgage troubles are not limited to the unemployed. About 588,000 borrowers defaulted on mortgages last year even though they could afford to pay -- more than double the number in 2007, according to a study by Experian and consulting firm Oliver Wyman. "The American consumer has had a long-held taboo against walking away from the home, and this crisis seems to be eroding that," the study said.
Just months after showing signs of leveling off, the housing market has thrown off conflicting signals in recent weeks. Jittery home builders and bad weather led to a 10.6% drop in new home starts in October, and applications for home-purchase mortgages have dropped sharply in recent weeks.
These same falling prices have boosted home sales from the depressed levels of last year. The National Association of Realtors reported Monday that sales of previously occupied homes in October jumped 10.1% from September to a seasonally adjusted annual rate of 6.1 million, the highest since February 2007.
The bump in sales was ahead of forecasts, spurred by falling prices, low mortgage rates and a federal tax credits for buyers. Congress recently expanded and extended the tax credits.
The latest First American data aren't comparable to previous estimates because the company revised its methodology. First American now accounts for payments made by homeowners that reduce principal, and it no longer assumes that home-equity lines of credit have been completely drawn down.
The changes reduced the total number of borrowers under water -- although both old and new methodology show increases from the previous quarter. Using the old methodology, the portion of underwater borrowers would have increased to 33.8% in the third quarter.
Homeowners in Nevada, Arizona, Florida and California are more likely to be deeply under water, according to the analysis. In Nevada, for example, nearly 30% of borrowers owe 50% or more on their mortgage than their home is worth, said First American.
More than 40% of borrowers who took out a mortgage in 2006 -- when home prices peaked -- are under water. Prices have dropped so much in some parts of the U.S. that some borrowers who took out loans more than five years ago owe more than their home's value.
Even recent bargain hunters have been hit: 11% of borrowers who took out mortgages in 2009 already owe more than their home's value.
Andrew Lunsford put 20% down when he bought his home in Las Vegas for $530,000 in 2004. Now, he said, his home was worth less than $300,000.
"I'm to the point where I feel I will never get my head above water," said Mr. Lunsford, a retired state trooper who works for an insurance company. He said his bank won't modify his loan because he can afford his payments, and he's unwilling to walk away, he said: "We're too honest."
Borrowers with negative equity are more likely to default if they live in a state where the bank can't pursue their assets in court, according to a study by the Federal Reserve Bank of Richmond.
But borrowers who are less than 20% under water are likely to maintain their mortgage if their loan is modified and the payments reduced, said Sanjiv Das, head of Citigroup's mortgage unit. "Beyond 120%, the most effective modification is a complete loan restructuring, including a principal reduction."
Mortgage companies have been reluctant to reduce mortgage principal over worries about "moral contagion, with people not paying their mortgage or redefaulting because they believed the bank would reduce their principal," Mr. Das said.
Many borrowers are so deeply under water that they can't take advantage of lower rates and refinance their mortgage. "We're declining hundreds of loans each month," said Steve Walsh, a mortgage broker in Scottsdale, Ariz. "The only way we will make headway is if we allow for a streamlined refinance where the appraisal is irrelevant."
Realtors reported that home sales in October were up 24% from a year earlier. The number of homes listed for sale nationwide was 3.57 million at the end of October, down 3.7% from a month earlier, the trade group said. But that inventory could rebound next year as banks acquire more homes through foreclosure.
About 7.5 million households were 30 days or more behind on their mortgage payments or in foreclosure at the end of September, according to the Mortgage Bankers Association. Many of those homes will be lost to foreclosure, adding to the supply of homes for sale.
A recovery could pay off for the roughly 30% of underwater borrowers who owe 110% or less of their home's value and are able to endure the slump. "Most people prefer to stay in their home" even if the value of their property has declined, said John Burns, a real-estate consultant based in Irvine, Calif.
Source: Wall Street Journal
First-Time Homebuyers Leading Market Back
Propelled by the first-time homebuyers tax credit, nearly half of home sales are now being made by first-time purchasers, according to an industry report.
In fact, 47% of all Americans who purchased homes this year had not owned one during the previous three years, according to a press release Friday from the National Association of Realtors (NAR). That was up from 41% of sales in 2008 and 36% in 2006.
The tax credit boosted markets by giving first-time buyers a credit of up to $8,000 they could deduct from their income taxes. The credit is fully refundable: Even a buyer who pays less than $8,000 in income tax gets the full amount of the credit back.
The credit was recently extended through the middle of 2010 and expanded to include many existing homeowners. That has the industry buzzing.
"The credit is working better than first projected -- it now looks like we'll have 2.3 to 2.4 million first-time buyers this year," said Lawrence Yun, chief economist for NAR. "With expansion of the tax credit to additional buyers through the middle of next year, and no major unforeseen events impacting the economy, home prices should rise between 3% and 5% in 2010."
NAR forecasts that existing-home sales will total slightly over 5 million in 2009, a 2% increase compared with 2008. Next year, they predict a gain of 13.6% to 5.69 million units. That should draw down inventory and prop up home prices, according to Yun, but, he cautioned: "Risks, such as unemployment, remain."
Critics of the tax credit call it a poorly targeted method of boosting sales. The credit added, by nearly the most positive evaluations -- including NAR's -- fewer than 400,000 sales to the total this year, about 20% of all first-time purchases.
Since all first-timers get the credit, whether it persuaded them to buy or not, that would mean about $40,000 was spent by the government for every extra sale, critics say.
Indeed, many in the industry trace the improvement in the housing market to much better affordability, rather than the tax credit.
Not only have home prices fallen more than 30% from their peak, according to the S&P/Case-Shiller Home Price Index, but mortgage rates have remained extremely low all year, keeping monthly payments low.
Most sales have been of existing homes. New home sales, as well as new home construction, have remained mired in the doldrums.
NAR predicts total new home sales will total a mere 397,000 this year, rising to 549,000 in 2010. During the housing boom, new home sales were far higher, more than 1.35 million in 2005, for example.
While new home sales are still very low, the inventory of new homes for sale has been dropping. That's because very few new homes are being built. Existing home inventory has also fallen a bit.
"We've seen a steady downtrend in housing inventory for well over a year," said Yun.
Any home price rise will also have a healthy impact on the foreclosure plague. Falling prices are a major contributing factor driving foreclosures. As home values fall, homeowners are less able and less likely to continue to make monthly payments.
Mortgage borrowers often fall behind because there's no home equity cushion to tap should they run into unexpected expenses.
Too, when home values really plummet and owners fall way underwater, owing far more than their home is worth, it sometimes makes good financial sense to give up trying to pay for the home.
Under those conditions, some homeowners simply walk away.
Source: CNN
In fact, 47% of all Americans who purchased homes this year had not owned one during the previous three years, according to a press release Friday from the National Association of Realtors (NAR). That was up from 41% of sales in 2008 and 36% in 2006.
The tax credit boosted markets by giving first-time buyers a credit of up to $8,000 they could deduct from their income taxes. The credit is fully refundable: Even a buyer who pays less than $8,000 in income tax gets the full amount of the credit back.
The credit was recently extended through the middle of 2010 and expanded to include many existing homeowners. That has the industry buzzing.
"The credit is working better than first projected -- it now looks like we'll have 2.3 to 2.4 million first-time buyers this year," said Lawrence Yun, chief economist for NAR. "With expansion of the tax credit to additional buyers through the middle of next year, and no major unforeseen events impacting the economy, home prices should rise between 3% and 5% in 2010."
NAR forecasts that existing-home sales will total slightly over 5 million in 2009, a 2% increase compared with 2008. Next year, they predict a gain of 13.6% to 5.69 million units. That should draw down inventory and prop up home prices, according to Yun, but, he cautioned: "Risks, such as unemployment, remain."
Critics of the tax credit call it a poorly targeted method of boosting sales. The credit added, by nearly the most positive evaluations -- including NAR's -- fewer than 400,000 sales to the total this year, about 20% of all first-time purchases.
Since all first-timers get the credit, whether it persuaded them to buy or not, that would mean about $40,000 was spent by the government for every extra sale, critics say.
Indeed, many in the industry trace the improvement in the housing market to much better affordability, rather than the tax credit.
Not only have home prices fallen more than 30% from their peak, according to the S&P/Case-Shiller Home Price Index, but mortgage rates have remained extremely low all year, keeping monthly payments low.
