Price Data Is Good News For Home Buyers

Wall Street Journal

Homes are now cheap.

No, not everywhere in the country (more about that later). And, even after the latest Case-Shiller data, it's anyone's guess when they might actually turn around and start rising steadily again. It could be years.

But if you've been thinking of buying a home to live in, the current meltdown is a big opportunity.

You might not know it from the coverage of the latest data. Too many, as usual, are focused on the trees instead of the forest. The 10 and 20-city composite indexes were unchanged between September and October. And the numbers were lower than a year ago, but the rate of decline seems to have slowed: Two facts that are both obvious and practically useless. Indeed the latest survey contains a whole truckload of information for all those who prefer data to knowledge.

But long-term fundamentals are more important than the short-term noise. And it's generally a mistake to pay too much attention to doomsayers or to overthink these things.

Here's some home truths.

Real estate prices in the Case-Shiller 10-city index have now fallen by a stunning 30% from their 2005 peak. Nothing like it has been seen since the Great Depression–and, according to some sources, not then either. Obviously for anyone who bought a home at the peak of the market this has been a disaster. But for those thinking of buying a home now this is exceptionally good news.

And at the same time, mortgage rates have also plummeted. In 2006 you had to pay an average of about 6.4% on a 30-year fixed loan, according to the Federal Reserve. Right now you can get deals for about 5%.

Put the two together, and it's a winning combination.

The Case-Shiller 10-city data go back to 1987. I ran the numbers comparing the index values, mortgage rates and average weekly earnings. Net conclusion: On average–an important point I'll return to shortly–buying a home now is as cheap as it was in the mid-1990s, when houses were an absolute steal.

No, the Case-Shiller data aren't perfect. The biggest complaint is that they are weighted too much towards the coasts and the big "bubble" cities like Miami, Las Vegas and Phoenix.

So I decided to run the same analyses–average prices, mortgage rates and weekly earnings–for the home price data tracked by the U.S. Census. Those numbers go back further than Case-Shiller, to 1972.

You can see the results in the two charts here.

The top chart simply compares the average home price to average weekly earnings. Yes, there has been a clear, gently rising long-term trend: Over many decades people have been choosing to spend more on housing, buying bigger and better homes. But the bubble, and subsequent collapse, still stand out clearly. By this measure, median homes nationwide today are about as cheap–when compared to earnings–as they were in the early 1990s.

Yet back then mortgage rates were around 8, 9 or even 10%.

If you buy an average home today, and take out a 30-year mortgage at 5%, the annual bill for interest and repayment of principal will come to about 19 times typical weekly earnings (If you get the $8,000 refundable tax credit too, it drops below 18 times). As you can see from the bottom chart, we haven't seen it that low since the early 1970s.

You can hear the objections. Doomsayers ask: What about these waves of mortgage resets coming in the next two years? What about all the unemployment? And the foreclosures? And so on.

These are all valid arguments for refusing to buy homes when they are expensive, or even averagely priced. But the whole point about markets is that they adjust. Prices are now cheap. They reflect this bad news, and more. If you have a stable income, and you can get a 30-year mortgage at 5% or so, and you are willing to drive a hard bargain on a home in this market, this is your time.

Over and over again, history suggests that the best investments are the ones no one wants–gold when it was $260 an ounce, Amazon.com when it fell below $10 in 2002, Hong Kong shares during the SARS "crisis" in 2003, and so on. If an investment feels comfortable, it's should make you nervous. If it makes you really nervous, that's probably good.

The biggest objection, or caveat, is one I hinted at earlier. These are average prices  - check with a realator for prices on Raleigh real estate. The variations are truly remarkable. Prices in places like Miami, Las Vegas and Phoenix have roughly halved from the highs in early 2006, according to Case-Shiller. Meanwhile in cities like New York and Boston they have fallen by a fifth or less. It's hard to argue that some of the most resilient areas are cheap. New York real estate prices are still up about 75% since the start of the decade. Maybe they have much further to fall.

But outside of these hot spots, real estate is now cheap.

Citigroup To Suspend Foreclosures For 30 Days

USA Today

WASHINGTON — Citigroup will suspend foreclosures and evictions for 30 days in a temporary break for about 4,000 borrowers during the holiday season.

The New York-based bank said Thursday the suspension will run from Friday through Jan. 17. It applies only to borrowers whose loans are owned by Citi. Borrowers who make payments to Citi but whose loans are owned by other investors are out of luck.

"We want our borrowers to have a much less stressful time, to spend their time with their families during the holidays as opposed to worrying about their homes," Sanjiv Das, head of the company's mortgage division, said in an interview.

The suspension means Citi will halt foreclosure sales and stop evicting homeowners from properties it has already seized. The company projects it will help 2,000 homeowners with scheduled foreclosure sales and another 2,000 that were due to receive foreclosure notices including holders of Raleigh real estate.

Das also said the company is working on "some long-term fundamental alternatives" to foreclosure, but declined to be specific. "We know that moratoriums are not permanent solutions," he said.

Most major lenders suspended foreclosures last winter while the Obama administration developed its $75 billion loan modification program. Foreclosures picked up again after those suspensions lifted. In recent months, they have fallen as banks evaluate whether borrowers qualify for the government program.

Citi has enrolled about 100,000 borrowers in the Obama program, but had made only about 270 of those modifications permanent as of the end of last month, according to a Treasury Department report. But Das said the low number resulted from a "reporting error" and said it will rise dramatically by year-end.

"I have put a lot of pressure on my team to make sure that there is almost nothing left in the pipeline," he said.

Homebuyer Tax-Credit Extension Fails as Catalyst

Bloomberg

President Barack Obama’s extension last month of a tax credit for first-time homebuyers failed to stir optimism among homebuilders or stock investors about the industry’s prospects.

The National Association of Home Builders/Wells Fargo Housing Market Index and a Standard & Poor’s index of homebuilding shares dropped after Obama signed the legislation on Nov. 6. The chart tracks these indicators since 2000.

Homebuyers received another five months, until April 30, to take advantage of the government’s $8,000 credit. They also became eligible for an additional $6,500 credit if they owned their previous residence for at least five years.

“The extension has not materially helped traffic or sales despite the program’s expansion,” Carl Reichardt, a Wells Fargo analyst, wrote yesterday in a report.

The NAHB/Wells Fargo index, an indicator of builders’ confidence, fell to 16 this month from 17 in November. None of the 47 economists in a Bloomberg News survey expected the decline. Readings below 50 show that most participants are pessimistic.

S&P’s industry gauge, consisting of builders in the S&P 500, MidCap 400 and SmallCap 600 indexes, dropped 8.4 percent from Nov. 6 to yesterday. S&P’s broadest index of U.S. stocks rose 4 percent during the period.

The shifts in sentiment and share prices were at odds with the growth in November housing starts and building permits that the Commerce Department reported today. Starts rose 8.9 percent to an annual rate of 574,000 homes. Permits climbed 6.9 percent to a 584,000 pace including such items as vacation homes in Atlantic Beach NC, the fastest since November 2008.

Annual Remodeling Report Finds 4 Best Improvements For Selling Your Home

MSN

House prices are still dropping, so it pays to know which upgrades will deliver the best return when you sell your home. An annual remodeling report finds 4 basic replacements are likely your smartest choice.

Remodeling is a better investment in some years than others. This year is among the worst if you’re hoping to recoup much money when you sell, says a newly released report. Homeowners are getting back just 64%, on average, of a project’s cost, compared with 87% in 2005, according to Remodeling Magazine’s 2009-2010 Cost vs. Value report.

Some projects pay back better than others. You get more bang for the buck putting money into a basement or attic upgrade than adding a wing to the house. Some of the highest-return projects include a deck addition and quick, conservatively priced replacements of old siding, entry door or windows. (If you want a different perspective, personal-finance guru Liz Pulliam Weston calls remodeling “a waste of money.”)

The report compiles responses from about 4,000 members of the National Association of Realtors in 80 cities to survey questions about 33 hypothetical projects. “I think what the real-estate agents are saying is you’re taking a big risk if you’re buying these high-ticket items, because the market is slow. Buyers are looking for utility,” says Sal Alfano, the magazine’s editorial director. “They’re not so wowed these days as they were three or four years ago.”

A retreat from overbuilding
Some contractors are dropping their rates to get work, so it might seem a good moment, if you have the money, to do a big, blow-out addition. And maybe it is, if you can keep the house long enough. But today, a high-end master suite remodel, for example, returns just 56% of the cost, on average, compared with 80% in 2005. 

