Tuesday, October 16, 2012

Repeat home buyers fuel housing recovery

(MoneyWatch) Across most of the country, home prices remain affordable and rents continue to rise. And while today's investors are helping the housing recovery, they're not completely responsible. Data from the National Association of Realtors (NAR) suggests that traditional repeat buyers are driving today's market.

"Though housing markets are changing across the nation, investors are still seeing great opportunities. Hundreds of thousands of foreclosures and short sales are coming to market and rents are continuing to improve in most markets, creating a positive environment for the nation's 2.81 million residential real estate investors," Joshua Dorkin, founder and CEO of BiggerPockets.com, said in a press release.

According to the survey, one out of eight -- or 28.1 million Americans -- either consider themselves to be residential real estate investors or own residential investment properties today, according to the survey. That high number is not surprising when you consider many homeowners are renting out properties they'd rather sell.

NAR data shows investors accounted for an average 22 percent of the market share from 2003 to 2011.

There are perks to investors taking an active interest in today's real estate market. With millions of Americans actively investing in real estate, billions of dollars are being poured into repairs. The results of the survey reveal that real estate investors are spending more than the Department of Housing and Urban Development (HUD) to rehabilitate neighborhoods.

At a median expenditure of $7,500 per property owned, investors are spending a total of $9.2 billion per year to repair the damage caused by foreclosures. By comparison, Congress has authorized a total of about $7 billion for the Neighborhood Stabilization Program over the past four years.

Investor activity has benefited the housing market, but there's a downside too. "Investors have been largely purchasing with all-cash, which puts first-time buyers at a significant disadvantage," Walter Molony, a NAR spokesman, said in an e-mail. "Both investors and entry-level buyers have been focused on low price ranges, with investors winning the deals since they don't have a need for financing."

So while the BiggerPockets.com/Memphis Invest survey shows investors planning to continue purchasing and rehabbing property, NAR data shows the overall investor market share is on the decline. The drop started in March, and since April investor market share has averaged 18 percent -- below its long-time average of 22 percent.

Investors certainly help fuel the housing recovery, but NAR data shows they aren't the driving force. "First-time homebuyers are also below their long-term average with housing shortages in the low price ranges and a headwind of tight credit," notes Molony. "At present, the market is being driven by an increase in traditional repeat buyers."

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Thursday, October 11, 2012

Home Prices on the Rebound in West Michigan

Home prices across the country are rebounding nationally and in West Michigan according to new real estate numbers.

As the situation stands now, buyers may have to act fast because housing inventories are abnormally low. The Grand Rapids Association of Realtors says it’s lower than they’ve seen in seven or eight years.

Mari Anne Nelson of Novi is looking to buy a condo in Grand Rapids. “I’m just very impressed with the quality and location,” says Nelson.

She’s carefully weighing their options at the Fitzgerald downtown with Keller and Williams Realtors.

“I don’t think it’s any kind of you can’t keep up but, if you like it you’d better act upon it because it might not be there,” says Mari Anne Nelson.

“Today, there is not as much on the market and there is a sense of urgency because there are a lot of buyers looking at fewer homes,” says Julie Rietberg, CEO of the Grand Rapids Association of Realtors.

As supply dwindles, prices are increasing. A study by S&P Case-Shiller National reports that in the United States in July, prices rose by 1.6 percent compared to the same time last year. “These are levels we haven’t seen since pre-2005,” says Rietberg.

West Michigan reflects that increase in prices. According to the Grand Rapids Association of Realtors, the average home sale price in August of 2011 was more than $125,000. This August 2012, prices increased to an average of $141,000.

Year-to-date numbers show last year, Grand Rapids was at an average home price of more than $121,000, this year the prices are at an average of $133,000 year-to-date.

“Home sales are up almost 20% from a year ago this time. And with an increase in sales, we’re seeing the prices up almost 10% as well, which is obviously a great improvement,” says Meg Dunn, Vice President of Mortgage Sales for Lake Michigan Credit Union.

She says her company’s mortgages are moving quickly as the economy improves and interest rates remain low. “Our results here have been more dramatic and our volume is up 78% from a year ago last time, so well above what we’re seeing in the marketplace,” says Dunn.

