Existing-Home Sales Constrained by Tight Supply in May, Prices Continue to Gain

Limited supplies of housing inventory held back existing-home sales in May, but sales maintained a strong lead over year-ago levels and home prices are on a sustained uptrend in all regions, according to the National Association of REALTORS®.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, declined 1.5 percent to a seasonally adjusted annual rate of 4.55 million in May from 4.62 million in April, but are 9.6 percent above the 4.15 million-unit pace in May 2011.

Lawrence Yun, NAR chief economist, said inventory shortages in certain areas have been building all year. “The slight pullback in monthly home sales is more likely due to supply constraints rather than softening demand. The normal seasonal upturn in inventory did not occur this spring,” he says. “Even with the monthly decline, home sales have moved markedly higher with 11 consecutive months of gains over the same month a year earlier.”
There are broad-based shortages of inventory in the lower price ranges in much of the country except the Northeast, and in the West supply is extremely tight in all price ranges except for the upper end. ” REALTORS® in Western states have been calling for an expedited process to get additional foreclosed properties onto the market because they have more buyers than available property,” Yun adds. Widespread inventory shortages also are found in much of Florida.

Total housing inventory at the end of May slipped 0.4 percent to 2.49 million existing homes available for sale, which represents a 6.6-month supply at the current sales pace; there was a 6.5-month supply in April. Listed inventory is 20.4 percent below a year ago when there was a 9.1-month supply. Unsold inventory has trended down from a record 4.04 million in July 2007; supplies reached a cyclical peak of 12.1 months in July 2010.

“The recovery is occurring despite excessively tight credit conditions and higher downpayment requirements, which are negating the impact of record high affordability conditions,” Yun says.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage declined to a record low 3.80 percent in May from 3.91 percent in April; the rate was 4.64 percent in May 2011; recordkeeping began in 1971.

The national median existing-home price for all housing types rose 7.9 percent to $182,600 in May from a year ago, the third consecutive month of year over year price gains. The last time there were three back-to-back price increases from the same month a year earlier was from March to May of 2006. “Some of the price gain results from a shrinking share distressed homes in the sales mix,” Yun explains.

Distressed homes – foreclosures and short sales sold at deep discounts – accounted for 25 percent of May sales (15 percent were foreclosures and 10 percent were short sales), down from 28 percent in April and 31 percent in May 2011. Foreclosures sold for an average discount of 19 percent below market value in May, while short sales were discounted 14 percent.
NAR President Moe Veissi offers advice to buyers in markets with limited supply. “We are hearing a lot about multiple bidding and quick sales in areas with tight supply, with competition between first-time buyers and cash investors, who have a significant advantage,” he says.

“It’s extremely important to listen to the advice of your agent and perform all the due diligence that you would normally do in a more balanced market, such as making offers contingent upon a satisfactory home inspection,” Veissi says.

First-time buyers accounted for 34 percent of purchasers in May, compared with 35 percent in April and 36 percent in May 2011.

All-cash sales slipped to 28 percent of transactions in May from 29 percent in April; they were 30 percent in May 2011. Investors, who account for the bulk of cash sales, purchased 17 percent of homes in May, down from 20 percent in April and 19 percent in May 2011. “These figures reflect a modest increase in traditional repeat home buyers in May,” Yun says.

Single-family home sales slipped 1.0 percent to a seasonally adjusted annual rate of 4.05 million in May from 4.09 million in April, but are 10.4 percent above the 3.67 million-unit level in May 2011. The median existing single-family home price was $182,900 in May, up 7.7 percent from a year ago.
Existing condominium and co-op sales fell 5.7 percent to a seasonally adjusted annual rate of 500,000 in May from 530,000 in April, but are 4.2 percent higher than the 480,000-unit pace one year ago. The median existing condo price was $180,000 in May, which is 8.8 percent above May 2011.

Regionally, existing-home sales in the Northeast fell 4.8 percent to an annual level of 590,000 in May but are 7.3 percent higher than May 2011. The median price in the Northeast was $250,700, up 3.8 percent from a year ago.

