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Real Estate Outlook: Increase in Housing Starts!

When you get reports of increases in both new housing starts and existing home and condo sales in a single week, that's got to say something positive about where real estate is headed.

Last week the US Commerce Department announced that new home starts, which have been lackluster for most of the housing downcycle -- rose in January to their highest level in half a year.

Total starts nationwide were up nearly three percent for the month, and rose in three out of four regions covered by the Commerce report. In the Northeast, new starts bounced upward by 10 percent.

In the West, they were up by 9 percent, in the South by one percent.

Only the Midwestern region saw a decline -- of 3.2 percent.

Meanwhile, the latest quarterly report on existing home and condo sales found total sales up by a stunning 14 percent in the final three months of last year compared with the third quarter.

Transactions were up in 48 states plus the District of Columbia for the quarter -- and they jumped by double digit percentages in 32 states.

Even prices were on the upswing: Of the 151 major housing markets tracked by the National Association of Realtors' survey, median prices were higher in 67 -- and up by double digits in 16 metro areas.

Lawrence Yun, chief economist for the National Association of Realtors, attributed the rise in sales and prices to the two popular federal housing tax credits now available to first-time and repeat purchasers, plus low mortgage rates.

On a regional basis, the biggest sales gains came in the Western states, where they were up 16 percent for the quarter and are 18 percent higher than the year before.

In the Midwest, sales were up by nearly 15 percent. In the South, 14 percent. And in the Northeast by 11 percent.

In a separate study, the national housing affordability index closed out 2009 just a fraction below its all time record high, meaning new and existing houses are now more affordable for a broader group of households than at just about any time in the past twenty years.

The index, which is jointly published by Wells Fargo and the National Association of Home Builders, found that fully 71 percent of American families can afford to buy the median priced home with a median household income of $64,000.

An important part of that affordability equation , of course, is the mortgage market, and rates remain close to multi-decade lows.

Last week's average 30 year fixed rate was 4.9 percent, according to the Mortgage Bankers Association, while 15 year rates averaged 4.3 percent.

This article was published in Realty Times
Written by: Kenneth R. Harney, February 23, 2010

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The Offer: There's More to It Than Price

Fixating on price in real estate may cost you the deal:

*Sellers who decide that a specific dollar figure will buy their home and won’t budge from that bottom line may sell themselves short.

*Buyers who drop out of a transaction for a property they love because the seller’s counter-offer shocks them may be quitting before they have really started negotiating.

When a buyer makes an offer to purchase a house, condominium unit or commercial property, the purchase price is a prime consideration, but it represents only part of the total value offered to the seller. Problems may arise for both sides of the transaction when this fact is forgotten.

Value Elements in an Offer

The value expressed in a buyer’s offer to purchase, or in a seller’s offer to sell, involves 5 key elements -- a financial package:

1. Purchase Price, the stated amount of dollars offered by the buyer, represents a significant contributor to value, but there are other important factors which can reduce the amount the seller receives or which can compromise the transaction. It’s not the purchase price, but the net proceeds of the sale that sellers -- and savvy buyers -- should concentrate on.

2. Closing Date, or the day ownership changes hands and the seller receives the money, can represent cost or value to both parties. Savvy buyers usually attempt to meet the seller’s preferred moving date, especially when the seller has committed to purchasing another property or needs the proceeds of the sale on a specific date. For instance, a closing before that date may be expensive because the seller would have to move out and store everything until they could move into their new home. That double move and the inconvenience represent out-of-pocket costs and time lost that make the actual purchase price lower than stated. A closing date later than the seller’s preferred date may leave the seller owning two homes—and paying off two mortgages—at once. The seller may incur extra costs in arranging bridge financing to meet legal obligations to close on their new home before they receive proceeds from the sale of their current home. Choice of closing date may represent costs or value to the buyer as well. Balancing this reality for both parties is key in negotiation.

3. Inclusions and Exclusions to the sale also represent costs and value for both parties. Appliances, heating systems and draperies are common seller inclusions designed to boost value for buyers. If warranties for everything from a new roof or solar panels to new appliances cannot be transferred to a buyer, these items become “second-hand”and will probably represent less value to buyers. Buyers are also free to include excluded seller items, like an antique light fixture, in the offer to purchase. Deals have been lost to disagreements over light fixtures, fireplace accessories and vintage furnishings, so prudent sellers remove contentious items before listing. A buyer may offer less than list price and ask for nothing; a seller could sign back for more money and include items to sweeten the pot. Value is very subjective for these non-real-estate items and that’s where negotiations can get heated.

