Friday, May 13, 2011

Homeownership: Building Family Wealth


by The KCM Crew on May 11, 2011

The question facing many families making a move today is whether it makes more sense to rent or buy. We have been very upfront in discussing our unwavering belief in homeownership. It is for that reason that today we want to quote from a study issued by an institution with no ties to the real estate business or mortgaging.
The Joint Center for Housing Studies at Harvard University just released a study, America’s Rental Housing: Meeting Challenges, Building on Opportunities. The study discusses the need for a greater supply of quality rental units in America. We agree. However, there were a few nuggets of information found in the study we want everyone to know.

American’s Belief in Homeownership Has NOT Fundamentally Changed

There seems to be some feeling that homeownership has lost it’s luster and perhaps is no longer a component of the American Dream. Harvard explains:
To date, attitudes about owning have become only slightly more negative while attitudes about whether now is a good time to buy are little different than before the housing boom. In the latest Fannie Mae housing survey from October–December 2010, the vast majority of respondents—including renters—continued to believe that homeownership makes more financial sense than renting. In addition, nearly two-thirds of all renters surveyed reported their intention to buy homes in the future.

Homeownership Creates Wealth

Because prices have fallen dramatically in many parts of the country in the last five years, some are too easily dismissing homeownership’s role in building family wealth over the last century. The study explains:
In addition, renters have only a fraction of the net wealth of owners. Near the peak of the housing bubble in 2007, the median net wealth of homeowners was $234,600—about 46 times the $5,100 median for renters. Even if homeowner wealth fell back to 1995 levels, it would still be 27.5 times the median for renters.
The recent fall in prices can’t wipe out the 100 year history housing has as a good long-term investment.

Bottom Line

The study was promoting the need for the construction of more rental housing for the average American family. However, when it came to a discusion on building wealth, Harvard offered:
“And for individuals as well as businesses, owning rental properties is an avenue for wealth creation.”
And how do these individuals and businesses create that wealth. Owning the real estate and collecting rent from their tenants to offset the mortgage payments. Build your family’s wealth – not your landlord’s. We believe OWNERSHIP almost always makes the most sense.


Joe Naccarato, Broker, Realtor
Top Performer Award Recipient 
Allen Tate Realtors
Tel. 704.953.0183
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number! 
Referrals are greatly appreciated. 

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Mortgage Rates Drop to Lowest Level of Year



In declining for the fourth straight week, mortgage rates reached their lowest levels of 2011.

The 30-year fixed-rate mortgage, a popular choice among home buyers, averaged 4.63 percent this week, reports Freddie Mac in its weekly mortgage market survey. Last week, the 30-year mortgage stood at 4.71 percent; compared to last year at this time, it averaged 4.93 percent.

Meanwhile, the 15-year fixed-rate mortgage also reached its lowest level of the year, averaging 3.82 percent this week from 3.89 percent last week. Last year at this time, the 15-year mortgage averaged 4.30 percent.

The 5-year adjustable-rate mortgage averaged 3.41 percent, down from last week’s 3.47 percent average. A year ago, it averaged 3.95 percent.

As rates continue to fall, the number of mortgage applications are increasing. Mortgage applications increased 8.2 percent this week compared to one week earlier, reports the Mortgage Bankers Association. The refinancing index increased 9 percent--it’s highest level since mid-March. Mortgage applications for purchase also got a boost, rising 7.1 percent compared to the previous week.

Source: “30-Year Fixed-Rate Mortgage Drops to 4.63 Percent,” Freddie Mac (May 12, 2011) and “Mortgage Applications Increased 8 Percent in Early May, Says MBA,” RISMedia (May 12, 2011)



Joe Naccarato, Broker, Realtor
Top Performer Award Recipient 
Allen Tate Realtors
Tel. 704.953.0183
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number! 
Referrals are greatly appreciated. 
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Tuesday, May 10, 2011

5 Reasons You Should Consider Selling Now



by The KCM Crew on May 10, 2011

If you plan on moving anytime in 2011, you should strongly consider selling your house now rather than waiting. Here are five reasons why:

1.) This is when your house will get the most exposure 

The spring, and particularly the month of May, is when most buyers enter the real estate market. This surge of buyers dramatically increases the exposure for your house . The best chance of getting quality offers (perhaps even multiple offers) is RIGHT NOW!

2.) Foreclosures and short sales will increase in about 90 days

The good news is that the number of people paying their mortgage on time is increasing. This will lead to less distressed property sales later this year and throughout 2012. The not-so-good news is that there is still a large inventory of existing foreclosures and short sales that will still be coming to market.
As an example, LPS reported in their latest Mortgage Monitor that:
  • There are still twice as many loans going 90+ days delinquent as are starting foreclosure
  • There are almost three times the number of foreclosure starts as there are foreclosure sales
  • Distressed property inventory levels are almost 45 times the rate of monthly foreclosure sales 
This means that there is a backlog of properties which will start coming to the market in about 90 days as banks clear up their paperwork challenges. These properties sell at dramatic discounts. They will be your competition. Both Fannie Mae and Freddie Mac have recently discussed the magnitude of this challenge.

3.) Interest rates have risen over the last six months

Interest rates have stabilized recently. However, in the last six months, interest rates have climbed over 1/2%. Every time the rates increase 1/4%, approximately 250,000 buyers are eliminated from qualifying for a mortgage. In an environment of volatile rates, waiting could mean that there will be fewer buyers eligible to purchase your house. It also could mean that you will pay a higher rate on the next home you buy.

