Sunshine and Open Spaces Equal Happiness

People who live in warm, sunny states where the living is easy are happier than people who live where the weather, prices, air quality, and congestion aren’t so agreeable, according to comparison of statistics compiled by the Centers for Disease Control and Prevention.

The study asked participants: “How satisfied are you with your life?” The results showed that the happiest state is Louisiana; rounding out the top five are Hawaii, Florida, Tennessee, and Arizona.

New York State is at the bottom of the happiness scale. California ranks 46.

Economists Andrew J. Oswald of the University of Warwick in England and Stephen Wu of Hamilton College in Clinton, N.Y., published these finding in Friday’s edition of Science magazine. Oswald says the happiest people tend to live in states that do well in quality-of-life studies, and people who live in states where there are long commutes, congestion, and high prices are more likely to be unhappy.

Source: Associated Press, Randolph E. Schmid (12/17/2009)

Obama Presses Bank Chiefs to Lend More

The heads of the largest U.S. banks will meet with President Obama on Dec. 14 to discuss the decline in lending over the past five quarters and the need for financial reform legislation.

Obama has called the top bankers to the White House because he wants the banking industry, which has lobbied heavily against more oversight, to lend more.

The administration says banking executives should show proper gratitude for its efforts to help rescue the industry, which has tapped public aid to return to profitability.

Source: Washington Post, Binyamin Appelbaum (12/14/09)

Winterize Vacant Properties

It’s that time of year again when we hit freezing temperatures and your vacant homes are at risk for broken water pipes. Winterizing a vacant property ensures piece of mind that even if your furnace stops working, your home is protected. Below are the steps taken to winterize homes (please consult a FSP professional for these services) 

1. draining of all plumbing and heating systems as required;
2. using air pressure to clear the system of water;
3. adding anti-freeze to all traps and fixtures;
4. shutting off water supply to the property;
5. disconnecting the water meter, removing it from the cradle and leaving it on the premises;
6. disconnecting the feed pipe leading to the main water valve and plugging or capping it; and
7. placing tags, labels, warning signs, and dates on all items winterized, including FSP’s address and telephone number on all tags and labels.

Obama Proposes Cash for Caulking

President Obama proposed a program Tuesday that would reimburse home owners for installing energy-efficient appliances, windows, and insulation.

Under what has been dubbed “Cash for Caulking,” home owners would get a 50 percent rebate on items like energy-efficient air conditioners, heating systems, washing machines and dryers, refrigerators, replacement windows, and insulation up to $12,000, meaning a household could spend $24,000 and get $12,000 back. There will likely be no income restrictions.

Steve Nadel, director at the American Council for an Energy-Efficient Economy, who is helping to craft the legislation, says they are contemplating having contractors or retailers pay part of the cost upfront to ease the need for home owners to come up with lots of cash.

Source: CNNMoney.com (12/08/2009)

More Homes Claim ‘Green’ Label

Despite the slump in new construction, more than 75,000 homes with the Energy Star designation have been completed in 2009.

The Energy Star label means a home is at least 20 percent more energy-efficient than other new properties.

One of the builders taking advantage of the increasing interest in green living is Pulte Homes, which is building 185 homes in Las Vegas with solar-paneled roofs and certification by the U.S. Green Building Council. “Consumer acceptance has been outstanding,” says Walter Cuculic, director of strategic market for the builder.

Source: Gannett News Service, Wendy Koch (12/03/2009)

NAR: FHA Key to Housing Market and Recovery

The Federal Housing Administration mortgage insurance program is a critical part of the American housing fabric and has never been more important than it is in today’s market, NAR President Vicki Cox Golder told a congressional panel this week.

Testifying before the House Committee on Financial Services, Golder said that the FHA program is fiscally sound with responsible underwriting, and needs enhancements not radical reform. She urged Congress and the administration to tread lightly before making changes to a program that has a profound impact on economic recovery and serves the nation’s families.

“With the collapse of the private mortgage market, the importance of the FHA mortgage insurance program has never been more apparent. Thus far in 2009, nearly 80 percent of all FHA insured purchasers are first-time homebuyers. And if you take a closer look at the numbers, you’ll see that program is doing exactly what it was designed to do—make more affordable mortgage financing available to homeowners,” said Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz.

She pointed out that this year almost 50 percent of non-white Hispanic borrowers used FHA insurance or the Veterans Administration’s loan guaranty for home-purchase loans and 21 percent used the FHA or VA program to refinance a home loan. Last year, more than 60 percent of home-purchase loans and about 45 percent of refinance loans to black homebuyers were insured or guaranteed by either FHA or VA.