Most sales have been of existing homes. New home sales, as well as new home construction, have remained mired in the doldrums.
NAR predicts total new home sales will total a mere 397,000 this year, rising to 549,000 in 2010. During the housing boom, new home sales were far higher, more than 1.35 million in 2005, for example.
While new home sales are still very low, the inventory of new homes for sale has been dropping. That's because very few new homes are being built. Existing home inventory has also fallen a bit.
"We've seen a steady downtrend in housing inventory for well over a year," said Yun.
Any home price rise will also have a healthy impact on the foreclosure plague. Falling prices are a major contributing factor driving foreclosures. As home values fall, homeowners are less able and less likely to continue to make monthly payments.
Mortgage borrowers often fall behind because there's no home equity cushion to tap should they run into unexpected expenses.
Too, when home values really plummet and owners fall way underwater, owing far more than their home is worth, it sometimes makes good financial sense to give up trying to pay for the home.
Under those conditions, some homeowners simply walk away.
Source: CNN
2.8% Drop In lending Is Largest Since 1984
Lending by U.S. banks plunged by 2.8 percent in the third quarter, the largest drop since at least 1984 and the fifth consecutive quarter in which banks have reduced lending, the Federal Deposit Insurance Corp. reported Tuesday.
The decline in lending is emerging as a serious impediment to economic recovery. Banks reduced the amount of money extended to their customers by $210.4 billion between July and September, cutting back in almost every category, from mortgage lending to funding for corporations.
Large banks, the beneficiaries of billions of dollars in federal aid intended to spur new lending, were responsible for a disproportionate share of the decline, the FDIC said. "We need to see banks making more loans to their business customers," FDIC Chairman Sheila C. Bair said Tuesday.
Bair renewed her call for the government to spur lending by helping banks sell troubled loans, freeing up money for new lending. The Obama administration has considered several versions of such a program but so far has resisted calls to proceed.
The FDIC reported the lending data as part of a quarterly review of the health of the banking industry. Banks posted an aggregate profit of $2.8 billion in the third quarter, swinging back from a loss of $4.3 billion in the second quarter, the FDIC said.
About a quarter of banks continued to lose money, however, and regulators closed 50 banks during the third quarter.
The cost of cleaning up failed banks has depleted the FDIC's insurance fund, which repays depositors in those banks. The FDIC said the fund had a negative balance of $8.2 billion at the end of September. The agency plans to collect $45 billion from the banking industry at the end of the year, an amount it projects will cover the cost of failures over the next several years.
The level of the insurance fund does not affect the safety of insured deposits, as the FDIC is ultimately backed by the Treasury.
The FDIC said that just three new banks were created during the third quarter, the smallest number since World War II.
Source: Washington Post
The decline in lending is emerging as a serious impediment to economic recovery. Banks reduced the amount of money extended to their customers by $210.4 billion between July and September, cutting back in almost every category, from mortgage lending to funding for corporations.
Large banks, the beneficiaries of billions of dollars in federal aid intended to spur new lending, were responsible for a disproportionate share of the decline, the FDIC said. "We need to see banks making more loans to their business customers," FDIC Chairman Sheila C. Bair said Tuesday.
Bair renewed her call for the government to spur lending by helping banks sell troubled loans, freeing up money for new lending. The Obama administration has considered several versions of such a program but so far has resisted calls to proceed.
The FDIC reported the lending data as part of a quarterly review of the health of the banking industry. Banks posted an aggregate profit of $2.8 billion in the third quarter, swinging back from a loss of $4.3 billion in the second quarter, the FDIC said.
About a quarter of banks continued to lose money, however, and regulators closed 50 banks during the third quarter.
The cost of cleaning up failed banks has depleted the FDIC's insurance fund, which repays depositors in those banks. The FDIC said the fund had a negative balance of $8.2 billion at the end of September. The agency plans to collect $45 billion from the banking industry at the end of the year, an amount it projects will cover the cost of failures over the next several years.
The level of the insurance fund does not affect the safety of insured deposits, as the FDIC is ultimately backed by the Treasury.
The FDIC said that just three new banks were created during the third quarter, the smallest number since World War II.
Source: Washington Post
30-Year Rates Match All Time Low This Week
Freddie Mac released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 4.78 percent with an average 0.7 point for the week ending November 25, 2009, down from last week when it averaged 4.83 percent. Last year at this time, the 30-year FRM averaged 5.97 percent. The 30-year has not been this low since the week ending April 30, 2009, when it averaged 4.78 percent.
The 15-year FRM this week averaged 4.29 percent with an average 0.6 point, down from last week when it averaged 4.32 percent. A year ago at this time, the 15-year FRM averaged 5.74 percent. The 15-year FRM has never been this low since Freddie Mac started tracking it in 1991.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.18 percent this week, with an average 0.6 point, down from last week when it averaged 4.25 percent. A year ago, the 5-year ARM averaged 5.86 percent. The 5-year ARM has never been this low since Freddie Mac started tracking it in 2005.
The 1-year Treasury-indexed ARM averaged 4.35 percent this week with an average 0.7 point, unchanged from last week when it averaged 4.35 percent. At this time last year, the 1-year ARM averaged 5.18 percent. The 1-year ARM has not been this low since the week ending July 7, 2005, when it averaged 4.33 percent.
(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)
"Long-term mortgage rates eased for the fourth consecutive week to record levels," said Frank Nothaft, Freddie Mac vice president and chief economist." Interest rates for 30-year fixed mortgage loans tied an all-time record low while both 15-year fixed mortgages and 5-year ARMs broke their corresponding records. Interest rates for 30-year fixed-rate loans are currently 0.8 percentage points below this year's peak set in mid-June, which shaves roughly $100 off the monthly payments on a $200,000 mortgage.
"House prices are slowly beginning to firm now. For instance, annual house price declines slowed for the sixth consecutive month in September, down only 3 percent, and represented the smallest decline since February 2008, according the Federal Housing Finance Agency's purchase-only house price index. Moreover, 11 of the 20 major metropolitan areas experienced monthly house price increases between August and September, based on the S&P/Case-Shiller® 20-city house price indexes.
Source: Freddie Mac
The 15-year FRM this week averaged 4.29 percent with an average 0.6 point, down from last week when it averaged 4.32 percent. A year ago at this time, the 15-year FRM averaged 5.74 percent. The 15-year FRM has never been this low since Freddie Mac started tracking it in 1991.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.18 percent this week, with an average 0.6 point, down from last week when it averaged 4.25 percent. A year ago, the 5-year ARM averaged 5.86 percent. The 5-year ARM has never been this low since Freddie Mac started tracking it in 2005.
The 1-year Treasury-indexed ARM averaged 4.35 percent this week with an average 0.7 point, unchanged from last week when it averaged 4.35 percent. At this time last year, the 1-year ARM averaged 5.18 percent. The 1-year ARM has not been this low since the week ending July 7, 2005, when it averaged 4.33 percent.
(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)
"Long-term mortgage rates eased for the fourth consecutive week to record levels," said Frank Nothaft, Freddie Mac vice president and chief economist." Interest rates for 30-year fixed mortgage loans tied an all-time record low while both 15-year fixed mortgages and 5-year ARMs broke their corresponding records. Interest rates for 30-year fixed-rate loans are currently 0.8 percentage points below this year's peak set in mid-June, which shaves roughly $100 off the monthly payments on a $200,000 mortgage.
"House prices are slowly beginning to firm now. For instance, annual house price declines slowed for the sixth consecutive month in September, down only 3 percent, and represented the smallest decline since February 2008, according the Federal Housing Finance Agency's purchase-only house price index. Moreover, 11 of the 20 major metropolitan areas experienced monthly house price increases between August and September, based on the S&P/Case-Shiller® 20-city house price indexes.
Source: Freddie Mac
Friday, November 20, 2009
Make Money In 2010: Your Home
Following three years of declining home prices, the end of the nationwide housing slump may be in sight. Home sales consistently have been rising, the surplus of houses is shrinking, and most economists believe home values nationwide will hit bottom in the second half of 2010 - but not before declining an additional five to 10 percent. That's good news for homeowners hoping to sell or rebuild lost equity.
