Home Prices Keep Soaring

Home prices keep soaring

  @CNNMoney July 30, 2013: 10:38 AM ET

home prices 073013

Home prices continued to gain steam in May according to a closely-watched reading, even as mortgage rates climbed.

The S&P/Case-Shiller home price index was up 12.2% compared to a year ago, slightly better than the 12.1% rise in April. It was the biggest year-over-year jump in prices since March 2006, near the peak of the housing bubble.

Prices in two cities – Dallas and Denver – hit record highs, topping even the peaks they reached during the housing bubble.

However, the national index, which measures prices in the 20 largest markets, is still 24.4% below the peak of June 2006.

Just a year ago, the index posted a 12-month decline in prices. Sellers had been struggling while their homes languished on the market for months, or even years. But prices have increased every month since June 2012, and each month the increase has been greater than the month before.

The gain in home prices has now made this a good time to sell a home. Many sellers are finding themselves in the midst of bidding wars, with buyers eager to make a purchase in a market with a tight supply of houses available for sale. House hunters are also eager to lock in a mortgage while rates are still low, at least by historic standards.

The record low mortgage rates of earlier this year have risen significantly, crimping thepurchasing power of potential home buyers. But climbing rates have yet to slow the rapid increase in home prices.

Additionally, prices are being boosted by a sharp drop in foreclosures, which had been holding prices down.

Related: 5 things to know about rising mortgage rates


"Home prices continue to strengthen," says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. All 20 markets measured in the index have higher prices than they did in April. The housing market's recovery has been an important factor in the nation's overall economic improvement.

Many of the markets with the biggest year-over-year changes in prices are those that were hit hardest by housing's collapse. Prices in San Francisco, Las Vegas, Phoenix and Atlanta are all up more than 20% from a year ago. New York had the most modest rise with a 3.3% increase.

But the rapid price gains over the last year are at a level that no expert thinks can be sustained. Some have even suggested it was unhealthy for the market, raising the risk of anew housing bubble, at least in some regions. The rapid rise of housing prices in the middle of the decade eventually sparked the crisis in the financial markets and the Great Recession.

But Joseph LaVorgna, chief US economist for Deutsche Bank, said he believes prices still have room to increase further, even if their pace slows.

"Affordability remains near historic highs despite the recent rise in rates and home prices," he said. "And the increase in home prices should encourage banks to ease lending standards for mortgages, since the collateral for the underlying loan is appreciating in value." To top of page



Making a Low Offer


 How to Make a Low Offer on a Home

  • new home, home for sale, showing home, home showing, real estate agent, agent, broker, homebuyer, home sales, home buyer

The market is rebounding in many parts of the country. With low interest rates and little inventory, many properties are seeing multiple offers. Homes that show well and are priced appropriately are selling quickly.

In this environment, getting a “deal” on a home may seem an impossible dream. But in some cases, savvy buyers can still make a low offer on a home — and win. Here’s how.

Look for sellers who don’t listen to their agents

Smart sellers hook up with a good local agent early in the process, are informed about the market and the comps, and take their agent’s recommendations regarding pricing and how the home shows. Months in advance, they discuss small cosmetic changes that need to be made to get the best price for the property. These smart sellers go to market with their best foot forward and can command top dollar.

And then there are sellers who don’t take their agent’s advice. They don’t even want to hear what their agent has to say. These sellers can provide the real opportunity for smart buyers.

Consider two similarly sized homes for sale on identical blocks in a subdivision in El Dorado Hills, CA. Both homes were built around the same time and have similar finishes and fixtures. Home A is well- priced at $699,000. Home B is overpriced at $759,000. Ultimately, they’re comparable homes in a frenetic market with little inventory and lots of buyers. Buyers assume that all homes should sell over asking because that’s what they’re used to.

Home A, listed at $699,000, receives multiple offers over asking and sells for $745,000 in the first week. As for overpriced Home B, weeks go by. It sits. And sits. And sits. Buyers think there must be something “wrong” with it. After 30 days and no offers in today’s fast-paced market, it becomes a “stale” listing.

This is when a smart buyer will come in with a low offer. That seller, having shot himself in the foot for pricing too high at $759,000, now must entertain an offer of $725,000 and ultimately settles at $735,000. The result: The buyer of overpriced Home B gets the house for $10,000 less than the buyer of Home A, which had multiple competing offers and sold for more than the asking price.

