Real Estate Outlook: Change Anticipated
by Kenneth R. Harney
The national economic headlines continue to be bearish, but some of the underlying fundamentals for real estate are pointing to better days ahead.
Take home mortgage rates: Last week thirty year fixed rates dropped below the seemingly-unbreakable five percent barrier for the first time on record, according to the Mortgage Bankers Association.
New thirty year loans went for an average 4.89 percent, while fifteen year loans were just above 4.6 percent.
Equally important, the outlines of the Obama administration's and Congress's plans to turn around the housing markets just became clearer. Tops on their list: Ending the foreclosure epidemics in some parts of the country through ambitious new programs designed to rework the terms of hundreds of thousands of mortgages that are now unaffordable.
In a letter to Congress last week, Lawrence Summers, Obama's nominee to head the National Economic Council, said the incoming administration plans to use portions of the remaining $350 billion in "TARP" -- or "Troubled Asset Relief Program" -- money to rework monthly payments for what Summers called "responsible home owners" now facing economic challenges in the recession.
Though Summers did not go into detail, the program is likely to be based on FDIC chairman Sheila Bair's proposed "mass-modification" concept that the Bush administration rejected last Fall.
Versions of that program might include widespread principal write-downs -- outright reductions in home owners' mortgage balances -- and guarantees to lenders in the event borrowers re-default.
The Obama administration is also likely to institute an immediate ban on all foreclosure actions, possibly for three months, and is certain to enact bankruptcy reform legislation allowing judges to modify mortgage terms to forestall foreclosures.
Why's this important for anyone involved in real estate? The key to stabilizing local markets, say most economists, is reducing the numbers of new foreclosures and other distressed-price transactions.
Foreclosures lower property values in surrounding neighborhoods, wherever they occur. That discourages potential buyers -- who don't want to plunge in as long as prices are still declining.
If the new administration and Congress can successfully reduce the numbers of new foreclosures, there's an excellent chance that the current combination of low prices and record low mortgage rates can have the effect they should be having: Spurring new sales.
Add in still another factor: Congress may create a new and improved tax credit -- one that's not repayable and covers all home purchases, not simply first-time buyers -- and we just might be looking at a FAR more positive outlook than a lot of people could imagine.
Market Conditions
by Realty Times Staff
The latest report from the National Association of Realtors (NAR) indicates that existing homes sales have risen, due to a jump in sales in the Western region of the United States.
Despite this jump, NAR chief economist Lawrence Yun said the market is underperforming and hurting the broader economy. “We’ve added 25 million people to our population over the past decade and housing affordability conditions are the best we’ve seen since 1973, but household formation is much lower than expected. Consequently, there is a pent-up demand which could be unleashed with the right stimulus, including a non-repayable home buyer tax credit. The Obama administration and Congress need to move fast to stimulate a spring sales upturn which will help to stabilize home prices and set the foundation for a sustainable economic recovery.”
Hey everyone, hope all is well, the market has been crazy lately with interest rates changing daily, but the rest of this year is showing a lot of promise and I am confident that this market will start to turn around very soon! I have posted a couple of new articles that I thought everyone would find enjoyable. Talk to everyone soon!...Brian
2009 Three Central Indiana counties see increase in home sales
Decreasing housing inventory, stable sales prices assist sellers, but still a buyer’s market
INDIANAPOLIS – While overall home sales remain lower on a month-to-month and year-to-date basis in Central Indiana, three Indianapolis-area counties reported higher sales in December 2008 than the same time in 2007, according to finalized pended sales statistics compiled by F.C. Tucker Company. Hancock, Johnson and Marion counties showed improvement over other counties in the nine-county region F.C. Tucker serves.
Available homes for sale dropped 14.3 percent in December 2008 with 2,605 fewer homes on the market than in December 2007. Total homes available for sale at year-end were 15,600. Marion County and Hendricks County experienced the greatest decrease in inventory at 19.2 percent each.
Current interest rates are hovering around 5 percent for a 30-year, fixed-rate loan, and with the Federal Reserve’s MBS (mortgage-backed securities) buying program in full swing, many experts believe that mortgage rates will stay down for the foreseeable future.
