Signs of Change: Existing-Home Sales Rise 3.6% in June

Existing-home sales rose for the third consecutive month with inventory easing and home prices declining less sharply in June, according to the National Association of Realtors®.

Existing-home sales-including single-family, townhomes, condominiums and co-ops-increased 3.6% to a seasonally adjusted annual rate of 4.89 million units in June from a downwardly revised pace of 4.72 million in May, but are 0.2% lower than the 4.90 million-unit level in June 2008.

Lawrence Yun, NAR chief economist, is hopeful about the gain. “The increase in existing-home sales occurred in all major regions of the country,” he said. “We expect a gradual uptrend in sales to continue due to tax credit incentives and historically high affordability conditions. Despite the rise in closed transactions, many Realtors® are reporting lost sales as a result of new appraisal standards that went into effect May 1 of this year.”

A June survey of NAR members shows 3% experienced at least one lost sale as a result of the new Home Valuation Code of Conduct, with seven out of 10 reporting an increased use of out-of-area appraisers. Seventy percent of NAR appraiser members said consumers were paying higher fees, while 85% report a perceived reduction in appraisal quality.

“Clearly the process needs to be revised, but the most logical approach is to use appraisers with local expertise, industry designations and access to local data, who make a physical examination of the property and use apples-to-apples comparisons with nearby home sales,” Yun said. “In many cases, normal homes are being compared with distressed homes sold at a discount, which often are in subpar condition-this is causing real harm to both buyers and sellers.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 5.42% in June from 4.86% in May; the rate was 6.32% in June 2008. Mortgage interest rates have trended lower in recent weeks.

Total housing inventory at the end of June fell 0.7% to 3.82 million existing homes available for sale, which represents a 9.4-month supply at the current sales pace, down from a 9.8-month supply in May. Raw inventory totals are 14.9% below a year ago.

“This is another hopeful sign-if we can keep the volume of sales above the level of new inventory, prices could stabilize in many areas around the end of the year,” Yun said.
An NAR practitioner survey in June showed first-time buyers accounted for 29% of transactions, unchanged from May, and that the number of buyers looking at homes is up nearly 12 percentage points from June 2008.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are very good opportunities. “Despite some of the challenges, the housing market continues to demonstrate signs of recovery,” he said. “The temporary first-time buyer tax credit is clearly helping people make a decision and is contributing to the overall stimulus impact, but since it’s taking longer to close transactions, many would-be beneficiaries may not be able to take advantage of the credit before the December 1 expiration date. As a consequence, consumers need the expertise of Realtors more than ever to navigate both the obstacles and opportunities in today’s market.”

The national median existing-home price for all housing types was $181,800 in June, which is 15.4% below June 2008. Distressed properties, which accounted for 31% of sales in June, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes.

Single-family home sales rose 2.4% to a seasonally adjusted annual rate of 4.32 million in June from a level of 4.22 million in May, and are 0.2% higher than the 4.31 million-unit pace a year ago. The median existing single-family home price was $181,600 in June, which is 15.0% below June 2008.

Existing condominium and co-op sales jumped 14.0% to a seasonally adjusted annual rate of 570,000 units in June from 500,000 in May, but are 3.1% below the 588,000-unit level in June 2008. The median existing condo price was $183,300 in June, down 18.9% from a year ago.

Northeast
Regionally, existing-home sales in the Northeast rose 2.5% to an annual pace of 820,000 in June, but are 4.7% below a year ago. The median price in the Northeast was $249,400, down 5.9% from June 2008.

Midwest
Existing-home sales in the Midwest increased 0.9% in June to a level of 1.10 million but are 1.8% lower than June 2008. The median price in the Midwest was $157,000, which is 9.1% below a year ago.

South
In the South, existing-home sales rose 4.0% to an annual pace of 1.81 million in June but are 3.7% below a year ago. The median price in the South was $163,200, down 11.9% from June 2008.

West
Existing-home sales in the West improved by 6.4% to an annual rate of 1.16 million in June, and are 11.5% higher than June 2008. The median price in the West was $214,800, which is 24.9% below a year ago.

Read more: http://rismedia.com/2009-07-23/signs-of-change-existing-home-sales-rise-36-in-june/#ixzz0N3NOUsXT

First-Time Homebuyers Have Unique Advantage in Mortgage Market

First-time homebuyers and those thinking about refinancing are in a great place.

“The credit markets are still tight, but they have loosened up significantly from 90 days ago,” said Scott Norman, vice president of the Texas Mortgage Bankers Association.

So is this a good time to enter a mortgage transaction? It might be, if you can qualify. “The two biggest issues are going to be credit and down payment,” Norman said. “Those are really going to trigger your ability to get a mortgage in a decent amount of time.”

