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Housing affordability reaches record in first quarter
Friday, May 18th, 2012Housing affordability reached a milestone in the first quarter, according to the National Association of Realtors® (NAR).
NAR’s composite quarterly Housing Affordability Index rose to a record high of 205.9 in the first quarter of 2012. The Index provides a quick look at affordability and is calculated by the relationship between median home price, median family income and average mortgage interest rate. The higher the index, the greater the household purchasing power.
The first quarter marks the first time the quarterly index broke the 200 mark since NAR recordkeeping began in 1970.
“For those with good credit, we’ve never seen better housing affordability conditions or market opportunities than we see at present,” says NAR President Moe Veissi, broker-owner of Veissi & Associates Inc. in Miami and 2002 president of Florida Realtors.
Veissi thinks things could be even better if lending standards would return to normal.
“Although home prices are stabilizing and sales are rising, some buyers still have to jump through a lot of hoops to convince a lender that they are creditworthy, even for a mortgage that would be well within their means,” he says. “This is especially true for self-employed buyers.”
The index finds that a median-income family, earning just under $61,000, could afford a home costing $325,500 in the first quarter – more than double the national median existing single-family home price of $158,100. The median monthly mortgage principal and interest payment for a median-priced home would take only 13.5 percent of gross income.
A companion index measuring the ability of first-time buyers to purchase a home also set a record, with the first-time buyer index reaching 135.8 in the first quarter. Assumptions for the first-time buyer index include a lower income, at 65 percent of median family income, a starter home costing 85 percent of the median price, and a downpayment of 10 percent. In the first quarter, the typical entry-level buyer could afford a home costing $182,500, which is well above the overall median price.
“It’s never been easy to buy a first home because of the cash required for downpayment and closing costs, but conditions for first-time buyers who are able to get a mortgage have never been better,” Veissi says.
Most first-time buyers choose a loan with a lower downpayment, often an FHA-insured loan with 3.5 percent down, and some use the VA program with no downpayment.
Both home prices and mortgage interest rates are expected to edge up modestly as the year progresses, but housing affordability will remain very favorable with the median-income household well positioned to afford a median-priced home. For all of 2012, the index is projected to set an annual record, averaging 191 for the year.
Source: Florida Realtors Reprinted with permission. Florida Realtors® All Rights Reserved
Three housing trends emerging this spring
Wednesday, May 2nd, 2012 What can homebuyers expect to face this selling season? An improving housing market has made it a different picture in many areas compared to recent years, housing experts say. Bankrate.com notes the following trends:
1. Fierce competition.
Housing affordability is at a record high due to falling home values and mortgage rates near record lows. More buyers are jumping off the sidelines. At the same time, investors are snapping up bargain prices, often in all-cash deals, and competing with traditional homebuyers. Add in a sinking inventory of homes for sale, and the competition is getting fiercer.
“Rents are going up, and as long as there are properties at the level where investors can get positive cash flow, they will continue to invest,” says Jed Smith, managing director of quantitative research for the National Association of Realtors®. Smith adds that first-time homebuyers, in particular, may find increased competition from investors in trying to snag some of the best deals on the market.
2. More renters show desire to become homeowners.
Recent surveys show that buying a home now is more affordable than renting. As such, more renters are finding homeownership more enticing.
The signs are already starting to show: About 59.5 percent of tenants recently surveyed by Kingsley Associates say they intend to renew their leases this year, which is the lowest rate since early 2009.
3. Mortgages may be a little pricier.
Fannie Mae, Freddie Mac and the Federal Housing Administration recently raised their loan fees, which means homebuyers can expect to pay a little more for their mortgage this spring.
“Those who don’t have credit scores in the high 600s to low 700s may be forced to go the FHA route,” says Ed Conarchy, a mortgage planner at Cherry Creek Mortgage in Gurnee, Ill. “And they will be stuck with the higher fees.”
Buyers with smaller downpayments can expect to pay more for FHA mortgage insurance premiums, which have risen to 1.75 percent of the loan total. Bankrate.com cites an example illustrating the higher fees: A borrower who takes out a $200,000 FHA loan will likely have to pay about $3,500 for mortgage insurance upfront. Prior to the increase taking effect, borrowers would pay about $2,000 for that same loan amount.
