4 Keys For a Full Housing Recovery

Housing RecoveryAs we head into the new year and the Spring Selling Season,   economist take a look at what is needed for a full housing recovery.

In order to have a full housing recovery market and economic recovery, economists point to the need for four positive indicators:

  1. A healthy job market with low stable unemployment;
  2. Mortgage delinquencies that have returned to historical averages;
  3. Home prices consistent with an affordable mortgage payment–to–income ratio; and
  4. Home sales that are in the range of historical norms.

So, is the housing market inching closer to a full housing recovery?

Freddie Mac’s U.S. Economic and Housing Market Outlook for January takes a look at how the housing market is performing among these four indicators. Economists note that the unemployment rate – while inching down – still remains high at 6.7 percent. Meanwhile, mortgage delinquencies have fallen to 5.88 percent – nearly half of their peak rate but still higher than the national average of about 2 percent, Freddie notes.

Home prices still have some room to grow without outpacing income growth, economists say.

“From 1999–2006, mortgage payments on a hypothetical 30-year fixed-rate mortgage would have increased by 50 percent more than income growth,” Freddie Mac notes in the report. “Currently, payment-to-income ratios are only 60 percent of the level we had in 1999, suggesting room for continued housing growth.”

Finally, home sales have risen over the past two years but remain below levels from a nearly a decade ago. Home sales, historically, average a rate of about 6 percent of the housing stock every year. They dropped to 4 percent during the housing crisis. Economists are predicting a 5.7 percent pace in 2014.

“As we start 2014, the housing recovery continues its steady pace,” Frank Nothaft, Freddie Mac’s chief economist. “House-price gains will likely moderate from last year’s pace but rise about 5 percent in national indexes. Home sales, as well as other key indicators, continue to trend in the right direction, although in some markets we are seeing the sales recovery strengthen while many others remain weak.”

If you’re ready to sell your home with a professional who understands how to keep the Days on Market to a minimum, Call Debra Obrock at: 480 688-2000

What Is Days on Market?

Days on MarketDays on Market refers to the number of days a house been up for sale? The number of days on market can be good news or bad news depending on if you are the Buyer or Seller.

Why Days On Market is Important?

As a Buyer, you might be happy to know  that a house has sat on the market for a long time . The seller is probably more eager to sell than a month before, and is most likely willing to work a deal. An eager seller makes a happy buyer in most cases.

As a Seller, you might not be so happy about it, and for the same reason. You are now an eager seller, yet you still want to get the best price for your home, but the buyer will have  the upper hand.

Already, you may be beginning to understand how the DOM metric can affect the sale of your home.

The problem with the Days On Market metric is that it causes buyers and agents to build false assumptions. If a home has been on the market for an above-average length of time, we start to wonder, “what’s the matter with that listing?” Even though we know there are other reasons for a home to go static and not sell, many people automatically think there’s something wrong.

Reasons For An Extended Days on Market

  • Home May Be Overpriced – Nothing is wrong with the property itself; it’s just priced too high.
  • Seller Testing The Market – Although it’s a big mistake and agents will tell you so, some sellers test the market by throwing a high price on a home they don’t care if they sell – just to see if somebody is foolish enough to take it.
  • Seller is Sticking To Their Guns – Often, sellers get fixed on a price and won’t budge, come hell or high water. They figure they can wait around until the market can meet their price, not the other way around.
  • Still Renovating – Sometimes, a home will go on the market in the middle of renovations. The sellers aren’t ready to let the home be seen, so it just sits there.
  • Available for Showings – A growing problem is the lack of access to a home for sale. Sadly, agents and FSBOs alike seem to be unavailable when a buyer wants to view the home. Obviously, no viewing means no sale.

Don’t let your Days on Market get high because of simple mistakes. If you’re serious about selling your home, remember the five reasons above and make sure you aren’t doing them.

If you’re ready to sell your home with a professional who understands how to keep the Days on Market to a minimum, Call Debra Obrock at: 480 688-2000

Fixed Mortgage Rates Fall

Mortgage RatesIn Freddie Mac’s results of its Primary Mortgage Market Survey, average fixed mortgage rates fell again this week following the release of weaker housing data.

