Posts Tagged ‘home’

That’s right— it’s not 2006 anymore.

Five years ago, it was a seller’s market in many metro areas. Buyers would go to extraordinary lengths to get the home they wanted and a real estate purchase was top priority. They’d constantly monitor new homes for sale. They’d tirelessly tour open houses. Bid well over the asking price. Swallow the roof repair costs. Allow the seller to continue living in the home for two months after closing. All of that was no problem — it was all part of getting into the market.

After the real estate market upheaval of the past few years, those buyers are long gone. Some became renters. Many who would be ready to “trade up” to a larger or renovated home have decided to make appropriate fixes to their current home instead. Some are stuck in their homes due to poor equity. Others are on the sidelines waiting for home prices to bottom, or the economy to rebound.

Who does that leave in the pool of buyers today? The Home Stealer, the Market Feeler, and the Real Dealer. Unlike buyers five years ago, they’re far more cautious — sometimes to the point of inaction. Knowing the type of buyer you’re dealing with can help you avoid a lot of pain and wasted time and might help you get a better deal.

The Home Stealer

In the game of baseball, a Home Stealer scores points for his team. In the game of real estate, a Home Stealer is a strikeout, at least for the seller.

A seasoned Realtor can usually spot Home Stealers. They’re not terribly experienced in the local real estate market and in most cases, they have little or no relationship with a real estate agent. They’re likely not pre-approved for a mortgage but will say that they are. They’ll withhold information, thinking that staying coy helps them in negotiations. Finally, without solid knowledge of the offer-writing process, local market customs, or the advice of a local Realtor, they may make outrageous requests from the seller. I’ve seen Home Stealers ask the seller to make major modifications to a room or ask a neighbor to cut down a tree.

In short, they’re not real buyers. They may be in a few years. For now, they like the attention. By writing offers and acting important, they get their egos stroked while wasting everyone else’s time. Their goal is to “steal” a home by making a really low offer and/or squeezing as many concessions out of the seller as possible, sometimes after having only visited the property once.

Advice to sellers: If the buyer can’t or won’t answer legitimate questions about themselves, their finances or experience in the market, they’re not serious. Don’t waste your time; Home Stealers are opportunists. Ultimately, your property represents just another opportunity to them, rather than the home of their dreams. If you’re inclined to take less than your list price, say no to the Home Stealer, reduce your price and give the rest of the market a shot at it. You might end up with a Real Dealer (more on them in a minute).

The Market Feeler

Market Feelers have just entered the market and are “feelingit out. There’s no urgency for them, and buying a new home might actually be optional. They may fall in love with your home, but they want to take their time deciding. They might come across as a Home Stealer by the type of offer they make or as a Real Dealer by their interest in the property. They’re tough to spot, but a good listing agent will ask all the right questions.

Because they’ve just jumped into the fray, Market Feelers may give you a low-ball offer. It’s not because they’re trying to “steal” your home. It’s usually because psychologically, they’re not quite ready to dive in. Low-balling is a comfortable way of sticking a toe into the water.

Unlike Home Stealers, Market Feelers are more likely to disclose their financial situation to their seasoned agent. They probably have a pre-approval letter from a lender, too. They’re likely represented by a local agent and seem to be well-versed on local market and conditions. They may even come for multiple showings. But when it comes down to it, their offer is too low.

Advice for sellers: Try to work with them at first. Respectfully move on from the low-ball offer but with the realization that the buyer might return with a reasonable offer later. Market Feelers are often on their way toward becoming Real Dealers, once they can get beyond their inexperience and overly cautious approach. Unfortunately, that transformation might take months.

The Real Dealer

These buyers are “the real deal.” They’re working with experienced agents and brokers, with whom they have good relationships. They’re experienced in your local real estate market. They’ll spend a lot of time in your home. They ask a lot of questions because they’re seriously interested and want to know as much as possible. Don’t be insulted or bothered by their questions; be sure to answer them. Once they’ve visited a few times, they bring friends, co-workers, family members, a trusted contractor, and probably a tape measure on return visits. They might ask your Realtor to see the attic or the sub-basement.

When it’s time to write an offer, the contract comes with a local bank or mortgage broker pre-approval letter. Real Dealers (through their agents) will often submit a letter of introduction to the sellers, giving information about themselves while also spelling out the terms of the offer. Their offers are usually within striking distance of the asking price.

Advice to sellers: This is what you’ve been waiting for. Be responsive, act quickly, and make yourself available to Real Dealers.

How to Spot The Buyer

These days, the listing agent has such an important role in negotiating the transaction.  They are the only ones that interact with all parties of the transaction. With your agent’s help and bird’s-eye view of the deal, find out everything you can about potential buyers. Why are they buying? What do they do for work? Where is their office?  What is their motivation for purchasing? Did they just get a new job or have a new baby? How long have they been looking at real estate? How many offers have they already written? You can understand a lot about who you are dealing with, which will ultimately help you in your negotiations.

