People are delaying the decision to buy a home because they are not sure where prices are headed. If they buy and prices continue to soften, they feel that they will not have purchased at the optimal moment. They reason that, if they sit and wait, they can’t be hurt. This thinking assumes that a non-decision comes without consequence.
The normal retort to this thinking by people bullish on real estate is that prices may soon turn to the positive or that interest rates will start heading upward. Buy now before the cost of buying increases! Today, we want to look at this from a different angle. We want to alert our readers that their housing expense is about to increase if they continue to rent.
Currently, in most parts of the country, buying is less expensive than renting. Plus, purchasers can lock in their housing expense for the next thirty years by buying now. They will get a sensational price and a record low interest rate. What will happen if they continue to rent?
If a family continues to rent, they are looking at a housing expense which will rise with the market. Rental costs increase by 3% a year historically. But today’s rental market favors the landlord to a greater degree. Below is a graph of how rental prices have increased recently and where they are projected to go over the next few years based on a report from Marcus & Millichap.
Hoping to save by delaying the purchase of a home may result in higher housing costs while you’re waiting, thus achieving the exact opposite result. Check with a local real estate professional to determine the best option for you and your family.
As we conclude 2011 and head into 2012, Virginia’s housing market will likely continue to stabilize, due to factors like low interest rates, rising residential rental rates, and an improving household balance sheet based on increases in household saving habits.
“We are encouraged by the overall numbers shown in the fourth quarter. The pace of home sales is picking up and without artificial stimulus proving that people are taking advantage of low interest rates and low home prices. This upcoming year is an optimistic one for real estate; one in which we hope to see stronger signs of recovery and stabilization,” said Virginia Association of REALTORS® President Trish Szego.
Highlights:
Click here for the full Q4 Virginia Home Sales Report.
EDITOR'S NOTE: Mike Hixenbaugh covers city government for The Virginian-Pilot. This piece was one of his "Above Board" columns published in the Beacon section of The Pilot.
Virginia Beach has been named “America’s Most Listed City.”
The honor was awarded by me in an email to a coworker last week. Factors considered included several Google searches. The lead researcher (still me) found the Beach has been included in at least 70 “best of” lists in recent years and assumed that must be good enough for No. 1.
The certificate is in the mail.
More and more, online news sites are releasing lists that rank U.S. cities based on criteria ranging from “Best Places to Find a Date” to “Top 10 Cities for Christmas Lights.”
Critics of such lists say they are drummed up to boost Internet traffic, rely on selective data, fail to consider intangible characteristics and are notoriously fickle.
In 2009, U.S. News and World Report named Virginia Beach one of “America’s 10 Best Places to Grow Up.” Two years later, The Daily Beast online news site ranked the city at No.?3 on its list of the nation’s “Worst Cities to be Young.”
Blame the recession.
Nevertheless, some people like the lists, and the Beach certainly has fared well recently.
An online financial site known for producing numerous “best of” lists named Virginia Beach “America’s Best Run City.” City Council members celebrated the honor last week, and as they gushed, a city release popped into my inbox: “Virginia Beach Ranked No. 2 City in America for Raising a Family.”
Did you hear that, children? We’ve still got it!
In honor of the winning streak, I present Virginia Beach’s Top Five Top 10 Listings of all time.
5. Top 10 U.S. Boardwalks, National Geographic, 2011 / Ranking: 9 / Factors: The writer liked the nautical sculptures. (Go King Neptune.)
4. America’s Least Stressful Cities, MSNBC, 2008 / Ranking: 1 / Factors: Easy call. The city’s slogan is “Live the Life.” (Note: The writers did not drive Interstate 264 at rush hour.)
3. Top 10 Cities To Give Birth, Fit Pregnancy magazine, 2008 / Ranking: 8 / Factors: Stroller friendliness. (Have you seen that boardwalk?)
2. Top 10 Most Romantic Cities, Business Insider, 2011 / Ranking: 1 / Factors: Residents buy a lot of jewelry on Valentine’s Day. (Nothing says romance like “I had to take a second mortgage.”)
