AUGUST HOME SALES BEHIND PACE SET IN 2013, AHEAD OF FIVE YEARS PRIOR
Prices better than last year and continue to lead housing performance statewide

(INDIANAPOLIS, IN) – There were just 276 less homes sold statewide in August than during the same month of last year, a 3.6 percent decrease; however, last month's home sales outpaced the five years prior to 2013. This is according to the Indiana Real Estate Markets Report today released by the state's REALTORS®.

August home sale prices were better than last year. The median sale price of $130,000 is a 4.0 percent increase from 2013, and the average of $159,846 is a 6.1 percent increase.

Other year-over-year comparisons from the report show -

• The number of pending home sales increased 4.4 percent to 6,889
• The percent of original list price received increased 1.6 percent to 94.2
• The number of new listings decreased 6.7 percent to 10,327
• The inventory of homes for sale increased 4.8 percent to 47,901

"Activity may fall a bit short of the impressive levels it reached last year, but housing has performed much stronger altogether than predicted the first of the year, with prices leading the charge," said Karl Berron, CEO of the Indiana Association of REALTORS®.

"It's encouraging to see second quarter GDP growth revised upwards and stronger-than-expected jobs numbers in recent months," continued Berron. "Wage growth is the fuel necessary for recovery to really take off."

Source: http://www2.realtoractioncenter.com/site/MessageViewer?amp;autologin=true&dlv_id=342549&em_id=364213.0

Real estate practitioners in vacation spots across the country say the market for second homes is picking up steam as buyers grow more confident given signs of growth in small businesses.

The National Association of REALTORS® reports a 7 percent jump in vacation sales to 502,000 last year, accounting for 11 percent of all volume. The median vacation home price was $121,000 last year, down from a peak of $204,100 in 2005, but agents in some locales say prices are beginning to creep up as the distressed inventory is moved out.

Vacation-home buyers are snapping up higher-priced properties, although Jennifer Calenda of Michael Saunders & Co. in Southwest Florida says prices are not necessarily on the rise. With inventory hitting a seven-year low of 4.7 months in Sarasota, Manatee, and Charlotte counties, she says buyers "are saying 'we better hurry up.'"

Inventory is so scarce in some markets that some real estate professionals report multiple offers; and with prices probably at the bottom, Trulia economist Jed Kolko says people ready to make a cash purchase or who can qualify for low mortgage rates should strongly consider buying now.

Source: "Vacation Home Buyers Return, Pick Pricier Properties," Investor's Business Daily

An index measuring improvement in the nation’s housing markets is showing signs of plateauing, which could be a good sign for the spring home-buying season, according to an economist.

The number of metro areas joining the Improving Markets Index ticked up slightly to 101 in April from 99 in March, according to the index released by the National Association of Home Builders and First American. The index measures improvements in metro areas by analyzing increases in housing permits, employment, and housing prices for at least the last six consecutive months.

Source: http://realtormag.realtor.org/news-and-commentary/daily-news?page=1

More home buyers may jump off the sidelines this spring as they get more urgent about purchasing a home, fearing that home price and mortgage rate increases are on the horizon.

Housing surveys in recent weeks have shown that more Americans are seeing now a great time to purchase a home. In the most recent survey, 73 percent of Americans say now is a good time to buy, according to the latest Fannie Mae Housing Survey conducted in March. That’s up from 70 percent in February who said it was a great time to buy.

"Conditions are coming together to encourage people to want to buy homes," says Doug Duncan, Fannie Mae’s chief economist. "With an increasing share of consumers expecting higher mortgage rates and home prices over the next 12 months, some may feel that renting is becoming more costly and that home ownership is a more compelling housing choice."

Indeed, more buyer urgency is evident in the market. Thirty-three percent of those surveyed by Fannie say they expect home prices soon to increase, which is the highest percentage in a year. What’s more, nearly 40 percent say they expect mortgage rates to rise in the next year too, which is also up from previous surveys.

Coupled with that, 48 percent of Americans say they expect rents to continue to climb, and 44 percent say they expect their financial situation to improve in the next year.

Source: “More Americans Think It’s Time to Buy a Home,” MSN Real Estate (April 9, 2012)

Home buying is the smarter choice than renting, according to Trulia’s Winter 2012 Rent vs. Buy Index.

Buying a home is more affordable than renting in 98 of the nation’s 100 largest metro areas, according to the index, which tracks asking prices for rental units compared to for-sale homes in major metro areas.

The only two metros out of the 100 tracked where renting was found to be the better deal: Honolulu and San Francisco. Still, the index notes that if you plan to stay in those markets more than five years, you might still be better off owning than renting in those markets too.

Falling home values and low mortgage rates have made home ownership more affordable. Meanwhile, rents have been on the rise.

“As rents rise and prices stagnate, home ownership is becoming even more affordable, but rising rents create a dilemma for people who can’t afford to buy yet,” says Jed Kolko, Trulia’s chief economist. “Rising rents make it harder for people to save for a down payment, which is the biggest barrier to buying a home that aspiring home owners face.”

Top 10 Metros to Buy vs. Rent

1. Detroit

2. Oklahoma City, Okla.

3. Dayton, Ohio

4. Warren-Troy-Farmington Hills, Mich.

5. Toledo, Ohio

6. Grand Rapids, Mich.

7. Cleveland, Ohio

8. Atlanta

9. Gary, Ind.

10. Memphis, Tenn.

By Melissa Dittmann Tracey, REALTOR® Magazine Daily News http://realtormag.realtor.org/daily-news/2012/03/22/buying-cheaper-renting-in-nearly-all-major-cities

The Indiana Association of Realtors is reporting a 14 percent jump in closed homes sales for November, compared to the same month a year earlier. IAR also says prices did not follow the trend. The statewide median and average price of homes sold in November were slightly less than the same period in 2010.