4. Terms and Conditions are clauses in the offer which cover “what if” risks for one party and the obligations of both parties. These clauses detail what the buyer asks the seller to do for the purchase price. Arrange a survey or include a treasured light fixture? Sellers can create conditions in an offer to sell, but usually conditions are of greater concern to the buyer, particularly if approval of a third partly like a lender or city planning department is involved in determining the property’s suitability. Conditions to arrange financing or a home inspection are among the “ifs” that define the offer to purchase. The degree of uncertainty attached to the conditions and the buyer’s related ability to close effect the value of an offer. For instance, a buyer who is pre-approved for a mortgage of sufficient size offers less risk to a seller. However, if the purchase price is significantly-above market value, the lender may not approve the mortgage, so a condition for financing is essential to protect all parties. A full-price offer with conditions that will be difficult to meet may hold less value than an under-list-price offer with no conditions. Alternatively, if the conditions are merely formalities, the conditional offer could represent greater value. Would you recognize the difference if you were the seller? That’s where the expertise of the real estate professionals involved becomes valuable...

5. Intent and Sincerity are vital aspects of an offer although difficult to quantify. How determined is the buyer to buy, and why? How determined is the seller to sell? If either party changes their mind after the contract exists and before the closing date, the injured party has remedies in court. These legal steps may not make up for lost time and, perhaps, a missed market. An investor or flipper may decide to cut losses and bail out of the deal if the market drops significantly before closing. A seller may have second thoughts if their plans to move fall through. For both parties, value should lie in the certainty that the other party will close in spite of market shifts.

Yes, price matters, but there’s a lot more involved in creating an offer that demands to be accepted. That’s why an experienced real estate professional is a valuable contributor to success. Professionals can calculate, or at least estimate, the seller’s net proceeds after costs related to the offer and deduction of commission. This information helps the seller accurately evaluate an offer to purchase. Understanding cost and benefit for all elements of an offer helps a buyer intent on ownership to create the best financial package possible.

Tip: Re-read this article when you are ready to make an offer, counter an offer or accept one.

This will ensure value is visible to you on all levels before you decide to walk away or sign on the dotted.

Source: Have You Home and Money Too and Shared Ownership
Written by PJ Wade
February 23, 2010

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Is Your Credit Score as High as You Think?

It is common to assume that paying bills on time automatically means having a high credit score. Unfortunately, that's not always the case. There are many misperceptions about how scores are calculated -- and yours could be lower than you might expect.

Credit scores are used by financial institutions to determine whether they should lend money to a potential borrower and, if so, what interest rate should be charged. A higher score means an applicant is statistically less likely to default on the loan so they get a lower interest rate.

Ignoring your credit score could be a costly mistake. As an example, let's say you bought a $400,000 house with a 30-year fixed-rate mortgage at a 6-percent interest rate. Over the term of the loan, you would pay interest charges of $463,354. If, however, you had a lower score and your bank bumped your interest rate up to 8 percent, you would pay interest charges of $656,619. That's a hefty difference of $193,265.

There are many credit scoring systems available to lenders, but FICO scores are by far the most commonly used. The system was developed by the Fair Isaac Corporation back in the 1960s. Technically, you have three different FICO scores -- one for each of the three major credit reporting agencies.

Knowing how FICO scores are calculated can help you make better decisions about your credit. At a minimum, you should be aware of some of the most common misperceptions:

I always pay my bills on time so I must have a high credit score.

Paying your bills on time is clearly a critical factor, but it only accounts for 35 percent of your overall FICO score. It also looks at four other components: the amount of debt you owe (30 percent), the length of your credit history (15 percent), the number of credit accounts you've recently opened (10 percent), and the types of credit you use (10 percent).

Consolidating multiple credit cards will increase my score.

Consolidating credit cards could make it easier to pay down debt, but your FICO score could actually decrease if you consolidate to fewer accounts with balances that are closer to the maximum available credit. FICO considers you a lower risk if you have multiple credit accounts, keep the payments up-to-date, and maintain balances between 25 percent and 35 percent of the available credit.

I don't have any credit cards or other major debt so I can't have a low score.

