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Modest Volume, Price Gains Seen Next Year

The housing recovery will continue on its slow but steady pace over the next couple of years, NAR Chief Economist Lawrence Yun said Friday morning at the REALTORS® Conference & Expo Economic Issues & Residential Real Estate Business Trends forum.

November 2011 | By Robert Freedman

NAR Chief Economist Lawrence Yun predicted home sales would increase by 4 percent next year and home prices would inch up 2 percent during the Economic Issues & Residential Real Estate Business Trends forum Friday morning. In 2013, he projected sales to pick up another 6 percent and prices to rise another 3 percent.

Home-sales growth has been flat this year, even though it couldn’t be a better time for consumers to buy, because prices are still down—essentially under replacement value—and interest rate are at historical lows. Even employment and wages have been heading up, although both at a modest pace.

Yun characterized today’s market as “strange” because of this disconnect between the good buying conditions and the low sales growth.

Rock-bottom consumer confidence is a big part of the weak market but the hurdles to borrowers imposed by lenders through stringent underwriting requirements are a major issue, too. Lenders are requiring applicants to have credit scores of about 760 for Fannie Mae and Freddie Mac loans, and just under 700 for FHA loans, shrinking potential home sales by about 20 percent.

The stiff requirements come at a time when banks are seeing strong profits and run counter to the Federal Reserve’s efforts to use rock-bottom interest rates to attract borrowers and get the economy moving.

Behind the tough underwriting is a concern among banks about borrowers’ ability to repay loans, but Yun says that risk is low. Rather than continuing to head down, home prices have been stable for the last two years and are poised to head up, which will reduce lending risks, lower foreclosures, boost sales, and further strengthen the market.

To show that home prices have been stable, he cited both NAR and Case-Shiller data, which show prices have been hovering around a $140,000 national median since 2009.

Yun said it was crucial that the federal government not stymie what little momentum the housing market is seeing by moving forward with a proposal to require 20 percent down payments from home buyers or making other destabilizing housing policy shifts. It’s also crucial for interest rates to stay low, although if lenders return their underwriting to the sound standards they used before the housing boom, he said, the market could handle higher interest rates.

Richard Peach, senior vice president at the Federal Reserve Board of New York and the other speaker at the session, offered a unique suggestion to improve the housing sector, one that was particularly suitable for Veteran’s Day: help military personnel who served overseas purchase foreclosed homes.

“My idea is to allocate certificates to 2.5 million service members who served in Afghanistan and Iraq that could be used as a downpayment on a foreclosed home in the Fannie or Freddie portfolio,” Peach said.

Reprinted from REALTOR® Magazine November 2011 with permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright 2011. All rights reserved.

Posted by Mark Trafton on November 15th, 2011 9:37 AMPost a Comment (0)

October 30th, 2011 9:22 AM

 

Multiple Signs Point to an Uptick in Real Estate Market

http://rismedia.com/2011-10-24/multiple-signs-point-to-real-estate-rebound/?utm_source=twitterfeed&utm_medium=twitterarket

 

Mortgage Applications are UP

http://www.linkedin.com/news?actionBar=&articleID=870072430&ids=0VejoPc3oRdzwIczwNczgVdjoUb30Pd38Tc30Te2MVcjcTcP8SdzwId38ScPsMdjoU&aag=true&freq=weekly&trk=eml-tod-b-ttle-44&ut=3vEioe68RbFkY1




Mortgage Interest Rates Change Little This Week—Remain at RECORD LOWS!!

http://realtytimes.com/rtpages/20111028_rates.htm

 

Renters Spend 5% More Than Homeowners

http://www.floridarealtors.org/NewsAndEvents/article.cfm?p=1&id=266711




Investors See Bigger Profits from Rising Rents

http://www.floridarealtors.org/NewsAndEvents/article.cfm?p=5&id=266727





Builders Cut Prices Resulting in 5.7% More New Homes Sales

http://realtormag.realtor.org/daily-news/2011/10/27/builders-slash-prices-new-home-sales-rise-57



Pending Sales Slip From Aug to Sep, but are UP Compared to Last Year

http://www.floridarealtors.org/NewsAndEvents/article.cfm?p=4&id=266723







Posted by Mark Trafton on October 30th, 2011 9:22 AMPost a Comment (0)

October 5th, 2011 5:27 PM

We recently attended the Leading Real Estate Companies of the World regional conference in Atlanta, GA. Business Consultant and Speaker, Mike Staver gave a powerful presentation regarding how to stay positive when times are tough. Here are
four simple steps we can take each day:

1) Gratitude: Think of 5 things you are thankful each morning (life, faith, family, country, city, successes, home, pets, life’s comforts, etc….)



