Home prices up slightly, but still down from year ago

By Jim Droz

Home prices rose in the second quarter compared to the first quarter, but fell on a year-over-year basis, according to the latest Standard & Poor’s/Case-Shiller National Home Price Indices report.

The quarterly national index rose 3.6 percent in the second quarter to 130.1, after a reported “double dip” in the first quarter. That’s a 5.9 percent decline compared to second-quarter 2010, taking home prices back to what they were in early 2003.

The 20-city composite index rose 1.1 percent on a monthly adjusted basis in June, to 141.3. On a seasonally adjusted basis, the composite remained essentially flat at -0.1 of a percent. The composite fell 4.5 percent year over year.

None of the 20 cities in the composite posted monthly declines in June, and 19 of 20 posted increases. Minneapolis and Chicago saw the largest monthly increases, at 3.2 percent each. All 20 markets declined compared to June 2010, however, with Minneapolis and Portland seeing the biggest drops, down 10.8 percent and 9.6 percent, respectively.

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Some cities battling back with consistent rise in home values

By Jim Droz

A smattering of cities has managed to buck the sluggish housing trend by seeing modest gains in home values over the past several months. Those cities were highlighted by Forbes Magazine in its list of recession-resistant cities. The compilation reflects the 25 cities welcoming steady home price gains since the start of 2011.

Despite a 9.9 percent unemployment rate, Bay City, Mich., tops the list with seven consecutive months of rising home values. The median home price in the Great Lakes Bay area city is $80,100.

Bay City isn’t the only small- to mid-sized metropolis with a hopeful housing market. It’s joined by fellow Michigan city, Battle Creek, with a 0.6 percent price gain in the first quarter and a 5.2 percent gain in the second; Pueblo, Colo., with a 2.5 percent price gain in the first quarter and a 5.5 percent price gain in the second; and Champaign-Urbana, Ill., with a 0.5 percent rise in the first quarter and a 1.2 percent rise in the second.

One of the surprising results on the list is Florida, one of the states to suffer most from the real estate boom and bust, which has six cities on the list, led by Fort Myers, which had a 2.9 percent appreciation rate in the first quarter and a 3.7 percent rate during the second.

Municipalities where housing bubbles never arose in the first place also continue to fare well. Housing prices in cities such as Pittsburgh, Oklahoma City, Boulder, Colo., and Durham, N.C., have come off less than 7 percent from the 2006 real estate peak.

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Home prices continue to drop in California

By Jim Droz

The influx of distressed properties contributed to the drop in home prices in California in July. The median price for new and resale houses and condominiums in the state last month was $252,000, down 0.4 percent from June and down 6 percent from July 2010.

California’s median – the point at which half the homes sold for more and half for less – has dropped year-over-year for 10 consecutive months. The median’s bottom for the current real estate cycle was $221,000 in April 2009, and the peak was $484,000 in early 2007.

Of the existing homes sold in July, 34.6 percent had been foreclosed on during the past year. The peak was in February 2009 at 58.5 percent. Short sales – transactions in which the sale price is less than what was owed on the property – made up about 18 percent of resales last month.

The July median price in Southern California fell 4 percent from a year earlier to $283,000. The median price in the San Francisco Bay Area was $374,000, down 7 percent from July 2010.

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Buying a home is cheaper than renting in majority of major cities

By Jim Droz

Home prices have taken such a beating and demand for rental units has increased so much that it’s now cheaper to buy a two-bedroom home than to rent one in most major U.S. cities.

According to online real estate site Trulia, buying was cheaper than renting in 74 percent of the country’s 50 largest cities in July. In just 12 percent of the cities, including New York, Seattle and San Francisco, renting was cheaper. In the remaining 14 percent of cities, renting was less expensive but close to the cost of buying.

In addition to a continuing decline in home prices, low interest rates have added a lot of weight to the buy side of the scale. Add in the tax perks of home ownership and for those who can afford it and can actually qualify for a loan, it certainly is a buyer’s market.

Top buyer’s markets

Las Vegas offered the most compelling buy-side math, Trulia’s survey found, with prices there plunging more than 59 percent from their August 2006 peak. The median price of a two-bedroom, two-bath condo or townhouse is about $60,000, a ratio of only six times the median annual rent of a similar rental apartment, which is $9,700.

Monthly mortgage payments on a median-priced Las Vegas condo would come to $256 on a 30-year, 5-percent interest loan. Even factoring in property taxes and common charges of roughly $300 a month, the monthly amount is still lower than the $810 in monthly rent they would pay on a similar place.

Detroit, according to Trulia, is another metro area where buying is better. The median price for a condo or townhouse is about seven times annual rent. Home prices in Mesa, Ariz., and Fresno, Calif., also clock in at seven times rent.

