Real estate review and predictions: What follows a decade of boom and bust?
By Renae MerleWashington Post Staff Writer Saturday, January 2, 2010
The U.S. housing market has been in a slump for nearly four years. Home prices have fallen 30 percent since reaching their peak in 2006, leaving nearly a quarter of borrowers owing more than their homes are worth. Millions of homeowners have fallen into foreclosure.
So what will 2010 bring? Many economists expect to see a continuation of the tentative signs of healing found in the housing market in 2009.
Reduced prices, low interest rates and a tax credit for first-time home buyers helped boost the market in 2009. The pickup in sales translated into a stabilization of prices in some parts of the country. In Northern Virginia, for example, median home prices bounced more than 11 percent in November compared with a year earlier. That could continue in 2010 as long as the economic rebound persists, economists said. But risks remain, including an expected increase in mortgage rates later this year and rising unemployment. "The unemployment rate is a big concern that could slow the recovery process," said Lawrence Yun, chief economist for the National Association of Realtors.
Will home sales continue to rebound in 2010?
Economists largely agree that the rebound in home sales that began in 2009 will continue in the new year. The National Association of Realtors predicts that sales will rise 10 percent this year, after a 5 percent increase in 2009.
The rebound could be even stronger in the market for new homes. After reaching the lowest inventory levels since the 1970s, there are likely to be about 500,000 new homes sold in 2010, an increase of about 30 percent from last year, said Dave Crowe, chief economist for the National Association of Home Builders.
But that's still far from the 1 million new-home sales that occur in a normal year, Crowe said. "The rate will appear rather impressive due to the rather dismal levels we achieved in 2009," he said.
Nancy's perspective...
As we will more than likely see an increase of homes in default in 2010, we hope homeowners will educate themselves on what their options are; whether it be a loan modification through the HAMP program, or understanding the advantages of a short sale over a foreclosure. Allowing your home to go into foreclosure before considering the long term ramifications can be detrimental to a person's credit for 5-7 years. A Short Sale will only affect a person's credit for up to two years. Please feel free to go to our website at http://www.cookteamonline.com/ and take a look at the 'Short Sale Application' tab to see if you qualify for a short sale. We would be happy to talk to you about your options if you are struggling to make your housepayments.
2010 will be a challenging year for many of us. As we are challenged to make tough decisions it's important to put things into perspective and focus on what truly are the most important things in life... family, friends, health and a God who will never leave us as we are!
Happy 2010 to all!
Tuesday, January 5, 2010
Monday, November 2, 2009
Loan Modification or Short Sale?
This article was taken from the Wall Street Journal...
Please give us your opinion on this at the end of the article
For many underwater borrowers, refinancing isn't always attractive because they could still owe more than the value of their home and face years of payments before they regain equity. Refinancing can be especially risky for those homeowners who might move within a few years or who are nervous about losing a job.
"If you're deeply underwater, it's going to be a long time before you regain equity, unless housing seriously rebounds. So investing more in the house is maybe not the best strategy," said Andrew F. Haughwout, a research economist at the Federal Reserve Bank of New York.
The Obama administration's refinancing program (HAMP) targets borrowers who are not in trouble on their mortgages now but, because they are underwater, are at risk of falling into trouble later. By suspending the traditional refinancing requirement that borrows have equity, officials hope to make them less vulnerable to foreclosure. Homeowners with loans backed by Fannie Mae or Freddie Mac are eligible.
Recent studies have shown that one-third of borrowers are underwater on their mortgage. The problem is most acute for borrowers who took out loans in 2006 and 2007--about 60 percent of them are underwater.
Many borrowers can't even afford the help because they must still pay traditional closing costs, which can run thousands of dollars. And those with little equity in their homes are charged higher fees under the program's rules because they are considered a higher risk. Moreover, many borrowers are so far in the hole they couldn't qualify for the federal program even if they wanted to.
In July, the Treasury Department raised the limit to include borrowers who owed up to 25% more than their home was worth. The higher limits went into effect for borrowers with Fannie Mae-backed loans in September and for Freddie Mac borrowers this month.
Though the housing market has stabilized in some parts of the country, home prices are expected to fall nationally through next year as foreclosed properties continue to pile onto the market, economists say. On average, home prices are likely to fall another 7 percent by early 2011, bringing them down 28% from their peak in 2007, according to IHS Global Insight.
Leaving Homes Behind
A growing number of underwater borrowers are walking away from their home even if they can afford the payments, according to recent studies. More than 25% of mortgage defaults during this housing crisis have been so-called strategic defaults, according to a study published in June by professors at Northwestern University, the University of Chicago and the European University Institute. Another study by credit bureau Experian and Oliver Wyman, a strategic consulting firm, estimated that nearly 600,000 borrowers "strategically defaulted" on their mortgages in 2008, more than double the number from 2007.