Depending on your area of the country, it’s still a buyer’s market and will continue to be for some time. Knowing as much as you can about potential buyers helps to tip the balance of power a little bit back in your favor. At a minimum, by being well informed, you’ll avoid wasting time with Home Stealers and early-stage Market Feelers.

Buying a home? See Buyer’s Guide to Understanding Today’s Seller.

Brendon DeSimone is a Realtor and real estate expert based in San Francisco and New York. He is a contributor to Zillow Blog, has collaborated on multiple real estate books and is often quoted by major media outlets.

Posted at Zillow.com

Many retirees are planning to access home equity, hoping it may make the difference between a comfortable retirement and just getting by. This article considers some of the strategies for tapping home equity, such as moving to a more affordable residence or obtaining a reverse mortgage.

Before You Start:

• Talk with your spouse or partner about using your home to help finance retirement. Are you in agreement?
• Consider whether your plans are realistic. For example, ask yourself whether you could really downsize to a smaller home.
• Begin looking into the cost-of-living implications that would be associated with moving to a different part of the country.
• Check your most recent retirement account statement to determine whether you’re already contributing the maximum amount.

Your Home and Your Retirement

Unlike earlier generations of retirees, who paid off first mortgages and retired at the family homestead, today’s Baby Boomers are looking to capitalize on home equity to enhance their retirement savings. Popular strategies for tapping home equity include downsizing to a smaller house or condominium, relocating to an area where the cost of living is more affordable, and taking out a reverse mortgage.

Regardless of which strategy you choose, it’s important to be realistic about what your house may be worth when you retire. Although housing prices have escalated considerably during the past few years, a variety of factors may cause them to level off or decline at some point in the future. Home equity may add value to a diversified portfolio, but relying too much on your house to fund your retirement could work against you if the real estate market in your area cools considerably.

Making a Move

Selling your existing home and relocating to a more affordable house or condominium may be a reasonable option if you have considerable home equity and the shift won’t negatively affect your lifestyle. As part of your research, remember to investigate the overall housing costs in your desired area. For example, real estate values and property taxes typically vary considerably by locale, sometimes even within the same state. Additionally, before relocating to a new area, you might want to spend significant time there to make sure it is compatible with your lifestyle and interests.

When calculating your home’s sale price as part of the retirement income equation, be sure to use realistic assumptions. Real estate prices have risen at above-average rates in recent years (see table on average annual rise in home prices, below), and there is always the potential that they may level off or even decline in the future. When planning your retirement income, remember the importance of diversification — owning a portfolio of stocks, bonds, and cash investments in addition to home equity — to help guard against market swings in any one area, including real estate. Of course, there are no guarantees that a diversified portfolio will protect against overall financial losses, but a diversified portfolio can position you to potentially take advantage of gains in several financial sectors.

Finally, when selling your home, consider that the first $250,000 in capital gains ($500,000 if you sell jointly with a spouse) is not subject to federal taxation if you lived in the house for two years or more.

A Reverse Mortgage: A Tool for Staying Put

Tapping home equity doesn’t necessarily require relocating. A reverse mortgage may be a solution if you have significant home equity and a desire to stay in your existing home. With a reverse mortgage, you receive a source of income by borrowing against your home’s equity. Payouts are tax free and may be taken as a lump sum, a line of credit, or an annuity-like payment schedule.

To qualify, you and other owners (such as a spouse or partner) must be at least 62 years of age. You must own your home outright or be able to retire an existing mortgage with the money you receive from the reverse mortgage. As long as the reverse mortgage is in effect, you are responsible for maintaining your home, and for paying taxes and insurance. The loan plus accrued interest is due when you die or sell the house.

When evaluating a reverse mortgage, be sure to consider the fees, which may be substantial. You may have to pay a loan origination fee of between 6% and 8% of the value of your home, in addition to servicing fees assessed over the term of the mortgage. Because of the relatively high fees, many experts recommend a reverse mortgage only if you plan to remain in your home for the long term. Also keep in mind that the amount you owe tends to grow over time, as interest (which is usually based on a variable, rather than fixed, rate) accrues on amounts that are gradually paid out. Over time, a reverse mortgage can completely exhaust the value of your home, leaving little if any assets left over for your heirs.

Payout Alternatives

Study payout options associated with a reverse mortgage carefully to determine whether one may work for you.

The recent boom in the national housing market may have lulled many Baby Boomers into believing their home equity will be enough to see them through a comfortable retirement. If you’re among those who intend to rely on a home’s value — either through downsizing, relocating, or obtaining a reverse mortgage — make sure that your plans include realistic projections. And remember that maintaining a diversified portfolio of other types of investments can potentially help balance out your overall pool of financial assets.

