Soon You Can Flee Your Underwater Home. But It Will Cost You
For some homeowners, March 1 will be Liberation Day. Thats when Fannie Mae and Freddie Mac will start allowing some homeowners who have been stuck in their homesunable to move because they owe more than the property is worthto relinquish the houses and cancel their debt.
The new rules for deed-in-lieu transactions apply to people who are current or less than 90 days late on their mortgage payments. To the extent that the change makes it easier for people to moveto take a new job, shift locations following the death of a spouse or caregiver, or if they become ill and can no longer afford the house paymentit should help the economic recovery. The change also will benefit military personnel who are relocated.
To be eligible to turn over the house keys, homeowners must be making payments of at least 55 percent of their monthly income for the house and must be able to document a hardship that requires a move, such as a spouses death. The home must be clean and not damaged. Homeowners may also have to surrender as much as 20 percent of personal assets, excluding retirement accounts, to partially meet the loans unpaid balance, depending on the borrowers financial situation. The program does not affect second mortgages. Mortgage servicers can offer up to $6,000 for second-lien holders to release borrowers from the loans, but theres no requirement that the holders agree. This could limit participation.
$6,495,300 worth of talk time to Cell Phones for Soldiers
As a proud sponsor of Cell Phones for Soldiers for 5 Years now, all of our staff and Realtors and done such a commendable job collecting donations for our drive. Today, we shipped 1,054 cell phones and boxes and boxes of recyclable accessories to Cell Phones for Soldiers. Those 1,054 cell phones equate to 63,240 minutes of talk time to our troops. Altogether, the grand total of our efforts have reached 15,465 cell phones collected and donated totaling 927,900 minutes of talk time. Weve almost hit the million mark in minutes donated! From Kuwait and Afghanistan and Iraq, that 927,900 minutes of talk time equals $6,495,300! You are reading that correctly Six Million, Four Hundred Ninety Five Thousand Three Hundred Dollars!
Its amazing to think that each and every one of the phones we have collected can make such a difference. Cell Phones for Soldiers and the Helping Heroes Home program just wanted to send along a note of thanks to all of you at Classic for you efforts and to let you know what you do is so appreciated by our troops and their families. Thanks to all of you that have participated in helping the cause. Youre definitely a classic!
During the hustle and bustle of the holidays, Cell Phones for Soldiers wants to take a minute to let you know how much we appreciate your support and dedication to the charitys mission. Cell Phones for Soldiers could not assist the number of active duty military members and veterans without your help.
Thanks to you and your companys support, the charity has provided more than 168 million minutes of free talk time to our servicemen and women since 2004. And in just six months, Helping Heroes Home has assisted more than 150 veterans and their families with emergency needs. Since the beginning of November, Helping Heroes Home prevented eight veterans and their families from being evicted from their homes.
Improving Markets List Grows to 259 with All 50 States Represented
As more markets across the country improved, all 50 statesplus the District of Columiawere able to receive representation in Februarys Improving Markets Index (IMI) released by the National Association of Builders (NAHB) and First American.
Last year during this time, just 36 states were represented.
For this month, the IMI grew to include 259 markets, up from 242 in January.
The fact that all 50 states now have at least one metro on the improving list shows that the housing recovery has substantial momentum and continues to expand from one market to the next, said 2013 NAHB Chairman Rick Judson, a home builder from Charlotte, North Carolina.
In order to be recognized as improving, metro areas need to show improvement from their respective troughs in housing permits, employment, and house prices for at least 6 consecutive months.
In February, 20 metros were added to the list, while three dropped out. The lists newcomers include Rome, Georgia; Fort Wayne, Indiana; Myrtle Beach, South Carolina; Albuquerque, New Mexico; and Racine, Wisconsin.
David Crowe, NAHBs chief economist, noted over 70 percent of the 361 metros covered by the index are listed as improving this month.
Thats a far cry from when we initiated this index with just 12 improving metros in September of 2011 for the purpose of highlighting places that didnt fit the mold of the national headlines, Crowe said.
Though, Judson warned, there is still much room for improvement in metros that have not yet been listed as well as those that have.
[W]e know that a key factor slowing this progress is todays overly stringent mortgage standards that are keeping qualified buyers on the sidelines, he added.
A complete list of all 259 metropolitan areas on the IMI can be found online.
Case-Shiller Indexes Show Sharp Annual Gain in November
Despite seeing a month-over-month drop, the 10- and 20-city Case-Shiller Home Price Indexes registered their strongest year-over-year improvement in two and a half years on a non-seasonally adjusted basis, Standard&Poors reported Tuesday.
