So just how long does a Foreclosure take?

So just how long does a Foreclosure take?In Idaho, from the time of the official Notice of Default, it must by law be a minimum of 120 Days until the trustee sale.  How long from when you quit making payments do you receive a Notice of Default?  That varies greatly between lenders and even within lenders. It can be 45 days to years, literally years. Most are more likely in the 90 to 120 days time frame. Today I am including a graphic that shows the national average nationally by state of foreclosure time frames.

Homeownership as an Investment

Homeownership as an Investment Posted: 12 Dec 2012 04:00 AM PST   In Real Estate: Today’s Golden Opportunity we compared the current housing market to the market for gold about a decade ago. Some commented on the fact that you can’t compare gold to real estate as an investment as gold is a very liquid asset and it would take more time and effort to sell a house. We were not trying to make the case for real estate vs. gold as an investment in our blog. We were just showing that all investments go through cycles and that the best time to buy any investment may be when everyone is saying not to. However, since the subject of comparing real estate to other investments has come up, let’s take a closer look. There are two major advantages to investing in a home of your own rather than another option: You Can’t Live in Your IRA When you buy your own home you are not taking available dollars away from another investment. You are replacing one housing expense (rent) which has no potential for a return on investment with another (mortgage payment) that does give you an opportunity for a return. We realize that there has been research showing that over the last 30 years renting has been less expensive than owning. That research also says that if you invested the entire difference between the rent payment and mortgage payment you may have done better financially.  There are two challenges with this conclusion: Today, in the vast majority of the country, renting is actually more expensive than owning a home. History has proven that tenants DO NOT invest the difference in their rent and mortgage payments. Today,studies show that owning a home is no more expensive than renting a home. However, even if this wasn’t the case, history shows that owning a home creates greater wealth. Paying a mortgage creates what financial experts call ‘forced savings’. The Joint Center for Housing Studies at Harvard University released a study last year titled America’s Rental Housing: Meeting Challenges, Building on Opportunities. In the study, they actually quantified the difference in family wealth between renters and homeowners: “[R]enters have only a fraction of the net wealth of owners. Near the peak of the housing bubble in 2007, the median net wealth of homeowners was $234,600—about 46 times the $5,100 median for renters. Even if homeowner wealth fell back to 1995 levels, it would still be 27.5 times the median for renters.” There Are Tremendous Tax Advantages to Investing in a Home There is no doubt that selling an investment such as gold is easier than selling your home. However, this liquidity comes at a price. The price is called capital gains. That is the tax you pay on any financial gain you receive from the investment. This tax doesn’t apply the same way when you sell your primary residence: Theresa Palagonia, a CPA and the Accounting Manager for the firm G.S. Garritano & Associates, was good enough to explain the Home Sale Exclusion Rules: “You may qualify to exclude from your income all or part of any gain from the sale of your main home. Maximum Exclusion You can exclude up to $250,000 of the gain on the sale of your main home if all of the following are true: You meet the ownership test. You meet the use test. During the 2 year period ending on the date of the sale, you did not exclude gain from the sale of another home. If you and another person owned the home jointly but file separate returns, each of you can exclude up to $250,000 of gain from the sale of your interest in the home if each of you meets the three conditions listed above. You may be able to exclude up to $500,000 of the gain on the sale of your main home if you are married and file a joint return and meet the requirements. (Special rules apply for joint returns.) Ownership and Use Tests During the 5 year period ending on the date of the sale, you must have: Owned the home for at least 2 years, and Lived in the home as your main home for at least 2 years Certain exceptions exist in which you may qualify for the exclusion without satisfying the tests listed.” Bottom Line Every investment has pros and cons. That is why there is such an assortment of great opportunities. Real Estate has been, is and always will be one of those opportunities.

 

 

Was 2012 a Better Year for Real Estate Than 2011?

ABSOLUTELY!  Yesterday I ran an article on our Ada County statistics. Following is a graph showing pending home sales nationally. Real estate sales continue to climb, and with interest rates around 3.5% and prices starting to increase, why not?!?

From KCM Blog

There are still those questioning whether the housing market is truly making a comeback. We have decided to graph home sales over the last two years based on the National Association of Realtor‘sPending Home Sales Report. We believe the graph removes all doubt.



The methodology for the report as per NAR:

“The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.”

