Market Types You’ll See This Year

Market Types You’ll See This Year. Image courtesy of ddpavumba / FreeDigitalPhotos.net

From the stalwarts to the tech magnets and comeback kids, the new year is likely to see several types of markets. Redfin recently highlighted six “housing market personas” that the real estate brokerage believes will be driving the continued recovery in 2015. Here’s an overview of the personas and the pros and cons of each:

1. Stalwarts: “Strong economies, lots of Millennial buyers, yet still affordable.”
   Good news: Lots of jobs and booming economies.
   Bad news: Picky buyers and lack of selection.
   Markets that fit this persona: Chicago, Houston, and Dallas.
2. Topping Out: “Sky-high prices that will peak and even dip into negative territory this year.”
   Good news: Strong economies and well-paying government jobs.
   Bad news: Bidding wars and low inventories.
   Markets that fit this persona: San Francisco; San Jose, Calif.; and Washington, D.C.
3. Tech Magnets: “Tech-driven economies, young wealth; getting more expensive, with growth limited by zoning or geography.”
   Good news: Lots of wealthy households.
   Bad news: Little room to expand, and suburbs losing popularity.
   Markets that fit this persona: Boston, Seattle, and Denver.
4. Comeback Kids: “Markets hit hard by the financial crisis that will see a pickup in sales in 2015.”
   Good news: Lots of investors and broad-based job growth.
   Bad news: Few affordable single-family homes, and new construction mostly limited to the luxury market.
   Markets that fit this persona: Miami; Atlanta; and Orlando, Fla.
5. Sleepers: “Not in the news much, but mid-priced cities with good economies and job opportunities.”
   Good news: Lots of new development and big tech-job gains.
   Bad news: Not many affordable homes available.
   Markets that fit this persona: Baltimore; Philadelphia; and Raleigh, N.C.
6. Down But Not Out: “Hit hardest by housing crisis, fewer jobs, still working through foreclosures.”
   Good news: Lots of homes for sale.
   Bad news: Overzealous builders and cookie-cutter remodels.
   Markets that fit this persona: Las Vegas; Phoenix; and Tampa, Fla.

Source: “From Stalwarts to Comeback Kids and Sleepers, Redfin Names 6 Housing Market Personas for 2015,” Redfin blog (Jan. 5, 2015)

When Sellers Try to Take Too Much

When Sellers Try to Take Too Much. Image courtesy of smarnad / FreeDigitalPhotos.net

Some sellers want to take more with them than a favorite light fixture or curtain rod. They may want to move entire rooms to their new home.

That’s what Cindy Jones, a real estate broker in Woodbridge, Va., recently encountered when she saw a listing that noted the seller wanted to take the entire kitchen with them.

“How do you explain to the underwriter that the kitchen doesn’t come with the house and expect to get a loan that includes the value of a kitchen?” she wrote in a recent post on ActiveRain.com.

The Los Angeles Times recently featured an article on sellers who may want to take too much with them when they move, and how it can derail a deal. In some cases, sellers don’t tell their agent of their intentions beforehand.

For example, Lenn Harley, a broker in the Washington area at Homefinders.com, says she had a transaction once where the seller removed a crystal chandelier prior to closing. Her buyers noticed the switch during their pre-closing walk through, and ended up receiving a $2,500 credit for the missing chandelier.

Other agents share that some sellers try to swap in inexpensive fixtures, for example, for a higher priced one in the final hour. Others say they’ve had clients try to dig up plants and trees from the yard that they wanted to take with them when they moved. Mark Arlow of Keller Williams in Savannah, Ga., said he had a client who wanted to move the home’s front door with him. It was the door to the family farm where he had grown up.

“When they sold the farm, they kept the front door as a reminder of the farm, and now the door goes with them wherever they go,” Arlow said.

It’s hard to guess what sellers are planning on retaining from their home, so real estate professionals must have upfront conversations with sellers about what stays with the house. If home owners plan to take a certain fixture with them, they may be better off removing and replacing it prior to the home being listed.

After all, “when a seller starts keeping things that should stay with the house, I guarantee that the contract negotiations will be painful,” says Eve Alexander of Windermere Real Estate in Orlando, Fla.

Source: “Some Home Sellers Want to Take Everything, Including Kitchen Sink,” Los Angeles Times (Jan. 4, 2015)

Veterans Missing Out on Home Ownership?

Veterans Missing Out on Home Ownership? Image courtesy of stockimages / FreeDigitalPhotos.net

Military vets who fail to look into government programs could be leaving money on the table when they purchase a home, according to a new article published by the Los Angeles Times.