The 10-city index fell 0.2 percent, and the 20-city index dropped 0.1 percent from October to November. On an annual basis, however, the 10-city index was up 4.5 percent, and the 20-city index rose 5.5 percent. It was the strongest yearly gain in the 10-city index since June 2010 and in the 20-city index since May 2010.
Is the appraiser from within a 10-mile radius of your property? "This is one of the first questions you should ask the appraiser," says Ben Salem, a real estate agent with Rodeo Realty in Beverly Hills, California.
He recalled a recent case where an appraiser visited an unfamiliar property in nearby Orange County and produced an appraisal that Salem said was $150,000 off. "If the appraiser doesn't know the area intimately, chances are the appraisal will not come back close to what a property is really worth."
You can request that your lender send a local appraiser; if that still doesn't happen, supply as much information as you can about the quality of your neighborhood.
PROVIDE YOUR OWN COMPARABLES
Provide your appraiser with at least three solid and well-priced comparable properties. You will save her some work, and insure that she is getting price information from homes that really are similar to yours.
Websites including Realtor.com, Zillow and Trulia offer recent sales prices and details such as the number of bedrooms and bathrooms in a home.
KNOW WHAT ADDS THE MOST VALUE
If you're going to do minor renovations, start with your kitchen and bathrooms, says G. Stacy Sirmans, a professor of real estate at Florida State University. He reviewed 150 variables that affect home values for a study sponsored by the National Association of Realtors. Wood floors, landscaping and an enclosed garage can also drive up appraisals.
DOCUMENT YOUR FIX-UPS
If you've put money into the house, prove it, says Salem.
"Before-and-after photos, along with a well-defined spreadsheet of what was spent on each renovation, should persuade an appraiser to turn in a number that far exceeds what he or she first called out."
Don't forget to highlight all-important structural improvements to electrical systems, heating and cooling systems - which are harder to see, but can dramatically boost an appraisal. Show receipts.
TALK UP YOUR TOWN
If your town has recently seen exciting developments, such as upscale restaurants, museums, parks or other amenities, make sure your appraiser knows about them, says Craig Silverman, principal and chief appraiser at Silverman&Co. in Newtown, Pennsylvania.
DISTINGUISH BETWEEN UPSTAIRS AND DOWNSTAIRS
Many homeowners covet that refinished basement, but that doesn't mean appraisers look at it the same way. "Improvements and additions made below grade, such as a finished basement, do not add to the overall square footage of your house," says John Walsh, president of Total Mortgage Services in New York. "So they don't add anywhere near as much value as improvements made above grade."
According to Remodeling magazine, a basement renovation that cost $63,000 in 2011-12 will recoup roughly 66 percent of that in added home value. That's not as good as an attic bedroom, which will recoup 73 percent of its cost. Even similar bedrooms typically count for more if they are upstairs instead of downstairs.
Even jaded appraisers can be swayed by a good looking yard. "Tree trimming, cleaning up, a few flowers in the flower beds and paint touch up can all help the appraisal," says Agnes Huff, a real estate investor based in Los Angeles.
That advice holds true indoors, too. "Get rid of all the clutter in your home," says Jonathan Miller, a longtime appraiser in New York. "It makes the home appear larger."
GIVE THE APPRAISER SOME SPACE
Don't follow the appraiser around like a puppy. "I can't tell you how many homeowners or listing agents follow me around in my personal space during the inspection," he says. "It's a major red flag there is a problem with the home."
And while you're at it, make the appraiser's job as pleasant as possible by giving your home a pleasant smell. At a minimum, clean out the litter box. Baking some fresh cookies and offering him one or two probably won't sway your appraisal, nor should it. But it couldn't hurt.
Radon is an odorless, colorless radioactive gas, which is formed by the natural breakdown of uranium in soil. Radon can be found in high concentrations in rock and soil that contains granite, shale, phosphate and uranium, or even fill soil containing industrial waste.
Radon gas moves through the soil toward the earth's surface where it either safely dissipates in outdoor air or seeps into buildings through cracks and gaps in the building's foundation. Radon can also be introduced into a building or home through the water-supply, particularly if there is a private well. Certain building products, such as the stone used for a fireplace, can also be a source of radon gas.
Research indicates that once trapped inside a home, radon can accumulate to the point where it can be harmful to the occupants. Actually, it is the breakdown of radon into what is referred to as radon decay products (or radon daughters) that represents the greatest concern. These radioactive products become attached to airborne particles, which can be inhaled and ultimately cause lung tissue damage and cancer. Smokers are especially prone to the adverse effects of long-term radon exposure.
