Building Confidence Rises To 5-Year High

Homebuilder confidence since 2000

Home builders anticipate growth in the market for newly-built, single-family homes.  

For June 2012, the National Association of Homebuilders reports its monthly Housing Market Index at 29 — an increase of more than 100% from one year ago and the highest HMI value since May 2007.

When the Housing Market Index reads 50 or better, it’s meant to indicate favorable conditions for builders in the single-family, new-construction market. Readings below 50 suggest unfavorable conditions for builders.

The index has not been above 50 since April 2006. 

The NAHB Housing Market Index is not a “single survey” — it’s a composite. Three separate surveys are sent by the trade association to its members and roughly 400 builders respond. The NAHB’s survey questions query builders on their current single-family home sales volume; their projected single-family home sales volume for the next 6 months; and, their current levels of buyer “foot traffic”.

The results are then compiled into the NAHB Housing Market Index.

In June, home builders provided mixed replies :

  • Current Single-Family Sales : 32 (+2 from May)
  • Projected Single-Family Sales : 34 (Unchanged from May)
  • Buyer Foot Traffic : 23 (Unchanged from May)

Of particular interest to today’s new construction buyers is that builders are reporting higher levels of single-family sales, and expect their sales volume to increase over the next six months. This expectation is rooted in housing market momentum and low mortgage rates.

Never in recorded history have homes been as affordable as they are today and home buyers are taking notice. Foot traffic through builder models remains strong and is at its highest pace in more than 5 years. 

When demand for homes outweighs the supply of homes, home prices rise. If builder expectations are met, therefore, buyers should expect new home prices to rise in 2012’s second half.

Planning to buy new construction this year or next? Consider moving up your time frame.

10 Cities Projecting Home Value Increases Through 2013

10 cities poised for growth through 2013Nationwide, the U.S. housing market is showing signs of recovery. Home prices are rising as demand for homes outweighs existing home supply in many metropolitan regions.

As is customary in real estate, though, the degrees to which home values change vary by area.

In some U.S. markets, the housing recovery is outpacing the national average. In other markets, it lags. In an effort to measure the changes, CNNMoney has named the 10 U.S. housing markets in which home prices may rise the fastest.

The list is stuffed with small- to mid-size cities, most of which have experienced huge price drops since the housing market’s peak in 2007. The cities are gems, however, for the right type of home buyer. This may include real estate investors, first-time buyers, move-up buyers, and even parents with children in need of “college housing”.

As listed by CNNMoney, the 10 cities in which home values are rising fastest are :

  1. Madera, CA (Down 53.1% from peak; Forecast 21.5% gain through 2013)
  2. Medford, OR (Down 37.1% from peak; Forecast 20.1% gain through 2013)
  3. Yuma, AZ (Down 37.4% from peak; Forecast 16.7% gain through 2013)
  4. Corvallis, OR (Down 11.4% from peak; Forecast 13.2% gain through 2013)
  5. Eugene, OR (Down 21.2% from peak; Forecast 12.4% gain through 2013)
  6. Olympia, WA (Down 26.3% from peak; Forecast 11.3% gain through 2013)
  7. Boise, ID (Down 36.9% from peak; Forecast 11.0% gain through 2013)
  8. Billings, MT (Down 3.0% from peak; Forecast 10.1% gain through 2013)
  9. Lewiston, ID (Down 7.5% from peak; Forecast 10.0% gain through 2013)
  10. Sante Fe, NM (Down 17.1% from peak; Forecast 10.0% gain through 2013)

These 10 cities are more diverse in their make-up than their geography. All ten can be found in the western half of the United States. However, whereas some cities are expected to excel as a result of proximity of universities — Eugene and Corvallis, for example — others are expected to excel for economic reasons.

This includes cities such as Yuma, which is in a Foreign Trade Zone.

Real estate remains a local market, though, and even within these ten cities, there will exist neighborhoods in which growth exceed national averages, and areas in which growth falls behind.

For accurate, real-time real estate data , be sure to speak with a real estate professional.

Georgia Takes Top Foreclosure Spot For First Time Since 2006

Foreclosure concentration June 2012

According to foreclosure data firm RealtyTrac, the number of foreclosure filings nationwide rose 9 percent in May as compared to April 2012. Filing topped 200,000 units for the first time in 3 months.

The term “foreclosure filing” is a catch-all term comprising default notices, scheduled auctions, and bank repossessions. On average, 1 in every 639 U.S. homes receiving a foreclosure filing in May.

As in most months, foreclosure activity was concentrated by state. Just 6 states accounted for more than half of the nation’s total filings.