MAKING SENSE OF THE STORY FOR CONSUMERS
Mortgage rates currently are below 5 percent, and should remain low for the next few months, partially due to the Federal Reserve's ongoing purchase of mortgage-backed securities. However, if the economy quickly turns around and inflation fears resurface, rates could rise to as high as 6.5 percent, slowing demand and pushing down home values.
According to one analyst, the market will remain tilted in favor of buyers over the next year, but that power gradually will be reduced as conditions in the housing market continue to improve.
Buyers hoping to purchase or invest in a lower-priced, entry-level home should expect some competition from investors and other buyers. To remain competitive, buyers are advised to put down as much cash as possible, as many investors are offering to make all-cash deals. Another factor to keep in mind is that offers below listing price often are outbid by others.
Some home sellers are postponing listing their homes until the market recovers. However, timing the market is difficult, so homeowners thinking of selling should carefully weigh their options. Congress recently expanded the federal tax credit to include some existing homeowners, but they must close before June 30, 2010 to qualify. Although existing homeowners are not required to sell their current home to qualify for the credit,those who plan to rent out their current residences should be aware that many lenders require borrowers to show they are financially capable of paying two mortgages, or show rental income for at least six months. Discretionary sellers should discuss their options with a REALTOR before making a decision.
Source: CNN
MAKING SENSE OF THE STORY FOR CONSUMERS
Mortgage rates currently are below 5 percent, and should remain low for the next few months, partially due to the Federal Reserve's ongoing purchase of mortgage-backed securities. However, if the economy quickly turns around and inflation fears resurface, rates could rise to as high as 6.5 percent, slowing demand and pushing down home values.
According to one analyst, the market will remain tilted in favor of buyers over the next year, but that power gradually will be reduced as conditions in the housing market continue to improve.
Buyers hoping to purchase or invest in a lower-priced, entry-level home should expect some competition from investors and other buyers. To remain competitive, buyers are advised to put down as much cash as possible, as many investors are offering to make all-cash deals. Another factor to keep in mind is that offers below listing price often are outbid by others.
Some home sellers are postponing listing their homes until the market recovers. However, timing the market is difficult, so homeowners thinking of selling should carefully weigh their options. Congress recently expanded the federal tax credit to include some existing homeowners, but they must close before June 30, 2010 to qualify. Although existing homeowners are not required to sell their current home to qualify for the credit,those who plan to rent out their current residences should be aware that many lenders require borrowers to show they are financially capable of paying two mortgages, or show rental income for at least six months. Discretionary sellers should discuss their options with a REALTOR before making a decision.
Source: CNN
Talking Points
Homeowners can reduce their energy bills by lowering the thermostat setting on their water heater. Most manufacturers set water heater thermostats at 140 degrees Fahrenheit, but most households don't need water hotter than 120 degrees. Households with water heaters older than 12 years should consider replacingit with a new unit. This year and next, the federal governmentis offering a tax credit of 30 percent of the cost of qualifiedwater heaters, up to $1,500.
Affordability in California during the third quarter of 2009 stood at 64 percent, meaning 64 percent of the state'shouseholds could afford to purchase an entry-level home inCalifornia, according to the CALIFORNIA ASSOCIATION OF REALTORS First-time Buyer Housing Affordability Index.The median price of an entry-level home in California was $247,150 in the third quarter of 2009, making the estimated monthly payment including taxes and insurance $1,450, accordingto C.A.R.'s affordability index.
The minimum household income needed to purchase an entry-level home in California in the third quarter of 2009 was $43,500. First-time buyers typically purchase a home equal to 85 percent of the prevailing median price.
Source: California Association of Realtors
Affordability in California during the third quarter of 2009 stood at 64 percent, meaning 64 percent of the state'shouseholds could afford to purchase an entry-level home inCalifornia, according to the CALIFORNIA ASSOCIATION OF REALTORS First-time Buyer Housing Affordability Index.The median price of an entry-level home in California was $247,150 in the third quarter of 2009, making the estimated monthly payment including taxes and insurance $1,450, accordingto C.A.R.'s affordability index.
The minimum household income needed to purchase an entry-level home in California in the third quarter of 2009 was $43,500. First-time buyers typically purchase a home equal to 85 percent of the prevailing median price.
Source: California Association of Realtors
Survey: 5 Percent of Americans Plan To Buy A Home Next Year
Just one in twenty Americans say they plan to buy a home within the next year, and they're most likely to be 34 years old or younger and living in the South or West, according to a survey released Wednesday.
Roughly a quarter of potential buyers said the No. 1 reason they would buy now is because prices have bottomed out. That reason topped bargain-priced foreclosures, worries about rising interest rates and a wide selection of homes.
The survey, conducted for Move.com, reveals how Americans are responding to a nascent and fragile housing recovery after three years of staggering price declines. The percentage of buyers thinking of jumping into the market was down slightly from a March survey, but up about 1 point from a poll in June.
Home prices rebounded this past summer at an annualized pace of almost 7 percent, according to the Standard & Poor's/Case-Shiller home price index. But with high unemployment and foreclosures clouding the picture, economists debate whether prices will dip again.
Recent housing figures and homebuilder earnings support a stabilizing housing market, and concerns about the expiration of federal homebuyer tax credit are moot after Congress last week extended and expanded the credit.
Buyers who have owned in their current homes for at least five years are eligible for tax credits of up to $6,500, while first-time homebuyers — or anyone who hasn't owned a home in the last three years — would still get up to $8,000. To qualify, buyers have to sign a purchase agreement by April 30, 2010, and close by June 30.
The survey was conducted before the credit extension.
Those surveyed widely favored federal policies that kept interest rates low and helped troubled homeowners avoid foreclosure over those that helped first-time homebuyers purchase a home. And, overall, 48 percent of those polled didn't think the government was doing enough to stabilize the housing market, whereas 42 percent thought it was.
Forty-five percent of Americans worry that they or someone they know will face foreclosure in the next year. And almost 30 percent of those with a mortgage have contacted their lender in the past year to reduce their payments.
One of the survey participants, Joe Handley of Harrington, Del., called his lender in December last year to consolidate a second mortgage and cut his interest rate from 6.75 percent to 5.25 percent.
"We wanted to build up our savings for emergencies," the 37-year-old said.
His timing was prescient. In July, Handley, who works in the information technology department for the State of Delaware, took a pay cut and the $400 monthly savings from the new loan has helped cushion the blow.
Almost a quarter of Americans who refinanced their mortgages have used the savings for living expenses or paying down debt, the survey found. Less than 9 percent are putting the savings toward investment or retirement.
The telephone poll, which included about two-thirds homeowners and one-third renters, was conducted in October by market research firm GfK. It had a margin of error of plus or minus 3 percentage points.
Source: Mercury News
Roughly a quarter of potential buyers said the No. 1 reason they would buy now is because prices have bottomed out. That reason topped bargain-priced foreclosures, worries about rising interest rates and a wide selection of homes.
The survey, conducted for Move.com, reveals how Americans are responding to a nascent and fragile housing recovery after three years of staggering price declines. The percentage of buyers thinking of jumping into the market was down slightly from a March survey, but up about 1 point from a poll in June.
Home prices rebounded this past summer at an annualized pace of almost 7 percent, according to the Standard & Poor's/Case-Shiller home price index. But with high unemployment and foreclosures clouding the picture, economists debate whether prices will dip again.
Recent housing figures and homebuilder earnings support a stabilizing housing market, and concerns about the expiration of federal homebuyer tax credit are moot after Congress last week extended and expanded the credit.
Buyers who have owned in their current homes for at least five years are eligible for tax credits of up to $6,500, while first-time homebuyers — or anyone who hasn't owned a home in the last three years — would still get up to $8,000. To qualify, buyers have to sign a purchase agreement by April 30, 2010, and close by June 30.
The survey was conducted before the credit extension.
Those surveyed widely favored federal policies that kept interest rates low and helped troubled homeowners avoid foreclosure over those that helped first-time homebuyers purchase a home. And, overall, 48 percent of those polled didn't think the government was doing enough to stabilize the housing market, whereas 42 percent thought it was.
Forty-five percent of Americans worry that they or someone they know will face foreclosure in the next year. And almost 30 percent of those with a mortgage have contacted their lender in the past year to reduce their payments.
