Housing may help give the economy a lift

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·         Housing may help give the economy a lift

·         NEW YORK – Nov. 9, 2012 – Lately, the housing market may be the one thing going right for the economy, Reuters reports. Several signs have pointed to a housing market in full recovery mode.

“Higher sales, prices and building, albeit modest so far, are a welcome boost as other drivers of the economy falter,” Reuters reports.

Unlike the “boom” years, housing has accounted for a small fraction of the gross domestic product in recent years. In 2005, it accounted for 6 percent, compared to 2.5 percent in the third quarter of this year.

The housing sector “would have to be on steroids to significantly boost GDP growth,” Paul Dales, an economist with Capital Economics, wrote in a recent research note.

Still, several economists are hopeful that residential investment could add two- to three-tenths of a percentage point to the GDP next year.

An increase in housing-related jobs also may help give the economy a lift. Housing-related jobs increased an average of 11,000 per month this year, a significant shift from 2011 when housing-related jobs declined, on average, by 1,000 per month.

But even the 11,000 per month could pale by 2013 if they hit an average of 30,000 per month, as predicted by Jim O’Sullivan, chief of U.S. economist at High Frequency Economics. That could make housing a significant contributor to chipping away at the unemployment rate. Analysts estimate that the economy needs 150,000 jobs created each month to keep the unemployment rate steady.

Housing may also help lift consumer spending, another important factor that needs to increase to give the economy a jolt. Real estate wealth can help, economists say. As more homeowners refinance into record low mortgage rates, these households will have more to spend.

Source: “Housing Market Rebound Fails to Recharge Economy,” Reuters (Nov. 5, 2012)

© Copyright 2012 INFORMATION, INC. Bethesda

 

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Short sale worth the extra hit?

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·         Real Estate Q&A: Short sale may be worth the extra tax hit

·         FORT LAUDERDALE, Fla. – Nov. 8, 2012 – Question: I have decided to sell my home through a short sale. I have heard that the deadline for the tax waiver is the end of the year. After that, you have to pay taxes on any debt that the lender forgives. I don’t want to owe money to the government. Now I’m unsure whether to go through with the short sale. – Sarah

Answer: The Mortgage Forgiveness Debt Relief Act of 2007 does expire at the end of this year, and industry groups and observers are concerned about the effect on homeowners and the real estate market in general. Most pundits, including me, think the law will be extended at some point. Still, this isn’t something you can count on.

As it is now, the amount the lender forgives on most primary residences is not taxable. No extension would make short sales less attractive next year and beyond because sellers would have to pay taxes due to the forgiven debt. This could result in tax hits of a few thousand dollars or considerably more.

Despite the potential tax liability, a short sale still may be the best choice – particularly if you owe much more than the house is worth, you’re getting divorced or you have to move quickly for a new job. Consult an accountant and see about your specific situation. Despite its reputation, the Internal Revenue Service often is willing to work with taxpayers.

About the writer: Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar. He is the chairperson of the Real Estate Section of the Broward County Bar Association and is an adjunct professor for the Nova Southeastern University Paralegal Studies program.

The information and materials in this column are provided for general informational purposes only and are not intended to be legal advice. No attorney-client relationship is formed. Nothing in this column is intended to substitute for the advice of an attorney, especially an attorney licensed in your jurisdiction.

Copyright © 2012 Sun Sentinel (Fort Lauderdale, Fla.), Gary M. Singer. Distributed by McClatchy-Tribune News Service.

 

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Home prices rise all over the US

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WASHINGTON – Nov. 7, 2012 – Growth in metropolitan area median home prices increased in the third quarter, and more areas are showing gains, according to the latest quarterly report by the National Association of Realtors® (NAR).

The median existing single-family home price rose in 120 out of 149 metropolitan statistical areas (MSAs) based on closings in the third quarter compared with same quarter in 2011, while 29 areas had price declines. In the second quarter 110 areas showed increases from a year earlier, while in the third quarter of 2011 only 39 metros were up.

NAR Chief Economist Lawrence Yun said the growth in home prices gets down to supply and demand. “Housing inventories have been gradually trending down from a record set in the summer of 2007,” he said. “Earlier this year, a broad equilibrium began to develop in most areas between home buyers and sellers, which led to a sustained upturn in home prices. We expect fairly normal appreciation patterns in 2013, but there is a risk of price acceleration if builders are unable to increase supply to meet the needs of our growing population and household formation.”

