Lee Morof's Real Estate Blog

According to the S&P Case-Shiller 10-and 20-City Housing Market Indices for September, home prices grew at an average of 13.30 percent year-over-year and achieved the highest growth rate for home prices since February 2006.

On a month-to month basis, home prices are slowing in most areas with 19 cities included in the S&P 20-City Housing Market Index showing lower rates of growth in home prices. September’s average month-to-month growth rate was 1.0 percent for the 20-City HMI as compared to 0.90 percent in August, and 1.90 percent posted earlier in 2013.

Home prices increased by 0.70 percent in September for the combined 20-City and 10-City Housing Market Indices tracked by Case-Shiller.

Rapidly Rising Home Prices In The West: Another Housing Bubble On Tap?

Home prices continued rising in the West, with Las Vegas leading the pack with a 29.10 percent gain year-over-year although average home price in Las Vegas, Nevada remains 46 percent than its peak in February of 2006.

California also showed double-digit year-over-year growth for home prices with San Francisco at 25.70 percent, Los Angeles at 21.80 percent and San Diego posting 20.90 percent growth in home prices year-over-year.

Rapidly increasing home prices in the West are largely due to demand exceeding supply, but buyers may be sitting on the sidelines due to concerns over another housing bubble in the making.

Buyers in this scenario are aware of increasing home prices, but aren’t buying now to avoid higher prices later. Instead they are waiting to see what happens with current home prices and housing market conditions in the longer term.

Chicago, Illinois posted its highest year-over-year growth rate since 2005 while Cleveland, Ohio posted a growth rate of 5.00 percent for September as compared to a month-to-month growth rate of 3.70 percent.

This was the second lowest month-to-month growth rate for home prices, with New York City posting a month-to-month home price growth rate of 4.00 percent from August to September.

FHFA Reports Slight Gain In Home Prices

The Federal Housing Finance Agency reported stronger gains in home prices for properties financed with mortgages owned or guaranteed by Fannie Mae or Freddie Mac. In September, home prices reported by FHFA rose by 0.30 percent as compared to August’s growth rate of 0.40 percent. 

On a year-over-year basis, FHFA reported a gain of 8.40 percent between the third quarter of 2012 and the third quarter of 2013. Adjusted for inflation, home prices as reported by FHFA have risen approximately 7.20 percent. FHFA noted that home prices are growing at a rate far above the rate of 1.20 percent reported for other “goods and services.”

Lower numbers of foreclosed homes are seen as a boost for home prices in general; as mortgage lenders tend to offer foreclosed homes for sale at low prices in order to reduce inventories of real estate owned.

The short holiday week brought a flurry of economic reports last week. Highlights included pending home sales, the S&P Case-Shiller Housing Market Indices and the FHFA home price index. No reports were released on Thursday and Friday in observance of the Thanksgiving holiday.

The NAR released its Pending Home Sales report for October. Although pending home sales dropped by -0.60 percent, the decline was less than September’s reading of -4.60 percent.

NAR cited higher home prices and mortgage rates along with concerns over the then-pending government shutdown as factors that contributed to fewer pending sales. Pending sales are determined by signed purchase contracts and are considered an indication of future completed home sales and mortgage loan closings.

Department of Commerce reported that building permits issued increased from 974,000 in September to 1.03 million for October. Permits for multi-family dwellings rose by 17 percent from September, but permits for single-family homes rose by 1.00 percent.

A lagging supply of available single-family homes has been driving home prices up as demand also increases. The multi-family reading reflected the sector’s volatile nature and was largely concentrated in the West.

Case-Shiller And FHFA Report Higher Year-Over-Year Average Home Prices

The S&P Case-Shiller 20-City Housing Market Index for September reported its highest year-over-year gain in seven years, but the month-to-month reading was lower. The year-over-year reading was 13.30 percent in September and the month-to-month reading showed lackluster growth at 0.70 percent.

When seasonally adjusted, September’s reading was 1.00 percent against the seasonally-adjusted August reading of 1.90 percent.

In addition to the then-looming government shutdown, concerns over rapidly rising home prices in the West may have caused would-be buyers to sit on the sidelines as fears of another “housing bubble” gained traction.

Rising home prices also impact affordability and impact the ability of buyers depending on mortgage loans to compete with cash buyers.