Summary:

• Strategies for accessing home equity may include selling your house and moving to a smaller residence, relocating to a community where the cost of living is more affordable, or obtaining a reverse mortgage.
• Because real estate values may potentially level off or even decline, it’s important not to rely too much on the value of your home to finance your later years. Consider using home equity to supplement a diversified portfolio that includes stocks, bonds, and cash investments.
• Accessing home equity by selling your house may have the greatest appeal if you are able to find alternate housing without significantly compromising your lifestyle.
• A reverse mortgage may work for homeowners who have considerable home equity and want to remain in their current residence. Payout options typically include a lump sum, a line of credit, or an annuity-type schedule of payments.
• When evaluating reverse mortgages, review the fees and overall cost of borrowing (total interest paid over time), which may be considerable.

Checklist:

• Read the fine print before signing any type of reverse mortgage, paying particular attention to details about fees and expenses.
• Reinvigorate your traditional retirement saving initiatives by maximizing contributions to your workplace plans and/or IRAs.
• If a reverse mortgage will make it impossible for you to pass along the full value of your home to an heir or heirs, consider revising your estate plan accordingly.
• Don’t base long-term financial plans on the assumption that your home will maintain or surpass its current value.

Copyright: Yahoo Finance

The Census Bureau and Department of Housing and Urban Development have released New Residential Sales data for May  2011.

New Residential Sales data provides statistics on the sales of new privately-owned single-family residential structures in the United States. Data included in the press release are (1) the number of new single-family houses sold; (2) the number of new single-family houses for sale; and (3) the median and average sales prices of new homes sold. New residential sales estimates only include new single-family residential structures. Sales of multi-family units are excluded from these statistics.

Here is a Quick Recap from Reuters...

• RTRS - US MAY SINGLE-FAMILY HOME SALES 319,000 UNIT ANN. RATE (CONS 310,000) VS APRIL 326,000 (PREV 323,000)
• RTRS - US MAY SINGLE-FAMILY HOME SALES -2.1 PCT VS APRIL +6.5 PCT (PREV +7.3 PCT)
  
• RTRS - US MAY HOME SALES NORTHEAST -26.7 PCT, MIDWEST UNCH, SOUTH +2.4 PCT, WEST -3.5 PCT RTRS
  
• RTRS - US MAY NEW HOME SUPPLY 6.2 MONTHS' WORTH AT CURRENT PACE VS APRIL 6.3 MONTHS RTRS
  
• RTRS - US MAY MEDIAN SALE PRICE $222,600, -3.4 PCT FROM MAY 2010 ($230,500)
  
• RTRS - US HOMES FOR SALE AT END OF MAY 166,000 UNITS, RECORD LOW, VS APRIL 172,000 UNITS

Sales of new single-family houses in May 2011 were at a seasonally adjusted annual rate of 319,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.

This is 2.1 percent (±10.7%)* below the revised April rate of 326,000, but is 13.5 percent (±13.6%)* above the May 2010 estimate of 281,000.

The median sales price of new houses sold in May 2011 was $222,600; the average sales price was $266,400. The seasonally adjusted estimate of new houses for sale at the end of May was 166,000. This represents a supply of 6.2 months at the current sales rate.

Honestly I don't know why we even cover this data anymore. It's like we're expecting to hear something different from the Commerce Department.

Do you see that blue histogram in the chart above? It estimates the amount of New Home Sales that will have occurred by the end of 2011 if sales continue at their current pace (Annualized). One thing you might notice about that histogram chart is its most recent additions look historically low in comparison to the housing boom of the mid-2000's. While the current pace of annualized sales is indeed above the record low of 278,000 seen in August 2010, at 319,000 we're not too far from the bottom! And we haven't been since April 2010 either, when the annualized pace was 420,000 New Home Sales. Same story different month....

Here's another fun fact if you're not satisfied. The "(±10.7%)" and "(±13.6%)" seen in this part of the report: "This is 2.1 percent (±10.7%)* below the revised April rate of 326,000, but is 13.5 percent (±13.6%)* above the May 2010 estimate of 281,000", represents the Standard Error of the survey results. When the Standard Error is bigger than the Commerce Department's estimation, we would say the survey results are "Statistically Insignificant". Meaning we don't know if New Home Sales actually increased or decreased in May. The survey data is telling us NOTHING!  A BETTER EXPLANATION

So on two accounts we learned nothing new about the residential construction market today. Well wait, there was one thing...

RTRS - NEW HOMES FOR SALE AT END OF MAY AT 166,000 UNITS. NEW RECORD LOW (PREVIOUS WAS APRIL 2011 AT 172,000 UNITS)

The new construction market has gone totally stagnate....

