Have We Reached Bottom? 10 Factors to Consider
RISMEDIA, June 24, 2009-Historically, the value of real estate goes through cycles. Many factors affect the value of homes including the laws of “supply and demand.” From the Appraisal Institute, here’s a quick reference guide to some of the factors involved and advice on how to spot a turning point in the market:
1. A spike in local sales activity. A spike refers to a significant rise in the number of home sales (or values) in a local market area, which generally is measured month to month. A spike does not necessarily mean continued growth, i.e. it could be a one month phenomenon.
2. Higher asking and selling prices vs. appraisal value opinions for residential properties. Appraisers study the markets; they do not make the markets. When the data shows higher sale prices in comparable properties market value opinions will increase proportionally. Appraisers seek evidence of value but do not create the value. In time periods with low activity, evidence of any kind is difficult to find.
3. More activity at open houses. Open houses with five to eight attendees is considered average, so a dozen or more people attending an open house means buyer interest is picking up. Also, the mood of the attendees is important. Are they optimist and upbeat? Buyers interest alone does not always translate to effective purchasing power. If the number of buyers in the market increases but they do not have requisite down payments, the sales may still not occur.
4. Shorter marketing times. In some markets, houses have been up for sale for more than a year. In most balanced residential markets, properties that are priced competitively will typically sell in less than six months. If the Days On Market (DOM) is shortening, many practitioners will read an improvement in the market.
5. Reduced number of foreclosures and short sales. A reduction in these transactions commonly signals a more balanced market. If lenders are reluctant to foreclose because of an oversupply of inventory, they may choose to wait to repossess the properties, which could allow a spike in the number of foreclosures later despite a better market condition.
6. Stabilized employment. Stable or increasing employment rates provide the necessary confidence for potential buyers to invest in a home. Since most buyers rely on borrowed funds to make real estate purchases and borrowing money usually requires a source of repayment and that usually means jobs, an increase in this basic need, will enable more real estate sales.
7. Fewer buyer incentives and seller concessions. Seller-paid incentives or concessions are a sign of seller motivation. If there are fewer builders offering “free” upgrades and fewer sellers sweetening the deal with big screen TVs, it may be a sign of lessening supply and therefore a better market.
8. New construction starts. Most builders are quite attune to their markets and will not build new homes without a corresponding contract for sale or a perceived increase in demand. An increase in the number of building permits usually indicates higher demand and higher prices. If residential properties are selling for 25% less than they cost to build, only a few new homes will be built. It would be prudent to buy an existing home rather than build a new one for a much higher price.
9. “Move-up” buyers entering the market. More buyers willing to move to a larger or superior quality home indicates a healthy market. The lack of buyers at the lower end of the price range will have a chain reaction throughout the market. If a buyer for a high priced home has a lower priced home to sell first, the sale of the higher priced home may have to occur before the higher priced one can sell.
10. Apartments advertising renter specials - fewer renters in the market may indicate more people are moving into owner occupied homes or it could indicate a reduction in population. Lower population will cause an oversupply of housing which will oftentimes permeate throughout several markets.
Wednesday, June 24, 2009
Thursday, June 11, 2009
Recommendations For The White House
Business Roundtable, an association of chief executive officers of leading U.S. corporations, issued a set of recommendations for the White House and Congress that are aimed at jumpstarting the housing market in order to stimulate a broader economic recovery. The Business Roundtable’s recommendations are as follows:
· Keep mortgage interest rates at historically low levels (below 5 percent) for at least one year;
· Expand the current First-Time Homebuyer Tax Credit incentive from the lesser of 10 percent of the purchase price of the home or $8,000 to a higher limit of either 10 percent or $15,000 for all homebuyers, remove the income restrictions and include all primary residence purchases for one full year;
· Conduct a thorough review of current foreclosure mitigation and loan-modification programs in light of rising loan-modification re-default rates;
· Make permanent the current temporary conforming loan limits; and
· Continue to review and strengthen government efforts already underway to review and refine mortgage lending practices.