Housing experts are saying these borrowers are calculating that their homes are no longer a sound investment. For example, a homeowner who is 25 percent underwater would spend nearly 10 years making regular payments before regaining any equity in the home, according to mortgage research from HSH Associates.
"They are effectively renters with all of the costs of homeownership", said Jakabovics at the Center for American Progress.
Please give us your opinion on this at the end of the article
For many underwater borrowers, refinancing isn't always attractive because they could still owe more than the value of their home and face years of payments before they regain equity. Refinancing can be especially risky for those homeowners who might move within a few years or who are nervous about losing a job.
"If you're deeply underwater, it's going to be a long time before you regain equity, unless housing seriously rebounds. So investing more in the house is maybe not the best strategy," said Andrew F. Haughwout, a research economist at the Federal Reserve Bank of New York.
The Obama administration's refinancing program (HAMP) targets borrowers who are not in trouble on their mortgages now but, because they are underwater, are at risk of falling into trouble later. By suspending the traditional refinancing requirement that borrows have equity, officials hope to make them less vulnerable to foreclosure. Homeowners with loans backed by Fannie Mae or Freddie Mac are eligible.
Recent studies have shown that one-third of borrowers are underwater on their mortgage. The problem is most acute for borrowers who took out loans in 2006 and 2007--about 60 percent of them are underwater.
Many borrowers can't even afford the help because they must still pay traditional closing costs, which can run thousands of dollars. And those with little equity in their homes are charged higher fees under the program's rules because they are considered a higher risk. Moreover, many borrowers are so far in the hole they couldn't qualify for the federal program even if they wanted to.
In July, the Treasury Department raised the limit to include borrowers who owed up to 25% more than their home was worth. The higher limits went into effect for borrowers with Fannie Mae-backed loans in September and for Freddie Mac borrowers this month.
Though the housing market has stabilized in some parts of the country, home prices are expected to fall nationally through next year as foreclosed properties continue to pile onto the market, economists say. On average, home prices are likely to fall another 7 percent by early 2011, bringing them down 28% from their peak in 2007, according to IHS Global Insight.
Leaving Homes Behind
A growing number of underwater borrowers are walking away from their home even if they can afford the payments, according to recent studies. More than 25% of mortgage defaults during this housing crisis have been so-called strategic defaults, according to a study published in June by professors at Northwestern University, the University of Chicago and the European University Institute. Another study by credit bureau Experian and Oliver Wyman, a strategic consulting firm, estimated that nearly 600,000 borrowers "strategically defaulted" on their mortgages in 2008, more than double the number from 2007.
Housing experts are saying these borrowers are calculating that their homes are no longer a sound investment. For example, a homeowner who is 25 percent underwater would spend nearly 10 years making regular payments before regaining any equity in the home, according to mortgage research from HSH Associates.
"They are effectively renters with all of the costs of homeownership", said Jakabovics at the Center for American Progress.
Tell us what you think...
Friday, September 25, 2009
PROPERTY VIRGINS
By G.M. Filisko--Taken from REALTOR magazine
October 2009
Nervous. Arrogant. Cautious. Excited.
Although these words seem contradictory, they sum up today’s first-time buyers.
"First-time buyers are many things at once," explains Paul Gorney, a sales associate at Sudler Sotheby’s International Real Estate in Chicago. "They’re scared to pay too much, excited to get a ‘good deal,’ and confused because of the number of homes and the situations in which sellers are selling, such as short sales and foreclosures.
"First-timers need serious guidance," he says.
That guidance is especially critical for buyers who are trying to beat the Nov. 30 closing deadline to qualify for the federal first-time home buyer tax credit. (At press time, it was unclear whether the credit would be extended.) Here’s how to overcome three false assumptions that can derail first-timers.
1. "The housing market is weak."
First-timers have likely read every stitch of news about how homes aren’t selling. The trouble is that’s simply not true in many entry-level markets.
"First-time buyers need to understand the environment they’re competing in," says Dana Graham, CRS®, a sales associate at Prudential California Realty in Palos Verdes, Calif. "In my market, homes for first-time buyers priced under $800,000 are hotter than a $2 pistol. A few months ago, one had 21 offers."
Graham turns that fact into a positive. "If there are so many other buyers," he tells first-timers, "you’re not dumb to be buying now."
2. "I need to see all the options."
Many buyers proceed with excessive caution because of the endless inventory and their desire to find the perfect home. That can lead to paralysis by analysis, says Kathleen Alexander, ABR®, CRS®, a sales associate with Keller Williams Realty Boston Metro. Like Graham, Alexander uses facts to get buyers off the fence. "I make sure they’re armed with all the data they could possibly desire—which homes have sold in which areas and for how much—and I explain how to interpret the data," she says. "I want them to have a firm grasp on the market. That takes away a lot of the hesitancy."