Existing-home sales in the Midwest rose 1.0 percent in May to a pace of 1.04 million and are 19.5 percent above a year ago. The median price in the Midwest was $147,700, up 6.4 percent from May 2011. In the South, existing-home sales slipped 0.6 percent to an annual level of 1.78 million in May but are 9.2 percent higher May 2011. The median price in the South was $159,700, up 7.8 percent from a year ago. Existing-home sales in the West declined 3.4 percent to an annual pace of 1.14 million in May but are 3.6 percent above a year ago. The median price in the West was $233,900, up 13.4 percent from May 2011. “The sharp price increase in the West results largely from more sales at the upper end of the market,” Yun explains.

WASHINGTON (June 21, 2012) -realtor.org

What Age Group Is Most Affected By The Housing Bust?

Is the economy getting better? Well, depends on who you ask. More specifically, the age of the person you ask.

A new government report finds that the 35- to 44-year-old members of Generation X have been the hardest hit by the economy. In terms of actual dollars lost, 45- to 54-year-olds took the biggest hit. Median net worth declined by $54,881, to $90,434. That’s a 38 percent drop from 2005, calculated in 2010 dollars.

The Census Bureau study found that between 2005 and 2010, households led by 35- to 44-year-olds saw the biggest percent decline in median household net worth. For those households, median net worth declined 59 percent, from $80,521 in 2005 to $33,200 in 2010, adjusted in constant 2010 dollars.

Overall, the median household net worth declined by 35 percent between 2005 and 2010, to $66,740. The Census data comes a week after the Federal Reserve released a separate survey showing that the median net worth of the American family dropped 39 percent from about $126,000 in 2007 to $77,000 in 2010.

Why the massive drop in net worth? You guessed it … the housing bust. Thankfully the market is turning around and, hopefully, we’ll start seeing an increase in net worth as property values rise.

Visit our website at www.kathyandginarealty.com to keep up-to-date on the local real estate market and trends.

Americans See Biggest Home Equity Jump in 60 Years!

Americans are digging themselves out of mortgage debt.

Home equity in the first quarter rose to $6.7 trillion, the highest level since 2008, as homeowners taking advantage of record-low borrowing costs to refinance their loans brought cash to the table to pay down principal. The 7.3 percent gain was the biggest jump in more than 60 years, according to an analysis by Bloomberg of Federal Reserve data.

It’s the strongest sign yet that Americans’ home-loan debt burden is beginning to ease after the record borrowing that created, and ultimately popped, the housing bubble, leaving almost a quarter of homeowners with mortgages owing more than their properties were worth, said Richard DeKaser, deputy chief economist at Parthenon Group LLC in Boston. Half the mortgages refinanced in the fourth quarter reduced loan size, a record, according to Freddie Mac, the government-owned mortgage buyer.


“The willingness of homeowners to carry housing debt has been radically altered,” said DeKaser, former chairman of theAmerican Bankers Association’s Economic Advisory Committee. “When the market was booming, a mortgage was used as a leveraging tool, and now it’s seen as a risk.”


Measured as a share, rather than in dollars, homeowner equity was 41 percent of U.S. residential property value in the first quarter, including homeowners who don’t have mortgages, according to the Fed study released last week. The last time the share was that high was in the third quarter of 2008 when it was 43 percent.

‘Bubble Burst’

“People got too overleveraged in the boom years, and that left them with too much debt when the bubble burst,” said Paul Miller, a managing director with FBR Capital Markets in Arlington, Virginia. “Now, they’re trying to put themselves back on solid ground.”

Residential mortgage debt peaked in 2007 at $10.6 trillion, doubling in six years, according to Fed data. Since then, it has fallen 7 percent as the value of all residential property has dropped 23 percent.

Americans aren’t just bringing money to the table when they refinance their mortgages. Many also are choosing to shorten the term of their loans, which increases monthly payments. The average mortgage term fell to 27 years in March and April from 29 years February. Almost all U.S. mortgages have either 30-year or 15-year terms. When the average falls, it shows more people are choosing the shorter period.

The average U.S. rate for a 30-year fixed mortgage has tumbled since early 2011 to 3.71 percent this week, rising from last week’s record-low 3.67 percent. Refinancing applications, meanwhile, are at a three-year high.