“We believe targeted, demand-side solutions – such as the ones Business Roundtable is recommending today – will provide a critical next step for a housing recovery that will help create jobs and boost the economy as a whole,” said Smith in the Business Roundtable’s press release.
Coldwell Banker Realtors applaud the Business Roundtable for its proactive efforts to reinvigorate the U.S. housing market, and we are proud of the leadership role our parent company, Realogy, has taken in this regard. Many of our brokers and sales associates already have been involved in grassroots lobbying efforts in support of housing issues with your elected officials in Washington, D.C.
We understand that the legislative process is often a long and winding road that is hard to predict, but at some point in the future, we expect to make our voices heard in support of any new legislation in Congress that would advance these recommendations.
· Keep mortgage interest rates at historically low levels (below 5 percent) for at least one year;
· Expand the current First-Time Homebuyer Tax Credit incentive from the lesser of 10 percent of the purchase price of the home or $8,000 to a higher limit of either 10 percent or $15,000 for all homebuyers, remove the income restrictions and include all primary residence purchases for one full year;
· Conduct a thorough review of current foreclosure mitigation and loan-modification programs in light of rising loan-modification re-default rates;
· Make permanent the current temporary conforming loan limits; and
· Continue to review and strengthen government efforts already underway to review and refine mortgage lending practices.
“We believe targeted, demand-side solutions – such as the ones Business Roundtable is recommending today – will provide a critical next step for a housing recovery that will help create jobs and boost the economy as a whole,” said Smith in the Business Roundtable’s press release.
Coldwell Banker Realtors applaud the Business Roundtable for its proactive efforts to reinvigorate the U.S. housing market, and we are proud of the leadership role our parent company, Realogy, has taken in this regard. Many of our brokers and sales associates already have been involved in grassroots lobbying efforts in support of housing issues with your elected officials in Washington, D.C.
We understand that the legislative process is often a long and winding road that is hard to predict, but at some point in the future, we expect to make our voices heard in support of any new legislation in Congress that would advance these recommendations.
Wednesday, June 10, 2009
Utah To Rebound Quickly
SALT LAKE CITY -- A new study shows Utah may be poised to recover from the recession more quickly than most states. The
reason, according to the conservative authors, is Utah's business-friendly environment.
This is a conservative study with a lot of praise for Utah's conservative Legislature and its policies,but the forecast is a pragmatic look at what businesses want and what Utah has.
Poised to attract more high-tech companies, more in research and medicine, in recreation, tourism and energy; Utah may have
what it takes to climb out of the recession first. "We do have a very attractive environment for business, and it's been stable," said Sen. Wayne Niederhauser.
One of the advantages comes in the area of tax policy, specifically income tax reform. Utah also has less government regulation and involvement is a plus for businesses. Gov. Jon Huntsman is also working to promote Utah as a future renewable energy hub. Together, it could add up to an even more prosperous future for Utah. "There probably is not another state in America right now with better practices, in terms of attracting, building and promulgating renewable energy," Huntsman said.
At the same time, Utah has a chance to lead the way in using prosperity to create a better life for people. It can do so in many ways. One example is in being smart about health care reform. "We're saying it's great the state is embarking on health system
reform. Let's make sure that, at the end of the day, those reforms result in predictable costs for businesses and affordable costs for employees so they can succeed on the job," said Judi Hilman, with the Utah Health Policy Project.
By comparison, states like California and New York have been raising taxes steadily. That has led to a very difficult downward spiral for those states.
March 2009 KSL
reason, according to the conservative authors, is Utah's business-friendly environment.
This is a conservative study with a lot of praise for Utah's conservative Legislature and its policies,but the forecast is a pragmatic look at what businesses want and what Utah has.
Poised to attract more high-tech companies, more in research and medicine, in recreation, tourism and energy; Utah may have
what it takes to climb out of the recession first. "We do have a very attractive environment for business, and it's been stable," said Sen. Wayne Niederhauser.
