Sales figures for previously owned homes rose in August following a big correction in July, according to data released by the National Association of Realtors (NAR) Thursday. The trade group’s existing-home sales report showed a 7.6 percent increase in transactions during the month, bumping the annualized sales pace to 4.13 million homes.
That’s up from a revised sales pace of 3.84 million the previous month, after sales plunged 27 percent in July – the worst showing for existing-home sales in nearly 15 years.
Sales transactions for pre-owned homes remain 19 percent below the 5.10 million-unit pace recorded a year ago.
The research firm IHS Global Insight said the month-to-month rise was in line with expectations, but called the results “disappointing nonetheless,” noting that housing demand remains weak and mortgage applications to buy homes have been stagnant since collapsing in May.
“We are not expecting worse sales numbers going forward, just a long climb out of a deep hole,” said Patrick Newport, U.S. economist for IHS. Newport says the path to recovery in housing will be through the labor market, and as a result, he’s doesn’t anticipate sales to climb above the 6.0 million mark – a number he says would accompany “normal conditions” – until 2013.
According to NAR’s report, the sales share of distressed homes rose to 34 percent in August, up from 32 percent the month prior. First-time buyers purchased 31 percent of homes last month, compared to 38 percent in July.
NAR says the national median existing-home price was $178,600 in August, up 0.8 percent from August 2009.
The analysts at Capital Economics contend that the current weakness of demand relative to the high level of supply suggests home prices still have further to fall.
The August rebound did pare housing inventory down to 3.98 million existing homes available for sale, resulting in the months’ supply of unsold properties falling from 12.5 to 11.6.
But as Paul Dales, U.S. economist for Capital Economics, explained, that is still well above the 6-7 months that has historically been consistent with stable prices.
----------------------------
Article written by Carrie Bay - DSNews.com
The Gray Rider
The Gray Rider Real Estate Co.-
Friday, September 24, 2010
Thursday, September 23, 2010
MORTGAGE DEFAULT RISK DIMINISHES AS CONSUMER CREDIT CONDITIONS IMPROVE
The credit bureau TransUnion says U.S. consumers are less of a credit risk now than they were in 2009 and earlier this year.
The Chicago-based agency’s proprietary Credit Risk Index (CRI) declined 117 basis points, or 0.9 percent, between the first and second quarters of 2010. The drop was more than double the decrease observed between the fourth quarter of 2009 and the first quarter of 2010.
TransUnion says this decrease is the second decline in as many quarters and is a harbinger of the moderate improvements in delinquency rates reported by the company in August across all credit sectors.
The CRI is now 5 percent lower than it was a year ago. The index “is a stronger leading indicator of consumer credit risk and is much more highly correlated to consumer delinquency rates than the average credit score,” according to TransUnion.
At the end of the second quarter in 2010, 46 states and the District of Columbia experienced declines in their respective credit risk indices, “signaling that a broad improvement in consumer credit conditions is finally taking root,” TransUnion said. Only Alaska, Hawaii, Idaho, and North Carolina experienced increases in their consumer credit risk readings.
“We are optimistic that, short term, the Credit Risk Index will to continue to experience small declines. Consumer delinquency rates should continue to decrease as employment conditions improve,” said Chet Wiermanski, global chief scientist at TransUnion.
“Long term, we are encouraged by the great lengths consumers have taken to reduce their debt burden, which possibly represents a fundamental paradigm shift in consumer behavior,” Wiermanski added. “After experiencing the most difficult economic times in two generations, it appears that consumers are relearning how to manage their existing credit obligations and live within their means.”
TransUnion also analyzed how university cities fared compared to other large cities in their state in terms of consumer credit risk. The company found that cities that were home to a university were 12.5 percent less risky than their same-state counterparts without a college campus.
For mortgages, the average 90-day delinquency rate for university cities was 5 percent, compared to 8.9 percent for the largest cities.
Wiermanski says a relatively stable employment picture and a captive consumer base with disposable income are two reasons driving these results.
TransUnion’s analysis sourced from a database of 27 million randomly sampled consumer records.
-----------------------
Article written by Carrie Bay - DSNews.com
The Chicago-based agency’s proprietary Credit Risk Index (CRI) declined 117 basis points, or 0.9 percent, between the first and second quarters of 2010. The drop was more than double the decrease observed between the fourth quarter of 2009 and the first quarter of 2010.
TransUnion says this decrease is the second decline in as many quarters and is a harbinger of the moderate improvements in delinquency rates reported by the company in August across all credit sectors.
The CRI is now 5 percent lower than it was a year ago. The index “is a stronger leading indicator of consumer credit risk and is much more highly correlated to consumer delinquency rates than the average credit score,” according to TransUnion.
At the end of the second quarter in 2010, 46 states and the District of Columbia experienced declines in their respective credit risk indices, “signaling that a broad improvement in consumer credit conditions is finally taking root,” TransUnion said. Only Alaska, Hawaii, Idaho, and North Carolina experienced increases in their consumer credit risk readings.