Arlington, Texas, Sacramento, Calif., Phoenix and Jacksonville, Fla., all had buy-rent ratios of eight.

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Florida agent is sealing the deals with help from HouseHunt

By Jaime Westman

HouseHunt is batting a robust .500 this year with Matt Danver, a real estate agent working out of a Keller Williams office in Ormond by the Sea, a small community about 15 miles north of Daytona Beach on Florida’s east coast.

Danver is bucking the national trend by selling as many houses through July of this year as he did in all of 2010. Half of his closings have come from HouseHunt leads.

“I sold 20 houses during the first half of the year, and 10 came from my association with HouseHunt,” Danver said. “A couple of the ones I sold were to people who had been on the e-mail system, or what you call the TIM system, for well over a year.”

Danver said HouseHunt’s system that sends prospective buyers weekly e-mail updates is a valuable tool for his craft.

“Typically what I do when I get the lead is e-mail all of them as quickly as I can,” Danver said. “That seems to work best for me. That way they can get back to me when they’re ready.”

Which, in some cases, might take a few years.

“Every once in a while I’ll get an e-mail from somebody and I’ll go into the system and see that he or she has been with me since 2008, so the system has been sending them e-mails for three years,” Danver said. “That’s a great tool. These buyers were finally ready to come around and things hit this year.”

To see listings of houses in your area, visit househunt.com.

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Homeowners and buyers urged to act fast on mortgage rates

By Jim Droz

Silver linings and seeing the glass as half full have been hard to envision with the recent grim economic news.

But plunging mortgage rates at least one sign of optimism for homeowners.

The average rate for 30-year fixed-rate mortgages fell to 4.54 percent for the week ended Aug. 3, according to consumer-information site Bankrate.com — not far from the record low of 4.42 percent in November 2010. The average rate on 15-year fixed-rate mortgages dropped to 3.68 percent, a record low.

Homeowners should act fast, said Greg McBride, a senior financial analyst with Bankrate.com. After Sept. 30, the limits for conforming loans — those backed by government-sponsored agencies Fannie Mae or Freddie Mac — are scheduled to shrink to $625,000 from $729,750. Mortgages above $625,000 will likely face higher rates after Sept. 30 — up to a half a percentage point, McBride said.

“There is a tremendous sense of urgency to act now before the goal posts change,” he said.

Mortgage rates vary by region, even among the biggest lenders — but they are falling across the board. A recent survey showed that Bank of America Corp., the nation’s largest bank by assets, is offering a 4.4 percent rate on 30-year fixed-rate mortgages in New York City. J.P. Morgan Chase & Co. is offering California homeowners a 4.5 percent rate on 30-year fixed-rate mortgages, and 3.6 percent for 15-year fixed-rate loans. Rival Wells Fargo & Co. is pitching a 4.5 percent rate on its 30-year fixed-rate mortgage for Chicago homeowners, and 3.4 percent on 15-year fixed-rate loans.

The downside, of course, is that the latest decline in rates is a result of disappointing economic reports, but falling mortgage rates can lead to big savings. A homeowner with a $700,000 30-year fixed-rate loan at 5.5 percent pays $3,974 a month. By refinancing to a 30-year fixed rate at 4.5 percent, the payment drops by $428 a month — a savings of roughly $154,080 over 30 years.

Adjustable-rate mortgages, which carry lower initial rates that adjust to prevailing market rates in the future, also are near record lows. Rates for seven-year adjustable-rate mortgages are 3.5 percent, according to Bankrate.com, while five-year adjustable mortgages are at 3.2 percent.

Keep in mind that the difference between rates on fixed-rate loans and adjustable-rate loans is widening — it now stands at about 1.3 percentage points, much higher than the average of 0.44 point, McBride said. That gap makes ARMs look more attractive.

Of course, ARMs come with the risk that payments will spike in the future. But assuming the fees are low enough, an ARM can make sense for homeowners who expect to sell in a few years and want to sock away some extra money, McBride said.

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Fannie Mae’s defaults sink to 2-year low

By Jim Droz

The percentage of mortgages in default more than 60 days in Fannie Mae’s portfolio have fallen to the lowest level in two years, another sign that defaults are slowly but steadily declining as more homeowners pay their mortgages on time.

Serious defaults of conventional single family mortgages fell to 4.08 percent in June and July, compared to 4.82 percent in July 2011. Serious defaults peaked in February 2010 when they reached 5.59 percent of all mortgages in Fannie’s portfolio. Currently Fannie holds about $728 billion worth of mortgages in its portfolio.

Government-controlled mortgage company Fannie Mae said that its second-quarter loss widened as it continues to seek loan modifications to help reduce defaults amid the ongoing difficulties in the housing and mortgage markets. Fannie Mae also said that it aims to lower its credit losses while keeping as many families as possible in their homes and protecting property values.