4.) Qualifying for a mortgage is about to get even more difficult

Besides increasing rates, there are other factors that will hinder a buyer’s ability to qualify for a mortgage as we move forward. Lending standards have been getting tighter over the last year. And as the government debates the new proposed guidelines (QRM), banks are gearing up for even more stringent standards.
Morgan Stanley recently stated:
“Recent developments in issues such as GSE reform, Dodd-Frank securitization rules, and foreclosure settlement issues suggest a tighter and more expensive environment for mortgage credit.” 
This may impact any potential purchaser for your property and may also impact your next purchase.

5.) It’s time to get on with your life 

Probably the most important reason to sell is so you can get on with your life. You placed your home on the market for a reason. Do not allow a less-than-stellar housing market prevent you from reaching your goals as an individual or as a family. Think about the reasons you decided to move in the first place. Are these reasons still important to you? If you have to take less than you were originally hoping to get for your house, your family has a question to ask each other: Is the dollar difference in sales price worth putting off our plans? Only you and your family know the answer to that question.

Bottom Line 

If you plan to sell this year, the reasons above prove that selling now makes more sense than waiting to later in the year. Sit with a real estate professional in your area today to fully understand your best option.


Joe Naccarato, Broker, Realtor
Top Performer Award Recipient 
Allen Tate Realtors
Tel. 704.953.0183
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number! 
Referrals are greatly appreciated. 

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Existing-Home Sales Rise in Most States



Existing-home sales continued to recover in the first quarter with gains in 49 states and the District of Columbia, while 22 percent of metropolitan areas saw prices rise from a year ago, according to the latest survey by the NATIONAL ASSOCIATION OF REALTORS®.

Total state existing-home sales, including single-family homes and condos, rose 8.3 percent to a seasonally adjusted annual rate of 5.14 million in the first quarter from 4.75 million in the fourth quarter, and are only 0.8 percent below a 5.18 million pace during the same period in 2010.

Also in the first quarter, the median existing single-family home price rose in 34 out of 153 metropolitan statistical areas from the first quarter of 2010, including four with double-digit increases; one was unchanged and 118 areas showed price declines.

Lawrence Yun, NAR chief economist, said home prices are all over the map. “The reading of quarterly price data can be volatile because they are based on the types of homes that are sold during the quarter. When buyers principally purchase distressed properties in a given market, the recorded prices will be very low, which is what we’re seeing now in much of the country,” he said. “Annual price data provides a better guide about the direction of the market in those areas.”

Distressed Sales Put Pressure on Prices

The national median existing single-family home price was $158,700 in the first quarter, down 4.6 percent from $166,400 in the first quarter of 2010. The median is where half sold for more and half sold for less. Distressed homes typically sold at a discount of about 20 percent, accounted for 39 percent of first quarter sales, up from 36 percent a year earlier.

Yun said lower priced homes have seen the best sales performance. “The biggest sales increase has been in the lower price ranges, which are popular with investors and cash buyers,” he said. “The preponderance of sales activity at the lower end is bringing down the median price, so what we’re seeing is the result of a change in the composition of home sales.”

Although sales are slightly below a year ago, the volume of homes sold for $100,000 or less in the first quarter was 8.9 percent higher than the first quarter of 2010, creating a downward skew on the overall median price.

The share of all-cash home purchases rose to 33 percent in the first quarter from 27 percent in the first quarter of 2010.


More Investors in the Market

Investors accounted for 21 percent of first quarter transactions, up from 18 percent a year ago, while first-time buyers purchased 32 percent of homes, down from 42 percent in the first quarter of 2010 when a tax credit was in place. Repeat buyers accounted for a 47 percent market share in the first quarter, up from 40 percent a year earlier.

“The rising sales trend in nearly all states is a part of the healing process to clear off inventory. Sales need to rise before prices can firm up,” Yun added.

NAR President Ron Phipps said strong sales of distressed homes are exactly what the market needs. “The good news is foreclosures, which account for two-thirds of all distressed homes sold, are selling very quickly,” he said. “Short sales still take far too long to get lender approval, but it appears the inventory of distressed property is peaking and will be gradually declining next year. This means the market should slowly return to balance. We are encouraged that recent home buyers are having exceptionally low default rates.”

According to Freddie Mac, the national commitment rate on a 30-year conventional fixed-rate mortgage averaged 4.85 percent in the first quarter, up from a record low 4.41 percent in the fourth quarter, but below the 5.00 percent average in the first quarter of 2010.


A Closer Look at Price Trends

In the condo sector, metro area condominium and cooperative prices – covering changes in 53 metro areas – showed the national median existing-condo price was $152,900 in the first quarter, down 10.4 percent from the first quarter of 2010. Eleven metros showed increases in the median condo price from a year ago, one was unchanged and 41 areas had declines.

Regionally, existing-home sales in the Northeast increased 0.8 percent in the first quarter to a level of 800,000 but are 7.3 percent below the first quarter of 2010. The median existing single-family home price in the Northeast declined 5.0 percent to $234,100 in the first quarter from a year ago.

Existing-home sales in the Midwest rose 7.9 percent in the first quarter to a pace of 1.09 million but are 5.0 percent below a year ago. The median existing single-family home price in the Midwest fell 5.3 percent to $124,400 in the first quarter from the same period in 2010.

In the South, existing-home sales increased 8.5 percent in the first quarter to an annual rate of 1.96 million and are 2.8 percent higher than the first quarter of 2010. The median existing single-family home price in the South slipped 0.6 percent to $141,800 in the first quarter from a year earlier.

Existing-home sales in the West jumped 13.5 percent in the first quarter to a level of 1.29 million and are 2.1 percent above a year ago. The median existing single-family home price in the West fell 4.7 percent to $197,400 in the first quarter from the first quarter of 2010.

