Realty World – Viking Realty

Investment-home sales surged an extraordinary 64.5 percent to 1.23 million last year from 749,000 in 2010.
Investment sales jumped to 27 percent in 2011 from 17 percent in 2010.
“During the past year investors have been swooping into the market to take advantage of bargain home prices,” said NAR Chief Economist Lawrence Yun. “Rising rental income easily beat cash sitting in banks as an added inducement. In addition, 41 percent of investment buyers purchased more than one property.”
The median investment-home price was $100,000 in 2011, up 6.4 percent from $94,000 in 2010.
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 FICO survey of bank risk professionals found that 46 percent of them expect the volume of strategic defaults in 2012 to surpass 2011 levels, as more than 25 percent of U.S. homeowners owe more on their mortgages than their homes are worth.
Concerns about strategic defaults were also reflected in response to a question about the consumer payment hierarchy. When asked if the current generation of homeowners considers their mortgage to be their most important credit obligation, 49 percent of bankers said NO and 29 percent said YES.
Although concerns remain regarding strategic defaults, other signs point to growing stability in the housing market. More respondents (26 percent) expected delinquencies on mortgages to decline in the coming months than at any previous time in the two years FICO has been conducting this survey. Furthermore, 53 percent of respondents said the housing market would improve by the end of 2012, compared with 24 percent who said the market would deteriorate.
More than half of survey respondents expected the supply of credit for residential mortgages to fall short of demand over the next six months. A similar majority (53 percent) expected the supply of credit for mortgage refinancing to fall short of demand, indicating that lenders remain cautious about the risks in the real estate market.
Article was reprinted with permission from the Calif Assoc of Realtors. 
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Hi All,  I am re-posting this article written by Steve Cook…..or is it Nick at nick does loans?  Either way it is well written and informative.  It sounds to me as if the buyers who are on the fence better jump off and jump in if they want to get in at the bottom…………
In two years Real Estate will rock!
Written by: Steven Cook
Housing starts will nearly double and home prices will begin to rise in 2013, with prices increasing significantly in 2014.
Those rosy predictions come from a new semi-annual survey of 38 of the nation’s leading real estate economists and analysts by the Urban Land Institute’s Center for Capital Markets and Real Estate. The economists foresee broad improvements for the nation’s economy, real estate capital markets, real estate fundamentals and the housing industry through 2014, including:

The national average home price is expected to stop declining this year, and then rise by 2 percent in 2013 and by 3.5 percent in 2014.
Vacancy rates are expected to drop in a range of between 1.2 and 3.7 percentage points for office, retail, and industrial properties and remain stable at low levels for apartments; while hotel occupancy rates will likely rise;
Rents are expected to increase for all property types, with 2012 increases ranging from 0.8 percent for retail up to 5.0 percent for apartments;

