Why A Bunch Of Economists Expect The US Housing Market To Go On A Huge Tear

 

Bank of America has again revised up its home price forecast to 8 percent for 2013, up from 4.7 percent.This is after a 7.3 percent rise in 2012.

In a new report titled “Someone say House Party?”, BAML’s Chris Flanagan, Michelle Meyer, and Justin Borst write that “a positive feedback loop has begun”. Basically, when people think home prices are rising, they think they will keep doing so and  credit conditions will improve, and this in increases demand for homes.

And there’s proof of this. Fannie Mae‘s latest survey shows that 48 percent of respondents believe that home prices will rise over the next 12 months, only 10 percent forecast a fall.

“It is a powerful positive relationship especially in this environment of historically low interest rates and a Federal Reserve determined to keep policy accommodative.”

Tight housing supply and affordability are likely to stoke demand and push home prices higher.

What’s more, the declining inventory isn’t being driven by demand like it was during the housing boom, but by declining supply. And the drag from shadow inventory was also a lot lower than expected.

In a note out yesterday, Capital Economics’ Paul Diggle also upwardly revised his home price forecast to 8 percent for the year, up from his previous call for a 5 percent rise.

“Prices of both new and existing homes are picking up, the latter by over 10% year-on- year. Indeed, after a couple of years during which new house prices outperformed, primarily owing to builders constructing more homes for the higher-end market, we now expect existing house prices to close the gap.

As more consumers are able to access mortgage credit, homebuilders should widen their offering, while continued investment demand will bid up existing house prices.”

 

new and exisitng home price sales chart

Capital Economics

 
And Ivy Zelman was on CNBC yesterday saying “we’re in a nirvana for housing. I’m the most bullish I’ve ever been”.

BAML’s economists expect home prices to rise despite tepid economic growth. This is because the Fed will continue to keep mortgage rates low. Only a huge jolt to the payrolls would hurt the housing recovery.

Both BAML economists and Diggle however expect the pace of home price growth to decline in 2014. BAML forecasts 6.5 percent in 2014. Diggle expects 5 percent growth in 2014 and 2015 because he thinks large gains in home prices can’t be sustained through investor demand.

Read more: http://www.businessinsider.com/baml-us-home-prices-to-rise-8-2013-3#ixzz2NO4Ljbuv

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Real Estate Professionals Expect Both Home #Values and Transactions to Increase in 2013 #housing

Market Leader Survey Shows 28 Percent Increase in Market Confidence vs. 2012, Highlights Several “Heartland” Markets Expected to Lead the Recovery

KIRKLAND, WA, Mar 11, 2013 (MARKETWIRE via COMTEX) — Market Leader LEDR -0.46% , a leader in online marketing and technology solutions for real estate professionals, today released results of a nationwide survey highlighting a significantly more optimistic real estate community across several key market indicators, including real estate valuations, existing-home transactions, new construction starts and more. The survey involved more than 2,400 real estate professionals, all members of ActiveRain, the real estate industry’s largest social media network with more than 330,000 real estate professional members.

A similar survey in early 2012 correctly predicted the bottom of the US real estate market, as the National Association of REALTORS (NAR) showed a 9 percent jump in existing-home sales over the previous year.

For 2013, 84 percent of surveyed real estate professionals believe that real estate values and the number of transactions will increase this year over 2012. Whereas in 2012, one-third of real estate markets were forecasted to see valuation declines, no single market is expected to see a decline in valuations or transactions in 2013.

2012 vs 2013 Real Estate Confidence*

        ----------------------------------------------------------------------------
                                                    2012        2013      Increase
        ============================================================================
        Real estate values                           3.0         3.9         28%
        Real estate transactions                     3.6         4.0         11%
        New constructions starts                     3.2         3.9         21%
        Local economy                                3.4         3.8         12%
        ----------------------------------------------------------------------------

        
(Scale of 1-5 where 1 represents a significant decline, 3 represents it to stay flat, and 5 represents a significant increase)

“The differences in how real estate professionals are seeing the market in the past 12 months is significant,” said Nikesh Parekh, CEO of ActiveRain. “Confidence in the real estate market has increased by 28 percent, and a rebound in both housing and construction this year is a great sign for the economy.”

