Posts Tagged ‘Real Estate’
Mortgage Shopping 101
Consumers will research on average 3 different models of computers before purchasing one. Why does the real estate correspondent care about computers? I don't. I'm just throwing out some important background information to make my point, like that 96 percent of American consumers compare prices when shopping for anything.
Higher conforming loan limits due to expire
Unless Congress intervenes, the maximum loan amount the Federal Housing Administration will back, as well as loans backed by Fannie Mae and Freddie Mac, will return to $417,000 in most areas and $625,500 in high-cost areas. The higher loan limits are due to expire Dec. 31, 2010. Over the last two years, the government raised the limits in some high-cost areas to $729,750. If Congress doesn’t extend higher limits, home prices would “drop precipitously” because it would be “impossible to finance homes in most parts of Los Angeles and certain other major cities,” said Rep. Brad Sherman, a California Democrat and member of the House Financial Services Committee. But many economists support the end to higher limits. “We need to think how we are going to exit from a Fannie-and-Freddie world, and this is a very small step toward that exit,” said Richard K. Green, director of the University of Southern California’s Lusk Center for Real Estate. “Dialing it back to $625,500 is a perfectly reasonable thing to do.” Source: The Wall Street Journal
Where is the shadow inventory?
For the last year, the real estate industry has been talking about shadow inventory and the coming flood of distressed properties. Where are they? Here’s what’s happening, according to a recent paper by Alan Mallach, a senior fellow the Brookings Institution: • Some delinquencies have been resolved through loan modifications or people working out the problems on their own. • Banks are getting better at managing short sales. • Investors are aggressively buying up properties, sometimes in bulk, directly from the banks or at courthouse auctions so they don’t hit the market. The likeliest outcome, Mallach predicts, is a steady flow of foreclosures over a long timeframe that will prevent another crash in home prices – but it will probably lead to low or no appreciation in home prices for a while. Source: The Wall Street Journal, Nick Timiaros
Wave of foreclosure sales could hurt prices
More foreclosures could move onto the market as borrowers fall out of the government’s loan-modification program. That, coupled with weak demand, could lead to lower home prices across the board, suggests an article in the Wall Street Journal. Over the past two years, the pattern has become clear: the more homes that are being sold by lenders, the faster prices will fall. Ivy Zelman, CEO of research firm Zelman & Associates, says that distressed sales could account for 50 percent of properties sold by the end of the year – unless conventional sales recover. Neither she nor Glenn Kelman, CEO of Redfin Corp., believe that there will be massive declines in prices because homes are already undervalued in many areas, but Kelman suggests that the decline could be 5 percent to 10 percent. Should the government intervene again? Susan Wachter, professor of real estate at the University of Pennsylvania’s Wharton School, says that could be necessary if the bank sales trigger a downward spiral, “where price declines are feeding further price declines.” Source: The Wall Street Journal, Nick Timiraos
Builders resuscitate stalled projects
A nationwide report on stalled real estate projects shows that many are being completed by builders that are paying less than half the initial value of properties The report by Brad Hunter, chief economist for Metrostudy, found the most activity in Florida, California, Las Vegas, Utah and the suburbs of Washington, D.C. “This is a natural progression of the cycle,” Hunter said. “Projects fail, the price of the asset drops until it reaches a point where it’s profitable for someone else to pick it up and remarket it. They reposition the project and then what was formerly infeasible, is feasible.” The 12 largest homebuilders by market value acquired 16,631 lots in the six months, according to data compiled by Bloomberg. Tom Dallape, principal at the Hoffman Company, a land brokerage advisory firm in Irvine, Calif., says builders are tailoring these revived projects to the market, reducing average home sizes from 3,000 square feet to about 2,000. Source: Bloomberg, Prashant Gopal and John Gittelsohn (09/08/2010) © Copyright 2010 INFORMATION, INC. Bethesda, MD
Pros and cons of corner properties
Some people see a corner lot as an asset, but an equal number believe it is a liability. Pluses of these properties include more flexible design options, shorter driveways, sunnier interiors and more on-street parking. The negatives are a small and not-very-private backyard, more noise, more streetlights and headlights, and a greater need to look out for dogs and children. Additional maintenance demands, which bring higher costs, discourage some would-be buyers of corner properties, said Steve Hovany, president of Schaumburg’s Strategy Planning Associates, a real estate planning consultancy. But some buyers like corner homes anyway. A corner home “is a rare home,” said Ray Hartshorne, partner with Chicago’s Hartshorne Plunkard Architecture. “It’s a home that’s distinctive in a world that makes distinctive homes more valuable.” Source: Chicago Tribune, Jeffrey Steele (
Home prices up 1% in June
U.S. home prices rose in June for the third straight month amid a burst of homebuying due to tax incentives that have since expired. The Standard & Poor’s/Case-Shiller 20-city home price index posted a 1 percent increase in June from May and was up 4.2 percent from a year ago. Home prices nationally were up 4.8 percent in the second quarter compared with the first quarter, largely due to government tax credits of up to $8,000 that caused sales to surge. Seventeen cities showed price gains on a monthly basis. Prices in Seattle and Portland (Oregon) were flat from a month ago, while prices in Las Vegas fell. Nationally, prices have risen 6 percent from their April 2009 bottom. But they remain 28 percent below their July 2006 peak. Copyright © 2010 The Associated Press, Alan Zibel, AP real estate writer.
Number of underwater mortgages in U.S. fell in 2nd Quarter
Real estate data provider CoreLogic says the number of U.S. homes with mortgages that exceed what the property is worth declined slightly in the second quarter versus the first three months of this year. The firm said Thursday there were 11 million homes with so-called underwater mortgages at the end of June. That's down from 11.2 million at the end of March. The firm attributed the decline primarily to homes being repossessed by lenders. In all, 23 percent of U.S. homes with mortgages were underwater at the end of June. Nevada had the highest rate of underwater mortgages of any state at 68 percent, followed by Arizona at 50 percent and Florida at 46 percent. Copyright © 2010 The Associated Press, Alex Veiga, AP real estate writer.
Real estate incentives going out of style
With home sellers trying to limit losses and the government restricting seller contributions, buyers have access to fewer cash incentives and other perks – such as cars, televisions, and appliances – for going through with a transaction. These days, experts say more sellers are attracting buyers’ attention by pricing competitively or lowering the price. Other residential property professionals point out that buyers are taking into consideration that a family member could become unemployed, and they are making buying decisions based on one income. “Gimmicks don’t work well when buyers have so many avenues to be educated about what’s for sale and what has sold and for what price,” says Aaron Dickinson of Edina Realty in Minneapolis. Source: News OK (08/21/10) Buchta, Jim
Redfin CEO and Others Pull Back on Housing
I had a chance today to sit down this morning with the CEO of online real estate brokerage Redfin, Glenn Kelman, who is one of the few people actually making money in the housing market these days.