*A house is considered sold when either a sales contract has been signed or a deposit accepted.   Included in our estimates are houses for which a sales contract is signed or deposit accepted before construction has actually started; for instance, houses sold from a model or from plans before any work has started on the footings or foundations.  These estimates also include houses sold while under construction or after completion.  This survey does not follow through to the completion ("closing") of the sales transaction, so even if the transaction is not finalized, the house is still considered sold. Preliminary new home sales figures are subject to revision due to the survey methodology and definitions used. The survey is primarily based on a sample of houses selected from building permits.

Finding the right first home starts with a price range and a short list of desirable neighborhoods. But there are many other factors you’ll need to consider before investing in what may be your biggest asset.

Before You Start:

• Grab your current household budget so you can consider your financial situation and your ability to make mortgage payments.
• Ask family and friends if they can recommend experts, like a lawyer and an inspector, who can help with the home buying process.
• Think about your lifestyle and how it might affect your choice of home and neighborhood.
• Do a little research on current home prices in the neighborhoods you plan to target.

Buying Your First Home

Home ownership is the cornerstone of the American Dream. But before you start looking, there are a number of things you need to consider. First, you should determine what your needs are and whether owning your own home will meet those needs. Do you picture yourself mowing the lawn on Saturday, or leaving your urban condo for the beach? The best advice is to look at buying a home as a lifestyle investment, and only secondly as a financial investment.

Even if housing prices don’t continue to increase at the torrid pace seen in recent years in many areas, buying a home can be a good financial investment. Making mortgage payments forces you to save, and after 15 to 30 years you will own a substantial asset that can be converted into cash to help fund retirement or a child’s education. There are also tax benefits.

Like many other investments, however, real estate prices can fluctuate considerably. If you aren’t ready to settle down in one spot for a few years, you probably should defer buying a home until you are. If you are ready to take the plunge, you’ll need to determine how much you can spend and where you want to live.

How Much Mortgage Can You Afford?

Many mortgages today are being resold in the secondary markets. The Federal National Mortgage Association (Fannie Mae) is a government-sponsored organization that purchases mortgages from lenders and sells them to investors. Mortgages that conform to Fannie Mae’s standards may carry lower interest rates or smaller down payments. To qualify, the mortgage borrower needs to meet two ratio requirements that are industry standards.

The housing expense ratio compares basic monthly housing costs to the buyer’s gross (before taxes and other deductions) monthly income. Basic costs include monthly mortgage, insurance, and property taxes. Income includes any steady cash flow, including salary, self-employment income, pensions, child support, or alimony payments. For a conventional loan, your monthly housing cost should not exceed 28 percent of your monthly gross income.

The total obligations to income ratio is the percentage of all income required to service your total monthly payments. Monthly payments on student loans, installment loans, and credit card balances older than 10 months are added to basic housing costs and then divided by gross income. Your total monthly debt payments, including basic housing costs, should not exceed 36 percent.

Many home buyers choose to arrange financing before shopping for a home and most lenders will “pre-qualify” you for a certain amount. Prequalification helps you focus on homes you can afford. It also makes you a more attractive buyer and can help you negotiate a lower purchase price. Nothing is more disheartening for buyers or sellers than a deal that falls through due to a lack of financing.

In addition to qualifying for a mortgage, you will probably need a down payment. The 28 percent to 36 percent debt ratios assume a 10 percent down payment. In practice, down payment requirements vary from more than 20 percent to as low as 0 percent for some Veterans Administration (VA) loans. Down payments greater than 20 percent generally buy a better rate. Lowering the down payment increases leverage (the opportunity to make a profit using borrowed money) but also increases monthly payments.

How Much Home Can You Afford?

Bob and Janet’s combined income is $50,000 a year, or $4,166 a month. Their housing expense ratio of 28 percent yields a monthly maximum of $1,166 for mortgage, insurance, and taxes ($4,166 x 0.28 = $1,166).

Their total debt ceiling of 36 percent is $1,583 (4,166 x 0.36 = $1,500). Their monthly debt payments include a $200 car payment, credit card payments of $100, and student loan payments of $200. Subtracting this total of $500 from the $1,500 permitted leaves $1,000 in monthly housing payments.

Costs of Buying a Home

Many home buyers are surprised (shocked might be a better word) to find that a down payment is not the only cash requirement. A home inspection can cost $200 or more. Closing costs may include loan origination fees, up-front “points” (prepaid interest), application fees, appraisal fee, survey, title search and title insurance, first month’s homeowners insurance, recording fees and attorney’s fees. In many locales, transfer taxes are assessed. Finally, adjustments for heating oil or property taxes already paid by the sellers will be included in your final costs. All this will probably add up to be between 3 percent and 8 percent of your purchase price.

