Existing home sales are down, thanks to the tax credit expiration and high unemployment numbers, to name just two factors. (Photo Credit: CC BY-ND/David/Flickr)

While new home sales showed an increase in June (but a marked decrease in July), the Association of Realtors has revealed the dirty underbelly of those statistics, reports Bloomberg. Contracts to buy previously owned homes were down that month, something that experts did not predict. The indication here is that as the home buyer tax credit expired, demand spiraled downward.

Economists predicted 4 percent growth in existing home sales

The median forecast by the National Association of Realtors had a much rosier outlook on June 2010. Existing home sales weren’t predicted to fall as far as they did immediately following the April 30 deadline for the government tax credit, when a massive 30 percent drop occurred. Bloomberg reports that 30 percent drop in May 2010 was the largest decrease in existing home sales since the association began the median forecast in 2001.

No more $8,000 credit means people need to earn more

Of course America remains in a recession, which means that unemployment is still high and wage gains remain stagnant. As Treasury Secretary Tim Geithner predicts that unemployment will increase in August, existing home sales probably aren’t going to be trending upward for a while. Stocks are down in anticipation of the bad news, as the Standard & Poor’s 500 recently went down 0.6 percent.

Existing home sales are the bulk of the housing market

In fact, 90 percent of the U.S. housing market consists of existing home sales, so the recent downturn doesn’t bode well for a housing market recovery. Lawrence Yun, chief economist of the National Association of Realtors, told Bloomberg that “There could be a couple of additional months of slow home sales activity before picking up later in the year, provided the job market improves.”

The specter of home seizure

Then there are those pesky foreclosures. Even though 30-year fixed mortgages are down to 4.54 percent at July’s end, foreclosure was up 38 percent from the year previous, according to RealtyTrac, Inc. Donald Horton of home builder D.R. Horton Inc. remarked that market conditions have become quite challenging, and there’s no immediate end in sight.

Sources:

Bloomberg

Homeowners who are staying put

Think it's OK to leave your property vacant when it's up for sale? Not a good idea. Use payday loans if necessary, but pay to get vacant home insurance!

Payday loans are proving their worth in the sluggish Real Estate market. Today homes are taking longer than ever to sell. It is not uncommon to put your home for sale in April, the prime month for sales, and still be waiting on a qualified buyer in September. The housing market has suffered greatly since the recession and many people either don’t have the funds to buy a house or don’t qualify for a loan.

When a homeowner has to keep a home on the market, sometimes they are forced to move and leave the sale property vacant. This creates a problem for homeowners because vacant houses are known as “nuisances in neighborhoods and they are temptations for vandals and thieves,” according to Michael McRaith, director of Chicago’s Department of Insurance.

Insurance and the Vacant Home

It is a fact that insurance providers do not like vacant homes. Homeowners are finding out the hard way that if their property is not inhabited, it could be dropped from homeowner’s policy coverage. Empty homes are known as riskier to insure. Peter Moraga, spokesman for the Insurance Information Network of California, said, “Kids climbing over a dilapidated fence could get hurt, or teens partying in a vacant home could fall and slip.” Such issues could make empty homes a huge hazard for homeowner insurers.

Solutions for Vacant Properties

For anyone who foresees a vacant home in their future, there are options. People who need to insure their vacant homes normally have two choices: They can either buy an endorsement to their existing homeowner’s insurance policy or try buying separate vacant-home insurance.

The most convenient option is for a customer to use an endorsement to their existing policy. State Farm Insurance offers these endorsements and they normally cost less than $100 to add to an existing policy. If a homeowner needs to, they can fund the additional cost with small payday loans, savings or a credit card. It’s a much simpler solution than doing nothing and it is much more cost effective than not having insurance if a disaster occurs.

There is also the option to buy separate vacant-home insurance. This option is not available through every insurance agency and customers may have to look around to find it. The easiest way is to ask your current insurance agent for recommendations.

Vacant-Property Owners Shouldn’t Ignore the Issue

The single worst thing that can be done, however, is to ignore the issue. Many policies don’t announce their rules regarding vacancies, but if an issue arises they will rely on it. Moraga confirms that “Most policies have exclusions for ‘neglect’ or ‘abandonment of property.’ If a homeowner is not living in the home and does not notify their insurance agent that the home is sitting vacant, any claim for property damage or liability under the homeowner’s insurance policy could be excluded or constitute insurance fraud.”

Better Safe Than Sorry with Insurance

The best option is to protect yourself. If you have a property that will be sitting vacant, call your insurance agent and ask them what the best option for you is. It’s better to use savings, small payday loans or a credit card to fund a fee than to have a much larger liability on your hands if something happens at your vacant property.

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