2) Abundance: Think of the things you have an abundance of (love, family, friends, food, clothing, shelter, knowledge, experience, etc…)



3) STOP watching/listening to the news and STOP reading the paper! We are constantly bombarded with negative news. The vast majority of the stories are useless because they rarely cover the topics in depth, they rarely cover varying perspectives, and they rarely focus on solutions.



4) FOCUS ON THE THINGS YOU CAN CONTROL!! For example:
While we cannot control the economy, the housing market, our home’s
appreciation/depreciation, our investment returns, the media, the weather, etc….we can certainly control the amount of time and effort we put into our work and we can certainly control our attitudes and the way we treat others! The simple truth is that our chances for success and happiness dramatically increase when we work hard and have a positive attitude.



Posted by Mark Trafton on October 5th, 2011 5:27 PMPost a Comment (0)

October 1st, 2011 9:01 AM

THERE’S NEVER BEEN A BETTER TIME TO BUY!!! RATES ARE AT RECORD LOWS, HOUSING AFFORDABILITY IS AT ITS HIGHEST LEVEL IN YEARS, THERE IS PLENTY OF INVENTORY, PRICES ARE LOW AND MANY SELLERS ARE WILLING TO BARGAIN!!!

Here are some reasons to BUY rather than rent:

–It may actually be CHEAPER to BUY than to rent. We recently ran a cost analysis for a $90,000 home in Tallahassee. Assumptions: FHA loan, 30 year fixed rate of 3.75%, $406.24 per month for principal and interest, $66.66 per month for property taxes, $62.50 per month for homeowners insurance, and $82.53 per month for mortgage insurance. The total monthly payment for the home turned out to be about $618. The rents in this particular neighborhood are around $825 per month. A person who chooses to buy a home here instead of renting could realize a savings of $207 per month!!! Or they could possibly buy a larger, nicer home with the same $825 per month payment that is currently charged for rent!!

–There may be even MORE savings involved. Many buyers would be able to take advantage of the mortgage interest deduction each year. The mortgage insurance paid may also be tax deductible! Furthermore, the new homeowner may be eligible for the rebates/credits available for those who desire to upgrade to more energy efficient appliances.

–ADDITIONALLY, Over time, the buyer may build up equity. A portion of the mortgage payment goes toward paying down the “principle” each month. This does not happen when one pays rent. Rent is basically money down the drain. Furthermore, the new owner could build up equity if the home appreciates over the years. Equity is certainly a way to create long term wealth.

–Budgeting Stability: In this case, the $618 monthly payment STAYS THE SAME for 30 years (or less if it is paid off earlier)!!! In the case of renting, there’s a good chance the rent will go up each time the rental agreement comes up for renewal. This could really add up over the years!

–Freedom: When you own the home, it’s yours! This means you can decorate, paint, improve, landscape, etc….the way you want it done (make sure you comply with the neighborhood covenants and restrictions)

–Safety and Security: An important reason families buy homes is because they want a good place to raise children and provide them with a good education. They also want a place where they can feel safe and secure and where they can build long term friendships and relationships with their fellow neighbors

–For more in depth “buy vs rent” calculations, see: _

http://www.nytimes.com/interactive/business/buy-rent-calculator.html

 

What are Americans saying about homeownership?  See below:

 

 

Posted by Mark Trafton on October 1st, 2011 9:01 AMPost a Comment (0)

 

It’s almost here! This weekend’s game between 5th ranked FSU and number 1 ranked OU has been built up to be one of the most important games in college football this year!

The hype was intensified when ESPN announced it was going to telecast its
weekly “College Game Day” show here in Tallahassee. The game is set for 8 pm on Saturday. Here are some suggestions to keep the fans busy prior to kickoff.

–Friday Night: Go to the Seminole Block Party and “Downtown Getdown” on Adams St and Kleman Plaza rom 5 to 10 pm. This party will be huge
and includes special live entertainment from Corey Smith and Tyler Reeves.

–Saturday Morning: Go to FSU’s Langford Green for the live ESPN Game Day telecasting that begins at 9 am. Lots open at 7 am.

–Saturday Morning to Game Time: Go to Doak Campbell Stadium and TAILGATE!!! There will be lots going on besides the ESPN Game Day telecast. Closer to game time, the area around the “Unconquered Statue” always has lots of food, music, and fun activities. You can also shop right there at the stadium for all your FSU fan items.

–Don’t want to head to Doak Campbell Stadium that early? There’s nothing like pre-game beer and oysters. Barnacle Bill’s and Calico Jacks (CJ’s) are two great place to work into your college game day schedule.

