Daily Archives: February 25, 2015

Historic snows causing headaches for real estate industry | North Salem Real Estate

All that snow in New England may make your property look as pretty as a calendar shot, but it won’t do you any favors if you’re trying to buy or sell a house.

The storms that have dropped an epic 8 feet of snow are causing grief for the real estate industry.

Some real estate agents have had to cancel nearly a month of weekend open houses because of the poorly timed snowstorms. Others have had to brace prospective buyers about to tour homes showing the ravages of winter, including leaky walls and ceilings caused by a buildup of ice on the roof.

Agents complain that deals are being held up because inspectors are unable to get a look at roofs, septic tanks and other features buried under mounds of snow and ice.

And sellers are grumbling about how difficult it is to move out of their homes in the treacherous weather.

“Honestly, every day is a new issue,” said Kate Lanagan MacGregor, a real estate agent in Mattapoisett, as she rattled off some of her recent struggles. Her latest: trying to empty a newly sold house of the furniture her company had used to “stage” the place for prospective buyers.

“Usually, you can just run up and grab your furniture. Now, the driveway’s not plowed, there’s no path shoveled and you can’t physically get your stuff out the door,” she said.

Homeowner Abbie Cregan recounted her ordeal moving out of her longtime home in Fairhaven just days earlier.

“We were literally pulling washers, dryers, furniture sets out of the house with a dolly and a strap and dragging them through the snow,” she said from her new home in snow-free Phoenix, Arizona. “I still have bruises from it.”

Jeremy Madore said he and his wife are closing on a four-bedroom home in Leominster that they found just weeks ago, in the throes of the snowstorms. He said a home inspector had to clear away a chunk of the snow-covered roof to assess its quality.

Now they’re watching to see how the barn’s roof holds up under the weight and what happens to the basement when the snows finally melt.

“It was definitely more aggravating home shopping in this weather,” Madore said. “We climbed over snowbanks and icy, slippery steps. I brought my snow pants and boots to make sure I wasn’t deterred from making a full circle around the property.”

Corinne Fitzgerald, president of the Massachusetts Association of Realtors, said she won’t have a clear picture of the effect on home sales until figures come in around mid-March. But February, she noted, tends to be the slowest month anyway.

Nationally, sales of existing homes fell slightly in January, in part because of the severe cold and snowy weather in New England and other parts of the country, according to Ian Shepherdson, chief economist at Pantheon Macroeconomics, a market forecasting firm. He said February data should show further declines.

Real estate agents said many sellers appear to be waiting until the weather clears to put their homes on the market, meaning a potentially busy spring. But winter can also hold certain opportunities.

 

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http://finance.yahoo.com/news/historic-snows-causing-headaches-real-estate-industry-190237900–finance.html

 

How Zillow Is Overestimating the Value of Your Home | Waccabuc Real Estate

Buying a home is arguably the largest investment you can make. You purchase your house, probably put work into it to make it fit your style, and hopefully add improvements along the way that will increase its value. So when it’s time to sell the house, you want to make sure you’re getting the best price for it. That often includes working with a real estate agent in your area, but it can also mean researching online ahead of time to get a good idea of a fair market price.

But the problem is that, sometimes, those online estimates inflate what homes are actually worth, causing a rift in expectations. And when Zillow says the price is higher than a realtor wants to ask, it can create conflict when trying to sell your house.

It’s a conflict that has begun to spring up more frequently, as growing numbers of people turn to online sites to price check before contacting a realtor. A total of 105.4 million people visited real estate websites in January 2015, an increase of about 24% from the year before, according to information provided by analytics website comScore. Within those categories, Zillow accounted for 57.4 million visitors to their site. Trulia, which was formally acquired by Zillow on February 17, accounted for another 36.3 million unique visitors, representing 71% of the total visitors in the real estate category.

Zillow’s staff knows that prices can vary from online to what the sign says in your front yard. It’s why the website has a section devoted to explaining how the “Zestimates” are created, the information that’s used, and some of the variation people can expect in certain areas around the country. Zillow lists Zestimates for about 100 million homes nationwide, but Zillow reportsit has an 8% median error rate across the country. That means that about half the Zestimates fall within 8% of the selling price, and about half fall out of that range.

To put that 8% into perspective, assume there’s a house that sells for $350,000. About half the time, Zestimates will show a fair price between $322,000 and $378,000, the 8% spread of about $28,000 on either side of that selling price. But the other half of the time, it could be outside that range. And as always when working with percentages, the value of the home directly impacts the range. For a home worth $500,000, that spread on either side of the selling price could be $40,000.

In certain parts of the country, that variation is even more severe. Twenty-five states have median error rates that fall below the national average, with Virginia and Nebraska at 5.5% and 5.7%, respectively. But West Virginia, at the other end of the spectrum, has a median error rate of 13.6%. Zillow doesn’t keep data on every county across the country, but some such as Dade County in Georgia have error rates of 35%. The highest listed in the data from December 2014 is Apache County in Arizona at 69.4%.