“You’re not seeing the big 750-square-foot additions being put on the side of a house like you were a few years ago,” says Martin Conneely, owner of Conneely Contracting, in Arlington, Mass. “Our biggest (jobs) right now are maintenance replacements (of windows, doors, siding and roofing), basement renovations and moderately priced upgrades in the kitchen and bath.”

Despite widespread talk of falling labor prices among remodelers, the cost of construction overall hadn’t changed much.  Return on investment (ROI) is dropping because, in a market flooded with foreclosures, even if labor costs are dropping, the price of existing homes is at such a discount that anything newly built can’t compete.

The 22-year-old Cost vs. Value survey makes clear that return on investment depends greatly on where you live. The highest payback is in the Pacific region (Alaska, California, Hawaii, Oregon and Washington). There, although costs are double the next-most-expensive region (the Mid-Atlantic, including New Jersey, New York and home remodeling Pennsylvania), high resale values more than compensate.

Peter Michelson, CEO of Renewal Design-Build in Decatur, Ga., cautions homeowners to be aware that projects described and priced in this report can — and often do — cost considerably more than the amounts given.

ROI is better in the West South Central (Arkansas, Louisiana, Texas, Oklahoma), South Atlantic (Washington, D.C., Delaware, Florida, Georgia, Maryland, the Carolinas, Virginia, West Virginia) and East South Central (Alabama, Kentucky, Mississippi, Tennessee) regions.

Residents of the Mountain states (Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona and New Mexico) and New England (Maine, Massachusetts, Connecticut, New Hampshire, Rhode Island, Vermont) enjoy average returns.

It’s hardest to make a buck back on your project in the Middle Atlantic, West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, the Dakotas) and East North Central (Indiana, Michigan, Ohio and Wisconsin) regions.

The math didn’t always come out so poorly. As recently as 2005, few homeowners bothered to figure out if their plans meant overbuilding for the neighborhood, Alfano says. They just commissioned the work they wanted and assumed prices would rise to cover their costs.

They were largely correct until 2006, when payback began shrinking along with the scale of jobs that homeowners were undertaking. “The projects that were evaluated as having the most return were not kitchens and baths so much anymore. All of a sudden it was these exterior replacements: roofing, siding and windows,” Alfano says.

It was the beginning of the end of the housing boom. “Today, resale value has come to the forefront. People are much more conscious of building for the neighborhood, and they’re worried about their mortgage rates and their jobs.”

Basic replacements rule
As a group, low-cost replacements — new siding, windows, doors and roofing — deliver the best bang for the buck now, a considerably better payback than from a two-story remodel or a kitchen remodel.

Given great improvements in materials, you can replace your inefficient 10- or 15-year-old products with highly efficient ones for a decent return when you sell. In addition, the improvements help you save on heating and cooling bills. Replacing leaky windows with highly efficient newer ones is a good example. The technology behind the glass and frames has so improved that you’re tightening up your home’s weatherproofing in the process. You get more comfort and, from the real-estate agent’s point of view, new windows show off your house from the street.

Replacement projects included in the Cost vs. Value survey all cost less than $20,000 and most cost considerably less. They instantly enhance curb appeal, boosting a home’s marketability, and they require little maintenance once installed - all of which are better prospects than with a home addition. A bonus: Most of these replacements qualify for a federal tax credit for energy efficiency (not included in Remodeling Magazine’s ROI calculations).

1. Replace the front door.

    * The absolute best return on the money of any of the projects surveyed — 129% of cost — is gained by replacing a beat-up front door with a $1,200 steel-shell door filled with foam insulation.
    * A new fiberglass door (more expensive, at $3,490) returns less, about 65%. (Fiberglass is the new chic building material because it’s rugged and durable, can be painted and will mimic almost any wood. Unlike wood, it doesn’t crack, warp or shrink and needs zero maintenance.)
    * Spend about $7,500 on an entire new entrance, including a widened opening, a solid-core wood door and high-end glass, new lighting and better locks, and you’ll recoup 69%, on average.

2. Replace home siding

    * Replacing old siding with a durable fiber-cement product ($13,287) recoups about 84% at resale.
    * Use vinyl siding ($10,607) to get an 80% return.
    * Foam-backed vinyl ($13,022) costs more and earns back less — roughly 79% — but it is much more efficient at insulating a home.

3. Replace windows. Three of the four window-replacement projects considered in the survey pay back about 77%:

    * Wood-trimmed windows ($11,700).
    * Lower-end vinyl windows ($10,728).
    * Windows trimmed in higher-end vinyl ($13,862).
    * The fourth project, higher-end wood-replacement windows ($17,816), has a return of about 72%. Fiberglass windows weren’t included in the study.

Replace the roofing: Spend $19,731 on new fiberglass asphalt shingles and you’re likely to recoup about 67% of the cost.

    * A higher-end roof replacement using standing-seam metal ($37,359) pays back about 61% of the cost, agents told the survey.

Additions aren’t cost-effective
Except for a new deck, which pays back nicely, adding to a home’s footprint brings a poor return these days. There are better ROIs for Raleigh real estate.

A new deck
    * Wood is high-maintenance, but homebuyers love it: A new wood deck ($10,634) returns 81%.
    * New outdoor decks of midrange composite planks ($15,373) return around 71% of the cost at resale.
    * A higher-grade composite ($37,745) brings an ROI of about 61%.

Other additions
    * Adding a 200-square-foot sunroom ($73,167) recoups 51%. [Find a Sunroom Builder in Grand Rapids Michigan]
    * A high-end ($225,995) master suite project, adding 640 square feet to the house, including a bath with walk-in shower and stone walls, brings a 56% return.
    * A less ambitious, less costly ($103,696), 640-square-foot master suite addition including whirlpool bath and ceramic tile recoups 65%.
    * A garage addition ($87,230) earns back about 56%.
    * A high-end bathroom addition ($75,812) earns about 58% at resale.
    * Adding a midrange, 6-by-8-foot full bath ($39,046) recoups about 60%.
    * Add a midrange two-story wing ($156,309) to the house, including 24-by-16-foot first-floor family room and second-floor bedroom and full bath, for a return of about 69%.
    * A midrange family room addition ($82,756) returns around 65% of the cost.
    * Adding a sunroom or home office were the projects that yielded the least payback, presumably because these special-purpose rooms appeal to fewer buyers and are in less demand.

Best use of the money (besides replacements)
Upgrading existing space, such as a bathroom remodel, is the best bet for recouping cost. It makes sense: Pouring a foundation, framing a structure and bringing in electricity and plumbing are among the most expensive aspects of a building project. When you can largely skip these steps and increase your usable space, the payback is richer:

    * An attic conversion, including a 15-by-15-foot bedroom with dormer and a 5-by-7-foot bath with shower ($49,346) returns comparative gold: 83% return, on average. Agents in several cities said this job would return more than 100%.
    * A basement ($62,067) remodel —a 20-by-30-foot entertainment room and 5-by-8-foot full bath — recoups about 75% of its cost.
    * A midrange 5-by-7-foot bathroom remodel ($16,142) with standard fixtures and trim has a 71% ROI.
    * Expanding that bathroom to 100 square feet ($52,295), including moving plumbing and wiring and adding higher-end cabinets and fixtures, brings a 62% ROI.

Kitchens and baths: Scaled back but ever popular
High-end kitchens and baths are fading in popularity, replaced by “very practical things,” Michelson says. “The $400,000 and $500,000 jobs are few and far between. The jobs between $50,000 and $200,000, we’re doing lots of those.”

Bath and kitchen remodeling hasn’t stopped, since these projects maximize the enjoyment of the most-used spaces in a home. But “people are definitely being smarter with their money,” Conneely says. “For instance, a $75,000 remodel five years ago? That same client would today spend $50,000.” People who blithely bought the best of everything now pursue the same look by choosing materials judiciously.

    * A minor kitchen upgrade ($21,411) installing new cabinet fronts, laminate counters and other cosmetic improvements is a decent investment, at 78% ROI.
    * A major kitchen remodel ($57,215) using midrange materials — semi-custom cabinets and laminate counters — pays back about 72%.
    * A high-end major kitchen remodel ($111,794) with top-of-the-line cherry cabinets, stone counters, glass backsplash and expensive, built-in appliances, pays back just 63%.

10 Questions Regarding The Housing Market

The Wall Street Journal

The U.S. housing market has been in a slump for the past four years. When will it ever end?