“We are optimistic that, short term, the Credit Risk Index will to continue to experience small declines. Consumer delinquency rates should continue to decrease as employment conditions improve,” said Chet Wiermanski, global chief scientist at TransUnion.
“Long term, we are encouraged by the great lengths consumers have taken to reduce their debt burden, which possibly represents a fundamental paradigm shift in consumer behavior,” Wiermanski added. “After experiencing the most difficult economic times in two generations, it appears that consumers are relearning how to manage their existing credit obligations and live within their means.”
TransUnion also analyzed how university cities fared compared to other large cities in their state in terms of consumer credit risk. The company found that cities that were home to a university were 12.5 percent less risky than their same-state counterparts without a college campus.
For mortgages, the average 90-day delinquency rate for university cities was 5 percent, compared to 8.9 percent for the largest cities.
Wiermanski says a relatively stable employment picture and a captive consumer base with disposable income are two reasons driving these results.
TransUnion’s analysis sourced from a database of 27 million randomly sampled consumer records.
-----------------------
Article written by Carrie Bay - DSNews.com
Tuesday, September 14, 2010
MARKET FORECASTS FOR HOME PRICES CONTINUE TO DARKEN
Home prices have hit upon relatively stable ground in recent months – a welcome reprieve from the freefall days most markets had grown acutely accustomed to after the reverberating bursting of the housing bubble. But that stability may be fleeting. If you heed the words of the seers keeping a close watch over industry trends and movements in price lines, you should be bracing for another decline in property values, as the elusive floor drops a little lower.
The analysts at Moody’s Investors Service say they don’t expect the national house price index to find its bottom until the early half of next year. And even then, they warn that price appreciation will remain weak for at least the next couple of years.
Fiserv expects to see prices bounce up and down around their lows for the next two to three years. A recent forecast from the company paints a picture of particularly steep declines in markets that have been hit the hardest by the housing downturn.
In Nevada, Fiserv projects that by the first quarter of 2011, home prices will be 11.1 percent below Q1 2010 levels. In Arizona the company predicts an annual decline of 10.8 percent by March of next year, and Florida is likely to see prices fall another 8.8 percent.
Barclays Capital says it expects depressed readings in home prices for the next five to ten months, with national property value gauges ultimately bottoming 7 percent from current levels in the first quarter of 2011.
MacroMarkets LLC recently announced the results of its August 2010 Home Price Expectations Survey, compiled from 107 responses of a diverse group of economists, real estate experts, and investment and market strategists.
“For the third consecutive month, the consensus from the experts indicates weakened overall confidence in the U.S. housing recovery,” said Robert Shiller, MacroMarkets co-founder and namesake of the closely-watched Case-Shiller Home Price Index.
Shiller says only 21 percent of the surveyed panelists now predict positive growth in home prices nationwide for 2010. The majority of the respondents expect annual U.S. home price appreciation will not exceed 3.58 percent until 2014.
“Any real improvement in the nation’s economic health will depend on improvement in home prices,” according to Michael Feder, president and CEO of the real estate data and analytics firm Radar Logic.
“Weakening housing demand, coupled with a large and growing supply of unsold homes, make it likely that housing prices will fall by the end of the year, perhaps to new lows,” Feder added. “If home prices make another large move downward, the odds of a second U.S. economic downturn likely will increase.”
------------------------
Article written by Carrie Bay - http://www.dsnews.com/
The analysts at Moody’s Investors Service say they don’t expect the national house price index to find its bottom until the early half of next year. And even then, they warn that price appreciation will remain weak for at least the next couple of years.
Fiserv expects to see prices bounce up and down around their lows for the next two to three years. A recent forecast from the company paints a picture of particularly steep declines in markets that have been hit the hardest by the housing downturn.
In Nevada, Fiserv projects that by the first quarter of 2011, home prices will be 11.1 percent below Q1 2010 levels. In Arizona the company predicts an annual decline of 10.8 percent by March of next year, and Florida is likely to see prices fall another 8.8 percent.
Barclays Capital says it expects depressed readings in home prices for the next five to ten months, with national property value gauges ultimately bottoming 7 percent from current levels in the first quarter of 2011.
MacroMarkets LLC recently announced the results of its August 2010 Home Price Expectations Survey, compiled from 107 responses of a diverse group of economists, real estate experts, and investment and market strategists.
“For the third consecutive month, the consensus from the experts indicates weakened overall confidence in the U.S. housing recovery,” said Robert Shiller, MacroMarkets co-founder and namesake of the closely-watched Case-Shiller Home Price Index.
Shiller says only 21 percent of the surveyed panelists now predict positive growth in home prices nationwide for 2010. The majority of the respondents expect annual U.S. home price appreciation will not exceed 3.58 percent until 2014.
