Posted By marketing On April 15, 2010 @ 9:14 am In Interest Rates, The Economy, economy
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by Steve Harney on April 12, 2010
The big question we seem to be getting as of late is whether or not a housing recovery will be coming by the second half of 2010. Today we asked Steve Harney to list five areas that will affect the two main components of a housing recovery: housing supply and demand. When aligned, these two components will bring price stabilization.
-The KCM Crew
Unemployment, Mortgage Interest Rates, Distressed Properties, Gov’t Intervention, Prices
There are many pieces that determine every market, and real estate is no exception. Knowing which keys will determine the future is no easy task. Today, I will list what I believe are the five major factors in real estate throughout the rest of 2010.
Unemployment
Recently we posted a blog [1] on the impact unemployment (or underemployment) has on the housing sector. We explained that there were two distinct affects:
1.Obviously an unemployed person cannot purchase a home. Demand for housing will remain muted as long as unemployment remains high.
2.When a wage earner in a home loses their job, it increases the chances that the family can no longer afford to pay their mortgage payment. Once a family falls 90 days behind on the payment, there is less than a 1% chance that they will ever catch up. There are more and more households that will face foreclosure or a short sale as long as unemployment remains high. This will increase the supply of distressed properties coming to the market.
Outlook for the second half of 2010:
Less demand and more supply can only mean continued downward pressure on home prices.
Mortgage Interest Rates
The Fed has decided not to extend their assistance in the mortgage markets. Many experts feel that will cause mortgage rates to rise quickly and dramatically. As Housing Wire reported [2] last week:
Mortgages need to be originated at roughly 6% at least to get any sort of capital flow; this was the case in previous securitization efforts, and its likely true now as well.
In the last week, rates have already jumped one quarter of a point. When rates increase two things happen:
1.Less people qualify to purchase a home
2.Those that still qualify decrease the price of the home they purchase so the monthly cost will remain the same.
Outlook for the second half of 2010:
Anything that has a negative impact on demand lengthens the time to recovery.
Distressed Properties
The long anticipated surge of foreclosures is upon us. Banks are letting us know that the time has come for them to start releasing their foreclosure inventory to the market.
As an example in a post last week, the Irvine Housing Blog [3] reported:
The west coast manager of real estate owned, Senior Vice President Ken Gaitan, stated that Bank of America, which currently forecloses on 7,500 homes a month nationally, will increase that number to 45,000 homes per month by December of 2010.
Our best hope is that the current short sale plans being instituted by the government (HAFA) and the private sector will be successful. A short sale has a much less severe impact on the value on the other houses in a neighborhood than does a foreclosure.
I believe both the increase of distressed properties and the timing of their release to the market will be the biggest real estate story of 2010.
Outlook for the second half of 2010:
Anytime the supply of an item increases and demand remains flat, pricing is adversely impacted. This supply will come at discounted prices (foreclosures at about 50% of value, short sales at about 70%). Its impact could be substantial.
Government Intervention
The administration has already exited its program which allowed them to purchase mortgage-backed-securities and it seems likely that there will be no extension of the Home Buyers Tax Credit.
The only appetite the government seems to have left regarding the housing market is in the form of modifications. Their new HAMP enhancement program which concentrates on the unemployed and those with negative equity seems to make sense.
However, the original plan was supposed to help 3-4 million American families save their house from foreclosure. A year later less than 200,000 have received a permanent modification. The sheer number of people in need might be too much to manage.
Outlook for the second half of 2010:
If you are a strong believer in miracles than you might hold solace in the new modification programs. If you are more of a historian, you know that, at best, mod programs in the past have only helped delay the inevitable.
Prices
Most experts have always used pricing as a key indicator to determine the recovery of any market. Real estate is no exception. I personally believe that pricing does not change until after the market recovers. However, for the sake of this blog, let’s go with the experts.
