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May 12, 2010

Posted by allthingshavelock in National Real Estate.
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Daily Real Estate News  |  May 6, 2010  |   

Study: Reckless Spending Behind Foreclosures
Did banks prey on unwitting consumers or did borrowers go into foreclosure because they stretched further than they should have?

Researchers at the University of Arkansas found that most households in foreclosure were relatively affluent and highly educated people with few or no children, living in geographical areas that experienced extremely rapid real estate appreciation.

The researchers divided U.S. households into 21 life-stage groups, using data from a variety of sources. Then they identified which groups experienced the most foreclosures. The group with the highest foreclosure percentage was one they dubbed “Cash & Careers,” affluent adults born between the mid-1960s and the early 1970s.

Members of this group had high household incomes, high education levels, high home values, and none to only a few children. Also, members of this group were classified as aggressive investors, most of whom lived in areas – California, Nevada, Arizona, and Florida – with rapid real estate appreciation.

“The policy implication from our results is that strong consumer protection laws, though necessary to prevent Wall Street banks from offering high-risk loans to the most vulnerable – will not be sufficient to prevent another financial crisis like the one the U.S. economy experienced in 2007 and 2008,” says Tim Yeager, associate professor of economics and lead author of the study.

Source: University of Arkansas (05/06/2010)

January 15, 2010

Posted by allthingshavelock in National Real Estate.
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Daily Real Estate News  |  January 11, 2010  |  

Fed: It’s Time the Market Stands on its Own
April 1 will be the first day that the Federal Reserve will end its debt purchase program and allow the struggling U.S. mortgage market to operate unassisted. As a result, the Fed believes mortgage rates will rise about three-quarters of a percent to about 6 percent, Boston Fed President Eric Rosengren said Saturday.

Fear of a worldwide perception that the U.S. government is simply printing money to use to purchase mortgage-related securities is a big reason the Fed has pulled back, analysts say. If that fear caused a sell-off of U.S. government bonds, it would push borrowing costs substantially higher and derail the economic recovery.

“We are still in uncharted waters,” Fed Vice Chairman Donald Kohn said in an unrelated speech Saturday. “We will need to be flexible and adjust as we gain experience.”

Source: Reuters News, Pedro Nicolaci da Costa (01/08/2010)

November 20, 2009

Posted by allthingshavelock in National Real Estate.
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Top 8 House-Hunting Mistakes

By Amy Fontinelle, Investopedia

Oct 30th, 2009

 These mistakes will blow your cool — your budget is likely to follow.

Buying a home is a very emotional process, and allowing those emotions to get the best of you can cause you to make any number of mistakes. Since buying a home has many far-reaching implications, from where you will live to how hard it will be to make ends meet, it’s important to keep your emotions in check and make the most rational decision possible.

There are eight common emotional mistakes that people make when buying a home. Avoiding these pitfalls will help you find the best home-sweet-home.


Mistake 1: Falling in love with a house you can’t afford

Once you’ve fallen in love with a particular home, it’s hard to go back. You start dreaming about how great your life would be if you had all the wonderful things it offered – the lovely, tree-lined streets, the jetted bathtub, the spacious kitchen with professional-grade appliances. However, if you can’t or won’t be able to afford that house, you’re just hurting yourself. To avoid the temptation to get in over your head financially, or the disappointment of feeling like you’re settling for less than you deserve, it’s best to only look at homes in your price range.

Further, start your search at the low end of your price range – if what you find there satisfies you, there’s no need to go higher. Remember, when you buy another $10,000 worth of house, you’re not just paying an extra $10,000 – you’re paying an extra $10,000 plus interest, which might come out to double that amount or more over the life of your loan. You may be better off putting that money toward another purpose.

Mistake 2: Thinking that a particular house is the only one that will suit you

Unless you are a high-end buyer looking at custom homes, chances are that for any home you find that you like, there are quite a few others that are nearly identical to it. Most neighborhoods have multiple homes that are the same model. Further, most neighborhoods are full of homes that were all constructed by the same builder, so even if you can’t find an identical model for sale, you can probably find a house with many of the same features. If you’re considering a condo or townhouse, the odds are also in your favor.

Even when you have a long list of must-haves, there are probably several homes out there that can meet your needs. Another house in the same area might be similar enough to meet your needs but be less expensive. Likewise, you could find a similar model with more of the upgrades you’re looking for at a similar price.

