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What can homebuyers can expect in 2010?

According to a national survey commissioned by Move.com, one in six (15.4 percent) home buyers are considering saving up to buy a new home within the coming year. We asked the Ask a REALTOR® team to give us more insight into what these buyers can expect in 2010.

What extreme measures should a buyer be willing to take in order to buy a home in 2010?

Lora Davis: “Buyers, in many cases, will still be looking at short sales and bank owned REOs as the best values in 2010. Being willing to put in a little “sweat” after closing will get them the best buys. Many bank-owned and short sale homes need cleaning and refurbishing. Looking beyond the surface to potential will reap rewards in the long run.”

Steve Jackson: “The only ‘extreme’ measures that I would counsel my buyer clients to use in 2010 would be using ‘extreme’ caution…not to get caught up in the rush to buy ’something/anything’ just to get in under the tax credit deadline. I am of the opinion that the buyer must have clear and realistic goals regarding why they are buying, why they are buying NOW, what they are buying, how they are buying, and the list goes on.”

Michael Bunch: “Buyers need to seriously consider taking a manageable loss on the sale of their home to unload it so they can move up and work the percentage decreases in value to their benefit. Also, they might be able to get into a neighborhood that was out of their price point and probably soon will be again.

15.7% of buyers are looking for investment properties. What advice do you have for these buyers?

 

Sheri Moritz: “I work with a large number of investors in our market and have found the most valuable thing that most lack is knowledge and reality. I have yet to come across a new investor that tries to flip a house to find that it was much more than they thought they were going to be getting into. This is not a ‘learn-as-you-go-along’ type of venture, unless you have an extremely unlimited amount of money. Do as much research as possible and have contractors that you can trust who will give you realistic estimates of what repairs will cost and how long it will take to complete them. Then add about 20 percent  in dollars and 40 percent more in time.”

Deb Madey: “Investors need to clearly study and define their objectives. Once they have clearly identified the target criteria, an investor needs to identify, act, and move forward or away from possible properties quickly. If a property fails the criteria, move on. If it meets the criteria, do not agonize over insignificant personal perks a property lacks. A first-time homebuyer purchasing their primary home can and should focus on the details that make a house a home. Perceptive investors know their targets, make offers and walk away at pre-determined thresholds.”

Reprinted from Realtor.com blogs.

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Home sales contracts soar in October

NEW YORK (CNNMoney.com) -- Americans are inking a lot of deals to buy homes.

In October the National Association of Realtors recorded an unprecedented ninth consecutive month of increases in the number of signed contracts.

Although these are not closed sales, and some deals can fall through, signed contracts are a good indicator of where the housing market is headed.

Between September and October NAR's Pending Home Sales Index rose 3.7% to 114.1 from 110 in October. But the index is 31.8% higher than a year ago, when it was 86.6. That's the biggest year-over-year gain in the history of the index.

The PHSI is also at its highest level since March 2006, and the rise confounded expert expectations. A panel of industry analysts put together by Briefing.com had forecast a 1% drop in new contracts.

NAR's chief economist, Lawrence Yun, gives much of the credit for increased sales to the homebuyer's tax credit, which first-time homebuyers could claim to reduce their taxes by up to $8,000.

"The tax credit is helping unleash a pent-up demand from a large pool of financially qualified renters, much more than borrowing sales from the future," Yun said in a prepared statement.

The credit had been due to lapse on Dec. 1, so many October buyers may have acted to get in under the wire.

However, the credit has been extended through the middle of 2010 and expanded to include many move-up buyers. The housing industry hopes that will keep sales perking until the economy picks up and markets return to a more normal condition.

In a related story, the Census Bureau reported that private residential construction spending surged 3.9% during October.

Yun cautioned, however, that housing market indicators, such as pending sales, may weaken over the next few months.

"The expanded tax credit has only been available for the past three weeks, but the time between when buyers start looking at homes until they close on a sale can take anywhere from three to five months," he said.

"Given the lag time, we could see a temporary decline in closed existing home sales from December until early spring when we get another surge," he added. "But the weak job market remains a major concern and could slow the recovery process."

The good news is that number of homes on the market has declined, removing some of the bloat that has depressed prices. There is now a seven month supply of homes on the market at the current rate of sale. which is down from 10.2 months a year ago. Yun predicted that housing conditions could return to near normal and home prices firm up by mid-2010.

