Interest rates have not been this low in nearly 50 years.  And home prices are now at their lowest.  This is a perfect time to buy a home or investment property and leverage the best “buyers’ markets” in recent history. 

 If you want results, a smooth purchase process, and timely closing,
then contact High Desert’s Top Producing Agents
Lynne Lamoreaux and partner Shoray Wolfe
and put the power of  “Lynne & Shoray" to work for you! 

                      Shoray Wolfe                         Lynne Lamoreaux
                      760-514-1314                         760-240-4022
                       CA LIC # 01882542                        CA LIC # 00827577

Topics below:

-   Home Affordability Offering Up 40-Year Deals

-   Housing picture expected to brighten in 2012.

-   Smaller homes to grow in demand.

-   Tough times Ahead for Rental Market.

-   Three reasons to buy now.-   Has housing reached a "Recovery Path"?

-   Rental costs about to take off - Reasons why now is a good time to buy.

-   Housing shortage on the horizone.

-   Bargain seeking home buyers on the hunt.

-   Shadow Inventory Shrinks to 1.8 million homes.

-   How can you beat a cash bidder?

-   Next 2 years is prime time for real estate investors

-   Future growth in Housing Demand.

-   The Importance of Credit Scores In Mortgage Rates.

-  What’s worse for credit score — foreclosure, short sale or deed in lieu?

Home Affordability Offering Up 40-Year Deals

 HOUSING PICTURE EXPECTED TO BRIGHTEN in 2012. 

Tough Times Ahead for Rental Market:

While there appears to be an excess in rental housing presently, renters will likely find a very challenging rental market in the months ahead as vacancy rates vanish and rents rise, warns The Harvard Joint Center for Housing Studies in its latest report on America’s rental housing.

Contributing to the challenge, a dwindling number of multifamily units are being built. Typically, the development of new multifamily housing needs plenty of lead time too. Therefore, as more people opt to rent, vacancy rates will continue to disappear, which will cause rents to rise.

Owners and investors of rental housing stand to profit in the coming months from the tightening rental market. But for renters, they’ll find the rental market increasingly challenging, the study says.

Single-family home foreclosures may help relieve some of the pressure in the rental market, according to the study. With the number of foreclosures skyrocketing, some of these single-family home foreclosures may add to the number of rental units and even help stabilize distressed neighborhoods that have been badly hit by the foreclosure crisis, the study says.

Source: “Harvard Study Warns of Rent Bubble,” RISMedia (June 2, 2011)

Has Housing Reached a 'Recovery Path'?

Sales of existing homes rose slightly in March, marking the sixth consecutive monthly rise for existing home sales in the last eight months, the National Association of REALTORS reported Wednesday.

"We're clearly on a recovery path," says Lawrence Yun, NAR chief economist.

Existing home sales rose 3.7 percent in March from February, as distressed sales, such as those in foreclosure, continued to make up a big bulk of home sales (40 percent of all purchases).

"At this point, we're likely to see a steady improvement in sales," says economist Joel Naroff of Naroff Economic Advisors.

So just in time for the spring buying season, here’s what economists have to say about who’s buying and currently driving the market:

Investors: All-cash deals last month made up a record number of sales, accounting for 35 percent of all resold homes. Investors continue to make up a big part of those cash deals. Investors are buying distressed homes and flipping them for a slight profit or turning them into rentals, says Patrick Newport, economist at IHS Global Insight.

Luxury consumers: Some real estate professionals are reporting a pick up in luxury markets in some cities too. "The confidence is back in the market," says Neil Palmer, CEO at Christie’s International Real Estate.

Foreign buyers: Coastal markets, in particular, are seeing a surge of foreign buyers, such as in New York, Palm Beach, Fla., and San Francisco, AOL Real Estate news reports.

Traditional buyers: Traditional buyers are also re-emerging. Mortgage applications to buy homes rose 10 percent over a seven-week period, according to the Mortgage Bankers Association’s most recent report. "This pickup in demand should show up in improved existing home sales in April and May, unless lending conditions tighten," Newport says.

The market is making “slow, steady progress” and demand in housing is rising even with higher mortgage rates “so that's encouraging,” Pierre Ellis, an economist at Decision Economics in New York, told The New York Times.

"It's the new financial psychology," says Jarvis Slade Jr., Christie's managing director for the Americas. "We've had two years of hesitation, the sellers are realistic, the buyers confident and cautious, but Americans are starting to feel better."

Source: “Rising home sales point to a recovery; Prices expected to keep falling 5% to 7% this year,” USA Today (April 21, 2011), “U.S. Home Sales Top Forecasts in March,” The New York Times (April 21, 2011), and “Rich People Buying Homes Again--Should You?” AOL Real Estate News (April 20, 2011)

Rental Costs Are About to Takeoff
Reasons NOW Is a Great Time to Buy - By The KCM Crew

We are often asked whether it is better to rent or buy in the current housing market. The answer to that question is: "It all depends."