According to the monthly “Indiana Real Estate Markets Report” today released by the Indiana Association of REALTORS®, activity was high in November with both the number of closed and pending home sales up by double digits year-over-year.

Statewide, when comparing November 2011 to November 2010:

The number of closed home sales increased 14.2% to 4,411; and
The number of pending home sales increased 10.4% to 3,959.
Prices did not follow that trend. Both the statewide median and average price of homes sold in November 2011 was less than in November 2010, but just slightly:

The median sale price of homes decreased 1.8% to $110,000; and
The average sale price of homes decreased 0.2% to $132,949.
“We’re close to being able to say that 2011 was better than the last two years,” said Karl Berron, Chief Executive Officer. “Local housing markets may not be making progress as quickly as we’d like, but they’re making progress and that’s good news for everyone.”

With regard to the slight dip in prices, Berron said REALTORS® were not concerned because year-to-date, the median sale price of homes in Indiana is actually up when compared to 2010 and 2009, and so is the average sale price.

“Home prices here in Indiana have historically held their ground,” said Berron. “It’s one of the reasons we enjoy a homeownership rate of more than seventy percent, and is certainly a positive for would-be home owners who are now shopping with some of the lowest mortgage interest rates in current memory.”

Whether market activity and value continue to grow depends upon a number of factors outside of the real estate industry’s control say REALTORS® across the state. The number one item on their list is more jobs, which drives number two and three on the group’s list – available financing for qualified buyers and less foreclosure inventory.

“Folks looking to invest should start with the sortable county tables of this report and then talk to a local REALTOR® who can give the most insight into what’s happening in a neighborhood, city or school district,” concluded Berron.

More about the “Indiana Real Estate Markets Report”

Established in May 2009 and found online under the Reports tab of www.IndianaIsHome.com, the “Indiana Real Estate Markets Report” was the first-ever county-by-county comparison of existing single-family home sales in Indiana. In March 2010, IAR added statistics on other types of existing detached single-family (DSF) home sales – condominiums, duplexes, townhomes, mobile homes, etc. – to the report.

The report became even more robust in August 2010. It now tells how the statewide housing market is performing according to eight different indicators, each with one-month and year-to-date comparisons, as well as a historical look. It also provides specific county information for 91 of Indiana’s 92 counties in a sortable table format, allowing for consistent comparison between local markets. IAR obtains the data directly from and releases this report in partnership with 26 of the state’s 27 Multiple Listing Services (MLSs), including the Broker Listing Cooperative® (BLC®) in both central and southwestern Indiana.

IAR represents approximately 15,000 REALTORS® who are involved in virtually all aspects related to the sale, purchase, exchange or lease of real property in Indiana. The term REALTOR® is a registered mark that identifies a real estate professional who is a member of America’s largest trade association, the National Association of REALTORS®, and subscribes to its strict Code of Ethics.

Source: Indiana Association of Realtors

Source: http://www.insideindianabusiness.com/newsitem.asp?ID=51432

Total existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 7.7 percent to a seasonally adjusted annual rate of 5.03 million in August from an upwardly revised 4.67 million in July, and are 18.6 percent higher than the 4.24 million unit level in August 2010.

Lawrence Yun, NAR chief economist, said there are some positive market fundamentals. “Some of the improvement in August may result from sales that were delayed in preceding months, but favorable affordability conditions and rising rents are underlying motivations,” he said. “Investors were more active in absorbing foreclosed properties. In additional to bargain hunting, some investors are in the market to hedge against higher inflation.”

Investors accounted for 22 percent of purchase activity in August, up from 18 percent in July and 21 percent in August 2010. First-time buyers purchased 32 percent of homes in August, unchanged from July; they were 31 percent in August 2010.

All-cash sales accounted for 29 percent of transactions in August, unchanged from July; they were 28 percent in August 2010; investors account for the bulk of cash purchases.

“We had some disruptions from Hurricane Irene in the closing weekend of August, when many sales normally are finalized, along the Eastern seaboard and in New England,” Yun said. “As a result, the Northeast saw the smallest sales gain in August, and some general impact is expected in September with widespread flooding from Tropical Storm Lee. Aberrations in housing data are possible over the next couple months as markets recover from disrupted closings and storm damage.”

Yun said an extremely important issue currently is the renewal and availability of the National Flood Insurance Program, scheduled to expire at the end of this month. “About one out of 10 homes in this country need flood insurance to get a mortgage, and we would see significant negative market impacts without it,” he said.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 4.27 percent in August, down from 4.55 percent in July; the rate was 4.43 percent in August 2010. Last week, Freddie Mac reported the 30-year fixed rate fell to a record low 4.09 percent.

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said the market is remarkably affordable for people with secure jobs, good credit and long-term plans. “All year, the relationship between home prices, mortgage interest rates and family income has been hovering at historic highs, meaning the best housing affordability conditions in a generation,” he said.

“The biggest factors keeping home sales from a healthy recovery are mortgages being denied to creditworthy buyers, and appraised valuations below the negotiated price. Buyers may be able to find more favorable credit terms with community and small regional banks, and Realtors® can often give buyers advice to help them overcome some of the financing obstacles,” Phipps said.

Contract failures – cancellations caused largely by declined mortgage applications or failures in loan underwriting from appraised values coming in below the negotiated price – were reported by 18 percent of NAR members in August, up from 16 percent July and 9 percent in August 2010.

