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Daily Real Estate News | June 24, 2008
The Federal Reserve, which opens a two-day meeting today, is expected to leave its key interest rate unchanged at 2 percent when it wraps up the session on Wednesday.
Mortgage rates are somewhat affected by this short-term rate, but are more closely tied to long-term U.S. Treasury rates and other concerns. Recent increases in mortgage rates have slowed the problem-plagued housing market and fueled inflation.
So what's the Fed to do?
"Tread lightly on rates and carry a big rhetorical anti-inflation stick," says Ken Mayland, president of ClearView Economics.
Economists predict the Fed's policy statement, expected to be released Wednesday, probably will highlight inflation risks but won't go as far as to signal a rate increase at the Fed's next meeting Aug. 5.
Source: The Associated Press (06/24/2008)
The following article would lead one to believe inventory (number of homes on the market)
may be on its way down, at least in this age demographic. A good thing for most markets. Read on...
- Duane
June 17, 2008
Real Trends Email Updates - Realtrends.com
The formerly vibrant new-home buyer market of empty-nesters has decided instead to feather their current nests. According to a survey released today by AARP (formerly American Association of Retired Persons), nearly one-third of middle-aged and older Americans say they are making changes to their current homes so that they can live in those homes for longer rather than buy a new house or downsize to an apartment.
"Contrary to general thought, AARP's survey indicates that Americans who are 45-plus are not looking to downsize or leave their current homes as they prepare for or enter retirement," said Elinor Ginzler, AARP senior vice president for livable communities. "They are literally fixing to stay, improving their homes in order to stay there longer and largely overlooking the drop in home values. Call it cocooning or nesting, boomers and their parents are digging in and staying put.”
Unlike many other Americans, though, this group does not appear to be worried about losing their homes. But they are fretting about the effects of the housing slump and foreclosure crisis on their neighborhoods (64 percent) and the U.S. economy (89 percent). A top concern: the risk of crime in areas with high numbers of foreclosed homes, which was on the minds of 69 percent of respondents.
Daily Real Estate News | May 12, 2008
New trends will reshape tastes in homes and transform how you buy and sell, experts say. So what will the housing market of the future look like? Money magazine interviewed developers, architects, lenders, and more, to paint the following picture:
Smaller houses. In a February survey of potential home buyers by the National Association of Home Builders, 60 percent said they would rather have a smaller house with more amenities than vice versa. "In the past, people would say 'Give me space and I'll add the features later,' " says Gopal Ahluwalia, the NAHB's vice president of research. Newly built houses will have layouts that can "live bigger" than their square footage would suggest, with rooms that can do double duty, experts say.
New tools for assessing mortgage risk. With foreclosures projected to reach 2 million nationwide by the end of next year, bankers are rethinking how they set mortgage rates. Eventually, mortgage pricing may come to resemble pricing for, say, homeowners insurance, which takes into account dozens of factors. Lenders "want to be able to assess the risk, practically down to the biological level, that you won't pay your mortgage," says Keith Gumbinger, vice president of HSH Associates, which tracks the home-lending market.
Housing data: no secrets left. With more innovative real estate Web sites popping up, everyone now knows how much everyone else's house is worth, and consumers will continue to have unprecedented access to housing information that was once found only in multiple listing services.
Source: Money, Stephen Gandel (06/01/2008)
Daily Real Estate News | May 2, 2008
Some cities aren’t feeling the pain of falling home prices or rising unemployment. Despite the national slowdown, they're doing just fine.
To identify the economically healthiest cities, Forbes magazine examined key measures in the country’s 50 largest metros. The magazine studied unemployment and job-growth data from the Bureau of Labor Statistics, home price data from the NATIONAL ASSOCIATION REALTORS®, and information on gross metropolitan product growth provided by the U.S. Conference of Mayors.
Here are the 10 cities that Forbes sees as practically recession-proof, along with the percentage of growth for median-priced homes in the past year.
Source: Forbes, Matt Woolsey (04/29/2008)
by Dena Kouremetis
PATH (The Partnership for Advancing Technology in Housing) recently released its annual recommendations on the top remodeling technologies to make existing homes more durable, stronger and more resource efficient.
The top 10 technologies include:
1. Air Sealing: which include non-fiberglass batts, sprayed foam insulation, and sprayed fiber insulation are recommended because they improve the thermal resistance of exterior walls.
2. Smartvent Ventilation: This new mechanical ventilator system measures the moisture content of outdoor and crawlspace air and only provides ventilation when the outdoor air is drier than crawlspace air.
3. HVAC Sizing (Heating, Ventilation and Air Conditioning): estimating heating and air conditioning loads more accurately so properly sized HVAC systems are installed to ensure energy efficiency.
