For Week Ending December 8, 2012
Publish Date: December 17, 2012 • All comparisons are to 2011
The chase to 2013 is on, and we are pleased by the prospects ahead. Given the upward progress of the 2012 housing market, many homeowners may find that their properties will be worth more next year. That's a nice change of pace for potential sellers, and for residential real estate as a whole, and is a direct result of widespread improvements in the marketplace. Most of the positive trends we have seen in 2012 should persist into the new year. Let's take a peek at what's happening locally today.
In the Twin Cities region, for the week ending December 8:
• New Listings increased 3.0% to 942
• Pending Sales increased 12.6% to 788
• Inventory decreased 28.8% to 13,832
For the month of November:
• Median Sales Price increased 16.2% to $172,000
• Days on Market decreased 26.2% to 103
• Percent of Original List Price Received increased 3.6% to 94.2%
• Months Supply of Inventory decreased 40.0% to 3.4
For more information see: www.mplsrealtor.com
Tuesday, December 18, 2012
Wednesday, December 5, 2012
New MHFA Programs Start December 18, 2012!
MHFA rolled out their new programs which will be effective with loan locked on or after December 18th. The new MHFA programs are the Start Up and the Step Up programs. The Start Up replaces the prior first time homebuyer loan programs and the Step up is a new program geared towards non-first time home buyers.
Buyers currently qualified and entered into the system before December 18th will be using current Minnesota Housing guidelines
Here is an outline of a few of the major changes:
~ Minimum credit score is 640 with ratio of 45% of less
~ Minimum credit score is 660 with ratio from 45-50% - Maximum housing ratio of 50%
Also, from what we are hearing with upcoming regulation changes we foresee underwriting requiring to show more of a borrower’s ability to repay the mortgage loan. This may include showing reserves for their payment, proof of rent payments, and alternative credit sources for buyers with limited credit and clean/re-established credit history for borrowers with prior major derogatory accounts.
There will be new income limits for the programs – Conventional, RD, and VA will have higher income limits. The FHA income limits have not been posted yet.
Down Payment Assistance changes:
~ The Deferred Payment Loan (formerly the $4,500 assistance) has now changed to 3% of the sales price OR $3,000 whichever is higher
~ Max income limits have been changed to 1 person: $35,250 2 people $40,300 3 people $45,300 and 4 people $50,350
~ Limited to the greater of 8 months PITI or $8,000 reserves after closing
Monthly Payment Loan (new program)
~ This is the only assistance that is available for non-first time home buyers
~ Can be used by first time home buyers who do not qualify for the Home Help or the Deferred Payment Loan
~ Max FHA income limit to follow – Conventional, RD and VA $83,900 for family of 1-2 and $96,485 for 3+
~ Payments are fully amortizing over 10 years at the same interest rate as the first mortgage
~ Maximum loan amount is 5% of the sales price or $5,000 whichever is higher
~ Unlimited cash reserves allowed after closing
Home Help changes:
Maximum loan amount $10,000 – limited to the following:
5% or $5,000 of purchase price plus
$1,000 bank owned/short sale
$1,000 HH income less than 60% AGI
$1,000 HH income less than 50% AGI
$1,000 if housing ratio is under 25%
Limited to the greater of 8 months PITI or $8,000 reserves after closing
Does require a minimum of $500 in reserves
50% forgiven after 6 years (change from 70%)
For more information contact:
Brian K. Lindstrom
Senior Mortgage Banker
NMLS ID #695808
Lake Area Mortgage, A Division of Lake Area Bank
Phone: (651) 209-2922
Fax: (651) 209-2929
E-mail: blindstrom@lakeareamtg.com
Buyers currently qualified and entered into the system before December 18th will be using current Minnesota Housing guidelines
Here is an outline of a few of the major changes:
~ Minimum credit score is 640 with ratio of 45% of less
~ Minimum credit score is 660 with ratio from 45-50% - Maximum housing ratio of 50%
Also, from what we are hearing with upcoming regulation changes we foresee underwriting requiring to show more of a borrower’s ability to repay the mortgage loan. This may include showing reserves for their payment, proof of rent payments, and alternative credit sources for buyers with limited credit and clean/re-established credit history for borrowers with prior major derogatory accounts.
There will be new income limits for the programs – Conventional, RD, and VA will have higher income limits. The FHA income limits have not been posted yet.
Down Payment Assistance changes:
~ The Deferred Payment Loan (formerly the $4,500 assistance) has now changed to 3% of the sales price OR $3,000 whichever is higher
~ Max income limits have been changed to 1 person: $35,250 2 people $40,300 3 people $45,300 and 4 people $50,350
~ Limited to the greater of 8 months PITI or $8,000 reserves after closing
Monthly Payment Loan (new program)
~ This is the only assistance that is available for non-first time home buyers
~ Can be used by first time home buyers who do not qualify for the Home Help or the Deferred Payment Loan
~ Max FHA income limit to follow – Conventional, RD and VA $83,900 for family of 1-2 and $96,485 for 3+
~ Payments are fully amortizing over 10 years at the same interest rate as the first mortgage
~ Maximum loan amount is 5% of the sales price or $5,000 whichever is higher
~ Unlimited cash reserves allowed after closing
Home Help changes:
Maximum loan amount $10,000 – limited to the following:
5% or $5,000 of purchase price plus
$1,000 bank owned/short sale
$1,000 HH income less than 60% AGI
$1,000 HH income less than 50% AGI
$1,000 if housing ratio is under 25%
Limited to the greater of 8 months PITI or $8,000 reserves after closing
Does require a minimum of $500 in reserves
50% forgiven after 6 years (change from 70%)
For more information contact:
Brian K. Lindstrom
Senior Mortgage Banker
NMLS ID #695808
Lake Area Mortgage, A Division of Lake Area Bank
Phone: (651) 209-2922
Fax: (651) 209-2929
E-mail: blindstrom@lakeareamtg.com
Tuesday, November 27, 2012
Weekly Market Update
For Week Ending November 17, 2012
Publish Date: November 26, 2012 • All comparisons are to 2011
This year, there's a lot to be thankful for beyond the traditional holiday bird. Home buyers can be thankful for record-low mortgage rates. Sellers can be thankful for the possibility of getting more money in less listing time. Some homeowners are thankful for the housing recovery because it may alleviate underwater situations. Tryptophan doesn't seem to be slowing buyer and seller optimism.
In the Twin Cities region, for the week ending November 17:
• New Listings increased 11.4% to 1,046
• Pending Sales increased 9.8% to 843
• Inventory decreased 29.4% to 14,770
For the month of October:
• Median Sales Price increased 14.8% to $175,000
• Days on Market decreased 25.2% to 103
• Percent of Original List Price Received increased 3.5% to 94.5%
• Months Supply of Inventory decreased 40.1% to 3.7
For more information go to www.mplsrealtor.com
Publish Date: November 26, 2012 • All comparisons are to 2011
This year, there's a lot to be thankful for beyond the traditional holiday bird. Home buyers can be thankful for record-low mortgage rates. Sellers can be thankful for the possibility of getting more money in less listing time. Some homeowners are thankful for the housing recovery because it may alleviate underwater situations. Tryptophan doesn't seem to be slowing buyer and seller optimism.
In the Twin Cities region, for the week ending November 17:
• New Listings increased 11.4% to 1,046
• Pending Sales increased 9.8% to 843
• Inventory decreased 29.4% to 14,770
For the month of October:
• Median Sales Price increased 14.8% to $175,000
• Days on Market decreased 25.2% to 103
• Percent of Original List Price Received increased 3.5% to 94.5%
• Months Supply of Inventory decreased 40.1% to 3.7
For more information go to www.mplsrealtor.com
Monday, November 19, 2012
Bedroom Fire Safety Tips
By Dave Donovan
www.realtor.com
According to the U.S. Fire Administration (USFA), about 600 lives are lost every year in fires that originate in the bedroom. The causes of these fires are wide ranging, from smoking in bed to faulty electrical equipment, but one fact remains certain – almost every one of them could have been avoided.
Nothing is 100 percent effective at preventing a fire from breaking out but there are plenty of things you can do to reduce the chances of one breaking out in your bedroom. Here are a few tips you should implement immediately to lower your risk of a bedroom fire.
Tip #1 – Never Smoke in Bed
Smoking in bed is one of the most common causes of bedroom-related fires and because people are usually asleep when the fire starts, mortality rates tend to be high in these instances. While it can be difficult to kick the habit entirely, not smoking in bed is doable and highly recommended for your safety.
Tip #2 – Replace Pre-2007 Mattresses
In 2007, the government passed the Federal Mattress Flammability Standard which requires all mattress manufacturers to make their mattresses according to certain fire-proofing standards. If you have a mattress that pre-dates the standard, then it should be replaced so your bedroom is equipped with the safest possible mattress.
Tip #3 – Install Working Smoke Detectors
A smoke detector should be placed outside each bedroom door and on every level of the home, including the basement. Ideally, the smoke detector will be hard-wired with a battery back-up. In order to ensure constant protection, make a habit of replacing the batteries in the smoke detectors when you change your clocks for daylight savings time.
Tip #4 – Keep Matches and Lighters Hidden
More than 35,000 fires are started every year by children playing with matches or lighters and more than 400 of these fires prove fatal. If you must have lighters or matches in your home, keep them stored somewhere where your child will not have access to them. Teaching your child about fire safety and how it is not something to play with will help give him or her healthy respect for fire which will reduce the chances of your child playing with it.
Tip #5 – Inspect Electrical Appliances Regularly
Bedroom electrical appliances should be checked regularly to help lower the risk of one starting a fire. Extension cords should be in good shape and without evident fraying or cuts in the insulation. Be careful you don’t trap any electrical cords between furniture and the wall or floor and only use appliances and power cords that are UL-Listed.
Tip #6 – Use Space Heaters Properly
Space heaters are notorious for starting bedroom fires because most people don’t realize how dangerous they can be. Space heaters should be placed at least three feet away from all walls, clothing and furniture. Nothing should ever be draped over the heater, even when it is not in use.
Tip #7 – Turn Off Electric Blankets and Heating Pads
Electric blankets are popular holiday gifts and heating pads offer soothing heat when you’re not feeling under the weather, but these devices can be fire hazards when they are left on. While many models have built-in timers, others do not, so it is good practice to turn the heating pad or electric blanket off when you’re finished using it.
Eliminating the risks of suffering a bedroom fire is practically impossible, but by implementing these few tips, you can greatly reduce the risk of it happening in your home.
www.realtor.com
According to the U.S. Fire Administration (USFA), about 600 lives are lost every year in fires that originate in the bedroom. The causes of these fires are wide ranging, from smoking in bed to faulty electrical equipment, but one fact remains certain – almost every one of them could have been avoided.
Nothing is 100 percent effective at preventing a fire from breaking out but there are plenty of things you can do to reduce the chances of one breaking out in your bedroom. Here are a few tips you should implement immediately to lower your risk of a bedroom fire.
Tip #1 – Never Smoke in Bed
Smoking in bed is one of the most common causes of bedroom-related fires and because people are usually asleep when the fire starts, mortality rates tend to be high in these instances. While it can be difficult to kick the habit entirely, not smoking in bed is doable and highly recommended for your safety.
Tip #2 – Replace Pre-2007 Mattresses
In 2007, the government passed the Federal Mattress Flammability Standard which requires all mattress manufacturers to make their mattresses according to certain fire-proofing standards. If you have a mattress that pre-dates the standard, then it should be replaced so your bedroom is equipped with the safest possible mattress.
Tip #3 – Install Working Smoke Detectors
A smoke detector should be placed outside each bedroom door and on every level of the home, including the basement. Ideally, the smoke detector will be hard-wired with a battery back-up. In order to ensure constant protection, make a habit of replacing the batteries in the smoke detectors when you change your clocks for daylight savings time.
Tip #4 – Keep Matches and Lighters Hidden
More than 35,000 fires are started every year by children playing with matches or lighters and more than 400 of these fires prove fatal. If you must have lighters or matches in your home, keep them stored somewhere where your child will not have access to them. Teaching your child about fire safety and how it is not something to play with will help give him or her healthy respect for fire which will reduce the chances of your child playing with it.
Tip #5 – Inspect Electrical Appliances Regularly
Bedroom electrical appliances should be checked regularly to help lower the risk of one starting a fire. Extension cords should be in good shape and without evident fraying or cuts in the insulation. Be careful you don’t trap any electrical cords between furniture and the wall or floor and only use appliances and power cords that are UL-Listed.
Tip #6 – Use Space Heaters Properly
Space heaters are notorious for starting bedroom fires because most people don’t realize how dangerous they can be. Space heaters should be placed at least three feet away from all walls, clothing and furniture. Nothing should ever be draped over the heater, even when it is not in use.
Tip #7 – Turn Off Electric Blankets and Heating Pads
Electric blankets are popular holiday gifts and heating pads offer soothing heat when you’re not feeling under the weather, but these devices can be fire hazards when they are left on. While many models have built-in timers, others do not, so it is good practice to turn the heating pad or electric blanket off when you’re finished using it.
Eliminating the risks of suffering a bedroom fire is practically impossible, but by implementing these few tips, you can greatly reduce the risk of it happening in your home.
Monday, November 12, 2012
Weekly Market Update
For Week Ending November 3, 2012
Publish Date: November 12, 2012 • All comparisons are to 2011
1.3 million. That's how many Americans were reportedly lifted out of underwater mortgage situations this year from rising home prices, according to the Obama administration's October Housing Scorecard. There's more going on than meets the eye here. Rising prices also help restore tax base, decreasing the likelihood of
tax increases later. National GDP even benefits. When real estate is chugging along, things are good. And now, arguably more so than ever in the past four or five years, real estate is starting to chug again. It's not at full speed yet, but the open track ahead beckons.
In the Twin Cities region, for the week ending November 3:
• New Listings decreased 1.0% to 1,125
• Pending Sales increased 25.3% to 930
• Inventory decreased 27.7% to 15,434
For the month of October:
• Median Sales Price increased 14.8% to $174,995
• Days on Market decreased 25.0% to 103
• Percent of Original List Price Received increased 3.5% to 94.4%
• Months Supply of Inventory decreased 41.0% to 3.7
For more information please see: www.mplsrealtor.com
Publish Date: November 12, 2012 • All comparisons are to 2011
1.3 million. That's how many Americans were reportedly lifted out of underwater mortgage situations this year from rising home prices, according to the Obama administration's October Housing Scorecard. There's more going on than meets the eye here. Rising prices also help restore tax base, decreasing the likelihood of
tax increases later. National GDP even benefits. When real estate is chugging along, things are good. And now, arguably more so than ever in the past four or five years, real estate is starting to chug again. It's not at full speed yet, but the open track ahead beckons.