“As the leading advocate for homeownership and housing issues, NAR knows that without FHA mortgage insurance, our housing market could never start to recover,” Golder said.

FHA’s decline in reserves is in part a reflection of a projected change in home price values, and is not tied to excessive increases in defaults or unsound underwriting practices, she said. In citing the recent FHA audit, Golder said, “If FHA makes no changes to the way it does business today, the reserves will actually exceed 2 percent in the next several years. FHA has sufficient reserves.”

FHA cash reserves and capital reserves give the agency combined assets of $30.4 billion—enough to pay all claims over a 30-year period. Most banks are required to hold reserves sufficient to pay only one year of claims. “REALTORS® strongly believe that FHA is taking the necessary steps to assure its financial solvency,” Golder said.

“We look forward to working with the Department of Housing and Urban Development. We have confidence that FHA Commissioner Dave Stevens will do what’s needed to ensure the financial health and stability of the FHA fund. We encourage FHA to take steps that will have the least impact on FHA borrowers who are such an important part of our housing and economic recovery,” said Golder.

NAR strongly opposes H.R. 3706, the “FHA Taxpayer Protection Act of 2009,” which would increase FHA’s downpayment requirement. The bill would not add anything to FHA reserves but would put homeownership out of reach for many creditworthy borrowers.

“REALTORS® believe that the best way to ensure FHA’s success is to strengthen it,” she said.

Golder also thanked Chairman Barney Frank (D-Mass.) and the committee for passing legislation to extend the higher loan limits through 2010, but urged the committee to make the higher limits permanent. “The higher limits are not just for a few states with high median prices. There are currently 245 counties in 28 states that have high cost limits—this is a national issue,” she said.

Source: NAR

Mortgage Applications Rise Over Thanksgiving

Mortgage applications rose last week, according to the Mortgage Bankers Association weekly survey.

On a seasonally adjusted basis, mortgage loan applications increased 2.1 percent compared to the previous week. The seasonally adjusted purchase index increased 4.1 percent from the previous week, while the refinance index rose 1.7 percent.

On an unadjusted basis – reflecting the Thanksgiving holiday – the purchase index decreased 30.4 percent compared with the previous week and was 34.9 percent lower than it was the same week a year ago.

Mortgage rates continued to decline, with 30-year fixed rates reaching their lowest level since May.

30-year fixed-rate mortgages decreased to 4.79 percent from 4.82 percent;
15-year fixed-rate mortgages decreased to 4.27 percent from 4.32 percent;
1-year ARMs decreased to 6.56 percent from 6.66 percent.

Source: Mortgage Bankers Association (12/02/2009)

Tax Credit Quandaries Answered

The complexity of new home buyer tax credits leaves potential buyers with many questions. Here are answers to some of the most confusing:

How does a current home owner qualify for the $6,500 credit?
Buyers must have lived in their homes for at least five out of the last eight years. The home they buy must become their primary residence, but buyers don’t have to sell their previous home. They can use the previous home as a rental or a second home and still claim the credit.

Does the new home have to be more expensive than the one the buyer currently owns?
No. It is fine to use it to downsize. If the property sells for more than $800,000, the buyers don’t qualify.

Can buyers who are building a new home claim the credit?
Yes, although the contract must be in place by April 30 and the buyer must move in by July 1.

Can buyers claim the credit if they purchase a home from a relative?
No. The legislation prohibits taxpayers from claiming the credit if the sale is between “related parties,” including parent, grandparent, child, or grandchild.

Source: USA Today, Sandra Block (11/24/2009)

Foreclosures Becoming Party Central

Foreclosed and vacant homes are becoming the spot of choice for some entrepreneurial partiers.

Police around the country are busting young people who either rent vacant houses for a bash or just sneak in.

In San Diego County, California, Sheriff’s Office Detective Jeff Lauhon says some well-organized entrepreneurs were asking real estate professionals for tours of large foreclosed homes in remote places. While touring the property, they would open a window or unlock an outside door, so they could return and throw a party.

“It turned into a business venture. They were charging admission to cover the cost of alcohol and to make a good profit,” Lauhon says.

In Tempe, Ariz., another party town, patrol officers have been assigned lists of foreclosed homes so officers can make sure nothing is going on, says Sgt. Steve Carbajal.

Source: USA Today, Larry Copeland (11/23/2009)

Existing-Home Sales Record Big Gains

Driven by the home buyer tax credit, existing-home sales showed another big gain in October with a strong uptrend established over the past seven months, according to the NATIONAL ASSOCIATION OF REALTORS®. At the same time, inventories have continued to decline.