4. High Efficiency Toilets: Designed for water conservation, high efficiency toilets have been defined by the plumbing industry and the EPA as those that use an average of 20% less water per flush than the industry standard of 1.6 gallons. A high efficiency unit toilet can save up to 8,760 gallons of water each year for a family of four.
5. Compact Fluorescent Lighting: Compact fluorescent lamps (CFL), are simply miniature versions of full-size fluorescent lights, but four times more efficient and last up to 10 times longer than incandescent bulbs.
6. High Performance Windows: Window technology has evolved over the years to the point where windows can be selected not only for their aesthetic qualities, but also for their performance abilities.
7. Wireless Lighting and Thermostats: These controls can be set on timers or using a variety of sensors with wireless systems to increase home efficiency without sacrificing home owner comfort.
8. Solar Hot Water: Solar water heaters come in a variety of configurations but each differs in design, cost, performance and level of complexity. Most systems have back-up water heating such as electricity or gas.
9. Recycled/Renewable Flooring: The two types of environmentally-conscious flooring that lead the market are recycled flooring from old structures and renewable flooring from fast-growing trees, such as bamboo.
10. Tubular Skylights: Tubular skylights use the sun for lighting interiors without the drawbacks associated with conventional skylights. They are generally easier to install than typical skylights and, from the home's interior, resemble conventional lighting fixtures.
For more information, visit the PATH website at pathnet.org.
Published: April 30, 2008
by Peter L. Mosca
April 22 is Earth Day, when the national discussion -- media reports, water cooler and online chats, and political speeches -- turns to the environment and the growing acceptance of the world's population to the many advantages of green living. The National Association of the Remodeling Industry (NARI) wants homeowners to know they can secure eco-friendly solutions year-round from a professional remodeler.
"If you had to put it in a nutshell, the biggest trend we're seeing is sustainable design," says Stewart Davis, AIA, design director for CG & S Design-Build in Austin, Texas, a NARI member. "We're still doing nice kitchens and baths, but people want to do these projects as green as possible -- and within their budget."
According to NARI, remodelers can help a homeowner decrease energy costs, alleviate health concerns and reduce the consumption of natural resources in the following areas:
Efficient Heating & Cooling New insulation technologies, such as spray-in cellulose insulation, is made from 80 percent post-consumer recycled newspaper and will effectively seal homes from harsh heat and cold. Thermal solar energy is a non-polluting energy source that is easily captured and used for water and space heating. Although solar water heaters can be expensive ($1,000-$4,000), they can show paybacks of four to eight years, according to Austin Energy. Space heating systems can vary from $800 for wall heaters to $4,000 and more for large central systems.
Reducing Water Consumption Selecting the right appliances, such as water-conserving washers, dryers and dishwashers, and installing low-flush toilets and showerheads can reduce the amount of water needed and help trim water bills. NARI notes that approximately 8,000 gallons of water per household each year are lost while waiting for hot water to come from the tap. "Simply positioning the water heater as close as possible to the points of use for hot water can help conserve this valuable resource."
Healthy Indoor Air Modern building materials, such as construction adhesives, paints and treated woods, can have toxic VOCs (Volatile Organic Compounds) that adversely affect sensitivities to indoor airborne irritants. Remodelers use air filters and new, non-toxic materials that improve the overall health of a home.
Sustainable Materials "Green" surfaces, such as reclaimed hardwood, bamboo flooring and recycled glass countertops leave a lighter footprint on the environment, plus remodelers reduce the environmental impact by choosing materials made from local or regional sources.
Quality Over Quantity Homeowners willing to opt for slightly smaller homes in exchange for smarter planning and design look to multifunctional spaces, such as a home office, that can double as a guest bedroom," Davis says. "In areas with small lots, every square foot needs to count and remodelers and architects can help design spaces that do that." Recycle Construction Waste Eco-conscious remodelers recycle as much project waste as possible during a home renovation project. For example, Texas-based CG &S Design-Build, winners of five regional NARI Contractor of the Year Awards in 2008 and member of the City of Austin's award-winning Green Building Program, brings four waste containers to a project site -- for paper, metal, wood and concrete -- in an effort to recycle more efficiently. "We are very aware that so much waste is traditionally put in a landfill and we are trying reduce that as much as we can," said Stewart Davis, AIA, design director for CG & S.
[Note: The National Association of the Remodeling Industry, with more than 7,700 member companies nationwide, is "The Voice of the Remodeling Industry™." To locate a local remodeling professional, visit NARI's Web site at www.RemodelToday.com.]
Published: April 14, 2008
Release date: 04/03/08
40 Years Later, Realtors® Remain Vigilant to Ensure Fair Housing for All Americans
WASHINGTON, April 01, 2008 - As America celebrates the 40th anniversary of the passage of the Fair Housing Act this month, Realtors® continue to be outspoken advocates for fair housing, working with home buyers and sellers to ensure they receive equal access to affordable housing and homeownership.