The national median existing-home price for all housing types was $168,300 in August, which is 5.1 percent below August 2010. Distressed homes – foreclosures and short sales typically sold at deep discounts – accounted for 31 percent of sales in August, compared with 29 percent in July and 34 percent in August 2010.

Total housing inventory at the end of August fell 3.0 percent to 3.58 million existing homes available for sale, which represents an 8.5-month supply at the current sales pace, down from a 9.5-month supply in July.

Single-family home sales rose 8.5 percent to a seasonally adjusted annual rate of 4.47 million in August from 4.12 million in July, and are 20.2 percent above the 3.72 million pace in August 2010.

The median existing single-family home price was $168,400 in August, which is 5.4 percent below a year ago.

Existing condominium and co-op sales increased 1.8 percent a seasonally adjusted annual rate of 560,000 in August from 550,000 in July, and are 8.3 percent higher than the 517,000-unit level one year ago. The median existing condo price was $167,500 in August, down 3.3 percent from August 2010.

Regionally, existing-home sales in the Northeast increased 2.7 percent to an annual pace of 770,000 in August and are 10.0 percent above a year ago. The median price in the Northeast was $244,100, which is 5.1 percent below August 2010.

Existing-home sales in the Midwest rose 3.8 percent in August to a level of 1.09 million and are 26.7 percent above August 2010. The median price in the Midwest was $141,700, down 3.5 percent from a year ago.

In the South, existing-home sales increased 5.4 percent to an annual pace of 1.94 million in August and are 16.9 percent higher than a year ago. The median price in the South was $151,000, which is 0.8 percent below August 2010.

Existing-home sales in the West jumped 18.3 percent to an annual pace of 1.23 million in August and are 20.6 percent higher than August 2010. The median price in the West was $189,400, down 13.0 percent from a year ago.

Source: NAR http://://realtormag.realtor.org/daily-news/2011/09/21/august-existing-home-sales-leap-despite-headwinds

Americans are more optimistic about their home buying prospects than residents of other countries, with nearly two-thirds of Americans saying now is a good time to buy a home, according to the new Genworth International Mortgage Trends Report.

The local economic outlook, concerns about property affordability, and worries about future unemployment are among the issues listed by survey respondents as obstacles to their purchasing a home.

Yet these economic concerns have not translated into excessive mortgage stress among U.S. home buyers. According to the survey, 87% of Americans who bought their first home in the past 12 months expected to easily meet their mortgage repayment obligations in the coming year, a slight improvement over the 85% who comfortably met their mortgage payments in the 12 months prior to the survey period.

Due to affordability issues — high home prices, higher costs of living, or fear of rising interest rates — the average age of first-time home buyers has risen in all countries except India over the last 40 years. The average age at which a person in the U.S. was able to purchase a first home rose from 27.3 in the 1970s to 31.6 in the 2000s.

“The U.S. is the most optimistic among all the markets surveyed about buying a home,” said Kevin Schneider, Genworth U.S. Mortgage Insurance president. “Nearly two-thirds of Americans surveyed believe now is a good time to buy a home … We hope that federal and state lawmakers recognize this pent-up demand and enact policies that foster prudent home ownership.”

Some key findings from other nations surveyed:

• Consumer confidence is a major factor in home buying. Developing countries are especially optimistic. India was the most positive country, with two thirds of Indian respondents feeling good about their national economy, followed by Mexico, where 42% of respondents were optimists.

• Indebtedness colors how households around the world view their financial situation and how they approach buying a home. Western countries tended to have higher levels of debt, but were also more comfortable taking on debt.

• In almost all of the countries surveyed, housing affordability is keeping first-home buyers out of the property market. The reasons for affordability challenges range from the rising costs of living, a fear of interest rate rises, lack of housing availability to high house prices.

Source: Genworth Financial

New home construction is picking up just in time for the spring buying season, according to the latest new-home report released on Tuesday from the Commerce Department. Builders broke ground on more new homes in March than in the last six months.

Another bright spot: Building permits, an indicator of future construction, increased 11.2 percent for the month.

After a dismal winter performance, new-home building bounced back 7.2 percent in March from February to a seasonally adjusted 549,000 units. Yet, the sector is still far below the 1.2 million units a year that economists consider a healthy building pace.

The new-home sector has faced hard times in recent years, competing against a flood of foreclosures and short sales on the market that have pushed housing prices down. In February, construction fell to its lowest level in nearly two years, and requests for building permits to start new projects had dropped to a five-decade low in February.

Builder sentiment also remains low, according to Monday’s release of the National Association of Home Builders’ monthly index of industry sentiment for April.

Builders' views on the market had risen slightly in March to 17 in the index but in April fell back to 16, a level that it had remained at for four straight months prior to March. Any reading below 50 indicates negative sentiment about the market, a level the index hasn’t been above since April 2006.

Source: “U.S. Housing Starts, Permits Rebounded in March,” Associated Press (April 19, 2011) and “Builder Outlook for Home Buying Falls Slightly as Foreclosures, Short Sales Weigh Heavy,” Associated Press (April 18, 2011)

Pending home sales improved further in December, marking the fifth gain in the past six months, according to the National Association of Realtors®

The Pending Home Sales Index,* a forward-looking indicator, increased 2.0 percent to 93.7 based on contracts signed in December from a downwardly revised 91.9 in November. The index is 4.2 percent below the 97.8 mark in December 2009. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, credits good affordability conditions and economic improvement. “Modest gains in the labor market and the improving economy are creating a more favorable backdrop for buyers, allowing them to take advantage of excellent housing affordability conditions. Mortgage rates should rise only modestly in the months ahead, so we’ll continue to see a favorable environment for buyers with good credit,” he said.