In the Twin Cities region, for the week ending November 3:
• New Listings decreased 1.0% to 1,125
• Pending Sales increased 25.3% to 930
• Inventory decreased 27.7% to 15,434
For the month of October:
• Median Sales Price increased 14.8% to $174,995
• Days on Market decreased 25.0% to 103
• Percent of Original List Price Received increased 3.5% to 94.4%
• Months Supply of Inventory decreased 41.0% to 3.7
For more information please see: www.mplsrealtor.com
Monday, November 5, 2012
Home Buying for Young People: Plan Ahead
By Marcie Geffner
www.realtor.com
Here are five recommendations for young people who want to position themselves for homeownership.
Granted, few young people spend much time day-dreaming about buying their first home. They're naturally preoccupied with academics, athletics, parties, dating and future career possibilities. Nonetheless, there are a number of good reasons to start learning early in life about the costs of buying a home and the responsibilities of homeownership. For example, a college student's misuse or abuse of credit cards can preclude his or her buying a home later on.
Here are five recommendations for young people who want to position themselves for homeownership:
1. Establish good credit habits and a favorable credit history. Get a credit card and use it responsibly. Apply for an automobile loan and make your payments on time every month. If you're renting an apartment, put your own name on the lease and the utility bills and make sure the rent and the bills are paid every month. If you're already struggling with credit card debt or have large student loans, take a free workshop from the non-profit Consumer Credit Counseling Service. Call (800) 388-2227 for information.
2. Start saving for a down payment and closing costs. It's possible to purchase a first home in many parts of the country without much in the way of savings. But in high-cost housing areas, starting to save early can be enormously beneficial because you'll get the advantage of compounding interest and have a longer period of time to grow your investments. Open a savings account or a stock brokerage investment account and make regular deposits.
3. Read some books. Your local library and bookstore probably have at least a few shelves of books about financial management and buying a home. Take notes. Make a financial plan for yourself. You can learn a lot about real estate, budgeting and credit on REALTOR.com® too.
4. Research where you'd like to live. Many young people assume they'll continue living in their own home town when they get older, but people are more mobile than ever and chances are good you'll one day live in another city or even another state. Again, the library, bookstore and Web can be excellent resources for information about housing costs and homeownership opportunities around the country.
5. Tap your real estate agent relatives for advice. Parents, grandparents, aunts, uncles or older cousins in the real estate business can give you good information about the cost of housing in the area where you want to live and what it takes to buy a home. Questions to ask: Is housing affordable in this area? How much money would I need to save in order to buy a home? What advice would you give me about planning my financial future? Would you recommend some books that I might like to read about buying a home? Don't be shy. If you have a question, ask someone in a position to know the answer.
Copyright © 2000 Marcie Geffner. All rights reserved.
www.realtor.com
Here are five recommendations for young people who want to position themselves for homeownership.
Granted, few young people spend much time day-dreaming about buying their first home. They're naturally preoccupied with academics, athletics, parties, dating and future career possibilities. Nonetheless, there are a number of good reasons to start learning early in life about the costs of buying a home and the responsibilities of homeownership. For example, a college student's misuse or abuse of credit cards can preclude his or her buying a home later on.
Here are five recommendations for young people who want to position themselves for homeownership:
1. Establish good credit habits and a favorable credit history. Get a credit card and use it responsibly. Apply for an automobile loan and make your payments on time every month. If you're renting an apartment, put your own name on the lease and the utility bills and make sure the rent and the bills are paid every month. If you're already struggling with credit card debt or have large student loans, take a free workshop from the non-profit Consumer Credit Counseling Service. Call (800) 388-2227 for information.
2. Start saving for a down payment and closing costs. It's possible to purchase a first home in many parts of the country without much in the way of savings. But in high-cost housing areas, starting to save early can be enormously beneficial because you'll get the advantage of compounding interest and have a longer period of time to grow your investments. Open a savings account or a stock brokerage investment account and make regular deposits.
3. Read some books. Your local library and bookstore probably have at least a few shelves of books about financial management and buying a home. Take notes. Make a financial plan for yourself. You can learn a lot about real estate, budgeting and credit on REALTOR.com® too.
4. Research where you'd like to live. Many young people assume they'll continue living in their own home town when they get older, but people are more mobile than ever and chances are good you'll one day live in another city or even another state. Again, the library, bookstore and Web can be excellent resources for information about housing costs and homeownership opportunities around the country.
5. Tap your real estate agent relatives for advice. Parents, grandparents, aunts, uncles or older cousins in the real estate business can give you good information about the cost of housing in the area where you want to live and what it takes to buy a home. Questions to ask: Is housing affordable in this area? How much money would I need to save in order to buy a home? What advice would you give me about planning my financial future? Would you recommend some books that I might like to read about buying a home? Don't be shy. If you have a question, ask someone in a position to know the answer.
Copyright © 2000 Marcie Geffner. All rights reserved.
Monday, October 29, 2012
Weekly Market Update
For Week Ending October 13, 2012
Publish Date: October 22, 2012 • All comparisons are to 2011
Housing pessimism is as out of fashion nowadays as bell bottoms and shoulder pads. Those who are still fishing for that elusive "market bottom" have likely missed it in most areas. The major story continues to be tightened inventory and high buyer turnout. Homes should be selling faster and for closer to list price – or even above in the hottest neighborhoods. Continue to monitor key differences between the foreclosure and traditional segments as well as variability between the single-family and condo markets.
In the Twin Cities region, for the week ending October 13:
• New Listings increased 7.3% to 1,252
• Pending Sales increased 26.7% to 954
• Inventory decreased 28.8% to 16,017
For the month of September:
• Median Sales Price increased 12.6% to $174,500
• Days on Market decreased 28.4% to 101
• Percent of Original List Price Received increased 4.0% to 94.8%
• Months Supply of Inventory decreased 39.6% to 4.1
For more information: www.mplsrealtor.com
Publish Date: October 22, 2012 • All comparisons are to 2011
Housing pessimism is as out of fashion nowadays as bell bottoms and shoulder pads. Those who are still fishing for that elusive "market bottom" have likely missed it in most areas. The major story continues to be tightened inventory and high buyer turnout. Homes should be selling faster and for closer to list price – or even above in the hottest neighborhoods. Continue to monitor key differences between the foreclosure and traditional segments as well as variability between the single-family and condo markets.
In the Twin Cities region, for the week ending October 13:
• New Listings increased 7.3% to 1,252
• Pending Sales increased 26.7% to 954
• Inventory decreased 28.8% to 16,017
For the month of September:
• Median Sales Price increased 12.6% to $174,500
• Days on Market decreased 28.4% to 101
• Percent of Original List Price Received increased 4.0% to 94.8%
• Months Supply of Inventory decreased 39.6% to 4.1
For more information: www.mplsrealtor.com
Monday, October 22, 2012
5 Essential Questions to Ask Before Hiring a Contractor
By Oliver Marks
houselogic.com
You’re ready to remodel but you want to make sure you get the best contractor for the job. Here’s what to ask the candidates before you decide.
For all of the excitement of choosing plumbing fixtures, cabinets, and tiles for a remodeling project, the most important decision you make won’t involve color swatches or glossy brochures. It’s the contractor you pick that makes or breaks the job. That choice will determine the quality of the craftsmanship, the timeliness of the work, and the amount of emotional and financial stress the process puts on you. To make sure you’re getting the best contractor for the job, here are five questions to ask the candidates.
1. Would you please itemize your bid?
Many contractors prefer to give you a single, bottom-line price for your project, but this puts you in the dark about what they’re charging for each aspect of the job. For example, let’s say the original plan calls for beadboard wainscot in your bathroom, but you decide not to install it after all. How much should you be credited for eliminating that work? With a single bottom-line price, you have no way to know.
On the other hand, if you get an itemized bid, it’ll show the costs for all of the various elements of the job—demolition, framing, plumbing, electrical, tile, fixtures, and so forth. That makes it easier to compare different contractors’ prices and see where the discrepancies are. If you need to cut the project costs, you can easily assess your options. Plus, an itemized bid becomes valuable documentation about the exact scope of the project, which may eliminate disputes later.
The contractor shouldn’t give you a hard time about itemizing his bid. He has to figure out his total price line by line anyway, so you’re not asking him to do more work, only to share the details. If he resists, it means he wants to withhold important information about his bid—a red flag for sure.
2. Is your bid an estimate or a fixed price?
Homeowners generally assume that the bid they’re seeing is a fixed price, but some contractors treat their proposals as estimates, meaning bills could wind up being higher in the end. If he calls it an estimate, request a fixed price bid instead. If he says he can’t offer a fixed price because there are too many unknowns about the job, then eliminate the unknowns.
“Have him open up a wall to check the structure he’s unsure about or go back to your architect and solidify the design plans,” says Tampa, Fla., attorney George Meyer, who is chair-elect of the American Bar Association’s Forum on the Construction Industry. If you simply cannot resolve the unknowns he’s concerned about, have the project specs describe what he expects to do—and if he needs to do additional work later, you can do a change order (a written mini-bid for new work).
3. How long have you been doing business in this town?
A contractor who’s been plying his trade locally for 5 or 10 years has an established network of subcontractors and suppliers in the area and a local reputation to uphold. That makes him a safer bet than a contractor who’s either new to the business or new to the area—or who’s planning to commute to your job from 50 miles away.
You want to see a nearby address (not a PO box) on his business card—and should ask him to include one or two of his earliest clients on your list of references. This will help you verify that he hasn’t just recently hung his shingle—and will give you perspective from a homeowner who has lived with the contractor’s work for years. After all, the test of a quality job, whether it’s a bluestone patio or a family room addition, is how well it stands the test of time.
4. Who are your main suppliers?
You’ve found a few potential contractors, you’ve talked to the happy former clients on each of their reference lists, now it’s time for one additional bit of homework: talking to their primary suppliers. There’s no better reference for a tile setter, for example, than his preferred tile shop; for a general contractor than his favorite lumberyard or home center pro desk; for a plumber than the kitchen and bath showroom where he’s on a first name basis.
The proprietors of these shops know a contractor’s professional reputation, whether he has left a trail of unhappy customers in his wake, if he’s reliable about paying his bills—and whether he’s someone you’ll want to hire. The contractor should have absolutely no qualms about telling you where he gets his materials, as long as he’s an upstanding customer.
5. I’d like to meet the job foreman—can you take me to a project he’s running?
Many contractors don’t actually swing hammers. They spend their days bidding new work and managing their various jobs and workers. In some cases, the contractor you hire may not visit the jobsite every day—or may not even show himself again after you’ve signed the contract. So the job foreman—the one who’s working on your project every day—is actually the most important member of your team.
Meeting him in person and seeing a job that he’s running should give you a feel for whether he’s someone you want managing your project. Plus, it gives the general contractor an incentive to assign you one of his better crews since you’re more likely to hire him if you see his A Team. If the contractor says he’ll be running the job himself, ask whether he’ll be there every day. Again, he’ll want to give you a positive response—something you can hold him to later on.
The subtleties of how to hire a contractor
It’s not only the answers to these questions that will help you judge potential contractors—it’s the way they answer them. Were they easy to talk to and forthcoming with details or did they hem and haw and make you ask more than once? Difficulty communicating now means difficulty communicating on the job later. But clear, timely and thoughtful responses—combined with terrific references, great completed work that you’ve seen, and a smart take on your project—may mean you’ve found the right pro for your job.
Read more: http://www.houselogic.com/home-advice/contracting/five-essential-questions-ask-before-hiring-contractor/#ixzz2A2I68yWI
houselogic.com
You’re ready to remodel but you want to make sure you get the best contractor for the job. Here’s what to ask the candidates before you decide.
For all of the excitement of choosing plumbing fixtures, cabinets, and tiles for a remodeling project, the most important decision you make won’t involve color swatches or glossy brochures. It’s the contractor you pick that makes or breaks the job. That choice will determine the quality of the craftsmanship, the timeliness of the work, and the amount of emotional and financial stress the process puts on you. To make sure you’re getting the best contractor for the job, here are five questions to ask the candidates.
1. Would you please itemize your bid?
Many contractors prefer to give you a single, bottom-line price for your project, but this puts you in the dark about what they’re charging for each aspect of the job. For example, let’s say the original plan calls for beadboard wainscot in your bathroom, but you decide not to install it after all. How much should you be credited for eliminating that work? With a single bottom-line price, you have no way to know.
On the other hand, if you get an itemized bid, it’ll show the costs for all of the various elements of the job—demolition, framing, plumbing, electrical, tile, fixtures, and so forth. That makes it easier to compare different contractors’ prices and see where the discrepancies are. If you need to cut the project costs, you can easily assess your options. Plus, an itemized bid becomes valuable documentation about the exact scope of the project, which may eliminate disputes later.
The contractor shouldn’t give you a hard time about itemizing his bid. He has to figure out his total price line by line anyway, so you’re not asking him to do more work, only to share the details. If he resists, it means he wants to withhold important information about his bid—a red flag for sure.
2. Is your bid an estimate or a fixed price?
Homeowners generally assume that the bid they’re seeing is a fixed price, but some contractors treat their proposals as estimates, meaning bills could wind up being higher in the end. If he calls it an estimate, request a fixed price bid instead. If he says he can’t offer a fixed price because there are too many unknowns about the job, then eliminate the unknowns.
“Have him open up a wall to check the structure he’s unsure about or go back to your architect and solidify the design plans,” says Tampa, Fla., attorney George Meyer, who is chair-elect of the American Bar Association’s Forum on the Construction Industry. If you simply cannot resolve the unknowns he’s concerned about, have the project specs describe what he expects to do—and if he needs to do additional work later, you can do a change order (a written mini-bid for new work).
3. How long have you been doing business in this town?
A contractor who’s been plying his trade locally for 5 or 10 years has an established network of subcontractors and suppliers in the area and a local reputation to uphold. That makes him a safer bet than a contractor who’s either new to the business or new to the area—or who’s planning to commute to your job from 50 miles away.