The Fair Housing Act protects the basic right of all Americans to pursue the dream of homeownership, free from discrimination based on race, color, religion, sex, disability, familial status and national origin. NAR demonstrates its strong commitment to fair housing through partnerships with real estate diversity partners, education, and grant and award programs.
“Realtors® build communities and play a vital role in advancing fair housing laws and improving access to affordable housing,” said NAR President Dick Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif. “NAR and its 1.3 million members pledge to continue our work educating home buyers and homeowners in our communities about fair housing laws, discrimination and predatory lending practices, making the dream of homeownership viable for all Americans.”
NAR is working with Congress to make permanent the new FHA and conforming loan limits, mandated by the economic stimulus package, so that Americans can access affordable financing in all areas of the country. Realtors® also continue to push for a stronger, more flexible FHA program, to give more first-time home buyers access to affordable and safe financing options.
For the past decade, NAR has been educating Realtors® about being sensitive to and aggressive in meeting the homeownership needs of a diverse society through its “At Home with Diversity” program. More than 25,000 Realtors® have completed the course. In celebration of Fair Housing Month, NAR is waiving the At Home with Diversity® program fee for any local or state Realtor® association that sponsors the course in April. Realtors® can also save 50 percent off the online At Home with Diversity® course this month.
NAR also embraces fair housing by recognizing the efforts of individuals and organizations that advance minority homeownership. NAR joins together with five real estate diversity partners in sponsoring the HOPE Awards (Home Ownership Participation for Everyone). The awards showcase exceptional individuals and organizations that are working to increase minority homeownership, revitalize communities and expand affordable housing opportunities.
In 2007, NAR proudly contributed $1 million to the Martin Luther King, Jr. National Memorial Project. The memorial is due to open on the National Mall in Washington, D.C. in 2009.
In addition, NAR’s Community Outreach Department provides financial resources to local and state Realtor® associations for programs and activities that advance smart growth, diversity and housing opportunities. Grants of up to $5,000 are awarded twice a year; more than $239,000 was awarded in 2007.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.3 million members involved in all aspects of the residential and commercial real estate industries.
Source: National Association of REALTORS
Daily Real Estate News | March 20, 2008
Doing business in the United States is challenging these days, but locating in the right city can make life easier.
Forbes magazine has for the tenth year in a row ranked the 200 largest metro areas according to their business acumen. Cities topping the list have solid job growth, an educated labor pool and low business costs. The calculation also includes tax, energy and office space costs, and takes into account Economy.com’s living cost index.
Six of the 10 top metro areas are in and around state capitals.
Here are the magazine’s top choices:
Best Metros
Raleigh, N.C.
Boise, Idaho
Fort Collins, Colo.
Des Moines, Iowa
Lexington, Ky.
Atlanta, Ga.
Richmond, Va.
Olympia, Wash.
Spokane, Wash.
Knoxville, Tenn.
Best Smaller Metros
Sioux Falls, S.D.
Iowa City, Iowa
Bloomington, Ind.
Columbia, Mo.
Bismarck, N.D.
Morgantown, W.Va.
Rapid City, S.D.
Greenville, N.C.
Charlottesville, Va.
Blacksburg, Va.
Source: Forbes, Kurt Badenhausen (03/19/2008)
Release date: 03/10/08, Source: REALTOR® Magazine
Before a home owner curses the troubled housing market, he or she should take solace in the U.S. tax code, which makes buying a home a good deal for almost everyone.
Here’s why:
Mortgage interest deductions, including in some cases mortgage insurance premiums, reduce home owners’ tax liability by reducing income. The deduction includes interest paid on both a first and a second home.
Interest on home equity loans is also deductible — whether the borrower uses the money to remodel the kitchen or to take a vacation to Disney World.
Profits from selling a house are potentially a huge windfall. When a home owner sells a primary residence, any profit on the sale of the property is tax free up to $250,000 for single home owners and $500,000 for married home owners filing. Any profit above that is nearly always a long-term capital gain taxed at 15 percent — less if the seller’s tax rate is less than 20 percent.
Home owners can itemize. That opens up opportunities to deduct a host of other items that wouldn’t be deductible if the taxpayer took the standard deduction.
WASHINGTON, March 06, 2008
The U.S. Department of Housing and Urban Development today published new FHA and conforming loan limits, based on median home prices as mandated by the Economic Stimulus Act signed by President Bush in February. New loan limits for FHA and Fannie Mae and Freddie Mac are now calculated at 125 percent of the HUD published median prices, with a floor of $271,050 and $417,000, respectively, not to exceed $729,750. NAR expects the impact on the housing market to be significant because of the infusion of capital into the mortgage market, which should result in lower interest rates across the board. In addition, there will be a direct impact on high-cost areas that previously required borrowers to take out costlier jumbo mortgages.