 

Ada County Recovery Continues!

Sales in November 2012 were 562 in Ada County, an increase of 14% compared to November 2011.   Year-to-date sales are 6,468; 15% over the first eleven months of 2011. Dollar volume for November was up 34% to $119Mil. For the year we are at $1.3Billion! New homes sold in November increased 65% over new homes sold in November of 2011!!…and are up 67% YTD. Historically, November sales decrease by 9% from October. November 2012 sales decreased by 11% from October 2012. Of our total sales in November… 24% were distressed (151 total sales)….up 1% from October 2012. In November 2011, 48% of our sales were distressed.  In January 56% of distressed properties were REOs and 44% were short sales.  In November the ratio was 63% short sales (84 total sales) and 37% REOs (49 total sales). In September 2012 our REO activity fell to 29% of distressed sales (lowest in several years).  October REO activity increased to 42% of distressed sales and then fell back to 37% in November. This ratio to short sales is what we were looking at last summer.  The difference is that overall distressed activity is lower than it was; resulting in fewer distressed transactions. This is eight consecutive months with short sales being the larger percentage of distressed properties sold. Pending sales at the end of November were 838; down 16% from October. In general pending sales in May are the highest of the year; and June the second highest.  The percentage of pending sales in distress increased 2% from October, totaling 29% overall. There has been very little fluctuation in this number since May 2012 when we first went below 30%. A year ago we were averaging close to 50% of pendings in distress; but have decreased steadily since January.  Of Pending sales in distress, short sales outnumbered REO’s 2.6 to 1. At the end of November, we had 12% more sales pending than at the end of November 2011. November median home price was $174,400; up 19% from November 2011. Median home price is up 28.5% since January of this year and above $170,000 for seven months running.  We continue to outpace our national recovery; according to NAR’s most recent report. New Homes median price for November was $249,950; up 16% from November 2011. The number of houses available at the end of November decreased 5% from October. At the end of November our total active inventory was 1,865 homes; the lowest since December 2001. This is 14% less than last year at this time. At the same time, the percentage of distressed active listings increased 2% to 26%. This number has increased the last two consecutive months. We have been hovering between 33% and 36% for the last year. We remain well below the 40% levels set last spring….when we were on the increase. With an inventory increasing and the percentage of distressed inventory holding steady; median home price will continue to strengthen. Of our Distressed Inventory 88% is Short Sales (425 homes) and only 12% is REO (69 homes); nearly unchanged from last month. Available inventory declined in all price points; except for a net gain of three houses in the <$120,000 price. In Ada County we now have less than 3.1 months of inventory on hand. The price category in shortest supply is < $159,999 where we have 2.4 months. All price points up to $400,000 have less than 4 month’s supply. We have benefited for nearly two years from inventory levels much lower than national average. Multiple offers are much more prevalent; now becoming the norm. Based on November sold data, our most desirable price point is $120,000 to $160,000 which was 25% of total sales. The next largest price point sold is $160,000 to $200,000 at 14% of all sales.

 

Get the Price right at the start!

I talk about this on every listing appointment I go to, it is critical to price your home right from the start.  I can not count how many times I have heard: "We can always go down but we can't go up."  Very true, but if you start too high you often will indeed go lower, lower than you would have if you had started more accurately. If you thinking about selling your house, call me, price it right and get a better return!

With the housing market showing signs of a recovery, sellers may think they can list their homes at a higher price and adjust if necessary. That may not be a good strategy. This is a post we ran last year by Ken H. Johnson, Ph.D. — Florida International University (FIU) and Editor of the Journal of Housing Research. To view other research from FIU, visit http://realestate.fiu.edu/. - The KCM Crew

The Research

Are there any negative effects from changing the listing price of a property?  This question haunts Brokers/Agents as well as sellers of property every day.  At present, there does not seem to be a consensus answer to this question within the professional real estate community.  Fortunately, this question was scientifically investigated by John R. Knight. Unfortunately, few know the results of Professor Knight’s research.

In Knight, the impact of changing a property’s listing price is investigated.  Additionally, the types of property that are most likely to experience a price change are also estimated.  The findings from this research indicate that, on average, properties which experience a listing price change take longer to sell and suffer a price discount greater than similar properties.  Furthermore, bigger price changes are found to experience even longer marketing times and greater price discounts.  Finally, as for which properties are most likely to experience a price change, Knight finds that the greater the initial markup; the higher the likelihood that any given property will experience a listing price change.