Look for homes that don’t show well

Consider a third home for sale, Home C, also priced at $699,000 in El Dorado Hills. But this is the home of a hoarder. There is so much “stuff” in the house, too much furniture. The house hasn’t been painted in years. The kitchen cabinets have seen better days. The wall-to-wall carpet in the living areas is filled with stains. To top it off, the seller is a smoker, and you can’t miss that smell. The seller has resisted the agent’s suggestions to thin out the home, put some things in storage, do some painting and get rid of the smoke smell.

The result? This home, too, sits on the market for weeks and weeks. Buyers know what’s wrong with it. But the savvy buyer realizes that nearby Home A sold for more than the asking price. The buyer does the math and realizes that it would only take a few weeks’ worth of work and about $20,000 to make Home C move-in ready.

The buyer makes a low offer and gets the home for $687,000. After the cleaning and cosmetic work, the buyer spent a total of $707,000. The comparable property, Home A, went for $745,000. This buyer was rewarded with nearly $40,000 in equity for thinking outside the box, rolling up his sleeves and getting a little dirty in the process.

In all markets, there will be sellers who resist the advice of their real estate agents and don’t put their best foot forward when going on the market. Their homes sit on the market while others move quickly. Don’t be turned off by these homes like most buyers are. Instead, see them as an opportunity. Think outside the box and do your homework. These homes can provide a nice opportunity for a smart buyer to make a low offer on a home in this competitive market — and ultimately get a good deal.

Read More from Zillow.com

Brendon DeSimone is a Realtor and one of the nation’s leading real estate experts.  He has collaborated on multiple real estate books and his expert advice is regularly sought out by print, online and television media outlets including FOX News, CNBC, Good Morning America and Forbes. An avid investor himself, Brendon owns real estate around the US and abroad and is licensed to sell in California and New York. You can find Brendon on Facebook or follow him on Twitter or Google Plus.

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow

Read more: http://www.foxbusiness.com/personal-finance/2013/07/29/how-to-make-low-offer-on-home/#ixzz2aTKPWaT0

How to Make a Low Offer on a Home

Housing Finance Reform


Housing Finance Reform: What's Next?

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The days of "liar loans" and loan approvals based on not much more than a heartbeat are long gone, but the fallout from the housing crisis is far from over. While homebuyers and homeowners may be focused most on their own ability to finance a home, the federal government and real estate policy experts continue to discuss reforming the nation's home financing system.

Compare Mortgage Rates in Your Area

Though not every proposed reform will have a direct impact on consumers, initiatives in five key areas are likely to change mortgage financing in the future. These areas are the unfinished business of mortgage reform.

   Winding down Fannie Mae and Freddie Mac.
    Creation of a common securitization platform.
    Reform of the compensation system for mortgage servicers.
    Revision of key documents for borrowers.
    Improvements to the mortgage recordation and securitization systems.

Winding down Fannie Mae and Freddie Mac

On June 25, Sens. Bob Corker, R-Tenn., and Mark Warner, D-Va., introduced the "Housing Finance Reform and Taxpayer Protection Act" to reform the secondary mortgage market and replace the current reliance on Fannie Mae and Freddie Mac with a private system.

"While this bill may not go through as written, eventually I think we'll see something like it that essentially turns the government role in mortgage financing into something more like (Federal Housing Administration) financing, which is just insurance and not actually ownership of loans," says Richard K. Green, director of the University of Southern California Lusk Center for Real Estate in Los Angeles.

Nicolas Retsinas, director emeritus of Harvard University's Joint Center for Housing Studies, expects it will take five to 10 years after legislation is passed before Fannie Mae and Freddie Mac are wound down.

Right now, Fannie Mae and Freddie Mac are profitable, says Rick Sharga, executive vice president at Carrington Mortgage Holdings in Santa Ana, Calif., so that creates pressure on the government to keep them around a little longer.

Creation of a common securitization platform

Green says the current system, in which Freddie Mac, Fannie Mae, the FHA and private lenders each have different platforms to determine fees and interest rates, will eventually be switched to a single system, "like the Good Housekeeping Seal of Approval" for loans.

Retsinas says he thinks the transition will take a few years, but that eventually, getting clarity will help consumers get more access to capital and potentially lower interest rates. Green thinks conforming loan limits are likely to be a little lower once the transition is made and that some loan fees could be a little higher.

