Housing Starts Fall Back to Lowest Level in Six Months

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RISMEDIA, November 20, 2009—Nationwide housing production fell 10.6% to a seasonally adjusted annual rate of 529,000 units in October 2009 as builders awaited word on whether an important home buyer incentive would be extended, according to data recently released by the U.S. Commerce Department.

“As of October, the deadline for starting a home that could be completed in time for purchasers to take advantage of the $8,000 first-time home buyer tax credit had come and gone, and builders had no clear sign of whether Congress would extend the credit beyond the end of November,” explained Joe Robson, chairman of the National Association of Home Builders (NAHB) and a home builder from Tulsa, Okla. “However, now that Congress has wisely moved to extend the tax credit into next year and expand its eligibility to more buyers, we hope and expect that this will have a substantial stimulative effect on home sales and help keep the housing market solidly on the road to recovery.”

“Builders were clearly in a holding pattern in October as the future of the home buyer tax credit hung in the balance,” agreed NAHB Chief Economist David Crowe. “This is not surprising, given the fact that the tax credit had been the primary driver of construction and sales in the summer and early fall. However, the fact that permits for single-family construction remained roughly unchanged in the month is an indication that builders are preparing for the possibility of more favorable housing market conditions in the future. That said, significant challenges continue to confront builders with regard to obtaining financing for viable projects and appropriate appraisal values on newly built homes.”

Single-family housing starts declined 6.8% in October to a seasonally adjusted annual rate of 476,000 units, the slowest pace since May of this year. Meanwhile, multifamily housing starts fell by a dramatic 34.6% to a seasonally adjusted annual rate of just 53,000 units – the slowest pace on record.

Combined starts activity fell across the board in October, with the Northeast posting an 18.8% decline, the Midwest a 10.6% decline, the South a 9.6% decline and the West an 8.5% decline, respectively.

Permit issuance, which can be an indicator of future building activity, fell 4% overall in October to a seasonally adjusted annual rate of 552,000 units, due primarily to a double-digit drop-off on the multifamily side. While single-family permits held virtually flat at 451,000 units, multifamily permits were down nearly 18% to 101,000 units.

Regionally, permit activity was mixed, with the Northeast posting no change for the month, the Midwest registering a 2% gain, the South posting a 5.8% decline and the West posting a 6.7% decline, respectively.

For more information, visit www.nahb.org.

Homeowners Slashed Listing Prices by $24,718 on Average in October 2009

RISMEDIA, November 17, 2009—More than four out of every 10 homes listed for sale (43.5%), across 27 major U.S. housing markets reduced their listing prices in October 2009, according to a report of homes listed on Multiple Listing Services (MLS) in the markets surveyed by ZipRealty. This is down slightly from September.

According to the survey, MLS-listed properties with reduced prices have had their prices cut an average of twice, but sellers are not knocking quite as much off as they did earlier this year. Home owners slashed listing prices by an average of $24,718 in October, just slightly less than the average reduction of $24,960 in September.

The median list price across all 27 markets decreased slightly to $281,416, down 2.02% compared to September.

Other highlights of the brokerage’s monthly survey of price reduction data include:
-Miami-area (Ft. Lauderdale/Palm Beach) homeowners reduced list prices by the largest percentage at 15.7% or $40,000 on average
-Homeowners in Raleigh-Durham reduced prices by the smallest percentage at 4.6% or $11,000 on average
-Of the markets studied, those with the highest percentage of price-reduced homes are Jacksonville (50.9%), Orlando (50.1%) and Chicago (50.1%)
-Markets with the lowest percentage of price-reduced homes are Denver (31.1%), Los Angeles (33.6%), Sacramento (36.4%) and San Diego (35.7%)
-Markets where sellers have cut the most in absolute dollars are: San Diego ($54,000 median price reduction), Orange County, Calif. ($51, 000 median price reduction), San Francisco ($50,500 median price reduction) and Los Angeles ($43,000 median price reduction).
-As in September, Orange County had the highest median list price at $624,900. Jacksonville, Fla. has the lowest median list price at $172,000

If you would like to buy or sell Wilmington, foreclosures, short sells, investment properties, NC real estate, contact Sandy and Steve Thornton for all your home buying and selling needs. Specializing in Wilmington, Leland, Hampstead, Sneads Ferry, Jacksonville, Topsail Island including Surf City, Topsail Beach, North Topsail Beach, Beach and waterfront properties covering New Hanover County, Pender County, Brunswick County and Onslow County areas

Sellers Gain Tiny Bit of Traction in September; Buyers Still Negotiating Thousands Off Home Prices

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RISMEDIA, November 17, 2009—The negotiating power of homebuyers slipped a tad in September 2009, but buyers in most markets were still negotiating thousands of dollars off the last listing price of homes. Buyers nationally negotiated a median 2.9% off the final listing price, down from 3% in August 2009, according to the September Zillow Real Estate Market Reports.

In some markets, buyers continued negotiate large discounts. The Vero Beach, Florida market topped the list again in September, with buyers paying a median 8.1% off the final price of homes. Based on a median listing price of $235,000, that translates to a discount of nearly $19,000. The other top negotiating spots were also in Florida, with buyers in the Naples, Sarasota and Panama City markets negotiating more than 7% off the final listing price of their new homes.

On the other end of the spectrum, buyers paid more than asking price in seven metro areas. Most of these were the California markets that have been hardest-hit by foreclosures. In Stockton, buyers paid a median 2.4%, or about $4,500 more than asking price. In Las Vegas, buyers also paid more than asking price (a median 0.5% or $836).

Here is a list of 10 markets where sellers are getting more than asking price.

One note about homes still on the market: 22.7% of them had a price cut as of the end of September, and sellers cut a median 6.5% off.

For more information, visit www.Zillow.com.

Existing-Home Sales Surge in Many States in Third Quarter, Metro Prices Moderating

RISMEDIA, November 16, 2009—Most states continued to experience rising existing-home sales in the third quarter 2009, with prices moderating in many metro areas, according to the latest survey by the National Association of Realtors®. Total state existing-home sales, including single-family and condo, increased 11.4% to a seasonally adjusted annual rate of 5.30 million units in the third quarter from 4.76 million units in the second quarter, and are now 5.9% above the 5.01 million-unit pace in the third quarter of 2008. Sales increased from the second quarter in 45 states and the District of Columbia; 28 states and D.C. saw double-digit gains. Year-over-year sales were higher in 32 states and D.C.

