Millennials – Searching for better home buying markets

While first-time home buyers’ presence in the housing market has been subdued in recent years, some metro areas are poised to soon see an increase in home buying from the millennial generation, according to new research from the National Association of REALTORS®.

“Limited job prospects, student debt, and flat wage growth have combined with tight credit conditions and low inventory to price millennials out of some of the top cities such as New York and San Francisco,” says Lawrence Yun, NAR’s chief economist. “However, NAR research finds that there are other metro areas millennials are moving to where job growth is strong and home ownership is more attainable. These markets are well-positioned to soon experience a rise in first-time buyers as the economy improves.”

To identify those soon-to-be booming millennial markets, NAR factored in current housing conditions and housing affordability, job creation, and population trends in 100 metro area across the country that have a large millennial presence to determine the best markets for aspiring millennial home buyers. Seven of the 10 metro areas were in the Midwest and West. The top markets identified (listed in alphabetical order) are:

  • Austin, Texas
  • Dallas
  • Denver
  • Des Moines, Iowa
  • Grand Rapids, Mich.
  • Minneapolis
  • New Orleans
  • Ogden, Utah
  • Salt Lake City
  • Seattle

NAR also identified the following markets with high potential for attracting millennial home buyers:

  • Madison, Wis.
  • Nashville, Tenn.
  • Omaha, Neb.
  • Raleigh, N.C.
  • Washington, D.C.

“Millennials will eventually settle down, trade their roommates for spouses and want to raise a family,” says Steve Brown, NAR’s president. “As long as median income continues to support purchasing power in most areas, the demand and opportunity will be there for millennials to purchase their first home with guidance and insights from a REALTOR®.”

Source: National Association of REALTORS®

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Property Radar’s June report shows home price gains in California

California single-family home and condominium sales gained 0.6 percent in June 2014 but were down 12.6 percent from June 2013. Year-to-date sales for the first six months of the year are the lowest since 2008. For the month, non-distressed property sales increased 2.8 percent while sales of distressed properties fell 9.1 percent.

“June marks the sixth consecutive month that sales have been lower on a year-over-year basis,” said Madeline Schnapp, Director of Economic Research for PropertyRadar. “The lack of distressed property inventory and rapid increase in median prices has definitely taken a toll on demand.”

The June 2014 median price of a California home reached its highest level since December 2007, up 5,000 dollars, or 1.3 percent, to 390,000 dollars from 385,000 dollars in May. On a year-ago basis, median home prices gained 10.0 percent. Driving the month-over-month price increase in June was the 2.8 percent increase in the sales volume of higher priced non-distressed properties, which accounted for nearly 83 percent of total sales. The median price of non-distressed homes was up only 0.8 percent over last year. The deceleration in price increases is even more apparent at the county level. In March, double-digit price increases occurred in 16 of the 26 largest California counties but by June that number had fallen to eight.

“The nearly uninterrupted double-digit monthly increases in median home prices from August 2012 through March 2014 has slowed considerably,” said Schnapp. “That’s good news for buyers who were finding themselves rapidly priced out of the market.”

In other California housing news:

  • Cash sales remained elevated in June, accounting for 22.2 percent of total sales. Despite the historically high levels of cash sales, cash sales have been steadily declining, falling 31.6 percent, since reaching an interim peak in May 2013.
  • Flip sales fell 6.6 percent for the month and were down 30.0 percent for the year and are down 40.4 percent from the October 2012 peak.
  • Negative equity remains elevated in California and continues to impart negative headwinds to the real estate market. In June, nearly 1.1 million California homeowners, or 12.9 percent remain underwater.
  • Institutional Investor LLC and LP purchases fell 8.7 percent for the month and are down 31.8 percent from June 2013. Institutional investor demand continues to wane in the face of higher prices and lower return on investments. Institutional Purchases have posted consistent monthly declines and are down 48.0 percent from their December 2012 peak.
  • Foreclosure starts, or Notices of Default (NODs), fell 2.0 percent between May and June, extending a longer-term downward trend. Foreclosure sales fell 5.2 percent for the month and are down 12.6 percent for the year. The June decline decelerated compared to May.

“Affordability and tight credit have slowed or stopped price increases despite lack of inventory,” said Schnapp. “Going forward, we expect low sales volumes and flat prices until increased supply or looser credit forces prices lower.”