In recent years, real estate has proven as jittery and unreliable as any other market. The average U.S. home price nearly doubled between January 2000 and April 2006, according to the First American LoanPerformance index. Since then, the average has fallen about 30%. The drop has been 53% in the Las Vegas metropolitan area and 39% in Miami, where about a quarter of all households with mortgages are behind on their payments or in foreclosure. The value of your home might be determined more by whether the neighbors keep their jobs than whether the house has ample light and closet space.

Here is a guide to navigating a fractured and volatile market:

1. Is the housing market getting better?

It has shown some signs of healing this year, but the much-touted recovery is tentative and fragile.

Home sales have increased from the severely depressed levels of 2008. The inventory of unsold homes listed for sale also is down. Bidding wars are breaking out for foreclosed homes in the sorts of neighborhoods (near jobs and decent schools) that attract both first-time buyers and investors seeking rental properties.

But more than 6.7 million U.S. households with mortgages, or about 13%, are behind on their payments or are in the foreclosure process, according to the Mortgage Bankers Association. Eventually, many of them will lose those homes, sending more supply onto the market. Unemployment has continued to rise, and the housing market is unlikely to show a sustained recovery until job growth resumes.

While the supply of middle-class homes on the market has declined somewhat, it remains ample in most places. And there is a huge glut of high-end houses for sale in many areas. That means prices of high-end homes might still have a long way to fall.

2. When will housing bottom out?

There probably won't be any clear turning point. Monthly indicators, such as home sales and prices, tend to bounce erratically from month to month, making it hard to discern the underlying trend. And the housing bust will end at different times in different places. House prices already might have bottomed out in the coveted Virginia suburbs with short commutes into Washington, D.C., for instance. But it probably will be years before all of the unsold condos find buyers in parts of Florida.

Generalizations about states or metropolitan areas don't say much about what is happening in your neighborhood. In Summit, N.J., known for good schools and an easy, 45-minute train commute to Manhattan, the median home price in September was up 1.2% from a year earlier, according to Otteau Valuation Group, an appraisal company. In Atlantic City, N.J., which suffers from too much speculative building of condominiums and weak demand for vacation homes, the median price is down about 12% from a year ago.

3. What signals should I watch to determine whether my local market is improving?

One way to get a sense of supply is to ask a good local real estate agent for stats on how many homes are listed for sale in your town and how many months it would take at the current sales rate to absorb that supply. Anything over about six months generally is considered high, meaning that sellers might have to cut prices. Another way to get a sense of a neighborhood's health is to count the number of for-sale signs and vacant houses. If there are more than a couple vacant homes in a block, that might be a bad sign, particularly if no one is taking care of them.

The supply of homes listed for sale has fallen very sharply in some areas. But the supply is likely to balloon again in many areas with a renewed surge in foreclosures. Many local newspapers provide information on foreclosure filings.

Demand depends heavily on the job market. The U.S. Bureau of Labor Statistics provides unemployment rates by metropolitan area. In September, they ranged from 2.9% in Bismarck, N.D., to 30% in El Centro, Calif. State and local agencies provide job-market data, too. Celia Chen, a housing economist at Moody's Economy.com, says help-wanted signs can be a useful local indicator; if you start seeing more of them around your neighborhood, that is a sign that business in your area could be starting to recover.

4. How can I figure out the value of my home?

You never know for sure what a home will fetch until you put it on the market, and then it is partly a matter of luck. Will the eager buyer who shares your taste in home style and neighborhood show up on day one or day 200?

Some Web sites -- including Zillow.com, HomeGain.com and Cyberhomes.com -- provide estimates of individual home values. These estimates are largely based on recent sales of nearby homes, and in some cases they are wildly off the mark. But they often provide a ballpark idea of a home's value.

You might come closer to the real value by talking to a local agent and looking at recent prices for homes that you know are very similar to yours. If you want to be more scientific and don't mind paying a few hundred dollars, hire a professional appraiser.

5. Does it matter whether I'm "under water"?

At least you have plenty of company. About 20% of owners of single-family homes with mortgages owe more than the current estimated value of their homes, according to Zillow.com.

If you can afford your monthly payment and don't need to move soon, that might not be a big problem. But it is hard, and sometimes impossible, to refinance a mortgage if you are under water, and you will take a bath if you have to sell the home now. Some people who can afford to make their monthly mortgage payments are deciding it doesn't make sense to do so because they don't expect their home values ever to recover to past peaks, and they could rent similar houses for much lower monthly costs.

6. If I lose my home to foreclosure, how long will it take to repair my credit record?

It probably will be three to five years before you can qualify for a home mortgage insured by the government, depending on your circumstances, and that assumes you have re-established a record for paying your bills on time. The foreclosure will remain a blot on your credit record for seven years, likely raising your interest costs even if you do get another loan. If you pay bills on time, keep your credit-card balances low and don't apply for too many cards, you can make a "slow, gradual improvement" in your credit score, says Tom Quinn, a vice president at Fair Isaac Corp., which provides tools for analyzing credit records.

7. If I'm renting, is now a good time to buy a house?

It may well be. Prices in most areas are well below their peaks, even if they haven't hit bottom. Don't kid yourself that you can time the bottom of the market perfectly. But don't feel any pressure to buy in a hurry, because the supply of housing is likely to remain ample for years in many areas.

Generally, it doesn't make sense to buy unless you expect to remain in the house for at least four or five years, because the transaction costs -- including commissions for real estate agents and mortgage fees -- are heavy.

But now is clearly a good time to rent. Many landlords need tenants badly. The national apartment-vacancy rate in the third quarter was 7.8%, the highest in 23 years, according to Reis Inc., a New York research firm. So landlords are cutting rents and offering such sweeteners as free flat-screen televisions or several months of free rent to retain or attract tenants. Some owners of condos will "cut their throats to get some kind of rental income to cover part of their expenses," says Jack McCabe, a real estate consultant in Deerfield Beach, Fla.

8. Can I get a tax credit if I buy a home now?

Under an expanded and extended program approved by Congress earlier this month, tax credits are available to many people who buy or sign a contract to buy a principal residence by April 30 and complete the purchase by June 30. The tax credit is up to $8,000 for first-time home buyers and $6,500 for people who already have owned a home for at least five consecutive years during the previous eight years. The credit is available for individual taxpayers with annual incomes of up to $145,000 or joint filers with incomes up to $245,000.

9. Can I get a mortgage on attractive terms?

Only if you have a good credit record, a moderate amount of debt in relation to your income and the ability to fully document your income. That last requirement is fairly easy for people who work for a salary and have had the same employer for more than two years, but it can be tough for self-employed people with incomes that vary substantially from year to year.

A borrower with a strong credit score of 740 or higher (on the scale of 300 to 850) and the ability to make a down payment of at least 20% could get an interest rate of about 5% with no origination fees on a 30-year fixed-rate mortgage, says Lou Barnes, a mortgage banker in Boulder, Colo. But if your credit score is 680, the rate jumps to about 5.5%.

People who can't make a down payment of at least 20% generally are being funneled into loans insured by the Federal Housing Administration. That means paying extra fees for the FHA insurance.

Borrowing costs are steeper at the high end of the housing market. For so-called jumbo loans -- those above $729,750 in areas with the highest housing costs or $417,000 in places with the lowest costs -- interest rates on 30-year fixed-rate mortgages last week averaged 5.95%, according to HSH Associates, a financial publisher.

10. Should I invest in foreclosed homes?

Probably not. A lot of investors chase these properties, and only the most experienced know how to deal with all of the pitfalls. Homes auctioned at trustee or sheriff sales are sold on an as-is basis, and there is no provision for an inspection before you take ownership. If after buying you find out that termites have been treating the floor joists as an all-you-can-eat buffet, that is your problem. You must pay for the full price within a day or two, so you need a lot of cash or access to special short-term loans for investors that come with interest rates of around 18%. This is a pursuit best left to people with a lot of time, nerve, cash and knowledge of the local market.

New Home Sales Highest Since 2008

Bloomberg

Purchases of new homes in the U.S. rebounded more than anticipated in October as buyers rushed to take advantage of a government tax credit before it expired.

Sales rose 6.2 percent to an annual pace of 430,000, the highest level since September 2008, the Commerce Department said today in Washington. The median sales price fell 0.5 percent and the number of unsold homes reached a four-decade low.

Rising demand shows the administration’s incentive for first-time buyers, which earlier this month was extended into next year and expanded to include current owners, may help housing recover from the worst slump since the Great Depression. Home values may remain under pressure as builders are forced to compete with mounting foreclosures as unemployment climbs.