The national median existing single-family home price was $186,100 in the third quarter, up 7.6 percent from $173,000 in the third quarter of 2011, which is the strongest year-over-year price increase since the first quarter of 2006 when the median price rose 9.4 percent. In the second quarter the price increased 7.2 percent from a year earlier.

The median price is where half of the homes sold for more and half sold for less; medians are more typical than average prices, which are skewed higher by a relatively small share of upper-end transactions.

Some of the price gain resulted from a smaller share of distressed home sales in the market, but the higher prices significantly reflect a market recovery. Distressed homes - foreclosures and short sales that generally sell at deep discounts - accounted for 23 percent of second quarter sales, down from 30 percent a year ago.

A separate breakout of income requirements to buy a home on a metro area basis shows buyers in the vast majority of areas had ample income in the third quarter, assuming they could meet stringent mortgage credit standards.

Total existing-home sales, including single-family and condo, rose 3.2 percent to a seasonally adjusted annual rate of 4.68 million in the third quarter from 4.54 million in the second quarter, and were 10.3 percent higher than the 4.25 million pace during the third quarter of 2011.

At the end of the third quarter 2.32 million existing homes were available for sale, which is 20.0 percent below the close of the third quarter of 2011 when 2.90 million homes were on the market.

According to Freddie Mac, the national commitment rate on a 30-year conventional fixed-rate mortgage averaged a record low 3.54 percent in the third quarter, down from 3.80 percent in the second quarter and 4.31 percent in the third quarter of 2011.

NAR President Moe Veissi, broker-owner of Veissi & Associates Inc. in Miami, said affordability conditions are a big factor in rising sales. “Historically low mortgage interest rates are encouraging many buyers who were on the sidelines,” he said. “Sales this year are notably higher than the levels seen in 2008 through 2011, so we’re clearly in a recovery phase with rising sales, declining inventory and rising prices. Of course the recovery would be stronger and more stable if we could return to safe but sensible mortgage underwriting standards.”

A breakout of incomes required to purchase a median-priced existing single-family home by metro area shows the typical buyer had more income than necessary in the third quarter. Income amounts are determined using several downpayment percentages, assuming a mortgage interest rate of 4 percent and 25 percent of gross income devoted to mortgage principal and interest.

The national median family income was $61,700 in the third quarter. However, to purchase a home at the national median price, a buyer making a 5 percent downpayment would only need an income of $40,900. With a 10 percent downpayment the required income is $38,700, while with 20 percent down the necessary income is $34,400.

In the condo sector, metro area condominium and cooperative prices - covering changes in 54 metro areas - showed the national median existing-condo price was $180,800 in the third quarter, up 7.7 percent from the third quarter of 2011. Thirty-three metros showed increases in their median condo price from a year ago and 21 areas had declines.

First-time buyers purchased 32 percent of all homes in the third quarter, down from 34 percent in the second quarter; they were 32 percent in the third quarter of 2011.

The share of all-cash home purchases was 27 percent in the third quarter, down from 29 percent in the second quarter and 29 percent in the third quarter of 2011. Investors, who make up the bulk of cash purchasers and compete with first-time buyers, accounted for 17 percent of all transactions in the third quarter, down from 19 percent in the second quarter and 20 percent a year ago.

“The modest decline in first-time buyers and investors shows the impact of limited inventory in the lower price ranges from a shrinking share of distressed homes, which are popular with both of these groups,” Yun explained.

Regionally, existing-home sales in the Northeast increased 1.7 percent in the third quarter and are 9.8 percent above the third quarter of 2011. The median existing single-family home price in the Northeast slipped 0.3 percent to $246,900 in the third quarter from a year ago.

In the Midwest, existing-home sales rose 5.2 percent in the third quarter and are 17.8 percent higher than a year ago. The median existing single-family home price in the Midwest increased 4.2 percent to $151,100 in the third quarter from the same quarter in 2011.

Existing-home sales in the South increased 5.4 percent in the third quarter and are 11.7 percent above the third quarter of 2011. The regional median existing single-family home price rose 5.7 percent to $165,400 in the third quarter from a year earlier.

In the West, existing-home sales slipped 1.2 percent in the third quarter due to limited supplies, but are 2.1 percent higher than a year ago. With the tight inventory, the median existing single-family home price in the West surged 20.2 percent to $247,400 in the third quarter from the third quarter of 2011.