Those six states were :

  1. California : 13.6% of all repossessions
  2. Florida : 11.0% of all repossessions
  3. Georgia : 9.8% of all repossessions
  4. Illinois : 6.6% of all repossessions
  5. Michigan : 6.5% of all repossessions
  6. Arizona : 6.3% of all repossessions

An interesting note, though, is that for the first time since February 2006, Georgia was the country’s most foreclosure-heavy state, displacing Nevada, which has dominated the foreclosure landscape for the last 5 years.

1 in 300 Georgia homes received a foreclosure filing in May. The national average last month was 1 in 639 homes.

At the other end of the foreclosure spectrum is Vermont. There was just 1 foreclosure filing for every 15,539 homes in The Green Mountain State last month.

Meanwhile, distressed homes remain in high demand with today’s home buyers, accounting for 28 percent of April’s overall existing home sales based on data from the National Association of REALTORS®. However, if your home purchase plans call for buying a foreclosed or bank-owned home, make sure you do your research first.

Buying bank-owned property is a different process as compared to buying a non-distressed home. The purchase contracts are different, the buyer-seller negotiations are different, and the homes are sometimes sold with defects. This can make it difficult to get a mortgage — or even impossible.

Before buying “distressed”, therefore, be sure to with a real estate agent. It’s good to have an experienced agent on your side to coach you through the process.

31 States Represented In June’s Improving Market Index

Improving Markets Index June 2012The number of U.S. housing markets showing “measurable and sustained growth” slipped by 20 in June, according to the National Association of Homebuilders.

The Improving Market Index is meant to identify housing markets in which economic growth is occurring as a whole — not just in the real estate space.

By using three separate, independently-collected data series, each tied to local economic conditions, the Improving Market Index takes a broader view of the housing market than other housing market indicators — the Case-Shiller Index, for example — which are often singularly tied to housing contracts.

The Improving Market Index tracks three distinct data series :

  1. From the Bureau of Labor Statistics : Employment statistics
  2. From Freddie Mac : Home price growth
  3. From the Census Bureau : Single-family housing growth

A given metropolitan area is categorized as “improving” by the National Association of Homebuilders if all three data series indicate growth at least six months after that area’s most recent economic trough.

In other words, the Improving Market Index looks past head-fakes of recovery, instead in search of long-term, sustainable growth.

This is one reason why its list of included cities is so fluid. It’s difficult for a metropolitan area to meet the Improving Market Index’s inclusion requirements month-after-month in a post-recession economy.

The Improving Market Index dropped to 80 in June, says the home builder trade group.

The list includes 28 new entrants, with forty-eight markets removed as compared to May. 31 states are represented nationwide.

For home buyers , the Improving Markets Index is a non-actionable report but it does do a good job of highlighting the local nature of real estate. For example, Columbus, Indiana was added as an Improving Market in June. Yet, Indianapolis, Indiana — located just 46 miles away — was downgraded from the same list. 

Economies vary by locale.

The complete Improving Markets Index is available for download at the NAHB website. For a better gauge of what’s happening on the local level , though, talk to a local real estate agent.

Before Moving, Check Your New Cost Of Living Estimates

Cost of Living adjustments in a new townWith home values slow to rise and mortgage rates at all-time lows, there’s never been a more affordable time to own a home.

However, there is more to the cost of living than just a mortgage payment. There’s the cost of groceries, gasoline and routine medical care, too.

Not surprisingly, where we live affects our costs.

Big cities are often more expensive in which to live, for example, and local tax laws influence daily costs, too. 

For home buyers moving across state borders, therefore — or even for those moving long distances intra-state — it’s important to know the relative costs in your new hometown as compared to your current one. Your household cash flow depends on it. You can’t know your budget for a home if you don’t know what life in a new town will cost you.

Enter Bankrate.com’s Cost of Living Comparison Calculator.

In comparing the costs of 60 mundane, everyday items, the Cost of Living Comparison calculator can show you how common costs in your current home town compare to costs in your soon-to-be new home town.

The calculator asks for just three inputs — (1) In what city do you live now, (2) To what city are you moving, and (3) What is your current salary — then uses that information to produce a detailed cost comparison.

Some of the Cost of Living items compared include :

  • Ground beef costs
  • Veterinary services costs
  • Dozen egg costs
  • Doctor visit costs
  • Hair care costs

The calculator also includes local mortgage rate differences to help plan for housing, and accounts for median home prices, too.

The online Cost of Living calculator is based on data from the ACCRA. On the ACCRA website, a similar cost comparison report sells for $5. At Bankrate.com, you can get the data for free.

Mortgage Payments Fall To All-Time Lows

Mortgage payments

It’s a money-saving time to be a home buyer. Historically, mortgage rates of all types — conventional, FHA, VA and USDA — have never been lower and low mortgage rates make for low monthly payments. 