Reform of the compensation system for mortgage servicers

"Right now, there's no great incentive for the resolution of problem loans," Green says. "The idea is that mortgage servicers need to be compensated in some way to get them interested in doing a loan modification, but that hasn't happened yet."

If you're in trouble on your loan, this eventual reform may make a difference, but so far the issue hasn't been resolved, Green says.
Revision of key documents for borrowers

Mortgage disclosure documents for borrowers have been revised in the past, but few people are satisfied that the "good faith estimate" and the Truth in Lending Act, or TILA, disclosures are easy to understand.

"The objective is to have a standardized set of documents regardless of who you're getting your loan from and to have it easy to understand for borrowers," Sharga says. "The (Consumer Financial Protection Bureau) has been pilot-testing documents with lenders, and the plan is to have final revisions in place by early 2014."

Improvements to the mortgage recordation and securitization systems

"The real estate and mortgage industries are throwbacks to times when all transactions were paperwork-intensive," Sharga says. "There's probably been the least concrete action to date in the area of improvements to recordation and securitization systems."

Eventually, Sharga believes a technical solution will be developed, but for now, individual mortgage companies are pursuing this themselves.

"The good news in housing finance reform is that there are proposals out there, and people are getting stirred up about these ideas, but that's not the same as action," says Retsinas. "I think there's a 90% chance that the next president will inherit the same situation we're in now."

Read more: http://www.foxbusiness.com/personal-finance/2013/07/26/housing-finance-reform-what-next/#ixzz2aSwInRPA

Area Foreclosure Rates Are Down


Area foreclosure rates plunge from year ago

Published: Wednesday, Jul. 24, 2013 – 12:00 am | Page 6B
Last Modified: Wednesday, Jul. 24, 2013 – 6:59 am


Foreclosure rates in the four-county Sacramento region fell by more than half in May from the same month a year ago, CoreLogic reported Tuesday.

Among outstanding mortgages, the rate of foreclosures fell from 2.61 percent in May 2012 to 1.09 percent in May of this year, the Irvine-based real estate information service said.

Foreclosure rates in the region have been falling for months as home values rise and the economy gradually improves.

May’s foreclosure rate was lower than the national average of 2.61 percent, it said.

The numbers of homeowners seriously delinquent on their mortgages in the Sacramento area also continued falling. In May, the 90-day delinquency rate fell to 3.86 percent from 6.65 percent the same month last year.

Also on Tuesday, the California Association of Realtors reported a continuing decrease in sales of distressed properties.

In June 2012, more than half of all homes sold in Sacramento were foreclosures or short sales, the Realtors’ group said. Last month, only about a quarter of homes sold were properties in which owners owed more than their homes were worth; the rest were traditional equity sales.




House Flipping is Back

House-flipping is back, flourishing again
CNBC.com 07/18/13 12:52 PM ET
By: Diana Olick

For the past several years single-family housing investors have been playing the buy and hold game. Strong rental demand and soft home prices made that the best bet. Now, with home prices up more than 12 percent from a year ago, the strategy is suddenly changing.

“It’s a perfect storm for flipping right now in many parts of the country because home prices are bouncing off the bottom,” said Daren Blomquist, vice president at RealtyTrac. “That is something that flippers can catch on the coattails of and ride that wave as long as it lasts.”

Home-flipping, defined as buying and selling the same home within six months, came roaring back in the first half of this year. There were 136,184 homes flipped, an increase of 19 percent from a year ago and 74 percent from the first half of 2011, according to a new report to be released Friday by RealtyTrac.

John Paulson created quite a buzz in the housing market yesterday at the Delivering Alpha conference. CNBC’s Diana Olick digs into the latest housing data for your best investment.

Increases, however, are nothing compared with the profit jump. Investors made an average gross profit of $18,391 per home, or a 9 percent gross return. That is up 246 percent from a year ago.

“Home-flipping business has keyed up quite a bit in the last 6 months,” said Steve Jones, founder of Los Angeles-based Better Shelter. Jones, who has been flipping homes for five years, said the competition is really heating up.

“There’s not a lot of inventory, and every time a listing comes up it’s like piranha in the water,” he said.

Jones bought and flipped eight houses in the first half of this year, going in with all-cash and looking for hidden value, like unique architecture or renovation potential. He does quite a bit of work on the homes, always looking at the bottom line, but also imagining who the end buyer is going to be.

