Real Estate Information Archive

Blog

Displaying blog entries 1-3 of 3

One in Five Say It’s a Good Time to Sell

by Ingrid Miles, CBR, REALTOR®

Last month the largest percentage of Americans since the housing bust said they believe it’s a good time to sell house, according to the latest Fannie Mae National Housing Survey.

Results from show Americans’ optimism about the recovery of the housing market and with regard to homeownership continued its gradual climb, bolstered by a series of mortgage rate decreases experienced throughout the summer. Consumer attitudes about the economy also improved substantially last month, breaking the progression of waning confidence seen during much of this year.

Survey respondents expect home prices to increase an average of 1.5 percent in the next year. The share who says mortgage rates will increase in the next 12 months dropped 7 percentage points to 33 percent. Nineteen percent of those surveyed say now is a good time to sell, marking the highest level since the survey began in June 2010. Tying the June 2012 level (and the all-time high since the survey’s inception), 69 percent of respondents said they would buy if they were going to move.

With regard to the economy overall, 41 percent of consumers now believe the economy is on the right track, up from 33 percent last month, while 53 percent believe the economy is on the wrong track, compared with 60 percent the prior month. Both the right track and wrong track figures mark the highest and the lowest readings, respectively, since the survey began in June 2010.

Thirty-seven percent of those surveyed expect home prices to go up in the next year, the highest level since the survey’s inception in June 2010. Thirty-three percent of respondents say mortgage rates will go up in the next year, a decrease of 7 percentage points since last month. Those who say now is a good time to buy dipped slightly to 72 percent.

Consumer optimism climbed in September, with 41 percent saying the economy is on the right track—the highest level recorded since the survey’s inception and an 8 percentage point increase over last month. Forty-four percent of respondents expect their personal financial situation to improve over the next year, up from 42 percent in August.

The share of respondents who say their household income is significantly higher than it was 12 months ago decreased by 3 percentage points to 17 percent. Thirty-four percent of those surveyed say their household expenses are significantly


Article printed from RISMedia: http://rismedia.com

 

Homeowners Recover 13.5 Percent of Lost Equity Through Q3

by Ingrid Miles, CBR, REALTOR®

 

Rising home values have brought homeowner equity to its highest level since the third quarter of 2008 and helped lift 1.3 million families above water. Homeowner equity jumped $406 billion, or 5.9 percent, to $7,275 billion in the second quarter of 2012, according to the Obama Administration’s September Housing Scorecard.

After a sharp first quarter rise, total equity has grown to $863 billion, or 13.5 percent, since the end of 2011. The number of underwater borrowers has declined by 11 percent since the end of last year, from 12.1 million in the 4th quarter of 2011 to 10.8 million in the second quarter of 2012.

Nearly 1.3 million homeowner assistance actions have taken place through the Making Home Affordable Program, while the Federal Housing Administration (FHA) has offered more than 1.4 million loss mitigation and early delinquency interventions. The Administration’s programs continue to encourage improved standards and processes in the industry, with HOPE Now lenders offering families and individuals more than three million proprietary mortgage modifications through July.

As of August, more than one million homeowners have received a permanent HAMP modification, saving approximately $539 apiece on their mortgage payments each month, and an estimated $15 billion to date. In August, 81 percent of homeowners with eligible non-GSE mortgages benefitted from principal reduction with their HAMP modification. Eighty-seven percent of homeowners entering the program in the last two years have received a permanent modification.

“As the September housing scorecard indicates, our housing market is showing important signs of recovery – with homeowner equity at a four-year high and summer sales of existing homes at the strongest pace in two years,” says HUD Acting Assistant Secretary Erika Poethig. “The Administration’s efforts to keep housing affordable and refinances strong are critical with so many households still struggling to make ends meet. That is why we continue to ask Congress to approve the President’s refinancing proposal so that more homeowners can secure the help they need.”