1. America’s Vainest Cities, Forbes, 2007 / Ranking: 8 (Tied with New York City) / Factors: The city has a high plastic surgeon-to-resident ratio. (Also, have you seen some of these other rankings? We’re awesome.)
by The KCM Crew on January 11, 2012
Many believe that very few houses are selling and that almost no one can get a mortgage. We want to let everyone know that neither of these assumptions is true. Recently, the National Association of Realtors (NAR) released their Existing Homes Sales Report. According to the report there are, on average, 12,109 homes selling in the United States EACH and EVERY DAY! That means that approximately 12,000 houses sold yesterday, approximately 12,000 will sell today and approximately 12,000 will sell tomorrow. So the thinking that homes aren’t selling just isn’t true.
Another interesting fact in the report was that 72% of these transactions were accompanied by a mortgage. That means that approximately 8,719 people qualify for a mortgage on a daily basis in this country.
There are over 12,000 homes sold and over 8,000 mortgages granted every day. The real estate market is doing better than many believe.
FOR IMMEDIATE RELEASE: January 13, 2012
Strong Finish to 2011 and Signs of Bright Beginning for 2012
(Virginia Beach, Virginia – January 13, 2012)
The residential real estate market in Hampton Roads finished 2011 strong. Settled residential
sales and under contract residential sales each posted healthy results in the final month of the year.
Settled residential sales for the region increased 21% in December 2011 when compared to
December 2010 (1,589 vs. 1,311). It was the most settled residential sales for the month of December
since 2006 with 1,914. James City County had the largest year-over-year percentage increase in units
settled, 138%, from 39 units in 2010 to 93 units in 2011. Of the seven major cities in Hampton Roads,
Virginia Beach had the lowest year-over-year increase at 10% (444 vs. 403).
Another positive sign was the median settled sales price for these homes. Though down 3% to
$197,500 when compared to the 2010 median settled sales price in December of $203,000 this 3% was
the lowest year-over-year decline for any month in 2011 and could point to stabilizing prices. James City
County had the largest year-over-year percentage increase in median settled sales price, 12%, to
$319,000. Suffolk had the next largest median settled sales price increase at 8%. The median settled
sales price in Norfolk for December 2011 decreased, year-over-year, 15%.
The number of active residential listings for sale declined 19% to 11,095 in December 2011 as
compared to the same time in 2010. This marked the tenth consecutive month with a decrease in the
number of homes for sale and was the lowest measure for the month of December since 2006 when
there were 9,960 homes for sale. Coupled with the solid increase in settled sales, the drop in active
listings for sale pushed the months’ supply of inventory to 7.3 months, the lowest reading since REIN
began measuring in 2008. Norfolk, Virginia Beach, Portsmouth and Newport News each saw a drop in
homes for sale of at least 22% when compared to December 2010.
Looking forward to the residential real estate market of 2012, the under contract sales of
December 2011 show promise. Residential under contract sales grew by 18% in December 2011 when
compared to December 2010. The areas with the largest year-over-year percentage increases were
James City County, Portsmouth, Norfolk and Chesapeake with gains of 57%, 45%, 36% and 34%
respectively. However, Virginia Beach, Suffolk, Hampton and Newport News all experienced gains of
5% or less in December 2011.
Despite the market conditions, homes are still selling and some
homeowners have been able to successfully beat the odds and
sell for top dollar. To model the success of these savvy
homeowners, let's take a look at six tips to sell your home for top
dollar:
1. Price your home aggressively
Setting the right price for your home is the single most important
decision you will make when you decide to sell. Go too high and
you risk turning off every buyer in the marketplace, go too low and
you leave money on the table. One simple but powerful technique
for pricing your home aggressively is to spend the day looking at
with yourself. Compared to the competition what would be a price that would position your home as the best value
proposition for buyers in your marketplace?
2. Hire an aggressive listing agent
Not all listing agents are created equal. To find an aggressive full time agent, take the time to research the market,
talk to friends, neighbors, and colleagues about who they recommend, and interview multiple agents before making
a hiring decision. Don’t hire an agent just because they tell you what you want to hear. Make sure your agent gives
you a true picture about values in your marketplace, even if you don’t want to hear it. In addition, be sure to come to
an agreement about a specific, documented marketing plan before signing a long term listing agreement.
