Why it is Time to Buy

Back in June 2006, when the housing market peaked, the prospect of a five-year national housing bust seemed unimaginable to most people. And yet here we are, with the latest Standard & Poor’s Case-Shiller index showing that prices hit new bear-market lows, falling back to 2002 levels nationally and to 1990s levels in some battered regions.

Despite all the gloom, however, there are growing indications that it is a good time to buy. Mortgage rates, which fell to 4.55% for the week ending June 2, according to Freddie Mac, are near 50-year lows. Homes have become more affordable than they have been in years: According to Moody’s Analytics, the ratio of home prices to income is now 20.9% lower than the 15-year average through 2010, and 12.5% lower than the 1989-2004 average. A historic glut of homes, meanwhile, has created a buyer’s market: There were about 15 million vacant homes in the U.S. last year – some 3.1 million more than normal.

Such conditions might not last long. Moody’s Analytics predicts that the number of distressed sales will begin to fall in 2013, and that prices will begin to edge upward then. Home building is at a virtual standstill, so the supply overhang isn’t likely to get much worse. Meanwhile, demographic indicators such as “household formation”—the number of new households each year—are on the rise, and promise to take a bite out of the glut in coming years.

The upshot: While we might not see rapid growth in the next couple of years, there are a tremendous number of positive signs that could lead to a rebound. The short-term outlook isn’t encouraging. Job growth remains weak, foreclosure sales are making up more of the market, and economists are predicting that home prices will fall more in the coming months.  But the long-term benefits of homeownership remain very much intact. For now, at least, you can deduct the mortgage interest on your taxes – a big perk for people in higher tax brackets. You get to paint your walls any color you wish, without having to clear it with a landlord. And assuming you can buy a home for about the same price as you can rent one, buying will give you the ability one day to live rent-free. Come retirement time, a paid-off mortgage means your monthly expenses are significantly reduced, and you have a chunk of equity to play with.

So what might the next five years look like? Once the foreclosure mess begins to clear up, say housing economists, the traditional drivers of the housing market—demographics, affordability, loan availability, employment and psychology—should take over.

Here is a glimmer of what the future may hold: While overall home prices fell by 7.5% in April over the same period a year earlier, according to CoreLogic, a Santa Ana, Calif., provider of real-estate data and analytics, if you exclude distressed sales, prices were off just 0.5%. So if you are in a market that isn’t battered by foreclosures, you may be close to a bottom already.

Please visit www.RajQsar.com for all your real estate needs in Orange County.

10 Cities With the Highest-Priced Listings

Daily Real Estate News  | April 28, 2011

10 Cities With the Highest-Priced Listings
Last month, the national median list price was $199,500, down 0.25 percent for the year, according toRealtor.com housing data of 146 markets. But in San Francisco, the median list price is more than three times that amount.

The following is a list of the cities that had the highest median list prices in March 2011, based on Realtor.com housing data.

1. San Francisco
Median list price: $639,000
Down 8.45 percent for the year
Median days on the market: 63

2. Santa Barbara-Santa Maria-Lompoc, Calif.
Median list price: $559,000
Down 19.57 percent year-over-year
Median days on the market: 117

3. San Jose, Calif.
Median list price: $470,000
Down 5.05 percent year-over-year
Median days on the market: 71

4. Orange County, Calif.
Median list price: $450,000
Down 5.05 percent year-over-year
Median days on the market: 100

5. Honolulu
Median list price: $444,000
Down 1.11 percent year-over-year
Median days on the market: 112

6. Santa Fe, New Mexico
Median list price: $435,000
Up 4.82 percent year-over-year
Median days on the market: 288

7. Ventura, Calif.
Median list price: $420,000
Down 6.67 percent year-over-year
Median days on the market: 93

8. New York
Median list price: $389,000
Down 2.51 percent year-over-year
Median days on the market: 146

9. Naples, Fla.
Median list price: $389,000
Up 2.40 percent year-over-year
Median days on the market: 225

10. Boulder-Longmont, Colo.
Median list price: $380,000
Up 2.73 percent year-over-year
Median days on the market: 114
To search for Million Dollar Listings just go to www.RajQsar.com/Search


Source: REALTOR® Magazine online (April 28, 2011)

April new home sales rose 7.3%

[Update 1: Adds NAHB, Capital Economics quotes.]

