For almost a decade now, every time we talked about real estate we immediately discussed money. We didn’t talk about the value of a home but instead about the price of the house. We didn’t worry about a roof over our heads but instead the ceiling on our interest rate. We didn’t care as much about where we raised our family as we cared about how much we increased our family’s net worth.
That will change in 2011. The KCM Crew believes very strongly that real estate will return to what it has been for the 200+ year history of this country: a place for us and our families to live comfortably. It will also prove to be a great long term investment as it always has been.
Our parents and our grandparents didn’t buy their homes as a short term financial investment. They bought it so they had a place of their own to come home to at the end of the day; a place to raise their family; a place they could feel safe.
Sure they dreamed of a ‘mortgage-burning’ party. They realized it was a form of forced savings. They were taught that, if they paid their mortgage every month, they would wind up with a little retirement account decades later.
And, they realized that wouldn’t happen if they rented.
However, in the last decade, we somehow forgot that the financial aspect was the serendipity not the major reason to buy. We believe that 2011 will be the year that people return to the historic reasons families purchased a home. This is the year when we again remember that homeownership is a major part of the American Dream.
What about the challenges to a housing recovery? Let’s look at them.
The Economy
Most reports are showing that the economy is doing better than expected. This shopping season provided additional proof of this point. As the economy recovers, so will consumer confidence. This will be great news for housing.
Unemployment
There is much talk about a ‘jobless recovery’. We agree that unemployment will continue to be a challenge. However, when you talk about housing, it is not the unemployment rate that is all telling. Instead, it is the change in the rate. As unemployment skyrocketed, people started to worry about their own job. Any change creates concern. Unabated concern turns to fear. Fear causes paralysis. The spike in unemployment has plateaued. People no longer have the felling that ‘they are next’. The fear will diminish and people will start moving on with their lives. This too will be great news for housing.
Interest Rates
It seems the bottomless pit in which rates have been falling does have a floor after all. And it seems we have found it. Those purchasers who had been waiting for the best interest rate may have already missed it.
Prices
Economists are projecting that prices will not see any appreciation in 2011. Sellers who had been waiting for 2006 to return will come to the realization that waiting any longer makes little sense. They will instead decide to get on with their lives and sell this year.
Prices probably will soften further. However, the possible savings to potential buyers will be minimized by a rise in interest rates.
Bottom Line
This is the year that normalcy returns to real estate. People will buy and sell based on the desire for a better life for themselves and their families. They will realize that is the true value of homeownership and they will be willing to pay for that value.
Reprinted from KCM Blog
Wednesday, December 29, 2010
Monday, December 27, 2010
Dr. Doom, Mr. Bear and Real Estate
Trying to negotiate the current housing market is difficult. There are so many external variables impacting real estate it seems almost impossible to project where sales and prices are headed. But, there were two people who saw the challenges we are currently experiencing back in 2005-2006. They looked at the market and predicted we were in for the collapse that occurred. Who are these men? How do they see real estate today? What are they doing to take advantage of the current market?
Dr. Doom
Nouriel Roubini is a teacher at New York University. He warned that borrowers defaulting on their mortgage loans would unleash a housing bust and deep recession.
According to the Wall Street Journal Roubini is:
…the New York economist whose warnings of a housing collapse earned him the nickname “Dr. Doom” … Ever since much of his dire forecasting came true, Mr. Roubini has become one of the world’s most recognizable economists. He has been in demand as a speaker and consultant, often shuttling around the globe to advise central bankers and finance ministers.
Mr. Bear
John Paulson is the person who made a fortune betting that the subprime mortgage mess would cause the real estate market to collapse. He understands how the housing market works and knows when to buy and when to sell. What do others think of Paulson?
According to Forbes John Paulson is:
…a multibillionaire hedge fund operator and the investment genius who made a killing going short subprime mortgages a few years ago.
Why discuss these gentlemen today?
The interesting thing is that both these gurus just purchased real estate in New York. The Wall Street Journal reports Roubini:
just plunked down $5.5 million for an East Village penthouse loft, public records show … Real-estate people in New York were quick to seize on his purchase as a healthy sign for the local property market.
“Even the most bearish think our market has nowhere to go but up,” said Frederick Peters, president of Warburg Realty Partners.
“Dr. Doom is a little late to catch the bottom, but there’s still plenty of upside at this point.”
Paulson also just closed on a multi-million dollar home:
Mr. Paulson purchased a two-bedroom apartment at Olympic Tower, a luxury condominium on Fifth Avenue across the street from St. Patrick’s Cathedral and Rockefeller Center, for $2.85 million, according to public records. The 51-story building was developed by Aristotle Onassis and is popular with part-time residents from abroad.
Bottom Line
It seems that Mr. Bear and Dr. Doom are looking at the real estate market quite differently right now. Does that mean the market is at its bottom and about to turn for the better? Mr. Paulson recently put it this way:
“If you don’t own a home, buy one. If you own one home, buy another one. And if you own two homes, buy a third and lend your relatives the money to buy one.”
Dr. Doom
Nouriel Roubini is a teacher at New York University. He warned that borrowers defaulting on their mortgage loans would unleash a housing bust and deep recession.
According to the Wall Street Journal Roubini is:
…the New York economist whose warnings of a housing collapse earned him the nickname “Dr. Doom” … Ever since much of his dire forecasting came true, Mr. Roubini has become one of the world’s most recognizable economists. He has been in demand as a speaker and consultant, often shuttling around the globe to advise central bankers and finance ministers.
Mr. Bear
John Paulson is the person who made a fortune betting that the subprime mortgage mess would cause the real estate market to collapse. He understands how the housing market works and knows when to buy and when to sell. What do others think of Paulson?
According to Forbes John Paulson is:
…a multibillionaire hedge fund operator and the investment genius who made a killing going short subprime mortgages a few years ago.
Why discuss these gentlemen today?
The interesting thing is that both these gurus just purchased real estate in New York. The Wall Street Journal reports Roubini:
just plunked down $5.5 million for an East Village penthouse loft, public records show … Real-estate people in New York were quick to seize on his purchase as a healthy sign for the local property market.
“Even the most bearish think our market has nowhere to go but up,” said Frederick Peters, president of Warburg Realty Partners.
“Dr. Doom is a little late to catch the bottom, but there’s still plenty of upside at this point.”
Paulson also just closed on a multi-million dollar home:
Mr. Paulson purchased a two-bedroom apartment at Olympic Tower, a luxury condominium on Fifth Avenue across the street from St. Patrick’s Cathedral and Rockefeller Center, for $2.85 million, according to public records. The 51-story building was developed by Aristotle Onassis and is popular with part-time residents from abroad.
Bottom Line
It seems that Mr. Bear and Dr. Doom are looking at the real estate market quite differently right now. Does that mean the market is at its bottom and about to turn for the better? Mr. Paulson recently put it this way:
“If you don’t own a home, buy one. If you own one home, buy another one. And if you own two homes, buy a third and lend your relatives the money to buy one.”