(Read more: Corelogic: There is no housing bubble)

“Some homes you do really great, and some homes you kind of do OK. I have to keep my crews busy, so it averages out,” said Jones.
The math is looking better and better to investors as prices rise, with one possible hitch: Rising mortgage rates. Investors largely use cash on the front end, but their buyers don’t.

“On the flip side, when they are actually flipping the properties to the end-users, interest rates matter because those end-users will not be able to afford as much as interest rates go up.” added Blomquist.

Carl Quintanilla spoke with John Paulson at CNBC’s “Delivering Alpha” conference. Large-scale institutional investors have been swarming the distressed housing market since the height of the housing crash, buying homes in bulk, rehabilitating them and putting them up for rent. Companies like Blackstone, Colony Capital, Waypoint and hedge fund titan John Paulson have been reaping solid rewards on the trade.

Paulson, speaking at CNBC’s Delivering Alpha conference, said he is still high on housing.

“It’s not too late to get involved. I still think buying a home is the best investment any individual can make. Affordability is still at an all-time high,” said Paulson.

Large-scale investors, however, may not be behind the surge in home flipping. They may, in fact, be the cause of it.

“Now that the institutional investors are doing buy and hold, a lot of these guys [individual investors] can’t compete with their checkbooks,” said Rick Sharga, formerly an executive at Carrington who now works for Auction.com. “In some cases the individual investors are flipping them to the institutional investors.”

While many of the large funds have teams that renovate homes, in some cases they would rather pay a premium for a move-in-ready property, rather than waste time and money remodeling.

“So the flippers are kind of the in-between middleman who is getting the property into good rentable condition and then selling to the institutional investors,” explained Blomquist.

(Read more: Map: Tracking the US real estate recovery)

The renovation of course takes away from the flipper’s profit, begging the question, if a flipper is getting perhaps a 5 percent return on the investment after costs, why not play the stock market instead? Surely they will see a bigger profit faster, but there is larger downside risk.

“You can’t control the stock market,” remarked Sharga. “You have a little bit more ability to control your success in housing if you know what you’re doing and you know your market well.”

The potential profit from house flipping varies dramatically market to market.

Formerly hot investor markets like Phoenix, Las Vegas and much of Southern California are seeing big drops in flipping, as there is very little to buy and what is available is selling at a premium.

—By CNBC’s Diana Olick. Follow her on Twitter @Diana_Olick.
Questions?Comments? facebook.com/DianaOlickCNBC.

California Real Estate Agents Keeping it Legal

As Real Estate Professionals, sometimes it could be a challenge to stay current with so many ever changing rules, ordinances and laws.

Local Sign Ordinances

It is important to be a good steward when it comes to real estate sign placement, use discretion and common sense when putting signs up.  Following current ordinances helps avoid restrictions on where and when signs can be placed.  Many of our local ordinances have small variations between one another and it can be difficult to keep track, so we have put together a refresher course at the bottom of the newsletter.  Two good rules to always follow: keep signs out of the public right of way, this includes sidewalks, and never attach balloons to signs.

Mortgage Interest Deduction at Risk?
The National Association of REALTORS® issued an important call-for-action.  The U.S. Senate is considering tax reform options and adopted a “Blank Slate” approach that initially eliminates every provision in the tax code, including the mortgage interest deduction and all those that encourage real estate ownership and investment.  Senators must submit their tax reform priorities by July 26th.  REALTORS® need to make their voices heard now so real estate provisions are on the top of Senators’ lists.  If you have not responded to this call-for-action to voice your support for the mortgage interest deduction, doing so is quick and simple: you can take action here

Potential Reform for Fannie and Freddie
House Financial Services Chairman Jeb Hensarling (R-Texas) introduced legislation to phase out federal involvement in the secondary mortgage market by eliminating Fannie Mae and Freddie Mac over several years, and adding limits to who can get federally backed financing through FHA, how much would be guaranteed, and at what cost.  NAR is strongly opposed to this legislation in its current version.  NAR believes in retaining federal involvement in the conventional mortgage market.  SAR members met with local elected Congressional representatives in May to discuss the importance and need for a “do no harm” approach in potential reform for Fannie and Freddie.

NFIP Implementation
The National Association of REALTORS® is currently working a multifaceted approach to keep REALTORS® apprised of, and address serious concerns about the implementation of the National Flood Insurance Program reform legislation.  This legislation will phase out certain flood insurance subsidies.  SAR has received unofficial preliminary information that the Sacramento Region will not be affected by these price increases.  If you see or hear anything contrary, please contact Caylyn Brown at cbrown@sacrealtor.org.