“We are getting some help from the Federal Reserve in terms of low rates, lower prices and of course the tax credit,” said Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio. “People are coming off the fence and getting into the market. We have seen a bottom. I’m pretty confident that the turn in the housing industry is behind us.”

Sales were projected to climb to a 404,000 annual pace from an originally reported 402,000 rate in September, according to the median estimate in a Bloomberg survey of 75 economists. Forecasts ranged from 350,000 to 425,000. The government revised September’s reading up to 405,000. Commerce Department also said.

U.S. stocks rose after the report. The Standard & Poor’s 500 Index increased 0.2 percent to 1107.66 at 10:36 a.m. in New York.

Sales in the South

The entire increase in sales was in the South, while the other three U.S. regions registered a decline.

“The South is the largest region by size, accounting for over 50 percent of new home sales, so that the gain is still significant, even though a broader improvement would have been more favorable,” Ryan Wang, an economist at HSBC Securities USA Inc. in New York, said in a note to clients.

The median price of a new home in the U.S. decreased to $212,200, from $213,200 a year earlier.

Sales of new homes were up 5.1 percent from October 2008, the first year-over-year gain since November 2005.

Inventories dropped. The number of homes for sale fell to a seasonally adjusted 239,000, the fewest since May 1971. The supply of homes at the current sales rate decreased to 6.7 months’ worth, the lowest level since December 2006.

Timely Indicator

While accounting for less than 10 percent of the housing market, new-home purchases are considered a timelier indicator because they are based on contract signings. Sales of previously owned homes, which make up the remainder, are compiled from closings and reflect contracts signed weeks or months earlier.

President Barack Obama this month extended the $8,000 tax credit for first-time homebuyers until April 30 from Nov. 30, and expanded it to include some current homeowners.

Borrowing costs may stay low as Fed policy makers have signaled they will hold the benchmark interest rate near zero for an extended period.

“The housing sector continued to recover, on balance,” central bankers said in minutes of the Nov. 3-4 meeting released yesterday.

Lower rates and stimulus efforts are reviving demand. Existing home sales jumped in October to the highest level since February 2007, the National Association of Realtors reported this week.

Tax Credit

The timing of the tax incentive’s extension indicates existing home purchases may jump again this month, decline in December and early 2010, before picking up again, the Realtors group said this week.

The erosion in prices is also abating, the S&P/Case-Shiller home-price index showed yesterday. Home prices in 20 cities rose in September from the prior month, the fourth straight gain. Compared with September 2008, the gauge had the smallest year- over-year decline since the end of 2007.

The labor market needs to turn around to ensure a sustained rebound in housing, according to economists. The unemployment rate, which rose to a 26-year high of 10.2 percent last month, will exceed 10 percent through the first half of 2010, a Bloomberg survey showed.

Foreclosure filings surpassed 300,000 for an eighth straight month in October as rising joblessness made it tougher for homeowners to pay bills, according to RealtyTrac Inc. data.

Home Improvement

Companies seeing signs of stability include Home Depot Inc., the largest U.S. home-improvement retailer. The Atlanta- based company’s third-quarter profit beat the average estimate of analysts as it slashed costs, and the chain gained market share.

Home Depot “continued to see signs of stabilization in the markets that were hardest hit by the housing crisis,” Chief Executive Officer Frank Blake said on a conference call with analysts on Nov. 17. “Despite this positive momentum, caution is appropriate.”

Internet Summit Held At Raleigh Convention Center

Raleigh Telegram

RALEIGH - See photos from the Internet Summit held at the Raleigh Convention Center on November 4th and 5th, that The drew in over 1,200 tech executives from around the world to talk about the future of the web and mobile applications.

The event included displays from up and coming technology firms, speakers from companies such as Microsoft, ESPN.com, Lending Tree, Pandora.com, as well as representatives from the Raleigh online marketing world. Others that participated included executives from Google, IBM, Lenovo, Red Hat, Technorati, AOL, Expedia.com, Digg, Microsoft, CBS Interactive, ESPN.com, Topix, Peak10, Hosted Solutions, iContact, Bronto, and more.

The event inclouded panel discussions on email marketing, cloud computing, mobile devices, and more as well as networking sessions in between events. It was a great chance for Raleigh web developers to show off their talents.

The annual event, which is in its second year, was organized by the TechJournal South magazine and was co-sponsored by The Raleigh Telegram and was the largest Internet event ever held in North Carolina.

View photos from the 2009 Internet Summit

Housing Sales Up 17% In Triangle Housing Market

Triangle Business Journal

For the first time in more than a year, the Triangle residential market made a monthly gain in the number of homes sold, with 17.6 percent more homes sold during October compared to the year prior,

Market watchers say the data signifies a major turning point in the local housing economy.

In the Triangle, 2,009 homes were sold in October compared to 1,709 homes sold the same month the year prior, according to Triangle Multiple Listing Service. Triangle MLS tracks new and existing home sales data in Wake, Durham, Orange and Johnston counties.

The dollar volume of homes sold last month also grew, by 8.3 percent, to $441.8 million in October compared to $407.9 million in homes sold the year prior. That’s the first gain in sales volume since October 2008, says residential real estate analyst Stacey Anfindsen.

“We’ve hit the floor, and at least we know how low we can go – hopefully -- and operate our business off of that,” Anfindsen says.

Anfindsen gave two reasons the market improved. First, the federal $8,000 first-time home buyer tax credit program, which expires at the end of November, helped convince many buyers who were on the fence to take the plunge. The federal government since has instituted another tax credit program that offers a $6,500 tax break to qualified homeowners looking to move up to middle-market homes that cost no more than $800,000.

Second, home sales in the Triangle started their free-fall in late 2008, so the market today is in comparison to one of the slowest housing markets in decades.

“October, November and December should be really good because everything kind of shut down this time last year,” Anfindsen says. “We’ll probably see the market grow 5 to 10 percent and have nice comparisons until about February when we will see it start to normalize.”

All is not well, though. The average Triangle home sale price was down by 8 percent in October compared to October 2008, and it took four more days on market to sell than the year prior. But the inventory of homes for sale also declined, by 13 percent, and the number of new listings including Raleigh real estate declined by 2.5 percent, meaning there is less competition for the homes on the market for sale.

In Wake County, 1,141 homes sold in October compared to 967 home sales the year before, which is an 18 percent increase. Total dollar volume of homes sold in the county was $270 million, which was up by 5.5 percent from the year prior.

In Durham County, 269 homes sold in October compared to 210 homes sold the year before, which is a 28 percent increase. Total dollar volume of homes sold in the county was $52 million, which was up by 23.4 percent from the year prior.

In Orange County, 91 homes sold in October compared to 62 homes sold the year before, or a 47 percent increase. The total dollar volume of homes sold in the county was $28.3 million, which was up 43 percent from the year prior.

In Johnston County, 193 homes sold in October compared to 176 homes the year before, or a 9.7 percent increase. Total dollar volume of homes sold in the county was $32 million, which was up by 5 percent from the year prior.

Still Time To Earn Tax Credits For Home Projects

Story from the Wall Street Journal

Looking to make home improvements to help keep energy costs down this winter? The federal government is offering some financial incentives in the form of tax credits.

The credits can be claimed on a homeowner's income taxes for 2009 or 2010, whatever year the improvements were purchased. With a credit, the amount comes off any taxes you owe. Also, the credit is nonrefundable, meaning it allows taxpayers to lower their tax liability to zero, but not below zero, according to the Internal Revenue Service.

It's a good time to be thinking about improvements, says Ronnie Kweller, spokeswoman for the Alliance to Save Energy.

Upgrade your insulation, windows, doors, roofing, heating and air-conditioning system or water heater, and you could qualify for a federal tax credit for 30% of the purchase price of the product -- up to a $1,500 maximum credit.

To qualify for the credit, you must place those purchases in service between Jan. 1, 2009 and Dec. 31, 2010.

"The $1,500 cap applies to the aggregate amount of credits claimed in both years combined," says Robin Christian, senior tax analyst at the tax and accounting business of Thomson Reuters. "Also, only improvements made to your principal residence qualify -- vacation homes are not considered."

Details on which products qualify can be found on the Environmental Protection Agency's Energy Star program Web site. Some stores also post information. For instance, at Home Depot's Web site, there's a link to a list of specific products that qualify. Click on "Tax Credit Eligibility."
No Cap on Bigger Items

For typically more-costly improvements -- including solar water heaters, solar panels, small wind-energy systems and geo-thermal heat pumps -- the credit is for 30% of the purchase price, with no cap, according to energystar.gov. Fuel cells also are covered, at 30% of the cost, up to $500 per 0.5 kilowatt of power capacity.

