Thursday, April 24, 2014

Real estate’s spring buying season fails to launch

Mortgage giants Fannie Mae and Freddie Mac have lowered their forecasts for home sales this year, citing low inventory and the affordability crunch that shortage of homes has spurred.
After relatively weak home sales in the first two months of the year, Freddie and Fannie now predict there will be 5.5 million sales in 2014, flat from last year.
In a statement, Frank Nothaft, Freddie Mac’s vice president and chief economist, said the spring home buying season had started with “mixed signals.”
“Tight inventory may pose a significant challenge for homebuyers in many markets across the country, which may result in higher home prices and sales being lower than expected,” he said.
“This is good news for those markets that have room to run on the house price appreciation front, but it’s also going to increase the affordability pinch in many markets, especially along the country’s east and west coasts. Two indicators that are supporting local housing activity are rising consumer confidence and declining unemployment rates.”
While severe winter weather could account for some of the weakness earlier this year, a sharp decline in housing affordability is also to blame, according to Fannie Mae. For instance, existing-home sales in February were down about 7 percent from a year ago, but the decline was due to sales of lower-priced homes costing $250,000 or less — higher-priced homes rose across the board.

This suggests “that declining affordability conditions and lean inventory of bargain-priced homes — consistent with a shrinking pipeline of foreclosure properties — contributed largely to the dismal performance of existing-home sales,” Fannie Mae said.
Inventory rose to its highest level in nearly a year in February, to a 5.2 months’ supply, but that is still low by historical standards and has helped boost home prices despite sluggish demand, Fannie Mae added.
Nonetheless, Fannie Mae Chief Economist Doug Duncan said the recent loss of momentum in the housing market is likely to be temporary.
“Overall, we expect housing to add 0.3 percentage points to economic growth this year. While existing-home sales have remained essentially flat, we continue to believe that new-home sales will increase at a double-digit pace,” he said in a statement.
“Housing starts are expected to rise to about 1.05 million units in 2014, up from 925,000 in 2013 but approximately 50,000 fewer than we expected at the beginning of the year due to builders’ credit and labor constraints.”
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Yulonda Evans

Monday, April 21, 2014

3 Types of Professional Home Buyers

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A Few Types of Investors

During the process of choosing the right investor for your property, it is imperative to understand what type of investor he or she is.  Is the investor a “fix and flip” kind?  A “buy and hold”?  Are they planning on being the end buyer at all thus garnering them the label of “wholesaler”?  You may think this doesn’t matter but as we will see, it is extremely important to understand what type of investor you are entering a contract with and what it means for you and your property.

The “Buy and Hold”

This individual will want to purchase a property with the plan to hold onto it for a long period of time as a rental property.  In this case, the subject property does not necessarily need to have much equity for them to purchase, just good rental potential with cash flow.  Although be aware that a home with little to no equity means that you, as the seller, will not walk away with much in your pocket.  Additionally, this type of investor is going to want to purchase a property that will not require a huge monetary investment in order to get it “rent ready”.

The “Wholesaler”

This type of investor is the one that could pose the most risk to you, the seller.  In this case, the investor you are meeting with initially will not be the end buyer of your house.  Wholesalers typically will get a property under contract with a seller for one price and then try and find an end buyer to “flip” the property (really the contract) to before the agreed close date.  This is completely legal and has the potential to be a win-win if it’s done correctly and with full disclosure.   However, please be aware that if you, the homeowner, are under any sort of time constraints, this can be disastrous for you.  The investor will have protected himself with some sort of way out of the contract, usually an ‘option’ or ‘due diligence’ period.  If they cannot find an end buyer, they can walk away, leaving you 14-30 days down the road in the same situation you were in.  If you are facing foreclosure, this can be catastrophic.
Selling to an investor should be a positive and relatively simple process.  After all selling your house to an investor at a discount should be full of benefits to you and your situation.   Do your home work!  Find out what type of investor you are dealing with.  Ask questions and don’t accept vague answers.  There are many honest, professional investors out there.  Don’t settle until you find the one that’s right for your unique real estate situation.

The “Fix and Flip”

He or she purchases a property that has equity at about a maximum of 70% market value, remodels it, or fixes it up in a relatively short amount of time (usually around 4-8 weeks), and then sells it on the open market.  For the investor there’s a lot of time and money tied up in a deal like this but also an opportunity to turn a nice sized profit this way.  This type of investor may require an “option period” during the contract to bring out an inspector and get repair bids but a seasoned investor should have an excellent idea of what things cost and be able to quickly calculate fix-up costs with a thorough walk-through.  They may or may not submit a cash offer.  Many investors work with a line-of-credit through a local bank that works just as well as cash.  This conserves their capital which, in many cases, the investor may use for fix-up costs.  It could normally take anywhere from 14-30 days to close with this type of  bank line-of-credit.  Whereas a cash buyer may be able to close somewhat faster, however it is important to realize that just because someone is offering a cash purchase does not mean you can close tomorrow.  The title company still will need time to review the deed, check for outstanding liens, and draw up necessary documentation.
source: Jerred Morris(realtytimes)
Yulonda Evans
Exceeding Expectations

Monday, April 7, 2014

2014 Real Estate Predictions
Did the Predictions Hold Up?
The U.S. real estate market made a robust comeback in 2013, surpassing expectations of many economists, as the combination of low inventories and historically low interest rates caused home prices to rise and even helped fuel bidding wars in some markets, surpassing the expectations of many economists. While positive trends, such as increasing home values, are expected to continue into 2014, mortgage rates are also expected to rise in the coming year and could put a damper on home buyers’ abilities to afford new homes.
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Sunday, April 6, 2014

Eroding home affordability carries bubble concerns | Inman News

Are you Concerned about our New Housing Market?  Check Out the Link Below, It may change your mind about how you feel about today's market

Eroding home affordability carries bubble concerns | Inman News

Southern Cali Home Sales takes a Plunge in February

Recent statistics have shown that the housing market has stayed dormant throughout February – home prices have remained essentially flat while sales took a tumble – leading many experts to believe the market has flattened. The question on everyone’s mind now, how much price appreciation does 2014 have in store for us? DataQuick reported earlier in the month that buyers have continued to hold back throughout the month of February while more homes were put on the market. While the median home price in Southern California inched up by about 0.8% from January, sales plunged by a whopping 12% compared to February of 2013 – lower than any February since 2008! Prices have actually stayed relatively flat since June of 2013 – about 20% higher than February of last year – when we saw the market stabilize after many of the great leaps and bounds made by the market in months prior. Now, many of the investors who had once flooded the market have left, and the market is relying on first-time home buyers and families looking for trade up keep the recovery going. The real question is whether or not this will happen in our still-weak economy. There are a couple factors playing against these would-be homebuyers. While prices have stayed somewhat stable, many buyers still struggle with high prices and interest rates, pushing homes into a range where they are unaffordable. Paired with the lack of homes available on the market, many of these potential buyers simply cannot find a home they can afford. In regards to the matter, Richard Green, Director of USC’s Lusk Center for Real Estate, was quoted saying, “We’ve basically run out of houses that people can afford. Three or four years ago, if you were a family making $60,000 there was plenty of stuff you could buy in Southern California. That’s gone.” Whether or not we’ll see much appreciation in Southern California throughout 2014 is still up in the air, but for now things are looking pretty ugly.