Implications for Practice

Sellers as well as Brokers/Agents should therefore be aware of the critical necessity of getting the price correct from the start.  Sellers wanting to over list will ultimately take longer to sell and will sell their property for less, on average, according to Knight.  Brokers/Agents’ desire to take a listing and get the price right later will ultimately lead to their working harder according to Knight, and they are not doing their sellers any favors.  Thus, an initial and detailed analysis of the proper price is much more critical than many originally thought.

Interestingly, I have found in my own research that the direction (up or down) of the listing price change does not matter.  A listing price increase and decrease both lead to similar results found in Knight’s work – longer marketing times and lower prices.  Therefore, get the price right from the beginning.  It is best for all.

 

Five Reasons to BUY NOW!

Based on prices, mortgage rates and soaring rents, there may have never been a better time in real estate history to purchase a home than right now. Here are five major reasons purchasers should consider buying: Supply Is Shrinking With inventory declining in many regions, finding a home of your dreams may become more difficult going forward. There are buyers in more and more markets surprised that there is no longer a large assortment of houses to choose from. The best homes in the best locations sell first. Don’t miss the opportunity to get that ‘once-in-a-lifetime’ buy. Price Increases Are on the Horizon Prices were expected to bounce along the bottom this winter. However, many pricing indices (examples:CoreLogic, FHFA, LPS, Case Shiller) are reporting that prices are continuing to rise. Rents Are Skyrocketing Rents historically increase by 3.2% on an annual basis. A study issued earlier this year projects rent increases of 4% for the next two years. Trulia recently reported that rents this year have actually shot up by 5.4%. Interest Rates Are Projected to Rise The Mortgage Bankers Association has projected that the 30-year mortgage interest rate will be 4.4% by the end of 2013. That is an increase of approximately one full point over current rates. Buy Low, Sell High We would all agree that, when investing, we want to buy at the lowest price possible and hope to sell at the highest price. Housing can create family wealth as long as we follow this simple principle. Today, real estate is selling ‘low’. It’s time to buy.

 

October market report in pictures…things are heating up

Today is a recap of yesterday's numbers in picture form. Which do you prefer?

Thanks to Mac Lebowitz of the Ada County Association of Realtors!

Ada County, End Of Year Sales Really Kicks In…

Yesterday I posted a combined report for Ada and Canyon counties from Pioneer Title Company. This morning is amore detailed report of Ada County.

by Marc Lebowitz, RCE, CAE

ACAR Executive Director

Sales in October 2012 were 631 in Ada County, an increase of 17% compared to October 2011.   Year-to-date sales are 5,895; 10% over the first nine months of 2011.

Dollar volume for October was up 39% to $132Mil. For the year we are at $1.177Billion!

New homes sold in October increased 91% over new homes sold in September of 2011!!…and are up 67% YTD.

Historically, October sales decrease by 7% from September. October 2012 sales increased by 12% from September 2012.

Of our total sales in October… 24% were distressed (151 total sales)….up 3% from September 2012. In October 2011, 45% of our sales were distressed.  In January 56% of distressed properties were REOs and 44% were short sales.  In September the ratio was 71% short sales (79 total sales) and 29% REOs (32 total sales). In October something interesting happened…Short sales fell from 71% to 58% (87 total sales) of total distressed transactions while REO’s increased from 29% to 42% (64 total sales) overall. Although not a large raw number, it represents an increase of REO activity and is something to watch. This is eight consecutive months with short sales being the larger percentage of distressed properties sold.

Pending sales at the end of October were 992; down 11% from September. In general pending sales in May are the highest of the year; and June the second highest.  The percentage of pending sales in distress decreased 1% from September, totaling 27% overall. There has been very little fluctuation in this number since May 2012 when we first went below 30%. A year ago we were averaging close to 50% of pendings in distress; but have decreased steadily since January.  Of Pending sales in distress, short sales outnumbered REO’s 2.7 to 1.

At the end of October, we had 22% more sales pending than at the end of October 2011.

October median home price was $178,000; up 19% from October 2011. Median home price is up 29% since January of this year and above $170,000 for six months running.  We continue to outpace our national recovery; according to NAR’s most recent report.

