Pending Home Sales Down

Pending home sales declined in September for the fourth month in a row, a signal to expect lower home sales this quarter and a flat trend going into next year, a trade group said Monday.

The pending home sales index, a forward looking indicator, fell 5.6% to 101.6 in September from a downwardly revised 107.6 in August and is 1.2% below last year's level, the National Association of Realtors says.

That the index is lower than last year marks the firs time that's occurred in 29 months, NAR says.

"This tells us to expect lower home sales for the fourth quarter," says Lawrence Yun, NAR chief economist. Even so, he expects prices to continue to rise, but at a slower pace -- echoing expectations of many housing watchers and other economists.

Higher mortgage interest rates and home prices curbed consume buying power, NAR says. The government shutdown also played a role, as government and contract workers were on the sidelines.

 

Reality TV is not really reality!

Have you ever watched those house buying shows on TV? My wife watches occasionally and I will come in and see a bit and it drives me crazy! It is certainly not life as I know it. So if you came to buy a house, and I tell you you I will let you choose out of 3 homes, how would that go over? Or you tell me you have a maximum budget of $300,000, and I proceed to show a house priced at $395,000?

And while I am on that subject of reality, all the automatic house payment calculators out there which fail to include taxes, hazard insurance and mortgage insurance. Or the on-line house value estimators, yes Zillow I am talking about you, which many times are not even in the right ball park.

I found this graphic from the KCM Blog that compares some of the myths vs. reality.

Bottom Line: Reality TV may be entertaining, but it is not reality! (And online payments and values can give some background but ask a professional before you start making a decision.)

Vacancy Report

The 3rd Quarter vacancy rates are in and it looks like a good solid market for landlords, many people have considered it over the years, perhaps now is the time to jump in!  I thank Park Place Property Management for the following charts.



 

Forbes: Buy Now or Pay More Later?

Even though no one at KCM actively lists or sells real estate, some of our readers believe that there is an inherent basis toward the real estate community in our writing. For that reason, we want to quote a third party source today.Forbes, in their online edition last week, spoke to the importance of buying a home now rather than waiting.

The article, Should You Buy a Home Now or Pay More Later?, explains:

“With mortgage rates creeping up toward 5% as 2013 draws to a close, potential home buyers have some decisions to make — and soon.

The danger for potential homebuyers isn’t that mortgage rates are nearing 5.00%; the real threat is that rates could go higher, to 5.50% or even 6.00% in 2014.”

The article spells out the financials consequences a buyer would face by waiting. ($67,746 on a $300,000 mortgage).

They gone on to identify four things a buyer should take into consideration before delaying a decision to purchase.

1. Rates will likely rise — and soon with 5% interest rates right around the corner.


2. The Federal Reserve will stop “tapering” causing rates to return to historically normal levels (6-7%).


3. Home values are rising


4. The autumn buying season is underrated “as you can take advantage of year-end tax breaks and the fall weather makes it an ideal time to move”.

Bottom Line

The financial advice Forbes gave to their readers was rather simple. Buy now or pay more later!!

Thanks to KCM Blog for this timely advice, and to Forbes. If you are ready to head the advice, give me a call or shoot me an email and I'll get searching for your new home TODAY!

 

10 Hidden Hazards When Buying Foreclosures

I have sold several foreclosures over the past few years, and buyer's have generally been pleased with their purchases with a minimum amount of surprises. (Some surprises never the less!) But one must always use caution and do their due diligence. The following article from KCM Blog lists 10 potential hazards of which a foreclosure should be aware.

