2012 Big Year for Home Price Increases

Home prices in the U.S. rose 7.3 percent in 2012 and are projected to rise 3.9 percent annually for the next five years, according to the latest CoreLogic analysis.

Florida cities, however, vary from the nation and even each other in 2012 home values, as well as CoreLogic’s projections for the future. Prices rose during 2012 in all six Florida cities tracked by the index, varying from a low of 3.5 percent in Jacksonville to a high of 13.5 percent in Miami. However, the company predicts a slight price decline in five cities by the close of 2013. It predicts only Tampa will see an increase this year, with prices rising 3.9 percent.

As 2013 continues, CoreLogic predicts, “market dynamic shifts” in bubble/crash metro areas. The company points out that homes are still undervalued in bubble cities, including some in Florida, but it predicts that investor demand for foreclosed properties will decline.

In addition, today’s rising prices will, over time, make a home purchase less affordable for some families, and  “other demand factors that have driven recent double-digit price gains are unlikely to persist throughout the year.”

CoreLogic also thinks higher home sale prices will draw more sellers into the market, particularly those who recently emerged from being underwater. That higher inventory of for-sale homes coupled with lower investor demand will, according to CoreLogic, moderate price increases in 2013.

“Home prices were up in seven out of every 10 metro areas (nationally) in 2012,” say Dr. David Stiff, chief economist for CoreLogic Case-Shiller. “In 2011, prices appreciated in fewer than one-in-five markets.”

Stiff isn’t worried about another housing bubble, however.

“Even if double-digit price appreciation were to continue in the former bubble metro areas, there is no reason to believe that new home price bubbles are forming,” he says. “That’s because single-family homes in these markets are still very affordable, even after last year’s large price gain.”

He does expect some price volatility, however, as the market adapts to changing conditions. Nationally, CoreLogic forecasts a 2.5 percent price increase in 2013.

Florida cities

The CoreLogic analysis offered three price points for six Florida cities – the price increase or decrease over three years at the end of 2012; the price increase or decrease in 2012; and the forecasted price increase or decrease in 2013. They include:

Fort Lauderdale: A 3% price increase in the three years prior to Dec. 31, 2012; a 9.6% rise in 2012; and a 3.9% price decline forecast for 2013.

Jacksonville: A 10.2% price decline in the three years prior to Dec. 31, 2012; a 3.5% rise in 2012; and a 0.8% price decline forecast for 2013.

Miami: A 7.2% price increase in the three years prior to Dec. 31, 2012; a 13.5% rise in 2012; and a 4.4% price decline forecast for 2013.

Orlando: A 1.1% price decline in the three years prior to Dec. 31, 2012; a 9.5% rise in 2012; and a 2.9% price decline forecast for 2013.

Tampa: A 3.3% price decline in the three years prior to Dec. 31, 2012; a 7.1% rise in 2012; and a 3.9% price increase forecast for 2013.

West Palm Beach: A 1.5% price decline in the three years prior to Dec. 31, 2012; a 9.8% rise in 2012; and a 3.4% price decline forecast for 2013.

 





© 2013 Florida Realtors®

Number of Housing Starts Counters Drop in Foreclosures

A RealtyTrac housing market analysis compared building permit data released by the U.S. Department of Housing (HUD) for the first quarter to foreclosure starts for the same time period. RealtyTrac looked at the national, state and city level.

“Nationwide and in most markets, it appears builders are planning to ramp up activity that will help offset a drop in foreclosure starts, but there are some markets where a jump in both building permits and foreclosure starts in the first quarter indicate the scales will tip more heavily in favor of supply of homes for sale in the coming months – both new homes and foreclosures,” says Daren Blomquist, vice president at RealtyTrac.

“On the other extreme there are some markets where both building permits and foreclosure starts are down dramatically, indicating that there will be no reprieve from the shortage of homes for sale in those markets in the near future.”

First quarter findings

• Nationwide, single-family building permits increased 27 percent from a year ago – the highest first-quarter total since 2008. Meanwhile, U.S. foreclosure starts decreased the same amount, 27 percent, to the lowest quarterly level since the second quarter of 2006.

• The majority of building permits in the first quarter were for single-family homes (64 percent of total permits), followed by 5+ unit multi-family properties (33 percent). Overall, multi-family building permits increased 23 percent from a year ago.