Credits for these improvements are available through 2016, but you must claim them for the tax year in which you made the purchase. And all but the fuel-cell equipment can be used for a vacation home as well.

One note: To qualify for the credits, all of the products must be used inside a home. That means equipment used to heat a pool or hot tub doesn't qualify, Ms. Christian says.

Also, the federal tax credits don't always cover the cost of installation. The installation costs for heating and cooling systems and some other higher-cost improvements qualify, according to the Energy Star site. But installation of windows, insulation, doors and roofs doesn't.

The tax-credit rules are different if you are building a new home. In this instance, you can qualify for the credit for some upgrades, including geo-thermal heat pumps, solar panels, solar water heaters, small wind-energy systems and fuel cells. But you won't get a tax credit for the purchase of windows, doors, insulation, roofs, heating and air-conditioning systems, and nonsolar water heaters, according to the Energy Star site.

Make sure any products you purchase come with a Manufacturer Certification Statement, a signed statement from the manufacturer that says the product qualifies for the tax credit. You will need that and any receipts when you claim the credit on your taxes.

Monica Rebella, a certified public accountant in Tustin, Calif., suggests making a copy of receipts since the print can wear off receipts over time.
Where to Start

When looking to make a home more energy efficient, consumers typically first turn to insulation and windows.

"If you need insulation, that is the most cost-effective upgrade you can make -- even without a tax credit," says Karen Schneider, Web-site manager for Energy Star. "If you have a 50-year-old home and never looked at the insulation, now is the time to do that."

Many insulation projects, such as upgrading or adding insulation in an attic, are easy for do-it-yourselfers, says Michael Chenard, director of environmental affairs for home-improvement store Lowe's. "Insulation is one of the easiest things to do that is covered by the tax-credit promotion," he says.

Replacing windows also can be done by amateurs, as long as the measurements are accurate, Mr. Chenard says.

The tax credit makes the cost of a more-efficient window competitive with a lower-grade window that doesn't qualify, says Art Donnelly, owner of Legacy Builders & Remodelers in Holbrook, N.Y. And because of the weak economy, companies' "backlogs aren't as long," he says. "So it's quicker to get things installed."

Housing Data Yield Mixed Results Overall

By The Wall Street Journal

Housing starts rose slightly in August, but a decline in construction of single-family homes after five months of increases highlighted the fragile state of the economy.

Meanwhile, in a positive sign, the pace of layoffs slowed as initial claims for jobless benefits dropped by 12,000 to 545,000 in the week ended Sept. 12.

Housing starts climbed 1.5% to a seasonally adjusted annual rate of 598,000 in August from the previous month on an increase in multifamily home construction, the Commerce Department said Thursday. But single-family homes and kitchen remodeling Grand Rapids, which accounted for about 80% of all housing starts, fell 3% to 479,000.

Many economists expect home remodeling Grand Rapids to contribute positively to gross domestic product in the second half of the year, after dragging it down last quarter. But as the housing sector continues on its rocky path to stabilization, it might not make a strong contribution. Even with recent gains, new home starts were 29.6% lower than a year earlier, and they are expected to remain at relatively low levels while the market works through the glut of foreclosed homes and builders battle a tight credit market.

On a more positive note, Precision Remodeling building permits, a sign of future construction, increased 2.7% in August to a seasonally adjusted annual rate of 579,000.

With permit requests also rising, we should continue to see improvement in housing going forward. Just don't expect any huge increases, and don't be surprised if once in a while activity eases.

Despite the fall in single-family home remodeling Quakertown starts, they are expected to trend upward, albeit at a slow pace. They are still 21.7% lower than a year earlier.

Starts of multifamily homes with sunrooms Grand Haven, five or more units, including apartments and condominiums, tend to be more volatile. They rose 35.3% in August after falling in July. The number of starts is still off 48.2% from a year earlier.

"A modest rebound from such a depressed level of activity is not too surprising," Morgan Stanley analysts wrote in a note to clients. "However, we do not expect to see any sustained upside in multifamily construction."

The labor market continued on its slow road to recovery as the four-week average of new claims for jobless benefits, which aims to smooth volatility, fell by 8,750 to 563,000, the Labor Department said Thursday.

But continuing jobless claims, those drawn by workers for more than one week, climbed to 6.23 million in the week ended Sept. 5 -- up 129,000.

NC Gov. Perdue signs beefed up consumer protection

By The Associated Press

RALEIGH, N.C. — North Carolina consumers soon will have new protections from Raleigh real estate foreclosures and intimidating debt collection practices.

Gov. Beverly Perdue on Wednesday signed into law a bill approved by the Legislature last month and backed by Attorney General Roy Cooper.

Once the new law takes effect next month, it will allow a clerk of court to postpone Raleigh real estate foreclosure hearings for up to 60 days to allow a homeowner more time to work out a payment plan with the mortgage holder and remain in their home.

During this recession, thousands of North Carolinians have lost their homes because of foreclosure. When Raleigh NC real estate is foreclosed it's bad for our Raleigh families, it's bad for our Raleigh communities, it's bad for our Raleigh businesses and it's bad for the entire state North Carolina. This bill makes it easier for homeowners to work out a deal with their lenders and avoid foreclosure.

The bill also sets out new rules for companies that attempt to collect from consumers on old debts from credit cards or other unpaid bills.

The law extends regulation to debt buyers, who Cooper said have engaged in overly aggressive debt collecting practices.

Debt buyers pay credit card companies, hospitals and others a fraction of the full amount due on unpaid accounts, then work at forcing debtors to pay up. The state law extends debt-collection regulations to cover the law firms that often file lawsuits to collect the cash. Critics say debt buyers often pursue collection even when it is barred by law, such as when the debt is discharged after bankruptcy or has lingered beyond the legal collection deadline.

Beginning next month, debt buyers who try to collect on a debt that they should reasonably know is blocked by a statute of limitations could face lawsuits and civil penalties of up to $4,000 per violation.

The state law also will require debt collectors to provide documents proving they own the accounts they're trying to collect. Taking a Raleigh NC real estate debtor to court will require records including the original account number of the debt, the name of the original creditor, and an itemization of charges and fees the current creditor claims is owed.

First Time Homebuyer Program

Many Americans are about to close on the sale of their new home to officially become a homeowner for the first time.

Americans are taking advantage of the federal first time homebuyers program, before it runs out.

It definitely gives Americans the ambition to keep on everybody because buying a home is such a long process. You have to jump through so many hoops.

Ann Davis of FORHomeBuyers, Inc., says, "To meet the deadline, you must close on the sale of your home by November 30th". Ann Davis is a top buyers agent in the Raleigh real estate market.

To do that, Davis recommends that you have a contract in place by the end of September.

She says that should give you enough time and some extra, to make sure everything that leads up to the closing, gets done.

There are contingencies such as the home inspection contingency that needs to be performed and making sure you have mortgage in place which usually takes a couple of weeks.

The first time home buyer credit is available for homes bought on or after January 1st of this year.

To qualify, if you're single, you must make less than $75,000 a year.

If you're married, it's a combined income of less than $150,000.

The credit is a maximum of $8,000 or 10% of the home's purchase price.

To get the first time home buyer's tax credit, all you need to do is file for it on your federal income tax return.

FORHomeBUYERS, Inc., offers Exclusive Buyer Only Raleigh Real Estate Services.

Are you considering relocating to Raleigh NC, buying or building a new home in Raleigh-Cary-Durham-Chapel Hill NC or anywhere in the Triangle area of North Carolina? FOR HomeBUYERS, Inc., a leading Raleigh real estate agency and Exclusive Buyer Real Estate Agency in Raleigh will represent YOU 100% throughout the entire home buying or home building process.

As an 18 year old Raleigh Real Estate Agency we have Exclusive Buyer Only Real Estate Agents who serve Raleigh, Durham, Cary, Apex, Chapel Hill, Garner, Holly Springs, Fuquay Varina, Wake Forest, Knightdale, Wendell, Zebulon, Hillsborough, Clayton, Wake County, Durham County, Orange County, Chatham County, Johnston County, North Carolina (NC).

Pending U.S. home sales jump in July

By The Charlotte Business Journal

First-time buyers of Chapel Hill homes kept pending home sales climbing for the sixth consecutive month in July, according to the National Association of Realtors.

The group’s Pending Home Sales Index jumped 3.2 percent in July to 97.6. The index is 12 percent higher than in July 2008.

The recovery is broad-based across the Raleigh real estate market and across most of North Carolina. Housing affordability has been at record highs this year with the added stimulus of a first-time-buyer tax credit.