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Zombie Homes make up almost 21% of foreclosures today

We see several examples of homes in Nevada County where the owner has moved out before the foreclosure process has started. Theses are called “Zombie” homes because they appear foreclosed but they are still owned by the owner of record. Zombie foreclosures are still haunting the housing market, representing one in every five foreclosures nationally, according to RealtyTrac, a housing data firm. “Zombie foreclosure” is a term coined to describe properties where the foreclosure process has been started and the home owner vacates, but the foreclosure has never been completed. As such, the distressed home owners who vacate eventually find they still own the home, and are often unaware they are still responsible for it.

The vacated properties can become eyesores in neighborhoods and drive down nearby property values. They also take a big chunk out of local government revenue in the form of unpaid property taxes. RealtyTrac estimates that more than $400 million in property tax revenue is likely delinquent due to zombie foreclosures. Still, the zombie foreclosure rate has shown some improvement, falling 7 percent compared to the first quarter of this year and dropping 16 percent from year-ago levels.

Florida has the highest number of zombie foreclosures, accounting for more than one-third of all zombie foreclosures nationwide. New York, New Jersey, Illinois, and Ohio also have some of the highest numbers of zombie foreclosures across the country.

“Most of these states have seen an increase in new foreclosure activity over the past year, creating a more fertile breeding ground for zombie foreclosures,” says Daren Blomquist, vice president at RealtyTrac.

Some states, such as Florida and Illinois, are looking to combat zombie foreclosures by weighing legislation that could help “fast track” foreclosures and move the abandoned properties through the system more quickly, RealtyTrac reports. New York is also considering legislation that would make lenders responsible for the upkeep of zombie foreclosures. Some local governments—such as in Cleveland and Detroit—also are creating land banks that would include zombie foreclosures, allowing city officials to rehab properties or demolish them.

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Realty Trac reports 6% increase in median home prices month over month

In the May 2014 Residential & Foreclosure Sales Report, RealtyTrac reported that U.S. properties sold at an estimated annual pace of 5.1 million in May. The pace of sold homes remained virtually unchanged from April, with a small increase of less than 1 percent from May 2013.

Including distressed and non-distressed properties, median home prices increased month-over-month by 6 percent to $180,000 in May, up 13 percent from the previous year. May’s increase was the second consecutive month with a double-digit annual increase in U.S. home prices, as well as the biggest annual increase since home prices bottomed out in March 2012.

Distressed sales, which the company defines as properties in foreclosure or bank-owned, posted a median price of $120,000, 37 percent below the median price of non-distressed properties. Distressed sales coupled with short sales accounted for 14.3 percent of all U.S. residential sales in May—down from 15.6 percent of sales in April and down from 15.9 percent of all sales in May 2013.

“Distressed sales continue to represent a smaller share of the overall sales pie nationwide, helping to boost median home prices higher given that distressed sales tend to be in lower price ranges,” said Daren Blomquist, VP at RealtyTrac. “When broken down by average price range, U.S. sales are clearly shifting away from the lower end.”

He continued, “Properties selling below $200,000 represented 50 percent of all sales in May, but that was down from a 55 percent share a year ago. Meanwhile, the share of homes selling above $200,000 increased from a 45 percent a year ago to a 50 percent in May 2014.”

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75% of Millennials plan to buy a home in the next 5 years.

Millennials plan to make more of a move in the housing market, particularly within the next five years. Thirty-two percent of 18-34 year olds say they plan to buy a home in the next 12 months. What’s more, three quarters of Millennials plan to buy a home in the next five years, according to a survey of 2,500 adults released by BMO Harris Bank that compared the timelines for likely home purchases among age groups.

For comparison, 62 percent of the 35 to 44 age group says they plan to move within the next five years; 35 percent of 45 to 54 age group; 31 percent of ages 55 to 64; and 19 percent of those older than 65.

“We’re seeing a fair amount of confidence in the housing market, which is encouraging news,” says Kevin Christopher, head of mortgage sales at BMO Harris Bank. “For many in the under 35 age range, this may be their first home.”

But home ownership is still out of reach for some. About one-third of renters surveyed say they would like to buy a home but they’re unable to afford it. High student loan debt continues to be a big obstacle for Millennials in qualifying for a mortgage to purchase a home.