Mistake 3: Being so desperate to become a homeowner that you buy a place that doesn’t suit you

When you’ve been looking for a while and you’re not seeing anything you like – or worse, you’re getting outbid on the houses you do want – it’s easy to start thinking that what you really want simply won’t happen. If you move into a house you’ll end up hating, the transaction costs to get rid of it will be costly. You’ll have to pay an agent’s commission (up to 5-6% of the sale price) and you’ll have to pay closing costs for the mortgage on your new house. You’ll also deal with the hassle and expense of moving yet again. If you decide not to move but to try to make the best of what you have, remember that alterations and renovations are expensive, time-consuming and stressful. The best advice is to wait if you have the luxury of time, or to correct your vision for your future to what you actually need, not want.

Mistake 4: Overlooking important flaws in the structure, appearance or location of the house

For any of the three reasons we just discussed, you might be tempted to ignore major problems with the house that will be difficult, expensive or impossible to change. Carefully consider your options before you make a commitment, and consider waiting until something better comes along. New houses come on the market every day.

Mistake 5: Thinking you’re a handyman when you’re not

Don’t buy a fixer-upper that’s more than you can handle in terms of time, money or ability. For example, if you think you can do the work yourself then realize you can’t once you get started, any repairs or upgrades you were planning to make will probably cost twice as much once you factor in the labor – and that may not be in your budget. Not to mention the costs involved to fix anything you may have started and the fees to replace the materials you wasted. Honestly evaluate your abilities, your budget and how soon you need to move before purchasing a property that isn’t move-in ready.

Mistake 6: Putting in an offer before carefully considering all the pros and cons of the property

In a hot market (or even a hot submarket, with dirt-cheap, bank-owned properties during a housing slump) it may be necessary to pull the trigger very quickly if you find a home you like. However, you have to balance the need to make a quick decision with the need to make sure the home will be right for you. Don’t neglect important steps like making sure the neighborhood feels safe at night as well as during the day and investigating possible noise issues like a nearby train. Ideally you’ll be able to take at least a night to sleep on the decision. How well you sleep that night and how you feel about the home in the morning will tell you a lot about whether the decision you’re about to make is the right one. Taking the time to consider the decision also gives you a chance to research how much the property is really worth and offer an appropriate price.

Mistake 7: Being too slow to pull the trigger

It’s a tough balancing act to make sure you make a careful decision yet don’t take too long to make it. Losing out on a property that you were almost ready to make an offer on because someone beat you to it can be heartbreaking. It can also have economic consequences. Let’s say you are self-employed. Perhaps for you more than anyone else, time is money. The more time and energy you have to take out of your normal activities to search for a house, the less time and energy you have available to work. Not dragging out the homebuying process unnecessarily may be the best thing for your business, and the continued success of your business will be essential to paying the mortgage. If you don’t pull the trigger quickly, someone else might, and you’ll have to keep looking. Don’t underestimate how time-consuming and routine-disrupting house shopping can be.

Mistake 8: Offering more than a house is worth

If there’s a lot of competition in your market and you find a place you really like, it’s all too easy to get sucked into a bidding war – or to try to preempt a bidding war by offering a high price in the first place. There are a couple of potential problems with this. First, if the house doesn’t appraise at or above the amount of your offer, the bank won’t give you the loan unless the seller reduces the price or you pay cash for the difference. If this happens, the shortfall on your bid as opposed to your mortgage will have to be paid out of pocket. Second, when you go to sell the house, if market conditions are similar to or worse than they were when you purchased, you may find yourself upside down on the mortgage and unable to sell. Make sure the purchase price for the home you buy is reasonable for both the house and the location by examining comparable sales and getting your agent’s opinion before making an offer.


Even knowing all of these things, it’s still hard to act on them. You may still find yourself making decisions based on emotion during the home-buying process. Slow down, overcome your emotions and, ultimately, make a home-purchase decision that’s good for both your feelings and your finances.


November 12, 2009

Posted by allthingshavelock in National Real Estate.
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Daily Real Estate News  |  November 10, 2009  |  

States See Surging Sales, Moderating Prices
Most states continued to experience rising existing-home sales in the third quarter, with prices moderating in many metro areas, according to the latest survey by the NATIONAL ASSOCIATION OF REALTORS®.