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, issued its housing market index report for September. Based on sales of homes financed with Fannie Mae or Freddie Mac-owned mortgages, FHFA’s report indicated that year-over-year home prices at an annual rate of 8.50 percent in September as compared to August’s year-over-year reading of 8.40 percent.

Economists noted that the increase of home prices is slowing due to a number of factors including higher mortgage rates and restrictive lending policies that are making it more difficult for buyers to purchase homes.

Analysts said that next year could bring a more sustainable rate of home appreciation with year-over-year readings averaging between five and eight percent.

Freddie Mac issued its weekly Primary Mortgage Market Survey on Wednesday; average mortgage rates for 30 and 15 year mortgages rose to 4.29 percent and 3.30 percent respectively.

Discount points for fixed rate mortgages were unchanged at 0.70 percent. The average rate for a 5/1 adjustable rate mortgage dropped by one basis point to 2.94 percent with discount points unchanged at 0.50 percent.

What’s Ahead

This week’s scheduled economic reports include Construction Spending, ADP Employment, New Home Sales and the Fed’s Beige Book. The Bureau of Labor Statistics will release its Non-farm Payrolls report and the national unemployment rate.

Weekly jobless claims and Freddie Mac’s Primary Mortgage Market Survey will be released as usual on Thursday.

“There’s always something to be thankful for. If you can’t pay your bills, you can be thankful you’re not one of your creditors” – Author Unknown

With Thanksgiving being tomorrow, I find myself thinking about everything I have to be thankful for. For instance, I’ve been a real estate agent for some time, which is a position that I enjoy and love. 

What Am I Grateful For?

I’m also grateful to be able to share the knowledge that I’ve learned throughout the years with my clients and those of you who read my blog. It’s a wonderful and rare thing to do something that you love for a living.

Most of us are so busy reaching our goals, making plans for the future, pushing and struggling to rise to wherever we feel our position in life should be, that we very rarely take the time to look back at where we started. 

While it’s always a good idea to have goals, to visualize and work towards them, if you never take the time to appreciate what you’ve done then it becomes a constant, maddening race to the finish line. Intangible things, such as happiness and satisfaction, fall by the wayside, considered unimportant in the grand scheme of things.

What Do I Savor?

With Thanksgiving drawing closer, this real estate agent invites you to think about what you have to be thankful for. Whether big or small, you’ll find yourself savoring all the good things in your life. 

So what are some of the things that you’re grateful for? It doesn’t have to be a big thing to be appreciated. Was the sky particularly beautiful today? 

Maybe you caught the bus on time, or you’re throwing the family Thanksgiving dinner this year and everyone is coming. If it brightens your life, brings a smile to your face, lightens your mood or warms your heart, be thankful for the experience. 

Enjoy each moment as if it were your last, sipping from the cup of gratitude and appreciation; you may find that your heart is constantly filled with happiness. Your trusted real estate professional invites you to make every day Thanksgiving Day.

The National Association of REALTORS reported Monday that pending home sales dropped by -0.60 percent in October after falling at a revised rate of -4.60 percent in September. According to Lawrence Yun, chief economist for NAR, 17 percent of real estate agents reported delays in loan closings due to the government shutdown in early October.

Lenders were unable to verify borrower income through the IRS, which was closed during the shutdown. October was the fifth consecutive month with fewer pending home sales reported.

Homeowners who owe more on their mortgages than their homes are waiting to sell, and recent spikes in mortgage rates were cited as factors contributing to fewer pending sales.

Pending home sales are defined as homes for which signed purchase offers have been received and are considered an indicator of future home sales. The NAR notes that most pending sales close within 30 to 60 days of an offer being signed.

High Demand And Low Supply Of Homes Thwarts Buyers

Would-be homebuyers may be including their dream homes on their wish lists for the holidays as many areas continue to experience a short supply of homes against high demand. In desirable areas this can lead to bidding wars and homes being sold before they are listed for sale.

Cash buyers are benefitting from these situations, while first-time and moderate income buyers may be sidelined due to affordability issues and the inability to compete with cash buyers.

Mortgage rates fell last week and the previous week. While a recovering housing market has been causing home prices to rise, economists described current readings for pending sales as a “pause” in the housing market recovery and said that a significant decline in home sales could adversely impact overall economic recovery.

Regional Pending Sales Mixed

Pending sales for the Northeast and Midwestern regions increased slightly and declined in the South and West. This suggested to some economists and analysts that the formerly hot housing market is cooling off along with the weather. Some decline in home sales is expected during fall and winter months.

