3 Common Real Estate MYTHS for 2013

February 11, 2013

  AS we move into 2013,  the question on everyone’s mind is : What’s going on with the real estate market? . Right?  That’s because we all know that EVERYONE is interested in real estate, home values, interest rates and Realtors®.  After all, we Realtors® are the most important people on the face of the earth…which is why we put our picture on everything!  But I digress..

Myth #1 :  Now is NOT the time to list and sell my house..its too much of a buyers market.

…While it might be true that the general feeling is that it’s a buyers market, in recent months statistics have shown that the inventory of homes listed for sale is starting to drop. The numbers are starting to show a shift in several key categories important to clients looking to sell their homes.

Compared to the 4th Quarter of 2011, the 4th Quarter of 2012 saw a decrease in the number of homes for sale. A 12.3% decrease to be exact.  **

Add to that the fact that the number of homes sold in the same time period  increased by 21.2%**

**Greater Harrisburg Association of Realtors (click for full report)

What does this mean? :  Inventories are starting to drop, and demand is starting to rise. And as we all know from ECON 1o1 , Falling supply with rising demand = $$.

With these numbers and the current interest rates, NOW is a great time to put your home on the market. A properly priced home, with the proper marketing  WILL SELL.  Additionally, if you are buying another home after you sell yours, you can take advantage of MYTH #2.

Myth #2    Interest Rates will always be this low, no need to buy now. 

In 2013 interest rates will go up. That’s just  my prediction. There are a lot of signs that interest rates will begin to rise. Mortgage professionals i talk to are saying they agree. Rates will still be low, but they might begin to tick up.2013 rates.

The reasons for this are many. The FEDs monetary policy should be kept a close eye on. Treasury Notes are of major importance. The following excerpt from ABOUT.com explains the relationship between T-notes and Mortgage interest rates.

“Treasury notes directly affect the interest rates on fixed-rate mortgages. How? When Treasury yields are higher, so are interest rates. That’s because investors who want a fixed return on their money will either shop for Treasury notes, CDs, money market funds, mortgages or corporate bonds. Treasury notes are considered ultra-safe since they are guaranteed by the U.S. government. CDs and money market funds are slightly less safe, since they aren’t guaranteed. However, that safety comes with a price – a lower return.

Investors who want a slightly higher return, and are willing to accept more risk, will buy mortgages. Instead of buying the mortgages directly, they usually purchase products backed by mortgages, called (you guessed it) mortgage-backed securities. When Treasury yields rise, mortgages also have to provide higher returns to attract investors. The result to the borrower? Higher interest rates. ”  ( see full article )

With rates still around 3.5% -4%, buyers should be thrilled and beating the streets to buy properties now. I have seen a fair number of people putting it off for one reason or another. What they should be doing is buying now rather than later.

Myth #3     I don’t need a Realtor®

You always should consult and hire a professional real estate agent. Certain things in life you should always hire a professional to handle:  you wouldn’t try to diagnose your own chest pains and you wouldn’t try to install your own in-ground swimming pool. It just makes sense, when  there is the potential to make or lose a lot of money or die, to hire a professional.  Realtors® are trained and experienced in the nuances of the real estate transaction .  We are trained to negotiate the best possible terms for our clients and we follow a strict Code of Ethics.  (see my blog post on Realtors for some great info.)

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Home Improvements : Best Bang for your Buck is……….?

February 26, 2010

Welcome to 2010. The Vancouver Olympics are in full swing, the economy has shown signs of life and the average American still can’t get a loan to buy a home!

The factors contributing to our current economic  ‘situation’  have produced a climate where….LENDERS WONT LEND MONEY!

As we all know, the Real Estate Market is a huge part of our national economy. Until the credit crunch loosens and banks begin to lend money, the Real Estate Market will remain tight and it will remain a BUYERS MARKET. But,it’s a buyers market only in the sense that SELLERS are not getting the prices they were getting a few years ago and there are not enough qualified BUYERS to put upward pressure on home prices.

What can SELLER’S do to combat these evil forces? What can home sellers do to get the 20% appreciation they are entitled to? 