Borrowers with higher mortgages can expect higher fees too. The FHA announced that in June it would increase its annual insurance for mortgages more than $625,500. “A borrower who lives in a high-cost area and takes out the maximum $729,750 (which is the FHA limit for high-cost areas) will pay $912 each month in mortgage insurance alone,” Bankrate.com reports.
Source: Florida Realtors Reprinted with permission. Florida Realtors® All Rights Reserved
Renovators do more with less
Friday, April 27th, 2012Glitzy is out and comfy is in as Americans take a simpler approach to home renovation.
With real estate values still in the doldrums, people are seeing their houses less as investments and more as, well, homes. Since they’re staying put, they’re taking on targeted – rather than extreme – makeovers aimed at livability.
Home remodeling is expected to pick up and post solid growth in the second half of this year, making 2012 a robust year, according to the remodeling futures program at Harvard University’s Joint Center for Housing Studies. Driving the market will be midsize kitchen and bath projects, maintenance work and energy-efficiency upgrades.
In fact, unlike a few years ago, Americans are now spending more on remodeling than on new construction, says Stephen Melman of the National Association of Home Builders. He says they’re moving less now than at any time since World War II, so they’re thinking less about the resale value of a remodel.
“They do it, because they want to. That’s a major change in the psychology,” he says.
Yet with home-equity loans in short supply, many Americans are paying cash for renovations, so their projects tend to be smaller and focused.
“Everyone is value-oriented,” says Debra Toney of Three Week Kitchens/Baths in a Week, a remodeling firm with offices in Denver and Texas. “They’re just more cautious,” she says, citing their willingness to pick basic appliances rather than Sub-Zero refrigerators and Wolf ranges.
More consumers, 61 percent, said it was important to get the most bang for the buck last year than did so, 56 percent, in 2010 and slightly more said they’d spend extra time looking for bargains, according to a reader survey released in February by Better Homes and Gardens magazine.
The survey found consumers are most interested in style upgrades to countertops, flooring, faucets and fixtures, followed by general maintenance, decor updates, efficiency and home organization.
“I suggest people try simple changes first,” such as new light fixtures or paint colors, says designer Stephen Saint-Onge, author of No Place Like Home (Wiley). He recalls a couple in Manhattan who wanted to gut their condo, but after he moved their furniture around for a few minutes, they saw new possibilities and a less extensive makeover.
Informality reigns
A cultural shift may be afoot as a response to the Great Recession.
“There’s a shying away from being ostentatious,” says architect Sarah Susanka, co-author of Not So Big Remodeling (Taunton Press). She sees this even among people who have little reason to worry about finances.
“The trend we keep seeing is a move from formal to informal living,” says Jerry Levine, president of the Washington, D.C.-area remodeling firm Levine Group Architects & Builders. He says his high-end clientele, who spend an average of $240,000 on renovations, want spaces to be comfortable, not fancy.
Take Sherry Hiemstra, for example. When she remodeled a 2002 duplex in the nation’s capital, she shrank the luxury kitchen (it took over half the first floor) and added windows to the dining area to bring in more light and views of the holly-rimmed patio walkway.
“We wanted something that was very comfortable and met our lifestyle,” she says.
“Before, it was curb appeal, showiness and keeping up with the Joneses,” says Duo Dickinson, author of Staying Put: Remodel Your House to Get the Home You Want (Taunton Press).
Now, he says, Americans are going back to the future as they try to create permanent, family homes that reflect who they are. “The house is the most direct mirror of your personal values,” he says. “When people renovate to change their lives, they waste money,” but when they renovate to improve how they already live, they benefit.
Levine agrees. Before a project starts, he says, “It’s really important for homeowners to know what’s bothering them about the house.” He says if they can’t identify the problem, they may not find the right solution.
What are homeowners seeking?
• Outdoor connection. Dickinson says the single biggest overall trend is homeowners craving to be connected to the outdoors, via larger windows, decks or porches.