Your FICO score doesn't take into account your net worth or your income level -- it only looks at your past borrowing history. Your FICO score will be lower if you haven't established a long-term borrowing history with multiple creditors.

Closing a credit card is better for my score than keeping it open.

Closing a credit card will not necessarily hurt your score in the short term, but you will eventually lose the positive effects of the long-term credit history that you've established with that lender.

I shouldn't shop around for a mortgage or other large loan because credit inquiries hurt my score.

A large number of credit inquiries will lower your score, but FICO is smart enough to know when you are rate shopping. Inquiries for similar types of credit are bundled if they're made within the same 14-day period.

I shouldn't check my credit report more than once a year because credit inquiries hurt my score.

Checking your own credit report does not affect your score, so feel free to check it as many times as you'd like.

If you want to learn more about how FICO scores are calculated, visit Fair Isaac's web site at www.myfico.com. They offer a host of informational materials and credit score tips. And while you're at it, you can also order your three scores for a small fee.

Becoming more knowledgeable about FICO scores could help you to keep those pesky interest rates at a minimum. With just a small investment of time, you will be able to make smarter credit decisions and take proactive steps to increase your score.

This article was published in Realty Times
Written by: Rick Salmeron

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Mortgage Rates Hover Near Record Lows!

McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 4.93 percent with an average 0.7 point for the week ending February 18, 2010, down from last week when it averaged 4.97 percent. Last year at this time, the 30-year FRM averaged 5.04 percent.

The 15-year FRM this week averaged 4.33 percent with an average 0.6 point, down from last week when it averaged 4.34 percent. A year ago at this time, the 15-year FRM averaged 4.68 percent.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.12 percent this week, with an average 0.5 point, down from last week when it averaged 4.19 percent. A year ago, the 5-year ARM averaged 5.04 percent.

The 1-year Treasury-indexed ARM averaged 4.23 percent this week with an average 0.6 point, down from last week when it averaged 4.33 percent. At this time last year, the 1-year ARM averaged 4.80 percent.

"Mortgage rates eased for the second week, while economic data releases suggest that the housing market may be in a slow state of recovery," said Frank Nothaft, Freddie Mac vice president and chief economist. "The National Association of Realtors® (NAR) reported that existing home sales rose in 48 states and the District of Columbia between the third and fourth quarters of 2009; 32 states experienced double-digit growth. In addition, 67 metropolitan areas saw positive annual house price growth in the fourth quarter, more than double that in the third quarter, according to the NAR."

"New home construction is also slowly improving. One-family housing starts rose to an annual pace of 484,000 homes in January, which is up almost 36 percent from January 2009, based on the U.S. Census figures. Moreover, homebuilder assessments of market conditions over the first half of 2010 improved in February, according to National Association of Homebuilders/Wells Fargo Housing Market Index."

This article was published in Realty Times
Written by: Realty Times Staff, February 19, 2010

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Loan Modification Program Isn't On Track Yet

It would be unfair to say that the Obama administration hasn’t been trying to restore the health of the housing market. Unfortunately, it would be inaccurate to say that its programs are having much success. The loan modification program is a worrisome case in point.

On February 18, 2009 the Treasury Department announced the Homeowner Affordability and Stability Plan. The Loan Modification portion of that program had a goal "to keep up to 3 to 4 million Americans in their homes by preventing avoidable foreclosures."

August 4, 2009 the administration released its first monthly Servicer Performance Report which claimed that the program was "on pace." It noted that by July more than 230,000 trial modifications had begun. By November, however, the administration announced a campaign to pressure mortgage companies because, said assistant Treasury Secretary, Michael Barr, "The banks are not doing a good enough job."

Recently, a detailed report of the program’s progress was made available on the website . The report showed results through December, 2009. As of December, 66,465 permanent loan modifications had been granted. Another 46,000 had been approved but had not yet been accepted by the borrowers. Now, in many ways those are nice numbers; and many of us – not all, I know – would be happy for the borrowers. But, in the context of the entire situation, those numbers are rather paltry. Taken together they represent only 3% of the estimated eligible mortgages, and only 12% of the modification programs that have been started. More than ½ million trial modifications had been started by August; yet, by December almost 800,000 were still in the trial stage.

The slow pace and the low ratio of trial modifications becoming permanent modifications does not bode well for the administration to meet its goal of keeping 3 - 4 million borrowers in their homes over the next three years.