Among the local markets expected to see the greatest activity and rebound in 2013 are several cities in the middle of the country. In fact, eight of top ten markets predicted to experience the most growth in 2013 are “heartland” states.

2013 Best Real Estate Markets

1. Austin 2. Ft. Myers – Naples 3. Kansas City 4. Salt Lake City

5. Houston 6. Portland, OR 7. Dallas-Ft. Worth 8. Nashville 9. Detroit 10. San Antonio

A full breakdown of the survey and its findings, as well as an infographic highlighting the key results, can be found at http://www.realestate.com/advice/real-estate-market-is-back/.

About Market Leader

Market Leader, founded in 1999, provides innovative online technology and marketing solutions for real estate professionals across the United States and Canada. The company serves more than 125,000 real estate agents, brokerages and franchisors, offering complete end-to-end solutions that enable them to grow and manage their businesses. Market Leader customers earn more than twice the median income of the typical NAR member. Market Leader’s subscription-based real estate marketing software — including websites, contact management, a marketing center, and lead generation services — helps customers generate a steady stream of prospects, plus provides the systems and training they need to convert those prospects into clients. In addition, the company’s national consumer real estate sites, including http://www.realestate.com, give its customers access to millions of future home buyers and sellers, while providing consumers with free access to the information they seek.

ActiveRain is the real estate market’s largest social media network, with more than 330,000 professional members, and is owned by Market Leader.

Pending Home Sales Soar Despite Rough Winter #housing #realestate

Rough winter weather across much of the nation at the start of this year apparently did not keep home buyers away.

Contracts to buy existing homes in January rose a strong 4.5 percent from the previous month, according to the National Association of Realtors, which also revised December’s numbers down. That beats expectations of a 1.8 percent gain. Volume is now 9.5 percent above January 2012 and is the highest reading since April 2010. This as closed sales of existing homes, where contracts were signed toward the end of last year, were basically flat.

“Over the near term, rising contract activity means higher home sales, but total sales for the year are expected to rise less than in 2012, while home prices are projected to rise more strongly because of inventory shortages,” wrote Lawrence Yun, chief economist for the Realtors in a release.

The existing home market is faced with a lack of supply of homes for sale, as nearly half of home sales last year were of distressed properties.

Getty Images

Banks have been slow to put foreclosed homes up for sale recently, possibly waiting for prices to improve further. While some expected a surge in inventory once home prices began to improve, that so-called “shadow supply,” has yet to emerge. Prices are rising fast, up nearly 7 percent in December from a year ago in the nation’s twenty largest real estate markets, according to the S&P/Case Shiller Index. But some would-be sellers may be waiting to see just how high prices move in the coming months, while millions of others are still trapped underwater, owing more on their mortgages than their homes are worth.

Mortgage applications to purchase a home fell 5 percent last week from the previous week and is now at its lowest level since the end of last year, according to a Mortgage Bankers Association weekly survey. Applications historically start to pick up around now, as President’s Day weekend marks the unofficial start of the usually busy spring housing season.

Regionally, the Realtors’ Pending Home Sales Index in the Northeast rose 8.2 percent in January and is 10.5 percent higher than January 2012. In the Midwest the index increased 4.5 percent and is 17.7 percent above a year ago. Pending home sales in the South rose 5.9 percent and are 11.3 percent higher January 2012. In the West the index edged up 0.1 percent in January but is 1.5 percent below a year ago. Supplies of homes for sale are most limited in the West, where investors have been buying distressed properties in bulk.

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—By CNBC’s Diana Olick; Follow her on Twitter @Diana_Olick or on Facebook atfacebook.com/DianaOlickCNBC

 

 

Americans, by a margin of more than 3 to 1, expect the housing market to improve over the next 12 months, part of a broader brightening in their outlook for the economy, according to a Bloomberg National Poll.