“Since the advent of smartphones and laptops, people have found their visual focus is about 1 foot away,” he says, adding they need a release from that. “Homes are more permeable. We have many more garden designs than before.”
• Vegetable gardens, too. Many homeowners are indulging their outdoor craving, and the push to eat local, by creating a homestead that grows food and – in some cases – even raises livestock.
• Livable kitchens. “The kitchen is the new living room,” says Dickinson, so he says Americans want cushioned seating at the counter or in a built-in banquette. He says homeowners also want the kitchen to multitask as a recycling center and a spot to recharge laptops. He says they’re shifting from wall cabinets, which can block views to a living area, toward walk-in pantries for storage.
• More open floor plans. Many homeowners want kitchens that connect not only to a living room but also to a dining area and the outdoors. “They want more light and openness,” says Richard Loosle of Kube Architecture, a Washington D.C.-based firm that remodels many row houses.
• Togetherness. With this open-living core, there’s “a return to togetherness, a countertrend to the 1990s, when everyone fled the great room,” said Jill Waage of Better Homes and Gardens at an International Builders Show presentation in February. “Now we’re flocking back.” She says Wi-Fi and headphones allow individuals to remain in the same room while doing different activities.
• Smaller master baths. Kitchens may be opening up, but many master baths are shrinking. “We’re doing away with spa tubs. We’re reclaiming that space for larger showers and vanities,” says Josh Baker of BOWA, a high-end remodeler in the nation’s capital. He says his clients now focus more on quality, timeless finishes and less on size.
• Better use of space. Rather than expanding their living space, homeowners are looking to reconfigure existing space to make it work better. Readers surveyed last year by Better Homes and Gardens said they wished for a home with an average 1,856 square feet – down from 1,914 square feet in 2010.
• Energy efficiency. “Windows, insulation and doors were the 1, 2, 3 for energy efficiency” upgrades requested by clients in the last quarter of 2011, says Melman of the National Association of Home Builders. A close fourth was more efficient heating and cooling, or HVAC, equipment.
“Show me the money” is what Connecticut-based architect Dickinson hears from clients about green renovations. He says consumers want retrofits, as long as they pay for themselves within 10 years.
Federal tax credits for more efficient doors, windows, roofs and HVAC systems expired in December, but they remain in effect through 2016 for solar panels, geothermal heat pumps, solar water heaters, small wind turbines and fuel cells.
• Mudrooms or “drop zones.” “Mudrooms have burgeoned in size,” Dickinson says, as Americans seek to reduce clutter and bring order to their homes. He says those who don’t have the space for a mudroom are asking for a basic “drop zone” to put shoes, etc.
• Universal design. As Baby Boomers age, they’re seeking to stay in their homes by building wheelchair-accessible ramps, wider hallways and step-free showers.
Such universal design ranked as the fifth-most-popular feature in kitchen remodels and the third in bathrooms, according to a fourth-quarter 2011 survey of consumer interests by the American Institute of Architects.
“You have no idea what your life will be like at 80,” Susanka says, so she recommends people do the “sensible things” such as making doorways at least 34 inches wide to accommodate a possible wheelchair and having space on the main level that could be used as a bedroom and bath.
• Remodeling apps. Dozens of smartphone and iPad apps, some free, are available to guide homeowners. Houzz offers more than 325,000 photos of homes and landscapes, and DreamHome shows the works of professional designers. Sherwin Williams’ ColorSnap and Benjamin Moore’s Color Capture allow users who provide a photo of something they like to find a paint to match its color.
Source: Florida Realtors Reprinted with permission. Florida Realtors® All Rights Reserved
Home sellers can hurt their own chances
Monday, April 16th, 2012Home sellers find interest heats up in the spring as many families look to get settled in a new place before the school year starts in August.
But the traditional March-through-May buying season can be a dud for sellers who don’t deliver what they promise or who stand over buyers as they open cupboards and peek in bedrooms.
“Some sellers are their own worst enemies,” said Michael Citron, an agent for RE/MAX ParkCreek in Broward County, Fla.