We had seen a stabilization of pricing as we finished 2009. Many people jumped on that data to pronounce a recovery in the housing sector. Most recent data, however, suggest that prices are again softening and many are predicting price declines from anywhere from 5-20% off current values.
As Housing Wire reported [4] last week:
After nine months of quarterly gains, US home prices dipped 3.9% from January to March as real-estate owned (REO) property takes more of the market, according to the Clear Capital Home Price Index.
“Although yearly price changes remain positive compared to last winter’s lows, the most recent declines reflect the fragile and volatile state of many housing markets and could signal a trend to renewed lows off last year’s levels for several markets,” said Alex Villacorta, senior statistician at Clear Capital.
I believe that if we are to use pricing as a key indicator than 2010 will not be the year the industry recovered.
Outlook for the second half of 2010:
Prices will continue to decline throughout 2010 as demand wanes and the supply of houses on the market increases – perhaps dramatically.
http://kcmblog.com/2010/04/12/the-5-keys-to-a-real-estate-recovery/ [5]
Wednesday, April 21, 2010
Investor Interest in Real Estate Triples in 12 Months
RISMEDIA, April 16, 2010—According to a new Move, Inc., survey, interest in real estate as an investment has more than tripled in the past year. In fact, 17.2% of potential home buyers today say they plan to purchase a home in the near future as an investment compared to just 5.6% in March 2009.
The survey also found just over ten percent (12.3%) of Americans planning to purchase investment property in the near future say they will pay for the property using 100% cash, and 12.8% will use cash for more than 50% of the purchase price and finance the rest. Almost half (49.2%) say they will buy the property with less than 50% cash down and finance the remainder. The U.S. Census Bureau reported that one in three U.S. homes are owned free and clear, without a mortgage.
Nearly half of these potential real estate investors (46.5%) say they plan to own the property for six or more years, 16% expect to hold the property between two and five years, while 10.6% plan to own the property between six and 24 months.
While interest by potential home buyers in purchasing a foreclosure to live in themselves has dropped 31.1% in the past five months to 26.5%, this newest Move survey found interest in purchasing a foreclosure as an investment is on the rise. In fact, interest in purchasing a foreclosure as an investment to fix it up and resell it rose from 11.3% in October 2009 to 16% in March 2010, a 42% increase.
Economy and lifestyle needs to trigger transactions with buyers and sellers
The Move Homeownership survey also found approximately half (49%) of all homeowners would buy another home today if they could sell their current home for what they paid for it or more. This is especially true for homeowners ages 25 to 34 (68.2%).
Some of the most important reasons influencing homeowners’ decisions to sell their current home with the intention of purchasing another include the need to lower monthly expenses because of financial hard times (25.4%), their growing family needs more space (20%), or the desire for their children to attend a better school (14.1%). Moving closer to important daily conveniences (12.3%) or work (10.9%) and the desire to improve their lifestyle by purchasing a nicer or larger home because they’re doing well (10%) were also among the most important reasons homeowners would purchase a different house once they sell their current home.
“Real estate and housing today face many of the same challenges other major industries are experiencing as a result of our national economy,” says Move Chief Revenue Officer, Errol Samuelson. “Concerns around employment and their overall economic situation are causing many people to wait until the economy improves before they commit to one of the largest purchases they’ll most likely make in their lives. The findings of this newest survey make it clear the desire and motivation to be a homeowner remains strong, and as the economy continues to strengthen and improve, so will the housing market.”
Perceptions on affordability improve, first-time buyers prepare to buy
Despite today’s challenging economy, demand for homeownership remains strong and first-time buyers make up a significant number of all potential buyers. One in five consumers (21%) report they plan to purchase a home in the next 12 months to five years, with 7.9% planning to purchase in the next two years. Of those planning to purchase a home in the near future, half (50.7%) are first-time buyers, with men (55%) somewhat more interested in entering the housing market as a first-time buyer than women (45%).