There are certain situations where renting short term probably makes sense. It may make sense if you are retiring to a different region of the country and are not yet sure where you want to set down roots for the next 25 years. It may make sense if you have a one-year employment contract that will probably require a move to another place upon termination.

However, in most other cases, renting right now makes little sense for several reasons.

• Even though prices may still soften, waiting to buy wouldn't make sense as the cost of owning a home may still increase.
• Mortgages may soon become much more expensive than they are right now.
• Owning a home is less expensive than renting a home in 72% of major U.S. cities.
• Rental costs are about to explode.

Let's take a closer look at the last reason. We have often said that the cost of anything is based on supply and demand. The number of widgets for sale and the number of widget buyers together create the price for widgets. That will also apply to rents. There is a much larger demand for rentals right now. The economy has forced many to leave their foreclosed homes and other buyers are afraid to plunge into homeownership.

At the same time, the supply of rentals is rapidly decreasing. When supply is rapidly decreasing and demand is quickly increasing, prices have only one place to go – and that is UP! That is exactly where rental prices are headed.

Bottom Line

Is now a good time to rent? We think not. You can buy a home today at a discounted price and get a 30-year mortgage at a historically low interest rate. You can set your housing expense for the next thirty years. On the other hand, rental costs are poised to increase for years to come.

If you have any questions about your personal situation, contact the professional who supplied you with this month’s issue of YOU Magazine.

Reprinted with permission. All Contents ©2011. Steve Harney. KCMBlog.com.

Housing Shortage on the Horizon?

Bargain-Seeking Home Buyers on the Hunt

Housing prices across the country are at multi-year lows and mixed with low interest rates bargain hunters are targeting real estate.

More investors are heading to the market looking to make cash buys for real estate, investing in second or even a third home, Reuters News reports.

"We're starting to get a lot more inquiries and assisting in transactions," says Rocco Papandrea, a senior vice president and wealth management adviser at Merill Lynch in New York. Papandrea says he’s seeing more interest in properties along the West Coast and in Colorado, as well as Florida.

Canadian buyers in particular are expected to be looking to purchase U.S. homes. The Bank of Montreal estimates that one-in-five Canadians is considering buying U.S. property.

With dropping home prices, more cities are looking to be attractive buys, such as the increasing affordability in popular vacation-home designations along the U.S. Sunbelt. For example, home prices have fallen 44 percent in Tampa, 54 percent in Phoenix, 57 percent in Las Vegas, and 49 percent in Miami, the Bank of Montreal reports.

"If the economy keeps clicking along and jobs keep growing, housing will be fine," says Dean Frankel, a portfolio manager at Urdang Capital Markets in Plymouth Meeting, Pennsylvania, who oversees around $1.7 billion in real estate equity investments.

The economy--and ultimately housing--may then get a boost from the latest unemployment report released Friday. The unemployment rate reached a two-year low of 8.8 percent in March as companies began a brisk wave of hiring, adding employees at the fastest two-month pace since before the recession even started, the Labor Department reports.

The unemployment rate has fallen a full percentage point in the last four months, which marks the sharpest drop since 1983.

Source: “U.S. Housing Market Attracting Bargain-Hunters,” Reuters News (March 31, 2011) and “Unemployment Rate Falls to 2-Year Low of 8.8 Pct.; Employers Add 216k Jobs in March,” The Associated Press (April 1, 2011)

'Shadow' Inventory Shrinks Slightly to 1.8 Million

An improving economy has helped more home owners stay current on their mortgages and banks’ willingness to do more loan modifications have all helped to slightly drop the number of distressed homes, says Sam Khater, CoreLogic senior economist.

The U.S. had 1.8 million distressed homes in January that had yet to be listed for sale — that's down slightly from 2 million homes in January 2010, market researcher CoreLogic reports.

Experts predict that number will continue to drop as the economy improves.

This “shadow” inventory includes homes that are more than 90 days delinquent on the mortgage, are in the foreclosure process, or are already bank owned, according to CoreLogic.

The states with the highest shadow inventory are New Jersey, Illinois, and Maryland, where it's estimated it will take 21 months (nearly 2 years) to sell the homes that are 90 days or more delinquent, CoreLogic reports.

Source: “Number of Unlisted ‘Shadow’ Homes Dip,” USA Today (March 31, 2011)

How Can You Beat a Cash Bidder?

Cash buyers are flooding the real estate market in record numbers to take advantage of bargain housing prices. But these buyers may put consumers who need financing at a disadvantage.

