Some experts are saying that the next big real estate problem could be a shortage of homes.
Only 672,000 new homes were started in April. That’s less than half the number needed to meet the country’s average population growth.
In the past, an average of more than 1.3 million households have been built each year, creating demand for 1.5 million new homes. In 2009, only 398,000 new households were formed, according to the Census Bureau.
"The decline in household formation is artificial," says James Gaines, a real estate economist with Texas A&M. "The young are moving in with their parents. There's even doubling up among working-class people. There's a pent-up demand coming if and when the economy recovers."
Some economists believe this analysis fails to take into account the changing economy or the large inventory of vacant properties. But Gaines and others say these factors are unlikely to significantly drive down demand.
Source: CNNMoney.com, Les Christie (06/15/2010)
Saturday, June 19, 2010
Monday, June 14, 2010
House Hunting? 5 Things to Keep in Mind....
1. Expect stiff competition for some homes. There still seems to be an abundance of buyers and homes for sale are still receiving multiple offers. In most areas homes are selling on average at or just above (101-103%) of asking price. Bottom line is expect some competition and be proactive!
2. Getting a loan may be more complicated and time-consuming than you expect. With all of the questionable lending in recent years underwriters are being VERY cautious these days. Tax returns, pay stubs, verification of employment, and credit checks right before funds are drawn are not uncommon. Be VERY careful in escrow not to make any large purchases and do your homework ahead of time - GET PRE-APPROVED.
3. Buyers, be prepared to try, try again. It can be extremely frustrating for buyers right now. It feels as though foreclosure banks and short-sale servicers are holding all the cards and buyers are forced to play by their rules. Be patient, don't get emotionally attached to any one house, and be persistent. There are great deals to be had if you can survive the journey.
4. The appraisal process can throw a monkey wrench into a sale. Appraisals seem to be coming in lower than usual, possibly from increased scrutiny and the fear that lenders will crack down on any appraiser that causes them to lend more than the home is worth. If the home appraises at or above the offered price then everybody is happy. But if it comes in below the offered price then renegotiation must take place until funds are conceded to the appraised value.
5. Completing a "short sale" can be a hassle. Although programs like H.A.F.A. seem to be helping, the short sale process can still take months (depending on the servicer). There are typically savings to be had if one can stomach the ride and, in my opinion, short sales are worth the wait.
If you have any questions in regards to any of the above then I'd be happy to discuss things with you further. Please contact me anytime at tcrekevin@gmail.com with any questions or concerns.
2. Getting a loan may be more complicated and time-consuming than you expect. With all of the questionable lending in recent years underwriters are being VERY cautious these days. Tax returns, pay stubs, verification of employment, and credit checks right before funds are drawn are not uncommon. Be VERY careful in escrow not to make any large purchases and do your homework ahead of time - GET PRE-APPROVED.
3. Buyers, be prepared to try, try again. It can be extremely frustrating for buyers right now. It feels as though foreclosure banks and short-sale servicers are holding all the cards and buyers are forced to play by their rules. Be patient, don't get emotionally attached to any one house, and be persistent. There are great deals to be had if you can survive the journey.
4. The appraisal process can throw a monkey wrench into a sale. Appraisals seem to be coming in lower than usual, possibly from increased scrutiny and the fear that lenders will crack down on any appraiser that causes them to lend more than the home is worth. If the home appraises at or above the offered price then everybody is happy. But if it comes in below the offered price then renegotiation must take place until funds are conceded to the appraised value.
5. Completing a "short sale" can be a hassle. Although programs like H.A.F.A. seem to be helping, the short sale process can still take months (depending on the servicer). There are typically savings to be had if one can stomach the ride and, in my opinion, short sales are worth the wait.
If you have any questions in regards to any of the above then I'd be happy to discuss things with you further. Please contact me anytime at tcrekevin@gmail.com with any questions or concerns.
Monday, June 7, 2010
High Level of Pending Home Sales Continues
Pending home sales are at the highest level since last October when the index reached 112.4 and first-time buyers were rushing to beat the initial deadline for the tax credit. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, said this second round of surging sales from the tax credit extension looks as strong as the original tax credit. “There were concerns that only a small pool of buyers were left to take advantage of the tax credit extension. But evidently the tax stimulus, combined with improved consumer confidence and low mortgage interest rates, are contributing to surging sales,” he said. “The housing market has to get back on its own feet and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs.”
Lawrence Yun, NAR chief economist, said this second round of surging sales from the tax credit extension looks as strong as the original tax credit. “There were concerns that only a small pool of buyers were left to take advantage of the tax credit extension. But evidently the tax stimulus, combined with improved consumer confidence and low mortgage interest rates, are contributing to surging sales,” he said. “The housing market has to get back on its own feet and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs.”
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