Lackluster Recovery

DeKaser of Parthenon attributes the reduction in mortgage debt to a “fear factor.” A lackluster recovery that still has one of every 15 people unemployed has persuaded some borrowers of the wisdom of thriftiness, he said.

“People are worried about falling home prices and they’re worried about the economy,” said DeKaser. “If they can afford it, they’re paying down their mortgages instead of buying things because it makes them feel like they’ll sleep better at night.”

Home prices tumbled for six straight months through March to the lowest level in a decade, 35 percent below the peak prices of the housing boom, according to the S&P/Case-Shiller price index of 20 U.S. metropolitan areas. A 3.4 percent increase in home sales last month may signal prices are beginning to stabilize, according to Eric Belsky, managing director of Harvard University’s Joint Center for Housing Studies, in its “State of the Nation’s Housing” report issued today.

Economic Growth

The U.S. economy probably will grow at a 2.2 percent pace in 2012, the third year after the end of the recession, according to the median forecast of 93 economists surveyed by Bloomberg. That compares with a 3.9 percent average expansion rate in the third-year period following the 1982, 1994, and 2001 recessions. In 2013, the growth rate probably will be 2.4 percent, according to the economists’ average estimate.

Homeowners who are able to shorten the terms of their loans or reduce their balances when they refinance are the lucky ones, said Chris Christopher, a senior economist at IHS Global Insight in Lexington, Massachusetts.

“Homeowners who are paying down mortgage debt are the survivors,” said Christopher. “They probably didn’t lose their jobs, so they’re in a better position to do that.”

About 23 percent of mortgage holders are underwater on their loans, meaning they owe more than their homes are worth, according to CoreLogic Inc., a mortgage data and software firm inSanta Ana, California. About 2.1 million properties were in foreclosure in April, according to Lender Processing Services, a mortgage data firm in Jacksonville, Florida.

‘Bubble Days’

“Consumers’ view of the housing market clearly has been radically changed since the bubble days,” said Dean Maki, chief U.S. economist at Barclays Plc in New York. “We saw what happened to people who were way overleveraged.”

“Paying down mortgage debt is bad for economic growth -- putting your money into your house usually means you’re spending less,” said FBR’s Miller. “It’s good for our economic health in the long run, though, because it improves household balance sheets.”

Retail sales in the U.S. fell in May for a second month, prompting economists to cut forecasts for economic growth as limited job growth and income gains hold back consumers. The 0.2 percent decrease matched April’s drop that was previously reported as a gain, Commerce Department figures showed yesterday in Washington.

National Income

Annual increases in national income slowed to $581 billion in 2011 from $693 billion in the prior year, according to the Bureau of Economic Analysis. The first quarter’s $127.7 billion gain puts 2012 on course for a $510.8 billion increase, the lowest since income dropped in 2009.

“People are looking around them and seeing people they know getting their salaries cut or losing their jobs,” said Miller, a former examiner with the Federal Reserve Bank of Philadelphia. “If you want security, you can put your money in a savings bank for half a percentage point, or you can pay down your mortgage.”

FBR’s Miller said when he refinanced his home loan last year, he “brought a big check to the table” to reduce his mortgage balance. The reason?

“So my wife would leave me alone,” said Miller. “Just like a lot of people, she wants to have no mortgage debt.”

Courtesy of Bloomberg News June 14, 2012. by: Kathleen M. Howley  

Renters Would Rather OWN Than Pay Rent

Fannie Mae’s latest quarterly National Housing Survey focuses on the homeownership aspirations of Americans. Despite the recent housing crisis, most Americans continue to believe that homeownership is better than renting.


And while Fannie Mae’s data finds that financial constraints and employment concerns may be keeping potential homebuyers on the sidelines, that could change. As employment picks up and the economy grows stronger, stabilizing home prices may entice Americans to buy a home in coming years.