The problem isn’t a lack of participation by lenders. 107 servicers have signed up so far in addition to approximately 2300 lenders who service Fannie Mae and Freddie Mac loans. It is estimated that 89% of eligible mortgage debt outstanding is covered by participating servicers. Admittedly, though, their performance is uneven. Those who have the highest percentage of trial and permanent modifications are Citimortgage (47%), Saxon Mortgage Services (46%), and GMAC (44%). Not quite so stellar is Wachovia at 3%. Nine servicers have only offered modifications to fewer than 20% of their estimated eligible borrowers.

Nor do all borrowers find the modifications offered to be acceptable. 22% who were offered plans did not take them. There are no data as to why this is so. One can speculate though. For one thing, it is quite possible that eligible borrowers facing seriously negative equity will decide that, even with lower payments, it just doesn’t make sense to try to hang on There is no clear reason why the ratio of permanent modifications to trial plans is so low. Certainly bureaucratic inertia and interminably convoluted paperwork issues may have a lot to do with it.

Inasmuch as plans have been offered to only 35% of estimated eligible borrowers, it would appear that one reason the program isn’t receiving its desired results is simply that many potential beneficiaries are not applying. There could be a number of reasons for this, many of them having to do both with ignorance of the program and with denial of the issues.

Many real estate agents do an exceptionally good job of communicating with the public. They can provide a useful service by making people aware of the attempts to resolve issues related to delinquencies and foreclosure. People should know that they can obtain a good deal of useful information by visiting the MakingHomeAffordable website.

Written by Bob Hunt
February 16, 2010

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Real Estate Outlook: National PMI Index

One of the most accurate forecasters of housing value movements has just signaled something potentially important: For the first time in a year, according to the national PMI index, “overall risk has decreased” in the 384 metropolitan markets covered by the survey.

The PMI risk index is produced quarterly by private mortgage insurance giant, PMI Group. It examines local employment, household income, economic growth, demographic changes and other factors to predict where home values are headed in these market areas.

PMI's risk index was among the earliest warning bells about the housing crash, so its quarterly findings are followed closely by mortgage analysts. According to the latest index released last week, home values are increasing in dozens of major metropolitan markets, causing the average risk rating for the U.S. to drop by 2.6 percent.

That's not huge, but it's a directional signal. The index found risk levels elevated in the so-called “sand states” -- California, Florida, Nevada and Arizona. It also documented a slight worsening of affordability conditions in 81 percent of metropolitan markets -- mainly the result of the uptick in home prices and slightly higher average mortgage interest rates late last year.

Another key market barometer was released last week with at least mildly encouraging numbers: The Zillow index of home owner negative equity found that the national average rate dropped to 21.4 percent in the last quarter of 2009, down from 23 percent in the second quarter.

Also the Federal Reserve's quarterly study measuring the nation's finances - the so-called “flow of funds” report, found that after nearly three years of declines, Americans are building positive equity in their homes again.

Between the first quarter of last year and the third quarter, according to the Fed, homeowner equity increased by almost $1 trillion. That was caused primarily by a combination of rising home values and principal paydowns on mortgages.

Meanwhile, home builders are also reporting an easing of their multi-year tale of woe: Several major publicly-traded national builders, including D R Horton and Beazer, announced last week that they are seeing higher numbers of orders along with reduced cancellation rates on contracts.

Horton said in its most recent quarter, orders for new homes were 45 percent above year-earlier levels, and the cancellation rate dropped from 38 percent to 26 percent.

Mortgage rates continue to be helpful as well: Thirty year fixed rates dropped to 4.9 percent last week, according to the Mortgage Bankers Association. Fifteen year rates remained flat at 4.3 percent.

This article was published in Realty Times
Written by: Kenneth R. Harney, February 15, 2010

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Looking For A Realtor In Lake Tahoe?

If you are looking for a Realtor in Lake Tahoe... Look No Further!

Alvin Steinberg has been in Real Estate since 1972 and carries a CRS (Certified Residential Specialist) in both California and Nevada. Alvin and his team are dedicated in providing you professional service whether you are buying or selling property in beautiful Lake Tahoe. One call does it all… Call Alvin’s Team.

Find out why "Ask for Alvin" are becoming the three most important words in real estate. Call Alvin today, you'll be delighted that you did!

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Breathtaking Lake View Home in Lake Tahoe!

Great News for Buyers!

