Weekly Real Estate Report

The Fed Speaks -- Holiday Cheer?

Well after months and months of speculation, the Federal Reserve Board finally announced the start of their "tapering" program in which they will reduce the amount of their purchases of government and mortgage-back securities by ten billion dollars per month. Starting in January, the Fed will purchase $75 billion dollars monthly instead of $85 billion dollars. This program was instituted during the financial crisis both to keep long-term rates lower and provide some stability in a mortgage market which was devastated by the crisis. By lowering the amount of purchases, the Fed is officially proclaiming that America is well on the road to recovery.

This does not mean that the Fed is about to raise interest rates. What it means is that the Fed will be exerting less influence over long-term rates which are of utmost importance to consumers because fixed-rate home loans are influenced significantly by the direction of long-term interest rates. The Fed has been going out of its way to say this does not mean that they are ready to raise short-term rates. The Fed has emphasized its commitment to keep short-term interest rates "exceptionally low" until either the unemployment rate falls to around 6.5% or the inflation rate exceeds 2.5% a year.

Why is this good news for the Holiday? Well, the stock markets rallied decisively on the news. The economy is recovering and this is a good thing. Long-term rates rise when the economy is stronger. This is especially the case when rates are bouncing back from the lowest point in history. But rates are still very, very historically low. And this is good news for homeowners because a stronger economy will translate into more buyers and this will cause the positive cycle to continue. All in a low rate environment. So, we have something to celebrate.

 

The foreclosure crisis is showing signs that it's finally fading away. The number of new foreclosure filings -- which includes default notices, auctions and bank repossessions -- dropped 15% to a total of 113,454 properties in November, according to RealtyTrac, an online marketer of foreclosed properties. That was the biggest monthly decline since November 2010, and foreclosure filings are now at the lowest level since December 2006. From a year ago, filings are down 37%. "The depth and breadth of the decrease provides strong evidence that we are entering the ninth inning of this foreclosure crisis with the outcome all but guaranteed," Daren Blomquist, vice president at RealtyTrac, said in a statement. Along with general economic improvements that have made it possible for homeowners to stay on top of housing payments, people are also trying harder to hold onto their homes as housing prices continue to rise. "People have more to lose if they lose their home," said Jed Kolko, chief economist at Trulia. While filings are much lower than the average of 300,000 filings per month during the height of the foreclosure crisis, they haven't quite recovered to the level of around 86,000 that was seen in 2005 and 2006, before the housing bubble burst."While foreclosures will likely continue to stage a weak rally in certain markets next year as the last of the distress left over from the Great Recession is dealt with, it is highly unlikely that there will be a foreclosure comeback that poses any major threat to the solid housing recovery that has now taken hold," said Blomquist. Source: CNN/Money

For 75 percent of military families, owning a home is one of the most important things to accomplish upon returning from service, according to a Century 21 survey. Harris Interactive conducted the study of more than 400 responses of military members or spouses. “Home ownership is a top priority for many, but is especially significant to those returning from a tour of duty,” says Rick Davidson, president and CEO of Century 21 Real Estate. Eighty-eight percent of veterans said that owning a home makes them feel safer. Vets also say they have a strong desire for home ownership because they want to own their own residence (73 percent), establish a household (43 percent), and have financial security (36 percent). However, only 33 percent of military families say they look for a home within a year of returning from active duty. The biggest obstacles reported were the price of homes, the inability to come up with a down payment, and personal savings. For those who do a begin a home search, vets and their families report space—in terms of number of bedrooms and bathrooms—is more important than other specific features in finding the perfect home. Storage space, amount of square footage, outdoor space, and an updated kitchen were cited as the most important amenities. Source: Realtor® Magazine Daily News

Single-family new-home sales posted a sharp rise in October, up 25.4 percent from September, according to newly released Census Bureau data. That was a similar rate to last spring when the new-home market was taking off in recovery mode. Across the country, all regions posted double-digit gains in new-home sales in October. In the Midwest, they jumped 34 percent; 28.2 percent in the South; 19.2 percent in the Northeast; and 15.2 percent in the West. As sales gained, inventory levels fell to a 4.9-month supply. "The strong October results return us to the sales levels we saw earlier this year and negate the pause caused by the sudden jump in rates," says David Crowe, chief economist for the National Association of Home Builders. "We expect sales to continue to rise as pent-up demand is released and first-time home buyers creep back into the market." The average price for a new home was $321,700 in October, according to Census data. That puts it on par with the average price during the 2006-07 boom times. The average price for a new home was $321,700 in October, according to Census data. That puts it on par with the average price during the 2006-07 boom times. Source: National Association of Home Builders

Jennifer Odom

Merry Christmas!

Best wishes for peace, prosperity and happiness.
Have a very merry Christmas!

Jennifer Odom with Landmark Bank

Weekly Real Estate Report

What Does a Better Job Market Mean?

Last month we printed a quote from a Federal Reserve Study. This study indicated that the economy was poised to start producing more jobs. While many were skeptical regarding this prediction, the October and November jobs reports indicate that this speculation was right on point. The economy has produced just over 200,000 jobs per month during the past four months while the previous four month average hovered around 160,000 per month. Not only has the jobless rate dropped to 7.0%, but initial claims for unemployment benefits have moved below 300,000 for the first time since the recession started. Though in the past week, they bounced back significantly most likely due to the timing of the Thanksgiving Holiday.