The survey also found that while housing has become more affordable in the past nine months, most Americans are still unaware of how affordable homes are today. Based on survey results, 41.5% of Americans think a family making the median income of $52,029 can afford nearly half (45.7%) of all the available homes for sale in their area. In June 2009, more than three-quarters (76.4%) of Americans said they thought a family earning the national median income could afford 50% or fewer of the homes for sale in their area.
In fact, a median income family today can afford approximately 70% of the homes for sale on the Move Network, a leader in online real estate.
Dreams delayed not lost
According to this newest survey, the economy has forced some homeowners to make serious sacrifices or changes to their lifestyle as they wait for conditions to improve. Just over two-thirds (69.1%) of homeowners who have delayed selling their home reduced their daily living expenses in order to pay their mortgage, 35.4% have downsized to a smaller home, and 33.5% have delayed expanding their family as planned.
Approximately one-third (36%) of homeowners not in a position to sell their home and purchase a home that better fits their needs, report they couldn’t purchase a different home in a more upscale neighborhood as a result. This was especially true for women (45.1%) compared to men (27.2%). In addition, 24% of homeowners say they’ve not been able to move closer to work or a desired school (21.9%), purchase a second vacation home or retirement home (21.9%), or buy a rental property as an investment (21.5%) as a result of their current situation.
Real estate remains high on consumer radar
Real estate remains top of mind with Americans as more than half (55.1%) say they’re paying more attention to home values today as compared to a year ago. Only 10.8% say they’re paying less attention to home values this year. In the past year, monthly unique visitors on the Move Network, a leader in online real estate, have increased by 7.6% percent from 7.8 million in February 2009 to 8.4 million in February 2010. In February 2010, the top ten most popularly searched MSAs on the Move Network in order of popularity were Chicago, Los Angeles-Long Beach, Detroit, Dallas, Philadelphia, Tampa-St. Petersburg-Clearwater, Phoenix-Mesa, Boston, Atlanta, and Las Vegas.
For more information, visit http://www.move.com.
http://rismedia.com/2010-04-15/investor-interest-in-real-estate-triples-in-12-months/
The survey also found just over ten percent (12.3%) of Americans planning to purchase investment property in the near future say they will pay for the property using 100% cash, and 12.8% will use cash for more than 50% of the purchase price and finance the rest. Almost half (49.2%) say they will buy the property with less than 50% cash down and finance the remainder. The U.S. Census Bureau reported that one in three U.S. homes are owned free and clear, without a mortgage.
Nearly half of these potential real estate investors (46.5%) say they plan to own the property for six or more years, 16% expect to hold the property between two and five years, while 10.6% plan to own the property between six and 24 months.
While interest by potential home buyers in purchasing a foreclosure to live in themselves has dropped 31.1% in the past five months to 26.5%, this newest Move survey found interest in purchasing a foreclosure as an investment is on the rise. In fact, interest in purchasing a foreclosure as an investment to fix it up and resell it rose from 11.3% in October 2009 to 16% in March 2010, a 42% increase.
Economy and lifestyle needs to trigger transactions with buyers and sellers
The Move Homeownership survey also found approximately half (49%) of all homeowners would buy another home today if they could sell their current home for what they paid for it or more. This is especially true for homeowners ages 25 to 34 (68.2%).
Some of the most important reasons influencing homeowners’ decisions to sell their current home with the intention of purchasing another include the need to lower monthly expenses because of financial hard times (25.4%), their growing family needs more space (20%), or the desire for their children to attend a better school (14.1%). Moving closer to important daily conveniences (12.3%) or work (10.9%) and the desire to improve their lifestyle by purchasing a nicer or larger home because they’re doing well (10%) were also among the most important reasons homeowners would purchase a different house once they sell their current home.
“Real estate and housing today face many of the same challenges other major industries are experiencing as a result of our national economy,” says Move Chief Revenue Officer, Errol Samuelson. “Concerns around employment and their overall economic situation are causing many people to wait until the economy improves before they commit to one of the largest purchases they’ll most likely make in their lives. The findings of this newest survey make it clear the desire and motivation to be a homeowner remains strong, and as the economy continues to strengthen and improve, so will the housing market.”