Current Fixed Mortgage Rates
  • 30-year fixed-rate mortgage (FRM) averaged 4.32 percent with an average 0.7 point for the week ending January 30, 2014, down from last week when it averaged 4.39 percent. A year ago at this time, the 30-year FRM averaged 3.53 percent.
  • 15-year FRM this week averaged 3.40 percent with an average 0.6 point, down from last week when it averaged 3.44 percent. A year ago at this time, the 15-year FRM averaged 2.81 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.12 percent this week with an average 0.5 point, down from last week when it averaged 3.15 percent. A year ago, the 5-year ARM averaged 2.70 percent.

1-year Treasury-indexed ARM averaged 2.55 percent this week with an average 0.4 point, up from last week when it averaged 2.54 percent. At this time last year, the 1-year ARM averaged 2.59 percent.

Thinking of buying a home?
I can help you evaluate the emotional and monetary worth of homes
and find a home that fits your values and lifestyle.
Give me a call today:480 688-2000.

How To Measure Your Home’s Real Value

Home ValueAs a society, it seems like we’ve gotten away from appreciating our homes for their emotional and sentimental worth. Instead, we focus solely on their monetary value.

An Appraiser Can Estimate A Home’s Monetary Value, But To Gain A True Concept Of Your Home’s Worth, You Must Also Take Into Consideration:

  1. Pride Of Ownership. You don’t buy a pair of Prada shoes because you’re going to be able to resell them and make a profit. You buy them because they make you look good and feel good.
  2. Security And Stability.Your home provides a roof over your head that’s in your control. You can decorate it how you want. You don’t have to worry about a landlord selling the property or asking you to move out. In the “olden days” (or should I say “golden days”), we called our homes our castles because, as owners, we felt like the kings and queens of our homes. You can still feel that way! Claim your castle and crown yourself king or queen today.
  3. A Safe Haven.After a tough day at work or a day of disappointments, where’s the first place you think of going?  Home! As Dorothy says, “There’s no place like home.”
  4. A Place To Make Memories.  Your son’s tree house and daughter’s playhouse. The markings on the wall that tracked your children’s growth. The porch swing where you start and end every anniversary celebration.
  5. A Neighborhood Full Of Friends. In the event of an emergency, your neighbors are your first line of defense. They’re also the simplest, best and least expensive form of security. Additionally, they may have the exact tool you need for a project; the extra pair of hands you need to complete a project or children to become playmates with yours. Neighbors also give you that much needed in-person, up-close social network.

Even if your home’s economic value has dropped, you continue to benefit from its emotional values of community, stability, security and success.

Thinking of buying a home? I can help you evaluate the emotional and monetary worth of homes and find a home that fits your values and lifestyle. Give me a call today:480 688-2000.

Existing Home Sales Reach Highest Level In 7 Years

Existing Home Sales Reach Highest Level In 7 Years Existing home sales in December pushed 2013 sales of existing homes to a 7 year high, according to the NAR. December’s reading of 4.86 sales of pre-owned homes came in at 4.87 million on a seasonally adjusted annual basis.

Although projections had been for 4.89 million sales, the December reading topped November’s revised sales of 4.82 million pre-owned homes.

December’s reading showed the first gain in existing home sales in three months. NAR reported that existing home sales for 2013 reached 5.09 million, which represented a 9.10 percent increase over 2012.

More Good News: Median Price Of Existing Homes Rises

NAR reported that the national median price for pre-owned homes increased to $198,000, a year-over-year increase of 9.90 percent. The average price of an existing home for all of 2013 was $197,100. This was the strongest growth in existing home prices since 2005 and represented an increase of 11.50 percent.

There were 1.86 million pre-owned homes for sale in December. At current sales rates, this represents a 4.60 month inventory. Real estate pros like to see a minimum of a six-month supply of available homes, so existing homes remain in short supply.

Analysts attributed rising home prices to improving economic conditions and a persistent shortage of homes for sale.

FHFA: Slower Gain for Home Prices In November

FHFA, the agency that oversees Fannie Mae and Freddie Mac, reported that November prices of homes financed with mortgages owned or guaranteed by the two agencies rose by a seasonally adjusted 0.10 percent as compared to October’s increase of 0.50 percent and an expected growth rate of 0.40 percent.

November’s reading brought year-over-year home sales to an increase of 7.60 percent, but is still 8.90 percent below their April 2007 peak.

Analysts noted that recent reports of increasing new home construction and rising new home sales as reasons why prices of existing homes are seeing slower growth.

As your agent, Debra Obrock will make sure your home is ready to sell fast and t top dollar.
Call Debra today: 480 688-2000

A Buyer’s Agent is the Best Choice

Buyer's AgentMany Buyer’s  are misinformed about the benefits of working with a Buyer’s Agent when purchasing Real Estate. They still believe they will get a better deal if they call the Listing Agent.

