Housing Set To Give Economy A Boost In '13

Home sales are set to keep marching upward this year after hitting their highest level in five years in 2012, economists say.

Existing-home sales for the full year rose 9.2 percent from 2011, according to preliminary data, the National Association of Realtors (NAR) reported Tuesday.

New home sales, which will be reported Friday, have also been improving.

Housing is finally contributing to the economy's growth instead of pulling it down, Moody's Analytics chief economist Mark Zandi says.

He expects housing to contribute a fifth of the economy's growth this year. In 2009, it subtracted more than 1 percentage point from GDP growth, he says.

Housing has historically led the U.S. economy out of recessions.

Now that housing appears to be mending, with prices rising and more new construction, "the recovery will start to feel more normal," says David Crowe, chief economist for the National Association of Home Builders.

New home sales are especially important to the economy because buyers spend money on other items, such as furnishings, appliances and landscaping.

Rising home values also increase household wealth.

December's existing-home sales, down 1 percent from November to a seasonally adjusted annual rate of 4.94 million, were almost 13 percent higher than a year earlier, the NAR says.

Last month's numbers were weaker than expected, but "the trend is still up," says Liz Ann Sonders, Charles Schwab chief investment strategist.

Home sales - and prices - are being driven higher by:

• Low interest rates. Average interest rates for 30-year-fixed loans have been below 4 percent for the past 14 months, Freddie Mac data show.

• Job growth. The unemployment rate stood at 7.8 percent in December, down from its peak of 10 percent in fall 2010. A better job market is helping more people move out of friends' and relatives' homes into their own. Net household formations topped 1 million in each of the past two years, Sonders says. That's more than twice the level of 2009 and 2010.

Not all economists see brighter days ahead for housing, given what market researcher CoreLogic says was a 7.4 percent jump in home prices in November from a year earlier.

Higher taxes and cuts in government spending, along with still-tepid job growth, will weigh on the market this year, says Steven Ricchiuto, chief economist for Mizuho Securities.

"You've probably already seen the best of the housing recovery," he says.

Written by,
Julie Schmit
USA Today

Seven ways to build up your credit score to be eligible for the best interest rates.

Credit score requirements for loans are higher than they have been in the past, so a good credit score is more crucial than ever. In today's economy most lenders are looking for credit scores of 720 or higher to secure a low mortgage rate. Here are seven ways to build up your credit score so you can enjoy the best interest rates available.

• Request your credit reports and assess the situation. Credit bureaus (www.experian.com, www.transusion.com, www.equifax.com) are required to provide you with a free credit report every year. Nationwide consumer reporting companies get their information from different sources, the data in your report from one company may not reflect the same data in your reports from the other two companies, so request all three.
• Check to verify all of the information is correct. If there are any errors, contact the bureaus immediately.
• Your payment history accounts for 35% of your score, so make sure payments are on time every month.
• The amount owed is 30% of your score. A good rule is to use less than 10% of your credit available on each individual card.
• The length of your credit history accounts for 15%, so maintain your accounts instead of closing them. You are not penalized for available credit.
• New credit is 10% of your score and every time you apply for credit an inquiry is added to your report, which drops your score.
• Types of credit used accounts for 10%. Installment loans like vehicle and personal loans demonstrate you can manage various long and short-term credits.

Home selling season isn't waiting until spring this year

There are indications of an unusually early start to the 2013 season as buyers rush to get off the sidelines before home prices and mortgage rates go higher.

WASHINGTON - Could we be looking at an early spring this year - not in meteorological terms but real estate? Could the chilly December-to-February months, which traditionally see fewer buyers out shopping for houses compared with the warmer months that follow, be more active than usual? And if so, what does this mean to you as a potential home seller or buyer?

There is growing evidence, anecdotal and statistical, that there are more shoppers on the prowl in many parts of the country than is customary for this time of year, more people requesting "preapproval" letters from mortgage companies, more people visiting websites offering homes for sale and more people telling pollsters that they expect home prices to continue rising and that the worst of the housing downturn is long past. There is even data showing that during holiday-distracted December, there was a jump in visits to homes listed for sale.

Coldwell Banker, one of the largest brokerages in the country, says traffic to its listings website was up 38% during the last month, compared with year-earlier levels. ZipRealty, an online brokerage based in Emeryville, Calif., reports that its website has seen an unusual 33% increase in home shoppers in the first half of January compared with December.