Findings

• Across all education levels, Americans say owning makes more sense than renting. This belief is held consistently across all demographic groups.
• Nearly two-thirds of current renters say that they will buy a house at some point in the future.
• Non-financial factors, such as safety and quality of local schools, continue to be the top reasons for buying a home across all income groups.
• African-Americans and Hispanics are more likely to cite various benefits to homeownership, such as buying a home as a way to build wealth, as a symbol of success and civic benefits.
“In spite of the impact of the housing crisis on home values and homeownership rates across the country, Americans by and large still hope to become homeowners,” says Doug Duncan, vice president and chief economist of Fannie Mae. “A point of concern for the industry is that some consumers find the mortgage shopping process difficult to navigate. If potential homeowners avoid the process because they believe it to be too complex, we will likely see a continued impact on homeownership rates.”
Overall, certain groups (renters, those with lower levels of education, people with lower incomes, African-Americans and Hispanics) cite potential difficulties in getting a mortgage. Renters today are most likely to cite poor credit, complexity of the loan process and bad economic times as major reasons not to buy a home.

Financing problems

• Renters are consistently more likely than mortgage borrowers to think it would be difficult for them to get a home, and say financial reasons are the major reason they have not bought a home.
• African-Americans and Hispanics are more likely to indicate that getting a mortgage is difficult, regardless of income level. They’re also more likely to cite bad economic times and the complexity of the mortgage process as major reasons not to buy a home.
• Groups with lower levels of education are more likely to say it would be difficult for them to get a mortgage than groups with higher levels of education.
• Hispanics are less confident than other groups about receiving information they need to choose the right mortgage.
Moreover, attitudes about homeownership as an investment, financial constraints and mortgage accessibility may mean that more Americans choose not to act on their aspiration for homeownership, thus potentially leading to lower homeownership rates.

Homeownership as an investment

• The margin of Americans believing homeownership has the highest investment potential has declined over the past several years.
• At the same time, the perceived safety of owning a home as an investment has trended downward, reaching a low of 63 percent in the fourth quarter of 2011.
• In turn, groups with higher levels of education and higher incomes are more likely to think buying a home is a safe investment.

How To De-Clutter Without Stressing

You’ve probably been thinking about how badly you need to de-clutter your home for a while now. Perhaps you tried, but can’t summon the energy to finish this beast of a project. Maybe you just don’t know where to start. But a systematic approach to de-cluttering can prove to be surprisingly cathartic, as you free yourself from the excess material possessions taking up space in your home or storage unit. Purging what you don’t need allows you to start a fresh, uncluttered home life. Spare yourself headaches with this no-nonsense plan for downsizing, just in time for moving season.

1. Put on some high-energy music, similar to what you would listen to during a workout. This will help you work faster, which is crucial to making instinctive decisions about whether to keep or get rid of certain belongings. It will also help sustain your positive energy level throughout the endeavor.

2. Grab several large garbage bags, a few boxes and a marker. Label half of these “Trash” and the other half “Donate.” Label the boxes “Sell.” Then place at least one of each in every room or section of your home.

3. Carefully plan your attack. Determine in what order you will move through your home, one room at a time and one section of each room at a time. Adhering to this plan is crucial to avoid becoming overwhelmed or frustrated with the project. If you bounce around and try to work too many different spaces at once, there is a good chance you’ll give up entirely. Your best bet is to start with the first room off the front door and move inland. The same applies within each room — move through in a circular spiral, from the perimeter around the walls in toward the center.

4. Commence the de-cluttering. Sift through the contents of every drawer, cabinet and shelf that crosses your path. Assess every sock, fork and CD. Instead of getting distracted by the rediscovery of your old Tamagotchi pet, focus on making quick judgment calls on whether something stays or goes. If it stays, let it be. Don’t try to work cleaning and re-organizing into these de-cluttering plans — save that project for another day.

5. Separate sell-able items. When you come across unwanted belongings that definitely aren’t trash and are probably too high-value to donate, consider selling them. If you think you can get cash for any electronic, clothing or furniture item, place it in one of the designated boxes. When you’re done decluttering, immediately schedule yourself a few hours to post ads online later. Hold yourself accountable to getting this done, or you’ll be left with yet more clutter sitting in a pile by the door.

6. Plan a trip to Goodwill or your charity of choice. The same way you have to mandate yourself to sell unwanted belongings, do the same for donations. Pile your bags into the back of your car as soon as possible, and swing by a local donation bank as soon as you have a minute.