According to Freddie Mac’s weekly mortgage rate survey, the average 30-year fixed rate mortgage fell to 3.67% nationwide last week for borrowers willing to pay 0.7 discount points at closing, plus a full set of closing costs. 0.7 discount points is a one-time closing cost equal to 0.7 percent of your loan size, or $700 per $100,000 borrowed.

Today’s mortgage rates are a bargain as compared to just 1 year ago.

In early-June 2011, the average 30-year fixed rate mortgage nationwide was higher by 88 basis points, or 0.88%. If you are among the many U.S. homeowners who bought or refinanced a home around that time, refinancing to today’s mortgage rates could save you 10% or more on your payment.  

Home buyers have measurably more buying power, too.

Here is how mortgage payments on a typical 30-year fixed rate mortgage have changed in 12 months :

  • June 2011 : $509.66 principal + interest per $100,000 borrowed
  • June 2012 : $458.59 principal + interest per $100,000 borrowed

Setting the math to a real-life example, a homeowner whose $350,000, 30-year fixed rate mortgage dates to last June would recognize monthly savings of at least $179 per month just by refinancing into a new 30-year fixed rate mortgage at today’s current levels. That’s more than $2,145 in payment savings per year.

Even after accounting for the required loan discount points and closing costs, the “break-even point” on a refinance like that can come quickly.

Mortgage rates have been dropping but there’s no promise they’ll fall forever. Once rates reverse higher, they’re expected to rise sharply. Therefore, if you’re planning to buy a home or refinance one , consider locking in a mortgage rate while mortgage rates are low.

The market looks good for that today.

How To Keep A Clean Refrigerator

Clean refrigeratorDo you clean your refrigerator regularly, or only after you’ve run out of space? If your answer is the latter, your refrigerator may be harboring dangerous bacteria that can make you, your family, and your house guests ill.

Refrigerators should be cleaned monthly, inside and out, ideally. The process involves removing all foods, cleaning all shelves, and wiping down drawers. Spoiled food is removed and old containers reclaimed.

The process takes 20 minutes. Here’s how to do it.

First, prepare your cleaning stations, including filling a sink with soapy water, and having drying towels handy. Complete this step before you start to remove food from the refrigerator. This limits the amount of time that food has available to reach room temperature.

Next, remove all food from the appliance. Throw out old food past its expiration, and leftovers which have been in containers for more than a few days. Check dairy products for expiration dates — especially cheeses and creams. Toss fruits and vegetables that have spoiled. Wipe down condiment jars and bottles with a damp towel.

Next, with the refrigerator empty, remove all shelves and drawers and wash them in the water-filled sink. Scrub to remove any caked-on foods and spills. Rinse off the soapy water and dry the part on your drying towels.

Then, while the shelves and drawers are drying, using a mixture of baking soda and water, wipe down the interior surfaces of your appliance. The mixture should be roughly 2 tablespoons of baking soda for every 1 gallon of water. Wipe the mixture off with a clean towel.

Lastly, move the shelves and drawers back into the refrigerator and replace all of the food that’s “good”.

Refrigerators can be a dirty place. We rarely wash our hands before handling food in a refrigerator and that can contribute to a bacteria-heavy environment. A good cleaning, though, can keep our foods — and our home — healthy.

Clean your refrigerator regularly.

Phoenix Leads Annual Home Price Gains, According To Case-Shiller Index

Case-Shiller Index

Standard & Poors released its March 2012 Case-Shiller Index last week. The index is meant to measure changes in home prices from month-to-month, and from year-to-year, in select U.S. cities.

According to the report, home values rose in 12 of the Case-Shiller Index’s 20 tracked markets, and one market remained unchanged.

Of the Case-Shiller markets, Phoenix, Arizona posted the largest one-year gain, climbing 6.1 percent. Atlanta, Georgia posted the largest one-year loss. Values falling more than seventeen percent there year-over-year.

Overall, the Case-Shiller Index was relatively unchanged in March as compared to the month prior, but down nearly 3 percent on an annual basis. Nationwide, says Standard & Poor’s, home values are back to the levels of late-2002.

Don’t be overly concerned, however. Though widely-cited, the Case-Shiller Index is a flawed and misleading metric. It’s methodology almost guarantees it.

The first flaw in the Case-Shiller Index is its limited geography. Despite there being more than 3,100 municipalities nationwide, the Case-Shiller Index tracks just 20 of them. They’re not the 20 largest ones, either. Houston, Philadelphia, San Antonio, San Jose are specifically excluded from the Case-Shiller Index and each is among the Top 10 Most Populous Cities in the United States.

Minneapolis (#48) and Tampa (#55), by contrast, are included.

The Case-Shiller Index’s second flaw is that only tracks the sales of single-family, detached homes. Sales of condominiums and multi-unit homes carry no weight in the index whatsoever — even in cities such as Chicago and New York in which condos can account for a large percentage of the overall real estate market.