Rising home values have brought homeowner equity to its highest level since the third quarter of 2008 and helped lift 1.3 million families above water. Homeowner equity jumped $406 billion, or 5.9 percent, to $7,275 billion in the second quarter of 2012. After a sharp first quarter rise, total equity has grown to $863 billion, or 13.5 percent, since the end of 2011. The number of underwater borrowers has declined by 11 percent since the end of last year, from 12.1 million in the 4th quarter of 2011 to 10.8 million in the second quarter of 2012.

The Administration’s foreclosure programs are providing relief for millions of homeowners as we continue to recover from an unprecedented housing crisis. Nearly 1.3 million homeowner assistance actions have taken place through the Making Home Affordable Program, while the Federal Housing Administration (FHA) has offered more than 1.4 million loss mitigation and early delinquency interventions. The Administration’s programs continue to encourage improved standards and processes in the industry, with HOPE Now lenders offering families and individuals more than three million proprietary mortgage modifications through July.

Homeowners entering HAMP continue to benefit from deep and sustainable assistance. As of August, more than one million homeowners have received a permanent HAMP modification, saving approximately $539 on their mortgage payments each month, and an estimated $15 billion to date. In August, 81 percent of homeowners with eligible non-GSE mortgages benefitted from principal reduction with their HAMP modification. Eighty-seven percent of homeowners entering the program in the last two years have received a permanent modification

For more information, visit www.realestateeconomywatch.com.


Article printed from RISMedia: http://rismedia.com

4 tips for a smarter home purchase

by Ingrid Miles, CBR, REALTOR®

Mood of the Market

The fields of behavioral economics and behavioral finance are a couple of 21st-century mashups, academia-style, blending observations about the often-irrational financial decisions people make (which, writ large, become economic trends) with insights from the behavioral sciences, from anthropology to psychology, and beyond.

Though these disciplines originated in the ivory tower, they have, in turn, given birth to a number of findings, insights and even mandates for every homebuyer who wants to optimize the dozens, maybe even hundreds, of decisions they'll face at every point on the path to purchasing a home, from when to buy to how much to offer to what type of mortgage to take.

Here are the four most powerful behavioral economic and finance insights with real estate implications, and how you can apply them to level up your own home buying decision-making:

1. Observing willpower basics can help you avoid overspending.

In real estate, overspending can mean any of several things, but there is one definition that is particularly insidious, and it's the simplest: spending more than you can truly, sustainably afford to!

This happens because, over the years, buyers have grown to conflate their lender's decision on how much they can spend with their own decision to make about how much they can afford to spend.

It's like confusing your credit card limit with what is responsible to spend.

Willpower researchers have found that not only does the elusive ability to exercise self-control in the face of temptation actually exist, it can be fostered in some relatively simple ways. This is good news for homebuyers in today's hot market, where multiple offers and a fear of missing out on good deals can create that auction atmosphere that causes otherwise sane and sober spenders to throw every cent they can at their target home.

The theory of ego depletion says that willpower is finite, and can be depleted by putting too many demands on it at once. So, rather than trying to diet, stop biting your nails and start a new cardio regimen all at the same time, most people do better making one willpower-sapping change at a time.

And the same goes with homebuying: If you've had a day where you went to great lengths to bite your tongue to avoid snapping at your kids, and you also had to turn down Girl Scout cookies and birthday cake carbs at work all day, it might not be the right night to decide how much to offer on your home. Instead, ask your agent to connect with the listing agent and let them know to expect an offer in the morning.

Similarly, avoid letting yourself get too hungry or binging on sugary treats during the stress of your house hunt; willpower requires brain glucose, so super-hungry house hunters or those on a sugar rush/crash cycle are liable to make poor decisions at offer-price decision time.

2. Ditch the herd.

Everyone wants to buy low and sell high, especially when buying a home. The challenge is that we all have an innate fear of missing out on both bargains and profits. Our inclination to act on this fear is exacerbated when we hear stories of the steal that our cousin got on a foreclosed home at the bottom of the market, or the cash that is being thrown at our next-door neighbor at the top.