8. Victoriously march to the closest Dumpster and toss in your “Trash”-labeled bags. Set a calendar reminder to repeat the process in exactly one year. You’ll be surprised how many of the items you desperately clung to the previous year end up in the trash the next!

Important Do's and Don'ts for Flying the American Flag

Fly Your Flag Regularly ... and Correctly ... Here's How!

Important Do's  

• It is the universal custom to display the national flag only from sunrise to sunset on buildings and on stationary flagstaffs in the open, but it should not be displayed on days when the weather is inclement. The U.S. flag may be displayed at night upon special occasions when it is desired to produce a patriotic effect.
• Display the U.S. flag on all days that weather permits, but especially on national and state holidays and other days that may be proclaimed by the President of the United States. On Memorial Day, the U.S. flag should be half-staffed until noon.
• The U.S. flag should be displayed on or near the main building of every public institution, during school days in or near every schoolhouse, and in or near every polling place on election days.
• Always hoist the U.S. flag briskly. Lower it ceremoniously.
• When the U.S. flag is in such condition that it is no longer a fitting emblem for display, it should be destroyed in a dignified way, preferably by fire, privately. 

Important Don'ts  

• Never in any way should any disrespect be shown the U.S. flag.
• The U.S. flag should never be dipped to any person or thing. Regimental colors, State flags, and organization or institutional flags are dipped as a mark of honor.
• The U.S. flag should never touch anything beneath it - ground, floor, water or merchandise.
• The U.S. flag should never be carried horizontally, but always aloft and free.
• Always allow the U.S. flag to fall free - never use the U.S. flag as drapery, festooned, drawn back, or up in folds. For draping platforms and decoration in general, use blue, white, and red bunting. Always arrange the bunting with blue above, the white in the middle, and the red below.
• The U.S. flag should never be fastened, displayed used or stored in a manner which will permit it to be easily torn, soiled or damaged in any way.
• Never use the U.S. flag as a covering or drape for a ceiling.
• Never place anything on the U.S. flag. The U.S. flag should never have placed upon it, or attached to it, any mark, insignia, letter, word, figure, design, picture or drawing of any nature.
• Never use the U.S. flag for receiving, holding, carrying or delivering anything.
• The U.S. flag should not be embroidered on such articles as cushions, handkerchiefs, and the like, printed or otherwise impressed paper napkins or boxes or anything that is designed for temporary use and discard; or used as any portion of a costume or athletic uniform. Advertising signs should not be fastened to a staff or halyard from which the flag is flown.

Helping Seniors Plan For Future Housing Needs

An introduction to Certified Senior Real Estate Specialist (SRES®)

Some of the most important decisions you will make in your life will happen as you lay your plans for your retirement years. When faced with an ideal situation, it is easy to say, “I want it all.” But, for most it takes planning and fine tuning to make the senior years comfortable and manageable. As you begin your aging in place planning, you will run into many decisions and challenges. Having experts on your side to help you determine your needs and prioritize them will go a long way towards alleviating stress and give you guidance during a time you most need it.


One of the first decisions you will need to make is whether to purchase a new home designed to help you age in place or for you to redesign your current living quarters to meet your aging needs. If you are looking to purchase a home or sell your current one, the Seniors Real Estate Specialists® are here to guide you.

What is an SRES®?

Certified Senior Real Estate Specialists are qualified to address the needs of home buyers and sellers age 50+. The SRES designation is awarded to National Association of REALTORS® member agents who have successfully completed its education program. 

We are Certified Senior Real Estate Specialists. By earning the SRES® designation,  we have demonstrated necessary knowledge and expertise to counsel clients age 50+ through major financial and lifestyle transitions involved in relocating, refinancing, or selling the family home. We have received special training in these areas and are prepared to offer the options and information needed in making these life changing decisions.

What Does SRES Mean to Me?
A Certified Senior Real Estate Specialist is trained to help you through your aging in place home search, financial options and changing – sometimes complicated – laws that may be different now from the last time you went through the buying or selling process. An SRES® knows the ins and outs of buying a home for aging seniors and, backed by his sensitivity and understanding, an SRES® will have the ability to counsel senior clients through financial and lifestyle matters.