Well there are some things homeowners can do  to increase the value of their home and help them to get a fair price on their home when it is time to sell. Firstly, the days of 20% appreciation are gone, so we might as well get used to that now.  Despite the gloom and doom seen all over the news, there still are many qualified buyers searching for a home. Not all buyers are looking for distressed and bank owned properties.

With a few simple home improvements, sellers can as least know they are putting their best foot forward when getting their home on the market. ( I’ll just mention here that every homeowner owes it to themselves to consult with a Realtor before putting their property on the market…See my other blogs….and its financially prudent.)

What improvements bring the most value for resale? Typically, bathrooms and kitchens are the most secure in getting your investment back out when you sell. These items are also the most prominent for new homebuyers and can increase your sale price as well as set you apart from other homes. Finished basements are also popular but do not raise the market value of the home much.

But what about exterior improvements?

A December report released by The National Realtors Association shines the light on this very subject.

The article state “the smartest home improvement investments may also be some of the least expensive. Results from the 2009 Remodeling Cost vs. Value Report show that small-scale exterior projects are the most profitable at resale, according to estimates by Realtors® who completed a recent survey.”

Exterior Remodeling Proves Best Bang for Your Buck, Realtors® Report

In todays Real Estate market, Sellers need to keep on top of the trends and what buyers are looking for. The competition can be fierce, many sellers trying to attract fewer buyers….supply and demand..ecomonics 101..thanks Professor Bellinger…Dickinson College.

– Cal Williams

www.CalWilliams.com


Housing Market Facts: For Buyers and Sellers

February 1, 2010

Goodbye 2009, Hello 2010! (At least if you’re a Real Estate Professional.) If the U.S. economy is going to get back on track, real estate must lead the way.(see my previous blog : Real Estate- the foundation of the American Economy. ) While my primary area of specialization is the Mechanicsburg , Pennsylvania real estate market, its important to keep up with trends and information on the national market as well.

The following website is a great resource for anyone interested in real estate market facts. The link is provided by the NAtional Association of Realtors.

Housing Market Facts.

-Cal Williams

Feb 1, 2010


SHORT SALES 101-The Basics

January 18, 2010

 

The Basics: Short Sales

Due to current economic conditions, the number of short sale properties on the market is rising. The increasing number of short sales on the market presents challenges for REALTORS®. Below you’ll find more information on: short sales and their challenges, the government’s efforts to address these challenges, and tools to help you navigate the short sale process. 

Home Affordable Foreclosure Alternatives Program (HAFA)

On November 30, 2009, the Treasury Department released guidelines and forms for its new Home Affordable Foreclosure Alternatives Program (HAFA), part of the  Home Affordable Modification Program (HAMP).

What is a short sale?A short sale is a transaction in which the lender, or lenders, agree to accept less than the mortgage amount owed by the current homeowner. In some cases, the difference is forgiven by the lender, and in others the homeowner must make arrangements with the lender to settle the remainder of the debt.

Why is the number of short sales rising?

Due to the recent economic crisis, including rising unemployment, and drops in home prices in communities across the nation, the number of short sales is increasing. Since a short sale generally costs the lender less than a foreclosure, it can be a viable way for a lender to minimize its losses.

A short sale can also be the best option for a homeowners who are “upside down” on mortgages because a short sale may not hurt their credit history as much as a foreclosure. As a result, homeowners may qualify for another mortgage sooner once they get back on their feet financially.

What challenges have short sales presented for REALTORS®?

The rapid increase in the number of short sales, and the short sales process itself present a number of challenges for REALTORS®. Major challenges include:

  1. Limited experience
    Many REALTORS® are new to the short sales process; a difficulty which is compounded by many lenders’ lack of sufficient and experienced staff to process short sales. Even if the REALTORS® are experienced, most servicers are under-staffed and still not adequately trained, making negotiating a short sale particularly difficult.
  2. Absence of a uniform process and application
    Currently, both short-sales documents and processes are lender-specific, making it very difficult and time-consuming for REALTORS® to become knowledgeable and efficient in facilitating these transactions. 
  3. Multiple lenders
    When more than one lender is involved, the negotiations are much more difficult. Second lien holders often hold up the transaction to exert the largest possible payment, in exchange for releasing their lien, even though in foreclosure they will get nothing.

