The Kallhoff Team

Thursday, August 15, 2013

More Buyers Becoming Wary of Short Sales

DAILY REAL ESTATE NEWS | THURSDAY, AUGUST 15, 2013

Home buyers once saw short sales as big bargains, but their appeal has fizzled in some parts of the country — so much so that some real estate professionals are advertising listings as "not a short sale" to attract more buyers.

"'Short sale' does have a stigma now," says Summer Greene, regional manager of Better Homes and Gardens Florida First Real Estate in Fort Lauderdale, Fla. Greene says getting bank approval for a short sale can be difficult, and the process of buying a short sale can take four to six months in her area.

A recent study found that short sales in Boca Raton tended to stay on the market much longer than other homes. And when homes were advertised as "not a short sale," they tended to sell for 2 percent to 5 percent more than comparable non-distressed homes that were not advertised the same way, according to the study. Homes advertised as "not a short sale" also sold faster, according to the study.

"What really caught our eye was there were a lot of people specifically stating, 'We are not a short sale,'" says Ken H. Johnson, the study's co-author and a professor with Florida International University's real estate department. "Not only were [the homes] not a short sale, but they got the extra mile to state that to clearly delineate themselves from the rest. That shouldn’t be happening."

In housing markets where short sales are less prevalent, agents say they aren’t noticing the stigma. Buyers aren't as aware of the lengthy process so they don’t dread it as much. Therefore, singling out a property as “not a short sale” would be pointless, says Diane Saatchi, an associate broker with Saunders and Associates in the Hamptons.

Source: “Is There a Stigma with Home ‘Short Sales?’” CBSNews.com (Aug. 14, 2013)

http://realtormag.realtor.org/daily-news/2013/08/15/more-buyers-becoming-wary-short-sales

Tuesday, August 13, 2013

Slowdown in Home Prices No Reason to Panic?

DAILY REAL ESTATE NEWS | TUESDAY, AUGUST 13, 2013

Though home prices have risen nearly 12 percent from a year ago, a slowdown is expected soon. But many analysts say it’s no cause for concern.

“Prices are still going to rise — just not as at brisk a pace as we’ve seen over the past year,” The Wall Street Journal reports. “This should calm down those pundits who have fretted over a new crop of housing bubbles.”

According to a report by Goldman Sachs economists, home prices will likely moderate because they have returned to “fair value” and are no longer being viewed as “undervalued,” as they were for the past two years. Also, a rise in mortgage rates may cause some buyers to re-evaluate their options.

For the first time this year, buyer traffic dropped below agents’ expectations, and “the next few months will be crucial to determining whether this is just a pause or something more,” the Goldman Sachs report notes.

The report also notes that investors will likely slow their purchases as the number of foreclosures start to dry up. What’s more, the inventory of homes for sale is starting to loosen as more sellers look to put their homes on the market. Those sellers, in turn, will then be looking to purchase another home, so prices will still likely continue to rise until new-home construction catches up.

“With the improving underlying housing demand driven by household formation and economic recovery, we think housing activity will remain on an upward trajectory, despite occasional ups and downs along the way,” says the Goldman report.

Source: “Why Home-Price Growth Will Slow,” The Wall Street Journal (Aug. 12, 2013)

http://realtormag.realtor.org/daily-news/2013/08/13/slowdown-in-home-prices-no-reason-panic

Monday, August 12, 2013

Investors Embrace Risk in High-End Flipping

DAILY REAL ESTATE NEWS | MONDAY, AUGUST 12, 2013

High-end and luxury house flipping is on the rise nationwide. According to RealtyTrac, the number of flipped homes valued at $1 million or more has risen nearly 40 percent across the country since 2011. RealtyTrac defines a home that has been both purchased and sold within six months as a flip.

In some markets, high-end flipping is becoming particularly big business. For example, between 2011 and 2012 alone, luxury house flipping rose a whopping 867 percent in Orlando and was up 456 percent in Phoenix, according to RealtyTrac.

"Flippers are getting more confident that the market is really recovering, and therefore are more willing to go high-end, even though it's more risky," says Daren Blomquist, RealtyTrac’s vice president. He says that refurbished mansions often sell fast via all-cash offers.

For the past few years, investors have been targeting low- to mid-market homes, buying them at bargain prices and turning them into rentals. But with foreclosures falling, that market has nearly “dried up,” says Jan Brzeski, a private money lender running an investment firm in Los Angeles that provides loans to house flippers. As such, more investors are eyeing the high-end market for profits.

However, with more money involved in the purchases, more money is at risk. But for some, it’s been worth it. Brzeski says he purchased a West Hollywood home in 2011 for $1.425 million and poured another $1.175 million in remodeling costs into it. The home fetched multiple, all-cash offers and eventually sold for $3.5 million.

“This was an incredibly profitable project,” Brzeski says. “This really opened my eyes."

Source: “Flip that mansion: Investors see riches in luxury U.S. homes,” Reuters (Aug. 11, 2013)

Read more

Home Flipping Goes High-end

http://realtormag.realtor.org/daily-news/2013/08/12/investors-embrace-risk-in-high-end-flipping

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Friday, August 9, 2013

Foreclosure Fears Less Haunting to Housing Recovery

DAILY REAL ESTATE NEWS | FRIDAY, AUGUST 09, 2013

Fears over a large overhang of potential foreclosures that could threaten the housing recovery have failed to materialize — and aren’t likely to do so — according to the Mortgage Bankers Association.