Sellers often prefer cash deals because it can mean faster closings and transactions that are less likely to fall through. Some sellers are even accepting lower offers because they are from cash buyers than higher offers from a financing buyer just because they view it as a more solid deal that will be quicker to the closing table.

So how can your financed buyers compete? Experts offer a few tips.

Get pre-approved or pre-qualified for a mortgage. “The smartest thing they can do is make sure they talk to a competent mortgage banker … to pre-approve them ahead of time,” says Mike Litzner, broker and owner of Century 21 American Homes in New York.

Show you’re in good standing. You'll improve your chances of getting a seller to accept your bid by having more cash that you’re willing to put down, showing you have a stable job, and good credit, Litzner says. Also, a well-prepared, typed-out contract that includes a cover page summary of the contract deals is another way to show you’re a serious buyer, says Dan Quinn, a real estate professional with Prudential Carruthers REALTORS® in the Silver Spring area of Maryland.

Offer more earnest money. Offering a high down payment and high deposit can also help improve your chances of beating out a cash bidder, Quinn says.

Act quickly. “What I found out is with these cash buyers, they act quickly,” Quinn says. “To compete, you have to act quickly. A lot of times, these are investors and they have a relationship with these listing agents.” Buyers' agents should develop rapport with the listing agents too, Quinn says.

Realize, however, that while some sellers may be highly motivated to accept a cash buyers offer, even if it’s lower than others, sellers with more equity in their homes may be less wooed by lowball cash offers, says Donne Knudsen, a mortgage loan originator with Cobalt Financial Corp. in Los Angeles. Instead, sellers who still have equity in their homes likely will be more motivated by the best and highest offer, since closing quickly may not be as critical to them, she says.

Source: “How to Beat a Cash Bidder in the Housing Market,” MarketWatch (April 13, 2011)
 

Next 2 years is prime time for real estate investors

18.5% plan to pay in cash!      By Inman News, Thursday, May 26, 2011.

Future Growth in Housing Demand
 

A majority of young adults still want to own a home, despite the troubled housing market of the past several years, according to a recent report released by Wells Fargo.

Thirty-six percent of the "Millennials" own a home today, and 66% said they see themselves as homeowners within the next five years, the report found. The Wells Fargo report defines Millennials as people born between 1979 and 2001.

There are 51.5 million people between the ages of 20 and 31, prime ages for becoming a first-time homeowner. There are more people in this home-buyer age group than there were baby boomers of that age in 1977.

The finding is encouraging for the housing market because it suggests strong housing demand in the years ahead.

Read more real-estate news in this week’s pages, including why more people are thinking about becoming landlords and the top 10 most affordable — and most expensive — places to buy a home today.

In general, consumers have stayed optimistic about homeownership, despite the housing-market challenges of the past several years, Wells Fargo found. In the survey of 3,000 boomers, Gen Xers and Millennials, 75% said they’d like to own a home — even if it meant losing money on it.

The Importance of Credit Scores In Mortgage Rates

  By TOM LAURICELLA

With interest rates near rock bottom and home prices down, this ought to be a great time to buy a home. But for most people, it's a lousy time to get a mortgage.

Years after the collapse of the real-estate market and resulting financial crisis, it takes nearly pristine credit scores and hefty down payments to get the best rates.

Andy Rash

"Since 2009, credit has become a lot tighter," says Greg Reiter, who follows mortgage-backed bonds at RBS Global Banking & Markets.

For borrowers, this highlights the need to pay close attention to credit scores. New rules unveiled last week should make it easier for consumers to see how their credit scores affect the interest rates they pay. These rules, the result of last year's Dodd-Frank financial-services legislation, require banks and other lenders to disclose to consumers the scores used to determine interest rates charged borrowers, or to deny credit.

The new reality for borrowers can be seen in the FICO credit scores on the loans that banks are giving out and that are backed by government agencies Fannie Mae and Freddie Mac. These days the two agencies essentially finance 75% of all mortgages by purchasing the loans from the banks. In the process, they shape how much it costs to borrow.

FICO scores range from 300 to 850. Pre-crisis, a score of 700 to 725 was deemed solid and a borrower could expect to get a "conventional" mortgage at the lowest rates.

From 2003 through 2006, 82% of Fannie Mae mortgages were for borrowers with a score between 700 and 750, according to data compiled by RBS.

But so far in 2011, only 13% of Fannie Mae mortgages carry that score, and just 1.7% have a score of 700 to 725, according to RBS. This year, 75% of Fannie Mae mortgages are for FICO scores of 750 to 775, up from less than 5% before 2005.

Meanwhile, the median score is 711, according to FICO.