Low interest rates are fueling eve more buyers like Mari Anne. She says, “Trying to find the best location for what we want, accessibility downtown.”

Dunn says she expects the low interest rates to continue for quite some time.
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Wednesday, October 10, 2012

Vacation home market picks up in Michigan

Michigan vacation home  sales are rising as an influx of Southerners and East Coasters competes with Midwestern buyers for properties after awakening to the lure of summering in the Great Lakes State.
This is the second straight year that real estate agents in the northern Lower Peninsula have reported improved second home sales.
Industry players said a slowly recovering Michigan economy, the state's marketing campaign and glowing media reports about the area have lit a fire under the vacation-home market stretching from Manistee to Mackinaw City. It comes as National Association of Realtors Chief Economist Lawrence Yun predicts a nationwide uptick in vacation home sales.
Sales representatives said in 2011 that areas like the northeast counties atop Michigan's Lower Peninsula still reeled from foreclosures and dropping prices. This year, prices are slow to rise because homeowners and Realtors in Traverse City, Charlevoix and other parts scattered around Michigan's "little finger" on Lake Michigan are still clearing homes and condominiums with depressed prices.
Carla Houle and her husband John Libbe just bought a four-bedroom house called Chimney Ridge in the Homestead for about a half-million dollars — down from its asking price of nearly $900,000 four years ago. The 2,300-square-foot, open-plan house is tucked into the woods and has a view of Glen Lake a few miles away.
"Interest rates were down; the house price was down; it was just a good time," said Houle, a Xerox sales executive, whose husband Libbe helps run a family-owned local construction company.
Interest rates are at record lows, helping to boost home sales — though lending conditions have tightened. Freddie Mac reported Thursday that 30-year, fixed-rate mortgages this week averaged 3.4 percent.
About 20 miles to the southeast on the eastern shore of Sutton's Bay, Texans Craig Chick and Kate Wessels Doner are packing up for the Lone Star State again after enjoying the summer life on the Leelanau Peninsula. They bought a cottage with some out-buildings "pretty close to the market low" in June 2011, Chick said.
The couple, parents of two, already have enhanced the place with a stone beachfront patio and other improvements.
National media attention also has helped. ABC's "Good Morning America" chose the Sleeping Bear Dunes on Lake Michigan as "the most beautiful place in America." And TV chef Mario Batali, a Sutton's Bay resident, sings the area's praises.
Traverse City has a higher national profile in part because of the rise of Michael Moore's annual film festival, which this year attracted an appearance by actress Susan Sarandon.
Last year, vacation home sales nationwide increased 7 percent from the year before, while the average price fell 19 percent to $121,300, according to a National Association of Realtors survey. More precise vacation home sales aren't kept because buyers don't identify in a real estate sale how they will use the property.
All-cash purchases continue to play a prominent role up north. The stock market  rebound is giving families with plenty of money a chance to scoop up second homes, NAR's Yun said.
"There's always cash available out there; this is America," Platt said. "And based on the hysterics of the last five years, people with money keep watching, and they get to the point where they say, 'Prices aren't going to get much lower.' And that is now."


From The Detroit News: http://www.detroitnews.com/article/20121002/BIZ/210020353#ixzz28tpm5Q7R

Monday, October 8, 2012

Thirty-year mortgage rate drops to another record low

 Average rates on fixed mortgages fell again to record lows, giving would-be buyers more incentive to brave the housing market.
Mortgage buyer Freddie Mac says the average rate on the 30-year loan fell to 3.56%. That's down from 3.62% last week and the lowest since long-term mortgages began in the 1950s.
The average rate on the 15-year mortgage, a popular refinancing option, dipped to 2.86%, below last week's previous record of 2.89%.
The rate on the 30-year loan has fallen to or matched record low levels in 11 of the past 12 weeks.
Cheaper mortgages have contributed to a modest housing recovery this year. Home sales were up in May from the same month last year. Home prices are rising in most markets. And homebuilders are starting more projects and spending at a faster pace.
Low mortgage rates could also provide some help to the economy if more people refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend. Many homeowners use the savings on renovations, furniture, appliances and other improvements, which help drive growth.

