Updates from December, 2012

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  • FHA says flip away -- within limits

    1:18 pm on December 13, 2012 | Comments:0
    Tags: , , flipping,   Filed under: Consumer news and advice, Federal Goverment, FHA, investment, The Housing Market

    Temporary waiver of 90-day ‘anti-flipping’ rule extended through 2014

    By Ken Harney, Monday, December 3, 2012.

    Inman News®

    Good news for single-family home investors, rehabbers and buyers seeking to use low down payment FHA financing: The temporary waiver of FHA’s 90-day “anti-flipping” rule was extended last week through 2014.

    The waiver, which facilitates purchases of homes from sellers who have held title to their properties for less than 90 days, continues a policy first adopted by the Obama administration in 2010.

    Starting in 2003, FHA had imposed the 90-day standard as part of an effort to rein in rampant quick-flips of houses where investors made minimal or no improvements to rundown, foreclosed or abandoned houses, then sold them days or weeks later at high price markups with the help of inflated appraisals to purchasers using FHA loans.

    Those flips frequently involved collusion and fraud by teams of mortgage loan officers, realty agents and appraisers — even straw buyers who defaulted and disappeared without making a single payment — and racked up significant losses to FHA’s insurance fund. Neighborhoods suffered because the properties remained empty and in bad physical condition, depressing values of houses in the immediate vicinity. (More …)

     
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  • Investor Confidence Rises with Real Estate Market Progress

    9:13 am on November 2, 2012 | Comments:0
    Tags: , investor,   Filed under: Buyer Info, investment, Real Estate Trends

    By John E. Miller

    Over the last few years real estate investor confidence has been harder to find than a needle in a haystack. Today, however, things look differently as investor confidence is on the upswing—which is positive news for everyone involved in real estate.

    Investors After the Real Estate Market Crash

    Let’s face it—in comparison to the life of real estate investors before the crash, it has been very hard to make a living with real estate investing over the last few years. Successful investors decided to purchase foreclosures and other distressed properties and turn these homes into rental properties in areas with a high demand. Although these investors had to expand their job description to include “landlord,” this minor adjustment enabled these investors to immediately start seeing a return on their investment.

    (More …)

     
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  • Where Are House Prices Headed in 2012?

    9:15 am on January 19, 2012 | Comments:0
    Tags: , , , , , , , , ,   Filed under: Agent information, Buyer Info, Consumer news and advice, Housing Market, investment, Median Sales Price, pricing, Second Home Buyers, Seller Info, Supply and Demand, The Housing Market

    by The KCM Crew on January 18, 2012

    There is no shortage of opinions as to where home prices are headed in 2012. From Clear Capital’s expectation that prices will show a ‘slight uptick’ this year to Fitch’s projection that prices ‘will fall another 13 percent’, there seems to be no consensus as to where real estate values are headed. How can there be such a disparity of opinion among industry experts? Prices are determined by the relationship between supply and demand and there are many unanswered questions regarding both of these components.

    Questions about Demand

    Will this be the year that the 5.9 million adults between the ages of 25 and 34 that are still living with their parents decide to purchase a home of their own?

    With mortgage payments lower than rent payments in the majority of the country, will first time buyers finally decide it makes more financial sense to buy rather than rent?

    Will the baby boomers take advantage of the great deals available and start purchasing vacation and retirement homes?

    Will investors continue to purchase large quantities of distressed properties?

    Will hedge funds negotiate a deal with the banks for bulk purchases of foreclosures?

    Questions about Supply

    Will 2012 be the year that builders again increase inventories of newly constructed homes?

    Will baby boomers put their primary residences up for sale and relocate to their retirement destinations?

    Will 2012 be the year that the shadow inventory of foreclosures finally makes its way to market?

    If prices depreciate, it will force more homes into a negative equity situation. Will this create another surge in short sales and foreclosures?

    Will the government put together a plan to convert large numbers of foreclosures into rental properties?

    Bottom Line

    With so many unanswered questions regarding both the demand for housing and supply of properties, it is very difficult to determine where prices will be at the end of the year. We suggest you contact a local real estate professional to help you determine where values are headed in your area.

     
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  • Comparing Real Estate To Other Investments

    2:24 pm on January 5, 2012 | Comments:0
    Tags: , , ,   Filed under: Buyer Info, Consumer news and advice, investment, Stock Market

    by The KCM Crew on January 4, 2012

    We recently posted Real Estate: Today’s Golden Opportunity comparing the current housing market to the market for gold about a decade ago. Some commented on the fact that you can’t compare gold to real estate as an investment as gold is a very liquid asset and it would take more time and effort to sell a house. We were not trying to make the case for real estate vs. gold as an investment in our blog. We were just showing that all investments go through cycles and that the best time to buy any investment may be when everyone is saying not to.