Source: NAR



Joe Naccarato, Broker, Realtor
Top Performer Award Recipient 
Allen Tate Realtors
Tel. 704.953.0183
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number! 
Referrals are greatly appreciated. 



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Monday, May 9, 2011

Shedding a Little Light on Shadow Inventory


by The KCM Crew on May 9, 2011

Last week, we posted a blog titled: The Impact of Distressed Properties on Neighboring Values. In the article, we said there would be more distressed properties coming to market in the next six months and that these properties would put added downward pressure on prices of other homes in the area. Some questioned our assumption that foreclosures were about to increase and others questioned our assertion that they would have a negative impact on values. We want to qualify both of our statements today.

Distressed properties are about to increase

We have been in the ‘eye of the storm’ regarding the shadow inventory of foreclosure properties for the last several months. Foreclosures have been delayed by court systems mandating that the banks have their paperwork in order. Just last week, Fannie Mae addressed this issue in a report:
“Our foreclosure rates remain high. However, foreclosure levels were lower than what they otherwise would have been in the first quarter of 2011 due to the delays caused by servicer foreclosure process deficiencies and the resulting foreclosure pause.”
In their First Quarter 2011 Financial Results Supplement, Freddie Mac, also addressed this issue last week:
“We expect the pace of our REO acquisitions to increase in the remainder of 2011, in part due to the resumption of foreclosure activity by servicers, as well as the transition of many seriously delinquent loans to REO.”
More foreclosures will be coming to the market throughout 2011.

Distressed properties impact prices of surrounding properties 

Clear Capital discussed this point in their May 2011 Market Report. In the report they used two graphs to emphasize the connection. In the first graph, they charted the national saturation rate of foreclosures (REOs) from 2008 until the present.
 
In the second graph they charted national home prices during the same time period.
 
We can see that as the saturation rate of foreclosures increase, prices decrease.

Bottom Line

More foreclosures will be coming to market and they will have an impact on values. How will your neighborhood be affected? Sit down with a local real estate expert to find out.


Joe Naccarato, Broker, Realtor
Top Performer Award Recipient 
Allen Tate Realtors
Tel. 704.953.0183
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number! 
Referrals are greatly appreciated. 
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Sunday, May 8, 2011

In Time for Buying Season, Rates Hit Yearly Lows



The 30-year fixed-rate mortgage, a popular choice among buyers, sank even lower this week, matching its yearly low of 4.71 percent from January, reports Freddie Mac in its weekly mortgage market survey. Last year at this time, the 30-year fixed-rate mortgage averaged 5 percent.

Meanwhile, the 15-year fixed-rate hit a new yearly low of 3.89 percent this week. Last week, the 15-year fixed-rate mortgage averaged 3.97 percent. The 15-year rate averaged 4.36 percent last year at this time. It reached its lowest level on record in November when it averaged 3.57 percent.

The one-year adjustable-rate mortgage averaged 3.14 percent, down from last week’s 3.15 percent. Last year at this time, it averaged 4.07 percent.

"Weaker economic data reports reduced Treasury bond yields and allowed mortgage rates to drift lower for the third consecutive week,” says Frank Nothaft, Freddie Mac’s chief economist.

Source: “30-Year Fixed-Rate Mortgage Matches Yearly Low of 4.71 Percent,” Freddie Mac (May 5, 2011)


Joe Naccarato, Broker, Realtor
Top Performer Award Recipient 
Allen Tate Realtors
Tel. 704.953.0183
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number! 
Referrals are greatly appreciated. 
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Saturday, May 7, 2011

The Impact of Distressed Properties on Neighboring Values


by The KCM Crew on May 6, 2011

The banks are finally getting their foreclosure paperwork in order. They will start bringing larger numbers of distressed properties to market over the next six months. We must realize that this influx of discounted inventory will have an impact on the values of neighboring homes. How large an impact?
According to RealtyTrac a foreclosure sells for 59% of the value of a similar non-distressed property. Therefore, this foreclosure inventory will affect values in two ways:

1.) As Discounted Competition

Obviously, a segment of purchasers will prefer the discounted property based on price alone. Even if the distressed property is in need of substantial repair, the buyer is getting the property at a 41% discount. Price is determined by supply and demand. Distressed properties will eat up a portion of the demand for housing and that will put downward pressure on all values.

2.) As Comparable Sales on Your Appraisal

Even after you put your house into contract, this distressed inventory can still impact your transaction. Unless your purchaser is paying all cash, there will be an appraisal of your property by the bank who is giving the mortgage to your buyer to complete the purchase. Because of the volume of distressed properties selling in almost every market, banks are instructing appraisers to use these discounted sales in determining values of non-distressed sales. We can argue the logic of this some other time. At this point, we must simply be aware that this is taking place.

Bottom Line

Over the next several months, banks will be moving substantial numbers of foreclosures onto the market. This will impact values of other homes in the region. If you are considering selling, now might be the best time. You want to be sold and closed before these properties come to market and impact your price.


Joe Naccarato, Broker, Realtor
Top Performer Award Recipient 
Allen Tate Realtors
Tel. 704.953.0183
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number! 
Referrals are greatly appreciated. 

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Thursday, May 5, 2011

REO Inventory Reaches All-Time High



The national inventory of REO properties rose in March to a record high of 2.2 million. Foreclosure starts also increased by 33 percent month-over-month, according to the March Mortgage Monitor report by Lending Processing Services Inc.

However, it’s not all doom and gloom for the housing market. The report revealed a significant increase in foreclosure sales, which is helping to chip away at the swelling inventories that are battering many markets.