 

Fifty percent of poll respondents say the market will continue to get better in 2013 compared with only 16 percent who say they expect it to decline. An additional 31 percent say the market will stay about the same.

i_HUBqi9VQ20Prices are very steadily, slowly, starting to creep back up,” says Eric Matheny, 31, an attorney from Fort Lauderdale,Florida, who purchased a new home five months ago. “The housing market is a major part of the economy, so it says something about the strength of the economy.”

The S&P/Case-Shiller 20-city index rose 5.5 percent in the 12 months to November, the biggest year-over-year gain since August 2006. In January, homebuilders began work on 613,000 single-family homes, the most since July 2008, the U.S. Commerce Department said yesterday.

As the housing market, the epicenter of the 2008 financial crisis, continues healing, Americans say they expect its improvement to spread through the economy, according to the poll of 1,003 adults conducted Feb. 15-18.

By a margin of 43 percent to 26 percent, respondents say prospects for job growth will rise over the next 12 months, with 30 percent seeing little change; 37 percent anticipate a stronger economy compared with 25 percent who disagree and 37 percent who say it will be about the same.

Deficit Concern

Susan Kosko, 43, a risk-management assistant in ruralPennsylvania, says she feels “a tiny bit” better about the economy thanks to rising home prices in her area and lowinterest rates.

“The deficit is a big concern,” she adds via e-mail.

On several other measures of economic well-being that Bloomberg has tracked over time, the share of poll respondents saying they expect improvement rose from December.

Asked about overall financial security, 32 percent say they expect their situation to get better compared with 14 percent who see tougher times ahead and 48 percent seeing little change.

There’s also an increase in the share of respondents saying the market value of their homes will rise, with 27 percent expecting higher prices compared with 16 percent who anticipate falling values and 34 percent saying they’ll be about the same. In December, Americans were evenly split, with 20 percent predicting higher prices and 20 percent lower prices.

Getting Closer

By a margin of 49 percent to 37 percent, Americans say they feel they’re moving closer to their career and financial goals.

“We’re every year getting closer and closer,” says Matheny. “I’ve got a good work ethic and I put my heart and soul into my job.”

Still, more than three years after the end of the 2007-09 recession, concerns remain. Asked about having enough disposable income to make large household purchases, 29 percent say they expect more difficulty in the coming year compared with 19 percent who plan to loosen their belts.

Thirty-one percent say money for vacations or entertainment will be tighter while 21 percent say the situation will improve. While 28 percent say they expect their household-income situation will be better, 13 percent say it will be worse and 54 percent see no change.

“We’re advancing, but very, very slowly,” says John Grannan, 62, a retired police officer in Fort WayneIndiana, who now teaches criminal justice at a local university.

The economy will grow 1.8 percent this year, according to the median forecast of economists surveyed by Bloomberg.

Failing Grade

With the stock market close to regaining its pre-crisis peak, respondents expect betterinvestment performance by a margin of 23 percent to 18 percent, with 34 percent seeing little change.

Bob Magera, 63, a part-time pharmaceutical salesman in Myrtle Beach, South Carolina, says his 401(k) retirement accounts lost about 50 percent of their value during the financial crisis.

“I’m not where I’d like to be, but I’m OK,” he said.

The outlook isn’t without clouds. President Barack Obama continues to get a failing grade from a plurality of respondents on the question of “making people like me feel more economically secure.” By 48 percent to 45 percent, respondents disapprove of the president’s performance on that issue.

Political Dysfunction

Outright majorities say they expect the national debt and health-care costs to continue worsening. By a 56 percent to 16 percent tally, poll respondents say the nation’s $16 trillion debtwill get worse over the next 12 months while 55 percent say health-care costs will get worse.

Washington’s chronic showdowns over government spending also have left Americans worried about the impact of political dysfunction on retirement programs such as Social Security and Medicare. And by 46 percent to 10 percent, those surveyed expect their federal tax bills to rise in the coming year.

