Household Formation to Outpace Apartment Boom

Household Formation to Outpace Apartment Boom, Image by jscreationzs & FreeDigitalPhotos.net

A big growth in new household formation is expected to drive up housing starts in the new year that will outpace the apartment boom, according to forecasts by Freddie Mac’s Chief Economist Frank Nothaft.

Nothaft is forecasting a net growth of 1.2 to 1.25 million new Household Formation in 2013 that will provide a big boost to housing starts next year. That expected growth also will likely drive down apartment vacancy rates to 10-year lows and outpace the boom in new apartment construction, Nothaft says.

Unemployment is expected to improve slightly in 2013 and the job and income gains will help jump-start more household formation, according to Nothaft. Also, more adult children who took up residence in their parents’ homes are expected to move out next year, helping to increase household formation.

“The last few months have brought a spate of favorable news on the U.S. housing market with construction up, more home sales, and home-value growth turning positive,” Nothaft says. “This has been a big change from a year ago, when some analysts worried that the looming ‘shadow inventory’ would keep the housing sector mired in economic depression. Instead, the housing market is healing, is contributing positively to GDP and is returning to its traditional role of supporting the economic recovery.”

Source: “Freddie Mac Economist Sees New Households Outpacing Apartment Boom,” RISMedia (Dec. 15, 2012)

Incentives Still Help Seal Deals, Builders Say

Incentives Still Help Seal Deals, Builders Say, Image by Stuart Miles & FreeDigitalPhotos.net

While home buying has picked up, some builders say reluctant buyers may need an extra push to get moving. Some developers are offering up incentives or discounts paid by the developer at closing to help speed up deals, finish out housing projects, and sell hard-to-unload homes.

“[Incentives] can get buyers across the finish line,” says Eric Benaim, the chief executive of the brokerage Modern Spaces.

For example, developers with Benaim—a Long Island City, Queens project in New York—are offering buyers a credit equal to 6 percent of the unit’s cost for completing a purchase. The credit can be applied only to closing costs.

Other incentives may come in the form of offers to pay for transfer taxes and lawyer fees. Or some developers are creating special program incentives, such as Douglas Elliman in New York’s “1-1-1 buydown” program—which pays the equivalent of one point of a buyer’s mortgage interest rate for the first three years. For some three-bedroom units in a development, that could mean a more than $10,000 savings to a home buyer.

Incentives may take money out of developers’ pockets, but “you would spend the money on advertising anyway,” says Brian Meier, a Douglas Elliman broker.

Source: “Some Buildings Find Buyers Need a Nudge,” The New York Times (Dec. 16, 2012)

Fed Plans to Keep Interest Rates Low

Fed Plans to Keep Interest Rates Low, Image by renjith krishnan & FreeDigitalPhotos.net

The Federal Reserve announced Wednesday that it plans to keep interest rates low as long as the unemployment rate is above 6.5 percent. This was the first time that the Fed has ever identified an exact unemployment rate to be reached before it plans to raise interest rates.

To push rates lower, the Fed will continue to buy $85 billion in Treasury securities and mortgage-backed securities each month until the unemployment rate improves.

Since December 2008, the Fed has held short-term interest rates near zero. The move has helped reduce borrowing costs and helped mortgage rates reach all-time lows.

Many of the Fed’s senior officials say they do not expect the unemployment rate to reach 6.5 percent until the end of 2015.

In November, the unemployment rate was 7.7 percent. The last time it was below 6.5 percent was September 2008.

Source: “Fed Ties Rates to Joblessness, With Target of 6.5%,” The New York Times (Dec. 12, 2012)

The Best Buyers’ Market Is …

The Best Buyers’ Market Is …, Image by phanlop88 & FreeDigitalPhotos.net

Chicago is the top housing market for home shoppers, according to recent rankings of 30 of the largest U.S. metro areas released by Zillow. This is the second year in a row the Second City has nabbed the top spot.

To arrive at its rankings, Zillow analyzed selling prices versus list prices, the number of days a listing appeared on its web site, and the percentage of homes in a market with a price reduction.

Here are some of the top markets for home buyers, according to Zillow’s list:

1. Chicago
2. Cleveland
3. Philadelphia
4. Cincinnati
5. New York, N.Y.
6. Pittsburgh
7. Baltimore, Md.
8. St. Louis, Mo.
9. Columbus, Ohio
10. Charlotte, N.C.

Meanwhile, the top housing market for sellers is San Jose, Calif., according to Zillow.

Source: “The Top Buyers’ and Sellers’ Markets for American Homes,” Business Insider (Dec. 12, 2012) and “Chicago Again Named Best Housing Market — for Buyers,” Chicago Tribune (Dec. 12, 2012)

Blogging Mistakes to Avoid for Real Estate Agents

Blogging Mistakes to Avoid for Real Estate Agents, Image by Stuart Miles & FreeDigitalPhotos.net

Many real estate professionals have blogs to help them reach out to new customers and establish credibility and expertise. But if you’re not careful, blogging could hurt your brand — not help it.

Forbes recently highlighted some of the following common blogging mistakes to avoid:

• Not posting on a schedule or frequently. “Posting sporadically can impact how well your blog ranks in search engines, but can also hurt readership numbers, as visitors may think you stopped posting and never return,” according to the Forbes article.
• Not Using Google+. While the social network has been dubbed a “ghost town” by some, it may be able to help increase your blog’s readership and appear higher in the search rankings. Share your blog posts on Google+ and also use Google’s authorship feature, the Forbes article recommends.
• Failing to use images. “A lack of images impacts how a blog post looks when shared on social platforms,” according to the Forbes article. “Using images also helps keep readers engaged on a blog post by providing visual and psychological breaks, which are especially useful for longer posts.”

Read more about how to counter common blogging mistakes at Forbes.

Source: “6 Blogging Mistakes Your Business Should Avoid,” Forbes (Dec. 11, 2012)