Sales Of Existing Homes Better Than Expected

October sales of existing homes surpassed expectations of 5.10 million sales with a reading of 5.12 million existing homes sold. Again, the government shutdown and related concerns of consumers and home builders were cited as reasons for sales falling shy of September’s reading of 5.29 million existing homes sold.

Last week’s scheduled economic news was varied, but mortgage rates fell and jobless claims were significantly lower than expected. The minutes for last month’s FOMC meeting were released, and confirmed the Federal Reserve’s intention to leave its quantitative easing program unchanged at least for the near term.

The National Association of Homebuilders Wells Fargo Housing Market Index for November indicated that builder confidence, while still positive, dipped by one point to a reading of 54 as compared to an anticipated reading of 55, and October’s revised reading of 54.

Retail Sales for October Rose By 0.4 Percent

NAHB noted that uncertainty over the federal budget and political gridlock may have kept builder and consumer confidence levels from achieving further gains in November.

The Consumer Price Index for October contracted by -0.10 percent against expectations of 0.00 percent growth and September’s reading of 0.20 percent growth. The Core CPI, which excludes volatile food and energy sectors, rose by 0.10 percent against expectations of 0.20 percent and was unchanged from September’s reading.

The National Association of REALTORS reported that Existing Home Sales for October were lower than for September’s reading of 5.29 million, but slightly exceeded the expected reading of 5.10 million. October’s reading came in at 5.12 million sales of existing homes.

Analysts attributed the lower reading to tight supplies of available homes in many areas and higher home prices and mortgage rates that impacted affordability.

The FOMC minutes indicated that the committee has ongoing concerns over national unemployment rate of 7.20 percent against the committee’s target unemployment rate of 6.50 percent.

Weekly Jobless Claims were notably lower at 323,000 new jobless claims as compared to the prior week’s reading of 344,000 new jobless claims. Analysts and investors had expected a reading of 334,000 new jobs. Analysts noted the Veterans Day holiday as a likely contributor to the lower reading for new jobless claims.

Freddie Mac provided good news in its weekly Primary Mortgage Market Survey; the average rate for a 30-year fixed rate mortgage fell from 4.35 percent to 4.22 percent with discount points unchanged at 0.70 percent. The rate for a 15-year mortgage fell from 3.35 percent to 3.27 percent with discount points unchanged at 0.70 percent. 

The average rate for a 5/1 adjustable rate mortgage remained unchanged at 2.61 percent with discount points unchanged at 0.40 percent. This was encouraging news for home buyers and homeowners who have recently faced rising mortgage rates and home prices.

What’s Coming Up

This week’s schedule for economic reports includes several of interest to mortgage and housing professionals. Pending Home Sales will be out on Monday; Tuesday’s calendar is full with Housing Starts and Building Permits, the Case-Shiller Housing Market Index, the FHFA Home Price Index and the Consumer Confidence Index.

Wednesday’s news includes Weekly Jobless Claims, the University of Michigan Consumer Sentiment Index and Leading Economic Indicators. No economic news is scheduled for Thursday or Friday in observance of the Thanksgiving holiday.

Thanksgiving is right around the corner, and if you’re opening your home for the family get together, that usually means you’ll be decorating. 

If you’ve racked your mind for ideas and none sound just right, here are a few decorating ideas that might help you along your way.

Fall Leaves

Decorations don’t have to be expensive, just look outside the door of your home. Brightly colored fall leaves, either randomly placed on the table or bunched in small arrangements, can really brighten up a table.

Turkey Napkins

Folded turkey napkins is a simple way to spruce up your Thanksgiving table. Use linen napkins for a classy touch.

Thanksgiving Centerpiece 

A cornucopia is a great idea for the centerpiece. Filled with leaves, small pumpkins and other fall foliage or fruits, cornucopias remind us to be thankful for nature’s bounty.

Candles 

Candles can add a warm touch to any Thanksgiving dinner. The key for candle placement is to arrange them in places where a person’s breath won’t blow the flame out, generally between where people sit instead of in front of them.

Thanksgiving Wreaths

Thanksgiving wreaths can be fun to make, and a well-made wreath may even bring some surprising compliments. Tasteful and elegant at any time, wreaths made in fall colors are a beautiful addition to your decorations.