The index was up in the South and West but declined in the Midwest and Northeast.

The NAR’s Housing Affordability Index for July was 158.5, up 36 points year over year.

Raleigh real estate sales will likely drop in next year’s first quarter if the tax credit isn’t extended.

However, the fundamentals of the housing market and the economy are trending up, and we expect home sales to generally pick up in the second quarter of 2010.

Existing-home sales figures for August will be released Sept. 24, and the Pending Homes Sales Index for the month will be released Oct. 1, the association says.

CUs Foreclosing on Fewer Homes Than Banks and Not as Quickly

By The Credit Union Times

In general, credit unions appear to be foreclosing on a smaller percentage of their mortgage loans than other financial institutions and are usually taking longer to do it, according to credit union executives and NCUA data.

An organization that bills itself as the “leading online marketplace of foreclosure properties,” reported that foreclosures nationwide rose 7% in July over the previous month and were 32% over what they had been a year before. The worse states for home foreclosures were, as they have been for months, California, Florida, Arizona and Nevada. However, Utah, Idaho, Georgia, Illinois, Colorado and Oregon were also high in the firm’s rankings.

July marks the third time in the last five months where we’ve seen a new record set for foreclosure activity. Despite continued efforts by the federal government and state governments to patch together a safety net for distressed homeowners, we’re seeing significant growth in both the initial notices of default and in the bank repossessions.

Credit unions have been part of this trend, but in a more deliberate manner, according to NCUA data and credit union executives.

According to the NCUA, the ratio among all federally insured credit unions for fixed-rate and hybrid balloon first mortgages that were two months delinquent, as of March, was 0.9% and the ratio for adjustable-rate first mortgages that were more than two months delinquent was 2.18%. Both numbers suggested that the rate of credit union mortgage loans that eventually wind up in foreclosure will remain extremely low relative to the overall housing and foreclosure picture. But, credit union executives pointed out that foreclosure rates are running at historic highs for their institutions.

No doubt our foreclosures on Chapel Hill homes have been lower than that the nation overall, but certainly higher than we are used to. Part of that is because we did not make the same sorts of risky, novelty loans that got so many homeowners and their lenders in trouble, so we haven’t had as many loans go bad.

But also observed that the foreclosure spike could be seen as an overall necessary evil for the real estate market overall.

The increase on foreclosures on Winston Salem Homes is not all bad news to the extent that it represents a reviving housing market.

Lenders are slower to foreclose when housing prices are in the dumps, and they calculate they will have to hold the properties for longer. If a market starts to rise, they might foreclose faster in order to move the foreclosed property back into a more profitable situation more quickly.

With a more or less nationwide field of membership and as the largest credit union mortgage originator and servicer, Navy Federal provides a unique window on the state of credit union foreclosures, since it had borrowers in markets hard hit by the economic downturn and ones that have had it relatively easier.

According to Navy Federal’s June 2009 report to NCUA, the credit union had a delinquency rate of 0.88% for fixed-rate first mortgages and 3.08% for adjustable rate mortgages. In addition, the credit union had almost $495 million worth of foreclosed real estate on its books.

In addition to better loans to begin with,the Navy’s ability to work with borrowers on loans still on its books as helping to keep the foreclosure numbers down. The Navy Federal has about 50% of the loans it originates on its books and has sold about 50% to the secondary market.

The credit union has not yet begun to participate in the Making Home Affordable program, but they have until the end of the year to formally participate.

Instead, Navy Federal has been working one-on-one with borrowers to determine which parameters of their loans can be modified to bring them back, if possible, to a number they can afford. Nobody wants to foreclose, he observed.

According to the credit union’s June Raleigh real estate report to NCUA, SECU holds more than $366 million in foreclosed real estate, up from over $327 million in June of last year.

The SECU’s foreclosure picture is often clouded by the number of times it may be the first mortgage holder in a situation where the borrower has taken a second mortgage with another lender.

Every modification situation that succeeds is going to be different, and none of the ones that fail will fail for precisely the same reason.

Once it’s clear that SECU will foreclose on a property, the credit union moves swiftly to place it with real estate agents who know the community and have experience staging and selling foreclosed properties.

They don’t want to have to hold on to these places any longer than we have to. That’s why foreclosures are pretty much a lose-lose circumstance–because we have a property we don’t want to have and the borrower has a property that a lot of the time, they still want to have.

Somewhat surprisingly, the small measure of good news in the foreclosure situation may be coming from Florida, one of the hardest hit states.

What people forget is that the foreclosure and real estate crisis started down here faster than it did in the rest of the country, so we are pretty much burned through our problem real estate already.

Busy time for homebuilders

By The Wall Street Journal

WASHINGTON -- At least the market for new Wilson NC homes isn't getting worse, and that's the first step to getting better.

In fact, the overall economy is getting a small boost as more buyers walk into model houses ready to sign contracts and builders hire workers to pour foundations and pave roads.

Construction of single-family Chapel Hill homes rose in July for the fifth straight month, edging up almost 2 percent to the highest level since October, the government said Tuesday. Building permits climbed nearly 6 percent.

Each new Wilson NC home, Vacation homes Atlantic Beach NC and Chapel Hill Home built creates about three jobs, on average, and generates about $90,000 in taxes paid to local and federal authorities, according to the National Association of Home Builders.

With new construction up 37 percent from its low point this winter, the industry is expected to help the overall economy this quarter for the first time in 3-1/2 years.

"Housing is no longer a drag," said Mark Vitner, a senior economist with Wells Fargo. "That's a good thing."

Of course, the housing industry is coming back from the worst recession since the Great Depression, and construction is still more than 70 percent lower than at its 2006 peak. So the effect of hiring and spending on materials such as wood and concrete is modest.

In addition, hammers are silent at construction sites for apartment buildings. For developers, it makes little sense to build when there are so many vacant homes and condominiums for rent. Apartment construction fell 13 percent from June to July.

That pulled the combined construction rate for homes and apartments down 1 percent to a seasonally adjusted annual rate of 581,000 units, from 587,000 in June. Economists polled by Thomson Reuters expected 600,000.

There are still several threats to the recovery of the U.S. housing market.

The unemployment rate, now 9.4 percent, could exceed 10 percent, leaving more homeowners unable to pay their mortgages. Interest rates are still at historic lows but could rise, making homes less affordable. Foreclosures are still at record highs.

And July was the last month that most builders could start new homes and have first-time buyers qualify for a new tax credit. Buyers can save 10 percent on the price of a home, up to $8,000 in taxes, if they complete the purchase by the end of November.

Builders and real estate agents are pressuring Congress for that credit to be extended. If it isn't, sales could easily slump.

One of the reasons for the purchase was Centex's focus on more affordable homes. Since the housing bubble burst, many builders have shifted to smaller houses, Assisted living raleigh and Assisted Living Dearborn, which can be sold at lower prices.

Home Prices Show More Signs of Life

Raleigh real estate and Durham real estate real estate, Home prices rose again in the year's second quarter, but economists say it's too soon to call it a turning point for the beleaguered sector.

Apex real estate prices increased 0.4 percent from May to June after increasing 0.2 percent from April to May.

Prices, however, are still down significantly -- 11.9 percent -- when compared with June 2008.

For national home prices, the substantial 15.4 percent drop in June from a year earlier was the smallest decline since April 2008.

The gains are the first two consecutive quarterly increases in three years, although prices are at the same level as early 2003.

Adding to that momentum is rising consumer confidence. The New York-based Conference Board's Consumer Confidence Index reported Tuesday that confidence in August had rebounded from July because consumers became less concerned about the job outlook.

Home Price Indices measure the residential housing market by tracking changes in home values using repeat sales of existing homes.

Existing-home sales also show an upward trend this year, as the National Association of Realtors on Aug. 21 reported increases for four months in a row for the first time in five years.

In the Northeast, existing-home sales climbed 13 percent in July, the biggest gain of any of the four regions. However the median price was down 15 percent from a year ago because of the increase in foreclosed homes, which NAR said typically sell for 15 percent to 20 percent less than other homes.

Raleigh real estate, Durham real estate and Chapel Hill real estate also is seeing the upward trend in month-over-month statistics.

The median price of homes sold edged up to $430,000 in June from $429,000 in May, and the number of homes sold rose 51 percent in the same time period.

When comparing June prices with June 2008, however, prices and volume were down. A year ago, the median price was $515,000 and 23 more homes were sold during the month.

Sellers understand the over-inflation of prices that took place in 2004 to 2006, so the correction has already taken place.

