Daily Archives: July 20, 2012

Florida’s housing market continues positive trends in June 2012 | Cross River Realtor

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Florida’s housing market had increased pending sales, more closed sales, higher median prices and a reduced inventory of homes for sale in June, according to the latest housing data released by Florida Realtors.

“Florida’s housing recovery continues its positive momentum,” said 2012 Florida Realtors President Summer Greene, regional manager of Better Homes and Gardens Real Estate Florida 1st in Fort Lauderdale. “All of the signs point to solid gains, which is good news for the state’s economy.  In June, pending sales were up 31 percent for existing single-family homes and nearly 23 percent for townhouse-condo units compared to a year ago. The trend shows that many buyers are ready to purchase their Florida dream home, but a lack of financing options and overly restrictive credit standards remain obstacles.”

Pending sales refer to contracts that are signed but not yet completed or closed; closed sales typically occur 30 to 90 days after sales contracts are written.

Statewide closed sales of existing single-family homes totaled 18,800 in June, up 5.3 percent compared to the year-ago figure, according to data from Florida Realtors Industry Data and Analysis department and vendor partner 10K Research and Marketing. The statewide median sales price for single-family existing homes last month was $151,000, up 8.2 percent from June 2011.

According to the National Association of Realtors, the national median sales price for existing single-family homes in May 2012 was $182,900, up 7.7 percent from the previous year. In California, the statewide median sales price for single-family existing homes in May was $312,110; in Maryland, it was $259,207; and in New York, it was $208,000.

The median is the midpoint; half the homes sold for more, half for less. Housing industry analysts note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes.

Looking at Florida’s year-to-year comparison for sales of townhomes/condos, a total of 9,202 units sold statewide last month, up 1.5 percent from those sold in June 2011. The statewide median for townhome-condo properties was $110,000, up 15.8 percent over the previous year. NAR reported the national median existing condo price in May 2012 was $180,000.

Last month, the inventory for single-family homes stood at a six-months’ supply; inventory for townhome-condo properties was at a 5.9-months’ supply, according to Florida Realtors.

“The trend we’ve seen established over the past year is continuing,” said Florida Realtors Chief Economist Dr. John Tuccillo. “In June, every housing market indicator moved in the right direction. Closed sales are up, but so are pending sales, median prices, average prices and the ratio of sales price to list price. Conversely, listings are down, days on market are down and — most important — inventories are down. We have now reached a six months’ supply of inventory for existing single-family homes and 5.9-months’ supply for townhouse-condos.”

Tuccillo added, “With an improving employment environment in Florida, we expect that the housing market recovery will continue in the future.”

The interest rate for a 30-year fixed-rate mortgage averaged 3.68 percent in June 2012, significantly lower than the 4.51 percent average during the same month a year earlier, according to Freddie Mac.

To see the full statewide housing activity report, go to Florida Realtors Media Center at http://media.floridarealtors.org/ and look under Latest Releases, or download the June 2012 data report PDF under Market Data at: http://media.floridarealtors.org/market-data

This article was contributed to The Log by Florida Realtors.

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The Housing Market’s New Problem? Not Enough Homes to Sell | Waccabuc Realtor

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Home > News > The Home Front > The Housing Market’s New Problem? Not Enough Homes to Sell

The Housing Market’s New Problem? Not Enough Homes to Sell

July 20, 2012 RSS Feed Print

A worker stands in the early-morning sunlight on a home construction project in Newtown, Pa., on June 20, 2012.

A worker stands in the early-morning sunlight on a home construction project in Newtown, Pa., on June 20, 2012.

It seems like just a few months ago, home values were plummeting as thousands of foreclosures flowed onto the housing market.

Now, the tables have turned. A huge draw-down in for-sale inventories around the country has tightened markets, fueling bidding wars and price increases. Housing, no longer blamed for dragging down the economic recovery, is being celebrated as the one bright spot amid a recent deluge of disappointing economic reports.

"It’s like the Twilight Zone, isn’t it?" muses Glenn Kelman, CEO of Seattle-based real estate website Redfin. "Consumer confidence and jobs are down, but real estate keeps going up. Now it’s the plank that the rest of the economy is clinging to."