Perceptions on affordability improve, first-time buyers prepare to buy
Despite today’s challenging economy, demand for homeownership remains strong and first-time buyers make up a significant number of all potential buyers. One in five consumers (21%) report they plan to purchase a home in the next 12 months to five years, with 7.9% planning to purchase in the next two years. Of those planning to purchase a home in the near future, half (50.7%) are first-time buyers, with men (55%) somewhat more interested in entering the housing market as a first-time buyer than women (45%).
The survey also found that while housing has become more affordable in the past nine months, most Americans are still unaware of how affordable homes are today. Based on survey results, 41.5% of Americans think a family making the median income of $52,029 can afford nearly half (45.7%) of all the available homes for sale in their area. In June 2009, more than three-quarters (76.4%) of Americans said they thought a family earning the national median income could afford 50% or fewer of the homes for sale in their area.
In fact, a median income family today can afford approximately 70% of the homes for sale on the Move Network, a leader in online real estate.
Dreams delayed not lost
According to this newest survey, the economy has forced some homeowners to make serious sacrifices or changes to their lifestyle as they wait for conditions to improve. Just over two-thirds (69.1%) of homeowners who have delayed selling their home reduced their daily living expenses in order to pay their mortgage, 35.4% have downsized to a smaller home, and 33.5% have delayed expanding their family as planned.
Approximately one-third (36%) of homeowners not in a position to sell their home and purchase a home that better fits their needs, report they couldn’t purchase a different home in a more upscale neighborhood as a result. This was especially true for women (45.1%) compared to men (27.2%). In addition, 24% of homeowners say they’ve not been able to move closer to work or a desired school (21.9%), purchase a second vacation home or retirement home (21.9%), or buy a rental property as an investment (21.5%) as a result of their current situation.
Real estate remains high on consumer radar
Real estate remains top of mind with Americans as more than half (55.1%) say they’re paying more attention to home values today as compared to a year ago. Only 10.8% say they’re paying less attention to home values this year. In the past year, monthly unique visitors on the Move Network, a leader in online real estate, have increased by 7.6% percent from 7.8 million in February 2009 to 8.4 million in February 2010. In February 2010, the top ten most popularly searched MSAs on the Move Network in order of popularity were Chicago, Los Angeles-Long Beach, Detroit, Dallas, Philadelphia, Tampa-St. Petersburg-Clearwater, Phoenix-Mesa, Boston, Atlanta, and Las Vegas.
For more information, visit http://www.move.com.
http://rismedia.com/2010-04-15/investor-interest-in-real-estate-triples-in-12-months/
New Home, New Expenses: First-Time Home Buyers Change Their Lifestyle to Afford Home Ownership
marketing 4:31 pm on April 19, 2010
Comments:0
Tags: Consumer news and advice (27), First Time Home Buyers (14), home buyers (89), real estate (111) Filed under: Buyer Info, People, Seller Info, economy
RISMEDIA, April 17, 2010—BBVA Compass recently released a new survey on first-time home buyers indicating that, prior to purchase, a vast majority of first-time home buyers (88%) believe they have accounted for all expenses related to owning a home. Seemingly contradicting that notion, amongst those who had purchased a home in the past 12 months, just over half indicate the expenses were more than they had calculated, causing a change in lifestyle. These results came from the BBVA Compass First-Time Home Buyers Online Survey which polled American consumers about the thoughts, emotions and hurdles related to owning and enjoying a first home.
Regarding potential first-time home buyers, key findings included:
-Nearly one third have anxiety over the affordability of owning a home.
-7 in 10 indicate that the first-time home buyer’s tax credit has not truly factored into the timing of when they decide to purchase a home.
-92% of respondents indicate that having additional time before their first payment due date would be helpful.