Read more: http://wallstcheatsheet.com/business/how-zillow-is-overestimating-the-value-of-your-home.html/?a=viewall#ixzz3SnKz8qU7

Mortgage Loan Rates Post Third Straight Weekly Rise | South Salem Real Estate

The Mortgage Bankers Association (MBA) released its report on mortgage applications Wednesday morning, noting a week-over-week decrease of 3.5% in the group’s seasonally adjusted composite index for the week ending February 20. That followed a drop of 13.2% for the week ending February 13, mortgage loan rates increased on all five types of loans for the second consecutive week.

On an unadjusted basis, the composite index decreased by 12% week-over-week. The seasonally adjusted purchase index increased 5% compared to the week ended February 13. The unadjusted purchase index fell by 2% for the week and is now 2% lower year-over-year.

Home buying action is typically slow in January and February due to wintry weather. Home price increases have fallen sharply year-over-year, as Tuesday’s Case-Shiller home price index indicated. Interest rates are rising, likely in an effort to attract bond investors.

Adjustable rate mortgage loans accounted for 5.2% of all applications, down from 5.3% in the prior week.

The MBA’s refinance index decreased 8% week-over-week, and the percentage of all new applications that were seeking refinancing declined from 66% in the prior week to 62%.

The FHA share of all applications rose from 15.2% a week ago to 15.3%, and the VA share decreased from 8.0% to 9.6%.

The average mortgage loan rate for a conforming 30-year fixed-rate mortgage increased from 3.93% to 3.99%. The rate for a jumbo 30-year fixed-rate mortgage increased from 3.92% to 4.09%. The average interest rate for a 15-year fixed-rate mortgage increased from 3.24% to 3.28%.

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http://finance.yahoo.com/news/mortgage-loan-rates-post-third-123055690.html

U.S. Housing Stability Improves for Fourth Consecutive Month | Cross River Real Estate

Freddie Mac today released its newly updated Multi-Indicator Market Index® (MiMi®) showing the U.S. housing market continuing to stabilize at the national level for the fourth consecutive month. Thirty-eight of the 50 states, plus the District of Columbia, and 40 of the 50 metros, are now showing an improving three month trend. Three additional metros entered their benchmarked stable ranges of housing activity including Buffalo, Boston and Nashville.

News Facts:

  • The national MiMi value stands at 74.9, indicating a weak housing market overall but showing a slight improvement (+0.37%) from November to December and a positive 3-month trend of (+1.09%). On a year-over-year basis, the U.S. housing market has improved (+4.41%). The nation’s all-time MiMi high of 121.7 was April 2006; its low was 57.2 in October 2010, when the housing market was at its weakest. Since that time, the housing market has made a 31 percent rebound.
  • Sixteen of the 50 states plus the District of Columbia have MiMi values in a stable range, with the District of Columbia (97.6), North Dakota (97.2), Montana (91.1), Hawaii (89.9) and Wyoming (89.1) ranking in the top five.
  • Eleven of the 50 metro areas have MiMi values in a stable range, with Los Angeles (86.4), Austin (86.3), San Jose (83.9), Houston (83.3), and Pittsburgh (83.3) ranking in the top five.
  • The most improving states month-over-month were Delaware (+1.87%), Michigan (+1.28%), North Carolina (+1.18%), Oregon (+1.18%) and Texas (+0.85%) On a year-over-year basis, the most improving states were Nevada (+19.87%), Colorado (+11.42%), Rhode Island (10.52%), Illinois (+10.14%), and Ohio (+9.27%)
  • The most improving metro areas month-over-month were Detroit (+1.40%), Tampa (+1.28), Kansas City (+1.13%), Louisville (+1.12%), and Charlotte (1.04%). On a year-over-year basis the most improving metro areas were Las Vegas (+19.76%), Denver (+12.14%), Chicago (+10.93%), Providence (+10.35%) and Columbus (+9.36%).
  • In December, 38 of the 50 states and 40 of the 50 metros were showing an improving three month trend. The same time last year, 47 states plus the District of Columbia, and 47 of the top 50 metro areas were showing an improving three month trend.

Quote attributable to Freddie Mac Deputy Chief Economist Len Kiefer:

“Housing markets are getting back on track. The national MiMi improved for the fourth consecutive month. Nearly 80 percent of the state and metro housing markets MiMi tracks are improving or in their stable range of activity. We’ve even seen the MiMi purchase application indicator increase 0.07 percent on a year-over-year basis. Low mortgage rates and moderating house price growth are helping to keep payment-to-income ratios favorable for the typical family in most of the country. In fact, Los Angeles is the only metro market with an elevated MiMi payment-to-income indicator whereas most other markets remain quite affordable. And of course, labor markets are generally improving.

“As we mentioned last month, we’re keeping an eye on markets with deep ties to energy. We’ve seen some deterioration on a month-over-month basis in some of these energy markets. For example, Louisiana has seen its state employment situation deteriorate over the last several months. A declining employment indicator has caused its MiMi score to move from 86.7 in April down to 80.2.”