"That would mean broad wealth stabilization for the vast number of middle-class families," he said.

By Les Christie, CNNMoney.com staff writer

Administration Encourages Mortgage Relief

The U.S. government is expected to announce a plan Monday that will put increased pressure on mortgage companies to modify loans for troubled borrowers.

Under the current $75 billion Treasury program, companies that lower payments for troubled borrowers collect $1,000 initially from the government for each loan and subsequently get $1,000 annually for up to three years. The new program is expected to withhold payment on those fees until the mortgage companies make the mortgage modifications permanent.

The new plan also has programs that will encourage mortgage companies to expedite the loan modification process, according to Treasury spokeswoman Meg Reilly.

Source: The Associated Press, Martin Crutsinger 

Should Underwater Borrowers Stay or Go?

Increasing numbers of home owners are struggling with the decision to walk away from their homes because their mortgages are so far underwater.

Whether it is a good idea or not is an open question with strong arguments on both sides of the decision.

Leaving a home and a mortgage ruins a credit score, complicating future transactions, and makes it more difficult to rent another residence and buy a car.

Despite this potential pain, Glenn Kelman, chief executive of Zillow.com, believes that people should consider giving up.

"I think there are a lot of people who don't walk away from their house for moral reasons that are economically irrational," he said.

Some experts believe that credit-evaluation companies will view foreclosures differently in this era. "This is a once-in-a-century real estate market. The question that FICO will be asking itself is, is a foreclosure in 2008 and 2009 the same as a foreclosure in 1998, 1999 or 2003 and 2004?" said Todd J. Zywicki, a bankruptcy expert at George Mason University School of Law in Arlington, Va.

Source: The Los Angeles Times, Alejandro Lazo

Mortgages Tie Record Low of 4.78%

By AMY HOAK

Rates on 30-year fixed-rate home mortgages averaged 4.78% this week, matching an all-time low in Freddie Mac's weekly survey of conforming mortgage rates, released Wednesday.

The mortgage averaged 4.83% last week and 5.97% a year ago. This week's average matched a low set the week ending April 30.

"Interest rates for 30-year fixed-rate loans are currently 0.8 percentage points below this year's peak set in mid-June, which shaves roughly $100 off the monthly payments on a $200,000 mortgage," said Frank Nothaft, Freddie Mac chief economist.

Fifteen-year fixed-rate mortgages averaged 4.29% for the week ended Nov. 25, a new low since Freddie Mac began tracking it in 1991. This week's average is down from 4.32% last week and 5.74% a year ago. The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.18% this week, down from 4.25% last week and 5.86% a year ago. The ARM hasn't been this low since Freddie Mac started tracking it in 2005.

And the one-year Treasury-indexed ARM averaged 4.35%, unchanged from last week. The ARM averaged 5.18% a year ago. It hasn't been lower since the week ending July 7, 2005, when it averaged 4.33%.

Also on Wednesday, the Mortgage Bankers Association reported that mortgage-application volume was down a seasonally adjusted 4.5% for the week ended Nov. 20, compared with the week before.

Compliments of: http://online.wsj.com

Only a 7-month supply of homes on market; bidding wars are erupting

Home sales rise to highest level in 2.5 years

  

WASHINGTON - Home sales surged for the second month in a row in October, climbing to the highest level in 2 1/2 years as first-time buyers rushed to take advantage of an expiring tax credit.

Home sales nationwide are now up nearly 36 percent from their bottom in January, data Monday showed, though they are still 16 percent below the peak in autumn 2005. At the current sales pace, there is only a 7-month supply of homes on the market and in some areas there are bidding wars.

Joey Wilson, 53, and her husband made unsuccessful offers on 20 Las Vegas homes since midsummer before closing on a four-bedroom, $136,000 home this month.

"It's insane," said Wilson, who relocated from Kentucky. "I've never seen a market like this before."

The National Association of Realtors said home resales rose 10.1 percent to a seasonally adjusted annual rate of 6.1 million in October, from a downwardly revised pace of 5.54 million in September. It was the biggest monthly increase in a decade, and far above the 5.65 million pace expected by economists, according to Thomson Reuters.

Without adjusting for seasonal factors, sales were up 21 percent from a year earlier and were up in all four regions of the country. The gains were led a 26 percent increase in the Midwest. Sales were up 25 percent in the Northeast, 23 percent in the South and 10 percent in the West.

