Tuesday, May 31, 2011

Gas Prices Impact Real Estate Choices

Gas prices have been steadily rising. The average price of a gallon has increased more than 30 percent over the past 12 months. Although it has come down a few cents in the past few weeks, economists expect it to remain well above the $3 per gallon mark through the rest of 2011. This not only affects the type of cars Americans drive and their driving habits, but it also impacts their housing choices. More buyers are choosing homes closer to shops and services because of the increase in gas prices.

Home buyers are not only thinking about carpooling and taking public transportation to work, but they are also rethinking their long commutes to work. According to a Coldwell Banker survey of 1,188 of its real estate agents regarding buyer trends, 75 percent said higher gas prices are influencing homebuyers about their decisions purchase homes. 89 percent of the respondents said buyers want to look for homes closer to work, and a whopping 93 percent said buyers would choose to live closer to their work if gas prices continue to rise.

Since more employers are providing flexibility to work from home, more buyers are expected to look for homes which allow them to telecommute. In fact, 77 percent of the surveyed agents said more buyers are interested in having or creating a home office.

Since most buyers wouldn’t fancy living in their gas-sipping Toyota Prius, they are thinking about considering urban living. 56 percent of the surveyed agents said compared to 5 years back, more home buyers are contemplating urban living as a way of reducing their commute time and distance. The main attraction is the ability to walk to work, buy groceries and hop on public transportation. It is no wonder that smart growth communities are becoming popular in several metros. People seem to like the attractive mix of affordable, middle-income, and up-scale housing with restaurants, theaters, offices and retailers located within the community. Many of them are located near or close to a public transportation facility, which means people can walk to work, ride a bike or take the bus or train.

"The decision to buy a home has always been tailored around the personal, multi-faceted lifestyle needs of each buyer," said Jim Gillespie, CEO of Coldwell Banker Real Estate. "Today, rising fuel costs and a person's decision to commute or perhaps work remotely are additional factors of the decision home buyers must consider."

When a nation is in recession, real estate typically helps in recovery. But given the weak economy combined with sustained high gas prices, real estate is not expected to get the country out of this recession. But it is definitely interrupting the pattern of unending urban sprawl in most metros.

Are gas prices influencing your decision about where you would buy your home? Are you planning to look for smart growth urban living communities? Let us know the choices and changes you are considering.

CBAR made the news in Utah!

Check it out: http://utah-mls.net/realty-listings/latest-listings-news-6/

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Monday, May 9, 2011

Existing Home Sales Rise in March

There have been some signs lately about the housing market crawling its way back slowly after it bottomed out last July. According to the National Association of Realtors (NAR), sales of existing homes in the United States rose 3.7% in March to a seasonally adjusted annual rate of 5.1 million.

These results were better than expected because many experts and economists had predicted that number to be close to 5 million units. In February, 4.88 million existing homes were sold, while the initial estimate was 4.92 million units. Although March's rate was 24.8% below the November 2009 peak of 6.49 million units, the fact that existing home sales have increased in six of the past eight months is being considered a small but sure step towards the U.S. housing market recovery.

In March, three of the four U.S. housing regions saw an increase in existing home sales. The South led the way with an 8.9% increase in resales to an annual level of 1.99 million, followed by a 3.9% increase in the Northeast to an annual level of 800,000, and 1% in the Midwest to an annual rate of

1.06 million. Sales of existing homes fell 0.8% in the West to an annual level of 1.25 million. 

Sales of single-family homes grew by 4% in March to a seasonally adjusted annual rate of 4.45 million units. Sales of condos rose 1.6% to an annual rate of 650,000. Some housing analysts argue that sales of existing homes in March of this year were lower than the 5.44 million units sold in March 2010. Although it is true that sales were at a higher level between the months of March and June 2010, these elevated levels were due to buyers rushing to take advantage of the federal tax credits for homebuyers.