“Any real improvement in the nation’s economic health will depend on improvement in home prices,” according to Michael Feder, president and CEO of the real estate data and analytics firm Radar Logic.
“Weakening housing demand, coupled with a large and growing supply of unsold homes, make it likely that housing prices will fall by the end of the year, perhaps to new lows,” Feder added. “If home prices make another large move downward, the odds of a second U.S. economic downturn likely will increase.”
------------------------
Article written by Carrie Bay - http://www.dsnews.com/
Friday, September 10, 2010
FIVE MISTAKES HOME BUYERS MAKE
Home buyers are an increasingly rare breed these days. Many who were eager to buy a house raced to take advantage of federal homebuyer tax credits. When those government perks expired in April, home sales essentially went into deep freeze, plummeting to levels not seen in more than a decade, according to the latest numbers from the National Association of Realtors.
Still, the Realtors project that nearly 4 million existing homes will sell in 2010. First-time buyers, without the burden of a home to sell, could benefit from the foul market–and the record low mortgage rates.
But woe to the overconfident buyer. Here are five common missteps that first-time home buyers make.
1. SNUBBING THE REAL ESTATE AGENT
With so many websites offering a mass of data on listings, who needs an agent? Most people, actually. Finding a house and figuring out comps–the price of comparable homes on the market–is the easy part. Managing the nuances of offers, inspections, financing and all the other pivotal steps to buying a home is where many new buyers tend to get tripped up, says Shii Ann Huang, an associate broker with The Corcoran Group in New York.
When you hire an agent to act as your "buyer's representative," she's obligated to put your interests first, even if her commission is paid by the seller and based on the sale price. Skeptical? That's all the more reason to find an agent on your terms. Ask friends and acquaintances for referrals and interview two or three candidates before deciding.
But don't let the agent find you. When Viviane Ugalde and her husband, both physicians, bought their first home in Sacramento nearly two decades ago they made this mistake. "We stumbled onto an agent when she saw us peeking in the windows of an empty house for sale," Ms. Ugalde recalls. The agent, who happened to live on the same block, came out of her house (wearing pajamas), offered to show the couple around the neighborhood, and ultimately helped them find a house. Then the agent, who was new to real estate, neglected to show up for the closing. "It was scary and confusing signing what seemed like a thousand pages," says Ms. Ugalde.
2. GUESSTIMATING HOW N=MUCH YOU CAN AFFORD
Many buyers mistakenly take a do-it-yourself approach to financing. They use online calculators to estimate how much house they can afford, dive into the house hunt and then get a dose of cold water when lenders refuse to qualify them for that amount. "The process is so different than it was four or five years ago," says Diann Patton, a broker with Coldwell Banker in Grass Valley, Calif. Not only are lenders reading loan applications closely, she says, they're verifying employment and running credit checks multiple times during the process.
Make a date with a mortgage broker or banker before you get serious about your search, says Ms. Patton. Remember, too, that the costs of buying and owning a home go well beyond the sticker price. While online calculators do take into account property tax and insurance, it's up to you to account for maintenance costs, moving fees and association dues.
3. LETTING CHARM CLOUD YOUR JUDGEMENT
No one will fault you for falling hard for a charming older home. But, unless the house has been painstakingly remodeled or you're prepared to pay for repairs and upgrades, an old house can quickly lose its allure. Last year Alison Koop, a public relations manager for the University of Washington, came dangerously close to saying "I do" to a seemingly fabulous mid-century home in northeastern Seattle. Ms. Koop was so smitten with the big windows and vaulted ceilings in the living room that she neglected to notice the exposed wires, shoddy roof and other structural problems. Any delusions Ms. Koop had were laid to rest in the guest bathroom. "When the inspector turned the faucet on," she says, "the spigot fell off, hitting the floor of the tub with an exclamatory thunk."
If you're considering an old home, don't let the inspection be your last line of defense, says Jay Papasan, vice president of publishing at Keller Williams Realty. "Negotiate a long due diligence period," he says. That gives you time to get real estimates from contractors and back out if need be.
Of course, new homes aren't without their drawbacks. Recently, many newly built homes experienced serious problems with Chinese-made drywall, for example. Proceed with care whatever the home's age.
4. FOCUSING ON THE HOUSE, NOT THE NEIGHBORHOOD
In hindsight, many buyers say they wish they'd taken their due diligence a few steps further to really get to know all the perks, quirks and hassles of living in a particular place. You can always fix up the house, but there's no easy remedy for annoying neighbors, oppressive homeowner association rules and marathon commutes. When Laurie Tarkan and her husband bought their first home in 2001 they were so infatuated with the circa-1924 three-bedroom cottage that–in addition to brushing over some of the headaches of an old house –they didn't give a whole lot of thought to its somewhat out-of-the-way location about a mile from downtown Maplewood, N.J., a popular New York suburb. "As a first-time buyer you're not aware of all the things you should think about that aren't about the house," says Ms. Tarkan, who after living in New York City for 17 years, still hasn't gotten used to driving everywhere.