Ongoing Costs

In addition to mortgage payments, there are other costs associated with home ownership. Utilities, heat, property taxes, repairs, insurance, services such as trash or snow removal, landscaping, assessments, and replacement of appliances are the major costs incurred. Make sure you understand how much you are willing and able to spend on such items.

Condominiums may not have the same costs as a house, but they do have association fees. Older homes are often less expensive to buy, but repairs may be greater than those in a newer home. When looking for a home, be sure to check the actual expenses of the previous owners, or expenses for a comparable home in the neighborhood.

Choosing a Neighborhood

Before you start looking at homes, look at neighborhoods. Schools and other services play a large part in making a neighborhood attractive. Even if you don’t have children, your future buyer may. Crime rates, taxes, transportation, and town services are other things to look at. Finally, learn the local zoning laws. A new pizza shop next door might alter your property’s future value. On the other hand, you may want to run a business out of your home.

Look for a neighborhood where prices are increasing. As the prices of the better homes increase, values of the lesser homes may rise as well. If you find a less expensive home in a good neighborhood, make sure you factor in the cost of repairs or upgrades that such a house may need.

Finding a Broker

If you are a first-time home buyer, you will probably want to work with a broker. Brokers know the market and can be a valuable source of information concerning the home buying process. Ask lots of questions, but remember that most brokers are working for the seller, and in the end, their primary obligation is to the seller and not to you. An alternative is a so-called buyer’s broker. This individual does work for you, and therefore is paid by you. Seller’s brokers are paid by the seller.

Make sure that the broker has access to the Multiple Listing Service (MLS). This service lists all the properties for sale by most major brokers across the country. Brokerage commissions average 5 percent to 7 percent and are split between the listing broker and the broker that eventually sells the home. Don’t be surprised if your broker is eager to sell you their own listing since they would then earn the entire commission.

Once you’ve determined a price range and location, you’re ready to look at individual homes. Remember that much of a home’s value is derived from the values of those surrounding it. Since the average residency in a house is seven years, consider the qualities that will be attractive to future buyers as well as those attractive to you.

Although it can be difficult, try to remember that you will probably want to sell this home someday. The more research you do today, the better your decision will look in the years to come.

Summary:

• Buying a home can mean building significant value through the years.
• Think carefully about how much you can afford to spend and consider borrowing guidelines like those used by Fannie Mae.
• Pre-qualifying with your lender is a good way to determine how much house you can afford.
• You will need cash for a down payment and closing costs. Generally speaking, the higher the down payment, the lower the interest rate and monthly mortgage payment.
• In addition to your mortgage payments, you will also need to consider the other costs of home ownership.
• Schools, taxes, services, crime rates, transportation, and zoning are important considerations when selecting a neighborhood.
• Brokers usually represent the seller, but they can be valuable sources of information for buyers as well. A broker that belongs to the Multiple Listing Service will be able to offer a wider variety of homes to choose from.
• Remember to consider resale value when buying your home.

Copyright: Yahoo Finance.com

A Conventional wisdom says that you need to stay in a home a minimum of five years to ensure that you recoup your purchasing costs. But with some markets soaring, this advice doesn’t always apply.

It’s All About the Market

Market conditions play a huge part in any decision about when to buy. Housing market values have varied widely from region to region in recent years. While the Florida market has seen meteoric rises in home values, Ohio has seen its real estate prices go into negative territory in the last year.

Do not buy high and sell low – if your market is softening or has hit its peak and is heading south, you may want to wait on your purchase.

The magazine Smart Money has created a worksheet to compare the costs of renting vs. buying using market appreciation calculations to determine at what point you come out ahead. Plugging in the price, down payment, your income bracket, interest rate, and current market appreciation rates, the worksheet will break out what you will gain.

For example, say you were to buy a $400,000 house in Boulder, Colorado and you estimate the market will soften from the current 11% appreciation to about 9 percent annually. If you stayed in the house three years, you would recover $88,750 in equity at the end of that period; if you stayed five years, you’d realize $120,360.

It’s All About You

The top three reasons people file for bankruptcy are change of job status, divorce, and unforeseen health expenses. If you face any of these challenges and don’t have a financial cushion, this may negatively impact your ability to pay a mortgage. Big life events dictate your readiness to buy now or to wait for a little more stability.

Signs you should not buy right now:

• Will you be moving within the next five years?
• Will you be having kids soon?
• Will you be making a job change?
• Have you recently filed for bankruptcy or is your credit score below 630?

If you answered yes to any of these questions, or you are experiencing other life-changing events like illness, marriage, divorce, or breakup, you may want to wait.

Your Financial Future

Aside from life events contributing to your decision, getting your financial house in order before you begin your home search is key. Even with all the programs available for buyers with a low-or-no down payment, if your debts are growing steadily and you don’t foresee an increase in your income, you are putting yourself in greater financial risk by taking on a mortgage.