One of the advantages comes in the area of tax policy, specifically income tax reform. Utah also has less government regulation and involvement is a plus for businesses. Gov. Jon Huntsman is also working to promote Utah as a future renewable energy hub. Together, it could add up to an even more prosperous future for Utah. "There probably is not another state in America right now with better practices, in terms of attracting, building and promulgating renewable energy," Huntsman said.
At the same time, Utah has a chance to lead the way in using prosperity to create a better life for people. It can do so in many ways. One example is in being smart about health care reform. "We're saying it's great the state is embarking on health system
reform. Let's make sure that, at the end of the day, those reforms result in predictable costs for businesses and affordable costs for employees so they can succeed on the job," said Judi Hilman, with the Utah Health Policy Project.
By comparison, states like California and New York have been raising taxes steadily. That has led to a very difficult downward spiral for those states.
March 2009 KSL
Friday, May 29, 2009
Home Sales Increase
Home Sales Jump
Existing-home sales rose in April with strong buyer activity in lower price ranges, according to the NATIONAL ASSOCIATION OF REALTORS®.
In Utah County we saw home sales go from 361 in March to 385 in April. As of today there are 516 homes under contract in Utah County!!
Existing-home sales — including single-family, townhomes, condominiums and co-ops — increased 2.9 percent to a seasonally adjusted annual rate of 4.68 million units in April from a downwardly revised pace of 4.55 million units in March. Yet, home sales were 3.5 percent below the 4.85 million-unit level in April 2008, according to NAR.
Lawrence Yun, NAR chief economist, says first-time buyers continue to influence the market but there also is a seasonal rise of repeat buyers.
“Most of the sales are taking place in lower price ranges and activity is beginning to pickup in the midprice ranges, but high-end home sales remain sluggish,” he says. “The Federal Reserve needs to help restore liquidity for the jumbo mortgage market by buying these loans under the TALF program.”
Buyers Once Again Emerge
An NAR practitioner survey in April showed first-time buyers declined to 40 percent of transactions, implying more repeat buyers are entering the traditional spring home-buying season. It also showed the number of buyers looking at homes has increased 14 percentage points from a year ago.
“This is consistent with our forecast for home sales in the latter part of the year to be 10 to 20 percent higher than the second half of 2008,” Yun says.
It's critical that distressed homes be quickly cleared from the market, Yun says.
“Fortunately, home buyers are being attracted to deeply discounted prices and are bidding up many foreclosed listings, particularly in California, Nevada, and Florida — this will set the stage for healthy market conditions going forward,” Yun says.
NAR President Charles McMillan says conditions are optimal for buyers with good jobs and long-term plans.
“We have record low mortgage interest rates, a wide selection of homes and affordable prices in most areas,” he says. “When you add the $8,000 first-time buyer tax credit, it’s hard to imagine a better time to make an investment in your future through homeownership.”
Existing-home sales rose in April with strong buyer activity in lower price ranges, according to the NATIONAL ASSOCIATION OF REALTORS®.
In Utah County we saw home sales go from 361 in March to 385 in April. As of today there are 516 homes under contract in Utah County!!
Existing-home sales — including single-family, townhomes, condominiums and co-ops — increased 2.9 percent to a seasonally adjusted annual rate of 4.68 million units in April from a downwardly revised pace of 4.55 million units in March. Yet, home sales were 3.5 percent below the 4.85 million-unit level in April 2008, according to NAR.
Lawrence Yun, NAR chief economist, says first-time buyers continue to influence the market but there also is a seasonal rise of repeat buyers.
“Most of the sales are taking place in lower price ranges and activity is beginning to pickup in the midprice ranges, but high-end home sales remain sluggish,” he says. “The Federal Reserve needs to help restore liquidity for the jumbo mortgage market by buying these loans under the TALF program.”
Buyers Once Again Emerge
An NAR practitioner survey in April showed first-time buyers declined to 40 percent of transactions, implying more repeat buyers are entering the traditional spring home-buying season. It also showed the number of buyers looking at homes has increased 14 percentage points from a year ago.
“This is consistent with our forecast for home sales in the latter part of the year to be 10 to 20 percent higher than the second half of 2008,” Yun says.