Sizable shares of poll respondents express concern that Social Security and Medicare may not be available when they retire. On Social Security, 43 percent say it probably or definitely won’t exist when they need it, while 54 percent say the program will definitely or probably be there.

Thirty-nine percent of Americans are skeptical that Medicare will be around when they need it, while 57 percent say the health-insurance program for the elderly will definitely or probably be there.

Global Standing

“Unless we get this deficit under control and unless we get spending under control, I don’t think they’ll be around in five or six years,” says Grannan. “Sooner or later, those people we elected better get along and do something before this country falls apart.”

The poll also finds concern over the prospects for the U.S.’s global standing. Since the financial crisis erupted in the fourth quarter of 2008, the Chinese economy has grown at an average annual rate of 8.9 percent compared with 0.6 percent for the U.S., according to data compiled by Bloomberg.

In the poll, 35 percent say the country’s standing in the world will get worse over the next 12 months while 26 percent say it will improve. An additional 37 percent expect it to remain unchanged.

The Bloomberg National Poll was conducted by Selzer & Co., a Des Moines, Iowa-based pollster. It has a margin of error of plus or minus 3.1 percentage points.

To contact the reporter on this story: David J. Lynch in Washington at dlynch27@bloomberg.net

To contact the editor responsible for this story: Cesca Antonelli at fantonelli@bloomberg.net

 

These Are The Questions About Crime #Homebuyers Always Forget To Ask

breaking-bad-4The list of question every buyer asks about the various properties during a house hunt is relatively predictable.

How many bedrooms does it have? Baths? Square footage? What are the HOA dues?  What’s the school district?

Then, we get more specific, personalizing the questions based on our own vision, aesthetics and lifestyle needs:

Can that wall be moved?  Is there space for Grandma’s dining room table? Is there a shady spot for an orchid house in the backyard?

When it comes to crime, most of us simply don’t ask any questions at all, as (a) agents might be prohibited from doing much beyond pointing us to law enforcement sources, and (b) we tend to assume most neighborhoods are either ‘good’ or ‘bad,’ low-crime or not.

The truth is never so black and white. Fortunately, technology has made it easy-peasy for us to get a deeper, more nuanced, and more usable understanding of the crime that takes place in our neighborhood-to-be, which in turn allows us to make smarter decisions about which home we buy and how we live in it, once we buy it, than we could have even ten years ago.

The key to tapping into this nuanced crime information is asking the right questions. Here’s a short list of the right questions to ask about crime before you buy a home.

1.  Do any offenders live nearby? In most states, Megan’s Law and similar provisions mandate that certain individuals with histories of criminal convictions must register their home addresses with local authorities, who in turn are required to make this information available to the public. Google “your city, your state Megan’s Law registry” to find sites where you can type in an address (like the address of the home you’re considering buying) and find a list of registered sex offenders in the area. Many of these sites will also offer you a map showing your address and the relative locations of the homes of the registered offenders.

The reality is that every neighborhood – even very upscale areas – has someone living in it who has committed a crime in the past, so don’t completely freak out if you happen to find someone in your neighborhood-to-be with a history of sex offenses. The utility of this information is that it empowers you and your children to recognize these dangers and to take care to avoid hazardous situations. That said, if you happen to have young children and notice that the Megan’s Law map has a halfway house with a dozen registered sex offenders living right next door to your target home, that information might change your decision about whether that property is the right one for you.

There is also power in following the path of the information you are given on these registry sites.  Many will surface information like what the registrants’ crimes were, when they happened, the registrants’ photos and more useful intelligence. This information can help you evaluate the degree to which you should be concerned before you buy.

2.  Was the home a drug lab?  You think your home’s former owner’s food or pet smells are toxic? That’s nothing compared to the truly unpleasant and health-impairing effects some have experienced after buying a home that turned out to have been a methamphetamine lab in a former life.  If the sellers know this about a home, they should certainly disclose it. Unfortunately, many of these homes end up sold by banks as foreclosures, or by estates, trusts, landlords or other corporate owners who don’t know the home’s past – or don’t have a legal obligation to disclose it.