Graham stresses today’s low interest rates. "I tell them that rates now are late-1950s type rates," he says. "They have nowhere to go but up. If they go to an entirely plausible 7.5 percent—which is still low—prices would have to go down by about another 20 percent to make up for the difference in their monthly payments."
Don’t forget to remind them about the first-time home buyer tax credit deadline. "I tell buyers the tax credit is truly $8,000 they’ll get back when they file their taxes," says Sam DeBord, associate broker at RE/MAX Connected in Seattle. "If they normally get a tax refund, they’ll get an additional $8,000. It’s a gift from the government to get them started as home owners." (Note: There are income limits; buyers should consult a tax professional.)
3. "I’ve found a bargain!"
It’s true that affordability is at record levels today, but many buyers need help putting price into perspective.
"They think they can get a really, really nice house for $50,000, but the average home in our market is $150,000," says Craig Frooninckx, e-PRO®, GRI, a sales associate with DPR Realty LLC in Phoenix. "They perceive that there are really great deals, which is true. But a lot of homes in our area are stripped of all their fixtures. While a home may be listed for $60,000, buyers are going to need $40,000 in cash to replace the plumbing and restore the kitchen and bathrooms."
That can be hard for buyers to accept; Frooninckx often has to ferry them around so that they can witness the homes’ condition themselves. "We have to look at the really low-priced homes for them to realize they don’t want to do all that work," he says. "Then I say, ‘Give me a shot at showing you a couple of houses I think you’ll like.’"
Before you take on any first-time buyers as clients, do some due diligence. "I make them come in for a chat to make sure they’re serious and can qualify financially," Graham says. "It’s a litmus test. If they’re not willing to spend an hour or two to talk about their needs and financial situation, they’re not serious."
October 2009
Nervous. Arrogant. Cautious. Excited.
Although these words seem contradictory, they sum up today’s first-time buyers.
"First-time buyers are many things at once," explains Paul Gorney, a sales associate at Sudler Sotheby’s International Real Estate in Chicago. "They’re scared to pay too much, excited to get a ‘good deal,’ and confused because of the number of homes and the situations in which sellers are selling, such as short sales and foreclosures.
"First-timers need serious guidance," he says.
That guidance is especially critical for buyers who are trying to beat the Nov. 30 closing deadline to qualify for the federal first-time home buyer tax credit. (At press time, it was unclear whether the credit would be extended.) Here’s how to overcome three false assumptions that can derail first-timers.
1. "The housing market is weak."
First-timers have likely read every stitch of news about how homes aren’t selling. The trouble is that’s simply not true in many entry-level markets.
"First-time buyers need to understand the environment they’re competing in," says Dana Graham, CRS®, a sales associate at Prudential California Realty in Palos Verdes, Calif. "In my market, homes for first-time buyers priced under $800,000 are hotter than a $2 pistol. A few months ago, one had 21 offers."
Graham turns that fact into a positive. "If there are so many other buyers," he tells first-timers, "you’re not dumb to be buying now."
2. "I need to see all the options."
Many buyers proceed with excessive caution because of the endless inventory and their desire to find the perfect home. That can lead to paralysis by analysis, says Kathleen Alexander, ABR®, CRS®, a sales associate with Keller Williams Realty Boston Metro. Like Graham, Alexander uses facts to get buyers off the fence. "I make sure they’re armed with all the data they could possibly desire—which homes have sold in which areas and for how much—and I explain how to interpret the data," she says. "I want them to have a firm grasp on the market. That takes away a lot of the hesitancy."
Graham stresses today’s low interest rates. "I tell them that rates now are late-1950s type rates," he says. "They have nowhere to go but up. If they go to an entirely plausible 7.5 percent—which is still low—prices would have to go down by about another 20 percent to make up for the difference in their monthly payments."
Don’t forget to remind them about the first-time home buyer tax credit deadline. "I tell buyers the tax credit is truly $8,000 they’ll get back when they file their taxes," says Sam DeBord, associate broker at RE/MAX Connected in Seattle. "If they normally get a tax refund, they’ll get an additional $8,000. It’s a gift from the government to get them started as home owners." (Note: There are income limits; buyers should consult a tax professional.)
3. "I’ve found a bargain!"
It’s true that affordability is at record levels today, but many buyers need help putting price into perspective.