If you are looking for a beautiful lake view property in Lake Tahoe...We have the perfect home for you!

This grand residence has a delightful mountain ambiance with gorgeous lake views! The entry level offers a guest master bedroom suite, large game room and private guest quarters with bedroom and bathroom. On the upper level the living room features a striking floor to ceiling quartzite fireplace and oversized windows that capture the stunning views. The kitchen and dining area are open and spacious with impressive cathedral beamed ceilings, a skylight and access onto the front lake view deck. The master bedroom suite features large picture windows, a walk-in closet and a spacious master bathroom with spa tub and separate shower. At the end of a long day, enjoy the peaceful setting the back deck provides while relaxing in a steaming hot tub!

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New Financing Opportunities!

Investor Report: Financing Opportunities

You've probably heard that the Obama administration's budget sent to Congress last week emphasizes helping small businesses around the country, but you may not know that it also includes lots more potential financing opportunities for purchasers, owners and rehabbers of commercial real estate.

For starters, the White House wants $30 billion in so-called “TARP” bailout money that's been paid back by big banks to be redistributed to smaller banks to allow them to make more loans for small business purposes, including acquisitions and renovations of commercial and other investment real estate ranging from office buildings, retail strips, warehouses, restaurants -- you name it.

The budget also proposes to more than double the maximum loan amount of the government's main financing tool for small-scale commercial property -- the “SBA 504” program.

Under the budget, new loans could go as high as $5 million, up from the current $2 million cap.

Since a lot of people aren't all that familiar with the 504 program, here are some examples of the types of projects eligible for 504 financing:


* Buying commercial-use land and buildings, plus ancillary costs such as street improvements, utilities, parking lots and landscaping.

* Construction of new buildings and renovations of existing buildings to business-purpose use.

* “Green” and energy efficiency rehabilitations to commercial real estate.

Under the 504 program, which is overseen by the Small Business Administration, borrowers can put down as little as 10 percent into a deal. Compare that with financing packages available to investors and owners in the regular marketplace - where downpayments of 40 to 50 percent are standard.

Interest rates in the 504 program are attractive as well. Most financing packages involve a combination of a first mortgage and a second - with blended interest rates somewhere in the low six percent range currently.

President Obama also signed legislation recently cutting out some lending fees - roughly in the two percent range -- to lower 504 borrowers' upfront costs.

Chris Hurn, CEO of Mercantile Capital Corp., an Orland-based national lender who specializes in small business real estate financing, calls 504 “without question the very best commercial loan out there.”

But not enough potential users of the program seem to know about it, Hurn told Realty Times in an interview following the release of the budget.

Are there special requirements to qualify a 504 package? Absolutely: The real estate must be intended to house the borrower's business activities, in part or as a whole. That business activity, in turn, should retain existing employment or create new jobs - generally one job for every $65,000 of loan money.

Check it out.


Published in Realty Times
Written by Kenneth R. Harney
February 5, 2010

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Aging Buyers Want Easy, Comfortable Homes with First-Floor Master Bedroom

By the time you read this sentence of my column, another baby boomer will have turned 50 years old—it happens every seven seconds. The Baby Boomer generation makes up about 28 percent of the population and has some interesting statistics. According to BabyBoomerMagazine.com, this group has greater wealth than any other, controls 70 percent of the total net worth of American households, and accounts for 40 percent of total consumer demand.

This group also doesn’t want to be referred to as "senior citizens"; yet they are aging and modern comforts, especially for their lifestyle and home, are high priorities. This population typically falls into the empty-nest category. Baby Boomer Magazine writes, "With our children out of the home, we empty-nesters have more discretionary money to spend on ourselves—from the more upscale discount houses to the designer boutiques." When it comes to housing, this group wants easy, comfortable homes. The National Association of Home Builders (NAHB) and the MetLife Mature Market Institute found some interesting data when they surveyed consumers and builders in 2009. The analysis of data on housing preferences shows strong similarities of preferences between the 55-to-64-year-old-age group as compared to the 65+ group.

Technology-heavy features are of interest to the younger group, while the older group has a primary interest in finding single-story floor plans or, at least, homes that offer a first-floor master bedroom as well as universal-design features (suitable for all ages).

"The younger group of mature consumers reported enthusiastically that they want services like home maintenance and repair as part of their next home purchase, along with services typically connected to older homeowners, such as housekeeping, onsite health care and transportation," said John Migliaccio, in a press statement, director of research at MetLife’s Mature Market Institute.

