March 3, 2010 by Daniel Sosa
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According to the the National Association of Realtors®, “distressed homes” represented nearly 2 of every fifth home sold in January 2010. Clearly, real estate investors in Modesto and around the country are taking advantage of good deals on cheap property. But there’s risk involved. This NBC Today Show interview first ran in March 2009, featuring real estate expert Barbara Corcoran. Despite its age, the message remains relevant. Today may be a terrific time to buy a bank-owned home — just make sure you do your research first. There’s plenty of ways for investors to get burned. Some of the tips in the video include:
- Buy in your own backyard
- Start small, then build to a bigger portfolio
- Watch receipts — rent rolls don’t matter if tenants aren’t paying rent
Corcoran also gives pointers on how to evaluate a prospective tenant. Foreclosures should represent a large number of 2010’s total home sales and will offer interesting opportunities to bona fide real estate investors. be you jump in, make sure to watch the video. The rents you save may be your own.
To watch this streamline video, visit: www.thedailymortgagegazette.com
March 2, 2010 by Daniel Sosa
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The winter months have not been kind to home sales. After plunging 17 percent in December, Existing Home Sales fell by an additional 7 percent in January, according to the National Association of Realtors®. An “existing home” is a home resold by a previous owner (i.e. not new construction). In looking at the annualized, adjusted Existing Home Sales data, we find:
- Sales volume is at its lowest levels since June 2009
- Sales volume fell below its 12-month rolling average
- Home supplies are at a 5-month high
These are similar findings to the New Home Sales data issued by the government last week. That report put new home sales at a 40-year low and showed new homes supplies higher by an entire month. But don’t think housing rebound has halted! Home sales are cyclical and there are outside forces on today’s market.
For one, the market is still feeling the after-effects of the original First-Time Home Buyer Tax Credit. Sales spiked in the months leading up to the original November 2009 expiration date. A pull-back is natural and expected. Looking at the long-term trend, Existing Home Sales volume appears right in line.
Furthermore, weather across much of the U.S. was awful in January. That, too, can impede home sales as homes are neither shown nor negotiated when weather is majorly inclement. Anecdotal evidence is showing sales activity higher through February and into March. And, although it’s unlikely we’ll see a spike through April like we did last November, buy-side demand for homes should remain strong. The good news of the sagging sales reports is that today’s buyers may find home prices are lower and sellers are more willing to negotiate.
by Daniel Sosa
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Mortgage markets improved last week as economic reports painted a less-than-stellar portrait of the U.S. economy and concerns of a looming monetary policy change eased. Mortgage pricing improved dramatically, despite a late-Friday retreat. Mortgage rates are now at their lowest levels since early-February. Last week was heavy on negative data:
In addition, both the Case-Shiller and Home Price Indices showed a slight pullback in the housing sector. The impact of these statistics was muted, however. This is because Fed Chairman Ben Bernanke gave his semi-annual outlook to Congress and markets focused more on the chairman verbiage than hard data, looking for clues about the future of Fed policy. Bernanke stayed on message — the Fed Funds Rate will stay low for an extended period of time.
Mortgage rates were also helped by a strengthening U.S. dollar and demand for U.S.-denominated bonds. When demand for mortgage-backed bonds is strong, mortgage rates fall. This week, mortgage rates will jockey around Friday’s Non-Farm Payrolls report. Jobs are playing a large role in mortgage bond trading and markets expect that 30,000 jobs were lost in February. If the actual figure is better than 30,000 jobs lost, mortgage rates will rise. If it’s worse, rates will rise.
Other important data this week include Personal Consumption Expenditures — the Fed’s preferred inflation gauge — plus the Fed’s Beige Book release. Mortgage rates remain in flux so float with caution. Mortgage rates look good today, but by Friday, they could be much, much worse.
February 26, 2010 by Daniel Sosa
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Earlier this week, the private-sector Case-Shiller Index showed home prices slightly lower between November and December. Thursday, the public-sector Home Price Index showed the same. Publishing on a 2-month lag, the Federal Home Finance Agency said home prices fell by 1.6 percent nationally in December. And that’s an average, of course. Some regions performed well in December as compared to November, others didn’t.