Get the answer to this question to the best of your ability via this two-step process:
(a) talk with the neighbors – they often will reveal whether the house had a shady past, then
(b) search the federal Drug Enforcement Association’s Clandestine Laboratory Registry, here:  http://www.justice.gov/dea/clan-lab/clan-lab.shtml.

3.  What sorts of crimes happen in the area. Where and when do they happen? Crime happens virtually everywhere. But the details of crime patterns vary widely in various neighborhoods. One side of town might be plagued with an overall low crime rate, but the crime that does happen tends to be violent crime after dark. While another neighborhood across town might have lots of car break-ins during the day while people are at work, but not much going on after residents get back home – and not much violent crime at all.

This sort of information can be highly useful to a buyer-to-be, as it can help you make decisions not just about whether or not to buy, but also about whether to park your car outside (or not), whether to get an alarm and where in a given neighborhood you might prefer your home to be (e.g., interior cul-de-sac vs. thoroughfare in the same area).

Trulia Crime Maps offer precisely this sort of nuanced information, allowing you to view your town and neighborhood’s crime rate in heat map format showing the relative violent and non-violent crimes that have taken place recently in different parts of town. It also provides information on crime trends, in terms of the frequency of criminal activity taking place at various hours of the day, and the most dangerous intersections in your town or area.  SpotCrime.com offers another angle on nuanced crime data, breaking down crime types with easy-to-scan icons and providing data for communities all over the country.

4.  What anti-crime features does – or can – the home have?  Review your disclosures and talk with the sellers (through your agent, of course) about what anti-crime features the home currently has. This will allow you to prepare for any upgrades, downgrades or changes you’ll want to make.  For example, if a home has security bars that were installed 3 decades ago, you might want to have them brought up to code with a fire release bar, or removed altogether.  Or, perhaps the sellers currently have the home wired for an alarm that can be armed, disarmed and video monitored remotely – if you want to continue that service, you’ll need to get that information and make the account change when you take over the other utilities and home services.

On the other hand, the home might not have any anti-crime features.  So, if there is a particular alarm or monitoring system you like, it is smart to check in with that provider before close of escrow to find out whether they can provide services to the new address and, if so, what it will cost and take to equip the home and start service up at closing.

5.  What does the neighborhood do to fight crime – and how can I help? Neighborhoods across the country fight and prevent crime the grassroots way, by maintaining strong connections between the home owners and neighbors who all have in common the desire to live and raise their families in a safe, secure, thriving place.  Don’t hesitate to ask your home’s seller and/or any neighbors you talk to about whether there are any neighborhood associations, neighborhood watch groups, email lists, social networks, regular meetings, block parties or other community connections in which you can actively participate. ALL: Did you ever omit to ask a crime-related question about a home – and later come to regret it?

SOURCE: Trulia.com

#Housing holds key to full #job growth rebound #realestate

ap-builder-sentiment-4_3_r536_c534Housing began to rebound last year, with home starts, sales and prices all rising solidly. But many economists say the recovery is likely to be slow.

Excluding housing-related sectors, private payrolls increased to 99.5 million jobs in January, exceeding the previous high of 99.4 million in January 2008, the RBC study says.

That shows those industries haven’t completely recovered, because their job numbers should be even higher in a healthy market in light of population growth.

A more vigorous housing recovery would indirectly boost sectors such as education and health, professional and business services, and leisure and hospitality.

Still, RBC’s analysis does show that “the private sector (excluding housing) is back and in full recovery mode,” says Mark Zandi, chief economist of Moody’s Analytics.

By contrast, employment in housing-sensitive sectors — including construction, wood product manufacturing, furniture sales and architectural services — totaled 13.5 million last month, RBC says.

That’s nearly 500,000 above their December 2010 low. But it’s still almost 3 million below their total before the recession started in December 2007.