“While the housing market is on the upswing, the record level of student debt carried by young Americans does pose a challenge to many in their 20s and 30s hoping to purchase their first home,” says Michael Gregory, head of U.S. Economics at BMO Capital Markets. “Student debt levels have more than doubled in the last seven years to $1.1 trillion. The financial burden means renters are delaying entering the purchasing market, which has a trickle-down effect on the overall housing recovery.”

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Paint your Wagon…or your house, apt, condo or cave – TIPS FROM THE PROS

Every home suffers a few negatives, but not every solution requires pricey structural changes. Paint is an often-overlooked, low-cost remodeler’s remedy for common complaints with interiors, offering the chameleon-like ability to lighten, warm, enlarge, erase, or attract attention.

“Paint is a powerful tool that can enhance the architectural character and intent of space,” says Minneapolis architect Petra Schwartze of TEA2 Architects. “As you choose your paint, think about what the experience in the room should be.”

More Schwartze advice:

  • Always sample paint colors on a few walls. Don’t be shy about painting a few large swaths on walls and trim to consider the effect of natural and artificial lighting. Add samples to opposite sides of a room to judge the paint color from different angles.
  • Check the space with the samples in place and watch how the paint color changes at different times of the day.
  • Evaluate your reaction to the proposed colors: Does the space feel cozy or is the openness enhanced?

How to enlarge space with color

Painting walls white, cream, pastels, or cool colors (tinged with blue or green) creates the illusion of more space by reflecting light. Paint trim similar to walls (or use white on trim) to ensure a seamless appearance that visually expands space.

White or light colors lift a ceiling; darker shades can have a similar effect if you select a high-gloss paint sheen, which reflects light and enhances space.

Employ a monochromatic scheme to amplify the dimensions of a room. Select furnishings in one color and paint walls and trim to match. Lack of contrast makes a room seem more spacious.

Make walls appear taller by extending wall color onto the ceiling. Create a 6- to 12-inch-wide border of wall color on the entire ceiling perimeter, or wherever walls meet the ceiling.

Vertical and horizontal stripes of alternating color can make a room grand. While vertical stripes enhance room height by drawing the eye upward, horizontal stripes lure your gaze around the perimeter, making walls seem further away. Use similar light colors for low-contrast stripes, and your room will look even larger.

Creating intimacy

When a space feels cavernous, draw walls inward and make it cozy with warm colors (red-tinged) because darker hues absorb light. Similarly, a dark or warm color overhead (in a flat finish) helps make rooms with high or vaulted ceilings less voluminous.

Give peace a chance

The right paint choice can lend tranquility to a bathroom, master suite, or other quiet, personal space. A palette of soft, understated color or muted tones help you instill a calming atmosphere. Some good choices include pale lavenders, light grays or greens, and wispy blues.

Define your assets

Call out notable features in a room with paint. Dress crown mouldings and other trims in white to make them pop against walls with color. Make a fireplace or other feature a focal point by painting it a color that contrasts with walls.

“Using a higher sheen of paint on woodwork, such as baseboards and door or window casings,” says Schwartze, “creates a crisp edge and clear transition from the wall to the trim.”

Hide flaws

Not everything should stand out in a space. Using a low-contrast palette is a good way to hide unappealing elements or flaws. Conduit, radiators, and other components painted the same color as the wall will seem to disappear.

Selecting low-sheen or flat paint colors also helps hide flaws. Unless walls are smooth, avoid using high-gloss paint because it reflects light and calls attention to an uneven surface

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Worried about coming up with a large down payment to purchase a house? Here is some important info you need to know…

You Don’t Need That Much of a Down Payment

Many consumers are overestimating  the down payment they need in order to purchase a home, according to Christina Boyle, vice president and head of single-family sales at Freddie Mac.

Consumers believe they need 11 percent to 15 percent in order for lenders to approve them for a loan, according to a survey of renters and non-home-owners conducted by Zelman & Associates in New York. Thirty-nine percent say they need at least 15 percent of the purchase price in order to qualify for financing. Only 28 percent of respondents say they would even qualify for a mortgage.

But in reality, home buyers often can qualify for a conforming, conventional mortgage with a down payment of as little as 5 percent — and sometimes even 3 percent — Boyle writes. Between 2009 and 2013, Freddie Mac’s purchases of mortgages with down payments of less than 10 percent more than quadrupled. So far in 2014, more than one in five borrowers who took out conforming, conventional mortgages put down 10 percent or less.