Loans guaranteed by the Department of Veterans Affairs potentially offer big savings, and can be a way for qualified military personnel to break into home ownership since they often don’t require a down payment. In the majority of places, vets can borrow up to $144,000 without making any down payment on their home purchase. The limit stretches higher in some places. For example, in Sacramento, Calif. the maximum that can be borrowed is $827,500, and it’s $546,250 in San Diego.

For buyers who do have to go above the limits, lenders typically require a down payment of $1 for every $4 borrowed over the limit. In other words, the Los Angeles Times article notes: If a vet is borrowing $200,000, he or she will most likely need $14,000 as a down payment in most markets.

The fear of paperwork may scare off some potential buyers who are eligible for VA loans. But, according to data from the Veterans Association of Real Estate Professionals, VA loans close up to two days faster than conventional mortgages.

The VA loan program is among the fastest-growing sectors in the mortgage market, according to Inside Mortgage Finance. The VA department owned nearly 25 percent of the primary insured-loan market, which outpaces the Federal Housing Administration. What’s more, the vet population is huge: Nearly 12 percent of 16.4 million active-duty service members and military vets with a mortgage have a VA loan, according to data from the National Association of REALTORS®.

Several states and local governments also offer vets assistance on home purchases. For example, the California Housing Finance Agency has a tax credit program that reduces buyer’s federal taxes, which thereby creates extra income to use toward the monthly house payment. In Arizona, compensation received by service members who are on active duty any month of the year is exempt from income taxes on those months’ income. Arizona also offers a property tax exemption for widows and widowers of vets, as well as disabled persons. Also, some counties offer special savings to vets too. For example, in San Diego, qualifying military personnel may be eligible for rehab loans to help pay for fixes to existing properties.  Military.com offers a state breakdown of financing options for veterans.

Source: “Sellers who Ignore VA Buyers Are Missing Out,” United Feature Syndicate/Los Angeles Times (Dec. 28, 2014)

Housing Markets Show Signs of Stabilizing

Housing Markets Show Signs of Stabilizing. Image courtesy of hywards / FreeDigitalPhotos.net

A greater number of housing markets are showing signs of normalizing, as 70 of the markets tracked by a Freddie Mac index now move to positive momentum.

Freddie Mac’s latest Multi-Indicator Market Index (MiMi) showed a reading of 74.5 nationwide, which still indicates a weak housing market overall but shows signs of improvement from September to October and an improvement year-over-year.

The index’s all-time high was set in June 2006 when it reached 122.5. Its lowest point was 60.3 in September 2011. Since then, the housing market has made a 23.5 percent rebound, Freddie Mac notes.

The index monitors the stability of the nation’s housing market using Freddie Mac and local market data to gauge the performance of single-family housing markets relative to a long-term stable range. The index tracks home purchase applications, payment-to-income ratios, on-time mortgage payments, and the local employment picture.

In October, 29 of the 50 states and 41 of the 50 metros tracked were showing an improving three-month trend.

“Housing markets continue to heal across the country with those hardest hit showing the biggest improvement,” Freddie Mac Chief Economist Frank Nothaft notes. “Low mortgage rates have helped, but we also need better household income growth. The employment picture needs to improve more to strengthen wage growth. The good news is we’re slowly starting to see this happen in areas like Denver, San Jose, Nashville, and Pittsburgh to name a few, where we’re also seeing better purchase application activity on a monthly basis.”

Thirteen of the 50 states, plus the District of Columbia, now have MiMi values in the stable range. The top five are: North Dakota, the District of Columbia, Montana, Wyoming, and Hawaii. Eight of the 50 metro areas tracked also have MiMi values in the stable range, led by San Antonio, Austin, Houston, Los Angeles, and Salt Lake City.

The states showing the most improvement in their housing markets year-over-year are: Nevada, Illinois, Florida, Rhode Island, and Colorado. On a metro level, the markets showing the largest year-over-year improvement are: Las Vegas, Chicago, Miami, Denver, and Riverside, Calif.

Source: Freddie Mac

‘Naughtiest, Nicest Housing Market’ List

‘Naughtiest, Nicest Housing Market’ List. Image courtesy of photostock / FreeDigitalPhotos.net

Researchers have been checking their lists, trying to find out which housing markets have been naughty or nice this year. RealtyTrac analyzed 334 U.S. cities with populations of at least 100,000 to compile lists of the nicest — those markets with some of the lowest crime rates and foreclosures, highest employment, and best school scores — and to fish out those that have been the naughtiest.