More housing data is supporting that statement: The number of home owners behind on their mortgage payments or facing foreclosure dropped to a five-year low in the second quarter, according to a report released Thursday by the Mortgage Bankers Association.

At the end of June, nearly 6 percent of home mortgages were 90 days or longer past due or in the foreclosure process. That’s down from a 9.7 percent high set in late 2009, and down from 7.3 percent last year at this time.

“At a national level, all of the indicators are good. The numbers are down where they should be down,” says Brinkmann.

While the drop is welcome news to the housing industry, the share of home owners delinquent on their mortgages still remains well above historical levels. Prior to the housing boom, seriously delinquent rates averaged about 2.5 percent.

Some states — particularly those that don’t require foreclosures to go through the courts for approval — are seeing some of the biggest improvements and have returned to near pre-crisis levels. California had a foreclosure rate of 1.6 percent and Arizona’s was 1.5 percent in the second quarter. These mark a drastic improvement for these states, which once were in the top five as worst foreclosure rates in the nation during the housing downturn and now are No. 37 and 38, respectively, MBA reports.

On the other hand, judicial foreclosure states — such as Florida, New York, and New Jersey — continue to battle higher shares of foreclosures.

“If you look at where the problems are centering now, the northeast is more of a center of attention,” Brinkmann says.

Source: “Mortgage Delinquencies Hit Five-Year Low,” The Wall Street Journal (Aug. 8, 2013)

Read More

Foreclosures Down 29% From Year Ago

http://realtormag.realtor.org/daily-news/2013/08/09/foreclosure-fears-less-haunting-housing-recovery

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Thursday, August 8, 2013

Survey: Americans Upbeat on Housing, Despite Rates

DAILY REAL ESTATE NEWS | THURSDAY, AUGUST 08, 2013

Americans are increasingly optimistic about the housing market, despite the threat of a continued rise in mortgage rates, a new survey shows. Fifty-three percent of Americans expect home prices to increase by an average of 3.9 percent over the next 12 months, according to Fannie Mae’s July National Housing Survey of 1,000 home owners. Only 6 percent expect prices to fall, a new low in the survey's three-year history.

Seventy-four percent of those surveyed say now is a good time to purchase a house, and 40 percent say now is a good time to sell. But consumers are bracing themselves for higher mortgage rates: 62 percent of survey respondents say they expect rates to rise over the next year, while only 5 percent expect them to fall.

"Consumers have taken the interest-rate rise in stride,” says Doug Duncan, Fannie Mae’s chief economist. “Expectations for continued improvement in housing persist, and sentiment toward the current buying and selling environment is back on track from its dip last month. These results are consistent with our own analysis of previous housing cycles, which finds that interest rates and home prices are not strongly correlated."

Source: “Fannie Mae says Consumers Taking New Interest Rates in Stride,” Mortgage News Daily (Aug. 7, 2013)

http://realtormag.realtor.org/daily-news/2013/08/08/survey-americans-upbeat-housing-despite-rates

Tuesday, August 6, 2013

Home Buyers Face Higher Closing Costs

DAILY REAL ESTATE NEWS | TUESDAY, AUGUST 06, 2013

Rising mortgage rates aren't the only problem house hunters are facing. Closing costs for loan origination and other fees have increased 6 percent in the past year, according to a survey by Bankrate.com.

Borrowers with stellar credit who are making a 20 percent down payment are still forking over an average of $2,402 in closing costs on a $200,000 loan.

The main catalyst for the increase in closing costs is origination fees, which have jumped 8 percent in the past year. Rising interest rates often cause origination fees to go up, too. Lenders are also having to do more work underwriting loans. Rising mortgage rates often mean lenders make less profit on their loans, so they try to make up for the loss with higher closing fees, Guy Cecala, publisher of Inside Mortgage Finance, told USA Today.

Borrowers should shop around for mortgages because some lenders may offer loans with no origination fees, Cecala said.

Source: “Mortgage closing costs are on the way up,” USA Today (Aug. 5, 2013)

http://realtormag.realtor.org/daily-news/2013/08/06/home-buyers-face-higher-closing-costs

Monday, August 5, 2013

How to Identify a Healthy Housing Market

DAILY REAL ESTATE NEWS | MONDAY, AUGUST 05, 2013

Houston-based real estate consulting firm Metrostudy uses "drive-bys" to help it gauge the health of the residential market in different U.S. metro areas. Employees drive through newly built—or still under construction—housing developments from Texas to Florida and begin observing.

If there are toys on a house's front lawn, for example, that is a good sign that a family has moved in. Another positive sign is if a garden hose is attached to the side of the house. Not only is the home occupied, it also has an owner who cares about his or her property.

Among the bad signs are the absence of curtains in the windows, a high number of empty lots, and newly completed but clearly vacant houses. Metrostudy researchers say these are indicators that a developer may have badly overestimated demand and could soon be saddled with inventory.

Brad Hunter, chief economist of Metrostudy, is projecting double-digit increases in new-home prices for the remainder of 2013. He sees the speculative excess mostly gone from the market. In 2014, though, Hunter forecasts that new-home prices will increase only 6 percent as interest rates continue their upward climb. He concludes, "Mortgage rates could pose a challenge to affordability."

Source: "To Figure Out Where Real Estate Is Headed, Start Driving," Business Week (Aug. 5, 2013)

http://realtormag.realtor.org/daily-news/2013/08/05/how-identify-healthy-housing-market