Home Price Expectations Survey

In March 2011 a group of 111 of the top economists in the country were surveyed by MacroMarkets, a financial technology company founded by Robert Shiller, regarding their expectations for home prices in the next 5 years based upon the projected path of the S&P/Case-Shiller U.S. National Home Price Index.  Based on the average responses of the economists, homes across the nation are expected to begin building equity again starting sometime in 2012, with a home purchased today expecting to appreciate almost 10% in the next 5 years. Shiller noted that "there continues to be significant dispersion among the panelists regarding their individual home price forecasts and added, “A few respondents do see a real recovery, predicting prices up 20% or so by 2015."

As per an article I referenced yesterday from the Arizona Republic, Metro Phoenix Housing Market Showing Signs of Upswing, indications are that the greater metro Phoenix housing market is starting to turn around, with some Buyers finding themselves facing competition as properties receive multiple offers.

While we all still fear the unknown during these crazy economic times, the significance of the projections for the next five years cannot be ignored. If you don't buy now, will you regret your decision 5 years from now?

5 Reasons to Hurry Up and Get Your FHA Mortgage

Courtesy of Keeping Current Matters
Posted: 21 Apr 2011 04:00 AM PDT

 

With the likely installation of QRM (Qualifying Residential Mortgage) looming, it is clear that FHA mortgages will clearly become more popular merely because of the lesser down payment requirements. And as we have all learned, when the demand for something goes up, and the supply remains constant, prices go UP…that is, it becomes more expensive.

Point One

The FHA is permitted each year to insure a specific dollar amount of loans by Congress. I find it unlikely that anyone has factored the increased demand for FHA that QRM will create. Further, getting Congress to allocate more money to HUD in these days of deficits is not a sure thing. I could see a fourth quarter of 2011 with little financing available (or much more expensive financing) to people with less than 20% down.

Point Two

We hear, almost daily, that FHA is only semi-solvent…that they don’t have sufficient reserves. Foolishly, the MIP schedule was altered to give them less cash today (lowering the Up Front MIP) and increasing the longer term collection of monies (the Monthly MIP). To me, that almost insures another MIP change this year…one in which the UFMIP is hiked to get more money in the reserves now, making mortgages more expensive.

Point Three

The FHA is floating rumors about tightening guidelines. Maybe it will be an increase in minimum down payment from 3.5% to 5%. Maybe a cut in seller paid closing costs from 6% to 3%. Maybe both. Regardless, it is going to get harder to qualify. Understand with increased demand and steady supply, lenders will be choosier.

Point Four

Rates are creeping up anyway. With inflation making a strong comeback (fueled by high gas prices), the Fed will look to hike rates to control inflation.

Point Five

The current loan limits are going to be slashed. Presently, FHA will insure loans up to $729,250 in high cost areas. That number is huge when compared to historic loan limits and was instituted when desperate times called for desperate measures. And while we still might be semi-desperate, look for those loan limits to be lowered by at least $100,000 come the end of the year (when Congress sets them for the next year).

For buyers, waiting can be expensive, or worse. You might not even get a loan. For sellers, more expensive loans and less buyers who qualify, will force you to lower your prices even further. ACT NOW!

5 Celebrity Real Estate Mistakes Real People Make

Good article on Trulia Blog by Tara Nicholle-Nelson.
The biggest mistakes are:

1. Overspending
2. Assuming the bank will work with you.
3. Knowing nothing about your own finances
4. Flipping a house, expecting a fast fortune
5. Not paying your taxes

Click HERE to read the article.

More Positive Market News

I've been sharing news of an improving housing market for months now.  (Scroll down or use the Archive on the left sidebar to revisit those articles.)

Well, the news in this morning's Arizona Republic confirms that the metro Phoenix market is, indeed, showing signs of turning around.   I have included a link to the article, Metro Phoenix Housing Market Showing Signs of Upswing, below and have also included some graphs to illustrate what's going on in the current market.

We are seeing a definite increase in demand and decrease in supply of properties in all price ranges.  At my office meeting yesterday, colleagues shared news of multiple offers on properties throughout the Valley.  It was astounding to hear the reports of so many multiple offers coming in so quickly.  Many of those offers were on properties below $200,000, but there were also reports for higher-priced properties. Yes, many of the buyers are investors, some planning to "buy and flip" and others looking to turn properties into rentals, as the supply of rentals continues to drop drastically.  But, buyers who plan to occupy their homes are out there, too.  And, many who have been looking for a while are seeing and feeling the change in the market.  As the market changes continue, it's important for Buyers who are on the fence to make a move before rising interest rates and pending changes in mortgage regulations make it more difficult for those needing to borrow.