The listing agent is hired and contracted by the seller.

 
Their commission is negotiated upfront.  Then the listing agent agrees to share that commission with any cooperating agents when the property is marketed on the local MLS (Multiple Listing System).

If the listing agent sells the house themselves, they are under no obligation to change the amount they have negotiated with the seller.   That is between themselves and the seller.  If the listing agent sells the home to a buyer,  they have twice the amount of work to do to shepherd the deal to settlement.

Now, like any other business person, making a concession is the choice of any real estate agent. It might be the best business decision to make.  Sometimes its better to help out and make the transaction successful than to see the entire deal fall apart.  But that is a business decision that an agent may or may not make.  To assume something like that upfront isn’t a good idea.

A Buyer’s Agent Is Your Best Choice

 
The main reason why this assumption is not a good one, comes to an issue of representation. The listing agent represents the seller, which means they represent the seller’s best interest. It is a legal and fiduciary responsibility, made by contract. If you don’t have a buyer’s agent, you don’t have representation.

In the case that anything goes wrong in a home inspection or in any of the negotiations, the listing agent works for the best interest of the seller, not for you, the buyer.  You could very well end up in a situation that nets you a greater loss than the 1% or so you might think you are saving without a buyer’s agent.

Use a Buyer’s Agent when Purchasing New Home Construction

 
One of the biggest misconceptions is that you save money by not using a buyer’s agent when you are dealing with New Home Construction.  The X% commissions are built into the deal, it is already a cost of doing business for the builder.  So if you don’t have a buyer’s agent with you, the selling agent(s) are paid the entire X%.  You also could be better off with a buyer’s agent to negotiate on your behalf when dealing with new home construction.

If you are looking to buy a home in metro Phoenix,
Contact Debra Obrock and ask about buyer representation.
480 688-2000

The Right Price Will Sell Your Home….Not the Location

Price Sells the HouseYou’ve heard the old saying – “Location, location, location.”

The real truth is “Location, condition, and price.” And price trumps every other factor.

Location affects the value of a home, but it’s price that sells a home.

Oceanfront, mountainside, or penthouse, the most desirable location in the world won’t sell at the wrong price.

Every property has a potential buyer, but like rock, paper, scissors, it’s sometimes hard to know which factor is going to win the showdown.

A good location will sell at a fair price. A bad location will sell at a fair price, too. It just won’t be as a high as it would be for a good location.

A home in good condition will sell for a fair price. A home in poor condition will also sell at a fair price. Again, it won’t be as high as a comparable home in better condition.

But neither location or condition will sell any house. Only one thing does that – price.

So if you’re a seller waiting for that “special buyer” who will appreciate your faded pink and black bathroom tile, your vintage orange shag carpet and is willing to help you put your kids through college because of your real estate prowess, you’re going to have a long wait.

So if your home is represented by an agent, and it’s been on the market for a long time, chances are it’s your own fault.

Maybe you didn’t listen to your agent when he said you’re pricing your home above the market. Maybe you got mad at the first few folks who looked at your home and didn’t make offers.

When the showings stopped completely, maybe you accused your agent of not doing a good enough job.

You put the blame on everyone except where it belongs – on you. It’s not about you, what you want, or how much you need for your retirement.

It’s about the price.

New Home Loan Requirements Getting Stricter for Would Be Buyers

Home Loan Requirements Purchasing homes with all cash may be the trend that continues as new home loan requirements become more strict.

However, for those buyers who do need to purchase a home with a loan, expect to see some changes in the loan requirements as the new year rings in.

New Home Loan Requirements

Here are a just a few of the changes that are going into effect in January 2014. Some of these requirements are already in place by lenders.

The new guidelines are being implemented under The Consumer Financial Protection Bureau’s Qualified Mortgage (QM) and are designed to help avoid the borrowing catastrophes that caused the housing crisis. The guidelines are what the lenders use to prove borrowers’ ability to repay a loan.

One of the guidelines is borrowers must have a maximum debt-to-income ratio of 43 percent. Debt-to-income ratios have been in place but the new rules won’t allow for any compensating circumstances. That means that not even a significant down payment or a large cash reserve will be allowed to offset a higher debt ratio.

The incentive to follow these guidelines is huge for the lender. If the mortgages don’t meet the QM guidelines then the lender will be required to hold the loan as opposed to being sold to Fannie Mae and Freddie Mac.