Despite the head-scratching trends that seem to be more the norm than the exception in the housing market these days, there are a few explanations for the turn in real estate’s fortunes.

[Read: Retailers, Not Consumers, Swipe Victory in Credit Card Fee Settlement.]

Here’s a look at what’s driving inventory down, prices up, and boosting residential construction:

Banks have left the building. Although new foreclosure filings have been creeping up lately, according to foreclosure information website RealtyTrac, the inventory of REO or bank-owned homes fell significantly over the past year from more than 817,500 in June 2011 to just about 630,000 this June. That leads some experts to believe that financial institutions are holding onto real estate assets until prices improve more.

"[Banks] aren’t providing any of the inventory or liquidity they once did through foreclosures," Kelman says. "There’s almost no one else to fill the gap."

Almost. With fewer foreclosures and previously owned homes for sale, more and more motivated buyers have bounced from bidding wars to the drawing board, plunking down deposits with builders who are only too happy to see a spark of demand in the downtrodden construction industry.

This week saw some heartening news from the homebuilding sector, with builder confidence taking its biggest jump in nearly 10 years. June housing starts echoed that confidence, with the Commerce Department reporting new constructions reached their highest level in almost four years.

"That’s an exclamation point on the inventory crunch," Kelman says, adding that it will be years before there is enough new construction to satisfy demand. "People who weren’t willing to wait for builders to finish a new construction project now are."

Indeed, reignited interest in newly built homes has produced a sizable increase in residential sales for builders over the past 12 months—almost 6 percent according to financial information firm Sageworks.

[Read: Two Years After Dodd-Frank, Has Wall Street Changed?]

Sellers are sitting on the sidelines. In another inversion, it’s now sellers—not buyers—getting cold feet when wading into the housing market. With news that prices are inching up now, many sellers are waiting for property values to recover more before putting for-sale signs in their front yards again.

"Regular homeowners don’t want to sell their place because they think they can wait two years and get better prices," Kelman says. "Homebuilders are the only ones with product to sell."

Though there’s some concern that foreclosure inventory will start to tick up again, experts anticipate increased building activity to continue in coming months, especially since construction has been so anemic in recent years.

"There clearly is somewhat of a shortage of housing," says Earl Lee, president of Prudential Real Estate. "We need to be doing close to 1.5 million starts, and over the last eight years we’ve been doing less than 500,000 [a year on average]."

Investors. The investor share of the market has waned a bit in recent months, but that doesn’t mean the same benefits aren’t still there. With half of the country not able to qualify for credit, the stage is set for financially stable—and savvy—Americans able to obtain mortgages to scoop up properties at virtually unbeatable borrowing costs.

At last glance, interest rates on a 30-year fixed-rate mortgage were at a jaw-dropping 3.53 percent, according to Freddie Mac’s Primary Mortgage Market Survey.

[Read: For the First Time, Canadians Now Richer Than Americans.]

"That’s why there’s such a spread between rents and mortgages right now," Kelman says. "You can get someone who can’t qualify for a loan to pay your mortgage. Investors know they’re going to get their money back immediately. Their property is going to be cash-flow positive and they’re hoping to get appreciation now."

That lucrative scenario has pitted investors against first-time homebuyers and other prospective homeowners, driving prices up and driving some would-be buyers out of the game.

Still, even with some encouraging news this week, most experts don’t think it’s going to be a smooth ride to the top for the real estate market.

"A lot of the trends are going to be saw-toothed," Kelman says."If people think we’re in a bull market for real estate and that prices are going to smoothly rise, I’m just not convinced of that. But there just isn’t any data to suggest that the bottom is going to be ripped out of the market the way we saw in 2009 and 2011 either."

Meg Handley is a business reporter for U.S. News & World Report. You can reach her at mhandley@usnews.com and follow her on Twitter.

Tags:
housing,
new home sales,
existing home sales,
housing market

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The Home Front

There is no economic recovery without a housing recovery. From data on new housing starts to reports of existing home sales, reporter Meg Handley digs deeper into the latest news and numbers driving the housing market.