And, lastly, when the Case-Shiller Index is published, it’s published on a two-month delay. Buyers and sellers don’t need housing data from two months ago — they need data from today. The Case-Shiller Index tells us what housing was, in other words. It doesn’t tell us how housing is

Buyers and sellers need real-time, actionable information. You can’t get that from the flawed Case-Shiller Index. For more accurate, relevant real estate data, talk to your real estate professional instead. 

FHA To Change Its Mortgage Insurance Premium Schedule Monday, June 11, 2012

New FHA MIPBeginning Monday, June 11, the FHA is changing its mortgage insurance premium schedule for the second time this year.

Some FHA mortgage applicants will pay lower mortgage insurance premiums going forward. Others will pay more. The new premiums apply to all FHA mortgages, both purchase and refinance.

The MIP update will be the 5th time in four years that the FHA has changed its mortgage insurance premium schedule.

FHA-backed homeowners who have not refinanced within the last 3 years will benefit from the new MIP. This is because, beginning with all FHA Case Numbers assigned on, or after, June 11, 2012, homeowners whose current FHA mortgage pre-dates June 1, 2009 will be entitled to dramatically reduced annual mortgage insurance premiums and almost zero upfront MIP via the FHA Streamline Refinance program.

Whereas new FHA applicants may pay up to 1.25% per year for annual mortgage insurance plus 175 basis points at closing for upfront MIP, the “grandfathered” FHA applicants will pay just 0.55% per year for mortgage insurance and 1 basis point at closing.

Assuming an FHA loan size of $200,000, the savings are large :

  • New FHA applicant : $208 per month for annual MIP; $3,500 due at closing for upfront MIP.
  • Pre-June 2009 FHA applicant : $92 per month for annual MIP; $20 due at closing for upfront MIP.

The premiums apply to all FHA mortgage applicants, regardless of loan product or term. For example, 15-year FHA mortgage will follow the same mortgage insurance premium schedule as a 30-year FHA mortgages.

Another class of FHA-backed homeowners won’t get so lucky. For homeowners in high-cost areas whose mortgages are between $625,500 and the local FHA loan limit, annual mortgage insurance premiums will be raised by 0.25% for all 15-year and 30-year loan terms.

For loan sizes above $625,500, the new annual FHA mortgage insurance premiums are as follows :

  • Loan term of 15 years or fewer, loan-to-value of 90% or less : 0.35% per year
  • Loan term of 15 years or fewer, loan-to-value greater than 90% : 0.60% per year
  • Loan term of more than 15 years, loan-to-value of 95% or less : 1.45% per year
  • Loan term of more than 15 years, loan-to-value greater than 95% : 1.50% per year

FHA-backed homeowners with loan terms of 15 years or fewer, and with loan-to-values below 78%, are exempt from annual MIP. Upfront MIP payments, however, remain mandatory.

The FHA continues to tinker with its mortgage insurance premiums, attempting to strike a balance between affordability for its homeowners and solvency for its program. Experts expect the FHA to change its premiums again. And, when it does, it’s likely that premiums will rise.

If your FHA mortgage will be for more than $625,000, and you plan to make a purchase or refinance application soon, it’s best to get your FHA Case Number prior to Monday, June 11. Otherwise, you’ll pay higher annual MIP.

Against a $700,000 mortgage, the extra 0.25% in MIP per year will add $1,750 to your annual housing payment.

Simple Real Estate Definitions : Home Inspection

Get a home inspectionWhen you preview homes as a home buyer, you can get a good feel for the home’s visible traits — its finishes, its room counts, and its landscaping, for example. What you can’t get a feel for, though, is the home’s “bones”.

It’s for this reason that real estate professionals recommend that you have a property formally inspected immediately after going into contract for it.

A home inspection is a thorough, top-to-bottom check-up of a property’s structure and systems. It is not the same as a home appraisal, which is a valuation of the property. By contrast, home inspections are an objective report on a home’s physical condition.

Home inspections are performed by home inspectors who will typically do the following :

  • Check heating and cooling systems for leaks and efficiency
  • Check electrical systems for safety and soundness of design
  • Check plumbing systems for venting, distribution, and drainage

In addition, a home inspector will review a home’s roofing system; its doors, windows and garages; plus, any attic spaces and basements, where appropriate.

A home inspection may also uncover out-of-code electrical work that municipalities required to be fixed by law.

Meanwhile, it’s not just home buyers who can order inspections. Sellers can order them, too.

One recommended tactic is for a home seller to have the home inspected prior to listing for sale so that all required repairs can be made in advance of showing the home. This can speed up and simplify the sales process, and may help your home sell at a higher price. Buyers often prefer homes in “move-in” ready condition.

A thorough home inspection can take up to 6 hours to complete, depending on the size of the home.