Sales of new single-family homes rose 7.3% in April from a month earlier, easily topping most analyst estimates.

The Commerce Department said the seasonally adjusted rate of 323,000 units last month was up from 301,000 for March, which was revised upward slightly. April new home sales were down 23.1% from 420,000 a year earlier.

In February, new home sales fell 17% from the prior month to 250,000, the lowest level ever recorded.

The seasonally adjusted estimate of new homes for sale at the end of last month was 175,000 in February, representing a 6.5-month supply and at the lowest level in decades. A healthy housing market usually carries a six-month supply of single-family homes.

Analysts surveyed by Econoday expected home sales of 300,000 for April with a range of estimates between 285,000 and 320,000. A Briefing.com survey projectedhome sales of 290,000 for the month.

The median sales price of new homes sold in April was $217,900, up 4.6% from March.

Jerry Howard, chief executive officer of the National Association of Home Builders, believes the housing market is still “bouncing along the bottom.”

He said on Fox News Tuesday morning that prices, as well as home sales, can only go up from here.

Capital Economics said April’s increase in sales “may even underestimate the recent rebound since the data exclude condo sales, which are probably performing better than sales of new single-family homes.”

High Gas Prices Trigger Changes in Buyer Behavior

The rise in gas prices is influencing buyer decisions as they shop for a new home, causing more buyers to make short commutes and home offices a top priority, according to a new Coldwell Banker survey of more than 1,000 of its real estate professionals about buyer trends.

Seventy-five percent of the real estate professionals surveyed say the spike in gas prices is influencing their clients’ decisions on where to live. What’s more, if gas prices continue to increase, 93 percent predict that even more buyers will choose to live somewhere closer to their work.

Gas prices are topping $4 a gallon and higher, and are up about 30 percent over last year, which is starting to put a dent in many Americans’ pocketbook.

More real estate professionals also report that the rise in gas prices is prompting more buyers to look for homes that will allow them to work-from-home. Indeed, 77 percent of those surveyed say that more of their buyers are showing an interest in having a home office compared to five years ago.

Gas prices also seem to be spiking a renewed interest in urban living. More than half of real estate professionals surveyed say they are seeing more buyers wanting to target homes in urban areas compared to five years ago, citing shorter commute times, being able to walk to more places, and being near public transportation as the most likely reasons for the urban-area migration.

More buyers are also choosing homes closer to shops and services due to the increase in gas prices, according to the survey.

REO Inventory Reaches All-Time High

Daily Real Estate News  |  May 5, 2011

REO Inventory Reaches All-Time High 
The national inventory of REO properties rose in March to a record high of 2.2 million. Foreclosure starts also increased by 33 percent month-over-month, according to the March Mortgage Monitor report by Lending Processing Services Inc. 

However, it’s not all doom and gloom for the housing market. The report revealed a significant increase in foreclosure sales, which is helping to chip away at the swelling inventories that are battering many markets. 

Also, delinquencies continue to decline, which is a sign of fewer foreclosures brewing in the pipeline. Delinquencies fell more than 11 percent in March from February — the lowest level since 2008 and a nearly 20 percent year-over-year decline, according to Lender Processing Services Inc. The total U.S. loan delinquency rate, which is for loans 30 or more days past due (but not in foreclosure), is 7.78 percent. 

States with the highest percentage of loans where home owners have fallen behind are Florida, Nevada, Mississippi, New Jersey, and Georgia. 

On the other hand, states that boast the lowest percentage of delinquent loans are Montana, Wyoming, Alaska, South Dakota, and North Dakota. 

To search all REO homes on the MLS please visit www.RajQsar.com/search-foreclosures

Source: “Banks Build Record Foreclosure Inventory,” RISMedia (May 5, 2011)

Bailing on Mortgage Not a Good Idea

An estimated 11 million home owners owe more on their mortgage than their property is currently worth. That’s made more home owners consider walking away from their mortgage and home ownership, even those who can still comfortably afford to make their payments (known as “strategic default”). 