    However, since the subject of comparing real estate to other investments has come up, let’s take a closer look. There are two major advantages to investing in a home of your own rather than another option:

    You Can’t Live in Your IRA

    When you buy your own home you are not taking available dollars away from another investment. You are replacing one housing expense (rent) which has no potential for a return on investment with another (mortgage payment) that does give you an opportunity for a return. We realize that there has been research showing that over the last 30 years renting has been less expensive than owning. That research also says that if you invested the entire difference between the rent payment and mortgage payment you may have done better financially.  There are two challenges with this conclusion:

    1. Today, in the vast majority of the country, renting is actually more expensive than owning a home.
    2. History has proven that tenants DO NOT invest the difference in their rent and mortgage payments.

    Today, study after study shows that owning a home is no more expensive than renting a home. However, even if this wasn’t the case, history shows that owning a home creates greater wealth.

    Paying a mortgage creates what financial experts call ‘forced savings’. The Joint Center for Housing Studies at Harvard University released a study last year titled America’s Rental Housing: Meeting Challenges, Building on Opportunities. In the study, they actually quantified the difference in family wealth between renters and homeowners:

    “[R]enters have only a fraction of the net wealth of owners. Near the peak of the housing bubble in 2007, the median net wealth of homeowners was $234,600—about 46 times the $5,100 median for renters. Even if homeowner wealth fell back to 1995 levels, it would still be 27.5 times the median for renters.”

    There Are Tremendous Tax Advantages to Investing in a Home

    There is no doubt that selling an investment such as gold is easier than selling your home. However, this liquidity comes at a price. The price is called capital gains. That is the tax you pay on any financial gain you receive from the investment. This tax doesn’t apply the same way when you sell your primary residence:

    Theresa Palagonia, a CPA and the Accounting Manager for the firm G.S. Garritano & Associates, was good enough to explain the Home Sale Exclusion Rules:

    “You may qualify to exclude from your income all or part of any gain from the sale of your main home. 

    Maximum Exclusion

    You can exclude up to $250,000 of the gain on the sale of your main home if all of the following are true:

    • You meet the ownership test.
    • You meet the use test.
    • During the 2 year period ending on the date of the sale, you did not exclude gain from the sale of another home.

    If you and another person owned the home jointly but file separate returns, each of you can exclude up to $250,000 of gain from the sale of your interest in the home if each of you meets the three conditions listed above.

    You may be able to exclude up to $500,000 of the gain on the sale of your main home if you are married and file a joint return and meet the requirements. (Special rules apply for joint returns.)

    Ownership and Use Tests

    During the 5 year period ending on the date of the sale, you must have:

    • Owned the home for at least 2 years, and
    • Lived in the home as your main home for at least 2 years

    Certain exceptions exist in which you may qualify for the exclusion without satisfying the tests listed.”

    Bottom Line

    Every investment has pros and cons. That is why there is such an assortment of great opportunities. Real Estate has been, is and always will be one of those opportunities.

    http://www.kcmblog.com/2012/01/04/comparing-real-estate-to-other-investments/

     

     
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  • Buying a home now is a no-brainer

    9:01 am on December 14, 2010 | Comments:0
    Tags: , , ,   Filed under: Agent information, Buyer Info, investment, mortgage

    By Ali Velshi, CNN chief business correspondentDecember 13, 2010: 9:26 AM ET

     

    (MONEY Magazine) — Is now the right time to invest in a house?

    Trick question. Actually, it’s two questions.

    Question No. 1: Is now the time to buy?

    Question No. 2: Is buying a house a good investment?

    The first answer is easy: With a few exceptions, if you have 20% to put down and good credit, now is a great time to buy. That’s been the case all year, and I’d argue that we’re probably closer to the end than to the beginning of the really great time. Let me explain.

    Back in January home prices had dropped 28% from their peak. More important, interest rates were at historical lows. By locking in a mortgage for 15 or 30 years on a value-priced home, you were getting an incredible deal, even if home prices decreased. (I took my advice and bought a New York City apartment.)

    At the time, I thought that prices and rates were more likely to rise than fall. I was half right: Home values have been inching up since the spring, but mortgage rates, incredibly, dropped further.

    By August (the latest numbers available) the median home price had risen 1% over a year ago, but 30-year rates had dropped a half-point to 4.5%. Assuming 20% down and a 30-year mortgage, the total cost of owning a median-priced home is now down $16,000 from a year ago.

    Home values may waffle over the coming year, but because Americans take out such large, long mortgages, rates are what really matter. And I am more likely to grow hair than see 30-year mortgage rates drop below 4%. It’s far more likely that rates (and the cost of ownership) will rise.

    Now for question No. 2: Is a house a good investment?

    First, it depends on what you mean by investment. If your definition is strictly about dollars returned, a house probably won’t be a great use of your capital. If you bought the median-priced house today with 20% down, to recoup your total costs (and I’m not including property taxes and maintenance here) over three decades, the home’s value would have to rise about 3% a year.

    That’s likely, but you’ll almost certainly (we all hope) do much better than that in the stock market. The fact is, however, that that’s the normal case for housing; the booms that began after World War II and in the late 1990s were the exceptions.