That while drops in prices have varied across Bergen County, prices have fallen an average of 10 percent since 2005. That's opened up homeownership to a lot more people.

Realtors report increased sales and interest in homes priced at less than $500,000, which is considered lower end for the county. They also report a "strong demand" for homes in foreclosures. While the distressed prices hurt sales, they help reduce inventory.

The tone of the market has definitely shifted, but even with the pronounced rise in foreclosures, prices moved marginally upward. And that's a positive.

The U.S. Department of Commerce will release new-home sales figures today.

MLS: Triangle home sales heat up in July

Published By Triangle Business Journal

While the number of new and existing homes sold in the Triangle declined year-over-year in July, it was the best month so far in 2009 – and perhaps a sign that the residential real estate market is beginning to thaw.

According to the July Raleigh real estate report from Triangle Multiple Listing Service Inc., 2,337 homes were sold during July in the Triangle, down 8.5 percent from the 2,553 homes sold in July 2008 but a vast improvement over the 21 percent decline posted in June, when 2,211 homes were sold.


Year to date, the number of home sales in the Triangle are down 25 percent.

The total dollar volume of homes sold in July was down 12.2 percent from the year prior, to $536.3 million.

Much of the decline in home sales in the Triangle area is not related to demand. Many buyers are experience problems at the closing table. Home lenders are changing the terms of the loan prior to the closing, as many banks are hesitant to approve new home loans.

Ann Davis, founder of FORHomeBUYERS and a leading buyers agent in the RTP area reports that relationships and experience with local banks, credit unions and other Triangle home lenders are critical in today's market.

"We have direct contacts and many years of working experience designing custom home loans that work for all parties."

"Our clients' can use our experience to side-step many issues related to their credit rating and FICO scores and proceed smoothly through the entire closing process, says Ann Davis."

The median sales price of a home sold in the Triangle was down 1.8 percent in July, to $186,500, from $190,000 the year prior.

The number of new listings and the inventory of homes for sale also dropped 16 percent and 12.6 percent, respectively.

The Triangle region, as tracked by Triangle MLS, includes Wake real estate, Durham real estate, Orange real estate and Johnston real estate.

Broken down by county, Wake County had 10.5 percent fewer home sales in July compared to the year prior. Durham County had 11 percent fewer home sales. Orange County had 13.3 percent fewer home sales. Johnston County had no change from the year prior, with 206 homes sales in July.

Raleigh Real Estate Jumped 11% in June From May

Story By The Wall Street Journal

Raleigh real estate soared in June from the previous month, the third increase in a row and supplying fresh evidence the housing market is beginning to recover from its long crisis.

Sales of single-family homes increased by 11.0% to a seasonally adjusted annual rate of 384,000 compared to the prior month. Though, year-over-year, new-home sales were 21.3% lower than the level in June 2008.

The median price for new Chapel Hill homes was $206,200 in June, down 12.0% from $234,300 in June 2008. On a monthly basis, the price fell from May 2009's $219,000.

The increase was the fourth in six months, as buyers take advantage of falling prices. It appears new-home sales reached a bottom in January, at a level of 329,000, and that the market is beginning to recover slowly. The level of 384,000 in June was the highest since 390,000 last November.

Raleigh real estate new home construction unexpectedly rose in June. Housing starts increased 3.6% to a seasonally adjusted 582,000 annual rate compared to the prior month. The starts data also showed building permits surged, and single-family starts made their biggest climb in four years.

May new-home sales for Chapel Hill homes rose 2.4% to an annual rate to 346,000, Monday's data showed. Originally, May sales fell, sliding 0.6% to 342,000. April sales climbed 1.8%.

A recovery of the housing market will be slow. New homes are in competition with used homes, which are cheaper these days because of foreclosures.

Prices are down because of too much supply. The ratio of houses for sale to houses sold in June was 8.8. But inventories are shrinking. The ratio was 10.2 in May. At the end of June, there were an estimated 281,000 homes for sale. That's below 293,000 for sale at the end of May.

Cheaper prices and historically low mortgage rates are offsetting tight credit and a high unemployment rate. Another lure, for first-time buyers, is a government tax credit.

Regionally last month, new-home sales rose 29.2% in the Northeast, 43.1% in the Midwest, and 22.6% in the West. Sales in the South were down 5.3%.

An estimated 36,000 homes were actually sold in June, up from 33,000 in May, based on figures not seasonally adjusted.

Even real estate and property sales at unique offerings like Raleigh retirement communities are increasing.

If you're considering relocating to Raleigh NC, buying or building a new home in Raleigh-Cary-Durham-Chapel Hill NC or finding a Raleigh retirement community, FOR HomeBUYERS, Inc., a leading Raleigh real estate agency and Exclusive Buyer Real Estate Agency in Raleigh will represent YOU 100% throughout the entire home buying or home building process.

Federal Tax Incentive Gets Market Moving

Story from Newburyport News

There is a tax credit to stimulate the real estate market, and it's working. In February, a federal tax credit for first-time home buyers of $8,000 was passed into law, and the effect has been noticeable.

Basically, if you haven't owned a home for the last three years and your income is within the prescribed limits, if you buy a home before Dec. 1, you can claim an $8,000 credit against your 2009 income tax return. That's a chunk of cash in your pocket to buy a home. And because the FHA is giving mortgages with as little as 3.5 percent down to people with reasonable credit, the barriers to buying a home are low.

So things have been happening. The demand for lower-priced properties — less than $300,000 — has increased substantially. Condos are selling. Renters who never before thought they could buy their own home are finding out that now they can! And while buyers can't borrow the down payment, it CAN be a gift from a relative.

Some homeowners are realizing that now is a great time to sell because of this new demand. They have been catching on that now is a good time to put their starter home on the market and move on — it's a great time to move up because the homes in the $300K to $600K range are well priced and the interest rates are low.

Buyer and seller services have never been better — the best Realtors have hung in there through the slump and are busy with the growing momentum.

This government stimulus is well thought out and having a beneficial and stabilizing effect on the real estate market. While no one expects prices to go back to the levels of a few years ago any time in the foreseeable future, prices are now at the 2001-2002 levels, which makes a lot more sense. Unless you bought your home or refinanced it to the max at the peak of a giddy market, when many people — including the lending industry — unfortunately chose to ignore the old adage "it's too good to be true," you are probably in good shape to thoughtfully plan your home ownership future. Once again, we do have something to look forward to!

Current Market Trends

Story from the Press Democrat

The real estate industry is full of clichés and metaphors, for example: “location, location, location,” “a wave of foreclosures is about to hit the market,” “are we at the bottom of the market?” and “interest rates are the lowest they’ve been since the Macedonian Period!”

These clichés and metaphors are spewed out more frequently than the phrase “bailout” flashes across the ticker on Fox News, MSNBC and other media conglomerates who attempt to shape our economic thought process and buying habits. The million-dollar question: “Is this the right time to buy real estate?”

Although we can’t look into the future and give an accurate answer to that question, we can look at history and trends.

According to Kiplinger’s Personal Finance, “It’s a good time to snag a bargain if you’re confident in your job prospects and you don’t plan to sell for at least five years.” Over the past decade, real estate lost its way. Real estate was typically purchased to have a place to call “home” and raise a family or create lifelong memories. However, when real estate rose faster than a kindergartner’s hand when asked by their teacher “who wants a cookie?” real estate became a commodity and the American dream of owning a home changed overnight to an appreciation feeding frenzy.

Consumers thought it was their right to gain 20 percent appreciation year after year until they were ready to sell and retire from the proceeds or refinance with a less risky loan and take cash out for exotic vacations, vehicle and boat purchases or trips to the local home improvement store where homes were transformed from an outdated and sometimes unlivable dwelling to the neighborhood Taj Mahal.

With all of that aside, it does seem like now is a good time to buy real estate. In fact, according to Forbes.com, the number one item on their list of things to buy before the economy improves is housing. “This may be the best time in a generation to buy a home.”

The Pew research center reported that 75 percent of Americans said it was a “good” or “very good” time to buy (people-press.org). The Wall Street Journal reported that median home prices in the San Francisco Bay Area are up 9.2 percent year-to-date and MSN Money.com/Case Shiller posted the following statistics regarding return on investment from Jan. 1, 2001 through Dec. 31, 2008: The Dow Jones down 19.8 percent, the S&P down 35.2 percent, the Nasdaq down 59.9 percent and real estate up 69.8 percent.