Lawrence Yun, NAR chief economist, said the tax credit is a significant factor. “We can’t underestimate just how powerful a catalyst the first-time home buyer tax credit has been for the housing sector,” he said. “It’s given buyers the confidence they needed to get off the fence and take advantage of extremely affordable housing conditions. The buying conditions this year are the most favorable on record dating back to 1970, but the tax credit is allowing buyers to set aside any reservations about waiting for a better deal.”

During the third quarter, 123 out of 153 metropolitan statistical areas reported lower median existing single-family home prices in comparison with the third quarter of 2008, while 30 areas had price gains.

The national median existing single-family price was $177,900, which is 11.2% below the third quarter of 2008; the median is where half sold for more and half sold for less. Distressed sales- foreclosures and short sales- accounted for 30% of transactions in the third quarter, which continued to weigh down median home prices because they sell at a discount relative to traditional homes.

“The decline in the national median price has moderated recently, and a shrinking supply of unsold inventory suggests we are getting closer to price stabilization in many areas, but we need a steady stream of financially qualified buyers to further reduce inventory and get us to a self-sustaining market,” Yun said. “Foreclosures will continue to come on the market, but rising sales from the expanded tax credit should stabilize home prices by next spring and help to stem future foreclosures.”

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage rose to 5.16% in the third quarter from a record low 5.03% in the second quarter, but was dramatically lower than the 6.32% average rate in the third quarter of 2008.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said he is encouraged by recent actions in Congress. “Extending and expanding the tax credit to more buyers through the middle of next year is the right medicine,” he said. “Congress understands the impact of housing on the economy, so consumers who aren’t able to complete a transaction before the end of this month now have a second chance but must have a contract in place by April 30, 2010.”

The biggest sales gain between the second and third quarters was in North Dakota, up 42.3%; followed by Rhode Island which rose 26.5%; and Pennsylvania, up 25.6%. The largest single-family home price increase in the third quarter was in the Cumberland area of Maryland and West Virginia at $122,100, up 19.2% from the third quarter of 2008. Next was the Davenport-Moline-Rock Island area of Iowa and Illinois, where the median price increased 14.3% to $115,600, followed by Oklahoma City, at $144,100, up 9.1% from a year ago.

“The wide range of market performance and reversals around the country, ranging from double-digit gains to double-digit losses in both sales and prices, underscores just how local real estate truly is,” Yun said. “The wide changes and mix of numbers also indicates a market in transition, hopefully to one that is becoming more balanced and stable.”

Median third-quarter metro area single-family home prices ranged from a very affordable $61,400 in the Saginaw-Saginaw Township North area of Michigan to $566,000 in the San Jose-Sunnyvale-Santa Clara area of California. The second most expensive area in the third quarter was San Francisco-Oakland-Fremont at $538,100; followed by the Anaheim-Santa Ana-Irvine area of California at $498,800.

Other affordable markets include the Youngstown-Warren-Boardman area of Ohio and Pennsylvania at $70,700, and Lansing-East Lansing, Mich., at $86,600.

In the condo sector, metro area condominium and cooperative prices- covering changes in 55 metro areas- showed the national median existing-condo price was $178,000 in the third quarter, down 15.4% from the third quarter of 2008. Four metros showed annual increases in the median condo price and 51 areas had declines.

The metros experiencing condo price gains were San Diego-Carlsbad-San Marcos, at $215,100, up 13.3%; followed by the Cincinnati-Middletown area, up 2.0% to $119,700; the Toledo, Ohio, area, where the median price of $130,400 rose 1.7% from the third quarter of 2008; and the Indianapolis area at $114,400, up 0.8%.

Metro area median existing-condo prices in the third quarter ranged from $67,600 in Las Vegas-Paradise, Nev., to $432,800 in San Francisco-Oakland-Fremont. The second most expensive reported condo market was New York-Wayne-White Plains at $297,500, followed by Boston-Cambridge-Quincy at $293,700. Other affordable condo markets include Reno-Sparks, Nev., at $81,300 in the third quarter, and Jacksonville, Fla., at $91,600.

Northeast

Regionally, existing-home sales in the Northeast surged 16.7% in the third quarter to a pace of 930,000 units and are 6.9% higher than a year ago. The median existing single-family home price in the Northeast declined 9.4% to $244,500 in the third quarter from the same quarter in 2008. The best price gain in the region was in Buffalo-Niagara Falls, N.Y., where the median price of $119,700 rose 4.8% from the third quarter of 2008; followed by Manchester-Nashua, N.H., at $237,600, up 2.6%; and the Pittsburgh area, where the median price rose 1.5 percent to $124,600.

Midwest

In the Midwest, existing-home sales jumped 13.2% in the third quarter to a pace of 1.20 million and are 5.2% above a year ago. The median existing single-family home price in the Midwest was down 5.5% to $150,200 in the third quarter from the same period in 2008. After Davenport-Moline-Rock Island, the next strongest metro price increase in the region was in Cedar Rapids, Iowa, where the median price of $145,700 was 7.6% higher than a year ago; followed by Bismarck, N.D., at $157,200, up 7.5%; and Ft. Wayne, Ind., where the median price rose 6.9 percent to $102,500.

South

In the South, existing-home sales rose 11.3% in the third quarter to an annual rate of 1.97 million and are 5.9% higher than the third quarter of 2008. The median existing single-family home price in the South was $160,000 in the third quarter, down 7.9% from a year earlier. After Cumberland and Oklahoma City, the next strongest price increase in the region was in Shreveport-Bossier City, La., at $152,300, up 8.6% from the third quarter of 2008; Jackson, Miss., at $141,200, up 4.6%; and Durham, N.C., where the median price rose 3.6% to $184,300.

West

Existing-home sales in the West increased 5.6% in the third quarter to an annual rate of 1.19 million and are 4.6% above a year ago. The median existing single-family home price in the West was $224,000 in the third quarter, which is 16.4% below the third quarter of 2008. The best metro price performance in the West was in Yakima, Wash., where the median price of $158,400 rose 2.7% from a year earlier; the Denver-Aurora area at $229,100, up 1.8%; and the Kennewick-Richland-Pasco area of Washington, where the median price rose 0.7% to $172,200.