It's critical that distressed homes be quickly cleared from the market, Yun says.
“Fortunately, home buyers are being attracted to deeply discounted prices and are bidding up many foreclosed listings, particularly in California, Nevada, and Florida — this will set the stage for healthy market conditions going forward,” Yun says.
NAR President Charles McMillan says conditions are optimal for buyers with good jobs and long-term plans.
“We have record low mortgage interest rates, a wide selection of homes and affordable prices in most areas,” he says. “When you add the $8,000 first-time buyer tax credit, it’s hard to imagine a better time to make an investment in your future through homeownership.”
Saturday, May 23, 2009
Housing is more affordable!
National Association of Realtors Announces Housing Affordability Highest in 18 Years
This is one of the best times to purchase a home in decades. This week the National Association of Realtors underscored that fact with the release that nationwide housing affordability jumped 10 percentage points during the first quarter of 2009 to its highest level since the series began 18 years ago, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI). The HOI showed that 72.5% of all new and existing homes sold in the first quarter of 2009 were affordable to families earning the national median income of $64,000, up from 62.4% during the previous quarter and up from 53.8% during the first quarter of 2008.
Locally, the story is similar. In the Ogden-Clearfield area, 74.4% of all new and existing homes sold in the first quarter of 2009 were affordable to families earning the area’s median income of $68,500. That’s up 5% from the previous quarter and up 13% from the same period a year ago.
In Provo-Orem, 65.3% of all homes sold were affordable to families earning the median income of $62,900. That’s up 12% from the previous quarter and up 21% from the same period a year ago.
In Salt Lake, 65.9% of all homes sold were affordable to families earning the median income of $67,800. That’s up 7% from the previous quarter and up almost 20% from the same period a year ago.
This is one of the best times to purchase a home in decades. This week the National Association of Realtors underscored that fact with the release that nationwide housing affordability jumped 10 percentage points during the first quarter of 2009 to its highest level since the series began 18 years ago, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI). The HOI showed that 72.5% of all new and existing homes sold in the first quarter of 2009 were affordable to families earning the national median income of $64,000, up from 62.4% during the previous quarter and up from 53.8% during the first quarter of 2008.
Locally, the story is similar. In the Ogden-Clearfield area, 74.4% of all new and existing homes sold in the first quarter of 2009 were affordable to families earning the area’s median income of $68,500. That’s up 5% from the previous quarter and up 13% from the same period a year ago.
In Provo-Orem, 65.3% of all homes sold were affordable to families earning the median income of $62,900. That’s up 12% from the previous quarter and up 21% from the same period a year ago.
In Salt Lake, 65.9% of all homes sold were affordable to families earning the median income of $67,800. That’s up 7% from the previous quarter and up almost 20% from the same period a year ago.
Thursday, May 14, 2009
FHA Appraisal Tips
The following are excerpts from HUD Mortgagee Letter 2005-ML-48 regarding repair and inspection requirements.