© 2012 Florida Realtors

 

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Fla. consumer confidence hits five-year high

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·         Fla. consumer confidence hits five-year high

·         GAINESVILLE, Fla. – Sept. 26, 2012 – Florida’s September consumer confidence reached a post-recession high of 79 – up three points from a revised August reading of 76 – according to a monthly University of Florida (UF) survey.

“The last time Florida consumer confidence hit 79 was in October 2007,” says Chris McCarty, director of UF’s Survey Research Center in the Bureau of Economic and Business Research. “At that time, confidence was on its way down as the housing crisis was getting under way. This month’s index comes at a time when the economy is still in recovery.”

The September survey showed increases in all five components that researchers use to assess the collective economic opinion of Floridians.

In September, the component measuring whether respondents’ think they’re better off economically today compared to a year ago rose one point to 62. In addition, the component that measures economic expectations one year from now rose one point to 86, while the component measuring expectations that personal finances will improve a year from now rose one point to 86.

Floridians had a rosier outlook for the state as well. That component rose three points to 78. The component that measured their outlook for the nation went up two points to 84.

Finally, the component that measures whether Floridians think it’s a good time to buy big-ticket items, such as automobiles and refrigerators, rose two points to 82.

Despite the uptick, McCarty says several economic conditions serve as a drag on Florida’s recovery: job losses in construction and government helped keep the state’s unemployment rate in August unchanged from the previous month at 8.8 percent. And “although inflation is currently under control, consumers should expect increases in prices next year, as the effects of the drought hitting much of the U.S. make their way into food prices.”

However, there is good economic news for Florida.

The median price for a single-family home in August was up 5.8 percent over the previous year’s average at $147,000, although it was down slightly from July’s figure.

“The stock market is getting closer to the all-time record and this, along with increases in housing prices, are certainly a boost to consumers’ sense of wealth,” McCarty says, adding that October should prove to be an “interesting month.”

Political ideology, which already plays a significant role in consumer confidence, could also become even more crucial as the presidential campaign heats up. “Obama supporters have much higher confidence than Romney supporters,” McCarty. “Whether Floridians react negatively or positively remains to be seen, but it will largely determine consumer confidence as we get close to the holiday shopping season.”

Conducted Sept. 12-20, the UF study reflects the responses of 419 individuals who represent a demographic cross-section of Florida. The index used by UF researchers is benchmarked to 1966, which means a value of 100 represents the same level of confidence for that year. The lowest index possible is a 2; the highest is 150.

© 2012 Florida Realtors®

 

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Time to buy your first home is NOW

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·         Florida Housing Finance, the administrator of the Florida Bond program has just delivered some great news for area First Time Homebuyers.  The interest rate on the program has been lowered to a fixed rate of 3.5%!  Lender fees are still very limited on the program and no doc stamps or intangible taxes are collected on the note and mortgage which saves the borrower a significant amount at closing.

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·         A second program change that has been communicated is that the borrower’s minimum cash investment under the program of $1,000 can now be gifted!

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·         Most borrowers under the program will qualify for a $7,500 zero interest, zero payment second mortgage that can be used towards the down payment and closing costs of the loan.  Certain borrowers may qualify for additional assistance of up to $10,000 under the Lee County HOME program, up to $20,000 under the Collier County SHIP program or up to $5,000 under the Federal Home Loan Bank first time homebuyer program.  And if further assistance is needed, the seller can pay up to 6% of the purchase price towards closing costs!

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·         Keep in mind that to qualify for this program, the borrower and/or their spouse cannot have owned a primary residence over the last three years.  Also, maximum household income cannot exceed $79,800 for a family of three or more or $68,400 for a one or two person family in Lee County or $101,920 for a family of three or more or $87,360 for a one or two person family in Collier County.  The minimum credit score on the program is 640 and non-traditional credit can be developed for a borrower if no credit scores exist. 

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Contact us for more information

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Time to buy a house is NOW

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·         If you can pull it off, buy a house

·         NEW YORK – Aug. 13, 2012 – Investment opinions are like, um, noses: Everyone has one. Buy stocks, sell bonds? Go long steel and short copper? Buy sheep, sell deer?

It’s pretty easy to see both sides of an investment argument. But it’s hard to argue against buying a house now, assuming you can get a loan.