For more information, visit www.realtor.org.

Existing-Home Sales Surge in Many States in Third Quarter, Metro Prices Moderating

RISMEDIA, November 16, 2009—Most states continued to experience rising existing-home sales in the third quarter 2009, with prices moderating in many metro areas, according to the latest survey by the National Association of Realtors®. Total state existing-home sales, including single-family and condo, increased 11.4% to a seasonally adjusted annual rate of 5.30 million units in the third quarter from 4.76 million units in the second quarter, and are now 5.9% above the 5.01 million-unit pace in the third quarter of 2008. Sales increased from the second quarter in 45 states and the District of Columbia; 28 states and D.C. saw double-digit gains. Year-over-year sales were higher in 32 states and D.C.

Lawrence Yun, NAR chief economist, said the tax credit is a significant factor. “We can’t underestimate just how powerful a catalyst the first-time home buyer tax credit has been for the housing sector,” he said. “It’s given buyers the confidence they needed to get off the fence and take advantage of extremely affordable housing conditions. The buying conditions this year are the most favorable on record dating back to 1970, but the tax credit is allowing buyers to set aside any reservations about waiting for a better deal.”

During the third quarter, 123 out of 153 metropolitan statistical areas reported lower median existing single-family home prices in comparison with the third quarter of 2008, while 30 areas had price gains.

The national median existing single-family price was $177,900, which is 11.2% below the third quarter of 2008; the median is where half sold for more and half sold for less. Distressed sales- foreclosures and short sales- accounted for 30% of transactions in the third quarter, which continued to weigh down median home prices because they sell at a discount relative to traditional homes.

“The decline in the national median price has moderated recently, and a shrinking supply of unsold inventory suggests we are getting closer to price stabilization in many areas, but we need a steady stream of financially qualified buyers to further reduce inventory and get us to a self-sustaining market,” Yun said. “Foreclosures will continue to come on the market, but rising sales from the expanded tax credit should stabilize home prices by next spring and help to stem future foreclosures.”

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage rose to 5.16% in the third quarter from a record low 5.03% in the second quarter, but was dramatically lower than the 6.32% average rate in the third quarter of 2008.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said he is encouraged by recent actions in Congress. “Extending and expanding the tax credit to more buyers through the middle of next year is the right medicine,” he said. “Congress understands the impact of housing on the economy, so consumers who aren’t able to complete a transaction before the end of this month now have a second chance but must have a contract in place by April 30, 2010.”

The biggest sales gain between the second and third quarters was in North Dakota, up 42.3%; followed by Rhode Island which rose 26.5%; and Pennsylvania, up 25.6%. The largest single-family home price increase in the third quarter was in the Cumberland area of Maryland and West Virginia at $122,100, up 19.2% from the third quarter of 2008. Next was the Davenport-Moline-Rock Island area of Iowa and Illinois, where the median price increased 14.3% to $115,600, followed by Oklahoma City, at $144,100, up 9.1% from a year ago.

“The wide range of market performance and reversals around the country, ranging from double-digit gains to double-digit losses in both sales and prices, underscores just how local real estate truly is,” Yun said. “The wide changes and mix of numbers also indicates a market in transition, hopefully to one that is becoming more balanced and stable.”

Median third-quarter metro area single-family home prices ranged from a very affordable $61,400 in the Saginaw-Saginaw Township North area of Michigan to $566,000 in the San Jose-Sunnyvale-Santa Clara area of California. The second most expensive area in the third quarter was San Francisco-Oakland-Fremont at $538,100; followed by the Anaheim-Santa Ana-Irvine area of California at $498,800.

Other affordable markets include the Youngstown-Warren-Boardman area of Ohio and Pennsylvania at $70,700, and Lansing-East Lansing, Mich., at $86,600.

In the condo sector, metro area condominium and cooperative prices- covering changes in 55 metro areas- showed the national median existing-condo price was $178,000 in the third quarter, down 15.4% from the third quarter of 2008. Four metros showed annual increases in the median condo price and 51 areas had declines.

The metros experiencing condo price gains were San Diego-Carlsbad-San Marcos, at $215,100, up 13.3%; followed by the Cincinnati-Middletown area, up 2.0% to $119,700; the Toledo, Ohio, area, where the median price of $130,400 rose 1.7% from the third quarter of 2008; and the Indianapolis area at $114,400, up 0.8%.

Metro area median existing-condo prices in the third quarter ranged from $67,600 in Las Vegas-Paradise, Nev., to $432,800 in San Francisco-Oakland-Fremont. The second most expensive reported condo market was New York-Wayne-White Plains at $297,500, followed by Boston-Cambridge-Quincy at $293,700. Other affordable condo markets include Reno-Sparks, Nev., at $81,300 in the third quarter, and Jacksonville, Fla., at $91,600.

Northeast

Regionally, existing-home sales in the Northeast surged 16.7% in the third quarter to a pace of 930,000 units and are 6.9% higher than a year ago. The median existing single-family home price in the Northeast declined 9.4% to $244,500 in the third quarter from the same quarter in 2008. The best price gain in the region was in Buffalo-Niagara Falls, N.Y., where the median price of $119,700 rose 4.8% from the third quarter of 2008; followed by Manchester-Nashua, N.H., at $237,600, up 2.6%; and the Pittsburgh area, where the median price rose 1.5 percent to $124,600.

Midwest

In the Midwest, existing-home sales jumped 13.2% in the third quarter to a pace of 1.20 million and are 5.2% above a year ago. The median existing single-family home price in the Midwest was down 5.5% to $150,200 in the third quarter from the same period in 2008. After Davenport-Moline-Rock Island, the next strongest metro price increase in the region was in Cedar Rapids, Iowa, where the median price of $145,700 was 7.6% higher than a year ago; followed by Bismarck, N.D., at $157,200, up 7.5%; and Ft. Wayne, Ind., where the median price rose 6.9 percent to $102,500.

