Sunday, October 24, 2010

Housing Affordability: A Possible Good Omen
by Lawrence Yun, NAR Chief Economist

Amid all the media reports on how housing is still "in the tank," one piece of news seemed to have escaped many of the pundits. Housing affordability could possibly reach an all-time high of near 200 in the second half of this year. That is, a household making the median income would have twice the income necessary to buy a median-priced home in America. To date, NAR's housing affordability index reached an all-time high of 184 back in early 2009. It was only slightly above 100 during the housing bubble years, meaning that qualifying income barely met the requirements to buy a home even with a 20 percent down payment (if not using teaser-rate, funny/toxic mortgages). Historically over the past 40 years, the average affordability index was 118.

The principal reason for the expected record high housing affordability index reading is the rock bottom mortgage rates of 4.4 percent on a 30-year fixed rate. Add to that modest gains in the average wage rate, which rose 3 percent in 2009 and is up 1.2 percent this year-to-date in spite of the high unemployment rate. Consider now versus then when home prices were at their "bubble" peak in 2006.

Of course, like all things "real estate," affordability is local as well. There will be considerable local market variations in affordability conditions. Remember that one of the main components of NAR's affordability index is home prices. Some markets encountered only minimal price declines while others such as Las Vegas experienced a 60 percent nose dive. Still, on a nationwide basis, the affordability conditions have risen to compelling levels.

However, if a sizable number of people view - rightly or wrongly - that home prices will fall further and raise the affordability levels to even higher levels, then homebuying will continue to remain soft. That will lead to a further build up of inventory and thus hold back a true price recovery. The price decline potential was evident in July's housing data. Existing-home sales plunged 27 percent to 3.83 million seasonally adjusted annualized units - their lowest level since 1995. Even though there was little change in inventory (with 4 million homes available for sale), the actual months' supply of inventory rose sharply to 12.5. The sales decline reflected the aftermath of taking the stimulus medicine away. For nearly all of June, homebuyers knew they had to close the deal by the end of June to qualify for the tax credit. Therefore - and naturally - people rushed in to close in June and not wait till July. Qualitative REALTOR® member survey data about recent homebuyers suggest that investors, all-cash buyers, and buyers of expensive homes stayed in the market in July, but first-time buyers did not.

Going forward, home prices may fall, although I doubt in any meaningful way. Even if they do decline, there is no guarantee that affordability conditions will improve. Again, the principal reason for our current exceptionally high affordability conditions is lower mortgage rates. If prices were to fall 10 percent but mortgage rates creep up to 5.4 percent, then the affordability conditions could actually worsen.

As for home sales, there are far fewer people in the pipeline to buy a home in the immediate months after the tax credit expiration. Consequently, expect continuing low sales at least through autumn. But sales should slowly come back because of the high expected affordability conditions. Winter months are generally slow ones for home sales. If sales this coming winter matches up with past "normal" winters, then it would be a good sign that the housing market is getting back on track to normal sales levels. If sales this winter remain 20 to 30 percent lower than normal, then we are looking at trouble with high inventory stuck at a double-digit months' supply. Remember that the months-supply figure is also impacted by the raw count of homes listed for sale. Since inventory generally declines from summer to winter, the months' supply will steadily fall, hopefully to 8 or 9 months, and close to the level consistent with continuing price stabilization. For example, inventory fell by 600,000 to 800,000 from July to December in each of the past 3 years. If a similar decline occurs this year and home sales slowly bounce back to 4.5 million (annualized sales) then we can have continuing price stabilization.

A compelling argument can be made about the best affordability conditions, but it will be for naught if consumers lack confidence. Confidence in turn will be directly impacted by the general direction of the economy. Unfortunately, the economic recovery is coming to a virtual halt. GDP growth rates in the past three successive quarters were: 5.0%, 3.7%, and 1.6%. The upcoming GDP growth rates could be even lower figures. (If it turns negative for two straight quarters, then another fresh recession is at hand). At such tepid growth rate the unemployment rate could well reach 10 percent. GDP growth in a post-recessionary environment should be 5 percent or better, not only to start growing but to compensate for the recessionary downfall.

The weak economic expansion means that the job market will continue to look bleak and the unemployment rate could top 10 percent. This does not mean the country is necessary losing jobs on net right now. There have in fact been 763,000 private sector job creations from the beginning of the year to August. The soft economic expansion just means that the job creation pace is too slow to accommodate the rise in the labor force, particularly the recent high school and college graduates looking for work, aside from the need to fully re-hire the near 8 million job losses that occurred in the 2008 and 2009 recession. In a normal good year, there would be 2.5 to 3 million annual private sector job gains.

