Two lawmakers, one Republican and one Democrat, have joined forces to push federal legislation through that would facilitate wider use and shorter transaction timelines for a foreclosure alternative that some say could be a lifeline for millions of underwater homeowners while drastically reducing the number of empty, repossessed homes lining U.S. neighborhoods – the short sale.
The bill, introduced by Reps. Tom Rooney (R-Florida) and Robert Andrews (D-New Jersey), would impose a deadline of 45 days on lenders to give an approval, disapproval, or status of a decision on an offer for a short sale.
According to a statement from the congressmen, consumers have had difficulty executing short sales as lenders have taken months to decide whether to accept proposed short sale prices, which can often derail the sale altogether and send the homeowner into foreclosure.
Rooney and Andrews say their legislation, the Prompt Decision for Qualification for Short Sale Act of 2011, will bring the processing time for short sale price approvals in line with the home-buying and home-selling consumer’s expectations – at most 45 days after submitting the request for short sale approval.
A similar bill – in fact, by the same name – was introduced last September but never came up for debate before a House committee before the legislative session ended.
The National Association of Realtors (NAR) is throwing its support behind the new bill. The trade group has been actively pushing the lending industry to improve the process for approving short sales, which represent about 13 percent of recent home sales according to NAR data.
“Realtors want to help more homeowners avoid foreclosure by facilitating a short sale when a family is absolutely unable to keep their home; however, that can only happen if lenders and servicers approve short sale offers in a reasonable amount of time,” said Ron Phipps, president of NAR and broker-president of Phipps Realty in Warwick, Rhode Island.
Phipps says a short sale not only minimizes the negative impact on the borrower, but in most cases costs the lender less than a foreclosure. He praised Reps. Rooney and Andrews for their efforts on a bill that he says could soon bring relief to distressed homeowners who hope to avoid foreclosure.
Some market participants, though, aren’t so optimistic, arguing that the government has a host of requirements in place for the banks when it comes to certain housing and mortgage issues that aren’t enforced.
The Prompt Decision for Qualification for Short Sale Act of 2011 has not yet been referred to a committee.
Friday, April 29, 2011
Friday, April 22, 2011
Jobs, Demographic Forces Key to Housing Recovery
"Things are positive for the long run, though clearly there's going to be a period of turmoil," remarked Eric Belsky, managing director of the Joint Center for Housing Studies, in an interview coinciding with the release of the Center's 2010 report titled "The State of the Nation's Housing."
Among factors causing concern are elevated vacancy rates, record foreclosures, and continued high unemployment.
Over the coming decade and once employment stages a convincing comeback, demographic forces should lift currently depressed levels of household growth and spur increased construction and sales, according to JCHS representatives. The annual report analyzes current home ownership trends and examines how federal government policies are affecting the marketplace.
Bolstered by immigrants, the echo-boom generation is already larger than the baby boom generation, and the baby-bust generation (born 1966-1985) is nearly as large. If immigration matches the pace projected by the Census Bureau and headship rates (ratio of households to the population) by age and race hold steady, household growth should come close to 15 million from 2010 to 2020, the researchers reported. Even if it falls to half the projected pace, household growth should equal the 12.5 million growth from 1995-2005.
Both housing policy challenges and opportunities will abound in the years ahead, the report concludes.
A brightening personal-income picture, a willingness by more local banks to make home loans, reports that investors are returning to the housing market and that housing is the most affordable it has been in decades are encouraging signs of a real estate rebound. Nevertheless, the Harvard researchers say big changes are afoot in residential real estate, pointing to shifting demographics.
Among six demographic drivers with implications for housing are:
1.
Slowdown in household growth
A sharp drop in immigration, attributed to broad job losses, and a doubling up among economically stressed families have played major parts in decelerating household growth. During the first half of the decade, household growth was 1.2-1.4 million annually, but fell to less than 1.0 million per year in the subsequent years (2005-2009).
2.
Reduced mobility
Overall mobility rates fell by about 12.6 percent in the period 2005-2008 before stabilizing in 2009. Homeowners experienced the steepest declines, "likely because the housing crash left so many underwater (or nearly so) on the mortgages, making it difficult to move," the researchers suggested. Mobility rates among older owners posted the sharpest drop as many seniors deferred retiring and moving to a different home because the financial crisis depressed their home equity and reduced their retirement accounts.
3.
A lost decade for household income
For the first time since at least 1970, median household incomes for all age groups in each income quartile are likely to end the decade lower than they began. Households under age 25 in the lowest income quartile were hardest hit, but no group was spared from the declines.
"These dismal figures predate the heavy employment losses in 2009," the report cautions, noting housing demand must therefore build upon a lower real income base than a decade ago. If incomes do not bounce back quickly, "Americans will have to choose whether to cut back on the size and features of their homes or allocate larger shares of their incomes to housing."
4.
Household wealth reversals
Household wealth went through a sharp boom-and-bust cycle over the last decade, while household mortgage debt exploded. On a per household basis, in the span of a decade, real household wealth actually fell from $526,000 in 1999 to $486,600 in 2009. Mortgage debt soared, rising from less than $6 trillion to more than $10 trillion in inflation-adjusted dollars. A resulting drop in home equity was described as "startling" in the JCHS report, which noted, "Aggregate real home equity has not been this low since 1985 when there were far fewer homeowners than today."
5.
Growing diversity of demand
"Regardless of what happens in the future, immigration since 1980 has already reshaped the nation's demographic profile, particularly in terms of racial and ethnic diversity," wrote the authors of The State of the Nation's Housing 2010.
Throughout the current housing cycle, the numbers of immigrant and minority households outgrew those of native-born white households, accounting for 74 percent of net household growth between 2003 and 2009. Those rising numbers mean an increased presence of these sectors in home buying, remodeling, and rental markets. "Future expansion of housing investment and the growth in the broader economy will depend on reducing the significant income and wealth disparities between whites and minorities," the authors advised.