Regarding first-time home buyers who have purchased a home in the previous 12 months, key findings included:
-51% indicated that the monthly expense of owning a home was more than they calculated.
-Although 7 in 10 respondents said that the unexpected expenditures leveled out over time, another 87% said they changed their lifestyle as a result of the additional expenses.
-Nearly one third indicated that they paid for these unexpected expenditures with a mixture of cash and credit, perhaps indicating a lack of liquid funds.
“Owning a home is still the definition of the American Dream,” said Shelaghmichael Brown, BBVA Compass senior executive vice president and head of Retail Banking. “Yet, while the dream is alive and well, the expenses associated with owning a home can be surprising. As a financial institution, BBVA Compass is committed to educating consumers—with clarity and transparency—on the true costs of homeownership.”
Also among the findings of the BBVA Compass First-Time Home Buyers Online Survey was information related to the actual process of purchasing a home. Potential first-time home buyers indicated that when looking for financing on their new home purchase, the item that will be most important to them, but likely also the most confusing aspect, is understanding the process. Ultimately, the first-time home buyer is seeking someone who will provide clarity through each step of the process, from loan options to factors that might affect the rate obtained.
Both segments of first-time home buyers were also overwhelmingly in favor of mortgages that allow breathing room between closing and the due date of the first payment. With this financial cushion, the first-time home buyer indicated that they would be in a better position to pay off credit cards and other bills, as well as make some of those unexpected purchases (household items and improvements) that come along with owning a home.
“Obtaining a mortgage can be a very confusing and expensive process, particularly for the first-time home buyer,” said Jon Mulkin, executive vice president and director of consumer asset products. “The more clarity, transparency and help in making the financial transition from renter to buyer that banks can provide, the better positioned the consumer will be going into long-term homeownership.”
For more information, visit http://www.bbvacompass.com.
Comments:0
Tags: Consumer news and advice (27), First Time Home Buyers (14), home buyers (89), real estate (111) Filed under: Buyer Info, People, Seller Info, economy
RISMEDIA, April 17, 2010—BBVA Compass recently released a new survey on first-time home buyers indicating that, prior to purchase, a vast majority of first-time home buyers (88%) believe they have accounted for all expenses related to owning a home. Seemingly contradicting that notion, amongst those who had purchased a home in the past 12 months, just over half indicate the expenses were more than they had calculated, causing a change in lifestyle. These results came from the BBVA Compass First-Time Home Buyers Online Survey which polled American consumers about the thoughts, emotions and hurdles related to owning and enjoying a first home.
Regarding potential first-time home buyers, key findings included:
-Nearly one third have anxiety over the affordability of owning a home.
-7 in 10 indicate that the first-time home buyer’s tax credit has not truly factored into the timing of when they decide to purchase a home.
-92% of respondents indicate that having additional time before their first payment due date would be helpful.
Regarding first-time home buyers who have purchased a home in the previous 12 months, key findings included:
-51% indicated that the monthly expense of owning a home was more than they calculated.
-Although 7 in 10 respondents said that the unexpected expenditures leveled out over time, another 87% said they changed their lifestyle as a result of the additional expenses.
-Nearly one third indicated that they paid for these unexpected expenditures with a mixture of cash and credit, perhaps indicating a lack of liquid funds.
“Owning a home is still the definition of the American Dream,” said Shelaghmichael Brown, BBVA Compass senior executive vice president and head of Retail Banking. “Yet, while the dream is alive and well, the expenses associated with owning a home can be surprising. As a financial institution, BBVA Compass is committed to educating consumers—with clarity and transparency—on the true costs of homeownership.”
Also among the findings of the BBVA Compass First-Time Home Buyers Online Survey was information related to the actual process of purchasing a home. Potential first-time home buyers indicated that when looking for financing on their new home purchase, the item that will be most important to them, but likely also the most confusing aspect, is understanding the process. Ultimately, the first-time home buyer is seeking someone who will provide clarity through each step of the process, from loan options to factors that might affect the rate obtained.