One of the survey participants, Joe Handley of Harrington, Del., called his lender in December last year to consolidate a second mortgage and cut his interest rate from 6.75 percent to 5.25 percent.
"We wanted to build up our savings for emergencies," the 37-year-old said.
His timing was prescient. In July, Handley, who works in the information technology department for the State of Delaware, took a pay cut and the $400 monthly savings from the new loan has helped cushion the blow.
Almost a quarter of Americans who refinanced their mortgages have used the savings for living expenses or paying down debt, the survey found. Less than 9 percent are putting the savings toward investment or retirement.
The telephone poll, which included about two-thirds homeowners and one-third renters, was conducted in October by market research firm GfK. It had a margin of error of plus or minus 3 percentage points.
Source: Mercury News
In Housing Bust, Government Increasingly Favors Homeowners Over Renters
During the housing boom, critics increasingly complained that the government devoted too many resources to homeownership and too few to more affordable options, such as renting. Now, during the bust, the government’s commitment to ownership has grown even larger, according to a new report from the Congressional Budget Office.
This year, the government devoted four times the amount of budgetary resources to homeownership as it devoted to rental housing, or around $230 billion in spending and tax breaks for homeowners compared to around $60 billion for renting, the CBO reported. Around two-thirds of Americans are homeowners, according to the Census Bureau, though the rate fell to around 67.5% earlier this year, from a peak of 69.2% in 2004.
The report notes that, until recently, most government support for homeowners came in the form of tax breaks that don’t require government spending but result in the government collecting less in taxes than what might be owed.
But recent efforts to help stabilize a fragile housing market means that government spending now accounts for around half of federal support for housing, including a $75 billion tab for the government’s loan modification programs and taxpayer money to keep Fannie Mae and Freddie Mac in the black. That doesn’t include aid that the government has agreed to give to state housing finance agencies through Fannie and Freddie, or any aid that the Federal Housing Administration may need in the future. FHA officials say the agency won’t need taxpayer money unless housing deteriorates further, but the agency last week said its capital cushion had fallen to very low levels.
Several top officials in President Obama’s administration have a background in supporting multifamily housing, and the administration has indicated that it would do more to support a balanced housing policy than others in the past.
But in an interview last week, Shaun Donovan, the secretary of the Department of Housing and Urban Development, said that the need to stabilize single-family housing remains the top priority, for now, of the federal government when it comes to housing policy.
“Given the fragility of where we are right now in the market, it’s important that we focus on ensuring that we recover to stability before we engage the kind of wide-ranging discussion” that would examine support for owning versus renting, Mr. Donovan said. “We need to have a healthy debate in this country about the balance between homeownership and rental. I think our immediate focus is around the immediate crisis.”
The Obama administration tipped its hand earlier this year about its willingness to challenge sacred cows when it suggested limiting some of the mortgage-interest deduction that some higher-income earners might be able to claim on their tax returns. Mr. Donovan, who previously served as New York City’s housing commissioner and worked before that as an assistant housing secretary in charge of multifamily, said that a top priority would be to ensure that “the federal government doesn’t discourage rental housing.”
Source: The Wall Street Journal
This year, the government devoted four times the amount of budgetary resources to homeownership as it devoted to rental housing, or around $230 billion in spending and tax breaks for homeowners compared to around $60 billion for renting, the CBO reported. Around two-thirds of Americans are homeowners, according to the Census Bureau, though the rate fell to around 67.5% earlier this year, from a peak of 69.2% in 2004.
The report notes that, until recently, most government support for homeowners came in the form of tax breaks that don’t require government spending but result in the government collecting less in taxes than what might be owed.
But recent efforts to help stabilize a fragile housing market means that government spending now accounts for around half of federal support for housing, including a $75 billion tab for the government’s loan modification programs and taxpayer money to keep Fannie Mae and Freddie Mac in the black. That doesn’t include aid that the government has agreed to give to state housing finance agencies through Fannie and Freddie, or any aid that the Federal Housing Administration may need in the future. FHA officials say the agency won’t need taxpayer money unless housing deteriorates further, but the agency last week said its capital cushion had fallen to very low levels.
Several top officials in President Obama’s administration have a background in supporting multifamily housing, and the administration has indicated that it would do more to support a balanced housing policy than others in the past.
But in an interview last week, Shaun Donovan, the secretary of the Department of Housing and Urban Development, said that the need to stabilize single-family housing remains the top priority, for now, of the federal government when it comes to housing policy.
“Given the fragility of where we are right now in the market, it’s important that we focus on ensuring that we recover to stability before we engage the kind of wide-ranging discussion” that would examine support for owning versus renting, Mr. Donovan said. “We need to have a healthy debate in this country about the balance between homeownership and rental. I think our immediate focus is around the immediate crisis.”
The Obama administration tipped its hand earlier this year about its willingness to challenge sacred cows when it suggested limiting some of the mortgage-interest deduction that some higher-income earners might be able to claim on their tax returns. Mr. Donovan, who previously served as New York City’s housing commissioner and worked before that as an assistant housing secretary in charge of multifamily, said that a top priority would be to ensure that “the federal government doesn’t discourage rental housing.”
Source: The Wall Street Journal
Existing-Home Prices Slide In Most Metropolitan Areas
The median sale price in the third quarter is $177,900, down 11.2% from a year ago. Foreclosures and short sales account for nearly a third of all deals.
Prices of existing homes fell in 80% of the nation's metropolitan markets in the third quarter as distressed sales -- foreclosures and short sales -- accounted for nearly a third of all deals, a national group said Tuesday.
The U.S. median sale price for an existing single-family home was $177,900, an 11.2% drop from the same period a year earlier, according to the National Assn. of Realtors in Washington. Distressed sales continued to weigh on prices despite a popular tax credit fueling the volume of deals. Still, the median was higher than in the second quarter of this year, when it was $174,200.
Last week, President Obama signed into law an extension of the $8,000 tax credit for first-time home buyers and a new $6,500 credit for homeowners looking to purchase a new residence.
During the third quarter, 123 of 153 metropolitan areas reported lower median sale prices for existing single-family homes in comparison with the third quarter of 2008, while 30 areas had price gains.
Lawrence Yun, chief economist of the Realtors group, said shrinking inventories of homes helped to moderate price declines this year, but many economists worry that another wave of foreclosures could hit the market and push prices down again.
Median prices ranged from $61,400 in the Saginaw-Saginaw Township North area of Michigan to $566,000 in the San Jose-Sunnyvale-Santa Clara area of California. No. 2 was San Francisco-Oakland-Fremont at $538,100, followed by the Anaheim-Santa Ana-Irvine area at $498,800.
The third-quarter median sale price in the Los Angeles-Long Beach-Santa Ana metro area fell 11.5% to $345,600 from the year-earlier period but rose 11.1% from $311,100 in the second quarter.
Total existing-home sales, including single-family homes and condos, increased 11.4% in the third quarter to a seasonally adjusted annual rate of 5.3 million units from 4.76 million units in the second quarter, and are now 5.9% above the 5.01-million-unit pace in the third quarter of 2008.
Source: The Los Angeles Times
Prices of existing homes fell in 80% of the nation's metropolitan markets in the third quarter as distressed sales -- foreclosures and short sales -- accounted for nearly a third of all deals, a national group said Tuesday.
The U.S. median sale price for an existing single-family home was $177,900, an 11.2% drop from the same period a year earlier, according to the National Assn. of Realtors in Washington. Distressed sales continued to weigh on prices despite a popular tax credit fueling the volume of deals. Still, the median was higher than in the second quarter of this year, when it was $174,200.
Last week, President Obama signed into law an extension of the $8,000 tax credit for first-time home buyers and a new $6,500 credit for homeowners looking to purchase a new residence.
During the third quarter, 123 of 153 metropolitan areas reported lower median sale prices for existing single-family homes in comparison with the third quarter of 2008, while 30 areas had price gains.
Lawrence Yun, chief economist of the Realtors group, said shrinking inventories of homes helped to moderate price declines this year, but many economists worry that another wave of foreclosures could hit the market and push prices down again.
Median prices ranged from $61,400 in the Saginaw-Saginaw Township North area of Michigan to $566,000 in the San Jose-Sunnyvale-Santa Clara area of California. No. 2 was San Francisco-Oakland-Fremont at $538,100, followed by the Anaheim-Santa Ana-Irvine area at $498,800.