South

In the South, existing-home sales rose 11.3% in the third quarter to an annual rate of 1.97 million and are 5.9% higher than the third quarter of 2008. The median existing single-family home price in the South was $160,000 in the third quarter, down 7.9% from a year earlier. After Cumberland and Oklahoma City, the next strongest price increase in the region was in Shreveport-Bossier City, La., at $152,300, up 8.6% from the third quarter of 2008; Jackson, Miss., at $141,200, up 4.6%; and Durham, N.C., where the median price rose 3.6% to $184,300.

West

Existing-home sales in the West increased 5.6% in the third quarter to an annual rate of 1.19 million and are 4.6% above a year ago. The median existing single-family home price in the West was $224,000 in the third quarter, which is 16.4% below the third quarter of 2008. The best metro price performance in the West was in Yakima, Wash., where the median price of $158,400 rose 2.7% from a year earlier; the Denver-Aurora area at $229,100, up 1.8%; and the Kennewick-Richland-Pasco area of Washington, where the median price rose 0.7% to $172,200.

For more information, visit www.realtor.org.

Are Short Sales Really the Next Big Thing?

Foreclosure Fundamentals by Rick Sharga Print Article

RISMEDIA, November 11, 2009—If you believe the hype, it appears that the next phase of the housing market recovery is going to rely heavily on short sales to help remove distressed properties from the home sales pipeline. 

A “short sale” is a sale where the bank accepts as full value a price that’s less than what’s owed on the property. The debt is forgiven (although not always without some tax consequences), a foreclosure is avoided, a buyer gets a good deal on a property, the bank saves thousands of dollars in legal fees and the real estate agent makes a commission. Elegant. Practical. Simple. But as we’ll see, not really quite so simple. 

Short sales were never intended to be a mass market solution. Rather, they were relatively rare occurrences that took place when an unfortunate homeowner had a financial catastrophe—a job loss, a divorce, a medical problem—at precisely the same time his or her home lost significant value. When that happened, a loss mitigation manager at a bank would research the market, review the homeowner’s financial documents, carefully consider whether the borrower and loan in question met the criteria to justify a short sale and act accordingly. 

This approach worked well when there was one request a week or every few months. But with over 1.1 million homes in various stages of foreclosure in the RealtyTrac database, the workload for these loss mitigation managers has exploded from several a month to hundreds a week, with no drop-off in the amount of paperwork or research needed. So there are unavoidable delays in simply processing the volume of paperwork. 

But it gets worse. Each lending institution has slightly different versions of short sale forms. Property valuations, even—perhaps especially—appraisals, are in a state of flux, so loss mitigation managers are struggling to determine whether a short sale offer is reasonable or just plain silly. And there are some accounting issues: in many cases, lenders may opt to decline a good short sale offer today so that they can defer the loss (even though it may be a much greater loss) to a subsequent quarter—or even later. 

And there’s more. A second loan on a property makes it much more than twice as difficult to execute the sale. The second loan either needs to be negotiated away completely or satisfied with some nominal payment. In other cases, the holder of the primary mortgage may find it better financially to foreclose, wipe out the second lien, and simply use that amount as a discount to sell the property at a profit. Similarly, if there’s mortgage insurance on the note, the investor may decide it’s better to foreclose, collect the insurance, and let the insurer worry about getting value for the house. 

So why all the hype? Well, with the REO pipeline clogged and choking, and loan modification programs failing to make a dent in foreclosure numbers, short sales represent an opportunity to feed the demand for discounted properties while reducing the number of foreclosures. What can you do to help make this happen? What does the government have in mind? We’ll cover all that and more in next month’s column. 

Rick Sharga is senior vice president at RealtyTrac. 

For more information, visit www.realtytrac.com. 

If you would like to buy or sell Wilmington, foreclosures, short sells, investment properties, NC real estate, contact Sandy and Steve Thornton for all your home buying and selling needs. Specializing in Wilmington, Leland, Hampstead, Sneads Ferry, Jacksonville, Topsail Island including Surf City, Topsail Beach, North Topsail Beach, Beach and waterfront properties covering New Hanover County, Pender County, Brunswick County and Onslow County areas

Foreclosure Activity Slows for Third Straight Month

RISMEDIA, November 12, 2009—RealtyTrac one of the leading online marketplaces for foreclosure properties, released its October 2009 U.S. Foreclosure Market Report, which shows foreclosure filings—default notices, scheduled foreclosure auctions and bank repossessions—were reported on 332,292 U.S. properties during the month, a decrease of 3% from the previous month but still up nearly 19% from October 2008. The report also shows one in every 385 U.S. housing units received a foreclosure filing in October. 

“Three consecutive monthly declines is unprecedented for our report, and on first blush an indication that the foreclosure tide may be turning,” said James J. Saccacio, chief executive officer of RealtyTrac. “However, the fundamental forces driving foreclosure activity in this housing downturn—high-risk mortgages, negative equity, and unemployment—continue to loom over any nascent recovery. And despite all the efforts and resources directed at helping homeowners avoid foreclosure, we continue to see foreclosure activity levels that are substantially higher than a year ago in most states.” 

Nevada, California, Florida post top state foreclosure rates
Despite a 26% decrease in foreclosure activity from the previous month, Nevada continued to document the nation’s highest state foreclosure rate—one in every 80 housing units received a foreclosure filing in October. A total of 13,842 Nevada properties received a foreclosure filing during the month, a 4% decrease from October 2008 and the first ever year-over-year decrease in Nevada since RealtyTrac began tabulating the year-over-year change in January 2006. Nevada default notices were down 10% from October 2008, and scheduled foreclosure auctions were down 6% from October 2008, while bank repossessions were up 8% from October 2008. A new foreclosure mediation program implemented by state law (AB 149) in July may be slowing the inflow of distressed properties into the foreclosure pipeline. 

With one in every 156 housing units receiving a foreclosure filing in October, California posted the nation’s second highest state foreclosure rate for the second month in a row. A total of 85,420 California properties received a foreclosure filing during the month, a decrease of 1% from the previous month but still nearly 50% above the total reported in October 2008. The state’s default notices and scheduled foreclosure auctions were up 120% and 73% respectively from October 2008, when California foreclosure activity was in the midst of a three-month trough after a law (SB 1137) requiring lenders to give distressed homeowners extra notification before initiating foreclosure took effect in September 2008. 