“Letting more consumers know how down payments are determined could bring more qualified borrowers off the sidelines,” Boyle writes. “Depending on their credit history and other factors, many borrowers can expect to make a down payment of about 5 percent or 10 percent.” However, Boyle notes that any borrower who puts down less than 20 percent will be required to buy mortgage insurance.

Boyle says that buyers should also be encouraged by the abundant down-payment assistance programs that exist to help break into home ownership. Every state in the U.S., as well as many cities and counties, offer down-payment assistance programs for qualified borrowers, such as the American Dream Downpayment Initiative and HOME Investment Partnerships Program.

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Confused about “Coming Soon” Listings?

WASHINGTON (June 16, 2014) – Here is the latest form NAR regarding “Coming Soon” listings. The National Association of Realtors® today published information for NAR members regarding advertising properties as “coming soon.”

Some “coming soon” advertisements involve unlisted properties which may or will be listed with a broker in the near future, while others relate to properties that are subject to listing agreements where property is available to potential purchasers only through the listing broker and not available, temporarily or indefinitely, for showing or purchase through other MLS participants. In either case, “coming soon” properties are commonly withheld from the MLS.

“The first important step in advising a seller-client on whether to advertise a property as ‘coming soon’ is to identify the client’s best interests, as defined by that client,” said National Association of Realtors® General Counsel Katie Johnson. “Failing to act in the client’s best interest and failing to disclose the pros and cons of a limited marketing plan, such as ‘coming soon’ advertising, can violate state real estate license laws and regulations, MLS policies, and the Realtor® Code of Ethics.”

For most sellers, getting the highest possible price on the best terms is their best interest, and maximizing exposure of their property to potential buyers advances that interest. MLSs compile property information in an orderly manner and distribute that information to MLS participants who have buyer-clients actively seeking to purchase property in the location served by the MLS. Restricting the marketing of a seller’s property to only small networks, private clubs, or even to national websites without also making it available to other area brokers and agents and their buyer-clients through the MLS limits that property’s exposure and consequently the seller’s ability to attract competitive offers.

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Tips on protecting yourself when using free WiFi

Using the Starbucks WiFi or any public WiFi in your hotel room or other place? Be careful. There are hackers out there waiting for your personal information. Here are some tips from Forbes.com:

 - Verify the network name. One common attack involves hackers who set up a public Wi-Fi hotspot of their own that resembles the name of the legitimate business’ offering. The hacker’s hotspot allows you to browse the Internet as normal, but all of your emails, site logins, and social media activity are routed through the hacker’s network. Make sure the network you use is the legitimate business one.

  • Check for “https” in the URL bar. If a site address begins with “https,” that is an indication that it has SSL encryption. You will also see a padlock icon in the address bar. When this is present, the data will be encrypted for everything you send and receive. Also, if you get a pop-up window that says “untrusted” security certificate while on public Wi-Fi, experts recommend not visiting the site.
  • Use a VPN. Consider signing up for a VPN – virtual private network – service, which will encrypt all your communications. Forbes.com cites several low-cost options for VPN services like Private Internet Access and TunnelBear, which can be used on both desktop computers and Android and iOS devices.
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Boomerang Buyers are in the market

BOOMERANG BUYERS ARE BACK!
Boomerang buyers are people who lost their homes during the Real Estate market downturn and have rebuilt their credit and have stable employment and are now re-entering the home buying market. Yes, there are challenges but these buyers are in a unique position to make their dreams come true.

Some boomerang buyers heading back to the housing market may find they have to make down payments of at least 20 percent to qualify for a loan, but others are finding opportunities to put down as little as 3.5 percent or 5 percent.

The wait times for qualifying for a loan can vary depending on the former home owners’ circumstances. Typically, the wait times following a short sale or foreclosure are as follows:
• Seven-year wait for home owners with a previous foreclosure before they can qualify for a new mortgage through mortgage giants Fannie Mae and Freddie Mac. If the foreclosure was  included in a bankruptcy, the borrower has to wait only four years.
• Two-year wait for home owners who underwent a short sale before they’re eligible for another Freddie Mac and Fannie Mae loan.
• Three-year wait for home owners seeking a Federal Housing Administration loan after a foreclosure or short sale. Some home owners who underwent a foreclosure because of at least a 20 percent cut in their pay may be able to qualify for a new mortgage after just a year through FHA’s Back to Work program.

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