The third-quarter median sale price in the Los Angeles-Long Beach-Santa Ana metro area fell 11.5% to $345,600 from the year-earlier period but rose 11.1% from $311,100 in the second quarter.
Total existing-home sales, including single-family homes and condos, increased 11.4% in the third quarter to a seasonally adjusted annual rate of 5.3 million units from 4.76 million units in the second quarter, and are now 5.9% above the 5.01-million-unit pace in the third quarter of 2008.
Source: The Los Angeles Times
Thursday, November 19, 2009
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Ten Questions on the Volatile Housing Market
Lower Prices Have Spurred Home Sales, but Looming Foreclosures and High Unemployment Are Clouding the Outlook
The U.S. housing market has been in a slump for the past four years. When will it ever end?
In recent years, real estate has proven as jittery and unreliable as any other market. The average U.S. home price nearly doubled between January 2000 and April 2006, according to the First American Loan Performance index. Since then, the average has fallen about 30%. The drop has been 53% in the Las Vegas metropolitan area and 39% in Miami, where about a quarter of all households with mortgages are behind on their payments or in foreclosure. The value of your home might be determined more by whether the neighbors keep their jobs than whether the house has ample light and closet space.
Here is a guide to navigating a fractured and volatile market:
Neighborhood Market Watch
Gauge the rebound in six local markets, from Atlanta to Seattle.
1. Is the housing market getting better?
It has shown some signs of healing this year, but the much-touted recovery is tentative and fragile.
Home sales have increased from the severely depressed levels of 2008. The inventory of unsold homes listed for sale also is down. Bidding wars are breaking out for foreclosed homes in the sorts of neighborhoods (near jobs and decent schools) that attract both first-time buyers and investors seeking rental properties.
But more than 6.7 million U.S. households with mortgages, or about 13%, are behind on their payments or are in the foreclosure process, according to the Mortgage Bankers Association. Eventually, many of them will lose those homes, sending more supply onto the market. Unemployment has continued to rise, and the housing market is unlikely to show a sustained recovery until job growth resumes.
While the supply of middle-class homes on the market has declined somewhat, it remains ample in most places. And there is a huge glut of high-end houses for sale in many areas. That means prices of high-end homes might still have a long way to fall.
2. When will housing bottom out?
There probably won't be any clear turning point. Monthly indicators, such as home sales and prices, tend to bounce erratically from month to month, making it hard to discern the underlying trend. And the housing bust will end at different times in different places. House prices already might have bottomed out in the coveted Virginia suburbs with short commutes into Washington, D.C., for instance. But it probably will be years before all of the unsold condos find buyers in parts of Florida.
Generalizations about states or metropolitan areas don't say much about what is happening in your neighborhood. In Summit, N.J., known for good schools and an easy, 45-minute train commute to Manhattan, the median home price in September was up 1.2% from a year earlier, according to Otteau Valuation Group, an appraisal company. In Atlantic City, N.J., which suffers from too much speculative building of condominiums and weak demand for vacation homes, the median price is down about 12% from a year ago.
3. What signals should I watch to determine whether my local market is improving?
One way to get a sense of supply is to ask a good local real estate agent for stats on how many homes are listed for sale in your town and how many months it would take at the current sales rate to absorb that supply. Anything over about six months generally is considered high, meaning that sellers might have to cut prices. Another way to get a sense of a neighborhood's health is to count the number of for-sale signs and vacant houses. If there are more than a couple vacant homes in a block, that might be a bad sign, particularly if no one is taking care of them.
The supply of homes listed for sale has fallen very sharply in some areas. But the supply is likely to balloon again in many areas with a renewed surge in foreclosures. Many local newspapers provide information on foreclosure filings.
Demand depends heavily on the job market. The U.S. Bureau of Labor Statistics provides unemployment rates by metropolitan area. In September, they ranged from 2.9% in Bismarck, N.D., to 30% in El Centro, Calif. State and local agencies provide job-market data, too. Celia Chen, a housing economist at Moody's Economy.com, says help-wanted signs can be a useful local indicator; if you start seeing more of them around your neighborhood, that is a sign that business in your area could be starting to recover.
4. How can I figure out the value of my home?
You never know for sure what a home will fetch until you put it on the market, and then it is partly a matter of luck. Will the eager buyer who shares your taste in home style and neighborhood show up on day one or day 200?
Some Web sites -- including Zillow.com, HomeGain.com and Cyberhomes.com -- provide estimates of individual home values. These estimates are largely based on recent sales of nearby homes, and in some cases they are wildly off the mark. But they often provide a ballpark idea of a home's value.
You might come closer to the real value by talking to a local agent and looking at recent prices for homes that you know are very similar to yours. If you want to be more scientific and don't mind paying a few hundred dollars, hire a professional appraiser.
5. Does it matter whether I'm "under water"?
At least you have plenty of company. About 20% of owners of single-family homes with mortgages owe more than the current estimated value of their homes, according to Zillow.com.
If you can afford your monthly payment and don't need to move soon, that might not be a big problem. But it is hard, and sometimes impossible, to refinance a mortgage if you are under water, and you will take a bath if you have to sell the home now. Some people who can afford to make their monthly mortgage payments are deciding it doesn't make sense to do so because they don't expect their home values ever to recover to past peaks, and they could rent similar houses for much lower monthly costs.
6. If I lose my home to foreclosure, how long will it take to repair my credit record?
It probably will be three to five years before you can qualify for a home mortgage insured by the government, depending on your circumstances, and that assumes you have re-established a record for paying your bills on time. The foreclosure will remain a blot on your credit record for seven years, likely raising your interest costs even if you do get another loan. If you pay bills on time, keep your credit-card balances low and don't apply for too many cards, you can make a "slow, gradual improvement" in your credit score, says Tom Quinn, a vice president at Fair Isaac Corp., which provides tools for analyzing credit records.
7. If I'm renting, is now a good time to buy a house?
It may well be. Prices in most areas are well below their peaks, even if they haven't hit bottom. Don't kid yourself that you can time the bottom of the market perfectly. But don't feel any pressure to buy in a hurry, because the supply of housing is likely to remain ample for years in many areas.
Generally, it doesn't make sense to buy unless you expect to remain in the house for at least four or five years, because the transaction costs -- including commissions for real estate agents and mortgage fees -- are heavy.
But now is clearly a good time to rent. Many landlords need tenants badly. The national apartment-vacancy rate in the third quarter was 7.8%, the highest in 23 years, according to Reis Inc., a New York research firm. So landlords are cutting rents and offering such sweeteners as free flat-screen televisions or several months of free rent to retain or attract tenants. Some owners of condos will "cut their throats to get some kind of rental income to cover part of their expenses," says Jack McCabe, a real estate consultant in Deerfield Beach, Fla.
8. Can I get a tax credit if I buy a home now?
Under an expanded and extended program approved by Congress earlier this month, tax credits are available to many people who buy or sign a contract to buy a principal residence by April 30 and complete the purchase by June 30. The tax credit is up to $8,000 for first-time homebuyers and $6,500 for people who already have owned a home for at least five consecutive years during the previous eight years. The credit is available for individual taxpayers with annual incomes of up to $145,000 or joint filers with incomes up to $245,000.
9. Can I get a mortgage on attractive terms?
Only if you have a good credit record, a moderate amount of debt in relation to your income and the ability to fully document your income. That last requirement is fairly easy for people who work for a salary and have had the same employer for more than two years, but it can be tough for self-employed people with incomes that vary substantially from year to year.
A borrower with a strong credit score of 740 or higher (on the scale of 300 to 850) and the ability to make a down payment of at least 20% could get an interest rate of about 5% with no origination fees on a 30-year fixed-rate mortgage, says Lou Barnes, a mortgage banker in Boulder, Colo. But if your credit score is 680, the rate jumps to about 5.5%.
People who can't make a down payment of at least 20% generally are being funneled into loans insured by the Federal Housing Administration. That means paying extra fees for the FHA insurance.
Borrowing costs are steeper at the high end of the housing market. For so-called jumbo loans -- those above $729,750 in areas with the highest housing costs or $417,000 in places with the lowest costs -- interest rates on 30-year fixed-rate mortgages last week averaged 5.95%, according to HSH Associates, a financial publisher.