There are some evidence that the pick-up is still lackluster when you consider how many have left the workforce and the quality of jobs created; however, there is no doubt when you put all the numbers together, the job creation machine is steadily improving. The next question is--what does that mean for the economy? The economy improves as the job market improves. It is that simple. People who are working spend more money. More importantly, they make long term decisions such as setting up households, purchasing cars, homes, furniture and undertaking home improvements. For example, it is no coincidence that car sales in November hit their highest level since 2007.

A better economy comes with costs. This week the Federal Reserve meets and considers whether to lessen their stimulus efforts. Already interest rates have been increasing for the past six months in anticipation of this move. Most speculate that the Fed will not move until early next year and if jobs creation continues to improve, this prediction may become a certainty. News that Congressional budget negotiators have reached a preliminary agreement has heightened concerns that the move may come sooner because of a reduction of the threat of another government shutdown. Keep in mind that the Fed does not control long-term rates and if the markets feel the Fed should let rates rise, they are likely to rise no matter what action the Fed takes. The bottom line? The good news we are seeing in the employment sector is likely to end the run of good news we have seen with regard to record low rates. That does not mean that rates are likely to be high enough to make owning homes and cars unaffordable. There are still a lot of bargains out there. We just don't know how long they will last.

 

A tax break for struggling homeowners ends Jan. 1 and that could mean big tax bills -- and financial hits for their neighbors. Say a family is behind on their mortgage and the bank cuts them a deal, maybe reducing the loan principal or forgiving their home loan balance after a "short sale" in which the seller owes more than the final price. Under traditional IRS rules, the amount of that debt forgiveness would be taxable income. That temporarily changed in 2007 when Congress passed the Mortgage Foreclosure Debt Forgiveness Act. That law is set to expire at year's end. A return of the tax could affect many of the nearly 10 million Americans who owe more on their loans than their homes are worth, according to the National Association of Realtors (NAR). In a short sale, if a property with a $400,000 home loan sells for $250,000, the forgiven debt of $150,000 will be taxed after Jan. 1. The hit could top $35,000. Consumer advocates consider the tax unfair: "The money being taxed was 'phantom income' that existed only on paper," said Elyse Cherry, CEO of Boston Community Capital, a non-profit, neighborhood stabilization group. It will also damage foreclosure-prevention efforts, said Cherry. Many at-risk homeowners could not participate in programs if a big tax bill accompanies the fix. "The program only works when we can save homeowners money," she said. Source: CNN/Money

Homeowners frequently see their heating bills rise as Fall begins and the weather cools. For this reason, homes with energy efficient and environmentally friendly features are often a priority to prospective buyers. According to the National Association of Realtors’ 2012 Profile of Home Buyers and Sellers, nearly nine out of 10 recent homebuyers said that heating and cooling costs were somewhat or very important when considering a home for purchase. “Realtors build communities and know that consumer demand for greener homes and features has grown considerably over the past several years. Going green has proven to be more than a trend; many people now seek out this way of living and want homes and communities that are more resource efficient and sensitive to the environment,” said NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif. “As energy savings and green building features are becoming more important to buyers, sellers and businesses, it comes as no surprise that consumers are placing a higher value on properties with those features.” It’s easy to understand why home buyers tend to favor greener houses; often the higher a home’s energy efficiency, the more money is potentially saved in monthly heating and cooling costs. NAR data show that features which directly affect monthly energy costs are important to buyers; thirty-nine percent of survey respondents reported that a home’s heating and cooling costs were very important when considering a home for purchase, followed by energy-efficient appliances and lighting, each at 24 percent. Landscaping for energy conservation and environmentally friendly community features were less important but were still a factor in the minds of home buyers; nearly half of buyers found these features very or somewhat important. Source: NAR

Thousands of single-family homes are being built to rent rather than sell, reports the New York Times. More home builders and investors see it as an income-generating investment at a time when the pool of first-time home buyers is shrinking. The percentage of homes built specifically as rentals was 6.2 percent in 2012 — a record high, according to Census Bureau figures. For example, in the Atlanta area, a five-bedroom, three-bathroom new home that may have sold for less than $200,000 can fetch $1,300 a month in rent. “New homes still command a premium with renters,” the Times reports. For investors, a new home can offer “fewer repairs, lower maintenance, and it looks great to the tenants,” says Bruce McNeilage, the managing partner of Kinloch Partners, a Nashville-based real estate investment company that has been acquiring model homes in the Atlanta area to turn into rentals. “You can get maximum rents, and people are going to stay in them for a while because they’re brand-new.” However, some home owners say they’re concerned about investors turning their new subdivisions into neighborhoods of renters. They fear it will worsen property values. Some firms say they try to avoid buying up blocks of rentals in one subdivision. “We never do more than 20 or 25 percent of a subdivision — we like to spread it out as much as possible,” says James Breitenstein, CEO of San Francisco-based firm Landsmith, which has built about 1,000 homes for rent in Houston, Indianapolis, and Kansas City. “We don’t want them to become rental communities.” Source: New York Times

Jennifer Odom

The Real Estate Report 12/13/2013

Can House Prices Rise as Sales Slow?