The QM requirements potentially may have lower loan limits for conventional conforming loans. The agency that regulates Fannie Mae and Freddie Mac, The Federal Housing Finance Agency, will delay it’s normal adjustment of loan limits from January 1, 2014 to sometime later in the year. The agency is trying to see what kind of impact the new QM guidelines will have on the housing industry. For most housing markets, the current limits are $417,000 and up to $625,000 in high cost areas. How these figures will change remains to be seen in 2014.

Fee origination fees will be limited under the QM requirements which could make getting a smaller loan more difficult. Originating loan fees will be limited to no more than 3 percent of the loan amount. This could make mortgage lenders less likely to offer smaller loan amounts because they may not always be able to recoup their costs and make a profit.

The self-employed borrowers will also face tougher requirements with the new QM rules. These borrowers already face tough standards and they’ll likely be even more strict in 2014. In the QM guidelines, all borrowers must prove there is sufficient cash flow to make payments on their loan but self-employed borrowers’ incomes typically fluctuate. These borrowers frequently have cash reserves that they rely on to pay bills when the income is off in a particular month. However, even if there is a large amount of money in reserve, this may still be difficult for the self-employed borrower to get a loan approved due to this new “ability-to-repay” QM guideline.

We can expect to see changes in the loan approval process as the new year begins. However, some of the specific requirements may not be determined until later in 2014.

If you are considering buying a home in the Metro Phoenix, take advantage of Debra Obrock’s 25+ Years Exemplary Service as a Real Estate professional in the Valley of the Sun.
Call Debra: 480 688-2000 or start your search on her web site.

 

Home Equity Returns For Homeowners Who Held On

Home EquityHome prices surged 11.3 percent this year compared to 2012, the latest housing data by the National Association of REALTORS® shows. A rise in home prices has pulled more home owners out from underwater with the return of equity this year, NAR notes.

Home Equity Increases

 
On NAR’s Economists’ Outlook blog, researchers explain that a borrower who bought a median-priced home in 2004 and held it for nine years – the average tenure in a home – would now have $28,114 in equity (includes combined price appreciation and paying down mortgage principle).

A home owner who purchased a median priced home in 2012 would have more than $23,000 in home equity, according to NAR research.

Home owners who purchased in 2006  and 2007 – during the peak of the market – have faced the biggest falls in home prices, but NAR researchers note they are “nearly in positive equity” territory. A home owner who bought a home in 2006, for example, and owned through 2012 would have been underwater by about $28,200. However, by this year, that downfall has lessened to $4,700.

Home owners who bought since 2007 are mostly in positive equity, according to NAR research.

A study released last week by CoreLogic showed that more home owners were regaining equity. About 13 percent of all homes with a mortgage remain in negative equity by the end of the third quarter, compared to 14.7 percent who stood in negative equity at the end of the second quarter.

As your agent, Debra Obrock will make sure your home is ready to sell fast and t top dollar. Call Debra today: 480 688-2000

Staging Your Home Will Not Hide All Flaws

staging your homeStaging your Home before listing it will  show your home at its best  when  you sell your home, you want it look as good as possible.  This means de-cluttering your home, re-arranging furniture, and de-personalizing each room.

A staged home is more appealing to buyers and helps to highlight your home’s positive features. However, staging is not meant to cover major flaws in your home. Some things just have to be repaired.

Staging Your Home will not Hide Roof Problems

It doesn’t matter how pretty your home is, your buyer is going to expect you to fix roof problems or adjust your price to cover them. Your roof is one of the most important parts of your home.

Staging Your Home will not Hide Cracked Tile

Of course, you can use throw rugs to cover cracks in your tile, but chances are your buyers are going to look under them. Then they may think you are trying to hide a serious problem like a shifting foundation. Save yourself the headache and have your floors fixed.

Staging Your Home will not Hide Broken Windows

You have to expect your buyers to walk around your home checking out the views from the windows. They’re going to notice any cracks. If you have the budget, consider upgrading your windows and making your home more marketable. At the very least, you should have the glass replaced.

Staging Your Home will not Hide Torn Screens

If you have torn screens, your buyers may think you don’t take care of your property. Yet, screens are fairly easy to fix on your own. With the right supplies from your local hardware store, you can have new, sleek screens in less than a day.

As your agent, Debra Obrock will make sure your home is ready to sell fast and t top dollar. Call Debra today: 480 688-2000