10 Hidden Hazards When Buying Foreclosures  Buying a foreclosed home can seem like a dream. What could be better than getting a home for a fraction of the market value? Some may even say that the deals sound like they could be too good to be true. In some cases, those doubters aren't too far off the mark. There are some hidden dangers in buying foreclosure properties that, if you're not aware of them, could be disheartening and disappointing. If you are pursuing this route in buying your new home, be sure to look out for these hazards and hidden costs. Destruction of Property – A sad truth about foreclosure properties is that they have often been purposely destroyed. Sometimes the homeowners do this out of frustration over losing their homes, or out of simple carelessness when they realize their home is irretrievably gone after too many missed mortgage payments. If the homeowners have not destroyed the property themselves, there is also a chance that the home has been vandalized by other people because it has been left sitting empty. Poor Maintenance – If homeowners were unable to afford their mortgage payment, they almost certainly were unable to perform routine maintenance on the property. Problems can be as minor as a few leaky faucets, or as major as damaged roofing or central units. It May Be Unclean – A house being left unoccupied for a significant amount of time can mean it will be unclean, either through neglect on the part of the former owners or normal depreciation as the property is left uninhabited and not looked after. When a homeowner is selling the home, they will scrub the house clean or hire a cleaning service to entice buyers. A foreclosed home will not have this benefit. Depending on how long it was left and what condition it is in, there may even be vermin or termites to deal with. Undesirable Renovations – Sometimes homeowners were in the middle of a renovation when they lost their ability to pay their mortgage, so you can wind up with a half finished project on your hands when you purchase the property. There is also a chance that a garage or basement was turned into a living space to rent out in order to try and offset the cost of the mortgage. No Electricity – There is a good chance the electricity will be off in the foreclosed home, so you will have a hard time seeing what you are buying. Depending on the weather it may also be very hot or very cold in the house, and vacancy can take its toll on appliances left behind. Personal Property Left Behind – Many homeowners leave items behind, either because they now have no place to put them or because they were locked out of the house before they could retrieve them. You will now be left with the job of disposing of these items if you decide to purchase the property. Lack of Landscaping – More than likely, nobody has been maintaining the lawn of a foreclosed home. You may have a yard full of dead grass or a lawn so overgrown it seems like a jungle! Your foreclosed home will almost certainly require some degree of upkeep when it comes to to the landscaping surrounding the structure. No Disclosure – Because the owner of the property is a bank and the bank has not actually lived in the house, they have no idea what problems or issues there may be in the home and they have no obligation to tell you even if they did. You will have to get your own home inspection done to uncover potential issues. Stripped Bare – You may find your new foreclosed home completely stripped of appliances, copper piping, and anything else that might be worth money. Many times the previous owners do this to try and make back some money on their lost home. Other times, the home was broken into and robbed after the previous owners left. Judgments and Liens – Foreclosure properties can sometimes come with titles encumbered by judgments or liens that you may have to pay off to close on the deal. In short, buying a foreclosed property can be a great way to save money. However, be sure to look into all the potential costs involved before making a final decision. Do the math to determine if you will really wind up saving, or if the property will end up costing you when all is said and done.

 

 

TO DO LIST-when buying a home.

Keep ALL copies of your: Paystubs Bank Statements Tax Returns W2's Make ALL your payments on time Keep employment stable Document your assets Get Pre-Approved so you know how much home you can afford Save money for your down payment and closing costs Talk to your family about a gift if you will need one. If necessary, ask family members for gift funds for your down payment and closing costs Track and be prepared to provide sources of all large deposits Work with a reputable real estate professional

I found this to be a brief but useful reminder. Thanks to Sohayl Saboori of Eagle Home Mortgage.

Strategic Defaulters in Fannie and Freddie's Crosshairs

Fannie Mae and Freddie Mac are looking to collect unpaid mortgage debt from “strategic defaulters,” those underwater home owners who skipped out on their mortgages even though they had the ability to pay.

If a home is sold at foreclosure but the proceeds don't cover the outstanding balance of the home owner's loan, the mortgage giants can pursue judgments against the home owner forcing him or her to pay the deficiency. And the Federal Housing Finance Agency, which regulates Fannie and Freddie, is pushing them to step up their efforts to do just that.

The FHFA says Fannie and Freddie haven’t been aggressive enough in going after strategic defaulters, and the inspector general's office notes that the GSEs could cut their losses by making it more of a priority. The inspector general’s office estimates that Fannie and Freddie could recoup billions of dollars if they made strategic defaulters pay up. So far, the office has found that Freddie Mac did not refer 58,000 foreclosures — estimated deficiencies of $4.6 billion — for collection.

Some states do not allow deficiency judgments, but in more than 30 states and the District of Columbia, they are permissible. The FHFA says it will more closely monitor how effective Fannie Mae and Freddie Mac are in collecting deficiency judgments.

What I read was that Idaho allows deficiency judgements, BUT they must be filed within 90 days of the foreclosure. (I am not an attorney and am only repeating what I have read, I do not know if it is accurate and you are encouraged to consult an attorney if this may apply to you.) So you should beware if you are looking at a coming up short-sale or foreclosure and you have the ability to pay the debt.