Here is an interesting picture. The S&P/Case-Shiller House Price index showed prices in the 20 largest cities increased 13.3 percent annually in September, the highest year-over-year increase since February 2006. Yet, existing home sales have slowed a bit and pending home sales have been lower for several months, according to the National Association of Realtors. How can home prices be rising at a time in which home sales are slowing down? The answer is found in two important numbers. For one, the percentage of distressed sales is falling as the foreclosure inventory shrinks. LPS reports that the foreclosure inventory is down 30% over the past year. Since distressed homes sell at a significant discount over non-distressed sales, it makes sense that the average sale price is rising. During the height of the housing crisis, the flood of foreclosed homes exaggerated the drop in home prices and on the way out of the crisis, the rise in home prices is now exaggerated by the lower numbers of these sales.

Secondly, we still have a lack of inventory in many markets, especially at the lower end of the market. Housing sales are being held back because of this lack of inventory but at the same time we are not seeing slower housing sales cause downward pressure on prices. If there is more demand than supply, prices will be stable or rise regardless of the number of total sales. What does this mean for the future? If demand continues to rise, housing prices will continue rising or at least stabilize. The first factor -- distressed sales --- will become less of a factor in the future as we approach normalized levels of distressed sales.

The key is demand. If the economy continues to produce jobs at a decent rate, then we will have a greater demand for the real estate market. That is what makes November's employment report interesting. Heading into December we had a series of numbers which pointed to a stronger jobs market, including the lowest number of first time claims for unemployment benefits since before the recession started and a strong October employment report. This made the markets optimistic before the numbers were released. And the numbers did not disappoint as the economy once again created more than 200,000 jobs and the unemployment rate dropped to 7.0%.

It is official. FHA’s Office of Single Family Housing published Mortgagee Letter 2013-43 on Friday, December 6. This letter announced that on January 1, 2014, FHA will implement new Single Family loan limits for mortgages as detailed in the Housing and Economic Recovery Act of 2008 (HERA). As a result, the calculation of FHA’s maximum loan limits in high cost metropolitan areas of the country will be reduced and the current high “ceiling” of $729,750 will be reduced to $625,500. The revisions will be effective for all applications submitted after the end of December. The letter also announces the limits for areas between the base and high-cost limits which are also lower in many areas as well as the limits for reverse mortgages. Note that VA has not made their announcement regarding possible changes for next year as of December 6.  Source: FHA  Note: To be assured of obtaining the higher loan limits a prospective home buyer will need to ratify a contract and submit an application to a lender several days before the end of the year.  FHA has lower down payment requirements as compared to conventional mortgages. 

The Mortgage Bankers Association’s (MBA) Research Institute for Housing America (RIHA) released a new report entitled A Profile of Housing and Health among Older Americans authored by Professors Michael D. Eriksen of Texas Tech University, Gary V. Engelhardt of Syracuse University, and Nadia Greenhalgh-Stanley of Kent State University. “The study found older Americans who own their homes are more financially secure and generally experience fewer impediments to good health than their peers who rent,” said Professor Eriksen. “Owning a home provides the single largest asset in most Americans’ retirement portfolios, while renters have far more difficulty modifying their living space to adapt to any of the myriad physical ailments that tend to affect older people. Our report serves as a useful reference for all parties interested in the implications of housing on an aging society, a situation America now faces with large numbers of the Baby Boomer generation rapidly heading into retirement age.” This latest study provides a profile of the housing, functional status and health status of the near old (individuals aged 55 through 64) and older Americans (aged 65 and older) using the most recent data available from the Health and Retirement Study, a joint product spearheaded by the National Institute on Aging and the University of Michigan. “Housing demand over the next decade will be significantly impacted by the aging of the U.S. population. Real estate finance must also evolve to meet these changing needs, whether older Americans age in place and continue to own their homes, or whether they rent,” said Mike Fratantoni, executive director of RIHA, and vice president, Research and Policy Development for MBA. The study found that there were more than 47 million near old and older American households in 2010, of which 80 percent were homeowners. In addition, housing is still the dominant asset in the portfolios of older Americans. Median housing equity for older American homeowners was $125,000; the median housing-equity-to-income ratio was 2.4:1; and 50 percent of the typical older homeowner’s portfolio was composed of housing wealth. Source: NMP Daily

More home buyers are saying that living near family members is not an important consideration for them when home-shopping. They’d rather concentrate on property size, crime rates, school district, and length of commute when shopping for a new home rather than focusing on the distance to their in-laws, according to a new survey by Trulia and research firm Harris Interactive. The No. 1 driver in their home search? Home size, according to 70 percent of adults surveyed with children. The other top concerns for home-shopping that followed were crime rate, school district, and length of commute. On the other hand, 33 percent of adults with children and 29 percent of adults without children cited proximity to family members as important criteria when looking for a home to purchase. “Family members want intimacy at a distance,” says Deborah Carr, professor of sociology at Rutgers University. “They want love and support from their kin, but they also want to maintain their independence and autonomy.” That said, when times get tough, more Americans say they want to be near families. A survey during the recession by Relocation.com showed that Americans wanted to move near family or move-in with family to help curb costs. Multigenerational households have been rising. In fact, in 2008, 16 percent of Americans lived in a household with at least two adult generations — a record percentage, according to Pew Research Center research. Source: The