Tuesday, December 21, 2010
5 Reasons To List Your Home Now!
Selling your house in today’s market can be extremely difficult. It is for that reason that every seller should take advantage of each and every chance that appears. There is a fantastic opportunity available right now. Meet with your real estate agent and mortgage professional today and see whether it is the right time for you and your family to make a move.
Here are five reasons you should consider selling in the first 90 days of 2011.
1. Interest rates have spiked up.
Rates have jumped over 1/2 point in the last several weeks. The short term result of increasing rates is a surge of buyers jumping off the fence to purchase in fear that rates may continue climbing upward. This is a short window of opportunity. If rates fall again, buyers will jump back on the fence. If rates continue to rise, it limits the number of buyers who can qualify at each price point. Now is the best time to sell your house.
2. If you are moving up, you can save thousands.
If your family goal is to sell your current house and take advantage of the fabulous selection of properties currently available to buy the home of your dreams a at bargain basement price, DO IT NOW! Prices will continue to soften in most markets. However, if you are buying, COST should be more important than PRICE. Cost can be dramatically impacted by rising mortgage interest rates. Do the math and decide if now is the time.
3. During the winter months, the buyers are serious.
We all realize that buyers are not quick to pull the trigger on the purchase of a home today. There is no sense of urgency with the supply of eligible properties at all time highs. However, at this time of year, the ‘lookers’ are either staying warm (in the North) or just busy with other priorities. The home buyers left in the market are serious and are more apt to buy. Less showings – but to more motivated purchasers.
4. You beat the rush of inventory that is coming next year.
Every year there is an increase of inventory which comes to market from January through April as homeowners put their houses up for sale in preparation for the spring market. Here is the number of listings available for sale in 2010.
January – 3,277,000
February – 3,531,000
March – 3,626,000
April – 4,029,000
We believe there is a pent-up selling demand (homeowners who have held off selling over the last year) that will lead to an increase in these numbers this spring. You won’t have to worry about this increasing competition if you sell now.
5. You have less ‘discounted’ inventory with which to compete.
This year, sellers of non-distressed properties have been given an early holiday present. With banks trying to rectify their foreclosure procedures, there has been a large supply of discounted properties removed from competition. No one knows how long it will take banks to return to the normal flow of foreclosed properties to the market. However, until they do, every homeowner has a better chance of selling their property.
Bottom Line
If you are looking to sell in 2011, there may not be a more opportune time than this right now. Serious buyers, great move-up deals and less competition from super-motivated sellers and foreclosures creates the perfect selling situation. Don’t miss it!
Reprinted by permission from Keeping Current Matters Blogsite.
Here are five reasons you should consider selling in the first 90 days of 2011.
1. Interest rates have spiked up.
Rates have jumped over 1/2 point in the last several weeks. The short term result of increasing rates is a surge of buyers jumping off the fence to purchase in fear that rates may continue climbing upward. This is a short window of opportunity. If rates fall again, buyers will jump back on the fence. If rates continue to rise, it limits the number of buyers who can qualify at each price point. Now is the best time to sell your house.
2. If you are moving up, you can save thousands.
If your family goal is to sell your current house and take advantage of the fabulous selection of properties currently available to buy the home of your dreams a at bargain basement price, DO IT NOW! Prices will continue to soften in most markets. However, if you are buying, COST should be more important than PRICE. Cost can be dramatically impacted by rising mortgage interest rates. Do the math and decide if now is the time.
3. During the winter months, the buyers are serious.
We all realize that buyers are not quick to pull the trigger on the purchase of a home today. There is no sense of urgency with the supply of eligible properties at all time highs. However, at this time of year, the ‘lookers’ are either staying warm (in the North) or just busy with other priorities. The home buyers left in the market are serious and are more apt to buy. Less showings – but to more motivated purchasers.
4. You beat the rush of inventory that is coming next year.
Every year there is an increase of inventory which comes to market from January through April as homeowners put their houses up for sale in preparation for the spring market. Here is the number of listings available for sale in 2010.
January – 3,277,000
February – 3,531,000
March – 3,626,000
April – 4,029,000
We believe there is a pent-up selling demand (homeowners who have held off selling over the last year) that will lead to an increase in these numbers this spring. You won’t have to worry about this increasing competition if you sell now.
5. You have less ‘discounted’ inventory with which to compete.
This year, sellers of non-distressed properties have been given an early holiday present. With banks trying to rectify their foreclosure procedures, there has been a large supply of discounted properties removed from competition. No one knows how long it will take banks to return to the normal flow of foreclosed properties to the market. However, until they do, every homeowner has a better chance of selling their property.
Bottom Line
If you are looking to sell in 2011, there may not be a more opportune time than this right now. Serious buyers, great move-up deals and less competition from super-motivated sellers and foreclosures creates the perfect selling situation. Don’t miss it!
Reprinted by permission from Keeping Current Matters Blogsite.
Friday, December 17, 2010
How Will Foreclosures Affect Home Prices?
Three months ago, it was revealed that many banks were guilty of improperly processing the paperwork on their foreclosures. Most banks at the time declared a foreclosure moratorium while they reviewed their paperwork and corrected any errors. Today, we want to give you an update on the situation and explain how the housing market will be affected.
The banks have admitted to some procedural errors. The severity and intent of these errors is still being investigated and the proper sanctions are being debated (one state attorney general is threatening jail time). However, there seems to be no evidence that families were incorrectly forced from their homes.
So what does mean to the housing market?
When this discounted inventory enters the market, it will put downward pressure on house values. Foreclosures entering the market put downward pressure on the non-distressed properties trying to sell. A foreclosure is competition to other homes as they sell for a 41% discount.
When will this inventory come to market?
Celia Chen of Moody’s Analytics on when this inventory is expected to hit the market:
The “robo-signing” scandal is beginning to show up in U.S. foreclosure data. The inventory of homes in foreclosure rose sharply in the fall, reflecting the fact that a number of large mortgage servicers placed a moratorium on foreclosures midway through October, and were thus unable to complete these foreclosures and reduce inventories. Servicers have already lifted some of these moratoriums and it is likely business will return to usual by the beginning of 2011.
…sales of REOs to third parties and other types of distress sales such as short sale or auction sale to a third party will step up in the first quarter of next year as servicers resolve the foreclosure processing issues.
What impact will it have on house prices?
Prices will be affected. The question is to what degree. Ms. Chen explains it simply:
…the larger the ratio of distress sales to normal, nondistress sales, the greater the downward pressure on prices.
How many distressed sales are out there? According to Daren Blomquist, managing editor of the RealtyTrac:
“Even with this big drop in November we do have a continuing building inventory of properties in foreclosure or REO. We’re estimating those properties plus delinquencies to equal 3 million to 4 million homes waiting to hit the market.”
Bottom Line
With the enormity of the challenge, prices can be impacted in a big way. Ms. Chen in her report said she sees a 5% decline in prices through the first three quarters of 2011.
Reprinted from KCM Blog by permission
The banks have admitted to some procedural errors. The severity and intent of these errors is still being investigated and the proper sanctions are being debated (one state attorney general is threatening jail time). However, there seems to be no evidence that families were incorrectly forced from their homes.
So what does mean to the housing market?