Florida posted the third highest state foreclosure rate, with one in every 168 housing units receiving a foreclosure filing in October. A total of 51,911 Florida properties received a foreclosure filing during the month, a nearly 6% decrease from the previous month and a decrease of 4% from October 2008. It was the first year-over-year decrease in overall Florida foreclosure activity since July 2006. 

Other states with foreclosure rates ranking among the nation’s 10 highest were Arizona, Idaho, Illinois, Michigan, Georgia, Maryland and Utah. 

Four states account for more than 50 percent of national total
Four states accounted for 52% of the nation’s total foreclosure activity in October: California, Florida, Illinois and Michigan. 

Illinois posted the third highest state total after California and Florida, with 19,946 properties receiving a foreclosure filing in October—a 56% spike from the previous month and the highest monthly total for Illinois since RealtyTrac began issuing its report in January 2005. The state’s foreclosure rate jumped from No. 11 in September to No. 6 in October, and it was the only state with a foreclosure rate in the top 10 to post a monthly increase in foreclosure activity. A recent state law (SB 2513) that gives distressed homeowners an extra grace period to seek counseling to help avoid foreclosure may have created some pent-up foreclosure activity in the state. After the law went into effect in April, Illinois foreclosure activity decreased for three straight months before beginning to climb again. 

Michigan registered the fourth highest state foreclosure activity total despite a nearly 2% decrease from the previous month. A total of 16,468 Michigan properties received a foreclosure filing in October, an increase of nearly 45% from October 2008. 

Other states with totals among the 10 highest in the country were Nevada (13,842), Arizona (13,345), Georgia (12,468), Texas (11,798), Ohio (11,646) and New Jersey (7,435). 

Three states account for all top 10 metro foreclosure rates
Despite a 27% decrease in foreclosure activity from the previous month, Las Vegas continued to document the nation’s highest foreclosure rate among metropolitan areas with a population of at least 200,000. One in every 68 Las Vegas housing units received a foreclosure filing in October—more than five times the national average. 

Seven of the top 10 metro foreclosure rates were in California, led by Vallejo-Fairfield at No. 2 and Modesto at No. 3, both with one in every 81 housing units receiving a foreclosure filing. Other California cities in the top 10 were Riverside-San Bernardino-Ontario at No. 4 (one in 83), Bakersfield at No. 6 (one in 97), Merced at No. 7 (one in 100), Stockton at No 8 (one in 116), and Sacramento-Arden-Arcade-Roseville at No. 10 (one in 130). 

Metro areas in Florida accounted for the remaining two spots in the top 10: Cape Coral-Fort Myers at No. 5 (one in 92) and Orlando-Kissimmee at No. 9 (one in 117). 

For more information, visit www.realtytrac.com. 

The First-Time Homebuyer Tax Credit – A Consumer’s Point of View

RISMEDIA, November 11, 2009—Like many first-time homebuyers across the country, Jen Bond and Matt Huisking were motivated to get off the sidelines and into the real estate market when the First-Time Homebuyer Tax Credit was enacted in early 2009. Working with Julie Vanderblue and Kim Vartuli of the Vanderblue Team in Fairfield, Connecticut, Bond and Huisking were able to take advantage of the tax credit and close on their first home within 30 days. 

“Although we had been saving money and thinking about getting into the real estate market for some time, the tax credit was the motivating factor behind our decision to move forward and purchase a home,” says Huisking. This sentiment echoes that of many first-time buyers who decided to take advantage of the tax credit at a time when home prices and mortgage rates are at all time lows. “Knowing that the credit was going to expire was a huge push into our moving ahead with the search,” he adds. Now that the credit has been extended and expanded, more first-time buyers as well as move-up buyers have the opportunity to take advantage of a benefit that won’t be around forever. 

For Bond and Huisking, the process of buying their first home and utilizing the tax credit is another success story in what will hopefully become a turning point for the real estate industry. Starting the process of searching for a home on their own, Bond and Huisking reached out to Vanderblue and Vartuli to enlist their help to be able to purchase a home before the tax credit expired. Vanderblue and Vartuli showed Bond and Huisking a dozen or so properties before they found the one that was right for them and recently purchased the home in a process that took just 30 days. “We recognized the value of the home as soon as it came on the market and moved quickly in order to close on it within 30 days,” adds Huisking. 

Even though Bond and Huisking could afford the home without the tax credit, it was a nice bonus for them. “If we had been on the edge of being able to afford the house, we might have been more hesitant,” says Huisking, “but we saw an opportunity to be able to purchase the home and then use the credit to invest back into the house.” Looking back on the entire process, Huisking sums it up in one word: simple. “In order to use the tax credit to purchase our home, all we had to do was file an amended 2008 tax return and we got the money within 6 weeks or so,” he says. “The biggest confusion we had throughout the process was whether or not we would be eligible for the entire credit or just a partial credit because of our income level.” Since Bond and Huisking filed as separate returners and she qualified for the entire credit, they were able to take advantage of the entire $8,000. 

“The first-time homebuyer tax credit has been a great tool to get prospective buyers off the fence,” says Vanderblue. “Now that the credit has been extended and expanded, buyers are going to sit up and take notice and will move to take advantage of it now, as it won’t last forever,” she adds. The increase in income level is a huge advantage of the extended tax credit ($125,000 for single filers and $225,000 for joint filers). “This is crucial, especially in a market such as Fairfield County,” says Vanderblue. “One of the biggest problems with the initial tax credit was the income level because most first-time buyers in our market didn’t qualify for the credit because of their income,” she says. 

Educating prospective buyers about the advantages of the tax credit has become an important task for Vanderblue and Vartuli. “We stress the overall picture of what the credit is about to our clients but advise that they speak with an accountant or attorney to get the specifics. The extended homebuyer tax credit gives us something to talk about as well as a way to shine as Realtors while educating our clients,” concludes Vanderblue. 

About the Vanderblue Team
One of the many benefits to using the Vanderblue Team is the specialized skill sets each team member offers, such as Short sales, New Construction, Investment Division, etc. Vartuli is highly-skilled in representing first-time buyers in the Fairfield and Trumbull areas and was chosen specifically to represent these buyers for her ability to guide them and educate them on the many options available to first-time buyers. 

For more information, visit http://vanderblue.com.

Understanding Home Owners Association Fees

By George W. Mantor

“The Home Owners Association fee is too high!” 