 

Jennifer Odom

The Real Estate Report 12/4/2013

The Muddled Oil Picture

We find it kind of interesting that the stock market continues to hit records at a time in which oil prices are moderating. Conventional wisdom tells us that the stock market rallies when the economy is getting stronger. A stronger economy causes higher demand for energy. That would cause oil and gas prices to rise. Yet, in August oil prices pushed to approximately $110 per barrel and by the middle of November, they had receded to below $95.00 per barrel. In the meantime, in the middle of November stock prices hit record levels again. Why the disconnect? Some of the drop in oil prices could be associated with the uncertainty which accompanied the government shutdown -- however the stock market did not seem to be affected by the shutdown and oil prices did not rebound when the shutdown was over. There are also seasonal factors. We got through the hurricane season without any major storms which could have damaged our ability to produce oil. Finally, the progress towards the Iranian nuclear agreement also weighed in on oil prices.

On the other hand, there were some additional important announcements that are affecting the overall picture. The International Energy Agency reported that the U.S. will surpass Saudi Arabia as the top oil producer in the world by 2015. The Administration also announced in November that our oil production is at a 24-year high and our imports are at a 17-year low. The factors for this include both new oil extraction technologies such as fracking and more energy efficient cars. Long-term projections in the IEA report were not as optimistic; however, for now the energy picture is getting better. Why is this important? As the economy grows, if oil prices also increase this causes a drag on economic growth. If in 2014 oil prices stay where they are, consumers will have more money to spend in other areas --from furniture to cars to houses. In other words, if it holds the oil price picture could be very good news. Meanwhile this week we will see another jobs report. This one is sure to be interesting as a follow-up to the surprisingly strong report from the previous month.

The U.S. homeownership rate climbed from the lowest level in 18 years, signaling that the real estate rebound is drawing in more buyers. The share of Americans who own their homes was 65.3 percent in the third quarter, up from 65 percent in the previous three months, the Census Bureau reported. The prior level was the lowest since the third quarter of 1995. Rising real estate values are removing negative equity, helping homeowners avoid foreclosure, while also luring would-be purchasers into the market before prices and rates go higher. The pool of eligible buyers is expanding as U.S. employment improves and families who lost properties during the recession repair their credit and seek another chance at owning. Americans whose properties were repossessed were once “homeowners by choice and now they are renters by chance,” Richard Smith, chief executive officer of Realogy Holdings Corp. (RLGY), owner of brokerage brands Coldwell Banker and Century 21, said in a telephone interview yesterday. “They will repair their credit and be back in the market as homebuyers. We don’t grow up in the country aspiring to be renters. We aspire to be owners.” Home prices jumped 12 percent in September from a year earlier, the 19th straight annual increase, Irvine, California-based CoreLogic Inc. reported as well. Source: Bloomberg

Solar panels are soaring in popularity, almost becoming a standard for new homes in several markets, Bloomberg reports. Six of the 10 largest U.S. homebuilders say they now include solar panels in new construction, and consumer demand for them is expected to soar 56 percent nationwide this year, according to the Solar Energy Industries Association. “In the next six months, homebuilders in California and the expensive-energy states will be going solar as a standard and just incorporating it into the cost of the house like any other feature,” Jim Petersen, CEO of solar contractor PetersenDean Inc., told Bloomberg. Installing solar panels during the home-construction phase is about 20 percent cheaper than doing so after the house is built. Solar panels can cost between $10,000 to $20,000, but they can drastically reduce electricity bills. In California, the biggest solar state, as many as one in five homes built this year will have solar panels, according to some industry estimates. Source: Reuters

Though U.S. developers added 39 million square feet of new office space nationwide over the last year, the gains were muted because another 22 million square feet of office space was removed from the market, CoStar Group reports. Where did it go? Developers have either demolished or converted the removed space into other uses, such as apartments or condos, according to an analysis of CoStar’s third-quarter Office Outlook and Forecast. But more developers are second-guessing demolishing these older offices and opting to convert these spaces into residences in order to help meet growing demand for urban residential space. The trend is most evident in markets like New York City, San Francisco, Chicago, Philadelphia, Baltimore, northern New Jersey, and Washington, D.C., CoStar notes. Developers are finding that residential condos can fetch investment sales prices of up to $5,000 per square foot, much higher than what the office buildings attracted. Source: The CoStar Group

Jennifer Odom

 

 
 

Interesting December Facts...

Jennifer Odom

Happy Thanksgiving!

The Real Estate Report 11/20/2013

 

Maybe It's Not a Fluke

Two weeks ago we published a column entitled "Words of Optimism." Last week a surprisingly strong employment report was released. Was this a coincidence or was it an accurate prognostication? We do know that the jobs data can be tricky. What looks strong one month can be reversed the next month as the new month's data is always accompanied by revisions of previous numbers. Thus, we would need to see two or three months of strong jobs reports before we declare a turnaround and a great prediction (or a lucky guess). On the other hand, the words of optimism were based in fact and those facts included the important numbers regarding increased household formulation. As a matter of fact, household formulation and jobs data are clearly linked.