When this discounted inventory enters the market, it will put downward pressure on house values. Foreclosures entering the market put downward pressure on the non-distressed properties trying to sell. A foreclosure is competition to other homes as they sell for a 41% discount.
When will this inventory come to market?
Celia Chen of Moody’s Analytics on when this inventory is expected to hit the market:
The “robo-signing” scandal is beginning to show up in U.S. foreclosure data. The inventory of homes in foreclosure rose sharply in the fall, reflecting the fact that a number of large mortgage servicers placed a moratorium on foreclosures midway through October, and were thus unable to complete these foreclosures and reduce inventories. Servicers have already lifted some of these moratoriums and it is likely business will return to usual by the beginning of 2011.
…sales of REOs to third parties and other types of distress sales such as short sale or auction sale to a third party will step up in the first quarter of next year as servicers resolve the foreclosure processing issues.
What impact will it have on house prices?
Prices will be affected. The question is to what degree. Ms. Chen explains it simply:
…the larger the ratio of distress sales to normal, nondistress sales, the greater the downward pressure on prices.
How many distressed sales are out there? According to Daren Blomquist, managing editor of the RealtyTrac:
“Even with this big drop in November we do have a continuing building inventory of properties in foreclosure or REO. We’re estimating those properties plus delinquencies to equal 3 million to 4 million homes waiting to hit the market.”
Bottom Line
With the enormity of the challenge, prices can be impacted in a big way. Ms. Chen in her report said she sees a 5% decline in prices through the first three quarters of 2011.
Reprinted from KCM Blog by permission
Wednesday, December 15, 2010
Negative Equity - Decreasing
Back in October, we posted that falling home prices would drive more homeowners into a negative equity situation where their home was worth less than the amount of their mortgage (also known as the house being ‘under water’ or ‘upside down’). If a homeowner falls further into negative equity, it increases the chances that they will walk away from their mortgage obligation. This is known in the industry as a strategic default. This could dramatically increase the number of foreclosures coming to market and cause house values to fall further.
The Wall Street Journal reported on the impact of negative equity on strategic default:
Most defaults are typically driven by a combination of income shock and negative equity, or what’s known as the “double-trigger” hypothesis. While borrowers who lose their jobs but have equity in their homes can sell and avoid default, those without any equity are left with fewer options.
The most recent Fannie Mae National Housing Survey looked at how people viewed walking away from their mortgage obligation. Here are some of their findings:
Underwater delinquent borrowers are the most likely to have considered stopping their mortgage payments.
Delinquent borrowers are almost three times as likely to have considered stopping their mortgage payments if they know someone who has defaulted on their mortgage.
17% of all people who are delinquent believe the amount they owe on their mortgage is 5-20% more than the value of their home. That number jumps to 29% when they believe the amount they owe on their mortgage is at least 20% more than the value of their home.
The CoreLogic 3rd Quarter Negative Equity Report released Monday showed
… equity data indicating a third consecutive quarterly decline in negative equity for residential properties. CoreLogic reports that 10.8 million, or 22.5 percent, of all residential properties with mortgages were in negative equity at the end of the third quarter of 2010, down from 11.0 million and 23 percent in the second quarter. This is due primarily to foreclosures of severely negative equity properties rather than an increase in home values.
Obviously, the fact that the number is declining is good news for the housing market. However, with prices again falling there is concern that the current situation could worsen. Mark Fleming, chief economist with CoreLogic said
“Negative equity is a primary factor holding back the housing market and broader economy. The good news is that negative equity is slowly declining, but the bad news is that price declines are accelerating, which may put a stop to or reverse the recent improvement in negative equity.”
Radar Logic addressed the CoreLogic report yesterday in an opinion piece:
According to research by CoreLogic, borrowers become more likely to default the further underwater they become in their mortgages. Thus, falling home prices could increase defaults, foreclosures and, as a result, the inventory of bank-owned properties. Based on our analysis, homes sold by financial firms sold for 38 percent less, on average, than homes sold by other sellers as of September 30, 2010. As such, foreclosed homes represent a low-priced alternative to homes for sale by owner/occupants, and as sales of foreclosed homes become a larger percentage of total sales, owner/occupants face increasing pressure to reduce their asking prices in order to compete. So falling prices could create a self-perpetuating cycle of negative equity, foreclosures, and further price declines.
Bottom Line
If people fall into negative equity, the chances they will strategically default increases. This would lead to more foreclosures which will mean more downward pressure on home values. More homeowners will see themselves in negative equity as prices fall. And round and round we would go. Let’s hope prices hold thus preventing this from happening.
Reprinted from KCM Blogsite
The Wall Street Journal reported on the impact of negative equity on strategic default:
Most defaults are typically driven by a combination of income shock and negative equity, or what’s known as the “double-trigger” hypothesis. While borrowers who lose their jobs but have equity in their homes can sell and avoid default, those without any equity are left with fewer options.
The most recent Fannie Mae National Housing Survey looked at how people viewed walking away from their mortgage obligation. Here are some of their findings:
Underwater delinquent borrowers are the most likely to have considered stopping their mortgage payments.
Delinquent borrowers are almost three times as likely to have considered stopping their mortgage payments if they know someone who has defaulted on their mortgage.
17% of all people who are delinquent believe the amount they owe on their mortgage is 5-20% more than the value of their home. That number jumps to 29% when they believe the amount they owe on their mortgage is at least 20% more than the value of their home.
The CoreLogic 3rd Quarter Negative Equity Report released Monday showed
… equity data indicating a third consecutive quarterly decline in negative equity for residential properties. CoreLogic reports that 10.8 million, or 22.5 percent, of all residential properties with mortgages were in negative equity at the end of the third quarter of 2010, down from 11.0 million and 23 percent in the second quarter. This is due primarily to foreclosures of severely negative equity properties rather than an increase in home values.
Obviously, the fact that the number is declining is good news for the housing market. However, with prices again falling there is concern that the current situation could worsen. Mark Fleming, chief economist with CoreLogic said
“Negative equity is a primary factor holding back the housing market and broader economy. The good news is that negative equity is slowly declining, but the bad news is that price declines are accelerating, which may put a stop to or reverse the recent improvement in negative equity.”
Radar Logic addressed the CoreLogic report yesterday in an opinion piece:
According to research by CoreLogic, borrowers become more likely to default the further underwater they become in their mortgages. Thus, falling home prices could increase defaults, foreclosures and, as a result, the inventory of bank-owned properties. Based on our analysis, homes sold by financial firms sold for 38 percent less, on average, than homes sold by other sellers as of September 30, 2010. As such, foreclosed homes represent a low-priced alternative to homes for sale by owner/occupants, and as sales of foreclosed homes become a larger percentage of total sales, owner/occupants face increasing pressure to reduce their asking prices in order to compete. So falling prices could create a self-perpetuating cycle of negative equity, foreclosures, and further price declines.
Bottom Line
If people fall into negative equity, the chances they will strategically default increases. This would lead to more foreclosures which will mean more downward pressure on home values. More homeowners will see themselves in negative equity as prices fall. And round and round we would go. Let’s hope prices hold thus preventing this from happening.
Reprinted from KCM Blogsite
Tuesday, December 14, 2010
Are Houses Undervalued???