NAR research points out that increasing FHA loan limits will help an additional 138,000 Americans achieve the dream of home ownership and will allow nearly 200,000 homeowners to refinance and potentially keep their home. In addition, NAR believes that increasing the loan limits for Fannie Mae and Freddie Mac will bolster the housing finance market, which continues to be severely stressed, by providing an immediate infusion of much needed liquidity to the nation’s mortgage market.
An economic impact study conducted by NAR in January 2008 estimated that increasing conforming loan limits would result in as many as 500,000 refinanced loans and could help reduce foreclosures by as much as 210,000. In addition, over 300,000 additional home sales could be generated, housing inventory would be reduced and home prices would be strengthened by two to three percentage points.
Why HUD Took This Action
HUD was mandated in the Economic Stimulus Act to publish new loan limits within 30 days of the bill's signing by President Bush on February 13.
How HUD Calculates Its Median Home Prices
HUD median home prices differ from those published by NAR. That is because HUD uses a variety of sources and different areas to calculate the median home price.
Who Will be Affected
Increased loan limits will have a wide impact. The added liquidity in the mortgage market will help to make mortgages more easily available. Receiving direct helped will be borrowers in high cost areas who previously had no recourse except high- cost jumbo loans, and those with high-cost loans who can refinance into lower interest rate loans.
Realtor.org March 6, 2008
This article was published on: 03/01/2008, BY ROBERT FREEDMAN
Population gains bode well for home sales.
Economists can argue about the short-term prospects of home sales as consumers ponder the best time to buy. But there’s little doubt among analysts about the market’s long-term prospects.
The United States is adding one person every 13 seconds. At the start of 2008, the country had surpassed 303 million residents, almost 3 million more than it had at the start of 2007, the Census Bureau says.
One of the driving forces of this increase is a rise in the U.S. birth rate, now the highest it’s been in more than 40 years, according to an Associated Press review of births dating back to 1909. Fueling the births are higher rates for immigrant households, particularly Hispanics.
For real estate professionals, the country’s continuing strong growth is a good sign in today’s challenging times. “With a population increase of 3 million, household formation typically expands by up to 1.5 million,” says NAR Chief Economist Lawrence Yun.
And because new household formation is the critical first step toward home ownership, the population gains point to robust demand in the years ahead, especially since a significant portion of the increase is fueled by immigrants, who arrive at the rate of one every 30 seconds, the Census Bureau says.
Immigrant households have the highest home ownership rates of all demographic groups, according to a study released last year by the Homeownership Alliance. After immigrant households have been in the country for 30 years, their rate of home ownership rises to just below 75 percent.
For Yun, the Census Bureau figures suggest demand for housing will rise. Last year, new household formation totaled only 650,000 units, about half the historical norm. “Many people have evidently doubled up with roommates or have moved back in with family,” he says. Markets should see more demand once consumer confidence is restored.
Daily Real Estate News | February 15, 2008
Federal Reserve Chairman Ben Bernanke told the Senate Banking Committee on Feb. 14 that the central bank is likely to make fewer rate cuts in the immediate future.
Over the past six months, the Fed has cut rates by a total of 2.25 percentage points; but the aggressive moves have not done much to alleviate the credit squeeze. Bernanke said the economy is more likely to see the benefits of the rate cuts in the second half of the year, and analysts now say the markets still expect the Fed to cut rates at its next meeting on March 18 but do not expect it to be as aggressive in doing so.
The Fed "is signaling less rather than more in the way of future rate cuts and this is disappointing to those who feel more is necessary," says Richard DeKaser, National City Corp. chief economist.
Source: Investor's Business Daily, Scott Stoddard (02/15/08)
Daily Real Estate News | February 8, 2008
Housing inventory in most major metropolitan markets rose only slightly in January, a month when post-holiday for-sale signs usually sprout.
Total listings of homes in 29 major markets were up only 1.1 percent compared to December, according to figures compiled by ZipRealty Inc., a real estate firm based in California.
There are still plenty of homes on the market. Inventory was up 20 percent from January 2007 in 18 metro areas for which Zip has comparable year-earlier data.
Housing inventory usually rises about 5 percent compared with December, says housing economist Thomas Lawler. This year, people appear to be holding off because “conditions are so lousy,” Lawler says.
Source: The Wall Street Journal, James R. Hagerty (02/08/2008)
Daily Real Estate News | December 7, 2007
The Bush administration and a coalition of bankers released a plan Thursday to deal aggressively with the mortgage crisis, which is increasingly becoming a political issue.