The construction industry, for instance, has gained nearly 300,000 jobs the past two years, though it’s still 1.8 million off its late-2007 level of 7.5 million. If all those jobs had been recouped, the nation’s jobless rate in December would have been 6.6% rather than 7.8%, according to a recent report by the Federal Reserve Bank of St. Louis.

Housing construction also has an outsize impact on the overall economy. Although it makes up 3% to 4% of the nation’s gross domestic output, it accounted for more than a tenth of economic growth last year.

That doesn’t include its ripple effect on other industries. Employment in wood products manufacturing, for instance, rose to 344,000 in January, up from a recent low of 331,000 in 2011 but below 500,000 in December 2007.

Hundreds of makers of kitchen cabinets, doors, flooring and other products have shut down in recent years, says Philip Bibeau, head of the Wood Products Manufacturers Association. Many of those that remain are breaking even or losing money, living off their cash reserves from the mid-2000s housing boom, he says.

“They’re hanging in there,” Bibeau says, hoping for a stronger housing upturn.

That could take awhile. Economist Patrick Newport of IHS Global Insight predicts housing starts of 966,000 this year, up from 781,000 in 2012. But he doesn’t expect a normal level of 1.5 million starts until 2015 because high mortgage debt and strict lending standards are still crimping growth.

Zandi says rising home prices and falling mortgage delinquencies will open the home-lending spigots much sooner. Next year, he expects 1.7 million housing starts — and much stronger job growth.

 

 

Source: USAtoday.com

Most Young Consumers Want to Buy a Home, Survey Finds

homeownershipThe economic downturn that ended a few years ago may have soured many consumers on making significant financial decisions. But as the effects of the recession fade, many may be more interested inhomeownership. That seems particularly true of younger consumers who may not have been in a position to buy years ago.

Today, the vast majority of consumersbetween the ages of 25 and 44, comprising both millennials and those in Generation X, say that homeownership is at least somewhat important to them, according to a new survey from Prudential Real Estate. In all, 96 percent of all consumers feel this way. But 77 percent of those aged 25 to 34, and 78 percent of people between 35 and 44, say it’s “very important.” Further, 74 percent say that the current levels of affordability lent by historically low interest rates mean that now is a great time for them to buy a home.

“Millennials and Generation X — about 85 million people strong — face a unique opportunity in U.S. housing,” said Earl Lee, chief executive officer at HSF Affiliates LLC and president of Prudential Real Estate. “They are generally optimistic about homeownership and, by nature, share a strong sense of community. As important, many were not impacted by the real estate downturn and are looking at today’s buying opportunities with keen interest.”

In addition, 63 percent of those polled say they currently have a favorable view of the real estate market in general, and those in the younger generations were typically more enthusiastic about it than their older counterparts, the report said. Further, the number of people who contemplated getting into the market but did not buy or sell a property in the previous year was up 10 percent in the last six months of 2012 when compared with the end of the second quarter.

However, many consumers are still understandably cautious about wading into real estate even with all the improvements and good sentiments, the report said. In all, 62 percent say they’re having more trouble getting financing from lenders than they would have faced prior to the downturn, and 72 percent want to have a trusted partner in their lender. It’s believed that more buyers will continue entering the market in the next year at least, driven largely by interest rates and prices that have remained extremely low when compared with historical norms.

 

Source: Realestate.AOL.com

6 tips to win a bidding war for your next home

Do you have what it takes to beat competitors for the house you want?

c6cb797975604ae889b550fe5d5e0e6cThe bidding wars are back. While not every local real-estate market is experiencing bidding wars, some homebuyers find themselves competing for houses because not many are for sale in their markets. For example, in Phoenix, it would take just 2.3 months to sell all the homes currently on the market, says Susan Paul, owner of Better Homes and Gardens Real Estate Move Time Realty in Scottsdale, Ariz. The result? Many homes have 10 to 15 offers the day they go on the market, she says.

To compete in a bidding war, buyers need to prepare financially for the home purchase. They have to be familiar with property values in their target neighborhoods. And they must know what they want.