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First rental applicant needn’t get the nod | North Salem NY Real Estate

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A: When it comes to choosing tenants, careful screening is a must. Landlords check for past “good tenant behavior,” which includes a history of paying the rent on time, positive recommendations from prior landlords, and an absence of terminations or evictions. But these aren’t the only valid criteria — you’ll want someone who makes enough money to reasonably handle the rent, and who can meet your rental terms, such as committing to a yearlong lease or refraining from keeping a pet.

Your move-in date is one of those “rental terms.” Screening for someone who can move in when the unit is available is completely legitimate, because a sound business reason underlies the requirement: You want to begin collecting rent as soon as possible! No one can argue with this.

Landlords often face situations where two or more applicants appear to be roughly equally qualified. At that point, they need a tie-breaker. It’s a safe bet to use the date of application — safe because it’s an objective test and can’t be construed as discriminatory.

But that’s not the same as saying that the first applicant should always get the nod. You’re free to consider all qualified applicants, advance those who appear qualified to a finalists list, and use the date of application only if it’s the only way to break a tie. Most of the time, upon closer study, you’ll see that other factors, such as a higher income, rave recommendations from prior landlords, or a long history of steady renting will naturally elevate one candidate above the rest.

Just be sure that the criteria you’re using are based on sound business reasons, not subjective feelings.

Q: One of our tenants is breaking her lease and moving out two months early. She has been great about finding a new tenant — she presented us with three applicants whom she had prescreened, and we approved one. The applicant will stay for a year and wants to move in right after the original tenant moves out, but we want to spend a couple of weeks doing whatever work needs to be done before a new tenancy begins.

The new person is content to wait, but the original tenant is concerned that she’ll end up paying rent for those two weeks. We understand our duty to use reasonable efforts to re-rent, but we think we’re entitled to a reasonable time for turnover, which the lease-breaking tenant should pay for. –Mike and Bella P.

A: You and your tenant have approached the situation in an admirably civil way. All too often, even in states that require landlords to use reasonable efforts to re-rent, landlords simply pocket the deposit, even when the unit re-rents right away. Tenants either don’t understand that their liability for rent ended at that moment, or they have moved far away and can’t feasibly sue for the deposit’s return.

Tenants who break a lease without a legally justified reason, as appears to be the case here, are wise to do their best to find replacement residents, thus shortening the time that the unit is on the market — time that the original tenant will pay for if the market is soft and it’s hard to find a new tenant. In a hot market with no lack of qualified applicants, the unit might rent right away, and it’s conceivable that the landlord will lose no rent at all.

I’ve answered questions concerning who pays for the landlord’s efforts to market and show the rental when a tenant breaks the lease, but your question is new to me (though it’s logically related, as you’ll see). If you typically keep a unit unoccupied for a period of time between tenants, in order to assess the need for repairs or refurbishing and then do the work, your plan with respect to this vacancy is no different. But, says the tenant, when there’s a voluntary vacancy, the landlord knows that he will not collect rent during that time; why should he collect it now, when the turnover period has simply been advanced a few months?

The tenant’s argument might continue by drawing a parallel between this situation and the landlord’s expectation that a departing tenant pay for advertising and showing costs — there, too, no one underwrites these expenses when the vacancy doesn’t result from a lease break, so why (unless there’s a statute to the contrary) should they apply now?

In both cases, it’s no answer to say, “The tenant was the wrongdoer so he should pay.” That sort of reasoning has no place in a legal analysis over compensating the landlord for the results of the tenant’s lease breaking. The only question is how to accurately compensate the landlord for the damages he has suffered.

There is a way to do this. Look at it this way: Had the original tenant stayed to the end of the term, you’d be facing two weeks of no rent while you refurbish after that. Because of the early departure, you’re facing it two months earlier. Your loss is not having two weeks of rent money in the bank for two months. In other words, your loss is the interest you’d receive for two months on two weeks’ rent. Given today’s dismal interest rates, that’s not too much.

Have another talk with your tenant. Chances are that you can come to an agreement, with the tenant perhaps agreeing to cover your “soft” costs of having to handle a new tenancy when you were not expecting to do so. But expecting the departing tenant to pay rent while you refurbish the rental for a new resident isn’t reasonable.