The housing recovery is being driven by lower prices combined with federal programs to lower mortgage rates and bring more buyers into the market. The median sales price was $173,100, down 7 percent from a year earlier and off roughly 2 percent from September.

Many experts predict prices will hit a new low next spring, perhaps falling another 5 to 10 percent, as more foreclosures get pushed onto the market.

The government has tried to counter that trend by offering a tax incentive for first-time buyers and by keeping mortgage rates around 5 percent since the spring.

The tax credit of up to $8,000 for first-time owners was originally set to run out on Nov. 30, but Congress renewed it earlier this month and broadened its reach. People who have owned their current homes for at least five years can now claim a tax credit of up to $6,500 for a home purchase. To qualify, buyers must sign a purchase agreement by April 30.

The Realtors' report on October home sales reflects offers made before buyers knew the tax credit would be extended.

"The incentives really did get people to go out and buy," said Wells Fargo economist Adam York. "The question is: What does the trend look like when the credit is over with?"

Home sales are likely to drop over the winter as buyers hibernate for a few months without the looming tax credit deadline.

The new deadline means "we're going to see some good activity coming out of the spring," said Pat Lashinsky, chief executive of online real estate brokerage ZipRealty Inc.

But the government support can't last forever. For example, the Federal Reserve is likely to curtail its effort to push down mortgage rates next year. If rates then rise too high, it would make home purchases less affordable and dampen housing demand.

"When we do kick those crutches out from under the housing market, will it be able to stand on its own?" said Mark Fleming, chief economist with real estate information company First American CoreLogic. "It's really hard to tell."

Another concern is that job losses are pushing once creditworthy homeowners into default. Borrowers with prime, fixed-rate loans accounted for one in three new foreclosures in the second quarter, the Mortgage Bankers Association said last week. Nationwide, a record 14 percent of homeowners with a mortgage were either behind on their payments or in foreclosure.

And in areas where foreclosures have hit hard, housing remains depressed, despite low prices and mortgage rates and the tax credit.

Cleveland real estate agent Colleen Rock notes that the city's economy is still struggling with job losses. Another round of foreclosures could depress prices again.

"Just because we're stabilizing, I can't comfortably tell you we're back to a normal market," said Rock, an agent with Re/Max Crossroads. "It might be another year."

The Associated Press and Reuters contributed to this report.

New-home sales rise to highest level in a year

  

WASHINGTON - Sales of new homes rose last month to the highest level in more than a year as strong activity in the South made up for weakness in the rest of the country.

The Commerce Department said Wednesday that sales rose 6.2 percent to a seasonally adjusted annual rate of 430,000 from an upwardly revised 405,000 in September. Economists surveyed by Thomson Reuters had expected a pace of 410,000.

The report tallies signed contracts to buy homes, rather than completed sales. Home shoppers in October were acting before lawmakers decided to extend a tax credit for first-time buyers and expand it to some existing homeowners. The credit now covers contracts signed by April 30.

The surge in sales was driven entirely by a 23 percent increase in the South. Sales fell about 5 percent in the West and Northeast, and fell 20 percent in the Midwest.

Despite the lack of certainty about the tax credit that buyers faced in October, sales were up 5.1 percent from a year ago, the first yearly increase since November 2005.

The median sales price of $212,200 was almost even with $213,200 a year earlier, but up almost 1 percent from September's level of $210,700.

The building industry lobbied hard for the tax credit extension, and builders have been feeling better about their business prospects these days.

Last month, Ryder Homes of Nevada Inc. resumed construction on houses at two of its communities around Reno. "We're finding people aren't coming in willing to wait six months," said Rob Dunbar, Ryder's land development manager.

By scaling back on construction, the building industry has brought the oversupply of homes on the market under control.

There were 239,000 new homes for sale at the end of October, down 4.4 percent from September and the lowest inventory level in nearly four decades.

At the current sales pace, that represents 6.7 months of supply, down from last winter's peak of more than a year.

The housing market, buoyed by federal assistance, has been recovering from the worst downturn in decades.

The National Association of Realtors said Monday home resales rose 10 percent from September to October, the biggest monthly increase in a decade. Along with the tax credit, buyers are being attracted by low prices and mortgage rates.