FHA Repair Requirements: Below are examples of minor property conditions that no longer require automatic repair for existing properties include, but are not limited to:
* Missing handrails * Cracked or damaged exit doors that are otherwise operable * Cracked window glass * Defective paint surfaces in homes constructed post 1978 * Minor plumbing leaks (such as leaky faucets) * Defective floor finish or covering (worn through the finish, badly soiled carpeting) * Evidence of previous (non-active) Wood Destroying Insect/Organism damage where there is no evidence of unrepaired structural damage * Rotten or worn out counter tops * Damaged plaster, sheetrock or other wall and ceiling materials in homes constructed post- 1978 * Poor workmanship * Trip hazards (cracked or partially heaving sidewalks, poorly installed carpeting) * Crawl space with debris and trash * Lack of an all weather driveway surface
Below are examples of property conditions that may represent a risk to the health and safety of the occupants or the soundness of the property for which FHA will continue to require automatic repair for existing properties include, but are not limited to:
* Inadequate access/egress from bedrooms to exterior of home * Leaking or worn out roofs (if 3 or more layers of shingles on leaking or worn out roof, all existing shingles must be removed before re-roofing) * Evidence of structural problems (such as foundation damage caused by excessive settlement) * Defective paint surfaces in homes constructed pre-1978 * Defective exterior paint surfaces in home constructed post-1978 where the finish is otherwise unprotected * Exposed sub-flooring, missing carpet, vinyl, tile floors
FHA Inspection Requirements: FHA no longer mandates automatic inspections for the following items and/or conditions in existing properties:
* Wood Destroying Insects/Organisms: inspection required only if evidence of active infestation, mandated by the state or local jurisdiction, if customary to area, or at lender's discretion * Well (individual water system): test or inspection required if mandated by state or local jurisdiction; if there is knowledge that well water may be contaminated; when the water supply relies upon a water purification system due to presence of contaminants; or when there is evidence of: Corrosion of pipes (plumbing)Areas of intensive agriculture within 1/4 mile Coal mining or gas drilling operations within 1/4 mile Dump, junkyard, landfill, factory, gas station, or dry cleaning operation within 1/4 mile Unusually objectionable taste, smell or appearance of well water (superceding the guidance in Mortgagee Letter 95-34 that requires well water testing in the absence of local or state regulations) * Septic: test or inspection required only if evidence of system failure, if mandated by state or local jurisdiction, if customary to the area, or at lender's discretion * Flat and/or unobservable roof
FHA Appraisal Requirements: Appraisers are to recommend only those repairs necessary to make the property comply with FHA’s Minimum Property Requirements (MPR) or Minimum Property Standards (MPS) together with the estimated cost to cure. Recommended repairs are based on a visual inspection of readily observable items only.
Cosmetic repairs are not required; however, they are to be considered in the overall condition rating and valuation of the property. Examples of cosmetic repairs would include surface treatments, beautification or adornment not required for the preservation of the property. For example, generally, worn floor finishes or carpeting, holes in window screens, or a small crack in a windowpane are examples of deferred maintenance that do not rise to the level of a required repair but must be reported by the appraiser. The physical condition of existing building improvements is examined at the time of the appraisal to determine whether repairs, alterations or inspections are necessary - essential to eliminate conditions threatening the continued physical security of the property.
Required repairs will be limited to necessary requirements to:
protect the health and safety of the occupants (Safety)
protect the security of the property (Security)
correct physical deficiencies or conditions affecting structural integrity (Soundness)
FHA Repair Requirements: Below are examples of minor property conditions that no longer require automatic repair for existing properties include, but are not limited to:
* Missing handrails * Cracked or damaged exit doors that are otherwise operable * Cracked window glass * Defective paint surfaces in homes constructed post 1978 * Minor plumbing leaks (such as leaky faucets) * Defective floor finish or covering (worn through the finish, badly soiled carpeting) * Evidence of previous (non-active) Wood Destroying Insect/Organism damage where there is no evidence of unrepaired structural damage * Rotten or worn out counter tops * Damaged plaster, sheetrock or other wall and ceiling materials in homes constructed post- 1978 * Poor workmanship * Trip hazards (cracked or partially heaving sidewalks, poorly installed carpeting) * Crawl space with debris and trash * Lack of an all weather driveway surface
Below are examples of property conditions that may represent a risk to the health and safety of the occupants or the soundness of the property for which FHA will continue to require automatic repair for existing properties include, but are not limited to:
* Inadequate access/egress from bedrooms to exterior of home * Leaking or worn out roofs (if 3 or more layers of shingles on leaking or worn out roof, all existing shingles must be removed before re-roofing) * Evidence of structural problems (such as foundation damage caused by excessive settlement) * Defective paint surfaces in homes constructed pre-1978 * Defective exterior paint surfaces in home constructed post-1978 where the finish is otherwise unprotected * Exposed sub-flooring, missing carpet, vinyl, tile floors
FHA Inspection Requirements: FHA no longer mandates automatic inspections for the following items and/or conditions in existing properties:
* Wood Destroying Insects/Organisms: inspection required only if evidence of active infestation, mandated by the state or local jurisdiction, if customary to area, or at lender's discretion * Well (individual water system): test or inspection required if mandated by state or local jurisdiction; if there is knowledge that well water may be contaminated; when the water supply relies upon a water purification system due to presence of contaminants; or when there is evidence of: Corrosion of pipes (plumbing)Areas of intensive agriculture within 1/4 mile Coal mining or gas drilling operations within 1/4 mile Dump, junkyard, landfill, factory, gas station, or dry cleaning operation within 1/4 mile Unusually objectionable taste, smell or appearance of well water (superceding the guidance in Mortgagee Letter 95-34 that requires well water testing in the absence of local or state regulations) * Septic: test or inspection required only if evidence of system failure, if mandated by state or local jurisdiction, if customary to the area, or at lender's discretion * Flat and/or unobservable roof
FHA Appraisal Requirements: Appraisers are to recommend only those repairs necessary to make the property comply with FHA’s Minimum Property Requirements (MPR) or Minimum Property Standards (MPS) together with the estimated cost to cure. Recommended repairs are based on a visual inspection of readily observable items only.