Here are five things that turn off prospective buyers:
• A cluttered house or one that smells. When sellers have too many possessions, buyers have a hard time imagining themselves living there. Sellers should put their stuff in storage – or move out altogether, if possible.
Pet odors also are a big turn-off, as is a house that reeks of cigarette or cigar smoke. “If buyers smell smoke, they’ll walk out immediately,” said Jon Klein, an agent for Real Living 1st Choice Realty in Coral Springs, Fla.
• False or misleading advertising. Sellers and their agents may stretch the truth by claiming a home has four bedrooms, but the fourth room isn’t a bedroom because it doesn’t have a window and closet.
Joanne Caouette, a Canadian looking to buy in Broward, said one home was advertised as waterfront but only had a water view. “It’s a waste of our time,” she said.
• Sellers not committed to selling. Some sellers want to test the market, then waffle when buyers show serious interest. Others ignore offers or are insulted by what they consider low bids.
“No offer is insulting,” said Bob Melzer, an agent for the Keyes Co. in Boynton Beach, Fla. “It’s a point to begin.”
Wishy-washy sellers don’t use lock boxes that give agents quick access, or they’re not accommodating when it comes to scheduling the homes for showings.
“If you want to sell your house, there should be very few times when you can’t show it,” said Cathy Prenner, an agent for Campbell & Rosemurgy in northeast Broward.
• Overpricing the house. Many sellers are too attached to their homes and think they’re worth more than they are, agents say.
Even though prices are beginning to stabilize, a seller who misses the target likely won’t generate much interest.
Before hiring an agent, interview several. They almost certainly will have documentation that shows what comparable homes in the neighborhood are selling for.
“If you set the home at market price, you’re going to get that property sold,” said Summer Greene, a real estate manager in Fort Lauderdale and president of the Florida Realtors trade group.
• Sellers who stay for the showing. This is a pet peeve of buyers and agents, who say sellers should be long gone when prospective buyers show up.
The buyers want to be free to tour the homes without the owners present. They don’t want to carry on a conversation or listen to why the sellers think they should buy the house.
Citron strongly opposes sellers talking to buyers before they’ve signed a contract. By revealing their motivation, for instance, sellers can inadvertently give buyers more power in negotiations.
“The only thing you can do if you talk to the prospective buyer is hurt the deal,” Citron said.
Source: Florida Realtors Reprinted with permission. Florida Realtors® All Rights Reserved
FHA clarifies new ‘credit dispute’ rule
Monday, April 9th, 2012The Federal Housing Administration (FHA) back stepped a bit on a rule announced earlier. FHA says it will give borrowers a chance to explain any disputed collection accounts in their history in order to qualify for an FHA-backed mortgage. A new FHA rule took effect April 1 and had some in the real estate community concerned that it would shut more buyers out by disqualifying them for mortgages.
Under FHA’s new rule, borrowers with any credit disputes greater than $1,000 on file will not be able to get the government-backed loan. As first announced, borrowers either have to pay the remaining balance of the credit amount or show proof of entering into a payment plan for it.
The FHA is easing those restrictions somewhat, according to new instructions it provided to lenders, HousingWire reports. Borrowers will be exempt from the new rule if the credit amount is from a “life event.” This might include a medical bill, death, divorce or unemployment.
“The borrower may provide a written explanation and documentation as it applies to all types of disputed and collections accounts if it makes sense, and is consistent with other credit information in the file,” according to instructions provided to lenders.
Also starting on April 1, the FHA raised its insurance premiums, citing it as another effort to try to rebuild its emergency fund, which has fallen below the mandated amount Congress requires.
Source: Florida Realtors Reprinted with permission. Florida Realtors® All Rights Reserved
Fla. deal offers small biz a free website
Friday, March 30th, 2012Florida Gov. Rick Scott announced a partnership with Google to create free websites for small businesses throughout Florida.
The initiative, “Florida Get Your Business Online,” will, according to Scott, help drive economic growth by giving Florida businesses the tools and resources they need to create a website, find new customers and grow.