While offering the most money might seem like the best way to win a bidding war, sellers don’t always choose the highest offer. Instead, sellers often prefer offers that are most likely to go through and that meet their conditions. Here are six tips to increase your chances of making the winning offer in a bidding war for the house of your dreams.

1. Have a lender on speed dial
“Too many buyers talk to a lender and start looking at homes at the same time,” says Eldad Moraru, a real-estate agent with Long & Foster Real Estate Inc. in Bethesda, Md. “You need to have everything (financial) done before you begin to look.” Then you are more likely to win a bidding war.

He suggests selecting a lender and a loan, completing everything the lender requires and having a preapproval letter in hand — all before submitting an offer.

“You need to make sure your lender is ready to issue an approval letter specific to the property at the drop of a dime,” Moraru says.

Paul recommends keeping a file folder constantly updated with your most recent pay stubs, all pages —even blank pages — of recent bank statements and any other documentation the lender may need to make a quick loan approval. Then you are ready to make an offer.

A strong preapproval is essential, especially if you are competing against buyers with cash to offer, says Alan T. Aoyama, vice president of Century 21 M&M Associates in Cupertino, Calif. Any hint that you might have trouble qualifying for financing could eliminate you from the seller’s choice of buyers.

2. Cash in your pocket plus the paperwork to prove it
“An all-cash buyer can even waive the appraisal,” Aoyama says. “If you’re a noncash buyer, you need to have a copy of your proof of funds with your offer, along with a strong preapproval. At a minimum, you should offer a down payment of 20% if you know you’ll be competing against other buyers. You need to show you have the funds to close and the ability to make up the difference if the appraisal comes in too low.”

Moraru says that in Washington, D.C., and Maryland, it’s common to supplement your offer with a financial information sheet detailing your job history, salary and bonuses, 401(k) balance, how much you have for a down payment and where the money is saved.

A higher-than-customary earnest money deposit can sometimes impress sellers when there is a bidding war, Moraru says. Just make sure you fully meet all deadlines and terms of the contract so you don’t lose your deposit.

3. Make a fast, personalized offer
To compete against other buyers in a potential bidding war, make sure you see a home the day it goes on the market, so you can move quickly, Paul says.

“Your buyers agent should talk to the listing agent to find out what is motivating the sellers and what they need — such as a quick settlement or a post-settlement rent-back,” Paul says. “Be flexible, and work that into your offer. Make it as easy on the sellers as possible so your offer is chosen above 15 others.”

Paul says buyers should offer to help the sellers in any way they can, such as helping them find a home for their pet if they can’t take it with them.

Moraru says while price is important, sellers want to know the buyer can finance the property and meet any other conditions. If you don’t know the date when the sellers want to settle, you can write “will settle on seller’s schedule” into the offer.

Aoyama suggests offering 30 days of free rent if the sellers want to stay in their home after settlement.

4. Keep your home inspector on alert
Most real-estate agents don’t recommend buying a home without an inspection, but making your offer contingent on an inspection can weaken your position if other buyers are waiving an inspection contingency. Aoyama says buyers should carefully read all disclosures and reports that are available, because some sellers provide a home inspector’s report for buyers. You can also have an home inspection done after your offer has been accepted that can provide information on the home’s condition.

“If you’re serious about a particular house, you can have a home inspection before you make an offer, and then make a noncontingent offer if you’re satisfied with the report,” Moraru says. “You’ll need to move fast, though, and have a home inspector ready almost the day the home goes on the market.”

Paul says you can bring a home inspector along when you first look at the home and say the inspector is a friend, just to get a feel for the condition of the home without an in-depth checkup.

“If the inspector says the house looks OK, you can feel better about waiving the home inspection contingency,” Paul says.

5. Eliminate or reduce contingencies
One of the best ways to make your offer stronger is to eliminate contingencies regarding home inspection, financing or appraisal, Aoyama says. That puts you in a more solid position to win a bidding war. If you have cash reserves to cover the gap between a low appraisal and your offer, you can waive the appraisal contingency, he says, but leave your financing contingency in place to protect yourself.