RISMEDIA, November 10, 2009—That is one of the most common objections to purchasing real estate where there is a community Association requiring the payment of regular dues and fees. These can range from less than a hundred dollars per month, if for example the only service is streetscaping, to upwards of a couple of thousand dollars for a luxury penthouse. Depending on square footage and amenities, most fees range between $250 and $750. 

Taken out of context, the amount can seem outrageous. But, when considered from a prospective of value received, you can be pretty certain that you are getting one of the last great bargains. 

When evaluating the HOA monthly fee, it is important to consider three things: how was the number arrived at, what does it cover, can anything be done for less? 

1. How is the HOA fee determined? 

In California, and probably most other states, developers must obtain state approvals before their projects can be offered to prospective buyers. Part of the submission process for developments with an Owners Association is the creation of a detailed budget for the operation and maintenance of the common area and the provision of necessary services. 

Developers want to project the most positive scenarios in order to keep HOA dues low and not discourage prospective buyers. And, they are also aware that a $500 per month Association fee equates to another $100,000 that the buyer could have spent for the home. The higher the Association fee, the less the borrower/buyer can spend. 

On the other side, the State wants to establish a realistic budget that will allow for proper funding well into the future. For the consumer, that process of compromising means that the budget is as realistic as it can be at the time it was created. 

The main thing to keep in mind is that the developer will be paying the Association fees on all unsold property within the Association. The developer is not the one benefiting from high fees so there is no reason to blame them. 

2. What does the HOA fee is cover? 

It’s also important to consider what is included. Amenities very widely from project to project; high-rises cost more to operate and maintain than low rise buildings. 

One of the responsibilities associated with real estate ownership is the obligation to maintain and protect the improvements from deterioration, damage, weathering, etc. Living out in the burbs you need a garage full of tools and a lot of weekends to stay ahead of nature. 

Depending on the type of development, there could be a need for a lot of landscape maintenance. That takes labor, and labor is expensive 

If there are common areas such as a lobby, pool, gym, or even hallways, they need to be cleaned regularly, maintained occasionally, painted often, and replaced over time. Garages must be swept and windows washed. 

Then there is liability, property and other forms of insurance, and possibly a security force. 

What utilities are included? Are water, sewer, electric, gas, trash and cable billed individually or are some paid collectively through the Association? 

Then there is usually a management Association looking after things, paying the bills, and communicating all of that to the homeowners. 

3. Can it be done for less? 

Add it all up and you’ll see that the economies of scale allow for a high level of service at a true cost far lower than you could do it yourself. 

And remember, it is your building and your Association. You want to protect your investment and to have the kind of amenities that will allow for profitable reselling in the future. Serve on your Association board. If you can economize, you can lower your HOA fee. 

But, don’t lose sight of the fact that you are paying for important services with a volume discount. It isn’t just an expense; it’s protecting your investment.

George W. Mantor is known as “The Real Estate Professor” for his wealth building formula, Lx2+(U²)xTFP=$? and consumer education efforts. During a career that has spanned more than three decades, he has amassed experience in new home and resale residential real estate, resort marketing, and commercial and investment property. He is currently the founder and president of The Associates Financial Group, a real estate consulting firm.

Mantor can be reached at GWMantor@aol.com.

Home Sellers: Top 5 Home Improvement Projects Based on Cost and Return on Investment

RISMEDIA, November 10, 2009—HomeGain.com, one of the first websites to offer Web-based free instant home values, announced that it has released the results of its nationwide home improvement and home staging Home Sale Maximizer survey. 

HomeGain’s recent survey shows the top do-it-yourself home improvements that Realtors recommend to home sellers. HomeGain received responses from nearly 1,000 Realtors nationwide and configured a list of the top 12 do-it-yourself (DIY) home improvements that cost under $5,000 and benefit sellers most when they sell their homes. 

According to the HomeGain survey, the top five home improvements that Realtors recommend to home sellers based on cost and return on investment (from highest to lowest ROI) are: 

1. Cleaning and de-cluttering ($200 cost / $1,700 price increase / 872% ROI)
2. Home staging ($300 cost / $1,780 price increase / 586% ROI)
3. Lightening and brightening ($230 cost / $1,300 price increase / 572% ROI)
4. Landscaping ($320 cost / $1,500 price increase / 473% ROI)
5. Repairing plumbing ($385 cost / $1,250 price increase / 327% ROI) 

Cleaning and de-cluttering continues to rank as the top suggested home improvement (since the survey was originally conducted in 2000), recommended by 98% of Realtors, costing less than $200 and returning a value of nearly $1,700 to the home’s sale price, or an 872% return on investment. 

“Many Realtors agree, especially in a buyer’s market, that sellers who make these recommended home improvements often get their homes sold faster and at higher prices,” stated Louis Cammarosano, General Manager at HomeGain. “We have customized our Home Sale Maximizer online home improvement tool to help identify and prioritize the projects that can increase the salability and selling price of a home.” 

Rounding out the top 12, the list of low cost, do-it-yourself home improvements includes: updating electrical, replacing or shampooing carpets, painting interior walls, repairing damaged floors, updating kitchen, painting outside of home, and updating bathroom/s.

The home improvement projects with the highest price increases to a home’s resale value are updating the kitchen ($1,200 cost / $2,850 price increase), followed by painting the outside of the home ($900 cost / $1,815 price increase) and home staging ($300 cost / $1,780 price increase). 

“Inexpensive cosmetic home improvements and basic improvements greatly enhance the value of the home,” stated Carol Wilson of Carpenter Real Estate in Indianapolis, IN, HomeGain AgentEvaluator member since 1999. 

For more information, visit www.homegain.com. 

Expanded Version of Tax Credit Will Allow More Homebuyers to Qualify

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RISMEDIA, November 9, 2009—President Obama recently signed an expanded version of the $8,000 first-time homebuyer tax credit that was set to expire on November 30. “The new version of the tax credit has the potential to stimulate the housing market even more than the old version due to the fact that more people will qualify under the new rules,” said Gibran Nicholas, Chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers. “Although the tax credit remains at $8,000 for homebuyers that have not owned a primary residence in the last three years, it has been expanded to include a $6,500 tax credit for homebuyers that have lived in their current primary residence for at least five consecutive years out of the past eight years. Under the old rules, move-up homebuyers did not qualify.” Consider these three examples: 

Example 1:
Jane purchased a home in 2002, lived there for 5 years as her primary home, moved out in 2007, and turned that home into a rental property. If Jane decides to buy a new primary residence today, she would qualify for the $6,500 tax credit based on the fact that she lived in the same residence as her primary home for at least five consecutive years out of the past eight.