6.
Residential development and the environment
Acknowledging a "growing chorus" is calling for more compact forms of residential development to reduce vehicle miles traveled (VMT), and consequently, carbon emissions and energy consumption, the researchers reviewed various studies and arguments by proponents. They observed:
1. In most communities, achieving compact development would require changes to local zoning laws, which today often discourage higher densities along with mixed commercial and residential land uses.
2. Compact development would, at best, reduce VMT and related carbon emissions relative to a 2000 baseline between 11 percent (as estimated by the National Research Council) and 18 percent (the Urban Land Institutes estimate) by 2050.
3. More compact development patterns would help make public transportation more economical.
4. While having public transit in the area increases the share of commuters that use it, access does not necessarily mean high ridership. In fact, less than 25 percent of households with at least one commuter report using public transport regularly.
The Outlook
The aging echo-boom generation, augmented by immigration, will increasingly drive household growth over the next 15 years. The number of echo boomers is expected to swell to 92.9 million by 2025. Immigration is expected to grow to 86.5 million. "This highly diverse generation will give demand for apartments and smaller start homes a lift over the next 15 years," the report stated.
Second-generation Americans (children born in the US to immigrant parents) among the echo boomers will be important in shaping the characteristics of future households since those aged 25-64 typically have higher household incomes than both foreign-born and other native-born households of all races and ethnicities.
Baby boomers will boost demand for senior housing. JCHS researchers say the units built over the next 10-20 years that intentionally cater to older Americans will be the housing available for generations to come. They expect senior housing issues will gain more urgency during the coming decade as a result of limited federal support for senior housing and the current funding system that encourages expensive trips to skilled nursing facilities rather than lower-cost, less institutional assisted living options and programs.
The State of the Nation's Housing, released annually by the Joint Center for Housing Studies, provides a periodic assessment of the nation's housing outlook and summarizes important trends in the economics and demographics of housing. The report continues to earn national recognition as a source of information regularly utilized by housing researchers, industry analysts, policy makers, and the business community.
The complete 44-page report on The State of the Nation's Housing 2010 may be viewed and downloaded at http://www.jchs.harvard.edu/publications/markets/son2010/
Among factors causing concern are elevated vacancy rates, record foreclosures, and continued high unemployment.
Over the coming decade and once employment stages a convincing comeback, demographic forces should lift currently depressed levels of household growth and spur increased construction and sales, according to JCHS representatives. The annual report analyzes current home ownership trends and examines how federal government policies are affecting the marketplace.
Bolstered by immigrants, the echo-boom generation is already larger than the baby boom generation, and the baby-bust generation (born 1966-1985) is nearly as large. If immigration matches the pace projected by the Census Bureau and headship rates (ratio of households to the population) by age and race hold steady, household growth should come close to 15 million from 2010 to 2020, the researchers reported. Even if it falls to half the projected pace, household growth should equal the 12.5 million growth from 1995-2005.
Both housing policy challenges and opportunities will abound in the years ahead, the report concludes.
A brightening personal-income picture, a willingness by more local banks to make home loans, reports that investors are returning to the housing market and that housing is the most affordable it has been in decades are encouraging signs of a real estate rebound. Nevertheless, the Harvard researchers say big changes are afoot in residential real estate, pointing to shifting demographics.
Among six demographic drivers with implications for housing are:
1.
Slowdown in household growth
A sharp drop in immigration, attributed to broad job losses, and a doubling up among economically stressed families have played major parts in decelerating household growth. During the first half of the decade, household growth was 1.2-1.4 million annually, but fell to less than 1.0 million per year in the subsequent years (2005-2009).
2.
Reduced mobility
Overall mobility rates fell by about 12.6 percent in the period 2005-2008 before stabilizing in 2009. Homeowners experienced the steepest declines, "likely because the housing crash left so many underwater (or nearly so) on the mortgages, making it difficult to move," the researchers suggested. Mobility rates among older owners posted the sharpest drop as many seniors deferred retiring and moving to a different home because the financial crisis depressed their home equity and reduced their retirement accounts.
3.
A lost decade for household income
For the first time since at least 1970, median household incomes for all age groups in each income quartile are likely to end the decade lower than they began. Households under age 25 in the lowest income quartile were hardest hit, but no group was spared from the declines.
"These dismal figures predate the heavy employment losses in 2009," the report cautions, noting housing demand must therefore build upon a lower real income base than a decade ago. If incomes do not bounce back quickly, "Americans will have to choose whether to cut back on the size and features of their homes or allocate larger shares of their incomes to housing."
4.
Household wealth reversals
Household wealth went through a sharp boom-and-bust cycle over the last decade, while household mortgage debt exploded. On a per household basis, in the span of a decade, real household wealth actually fell from $526,000 in 1999 to $486,600 in 2009. Mortgage debt soared, rising from less than $6 trillion to more than $10 trillion in inflation-adjusted dollars. A resulting drop in home equity was described as "startling" in the JCHS report, which noted, "Aggregate real home equity has not been this low since 1985 when there were far fewer homeowners than today."
5.
Growing diversity of demand
"Regardless of what happens in the future, immigration since 1980 has already reshaped the nation's demographic profile, particularly in terms of racial and ethnic diversity," wrote the authors of The State of the Nation's Housing 2010.
Throughout the current housing cycle, the numbers of immigrant and minority households outgrew those of native-born white households, accounting for 74 percent of net household growth between 2003 and 2009. Those rising numbers mean an increased presence of these sectors in home buying, remodeling, and rental markets. "Future expansion of housing investment and the growth in the broader economy will depend on reducing the significant income and wealth disparities between whites and minorities," the authors advised.