We have been barraged with headlines and news stories telling us that home values will continue to soften for the next several quarters. Some experts are predicting that today’s values will drop and not be seen again until the middle of 2012 at the earliest. We concur with these estimates based on the current demand for housing in relationship to current supply of both the visible and the shadow inventory of houses. Here we are discussing ‘market value’.
However, there is another way to value residential real estate. Housing analysts look at the ratio between current wages and sales prices. They use a multiplier to determine how much home the average buyer can afford and compare that to the average price at which a home sells. DSNews just ran an article on this subject. They stated:
The sharp fall in residential property prices in the third quarter means that housing in the United States has become even more undervalued, according to the analysts at Capital Economics.
Based on the latest S&P Case-Shiller index, Capital Economics has concluded that house prices are now 17 percent undervalued relative to disposable income per capita. Housing has never before looked as undervalued, the firm pointed out in a research note released to DSNews.
Looking at the data included in the index compiled by the Federal Housing Finance Agency (FHFA), residential home prices are 14 percent undervalued, which is also a record, according to Capital Economics.
The National Association of Realtors (NAR) has their own Housing Affordability Index. According to NAR:
The affordability index measures whether or not a typical family could qualify for a mortgage loan on a typical home. A typical home is defined as the national median-priced, existing single-family home as calculated by NAR. The typical family is defined as one earning the median family income as reported by the U.S. Bureau of the Census. The prevailing mortgage interest rate is the effective rate on loans closed on existing homes from the Federal Housing Finance Board and HSH Associates, Butler, N.J. These components are used to determine if the median income family can qualify for a mortgage on a typical home.
In their article, DSNews also addresses the NAR index:
The housing affordability index from the National Association of Realtors (NAR) remains close to its record high. Capital Economics explained that NAR’s affordability assessment indicates that a median income household with a 20 percent down payment can now more easily afford the monthly mortgage payments on a median-priced home than at any time in the last 30 years.
By each of these historic measurements, homes are at all time values!!
Bottom Line
Lack of consumer confidence has caused many buyers to refrain from taking advantage of the golden opportunities that exist in housing today. However, buyers should look at COST (price and interest rate) not just price. People who purchase today will reap the reward of buying an undervalued asset and should enjoy excellent appreciation when inventory levels return to normal levels.
Reprinted by permission from KCM
However, there is another way to value residential real estate. Housing analysts look at the ratio between current wages and sales prices. They use a multiplier to determine how much home the average buyer can afford and compare that to the average price at which a home sells. DSNews just ran an article on this subject. They stated:
The sharp fall in residential property prices in the third quarter means that housing in the United States has become even more undervalued, according to the analysts at Capital Economics.
Based on the latest S&P Case-Shiller index, Capital Economics has concluded that house prices are now 17 percent undervalued relative to disposable income per capita. Housing has never before looked as undervalued, the firm pointed out in a research note released to DSNews.
Looking at the data included in the index compiled by the Federal Housing Finance Agency (FHFA), residential home prices are 14 percent undervalued, which is also a record, according to Capital Economics.
The National Association of Realtors (NAR) has their own Housing Affordability Index. According to NAR:
The affordability index measures whether or not a typical family could qualify for a mortgage loan on a typical home. A typical home is defined as the national median-priced, existing single-family home as calculated by NAR. The typical family is defined as one earning the median family income as reported by the U.S. Bureau of the Census. The prevailing mortgage interest rate is the effective rate on loans closed on existing homes from the Federal Housing Finance Board and HSH Associates, Butler, N.J. These components are used to determine if the median income family can qualify for a mortgage on a typical home.
In their article, DSNews also addresses the NAR index:
The housing affordability index from the National Association of Realtors (NAR) remains close to its record high. Capital Economics explained that NAR’s affordability assessment indicates that a median income household with a 20 percent down payment can now more easily afford the monthly mortgage payments on a median-priced home than at any time in the last 30 years.
By each of these historic measurements, homes are at all time values!!
Bottom Line
Lack of consumer confidence has caused many buyers to refrain from taking advantage of the golden opportunities that exist in housing today. However, buyers should look at COST (price and interest rate) not just price. People who purchase today will reap the reward of buying an undervalued asset and should enjoy excellent appreciation when inventory levels return to normal levels.
Reprinted by permission from KCM
Monday, December 13, 2010
November MLS Report
This is a report prepared by David Flore of Cunningham & Company and is an excellent summary of how the market in our MLS area performed. For those of you who like statistics, this is an excellent read. There is also a good summary of the Carolina/Kure Beach market included in this report. The Charts and Graphs would not copy into my blog, so if you would like the full report, please let me know and I'll send it to you.
David’s Comments –
Season’s Greetings while this is the last report for 2010 we still have 19 days to get home sales closed. My January report will sum up our 2010 sales production. The Holiday Season offers us an opportunity to reflect on the good times of this past year and a chance to set goals and plans for the coming year. I want to say Thanks to all of you that I have worked with over the course of 2010. We have a lot to accomplish in 2011, especially a new Sales Contract. I wish you and yours the best during this holiday season.
Have a Merry Christmas & A Happy New Year
November’s average sales price has managed to exceed last month as well as Nov 2009 & 2008 average sales price. While the numbers of sales were down from last month and as well as down from a year ago. Our average sales price is up 6.8% over last month and up 11.2% from Nov 2009 and up .05% from Nov 2008. When we look at our year to date average sold price we are only down 1.9% from Nov 2009. Our median sold price is up from last month by 5.6% and up by 6.0% from last November. Our median sold price has rebounded and has risen. Our rolling 12 months we are up 4.5% in sold units and our average sold price is only down by 2.3%. Sold units are only 3 units down from last month and down 90 from last November.
In the month of November we saw a decrease of 143 homes in our listing inventory, we have 5,007 homes on the market as of December 1st. This continues to put us in a strong buyer’s market with a listing inventory of over a 16.3 month supply. With the low sales in November this affects our month supply with an improvement of .5 months from last month. Our average list price has stayed below the $400,000 range for the last year; we are currently at $353,465. In November we saw an increase in our seller concessions, it is now 28.2%. Our average days on the market remain 121 days. The list to sold ratio is 93.2% this number needs to continue to get better. The number of homes that sold in 15 days or less continues to remain very low, 14.4% of November sold homes. The 30-year fixed-rate mortgage (FRM) averaged 4.61% with an average 0.7 points for the week ending December 9, 2010. We have hit historic lows in mortgage rates and they are possibly on the rebound. Call me so I can show you or your clients how they can get the benefit of these rates. Have a great week and let me know what I can do to help you and your clients.
Despite all the media comments about our markets we are still lending money for residential mortgages. If a client has income and credit and some sort of down payment; they can get a mortgage. It goes to the basic three C’s – Capacity, Collateral and Character.
Listing Inventory
In November we saw a decrease in listing inventory of 143 units. We are about 106 units under December 1, 2009. We have 5,007 single family homes for sale in our MLS. The average list price of $353,465 is down by $10,632 from last month. The average list price has decreased by 6.8% from December 1, 2009.