As more jobs are created, more households are created as children move out on their own. This demand for housing -- both rental and purchase -- creates more jobs. This relationship created a vicious cycle during the recession. Today it could influence the start of a virtuous cycle in which the economy is buoyed by both factors working together. Again, our thoughts are not just the result of rampant speculation. A recent report by the Federal Reserve Board indicated that the employment rate was set to fall in the coming months -- "Across the board, these indicators show the pace of the labor market recovery has increased compared with a year ago," wrote Mary Daly, the San Francisco Fed's deputy research director, and colleagues Bart Hobijn and Benjamin Bradshaw. "We take this as evidence that the recovery in the labor market is robust, broad-based, and likely to continue, if not accelerate, over the coming months." (Reuters). So, perhaps the surprising jobs report was not a fluke. But we still need to see a few more months of data to really determine if this is the case.

Americans don’t care to get to know the neighbor renting next door, according to a survey of more than 3,000 adults conducted by Harris Interactive on behalf of Trulia. Home owners dismiss neighbors who are renters more than any other group living in their neighborhood, the survey finds. Thirty-five percent of respondents say it’s most important to them that their neighbors be home owners, and 51 percent of home owners say they prefer to have other home owners as neighbors. That compares to 33 percent who say they prefer neighbors who speak the same language as them, 16 percent who say they prefer neighbors with the same family structure, and 10 percent who say they prefer the same race and ethnicity. At a time when more single-family homes have been turned into rentals, other surveys have found a prejudice against renter neighbors, too. Nearly 75 percent of home owners say that renters are bad neighbors, according to a survey by NeighborsFromHell.com. “Renters are less likely to adapt to local customs concerning noise, trash, parking, and lawn upkeep,” says Robert Borzotta, founder of NeighborsFromHell.com. “Home owners are perceived to care more about their property, its appearance, safety of the community, and property values.” Source: Trulia

More than 70 percent of the U.S. housing stock was built prior to 1990, and an aging housing stock may present more opportunities for buyers searching for a bargain, according to RealtyTrac’s Aging Homes Analysis. "The high percentage of homes that are at least 20 years old and likely in need of some major repairs is eye-opening," says Jake Adger, chief economist at RealtyTrac. "However, given the low inventory of homes available for sale in today's market, this challenge of aging U.S. housing supply can also be an opportunity for buyers looking for a bargain and home owners looking to update their living space and improve the value of their homes." Older homes often need upgrades for energy efficiency and may lack floor plans or amenities that home buyers desire today, according to RealtyTrac’s analysis. On average, homes built prior to 1990 sold for $233,211 this year, compared to $256,292 for newer homes. "The lower price point on older homes is not surprising given many are in need of some rehab and are more likely to have maintenance issues," Adger says. "But this also presents an opportunity for buyers willing to take on that older inventory. Those buyers can purchase at lower price points and face less competition from institutional investors," who tend to buy newer homes. Source: Mortgage News Daily

Key House and Senate members have reached a bipartisan deal to delay changes to the federal flood insurance program that are raising premiums for many homeowners. The bill would require regulators to address affordability of the coverage before implementing rate hikes. Rep. Maxine Waters, D-Calif., ranking member of the House Financial Services Committee, announced the bipartisan legislative fix for the National Flood Insurance Program (NFIP) that she said will assure that “changes are implemented affordably.” Senators Mary L. Landrieu, D-La., Johnny Isakson, R-Ga., Robert Menendez, D-N.J., Jeff Merkley, D-Ore., Thad Cochran, R-Miss., Heidi Heitkamp, D-N.D., David Vitter, R-La., and John Hoeven, R-N.D., are among those sponsoring the legislation in the Senate. Senate and House leaders who are involved now in budget talks have not indicated if or when there might be a vote on any proposals to delay Biggert-Waters. Waters was a chief architect of the bipartisan Biggert-Waters Flood Insurance Reform Act that ordered an end to many premium subsidies for property owners and a remapping of communities along with other changes that are resulting in many homeowners facing big premium hikes and more property owners being told they must buy flood coverage. In some areas, the premiums hikes are beginning to affect home sales. Source: Insurance Journal

Jennifer Odom

Interesting November Facts...

INTERESTING FACTS...  •  The name November comes from the Roman word 'novem' meaning nine, because it was the ninth month in their roman calendar!  •  On November 6, 1869, the first intercollegiate football game was played in the United States between Rutgers and Princeton.  •  Thanksgiving has been an annual holiday in the United States since 1863 when Abraham Lincoln issued a 'Thanksgiving Proclamation'.  •  Did you know? The average weight of a turkey purchased at Thanksgiving is 15 pounds! For your nutrition buffs, turkey has more protein than chicken or beef!   ALSO IN NOVEMBER...  •  Nov. 1 — Day of the Dead  •  Nov. 3 — Fall Back  •  Nov. 5 — Election Day  •  Nov. 11 — Veteran's Day  •  Nov. 27 — Hanukkah Begins  •  Nov. 28 — Thanksgiving  •  Nov. 28 — Macy's Parade

 

Enjoy the beauty of November!   Jennifer Odom

Happy Halloween!

Jennifer Odom

Have a Monster Bash!