“If you can’t waive these, you can at least shorten the time frame, such as (by) reducing the loan contingency to 10 days if you know your lender can provide you with proof of financing quickly enough,” Aoyama says.

Offering to buy the home as is can be tempting, but make sure you have an accurate idea of the home’s condition with an informational inspection for safety.

Paul says buyers need to make their offer as strong as possible, so if you don’t need a home warranty or help with closing costs, don’t ask for them.

6. Try an escalation clause — maybe
An escalation clause is an addendum to a purchase offer that authorizes your agent to offer a specified amount above the best offer the seller receives. It’s a powerful way to wage a bidding war. “Buyers are offering escalation clauses a lot less often than when the housing market was booming, unless the home is priced way below market value,” Moraru says. “I recommend that buyers who want to offer an escalation clause be very careful when choosing to go as high as they can with the understanding that they can live with the price if it goes to the maximum amount. They also need to feel that if someone else gets the house at a higher price, that buyer overpaid.”

The US #Housing Market Is Actually Two Very Different Housing #Markets

Everyone knows that the U.S. housing market is on its way up.

painted-ladies-alamo-square-houses-san-francisco-3But housing is a local story; the U.S. market is made up of many smaller markets with their own idiosyncrasies.

There is, however, one quality that clearly distinguishes two types of U.S. housing markets: the foreclosure process.

Specifically, the type of foreclosure process (judicial or non-judicial) has determined how quickly a market has been able to clear out inventory.

“The non-judicial foreclosure process used in most Western markets has allowed lenders to efficiently clear the distress, while at the same time facilitating strong investor activity and a home price recovery,” says Adam Artunian, an analyst with John Burns Real Estate Consulting.  “Ironically, the judicial foreclosure process, which was designed to protect homeowners, is delaying the recovery in those markets.”

Here are three key points (verbatim) from Artunian:

  • Markets with the strongest price appreciation are in non-judicial-foreclosure states. Areas where laws allow banks to clear distressed homes without lengthy court proceedings are recovering the most quickly. Markets like Phoenix, San Francisco, Denver  and San Diego have seen prices surge 10% – 20% over the last year. Lenders in these markets have already seized and resold a large quantity of distressed properties, whereas those in judicial-foreclosure states are still navigating the foreclosure process.
  • The foreclosure process takes up to 3 times longer in judicial states. Nationally, properties foreclosed in 3Q12 took an average of 382 days to complete the foreclosure process. However in judicial states, the process averages closer to 500 days and even longer in some jurisdictions. In Florida and New York, the foreclosure process can take up to 3 years, which is considerably slowing the eradication of distress in these markets.
  • The relatively quick foreclosure process in non-judicial markets has helped to sharply reduce the levels of resale inventory. Months of resale supply currently ranges from 1 – 4 months in most major non-judicial markets, well below the historical average of 6 months. In many prime submarkets, limited resale inventory is even causing bidding wars where homes are sold well above asking prices.

Here’s a table from John Burns that clearly shows where prices are rising:

home prices

John Burns Real Estate Consulting

So, the U.S. housing market is not one market.  It’s two markets.

Read more: http://www.businessinsider.com/two-very-different-us-housing-markets-2013-2#ixzz2KegO7nPZ

December construction spending inches upward #Housing

HousingDivision_16Construction spending in the U.S. rose slightly to $885 billion in December, up 9% from the month before, the United States Census Bureau reported Friday.

The December construction spending numbers are still 7.8% higher than the previous December, when the spending total reached approximately $820.6 billion.

Seasonally adjusted private residential spending increased slightly from November to December, rising 2.0% from $602.9 billion to $614.9 billion. The residential construction rate also hit $308.2 billion, 2.2% above the revised November estimate of $301.7 billion.

“The increase in December was led by a 2.2% gain in residential outlays after a 0.6% increase in November. Most of the latest improvement was from multifamily construction although single-family outlays also advanced. Public construction declined in the latest month,” noted Econoday.

To see the full chart of construction spending since 2008, click on the image below.

Dec. Construction Spending