• States with the most single family building permits in the first quarter were Texas, Florida, North Carolina, California and Georgia, all of which posted double-digit percentage increases from a year ago.

• All these top states also posted decreasing foreclosure starts from a year ago, although Florida foreclosure starts were down just 1 percent.

• States where both single family building permits and foreclosure starts increased from a year ago included Nevada, Washington, New Jersey, Maryland and New York.

• Cities with the most single family building permits in the first quarter were Houston, Oklahoma City, Austin, El Paso and Fort Worth. Of these top five, all except for Austin posted decreasing foreclosure starts during the same time period. Austin foreclosure starts increased 19 percent.

• Cities with the most foreclosure starts in the first quarter were Miami, Las Vegas, Chicago, Fort Lauderdale and Orlando, with Las Vegas, Fort Lauderdale and Orlando posting increases in foreclosure starts from a year ago. All five cities posted increases in single-family building permits from a year ago.

• Cities where both single family building permits and foreclosure starts increased at least 10 percent from a year ago in the first quarter included Las Vegas, Seattle, Raleigh, N.C., Reno, Nevada, and Boca Raton.

• Cities where both single family building permits and foreclosure starts decreased from a year ago in the first quarter included San Antonio, Albuquerque, Fresno, Bakersfield (both in California) and Greensboro, N.C.

• RealtyTrac posted a chart of 19 U.S. cities with “the most for-sale inventory coming.” In Florida, Delray Beach ranked No. 1, with Boca Raton at No. 16 and Ocoee at No. 19.

 





© 2013 Florida Realtors®

Chinese Buyers Can’t Resist Lure of Florida Homes

The National Association of Realtors says foreigners – primarily from Canada, China, and Latin America – made $82 billion in U.S. real estate purchases last year.

Chinese buyers, in particular, seem to have a hearty appetite for American real estate – especially in California, New York and Florida. Garrett Kenny, CEO of Century 21 Team Feltrim in Florida, is courting Chinese buyers, traveling overseas to network with Chinese agents and investors and tout the benefits of owning property in Florida.

He was impressed with the OPP Tour of China, which covered four cities in 10 days. “Three days back and already dealing with three agents successfully,” he says. “We will certainly be going on more tours with OPP in 2013.”

With two-bedroom apartments in Shanghai fetching more than $2 million, it is no surprise that Chinese buyers are drawn to Florida, where three-bedroom homes in some areas can be had for about $200,000.

Not only do the Chinese view U.S. real estate as a good value, but they also view U.S. properties as status symbols, says Las Vegas real estate agent Betty Chan.

 





Source: RealtyBizNews (05/14/13) Wheatley, Mike

© Copyright 2013 INFORMATION, INC. Bethesda, MD (301) 215-4688

Real Estate Reality TV Shows: Fact vs. Fiction

Network television offers a slew of reality shows that supposedly give viewers an inside glimpse into the home buying process, but the programs aren’t necessarily a true representation of the real-world experience.

San Francisco-based realty broker Herman Chan, a previous guest on two HGTV reality shows, notes that much of it is staged. Moreover, the shows mainly cover the fun parts of homebuying and ignore the unglamorous aspects. For example, viewers rarely see house shoppers selecting a property agent, meeting with home inspectors or applying for a mortgage.

“It’s a very condensed version of what to expect,” says Chan, who agrees the shows focus on the happy moments. “Afterward is when it gets problematic,” he says. “What if the appraisal doesn’t come in, or there are whackadoo neighbors?”

In addition, the listings featured on TV shows suggest that they’re clean and well lit. But in reality, Chan says, “Babies might be crying or peoples’ laundry might be hanging in the background.”

However, Chan and other realty professionals say that actually could help by convincing sellers to “up their game.”

Janice Leis – who handles properties in Pennsylvania, New Jersey and Florida – says sellers “can learn that you need to clean out your house, you need to paint it. The outside needs to be cleaned up, and you need to take furniture out. (Reality TV) shows sellers what’s important to the masses of people that are out there looking.”

Buyers can also learn a thing or two from the reality shows, even if the examples deviate from real life.

Especially useful, Leis and Chan say, are home buying shows that ask buyers to list their needs and wants first. They say it also helps buyers by getting them to expect some compromises along the way.