The housing cycle is a long one, in part because buying a house moves at a glacial pace, at least compared with the time it takes to buy a stock or bond. If you’re not pre-approved for a mortgage, you have to submit to a credit check, which, these days, is only slightly less intrusive than a CIA background check. You have to get the home inspected. You have to figure out the various fees your bank charges, including the one marked “Just because we can.”

How long is a housing cycle? Pretty long. A relatively modest housing bubble, by today’s standards, occurred in Boston in the late 1980s. Average home prices, adjusted for inflation, hit $310,000 in October 1987. Home prices didn’t hit that level again until May of 2000. Someone who bought at the high had a long wait to get even – particularly in light of the broker’s commission.

Home prices bottomed, however, in March 1993 – roughly six years after the top. History doesn’t repeat itself precisely, but it’s interesting to note that the top of the last housing bubble was six years ago, in 2006.

Why be bullish on housing?

Prices. You can always buy low and watch prices go lower. But by many measures, home prices are still cheap. The median single-family home price – half higher, half lower – hit its nadir in January, dropping to $154,600, the lowest since October 2001, according to the National Association of Realtors. That’s down from a high of $230,900 in July 2006.

Existing-home prices rose in June to a median $190,100, up 8 percent from June 2011. Those are still 2003 levels.

Supply. The good news is that the enormous supply on the market is shrinking. It takes a wearisome amount of time for supply to shrink, in part because there are people who have wanted to sell their homes for many years, but haven’t been able to get the price they want. As prices rise, more homes come on the market.

Nevertheless, Ned Davis Research, a respected institutional research firm, estimates that excess supply of houses on the market should be eliminated by the end of 2013. When excess supply dries up, people start building more new houses, which has the virtuous effect of reducing the unemployment rate and increasing the economy generally.

Mortgage rates. The average 30-year fixed-rate mortgage rate is 3.59 percent, according to mortgage giant Freddie Mac. That’s above the all-time low of 3.49 percent the week of July 26, but close enough. It’s conceivable that at some point in the next 30 years, your interest rate would be less than the rate of inflation.

Assuming you financed 80 percent of the median single-family home, or $152,080, your mortgage payment would be about $691, excluding taxes and other irritations. About $5,589 of your first year’s payments would be tax-deductible mortgage interest.

Thanks mainly to low home prices and interest rates, the NAR’s housing affordability index rose to its highest level on record. (The higher the index, the more affordable the average home. The index also takes into account average family income, which has been falling since 2008.)

What could go wrong? All sorts of things. You may not be able get a loan. Bankers are insisting on checking things that seemed far too troublesome during the housing bubble, like whether you have a decent credit rating, a down payment, or a job.

The other problem is that houses are leveraged investments – that is, you borrow money to buy them. Let’s consider the example above, where someone buys a $190,100 house and finances $152,080.

Your investment is $38,020. Let’s say that the worst happens: Home prices fall, and you have to sell the house for $175,000.

Unfortunately, the bank won’t split the loss with you. You’ll get back $22,920 from the sale, and wave goodbye to $15,100 of your downpayment. That’s a 40 percent loss, even though your house has fallen 8 percent in value.

There are other risks with homeownership, ranging from termites to ghosts in the hall closet. But if you’re planning to live in your home for a long time, you have the money, and you can get financing, it’s a fine time to buy.

© Copyright 2012 USA TODAY, a division of Gannett Co. Inc.

 

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Housing market turning around. Prices moving up

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National Association of REALTORS(R) FROM THE President Encouraging Signs

 

We're seeing a lot of encouraging signs in the housing market across the country. NAR's latest existing–home sales report shows there's not inventory to meet the demand in many areas and that's driving up prices and creating multiple bidding situations. These findings vary greatly from what we've had before. Hear more from an interview I did recently with XM radio, and be sure to share it with your clients. Listen to President Moe Veissi's radio interview http://www.realtor.org/audio/moe-veissi-discusses-encouraging-signs-in-housing-market-on-xm-radio?om_rid=AABhLk&om_mid=_BQGxlvB8tHU1W6&om_ntype=NARWeekly Moe Veissi Discusses Encouraging Signs in Housing Market on XM radio 02:04 ·moe-veisse-xm-radio-discusses-encouraging-housing-market-signs-2012-07-30.mp3 Listen to an interview with NAR President Moe Veissi on XM radio where he talks about encouraging signs in the housing market, including year-over-year price increases, lower inventory, and even multiple bids in some instances. He provides tips for people considering buying a home and what to do ahead of time before beginning the search for the perfect home

 

 

 

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