Thanksgiving Baskets

Thanksgiving baskets can be simple, inexpensive decorations for your home.  Acorns or other nuts, mixed with fall leaves and a few flowers from your garden, will brighten up any room.  Hang small baskets from wall hooks, or place larger baskets in corners.

No matter what Thanksgiving decorations you use, whether elegant or fun, hand-made or store-bought, the key is not to overdo it.  Don’t let yourself get so caught up in making the decorations perfect that you forget to enjoy your friends, family and food. 

May you have many things to be thankful for in the years to come. Happy Thanksgiving!

The National Association of Home Builders released its Housing Market Index for November on Monday. This month’s HMI reading was 54 against expectations of a reading of 55. October’s reading was also 54 after being downwardly revised.

Readings over 50 generally indicate that a majority of builders surveyed are confident in current housing market conditions, but the current pause came after two months of decline in home builder confidence. While the short term index readings are lower than in past months, the HMI is currently 20 percent higher than last year.

David Crowe, chief economist for NAHB said that “the fact that builder confidence remains above 50 is an encouraging sign.” Mr. Crowe also cited federal debt and budget issues as factors that keep builders and consumers from building and buying homes.

Fluctuating Mortgage Rates Of Concern To Builders, Home Buyers

Home builders are also subject to the impact of volatile mortgage rates, which can create affordability issues for first time and moderate income home buyers. There is some good news concerning mortgage rates as the Federal Reserve announced its plant to keep its quantitative easing program in effect in the coming months.

QE was implemented in 2012 and consists of the Fed purchasing $85 billion per month is treasury and mortgage-backed securities with the goal of keeping long-term interest rates and mortgage rates low.

Home builder confidence readings are not in synch with construction rates, as builder confidence was rapidly driven by excessive demand for homes against minimal inventories of available homes in many areas.

Components of November’s HMI provide more precise indications of builder confidence. November’s reading for confidence in sales of single family homes within the next six months fell from 61 in October to 60 in November.

Builder sentiment for current home sales was unchanged at 58 and the November reading for builder confidence in buyer foot traffic fell by one point from 43 in October to 42.

Regional Home Builder Confidence Readings Mixed

Regional builder confidence readings for November were as follows:

Northeast: This region gained 14 points with a reading of 44 for November.

South: Builder confidence rose by one point to a reading of 55.

Midwest: November’s reading declined by eight points to 54.

West: The reading for November was one point lower at 58.

Home sales are typically slower during the holiday season and winter months.

The Veterans Day holiday on Monday contributed to a quiet week for economic news. On Wednesday the reading for the federal budget deficit for October fell from September’s reading of -$120 billion to -$92 billion.

Freddie Mac Released Its Primary Mortgage Market Survey On Thursday

The average mortgage rates increased across the board, but remain below historical levels. The rate for a 30-year fixed rate mortgage rose by 9 basis points from 4.16 percent to 4.35 percent with discount points decreasing from 0.80 percent to 0.70 percent.

The average 15-year mortgage rate rose from 3.27 percent to 3.35 percent with discount points the same at 0.70 percent. The rate for a 5/1 adjustable rate mortgage increased from 2.96 percent to 3.01 percent with discount points moving from 0.50 percent to 0.40 percent.

Weekly Jobless Claims were released Thursday and were reported at 339,000 new claims. This was higher than the expected number of 335,000 new claims, but lower than the prior week’s reading of 341,000 new claims.

In other news, Janet Yellen, the President’s choice for chairing the Federal Reserve, defended the Fed’s quantitative easing policy during her first confirmation hearing before the Senate Banking Committee.  QE, which involves Fed purchases of $85 billion monthly in Treasury and mortgage backed securities, was designed to keep long-term interest rates and mortgage rates low.

Credit Reporting Agency: Mortgage Defaults Reach 5-Year Low In Q3 2013

TransUnion, one of three major credit reporting agencies in the U.S., reported that mortgage defaults fell to a five-year low to a reading of 4.09 percent for the third quarter of 2013.

This reading is lower year-over-year than the revised reading of 5.33 percent for the third quarter of 2012. The reading for third quarter 2013 mortgage defaults is also lower than the reading of 4.32 percent for the second quarter of 2013.

A mortgage default is defined as a home loan that is at least two months past due on payments.

Analysts cite moderate but stable job gains, comparatively low mortgage rates and a short supply of available homes as factors contributing to improvements in the housing sector. Analysts noted that mortgage defaults have declined during the past five quarters.