For the next year, Florida businesses can go to www.floridagetonline.com to get a free website. Google partnered with Intuit to provide its Intuit Websites offerings that include an easy-to-build website, a customized domain name and free web hosting for one year. The offer includes tools, training and other resources.
While 97 percent of Americans look online for local products or businesses, 68 percent of Florida small businesses do not have a website.
“The perception that getting online is complex, costly and time-consuming has prevented many Florida small businesses from taking the first step,” says Scott Levitan, Director of Small Business Engagement at Google. “This program makes it fast, easy and free for businesses to get online.”
As part of the program, Google will provide free workshops to small businesses in Miami and Tampa.
The Miami training takes place on April 3 and April 4 at the Adrienne Arsht Center for the Performing Arts, Knight Concert Hall, 1300 Biscayne Boulevard. Training in Tampa takes place on April 5 at the Tampa Museum of Art, 120 West Gasparilla Plaza.
Source: Florida Realtors Reprinted with permission. Florida Realtors® All Rights Reserved
Realtors in Fla., across U.S. prepare for Nationwide Open House
Thursday, March 22nd, 2012To showcase the importance of homeownership, Realtors in Florida and across the U.S. plan to host thousands of open houses as part of Nationwide Open House Weekend, April 28-29, sponsored by the National Association of Realtors® (NAR).
“With a range of housing opportunities at affordable prices and continued low mortgage rates, now is a great time to become a Florida homeowner,” says 2012 Florida Realtors President Summer Greene, regional manager of Better Homes and Gardens Real Estate Florida 1st in Fort Lauderdale. “On April 28 and 29, people will have a chance to conveniently see many homes for sale in communities across Florida and the entire nation. The event is a fun way to bring buyers and sellers together, with Realtors on hand to answer questions and help them navigate the homebuying process.”
The housing market shows positive signs of improvement as the economy grows stronger, according to industry analysts. For many, homeownership remains an important part of the American Dream. Research from NAR indicates that more renters aspire to become homeowners, and an overwhelming majority of Americans believe buying a home is a solid financial decision.
NAR is providing resources, tips and ideas to make the Realtor Nationwide Open House Weekend a success locally and nationally. For more information about the event, go to NAR’s website (login required) at http://www.realtor.org/topics_secured/nationwideopenhouse/ae_resources.
Need balloons for your open house? Blue balloons with the Realtor “R” logo in white can be purchased through NAR’s Realtor Team Store (login required) under the miscellaneous category. You may also purchase balloons directly from Burton & Burton, a wholesale distributor that Florida Realtors used during last year’s statewide open house event. Burton and Burton still has available the customized imprint of the white Realtor “R” logo to place on 11-inch dark blue balloons. To find out more about prices, quantities, shipping schedules and shipping costs, call Burton & Burton directly at (800) 701-7013 and ask for the custom imprint department.
To search for open houses during the Nationwide Open House Weekend, consumers should check with Realtor associations and boards in their area – many local Realtor organizations will have information about participating open houses on their association websites. Consumers should also check local newspaper and online real estate listings for open houses during April 28 and April 29.
Source: Florida Realtors Reprinted with permission. Florida Realtors® All Rights Reserved
New Iphone App – Snap picture of a home and get its history
Thursday, March 15th, 2012A new iPhone app, HomeSnap, allows users to take a picture of any home and find its current value, last sale date and price, local schools and more. If the home is currently for sale, the smartphone user gets its MLS information. If a home was just sold, HomeSnap lists the final sale price and listing history.
The app comes from Washington, D.C.-based Sawbuck Realty, an online real estate broker. If a HomeSnap user contacts the company about a home, Sawbuck connects them with local real estate agents participating in the program. According to a media release from Sawbuck, the company received $2 million in program funding from real estate investor Robert Stewart.
So far, HomeSnap does not operate in Florida, but Sawbuck co-founder and CEO Guy Wolcott says the company plans to expand farther in 2012 and 2013. The system currently operates in some East Coast cities, major markets in California and Texas, Chicago, Phoenix and the Washington, D.C. area. In 2012, the company plans expansions into Austin, San Antonio, Seattle and Portland.