Redfin, a Seattle brokerage, found that during the week of Dec. 30, shoppers requesting home tours by agents jumped 26% over the four-week average, and 9% compared with the same week the year before.

Economists at the National Assn. of Realtors report that foot traffic at houses listed for sale in well over half of all markets around the country was higher in December than the year before. Given the strong December reading, says Paul C. Bishop, vice president for research at the association, sales in the coming weeks should be "robust."

Even in markets that typically hibernate until the snow melts, there are indications of an unusually early start to the 2013 season. Joe Petrowsky, president of Right Trac Financing Group, a mortgage company near Hartford, Conn., says he has received a much higher volume of requests for "preapproval" letters - which tell sellers that a purchaser is qualified for a mortgage loan - compared with what's typical at this time of year.

"I'm seeing twice as many buyers this January as last January," Petrowsky said. "People have finally figured out that prices are moving up, interest rates are really low, and they don't want to miss out on the opportunity."

In the Washington, D.C., area, Long & Foster Real Estate, the country's largest independent broker, reports strong "signs that we are going to have an early spring" in terms of home sales. In an unusual occurrence for January, according to Steve Wydler, a Long & Foster agent in Northern Virginia, "multiple offer situations are becoming increasingly common, with prices being escalated above asking price."

Gretchen Castorina, an agent with brokerage firm Allen Tate in Chapel Hill, N.C., says "spring started last month" in terms of new clients and multiple-bid competitions. Even in the dark final days of December, Castorina says she was busy. "I was showing houses on Dec. 31," she said, and had written a contract for buyers just before Christmas.

Jo Ann Poole, an agent with Simi Valley Real Estate, says that for a variety of reasons, "in the last 10 days people have figured it out" and are making real estate moves that might have normally been pushed back into the spring months.

Polling by Fannie Mae, the government-backed mortgage investor, may shed some light on what's motivating buyers. In a survey of 1,002 adults in December, Fannie found the highest share of consumers in the survey's 21/2-year history who expect home prices to rise during the coming 12 months. Forty-three percent expect mortgage rates to jump, and 49% believe that the cost of renting will increase.

Roll all this together, says Doug Duncan, Fannie's chief economist, and you can see why consumer sentiment "could incentivize those waiting on the sidelines... to buy a home sooner rather than later" - pushing spring behavior into midwinter.

What's missing from this equation? More owners listing their homes for sale. Inventories of available homes are down in most markets, mainly because many sellers are under the impression that it's still a buyer's market filled with low-ballers who won't pay them a fair price. In many parts of the country, that is last year's news. In 2013, it's simply no longer the case.

Written by,
Kenneth Harney

2013 Looks Good For Property Buyers

Is it a good time to buy?

That's always a challenging real estate question because, well, you have to ask real estate people for the answer. And, well, they have a habit of being overly optimistic.

Nevertheless we decided to ask real estate pros around town what they'd tell the inquisitive relative or neighbor who asked the quintessential property question. And, yes, we heard "It's a good time" a lot.
Let's start with residential outlooks ...

Len Herman, 2013 president of the Orange County Association of Realtors and agent with Keller Williams Realty in Mission Viejo, says the timing is perfect to buy.


"It may be the best time ever to buy a home which you plan to keep. Home prices are down about 40 percent off their peak and interest rates remain at or near record lows. Additionally, prevailing market rents versus mortgage payments favor home ownership."

Gary Watts, broker for Impact Real Estate in Mission Viejo, says cheap loan rates are key for the house shopper.
"For a buyer, please get in as soon as possible because before long, interest rates will have to rise. With today¹s low interest rates, house payments can be less than renting, and if we are at or near the bottom of the house-price cycle, then add potential future appreciation to your acquisition."

Veronica Hicks, broker from CondosEtc., had similar thoughts for those with a long-run horizon.


"And you tell them ... It has been a good time to buy and invest for the last two to three years. Two years from now prices will be higher and rates will be higher."

Daren Blomquist, vice president at foreclosure tracker RealtyTrac from Irvine, says for the investor it's not easy -- but flipping a house for a quick profit still is possible.