The initiative would hold down rates for certain subprime mortgages, which are loans offered to borrowers with spotty credit histories. The freeze will be available only to home owners who have not fallen behind on their payments at the lower introductory rates and who are living in the homes. This requirement would exclude people who bought investment properties hoping to profit from the housing boom.
Also excluded are people who can afford the higher payments. The administration expects these people will move as soon as they can to refinance to more affordable fixed-rate loans.
The administration said its plan could help 1.2 million home owners either through a freeze or by helping owners refinance. The Center for Responsible Lending, which battles predatory lending, estimates that only 145,000 home owners would qualify for the freeze because the criteria are too narrow.
Source: The Associated Press, Martin Crutsinger (12/06/2007)
Daily Real Estate News | December 4, 2007
Old homes can be quaint, but there’s a difference between old and outdated. Unless home owners periodically invest in upgrades, their homes will fall so far below the standards of current buyers that they become obsolete and hard to sell.
What’s obsolete? Here’s a list of relics, many of them courtesy of Nick Kuhn, an associate with McEnearney Associates in Washington DC.
Source: The Washington Post, Elizabeth Razzi (12/02/07)
Daily Real Estate News | November 14, 2007
“2007 has been a year of challenge; 2008 will be a year of opportunity for serious buyers and for REALTORS®,” NAR Chief Economist Lawrence Yun told a packed house at the NAR Conference Tuesday.
What Yun characterized as “the roulette economy” of 2007, fueled by subprime greed and then buyers’ fear, is almost over. With a favorable economy, pent-up home demand, and Wall Street “fessing up to its losses and cleaning up its underwriting,” 2008 will be a healthy market for serious buyers, he said.
Home prices nationally have declined by some 1.5 percent in 2007, which is "no big deal" after years of rapid appreciation, said Yun. In addition, he noted, there are still many markets such as Utah, North Carolina, and Tennessee that are appreciating and may even be undervalued.
Remind Clients That Markets Are Local
“REALTORS® have to educate their clients that all markets are local and that problems in a few areas aren’t meaningful," he said. "A national picture of the real estate market is just about as valuable as giving a national high temperature for the day."
Yun also noted that while the credit crunch slowed deals in 2007, much of the pain is being felt in the subprime area, while other mortgage sectors are stabilizing. Subprime constitutes only about 10 percent of mortgage loans, but accounts for some 40 percent of current foreclosures. Going forward, proposed federal legislation that would increase FHA loan limits should help moderate-income buyers, said Yun.
Yun expects GDP growth of 2.8 percent and job growth of 1.1 percent in 2008. Inflation should also remain under 3 percent, and interest rates should rise only slightly, he predicts. “For buyers who are into home ownership for the long term, housing still remains the best investment,” he concluded.
Strong Fundamentals Bode Well for Housing
Other national sales downturns in the last 30 years were spurred by broad economic problems, Yun said. This year, by contrast, economic fundamentals remain solid, with the U.S. gross domestic product expected to grow by a respectable 2 percent, supported by 2 million job gains in the last two years and continuing low interest rates.
Yun said 2007 existing-home sales will exceed 5.5 million, close to the level in 2002, a record-setting year. At the same time, home prices remain near record highs despite drops in a few markets.
Get Ready for the New Generation
Following Yun’s presentation, former NAR economist John Tuccillo gave attendees a preview of what the next real estate market would look like. When recovery comes, said Tuccillo, most clients will be Gen X and Gen Y. These younger buyers don’t want relationship selling; instead they want the best bottom line deal you can find and the one-stop shopping to make the deal faster so they can get on with their lives.
Other big buyers in the next decade will be retiring boomers, who will want homes in 24-hour cities and college towns. “Real estate practitioners have traditionally worked with first-time buyers. Think of these people as last-time buyers,” he quipped.
It’s hard to predict when any local market will begin to improve, but there are three indicators, said Tuccillo. First would be a drop in new listings, indicating sellers are withdrawing from the market. Second, days on market will fall. And third, the gap between listing price and sales price will narrow.
— REALTOR® Magazine Online
Daily Real Estate News | November 7, 2007
The U.S. House Financial Services Committee approved legislation on Tuesday creating new consumer protection standards in the mortgage industry.
The bill drafted by Rep. Barney Frank (D-Mass.) would:
The bill now moves to the full House. Similar legislation was introduced in May by Sen. Charles Schumer (D-N.Y.), but has been stalled in the Senate.
Source: The Associated Press, Alan Zibel (11/06/2007)
Daily Real Estate News | October 10, 2007
Conditions in the mortgage market are improving for consumers, which should help to release some pent-up demand in early 2008, according to the latest forecast by the NATIONAL ASSOCIATION OF REALTORS®.
