Real Estate News

Why millenials are hurting the real estate recovery

First time home buyers haven’t been helping the housing recovery as planned. They haven’t helped not because they don’t want to be homeowners, but because they have more obstacles standing in their way.

                It is a tough road for this generation (ages 18-39), but it is something they all aspire to do. It is in most of their plans, but renting has become somewhat of an undesirable situation, and they want to own for the next time they move. What is getting in the way for this generation is the economy. There are repercussions that are far too dangerous to go ahead and buy a house if it is not done right.

                What this generation is facing is a lack of savings, poor credit scores, and horrible student loan debt is what is hindering young people from buying a home.  Young people now a day are waiting longer to get married and start a family, which are life events that lead them to purchase a home.

                For now, this absence of young adults from the housing market continues to dent the homeownership rate. The age group 25-35 is having the hardest time recovering from the “great recession”. This generation is mostly renting. While experts believe it will get worse before it gets better, one thing is for sure: Young people have plenty of hurdles to becoming homeowners.

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First Time Real Estate Investment Strategy

     More and more people are living in rental properties today now than ever. This means investing in one can be extremely lucrative. As with any real estate investment, a rental investment has risk. It also requires tedious research, but the risk and rewards can pay off. You need to take into account the considerations before taking the step out on that branch. If you have no prior experience, you need to ask yourself a few key questions.

Money Matters- first look at your financial situation. What kind of down payment can you make, and how much of a monthly mortgage payment can you afford? How much will you need to make in monthly income in order to keep up with the monthly payments? Do you have enough of an emergency fund to handle vacancies in a down period?

     It's not a bad idea to get pre-approved for an investment property loan, and then secure the service of a real estate agent to help you find the type of property you desire.

Location Matters- You obviously don't want to invest in an area where no one wants to live, so find a place where people do want to live. Consider the proximity to transportation, schools, and shopping, as well as the areas crime rate. These are the same considerations you would look at if you were buying a home for yourself. Next decide what kind of property you want to invest in and what interests you. Are you wanting a single, or multi-person dwelling property. Condos? An apartment complex? A vacation destination?

     Once you've decided upon the property type, you will need to look at whether or not you have the financials (and time) to handle a fixer upper. If not, be ready to buy a place that has minimal necessary up-front fixers. You will also need to think about how much rent to charge based on the area and amenities the property offers.

Management Matters- Are you ready to manage...

Green Construction Predicted to Grow

     Green home construction is expected to grow significantly in the next four years according to the latest McGraw-Hill construction Smart Market Report. In 2011 the green home share was expected to grow by 17 percent, but that number for 2012 is expected to grow by an unbelievable 29-38 percent into 2016.

     In the current market there is a need to differentiate your homes from others. When builders can build green homes, they are not only offering higher quality, but higher value, and have a major edge over the traditional houses being built.

      Consumers want green homes for several reasons. First is they will save themselves money in the long run. Also these homes are perceived as higher quality. There are other factors that are driving green home growth. Two-thirds of builders have found that their customers have been requesting green homes in seek of lower energy costs.

     The higher costs of building green homes is less of a factor now than it was four years ago. The supply of green resources has increased which lowers the price of their cost for builders.

     There has surely been a shift in the market since green homes have taken charge of the market. The report found that 80 percent report that energy efficiency is making today's homes greener compared to the past. Energy efficiency is a huge feature that is growing in the market. It has become the top practice among builders and remodelers. 

     Another top consideration is indoor air quality. 95 Percent of green home builders are using this feature to attract their customers. These findings confirm the shift we have seen in the market. The factors that seem to be driving the market today are energy effeciency and sustainable waste management practices.

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Shortage of Homes for Sale Creates Fierce Competition

     The newest problem in the slowly recovering housing market isn't a shortage of buyers, but a shortage of good, quality homes. Potential buyers are packing open houses and making offers on properties before they are even listed. This is causing bidding wars. With the wars created, real estate agents are competing among each other to represent the few sellers that do exist.