You want to see a nearby address (not a PO box) on his business card—and should ask him to include one or two of his earliest clients on your list of references. This will help you verify that he hasn’t just recently hung his shingle—and will give you perspective from a homeowner who has lived with the contractor’s work for years. After all, the test of a quality job, whether it’s a bluestone patio or a family room addition, is how well it stands the test of time.
4. Who are your main suppliers?
You’ve found a few potential contractors, you’ve talked to the happy former clients on each of their reference lists, now it’s time for one additional bit of homework: talking to their primary suppliers. There’s no better reference for a tile setter, for example, than his preferred tile shop; for a general contractor than his favorite lumberyard or home center pro desk; for a plumber than the kitchen and bath showroom where he’s on a first name basis.
The proprietors of these shops know a contractor’s professional reputation, whether he has left a trail of unhappy customers in his wake, if he’s reliable about paying his bills—and whether he’s someone you’ll want to hire. The contractor should have absolutely no qualms about telling you where he gets his materials, as long as he’s an upstanding customer.
5. I’d like to meet the job foreman—can you take me to a project he’s running?
Many contractors don’t actually swing hammers. They spend their days bidding new work and managing their various jobs and workers. In some cases, the contractor you hire may not visit the jobsite every day—or may not even show himself again after you’ve signed the contract. So the job foreman—the one who’s working on your project every day—is actually the most important member of your team.
Meeting him in person and seeing a job that he’s running should give you a feel for whether he’s someone you want managing your project. Plus, it gives the general contractor an incentive to assign you one of his better crews since you’re more likely to hire him if you see his A Team. If the contractor says he’ll be running the job himself, ask whether he’ll be there every day. Again, he’ll want to give you a positive response—something you can hold him to later on.
The subtleties of how to hire a contractor
It’s not only the answers to these questions that will help you judge potential contractors—it’s the way they answer them. Were they easy to talk to and forthcoming with details or did they hem and haw and make you ask more than once? Difficulty communicating now means difficulty communicating on the job later. But clear, timely and thoughtful responses—combined with terrific references, great completed work that you’ve seen, and a smart take on your project—may mean you’ve found the right pro for your job.
Read more: http://www.houselogic.com/home-advice/contracting/five-essential-questions-ask-before-hiring-contractor/#ixzz2A2I68yWI
Monday, October 15, 2012
Weekly Market Update
For Week Ending September 29, 2012
Publish Date: October 8, 2012 • All comparisons are to 2011
Some say that housing and the economy are woven together into a single garment of destiny. Let's review recent national economic data: a good September non-farm payroll report marking 31 consecutive months of private job growth, the unemployment rate falling to 7.8 percent (a 44-month low), a widely positive S&P/Case-Shiller home price report and mortgage rates averaging close to 3.4 percent. Combine the above trends with less housing supply and strong home sales numbers, and you can start to see just what's driving this recovery. Here's what transpired locally.
In the Twin Cities region, for the week ending September 29:
• New Listings increased 6.2% to 1,314
• Pending Sales increased 15.5% to 1,000
• Inventory decreased 29.6% to 16,261
For the month of September:
• Median Sales Price increased 12.3% to $174,000
• Days on Market decreased 28.7% to 101
• Percent of Original List Price Received increased 4.1% to 94.8%
• Months Supply of Inventory decreased 40.9% to 4.0
For more information: http://www.mplsrealtor.com
Publish Date: October 8, 2012 • All comparisons are to 2011
Some say that housing and the economy are woven together into a single garment of destiny. Let's review recent national economic data: a good September non-farm payroll report marking 31 consecutive months of private job growth, the unemployment rate falling to 7.8 percent (a 44-month low), a widely positive S&P/Case-Shiller home price report and mortgage rates averaging close to 3.4 percent. Combine the above trends with less housing supply and strong home sales numbers, and you can start to see just what's driving this recovery. Here's what transpired locally.
In the Twin Cities region, for the week ending September 29:
• New Listings increased 6.2% to 1,314
• Pending Sales increased 15.5% to 1,000
• Inventory decreased 29.6% to 16,261
For the month of September:
• Median Sales Price increased 12.3% to $174,000
• Days on Market decreased 28.7% to 101
• Percent of Original List Price Received increased 4.1% to 94.8%
• Months Supply of Inventory decreased 40.9% to 4.0
For more information: http://www.mplsrealtor.com
Monday, October 8, 2012
Reverse Mortgage Loans: Pros and Cons
If you’re thinking of taking out a reverse mortgage to supplement your retirement income, you have six options for getting your payments each month. Each option has pros and cons.
A reverse mortgage counselor, an accountant, or a financial planner can help you think through the options.
1. One lump sum gives you all your cash at once.
Pros: Useful if you want to invest in something that requires a lot of cash up front, such as starting a small business. You’ll get a fixed interest rate (all the other options come only as adjustable-rate mortgages).
Cons: You pay interest on the whole amount you borrow. If you don’t need all that money now, you’re paying interest needlessly. Plus, you may not be able to take more out of your house if you run into financial trouble later in life. If you go with one lump sum, be sure you have enough guaranteed future income to pay household expenses, such as insurance and property taxes, for the rest of your life.
2. Tenure gives you the same amount of cash each month until you move out or die.
Pros: The payments continue as long as you live in the house — even if you live to be 101 years old, you’ll still be getting that monthly payment.
Cons: You have to swap into a different payment option if you need a lump sum for a big repair.
3. Term provides a set amount of cash for a fixed period of time, such as $500 a month for 5 years.
Pros: Useful if you need income to cover a monthly payment that’s only going to last a certain amount of months, such as a car payment that ends in two years, or if you need income to tide you over while you wait for another source of income to start coming in, such as from an annuity.
Cons: It may be cheaper to take a lump sum at the beginning of your mortgage and pay that debt off all at once instead of using the monthly mortgage payment for that bill.
4. Line of credit allows you to take as much or as little as you need each month until the line of credit is gone.
Pros: You only pay interest on the cash you need each month. You can take more cash when you have unexpected expenses, such as needing a new furnace. Each year you that don’t use it, your line of credit increases because your life expectancy decreases by a year.
Cons: If you take out too much money, you can drain your line of credit.
5. Modified tenure provides a set monthly payment as long as you live in your home, and there’s also a line of credit available.
Pros: You’ll have a check every month to help with living expenses, and a line of credit to cover unexpected expenses. You only pay interest on the cash you take.
Cons: You have to get a variable rate reverse mortgage to use this or any of the other plans besides the lump sum. With a variable rate, you don’t know how much the interest rates will be in the future. And although you don’t have to pay back that interest, your heirs might — heirs receive the difference between what your house sells for after you die or move out, and what’s owed on the reverse mortgage.
6. Modified term provides a monthly payment for a fixed number of months and a line of credit when you need extra cash.
Pros: Good if you have a bill to pay every month for a set number of months, such as a personal loan you’re paying off, and you’d like a line of credit for unexpected expenses.
Cons: It may be cheaper to pay off that personal loan when you first get your reverse mortgage, depending on what the interest rates are for your personal loan and your reverse mortgage.
Changing your reverse mortgage payment option
If you choose a payment option and it doesn’t work out, you can swap into another one — unless you chose the lump sum. You can’t change a lump sum option because you’ve already taken all the cash you were eligible to get.
Still, it’s better to pick the right plan from the get-go, so think about what you need to use the cash for and how that monthly reverse mortgage payment fits in with your overall financial plan.
Read more: http://www.houselogic.com/home-advice/reverse-mortgages/reverse-mortgage-loans-pros-cons/#ixzz28igd2wa5
Published: October 20, 2011
By: Dona DeZube
Monday, October 1, 2012
Weekly Market Update
For Week Ending September 15, 2012
Publish Date: September 24, 2012 • All comparisons are to 2011
On September 13, the Federal Reserve announced its third round of quantitative easing (QE3). This time, it took the form of $40 billion in mortgage-backed securities (MBS) purchases each month. The goal is to bolster the stock market by diminishing returns on MBSs. This will make equities more attractive, which will provide capital to corporations, who should in turn hire and therefore spur consumer spending. If successful, that job creation and spending will resonate into housing consumption and reinvestment. New jobs fuel housing demand which alleviates underwater homeowners and supports home prices. Here's how we rounded out the week.
In the Twin Cities region, for the week ending September 15:
• New Listings increased 4.0% to 1,360
• Pending Sales increased 18.4% to 978
• Inventory decreased 29.5% to 16,479
For the month of August:
• Median Sales Price increased 14.8% to $178,000
• Days on Market decreased 23.9% to 107
• Percent of Original List Price Received increased 4.2% to 95.1%
• Months Supply of Inventory decreased 41.5% to 4.2
For more information visit www.mplsrealtor.com
Publish Date: September 24, 2012 • All comparisons are to 2011
On September 13, the Federal Reserve announced its third round of quantitative easing (QE3). This time, it took the form of $40 billion in mortgage-backed securities (MBS) purchases each month. The goal is to bolster the stock market by diminishing returns on MBSs. This will make equities more attractive, which will provide capital to corporations, who should in turn hire and therefore spur consumer spending. If successful, that job creation and spending will resonate into housing consumption and reinvestment. New jobs fuel housing demand which alleviates underwater homeowners and supports home prices. Here's how we rounded out the week.
In the Twin Cities region, for the week ending September 15:
• New Listings increased 4.0% to 1,360
• Pending Sales increased 18.4% to 978
• Inventory decreased 29.5% to 16,479
For the month of August:
• Median Sales Price increased 14.8% to $178,000
• Days on Market decreased 23.9% to 107
• Percent of Original List Price Received increased 4.2% to 95.1%
• Months Supply of Inventory decreased 41.5% to 4.2
For more information visit www.mplsrealtor.com
Monday, September 24, 2012
How to Stop Your Dog From Digging In Your Yard
Don’t let your dog wreck your yard by digging up your lawn. Here are 5 foolproof ways to stop doggie destruction.
•Published: August 10, 2012 • By: Lisa Kaplan Gordon • Houselogic.com
We love our dogs, but our yards don’t. Dogs dig up the lawn in a heartbeat, eager to bury a bone or chase a gopher, leaving gaping holes and piles of dirt.
Here’s how to keep your dog from digging up your yard. (If it’s your garden instead, here are tips on how to keep dogs out of your garden.)
1. Tire out your dog
A napping dog is not a digging dog, so exhaust your pet with regular walks and active play.
“Home owners with big yards think they can just open the back door and their dogs will be entertained,” says Tim Link, a dog expert and author of Wagging Tales.
“That’s boring for an animal,” says Link. “You have to mix it up. If a dog is stimulated, he’ll get into a lot less mischief.”
To activate your animal, try:
Hiding a favorite indoor toy outdoors so he can hunt for it.
Playing catch with a ball or Frisbee.
Taking her on frequent walks.
Setting up an agility course.
2. Offer a digging spot of his own
Dogs dig for thrills, for a cool place to lie down, and for a place to bury bones. It’s an instinctive behavior you can’t eliminate, but you can redirect it by building your pet a digging box.
It doesn’t have to be big – a shaded, 4-by-4-foot space will do. Fill it with sand, cat box filler, or wood chips. Then let your dog watch you bury a toy or treat in the box. When he goes after it, praise his efforts — dogs would rather be rewarded for digging in their box than scolded for digging in your garden.
3. Nix the bones
Instead of offering your dog a bone that he’ll want to hide in a hole, give your pet rawhide or veggie-based chews that he’ll eat rather than bury.
Also, buy your puppy a busy ball ($10-$15) that dispenses treats as he bats it around. It’s a challenge and exercise, which will keep your dog’s body and mind active.
4. Get rid of unwanted pests
Dogs often dig around fences and shrubs to hunt prey — such as rats, gophers, and moles. Beat him to the job by humanely getting rid of rodents. Don’t use poison to kill the critters, because it could kill your pet, too.
5. Keep your dog company
If you know your dog likes to dig or eat outdoors, don’t leave him unattended. Let him watch you plant your garden and explain what you’re doing and the behavior you expect.
Yep, your read that right.
Link says dogs understand and respond to human conversation, so long as it contains high praise and clear directions, and is followed by a reward for good behavior.
You might say, “Sebastian, you’re the best dog in the world, and I know you love to dig. But I don’t want you digging up the lawn and ruining our beautiful yard. Now, let’s get a treat.”
Read more: http://www.houselogic.com/home-advice/landscaping-gardening/how-to-stop-your-dog-from-digging/#ixzz27OlzzjX0
•Published: August 10, 2012 • By: Lisa Kaplan Gordon • Houselogic.com
We love our dogs, but our yards don’t. Dogs dig up the lawn in a heartbeat, eager to bury a bone or chase a gopher, leaving gaping holes and piles of dirt.
Here’s how to keep your dog from digging up your yard. (If it’s your garden instead, here are tips on how to keep dogs out of your garden.)
1. Tire out your dog
A napping dog is not a digging dog, so exhaust your pet with regular walks and active play.
“Home owners with big yards think they can just open the back door and their dogs will be entertained,” says Tim Link, a dog expert and author of Wagging Tales.
“That’s boring for an animal,” says Link. “You have to mix it up. If a dog is stimulated, he’ll get into a lot less mischief.”
To activate your animal, try:
Hiding a favorite indoor toy outdoors so he can hunt for it.
Playing catch with a ball or Frisbee.
Taking her on frequent walks.
Setting up an agility course.
2. Offer a digging spot of his own
Dogs dig for thrills, for a cool place to lie down, and for a place to bury bones. It’s an instinctive behavior you can’t eliminate, but you can redirect it by building your pet a digging box.
It doesn’t have to be big – a shaded, 4-by-4-foot space will do. Fill it with sand, cat box filler, or wood chips. Then let your dog watch you bury a toy or treat in the box. When he goes after it, praise his efforts — dogs would rather be rewarded for digging in their box than scolded for digging in your garden.
3. Nix the bones
Instead of offering your dog a bone that he’ll want to hide in a hole, give your pet rawhide or veggie-based chews that he’ll eat rather than bury.
Also, buy your puppy a busy ball ($10-$15) that dispenses treats as he bats it around. It’s a challenge and exercise, which will keep your dog’s body and mind active.
4. Get rid of unwanted pests
Dogs often dig around fences and shrubs to hunt prey — such as rats, gophers, and moles. Beat him to the job by humanely getting rid of rodents. Don’t use poison to kill the critters, because it could kill your pet, too.