With only a few exceptions, many loans for people who are still repairing their credit or recovering from bankruptcy carry higher rates than those available once your credit is in better shape. So the question comes down to this: Do you buy now, before prices appreciate higher than you can afford, but do so with an expensive loan? Or do you wait and repair your credit, then get a favorable loan, and pay more for your home?

That’s the sort of analysis you need to go over with a financial counselor or mortgage broker before you start hitting open houses.

Ways to Cushion the Blow

On the other hand, if you are willing to buy a home that needs a bit of work and, over time, you can afford to get it done, your home could appreciate faster, strengthening your financial position. If you are willing to take on a roommate or renter, you can also soften the expense of a mortgage, which almost always costs more than rent. Buying a home is a risk, and it’s worth asking yourself hard questions about what you’re willing to do to protect yourself from getting in over your head.

If you answered “no” the life-change questions, and have the down payment or equity from your current home, you still need to look at interest rates and at how buying affects your taxes. You can’t time the stock market, but you can time interest rate hikes, as they are a little easier to predict. If they are going up fast, you can jump in before they rise too far; if they are already high, you will have to calculate how refinancing in the future affects your budget.

What to Do First

If you are anxious to get moving, be patient. You have a few things to do first:

• Go to open houses – get the lay of the land
• Talk to a mortgage broker to get pre-approved
• Interview agents (You may want to find an agent at the same time as you look for a mortgage broker – a good agent can recommend reputable brokers and help you make sense of the terms of the loan)
• Review credit report and scores with mortgage broker to determine if any repairs are needed
• Use Zillow.com to find info on neighborhoods that interest you and then use the Home QandA feature to ask current homeowners

Copyright: Zillow.com

The National Association of Homebuilders (NAHB) today reported  that its Housing Market Index (HMI) fell to 13 after standing at 16 for six out of the last 7 months seven months.  The HMI is a measure of builder confidence gleaned from homebuilders' responses to a monthly survey that has been conducted by NAHB for over 20 years.

 "Builders are being squeezed by the continuing weakness in existing-home prices - against which they must compete -- as well as rising material costs," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nevada. "In addition to the ongoing impacts of distressed property sales on home prices, appraisal values and consumer confidence, rising costs for materials such as roofing, copper, wallboard, vinyl siding and other components have made it extremely difficult to construct a new home and sell it at a price that covers the costs."

The NAHB/Wells Fargo survey asks homebuilders to gauge both current single-family home sales and their expectations for those sales over the next six months as "good," "fair," or "poor."  They are also asked to rate current traffic of perspective buyers as "high to very high," "average" or "low to very low." In addition to the composit HMI, a component index is constructed for each of the three sets of responses.  A score over 50 on any index indicates that more builders view sales conditions as good rather than as poor.  The index has not had a score over 50 since late in 2006.

Every component of the HMI fell in June.  The component measuring buyer traffic decreased 2 points to 12 after last month's reading of 14 was the highest since May 2010.  Current Sales Conditions also fell 2 points, bringing that component of the index to 13.  Sales Expectations fell from 19 to 15, matching record lows from February and March of 2009. 

"Builder confidence has waned even further as economic growth has stalled, foreclosures have continued to hit the market and the cost of building a home has risen," agreed NAHB Chief Economist David Crowe. "Meanwhile, potential new-home buyers are being constrained by difficulty selling their existing homes, stringent lending requirements, and general uncertainty about the economy. Economic growth must pick up in order for housing to gain the momentum it needs to get back on track."

Regionally, the HMI results were mixed, with the Northeast actually rising 2 points while the West represented the other end of the spectrum, falling 4 points.  The midwest and south dropped 3 and 2 points respectively.   

The March S&P/Case Shiller Home Price Indices, released by Standard & Poor's, paint an increasingly clear picture of the "double dip" in U.S. home prices.

The indices, which are billed by S&P as the leading measure of U.S. home prices, are constructed to track the price path of typical single-family homes in a number of metropolitan statistical areas (MSAs).  The study uses matched price pairs of individual houses to construct a 20-City Composite Index and a 10-City Composite Index which are updated monthly. The indices have a base value of 100 which was set in January 2000.  Thus a current index value of 150 indicates there has been a 50% appreciation since that date for a typical home in the subject market.

Excerpts From The Release...

The U.S. National Home Price Index declined by 4.2% in the first quarter of 2011, after having fallen 3.6% in the fourth quarter of 2010. The National Index hit a new recession low with the first quarter's data and posted an annual decline of 5.1% versus the first quarter of 2010. Nationally, home prices are back to their mid-2002 levels.