As Chan puts it: “There’s no perfect house.”

 





Source: U.S. News & World Report (05/13/13) Johnston, Susan

© Copyright 2013 INFORMATION, INC. Bethesda, MD (301) 215-4688

Many Buyers Confused About Mortgage Process

Most homeowners, especially first-timers, borrow a large amount of money to buy a home. But how much do they know about the process? A survey conducted by Ipsos Ipsos for Zillow attempted to find out.

According to the Zillow Mortgage Marketplace survey of first-time homebuyers, they answered one-third (32.5 percent) of the questions about basic mortgage information incorrectly.

For example, one-third (34 percent) of first-time homebuyers don’t realize it’s possible to get a home loan with a downpayment less than 5 percent.

Many first-time buyers also don’t understand how to secure the best possible interest rate and loan terms. One-quarter (26 percent) incorrectly believe they’re obligated to close their loan with the lender that pre-approved it; and, separately, 24 percent incorrectly believe that the best interest rates and fees can always be found through the bank they currently use.

Additionally, one-third of buyers (34 percent) believe all lenders are required by law to charge the same fees for credit reports and appraisals, even though it’s best to shop multiple lenders to compare rates and fees.

Confusion also reigns after the home sale. Almost half (47 percent) of current homeowners believe they must wait at least one year between refinancing.

“All too often buyers focus on negotiating a lower home price and ignore the importance of finding the right loan,” says Erin Lantz, director of mortgages for Zillow. “If a homebuyer can lower their interest rate by even half a percentage point, they can not only increase their purchasing power, but save thousands of dollars over the life of the loan.”

Additional survey findings

• One-third (34 percent) of polled prospective homebuyers do not know what the term “annual percentage rate” (APR) means. The annual percentage rate (APR) is a yearly rate that reflects the true cost of a mortgage and is inclusive of the interest rate, points, mortgage insurance (when applicable), and other fees, including origination and underwriting fees. The APR will typically be higher than the interest rate quoted by lenders, and should be used as a starting point when comparing loan quotes between lenders.

• Half (50 percent) of prospective homebuyers do not understand that mortgage rates change throughout the day. In reality, much like the stock market, mortgage rates can change rapidly. To get the optimum rate, it is important to monitor rates and shop around.

• Nearly one-third (31 percent) of current homeowners incorrectly believe that you must wait seven years after a short sale or foreclosure to purchase again. In most cases, homebuyers with a short sale history typically only need to wait 2-4 years depending on their downpayment and the loan type. The waiting period after a foreclosure is longer – typically, buyers need to wait 3-7 years before they can qualify for a new home loan.

• More than one-third (34 percent) of current homeowners incorrectly believe that you can only refinance your home every 12 months. In reality, homeowners can refinance as often as they want. However, homeowners should weigh the cost of the refinance against the time they will own the home and the monthly payment change to determine if refinancing makes sense.

 





© 2013 Florida Realtors®

Is the Quick House Flip Making a Comeback?

More Americans are again on the hunt to snag a home at a bargain price, fix it up, and then try to resell it for a quick profit. These home flippers mostly vanished during the housing downturn, but flipping is starting to return thanks to slowly rising home values.

RealtyTrac says flipping increased for the second year in row, rising a slight 0.33 percent in 2012 from 12 percent in 2011. The company defines flipping as buying and selling a property within six months.

According to RealtyTrac, the average gross profit in a flip was $37,375 in 2012; and some of the best places to flip homes in 2012 were Orlando, Fla.; Richmond, Va.; Tucson, Ariz.; and Charlotte, N.C.

For example, Orlando home flips were purchased for $100,397, on average, and then sold for $174,895 – earning a gross profit, on average, of nearly $75,000.

Flippers are more cautious this time around, however. They tend to come in with an all-cash deal, and many also hold onto properties longer than they once did. On average, the flipping time from purchase to resale stands at about 106 days today, according to RealtyTrac.

“That seems to be the sweet spot for a profitable deal,” says Daren Blomquist, vice president at RealtyTrac. “Back in the housing bubble, many flippers were solely relying on price appreciation, sitting back and selling for big profits within a month or two.”