5. Keep your dog company
If you know your dog likes to dig or eat outdoors, don’t leave him unattended. Let him watch you plant your garden and explain what you’re doing and the behavior you expect.
Yep, your read that right.
Link says dogs understand and respond to human conversation, so long as it contains high praise and clear directions, and is followed by a reward for good behavior.
You might say, “Sebastian, you’re the best dog in the world, and I know you love to dig. But I don’t want you digging up the lawn and ruining our beautiful yard. Now, let’s get a treat.”
Read more: http://www.houselogic.com/home-advice/landscaping-gardening/how-to-stop-your-dog-from-digging/#ixzz27OlzzjX0
Monday, September 17, 2012
Weekly Market Activity Report
September 10, 2012
Weekly Market Activity Report
from MAAR.com
Signals. They're everywhere. From the flow of traffic on Main Street to the movement of electrons inside a microchip, we take our cues from trusted indicators. Recently, housing data has been signaling increased momentum toward recovery. It doesn't really matter what signals you're watching either. From new starts, existing sales and prices to market times, seller concessions and the supply-demand balance, all signals point to healing. It won't necessarily be quick nor felt evenly across all cities or states. But the trend is your friend. And our friend is signaling a thumb's up.
In the Twin Cities region, for the week ending September 1:
• New Listings decreased 10.1% to 1,171
• Pending Sales increased 13.3% to 1,025
• Inventory decreased 30.0% to 16,676
For the month of August:
• Median Sales Price increased 15.5% to $179,000
• Days on Market decreased 24.1% to 107
• Percent of Original List Price Received increased 4.2% to 95.1%
• Months Supply of Inventory decreased 42.7% to 4.1
Weekly Market Activity Report
from MAAR.com
Signals. They're everywhere. From the flow of traffic on Main Street to the movement of electrons inside a microchip, we take our cues from trusted indicators. Recently, housing data has been signaling increased momentum toward recovery. It doesn't really matter what signals you're watching either. From new starts, existing sales and prices to market times, seller concessions and the supply-demand balance, all signals point to healing. It won't necessarily be quick nor felt evenly across all cities or states. But the trend is your friend. And our friend is signaling a thumb's up.
In the Twin Cities region, for the week ending September 1:
• New Listings decreased 10.1% to 1,171
• Pending Sales increased 13.3% to 1,025
• Inventory decreased 30.0% to 16,676
For the month of August:
• Median Sales Price increased 15.5% to $179,000
• Days on Market decreased 24.1% to 107
• Percent of Original List Price Received increased 4.2% to 95.1%
• Months Supply of Inventory decreased 42.7% to 4.1
Friday, June 1, 2012
Weekly Market Update
For Week Ending May 19, 2012
The tempo in residential housing has remained upbeat through the first five months of 2012. Year-to-date figures begin to sing a compelling tune at this time of year, and the song thus far is that markets are moving back toward balance and home prices are beginning to reflect that stabilization. For the most recent week, buyer activity was higher than year-ago levels while listing activity registered lower. Keep an eye on months supply, seller concessions, market times and foreclosure rates. Multiple offers are back and tentative owners looking to move should take note. It's okay to sing in public again.
In the Twin Cities region, for the week ending May 19:
• New Listings decreased 9.6% to 1,533
• Pending Sales increased 18.6% to 1,116
• Inventory decreased 29.4% to 17,648
For the month of April:
• Median Sales Price increased 12.1% to $162,500
• Days on Market decreased 15.2% to 135
• Percent of Original List Price Received increased 3.6% to 93.4%
• Months Supply of Inventory decreased 42.0% to 4.8
All data from NorthstarMLS. Provided by the Minneapolis Area Association of REALTORS®. Powered by 10K Research and Marketing. | Sponsored by Royal Credit Union www.rcu.org
The tempo in residential housing has remained upbeat through the first five months of 2012. Year-to-date figures begin to sing a compelling tune at this time of year, and the song thus far is that markets are moving back toward balance and home prices are beginning to reflect that stabilization. For the most recent week, buyer activity was higher than year-ago levels while listing activity registered lower. Keep an eye on months supply, seller concessions, market times and foreclosure rates. Multiple offers are back and tentative owners looking to move should take note. It's okay to sing in public again.
In the Twin Cities region, for the week ending May 19:
• New Listings decreased 9.6% to 1,533
• Pending Sales increased 18.6% to 1,116
• Inventory decreased 29.4% to 17,648
For the month of April:
• Median Sales Price increased 12.1% to $162,500
• Days on Market decreased 15.2% to 135
• Percent of Original List Price Received increased 3.6% to 93.4%
• Months Supply of Inventory decreased 42.0% to 4.8
All data from NorthstarMLS. Provided by the Minneapolis Area Association of REALTORS®. Powered by 10K Research and Marketing. | Sponsored by Royal Credit Union www.rcu.org
Thursday, April 26, 2012
Weekly Market Activity for the Week of April 23, 2012
Job growth, low mortgage rates, rising rents and a relatively inexpensive housing stock. These are just some of the playful teases in the burlesque revue that is today's market recovery. Another week passed with buyers displaying no signs of slowing down. In general, sellers are discovering a less-intimidating scene, and buyers are reveling in the showy marketplace. As expected, spring's warming glow continues to fuel optimism and consumer activity. But that won't necessarily be the case in every area or segment, so do your research before making that move.
In the Twin Cities region, for the week ending April 14:
• New Listings decreased 9.5% to 1,637
• Pending Sales increased 25.5% to 1,170
• Inventory decreased 27.8% to 17,384
For the month of March:
• Median Sales Price increased 7.1% to $149,900
• Days on Market decreased 9.6% to 145
• Percent of Original List Price Received increased 3.8% to 92.1%
• Months Supply of Inventory decreased 38.0% to 4.7
For more Real Estate information www.mplsrealtor.com
In the Twin Cities region, for the week ending April 14:
• New Listings decreased 9.5% to 1,637
• Pending Sales increased 25.5% to 1,170
• Inventory decreased 27.8% to 17,384
For the month of March:
• Median Sales Price increased 7.1% to $149,900
• Days on Market decreased 9.6% to 145
• Percent of Original List Price Received increased 3.8% to 92.1%
• Months Supply of Inventory decreased 38.0% to 4.7
For more Real Estate information www.mplsrealtor.com
Friday, April 13, 2012
11 Irrefutable Signs of a Real Estate Recovery
Auto sales. Consumer confidence. Manufacturing. Retail Sales. Exports. You name it. Over the last six months, nearly every facet of the U.S. economy has shown improvement. And the real estate market is no exception.
Here’s the irrefutable proof:
Recovery Sign #1: Housing Starts. In February, housing starts checked-in at an annual rate of 698,000 units. That’s up 14.7% from the 608,800 starts in 2011… up 18.9% from the 586,900 starts in 2010… and up 25.9% from the record-low 554,000 starts in 2009. Even after the uptick, though, we’re nowhere close to the high-water mark of 2.07 million starts hit in 2005.
Recovery Sign #2: Building Permits. In February, building permits – a proxy for future construction – climbed to an annual rate of 717,000 units. That was ahead of expectations. It also represents the highest level since October 2008.
Recovery Sign #3: Dwindling Inventory. Expect even more building on the horizon. Why? Because new home inventories plumbed their lowest level on record in January at 150,000 units.
If we include existing homes in the mix, the total number of homes listed for sale has dropped – on a year-over-year basis – for 12 consecutive months. Now there are 2.43 million homes listed for sale, which is down 19.3% in the last year and down 39.8% from the record inventory of 4.04 million homes in July 2007.
Recovery Sign #4: Bidding Wars. The lack of inventory is creating a competitive bidding environment. Online brokerage firm, Redfin, reports that agents encountered multiple bids on about 50% of offers in Seattle, Boston, Washington D.C. and Oregon through March 15.
Recovery Sign #5: A Bottom in New Home Sales. Last year, new home sales fell to 302,000 units – the worst reading on record. For comparison’s sake, in 2005, 1.28 million new homes were sold. The market has likely bottomed out. I say that because new home sales in February checked-in at an annual rate of 313,000 units, which is 11.4% higher than last February’s rate.
Recovery Sign #6: A Rebound in Existing Home Sales. In the last year, demand for previously owned homes ticked 8.8% higher to an annual rate of 4.59 million. And the number of contracts to buy existing homes in February jumped even more – up 14% year-over-year.
Recovery Sign #7: Prices. As I’ve written before, prices will be the last sign of a recovery. They’re a lagging indicator, like unemployment. That being said, signs of a price rebound are materializing. Based on the latest Case-Shiller Indexes, prices in Miami and Phoenix – arguably two of the hardest-hit real estate markets – were up in January by 1.2% and 2%, respectively. That marks the third consecutive month of improving prices in Miami and the fourth in Phoenix.
Recovery Sign #8: Rising Confidence. If insiders know best, they’re certainly sending bullish signals. The National Association of Realtors/Wells Fargo Index of builder confidence climbed for the sixth month in March. It’s now at the highest level since 2007.
Individual builders aren’t hiding their optimism, either. The CEO of the nation’s third-largest homebuilder recently said, “A very real trend is beginning to take shape… There are empirical data points that are today confirming that the market is showing real signs of stability.” Indeed!
Recovery Sign #9: Historic Affordability. With prices down an average of 36% from the peak – and rent prices rising – it’s never been cheaper to buy a home. In fact, the National Association of Realtors Housing Affordability Index hit a record high of 206.1 in January. (A value of 100 means a family earning the national median income can afford a median-priced property at current mortgage rates.)
A separate study by Trulia found it’s now less expensive to buy than rent in 98 of America’s 100 most populous metropolitan areas. (Honolulu and San Francisco were the lone exceptions.)
And yet another study found that the affordability gap is widening, strongly in favor of buying. Deutsche Bank reports that the average rent is now 14.9% more than the average home loan payment – up from 8.1% in the previous quarter.
It’s worth noting, too, that borrowing costs are down about 20% in the last year. Mortgage rates hit an all-time low of 3.87% in February – down from 4.95% a year ago.
Recovery Sign #10: Employment. It’s hard to buy a house if you don’t have a job. And no one can deny that the labor market is improving. In the last eight months, the unemployment rate is down almost one full percentage point.
Recovery Sign #11: An Influx of “Smart Money.” Greg Zuckerman of The Wall Street Journal reports, “Over the last couple months some of the best investors on the street… have been making big bets on homebuilders.” And he’s not kidding.
The list reads like a “Who’s Who” on Wall Street. It includes SAC Capital, Blackstone, Caxton Associates, Cerberus, Canyon Partners and CQS U.K.
Bottom line: Add all the hard data up and it’s clear – the real estate market has officially entered recovery mode.
I’m not alone in this conclusion, either. My colleague, Karim Rahemtulla, believes the same. And in the latest issue of WSD Insider, released on Friday, we both revealed our favorite ways to profit from the unfolding recovery.
It’s not too late to act on the opportunities we revealed. All you have to do is sign up for a risk-free trial here and you’ll be granted immediate access to our recommendations.
Published Mon, Apr 9th, 2012 Louis Basenese
http://www.wallstreetdaily.com/2012/04/09/signs-of-real-estate-recovery/
Here’s the irrefutable proof:
Recovery Sign #1: Housing Starts. In February, housing starts checked-in at an annual rate of 698,000 units. That’s up 14.7% from the 608,800 starts in 2011… up 18.9% from the 586,900 starts in 2010… and up 25.9% from the record-low 554,000 starts in 2009. Even after the uptick, though, we’re nowhere close to the high-water mark of 2.07 million starts hit in 2005.
Recovery Sign #2: Building Permits. In February, building permits – a proxy for future construction – climbed to an annual rate of 717,000 units. That was ahead of expectations. It also represents the highest level since October 2008.
Recovery Sign #3: Dwindling Inventory. Expect even more building on the horizon. Why? Because new home inventories plumbed their lowest level on record in January at 150,000 units.
If we include existing homes in the mix, the total number of homes listed for sale has dropped – on a year-over-year basis – for 12 consecutive months. Now there are 2.43 million homes listed for sale, which is down 19.3% in the last year and down 39.8% from the record inventory of 4.04 million homes in July 2007.
Recovery Sign #4: Bidding Wars. The lack of inventory is creating a competitive bidding environment. Online brokerage firm, Redfin, reports that agents encountered multiple bids on about 50% of offers in Seattle, Boston, Washington D.C. and Oregon through March 15.
Recovery Sign #5: A Bottom in New Home Sales. Last year, new home sales fell to 302,000 units – the worst reading on record. For comparison’s sake, in 2005, 1.28 million new homes were sold. The market has likely bottomed out. I say that because new home sales in February checked-in at an annual rate of 313,000 units, which is 11.4% higher than last February’s rate.
Recovery Sign #6: A Rebound in Existing Home Sales. In the last year, demand for previously owned homes ticked 8.8% higher to an annual rate of 4.59 million. And the number of contracts to buy existing homes in February jumped even more – up 14% year-over-year.
Recovery Sign #7: Prices. As I’ve written before, prices will be the last sign of a recovery. They’re a lagging indicator, like unemployment. That being said, signs of a price rebound are materializing. Based on the latest Case-Shiller Indexes, prices in Miami and Phoenix – arguably two of the hardest-hit real estate markets – were up in January by 1.2% and 2%, respectively. That marks the third consecutive month of improving prices in Miami and the fourth in Phoenix.
Recovery Sign #8: Rising Confidence. If insiders know best, they’re certainly sending bullish signals. The National Association of Realtors/Wells Fargo Index of builder confidence climbed for the sixth month in March. It’s now at the highest level since 2007.
Individual builders aren’t hiding their optimism, either. The CEO of the nation’s third-largest homebuilder recently said, “A very real trend is beginning to take shape… There are empirical data points that are today confirming that the market is showing real signs of stability.” Indeed!
Recovery Sign #9: Historic Affordability. With prices down an average of 36% from the peak – and rent prices rising – it’s never been cheaper to buy a home. In fact, the National Association of Realtors Housing Affordability Index hit a record high of 206.1 in January. (A value of 100 means a family earning the national median income can afford a median-priced property at current mortgage rates.)
A separate study by Trulia found it’s now less expensive to buy than rent in 98 of America’s 100 most populous metropolitan areas. (Honolulu and San Francisco were the lone exceptions.)