Roofs, Random Thoughts

I am going to have a new roof put on my house in the next couple of weeks.

OUCH! New roofs are expensive, that is the first thing I learned.

Building codes only allow a maximum of two layers, which my roof already has, so that makes it even more expensive. (Which was the 2nd thing I learned.)

Prices, even between reputable firms vary drastically, it can pay to shop around. (Lesson #3?)

I happened to receive an email on vent problems in a roof from Dave Thomsen Inspections, I thought I 'd include those as well.

As with any other system, roof venting may have been installed incorrectly, may not have enough area, may have been rendered inoperable by changes to the home, or may have been badly modified by the homeowner in an attempt to save energy.  Such problems include: a lack of vents. It is not uncommon to see a complete lack of ventilation. In these cases, the high temperatures within the roof covering will induce a rapid breakdown of the materials. This not only affects asphalt shingle roofs, but also flat and tile roofs that use roll roofing as the primary water barrier. It is also common to find high levels of moisture in these attics, which promotes moisture-related issues, such as rotting sheathing and mold growth. blocked vents. Very often, inspectors will see instances of poorly installed insulation blocking the soffit and other vents. These should be reported as in need of repair. false vents. It is all too common to see what appear to be vents installed that are, in fact, not connected through the structure.  Inspectors will sometimes see instances of ridge vents apparently installed, but the roofers did not trim back the roof sheathing along the roof's peak to allow the vents to actually work. I have vents currently, but all the roofers I obtained bids from are increasing the number of vents.

The inspection on one of my last sales revealed possible mold in the attic due to the bathroom being vented into the attic instead of outside. The listing agent indicated she had found that on several homes built by a particular builder. YIKES

So keep a good roof over your head, ya hear!

Why You Should Sell Your House Now

Several valid things to consider for our area as well as nationally! Posted: 15 Oct 2013 04:00 AM PDT Many now realize that it is a great time to buy a home.  It might also be an opportune time to sell your house.  Here are the five reasons we believe now may be a perfect time to put your house on the market. 1. Demand Is High The most recent Existing Home Sales Reports by the National Association of Realtors (NAR) show a double digit percent increase in sales year-over year; sales have remained above last year’s levels for over 25 months.  There are buyers out there right now and they are serious about purchasing. 2. Supply Is Beginning to Increase Total housing inventory is again approaching historic norms of a 5 month supply compared with 4.3 months in January.  Many expect inventory to continue to rise as 3.2 million homeowners escaped the shackles of negative equity in the last 12 months and an additional 1.9 million are expected to enter positive equity in the next 12 months.  Selling now while demand is high and before supply increases may garner you your best price. 3. New Construction Is Coming Back Over the last several years, most homeowners selling their home did not have to compete with a new construction project around the block.  As the market is recovering, more and more builders are jumping back in.  These ‘shiny’ new homes will again become competition as they are an attractive alternative for many purchasers. 4. Interest Rates Will Again Rise Although Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have softened recently, most experts predict that they will begin to rise later this year.  The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison projecting that rates will be up almost a full percentage point by this time next year. Whether you are moving up or moving down, your housing expense will be more a year from now if a mortgage is necessary to purchase your next home. 5. It’s Time to Move On with Your Life Look at the reason you are thinking about selling and decide whether it is worth waiting.  Is the possibility of a few extra dollars more important than being with family; more important than your health; more important than having the freedom to go on with your life the way you think you should? You already know the answers to the questions we just asked.  You have the power to take back control of your situation by putting the house on the market today.  The time may have come for you and your family to move on and start living the life you desire.  That is what is truly important.

COURTESY OF KCM BLOG

Homeownership and Net Worth

Over the last five years, homeownership has lost some of its allure as a financial investment. As homeowners suffered through the housing bust, more and more began to question whether owning a home was truly a good way to build wealth. A recentstudy by the Federal Reserve formally answered this question.

Some of the findings revealed in their report:

• The average American family has a net worth of $77,300


• Of that net worth, 61.4% ($47,500) of it is in home equity


• A homeowner’s net worth is over thirty times greater than that of a renter


• The average homeowner has a net worth of $174,500 while the average net worth of a renter is $5,100

Bottom Line

The Fed study found that homeownership is still a great way for a family to build wealth in America.

 

Ada County in Pictures! (September Market Report That Is!)

