Recovery for Former Homeowners

The recent San Jose Mercury News article about foreclosure victims buying again is good news all around. As we all know, Americans want to be homeowners. And they want to own a home so much that they forget about the pain and sadness their last experience caused. So, for many, just three years later they are ready with their down-payment and their moving boxes, and they’re saying, “Let’s do it again!”

Fortunately, there are ways to accomplish home-ownership for these people with the help of the government backed programs like FHA. Read the article, and if you’re ready to be a homeowner again, contact us and we’ll get you on your way.

Household Formation and New Home Sales Both Running Strong

By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.

Two of the most interesting housing indicators to hit the news in the last week were an uptick in new home sales and a discussion about the rise in household formation.
Let’s look at household formation first.

First, what is it? Essentially it’s when a person or group of people forms a household. It’s significant in housing because the market needs households in order to create demand for both home purchases and rentals.

The Census Bureau tracks this number and not surprisingly found over the last 4-5 years that more college graduates and young adults either moved back in with their parents to wait out a tough economic climate or never left, which stifled household formation.

But, according to the Census Bureau and an analysis by Zelman and Associates, household formation is trending upward once again, thanks in part to Millennials who are moving out of their parents’ houses.

Obviously, young people moving out, forming households and starting their lives is good news for the economy and especially the housing market. It doesn’t mean folks are jumping straight from mom and dad’s basement to their first home purchase, but it’s an important step in the recovery engine.

New home sales

The other good piece of news this week was the rise in new home sales, which last month jumped to the highest level in more than two years. In its latest release, the Commerce Department said that new home sales were up 5.7% in September to a seasonally adjusted annual rate of 389,000. That’s up from 368,000 in August and the highest rate since April 2010, when the federal homebuyer tax credit boosted sales.

Further, sales have risen 27.1% in the last year, the strongest yearly gain since February.

Strong growth in new home sales is an important indicator as it can help to spur more new construction, which some markets dealing with constrained inventory really need right now.

In addition, new home construction has the potential to create more jobs and boost economic growth. Another win for housing.

As we start to approach the end-of-year holiday season, we can feel pretty good about the state of the recovery and how things may fare in 2013.

Happy Halloween

Haunted House Info

 

The two economists at Turlia, including Jed Kolko, the head economist, have lot of time on their hands, so this Halloween season they did extensive research, evaluation and calculation bout haunted houses and exactly where most of them are located. It’s a fun article, but it also may make you wonder if it might really be true.

The Interest Rate Story

Hot At The Top

Here’s a post from Alain Pinel, Sr. Vice President / Managing Officer at Intero Real Estate Services, Inc. We occassionally post information Alain provides about the Luxury Real Estate Market. Not everyone will be able to take action in this area but it’s interesting information.
Susan & Rick



The high end is going strong. Thank you. Nice to see that it is, again, the locomotive pulling the market and driving prices in the right direction. When I make such a statement, I realize that some readers in much of the country must be questioning my sanity. After all, in most areas, it is not the high end but affordability and a shrinking portion of the distressed sales relative to the entire market which are the key factors of the business momentum we have been observing all year.

So let me define “high end.” The expression, in my vocabulary, does not mean the top 10 or 20% of the price pyramid in any market area. It means only the top luxury tier of ONLY those towns or districts all over the US which are commonly recognized and referred to as “high end markets”. I.O.W., the location defines the high end, not just the price point. To be sure, those upscale locations are not many on the map.

The luxury market has been very slow to come alive this year. Today, it is vibrant. Hopefully nobody in Washington is going to make waves and mess up with this long awaited momentum.
A friend of mine, Jurgen Weller, was reminding me that the low cost of mortgage money has a lot to do with the high end resurgence; at least as much as its beneficial impact in all price segments. True, although at the top end of the market, cash is king. Traditional financing is seldom used. Too bad in a way, since it is always smart to leverage other people’s money rather than dig into our own cash register.

Jurgen’s point is as follows: the cost of financing a million dollar over 30 years has dropped $571,000 since 2008, only four years ago! Enough, as he puts it, to send two kids to Harvard Business School for 4 years and keep some change to feed them when they come home. Of course, by then, the parents would be long gone since I have yet to see a human being who would live in a house long enough to fully amortize the loan!

In any case, sales in the multimillion dollar range are going up, up and up. In the most exclusive areas, the incremental improvement at the top far exceeds the price and unit sales improvement registered over the first 9 months in a lower price range. In fact, the higher you go on the price ladder, the higher the jump relative to the same period of last year.

Take a look at pricey San Mateo County in the hot Silicon Valley:

• From 1 to 3M, sales are up 12.5% and the average sale price is up 1.8%

• From 3 to 5M, sales are up 14% and the Avg SP is up 2.8%

• Over $5M, sales are up…29% and the Avg SP is up…25.6%! And those stats only pertain to what is actually reported through the MLS; it could be even more dramatic since, as we know, easily a third of the luxury listings escape the MLS and are listed, known, shown and sold by the local market top guns.

I like what I am seeing in the high end. When it’s good at that level, it’s good or getting better underneath. Please join me in keeping our fingers crossed and insure that the wind will be with us next year and beyond.