Also, delinquencies continue to decline, which is a sign of fewer foreclosures brewing in the pipeline. Delinquencies fell more than 11 percent in March from February — the lowest level since 2008 and a nearly 20 percent year-over-year decline, according to Lender Processing Services Inc. The total U.S. loan delinquency rate, which is for loans 30 or more days past due (but not in foreclosure), is 7.78 percent.

States with the highest percentage of loans where home owners have fallen behind are Florida, Nevada, Mississippi, New Jersey, and Georgia.

On the other hand, states that boast the lowest percentage of delinquent loans are Montana, Wyoming, Alaska, South Dakota, and North Dakota.

Source: “Banks Build Record Foreclosure Inventory,” RISMedia (May 5, 2011)


Joe Naccarato, Broker, Realtor
Top Performer Award Recipient 
Allen Tate Realtors
Tel. 704.953.0183
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number! 
Referrals are greatly appreciated. 

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Wednesday, May 4, 2011

Is a Short Sale or a Foreclosure My Best Option?


by The KCM Crew on May 4, 2011

We get asked this question quite often. In a rapidly changing market, it is difficult to give absolute answers. Much depends on your family’s personal situation. However, if you realize that you can no longer make the payments, you may have to decide between doing a short sale or letting the home go to foreclosure. Here are three things you may wish to consider:

1.) Impact on Your Future Ability to Get a Mortgage

There are many different lending institutions, each with their own requirements when it comes to your ability to obtain a mortgage in the future. However, a common trend is to be much more lenient with someone working through a short sale rather than letting the house go to foreclosure. As an example, the Fannie Mae site, Know Your Options explains you:
May be able to get a Fannie Mae mortgage to purchase a home sooner (in as little as 2 years) than if you went through foreclosure (at least 7 years)
You can get further information here. However, in a rapidly changing environment, make sure you get the latest information available from the actual lending institutions mentioned.

2.) Impact on Your Credit Score

There has been much dialogue on this issue. The question is whether or not a foreclosure will have a more severe impact on your credit score than a short sale. A recent FICO study sheds needed light on this question. Here is a chart from that report.
The first chart shows the impact on the score for each stage of delinquency, and the second shows how long it takes the score to fully “recover” after the fact.
We can see that there is very little difference in impact on your credit score whether you choose a short sale or a foreclosure.

3.) Impact on Your Family during the Move

Usually a family asking this question is already experiencing major financial difficulties. This may be putting immense pressure on both parents and the children. If you allow your home to go to foreclosure, you move and leave it vacant or you stay waiting for an official to knock on your door demanding you move. That added burden can cause even more stress for a family.
In the short sale process, you work with the bank and pre-determine the day you will move. The new purchasers usually move in the same day. Your family moves with a plan and you don’t leave the neighborhood with a vacant house to deal with. There is a level of dignity in this type of move that does not always take place in a foreclosure situation.

Bottom Line

For several reasons, a short sale may be the better option for your family. It is best to get professional advice if faced with this decision.


Joe Naccarato, Broker, Realtor
Top Performer Award Recipient 
Allen Tate Realtors
Tel. 704.953.0183
Do you know someone buying or selling anywhere? I can help them! Please give them my phone number! 
Referrals are greatly appreciated. 
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Tuesday, May 3, 2011

Almost 14,000 Houses Sold Yesterday


by The KCM Crew on May 3, 2011

One of the biggest misconceptions in today’s housing market is that homes are not selling. That is simply not true. Last month’s Existing Sales Report from the National Association of Realtors (NAR) showed that homes were selling at an “annual rate of 5.10 million”. That’s an average of 13,973 every day – 365 days a year!
And the monthly Pending Sales Report, which measures the number of houses going into contract each month, has showed increases in six of the last nine months prompting Lawrence Yun, NAR’s chief economist to say:
“Since reaching a cyclical bottom last June, pending home sales have posted an overall gain of 24 percent and demonstrate the market is recovering on its own. The index means modest near-term gains in existing-home sales are likely.”
We realize that 40% of the sales are distressed properties and that 22% of buyers are investors. Yet, that still doesn’t negate the fact that homes are in fact selling… and 60% of them are NOT foreclosures or short sales.
And Yun believes this uptick will continue:
“Based on the current uptrend with very favorable affordability conditions, rising apartment rents and ongoing job creation, existing-home sales should rise around 5 to 10 percent this year.”

Bottom Line

Homes are selling. You probably will need to offer a compelling price if you put your house on the market. But if you do, it will sell.

See All My Listings at: www.JoeNaccarato.com
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Monday, May 2, 2011

Bailing on Mortgage Not a Good Idea



An estimated 11 million home owners owe more on their mortgage than their property is currently worth. That’s made more home owners consider walking away from their mortgage and home ownership, even those who can still comfortably afford to make their payments (known as “strategic default”).

Walking away from a mortgage usually results in either a short sale or foreclosure. So what are the consequences of walking away? There may be far more consequences than what most home owners ever considered.

The consequences include everything from badly affected credit to potential tax consequences and deficiency risks. There are even possible professional implications, Justin McHood with Academy Mortgage in Chandler, Ariz., warns in an article at Zillow.com.

Home owners' credit scores will be badly hit regardless of whether they attempt a short sale or have their property foreclosed on. (See How Missed Mortgage Payments Hurt Credit Scores)

There also could be the potential for deficiency risks when walking away from a home, which largely varies from state to state. (View anti-deficiency laws by state.) In some states, lenders may sue you for the difference between what you owe and what your short-sale or foreclosure proceeds are, McHood notes.