Cosmetic repairs are not required; however, they are to be considered in the overall condition rating and valuation of the property. Examples of cosmetic repairs would include surface treatments, beautification or adornment not required for the preservation of the property. For example, generally, worn floor finishes or carpeting, holes in window screens, or a small crack in a windowpane are examples of deferred maintenance that do not rise to the level of a required repair but must be reported by the appraiser. The physical condition of existing building improvements is examined at the time of the appraisal to determine whether repairs, alterations or inspections are necessary - essential to eliminate conditions threatening the continued physical security of the property.
Required repairs will be limited to necessary requirements to:
protect the health and safety of the occupants (Safety)
protect the security of the property (Security)
correct physical deficiencies or conditions affecting structural integrity (Soundness)
Tuesday, May 12, 2009
Good News for Utah
Good News for Utah
Three of Utah's metro areas were included in the top-ten fastest growing metropolitan areas in a report released by the Census Bureau this month. The Provo-Orem, Logan, and St. George metro areas all made the top-ten list. The reports list 363 metropolitan areas throughout the nation.
The Provo-Orem metro area saw population growth of 3.4 percent, which was the sixth highest in the nation. The Logan metro area ranked ninth nationally with a 3.2 percent increase, and coming in at number ten was the St. George metro area with a 3.1 percent increase.
While the bulk of Utah's population growth came via natural growth, which is the difference between births and deaths in a year, one-third of Utah's growth came from in-migration from outside the state. This is an indication of Utah's overall economic strength.
Although the economy has slowed down, Utah is still outperforming most of the nation and is maintaining a substantially lower unemployment rate. This would indicate that we will still continue to see an increase in net in-migration to the state. "Business leaders and individuals, even internationally, are recognizing the long term trends in Utah. The state is being recognized as a long term 'hot spot' and companies must plan for the long-term; they want stability and security," says, Pam Perlich senior research economist at the University of Utah.
Three of Utah's metro areas were included in the top-ten fastest growing metropolitan areas in a report released by the Census Bureau this month. The Provo-Orem, Logan, and St. George metro areas all made the top-ten list. The reports list 363 metropolitan areas throughout the nation.
The Provo-Orem metro area saw population growth of 3.4 percent, which was the sixth highest in the nation. The Logan metro area ranked ninth nationally with a 3.2 percent increase, and coming in at number ten was the St. George metro area with a 3.1 percent increase.
While the bulk of Utah's population growth came via natural growth, which is the difference between births and deaths in a year, one-third of Utah's growth came from in-migration from outside the state. This is an indication of Utah's overall economic strength.
Although the economy has slowed down, Utah is still outperforming most of the nation and is maintaining a substantially lower unemployment rate. This would indicate that we will still continue to see an increase in net in-migration to the state. "Business leaders and individuals, even internationally, are recognizing the long term trends in Utah. The state is being recognized as a long term 'hot spot' and companies must plan for the long-term; they want stability and security," says, Pam Perlich senior research economist at the University of Utah.
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