The 2015 MiMi release calendar is available online. The February release of MiMi includes revisions to the Purchase Applications indicator based on the latest The Home Mortgage Disclosure Act (HMDA) data.

MiMi monitors and measures the stability of the nation’s housing market, as well as the housing markets of all 50 states, the District of Columbia, and the top 50 metro markets. MiMi combines proprietary Freddie Mac data with current local market data to assess where each single-family housing market is relative to its own long-term stable range by looking at home purchase applications, payment-to-income ratios (changes in home purchasing power based on house prices, mortgage rates and household income), proportion of on-time mortgage payments in each market, and the local employment picture. The four indicators are combined to create a composite MiMi value for each market. Monthly, MiMi uses this data to show, at a glance, where each market stands relative to its own stable range of housing activity. MiMi also indicates how each market is trending, whether it is moving closer to, or further away from, its stable range. A market can fall outside its stable range by being too weak to generate enough demand for a well-balanced housing market or by overheating to an unsustainable level of activity.

New U.S. home sales flat at 481,000 annual pace in January | Bedford Hills Real Estate

New U.S. homes sold at an annual rate of 481,000 in January, little changed from December’s revised figure, the government said Wednesday. Economists polled by MarketWatch had forecast sales to fall to a seasonally adjusted 467,000 from a revised 482,000 in the final month of 2014.

 

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http://www.marketwatch.com/story/new-us-home-sales-flat-at-481000-annual-pace-in-january-2015-02-25

Adjustable Rate Mortgages: It’s All About Timing | Bedford Corners Real Estate

Rate shoppers naturally gravitate toward the lowest quotes, but a lower rate can lead to financial trouble if you don’t understand your loan terms. It’s important to know the relationship between rates and fixed terms so you can determine when it’s appropriate to use a shorter loan term instead of a longer one.

A 30-year fixed mortgage rate is higher than a five-year adjustable rate mortgage (ARM) rate because a financial institution is taking more risk to lend you the money for a longer period of time.

The reason for this goes to the root concept of how banks operate. A bank’s business model is to ensure that interest they collect on loans exceeds interest they must pay out on deposits.

Interest that banks must pay you on deposits rises as the economy expands, and falls as the economy contracts over time. It’s easier for banks to manage this interest rate risk in the short term.

For example, interest rates paid on checking and savings deposits are very low because you’re free to withdraw your money any time, while rates paid on certificate of deposit (CD) accounts are slightly higher because the bank requires you to keep those funds deposited for periods of one month to five years.

Because banks know  their expenses on deposits for periods up to five years, they know how to price mortgage loans up to five years. Today, many banks would pay you about 2.25 percent on a five-year CD, and they’d charge you about 3.25 percent for a five-year ARM.

But if you were getting a 30-year fixed loan, they might charge you about 3.875 percent — although these rates fluctuate. This rate is higher in order to compensate a bank for the interest rate risk they’re taking. Rates they must pay on deposits might be much higher during that 30-year period as the economy fluctuates, but your 3.875-percent mortgage rate is guaranteed.

Peg loan term to expected time in the loan

Let’s say you were buying a $300,000 home with 20 percent down, and chose the five-year term at 3.25 percent because the $1,044 payment sounded more affordable than the $1,129 payment on the 30-year fixed at 3.875 percent.

You must be aware that your rate is set for five years, then will adjust each year for 25 years. These adjustments protect the bank from interest rate risk by allowing the loan to move to a market rate when the five-year fixed period expires.

The initial fixed rate of 3.25 percent will change to a market rate comprised of a fluctuating index such as the one-year LIBOR rate (a benchmark for short-term interest rates worldwide) plus a base rate (called a margin) of about 2.25 percent. If the loan adjusted today, it would go down to 2.94 percent because LIBOR remains abnormally low — it was recently .69 percent — as the global economy struggles.

A more normal LIBOR rate is about 3.25 percent. Add that to the ARM margin of 2.25 percent, and your adjusted rate would be more like 6.5 percent, making your new payment in year six jump to $1,447 (which is calculated by amortizing the remaining balance at the five-year mark over the remaining 25 years of the loan).

This is $403 more than the payment on the initial five-year fixed period, and $318 more than the 30-year fixed you could’ve taken. And the loan will adjust to current LIBOR plus 2.25-percent margin once per year from that point forward.

It’s a lot of risk, and raises the question: How do you choose the right balance between the lowest rate and longest fixed term?

The answer is simple: Make sure your rate is fixed for as long as you expect to be in the home or in the loan.

If you know you’ll sell the home or pay off the loan in five years, a five-year ARM is appropriate. Other ARMs you can get have initial fixed periods of three, seven and 10 years, and rates rise as the terms lengthen. If you know you’ll be in the home or the loan longer than 10 years, then your safest budget move is to choose a 15-year fixed or 30-year fixed loan.

 

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http://www.zillow.com/blog/adjustable-rate-mortgage-timing-170590