Think about it: When prices are cheapest, and on the decline, demand is low and is hard to drive upwards, because people are afraid to buy a home when they think the price might continue to decline. And the opposite is true: When home prices are rapidly ascending, demand is high, and tends to snowball even higher, as people afraid of missing out on value increases and others afraid of being priced out of the market frantically join the herd and buy, buy, buy!

This is precisely why it's foolhardy as a homebuyer to try to time the market just right. Best practice is to buy when the time is right for you, your family and your finances, then to get educated about market dynamics and use them to inform your strategy on how you execute your purchase, like what price range and area to target, how much to offer and when to lock your interest rate.

3. Overconfidence and real estate are a deadly combination.

Behavioral finance researchers and theorists have devoted a lot of attention to overconfidence: the tendency of some investors and financial professionals to overestimate their ability to pick stocks, trade profitably or otherwise succeed at a given task. In the realm of traded assets, overconfidence cause all sorts of simple, yet potentially catastrophic, behaviors, like making excessive trades, which has been correlated to big time losses over time.

And overconfidence is just as deadly in real estate: Homebuyers who incorrectly gage their own bargaining power, future finances or fix-it prowess can and often do end up in what my mom would call "a world of hurt."

  • Lowball offers or other negotiating strategey (no typo) can result in lost home after home, all while prices go up and your energy and enthusiasm go down.
  • Making mortgage obligations with overly optimistic hopes for your future income or the home's appreciation is exactly what got the last generation of homeowners in trouble.
  • And buying a major fixer when you have no money to hire a contractor and you've never even had any interest in owning, much less swinging, a hammer? It's a recipe for disaster. Didn't you ever see "The Money Pit"?

4. Don't let loss aversion make you forget what you can truly afford.

There is an interesting imbalance in most of our brains, when it comes to our financial decisions: We are more afraid of losing money (and financial opportunities) than we are attached to acquiring gains. That is, our fear of loss is much, much greater than our emotional attachment to potential profits.

In homebuying, this most often manifests when house hunters lose their minds and cut the purse strings entirely to secure a hot home in a hot market. This is the same mindset that has kept homeowners stuck in homes in depressed markets: Some unemployed and underemployed homeowners have even forgone great job offers in other areas, committed to spending what might be dozens of years in the very worst local economic markets, all to avoid short-selling the place and taking a loss.

I've seen people do very, very scary things out of loss aversion, from simply (but devastatingly) overextending themselves to buy homes they can't afford without endangering their financial well-being, to taking mortgages they knew would adjust problematically in 12 months. What's even more dysfunctional, though, is avoiding the "loss" of a target property by taking gifts and loans from relatives who you know upfront will be less than cheerful givers and who you know upfront will never let you hear the end of it.

Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

Displaying blog entries 1-3 of 3

Contact Information

Photo of Ingrid Miles, CBR, SRES, Lead REALTOR Real Estate
Ingrid Miles, CBR, SRES, Lead REALTOR
Keller Williams Realty
11 South Main St & 1 Merrimac St
Topsfield & Newburyport MA 01983 & 01950
Direct: 978-471-9750
978.861.4218
Fax: 978-861-4218

The property listing data and information, or the Images, set forth herein were provided to MLS Property Information Network, Inc. from third party sources, including sellers, lessors and public records, and were compiled by MLS Property Information Network, Inc. The property listing data and information, and the Images, are for the personal, non-commercial use of consumers having a good faith interest in purchasing or leasing listed properties of the type displayed to them and may not be used for any purpose other than to identify prospective properties which such consumers may have a good faith interest in purchasing or leasing. MLS Property Information Network, Inc. and its subscribers disclaim any and all representations and warranties as to the accuracy of the property listing data and information, or as to the accuracy of any of the Images, set forth herein.”