Example 2:
Harry purchased a home in 2004, and lived there for the past 5 years as his primary home. If Harry decides to buy a new primary residence today, he would qualify for the $6,500 tax credit based on the fact that he lived in the same residence as his primary home for at least five consecutive years out of the past eight.

Example 3:
Nicole purchased a home in 2006, and lived there for the past 3 years as her primary home. If Nicole decides to buy a new primary residence today, she would not qualify for the $6,500 tax credit based on the fact that she did not live in the same residence as her primary home for at least five consecutive years out of the past eight. 

The tax credit applies to homes purchased for less than $800,000 before May 1, 2010. “If you sign a binding contract to purchase a home before May 1st, you would need to close on the transaction before July 1, 2010,” Nicholas said. “It works kind of like a gift certificate that can be redeemed for cash. You simply file a form with the IRS right after you buy your home, and the IRS will send you a check for the full amount of your credit.” 

The income limitation for single tax payers went up from $75,000 under the old rules to $125,000 under the new rules. For married tax payers, the income limitation went up from $150,000 to $225,000. “This means that more people will qualify for the credit – especially in parts of the country with higher costs of living,” Nicholas said. “This should help stimulate parts of the housing market that may not have been impacted by the old version of the credit.” 

There are many creative ways of structuring your home purchase transaction in ways that maximize the benefits of the credit. Here are a few examples: 

-The credit applies to 1-4 unit homes as long as you live in one of the units as your primary residence – you could live in one unit and rent out the others

-If two unmarried individuals buy a home, and only one of the individuals qualifies for the credit based on their income or past home ownership status, the individual who qualifies for the credit can claim the full credit. (Note: In the case of married couples, both spouses must qualify for the credit).

-The credit applies even if you have co-signers on your mortgage loan 

For more information, visit www.CMPSInstitute.org. 

5 Spaces to Consider When Creating a Flexible Home

By Melissa Birdsong

RISMEDIA, November 6, 2009—The definition of family has expanded far beyond the traditional image of a married couple and 2.2 children, and daily lives are busier than ever. Understanding a family’s unique needs and lifestyle is important in helping them find a house that really feels like home. 

Flexibility may be the buzzword of the millennia. Flexible schedules, flexible work hours, flexible space—Americans are regaining control by rearranging the flow of their day-to-day lives. Very few of us lead cookie-cutter lives, so cookie-cutter home solutions don’t always work. If every family has a unique configuration and life pattern—consider single moms, empty nesters with visiting kids and grandkids, families with young children, multigenerational families—shouldn’t the architecture that surrounds them be flexible enough to accommodate their needs? The opportunity is to identify houses that offer “adaptable possibilities” and develop talking points aligned with your client’s situational needs. 

Buying a home today is an emotional, economic and deeply considered purchase. That home will be a base station for family, friends, neighbors, school, work and play and its layout and traffic pattern will need to accommodate the “busy-ness” of life. As buyers imagine themselves in a potential home, adaptable space may be a selling point over and above simple staging. Here are a few spaces to consider: 

-Kitchen: We cook, we do homework, we entertain, we do crafts there. Open or co-located areas for simultaneous activities and multiple people usually top the wish list. If space is limited, suggest a corner of the kitchen or an adjoining dining room as a homework/conversation area.

-Open, accessible plans: If your client is single, an open plan delivers a great space for entertaining. An older or multi-generational family may view it in terms of accessibility. Either will have visiting family members, so having a “visitable” home offers the opportunity to welcome anyone regardless of age or ability. One zero-threshold entry, wide doorways and a main floor bathroom offer ease of use and accessibility whether you’re unloading groceries or have a temporary or permanent physical impairment.

-Home office/library/reading space: Part of a dining room, den, extra bedroom or even an extra closet can be furnished to create a small space for quiet activities. Bookcases lining a wall speak volumes regarding functionality far beyond the original intention of the room.

-Basement: This extra square footage offers many options so even if the space is un- or partially-finished, paint the vision for tomorrow’s media room, game room, exercise or craft area.

-Outdoor living spaces: Whether it’s a tiny lot or large open space, suggesting ideas that go “beyond the deck” with landscaping, pathways and sitting areas brings even the mundane to life. 

Seeing a home through a different lens may help your clients imagine the space as they would actually use it and gain a new perspective on possibilities. Going beyond the basics of BR/BA-speak to engage your clients in lifestyle discussions will not only help you find solutions that are right for each family; it will help them find the perfect fit for the architecture of their lives. 

Melissa Birdsong is vice president for Trend, Design & Brand, Lowe’s Companies, Inc. 

For more information, visit www.lowes.com. 

Senate Clears Homebuyer Tax Credit Extension; May Pass as Early as This Week

By Steve Cook and Brett Arends

RISMEDIA, November 5, 2009—After two weeks of delay, the Senate cleared the way to pass a seven month extension and expansion of the tax credit for homebuyers. By an 85 to 2 roll call vote, the Senate voted to cut off debate on a package of measures that includes the homebuyer credit, making it virtually certain that the legislation will reach President Obama for his signature this week. 

The homebuyer tax credit, due to expire at the end of November would be extended through April 30 of next year. First-time buyers who are in the process of making a purchase would not need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline. 

For the first time, the legislation that was recently cleared makes move-up buyers as well as first-time buyers eligible for a credit. The $8,000 maximum first-timer credit will continue and will now be available to couples with income up to $225,000, a nearly $55,000 increase above the level in existing law. A new $6,500 maximum credit would also be available to move-up homeowners who have lived in their current residence for five of the prior eight years. 

For homebuyers across the country, the expanded tax credit would allow more people to qualify for the credit. While two-thirds of American families own their own home, and most earn less than the income limits that have been established within the extension, more buyers may be eligible. Move-up buyers don’t have to sell their current home to qualify for the new credit, but the money cannot be used to buy a vacation home. “It’s only for a primary residence,” said Regan Lachapelle, a spokeswoman for Sen. Harry Redi (D-Nev.), who helped engineer the deal. “In expanding the tax credit, we are helping first-time home buyers, as well as homeowners looking to move up to a new home, but we would exclude from the credit speculators who may have recently purchased a home intending to flip it for a fast profit,” said Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee. 