Walking away from a mortgage usually results in either a short sale or foreclosure. So what are the consequences of walking away? There may be far more consequences than what most home owners ever considered. 

The consequences include everything from badly affected credit to potential tax consequences and deficiency risks. There are even possible professional implications, Justin McHood with Academy Mortgage in Chandler, Ariz., warns in an article at Zillow.com

Home owners’ credit scores will be badly hit regardless of whether they attempt a short sale or have their property foreclosed on. (See How Missed Mortgage Payments Hurt Credit Scores)

There also could be the potential for deficiency risks when walking away from a home, which largely varies from state to state. (View anti-deficiency laws by state.) In some states, lenders may sue you for the difference between what you owe and what your short-sale or foreclosure proceeds are, McHood notes. 

Home owners considering walking away also should weigh the potential difficulty they may face from moving too. For example, if moving into a rental property, they’ll have to convince a landlord to rent to them after they have the red flag of missed mortgage payments on their credit record. And paying for moving expenses — which many walkaways fail to consider — can quickly add up too. 

Plus, home owners may find professional consequences from walking away from a mortgage, as the number of employers eyeing employees’ credit profiles continues to grow. 

Source: “The Consequence of Walking Away,” Zillow.com (April 27, 2011)

Rates Reverse—Lower!

Rates on U.S. mortgages fell this week, following four weeks of increases, according to Freddie Mac’s weekly survey of conforming mortgage rates, released on Thursday.

The 30-year fixed-rate mortgage averaged 4.8% for the week ending April 21, down from 4.91% last week and 5.07% a year ago, according to the survey.

“Low inflation is keeping mortgage rates at bay,” said Frank Nothaft, vice president and chief economist of Freddie Mac.

Rates on 15-year fixed-rate mortgages also dropped, averaging 4.02%, down from 4.13% last week and 4.39% a year ago.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.61%, down from 3.78% last week and 4.03% a year ago.

And the 1-year Treasury-indexed ARM averaged 3.16%, down from 3.25% last week and 4.22% a year ago.

To obtain the rates, the fixed-rate mortgages required payment of an average 0.7 point, while the ARMs required an average 0.6 point. A point is 1% of the mortgage amount, charged as prepaid interest.

In closing – although housing starts and existing home sales in March were stronger than the market consensus, they were still at low levels. Moreover, home builders reportedly became more pessimistic in April about the near-term according to the NAHB/Wells Fargo Housing Market Index.

To search all homes on the MLS please visit www.RajQsar.com

Distressed Properties Claim 40% of Existing-Home Sales

Distressed homes – typically REOs and short sales – accounted for 40 percent of the existing homes sold in March, the National Association of Realtors (NAR) reported Wednesday.

The trade group notes that these properties generally sell at discounts in the vicinity of 20 percent. Their large market share served to dampen the median existing-home price. For all housing types, it came in at $159,600 last month, down 5.9 percent from March 2010.

Overall, sales of previously owned homes rose 3.7 percent last month as the spring buying season began to take hold. NAR described March’s reading as “continuing an uneven recovery,” following the 9.6 drop recorded in February.

Lawrence Yun, NAR’s chief economist, expects the improving sales pattern to continue.

“Existing-home sales have risen in six of the past eight months, so we’re clearly on a recovery path,” he said. “With rising jobs and excellent affordability conditions, we project moderate improvements into 2012, but not every month will show a gain – primarily because some buyers are finding it too difficult to obtain a mortgage.”

“For those fortunate enough to qualify for financing, monthly mortgage payments as a percent of income have been at record lows,” Yun added.

The March numbers put the annual sales rate at 5.10 million in March, up from a revised 4.92 million in February, but below the 5.44 million pace in March 2010.

NAR notes that sales were at elevated levels from March through June of 2010 in response to the federal homebuyer tax credit. Immediately following its expiration, existing-home sales bottomed last July, and been on a slow but fairly steady path ever since.

“Although home sales are coming back without a federal stimulus, sales would be notably stronger if mortgage lending would return to the normal, safe standards that were in place a decade ago – before the loose lending practices that created the unprecedented boom and bust cycle,” Yun said.

