Pound Ridge NY sales up 12% – Prices down 17% | RobReportBlog
Pound Ridge Real Estate Report – past six months
2012
36 homes sold
$675,000 median sold price
$355,000 low price
$2,875,500 high price
3230 ave. size
$269 ave price per foot
184 ave. DOM
92.82 ave sold to ask
$885,537 average sold price
With record low interest rates and affordable prices, this was to be the year of the first-time home buyer. Instead, first-timers’ market share has fallen from 39 percent of existing home sales last year to 31 percent in October. What happened?
Asked the Wall Street Journal last May: “It’s been a scary few years for the housing market. But at some point, the nightmare has to end (please?). Is now the time? Should first-time home buyers consider jumping into the market?”
As the year winds down, the answer to those questions, unfortunately, is a resounding no. First-time buyers, who accounted for as much as half of all existing homes purchased at the height of the federal tax credit in 2009 and norm ally account for 40 percent of all sales now have nearly reached the record low of 28 percent recorded in January 2011 when sales plummeted following the expiration of the credit.
Yet these days sales are up while first-timer market share is down. The National Association of Realtors reported September sales rose 2.1 percent to a seasonally adjusted annual rate of 4.79 million in October from 4.69 million in September, and are 10.9 percent above the 4.32 million-unit level in October 2011.
Investors with deep pockets of cash received a lot of the blame for the tough times many first-timers faced this year, by out-competing them for declining numbers of foreclosures and short sales. Yet NAR’s numbers don’t indicate that investors have not gained at the expense of first time buyers. In October, investors purchased 20 percent of existing homes, up from 18 percent in September; they were 18 percent in October 2011. In fact, investor market share is also at low ebb; last year NAR credited investors with 29 percent of all home purchases.
The vast majority of first-time buyers se financing and fingers have pointed at lenders for the problems that buyers have been having getting financing, but conditions may be improving for borrowers with good credit. Lending standards were tightened dramatically in the years following the housing boom, but very few banks have raised standards since 2010, according to the Federal Reserve’s quarterly Senior Loan Officer Survey. Yesterday Ellie Mae reported that 61.2 percent of purchase loan applications closed in October, the sixth straight month that the closing rate has improved, up from 55.2 percent in April. Moreover, Ellie Mae, which processes 20 percent of all originations, reported that October FHA purchase loans, which are popular with first-time buyers, have a lower average FICO score (700) than all purchase loans (750) and conventional purchase loans (762).
However, FHA’s financial problems have made them more expensive for borrowers and unavailable to hose with marginal credit. Mortgage insurance premiums rose this year and will rise again in January (See FHA Audit Leads to Higher Fees).
Down payments, which rose significantly following the housing crash, are also a barrier to first-time buyers. The days of “no down” loans are over but after rising in 2007 through 2010, down payments actually have declined. The median downpayment made by all homebuyers in 2012 was 9 percent, ranging from 4 percent for first-time buyers to 13 percent for repeat buyers. The median down payment was the lowest since 2009 but still far above the levels during the housing boom, when nearly half of first-time buyers made no downpayment at all. Moreover, dozens of downpayment assistance programs sponsored by state and local housing authorities that provide grants and low interest loans for down payments to qualified applicants have plenty of funding available. Down Payment Resource lists local programs for easy access by borrowers.
There is no doubt the younger workers have suffered more than other age groups in the economic down turn. One result has been a lower rate of household formation, a critical predictor of first-time buyer activity. But according to Catherine Rampell at the New York Times household formation has been picking up. Over the last year, though, household formation has been picking up.
She quotes Mark Zandi of Moody’s Analytics: “Years’ worth of households that have been pent up will be unleashed in the next few years,” he predicted. “That’s one reason why I’m more optimistic than some other people about G.D.P. growth in the next few years. As we move to the mid-part of the decade, I think those households will get formed and that will power a lot of housing construction and consumption.”
To sum up, 2012 didn’t bring the year of the first-time buyer but it did see competition of with investors in decreasing, financing available with good credit, interest rates still at record lows, easing of down payments, heightened household formation. Perhaps 2013 will bring increased inventories of entry-level homes, higher employment and more new households.
Is the Year of the First-time Buyer yet to come?
At the end of the 1970s, ’80s and ’90s, homeowners in many areas cashed in big profits when they sold. This enabled them to trade up to a bigger home, sometimes in a better neighborhood.
Homeowners used their homes as piggy banks through the use of home equity lines of credit (HELOCs) to buy cars, pay for vacations and medical bills, renovate their homes, and pay for college educations and retirement.
