Tips for Securing a Vacant House

If a client’s home is going to be empty for the winter or even just the holiday season, here are some suggestions from police officers for keeping that property secure and discouraging intruders:

Sign the house up for security checks from the local police department. Generally, the officers assigned to the area will keep an eye on the property at no charge.

If there is a security system, make sure the security company knows the house will be empty and has an emergency contact.

Stop the newspaper and mail. Ask neighbors to keep an eye out for other unsolicited paper that may gather on the driveway or in the mailbox.

Arrange for a snow-removal or lawn care service.

If the property is winterized, post that information where it can be seen from the inside, but not the outside.

Remove anything from the house that is obviously valuable.
Put the lights on timers. Don’t leave lights on all night because that will alert intruders that the house is unoccupied.Make sure all the windows and doors are locked.Take a video of the house to make damages and theft easier to prove.


Source: The Charlotte Observer, Dan Tierney, Erica Beshears, and Lena Warmack (12/14/06)

Bump in New-Home Sales Considered Temporary

Sales of new homes rose in August, but the gain is expected to be temporary, as the housing industry struggles with a near-record level of unsold homes.The U.S. Department of Commerce reports new-home sales increased 4.1 percent last month, but even with the increase, the median price of a new home fell to $237,000, a drop of 1.3 percent from August 2005. It was the first price decline from one year to the next since late 2003.Sales of existing homes fell for a fifth straight month in August, and the median price of an existing home dipped on a year-to-year basis for the first time in more than a decade. Construction of new homes and apartments fell 6 percent.Analysts were unimpressed with the August rise in new-home sales, noting that it followed a 7.5 percent drop in July and left sales 17.4 percent below the pace of a year ago.“August is just a blip. Housing is still headed down,” says Mark Zandi, chief economist at Economy.com.Many analysts say the government statistics understate the drop in new-home prices because they do not pick up heavy discounting as builders offer incentives. The inventory of unsold homes declined slightly, to 568,000 houses, but remains the second-highest level on record after July’s backlog of 570,000 unsold homes.Source: The Associated Press, Martin Crutsinger (09/28/06)

What to Consider Before a Home Auction

Auctions are growing in popularity. Here are some basics that you should consider if you're thinking about selling a client's home through an auction.

Is the property a good candidate for auction? Are the sellers willing to close within 30 days of the sale? Can they handle an uncertain final sales price?

Choose an auction company with experience, referrals, and professional affiliations with organizations such as the National Auctioneers Association.

Plan to meet with a company representative, who will visit the home to assess the property.

Select an auction method. An absolute auction does not set a minimum amount, allowing the property to be sold at the highest bid. This could be above or below the price owners hoped to get. A reserve auction allows owners to accept or reject the final bid. Some auctions start at a minimum amount, which may or may not be disclosed to the public before the auction day.

Plan a marketing strategy that aggressively uses banners, radio and TV commercials, and other techniques.

Prepare for tours. As with any sale, the home must look its best.
Finish the sale. Once the homeowner accepts the bid, both sides enter a no-contingency contract to close within 30 days.

How to Get the Most from a Cooling Market

A drop-off in buyer demand and rising home inventories has made putting a house on the market trickier for home owners whose properties appreciated during the boom and who hope to retain their gains, says a new report on RealEstateJournal.com, The Wall Street Journal's guide to property.RealEstateJournal.com offers these tips for selling a home in a cooling market:

1. Size up the playing field. Study your local market and investigate other homes for sale, local asking prices and what buyers are paying.

2. Price competitively. If a home is overpriced, a buyer will dismiss it and move on to the next one. Price a residence just below what the market will bear.

3. Do your legwork. Use the Internet and networking to locate a buyer.

4. Don't delay. Point out to a seller that even if an offer isn’t all he had hoped, taking it instead of waiting for a better deal can save money in the long run.

5. Negotiate. Offer concessions to potential buyers, such as making minor fixes. Small expenditures speed a sale and, ultimately, preserve price gains.

6. Play up a home's assets. Impress buyers with a repainted interior, clean closets, nice landscaping and an orderly garage.

Source: RealEstateJournal.com (08/01/2006)

Home Sales Dip in June as Market Stabilizes

Existing-home sales declined modestly in June, while home prices were up slightly from a year ago, according to the NATIONAL ASSOCIATION OF REALTORS®.