Spend as much time as you can in your future neighborhood, ideally on different days and times. Eat in the restaurants, drop in a yoga class, test drive your commute.
5. MAKING ARBITRARY OFFERS
With housing inventory running high and sales at record lows, in most markets, there's no shortage of houses for sale and sellers desperate to get out from under them–all the more reason to hold out for the right house and the right price. But when you find that perfect house, don't assume you can lob a lowball offer or make unreasonable demands. Even in hard-hit markets, nice houses in desirable neighborhoods are fetching multiple bids.
If the house has been on the market for months, you probably don't need to worry about other buyers lining up behind you. Make an offer based on recent sales for comparable homes, foreclosure activity and market trends, and don't be afraid to start the bidding low. If the house is fresh on the market (or recently foreclosed) and other buyers are circling the block, put your best foot forward but don't get suckered into a bidding war.
--------------------------------------
Article written by Sarah Max - Wall Street Journal - Real Estate
Still, the Realtors project that nearly 4 million existing homes will sell in 2010. First-time buyers, without the burden of a home to sell, could benefit from the foul market–and the record low mortgage rates.
But woe to the overconfident buyer. Here are five common missteps that first-time home buyers make.
1. SNUBBING THE REAL ESTATE AGENT
With so many websites offering a mass of data on listings, who needs an agent? Most people, actually. Finding a house and figuring out comps–the price of comparable homes on the market–is the easy part. Managing the nuances of offers, inspections, financing and all the other pivotal steps to buying a home is where many new buyers tend to get tripped up, says Shii Ann Huang, an associate broker with The Corcoran Group in New York.
When you hire an agent to act as your "buyer's representative," she's obligated to put your interests first, even if her commission is paid by the seller and based on the sale price. Skeptical? That's all the more reason to find an agent on your terms. Ask friends and acquaintances for referrals and interview two or three candidates before deciding.
But don't let the agent find you. When Viviane Ugalde and her husband, both physicians, bought their first home in Sacramento nearly two decades ago they made this mistake. "We stumbled onto an agent when she saw us peeking in the windows of an empty house for sale," Ms. Ugalde recalls. The agent, who happened to live on the same block, came out of her house (wearing pajamas), offered to show the couple around the neighborhood, and ultimately helped them find a house. Then the agent, who was new to real estate, neglected to show up for the closing. "It was scary and confusing signing what seemed like a thousand pages," says Ms. Ugalde.
2. GUESSTIMATING HOW N=MUCH YOU CAN AFFORD
Many buyers mistakenly take a do-it-yourself approach to financing. They use online calculators to estimate how much house they can afford, dive into the house hunt and then get a dose of cold water when lenders refuse to qualify them for that amount. "The process is so different than it was four or five years ago," says Diann Patton, a broker with Coldwell Banker in Grass Valley, Calif. Not only are lenders reading loan applications closely, she says, they're verifying employment and running credit checks multiple times during the process.
Make a date with a mortgage broker or banker before you get serious about your search, says Ms. Patton. Remember, too, that the costs of buying and owning a home go well beyond the sticker price. While online calculators do take into account property tax and insurance, it's up to you to account for maintenance costs, moving fees and association dues.
3. LETTING CHARM CLOUD YOUR JUDGEMENT
No one will fault you for falling hard for a charming older home. But, unless the house has been painstakingly remodeled or you're prepared to pay for repairs and upgrades, an old house can quickly lose its allure. Last year Alison Koop, a public relations manager for the University of Washington, came dangerously close to saying "I do" to a seemingly fabulous mid-century home in northeastern Seattle. Ms. Koop was so smitten with the big windows and vaulted ceilings in the living room that she neglected to notice the exposed wires, shoddy roof and other structural problems. Any delusions Ms. Koop had were laid to rest in the guest bathroom. "When the inspector turned the faucet on," she says, "the spigot fell off, hitting the floor of the tub with an exclamatory thunk."
If you're considering an old home, don't let the inspection be your last line of defense, says Jay Papasan, vice president of publishing at Keller Williams Realty. "Negotiate a long due diligence period," he says. That gives you time to get real estimates from contractors and back out if need be.
Of course, new homes aren't without their drawbacks. Recently, many newly built homes experienced serious problems with Chinese-made drywall, for example. Proceed with care whatever the home's age.