For those thinking about selling, now is the time to get your house on the market.  It is anticipated that more distressed properties (short sales and bank-owned) will be coming on the market soon.  Waiting to sell will mean more competition from these properties.  The key to selling a home will be proper pricing.

Metro Phoenix Housing Market Showing Signs of Upswing

Source:  The Arizona Republic
Article By: Catherine Reagor
Apr. 20, 2011

Below are some quotes from Catherine Reagor's article, followed by a link so you can read the complete article.  It's great news... do read it!

Metro Phoenix's housing market took a turn for the better last month, and if current trends continue, home prices could start to climb again before the end of the year.

Last month, existing home sales in metro Phoenix climbed to their highest level since October 2005, which was in the midst of the boom.

Real Estate Analyst, Tom Ruff, is quoted as saying:  "I am not being overly optimistic when I say home prices could climb during the next six to nine months.  Those same market indicators that went negative last year are now turning positive."

Michael Orr, statistician and publisher of the Cromford Report, is quoted as saying: "The housing market is showing encouraging signs of a strong recovery in demand and a correction of an oversupply problem we have had since 2006... Phoenix home prices could start to gradually climb later this year or there could be a 'sharp movement' up in prices."

Click HERE to read the entire article at azcentral.

These graphs (courtesy of Michael Orr) show Sales (Closed), Pending Listings (Have Contracts, but haven't Closed yet),  and Active Listings per month for All Areas and Types of Property in the Metro Phoenix area.  These did not appear in the article, but I wanted to share them with you.  It's quite a visual, isn't it?!

Historically, home sales increase starting around March and continue through Spring, as families try to get settled in new homes before a new school year begins.  You'll note that last year there was a drop in sales when the First-Time Homebuyers Tax Credit ended  June.

For graphs and charts showing home stats specific to Paradise Valley and Scottsdale, please visit my website, pookbellini.com.  Those charts are updated weekly.  Contact me for information on other areas.

Real Estate: It's time to buy again

Source: CNNMoney.com (Fortune Finance)
Posted by Shawn Tully, Senior Editor-at-Large 
March 28, 2011 

The news is changing... here's yet another article talking about the start of a turn-around in the housing market.  The media has been slow to report this, but in this article, Real Estate:  It's Time to Buy Again, Shawn Tully says, "Forget stocks. Don't bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing."

http://finance.fortune.cnn.com/2011/03/28/real-estate-its-time-to-buy-again/

Is the Phoenix Market Turning Around?

In my last newsletter (in an article titled "Homes Are Selling Again!"), I said that there are changes happening in the Phoenix housing market.  This morning Bob Bemis, CEO of ARMLS, confirmed that in an interview on Channel 12 News.  He said, "We are starting to see glimmers of hope."   Mr. Bemis noted that we saw a record number of sales in March (highest number of sales in the last 5 years!) and inventory is dropping. Additionally, he said that the "average selling price" went up 3% in March and the "median selling price" went up a little less than 1%, with the Future Price Index indicating that in 2 of the next 3 months both the average and median sales prices will go up. Most of the activity has been in the $200,000 to $500,000 range and the upper end market is still considered slow, but, as I mentioned last time, Paradise Valley properties are beginning to move.  Still deciding if this is the time to buy?  This might be the time to make your move.

http://www.azcentral.com/video/887728311001

Passage of the "Jobs Bill"; Residential Property Tax Impacts » April 2011

Source: Arizona REALTOR® Magazine - April 2011
Article by: Nicole LaSlavic, Arizona Association of REALTORS® (AAR) Government Affairs Director
   
This Article provides insight into how the new "Jobs Bill" (signed into law by Governor Brewer on February 17, 2011) will be affecting homeowners pocketbooks.  Ms. LaSlavic notes that, "Currently, many homeowners are unaware that their residential property taxes are lowered by a payment made from the State General Fund directly to the county in which the property is located.  This payment is paid to residential properties in Class Three of the property tax code. Class Three properties include owner-occupied primary residences and second/vacation homes."  Under the new law, homeowners will be required "to go through the cumbersome process of signing an affidavit beginning in 2012 and subsequent even-numbered years, under penalty of perjury, that they are living in the home or that the home is being leased or rented to a relative. The affidavit will be mailed along with the annual Notice of Full Cash Value sent to owners of Class Three Property. The forms must be completed and returned to the County Assessor within 60 days or the residential property will be reclassified as Class Four and the property taxes will go up as much as $600 depending on the home’s value. The problem with the affidavit is that it treats the property as a rental until the homeowner can prove otherwise."

Although owners of second or vacation homes currently receive the homeowner's rebate, they would be disqualified from receiving it under the new law.

Passage of the "Jobs Bill"; Residential Property Tax Impacts » April 2011