Lawrence Yun, NAR vice president of research, notes that widening credit availability will help turn around home sales. “Conforming loans are abundantly available at historically favorable mortgage rates. Pricing has steadily improved on jumbo mortgages since the August credit crunch, and FHA loans are replacing subprime mortgages,” he says.
Yun says it’s important to place the current housing market in perspective, and that 2007 will be the fifth highest year on record for existing-home sales.
“Although sales are off from an unsustainable peak in 2005, there is a historically high level of home sales taking place this year — a lot of people are, in fact, buying homes,” he says. “One out of 16 American households is buying a home this year. The speculative excesses have been removed from the market and home sales are returning to fundamentally healthy levels, while prices remain near record highs, reflecting favorable mortgage rates and positive job gains.”
Yun emphasizes that all real estate is local with naturally large variations within a given area. For example, markets such as Austin, Salt Lake City, and Raleigh have been outperforming recently and will continue to do well next year, Yun predicts. Also, other areas like Denver and Wichita, Kansas, will likely move up in the price growth rankings due to very positive local economic developments, he notes.
Housing Outlook
“Housing is still a good long-term investment, and we’ll be seeing a broad, modest improvement in home prices in 2008," NAR President Pat V. Combs says.
Here's what NAR predicts:
“A cutback in housing construction is a positive sign for the market because it will help lower inventory and firm up home prices,” Yun says. Housing starts, including multifamily units, are likely to total 1.37 million in 2007 and 1.24 million next year, down from 1.8 million in 2006.
Meanwhile, the 30-year fixed-rate mortgage is expected to average 6.4 percent for the next two quarters and then edge up to the 6.6 percent range in the second half 2008. Additional cuts expected in the Fed funds rate will help to keep mortgage interest rates historically favorable, according to NAR.
Also, growth in the U.S. gross domestic product is estimated at 2 percent this year, below the 2.9 percent growth rate in 2006; GDP is likely to grow 2.7 percent next year.
The unemployment rate is forecast to average 4.6 percent this year, unchanged from 2006. Inflation, as measured by the Consumer Price Index, is expected to be 2.8 percent in 2007, compared with 3.2 percent last year. Inflation-adjusted disposable personal income will probably increase 3.6 percent in 2007, up from 3.1 percent last year.
— REALTOR® Magazine Online
Daily Real Estate News | September 19, 2007
The Federal Reserve Tuesday sliced one-half a percentage point off the federal funds rate, cutting it to 4.75 percent from 5.25 percent. It also cut its discount rate by the same amount, also bringing it to 5.25 percent.
The cuts could be a mixed blessing for home buyers, pushing fixed-rate mortgages higher if inflation worries grow, economists say.
But relief could come in other ways. Consumers should start feeling the impact quickly in the form of reduced payments on home-equity lines of credit, credit cards, and some car loans.
There is likely to be little immediate relief for borrowers with many adjustable-rate mortgages because the rates on roughly half of these loans are tied to the London interbank offered rate (LIBOR). LIBOR recently jumped sharply above the Fed funds rate because of the continuing credit crunch in the markets.
"If LIBOR doesn't come down, there is no relief" for many mortgage borrowers, says James Bianco, president of Bianco Research LLC, a market-research firm in Chicago.
Nevertheless, the NATIONAL ASSOCIATION OF REALTORS® applauded the Fed’s move to cut interest rates.
"We believe that the Federal Reserve Board made the right move today in lowering the interest rate," says NAR President Pat V. Combs. "Making borrowing more affordable will make money more available and this could go a long way in helping turn around the sluggish housing market."
Source: The Wall Street Journal, Jane J. Kim and Ruth Simon (09/19/07) and REALTOR® Magazine Online
Daily Real Estate News | September 5, 2007
Mortgage applications were up last week, after three sliding weeks, according to the Mortgage Bankers Association's weekly survey.
The mortgage applications index rose by a seasonally adjusted 1.3 percent to 622.9. On an unadjusted basis, the index slid 0.2 percent compared with the previous week, but was up 10 percent compared with the same week a year ago.
The refinance share of mortgage activity increased to 41.4 percent of total applications.
Mortgage rates were up slightly, too:
— REALTOR® Magazine Online
Daily Real Estate News | August 20, 2007
The housing downturn has many builders, real estate agents, and home sellers paying close attention to landscaping as a way to generate buyer interest and boost sales prices.
Research by the NATIONAL ASSOCIATION OF REALTORS® says landscaping is "very important" to almost 20 percent of buyers. Plus, University of Washington-Seattle researcher Kathleen Wolf says landscaped lots sell for about 7 percent more.
The exact amount depends on location. For example, Palm Beach, Fla.-based real estate agent Nancy Macaluso notes that palm trees and flowers can boost a home's price by 10 percent to 15 percent in comparison to the sales prices of properties without such landscaping.