6.
Residential development and the environment
Acknowledging a "growing chorus" is calling for more compact forms of residential development to reduce vehicle miles traveled (VMT), and consequently, carbon emissions and energy consumption, the researchers reviewed various studies and arguments by proponents. They observed:
1. In most communities, achieving compact development would require changes to local zoning laws, which today often discourage higher densities along with mixed commercial and residential land uses.
2. Compact development would, at best, reduce VMT and related carbon emissions relative to a 2000 baseline between 11 percent (as estimated by the National Research Council) and 18 percent (the Urban Land Institutes estimate) by 2050.
3. More compact development patterns would help make public transportation more economical.
4. While having public transit in the area increases the share of commuters that use it, access does not necessarily mean high ridership. In fact, less than 25 percent of households with at least one commuter report using public transport regularly.
The Outlook
The aging echo-boom generation, augmented by immigration, will increasingly drive household growth over the next 15 years. The number of echo boomers is expected to swell to 92.9 million by 2025. Immigration is expected to grow to 86.5 million. "This highly diverse generation will give demand for apartments and smaller start homes a lift over the next 15 years," the report stated.
Second-generation Americans (children born in the US to immigrant parents) among the echo boomers will be important in shaping the characteristics of future households since those aged 25-64 typically have higher household incomes than both foreign-born and other native-born households of all races and ethnicities.
Baby boomers will boost demand for senior housing. JCHS researchers say the units built over the next 10-20 years that intentionally cater to older Americans will be the housing available for generations to come. They expect senior housing issues will gain more urgency during the coming decade as a result of limited federal support for senior housing and the current funding system that encourages expensive trips to skilled nursing facilities rather than lower-cost, less institutional assisted living options and programs.
The State of the Nation's Housing, released annually by the Joint Center for Housing Studies, provides a periodic assessment of the nation's housing outlook and summarizes important trends in the economics and demographics of housing. The report continues to earn national recognition as a source of information regularly utilized by housing researchers, industry analysts, policy makers, and the business community.
The complete 44-page report on The State of the Nation's Housing 2010 may be viewed and downloaded at http://www.jchs.harvard.edu/publications/markets/son2010/
Thursday, April 14, 2011
New Rules for First-Time Homebuyers
Without a house to sell , first-time home buyers have had a field day in the depressed housing market. Until recently, anyway. A series of new rules, regulations and policies have changed the landscape, making buying that new home harder and more expensive.
Not long ago, first-time buyers accounted for 40% of home sales. Now they're down to 29% and falling, experts say, as first-time buyers confront a steady accumulation of rising fees, costs, and rates. This month, fees on most new mortgages will rise by up to 0.50%. In April, fees on small-down-payment mortgages, a first-time buyer favorite, will spike. Meanwhile, more lenders are requiring larger down payments, and new proposals from the Obama administration call for mortgages to become more expensive and limited in size.
The new fees and higher barriers to entry are all a response to the sweeping mortgage losses of the last several years. Banks and other lenders lost billions of dollars on subprime and other risky mortgages, and some must now buy back bad loans they sold to Fannie Mae and Freddie Mac. To cover those losses, banks and the agencies are raising fees on new mortgages, says Keith Gumbinger, a vice president at HSH Associates, which tracks the mortgage market. Also, from the perspective of lenders and the government, making it harder and more expensive to get a mortgage will deter or cull the riskiest borrowers and minimize defaults.
But taken in total, all this reform means the window of opportunity for first-time buyers may be closing. Home prices still seem to be near the bottom, mortgages are still cheap and, though they have increased over the past five months, interest rates are still low. Of course, there are still reasons to wait to buy: The changes to the mortgage market could depress home sales and prices further. But for those who don't want to wait, here are the new rules for first-time home buyers.
New rule: Put more money down.
As housing prices drop, mortgage lenders are requiring larger downpayments on homes.
Not because you'll have to -- it's still possible to make a down payment of less than 5% -- but because you want to. Insurance fees on the government-insured mortgages that require just 3.5% down have doubled in seven months, to up to 1.15% (as of April). On a 30-year, $300,000 mortgage, a buyer would pay $30,000 more in fees than if he had signed up for the mortgage in September. Also, between new lender requirements and cash-flush buyers, down payments have been rising since the last half of 2010 and now average 34% of the purchase price, according to the latest data by mortgage-data firm CoreLogic.
It's unlikely that a first-time home buyer can save so much money for a down payment, especially in high-priced markets like New York and San Francisco, says Cameron Findlay, chief economist at LendingTree.com, which tracks mortgage rates. Instead, first timers might need to consider alternative options to get cash , like grants offered by individual states. And most lenders still permit buyers to use cash gifts from family with a notarized letter from the donor stating that the money doesn't need to be paid back, says Gumbinger. Or, a buyer who's open to co-owning a home can sign up for a mortgage with a co-applicant who has extra cash to put down but wants a stake in the property.
New rule: Stay for a decade.
Not only are the days of flip-and-move long gone, but buying a house has become truly a long-term investment. In many cases, 10 years long, says Paul Bishop, vice president of research at the National Association of Realtors -- if buyers are hoping to make a profit or just break even. As mortgage fees rise, buyers have to recoup larger costs, which takes a longer time. Also, experts predict very slow growth in home prices over the next 10 years, which means it will take a long time before sellers can make a profit, says Findlay. Of course, buying a home may still make financial sense, but buyers' focus should shift from rising prices to building equity.
For first-time buyers, this means avoiding homes that require renovations, if it's possible -- it will only take longer to recoup the costs of a new kitchen or deck, says Findlay. Instead, stick to a home that requires few major projects, which builds equity with the passing of time. Also, a bigger down payment can cushion the blow for buyers who end up having to sell in a hurry, because it lessens the chances of owing more money on the home than it's worth should values drop.