And yet another study found that the affordability gap is widening, strongly in favor of buying. Deutsche Bank reports that the average rent is now 14.9% more than the average home loan payment – up from 8.1% in the previous quarter.
It’s worth noting, too, that borrowing costs are down about 20% in the last year. Mortgage rates hit an all-time low of 3.87% in February – down from 4.95% a year ago.
Recovery Sign #10: Employment. It’s hard to buy a house if you don’t have a job. And no one can deny that the labor market is improving. In the last eight months, the unemployment rate is down almost one full percentage point.
Recovery Sign #11: An Influx of “Smart Money.” Greg Zuckerman of The Wall Street Journal reports, “Over the last couple months some of the best investors on the street… have been making big bets on homebuilders.” And he’s not kidding.
The list reads like a “Who’s Who” on Wall Street. It includes SAC Capital, Blackstone, Caxton Associates, Cerberus, Canyon Partners and CQS U.K.
Bottom line: Add all the hard data up and it’s clear – the real estate market has officially entered recovery mode.
I’m not alone in this conclusion, either. My colleague, Karim Rahemtulla, believes the same. And in the latest issue of WSD Insider, released on Friday, we both revealed our favorite ways to profit from the unfolding recovery.
It’s not too late to act on the opportunities we revealed. All you have to do is sign up for a risk-free trial here and you’ll be granted immediate access to our recommendations.
Published Mon, Apr 9th, 2012 Louis Basenese
http://www.wallstreetdaily.com/2012/04/09/signs-of-real-estate-recovery/
Tuesday, April 3, 2012
Weekly Market Update
The last time you were at the doctor, your vital signs were checked – heart rate, pulse, temperature and blood pressure. Progress was documented and valuable insights were gained, whether it was a routine visit or one of many checks during an extended hospital stay. The housing market has been in and out of intensive care for the past several years. Monitoring vitals matters, and that's what you'll find on the following pages. The pulse of today's market indicates that we may be getting ready to leave the ICU. So if you could just please pull up your sleeve, let's check your blood pressure.
In the Twin Cities region, for the week ending March 24:
• New Listings increased 2.2% to 1,414
• Pending Sales increased 30.2% to 1,052
• Inventory decreased 27.3% to 17,193
For the month of February:
• Median Sales Price decreased 1.4% to $138,000
• Days on Market decreased 9.0% to 145
• Percent of Original List Price Received increased 2.5% to 90.6%
• Months Supply of Inventory decreased 34.8% to 4.7
Mark Allen, RCE, CIPS, CRS
Chief Executive Officer
Minneapolis Area Association of REALTORS®
952.988.3134
www.mplsrealtor.com
In the Twin Cities region, for the week ending March 24:
• New Listings increased 2.2% to 1,414
• Pending Sales increased 30.2% to 1,052
• Inventory decreased 27.3% to 17,193
For the month of February:
• Median Sales Price decreased 1.4% to $138,000
• Days on Market decreased 9.0% to 145
• Percent of Original List Price Received increased 2.5% to 90.6%
• Months Supply of Inventory decreased 34.8% to 4.7
Mark Allen, RCE, CIPS, CRS
Chief Executive Officer
Minneapolis Area Association of REALTORS®
952.988.3134
www.mplsrealtor.com
Monday, March 26, 2012
Mortgage Rates Rise Above 4 Percent
by The Associated Press
March 22, 2012
The average U.S. rate on a 30-year fixed mortgage rose above 4 percent for the first time in more than three months. The sharp increase suggests the window to buy or refinance a home at historically low rates is closing.
Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan jumped to 4.08 percent, up from 3.92 percent the previous week. A month ago, it touched 3.87 percent, the lowest since long-term mortgages began in the 1950s.
The average on the 15-year fixed mortgage rose to 3.30 percent, up from 3.16 percent last week and a record low of 3.13 percent two weeks ago.
Mortgage rates are rising because they tend to track the yield on the 10-year Treasury note. The improving economy has driven yields on long-term U.S. Treasury bonds higher in recent weeks.
The average rate on the 30-year mortgage had been below 4 percent since the first week in December. Low mortgage rates have been among a number of signs that the housing market is starting to pick up.
The past two months made up the best winter for sales of previously occupied homes in five years, when the housing crisis began.
Builders have grown more optimistic over the past six months after seeing more people express interest in buying a home. They have responded by requesting the most permits to build single-family homes and apartments since October 2008.
Optimism is also rising because the job market has strengthened. Employers have added an average 244,600 jobs per month from December through February. That has helped lower the unemployment rate to 8.3 percent, the lowest level in nearly three years.
Even with the improvement, the housing market is still weak. Millions of foreclosures and short sales when a lender accepts less than what is owed on a mortgage remain on the market. And the housing crisis and recession have also persuaded many Americans to rent instead of buy, which has led to a drop in homeownership.
Economists say housing is years away from returning to full health.
To calculate the average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.
The average rates don't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fees for the 30-year and 15-year fixed loans were 0.8, unchanged from 0.8 last week.
For the five-year adjustable loan, the average rate rose to 2.96 percent from 2.83 percent, and the average fee edged down to 0.7 from 0.8.
The average on the one-year adjustable loan rose to 2.84 percent from 2.79 percent, and the average fee was unchanged at 0.6.
March 22, 2012
The average U.S. rate on a 30-year fixed mortgage rose above 4 percent for the first time in more than three months. The sharp increase suggests the window to buy or refinance a home at historically low rates is closing.
Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan jumped to 4.08 percent, up from 3.92 percent the previous week. A month ago, it touched 3.87 percent, the lowest since long-term mortgages began in the 1950s.
The average on the 15-year fixed mortgage rose to 3.30 percent, up from 3.16 percent last week and a record low of 3.13 percent two weeks ago.
Mortgage rates are rising because they tend to track the yield on the 10-year Treasury note. The improving economy has driven yields on long-term U.S. Treasury bonds higher in recent weeks.
The average rate on the 30-year mortgage had been below 4 percent since the first week in December. Low mortgage rates have been among a number of signs that the housing market is starting to pick up.
The past two months made up the best winter for sales of previously occupied homes in five years, when the housing crisis began.
Builders have grown more optimistic over the past six months after seeing more people express interest in buying a home. They have responded by requesting the most permits to build single-family homes and apartments since October 2008.
Optimism is also rising because the job market has strengthened. Employers have added an average 244,600 jobs per month from December through February. That has helped lower the unemployment rate to 8.3 percent, the lowest level in nearly three years.
Even with the improvement, the housing market is still weak. Millions of foreclosures and short sales when a lender accepts less than what is owed on a mortgage remain on the market. And the housing crisis and recession have also persuaded many Americans to rent instead of buy, which has led to a drop in homeownership.
Economists say housing is years away from returning to full health.
To calculate the average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.
The average rates don't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fees for the 30-year and 15-year fixed loans were 0.8, unchanged from 0.8 last week.
For the five-year adjustable loan, the average rate rose to 2.96 percent from 2.83 percent, and the average fee edged down to 0.7 from 0.8.
The average on the one-year adjustable loan rose to 2.84 percent from 2.79 percent, and the average fee was unchanged at 0.6.
Monday, March 19, 2012
Market Update for March 19th
Buyer activity: up. Seller activity: down. That could soon change if sellers begin to increase their activity levels entering the spring market. They've understandably been a tad shy lately, but the changing landscape is starting to register with well-informed homeowners looking to move. Buyers have shown that they refuse to let one of the most attractive purchase environments pass them by. As activity revs up this spring, not all segments will benefit equally. Which is exactly why the numbers are so central to assessing both the breadth and depth of market recovery.
In the Twin Cities region, for the week ending March 10:
• New Listings decreased 0.3% to 1,450
• Pending Sales increased 20.9% to 995
• Inventory decreased 24.3% to 17,899
For the month of February:
• Median Sales Price decreased 1.4% to $138,000
• Days on Market decreased 9.1% to 145
• Percent of Original List Price Received increased 2.6% to 90.6%
• Months Supply of Inventory decreased 35.8% to 4.7
Mark Allen, RCE, CIPS, CRS
Chief Executive Officer
Minneapolis Area Association of REALTORS®
952.988.3134
www.mplsrealtor.com
In the Twin Cities region, for the week ending March 10:
• New Listings decreased 0.3% to 1,450
• Pending Sales increased 20.9% to 995
• Inventory decreased 24.3% to 17,899
For the month of February:
• Median Sales Price decreased 1.4% to $138,000
• Days on Market decreased 9.1% to 145
• Percent of Original List Price Received increased 2.6% to 90.6%
• Months Supply of Inventory decreased 35.8% to 4.7
Mark Allen, RCE, CIPS, CRS
Chief Executive Officer
Minneapolis Area Association of REALTORS®
952.988.3134
www.mplsrealtor.com
Monday, March 12, 2012
Foreclosures in Minnesota, 2011 Report
There were 21,298 homes sold at Sheriff's Sale in 2011 in Minnesota, the fewest since 2007. However, it also reflects the fact that the foreclosure crisis is not over yet, as it means that over 1% of EVERY HOME in Minnesota was lost to foreclosure last year.
It also brings the cumulative total of foreclosures in Minnesota since we began tracking these numebrs in 2005 to over 135,000.
The comprehensive report, titled “Foreclosures in Minnesota”, analyzes sheriff’s sale data, the primary means of identifying foreclosures, from each of Minnesota's 87 Counties. Minnesota is unique among other states in the availability of current, comprehensive foreclosure sale data.
In addition to the 21,298 homes that were sold in a foreclosure sale, more than 54,500 households continued to struggle with mortgage payments and received a pre-foreclosure notice from their lender during the year. (For more information about pre-foreclosure notices, visit the Center's blog at www.hocmn.org).
The Minnesota Homeownership Center, Greater Minnesota Housing Fund, Minnesota Housing and Family Housing Fund published the report, with research provided by HousingLink.
As always, struggling homeowners are encouraged to seek the help of a certified foreclosure prevention specialist that is a member of the Homeownership Advisors Network, as soon as possible. Waiting limits a homeowner’s options.
Published By Minnesota Association of REALTORS 3/12/2012
It also brings the cumulative total of foreclosures in Minnesota since we began tracking these numebrs in 2005 to over 135,000.
The comprehensive report, titled “Foreclosures in Minnesota”, analyzes sheriff’s sale data, the primary means of identifying foreclosures, from each of Minnesota's 87 Counties. Minnesota is unique among other states in the availability of current, comprehensive foreclosure sale data.
In addition to the 21,298 homes that were sold in a foreclosure sale, more than 54,500 households continued to struggle with mortgage payments and received a pre-foreclosure notice from their lender during the year. (For more information about pre-foreclosure notices, visit the Center's blog at www.hocmn.org).
The Minnesota Homeownership Center, Greater Minnesota Housing Fund, Minnesota Housing and Family Housing Fund published the report, with research provided by HousingLink.
As always, struggling homeowners are encouraged to seek the help of a certified foreclosure prevention specialist that is a member of the Homeownership Advisors Network, as soon as possible. Waiting limits a homeowner’s options.
Published By Minnesota Association of REALTORS 3/12/2012
Monday, February 27, 2012
Market Update for the Week of February 27th
The week left yet another trail of evidence leading back to a housing market on the mend. This time, the encouraging signs were even less clandestine. Nationally, both new and existing home sales enjoyed improvements. Even some December numbers were upwardly revised. New home sales have real and noticeable impacts on GDP, thus generating jobs and driving down unemployment. The overall bias for the entire U.S. is firmly toward balance. Locally, market activity was mostly positive. Spring will still be the major tell.
In the Twin Cities region, for the week ending February 18:
• New Listings decreased 7.1% to 1,256
• Pending Sales increased 28.6% to 899
• Inventory decreased 23.2% to 17,756
For the month of January:
• Median Sales Price decreased 3.4% to $140,000
• Days on Market decreased 8.5% to 142
• Percent of Original List Price Received increased 3.4% to 91.2%
• Months Supply of Inventory decreased 34.2% to 4.7
Mark Allen, RCE, CIPS, CRS
Chief Executive Officer
Minneapolis Area Association of REALTORS®
952.988.3134
www.mplsrealtor.com
In the Twin Cities region, for the week ending February 18:
• New Listings decreased 7.1% to 1,256
• Pending Sales increased 28.6% to 899
• Inventory decreased 23.2% to 17,756
For the month of January:
• Median Sales Price decreased 3.4% to $140,000
• Days on Market decreased 8.5% to 142
• Percent of Original List Price Received increased 3.4% to 91.2%
• Months Supply of Inventory decreased 34.2% to 4.7
Mark Allen, RCE, CIPS, CRS
Chief Executive Officer
Minneapolis Area Association of REALTORS®
952.988.3134
www.mplsrealtor.com
Monday, February 20, 2012
7 Tips for Improving Your Credit
Here’s how to clean up your credit so you get the least-expensive home loan possible.
Boost your credit score by paying the balance on your credit cards in full, and on time, every month. Image: Rob Daly/OJO Images/Getty Images
Getting the loan that suits your situation at the best possible price and terms makes homebuying easier and more affordable. Here are seven ways to boost your credit score so you can do just that.
Answers to frequently asked credit report questions
G.M. Filisko is an attorney and award-winning writer who keeps a close eye on her credit scores. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.
Published By: G. M. Filisko
Read more: http://buyandsell.houselogic.com/articles/7-tips-improving-your-credit/#ixzz1mwIFKryf
Boost your credit score by paying the balance on your credit cards in full, and on time, every month. Image: Rob Daly/OJO Images/Getty Images
Getting the loan that suits your situation at the best possible price and terms makes homebuying easier and more affordable. Here are seven ways to boost your credit score so you can do just that.