10. Should I invest in foreclosed homes?
Probably not. A lot of investors chase these properties, and only the most experienced know how to deal with all of the pitfalls. Homes auctioned at trustee or sheriff sales are sold on an as-is basis, and there is no provision for an inspection before you take ownership. If after buying you find out that termites have been treating the floor joists as an all-you-can-eat buffet, that is your problem. You must pay for the full price within a day or two, so you need a lot of cash or access to special short-term loans for investors that come with interest rates of around 18%. This is a pursuit best left to people with a lot of time, nerve, cash and knowledge of the local market.
Source: Wall Street Journal
The U.S. housing market has been in a slump for the past four years. When will it ever end?
In recent years, real estate has proven as jittery and unreliable as any other market. The average U.S. home price nearly doubled between January 2000 and April 2006, according to the First American Loan Performance index. Since then, the average has fallen about 30%. The drop has been 53% in the Las Vegas metropolitan area and 39% in Miami, where about a quarter of all households with mortgages are behind on their payments or in foreclosure. The value of your home might be determined more by whether the neighbors keep their jobs than whether the house has ample light and closet space.
Here is a guide to navigating a fractured and volatile market:
Neighborhood Market Watch
Gauge the rebound in six local markets, from Atlanta to Seattle.
1. Is the housing market getting better?
It has shown some signs of healing this year, but the much-touted recovery is tentative and fragile.
Home sales have increased from the severely depressed levels of 2008. The inventory of unsold homes listed for sale also is down. Bidding wars are breaking out for foreclosed homes in the sorts of neighborhoods (near jobs and decent schools) that attract both first-time buyers and investors seeking rental properties.
But more than 6.7 million U.S. households with mortgages, or about 13%, are behind on their payments or are in the foreclosure process, according to the Mortgage Bankers Association. Eventually, many of them will lose those homes, sending more supply onto the market. Unemployment has continued to rise, and the housing market is unlikely to show a sustained recovery until job growth resumes.
While the supply of middle-class homes on the market has declined somewhat, it remains ample in most places. And there is a huge glut of high-end houses for sale in many areas. That means prices of high-end homes might still have a long way to fall.
2. When will housing bottom out?
There probably won't be any clear turning point. Monthly indicators, such as home sales and prices, tend to bounce erratically from month to month, making it hard to discern the underlying trend. And the housing bust will end at different times in different places. House prices already might have bottomed out in the coveted Virginia suburbs with short commutes into Washington, D.C., for instance. But it probably will be years before all of the unsold condos find buyers in parts of Florida.
Generalizations about states or metropolitan areas don't say much about what is happening in your neighborhood. In Summit, N.J., known for good schools and an easy, 45-minute train commute to Manhattan, the median home price in September was up 1.2% from a year earlier, according to Otteau Valuation Group, an appraisal company. In Atlantic City, N.J., which suffers from too much speculative building of condominiums and weak demand for vacation homes, the median price is down about 12% from a year ago.
3. What signals should I watch to determine whether my local market is improving?
One way to get a sense of supply is to ask a good local real estate agent for stats on how many homes are listed for sale in your town and how many months it would take at the current sales rate to absorb that supply. Anything over about six months generally is considered high, meaning that sellers might have to cut prices. Another way to get a sense of a neighborhood's health is to count the number of for-sale signs and vacant houses. If there are more than a couple vacant homes in a block, that might be a bad sign, particularly if no one is taking care of them.
The supply of homes listed for sale has fallen very sharply in some areas. But the supply is likely to balloon again in many areas with a renewed surge in foreclosures. Many local newspapers provide information on foreclosure filings.
Demand depends heavily on the job market. The U.S. Bureau of Labor Statistics provides unemployment rates by metropolitan area. In September, they ranged from 2.9% in Bismarck, N.D., to 30% in El Centro, Calif. State and local agencies provide job-market data, too. Celia Chen, a housing economist at Moody's Economy.com, says help-wanted signs can be a useful local indicator; if you start seeing more of them around your neighborhood, that is a sign that business in your area could be starting to recover.
4. How can I figure out the value of my home?
You never know for sure what a home will fetch until you put it on the market, and then it is partly a matter of luck. Will the eager buyer who shares your taste in home style and neighborhood show up on day one or day 200?
Some Web sites -- including Zillow.com, HomeGain.com and Cyberhomes.com -- provide estimates of individual home values. These estimates are largely based on recent sales of nearby homes, and in some cases they are wildly off the mark. But they often provide a ballpark idea of a home's value.
You might come closer to the real value by talking to a local agent and looking at recent prices for homes that you know are very similar to yours. If you want to be more scientific and don't mind paying a few hundred dollars, hire a professional appraiser.
5. Does it matter whether I'm "under water"?
At least you have plenty of company. About 20% of owners of single-family homes with mortgages owe more than the current estimated value of their homes, according to Zillow.com.
If you can afford your monthly payment and don't need to move soon, that might not be a big problem. But it is hard, and sometimes impossible, to refinance a mortgage if you are under water, and you will take a bath if you have to sell the home now. Some people who can afford to make their monthly mortgage payments are deciding it doesn't make sense to do so because they don't expect their home values ever to recover to past peaks, and they could rent similar houses for much lower monthly costs.
6. If I lose my home to foreclosure, how long will it take to repair my credit record?
It probably will be three to five years before you can qualify for a home mortgage insured by the government, depending on your circumstances, and that assumes you have re-established a record for paying your bills on time. The foreclosure will remain a blot on your credit record for seven years, likely raising your interest costs even if you do get another loan. If you pay bills on time, keep your credit-card balances low and don't apply for too many cards, you can make a "slow, gradual improvement" in your credit score, says Tom Quinn, a vice president at Fair Isaac Corp., which provides tools for analyzing credit records.
7. If I'm renting, is now a good time to buy a house?
It may well be. Prices in most areas are well below their peaks, even if they haven't hit bottom. Don't kid yourself that you can time the bottom of the market perfectly. But don't feel any pressure to buy in a hurry, because the supply of housing is likely to remain ample for years in many areas.
Generally, it doesn't make sense to buy unless you expect to remain in the house for at least four or five years, because the transaction costs -- including commissions for real estate agents and mortgage fees -- are heavy.
But now is clearly a good time to rent. Many landlords need tenants badly. The national apartment-vacancy rate in the third quarter was 7.8%, the highest in 23 years, according to Reis Inc., a New York research firm. So landlords are cutting rents and offering such sweeteners as free flat-screen televisions or several months of free rent to retain or attract tenants. Some owners of condos will "cut their throats to get some kind of rental income to cover part of their expenses," says Jack McCabe, a real estate consultant in Deerfield Beach, Fla.
8. Can I get a tax credit if I buy a home now?
Under an expanded and extended program approved by Congress earlier this month, tax credits are available to many people who buy or sign a contract to buy a principal residence by April 30 and complete the purchase by June 30. The tax credit is up to $8,000 for first-time homebuyers and $6,500 for people who already have owned a home for at least five consecutive years during the previous eight years. The credit is available for individual taxpayers with annual incomes of up to $145,000 or joint filers with incomes up to $245,000.
9. Can I get a mortgage on attractive terms?
Only if you have a good credit record, a moderate amount of debt in relation to your income and the ability to fully document your income. That last requirement is fairly easy for people who work for a salary and have had the same employer for more than two years, but it can be tough for self-employed people with incomes that vary substantially from year to year.
A borrower with a strong credit score of 740 or higher (on the scale of 300 to 850) and the ability to make a down payment of at least 20% could get an interest rate of about 5% with no origination fees on a 30-year fixed-rate mortgage, says Lou Barnes, a mortgage banker in Boulder, Colo. But if your credit score is 680, the rate jumps to about 5.5%.
People who can't make a down payment of at least 20% generally are being funneled into loans insured by the Federal Housing Administration. That means paying extra fees for the FHA insurance.
Borrowing costs are steeper at the high end of the housing market. For so-called jumbo loans -- those above $729,750 in areas with the highest housing costs or $417,000 in places with the lowest costs -- interest rates on 30-year fixed-rate mortgages last week averaged 5.95%, according to HSH Associates, a financial publisher.