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3 considerations before listing low to get multiple offers | Waccabuc NY Real Estate

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A: With multiple offers on the comeback, many savvy sellers are pricing their homes on the low end with the intention to drive buyer interest and — fingers crossed — generate multiple offers. In markets where rising buyer activity and home values have already begun to decrease the inventory of available homes for sale, this strategy has been very effective. However, there is always the risk of precisely the problem you pose: What happens if you get only a single offer at the asking price?

Here are several pieces of advice for sellers who are worried about what happens when listing low doesn’t result in multiple offers:

1. Consider what the offer you get does and does not mean. You are never obligated to sell your home at a price you don’t want to, no matter how close the offer is to what you are asking for the property. I’ve actually seen a couple of very isolated situations during my career, in which sellers get a single full-price offer and reject it or issue a counteroffer, sometimes because they are in the situation you describe, and other times because it has come to their attention that they owe more on the home than they expected. (Don’t plan on doing this, though; it is a strategy with a high likelihood for disgusting a buyer and turning them all the way off.)

The reality is that, if you get only one offer at a given price, that may truly be the fair market value of your home even if you think you might have gotten a higher offer for the property had you asked for more. To live in that world of “what might have happened if” is to torture yourself with the impossibility of guessing at what a hypothetical situation would have turned out like. The real deal is that if you had asked for more, it’s possible you would have gotten more. It’s equally possible that the one buyer who did make an offer would never even have come to see the property.

2. Understand your listing agreement before you list it low. Under some listing agreements (your contract with the agent who lists your home for sale), a full-price, cash offer with no contingencies may obligate you to pay a commission even if “full price” is the discount price you set in an effort to get multiple offers. You can negotiate to change the default terms of your listing agreement, though, so that you are obligated to only pay a commission on a transaction that actually closes. You would need to do this before signing the agreement, and before the home goes on the market.

Get some legal advice from a local attorney if you don’t feel you completely understand the terms and implications of your listing agreement before you sign it and before you set the list price of your home.

3. Don’t list your home at a price you’d be upset to receive for it. The savvy sellers who list their homes on the low end to generate multiple offers are not listing their properties hundreds of thousands of dollars below their fair market value, or even making them the lowest-priced home in the neighborhood. Smart, aggressive pricing is listing a home at what seems like the low end of the range of comparable-supported prices or a slight discount from that — and by that I’m talking about a 2-5 percent discount, not 40 or 50 or 70 percent.

Many sellers are OK with taking the risk that their home might sell at 2 percent below the comparables as a trade-off for the opportunity to generate multiple offers and the possibility of receiving a premium sale price. And if you are a seller considering listing low, you should be uber-aware of the potential trade-offs, and should make that decision only if you have market data to support the fact that this strategy makes sense in your local market.

To be crystal clear, my opinion and advice is that, as a seller, you should not list your home at a price you would be upset about receiving or unwilling to accept.

And remember that “listing it low” is a strategy that has proven to be successful for people specifically aiming to generate multiple offers in the many markets that currently support multiple offers. If your objective is simply to sell your home — period — in a down market, for example, then this may not be the route for you to take.

Every market is different, and every home and seller is different. If your market is still very soft or you don’t see any multiple offers happening in your town, you may not be able to generate loads of offers no matter what you price your home at. As always, work with your agent and take a long hard look at your local market dynamics before deciding on a pricing strategy.

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Unattached appliances are personal property | Cross River NY Homes

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While the recommendation of writing into a real estate contract items that the buyer wants to remain in the house is good advice, it is also problematic.

The majority of homes under $300,000 are financed FHA. Underwriters are specific that no personal property is to be appear in a contract. Therefore, unattached items such as refrigerators and washer-dryers are left in limbo.

When the sellers say items will remain and the buyers trust that they will be left, buyers are unprotected in FHA financing. It is customary in our market that appliances stay with the house, but the FHA buyer has no legal protection.

I think this should have be revealed in the article.

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Golden State on the rise: Top 10 metros with rising median list prices | South Salem NY Real Estate

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<a href="<a href=California image via Shutterstock.