“In the past two years, home buyers have been very successful, with super-low loan default rates, partly because of stable home prices during that time. That trend is likely to continue in 2011 as long as there is sufficient demand to absorb inventory,” Yun said. “The latest pending sales gain suggests activity is very close to a sustainable, healthy volume of a mid-5 million total annual home sales. However, sales above 6 million, as occurred during the bubble years, is highly unlikely this year.”

The PHSI in the Northeast increased 1.8 percent to 73.9 in December but is 5.3 percent below December 2009. In the Midwest the index rose 8.0 percent in December to 84.6 but is 5.1 percent below a year ago. Pending home sales in the South jumped 11.5 percent to an index of 101.9 and are 1.7 percent above December 2009. In the West the index fell 13.2 percent to 105.8 and is 10.7 percent below a year ago.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

# # #

*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.

NOTE: Existing-home sales for January will be reported February 23 along with revisions for the past three years, and the next Pending Home Sales Index will be released February 28. Fourth quarter metro area home prices and state home sales will be published February 10; release times are 10:00 a.m. EST.

Source: http://www.realtor.org/press_room/news_releases/2011/01/phs_continue

2010 on par with 2009;
Median sale price of homes increases for the 13th month out of the last 15

Today’s release of the “Indiana Real Estate Markets Report” by the Indiana Association of REALTORS® (IAR) provides the usual month-over-month comparison and because of timing, also provides a comparison of calendar years that supports the association’s past recommendation for reviewing housing data in the long-term.

Statewide, when comparing 2010 to 2009:
The number of closed home sales decreased 6.6% to 57,765; and
The median sale price of homes increased 1.8% to $112,000.
The Report at a glance:
 
Statewide Housing Market Overview
(Monthly Indicators)
Sortable County Tables:
One-month & Year-to-date Views
Trailing three- & 12-month Views
Reportisode:
"The Long View"

“The federal homebuyer tax credit was only in play for a third of last year.  And yet, the numbers show the market on par with 2009, which might take some who listen to non-local news by surprise,” said Karl Berron, Chief Executive Officer.
“Admittedly, activity is not as high as we want it to be,” he continued.  “The good news is that prices are up, which is important to not just homeowners and families, but also to communities and the state.  In fact, the median sale price of homes has increased 13 out of the last 15 months."

Commercial real estate markets are flattening out, with modestly improving fundamentals expected in 2011, according to the NATIONAL ASSOCIATION OF REALTORS®.

“The basic fundamental of rising commercial leasing demand, resulting from a steadily improving economy, means overall vacancy rates have already peaked or will soon top out,” says Lawrence Yun, NAR's chief economist. “The outlook for the office and industrial markets has moderated with modestly declining vacancy rates expected as 2011 progresses, while the retail sector should hold fairly steady. Still, high vacancy rates imply falling rents.”

Yun anticipates a rise in household formation from an improving economy, which will increase demand for housing, both ownership and rental. “Multifamily housing is the one commercial sector that has held on relatively well in the past year, and can expect the best performance in 2011,” he added.

“Apartment rents could rise by 1 to 2 percent in 2011, after having fallen in 2009 and no growth in 2010,” Yun said. “This rent rise therefore could start to force up broader consumer prices as well.” He noted that the housing shelter cost of primary rent, and owner’s rental equivalence, is the biggest component in the Consumer Price Index, accounting for 32 percent of its total weight.

The Society of Industrial and Office REALTORS®, in its SIOR Commercial Real Estate Index, an attitudinal survey of more than 400 local market experts, shows vacancy rates are slowly improving, but rents continue to be soft with elevated levels of subleasing space on the market.

The SIOR index, measuring the impact of 10 variables, rose 1.6 percentage points to 42.6 in the third quarter, but remains well below a level of 100 that represents a balanced marketplace. This is the fourth straight quarterly improvement following almost three years of decline.

Commercial real estate development continues at stagnant levels with little investment activity, but is beginning to pick up in many parts of the country. NAR’s
latest Commercial Real Estate Outlook offers projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail, and multifamily markets. Historic data were provided by CBRE Econometric Advisors.

Office Markets
Vacancy rates in the office sector, where a large volume of sublease space remains on the market, are forecast to decline from 16.7 percent in the current quarter to 16.4 percent in the fourth quarter of 2011, but with very little change during in the first half of the year. The markets with the lowest office vacancy rates currently are New York City and Honolulu, with vacancies around 9 percent. All other monitored markets have double-digit vacancy rates.

Annual office rent is expected to decline 1.8 percent this year, and then slip another 1.6 percent in 2011. In 57 markets tracked, net absorption of office space, which includes the leasing of new space coming on the market as well as space in existing properties, should be a negative 3.7 million square feet this year and then a positive 16.4 million in 2011.

Industrial Markets
Industrial vacancy rates are projected to decline from 13.9 percent currently to 13.2 percent in the closing quarter of 2011. At present, the areas with the lowest industrial vacancy rates are Los Angeles, Salt Lake City, and Kansas City, with vacancies in the 8 to 10 percent range.

Annual industrial rent is likely to fall 4.0 percent this year, and decline another 3.4 percent in 2011. Net absorption of industrial space in 58 markets tracked should be a negative 25.1 million square feet this year and a positive 134 million in 2011.