10. Should I invest in foreclosed homes?
Probably not. A lot of investors chase these properties, and only the most experienced know how to deal with all of the pitfalls. Homes auctioned at trustee or sheriff sales are sold on an as-is basis, and there is no provision for an inspection before you take ownership. If after buying you find out that termites have been treating the floor joists as an all-you-can-eat buffet, that is your problem. You must pay for the full price within a day or two, so you need a lot of cash or access to special short-term loans for investors that come with interest rates of around 18%. This is a pursuit best left to people with a lot of time, nerve, cash and knowledge of the local market.
Source: Wall Street Journal
Consumer Interest in Investing Doubles
A new survey found that 12.1 percent (one out of eight) of today’s home buyers plan to purchase a home as an investment property, compared with 5.6 percent in March 2009, according to the Move.com Homeownership Survey. Of those interested in buying a home as an investment, 15.8 percent were men and 8.1 percent were women.
The survey also found that buyers who plan to purchase foreclosures expect to profit both from deeply discounted purchase prices, as well as healthy appreciation rates over the next five years. Most foreclosure buyers (58.2 percent) expect to pay 20 percent or less than market price for a foreclosure, while 38.5 percent expect a discount of 25 percent or greater. While, 73 percent expect their properties to appreciate ten percent or more in five years, 28 percent expect their purchases to appreciate 20 percent or more during that same investment horizon.
Source: Move.com
The survey also found that buyers who plan to purchase foreclosures expect to profit both from deeply discounted purchase prices, as well as healthy appreciation rates over the next five years. Most foreclosure buyers (58.2 percent) expect to pay 20 percent or less than market price for a foreclosure, while 38.5 percent expect a discount of 25 percent or greater. While, 73 percent expect their properties to appreciate ten percent or more in five years, 28 percent expect their purchases to appreciate 20 percent or more during that same investment horizon.
Source: Move.com
Customer Satisfaction With Lenders Declines
Overall satisfaction among mortgage customers declined 18 index points to 739 in 2009 from 757 in 2008, according to the J.D. Power and Associates 2009 Primary Mortgage Origination Satisfaction StudySM.
The average time required to approve and close a loan increased to nearly 47 days in 2009, compared with approximately 30 days in 2008, primarily due to increased scrutiny of loan applications and higher origination volumes driven by increases in refinancing, according to the study.
Source: J.D. Power and Associates
The average time required to approve and close a loan increased to nearly 47 days in 2009, compared with approximately 30 days in 2008, primarily due to increased scrutiny of loan applications and higher origination volumes driven by increases in refinancing, according to the study.
Source: J.D. Power and Associates
Friday, November 13, 2009
Long-Term Rates Fall to Lowest Level in Five Weeks
Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 4.91 percent with an average 0.7 point for the week ending November 12, 2009, down from last week when it averaged 4.98 percent. Last year at this time, the 30-year FRM averaged 6.14 percent.
The 15-year FRM this week averaged 4.36 percent with an average 0.6 point, down from last week when it averaged 4.40 percent. A year ago at this time, the 15-year FRM averaged 5.81 percent.
The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.29 percent this week, with an average 0.6 point, down from last week when it averaged 4.35 percent. A year ago, the 5-year ARM averaged 5.98 percent.The one-year Treasury-indexed ARM averaged 4.46 percent this week with an average 0.6 point, down from last week when it averaged 4.47 percent. At this time last year, the 1-year ARM averaged 5.33 percent.
(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)
"Mortgage rates eased further over the week, helping to promote an affordable home-purchase market and stimulate refinance," said Frank Nothaft, Freddie Mac vice president and chief economist. "This comes at a time when house price declines are moderating and consumer demand for prime mortgages at commercial banks has picked up.
"The National Association of Realtors ® reported that national median sales price of existing homes fell 11.2 percent in the third quarter relative to the same period last year. Moreover, almost 20 percent of the top metropolitan areas experienced positive annual growth, compared to only about 12 percent in the first quarter of this year."
Source: Freddie Mac
The 15-year FRM this week averaged 4.36 percent with an average 0.6 point, down from last week when it averaged 4.40 percent. A year ago at this time, the 15-year FRM averaged 5.81 percent.
The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.29 percent this week, with an average 0.6 point, down from last week when it averaged 4.35 percent. A year ago, the 5-year ARM averaged 5.98 percent.The one-year Treasury-indexed ARM averaged 4.46 percent this week with an average 0.6 point, down from last week when it averaged 4.47 percent. At this time last year, the 1-year ARM averaged 5.33 percent.
(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)
"Mortgage rates eased further over the week, helping to promote an affordable home-purchase market and stimulate refinance," said Frank Nothaft, Freddie Mac vice president and chief economist. "This comes at a time when house price declines are moderating and consumer demand for prime mortgages at commercial banks has picked up.
"The National Association of Realtors ® reported that national median sales price of existing homes fell 11.2 percent in the third quarter relative to the same period last year. Moreover, almost 20 percent of the top metropolitan areas experienced positive annual growth, compared to only about 12 percent in the first quarter of this year."
Source: Freddie Mac
Thursday, November 12, 2009
Federal Tax Credit Extended, Expanded
The federal tax credit for home buyers was signed into law by President Obama Friday, Nov. 6. The tax credit, which was set to expire Nov. 30, has been extended through April 30, 2010 with a 60-day extension if a binding contract is in place prior to deadline. It also was expanded to include existing homeowners who have lived in their primary residences for five consecutive years out of the last eight years.
First-time home buyers still may be eligible for a tax credit of up to $8,000, while existing homeowners may receive a credit of up to $6,500. The bill also increases the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers, to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000 in both instances.
Under additional provisions in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The bill maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.
Source: California Association of Realtors
First-time home buyers still may be eligible for a tax credit of up to $8,000, while existing homeowners may receive a credit of up to $6,500. The bill also increases the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers, to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000 in both instances.
Under additional provisions in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The bill maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.
Source: California Association of Realtors
Fed Leave Key Rate Unchanged
The Federal Reserve last week announced it will maintain its target for the federal funds rate in the 0 percent to 0.25 percent range, and expects economic conditions to warrant exceptionally low levels of the federal funds rate for an extended period of time. “Information . . . suggests that economic activity has continued to pick up,” the Fed said in a prepared statement.
“Conditions in financial markets were roughly unchanged and activity in the housing sector has increased over recent months. Household spending appears to be expanding, but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing, though at a slower pace; they continue to make progress in bringing inventory stocks into better alignment with sales,” the Fed said.
To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve also said it will purchase a total of $1.25 trillion of agency mortgage-backed securities and nearly $175 billion of agency debt, and will gradually slow the pace of these purchases in order to promote a smooth transition in markets.
Source: Federal Reserve
“Conditions in financial markets were roughly unchanged and activity in the housing sector has increased over recent months. Household spending appears to be expanding, but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing, though at a slower pace; they continue to make progress in bringing inventory stocks into better alignment with sales,” the Fed said.
To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve also said it will purchase a total of $1.25 trillion of agency mortgage-backed securities and nearly $175 billion of agency debt, and will gradually slow the pace of these purchases in order to promote a smooth transition in markets.
Source: Federal Reserve
Landmark Settlement For Housing Discrimination
The U.S. Dept. of Justice has obtained a record $2.725 million settlement against Los Angeles apartment owners for alleged rental discrimination. In a lawsuit brought in August 2006, the Justice Dept. claimed that Donald T. Sterling and others engaged in discriminatory practices, such as refusing to rent to African-Americans, Hispanics, and families with children, refusing to rent to non-Koreans in Koreatown buildings, misrepresenting the availability of rental units, and preparing internal reports of tenants' racial profiles.
Under the name of Beverly Hills Properties, the defendants in this lawsuit own and manage about 119 apartment buildings containing more than 5,000 apartment units in Los Angeles County. Their agreement to pay $2.725 million is the largest monetary settlement the Justice Dept. has ever obtained for rental housing discrimination. The bulk of the money will be placed in a fund to pay tenants harmed by the defendants' discriminatory practices. The defendants also must take certain measures to ensure non-discriminatory practices, such as obtain fair housing training and monitor their employees' compliance with fair housing laws over the next three years.