RealtyTrac’s analysis found that in the 10 “nicest” housing markets school scores were nearly twice the national average, crime rates were one-third the national average, and the unemployment rate was at an average of 4.6 percent. They also found that foreclosures were lowest — 24 foreclosures per 10,000 housing units.

The 10 cities that made RealtyTrac’s “nicest” list this year are:

1. Cary, N.C.
2. Fairfax, Va.
3. Pearland, Texas
4. Irvine, Calif.
5. Frisco, Texas
6. Sugar Land, Texas
7. Richardson, Texas
8. Katy, Texas
9. College Station, Texas
10. Fremont, Calif.

On the other hand, in the “naughtiest” cities this year, RealtyTrac found that school scores were one-half the national average; crime rates were nearly twice the national average, and the average unemployment rate was 7.8 percent. Milwaukee, Detroit, and Stockton, Calif., topped RealtyTrac’s list as the “naughtiest” this year.

Source: “The 10 Naughtiest and Nicest Housing Markets,” RealtyTrac (Dec. 18, 2014)

Home Sales Lost Momentum in November

Home Sales Lost Momentum in November. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Existing-home sales fell last month as housing supply showed signs of tightening, according to the National Association of REALTORS®’ latest housing report. Sales activity was choppy throughout the country, with all regions posting declines compared to a month earlier, NAR noted.

“Fewer people bought homes last month despite interest rates being at their lowest levels of the year,” says Lawrence Yun, NAR’s chief economist. “The stock market swings in October may have impacted some consumers’ psyche and, therefore, led to fewer November closings. Furthermore, rising home values are causing more investors to retreat from the market.”

Existing-home sales, which reflects single-family homes, townhomes, condos, and co-op sales, dropped 6.1 percent in November to a seasonally adjusted annual rate of 4.93 million. Sales are at their lowest annual pace since May. However, sales remain above year-over-year levels, up 2.1 percent compared to November 2013.

5 Stats to Gauge the Market

Here’s an overview of the latest housing data from NAR’s November report:

1. Home prices: The median price of an existing home for all housing types was $205,300 in November, which is 5 percent higher than a year ago. November marked the 33rd consecutive month of year-over-year price gains.
2. Single-family home and condo sales: Single-family home sales fell 6.3 percent to a seasonally adjusted annual rate of 4.33 million in November, down from 4.62 million in October. However, they remain 2.4 percent above the 4.23 million pace a year ago. Existing condominium and co-op sales fell 4.8 percent to a seasonally adjusted annual rate of 600,000 units in November, unchanged from a year ago.
3. Inventory levels: Housing inventory dropped 6.7 percent at the end of November to 2.09 million existing homes available for sale. That represents a 5.1-month supply at the current sales pace, which is unchanged from last month. Still, unsold inventory remains 2 percent higher than a year ago. “Lagging homebuilding activity continues to hamstring overall housing supply and is still too low in relation to this year’s promising job growth,” says Yun. “Much faster price and rent appreciation — easily exceeding wage growth — will occur next year unless new construction picks up measurably.”
4. First-time buyers: The share of first-time buyers rose to 31 percent in November, marking the highest share since October 2012. First-time buyers have averaged a 29 percent market share through most of this year. Fannie Mae and Freddie Mac’s new low-down-payment program, offering 3 percent down-payment loans, likely will improve access to credit for first-time buyers, says NAR President Chris Polychron. “The new program mitigates risk with strong underwriting and ensures that responsible buyers have access to safe and affordable mortgage credit,” Polychron says. “Furthermore, NAR believes lenders must do their part to ensure loans are prudently underwritten and are made available to qualified borrowers.”
5. Distressed sales: Foreclosures and short sales were mostly unchanged in November from October, remaining at 9 percent. Distressed sales made up 14 percent of all sales a year ago. Broken out in November, 6 percent of sales were foreclosures and 3 percent were short sales. Foreclosures sold for an average discount of 17 percent below market value in November, while short sales were discounted 13 percent.

Regional Breakdown

Here’s an overview of how existing-home sales performed across the country in November:

• Northeast: Dropped 4.2 percent to an annual rate of 680,000 but remain 4.6 percent above a year ago. Median price: $246,100, 1.3 percent above a year ago.
• Midwest: Fell 8.9 percent to an annual rate of 1.13 million and are 1.7 percent below November 2013. Median price: $160,500, up 7 percent from a year ago
• South: Decreased 3.2 percent to an annual rate of 2.09 million but remain 5 percent above November 2013. Median price: $176,500, up 5.2 percent from a year ago
• West: Fell 9.6 percent to an annual rate of 1.03 million but are 1 percent below a year ago. Median price: $292,700, 3.5 percent above November 2013

Source: National Association of REALTORS®

The Laptop-Powered Home?