Retail Markets
Retail vacancy rates are expected to change little, declining from 13.1 percent in the fourth quarter of this year to 13 percent in the fourth quarter of 2011. Markets with the lowest retail vacancy rates currently include San Francisco; Orange County, Calif.; and Honolulu, with vacancies in the 7 to 8 percent range.

Average retail rent is seen to drop 3.4 percent in 2010 but largely stabilize next year, slipping 0.3 percent in 2011. Net absorption of retail space in 53 tracked markets is projected to be a negative 0.5 million square feet this year and then a positive 5.0 million in 2011.

Multifamily Markets
The apartment rental market — multifamily housing — is expected to get a boost from growth in household formation. Multifamily vacancy rates are forecast to decline from 6.4 percent in the current quarter to 5.8 percent in the fourth quarter of 2011. Areas with the lowest multifamily vacancy rates presently are San Jose, Calif.; Miami; Boston; and Portland, Ore., with vacancies in a range around 4 percent.

Average apartment rent is likely to rise 0.2 percent this year and another 1.4 percent in 2011. Multifamily net absorption should be 85,200 units in 59 tracked metro areas this year, and another 147,000 in 2011.

Source: NAR

http://www.realtor.org/RMODaily.nsf/pages/News2010112901?OpenDocument

Consumer confidence and business spending are key to whether the U.S. housing market will move into a virtuous or a vicious cycle in 2011, NAR Chief Economist Lawrence Yun told a packed audience at the Residential Economic Outlook Forum Friday in New Orleans.

After the downturn, the housing market has clawed its way back to a point of near stability, Yun said, with the pace of new foreclosures easing, sales moving toward historically normal levels and prices on a national basis gaining modestly.

At the same time, affordability remains strong. He said all of the price excesses from the housing bubble have been squeezed out. In San Diego, for example, buyers today would pay $1,564 a month in mortgage payments for a house that at the height of the boom would have cost them $2,833 a month.

The broader economy is also showing positive signs, with businesses enjoying strong profits, sitting on huge cash reserves, and even adding jobs. Yun predicts this positive trend to continue into 2011, with existing home sales reaching 5.5 million units, prices rising a modest 1 percent, and the U.S. gross domestic product increasing to about 2.5 percent.

“We are entering a virtuous cycle,” he said. But for the positive trend to continue, he added, businesses will have to start spending some of their cash to fuel job growth at a far greater pace than they’re doing now. Currently, businesses are adding jobs at a pace of about 100,000 a month. That needs to grow to about 400,000 a month for unemployment
to start shrinking.

The scenario will be far more negative if businesses continue to sit on their cash. In that case, sales will fall, inventories will rise, the high rate of foreclosures will resume, and the cost to the federal government of bailing out Fannie Mae and Freddie Mac will surge.

Federal Reserve Governor Thomas Koenig, who shared the data with Yun, said the Fed’s continued effort to spur the economy, most recently through a $600 billion bond buying program, is understandable given concerns over the slow pace of growth. But the continued subsidization of the market could unleash inflationary forces.

Yun said he sees possible evidence of inflation building, but it’s not visible now because the housing-cost portion of inflation measurements is holding down prices.

—Rob Freedman, REALTOR® Magazine

http://www.realtor.org/RMODaily.nsf/pages/News2010110801?OpenDocument

Using U.S. Census data, the nonprofit Tax Foundation has uncovered where the highest property taxes in the country are paid relative to the median value of the homes. Some of the locales may surprise you.

New Jersey came in first — no surprise there — but New Hampshire, which has no state income tax and prides itself on that, had the next-highest real estate taxes as a percentage of home values.

Louisiana had the lowest median taxes compared to property values, another ho-hum finding. But the second-lowest taxes compared to values are in pricey Hawaii.

The national median for real estate taxes is 1.04 percent of a property’s value. Here’s the list of the top 10 states with the highest median real estate taxes as a percentage of median home value as well as the ranking of states with the lowest:

States with the highest taxes:

1. New Jersey (1.89 percent of property value)
2. New Hampshire (1.86 percent)
3. Texas (1.81 percent)
4. (tie) Wisconsin (1.76 percent)
4. (tie) Nebraska (1.76 percent)
6. Illinois (1.73 percent)
7. Connecticut (1.63 percent)
8. Michigan (1.62 percent)
9. Vermont (1.59 percent)
10. North Dakota (1.42 percent)

States with the lowest taxes:

1. Louisiana (0.18 percent)
2. Hawaii (0.26 percent)
3. Alabama (0.33 percent)
4. Delaware (0.43 percent)
5. West Virginia (0.49 percent)
6. South Carolina (0.50 percent)
7. (tie) Arkansas (0.52 percent)
7. (tie) Mississippi (0.52 percent)
9. New Mexico (0.55 percent)
10. Wyoming (0.58 percent)

Source: 2009 U.S. Census Data and Tax Foundation calculations

http://www.realtor.org/rmodaily.nsf/pages/News2010100101?OpenDocument

New home construction edged up slightly in July but applications for building permits tumbled to the lowest point in 14 months, a sign of continued stress in housing. 

Construction of new homes and apartments rose 1.7 percent in July, the Commerce Department reported Tuesday. Still, applications for building permits, considered a good sign of future activity, fell 3.1 percent. 

A rebound in housing is considered critical for a sustained economic recovery. But builders continue to struggle with weak demand for new homes caused by high unemployment and a glut of foreclosed homes on the market. 

The July increase in housing construction pushed total activity to a seasonally adjusted annual rate of 546,000 units. Building activity in June was weaker than first reported. It fell 8.7 percent to an annual rate of 537,000 units, the slowest pace since October of last year. 