“We remain the largest source of liquidity for the U.S. mortgage market, and we are committed to creating long-term value by helping to build a stable, sustainable housing market for the future,” president and CEO Michael J. Williams said in a statement.

Fannie’s rescue has been one of the most expensive government bailouts. It has received nearly $100 billion from the Treasury to stay afloat.

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Foreclosure problem driving people to rent, survey says

By Jim Droz

As the foreclosure crisis continues to wreak havoc on the housing market, a source of national pride has taken a sour turn. Home ownership is on the decline and, according to a recent Morgan Stanley report, the United States is fast becoming a nation of renters.

Early this month, the Census Bureau reported that the percentage of people who owned a home had dropped to 65.9 percent during the second quarter – its lowest level since the first quarter of 1998 and a far cry from the high of 69.2 percent reached in late 2004.

Yet, in a research paper issued a week earlier, Morgan Stanley analysts Oliver Chang, Vishwanath Tirupattur and James Egan argued that the home ownership rate is even lower than the Census Bureau statistics say.

In fact, once they factored in delinquent mortgage borrowers (the ones who are likely to lose their homes at some point), Morgan Stanley calculated that the home ownership rate is more like 59.2 percent. That’s the lowest level since the Census Bureau started keeping quarterly records back in 1965. The Census Bureau’s statistics, however, do not factor in mortgage delinquencies.

“The combination of falling home prices, limited mortgage credit, continued liquidations and better rental options is fundamentally changing the way Americans live,” the analysts said. “We believe this change is only beginning and is moving the country toward becoming a renters’ society.”

Many people are still technically considered homeowners who occupy their homes, even though they no longer make their mortgage payments. These “homeowners” can squat for months or even years because banks have been slow to process foreclosures in recent months.

In addition to the millions of people who have lost their homes to foreclosure, Morgan Stanley said that another reason for the decline in home ownership is that many of the people who would like to buy homes can’t get a mortgage.

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Report shows foreclosure activity on decline in most metro areas

By Jim Droz

RealtyTrac’s Midyear 2011 Metro foreclosure report shows that foreclosure activity decreased on a year-over-year basis in 178 out of the nation’s largest 211 metropolitan areas.

That’s the good news. Unfortunately for California, Nevada and Arizona, they just can’t let go of their stronghold on the top 10 list of having metros with the highest foreclosure rates. Florida is showing signs of improvement, however, with only one metro area in the top 20 — Cape Coral-Fort Myers at 12. Other metro’s on the top 20 foreclosure rate list were Boise City-Nampa, Idaho; Atlanta-Sandy Springs-Marietta, Ga.; Greeley, Colo.; and Salt Lake City.

“Foreclosure activity continued to slow in the first half of 2011, especially in the most foreclosure-saturated markets and in markets where the judicial foreclosure process is used,” said James J. Saccacio, chief executive officer of RealtyTrac. “The 20 metro areas with the biggest year-over-year decreases in foreclosure activity were all in states with judicial foreclosure processes — New York, Maryland, Florida, New Jersey, Connecticut, Massachusetts and Illinois.

“These dramatic decreases indicate the foreclosure pipeline continues to be clogged in many local markets across the country, sometimes by a glut of already-foreclosed properties that are not selling quickly, sometimes by a mountain of improperly filed foreclosures that are blocking the inflow of new foreclosure filings — and sometimes by

Las Vegas continues to be the headliner in terms of foreclosure rates, posting the nation’s highest metro foreclosure rate with one out of every 19 housing units (5.36 percent) receiving a foreclosure notice during the first half of this year which works out to six times the national average.

Nineteen of the nation’s 20 most-populated metro areas had a year over year decrease in foreclosure activity in the first half of 2011 with Seattle being the only exception, showing almost a 10 percent increase from the year before.

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Bad economy isn’t a valid excuse for poor real estate sales

By Jim Droz

An underperforming economy is not an excuse for real estate agents to do the same.

Agents who adjust to the times and maintain a can-do attitude will always do well.

In today’s world, one of the best ways to network with positive people is to attend training classes where you are most likely to meet agents focused on working harder at developing their skills.

In short, there are two skills you cannot delegate:

Prospecting: If you aren’t prospecting everyday, you can’t blame the economy for your lack of production. You might argue that you can delegate prospecting, but hoping a prospect hits your website doesn’t count because it’s passive.

Saying the right thing at the right time: Who are you going to call when you are standing in the kitchen and the husband says, “I love this home, but my wife likes the first home you showed us”? If you don’t believe that you make your living by the words you speak and you are not learning scripts, don’t blame the economy.

If you’re doing well in these two categories, great. If not, can you think of two more important skills you need to sharpen? Regardless of the skills you need to work on, be honest with yourself and start honing.

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