The homebuyer tax credit appears to have done its job in preventing home price over-correction. NAR prices show stabilizing pattern for the past 12 months while Case-Shiller price data show stabilizing patter for the past 18 months. We'll still need to wait several more months to get a definitive gauge on price stabilization. At this point, we'll see how the housing market behaves in the absence of the stimulus medicine. As with any sectors in the economy, it is very unhealthy to be dependent on government help for a long period. Compelling affordability conditions and some job creations are a move in the right direction and we have to just allow some time for these factors to work their way into the system. But an important question that will linger is of when consumer confidence will genuinely return to close on the deal.

Reprinted from REALTOR® Magazine September 2010 with permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright 2010. All rights reserved.

Friday, October 15, 2010

See What all the fuss is about

Frank Garcia Music
under the stars this SAT between 5 and 9 pm? Tedd Webb & other
stars singing fund raiser so that our Camp Bayou and Fossil museum
can continue to awe and excite the many thousands of children who have

Friday, October 8, 2010

Real Estate Tip:Inspection Repairs
When you sell a house, the buyers will probably have a home inspection before they sign a contract to purchase the home. The inspector may turn up something that needs attention or repair, and after the inspection, the buyers may produce a list of items they want repaired as a condition for moving forward on the sale.

When you get the buyers' list, remember that some of the items may be negotiable. Sales contracts usually require that all the systems be in working condition. Some buyers may make requests that go beyond the normal obligations of the seller. They may ask for a new roof or certain structural repairs that you may not want to make. Your agent can help you to assess the risks of just saying "no" to buyers who are making demands you consider to be unreasonable. You may decide to decline the requests, but the buyers may also decide to back out of the deal as a result.

When you agree to make repairs, hire licensed professionals who will guarantee their work, and give copies of the reports to the buyers. Arrange to have the repairs made as far ahead of time to avoid last-minute complications which could compromise the transaction.

* See Bonnie's Feature Properties: www.TAMPACOASTALHOMES.COM/myhomes.asp

Bonnie Fagoh
C21 Beggins
Phone: 813-658-1344

Monday, October 4, 2010

Hello Anglers,

I have to start off by saying that this cool air that I have been feeling in the morning feels good but has brought back some bad memories concerning last years cold. I'll use that as the segway to pass along the information concerning the FWC ruling on Snook. The FWC has ruled that the Snook season be closed until September 2011. I applaud them and feel that this will be the best long term decision. With the water cooling a little, October should be fantastic. September was a pretty good month and we caught a lot of fish under the right conditions. October should be better. The Trout, Redfish, and Grouper bite will increase dramatically as the water temps drop into the 70's. We are also on the cusp of the King Mackerel migration. These fish will be heading south and will make a brief visit in our area. Along with them will be the bigger Spanish Mackerel and the Bonita (Little Tuny). If you have ever been on the other end of the line with a Bonita then you know the battle and the fun it produces. They are not good for eating but are great for catching. The Big Black Drum are under the bridges in the Bay and schooling up and will soon depart and head offshore when the water drops below their comfort zone. I have not taken a trip for them yet but have gotten good reports from my peers. Tarpon are still in a few places, but time for them is limited with the Fall season headed our way. I hope everyone has a Happy Halloween. Until next time, good luck and be safe on the water.

Remember: don't let your kid be the one that got away, take them fishing.

Thank you,

Capt. Ric Liles
Co-Host - Outdoor Fishing Adventures, ESPN Radio

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Friday, October 1, 2010


October Real Estate Update

One thing you can say it hasn't been boring!!

Rates Back Down
In Freddie Mac's results of its Primary Mortgage Market Survey the 30-year fixed-rate mortgage averaged 4.32 percent for the week ending September 30, 2010 - down from the previous week when it averaged 4.37 percent. Last year at this time, the 30-year fixed-rate mortgage averaged 4.94 percent.
Confidence in the state of the economy fell among consumers and businesses, which led to a decline

Mortgage Rates

Source: Realty Times
U.S. averages as of September 30, 2010:

30 yr. fixed: 4.32%
15 yr. fixed: 3.75%
1 yr. adj: 3.48%

in long-term bond yields and brought many mortgage rates back to record setting lows this week.

What's New in New
Housing Design

Below are the products that are currently grabbing the most attention of the home building and remodeling industries:
Appliance Drawers. Small warming drawers, modest-sized dishwasher drawers for small loads, refrigerator drawers and microwave drawers.
Counter-depth refrigerators. Some are only 24 inches deep.
Motion-detecting faucets. Like you'd find in the restrooms of businesses.
LED lighting. These are used under cabinets and in ceiling fixtures as a longer-lasting, more efficient alternative to compact fluorescent lamps and incandescent bulbs.
Electric heated floors. A nice touch in bathrooms,
Showers with multiple heads and body sprays. Bathtubs are out.

