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Bedford Corners Real Estate

Fitch: Regional Problems Hamper Recovery | Bedford Corners Real Estate

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In addition to banks’ tight mortgage lending standards that were criticized by Federal Reserve Chairman Ben Bernanke two weeks ago, Fitch also said continued recovery in residential real estate prices will require regional improvements.

Meaningful improvement is likely to be hampered by slow foreclosure processing in judicial. The judicial process governing liquidations in states, including New Jersey and New York, may add more than six months to the timeline. While home prices in those states fell less than in many others during the downturn, both have seen prices erode in the past year.

Meaningful improvement in housing is also being hindered by regional unemployment rates said the Fitch ratings service in an article that originally appeared as a post on the Fitch Wire credit market commentary page.

On Nov. 20, the Bureau of Labor and Statistics released unemployment data showing the Pacific region continued to report the highest jobless rate at 9.5 percent, while the lowest was the West North Central at 5.6 percent. Just two of the regions reported statistically significant unemployment rate changes. The rate in the South fell by 0.2 percent and the West by 0.1 percent.

The service said that at the national level, tight residential lending practices must be loosened before a meaningful recovery can take root. While tight underwriting practices were appropriate after the collapse in the subprime mortgage market, at a speech last week, Federal Reserve Chairman Ben Bernanke said “it seems likely at this point that the pendulum has swung too far the other way, and that overly tight lending standards may now be preventing creditworthy borrowers from buying homes, thereby slowing the revival in housing and impeding the economic recovery.”

via realestateeconomywatch.com

Freddie Mac Economist Sees New Households Outpacing Apartment Boom | Bedford Corners Real Estate

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In his 2013 forecast, Freddie Mac’s chief economist, Frank Nothaft, sees more than a million new households bolstering housing starts, driving apartment vacancy rates down to ten year lows and outpacing the boom in new apartment construction.

“The last few months have brought a spate of favorable news on the U.S. housing market with construction up, more home sales, and home-value growth turning positive. This has been a big change from a year ago, when some analysts worried that the looming ’shadow inventory’ would keep the housing sector mired in an economic depression. Instead, the housing market is healing, is contributing positively to GDP and is returning to its traditional role of supporting the economic recovery,” Nothaft says.

Here’s how Nothaft sees the coming year:

  • Next year some regions will post faster house price gains, while some will be stagnant or see value loss fof the year, but overall, the housing recovery continue to strengthen property values and most U.S. house price indexes will likely rise by 2 to 3 percent, according to 2012 forecast from Freddie Mac’s chief economist,
  • Look for fixed-rate mortgage rates to remain near their 65-year record lows for the first half of 2013 then begin rising a bit in the tail end of next year, but staying below 4 percent. In the single-family market, this means homebuyer affordability should remain very high in 2013 for those with good credit history, stable income, and sufficient savings.
  • Household formation will be up. Unemployment, while still high, will likely drift down toward 7.5 percent; the resulting job and income gains will facilitate household formations – meaning that more members of the boomerang generation who have been living in their parents’ basements should start to move out. Look for net growth of 1.20 to 1.25 million households in 2013. These gains will help drive more housing construction and reduce vacancy rates further. Housing starts should be up around the 1.0 million pace (seasonally adjusted annual rate) by the fourth quarter of 2013.
  • Vacancy rates have been trending lower for much of the past three years because household formations have outpaced new construction. To illustrate, in 2012, net household formations through the third quarter totaled 1.15 million but completions of newly built homes (both rental and for sale) were just under 700,000; the difference is made up by a reduction in vacancies. This trend will continue in 2013 and could bring total vacancy rates down to levels last seen a decade ago. While this is good news for property owners, tenants will likely see rents rise a bit faster than prices on all other goods.
  • Refinance activity accounted for the bulk of residential lending in 2012 and will account for the bulk of it in 2013, too. But, simply put, we’ve seen the peak in refinancing. Homeowners who obtained a loan with a low mortgage rate in 2012 or refinanced through the Home Affordable Refinance Program are unlikely to refinance in 2013. Next year’s likely pickup in home sales won’t be enough to offset the coming drop in refinance activity. Consequently, total single-family originations will probably drop by about 15 percent in 2013. On the other hand, permanent financing on newly built apartment buildings, a pickup in property transactions, and refinancing of loans exiting “yield maintenance” terms are expected to increase multifamily lending by about 5 percent.
via realestateeconomywatch.com

New home sales fall 0.3% in October | Bedford Corners NY Real Estate

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After a spike in September, new single-family home sales fell 0.3% to 368,000 last month, according to the U.S. Census Bureau.

Sales dropped from September’s 389,000, but were 17.2% higher than a year ago when only 314,000 units were sold.

In October, the median sales price of a new home was $237,000, while the average sales price was $278,900.