The tax credit has fired-up the housing market, driving existing home sales to the highest level in over two years. The National Association Realtors reported sales jumped 9.4% to a seasonally adjusted annual rate of 5.57 million units in September and are 9.2% higher than the 5.10 million-unit pace in September 2008. 

The legislation included provisions added to address complaints of fraud as well. The Internal Revenue Service is given greater authority to oversee the process to root out fraud, and provisions are added in response to past abuses of false sales or underage buyers. An investigation by the Treasury Department’s Inspector General for Tax Administration found that more than 580 children, some as young as four years old, had received $627,000 in first-time homebuyer credits. The IRS has identified 167 suspected criminal schemes and opened nearly 107,000 examinations of potential civil violations of the first-time homebuyer tax credit.

For more information, visit www.realestateeconomywatch.com and www.wsj.com

If you would like to buy or sell Wilmington, foreclosures, short sells, investment properties, NC real estate, contact Sandy and Steve Thornton for all your home buying and selling needs. Specializing in Wilmington, Leland, Hampstead, Sneads Ferry, Jacksonville, Topsail Island including Surf City, Topsail Beach, North Topsail Beach, Beach and waterfront properties covering New Hanover County, Pender County, Brunswick County and Onslow County areas

Pending Home Sales Rise for Record Eight Straight Months

RISMEDIA, November 3, 2009—Pending home sales rose again, marking eight consecutive monthly gains–the longest streak since measurement began in 2001, according to the National Association of Realtors®. 

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in September 2009, rose 6.1% to 110.1 from a reading of 103.8 in August, and is 21.2% higher than September 2008 when it stood at 90.9. The gain from a year ago is the largest annual increase on record, and the index is at the highest level since December 2006 when it was 112.8. 

Lawrence Yun, NAR chief economist, said the momentum is understandable. “What we’re witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month,” he said. “Home values will stabilize sooner rather than over-correcting. That, in turn, will mean wealth stabilization for the vast number of middle-class families and lay the foundation for a durable economic recovery.” 

NAR estimates approximately 3 million renters are now financially well-qualified to buy a median-priced home. “As long as buyers do not overstretch and stay well within their budget, a sizable pent-up demand can be tapped among financially qualified potential buyers,” Yun said. “Although the tax credit is greatly reviving the existing home market, new-home sales may continue to struggle as home builders hold back production to drive down inventory. In addition, there remains an ongoing credit crunch for construction loans.” 

The Pending Home Sales Index in the Northeast slipped 2.0% to 83.6 in September but remains 16.9% above September 2008. In the Midwest the index rose 8.1% to 98.2 in September and is 17.8% higher than a year ago. In the South, pending home sales increased 4.9% to an index of 109.7 and is 22.8% above September 2008. In the West the index jumped 10.2% to 143.8 and is 23.7% above a year ago. 

Yun added that strong near-term reports should not be overstated. “We’re clearly not out of the woods because an excess of homes remains on the market despite recent improvements,” he said. “Although current inventory is getting closer to price equilibrium, foreclosures will continue to enter the pipeline. An extended and expanded tax credit would help absorb this incoming inventory.” 

For more information, visit www.realtor.org. 

If you would like to buy or sell Wilmington, foreclosures, short sells, investment properties, NC real estate, contact Sandy and Steve Thornton for all your home buying and selling needs. Specializing in Wilmington, Leland, Hampstead, Sneads Ferry, Jacksonville, Topsail Island including Surf City, Topsail Beach, North Topsail Beach, Beach and waterfront properties covering New Hanover County, Pender County, Brunswick County and Onslow County areas

CAR Reports September Home Sales Increased 2.1 Percent; Median Home Price Declined 7.3 Percent

RISMEDIA, November 2, 2009—Home sales increased 2.1% in September 2009 in California compared with the same period a year ago, while the median price of an existing home declined 7.3%, the California Association of Realtors® (C.A.R.) recently reported. 

“The market’s momentum continued in September, as many homebuyers took advantage of the federal tax credit,” said C.A.R. president James Liptak. “The success of the federal tax credit is clear. Nearly 70% of first-time homebuyers report that the tax credit was ‘the most important’ or a ‘very important’ factor in their decision to buy a home. 

Closed escrow sales of existing, single-family detached homes in California totaled 530,520 in September at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local Realtor associations statewide. Statewide home resale activity increased 2.1% from the revised 519,530 sales pace recorded in September 2008. Sales in September 2009 increased 0.6% compared with the previous month. 

The statewide sales figure represents what the total number of homes sold during 2009 would be if sales maintained the September pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales. 

The median price of an existing, single-family detached home in California during September 2009 was $296,090, a 7.3% decrease from the revised $319,310 median for September 2008, C.A.R. reported. The September 2009 median price rose 1.1% compared with August’s $292,960 median price. 

“A new milestone was reached in September, when five C.A.R. regions reported positive year-to-year increases in the median price, the first such increase since January 2008,” said C.A.R. Vice President and Chief Economist Leslie-Appleton-Young. “September also marked the seventh consecutive month of month-to-month increases in the statewide median price and the first single-digit decline in the year-to-year median price since October 2007, after 22 consecutive months of double-digit decreases. “Efforts by the government to stimulate housing and the economy clearly are impacting the market. Sales have exceeded 500,000 homes for 13 consecutive months, and now are 33.1% higher on a year-to-date basis compared with 2008,” added Appleton-Young. 

Highlights of C.A.R.’s resale housing figures for September 2009: 

-C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in September 2009 was 4.2 months, compared with 6.5 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

-Thirty-year fixed-mortgage interest rates averaged 5.06% during September 2009, compared with 6.04% in September 2008, according to Freddie Mac. Adjustable-mortgage interest rates averaged 4.59% in September 2009, compared with 5.14% in September 2008.

-The median number of days it took to sell a single-family home was 33.6 days in September 2009, compared with 46.2 days (revised) for the same period a year ago. 

For more information, visit www.car.org.