These strong projections are based on a promising outlook for the overall economy. The survey results show the real gross domestic product (GDP) is expected to rise steadily from 2.5 percent this year to 3 percent in 2013 to 3.2 percent by 2014; the nation’s unemployment rate is expected to fall to 8.0 percent in 2012, 7.5 percent in 2013, and 6.9 percent by 2014; and the number of jobs created is expected to rise from and expected 2 million in 2012 to 2.5 million in 2013 to 2.75 million in 2014.
The improving economy, however, will likely lead to higher inflation and interest rates, which will raise the cost of borrowing for consumers and investors. For 2012, 2013 and 2014, inflation as measured by the Consumer Price Index (CPI) is expected to be 2.4 percent, 2.8 percent and 3.0 percent, respectively; and ten-year treasury rates will rise along with inflation, with a rate of 2.4 percent projected for 2012, 3.1 percent for 2013, and 3.8 percent for 2014.
The survey, conducted during late February and early March, is a consensus view and reflects the median forecast for 26 economic indicators, including property transaction volumes and issuance of commercial mortgage-backed securities; property investment returns, vacancy rates and rents for several property sectors; and housing starts and home prices. Comparisons are made on a year-by-year basis from 2009, when the nation was in the throes of recession, through 2014.
While the ULI Real Estate Consensus Forecast suggests that economic growth will be steady rather than sporadic, it must be viewed within the context of numerous risk factors such as the continuing impact of Europe’s debt crisis; the impact of the upcoming presidential election in the U.S. and major elections overseas; and the complexities of tighter financial regulations in the U.S. and abroad, said ULI Chief Executive Officer Patrick L. Phillips. “While geopolitical and global economic events could change the forecast going forward, what we see in this survey is confidence that the U.S. real estate economy has weathered the brunt of the recent financial storm and is poised for significant improvement over the next three years. These results hold much promise for the real estate industry.”
A slight cooling trend in the apartment sector – the investors’ darling for the past two years – is seen in the survey results, with other property types projected to gain momentum over the next two years. By property type, total returns for institutional quality assets in 2012 are expected to be strongest for apartments, at 12.1 percent; followed by industrial, at 11.5 percent; office, at 10.8 percent; and retail, at 10 percent. By 2014, however, returns are expected to be strongest for office, at 10 percent, and industrial, at 10 percent; followed by apartments at 8.8 percent and retail at 8.5 percent.
The forecast predicts a modest increase in vacancy rates, from 5 percent this year to 5.1 percent in 2013 to 5.3 percent in 2014; and a decrease in rental growth rates, with rents expected to grow by 5 percent this year, and then moderate to a growth rate of 4.0 percent for 2013 and 3.8 percent by 2014. This may be indicative of supply catching up with demand.
For the housing industry, the survey results suggest that 2012 could mark the beginning of a turnaround – albeit a slow one. Single-family housing starts, which have been near record lows over the past three years, are projected to reach 500,000 in 2012, 660,000 in 2013, and 800,000 in 2014. The overhang of foreclosed properties in markets hit hardest by the housing collapse will continue to affect the housing recovery in those markets. However, in general, improved job prospects and strengthening consumer confidence will likely bring buyers back to the housing market.
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Should I buy or rent?
The answer has never been clearer: Buy.
In 98 of the top 100 housing markets, buying a home is more affordable than renting, according to the online real estate company Trulia. Only Honolulu and San Francisco buck the trend.
There are several reasons. Home prices are falling. Mortgage interest rates are at historically low levels. And rents are on the rise.
Of course, many renters are not in a position to buy. For one, it’s hard to get a
mortgage these days, despite low rates. And paying rent can push them further away from being able to afford to buy, “Rising rents make it harder for people to save for a down payment, which is the biggest barrier to buying a home that aspiring homeowners face,” Jed Kolko, Trulia’s chief economist.
The nation’s cheapest buyer’s market is Detroit, where purchasing is only 3.7 times more expensive than renting.
Other top five metro areas where buying is much better than renting are Oklahoma City, Dayton, Ohio,Warren, Mich. and Toledo, Ohio.
In San Francisco, for example, studio and one-bedroom apartments sell for 13.1 times rent, while three bedrooms or larger sell for more than 18 times rent.
“People will pay more for a home if they expect prices to rise and give them a better return on their investment,” said Kolko.
According to Ken H. Johnson, a professor of real estate at Florida International who has studied the buy-vs-rent question extensively.
He believes home prices nationally have bottomed.”The ship has turned,” he said.
“Markets should slowly start to recover. Housing will return to its traditional
role of a safety investment.”
If so, that adds an incentive to buy. And investing in many of the most expensive markets may be even safer.
Kolko pointed out that places like Honolulu, San Francisco and Boston have strong long-term growth prospects. They also have little physical space to grow, a factor that tends to keep prices strong.
 The above information was obtained by the Calif. Assco. of  Realtors & CNN Money.
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Five years after the housing bubble burst, America’s wealthiest families are now losing their homes to foreclosure at a faster rate than the rest of the country — and many of them are doing so voluntarily.
Last year over 36,000 homes valued at $1 million or more were foreclosed on, or at least in default, according to data compiled by RealtyTrac, which tracks foreclosures. While that’s still a low percentage of all foreclosures, it is growing.
Out of all foreclosure activity, the share of foreclosures on properties valued at $1 million or more has risen by 115% since 2007 while the share of multi-million dollar foreclosures — or homes valued at more than $2 million — jumped by 273%. Meanwhile, the share of foreclosures on mid-range properties valued between $500,000 and $1 million fell by 21%.
Lenders are typically more willing to work with homeowners that have other resources. But with a recovery in the housing market still years away, foreclosure has turned out to be a worthwhile option after all. Saddled with bloated mortgages after a long run up in property values, many high-end homeowners have chosen to pursue a “strategic default.” Even though they can afford the monthly mortgage payments, they still decide to walk away from their home because they owe more on the property than it is worth.
In million-dollar homes, you’re looking at people who can afford it, but they have to make a business decision: Does it make sense to make payments on a mortgage when the home is worth less than they owe. In many cases, it often makes more financial sense to walk away.
This information obtained by the Calif. Asso. of Realtors, courtesy of CNN Money, Feb 23, 2012.

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Image via Wikipedia
The Fremont Planning Commission held a work session on Thursday, Nov 17 to discuss the proposed Climate Action Plan (CAP).  Among the implementing measures is a Residential Energy Conservation Ordinance (RECO) that would require energy retrofits be completed when a home is sold. This could cost a home seller hundreds of dollars.
 Realtor members have testified at several meetings and met with Fremont officials in an attempt to remove these proposals from the CAP.  The Planning Commission appears to understand the negative impacts such requirements would have on the real estate market. However, City staff are still set on including the RECO, and it’s point-of-sale requirements, in the final CAP.
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Mortgage rates have been hitting historic lows for five weeks in a row. But
that doesn’t mean you should refinance your mortgage just yet.

The average rate for 30-year-fixed-rate mortgages fell to 3.94% for the week
ended Oct. 6, according to mortgage-finance giant Freddie Mac—the lowest on
record. Rates on 15-year loans, meanwhile, have fallen to a record low of 3.28%.