Both segments of first-time home buyers were also overwhelmingly in favor of mortgages that allow breathing room between closing and the due date of the first payment. With this financial cushion, the first-time home buyer indicated that they would be in a better position to pay off credit cards and other bills, as well as make some of those unexpected purchases (household items and improvements) that come along with owning a home.
“Obtaining a mortgage can be a very confusing and expensive process, particularly for the first-time home buyer,” said Jon Mulkin, executive vice president and director of consumer asset products. “The more clarity, transparency and help in making the financial transition from renter to buyer that banks can provide, the better positioned the consumer will be going into long-term homeownership.”
For more information, visit http://www.bbvacompass.com.
Saturday, April 3, 2010
Michael Saunders and Company Agents find the most buyers for Longboat Key Homes
If selling your home or condominium is high on your agenda in 2010 here are some important facts you should know.
Any licensed brokerage is capable of listing your property. But only one is the undisputed leader in finding buyers for homes on Longboat Key. Michael Saunders & Company.
The proof is in the performance. Based on dollar volume sales over the past 12 months—as recorded by the Mid Florida MLS and published by the leading independent real estate tracking firm TRENDGRAPHIX—agents from Michael Saunders & Company bring buyers to Longboat Key property sales nearly twice as often as their next closest competitor.
As the below bar graphs depict, this phenomenon holds true across all price ranges; but becomes noticeably more dramatic as the price range increases. For properties $1 million and up, our agents furnish buyers more often than our next four closest competitors combined.
Before you list your Longboat Key property, contact an agent from Michael Saunders & Company. Find out how the region’s largest network of top-producing agents, its most heavily-frequented Web site and unparalleled network of international brokerage affiliations will help you succeed in finding a buyer faster. After all, isn’t that what selling your home is all about?
Any licensed brokerage is capable of listing your property. But only one is the undisputed leader in finding buyers for homes on Longboat Key. Michael Saunders & Company.
The proof is in the performance. Based on dollar volume sales over the past 12 months—as recorded by the Mid Florida MLS and published by the leading independent real estate tracking firm TRENDGRAPHIX—agents from Michael Saunders & Company bring buyers to Longboat Key property sales nearly twice as often as their next closest competitor.
As the below bar graphs depict, this phenomenon holds true across all price ranges; but becomes noticeably more dramatic as the price range increases. For properties $1 million and up, our agents furnish buyers more often than our next four closest competitors combined.
Before you list your Longboat Key property, contact an agent from Michael Saunders & Company. Find out how the region’s largest network of top-producing agents, its most heavily-frequented Web site and unparalleled network of international brokerage affiliations will help you succeed in finding a buyer faster. After all, isn’t that what selling your home is all about?
Lido Key Community Video
Just over the bridge from downtown Sarasota lie the gorgeous beaches and lush tropical features of LIDO KEY. Some say LIDO affords the perfect place for a short stay or the place to live forever.
LIDO KEY is the beginning and end to many visitors search for the perfect Sarasota lifestyle. The Key offers many beachfront condominiums with magnificent views of the beautiful beaches.
LIDO KEY is the beginning and end to many visitors search for the perfect Sarasota lifestyle. The Key offers many beachfront condominiums with magnificent views of the beautiful beaches.
Thursday, April 1, 2010
Florida: a mix of different personalities
The article continues “It’s freezing outside, there are at least a couple more months to go before the weather warms up, and the idea of a holiday home in the sun is probably pretty tempting right now. But Spain’s not hot enough, and the Caribbean and the Seychelles are too expensive. Could Florida be the answer?
Continued...
Siesta Key Video
SIESTA KEY is one of the area’s largest islands and is filled with a varied collection of neighborhoods, each with its own individual flavor. At one point, you’ll discover grand bayfront mansions. From mid Siesta to the south end, you will find condominiums and villas interspersed among single family neighborhoods both on the bay side and gulf side.
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