4. FOCUSING ON THE HOUSE, NOT THE NEIGHBORHOOD
In hindsight, many buyers say they wish they'd taken their due diligence a few steps further to really get to know all the perks, quirks and hassles of living in a particular place. You can always fix up the house, but there's no easy remedy for annoying neighbors, oppressive homeowner association rules and marathon commutes. When Laurie Tarkan and her husband bought their first home in 2001 they were so infatuated with the circa-1924 three-bedroom cottage that–in addition to brushing over some of the headaches of an old house –they didn't give a whole lot of thought to its somewhat out-of-the-way location about a mile from downtown Maplewood, N.J., a popular New York suburb. "As a first-time buyer you're not aware of all the things you should think about that aren't about the house," says Ms. Tarkan, who after living in New York City for 17 years, still hasn't gotten used to driving everywhere.
Spend as much time as you can in your future neighborhood, ideally on different days and times. Eat in the restaurants, drop in a yoga class, test drive your commute.
5. MAKING ARBITRARY OFFERS
With housing inventory running high and sales at record lows, in most markets, there's no shortage of houses for sale and sellers desperate to get out from under them–all the more reason to hold out for the right house and the right price. But when you find that perfect house, don't assume you can lob a lowball offer or make unreasonable demands. Even in hard-hit markets, nice houses in desirable neighborhoods are fetching multiple bids.
If the house has been on the market for months, you probably don't need to worry about other buyers lining up behind you. Make an offer based on recent sales for comparable homes, foreclosure activity and market trends, and don't be afraid to start the bidding low. If the house is fresh on the market (or recently foreclosed) and other buyers are circling the block, put your best foot forward but don't get suckered into a bidding war.
--------------------------------------
Article written by Sarah Max - Wall Street Journal - Real Estate
Wednesday, September 8, 2010
FHA PPROGRAM FOR UNDERWATER BORROWERS NOW UNDERWAY
Tuesday marked the start of a new, targeted government housing program designed to help the millions of Americans who, in the wake of plummeting property values, owe more on the mortgage than their home is worth.
The government’s mortgage insurer, the Federal Housing Administration, is at the center of the new program for underwater homeowners. FHA is now offering certain non-FHA borrowers with negative equity, who are current on their existing mortgage, the opportunity to refinance into a new FHA-insured loan, as long as their existing lien holders agree to write off at least 10 percent of the unpaid principal balance on the first mortgage.
Officials have suggested that between 500,000 and 1.5 million underwater borrowers could receive a new, more sustainable mortgage through the FHA Short Refinance oprion.
But analysts say because participation in the program is voluntary and requires the consent of all lien holders, they expect significantly smaller results. Barclays Capital estimates that the new FHA refinancing program will only reach 200,000 to 300,000 homeowners.
The latest data from CoreLogic shows that some 11 million borrowers were in a negative equity position as of the end of June. That equates to 23 percent of all U.S. residential properties with a mortgage.
The FHA Short Refinance option, originally announced in March, is aimed at providing some mortgage relief to homeowners whose biggest investment – their home – has left them with a huge equity gap because their local markets saw declines in home values.
Homeowner advocates and even government watchdog groups have been imploring the administration to tackle the underwater mortgage issue for some time now. Studies have shown that severe negative equity can be a strong default trigger. By getting in front of the problem early with a solution, while these homeowners are still current, the administration is hoping to fend off a new round of foreclosures.
To facilitate the refinancing of new FHA-insured loans under the program, the U.S. Department of Treasury says it will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens.
The government has earmarked $14 billion in Troubled Asset Relief Program (TARP) funds to support the program.
-----------------------------------
Article written by Carrie Bay - http://www.dsnews.com/
The government’s mortgage insurer, the Federal Housing Administration, is at the center of the new program for underwater homeowners. FHA is now offering certain non-FHA borrowers with negative equity, who are current on their existing mortgage, the opportunity to refinance into a new FHA-insured loan, as long as their existing lien holders agree to write off at least 10 percent of the unpaid principal balance on the first mortgage.
Officials have suggested that between 500,000 and 1.5 million underwater borrowers could receive a new, more sustainable mortgage through the FHA Short Refinance oprion.
But analysts say because participation in the program is voluntary and requires the consent of all lien holders, they expect significantly smaller results. Barclays Capital estimates that the new FHA refinancing program will only reach 200,000 to 300,000 homeowners.
The latest data from CoreLogic shows that some 11 million borrowers were in a negative equity position as of the end of June. That equates to 23 percent of all U.S. residential properties with a mortgage.
The FHA Short Refinance option, originally announced in March, is aimed at providing some mortgage relief to homeowners whose biggest investment – their home – has left them with a huge equity gap because their local markets saw declines in home values.
Homeowner advocates and even government watchdog groups have been imploring the administration to tackle the underwater mortgage issue for some time now. Studies have shown that severe negative equity can be a strong default trigger. By getting in front of the problem early with a solution, while these homeowners are still current, the administration is hoping to fend off a new round of foreclosures.
To facilitate the refinancing of new FHA-insured loans under the program, the U.S. Department of Treasury says it will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens.
The government has earmarked $14 billion in Troubled Asset Relief Program (TARP) funds to support the program.