Total state existing-home sales, including single-family and condo, increased 11.4 percent to a seasonally adjusted annual rate of 5.30 million units in the third quarter from 4.76 million units in the second quarter, and are now 5.9 percent above the 5.01 million-unit pace in the third quarter of 2008.
Sales increased from the second quarter in 45 states and the District of Columbia; 28 states and D.C. saw double-digit gains. Year-over-year sales were higher in 32 states and D.C.

Lawrence Yun, NAR chief economist, said the tax credit is a significant factor. “We can’t underestimate just how powerful a catalyst the first-time home buyer tax credit has been for the housing sector,” he said. “It’s given buyers the confidence they needed to get off the fence and take advantage of extremely affordable housing conditions. The buying conditions this year are the most favorable on record dating back to 1970, but the tax credit is allowing buyers to set aside any reservations about waiting for a better deal.”

During the third quarter, 123 out of 153 metropolitan statistical areas2 reported lower median existing single-family home prices in comparison with the third quarter of 2008, while 30 areas had price gains.

The national median existing single-family price was $177,900, which is 11.2 percent below the third quarter of 2008; the median is where half sold for more and half sold for less. Distressed sales – foreclosures and short sales – accounted for 30 percent of transactions in the third quarter, which continued to weigh down median home prices because they sell at a discount relative to traditional homes.

“The decline in the national median price has moderated recently, and a shrinking supply of unsold inventory suggests we are getting closer to price stabilization in many areas, but we need a steady stream of financially qualified buyers to further reduce inventory and get us to a self-sustaining market,” Yun said. “Foreclosures will continue to come on the market, but rising sales from the expanded tax credit should stabilize home prices by next spring and help to stem future foreclosures.”

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage rose to 5.16 percent in the third quarter from a record low 5.03 percent in the second quarter, but was dramatically lower than the 6.32 percent average rate in the third quarter of 2008.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said he is encouraged by recent actions in Congress. “Extending and expanding the tax credit to more buyers through the middle of next year is the right medicine,” he said. “Congress understands the impact of housing on the economy, so consumers who aren’t able to complete a transaction before the end of this month now have a second chance but must have a contract in place by April 30.”

The biggest sales gain between the second and third quarters was in North Dakota, up 42.3 percent; followed by Rhode Island which rose 26.5 percent; and Pennsylvania, up 25.6 percent.

The largest single-family home price increase in the third quarter was in the Cumberland area of Maryland and West Virginia at $122,100, up 19.2 percent from the third quarter of 2008. Next was the Davenport-Moline-Rock Island area of Iowa and Illinois, where the median price increased 14.3 percent to $115,600, followed by Oklahoma City, at $144,100, up 9.1 percent from a year ago.

“The wide range of market performance and reversals around the country, ranging from double-digit gains to double-digit losses in both sales and prices, underscores just how local real estate truly is,” Yun said. “The wide changes and mix of numbers also indicates a market in transition, hopefully to one that is becoming more balanced and stable.”

Median third-quarter metro area single-family home prices ranged from a very affordable $61,400 in the Saginaw-Saginaw Township North area of Michigan to $566,000 in the San Jose-Sunnyvale-Santa Clara area of California. The second most expensive area in the third quarter was San Francisco-Oakland-Fremont at $538,100; followed by the Anaheim-Santa Ana-Irvine area of California at $498,800.

Other affordable markets include the Youngstown-Warren-Boardman area of Ohio and Pennsylvania at $70,700, and Lansing-East Lansing, Mich., at $86,600.

In the condo sector, metro area condominium and cooperative prices – covering changes in 55 metro areas – showed the national median existing-condo price was $178,000 in the third quarter, down 15.4 percent from the third quarter of 2008. Four metros showed annual increases in the median condo price and 51 areas had declines.

The metros experiencing condo price gains were San Diego-Carlsbad-San Marcos, at $215,100, up 13.3 percent; followed by the Cincinnati-Middletown area, up 2.0 percent to $119,700; the Toledo, Ohio, area, where the median price of $130,400 rose 1.7 percent from the third quarter of 2008; and the Indianapolis area at $114,400, up 0.8 percent.