New Homes median price for October was $241,979; up 16% from October 2011.

The number of houses available at the end of October decreased 7% from September. At the end of October our total active inventory was 1,962 homes. This is 14% less than last year at this time.

At the same time, the percentage of distressed active listings increased 1% to 24%. This is the second lowest number we’ve seen in several years. We have been hovering between 33% and 36% for the last year. We remain well below the 40% levels set last spring….when we were on the increase.

With an inventory increasing and the percentage of distressed inventory decreasing; median home price will continue to strengthen.

Of our Distressed Inventory 90% is Short Sales (392 homes) and only 10% is REO (47 homes); nearly unchanged from last month.

Available inventory declined in all price points.

In Ada County we now have less than 3.3 months of inventory on hand.

The price category in shortest supply is < $159,999 where we have 2.3 months. All price points up to $400,000 have less than 4 month’s supply. We have benefited for nearly two years from inventory levels much lower than national average.

Multiple offers are much more prevalent; now becoming the norm.

Based on October sold data, our most desirable price point is $120,000 to $160,000 which was 23% of total sales. The next largest price point sold is $160,000 to $200,000 at 15.4% of all sales.

 

THE PTC INDEX FOR ADA AND CANYON COUNTIES

This index provided by Pioneer Title provides an excellent snapshot of out real estate market here in the Boise-Nampa Metro area.

The PTC Index is a monthly measurement of the vibrancy of the Treasure Valley real estate market. Based on a custom weighted algorithm, it combines nine critical measurements of the real estate market into a single, useful number: the PTC Index. To give you some perspective, when the market was at its most active point in 2005, the PTC Index average would have been 225. In January of 2010 we reached a low of 28. Though times have changed, the need for this data is greater than ever.

Typically, the Treasure Valley real estate market shows signs of slowing down ahead of the winter months in October but this year October has been distinctive. Building permits are up 11% from the month prior, while new home sales making gains of nearly 25% during the same time period. In the year ago time frame, existing home sales are holding steady with gains of 8.1% over Sept 2012. As expected, refis are still making gains; October's refinances are up 26.5% from the month prior. The average sales price in the Treasure Valley rose a bit to $165,155, up 20.6% from a year ago. Notices of default and distressed properties ticked down from September by 3.6% and 12.1%, respectively.

Filter Results January 2009 February 2009 March 2009 April 2009 May 2009 June 2009 July 2009 August 2009 September 2009 October 2009 November 2009 December 2009 January 2010 February 2010 March 2010 April 2010 May 2010 June 2010 July 2010 August 2010 September 2010 October 2010 November 2010 December 2010 January 2011 February 2011 March 2011 April 2011 May 2011 June 2011 July 2011 August 2011 September 2011 October 2011 November 2011 December 2011 January 2012 February 2012 March 2012 April 2012 May 2012 June 2012 July 2012 August 2012 September 2012 October 2012

October 2012

Building Permits	237
New Home Sales	195
Existing Home Sales	706
Refinance	2050
Average Sales Price	167550.5
Financial-Bond Market(10-yr Treasury)	1.75
Days on Market	64.5
Distressed(Short Sales and REO)	2112
Notices of Default	298
PTC Index	266

All I can say is WOW!

Will the Mortgage Forgiveness Act Be Extended?

This is a big question for anyone still facing foreclosure or considering a short sale.  I hope Congress can get it together long enough to at least handle this critical issue.

The Mortgage Forgiveness Debt Relief Act of 2007 is set to expire at the end of the year. The act allows taxpayers to be excluded from paying taxes on forgiven debt in certain situations. As their website explains:

“The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.”

The act also applies to debt forgiven in a short sale. The big question is whether or not Congress will extend it past the December 31st deadline. Forty-one state attorneys general signed a letter urging Congressional leaders to extend the act. In the letter, it is explained:

“Each of our offices receives calls every day from homeowners trying to save their homes or struggling to recover from losing their homes…Congress must act. We urge you to extend the existing exclusion of forgiven or cancelled mortgage debt from taxable income under federal law before it expires at the end of this calendar year.”

The push is on to get an extension. Here are the current bills in Congress:

• U.S. House of Representatives: Resolution 4336 and Resolution 4202


• Senate: Senate Bill 2250

Whether Congress will act in time to extend the act before its expiration is anyone’s guess.