The potential for radon in any particular home is dependent on a number of variable factors such as the underlying soil composition, the type of construction materials and methods used, weather conditions, and even occupant lifestyle. Radon concerns tend to be greatest in hilly or mountainous regions, and less of an issue in sandy coastal areas. But pockets of radon-producing elements can be found almost anywhere. The U.S. Environmental Protection Agency (www.epa.gov), Health Canada, (www.hc-sc.gc.ca) and local health departments can provide information on radon and maps identifying areas subject to radon concerns.
Radon levels may vary from season to season, day to day, or even by the hour, as pressure differences occur outside or within a structure. Dramatically different radon levels can be found in seemingly identical neighboring homes. Consequently, the only way to determine if there is a radon concern is to perform a test. While radon kits are available for consumer use, it is generally recommended that radon screening or testing be performed by a qualified radon professional, especially for real estate transactions.
Even with professional testing, it can be difficult to readily determine average annual radon levels in a particular home. Radon levels tend to become elevated when the air pressure within a house is less than that of the radon gas in the soil. This type pressure imbalance can occur with the use of certain appliances and fans, particularly in relatively airtight structures. Fuel-burning appliances that require indoor air for combustion, or draw in air for other purposes, lower indoor air pressure. This action can result in the radon gas being drawn into the building through sub-surface cracks and/or other openings.
Since radon gas is naturally occurring, it cannot be eliminated; but it can be controlled. Once the radon level in a particular house is quantified using one of several recognized radon-testing methods, steps can be taken to lower the radon level and the potential health concern.
In most cases, the concentration of radon in air is used to determine the radon action level:
In the United States, the Environmental Protection Agency has established a continuous exposure level of 4 (or more) picocuries per liter (pCi/L) as the action level.
Health Canada has established 200 (or more) becquerels per cubic meter (Bq/m3) as the recommended action level for homes in Canada.
200 Bq/m3 (or 5.4 pCi/L) is a slightly higher level than the 4 pCi/L guideline used in the U.S.; however, it is significantly below the 800 Bq/m3 action level used in Canada until 2007.
These measurements do not necessarily represent a safe amount of radon; rather they serve to provide guidance in determining when remedial action is advisable. Radon levels in these ranges are also deemed the point to which conventional radon remediation methods can be expected to lower radon levels in a home in most cases.
There are several methods that can be used to lower radon levels. Radon mitigation systems include ventilation systems, pressurization of the basement air, and block wall ventilation. However, the most commonly used and effective radon mitigation method is sub-slab suction. This method makes use of plastic piping, installed through the floor slab of a house, basement, or even crawlspace, and a low-volume, continuously operating fan to create a negative-pressure within the piping. This draws in radon- laden air from below the house and vents it harmlessly to the exterior.
Radon levels below the action levels generally do not require any significant remedial action (subject to the specific situation or occupant concerns), as it may be difficult to achieve significantly lower levels even if a radon mitigation system is installed.
This information is provided for general guidance purposes only. Neither HMA Franchise Systems, Inc. nor the local HouseMaster® franchise warrants its accuracy and assumes no liability related to its use. Contact the local franchise office and/or qualified specialists for advice pertinent to your specific house or circumstances. Copyright DBR 2009. Each HouseMaster franchise is an independently owned and operated business. HouseMaster is a registered trademark of DBR Franchising, LLC.
U.S. home values in 2012 rose 5.9 percent over 2011, according to data in Zillows latest Home Value Index (HVI).
The 5.9 percent appreciation rate is the largest annual gain since August 2006, near the peak of the housing bubble.
While the market still has some ground to cover before its completely healthy again, Zillow said in a release that 2012s appreciation rate far exceeded yearly rates of appreciation typically associated with healthy markets, which can expect annual home value appreciation of roughly 3 percent on average.
Looking ahead, the Zillow Home Value Forecast projects an appreciation rate of 3.3 percent in 2013, more in line with historic norms.
In addition, the fourth quarter of 2012 saw home values rise to an average $157,400, up 2.5 percent over Q3, according to the fourth quarter Zillow Real Estate Market Reports.
Of the 30 largest metros covered in the HVI, only Cincinnati and Chicago failed to report annual and quarterly increases in the fourth quarter, Zillow said. Of the 366 total metros analyzed, 254 (69 percent) registered annual home value gains in 2012, while 278 (76 percent) experienced quarter-over-quarter appreciation.
