What Do Americans Think About the Current Housing Market?

Photo: © Steve Greer - iStockphoto

Home buyers and investors alike are trying to gauge the health of the real estate market. One of the best ways to predict sales figures is to ask Americans if they plan on buying. The Fannie Mae National Housing Survey of May 2012 reported on the attitudes of 1,002 polled Americans toward the real estate market and the economy. The answers reflect the current—and the future—state of the housing market.

Higher Home Prices

Seventy-two percent of survey respondents believed that the current real estate market

was a good one to jump into, a one percent increase over the previous month. A much smaller 15 percent of respondents thought market conditions favored sellers. The reason—many respondents expected home prices to increase by an average of 1.4 percent, the highest value yet recorded in the National Housing Survey. This increase would incentivise many Americans to start their home searches before prices rise, while encouraging sellers to wait for a higher asking price. Another reason for the positive outlook is the belief of 41 percent of respondents that home mortgage rates will increase over the next year; buyers want to lock in their mortgages before rates increase.

Downturn in Personal Finances

Yet only 63 percent of those surveyed would buy in today's real estate market, down from 64 percent in April and 66 percent in March. This could be due to the answers respondents gave to questions about personal finances. Twelve percent of respondents expected to see a decline in their financial standing, while 46 percent expected their financial situation to stay the same over the next 12 months. Fifteen percent of those questioned stated their household income is lower than it was a year ago.

Positive Signs

While 32 percent of those surveyed said their expenses had increased significantly in the past year, that is the lowest value reported in the history of the survey and a four percent decrease from the month before. And a record-high 38 percent of respondents believed the economy was starting to improve.

Rising Rents

Survey respondents also foresaw an increase in rental prices. Forty-nine percent—the highest percentage recorded to date—believed rental prices would rise. On average, respondents expected rents to increase by 4.1 percent over the next year. It could be the rising rents, or it could be the dream of home ownership, but when respondents were asked what they would do if they were to move, only 32 percent would rent while 63 percent would buy.

Americans are approaching the American dream with a little more caution, keeping their finances and the future of the economy in mind—an approach that can only help the long-term stability of the housing market.

This Article was written for my NOLA Westbank Homes Newletter for July: Realty News

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3 Things You Should Know About Short Sales

Having a Realtor can bring some stability into a Short Sale transaction, but everyone needs to realize that a short sale’s success depends on a variety of issues.  This type of transaction is constantly evolving; however there are a few things that remain the same and any Seller considering a Short Sale will need to understand.

Market Value Matters

Short sales sell for market value.  You heard this correctly!  A bank will generally agree to a short sale if the numbers make sense.  Banks realize that homes need to appraise and Banks also need to mitigate their loss.  Therefore, having a home listed for well below market value is not the best strategy for getting an approved short sale.  It's true you may get plenty of offers, but if the bank won’t accept any of them you end up having wasted a lot of energy,  face disappointment and several angry potential buyers.

Banks are no longer in the business of giving away houses.  The banks need numbers that make sense. So when the figures make sense, the likelihood of a successful short sale closing is 90%.

Only Real Hardships Get the Help

I’ve heard of many potential sellers say the only reason they are pursuing a short sale is because everyone else is doing it.  Purchasing a house during the housing boom is not a legitimate hardship.  If you purchased a house during that time period and now you are unable to pay your mortgage - that is a hardship.

Strategic default is never a good idea! Banks actually analyze short sale sellers’ hardships, and most center on the economy, so the bank is going to make sure that a short sale is in their own best interest.  Acceptable hardships include medical issues, divorce, disability, significant loss of income, death, unemployment, and relocation.

Short Sale Laws are Local to Your State

There are currently no national short sale laws on the books.  There are federal guidelines, but they can be applied when and how a bank wants.

In the Short Sales I have done in my state, when the short sales are completed the deficiency amounts were forgiven for homes which were the primary residence of the Sellers.  But this may not be the case in all states, or when the home was not owned for the purpose of the primary residence.