Existing-home sales—including single-family, townhomes, condominiums and co-ops—surged 10.1 percent to a seasonally adjusted annual rate of 6.10 million units in October from a downwardly revised pace of 5.54 million in September, and are 23.5 percent above the 4.94 million-unit level in October 2008. Sales activity is at the highest pace since February 2007 when it hit 6.55 million.

Tax Credit Fuels Surge

Lawrence Yun, NAR chief economist, was surprised at the size of the gain. “Many buyers have been rushing to beat the deadline for the first-time buyer tax credit that was scheduled to expire at the end of this month, and similarly robust sales may be occurring in November,” he said. “With such a sale spike, a measurable decline should be anticipated in December and early next year before another surge in spring and early summer.”

Now that the tax credit has been extended and expanded, potential buyers have until April 30 to have a contract in place. “There is still a large pent-up demand that can be tapped before the tax credit expires. Our recent consumer survey further shows that 13 percent of successful first-time buyers had a previous contract that was cancelled or fell through—there likely are many more buyers who were attempting to purchase but simply ran out of time,” Yun said.

Historically low interest rates also are boosting the market. “Mortgage interest rates last month were the third lowest on record dating back to 1971,” Yun noted. According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 4.95 percent in October from 5.06 percent in September; the rate was 6.20 percent in October 2008. Last week, Freddie Mac reporter the 30-year rate dropped to 4.83 percent.

Inventory Declines

NAR President Vicki Cox Golder said strong demand by first-time buyers is creating some unusual conditions. “In parts of the country, especially in Southwestern states but also in Florida and suburban Washington D.C., we’ve been getting many reports of multiple bids in the lower price ranges with foreclosed properties getting absorbed quickly,” she said.

“In fact, low-end inventory has become very tight in many areas and in some cases buyers are becoming more aggressive. In this kind of environment it’s important to work with a REALTOR® who can walk you through the process and help you negotiate a satisfactory deal,” Golder said.

Total housing inventory at the end of October fell 3.7 percent to 3.57 million existing homes available for sale, which represents a 7.0-month supply at the current sales pace, down from an 8.0-month supply in September. Unsold inventory totals are 14.9 percent below a year ago.

“The supply of homes on the market is now at the lowest level in over two-and-a half years – we’re getting closer to a general balance between buyers and sellers,” Yun said. The last time the relative housing inventory was this low was in February 2007 when it also was at a 7.0-month supply.

Existing Home Price by Type

The national median existing-home price for all housing types was $173,100 in October, down 7.1 percent from October 2008. Distressed properties, which accounted for 30 percent of sales in October, continue to downwardly distort the median price because they usually sell at a discount relative to traditional homes in the same area.

“In the second half of 2010, if home values show consistent stabilization or even a modest increase, then home sales could remain at normal healthy levels because consumers would no longer be worried about a price overcorrection,” Yun said.

He added that low home prices also are contributing to extremely favorable affordability conditions. “With the abnormal drop in home prices over the past few years, the price-to-income ratio has fallen below the historic trend line,” Yun said. “This is adding to the buying power of the typical family, with affordability conditions this year at the highest on record dating back to 1970, but prices are beginning to flatten and are poised to rise next year.”

Single-family home sales rose 9.7 percent to a seasonally adjusted annual rate of 5.33 million in October from a pace of 4.86 million in September, and are 21.4 percent above the 4.39 million-unit pace in October 2008. The median existing single-family home price was $173,100 in October, down 6.8 percent from a year ago.

Existing condominium and co-op sales surged 13.2 percent to a seasonally adjusted annual rate of 770,000 units in October from 680,000 in September, and are 40.8 percent above the 547,000-unit level a year ago. The median existing condo price was $172,900 in October, which is 10.4 percent below October 2008.

Regional Views

Here’s a look at existing-home sales figures in different regions of the United States:

Northeast: Existing-home sales rose 11.6 percent to an annual level of 1.06 million in October, and are 27.7 percent higher than October 2008. The median price in the Northeast was $235,400, down 2.6 percent from a year ago.

Midwest: Existing-home sales surged 14.4 percent in October to a pace of 1.43 million and are 28.8 percent above a year ago. The median price in the Midwest was $146,600, a gain of 1.1 percent from October 2008.

South: Existing-home sales rose 12.7 percent to an annual level of 2.30 million in October and are 25.7 percent higher than October 2008. The median price in the South was $151,100, down 6.3 percent from a year ago.

West: Existing-home sales increased 1.6 percent to an annual rate of 1.31 million in October and are 12.0 percent above a year ago. The median price in the West was $220,200, which is 14.7 percent below October 2008.

—NAR