New rule: Brace for competition.
Following the housing downturn, desperate sellers were often eager to accept an offer – any offer. But now, first-time buyers looking for discounted prices may be disappointed. Over the past few months, investors, international buyers, and downsizing retirees have made a noticeable impact on the market, because they're paying with cash. In January, about 32% of purchases were made with all cash, up from 26% a year ago, according to the NAR. Sellers are often more inclined to accept these offers since they don't need to wait for a lender to approve financing.
To stand out, first-time buyers can present an offer with few contingencies. At this point, given growing competition among buyers, there's little reason for a seller to work with someone who requests repairs or asks them to cover the closing costs. But offers from buyers who ask strictly for a home inspection and appraisal – two requirements they shouldn't give up – are more likely to get accepted than all-cash bids with a long list of requirements.
Not long ago, first-time buyers accounted for 40% of home sales. Now they're down to 29% and falling, experts say, as first-time buyers confront a steady accumulation of rising fees, costs, and rates. This month, fees on most new mortgages will rise by up to 0.50%. In April, fees on small-down-payment mortgages, a first-time buyer favorite, will spike. Meanwhile, more lenders are requiring larger down payments, and new proposals from the Obama administration call for mortgages to become more expensive and limited in size.
The new fees and higher barriers to entry are all a response to the sweeping mortgage losses of the last several years. Banks and other lenders lost billions of dollars on subprime and other risky mortgages, and some must now buy back bad loans they sold to Fannie Mae and Freddie Mac. To cover those losses, banks and the agencies are raising fees on new mortgages, says Keith Gumbinger, a vice president at HSH Associates, which tracks the mortgage market. Also, from the perspective of lenders and the government, making it harder and more expensive to get a mortgage will deter or cull the riskiest borrowers and minimize defaults.
But taken in total, all this reform means the window of opportunity for first-time buyers may be closing. Home prices still seem to be near the bottom, mortgages are still cheap and, though they have increased over the past five months, interest rates are still low. Of course, there are still reasons to wait to buy: The changes to the mortgage market could depress home sales and prices further. But for those who don't want to wait, here are the new rules for first-time home buyers.
New rule: Put more money down.
As housing prices drop, mortgage lenders are requiring larger downpayments on homes.
Not because you'll have to -- it's still possible to make a down payment of less than 5% -- but because you want to. Insurance fees on the government-insured mortgages that require just 3.5% down have doubled in seven months, to up to 1.15% (as of April). On a 30-year, $300,000 mortgage, a buyer would pay $30,000 more in fees than if he had signed up for the mortgage in September. Also, between new lender requirements and cash-flush buyers, down payments have been rising since the last half of 2010 and now average 34% of the purchase price, according to the latest data by mortgage-data firm CoreLogic.
It's unlikely that a first-time home buyer can save so much money for a down payment, especially in high-priced markets like New York and San Francisco, says Cameron Findlay, chief economist at LendingTree.com, which tracks mortgage rates. Instead, first timers might need to consider alternative options to get cash , like grants offered by individual states. And most lenders still permit buyers to use cash gifts from family with a notarized letter from the donor stating that the money doesn't need to be paid back, says Gumbinger. Or, a buyer who's open to co-owning a home can sign up for a mortgage with a co-applicant who has extra cash to put down but wants a stake in the property.
New rule: Stay for a decade.
Not only are the days of flip-and-move long gone, but buying a house has become truly a long-term investment. In many cases, 10 years long, says Paul Bishop, vice president of research at the National Association of Realtors -- if buyers are hoping to make a profit or just break even. As mortgage fees rise, buyers have to recoup larger costs, which takes a longer time. Also, experts predict very slow growth in home prices over the next 10 years, which means it will take a long time before sellers can make a profit, says Findlay. Of course, buying a home may still make financial sense, but buyers' focus should shift from rising prices to building equity.
For first-time buyers, this means avoiding homes that require renovations, if it's possible -- it will only take longer to recoup the costs of a new kitchen or deck, says Findlay. Instead, stick to a home that requires few major projects, which builds equity with the passing of time. Also, a bigger down payment can cushion the blow for buyers who end up having to sell in a hurry, because it lessens the chances of owing more money on the home than it's worth should values drop.
New rule: Brace for competition.
Following the housing downturn, desperate sellers were often eager to accept an offer – any offer. But now, first-time buyers looking for discounted prices may be disappointed. Over the past few months, investors, international buyers, and downsizing retirees have made a noticeable impact on the market, because they're paying with cash. In January, about 32% of purchases were made with all cash, up from 26% a year ago, according to the NAR. Sellers are often more inclined to accept these offers since they don't need to wait for a lender to approve financing.
To stand out, first-time buyers can present an offer with few contingencies. At this point, given growing competition among buyers, there's little reason for a seller to work with someone who requests repairs or asks them to cover the closing costs. But offers from buyers who ask strictly for a home inspection and appraisal – two requirements they shouldn't give up – are more likely to get accepted than all-cash bids with a long list of requirements.
Thursday, April 7, 2011
Housing market doing “surprisingly well” without a stimulus
Last month’s pending sales fell below year-ago totals in Western Washington, but brokers say the market is faring quite well, considering last year’s activity was boosted by federal tax credits.
The latest report from Northwest Multiple Listing Service shows 7,570 pending sales of single family homes and condominiums during March. That’s down about 12 percent from a year ago when members reported 8,605 pending transactions (mutually accepted offers) across the 21 counties in the Northwest MLS service area.
“The market is doing surprisingly well without a stimulus,” observed Northwest MLS director OB Jacobi, president of Windermere Real Estate Company. “Considering that this time last year there was a rush of buyers trying to beat the tax credit deadline, to have the number of sales off just slightly points towards a strengthening market,” he added.
