Stigmatized Properties Can Offer Big Bargains.

Stigmatized Properties Can Offer Big Bargains

Home buyers who can stomach some misfortune in a home’s past may be able to find big discounts. For example, buyers can expect to pay 10 percent to 25 percent off the regular market home price for Stigmatized Properties, according to real estate consultant Randall Bell of Bell Anderson & Saunders. And depending on how bad the crime was that occurred at the home, the more a home buyer can expect in discount to the price.

“In large, it all comes down to finding the right discount to entice a buyer to accept the Stigmatized Properties along with its tainted history,” Bell told AOL Real Estate.

But for some, the crime that happened may be too much to stomach, regardless of the big discount. Some buyers worry about the resale value and what others will think too. Also, homes where crimes took place tend to linger on the market from two to seven years longer than they would without a tainted past, according to Bell.

For example, a Southern California mansion that was the place where 39 cult members from Heaven’s Gate killed themselves sold for $668,000 two years following the suicides, which was less than half of the $1.6 million list price before the suicides occurred. Also, the home where O.J. Simpson’s ex-wife Nicole Brown Simpson and her friend Ronald Goldman was killed lingered on the market for two years before selling for $590,000—$200,000 less than the initial asking price.

However, some buyers say they are willing to overlook a home’s shady past. “It may have a terrible history,” says Chris Butler, who purchased a split-level ranch nestled in a forest in Akron, Ohio, that once belonged to serial killer Jeffrey Dahmer and was the site of Dahmer’s first murder. “But the house didn’t kill anybody.”

Source: “Jeffrey Dahmer, Andrea Yates, the Lemp Family: Life Inside Homes Where Grisly Deaths Took Place,” AOL Real Estate (Aug. 2, 2012)

Mortgage Rates Inch Up After Record Streak.

Mortgage Rates Inch Up After Record Streak

Following a 13-week record-low streak, 30-year Mortgage Rates—the most popular choice among home buyers—started moving back up this week, according to Freddie Mac’s weekly mortgage market survey. The average 30-year mortgage had dropped or matched record lows in 13 of the last 14 weeks. But this week, mixed economic news prompted mortgage rates to rise higher.

“Recent announcements of additional debt relief for the Eurozone and mixed domestic economic indicators added upward pressure on Treasury yields as well as mortgage rates this week,” says Frank Nothaft, Freddie Mac’s chief economist.

Here’s a closer look at how mortgage rates fared for the week ending Aug. 2:

• 30-year fixed-rate mortgages averaged 3.55 percent, with an average 0.7 point, up from last week’s all-time record average of 3.49 percent. A year ago at this time, 30-year rates averaged 4.39 percent.
• 15-year fixed-rate mortgages averaged 2.83 percent, with an average 0.6 point, also edging up from its all-time low posted last week of 2.8 percent. Last year at this time, 15-year rates averaged 3.54 percent.
• 5-year adjustable-rate mortgages averaged 2.75 percent this week, with an average 0.6 point, up slightly from last week’s 2.74 percent average. Last year at this time, 5-year ARMs averaged 3.18 percent.
• 1-year ARMs averaged 2.7 percent this week, with an average 0.4 point, dropping from last week’s 2.71 average. A year ago, 1-year ARMs averaged 3.02 percent.

Source: Freddie Mac

Home Ownership Unswayed.

Eighty-five percent of Americans say they prefer home ownership over renting, according to a newly released Fannie Mae national housing survey of more than 12,000 interviews from 2011. The study finds that the housing and financial crisis has not been a big factor in Americans’ decisions to rent or buy.

“The non financial benefits that people derive from the consumption of housing mitigate the negative financial experiences that many home owners have had,” says Steve Deggendorf, one of the authors of the study.

Instead, “for a large number of people, emotions rule. We need to think about how they approach the housing decision and think about the kind of help that they may need [in the process].”

The researchers note that it’s important to help Americans take a more conscious approach in their Home Ownership decisions, assisting them to better balance their “wants” in a home with what they can actually afford. The researchers add that buyers’ emotions often lead them to ignore their practical ability to buy a home at all.

“Our study shows that the negative housing events of the past few years have not discouraged people from wanting to own a home,” according to the study. “Exposure to mortgage default, perceived home value appreciation/depreciation, and self-reported underwater status are not significant factors in the models in predicting individuals’ intentions for Home Ownership for their next move.”

Instead, 33 percent of current renters say demographics like employment, age, income and marital status are important drivers for them on whether they will continue to rent or purchase a home. Only 25 percent of those surveyed cited financial attitudes as having an impact on their next housing decision.

Source: “People Still Want to Buy Homes: Fannie Mae,” HousingWire (Aug. 2, 2012)

First Time Home Buyers Make Up Smaller Share of Buyers.

First Time Home Buyers Make Up Smaller Share of Buyers

The share of First Time Home Buyers on the market is falling to historical lows, despite record levels of housing affordability. With record low mortgage rates and falling home values, many would expect First Time Home Buyers to be flooding the market for their chance to get part of the American dream.

However,  the number of First Time Home Buyers is shrinking, falling in May and June, even as the housing market shows signs of picking up. According to National Association of REALTORS® housing data, 32 percent of buyers in June purchased their first home. Yet, the historical average tends to be 40 percent.