Editor’s note: Data from Realtor.com’s June 2012 Real Estate Trend Data Report. The report analyzes data for 146 U.S. metros and includes single-family homes, condos, townhomes and co-ops.

Three California metros — Santa Barbara-Santa Maria-Lompoc, San Francisco and Oakland — shot to the top five of metros with the largest year-over-year percentage median list price jump, according to Realtor.com data through June 2012. They also claim the highest list prices in the top 10 (outside of Washington, D.C.-Md.-Va.-W.Va.(D.C.)’s $425,000) with June 2012 median list prices of $699,000, $725,000 and $379,000, respectively.

Median list prices in the country are on the rise, too.

For the sixth month in a row, median list prices of for-sale U.S. homes — at $195,000 as of June — have increased from the previous month, according to Realtor.com’s June 2012 real estate report. This trend, along with a 20 percent drawdown in inventory — and close to 10 percent fewer days of for-sale homes on market — from a year ago, indicate to some that U.S. housing is in the gentle stages of a recovery, on the upcurve of its long, low bottom.

Data PointPercent Change, June 2011 to June 2012Value
Median List Price2.68%$195,000
Number of Listings-19.35%1.89 million
Median Age of Inventory-9.67%84

Source: Realtor.com

The U.S.-wide median list price rose to $195,000 in June, 0.05 percent higher than May’s median list price and 2.68 percent higher than last June’s. Throughout the country, median list prices have held steady for roughly the last two years, after experiencing a precipitous slide from a high of $250,000 in 2007, when Realtor.com first started tracking them.

However, this six-month stretch of consecutive month-over-month median list price increase through June 2012 is the longest sustained stretch of growth this chart has seen.

Source: Realtor.com

Another indicator of a general housing recovery — for-sale inventory is down 19.35 percent from June 2011 to 1.89 million homes. And it’s fresher — down 9.67 percent to a median 84 days on market from a 93-day mark a year ago.

Also, this month’s data begins to solidify a geographical boom-to-bust-to-recovery trend: a hard-hit-area comeback. The inventory drop and simultaneous median list price jump that occurred in Florida during the last half of 2011 has shifted to California (and Seattle, Phoenix and Atlanta) in the first half of this year where seven of the top 10 metros for year-over-year (June 2011 to June 2012) inventory drop occurred.

Hard-hit Detroit is also slowly climbing the ranks; it now ranks No. 16 for median list price increase on a yearly basis and stands at No. 4 of the top metro median list price growth from May 2012 to June 2012. Still, it’s the only one of the 146 metros tracked by Realtor.com with a sub-$100,000 median list price in June 2012 with $99,000.

Railroad tracks in Detroit image via Shutterstock

In another sign of the California-heavy nature of the current housing recovery, nearly half of the metros in the top 20 for month-over-month (May 2012 to June 2012) median list price increases, by percentage increase, are in California.

Top 10 metros, in order, for May 2012 to June 2012 median list price increases, by percentage of growth:

  • Santa Barbara-Santa Maria-Lompoc, Calif.
  • Bakersfield, Calif.
  • Charleston, W.Va.
  • Detroit, Mich.
  • Reno, Nev.
  • San Jose, Calif.
  • Orlando, Fla.
  • San Francisco
  • Minneapolis-St. Paul, Minn.-Wisc.(Minn.)
  • Chattanooga, Tenn.-Ga.(Tenn.)

Source: Realtor.com

Santa Barbara-Santa Maria-Lompoc, Calif., and the San Francisco Bay Area metros of San Francisco, Oakland and San Jose — all in the top 12 now for year-over-year median list price increase (by percentage increase) — were not in the top 20 in January. In fact, no California cities cracked the top 20 for year-over-year median list price increases (by percentage growth) that month.

Santa Barbara now tops all 146 metros Realtor.com tracks for year-over-year percentage median list price increase, followed by Phoenix-Mesa, Ariz., at No. 2, and its NorCal big cousin, San Francisco, at No. 3.

See the rest of the top 10 below.

Location: Santa Barbara-Santa Maria-Lompoc, Calif.

 

Median List Price Increase (June 2011 to June 2012)33.14%
Median List Price$699,000

Mission Santa Barbara in Santa Barbara, Calif., via Shutterstock

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