Twelve of the 20 MSAs and the 20-City Composite also posted new index lows in March. With an index value of 138.16, the 20-City Composite fell below its earlier reported April 2009 low of 139.26.  Minneapolis posted a double-digit 10.0% annual decline, the first market to be back in this territory since March 2010 when Las Vegas was down 12.0% on an annual basis.

"This month's report is marked by the confirmation of a double-dip in home prices across much of the nation. The National Index, the 20-City Composite and 12 MSAs all hit new lows with data reported through March 2011. The National Index fell 4.2% over the first quarter alone, and is down 5.1% compared to its year-ago level. Home prices continue on their downward spiral with no relief in sight." says David M. Blitzer, Chairman of the Index Committee at S&P Indices. "Since December 2010, we have found an increasing number of markets posting new lows. In March 2011, 12 cities - Atlanta, Charlotte, Chicago, Cleveland, Detroit, Las Vegas, Miami, Minneapolis, New York, Phoenix, Portland (OR) and Tampa - fell to their lowest levels as measured by the current housing cycle. Washington D.C. was the only MSA displaying positive trends with an annual growth rate of +4.3% and a 1.1% increase from its February level."

"The rebound in prices seen in 2009 and 2010 was largely due to the first-time home buyers tax credit. Excluding the results of that policy, there has been no recovery or even stabilization in home prices during or after the recent recession. Further, while last year saw signs of an economic recovery, the most recent data do not point to renewed gains."

The table below summarizes the results for March 2011. The S&P/Case-Shiller Home Price Indices are revised for the 24 prior months, based on the receipt of additional source data.

In the midst of all these falling prices and record lows, Washington DC was the only city where home prices increased on both a monthly (+1.1%) and annual (+4.3%) basis. Seattle was up a modest 0.1% for the month, but still down 7.5% versus March 2010.

S&P/Case-Shiller reports data on both a seasonally adjusted and non-adjusted basis but recommends using the latter as being a more reliable indicator.  We have used only the non-adjusted data in compiling this summary.

Home values are down 30 percent from their peak. And they could drop another 7-9 percent this year. Yet property taxes keep going up! Take action and get yours lowered in five easy steps:

Know the process

When it comes to assessments, every town is different. First stop: your local assessor’s office. Find out how they go about assessing properties, what forms you need to file and when the deadlines are for filing that appeal. You typically have 60 days or less from the time your annual assessment was mailed to lodge your appeal.

Get a property card

While at the town hall, get a copy of your property card. This contains all the info the assessor used in determining your home’s assessed value — home’s square footage, the number of bedrooms and bathrooms, and features such as a garage or finished basement.

Know the neighborhood

Here, we’re talking comps. You need to know what comparable homes have recently sold for. Comparable in terms of size, location, amenities and more. This is where Zillow comes in handy. Find at least 3-5 properties that are comparable to yours, and if you discover that yours is valued at least 5-10 percent higher, then you likely have a case.

Make your case

If you have evidence that your home is over assessed — and the National Taxpayers Union estimates that as many as 60 percent of properties are — ask that it be re-assessed. Are there mistakes on your property card? For example, are there math errors? Is your home classified as “commercial” even though it’s “residential”? Mistakes as these are common (the inaccuracy rates on these cards is between 30-50 percent, according to the NTU). They can be corrected on the spot and you can avoid a formal hearing altogether.

File an appeal

More than a simple math mistake? Think you have a legitimate case? Then file an appeal. While the rules for appeals vary from place to place, most appeals are submitted in written form to county boards with a statement explaining why you feel the evaluation is inaccurate. Support this claim with evidence (property cards and photos can be useful if comparing the condition of your home to others), and succinctly make your case, with your eye on the prize: one in three challenges results in a tax reduction and the average tax savings is $200-$5,000 a year, according to the NTU.

Copyright: Zillow.com

A Conventional wisdom says that you need to stay in a home a minimum of five years to ensure that you recoup your purchasing costs. But with some markets soaring, this advice doesn’t always apply.

It’s All About the Market

Market conditions play a huge part in any decision about when to buy. Housing market values have varied widely from region to region in recent years. While the Florida market has seen meteoric rises in home values, Ohio has seen its real estate prices go into negative territory in the last year.

Do not buy high and sell low – if your market is softening or has hit its peak and is heading south, you may want to wait on your purchase.

The magazine Smart Money has created a worksheet to compare the costs of renting vs. buying using market appreciation calculations to determine at what point you come out ahead. Plugging in the price, down payment, your income bracket, interest rate, and current market appreciation rates, the worksheet will break out what you will gain.

For example, say you were to buy a $400,000 house in Boulder, Colorado and you estimate the market will soften from the current 11% appreciation to about 9 percent annually. If you stayed in the house three years, you would recover $88,750 in equity at the end of that period; if you stayed five years, you’d realize $120,360.