"Half the population is locked out" from the best mortgages, says Mr. Reiter.

The upshot is that borrowing costs more even with a 730 score and a 20% down payment, says Norman Calvo, president of Universal Mortgage in Brooklyn, N.Y.

"Three years ago, if you had 730 it was excellent," Mr. Calvo says. Today, he says, it could cost an extra 0.125 percentage point per year on a mortgage, "just because you have one little nick on your credit report."

For more typical scores, the premiums are even bigger. At 700 to 725, it's usually an extra quarter percentage point, and at 630 -- if a borrower can find a loan -- the additional cost is 1.5 percentage points, Mr. Calvo says. "If you have a credit score of less than 680, you've got to be worried about approvability."

The news is also grim for those looking to refinance. Based on the level of interest rates, RBS estimates 60% of agency-backed mortgages should be eligible to refinance. But once home values and credit scores are factored in, just 12% are eligible.

These trends show the importance of understanding credit scores. Mr. Calvo says borrowers sometimes unintentionally make matters worse. For example, closing an unused credit card can actually lower a score in the short term!

What’s worse for credit score — foreclosure, short sale or deed in lieu?

By Michelle Singletary, Published: August 30

You can’t really say that credit scores don’t matter. They do.
So it’s understandable that the hundreds of thousands of homeowners who finally realize they can no longer hold onto their homes worry about how turning in their keys to the house through various transactions with their lender will affect their credit scores.

People can just let the home go to foreclosure, and this will affect their scores for seven years. Or they can do a deed in lieu of foreclosure. With a deed in lieu, you voluntarily give your home to the lender in exchange for the cancellation of your loan. This, too, can create a negative mark on your credit history.
Homeowners can also get out from under a mortgage by doing a short sale, in which the lender allows the borrower to sell the house for less than what is owed. A short sale is also bad for your credit.

RealtyTrac recently reported that pre-foreclosure transactions, which often include short sales, jumped 19 percent between the first and second quarter of this year. Short sales accounted for 12 percent of all housing sales in the second quarter, up from 10 percent for the same period last year.
But is there a pecking order in which the ubiquitous credit scoring system treats a short sale more favorably than a foreclosure or a deed in lieu of foreclosure?

I get this question quite often these days. Homeowners have been led to believe that because foreclosure is so devastating to their credit scores, almost anything else is better.
This is not true — turns out there’s no significant difference in FICO score impact among foreclosures, short sales or deeds in lieu of foreclosure, said Bradley Graham, senior director of scores product management at FICO, which is the trademark credit scoring model created by Fair Isaac Corp. It’s the most widely used scoring system in the country.  “All of those events represent a loan default and as such are highly predictive of future credit risk,” Graham wrote in an e-mail.

If you apply for a loan in the future, certain lenders may look more favorably at a short sale than at a foreclosure, but the credit scoring system sees all these defaults as equally bad. Graham said that based on the analysis of the information that lenders share with credit bureaus about those forms of mortgage default, they have about the same weight when determining future risk.

There are two caveats in what lenders report to the credit bureaus, Graham said. The negative impact of a foreclosure, short sale or deed in lieu of foreclosure can be slightly less if the lender does not report a deficiency balance. A deficiency balance is the amount one may owe the bank after a property is sold.

In a blog posting this year, Fair Isaac illustrated the relative score impact for different consumers who experience a mortgage delinquency or foreclosure/short sale/deed in lieu. To find the chart, go to bankinganalyticsblog.fico.comand search for “Research looks at how mortgage delinquencies affect scores.”
Here’s something interesting: The FICO analysis found that the higher your original score, the greater the drop and the longer it will take for your credit to recover to the same level assuming all else held constant. A consumer who started with a 780 score and did a short sale with no deficiency balance could see his score drop to a range of 655 to 675. The FICO scale goes from a low of 300 to a high of 850. A consumer who started with a score of 680 could see a drop to a range of 610 to 630.  For the consumer with the original 780 score, it could take seven years to get back to that level. But at 680, it could take just three years.

So how would a loan modification affect your score?
Credit reports show limited information about mortgages, such as balance, date opened, payment history and current status. The information reported does not show loan terms such as interest rate, monthly payment or number of months remaining on the loan. If a mortgage modification changes only the interest rate, the years remaining on the loan and/or the amount of the borrower’s monthly payment, those changes will not be reflected on the credit report and can’t affect the person’s credit score, Graham said.

At least now you know that if you decide you can’t keep your house, you don’t have to fret that one way to turn in your keys is far worse than the other. So just weigh what’s best for your overall situation and not only the impact to your credit score, Graham said. “The FICO score is only one part of anyone’s credit profile and reputation.”

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Daily Real Estate News | Thursday, November 17, 2011