Meanwhile, investors offering all-cash deals for properties is soaring, prompting some analysts to point the finger at cash investors for increasingly shutting out First Time Home Buyers in the market.

Investors, with their attractive cash bids, have been flooding the market with purchases of entry-level homes and foreclosures, while the home buyers continue to struggle to secure financing from banks’ tightened lending standards as well as save for a down payment.

Source: “First-time Buyers Slipping as Share of Home Sales,” The Oregonian (July 30, 2012)

Mortgages, Home Improvement Top Consumer Gripes.

Mortgages, Home Improvement Top Consumer Gripes

When it comes to mortgages and home improvement, many consumers have some complaints, according to a new survey by the Consumer Federation of America, which reveals the top consumer complaints of last year.

Among its list of 2011 top “worst” consumer gripes: mortgage-related problems, home improvement, timeshare sales and resales, Internet sales, and fraud.

Many of the mortgage complaints stem from the foreclosure crisis and home owners who owe more on their loans than their homes are currently worth, according to the study.

Home improvement and construction complaints remain a top complaint in the latest survey, mostly centered around “shoddy work” or “failure to start or complete the job,” according to the study. Consumers also complained about a surge in telemarketing and mail solicitations for home repairs “disguised as offers to perform free energy audits.”

Landlord and tenant complaints mostly centered on “unhealthy or unsafe conditions, failure to make repairs or provide promised amenities, deposit and rent disputes, and illegal eviction tactics,” according to the report.

Other real estate-related complaints involved timeshare sales and resales, retirement communities and assisted living facilities, and real estate fraud.

Source: Consumer Federation of America

Housing Market Lifts Off From the ‘Bottom’.

Housing Market Lifts Off From the ‘Bottom’

Recent Housing Market indexes have shown single-family home prices are on the rise, providing more evidence that the “bottom” of the market is already behind.

“We’re wiping out just about all of the decline,” Joel Naroff, chief economist at Naroff Economic Advisors, told NBC.com about recent Housing Market data showing home prices inching up. “It indicates the market has turned the corner on the pricing side.”

Some recent Housing Market indexes suggest that the “bottom” of the market was reached in January 2012. Since that time, housing prices have been picking up in many housing markets.

But “the turnaround in home prices was unexpected,” says Patrick Newport, an economist with IHS Global Insight. “The conventional wisdom in February, following that landmark agreement [of the $26 billion mortgage settlement with the nation’s five largest banks], was that we would see a surge in foreclosures of some size that would lead to lower home prices. This surge never materialized and home prices have turned.”

Newport points to several signs of a housing market on the mend. For one, housing starts are up, after reaching a low in the fourth quarter of 2011. Also, he says the FHFA monthly House Price Index shows a 3.7 percent increase in May year-over-year, which he notes is higher than inflation and “means that real housing wealth, a consumer spending driver, was also up.”

The increase in home prices is also leading to a fewer number of home owners who are underwater on their mortgages, owing more on their mortgage than their home is currently worth. The number of underwater home owners fell from 12.1 million at the end of 2011 to 11.4 million at the end of the first quarter this year, according to CoreLogic data.

Source: “Evidence Mounts that Home Prices Hit Bottom Last Winter,” NBC News (July 31, 2012)

Short Sale Rush Is On…

Short Sale Rush Is On

Housing experts are predicting a drastic rise in short sale of homes, with an all-time high expected to be reached this year.

The number of short sale on homes has already risen 25 percent during the first quarter year-over-year, according to RealtyTrac data.

Banks are realizing that short sale of homes can be more profitable than letting homes slip into foreclosure, so they are becoming more willing to do them. Some banks are reportedly offering home owners up to $45,000 to agree to do a short sale.

“We’re seeing a rush already,” Daren Blomquist of RealtyTrac told Reuters. “There was a big increase on the short sale of homes in the first quarter and we’re expecting that to continue.”

The Obama administration is also pushing for banks to do more short sale on homes, and new government initiatives are no longer including the loan amount forgiven on a short sale to be counted as taxable income under federal law — but that will expire at the end of this year, Reuters reports.

Source: “Prepping for the Summer Wave of Short Sales,” Reuters (July 25, 2012)

Home Ownership Rates Are Highest…

Home Ownership Rates Are Highest…

The national home ownership rate has held mostly steady this year, standing at 65.5 percent for the second quarter, according to recent U.S. Census Bureau data. The rate is 0.4 percentage points lower than the second quarter of 2011, but 0.1 percentage point higher than the first quarter of this year.

The home ownership rate has steadily fallen over the last few years since last peaking in the first quarter of 2005 at 69.1 percent.

Home ownership rates are highest in the Midwest at 69.6 percent whereas home ownership rates are the lowest in the West, at 59.7 percent, according to the Census data.

Here’s a closer look at the home ownership rate among different demographics, according to the second quarter U.S. Census Bureau housing data:

• The home ownership rate is highest at 81.6 percent for those ages 65 years and over.
• The home ownership rate is lowest at 36.5 percent for those who are under 35 years of age.
• Non-Hispanic whites have the highest home ownership rates among the races at 73.5 percent, while the Hispanic home ownership rate was 46.5 percent and 43.8 percent for African Americans in the second quarter.

Source: U.S. Census Bureau