Real Estate Information

Mortgage Rates Rise as Housing Ends Year on High Note

Average mortgage rates went up this week as the housing market ended 2011 on a high note, according to Freddie Mac's weekly survey of rates.

The 30-year fixed-rate mortgage averaged 3.98% for the week ending Jan. 26, reversing its previous three-week trend of setting all-time record lows. Still, this marks the eighth consecutive week the 30-year fixed-rate mortgage has remained below 4%.

Last week it averaged 3.88% and last year at this time it was at 4.8%.

New Home Sales Drop 2.2% in December as 2011 Hits Record Low

New single-family home sales fell 2.2% to an annual rate of 307,000 in December from 314,000 a month earlier, according to the Commerce Department.

The seasonally adjusted rate, dropped 7.3% from 331,000 a year earlier. The preliminary estimate for actual new homes sold in 2011 came in at 302,000, 6.2% below 323,000 sold in 2010. Annual sales marked a new low since at least 1963, the start of Commerce Department records.

For some perspective, builders sold 1.28 million new homes in 2005.

Foreclosures for Sale: 34% Off

Foreclosure homes sold for 34 percent less than the average price of a non-distressed home during the third quarter of 2011, according to new data released by RealtyTrac recently.

The average sales price of homes in the process of foreclosure or bank-owned was $165,322 over the July-to-September period last year.

RealtyTrac says third parties purchased a total of 221,536 residential properties classified as foreclosures or REO during the third quarter of 2011, representing just 20 percent of all residential sales during that timeframe.

Consumer confidence improved in November, rising 15 points and reaching its highest level since July. The Survey is based on a probability-design random sample, is conducted for The Conference Board by Nielsen. The cutoff date for the preliminary results was November 15th. With consumers’ view of business conditions perking up, and job conditions brightening, positivity seeps into what has been a fairly negative. The Index now stands at 56.0, up from 40.9 in October. The Present Situation Index increased to 38.3 from 27.1. The Expectations Index rose to 67.8 from 50.0.

Confidence has bounced back to levels last seen during the summer (July 2011, 59.2). Consumers’ assessment of current conditions finally improved, after six months of steady declines. Consumers’ apprehension regarding the short-term outlook for business conditions, jobs and income prospects eased considerably. Consumers appear to be entering the holiday season in better spirits.

Consumers’ appraisal of present-day conditions improved in November. Those stating business conditions are “good” increased to 13.3 percent from 11.2 percent, while those stating business conditions are “bad” declined to 38.2 percent from 43.7 percent. Consumers’ appraisal of the labor market was also more upbeat. Those claiming jobs are “plentiful” increased to 5.8 percent from 3.6 percent, while those saying jobs are “hard to get” decreased to 42.1 percent from 46.9 percent.

Consumers’ outlook for the job market also improved. Those expecting more jobs in the months ahead rose to 12.9 percent from 10.8 percent, while those expecting fewer jobs decreased to 24.1 percent from 27.6 percent. The proportion of consumers anticipating an increase in their incomes rose to 14.9 percent from 11.1 percent.

Consumers’ short-term outlook, which had declined last month, was less negative in November. The proportion of consumers anticipating business conditions to improve over the next six months increased to 13.6 percent from 10.2 percent, while those anticipating business conditions will worsen declined to 15.8 percent from 21.3 percent.

Now that freezing temperatures are here to stay Realtors are winterizing their vacant homes. That process made me think about what you should do for the home you are living in right now.

The most common problem we see at this time of year is caused when homeowners forget to remove garden hoses from exterior faucets and to turn off the water supply inside the house. Once this is done you need to open the outside faucet and allow the water to drain. If you can’t shut off the water inside the home you need to stop by the hardware store and pick up an insulated cover for each outside faucet.

You can find them on line at Aubuchon Hardware.

The question of taking a home off the market until spring is fairly common around the holiday season. Many sellers think that there are not enough buyers looking during the holidays to make it worth the time and energy to keep the home on the market.