Monthly Average Sold Price
Our monthly average sold price is up by 6.8% from last month and up 11.2% from November 2009 and up .05% from November 2008. Our average sold price is up by $16,103.00 from last month. November average sold price ($251,522) shows an increase of 7.3% from year end 2009. Our average sold price is up by $25,368.00 from last November and up $1,343.00 from November 2008.
Monthly Sold Units
This month’s decline in the number of homes sold when compared to previous year is down 90 units. The number of sold homes is down 3 homes from last month and down 22.7% from November 2009. Last month we had 309 sold units and this month 306 sold units, last year in November we had 396 sold units.
Average Sold Price Year to Date
Year over year our year to date numbers have dipped a little.
2003 year end average sale price $ 186,137
2004 year end average sale price $ 210,048
2005 year end average sale price $ 254,080
2006 year end average sale price $ 264,498
2007 year end average sale price $ 273,408
2008 year end average sale price $256,498
2009 year end average sale price $234,379
2010 year to date average sale price $230,335
While our current year to date numbers are lower than Year End 2009 they do show promising signs that our sales are on the upswing. The eleven months of 2010 has a 130 sold unit gain over first eleven months of 2009. The average sales price is down 1.9% for the first eleven months of 2010 than the first eleven months of 2009. Our median sales price is just .01% behind 2009.
Rolling 12 months
When we look at December 1st, 2009 to November 30st, 2010 we have 4,499 sold units and when we compare December 1st, 2008 to November 30st, 2009 we have a 193 unit gain (4,306 sold units). When we look at the same rolling 12 months for average sold price we see that we are only down by 2.3%. So the dates of 12/1/2009 to 11/30/2010 we have an average sold price of $230,335 while from 12/1/2008 to 11/30/2009 we had an average sold price $235,715.
Median Sold Price
Our Median sold price rebounded this month an increase of 5.6% from last month, up to $190,000. Our national numbers lag by one month. Our median sales continues it small climb while the national median has some smaller declines. I am hoping we can see the national median sales price reverse its downward trend.
Pending
Pending Sales – A sale is listed as pending when the contract has been signed but the transaction has not yet closed. Sales are typically finalized within one to two months from signing. I look at the total pending units on a regular basis and this is how they chart out. We saw our peak pending numbers about May 3rd. Our pending index is dropping to our winter lows; November is 5.7% down from last month and down 11.0% from last year this time.
Market Absorption rate – The number of homes sold in November, 306 divided by the current listing inventory, 5,007 gives us a 16.3 month supply of single family homes. This decreased by .50 months from last month. We need to get this inventory back under 12 months. With a large inventory and the few sales in November this affects our market absorption. With rates where they are and plenty of inventory; we can get this number down.
List to Sold price ratio – the average list price of the sold properties is $269,991 and the average sold price is $251,521 for November which gives us a 93.2% list to sold price ratio – a .20% change from last month. We have now managed to stay under 95% for over a year and several months.
Seller Concessions – We had 28.2% of sold properties report a sales concession for November, an increase of 3.5%. We want this number to go lower.
Days on Market – The average days on market for the sold properties is now at 121 for November. That is about 4 months to keep a property on the market. Only 14.4% of the properties were placed under contract in less than 15 days for the month of November.
Carolina & Kure Beach
There are currently 392 single family homes for sale and this represents a 13 unit decrease over November 1, 2010 and 7.8% of our total WRAR inventory. The average list price is $401,925 a decrease of about $10,434 from November. In November there were 29 homes sold, divide that by the homes available and you have a 13.5 monthly supply of homes in Carolina and Kure Beach. The average sold price for the month of November was $253,917 and is down $9,522 from last month. When we look at our rolling 12 months December 1, 2009 to November 30, 2010 we have 335 homes sold at an average price of $281,225. While December 1, 2008 to November 30, 2009 we had 278 homes sold at an average price of $301,186. 2010 continues to be a better year than 2009 for Carolina Beach and Kure Beach.
This data was pulled on December 11, 2010, based on information from the Wilmington Regional Association of REALTORS Incorporated, for the period Jan. 1, 2005 through November 30, 2010.
The Market
Bond Yields Rise so do Mortgage Rates
Freddie Mac released the results of its Primary Mortgage Market Survey®, which found that once again, both fixed- and short-term mortgage rates rose this week. This was the fourth week in a row where fixed-rate mortgage rates were up.
News Facts
30-year fixed-rate mortgage (FRM) averaged 4.61 percent with an average 0.7 point for the week ending December 9, 2010, up from last week when it averaged 4.46 percent. Last year at this time, the 30-year FRM averaged 4.81 percent.
15-year FRM this week averaged 3.96 percent with an average 0.7 point, up from last week when it averaged 3.81 percent. A year ago at this time, the 15-year FRM averaged 4.32 percent.
Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.
"After Europe made strides in its debt situation, investors left the security of U.S. Treasury debt causing bond yields to rise and mortgage rates along with them. Interest rates for 30-year fixed mortgages are now almost a half percentage point higher than the record low set in mid-November, which for a $200,000 conventional loan amounts to $50 more in monthly payments.
"Housing demand appears to be picking up recently. Existing pending sales jumped 10.4 percent in October to the strongest pace since April, according to the National Association of Realtors®. More recently, mortgage applications for home purchases rose for the three consecutive weeks ending on December 3rd, representing a 17.7 percent increase and the strongest pace since the week of May 7th, based on figures released by the Mortgage Bankers Association."
Freddie Mac
30 Year Fixed Rates
The Offer to Purchase and Contract – January 1, 2011
Are you Ready for the New and Improved - Offer to Purchase Contract? I guess the real question should be – Is your Lender Ready? At Cunningham & Company – We are Ready!
We are prepared to work with your clients in advance of contract to get them “Buyer Ready”. The new contract advises the buyer to consult with a lender prior to signing the offer. With a “Buyer Ready” you and your client can go house hunting with confidence. All we will need is a property, sales contract, acceptable appraisal and a flood certification. Your buyer benefits because they have a better negotiation position and could offer a shorter Due Diligence period. As an agent you benefit with your buyers credit and financial issues resolved prior to writing a contract. You come away with smarter time management and a happier client. Contact me for further info on getting your client “Buyer Ready”.
At Cunningham & Company we can provide you with the right mortgage to meet your specific needs.
I offer these key statistics to keep you informed as to how our market is moving. With 20 years of real estate sales and management and finance in my background I am able to evaluate the current conditions and provide you with accurate data. With key information from your clients I can evaluate their needs and offer them the best plan for their current mortgage. Call me today for a quote.
Cunningham & Company is a full service Mortgage Banker - we handle everything in house. We do first time buyers, USDA, FHA and VA loans, Conventional and Jumbo Loans, 100% financing and we have a large selection of adjustable rate loans as well as several interest only programs. Call me today with my background in real estate and the resources of Cunningham & Company working together... you can't miss. A loan in the crowd.
David Flory
David’s Comments –
Season’s Greetings while this is the last report for 2010 we still have 19 days to get home sales closed. My January report will sum up our 2010 sales production. The Holiday Season offers us an opportunity to reflect on the good times of this past year and a chance to set goals and plans for the coming year. I want to say Thanks to all of you that I have worked with over the course of 2010. We have a lot to accomplish in 2011, especially a new Sales Contract. I wish you and yours the best during this holiday season.