Home owners considering walking away also should weigh the potential difficulty they may face from moving too. For example, if moving into a rental property, they’ll have to convince a landlord to rent to them after they have the red flag of missed mortgage payments on their credit record. And paying for moving expenses — which many walkaways fail to consider — can quickly add up too.

Plus, home owners may find professional consequences from walking away from a mortgage, as the number of employers eyeing employees’ credit profiles continues to grow.

Source: “The Consequence of Walking Away,” Zillow.com (April 27, 2011)
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Foreclosures: Are They Increasing or Decreasing?



by The KCM Crew on May 2, 2011

There seems to be much confusion about the number of distressed properties which are currently entering the housing market. This inventory has a tremendous impact on pricing in any particular region. For this reason, we want to bring a little clarity to the situation. Mortgage delinquencies are decreasing and foreclosures are increasing. Still confused? Let us explain.

Delinquencies are decreasing

The great news at this time is that the number of people 90+ days behind on their mortgage payment is falling. As the employment picture slowly brightens and families adjust to their current financial situation, more people are paying their mortgage on time. This has created headlines touting that the foreclosure situation is easing. Those headlines are correct. However…

Foreclosures are again flowing to the market

We must still clear the large inventories of foreclosed properties that exist. We had a small reprieve over the last few months as many distressed properties were caught in a logjam created as banks corrected faulty paperwork. That bottleneck is beginning to clear. This month’s LPS Mortgage Monitor shows exactly this situation in this graph:
 
As further evidence, Campbell/Inside Mortgage Finance just released their HousingPulse Distressed Property Index (DPI). The Index indicated that:
… nearly half of the housing market is now distressed properties. This trend is likely to continue as a backlog of foreclosures and mortgage defaults make their way through the housing pipeline.

What does this mean?

We will keep hearing what seems to be conflicting reports on the foreclosure situation. Remember that delinquencies and foreclosures are two different measures and can go in different directions. Here is an additional slide from the Mortgage Monitor to help you distinguish the differencies.

Bottom Line

More people are paying their mortgage. Once we clear through the existing distressed property inventory, the market will finally gain momentum.
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Saturday, April 30, 2011

Analysts Say Housing Is on the Way Up


Analysts at both Standard & Poor's and Barclays Capital agree that the uptick in home resales last month is a favorable sign of things to come. Because pending home sales — an indicator of future activity — were up in February, S&P believes transaction volume will rise for April.

Barclays, meanwhile, says March's 3.7 percent gain in existing-home sales merely reinforces its position that the housing market actually hit bottom in late 2010.

Source: “Monday Morning Cup of Coffee,” Housing Wire, Jon Prior (04/25/11)


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Friday, April 29, 2011

New Listing: Providence Woods; 5 Bedrooms; 1.41 Acres! 3516 Bounty Ct



Click On The Link Below To View Full Details:

http://www.allentate.com/joenaccarato/DesktopDefault.aspx?pageid=108&pagealias=ATWAgentListingDetail&ListingID=1980989&ListingPosition=3&From=AgentFeaturedProperties

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Tuesday, April 26, 2011

Is It Time to Diversify Your Investment Portfolio?


by The KCM Crew on April 26, 2011

Studies now show that over 20% of the houses with mortgages in the country are underwater (where the loan amount exceeds the value of the property). Some bought their house at the top of the market and saw prices come tumbling down over the last few years. Losing this value has caused challenges for many in this category.
Other homeowners are underwater because they refinanced their homes at the height of the market and cashed out some of their equity. Some did this several times as values continued to rise and interest rates continued to fall. When prices dropped, they too found themselves in a negative equity situation. But not everyone in this category is in a worse position financially. Let’s break down this category.

Some Used Their House as an ATM

Some homeowners took cash out of their home to finance a lifestyle they desired. They bought a new car or a new boat. Some used the cash for fabulous vacations to locations they had always dreamed about. This group didn’t lose their equity. They spent it. Maybe these purchases were worth the price that these homeowners are now paying. Only the individual person can answer that question.

Some Used Their House to Finance an Education or Start a Business

It has long been a tradition in this country that people tap the equity in their home to finance their children’s college education or to gather together the start-up capital necessary to open their own business. These people didn’t lose their equity. They invested it in their children or their business. Was it worth it? For the couple who refinanced their home for their son or daughter’s eduction in 2007, a good time to ask may be next month as they are attending their children’s college graduation. For those who started a business with the money, whether it was a good idea was determined by their business plan not the housing market.

Some Used Their Home to Diversify Their Investment Portfolio

Some savvy homeowners, upon seeing their home values skyrocketing, decided to pull cash out and invest in other asset classes. At the height of the market (2006), some took $100,000 out of their home and invested in the stock market or in precious metals. Instead of sitting on their equity, they decided to put it to work for them. How did this group do? If they invested in the Dow, that $100,000 is now worth approximately $115,000. If they invested in gold, that $100,000 is now worth $290,000. (We never read about these people in the thousands of stories on the housing bubble. Good news just doesn’t seem to sell papers.)

Bottom Line

In every challenge there is an opportunity. Perhaps the opportunity in housing today is to use some of the equity in other assets we currently own to purchase real estate while it is low and mortgage money remains cheap. The Wall Street Journal and Forbes Magazine both suggested this exact strategy to their readers in the last three months.
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Monday, April 25, 2011

New Listing: 9941 Heritage Oak Ln , Marvin NC 28173 . 2.70 Acres In Marvin!!