For both groups, easy living is a huge housing attractor. Low maintenance inside and outside the home is very appealing. However, not all homes are conducive to this. NAHB’s vice president for survey and housing policy research, Paul Emrath, warned in a public statement that the decreased construction of communities that serve the mature market could lead to a shortage of housing for that population. The current financial crisis has caused a lack of available capital for development and construction of these communities.

A few other key findings for the 55+ demographic group come from a study released last quarter by MetLife and NAHB. A few of the findings challenge conventional wisdom. The study reported that older buyers, often thought to shop for smaller homes, are actually looking for their next home to be equally sized to their current one. At the time of the survey, the respondents’ median size home was 1,886 square feet, compared to the median 1,903 square feet many say they want in a new home. Three bedrooms (51 percent respondents) are preferred over four or more (18 percent).

Other findings include the top rated features in a home: washers and dryers, storage space, easy-to-open windows, main-level master bedroom, and easy-to-use climate controls. Also, ranking high on the list for home features is preparation for high-speed Internet. Environmentally-friendly homes are alluring but most consumer respondents in this study reported they would not pay extra for it; 12 percent indicated they would. Energy-efficient appliances and home security systems were also rated as important features.

As for location, the majority of respondents say they prefer a suburban home; 32 percent want to live closer-in suburbs and 31 percent prefer further-outlying suburbs. A rural community is preferred by 28 percent, while only 9 percent want to live in a central city.

This article was published in Realty Times
Written by: Phoebe Chongchua, January 29, 2010

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Lake View Condo In Lake Tahoe!

Great News for Buyers!

If you are looking for a beautiful lake view property in Lake Tahoe...We have the perfect solution for you and it's just minutes away from Diamond Peak Ski Resort!

Spectacular lake and ski slope views await you from this immaculate, turn-key condo. Over the 2007-08 winter season, the entire unit was painted from top to bottom, fully re-carpeted and the tile floors were replaced in the kitchen, master bathroom and the guest master bathroom. The living area on the upper level has a wonderful open floor plan with cathedral beamed ceilings and large view windows. Other features include a gas log fireplace in the living room, granite countertops in the kitchen and a mirrored wall in the dining area. With easy access from the living room or dining area, the deck is the perfect place to relax while you take in the incredible views and the sunny E/SE exposure minimizes the snow accumulation. Another great feature is the roomy loft area providing extra space for whatever your needs may be!

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Real Estate Outlook: Jumps and Gains

You can take your economic cues from the Federal Reserve Board' s latest assessment…or you can take them from the nation's consumers directly, as measured by the Conference Board's monthly Consumer Confidence survey.

Both are now essentially saying the same thing: The economy is surely but steadily getting stronger, consumers feel better than they have in months about their prospects, but the ongoing concern -- and it's a big one -- is unemployment and creating new jobs.

The Consumer Confidence index -which is based on interviews with 5,000 households per month -hit its highest mark in more than a year. At the same time, Federal Reserve Board announced its decision to hold interest rates at their low current levels, and observed that the economy is still very much in recovery mode - a slow healing process that the Fed doesn't want to diminish by raising rates.

Meanwhile, the federal government's latest numbers on home prices should definitely make consumers more confident when it comes to home purchases and whether the downcycle has come to an end.

The Federal Housing Finance Agency's monthly home price index showed an average national seasonally-adjusted gain of seven tenths of a percent, including a big two percent jump in the Western states.

The Standard & Poor's Case-Shiller monthly home price index also rose in 14 of the 20 major markets it tracks. That was the sixth consecutive month of price improvements from Case-Shiller, which, as you may recall, used to be the most negative price index of all.

Housing sales numbers came in low during December - a decline which had been widely forecast by analysts. The National Association of Realtors reported that home resales fell by nearly 17 percent for the month.

Lawrence Yun, the chief economist for the association, said that was caused primarily by the overloading of sales in September, October and November, as first-time buyers rushed to complete purchases before the expiration date for the $8,000 tax credit.

The earlier sales took all the ooomph out of closings at the end of the year.

Nevertheless, select markets did see some big jumps in sales: In Florida, for example, sales of single family houses were up by 33 percent for the month compared with the prior year, and condo sales gained an amazing 91 percent!