Local Sign Ordinances Continued
California Civil Code Section 713 sets the legal ground work for real estate signs.  This section states that an owner of a property, or their agent, is allowed to advertise the sale or lease of that property on site in plain view of the public.  This advertisement may include directions to the property, the owner or agent’s name, address, and telephone number.  Local governments are permitted to regulate the display or placement of these signs on public and private right of way.

The City of Citrus Heights requires that real estate signs be no more than five square feet, and set back from the public right of way ten feet.  Freestanding directional signs should be limited to one per driveway, and one per service entrance.  Directional signs are to be less than four square feet and thirty inches tall.  These signs need to be set back at least five feet from the public right of way.

The City of Elk Grove requires on site real estate signs to be set back five feet from the public right of way, and out of any required vision triangle.  Residential property signs cannot be more than six square feet, and are limited to three riders per sign.  Directional open house signs are allowed on weekends and holidays.  One sign may be placed for each change in direction, to a maximum of five signs.  The open house signs may not be more than six square feet.  For commercial property, one on site sign per street frontage is allowed.  Commercial parcels less than one acre may have a thirty-two square foot sign, parcels larger than one acre may have a forty-eight square foot sign no more than eight feet tall.  All signs must be removed no later than close of escrow.

In the City of Folsom, signs must be set back five feet from the public right of way, and remain out of the vision triangle.  For residential property these signs need to be less than six square feet, and no more than three riders per sign.  Open house signs are allowed on weekends and holidays, one sign for every change in direction, with a maximum of five signs.  Open house signs may not be larger than six square feet.  Commercial property is permitted to use one sign per street frontage.  For property less than one acre these signs must be no more than thirty-two square feet.  Parcels larger than one acre may use a forty-eight square foot sign, with an eight foot height limit.

The City of Rancho Cordova allows for not more than one for sale sign per property frontage.  Residential signs are limited to ten square feet and must be set back at least three feet, and shall not obstruct corner visibility requirements.  Nonresidential signs are limited to a maximum of 32 square feet and shall be set back at least three feet from the right-of-way.  Open house directional signs are permitted on weekends and holidays when open house sales activities are ongoing.  One sign may be placed for each change in direction to a maximum of five signs.  Directional signs are not to exceed an overall size of nine square feet, including supports, and not exceed a height of thirty inches.  Directional signs are not to be placed in the public right-of-way.

In the City of Sacramento, one sign per parcel is allowed, one sign may be located on the ground level, and one above balcony level, no sign shall be attached to the first floor balcony.  The area of the sign will not exceed six square feet, and the design of each sign shall be black ink on white board.  The sign is to be removed within seven days after the sale, rental, or lease solicited is accomplished.  If the sign is not removed within this time frame, it shall be removed immediately, at no cost to the City.  No signs are to be in the public right-of-way.  Signs may be placed in the area between the face of the street curb and the street side edge of the sidewalk (commonly referred to as the planting strip or mowing strip).

The City of West Sacramento allows one sign per property, but it must remain entirely on the property it applies to, be smaller than six square feet, and cannot be directly illuminated.  This sign must be removed within seven days of sale, rental, or lease of the property.  Off-site directional signs are allowed for real property events that are sponsored by a real estate agent or property owner.  The signs may only be displayed on event days, and will be displayed no earlier than eight am on the day of the event and removed no later than four pm the day of the event.  These signs are only allowed for existing properties that are available for sale, lease, or exchange.

Single Women Are Buying Homes At Twice The Rate Of Men

Single Women Taking on Real Estate

A few decades ago, a single woman buying real estate on her own was a rarity.

Single Women Are Buying Homes At Twice The Rate Of Men

Before the Fair Housing Act of 1968, few women could get approved for a credit card, much less a mortgage, without a husband’s or father’s signature.

Now that’s all changed. In fact, the National Association of Realtors reports that since the mid-1990s, single women have purchased homes at nearly twice the rate of single men.

Last year, single female homeowners made up 18 percent of household composition in the association’s Profile of Home Buyers and Sellers, compared to 10 percent for single men.

Julie Cook, a public relations professional in Michigan, recently closed on her first home, a three-bedroom ranch outside Detroit. After living in New York City and paying sky-high rent for a few years, the Detroit native recently moved back to the area and decided to take advantage of more affordable home…

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