 





Source: “The New Rules of House Flipping,” Reuters (April 18, 2013)

© Copyright 2013 INFORMATION, INC. Bethesda, MD (301) 215-4688

NAR: Pending Sales Rise Modestly as Inventory Tightens

Pending home sales increased in March and remain above year-ago levels, but contract activity in recent months shows only modest movement, according to the National Association of Realtors® (NAR).

NAR’s Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 1.5 percent to 105.7 in March from a downwardly revised 104.1 in February, and is 7 percent above March 2012 when it was 98.8.

Pending sales have been above year-ago levels for the past 23 months; the data reflect contracts but not closings.

“Contract activity has been in a narrow range in recent months, not from a pause in demand but because of limited supply,” says Lawrence Yun, NAR chief economist. “Little movement is expected in near-term sales closings, but they should edge up modestly as the year progresses. Job additions and rising household wealth will continue to support housing demand.”

The pending index in the Northeast was unchanged at 82.8 in March and is 6.3 percent higher than March 2012. In the Midwest, the index increased 0.3 percent to 103.8 in March and is 13.7 percent above a year ago.

Pending home sales in the South rose 2.7 percent to an index of 120 in March and are 10.4 percent higher than March 2012. In the West, the index increased 1.5 percent in March to 102.9 but is 4.3 percent below a year ago.

NAR predicts that total existing-home sales in 2013 will increase 6.5 to 7 percent over 2012 to nearly 5 million sales this year, while the national median existing-home price is forecast to rise about 7.5 percent.


 





© 2013 Florida Realtors®

Home Equity Loans: They’re Back

As housing values rise, home-equity loans and lines of credit are staging a comeback, MSN Money reports.

In late 2008 as the housing market slowed dramatically, home-equity borrowing came to nearly a standstill as lenders became cautious because values were falling so quickly. By late 2011, nearly a third of U.S. homes with mortgages owed more on their loan than their house was worth.

In markets where home prices are rising, though, lenders are starting to issue equity loans once again. New players have jumped in too. For example, Discover Financial Services announced in March that it would offer fixed-rate home-equity loans of $25,000 to $100,000. The offer is for current customers but will be extended to others eventually.

While lenders may be more willing to extend a home-equity loan, they’re more cautious than in the past. Lending on 100 percent of owners’ equity is now rare, and borrowers won’t likely get more than 85 percent of a home’s value.

 





Source: “Home-equity loans make quiet comeback,” MSN Money (April 23, 2013)

© Copyright 2013 INFORMATION, INC. Bethesda, MD (301) 215-4688

Walk-Through of The Greens at Tuscawilla

Common Myths About Real Estate Auctions

Auctions are a viable option for both homebuyers and sellers, despite many misconceptions about the process. While some believe only foreclosures or properties in bad condition are sold via auction, in reality, all types of properties are sold on the auction block – including luxury homes and commercial buildings.

Contrary to popular belief, properties up for auction can be inspected, with the exception of those auctioned by a county or involved in judicial auctions.

Buyers do not have to pay the full amount in cash, as some mistakenly believe; but they do have to present a 5 percent to 10 percent earnest money deposit and a mortgage preapproval.

While sellers pay a fee to cover the accelerated marketing process, auctions can cost them less than a traditional sale by moving the home quickly and minimizing carrying and maintenance costs. Additionally, sellers generally do not lose money at auction, as an auction typically determines the home’s true value and competitive bidding can even increase the price beyond that.

Sellers also benefit from setting terms other than the price, such as timing and lack of contingencies.

Another myth tied to real estate auctions is the belief that agents and brokers cannot be involved in the process; however, they actually play a role by referring clients, serving as a cooperative broker/agent, or acting as a listing broker/agent and earning a commission.

If a home fails to sell at auction, it can impact later buyers’ perception of the property. But experts say that’s fairly rare – that most properties do sell at auction, and pre-sales are popular.

Finally, it’s important to note that sellers only have to accept the final bid, regardless of amount, in a reserve auction; and first-time buyers – not just investors – attend auctions.

Many sellers without a hardship or even need to sell quickly choose an auction because they want to take advantage of the accelerated marketing process and 30- to 45-day closing.

 





Source: RealtyBizNews (04/24/13)

© Copyright 2013 INFORMATION, INC. Bethesda, MD (301) 215-4688