A comparison to two years ago reveals a double-digit jump in pending sales. Area-wide, the volume is up nearly 33 percent, rising from 5,701 pending sales in March 2009 to 7,570 for last month. For the four-county Puget Sound region, pending sales spiked nearly 42 percent compared to two years ago (from 4,266 to 6,049). “The glass is starting to look more half full than half empty,” Jacobi commented.
Mike Grady, president and COO of Coldwell Banker Bain, agreed. “Most real estate professionals will be happy to move past the year-over-year comparisons that have been made the first few months of 2011, as they reflect the boost given home sales by last year’s Homebuyer Tax Credit,” he noted, adding, “Home sales are now standing on their own -- without the benefit of incentives -- and the market is actually behaving quite typically.”
Buyers have plenty of choices, although the selection is smaller than a year ago, reflecting fewer new listings being added to inventory. Members added 9,812 new listings to inventory last month, which compares to 12,994 additions for the same month a year ago. At month end, the Northwest MLS database included 33,444 active listings, including 28,146 single family homes and 5,298 condominiums. That’s a drop of 5,272 properties, a decline of 13.6 percent.
“In fact, some urban core neighborhoods, such as Greenlake, Queen Anne and West Bellevue, are seeing very strong demand, and a waning supply of desirable homes for sale,” Grady reported. Many buyers looking in these neighborhoods are beginning to express frustration over the lack of available homes, according to Grady. “As a result, Realtors are beginning to report multiple offers, with contracts settling over the list price on the best homes.”
While this certainly isn’t the norm in most areas served by the NWMLS, Grady said it is encouraging that in some areas homes are selling briskly, and distressed and bank-owned properties are still in the minority.
Distressed properties continue to drag down prices. According to research by the National Association of REALTORS®, nearly one of every four home sales (24 percent) in Washington is classified as a short sale or foreclosure.
Northwest MLS members reported 4,590 closed sales of single family homes and condominiums last month. That total represents a drop of 7.7 percent from twelve months ago when members notched 4,972 closings.
Prices on last month’s closed sales system-wide declined about 8 percent compared to a year ago. The area-wide median sales price was $242,925; a year ago it was $264,475. In King County, prices dipped about 7 percent ($319,950 last month versus $343,950 for March 2010), although the gap was much narrower in some areas. In the Northwest MLS map areas comprising the Eastside, prices were off about 2 percent ($435,000 versus 444,000), while in the Seattle area, the year-over-year drop was only about 1 percent ($357,500 versus $361,500).
“We saw a lot of qualified buyers making offers in March,” Windermere’s Jacobi remarked. “They're out of the tire-kicking mode and ready to buy now. Inventory is low in general, and there is a particular shortage of move-in ready homes,” he stated, noting properties that are selling look like model homes. “Sellers realize if they remove any buyer objections ahead of time, their house will sell, and sell quickly.”
Jacobi said one of his company’s brokers wrote a cash offer for a client on a $1.1 million home in Bridle Trails the first day it was on the market. “The house was in perfect shape and newly painted. The sellers did a pre-inspection and spent several thousand dollars on minor repairs. The property got multiple offers,” he reported. The sellers accepted the cash offer for just under their asking price.
Grady senses some neighborhoods appear to be close to recovery, citing remarks by a broker who likened the market to a space capsule re-entering the atmosphere. “While it might appear to be burning out of control, the heat is actually beneficial, providing the friction necessary to slow the descent and allow a safe landing. Perhaps our broader market appears to be smoldering now, but some neighborhoods also appear to be close to recovery. With ‘Spaceship Seattle’ currently offering fewer than two single family homes for sale for every buyer currently under contract, it could be an interesting summer around the real estate launch pad,” he suggested.
Commenting on the latest nationwide report on pending sales, Lawrence Yun, NAR chief economist, said “We may not see notable gains in existing-home sales in the near term, but they’re expected to rise 5 to 10 percent this year with the economic recovery, job creation and excellent affordability conditions providing confidence to buyers who’ve been on the sidelines.”
Yun also emphasized the importance of looking at the broader trend, citing the unusually bad weather in the Northeast as having a negative impact on February’s data. “Month-to-month movements can be instructive, but in this uneven recovery it’s important to look at the longer term performance,” he said. “Pending home sales have trended up very nicely since bottoming out last June, even with periodic monthly declines.”
Northwest Multiple Listing Service, owned by its member real estate firms, is the largest full-service MLS in the Northwest. Its membership includes more than 22,000 real estate brokers. The organization, based in Kirkland, Wash., currently serves 21 counties in Washington state.
Statistical Summary by Counties: Market Activity Summary - March 2011
Copyright © 2011 Northwest Multiple Listing Service
The latest report from Northwest Multiple Listing Service shows 7,570 pending sales of single family homes and condominiums during March. That’s down about 12 percent from a year ago when members reported 8,605 pending transactions (mutually accepted offers) across the 21 counties in the Northwest MLS service area.
“The market is doing surprisingly well without a stimulus,” observed Northwest MLS director OB Jacobi, president of Windermere Real Estate Company. “Considering that this time last year there was a rush of buyers trying to beat the tax credit deadline, to have the number of sales off just slightly points towards a strengthening market,” he added.
A comparison to two years ago reveals a double-digit jump in pending sales. Area-wide, the volume is up nearly 33 percent, rising from 5,701 pending sales in March 2009 to 7,570 for last month. For the four-county Puget Sound region, pending sales spiked nearly 42 percent compared to two years ago (from 4,266 to 6,049). “The glass is starting to look more half full than half empty,” Jacobi commented.