–For more information about things to do in Tallahassee this game day weekend, see:

http://fallfrenzy.visittallahassee.com/

Posted by Mark Trafton on September 15th, 2011 8:01 AMPost a Comment (0)

August 27th, 2011 9:49 AM
By Brian Summerfield, Online Editor, REALTOR® Magazine

For someone whose life has been filled with so much rejection and loss, Dick Vitale seems like a very happy man.

The colorful ESPN basketball commentator and coach, of course, has experienced plenty of success as well, which he related yesterday afternoon to attendees at the National Association of REALTORS® Leadership Summit in Chicago. But there were times early in his career when he questioned whether he had what it took to reach his goals.

What got him through that difficult period was a nugget of wisdom from his mother, who told him, “Don’t allow ‘can’t’ to be part of your life, Richie.” That advice, he said, inspired him to redouble his efforts. As a result, he went from coaching sixth grade basketball to the NBA in just six years.

But the obstacles didn’t stop when he got to the pros. He was fired in 1979 as head coach of the Detroit Pistons due to disagreements with the owner about the direction of the team. Vitale said this brought him to a low point in his life, where he sat around the house watching soap operas and waiting for coaching offers that never came.

As fortune would have it, a TV executive contacted him about doing color commentary for a basketball game. After initially turning down the proposal, Vitale accepted. And he’s never looked back.

“It’s been 32 of the greatest years I ever had. I’ve had a blast on television,” he said.

According to Vitale, winning in the game of life — “the game we all play” — is a simple formula of passion + work ethic + good decisions in your personal life. That last point is especially important, but too often neglected, he says.

“There is nothing greater in the world than family, to share in the moments of success we have,” Vitale explained.

Many people might expect Vitale to settle into his role and routine comfortably at this point in his life, but he’s not having it. He’s still coming up with new things to accomplish, and says he still writes down goals on a regular basis, and devises the X’s and O’s to achieve them.

“Anyone can say, ‘I have a goal,’” he explained. “But you have to have a plan. You have to have commitment. I have goals to this day. I try to attack them with as much vitality as I can. That helps me enjoy life.”

What keeps him going are his three Es: energy, enthusiasm, excitement. And he’s applied those recently to a big goal: raising money for research and treatment of pediatric cancer. Through his efforts, he’s raised $1 million or more every year for the past six years. And his efforts go beyond money — Vitale has visited children’s hospitals to help lift the kids’ spirits.

“You think you have it tough? Look at those kids,” he said. “Economies go up and down, and you’ll get other chances to make sales. But many of these kids won’t get other chances.”

With his singular drive and zeal, Vitale is doing his part to help find a cure in order to give them those chances. And that’s awesome, baby. With a capital ‘A’.

Reprinted from REALTOR® Magazine August 2011 with permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright 2011. All rights reserved.

Posted by Mark Trafton on August 27th, 2011 9:49 AMPost a Comment (0)


 

We want to discuss the impact the downgrade of the U.S. credit rating will have on mortgage interest rates. In these times of uncertainty and volatility, no one knows for sure what will happen next. However, we want to talk about possible scenarios.  

Mortgage rates normally run parallel to the country’s Treasury bonds. If many people are buying Treasury bonds the return on those bonds decrease. If less people are interested in buying bonds, then the return on those bonds must increase in order to draw more buyers. If bond returns increase or decrease, mortgage rates normally follow.

Many experts feel that the downgrade in the country’s credit rating will cause people to see greater risk and therefore be less likely to invest in our Treasury bonds. That would necessitate returns to push upward as any investor would seek higher returns as compensation for the perceived greater risk. If that happens, mortgage rates will probably increase. Many experts believe this scenario will take place.

However, others believe the exact opposite could happen. If people think the U.S. is struggling financially, they may question the entire world economy.  If they do, they might still trust the U.S. bonds over other investments. Then, Treasury bond returns would decrease as demand increases. Mortgage interest rates may actually soften in this scenario.

Bottom Line

Again, no one knows for sure what will happen. Rates could go up, go down or stay relatively unchanged. We will keep you current on any movements in rates.

To all economists and to all who wish they were: We realize this is an oversimplified explanation of a very complicated issue. We attempt to help our readers get a basic understanding of situations that impact the housing market. If you want to share a more complicated explanation, please feel free to comment.

– Keeping Current Matters, August 8, 2011

Posted by Mark Trafton on August 8th, 2011 1:13 PMPost a Comment (0)

 

Pending home sales increased in June following a wide swing down in April and then up in May, according to the National Association of REALTORS®.  Activity increased in the West and South but declined in the Midwest and Northeast; all regions show strong double-digit gains from a year ago.

The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, rose 2.4 percent to 90.9 in June from 88.8 in May and is 19.8 percent above the 75.9 reading in June 2010, which was the low point immediately following expiration of the home buyer tax credit.  The data reflects contracts but not closings.