     Housing inventory has sunk to levels not seen since the bubble years. In April the homes across the country with a "for Sale" sign hit a record low of 2.5 million since 2006. Buyers are finding that the competition for quality homes is much more intensive than they thought.

      Near rock bottom interest rates and the sharp decline in inventory has helped stabilize some of the hardest hit markets like Las Vegas, Phoenix, Miami, etc. Some agents are worried that the lack of homes will turn off potential buyers, which would stifle the recent recovery in home sales. 

     All the predictions about the upcoming wave of foreclosures that was expected to dump a bunch of homes into the market hasn't come. Less borrowers are entering default, and banks are better managing the properties the have in their books.

      Keep you eyes open for the best homes, and be sure to act fast!

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Homeowners Make it Personal When they Can't Move When Planned

     More than a quarter of Americans plan on staying in their home 20 years or longer than planned, and that's fueling a trend in personalized home improvements. 

     The National Association of Remodeling Industry (NARI) says personalizing spaces is a better plan thanworrying about market conditions that could ruin plans to move. 

     NARI claims that 26% of those surveyed in an online poll said they plan to stay an additional 16-20 yars where they are and another 23% said they would stay 6-10 years because home values have declined in the recent economic downturn.

     This tells quite a bit of what homeowners are expecting as a result of the recession.  Because many homes ahve decreased in value, many people want to stay in one spot much longer than they had originally had intended. However, this market action has caused another unintended reaction of a new remodeling trend. homes that better fit personal lifestyles are more suitable for the long run. 

    Remodeling use to be about fixing a home up to be sold for more than you paid for it, but not anymore. Remodeling has come to only fixing the house up to fit specalized and personal renovations taht suit only the residents needs. 

     This isn't just new fabrics, window covers, and such. Think of brand new kitchens, real work at home head quarters, tech centers, home movie theatres, art rooms, vehicle collection garages, wine cellars and tasting rooms, mini micro breweries, yoga studios, meditation rooms, and much more. If you can think of it, someone out there probably has it. The space is only limited by your imagination. 

     it is important to make your renovations a true reflection of your lifestyle and not just a whimsical, impulsive move to renovate. Make sure that whatever you decide to build is something that you will use, otherwise...

Senate Banking Democrats urge FHFA to Allow More REFIS

Recently all twelve Democrats in the Senate Banking Committee pressured the Federal Housing Finance Agency to remove more restrictions to refinancing Fannie Mae and Freddie Mac mortgages.

The FHFA eased a few rules last November under a renewed Home Affordable Refinancing Program. It lifted the loan-to-value cap, specific appraisal requirements, up front loan-level price adjustment fees, and removed some representation-and-warranty risk if the borrower refinances with the same lender.

Last Friday the lawmakers sent a letter requesting more. They suggested the removal of upfront fees when Fannie and Freddie already have the credit risk. They asked for FHFA to make refinancing easier with buyers who have 20% or more in equity on their house. They also wanted to reduce more rep and warranty risk in order to remove disincentives for servicers to refinance.

They explain in their letter that as citizens you all can no onger wait, and as 'elected officials' neither can they.

Around 2,700 mortgages with a loan-to-value ration between 105% and 125% received HARP refinancing in December, and nearly half of the 5,100 such loans refinanced in November.

More than 20,600 with LTV's between 80% and 125% received HARP refinancing which was also down 31% from the previous month. Meanwhile, mortgage rates sank below 4% last week according to Freddie Mac.

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Top Cities for Foreclosure Deals

'Impressive' would be a good word to describe the number of distressed and foreclosed homes in years the most recent years. In most towns these foreclosed properties have been drawing investors in to sign a contract. All that is fore sure is that these homes need to sell.

Some investors and buyers may feel a slight sting known as guilt that they're taking advantage of sellers, but keep in mind that these homes are already in the bank's posession. These homes aren't individually owned, and buying up these homes can help reinvigorate the market.

Nearly a third of today's sales consist of foreclosed homes. Most of these homes should be been put on the market a few years ago, but are just now popping up. Don't feel any guilt, because today any sale is a good sale.