(ARA) - You're invited to a "Monster Bash." What's more fun than Halloween? Young or old, everyone seems to get into the spirit. Why not gather a group together this Halloween and have some spooky fun along with a frightening feast?

When planning a Halloween party, it is best to consider the ages of all goblins that will be attending. Adults and children may both love the fun of Halloween, but the fright factor will be different. Once you have established your guest list, you can start to plan "tricks or treats."

For tricks, start the guests off by having a "frightening fashion show" where they walk down a red carpet to show their costumes. Cover the carpet with spiders and webs and, if everyone is brave enough, turn the lights down low. Be sure to play some ghoulishly good music, such as "The Monster Mash," so that your party ghosts and princesses can get into the spirit. This is a good way to "break the ice" and let everyone showcase their costumes before the party begins.

Follow up the fashion show with a few games such as pass the pumpkin or bobbing for apples. If guests will be heading out for candy, be sure to feed them a selection of healthy "treats." Why not start with deviled eggs?

The incredible edible deviled egg is a party favorite and fits perfectly into a Halloween theme. The high quality protein from the egg will help witches and mummies feel full longer, which could help minimize their munching on candy. Deviled eggs are also the perfect appetizer before serving a Halloween meal such as "creepy crawly chili" (chili topped with gummy worms) and "tombstone tossed salad" (decorate the salad bowls with funny tombstones).

If you really want to get into the spirit when planning your menu, why not dress your basic deviled egg recipe up in a costume by trying this recipe? For more recipe ideas visit www.incredibleegg.org.

Mystery Pirate Ships

Yields: Six servings

Ingredients:

6 hard-cooked eggs
2 tablespoons mayonnaise
2 tablespoons sweet pickle relish
1 teaspoon prepared mustard
1 package (2.5 ounces) smoked sliced, chopped, pressed, cooked ham
12 green olives, optional
Directions:

Cut eggs in half lengthwise. Remove yolks. Set whites aside. Place yolks in a one-quart plastic food storage bag. Add mayonnaise, relish and mustard. Press out air. Close bag. Press and roll bag until yolk mixture is thoroughly blended. Push yolk mixture toward bottom corner of bag. Snip off about 1/2 inch of the bag corner. Squeezing bag gently from the top, fill reserved whites with yolk mixture.

Place each filled egg on one ham slice. Turn two opposite corners up over the yolk mixture and gently press. For masts and flags, stick wooden picks topped with olives into the boats, if desired. Chill to blend. Courtesy of ARAcontent

Jennifer Odom

The Real Estate Report 10/16/2013

 

 

The Employment Report that Wasn't...

This week in the month we usually present an analysis of the monthly employment data. Only last week the report was not released because of the government shutdown. And if it was released, we really couldn't trust the numbers because the report itself would not reflect the damage that was done during the government shutdown. The employment data covers September and the shutdown began October 1. As a matter of fact, it will be some time before we see how the period of the shutdown really influences the economy. Even the thought of the end of the shutdown brought cheer to the stock market last week. And while we could very well see interest rates and oil prices head back up after a real deal is solidified -- these moves could be short lived because of the unknowns regarding the long-term effects of the shutdown upon the economy.

With the approximate date of the debt ceiling limit approaching, we write this column confident of at least a last minute short-term deal coming to fruition this week. Beyond that, the shutdown of government will serve as a good test of the strength of the recovery. This year the stock market has soared and rates have risen in response to the fact that we were no longer threatened with a double dip recession. The shutdown is a reminder that intervening variables -- both positive and negative -- have a way of telling us that all bets are off the table. You just can't predict the future when it comes down to variables that you can't foresee. And so it will go with the reaction of the economy to the shutdown. Perhaps we will be resilient and bounce right back. Or perhaps this shutdown will wind up slowing the economy down for awhile. Only time will tell us and hopefully there will not be additional intervening variables in the meantime.

 

According to the Wall Street Journal, rising home-buying costs are pushing people into apartments, causing landlords to pass along hefty rent increases this summer. The average monthly rent in the third quarter was $1,073, up 1% from the prior quarter, the largest quarterly gain in a year, according to a report to be released Tuesday by Reis Inc., a real-estate research firm. Compared with the third quarter a year ago, average monthly rent was up 3%. None of the 79 markets tracked by Reis saw rents fall. Source: The WSJ

The Appraisal Institute advised homeowners to use discretion when deciding which home improvement projects to take on, saying that not all renovations positively impact property values. “Projects that take a home significantly beyond community norms are often not worth the cost when the owner sells the home,” said Appraisal Institute president Richard L. Borges II, MAI, SRA. “If they don’t match what’s standard in a community, they’ll be considered excessive.” According to Remodeling magazine’s most recent Cost vs. Value report, some of the projects with the highest expected return on investment are siding replacement, entry door replacement, attic bedroom addition, minor kitchen remodel and garage door replacement. Other renovations with high expected pay-offs include basement remodel, deck addition and window replacement. Borges advised homeowners that it may be best to hold off on big renovations if a homeowner isn’t sure how long they will be in their home. The longer a homeowner stays in a property, the greater the opportunity for a return on investment, he said. “Consumers should be aware that cost does not necessarily equal value,” Borges added. For an unbiased analysis of what their home would be worth both before and after an improvement project, a homeowner can work with a professional real estate appraiser – such as a designated member of the Appraisal Institute – to conduct a feasibility study. During a feasibility study, the appraiser will analyze the homeowner’s property, weigh the cost of rehabilitation and provide an estimate of the property's value before and after the improvement. Some green and energy-efficient renovations, such as adding Energy Star appliances and extra insulation, are likely to pay the homeowner back in lowered utility bills relatively quickly. Lower utility costs also are a draw for potential homebuyers. When appraising a home, the appraiser evaluates local supply and demand for green and energy-efficient properties and features. Source: NMP Daily