By Alain Pinel
Sr. Vice President / Managing Officer
Intero Real Estate Services, Inc.

A Tale of Two Banks and House Flippers

We regularly share information from our President & CEO at Intero Real Estate Services, Inc. We hope you find the information informative and useful. This week Gino has an several items to bring you up to date about.

Susan & Rick

 

In housing rebound news this past week we saw a handful of positive indicators pop up: the nation’s largest housing lender reported a strong gain in earnings, another big bank phones in record mortgage production revenue, and flipping appears to be back in vogue.

Wells Fargo’s earnings release this month beat expectations, giving new data to the housing rebound. So far, most of the data showing a positive uptick has been in home sales, home values and a slowdown in foreclosures.

Wells Fargo reported third-quarter earnings of $4.94 billion, or 88 cents a share, beating estimates of 87 cents. Revenue was $21.2 billion. Mortgage lending added $11.9 billion in core loans during the quarter, the bank reported. However, Wells Fargo also noted that new pressure on interest rate-based earnings, and analysts will continue to watch the balance between increasing core loans and decreasing earnings from interest.

Meanwhile, JPMorgan Chase, also reported a successful quarter with record third-quarter net income of $5.7 billion, and record mortgage production revenue (excluding repurchase losses) rose to a record $1.8 billion, up 36% from the previous year.

JPMorgan said mortgage loan originations were $47.3 billion, up 29% from the prior year and 8% from the previous quarter. Mortgage loan application volume was $73.2 billion, up 26% from last year and 9% from the previous quarter. About 75% of the production volume was from refinances, and the rest from purchases.

Finally, flipping appears to be back in vogue. The act of buying houses, fixing them up and selling at a profit was big and profitable to most investors during the housing boom. But we haven’t heard much of it since the peak and recession.

That seems to be changing, according to RealtyTrac data recently reported in the Washington Post. The number of flips rose 25% during the first half of 2012 compared to the same period last year, and the gross profit on each property averaged $29,342. Of course, average profits for flipping really vary by market and depend heavily on the trend in local house prices.

The hottest markets for flipping are Phoenix, Las Vegas, Miami and Atlanta – coincidentally the same markets that suffered immensely during the recession and housing downturn. Since prices have fallen substantially from their high point in these markets and now seem to be trending up again, investors are once again attracted to the potential for profit.

Now’s a good time to look outside home sales and values for market indicators as we try to gauge which markets are healthy, which are hot and which are still slipping to their bottom. Mortgage lenders have insight here as we see with Wells Fargo and JPMorgan. Tightened lending conditions were a sticky issue in the first few years of the recession, but it seems to have improved substantially.
Get ready for an exciting 2013!

By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.

Home Staging Advice

Here's what my Facebook Friend Lori Thomas has to say about home staging. We think it's good advice and agree with almost all 21 reasons today's sellers should stage their home.

We think Number 6 may not be the case, but we're willing to discuss it.

There's  a small note to Number 15, and that is we don't usually have every room staged if the home is vacant. We do several key rooms. In an occupied home, it really is all rooms.

Now you'll have to read the article and let us know what you think.

Mortgage Fraud is on the rise

California Housing Recovery Update

The housing recovery in California is expected to continue through to 2013, but the market won't be fully "corrected" until as far off as 2017, according to the California Housing Market Forecast released by the CAR. As most of you know the Bay Area, including South Santa Clara County, is a very special place. While the rest of the country has been recovering we think it is more accurate to say the area’s housing market has exploded over the last 18 to 24 month. Most listings are selling with multiple offers and over the list price. In some markets we have seen prices increase by as much as 20 to 30 percent in just the last 18 months…many areas just a little north of Gilroy and Morgan Hill are seeing prices at ALL TIME HIGHS. Remember however, the housing market in the Bay Area is like the weather and varies widely depending on where you are. If you want to know what is going on in your specific neighborhood feel free to comment here, send me an email, send me a text or give me a call.

 

A few more statewide details:

 

• Homes sales and prices are expected to keep rising, but lower-than-normal inventory levels and underwater mortgages are key hindrances to a faster recovery, according to Leslie Appleton-Young, chief economist with the CALIFORNIA ASSOCIATION OF REALTORS®.
• Home sales are forecasted to rise 1.3 percent to 530,000 units next year, based on the projected tally of 523,300 units this year. That's a slower growth than that of 2011 to 2012, which is roughly 5 percent.
• The momentum in prices also is expected to carry through to 2013, a result of pent-up demand for a limited housing supply. The median price could rise 5.7 percent to $335,000 in 2013. That's lower than the projected price growth from 2011 to 2012, an estimated 11 percent. The state has a 3.2 months' worth of housing inventory, significantly lower than the 16 months'-plus supply of saw roughly four years ago.
• “Pent-up demand from first-time buyers will compete with investors and all-cash offers on lower-priced properties, while multiple offers and aggressive bidding will continue to be the norm in mid- to upper-price range homes,” said Appleton-Young in the report.
• Appleton-Young says what underwater borrowers throughout the state -- be it selling or holding -- will have a big effect on next year's housing recovery.
• Other things to watch next year that will have a bearing on the housing market include: policies related to the state, local and federal governments; and housing and monetary policies, Appleton-Young said.

Read the full story