Housing construction got a boost earlier in the year when the government offered buyers up to $8,000 in federal tax credits. But after the incentives expired at the end of April, sales and constructions activity slumped. 

Driving the July increase was a 32.6 percent surge in construction of apartments and condominiums, which jumped to an annual rate of 114,000 units. The bigger single-family sector declined 4.2 percent, falling to an annual rate of 432,000 units. 

The drop in building permits left applications for new construction at a seasonally adjusted annual rate of 565,000, the slowest pace since May 2009. 

Construction activity surged 30.5 percent in the Northeast and was up 10.7 percent in the Midwest. However, construction fell 6.3 percent in the South and was flat in the West. 

In advance of the report on housing starts, the National Association of Home Builders reported Monday that its monthly index of builder sentiment dropped to 13 in August. That was the lowest reading in 17 months. Readings below 50 indicate negative sentiment about the housing market. 

The last time builders' index was above 50 was in April 2006. 

Builders say consumers remain worried about the weak economic recovery and the sluggish jobs market. Among those who are buying, many are opting for deeply discounted foreclosed properties.

Sourcee: http://www.foxnews.com/politics/2010/08/17/new-home-construction-edges-percent-july/

Market Watch For August 2010

Two months have passed since the expiration of the homebuyer’s tax credit and we’ve had time to see how the market would react.  As I predicted, we did see a decline in closed transactions from May and June levels as a result of a decrease in written transactions from the previous months.  And while the news isn’t great, it’s better than expected.  July brought an increase in written contracts up 37% from May and up 22% from June.  I believe July written contracts are more representative of the remainder of the year than either the spectacular numbers we saw in March and April or the depressed numbers we saw in May and June.

The tax credit has expired, but there really has never been a better time to buy.  I mentioned briefly last month that interest rates were attractive but I don’t think many potential buyers realize how much more house the same payment buys today than it did not long ago.  Thirty year fixed rates are now about 4.25%.  On a $100,000 loan that monthly payment (before taxes and insurance) is only $492.  That is $75 a month less than the payment at 5.5% and $140 a month less than the payment at 6.5%.  Buyers can buy the same home and have more money in their pocket or buy a bigger home with the same payment.  Either way rates are great and will not stay at this level.  Don’t miss your chance to take advantage of this opportunity.

While you are shopping for your home don’t forget that TuckerMobile.com allows you to search for any listed home from any smart phone.  It is easy to search by price, address or MLS number and you can save your search results.  Please call me at 812-499-9234 if you have any questions. 

We would like to take this opportunity to congratulate Kevin Eastridge Broker/Owner of F.C.TuckerEmge Realtors this year’s recipient of the Realtor of The Year 2010 Award.

Enjoy your Labor Day weekend and I’ll update you again next month. 

Market Watch For July 2010

We now have results from June closings and as I suggested, closed transactions declined from April and May.  Although June closings were almost 21% below May levels they were still slightly higher than the average for the preceding twelve months.  I do not expect July closings to be significantly different from June.  2010 will be something of a mirror image of 2009 for closed transactions.  The second half of 2009 was significantly stronger than the first half of 2009.  I believe that the first six months of 2010 will be stronger than the second six months of 2010.  The reason for this disparity in both years is the timing of tax credits.  The initial homebuyer tax credit expired in November of 2009.  The tax credits were subsequently extended and they expired in April of 2010.  I do not expect any renewal of these tax credits.

The best news going forward is that interest rates are at some of the lowest levels in history.  Since home prices are lower than they were a few years ago, and rates are great, you can buy more house with a lower monthly payment than at any time in recent history.

 We have also made shopping for homes easier than ever.  We just introduced Tuckermobile.com. This allows you to shop for homes quickly from your smart phone.  Now you can find everything from anywhere, any time.  Simply go to Tuckermobile.com and you can search by Street name, MLS number, zip code or any of several other options.  You can also save properties you select.  If you have signed up for MyFCTuckerEmge.com any saved properties you select on Tuckermobile.com will automatically appear on your saved searches.  All of this is free.  All of this is automatic.  None of it requires a download and it gives you 24/7 access to the entire MLS system from your smart phone.

 I can’t do anything about the temperature outside but I can help you shop from where ever you are comfortable.  Give me a call if I can help with any of your real estate needs and as always I really appreciate referrals if you know of someone else that is thinking about buying or selling.

Wishing you a great summer and we look forward talking to you soon.

• Existing-home sales in the Northeast fell 18.3 percent to an annual level of 890,000 in May from a surge in April, but are 12.7 percent higher than a year ago. The median price in the Northeast was $240,200, down 2.2 percent from May 2009.
• In the Midwest, existing-home sales were unchanged in May at a pace of 1.33 million and are 22.0 percent above May 2009. The median price in the Midwest was $150,700, up 2.2 percent from a year ago.
• In the South, sales increased 0.5 percent to an annual level of 2.15 million in May and are 22.9 percent above a year ago. The median price in the South was $159,000, up 1.0 percent from May 2009.
• Existing-home sales in the West rose 4.9 percent to an annual rate of 1.29 million in May and are 15.2 percent higher than May 2009. The median price in the West was $221,300, up 7.4 percent from a year ago.

As I said last month, sales in March and April were spectacular!  Many of the contracts written in those months closed in May.  Closed volume in May was at its highest level since June of 2007 and was $10 million higher than any month in over two years.  All those closings also reduced our month’s supply of inventory to just over 6 months supply.  That means our inventory of homes is at its lowest level in almost 4 years.  All of that is great news, but real estate results and conditions should not be measured based only on one or two month’s activity.  A longer period of time gives us a more accurate picture.  Pended transactions declined significantly in May, partially as a result of the expiration of the tax credit.  Closings will still be healthy in June, just not at May levels. 