According to a NAR survey, first-time buyers purchased 33% of homes in March, compared with 34% in February. Cash sales accounted for 35% of the market share in March, up from 33% in February. Investors accounted for 22% of sales, up from 19% in February. The remaining 45% were purchased by repeat buyers.

The improving sales pattern is likely to continue, said NAR Chief Economist Lawrence Yun. "Existing-home sales have risen in six of the past eight months, so we're clearly on a recovery path," he said. "With rising jobs and excellent affordability conditions, we project moderate improvements into 2012, but not every month will show a gain-primarily because some buyers are finding it too difficult to obtain a mortgage. For those fortunate enough to qualify for financing, monthly mortgage payments as a percentage of income have been at record lows."

"Although home sales are coming back without a federal stimulus, sales would be notably stronger if mortgage lending would return to the normal, safe standards that were in place a decade ago-before the loose lending practices that created the unprecedented boom-and-bust cycle," Yun explained. 

NAR's housing affordability index shows that the typical monthly mortgage principal and interest payment for the purchase of a median-priced existing home is only 13% of gross household income, the lowest since records began in 1970. According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.84% in March, down from 4.95% in February.

The inventory of existing homes decreased to 8.4 months in March, as compared to 8.5 months in February. If sales continue at this rate for the rest of 2011, this year will be better than 2010 for existing home sales.

Congress eliminates all funding of HUD “Housing Counseling Assistance Program”

The recent budget approval by the U.S. Congress avoided a government shutdown and ensured that the federal government would be operational through the end of this fiscal year (FY). The final budget agreement contains numerous spending cuts across a variety of domestic discretionary programs, including the elimination of all funding, totaling $88 million, for the Housing & Urban Development Department’s (HUD) Housing Counseling Assistance Program. The program helps millions of home owners by providing free counseling on foreclosure, reverse mortgages, refinancing, and pre-purchase services.
These cuts include all funding for federally mandated reverse mortgage counseling. Borrowers seeking FHA-insured reverse mortgage are mandated by federal guidelines to first go through HUD-approved reverse mortgage counseling. In many cases, local housing counseling agencies – approved and funded in part by HUD – are the only source of help for distressed homeowners.
"This unique counseling helps older homeowners understand the costs, benefits, and risks associated with these loans,” said Barbara Stucki, of the National Council on Aging (NCOA), one of eight intermediaries that provide this counseling service nationwide. “Without this funding, older Americans who can least afford it may have to pay for this critical advice out-of-pocket,” Stucki said. 
The federal agency, state housing associations, and even some lawmakers themselves have touted such HUD-approved counselors as the go-to source for homeowners struggling to make their mortgage payments. Their services are free and organizations working to educate borrowers about foreclosure relief scams position HUD-approved counselors as their strongest defense.
Over the past two years, HUD-approved housing counselors have helped more than 4 million families struggling to keep their homes, according to the federal agency.  Housing experts state that the HUD funding provides much-needed assistance to struggling homeowners across the country — and the housing recovery — could be severely impacted by its elimination.
Faith Schwartz, executive director of HOPE NOW, said, “Housing counseling dollars remain critical to homeowners at risk…Housing counselors have a proven track record of success with regard to pre-purchase and foreclosure prevention counseling. Eliminating an important source of funding is concerning, as industry and non-profit counselors have been working together to keep people in their homes.”
Despite having a history of bipartisan support, the program lost its entire budget. Eliminating this program will cause many nonprofits to cut these free counseling services and lay off highly skilled staff. A lot of people are shocked that Congress would cut such a results-driven program especially with data showing that access to counseling reduces default rates. 
Many industry analysts feel cutting the nation’s nonprofit housing counseling system is a bad public policy, especially when the country is burdened by record foreclosures, high unemployment and economic uncertainties. Many nonprofit organizations are warning about an increase in foreclosures due to the elimination of the Housing Counseling Assistance Program. Scam artists and real estate speculators are expected to come out in droves to take undue advantage of vulnerable homeowners.