3. Stage the home & use curb appeal
Buyers won't pull the trigger unless they become emotionally invested in your home. To help build a stronger first
impression, start from the outside first by working hard to improve your home's curb appeal. Remove the weeds,
plant fresh flowers and spruce up your exterior paint if needed. Next move inside and stage each space by creating
a focal point and a story for each room. A set dining table, a book by the bed, or a game in the kids room are all
simple examples of staging.
5. Offer incentives & pre-paids
A buyer who has narrowed their search down to two or three top choices may need a little push to motivate them to
take action. To encourage buyers, many sellers offer incentives like buying the interest rate down on the purchaser's
loan, paying for closing costs, inspections, or repairs, or providing allowances or credits for home upgrades after
closing. In addition, many sellers prepay for services like internet services for a year, taxes, homeowners association
dues, or even golf club memberships.
6. Get pre-inspections
Many sellers do pre-inspections of the home to provide buyers with a clear whole home inspection or pest and dry
rot inspection. (A word of caution: anything discovered during a pre-inspection will likely need to be disclosed
whether you fix the issue or not). It’s often easier and cheaper to do needed repairs in advance than trying to
negotiate them later with an emotional buyer.
After half a decade of withering sales and slumping prices, there are strong and diverse signs that the single-family housing market is poised for a rebound.
In some metropolitan areas, the market has bottomed, with both sales and prices on the rise and foreclosures on the decline.
This contrarian — and largely overlooked — thesis flies in the face of the persistent gloom that has nagged the industry since 2007, when the subprime crisis flared.
Industry analysts and players cite a number of reasons — some traditional (employment), others unique to the post-credit bubble era (foreclosures) — for the long-awaited sea change. An analysis of industry and government data also support the forecast.
“It has become increasingly apparent to us that the pieces for a housing rebound next year are beginning to fall into place,” declared Barclays Capital analyst Stephen Kim in a recent note to investors.
Proponents admit that the nascent rebound could easily be derailed, but stress that after years of government efforts to support sales and prices as well as the volatile impact of foreclosures, the market has regained a measure of normalcy.
“With the exception of really hard-hit markets, the vast majority is ready to turn around,” adds Jerry Howard, president and CEO of the National Association of Home Builders, NAHB. "The Washington, D.C., area is not only ripe for recovery, they need to start building units.”
The iShares Dow Jones US Home Construction Index Fund [ITB 11.53 -0.23 (-1.96%) ] , for example, is up some 38 percent, while the S&P 500 is up about 21 percent.
Nevertheless, skeptics overwhelmingly outnumber the optimists, given the false-starts of previous years, the economy’s sub-par performance, a new wave of distressed properties and the capacity for the European debt crisis to spook business, consumers and investors.
“I think it’s premature,” says Richard Smith, CEO of Realogy, the nation’s largest real estate company, whose brands include Century 21, Coldwell Banker and Sotheby's International. “We see little indications here and there. Transaction volume is improving. Prices are still under pressure. This isn’t going to be one of those spiked robust recoveries.”
Smith is echoing the conventional industry calculus: that price increases follow sales growth amid consistently strengthening demand.
There’s been little conventional, however, about this housing slump, which is one reason it's had so many false bottoms. Among its many firsts — housing starts fell through 1 million annual units, foreclosures topped 2 million in three consecutive years, and home prices declined on a national basis.
The catalysts to recovery are mostly the same: for potential buyers, residential rents have now risen enough to consider buying; existing-home inventory is the lowest in five years, while that of new homes is at a 40-year low; affordability is at a record high; delinquencies have peaked; consumer confidence is on the rise ; and job growth is accelerating.
For investors, with a continuation of the gold rally in question, real estate is beginning to look like a viable inflation hedge alternative, while rising rents mean greater profits.
That thinking may help explain why the iShares Dow Jones US Home Construction Index Fund [ITB 11.53 -0.23 (-1.96%) ] , a broad barometer for the housing market, is up some 38 percent from the stock market's October bottom, while the S&P 500 is up about 21 percent.
Finally, there’s the intangible fatigue with bad news, and a desire to end the negative feedback loop.
“We believe there is sizable housing demand that could be released into the market," says Lawrence Yun, chief economist of the National Association of Realtors, NAR.
The NAR is forecasting existing home sales will rise 5 percent in both 2012 and 2013; prices will edge up 2 percent in each of those two years, then 4 percent in 2014.