"They think they can get a really, really nice house for $50,000, but the average home in our market is $150,000," says Craig Frooninckx, e-PRO®, GRI, a sales associate with DPR Realty LLC in Phoenix. "They perceive that there are really great deals, which is true. But a lot of homes in our area are stripped of all their fixtures. While a home may be listed for $60,000, buyers are going to need $40,000 in cash to replace the plumbing and restore the kitchen and bathrooms."
That can be hard for buyers to accept; Frooninckx often has to ferry them around so that they can witness the homes’ condition themselves. "We have to look at the really low-priced homes for them to realize they don’t want to do all that work," he says. "Then I say, ‘Give me a shot at showing you a couple of houses I think you’ll like.’"
Before you take on any first-time buyers as clients, do some due diligence. "I make them come in for a chat to make sure they’re serious and can qualify financially," Graham says. "It’s a litmus test. If they’re not willing to spend an hour or two to talk about their needs and financial situation, they’re not serious."
Wednesday, September 23, 2009
Time is ticking for First Time Home Buyers Tax Credit
Time is running out for the first time homebuyer tax credit. Interested first time homebuyers should be in contract by October 10th to ensure a timely close before the end of the year to qualify for this credit.
The following article taken from Bloomberg.com gives an overview of what may be to come in the next few months with the housing market;
Sept. 21 (Bloomberg) -- The recovering housing market may be heading for a relapse as President Barack Obama and Federal Reserve Chairman Ben S. Bernanke consider ending support for the source of the global financial crisis.
The Obama administration is studying whether to let a first-time home buyers’ tax credit expire as scheduled at the end of November. Bernanke and his Fed colleagues may continue talking this week about how to wind down purchases of mortgage- backed securities, according to Peter Hooper, chief economist at Deutsche Bank Securities Inc. in New York. The two programs have helped stabilize real-estate demand, with new-house sales rising 9.6 percent in July from the prior month, the most since 2005.
Ending these efforts may stifle the housing rebound by depressing sales and pushing up both mortgage-backed bond yields and interest rates on home loans, even in the face of the record-low zero to 0.25 percent short-term rates the Fed has engineered, said economist Thomas Lawler. A weaker housing market would likely dampen the economic recovery and undercut shares of builders including Fort Worth, Texas-based D.R. Horton Inc. and Miami-based Lennar Corp., that have risen 40 percent this year, based on the Standard and Poor’s Supercomposite Homebuilding Index of 12 companies
Abrupt Stop
An abrupt stop might push up mortgage rates by a half to one percentage point, said Hooper, a former Fed official. Tapering off -- by reducing weekly purchases and stretching them beyond the end of the year -- would have a more muted effect, pushing rates up by at least a quarter percentage point, he said, adding that the Fed may announce just such a strategy after its meeting this week.
Mortgage rates for 30-year fixed home loans averaged 5.04 percent in the week ended Sept. 17, down from 5.07 percent the previous week, according to McLean, Virginia-based Freddie Mac, a government-controlled mortgage-finance company.
NOW IS THE TIME TO BUY!!!
The following article taken from Bloomberg.com gives an overview of what may be to come in the next few months with the housing market;
Sept. 21 (Bloomberg) -- The recovering housing market may be heading for a relapse as President Barack Obama and Federal Reserve Chairman Ben S. Bernanke consider ending support for the source of the global financial crisis.
The Obama administration is studying whether to let a first-time home buyers’ tax credit expire as scheduled at the end of November. Bernanke and his Fed colleagues may continue talking this week about how to wind down purchases of mortgage- backed securities, according to Peter Hooper, chief economist at Deutsche Bank Securities Inc. in New York. The two programs have helped stabilize real-estate demand, with new-house sales rising 9.6 percent in July from the prior month, the most since 2005.
Ending these efforts may stifle the housing rebound by depressing sales and pushing up both mortgage-backed bond yields and interest rates on home loans, even in the face of the record-low zero to 0.25 percent short-term rates the Fed has engineered, said economist Thomas Lawler. A weaker housing market would likely dampen the economic recovery and undercut shares of builders including Fort Worth, Texas-based D.R. Horton Inc. and Miami-based Lennar Corp., that have risen 40 percent this year, based on the Standard and Poor’s Supercomposite Homebuilding Index of 12 companies
Abrupt Stop
An abrupt stop might push up mortgage rates by a half to one percentage point, said Hooper, a former Fed official. Tapering off -- by reducing weekly purchases and stretching them beyond the end of the year -- would have a more muted effect, pushing rates up by at least a quarter percentage point, he said, adding that the Fed may announce just such a strategy after its meeting this week.
Mortgage rates for 30-year fixed home loans averaged 5.04 percent in the week ended Sept. 17, down from 5.07 percent the previous week, according to McLean, Virginia-based Freddie Mac, a government-controlled mortgage-finance company.
NOW IS THE TIME TO BUY!!!
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