The key question now is where do we go from here?  Although we will not see results like March and April anytime soon, there are several reasons, according to The Kiplinger Letter, to believe that housing sales are on a steady but slow increase.  First home prices are very affordable.  It now takes about 18% of the typical household income to meet principal and interest payments on a single family home which compares favorably with the long term average of 26%.  Second, consumer confidence is improving which is critical to expensive, long term commitments, like home purchases.  As I said a couple of months ago, three quarters of Americans believe now is a good time to buy.  Third, there is a consensus that credit conditions will ease and that mortgage interest rates will remain at their very low level for several more months.  We won’t, and we shouldn’t, go back to the freewheeling days of 2007 but a slight loosening of credit can be helpful without creating unreasonable risks.

The best tip I can give you about shopping for homes is to start at www.TheTrentiniTeam.com or www.FCTuckerEmge.com  We just enhanced and enlarged the size of pictures on all listings and are in the process of making several other improvements which we will roll out later this year.

Kathy and I would like to take this opportunity to whish you happy summer holidays and above all safe travels.

The Federal Reserve’s periodic survey of economic conditions, known as the Beige Book, this week reported growth in all 12 regions for the first time since 2007.

Here’s what the Beige Book had to say about real estate:

Boston. Commercial real estate leasing was flat in some areas and noticeably improved in others.

New York. Commercial real estate leasing has picked up noticeably although vacancy rates continue to rise in some areas. Residential rents appear to have bottomed.

Richmond. Residential real estate markets are improving with the inventory of homes in the Washington, D.C., suburbs falling to its lowest level in 18 months.

St. Louis. Commercial and industrial real estate activity remaina slow, but the suburban office vacancy rate increased in Little Rock; Louisville, KY; and Memphis. It was flat in St. Louis.

Minneapolis. Home construction is rebounding with building permits in the Minneapolis-St. Paul area doublinf year-over-year in May. Vacant commercial real estate increased in Minneapolis.

Kansas City, Mo. Home sales rose, but practitioners are less optimistic about upcoming months.

Dallas. Housing demand has improved, but bankers say many potential borrowers are being turned away because of poor credit.

Source: Associated Press, Christopher S. Rugaber (06/09/2010) http://www.realtor.org/RMODaily.nsf/pages/News2010061001?OpenDocument

Renting out your house can be a smart financial move, as long as you calculate your costs carefully.

You have a single-family house you’d like to rent out. Perhaps you’re temporarily relocating for work, or maybe you inherited your childhood home from your parents, and you’re not quite ready to part with it yet.

Renting can be a profitable choice, but it requires an investment of time, money, and organization to make it work. Here’s how to determine whether renting out your house is worth the cost.

Calculate your monthly expenses

You want to charge at least enough to cover your monthly outlay. So the first step is to use our free downloadable worksheet to calculate your costs. Start with regular expenses like mortgage, maintenance, and homeowners association dues.

You may also need to upgrade your insurance coverage. Your agent can advise you about adding landlord insurance, a special type of policy that covers rental properties. As a rule, landlord insurance costs about 25% more than standard homeowners insurance.

If you’re renting the house furnished, make sure you’re covered for the personal possessions you leave behind. Jane Cline, the insurance commissioner of West Virginia, tells owners to prepare a detailed inventory of household items. If you’re renting the house unfurnished, figure in the costs of moving and storing your items.

Check out prospective tenants

As a practical matter, you’ll have to formally check out your prospective renters. MrLandlord.com, an information and service site for landlords, suggests a variety of background checks: credit reports, eviction reports, and criminal background reports. None of these is expensive, but you must get your prospects’ permission.

MrLandlord.com charges $8.95 for an eviction report. A combined credit and eviction report is $14.95. If you want to be especially careful, a countywide criminal report costs $29.95.

Account for maintenance and upgrades

Even with the most scrupulous checks, you can’t be completely sure renters will take good care of your home. Eva Rosenberg, an enrolled agent in Northridge, Calif., advises that if you’re not within easy driving distance of your rental property, you’ll need to arrange for someone else to keep an eye on the place, even if it’s just to make sure the lawn is mowed. If the tenants are neglecting upkeep, you’ll want to know about it sooner rather than later, since it could be a warning sign of trouble down the line.

Of course, even if the renters are conscientious, problems can crop up: boilers will fail; roofs may leak; washing machine hoses can burst. If household systems or appliances need repair or replacement, you’re better off spending the money up front, before the fix becomes an expensive emergency.

You may also want to invest in some of the “extras” that Sue Peters, a broker in Wellfleet, Mass., recommends adding to attract a tenant willing to pay a higher fee. She suggests spending money on air conditioning, expanded-channel cable TV, and a Wi-Fi network.

Don’t want the headaches? Hire a property manager

You can save yourself a lot of time and effort if you engage a management company to oversee the property and take care of the details. Some firms charge a percentage of the rental fee, others a flat monthly fee, based on the extent of services. Joe Aimone of GoRenter in Phoenix, Ariz., says his firm offers a variety of services, starting at as little as $50 a month, including general maintenance, rent collection, and—if necessary—eviction.

A management company can help you figure out how much to charge, find and vet tenants, and prepare a lease. It will also pay the real estate taxes on your behalf and present you with an annual 1099 form. Many management companies maintain 24-hour emergency lines and a roster of approved service people, so they can take care of plumbing or electrical problems and bill you later. A property manager will also see that driveways and sidewalks are shoveled, so you don’t find yourself with an unpleasant claim against your liability insurance.