Lawrence Yun, NAR chief economist, said there may be some increase in closed existing-home sales.  “For the majority of transactions, the lag time between pending contacts to actual closings is one to two months.  Therefore, the two consecutive months of rising activity should lead to overall improvement in closed sales in upcoming months,” he said.  “Though a higher than normal cancellation rate can hold back final closing figures, it could well be that some past cancellations are nothing more than delayed buying decisions rather than outright cancellations.”

Yun said tight credit and economic uncertainty have been constricting the market.  “The best way to ensure a more solid recovery in housing is to simply return to normal, sound credit standards so more creditworthy home buyers can get a mortgage,” he said.

“Washington also should not rock the boat with policy changes that would negatively impact affordable credit or otherwise increase the cost of buying or owning a home,” Yun added.

Breakdown by region: 

Northeast: The PHSI slipped 0.4 percent to 68.9 in June, but is 19.4 percent higher than June 2010. 

Midwest: The index fell 3.7 percent to 79.7 in June, but is 26.4 percent above a year ago. 

South: Pending home sales increased 4.4 percent to an index of 99.2 and are 19.1 percent higher than June 2010. 

West: The index rose 6.4 percent to 107.0 in June and is 16.4 percent above a year ago.

Existing-home sales this year are expected to total 5 million, slightly higher than 2010.  Similarly, little change is forecast for aggregate home prices with several indicators, including NAR’s median prices, showing recent signs of stabilization.

Reprinted from REALTOR® Magazine Online July 2011 with permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright 2011. All rights reserved. http://www.realtor.org/realtormag

Posted by Mark Trafton on July 28th, 2011 2:57 PMPost a Comment (0)

July 19th, 2011 5:42 PM

 

INVENTORY vs SALES

--This chart is a “mind blower”.  It’s self explanatory and should get everyone’s attention.

--It illustrates the huge hurdle, excessive inventory/supply that sellers must overcome to be successful.  These are real numbers from our MLS. In June of 2011, we had an inventory of 1,964 detached single family homes in Leon County vs. a measley 166 sales.

--In order to be among the very few that sell, the home MUST be the absolute, clear choice among the competition. This means its price must be COMPELLING (instead of just competitive), and it must be in tip-top shape!

Posted by Mark Trafton on July 19th, 2011 5:42 PMPost a Comment (0)

June 29th, 2011 3:08 PM

Pending home sales rose strongly in May with all regions experiencing gains from a year ago, pointing to higher housing activity in the second half of the year, according to the National Association of REALTORS®.

The Pending Home Sales Index rose 8.2 percent to 88.8 in May from an upwardly revised 82.1 in April and is 13.4 percent higher than the 78.3 reading in May 2010. The data reflects contracts but not closings, which normally occur with a lag time of one or two months.

This is the first time since April 2010 that contract activity was above year-ago levels, and the monthly gain was the strongest increase since last November when the index rose 10.6 percent.

Lawrence Yun, NAR chief economist, said the improvement bodes well for home prices. “Absorption of inventory is the key to price improvement, and this solid gain in contract signings implies that home values in many localities are or will soon be stabilizing as inventories get absorbed at a faster pace,” he said.

“Some markets have made a rapid turnaround, going from soft activity to contract signings rising by more than 30 percent from a year ago, including areas such as Hartford, Conn., Indianapolis, Minneapolis, Houston, and Seattle,” Yun added.

Pending home sales have trended up unevenly since bottoming last June, rising in seven of the past 11 months. “Home sales still could be 15 to 20 percent higher,” Yun said. “If banks would simply return to normal, sound underwriting standards and begin lending to more creditworthy borrowers, we’d get a much faster recovery in the housing sector.”

“In addition, a nonsensical situation has developed recently in some states with HUD unable to complete foreclosure deals because of insufficient funds to pay attorney fees at closing, even with buyers offering the full listing price,” Yun added.

Regional Performance

? The PHSI in the Northeast rose 7.3 percent to 69.2 in May and is 4.4 percent above a year ago.
? In the Midwest, the index jumped 10.5 percent to 82.8 and is 17.2 percent higher than May 2010.
? Pending home sales in the South increased 4.1 percent to an index of 95.0 in May and are 14.6 percent higher than a year ago.
? In the West, the index surged 12.9 percent to 100.6 and is 13.5 percent above May 2010.

Yun cautioned that healthy job creation is necessary to ensure a solid recovery in both housing and the overall economy. “The job market has sputtered recently, and because variations in local job creation impact housing demand, markets will recover unevenly around the country,” he said.

Reprinted from REALTOR® Magazine Online May 2011 with permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright 2011. All rights reserved. http://www.realtor.org/realtormag

Posted by Mark Trafton on June 29th, 2011 3:08 PMPost a Comment (0)
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