Mike Grady, president and COO of Coldwell Banker Bain, agreed. “Most real estate professionals will be happy to move past the year-over-year comparisons that have been made the first few months of 2011, as they reflect the boost given home sales by last year’s Homebuyer Tax Credit,” he noted, adding, “Home sales are now standing on their own -- without the benefit of incentives -- and the market is actually behaving quite typically.”
Buyers have plenty of choices, although the selection is smaller than a year ago, reflecting fewer new listings being added to inventory. Members added 9,812 new listings to inventory last month, which compares to 12,994 additions for the same month a year ago. At month end, the Northwest MLS database included 33,444 active listings, including 28,146 single family homes and 5,298 condominiums. That’s a drop of 5,272 properties, a decline of 13.6 percent.
“In fact, some urban core neighborhoods, such as Greenlake, Queen Anne and West Bellevue, are seeing very strong demand, and a waning supply of desirable homes for sale,” Grady reported. Many buyers looking in these neighborhoods are beginning to express frustration over the lack of available homes, according to Grady. “As a result, Realtors are beginning to report multiple offers, with contracts settling over the list price on the best homes.”
While this certainly isn’t the norm in most areas served by the NWMLS, Grady said it is encouraging that in some areas homes are selling briskly, and distressed and bank-owned properties are still in the minority.
Distressed properties continue to drag down prices. According to research by the National Association of REALTORS®, nearly one of every four home sales (24 percent) in Washington is classified as a short sale or foreclosure.
Northwest MLS members reported 4,590 closed sales of single family homes and condominiums last month. That total represents a drop of 7.7 percent from twelve months ago when members notched 4,972 closings.
Prices on last month’s closed sales system-wide declined about 8 percent compared to a year ago. The area-wide median sales price was $242,925; a year ago it was $264,475. In King County, prices dipped about 7 percent ($319,950 last month versus $343,950 for March 2010), although the gap was much narrower in some areas. In the Northwest MLS map areas comprising the Eastside, prices were off about 2 percent ($435,000 versus 444,000), while in the Seattle area, the year-over-year drop was only about 1 percent ($357,500 versus $361,500).
“We saw a lot of qualified buyers making offers in March,” Windermere’s Jacobi remarked. “They're out of the tire-kicking mode and ready to buy now. Inventory is low in general, and there is a particular shortage of move-in ready homes,” he stated, noting properties that are selling look like model homes. “Sellers realize if they remove any buyer objections ahead of time, their house will sell, and sell quickly.”
Jacobi said one of his company’s brokers wrote a cash offer for a client on a $1.1 million home in Bridle Trails the first day it was on the market. “The house was in perfect shape and newly painted. The sellers did a pre-inspection and spent several thousand dollars on minor repairs. The property got multiple offers,” he reported. The sellers accepted the cash offer for just under their asking price.
Grady senses some neighborhoods appear to be close to recovery, citing remarks by a broker who likened the market to a space capsule re-entering the atmosphere. “While it might appear to be burning out of control, the heat is actually beneficial, providing the friction necessary to slow the descent and allow a safe landing. Perhaps our broader market appears to be smoldering now, but some neighborhoods also appear to be close to recovery. With ‘Spaceship Seattle’ currently offering fewer than two single family homes for sale for every buyer currently under contract, it could be an interesting summer around the real estate launch pad,” he suggested.
Commenting on the latest nationwide report on pending sales, Lawrence Yun, NAR chief economist, said “We may not see notable gains in existing-home sales in the near term, but they’re expected to rise 5 to 10 percent this year with the economic recovery, job creation and excellent affordability conditions providing confidence to buyers who’ve been on the sidelines.”
Yun also emphasized the importance of looking at the broader trend, citing the unusually bad weather in the Northeast as having a negative impact on February’s data. “Month-to-month movements can be instructive, but in this uneven recovery it’s important to look at the longer term performance,” he said. “Pending home sales have trended up very nicely since bottoming out last June, even with periodic monthly declines.”
Northwest Multiple Listing Service, owned by its member real estate firms, is the largest full-service MLS in the Northwest. Its membership includes more than 22,000 real estate brokers. The organization, based in Kirkland, Wash., currently serves 21 counties in Washington state.
Statistical Summary by Counties: Market Activity Summary - March 2011
Copyright © 2011 Northwest Multiple Listing Service
Tuesday, April 5, 2011
Financial concerns becoming more important to "mature movers"
Buyers in the 55+ segment are becoming more practical when searching for a new home in the wake of the recession, with design considerations becoming less important. Instead, according to a recent study, financial concerns are becoming more prominent among "mature movers."
While design, amenities and appearance of both the residence and the community remain important, those considerations are diminishing in the post-recession era.
The evolving preferences of the growing 55+ demographic were revealed in a joint study by the 50+ Housing Council of the National Association of Home Builders (NAHB) and the MetLife Mature Market Institute.
In contrast to previous studies, fewer 55+ buyers are depending on home sale proceeds to finance a new purchase.
The study, "Housing Trends Update for the 55+ Market," explores housing data from the Census Bureau’s 2009 American Housing Survey (AHS). Researchers focused on households living in active adult communities, either age-qualified active adult communities where at least one resident must be age 55+, other non-age-qualified 55+ owner-occupied communities (not explicitly restricted to 55+ households but nevertheless occupied primarily by people age 55+), or age-restricted rental communities.
In 2009, only 55 percent of new age-qualified active adult home buyers reported their down payment came from a previous home sale, significantly down from 100 percent of respondents in 2005 and 92 percent in 2007. In 2005 and 2007, no active adult community buyers reported having to tap cash or savings for a down payment. That changed significantly in 2009 when 45 percent of the average buyer’s down payment came from cash or savings.
"By the year 2020, as Baby Boomers move into this age bracket, almost 45 percent of all U.S. households will include someone at least 55 years old," said David Crowe, NAHB’s chief economist. That translates to a dramatic rise in the number of households seeking housing better suited to changing, he noted.