Though the recovery in home values appears to be widespread, its not balanced among metros, Zillow said. According to the report, growth rates ranged from a high of 22.5 percent yearly appreciation in Phoenix to a low of 0.2 percent depreciation in Cincinnati and Chicago. Seven of the top 30 largest metros posted annual home value appreciation of 10 percent or higher.
We expected 2012 to be a good year for housing, and it delivered in spades, said Zillow chief economist Dr. Stan Humphries. Strong demand paired with limited inventory in many markets helped fuel a robust and often rapid recovery in overall home values, good news for homeowners after years of poor performance.
While home value appreciation is expected to slow down in 2013, Humphries said the anticipated 3.3 percent annual appreciation rate is more sustainable. That said, consumers should be careful to temper their expectations accordingly.
Its important to be cautious moving forward, even as we celebrate the undeniably positive end to 2012, and be careful that consumers dont grow to expect such high appreciation as the norm, Humphries said. Buying a home should be a long-term decision, and these swings between a deep housing recession and higher-than-normal appreciation rates can give consumers whiplash and cause some to lose sight of that.
As home values rose throughout 2012s fourth quarter, foreclosure activity declined, with 5.22 out of every 10,000 homes nationwide facing foreclosure in December (down 2.2 homes per 10,000 year-over-year and 1.2 homes quarter-over-quarter). The share of foreclosure re-sales dropped to 12 percent, down 4 percent from the end of 2011 and 0.3 percent from the third quarter.
Meanwhile, national rents fell 0.6 percent from the third quarter to the fourth; however, rents were up 4.2 percent year-over-year in 2012. The Zillow Rent Index stood at $1,274 at the end of December.
RE/MAX Co-Founder Offers Top 10 Predictions for 2013
RE/MAX co-founder and chairman Dave Liniger says he expects the national housing markets rebound in 2012 to not only continue into 2013, but he also thinks the year could be the best the industry has seen in a very long time
And, as the market heals, its not just one factor that is restoring the industry, but several that are playing a role.
Although interest rates have been at historic lows, they have not been the driving force behind this recovery, Liniger said. Theres no single factor driving this market; its been a combination of low prices, low inventory, improving consumer confidence and a huge pent-up demand. That was true throughout 2012 and will continue to be true in 2013.
Liniger, however, warned that the recovery will be slow and steady, adding it is not completely on solid ground just yet.
Liniger noted concerns regarding government regulations, strict lending standards, and the overall economy.
But if housing can stay on the road to recovery, its possible that it can pull the rest of the economy along with it, he concluded.
Liniger also offered his top 10 predictions for the year in a video presentation. According to the RE/MAX research team, Linigers predictions for 2012 were 85 percent accurate.
Linigers Top 10 Real Estate Predictions for 2013
1. With more pent up demand, more homebuyers and sellers are expected to enter the market.
2. Homes sales will rise by 6-7 percent, and prices will rise by 3-4 percent.
3. The inventory of homes for sale will hit a bottom. More homes will be on the market from homeowners whose equity has increased and from lenders who are foreclosing more efficiently.
4. Higher priced homes will begin to sell.
5. Distressed property numbers will bottom out. We will be dealing with a significant number of distressed properties for a few more years, but the numbers should start retreating to more traiditonal levels in 2013, Liniger said.
6. Shadow inventory will continue to fall. Liniger explained shadow inventory has already fallen 12 percent from 2011.
7. The number of short sale closings will rise to a peak.
8. Record low mortgage rates will rise slightly by year-end. Although they will remain near their historic lows, Liniger says rates may start to inch up towards the end of year.
9. Lending will remain tight was Linigers one negative prediction. Due to increased government regulation and the soon to be established provisions of Dodd-Frank, lenders will be compelled to keep standards tight, he said.
10. Home affordability will remain the best in years, bringing more buyers into the market.
Should Young People Buy Homes? Weighing the Pros and Cons
If there's anything we've learned in the past few years about real estate, it's that property doesn't always go up in value. And because it doesn't, you shouldn't just buy property and assume that you're going to earn equity and wealth from that ownership.
Instead, buying a home should be a personal decision based on your life and financial situation.
So if you are young, should you buy real estate? The answer, as with many things, is that it depends. But for the vast majority of young people, the answer is probably no. Here's why.
Real Estate is Long-Term
We buy real estate in order to hopefully earn wealth and improve our lot in life. The most likely way that you will earn real estate wealth is by owning property for long periods of time, preferably a decade or greater. This long-term ownership does not coincide with the habits and traits of most young people. So if you're not very sure you will own a property for a long time, let a landlord deal with the inherent risks, pains and issues of real estate ownership.