“We continue to be encouraged by the decline in inventory in Central Indiana,” said H. James Litten, president of F.C. Tucker Company’s Residential Real Estate Services Division. “As available inventory declines, we hope to see pricing firm up. Also, as interest rates remain historically low, consumer confidence will continue to grow.”
Homes remained on the market an average of 92 days in December, only a 2.2 percent increase comparing year-to-date figures from 2007 and 2008. Four counties – Hancock, Hendricks, Johnson and Madison – showed a decrease in days on the market, compared to December 2007. Madison County boasted the largest change, shaving off an average of six days on the market.
Madison County also showed a 7.4 percent increase in average home sales price in December 2008, compared to December 2007. Home inventory in the county decreased 7.9 percent over the same timeframe. Litten is optimistic the trend will continue into 2009.
Pended single-family and condominium home sales
County
December
07
08
% Change
Year-to-date
Boone
42
41
-2.4%
-14.3%
Hamilton
237
225
-5.1%
-11.3%
Hancock
56
58
3.6%
-14.6%
Hendricks
125
92
-26.4%
-7.8%
Johnson
112
118
5.4%
-12.0%
Madison
83
66
-20.5%
-15.7%
Marion
729
746
2.3%
-10.4%
Morgan
40
39
-2.5%
-9.9%
Shelby
28
26
-7.1%
-9.1%
TOTAL
1,452
1,411
-2.8%
-11.0%
Active Listings - Inventory
516
543
5.2%
2,808
2,609
644
594
1,336
1,080
-19.2%
1,262
1,159
-8.2%
1,084
998
-7.9%
9,519
7,695
614
562
-8.5%
382
320
-16.2%
18,165
15,560
# # #
Editor’s Note: All statistics were compiled by F.C. Tucker Company from a report drawn from Propertylinx statistics on January 7, 2009. Pending means the sales contract has been signed, but the transaction has not closed. According to the NAR, pending sales typically are finalized within a month or two of signing.
About F.C. Tucker Company
F.C. Tucker Company is the largest real estate firm in Indiana and is ranked among the largest independent real estate firms in the nation. Its family of businesses includes a full range of real estate services – mortgages, title insurance, relocation services, a full line of insurance products, auctioning, homeowner services vendors and warranty products. Started in Indianapolis 91 years ago, Tucker has 29 affiliate offices in Indiana, Kentucky and Florida, in addition to its 14 Indianapolis-area offices. We provide outstanding service to individuals and companies looking to buy or sell residential real estate, including first-time homebuyers, move-up and move-down buyers and sellers, relocating buyers and sellers, and investors.
Hello all, I hope everyone had a great Holiday Season. It has been awhile since I last let everyone know what was going on with the market as well as myself. As far as the market, it is definitely a buyers market right now, and with the interest rates as low as they are it reflects that. Despite 2008 being a crazy year for everyone financially, people are still buying and selling real estate, which is why I had my best year yet selling close to 6 million, while making the Presidents Club, which has been a goal of mine since I started in the business 4 years ago. Along with all that I have hired an assistant and going to start building the "Rule Team" under Fc Tucker's umbrella. So with out further ado I will introduce everyone to Jeremy...
Thanks Brian. Hello, my name is Jeremy Tritch and I am now working for Brian, I am currently in the process of getting licensed and have a great opportunity to work with Brian and learn the business from a proven seller in this market. I am really excited to start 2009 off with a new career. I look forward to "blogging" and helping Brian keep everyone informed on the market, how it is changing for the better everyday.
Brian and I hope everyone has a great 2009 and we are looking forward to making 2009 a year to remember for the Rule Team. Below you will find some recent articles with some good information on the current market. Talk to everyone soon. Brian Rule and Jeremy Tritch
Long-Term Rates for Tenth Consecutive Week Setting Yet Another New Low
McLEAN, VA -- Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 5.01 percent with an average 0.6 point for the week ending January 8, 2009, down from last week when it averaged 5.10 percent. Last year at this time, the 30-year FRM averaged 5.87 percent. The 30-year FRM has not been lower since Freddie Mac started the Primary Mortgage Market Survey in 1971.
The 15-year FRM this week averaged 4.62 percent with an average 0.7 point, down from last week when it averaged 4.83 percent. A year ago at this time, the 15-year FRM averaged 5.43 percent. The 15-year FRM has not been lower since June 13, 2003, when it averaged 4.60 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.49 percent this week, with an average 0.7 point, down from last week when it averaged 5.57 percent. A year ago, the 5-year ARM averaged 5.63 percent.