While mortgage rates vary by region even among the nation’s biggest lenders,
they are down throughout the country for borrowers with excellent credit.
Citigroup, the third-largest U.S. bank by assets, is pitching a 4.193% rate on
30-year-fixed loans and a 3.806% rate for 15-year-fixed mortgages. EverBank
Financial of Jacksonville, Fla., is offering Cincinnati-area residents a 3.89%
rate on 30-year fixed-rate loans.

Steve Walsh, who heads mortgage lender Scout Mortgage in Scottsdale, Ariz.,
says he has seen a surge in interest among borrowers looking to take advantage
of low rates. “There’s a feeling that rates are basically at the lowest they can
get,” he says. But are they?
No one can predict the future, of course, but policy makers seem intent on
pushing rates down even further.
The Federal Reserve, for example, is trying to move rates lower by buying
more mortgage-backed securities. And Obama administration officials are talking
to lenders about ways to reinvigorate the Home Affordable Refinance Program, a
government initiative to help borrowers refinance even if they have little or no
equity left in their homes.

Real Estate at SmartMoney

Mortgage Calculator
Should You Refinance?
How Much Can You Afford

The goal for both: to get rates low enough so that more people will find it
beneficial to refinance. If people start doing it en masse, it could help the
economy.
“In the short term, rates could fall,” says Brad Hunter, chief economist for
Houston-based Metrostudy, a housing-market research firm. “In the longer term,
rates will rise as the economy starts to strengthen.”
If that were to play out, then refinancing now, with rates still around 4%,
could be a mistake. That’s because the chances are good that if you own a home,
and have significant equity in that home and good credit, you already have
refinanced in the past few years. Because refinancing involves costs—typically
2% of the mortgage value—it often doesn’t pay to refinance every time rates tick
down, tempting though it is.
“Don’t become a refinance junkie,” says Greg McBride, a senior financial
analyst at Bankrate.com, a consumer-information site. “You pay for it later in
the form of closing costs.”
So how far do rates need to fall before it makes sense for you to refinance?
Economists at the University of Chicago have tried to answer the question.
The ideal refinance rate must factor in closing costs, marginal tax rates,
the number of years left on the mortgage and other factors, the economists say.
Homeowners often make decisions based on faulty assumptions about rates, says
David Laibson, an economics professor at Harvard University and one of the
Chicago study’s authors. “Mortgage rates follow what we call a random walk, and don’t bounce back from
lows like most people assume,” he says.
In other words, what goes down could keep going down—even if it goes up for a
little while first. If you catch the first big dip, you can miss later ones that
offer even better opportunities.
The economists produced an online calculator, at zwicke.nber.org/refinance/, that distills their theory into a
tool that calculates how far interest rates need to fall for homeowners to
derive value from refinancing—the “optimal” refinance rate.
For example, their formula suggests that a homeowner with a $400,000 mortgage
with 25 years left on a 30-year-fixed rate mortgage at 4.75% shouldn’t refinance
until rates fall to below 3.51%, assuming 2% closing costs.
The risk of waiting for a lower rate, of course, is that it will never come.
If you are unwilling to take the gamble, your best bet is to negotiate hard on
fees.
The conventional wisdom is that it doesn’t make sense to refinance unless you
can shave at least a point off your interest rate. That’s because you don’t want
your “break-even” point—when your savings exceed your refinancing costs—to be
longer than two years or so.
But if you can persuade your lender to waive the fees, or most of them, you
might need only a half-point of savings to make a deal worthwhile, says
Bankrate.com’s Mr. McBride.
Last week, Michael Allison refinanced his $417,000 mortgage on a
three-bedroom California Ranch-style house in Santa Barbara, Calif. The
41-year-old fitness-center owner says he will save $200 a month by switching
from a 30-year fixed-rate mortgage at 4.87% to one at 4.25%.
“It’s an absolutely great deal and didn’t cost me anything,” Mr. Allison
says. His lender, Provident Savings Bank in Pleasanton, Calif., covered the
closing costs after his real-estate agent made some calls to the firm.
With a little negotiation, homeowners can persuade lenders to cover their
fees. “It’s not a free lunch,” Mr. McBride says, because borrowers get slightly
higher rates in exchange—but it is a good way to minimize your upfront
costs.
Another option that’s growing in popularity: refinancing a home at a shorter
term—say, 20 or 15 years. If you can find a rate that keeps your monthly payment
about the same as you were paying on your old 30-year loan, the decision is a
no-brainer, says Mr. Walsh of Scout Mortgage.
Lloyd Qualls, a 57-year-old accountant in Mesa, Ariz., decided to do just
that. Last month he ditched his 30-year fixed-rate loan at 4.875% for a 15-year
fixed-rate loan at 3.375%. While that boosted his payments by $89 a month, it
will shorten his payment period by 13 years and save him $104,233 on interest
over the life of the loan.