    Of course, there are places where you might do better. I bought my condo in Manhattan, a small island that, by virtue of the business done on it, has a sustained demand for property. And smaller, energy-efficient housing in cities or inner suburbs around San Francisco or Chicago is likely to be in higher demand than big, outer suburban homes with long commutes to Las Vegas or Atlanta.

    According to urban and environmental planning professor William Lucy of the University of Virginia, this move toward urbanization in American housing is the reversal of a trend that’s been in place since 1945. Keep it in mind when making your buying decisions.

    That said, the key point to remember is this: Buying a fairly priced home at today’s rates may be the best deal you will ever get. And who knows? It may even turn out to be a good investment.  To top of page

    http://money.cnn.com/2010/12/10/pf/buy_a_home_now.moneymag/index.htm

     
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  • 58 Percent of Americans Expect Housing Market to Recover after 2012, According to Trulia and RealtyTrac

    8:51 am on December 9, 2010 | Comments:0
    Tags: , , , , , ,   Filed under: Agent information, Buyer Info, Consumer news and advice, economy, investment, Seller Info, The Economy

    RISMEDIA, December 9, 2010—Trulia.com, a top site for home buyers, sellers and renters, and RealtyTrac, a leading online marketplace for foreclosure properties released the latest results of an ongoing survey tracking home buyers’ attitudes toward foreclosed homes. Results of the survey conducted online from November 2-4, 2010 by Harris Interactive on behalf on Trulia and RealtyTrac showed that Americans continue to grapple with uncertainty about the housing market, with 58% of U.S. adults expecting recovery to take at least another two years.

    As a result of the recent robo-signing debacle, half of U.S. adults expressed that they now have less faith in mortgage lenders, banks and the government. Another 35% believe the robo-signing issue will delay the housing market’s recovery, while only 6% of U.S. adults think the robo-signing issue will have no effect on the recovery of the housing market. (More …)

     
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  • This is Good News for Housing, Not Bad News

    8:42 am on November 30, 2010 | Comments:0
    Tags: , , , , ,   Filed under: Agent information, Buyer Info, Consumer news and advice, investment, Seller Info, Statistics

    by The KCM Crew on November 30, 2010

    We found it interesting to see how some media outlets reported on the latest Fannie Mae National Housing Survey. It is true that the number of people who believe that now is a good time to buy a home dipped 2% since the June report. However, the report also showed that 68% of people still believe it is a good time to buy. That is more than two out of every three people surveyed.

    Yet, the headlines seemed to concentrate exclusively on the negative:

    Survey: Americans Growing More Cautious on Housing – Wall Street Journal 11/24

    Housing Drop: More Bad News for the Economy – Time 11/24 (More …)

     
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  • 6 Reasons Why It’s Smart to Buy a Vacation Rental Home Now

    8:47 am on October 26, 2010 | Comments:0
    Tags: , , , , , ,   Filed under: Agent information, Buyer Info, Consumer news and advice, Interest Rates, investment, Second Home Buyers

    RISMEDIA, October 22, 2010—Lately, you’ve been thinking a lot about investing strategies. You have a small nest egg that needs to grow, but frankly you don’t trust the stock market. And while real estate has been somewhat of a rocky road in recent years, it’s still a solid long-term investment strategy—and clearly we’re in a buyer’s market. But you aren’t really interested in being a landlord. So what can you do?

    Christine Karpinski has a suggestion: Purchase a vacation home and rent it out to travelers. (More …)

     
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  • Your Home Is An Investment. Treating It Like One?

    12:59 pm on October 7, 2010 | Comments:0
    Tags: , , ,   Filed under: Buyer Info, Home improvement, Home owner information, investment

    by Dean Hartman on October 7, 2010

    There is a pendulum when we look at real estate. On one side is Real Estate as an Investment. On the other is Real Estate as a Home – a place to raise a family, have the pride of homeownership, etc.

    In the house price frenzy of a few years ago, people looked at their home almost purely as an investment with constant growth. Many refinanced their home multiple times extracting equity to buy a lifestyle beyond their means. Many saw fantastic annual rates of return on their investment. The pendulum swung way too far. We forgot the house as a home. (More …)

     
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  • Second-home market offers first-rate deals for boomers

    12:29 pm on September 27, 2010 | Comments:0
    Tags: , , , , , , , , ,   Filed under: Agent information, Baby Boomers, Buyer Info, Consumer news and advice, economy, investment, Second Home Buyers, Seller Info, The Economy, The Housing Market, Web Stats - 2010

    By Eugene L. Meyer, U.S. News & World Report

    3:49 p.m. CDT, September 23, 2010

    The housing market reflects a paradox of the current economy: Though some baby boomers are struggling to prevent their primary residences from sliding into foreclosure, others are realizing their dream of purchasing a vacation getaway.

    Many people “still have a lot of money that sits on the sidelines waiting,” said Michael Saunders, a Sarasota, Fla., broker active in the second-home market. “I think the wait is over for them. Anywhere you look, you are going to find prices we haven’t seen since 2001,” largely because of foreclosures and short sales of homes for less than what’s owed on them. (More …)

     
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