States can either have recourse loans or non-recourse loans.  A recourse loan allows the bank to demand a borrower pay the difference between what the property is sold for and what is owed on the lien.  Many recourse states allow lien holders (banks) to pursue judgment liens against the borrower for the deficiency amount.  This process allows the bank to garnish a borrower’s wages until the debt is paid off.  Garnishments can be as much as 25% of non-exempt disposable earnings, and bankruptcy doesn’t always save a defaulted borrower from judgment liens.

Remember - Your Real Estate agents is not allowed to practice law, unless they are actually licensed to do so. However, Realtors are required to be aware of possible penalties for short selling a home and also be able to direct their clients to the right resources to discuss the possible consequences and solutions.  So it is important to consult with your Realtor and your CPA.

Short sales can be complicated to navigate, so don't try to do it alone.  But for those of you who qualify and require some much-needed relief, remember, it is important to have an experienced Realtor to help you. 

Note: This article also includes information summarized from the Trulia website provided as a service to Realtors.

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Impact of Our Economy on Buyers – Especially First Timers

For a long time now, most people have been worried about the economy and how it will effect them.  The unemployment rate is rising and so are the number of foreclosures.  The worry of job security and tightening of credit standards have kept many buyers out of the market.  Most buyers still in the market are looking for homes lower in price than before, and this is causing the average sale price of homes to be lower across the board.  On top of this, more homes selling at foreclosure prices will eventually bring the rest of home prices down.  Out of the buyers who are left, some sit back for the prices to drop lower.  This causes bumps in the road as the market trys to stabalize.  The truth is that the ones that wait too long are going to miss the opportunities that exsist now.  While prices of homes are still low and interest rates have now dropped this week again, too many buyers are not taking advantage of this.  Read here where New Orleans City Business reported this week, "Average Rate on 15 Yr Mortgage Dips Below 4%".  This article reports that the average 15yr fixed mortgage dropped to 3.97% while the average 30yr fixed mortgage fell to 4.88%.  The yield on U.S. Treasury bonds fell due to worries that the crisis in Japan could slow economic growth, which the rates followed.

What every first time home buyer should know

So what should the first time homebuyer do?  Be prepared!  Education and planning is the key and remember to get help.  Consult your Realtor for advice even if you don't believe you are ready to buy yet.  Here are Do's and Don'ts to follow:

Do:

Save your money now while you are planning.  Save money now and don't wait.  Most first time homebuyers are using FHA loans becasue they only need a 3.5% downpayment, but also remember you will also need money for closing costs and pre-paid items such as homeowner's insurance. 

Gather a team you trust.  Assemble a professional team to get you through the technicalities of home buying.  Start with finding a Realtor. Interview this person to make sure they are knowledgable and that you feel comfortable with them.  Then your Realtor can help you to continue to build your team to include a mortgage specialist and then later a home inspector and title company.  Ask around for referrals and meet with them in advance so that you are comfortable relying on their advice when you need it most.

Know what you can afford.  Only you with the help of your Realtor and lender can properly determine what you can afford.  Mortgage standards are still constantly changing and your bank or mortgage company of choice can help you keep up with the most recent requirements.  They will also run your credit report.  A good mortgage specialist will not only let you know if your credit is up to standards, but also give you suggestions to get you ready if it is not.  You want a credit score minimum of 640, but the higher the better.

Choose the right option for you.  After you know what you can afford, narrow down your search by figuring out what type of home suits you best.  Ask yourself questions such as do you want: a house or a condo?  A new home or older home?  Is more square footage worth a longer commute?  Are you looking to renovate or move right in?  In the city or a smaller community?  You may also want to drive around in the towns your are considering to find the neighborhoods you like and will feel comfortable in.


Don’t:

Skip the home inspection. You may know a handy guy, but the best way to see if your dream home will turn into a nightmare is by having, before you purchase your home, a home inspector identify any potential problems and determine whether or not any upgrades need to be made.

Buy more than you need.  Even if you can afford a more expensive home, choosing one that you love at a lower price point allows you to keep some breathing room in your budget. A fourth bedroom that you never use is just another room to clean and heat!


 
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