Fifty-five percent of Americans say they expect home values to rise over the next 12 months, further showing that consumers are becoming less fearful about jumping back into the real estate game, according to Bankrate’s latest monthly Financial Security Index. Nine percent of Americans say they think prices will fall, and 27 percent believe values will stay flat. "It appears that Americans' love affair with real estate is back," says Greg McBride, senior financial analyst for Bankrate.com. "Even though the housing bust shows that housing prices don't just go straight up, people just don't have the same risk aversion to real estate and home ownership that they do to stock ownership." Bankrate’s July index showed that Americans prefer real estate over stocks as a way to invest money they don’t need for 10 years. The decrease in foreclosures and still-low rates have been two factors helping home values to recover, says William Delwiche, an investment strategist for Robert W. Baird & Co. "We got past that wave of the foreclosure crisis and banks trying to dump all their homes on the market," Delwiche says. "Lower rates have had an undeniably positive effect on not just household balance sheets, but also the housing market generally. It makes it much easier to buy a house if you're so inclined." Source: Bankrate.com

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Real Estate Report 10/10/2013

 

The housing recovery goes deeper than just an improvement in home prices, with single-family home construction contributing approximately 500,000 jobs to the economy year-over-year, Regional Economic Models Inc. said in a press release. Additionally, the net gain in jobs accounts for a quarter of the approximately 2 million jobs added to the economy from July 2012 to July 2013. Furthermore, the biggest net growth occurred in Texas, with 59,600 jobs, and Florida, with 54,000 jobs, and California, with 30,200 jobs. “Construction of new homes is a major driver of our economy at the national and state levels,” said Frederick Treyz, CEO and Chief Economist of REMI. “We estimate that for every new house constructed, between four and five new jobs on average are created,” he added. Source: HousingWire

The number of new foreclosure filings in August hit its lowest level in nearly eight years, according to RealtyTrac, an online marketer of foreclosed properties. Soaring home prices and a big decline in underwater borrowers -- those who owe more on their home loans than their homes are worth -- have helped drive the trend. August initial foreclosure filings fell 44% to 55,575, just below the 56,063 that were recorded in October 2005. The foreclosure crunch began in summer 2006, at about the same time that housing prices hit their peak. "This is a strong indicator that the crisis is over," said Daren Blomquist, vice president at RealtyTrac. "The foreclosure floodwaters have receded in most parts of the country, although lenders and communities continue to clean up the damage left behind," he added. The mopping-up process continues, however. In August, for example, the number of homes repossessed by lenders rose 6%, compared with July, to 39,277. But that still represents a drop of 25% year-over-year, and is more than 60% below the peak of repossessions in September, 2010. Source: CNN/Money

The proportion of investors involved in the housing market has fallen in the last few months. As their numbers dwindle, it may allow other buyers to step in, according to housing experts. Investors have gone from accounting for 23 percent of home purchases in February to about 20 percent in June—the lowest level since September 2012, according to data from Campbell/Inside Mortgage Finance survey. Their numbers will likely decrease even more in the coming year. About 48 percent of investors recently surveyed say they plan to lessen their home purchases over the next year, according to a recent survey by ORC International. Only 20 percent of the investors surveyed say they plan to buy more homes in the next year, a drop from 39 percent 10 months earlier. "Investors helped stabilize a housing market that was in free-fall and they did so by taking advantage of fire-sale home prices," says Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. "Now you see fewer bargain prices in the market and that's a reason investor demand is coming off its peak." In recent years, many buyers—particularly first-time home buyers—may have lost out to investors’ all-cash offers on homes. Banks and sellers may have been lured by the idea of a quick deal that cash offers typically provide over offers from buyers who require financing. But with less competition from investors, some housing experts say this may allow an opportunity for other potential buyers to get into the market. Source: Reuters

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The Real Estate Report 10/2/2013

 

Thank You Congress

Once again, the United States Congress has warded off a major threat to the economy. For the past several months interest rates have been rising in response to the threat of the Federal Reserve Board starting to end one element of their stimulus program. For the past several years, the Fed has implemented an unprecedented program to bring down long-term interest rates by purchasing Treasury and Mortgage Backed Securities. Typically in response to a recession, the Fed lowers short-term borrowing rates but the recession of 2008 was so deep that they had to resort to extreme measures. For one thing, the secondary markets for home loans collapsed and without this targeted stimulus we would have been trying to overcome the subsequent foreclosure crisis within the real estate markets with financing for real estate at higher rates and more difficult to obtain.