- Values in the Middle Atlantic states improved slightly
- Values in New England were essentially unchanged
- Values in the Mountain states sagged, down 3.5%
These aren’t just footnotes. They’re an important piece toward understanding what national real estate statistics really mean. In short, “national statistics” are just a compilation of a bunch of local statistics. For example, if we dig deeper into the FHFA Home Price Index 70-page report, we find that cities like Terre Haute, IN, Buffalo, NY, and Amarillo, TX posted year-over-year home price gains. You won’t see that in a “national” report.
Furthermore, it’s a sure bet that those same cities, you could find neighborhoods that are thriving, and others that are not. Just because the city shows higher home values overall, it won’t necessarily be the case for every home in the city. Every street in every neighborhood of every town in America has its own “local real estate market” and, in the end, that’s what should be most important to today’s buyers and sellers. National data helps identify trends and shape government policy but, to the layperson, it’s somewhat irrelevant. So, when you need to know whether your home in Lodi is gaining or losing value, you can’t look at the national data. You have to look at your block — what’s selling and not selling — and start your valuations from there.
by NAR Updates
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Existing-home sales fell in January but are above year-ago levels, and prices are holding steady.
February 25, 2010 by Daniel Sosa
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The housing recovery showed particular weakness in the New Homes Sales category last month — good news for homebuyers in San Joaquin County and around the country. A “new home” is a home for which there’s no previous owner. New Home Sales fell 11 percent from the month prior and posted the fewest units sold in a month since 1963 — the year the government first started tracking New Home Sales data. Right now, there are roughly 234,000 new homes for sale nationwide and, at the current sales pace, it would take 9.1 months to sell them all. This is nearly 2 months longer than at October 2009’s pace. The reasons for the spike in supply are varied:
- The original home buyer tax credit expired in November
- Weather conditions were awful in most of the country in January
- Weak employment and consumer confidence continue to hinder big ticket sales
Now, these might be less-than-optimal developments for the economy as a whole, but for buyers of new homes, it’s a welcome turn of events. Home prices are based on supply and demand, after all. As a result, this season’s home buyers may be treated to “free” upgrades from home builders, plus seller concessions and lower sales prices overall.
It’s all a matter of timing, of course. New Home Sales reports on a 1-month lag so it’s not necessarily reflective of the current, post-Super Bowl home buying season. And from market to market, sales activity varies. That said, mortgage rates remain low, home prices are steady, and the federal tax credit gives two more months to go under contract. It’s a favorable time to buy a new home.
February 24, 2010 by NAR Updates
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Realtors® is now accepting applications for the 11th annual REALTOR® Magazine Good Neighbor Awards.
by Daniel Sosa
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Using data compiled in December, Standard & Poors released its Case-Shiller Index Tuesday. The report shows home prices down just 2.5% on an annual basis, a figure much lower than the 8.7% annual drop reported after Q3. According to Case-Shiller representatives, the housing market is “in better shape than it was this time last year”, but some of the summer’s momentum has been lost. 15 of 20 tracked markets declined in value between November and December 2009. Meanwhile, it’s interesting to note the 5 markets that didn’t decline — Detroit, Los Angeles, Las Vegas, Phoenix and San Diego. Each of these metro regions were among the hardest hit nationwide when home prices first broke. Now, they’re leading the pack in price recovery. For some real estate investors, that’s a positive signal. But we also have to consider the Case-Shiller Index’s flaws because they’re big ones. As examples:
- Case-Shiller data is reported on a 2-month lag
- The Case-Shiller sample set includes just 20 U.S. cities
- There’s no “national real estate market” — real estate is local
That said, the Case-Shiller Index is still important. As the most widely-used private sector housing index, Case-Shiller helps to identify broader housing trends and many people believe housing is a key element in the economic recovery. If the markets that led the housing decline will lead the housing resurgence, December’s data shows that full recovery is right around the corner.
February 23, 2010 by NAR Updates
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While the recent recession negatively impacted commercial real estate, there is hope for improvement.