Total existing-home sales — including single-family, townhomes, condominiums and co-ops — declined 1.3 percent to a seasonally adjusted annual rate1 of 6.62 million units in June from an upwardly revised level of 6.71 million May. Last month’s sales were 8.9 percent below the 7.27 million-unit pace in June 2005.David Lereah, NAR’s chief economist, says the housing market is flattening-out. “Over the last three months home sales have held in a narrow range, easing to a level that is near our annual projection, which tells us the market is stabilizing,” he said. “At the same time, sellers have recognized that they need to be more competitive in their pricing given the rise in housing inventories. Home prices are only a little higher than a year ago.”The national median existing-home price for all housing types was $231,000 in June, up 0.9 percent from June 2005 when the median was $229,000. The median is a typical market price where half of the homes sold for more and half sold for less.“The change in price performance is directly tied to housing inventories; a year ago we had a lean supply of homes and a sellers’ market, with monthly home sales at an all-time record high,” Lereah said. Total housing inventory levels rose 3.8 percent at the end of June to 3.73 million existing homes available for sale, which represents a 6.8-month supply at the current sales pace. By contrast, in June 2005, there was a tight 4.4-month supply on the market.

New Opportunities for Home Buyers

NAR President Thomas M. Stevens from Vienna, Va., said opportunities have opened for home buyers. “People who were discouraged by the bidding wars that were so common over the last few years are finding more choices now,” said Stevens, senior vice president of NRT Inc. “Relative to the five-year housing boom, this year is a buyer’s market in much of the country with plentiful supply, along with interest rates which remain historically favorable, so it’s a good time to buy a home.”According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.68 percent in June, up from 6.60 percent in May; the rate was 5.58 percent in June 2005.Single-family home sales eased 0.9 percent to a seasonally adjusted annual rate of 5.81 million in June from an upwardly revised 5.86 million in May, and were 8.2 percent below the 6.33 million-unit pace in June 2005. The median existing single-family home price was $231,500 in June, up 1.1 percent from a year ago.Existing condominium and cooperative housing sales fell 5.5 percent to a seasonally adjusted annual rate of 805,000 units in June from a pace of 852,000 in May, and were 14.6 percent below the 943,000-unit level in June 2005. The median existing condo price3 was $226,900 in June, down 2.1 percent from a year earlier.

Regional Market Conditions

Existing-home sales in the Midwest were unchanged in June, holding at a level of 1.52 million, and were 6.2 percent lower than a year ago. The median price in the Midwest was $175,000, which is 1.7 percent below June 2005.Existing-home sales in the West also were unchanged, at an annual pace of 1.41 million in June, and were 17.1 percent lower than June 2005. The median price in the West was $342,000, the same as a year ago.Existing-home sales in the South eased 2.3 percent to a pace of 2.57 million in June, and were 5.5 percent below June 2005. The median existing-home price in the South was $191,000, down 0.5 percent from a year earlier.Existing-home sales in the Northeast declined 3.5 percent to an annual sales rate of 1.11 million units in June, and were 9.8 percent below a year ago. The median price in the Northeast was $298,000, up 7.2 percent from June 2005.— NAR

Bankrate: Bernanke Keeps Mortgage Rates in Flux

Fixed mortgage rates are more than one full percentage point higher than one year ago

RISMEDIA, July 21, 2006—Compared to one week ago, mortgage rates inched higher on both fixed and adjustable rate loans. The average 30-year fixed rate mortgage rose to 6.89 percent from 6.87 percent last week. According to Bankrate.com's weekly national survey of large lenders, the 30-year fixed rate mortgages had an average of 0.3 discount and origination points. The average 15-year fixed rate mortgage, popular for refinancing, increased by a similar amount to 6.49 percent. On larger loans, the average jumbo 30-year fixed rate is now 7.05 percent. Adjustable rate mortgages were no different. The average 5/1 adjustable rate mortgage notched higher to 6.55 percent, and the average one-year ARM crept higher to 6.13 percent. Mortgage rates spent much of the past week treading water, but that all changed once Fed Chairman Ben Bernanke appeared before the Senate Banking Committee Wednesday morning. Almost immediately, Bernanke's words soothed investors concerned about the Fed raising interest rates too far. Yields on government securities started to fall, and mortgage rates declined right along with them. Treasury yields and mortgage rates dipped sharply between 10 a.m. and 11 a.m. Eastern time as Bernanke was speaking. Bankrate.com's weekly survey was largely complete prior to rates declining. Fixed mortgage rates are more than one full percentage point higher than one year ago. In July 2005, the average 30-year fixed mortgage rate was 5.78 percent, meaning that the monthly payment on a loan of $165,000 was $966.04. With the average 30-year fixed rate now 6.89 percent, the same loan originated today would carry a payment of $1,085.59. Despite recent increases, fixed mortgage rates remain an attractive refinancing alternative for adjustable rate borrowers facing sharp payment adjustments.

Real estate's July report card

This is the latest from John Burns, founder of Real Estate Consulting in Irvine, Calif.

Guest perspective: Will housing have a hard or soft landing?