Relatively modest production of such housing is on the horizon, according to NAHB data. Abut 54,000 housing starts are projected in 55+ communities this year. That reflects a 30 percent jump from estimated 2010 levels. A more robust 79,000 housing starts in 55+ communities are anticipated in 2012.
Prices remain lower than 2005, when prices peaked. The analysis showed a big difference between buyers in age-qualified active adult communities and other 55+ community buyers. Average prices for 55+ homes dropped in 2007, but partially rebounded in 2009. Prices for age-qualified communities more than bounced back: they set a record with an average price of $319,000. Researchers found buyers in this group were more affluent, with average annual incomes of more than $80,000. More than one-fourth (27 percent) reported earning at least $100,000, a jump from fewer than 5 percent of such buyers in 2001.
"Most 55+ consumers—those who chose to move and those who stay in their homes—report they are happy with their homes and communities," said Sandra Timmermann, Ed.D., director of the MetLife Mature Market Institute. She said those who moved to an age-qualified community reported the greatest satisfaction, rating their homes and communities at nine on a 10-point scale.
The desire to be near family and friends is the mature mover’s overwhelming motivation, the report noted. Buyers who fall into the 55+ age range that are moving into rental homes, both multi-family and single-family, cited a desire for less expensive housing as second in importance to living near friends and family.
Those who are able to buy are getting much more for less. In 2009, more than half the 55+ buyers said they were moving into better homes, but fewer than half reported their new homes cost more than the old ones.
"Proximity to work" was more important than in the past for those relocating to age-qualified, active adult communities. In 2009, twelve percent underscored the trend toward delayed retirement in this age group, up from 2 percent in 2001. There was also a reported increase in the share of 55+ single-family homeowners who say they work at home, a trend the researchers suggested is noteworthy for home designers.
A small, but growing share of older households is taking advantage of the ability to convert some of their home equity into a reverse mortgage or home equity conversion mortgage. They tend to be older, single-person households with lower household income and longer housing tenure. Those with reverse or home equity conversion mortgages represented more than 241,000 households in 2009, a 54 percent increase since 2007.
The report reflects trends in the American Housing Survey between 2001 and 2009. Characteristics are tabulated by the age of the occupants and structure type, as well as by community type.
"Housing Trends Update for the 55+ Market" can be downloaded from www.MatureMarketInstitute.com or from www.nahb.org/55PlusResearch.
While design, amenities and appearance of both the residence and the community remain important, those considerations are diminishing in the post-recession era.
The evolving preferences of the growing 55+ demographic were revealed in a joint study by the 50+ Housing Council of the National Association of Home Builders (NAHB) and the MetLife Mature Market Institute.
In contrast to previous studies, fewer 55+ buyers are depending on home sale proceeds to finance a new purchase.
The study, "Housing Trends Update for the 55+ Market," explores housing data from the Census Bureau’s 2009 American Housing Survey (AHS). Researchers focused on households living in active adult communities, either age-qualified active adult communities where at least one resident must be age 55+, other non-age-qualified 55+ owner-occupied communities (not explicitly restricted to 55+ households but nevertheless occupied primarily by people age 55+), or age-restricted rental communities.
In 2009, only 55 percent of new age-qualified active adult home buyers reported their down payment came from a previous home sale, significantly down from 100 percent of respondents in 2005 and 92 percent in 2007. In 2005 and 2007, no active adult community buyers reported having to tap cash or savings for a down payment. That changed significantly in 2009 when 45 percent of the average buyer’s down payment came from cash or savings.
"By the year 2020, as Baby Boomers move into this age bracket, almost 45 percent of all U.S. households will include someone at least 55 years old," said David Crowe, NAHB’s chief economist. That translates to a dramatic rise in the number of households seeking housing better suited to changing, he noted.
Relatively modest production of such housing is on the horizon, according to NAHB data. Abut 54,000 housing starts are projected in 55+ communities this year. That reflects a 30 percent jump from estimated 2010 levels. A more robust 79,000 housing starts in 55+ communities are anticipated in 2012.
Prices remain lower than 2005, when prices peaked. The analysis showed a big difference between buyers in age-qualified active adult communities and other 55+ community buyers. Average prices for 55+ homes dropped in 2007, but partially rebounded in 2009. Prices for age-qualified communities more than bounced back: they set a record with an average price of $319,000. Researchers found buyers in this group were more affluent, with average annual incomes of more than $80,000. More than one-fourth (27 percent) reported earning at least $100,000, a jump from fewer than 5 percent of such buyers in 2001.
"Most 55+ consumers—those who chose to move and those who stay in their homes—report they are happy with their homes and communities," said Sandra Timmermann, Ed.D., director of the MetLife Mature Market Institute. She said those who moved to an age-qualified community reported the greatest satisfaction, rating their homes and communities at nine on a 10-point scale.
The desire to be near family and friends is the mature mover’s overwhelming motivation, the report noted. Buyers who fall into the 55+ age range that are moving into rental homes, both multi-family and single-family, cited a desire for less expensive housing as second in importance to living near friends and family.
Those who are able to buy are getting much more for less. In 2009, more than half the 55+ buyers said they were moving into better homes, but fewer than half reported their new homes cost more than the old ones.
"Proximity to work" was more important than in the past for those relocating to age-qualified, active adult communities. In 2009, twelve percent underscored the trend toward delayed retirement in this age group, up from 2 percent in 2001. There was also a reported increase in the share of 55+ single-family homeowners who say they work at home, a trend the researchers suggested is noteworthy for home designers.
A small, but growing share of older households is taking advantage of the ability to convert some of their home equity into a reverse mortgage or home equity conversion mortgage. They tend to be older, single-person households with lower household income and longer housing tenure. Those with reverse or home equity conversion mortgages represented more than 241,000 households in 2009, a 54 percent increase since 2007.
