Fed ACTS

Update:   Feds just  authorized  QE 3rd repurchase of mortgage backed securities!!!

All reports indicate action taken to further pump up home sales.  As I have stated and Jim Belote in notes such as that below has stated, housing is a major contributor to our economy....not only house purchases but the complimentary appliance, furniture, lawn and garden purchases(along with hundreds of other impacts upon economy.

So the positive news keeps coming!!  Stock Market soared  200 points(DOW) with financial stocks leading the way.

Keeping you updated on the market! For the week of  September 10, 2012 MARKET RECAP This lead in could be filed under “dog bites man,” because it's something most of us already know. We are referring to recent data from the National Association of Realtors that show the time to sell a home is shrinking. According to the NAR, the time to sell for traditional sellers is back within historic norms: the median time a home was listed fell to 69 days in July, down from 98 days a year earlier. Of course, national numbers often hold little meaning to any particular local market. In fact, the NAR's data range from one-third of the homes were listed for less than a month, while one in five homes was listed for at least six months. The positive takeaway is that more homes in more markets are selling at a quicker pace. What's more, that pace appears to be accelerating. The price of many homes listed for sale is also accelerating. Clear Capital reports that home prices are up 2.9% year over year in August. Clear Capital cites fewer REO properties coming to market due to new borrower-friendly legislation and the $25 billion lenders' settlement with the federal government. That's really only part of the story, though, and gives short sales the short shrift, because many lenders are simply finding it more remunerative to engage in short sales than foreclosure and REO sales. While we are on the subject of sales and prices, Trulia reports that national asking prices on for-sale homes, which precede actual sales prices by two or more months, increased 2.3% year over year in August. Gains were widespread, with 68 of the 100 largest metropolitan areas Trulia follows reporting price increases. Trulia's data are particularly encouraging, because they are a leading indicator of future home sales (where we are going is much more important than where we've been). Therefore, we would be surprised if home-price gains and the housing recovery were not to persist into fall. That said, lending could be the monkey wrench that grinds the recovery gears to a halt. Participation is the issue, and it is akin to the observation “water, water everywhere, but not a drop to drink.” Rates are low, but not enough borrowers are able to take advantage of them. We've mentioned many times over the past year that the issue isn't low lending rates at this point: it's a dearth of borrower-buyers. If only the same people can access credit at these low rates, these low rates become meaningless. A less restrictive lending environment would do much more to accelerate the recovery than historic low rates. Economic Indicator Release Date and Time Consensus Estimate Analysis International Trade (July) Tues., Sept. 11, 8:30 am, et $43.5 Billion (Deficit) Important. A weaker dollar is raising import prices. The trend could stimulate consumer-price inflation. Mortgage Applications Wed., Sept. 12, 7:00 am, et None Important. Purchase applications have again slowed, pointing to lower home-sale volumes. Producer Price Index (August) Thurs., Sept. 13, 8:30 am, et All Goods: 1.6% (Increase) Core: 0.3% (Increase) Important. Food and energy price increases are elevating producer inflation rates. Retail Sales (August) Fri., Sept. 14, 8:30 am, et 0.7% (Increase) Important. More retail sales points to increased economic growth. Is This the Next Bubble? An aspiring home owner who can't buy a home becomes a renter. Today's credit markets have forced many aspiring home owners to become renters. In turn, the rental market has caught fire. By some estimates, there are 2.1 million more single-family homes rented now than in 2006. It's a strong trend. Rents rose nationally 4.7% year over year in August, which builds upon the 5.8% year-over-year rise recorded back in May. In a few markets, Houston and Seattle most notably, rents are up 10% year over year. Buyers of rental homes (many paying with cash) have soaked up much of the inventory, and to be sure, that's a positive. But many of the people renting these properties would have preferred to buy them themselves, but they were precluded from buying because they were unable to secure financing. The market at this point is becoming too skewed toward rentals, which is driving up rents at an abnormally fast rate. This isn't a good thing, because abnormally fast-growing rates aren't sustainable rates. Should rents turn south, many of those investment properties will no longer be sound investments, particularly those bought late into the rising-rent trend. What's more, a neighborhood of rentals isn't as well maintained or holds its value like a neighborhood of owners. A neighborhood of rental homes tends to loose value over time; a neighborhood of owner-occupied homes tends to gain value over time. The point we want to emphasis is that we need a lending environment that encourages more of the latter; that is, more owner-occupied buying. To get that, we need a lending environment that encourages profitable, heterogeneous lending. We simply don't have that today. If you wish to unsubscribe, click on the link below and send the email. If this

Interest Rates Drive Market...Are You in Driver's Seat?

Time to talk interest rates...Again!!!


With the frequent mention of the stablized but not accelerating Real Estate sales nationwide, so much misinformation or at least misinterpretation of the "true nature of today's market" is too common.


The facts are very simple in most markets:


     Home prices are steady to rising slowly


     Short Sales and Foreclosure are still a meaningful 
         part of the market


    Banks will be required to reply to buyer contracts on Short Sales 
         and Foreclosures in under 30 days beginning July 1, 2012


    Qualified buyers are getting mortgages...just extra paperwork            
         required


    Interest rates are the lowest in history...last week's average
         30 year mortgage    3.75%
         15 year mortgage    2.25%


All these factors should motivate individuals and families needing a new place and investors looking to get in while the getting is good to "jump in" while the water is great.