Metro area median existing-condo prices in the third quarter ranged from $67,600 in Las Vegas-Paradise, Nev., to $432,800 in San Francisco-Oakland-Fremont. The second most expensive reported condo market was New York-Wayne-White Plains at $297,500, followed by Boston-Cambridge-Quincy at $293,700.

Other affordable condo markets include Reno-Sparks, Nev., at $81,300 in the third quarter, and Jacksonville, Fla., at $91,600.

Regionally, existing-home sales in the Northeast surged 16.7 percent in the third quarter to a pace of 930,000 units and are 6.9 percent higher than a year ago.
The median existing single-family home price in the Northeast declined 9.4 percent to $244,500 in the third quarter from the same quarter in 2008. The best price gain in the region was in Buffalo-Niagara Falls, N.Y., where the median price of $119,700 rose 4.8 percent from the third quarter of 2008; followed by Manchester-Nashua, N.H., at $237,600, up 2.6 percent; and the Pittsburgh area, where the median price rose 1.5 percent to $124,600.
In the Midwest, existing-home sales jumped 13.2 percent in the third quarter to a pace of 1.20 million and are 5.2 percent above a year ago.

The median existing single-family home price in the Midwest was down 5.5 percent to $150,200 in the third quarter from the same period in 2008. After Davenport-Moline-Rock Island, the next strongest metro price increase in the region was in Cedar Rapids, Iowa, where the median price of $145,700 was 7.6 percent higher than a year ago; followed by Bismarck, N.D., at $157,200, up 7.5 percent; and Ft. Wayne, Ind., where the median price rose 6.9 percent to $102,500.

In the South, existing-home sales rose 11.3 percent in the third quarter to an annual rate of 1.97 million and are 5.9 percent higher than the third quarter of 2008.

The median existing single-family home price in the South was $160,000 in the third quarter, down 7.9 percent from a year earlier. After Cumberland and Oklahoma City, the next strongest price increase in the region was in Shreveport-Bossier City, La., at $152,300, up 8.6 percent from the third quarter of 2008; Jackson, Miss., at $141,200, up 4.6 percent; and Durham, N.C., where the median price rose 3.6 percent to $184,300.

Existing-home sales in the West increased 5.6 percent in the third quarter to an annual rate of 1.19 million and are 4.6 percent above a year ago.
The median existing single-family home price in the West was $224,000 in the third quarter, which is 16.4 percent below the third quarter of 2008. The best metro price performance in the West was in Yakima, Wash., where the median price of $158,400 rose 2.7 percent from a year earlier; the Denver-Aurora area at $229,100, up 1.8 percent; and the Kennewick-Richland-Pasco area of Washington, where the median price rose 0.7 percent to $172,200.

Source: NAR

October 19, 2009

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Daily Real Estate News  |  October 14, 2009  |   Share

Buyers Must Hurry to Meet Credit Deadline
There’s still time for a first-time home buyer to complete a transaction before the tax credit expires Nov. 30, says Diann Patton, consumer spokeswoman for Coldwell Banker Real Estate.

But home buyers who have to apply for a mortgage should make sure they have all the necessary paperwork in hand. Patton advises that they’ll need to have tax returns, income verification and bank statements, as well as completed applications forms ready to submit.

Buyers in a hurry to claim the credit should also avoid short-sale properties, Patton says, because that process can delay closings.

Source: USA Today, Sandra Block (10/13/2009)

September 25, 2009

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Daily Real Estate News  |  September 25, 2009  

Mortgage Rates Hold Steady
The average rate on 30-year, fixed mortgages held at 5.04 percent for the week ended Sept. 24—down from 6.09 percent a year ago, according to Freddie Mac.

Interest on 30-year, fixed loans has declined in the past three weeks, according to Freddie Mac chief economist Frank Nothaft, and the Mortgage Bankers Association reported a 13 percent increase in application volume last week.

Other rates performed as follows:

  • 15-year fixed loans dipped for the week from 4.47 percent to 4.46 percent.
  • Five-year hybrid adjustable-rate mortgages were flat at 4.51 percent.
  • One-year ARMs fell from 4.58 percent to 4.52 percent.

Source: Wall Street Journal (09/25/09)

September 24, 2009

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Daily Real Estate News  |  September 18, 2009  

10 Markets Where Building Is Booming
The building business—both commercial and residential—is a seeing a recovery in some markets, especially those where military, government, and energy jobs are driving demand.