Yesterday I published the Ada County Market report, for those of you who like the look of graphs better, today is for you.

Home sales, inventory levels and median prices are all up.

September Housing Market Summary…are you people in Washington really going to mess this up?

Single family home sales in September 2013 were 683 in Ada County, an increase of 20% compared to September 2012. Year-to-date sales are 6,187; up 11% over 2012 YTD sales of 5,266.  NAR data says that for every home sold, $60,000 is added to the local economy.  Based on our sales volume, we have added $371 Million to our local economy so far this year. Dollar volume for September was up 35% to $161 million and YTD we are just over $1.4 billion in sales. Days on market averaged 46 in September, no change from August.  Our year-to-date average is 51 days. New homes sold in September totaled 129, the same number as sold in September 2012. Historically, September sales decrease from August.  This year is no different as September 2013 sales decreased 18% compared to August 2013. Of the total sales in September, 9% were distressed; down 2% from last month. In September 2012, 21% of sales were distressed. Pending sales at the end of September were 949; down 12% from August 2013. Of Pending sales in distress (12%), short sales outnumbered REO’s 2 to 1. At the end of September, we had 15% fewer sales pending than at the end of September 2012. This is the second consecutive month in which we’ve seen a decline in pendings relative to the previous year. This is a key number to monitor moving forward. Unfortunately, it does appear that the government shutdown will have a chilling effect on sales. September median home price was $194,500; up 11% from September 2012. According to NAR’s most recent report; national median price is $212,000. New Homes median price for September was $268,548; up 12% from September 2012. For Existing homes the increase is 14%. The number of houses available for sale at the end of September increased 4% from August 2013 to 2,640.  This is 22% more than last year at this time. Since January we have increased the number of single family homes for sale by 54%, allowing us to grow our YTD sales increase. Of the total active listings, 10% are distressed, down 1% from the end of August 2013. With inventory increasing and the percentage of distressed inventory decreasing, median home price will remain strong through the end of this year. Of our Distressed Inventory, 73% is Short Sales (182) and 27% is REO (67). Available inventory increased at all price points except in the +$450K range.  The price range adding the most homes to the market is $120,000 to $160,000, with an increase of 34 homes. In Ada County we now have 3.2 months of inventory on hand, up a little from the end of August. The price category in shortest supply is <$120K where we have 1.9 months. All price points up to $500,000 have a 4 month’s supply. We’ve left behind the Summer of ’13 and its highest sales and median prices of the year.

 

Buyers-Window of Opportunity Still Open

Yesterday I spoke of knowing where we are "headin." Here is some additonal projections about where the mortgage rates will head. The Fed recently announced they would contiue to purchase bonds, which eased the upward pressure on mortgage rates.

The Fed recently announced they would continue their current pace of purchasing bonds until the economy was stronger. This bond purchasing program is the reason that mortgage interest rates are at historic lows. Rates began to increase over the last several months just on the anticipation that the Fed would announce that they would be reducing the level of bond purchases last month. When that didn’t happen, rates actually decreased (4.50 to 4.37).

That was great news for any buyer in the process of purchasing a home. However, this window of opportunity is expected to close in the very near future as most experts expect the Fed to taper the bond purchasers in December. Even Ben Bernanke, Chairman of the Fed, suggested that the Fed could still scale back the stimulus this year. He stated:

"If the data confirms our basic outlook, then we could move later this year.”

Where will mortgage rates head in 2014?

The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors have each projected that the 30 year fixed rate mortgage will have interest rates in excess of 5% by this time next year. The average of their four projections is 5.3%. The table below shows the impact this will have on the monthly principal and interest payment on a $250,000 mortgage:

A buyer should take advantage of the current window of opportunity before it is too late.

Give me a call today, to get started finding your home before the window closes!

 

Where are we going?

This is a song from the old musical, "Paint your Wagon." The lyrics go something like this: Where am I goin?/I don't know./ Where am I headin?/I ain't certain./ All I know am I am on my way.

There is also a quote from Voltaire stating: "I don't know where I am going, but I am on my way."

We may not know where the housing market is going but we are on our way. But there are folks who predict where we are" headin." The National Association of Realtors predict the following.



 

 

 

 

Skip the Bagel!!

Today’s InfoGraphic courtesy of our great friend Dave Savage from Mortgage Coach.