Expect to pay a management company 8% to 10% of the annual gross rent, on average, with a $50 to $85 monthly minimum.

Keep scrupulous records

Whether or not you use a management company, you’ll have to keep extensive business records. DeDe Jones, CFP, CPA, in Lakewood, Colo., advises owners to save receipts for any expenses and to file them carefully.

The IRS treats maintenance expenditures, like a new hot-water heater, differently from capital improvements, such as a new deck or patio, so you’ll want to consult a tax professional. Meanwhile, keep the two types of receipts separate to make tax prep easier. You’ll have to file Schedule E on Form 1040, which can also serve as a template for the kinds of records you’ll need.

Finally, because of the complex tax and liability issues involved, many financial experts suggest forming a corporation when you become a landlord. An attorney can advise you about whether incorporating makes sense in your situation.

Richard J. Koreto has been editor of several professional financial magazines and is the author of “Run It Like a Business,” a practice management book for financial planners. He and his wife own a pre-Civil War house in Rockland County, New York.

Source: http://www.houselogic.com/articles/costs-renting-out-your-house/

As I said last month, pended transactions (signed contracts for sales not yet closed) for March were great.  Pended transactions for April were simply off the chart.  I believe that pended transactions for March and April combined were the best two month period in local MLS history.  As a result, inventory was just over 7 month’s supply.  I think the important questions, as a result of the past two months performance, are what does this mean and where are we going?

I think we know several things and we can draw some conclusions.  First, closed transactions during May and June will be excellent.  This will continue to keep inventory levels relatively low especially compared to unusually high levels we saw at the beginning of the year.  I also believe that the homebuyer tax credits that expired at the end of April were clearly a factor in these remarkable sales numbers.  The key question is: how big a factor were the tax credits?  If average pended transactions for May-July are only down 25% from April’s spectacular numbers the housing market is in excellent condition.  If pended transactions are down closer to 50% then we still have to wait for a fuller recovery.  I believe that the number will be between 30-40%.  That indicates that things have definitely improved and we are moving in the right direction, but we still have room for improvement.

Two other bright spots are an improvement in closed transactions over $200,000 and an improvement in sales price to list price percentage.  For homes over $200,000 sales are up 31.3% in the first four months of this year compared to the same four months last year.  Sales price to list price in April was 95.83%, the highest percentage in almost two years.  This is another sign of our improving market.

 School will be out soon and I’m looking forward to a great summer.  It’s easy to look for homes anytime, regardless of the weather, at http://TheTrentiniTeam.com

With the housing recovery still fragile, it’s hard to look ahead with anything but caution. However, the long-term prospects for the market are “incredible,” FHA Commissioner David Stevens told REALTORS® yesterday in the opening forum of the 2010 NAR Midyear Legislative Meetings & Trade Expo.

Young households today represent a demographic block larger than even the baby boomers, and their entry into the housing market promises to help build “an incredible real estate market in the future,” said Stevens. But first the housing market must move from recovery to stability and then to long-term growth, and that will only happen if investors regain confidence in the mortgage market. And for that to happen, the mortgage market must be reformed to reward transparent financing structures.

Stevens credited NAR’s role in helping Congress and the administration stabilize the market through its support of a “mosaic” of pragmatic policies, such as:

• The Federal Reserve’s $1.25 trillion dollar investment in Fannie Mae and Freddie Mac mortgage backed securities, which helped keep interest rates historically low.
• The home buyer tax credit, which has so far been taken by 2.2 million households for $16 billion in total returns
• The federal government’s foreclosure prevention efforts, which have helped 1.1 million households.

That mix of programs has led to today’s housing recovery but the job won’t be finished, he says, until the federal government steps out of the picture and the market stands on its own. “We constantly talk about exit strategy,” Stevens said, referring to the administration’s goal of unwinding its mortgage-market interventions.

To help protect the recovery, Stevens urged REALTORS® while they’re in Washington this week to convince lawmakers to pass FHA reform legislation under consideration in the House as soon as possible. That legislation, H.R. 5072, would enable FHA to lower the upfront mortgage insurance premium and instead fold a higher annual premium into the loan, a change that would align FHA with the approach used in the private sector. The legislation would also give FHA more tools for clamping down on bad lenders.

The changes in the mortgage insurance premium are needed to help FHA improve its financial picture and restore its reserves to its congressionally mandated level. Not having the authority it needs to change its premium structure “is costing FHA $300 million a month in money it’s not getting,” he said.

“You are the recovery,” he told the packed room of REALTORS®. “Now we’ve got to finish the job.”

Source: http://speakingofrealestate.blogs.realtor.org/2010/05/12/stevens-%e2%80%9cincredible%e2%80%9d-market-ahead/

• Sell low and buy low. Because all property values are down, the loss on the property a home owner sells is really only a paper loss because the next property he buys also will be a bargain. If he buys smartly, when prices come back up in a few years, he’ll be in better shape.
• Down-payment help is widely available. While nothing-down loans have disappeared, it is easy to find down-payment assistance for lower-income and first-time home buyers. Programs vary all over the country, but one good way to find them is to search online for “down-payment assistance programs” and the name of your region.
• Your uncle has money to share. Besides the $8,000 first-time home buyer tax credit and the $6,500 move-up credit, there are an array of energy tax credits that can make home improvements pay off in cash.
• Good help is available. Really talented real estate practitioners, contractors, and designers are available and eager for business.