Take interest rate benefit:


    The difference in Principal and Interest payment between 3.75% 
      mortgage(today) and a historical 'good' of 7% mortgage is as 
      follows:


                                        3.75%               7%          Monthly
      Mortgage                Payment          Payment     Savings


    $100,000                    $463                $665           $202 
   
    $200,000                    $926             $1330            $404


    $300,000                  $1347             $1996            $649


    $400,000                  $1796             $2661            $935


  To realize the real value of these rates, simply note that
  a buyer can buy a home with $400,000 mortgage for $200 per
  month less than Principal and Interest Payment on a $300,000
  mortgage at 7%.


  Now that is saving big dollars by striking when the fire is hot!!!


   And is it ever HOT!!!

Price it Right

Market is popping!!! (edit/delete)

Wow!!! Has life been busy in the last 30 days.   Buyers and Sellers alike have been contacting me to leverage the low rates on the new home they wish to buy.  The sellers have understand the data I have provided illustrating the need for a "compelling price" for a well-appointed home.

RESULTS:  Two listings sold within 7 days of being listed!!!  

So what is a "Compelling Price"????   

              If you read this blog in the past week, you read this chart:

The Compelling Price is a price that recognizes the modest price depreciation from 2008 and the ratio that my be present to a home originally purchased in 2004 or 2005 for example.  It notest that the value of the house may be down from "its high" but remains well-above what was paid.  In addition, this understanding provide "room" to price the home to sell yet at a profit.    One final item to address:  Foreclosure and Short Sale activity in a home's neighborhood.   

A Well Appointed Home is defined as an older home updated in key are

Key Rent vs Buy Decisions

Rent vs Buy  dilemma has haunted 1st time home buyers forever.  Yet, for the uninitiated home buyer, this has to be an expected challenge.

At face value, buying a home is a better decision than renting one. With a home purchase, the buyer has a key opportunity to gain equity(value) as the first step of his future financial success.

 Anyone who has rented for more than 6 months quickly realize that they may as well as light a match to the rent check as they are gaining no value from the rent payment other than a roof over their head.  Typically, the home owner can expect to receive a 2 to 5% return on their investment in a home ever year.

Though the bubble of the early part of 2000s has cause this paradigm to be turned on its head for some people,  this by no means suggest that home ownership is worse than renting.  It just "aint' true".

 Key Advantages to Home Ownership:

• Initial "One Month" Grace Period between last rent payment of prior month and 1st Home Mortgage Payment
• Tax Benefit -- Mortgage Interest Deduction can lower taxes, increasing refunds significantly.
• Improved Credit Score
• Improve Ability to Qualify for other credit purchases....buy a house and the car dealership will darn near       give you a car!!!
• Improve the Community...home owners take care and improve a neighborhood
• Possible Equity Growth assist housing market through move-up purchases as lifestyle, job transfers/promotions and family needs permit

Yet, the prep for the renter to become a home owner is paramount!!!

• Clean up Credit Report; Raise credit score above 600(minimum)
• Take 1st Time Home Owners Class
• Learn about Mortgage Types, Down Payments and Qualifications
• Save...Save...Save  Downpayment and Closing Costs
• Investigate areas of town that interest the buyer and are within the purchasing power of the buyer
• Be employed in the same field, preferably the same employer, for a minimum of two years.  All mortgage applicants should meet this requirement.
• If Gift to be provided by Parents or another family member to make the home purchase, find out guidelines and stipulations now.
• Know that unlike renting, home ownership is a long term commitment.  Purchasing a home for one year prior to relocation out of town will be financially disastrous for most buyers...think 5-7 years.

Selecting a Realtor like me early in this process is invaluable for the 1st Time Home Buyer.  The Realtor can help the renter prepare to buy and guide him/her through the steps noted above.   Every buyer's needs are specific and the Realtor will ensure those needs are met!!!

 

Still on the Fence???? Decisive People Always Win

Always on the lookout for great information to share!!!

Last Time, I spoke of moving forward on your home purchase while
rates are historically low though some financial indicators are down.

Jim Belote of Union Mortgage echoed my thoughts in his August 23rd Recap
quoting a favorite author, Charles Dickest from "A Tale of Two Cities":

"It was the best of times, it was the worst of time"

further quoting Dickens further in saying

"it was the spring of hope and the winter of despair".

Jim notes the ease of seeing the worst of time with home builders
confidence low at 13 when a score of 50 indicates confidence. And
the challenge of seeing the good in housing start rebound to a 1.7%
increase in July...will August increase also???

What about those great interest rates of 4.5% or lower???? Again Jim
points out the conflict between the great rates and the federal programs
to aid home buyers and sellers versus buyer "perception" that Fannie
Mae's and Freddie Mac's lending standards will keep them from getting a
loan.

Implication: Buyers and homeowners could be saving lots of money on
a mortgage/new home if they willing to talk with a great mortgage
officer to start the process.

Once the word gets out that those in the game are the real winners...
there will be few that sit on the sidelines.

How will you feel if you see the game slip you by???

Especially if you have a great job and have money to invest in
distressed mortgages or distressed home sellers? Yes, this is a
bright spot though only $25 Billion of delinquent loans where sold in
the past 2 year(only .25% of all outstanding home loans). This may
increase as such investors help clear off the delinquent loans quicker
than the banks and federal govt.

Another game that could be right for you!!! Are you in??

Thanks Jim for the great input!!!