Not Settled in a Career
At a young age, you rarely know whether you'll be living in the same area for a long time. People are very mobile these days, including switching jobs, getting job transfers, changing careers, going back to school, etc. If you buy a property and have to sell it due to a career move in a few years, you're most likely going to lose money on your real estate ownership.
Can't Afford a Place You Love
Additionally, you might not have the financial resources to afford a place that you really love, and you'll end up buying in anticipation that you'll earn equity and trade up in a few years. Now you probably will trade up in a few years, but you probably won't earn any equity. In fact, you'll likely lose money -- primarily due to steep transaction costs. The better way to go is to save your money for several years and buy a place you really love when you have the savings and income to be a homeowner.
Not Settled in Life
You finish school, get a job and work a few years. Then you realize you've got to move somewhere else, "see the world," if you will! That house you bought would hinder your ability to relocate, and if you did move, you'd probably lose money.
So if you are young, wild and free -- and not sure of your 5- to 10-year plan -- you'll probably do better as a renter.
When might it make sense to buy young? If you're sure you'll own the property a long time, then it's probably a good idea to buy. Just make sure you can comfortably afford the payments along with all your other bills. Also if you want to be in the landlord business and plan to convert the property from a personal residence to a rental, then buying at a younger age would be a smart move for you.
Just ask yourself before you decide whether to buy real estate, "Am I sure my ownership will be for the long haul?"
The Great Housing Rebound of 2012: How the Fed Helped Sellers Beat the Odds
Without a doubt, the U.S. housing market has been the most successful sector of the economy this year, and Wednesdays Case-Shiller home-price index report which showed a fifth consecutive month of year-over-year increases in home prices nationwide was a late Christmas present for homeowners across the country.
The housing-market bottom was one of the biggest business stories of 2012. After years of falling home values, the data clearly showed that the bleeding stopped somewhere in the first part of 2012 and that home prices have actually begun to slowly rise since then. In addition, other indicators like housing starts, new home sales and foreclosure statistics all point toward a healing housing sector.
These dynamics have gotten some economists and market analysts excited about the growth prospects for the U.S. economy in 2013. Robert Johnson, director of economic analysis for Morningstar, called housing the big change factor in 2013 and believes that direct housing investment will be a meaningful contributor to economic growth in 2013. He also sees industries related to housing like furniture manufacturing and sales adding to economic growth in 2013 as the housing market begins to pick up.
Theres no doubt that were finally seeing the beginnings of what economists call a positive feedback loop when it comes to housing. Rising home prices allow lenders to be more generous with home financing, which allows even more prospective home buyers to access the market, further driving up home prices. And higher home values give consumers and builders more confidence to go out and spend money or make investments, which also stimulates the real estate market and broader economy.
But with all this enthusiasm for the housing-market recovery, its important to take a step back and think about the real driving force behind rising home prices. Jonathan Miller, president and CEO of the real estate appraisal and consulting firm Miller Samuel Inc., astutely asks the question of how home prices can rise in an environment in which unemployment remains high, there is little growth in take-home pay, taxes seem poised to rise and lending standards continue to be tight.
One of the answers to this riddle, according to Miller, is the Federal Reserve. Record low mortgage rates, primarily (though not exclusively) due to the Feds decision to buy up mortgage-backed securities, have done much to boost home prices. Last month I wrote about an analysis done by Tim Iacono of Iacono Research that illustrated just how significant Fed stimulus efforts can be when it comes to home prices. He showed that todays superlow rates can enable a home buyer to purchase a house that is 50% more expensive than she would have been able to afford under the average mortgage rates over the past 20 years.
In addition, there is reason to be concerned that distressed home sales like foreclosures or short sales will hamper the housing recovery in 2013. Miller notes that distressed home sales began to increase yet again in the second quarter of 2012, as banks started to ramp up their foreclosure mechanisms after the resolution of the robo-signing scandal earlier this year. Homes sold under these conditions are usually done so at a steep discount, and large amounts of distressed properties on the market will drive down home prices more generally.
This is not to say that the recent trend of rising home prices isnt a good thing. Its very difficult to imagine a significant economic recovery in an environment of falling real estate prices, as a house is most Americans single most significant asset. But any sober analysis of the recovery must admit that Federal Reserve stimulus is probably the single most important factor driving rising home prices. And until we see a significant drop in unemployment, or a significant increase in wages, we wont get a housing-market recovery that can sustain itself without unprecedented intervention from the central bank.