However, most appraisers and tax assessors do not include landscaping in their valuations; and there are no standards governing how arborists and landscape experts calculate a plant's value.
Still, home owners are shelling out hundreds of dollars for yard appraisals as part of their marketing strategies, and builders are expanding their landscaping budgets.
Experts say sellers would be wise to maintain their yards, as unkempt trees and shrubs can conceal views that have the potential to boost sales prices by tens of thousands of dollars.
Source: Wall Street Journal, June Fletcher (08/17/07)
Daily Real Estate News | August 7, 2007
More home buyers want extra garage space with two or more spaces in their homes, according to the “2007 Profile of Buyers’ Home Feature Preferences,” which was released Tuesday by the NATIONAL ASSOCIATION OF REALTORS®.
The number of buyers expressing a desire for oversized garages grew 16 percentage points since NAR's last survey of buyer preferences in 2004. About 57 percent of home buyers surveyed now say they want an oversized garage. What's more, among buyers who purchased homes without big garages, 56 percent said they would have paid more for an oversized garage, compared to only 6 percent in the 2004 survey.
NAR's latest home buyer preference survey, which reports responses from buyers who purchased homes in 2006, asks buyers about the importance of 75 home features and room types.
What They're Shopping For
Other priorities for today’s home buyers include:
Buyers also said they're willing to pay more for these extras. For example, 65 percent of buyers said they would be willing to pay a median $1,880 extra for a home with central air conditioning. One out of four buyers also was willing to pay a median of $4,760 more for waterfront property.
Regional Preferences
What home buyers want in the South, however, is not always what buyers in the West want. The survey identified some of the following regional preferences in home features:
Fixing up the Nest
According to the survey, nearly six out of 10 recent home buyers took on remodeling or home improvement projects within three months of their purchase. Close to half of home buyers who remodeled or made improvements updated their kitchen, and nearly half remodeled or improved their bathroom.
New-home owners spent a median of $4,350 on home improvement or remodeling projects undertaken within three months of purchase.
“The fact that a majority of home buyers quickly remodel key areas of their homes ties into the fact that their home is a good, long-term investment,” says Paul Bishop, NAR manager of real estate research. “Regardless of market conditions in the short term, when purchased for the long term, housing is one of the safest investments consumers can make.”
Indeed, more than half of home buyers said they believe their home has high investment potential, and another four out of 10 say it has moderate investment potential. Only 3 percent felt their home’s investment potential was low.
Generational Differences
Age was the biggest differentiation in what buyers were looking for in a home. Buyers 75 years old and older wanted a single-level home (74 percent) that was less than 10 years old (43 percent) with a walk-in closet in the master bedroom (74 percent).
On the other hand, most buyers between the ages of 25-34 wanted a backyard or play area (60 percent).
More than half of buyers over 65 wanted a separate shower enclosure in the master bathroom, compared to only one-fourth of buyers ages 25-34.
Also, older buyers placed a higher priority on energy efficiency home features than did younger buyers — 63 percent of buyers 75 and older said it was very important, but only 32 percent of buyers who were 18-24 agreed.
Home Growth
Overall, the survey also revealed that while homes are getting bigger, the number of bedrooms is shrinking. From 2004 to 2006, the size of the typical home purchased increased by about 100 square feet to 1,840 square feet, while the median number of bedrooms dropped from four to three during that same period.
The median age of the home reported in the current survey is 12 years, down from 15 years in 2004.
Real estate practitioners see hundreds, if not thousands, of houses with their buyer clients every year and know exactly what buyers are looking for in a home, says NAR President Pat V. Combs. “This insight is one more way REALTORS® add value to the real estate transaction,” Combs says.
— REALTOR® Magazine Online
Daily Real Estate News | July 19, 2007
A slowdown in the rising cost of homeownership could be a persistent feature of the economy, according to research by the U.S. Bureau of Labor Statistics (BLS).
In producing the consumer-price index, the BLS measures homeownership costs by estimating how much a homeowner would receive for renting out his home. Owners’ equivalent rent or OER makes up 24 percent of the consumer price index.
The government also measures rents actually paid by people who rent by sampling thousands of rental units across the country. Most of the time, actual rents and OER are about the same. But sometimes they diverge and that’s what is happening now. In the 12 months through May, rents rose 4.4 percent and OER rose 3.5 percent.
An unpublished study by the BLS suggests that the reason is a difference is the way the Bureau calculates rents in renter-dominated neighborhoods in cities, giving them more weight. But others argue that vacancies in owner-occupied homes are up and this is restraining growth in rents in areas where there is a lot of owner-occupied housing.