He says given that the Federal Housing Administration (FHA) and Veterans Affairs (VA) government-backed loan programs turned a modest profit over to Treasury last year, and have never required a taxpayer bailout, low down payment loans should continue to be made available for consumers who have demonstrated financial responsibility.

A parallel NAR practitioner survey shows first-time buyers purchased 33 percent of homes in March, compared with 34 percent in February. They were 44 percent in March 2010.

All-cash sales were at a record market share of 35 percent last month, up from 33 percent in February and 27 percent in March 2010.

Investors accounted for 22 percent of sales activity in March, up from 19 percent both the month before and a year earlier.

Looking for a distressed property in Orange County.  Search like a pro at http://rajqsar.com/search-foreclosures or email our team at Raj Qsar – Premier Orange County Real Estate today.

Just the Right Description

Being that yesterday was Tax Day, we figured we all could use a good laugh.  Nothing serious this week – just a good chuckle or two.  Next time you are stumped trying to find just the right euphemism for a, well, unique quality of a new home on the market, please consult the list below:

• Old charmer – just an ugly old house

• Stunning house – the house is not ugly

• Tudor – two bedrooms are in the attic which is not insulated; very hot in summer and very cold in winter

• Cape Cod – styled after Third World slum dwellings

• Sunny corner lot – noisy intersection of two busy streets

• Easy freeway access – noisy arterial street close to freeway

• Low maintenance lot – no yard; the kids will have to play in the street

• Meticulously maintained in the original condition – the appliances are 50 years old

• Ready to remodel – the house is about to collapse; double-check it’s not already condemned

• Newly remodeled kitchen – 50-year old cabinetry and faucets have been replaced with cheap modern equivalents

• Motivated sellers – seller is behind on their mortgage payments

• Ready to move in – the interior has been painted with one coat of cheap paint

• Desirable neighborhood – this little house is extravagantly overpriced because the neighborhood has a snobbish reputation

• 1-car garage – you can fit a Ford Escort into the garage, but there is no room to open the doors

• In-city living – it is not safe to walk in this neighborhood after dark

• Recreation room with wet bar – basement has been painted and has a faucet

• Large family room – large basement

• Bedroom in basement – basement has a 1′ by 2′ window

• Lots of storage space – basement too small to be called a family room

• Partial mountain view – you can see the tip of Mt. Baldy if you climb onto the roof

• Views of wildlife – good view of your neighbor’s bedroom window

• Build sweat equity – the house is not habitable

• Needs a little TLC – plan on renting a bulldozer

• Storybook – the house is old and the roof is not flat

• Efficiently designed kitchen – the kitchen is too small to fit two people at the same time

• Great water pressure – the house is next to a water tower

• Quiet neighbors – the home backs to a cemetery

• Cozy bathroom – you can shower while sitting on the toilet

• Won’t last! – hurry and place an offer before the bank forecloses

• Unique – it’s weird, just weird

We like to laugh a lot at Raj’s office – thought you would like this too.

Survey: Americans Still Optimistic About Housing

A sluggish real estate market hasn’t shaken the confidence of the public in how it views home ownership, according to a new study by the Pew Research Center. Eight in 10 adults (or 81 percent) say owning a home is the best long-term investment a person can make, according to the Pew study of about 2,000 adults conducted in March.

“Home owners are not blind to what has happened to home prices, nor are they expecting a speedy recovery,” according to the Pew study. In fact, of the home owners surveyed, about half said their home is worth less now than before the recession, while 31 percent said their home’s value has stayed the same.

Nevertheless, 82 percent of home owners who say their home is worth less now than before the recession either strongly or somewhat agree that home ownership is the best long-term investment a person can make, according to the survey.

The value of home ownership even continues to emerge on top when home owners were surveyed and asked to rate the importance of four long-term financial goals. Home ownership and “being able to live comfortably in retirement” rated the highest–viewed as either extremely or very important by 80 percent of respondents.

Yet, their optimism about home ownership doesn’t mean they’re completely happy with their current home. Nearly a quarter of all home owners surveyed said that if they had it to do all over again, they would not buy their current home. Most of the “buyer’s remorse” complaints were about the home itself or its location. Only 31 percent of those surveyed cited financial factors, such as the home losing value or their own changing financial situation.

For more information about your local market please visit www.RajQsar.com

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