-----------------------------------
Article written by Carrie Bay - http://www.dsnews.com/
Friday, September 3, 2010
NAR's INDEX OF PENDING HOME SALES UNEXPECTEDLY CLIMBS
Following a sharp drop in the months immediately after the homebuyer tax credit expired, the National Association of Realtors’ (NAR) gauge for future sales of previously owned homes has risen.
NAR reported Thursday that its Pending Home Sales Index, a forward-looking indicator based on contracts signed in July, increased 5.2 percent from last month’s reading. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.
The index remains 19 percent below measurements recorded a year ago, but the month-to-month jump was an unexpected development, and some analysts are saying it may be a sign that the post-tax credit lull in home sales will soon come to an end. A group of economists surveyed by Bloomberg were expecting the pending sales index to fall by 1 percent.
The national index had fallen 29.9 percent based on contract signings in May – closely reflected in July’s 27 percent drop in actual existing-home sales. It lost another 2.8 percent after NAR’s analysis of June’s contracts, likely a good indicator of where August’s actual sales will end up. The latest 5.2 percent increase could be a telling sign of September’s sales numbers.
Despite the bit of good news his organization offered the markets with its Thursday report, Lawrence Yun, NAR’s chief economist, cautioned that the recovery ahead will be a slow and lengthy one.
“Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” Yun said. “But the recovery looks to be a long process. Homebuyers over the past year got a great deal [but] for those who bought at or near the peak several years ago, particularly in markets experiencing big bubbles, it may take over a decade to fully recover lost equity.”
Pending home sales are currently up in every region of the country. The Northeast saw an increase of 6.3 percent; the Midwest’s index rose 4.1 percent; the South posted a 1.2 percent gain; and the West was the big leader, with an 11.6 percent increase.
Paul Dales, U.S. economist for the research firm Capital Economics, says though, that the key point is that economic conditions are not strong enough to generate a decent housing recovery.
“Processing delays mean that the relationship between pending home sales and actual existing home sales has loosened in recent months,” Dales said. “But at face value, the former is now consistent with a rise in existing sales from July’s record low of 3.83m to around 4.40m in August.”
Dales added, “That would be a spectacular-sounding 15 percent month-to-month jump, but it would not even reverse the falls seen after the expiry of the tax credit and would leave sales at levels not sustained since 1997.”
------------------------------
Article written by Carrie Bay - http://www.dsnews.com/
NAR reported Thursday that its Pending Home Sales Index, a forward-looking indicator based on contracts signed in July, increased 5.2 percent from last month’s reading. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.
The index remains 19 percent below measurements recorded a year ago, but the month-to-month jump was an unexpected development, and some analysts are saying it may be a sign that the post-tax credit lull in home sales will soon come to an end. A group of economists surveyed by Bloomberg were expecting the pending sales index to fall by 1 percent.
The national index had fallen 29.9 percent based on contract signings in May – closely reflected in July’s 27 percent drop in actual existing-home sales. It lost another 2.8 percent after NAR’s analysis of June’s contracts, likely a good indicator of where August’s actual sales will end up. The latest 5.2 percent increase could be a telling sign of September’s sales numbers.
Despite the bit of good news his organization offered the markets with its Thursday report, Lawrence Yun, NAR’s chief economist, cautioned that the recovery ahead will be a slow and lengthy one.
“Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” Yun said. “But the recovery looks to be a long process. Homebuyers over the past year got a great deal [but] for those who bought at or near the peak several years ago, particularly in markets experiencing big bubbles, it may take over a decade to fully recover lost equity.”
Pending home sales are currently up in every region of the country. The Northeast saw an increase of 6.3 percent; the Midwest’s index rose 4.1 percent; the South posted a 1.2 percent gain; and the West was the big leader, with an 11.6 percent increase.
Paul Dales, U.S. economist for the research firm Capital Economics, says though, that the key point is that economic conditions are not strong enough to generate a decent housing recovery.
“Processing delays mean that the relationship between pending home sales and actual existing home sales has loosened in recent months,” Dales said. “But at face value, the former is now consistent with a rise in existing sales from July’s record low of 3.83m to around 4.40m in August.”
Dales added, “That would be a spectacular-sounding 15 percent month-to-month jump, but it would not even reverse the falls seen after the expiry of the tax credit and would leave sales at levels not sustained since 1997.”
------------------------------
Article written by Carrie Bay - http://www.dsnews.com/
Wednesday, August 25, 2010
THE TOP FIVE CONTRACTOR SCAMS AND HOW TO AVOID THEM
Protect yourself against unscrupulous contractors by learning about the warning signs of these common home-improvement scams.
Crooks go where the money is. So with Americans spending as much as $22 billion a year on construction projects, it’s no surprise that home improvement has become a favorite target for fraud artists. Some of these shady characters use amazingly well-polished hoaxes that are tricky to spot until it’s too late.