At the same time, mortgage financing continues to be a big plus in the equation as well: Rates were stable last week -- five percent for 30-year fixed loans and 4.3 percent for 15-year loans - according to the Mortgage Bankers Association.

Better yet: applications for new loans to purchase homes jumped by 3 percent last week.

This article was published in Realty Times

Written by: Kenneth R. Harney, February 2, 2010

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February Round Up: Mortgage Rates Steady

In Freddie Mac's results of its Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 4.98 percent with an average 0.6 point for the week ending January 28, 2010, down slightly from the previous week when it averaged 4.99 percent. Last year at this time, the 30-year FRM averaged 5.10 percent.

The 15-year FRM this week averaged 4.39 percent with an average 0.6 point, down slightly from the previous week when it averaged 4.40 percent. A year ago at this time, the 15-year FRM averaged 4.80 percent. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.25 percent this week, with an average 0.6 point, down from the previous week when it averaged 4.27 percent. A year ago, the 5-year ARM averaged 5.27 percent.

The 1-year Treasury-indexed ARM averaged 4.29 percent this week with an average 0.5 point, down from the previous week when it averaged 4.32 percent. At this time last year, the 1-year ARM averaged 4.90 percent.

"Mortgage rates held steady this week ahead of the Federal Reserve's (Fed) policy committee meetings," said Frank Nothaft, Freddie Mac vice president and chief economist. "The Fed announced on January 27th that economic activity has continued to strengthen. It also noted that with substantial resource slack continuing to restrain cost pressures and with longer-term inflation expectations stable, inflation is likely to be subdued for some time.

"Last year was rough on the housing market. The number of new one-family housing starts hit a historical low of just under half-a-million units since records began in 1959. Similarly, new home sales were under 400,000 homes, an all-time record since data compilation began in 1963. Total existing home sales, however, rose to almost 5 million houses, which was the first annual increase in four years."

House Hunters Come Out Early

The springtime spurt in home buying may hit before the snow melts this year as buyers scramble to meet an April 30 tax credit deadline.

The spring buying season typically takes off in March and runs through May. But buyers who want to claim this year’s tax credit—up to $8,000 for first-time buyers and up to $6,500 for repeat buyers -- must have signed purchase contracts by April 30. And they have to complete the deal by June 30.

"I expect the buying season will be moved up," says Vicki Cox Golder, President of the National Association of Reatlors. Sales "are going to take off in February and March and really take off in April. My concern is that the move-up buyer hasn’t thought what they need to do. Their window is really short. They have to coordinate closing dates."

Nearly 11 Million People Now Working from Home

The number of people who worked at home increased by nearly 2 million, from about 9.5 million in 1999 to about 11.3 million in 2005, according to new data released by the U.S. Census Bureau. Nearly half of these home workers had college degrees and nearly half of them earned $75,000 a year or more.

It would seem that with all those people working from home, having a dedicated home office would be a smart move for a renovator. But that’s not the case. According to the 2010 Remodeling Magazine Cost vs. Value report, the average home office costs $28,375 to build and returns $13,648 at resale. That’s a cost vs. value of only 48.1%.

What are the 8% of U.S. workers who work from home doing? About a third worked in professional and related services, while 12% worked in business and repair service. Another 10% worked in finance, insurance, or real estate. The most popular occupations among those who reported working at home were professional (25%), executive, administrative and managerial (22%), and sales (18%). The median monthly earnings of workers who worked at home were about $2,400 in 2005; the median annual family income for these workers was approximately $68,000.

Resolve to Take a Look at Refinancing

If you haven't looked into refinancing your mortgage under federal programs, you could be missing an opportunity to save money, keep your home and give the economy a little juice.

Federal mortgage refinance programs have given more than 2 million homeowners a better shot at holding on and the economy a much needed shot in the arm.

What's more, the year began with fixed interest rates hovering slightly above 5 percent, but still near record lows, according to Erate.com.

First American CoreLogic's "How the U.S. Consumer Has Benefited from Mortgage Finance Programs in 2009," reveals a group of 2.2 million homeowners have saved an average $120 a month on their mortgage payment -- a 10.5 percent reduction from the previous mortgage payment.

The study says the refinance activity will result in $2.3 billion in mortgage payment savings for borrowers who refinanced in the first six months of 2009. Over the next five years, the total benefit to homeowners who refinanced in 2009 will grow to $11.5 billion.

This article was published in Realty Times
Written by: Realty Times Staff

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