Have a Merry Christmas & A Happy New Year
November’s average sales price has managed to exceed last month as well as Nov 2009 & 2008 average sales price. While the numbers of sales were down from last month and as well as down from a year ago. Our average sales price is up 6.8% over last month and up 11.2% from Nov 2009 and up .05% from Nov 2008. When we look at our year to date average sold price we are only down 1.9% from Nov 2009. Our median sold price is up from last month by 5.6% and up by 6.0% from last November. Our median sold price has rebounded and has risen. Our rolling 12 months we are up 4.5% in sold units and our average sold price is only down by 2.3%. Sold units are only 3 units down from last month and down 90 from last November.
In the month of November we saw a decrease of 143 homes in our listing inventory, we have 5,007 homes on the market as of December 1st. This continues to put us in a strong buyer’s market with a listing inventory of over a 16.3 month supply. With the low sales in November this affects our month supply with an improvement of .5 months from last month. Our average list price has stayed below the $400,000 range for the last year; we are currently at $353,465. In November we saw an increase in our seller concessions, it is now 28.2%. Our average days on the market remain 121 days. The list to sold ratio is 93.2% this number needs to continue to get better. The number of homes that sold in 15 days or less continues to remain very low, 14.4% of November sold homes. The 30-year fixed-rate mortgage (FRM) averaged 4.61% with an average 0.7 points for the week ending December 9, 2010. We have hit historic lows in mortgage rates and they are possibly on the rebound. Call me so I can show you or your clients how they can get the benefit of these rates. Have a great week and let me know what I can do to help you and your clients.
Despite all the media comments about our markets we are still lending money for residential mortgages. If a client has income and credit and some sort of down payment; they can get a mortgage. It goes to the basic three C’s – Capacity, Collateral and Character.
Listing Inventory
In November we saw a decrease in listing inventory of 143 units. We are about 106 units under December 1, 2009. We have 5,007 single family homes for sale in our MLS. The average list price of $353,465 is down by $10,632 from last month. The average list price has decreased by 6.8% from December 1, 2009.
Monthly Average Sold Price
Our monthly average sold price is up by 6.8% from last month and up 11.2% from November 2009 and up .05% from November 2008. Our average sold price is up by $16,103.00 from last month. November average sold price ($251,522) shows an increase of 7.3% from year end 2009. Our average sold price is up by $25,368.00 from last November and up $1,343.00 from November 2008.
Monthly Sold Units
This month’s decline in the number of homes sold when compared to previous year is down 90 units. The number of sold homes is down 3 homes from last month and down 22.7% from November 2009. Last month we had 309 sold units and this month 306 sold units, last year in November we had 396 sold units.
Average Sold Price Year to Date
Year over year our year to date numbers have dipped a little.
2003 year end average sale price $ 186,137
2004 year end average sale price $ 210,048
2005 year end average sale price $ 254,080
2006 year end average sale price $ 264,498
2007 year end average sale price $ 273,408
2008 year end average sale price $256,498
2009 year end average sale price $234,379
2010 year to date average sale price $230,335
While our current year to date numbers are lower than Year End 2009 they do show promising signs that our sales are on the upswing. The eleven months of 2010 has a 130 sold unit gain over first eleven months of 2009. The average sales price is down 1.9% for the first eleven months of 2010 than the first eleven months of 2009. Our median sales price is just .01% behind 2009.
Rolling 12 months
When we look at December 1st, 2009 to November 30st, 2010 we have 4,499 sold units and when we compare December 1st, 2008 to November 30st, 2009 we have a 193 unit gain (4,306 sold units). When we look at the same rolling 12 months for average sold price we see that we are only down by 2.3%. So the dates of 12/1/2009 to 11/30/2010 we have an average sold price of $230,335 while from 12/1/2008 to 11/30/2009 we had an average sold price $235,715.
Median Sold Price
Our Median sold price rebounded this month an increase of 5.6% from last month, up to $190,000. Our national numbers lag by one month. Our median sales continues it small climb while the national median has some smaller declines. I am hoping we can see the national median sales price reverse its downward trend.
Pending
Pending Sales – A sale is listed as pending when the contract has been signed but the transaction has not yet closed. Sales are typically finalized within one to two months from signing. I look at the total pending units on a regular basis and this is how they chart out. We saw our peak pending numbers about May 3rd. Our pending index is dropping to our winter lows; November is 5.7% down from last month and down 11.0% from last year this time.
Market Absorption rate – The number of homes sold in November, 306 divided by the current listing inventory, 5,007 gives us a 16.3 month supply of single family homes. This decreased by .50 months from last month. We need to get this inventory back under 12 months. With a large inventory and the few sales in November this affects our market absorption. With rates where they are and plenty of inventory; we can get this number down.
List to Sold price ratio – the average list price of the sold properties is $269,991 and the average sold price is $251,521 for November which gives us a 93.2% list to sold price ratio – a .20% change from last month. We have now managed to stay under 95% for over a year and several months.
Seller Concessions – We had 28.2% of sold properties report a sales concession for November, an increase of 3.5%. We want this number to go lower.
Days on Market – The average days on market for the sold properties is now at 121 for November. That is about 4 months to keep a property on the market. Only 14.4% of the properties were placed under contract in less than 15 days for the month of November.
Carolina & Kure Beach
There are currently 392 single family homes for sale and this represents a 13 unit decrease over November 1, 2010 and 7.8% of our total WRAR inventory. The average list price is $401,925 a decrease of about $10,434 from November. In November there were 29 homes sold, divide that by the homes available and you have a 13.5 monthly supply of homes in Carolina and Kure Beach. The average sold price for the month of November was $253,917 and is down $9,522 from last month. When we look at our rolling 12 months December 1, 2009 to November 30, 2010 we have 335 homes sold at an average price of $281,225. While December 1, 2008 to November 30, 2009 we had 278 homes sold at an average price of $301,186. 2010 continues to be a better year than 2009 for Carolina Beach and Kure Beach.
This data was pulled on December 11, 2010, based on information from the Wilmington Regional Association of REALTORS Incorporated, for the period Jan. 1, 2005 through November 30, 2010.
The Market
Bond Yields Rise so do Mortgage Rates
Freddie Mac released the results of its Primary Mortgage Market Survey®, which found that once again, both fixed- and short-term mortgage rates rose this week. This was the fourth week in a row where fixed-rate mortgage rates were up.
News Facts
30-year fixed-rate mortgage (FRM) averaged 4.61 percent with an average 0.7 point for the week ending December 9, 2010, up from last week when it averaged 4.46 percent. Last year at this time, the 30-year FRM averaged 4.81 percent.
15-year FRM this week averaged 3.96 percent with an average 0.7 point, up from last week when it averaged 3.81 percent. A year ago at this time, the 15-year FRM averaged 4.32 percent.
Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.
"After Europe made strides in its debt situation, investors left the security of U.S. Treasury debt causing bond yields to rise and mortgage rates along with them. Interest rates for 30-year fixed mortgages are now almost a half percentage point higher than the record low set in mid-November, which for a $200,000 conventional loan amounts to $50 more in monthly payments.