The vast majority of contractors are honest, hardworking professionals. Protecting yourself against the few bad apples requires checking references, having a solid contract, and being alert to the warning signs of these top five contractor scams.
SCAM 1: I NEED THE MONEY UPFRONT
This is the most common ruse reported to the Better Business Bureau, says Erin Dufner, vice president of the organization’s Austin, Texas, office. Your contractor explains that because he has to order materials and rent earthmoving equipment to get the job started, he needs, say, 30% to 50% of the project price up front. Once you’ve forked over the dough, one of two things happens: He disappears on you, or he starts doing slapdash work knowing that you can’t really fire him because he’s sitting on thousands of your dollars.
How to protect yourself: Never prepay more than $1,000 or 10% of the job total, whichever is less. That’s the legal maximum in some states, and enough to establish that you’re a serious customer so the contractor can work you into his schedule—the only valid purpose of an advance payment. As to the materials and backhoe rentals, if he’s a professional in good standing, his suppliers will provide them on credit.
SCAM 2: TAKE MY WORD FOR IT
When you first meet with the contractor, he’s very agreeable about doing everything exactly to your specifications and even suggests his own extra touches and upgrades. Some of the details don’t make it into the contract, but you figure it doesn’t matter because you had such a clear verbal understanding. Pretty soon, though, you notice that the extras you’d discussed aren’t being built. When you confront the contractor, he tells you that he didn’t include those features in his price, so you’ll have to live without them or pony up additional money to redo the work.
How to protect yourself: Unfortunately, you have no legal recourse because you signed a contract that didn’t include all the details. Next time, make sure everything you’ve agreed on is written into the project description. Add any items that are missing, put your initials next to each addition, and have the contractor initial it, too—all before you sign.
SCAM 3: I DON'T NEED TO GET A PERMIT
You’re legally required to get a building permit for any significant construction project. That allows building officials to visit the site periodically to confirm that the work meets safety codes. On small interior jobs, an unlicensed contractor may try to skirt the rule by telling you that authorities won’t notice. On large jobs that can’t be hidden, the contractor may try another strategy and ask you to apply for a homeowner’s permit, an option available to do-it-yourselfers.
But taking out your own permit for a contractor job means lying to authorities about who’s doing the work. And it makes you responsible for monitoring all the inspections, explaining to the contractor what changes the inspector wants, and getting him to make them—since the contractor doesn’t answer to the inspector, you do.
How to protect yourself: Always demand that the contractor get a building permit. Yes, it informs the local tax assessor about your upgrade, but it weeds out unlicensed contractors and gives you the added protection of an independent assessment of the work, says Tampa, Florida, attorney George Meyer, chair-elect of the American Bar Association’s Forum on the Construction Industry.
SCAM 4: WE RAN INTO UNFORSEEN PROBLEMS
The job is already under way, perhaps even complete, when this one hits. Suddenly your contractor informs you that the agreed-upon price has skyrocketed. He blames the discovery of structural problems, like a missing beam or termite damage, or design changes that you made after the job began.
The additional fees might very well be legit, but some unscrupulous contractors bid jobs low to get the work and then find excuses to jack up the price later. If you’re unsure whether your contractor is telling the truth about structural problems, you can get an impartial opinion from a home inspector, the local branch of the National Association of Home Builders, or even your local building department.
How to protect yourself: Before signing the contract, make sure it includes a procedure for change orders, which are mini-contracts containing a work description and a fixed price, for anything that gets added to the job in progress. The extra work, whether it’s related to unforeseen building issues or homeowner whims, can proceed only after the change order is signed by both homeowner and contractor.
SCAM 5: I HAVE EXTRA MATERIALS I CAN SELL YOU CHEAP
This hoax is usually run by driveway paving companies, whose materials—hot-top asphalt and concrete—can’t be returned to the supplier. So the crew pulls up to your house with a load of leftover product and quotes a great price to resurface your driveway on the spot. Even assuming they really are giving you a bargain (by no means a sure thing), taking them up on the offer is risky. You have no idea who they are or whether they’ll do the job right. And if the driveway starts cracking next year, you can be sure that you won’t be able to find this bunch again.
How to protect yourself: Never hire a contractor on the spot, whether it’s a driveway paver, an emergency repairman who shows up after a major storm, or a landscaper with surplus plantings. Take your time to check contractors out to make sure they have a good reputation and do quality work.
All of these situations can be difficult to resolve once you’re a victim. But a little up-front effort now can keep you from throwing good money after bad later on.
--------------------------------
Article written by Oliver Marks - HouseLogic.com
A former carpenter and newspaper reporter, Oliver Marks has been writing about home improvements for 16 years. He’s currently restoring his second fixer-upper with a mix of big hired projects and small do-it-himself jobs.
Crooks go where the money is. So with Americans spending as much as $22 billion a year on construction projects, it’s no surprise that home improvement has become a favorite target for fraud artists. Some of these shady characters use amazingly well-polished hoaxes that are tricky to spot until it’s too late.