As a result of these challenges our members have reported difficulties with: unresponsive lenders; lost documents that require multiple submissions, inaccurate or unrealistic home value assessments, and long processing delays, which cause buyers to walk away.

What is being done to address or eliminate these challenges?

On May 14, 2009, the Obama Administration announced its upcoming Foreclosure Alternatives Program. Among other things, the new program:

  • Establishes financial incentives for servicers, sellers, and second lien holders to encourage the completion of short-sale transactions.
  • Requires that a timeline, of no fewer than 90 days, be set to allow a homeowner to sell a home, without threat of foreclosure action.
  • Requires the short sale agreement to specify reasonable and customary real estate commissions and costs to be deducted from the sales prices. (The servicer must agree not to negotiate a lower commission after receiving an offer.)
  • Will provide standardized documents, including short-sale agreements and offer acceptance letters.

More Information on Short Sales 

Foreclosure Alternative Program Fact Sheet

This article was reprinted from the NAR ( national Association of Realtors) Website .

www.Realtor.org

For More information please visit my website at www.CalWilliams.com


Real Estate- The Foundation of the American Economy : What’s in Store?

January 11, 2010

The slide began on 2007.  Prices were  rising, inventories were low and interest rates were low. The market was hot and real estate was the primary wealth building tool for Americans. But the slide was already beginning. A closer look at transaction reports would have made industry experts realize that there had already started a fundamental change in the markets. Most consumers and most real estate experts did not see the changes until it was too late. I’m sure there were signs but I didn’t see them. Credit has dried up and problems in the real estate industry still dominate the headlines.

Now , as we head into 2010, if real estate is to remain the foundation of the American economy, what needs to be done and who needs to do it?

The first thing is to get the blame out-of-the-way. We always need to place blame before we can move on.

There is plenty of blame to go around as to why the collapse occurred at all. Lenders, consumers, appraisers and the business cycle have all been blamed. And don’t forget the media, which loves to make everything seem worse than it is.  Its time to forget about who to blame and start paying attention to moving forward. 2010 is shaping up to be the year that the real estate industry  must  get back on course, for the good of our national economy.

Moving forward, the most widely publicised and brightest star in the real estate industry is, of course, the First Time Buyer Tax Credit, which we all know has been extended and expanded ( see previous blogs ).  Along with the tax credit providing an  unbelievable lift to the markets, I think consumer confidence needs to come back and it slowly will. There is ALWAYS a need for housing. There ALWAYS will be a need for housing.  Consumer confidence will return  and I think there are many signs that it already has begun to bounce back. The tax credit helps, but the simple fact that homeownership has been a part of the American Dream is what always helps to bring real estate back. This has all happened before and will again!

The benefits of homeownership are so great in this country that eventually the consumers will push the market back to where it should be.  One of the criticisms of our government, in regard to the collapse, was that they have made it too easy to buy a home.  But the reality of the situation, as every Econ 101 student knows, is that markets are cyclical. There will always be ups and downs. How high and for how long, and how low and for how long are the only variables.

Consumer confidence will return, if it has not already. On top of that, the government needs to continue to get credit flowing again and help existing homeowners keep their homes. There are many programs in place to help do this. Banks seem to be working with homeowners, through modifications and repayment plans, to help them keep their homes for the most part.

There is no denying that homeownership has many benefits and has a positive effect our national economy. I believe the people in position to help us through this understand this and are doing the right things. The market will always have its ups and downs. The severity of the business cycle, in either direction, is what we must control and prepare for.

Our economy and the world economy will benefit from getting the real estate industry back on track in 2010. I believe that the support and programs being initiated by the industry and the government will make this happen, and 2010 will be the year that noticable improvements in the real estate market are realized by the consumer.

Cal Williams

www.CalWilliams.com


November Homesale Numbers reported

December 29, 2009

Statistics recently released from the NAR  show existing homesales numbers up again. The article below is reprinted from www.cnnmoney.com.