"Housing demand appears to be picking up recently. Existing pending sales jumped 10.4 percent in October to the strongest pace since April, according to the National Association of Realtors®. More recently, mortgage applications for home purchases rose for the three consecutive weeks ending on December 3rd, representing a 17.7 percent increase and the strongest pace since the week of May 7th, based on figures released by the Mortgage Bankers Association."
Freddie Mac
30 Year Fixed Rates
The Offer to Purchase and Contract – January 1, 2011
Are you Ready for the New and Improved - Offer to Purchase Contract? I guess the real question should be – Is your Lender Ready? At Cunningham & Company – We are Ready!
We are prepared to work with your clients in advance of contract to get them “Buyer Ready”. The new contract advises the buyer to consult with a lender prior to signing the offer. With a “Buyer Ready” you and your client can go house hunting with confidence. All we will need is a property, sales contract, acceptable appraisal and a flood certification. Your buyer benefits because they have a better negotiation position and could offer a shorter Due Diligence period. As an agent you benefit with your buyers credit and financial issues resolved prior to writing a contract. You come away with smarter time management and a happier client. Contact me for further info on getting your client “Buyer Ready”.
At Cunningham & Company we can provide you with the right mortgage to meet your specific needs.
I offer these key statistics to keep you informed as to how our market is moving. With 20 years of real estate sales and management and finance in my background I am able to evaluate the current conditions and provide you with accurate data. With key information from your clients I can evaluate their needs and offer them the best plan for their current mortgage. Call me today for a quote.
Cunningham & Company is a full service Mortgage Banker - we handle everything in house. We do first time buyers, USDA, FHA and VA loans, Conventional and Jumbo Loans, 100% financing and we have a large selection of adjustable rate loans as well as several interest only programs. Call me today with my background in real estate and the resources of Cunningham & Company working together... you can't miss. A loan in the crowd.
David Flory
Friday, December 10, 2010
Impact Of Rising Rates When Buying A Home
There has been much volatility in the 30 year mortgage rate over the last few weeks. According to Freddie Mac, rates have soared almost a half of a percent in just the last four weeks and now are as high as they have been in the last six months.
Frank Nothaft, vice president and chief economist of Freddie Mac, explained:
After Europe made strides in its debt situation, investors left the security of U.S. Treasury debt causing bond yields to rise and mortgage rates along with them. Interest rates for 30-year fixed mortgages are now almost a half percentage point higher than the record low set in mid-November.
No one knows for sure w4hat will happen as we move forward. The only thing we know for sure is that rising rates have a tremendous impact on a buyer’s payment. There are home buyers standing on the sidelines waiting for the prices of real estate to bottom out. If you are one of these buyers, be careful. You should be as concerned about the monthly COST as much as you are concerned about the PRICE.
Below is a table showing the impact rising rates have on the monthly payment – even if prices continue to soften:
Impact of Rates on Payment
6.0 $2,158 $2,218 $2,278 $2,338 $2,398
5.75 $2,100 $2,160 $2,218 $2,276 $2,334
5.50 $2,044 $2,100 $2,158 $2,214 $2,272
5.25 $1,988 $2,044 $2,098 $2,154 $2,208
5.0 $1,932 $1,986 $2,040 $2,094 $2,148
4.75 $1,878 $1,930 $1,982 $2,034 $2,086
4.5 $1,824 $1,874 $1,926 $1,976 $2,026
$360,000 $37 0,000 $380,000 $390,000 $400,000
-10% -7.5% -5.0% -2.5% LOAN
Bottom Line
You want the best value possible whenever you purchase anything. When buying real estate, the best value is not determined by price alone. Value is determined by price and financing costs. Take both into consideration when timing your purchase.
Frank Nothaft, vice president and chief economist of Freddie Mac, explained:
After Europe made strides in its debt situation, investors left the security of U.S. Treasury debt causing bond yields to rise and mortgage rates along with them. Interest rates for 30-year fixed mortgages are now almost a half percentage point higher than the record low set in mid-November.
No one knows for sure w4hat will happen as we move forward. The only thing we know for sure is that rising rates have a tremendous impact on a buyer’s payment. There are home buyers standing on the sidelines waiting for the prices of real estate to bottom out. If you are one of these buyers, be careful. You should be as concerned about the monthly COST as much as you are concerned about the PRICE.
Below is a table showing the impact rising rates have on the monthly payment – even if prices continue to soften:
Impact of Rates on Payment
6.0 $2,158 $2,218 $2,278 $2,338 $2,398
5.75 $2,100 $2,160 $2,218 $2,276 $2,334
5.50 $2,044 $2,100 $2,158 $2,214 $2,272
5.25 $1,988 $2,044 $2,098 $2,154 $2,208
5.0 $1,932 $1,986 $2,040 $2,094 $2,148
4.75 $1,878 $1,930 $1,982 $2,034 $2,086
4.5 $1,824 $1,874 $1,926 $1,976 $2,026
$360,000 $37 0,000 $380,000 $390,000 $400,000
-10% -7.5% -5.0% -2.5% LOAN
Bottom Line
You want the best value possible whenever you purchase anything. When buying real estate, the best value is not determined by price alone. Value is determined by price and financing costs. Take both into consideration when timing your purchase.
Thursday, December 9, 2010
Improve Your Credit Score
As you prepare to apply for credit (like a home mortgage) understand that it is significantly better to have your best possible credit profile BEFORE applying. Working to improve your score during the mortgage process can be done, but there are two problems. One, time to clear up items can become an obstacle when compared the time you are anticipating a closing. And two, lower scores upfront can give an underwriter an additional reason to be uncomfortable with a file. “Sooner, rather than later” should be the mantra of credit score improvements. Here are some tested ways to do it:
Credit Cards – Revolving Debt proportions
1. Look on the credit report for revolving debt (not installment loans, or “open” accounts)
2. As a general rule of thumb, the balance should be no more than 30% of the credit limit. So, if it’s more than that, have you should make every attempt to pay it down.
3. If there are many revolving accounts with high balances, you will most probably need to pay down most or all of them for the best score.
4. If there is nothing derogatory on the credit report, just high balances on revolving debt, you can often improve the score significantly. But, if there are many derogatory items on the credit report, paying down revolving debt may not help the score very much.
5. Many lender have software programs that can quickly determining for you which (if any) revolving accounts need to be paid down, and to what balance.
Collections/Judgments:
1. Paying off or satisfying such a derogatory account does not normally improve the score because the derogatory account still exists, and so still hurts the score. In fact, paying off an old collection may even make the score drop.
2. However, for collections, the borrower can ask for the account to be completely removed or deleted. If you have not yet paid the collection, you can use that as a bargaining chip.
3. If there are many collection accounts, removing just 1 or 2 may not do much good. You always need to look at the overall credit picture.
4. Charge-off accounts behave a little differently than collections. You can sometimes gain points by paying those off.
5. Your lender likely has a What-if Simulator to experimentally see what affect removing an account has on the score.
Late Dates
1. When you look at the overall credit report and you see LOTS of late dates, especially ones from within the last year, there is not much you can do to help the score…those lates simply need to drift into the past.