Sellers Quickly Transform Property with Paint

The best way to update a property is to paint it. It's a job that many sellers can do themselves. Here are five suggestions for making the work go quickly.
Get as much furniture as possible out of the way, and cover what's left with plastic drop cloths.
Buy good paint. Top-quality latex interior paint will hide what's underneath.
Tape the edges. Taping the edges with painters tape will speed up the job and make the results more professional.
Paint the ceiling first, then the walls, then the windows and trim and finally the baseboards. This will cut down on time spent repairing drips.
Cut in the corners. Applying a three-inch band of paint around the edges will allow you to fill in the middle with a paint roller.

Four Tips for Setting the Right Sales Price
Sellers think their homes are worth more than their real estate professional recommends, and buyers think these same homes are worth less.
It's a difficult disconnect that makes selling properties a challenge. Successfully marketing a home requires that the price be set carefully -- or it will languish on the market.
Among the considerations:
How many homes are for sale in the neighborhood? The more homes on the market, the more important it is to list at the lower end of the scale. "I want buyers to ask why is this house priced so competitively," said NAR President-elect Ron Phipps. "I want the answer to be an offer."
Take short sales and foreclosures into consideration when pricing. If the competing properties are in lousy condition, they are less of an issue, but if they are well taken care of, yet priced 25 percent below market, they can be a serious factor.
Negotiate decisively. "Buyers are not interested in back-and-forth negotiations these days," Phipps said. "They are less emotional and more disciplined. They will walk away."
Cut the price when you have to. If no one shows up for an open house, if no one calls and if there are no offers, then the price is too high. That means it's time to make a meaningful price cut.
What You Should Do Now If You
Plan On Selling This Fall

By Michele Dawson

Home sales during the fall are traditionally a bit slower than the frenzied spring and summer months. But fall can be a good time to sell because there are (usually) fewer houses on the market - meaning less competition - and buyers typically want to buy quickly before winter and the holidays set in.
If you plan on selling this fall, you'll want to do everything in your power to attract would-be homebuyers.
One of the first things you should do is examine, and, if needed, repair any major structural systems. If you're unaware of any, you may want to hire a professional home inspector. Chances are a potential buyer will hire an inspector to examine the house, so you might as well save yourself any surprises.
The American Society of Home Inspectors says a typical home inspection includes drainage conditions, exterior surfaces, decks, chimney, the roof, windows, doors, plumbing fixtures, furnace, air conditioner, insulation, ventilation, electrical, heating, and plumbing systems.
Once that's done, you should make sure you don't have any loose shingles. Repair and paint your gutters, if needed. Once the structural systems are repaired or given the thumbs-up, then you should turn to appearance.
# And when it comes to looks, if you're selling in the fall, there are many things to consider, including: Curb appeal. In other words, the way your house looks from the street - the roof's condition, how the paint is holding up, whether the windows are sparkling, the lawn is mowed, the landscape is attractive and not buried beneath a peppering of fall leaves, and the driveway and walkways are free from toys and clutter.
# Entering the house. Your front door should be in good condition. Usually when the real estate professional is busy retrieving the key from the lock box, the potential buyers are standing by with nothing else to look at but the front door. Does it need painting or staining? Also,
# new hardware will make it stand out, and why not adorn it with a seasonal fall wreath? Once inside your house, the two things that immediately turn off prospective buyers are dingy walls and dirty, ill-colored, outdated, or shabby carpet. Sometimes it's hard to be objective about the condition of your own house because you see it every day, so ask a friend, neighbor, or your real estate agent to give it a look and give you their honest opinion. Fresh paint can do wonders. Keep the colors neutral. And while you can offer buyers a carpet allowance to compensate for bad carpet, replacing it before selling really boosts that first impression and makes the house more appealing and worth more in the buyer's mind.
# Clear the clutter. If you have too much furniture, put some of it in storage. Fewer pieces of furniture will make the room seem larger and more open. Also, clear counters in the kitchen and bathrooms. Make sure closets are clean. Pack up some of your clothes now. Fewer hanging clothes in the closet will make the closet appear bigger.
# Talk to the professionals. Now's also a good time to interview real estate professionals. Ask about their experience, find out how well they know the area you're eyeing, and talk to references. Once you have someone lined up you can follow his or her additional recommendations and begin the final phases of preparation before your house goes on the market.
Finally, you should be mindful of setting a competitive price. Your REALTOR® will begin by conducting a competitive market analysis of your house and give you an estimate of the fair market value of your home, which is a range that will fluctuate depending on the housing market in your area and how much similar homes in your neighborhood are selling for.
Don't insist on setting the price too high, especially if you're on a timeline. A house priced appropriately will be taken more seriously and will ultimately sell more quickly than one that's overpriced.