One-year Treasury-indexed ARMs averaged 4.95 percent this week with an average 0.5 point, up from last week when it averaged 4.85 percent. At this time last year, the 1-year ARM averaged 5.37 percent.
"Interest rates for 30-year fixed-rate mortgages fell for the tenth week to a fourth consecutive record low due in part to the Federal Reserve’s recent purchases of mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae," said Frank Nothaft, Freddie Mac vice president and chief economist. "On November 25, 2008, the Federal Reserve announced that it planned to purchase up to $500 billion of these securities by the end of June of this year. For the sake of comparison, there were roughly $4.7 trillion of such securities backed by home mortgages available as of September 30, 2008."
"Since the end of October 2008, these rates have declined by almost 1 1/2 percentage points, or payment savings of about $184 a month for a $200,000 loan – an additional $11 dollars from last week."
At the start of a new year a lot of us get motivated to give our homes a good cleaning. It's a way to clear the physical and mental clutter and, if you're selling your home, it's a must-do to help attract buyers.
According to HomeGain, cleaning up and de-cluttering can gain you thousands of dollars at the time of the sale and cost you as little as a few hundred dollars, if you use experts, to get the job done. Next week, I'll explore other repair areas that result in the greatest return; but this week, it's all about getting organized to increase the chances of selling your home.
I recently took on the task and unloaded about 25 trash bags worth of once-prized possessions. It's funny how, as the years go by, time and lack of room can make you realize that those prized-possessions are just eating up space while serving little purpose. Most of us have more than we need. Having more stuff than you need in a home is not appealing to buyers. It can make them feel cramped, nervous, and overall uncomfortable in your home which may result in a lower offer.
The best approach to de-cluttering is to have an organized plan. Expert organizer Mary Pankiewicz of Clutter-Free & Organized suggests making a list of all the areas that need to be organized; otherwise you run the risk of giving up.
"What people do is they try to do too big of a project and then they get overwhelmed and then they get discouraged," says Pankiewicz.
So, if you're rolling up your sleeves and getting started, a good place to start de-cluttering is the hall closet. Why? Buyers are certain to open it up and check it out for space.
"The thing to remember, particularly with closets is, it doesn't matter how big the closet is -- if it looks crowded, the buyer still thinks it's a small closet," says Pankiewicz.
De-cluttering a home can be a huge task that can be made even more laborious if you're not careful. "What people will want to do is haul everything out of that closet and then they don't know what to do next because they've got too much stuff to deal with."
She recommends a systematic approach to clearing clutter. Pankiewicz tells clients to first start with everything on the floor. Pull those items out and leave everything on shelves inside. Go through the items and get rid of the things that you don't have a use for. "The golden question to ask is not 'Will I ever use that?' That's what I call the keeper question because the answer to that [question] is 'Who knows, maybe.' So then I better keep it," says Pankiewicz. She says the better question to ask is, "What will make me use this or what will make me need this?"
Pankiewicz says when that question is asked, often people realize that they're never going to use the item and then are more willing to let it go.
Once you've found the stuff you're ready to get rid of, what do you do with it? Many sellers attempt to store it until they can have a yard sale or they donate the items. If you donate your items, make sure you take a look at the book Money for Your Used Clothing by William R. Lewis, CPA. The book tells you what the IRS will let you take as a tax deduction in 2008 for various items.
"If it's cluttered before the move, it's chaos after," says Pankiewicz. She adds, "The key mistake is people not making a decision before they pack things up."
That can be a very costly mistake for sellers. "They put stuff in storage and they pay for it year after year and then when they finally look at it, it's nothing they want," says Pankiewicz.
"The sooner you get your house ready to sell, the better decisions you'll make," says Pankiewicz. She says if sellers wait until the last minute then they tend to hold on to things and pack them up in storage saying, "I'll look at it later." That's how the clutter simply follows them from home to home.
Copyright © 2010 F.C. Tucker CompanyPortions Copyright © 2010 a la mode, inc.Another XSite by a la mode, inc. | Admin Login| Terms of Use| Site MapAll rate, payment, and area information are estimates and approximations only.