Home was custom built for current owners. Cul-de-sac lot w/ 2.7 acres of land, mature trees & privacy. Hardwood floors on main level, upgrades in kitchen & breakfast area, bright airy sunroom, beautifully landscaped lot. New roof in '08, upper AC unit new in 2010; Downstairs AC Unit new in 2008. Tons of storage areas, closet space, dbl sinks in master bathroom.Central Vacuum.Go see this one today!

Click On The Link Below To View Full Details:

http://www.allentate.com/joenaccarato/DesktopDefault.aspx?pageid=108&pagealias=ATWAgentListingDetail&ListingID=1980442&ListingPosition=2&From=AgentFeaturedProperties
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Your Retirement Home: Is Now the Time to Buy?



by The KCM Crew on April 25, 2011

The last several years have wreaked havoc on many people’s plans for retirement. They have seen their nest egg dwindle and in some cases disappear. Many have pushed back the date they will stop working and some have stopped even thinking about what part of the country to which they plan to relocate. For some however, this may be the time to again begin putting their retirement plan together.
There is a tremendous opportunity right now to buy a home at a sensational price in certain traditional retirement destinations. Couple that with the fact that in other parts of the country the housing market is still experiencing falling prices and we may be looking at a perfect window of opportunity to buy your retirement home.
Example: If you currently live in New Jersey, you are probably well aware of two things:
  1. there was a lot of snow there this past winter and
  2. the local housing market is struggling
Point number one might have you dreaming of spending your retirement years in a place like Las Vegas or Tucson or San Diego. However, point number two might have you believing this is not the time to even consider the move: If I can’t get top value for my house, why sell now? Actually, this may be a very opportune time.
What caused prices to tumble throughout the country was the emergence of distressed properties (foreclosures and short sales). These discounted properties put tremendous downward pressure on the values of the other homes in the region. The states that are clearing this inventory rapidly are the states where prices will recover more quickly. The states that were first hit with the housing crisis (Arizona, Nevada, California and Florida) are now the first to show signs of a recovery because they are selling off their distressed properties at a faster pace than many other parts of the country. New Jersey, on the other hand (along with much of the Northeast), is seeing their inventory of distressed properties growing. That is why prices are continuing to soften.

What does this have to do with my retirement plans?

If you own a home where prices are falling and plan to buy a retirement home in one of the areas that are beginning to recover, you are sitting on an asset that is losing value and waiting to purchase an asset that is about to increase in value. That doesn’t make sense financially. Even if you are not 100% ready to move right now, it might make sense to sell the 4 bedroom colonial you currently own in New Jersey (or in NY, MA or WA) and buy a smaller home or condo in town. With the additional money from the sale, you could probably buy a beautiful retirement home in the area you always dreamed about relocating to. Even if you needed some extra financing to buy the perfect home, you are borrowing while mortgage money is very inexpensive.

How do I know if this applies to me?

As mentioned above, the primary factor determining where prices are headed is the number of distressed properties in the area. Look at the map below from NAR. It shows the amount of distressed properties about to come to market in each state in the country. If the state you currently live in is red, yellow or orange and the state to which you plan to retire is a shade of green, you should at least consider the move.

Bottom Line

There are definitely challenges for many in the current housing market. At the same time, opportunities exist for others. Sit with a real estate professional who can give you the right data to help determine whether such an opportunity currently exists for you.
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Thursday, April 21, 2011

5 Reasons To Hurry Up And Get Your FHA Mortgage


by Dean Hartman on April 21, 2011

With the likely installation of QRM looming, it is clear that FHA mortgages will clearly become more popular merely because of the lesser down payment requirements. And as we have all learned, when the demand for something goes up, and the supply remains constant, prices go UP…that is, it becomes more expensive.

Talking Point One

The FHA is permitted each year to insure a specific dollar amount of loans by Congress. I find it unlikely that anyone has factored the increased demand for FHA that QRM will create. Further, getting Congress to allocate more money to HUD in these days of deficits is not a sure thing. I could see a fourth quarter of 2011 with little financing available (or much more expensive financing) to people with less than 20% down.

Talking Point Two

We hear, almost daily, that FHA is only semi-solvent…that they don’t have sufficient reserves. Foolishly, the MIP schedule was altered to give them less cash today (lowering the Up Front MIP) and increasing the longer term collection of monies (the Monthly MIP). To me, that almost insures another MIP change this year…one in which the UFMIP is hiked to get more money in the reserves now, making mortgages more expensive.

Talking Point Three

The FHA is floating rumors about tightening guidelines. Maybe it will be an increase in minimum down payment from 3.5% to 5%. Maybe a cut in seller paid closing costs from 6% to 3%. Maybe both. Regardless, it is going to get harder to qualify. Understand with increased demand and steady supply, lenders will be choosier.

Talking Point Four

Rates are creeping up anyway. With inflation making a strong comeback (fueled by high gas prices), the Fed will look to hike rates to control inflation.

Talking Point Five

The current loan limits are going to be slashed. Presently, FHA will insure loans up to $729,250 in high cost areas. That number is huge when compared to historic loan limits and was instituted when desperate times called for desperate measures. And while we still might be semi-desperate, look for those loan limits to be lowered by at least $100,000 come the end of the year (when Congress sets them for the next year).
For buyers, waiting can be expensive, or worse. You might not even get a loan. For sellers, more expensive loans and less buyers who qualify, will force you to lower your prices even further. ACT NOW!
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Has Housing Reached a 'Recovery Path'?



Sales of existing homes rose slightly in March, marking the sixth consecutive monthly rise for existing home sales in the last eight months, the National Association of REALTORS reported Wednesday.

"We're clearly on a recovery path," says Lawrence Yun, NAR chief economist.