"You've probably missed the absolute best time to buy or invest because you didn't buy in 2009 and 2010 when everyone else was running for the hills. Your best bet is to stay conservative and buy less than you can afford, leaving a margin for the unexpected. If you're investing in a property as a rental, simply leave an extra cushion between what you pay each month (principal, interest, taxes, insurance) and what the property generates in rental income each month. If you're flipping start with a property that is well below what you can afford and leave big margins in your budget to plan for the unexpected. In general, flipping would be a better strategy in Orange County while buying rentals is probably a better strategy in the Inland Empire."
Meanwhile, in commercial real estate ...

Rand Sperry, CEO of the Sperry Van Ness commercial real estate franchisor in Irvine, says investors of big properties, too, should keep cheap money in mind.

"In the last 35 years, I have never seen rates near the sub-4 percent level we are seeing today. I believe we are at or near the bottom and don¹t believe there is much more downside. We may have even pushed off the bottom. The availability of positive leverage, low interest rates, rental rates on commercial properties at five-year lows and improving market fundamentals lends itself to a unique investment environment."

Nick Lieberman, president of Bona Fide Mortgage of Irvine and treasurer of the Apartment Association of Orange County, says successful rental buyers will have reasonable expectations.

"Don¹t expect large returns in initial years. A 2 percent to 5 percent annual yield is probably all one can expect on a well-located, stabilized income-generating property. But compared with interest paid on savings -- typically less than 1 percent -- that may be a perfectly acceptable return. Depreciation benefits (for as long as they may remain a deduction) offer an addition boost to yield. The last five years of economic stress have put real estate values through the ringer, meaning reduced risk of decline in 2013 and greater likelihood of appreciation."

Alan Reay, president of the Atlas Hospitality Group tourism consultancy in Irvine, thinks hotels will be a hot property.

"With growing demand and limited new supply of hotel rooms, investors are going to enjoy robust cash on cash returns and value appreciation."

Trent Brooks, chief operating officer at Lyon Communities, says apartment investors will be rewarded by changing tastes in housing choices.

"I believe we are seeing a paradigm shift in how many Americans approach their housing decisions. The economic difficulties over the last few years have made homeownership less attractive and consequently boosted rental housing demand."
And, finally, Jeff Ingham, senior managing director at the Jones Lang LaSalle commercial real estate brokerage, says selectivity will be key.

"Since real estate is relatively custom and location-specific, there tends to be hidden opportunities in product type in most flat as well as improving market cycles. If you¹re considering investing in core Class A office product, prices have fully recovered and are currently trading at peak values. However, if you are looking for a long-term investment, the market has plenty of value-added Class A and B product to consider with higher, risk-adjusted returns. Class C product would be tough to invest in with any confidence in a return."

Written by
Jonathan Lansner and Jeff Collins / The Orange County Register

How To Make The Most Of Spring Curb Appeal

According to the National Association of REALTORS?, 63% of homebuyers will drop by after viewing a home they like online. If your home isn't alluring from the outside, potential buyers may never schedule a showing to see the desirable features within it. Here are some tips to create a first impression that may lead to a sale this spring.

1. Under pressure. Pressure washing is budget-friendly way to dramatically improve a home's exterior. Dingy siding, mildewed decks, faded walkways and oil-stained driveways can be returned to pristine condition.
2. Contain yourself. Consider investing in container plants. Arranging them around the yard and entryway is a quick way to brighten up a space and create a splash of color.
3. Get rid of gutter clutter. Clean your gutters. Often leaves, branches and debris may be visible from the street.
4. Open up. Homes with open your curtains often look brighter and more inviting.
5. Enjoy the view. Clean windows speak for themselves.
6. Lighten up. Outdoor lighting is aesthetically pleasing and provides visual aid in the dark.
7. Quick fixes. Updated hardware, such as doorknobs, lighting and even the mailbox, can greatly enhance an entryway.
8. Store more. Put away any tools, toys, bikes etc. out of sight so they do not detract from the home.
9. Repair and renew. Improve the obvious by filling in sidewalk cracks, fixing screen doors, and touching up any paint that is chipped.
10. Tidy up. Remember to rake the leaves and trim the hedges to give the yard a boost.