“The Commerce Department doesn’t note any specific reasons for the downward revision to September but it does note that Hurricane Sandy had only a minimal effect on October, hitting at month end and in an isolated area of the country,” said research firm Econoday. “Sales in the Northeast, which in any case is by far the least active region in the report, fell 32 percent in the month.”

At the end of October, the number of new homes for sale reached 147,000, representing a 4.8-month supply of homes at today’s sales pace.

“Attention turns tomorrow to the pending home sales index which will offer an advanced indication on existing home sales which, like new home sales, have had difficulty gaining much steam,” said Econoday.

Barclays Capital analyst Cooper Howes placed the numbers into a forward-looking perspective. “In our view, the pace of new home sales would have to pick up in order to continue the upward trend in housing starts,” he said, “given that we believe homebuilders are becoming more comfortable carrying inventory levels that have stabilized a bit above 4.5 months, we expect start activity gradually to plateau unless sales activity increases.”

“The small fall in new home sales in October, and the downward revision to September’s figures, mean that the recovery in new home sales is looking a little weaker than we were previously led to believe,” said Capital Economics. “Nevertheless, we expect activity in the new homes market to improve further next year.”

via housingwire.com

6 things a fireplace inspection will help you avoid | Bedford Corners Real Estate

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Q: We’re new homeowners. We bought an older home with a wood-burning fireplace in the living room. We’re looking forward to spending cozy nights in front of the fire this winter, but there is a concern.

When we bought the house we had a termite inspection, a roof inspection and a general home inspection. But we did not have a specific fireplace inspection. The home inspector did note that he found no problems with the fireplace, but we’re uneasy with what seems to be his cursory look. Should we have the fireplace checked out before using it? We’d appreciate any input you might have.

A: We strongly recommend a thorough fireplace inspection and having the chimney swept by a licensed chimney sweep. These professionals will not only clean the chimney of built-up creosote but will alert you to defects in the flue or firebox that can be downright dangerous.

There are a lot of bad things that can happen with a malfunctioning fireplace — the worst being a chimney fire that can spread to the roof structure and cause major damage.

Here’s a list of things a good chimney sweep will inspect:

  • There should be a cap with a screen on the chimney to prevent rain or snow from coming down the chimney and to prevent birds or other critters from nesting there.
  • He or she will look at the condition of the bricks and mortar. It’s possible the bricks exposed to the weather need to be reset or the mortar needs repointing.
  • The sweep will check out the flue liner and note excessive creosote buildup or cracked flue tiles. If the chimney hasn’t been swept recently (it probably hasn’t) he or she will recommend that it be cleaned before laying your first fire of the season. The leading cause of fires from wood-burning fireplaces, inserts or wood stoves is partially burned fuel (creosote) deposited on the walls of the chimney flue.
  • If the fireplace has glass doors, the sweep should inspect the gasket material around the door opening. Defective gaskets should be replaced to ensure proper operation of the fireplace. This is especially important if you have an insert or a wood stove, which are meant to be airtight. If an airtight appliance is operated without these gaskets effectively sealing the openings, excess air can leak into the firebox creating an over fire condition, which may permanently damage the appliance.
  • As part of the service the sweep should clean the blower if your fireplace is equipped with one. These blowers do not have a filtering system to prevent the buildup of dust and hair on the blower. Excessive dirt will shorten the life of the blower and may be a fire hazard.
  • The inspection may reveal broken or deteriorated brick lining in the firebox. Replacement of the damaged bricks may or may not be necessary depending on the severity.

When the fireplace inspection is done and the chimney is swept, there is one final task for you to perform. Replace the batteries and test any smoke or carbon monoxide detectors you have in your home to ensure these monitors are operating properly.

via inman.com

What happens to your taxes if we go over the fiscal cliff | Bedford Corners NY Real Estate

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If you’ve been paying any attention to the news, you doubtless know that the United States is rapidly approaching a “fiscal cliff.”

This is the date that various tax cuts and benefits enacted over the past 11 years are set to expire. That date is Jan.1, 2013.

It’s quite possible that President Obama and Congress will come to some agreement before Jan. 1 and extend at least some of these tax cuts.

However, it seems equally possible that they won’t.

What happens as of Jan. 1 if no deal is reached and we plunge off the cliff? Your taxes are going to go up.

The following handy chart shows what will happen if the most important of these tax provisions expire.