The housing market has had four significant downturns in the last 20 years. The current downturn has been swifter than any of the prior four. The extent of this correction has been similar to the two "soft landings," but we don't seem to have landed yet.

1988-91: The 1988-1991 period was a hard landing, with many companies going out of business. The reasons for the severity were primarily: 1) Job losses, particularly in California and Florida; 2) government-induced wipeout of the savings and loan industry, which was providing most of the capital to builders; and 3) some speculative price appreciation that caused affordability problems. The job losses also led to horrendous consumer confidence.

1993-1995 and 1998-2001: The two soft landings in this cycle were primarily driven by rising interest rates. The job losses in 2001 were primarily in the Midwest and a few technology-dependent markets.
Thus far in the current cycle, we have landed to "typical soft landing" conditions -- not everywhere, but nationally. Significant price appreciation from 2002-2005, which was driven by speculative investors and homeowners, followed by rising interest rates, have created affordability problems. Thus far, the job market and consumer confidence are holding up just fine, which leads us to believe that consumers will return once interest rates stabilize and the investors have sold their holdings. We don't know how long this will take but we are fairly certain that there are too many listings for the recovery to occur sometime this year.

The landing will probably vary by market and even submarket. The landing is likely to be soft (which we define to be the majority of builders still making positive profits) because there is nothing wrong with the economy. However, each market has its own issues that need to be worked through.

These issues include:

New-home supply: In some markets, there is an oversupply of new construction in the peripheral areas.
Resale supply: In most markets, there is an oversupply of resale listings, which is likely to be exacerbated by an almost certain increase in forced sales due to adjustable-rate mortgage resets.

Affordability: In markets that were flooded with speculators, there are affordability problems that are likely to be with us for many years to come.

Demand: Job losses in the Midwest and a few other markets are also a problem, but job growth remains solid in the major housing markets in the South and West.

The length of time that it will take to work through these issues is impossible to forecast. However, if the Fed can a) maintain positive job growth of 1.5 percent-plus per year and b) keep mortgage rates from rising too much further, most markets will return to normal once resale supply returns to a normal level. Builders who paid high land prices in the peripheral areas are probably going to have the toughest time during this adjustment period.

Our grading system of the economy and the housing market is a "bell curve" model, with statistics at an all-time high receiving an "A," statistics near the long-term average receiving a "C," and the worst times ever receiving an "F." In this grading system, it is OK to be a "C" student.

Here is our current report card:

Economic Growth: C

The U.S. economy is healthy. Economic growth in the first quarter was revised to 5.6 percent. Growth in June was slower than expected but still solid, adding 1.85 million jobs in the last 12 months. The core CPI inflation rose to 2.4 percent, and total inflation was 4.2 percent.

Leading Indicators: C-

The leading indicators declined for the second month, suggesting that economic growth is likely to be more moderate than the pace of the first quarter. The spread between the 2-year and 10-year Treasury was essentially 0 at month-end, which is concerning. The S&P Super Homebuilding Index continues to decline, having fallen 36 percent in the last year and 41 percent since its peak.

Mortgage Rates: B-

Mortgage rates continued to rise in June, with the one-year adjustable mortgage rate 19 basis points higher at 5.82 percent at month-end, while fixed mortgage rates rose to 6.78 percent. The Fed raised its short-term interest-rate target for the 17th consecutive time to 5.25 percent, hinting that at least one more increase is likely.

Consumer Behavior: C+

Consumer confidence rose in June to 105.7, due largely to an improved outlook for the next six months and for the labor market. While consumers may be delaying home purchases because of affordability issues or investment perceptions, they have a confident outlook for the future, which is critical to a housing market recovery.

Existing-Home Market: B

While home-buying activity remains high, rising listings is creating a much more competitive housing market. May sales of existing homes fell to a 6.7 million annual sales rate, down nearly 7 percent from one year ago. The inventory of existing homes continues to rise, rising to 6.5 months of supply, the highest value since July 1997. There are a record number 3.6 million existing homes available for sale.

New-Home Market: B-

May new-home sales rose to a 1.23 million-unit annual rate, higher than many economists expected. New-home sales fell only in the Northeast during the month. The Housing Market Index, which measures builder confidence, dropped another four points to 42, a decline of 42 percent in the last year. Unsold new-home inventory has fallen to 5.5 months of supply, while the supply of completed homes fell slightly to 1.2 months.

Housing Supply: C+

Construction is declining. Housing starts increased to 1.96 million in May from 1.86 million in April, but remain down 4 percent from one year ago. Single-family starts rose to 1.58 million. Permit activity fell for the fourth month in a row to 1.93 million units, more than 8 percent below the permit level in May 2005.