Source: U.S. Department of Justice
Under the name of Beverly Hills Properties, the defendants in this lawsuit own and manage about 119 apartment buildings containing more than 5,000 apartment units in Los Angeles County. Their agreement to pay $2.725 million is the largest monetary settlement the Justice Dept. has ever obtained for rental housing discrimination. The bulk of the money will be placed in a fund to pay tenants harmed by the defendants' discriminatory practices. The defendants also must take certain measures to ensure non-discriminatory practices, such as obtain fair housing training and monitor their employees' compliance with fair housing laws over the next three years.
Source: U.S. Department of Justice
Friday, November 6, 2009
Homeowners Win Big With Extension And Expansion Of Federal Tax Credit
The U.S. House of Representatives today voted 403 to 12 to extend and expand the home buyer tax credit. The bill passed the U.S. Senate late yesterday and now will go to President Obama for his signature, where it is expected to be signed this week.
The tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to receive a tax credit of up to $8,000, while existing homeowners will receive a credit of up to $6,500. Existing homeowners will be eligible for the $6,500 if they have lived in their current residences for at least five years. The bill also will increase the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000.
Under additional provisions in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The bill maintains the provision that home buyers do not have to repay the credit, provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.
For weeks, the CALIFORNIA ASSOCIATION OF REALTORS (C.A.R and its members have urged Congress and the U.S. Senate to extend and expand this crucial piece of legislation.
Nationwide, more than 1.4 million first-time home buyers were given the opportunity to become homeowners as a result of the Federal Tax Credit for First-time Home Buyers. According to C.A.R. research, nearly 40 percent of first-time home buyers surveyed said they would not have purchased a home without the federal tax credit, and approximately 70 percent said the tax credit was "the most important" or a "very important" factor in their decision to buy a home.
Source: California Association of Realtors
The tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to receive a tax credit of up to $8,000, while existing homeowners will receive a credit of up to $6,500. Existing homeowners will be eligible for the $6,500 if they have lived in their current residences for at least five years. The bill also will increase the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000.
Under additional provisions in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The bill maintains the provision that home buyers do not have to repay the credit, provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.
For weeks, the CALIFORNIA ASSOCIATION OF REALTORS (C.A.R and its members have urged Congress and the U.S. Senate to extend and expand this crucial piece of legislation.
Nationwide, more than 1.4 million first-time home buyers were given the opportunity to become homeowners as a result of the Federal Tax Credit for First-time Home Buyers. According to C.A.R. research, nearly 40 percent of first-time home buyers surveyed said they would not have purchased a home without the federal tax credit, and approximately 70 percent said the tax credit was "the most important" or a "very important" factor in their decision to buy a home.
Source: California Association of Realtors
Thinking Of Halting Payments On House?
Some homeowners underwater on their houses—who owe more on their mortgages than their homes are worth—wonder what would happen if they were to stop paying their mortgages.
When lenders do not receive payments, the first action taken by the lender is to report the missed payment to the credit bureaus by the first day of the next month. Sometimes this can happen in as little as two weeks from the due date, depending on when the payment is due. Generally, this action will leave a negative mark on a credit report and decrease the homeowner’s credit score by as much as 200 points.
Because of the negative mark on the homeowner’s credit report, within the next 30 days, homeowners can expect their other creditors to take note of the late payment and to take action. Credit card issuers may raise interest rates, lower credit limits, or close credit card accounts. The borrower’s auto insurance, student loans, and other forms of credit also may change, as these are tied to the borrower’s credit score as well.
If the homeowner does not pay for 90 days, the lender likely will start calling, trying to persuade the homeowner to enter into a loan modification. If a loan modification cannot be agreed upon between the homeowner and the lender, and the homeowner continue missing payments, the homeowner likely will be served with a foreclosure notice. After the foreclosure notice is received, the lender asks a court to issue a judgment against the homeowner, and a county sale is arranged.
Homeowners at risk of defaulting on their mortgages, or those who already are behind, should contact their lender immediately to work out a repayment plan and/or loan modification.
Source: California Association of Realtors
When lenders do not receive payments, the first action taken by the lender is to report the missed payment to the credit bureaus by the first day of the next month. Sometimes this can happen in as little as two weeks from the due date, depending on when the payment is due. Generally, this action will leave a negative mark on a credit report and decrease the homeowner’s credit score by as much as 200 points.
Because of the negative mark on the homeowner’s credit report, within the next 30 days, homeowners can expect their other creditors to take note of the late payment and to take action. Credit card issuers may raise interest rates, lower credit limits, or close credit card accounts. The borrower’s auto insurance, student loans, and other forms of credit also may change, as these are tied to the borrower’s credit score as well.
If the homeowner does not pay for 90 days, the lender likely will start calling, trying to persuade the homeowner to enter into a loan modification. If a loan modification cannot be agreed upon between the homeowner and the lender, and the homeowner continue missing payments, the homeowner likely will be served with a foreclosure notice. After the foreclosure notice is received, the lender asks a court to issue a judgment against the homeowner, and a county sale is arranged.
Homeowners at risk of defaulting on their mortgages, or those who already are behind, should contact their lender immediately to work out a repayment plan and/or loan modification.
Source: California Association of Realtors
Six Signs Your Home Will Increase In Value
Recent reports on the health of the economy and the housing market have shown improved conditions. The federal tax credit for first-time buyers, affordable home prices, and low interest rates also are driving many buyers into the market. However, housing markets are local, and can vary greatly from one to the next. Still, there are indicators on which homeowners can rely to determine whether their home’s value will rise.
MAKING SENSE OF THE STORY FOR CONSUMERS
•The unemployment rate in an area can help homeowners determine if their homes’ values is likely to rise. As the unemployment rate rises, fewer individuals are capable of purchasing homes, decreasing the demand for homes, and driving down prices. To find a city’s unemployment rate and whether it’s rising or falling, consumers can visit the Bureau of Labor Statistics’ Web site at http://www.bls.gov/lau.
• On average, foreclosed homes sell for 30 percent less than similar homes in the same area. However, that figure varies by housing market, according to an executive at RealtyTrac.com, which tracks foreclosures. As foreclosures increase, the average prices of homes in the neighborhood decrease. Visit http://www.realtrytrac.com to view properties in various stages of foreclosure, including foreclosure filings, auctions, and bank repossessions.
•Tracking a neighborhood’s inventory supply also is a good indicator. A supply of five to six months is considered “normal.” For the most extensive inventory level comparisons, homeowners should contact a local REALTOR®. Homeowners without an existing relationship with a REALTOR® can use the “Find a REALTOR®” function on the CALIFORNIA ASSOCIATION OF REALTORS®’ Web site to find the REALTOR® nearest them.
•Following the list-to-sale-price ratios of a neighborhood can help determine the direction of home prices in an area. If the price difference is shrinking for an area, that suggests the real estate market is improving. Some real estate Web sites offer this information, or homeowners can contact their REALTOR® who can provide the average list-to-sales price ratio and a historical comparison.
Source: California Association of Realtors
MAKING SENSE OF THE STORY FOR CONSUMERS
•The unemployment rate in an area can help homeowners determine if their homes’ values is likely to rise. As the unemployment rate rises, fewer individuals are capable of purchasing homes, decreasing the demand for homes, and driving down prices. To find a city’s unemployment rate and whether it’s rising or falling, consumers can visit the Bureau of Labor Statistics’ Web site at http://www.bls.gov/lau.
• On average, foreclosed homes sell for 30 percent less than similar homes in the same area. However, that figure varies by housing market, according to an executive at RealtyTrac.com, which tracks foreclosures. As foreclosures increase, the average prices of homes in the neighborhood decrease. Visit http://www.realtrytrac.com to view properties in various stages of foreclosure, including foreclosure filings, auctions, and bank repossessions.
•Tracking a neighborhood’s inventory supply also is a good indicator. A supply of five to six months is considered “normal.” For the most extensive inventory level comparisons, homeowners should contact a local REALTOR®. Homeowners without an existing relationship with a REALTOR® can use the “Find a REALTOR®” function on the CALIFORNIA ASSOCIATION OF REALTORS®’ Web site to find the REALTOR® nearest them.
•Following the list-to-sale-price ratios of a neighborhood can help determine the direction of home prices in an area. If the price difference is shrinking for an area, that suggests the real estate market is improving. Some real estate Web sites offer this information, or homeowners can contact their REALTOR® who can provide the average list-to-sales price ratio and a historical comparison.
Source: California Association of Realtors
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