Here’s what you’re up against in specific mortgage situations and what you can do to increase your chances of getting a deal done.

If you’re buying a home
Get ready for paperwork. Have your bank statements, W-2 wage and tax statement and pay stubs organized.

“Overdocumentation is the name of the game right now,” said Linda Davidson, senior loan officer at Service First Mortgage in Garland, Texas.

Having all the documents upfront will speed the application process.

Check your credit score. The most widely used score is the FICO, which ranges from 300 to 850. Your score, based on information in your credit report, helps lenders predict how likely you are to make your payments on time. The higher the number, the better the chance you’ll be approved for a loan at a low interest rate. “Clean up your credit score,” Norman said. Catch up on any late payments and pay off or pay down your debt.

First-time buyers have a sweetener in the form of an $8,000 credit on federal income taxes for homes purchased before Dec. 1.

It’s critical that you have a down payment because lenders want to see that you have skin in the game. Mortgages insured by the Federal Housing Administration require a 3.5% down payment, which can come from a family member, employer or charitable organization as a gift. For a non-FHA-insured loan, lenders are requiring a 10% down payment, said real estate agent Brenda Rogers of Coldwell Banker Apex, Realtors in Plano, Texas.

If you’re refinancing
“Have plenty of equity,” Rogers said. Equity represents the ownership value you’ve accumulated over time by making payments, and lenders want you to have a financial stake in the refinancing. “The lender doesn’t want to lend 100 percent of the value of the property,” said Norman, of the Texas Mortgage Bankers Association.

Another reason to build equity is that you don’t want to owe more on your home than it’s worth, a situation some homeowners face today.

Also, consider how long you plan to remain in your home, because you need to stay long enough to recoup closing costs associated with refinancing. Those costs typically will total $3,000 to $5,000, said Davidson, of Service First Mortgage. “If you’re going to move out of your home in five years or less, then typically it’s not going to be worth your doing,” she said. “If you plan on staying longer than that, then we need to look at the costs vs. the monthly savings to see how long it will take to recoup that cost.”

Sometimes things outside your control can affect your attempt to refinance.

Rachel Kelley of Plano said she’s been trying to refinance with Bank of America, which last year acquired her original lender, Countrywide Financial Corp. Kelley, a medical writer, ran into financial trouble after her work was cut to part time. “I cannot afford my house payment anymore,” she said. She said her repeated attempts to get more information from Bank of America on how to refinance her home through the Obama administration’s Making Home Affordable refinancing program have been unsuccessful. “I spoke to several people, trying to get information about the program and what I needed to do to refinance,” Kelley said. “It is very likely I will be behind on my payments in the near future due to their inability to get me the proper information on time in order to refinance.”

Loan modifications
A loan modification is when a lender changes the terms of your loan so you can afford your payments.

That can be done by lengthening the term of your loan, lowering your interest rate or allowing you to skip payments and adding those to the end of your loan.

The Obama administration is prodding mortgage-servicing companies to bolster their efforts to modify troubled loans. The servicer is the company that collects and processes your mortgage payment. It may or may not be your original lender.

If you’re having trouble making your payment, contact your servicer immediately and ask about a loan modification.

(c) 2009, The Dallas Morning News.
Distributed by McClatchy-Tribune Information Services.

Staging Basics

Staging Basics. Staging is the process of enhancing the impression a prospective buyer has about your home. Staging is all about removing things from your home that make it look smaller, drab or ated. It differs from decorating because decorating involves bringing things into the home to enhance the look of it.

The key to staging is simplicity. You want to get prospective buyers to a place where they can picture themselves in the home. To do this focus on the following:

Declutter. Remove "you" from the home (meaning pictures and personal items). Replace personal photos with scenery or postcards. A good rule to follow is to have no more than 3 items on any surface. Remove all items from kitchen counters and store them away.

Neutralize. Keep rooms light with paint colors like cream, tan, or white. Keep bright colors to a minimum and use neutral and/or natural colors that can work with many different styles.

Keep it clean. Nothing sells better than a clean and well maintained home. Always keep the home feeling and smelling clean for showings.

Upgrade without spending a lot. Some inexpensive things can make a huge difference. For example, new bed treatment (especially in master bedroom), new towels, fresh paint, or replacing old lamps and lighting fixtures.
Showing Your Home Checklist

• Clean the home from top to bottom
• Send pets to the neighbors
• Keep things organized and clutter free
• Don't forget to declutter outside (toys, folding lawn chairs)
• Mow the lawn, rake leaves, trim bushes, edge lawn, and plant some flowers for color
• Paint doors and windows to freshen up their appearance
• Patch holes in driveway and reapply sealant
• Wash windows and screens
  

Do Not

• Leave valuables out and on display
• Leave pictures or personal effects out
• Clutter the closets (buyers do look)
• Allow pet fur or smell to permeate the house
  

$8K Tax Credit for First Time Home Buyers

There is talk that this credit will be extended into 2010, but as of yet, nothing definitive has come out. As of today, this is the straight and skinny on the $8,000 Federal Income Tax Credit for first time home buyers.

