Realty World - Viking Realty » Real Estate

Investors Buying more Real Estate

Tom Lee — Sat, 19 May 2012 17:30:00 +0000

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.

Benefits of Working with a Real Estate agent

Brian Ripp — Sat, 12 May 2012 00:26:00 +0000

If you are considering buying or selling a home, you may think you will “save some money” and do it yourself. But did you know that by using a knowledgeable real estate professional, you are more likely to save not only money, but also valuable time and energy? With the many tasks you are currently trying to juggle, do you have the sales skills – not to mention the contacts and resources – to do it on your own? Instead of trying to take on more work for yourself, think about what a real estate representative can do for you.
As buyers, you know what your financial reserves are and what your future earning potential may be. You can give your real estate professional information about your income, saving and current debt. Then, your agent can take that information to help you make a choice about which homes best meet all of your needs, and to offer you objective information about homes that are on the market.
If you are selling property, a real estate representative will be aware of ways you can significantly increase the salability of your home. In addition, a real estate professional knows how, when and where your property should be advertised.
As a real estate professional, I can help with all of your buying and selling needs.

Six “Worth-the-Price” Fix-ups

Brian Ripp — Tue, 01 May 2012 15:11:00 +0000

Simple and affordable do-it-yourself projects can greatly increase a home’s resale value, according to HomeGains annual home improvement and staging survey. The marketing company surveyed nearly 600 real estate professionals to discover which DIY home improvement projects five sellers the biggest return for their buck.
Here are the six projects under $1,000 (approx.) that made the list.

Cleaning and decluttering. Remove any personal items, unclutter countertops, organize closets and make the home sparkling clean.
Brightening. Clean all windows inside and out, replace old curtains, update lighting fixtures, and remove anything that blocks light from the windows.
Smart staging. Rearrange furniture, bring in new accessories and furnishings to enhance rooms, incorporate artwork, and play soft music in the background.
Landscaping enhancements. Punch up the home’s curb appeal in the front and back yards by adding bark mulch, bushes, and flowers and ensuring current plants and grass are well-cared and manicured.
Repairing electrical or plumbing. Fix leaks under the sinks, remove any mildew stains, and ensure all plumbing is in good working condition.
Replacing or shampooing dirty carpets. Steam-clean carpets, replace any worn carpets, and repair any floor creaks.

Excerpted from HomeGains 2011 Home Sale Maximizer Survey
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Investment Home Sales Surge in 2011.

Barry Ripp — Mon, 30 Apr 2012 21:44:00 +0000

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More “Stratigic Defaults” Expected in 2012

Barry Ripp — Sun, 22 Apr 2012 21:37:00 +0000

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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Predictions Are That In Two Years Real Estate Will Be Well On Its Way Back.

Dawn Rivera — Fri, 20 Apr 2012 18:01:00 +0000

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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Credit Consequences and Timing

Skand Mittal — Fri, 06 Apr 2012 02:41:00 +0000

Credit may be adversely affected regardless of the type of sale—foreclosure or short sale. Credit score declines can vary and the negative mark may remain on the credit report for seven years. Both foreclosures and short sales might affect the ability to quality for a loan to purchase another home. In some short sale cases where the seller may have even been current with mortgage payments but sold the home for less than the outstanding loan amount, the credit report could indicate that the debt was settled for less than what was owed and the impact may be less severe.
In the event of a foreclosure, a borrower may not be able to qualify for another home loan for seven years without any extenuating circumstances, or five years with extenuating circumstances, under current Fannie Mae guidelines. The wait may be less with short sales. If payments are in arrears in a short sale, buyers may qualify to purchase another home within about two years for a Fannie Mae backed mortgage, or approximately three years for a FHA loan. If payments were current, consumers may qualify for another loan immediately, but it can be difficult to find a lender.
Exceptions and additional considerations apply to the conditions discussed, depending on individual circumstances. For consumers facing these difficult choices, it is advisable to seek professional assistance from anattorney and/or an accountant who can evaluate your specific situation.

Buy or Rent ??

Barry Ripp — Sat, 24 Mar 2012 18:53:00 +0000

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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Million Dollar Homes in Foreclosure

Barry Ripp — Fri, 24 Feb 2012 18:23:00 +0000

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.

Rich Americans: ‘Take My Mansion, Please’ (huffingtonpost.com)
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Talking Points

Skand Mittal — Mon, 06 Feb 2012 03:07:00 +0000

1. As the housing market continues to struggle for stabilization, many homeowners are turning to strategic default. Almost 11 million homes are now underwater, according to Corelogic. Around 3.5 million homeowners are behind in their payments and another 1.5 million homes are already in the foreclosure process, according to RealtyTrac.
2. Aside from the moral quandary of whether strategic default is the right decision, there also are other factors to consider.
3. borrowers’ credit scores will take a hit. According to FICO, someone with a 680 credit score would see their score decline anywhere between 85-100 points after a strategic default, and someone with a 780 credit score could lose 140-160 points.
4. Borrowers who are considering strategically defaulting on a house should look at it as a last resort, not a first option. Financial troubles could be eliminated by refinancing, especially if the Obama administration’s program is implemented.
5. Each state has its own rules and regulations regarding foreclosures, which affect both the length of the process and what the borrower could be liable for in the end.