 If you’re thinking this is not the "BEST" you are right. Sales generally peak in March and April of the year. But the Winter holidays are not the slowest time of the year. Normally, August is the slowest month!  So what does all this mean to you if you’re trying to sell a home?

It means that if you are truly interested in selling your home there is never a reason to leave your home off the market. A very successful Realtor friend of mine always has her best month in December. Why? Because she works to make it happen and anyone looking at this time of the year is REALLY sincere about buying.

What does this mean to you if you’re thinking of taking your home off the market for the Holiday?

DON’T

Here are the reasons to list your SE Michigan home for sale during the holidays

1. There is less competition for buyers.

2. Winter prospects are more serious buyers.

3. Your home looks better during the holidays.

4. One of the highest percentages if “the listing sold” to “listing taken” occurs during this time of year.

5. Exceptionally LOW interest rates.

6. You may receive more money for your home now because you have less competition.

7. Throughout the holiday season, you may restrict showings during your personal family events.

8. Buyers have more time to look at homes during the holidays, especially during vacations.

9. January is traditionally the biggest transfer month and you must be on the market to capture that market.

10. By selling now you can have a delayed closing or extended occupancy until the beginning of the following year if you want it.

11. When you sell during the winter you have an opportunity to buy during the spring, when many homes are on the market.

12. You may have fewer actual showings, but more qualified and motivated prospects.

13. Corporate transfers, who need to buy a home now, can’t wait until spring.

Here it is the second week of October and the weather has been BEAUTIFUL. We are spoiled. As we approach the weekend the Birmingham Bloomfield areas are going to start getting closer to “normal” Fall temperatures. Lack of excessive moisture in the ground is hindering normal “spectacular” Fall colors but they are still pretty. We are thinking that this would be a good time to visit one of several Cider Mills so very close to Birmingham and Bloomfield Hills.

A few Cider Mills that readily come to mind are the Franklin Cider Mill 7450 Franklin Road, Franklin MI (about 6 Miles from the Birmingham Bloomfield area); Yates Cider Mill 1990 E. Avon Road, Rochester (about 10 Miles from the Birmingham Bloomfield area); Paint Creek Cider Mill, 4480 Orion Road, Rochester ; and Parmenters Cider Mill, 714 Baseline Road, Northville. We will probably take a nice Sunday drive to the Cider Mill this weekend with our granddaughter, Kelley, and our two dachshunds, Penny Candy and Ziggy. We cherish these family times together and being able to enjoy the outdoors. We’re looking forward to the hot donuts, apple cider and fresh apples. Click here to see other Michigan Cider Mills. 

 Living in Michigan with its four seasons is wonderful.  If you or someone you know is thinking of making a move, please give us a call or visit our website for information on area listings in the greater Oakland County area.

The property values will decree in Birmingham if the Obama administrations recent proposal to get the government out of the mortgage lending business by dissolving Freddie Mac and Fannie Mae goes forward. This is not good news for homebuyers. If this takes place, the results may include:

1. More expensive mortgages
2. Higher fees
3. Higher interest rates
4. Larger down payments
5. Fewer lenders to choose from

“Buyers shouldn’t rush in – but there’s no reason in most markets to delay waiting for something better to come along – it probably won’t,” says Barry Zigas, director of housing policy at the Consumer Federation of America.

Ready to Move Up?

The environment in today’s market is a great time to be a buyer.

1. Interest rates are still at historical lows
2. The job market is improving
3. Affordability is near generational highs

For those with growing families and steady jobs now is the time to “move up”.

Birmingham will be hurt if the Obama administration moves forward on a plan to reinvent the United States support of the mortgage market,  a process that could take several years and would include phasing out Fannie Mae and Freddie Mac.  Careful consideration needs to be the keyword before moving in this direction!

The future would include a housing-finance system that would create a partnership for both the public and private sectors. Some changes include:

1. The government’s role would be smaller
2. Underwriting standards would be tighter
3. Borrowers would be required to hold larger amounts of equity in their homes.