I am often told by consumers that they’re waiting for the market to go down even more before they decide to buy. However, keep in mind that if homes decrease another 10 percent, you’ll save $50,000 on a $500,000 purchase, but if interest rates increase by more than 1 percent it will offset the $50,000 you saved on your purchase price and your monthly cost will increase.

USA Today is currently estimating that California’s excess supply of homes will be substantially depleted and new construction will be needed to meet demand, thus leading to a housing recovery. Over the past six years, 30-year mortgage interest rates have hit historical lows on five different occasions, followed by quick and dramatic increase in rates as reported by the Federal Reserve.

Again, one cannot predict the future, but with data and statistics one can be informed and make an educated decision. Our market place (especially homes priced under $400,000) is very competitive. Buyers in this price range are often bidding against multiple offers, homes are selling for above asking price and inventory is very low — all creating a demand for a supply that has decreased dramatically. It is a good time to buy, so contact a real estate professional, get pre-qualified with a loan officer and let the shopping begin!

Triangle Home Sales Dip, But Positives Emerge

Story from Triangle Business Journal

The number of Triangle homes sold in April was down year over year, but new data from the Triangle Multiple Listing Service show a couple of welcome trends.

First, while the 1,623 homes sold last month represented a 30 percent drop from the 2,324 sold in April 2008, it is the highest monthly total posted in six months. The triangle remains strong for those seeking Chapel Hill, Durham, or Raleigh relocation services.

Even better, the number of houses on the market represented a 7.5 month supply, down almost half from a high of 14.9 months in November. April 2008 featured a 6.9 month supply.

The median price for houses sold in April dipped 4 percent, to $177,600, from $184,922 in the same month last year. While a negative number, it’s still much better than the double-digit declines seen across much of the U.S.

The MLS figures, which are supplied by Stacey Anfindsen of research company Metrostudy, cover the Raleigh-Cary and Durham metropolitan areas. The numbers also are broken down by county.

• In Wake County, the number of homes sold dropped 35 percent, to 862. The inventory for sale represented a 7.3-month supply, up from 6.3 a year ago. The median price fell 2.5 percent, to $195,000.

• In Durham County, the number of homes sold slipped 20 percent, to 245. The inventory for sale for each Durham real estate agency represented a 4.9-month supply, down from 5.2 a year ago. The median price rose 3 percent to $170,000.

• In Orange County, the number of homes sold plunged 48 percent, to 57. The inventory for sale represented a 6.5-month supply, up from 5.9 a year ago. The median price fell 11 percent to $258,000.

• In Johnston County, the number of homes sold dips 22 percent, to 173. The inventory for sale represented a 8.9-month supply, up from 8.1 a year ago. The median price fell 5.6 percent, to $150,100.

Durham-Chapel Hill Surges Past Raleigh-Cary For Job Growth Potential

Story from Triangle Business News

The Durham-Chapel Hill metropolitan area has surged past Raleigh-Cary in NewGeography.com’s annual study ranking job-growth potential.

Durham-Chapel Hill soared 24 spots, to No. 19, in the rankings of all U.S. metropolitan areas with at least 30,000 jobs. Raleigh-Cary tumbled 30 spots, to No. 38.

The rankings are based largely on federal job growth numbers for 336 metropolitan areas. Researchers assess the numbers for the current year, the previous year and the previous five years and also compare five-year growth rates over the past decade to come up with a score for each area.

In addition to the overall rankings, the metros are grouped by market size. Durham-Chapel Hill rose seven spots, to No. 4, in the midsize group, while Raleigh-Cary dropped seven spots in the large group, to No. 8, from No. 1 last year.

Joel Kotkin, one of the researchers who put together the rankings, said on his blog that Durham-Chapel Hill offers tax and housing-cost bargains compared to major markets such as San Jose, Calif., and Boston.

Asked why Raleigh-Cary fell, Kotkin said in an e-mail that “It is a drop of jobs that was a bit more than other high-flyers.”

But, Kotkin said, Raleigh-Cary’s job numbers were still relatively solid, especially considering how poor the U.S. economy has performed over the past 15 months. Both areas are still among the most popular in the nation for relocating, and Raleigh real estate continues to sell along with Durham and Chapel Hill real estate.

“In 2008, 2 percent growth made a city a veritable boom town,” Kotkin said on his blog.

“In past iterations, we saw many fast-growing economies – some adding jobs at annual rates of 3 percent to 5 percent,” said Kotkin.

The top city overall was Odessa, Texas. For the complete rankings, go to this page on NewGeography.com.

The Return Of Jumbo Mortgages

As Originally Posted to the Wall Street Journal

Jumbo mortgages became more expensive and harder to come by as the nation's credit crisis deepened. That might be starting to change.

"Jumbo" refers to mortgages that are too large to be bought by Freddie Mac or Fannie Mae. The "conforming loan limit" for those government-backed entities is $417,000 in many parts of the country, but goes up to $729,750 in high-cost areas of the continental United States.

Bank of America recently began trumpeting its jumbo program, offering 30-year fixed-rate jumbo mortgages with rates in the high-5% range. "We decided it was time to really go after that market," says Vijay Lala, a product management executive for the bank.

More lenders may soon join in, says Guy Cecala, publisher of Inside Mortgage Finance.

He says Bank of America appears to have lower jumbo rates than its giant banking competitors Wells Fargo, J.P. Morgan Chase and Citibank. "I suspect the others will slowly follow suit," Mr. Cecala says.

Big Drop in Rates

The rates on 30-year fixed-rate jumbo mortgages averaged 6.5% for the week ended March 27 -- the lowest since May 2007, according to HSH Associates, a publisher of consumer loan information. On Oct. 31, a recent high point, the average rate on a 30-year fixed-rate jumbo mortgage was 7.9%, according to HSH data.

GMAC also has been pricing its jumbos aggressively, says Paola A. Kielblock, national product specialist for Fairway Independent Mortgage, a mortgage broker and banker based in Madison, Wis.

She recently has seen rates in the high-5% to the low-6% range for 30-year fixed-rate jumbo mortgages, and the low-5% range for five-year adjustable-rate jumbos.

Bill Higgins, chief lending officer for ING Direct, says his firm has been offering jumbos in the 5% range for several months -- even back when average rates were higher.

Lenders' interest in making more jumbo loans isn't surprising, says Keith Gumbinger, vice president for HSH.

Lenders no longer have many institutional buyers for their jumbo loans, forcing them to keep the loans they write on their books. Banks held back when cash was tight. But banks have more money to lend these days, as consumers have taken money out of the stock market and put it into safer investments.

"More cash comes in the door," Mr. Gumbinger says, and so "the loans go out the other side."

Plus, banks have gotten assistance from the federal government, and record-low conforming mortgage rates have inspired more people to refinance loans -- giving banks some more liquidity, he says.

For financial institutions, the return on a jumbo mortgage is also starting to look appealing. Banks are "taking a look at what investment alternatives there are," says Mr. Higgins of ING Direct, and they "are saying 'we wouldn't mind a 6% to 7% asset on the books.' "

Cheaper But Not Easy

Borrowers in the market for this kind of loan, however, shouldn't expect a simple process. Mortgage shoppers will find differences in price and availability from lender to lender, Mr. Gumbinger says. Jumbo programs vary greatly from one side of town to the other, he adds, and lenders will sometimes originate a higher volume of loans for a while, then slow down.

"To be honest, I'm not certain if [the low rates] will be around for a while," Ms. Kielblock says.

What You Need to Know

If you think you're in the market for a jumbo mortgage, consider the following:

Do you really need a jumbo? Don't automatically assume that your mortgage will exceed the conforming loan limits, says Cameron Findlay, chief economist of LendingTree. As home prices have fallen and the U.S. has raised loan limits in some areas, more home buyers probably need conforming mortgages.

Some people who are looking to refinance and who originally needed jumbo loans may also fall within increased loan limits.

With a conforming mortgage, you will likely get a better rate.

Availability may be increasing, but requirements are still stiff. Bank of America jumbo loans, for example, require at least a 720 credit score and a 20% down payment (or 20% home equity on a refinancing). And borrowers need to have at least six months worth of reserves in the bank. ING Direct requires 25% down.

Search widely for good deals. "Borrowers need to shop around for any mortgage, but particularly for jumbos," Mr. Cecala says. "A small local lender or credit union may have a good deal, but you won't know unless you do your homework. Ask real-estate agents, your friends, or anyone who might have a lead on a good jumbo lender."

Compare apples to apples. Lenders often talk about their products in terms that don't allow you to easily compare with other lenders, Mr. Higgins of ING says. Make sure to draw fair comparisons that consider mortgage fees and costs.