Existing home sales rose 3.7 percent in March from February, as distressed sales, such as those in foreclosure, continued to make up a big bulk of home sales (40 percent of all purchases).

"At this point, we're likely to see a steady improvement in sales," says economist Joel Naroff of Naroff Economic Advisors.

So just in time for the spring buying season, here’s what economists have to say about who’s buying and currently driving the market:

Investors: All-cash deals last month made up a record number of sales, accounting for 35 percent of all resold homes. Investors continue to make up a big part of those cash deals. Investors are buying distressed homes and flipping them for a slight profit or turning them into rentals, says Patrick Newport, economist at IHS Global Insight.

Luxury consumers: Some real estate professionals are reporting a pick up in luxury markets in some cities too. "The confidence is back in the market," says Neil Palmer, CEO at Christie’s International Real Estate.

Foreign buyers: Coastal markets, in particular, are seeing a surge of foreign buyers, such as in New York, Palm Beach, Fla., and San Francisco, AOL Real Estate news reports.

Traditional buyers: Traditional buyers are also re-emerging. Mortgage applications to buy homes rose 10 percent over a seven-week period, according to the Mortgage Bankers Association’s most recent report. "This pickup in demand should show up in improved existing home sales in April and May, unless lending conditions tighten," Newport says.

The market is making “slow, steady progress” and demand in housing is rising even with higher mortgage rates “so that's encouraging,” Pierre Ellis, an economist at Decision Economics in New York, told The New York Times.

"It's the new financial psychology," says Jarvis Slade Jr., Christie's managing director for the Americas. "We've had two years of hesitation, the sellers are realistic, the buyers confident and cautious, but Americans are starting to feel better."

Source: “Rising home sales point to a recovery; Prices expected to keep falling 5% to 7% this year,” USA Today (April 21, 2011), “U.S. Home Sales Top Forecasts in March,” The New York Times (April 21, 2011), and “Rich People Buying Homes Again--Should You?” AOL Real Estate News (April 20, 2011)
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Wednesday, April 20, 2011

Will the Cost of Buying Increase Even If Prices Fall?

Buyers Sitting On the Fence and Waiting... Make Sure You Read This!!

by The KCM Crew on April 20, 2011

We have discussed the proposed modifications to the mortgage process several times in this blog already. We want to make sure our readers understand the potential impact to the cost of financing a home these changes will have. The cost of buying a home may increase even if prices continue to soften. The total cost of a home is determined by two factors:
  • the price of the property 
  • the expense of financing the purchase (assuming you are not paying all cash)
Check with a local real estate professional to determine where prices are headed in your region for the type of home you are considering. However, even if prices are predicted to soften further in your area, the COST of the home may rise because of increased expenses in financing. These expenses could increase rather dramatically.

Interest Rates

Interest rates have remained at historic lows for over a year. As the economy improves, there will be less need for the government to keep rates low. Many are predicting interest rates will increase from 1/2 point to 3/4 of a point before the end of the year. We may also see an additional increase in rate for loans deemed ‘less qualified’.

New Mortgage Standards

The government has proposed a new definition for a ‘qualified residential mortgage’. The new standard would set a bar much higher than we have today. Anyone not meeting these requirements would not be eligible for the ‘best’ rates available. What could be the difference in interest rate? In a white paper released last week by a group that included the Center for Responsible Lending and the National Association of Realtors:
Some private estimates have concluded that 5 percent risk retention could result in a three-percentage point rise in interest rates for loans funded through securitization. In other words, today’s 5 percent market would become an 8 percent interest-rate market.
Even if the rates for these loans are only one percentage point higher than the best rate, the additional cost to a buyer could be dramatic.

Impact of Interest Rates on Mortgage Payment

The interest rate you receive obviously plays a big role in determining your monthly mortgage payment. How big a role? Here is a chart showing how your payment is impacted even if home prices fall:

Bottom Line

You may have delayed your home purchase decision because of concern over where PRICES may be headed. To make the best financial decision for you and your family, also take into consideration where the overall COST of the purchase may be headed.
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Tuesday, April 19, 2011

What Do Homeowners Say About Homeownership?


by The KCM Crew on April 19, 2011

There is no shortage of experts that want to let us know how Americans feel about owning a home after the collapse of the residential market in the last five years. They MUST be devastated. They MUST feel trapped like prisoners in their own homes. They MUST be sorry they ever bought the house. These assumptions seem logical at times and can occasionally be supported by anecdotal evidence.
However, we want to go to the only people who truly understand how homeowners feel - the homeowners themselves. There have been three major surveys done this year that can shed light on the issue:

The National Housing Survey

This survey conducted by Fannie Mae showed:
  • 96% of all homeowners said homeownership has been a positive experience.
  • 64% consider buying a home as a safe investment. Buying a home was considered safer than buying stocks by over three times the number of people (64% vs 17%).
The top four reasons to buy:
  1. It means having a good place to raise children and provide a good education
  2. You have a physical structure where you and your family feel safe
  3. It allows you to have more space for your family
  4. It gives you control over what you do with your living space (renovations & updates)

American Attitudes About Home Ownership

According to this survey conducted by Harris Interactive for the National Association of Realtors, home owners believe that home ownership benefits individuals and families and strengthens our communities.
The vast majority of home owners say that owning a home is a smart decision over the long term. Even in today’s challenging economy, 95% of owners believe that over a period of several years, it makes more sense to own a home.
Home owners are much more likely to be satisfied with the quality of their family and community life than renters. While more than half of owners (56%) are “very” or “extremely” satisfied with the overall quality of their family life, only about one-third (36%) of renters report the same levels of satisfaction. Also, 43% of home owners are “very” or “extremely” satisfied with their community life, compared with 30% of renters.
An overwhelming majority of home owners are happy with their decision to own a home. A full 93% of owners surveyed would buy again.