Most important, by selecting an SRES® you will have the confidence of knowing you have someone help you find housing solutions to improve your quality of life while you are relocating, refinancing or selling your home.

Where Can I Begin?

There's almost always an emotional element associated with selling a long-time home. We get calls all the time from family members that are concerned about themselves, their parents, and their loved ones that are getting older and need to make a change in their living situation. In these cases, you really need a REALTOR^® with senior experience, knowledge and marketing savvy. 

We not only can create a customized approach to marketing and selling your property, but we can also work with you to explore your housing options to ensure that your next home best serves your current and future needs. 

We have special knowledge about everything from reverse mortgages and the importance of universal design to the uses of pensions, 401k accounts, and IRAs in real estate transactions.

We can also help you steer clear of loan schemes and scams that victimize aged 50+ borrowers.

And when you need help from other professionals, we can tap our network and put you in touch with qualified home inspectors, movers, attorneys, CPAs and other experts.


If you have made the decision to sell your home, buy, or relocation ... give us a call! Our specialized training can help you, or someone you know, with any of your real estate needs.

How To Beat Big Investors To Good Properties

As Real Estate bidding wars become commonplace, it’s important to remember these adages:   

1.  The early bird gets the worm.
2.  Always put your best foot forward.

Especially in areas where inventories are limited, three or more offers may be submitted within the first 24 hours after a property goes on the market. By the time your Day 3 offer rolls in, the deal is done – especially on short sales or bank-owned properties.

How do the early birds get in, tour the property and make offers so quickly? Chances are, they didn’t go see the property. That’s right. The savvy investor knows the areas in which he wants to buy, he knows what size and type of properties he’s after, and he knows what he’s willing to spend. So, when he sees a listing that meets his criteria — he’s able to pounce. If the offer is accepted, Mr. Early Bird can go see the property; if he doesn’t like it, he can back out of the deal, generally at no cost (be sure to read your contract!)

This process may be frustrating for real estate novices, but it’s just the way it is. And, honestly, if you don’t know enough about your target properties and neighborhoods so that you, too, can make a quick offer — you need to do more homework.

Becoming the early bird means you need to be well-versed with the offer process. Smart buyers know the standard contract terms and many go so far as to arm their Real Estate Agents with signed, blank offering templates. If they see a listing they like, they can have their agent fill in the price and terms and forward the offer – all within hours of when the property first hits the MLS list.

Of course, first to bid doesn’t always win the property. You can improve your chances by ensuring you’re submitting the best possible offer. Some tips:

• Include a letter that pleads your case. Tell the seller why this is the perfect neighborhood for you, how long you’ve been looking, why you love the property (if you’ve been inside), and how you need a home to raise (or start) your family. Emphasize the aspects of your specific situation that might tug on the heartstrings of the seller or listing agent. 
• If it’s a traditional sale, ask to make your offer in person to the seller. Or, you might try to go see the property when the seller is at the house so they know who you are. Even having your agent personally deliver your offer may give you an edge. (Of course, this all takes substantial time so don’t go this route unless you are 95 percent sure you will move forward on the terms you offer!)
• Some listings require a lender pre-qualification letter and proof of funds. Whether they’re requested or not, you should always include those with your offer (a pre-approval letter from a lender would be even better).

When seven offers come in and your offer includes your personal letter, plus a pre-approval letter from the bank, plus your proof of funds, plus your agent introducing herself to the listing agent, well, you might just beat out the cash-buying investors.

Knowing your target neighborhoods and markets, plus the process and contract terms, will allow you to act quickly when the right property becomes available.

From personal experience, I can tell you it does work. I’d love to write more but I just received an email about a listing for a property I know meets my criteria and I hope to have my offer in to the listing agent by the time you’ve finished reading this sentence. Good luck!

Leonard Baron, MBA, CPA, is a San Diego State University Lecturer, a guest blogger on Zillow.com, the author of several books including “Real Estate Ownership, Investment and Due Diligence 101”, and loves kicking the tires of a good piece of dirt!Real Estate Agent