The recent housing recession brought a halt to this as home values dropped 30 percent or more, depending on location, wiping out equity for some and leaving many who bought with a low cash down payment with negative equity. More than 24 percent of homeowners in the U.S. today have a mortgage value that exceeds the market value of their homes.
2012 may be a pivotal point in the housing market. The decline in home prices has subsided and prices are actually moving higher in some markets. Buyers, instead of being reticent to buy a home that may lose value, are now anxious to buy before prices rise further. Lawrence Yun, chief economist for the National Association of Realtors, projects that home prices nationally will rise 5 to 10 percent over the next three years.
Does this mean that we’re moving back to a housing market that will enable homebuyers to treat their homes as an investment opportunity rather than just as a place to live?
There are still possible bumps ahead for the housing market. Millions of foreclosure properties have yet to come to market. The global economy is slowing, and U.S. economic and job growth are meager. Even so, some buyers who purchase in choice locations today could realize substantial gain when they sell.
HOUSE HUNTING TIP: High-demand neighborhoods are usually located close to centers where job creation is high. A good transportation system enhances home values, particularly if your neighborhood is near a hub that provides the means to travel in several directions. Some areas have benefited from foreign homebuyers.
Location has been touted as the key factor determining home value. That is still the case. Buyers want quality housing in close proximity to green spaces, recreation, good shopping and transportation.
One strategy is to buy a home that lacks curb appeal and could use updating that’s located in a neighborhood of superior homes. The neighborhood is already known as a winner. Your challenge is to bring the property up to the quality of the neighboring homes by making cost-effective improvements.
Shoddy renovations will be seen for what they are when you sell. Hire quality contractors at a reasonable price. Some homeowners do not make back what they paid for improvements when they sell. To ensure you don’t overimprove for the neighborhood, find out what buyers want and how much they’re willing to pay for it before you renovate.
For example, in California, a study conducted by UCLA and the University of California, Berkeley, showed that homes with a “green label” sold for approximately 9 percent more than comparable nonlabeled homes. A green-label home is labeled by Energy Star, Leadership in Energy and Environmental Design (LEED), and GreenPoint Rated.
There’s a certain amount of luck involved in making a profit on a home sale. For instance, buying a home in the next hot spot and waiting for the neighborhood to turn around before you sell could yield a tidy profit. A neighborhood that’s adjacent to one that’s already highly desirable might be a good place to look.
Patience will work for you if your aim is to come out financially whole or ahead of the game when you sell. Plan to hold for the long term. Don’t sell in a down market.
THE CLOSING: If the market presents an opportunity to sell sooner, take it, unless your home means more to you than profit.
The audit for the Federal Housing Administration found the mutual insurance fund short a projected $13.48 billion. However, it could have been worse, if not for the separation of REOs and pre-forelcosures on FHA books.
Capital resources for the year was negative $2.34 billion, which was impacted by five factors including an estimated decrease of $0.45 billion in real-estate owned inventory.
This year the FHA introduced the claim-type prediction model to separate REO claims and pre-foreclosure claims, according to the recent audit submitted to Congress, resulting in a decrease of $5.04 billion for the year and an expected decrease of $6.46 billion in 2018.
Distribution between REO and pre-foreclosure claims were relatively stable until widespread declines in home prices and higher volumes of defaults started to impact the fund in 2009. As a result, foreclosure claims became prolonged and delayed.
In previous years, historical average claim rates between REOs and pre-foreclosures were used to forecast future years. However the delay in claims decreased more REO counts than pre-foreclosure counts, so to avoid any biased delays the claims are now separately accounted for.
Click on the chart to view distribution between REO and pre-foreclosure claims:
“We assume that approximately 20 percent of the model projected REO liquidations would take the form of asset sales instead of foreclosure and the loss rate of the asset sales will gradually converge to the loss rates on REO dispositions during the next two years,” according to the report.
Click on the chart to view REO loss rate.
A funny thing happened after we launched Doorsteps, an online tool we explicitly designed and marketed to agents. Buyers kept signing up. And not just one or two. Dozens. Then hundreds. Then we lost count.
To be fair, this wasn’t entirely a shock. Doorsteps was conceived as a shared online workspace to help give agents a well-designed way to guide their buyers through the home-buying journey. It’s packed with 100% unbiased, insider information, and lots of smart tools to help their buyers (and potential buyers) make faster, better decisions.
We knew that buyers needed this kind of step-by-step support, and that there were no good places to get a really clear understanding of all the moving pieces. And certainly not in a single place to see it all in context. But what was surprising was how badly they wanted it, even before they had connected with an agent. In a nutshell, they were too impatient to wait to be invited in. They wanted to get going right here, right now.