Pew Research Center Survey

This recent survey titled “Home Sweet Home. Still” delves into homeowners’ current belief in homeownership as a long term investment:
Homeowners whose home value has fallen only a little are equally enthusiastic about housing as a long-term investment: 85% say buying a home is the best long-term investment a person can make. Among those who say their home has maintained it value or increased in value, 88% agree…
Even those who have seen their home values plummet are still committed to the idea that buying a home is a solid, long-term investment. Among those who say their home has lost a lot of its value, 80% agree that buying a home is the best long-term investment (36% strongly agree, 44% agree somewhat).

Bottom Line 

There have been families that have been devastated by the current economy. However, through it all, homeowners have not wavered  in their belief in homeownership as the best long-term investment.
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Monday, April 18, 2011

QRM: The Other Side of the Argument

 

by The KCM Crew on April 18, 2011

There is little doubt that the ease in which mortgage money was issued early in the last decade was one of the major reasons for the housing crash. What constitutes a ‘quality residential mortgage’ (QRM) definitely should  be redefined. However, several organizations see the newly suggested guidelines going too far.
The newly proposed QRM definition offered by the government addresses four main issues:
  • Type of mortgages that would qualify
  • The ratios between a purchaser’s income and their payment/overall debt
  • The amount of down payment which should be required (20% is being proposed)
  • The minimum FICO score for a borrower
The National Association of Realtors (NAR), the Center for Responsible Lending (CRL), the Mortgage Bankers Association (MBA), the National Association of Home Builders (NAHB), the Community Banking Mortgage Project and the Mortgage Insurance Companies of America (MICA) issued a white paper on the subject titled: Proposed QRM Harms Creditworthy Borrowers and Housing Recovery
The paper only challenges the potential down payment requirement (eventually the organizations will address the remaining three conditions in updates to this original white paper). Let’s look what the report says:
In the midst of a very fragile housing recovery, the government is throwing a devastating, unnecessary and very expensive wrench into the American dream. First time homebuyers will have to choose between higher rates today or a 9-14 year delay while they save up the necessary down payment…
High down payment and equity requirements will not have a meaningful impact on default rates. But they will require millions of consumers, who are at low risk of default, to either put off buying a home or pay unnecessarily high rates. The government is penalizing responsible consumers, making homeownership more expensive or simply out of reach for millions. We urge regulators to develop a final rule that encourages good lending and borrowing without punishing credit-worthy consumers.

Will Higher Down Payments Substantially Decrease Defaults?

The report actually studies the impact a higher down payment would have had on the default rates of loans written from 2002 through 2008. The report states:
They actually break it down:
…moving from a 5 percent to a 10 percent down payment on loans that already meet strong underwriting and product standards reduces the default experience by an average of only two- or three-tenths of one percent… Increasing the minimum down payment even further to 20 percent… (creates)  small improvement in default performance of about eight-tenths of one percent on average.

Will Higher Down Payments Impact a Buyer’s Ability to Purchase?

The white paper looks at three separate areas the proposed QRM would impact:
  1. The reduction in eligible buyers caused by an increase in down payment
  2. The time it would take to save a 20% down payment
  3. The cost of financing for a non-qualified mortgage
1.) The reduction in eligible buyers caused by an increase in down payment
As it did when looking at defaults, the paper studies the impact a higher down payment would have had on buyer demand from 2002 through 2008. The breakdown:
…moving from a 5 percent to a 10 percent down payment on loans that already meet strong underwriting and product standards…would eliminate from 7 to 15 percent of borrowers from qualifying for a lower rate QRM loan. Increasing the minimum down payment even further to 20 percent, as proposed in the QRM rule, would amplify this disparity, knocking 17 to 28 percent of borrowers out of QRM eligibility.
2.) The time it would take to save a 20% down payment
This section of the report was eye-opening. Here is the time it would take a family to save for the newly suggested down payment.
Based on 2009 income and home price data, it would take almost 9 years for the typical American family to save enough money for a 10 percent down payment, and fully 14 years to save for a 20 percent down payment. A 20 percent down payment requirement for the QRM means that even the most creditworthy and diligent first-time homebuyer cannot qualify for the lowest rates and safest products in the market. Even 10 percent down payments create significant barriers for borrowers, especially in higher cost markets. This will significantly delay or deter aspirations for home ownership, or require first-time buyers to seek government-guaranteed loan programs or enter the non-QRM market, with higher interest rates and riskier product features.
3.) The cost of financing for a non-qualified mortgage
Remember, the QRM does not set mandatory requirements for ALL loans. What it does is define the loans that are deemed less risky. The less risky loans will not add additional costs to the banks issuing them. Loans that are not eligible for this category will still be written but at a greater expense to the purchaser to cover the increased costs to the banks. How much greater? According to the study:
(T)oday’s 5 percent market would become an 8 percent interest-rate market. While that estimate may be high, even a one-percentage point increase in interest rates could be devastating to a fragile housing market. According to estimates from the National Association of Home Builders, every 1 percentage point increase in mortgage rates (e.g., from 5 percent to 6 percent) means that 4 million households would no longer be able to qualify for the median-priced home. A 3-percentage point increase would price out over 12 million households.

Bottom Line

Loan qualifications needed to become more stringent than they were five years ago. There is no argument about that. However, the QRM seems to set a down payment requirement (20%) that has a minor impact on default rates yet a major impact on a purchaser’s ability to buy. We should look long and hard at this issue before deciding.
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