The Laptop-Powered Home? Image courtesy of cuteimage / FreeDigitalPhotos.net

Research conducted by an IBM team may help keep discarded computer batteries out of landfills and give them a second life lighting homes.

A study based in India found that by taking apart used batteries, verifying and using working cells, and adding circuitry to allow charging and prevent overheating, they could create battery packs that could be distributed on a sustainable, low-cost basis. Homes in poorer or more rural areas could especially benefit, researchers said.

At least 70 percent of discarded batteries were able to power an LED light for a minimum of four hours per day for a full year, the researchers said.

According to Gizmag.com, which reported on the study, the Environmental Protection Agency estimates that about 50 million laptop and desktop PCs are discarded each year, many with working batteries.

Refurbished batteries were given to street vendors in Bangalore, who reported back that the LED lights had exceeded expectations. CFL bulbs lasted for a shorter time, however.

With the idea shown to be viable, work will start on streamlining the devices into a prototype, Gizmag reports.

Source: “Discarded laptop batteries could be used to power homes,” Gizmag.com (Dec. 9, 2014)

8 Things People Say Their Homes Don’t Have

8 Things People Say Their Homes Don’t Have. Image courtesy of imagerymajestic / FreeDigitalPhotos.net

The majority of Americans say they are living in less-than-ideal housing and neighborhoods. The Demand Institute recently polled more than 10,000 households — both renters and home owners — across income levels to find their top unfulfilled housing needs and desires.

“The biggest overarching thing is that when it comes to their homes, there are still a lot of things that Americans want to improve,” says Jeremy Burbank, vice president of the The Demand Institute, about its report, “The Housing Satisfaction Gap: What People Want But Don’t Have.” “There’s a desire for things like more space, privacy, and safe neighborhoods that are often attributed to single-family homes and ownership.”

According to the households polled, here’s what they don’t have that they wish they did:

Energy efficiency: Seventy-one percent of respondents ranked it as important, but only 35 percent are satisfied with their current home’s energy efficiency. Utility costs are rising, and Americans’ spending on electricity has surged 56 percent since 2000. More home owners are seeking ways to lower their utility costs. Energy-use monitors, smart home thermostats, high-efficiency appliances, and greater smart-home technology may pave the way for change in this area.

Renovation-ready: More than three-quarters of households say their homes require repairs. The recession caused many home owners to delay major projects. The top five major home-improvement jobs identified among households are painting; replacing carpet/flooring; remodeling a bathroom; remodeling a kitchen; and replacing windows and doors.

Updated kitchens and finishes: Many households say their kitchens could use an upgrade. Sixty-two percent of households say an updated kitchen with modern appliances and fixtures is important; only 38 percent are satisfied with their current home’s kitchen.

Accessibility: Americans have more needs for accessibility features in their homes that will allow them to age in place. Seventy-six percent of Americans surveyed believe a home they can stay in as they get older is important, but only 53 percent think their home meets that criteria. Baby boomers are increasingly interested in single-story homes, but they aren’t necessarily interested in slimming down the home’s square footage, Burbank notes.

Affordability: One in five Americans surveyed say they are unsatisfied with the cost of their current living situation. Twenty-six percent of owners and 40 percent of renters are spending more than 30 percent of their income on housing expenses. Eighty-one percent say it’s important that their housing costs fit their budget without requiring sacrifices. However, 60 percent say they’ve achieved this, while the rest say they do have to make sacrifices to afford their home. “There’s certainly a well-documented shortage of affordable housing, particularly when it comes to renters, and the situation is only getting worse,” says Burbank.

Safety: Twenty-two percent of those surveyed say they’re unsatisfied with the safety in their current home. About one-fifth of that group — most of whom live in non-urban areas — say they feel their neighborhood has become less safe in recent years. Home security systems and other technology may be the key to providing home owners with more peace of mind, Burbank says.

Privacy: More households desire privacy from their neighbors. Sixty-three percent consider privacy important, but only 42 percent say they’re satisfied with their current home’s privacy.

Greater storage: Nearly half of people planning to move say they want more space than they have in their current home. A home with ample storage space is an important feature households identified, and it’s one of the key reasons they want to renovate, too. Fifty-five percent of households say a home with storage space is important, but only 35 percent are currently satisfied with their home’s storage space.

Source: “The Housing Satisfaction Gap: What People Want, but Don’t Have,” The Demand Institute (2014) and “Can’t Get No Satisfaction: Americans’ Top Unmet Housing Needs,” Builder Online (Dec. 12, 2014)