HomeSnap users also get updates on the homes they photographed. The app tracks each one and updates info automatically, including estimated values, if a user goes back to check an earlier shot. Users can also share the photos with friends on Facebook and Twitter, or email the photos via text message or email.
Smartphone users will probably use the app for more than real estate research. If invited to a party at a new friend’s house, for example, a guest could take a picture of the house and immediately know what the owner paid for it, its size and more.
According to HomeSnap, it uses patent-pending technology to deliver the home information, and “most of the iPhone’s sensors” – which suggests the GPS function – and “advanced algorithms to identify each home.”
The app is free to download and available now in Apple’s App Store.
Source: Florida Realtors Reprinted with permission. Florida Realtors® All Rights Reserved
Obama holds news conference, unveils housing plan
Thursday, March 8th, 2012President Barack Obama is aiming mortgage relief at members of the military as well as homeowners with government-insured loans, the administration’s latest efforts to address a persistent housing crisis.
In his first full news conference of the year Tuesday, Obama was to announce plans to let borrowers with mortgages insured by the Federal Housing Administration refinance at lower rates, saving the average homeowner more than $1,000 a year. Obama also was detailing an agreement with major lenders to compensate service members and veterans who were wrongfully foreclosed upon or denied lower interest rates.
A senior administration official described Obama’s proposals to The Associated Press on the condition of anonymity to discuss them ahead of the announcement.
The efforts Obama is announcing do not require congressional approval and are limited in comparison with the vast expansion of government assistance to homeowners that he asked Congress to approve last month. That $5 billion to $10 billion plan would make it easier for more borrowers with burdensome mortgages to refinance their loans.
Obama is holding the news conference in the midst of a modestly improving economy. But international challenges as well as a stubbornly depressed housing market remain threats to the current recovery and to his presidency.
Obama has not held a full news conference since November.
Under the housing plans Obama was to announce Tuesday, FHA-insured borrowers would be able to refinance their loans at half the fee that the FHA currently charges. FHA borrowers who want to refinance now must pay a fee of 1.15 percent of their balance every year. Officials say those fees make refinancing unappealing to many borrowers. The new plan will reduce that charge to 0.55 percent.
With mortgage rates at about 4 percent, the administration estimates a typical FHA borrower with $175,000 still owed on a home could reduce monthly payments to $915 a month and save $100 a month more than the borrower would have under current FHA fees.
Though 2 million to 3 million borrowers would be eligible, the administration official would not speculate how many would actually seek to benefit from the program. The FHA provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. The loans typically go to homeowners who do not have enough equity to qualify for standard mortgages. It is the largest insurer of mortgages in the world.
For service members and veterans, Obama will announce that major lenders will review foreclosures to determine whether they were done properly. If wrongly foreclosed upon, service members and veterans would be paid their lost equity and also be entitled to an additional $116,785 in compensation. That was a figure reached through an agreement with major lenders by the federal government and 49 state attorneys general.
Under the agreement, the lenders also would compensate service members who lost value in their homes when they were forced to sell them due to a military reassignment.
Source: Florida Realtors Reprinted with permission. Florida Realtors® All Rights Reserved
Could rising rents bump up home sales?
Wednesday, February 29th, 2012Home sales may get a boost from the rising prices occurring in the rental market, which is making it cheaper to own rather than rent in a growing number of cities.
“We might see a spring season better than the numbers are predicting,” Jay Brinkmann, the Mortgage Bankers Association’s chief economist, said during the MBA conference in Florida this week.
The number of renters in the country increased during the housing crisis, while homeownership dropped to a 14-year low. But with rental costs rising nationwide, more renters may be lured to buying a home, particularly with home prices falling and mortgage rates hovering at record lows.
Mike Fratantoni, MBA’s vice president of economics and research, is forecasting home sales to increase 10 percent in 2013. An improving employment picture also is expected to have a positive impact on housing, MBA economists noted.
Still, “everything is going to be based overall where the economy goes,” Brinkmann said. “This is going to be a slow year. There are a number of headwinds we’re facing in terms of economic growth.”
Source: Florida Realtors Reprinted with permission. Florida Realtors® All Rights Reserved