1. Know your credit score
Credit scores range from 300 to 850, and the higher, the better. They’re based on whether you’ve paid personal loans, car loans, credit cards, and other debt in full and on time in the past. You’ll need a score of at least 620 to qualify for a home loan and 740 to get the best interest rates and terms. You’re entitled to a free copy of your credit report annually from each of the major credit-reporting bureaus, Equifax, Experian, and TransUnion. Access all three versions of your credit report at www.annualcreditreport.com. Review them to ensure the information is accurate.2. Correct errors on your credit report
If you find mistakes on your credit report, write a letter to the credit-reporting agency explaining why you believe there’s an error. Send documents that support your case, and ask that the error be corrected or removed. Also write to the company, or debt collector, that reported the incorrect information to dispute the information, and ask to be copied on any materials sent to credit-reporting agencies.3. Pay every bill on time
You may be surprised at the damage even a few late payments will have on your credit score. The easiest way to make a big difference in your credit score without altering your spending habits is to diligently pay all your bills on time. You’ll also save money because you’ll keep the money you’ve been spending on late fees. Credit card or mortgage companies probably won’t report minor late payments, those less than 30 days overdue, but you’ll still have to pay late fees.4. Use credit carefully
Another good way to boost your credit score is to pay your credit card bills in full every month. If you can’t do that, pay as much over your required minimum payment as possible to begin whittling away the debt. Stop using your credit cards to keep your balances from increasing, and transfer balances from high-interest credit cards to lower-interest cards.5. Take care with the length of your credit
Credit rating agencies also consider the length of your credit history. If you’ve had a credit card for a long time and managed it responsibly, that works in your favor. However, opening several new credit cards at once can lower the average age of your accounts, which pushes down your score. Likewise, closing credit card accounts lowers your available credit, so keep credit cards open even if you’re not using them.6. Don’t use all the credit you’re offered
Credit scores are also based on how much credit you use compared with how much you’re offered. Using $1,000 of available credit will give you a lower score than having $1,000 of available credit and using $100 of it. Occasionally opening new lines of credit can boost your available credit, which also affects your score positively.7. Be patient
It can take time for your credit score to climb once you’ve begun working to improve it. Keep at it because the more distance you put between your spotty payment history and your current good payment record, the less damage you’ll do to your credit score.Other web resources
How FICO scores are calculatedAnswers to frequently asked credit report questions
G.M. Filisko is an attorney and award-winning writer who keeps a close eye on her credit scores. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.
Published By: G. M. Filisko
Read more: http://buyandsell.houselogic.com/articles/7-tips-improving-your-credit/#ixzz1mwIFKryf
Monday, February 13, 2012
Homeowners Insurance: Time for an Annual Check-Up
It’s time for your annual check-up. The good news is that for this one, you won’t have to don one of those revealing hospital gowns—and you may walk away with a healthier pocketbook. We’re talking about a homeowners insurance check-up, a task you should complete once a year, ideally around renewal time. This will ensure your policy still provides the right level of coverage for your family, and your premium isn’t costing you more than it should.
Remember, homeowners insurance is essential. The coverage is designed to protect your home and its contents, as well as shield you from liability for accidents and such on your property. Block out an hour of your time, call an insurance agent, and get answers to these three important questions.
What type of coverage do I have?
The most effective type of coverage is known as “replacement cost,” which covers, up to your policy limits, what it would take today to rebuild your house and restore your belongings, says Jerry Oshinsky, a partner at Jenner & Block in Los Angeles who has represented homeowners in litigation against insurers.
“Extended” replacement cost coverage provides protection to your policy limit, say $500,000, and then perhaps another 20% of the cost after that. Percentages vary, but in this example you could recoup up to $600,000 on a $500,000 policy, assuming your losses reach that high. Extended coverage can compensate for any unanticipated expenses like spikes in construction costs between policy renewals. Now harder to find due to the industry shift toward extended replacement coverage, “full” or “guaranteed” replacement coverage covers an entire claim regardless of policy limits.
A less attractive alternative is “actual cash value” coverage that usually takes into account depreciation, the decrease in value due to age and wear. With this type of policy, the $2,000 flat-screen TV you bought two years ago will be worth hundreds of dollars less today in the eyes of your claims adjuster. Kevin Foley, an independent insurance broker in Milltown, N.J., favors replacement cost coverage unless you can save at least 25% on the premium for going with actual cash value coverage instead.
Even if you have replacement cost protection for your dwelling and personal property, don’t assume everything is covered. Structures other than your home on your property—such as a detached garage or swimming pool—require separate coverage. So too do luxury items like jewelry, watches, and furs if you want full replacement cost because reimbursement for those items is typically capped.
How much coverage do I really need?
OK, now that you’re clear on what type of policy you have, you need to figure out how much policy you truly require in dollar terms. Let’s say you purchased your home five years ago and insured it for $200,000. Today, it’s worth $225,000. Simply increasing your coverage to $225,000 may nonetheless leave you underinsured. Here’s why.
The key to determining how much dwelling coverage you need isn’t the value of your home but the money you’d have to pay to rebuild it from scratch, says Carlos Aguirre, an agent for Liberty Mutual Insurance in Arlington, Texas. Call your local contractors’ or homebuilders’ association and inquire about the average per-square-foot construction cost in your area. If it’s $150 and your home is 2,000 square feet, then you should be insured for $300,000.
There’s no rule of thumb for how much your homeowners insurance should cost. Insurers use numerous factors—age, education level, creditworthiness—to determine pricing, so the same policy could run you more than your neighbor. In recent years the average annual premium was $804. Oshinsky advises against scrimping on insurance because big increases in coverage probably cost less than you’d think. He recently purchased a liability policy that cost $250 for the first $1 million in coverage. Adding another $1 million increased his premiums only $12.50 more.
How can I lower my premiums?
The higher your deductible, the amount you pay out of pocket before coverage kicks in, the lower your premium. Landing on the appropriate deductible level requires remembering that insurance should cover major calamities, not minor incidents, says Foley, the independent insurance broker. Most homeowners should be able to absorb modest losses like a broken window pane or a hole in the drywall without filing claims. If you can, then you’re wasting money with a $250 deductible.
Foley’s rule: If you’re a first-time homeowner and don’t have a lot of savings, moving up to a $500 deductible will probably stretch your budget. However, if you live in a ritzy home and drive an expensive car, then you should be able to afford a $1,000 deductible. In Milltown, N.J., for example, the premium for a $200,000 home with a $500 deductible would be $736, according to Foley; moving up to a $1,000 deductible drops the annual premium to $672. That’s $64 in savings.
Every major insurer offers discounts to various groups, such as university employees or firefighters. Figure about 5%. Ask which affiliations would entitle you to a discount and how much. If an AARP membership would result in a $50 savings, pay the $16 dues and pocket the $36 difference. Many insurers also offer discounts ranging from 1% to 10% or more for installing protective devices like alarms and deadbolt locks, for going claim-free for an extended period, or for insuring both your car and your home with the same carrier.
Read more: http://www.houselogic.com/home-advice/home-insurance/homeowners-insurance-time-for-annual-check-up/#ixzz1mICSwferBy: G. M. Filisko
Remember, homeowners insurance is essential. The coverage is designed to protect your home and its contents, as well as shield you from liability for accidents and such on your property. Block out an hour of your time, call an insurance agent, and get answers to these three important questions.
What type of coverage do I have?
The most effective type of coverage is known as “replacement cost,” which covers, up to your policy limits, what it would take today to rebuild your house and restore your belongings, says Jerry Oshinsky, a partner at Jenner & Block in Los Angeles who has represented homeowners in litigation against insurers.
“Extended” replacement cost coverage provides protection to your policy limit, say $500,000, and then perhaps another 20% of the cost after that. Percentages vary, but in this example you could recoup up to $600,000 on a $500,000 policy, assuming your losses reach that high. Extended coverage can compensate for any unanticipated expenses like spikes in construction costs between policy renewals. Now harder to find due to the industry shift toward extended replacement coverage, “full” or “guaranteed” replacement coverage covers an entire claim regardless of policy limits.
A less attractive alternative is “actual cash value” coverage that usually takes into account depreciation, the decrease in value due to age and wear. With this type of policy, the $2,000 flat-screen TV you bought two years ago will be worth hundreds of dollars less today in the eyes of your claims adjuster. Kevin Foley, an independent insurance broker in Milltown, N.J., favors replacement cost coverage unless you can save at least 25% on the premium for going with actual cash value coverage instead.
Even if you have replacement cost protection for your dwelling and personal property, don’t assume everything is covered. Structures other than your home on your property—such as a detached garage or swimming pool—require separate coverage. So too do luxury items like jewelry, watches, and furs if you want full replacement cost because reimbursement for those items is typically capped.
How much coverage do I really need?
OK, now that you’re clear on what type of policy you have, you need to figure out how much policy you truly require in dollar terms. Let’s say you purchased your home five years ago and insured it for $200,000. Today, it’s worth $225,000. Simply increasing your coverage to $225,000 may nonetheless leave you underinsured. Here’s why.
The key to determining how much dwelling coverage you need isn’t the value of your home but the money you’d have to pay to rebuild it from scratch, says Carlos Aguirre, an agent for Liberty Mutual Insurance in Arlington, Texas. Call your local contractors’ or homebuilders’ association and inquire about the average per-square-foot construction cost in your area. If it’s $150 and your home is 2,000 square feet, then you should be insured for $300,000.
There’s no rule of thumb for how much your homeowners insurance should cost. Insurers use numerous factors—age, education level, creditworthiness—to determine pricing, so the same policy could run you more than your neighbor. In recent years the average annual premium was $804. Oshinsky advises against scrimping on insurance because big increases in coverage probably cost less than you’d think. He recently purchased a liability policy that cost $250 for the first $1 million in coverage. Adding another $1 million increased his premiums only $12.50 more.
How can I lower my premiums?
The higher your deductible, the amount you pay out of pocket before coverage kicks in, the lower your premium. Landing on the appropriate deductible level requires remembering that insurance should cover major calamities, not minor incidents, says Foley, the independent insurance broker. Most homeowners should be able to absorb modest losses like a broken window pane or a hole in the drywall without filing claims. If you can, then you’re wasting money with a $250 deductible.
Foley’s rule: If you’re a first-time homeowner and don’t have a lot of savings, moving up to a $500 deductible will probably stretch your budget. However, if you live in a ritzy home and drive an expensive car, then you should be able to afford a $1,000 deductible. In Milltown, N.J., for example, the premium for a $200,000 home with a $500 deductible would be $736, according to Foley; moving up to a $1,000 deductible drops the annual premium to $672. That’s $64 in savings.
Every major insurer offers discounts to various groups, such as university employees or firefighters. Figure about 5%. Ask which affiliations would entitle you to a discount and how much. If an AARP membership would result in a $50 savings, pay the $16 dues and pocket the $36 difference. Many insurers also offer discounts ranging from 1% to 10% or more for installing protective devices like alarms and deadbolt locks, for going claim-free for an extended period, or for insuring both your car and your home with the same carrier.
Read more: http://www.houselogic.com/home-advice/home-insurance/homeowners-insurance-time-for-annual-check-up/#ixzz1mICSwferBy: G. M. Filisko
Monday, February 6, 2012
Weekly Market Update
For Week Ending January 28, 2012
Publish Date: February 6, 2012 • All comparisons are to 2011
http://mplsrealtor.com/
Whether motivated by the election cycle, a jump in employment, improving housing market metrics or the best start to a year for the S&P 500 since 1989, home buyers posted increased activity levels compared to last year. Consumers signed more purchase agreements but sellers entered into fewer listing contracts. Changes in supply-side metrics confirm this, suggesting that relatively less new product is entering the market compared to buyer demand. That's helped other metrics return to more friendly territory. Whatever the reason, it's good to see that vote of confidence.
In the Twin Cities region, for the week ending January 28:
• New Listings decreased 17.5% to 1,090
• Pending Sales increased 22.9% to 833
• Inventory decreased 23.5% to 17,762
For the month of December:
• Median Sales Price decreased 6.5% to $145,000
• Days on Market decreased 2.3% to 141
• Percent of Original List Price Received increased 1.7% to 90.6%
• Months Supply of Inventory decreased 33.3% to 4.8
Publish Date: February 6, 2012 • All comparisons are to 2011
http://mplsrealtor.com/
Whether motivated by the election cycle, a jump in employment, improving housing market metrics or the best start to a year for the S&P 500 since 1989, home buyers posted increased activity levels compared to last year. Consumers signed more purchase agreements but sellers entered into fewer listing contracts. Changes in supply-side metrics confirm this, suggesting that relatively less new product is entering the market compared to buyer demand. That's helped other metrics return to more friendly territory. Whatever the reason, it's good to see that vote of confidence.
In the Twin Cities region, for the week ending January 28:
• New Listings decreased 17.5% to 1,090
• Pending Sales increased 22.9% to 833
• Inventory decreased 23.5% to 17,762
For the month of December:
• Median Sales Price decreased 6.5% to $145,000
• Days on Market decreased 2.3% to 141
• Percent of Original List Price Received increased 1.7% to 90.6%
• Months Supply of Inventory decreased 33.3% to 4.8
Monday, January 30, 2012
Freddie Mac Betting Against Struggling Homeowners
January 30, 2012
by Chris Arnold
Freddie Mac, a taxpayer-owned mortgage company, is supposed to make homeownership easier. One thing that makes owning a home more affordable is getting a cheaper mortgage.
But Freddie Mac has invested billions of dollars betting that U.S. homeowners won't be able to refinance their mortgages at today's lower rates, according to an investigation by NPR and ProPublica, an independent, nonprofit newsroom.
These investments, while legal, raise concerns about a conflict of interest within Freddie Mac.
"We were actually shocked they did this," says Scott Simon, who heads the mortgage-backed securities team at the giant bond trading and investment firm called PIMCO. "It seemed so out of line with their mission, out of line with what Congress wanted them to do."
Freddie Mac, formally called the Federal Home Loan Mortgage Corp., was chartered by Congress in 1970. On its website, it says it has "a public mission to stabilize the nation's residential mortgage markets and expand opportunities for homeownership." The company is owned by U.S. taxpayers and overseen by a regulator, the Federal Housing Finance Agency (FHFA).
In December, Freddie Mac CEO Charles Haldeman (left), FHFA Acting Director Edward DeMarco (center) and Fannie Mae CEO Michael Williams testified about the FHFA's performance to the House Financial Services subcommittee.
In December, Freddie's chief executive, Charles Haldeman, assured Congress his company is "helping financially strapped families reduce their mortgage costs through refinancing their mortgages."
But public documents show that in 2010 and 2011, Freddie Mac set out to make gains for its own investment portfolio by using complex mortgage securities that brought in more money for Freddie Mac when homeowners in higher interest-rate loans were unable to qualify for a refinancing.
Those trades "put them squarely against the homeowner," PIMCO's Simon says.