The vast majority of contractors are honest, hardworking professionals. Protecting yourself against the few bad apples requires checking references, having a solid contract, and being alert to the warning signs of these top five contractor scams.
SCAM 1: I NEED THE MONEY UPFRONT
This is the most common ruse reported to the Better Business Bureau, says Erin Dufner, vice president of the organization’s Austin, Texas, office. Your contractor explains that because he has to order materials and rent earthmoving equipment to get the job started, he needs, say, 30% to 50% of the project price up front. Once you’ve forked over the dough, one of two things happens: He disappears on you, or he starts doing slapdash work knowing that you can’t really fire him because he’s sitting on thousands of your dollars.
How to protect yourself: Never prepay more than $1,000 or 10% of the job total, whichever is less. That’s the legal maximum in some states, and enough to establish that you’re a serious customer so the contractor can work you into his schedule—the only valid purpose of an advance payment. As to the materials and backhoe rentals, if he’s a professional in good standing, his suppliers will provide them on credit.
SCAM 2: TAKE MY WORD FOR IT
When you first meet with the contractor, he’s very agreeable about doing everything exactly to your specifications and even suggests his own extra touches and upgrades. Some of the details don’t make it into the contract, but you figure it doesn’t matter because you had such a clear verbal understanding. Pretty soon, though, you notice that the extras you’d discussed aren’t being built. When you confront the contractor, he tells you that he didn’t include those features in his price, so you’ll have to live without them or pony up additional money to redo the work.
How to protect yourself: Unfortunately, you have no legal recourse because you signed a contract that didn’t include all the details. Next time, make sure everything you’ve agreed on is written into the project description. Add any items that are missing, put your initials next to each addition, and have the contractor initial it, too—all before you sign.
SCAM 3: I DON'T NEED TO GET A PERMIT
You’re legally required to get a building permit for any significant construction project. That allows building officials to visit the site periodically to confirm that the work meets safety codes. On small interior jobs, an unlicensed contractor may try to skirt the rule by telling you that authorities won’t notice. On large jobs that can’t be hidden, the contractor may try another strategy and ask you to apply for a homeowner’s permit, an option available to do-it-yourselfers.
But taking out your own permit for a contractor job means lying to authorities about who’s doing the work. And it makes you responsible for monitoring all the inspections, explaining to the contractor what changes the inspector wants, and getting him to make them—since the contractor doesn’t answer to the inspector, you do.
How to protect yourself: Always demand that the contractor get a building permit. Yes, it informs the local tax assessor about your upgrade, but it weeds out unlicensed contractors and gives you the added protection of an independent assessment of the work, says Tampa, Florida, attorney George Meyer, chair-elect of the American Bar Association’s Forum on the Construction Industry.
SCAM 4: WE RAN INTO UNFORSEEN PROBLEMS
The job is already under way, perhaps even complete, when this one hits. Suddenly your contractor informs you that the agreed-upon price has skyrocketed. He blames the discovery of structural problems, like a missing beam or termite damage, or design changes that you made after the job began.
The additional fees might very well be legit, but some unscrupulous contractors bid jobs low to get the work and then find excuses to jack up the price later. If you’re unsure whether your contractor is telling the truth about structural problems, you can get an impartial opinion from a home inspector, the local branch of the National Association of Home Builders, or even your local building department.
How to protect yourself: Before signing the contract, make sure it includes a procedure for change orders, which are mini-contracts containing a work description and a fixed price, for anything that gets added to the job in progress. The extra work, whether it’s related to unforeseen building issues or homeowner whims, can proceed only after the change order is signed by both homeowner and contractor.
SCAM 5: I HAVE EXTRA MATERIALS I CAN SELL YOU CHEAP
This hoax is usually run by driveway paving companies, whose materials—hot-top asphalt and concrete—can’t be returned to the supplier. So the crew pulls up to your house with a load of leftover product and quotes a great price to resurface your driveway on the spot. Even assuming they really are giving you a bargain (by no means a sure thing), taking them up on the offer is risky. You have no idea who they are or whether they’ll do the job right. And if the driveway starts cracking next year, you can be sure that you won’t be able to find this bunch again.
How to protect yourself: Never hire a contractor on the spot, whether it’s a driveway paver, an emergency repairman who shows up after a major storm, or a landscaper with surplus plantings. Take your time to check contractors out to make sure they have a good reputation and do quality work.
All of these situations can be difficult to resolve once you’re a victim. But a little up-front effort now can keep you from throwing good money after bad later on.
--------------------------------
Article written by Oliver Marks - HouseLogic.com
A former carpenter and newspaper reporter, Oliver Marks has been writing about home improvements for 16 years. He’s currently restoring his second fixer-upper with a mix of big hired projects and small do-it-himself jobs.
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