The report reflects trends in the American Housing Survey between 2001 and 2009. Characteristics are tabulated by the age of the occupants and structure type, as well as by community type.
"Housing Trends Update for the 55+ Market" can be downloaded from www.MatureMarketInstitute.com or from www.nahb.org/55PlusResearch.
Friday, April 1, 2011
Real Estate Outlook: Good News Across the Nation
The market is changing out there, and the latest reports are showing that when it comes to buyers, less is more in some cases.
A recent study from the National Association of Home Builders (NAHB) indicates that the recent housing slump has meant buyers are looking for smaller houses. The McMansions of the boom era are quickly losing their style.
The NAHB reports that the builders they "surveyed expect homes to average 2,152 square feet in 2015, 10 percent smaller than the average size of single-family homes started in the first three quarters of 2010. To save on square footage, the living room is high on the endangered list – 52 percent of builders expect it to be merged with other spaces in the home by 2015 and 30 percent said it will vanish entirely."
Also a heavy influence on the housing front are green and eco-friendly features. The NAHB reports that "in addition to floor plan changes, 68 percent of builders surveyed say that homes in 2015 will also include more green features and technology, including low-E windows; engineered wood beams, joists or tresses; water-efficient features such as dual-flush toilets or low-flow faucets; and an Energy Star rating for the whole house."
This is great news for eco-activists across the nation. The other great news this week? The Mortgage Bankers Association (MBA) reports that mortgage applications are at the highest level in months. They rose by 17.2 percent, that being the biggest increase since June 11th.
Michael Fratantoni, MBA's vice president of research and economics, reports, "An improving job market is beginning to pave the way for an improving housing market. Additionally, mortgage interest rates remained below 5 percent for a second week, maintaining affordability for buyers and leading to an increase in refinance applications."
The U.S. Department of Housing and Urban Development (HUD) had their own good news. Their latest February edition of the Obama Administration's Housing Scorecard revealed that existing home sales are on the rise thanks in part to high home affordability levels.
And since April of 2009, record low mortgage rates have helped more than 9.5 million homeowners to refinance, resulting in $18.1 billion in total borrower savings.
They did report, however, that the "housing market remains fragile as data through January paint a mixed picture of recovery. Existing home sales ticked upward in January, but remained below levels seen in the first half of 2010. Mortgage delinquencies continued a downward trend compared to early 2010 and foreclosure starts and completions remain below peak."
But not everyone is in agreement about what foreclosures mean for today's homeowner. According to the New York Times, "All 50 state attorneys general, as well as a host of federal agencies, are pushing for a settlement over investigations into foreclosure abuses by major mortgage servicers that could cost the industry $20 billion or more. Much of that money would be earmarked to reduce principal owed by homeowners facing foreclosure."
Many homeowners have weathered the storm, however, taking on heavy burdens in order to avoid foreclosure. Bank of America argues that by helping some and not helping others, we create an unfair system.
"There's a core problem that if you start to help certain people and don't help other people, it's going to be very hard to explain the difference,” said Brian T. Moynihan, the chief executive of Bank of America. "Our duty is to have a fair modification process.”
A recent study from the National Association of Home Builders (NAHB) indicates that the recent housing slump has meant buyers are looking for smaller houses. The McMansions of the boom era are quickly losing their style.
The NAHB reports that the builders they "surveyed expect homes to average 2,152 square feet in 2015, 10 percent smaller than the average size of single-family homes started in the first three quarters of 2010. To save on square footage, the living room is high on the endangered list – 52 percent of builders expect it to be merged with other spaces in the home by 2015 and 30 percent said it will vanish entirely."
Also a heavy influence on the housing front are green and eco-friendly features. The NAHB reports that "in addition to floor plan changes, 68 percent of builders surveyed say that homes in 2015 will also include more green features and technology, including low-E windows; engineered wood beams, joists or tresses; water-efficient features such as dual-flush toilets or low-flow faucets; and an Energy Star rating for the whole house."
This is great news for eco-activists across the nation. The other great news this week? The Mortgage Bankers Association (MBA) reports that mortgage applications are at the highest level in months. They rose by 17.2 percent, that being the biggest increase since June 11th.
Michael Fratantoni, MBA's vice president of research and economics, reports, "An improving job market is beginning to pave the way for an improving housing market. Additionally, mortgage interest rates remained below 5 percent for a second week, maintaining affordability for buyers and leading to an increase in refinance applications."
The U.S. Department of Housing and Urban Development (HUD) had their own good news. Their latest February edition of the Obama Administration's Housing Scorecard revealed that existing home sales are on the rise thanks in part to high home affordability levels.
And since April of 2009, record low mortgage rates have helped more than 9.5 million homeowners to refinance, resulting in $18.1 billion in total borrower savings.
They did report, however, that the "housing market remains fragile as data through January paint a mixed picture of recovery. Existing home sales ticked upward in January, but remained below levels seen in the first half of 2010. Mortgage delinquencies continued a downward trend compared to early 2010 and foreclosure starts and completions remain below peak."
But not everyone is in agreement about what foreclosures mean for today's homeowner. According to the New York Times, "All 50 state attorneys general, as well as a host of federal agencies, are pushing for a settlement over investigations into foreclosure abuses by major mortgage servicers that could cost the industry $20 billion or more. Much of that money would be earmarked to reduce principal owed by homeowners facing foreclosure."
Many homeowners have weathered the storm, however, taking on heavy burdens in order to avoid foreclosure. Bank of America argues that by helping some and not helping others, we create an unfair system.
"There's a core problem that if you start to help certain people and don't help other people, it's going to be very hard to explain the difference,” said Brian T. Moynihan, the chief executive of Bank of America. "Our duty is to have a fair modification process.”
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