For a long time a 20% down mortgage was the gold standard and things went well.  Why is it necessary to increase this number to 30%?

The proposal offered some steps to help attract private capital into the mortgage market, including:

1. A reduction in the maximum loan sizes that Fannie and Freddie can purchase
2. Gradual increases in the fees the mortgage companies charge lenders.

Both of those steps are designed to force lenders and investors to buy loans without government backing, but they will also raise borrowing costs for millions of Americans and weigh on the nation’s home-building industry.

BIRMINGHAM, National Association of REALTORS®, January 2011 was the third consecutive month of existing home sales rising.

This figure represents completed transactions that are single family homes, townhomes, condominiums or co-ops. These existing-home sales increased to 2.7% to a seasonally adjusted annual rate of 5.36 million in January. This is the first time in seven months that sales activity was higher than a year earlier.

Lawrence Yun, NAR chief economist, said, “The uptrend in home sales is consistent with improvements in the economy and jobs, which are helping boost consumer confidence. The extremely favorable housing affordability conditions are a big factor, but buyers have been constrained by unnecessarily tight credit. As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity.” Yun believes that the improvement is good but could be better.

By the Numbers

Investors accounted for:
23% of purchases in January
20% in December
17% in January 2010

All-cash sales:
32% in January
29% in December
26% in January 2010.

“Increases in all-cash transactions, the investor market share and distressed home sales all go hand-in-hand. With tight credit standards, it’s not surprising to see so much activity where cash is king and investors are taking advantage of conditions to purchase undervalued homes,” Yun said.

The national median existing-home price for all housing types was $158,800 in January, down 3.7 percent from January 2010.

Distressed homes market share:
37% in January 2011
36% in December 2010
38% in January 2010

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said the median price is being dampened by unusual market factors. “Unprecedented levels of all-cash purchases, primarily of distressed homes sold at deep discounts, undoubtedly pulls the median price downward,” Phipps said. “Given the levels of inventory we see today, we believe that traditional homes in good condition have held their value.”

The national average commitment rate for a 30-year, conventional, fixed-rate mortgage:
4.76% in January 2011
4.71% in December 2010
5.03% in January 2010
(Source: Freddie Mac)

The National Association of REALTORS®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries

More than one million members of the National Association of REALTORS® (NAR) remain steadfast in their belief that economic recovery depends in large measure on recovery in the housing market. Accordingly, the single most important contribution Congress can make to that recovery is to assure stability in the laws—particularly the tax rules—that undergird the housing economy.

To that end, we urge homeowners to ask their Representative to support H.Res.25, a bipartisan resolution offered by Representative Gary Miller and five original bipartisan cosponsors. It affirms the importance of the mortgage interest deduction (MID). The resolution expresses the sense of Congress that the MID should not be cut back, but rather that current law should be retained. To restrict current law in any way would undermine progress in the still-fragile housing recovery.

The nation cannot emerge from its current economic distress unless and until the housing crisis has abated. Congress must do everything in its power to shore up consumer confidence in housing by reaffirming its support for the tax benefits that support housing. The worth and value of the MID must be preserved.

People buy homes to satisfy many social, family and personal goals. The tax system facilitates achievement of those goals. The tax system supports homeownership by making it more affordable. Nonetheless, over the past year, some pundits have questioned the role of homeownership in American culture. Some have even gone so far as to say that the nation should reduce its commitment to homeownership.

Those pundits are wrong. No single investment contributes more to family wealth and community stability than the purchase of a home. Similarly, nearly every State in the Union—and a majority of Congressional districts—has at least one community where second homes are the foundation of local economies. To change the tax benefits associated with any housing investments, particularly in today’s economy, would be devastating to communities across the Nation.

Please join real estate professional. Gary Miller and send a message to your Representatives in Congress that you support a strong and stable housing market and that you support the current MID rules.