If that’s true, then economists believe the condition could persist, encouraging the Federal Reserve to hold off worrying about inflation. "It's something that, behind closed doors, has got to be making them more confident that the improvement in core inflation can be sustained," says David Greenlaw, economist at Morgan Stanley.
Source: The Wall Street Journal, Gregg Ip (07/18/2007)
Daily Real Estate News | July 9, 2007
Younger home buyers from Generations X and Y, born after 1965, grew up with technology and want high tech built into their homes, says Gopal Ahluwalia, staff vice president for research of the National Association of Home Builders in Washington, D.C.
"In the homes of the future, it's all going to be about technology," Ahluwalia says.
Here are some trends in high-tech homes:
Source: Orlando Sentinel, John Handley (07/08/07)
Daily Real Estate News | June 14, 2007
Most people don't fully understand current mortgage disclosure forms, according to a study that tested people's ability to answer key questions after having read the disclosure document.
The results prove that consumers could benefit from simpler explanations. Twenty percent couldn't figure out the amount of the loan or the cash due at closing. About a quarter couldn't decipher the settlement charges. A third didn't know what the interest rate was.
The study, released Wednesday by the Federal Trade Commission's Bureau of Economics, also tested a new easy-to-read form that got much more positive results.
"Our study demonstrated that it's possible to do a lot better than the current disclosures," said James M. Lacko, who authored the study with Janis K. Pappalardo. "There is a lot of interest in this right now, and we're hoping that this study will provide useful information to policymakers."
The study tested 800 mortgage customers. Half were given the current forms and half the new ones. Those tested on the current disclosure forms got an average of 61 percent of the test questions correct. Those who were given the prototype form answered 80 percent of them correctly, according to the survey results.
Source: The Wall Street Journal, Amy Hoak (06/13/2007)
Daily Real Estate News | May 4, 2007
The U.S. House Financial Services Committee on Thursday passed legislation allowing the Federal Housing Administration to offer borrowers a safer alternative to risky mortgage products and to help many home owners facing foreclosure.
The NATIONAL ASSOCIATION OF REALTORS®, a strong advocate of FHA modernization legislation, says the bill will bring about more stability to local real estate markets and economies.
“FHA can once again be a leader in providing safe loan products and preventing foreclosures by authorizing lenders to assist borrowers who are in default," says NAR President Pat V. Combs. "This ability will make a substantial difference for many families that may otherwise face foreclosure."
The legislation — titled the Expanding American Homeownership Act of 2007 — would increase loan limits, eliminate the statutory 3 percent minimum cash down payment, and give FHA flexibility to provide risk-based pricing. The bill will next go before the full House of Representatives for a vote.
What the Bill Would Do
NAR also supports the continued availability of FHA loss mitigation programs, which includes mortgage modifications that allow borrowers to change the terms of their mortgage so that they can afford to stay in their home. The program also offers “partial claim” programs through which FHA lends money to a borrower to cure a loan default. This no-interest loan is not due until the property is sold or paid off.
“In 2004 alone, more than 78,000 people were able to retain their home through FHA’s loss mitigation program, and two years later nearly 90 percent of these families are still in their home," Combs says. "That’s what I’d call really making a difference."
Boosting FHA mortgage loan limits will help first-time home buyers, minority buyers, and others who cannot qualify for conventional mortgages. Increasing loan limits will also help people living in high cost areas because the current low FHA limits make FHA unusable in those areas. Eliminating the 3 percent minimum down payment will also have positive results for many home buyers.
“The universal and consistent availability of FHA loan products is the principal hallmark that has made mortgage insurance available to individuals during periods of prosperity and economic depression,” Combs says. “The FHA program makes it possible for higher risk, yet credit-worthy borrowers to get prime financing.”
— REALTOR® Magazine Online
Daily Real Estate News | April 27, 2007
The price might be right, the layout spacious, and the commute short, but that perfect condo will be less than ideal if the noise from the upstairs neighbors rivals that jackhammer on the street.
For condo buyers, particularly those exchanging suburban quiet for urban hubbub, what they hear or don’t hear can make a difference in quality of life after they move in, says Mike Komula, an acoustician with Dudek, a California environmental consulting firm that helps builders assess the acoustic qualities of new buildings.
To help buyers learn what living there will be like before they sign a contract, Komula offers the following tips:
Quiet Construction
Builders are becoming increasingly cognizant of noise, and they know that “managing noise makes their multifamily projects more attractive to buyers,” says Komula. He recommends asking the builder, if possible, about construction details that enhance noise reduction.
Additionally, Komula suggests buyers ask about the Sound Transmission Class rating for walls between units and levels, floor-ceiling construction, between units. Most states include a rating in their building codes. California’s minimum is 50. An STC rating of 65 indicates a very high quality in terms of noise reduction.
— By Camilla McLaughlin for REALTOR Magazine Online