Looking back, though, it makes perfect sense. Home-buyers are different today than they were even five or ten years ago. This is a generation used to using technology to organize their lives, to connect with others, to make decisions. They expect – and increasingly demand – transparency. And they are surrounded by really well-designed tools they use every single day, whether they are trying to find the right doctor or book a table in a restaurant. So their standards for home-buying went way up even before many of them had bought their first home.
Especially for GenY, who watched their older siblings get pummeled in the housing crisis and don’t want to make the same mistakes. Or even GenX, who last bought a home seven or eight years ago and realize the landscape fundamentally shifted beneath them in the meantime.
Which is why we recently built a buyer-facing version of Doorsteps that would allow any buyer to use the app even before contacting an agent. The best part? The app now actually helps them find the right agent, and they will be way more organized, prepared, and ready to do so when they actually take that step. Pretty soon they’ll be able to find the right lender right within Doorsteps, too. And then the best-of-the-best service providers out there— home insurance, moving companies, you name it.
A New Generation of Homebuyer from Doorsteps on Vimeo.
So it’s a win-win. Buyers get to begin their journey on their own terms, if they choose to. But agents get to step in when those buyers are truly prepared and eager to take the step from curious to committed. Which is why Doorsteps agents are thrilled to connect with buyers who are already in the system, and why it’s such a personal joy for us to be able to enable that connection. It’s not just, “Hey, Jennifer, I saw a listing online that looked sort of nice. Should we meet?”, but more like “Hey, I’m pre-approved, I have clearly articulated my wants and needs, I have a realistic budget in mind, I have a general understanding of which neighborhoods may make the most sense for my life stage and family, and I’d like to move within three months. Should we meet?”.
You can imagine which of those buyers agents have told us they would like to work with more. And, honestly, this is what buyers want, too.
So we’re really excited to announce the launch of two Doorsteps. The agent version, which real estate professionals know and love. And the buyer version, which buyers demanded. And it’s a great lesson for any startup, or any real estate business. Listen. Be nimble. Be open to learn something you weren’t quite expecting. And make sure your welcome mat is as wide as it ought to be.
And even if you don’t use a lot of technology yourself, embody the characteristics that makes using technology so attractive to your clients. Clarity. Openness. Transparency. And for goodness sake, give ‘em what they want. If it happens to also be what they need, all the better.
Lockbox image via SentriLock LLC
The National Association of Realtors is considering whether multiple listing services and Realtor associations will be allowed to require that their members pay for some services that are now considered optional, such as lockboxes.
At least three MLSs have notified NAR of their desire to require all of their subscribers to pay for lockbox services, citing security issues when members don’t use the devices, and potential cost savings from universal member participation.
A policy adopted by NAR in 1996 to curb potential abuses of authority by MLSs and local Realtor associations limits the services that can be included in member dues. Products and services are defined as either “core,” “basic” or “optional.”
Dan Coffey, broker-owner of RE/MAX Harbor Country and Shore Realty Inc., said many MLSs already require members to pay for lockbox services.
“The train has left the station,” Coffey told members of NAR’s Multiple Listing Issues and Policies Committee. “Just about every MLS is already doing this — I don’t think they read the (rule) book.”
Coffey — a former president of the Michigan Association of Realtors — belongs to the Southwestern Michigan Association of Realtors, the first to raise the issue with NAR.
Although only three MLSs have officially weighed in with NAR in favor of such a change, “there are many more than three associations that support this move to make lockboxes a basic service,” said Dale Zahn, CEO of the West Michigan Lakeshore Association of Realtors..
Categorizing lockboxes as a “basic” service and requiring that all MLS subscribers pay for them facilitates cooperation between members and provides better security for home sellers, proponents say.
House keys kept in real estate offices can be copied, and combinations shared. Electronic lockboxes can be used only by MLS and association members, reducing the likelihood of unauthorized entries.
“It’s the local association’s choice to do what it wants to do — to provide the package that it thinks members like,” Zahn added. If members don’t like it, “they can find another association … it’s board of choice.”
But Jim Haisler, CEO of the Crystal Lake, Ill.-based Heartland Realtor Organization, worried that large regional MLSs might adopt policies that not all of the associations they serve would agree with.
“I’m part of a large regional (MLS) serving 11 associations,” Haisler said, referring to Lisle, Ill.-based Midwest Real Estate Data LLC (MRED), one of the nation’s largest MLSs. “I’m worried our MLS might be dictating to the 11 associations, (and) have some sort of governance over the associations.”
Cathy Libby, operations manager of Maine’s statewide MLS, Maine Real Estate Information System Inc., suggested that if NAR is considering whether to allow MLSs and associations to classify lockboxes as required services, it should also review whether other recent innovations like transaction management software, e-signatures and agent websites could also be classified as basic, required services.