Expiring provisionEffect if not extended
Increase in size of 15 percent rate bracket for married couples to double that of unmarried filersThe current 15 percent rate bracket for married couples filing jointly (200 percent of the deduction for unmarried individuals) will be reduced to 167 percent of the deduction for unmarried individuals. As a result, low-income and middle-income two-earner couples will owe more to the IRS than they would if they were single making the same income.
Reduced capital gain rates for individualsCapital gains will be taxed at a 20 percent rate (increased from the current 15 percent rate).
Dividends of individuals taxed at capital gain ratesDividends received by individuals will be treated as ordinary income and taxed at top income tax rate rather than as a capital gain, currently 15 percent.
10 percent individual income tax rateThe 10 percent income tax bracket will be removed; the lowest income tax rate bracket will then be 15 percent
Tax rates in top four bracketsTax rates in the top four brackets will be increased to (from current rate): 39.6 percent (35 percent), 36 percent (33 percent), 31 percent (28 percent), 28 percent (25 percent).
Increase in standard deduction for married couplesThe standard deduction for married couples (currently 200 percent of the deduction for singles) will be reduced to 167 percent. As a result, low-income and middle-income two-earner couples will owe more to the IRS than they would if they were single making the same income.
Repeal of overall limits on itemized deductions (the “Pease Limitation”Limits on itemized deductions will be restored (currently, there is no limit on allowable deductions). The total amount of itemized deductions will be reduced by 3 percent of the amount by which a taxpayer’s adjusted gross income exceeds a certain threshold. As a result, high-income households may not be able to take some itemized deductions.
Repeal of personal exemption phaseoutUnder present law, the amount of a taxpayer’s personal exemption is not phased out. A phaseout of personal exemptions will be restored in 2013 for taxpayers above a certain threshold. As a result, high-income households may not be able use personal deductions in full.
Decreased estate, gift and generation-skipping transfer taxReverts to pre-2001 levels. The estate and gift tax exemption level will be decreased from $5 million to $1 million, while the top tax rate will increase from 35 percent to 55 percent.
Alternative Minimum Tax inflation adjustment (“AMT Patch”)An additional 28 million taxpayers will be subject to the AMT because the amount of income exempt from the AMT would revert back to $33,750 for single taxpayers and $45,000 for married couples filing jointly, down from $48,450 for single taxpayers and $74,450 for married couples filing jointly for 2012.

How much this will cost you in additional taxes for 2013? It depends on your income. The Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution, has calculated that households in the lowest 20 percent of earners would pay an average of $412 more than in 2012, and that middle-income families would pay about $2,000 more. The top 20 percent of earners would pay an average $14,000 more, and the top 1 percent $121,000 more.

via inman.com

The Graying of Homeownership: Tight Credit is Tough on Younger, Single Buyers | Bedford Corners NY Real Estate

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High lending standards that make it virtually impossible for millions of younger, single home buyers to get a mortgage are creating an older, more married and wealthier population of homeowners.

The latest Profile of Home Buyers and Sellers by the National Association of Realtors found that dual income households comprise a greater portion of the housing market and singles are declining.  Sixty-five percent of all buyers are married couples, 16 percent are single women, 9 percent single men, 8 percent unmarried couples and 2 percent other; percentages of single buyers were slightly higher in 2011.

However, just two years ago, 58 percent of buyers were married, 20 percent were single women, 12 percent single men and 7 percent unmarried couples; the overall market share of single buyers declined a total of 7 percentage points over the past two years.  Before 2010, the market shares moved within a very narrow range, generally a percentage point or two.

The study shows the median age of first-time buyers was 31 and the median income was $61,800 in 2011.  The typical first-time buyer purchased a 1,600 square-foot home costing $154,100, while the typical repeat buyer was 51 years old and earned $93,100.  Repeat buyers purchased a median 2,100-square foot home costing $220,000. First-time home buyers had a 39 percent market share in the past.  Long-term survey averages show that four out of 10 buyers are typically first-time buyers, who are critical to a housing recovery because they help existing home owners to sell and make a trade.

Mortgage approvals have improved slightly in recent months but about half the national adult population has a credit score too low to get a loan.  Median scores for adults in the prime first time buyer age groups, 25-34 and 35-44 are far below the median scores of FHA and conventional purchase mortgages being approved today.

The September closing rate for applications for mortgages to purchase a home was 61 percent, the highest approval rate for purchase loans all year.  The median FICO score for all conventional purchase mortgages closed in September was 762 and for FHA purchase mortgages, popular among first-time buyers because of their low down payment requirement and used by 46 percent of first-time buyers in 2011, was 701, according to Ellie Mae, whose software platform processes about 20 percent of all U.S. mortgage originations.

The national median FICO score is 723 today, but median scores for younger adults are considerably lower.  For ages 25-34, the median is 652 and for the 35-44 age group, it’s 659.

Paul Bishop, NAR vice president of research, said the study is painting a clearer picture of the impact of mortgage limitations.  “We’ve known for some time that stringent mortgage credit standards have been holding back home sales, but these findings show single buyers have been hurt the most over the past two years.  Total home sales would be 10 to 15 percent higher without these unnecessary headwinds,” he said.

“The continued growth in married couples as single buyers shrink demonstrates that households with dual incomes are more successful in obtaining a mortgage.  However, given the historically favorable housing affordability conditions, most single-income buyers could also purchase a home and stay well within their means, if lending requirements were more sensible,” Bishop said.

via realestateeconomywatch.com