Freddie Mac's trades came at a time when mortgage rates were falling to record lows. Millions of homeowners wish they could refinance, but their lenders tell them they can't qualify for today's low rates because of tight rules. Freddie Mac is one of the gatekeepers with the power to set those rules, and lately, it has been saying no more often to homeowners.
That raises concerns among some industry insiders who see a conflict: Freddie Mac's own financial health improves when homeowners can't refinance.
Simply put, "Freddie Mac prevented households from being able to take advantage of today's mortgage rates — and then bet on it," says Alan Boyce, a former bond trader who has been involved in efforts to push for more refinancing of home loans.
In the summer of 2010, long lines of hopeful homeowners waited for help from the Neighborhood Assistance Corporation of America's "Save the Dream" tour. The tour made stops around the U.S., offering assistance from hundreds of mortgage counselors from various mortgage companies.
Freddie and FHFA repeatedly declined to comment on the specific transactions, but Freddie did say that its employees who make investment decisions are "walled off" from those who decide the rules for homeowners.
When Homeowners Lose,
Freddie Mac Wins
Freddie Mac, based in Northern Virginia, says its job is to purchase "loans from lenders to replenish their supply of funds so that they [the lenders] can make more mortgage loans to other borrowers." That's one reason why Freddie has a gigantic portfolio containing loans that generate income from mortgage payments. Critics say this investment portfolio has been allowed to grow far larger than necessary to further Freddie's policy mission.
Plus, in 2010 and 2011, Freddie didn't just hold a simple pile of loans. Instead, for hundreds of thousands of home loans, it used Wall Street alchemy to chop these loans up into complicated securities — slices of which were sold in financial markets.
and packages them. With the help of a Wall Street banker, it
can then slice off parts of the bundle to create different
investment securities, some riskier than others. The slices
could be set up so that, say, $900 million worth are relatively
safe investments, based upon homeowners paying
the principal on their mortgages.
Refinancing A Path To Recovery
"I'm sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low rates," Obama said during his State of the Union speech last week. "No more red tape. No more runaround from the banks."
In his State of the Union address, President Obama pushed for legislation to allow "every responsible homeowner the chance to save about $3,000 a year on their mortgage" by refinancing without what he called "red tape" or a "runaround from the banks."
Columbia University economist Chris Mayer supports such an approach. "A widespread refinancing program would have many benefits — not only helping the economy and putting tens of billions of dollars back in consumers' pockets, the equivalent of a very long-term tax cut," he says.
"It also is likely to reduce foreclosures and benefit the U.S. government by having fewer losses that they have to pay," Mayer adds.
In the long term, he says, allowing more Americans to refinance would help taxpayers as well as mortgage giants Freddie Mac and Fannie Mae, because they would suffer fewer losses related to foreclosures. These inverse floater trades, however, give Freddie Mac a short-term incentive to resist such so-called "mass re-fi" programs.
"If there was a mass re-fi program, the bets they made would get absolutely wiped out," PIMCO's Simon says. "The way these bets do the best is if the homeowner is barred from refinancing."
In a written statement, Freddie said it "is actively supporting efforts for borrowers to realize the benefits of refinancing their mortgages to lower rates." It also says it refinanced loans for hundreds of thousands of borrowers just last year.
Fannie and Freddie have taken part in an existing federal program known as "HARP" to help Americans refinance, but many economists say far more homeowners would benefit if Fannie and Freddie were to implement the program more aggressively.
The Silversteins had trouble selling this house after they moved out, forcing them to carry two mortgages for more than two years. "It just drained us," says Jay Silverstein.
Stuck In 'Financial Jail'
Some homeowners believe the current re-fi game is stacked against them.
Jay and Bonnie Silverstein describe themselves as truly stuck in a bad mortgage. They live in an unfinished development of yellow stucco houses north of Philadelphia. The developer went bankrupt.
The Silversteins bought this home before the housing market crashed, and then couldn't sell their old house. They now say that buying a new home before selling the old one was a mistake — a painful one. Stuck with two mortgages, they started to get behind on their payments on the old house.
"It wound up taking us years to sell that house, so we had two homes and two mortgages for two-and-a-half years," Jay Silverstein says. "It burned up my 401(k) and drained us."
Jay Silverstein has a modest pension, and they haven't missed a mortgage payment on their current home. Still, they are struggling. They could make the monthly payment on their new home if they could just refinance — down from their current interest rate of near 7 percent to today's rates below 4 percent. That could save them roughly $500 a month.
"You know, we're living paycheck to paycheck," he says. A lower rate "might go a long way toward helping us."
But that's the problem — getting approved for a refinancing. Here's why: After the housing market crashed, the Silversteins' old house had to be sold for less than the mortgage was worth. That's known as a short sale.
Freddie Mac has been tightening lending restrictions, and one of its restrictions blocks people with a short sale in their past from refinancing for up to four years following that short sale. So the Silversteins are stranded by the rule.
"We're in financial jail," Jay says. "We've never been there before."
One of Freddie Mac's restrictions blocks people who have a short sale in their past from refinancing for two to four years following the short sale.
Tight For Homeowners, But Elsewhere, Money Still Flows
Economists say that during the housing bubble, lending standards got too loose. Now many believe the pendulum has swung too far, making rules too tight.
The short-sale restriction may be a good example. For a home purchase, such a rule may be prudent, but allowing people with existing loans to refinance actually lowers the risk that they may default by giving them more affordable mortgage payments.
In a recent analysis of remedies for the stalled housing market, the Federal Reserve criticized Fannie and Freddie for the fees they have charged for refinancing. Such fees are "another possible reason for low rates of refinancing," the Fed wrote, adding that the charges are "difficult to justify."
Meanwhile, even though Freddie is a ward of the federal government, its top executives are highly compensated. The Freddie Mac official then in charge of its investment portfolio, Peter Federico, made $2.5 million in 2010, and had target compensation of $2.6 million for last year — the time period during which most of these inverse floater investments were made. ProPublica and NPR made numerous attempts to reach Federico. A woman who answered his home phone said he declined to comment.
by Chris Arnold
Freddie Mac, a taxpayer-owned mortgage company, is supposed to make homeownership easier. One thing that makes owning a home more affordable is getting a cheaper mortgage.
But Freddie Mac has invested billions of dollars betting that U.S. homeowners won't be able to refinance their mortgages at today's lower rates, according to an investigation by NPR and ProPublica, an independent, nonprofit newsroom.
These investments, while legal, raise concerns about a conflict of interest within Freddie Mac.
"We were actually shocked they did this," says Scott Simon, who heads the mortgage-backed securities team at the giant bond trading and investment firm called PIMCO. "It seemed so out of line with their mission, out of line with what Congress wanted them to do."
Freddie Mac, formally called the Federal Home Loan Mortgage Corp., was chartered by Congress in 1970. On its website, it says it has "a public mission to stabilize the nation's residential mortgage markets and expand opportunities for homeownership." The company is owned by U.S. taxpayers and overseen by a regulator, the Federal Housing Finance Agency (FHFA).
In December, Freddie Mac CEO Charles Haldeman (left), FHFA Acting Director Edward DeMarco (center) and Fannie Mae CEO Michael Williams testified about the FHFA's performance to the House Financial Services subcommittee.
In December, Freddie Mac CEO Charles Haldeman (left), FHFA Acting Director Edward DeMarco (center) and Fannie Mae CEO Michael Williams testified about the FHFA's performance to the House Financial Services subcommittee.
In December, Freddie's chief executive, Charles Haldeman, assured Congress his company is "helping financially strapped families reduce their mortgage costs through refinancing their mortgages."
But public documents show that in 2010 and 2011, Freddie Mac set out to make gains for its own investment portfolio by using complex mortgage securities that brought in more money for Freddie Mac when homeowners in higher interest-rate loans were unable to qualify for a refinancing.
Those trades "put them squarely against the homeowner," PIMCO's Simon says.
Freddie Mac's trades came at a time when mortgage rates were falling to record lows. Millions of homeowners wish they could refinance, but their lenders tell them they can't qualify for today's low rates because of tight rules. Freddie Mac is one of the gatekeepers with the power to set those rules, and lately, it has been saying no more often to homeowners.
That raises concerns among some industry insiders who see a conflict: Freddie Mac's own financial health improves when homeowners can't refinance.
Simply put, "Freddie Mac prevented households from being able to take advantage of today's mortgage rates — and then bet on it," says Alan Boyce, a former bond trader who has been involved in efforts to push for more refinancing of home loans.
In the summer of 2010, long lines of hopeful homeowners waited for help from the Neighborhood Assistance Corporation of America's "Save the Dream" tour. The tour made stops around the U.S., offering assistance from hundreds of mortgage counselors from various mortgage companies.
In the summer of 2010, long lines of hopeful homeowners waited for help from the Neighborhood Assistance Corporation of America's "Save the Dream" tour. The tour made stops around the U.S., offering assistance from hundreds of mortgage counselors from various mortgage companies.
Freddie and FHFA repeatedly declined to comment on the specific transactions, but Freddie did say that its employees who make investment decisions are "walled off" from those who decide the rules for homeowners.
When Homeowners Lose,
Freddie Mac Wins
Freddie Mac, based in Northern Virginia, says its job is to purchase "loans from lenders to replenish their supply of funds so that they [the lenders] can make more mortgage loans to other borrowers." That's one reason why Freddie has a gigantic portfolio containing loans that generate income from mortgage payments. Critics say this investment portfolio has been allowed to grow far larger than necessary to further Freddie's policy mission.
Plus, in 2010 and 2011, Freddie didn't just hold a simple pile of loans. Instead, for hundreds of thousands of home loans, it used Wall Street alchemy to chop these loans up into complicated securities — slices of which were sold in financial markets.
This hypothetical example may help explain what happens:1) Freddie Mac takes, say, $1 billion worth of home loan
and packages them. With the help of a Wall Street banker, it
can then slice off parts of the bundle to create different
investment securities, some riskier than others. The slices
could be set up so that, say, $900 million worth are relatively
safe investments, based upon homeowners paying
the principal on their mortgages.
2) But the one remaining slice, worth $100 million, is the riskiest part. Freddie retains that slice, known as an "inverse floater," which receives all of the interest payments from the entire $1 billion worth of mortgages.If the homeowner is unable to refinance, the Freddie Mac portfolio managers win, Simon says. "And if the homeowner can refinance, they lose."
3) That riskiest investment pays out a lucrative stream of interest payments. But Freddie's slice also has all the so-called "pre-payment risk" associated with that $1 billion worth of loans. So if lots of people "pre-pay" their old loans and refinance into new, cheaper ones, then Freddie Mac starts to lose money. If people can't refinance, then Freddie wins because it continues to receive that flow of older, higher interest payments.
Refinancing A Path To Recovery
"I'm sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low rates," Obama said during his State of the Union speech last week. "No more red tape. No more runaround from the banks."
"I'm sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low rates," Obama said during his State of the Union speech last week. "No more red tape. No more runaround from the banks."
In his State of the Union address, President Obama pushed for legislation to allow "every responsible homeowner the chance to save about $3,000 a year on their mortgage" by refinancing without what he called "red tape" or a "runaround from the banks."
Columbia University economist Chris Mayer supports such an approach. "A widespread refinancing program would have many benefits — not only helping the economy and putting tens of billions of dollars back in consumers' pockets, the equivalent of a very long-term tax cut," he says.
"It also is likely to reduce foreclosures and benefit the U.S. government by having fewer losses that they have to pay," Mayer adds.
In the long term, he says, allowing more Americans to refinance would help taxpayers as well as mortgage giants Freddie Mac and Fannie Mae, because they would suffer fewer losses related to foreclosures. These inverse floater trades, however, give Freddie Mac a short-term incentive to resist such so-called "mass re-fi" programs.
"If there was a mass re-fi program, the bets they made would get absolutely wiped out," PIMCO's Simon says. "The way these bets do the best is if the homeowner is barred from refinancing."
In a written statement, Freddie said it "is actively supporting efforts for borrowers to realize the benefits of refinancing their mortgages to lower rates." It also says it refinanced loans for hundreds of thousands of borrowers just last year.
Fannie and Freddie have taken part in an existing federal program known as "HARP" to help Americans refinance, but many economists say far more homeowners would benefit if Fannie and Freddie were to implement the program more aggressively.
The Silversteins had trouble selling this house after they moved out, forcing them to carry two mortgages for more than two years. "It just drained us," says Jay Silverstein.
The Silversteins had trouble selling this house after they moved out, forcing them to carry two mortgages for more than two years. "It just drained us," says Jay Silverstein.
Stuck In 'Financial Jail'
Some homeowners believe the current re-fi game is stacked against them.
If Jay and Bonnie Silverstein were able to refinance their mortgage, they could save nearly $500 a month.
If Jay and Bonnie Silverstein were able to refinance their mortgage, they could save nearly $500 a month.
Jay and Bonnie Silverstein describe themselves as truly stuck in a bad mortgage. They live in an unfinished development of yellow stucco houses north of Philadelphia. The developer went bankrupt.
The Silversteins bought this home before the housing market crashed, and then couldn't sell their old house. They now say that buying a new home before selling the old one was a mistake — a painful one. Stuck with two mortgages, they started to get behind on their payments on the old house.
"It wound up taking us years to sell that house, so we had two homes and two mortgages for two-and-a-half years," Jay Silverstein says. "It burned up my 401(k) and drained us."
Jay Silverstein has a modest pension, and they haven't missed a mortgage payment on their current home. Still, they are struggling. They could make the monthly payment on their new home if they could just refinance — down from their current interest rate of near 7 percent to today's rates below 4 percent. That could save them roughly $500 a month.
"You know, we're living paycheck to paycheck," he says. A lower rate "might go a long way toward helping us."
But that's the problem — getting approved for a refinancing. Here's why: After the housing market crashed, the Silversteins' old house had to be sold for less than the mortgage was worth. That's known as a short sale.
Freddie Mac has been tightening lending restrictions, and one of its restrictions blocks people with a short sale in their past from refinancing for up to four years following that short sale. So the Silversteins are stranded by the rule.
"We're in financial jail," Jay says. "We've never been there before."
One of Freddie Mac's restrictions blocks people who have a short sale in their past from refinancing for two to four years following the short sale.
One of Freddie Mac's restrictions blocks people who have a short sale in their past from refinancing for two to four years following the short sale.
Tight For Homeowners, But Elsewhere, Money Still Flows
Economists say that during the housing bubble, lending standards got too loose. Now many believe the pendulum has swung too far, making rules too tight.