Tight Inventory, Low Rates Helped Give A Boost To Housing Market

The housing market has steadily improved this year, helped by stable job gains and record-low mortgage rates. Here are five key things that happened in real estate in 2012:

1. Mortgage rates plummeted to record lows. Thirty years ago, the rate for a 30-year fixed home loan was in the double digits, between 13 percent to almost 18 percent. Now, it’s fallen below 4 percent, based on numbers from mortgage giant Freddie Mac. In fact, both the 30-year and 15-year rates in November dropped to their lowest levels in 41 years. Since then, neither have strayed too far from their all-time lows of 3.31 percent for the 30-year and 2.63 percent for the 15-year. Rates have consistently fallen throughout the year but received an extra downward push after the Federal Reserve said in September it would buy mortgage-backed securities to give the U.S. economy a lift. The plan is meant to keep long-term interest rates and mortgage rates down so more folks can buy homes and refinance their mortgages.

2. A $25 billion mortgage settlement pushes banks to help consumers. California Attorney General Kamala Harris and housing advocates called the deal between 49 states and five major lenders a historic deal that finally holds accountable the companies accused of wrongfully foreclosing on homes and failing to help property owners. Opponents of the deal say the effort was too little, too late, and a raw deal for consumers because the relief amount, when broken down by harmed homeowner, was minor. Critics of the mortgage settlement also point out that many states, including California, used part of their money to fix their budgets. Not quite the intended use. Still, banks have provided help to homeowners through the settlement. On the flip side, about two-thirds of that aid has been in the form of short sales, which some housing advocates argue is less desirable than a loan modification or other means of keeping the borrower in the home.

3. Short sales make up a larger share of the housing market than foreclosure resales. This happened because fewer homeowners have been defaulting on their mortgages because of a slightly improving economy and other alternatives such as loan modifications and short sales, deals where homeowners can sell their homes for less than what they owe as long as the lender says OK. In November, mortgage defaults sank to a six-year low and foreclosures decreased 35 percent from the same time a year ago. Also, the mortgage settlement appears to have contributed to somewhat of a short sale frenzy. Almost 40,000 of them were completed in the state through the settlement, from February to November. Short sales not only can benefit consumers, they also benefit lenders because they tend to be less costly to complete compared to foreclosures, which are lengthier to process.

4. Housing inventory is super tight. If you’re a buyer, especially someone who’s not an investor, you may be facing slim pickings out there. It’s not just in your head. There are about 5,300 active listings in San Diego County, half of what we saw just a year ago and the lowest level in at least three years, according to the local Realtors’ group. Inventory has consistently fallen for the last 15 months and may keep dropping if consumer demand remains strong and would-be sellers stay on the sidelines. Why aren’t folks listing their homes? Many are underwater on their mortgages and are waiting for prices to rise more.

5. Home prices and sales have stayed hot through the fall and winter. The median price for a home sold in November was $358,000, almost 14 percent higher than a year ago and the number of transactions reached a seven-year high for a November. Keep in mind, that happened during a fall month, when homebuying typically cools down. Homebuying demand remains strong especially among the investor crowd. That, coupled with limited inventory, has pushed prices up. This is not-so-great news for potential buyers. And possibly good news for potential sellers.

Written by
Lily Leung

California's fiercely competitive housing market

For months now, north state real estate agents have talked about the very low number of houses on the market and how it's created bidding wars, especially at the lower end.

On Thursday, the California Association of Realtors released results of a survey that shows this playing out across the state.

More homes in 2012 have received multiple offers than in any year since 2000.
Affordable prices and record-low interest rates are also fueling sales.

Nearly 6 of every 10 sales got an average of 4.2 offers, up from 3.5 in 2011, the CAR survey shows.

No surprise that lower-priced homes, many owned by the bank after being foreclosed, attracted more multiple offers than equity sales. Seven of 10 foreclosure and short sales got more than one offer.

In the release announcing the survey results, CAR President LeFrancis Arnold said the highly competitive market can make it tough on first-time home buyers. That's because they often are competing with investors armed with all-cash offers.

Nearly one of every three buyers in California has paid with cash this year. That's more than triple the amount it was in 2001 as demand for investment properties grows.

Foreclosure research firm RealtyTrac released data earlier this year that show speculators are getting more bullish on the north state's housing market.

There were 232 properties flipped in Shasta County in the first half of 2012, a 176 percent increase from the same six months a year ago.

By David Benda