2. However, if you just see 1 recent late date on 1 account, and just 1 other recent late date on another account, you should call those creditors and ask…beg…for those single late dates to be removed as a courtesy. It may also be that the late dates were a mistake, but don’t push the creditor to admit to making an error. Just ask them to remove it as a courtesy since you have an otherwise perfect payment history with that creditor.
3. Your lender can use the What-if-Simulator to experimentally see what affect removing a late date has on the score.
Authorized User Accounts-removing or adding
1. Piggybacking on someone else’s account can help or hurt your score.
2. If that account has recent late dates, you can most probably improve the score by having the actual account holder remove you as a user.
3. If the account is a revolving credit card and it’s “maxed out,” you might also improve the score by removing it, but only if you will still have other revolving credit cards on your report.
4. What about adding someone as an authorized user to a credit card? This may help, but the better course of action is to get the actual card holder to make it a joint account with you. This guarantees that the account will show up on the credit report within a month or two. But be careful…the account should have a lot of history, no late dates, high credit limit, and low balance.
Other things to help
1. Keep old revolving credit cards open…don’t close them.
2. Regularly check your credit report to catch errors early. You get a free one each year from each bureau. Go to www.annualcreditreport.com. Don’t do all 3 bureaus at the same time…space it out throughout the year.
3. Learn more about credit from websites like www.myfico.com and to get addresses to write the bureaus.
While I trust that some of your questions were answered in this blog, I bet many questions were also raised about your individual circumstance. Credit Score Optimization is one of the central reasons why you should engage the expertise of a good loan officer right NOW.
Reprinted from Keeping Current Matters Blog
Credit Cards – Revolving Debt proportions
1. Look on the credit report for revolving debt (not installment loans, or “open” accounts)
2. As a general rule of thumb, the balance should be no more than 30% of the credit limit. So, if it’s more than that, have you should make every attempt to pay it down.
3. If there are many revolving accounts with high balances, you will most probably need to pay down most or all of them for the best score.
4. If there is nothing derogatory on the credit report, just high balances on revolving debt, you can often improve the score significantly. But, if there are many derogatory items on the credit report, paying down revolving debt may not help the score very much.
5. Many lender have software programs that can quickly determining for you which (if any) revolving accounts need to be paid down, and to what balance.
Collections/Judgments:
1. Paying off or satisfying such a derogatory account does not normally improve the score because the derogatory account still exists, and so still hurts the score. In fact, paying off an old collection may even make the score drop.
2. However, for collections, the borrower can ask for the account to be completely removed or deleted. If you have not yet paid the collection, you can use that as a bargaining chip.
3. If there are many collection accounts, removing just 1 or 2 may not do much good. You always need to look at the overall credit picture.
4. Charge-off accounts behave a little differently than collections. You can sometimes gain points by paying those off.
5. Your lender likely has a What-if Simulator to experimentally see what affect removing an account has on the score.
Late Dates
1. When you look at the overall credit report and you see LOTS of late dates, especially ones from within the last year, there is not much you can do to help the score…those lates simply need to drift into the past.
2. However, if you just see 1 recent late date on 1 account, and just 1 other recent late date on another account, you should call those creditors and ask…beg…for those single late dates to be removed as a courtesy. It may also be that the late dates were a mistake, but don’t push the creditor to admit to making an error. Just ask them to remove it as a courtesy since you have an otherwise perfect payment history with that creditor.
3. Your lender can use the What-if-Simulator to experimentally see what affect removing a late date has on the score.
Authorized User Accounts-removing or adding
1. Piggybacking on someone else’s account can help or hurt your score.
2. If that account has recent late dates, you can most probably improve the score by having the actual account holder remove you as a user.
3. If the account is a revolving credit card and it’s “maxed out,” you might also improve the score by removing it, but only if you will still have other revolving credit cards on your report.
4. What about adding someone as an authorized user to a credit card? This may help, but the better course of action is to get the actual card holder to make it a joint account with you. This guarantees that the account will show up on the credit report within a month or two. But be careful…the account should have a lot of history, no late dates, high credit limit, and low balance.
Other things to help
1. Keep old revolving credit cards open…don’t close them.
2. Regularly check your credit report to catch errors early. You get a free one each year from each bureau. Go to www.annualcreditreport.com. Don’t do all 3 bureaus at the same time…space it out throughout the year.
3. Learn more about credit from websites like www.myfico.com and to get addresses to write the bureaus.
While I trust that some of your questions were answered in this blog, I bet many questions were also raised about your individual circumstance. Credit Score Optimization is one of the central reasons why you should engage the expertise of a good loan officer right NOW.
Reprinted from Keeping Current Matters Blog
Wednesday, December 8, 2010
Has real estate been a good investment over the last decade?
Has real estate been a good investment over the last decade?
Many people would be quick to answer ‘no’ to that question. However, they would be wrong. Real estate prices in this past decade have appreciated nicely despite the challenges over the last four years.
Forbes.com reported on this issue two days ago:
With all the teeth-gnashing over the real estate bubble, the bust and the mortgage mess, you can be forgiven for failing to notice this little tidbit: Housing had a superb decade.
According to Radar Logic, the value of a square foot of housing in the U.S. is up 58% from its January 2000 level. That represents an average annual gain of 4.3% in the value of one square foot of housing. According to the Case Shiller Pricing Index, home values are still up 34.9% over 2000 prices.
How did real estate compare to the stock market?
Forbes answered this question:
The growth in average U.S. housing values looks pretty impressive compared with that of other assets, especially stocks. The S&P 500 is lower now than it was in January 2000. So is the Nasdaq. Even factoring in inflation, which ran between 2.5% and 3.5% for most of the decade, a home purchase really did produce wealth for anybody who opted to sell some stocks and buy at around the time the dot-com crash got rolling.
Bottom Line
Even in what many consider a sub-par decade for the housing industry, real estate proved to be an excellent investment.
Many people would be quick to answer ‘no’ to that question. However, they would be wrong. Real estate prices in this past decade have appreciated nicely despite the challenges over the last four years.
Forbes.com reported on this issue two days ago:
With all the teeth-gnashing over the real estate bubble, the bust and the mortgage mess, you can be forgiven for failing to notice this little tidbit: Housing had a superb decade.
According to Radar Logic, the value of a square foot of housing in the U.S. is up 58% from its January 2000 level. That represents an average annual gain of 4.3% in the value of one square foot of housing. According to the Case Shiller Pricing Index, home values are still up 34.9% over 2000 prices.
How did real estate compare to the stock market?
Forbes answered this question:
The growth in average U.S. housing values looks pretty impressive compared with that of other assets, especially stocks. The S&P 500 is lower now than it was in January 2000. So is the Nasdaq. Even factoring in inflation, which ran between 2.5% and 3.5% for most of the decade, a home purchase really did produce wealth for anybody who opted to sell some stocks and buy at around the time the dot-com crash got rolling.
Bottom Line
Even in what many consider a sub-par decade for the housing industry, real estate proved to be an excellent investment.
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