1. Eight grand, new buyers: The tax credit included in the economic stimulus legislation is much narrower than the $15,000 proposal. This credit is equivalent to 10 percent of the purchase price of the home--although it's capped at $8,000--and applies only to first-time home buyers and principal residences. But unlike an earlier $7,500 home buyer tax credit, this one does not have to be repaid.

2. First time buyers defined: For the purpose of this legislation, a "first-time home buyer" is someone who hasn't owned a principal residence for three years before buying a house. (The date of purchase is considered the day that the title is transferred.) That means if you've owned a vacation home--but not a principal residence--within the past three years, you would still qualify for the credit.

3. 2009 buyers only: Only those who purchase a home on or after January 1 and before December 1, 2009 are eligible for the credit. Anyone who bought a home last year won't be able to take advantage of it.

4. Income limits: The tax credit is subject to income limitations. Single buyers need a modified adjusted gross income of $75,000 or less to qualify for the full credit, that's $150,000 for married couples. Those earning more than these thresholds may be eligible for reduced credits.

5. Refundable: Because the tax credit is "refundable," qualified buyers can take advantage of it even if they don't have much tax liability.

6. Recapture: Buyers have to own the home for at least three years in order to capitalize on the credit. If they sell the home before then, they will have to return the credit to the government. (Exceptions will be made in certain cases, such as death or divorce.)

Tips for First-Time Homebuyers

Home-price adjustments in markets around the country have opened doors of opportunity for many renters. If you are transitioning from renter to homeowner, the prospect of making such a large investment may be exciting, while at the same time overwhelming. But it doesn’t have to be. Here are six common mistakes to avoid.
1. Not understanding the homebuying process. Educate yourself. Find a homebuyer seminar that you can attend or research online. The U.S. Department of Housing and Urban Development Web site (www.hud.gov) has an entire section devoted to homebuyers with common questions of first-time homebuyers, mortgage and home-buying programs information, downloadable tools such as a wish list and home-shopping checklist, tips on selecting a real estate professional, etc. Likewise, Prudential Real Estate’s popular Web site, prudential.com/realestate, offers consumers brand-new tools for the homebuying process, such as free home environmental reports, Value Range Estimates and Property Profiles, among other resources.

2. Not asking questions. There are many facets and intricacies to the homebuying process, so although you may gain a basic knowledge, you will still have questions. Don’t hesitate to let your real estate professional know that you are new to the process. Make sure you choose a sales professional who is willing to spend time with you and walk you through the entire process. He or she will expect you to have questions at each step—from house hunting, to making an offer to the closing. Remember, this is one of the largest financial transactions of your life, so you want to have a clear understanding of what’s going on.

3. Buying on impulse. Don't feel pressured into making an offer on the first home you see. Buyers, especially first-timers, may be impressed by the first two or three homes they view. Look at a good selection. List the positives and negatives about each home. Narrow the prospects to three or four and then return for a closer look. When you decide to make a bid on a property, work with your real estate professional to get all of your questions answered before making an offer. But don't wait too long to make an offer. The longer you wait, the greater the chance other prospective buyers may place offers, making it harder for you to negotiate a good deal.
4. Looking outside your price range. Before beginning your home search, consider getting pre-qualified to so get an idea of how much you may be able to borrow. Use this information as a starting point in determining your price range. Then take into consideration other factors that will affect your monthly budget once you are a homeowner, such as property taxes, homeowners insurance, utilities, private mortgage insurance (PMI) and maintenance.
5. Not planning ahead. Think about personal changes you are planning in the next five to seven years. For instance, are you starting a family, and if so, is the home large enough and will it continue to be? If this will be a starter home or if you think you’ll be relocating in a few year, you’ll probably want to pay closer attention to appreciation and resale value. If a double-income is necessary to qualify for financing and to make your payments, do your plans foresee an income sufficient to continue making payments?

6. Failure to focus on location. Don’t just focus on the house. Examine the community. Does it suit your lifestyle? Is the area safe, well-maintained, close to work, stores and schools? Find out about zoning and what new construction is planned on vacant land in the immediate area. Also consider the property marketability when it’s time to sell.
Above all, remember knowledge is key. No question is a silly question. Your real estate professional can be an invaluable asset throughout the process. Making smart home buying decisions will make the home-buying process less scary and your first home purchase a rewarding experience.