Fast forward five years and we can see that the real estate markets are recovering from the crisis. The Federal Reserve Board has shown that they are now ready to ease off the pedal and the bond markets are reacting accordingly. Up steps Congress. When the Federal Reserve Board met two weeks ago, they were considering announcing the first step. But they hesitated. Why? The Fed felt at this point the economy is just not strong enough to take this first step, however small. And they did cite at least one threat to the economic recovery. What was that? A possible government shutdown because it appears Congress will go down to the wire with regard to the deadline to raise the debt limit. Simply stated, if we can't borrow money, we can't fund the government. We understand that Congress is likely to resolve or at least put off the disagreement. But that is not the point. By putting off the decision until the last minute once again they have again created an artificial threat that has caused rates to ease at least temporarily. Thanks, Congress! Meanwhile, this week the employment report will give us an important reading as to whether the Fed should have acted. A strong reading could cause rates to continue their climb while a weak reading could keep us where we are for now -- or even trend lower.

Trulia has released its Summer 2013 Rent vs. Buy Report, revealing whether buying a home is more affordable than renting in America’s 100 largest metropolitan areas. Looking at homes for sale and for rent on Trulia between June 1 and Aug.31, 2013, this study compares the average cost of renting and owning for all homes on the market in a metro area, factoring in all cost components including transaction costs, taxes, and opportunity costs. In the last year, the rate for a 30-year fixed-rate loan rose from 3.75 percent to 4.80 percent, raising the cost of buying a home relative to renting. Homeownership is now 35 percent cheaper than renting nationally, down from being 45 percent cheaper one year ago. “While it’s hard to believe after the recent spike in rates, it’s still more than one-third cheaper to buy a home than to rent,” said Jed Kolko, Trulia’s chief economist. “Recent rate and home price increases have made buying significantly more expensive than last year, but not enough to tip the math in favor of renting. This is because rates remain well below historical norms, and prices are still slightly undervalued, too.” Source: NAMP Daily

Sales of new single-family homes bounced back in August, helping to offset a large decrease in July after borrowers pulled back from higher rates, according to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. New-home sales rose 7.9 percent in August following July's 14.1 percent decline, a sign that higher interest rates haven't put a long-lasting damper on home-buying activity, says Rick Judson, chairman of the National Association of Home Builders. "Consumers are adjusting to the reality of today's higher rates following a period of record-setting lows, and today's sales report provides evidence of that," Judson says. "We expect to see more buyers coming back to the market as the psychological effects of the rate gains continue to wear off — particularly since, even after the recent spike, mortgage rates remain exceptionally favorable on a historic basis." August's new-home sales figure, which is at a seasonally adjusted annual rate of 421, 000, is 12.6 percent higher than a year ago. But that's still only about halfway to what most economists consider a sustainable level in a normal economy, notes David Crowe, NAHB’s chief economist. Inventory levels rose for the seventh consecutive month in August, with the number of new homes for sale rising 3.6 percent from July. Meanwhile, NAR's Pending Home Sales Index, a forward-looking indicator based on contract signings, fell 1.6 percent in August to 107.7. That's down from a reading of 109.4 in July, but still 5.8 percent above August 2012. An index of 100 is considered an average level of contract activity. NAR Chief Economist Lawrence Yun said the drop was not unexpected. "Sharply rising interest rates in the spring motivated buyers to make purchase decisions, culminating in a six-and-a-half-year peak for sales that were finalized last month," Yun said. “Moving forward, we expect lower levels of existing-home sales, but tight inventory in many markets will continue to push up home prices in the months ahead.” Source: The NAR and Associated Press

Home staging professionals discovered a unique way of marketing themselves in the fluctuating real estate environment by reminding home sellers that properties sell much faster after undergoing a professional facelift. The Real Estate Staging Association has the figures to back this up. In a recent study conducted by the trade association, 89 vacant occupied and un-staged homes were listed. These homes spent an average of 166 days on the market. However, when these exact same homes were professionally staged and relisted, they only spent an average of 32 days on the market — a 73% decrease in time spent on the market. "Every home can use staging,” said Shell Brodnax, CEO of RESA. "Even investors are coming in. They are buying those properties, they’re fixing the things that need to be fixed and they’re paying for staging," she added. According to Brodnax, staging is an effective tool no matter what the housing market looks like. In a slow market, staging can make a house stand out and sell. However, in a hot housing market, where things are more competitive, those properties are getting attention and often bringing in multiple offers, said Brodnax. Additional research done by the association showed that when 359 homes underwent staging before hitting the market, the homes received a first offer within 26 days after the staging. Of these homes, 69 received multiple offers. When a seller invests in staging before they list their home, the home will sell 87% faster, RESA studies proved. Brodnax noted that staging has gained momentum over the past 10 years as the market has continued to change. “It’s just really becoming more known — staging is a must,” said Brodnax. “Ten years ago, stagers were really struggling to get people to listen to them… staging now is a no brainer.” Audra Slinkey, president of Home Staging Resource, said homes that aren’t staged may still sell fairly quickly, but they may not sell for as much money as they could were they professionally staged. "Homes that are not being staged… it’s like leaving money on the table," said Slinkey. According to Slinkey, the average cost of staging is approximately 1-3% of the value of the home. However, the return on investment can be as much as 8-10% back. "It’s a small cost and work on the sell side, but it’s a win,” said Slinkey. "You improve upon a product and the demand and price goes up." Source: HousingWire

 

Jennifer Odom