Lake Charles, La., which leads the nation, is an anomaly—it’s recovering from hurricanes—but the other markets are largely driving by economic growth. For instance, building permits for apartments in Huntsville, Ala., near the expanding U.S. Space & Rocket Center, have jumped 400 percent so far in 2009.

Many of the contracts are going to smaller local builders, but some of the giants are getting back in the game as well. KB Home resumed construction in the Mid-Atlantic, including Washington D.C., after pulling back earlier this year.

The top 10 growth markets, based on building permits, are:

  1. Lake Charles, La., 122.5 percent
  2. Beaumont-Port Arthur, Texas, 65.8 percent
  3. Salt Lake City, 36.6 percent
  4. Huntsville, Ala., 30 percent
  5. Jacksonville, N.C., 28.6 percent
  6. Augusta-Richmond County, Ga.-S.C., 21.6 percent
  7. Fayetteville, N.C., 12.2 percent
  8. Las Cruces, N.M., 11.6 percent
  9. Auburn-Opelika, Ala., 11.3 percent
  10. Little Rock-North Little Rock, Ark., 7.7 percent

Source: BusinessWeek, Prashant Gopal (09/18/2009)

August 21, 2009

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By ALAN ZIBEL, AP Real Estate Writer Alan Zibel, Ap Real Estate Writer

WASHINGTON – The U.S. housing market is rebounding faster than expected. The question is, can it last? Home resales in July posted the largest monthly increase in at least 10 years as first-time buyers rushed to take advantage of a tax credit that expires this fall. Sales jumped 7.2 percent and beat expectations, the National Association of Realtors said Friday.

“The housing market is back up and running and that is great news,” wrote Joel Naroff of Naroff Economic Advisors.

Sales hit a seasonally adjusted annual rate of 5.24 million in July, from a pace of 4.89 million in June. It was the fourth-straight monthly increase and the strongest month since August 2007. Sales had been expected to rise to an annual pace of 5 million, according to economists surveyed by Thomson Reuters.

The risks, however, are unemployment, mortgage rates, and a homebuyer tax credit that is over at the end of November. And the last one could be a doozy because first-time buyers are snapping up one out of every three homes.

First-time buyers get a credit of 10 percent of the purchase price of a home, up to $8,000. Singles must earn less than $75,000, and couples less than $150,000. The real estate industry is lobbying to have the credit extended, but its unclear if Congress will be swayed.

“I would not be at all surprised to see a dip at the end of the year once the tax credit expires,” said Robert Dye, senior economist with PNC Financial Services Group.

The home sales report was another sign that the U.S. economy is on the verge of a long-awaited recovery after enduring a brutal recession and the worst financial crisis since the Great Depression.

Economic activity in both the U.S. and around the world appears to be leveling out and “the prospects for a return to growth in the near term appear good,” Federal Reserve Chairman Ben Bernanke said Friday.

But fallout from the recession will linger for some time. Unemployment rose in July in 26 states and fell in 17, the Labor Department said Friday. That is driving up foreclosures, which are not expected to level off until sometime next year.

Sales of foreclosures and other distressed properties made up about a third of all transactions last month, down from nearly half earlier this year. In places like San Diego and Orlando, buyers are snapping up foreclosed properties at deep discounts, and real estate agents are pressing banks to release more foreclosures onto the market.

Those sales helped drag down the median sales price by 15 percent to $178,400.

It took Stephen Stoyko two years of off-and-on house hunting before he bought a four-bedroom, two story foreclosure for $320,000. Built just 2 1/2 years ago in Roswell, Ga., north of Atlanta, the home was initially priced at $335,000.

Stoyko, who is single, expects to spend about $7,000 to replace missing kitchen appliances and light fixtures — a cost will be at least partially offset by the first-time homebuyer tax credit. “It’s bigger than I needed, but the price was right,” he said.

The inventory of unsold homes on the market rose to 4.1 million, from 3.8 million a month earlier as buyers who had held their homes off the market in the past decided to list them for sale. That’s a 9.4-month supply at the current sales pace, unchanged from June.


AP Real Estate Writer Adrian Sainz contributed to this report. AP Economics Writer Jeannine Aversa contributed reporting from Jackson Hole, Wyo.