The NAHB is forecasting a 5.1-percent increase in new home sales and a 10-percent increase for new home starts in 2012.
Jobs, Jobs, Jobs
A turnaround in the housing market will require continued improvement in the job market.
The economy has created jobs 13 months in a row for a total of almost 1.9 million. Weekly jobless claims have been routinely below the key level of 400,000, and the national jobless rate is down to 8.6 percent.
There are already signs in some markets that an improving employment picture is boosting housing demand and sale prices.
In cities such as Tampa, Fla., South Bend, Ind., Grand Rapids, Mich., Raleigh, N.C., Wichita, Kan., and Green Bay, Wis.., the median sales price of an existing single family home increased 1-2 percent in the third quarter, during which time the jobless rate and/or payrolls growth improved dramatically.
Even in the Cape Coral-Fort Myers, Fla. metropolitan area — considered the epicenter of the foreclosure crisis a few years ago — prices were just 1.4 percent lower in the third quarter than the previous year.
A new index by the NAHB and First American, the Improving Markets Index, IMI, launched in September, tracks housing markets throughout the country that are showing signs of improving economic health. Thirty cities – including San Jose, Pittsburgh, New Orleans and Winston-Salem, N.C. – are showing growth in permits, sales and employment.
In San Diego — where in the last year the jobless rate has fallen from 10.4 percent to 9.7 percent and 24,000 jobs have been added — home inventory is down to two months; in some areas of San Francisco (9.4 vs. 10.3 percent), it is one month.
More broadly, 40 percent of all states showed existing home sale increases on both a quarterly and annual basis in the third quarter, according to National Association of Realtors data. That includes high foreclosure-rate states, such as California, Georgia, Michigan and Utah. All but six states showed double-digit gains year over year.
Location, Location, Location
There’s even a strong case to be made that the foreclosure crisis is easing.
“The pipeline of distressed property is plentiful but less than last year,” when foreclosure activity hit a record 2.18 million, says Yun.
For the first nine months of 2011, foreclosure activity is down sharply from the same period last year (26.59 percent), whether it is the worst-off states — (Florida, 54.98 percent; California, 31.51 percent; Utah, 27.41 percent) — or better-off ones (New York, 46.57 percent; Mississippi, 33.25 percent; South Dakota, 26.59 percent), according to RealtyTrac, which tracks the data.
Third-quarter foreclosures (610,337) were up 1 percent from the previous quarter but down 34 percent from the year-ago period.
The wild card right now is an impending wave of new foreclosed properties on the market, following the removal of state moratoria and the settlement of state and federal lawsuits with lenders and loan servicers.
Realtors and FHA lenders had reason for cheer and mirth at the end of last week. "In an effort to continue stabilizing home values and improve conditions in communities experiencing high foreclosure activity, Acting FHA Commissioner Carol Galante will extend FHA's temporary waiver of the anti-flipping regulations."
With certain exceptions, FHA regulations prohibit insuring a mortgage on a home owned by the seller for less than 90 days, but this rule is waived through December 31, 2012, unless otherwise extended or withdrawn by FHA. "All other terms of the existing Waiver will remain the same. The Waiver contains strict conditions and guidelines to prevent the predatory practice of property flipping, in which properties are quickly resold at inflated prices to unsuspecting borrowers. The Waiver continues to be limited to sales meeting the following conditions: All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction. In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the Waiver will only apply if the lender meets specific conditions and documents the justification for the increase in value.
Why Title Insurance? | Why an inspection? | Contact Diane | Setting the Sales Price | Lead in the Home | About Me | School Information | Closing Costs | First Time Buyers | Inspection Tips | For Buyers | News | Real Estate Glossary | Selling Your Home | Virtual Tours | Our Featured Homes | Home | Staging Your House | Staging Checklist | 15 vs 30 Year Mtg Calc | Rent vs Buy Calc | Your Dream Home | 9 Steps to Ownership | How to Sell Your Home | Staging Your Home | Contingencies in Contracts | Homeowner Warranties | Improvements That Pay | Selling One, Buying Another | Fixer Uppers | My Blog
Copyright © 2012 William E Wood and AssociatesPortions Copyright © 2012 a la mode, inc.Another XSite by a la mode, inc. | Admin Login| Terms of Use| Site MapAll rate, payment, and area information are estimates and approximations only.