It’s All About You

The top three reasons people file for bankruptcy are change of job status, divorce, and unforeseen health expenses. If you face any of these challenges and don’t have a financial cushion, this may negatively impact your ability to pay a mortgage. Big life events dictate your readiness to buy now or to wait for a little more stability.

Signs you should not buy right now:

• Will you be moving within the next five years?
• Will you be having kids soon?
• Will you be making a job change?
• Have you recently filed for bankruptcy or is your credit score below 630?

If you answered yes to any of these questions, or you are experiencing other life-changing events like illness, marriage, divorce, or breakup, you may want to wait.

Your Financial Future

Aside from life events contributing to your decision, getting your financial house in order before you begin your home search is key. Even with all the programs available for buyers with a low-or-no down payment, if your debts are growing steadily and you don’t foresee an increase in your income, you are putting yourself in greater financial risk by taking on a mortgage.

With only a few exceptions, many loans for people who are still repairing their credit or recovering from bankruptcy carry higher rates than those available once your credit is in better shape. So the question comes down to this: Do you buy now, before prices appreciate higher than you can afford, but do so with an expensive loan? Or do you wait and repair your credit, then get a favorable loan, and pay more for your home?

That’s the sort of analysis you need to go over with a financial counselor or mortgage broker before you start hitting open houses.

Ways to Cushion the Blow

On the other hand, if you are willing to buy a home that needs a bit of work and, over time, you can afford to get it done, your home could appreciate faster, strengthening your financial position. If you are willing to take on a roommate or renter, you can also soften the expense of a mortgage, which almost always costs more than rent. Buying a home is a risk, and it’s worth asking yourself hard questions about what you’re willing to do to protect yourself from getting in over your head.

If you answered “no” the life-change questions, and have the down payment or equity from your current home, you still need to look at interest rates and at how buying affects your taxes. You can’t time the stock market, but you can time interest rate hikes, as they are a little easier to predict. If they are going up fast, you can jump in before they rise too far; if they are already high, you will have to calculate how refinancing in the future affects your budget.

What to Do First

If you are anxious to get moving, be patient. You have a few things to do first:

• Go to open houses – get the lay of the land
• Talk to a mortgage broker to get pre-approved
• Interview agents (You may want to find an agent at the same time as you look for a mortgage broker – a good agent can recommend reputable brokers and help you make sense of the terms of the loan)
• Review credit report and scores with mortgage broker to determine if any repairs are needed
• Use Zillow.com to find info on neighborhoods that interest you and then use the Home QandA feature to ask current homeowners

Reposted from: Yahoo Real Estate

Home prices fell faster in the first quarter of this year than at any time since the worst of the housing crisis according to the Real Estate Market Report released by Zillow. 

The Seattle firm's Home Value Index fell to $169,000, down 3 percent compared to the fourth quarter of 2009, the largest quarter-over-quarter decline since the fourth quarter of 2008, and 8.2 percent compared to the first quarter of 2010.  The company now predicts that the market will not reach bottom until 2012 at the earliest.

Zillow's index describes the median valuation for a given geographic area on a given day and includes the value of all single-family residences, condos, and cooperatives.  Data is aggregated from public sources by a number of data providers for 132 Metropolitan Statistical Areas dating back to 1996. Mortgage and home loan data is typically recorded in each county and publicly available through a county recorder's office. 

Negative equity reached a new high with 28.4 percent of all mortgages now underwater.  This is an increase of 1.4 percentage points since the previous quarter due to declining home prices.  Home values have dropped 29.5 percent from the peak in June 2006.

Meanwhile, foreclosures resumed as banks worked through the documentation and foreclosure process issues that caused many of them to impose moratoriums last fall. In March one out of every 1,000 homes in the country was foreclosed.

"Home value declines are currently equal to those we experienced during the darkest days of the housing recession. With accelerating declines during the first quarter, it is unreasonable to expect home values to return to stability by the end of 2011," said Zillow Chief Economist Dr. Stan Humphries. "We did expect substantial payback from the homebuyer tax credits, which buoyed the housing market last year, but underlying demand post-tax credit, as well as rising foreclosures and high negative equity rates, makes it almost certain that we won't see a bottom in home values until 2012 or later."

Very few markets were exempt from home value declines in the first quarter. The vast majority (97 percent) of the 132 markets in the study logged home value declines. Only the Fort Myers, Fla., Champaign-Urbana, Ill. and Honolulu, Hawaii metropolitan statistical areas (MSAs) experienced quarterly increases, with home values rising 2.4 percent, 0.8 percent and 0.3 percent, respectively. Home values in the Sarasota, Fla. MSA remained flat.

The full national report, in its interactive format, is available at www.zillow.com/local-info.  Additionally, in most areas data is available at the state, metro, county, city, ZIP and neighborhood level.