As defaulted mortgage loans made before the economy crashed are foreclosed, mortgage defaults were expected to continue falling. TransUnion reported that it expects mortgage defaults to fall below 4.00 percent by year-end.

What’s Coming Up: NAHB Index, FOMC Minutes

This week, the National Association of Home Builders is scheduled to release its Home Builder Confidence Index for November.

Along with the weekly releases of Jobless Claims and Freddie Mac’s PMMS report on mortgage rates, the FOMC is expected to release the minutes of its last meeting. Existing Home Sales for October are also set for release.

An open house gives you a great opportunity to look more closely at real estate you might be interested in buying. It also affords you the chance to chat with the owner or real estate agent so you can bring up any issues or hesitations you have with the home.

Knowing what to ask can be difficult, so below are examples of questions to ask at the next open house you attend.

Why Has The Seller Decided To Sell Now?

If you ask why the seller is moving, you could learn valuable information to help determine your offer or possibly whether or not you want to buy the home.

Knowing whether the owners are about to go into foreclosure, have experienced trouble in the neighborhood, or if they’ve retired and completely paid off the home can help you understand how urgently they need to sell their property.

Has The Seller Had Any Other Offers?

Don’t forget that you are not only negotiating with the seller for a price, you are also competing with other potential buyers. It really helps to know what you are up against.

It is important to understand that you might not get a 100% straight answer to this question as most sellers know that competition or perceived competition can cause a potential buyer to move forward more quickly and at a higher price.

If you’re comfortable in this discussion, you might want to try and see if you can find out the details of any other offers.

Does The Property Have Special Ownership Costs?

Ask the agent or owner about the other costs associated with owning the property, such as Home Owners Association fees within a condo complex or a gated community. It’s important to know about these extra expenses in advance so you can make an informed offer.

You may also want to ask about any pending litigation concerning the property. Litigation is not always a deal killer, but it’s better to know the details before you sign closing documents.

What Furniture And Appliances Are Being Sold With The House?

Most of the time, a seller will include their major appliances such as the refrigerator, stove and dishwasher with the home, but this isn’t always the case. If you don’t already have these items, it’s important to know whether they are included in the purchase price.

Is There Anything Else That You Want To Leave With The Home?

This is an important question to ask. Especially if there are specific things in the home that you have a strong interest in. Perhaps there is custom art work or a pool table that fits perfectly in the game room.

The seller may be eager to part with those items and include them in the sale of the home or sell them at a large discount. The open house is a great opportunity to learn more about a home before making the decision to buy it, so be sure you ask the right questions.

You’ve found the perfect new development and think your children would love swimming in the community pool and riding bikes on the wide streets. The new construction’s sales agent gave you a price and made a strong pitch urging you to buy immediately.

The question is, should you sign on the dotted line or bring in a real estate agent to handle the contract and negotiations?

The first thing you need to realize is that the new construction sales agent represents the developer and has their investment in mind. A real estate agent is someone who will be on your side. They’ll represent your interests and can help you.

Go Through The Process

If you’re looking at a specific development, the sales agent might offer you a discount if you sign without using a real estate agent. This is because the sales commission for the real estate agent usually comes out of the seller’s pocket.

However, most developers have this figure built into their price, so you might as well enlist a real estate agent’s help and advice — it’s free after all.

Decide If It’s A Smart Investment

Developers are invested in the property they’re trying to sell. They need to unload every lot in order to make a return on their investment, so it’s likely they don’t have your best interests in mind. A real estate agent will know what homes sell for in the area, what the school district is like and if it’s a good neighborhood. They’ll be able to recognize if it’s a good fit for your family.

Negotiate With Insider Knowledge

A real estate agent knows their market and usually the local gossip. If they’ve heard that a developer is willing to entertain low offers, then they might have clients that could buy in a neighborhood thought to be out of their price range. Also, they’ll know which upgrades a developer is likely to include in order to make the sale.

Decipher Confusing Paperwork

Buying property comes with a lot of paperwork. Contracts can be extremely confusing, so it’s always a good idea to have a seasoned veteran read over yours. A real estate agent has a great deal of experience with complicated contracts and knows what phrasing should be included and where sellers slip in sneaky wording.

From making sure the new construction is right for you to ensuring you get the upgrades you want and examining the contract with a fine-toothed comb, a real estate agent will represent your interests and get you the best deal.