Rather than recommend policy changes on lockboxes alone to NAR’s board of directors, the committee adopted a motion Saturday to review whether more sweeping changes to the 1996 policy statement are warranted.
The committee informed the board of directors that MLS Policy Statement 7.57, “Categorization of MLS Services, Information and Products,” will be “reviewed and revised, taking into account changes in technology and the real estate business” since the policy was adopted in 1996.
“Integral to this process will be consideration of whether, and how, the costs of providing lockbox equipment to MLS participants and subscribers (where lockboxes are an activity of MLSs) or to association members (where lockboxes are an activity of associations of Realtors) can be included in whole or in part in MLS dues and fees, or in Realtor dues,” the committee said in a report to the board Monday. “This analysis will also take into account the existing prohibition in the NAR bylaws on including the costs of property optional services in association dues.”
Last year, NAR boosted its majority stake in SentriLock LLC, a lockbox company that had about a 20 percent share of the market at the time, becoming sole owner of the company.
NAR’s staff liaison to the Multiple Listing Issues and Policies Committee, Cliff Niersbach, said that the lockbox issue presents a good opportunity to take a look at other services, and find “the best way to balance MLSs’ financial well-being with the rights of participants to decide what they really need to best serve their customers.”
Repurposing their respective arguments from Friday’s round of press conferences, President Obama and House Speaker John Boehner, R-Ohio, in this week’s addresses made their cases for and against extending tax cuts for the wealthiest two percent of Americans, with a view to avoid the so-called “fiscal cliff” at year’s end.
For his part, the president pointed at his reelection victory Tuesday as a message “loud and clear” that Americans “won’t tolerate dysfunction, or politicians who see ‘compromise’ as a dirty word – not when so many of your families are struggling.”
On Friday, Mr. Obama said that while he’s “open to compromise,” he won’t allow a deal to go through that extends the Bush-era tax cuts – set to expire at the end of the year – for the top two percent of high-income families. Both parties are scrambling to arrange a bargain before a series of tax increases and spending cuts go into effect Jan. 1, potentially hurling the United States into another recession.
“At the end of this year, we face a series of deadlines that require us to make major decisions about how to pay down our deficit – decisions that will have a huge impact on the economy and the middle class, now and in the future,” the president said. “Last year, I worked with Democrats and Republicans to cut a trillion dollars’ worth of spending, and I intend to work with both parties to do more.
“But as I said over and over again on the campaign trail… if we’re serious about reducing the deficit, we have to combine spending cuts with revenue – and that means asking the wealthiest Americans to pay a little more in taxes,” he continued. “That’s how we did it when Bill Clinton was president. And that’s the only way we can afford to invest in education and job training and manufacturing – all the ingredients of a strong middle class and a strong economy.”
The same budget battle in 2011 that eventually led to $1 trillion in cuts also brought the government within minutes of shutting down. On Tuesday, voters elected the same legislative makeup – a split Congress and Democratic White House – that has struggled over the president’s term to break free of partisan gridlock and move budget legislation.
While insisting he’s “open to compromise and new ideas,” and said he’s invited leaders of both parties to the White House to discuss solutions next week, the president issued a caveat: “I refuse to accept any approach that isn’t balanced,” he said. “I will not ask students or seniors or middle-class families to pay down the entire deficit while people making over $250,000 aren’t asked to pay a dime more in taxes.
“This was a central question in the election,” he continued, “and on Tuesday, we found out that the majority of Americans agree with my approach – that includes Democrats, Independents, and Republicans.”
But delivering the Republicans’ weekly response, Boehner, too, recycled his gist from Friday’s press conferences, arguing that allowing the top two rates to rise would be letting “our nation’s economy go off part of the fiscal cliff in January.”
Democrats “believe that doing that will generate more revenue for the federal government – but here’s the problem with that,” the House Speaker said. “Raising those rates on January 1 would, according to the independent firm Ernst & Young, destroy 700,000 American jobs. That’s because many of those hit by this tax increase are small business owners – the very people who are the key to job creation in America. I used to be one of them.
“This week, I offered congratulations to President Obama, along with an alternative to sending our economy over any part of the fiscal cliff,” he continued. The pillars of his own framework, Boehner explained, include tax reform “that closes special interest loopholes and lowers tax rates,” entitlement reform, and a rejection of “arbitrary” national defense cuts.
“A stronger economy means more revenue – which is exactly what the president is seeking,” he said, adding that a brief conversation with Mr. Obama this week left him “hopeful that we can continue those talks and forge an agreement that can pass both chambers of Congress.”