NEW YORK (CNNMoney.com) — After surging 10% in October, sales of existing homes jumped again in November, growing 7.4% compared with October to an annualized rate of 6.54 million units, according to the National Association of Realtors.

“This clearly is a rush of first-time buyers not wanting to miss out on the tax credit,” said NAR’s chief economist, Lawrence Yun

November was originally going to be the last month in which sales to first-time homebuyers would qualify for a federal tax credit of up to $8,000. However, that deadline was extended through June.

In addition, the tax credit was expanded to cover people who already own a home. They can qualify for a $6,500 tax credit if purchase a new house before the end of June. That should encourage “trade-up” buyers.

The strength of sales in November surprised the industry. A panel of experts compiled by Briefing.com had forecast month-over-month sales growth of just 2.5% to 6.25 million from 6.1 million a month earlier.

The sales total was also a huge improvement over a year ago. Sales rose 45.7% over the paltry annualized rate of 4.49 million units during November 2008.

The contribution made by first-time buyers is evident in a separate survey NAR conducted of its members. They estimate that 51% of sales in November were by newcomers to the market, up a point from 50% in October. Normally, first timers account for about 40% of sales.

Also propelling sales higher were rock-bottom interest rates. The average for a 30-year, fixed-rate loan during the month was just 4.88%, down from 4.95% in October and 6.09% a year ago.

With rates that much lower, homebuyers can save more than $150 a month on a $200,000 mortgage.

The industry expects home sales to slacken December, partially because of the tax credit’s originally scheduled demise. That caused some buyers to push up their closing, stealing sales from December.

However, sales will not fall off a cliff, though, according to Walter Molony, a NAR spokesman. “The psychology seems to be turning around,” he said. “Potential buyers, who had been staying on the fence, now believe we’re at or near the market bottom.”

One X-factor, however, is the vast numbers of homes that may come to market over the next few months. There is a large “shadow inventory” — homes owned by banks and mortgage companies — that have not yet been put up for sale. It could be as many as 1.7 million units, according to First American CoreLogic.

In addition, another spate of foreclosures could be hitting the market as a number of option-ARM mortgages are set to default.

All that may drive prices down, according to Shari Olefson, author of “Foreclosure Nation: Mortgaging the American Dream.” And the impact of these renewed price declines could again alter the market psychology.

“People think that prices have bottomed,” she said. “I don’t think they have. People will see price declines and that will discourage them from buying.”

Mike Larson, a real estate analyst with Weiss Research has preached all through the bust that price declines are what will “fix” the housing crisis.

“We needed to see prices fall to make ownership competitive with renting again, and to restore the normal relationship of house prices to income,” he said. “That has now happened and you’re seeing buyers come out of the woodwork as a result.”

Still, they will have to come out in large numbers to offset the inventory overhang in some of the worst markets, according to Olefson. In the Florida condo market, for example, there is a 35-to-40 month supply of units at the current rates of sale, she said.

Prices still almost certainly have further to fall. To top of page


First Time Homebuyer Tax Credit – End of Year Review

December 20, 2009

The holidays are here and with them comes the end of the year. At the risk of putting a damper on the season to be jolly,  i thought now might be a good time to review the first time homebuyer tax credit. It has been a huge newsmaker this year and many people may be confused about the details.

Here is an excerpt from an article by the NAR ( National Association of Realtors .) This article is found on their website at  Realtor.org.

Who Qualifies for the Extended Credit?

  • First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.
  • Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

If you purchased a home between January 1, 2009 and November 6, 2009, please see: 2009 First-Time Home Buyer Tax Credit.

Which Properties Are Eligible?

The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Is Available?

The maximum allowable credit for first-time home buyers is $8,000.

The maximum allowable credit for current homeowners is $6,500.

How is a Buyer’s Credit Amount Determined?

Each home buyer’s tax credit is determined by two additional factors:

  1. The price of the home.
  2. The buyer’s income.

Price

Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.

Buyer Income

Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009,  single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.

These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits. If you  purchased a home between January 1, 2009 and November 6, 2009, please see 2009 First-Time Home Buyer Tax Credit.

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.

Can a Buyer Still Qualify If He/She Closes After April 30, 2010?

Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.

Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.

More info available at www.CalWilliams.com


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