The short-sale restriction may be a good example. For a home purchase, such a rule may be prudent, but allowing people with existing loans to refinance actually lowers the risk that they may default by giving them more affordable mortgage payments.
In a recent analysis of remedies for the stalled housing market, the Federal Reserve criticized Fannie and Freddie for the fees they have charged for refinancing. Such fees are "another possible reason for low rates of refinancing," the Fed wrote, adding that the charges are "difficult to justify."
Meanwhile, even though Freddie is a ward of the federal government, its top executives are highly compensated. The Freddie Mac official then in charge of its investment portfolio, Peter Federico, made $2.5 million in 2010, and had target compensation of $2.6 million for last year — the time period during which most of these inverse floater investments were made. ProPublica and NPR made numerous attempts to reach Federico. A woman who answered his home phone said he declined to comment.
Monday, January 23, 2012
December Existing-Home Sales Show Uptrend
Washington, DC, January 20,
2012
Existing-home sales continued
on an uptrend in December, rising for three consecutive months and remaining
above a year ago, according to the National
Association of Realtors®.
The latest monthly data shows
total existing-home
sales1 rose 5.0 percent to a seasonally adjusted annual rate of 4.61
million in December from a downwardly revised 4.39 million in November, and are
3.6 percent higher than the 4.45 million-unit level in December 2010. The
estimates are based on completed transactions from multiple listing services
that include single-family homes, townhomes, condominiums and co-ops.
Lawrence Yun,
NAR chief economist, said these are early signs of what may be a sustained
recovery. “The pattern of home sales in recent months demonstrates a market in
recovery,” he said. “Record low mortgage interest rates, job growth and bargain
home prices are giving more consumers the confidence they need to enter the market.”
For all of 2011, existing-home
sales rose 1.7 percent to 4.26 million from 4.19 million in 2010.
According to Freddie Mac, the national average
commitment rate for a 30-year, conventional, fixed-rate mortgage
fell to another record low of 3.96 percent in December from 3.99 percent in
November; the rate was 4.71 percent in December 2010; recordkeeping began in
1971.
NAR President Moe Veissi,
broker-owner of Veissi & Associates Inc., in Miami, said more buyers are
expected to take advantage of market conditions this year. “The American dream
of homeownership is alive and well. We have a large pent-up demand, and
household formation is likely to return to normal as the job market steadily
improves,” he said. “More buyers coming into the market mean additional
benefits for the overall economy. When people buy homes, they stimulate a lot
of related goods and services.”
Total housing inventory at the
end of December dropped 9.2 percent to 2.38 million existing homes available
for sale, which represents a 6.2-month supply2 at the current sales pace, down
from a 7.2-month supply in November.
Available inventory has trended
down since setting a record of 4.04 million in July 2007, and is at the lowest
level since March 2005 when there were 2.30 million homes on the market.
“The inventory supply suggests
many markets will see prices stabilize or grow moderately in the near future,”
Yun said.
Foreclosures3 sold for an
average discount of 22 percent in December, up from 20 percent a year ago,
while short sales closed 13 percent below market value compared with a 16
percent discount in December 2010.
The national median
existing-home price4 for all housing types was $164,500 in December, which is
2.5 percent below December 2010. Distressed homes – foreclosures and short
sales – accounted for 32 percent of sales in December (19 percent were
foreclosures and 13 percent were short sales), up from 29 percent in November;
they were 36 percent in December 2010.
All-cash sales accounted for 31
percent of purchases in December, up from 28 percent in November and 29 percent
in December 2010. Investors account for the bulk of cash transactions.
Investors purchased 21 percent
of homes in December, up from 19 percent in November and 20 percent in December
2010. First-time buyers fell to 31 percent of transactions in December from 35
percent in November; they were 33 percent in December 2010.
Contract failures were reported
by 33 percent of NAR members in December, unchanged from November; they were 9
percent in December 2010. Although closed sales are holding up better than this
finding would suggest, contract cancellations are caused largely by declined
mortgage applications and failures in loan underwriting from appraised values
coming in below the negotiated price.
Single-family home sales
increased 4.6 percent to a seasonally adjusted annual rate of 4.11 million in
December from 3.93 million in November, and are 4.3 percent higher than the
3.94 million-unit pace a year ago. The median existing single-family home price
was $165,100 in December, which is 2.5 percent below December 2010.
Existing condominium and co-op
sales rose 8.7 percent to a seasonally adjusted annual rate of 500,000 in
December from 460,000 in November but are 2.0 percent below the 510,000-unit
level in December 2010. The median existing condo price was $160,000 in
December, down 3.0 percent from a year ago.
Regionally, existing-home sales
in the Northeast jumped 10.7 percent to an annual pace of 620,000 in December
and are 3.3 percent above a year ago. The median price in the Northeast was
$231,300, which is 2.7 percent below December 2010.
Existing-home sales in the
Midwest rose 8.3 percent in December to a level of 1.04 million and are 9.5
percent above December 2010. The median price in the Midwest was $129,100, down
7.9 percent from a year ago.
In the South, existing-home
sales increased 2.9 percent to an annual level of 1.76 million in December and
are 3.5 percent above a year ago. The median price in the South was $146,900,
down 1.1 percent from December 2010.
Existing-home sales in the West
rose 2.6 percent to an annual pace of 1.19 million in December but are 0.8
percent below December 2010. The median price in the West was $205,200, up 0.3
percent from a year ago.
The National Association of
Realtors®, “The Voice for Real Estate,” is America’s largest trade association,
representing 1 million members involved in all aspects of the residential and
commercial real estate industries.
# # #
NOTE: For local information,
please contact the local association of Realtors® for data from local multiple
listing services. Local MLS data is the most accurate source of sales and price
information in specific areas, although there may be differences in reporting
methodology.
Monday, January 16, 2012
Twin Cities home sales are up, but prices are down
Twin Cities home sales are up, but prices are down
JIM BUCHTA, Star Tribune
Higher sales, but much lower prices. That pretty much sums up the
Twin Cities housing market in 2011.And those diverging realities suggest that the area is still a long way from recovery as foreclosures and short sales accounted for a significant chunk of transactions last year.
Home sales in the Twin Cities metro area during the year rose 8.2 percent compared with 2010, but the median sale price fell 11.7 percent to $150,000, according to data released Tuesday by the St. Paul Area Association of Realtors and the Minneapolis Area Association of Realtors.
There were 41,429 home sales in 2011. With the exception of 2009, a year when the federal home buyer's tax credit helped goose sales, that was the most sales since 2006. But half of the closed sales last year were either foreclosures or short sales, down slightly from previous years.
Richard Tucker, president of the St. Paul Area Association of Realtors, said while 2011 showed promise, "price increases will be the final piece of the recovery."
The market was dogged by historically high levels of foreclosures and short sales that were popular with bargain shoppers and investors hungry for deals. While demand for those distressed homes have buoyed sales, they've put considerable downward pressure on prices. The 2011 median sale price of $150,000 is the lowest in more than a decade. Since the downturn began in 2006, when the median sale price topped out at $230,000, prices have been on a downward spiral.
Cari Linn, a sales agent with Coldwell Banker Burnet and president of the Minneapolis Area Association of Realtors, said that the market has become fragmented, with the biggest price declines coming from distressed sales, which dropped 14.2 percent to $115,000. Prices on traditional listings were off only 7.8 percent to $200,000, a sign of strengthening demand, tight inventory and less flexibility from sellers. Generally, bank-owned properties sell for far less than a traditional listing because lenders want to unload those properties quickly.
Despite ongoing troubles with foreclosures, Linn and other agents point to a historic decline in listings as a sign that the market is on the cusp of recovery. Overall inventory in 2011 was down nearly 30 percent from the previous year, but was down 41.4 percent compared with 2007.
Stronger sales helped whittle away at the number of houses on the market, but there were also fewer homeowners willing to put their houses up for sale. Many prospective sellers are waiting out the market either because they don't want to sell at a discount or because they owe more on the homes than what they're worth.
The number of new listings during December fell to the lowest level since 2004.
Strong sales and declines in inventory caused the absorption rate -- the number of months that it would take to sell the existing inventory -- to dip to 4.5 months. The market is considered balanced when there's a five-month supply of listings.
The latest report does little to explain how many sellers are waiting in the wings for better prices, or how many distressed properties are in the hands of lenders and have yet to hit the market. Banks are now stepping up foreclosure proceedings in the wake of the robo-signing scandal, which caused lenders to reevaluate the way foreclosures are processed.
Because of those unknowns, Jeanne Boeh, chairwoman of the Economics Department at Augsburg College in Minneapolis, said that while double-digit price declines are very unlikely in 2012 , prices will take longer to recover than the unusually low 2011 inventory levels might suggest.
"Inventory is down because people who don't have to sell aren't," she said. "Right now, people are saying 'I'm in no hurry.'"
Jim Buchta • 612-673-7376
Monday, January 9, 2012
Make Sure You Are Taking Advantage of All 2011's Tax Deductions
It's that time of year, time to pull together all your tax information for 2011. Here are some things that I found useful for you to use to help save some money on your taxes. If you have any questions on these items talk with a trusted tax advisor and if you don't have one, I can get you pointed in the right direction.
Information brought to you by houselogic.com:
HOME RELATED TAX DEDUCTIONS
There are deductions for mortgage interest, home offices, vacation homes, private mortgage insurance, and even medical home improvements. HouseLogic’s insights help you determine which fit your circumstances.
Read more: http://www.houselogic.com/home-taxes-financing/taxes-incentives/tax-deductions/#ixzz1iz8Dm0k4
ENERGY TAX CREDITS
2011’s federal energy tax credits of up to $500 for various home improvements are a far cry from what they were last year. But if the limits and other fine print—which we’ll get to—doesn’t dissuade you and you really need to upgrade one or more of the following systems, take advantage of the energy tax credits.
The energy tax credits are small, but at least a credit is better than a deduction:
No matter how much you spend on some approved items, you’ll never get the $500 credit—though you could combine some of these:
And not all products are created equal in the feds’ eyes. Improvements have to meet IRS energy-efficiency standards to qualify for the tax credit. In the case of boilers and furnaces, they have to meet the 95 AFUE standard. EnergyStar.gov has the details.
Tax credits cover installation—sometimes
Rule of thumb: If installation is either particularly difficult or critical to safe functioning, the credit will cover labor. Otherwise, not. (Yes, you’d have to be pretty handy to install your own windows and roof, but the feds put these squarely in the “not covered” category.)
Installation covered for:
Installation not covered for:
Determine if the system you’re considering is eligible for the credits. Go to Energy Star’s website for detailed descriptions of what’s covered; then talk to your vendor.
Save system receipts and manufacturer certifications. You’ll need them if the IRS asks for proof.
File IRS Form 5695 with the rest of your tax forms in 2012.
This article provides general information about tax laws and consequences, but isn’t intended to be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice, and remember that tax laws may vary by jurisdiction.
Read more: http://www.houselogic.com/home-advice/tax-credits/how-to-collect-2011-tax-energy-credits/#ixzz1iz9dLJ3s
Information brought to you by houselogic.com:
HOME RELATED TAX DEDUCTIONS
There are deductions for mortgage interest, home offices, vacation homes, private mortgage insurance, and even medical home improvements. HouseLogic’s insights help you determine which fit your circumstances.
Read more: http://www.houselogic.com/home-taxes-financing/taxes-incentives/tax-deductions/#ixzz1iz8Dm0k4
ENERGY TAX CREDITS
2011’s federal energy tax credits of up to $500 for various home improvements are a far cry from what they were last year. But if the limits and other fine print—which we’ll get to—doesn’t dissuade you and you really need to upgrade one or more of the following systems, take advantage of the energy tax credits.
- Biomass stoves
- Heating, ventilation, air conditioning
- Insulation
- Roofs (metal and asphalt)
- Water heaters (non-solar)
- Windows, doors, and skylights
- Storm windows and doors
The energy tax credits are small, but at least a credit is better than a deduction:
- Deductions just reduce your taxable income.
- With a credit, you get a dollar-for-dollar reduction in your tax liability: If you get the $500 credit, you pay $500 less in taxes.
- Other limits on IRS energy tax credits besides $500 max
- Credit only extends to 10% of the cost (not the 30% of yesteryear), so you have to spend $5,000 to get $500.
- $500 is a lifetime limit. If you pocketed $500 or more in 2009 and 2010 combined, you’re not entitled to any more money for energy-efficient improvements in the above seven categories. But if you took $300 in the last two years, for example, you can get up to $200 in 2011.
- With some systems, your cap is even lower than $500.
- $500 is the max for all qualified improvements combined.
- Certain systems capped below $500
No matter how much you spend on some approved items, you’ll never get the $500 credit—though you could combine some of these:
- System Cap
- New windows $200 max (and no, not per window—overall)
- Advanced main air-circulating fan $50 max
- Qualified natural gas, propane, or oil furnace or hot water boiler $150 max
- Approved electric and geothermal heat pumps; central air-conditioning systems; and natural gas, propane, or oil water heaters $300 max
And not all products are created equal in the feds’ eyes. Improvements have to meet IRS energy-efficiency standards to qualify for the tax credit. In the case of boilers and furnaces, they have to meet the 95 AFUE standard. EnergyStar.gov has the details.
Tax credits cover installation—sometimes
Rule of thumb: If installation is either particularly difficult or critical to safe functioning, the credit will cover labor. Otherwise, not. (Yes, you’d have to be pretty handy to install your own windows and roof, but the feds put these squarely in the “not covered” category.)
Installation covered for:
- Biomass stoves
- HVAC
- Non-solar water heaters
Installation not covered for:
- Insulation
- Roofs
- Windows, doors, and skylights
- How to claim the 2011 energy tax credit
Determine if the system you’re considering is eligible for the credits. Go to Energy Star’s website for detailed descriptions of what’s covered; then talk to your vendor.
Save system receipts and manufacturer certifications. You’ll need them if the IRS asks for proof.
File IRS Form 5695 with the rest of your tax forms in 2012.
This article provides general information about tax laws and consequences, but isn’t intended to be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice, and remember that tax laws may vary by jurisdiction.
Read more: http://www.houselogic.com/home-advice/tax-credits/how-to-collect-2011-tax-energy-credits/#ixzz1iz9dLJ3s
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