According to RealtyTrac.com there are great deals out there. In some towns buyers are able to buy homes at a 50% discount of more over non-distressed properties. They're reporting 'these steep foreclosure discounts are available in a wide range of markets, with a wide range of average priced homes. At the high ends of homes in San Francisco and Bridgeport, Connecticut, where the average price of a foreclosure was more than $300,000-- still 50% below the average price of homes not in foreclosure in the markets.'

Some of these eleven markets had amazingly low prices below $100,000, which made affordability rates sky-high. These cities were Saginaw, Michigan; Toledo, Ohio; Memphis, Tennessee; St. Louis, Missouri; and Milwaukee, Wisconsin. The city that lead the way with an average of 68% discount was Trenton, New Jersey, where the foreclosed property was selling for an average of $108, 302.

The remaining towns in the 50% discount list were Springfiled, Massachusetts;  New Haven, Connecticut; and Atlanta Georgia.

Other cities are still seeing major improvements of their sales being attributed to foreclosures or bank-owned properties. Most of these citites are in the state of...

The Federal Reserve Beige Book

To figure out where real estate is going in the next few months, start looking towards the Federal Reserve. Maybe you should focus on the latest pending home sales numbers? Look at both, but the key is this: The Federal Reserve's latest Beige Book Report. This report has economic data from each 12 regional banks, and nine of those 12 had positive data.

Despite the bad weather at the beginning of the year, the Federal Reserve found consumer spending and manufacturing output increasing. Both of these factors are good indicators of economic growth, especially consumer spending which accounts for 70% of U.S. economic activity.

A seperate report by the Commerce Department stated that consumer spending increased by half of a percent in January, which outpaced the growth for the past four months.

What does all this mean? It means consumers are getting their confidence back and spending more money to fuel the economy.

For the housing market, the National Association of Realtors claimed that the severe weather that tore parts of the country apart has damaged home shopping, knocking down pending home sales by 7.6 percent.

Pending home sales, which are signed contracts that havent yet been closed, are still 12 percent higher than they were this time last year. It's believed that there will be a bounce back in the next few months because buyers will be rushing to sign contracts to qualify for the expiring home purchase tax credits.

Home prices across the country are showing hints of improvements. According to the latest Clear Capital Price Index, prices have risen 5% on average for the most recent quarter on a year-over-year basis.

What is helping this is continuing favorable financing conditions in the mortgage markets. Mortgage applications have been up 12 percent in the past few months.

 

Goodluck

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Real Estate Outlook: Jobs Key to Recovery

Having a job is a luxary in today's economy. Their rebound is a huge factor in recovering the housing market. President Obama's proposed jobs legislation includes $15 billion dollars that would go toward fixing up and selling foreclosed homes. These homes would be sold at no profit, or at the price it cost to refurbish them.

The unemployment rate remains at 9.1% and even though jobs have been growing, they're not growing fast enough to establish a true recovery. Fewer jobs means less construction, less projects completed, and less money trading hands. The U.S. Commerce Department states that some months are worse than others concerning foreclosed homes. While most declines in housing were seen on the multi-family houses, some months have seen as much as 5%. Builders are hesitant to build houses due to lack of buyers,  possible foreclosures. This being the case builders confidence has declinded, but has risen slightly over the past few months, but still at a depressed level.

Many consumers are still unable or unwilling to move forward with the process of buying a house. Some places around the country are growing, but we need to get the whole country on board to grow, which means we need everyone to have jobs.

The only place where builders are still comfortable is the midwest. Builders have continued to confront the same challenges in accessing construction credit, obtaining accurate appraisal values for new homes, and competing against foreclosed properties that they have seen for awhile. What didn't help builder and consumer confidence was the market disruption caused by S&P downgrade and congressional gridlock on the budget deficit.

In order to get this great country back on it's feet, we need our Americans to get off their butts and get job. This is just a small step towards recovery, but it gets businesses moving again and puts money in peoples hands which usually goes right back into the economy. Help your country, help yourself, and...

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RE/MAX Associates Jan 2012 Newsletter

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