Still, the pace of home sales remains well below healthy levels. Many people are still having difficulty qualifying for home loans or can't afford larger down payments required by banks.
And the sluggish job market could deter some from making a purchase this year.
U.S. employers added only 80,000 jobs in June, a third straight month of weak hiring. The unemployment rate was unchanged at 8.2%, the government reported last week.
Slower job creation has caused consumers to pull back on spending.
Mortgage rates have been dropping because they tend to track the yield on the 10-year Treasury note. A weaker U.S. economy and uncertainty about how Europe will resolve its debt crisis have led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield falls.
To calculate average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.
The average does not include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1% of the loan amount.
The average fee for 30-year loans was 0.7 point, down from 0.8 point last week. The fee for 15-year loans also was 0.7 point, unchanged from the previous week.
The average rate on one-year adjustable rate mortgages rose to 2.69% from 2.68% last week. The fee for one-year adjustable rate loans slipped to 0.4 point, down from 0.5 point.
The average rate on five-year adjustable rate mortgages dropped to 2.74% from 2.79% last week. The fee was unchanged at 0.6 point.

Survey Shows Americans Are Increasingly Confident about Homeownership


Signs of growing confidence are widespread, according to the national survey. For instance:
• 69 percent believe that real estate is a good investment despite the market volatility of the past few years, up 6 percentage points from the first-quarter 2012 survey and 17 percentage points from first quarter 2011.
• 72 percent expressed confidence that the real estate market and property values will improve during the next two years, including a 6-point jump among those “very confident” or “confident” vs. the first quarter 2012, and a 14-point gain in this subset over first quarter 2011.
• Nearly two-thirds (64 percent) of respondents have a favorable perception of the U.S. housing market, up from 60 percent in first quarter 2012 and 52 percent in first quarter 2011).
“The American Dream is clearly on the mend,” says Earl Lee, president, Prudential Real Estate. “Americans are feeling better about homeownership and the ongoing recovery taking place in residential real estate. Many are increasingly optimistic about their personal circumstances and, with housing affordability near all-time highs, they want to act on the opportunity.”
Factors driving homeownership
Homeownership remains the central component to the American Dream, as 78 percent of respondents said owning a home was still “very important” – the same percentage reported in the first-quarter 2012 study. A full 98 percent said homeownership was at least somewhat important.
In addition, with interest rates at historically low levels, 96 percent of respondents at least “somewhat agree” that now is a great time to buy a home – the same percentage reported in the first-quarter 2012 study.
More than the financial reasons to buy a home, respondents placed higher priority on the emotional reasons for homeownership. “Control over living space,” “more space for family,” “safer neighborhood” and “good place to raise a family” rated higher than “a good investment,” “financial security” and “tax benefits.”
“Normalcy is returning to the U.S. real estate market and more people are buying homes for traditional reasons – to raise a family, feel secure and build a future,” says Lee. “Every last emotion is rolled up into owning a home – it’s where life happens – so it’s no surprise that the emotional side outweighs financial reasons for owning a home among respondents.”
Caution remains
The survey also shows that consumers remain cautious about the real estate market and process, as a full 30 percent “strongly agree” that the housing crisis reminds them to be more careful about buying or selling a home; up two percentage points from the first-quarter 2012 survey. In addition:
• Nearly two-thirds (65 percent) of respondents indicated that financing or getting a mortgage is more challenging than it was before the market crisis, which is up from 58% in the first-quarter 2012 survey.
• Among those considering a real estate transaction, 39 percent expressed concern they won’t be able to sell their current home, up 11 points from the first-quarter 2012 survey and 10 points from first quarter 2011.
• Given the dynamics and challenges of today’s real estate market, nearly three out of four (74 percent) respondents think it is more important than ever to work with a good real estate agent for the best success in buying or selling a home (up from 71 percent in first-quarter 2012 and 67 percent in first quarter 2011).
“Real estate markets are improving around the country and consumers face many choices,” concludes Lee. “Consumers should seek out a real estate professional who can help them make the best choices to suit their needs.”


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